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TABLE OF CONTENTS
Genocea Biosciences, Inc. Index to Financial Statements

Table of Contents

As filed with the Securities and Exchange Commission on December 23, 2013.

Registration No. 333-                

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933



GENOCEA BIOSCIENCES, INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)
  2836
(Primary Standard Industrial
Classification Code Number)
  51-0596811
(I.R.S. Employer
Identification Number)

Cambridge Discovery Park
100 Acorn Park Drive, 5th Floor
Cambridge, MA 02140
(617) 876-8191

(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)



William Clark
Chief Executive Officer
100 Acorn Park Drive, 5th Floor
Cambridge, MA 02140
(617) 876-8191

(Name, address, including zip code, and telephone number, including
area code, of agent for service)



Copies to:

Marc Rubenstein, Esq.
Ropes & Gray LLP
Prudential Tower
800 Boylston Street
Boston, MA 02199
(617) 951-7000

 

 

 

Barbara Kosacz, Esq.
Marc Recht, Esq.
Nicole Brookshire, Esq.
Cooley LLP
500 Boylston Street, 14th Floor
Boston, MA 02116
(617) 937-2300



Approximate date of commencement of proposed sale to public:
As soon as practicable after this Registration Statement is declared effective.

          If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.     o

          If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.     o

          If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.     o

          If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.     o

          Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer  o   Accelerated filer  o   Non-accelerated filer  ý
(Do not check if a
smaller reporting company)
  Smaller reporting company  o

CALCULATION OF REGISTRATION FEE

       
 
Title of each class of securities
to be registered

  Proposed maximum
aggregate offering price(1)

  Amount of
registration fee(2)

 

Common stock, $0.001 par value

  $75,000,000   $9,660

 

(1)
Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(o) of the Securities Act of 1933, amended.

(2)
Calculated pursuant to Rule 457(o) based on an estimate of the proposed maximum aggregate offering price.



           The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

   


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The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED DECEMBER 23, 2013

PRELIMINARY PROSPECTUS

LOGO

            Shares

Genocea Biosciences, Inc.

Common Stock
$      per share



        This is the initial public offering of our common stock. We are selling              shares of our common stock. We currently expect the initial public offering price to be between $            and $            per share of common stock.

        We have granted the underwriters an option to purchase up to              additional shares of common stock to cover over-allotments.

        We have applied to have our common stock listed on the NASDAQ Global Market under the symbol "GNCA".

        We are an "emerging growth company" as that term is used in the Jumpstart Our Business Startups Act of 2012 and, as such, have elected to comply with certain reduced public company reporting requirements for this prospectus and future filings.



         Investing in our common stock involves risk. See "Risk Factors" beginning on page 11.

         Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.



 
  Per share   Total
Public Offering Price   $   $
Underwriting Discounts   $   $
Proceeds to Genocea (before expenses)(1)   $   $

(1)
See "Underwriting" on page 153 for additional information regarding underwriting compensation.

        The underwriters expect to deliver the shares of common stock to investors on or about              , 2014 through the book-entry facilities of The Depositary Trust Company.

        Certain of our existing stockholders and their affiliated entities, including holders of more than 5% of our common stock, have indicated an interest in purchasing shares of our common stock in this offering at the initial public offering price. However, because indications of interest are not binding agreements or commitments to purchase, the underwriters could determine to sell more, less or no shares to any of these existing stockholders and any of these existing stockholders could determine to purchase more, less or no shares in this offering.



Citigroup   Cowen and Company



Stifel



Needham & Company

                        , 2014


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TABLE OF CONTENTS

 
  Page

Summary

  1

The Offering

  7

Summary Financial Data

  9

Risk Factors

  11

Cautionary Note Regarding Forward-Looking Statements

  44

Use of Proceeds

  46

Dividend Policy

  47

Capitalization

  48

Dilution

  50

Selected Financial Data

  52

Management's Discussion and Analysis of Financial Condition and Results of Operations

  54

Business

  76

Management

  112

Executive and Director Compensation

  120

Certain Relationships and Related Party Transactions

  132

Principal Stockholders

  135

Description of Capital Stock

  140

Shares Eligible for Future Sale

  145

Material United States Federal Income and Estate Tax Considerations for Non-U.S. Holders

  148

Underwriting

  153

Legal Matters

  159

Experts

  159

Where You Can Find More Information

  159

Index to Financial Statements

  F-1

         We are responsible for the information contained in this prospectus and in any free-writing prospectus we prepare or authorize. We have not authorized anyone to provide you with different information, and we take no responsibility for any other information others may give you. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than the date on the cover of this prospectus.

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SUMMARY

         This summary highlights information contained in other parts of this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including our financial statements and the related notes and the information set forth under the sections titled "Risk Factors", "Cautionary Note Regarding Forward-Looking Statements" and "Management's Discussion and Analysis of Financial Condition and Results of Operations". Unless the context requires otherwise, references in this prospectus to "Genocea", "we", "us" and "our" refer to Genocea Biosciences, Inc.


Overview

        We are a clinical stage biotechnology company that discovers and develops novel vaccines to address infectious diseases for which no vaccine or vaccines with limited effectiveness exist today. We use our proprietary discovery platform, ATLAS, to rapidly design vaccines that act through T cell (or cellular) immune responses, in contrast to approved vaccines, which are designed to act primarily through B cell (or antibody) immune responses. We believe that by harnessing T cells we can develop first-in-class vaccines to address infectious diseases where T cells are central to the control of the disease. In September 2013, we announced human proof-of-concept data for GEN-003, a candidate therapeutic vaccine, or immunotherapy, that we are developing to treat herpes simplex virus-2, or HSV-2, infections. These data from our ongoing Phase 1/2a trial represent the first reported instance of a vaccine significantly reducing viral shedding, an indicator of disease activity in HSV-2. If GEN-003 successfully completes clinical development and is approved, we believe it would represent an important new treatment option for patients with HSV-2. We are also developing a second T cell vaccine candidate, GEN-004 for pneumococcus, a leading cause of infectious disease mortality worldwide. We have initiated a Phase 1 trial for GEN-004, which we anticipate completing by mid-2014. This Phase 1 trial is designed to demonstrate the T cell response associated with natural protection against pneumococcus. If this trial is successful, we plan to conduct a Phase 2 clinical trial to seek to demonstrate that GEN-004 can reduce pneumococcus in humans by mid-2015.

Vaccine Overview

        Vaccines represent a major healthcare success story, having eradicated or significantly reduced the global prevalence of many infectious diseases. Today, there are vaccines approved to protect against approximately 30 infectious diseases. Total global vaccine revenues in 2012 were $27 billion.

        Vaccines work by training the immune system to respond to an infectious pathogen by exposing it to that pathogen, or a component of that pathogen, in a controlled way. Such components are often immunogenic proteins of a pathogen, called antigens. Vaccines rely on an ability of the human immune system, called adaptive immunity, to "remember" an invading organism and develop an immune response to it. The adaptive immune system consists of two main components: the B cell arm and the T cell arm. To date, all approved vaccines have been developed primarily to elicit B cell responses. B cells produce antibodies, which identify and initiate processes to kill foreign organisms by binding to one or more structures, such as antigens, on the pathogen surface. B cell responses are effective against organisms in the bloodstream, but are generally ineffective against those that reside primarily in host cells or mucosal surfaces such as those of the genitalia, nose and throat. For these organisms, no vaccines or vaccines with limited effectiveness exist. To address these pathogens, vaccines that engage the T cell immune system may represent the optimal solution.

Limitations and Challenges of Current Vaccine Discovery

        We believe T cell vaccine discovery has been particularly challenging for two reasons. The first is the diversity of human T cell responses. B cell responses to a particular antigen are generally more

 

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uniform across all humans than T cell responses. The specific antigens that elicit T cell responses vary across humans — people from different genetic groups can have different T cell responses to the same invading organism. Traditional vaccine discovery involves testing antigens in animals which are typically bred from a single genetic lineage and cannot effectively account for the diversity of human T cell responses that is necessary to optimize vaccine design.

        The second challenge to T cell vaccine discovery relates to the number of target candidates. Antibodies typically target proteins on a pathogen's surface. For B cell vaccines eliciting an antibody response, the number of potential targets has typically been small, limiting the number and combination of targets that need to be tested to find a protective vaccine. By contrast, the potential targets for T cell responses include every protein in the pathogen, including proteins that are not just on the surface of the pathogen, which can number in the thousands. The number and combination of candidate T cell targets, therefore, increases exponentially with pathogen size. For many larger organisms, the complexities associated with the pathogen size have presented a fundamental barrier to the discovery of effective T cell vaccines using traditional vaccine discovery tools, which usually rely on empirically selecting the potential targets from the proteins of a pathogen and iteratively testing them in animal models. This process is slow and labor intensive and can take many years.

The ATLAS Discovery Platform: A Novel Approach to Vaccine Discovery

        We have developed a proprietary technology platform that is designed to overcome the challenges associated with developing vaccines that stimulate T cell immunity. ATLAS, our AnTigen Lead Acquisition System, allows us to mimic ex vivo , or outside the body, the T cell responses of human populations exposed to an infectious pathogen by using human blood samples from those populations. We use ATLAS as a high throughput engine to rapidly screen T cells from hundreds of human subjects against every protein in a pathogen, and use the pattern of responses for each subject to determine which pathogen proteins are associated with protective responses. By comparing antigens identified in individuals who naturally control their infection with those who do not, we can select the antigens that may have the best likelihood of inducing protective T cell immune responses.

        We believe that, by identifying T cell antigens in this way, ATLAS will help create vaccines against pathogens that are generally inaccessible to antibodies and have therefore not been addressed successfully by B cell vaccines. By identifying the targets of human T cell responses ex vivo from human samples, rather than in animal models, we account for the diversity of human T cell responses. We also can screen every protein in a pathogen to choose from for all possible antigens. We believe these factors will significantly increase our likelihood of success in efficiently discovering T cell-based vaccines against diseases associated with unmet needs.

GEN-003: A Therapeutic Vaccine Candidate for HSV-2

        HSV-2 is a sexually transmitted disease affecting approximately 16% of the United States population between the ages of 14 to 49, and more than 500 million people worldwide, according to the Centers for Disease Control and Prevention and the World Health Organization. HSV-2 is a chronic, lifelong infection for which there is no cure. The virus persists in two states: inactive, or latent, and active. During latent states, patients have no symptoms or manifestations of disease. Intermittently, the virus activates, spreading to the skin and mucous membranes of the genital region. In active states, the virus can be detected by laboratory tests, and at these times the person is said to be shedding virus. Shedding lasts hours to several days or longer and is believed to be controlled eventually by the immune system. In general, when shedding is of short duration symptoms may not be present (so-called asymptomatic shedding). When shedding persists, ulcers may develop (clinical or symptomatic shedding). Sexual contact during either symptomatic or asymptomatic shedding events can lead to disease transmission. There is no known cure for HSV-2. For patients experiencing outbreaks, oral

 

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antiviral drugs are the only treatment option, but they are of limited effectiveness in reducing viral shedding, the risk of transmission from viral shedding and symptomatic outbreaks.

        We used ATLAS to design GEN-003 as a therapeutic vaccine, or immunotherapy, and are developing GEN-003 to treat people with HSV-2 infections. In our ongoing Phase 1/2a trial, we have generated human proof-of-concept data by showing that GEN-003 significantly reduces HSV-2 viral shedding in patients with moderate-to-severe infections. We believe this represents the first time a vaccine has been shown to reduce HSV-2 viral shedding in humans. In addition, the reduction in shedding appears to be durable, lasting for at least the six month period for which we have data. We believe that these initial clinical results demonstrate that GEN-003 has the potential to be a first-in-class vaccine to treat HSV-2. These data also suggest that GEN-003 may become the first vaccine to effectively treat an infection that is controlled significantly by the T cell immune system. We expect to complete our ongoing clinical trial and initiate a Phase 2 trial in mid-2014 to confirm these results, possibly to improve the anti-viral effect we have observed to date, and to optimize the vaccine dose.

        Based on market research surveys conducted on our behalf with more than 400 patients with HSV-2 infections and more than 300 physicians who treat patients with HSV-2 infections, we believe that, if approved, GEN-003 could be used either as monotherapy or in combination with oral antiviral medication. We anticipate that, since the mechanisms of action for GEN-003 and oral antiviral medication may complement each other, the control against symptoms and disease transmission risk offered by the combination could exceed that of either therapy alone. We therefore believe GEN-003 can be an important treatment option for people infected with HSV-2.

GEN-004: A Prophylactic Vaccine Candidate for Pneumococcus

        Our second program derived from ATLAS is GEN-004, a T cell vaccine that we are developing to protect against all strains of the bacteria pneumococcus. Pneumococcus is the most common cause of bacterial pneumonia in the world, and kills more children under age five globally than any other organism. Pneumococcus often resides harmlessly in the nose and throat, but can also spread to other parts of the body and cause disease. There are safe and effective vaccines that induce antibodies against pneumococcus, including Prevnar from Pfizer which achieved 2012 global revenue of $4.1 billion. However, Prevnar and other available vaccines protect against only a small number of the more than 90 pneumococcus serotypes known to cause disease, meaning that a universal pneumococcus vaccine would address a significant unmet need.

        We have designed GEN-004 to fight all serotypes of pneumococcus, and to do so through a T cell-based mechanism of action that complements existing vaccines. Using ATLAS, we have identified three protein antigens that associate highly with a protective T cell response against pneumococcus in humans. Moreover, as these proteins are conserved in all sequenced strains of pneumococci, we believe GEN-004 may be able to help protect against invasive disease caused by any pneumococcal serotype. We have demonstrated in mice that GEN-004 clears pneumococcus from the nose and throat through a T cell-mediated mechanism of action. We have initiated a Phase 1 clinical trial of GEN-004 to evaluate its safety and immunogenicity in healthy subjects. If the Phase 1 clinical trial is successful, we intend to initiate a Phase 2a clinical trial in the third quarter of 2014. If successful, we believe it could be the first clinical trial in which a vaccine induces a T cell response to reduce pneumococcus in the nasopharnyx, a necessary precursor to pneumococcal disease.

Other Opportunities

        We have a number of other preclinical stage research programs intended to address other areas of high unmet clinical need, all discovered using our ATLAS platform. Our chlamydia and HSV-2 prophylaxis programs have achieved promising preclinical study results from candidates generated using

 

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ATLAS. We are collaborating with the Bill & Melinda Gates Foundation on malaria vaccine research. We also believe ATLAS may offer utility in the discovery of new treatments for cancer.

Our Product Candidate Pipeline

        The following table describes our current development programs:

 
Vaccine Candidate
  Program   Stage of
Development
  Next Milestone   Anticipated
Timeline
 

GEN-003

  HSV-2 Therapeutic   Phase 1/2a   Initiate Phase 2   Mid-2014
 

GEN-004

  Pneumococcus Prophylaxis   Phase 1   Complete Phase 1   Mid-2014
 

GEN-001

  Chlamydia Prophylaxis   Pre-clinical   File IND   2016
 

GEN-002

  HSV-2 Prophylaxis   Pre-clinical   File IND   2016
 

GEN-005

  Malaria Prophylaxis   Research   Initiate pre-clinical studies   Second half of 2014

Our Team

        Our management and scientific teams possess considerable experience in vaccine and anti-infective research, manufacturing, clinical development and regulatory matters. We have also assembled a team of leading advisors, led by George Siber, M.D., to guide the further development of our programs. Previously, Dr. Siber was the Chief Scientific Officer of Wyeth Vaccines, where he led the development of several first-in-class vaccines including Prevnar. He is also an inventor of Respigam and Cytogam, antibodies to treat and protect against respiratory syncytial virus and cytomegalovirus, respectively. Dr. Siber is one of our directors and chairs our Scientific Advisory Board.

Our Strategy

        Our objective is to be the leading T cell vaccine company. Key components of our strategy are to:

    Continue to rapidly advance our lead vaccine candidate, GEN-003.   GEN-003 is a potential first-in-class therapeutic vaccine candidate we are developing to treat HSV-2 infections, for which we are currently conducting a Phase 1/2a trial. We intend to commence a Phase 2 trial in mid-2014 to optimize the vaccine dose, and a Phase 2b trial in mid-2015 to optimize the dosing regimen. We retain all rights to GEN-003 and plan to advance this program through regulatory approval and commercialize this vaccine through a focused commercial effort in the United States. Outside the United States, we intend to evaluate partnerships for GEN-003 opportunistically.

    Advance GEN-004 into human proof-of-concept clinical trials.   Our second clinical-stage product candidate is GEN-004, a vaccine candidate designed to prevent infections caused by all strains of pneumococcus. We have demonstrated proof-of-concept of GEN-004 in mice. We have initiated a clinical trial for GEN-004, and we believe we can demonstrate our novel T cell-based mechanism of action by mid-2014 and we can achieve human proof-of-concept in our Phase 2a clinical trial with GEN-004 by mid-2015. We believe such trials would provide the first evidence in humans that T cells could enable a vaccine against all strains of pneumococcus. We retain all rights to this program, other than certain rights we have granted in developing countries, and intend to opportunistically partner this program.

    Advance our discovery stage and preclinical novel vaccine programs.   We expect similarly to advance our novel preclinical prophylactic vaccine programs against chlamydia, HSV-2 and malaria through human proof-of-concept. We will seek partnerships opportunistically for late-stage development and commercialization of such programs.

 

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    Utilize ATLAS, our vaccine discovery platform, to develop additional T cell vaccine candidates.   We intend to continue to use ATLAS to discover and advance novel T cell vaccines. Since we begin our vaccine candidate discovery process by profiling human populations exposed to a pathogen, and use these subjects' own cells to comprehensively screen the entire proteome of the pathogen, we believe we have a better chance of identifying vaccines likely to protect against pathogens of interest. We intend to opportunistically expand our pipeline using ATLAS to discover T cell vaccines against pathogens for which B cell vaccines are ineffective or non-existent.

Risk Factors

        An investment in our common stock involves a high degree of risk. Any of the factors set forth under "Risk Factors" may limit our ability to successfully execute our business strategy. You should carefully consider all of the information set forth in this prospectus and, in particular, should evaluate the specific factors set forth under "Risk Factors" in deciding whether to invest in our common stock. These risk factors include, among others:

    We have incurred significant losses since our founding in 2006, which we anticipate will continue for the foreseeable future. We have never generated revenue from product sales and may never generate revenue from product sales.

    Failure to obtain additional funding when needed would force us to delay, limit, reduce or terminate our development or commercialization efforts of our product candidates.

    Our product candidates, including GEN-003 and GEN-004, are designed to work by eliciting T cell responses, which is a novel approach for vaccines and medical treatments and therefore could produce unexpected adverse clinical outcomes or result in delays in our obtaining regulatory approval.

    If our product candidates fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.

    Our product candidates, including GEN-003, may include one or more novel vaccine adjuvants, which may make it difficult for us to predict the requirements the United States Food and Drug Administration, or FDA, or other regulatory agencies may impose to demonstrate the safety of the product candidate.

    We expect to rely on third parties to conduct the majority of our product manufacturing and clinical development of our product candidates. If they fail to meet deadlines or perform in an unsatisfactory manner, our business could be harmed.

    Our future commercial success depends upon attaining significant market acceptance of our product candidates, if approved, among patients, physicians, third-party payors and others in the medical community.

    If we are unable to obtain or protect intellectual property rights related to our product candidates, we may not be able to compete effectively in our markets.

Implications of Being an Emerging Growth Company

        As a company with less than $1.0 billion in revenue during our most recently completed fiscal year, we qualify as an "emerging growth company" as defined in Section 2(a) of the Securities Act of 1933, as amended, which we refer to as the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As an emerging growth company, we may take advantage of

 

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specified reduced disclosure and other requirements that are otherwise applicable, in general, to public companies that are not emerging growth companies. These provisions include:

    reduced disclosure about our executive compensation arrangements;

    no non-binding shareholder advisory votes on executive compensation or golden parachute arrangements;

    exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting; and

    reduced disclosure of financial information in this prospectus, including two years of audited financial information and two years of selected financial information.

        We may take advantage of these exemptions for up to five years or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if we have more than $1.0 billion in annual revenues as of the end of a fiscal year, have more than $700.0 million in market value of our capital stock held by non-affiliates or if we issue more than $1.0 billion of non-convertible debt over a three year period. We may choose to take advantage of some, but not all, of the available exemptions. We have taken advantage of some reduced reporting burdens in this prospectus. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock.

        The JOBS Act permits an emerging growth company to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We have irrevocably elected not to avail ourselves of this extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth public companies.

Corporate Information

        We were incorporated in the state of Delaware in August 2006 as Genocea, Inc., and we subsequently changed our name to Genocea Biosciences, Inc. Our principal executive offices are located at Cambridge Discovery Park, 100 Acorn Park Drive, 5th Floor, Cambridge, Massachusetts 02140, and our telephone number is (617) 876-8191. Our Internet website is www.genocea.com . We have included our website address in this prospectus solely as an inactive textual reference. The information on, or that can be accessed through, our website is not part of this prospectus, and you should not rely on any such information in making the decision whether to purchase our common stock.

        Genocea® and the Genocea logo are our registered trademarks. The other trademarks, trade names and service marks appearing in this prospectus are the property of their respective owners.

 

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THE OFFERING

Common stock offered by us

                  shares

Common stock to be outstanding immediately following this offering

 

                shares

Option to purchase additional shares

 

                shares

Use of proceeds

 

We currently estimate that we will use the net proceeds from this offering, together with our existing cash and cash equivalents and future available borrowings under our credit facility, (1) to fund clinical development and manufacturing of GEN-003, (2) to fund clinical development and manufacturing of GEN-004, (3) to fund research and development and manufacturing of our prophylactic chlamydia, HSV-2 and malaria programs through filing of an investigational new drug, or IND, application and (4) for working capital and other general corporate purposes, including funding the costs of operating as a public company. See "Use of Proceeds".

Risk factors

 

You should read the "Risk Factors" section of this prospectus for a discussion of factors to consider carefully before deciding to invest in shares of our common stock.

Proposed NASDAQ Global Market symbol

 

GNCA

        Certain of our existing stockholders and their affiliated entities, including holders of more than 5% of our common stock, have indicated an interest in purchasing shares of our common stock in this offering at the initial public offering price. However, because indications of interest are not binding agreements or commitments to purchase, the underwriters could determine to sell more, less or no shares to any of these existing stockholders and any of these existing stockholders could determine to purchase, more, less or no shares in this offering.

        The number of shares of common stock to be outstanding after this offering is based on 138,601,619 shares of common stock outstanding at September 30, 2013 and excludes the following:

    18,726,854 shares of common stock issuable upon exercise of stock options outstanding at September 30, 2013 at a weighted-average exercise price of $0.22 per share;

    2,291,512 shares of common stock issuable upon the exercise of warrants outstanding at September 30, 2013 at a weighted-average exercise price of $0.61 per share;

    3,339,113 shares of common stock reserved for future issuance under our Amended and Restated 2007 Equity Incentive Plan at September 30, 2013; and

    shares of common stock reserved for future issuance under our 2014 Equity Incentive Plan.

        Unless otherwise indicated, all information in this prospectus reflects or assumes the following:

    the amendment and restatement of our certificate of incorporation and bylaws, which will occur immediately prior to the closing of this offering;

    a 1-for-      reverse split of our common stock effected on                    , 2014;

 

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    the conversion of all of our shares of our preferred stock outstanding at September 30, 2013 into 135,075,680 shares of common stock, which will occur automatically upon the closing of this offering(1);

    the conversion of warrants outstanding and exercisable at September 30, 2013 for 2,291,512 shares of preferred stock into warrants exercisable for 2,291,512 shares of common stock;

    no issuance or exercise of stock options or warrants on or after September 30, 2013; and

    no exercise by the underwriters of their option to purchase up to an additional                shares of common stock in this offering.

(1)
Our Series B preferred stock has an accruing cumulative dividend that increases the ratio into which our Series B preferred stock converts into our common stock for every day that our Series B preferred stock remains outstanding. Immediately prior to the completion of this offering, each outstanding share of Series B preferred stock will be automatically converted into approximately               shares of common stock (assuming the completion of this offering on September 30, 2013) determined by multiplying the outstanding shares of Series B preferred stock by the Series B preferred stock conversion ratio. The Series B preferred stock conversion ratio is calculated by dividing (1) the Series B preferred stock original issue price of $0.58 per share plus accrued dividends of 8.0% per annum calculated on a daily basis beginning December 17, 2010 through the date of completion of this offering by (2) the Series B preferred stock original issue price of $0.58 per share. The Series B preferred stock conversion ratio is also expressed with the following formula:

0.58 + (0.58 × (8.0% / 365 days) × (days elapsed from December 17, 2010 through the completion of this offering))
0.58

    Unless otherwise indicated, all share data in this prospectus gives effect to the anticipated conversion of all Series B preferred stock assuming the completion of this offering as of September 30, 2013. The actual number of shares that our Series B preferred stock will convert into will be determined on the date that our initial public offering closes. As of September 30, 2013, the Series B conversion ratio was 1-to-1.22 per share. Our Seed preferred stock, Series A preferred stock and Series C preferred stock convert into common stock on a 1-for-1 basis.

 

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SUMMARY FINANCIAL DATA

        The following summary financial data for the years ended December 31, 2011 and 2012 are derived from our audited financial statements included elsewhere in this prospectus. The summary financial data as of September 30, 2013 and for the nine months ended September 30, 2012 and 2013 have been derived from our unaudited financial statements included elsewhere in this prospectus. These unaudited financial statements have been prepared on a basis consistent with our audited financial statements and, in our opinion, contain all adjustments, consisting only of normal and recurring adjustments, necessary for a fair presentation of such financial data. You should read this data together with our financial statements and related notes included elsewhere in this prospectus and the information under the captions "Selected Financial Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations". Our historical results are not necessarily indicative of our future results, and our operating results for the nine months ended September 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013 or any other interim periods or any future year or period.

 
  Year Ended
December 31,
  Nine Months Ended
September 30,
 
(in thousands, except per share data)
  2011   2012   2012   2013  

Statement of Operations Data:

                         

Grant revenue

  $ 1,820   $ 1,977   $ 1,441   $ 711  

Operating expenses:

                         

Research and development

    13,543     11,240     7,242     11,354  

General and administrative

    3,004     3,690     2,610     3,113  
                   

Total operating expenses

    16,547     14,930     9,852     14,467  
                   

Loss from operations

    (14,727 )   (12,953 )   (8,411 )   (13,756 )

Other income (expense):

                         

Change in fair value of warrant

    75     93     67     (166 )

Loss on debt extinguishment

                (200 )

Interest expense, net

    (33 )   (507 )   (361 )   (338 )
                   

Other income (expense)

    42     (414 )   (294 )   (704 )
                   

Net loss

  $ (14,685 ) $ (13,367 ) $ (8,705 ) $ (14,460 )
                   

Reconciliation of net loss to net loss attributable to common stockholders:

                         

Net loss

  $ (14,685 ) $ (13,367 ) $ (8,705 ) $ (14,460 )

Accretion of redeemable convertible preferred stock to redemption value

    (1,605 )   (1,781 )   (1,204 )   (1,200 )
                   

Net loss attributable to common stockholders

  $ (16,290 ) $ (15,148 ) $ (9,909 ) $ (15,660 )
                   

Net loss per share attributable to common stockholders—basic and diluted(1)

  $ (4.66 ) $ (4.31 ) $ (2.82 ) $ (4.44 )
                   

Weighted-average number of common shares used in net loss per share attributable to common stockholders—basic and diluted(1)

    3,495     3,513     3,514     3,525  
                   

Pro forma net loss per share attributable to common stockholders—basic and diluted(1)

        $ (0.17 )       $ (0.13 )
                       

Weighted-average number of common shares used in pro forma net loss per share attributable to common stockholders—basic and diluted(1)

          88,918           119,674  
                       

 

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  As of September 30, 2013  
(in thousands)
  Actual   Pro Forma(2)   Pro Forma,
As Adjusted(3)(4)
 

Balance Sheet Data:

                   

Cash and cash equivalents

  $ 12,075   $ 12,075        

Working capital

    9,671     9,671        

Total assets

    14,626     14,626        

Preferred stock warrant liability

    600          

Preferred stock

    81,157          

Common stock and additional paid-in-capital

    4     81,761        

Total stockholders' (deficit) equity

    (73,613 )   8,144        

(1)
See Note 2 within the notes to our financial statements appearing elsewhere in this prospectus for a description of the method used to calculate basic and diluted net loss per common share and pro forma basic and diluted net loss per common share.

(2)
Pro forma to reflect the conversion of all outstanding shares of our preferred stock into shares of common stock, and the conversion of outstanding warrants to purchase our preferred stock into warrants to purchase our common stock, upon the closing of this offering.

(3)
Pro forma as adjusted to reflect the pro forma adjustments described in (2) above, and to further reflect (i) the filing and effectiveness of our amended and restated certificate of incorporation, which will occur immediately prior to the closing of this offering and (ii) the sale of shares of our common stock offered in this offering, assuming an initial public offering price of $            per share, the midpoint of the price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

(4)
A $1.00 increase (decrease) in the assumed initial public offering price of $            per share, the midpoint of the price range set forth on the cover of this prospectus, would increase (decrease) the pro forma as adjusted amount of each of cash and cash equivalents, working capital, total assets, common stock and additional paid-in-capital and total stockholders' (deficit) equity by approximately $             million, assuming that the number of shares offered by us, as set forth on the cover of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

 

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RISK FACTORS

         Investing in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below together with all of the other information contained in this prospectus, including our financial statements and the related notes appearing at the end of this prospectus, before deciding to invest in our common stock. If any of the following risks actually occurs, our business, prospectus, operating results and financial condition could suffer materially, the trading price of our common stock could decline and you could lose all or part of your investment. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business.

Risks Related to Our Financial Position and Need for Additional Capital

We have incurred significant losses since our founding in 2006 and anticipate that we will continue to incur significant losses for the foreseeable future and may never achieve or maintain profitability.

        We are a clinical-stage biotechnology company, and we have not yet generated significant revenues. We have incurred net losses each year since our inception, including net losses of $14.7 million and $13.4 million for the years ended December 31, 2011 and 2012, respectively, and $8.7 million and $14.5 million for the nine months ended September 30, 2012 and 2013, respectively. As of September 30, 2013, we had accumulated a deficit of $73.6 million. To date, we have not commercialized any products or generated any revenues from the sale of products, and we do not expect to generate any product revenues in the foreseeable future. We do not know whether or when we will generate product revenues or become profitable.

        We have devoted most of our financial resources to research and development, including our clinical and preclinical technology development and development activities. To date, we have financed our operations primarily through the sale of equity securities and debt facilities and, to a lesser extent, through grants from governmental agencies and a private not-for-profit organization. The amount of our future net losses will depend, in part, on the rate of our future expenditures and our ability to obtain funding through equity or debt financings, strategic collaborations or additional grants. We have not completed pivotal clinical studies for any product candidate and it will be several years, if ever, before we have a product candidate ready for commercialization. Even if we obtain regulatory approval to market a product candidate, our future revenues will depend upon the size of any markets in which our product candidates have received approval, our ability to achieve sufficient market acceptance, reimbursement from third-party payors and other factors.

        We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. We anticipate that our expenses will increase significantly if and as we:

    continue our Phase 1/2a clinical trial of GEN-003, our most advanced product candidate that we are developing for the treatment of HSV-2 infections, and commence a planned Phase 2 clinical trial in the second quarter of 2014 to optimize the vaccine dose, and a planned Phase 2b clinical trial in second quarter of 2015 to optimize the dosing regimen;

    continue our Phase 1 clinical trial of GEN-004, our second most advanced product candidate that we are developing to prevent infections caused by all strains of pneumococcus, and commence a planned Phase 2a clinical trial of GEN-004 by mid-2014;

    initiate additional preclinical, clinical or other studies for our other product candidates;

    manufacture material for clinical trials and for commercial sale;

    seek regulatory approvals for our product candidates that successfully complete clinical trials;

    establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain marketing approval;

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    seek to discover and develop additional product candidates;

    acquire or in-license other product candidates and technologies;

    make royalty milestone or other payments under any in-license agreements;

    maintain, protect and expand our intellectual property portfolio;

    attract and retain skilled personnel; and

    create additional infrastructure to support our operations as a public company and our product development and planned future commercialization efforts.

        The net losses we incur may fluctuate significantly from quarter to quarter and year to year, such that a period-to-period comparison of our results of operations may not be a good indication of our future performance. In any particular quarter or quarters, our operating results could be below the expectations of securities analysts or investors, which could cause our stock price to decline.

        To become and remain profitable, we must succeed in developing and eventually commercializing products that generate significant revenue. This will require us to be successful in a range of challenging activities, including completing preclinical studies and clinical trials of our product candidates, discovering additional product candidates, obtaining regulatory approval for these product candidates and manufacturing, marketing and selling any products for which we may obtain regulatory approval. We are only in the preliminary stages of most of these activities. We may never succeed in these activities and, even if we do, may never generate revenues that are significant enough to achieve profitability.

        Because of the numerous risks and uncertainties associated with pharmaceutical product development, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve profitability. If we are required by the FDA or the European Medicines Agency to perform studies in addition to those currently expected, or if there are any delays in completing our clinical trials or the development of any of our product candidates, our expenses could increase.

        Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would depress the value of our company and could impair our ability to raise capital, expand our business, maintain our research and development efforts, diversify our product offerings or even continue our operations. A decline in the value of our company could also cause you to lose all or part of your investment.

We will require substantial additional financing to achieve our goals, and a failure to obtain this necessary capital when needed would force us to delay, limit, reduce or terminate our product development or commercialization efforts.

        As of September 30, 2013, our cash and cash equivalents were $12.1 million. We believe that we will continue to expend substantial resources for the foreseeable future developing GEN-003, GEN-004 and our pre-clinical product candidates. These expenditures will include costs associated with research and development, potentially acquiring new technologies, potentially obtaining regulatory approvals and manufacturing products, as well as marketing and selling products approved for sale, if any. In addition, other unanticipated costs may arise. Because the outcome of our planned and anticipated clinical trials is highly uncertain, we cannot reasonably estimate the actual amounts necessary to successfully complete the development and commercialization of our product candidates.

        Our future capital requirements depend on many factors, including:

    the progress, results and costs of the Phase 1/2a clinical trial and our two planned Phase 2 clinical trials of GEN-003;

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    the scope, progress, results and costs of preclinical development, laboratory testing and clinical trials for our other product candidates, including our Phase 1 clinical trial and our planned Phase 2a clinical trial of GEN-004;

    the number and development requirements of other product candidates that we pursue;

    the timing of, and the costs involved in, obtaining regulatory approvals for our product candidates if clinical trials are successful and the outcome of regulatory review of our product candidates;

    the cost and timing of future commercialization activities for our products, if any of our product candidates are approved for marketing, including product manufacturing, marketing, sales and distribution costs;

    the revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval;

    the cost of manufacturing our product candidates for clinical trials in preparation for regulatory approval and in preparation for commercialization;

    our ability to establish and maintain strategic partnerships, licensing or other arrangements and the financial terms of such agreements;

    the costs involved in preparing, filing, prosecuting patent applications, maintaining, defending and enforcing our intellectual property rights, including litigation costs and the outcome of such litigation;

    the timing, receipt, and amount of sales of, or royalties or milestone payments on, our future products, if any; and

    the extent to which we acquire or in-license other products or technologies.

        Based on our current operating plan, we believe that the net proceeds we receive from this offering, and our existing cash and cash equivalents and available future borrowings under our credit facility will be sufficient to fund our projected operating expenses and capital expenditure requirements through at least the end of 2015. However, our operating plan may change as a result of many factors currently unknown to us, and we may need additional funds sooner than planned. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. Additional funds may not be available when we need them on terms that are acceptable to us, or at all. If adequate funds are not available to us when needed, we would be required to delay, limit, reduce or terminate preclinical studies, clinical trials or other development activities for one or more of our product candidates or delay, limit, reduce or terminate our establishment of sales and marketing capabilities or other activities that may be necessary to commercialize our product candidates.

Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates on unfavorable terms to us.

        Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings and license and development agreements with strategic partnerships with third parties. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a stockholder. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take certain actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through strategic partnerships with third parties, we may have to relinquish valuable rights to our technologies or product candidates,

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future revenue streams, research programs or product candidates or grant licenses on terms that are not favorable to us. If we are unable to raise additional when needed, we would be required to delay, limit, reduce or terminate our product development or commercialization efforts for GEN-003, GEN-004 or our preclinical product candidates, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Risks Related to Clinical Development, Regulatory Review and Approval of Our Product Candidates

Because our product candidates are in an early stage of development, there is a high risk of failure, and we may never succeed in developing marketable products or generating product revenue.

        Our early encouraging preclinical and clinical results for GEN-003 and our preclinical results for GEN-004 are not necessarily predictive of the final results of our ongoing or future clinical trials. We have not yet completed our first human clinical trial, a Phase 1/2a trial of GEN-003. Success in preclinical studies may not be predictive of similar results in humans during clinical trials, and successful results from early or small clinical trials of a vaccine candidate may not be replicated in later and larger clinical trials. If the results of our ongoing or future clinical trials are inconclusive with respect to the efficacy of our product candidates or if we do not meet our clinical endpoints with statistical significance or if there are safety concerns or adverse events associated with our product candidates, we may be prevented or delayed in obtaining marketing approval for our product candidates. Alternatively, even if we obtain regulatory approval, that approval may be for indications or patient populations that are not as broad as intended or desired or may require labeling that includes significant use or distribution restrictions or safety warnings. We may also be required to perform additional or unanticipated clinical trials to obtain approval or be subject to additional post-marketing testing requirements to maintain regulatory approval. In addition, regulatory authorities may withdraw their approval of the product or impose restrictions on its distribution in the form of a modified risk evaluation and mitigation strategy.

If we do not obtain regulatory approval for our current and future product candidates, our business will be adversely affected.

        Our product candidates are subject to extensive governmental regulations relating to, among other things, research, clinical trials, manufacturing, import, export and commercialization. In order to obtain regulatory approval for the commercial sale of any product candidate, we must demonstrate through extensive preclinical studies and clinical trials that the product candidate is safe and effective for use in each target indication. Clinical trials are expensive, time-consuming and uncertain as to outcome. We may gain regulatory approval for GEN-003, GEN-004 or our other preclinical product candidates in some but not all of the territories available or some but not all of the target indications, resulting in limited commercial opportunity for the approved vaccine, or we may never obtain regulatory approval for these product candidates in any jurisdiction.

We may find it difficult to enroll patients in our clinical trials, which could delay or prevent clinical trials of our product candidates.

        Identifying and qualifying patients to participate in clinical trials of our product candidates is critical to our success. The timing of our clinical trials depends on the speed at which we can recruit patients to participate in testing our product candidates. If patients are unwilling to participate in our studies because of negative publicity from adverse events in the biotechnology industries or for other reasons, including competitive clinical trials for similar patient populations, the timeline for recruiting patients, conducting studies and obtaining regulatory approval of potential products may be delayed or prevented. These delays could result in increased costs, delays in advancing our product development, delays in testing the effectiveness of our technology or termination of the clinical trials altogether.

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        Additionally, in order to identify vaccine candidates using our ATLAS platform, we need to collect and process blood samples from human cohorts exposed to a pathogen. If we are unable to collect blood from a sufficient cohort for an indication we may be unable to identify additional product candidates.

        We may not be able to identify, recruit and enroll a sufficient number of patients, or those with required or desired characteristics to achieve diversity in a study, to complete our clinical trials in a timely manner. Patient enrollment is affected by factors including:

    severity of the disease under investigation;

    design of the study protocol;

    size of the patient population;

    eligibility criteria for the trial in question;

    perceived risks and benefits of the product candidate under study;

    proximity and availability of clinical trial sites for prospective patients;

    availability of competing therapies and clinical trials;

    efforts to facilitate timely enrollment in clinical trials;

    patient referral practices of physicians; and

    ability to monitor patients adequately during and after treatment.

        We may not be able to initiate or continue clinical trials if we cannot enroll a sufficient number of eligible patients to participate in the clinical trials required by regulatory agencies. If we have difficulty enrolling a sufficient number of patients to conduct our clinical trials as planned, we may need to delay, limit or terminate on-going or planned clinical trials, any of which would have an adverse effect on our business.

We may not be able to comply with requirements of foreign jurisdictions in conducting trials outside of the United States.

        To date, we have not conducted any clinical trials outside of the United States. Our ability to successfully initiate, enroll and complete a clinical trial in any foreign country, should we attempt to do so, is subject to numerous risks unique to conducting business in foreign countries, including:

    difficulty in establishing or managing relationships with contract research organizations, or CROs, and physicians;

    different standards for the conduct of clinical trials;

    our inability to locate qualified local consultants, physicians and partners;

    the potential burden of complying with a variety of foreign laws, medical standards and regulatory requirements, including the regulation of pharmaceutical and biotechnology products and treatment; and

    the acceptability of data obtained from studies conducted outside the United States to the FDA in support of a Biologics License Application, or BLA.

        If we fail to successfully meet requirements for the conduct of clinical trials outside of the United States, we may be delayed in obtaining, or be unable to obtain, regulatory approval for our product candidates in the United States or in countries outside of the United States.

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We may encounter substantial delays in our clinical trials or we may fail to demonstrate safety and efficacy to the satisfaction of applicable regulatory authorities.

        Before obtaining marketing approval from regulatory authorities for the sale of our product candidates, we must conduct extensive clinical trials to demonstrate the safety and efficacy of the product candidates in humans. Clinical testing is expensive, time-consuming and uncertain as to outcome. We cannot guarantee that clinical trials will be conducted as planned or completed on schedule, if at all. A failure of one or more clinical trials can occur at any stage of testing. Events that may prevent successful or timely completion of clinical development include:

    delays by us in reaching a consensus with regulatory agencies on trial design;

    delays in reaching agreement on acceptable terms with prospective CROs and clinical trial sites;

    delays in obtaining required Institutional Review Board, or IRB, approval at each clinical trial site;

    imposition of a clinical hold by regulatory agencies for any reason, including safety concerns raised by other clinical trials of similar vaccines that may reflect an unacceptable risk with GEN-003 or after an inspection of clinical operations or trial sites;

    failure to perform in accordance with the FDA's good clinical practices, or GCP, or applicable regulatory guidelines in other countries;

    delays in the testing, validation, manufacturing and delivery of the product candidates to the clinical sites;

    delays caused by patients not completing participation in a trial or not returning for post- treatment follow-up;

    clinical trial sites or patients dropping out of a trial or failing to complete dosing;

    occurrence of serious adverse events in clinical trials that are associated with the product candidates that are viewed to outweigh its potential benefits; or

    changes in regulatory requirements and guidance that require amending or submitting new clinical protocols.

        Delays, including delays caused by the above factors, can be costly and could negatively affect our ability to complete a clinical trial. Our IND for GEN-003 was subject to a clinical hold from January 2012 to July 2012. In our original IND submission, we described a finding of osteonecrosis (microscopic evidence of bone and bone marrow death) in a toxicity study of GEN-003 conducted in mice. Because this finding was not present in toxicity studies conducted in other species, we reasoned that this was a mouse-specific finding and did not indicate a risk to humans in clinical trials. However, the FDA instituted a clinical hold and provided us with several options that would resolve this issue to their satisfaction. We selected the option to conduct an additional toxicity study in a highly relevant species (non-human primate) that would be more representative of a risk to humans. The study was conducted, no bone or bone marrow toxicity was observed, and the FDA subsequently lifted the clinical hold, allowing us to proceed with the first study in humans of GEN-003.

        We cannot give any assurance that we will be able to resolve any future clinical holds imposed by the FDA or other regulatory authorities outside of the United States, or any delay caused by other factors described above or any other factors, on a timely basis or at all. If we are not able to successfully initiate and complete subsequent clinical trials, we will not be able to obtain regulatory approval and will not be able to commercialize our product candidates.

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Our product candidates, including GEN-003 and GEN-004, are based on T cell activation, which is a novel approach for vaccines and medical treatments. Consequently, it may be difficult for us to predict the time and cost of product development. Unforeseen problems with the T cell approach to vaccines may prevent further development or approval of our product candidates. Because of the novelty of this approach, there may be unknown safety risks associated with the vaccines that we develop. Regulatory agencies such as the FDA may require us to conduct extensive safety testing prior to approval to demonstrate a low risk of rare and severe adverse events caused by the vaccines. If approved, the novel mechanism of action of the vaccines may adversely affect physician and patient perception and uptake of our products.

        We have concentrated our research and development efforts on T cell vaccine technology, and our future success is highly dependent on the successful development of T cell vaccines in general, and our product candidates in particular. There can be no assurance that any development problems we or others researching T cell vaccines may experience in the future will not cause significant delays or unanticipated costs, or that such development problems can be solved.

        Public perception of vaccine safety issues, including adoption of novel vaccine mechanisms of action, may adversely influence willingness of subjects to participate in clinical trials, or if approved, to prescribe and receive novel vaccines. For example, GEN-004 is being developed for prevention of Pneumococcal infections, and parental aversion to new vaccines or vaccines in general may adversely influence later stage clinical trials of this product candidate or, if approved, its commercial success.

GEN-003 includes a novel vaccine adjuvant and our other product candidates may include one or more novel adjuvants, which may make it difficult for us to predict the time and cost of product development as well as the requirements the FDA or other regulatory agencies may impose to demonstrate the safety of the product candidate.

        Novel vaccine adjuvants, included in some of our product candidates, may pose an increased safety risk to patients. Adjuvants are compounds that are added to vaccine antigens to enhance the activation and improve immune response and efficacy of vaccines. Development of vaccines with novel adjuvants requires evaluation in larger numbers of patients prior to approval than would be typical for therapeutic drugs. Guidelines for evaluation of vaccines with novel adjuvants have been established by the FDA and other regulatory bodies and expert committees. Our product candidates, including GEN-003, may include one or more novel vaccine adjuvants. The safety of any vaccine, because of the presence of an adjuvant, may have side effects considered to pose too great a risk to patients to warrant approval of the vaccine. Traditionally, regulatory authorities have required extensive study of novel adjuvants because vaccines typically get administered to healthy populations, in particular infants, children and the elderly, rather than in people with disease. Such extensive study has often included long-term monitoring of safety in large general populations that has at times exceeded 10,000 subjects. This contrasts with the few thousand subjects typically necessary for approval of novel therapeutics. Although GEN-003 is being developed as a treatment, and therefore is not expected to be administered to uninfected subjects, regulators nonetheless may require us to amass a prophylactic vaccine-like safety database. To date, the FDA and other major regulatory agencies have only approved vaccines containing five adjuvants, which makes it difficult to determine how long it will take or how much it will cost to obtain regulatory approvals for our product candidates in the United States or elsewhere.

If we fail to obtain regulatory approval in jurisdictions outside the United States, we will not be able to market our products in those jurisdictions.

        We intend to market our product candidates, if approved, in international markets. Such marketing will require separate regulatory approvals in each market and compliance with numerous and varying regulatory requirements. The approval procedures vary among countries and may involve requirements for additional testing, and the time required to obtain approval may differ from that required to obtain FDA approval. In addition, in many countries outside the United States, a vaccine must be approved

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for reimbursement before it can be approved for sale in that country. In some cases, the price that we intend to charge for our vaccine is also subject to approval. Approval by the FDA does not ensure approval by regulatory authorities in other countries or jurisdictions, and approval by one foreign regulatory authority does not ensure approval by regulatory authorities in other foreign countries or by the FDA. The foreign regulatory approval process may include all of the risks associated with obtaining FDA approval. We may not obtain foreign regulatory approvals on a timely basis, if at all. We may not be able to file for regulatory approvals and may not receive necessary approvals to commercialize our vaccines in any market.

Even if we receive regulatory approval for our product candidates, such vaccines will be subject to ongoing regulatory review, which may result in significant additional expense. Additionally, our product candidates, if approved, could be subject to labeling and other restrictions, and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with our products.

        Any regulatory approvals that we receive for our product candidates may also be subject to limitations on the approved indicated uses for which the product may be marketed or to conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase 4 clinical trials, and surveillance to monitor the safety and efficacy of the vaccine potentially over many years. In addition, if the FDA approves any of our product candidates, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion and recordkeeping for the product will be subject to extensive and ongoing regulatory requirements. These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with current good manufacturing practice, or cGMP, and GCP, for any clinical trials that we conduct post-approval.

        Later discovery of previously unknown problems with an approved product, including adverse events of unanticipated severity or frequency, or with manufacturing operations or processes, or failure to comply with regulatory requirements, may result in, among other things:

    restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market, or voluntary or mandatory product recalls;

    fines, warning letters, or holds on clinical trials;

    refusal by the FDA to approve pending applications or supplements to approved applications filed by us, or suspension or revocation of product license approvals;

    product seizure or detention, or refusal to permit the import or export of products; and

    injunctions or the imposition of civil, criminal and/or administrative penalties, damages, monetary fines, disgorgement, exclusion from participation in Medicare, Medicaid and other federal health care programs, and curtailment or restructuring of our operations.

        The FDA's policies may change and additional government regulations may be enacted that could affect regulatory approval that we have received for our product candidates. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or not able to maintain regulatory compliance, we may lose any marketing approval that may have been obtained and we may not achieve or sustain profitability, which would adversely affect our business.

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Risks Related to Our Reliance on Third Parties

We rely on third parties to conduct preclinical studies and clinical trials for our product candidates, and if they do not properly and successfully perform their obligations to us, we may not be able to obtain regulatory approvals for our product candidates.

        We rely on third party CROs and other third parties to assist in managing, monitoring and otherwise carrying out our GEN-003 and GEN-004 clinical trials. We expect to continue to rely on third parties, such as CROs, clinical data management organizations, medical institutions and clinical investigators, to conduct our clinical trials. We compete with many other companies for the resources of these third parties. The third parties on whom we rely generally may terminate their engagements at any time, and having to enter into alternative arrangements would delay development and commercialization of our product candidates.

        Our reliance on these third parties for research and development activities will reduce our control over these activities but will not relieve us of our responsibilities. For example, the FDA and foreign regulatory authorities require compliance with regulations and standards, including GCP, for designing, conducting, monitoring, recording, analyzing, and reporting the results of clinical trials to assure that the data and results are credible and accurate and that the rights, integrity and confidentiality of trial participants are protected. Although we rely on third parties to conduct our clinical trials, we are responsible for ensuring that each of these clinical trials is conducted in accordance with its general investigational plan and protocol.

        Furthermore, these third parties may also have relationships with other entities, some of which may be our competitors. If these third parties do not successfully carry out their duties under their agreements, if the quality or accuracy of the data they obtain is compromised due to their failure to adhere to clinical trial protocols or to regulatory requirements, or if they otherwise fail to comply with clinical trial protocols or meet expected deadlines, the clinical trials of our product candidates may not meet regulatory requirements. If clinical trials do not meet regulatory requirements or if these third parties need to be replaced, preclinical development activities or clinical trials may be extended, delayed, suspended or terminated. If any of these events occur, we may not be able to obtain regulatory approval of our product candidates on a timely basis or at all.

        We also expect to rely on other third parties to store and distribute drug supplies for our clinical trials. Any performance failure on the part of our distributors could delay clinical development or marketing approval of our product candidates or commercialization of our products, producing additional losses and depriving us of potential product revenue.

We intend to rely on third parties to conduct some or all aspects of our product manufacturing, and these third parties may not perform satisfactorily.

        We do not have any manufacturing facilities or personnel. We do not expect to independently conduct all aspects of our product manufacturing. We currently rely, and expect to rely, on third parties with respect to manufacturing. For example, we rely on third party suppliers and manufacturers to manufacture and supply vaccines for our initial GEN-003 and GEN-004 clinical trials. This reliance on third parties increases the risk that we will not have sufficient quantities of our product candidates or products or such quantities at an acceptable cost or quality, which could delay, prevent or impair our development or commercialization efforts.

        Any of these third parties may terminate their engagement with us at any time. If we need to enter into alternative arrangements, it could delay our product development activities. Our reliance on these third parties for manufacturing activities will reduce our control over these activities but will not relieve us of our responsibility to ensure compliance with all required regulations regarding manufacturing.

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        Reliance on third party manufacturers entails risks to which we would not be subject if we manufactured the product candidates ourselves, including:

    the inability to negotiate manufacturing agreements with third parties under commercially reasonable terms;

    reduced control as a result of using third party manufacturers for all aspects of manufacturing activities, including regulatory compliance and quality assurance;

    termination or nonrenewal of manufacturing agreements with third parties in a manner or at a time that is costly or damaging to us;

    the possible misappropriation of our proprietary information, including our trade secrets and know-how or infringement of third party intellectual property rights by our contract manufacturers; and

    disruptions to the operations of our third party manufacturers or suppliers caused by conditions unrelated to our business or operations, including the bankruptcy of the manufacturer or supplier.

        Any of these events could lead to clinical trial delays or failure to obtain regulatory approval, or affect our ability to successfully commercialize future products. Some of these events could be the basis for FDA action, including injunction, recall, seizure or total or partial suspension of production.

        Third party manufacturers may not be able to comply with cGMP regulations or similar regulatory requirements outside the United States. Our failure, or the failure of our third party manufacturers, to comply with applicable regulations could result in sanctions being imposed on us, including clinical holds, fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates or products, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of our products.

        Our product candidates and any products that we may develop may compete with other product candidates and products for access to manufacturing facilities. There are a limited number of manufacturers that operate under cGMP regulations and that might be capable of manufacturing for us.

        Any performance failure on the part of our existing or future manufacturers could delay clinical development or marketing approval. We do not currently have arrangements in place for redundant supply or a second source for bulk drug substance. If our current contract manufacturers cannot perform as agreed, we may be required to replace such manufacturers. Although we believe that there are several potential alternative manufacturers who could manufacture our product candidates, we may incur added costs and delays in identifying and qualifying any such replacement.

        Our current and anticipated future dependence upon others for the manufacture of our product candidates or products may adversely affect our future profit margins and our ability to commercialize any products that receive marketing approval on a timely and competitive basis.

If we are unable to manufacture our products in sufficient quantities, or at sufficient yields, or are unable to obtain regulatory approvals for a manufacturing facility for our products, we may experience delays in product development, clinical trials, regulatory approval and commercial distribution.

        Completion of our clinical trials and commercialization of our product candidates require access to, or development of, facilities to manufacture our product candidates at sufficient yields and at commercial-scale. We have no experience manufacturing, or managing third parties in manufacturing, any of our product candidates in the volumes that will be necessary to support large-scale clinical trials

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or commercial sales. Efforts to establish these capabilities may not meet initial expectations as to scheduling, scale-up, reproducibility, yield, purity, cost, potency or quality.

        We expect to rely on third-parties for the manufacture of clinical and, if necessary, commercial quantities of our product candidates. These third-party manufacturers must also receive FDA approval before they can produce clinical material or commercial products. Our products may be in competition with other products for access to these facilities and may be subject to delays in manufacture if third-parties give other products greater priority. We may not be able to enter into any necessary third-party manufacturing arrangements on acceptable terms, or on a timely basis. In addition, we may have to enter into technical transfer agreements and share our know-how with the third-party manufacturers, which can be time-consuming and may result in delays.

        Our reliance on contract manufacturers may adversely affect our operations or result in unforeseen delays or other problems beyond our control. Because of contractual restraints and the limited number of third-party manufacturers with the expertise, required regulatory approvals and facilities to manufacture our bulk vaccines on a commercial-scale, replacement of a manufacturer may be expensive and time-consuming and may cause interruptions in the production of our vaccine. A third-party manufacturer may also encounter difficulties in production. These problems may include:

    difficulties with production costs, scale-up and yields;

    unavailability of raw materials and supplies;

    insufficient quality control and assurance;

    shortages of qualified personnel;

    failure to comply with strictly enforced federal, state and foreign regulations that vary in each country where product might be sold; and

    lack of capital funding.

        As a result, any delay or interruption could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We may not be successful in establishing and maintaining strategic partnerships, which could adversely affect our ability to develop and commercialize products.

        A part of our strategy is to evaluate and, as deemed appropriate, enter into partnerships in the future when strategically attractive, including potentially with major biotechnology or pharmaceutical companies. We face significant competition in seeking appropriate partners for our product candidates, and the negotiation process is time-consuming and complex. In order for us to successfully partner our product candidates, potential partners must view these product candidates as economically valuable in markets they determine to be attractive in light of the terms that we are seeking and other available products for licensing by other companies. Even if we are successful in our efforts to establish strategic partnerships, the terms that we agree upon may not be favorable to us, and we may not be able to maintain such strategic partnerships if, for example, development or approval of a product is delayed or sales of an approved product are disappointing. Any delay in entering into strategic partnership agreements related to our product candidates could delay the development and commercialization of our product candidates and reduce their competitiveness even if they reach the market.

        In addition, our strategic partners may breach their agreements with us, and we may not be able to adequately protect our rights under these agreements. Furthermore, our strategic partners will likely negotiate for certain rights to control decisions regarding the development and commercialization of our product candidates, if approved, and may not conduct those activities in the same manner as we would do so.

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        If we fail to establish and maintain strategic partnerships related to our product candidates, we will bear all of the risk and costs related to the development of any such product candidate, and we may need to seek additional financing, hire additional employees and otherwise develop expertise which we do not have and for which we have not budgeted. This could negatively affect the development of any unpartnered product candidate.

Risks Related to Our Intellectual Property

If we are unable to obtain or protect intellectual property rights related to our product candidates, we may not be able to compete effectively in our markets.

        We rely upon a combination of patents, patent applications, know how and confidentiality agreements to protect the intellectual property related to our platform technology and product candidates. The patent position of biotechnology companies is generally uncertain because it involves complex legal and factual considerations. The standards applied by the United States Patent and Trademark Office, or U.S. PTO, and foreign patent offices in granting patents are not always applied uniformly or predictably. For example, there is no uniform worldwide policy regarding patentable subject matter or the scope of claims allowable in biotechnology patents. The patent applications that we own or in-license may fail to result in issued patents with claims that cover our discovery platform or product candidates in the United States or in other countries. There is no assurance that all potentially relevant prior art relating to our patents and patent applications or those of our licensors has been found, and prior art that we have not disclosed could be used by a third party to invalidate a patent or prevent a patent from issuing from a pending patent application. Even if patents do successfully issue and even if such patents cover our discovery platform or product candidates, third parties may challenge their validity, enforceability or scope, which may result in such patents being narrowed or invalidated. Furthermore, even if they are unchallenged, our patents and patent applications, or those of our licensors, may not adequately protect our platform technology, provide exclusivity for our product candidates, prevent others from designing around our patents with similar products, or prevent others from operating in jurisdictions in which we did not pursue patent protection. Any of these outcomes could impair our ability to prevent competition from third parties, which may have an adverse impact on our business.

        If patent applications we hold or have in-licensed with respect to our platform or product candidates fail to issue, if their breadth or strength of protection is threatened, or if they fail to provide meaningful exclusivity for our product candidates or ATLAS discovery platform, it could dissuade companies from collaborating with us. We or our licensors have filed several patent applications covering aspects of our product candidates. We cannot offer any assurances about which, if any, patents will issue, the breadth of any such patents or whether any issued patents will be found invalid and unenforceable or will be challenged by third parties. Any successful opposition to these patent applications, or patents that may issue from them, or to any other patent applications or patents owned by or licensed to us, could deprive us of rights necessary for the successful commercialization of any product candidate that we may develop. Since patent applications in the United States and most other countries are confidential for a period of time after filing, and some remain so until issued, we cannot be certain that we or our licensors were the first to file a patent application relating to any particular aspect of a product candidate. Furthermore, if third parties have filed such patent applications, an interference proceeding in the United States can be initiated by such third party, or by the U.S. PTO itself, to determine who was the first to invent any of the subject matter covered by the patent claims of our applications.

        In the United States, for patent applications filed prior to March 16, 2013, assuming the other requirements for patentability are met, the first to invent is entitled to the patent, while outside the United States, the first to file a patent application is entitled to the patent. On March 16, 2013, the United States transitioned to a 'first to file' system more like that in the rest of the world in that the

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first inventor to file a patent application is entitled to the patent. Under either the prior system or current one, third parties are allowed to submit prior art prior to the issuance of a patent by the U.S. PTO, and may become involved in opposition, derivation, reexamination, inter partes review or interference proceedings challenging our patent rights or the patent rights of others. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights, which could adversely affect our competitive position with respect to third parties.

        In addition, patents have a limited lifespan. In most countries, including the United States, the natural expiration of a patent is 20 years from the date it is filed. Various extensions of patent term may be available in particular countries, however in all circumstances the life of a patent, and the protection it affords, has a limited term. If we encounter delays in obtaining regulatory approvals, the period of time during which we could market a product under patent protection could be reduced. We expect to seek extensions of patent terms where these are available in any countries where we are prosecuting patents. Such possible extensions include those permitted under the Drug Price Competition and Patent Term Restoration Act of 1984 in the United States, which permits a patent term extension of up to five years to cover an FDA-approved product. The actual length of the extension will depend on the amount of patent term lost while the product was in clinical trials. However, the applicable authorities, including the FDA in the United States, and any equivalent regulatory authority in other countries, may not agree with our assessment of whether such extensions are available, and may refuse to grant extensions to our patents, or may grant more limited extensions than we request. If this occurs, our competitors may be able to take advantage of our investment in development and clinical trials by referencing our clinical and preclinical data, and then may be able to launch their product earlier than might otherwise be the case.

        Any loss of, or failure to obtain, patent protection could have a material adverse impact on our business. We may be unable to prevent competitors from entering the market with a product that is similar to or the same as our products.

We may become involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time consuming and unsuccessful.

        Competitors may infringe our patents or misappropriate or otherwise violate our intellectual property rights. To counter infringement or unauthorized use, litigation may be necessary to enforce or defend our intellectual property rights, to protect our trade secrets and/or to determine the validity and scope of our own intellectual property rights or the proprietary rights of others. Such litigation can be expensive and time consuming. Many of our current and potential competitors have the ability to dedicate substantially greater resources to litigate intellectual property rights than we can. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing upon or misappropriating our intellectual property. Litigation could result in substantial costs and diversion of management resources, which could harm our business and financial results. In addition, in an infringement proceeding, a court may decide that a patent owned by or licensed to us is invalid or unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in any litigation proceeding could put one or more of our patents at risk of being invalidated, held unenforceable or interpreted narrowly. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation.

Third-party claims of intellectual property infringement or misappropriation may prevent or delay our development and commercialization efforts.

        Our commercial success depends in part on our ability to develop, manufacture, market and sell our product candidates, and to use our or our licensors' proprietary technologies without infringing the

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patents and proprietary rights of third parties. There is a substantial amount of litigation, both within and outside the United States, involving patent and other intellectual property rights in the biotechnology and pharmaceutical industries, including patent infringement lawsuits, interferences, oppositions, reexamination, and inter partes review proceedings before the U.S. PTO and corresponding foreign patent offices. Numerous U.S. and foreign issued patents and pending patent applications owned by third parties exist in the fields in which we are developing and may develop our product candidates. As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that our product candidates may be subject to claims of infringement of the patent rights of third parties.

        Third parties may assert that we are employing their proprietary technology without authorization. There may be third-party patents or patent applications with claims for example to materials, formulations, methods of manufacture, methods of analysis, and/or methods for treatment related to the use or manufacture of our products or product candidates. In some cases, we may have failed to identify relevant such third-party patents or patent application. For example, applications filed before November 29, 2000 and certain applications filed after that date that will not be filed outside the United States remain confidential until patents issue. Except for the preceding exceptions, patent applications in the United States and elsewhere are generally published only after a waiting period of approximately 18 months after the earliest filing. Therefore, patent applications covering our platform technology or our products or product candidates could have been filed by others without our knowledge. Additionally, pending patent applications which have been published can, subject to certain limitations, be later amended in a manner that could cover our platform technologies, our products or product candidates and/or the use, analysis, and/or manufacture of our product candidates.

        If any third-party patents were held by a court of competent jurisdiction to cover aspects of our materials, formulations, methods of manufacture, methods of analysis, and/or methods for treatment, the holders of any such patents would be able to block our ability to develop and commercialize the applicable product candidate until such patent expired or unless we obtain a license. Such licenses may not be available on acceptable terms, if at all. Even if we were able to obtain a license, the rights may be nonexclusive, which could result in our competitors gaining access to the same intellectual property. Ultimately, we could be prevented from commercializing a product, or be forced to cease some aspect of our business operations, if, as a result of actual or threatened patent infringement claims, we are unable to enter into licenses on acceptable terms.

        Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize one or more of our product candidates. Defending against claims of patent infringement or misappropriation of trade secrets could be costly and time consuming, regardless of the outcome. Thus, even if we were to ultimately prevail, or to settle at an early stage, such litigation could burden us with substantial unanticipated costs. In addition, litigation or threatened litigation could result in significant demands on the time and attention of our management team, distracting them from the pursuit of other company business. In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys' fees for willful infringement, pay royalties, redesign our infringing products or obtain one or more licenses from third parties, which may be impossible or require substantial time and monetary expenditure.

        We may face a claim of misappropriation if a third party believes that we inappropriately obtained and used trade secrets of such third party. If we are found to have misappropriated a third party's trade secrets, we may be prevented from further using such trade secrets, limiting our ability to develop our product candidates, and we may be required to pay damages.

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        During the course of any patent or other intellectual property litigation, there could be public announcements of the results of hearings, rulings on motions, and other interim proceedings in the litigation. If securities analysts or investors regard these announcements as negative, the perceived value of our products, programs, or intellectual property could be diminished. Accordingly, the market price of our common stock may decline.

We have in-licensed a portion of our intellectual property, and, if we fail to comply with our obligations under these arrangements, we could lose such intellectual property rights or owe damages to the licensor of such intellectual property.

        We are a party to a number of license agreements that are important to our business, and we may enter into additional license agreements in the future. Our discovery platform is built, in part, around patents exclusively in-licensed from academic or research institutions. Certain of our in-licensed intellectual property also covers, or may cover, GEN-003 and other product candidates. See "Business — In-License Agreements" and "Business — Other Collaborations" for a description of our license agreements with The Regents of of the University of California, President and Fellows of Harvard College, University of Washington, Children's Medical Center Corporation, and Isconova AB.

        Our existing license agreements impose, and we expect that future license agreements will impose, various diligence, milestone payment, royalty and other obligations on us. If there is any conflict, dispute, disagreement or issue of non-performance between us and our licensing partners regarding our rights or obligations under the license agreements, including any such conflict, dispute or disagreement arising from our failure to satisfy payment obligations under any such agreement, we may owe damages, our licensor may have a right to terminate the affected license, and our ability to utilize the affected intellectual property in our drug discovery and development efforts, and our ability to enter into collaboration or marketing agreements for an affected product candidate, may be adversely affected.

Confidentiality agreements with employees and third parties may not prevent unauthorized disclosure of proprietary information.

        In addition to the protection afforded by patents, we rely on confidentiality agreements to protect proprietary know-how that may not be patentable or that we may elect not to patent, processes for which patents are difficult to enforce and any other elements of our platform technology and discovery and development processes that involve proprietary know-how, information or technology that is not covered by patents. We seek to protect our proprietary technology and processes, in part, by entering into confidentiality agreements with our employees, consultants, and outside scientific advisors, contractors and collaborators. Although we use reasonable efforts to protect our know-how, our employees, consultants, contractors, or outside scientific advisors might intentionally or inadvertently disclose our know-how information to competitors. In addition, competitors may otherwise gain access to our know-how or independently develop substantially equivalent information and techniques.

        Enforcing a claim that a third party illegally obtained and is using any of our know-how is expensive and time consuming, and the outcome is unpredictable. In addition, courts outside the United States sometimes are less willing than U.S. courts to protect know-how. Misappropriation or unauthorized disclosure of our know-how could impair our competitive position and may have a material adverse effect on our business.

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Risks Related to Commercialization of Our Product Candidates

Our future commercial success depends upon attaining significant market acceptance of our product candidates, if approved, among physicians, patients, third-party payors and others in the medical community.

        Even if we obtain marketing approval for GEN-003, GEN-004 or any other products that we may develop or acquire in the future, the product may not gain market acceptance among physicians, third-party payors, patients and others in the medical community. For example, we currently expect that GEN-003 will be required to be administered by injection initially and with boosters. Physicians or patients may not accept this product as a result of this anticipated dosing requirement. In addition, market acceptance of any approved products depends on a number of other factors, including:

    the efficacy and safety of the product, as demonstrated in clinical trials;

    the clinical indications for which the product is approved and the label approved by regulatory authorities for use with the product, including any warnings that may be required on the label;

    acceptance by physicians and patients of the product as a safe and effective treatment and the willingness of the target patient population to try new therapies and of physicians to prescribe new therapies;

    the cost, safety and efficacy of treatment in relation to alternative treatments;

    the availability of adequate course and reimbursement by third-party payors and government authorities;

    relative convenience and ease of administration;

    the prevalence and severity of adverse side effects;

    the effectiveness of our sales and marketing efforts; and

    the restrictions on the use of our products together with other medications, if any.

        Market acceptance is critical to our ability to generate significant revenue. Any product candidate, if approved and commercialized, may be accepted in only limited capacities or not at all. If any approved products are not accepted by the market to the extent that we expect, we may not be able to generate significant revenue and our business would suffer.

If we are unable to establish sales, marketing and distribution capabilities, we may not be successful in commercializing our product candidates if and when they are approved.

        We do not have a sales or marketing infrastructure and have no experience in the sale, marketing or distribution of pharmaceutical products. To achieve commercial success for any product for which we have obtained marketing approval, we will need to establish a sales and marketing organization.

        In the future, we expect to build a focused sales and marketing infrastructure to market or co-promote some of our product candidates in the United States, if and when they are approved. There are risks involved with establishing our own sales, marketing and distribution capabilities. For example, recruiting and training a sales force is expensive and time consuming and could delay any product launch. If the commercial launch of a product candidate for which we recruit a sales force and establish marketing capabilities is delayed or does not occur for any reason, we would have prematurely or unnecessarily incurred these commercialization expenses. This may be costly, and our investment would be lost if we cannot retain or reposition our sales and marketing personnel.

        Factors that may inhibit our efforts to commercialize our products on our own include:

    our inability to recruit, train and retain adequate numbers of effective sales and marketing personnel;

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    the inability of sales personnel to obtain access to physicians;

    the lack of adequate numbers of physicians to prescribe any future products;

    the lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with more extensive product lines; and

    unforeseen costs and expenses associated with creating an independent sales and marketing organization.

        If we are unable to establish our own sales, marketing and distribution capabilities and enter into arrangements with third parties to perform these services, our product revenues and our profitability, if any, are likely to be lower than if we were to market, sell and distribute any products that we develop ourselves. In addition, we may not be successful in entering into arrangements with third parties to sell, market and distribute our product candidates or may be unable to do so on terms that are favorable to us. We likely will have little control over such third parties, and any of them may fail to devote the necessary resources and attention to sell and market our products effectively. If we do not establish sales, marketing and distribution capabilities successfully, either on our own or in collaboration with third parties, we will not be successful in commercializing our product candidates.

Coverage and reimbursement may be limited or unavailable in certain market segments for our product candidates, which could make it difficult for us to sell our products profitably.

        Market acceptance and sales of any approved products will depend significantly on the availability of adequate coverage and reimbursement from third-party payors and may be affected by existing and future health care reform measures. Third-party payors, such as government health care programs, private health insurers and health maintenance organizations, decide which drugs they will provide coverage for and establish reimbursement levels. Coverage and reimbursement decisions by a third-party payor may depend upon a number of factors, including the third-party payor's determination that use of a product is:

    a covered benefit under its health plan;

    safe, effective and medically necessary;

    appropriate for the specific patient;

    cost-effective; and

    neither experimental nor investigational.

        Third-party payors, whether foreign or domestic, or governmental or commercial, are developing increasingly sophisticated methods of controlling health care costs. Coverage and reimbursement can vary significantly from payor to payor. As a result, obtaining coverage and reimbursement approval for a product from each government and other third-party payor will require us to provide supporting scientific, clinical and cost-effectiveness data for the use of our products to each payor separately, with no assurance that we will be able to provide data sufficient to gain acceptance with respect to coverage and reimbursement. We cannot be sure that coverage or adequate reimbursement will be available for any of our product candidates. Also, we cannot be sure that coverage determinations or reimbursement amounts will not reduce the demand for, or the price of, our products. If reimbursement is not available or is available only to limited levels, we may not be able to commercialize certain of our products. In addition, in the United States third-party payors are increasingly attempting to contain health care costs by limiting both coverage and the level of reimbursement of new drugs. As a result, significant uncertainty exists as to whether and how much third-party payors will reimburse patients for their use of newly approved drugs, which in turn will put pressure on the pricing of drugs.

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Price controls may be imposed, which may adversely affect our future profitability.

        In international markets, reimbursement and health care payment systems vary significantly by country, and many countries have instituted price ceilings on specific products and therapies. In some countries, particularly member states of the European Union, the pricing of prescription pharmaceuticals is subject to governmental control. In these countries, pricing negotiations with governmental authorities can take considerable time after receipt of marketing approval for a product. In addition, there can be considerable pressure by governments and other stakeholders on coverage, prices and reimbursement levels, including as part of cost containment measures. Political, economic and regulatory developments may further complicate pricing negotiations, and pricing negotiations may continue after coverage and reimbursement has been obtained. Reference pricing used by various European Union member states and parallel distribution, or arbitrage between low-priced and high-priced member states, can further reduce prices. In some countries, we may be required to conduct a clinical trial or other studies that compare the cost-effectiveness of our product candidates to other available vaccines in order to obtain or maintain coverage, reimbursement or pricing approval. Publication of discounts by third-party payors or authorities may lead to further pressure on the prices or reimbursement levels within the country of publication and other countries. There can be no assurance that our vaccine candidates will be considered cost-effective by third-party payors, that an adequate level of reimbursement will be available or that the third-party payors' reimbursement policies will not adversely affect our ability to sell our products profitably. If reimbursement of our products is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, our business could be adversely affected.

The impact of recent health care reform legislation and other changes in the health care industry and in health care spending on us is currently unknown, and may adversely affect our business model.

        In the United States, and in some foreign jurisdictions, the legislative landscape continues to evolve. Our revenue prospects could be affected by changes in health care spending and policy in the United States and abroad. We operate in a highly regulated industry and new laws or judicial decisions, or new interpretations of existing laws or decisions, related to health care availability, the method of delivery or payment for health care products and services could negatively impact our business, operations and financial condition. There is significant interest in promoting health care reform, as evidenced by the enactment in the United States of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act in 2010. It is likely that federal and state legislatures within the United States and foreign governments will continue to consider changes to existing health care legislation. We cannot predict the reform initiatives that may be adopted in the future or whether initiatives that have been adopted will be repealed or modified. The continuing efforts of the government, insurance companies, managed care organizations and other payors of health care services to contain or reduce costs of health care may adversely affect:

    the demand for any drug products for which we may obtain regulatory approval;

    our ability to set a price that we believe is fair for our products;

    our ability to obtain coverage and reimbursement approval for a product;

    our ability to generate revenues and achieve or maintain profitability; and

    the level of taxes that we are required to pay.

We face substantial competition, which may result in others discovering, developing or commercializing products before, or more successfully, than we do.

        The development and commercialization of new drug products is highly competitive. Our future success depends on our ability to demonstrate and maintain a competitive advantage with respect to

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the design, development and commercialization of our product candidates. Our objective is to design, develop and commercialize new products with superior efficacy, convenience, tolerability and safety. In many cases, the products that we commercialize will compete with existing, market-leading products.

        Oral antivirals, such as valacyclovir and famciclovir, are products currently approved to treat patients with HSV-2. GEN-003, our lead product candidate, will compete with these products, if approved. In addition, one or more products not currently approved for the treatment of HSV-2, including pritelivir (AiCuris) and HerpV (Agenus) and other vaccines in development by Coridon Pty, Ltd and Vical Incorporated may in the future be granted marketing approval for the treatment of HSV-2 or other conditions for which GEN-003 might be approved.

        Many of our potential competitors have significantly greater financial, manufacturing, marketing, drug development, technical and human resources than we do. Large pharmaceutical companies, in particular, have extensive experience in clinical testing, obtaining regulatory approvals, recruiting patients and in manufacturing pharmaceutical products. Large and established companies such as Merck & Co., Inc., GlaxoSmithKline plc, Novartis, Inc., Sanofi Pasteur, SA, Pfizer Inc. and MedImmune, LLC (a subsidiary of AstraZeneca PLC), among others, compete in the vaccine market. In particular, these companies have greater experience and expertise in securing government contracts and grants to support their research and development efforts, conducting testing and clinical trials, obtaining regulatory approvals to market products, manufacturing such products on a broad scale and marketing approved products. These companies also have significantly greater research and marketing capabilities than we do and may also have products that have been approved or are in late stages of development, and have collaborative arrangements in our target markets with leading companies and research institutions. Established pharmaceutical companies may also invest heavily to accelerate discovery and development of novel compounds or to in-license novel compounds that could make the product that we develop obsolete. As a result of all of these factors, our competitors may succeed in obtaining patent protection and/or FDA approval or discovering, developing and commercializing products before we do. In addition, any new product that competes with an approved product must demonstrate compelling advantages in efficacy, convenience, tolerability and safety in order to overcome price competition and to be commercially successful. If we are not able to compete effectively against potential competitors, our business will not grow and our financial condition and operations will suffer.

Our products may cause undesirable side effects or have other properties that delay or prevent their regulatory approval or limit their commercial potential.

        Undesirable side effects caused by our products or even competing products in development that utilize a common mechanism of action could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in the denial of regulatory approval by the FDA or other regulatory authorities and potential product liability claims. We are currently conducting a Phase 1/2a clinical trial for GEN-003. Serious adverse events deemed to be caused by our product candidates could have a material adverse effect on the development of our product candidates and our business as a whole. The most common adverse events to date in the clinical trial evaluating the safety and tolerability of GEN-003 have been fatigue, myalgia (muscle pain), pain tenderness and induration (inflammatory hardening of the skin). Our understanding of the relationship between GEN-003 and these events, as well as our understanding of adverse events in future clinical trials of other product candidates, may change as we gather more information, and additional unexpected adverse events may be observed.

        If we or others identify undesirable side effects caused by our product candidates either before or after receipt of marketing approval, a number of potentially significant negative consequences could result, including:

    our clinical trials may be put on hold;

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    we may be unable to obtain regulatory approval for our vaccine candidates;

    regulatory authorities may withdraw approvals of our vaccines;

    regulatory authorities may require additional warnings on the label;

    a medication guide outlining the risks of such side effects for distribution to patients may be required;

    we could be sued and held liable for harm caused to patients; and

    our reputation may suffer.

        Any of these events could prevent us from achieving or maintaining market acceptance of our products and could substantially increase commercialization costs.

Risks Related to Our Indebtedness

Our level of indebtedness and debt service obligations could adversely affect our financial condition, and may make it more difficult for us to fund our operations.

        In September 2013 we entered into a secured credit facility pursuant to a working capital term loan facility with Ares Capital Corporation providing for term loans of up to an aggregate of $10.0 million. On September 30, 2013, we drew down an initial $3.5 million under our secured credit facility and paid off our then existing secured credit facility. We drew down the remaining $6.5 million in December 2013. All obligations under our secured credit facility are secured by substantially all of our existing property and assets, excluding our intellectual property and licensed-in technology. This indebtedness may create additional financing risk for us, particularly if our business or prevailing financial market conditions are not conducive to paying off or refinancing our outstanding debt obligations at maturity. This indebtedness could also have important negative consequences, including:

    we will need to repay our indebtedness by making payments of interest and principal, which will reduce the amount of money available to finance our operations, our research and development efforts and other general corporate activities; and

    our failure to comply with the restrictive covenants in our secured credit facility could result in an event of default that, if not cured or waived, would accelerate our obligation to repay this indebtedness, and the lender could seek to enforce its security interest in the assets securing such indebtedness.

        To the extent additional debt is added to our current debt levels, the risks described above could increase.

We may not have cash available to us in an amount sufficient to enable us to make interest or principal payments on our indebtedness when due.

        Failure to satisfy our current and future debt obligations under our secured credit facility could result in an event of default and, as a result, our lender could accelerate all of the amounts due. In the event of an acceleration of amounts due under our secured credit facility as a result of an event of default, we may not have sufficient funds or may be unable to arrange for additional financing to repay our indebtedness. In addition, our lender could seek to enforce its security interests in the assets securing such indebtedness.

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We are subject to certain restrictive covenants which, if breached, could have a material adverse effect on our business and prospects.

        Our secured credit facility imposes operating and other restrictions on us. Such restrictions will affect, and in many respects limit or prohibit, our ability and the ability of any future subsidiary to, among other things:

    dispose of certain assets;

    change our lines of business;

    engage in mergers or consolidations;

    incur additional indebtedness;

    create liens on assets;

    pay dividends and make distributions or repurchase our capital stock; and

    engage in certain transactions with affiliates.

Risks Related to Our Business and Industry

If we fail to attract and keep senior management and key scientific personnel, we may be unable to successfully develop our products, conduct our clinical trials and commercialize our product candidates.

        We are highly dependent on members of our senior management, including William Clark, our President and Chief Executive Officer, Seth Hetherington, M.D., our Chief Medical Officer, Jessica Flechtner, Ph.D., our Vice President of Research, and Paul Giannasca, Ph.D., our Vice President of Development. The loss of the services of any of these persons could impede the achievement of our research, development and commercialization objectives. We have employment agreements with each of these members of senior management and we maintain a keyman insurance policy on Mr. Clark for $2.0 million.

        Recruiting and retaining qualified scientific, clinical, manufacturing, sales and marketing personnel will also be critical to our success. The loss of the services of our executive officers or other key employees could impede the achievement of our research, development and commercialization objectives and seriously harm our ability to successfully implement our business strategy. Furthermore, replacing executive officers and key employees may be difficult and may take an extended period of time because of the limited number of individuals in our industry with the breadth of skills and experience required to successfully develop, gain regulatory approval of and commercialize products. Competition to hire from this limited pool is intense, and we may be unable to hire, train, retain or motivate these key personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for similar personnel. We also experience competition for the hiring of scientific and clinical personnel from universities and research institutions. In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and development and commercialization strategy. Our consultants and advisors may be employed by employers other than us and may have commitments under consulting or advisory contracts with other entities that may limit their availability to us. If we are unable to continue to attract and retain high quality personnel, our ability to pursue our growth strategy will be limited.

Our employees, independent contractors, principal investigators, consultants, commercial partners, and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements and insider trading.

        We are exposed to the risk of fraudulent or other illegal activity by our employees, independent contractors, principal investigators, consultants, commercial partners, and vendors. Misconduct by these

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parties could include intentional, reckless and/or negligent conduct that fails: to comply with the laws of the FDA and similar foreign regulatory bodies; provide true, complete and accurate information to the FDA and similar foreign regulatory bodies; to comply with manufacturing standards we have established; to comply with federal, state and foreign health care fraud and abuse laws and regulations; to report financial information or data accurately; or to disclose unauthorized activities to us. In particular, the promotion, sale and marketing of health care items and services, as well as certain business arrangements in the health care industry are subject to extensive laws and regulations intended to prevent misconduct, including fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and, structuring and commission(s), certain customer incentive programs and other business arrangements. Activities subject to these laws also involve the improper use of information obtained in the course of patient recruitment for clinical trials. It is not always possible to identify and deter such misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, disgorgement, possible exclusion from participation in Medicare, Medicaid and other federal health care programs, contractual damages, reputational harm, diminished profits and future earnings, and curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.

Our relationships with health care professionals, institutional providers, principal investigators, consultants, customers (actual and potential) and third-party payors are, and will continue to be, subject, directly and indirectly, to federal and state health care fraud and abuse, false claims, marketing expenditure tracking and disclosure, government price reporting, and health information privacy and security laws. If we are unable to comply, or have not fully complied, with such laws, we could face penalties, including, without limitation, civil, criminal, and administrative penalties, damages, monetary fines, disgorgement, possible exclusion from participation in Medicare, Medicaid and other federal health care programs, contractual damages, reputational harm, diminished profits and future earnings, and curtailment or restructuring of our operations.

        Our business operations and activities may be directly or indirectly subject to various federal and state fraud and abuse laws, including, without limitation, the federal Anti-Kickback Statute and the federal False Claims Act. If we obtain FDA approval for any of our product candidates and begin commercializing those products in the United States, our potential exposure under such laws will increase significantly, and our costs associated with compliance with such laws are also likely to increase. These laws may impact, among other things, our current activities with principal investigators and research subjects, as well as proposed and future sales, marketing and education programs. In addition, we may be subject to patient privacy regulation by the federal government and state governments in which we conduct our business. The laws that may affect our ability to operate include, but are not limited to:

    the federal Anti-Kickback Statute, which prohibits, among other things, knowingly and willfully soliciting, receiving, offering or paying any remuneration (including any kickback, bribe, or rebate), directly or indirectly, overtly or covertly, in cash or in kind, to induce, or in return for, either the referral of an individual, or the purchase, lease, order or recommendation of any good, facility, item or service for which payment may be made, in whole or in part, under a federal health care program, such as the Medicare and Medicaid programs;

    federal civil and criminal false claims laws and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment or approval from Medicare, Medicaid, or other third-party payors

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      that are false or fraudulent or knowingly making a false statement to improperly avoid, decrease or conceal an obligation to pay money to the federal government;

    the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created new federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any health care benefit program or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any health care benefit program, regardless of the payor (e.g., public or private) and knowingly and willfully falsifying, concealing, or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, health care benefits, items or services relating to health care matters;

    HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 and their respective implementing regulations, which impose requirements on certain covered health care providers, health plans, and health care clearinghouses as well as their respective business associates that perform services for them that involve the use, or disclosure of, individually identifiable health information, relating to the privacy, security and transmission of individually identifiable health information without appropriate authorization;

    the federal Physician Payments Sunshine Act, created under Section 6002 of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, collectively, ACA, and its implementing regulations requires manufacturers of drugs, devices, biologicals and medical supplies for which payment is available under Medicare, Medicaid or the Children's Health Insurance Program (with certain exceptions) to report annually to the United States Department of Health and Human Services information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members, with data collection required beginning August 1, 2013 and reporting to the Centers for Medicare & Medicaid Services required by March 31, 2014 and by the 90 th  day of each subsequent calendar year;

    federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers;

    federal government price reporting laws, changed by ACA to, among other things, increase the minimum Medicaid rebates owed by most manufacturers under the Medicaid Drug Rebate Program and offer such rebates to additional populations, that require us to calculate and report complex pricing metrics to government programs, where such reported prices may be used in the calculation of reimbursement and/or discounts on our marketed drugs (participation in these programs and compliance with the applicable requirements may subject us to potentially significant discounts on our products, increased infrastructure costs, and potentially limit our ability to offer certain marketplace discounts);

    the Foreign Corrupt Practices Act, a United States law which regulates certain financial relationships with foreign government officials (which could include, for example, certain medical professionals); and

    state law equivalents of each of the above federal laws, such as anti-kickback, false claims, consumer protection and unfair competition laws which may apply to our business practices, including but not limited to, research, distribution, sales and marketing arrangements as well as submitting claims involving health care items or services reimbursed by any third-party payor, including commercial insurers; state laws that require pharmaceutical companies to comply with

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      the pharmaceutical industry's voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government that otherwise restricts payments that may be made to health care providers; state laws that require drug manufacturers to file reports with states regarding marketing information, such as the tracking and reporting of gifts, compensations and other remuneration and items of value provided to health care professionals and entities (compliance with such requirements may require investment in infrastructure to ensure that tracking is performed properly, and some of these laws result in the public disclosure of various types of payments and relationships, which could potentially have a negative effect on our business and/or increase enforcement scrutiny of our activities); and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways, with differing effects.

        In addition, the regulatory approval and commercialization of any of our product candidates outside the United States will also likely subject us to foreign equivalents of the health care laws mentioned above, among other foreign laws.

        Efforts to ensure that our business arrangements will comply with applicable health care laws may involve substantial costs. It is possible that governmental and enforcement authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law interpreting applicable fraud and abuse or other health care laws and regulations. If our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including, without limitation, civil, criminal, and administrative penalties, damages, monetary fines, disgorgement, possible exclusion from participation in Medicare, Medicaid and other federal health care programs, contractual damages, reputational harm, diminished profits and future earnings, and curtailment or restructuring of our operations.

We may encounter difficulties in managing our growth and expanding our operations successfully.

        As we seek to advance our product candidates through clinical trials and commercialization, we will need to expand our development, regulatory, manufacturing, marketing and sales capabilities or contract with third parties to provide these capabilities for us. As our operations expand, we expect that we will need to manage additional relationships with various strategic partners, suppliers and other third parties. Future growth will impose significant added responsibilities on members of management. Our future financial performance and our ability to commercialize our product candidates and to compete effectively will depend, in part, on our ability to manage any future growth effectively. To that end, we must be able to manage our development efforts and clinical trials effectively and hire, train and integrate additional management, administrative and, if necessary, sales and marketing personnel. We may not be able to accomplish these tasks, and our failure to accomplish any of them could prevent us from successfully growing our company.

If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of our product candidates.

        We face an inherent risk of product liability as a result of the clinical testing of our product candidates and will face an even greater risk if we commercialize any products. For example, we may be sued if any product we develop allegedly causes injury or is found to be otherwise unsuitable during product testing, manufacturing, marketing or sale. Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability and a breach of warranties. Claims could also be asserted under state consumer protection acts. If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit commercialization of our product candidates.

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Even a successful defense would require significant financial and management resources. Regardless of the merits or eventual outcome, liability claims may result in:

    decreased demand for any product candidates or products that we may develop;

    injury to our reputation and significant negative media attention;

    withdrawal of clinical trial participants;

    significant costs to defend the related litigations;

    a diversion of management's time and our resources;

    substantial monetary awards to trial participants or patients;

    product recalls, withdrawals, or labeling, marketing or promotional restrictions;

    loss of revenue;

    the inability to commercialize any product candidates that we may develop; and

    a decline in our stock price.

        Failure to obtain and retain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims could prevent or inhibit the commercialization of products we develop. We currently carry product liability insurance covering our clinical trials in the amount of $5.0 million in the aggregate. Although we maintain product liability insurance, any claim that may be brought against us could result in a court judgment or settlement in an amount that is not covered, in whole or in part, by our insurance or that is in excess of the limits of our insurance coverage. Our insurance policies also have various exclusions, and we may be subject to a product liability claim for which we have no coverage. We will have to pay any amounts awarded by a court or negotiated in a settlement that exceed our coverage limitations or that are not covered by our insurance, and we may not have, or be able to obtain, sufficient capital to pay such amounts.

Our auditors have identified a material weakness in our internal control over financial reporting.

        Although we are not yet subject to the certification or attestation requirements of Section 404 of the Sarbanes-Oxley Act, in the course of reviewing our financial statements in preparation for this offering, our independent registered public accounting firm has identified a deficiency that it concluded represented a material weakness in our internal control over financial reporting. The finding by our independent registered public accounting firm relates to our internal control infrastructure as of December 31, 2012. In particular, our auditors noted that our process for evaluating significant transactions and ensuring that such evaluations are properly performed and subject to an appropriate level of review was deficient. Our auditors assessed that these circumstances resulted in the failure to recognize the accretion of cumulative dividends as an adjustment to the carrying value of our Series B preferred stock. Under auditing standards established by the United States Public Company Accounting Oversight Board, a material weakness is a deficiency or combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected and corrected on a timely basis. We cannot provide any assurance that there will not be other material weaknesses that our independent registered public accounting firm or we will identify. If such issues are identified or if we are unable to produce accurate and timely financial statements, our stock price may be adversely affected and we may be unable to maintain compliance with listing requirements of our stock exchange.

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We must comply with environmental laws and regulations, and failure to comply with these laws and regulations could expose us to significant liabilities.

        We use hazardous chemicals and radioactive and biological materials in certain aspects of our business and are subject to a variety of federal, state and local laws and regulations governing the use, generation, manufacture, distribution, storage, handling, treatment and disposal of these materials. We cannot eliminate the risk of accidental injury or contamination from the use, manufacture, distribution, storage, handling, treatment or disposal of hazardous materials. In the event of contamination or injury, or failure to comply with environmental, occupational health and safety and export control laws and regulations, we could be held liable for any resulting damages and any such liability could exceed our assets and resources. We are uninsured for third-party contamination injury.

We may not be able to win government, academic institution or non-profit contracts or grants.

        From time to time, we may apply for contracts or grants from government agencies, non-profit entities and academic institutions. Such grants have been our only source of revenue to date. Such contracts or grants can be highly attractive because they provide capital to fund the on-going development of our technologies and product candidates without diluting our stockholders. However, there is often significant competition for these contracts or grants. Entities offering contracts or grants may have requirements to apply for or to otherwise be eligible to receive certain contracts or grants that our competitors may be able to satisfy that we cannot. In addition, such entities may make arbitrary decisions as to whether to offer contracts or make grants, to whom the contracts or grants will be awarded and the size of the contracts or grants to each awardee. Even if we are able to satisfy the award requirements, there is no guarantee that we will be a successful awardee. Therefore, we may not be able to win any contracts or grants in a timely manner, if at all.

Risks Related to Our Common Stock and This Offering

We are eligible to be treated as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.

        We are an "emerging growth company", as defined in the JOBS Act. For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. These exemptions include:

    being permitted to provide only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced "Management's Discussion and Analysis of Financial Condition and Results of Operations" disclosure;

    not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting;

    not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board providing for supplemental auditor's reports for additional information about the audit and the financial statements;

    reduced disclosure obligations regarding executive compensation; and

    exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

        We have taken advantage of reduced reporting burdens in this prospectus. In particular, in this prospectus, we have provided only two years of audited financial statements and have not included all

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of the executive compensation related information that would be required if we were not an emerging growth company. We cannot predict whether investors will find our common stock less attractive if we rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of these accounting standards until they would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this exemption and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

        We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including if the market value of our common stock held by non-affiliates exceeds $700.0 million as of any June 30 before that time or if we have total annual gross revenue of $1.0 billion or more during any fiscal year before that time, in which cases we would no longer be an emerging growth company as of the following December 31 or, if we issue more than $1.0 billion in non-convertible debt during any three-year period before that time, we would cease to be an emerging growth company immediately. Even after we no longer qualify as an emerging growth company, we may still qualify as a "smaller reporting company" if the market value of our common stock held by non-affiliates is below $75.0 million as of June 30 in any given year, which would allow us to take advantage of many of the same exemptions from disclosure requirements, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.

We do not know whether a market will develop for our common stock or what the market price of our common stock will be and, as a result, it may be difficult for you to sell your shares of our common stock.

        Before this offering, there was no public trading market for our common stock. If a market for our common stock does not develop or is not sustained, it may be difficult for you to sell your shares of common stock at an attractive price, or at all. Further, an inactive market may also impair our ability to raise capital by selling shares of our common stock and may impair our ability to enter into strategic partnerships or acquire companies or products by using our shares of common stock as consideration. We cannot predict the prices at which our common stock will trade. It is possible that in one or more future periods our results of operations may be below the expectations of public market analysts and investors and, as a result of these and other factors, the price of our common stock may fall.

        Certain of our existing stockholders and their affiliated entities, including holders of more than 5% of our common stock, have indicated an interest in purchasing shares of our common stock in this offering at the initial public offering price. To the extent these existing stockholders are allocated and purchase shares in this offering, such purchases would reduce the available public float for our shares because these stockholders will be restricted from selling the shares by restrictions under applicable securities laws described in the "Shares Eligible for Future Sale" section of this prospectus. As a result, the liquidity of our common stock could be significantly reduced from what it would have been if these shares had not been purchased by investors that were not affiliated with us.

The market price of our common stock may be highly volatile, and you may not be able to resell your shares at or above the initial public offering price.

        The initial public offering price for our shares will be determined by negotiations between us and the representatives of the underwriters and may not be indicative of prices that will prevail in the

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trading market. The market price of shares of our common stock could be subject to wide fluctuations in response to many risk factors listed in this section, and others beyond our control, including:

    results of clinical trials of our product candidates;

    the timing of the release of results of our clinical trials;

    results of clinical trials of our competitors' products;

    regulatory actions with respect to our products or our competitors' products;

    actual or anticipated fluctuations in our financial condition and operating results;

    publication of research reports by securities analysts about us or our competitors or our industry;

    our failure or the failure of our competitors to meet analysts' projections or guidance that we or our competitors may give to the market;

    additions and departures of key personnel;

    strategic decisions by us or our competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy;

    the passage of legislation or other regulatory developments affecting us or our industry;

    fluctuations in the valuation of companies perceived by investors to be comparable to us;

    sales of our common stock by us, our insiders or our other stockholders;

    speculation in the press or investment community;

    announcement or expectation of additional financing efforts;

    changes in accounting principles;

    terrorist acts, acts of war or periods of widespread civil unrest;

    natural disasters and other calamities;

    changes in market conditions for biopharmaceutical stocks; and

    changes in general market and economic conditions.

        In addition, the stock market has recently experienced significant volatility, particularly with respect to pharmaceutical, biotechnology and other life sciences company stocks. The volatility of pharmaceutical, biotechnology and other life sciences company stocks often does not relate to the operating performance of the companies represented by the stock. As we operate in a single industry, we are especially vulnerable to these factors to the extent that they affect our industry or our products, or to a lesser extent our markets. In the past, securities class action litigation has often been initiated against companies following periods of volatility in their stock price. This type of litigation could result in substantial costs and divert our management's attention and resources, and could also require us to make substantial payments to satisfy judgments or to settle litigation.

Our principal stockholders and management own a significant percentage of our stock and will be able to exercise significant influence over matters subject to stockholder approval.

        As of September 30, 2013, our executive officers, directors and principal stockholders, together with their respective affiliates, beneficially owned approximately 95.4% of our common stock, including shares subject to outstanding options and warrants that are exercisable within 60 days after such date, and we expect that upon completion of this offering that same group will continue to beneficially own at least            % of our outstanding common stock (assuming no participation in this offering by these

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stockholders). Accordingly, even after this offering, these stockholders will be able to exert a significant degree of influence over our management and affairs and over matters requiring stockholder approval, including the election of our board of directors and approval of significant corporate transactions. This concentration of ownership could have the effect of entrenching our management and/or the board of directors, delaying or preventing a change in our control or otherwise discouraging a potential acquirer from attempting to obtain control of us, which in turn could have a material and adverse effect on the fair market value of our common stock.

A significant portion of our total outstanding shares may be sold into the public market in the near future, which could cause the market price of our common stock to drop significantly, even if our business is doing well.

        Sales of a substantial number of shares of our common stock in the public market could occur at any time after the expiration of the lock-up agreements described in the "Underwriting" section of this prospectus. These sales, or the market perception that the holders of a large number of shares intend to sell shares, could reduce the market price of our common stock. After this offering, we will have            shares of common stock outstanding. This includes the            shares that we are selling in this offering, which may be resold in the public market immediately. The remaining            shares, or      % of our outstanding shares after this offering, are currently restricted as a result of securities laws or lock-up agreements but will be able to be sold, subject to any applicable volume limitations under federal securities laws with respect to affiliate sales, in the near future as set forth below.

        In addition, as of September 30, 2013, there were 2,291,512 shares subject to outstanding warrants and 18,726,854 shares subject to outstanding options that will become eligible for sale in the public market to the extent permitted by any applicable vesting requirements, the lock-up agreements and Rules 144 and 701 under the Securities Act. Moreover, after this offering, holders of an aggregate of 135,075,680 shares of our common stock and holders of warrants to purchase 2,291,512 shares of our common stock will have rights, subject to some conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholders. If such holders, by exercising their registration rights, cause a large number of securities to be registered and sold into the public market, these sales could have an adverse effect on the market price for our common stock. We also intend to register all shares of common stock that we may issue under our employee benefit plans, including our 2014 Equity Incentive Plan. Once we register these shares and they are issued in accordance with the terms of the plans, they can be freely sold in the public market upon issuance, subject to the lock-up agreements and the restrictions imposed on our affiliates under Rule 144. For more information, see "Shares Eligible for Future Sale—Rule 144".

You will incur immediate and substantial dilution as a result of this offering.

        The initial public offering price of our common stock will be substantially higher than the net tangible book value per share of our common stock. Therefore, if you purchase common stock in this offering, you will pay a price per share that substantially exceeds our pro forma adjusted net tangible book value per share after giving effect to this offering. To the extent shares subsequently are issued under options or warrants, you will incur further dilution. Based on an initial public offering price of $            , the midpoint of the range set forth on the cover of this prospectus, you will incur immediate and substantial dilution of $            per share, representing the difference between our pro forma net tangible book value per share, after giving effect to this offering, and the assumed initial public offering price. In addition, purchasers of common stock in this offering will have contributed approximately    % of the aggregate price paid by all purchasers of our stock but will own approximately    % of our common stock outstanding after this offering.

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We have broad discretion in the use of net proceeds from this offering and may not use them effectively.

        We currently intend to use the net proceeds from this offering to fund the continued clinical development of GEN-003 and GEN-004, and to continue to discover and develop other T cell vaccines in our pipeline, including funding the costs of operating a public company. See the section of this prospectus entitled "Use of Proceeds". Any remaining amounts will be used for working capital and general corporate purposes. Although we currently intend to use the net proceeds from this offering in such a manner, we will have broad discretion in the application of the net proceeds. Our failure to apply these funds effectively could affect our ability to continue to develop and commercialize our product candidates. Pending their use, we may invest the net proceeds from this offering in a manner that does not produce income or loses value.

We will incur increased costs as a result of being a public company and our management expects to devote substantial time to public company compliance programs.

        As a public company, we will incur significant legal, insurance, accounting and other expenses that we did not incur as a private company. In addition, our administrative staff will be required to perform additional tasks. For example, in anticipation of becoming a public company, we will need to adopt additional internal controls and disclosure controls and procedures and bear all of the internal and external costs of preparing and distributing periodic public reports in compliance with our obligations under the securities laws. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment will result in increased general and administrative expenses and may divert management's time and attention from product development activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, regulatory authorities may initiate legal proceedings against us and our business may be harmed. In connection with this offering, we are increasing our directors' and officers' insurance coverage, which will increase our insurance cost. In the future, it will be more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers.

        In addition, in order to comply with the requirements of being a public company, we may need to undertake various actions, including implementing new internal controls and procedures and hiring new accounting or internal audit staff. The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal control over financial reporting. We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that information required to be disclosed in reports under the Securities Exchange Act of 1934 as amended, or the Exchange Act, is accumulated and communicated to our principal executive and financial officers. Any failure to develop or maintain effective controls could adversely affect the results of periodic management evaluations. In the event that we are not able to demonstrate compliance with the Sarbanes-Oxley Act, that our internal control over financial reporting is perceived as inadequate, or that we are unable to produce timely or accurate financial statements, investors may lose confidence in our operating results and the price of our ordinary shares could decline. In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on NASDAQ.

        We are not currently required to comply with the SEC's rules that implement Section 404 of the Sarbanes-Oxley Act, and are therefore not yet required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. Upon becoming a public company, we will be required to comply with certain of these rules, which will require management to

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certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of our internal control over financial reporting commencing with our second annual report. This assessment will need to include the disclosure of any material weaknesses in our internal control over financial reporting identified by our management or our independent registered public accounting firm. To achieve compliance with Section 404 within the prescribed period, we will be engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk that we will not be able to conclude, within the prescribed timeframe or at all, that our internal control over financial reporting is effective as required by Section 404. If we identify one or more material weaknesses, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statement.

        Our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting until the later of our second annual report or the first annual report required to be filed with the SEC following the date we are no longer an "emerging growth company" as defined in the JOBS Act. We cannot assure you that there will not be material weaknesses or significant deficiencies in our internal controls in the future.

Provisions in our charter documents and Delaware law may have anti-takeover effects that could discourage an acquisition of us by others, even if an acquisition would be beneficial to our stockholders, and may prevent attempts by our stockholders to replace or remove our current management.

        Provisions in our amended and restated certificate of incorporation and amended and restated by-laws that will become effective upon the closing of this offering contain provisions that may have the effect of discouraging, delaying or preventing a change in control of us or changes in our management. These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock. In addition, because our board of directors is responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors. Among other things, these provisions:

    authorize "blank check" preferred stock, which could be issued by our board of directors without stockholder approval and may contain voting, liquidation, dividend and other rights superior to our common stock;

    create a classified board of directors whose members serve staggered three-year terms;

    specify that special meetings of our stockholders can be called only by our board of directors, the chairperson of our board of directors, our chief executive officer or our president;

    prohibit stockholder action by written consent;

    establish an advance notice procedure for stockholder approvals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to our board of directors;

    provide that our directors may be removed only for cause;

    provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum;

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    specify that no stockholder is permitted to cumulate votes at any election of directors;

    expressly authorize our board of directors to modify, alter or repeal our amended and restated by-laws; and

    require supermajority votes of the holders of our common stock to amend specified provisions of our amended and restated by-laws.

        These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management.

        Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.

        Any provision of our amended and restated certificate of incorporation, our amended and restated by-laws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock.

Our ability to use net operating losses to offset future taxable income may be subject to certain limitations.

        In general, under Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, a corporation that undergoes an "ownership change" is subject to limitations on its ability to utilize its pre-change net operating losses, or NOLs, to offset future taxable income. Our existing NOLs may be subject to substantial limitations arising from previous ownership changes, and if we undergo an ownership change in connection with or after this offering, our ability to utilize NOLs could be further limited by Section 382 of the Code. In addition, future changes in our stock ownership, many of which are outside of our control, could result in an ownership change under Section 382 of the Code. Our NOLs may also be impaired under state law. Accordingly, we may not be able to utilize a material portion of our NOLs. Furthermore, our ability to utilize our NOLs is conditioned upon our attaining profitability and generating U.S. federal taxable income. As described above under "—Risks Related to Our Financial Position and Need for Additional Capital", we have incurred net losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future; thus, we do not know whether or when we will generate the U.S. federal taxable income necessary to utilize our NOLs.

Our amended and restated certificate of incorporation designates the state or federal courts located in the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

        Our amended and restated certificate of incorporation that will become effective upon the closing of this offering provides that, subject to limited exceptions, the state and federal courts located in the State of Delaware will be the sole and exclusive forum for (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (3) any action asserting a claim against us arising pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated by-laws or (4) any other action asserting a claim against us that is governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and to have consented to the provisions of our amended and restated certificate of

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incorporation described above. This choice of forum provision may limit a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and employees. Alternatively, if a court were to find these provisions of our amended and restated certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition.

Because we do not anticipate paying any cash dividends on our capital stock in the foreseeable future, capital appreciation, if any, will be your sole source of gain.

        You should not rely on an investment in our common stock to provide dividend income. We do not anticipate that we will pay any cash dividends to holders of our common stock in the foreseeable future. Instead, we plan to retain any earnings to maintain and expand our operations. In addition, our ability to pay cash dividends is currently prohibited by the terms of our debt financing arrangement, and any future debt financing arrangement may contain terms prohibiting or limiting the amount of dividends that may be declared or paid on our common stock. Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any return on their investment. As a result, investors seeking cash dividends should not purchase our common stock.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

        This prospectus contains forward-looking statements. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, our clinical results and other future conditions. The words "anticipate", "believe", "contemplate", "continue", "could", "estimate", "expect", "forecast", "goal", "intend", "may", "plan", "potential" "predict", "project", "should", "target", "will", "would", or the negative of these terms or other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

        The forward-looking statements in this prospectus include, among other things, statements about:

    the timing of results of our ongoing and planned clinical trials;

    our planned clinical trials for GEN-003 and GEN-004;

    our estimates regarding the amount of funds we require to complete our two planned Phase 2 clinical trials for GEN-003 and our initiated Phase 1 trial and planned Phase 2a trial for GEN-004;

    our estimate for when we will require additional funding;

    our plans to commercialize GEN-003 and our other vaccine candidates;

    the timing of, and our ability to, obtain and maintain regulatory approvals for our product candidates;

    the rate and degree of market acceptance and clinical utility of any approved product candidate;

    the potential benefits of strategic partnership agreements and our ability to enter into selective strategic partnership arrangements;

    our ability to quickly and efficiently identify and develop product candidates;

    our commercialization, marketing and manufacturing capabilities and strategy;

    our intellectual property position; and

    our estimates regarding expenses, future revenues, capital requirements, the sufficiency of our current and expected cash resources and our need for additional financing.

        We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this prospectus, particularly in the "Risk Factors" section, that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make or collaborations or strategic partnerships we may enter into.

        You should read this prospectus and the documents that we reference in this prospectus and have filed as exhibits to the registration statement of which this prospectus is a part completely and with the understanding that our actual future results may be materially different from what we expect. The forward-looking statements in this prospectus represent our views as of the date of this prospectus. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. You should, therefore, not rely on

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these forward-looking statements as representing our views as of any date subsequent to the date of this prospectus.

        This prospectus includes statistical and other industry and market data that we obtained from industry publications and research, surveys and studies conducted by third parties. Industry publications and third party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe these industry publications and third party research, surveys and studies are reliable, we have not independently verified such data. With respect to the information from IMS Health, this represents MIDAS Ex-Manufacturer levels sales data. This information is an estimate derived from the use of information under license from the following IMS Health information service: MIDAS Sales Data. IMS Health expressly reserves all rights.

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USE OF PROCEEDS

        We estimate that the net proceeds of the sale of                  shares of common stock in this offering will be approximately $           million at an assumed initial public offering price of $          per share, the midpoint of the price range set forth on the cover of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us. If the underwriters exercise their over-allotment option in full, we estimate that the net proceeds will be approximately $           million after deducting underwriting discounts and commissions and estimated offering expenses payable by us. Each $1.00 increase or decrease in the assumed initial public offering price of $          per share would increase or decrease our net proceeds by $           million, assuming the number of shares offered by us, as set forth on the cover of this prospectus, remains the same and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.

        As of September 30, 2013, we had cash and cash equivalents of $12.1 million. We intend to use the net proceeds from this offering, together with our existing cash and cash equivalents and future available borrowings under our credit facility, as follows:

    approximately $           million to fund research, manufacturing and clinical development in connection with our ongoing Phase 1/2a clinical trial and two planned Phase 2 clinical trial studies for GEN-003;

    approximately $           million to fund research and development expenses in connection our Phase 1 clinical trial and our planned Phase 2a clinical trial for GEN-004;

    approximately $           million to fund research and development and manufacturing of our prophylactic chlamydia, HSV-2 and malaria programs to finalize the vaccine candidates, advance the candidates through preclinical toxicology and file an IND; and

    the remainder for working capital and other general corporate purposes.

        Our expected use of net proceeds from this offering represents our current intentions based upon our present plans and business condition, which could change in the future as our plans and business conditions evolve. As of the date of this prospectus, we cannot predict with certainty all of the particular uses for the net proceeds to be received upon the completion of this offering or the amounts that we will actually spend on the uses set forth above. We may also use a portion of the net proceeds to in-license, acquire or invest in complementary technologies, products or assets.

        The amount and timing of our actual expenditures will depend upon numerous factors, including the results of our research and development efforts, the timing and success of preclinical studies, our ongoing clinical trials or clinical trials we may commence in the future and the timing of regulatory submissions. As a result, our management will have broad discretion over the use of the net proceeds from this offering.

        Pending the use of the proceeds from this offering, we intend to invest the net proceeds in short-term, interest-bearing, investment-grade securities, certificates of deposit or government securities.

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DIVIDEND POLICY

        We have never declared or paid cash dividends on our common stock. We currently intend to retain all available funds and any future earnings, if any, to fund the development and expansion of our business and we do not anticipate paying any cash dividends in the foreseeable future. Any future determination to pay dividends will be made at the discretion of our board of directors. Additionally, our ability to pay dividends on our common stock is limited by restrictions under the terms of the agreements governing our secured credit facility. Payment of future cash dividends, if any, will be at the discretion of the board of directors after taking into account various factors, including our financial condition, operating results, current and anticipated cash needs, the requirements of current or then-existing debt instruments and other factors the board of directors deems relevant.

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CAPITALIZATION

        The following table sets forth our cash and cash equivalents and capitalization as of September 30, 2013:

    on an actual basis;

    on a pro forma basis to give effect to (i) the automatic conversion of all outstanding shares of our preferred stock into an aggregate of 135,075,680 shares of common stock upon the closing of this offering (utilizing a conversion ratio equal to 1-for-1.22 shares of common stock for each share of Series B preferred stock assuming that our initial public offering occurred as of September 30, 2013) and the filing of our amended and restated certificate of incorporation upon the closing of this offering, and (ii) the reclassification of our preferred stock warrant liability to additional paid-in-capital upon the automatic conversion of our preferred stock warrants into warrants exercisable for common stock, which will occur automatically upon the closing of this offering; and

    on a pro forma as adjusted basis to give further effect to the sale of shares of our common stock offered in this offering, assuming an initial public offering price of $        per share, the midpoint of the price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

        You should read this information together with our audited financial statements and related notes appearing elsewhere in this prospectus and the information set forth under the heading "Selected Financial Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations". Please see the section of this prospectus titled "The Offering" for a description of the rate at which our outstanding Series B preferred stock converts into shares of common stock upon the closing of this offering based on the date on which this offering closes.

 
  As of September 30, 2013  
(in thousands, except per share data)
  Actual   Pro Forma   Pro Forma,
As Adjusted
 

Cash and cash equivalents

  $ 12,075   $ 12,075   $    
               

Seed convertible preferred stock, $0.001 par value; 4,615 shares authorized; 4,615 shares issued and outstanding at September 30, 2013, and no shares issued and outstanding pro forma and pro forma as adjusted

    3,000          

Series A redeemable convertible preferred stock, $0.001 par value; 36,662 shares authorized; 35,577 shares issued and outstanding at September 30, 2013, and no shares issued and outstanding pro forma and pro forma as adjusted

    23,125          

Series B redeemable convertible preferred stock, $0.001 par value; 35,099 shares authorized; 34,581 shares issued outstanding at September 30, 2013, and no shares issued and outstanding pro forma and pro forma as adjusted

    24,532          

Series C redeemable convertible preferred stock, $0.001 par value; 53,276 shares authorized; 52,586 shares issued and outstanding at September 30, 2013, and no shares issued and outstanding pro forma and pro forma as adjusted

    30,500          

Stockholders' (deficit) equity:

                   

Common stock, $0.001 par value; 191,690 shares authorized, actual and pro forma; 3,526 shares issued and outstanding as of September 30, 2013, 138,602 shares issued and outstanding pro forma and                    shares authorized and            shares issued and outstanding, pro forma as adjusted

    4     139        

Additional paid-in capital

        81,622        

Deficit accumulated during the development stage

    (73,617 )   (73,617 )   (73,617 )
               

Total stockholders' (deficit) equity

    (73,613 )   8,144        
               

Total capitalization

  $ 7,544   $ 8,144   $           
               

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        A $1.00 increase or decrease in the assumed initial public offering price of $      per share would increase or decrease each of cash and cash equivalents, additional paid-in capital, total stockholders' (deficit) equity and total capitalization on a pro forma as adjusted basis by approximately $       million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

        The table above does not include:

    18,726,854 shares of our common stock issuable upon the exercise of stock options outstanding as of September 30, 2013 at a weighted average exercise price of $0.22 per share;

    2,291,512 shares of common stock issuable upon the exercise of outstanding warrants as of September 30, 2013 at a weighted-average exercise price of $0.61 per share;

    3,339,113 shares of common stock reserved for issuance pursuant to future equity awards under our Amended and Restated 2007 Equity Incentive Plan; and

            shares of common stock reserved for future issuance under our 2014 Equity Incentive Plan.

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DILUTION

        If you invest in our common stock in this offering, your ownership interest will be diluted to the extent of the difference between the initial public offering price per share of our common stock in this offering and the pro forma as adjusted net tangible book value per share of our common stock after this offering.

        We had a historical net tangible book value of $(73.6) million, or $(20.88) per share of common stock, as of September 30, 2013. Historical net tangible book value per share is equal to our total tangible assets, less total liabilities, divided by the number of shares of our common stock outstanding.

        The pro forma net tangible book value of our common stock as of September 30, 2013 was $8.1 million, or $0.06 per share of our common stock. Pro forma net tangible book value represents the amount of our total tangible assets less our total liabilities, divided by the pro forma number of shares of our common stock outstanding after giving effect to (1) the automatic conversion of our outstanding preferred stock into common stock (utilizing a conversion ratio equal to 1-for-1.22 shares of common stock for each share of Series B preferred stock assuming that our initial public offering occurred as of September 30, 2013), and (2) the reclassification of the preferred stock warrant liability to stockholders' (deficit) equity upon the closing of this offering.

        After giving further effect to the sale of          shares of common stock in this offering, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, at an assumed initial public offering price of $           per share, the midpoint of the price range set forth on the cover of this prospectus, our pro forma as adjusted net tangible book value as of September 30, 2013 would have been approximately $           million, or approximately $          per share of common stock. This represents an immediate increase in pro forma as adjusted net tangible book value of $          per share to our existing stockholders and an immediate dilution of $          per share to investors participating in this offering. Dilution per share to new investors is determined by subtracting pro forma net tangible book value per share after this offering from the initial public offering price per share paid by new investors. The following table illustrates this dilution on a per share basis:

Assumed initial public offering price per share

        $             

Historical net tangible book value per share as of September 30, 2013

  $ (20.88 )      

Increase attributable to the conversion of outstanding preferred stock and reclassification of preferred stock warrants

             
             

Pro forma net tangible book value per share as of September 30, 2013

             

Increase in net tangible book value per share attributable to new investors

             
             

Pro forma as adjusted net tangible book value per share after this offering

             
             

Dilution per share to new investors

        $             

        Each $1.00 increase (decrease) in the assumed initial public offering price of $          per share would increase (decrease) our pro forma as adjusted net tangible book value by approximately $           million, the pro forma as adjusted net tangible book value per share by approximately $           per share and the dilution to investors purchasing shares in this offering by approximately $          per share, assuming the number of shares offered by us, as set forth on the cover of this prospectus, remains the same and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. If the underwriters exercise their option to purchase additional shares, you will experience further dilution.

        The following table summarizes, on a pro forma as adjusted basis as of September 30, 2013, the differences between the number of shares of common stock purchased from us, the total consideration and the average price per share paid by existing stockholders (giving effect to the conversion of all

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outstanding shares of our preferred stock into 135,075,680 shares of common stock prior to the completion of this offering) and by investors participating in this offering, after deducting underwriting discounts and commissions and estimated offering expenses, at an assumed initial public offering price of $          per share, the midpoint of the price range set forth on the cover of this prospectus. As the table illustrates, new investors purchasing shares in this offering will pay an average price per share substantially higher than our existing stockholders paid.

 
  Shares Purchased   Total Consideration    
 
 
  Average Price
Per Share
 
(in thousands, except share and per share amounts)
  Number   Percent   Amount   Percent  

Existing stockholders

            % $                  % $             

New investors

            %           %               
                       

Total

          100 % $                100 % $    
                       

        A $1.00 increase or decrease in the assumed initial public offering price of $          per share would increase or decrease the total consideration paid by new investors by $           million and increase or decrease the percentage of total consideration paid by new investors by approximately        %, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same.

        If the underwriters exercise their option to purchase additional shares in full, pro forma as adjusted net tangible book value as of September 30, 2013 will increase to $           million, or $          per share, representing an increase to existing stockholders of $          per share, and there will be an immediate dilution of an additional $          per share to new investors.

        The number of shares of common stock to be outstanding after this offering is based on the number of shares outstanding as of September 30, 2013 and excludes the following:

    18,726,854 shares of common stock issuable upon the exercise of outstanding stock options having a weighted-average exercise price of $0.22 per share;

    2,291,512 shares of common stock issuable upon the exercise of outstanding warrants having a weighted-average exercise price of $0.61 per share;

    3,339,113 shares of common stock reserved for issuance pursuant to future equity awards under our Amended and Restated 2007 Equity Incentive Plan; and

    shares of common stock reserved for future issuance under our 2014 Equity Incentive Plan.

        Furthermore, we may choose to raise additional capital through the sale of equity or convertible debt securities due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. New investors will experience further dilution if any of our outstanding options or warrants are exercised, new options are issued and exercised under our equity incentive plans or we issue additional shares of common stock, other equity securities or convertible debt securities for lower consideration per share than in this offering in the future.

        Certain of our existing stockholders and their affiliated entities, including holders of more than 5% of our common stock, have indicated an interest in purchasing shares of our common stock in this offering at the initial public offering price. However, because indications of interest are not binding agreements or commitments to purchase, the underwriters could determine to sell more, less or no shares to any of these existing stockholders and any of these existing stockholders could determine to purchase more, less or no shares in this offering. The foregoing discussion and tables do not reflect any potential purchases by these existing stockholders or their affiliated entities.

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SELECTED FINANCIAL DATA

        The selected statements of operations data for the years ended December 31, 2011 and 2012 and the balance sheet data at December 31, 2011 and 2012 have been derived from our audited financial statements included elsewhere in this prospectus. The selected statements of operations data for the nine months ended September 30, 2012 and 2013 and the balance sheet data as of September 30, 2013 have been derived from our unaudited financial statements included elsewhere in this prospectus. These unaudited financial statements have been prepared on a basis consistent with our audited financial statements and, in our opinion, contain all adjustments, consisting only of normal and recurring adjustments, necessary for a fair presentation of such financial data. Our historical results for any prior period are not necessarily indicative of results to be expected in any future period, and our interim period results are not necessarily indicative of results to be expected for a full year or any other interim period.

        The information set forth below should be read in conjunction with the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of this prospectus and with our financial statements and notes thereto included elsewhere in this prospectus. The selected financial data in this section are not intended to replace the financial statements and are qualified in their entirety by the financial statements and related notes included elsewhere in this prospectus.

 
  Year Ended
December 31,
  Nine Months Ended
September 30,
 
(in thousands, except per share data)
  2011   2012   2012   2013  

Statement of Operations Data:

                         

Grant revenue

  $ 1,820   $ 1,977   $ 1,441   $ 711  

Operating expenses:

                         

Research and development

    13,543     11,240     7,242     11,354  

General and administrative

    3,004     3,690     2,610     3,113  
                   

Total operating expenses

    16,547     14,930     9,852     14,467  
                   

Loss from operations

    (14,727 )   (12,953 )   (8,411 )   (13,756 )

Other income (expense):

                         

Change in fair value of warrant

    75     93     67     (166 )

Loss on debt extinguishment

                (200 )

Interest expense, net

    (33 )   (507 )   (361 )   (338 )
                   

Other income (expense)

    42     (414 )   (294 )   (704 )
                   

Net loss

  $ (14,685 ) $ (13,367 ) $ (8,705 ) $ (14,460 )
                   

Reconciliation of net loss to net loss attributable to common stockholders:

                         

Net loss

  $ (14,685 ) $ (13,367 ) $ (8,705 ) $ (14,460 )

Accretion of redeemable convertible preferred stock to redemption value

    (1,605 )   (1,781 )   (1,204 )   (1,200 )
                   

Net loss attributable to common stockholders

  $ (16,290 ) $ (15,148 ) $ (9,909 ) $ (15,660 )
                   

Net loss per share attributable to common stockholders—basic and diluted(1)

  $ (4.66 ) $ (4.31 ) $ (2.82 ) $ (4.44 )
                   

Weighted-average number of common shares used in net loss per share attributable to common stockholders—basic and diluted(1)

    3,495     3,513     3,514     3,525  
                   

Pro forma net loss per share attributable to common stockholders—basic and diluted(1)

        $ (0.17 )       $ (0.13 )
                       

Weighted-average number of common shares used in pro forma net loss per share attributable to common stockholders—basic and diluted(1)

          88,918           119,674  
                       

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  As of December 31,   As of September 30, 2013  
(in thousands)
  2011   2012   Actual   Pro Forma(2)   Pro Forma,
As Adjusted(3)(4)
 

Balance Sheet Data:

                               

Cash and cash equivalents

  $ 5,742   $ 11,516   $ 12,075   $ 12,075        

Working capital

    3,852     7,932     9,671     9,671        

Total assets

    6,940     13,531     14,626     14,626        

Preferred stock warrant liability

    339     246     600          

Preferred stock

    47,848     64,707     81,157          

Common stock and additional paid-in-capital

    4     4     4     81,761        

Total stockholders' (deficit) equity

    (43,562 )   (58,402 )   (73,613 )   8,144        

(1)
See Note 2 within the notes to our financial statements appearing elsewhere in this prospectus for a description of the method used to calculate basic and diluted net loss per common share and pro forma basic and diluted net loss per common share.

(2)
Pro forma to reflect the conversion of all outstanding shares of our preferred stock into shares of common stock, and the conversion of outstanding warrants to purchase our preferred stock into warrants to purchase our common stock, upon the closing of this offering.

(3)
Pro forma as adjusted to reflect the pro forma adjustments described in (2) above, and to further reflect (i) the filing and effectiveness of our amended and restated certificate of incorporation, which will occur immediately prior to the closing of this offering and (ii) the sale of shares of our common stock offered in this offering, assuming an initial public offering price of $            per share, the midpoint of the price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

(4)
A $1.00 increase (decrease) in the assumed initial public offering price of $            per share, the midpoint of the price range set forth on the cover of this prospectus, would increase (decrease) the pro forma as adjusted amount of each of cash and cash equivalents, working capital, total assets, common stock and additional paid-in-capital and total stockholders' (deficit) equity by approximately $             million, assuming that the number of shares offered by us, as set forth on the cover of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

         You should read the following discussion and analysis of our financial condition and results of operations together with the section entitled "Selected Financial Data" and our financial statements and related notes appearing in this prospectus. Some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the "Risk Factors" section of this prospectus, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

        We are a clinical stage biotechnology company that discovers and develops novel vaccines to address infectious diseases for which no vaccine or vaccines with limited effectiveness exist today. We use our proprietary discovery platform, ATLAS, to rapidly design vaccines that act through T cell (or cellular) immune responses, in contrast to approved vaccines, which are designed to act primarily through B cell (or antibody) immune responses. We believe that by harnessing T cells we can develop first-in-class vaccines to address infectious diseases where T cells are central to the control of the disease. In September 2013, we announced human proof-of-concept data for GEN-003, a therapeutic vaccine candidate that we are developing to treat herpes simplex virus-2, or HSV-2, infections. These data from our ongoing Phase 1/2a trial represent the first reported instance of a vaccine significantly reducing viral shedding, an indicator of disease activity in HSV-2. If GEN-003 successfully completes clinical development and is approved, we believe it would represent an important new treatment option for patients with HSV-2. We are also developing a second T cell vaccine candidate, GEN-004 for Streptococcus pneumoniae or pneumococcus, a leading cause of infectious disease mortality worldwide. We have initiated a Phase 1 trial for GEN-004, which we anticipate completing by mid-2014. This Phase 1 trial is designed to demonstrate the T cell response associated with natural protection against pneumococcus. If this trial is successful, we plan to conduct a Phase 2 clinical trial to seek to demonstrate that GEN-004 can reduce pneumococcus in humans by mid-2015.

        We commenced business operations in August 2006. To date, our operations have been limited to organizing and staffing our company, acquiring and developing our proprietary ATLAS technology, identifying potential product candidates and undertaking preclinical studies and clinical trials of our product candidates. All of our revenue to date has been grant revenue. We have not generated any product revenue and do not expect to do so for the foreseeable future. We have primarily financed our operations through the issuance of our equity securities, debt financings and amounts received through grants. At September 30, 2013, we had received an aggregate of $85.5 million in gross proceeds from the issuance of equity securities and gross proceeds from debt facilities and an aggregate of $6.7 million from grants. At September 30, 2013, our cash and cash equivalents were $12.1 million.

        Since inception, we have incurred significant operating losses. Our net losses were $14.7 million and $13.4 million for the years ended December 31, 2011 and 2012, respectively. At September 30, 2013, we had accumulated a deficit of $73.6 million. We expect to incur significant expenses and increasing operating losses for the foreseeable future. Our net losses may fluctuate significantly from quarter to quarter and year to year. We will need to generate significant revenue to achieve profitability, and we may never do so.

        We believe that the net proceeds from this offering, together with our existing cash and cash equivalents at September 30, 2013 and proceeds from our future available borrowings under our debt facility, will enable us to fund our operating expenses and capital expenditure requirements through at least the end of 2015, by which time we expect to have completed our ongoing Phase 1/2a clinical trial

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and the first of our planned Phase 2 clinical trials for GEN-003 for HSV-2 and our Phase 1 clinical trial and our planned Phase 2a clinical trial for GEN-004 for pneumococcus. However, costs related to clinical trials can be unpredictable and therefore there can be no guarantee that the net proceeds from this offering and from these other sources will be sufficient to fund these studies or our operations through this period. These funds will not be sufficient to enable us to conduct pivotal clinical trials for, seek marketing approval for or commercially launch GEN-003, GEN-004 or any other product candidate. Accordingly, to obtain marketing approval for and to commercialize these or any other product candidates, we will be required to obtain further funding through public or private equity offerings, debt financings, collaboration and licensing arrangements or other sources. Adequate additional financing may not be available to us on acceptable terms, or at all. Our failure to raise capital when needed would have a negative effect on our financial condition and our ability to pursue our business strategy.

Financial Overview

    Revenue

        Grant revenue consists of revenue earned to conduct vaccine development research. We have received grants from a private not-for-profit organization and federal agencies. These grants have related to the discovery and development of several of our product candidates, including product candidates for the prevention of pneumococcus, chlamydia, and malaria. Revenue under these grants is recognized as research services are performed. Funds received in advance of research services being performed are recorded as deferred revenue. We plan to continue to pursue grant funding, but there can be no assurance we will be successful in obtaining such grants in the future.

        We have no products approved for sale. We will not receive any revenue from any product candidates that we develop until we obtain regulatory approval and commercialize such products or until we potentially enter into agreements with third parties for the development and commercialization of product candidates. If our development efforts for any of our product candidates result in regulatory approval or we enter into collaboration agreements with third parties, we may generate revenue from product sales or from such third parties.

        We expect that our revenue will be less than our expenses for the foreseeable future and that we will experience increasing losses as we continue our development of, and seek regulatory approvals for, our product candidates and begin to commercialize any approved products. Our ability to generate revenue for each product candidate for which we receive regulatory approval will depend on numerous factors, including competition, commercial manufacturing capability and market acceptance of our products.

    Research and Development Expenses

        Research and development expenses consist primarily of costs incurred to advance our preclinical and clinical candidates, which include:

    personnel-related expenses, including salaries, benefits, stock-based compensation expense and travel;

    expenses incurred under agreements with contract research organizations, or CROs, contract manufacturing organizations, or CMOs, consultants and other vendors that conduct our clinical trials and preclinical activities;

    costs of acquiring, developing and manufacturing clinical trial materials and lab supplies; and

    facility costs, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance and other supplies.

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        We expense internal research and development costs to operations as incurred. We expense third party costs for research and development activities, such as conducting clinical trials, based on an evaluation of the progress to completion of specific tasks such as patient enrollment, clinical site activations or information, which is provided to us by our vendors.

        The following table identifies research and development expenses on a program-specific basis for our product candidates for the years ended December 31, 2011 and 2012, the nine months ended September 30, 2012 and 2013 and the period from August 16, 2006 (inception) to September 30, 2013 (in thousands):

 
  Year Ended
December 31,
  Nine Months Ended
September 30,
   
 
  Period from
August 16, 2006
(Inception) to
September 30, 2013
 
  2011   2012   2012   2013

HSV-2 (GEN-003)(1)

  $ 9,429   $ 5,605   $ 3,725   $ 4,809   $ 25,062

Pneumococcus (GEN-004)(1)

    2,049     4,247     2,718     5,026     11,737

Other research and development(2)

    2,065     1,388     799     1,519     18,982
                     

Total research and development

  $ 13,543   $ 11,240   $ 7,242   $ 11,354   $ 55,781
                     

(1)
Includes direct and indirect internal costs and external costs such as CMO and CRO costs.

(2)
Includes costs related to other product candidates and technology platform development costs related to ATLAS.

        At September 30, 2013, we had incurred an aggregate of $36.8 million in research and development expenses related to GEN-003 and GEN-004. We expect our research and development expenses will increase as we continue the manufacture of pre-clinical and clinical materials and manage the clinical trials of, and seek regulatory approval for, our product candidates. In the near term, we expect that our research and development expenses will increase as we conduct our ongoing phase 1/2a and planned Phase 2 clinical trials for GEN-003 and a Phase 1 and planned Phase 2a clinical trial for GEN-004. We expect that the total costs to produce material for and to conduct our two planned Phase 2 clinical trials for GEN-003 will be approximately $25.0 million. With respect to GEN-004, we have started a Phase 1 clinical trial in the fourth quarter of 2013 and plan to start a Phase 2a clinical trial in the third quarter of 2014. We expect the total costs for these two trials, including the cost to manufacture the vaccine for these trials, will be approximately $8.0 million. Due to the numerous risks and uncertainties associated with product development, we cannot determine with certainty the duration, costs and timing of these clinical trials, and, as a result, the actual costs to complete these planned clinical trials may exceed the expected costs.

    General and Administrative Expenses

        General and administrative expenses consist principally of salaries and related costs for personnel, including stock-based compensation and travel expenses, in executive and other administrative functions. Other general and administrative expenses include facility-related costs, communication expenses and professional fees associated with corporate and intellectual property legal expenses, consulting and accounting services.

        We anticipate that our general and administrative expenses will increase in the future to support the continued research and development of our product candidates and to operate as a public company. These increases will likely include increased costs for insurance, costs related to the hiring of additional personnel and payments to outside consultants, lawyers and accountants, among other expenses. Additionally, if and when we believe a regulatory approval of our first product candidate

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appears likely, we anticipate that we will increase our salary and personnel costs and other expenses as a result of our preparation for commercial operations.

    Interest Expense, Net

        Interest expense, net consists primarily of interest expense on our long-term debt facilities and non-cash interest related to the amortization of debt discount and issuance costs, partially offset by interest earned on our cash and cash equivalents.

    Other Income (Expense)

        Other income (expense) consists of fair value adjustments on warrants to purchase preferred stock and loss on debt extinguishment.

    Accretion of Preferred Stock

        Certain classes of our preferred stock are redeemable beginning in 2017 at the original issuance price plus any declared or accrued but unpaid dividends upon written election of the preferred stockholders in accordance with the terms of our articles of incorporation. Accretion of preferred stock reflects the accretion of issuance costs and, for Series B preferred stock, cumulative dividends based on their respective redemption values.

Critical Accounting Policies and Significant Judgments and Estimates

        Our management's discussion and analysis of our financial position and results of operations is based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP. The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, we evaluate estimates, which include, but are not limited to, estimates related to clinical trial accruals, stock-based compensation expense, warrants to purchase redeemable securities, and reported amounts of revenues and expenses during the reported period. We base our estimates on historical experience and other market-specific or other relevant assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from those estimates or assumptions.

        While our significant accounting policies are described in more detail in the notes to our financial statements appearing elsewhere in this prospectus, we believe the following accounting policies to be most critical to the judgments and estimates used in the preparation of our financial statements.

    Accrued Research and Development Expenses

        As part of the process of preparing our financial statements, we are required to estimate our accrued research and development expenses and other current liabilities. This process involves reviewing open contracts and purchase orders, communicating with our personnel to identify services that have been performed for us and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost. The majority of our service providers invoice us monthly in arrears for services performed or when contractual milestones are met. We make estimates of our accrued research and development expenses and other current liabilities as of each balance sheet date in our financial statements based on facts and circumstances known to us at that time. We periodically confirm the accuracy of our estimates with the service providers and make adjustments, if necessary. Examples of estimated accrued research and development expenses and other current liabilities include fees paid to CROs in connection with clinical trials, CMOs with respect to pre-clinical and clinical materials and intermediaries and vendors in connection with preclinical development activities.

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        We base our expenses related to clinical trials on our estimates of the services performed pursuant to contracts with clinical sites that conduct clinical trials on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. Payments under some of these contracts depend on factors such as the successful enrollment of subjects and the completion of required data submission. In accruing service fees, we estimate the time period over which services will be performed, enrollment of subjects, number of sites and services performed in each period. Additionally, we accrue 10% of the earned amounts at each clinical site, which is payable upon completion of the required data submission for the clinical trial. If our estimates of the status and timing of services performed differs from the actual status and timing of services performed we may report amounts that are too high or too low in any particular period. To date, there has been no material differences from our estimates to the amount actually incurred.

    Stock-Based Compensation

        Since our inception in August 2006, we have applied the fair value recognition provisions of Financial Accounting Standards Board Accounting Standards Codification, or ASC, Topic 718, Compensation — Stock Compensation , or ASC 718, to account for stock-based compensation for employees and ASC 718 and ASC 505, Equity , or ASC 505, for non-employees. We recognize compensation costs related to stock options granted to employees based on the estimated fair value of the awards on the date of grant. Stock compensation related to non-employee awards is re-measured at each reporting period until the awards are vested. Described below is the methodology we have utilized in measuring stock-based compensation expense.

        Determining the amount of stock-based compensation to be recorded requires us to develop estimates of the fair value of stock-based awards as of their measurement date. We recognize stock-based compensation expense over the requisite service period, which is the vesting period of the award. Calculating the fair value of stock-based awards requires that we make highly subjective assumptions. We use the Black-Scholes option pricing model to value our stock option awards. Use of this valuation methodology requires that we make assumptions as to the volatility of our common stock, the fair value of our common stock on the measurement date, the expected term of our stock options, the risk free interest rate for a period that approximates the expected term of our stock options and our expected dividend yield. Because we are a privately held company with a limited operating history, we utilize data from a representative group of publicly traded companies to estimate expected stock price volatility. We selected representative companies from the biopharmaceutical industry with characteristics similar to us. We use the simplified method as prescribed by the SEC Staff Accounting Bulletin No. 107, Share-Based Payment as we do not have sufficient historical stock option activity data to provide a reasonable basis upon which to estimate the expected term of stock options granted to employees. For non-employee grants, we use an expected term equal to the remaining contractual term of the award. We utilize a dividend yield of zero based on the fact that we have never paid cash dividends and have no current intention of paying cash dividends. The risk-free interest rate used for each grant is based on the U.S. Treasury yield curve in effect at the time of grant for instruments with a similar expected life.

        Under ASC 718, we are required to estimate the level of forfeitures expected to occur and record stock-based compensation expense only for those awards that we ultimately expect will vest. For all periods presented, our estimated annual forfeiture rate was 10.52%.

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        Stock-based compensation expense includes options granted to employees and non-employees and has been reported in our statements of operations and comprehensive loss as follows (in thousands):

 
  Year Ended
December 31,
  Nine Months Ended
September 30,
   
 
  Period from
August 16, 2006
(Inception) to
September 30, 2013
 
  2011   2012   2012   2013

Research and development

  $ 117   $ 102   $ 94   $ 210   $    646

General and administrative

    197     205     132     237     965
                     

Total

  $ 314   $ 307   $ 226   $ 447   $ 1,611
                     

        We estimated the fair value of stock options of each employee stock award at the grant date using assumptions regarding the fair value of the underlying common stock on each grant date and the following additional assumptions:

 
  Year Ended
December 31,
  Nine Months Ended
September 30,
 
 
  2011   2012   2012   2013  

Expected volatility

    108.8 %   99.2 %   99.2 %   132.7 %

Risk-free interest rate

    2.83 %   0.99 %   1.23 %   1.73 %

Expected term (in years)

    6.25     6.25     6.25     6.25  

Expected dividend yield

    0 %   0 %   0 %   0 %

        At September 30, 2013, we had approximately $1.1 million of total unrecognized compensation expense, net of related forfeiture estimates, which we expect to recognize over a weighted-average remaining vesting period of approximately three years. While our stock-based compensation expense for stock options has not been significant to date, we expect the effect to grow in future periods due to the potential increases in the value of our common stock and increased number of stock options granted due to anticipated increases in our overall headcount.

        The following table presents the grant dates of stock options that we granted from January 1, 2012 through October 31, 2013 along with the corresponding exercise price for each option grant and our current estimate of the fair value per share of our common stock on each grant date, which we utilize to calculate stock-based compensation expense:

Date of Grant
  Number of Shares
Underlying Options
Granted
  Exercise Price
per Share
  Current Estimate of
Common Stock Fair
Value per Share on
Grant Date
 
1/19/2012     24,000   $ 0.15   $ 0.15  
2/15/2012     40,000   $ 0.15   $ 0.15  
5/24/2012     30,000   $ 0.15   $ 0.15  
7/26/2012     554,613   $ 0.15   $ 0.15  
11/15/2012     4,500   $ 0.15   $ 0.11  
1/17/2013     28,500   $ 0.11   $ 0.11  
2/4/2013     370,000   $ 0.11   $ 0.11  
3/6/2013     145,000   $ 0.11   $ 0.11  
5/23/2013     4,000   $ 0.11   $ 0.29  
7/25/2013     5,234,579   $ 0.29   $ 0.29  
8/12/2013     427,726   $ 0.29   $ 0.29  
10/21/2013     439,903   $ 0.46   $ 0.46  

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        At September 30, 2013, options to purchase 18,726,854 shares of our common stock were outstanding. The aggregate intrinsic value of these options was $             million, assuming an initial public offering price of $            per share, the midpoint of the price range set forth on the cover page of this prospectus.

    Determination of the Fair Value of Common Stock on Grant Dates

        Our board of directors determined the fair value of our common stock considering, in part, the work of an independent third-party valuation specialist. The board determined the estimated per share fair value of our common stock at various dates considering valuations performed in accordance with the guidance outlined in the American Institute of Certified Public Accountants Practice Aid, Valuation of Privately-Held Company Equity Securities Issued as Compensation , also known as the Practice Aid. Following the consummation of this offering, the fair value of our common stock will be determined based on the quoted market price of our common stock. We engaged an independent third-party valuation specialist to perform contemporaneous valuations as of December 31, 2011, December 31, 2012, July 25, 2013, August 12, 2013 and October 21, 2013 and a retrospective valuation as of March 6, 2013. In conducting the valuations, the independent third-party valuation specialist considered all objective and subjective factors that it believed to be relevant for each valuation conducted in accordance with the Practice Aid, including our best estimate of our business condition, prospects and operating performance at each valuation date. Other significant factors included:

    the prices of our preferred stock sold to outside investors in arm's length transactions, and the rights, preferences and privileges of our preferred stock as compared to those of our common stock, including the liquidation preferences of our preferred stock;

    our results of operations, financial position and the status of research and development efforts;

    the composition of, and changes to, our management team and board of directors;

    the lack of liquidity of our common stock;

    our stage of development and business strategy and the material risks related to our business and industry;

    the valuation of publicly traded companies in the life sciences and biotechnology sectors, as well as recently completed mergers and acquisitions of guideline companies;

    any external market conditions affecting the life sciences and biotechnology industry sectors;

    the likelihood of achieving a liquidity event for the holders of our common stock and stock options, such as an initial public offering, or IPO, or a sale of our company, given prevailing market conditions; and

    the state of the IPO market for similarly situated privately held biotechnology companies.

        The dates of our contemporaneous valuations have not always coincided with the dates of our stock option grants. In determining the exercise prices of the stock options set forth in the table above, our board of directors considered, among other things, the most recent contemporaneous valuation of our common stock and their assessment of additional objective and subjective factors that were relevant as of the grant dates. The additional factors considered when determining whether any changes in the fair value of our common stock had occurred between the most recent contemporaneous valuation and the grant dates included our stage of research and preclinical development, our operating and financial performance and current business conditions.

        There are significant judgments and estimates inherent in the determination of the fair value of our common stock. These judgments and estimates include assumptions regarding our future operating performance, the time to completing an IPO or other liquidity event, the related valuations associated with such events, and the determinations of the appropriate valuation methods at each valuation date.

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If we had made different assumptions, our stock-based compensation expense, net loss and net loss per share applicable to common stockholders could have been materially different.

        In July 2013, based on the progress of our clinical pipeline, overall capital market conditions, and the improving market for biopharmaceutical IPOs, our board of directors determined and directed management to begin preparation and submission of a confidential draft registration statement for an IPO. As a result of the updated information regarding potential future liquidity events, we performed a retrospective valuation as of March 6, 2013 because this grant date was more than two months from the most current contemporaneous valuation at December 31, 2012. From December 31, 2012 to March 6, 2013, we did not receive any significant scientific data or results or experience any other material events that would affect the fair value of our common stock.

    Common Stock Valuation Methodologies

        The valuations we obtained were prepared in accordance with the guidelines in the Practice Aid, which prescribes several valuation approaches for setting the value of an enterprise, such as the cost, market and income approaches, and various methodologies for allocating the value of an enterprise to its common stock. We generally used the market approach, in particular the guideline company and precedent transaction methodologies, based on inputs from comparable public companies' equity valuations and comparable acquisition transactions, to estimate the enterprise value of our company.

    Methods Used to Allocate Our Enterprise Value to Classes of Securities

        In accordance with the Practice Aid, we considered the various methods for allocating the enterprise value across our classes and series of capital stock to determine the fair value of our common stock at each valuation date. The methods considered consisted of the following:

    Probability-Weighted Expected Return Method, or PWERM.   The PWERM is a scenario-based analysis that estimates the value per share based on the probability-weighted present value of expected future investment returns, considering each of the possible outcomes available to us, as well as the economic and control rights of each share class.

    Option Pricing Method, or OPM.   Under the option pricing method, shares are valued by creating a series of call options with exercise prices based on the liquidation preferences and conversion terms of each equity class. The values of the preferred and common stock are inferred by analyzing these options.

    Hybrid Method.   The hybrid method employs the concepts of the PWERM and OPM merged into a single framework. The PWERM estimates the future equity value under a range of IPO exits and allocates the same in each scenario according to the subject company's capital structure, probability-weighting each exit and discounting the value to a present value equivalent using a risk-adjusted discount rate. The OPM consists of the scenario where we remain private, and is modeled over a weighted average term to exit using a financing round or external comparable benchmarks as the basis for fair market value determination.

        The foregoing valuation methodologies are not the only methodologies available and they will not be used to value our common stock once this offering is complete. We cannot make assurances as to any particular valuation for our common stock. Accordingly, investors are cautioned not to place undue reliance on the foregoing valuation methodologies as an indicator of future stock prices.

    Valuation of Common Stock at December 31, 2011

        We engaged a third-party valuation specialist to conduct a contemporaneous valuation of our common stock at December 31, 2011. At December 31, 2011, the most current round of equity financing was over a year earlier and therefore we did not place as much bearing on the most recent round of financing when determining the fair value of our common stock. As a result, we used the

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PWERM to estimate our enterprise value and to allocate this value to the various outstanding equity instruments. Under this method, the value of our common stock was based on the probability-weighted present value of expected future investment returns considering each of these possible outcomes and the rights of each class and series of our equity.

        The fair value of our common stock was estimated using a probability-weighted expected return method that afforded value to common stockholders under several future stockholder exit or liquidity event scenarios, either through (1) an IPO; (2) an acquisition or sale of our company at a premium to the cumulative liquidation preference of the preferred stockholders; or (3) an acquisition or sale of our company at a value below the cumulative liquidation preference of the preferred stockholders.

        Each individual stockholder exit or liquidity scenario considered in the analysis depended on the specific facts and circumstances, internal and external, present as of each valuation date. The future projected enterprise value used to value our common stock in the IPO scenarios and the sale scenarios were estimated by application of the market approach based on certain key assumptions, including the following:

    valuations of companies prior to the receipt of proceeds from initial public offerings completed within three years of the valuation date;

    estimated third-party sale values based on recent transactions involving biotechnology or biopharmaceutical companies; and

    expected dates for a future IPO or sale of our company.

        There were seven total scenarios considered in this valuation. Four of the scenarios assumed a stockholder exit, either through an IPO, sale of our company or sale of the technology. The remaining three scenarios assumed a downside exit event where no value is attributed to the common shareholders. For the IPO and sale scenarios, the estimated values of our common stock were estimated using assumptions as to pre-money or sale valuations determined with respect to those scenarios as described above, and dates of those scenarios, and an appropriate risk-adjusted discount rate. Finally, we calculated the present value for our common stock based on our estimate of the relative likelihood of occurrence of each scenario. A 10% weighting was assigned to the IPO scenarios split evenly between the high and low case scenarios, 30% weighting to the sale scenarios split evenly between the high and low case scenarios, and 60% weighting to the remaining scenarios.

        Finally, the estimated fair value of our common stock was reduced by a discount for lack of marketability. A discount is appropriate because our common stock is unregistered, and the holder of a minority interest in the common stock may not influence the timing of a liquidity event for our company. Our estimate of the appropriate discount for lack of marketability took into consideration put option methodologies consistent with the Practice Aid. The discount rate selected also took into account empirical studies of restricted stock issued by publicly-traded companies.

        The following table summarizes the significant assumptions for each of the valuation scenarios used in the PWERM analysis to determine the fair value of our common stock as of December 31, 2011.

 
  IPO—High
Case
  IPO—Low
Case
  Sale—High
Case
  Sale—Low
Case
  Remaining
scenarios

Key Assumptions

                   

Probability weighting

  5%   5%   15%   15%   60%

Liquidity date

  6/30/2014   6/30/2015   6/30/2014   6/30/2015  

Weighted average cost of capital

  25%   25%   25%   25%   25%

Discount for lack of marketability

  40%   40%   40%   40%   40%

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        Based on these factors, we determined that our common stock had a fair value of $0.15 per share at December 31, 2011.

    Stock Options Granted from January 2012 to November 2012

        Our board of directors granted stock options to purchase 24,000, 40,000, 30,000, 554,613, and 4,500 shares of our common stock on January 19, 2012, February 15, 2012, May 24, 2012, July 26, 2012, and November 15, 2012, respectively, and determined the fair value of our common stock on each date of grant to be $0.15 per share.

        In addition to the factors described above, our board of directors also considered the third-party valuation as of December 31, 2011 in estimating the fair value of our common stock. From December 31, 2011 through July 26, 2012, we did not receive any significant scientific data or results, or experience any other material events that would affect the fair value of our common stock. In addition, there were no significant changes in the overall capital markets that affected the assumptions used to estimate the fair value of our common stock. Given the uncertainty around a future liquidity event and the early stages of our clinical trial for GEN-003, our board of directors considered that no significant event or other circumstances had occurred between December 31, 2011 and July 26, 2012 and determined that there was no change in the fair value of our common stock during that period.

        Subsequent to the issuance of the November 15, 2012 award, we received a valuation dated December 31, 2012, as discussed below. Since this valuation was based primarily on the issuance of Series C preferred stock in October 2012 and the related dilutive effect on the common stock, the fair value of the common stock determined in the December 31, 2012 valuation was applied retrospectively to the grant on November 15, 2012 and the fair value of our common stock was reduced from $0.15 per share to $0.11 per share for accounting purposes, which had an immaterial effect on our financial results. From November 15, 2012 through December 31, 2012, we did not receive any significant scientific data or results, or experience any other material events that would affect the fair value of our common stock. In addition, there were no significant changes in the overall capital markets that affected the fair value of our common stock.

    Valuation of Common Stock at December 31, 2012

        We engaged a third-party valuation specialist to conduct a contemporaneous valuation of our common stock at December 31, 2012. In conducting this valuation, we used the OPM. We elected to switch to the OPM from the PWERM used for the December 31, 2011 valuation as the recent closing of the Series C preferred stock financing in September 2012 was considered a better indicator of value than using estimates of potential future liquidity events. Our equity value was estimated to be $71.6 million based on the recent Series C preferred stock transaction, a methodology referred to as a backsolve method according to the Practice Aid. The equity value was allocated among the outstanding shares of our preferred and common stock also using the OPM.

        The time to liquidity was estimated as two years based on then-current plans and estimates of our board of directors and management regarding a liquidity event. The risk free rate was estimated using the two year yield on government bonds. The annual volatility was estimated to be 64% which was based on the observed historical volatility of publicly-traded shares issued by companies which are comparable to ours.

        A discount for lack of marketability was applied to the value indicated for our common stock. The estimate of the appropriate discount for lack of marketability took into consideration put option methodologies consistent with the Practice Aid. The estimated discount for lack of marketability of 30% was applied to the value indicated for our common stock.

        Based on these factors, we determined that our common stock had a fair value of $0.11 per share as of December 31, 2012.

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    Stock Options Granted from January 2013 to February 2013

        Our board of directors granted options to purchase 28,500 and 370,000 shares of our common stock on January 17, 2013 and February 4, 2013, respectively, and determined the fair value of our common stock on each date of grant to be $0.11 per share. In addition to the factors described above, our board of directors also considered the valuations as of December 31, 2012 and, as discussed below, as of March 6, 2013, which concluded that the fair value of our common stock had not changed through that date, in estimating the fair value of our common stock. From January 1, 2013 through February 4, 2013, we did not obtain any significant scientific data or results, have any material corporate events such as financing events or enter into any other significant arrangements, or any other entity specific events that would affect the assumptions used to estimate the fair value of our common stock. In addition, there were no significant changes in the overall capital markets that would have affected the fair value of our common stock. As a results, the board of directors determined that the fair value of our common stock remained at $0.11 per share between January 1, 2013 and February 4, 2013.

    Valuation of Common Stock at March 6, 2013

        We engaged a third-party valuation specialist to conduct a retrospective independent valuation of our common stock as of March 6, 2013. In conducting this valuation, we used the OPM. Our equity value was estimated to be $77.0 million based on the recent transaction involving our Series C preferred stock, a methodology referred to as a backsolve method according to the Practice Aid, and considered the market movement in relevant market indices between the December 31, 2012 valuation date and the March 6, 2013 valuation date. The time to liquidity was estimated to be 1.8 years based on then-current plans and estimates of our board of directors and management regarding a liquidity event. The risk free rate was estimated using the 1.8 year yield on government bonds. The annual volatility was estimated to be 61% based on the observed historical volatility of publicly-traded shares issued by companies which are comparable to ours.

        A discount for lack of marketability was applied to the value indicated for our common stock. The estimate of the appropriate discount for lack of marketability took into consideration put option methodologies consistent with the Practice Aid. The estimated discount for lack of marketability of 30% was applied to the value indicated for our common stock.

        Based on these factors, we determined that our common stock had a fair value of $0.11 per share at March 6, 2013.

    Stock Options Granted from March 2013 to May 2013

        Our board of directors granted options to purchase 145,000 and 4,000 shares of our common stock on March 6, 2013 and May 23, 2013, respectively, and determined the fair value of our common stock on each date of grant to be $0.11 per share. Our board of directors considered the most recent independent third-party valuation at December 31, 2012.

        The fair value of our common stock at March 6, 2013 was subsequently supported by the independent third-party valuation which was dated concurrently with this grant. Subsequent to the issuance of the May 23, 2013 award, we received a valuation dated July 25, 2013, as discussed below. Since this valuation was based primarily on the changes in the capital markets and preliminary data that was received around the May 23, 2013 grant date, the fair value of the common stock determined in the July 25, 2013 valuation was applied retrospectively to the grant on May 23, 2013, and the fair value of our common stock was increased from $0.11 per share to $0.29 per share for accounting purposes, which had an immaterial effect on our financial results.

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    Valuation of Common Stock at July 25, 2013

        We engaged a third-party valuation specialist to conduct a contemporaneous valuation of our common stock as of July 25, 2013. Late in the second quarter of 2013, management and our board of directors believed that a future IPO could be possible based on our preliminary GEN-003 clinical results obtained in June 2013 and the more favorable IPO market conditions in the life sciences industry than in previous periods. To estimate our enterprise value, the hybrid method was used. The hybrid method is a PWERM where the equity value in one of the scenarios is calculated using an OPM. The hybrid method considered one IPO scenario and one OPM scenario. The method to value our common stock was switched to the hybrid method from the OPM, which was used for valuing our common stock at March 6, 2013, as there was increased probability of a liquidity event through an IPO, which should be weighted in the determination of the fair value of our common stock.

        For the July 25, 2013 valuation, the estimated fair value of our common stock was determined by assigning a 75% weighting to the estimated fair value using the OPM backsolve method and a 25% weighting to the estimated fair value under the IPO scenario. The 75% weighting on the OPM backsolve method was appropriate due to the proximity of the issuance of our Series C preferred stock in September 2012 to the valuation date. The weighting for the IPO scenario was deemed appropriate because at the time of the valuation, while an IPO scenario had become more probable, there was still significant risk of completing an IPO and no decision by the board of directors to pursue a transaction had been made.

        For the OPM scenario, our estimated equity value was based on the recent transaction involving our Series C preferred stock, adjusted for the market movement observed in relevant market indices between the December 31, 2012 valuation date and the July 25, 2013 valuation date. The time to a liquidity event was estimated to be 1.4 years and an annual volatility rate of 61% was assumed based on historical trading for the guideline public companies considered.

        These methodologies were utilized to arrive at a fair value of our common stock on a marketable basis. A discount for lack of marketability was applied to the value indicated for our common stock. The estimate of the appropriate discount for lack of marketability took into consideration put option methodologies consistent with the Practice Aid. The estimated discount for lack of marketability of 20% was applied to the value indicated for our common stock.

        Based on these factors, we determined that our common stock had a fair value of $0.29 per share at July 25, 2013.

    Stock Options Granted in July 2013

        Our board of directors granted options to purchase 5,234,579 shares of our common stock on July 25, 2013 and determined the fair value of our common stock on the date of grant to be $0.29 per share. Our board of directors considered the independent third-party valuation which was dated concurrently with the July 25, 2013 grant.

    Valuation of Common Stock at August 12, 2013

        We engaged a third-party valuation specialist to conduct a contemporaneous valuation of our common stock as of August 12, 2013. To estimate our enterprise value, we used the hybrid method which is consistent with the previous valuation at July 25, 2013. The hybrid method is a PWERM where the equity value in one of the scenarios is calculated using an OPM. The hybrid method considered one IPO scenario and one OPM scenario.

        For the August 12, 2013 valuation, the estimated fair value of our common stock was determined by assigning a 75% weighting to the estimated fair value using the OPM backsolve method and a 25% weighting to the estimated fair value under the IPO scenario. These weightings remained unchanged

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from the July 25, 2013 valuation since there had been no significant changes in the Company's plans between these two dates. Specifically, there was still significant risk of completing an IPO and no decision by the board of directors to pursue a transaction had been made.

        For the OPM scenario, our estimated equity value of the Company was based on the recent transaction involving our Series C preferred stock, adjusted for the market movement observed in relevant market indices between the December 31, 2012 valuation date and the August 12, 2013 valuation date. The time to a liquidity event was estimated to be 1.4 years and an annual volatility rate of 68% was assumed based on historical trading for the guideline public companies considered.

        We used these methodologies to arrive at a fair value of our common stock on a marketable basis. A discount for lack of marketability was applied to the value indicated for our common stock. The estimate of the appropriate discount for lack of marketability took into consideration put option methodologies consistent with the Practice Aid. The estimated discount for lack of marketability of 20% was applied to the value indicated for our common stock.

        Based on these factors, we determined that our common stock had a fair value of $0.29 per share at August 12, 2013.

    Stock Options Granted in August 2013

        Our board of directors granted options to purchase 427,726 shares of our common stock on August 12, 2013 and determined the fair value of our common stock on the date of grant to be $0.29 per share. Our board of directors considered the independent third-party valuation which was dated concurrently with the August 12, 2013 grant.

    Valuation of Common Stock at October 21, 2013

        We engaged a third-party valuation specialist to conduct a contemporaneous valuation of our common stock as of October 21, 2013. To estimate our enterprise value, we used the hybrid method which is consistent with the previous valuations at July 25, 2013 and August 13, 2013. The hybrid method is a PWERM where the equity value in one of the scenarios is calculated using an OPM. The hybrid method considered one IPO scenario and one OPM scenario.

        For the October 21, 2013 valuation, the estimated fair value of our common stock was determined by assigning a 45% weighting to the estimated fair value using the OPM backsolve method and a 55% weighting to the estimated fair value under the IPO scenario. We increased the weighting of the IPO scenario compared to the August 12, 2013 valuation as our board of directors approved the Company to pursue an IPO and we selected investment bankers and made significant progress to file a registration statement. In addition, we have continued to make scientific progress, including filing an IND for GEN-004, which has increased the probability of successfully completing an IPO.

        For the OPM scenario, our estimated equity value of the Company was based on the recent transaction involving our Series C preferred stock, adjusted for the market movement observed in relevant market indices between the December 31, 2012 valuation date and the October 21, 2013 valuation date. The time to a liquidity event was estimated to be 1.2 years and an annual volatility rate of 75% was assumed based on historical trading for the guideline public companies considered.

        We used these methodologies to arrive at a fair value of our common stock on a marketable basis. A discount for lack of marketability was applied to the value indicated for our common stock. The estimate of the appropriate discount for lack of marketability took into consideration put option methodologies consistent with the Practice Aid. The estimated discount for lack of marketability of 20% was applied to the value indicated for our common stock.

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        Based on these factors, we determined that our common stock had a fair value of $0.46 per share at October 21, 2013.

    Stock Options Granted in October 2013

        Our board of directors granted options to purchase 439,903 shares of our common stock on October 21, 2013 and determined the fair value of our common stock on the date of grant to be $0.46 per share. Our board of directors considered the independent third-party valuation which was dated concurrently with the October 21, 2013 grant.

Results of Operations

Comparison of the Years Ended December 31, 2011 and December 31, 2012

 
  Year Ended
December 31,
   
 
 
  Increase
(Decrease)
 
(in thousands)
  2011   2012  

Grant revenue

  $ 1,820   $ 1,977   $ 157  

Operating expenses:

                   

Research and development

    13,543     11,240     (2,303 )

General and adminstrative

    3,004     3,690     686  
               

Total operating expenses

    16,547     14,930     (1,617 )
               

Loss from operations

    (14,727 )   (12,953 )   1,774  

Other income (expense):

                   

Other income

    75     93     18  

Interest expense, net

    (33 )   (507 )   (474 )
               

Other income (expense)

    42     (414 )   (456 )
               

Net loss

  $ (14,685 ) $ (13,367 ) $ 1,318  
               

    Grant Revenue

        Grant revenue increased by $0.2 million from the year ended December 31, 2011 to the year ended December 31, 2012. This increase was due to the additional revenue in 2012 of $0.4 million related to a grant to fund research for our pneumococcus program and additional grant revenue of $0.1 million under our chlamydia grant offset by decreased revenue related to our government grant of $0.3 million due to lower costs incurred in our malaria program.

    Research and Development Expenses

        Research and development expenses decreased by $2.3 million from the year ended December 31, 2011 to the year ended December 31, 2012. This decrease was primarily due to higher costs in 2011 of $3.3 million attributable to material costs incurred in preparation for the commencement of our toxicology and Phase 1 clinical trial for GEN-003 which did not recur in 2012 and decreased purchases of lab supplies in 2012 of approximately $0.9 million. These decreases were partially offset by an increase in 2012 of $2.0 million attributable to the cost of our clinical trial for GEN-003 which began in the third quarter of 2012.

    General and Administrative Expenses

        General and administrative expenses increased by $0.7 million from the year ended December 31, 2011 to the year ended December 31, 2012. This increase was primarily due to additional overhead and personnel costs in 2012 of $0.2 million to support our on-going business development activities, $0.1 million in increased facility costs and $0.2 million related to higher legal patent expenses.

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    Other Income

        Other income consisted of the fair value adjustment of our warrants to purchase preferred stock. The increase in other income from the year ended December 31, 2011 to the year ended December 31, 2012 of $18 thousand was due primarily to a decrease in the fair value of the underlying preferred stock.

    Interest Expense, Net

        Interest expense, net increased $0.5 million from the year ended December 31, 2011 to the year ended December 31, 2012. The increase in net interest expense was primarily attributable to an increase amounts borrowed under our loan facility that we entered into in October 2011, resulting in additional borrowings of $5.0 million in March 2012.

Comparison of the Nine Months Ended September 30, 2012 and September 30, 2013

 
  Nine Months Ended
September 30,
   
 
 
  Increase
(Decrease)
 
(in thousands)
  2012   2013  

Grant revenue

  $ 1,441   $ 711   $ (730 )

Operating expenses:

                   

Research and development

    7,242     11,354     4,112  

General and adminstrative

    2,610     3,113     503  
               

Total operating expenses

    9,852     14,467     4,615  
               

Loss from operations

    (8,411 )   (13,756 )   (5,345 )

Other income (expense):

                   

Other income (expense)

    67     (366 )   (433 )

Interest expense, net

    (361 )   (338 )   23  
               

Other expense

    (294 )   (704 )   (410 )
               

Net loss

  $ (8,705 ) $ (14,460 ) $ (5,755 )
               

    Grant Revenue

        Grant revenue decreased by $0.7 million from the nine months ended September 30, 2012 to the nine months ended September 30, 2013. This decrease was primarily due to the completion of the grant to fund research for our pneumococcus program during 2012.

    Research and Development Expenses

        Research and development expenses increased by $4.1 million from the nine months ended September 30, 2012 to the nine months ended September 30, 2013. This increase was due primarily to higher costs of $2.1 million in 2013 attributable to external manufacturing costs for preclinical and clinical supply of GEN-004 in preparation for the commencement of our toxicology and clinical trials for GEN-004, an increase of $1.1 million in 2013 attributable to the cost of our clinical trial for GEN-003 which began in the third quarter of 2012 and an increase of $0.5 million due to higher salary and salary related costs to support additional research and manufacturing efforts.

    General and Administrative Expenses

        General and administrative expenses increased $0.5 million from the nine months ended September 30, 2012 to the nine months ended September 30, 2013. This increase in 2013 was due primarily to higher legal, professional and audit fees of $0.3 million and employee related costs of $0.1 million.

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    Other Income (Expense)

        Other income (expense) consisted of the fair value adjustment of our warrants to purchase preferred stock and loss on debt extinguishment. The decrease in other income (expense) from the nine months ended September 30, 2012 to the nine month ended September 30, 2013 of $0.4 million was due primarily to a $0.2 million increase in fair value of our warrants to purchase preferred stock as a result of an increase in the fair value of the underlying preferred stock and $0.2 million loss on debt extinguishment recorded during the nine months ended September 30, 2013 with no comparable activity in the prior year.

    Interest Expense, Net

        Interest expense, net decreased $23 thousand from the nine months ended September 30, 2012 to the nine months ended September 30, 2013. The decrease was primarily attributable to lower average principal balances outstanding during the nine months ended September 30, 2013 compared to the nine months ended September 30, 2012.

Liquidity and Capital Resources

    Overview

        Since our inception and through September 30, 2013, we have received an aggregate of $85.5 million in gross proceeds from the issuance of equity securities and gross proceeds from debt facilities and an aggregate of $6.7 million from grants. At September 30, 2013, our cash and cash equivalents were $12.1 million.

    Debt Financings

        In October 2011 we entered into a Loan and Security Agreement, or the Term Loan, which provided for up to $5.0 million in debt financing. The Term Loan provided for a draw-down period on the loan through March 1, 2012. In March 2012, we drew down the full $5.0 million available through the facility.

        From March 1, 2012 through May 1, 2012 we were obligated to make interest-only payments at the greater of (1) the lender's prime rate plus 5.0%, or (2) 8.0%. Thereafter, we were required to make 36 equal monthly payments of principal and accrued interest. During this 36-month period the Term Loan bore interest at the greater of (i) the lender's prime rate plus 4.75% or (ii) 8.0%. We were also obligated to pay 6.5% of the advance on the final repayment date, which was scheduled to be April 1, 2015. In connection with the Term Loan, we issued warrants to purchase 517,242 shares of Series B preferred stock at an exercise price of $0.58 per share. Upon execution of the Term Loan, the warrant to purchase 258,621 shares was immediately exercisable and the remaining warrant to purchase 258,621 shares became exercisable when we drew down the full amount of the loan on March 1, 2012. The $5.0 million term loan was collateralized by all of our corporate assets, excluding our intellectual property, and by a negative pledge on our intellectual property.

        On September 30, 2013, we entered into a new loan agreement, or the New Term Loan, which provided up to $10.0 million in debt financing. Upon the closing, we drew down $3.5 million and paid off the outstanding principal and interest on the Term Loan. Under the terms of the New Term Loan, we can draw additional advances up to the remaining $6.5 million through December 31, 2013. Each advance shall be repaid in 42 monthly installments. For the first nine months following each advance, we are obligated to make interest only payments. Thereafter, we are required to make 33 equal monthly payments of principal and interest. On the first business day of the 42 nd  month, we are also obligated to make a payment equal to 2.0% of the original principal amount of the advance. We may prepay the outstanding principal amount of the New Term Loan at any time. The New Term Loan was

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collateralized by a blanket lien on all our corporate assets, excluding our intellectual property, and by a negative pledge on our intellectual property. In connection with the New Term Loan, we issued a warrant to purchase 689,655 shares of Series C preferred stock at an exercise price of $0.58 per share. Upon execution of the New Term Loan, the warrant was immediately exercisable to purchase 689,655 shares.

    Operating Capital Requirements

        Our primary uses of capital are, and we expect will continue to be for the near future, compensation and related expenses, manufacturing costs for pre-clinical and clinical materials, third party clinical trial research and development services, laboratory and related supplies, clinical costs, legal and other regulatory expenses and general overhead costs.

        We believe that the net proceeds of this offering, together with our existing cash and cash equivalents and future amounts available under the New Term Loan, will be sufficient to fund our operations through the end of 2015. Based on our planned use of the net proceeds of this offering and our existing cash resources, we believe that our available funds following this offering will be sufficient to enable us to obtain clinical data from our ongoing Phase 1/2a clinical trial and planned GEN-003 Phase 2 clinical trials and our Phase 1 clinical trial and planned Phase 2a clinical trial for GEN-004. We expect that these funds will not be sufficient to enable us to seek marketing approval or commercialize any of our product candidates.

        We have based our projections of operating capital requirements on assumptions that may prove to be incorrect and we may use all of our available capital resources sooner than we expect. Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical products, we are unable to estimate the exact amount of our operating capital requirements. Our future funding requirements will depend on many factors, including, but not limited to:

    the timing and costs of our ongoing Phase 1/2a clinical trial and the first of our planned Phase 2 clinical trials for GEN-003 and our Phase 1 clinical trial and planned Phase 2a clinical trial for GEN-004;

    the progress, timing and costs of manufacturing GEN-003 and GEN-004 for current and planned clinical trials;

    the initiation, progress, timing, costs and results of preclinical studies and clinical trials for our other product candidates and potential product candidates;

    the outcome, timing and costs of seeking regulatory approvals;

    the costs of commercialization activities for GEN-003, GEN-004 and other product candidates if we receive marketing approval, including the costs and timing of establishing product sales, marketing, distribution and manufacturing capabilities;

    subject to receipt of marketing approval, revenue received from commercial sales of our product candidates;

    the terms and timing of any future collaborations, licensing, consulting or other arrangements that we may establish;

    the amount and timing of any payments we may be required to make, or that we may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights, including milestone and royalty payments and patent prosecution fees that we are obligated to pay pursuant to our license agreements;

    the costs of preparing, filing and prosecuting patent applications, maintaining and protecting our intellectual property rights and defending against intellectual property related claims; and

    the extent to which we in-license or acquire other products and technologies.

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        We expect that we will need to obtain substantial additional funding in order to commercialize GEN-003, GEN-004 and our other product candidates in order to receive regulatory approval. To the extent that we raise additional capital through the sale of common stock, convertible securities or other equity securities, the ownership interests of our existing stockholders may be materially diluted and the terms of these securities could include liquidation or other preferences that could adversely affect the rights of our existing stockholders. In addition, debt financing, if available, would result in increased fixed payment obligations and may involve agreements that include restrictive covenants that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, that could adversely affect our ability to conduct our business. If we are unable to raise capital when needed or on attractive terms, we could be forced to significantly delay, scale back or discontinue the development or commercialization of GEN-003, GEN-004 or our other product candidates, seek collaborators at an earlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available, and relinquish or license, potentially on unfavorable terms, our rights to GEN-003, GEN-004 or our other product candidates that we otherwise would seek to develop or commercialize ourselves.

    Cash Flows

        The following table summarizes our sources and uses of cash (in thousands):

 
  Year Ended
December 31,
  Nine Months Ended
September 30,
 
 
  2011   2012   2012   2013  

Net cash used in operating activities

  $ (13,488 ) $ (12,681 ) $ (9,363 ) $ (13,469 )

Net cash used in investing activities

    (318 )   (460 )   (59 )   (386 )

Net cash (used in) provided by financing activities

    (189 )   18,915     19,328     14,414  
                   

Net (decrease) increase in cash and cash equivalents

  $ (13,995 ) $ 5,774   $ 9,906   $ 559  
                   

    Operating Activities

        The decrease in net cash used in operations for the year ended December 31, 2012, as compared to the year ended December 31, 2011, was due primarily to a decrease in the net loss of approximately $1.3 million along with changes in our working capital accounts.

        Net cash used in operating activities was $13.5 million for the year ended December 31, 2011 and consisted primarily of a net loss of $14.7 million adjusted for non-cash items including depreciation expense of $0.3 million, stock-based compensation expense of $0.3 million, a decrease in the fair value of warrants of $0.1 million and a net increase in operating assets and liabilities of approximately $0.6 million.

        Net cash used in operating activities was $12.7 million for the year ended December 31, 2012 and consisted primarily of a net loss of $13.4 million adjusted for non-cash items including depreciation expense of $0.3 million, stock-based compensation expense of $0.3 million, a decrease in the fair value of warrants of $0.1 million, and a net increase in operating assets and liabilities of $0.1 million.

        The increase of $4.1 million in net cash used in operations for the nine months ended September 30, 2013 as compared to the nine months ended September 30, 2012 was due primarily to an increase in the net loss of approximately $5.8 million along with changes in our working capital accounts.

        Net cash used in operating activities was $9.4 million for the nine months ended September 30, 2012 and consisted primarily of a net loss of $8.7 million adjusted for non-cash items including depreciation expense of $0.2 million, stock-based compensation expense of $0.2 million, a decrease in

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the fair value of warrants of $0.1 million, and a net decrease in operating assets and liabilities of $1.1 million.

        Net cash used in operating activities was $13.5 million for the nine months ended September 30, 2013 and consisted primarily of net loss of $14.5 million adjusted for non-cash items including depreciation expense of $0.2 million, stock-based compensation expense of $0.4 million, an increase in the fair value of warrants of $0.2 million, and a net decrease in operating assets and liabilities of $0.1 million.

    Investing Activities

        During the years ended December 31, 2011 and December 31, 2012, our investing activities used net cash of $0.3 million and $0.5 million, respectively. The use of net cash in all periods primarily resulted from purchases of property and equipment to facilitate our increased research and development activities and headcount. The increase in net cash used in investing activities for the year ended December 31, 2011 as compared to the year ended December 31, 2012 was due primarily to an increase in laboratory equipment purchases in 2012.

        During the nine months ended September 30, 2012 and September 30, 2013, our investing activities used net cash of approximately $0.1 million and $0.4 million, respectively. The use of net cash in all periods primarily resulted from purchases of property and equipment to facilitate our increased research and development activities and headcount. The increase in net cash used in investing activities for the nine months ended September 30, 2012 as compared to the nine months ended September 30, 2013 was due primarily to an increase in laboratory equipment purchases in 2013.

    Financing Activities

        Net cash used in financing activities was $0.2 million for the year ended December 31, 2011 compared to net cash provided by financing activities of $18.9 million for the year ended December 31, 2012. Cash used in financing activities for the year ended December 31, 2011 consisted of $0.2 million in repayment of long-term debt related to an equipment loan for the acquisition of capital equipment. Net cash provided by financing activities for the year ended December 31, 2012 consisted primarily of $15.1 million in net proceeds from the issuance of Series C preferred stock and $5.0 million in borrowings under the Term Loan offset by repayments of long-term debt of $1.2 million.

        Net cash provided by financing activities was $19.3 million for the nine months ended September 30, 2012 compared to $14.4 million for the nine months ended September 30, 2013. Cash provided by financing activities for the nine months ended September 30, 2012 primarily related to $15.1 in net proceeds from the issuance of Series C preferred stock and $4.2 million in net debt proceeds. Cash provided for the nine months ended September 30, 2013 primarily related to $15.3 million in net proceeds from the issuance of Series C preferred stock and $0.8 million of net debt payments.

Off-Balance Sheet Arrangements

        We do not have any off-balance sheet arrangements.

Net Operating Loss Carryforwards

        At December 31, 2011 and December 31, 2012, we had United States federal net operating loss carryforwards of approximately $38.9 million and $51.7 million, respectively, which may be available to offset future income tax liabilities and expire at various dates through 2032. At December 31, 2011 and December 13, 2012, we also had United States state net operating loss carryforwards of approximately

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$36.4 million and $49.0 million, respectively, which may be available to offset future income tax liabilities and expire at various dates through 2017.

        At December 31, 2011 and December 31, 2012, we had federal research and development tax credit carryforwards of approximately $1.2 million available to reduce future tax liabilities which expire at various dates through 2032. At December 31, 2011 and December 31, 2012, we had state research and development tax credit carryforwards of approximately $0.6 million and $0.9 million, respectively, available to reduce future tax liabilities which expire at various dates through 2027. Net operating loss and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities and may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant stockholders over a three-year period in excess of 50%, as defined under Sections 382 and 383 of the United States Internal Revenue Code of 1986, as amended, as well as similar state provisions. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value of our company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. At December 31, 2012, we recorded a 100% valuation allowance against our net operating loss and research and development tax credit carryforwards, as we believe it is more likely than not that the tax benefits will not be fully realized. In the future, if we determine that a portion or all of the tax benefits associated with our tax carryforwards will be realized, net income would increase in the period of determination.

Contractual Obligations

        The following table summarizes our outstanding contractual obligations as of payment due date by period at December 31, 2012 (in thousands):

 
  Total   Less Than
1 Year
  1 - 3 Years   3 - 5 Years   More Than
5 Years
 

Long-term debt(1)

  $ 4,045   $ 1,675   $ 2,370   $   $  

Operating leases(2)

    3,578     630     2,948          

Manufacturing Agreement(3)

    2,000     2,000              
                       

  $ 9,623   $ 4,305   $ 5,318   $   $  
                       

(1)
As of December 31, 2012, we had a total of $4.0 million in long-term debt due consisting of amounts due under the Term Loan and an equipment term loan. On September 30, 2013, we entered into the New Term Loan agreement which provided up to $10.0 million in debt financing. Upon the closing, we drew $3.5 million and paid off the remaining principal balances of the existing debt facilities. Under the terms of the New Term Loan, we can draw the remaining $6.5 million available under the facility through December 31, 2013. The New Term Loan is not reflected in the table above.

(2)
In July 2012, we leased office and laboratory space at 100 Acorn Park Drive, Cambridge, MA that expires in February 2017.

(3)
Consists of payments of approximately $2.0 million related to a supply agreement to a contract manufacturer for the production of clinical materials.

        We also have obligations to make future payments to third party licensors that become due and payable on the achievement of certain development, regulatory and commercial milestones. We have not included these commitments on our balance sheet or in the table above because the achievement

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and timing of these milestones is not fixed or determinable. These additional contractual commitments include the following:

        License Agreement with The Regents of the University of California.     Under our license agreement with The Regents of the University of California, or UC, in respect of UC patent rights covering aspects of our ATLAS discovery platform, we agreed to pay UC low single digit royalties on net sales by us of vaccine products comprising antigens identified through use of the ATLAS discovery platform covered by licensed UC patent rights. If we sublicense UC patent rights, we will owe UC a percentage of sublicensing revenue, including any royalty paid to us on net sales by sublicensees.

        License Agreement with Harvard.     Under our license agreement with President and Fellows of Harvard College, or Harvard, in respect of Harvard patent rights covering certain chlamydia antigens, we agreed to pay Harvard royalties in the high single-digits on worldwide net sales by us or our sublicensees of vaccine products comprising such chlamydia antigens. In addition, we are required to pay Harvard specified milestone payments for development of the first such chlamydia vaccine. Under the same license agreement, in respect of patent rights covering aspects of our antigen discovery platform, we agreed to pay Harvard royalties in the low single-digits on worldwide net sales by us or our sublicensees, for a period of 10 years from first commercial sale, of vaccine products comprising antigens (other than chlamydia antigens above) identified through use of the antigen discovery platform covered by licensed Harvard patent rights. In addition, we are required to pay Harvard specified milestone payments for development of such vaccines. We estimate that it is reasonably likely that we will make milestone payments in the low six figures through 2015 under this agreement. If we sublicense Harvard patent rights, we will owe Harvard a percentage of sublicensing revenue, excluding payments we receive based on the level of sales or profits.

        License Ageement with Novavax.     Under our license agreement with Isconova AB, now Novavax, Inc., in respect of Novavax patent rights and trademarks covering adjuvant Matrix-M, we agreed to pay Novavax tranched royalties in the low single-digits on worldwide net sales by us or our sublicensees of vaccine products comprising our antigens and Matrix-M. In addition, we are required to pay Novavax specified milestone payments for development and commercialization of the first vaccine in each unique disease field. We estimate that it is reasonably likely that we will make milestone payments in the low six figures through 2015 under this agreement. If we sublicense Novavax patent rights, we will owe Novavax a percentage of the initial signing or upfront sublicensing fees we receive.

        License Agreement with Children's Medical Center Corporation.     Under our license agreement with Children's Medical Center Corporation, or Childrens, in respect of Childrens rights in jointly-owned patent rights covering certain Streptococcus antigens, we agreed to pay Childrens low single digit royalties on worldwide net sales by us or our sublicensees of vaccine products comprising such Streptococcus antigens. In addition, we are required to pay Childrens specified milestone payments for development and commercialization of such vaccines. We estimate that it is reasonably likely that we will pay milestone payments in the low six figures through 2015. If we sublicense the jointly-owned patent rights, we will owe Childrens a percentage of sublicensing revenue, excluding payments we receive based on the level of sales or profits.

        We also enter into contracts in the normal course of business with CROs for clinical trials and clinical supply manufacturing and with vendors for preclinical safety and research studies, research supplies and other services and products for operating purposes. These contracts generally provide for termination on notice and do not include any minimum purchase commitments, and therefore are cancelable contracts and not included in the table above.

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Qualitative and Quantitative Disclosures About Market Risk

        Our cash equivalents consisted of money market funds at September 30, 2013. The investments in these financial instruments are made in accordance with an investment policy approved by our board of directors which specifies the categories, allocations and ratings of securities we may consider for investment. The primary objective of our investment activities is to preserve principal while at the same time maximizing the income we receive without significantly increasing risk. Some of the financial instruments in which we invest could be subject to market risk. This means that a change in prevailing interest rates may cause the value of the instruments to fluctuate. For example, if we purchase a security that was issued with a fixed interest rate and the prevailing interest rate later rises, the value of that security will probably decline. To minimize this risk, we intend to maintain a portfolio which may include cash, cash equivalents and investment securities available-for-sale in a variety of securities which may include money market funds, government and non-government debt securities and commercial paper, all with various maturity dates. Based on our current investment portfolio, we do not believe that our results of operations or our financial position would be materially affected by an immediate change of 10% in interest rates.

        We do not hold or issue derivatives, derivative commodity instruments or other financial instruments for speculative trading purposes. Further, we do not believe our cash equivalents and investment securities have significant risk of default or illiquidity. We made this determination based on discussions with our investment advisors and a review of our holdings. While we believe our cash equivalents and investment securities do not contain excessive risk, we cannot provide absolute assurance that in the future our investments will not be subject to adverse changes in market value. All of our investments are recorded at fair value.

JOBS Act

        In April 2012, the JOBS Act was enacted in the United States. Section 107 of the JOBS Act provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth public companies.

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BUSINESS

Overview

        We are a clinical stage biotechnology company that discovers and develops novel vaccines to address infectious diseases for which no vaccine or vaccines with limited effectiveness exist today. We use our proprietary discovery platform, ATLAS, to rapidly design vaccines that act through T cell (or cellular) immune responses, in contrast to approved vaccines, which are designed to act primarily through B cell (or antibody) immune responses. We believe that by harnessing T cells we can develop first-in-class vaccines to address infectious diseases where T cells are central to the control of the disease. In September 2013, we announced human proof-of-concept data for GEN-003, an immunotherapy, or therapeutic vaccine, candidate that we are developing to treat herpes simplex virus-2, or HSV-2, infections. These data from our ongoing Phase 1/2a trial represent the first reported instance of a vaccine significantly reducing viral shedding, an indicator of disease activity in HSV-2. If GEN-003 successfully completes clinical development and is approved, we believe it would represent a first-in-class vaccine for patients with HSV-2. We are also developing a second T cell vaccine, GEN-004 to protect against Streptococcus pneumoniae , or pneumococcus, a leading cause of infectious disease mortality worldwide. We have initiated a Phase 1 trial for GEN-004, which we anticipate completing by mid-2014. This Phase 1 trial is designated to demonstrate that T cell response associated with natural protection against pneumococcus. If this trial is successful, we plan to conduct a Phase 2 clinical trial to seek to demonstrate that GEN-004 can reduce pneumococcus in humans by mid-2015.

        Vaccines represent a major healthcare success story, having eradicated or significantly reduced the global prevalence of many infectious diseases. To date, all approved vaccines have been developed primarily to elicit B cell responses. However, there remain many infections for which no effective vaccines or only partially effective vaccines exist. A major reason is that the organisms that cause these infections largely evade the antibody immune response generated by B cells, which can generally only address pathogens in the bloodstream. Such organisms may reside in host cells or mucosal surfaces of the nose and throat. To address these pathogens, vaccines targeting responses from the T cell arm of the immune system may present the solution.

        We believe T cell vaccine discovery has been particularly challenging for two reasons. First, the diversity of human T cell responses contrasts with the generally uniform B cell responses in humans. Second, the number of candidate targets for T cell responses can be exponentially greater than for B cell responses. These complexities represent fundamental barriers that traditional vaccine discovery tools, which rely largely on empirically selecting the potential targets from the proteins of a pathogen and iteratively testing them in animal models, have not been able to address.

        We have designed the ATLAS platform to overcome these T cell vaccine discovery challenges. We believe ATLAS represents the most comprehensive high throughput system for T cell vaccine discovery in the biopharmaceutical industry. ATLAS is designed to mimic one important part of the human immune system in a laboratory setting. Using ATLAS, we are able to measure T cell responses to the entire set of protein targets for a specific pathogen in blood samples from large, genetically diverse populations, allowing us to identify vaccine targets associated with protective T cell responses to disease. By comparing antigens identified in individuals who naturally control their infection with those who do not, we can select the antigens that may have the best likelihood of inducing protective T cell immune responses.

        We have generated human proof-of-concept data for our lead product candidate, GEN-003, which we designed using ATLAS. GEN-003 is a therapeutic vaccine, or immunotherapy, candidate we are developing to treat people with HSV-2 infections. In data from our ongoing Phase 1/2a trial, we have shown that GEN-003 significantly reduces HSV-2 viral shedding in patients with moderate-to-severe infections. Shedding is an important marker of the disease, indicating that the virus has been released to skin cells, leading to symptomatic outbreaks and to transmission through sexual contact. We believe

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this represents the first time a vaccine has been shown to reduce HSV-2 viral shedding in humans. We also believe it represents the first time anti-viral efficacy has been observed for a vaccine designed primarily to elicit T cell responses to address an infectious pathogen for which T cell immunity is considered central to the control of the disease. Our ongoing clinical trial of GEN-003 is fully enrolled, and we expect to complete this trial and initiate a Phase 2 trial in mid-2014 to confirm these results and optimize a vaccine dose.

        Our second program derived from ATLAS is GEN-004, a universal pneumococcal T cell vaccine that we are developing to protect against all strains of pneumococcus, the most common cause of bacterial pneumonia in the world. We have initiated a Phase 1 clinical trial of GEN-004 to evaluate its safety and immunogenicity in healthy subjects.

        We believe we are a leader in the field of T cell vaccine discovery and development. Our management and scientific teams possess considerable experience in vaccine and anti-infective research, manufacturing, clinical development and regulatory matters. We have also assembled a team of leading advisors, led by George Siber, M.D., to guide the further development of our programs. Previously, Dr. Siber was the Chief Scientific Officer of Wyeth Vaccines, where he led the development of several first-in-class vaccines including the pneumococcal vaccine, Prevnar, the top selling vaccine in the world by value. He is also an inventor of Respigam and Cytogam, the first antibodies approved to protect against respiratory syncytial virus and cytomegalovirus, respectively. Dr. Siber is one of our directors and chairs our Scientific Advisory Board.

        Since our inception and through September 30, 2013, we have received an aggregate of $85.5 million in gross proceeds from the issuance of equity securities and gross proceeds from debt facilities and an aggregate of $6.7 million in grant revenue. We have spent approximately $33.9 million on research and development from 2010 through 2012.

Our Strategy

        Our objective is to be the leading T cell vaccine company. Key components of our strategy are:

    Continue to rapidly advance our lead vaccine candidate, GEN-003.   GEN-003 is a potential first-in-class therapeutic vaccine candidate we are developing to treat HSV-2 infections, for which we are currently conducting a Phase 1/2a trial. We intend to commence a Phase 2 trial in mid-2014 to optimize the vaccine dose, and a Phase 2b trial in mid-2015 to optimize the dosing regimen. We retain all rights to GEN-003 and plan to advance this program through regulatory approval and commercialize this vaccine through a focused commercial effort in the United States. Outside the United States, we intend to evaluate partnerships for GEN-003 opportunistically.

    Advance GEN-004 into human proof-of-concept clinical trials.   Our second clinical-stage product candidate is GEN-004, a vaccine candidate designed to prevent infections caused by all strains of pneumococcus. We have demonstrated proof-of-concept of GEN-004 in mice. We have initiated a clinical trial GEN-004, and we believe we can demonstrate our novel T cell-based mechanism of action by mid-2014 and we can achieve human proof-of-concept in our Phase 2a clinical trial with GEN-004 by mid-2015. We believe such trials would provide the first evidence in humans that T cells could enable a universal vaccine against all strains of pneumococcus. We retain all rights to this program, other than certain rights we have granted in developing countries, and intend to opportunistically partner this program.

    Advance our discovery stage and preclinical novel vaccine programs.   We expect similarly to advance our novel preclinical prophylactic vaccine programs against chlamydia, HSV-2 and malaria through human proof of concept. We will seek partnerships opportunistically for late-stage development and commercialization of such programs.

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    Utilize ATLAS, our vaccine discovery platform, to develop additional T cell vaccine candidates.   We intend to continue to use ATLAS to discover and advance novel T cell vaccines. Since we begin our vaccine candidate discovery process by profiling human populations exposed to a pathogen, and use these subjects' own cells to comprehensively screen the entire proteome of the pathogens, we believe we have a better chance of identifying vaccines likely to protect against pathogens of interest. We intend to opportunistically expand our pipeline using ATLAS to discover T cell vaccines against pathogens for which B cell vaccines are ineffective or non-existent.

Vaccine Overview

        Vaccines represent a major healthcare success story. They have eradicated smallpox and dramatically reduced the mortality and morbidity associated with many other infectious diseases, such as diphtheria, measles, polio and tetanus. Today, there are vaccines approved to treat and protect against approximately 30 infectious diseases. Total global vaccine revenues in 2012 were $27 billion.

        Vaccines trace their roots to the smallpox vaccine, first tested in 1796 by Edward Jenner. Dr. Jenner demonstrated that he could protect subjects against smallpox by inoculating them with cow pox, a similar virus. More than 200 years later, the concept of a vaccine remains the same: training the immune system to respond to an infectious pathogen by exposing it to that pathogen, or a component of that pathogen, in a controlled way. Most vaccines are prophylactic, preventing an invading organism from causing disease. A vaccine can also be therapeutic, fighting an existing infection.

    How Vaccines Work

        Vaccines rely on an ability of the human immune system called adaptive immunity to "remember" an invading organism and develop an immune response to it. When confronted with a new organism, the immune system first seeks to eliminate the pathogen through an initial response of the so-called "innate immune system" and then generates immunological memory, or adaptive immunity, in which the immune system recognizes and "remembers" the invasive pathogen in order to combat it in the future. A vaccine introduces a pathogen or a specific portion of a pathogen to the adaptive immune system in a controlled manner in order to invoke acquired immunity against the specific pathogen it is designed to address.

        The adaptive immune system consists of two main components: the B cell arm, and the T cell arm. B cells and T cells are types of white blood cells, or lymphocytes. To date, vaccines have been thought to work primarily by harnessing the B cell arm of the adaptive immune system. The main function of B cells is to produce antibodies, a special type of protein that identifies and initiates processes to kill foreign organisms. Antibodies bind to one or more structures on the pathogen surface. These structures may be proteins or complex sugars, called polysaccharides, or other molecules, which are specific to the organism. Some B cells turn into so-called memory B cells following exposure to an organism, ensuring that the immune system will recognize the same pathogen in the future.

    Current Vaccine Discovery

        Vaccines available today have been developed to stimulate the production of antibodies and therefore protect against invading organisms that are primarily controlled by the B cell arm of the immune system. This type of immunity is effective against organisms that mediate disease in locations, primarily the bloodstream, that are accessible to antibodies and/or cells that kill organisms with the help of antibodies.

        Scientists have employed two alternative approaches for designing vaccines to induce antibody responses. The first approach has been to present a modified version of the whole pathogen to the immune system. In this approach, the vaccine is either an inactivated, or killed, pathogen or an

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attenuated pathogen, where the pathogen is live but rendered far less infectious. The advantage of this approach is that it enables vaccine development without knowing the specific surface structure of the pathogen that antibodies target for response and immunological memory. There are also significant disadvantages to this approach. Inactivating or attenuating pathogens in a large-scale, reproducible way is challenging, and there is a concern that attenuated pathogens could reactivate and cause the diseases they were designed to prevent. Another limitation is the potential that side effects of the vaccine may be more severe than when only part of the organism is used as the vaccine. A recent example is the pertussis, or whooping cough, vaccine that was originally developed as a whole killed vaccine, but later changed to a subunit, or purified protein, vaccine because of the rare but severe side effects of the whole cell vaccine. Due to these challenges, and the resultant regulatory hurdles, vaccines are increasingly designed using a second, and more targeted, approach.

        The second approach to design vaccines to induce an antibody response is to immunize with specific antigens, or immunogenic proteins, from the pathogen. Such antigens often are paired with either (1) an adjuvant that gives the immune system a "danger signal" to enhance the ability of the immune system to recognize the proteins as foreign substances or (2) a vector, such as a virus that is used to deliver the antigens to the immune system to enhance the response, or some combination of an adjuvant and vector are utilized. These so-called subunit, or purified protein, vaccines, while generally easier to produce than whole pathogen vaccines, pose a different challenge: selecting the optimal antigen or antigens from the pathogen to elicit the desired immune response.

        Modern vaccine antigen discovery largely consists of the search for the optimal antigens for immunological, and primarily B cell, responses. To date, this process has largely been empirical, meaning that it has required the testing of each potential antigen in animal models of disease to determine its ability to be recognized by the immune system. There is considerable time and cost associated with testing each antigen, singly and in various combinations, to determine which antigens can elicit the desired immune response. However, these hurdles have been somewhat mitigated by the fact that, for most pathogens currently addressed by vaccines, there is a small number of candidate antigens.

    Limitations and Challenges of Current Vaccine Discovery

        Despite more than 200 years of vaccine history, there remain many organisms for which effective or comprehensive vaccines do not exist. These include viruses such as HSV-2, cytomegalovirus, and Epstein-Barr virus, which causes mononucleosis, and bacteria that include pneumococcus, Chlamydia trachomatis , or chlamydia, and Staphylococcus aureus , or staphylococcus, which causes a wide range of soft tissue, organ and blood infections. Parasites such as Plasmodium falciparum , which causes much of the world's malaria, also have yet to be addressed with vaccines. Collectively, these organisms are responsible for millions of deaths and morbidity for millions more people annually.

        Vaccines that elicit B cell responses generally do not work for these pathogens, in part because the organisms evade B cell-mediated immunity. Some pathogens, such as HSV-2 and chlamydia, spend most of their life cycles sequestered within host cells and are inaccessible to antibodies that primarily reside in the bloodstream. Mucosal surfaces of the nasopharynx (nose and throat), gastrointestinal tract and genitalia, are also less accessible to antibodies in the bloodstream and harbor pathogens such as pneumococcus and staphylococcus. To address these pathogens, vaccines that engage the T cell immune system may represent the optimal solution.

        T cells, like B cells, are a type of white blood cell, of the immune system. They are generally classified as CD8 + cytotoxic T lymphocytes, or CTL, or killer T cells, and CD4 + , or helper T cells. Killer T cells recognize and eliminate pathogen-infected host cells. On the other hand, helper T cells produce compounds called cytokines that stimulate other immune cells to help fight infection. To initiate T cell responses to an infection, another type of specialized white blood cell, called

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antigen-presenting cells, or APCs, engulf invading pathogens. APCs process pathogen-derived protein antigens into smaller pieces, or epitopes, and place them on their surface as epitopes for recognition by killer T cells or helper T cells. Upon recognition, T cells activate to help eliminate the infection. Activated T cells can also become long-lived memory T cells that respond to infection should the host contact the infectious agent again, thus providing long-term protective immunity.

        As with B cell vaccine development, there are two potential approaches to developing vaccines that induce T cell immune responses. The first approach would be to develop an attenuated or inactivated pathogen vaccine. As discussed, such a vaccine may present significant manufacturing, safety and regulatory challenges. To date, no whole pathogen vaccine has been developed to induce T cell responses.

        The second potential approach would be to develop a subunit vaccine. However, there have been relatively few advances toward identifying target antigens that will elicit T cell responses, and, without the right antigen or antigens, a vaccine will not elicit the optimal immune response.

        Discovering T cell antigens is particularly challenging due to the human diversity of T cell response and to pathogen size. Humans can belong to one of nine different genetic supertypes that influence how epitopes are presented to T cells, and hence the set of proteins that make up a pathogen can range into the thousands. These challenges represent fundamental barriers to the development of vaccines against infectious organisms for which T cell immunity is critical for effective control.

         Challenge #1: Diversity of human T cell responses.     B cell responses to a particular antigen are generally more uniform across all humans than T cell responses. As a result, a vaccine designed to elicit a B cell response generally works across broad populations. However, the T cell arm of the immune system poses a complexity challenge. In contrast with a fairly uniform antibody response, each person has one of nine human leukocyte antigen, or HLA, supertypes that govern, among other things, the specific targets of T cell responses. A person belonging to one supertype may mount a T cell response to a different protein epitope—or an entirely different protein—than someone with a different supertype. Given these different HLA supertypes, modeling diseases in animals, which are typically bred from a single genetic lineage, cannot effectively account for or produce a vaccine candidate intended to address the human diversity in T cell responses.

         Challenge #2: Complexity of target selection due to pathogen size.     Antibodies produced by B cells typically target proteins on a pathogen's surface. For B cell vaccines targeting surface proteins, the number of potential targets has typically been limited. For example, the hepatitis B virus, addressable by two approved vaccines, consists of four proteins. Choosing the vaccine antigen from this small candidate list required testing only these four proteins, singly and in combination to find the most protective formulation. Here again, the T cell arm of the immune system works differently. It is not just surface proteins of a pathogen that can be targets for a vaccine, but rather every pathogen protein, collectively its full "proteome", can be a target of T cell responses. The number of candidate antigens, therefore, increases substantially based on the genetic complexity of the pathogen. For example, for HSV-2 the proteome comprises nearly 80 proteins, substantially increasing the complexity associated with target antigen selection, as the number of potential antigen combinations increases exponentially. The chlamydia proteome exceeds 900 proteins and the proteome for Plasmodium falciparum , a parasite that causes malaria, exceeds 5,000 proteins. In the case of such organisms, testing each protein in animals, singly and in various combinations to identify candidate antigens, could take many years. For many organisms, the complexities associated with the pathogen size have presented a fundamental barrier to discovering effective T cell vaccines.

        The combination of these two challenges renders discovery of T cell antigens by traditional empirical methods exceedingly difficult. We believe these challenges explain why no approved vaccines have been developed on the basis of T cell responses.

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The ATLAS Discovery Platform: A Novel Approach to Vaccine Discovery

        We have developed a proprietary technology platform that is designed to overcome the challenges associated with developing vaccines that stimulate T cell immunity. We have engineered this technology into a high throughput discovery platform we call ATLAS, our AnTigen Lead Acquisition System. This system mimics part of the human T cell immune system ex vivo , or outside the body. By comparing antigens identified in individuals who naturally control their infection with those who do not, we can select the antigens that may have the best likelihood of inducing protective T cell immune responses. We believe that this enables ATLAS to rapidly identify targets of T cell responses that are applicable to broad populations, over the range of HLA supertypes and represents a comprehensive throughput system designed for T cell antigen discovery in the biopharmaceutical industry.

        To use ATLAS, we collect T cells and APCs from hundreds of human donors who were naturally exposed to the disease-causing pathogen of interest. We segregate these donors into cohorts based on their clinical status. At one end of the spectrum are those exposed subjects who remained uninfected despite contact. At the other end of the spectrum, we include subjects who were unable to clear their infection or control their disease without significant intervention. If applicable, we also include subject cohorts between these ends of the spectrum, such as those with mild infections.

        We also create a library of every protein in the proteome of the pathogen of interest. We express each individual protein in bacterial hosts, which are cultured with APCs from each human donor. As each donor's APCs ingest the complete proteomic library, they present peptide epitopes from each protein on their surface. These epitopes can be recognized by T cells derived from the same donor. If the T cell recognizes the epitope on the surface of the APC, which it will do if has seen the epitope before and is a memory T cell for that particular epitope, it will be activated. The level of activation can be quantified by the amount of interferon gamma, or IFN- g , a cytokine produced by the T cell. We use the pattern of responses for each subject to infer which pathogen proteins are associated with productive, non-productive or even deleterious immune responses. The diagram below illustrates the process by which we use ATLAS to identify pathogens to elicit a T cell response.

GRAPHIC

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        We use ATLAS as a high throughput engine to comprehensively and rapidly screen human T cells to identify potentially relevant T cell vaccine antigens. Furthermore, ATLAS allows us to screen large proteomes in an efficient manner to identify antigens likely to best stimulate the T cell immune system, a process that is otherwise slow and labor intensive. By comparing antigens identified in individuals who control their infection with those who do not, we can select the antigens that may have the best likelihood of inducing protective immune responses. Since we discover the target antigens from human responses rather than animal responses, we believe we can use the targets to produce vaccine candidates that have a high probability of generating protective immunity in humans. To date, we have applied this platform to identify human T cell antigens from several viral and microbial proteomes, with sizes ranging from several dozen, as with HSV-2, to a few thousand expressed proteins, as with pneumococcus and chlamydia.

        In summary, we believe that ATLAS offers all of the following important advantages over other approaches to vaccine design and discovery:

    Enables vaccine discovery for pathogens that are generally inaccessible to antibodies.   For pathogens that reside in human cells or otherwise generally evade antibody responses, and which, as a result have not successfully been addressed by B cell vaccines, ATLAS represents a means to identify targets of effective T cell responses. This pathogen list includes dozens of bacteria, viruses and parasites that collectively account for millions of deaths and morbidity for millions more annually.

    Decreases the risk of vaccine discovery failure by identifying targets of T cell responses in humans.   By comprehensively screening the T cell responses of persons who have mounted effective immune responses to infectious disease pathogens, and comparing these responses to those who have not, ATLAS identifies antigens that associate with protection in humans. By identifying the targets of human T cell responses ex vivo from human samples, rather than in animal models, we both account for diversity of human T cell responses and avoid being misled by discovery in animals.

    Selects targets relevant to broad populations.   We believe ATLAS is highly efficient and can analyze T cells from a large number of individuals. Traditional analog vaccine antigen discovery necessarily focuses on the identification of epitopes that are able to be presented by APCs for only a minority of the target population. In contrast, we can process blood samples from hundreds of ethnically diverse subjects and therefore can ensure, from analyzing across the range of HLA supertypes, that our antigens are broadly relevant. As a result, we anticipate that both GEN-003 and GEN-004 will stimulate T cell responses across broad HLA types.

    Reduces the time and cost of vaccine discovery.   As we have demonstrated in both our HSV-2 and pneumococcus programs, after we collect blood samples from human cohorts exposed to a pathogen, we believe we can identify vaccine candidates in less than one year and for a few million dollars, compared to the industry norms of up to 10 years and $100 million to discover B cell vaccines, according to GlaxoSmithKline.

        We believe that our discovery platform can enable vaccine discovery for a wide range of infectious disease pathogens, in addition to our clinical stage vaccines. We have identified antigens that appear to associate with protective human responses in our prophylactic HSV-2 and chlamydia programs and demonstrated subsequently that these antigens can protect against disease in accepted animal models. We have also embarked upon a program to discover protective T cell antigens from Plasmodium falciparum , a causative agent of malaria under a program funded in part by an investment from the Bill & Melinda Gates Foundation, or the Gates Foundation. Many other pathogens evade antibody responses and therefore may be tractable to ATLAS, including those that cause tuberculosis, gonorrhea, and dengue fever.

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        We also believe ATLAS may offer utility in the discovery of new treatments for cancer. In recent years, new cancer immunotherapies such as Yervoy (ipilimumab; Bristol-Myers Squibb) have successfully delivered improved outcomes against cancers such as melanoma by reversing the inhibitive effect that cancer cells can have on T cell immune responses. Recruiting T cells to drive the containment of cancerous cells holds promise as a new approach to cancer treatment.

        Knowing the target or targets of the T cell responses may enable the development of next-generation immunotherapies with greater specificity that, in theory, could offer further protection against cancer.

    Antigen Discovery Using ATLAS—A Vignette from the Discovery of GEN-003 to Treat HSV-2

        Strong evidence for the role of T cells in controlling an HSV-2 infection emerged when a researcher at the University of Washington, Christine Posavad, Ph.D., identified a previously unknown and relevant patient population. These people were each in a sexual relationship with someone that had an HSV-2 infection, but had no evidence of infection by culture of, or measurable antibody response to, HSV-2. However, these individuals had evidence of T cell memory against HSV-2, indicating previous contact with HSV-2. In these patients, Dr. Posavad concluded that T cells are the driver of the protective response, but she could not comprehensively screen for the specificity of T cells that drove this response.

        Based in part on Dr. Posavad's observations and other emerging evidence of the role of T cells in controlling HSV-2 infection, we decided to use ATLAS to identify T cell stimulating antigens for HSV-2. We started by collecting blood from 195 people exposed to, or infected with, HSV-2. For each person, we documented the infection severity based on clinical records and assigned the subjects to a cohort according to this. Crucially, we included 43 subjects of the type identified by Dr. Posavad. We chose our sample size to enable statistical comparisons within and across cohorts. We also recruited genetically and ethnically diverse individuals to ensure broad HLA supertype coverage. The table below provides further details on the patients:

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        We also built two copies of a library consisting of each protein in the HSV-2 proteome. Since both killer and helper T cells are thought likely to play a role in controlling an HSV-2 infection, we believed that measuring both T cell responses would be necessary to optimize the design of a candidate vaccine. Research has shown that one cytokine T cells use to defend against HSV-2 is IFN- g . Therefore, for each subject in the study, we separately measured the IFN- g responses of helper T cell and killer T cells to each HSV-2 protein. An example of the output from our assay measuring killer T cells for one subject is below. We generate similar assays for all subjects for both killer and helper T cells.

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        ATLAS enables the generation of the above outputs. In this particular subject, the responses to many proteins hovered at a low level, while several proteins elicited relatively strong T cell responses.

        Analyzing the experimental results of the 195 ethnically diverse subjects has enabled us to associate T cell responses to individual proteins with better control or improved outcomes of HSV-2 infection. Using statistical analyses to identify commonalities and differences within the clinical cohorts and across them, we identified a small group of candidate antigens associated with protective T cell responses to HSV-2 in humans. We further produced and tested the selected antigens in animal models to arrive at the two proteins to be included in GEN-003. We believe that because we collected samples from ethnically diverse subjects, GEN-003 should work across patients regardless of HLA supertype. The entire process, including devising clinical cohorts, collecting the blood from 195 subjects, building two copies of the protein library, running proteins through ATLAS and determining priority candidate antigens took 15 months.

Our Product Candidate Pipeline

        The following table describes our current development programs:

Vaccine
Candidate
  Program   Stage of Development   Next Milestone   Anticipated Timeline

GEN-003

  HSV-2 Therapeutic   Phase 1/2a   Initiate Phase 2 trial   Mid-2014

GEN-004

  Pneumococcus Prophylaxis   Phase 1   Complete Phase 1 trial   Mid-2014

GEN-001

  Chlamydia Prophylaxis   Pre-clinical   File IND   2016

GEN-002

  HSV-2 Prophylaxis   Pre-clinical   File IND   2016

GEN-005

  Malaria Prophylaxis   Research   Initiate pre-clinical studies   Second half of 2014

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GEN-003 Market Opportunity

    Herpes Simplex Virus—2 (HSV-2)

        We are developing our lead product candidate, GEN-003, to treat patients with HSV-2 infections. GEN-003 consists of two protein antigens. The first antigen is ICP4.2, a large fragment of the protein ICP4 that we discovered in ATLAS screens to be a T cell antigen associated with protection from infection or with less severe infection. The second antigen is glycoprotein D2, or gD2, a B cell antigen that is the target of antibodies that provide anti-viral activity during the time in the life cycle of HSV-2 where the pathogen is susceptible to inactivation by antibodies. gD2 was also a target of T cells in our ATLAS screens and was selected based on such ATLAS screens as ATLAS prioritized gD2 as the B cell antigen most associated with T cell responses. We pair the antigens with Matrix-M2, a novel adjuvant that we have licensed exclusively for this indication from Novavax, Inc., or Novavax. See "—Other Collaborations—Isconova AB".

        HSV-2 is a sexually transmitted disease. HSV-2 infections have become an epidemic, spreading to approximately 16% of the United States population between the ages of 14 and 49, and more than 500 million people worldwide, according to the Centers for Disease Control and Prevention, or CDC, and the World Health Organization, or WHO.

        For infected individuals, the disease can manifest in a number of ways, with so-called viral shedding as the common element. For some of the virus' life cycle, it lies dormant within nerve cells near the spine. Although there may be no visible sign of infection, the virus lives within these nerve cells. Periodically, the virus reactivates and virus travels to skin cells of the genitalia where they are released. The release of the virus is called viral shedding and can be detected by swabbing the genital area and testing the swab for the presence of viral DNA. For reasons not completely understood, reactivation of the virus within the nerve cells may occur, resulting in a large amount of virus shedding from skin and mucus membranes. If the replication is maintained for a long enough period of time and at a high enough level, the virus destroys the cells it inhabits and causes ulcers to form on the skin. Patients experiencing such visible ulcers are considered symptomatic patients. It is generally believed that the immune system responds to episodes of HSV-2 outbreaks by activating T cells that reduce viral replication and destroy infected cells, allowing healing and resolution of genital ulcers, usually after a few days, although for many patients ulcers return at variable intervals. Patients may also experience periodic, low-frequency viral shedding. Because the shedding at these times does not lead to the development of ulcers, these episodes are called asymptomatic shedding. These asymptomatic patients continue to pose a disease transmission risk through sexual contact while shedding virus.

        Some people, approximately 60% of those infected, are asymptomatic or fail to recognize or seek medical attention for an initial mild outbreak of ulcers. According to the New England Journal of Medicine, roughly 40% of persons infected with HSV-2 experience visible symptoms. It has been reported in the Annals of Internal Medicine that approximately 70% of the people with visible symptoms experience three or more outbreaks per year, which we consider to be moderate-to-severe disease. Patients with HSV-2 experience significant distress because of the potential negative impact on their ability to form and maintain sexual relationships. Infection with HSV-2 can involve substantial risks in addition to the infection itself. For example, persons with HSV-2 infection have a threefold increased risk for human immunodeficiency virus, or HIV, acquisition. Additionally, pregnant women can transmit HSV-2 to infants in childbirth, which can result in severe brain damage or death.

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*
Note: Each bar represents 1 swab; 2 swabs collected per day; the absence of a bar means no shedding was detected on the swab on a particular day.

        The total number of days during a month that HSV-2 virus can be detected in the genital area with or without visible ulcers is called the shedding frequency. A pattern of shedding and outbreak for one person is illustrated in the graph above. Viral shedding is measured by collecting swabs of the genital area, following a protocol that has been used in decades of studies of HSV-2 viral shedding. In the example shown above, the subject collected swabs twice daily for 28 days. HSV-2 DNA was detectable in approximately 66% of the collected swabs, meaning the patient's shedding frequency is 66% for the period measured. Some swabs had no detectable viral DNA, meaning the subject did not shed virus at the time of sample collection (exemplified by the blank areas of the above graph). The magnitude of viral shedding varied widely from day to day and only sometimes resulted in clinical symptoms such as visible genital ulcers. Ulcers generally appear after several days of asymptomatic shedding and at times when the magnitude of shedding is highest. The extent, frequency, and duration of shedding vary from person to person, but the pattern is relatively consistent for each person.

    Limitations of Current HSV-2 Treatment Options

        There is no known cure for HSV-2. For patients infected with HSV-2, oral antiviral drugs are the only treatment option. The most commonly prescribed treatment is valacyclovir including Valtrex, marketed by GlaxoSmithKline. Other medications available are acyclovir (Zovirax, marketed by GlaxoSmithKline) and famciclovir (Famvir, marketed by Novartis). These drugs all work by limiting the ability of the virus to replicate when it emerges from latency. Sales for these oral antivirals totaled $1.6 billion globally in 2012, including nearly $700 million in the United States, according to IMS Health.

        Some patients treat their disease episodically. At the onset of outbreaks, or in the case of some patients, at the onset of prodrome, a tingling sensation that may precede an outbreak, patients take antiviral medication to reduce the duration and severity of the outbreak. According to the approved Valtrex prescribing information, episodic treatment only reduces the duration of outbreaks by up to 50% when compared to placebo. Patients treating their symptoms episodically are not protected against asymptomatic viral shedding and, therefore, have no reduced risk of transmission of infection to an uninfected sexual partner while asymptomatic.

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        Some patients treat their infection with daily antiviral medication. This approach is called chronic suppressive therapy, and has been shown to reduce—but not eliminate—viral shedding, the frequency of symptomatic outbreaks of genital ulcers, and the risk of transmission of the infection to an uninfected sexual partner. Even on chronic suppressive therapy, based on the valacyclovir prescribing information, 35% of patients taking chronic suppressive therapy suffer outbreaks within six months after initiation of treatment and 46% of patients suffer outbreaks within 12 months. Patients taking chronic suppressive therapy reduce their disease transmission risk only by as much as 52%.

        Due to the limited effectiveness of oral antiviral therapy, there remains a significant unmet medical need, against both the symptoms of HSV-2 and disease transmission risk from viral shedding.

GEN-003: A Therapeutic Vaccine Candidate for HSV-2

        GEN-003 is being studied in an ongoing Phase 1/2a trial. In a planned analysis of our data from this ongoing trial, we showed that GEN-003 is the first vaccine known to have demonstrated a statistically significant reduction in viral shedding. The data were presented in a late-breaker presentation at the Interscience Conference on Antimicrobial Agents and Chemotherapy in September 2013. The reduction in shedding appears to be durable, lasting for the six month period for which we have data. We believe that these initial clinical results demonstrate that GEN-003 has the potential to be a first-in-class vaccine to treat HSV-2.

        We believe that, if approved for the treatment of HSV-2 infections, GEN-003 could address the unmet needs of patients in several ways. For patients taking episodic therapy, GEN-003 could offer reduced symptomatic and asymptomatic viral shedding, potentially reducing disease transmission risk. Since episodic therapy offers no protection against disease transmission during asymptomatic shedding, these patients and their sexual partners are unprotected when the infected partner is not taking anti-viral medication.

        For patients on chronic suppressive therapy, we believe GEN-003 may provide both improved outcomes and increased convenience. For some patients, we anticipate that physicians will prescribe GEN-003 as baseline therapy. Such patients may still take oral antivirals in case of an outbreak to further control symptoms. Replacing daily therapy may offer convenience to these patients. For other patients, we anticipate that physicians may prescribe GEN-003 alongside chronic suppressive therapy. This combination therapy approach mirrors the treatment practice of other chronic viral infections such as HIV and hepatitis C virus. We anticipate that, since the mechanisms of action for GEN-003 and oral antiviral medication should complement each other, the control against symptoms and disease transmission risk offered by the combination would exceed that of either therapy alone.

Preclinical Evaluation of Our GEN-003 Product Candidate

        We tested GEN-003 in the guinea pig therapy model, the standard animal model of recurrent disease. Guinea pigs are used because the course of infection in the animal closely mirrors that of humans, with an initial outbreak that resolves, followed by frequent and periodic recurrences that last a few days. GEN-003 decreased ulcers over time by up to 55% versus placebo, measured over 63 days after initial immunization. This is the standard interval across which to measure impact on ulcers in the guinea pig model. Additionally, the vaccine reduced viral shedding significantly. In the period after completing immunization, from days 37-63, GEN-003 almost completely eliminated viral shedding. We are unaware of any other vaccine demonstrating similar impact either on clinical symptoms or on viral shedding in this model.

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Clinical Development

    GEN-003-001—Our Phase 1/2a Clinical Trial

        We are conducting a Phase 1/2a trial, testing the safety, T and B cell immunogenicity and impact on viral shedding of GEN-003 in subjects with documented recurrent HSV-2 infection. We are conducting the trial at seven sites in the United States, including some of the leading institutions for scientific and clinical research of HSV-2. The trial is double-blind, placebo-controlled and dose-escalating. We enrolled subjects between 18 and 50 years of age. An independent Data Safety Monitoring Board continues to monitor the safety of subjects enrolled in the clinical trial as well as the subject outcomes.

        This trial is fully enrolled with 143 otherwise healthy subjects with moderate-to-severe HSV-2 infections, defined as experiencing between three and nine symptomatic outbreaks per year when not on suppressive therapy. Subjects were randomized into one of three dose cohorts. Within each cohort, subjects were randomized in a 3:1:1 ratio, whereby for every three subjects receiving GEN-003, one would receive placebo and one would receive the ICP4.2 and gD2 proteins without the Matrix-M2 adjuvant. We included this last cohort to demonstrate that Matrix-M2 was necessary to biological responses. There were three vaccine dose groups, based on the amount of protein. The lowest dose group subjects received 10 µg of each protein combined with 50 µg of Matrix-M2. In the middle dose group, the protein doses increased to 30 µg. In the high dose group, subjects received 100 µg of each protein. Subjects received three vaccinations, on days zero, 21 and 42. The diagram below illustrates the dosing and swabbing regimen in the trial.

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        The primary objective of this trial is to monitor the safety profile of the proposed vaccine. Additionally, we are measuring the vaccine-induced T cell and B cell immune responses. We structured and statistically powered the trial to measure the proposed vaccine's impact on viral shedding, an important marker of virus activity. We selected this endpoint because of the direct connection between shedding, symptomatic outbreaks, and risk of transmission of virus by sexual contact. Without shedding, a patient will not experience symptomatic ulcers. Hence, a vaccine that reduces viral shedding would be expected to reduce symptoms as well. Every subject in the study swabbed their genitalia twice per day for 28 days before receiving the first assigned treatment injection, and after treatment, using the standard protocol that has been used for many clinical trials of HSV-2 shedding.

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        When we measured the viral DNA present in swabs from subjects over the 28-day measurement period after completing the three-dose regimen, subjects in the two highest GEN-003 dose cohorts showed a statistically significant reduction in viral shedding frequency from their own baseline shedding frequency, established over the 28-day measurement period preceding dosing, by an average of 51% (p<0.001) in the 30 µg dose cohort. GEN-003 reduced the magnitude of viral shedding by an average of 54% (p=0.01) in that same dose cohort. We are unaware of any other vaccine that has demonstrated such an impact on HSV-2 viral shedding in humans. The following chart summarizes the data demonstrating the statistically significant reduction in frequency of viral shedding following administration of GEN-003 vaccine.

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        We believe the reduction in viral shedding afforded by GEN-003 will translate into a reduction in clinical symptoms because the link between viral shedding is well established. It has been shown that asymptomatic patients shed half as frequently as symptomatic patients. Oral anti-viral drugs, which reduce viral shedding frequency, also reduce the number of symptomatic outbreaks and the risk of transmission. And in populations where oral anti-viral drugs provide lower efficacy, the viral shedding rates are higher than in those populations where oral anti-viral drugs provide work well.

        This Phase 1/2a clinical trial was not designed to measure the impact of GEN-003 on clinical symptoms. We believe that in a larger adequately powered, well controlled clinical trial GEN-003 may demonstrate clinical benefit, such as a reduction in frequency of HSV-2 outbreaks, could be shown to reach even more stringent statistical significance.

        In this Phase 1/2a trial, we are also measuring and evaluating the durability of response to the vaccine. Durability of response is measured by having subjects conduct an additional 28-day, twice daily genital swab collection to measure viral shedding frequencies six months after vaccination. For the 30 µg dose cohort as shown in the graph below, reduction in viral shedding remains statistically significant relative to the subject's own baseline viral shedding rate. In comparison, there was no reduction in viral shedding for placebo patients either immediately after vaccination or six months later. While we have not yet tested any booster regimen, based on the durability of response to date, we anticipate booster doses, if necessary, would be administered at intervals greater than six months.

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        Our data have also demonstrated that GEN-003 induced a broad immune response in vaccinated subjects at all dose levels. T cell responses increased from baseline 21-fold to ICP4.2 and 10-fold to gD2. Subjects also experienced strong increases in antibody response to ICP4.2 and gD2, as measured by immunoglobulin G, or IgG, a standard measure of antibody response. The antibodies generated in response to the vaccine are able to prevent the virus from infecting new cells, as measured by a standard assay for evaluating the ability of the virus to infect cells in vitro . The chart below shows the T cell immune response aggregated across all dose levels.


Fold Increase in T Cell Response from Baseline by Treatment Group

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        Overall, GEN-003 has been well tolerated. During the seven days following each injection, side effects have generally been those considered typically associated with vaccines, such as fatigue, site injection pain, tenderness and swelling. Among all vaccine dose groups, the frequency of adverse events, or AEs, appeared greater among those subjects given the 10 µg dose. In the 30 µg and 100 µg dose cohorts, the doses we intend to study in subsequent clinical trials, the AE rate was lower than that of the 10 µg cohort. In addition, the frequency of AEs appeared to diminish with subsequent doses.

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Beyond the week following vaccination with GEN-003 vaccine, the AE types and frequencies appeared similar to those following vaccination with placebo. The AEs have been transient, resolved over a few days and have resulted in only two subjects discontinuing further vaccinations: one for a combination of symptoms (myalgia and fatigue; and pain and tenderness at the injection site) and one for injection site pain.

    Next Steps: Phase 2 Dose Ranging and Dose Regimen Trials for GEN-003

        We plan to initiate a Phase 2 dose ranging trial of GEN-003 in mid-2014 and anticipate efficacy data by mid-2015. The primary trial objective is to optimize the vaccine dose. We expect to compare two protein levels, including the 30 µg dose, each combined with 25 µg, 50 µg or 75 µg of Matrix-M2, for a total of six dose cohorts. We anticipate the trial to enroll approximately 300 patients in total with similar or identical enrollment criteria and endpoints as the Phase 1/2a trial. Following completion of this Phase 2 dose ranging trial, we intend to complete a Phase 2b trial where we will seek to optimize our dosing regimen, or the number of doses and the interval between doses. We anticipate that clinical trial enrollment criteria and endpoints for both of these trials will be similar or identical to those of the preceding trials.

    Potential for GEN-003 to Treat HSV-1 Infection

        We anticipate that GEN-003 may also help a patient's immune system fight herpes simplex virus type-1, or HSV-1. HSV-1 is most commonly identified with cold sores and has infected approximately 60% of Americans, according to the CDC. Increasingly, HSV-1 has been associated with outbreaks of genital ulcers, though the frequency and severity of such outbreaks generally is less than those associated with HSV-2. HSV-1 and HSV-2 are related viruses and the proteins in GEN-003 are present in, and nearly identical to, those found in HSV-1. Consequently, we believe that GEN-003 will be active against HSV-1 and thus intend to study the potential for GEN-003 to combat HSV-1.

    The Opportunity to Prevent HSV-2 Infections

        In addition to treating HSV-2 infection with GEN-003, we believe that ATLAS may help to develop a vaccine that can prevent HSV-2 from infecting healthy persons. We believe that a vaccine that has therapeutic effect may be the foundation for a preventative vaccine. Since there will not likely be pre-existing immune responses to build upon in uninfected subjects, the preventative vaccine may include additional or different antigens than those in GEN-003 to be fully protective. Using data from the same ATLAS screening effort with which we designed GEN-003, we identified eight additional candidate antigens that could be added to GEN-003 or included in another vaccine for prophylaxis of HSV-2 infections. We have already demonstrated that several of the eight candidate antigens can provide some protection against infection in initial studies in mice. A prophylactic vaccine may be an important step in halting the epidemic, and could be used to treat uninfected partners of HSV-2 infected subjects to prevent them from acquiring the disease. The vaccine could also be used more broadly as a preventative measure. We intend to pursue development of a prophylactic HSV-2 vaccine and anticipate that we would partner this program at the appropriate point of clinical development.

GEN-004 Market Opportunity

    Pneumococcal Disease

        We are developing GEN-004 to prevent infections caused by pneumococcus. The Gates Foundation has noted that pneumococcus kills more children under age five globally than any other organism. GEN-004 consists of three whole Pneumococcal T cell protein antigens, SP0148, SP1912 and SP2108, combined with the adjuvant Alhydrogel, a form of alum that is available in several approved vaccines.

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        There are more than 90 serotypes, or strains, of pneumococcus known to exist. Each strain differs slightly in the composition of the polysaccharide capsule, a sugar-based component that covers the bacterial cell. These differences have likely arisen as the organism has evolved to evade human antibody responses. Pneumococcus is a bacterium that often resides harmlessly in the nose and throat but can cause otitis media, or middle ear infection, as well as pneumonia, an infection in the lungs. Such consequences of infection are considered non-invasive Pneumococcal disease, or NIPD.

        Invasive Pneumococcal Disease, or IPD, arises when pneumococcus enters the bloodstream and potentially spreads to other organs. The consequences of IPD can be severe and, according to the CDC, 10% of patients with IPD die. IPD is classified into three categories. Bacteremic pneumonia is an infection in one or both lungs with pneumococcus also in the bloodstream. It is generally a more severe infection than pneumonia that is not invasive. Other examples of IPD include sepsis, the presence of bacterial infection in the blood along with symptoms such as fever, elevated heart rate and respiratory rate, and high or low white blood cell count, and meningitis, an inflammation of the brain and spinal column.

    Limitations of Current Pneumococcal Vaccines

        Global revenue exceeded $5 billion in 2012, of which more than 70% came from Prevnar-13, marketed by Pfizer, which is named for the 13 capsular polysaccharides types, derived from 13 strains of pneumococcus, included in the vaccine. Other Pneumococcal vaccines include Synflorix, marketed by GlaxoSmithKline, and Pneumovax-23, marketed by Merck. These vaccines have dramatically reduced IPD caused by the serotypes addressed by the vaccines.

        The predecessor vaccine to Prevnar-13, Prevnar-7, led to the dramatic reduction of IPD caused by the seven vaccine serotypes of pneumococcus that are addressed by the vaccine. According to the CDC, the hospitalization rates due to IPD infection from these strains fell after the introduction of Prevnar-7, from 80 cases per 100,000 children in 2000 to less than 1 per 100,000 by 2007. In pre-approval randomized trials, Prevnar-7 was demonstrated to be safe and highly efficacious against IPD, moderately efficacious against pneumonia, and somewhat effective in reducing middle ear infection episodes and related office visits. The expectation is that Prevnar-13, introduced in 2010, will result in similar benefit against the seven serotypes covered by Prevnar-7 plus the additional six serotypes included in that vaccine.

        Nevertheless, significant limitations exist with this and other pneumococcal vaccines. As noted previously, there are more than 90 known serotypes of pneumococcus. Prevnar-13 covers only 13 of these serotypes. Incidence of invasive disease caused by the 75+ serotypes not included in that vaccine are rapidly increasing. As a consequence, Pfizer is believed to be working on a third generation Prevnar vaccine. Already a complex vaccine, each of the polysaccharide shells included in Prevnar-13, representing 13 of the most common disease-causing serotypes of pneumococcus, is conjugated, or chemically linked, to a protein carrier. It is believed that there are limits to how many polysaccharides that physically can be included in the vaccine. Moreover, the protective capacity per serotype appears to diminish as new polysaccharides are added to the vaccine. Still, other large companies, including GlaxoSmithKline, Merck, and Sanofi Pasteur, are also believed to be working on new vaccines against pneumococcus. To our knowledge, all of these companies' product candidates are being developed to elicit a B cell response.

GEN-004: A Prophylactic Vaccine Candidate for Pneumococcus

        We have designed GEN-004 to fight more than 90 serotypes of pneumococcus, and to do so through a T cell-based mechanism of action that complements existing vaccines. Since 2009, we have collaborated with Rick Malley, M.D., of Boston Children's Hospital, a leading researcher on host immunity to pneumococcus. He was the first person to demonstrate that Pneumococci are rapidly

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cleared from the nose, before they can get into the lungs and bloodstream, by a type of helper T cell called T H 17 cells. This is important because before pneumococci can cause IPD, they need to take up residence inside the nose, known as colonization. If the immune system could be taught to make T H 17 cells against pneumococci in sufficient quantities, then the bacteria will not have the ability to colonize, thus reducing or eliminating IPD occurrence. The majority of healthy adults are not colonized with pneumococcus, presumably due to T H 17 responses that they have generated through natural exposure. We believe a vaccine that stimulates T H 17 cells to reduce or prevent colonization of the nasopharynx by pneumococcus could be highly effective against all forms of pneumococcal disease including IPD and NIPD infections.

        Guided by this insight, we used ATLAS to design a novel pneumococcal vaccine, GEN-004. Since adults are generally "protected" against colonization by pneumococcus, we screened the blood of 50 healthy, ethnically diverse adults using ATLAS. We collected their APCs and T cells and screened the entire pneumococcus proteome, which consists of more than 2,200 proteins, to identify proteins associated with a strong T H 17 T cell response, as measured by their induction of the cytokine IL-17A, the predominant cytokine secreted by T H 17 cells. Based on these studies, we identified three protein antigens that associate highly with a protective T cell response against pneumococcus in humans. Moreover, as these proteins are conserved in all sequenced strains of Pneumococci, we believe GEN-004 may be able to help protect against invasive Pneumococcal disease caused by any Pneumococcal serotype, including those covered by the Prevnar franchise.

        We have demonstrated proof-of-concept of GEN-004 in a mouse model of nasal colonization, as demonstrated below. In this model, mice are immunized with the antigens adsorbed to ahydrogel and then challenged intranasally with live pneumococci. After 10 days, the nasal cavity is washed with saline, and the numbers of pneumococcal bacteria that colonized the nose are counted. We and others have shown that the prevention of colonization in this model is due to IL-17A secretion from helper T cells.

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    Clinical Development of GEN-004

        We have filed an IND and initiated a Phase 1 clinical trial in the United States to evaluate the safety of, and immune response to, GEN-004. Immune responses will be measured by an increase in helper T cells that produce IL-17A in response to the antigens included in the vaccine. We expect to enroll as many as 90 healthy adults in this trial, and follow them for one year. This trial will help us to determine the ideal vaccine dose to test in subsequent Phase 2 trials. We expect the initial results will be available in the second quarter of 2014. If the vaccine induces a T H 17 response, we believe this will be the first time a vaccine directed against pneumococcus in humans has done so.

        In the third quarter of 2014, we intend to initiate a Phase 2a trial for GEN-004 in adults if the Phase 1 clinical trial is successful. We anticipate data from our Phase 2a trial in mid-2015. Subjects in the clinical trial will receive either GEN-004 or placebo, and then be "challenged" intranasally with live pneumococcus, much like in the mouse colonization model. This means that pneumococcus will be introduced to the nasal cavity. We expect to enroll as many as 75 healthy adults in this trial. We will monitor AEs, immune responses as determined by IL-17A, and incidence of post-challenge colonization. We will follow these patients for a year and expect the initial results will be available in the second quarter of 2015. If successful, we believe this has the potential to be the first time a protein subunit vaccine will have directly demonstrated a reduction in nasopharyngeal colonization in humans.

Our Chlamydia Program

        Chlamydia is the most commonly reported bacterial sexually transmitted disease in the United States. According to the CDC, an estimated 2.9 million infections occur annually in the United States. Despite the widespread availability of antibiotics that are effective against Chlamydia trachomatis , the pathogen that causes chlamydia infections, incidence has increased at greater than 5% per year over the past decade, according to the CDC. A key reason for this is that chlamydia is often an asymptomatic infection, so infected individuals do not seek treatment, which can result in severe consequences, particularly in women, such as pelvic inflammatory disease, infertility and serious neonatal infections.

        Despite the need, vaccine development to combat chlamydia has been virtually non-existent. There has not been a chlamydia vaccine clinical trial since the 1960s, in which an attenuated pathogen vaccine demonstrated no lasting protection and showed hints of disease exacerbation. Antibodies appear to be unlikely to protect against infection as the pathogen is intracellular for much of its life cycle. Additionally, as a large genome pathogen, Chlamydia trachomatis represents a large T cell antigen discovery challenge. For these reasons, we believe that chlamydia is a particularly attractive pathogen for use of ATLAS to identify a vaccine candidate.

        We have achieved promising preclinical results from candidates generated using ATLAS. We collected blood from 144 subjects spanning multiple clinical cohorts, ranging from subjects whose infections spontaneously cleared, representing a putative natural protection cohort, to subjects with infertility caused by chlamydia infection. From the more than 900 proteins in the Chlamydia trachomatis proteome, we identified 22 novel proteins associated with a protective response. From these we have demonstrated that three proteins, when given in an animal model of infection and when paired with the Matrix-M2 adjuvant can significantly reduce infection risk.

        If the program were to reach the clinic, we believe it would be the first vaccine against chlamydia to be in clinical trials in more than 50 years. If it can successfully prevent chlamydia infections, we believe it would address a major unmet clinical need. As resources permit, we intend to opportunistically pursue development of this program.

Our Malaria Program

        Malaria is one of the deadliest infectious diseases in the world. Approximately 600 thousand to one million people died in 2010 due to malaria, primarily in the developing world. There is no vaccine

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to prevent malaria, an infection caused by the plasmodium parasites transmitted by mosquitoes. We previously collaborated with the Naval Medical Research Center, or NMRC, and recently initiated a second collaboration with the Gates Foundation for which malaria is a priority infectious disease. When the parasite is injected into the blood through the bite of an infected mosquito, it rapidly travels to the liver where it replicates exponentially, is released into the bloodstream, and causes sickness. T cells in the liver could potentially be used to kill the cells in which the parasite is hiding, before the parasite is able to replicate itself, and could therefore protect against blood infection. Both the Gates Foundation and NMRC have sponsored several studies investigating killed or attenuated whole organism vaccines, which induce immunity, but are impractical to manufacture due to the fact that the vaccines are based on irradiated parasites grown within the salivary glands of mosquitoes.

        We are in the process of collecting blood samples from subjects immunized with the killed organism and who were either protected or not protected after live parasite challenge to use ATLAS to identify the protein antigens that are associated with protective T cell responses. The identification of the protein targets of the T cell responses can enable the generation of a protein plus adjuvant vaccine designed to induce liver T cell responses and prevent malaria disease in a safe, scalable and affordable way.

Competition

        The biotechnology and pharmaceutical industries are characterized by intense and rapidly changing competition to develop new technologies and proprietary products. While we believe that our proprietary patent portfolio and T cell vaccine expertise provide us with competitive advantages, we face potential competition from many different sources, including larger and better-funded pharmaceutical companies. Not only must we compete with other vaccine companies but any products that we may commercialize will have to compete with existing therapies and new therapies that may become available in the future.

        There are other organizations working to improve existing therapies or to develop new vaccines or therapies for our initially selected indications. Depending on how successful these efforts are, it is possible they may increase the barriers to adoption and success of our GEN-003 and GEN-004 product candidates, if approved. These efforts include the following:

    HSV-2:   The current standard of care for the treatment of HSV-2 is valacyclovir, an oral antiviral medicine. Other currently approved oral antiviral medications include acyclovir and famciclovir. AiCuris, a private company based in Germany, is developing a new oral antiviral, pritelivir, and has advanced the compound into Phase 2 testing. We understand the company will pursue once-weekly dosing with this drug. We believe that GEN-003 may offer advantages in terms of improved symptom control, reduced disease transmission risk and improved compliance when compared to oral antivirals.

      There are also several companies attempting to develop new therapeutic vaccines against HSV-2, including Agenus Inc., Coridon Pty Ltd, Sanofi Pasteur and Vical Incorporated. We believe GEN-003 has advantages against each of the vaccines being developed by these companies based on the screens of human protection that we have conducted using ATLAS that include these competitors' antigens, published reports of preclinical vaccine efficacy, announced clinical results in the case of Agenus, Inc. and our own clinical results to date. However, there can be no assurance that one or more of these companies or other companies will not achieve similar or superior clinical results in the future as compared to GEN-003 or that our future clinical trials will be successful.

    Pneumococcus:   The current standard of care for the prevention of pneumococcus is Prevnar-7/Prevenar-13, marketed by Pfizer. In select countries, Synflorix, marketed by GlaxoSmithKline, is also widely accepted. Additionally, Pneumovax-23, marketed by Merck, is labeled by use for persons over 65. We believe that each of these companies is seeking to

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      develop improvements to their product. We believe these represent incremental improvements, adding a few additional strains to their coverage. In addition, we are aware of a pneumococcus vaccine that Sanofi Pasteur has taken into Phase 1 trials. This is a protein subunit vaccine designed to cover all strains of pneumococcus, but was designed to induce B cell responses. For many pneumococcal strains with dense sugars on their surface, the protein targets of the antibodies induced by the vaccine will be blocked by sugars that cover them. We believe that by covering all known pneumococcus serotypes, with a T cell-based mechanism of action that complements existing vaccines, GEN-004 may offer broader protection than existing vaccines. However, there can be no assurance that one or more of these companies or other companies will not achieve similar or superior clinical results in the future as compared to GEN-004 or that our ongoing and future clinical trials of GEN-004 will be successful.

        Many of our competitors, such as Merck, GlaxoSmithKline, and Sanofi Pasteur, either alone or with their strategic partners, have substantially greater financial, technical and human resources than we do and significantly greater experience in the discovery and development of product candidates, obtaining FDA and other regulatory approvals of vaccines and the commercialization of those vaccines. Accordingly, our competitors may be more successful than us in obtaining approval for vaccines and achieving widespread market acceptance. Our competitors' vaccines may be more effective, or more effectively marketed and sold, than any vaccine we may commercialize and may render our vaccines obsolete or non-competitive.

        Mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated among a smaller number of our competitors. These competitors also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.

        We anticipate that we will face intense and increasing competition as new drugs enter the market and advanced technologies become available. We expect any vaccines that we develop and commercialize to compete on the basis of, among other things, efficacy, safety, convenience of administration and delivery, price, the level of generic competition and the availability of reimbursement from government and other third-party payors.

        Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than any products that we may develop. Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for our products, which could result in our competitors establishing a strong market position before we are able to enter the market. In addition, our ability to compete may be affected in many cases by insurers or other third-party payors seeking to encourage the use of generic products.

Intellectual Property

        We strive to protect and enhance the proprietary technology, inventions and improvements that are commercially important to our business, including seeking, maintaining, and defending patent rights, whether developed internally or licensed from third parties. We also rely on trade secrets relating to our proprietary technology platform and on know-how, continuing technological innovation and in-licensing opportunities to develop, strengthen and maintain our proprietary position in the vaccine field. We additionally rely on regulatory protection afforded through data exclusivity, market exclusivity and patent term extensions where available. Still further, we utilize trademark protection for our company name, and expect to do so for products and/or services as they are marketed.

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        Our commercial success may depend in part on our ability to obtain and maintain patent and other proprietary protection for commercially important technology, inventions and know-how related to our business; defend and enforce our patents; preserve the confidentiality of our trade secrets; and operate without infringing the valid enforceable patents and proprietary rights of third parties. Our ability to stop third parties from making, using, selling, offering to sell or importing our products may depend on the extent to which we have rights under valid and enforceable patents or trade secrets that cover these activities. With respect to both licensed and company-owned intellectual property, we cannot be sure that patents will be granted with respect to any of our pending patent applications or with respect to any patent applications filed by us in the future, nor can we be sure that any of our existing patents or any patents that may be granted to us in the future will be commercially useful in protecting our commercial products and methods of manufacturing the same.

        We have developed or in-licensed numerous patents and patent applications and possess substantial know-how and trade secrets relating to the development and commercialization of vaccine products. As of the date of this prospectus, our patent portfolio includes the following:

    ATLAS

        Our discovery platform patent portfolio includes three patent families, currently comprising four issued U.S. patents and two pending U.S. applications. We hold an exclusive license from The Regents of the University of California to the first patent family, including U.S. Patent 6,004,815 and the related U.S. Patents 6,287,556 and 6,599,502. This first family includes claims to fundamental aspects of the ATLAS platform, developed by our scientific founder, Darren Higgins, Ph.D. while he was employed at the University of California, Berkeley. Patents in this family have a patent term until August 2018. We hold a further exclusive license from President and Fellows of Harvard College to the second patent family, which covers methods related to the ATLAS discovery platform. This second patent family includes a pending U.S. application and corresponding applications in Europe, Canada and Australia. Patents issuing from these applications are expected to expire in 2027. We wholly own the third patent family, which is specifically directed to the ATLAS platform as utilized by us. This third patent family includes U.S. Patent 8,313,894, a pending U.S. patent application, and corresponding pending applications in Europe, Canada and Australia. Patents issuing from applications in this family are expected to have a patent term until at least July 2029; issued U.S. Patent 8,313,894 has a term that includes Patent Term Adjustment and extends until at least June 2030.

    GEN-003 (HSV-2)

        We wholly own a portfolio of patent applications directed to HSV-2 vaccines, including GEN-003. This portfolio includes two patent families covering HSV-2 vaccine compositions and methods for inhibiting or treating HSV-2 infections. A U.S. application in the first patent family has been accepted as of November 7, 2013 with a U.S. patent expected to be issued within one to three months. A further U.S. application and applications in Europe, Canada, Australia, Japan, Brazil, Russia, India, China and nine additional foreign jurisdictions are pending in the first patent family. A U.S. application and applications in Europe, Australia and Japan are pending in the second family. Patents that issue from applications in these families are expected to expire in 2030 and 2031. We own a further patent family covering follow-on HSV-2 vaccine compositions.

        We hold a license from the University of Washington to a patent family that includes U.S. Patent 8,197,824 and European Patent No. 2263686 covering compositions of certain HSV-2 proteins and methods for treating HSV infections. This family includes pending applications in the United States, Europe and Canada. This patent family has a patent term until at least July 2023.

        We hold a license from Isconova AB (now Novavax) to two patent families covering Matrix-M2, the adjuvant used in GEN-003. Both patent families include issued patents in Europe; the first patent family also includes an issued patent in Japan. Applications in the United States, Canada, Australia,

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Japan (for the second family) and three additional foreign jurisdictions. These patent families have patent terms until at least July 2023 and July 2024.

    GEN-004 (Pneumococcus)

        We co-own with Children's Medical Center Corporation, or Childrens, a patent portfolio of patent applications directed to pneumococcus vaccines, including GEN-004. This patent portfolio includes two patent families covering pneumococcal vaccine compositions and methods for inhibiting or treating pneumococcal infections. A U.S. application and applications in Europe, Canada, Australia, Japan, Brazil, Russia, India, China and nine additional foreign jurisdictions are pending in the first patent family. A U.S. application and applications in Europe, Australia, Japan, Brazil, Russia, India, China and nine additional foreign jurisdictions are pending in the second patent family. Patents that issue from applications in these patent families are expected to have patent terms until at least 2030 and 2032, respectively. We hold an exclusive license to Childrens' interest in these patent rights. We co-own with Childrens two further patent families covering follow-on pneumococcal vaccine compositions, and Childrens' interest in these patents is also exclusively licensed to us.

    GEN-001 (Chlamydia)

        Our chlamydia patent portfolio includes four patent families (one of which overlaps with the ATLAS portfolio). We hold an exclusive license from President and Fellows of Harvard College to three of these four patent families. We wholly own the fourth patent family. The patent families cover chlamydia vaccine and immunogenic compositions and methods for inhibiting or treating chlamydia infections. A European Patent is issued in the first patent family; a U.S. application and applications in Canada and Australia are pending. A U.S. application and applications Europe, Canada, Australia and Japan are pending in the second and third patent families. A U.S. application and applications in Europe, Australia and Japan are pending in the fourth patent family. Patents issuing from applications in these four patent families are expected to expire between 2027 and 2031.

        In addition to the above, we have established expertise and development capabilities focused in the areas of preclinical research and development, manufacturing and manufacturing process scale-up, quality control, quality assurance, regulatory affairs and clinical trial design and implementation. We believe that our focus and expertise will help us develop products based on our proprietary intellectual property.

        The term of individual patents depends upon the legal term of the patents in the countries in which they are obtained. In most countries in which we file, the patent term is 20 years from the date of filing the non-provisional application. In the United States, a patent's term may be lengthened by patent term adjustment, which compensates a patentee for administrative delays by the United States Patent and Trademark Office in granting a patent, or may be shortened if a patent is terminally disclaimed over an earlier-filed patent.

        The term of a patent that covers an FDA-approved drug may also be eligible for patent term extension, which permits patent term restoration of a United States patent as compensation for the patent term lost during the FDA regulatory review process. The Hatch-Waxman Act permits a patent term extension of up to five years beyond the expiration of the patent. The length of the patent term extension is related to the length of time the drug is under regulatory review. A patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval and only one patent applicable to an approved drug may be extended. Moreover, a patent can only be extended once, and thus, if a single patent is applicable to multiple products, it can only be extended based on one product. Similar provisions are available in Europe and other foreign jurisdictions to extend the term of a patent that covers an approved drug. When possible, depending upon the length of clinical trials and other factors involved in the filing of a new drug application, or NDA, we expect to apply for patent term extensions for patents covering our product candidates and their methods of use.

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In-License Agreements

    University of California

        In August 2006, we entered into an exclusive license agreement with The Regents of the University of California, or UC, granting us an exclusive, royalty-bearing sublicensable license to a patent family that includes claims to fundamental aspects of the ATLAS platform, to make, use, offer for sale, import and sell licensed products and services, and to practice licensed methods in all fields of use in the United States. This patent family consists entirely of issued United States patents with a patent term until August 2018. UC retains the right to practice and to allow other educational and non-profit institutions to practice, the licensed intellectual property licensed under the agreement for educational and research purposes.

        Until first commercial sale of a licensed product or service, we are obligated to pay UC an annual license maintenance fee in the low five figures. Upon commercialization of our products and services covered by the licensed patents, we are obligated to pay UC royalties in the low single digits, subject to a minimum annual royalty in the low five figures, on the net sales of such products and services sold by us or our affiliates for the life of any licensed patents covering the products or services. The royalties payable to UC are subject to reduction for any third party payments required to be made, with a minimum floor in the low single digits. In addition, we agreed to pay UC a flat royalty in the low single digits on net sales of products sold by us or our affiliates which include a polypeptide, nucleotide sequence, biological organism or chemical entity identified in the practice of a licensed method or service, but not otherwise covered, by the licensed patent for the life of the licensed patents. If we receive any revenue (cash or non-cash) from any sublicensees, we must pay UC a percentage of such revenue, excluding certain categories of payments but including royalties on net sales by sublicensees, varying in the low-double digits for any sublicense depending on the scope of the license. Under the terms of the agreement, we are obligated to pay UC a specified development milestone payment and a specified commercial milestone payment up to $500 thousand in the aggregate for the first licensed product covered by the licensed patents, plus up to an additional $250 thousand if specified development and commercial milestones are met for each subsequent licensed product covered by the licensed patents. As of November 30, 2013, we have not made any milestone payments.

        We are required to diligently develop and market licensed products, services and methods. If we are unable to meet our diligence obligations, even after any extension thereof, UC has the right, depending on the number of years the agreement has been effective, to either terminate the agreement or convert our exclusive license to a non-exclusive license.

        Unless earlier terminated, the agreement with UC will remain in effect until the expiration of the last-to-expire patent under the licensed patent rights. We may terminate the agreement at any time by giving UC advance written notice. The agreement may also be terminated by UC in the event of a material breach by us that remains uncured after a specified period of time.

    Harvard University

        In November 2007, we entered into an exclusive license agreement with President and Fellows of Harvard College, or Harvard, granting us an exclusive, worldwide, royalty-bearing, sublicensable license to three patent families, to develop, make, have made, use, market, offer for sale, sell, have sold and import licensed products and to perform licensed services. This agreement was amended and restated in November 2012. The Harvard intellectual property covers methods related to the ATLAS discovery platform, as well as certain chlamydia immunogenic compositions and methods for inhibiting or treating chlamydia infections. Any patents within this portfolio that have issued or may be issued will expire normally in 2027 and 2028. Harvard retains the right to make and use, and to grant licenses to other not-for-profit research organizations to make and use, the licensed intellectual property for internal research, teaching and other educational purposes.

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        We are obligated to pay Harvard an annual license maintenance fee ranging from the low five figures to the mid five figures depending on the type of product and the number of years after the effective date of the agreement. For products covered by the licensed patent rights, we are obligated to pay Harvard milestone payments up to $1.8 million in the aggregate upon the achievement of certain development and regulatory milestones. For products discovered using the licensed methods, we are obligated to pay Harvard milestone payments up to $600 thousand in the aggregate for each of the first three products and up to $300 thousand in the aggregate for each additional product under the agreement upon the achievement of certain development and regulatory milestones. As of November 30, 2013, we have paid $33 thousand in aggregate milestone payments. Upon commercialization of our products covered by the licensed patent rights or discovered using the licensed methods, we are obligated to pay Harvard royalties on the net sales of such products and services sold by us, our affiliates and our sublicensees. This royalty varies depending on the type of product or service but is in the low single digits. The royalty based on sales by our sublicensees is the greater of the applicable royalty rate or a percentage in the high single digits or the low double digits of the royalties we receive from such sublicensee depending on the type of product. Depending on the type of commercialized product or service, royalties are payable until the expiration of the last-to-expire valid claim under the licensed patent rights or for a period of 10 years from first commercial sale of such product or service. The royalties payable to Harvard are subject to reduction, capped at a specified percentage, for any third party payments required to be made. In addition to the royalty payments, if we receive any additional revenue (cash or non-cash) under any sublicense, we must pay Harvard a percentage of such revenue, excluding certain categories of payments, varying from the low single digits to up to the low double digits depending on the scope of the license that includes the sublicense.

        We are required to use commercially reasonable efforts to develop licensed products, introduce them into the commercial market and market them, in compliance with an agreed upon development plan. We are also obligated to achieve specified development milestones. If we are unable to meet our development milestones for any type of product or service, absent any reasonable proposed extension or amendment thereof, Harvard has the right, depending on the type of product or service, to terminate this agreement with respect to such products or to convert the license to a non-exclusive, non-sublicensable license with respect to such products and services.

        Our agreement with Harvard will expire on a product-by-product or service-by-service and country-by-country basis until the expiration of the last-to-expire valid claim under the licensed patent rights. We may terminate the agreement at any time by giving Harvard advance written notice. Harvard may also terminate the agreement in the event of a material breach by us that remains uncured; in the event of our insolvency, bankruptcy, or similar circumstances; or if we challenge the validity of any patents licensed to us.

    University of Washington

        In January 2010, we entered into a patent license agreement with the University of Washington, or UW, which was subsequently amended and partially terminated with respect to specified patent rights in July 2012 and was further amended in September 2012 and November 2013. The agreement grants a worldwide, sublicensable, co-exclusive license to certain patent rights, and an exclusive license to certain other patent rights, to manufacture, have manufactured on our behalf, use, offer to sell or sell, offer to lease or lease, import, or otherwise offer to dispose or dispose of licensed products to prevent or treat HSV-2. Patents within the remaining licensed patent rights include claims to compositions of certain HSV-2 proteins and methods for treating HSV infections, with a patent term until at least July 2023. UW retains the right for itself and the Fred Hutchinson Cancer Research Center to make and use products and processes covered by the licensed patent rights for academic research, teaching and any other academic purpose.

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        Until the first commercial sale of a licensed product, we are obligated to pay UW an annual license maintenance fee in the low five figures. For each product covered by the licensed patent rights, we are obligated to pay UW milestone payments up to $750 thousand in the aggregate upon the achievement of certain development and commercial milestones. As of November 30, 2013, we have paid $25 thousand in milestone payments. Upon commercialization of our licensed products covered by the licensed patent rights, we are obligated to pay UW royalties in the low single digits on the net sales of such products sold by us, our affiliates and our sublicensees, subject to a minimum annual royalty payment in the low five figures following the first commercial sale of a licensed product. Royalties are payable on a country-by-country and licensed product-by-licensed product basis until the earlier of the termination of this agreement, or the date on which the manufacture, importation, use or sale of the licensed product is no longer covered by a valid claim of a licensed patent in such country. The royalties payable to UW are subject to reduction, capped at a specified percentage, for any third-party payments required to be made. In addition to the royalty payments, if we receive any additional revenue (cash or non-cash) under any sublicense, we must pay UW a percentage of such revenue, excluding certain categories of payments and payments made in consideration of additional intellectual property rights that are necessary or useful for commercialization of the licensed product, varying from the mid-single digits to the low double digit range depending on whether certain clinical study milestones have been achieved at the time the sublicense was granted.

        We are required to use commercially reasonable efforts to commercialize the inventions covered by the licensed patents and to make and sell the licensed products within a reasonable period of time. We are also obligated to achieve specified development and regulatory performance milestones.

        Our agreement with UW will expire on the date on which no valid claim in a licensed patent is pending or subsisting in any country worldwide. We may terminate the agreement on a licensed product-by-licensed product basis or in its entirety at any time by giving UW advance written notice. UW may also terminate the agreement in the event of a material breach by us that remains uncured within a specified timeframe; in the event of our insolvency, bankruptcy, or similar circumstances; or if we challenge the validity of the licensed patents.

Other Collaborations

    Children's Medical Center Corporation

        In September 2008, we entered into a collaborative research agreement with Childrens that was funded by PATH Vaccine Solutions, or PATH. The collaborative research project led to the identification of certain highly conserved pneumococcal antigens that are able to protect against colonization. The intellectual property covering these antigens is co-owned by us and Childrens and covers pneumococcal vaccine compositions and methods for inhibiting or treating pneumococcus infections. In February 2010, we entered into an exclusive license agreement with Childrens, which was amended and restated in March 2012. This agreement grants us an exclusive, worldwide, sublicensable license under Childrens' rights to the jointly-owned intellectual property to make, have made, use, sell, offer for sale, import and export licensed products and to practice licensed processes for the prevention and treatment of Streptococcus pneumoniae. Childrens retains the right to practice and use, and to allow academic non-profit research organizations to practice and use, the licensed intellectual property for research, educational, clinical and charitable purposes. Under the terms of the agreement, our license from Childrens is subject to PATH's separate non-exclusive, royalty-free license from Childrens to develop pneumococcal T cell-based protein vaccines worldwide and to market and sell such vaccines in developing countries.

        For products covered by the licensed patent rights, we are obligated to pay Childrens milestone payments up to $390 thousand in the aggregate upon the achievement of certain development and commercial milestones. As of November 30, 2013, we have not made any milestone payments. Upon commercialization of our products, we are obligated to pay Childrens royalties in the low single digits

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on the net sales of licensed products sold by us, our affiliates and our sublicensees. The royalties payable to Childrens are subject to reduction for any third-party payments required to be made, with a minimum floor in the low single digits. Royalties are payable for the term of the license agreement, which is 15 years from the effective date of the amended and restated agreement or until expiration of the last-to-expire patent under the licensed patent rights, whichever period is longer. If we receive any additional revenue (cash or non-cash) under any sublicense, we must pay Childrens a percentage of such income varying from the mid-single digits to low double digits depending on the clinical stage of development of the product, provided that such percentage may increase to match our financial obligations to third parties.

        We are required to use commercially reasonable efforts to bring at least one licensed product to market as soon as reasonably practical, consistent with sound and legal business practices and judgment and to accomplish the objectives set forth in an agreed upon development plan. If we are unable to meet our diligence obligations, even after any extensions thereof, Childrens has the right to terminate in this agreement in whole or in part.

        Unless earlier terminated, the agreement with Childrens will remain in effect until the later of 15 years from the effective date of the amended and restated agreement or the expiration of the last to expire patent under the licensed patent rights. We may terminate the agreement in its entirety or on a country-by-country and licensed product-by-licensed product basis, at any time by giving Childrens advance written notice. Childrens may terminate the agreement in the event of our bankruptcy, insolvency or similar circumstances; if we use confidential information to formally challenge Childrens' joint ownership of the licensed patent rights; or if we materially breach the agreement and do not cure such breach within a specified time period.

    Isconova AB

        In August 2009, we entered into an exclusive license and collaboration agreement with Isconova AB, now Novavax. The agreement grants us a worldwide, sublicensable, exclusive license to two patent families, to import, make, have made, use, sell, offer for sale and otherwise exploit licensed vaccine products containing an adjuvant which incorporates or is developed from Matrix-A, Matrix-C and/or Matrix-M technology, in the fields of HSV and chlamydia, and the time-limited exclusive fields of Neisseria gonorrhoeae , cytomegalovirus, or CMV, and Mycobacterium tuberculosis . After a specified period of time, the license grant to us in the time-limited exclusive fields will convert to a non-exclusive license with respect to all licensed intellectual property rights that were not jointly invented by us and Novavax under the collaboration. Under the terms of this agreement, Novavax also grants us a worldwide, sublicensable, non-exclusive license under such licensed intellectual property rights to import, make, have made, use, sell, offer for sale and otherwise exploit licensed products in the field of Streptococcus pneumoniae . Our rights in the field of Streptococcus pneumoniae are exclusive with respect to all intellectual property rights jointly invented by us and Novavax under the collaboration. The agreement further grants us certain limited rights to use Novavax trademarks.

        For licensed products in each unique disease field under the agreement, we are obligated to pay Novavax milestone payments up to approximately $3 million in the aggregate upon the achievement of certain development and commercial milestones. As of November 30, 2013, we have paid $100 thousand in aggregate milestone payments. Upon commercialization of our products, we are obligated to pay Novavax royalties on the net sales of licensed products sold by us, our affiliates and our sublicensees. The royalties payable to Novavax are in the low single digits and vary on a country-by-country and licensed product-by-licensed product basis based on the amount of net sales and the nature and timing of the licensed product's development. The royalties payable to Novavax are subject to reduction if the licensed product is not covered by one or more valid claims of the licensed patent rights, or if we are required to make any third-party payments. Royalties are payable for 10 years from first commercial sale in any particular country or until the date on which offer for sale of a

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licensed product is no longer covered by a valid claim of the licensed patent rights in such country, whichever period is longer. In addition to the royalty payments, if we receive any additional revenue (cash or non-cash) under any sublicenses, we must pay Novavax a percentage of such revenue, up to the low double digits.

        We are required to use commercially reasonable efforts to perform specified research activities in accordance with an agreed-upon research plan. We are also obligated to use commercially reasonable efforts consistent with prudent business judgment and business and market conditions to research, develop and carry out the commercialization of licensed products in HSV and chlamydia.

        Our agreement with Novavax will expire on a country-by-country and licensed product-by-licensed product basis on the date of the expiration of the royalty term with respect to such licensed product in such country. We may terminate the agreement on a country-by-country and licensed product-by-licensed product basis or in its entirety at any time by giving Novavax advance written notice. Both parties may also terminate the agreement in the event of a material breach by the other party that remains uncured or for bankruptcy, insolvency or similar circumstances. Novavax may terminate this agreement if we challenge the validity of any patents licensed to us.

Trade Secrets

        We may rely, in some circumstances, on trade secrets to protect our technology. However, trade secrets can be difficult to protect. We seek to protect our proprietary technology and processes, in part, by entering into confidentiality agreements with our employees, consultants, scientific advisors and contractors. We also seek to preserve the integrity and confidentiality of our data and trade secrets by maintaining physical security of our premises and physical and electronic security of our information technology systems. While we have confidence in these individuals, organizations and systems, agreements or security measures may be breached, and we may not have adequate remedies for any breach. In addition, our trade secrets may otherwise become known or be independently discovered by competitors. To the extent that our consultants, contractors or collaborators use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.

United States Government Regulation

        Biological products such as vaccines are subject to regulation under the Federal Food, Drug, and Cosmetic Act, or FD&C Act, and the Public Health Service Act, or PHS Act, and other federal, state, local and foreign statutes and regulations. Both the FD&C Act and the PHS Act and their corresponding regulations govern, among other things, the testing, manufacturing, safety, efficacy, labeling, packaging, storage, record keeping, distribution, reporting, advertising and other promotional practices involving biological products. FDA approval must be obtained before clinical testing of biological products. FDA approval also must be obtained before marketing of biological products. The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources and we may not be able to obtain the required regulatory approvals.

    United States Biological Products Development Process

        The process required by the FDA before a biological product may be marketed in the United States generally involves the following:

    completion of nonclinical laboratory tests and animal studies according to good laboratory practices, or GLPs, and applicable requirements for the humane use of laboratory animals or other applicable regulations;

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    submission to the FDA of an application for an IND, which must become effective before human clinical trials may begin;

    performance of adequate and well-controlled human clinical trials according to the FDA's regulations commonly referred to as good clinical practices, or GCPs, and any additional requirements for the protection of human research subjects and their health information, to establish the safety and efficacy of the proposed biological product for its intended use;

    submission to the FDA of a Biologics License Application, or BLA, for marketing approval that includes substantive evidence of safety, purity, and potency from results of nonclinical testing and clinical trials;

    satisfactory completion of an FDA inspection of the manufacturing facility or facilities where the biological product is produced to assess compliance with GMP, to assure that the facilities, methods and controls are adequate to preserve the biological product's identity, strength, quality and purity and, if applicable, the FDA's current good tissue practices, or GTPs, for the use of human cellular and tissue products;

    potential FDA audit of the nonclinical and clinical trial sites that generated the data in support of the BLA; and

    FDA review and approval, or licensure, of the BLA.

        Before testing any biological product candidate in humans, the product candidate enters the preclinical study stage. Preclinical studies, also referred to as nonclinical studies, include laboratory evaluations of product chemistry, toxicity and formulation, as well as animal studies to assess the potential safety and activity of the product candidate. The conduct of the preclinical studies must comply with federal regulations and requirements including GLPs.

        The clinical trial sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data, any available clinical data or literature and a proposed clinical protocol, to the FDA as part of the IND. Some preclinical studies may continue even after the IND is submitted. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA places the clinical trial on a clinical hold within that 30-day time period. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. The FDA may also impose clinical holds on a biological product candidate at any time before or during clinical trials due to safety concerns or non-compliance. If the FDA imposes a clinical hold, studies may not recommence without FDA authorization and then only under terms authorized by the FDA. Accordingly, we cannot be sure that submission of an IND will result in the FDA allowing clinical trials to begin, or that, once begun, issues will not arise that suspend or terminate such studies.

        Clinical trials involve the administration of the biological product candidate to healthy volunteers or patients under the supervision of qualified investigators, generally physicians not employed by or under the trial sponsor's control. Clinical trials are conducted under protocols detailing, among other things, the objectives of the clinical trial, dosing procedures, subject selection and exclusion criteria, and the parameters to be used to monitor subject safety, including stopping rules that assure a clinical trial will be stopped if certain AEs should occur. Each protocol and any amendments to the protocol must be submitted to the FDA as part of the IND. Clinical trials must be conducted and monitored in accordance with the FDA's regulations comprising the GCP requirements, including the requirement that all research subjects provide informed consent. Further, each clinical trial must be reviewed and approved by an IRB at or servicing each institution at which the clinical trial will be conducted. An IRB is charged with protecting the welfare and rights of trial participants and considers such items as whether the risks to individuals participating in the clinical studies are minimized and are reasonable in relation to anticipated benefits. The IRB also approves the form and content of the informed consent that must be signed by each clinical trial subject or his or her legal representative and must monitor the clinical trial until completed.

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        Human clinical trials are typically conducted in three sequential phases that may overlap or be combined:

    Phase 1.   The biological product is initially introduced into healthy human subjects and tested for safety. In the case of some products for severe or life-threatening diseases, especially when the product may be too inherently toxic to ethically administer to healthy volunteers, the initial human testing is often conducted in patients.

    Phase 2.   The biological product is evaluated in a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance, optimal dosage and dosing schedule.

    Phase 3.   Clinical studies are undertaken to further evaluate dosage, clinical efficacy, potency, and safety in an expanded patient population at geographically dispersed clinical trial sites. These clinical studies are intended to establish the overall risk/benefit ratio of the product and provide an adequate basis for product labeling.

        Post-approval clinical studies, sometimes referred to as Phase 4 clinical studies, may be conducted after initial marketing approval. These clinical studies are used to gain additional experience from the treatment of patients in the intended therapeutic indication, particularly for long-term safety follow-up.

        During all phases of clinical development, regulatory agencies require extensive monitoring and auditing of all clinical activities, clinical data and clinical trial investigators. Annual progress reports detailing the results of the clinical studies must be submitted to the FDA. Written IND safety reports must be promptly submitted to the FDA, the NIH and the investigators for serious and unexpected AEs, any findings from other studies, tests in laboratory animals or in vitro testing that suggest a significant risk for human subjects, or any clinically important increase in the rate of a serious suspected adverse reaction over that listed in the protocol or investigator brochure. The sponsor must submit an IND safety report within 15 calendar days after the sponsor determines that the information qualifies for reporting. The sponsor also must notify the FDA of any unexpected fatal or life-threatening suspected adverse reaction within seven calendar days after the sponsor's initial receipt of the information. Phase 1, Phase 2 and Phase 3 clinical studies may not be completed successfully within any specified period, if at all. The FDA or the sponsor or its data safety monitoring board may suspend a clinical trial at any time on various grounds, including a finding that the research subjects or patients are being exposed to an unacceptable health risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB's requirements or if the biological product has been associated with unexpected serious harm to patients.

        Concurrent with clinical studies, companies usually complete additional animal studies and must also develop additional information about the physical characteristics of the biological product as well as finalize a process for manufacturing the product in commercial quantities in accordance with GMP requirements. To help reduce the risk of the introduction of adventitious agents with use of biological products, the PHS Act emphasizes the importance of manufacturing control for products whose attributes cannot be precisely defined. The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among other things, the sponsor must develop methods for testing the identity, strength, quality, potency and purity of the final biological product. Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the biological product candidate does not undergo unacceptable deterioration over its shelf life.

    United States Review and Approval Processes

        After the completion of clinical trials of a biological product, FDA approval of a BLA must be obtained before commercial marketing of the biological product. The BLA must include results of

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product development, laboratory and animal studies, human studies, information on the manufacture and composition of the product, proposed labeling and other relevant information. In addition, under the Pediatric Research Equity Act, or PREA, a BLA or supplement to a BLA must contain data to assess the safety and effectiveness of the biological product for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective. The FDA may grant deferrals for submission of data or full or partial waivers. The testing and approval processes require substantial time and effort and there can be no assurance that the FDA will accept the BLA for filing and, even if filed, that any approval will be granted on a timely basis, if at all.

        Under the Prescription Drug User Fee Act, or PDUFA, as amended, each BLA must be accompanied by a significant user fee. PDFUA also imposes an annual product fee for biologics and an annual establishment fee on facilities used to manufacture prescription biologics. Fee waivers or reductions are available in certain circumstances, including a waiver of the application fee for the first application filed by a small business.

        Within 60 days following submission of the application, the FDA reviews the BLA to determine if it is substantially complete before the agency accepts it for filing. The FDA may refuse to file any BLA that it deems incomplete or not properly reviewable at the time of submission and may request additional information. In this event, the BLA must be resubmitted with the additional information. The resubmitted application also is subject to review before the FDA accepts it for filing. Once the submission is accepted for filing, the FDA begins an in-depth substantive review of the BLA. The FDA reviews the BLA to determine, among other things, whether the proposed product is safe and potent, or effective, for its intended use, and has an acceptable purity profile, and whether the product is being manufactured in accordance with GMP to assure and preserve the product's identity, safety, strength, quality, potency and purity. The FDA may refer applications for novel biological products or biological products that present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions. During the biological product approval process, the FDA also will determine whether a Risk Evaluation and Mitigation Strategy, or REMS, is necessary to assure the safe use of the biological product. If the FDA concludes a REMS is needed, the sponsor of the BLA must submit a proposed REMS; the FDA will not approve the BLA without a REMS, if required.

        Before approving a BLA, the FDA will inspect the facilities at which the product is manufactured. The FDA will not approve the product unless it determines that the manufacturing processes and facilities are in compliance with GMP requirements and adequate to assure consistent production of the product within required specifications. Additionally, before approving a BLA, the FDA will typically inspect one or more clinical sites to assure that the clinical trials were conducted in compliance with IND study requirements and GCP requirements. To assure GMP, GTP and GCP compliance, an applicant must incur significant expenditure of time, money and effort in the areas of training, record keeping, production, and quality control.

        Notwithstanding the submission of relevant data and information, the FDA may ultimately decide that the BLA does not satisfy its regulatory criteria for approval and deny approval. Data obtained from clinical trials are not always conclusive and the FDA may interpret data differently than we interpret the same data. If the agency decides not to approve the BLA in its present form, the FDA will issue a complete response letter that usually describes all of the specific deficiencies in the BLA identified by the FDA. The deficiencies identified may be minor, for example, requiring labeling changes, or major, for example, requiring additional clinical trials. Additionally, the complete response letter may include recommended actions that the applicant might take to place the application in a condition for approval. If a complete response letter is issued, the applicant may either resubmit the BLA, addressing all of the deficiencies identified in the letter, or withdraw the application.

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        If a product receives regulatory approval, the approval may be significantly limited to specific diseases and dosages or the indications for use may otherwise be limited, which could restrict the commercial value of the product. Further, the FDA may require that certain contraindications, warnings or precautions be included in the product labeling. The FDA may impose restrictions and conditions on product distribution, prescribing, or dispensing in the form of a risk management plan, or otherwise limit the scope of any approval. In addition, the FDA may require post marketing clinical trials, sometimes referred to as Phase 4 clinical trials, designed to further assess a biological product's safety and effectiveness, and testing and surveillance programs to monitor the safety of approved products that have been commercialized.

        One of the performance goals agreed to by the FDA under the PDUFA is to review 90% of standard BLAs in 10 months from filing and 90% of priority BLAs in six months from filing, whereupon a review decision is to be made. The FDA does not always meet its PDUFA goal dates for standard and priority BLAs and its review goals are subject to change from time to time. The review process and the PDUFA goal date may be extended by three months if the FDA requests or the BLA sponsor otherwise provides additional information or clarification regarding information already provided in the submission within the last three months before the PDUFA goal date.

    Federal and State Fraud and Abuse, Transparency and Privacy Laws

        In the United States, our business activities are subject to numerous other laws by federal and state authorities, in addition to the FDA, including but not limited to, the United States Federal Communications Commission, the United States Department of Health and Human Services, or HHS, and its various divisions, including but not limited to, the Centers for Medicare & Medicaid Services, or CMS. These laws are enforced by various federal and state enforcement authorities, including but not limited to, the United States Department of Justice, and individual United States Attorney offices within the Department of Justice, HHS' various enforcement divisions, including but not limited to, the Office of Inspector General, or OIG, the Office for Human Research Protections, or OHRP, and the Office of Research Integrity, or ORI, and other state and local government agencies.

        The federal Anti-Kickback Statute prohibits, among other things, knowingly and willfully offering, paying, soliciting, or receiving any remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or covertly, in cash or in kind, to induce, or in return for, purchasing, leasing, ordering, or arranging for or recommending, the purchase lease, or order of any good, facility, service or item for which payment is made, in whole or in part, under a federal health care program, such as Medicare. The federal Anti-Kickback Statute has been interpreted to apply to arrangements between manufacturers on one hand and prescribers, purchasers and formulary managers on the other. There are a number of statutory exceptions and regulatory safe harbors protecting certain common activities from prosecution. Failure to meet all of the requirements of a particular applicable statutory exception or regulatory safe harbor does not make the conduct per se illegal under the federal Anti-Kickback Statute. Instead, the legality of the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all of its facts and circumstances.

        The federal civil False Claims Act prohibits, among other things, any person or entity from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment to, or approval by, the federal government, or knowingly making, using, or causing to be made or used, a false record or statement material to a false or fraudulent claim to the federal government. Recently, the civil False Claims Act has been used to assert liability on the basis of kickbacks and improper referrals, improperly reported government pricing metrics such as Medicaid Best Price or Average Manufacturer Price, improper use of supplier or provider Medicare numbers when detailing a provider of services, improper promotion of drugs or off-label uses not expressly approved by the FDA in a drug's label, and misrepresentations with respect to the services rendered or items provided.

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        Additionally, the civil monetary penalties statute, among other things, imposes fines against any person who is determined to have presented, or caused to be presented, claims to a federal health care program that the person knows, or should know, is for an item or service that was not provided as claimed or is false or fraudulent.

        The federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, created new federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud or to obtain, by means of false or fraudulent pretenses, representations or promises, any of the money or property owned by, or under the custody or control of, any health care benefit program and knowingly and willfully falsifying, concealing or covering up by trick, scheme or device a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of, or payment for, health care benefits, items or services relating to health care matters.

        Many states have similar fraud and abuse statutes and regulations that apply to items and services reimbursed under Medicaid and other state programs, or, in several states, private payors.

        Additionally, the federal Physician Payments Sunshine Act within the Health Care and Education Reconciliation Act, or Health Care Reform Law, and its implementing regulations, require that certain manufacturers of drugs, devices, biological and medical supplies for which payment is available under Medicare, Medicaid or the Children's Health Insurance Program (with certain exceptions) to report to CMS, information related to certain payments or other transfers of value made or distributed to physicians and teaching hospitals, or to entities or individuals at the request of, or designated on behalf of, the physicians and teaching hospitals and to report annually to CMS certain ownership and investment interests held by physicians and their immediate family members.

        In addition, we may be subject to, or our marketing activities may be limited by, data privacy and security regulation by both the federal government and the states in which we conduct our business.

        If our operations are found to be in violation of any of the health regulatory laws described above, or any other laws that apply to us, we may be subject to penalties, including, without limitation, civil, criminal, and administrative penalties, damages, monetary fines, disgorgement, possible exclusion from participation in Medicare, Medicaid and other federal health care programs, contractual damages, reputational harm, diminished profits and future earnings, and curtailment or restructuring of our operations.

    Reimbursement

        In both domestic and foreign markets, the commercial success of any approved products will depend, in part, on the availability of coverage and adequate reimbursement of such products from third-party payors, such as government health care programs, commercial insurance and managed care organizations. Patients who are provided vaccinations, and providers providing vaccinations, generally rely on third-party payors to reimburse all or part of the associated health care costs. Sales of any approved vaccines will therefore depend substantially, both domestically and abroad, on the extent to which the costs of our approved vaccines will be paid by third-party payors. These third-party payors are increasingly challenging the prices charged for medical products and services and imposing controls to manage costs. The containment of health care costs has become a priority of federal and state governments and the prices of drugs have been a focus in this effort. Governments have shown significant interest in implementing cost-containment programs, including price controls, restrictions on reimbursement and requirements for substitution of generic products. Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could further limit our net revenue and results. Third-party payors may limit coverage to specific products on an approved list, or formulary, which might not include all of the FDA-approved products for a particular indication. In addition, there is significant uncertainty regarding the reimbursement status of newly approved health care products. Third-party payors are

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increasingly examining the medical necessity and cost-effectiveness of medical products and services, in addition to their safety and efficacy. We may need to conduct expensive pharmacoeconomic studies in order to demonstrate the cost-effectiveness of our products. If third-party payors do not consider our products to be cost-effective compared to other therapies, the payors may not cover our products after approved as a benefit under their plans or, if they do, the level of payment may not be sufficient to allow us to sell our products on a profitable basis.

        Within the United States, if we obtain appropriate approval in the future to market any of our current product candidates, we may seek approval and coverage for those products under Medicaid, Medicare and the Public Health Service, or PHS, pharmaceutical pricing program and also seek to sell the products to federal agencies.

        Medicaid is a joint federal and state program that is administered by the states for low income and disabled beneficiaries. Under the Medicaid Drug Rebate Program, manufacturers are required to pay a rebate for each unit of product reimbursed by the state Medicaid programs. The amount of the rebate for each product is set by law and may be subject to an additional discount if certain pricing increases more than inflation.

        Medicare is a federal program administered by the federal government that covers individuals age 65 and over as well as those with certain disabilities. Medicare Part D provides coverage to enrolled Medicare patients for self-administered drugs (i.e., drugs that do not need to be administered by a physician). Medicare Part D is administered by private prescription drug plans approved by CMS and each drug plan establishes its own Medicare Part D formulary for prescription drug coverage and pricing, which the drug plan may modify from time-to-time.

        Medicare Part B covers most injectable drugs given in an in-patient setting, and some drugs administered by a licensed medical provider in hospital outpatient departments and doctors' offices. Medicare Part B is administered by Medicare Administrative Contractors, which generally have the responsibility of making coverage decisions. Subject to certain payment adjustments and limits, Medicare generally pays for Part B covered drugs based on a percentage of manufacturer-reported average sales prices.

        Drug products are subject to discounted pricing when purchased by federal agencies via the Federal Supply Schedule, or FSS. FFS participation is required for a drug product to be covered and paid for by certain federal agencies and for coverage under Medicaid, Medicare Part B and the PHS pharmaceutical pricing program. FSS pricing is negotiated periodically with the Department of Veterans Affairs. FSS pricing is intended to not exceed the price that a manufacturer charges its most-favored non-federal customer for its product. In addition, prices for drugs purchased by the Veterans Administration, Department of Defense (including drugs purchased by military personnel and dependents through the TRICARE retail pharmacy program), Coast Guard, and PHS are subject to a cap on pricing (known as the "federal ceiling price") and may be subject to an additional discount if pricing increases more than inflation.

        To maintain coverage of drugs under the Medicaid Drug Rebate Program, manufacturers are required to extend discounts to certain purchasers under the PHS pharmaceutical pricing program. Purchasers eligible for discounts include hospitals that serve a disproportionate share of financially needy patients, community health clinics and other entities that receive health services grants from the PHS.

        The American Recovery and Reinvestment Act of 2009 provides funding for the federal government to compare the effectiveness of different treatments for the same illness. A plan for the research will be developed by the HHS, the Agency for Healthcare Research and Quality and the National Institutes for Health, and periodic reports on the status of the research and related expenditures will be made to Congress. Although the results of the comparative effectiveness studies

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are not intended to mandate coverage policies for public or private payors, it is not clear what effect, if any, the research will have on the sales of any product, if any such product or the condition that it is intended to treat is the subject of a trial. It is also possible that comparative effectiveness research demonstrating benefits in a competitor's product could adversely affect the sales of any of our approved products. If third-party payors do not consider our products to be cost-effective compared to other available therapies, they may not cover our products as a benefit under their plans or, if they do, the level of payment may not be sufficient to allow us to sell our products on a profitable basis.

        The United States and state governments continue to propose and pass legislation designed to reduce the cost of health care. In March 2010, the United States Congress enacted the Health Care Reform Law which has the potential to change health care financing by both governmental and private payors. In the future, there may continue to be additional proposals relating to the reform of the United States health care system, some of which could further limit the prices we are able to charge, or the amounts of reimbursement available for our vaccine candidates once they are approved.

        Outside the United States, ensuring adequate coverage and payment for our products will face challenges. In international markets, reimbursement and health care payment systems vary significantly by country, and many countries have instituted price ceilings on specific products and therapies. Pricing of prescription pharmaceuticals is subject to governmental control in many countries. Pricing negotiations with governmental authorities can extend well beyond the receipt of regulatory marketing approval for a product and may require us to conduct a clinical trial that compares the cost effectiveness of our product candidates or products to other available therapies. The conduct of such a clinical trial could be expensive and result in delays in our commercialization efforts. Third-party payors are challenging the prices charged for medical products and services, and many third-party payors limit reimbursement for newly-approved health care products. Recent budgetary pressures in many European Union countries are also causing governments to consider or implement various cost-containment measures, such as price freezes, increased price cuts and rebates. If budget pressures continue, governments may implement additional cost-containment measures. Cost-control initiatives could decrease the price we might establish for products that we may develop or sell, which would result in lower product revenues or royalties payable to us. There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our products.

    Foreign Regulation

        In addition to regulations in the United States, we will be subject to a variety of foreign regulations governing clinical trials and commercial sales and distribution of our product candidates. Whether or not we obtain FDA approval for a product candidate, we must obtain approval from the comparable regulatory authorities of foreign countries or economic areas, such as the European Union, before we may commence clinical trials or market products in those countries or areas. The approval process and requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from place to place, and the time may be longer or shorter than that required for FDA approval.

        Certain countries outside of the United States have a process that requires the submission of a clinical trial application much like an IND prior to the commencement of human clinical trials. In Europe, for example, a clinical trial application, or CTA, must be submitted to the competent national health authority and to independent ethics committees in each country in which a company intends to conduct clinical trials. Once the CTA is approved in accordance with a country's requirements, clinical trial development may proceed in that country. In all cases, the clinical trials must be conducted in accordance with good clinical practices, or GCPs and other applicable regulatory requirements.

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        Under European Union regulatory systems, a company may submit marketing authorization applications either under a centralized or decentralized procedure. The centralized procedure is compulsory for medicinal products produced by biotechnology or those medicinal products containing new active substances for specific indications such as the treatment of AIDS, cancer, neurodegenerative disorders, diabetes, viral diseases and designated orphan medicines, and optional for other medicines which are highly innovative. Under the centralized procedure, a marketing application is submitted to the European Medicines Agency where it will be evaluated by the Committee for Medicinal Products for Human Use and a favorable opinion typically results in the grant by the European Commission of a single marketing authorization that is valid for all European Union member states within 67 days of receipt of the opinion. The initial marketing authorization is valid for five years, but once renewed is usually valid for an unlimited period. The decentralized procedure provides for approval by one or more "concerned" member states based on an assessment of an application performed by one member state, known as the "reference" member state. Under the decentralized approval procedure, an applicant submits an application, or dossier, and related materials to the reference member state and concerned member states. The reference member state prepares a draft assessment and drafts of the related materials within 120 days after receipt of a valid application. Within 90 days of receiving the reference member state's assessment report, each concerned member state must decide whether to approve the assessment report and related materials. If a member state does not recognize the marketing authorization, the disputed points are eventually referred to the European Commission, whose decision is binding on all member states.

Manufacturing

        We do not have any manufacturing facilities. We currently rely, and expect to continue to rely, on third parties for the manufacture of our product candidates for preclinical studies and clinical trials, as well as for commercial manufacture if our product candidates receive marketing approval. To date, we have obtained materials for GEN-003 and GEN-004 from third-party manufacturers who are sole source suppliers to us. For both product candidates, we intend to identify and qualify contract manufacturers to provide the protein process development, protein production and adjuvant production and fill-and-finish services prior to submission of an NDA to the FDA.

Employees

        As of September 30, 2013, we had 38 full time employees. Of these 38 employees, 32 employees are engaged in research and development and six employees are engaged in finance, human resources, facilities and business and general management. We have no collective bargaining agreements with our employees and we have not experienced any work stoppages. We consider our relations with our employees to be good.

Facilities

        Our principal executive offices are located at 100 Acorn Park Drive, Cambridge, Massachusetts 02140, where we occupy approximately 23,666 square feet of laboratory and office space. Our lease term expires on February 28, 2017. We believe that our existing facilities are sufficient for our present and future operations, and we currently have no plans to lease additional space.

Legal Proceedings

        From time to time, we are subject to various legal proceedings and claims that arise in the ordinary course of our business activities. Although the results of litigation and claims cannot be predicted with certainty, as of the date of this prospectus, we do not believe we are party to any claim or litigation, the outcome of which, if determined adversely to us, would individually or in the aggregate be reasonably expected to have a material adverse effect on our business. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

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MANAGEMENT

Executive Officers, Significant Employees and Directors

        Below is a list of the names, ages as of November 30, 2013 and positions, and a brief account of the business experience of the individuals who serve as our executive officers and directors as of the date of this prospectus.

Name
  Age   Position

William Clark

    45  

President and Chief Executive Officer; Director (Class    )

Seth Hetherington, M.D.

    61  

Chief Medical Officer

Robert E. Farrell Jr., CPA

    48  

Vice President of Finance and Administration

Jessica Baker Flechtner, Ph.D.

    41  

Vice President of Research

Paul Giannasca, Ph.D.

    50  

Vice President of Development

Ravi Venkataramani, Ph.D.

    40  

Vice President of Business Development

George Siber, M.D.

    69  

Director (Class    )

Kevin Bitterman, Ph.D.

    37  

Director (Class    )

Katrine Bosley

    45  

Director (Class    )

Simeon J. George, M.D.

    34  

Director (Class    )

Stephen J. Hoffman, M.D., Ph.D.

    59  

Director (Class    )

        William Clark  has served as our President and Chief Executive Officer since February 2011. Previously he served as our Chief Business Officer from August 2010 to February 2011. Mr. Clark has served on our board of directors since February 2011. Prior to joining our Company, he served as Chief Business Officer at Vanda Pharmaceuticals, Inc., or Vanda, a biopharmaceutical company he co-founded in 2004. While at Vanda, he lead the company's strategic and business development activities, and played a central role in raising more than $220 million in multiple public and private financings. Prior to Vanda, Mr. Clark was a principal at Care Capital, LLC, a venture capital firm investing in biopharmaceutical companies, after serving in a variety of commercial and strategic roles at SmithKline Beecham (now GlaxoSmithKline). Mr. Clark holds a B.A. from Harvard University and an M.B.A. from The Wharton School at the University of Pennsylvania. We believe that Mr. Clark's operation and historical experience with our Company gained from serving as our Chief Executive Officer, President and member of our board of directors, combined with his prior experience at Vanda and in the venture capital industry focusing on biopharmaceutical companies qualify him to serve as a member of our board of directors.

        Seth Hetherington, M.D.  has served as our Chief Medical Officer since joining our Company in January 2011. Prior to joining our Company, Dr. Hetherington served as Senior Vice President of Clinical and Regulatory Affairs at Icagen, Inc., or Icagen, from May 2006 through December 2010. Prior to Icagen, Dr. Hetherington served as Vice President, Clinical Development and Chief Medical Officer at Inhibitex Inc. from June 2002 through April 2005 and held various positions of increasing responsibility in clinical drug development at GlaxoSmithKline from 1995 through June 2002. Dr. Hetherington has also served as a faculty member at the University of North Carolina School of Medicine and held appointments at several leading academic medical centers, including the University of Tennessee, St. Jude Children's Research Hospital in Memphis and Albany Medical College. Dr. Hetherington earned his B.S. at Yale University and his M.D. at the University of North Carolina, Chapel Hill. He completed his postgraduate training in pediatrics and pediatric infectious diseases at the University of North Carolina and the University of Minnesota, respectively. Dr. Hetherington has published extensively in medical and scientific literature, and is board certified in both pediatrics and pediatric infectious diseases. He also served as the industry representative to the Vaccines and Related Blood Products Advisory Committee of the FDA. He currently serves as the industry representative on the National Vaccine Advisory Committee of the U.S. Department of Health and Human Services.

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        Robert E. Farrell Jr., CPA  has served as our Vice President of Finance and Administration since joining our Company in May 2009. Prior to joining our Company, he served as Senior Director of Finance at Magen Biosciences, Inc., or Magen, from September 2008 to May 2009. In that position, he was responsible for all finance and administrative functions and he played a key role in the acquisition of Magen by PPD, Inc. Prior to Magen, Mr. Farrell held senior level financial positions at Oscient Pharmaceuticals Corp. and NeoGenesis Pharmaceuticals, Inc. where he built and directed all financial reporting efforts and helped guide the company through an initial public offering. Mr. Farrell is a licensed certified public accountant and holds a B.S. degree in Accounting from Bentley University.

        Jessica Baker Fletchtner, Ph.D.  has held multiple scientific roles since joining our Company in March 2007 and has served as our Vice President of Research since 2010. Prior to joining our Company, Dr. Flechtner was an Immunology Consultant at BioVest International, Inc. from June 2006 to March 2007, where she guided the development of assays to evaluate the success of the company's autologous Follicular (Non-Hodgkin's) Lymphoma vaccine in patients. As a researcher at Mojave Therapeutics, Inc., or Mojave, and Antigenics Inc. (now Agenus), which acquired Mojave's intellectual property, from 2001 to 2005, Dr. Flechtner developed protein and peptide-based vaccines and immunotherapies for cancer, infectious disease, autoimmunity and allergy. She is an inventor on nine pending or issued patents and has multiple peer-reviewed scientific publications. Dr. Flechtner performed her post-doctoral work in the laboratory of Dr. Harvey Cantor at the Dana Farber Cancer Institute and Harvard Medical School and holds a Ph.D. in Cellular Immunology and B.S. in Animal Science from Cornell University. She is a member of the American Association of Immunologists and the American Society for Microbiology.

        Paul Giannasca, Ph.D.  has served as our Vice President of Development since joining our Company in January 2010. Prior to joining our Company, Dr. Giannasca served as Vice President, Development at Acambis (now Sanofi Pasteur) from 2004 to 2010. Prior to Acambis, he was a senior scientist at OraVax from 1995 to 1999, where he contributed to the company's research initiatives for several vaccines, focusing on evaluating vaccine adjuvants and elucidating mechanisms of vaccine-induced protection. Dr. Giannasca holds multiple patents covering active and passive immunization against Clostridium difficile disease and has published more than 25 papers in the areas of infectious diseases, vaccine-induced protection and vaccine development. Dr. Giannasca received his B.S. in Biology from Fairleigh Dickinson University and his Ph.D. in Molecular and Cellular Biology from the University of Massachusetts-Amherst. He completed his post-doctoral training at Harvard Medical School/Children's Hospital Boston.

        Ravi Venkataramani, Ph.D.  has served as our Vice President of Business Development since joining our Company in July 2011. Prior to joining our Company, Dr. Venkataramani served as director of business development at MedImmune Inc., or MedImmune, from 2004 to 2010. While at MedImmune, he led several key strategic, product and technology deals. In addition, he shared responsibilities for building and managing the respiratory, immunology and autoimmunity drug portfolio of the company. Prior to joining MedImmune, he advised senior management of Fortune-100 clients on all aspects of corporate strategy and execution at Booz, Allen & Hamilton (now Booz & Co). He holds a B.S. from the University of Wisconsin at Superior and a Ph.D. in biochemistry and molecular biophysics from the University of Pennsylvania.

        George Siber, M.D.  has served as a member of our board of directors since 2007. From 1996 to 2007, Dr. Siber served as Executive Vice President and Chief Scientific Officer of Wyeth Vaccines, or Wyeth. While at Wyeth, Dr. Siber oversaw the development and approval of multiple widely-used childhood vaccines, including Prevnar, a pneumococcal vaccine which has achieved multibillion dollar revenues; Acel-Imune, an acellular pertussis vaccine; and Meningitec, a meningococcal meningitis vaccine. Prior to Wyeth, Dr. Siber was Director of the Massachusetts Public Health Biologic Laboratories and a Harvard Medical School Associate Professor of Medicine at Dana Farber Cancer

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Institute. During this time, Dr. Siber led the research and manufacturing of multiple vaccines and immune globulins including Respigam, a human immune globulin against respiratory syncytial virus. Dr. Siber holds an MD degree from McGill University in Canada, received post-doctoral training in Internal Medicine at Rush-Presbyterian Hospital in Chicago and Beth Israel Hospital in Boston and Infectious Disease and vaccinology training at Children's Hospital and Beth Israel Hospital, Harvard Medical School Boston. We believe that Dr. Siber's experience in life sciences and vaccine industries and his experience overseeing the development of multiple vaccines qualifies him to serve as a member of our board of directors.

        Kevin Bitterman, Ph.D.  has served as a member of our board of directors since August 2006. Since 2004, Dr. Bitterman has served as principal at Polaris Partners, or Polaris, and focuses on investments in life sciences companies. Prior to joining Polaris, Dr. Bitterman completed his Ph.D. in genetics at Harvard Medical School. His doctoral research focused on the molecular regulation of caloric restriction and on modulation of a novel class of protein deacetylases. Dr. Bitterman is a cofounder of Sirtris Pharmaceuticals, Inc. acquired by GlaxoSmithKline and was the founding CEO at Visterra Inc. In additional to representing Polaris as a director of our Company, he currently represents Polaris as a director of InSeal Medical, Kala Pharmaceuticals, Neuronetics, Inc., Visterra, Inc., TARIS Biomedical, and Vets First Choice. Additionally, Dr. Bitterman is a board observer to Arsenal Medical and 480 Biomedical. He received a Ph.D. in Genetics from Harvard Medical School and a Bachelor's in Biology from Rutgers College. We believe that Dr. Bitterman's extensive experience investing in, guiding and leading start-up and early phase companies, as well as his experience as a director of other companies, qualifies him to serve as a member of our board of directors.

        Katrine Bosley  has served as a member of our board of directors since March 2013. Ms. Bosley is currently the Entrepreneur-in-Residence at The Broad Institute. She served as Chief Executive Officer of Avila Therapeutics Inc., or Avila, from May 2009 to March, 2012, when Avila was acquired by Celgene Corporation. Before Avila, she was Vice President, Strategic Operations at Adnexus, a Bristol-Myers Squibb Company and was Vice President, Business Development at Adnexus Therapeutics Inc., or Adnexus, before that. She joined Adnexus from Biogen Idec where she held roles in business development, commercial operations, and portfolio strategy in the United States and Europe and led the in-licensing of Tysabri (natalizumab) among a number of other transactions. Earlier, she was part of the healthcare team at the venture firm Highland Capital Partners from 1993 to 1995. In addition to serving as a director of our Company, Ms. Bosley currently serves as a director of Galapagos NV and Coco Therapeutics Ltd. Ms. Bosley graduated from Cornell University with a Bachelor of Arts degree in biology. We believe that Ms. Bosley's experience as a chief executive officer of a biotechnology company and her breadth of experience in creating strategic and business development value qualifies her to serve as a member of our board of directors.

        Simeon J. George, M.D.  has served as a member of our board of directors since February 2009. Since 2007, Dr. George has served as partner of S.R. One, Limited, or S.R. One, and leads S.R. One's west coast investment activities. Prior to joining S.R. One, Dr. George was a consultant at Bain & Company from October 2006 to August 2007. In addition to serving as a director of our Company, Dr. George currently serves as a director of Anaphore, Auxogyn, Inc., HTG Molecular and Principia Biosciences. He received his BA in Neuroscience from the Johns Hopkins University, where he graduated Phi Beta Kappa, and received his MD from the University of Pennsylvania School of Medicine and his MBA (Mayer Scholar) from the Wharton School of the University of Pennsylvania. We believe that Dr. George's experience in the venture capital industry, particularly with biotechnology and pharmaceutical companies, as well as his experience as a director of other companies, qualifies him to serve as a member of our board of directors.

        Stephen J. Hoffman, M.D., Ph.D.  has served as a member of our board of directors since December 2010. Dr. Hoffman has served as a managing director at Skyline Ventures, a venture capital

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firm, since May 2007. From January 2003 to March 2007, Dr. Hoffman was a general partner at TVM Capital, a venture capital firm. Prior to that, he served as President, Chief Executive Officer and a director of Allos Therapeutics, Inc., or Allos, a biopharmaceutical company, from 1994 to 2002, and as Chairman of the Board until 2012. From 1990 to 1994, Dr. Hoffman completed a fellowship in clinical oncology and a residency/fellowship in dermatology, both at the University of Colorado. Dr. Hoffman was the scientific founder of Somatogen Inc., a biotechnology company that was acquired by Baxter International, Inc., a global medical products and services company, in 1998, where he held the position of Vice President of Science and Technology from 1987 until 1990. In addition to serving as a director of our Company, he currently serves as a director of several biopharmaceutical companies, including AcelRx, Inc., Concert Pharmaceuticals, Inc., Collegium Pharmaceuticals, Inc., Dicerna Pharmaceuticals, Inc. and Proteon Therapeutics, Inc. Previously, Dr. Hoffman served on the board of directors of Sirtris Pharmaceuticals, Inc., a pharmaceutical company that was acquired by GlaxoSmithKline, in 2008. Dr. Hoffman holds a Ph.D. in bio-organic chemistry from Northwestern University and an M.D. from the University of Colorado School of Medicine. We believe that Dr. Hoffman's scientific, financial and business expertise, including his diversified background as an executive officer and investor in public pharmaceutical companies as well as a director of a public pharmaceutical company, qualifies him to serve as a member of our board of directors.

Board Composition and Election of Directors

    Board Composition

        Our board of directors is currently comprised of six members. Our board of directors has determined that each of Dr. Bitterman, Ms. Bosley, Dr. George and Dr. Hoffman is independent for NASDAQ purposes. The members of our board of directors were elected in compliance with the provisions of the voting agreement among us and our major stockholders. The voting agreement will terminate upon the closing of this offering and we will have no further contractual obligations regarding the election of our directors. See "Certain Relationships and Related Party Transactions". Our directors hold office until their successors have been elected and qualified or until their earlier death, resignation or removal. There are no family relationships among any of our directors or executive officers.

        Our amended and restated certificate of incorporation and amended and restated bylaws that will become effective upon the closing of this offering provide that the authorized number of directors may be changed only by resolution of our board of directors. Our amended and restated certificate of incorporation and amended and restated bylaws also provide that our directors may be removed only for cause by the affirmative vote of the holders of at least 75% of the votes that all our stockholders would be entitled to cast in an annual election of directors, and that any vacancy on our board of directors, including a vacancy resulting from an enlargement of our board of directors, may be filled only by vote of a majority of our directors then in office.

        In accordance with the terms of our certificate of incorporation and bylaws that will become effective upon the closing of this offering, our board of directors will be divided into three classes, class I, class II and class III, with members of each class serving staggered three-year terms. Upon the closing of this offering, the members of the classes will be divided as follows:

    the class I directors will be                        ;

    the class II directors will be                        ; and

    the class III directors will be                        .

        Upon the expiration of the term of a class of directors, directors in that class will be eligible to be elected for a new three-year term at the annual meeting of stockholders in the year in which their term expires.

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        We have no formal policy regarding board diversity. Our priority in selection of board members is identification of members who will further the interests of our stockholders through his or her established record of professional accomplishment, the ability to contribute positively to the collaborative culture among board members, knowledge of our business and understanding of the competitive landscape.

    Director Independence

        Applicable NASDAQ rules require a majority of a listed company's board of directors to be comprised of independent directors within one year of listing. In addition, the NASDAQ rules require that, subject to specified exceptions, each member of a listed company's audit, compensation and nominating and corporate governance committees be independent and that audit committee members also satisfy independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as amended, or the Exchange Act. Under applicable NASDAQ rules, a director will only qualify as an "independent director" if, in the opinion of the listed company's board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee, accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries or otherwise be an affiliated person of the listed company or any of its subsidiaries.

        In November 2013, our board of directors undertook a review of the composition of our board of directors and its committees and the independence of each director. Based upon information requested from and provided by each director concerning his or her background, employment and affiliations, including family relationships, our board of directors has determined that Dr. Bitterman, Ms. Bosley, Dr. George and Dr. Hoffman are "independent directors" as defined under applicable NASDAQ rules. In making such determination, our board of directors considered the relationships that each such non-employee director has with our company and all other facts and circumstances that our board of directors deemed relevant in determining his or her independence, including the beneficial ownership of our capital stock by each non-employee director. Mr. Clark is not an independent director under these rules because he is our Chief Executive Officer and Dr. Siber is not an independent director under these rules because of his consulting relationship with us. Please see the section of this prospectus titled "Certain Relationships and Related Party Transactions".

        There are no family relationships among any of our directors or executive officers.

Board Committees

        Our board of directors has three standing committees: the audit committee, the compensation committee and the nominating and corporate governance committee.

    Audit Committee

        Our audit committee is composed of Ms. Bosley, Dr. George and Dr. Hoffman, with Dr. Hoffman serving as chairman of the committee. Our board of directors has determined that each member of the audit committee meets the independence requirements of Rule 10A-3 under the Exchange Act and the applicable listing standards of NASDAQ. Our board of directors has determined that                is an "audit committee financial expert" within the meaning of the SEC regulations and applicable listing standards of NASDAQ. The audit committee's responsibilities include:

    appointing, approving the compensation of, and assessing the qualifications, performance and independence of our independent registered public accounting firm;

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    pre-approving audit and permissible non-audit services, and the terms of such services, to be provided by our independent registered public accounting firm;

    reviewing the internal audit plan with the independent registered public accounting firm and members of management responsible for preparing our financial statements;

    reviewing and discussing with management and the independent registered public accounting firm our annual and quarterly financial statements and related disclosures as well as critical accounting policies and practices used by us;

    reviewing the adequacy of our internal control over financial reporting;

    establishing policies and procedures for the receipt and retention of accounting-related complaints and concerns;

    recommending, based upon the audit committee's review and discussions with management and the independent registered public accounting firm, whether our audited financial statements shall be included in our Annual Report on Form 10-K;

    monitoring our compliance with legal and regulatory requirements as they relate to our financial statements and accounting matters;

    preparing the audit committee report required by the rules of the SEC to be included in our annual proxy statement;

    viewing all related party transactions for potential conflict of interest situations and approving all such transactions; and

    reviewing and discussing with management and our independent registered public accounting firm our earnings releases and scripts.

    Compensation Committee

        Our compensation committee is composed of Dr. Bitterman and Dr. George, with Dr. Bitterman serving as chairman of the committee. Our board of directors has determined that each member of the compensation committee is "independent" as defined under the applicable listing standards of NASDAQ. The compensation committee's responsibilities include:

    annually reviewing and approving corporate goals and objectives relevant to the compensation of our chief executive officer;

    evaluating the performance of our chief executive officer in light of such corporate goals and objectives and determining and approving the compensation of our chief executive officer;

    reviewing and approving the compensation of our other executive officers;

    appointing, compensating and overseeing the work of any compensation consultant, legal counsel or other advisor retained by the compensation committee;

    conducting the independence assessment outlined in NASDAQ rules with respect to any compensation consultant, legal counsel or other advisor retained by the compensation committee;

    annually reviewing and reassessing the adequacy of the committee charter in its compliance with the listing requirements of NASDAQ;

    reviewing and establishing our overall management compensation, philosophy and policy;

    overseeing and administering our compensation and other compensatory plans;

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    reviewing and approving our equity and incentive policies and procedures for the grant of equity-based awards and approving the grant of such equity-based awards;

    reviewing and making recommendations to the board of directors with respect to director compensation; and

    reviewing and discussing with management the compensation discussion and analysis to be included in our annual proxy statement or Annual Report on Form 10-K.

    Nominating and Corporate Governance Committee

        Our nominating and corporate governance committee is composed of Dr. Bitterman, Ms. Bosley and Dr. Hoffman, with Ms. Bosley serving as chairman of the committee. Our board of directors has determined that each member of the nominating and corporate governance committee is "independent" as defined under the applicable listing standards of NASDAQ. The nominating and corporate governance committee's responsibilities include:

    developing and recommending to the board of directors criteria for board and committee membership;

    establishing procedures for identifying and evaluating board of director candidates, including nominees recommended by stockholders;

    identifying individuals qualified to become members of the board of directors;

    recommending to the board of directors the persons to be nominated for election as directors and to each of the board's committees;

    developing and recommending to the board of directors a set of corporate governance principles;

    articulating to each director what is expected, including reference to the corporate governance principles and directors' duties and responsibilities;

    reviewing and recommending to the board of directors practices and policies with respect to directors;

    reviewing and recommending to the board of directors the functions, duties and compositions of the committees of the board of directors;

    reviewing and assessing the adequacy of the committee charter and submitting any changes to the board of directors for approval;

    consider and report to the board of directors any questions of possible conflicts of interest of board of directors members;

    provide for new director orientation and continuing education for existing directors on a periodic basis;

    performing an evaluation of the performance of the committee;

    overseeing the evaluation of the board of directors and management; and

    our board of directors may establish other committees from time to time.

    Compensation Committee Interlocks and Insider Participation

        None of our executive officers serves as a member of the board of directors or compensation committee, or other committee serving an equivalent function, of any other entity that has one or more of its executive officers serving as a member of our board of directors or compensation committee.

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None of the members of our compensation committee has ever been employed by us. For a description of transactions between us and members of our compensation committee and affiliates of such members, please see the section of this prospectus titled "Certain Relationships and Related Party Transactions".

    Code of Business Conduct and Ethics

        We have adopted a code of business conduct and ethics that applies to all of our employees, officers and directors, including those officers responsible for financial reporting. Upon the closing of this offering, our code of business conduct and ethics will be available on our website. We intend to disclose any amendments to the code, or any waivers of its requirements, on our website.

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EXECUTIVE AND DIRECTOR COMPENSATION

Overview

        The following discussion relates to the compensation of our President and Chief Executive Officer, William Clark, and our two most highly compensated executive officers (other than our Chief Executive Officer), Seth Hetherington, M.D., our Chief Medical Officer, and Paul Giannasca Ph.D., our Vice President of Development. These three executives are collectively referred to in this prospectus as our named executive officers. Each year, the compensation committee of our board of directors and our board of directors review and determine the compensation of our named executive officers.

Elements of Executive Compensation

        The compensation of our named executive officers consists of base salary, annual cash bonuses and equity awards as well as employee benefits that are made available to substantially all salaried employees. Our named executive officers are also entitled to certain compensation and benefits upon certain terminations of employment and change of control transactions pursuant to employment letter agreements.

        Base Salaries.     Base salaries for our named executive officers are reviewed annually by our compensation committee and are set by our board of directors. When making its base salary recommendations to our board of directors, our compensation committee takes factors into account such as each executive's experience and individual performance, the company's performance as a whole, data from surveys of compensation paid by comparable companies, cost of living increases and general industry conditions, but does not assign any specific weighting to any factor. Our board of directors determines each named executive officer's base salary after reviewing the compensation committee's recommendation. In fiscal 2012, on the recommendation of our compensation committee, our board of directors approved a base salary of $329 thousand for Mr. Clark, $326 thousand for Dr. Hetherington and $258 thousand for Dr. Giannasca, representing an increase of 2.75%, 3.5% and 2.75%, respectively, from the base salary for each such executive in 2011.

        Annual Cash Bonuses.     Our annual cash bonus program promotes and rewards the achievement of key strategic business goals and individual performance goals. For fiscal 2012, the target annual bonus as a percentage of base salary for each of Mr. Clark, Dr. Hetherington and Dr. Giannasca was 40%, 30% and 25%, respectively. In the case of Mr. Clark, 100% of his annual bonus was based on the achievement of pre-established corporate performance goals and, in the case of Drs. Hetherington and Giannasca, 50% of the executive's respective annual bonus was based on the achievement of pre-established corporate performance goals and 50% was based on a quantitative and qualitative assessment of pre-established individual performance goals.

        At the beginning of fiscal 2012, our compensation committee established the corporate performance goals for 2012, each having a designated weighting. These corporate performance goals related to key strategic business and financial goals of the company, including maintenance of a certain level of cash reserves and securing funding through research grants, the completion of certain trials related to our clinical pipeline, and the achievement of certain manufacturing, strategic and research objectives. Also at the beginning of fiscal 2012, our chief executive officer, working with each of Dr. Hetherington and Dr. Giannasca, established each executive's individual performance goals and their weightings. These goals included objectives related to the completion of clinical programs and studies, research and development, managing studies according to schedule, managing certain programs and departmental costs within budgets and demonstrating leadership on research teams and with respect to direct reports.

        At the end of fiscal 2012, our compensation committee met to evaluate the level of achievement of the corporate goals. In determining the level of corporate performance for the year, our compensation

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committee evaluated the company's performance against the specified corporate performance goals and also took into account both our chief executive officer's assessment of his own performance and his assessment of the extent to which the corporate performance goals were achieved. Based on its evaluation, our compensation committee determined that 82% of the corporate performance goals was achieved. Our board of directors reviewed the compensation committee's recommendations and approved the achievement of the corporate performance goals at this level.

        With respect to Dr. Hetherington's and Dr. Giannasca's individual performance goals, Mr. Clark evaluated each executive's performance during the year against his individual performance goals, taking into consideration an assessment by the executive of his own performance. Based on this evaluation, Mr. Clark determined that, for each executive, 94% of the individual performance goals was achieved. After reviewing Mr. Clark's determination of individual goal achievement and determining the level of corporate goal achievement, our compensation committee recommended, and our board of directors approved, an annual bonus for 2012 of $105 thousand for Mr. Clark, $85 thousand for Dr. Hetherington, and $56 thousand for Dr. Giannasca.

        Equity Awards.     Our named executive officers participate in the Genocea Biosciences, Inc. Amended and Restated 2007 Equity Incentive Plan, which we refer to as the "2007 Equity Plan". See "Equity and Incentive Plans—2007 Equity Plan" below for additional details about this plan. No stock option or other equity grants were made under the 2007 Equity Plan to our named executive officers during fiscal 2012. Initial awards of stock options granted to our named executive officers generally vest as to 25% of the shares subject to the stock option after one year and thereafter continue to vest in monthly installments over the following 36 months, generally subject to the executive's continued employment. Other stock option awards generally vest in equal monthly installments over 48 months, generally subject to the executive's continued employment. Mr. Clark and Dr. Hetherington also received performance-vesting stock options, the terms of which are described under the "Outstanding Equity Awards at Fiscal Year-End" table below. Stock option awards serve to align the interests of our named executive officers with our shareholders because no value is created unless the value of our common stock appreciates after grant. Stock option awards also encourage retention through the use of time-based vesting and the achievement of key strategic goals through the use of performance-based vesting. Pursuant to agreements with our named executive officers, all or a portion of the executive's stock option awards will vest automatically upon certain terminations of employment following certain change of control transactions. See "—Employment Letter Agreements" below for additional details about these agreements.

        Benefits.     We provide modest benefits to our named executive officers, which are limited to participation in our 401(k) plan and basic health and welfare benefit coverage. These benefits are available to substantially all of our salaried employees.

        Employment Letter Agreements.     Mr. Clark and Drs. Hetherington and Giannasca each have entered into employment letter agreements with us that include severance and change of control protections. They are also subject to restrictive covenants, covering noncompetition, nonsolicitation and confidentiality.

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Summary Compensation Table

        The following table sets forth information about certain compensation awarded or paid to our named executive officers for the 2012 fiscal year.

Name and principal position
  Year   Salary
($)(1)
  Nonequity Incentive
Plan Compensation
($)(2)
  Total
($)
 

William Clark,

    2012     327,921     105,242     433,163  

President and Chief Executive Officer

                         

Seth Hetherington, M.D.,

   
2012
   
324,776
   
84,895
   
409,671
 

Chief Medical Officer

                         

Paul Giannasca, Ph.D.,

   
2012
   
257,320
   
56,218
   
313,538
 

Vice President, Development

                         

(1)
Salaries include amounts contributed by the named executive officer to our 401(k) plan.

(2)
Amounts shown reflect the cash amount paid to the named executive officer for fiscal year 2012 that was earned based the achievement of company and individual (in the case of Drs. Hetherington and Giannasca) performance goals as described in "—Elements of Executive Compensation—Annual Cash Bonuses" above.

Outstanding Equity Awards at Fiscal Year-End

        The following table sets forth information regarding equity awards held by our named executive officers as of December 31, 2012. Our named executive officers do not hold any equity awards other than stock options.

OPTION AWARDS

Name
  Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
  Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
  Equity Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
  Option
Exercise
Price
($)(4)
  Option
Expiration
Date(5)
 

William Clark,

    276,327 (1)   197,380 (1)       0.24     8/19/2020  

President and Chief Executive Officer

    147,062 (2)   147,067 (2)       0.24     12/17/2020  

            473,707 (3)   0.24     12/17/2020  

    1,857,490 (2)   2,195,280 (2)       0.17     2/17/2021  

Seth Hetherington, M.D.,

   
440,097

(1)
 
440,105

(1)
 
   
0.17
   
2/17/2021
 

Chief Medical Officer

    304,067 (3)           0.17     2/17/2021  

Paul Giannasca, Ph.D.,

   
210,982

(1)
 
78,368

(1)
 
   
0.24
   
2/18/2020
 

Vice President, Development

    79,570 (2)   94,040 (2)       0.17     2/17/2021  

(1)
Reflects time-based options to purchase shares of our common stock that vest as to 25% of the shares subject to the option 12 months following the vesting commencement date and thereafter vest in equal monthly installments over the following 36 months, generally subject to the executive's continued employment.

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(2)
Reflects time-based options to purchase shares of our common stock that vest in equal monthly installments over 48 months following the vesting commencement date, generally subject to the executive's continued employment.

(3)
Reflects performance-based options to purchase shares of our common stock that vest as to 100% of the shares subject to the option upon the company's achievement of a specified strategic financial and development milestone in the case of Mr. Clark, and upon the achievement of a milestone related to the initiation of a clinical trial, in the case of Dr. Hetherington, generally subject to the executive's continued employment.

(4)
The exercise price of the stock options is not less than the fair market value of a share of our common stock on the grant date, as determined by our board of directors based, in part, on an independent third-party valuation.

(5)
All stock options have a 10-year term measured from the grant date.

    Retirement Benefits

        We do not maintain any qualified or non-qualified defined benefit plans or supplemental executive retirement plans that cover our named executive officers. We offer a tax-qualified retirement plan, which we refer to as our 401(k) plan, to eligible employees, including our named executive officers. Our 401(k) plan permits eligible employees to defer their annual eligible compensation subject to the limitations imposed by the Internal Revenue Service. We may, but are not required to, make discretionary profit-sharing contributions on behalf of eligible employees under this plan. We did not make any contributions on behalf of eligible employees in fiscal year 2012.

Employment Letter Agreements

        We have entered into employment letter agreements with each of Mr. Clark, dated March 7, 2011, Dr. Hetherington, dated October 4, 2010, and Dr. Giannasca, dated December 21, 2009, as amended October 24, 2011. Each agreement provides for an initial base salary and an initial stock option award, as well as a discretionary performance-based bonus, with a target, as a percentage of base salary, of 40%, 30% and 25% in the case of Mr. Clark, Dr. Hetherington, and Dr. Giannasca, respectively. Each agreement also provides for certain payments and benefits upon a qualifying termination of the executive's employment following certain change of control transactions, as described below.

        Termination of Employment without Cause or for Good Reason Following a Change of Control.     If within twelve months after the consummation of a change of control (as defined in the executive's employment letter agreement), the executive's employment is terminated by us (or our successor) without cause or the executive terminates his employment for good reason (as such terms are defined in the executive's employment letter agreement), in the case of Mr. Clark and Dr. Hetherington, all stock options then held by the executive will fully vest and, in the case of Dr. Giannasca, stock options then held by the executive will vest to the extent such stock options otherwise would have vested over the 12 months following such termination of employment. In addition, in the case of Dr. Giannasca, we will continue to pay him his base salary for six months and will reimburse him for the cost of COBRA premiums for continued health benefit coverage for six months, as long as he is eligible for COBRA coverage and not able to participate in the health plans of another employer.

        Termination of Employment without Cause or for Good Reason.     If either Mr. Clark's or Dr. Hetherington's employment is terminated by us without cause or the executive terminates his employment for good reason (as such terms are defined in the executive's employment letter agreement), regardless of whether such termination is in connection with a change of control, we will continue to pay the executive his base salary for a period of 12 months, in the case of Mr. Clark, and six months, in the case of Dr. Hetherington, in accordance with our payroll policy. In addition, we will

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reimburse Dr. Hetherington for the cost of COBRA premiums for continued health benefit coverage for six months, as long as he is eligible for COBRA coverage. If Dr. Giannasca's employment is terminated by us without cause or if he terminates his employment for good reason other than within the 12-month period after a change of control, we will continue to pay him his base salary for two months, in accordance with our payroll policy, and reimburse him for the cost of COBRA premiums for continued health benefit coverage for two months, as long as he is eligible for COBRA coverage and not able to participate in the health plans of another employer.

        Severance Subject to Release of Claims.     Our obligation to provide the executive with any severance payments or other benefits under the executive's employment letter agreement is conditioned on the executive signing an effective release of claims in our favor.

        Employment Conditioned on Restrictive Covenants.     As a condition to the executive's employment with us, the executive was required to sign and must comply with the terms of an At-Will Employment, Confidential Information, Invention Assignment and Non-Competition Agreement, pursuant to which the executive has agreed not to compete with us for a period of 12 months following the termination of his employment and not to solicit our employees or independent contractors for a period of 36 months following the termination of his employment. Each executive has also agreed to covenants relating to the use and disclosure of confidential information and the assignment of inventions.

2012 Director Compensation

        The following table sets forth information concerning the compensation earned by our directors during 2012. In 2012, Dr. Siber was our only director that was compensated for service on our board of directors. Mr. Clark receives no additional compensation for his service as a director, and, consequently, is not included in this table. The compensation received by Mr. Clark as our chief executive officer during 2012 is included in the "Summary Compensation Table" above.


Director Compensation

Name
  Fees Earned
or
Paid in Cash
($)
  Option Awards
($)
  Total
($)
 

George Siber, M.D.

    124,992 (1)   24,548 (2)   149,540  

(1)
Amount represents annual director and consulting fees for services rendered by Dr. Siber. Amounts were paid in equal monthly installments.

(2)
Amount represents the aggregate grant date fair value of awards of time-vesting and performance-vesting stock options granted to Dr. Siber in 2012. This amount was computed in accordance with FASB ASC Topic 718 and excludes the value of estimated forfeitures. Assumptions used in the calculation of this amount are included in Note 12 to our financial statements included elsewhere in this prospectus. The grant date fair values of the performance-vesting stock options granted to Dr. Siber in 2012 are based on the probable outcome of the performance conditions associated with these stock options as of the grant date. Amounts are included in the table above for time-vesting stock options and for a performance-vesting option for which performance conditions were considered probable of occurring at July 26, 2012, the grant date. The aggregate grant date fair value of the performance based awards for which the performance conditions were not considered probable of occurring at July 26, 2012, assuming that the highest levels of the performance conditions are achieved, is $18 thousand.

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        As of December 31, 2012, our directors held the following aggregate number of options to purchase shares of our common stock: Dr. Siber held options to purchase 1,162,972 shares of our common stock and Dr. Bitterman, Dr. George and Dr. Hoffman held no options to purchase shares of our common stock.

Director Agreements

    Dr. Siber

        We have entered into a consulting agreement with Dr. Siber dated May 16, 2007, as amended on June 30, 2009, December 16, 2010, June 15, 2011 and June 5, 2013, providing for a consulting fee of $10 thousand per month, for consulting services performed by Dr. Siber related to strategic scientific and business development as well as for his service as the chairman of our board of directors. Dr. Siber was also entitled to receive grants of restricted stock and stock options in connection with his service to us. All stock options granted to Dr. Siber pursuant to the consulting agreement will fully vest if, within 12 months following a change of control, either we (or our successor) terminate the consulting agreement without cause (as such term is described in the consulting agreement), subject to Dr. Siber's continued service to the company or we or our successor does not offer to extend the term of the agreement. As of September 19, 2013, Dr. Siber ceased being the chairman of our board of directors and assumed the role of executive director and chairman of our scientific advisory board.

        Dr. Siber has agreed not to solicit our employees, contractors, and customers for a period of 12 months following the termination of the consulting agreement and is subject to covenants relating to the use and disclosure of confidential information and the assignment of inventions. Unless extended or earlier terminated, the term of the consulting agreement will expire on June 17, 2015.

        In 2012, performance-vesting and time-vesting stock options were granted to Dr. Siber. The performance-vesting stock options generally vest upon the company's achievement of certain business development and clinical milestones, and the time-vesting stock option generally vests in equal monthly installments over 48 months, generally subject to Dr. Siber's continued service to the company.

Equity and Incentive Plans

2007 Equity Plan

        The 2007 Equity Plan provides for the grant of stock and stock-based awards to key employees and directors of, and consultants and advisors to, us and our affiliates who, in the opinion of the compensation committee, are in a position to make a significant contribution to our success and the success of our affiliates. The following summary of the 2007 Equity Plan is not a complete description of all provisions of the 2007 Equity Plan and is qualified in its entirety by reference to the 2007 Equity Plan, which is filed as an exhibit to the registration statement of which this prospectus is a part.

        Plan Administration.     The 2007 Equity Plan is administered by our compensation committee, which has authority to determine eligibility for and grant awards and to determine the terms and conditions of awards, including the time or times at which awards vest or become exercisable and remain exercisable, and otherwise do all things necessary to carry out the purposes of the 2007 Equity Plan.

        Authorized Shares.     Subject to adjustment, the maximum number of shares of our common stock that may be delivered in satisfaction of awards under the 2007 Equity Plan is 22,127,159 shares. Shares of our common stock to be issued under the 2007 Equity Plan may be authorized but unissued shares of our common stock or previously issued shares acquired by the company.

        Types of Awards.     The 2007 Equity Plan provides for grants of stock options, stock appreciation rights, restricted and unrestricted stock, stock units (including restricted stock units), performance

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awards and other awards convertible into or otherwise based on shares of our common stock. Dividend equivalents may also be provided in connection with an award under the 2007 Equity Plan.

        Vesting.     Our compensation committee has the authority to determine the vesting schedule applicable to each award, and to accelerate the vesting or exercisability of any award.

        Termination of Employment.     Our compensation committee will determine the effect of termination of employment or service on an award. Unless otherwise provided by our compensation committee, upon a termination of a participant's employment or service, all unvested stock options then held by the participant and other awards requiring exercise will terminate, all other unvested awards will be forfeited, and all vested stock options and stock appreciation rights then held by the participant will remain outstanding for three months following such termination, or one year in the case of a participant's death, or, in each case, until the applicable expiration date, if earlier. All stock options and stock appreciation rights held by a participant immediately prior to the participant's termination of employment or service will immediately terminate upon termination of employment or service if our compensation committee determines the termination of employment or service resulted for reasons that cast such discredit on the participant as to justify immediate termination of the award.

        Covered Transactions.     In the event of a covered transaction, our compensation committee may, among other things, provide for the continuation or assumption of outstanding awards, for new grants in substitution of outstanding awards, for a cash-out of outstanding awards, for the accelerated vesting or delivery of shares under awards or for the termination of awards upon the occurrence of the covered transaction, in each case on such terms and with such restrictions as it deems appropriate. Except as our compensation committee may otherwise determine, each award generally will terminate upon the occurrence of the covered transaction. Under the 2007 Equity Plan, a covered transaction generally includes a consolidation, merger or similar transaction, including a sale or other disposition of stock in which the company is not the surviving entity or which results in the acquisition of all or substantially all of our outstanding stock, a sale or transfer of all or substantially all of our assets or a dissolution or liquidation of our company.

        Amendment and Termination.     Our compensation committee may amend the 2007 Equity Plan and any awards granted under it and may terminate the 2007 Equity Plan as to future awards, except that it may not alter the terms of an award so as to affect materially and adversely a participant's rights under the award without the participant's consent, unless it reserved the right to do so at the time the award was granted.

        Following this offering, all equity-based awards will be granted under the 2014 Equity Plan described below.

2014 Equity Plan

        In connection with this offering, our board of directors intends to adopt the Genocea Biosciences, Inc. 2014 Equity Incentive Plan, or the 2014 Equity Plan, and, following this offering, all equity-based awards will be granted under the 2014 Equity Plan. As of the date of this prospectus, no awards have been made under the 2014 Equity Plan. The following summary describes what we expect to be the material terms of the 2014 Equity Plan. This summary of the 2014 Equity Plan is not a complete description of all provisions of the 2014 Equity Plan and is qualified in its entirety by reference to the 2014 Equity Plan, which will be filed as an exhibit to the registration statement of which this prospectus is a part.

        Administration.     The 2014 Equity Plan is administered by our compensation committee. Our compensation committee has the authority to, among other things, interpret the 2014 Equity Plan, determine eligibility for, grant and determine the terms of awards under the 2014 Equity Plan, determine the form of settlement of awards (whether in cash, shares of our common stock or other

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property), and do all things necessary or appropriate to carry out the purposes of the 2014 Equity Plan. Our compensation committee's determinations under the 2014 Equity Plan are conclusive and binding.

        Eligibility.     Our key employees, directors, consultants and advisors are eligible to participate in the 2014 Equity Plan.

        Authorized Shares.     Subject to adjustment, as described below, the maximum number of shares of our common stock that may be delivered in satisfaction of awards under the 2014 Equity Plan is            shares, plus            shares that are available for grant under the 2007 Equity Plan on the date the 2014 Equity Plan is adopted. The number of shares of our common stock available for issuance under the 2014 Equity Plan will be automatically increased annually on each January 1st, from January 1, 2015 through January 1, 2024, in an amount equal to the lesser of        % of outstanding shares of our common stock as of the close of business on the immediately preceding December 31 st  or the number of shares determined by our board of directors. Subject to adjustment, as described below, no more than            shares of our common stock may be delivered in satisfaction of incentive stock options, or ISOs, awarded under the 2014 Equity Plan.

        The shares of our common stock to be issued under the 2014 Equity Plan may be authorized but unissued shares of our common stock or previously issued shares of our common stock acquired by us. Any shares of our common stock underlying awards that are settled in cash, expire or become unexercisable without having been exercised or that are forfeited or repurchased by us will again be available for issuance under the 2014 Equity Plan. In addition, the number of shares of our common stock delivered in satisfaction of awards will be determined net of shares of our common stock withheld by us in payment of the exercise price of an award or in satisfaction of tax withholding requirements with respect to an award.

        Individual Limits.     The maximum number of shares of our common stock subject to stock options and the maximum number of shares of our common stock subject to stock appreciation rights, or SARs, that may be granted to any participant in the 2014 Equity Plan in any calendar year is each            shares. The maximum number of shares of our common stock subject to other awards that may be granted to any participant in the 2014 Equity Plan in any calendar year is            shares.

        Types of Awards.     The 2014 Equity Plan provides for awards of stock options, SARs, restricted stock, unrestricted stock, stock units, performance awards and other awards convertible into or otherwise based on shares of our common stock. Eligibility for stock options intended to be ISOs is limited to our employees. Dividend equivalents may also be provided in connection with an award under the 2014 Equity Plan.

    Stock options and SARs.   The exercise price of a stock option, and the base price against which a SAR is to be measured, may not be less than the fair market value (or, in the case of an ISO granted to a ten percent shareholder, 110% of the fair market value) of shares of our common stock on the date of grant. Our compensation committee will determine the time or times at which stock options or SARs become exercisable and the terms on which such awards remain exercisable.

    Restricted and unrestricted stock.   A restricted stock award is an award of shares of our common stock subject to forfeiture restrictions, while an unrestricted stock award is not subject to such restrictions.

    Stock units.   A stock unit award is an award denominated in shares of our common stock that entitles the participant to receive shares of our common stock or cash measured by the value of the shares of our common stock in the future. The delivery of shares of our common stock or cash under a stock unit may be subject to the satisfaction of performance conditions or other vesting conditions.

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    Performance awards.   A performance award is an award the vesting, settlement or exercisability of which is subject to specified performance criteria.

    Other awards.   Other awards are awards that are convertible into or otherwise based on shares of our common stock.

        Performance Awards.     The 2014 Equity Plan provides for the grant of performance awards that are made based upon, and subject to achieving, performance objectives. Performance objectives with respect to those awards that are intended to qualify as "performance-based compensation" for purposes of Section 162(m) of the Code, or Section 162(m), to the extent applicable, are limited to an objectively determinable measure or measures of performance relating to any or any combination of the following (measured either absolutely or by reference to an index or indices and determined either on a consolidated basis or, as the context permits, on a divisional, subsidiary, line of business, project or geographical basis or in combinations thereof): sales; revenues; assets; expenses; earnings before or after deduction for all or any portion of interest, taxes, depreciation, amortization or equity expense, whether or not on a continuing operations or an aggregate or per share basis; return on equity, investment, capital, capital employed or assets; one or more operating ratios; operating income or profit, including on an after-tax basis; net income; borrowing levels, leverage ratios or credit rating; market share; capital expenditures; cash flow; stock price; stockholder return; sales of particular products or services; customer acquisition or retention; acquisitions and divestitures (in whole or in part); joint ventures, strategic alliances, licenses or collaborations; spin-offs, split-ups and the like; reorganizations; recapitalizations, restructurings, financings (issuance of debt or equity) or refinancings; manufacturing or process development; or achievement of clinical trial or research objectives, regulatory or other filings or approvals or other product development milestones.

        To the extent consistent with the requirements for satisfying the performance-based compensation exception under Section 162(m), to the extent applicable, our compensation committee may provide in the case of any award intended to qualify for such exception that one or more of the performance objectives applicable to an award will be adjusted in an objectively determinable manner to reflect events (for example, the impact of charges for restructurings, discontinued operations, mergers, acquisitions, extraordinary items, and other unusual or non-recurring items, and the cumulative effects of tax or accounting changes, each as defined by U.S. generally accepted accounting principles) occurring during the performance period that affect the applicable performance objectives.

        Vesting; Termination of Employment or Service.     Our compensation committee has the authority to determine the vesting schedule applicable to each award, and to accelerate the vesting or exercisability of any award. Our compensation committee will determine the effect of termination of employment or service on an award. Unless otherwise provided by our compensation committee, upon a termination of a participant's employment or service, all unvested stock options and SARs then held by the participant will terminate and all other unvested awards will be forfeited and all vested stock options and SARs then held by the participant will remain outstanding for three months following such termination, or one year in the case of death, or, in each case, until the applicable expiration date, if earlier. All stock options and SARs held by a participant immediately prior to the participant's termination of employment or service will immediately terminate if such termination is for cause, as defined in the 2014 Equity Plan, or occurs in circumstances that would have constituted grounds for the participant's employment or service to be terminated for cause, in the determination of the compensation committee.

        Non-Transferability of Awards.     Awards under the 2014 Equity Plan may not be transferred other than by the laws of descent and distribution, unless, for awards other than ISOs, otherwise provided by our compensation committee.

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        Recovery of Compensation.     Our compensation committee may cancel, rescind, withhold or otherwise limit or restrict any award at any time under the 2014 Equity Plan if the participant is not in compliance with the provisions of the 2014 Equity Plan or any award thereunder or if the participant breaches any agreement with our company with respect to non-competition, non-solicitation or confidentiality. Our compensation committee also may recover any award or payments or gain in respect of any award under the 2014 Equity Plan in accordance with any applicable company recoupment policy or as otherwise required by applicable law or applicable stock exchange listing standards.

        Certain Transactions; Certain Adjustments.     In the event of a consolidation, merger or similar transaction or series of related transactions, including a sale or other disposition of shares of our common stock, in which our company is not the surviving corporation or that results in the acquisition of all or substantially all of our then outstanding shares of common stock by a single person or entity or by a group of persons and/or entities acting in concert, a sale of all or substantially all of our assets or our dissolution or liquidation, our compensation committee may, among other things, provide for the continuation or assumption of outstanding awards, for new grants in substitution of outstanding awards, for the accelerated vesting or delivery of shares under awards or for a cash-out of outstanding awards, in each case on such terms and with such restrictions as it deems appropriate. Except as our compensation committee may otherwise determine, awards not assumed in connection with such a transaction will terminate automatically and, in the case of outstanding restricted stock, will be forfeited automatically upon the consummation of such covered transaction.

        In the event of a stock dividend, stock split or combination of shares, including a reverse stock split, recapitalization or other change in our capital structure that constitutes an equity restructuring within the meaning of FASB ASC 718, our compensation committee will make appropriate adjustments to the maximum number of shares of our common stock that may be delivered under, and the ISO and individual share limits included in, the 2014 Equity Plan, and will also make appropriate adjustments to the number and kind of shares or securities subject to awards, the exercise prices of such awards or any other terms of awards affected by such change. Our compensation committee will also make the types of adjustments described above to take into account distributions and other events other than those listed above if it determines that such adjustments are appropriate to avoid distortion in the operation of the 2014 Equity Plan.

        Amendment; Termination.     Our compensation committee will be able to amend the 2014 Equity Plan or outstanding awards, or terminate the 2014 Equity Plan as to future grants of awards, except that our compensation committee will not be able to alter the terms of an award if it would affect materially and adversely a participant's rights under the award without the participant's consent (unless expressly provided in the 2014 Equity Plan or the right to alter the terms of an award was expressly reserved by our compensation committee at the time the award was granted). Shareholder approval will be required for any amendment to the 2014 Equity Plan to the extent such approval is required by law, including applicable stock exchange requirements.

2013 Cash Bonus Program

        Our named executive officers are each entitled to participate in our annual cash bonus program for fiscal 2013. As with our 2012 program described above under "—Executive and Director Compensation—Elements of Executive Compensation—Annual Cash Bonuses", 2013 cash bonus awards will be determined based on the achievement of pre-established corporate and individual (in the case of Drs. Hetherington and Giannasca) performance goals. The corporate performance goals for 2013 under this program generally include key strategic and financial goals related to business development and grant funding, maintenance of a certain level of cash reserves, the development and commencement of certain clinical and commercial programs, the completion of research reports and other strategic objectives related to the company's clinical pipeline. The individual performance goals

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for 2013 include objectives related to completing studies on schedule, product delivery, business and clinical program development, and managing clinical operations and departmental costs within budget, as well as other leadership, lab safety and research and development goals. As in 2012, the target cash bonus as a percentage of base salary for 2013 is 40% for Mr. Clark, 30% for Dr. Hetherington and 25% for Dr. Giannasca.

Genocea Biosciences, Inc. Cash Incentive Plan

        In connection with this offering, our board of directors intends to adopt the Genocea Biosciences, Inc. Cash Incentive Plan, or the Cash Incentive Plan. Starting with our 2014 fiscal year, annual cash award opportunities for executive officers, including our named executive officers, and other key employees will be granted under the Cash Incentive Plan. The following summary describes what we expect to be the material terms of the Cash Incentive Plan. This summary is not a complete description of all provisions of the Cash Incentive Plan and is qualified in its entirety by reference to the Cash Incentive Plan, which will be filed as an exhibit to the registration statement of which this prospectus is a part.

        Administration.     The Cash Incentive Plan will be administered by our compensation committee. Our compensation committee has authority to interpret the Cash Incentive Plan and awards granted under it, to determine eligibility for awards and to do all things necessary to administer the Cash Incentive Plan. Any interpretation or decision by the compensation committee will be final and conclusive on all participants.

        Participants; Individual Limit.     Our executive officers and other key employees will be selected from time to time by the compensation committee to participate in the Cash Incentive Plan. The maximum payment to any participant under the Cash Incentive Plan in any fiscal year will in no event exceed $            .

        Awards.     With respect to each award granted under the Cash Incentive Plan, the compensation committee will establish the performance criteria applicable to the award, the amount or amounts payable if the performance criteria are achieved, and such other terms and conditions as the compensation committee deems appropriate. The Cash Incentive Plan permits the grant of awards that are intended to qualify as exempt performance-based compensation under Section 162(m) of the Code, to the extent applicable, as well as awards that are not intended to so qualify. Any awards that are intended to qualify as performance-based compensation will be administered in accordance with the requirements of Section 162(m), to the extent applicable. Awards under the Cash Incentive Plan will not be required to comply with the provisions of the plan applicable to performance-based compensation under Section 162(m) if they are eligible for exemption from such provisions by reason of the transition relief under Section 162(m).

        Performance Criteria.     Awards under the Cash Incentive Plan will be made based on, and subject to achieving, performance criteria established by our compensation committee, which may be applied to a participant or participants on an individual basis, to a business unit or division, or to the company as a whole. Performance criteria for awards intended to qualify as performance-based compensation for purposes of Section 162(m), to the extent applicable, are limited to the objectively determinable measures of performance relating to any or any combination of the following (measured either absolutely or by reference to an index or indices or the performance of one or more companies and determined either on a consolidated basis or, as the context permits, on a divisional, subsidiary, line of business, project or geographical basis or in combinations thereof): sales; revenues; assets; expenses; earnings before or after deduction for all or any portion of interest, taxes, depreciation, amortization or equity expense, whether or not on a continuing operations or an aggregate or per share basis; return on equity, investment, capital, capital employed or assets; one or more operating ratios; operating income or profit, including on an after-tax basis; net income; borrowing levels, leverage ratios or credit rating;

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market share; capital expenditures; cash flow; stock price; stockholder return; sales of particular products or services; customer acquisition or retention; acquisitions and divestitures (in whole or in part); joint ventures, strategic alliances, licenses or collaborations; spin-offs, split-ups and the like; reorganizations; recapitalizations, restructurings, financings (issuance of debt or equity) or refinancings; manufacturing or process development; or achievement of clinical trial or research objectives, regulatory or other filings or approvals or other product development milestones.

        To the extent consistent with the requirements of Section 162(m), to the extent applicable, the compensation committee may establish that in the case of any award intended to qualify as exempt performance-based compensation under Section 162(m), that one or more of the performance criteria applicable to such award be adjusted in an objectively determinable manner to reflect events (for example, the impact of charges for restructurings, discontinued operations, mergers, acquisitions, extraordinary items, and other unusual or non-recurring items, and the cumulative effects of tax or accounting changes, each as defined by U.S. generally accepted accounting principles) occurring during the performance period of such award that affect the applicable performance criteria.

        Payment under an Award.     A participant will be entitled to payment under an award only if all conditions to payment have been satisfied in accordance with the Cash Incentive Plan and the terms of the award. Our compensation committee will determine the payment date or dates for awards under the Cash Incentive Plan. Following the close of the performance period, our compensation committee will determine (and, to the extent required by Section 162(m), certify) whether and to what extent the applicable performance criteria have been satisfied. Our compensation committee will then determine the actual payment, if any, under each award. Our compensation committee has the sole and absolute discretion to reduce the actual payment to be made under any award. Our compensation committee may permit a participant to defer payment of an award subject to the requirements of applicable law.

        Recovery of Compensation.     Awards under the Cash Incentive Plan will be subject to forfeiture, termination and rescission, and a participant who receives a payment pursuant to the Cash Incentive Plan will be obligated to return such payment to us, to the extent provided by our compensation committee in connection with a breach by the participant of an award agreement under the plan or any non-competition, non-solicitation, confidentiality or similar covenant or agreement with our company or an overpayment of incentive compensation due to inaccurate financial data, in accordance with any applicable company recoupment policy, or as otherwise required by law or applicable stock exchange listing standards.

        Amendment; Termination.     Our compensation committee may amend the Cash Incentive Plan at any time, provided that any amendment will be approved by our shareholders if required by Section 162(m). Our compensation committee may terminate the Cash Incentive Plan at any time.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

        The following is a description of transactions, since January 1, 2010, to which we have been a party, in which the amount involved exceeded or will exceed $120 thousand, and in which any related person had a direct or indirect material interest.

Series B Preferred Stock Financing

        On December 17, 2010, we issued and sold an aggregate of 34,581,278 shares of our Series B preferred stock at a price at a purchase price of $0.58 per share for an aggregate purchase price of $20.1 million. The following table sets forth the number of shares of our Series B preferred stock that we issued to our 5% stockholders and their affiliates in this transaction:

Investor
  Shares of Series B
Preferred Stock
  Purchase Price ($)  

Johnson & Johnson Development Corporation

    9,852,217     5,714,286  

Skyline Venture Partners V, L.P.

    7,389,162     4,285,714  

Polaris Venture Partners and related funds

    4,660,853     2,703,295  

S.R. One, Limited

    3,273,430     1,898,589  

Lux Ventures, and related funds

    2,660,098     1,542,857  

Cycad Group, LLC

    2,349,151     1,362,508  

Auriga Ventures, III FCPR

    1,636,715     949,295  

Series C Preferred Stock Financing

        In September 2012 and June 2013, we issued and sold an aggregate of 52,586,206 shares of our Series C preferred stock at a purchase price of $0.58 per share for an aggregate purchase price of $30.5 million. The following table sets forth the number of shares of our Series C preferred stock that we issued to our 5% stockholders and their affiliates in this transaction:

Investor
  Shares of Series C
Preferred Stock
  Purchase Price ($)  

CVF, LLC

    12,931,034     7,500,000  

Bill & Melinda Gates Foundation

    8,620,690     5,000,000  

Polaris Venture Partners and related funds

    6,075,152     3,523,588  

Lux Ventures, and related funds

    5,295,318     3,071,284  

S.R. One, Limited

    4,851,958     2,814,135  

Johnson & Johnson Development Corporation

    4,187,214     2,428,584  

Skyline Venture Partners V, L.P.

    3,140,414     1,821,440  

Cycad Group, LLC

    2,514,096     1,458,176  

Auriga Ventures, III FCPR

    2,425,980     1,407,068  

Participation in this Offering

        Certain holders of more than 5% of our voting securities have indicated an interest in purchasing shares of our common stock in this offering at the initial public offering price. However, because indications of interest are not binding agreements or commitments to purchase, the underwriters could determine to sell more, less or no shares to any of these existing stockholders and any of these existing stockholders could determine to purchase more, less or no shares in this offering.

Indemnification Agreements

        Prior to the completion of this offering, we expect to enter into indemnification agreements with each of our directors and executive officers. These agreements will require us to indemnify these

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individuals and, in certain cases, affiliates of such individuals, to the fullest extent permissible under Delaware law against liabilities that may arise by reason of their service to us or at our direction, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified.

Registration Rights Agreement

        In connection with our Series C preferred stock financing, on September 28, 2012, we entered into an amended and restated registration rights agreement with the holders of all of our then-outstanding shares of preferred stock including certain of our named executive officers and entities with which certain of our directors are affiliated. The agreement provides that these holders have the right to demand that we file a registration statement with respect to the common stock issued upon conversion of our preferred stock. These holders may also request that shares of common stock held by them be included in certain registration statements that we are otherwise filing. See "Description of Capital Stock—Registration Rights".

Right of First Refusal and Co-Sale Agreement

        In connection with our Series C preferred stock financing, on September 28, 2012, we entered into an amended and restated right of first refusal and co-sale agreement with the holders of all of our then-outstanding shares of preferred stock including certain of our named executive officers and entities with which certain of our directors are affiliated. Pursuant to the terms of this agreement, in the event of a proposed sale of shares of our common or preferred stock, the seller was required to first offer such shares to the company and to the other investors, subject to certain conditions and restrictions. This agreement will terminate upon the completion of this offering.

Voting Agreement

        In connection with our Series C preferred stock financing on September 28, 2012, we entered into an amended and restated voting agreement with the holders of all of our then-outstanding shares of preferred stock including certain of our named executive officers and entities with which certain of our directors are affiliated, with respect to the election of directors and certain other matters. All of our current directors were elected pursuant to the terms of this agreement. This agreement will terminate upon the completion of this offering.

Investor Rights Agreement

        In connection with our Series C preferred stock financing, on September 28, 2012, we entered into an amended and restated investor rights agreement with the holders of all of our then-outstanding shares of preferred stock including certain of our named executive officers and entities with which certain of our directors are affiliated. Pursuant to the terms of this agreement, we granted our investors certain information rights as well as the right to participate pro rata in any future private financing rounds. This agreement will terminate upon the completion of this offering.

Transactions with Our Executive Officers, Directors and 5% Stockholders

        On May 16, 2007, we entered into a consulting agreement with Dr. George Siber, a member of our board of directors. The consulting agreement was amended on each of June 30, 2009, December 16, 2010, June 15, 2011 and June 5, 2013 and is in effect through June 17, 2015. Pursuant to the consulting agreement, Dr. Siber performs various consulting services for us, including determining our general scientific and business direction, recruitment of scientific advisory board members and consultants, recruitment of full-time management and scientific personnel and identifying and reviewing scientific developments and intellectual property. Since the beginning of our last fiscal year, Dr. Siber has been

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paid approximately $10 thousand per month under the consulting agreement. See "Executive and Director Compensation — Director Agreements — Dr. Siber" for further details on compensation paid to Dr. Siber under the consulting agreement.

Related Person Transactions Policy

        We have adopted a related person transaction approval policy that will govern the review of related person transactions following the closing of this offering. Pursuant to this policy, if we want to enter into a transaction with a related person or an affiliate of a related person,              will review the proposed transaction to determine, based on applicable NASDAQ and SEC rules, if such transaction requires pre-approval by the audit committee and/or board of directors. If pre-approval is required, such matters will be reviewed at the next regular or special audit committee and/or board of directors meeting. We may not enter into a related person transaction unless              has either specifically confirmed in writing that no further reviews are necessary or that all requisite corporate reviews have been obtained.

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PRINCIPAL STOCKHOLDERS

        The following table sets forth information relating to the beneficial ownership of our common stock as of November 30, 2013, by: each person, or group of affiliated persons, known by us to beneficially own more than 5% of our outstanding shares of common stock; each of our directors; each of our named executive officers; and all directors and executive officers as a group.

        The number of shares beneficially owned by each entity, person, director or executive officer is determined in accordance with the rules of the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares over which the individual has sole or shared voting power or investment power as well as any shares that the individual has the right to acquire within 60 days of September 30, 2013 through the exercise of any stock options, warrants or other rights. Except as otherwise indicated, and subject to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all shares of common stock held by that person.

        The percentage of shares beneficially owned is computed on the basis of 139,433,966 shares of our common stock outstanding as of November 30, 2013, which reflects the assumed conversion of all of our outstanding shares of preferred stock into an aggregate of 135,538,027 shares of common stock. Other than our Series B preferred stock, all of our preferred stock converts into shares of common stock on a one to one basis. Shares of our common stock that a person has the right to acquire within 60 days of November 30, 2013 are deemed outstanding for purposes of computing the percentage ownership of the person holding such rights, but are not deemed outstanding for purposes of computing the percentage ownership of any other person, except with respect to the percentage ownership of all directors and executive officers as a group. Unless otherwise indicated below, the address for each beneficial owner listed is c/o Genocea Biosciences, Inc., Cambridge Discovery Park, 100 Acorn Park Drive, Cambridge, MA 02140.

        Certain holders of more than 5% of our common stock and their affiliated entities have indicated an interest in purchasing shares of our common stock in this offering at the initial public offering price. However, because indications of interest are not binding agreements or commitments to purchase, the underwriters could determine to sell more, less or no shares to any of these existing stockholders and any of these existing stockholders could determine to purchase more, less or no shares in this offering. The following table does not reflect any such potential purchases by these existing principal stockholders or their affiliated entities. However, if any shares are purchased by these stockholders, the number of shares of common stock beneficially owned after this offering and the percentage of common stock beneficially owned after this offering will differ from that set forth in the table below.

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  Percentage of Shares
Beneficially Owned
Name and Address of Beneficial Owner
  Number of Shares
Beneficially Owned
  Before Offering   After Offering

5% or greater stockholders:

               

Polaris Venture Partners, and related funds(1)

   
22,758,851
   
16.3

%
 

650 East Kendall Street, 4 th  Floor
Cambridge, MA 02142

               

Lux Ventures, and related funds(2)

   
20,693,119
   
14.8
   

295 Madison Avenue, 24th Floor
New York, NY 10017

               

S.R. One, Limited(3)

   
18,130,301
   
13.0
   

c/o Corporation Service Company
2595 Interstate Drive, Suite 103
Harrisburg, PA 17110

               

Johnson & Johnson Development Corporation(4)

   
16,369,413
   
11.7
   

410 George Street
New Brunswick, NJ 08901

               

CVF, LLC(5)

   
12,931,034
   
9.3
   

222 N. LaSalle Street, Suite 2000
Chicago, IL 60601

               

Skyline Venture Partners V, L.P.(6)

   
12,277,062
   
8.8
   

525 University Avenue, Suite 610
Palo Alto, CA 94301

               

Cycad Group, LLC(7)

   
9,264,959
   
6.6
   

1270 Coast Village Circle
Santa Barbara, CA 93108

               

Auriga Ventures, III FCPR(8)

   
9,065,152
   
6.5
   

18, Avenue Matignon
75008 Paris, France

               

Bill & Melinda Gates Foundation(9)

   
8,620,690
   
6.2
   

P.O. Box 23350
Seattle, WA 989102

               

Directors and Named Executive Officers:

               

William Clark(10)

    3,983,899     2.8    

Seth Hetherington(11)

    1,152,173     *    

Paul Giannasca(12)

    502,672     *    

George Siber, M.D.(13)

    949,846     *    

Kevin Bitterman, Ph.D.(14)

    22,758,851     16.3    

Katrine Bosley(15)

    454,790     *    

Simeon J. George, M.D.(16)

    18,130,301     13.0    

Stephen J. Hoffman, M.D., Ph.D.(17)

    12,277,062     8.8    

All executive officers and directors as a group (11 persons)(18)

    61,620,619     41.8 %  

*
Represents beneficial ownership of less than one percent of our outstanding common stock.

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(1)
Consists of (i) 2,052,341 shares of common stock issuable upon conversion of seed preferred stock, 8,099,422 shares of common stock issuable upon conversion of Series A preferred stock, 5,561,025 shares of common stock issuable upon conversion of Series B preferred stock, 5,862,122 shares of common stock issuable upon conversion of Series C preferred stock, and warrants exercisable for 399,909 shares of common stock held by Polaris Venture Partners V, L.P., (ii) 40,000 shares of common stock issuable upon conversion of seed preferred stock, 157,857 shares of common stock issuable upon conversion of Series A preferred stock, 108,385 shares of common stock issuable upon conversion of Series B preferred stock and 114,252 shares of common stock issuable upon conversion of Series C preferred stock held by Polaris Venture Partners Entrepreneurs' Fund, L.P., (iii) 14,059 shares of common stock issuable upon conversion of seed preferred stock, 55,483 shares of common stock issuable upon conversion of Series A preferred stock, 38,093 shares of common stock issuable upon conversion of Series B preferred stock and 40,156 shares of common stock issuable upon conversion of Series C preferred stock held by Polaris Venture Partners Founders' Fund V, L.P., and (iv) 20,523 shares of common stock, 80,992 shares of common stock issuable upon conversion of Series A preferred stock, 55,610 shares of common stock issuable upon conversion of Series B preferred stock, 58,622 shares of common stock issuable upon conversion of Series C preferred stock held by Polaris Venture Partners Special Founders' Fund V, L.P. (together with Polaris Venture Partners V, L.P., Polaris Venture Partners Entrepreneurs' Fund, L.P. and Polaris Venture Partners Founders' Fund V, L.P., the Polaris Funds). North Star Venture Management 2000, LLC directly or indirectly provides investment advisory services to various venture capital funds, including the Polaris Funds. Jonathan Flint and Terrance McGuire, managing members of North Star Venture Management 2000, LLC, exercise voting and investment power with respect to North Star Venture Management, 2000. Each of the Polaris Funds has the sole voting and investment power with respect to the shares of the Company directly held by the applicable Polaris Fund. The respective general partners of the Polaris Funds may be deemed to have sole voting and investment power with respect to the shares held by such funds. The respective general partners disclaim beneficial ownership of all the shares held by the Polaris Funds except to the extent of their proportionate pecuniary interests therein. The members of North Star Venture Management 2000, LLC (the Polaris Management Members) are also members of Polaris Venture Management Co., V, L.L.C. (the general partner of each of the Polaris Funds). Jonathan Flint and Terrance McGuire, managing members of Polaris Venture Management Co. V, L.L.C., exercise voting and investment power with respect to Polaris Venture Management Co. V, L.L.C. As members of the general partner and North Star Venture Management 2000, LLC, the Polaris Management Members may be deemed to share voting and investment powers for the shares held by the Polaris Funds. The Polaris Management Members disclaim beneficial ownership of all such shares held by the funds except to the extent of their proportionate pecuniary interests therein. Kevin Bitterman, a director of the Company, has an assignee interest in Polaris Venture Management Co. V, L.L.C. To the extent that he is deemed to share voting and investment powers with respect to the shares held by the Polaris Funds, Dr. Bitterman disclaims beneficial ownership of all the shares held by the funds except to the extent of his proportionate pecuniary interest therein.

(2)
Consists of (i) 945,700 shares of common stock, 2,011,431 shares of common stock issuable upon conversion of seed preferred stock, 4,955,185 shares of common stock issuable upon conversion of Series A preferred stock, 1,680,257 shares of common stock issuable upon conversion of Series B preferred stock, 2,705,068 shares of common stock issuable upon conversion of Series C preferred stock and warrants exercisable for 587,931 shares of common stock held by Lux Ventures II, L.P. ("LV-II"), (ii) 54,300 shares of common stock, 115,492 shares of common stock issuable upon conversion of seed preferred stock, 207,800 shares of common stock issuable upon conversion of Series A preferred stock, 70,463 shares of common stock issuable upon conversion of Series B preferred stock and 113,440 shares of common stock issuable upon conversion of Series C preferred stock held by Lux Ventures II Sidecar, L.P. ("Sidecar"), (iii) 3,230,769 shares of common stock issuable upon conversion of Series A preferred stock, 1,416,651 shares of common stock issuable upon conversion of Series B preferred stock and 2,280,688 shares of common stock issuable upon conversion of Series C preferred stock held by Lux Ventures II Sidecar II LLC ("Sidecar II"), and (iv) 121,822 shares of common stock issuable upon conversion of Series B preferred stock and 196,122 shares of common stock issuable upon conversion of Series C preferred stock held by Lux Ventures II Sidecar III LLC ("Sidecar III") (together with Lux Ventures II, L.P., Lux Ventures II Sidecar, L.P. and Lux Ventures II Sidecar II LLC, the Lux Funds).

Lux Venture Partners II, L.P. ("LVP-II") is (i) the general partner of LV-II and Sidecar, and (ii) the manager of Sidecar II and Sidecar III. Lux Venture Associates II, LLC ("LVA-II") is the general partner of LVP-II and Lux Capital Management, LLC ("LCM LLC") is the sole member of LVP-II.

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    Robert Paull, Joshua Wolfe and Peter Hebert are the individual managers of LCM LLC (the "Individual Managers"). LVP II, LVA-II and LCM LLC disclaim beneficial ownership of such shares, except to the extent of their pecuniary interest therein. LCM LLC, as sole member, may be deemed to share voting and investment powers for the shares held by LV-II and Sidecar. As one of three individual managers, each of the Individual Managers disclaims beneficial ownership over the shares reported herein, and in all events disclaims beneficial ownership except to the extent of his pecuniary interest therein.

(3)
Consists of 9,230,769 shares of common stock issuable upon conversion of Series A preferred stock, 4,047,574 shares of common stock issuable upon conversion of Series B preferred stock and 4,851,958 shares of common stock issuable upon conversion of Series C preferred stock held by S.R. One, Limited. Simeon J. George is a partner at S.R. One, Limited. To the extent that he is deemed to share voting and investment powers with respect to the shares held by S.R. One, Limited, Dr. George disclaims beneficial ownership of all the shares held by S.R. One, Limited except to the extent of his proportionate pecuniary interest therein.

(4)
Consists of 12,182,199 shares of common stock issuable upon conversion of Series B preferred stock and 4,187,214 shares of common stock issuable upon conversion of Series C preferred stock held by Johnson & Johnson Development Corporation.

(5)
Consists of 12,931,034 shares of common stock issuable upon conversion of Series C preferred stock. Richard H. Robb, manager of CVF, LLC, exercises voting and investment power with respect to shares held by CVF, LLC. Mr. Robb disclaims beneficial ownership of all shares held by CVF, LLC except to the extent of his pecuniary interest therein.

(6)
Consists of 9,136,648 shares of common stock issuable upon conversion of Series B preferred stock and 3,140,414 shares of common stock issuable upon conversion of Series C preferred stock held by Skyline Venture Partners V, L.P. The general partner of Skyline Venture Partners V, L.P. is Skyline Venture Management V, LLC. Stephen J. Hoffman is a director of the Company and a member of Skyline Venture Partners V, L.P. To the extent that he is deemed to share voting and investment powers with respect to the shares held by Skyline Venture Partners V, L.P., Dr. Hoffman disclaims beneficial ownership of all the shares held by Skyline Venture Partners V, L.P. except to the extent of his proportionate pecuniary interest therein. John G. Freund and Yasunori Kaneko are Managers of Skyline Venture Management V, LLC and hereby disclaim beneficial ownership of all the shares held by Skyline Venture Partners V, L.P. except to the extent of his proportionate pecuniary interest therein.

(7)
Consists of 3,846,154 shares of common stock issuable upon conversion of Series A preferred stock, 2,904,709 shares of common stock issuable upon conversion of Series B preferred stock and 2,514,096 shares of common stock issuable upon conversion of Series C preferred stock. K. Leonard Judson (Managing Director and President) and Paul F. Glenn (Chairman) are the sole managers and directors of Cycad Group, LLC (the "Cycad Directors"). The Cycad Directors have shared voting and investment power with respect to the shares held by Cycad Group, LLC, and may be deemed beneficial owners of the shares held by Cycad Group, LLC. Mr. Judson and Mr. Glenn disclaim beneficial ownership of the shares beneficially owned by Cycad Group, LLC except to the extent of their pecuniary interest therein.

(8)
Consists of 4,615,385 shares of common stock issuable upon conversion of Series A preferred stock, 2,023,787 shares of common stock issuable upon conversion of Series B preferred stock and 2,425,980 shares of common stock issuable upon conversion of Series C preferred stock. Jacques Chatin, Bernard Daugeras and Patrick Bamas are managers of Auriga Ventures, III FCPR and exercise voting and investment power with respect to shares held by Auriga Ventures, III FCPR. The managers disclaim beneficial ownership of all shares held by Auriga Ventures, III FCPR, except to the extent of their pecuniary interest therein.

(9)
Consists of 8,620,690 shares of common stock issuable upon conversion of Series C preferred stock held by Bill & Melinda Gates Foundation.

(10)
Consists of 3,716,800 shares of common stock that can be acquired upon the exercise of outstanding options and 267,099 shares of common stock that can be acquired upon the exercise of options within 60 days of November 30, 2013.

(11)
Consists of 1,087,228 shares of common stock that can be acquired upon the exercise of outstanding options and 64,945 shares of common stock that can be acquired upon the exercise of options within 60 days of November 30, 2013.

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(12)
Consists of 468,927 shares of common stock that can be acquired upon the exercise of outstanding options and 33,745 shares of common stock that can be acquired upon the exercise of options within 60 days of November 30, 2013.

(13)
Consists of 24,000 shares of common stock, 921,679 shares of common stock that can be acquired upon the exercise of outstanding options and 4,167 shares of common stock that can be acquired upon the exercise of options within 60 days of November 30, 2013.

(14)
Consists of shares held by Polaris Venture Partners or related funds. By virtue of the relationships described in footnote 1 above, Dr. Bitterman may be deemed to share beneficial ownership in the shares held by Polaris Venture Partners or related funds. Dr. Bitterman disclaims beneficial ownership of the shares referred to in footnote 1 above.

(15)
Consists of 370,000 shares of common stock, 69,374 shares of common stock that can be acquired upon the exercise of outstanding options and 15,416 shares of common stock that can be acquired upon the exercise of options within 60 days of November 30, 2013.

(16)
Consists of shares held by S.R. One, Limited. By virtue of the relationships described in footnote 3 above, Dr. George may be deemed to share beneficial ownership in the shares held by S.R. One, Limited. Dr. George disclaims beneficial ownership of the shares referred to in footnote 3 above.

(17)
Consists of shares held by Skyline Venture Partners V, L.P. By virtue of the relationships described in footnote 6 above, Dr. Hoffman may be deemed to share beneficial ownership in the shares held by Skyline Venture Partners V, L.P. Dr. Hoffman disclaims beneficial ownership of the shares referred to in footnote 6 above.

(18)
Consists of (i) 53,166,214 shares of common stock issuable upon conversion of Series A preferred stock, Series B preferred stock and Series C preferred stock, (ii) 394,000 shares of common stock and (iii) 8,060,405 shares of common stock that can be acquired upon the exercise of outstanding options and the exercise of options within 60 days of November 30, 2013.

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DESCRIPTION OF CAPITAL STOCK

General

        The following description of our capital stock is intended as a summary only and is qualified in its entirety by reference to our fifth amended and restated certificate of incorporation and restated by-laws that will be in effect at the closing of this offering, which will be filed as exhibits to the registration statement of which this prospectus is a part, and to the applicable provisions of the Delaware General Corporation Law. We refer in this section to our fifth amended and restated certificate of incorporation as our certificate of incorporation, and we refer to our amended and restated by-laws as our by-laws. The description of our capital stock reflects changes to our capital structure that will occur upon the closing of this offering.

        Upon the closing of this offering, our authorized capital stock will consist of                      shares of our common stock, par value $0.001 per share, and                      shares of our preferred stock, par value $0.001 per share, all of which preferred stock will be undesignated.

        As of September 30, 2013, we had issued and outstanding:

    3,525,939 shares of our common stock;

    127,359,792 shares of our preferred stock that are convertible into 135,075,680 shares of our common stock; and

    options to purchase a total of 18,726,854 shares of our common stock with a weighted average exercise price of $0.22 per share.

        As of September 30, 2013, we had 41 stockholders of record.

Common Stock

        Dividend Rights.     Subject to preferences that may apply to shares of preferred stock outstanding at the time, holders of outstanding shares of common stock will be entitled to receive dividends out of assets legally available at the times and in the amounts as the board of directors may from time to time determine.

        Conversion or Redemption Rights.     Our common stock will be neither convertible nor redeemable.

        Liquidation Rights.     Upon our liquidation, dissolution or winding up, the holders of our common stock will be entitled to receive pro rata our assets which are legally available for distribution, after payment of all debts and other liabilities and the satisfaction of any liquidation preference granted to the holders of any then-outstanding shares of preferred stock.

        Rights and Preferences.     Holders of common stock have no preemptive, conversion or subscription rights and there are no redemption or sinking fund provisions applicable to the common stock. The rights, preferences and privileges of the holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that we may designate in the future.

Preferred Stock

        All currently outstanding shares of preferred stock will be converted automatically to common stock upon the completion of this offering.

        Following the completion of this offering, our board of directors will have the authority, without further action by our stockholders, to issue up to                      shares of preferred stock in one or more series, to establish from time to time the number of shares to be included in each such series, to fix the

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rights, preferences and privileges of the shares of each wholly unissued series and any qualifications, limitations or restrictions thereon, and to increase or decrease the number of shares of any such series, but not below the number of shares of such series then outstanding.

        Our board of directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of our common stock. The purpose of authorizing our board of directors to issue preferred stock and determine its rights and preferences is to eliminate delays associated with a stockholder vote on specific issuances. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring or preventing a change in control of us and may adversely affect the market price of our common stock and the voting and other rights of the holders of our common stock. It is not possible to state the actual effect of the issuance of any shares of preferred stock on the rights of holders of common stock until the board of directors determines the specific rights attached to that preferred stock.

        We have no present plans to issue any shares of preferred stock.

Warrants

        As of September 30, 2013, warrants to purchase a total of 1,084,615 shares of our Series A preferred stock were outstanding with an exercise price of $0.65 per share, which will be converted into warrants to purchase 1,084,615 shares of common stock upon the completion of this offering, are exercisable immediately and expire on February 11, 2014.

        As of September 30, 2013, warrants to purchase a total of 517,242 shares of our Series B preferred stock were outstanding with an exercise price of $0.58 per share, which will be converted into warrants to purchase 517,242 shares of common stock upon the completion of this offering, are exercisable immediately and expire on October 25, 2021.

        As of September 30, 2013, warrants to purchase a total of 689,655 shares of our Series C preferred stock were outstanding with an exercise price of $0.58 per share, which will be converted into warrants to purchase 689,655 shares of common stock upon the completion of this offering, are exercisable immediately and expire the earlier of September 30, 2023 or immediately prior to the closing of a deemed liquidation, as defined in the preferred stock purchase warrant agreement.

Registration Rights

        After our initial public offering, certain holders of shares of our common stock, including those shares of our common stock that will be issued upon conversion of our preferred stock in connection with this offering, and those shares of our common stock that are issuable pursuant to our outstanding preferred stock warrants, or warrant shares, will be entitled to certain rights with respect to registration of such shares under the Securities Act. These shares are collectively referred to herein as registrable shares.

        Under the amended and restated registration rights agreement, holders of registrable shares (other than warrant shares) can demand that we file a registration statement or request that their shares be included on a registration statement that we are otherwise filing, in either case, registering the resale of their shares of common stock. These registration rights are subject to conditions and limitations, including the right, in certain circumstances, of the underwriters of an offering to limit the number of shares included in such registration and our right, in certain circumstances, not to effect a requested S-1 or S- 3 registration within 90 days before or 180 days following the Company's estimated date of filing of a registration statement pertaining to an underwritten public offering of securities for the account of the Company offering of our securities, including this offering.

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    Demand Registration Rights

        Following the six-month anniversary of the completion of this offering, the holders of at least a majority of the registrable shares (other than warrant shares) may require us to file a registration statement under the Securities Act at our expense with respect to the resale of their registrable shares, and we are required to use our best efforts to effect the registration.

    Piggyback Registration Rights

        If we propose to register any of our securities under the Securities Act for our own account or the account of any other holder, the holders of registrable shares are entitled to notice of such registration and to request that we include registrable shares for resale on such registration statement, subject to the right of any underwriter to limit the number of shares included in such registration. We will pay all registration expenses, other than underwriting discounts and commissions, related to any demand or piggyback registration. The amended and restated registration rights agreement contains customary cross- indemnification provisions, pursuant to which we are obligated to indemnify the selling stockholders, in the event of misstatements or omissions in the registration statement attributable to us except in the event of fraud and they are obligated to indemnify us for misstatements or omissions attributable to them.

    Form S-3 Registration Rights

        After the expiration of the 180-day period following the completion of this offering, the holders of approximately                         shares will be entitled to certain Form S-3 registration rights if we are eligible to file a registration statement on Form S-3. As a result, holders owning a certain percentage of our capital stock and certain other identified holders will have the right to demand that we file a registration statement on Form S-3 so long as the aggregate value of the securities to be sold under the registration statement is at least $3 million, subject to certain exceptions.

    Expenses of Registration

        We will pay all expenses relating to any demand, piggyback, or Form S-3 registration, other than underwriting discounts and commissions, subject to specified conditions and limitations.

    Termination of Registration Rights

        The registration rights granted to any holder of registrable shares will terminate when all such holder's registrable securities could be sold or no longer qualify as registrable shares.

Anti-Takeover Effects of Our Certificate of Incorporation and Our By-Laws

        Our certificate of incorporation and by-laws will contain certain provisions that are intended to enhance the likelihood of continuity and stability in the composition of the board of directors and which may have the effect of delaying, deferring or preventing a future takeover or change in control of the company unless such takeover or change in control is approved by the board of directors.

        These provisions include:

        Classified Board.     Our certificate of incorporation will provide that our board of directors will be divided into three classes of directors, with the classes as nearly equal in number as possible. As a result, approximately one-third of our board of directors will be elected each year. The classification of directors will have the effect of making it more difficult for stockholders to change the composition of our board. Our certificate of incorporation will also provide that, subject to any rights of holders of preferred stock to elect additional directors under specified circumstances, the number of directors will

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be fixed exclusively pursuant to a resolution adopted by our board of directors. Upon completion of this offering, we expect that our board of directors will have six members.

        Action by Written Consent; Special Meetings of Stockholders.     Our certificate of incorporation will provide that stockholder action can be taken only at an annual or special meeting of stockholders and cannot be taken by written consent in lieu of a meeting. Our certificate of incorporation and the by-laws will also provide that, except as otherwise required by law, special meetings of the stockholders can be called only by or at the direction of the board of directors pursuant to a resolution adopted by a majority of the total number of directors. Except as described above, stockholders will not be permitted to call a special meeting or to require the board of directors to call a special meeting.

        Removal of Directors.     Our certificate of incorporation will provide that our directors may be removed only for cause by the affirmative vote of at least 75% of the voting power of our outstanding shares of capital stock, voting together as a single class. This requirement of a supermajority vote to remove directors could enable a minority of our stockholders to prevent a change in the composition of our board.

        Advance Notice Procedures.     Our by-laws will establish an advance notice procedure for stockholder proposals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to the board of directors. Stockholders at an annual meeting will only be able to consider proposals or nominations specified in the notice of meeting or brought before the meeting by or at the direction of the board of directors or by a stockholder who was a stockholder of record on the record date for the meeting, who is entitled to vote at the meeting and who has given our Secretary timely written notice, in proper form, of the stockholder's intention to bring that business before the meeting. Although the by-laws will not give the board of directors the power to approve or disapprove stockholder nominations of candidates or proposals regarding other business to be conducted at a special or annual meeting, the by-laws may have the effect of precluding the conduct of certain business at a meeting if the proper procedures are not followed or may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect its own slate of directors or otherwise attempting to obtain control of the company.

        Super Majority Approval Requirements.     The Delaware General Corporation Law generally provides that the affirmative vote of a majority of the shares entitled to vote on any matter is required to amend a corporation's certificate of incorporation or by-laws, unless either a corporation's certificate of incorporation or by-laws requires a greater percentage. Our certificate of incorporation and by-laws will provide that the affirmative vote of holders of at least 75% of the total votes eligible to be cast in the election of directors will be required to amend, alter, change or repeal the bylaws. This requirement of a supermajority vote to approve amendments to our by-laws could enable a minority of our stockholders to exercise veto power over any such amendments.

        Authorized but Unissued Shares.     Our authorized but unissued shares of common stock and preferred stock will be available for future issuance without stockholder approval. These additional shares may be utilized for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and employee benefit plans. The existence of authorized but unissued shares of common stock and preferred stock could render more difficult or discourage an attempt to obtain control of a majority of our common stock by means of a proxy contest, tender offer, merger or otherwise.

        Exclusive Forum.     Our certificate of incorporation will provide that, subject to limited exceptions, the state or federal courts located in the State of Delaware will be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (iii) any action asserting a claim against us arising pursuant to any provision of the Delaware General

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Corporation Law, our certificate of incorporation or our by-laws, or (iv) any other action asserting a claim against us that is governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and to have consented to the provisions of our certificate of incorporation described above. Although we believe these provisions benefit us by providing increased consistency in the application of Delaware law for the specified types of actions and proceedings, the provisions may have the effect of discouraging lawsuits against our directors and officers. The enforceability of similar choice of forum provisions in other companies' certificates of incorporation has been challenged in legal proceedings, and it is possible that, in connection with one or more actions or proceedings described above, a court could find the choice of forum provisions contained in our certificate of incorporation to be inapplicable or unenforceable.

    Section 203 of the Delaware General Corporation Law

        Upon completion of this offering, we will be subject to the provisions of Section 203 of the Delaware General Corporation Law. In general, Section 203 prohibits a publicly-held Delaware corporation from engaging in a "business combination" with an "interested stockholder" for a three-year period following the time that this stockholder becomes an interested stockholder, unless the business combination is approved in a prescribed manner. A "business combination" includes, among other things, a merger, asset or stock sale or other transaction resulting in a financial benefit to the interested stockholder. An "interested stockholder" is a person who, together with affiliates and associates, owns, or did own within three years prior to the determination of interested stockholder status, 15% or more of the corporation's voting stock.

        Under Section 203, a business combination between a corporation and an interested stockholder is prohibited unless it satisfies one of the following conditions: before the stockholder became interested, the board of directors approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder; upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding, shares owned by persons who are directors and also officers, and employee stock plans, in some instances; or at or after the time the stockholder became interested, the business combination was approved by the board of directors of the corporation and authorized at an annual or special meeting of the stockholders by the affirmative vote of at least two-thirds of the outstanding voting stock which is not owned by the interested stockholder.

        A Delaware corporation may "opt out" of these provisions with an express provision in its original certificate of incorporation or an express provision in its certificate of incorporation or by-laws resulting from a stockholders' amendment approved by at least a majority of the outstanding voting shares. We have not opted out of these provisions. As a result, mergers or other takeover or change in control attempts of us may be discouraged or prevented.

    Transfer Agent and Registrar

        The transfer agent and registrar for our common stock is Computershare Trust Company, N.A. The transfer agent and registrar's address is 144 Fernwood Ave, Edison, New Jersey 08837.

Listing

        We expect to apply for listing of our common stock on the NASDAQ Global Market under the symbol GNCA.

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SHARES ELIGIBLE FOR FUTURE SALE

        Prior to this offering, there has been no public market for our common stock. Future sales of our common stock, including shares issued upon the exercise of outstanding options or warrants, in the public market after this offering, or the perception that those sales may occur, could cause the prevailing market price for our common stock to fall or impair our ability to raise equity capital in the future. As described below, only a limited number of shares of our common stock will be available for sale in the public market for a period of several months after completion of this offering due to contractual and legal restrictions on resale described below. Future sales of our common stock in the public market either before (to the extent permitted) or after restrictions lapse, or the perception that those sales may occur, could adversely affect the prevailing market price of our common stock at such time and our ability to raise equity capital at a time and price we deem appropriate.

Sale of Restricted Shares

        As of September 30, 2013, based on the number of shares of our common stock then outstanding, upon the closing of this offering and assuming (1) the conversion of our outstanding preferred stock into common stock, (2) no exercise of the underwriters' option to purchase additional shares of common stock, and (3) no exercise of outstanding options or warrants, we would have had outstanding an aggregate of approximately                                    shares of common stock. Of these shares, all of the                                     shares of common stock to be sold in this offering, and any shares sold upon exercise of the underwriters' option to purchase additional shares will be freely tradable in the public market without restriction or further registration under the Securities Act, unless the shares are held by any of our "affiliates" as such term is defined in Rule 144 of the Securities Act. All remaining shares of common stock held by existing stockholders immediately prior to the completion of this offering will be "restricted securities" as such term is defined in Rule 144. These restricted securities were issued and sold by us, or will be issued and sold by us, in private transactions and are eligible for public sale only if registered under the Securities Act or if they qualify for an exemption from registration under the Securities Act, including the exemptions provided by Rule 144 or Rule 701, which rules are summarized below.

        As a result of the lock-up agreements referred to below and the provisions of Rule 144 and Rule 701 under the Securities Act, the shares of our common stock (excluding the shares sold in this offering) that will be available for sale in the public market are as follows:

Approximate Number of Shares   First Date Available for Sale into Public Market

  180 days after the date of this prospectus upon expiration of the lock-up agreements referred to below, subject in some cases to applicable volume limitations under Rule 144

Lock-up Agreements

        In connection with this offering, we, our directors, our officers and stockholders beneficially owning approximately    % of our shares of common stock outstanding as of September 30, 2013 (assuming conversion of all of our outstanding shares of preferred stock and warrants), have agreed with the underwriters not to dispose of or hedge any shares of our common stock or securities convertible into or exchangeable for shares of common stock during the period from the date of the lock-up agreement continuing through the date 180 days after the date of this prospectus, except with the prior written consent of Citigroup Global Markets Inc. and Cowen and Company, LLC, the representatives of the underwriters. The representatives of the underwriters have advised us that they have no current intent or arrangement to release any of the shares subject to the lock-up agreements prior to the expiration of the lock-up period.

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        The lock-up agreements do not contain any pre-established conditions to the waiver by Citigroup Global Markets Inc. and Cowen and Company, LLC on behalf of the underwriters of any terms of the lock-up agreements. Any determination to release shares subject to the lock-up agreements would be based on a number of factors at the time of determination, including but not necessarily limited to the market price of the common stock, the liquidity of the trading market for the common stock, general market conditions, the number of shares proposed to be sold, contractual obligations to release certain shares subject to the lock-up agreements in the event any such shares are released, subject to certain specific limitations and thresholds, and the timing, purpose and terms of the proposed sale.

        Following the lock-up periods set forth in the agreements described above, and assuming that the representatives of the underwriters do not release any parties from these agreements, all of the shares of our common stock that are restricted securities or are held by our affiliates as of the date of this prospectus will be eligible for sale in the public market in compliance with Rule 144 under the Securities Act.

        In addition to the restrictions contained in the lock-up agreements described above, we have entered into agreements with certain of our security holders, including our amended and restated investors rights agreement and our standard forms of option agreements under our equity incentive plans, that contain market stand-off provisions imposing restrictions on the ability of such security holders to offer, sell or transfer our equity securities for a period of 180 days following the date of this prospectus.

Rule 144

        In general, persons who have beneficially owned restricted shares of our common stock for at least six months, and any affiliate of the Company who owns either restricted shares of our common stock, are entitled to sell their securities without registration with the SEC under an exemption from registration provided by Rule 144 under the Securities Act.

    Non-Affiliates

        Any person who is not deemed to have been one of our affiliates at the time of, or at any time during the three months preceding, a sale may sell an unlimited number of restricted securities under Rule 144 if:

    the restricted securities have been held for at least six months, including the holding period of any prior owner other than one of our affiliates;

    we have been subject to the Exchange Act periodic reporting requirements for at least 90 days before the sale; and

    we are current in our Exchange Act reporting at the time of sale.

        Any person who is not deemed to have been an affiliate of ours at the time of, or at any time during the three months preceding, a sale and has held the restricted securities for at least one year, including the holding period of any prior owner other than one of our affiliates, will be entitled to sell an unlimited number of restricted securities without regard to the length of time we have been subject to Exchange Act periodic reporting or whether we are current in our Exchange Act reporting.

    Affiliates

        Persons seeking to sell restricted securities who are our affiliates at the time of, or any time during the three months preceding, a sale would be subject to the restrictions described above. They are also subject to additional restrictions, by which such person would be required to comply with the manner

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of sale and notice provisions of Rule 144 and would be entitled to sell within any three-month period only that number of securities that does not exceed the greater of either of the following:

    1% of the number of shares of our common stock then outstanding, which will equal approximately        shares immediately after the completion of this offering based on the number of shares outstanding as of September 30, 2013; or

    the average weekly trading volume of our common stock on the NASDAQ Global Market during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.

Rule 701

        In general, under Rule 701 a person who purchased shares of our common stock pursuant to a written compensatory plan or contract and who is not deemed to have been one of our affiliates during the immediately preceding 90 days may sell these shares in reliance upon Rule 144, but without being required to comply with the notice, manner of sale or public information requirements or volume limitation provisions of Rule 144. Rule 701 also permits affiliates to sell their Rule 701 shares under Rule 144 without complying with the holding period requirements of Rule 144. All holders of Rule 701 shares, however, are required to wait until 90 days after the date of this prospectus before selling such shares pursuant to Rule 701. Substantially all Rule 701 shares are subject to lock-up agreements as described below and in the section of this prospectus titled "Underwriting" and will become eligible for sale upon the expiration of the restrictions set forth in those agreements.

Registration Rights

        Upon the completion of this offering, the holders of 135,075,680 shares of our common stock issuable upon the conversion of our preferred stock, or their transferees, will be entitled to specified rights with respect to the registration of the offer and sale of their shares under the Securities Act. Registration of the offer and sale of these shares under the Securities Act would result in the shares becoming freely tradable without restriction under the Securities Act immediately upon the effectiveness of the registration. See the section of this prospectus titled "Description of Capital Stock—Registration Rights" for additional information.

Equity Incentive Plans

        We intend to file with the SEC one or more registration statements on Form S-8 under the Securities Act covering the shares of common stock that we may issue upon exercise of outstanding options reserved for issuance under our Amended and Restated 2007 Equity Incentive Plan and 2014 Equity Incentive Plan. Such registration statement is expected to be filed and become effective as soon as practicable after the completion of this offering. Accordingly, shares registered under such registration statement will be available for sale in the open market following its effective date, subject to Rule 144 volume limitations and the lock-up agreements described above, if applicable.

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MATERIAL UNITED STATES FEDERAL INCOME AND ESTATE TAX
CONSIDERATIONS FOR NON-U.S. HOLDERS

        The following discussion describes the material U.S. federal income and estate tax considerations relating to the purchase, ownership and disposition of our common stock by Non-U.S. Holders (defined below). This summary does not address all aspects of U.S. federal income and estate taxes, does not discuss the potential application of the alternative minimum tax or the 3.8% Medicare tax on net investment income and does not deal with state, local or non-U.S. tax consequences that may be relevant to Non-U.S. Holders of our common stock. This discussion is based upon Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, the Treasury regulations promulgated or proposed thereunder and administrative and judicial interpretations thereof, in effect and available as of the date hereof and all of which are subject to differing interpretations and to change, revocation or repeal at any time, possibly on a retroactive basis.

        This summary assumes that shares of our common stock are held as "capital assets" within the meaning of Section 1221 of the Code (generally, property held for investment). This summary does not purport to deal with all aspects of U.S. federal income and estate taxation that might be relevant to particular Non-U.S. Holders in light of their particular investment circumstances or status, nor does it address specific tax considerations that may be relevant to particular persons (including, for example, financial institutions, broker-dealers and traders in securities, insurance companies, partnerships or other pass-through entities or entities that are treated as disregarded entities for U.S. federal income tax purposes (regardless of their places of organization or formation, certain U.S. expatriates, tax-exempt organizations, pension plans, "controlled foreign corporations", "passive foreign investment companies", corporations that accumulate earnings to avoid U.S. federal income tax, persons in special situations, such as those who have elected to mark securities to market or those who hold common stock as part of a straddle, hedge, conversion transaction, synthetic security or other integrated investment or risk reduction strategy). In addition, except as explicitly addressed herein with respect to estate tax, this summary does not address estate and gift tax considerations or considerations under the tax laws of any state, local or non-U.S. jurisdiction.

        For purposes of this summary, a "Non-U.S. Holder" means a beneficial owner of common stock that for U.S. federal income tax purposes is not classified as a partnership and is not:

    an individual who is a citizen or resident of the United States;

    a corporation or any other organization taxable as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States, any state thereof or the District of Columbia;

    an estate, the income of which is included in gross income for U.S. federal income tax purposes regardless of its source; or

    a trust if (1) a U.S. court is able to exercise primary supervision over the trust's administration and one or more U.S. persons have the authority to control all of the trust's substantial decisions or (2) the trust has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person.

        If an entity that is treated as a partnership for U.S. federal income tax purposes holds our common stock, the tax treatment of persons treated as its partners for U.S. federal income tax purposes will generally depend upon the status of the partner and the activities of the partnership. Partnerships and other entities that are classified as partnerships for U.S. federal income tax purposes and persons holding our common stock through a partnership or other entity treated as a partnership for U.S. federal income tax purposes are urged to consult their own tax advisors.

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        There can be no assurance that the Internal Revenue Service ("IRS") will not challenge one or more of the tax consequences described herein, and we have not obtained, nor do we intend to obtain a ruling from the IRS with respect to the U.S. federal income or estate tax consequences to a Non-U.S. Holder of the purchase, ownership or disposition of our common stock.

         THIS SUMMARY IS FOR GENERAL INFORMATION ONLY AND IS NOT INTENDED TO BE TAX ADVICE. NON-U.S. HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME AND ESTATE TAXATION, STATE, LOCAL AND NON-U.S. TAXATION AND OTHER TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF OUR COMMON STOCK.

Distributions on Our Common Stock

        As discussed under "Dividend Policy" above, we do not anticipate paying any cash dividends in the foreseeable future. In the event that we do make a distribution of cash or property (other than certain stock distributions) with respect to our common stock (or in the case of certain redemptions that are treated as distributions with respect to our common stock), any such distributions generally will constitute dividends for U.S. federal income tax purposes to the extent of our current and accumulated earnings and profits, if any, as determined under U.S. federal income tax principles. If a distribution exceeds our current and accumulated earnings and profits, the excess will constitute a return of capital and will first reduce the holder's adjusted tax basis in our common stock, but not below zero. Any remaining excess will be treated as capital gain, subject to the tax treatment described below in "—Gain on Sale, Exchange or Other Disposition of Our Common Stock". Any such distribution would also be subject to the discussion below under the sections titled "—Additional Withholding and Reporting Requirements" and "—Backup Withholding and Information Reporting".

        Dividends paid to a Non-U.S. Holder generally will be subject to a 30% U.S. federal withholding tax unless such Non-U.S. Holder provides us or our agent, as the case may be, with the appropriate IRS Form W-8, such as:

    IRS Form W-8BEN (or successor form) certifying, under penalties of perjury, a reduction in withholding under an applicable income tax treaty, or

    IRS Form W-8ECI (or successor form) certifying that a dividend paid on common stock is not subject to withholding tax because it is effectively connected with a trade or business in the United States of the Non-U.S. Holder (in which case such dividend generally will be subject to regular graduated U.S. tax rates as described below).

        The certification requirement described above must be provided to us or our agent prior to the payment of dividends and must be updated periodically. The certification also may require a Non-U.S. Holder that provides an IRS form or that claims treaty benefits to provide its U.S. taxpayer identification number. Special certification and other requirements apply in the case of certain Non-U.S. Holders that hold shares of our common stock through intermediaries or are pass-through entities for U.S. federal income tax purposes.

        Each Non-U.S. Holder is urged to consult its own tax advisor about the specific methods for satisfying these requirements. A claim for exemption will not be valid if the person receiving the applicable form has actual knowledge or reason to know that the statements on the form are false.

        If dividends are effectively connected with a trade or business in the United States of a Non-U.S. Holder (and, if required by an applicable income tax treaty, attributable to a U.S. permanent establishment or fixed base), the Non-U.S. Holder, although exempt from the withholding tax described above (provided that the certifications described above are satisfied), generally will be subject to U.S. federal income tax on such dividends on a net income basis in the same manner as if it were a resident of the United States. In addition, if a Non-U.S. Holder is treated as a corporation for U.S. federal

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income tax purposes, the Non-U.S. Holder may be subject to an additional "branch profits tax" equal to 30% (unless reduced by an applicable income treaty) of its earnings and profits in respect of such effectively connected dividend income.

        Non-U.S. Holders that do not timely provide us or our agent with the required certification, but which are eligible for a reduced rate of U.S. federal withholding tax pursuant to an income tax treaty, may obtain a refund or credit of any excess amount withheld by timely filing an appropriate claim for refund with the IRS.

Gain on Sale, Exchange or Other Disposition of Our Common Stock

        Subject to the discussion below under the sections titled "—Additional Withholding and Reporting Requirements" and "—Backup Withholding and Information Reporting", in general, a Non-U.S. Holder will not be subject to U.S. federal income tax or withholding tax on gain realized upon such holder's sale, exchange or other disposition of shares of our common stock unless (i) such Non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of disposition, and certain other conditions are met; (ii) we are or have been a "United States real property holding corporation", as defined in the Code (a "USRPHC"), at any time within the shorter of the five-year period preceding the disposition and the Non-U.S. Holder's holding period in the shares of our common stock, and certain other requirements are met; or (iii) such gain is effectively connected with the conduct by such Non-U.S. Holder of a trade or business in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment or fixed base maintained by such Non-U.S. Holder in the United States).

        If the first exception applies, the Non-U.S. Holder generally will be subject to U.S. federal income tax at a rate of 30% (or at a reduced rate under an applicable income tax treaty) on the amount by which such Non-U.S. Holder's capital gains allocable to U.S. sources exceed capital losses allocable to U.S. sources during the taxable year of the disposition. If the third exception applies, the Non-U.S. Holder generally will be subject to U.S. federal income tax with respect to such gain on a net income basis in the same manner as if it were a resident of the United States and a Non-U.S. Holder that is a corporation for U.S. federal income tax purposes may also be subject to a branch profits tax with respect to any earnings and profits attributable to such gain at a rate of 30% (or at a reduced rate under an applicable income tax treaty).

        Regarding the second exception, generally, a corporation is a USRPHC only if the fair market value of its U.S. real property interests (as defined in the Code) equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests plus its other assets used or held for use in a trade or business. Although there can be no assurance in this regard, we believe that we are not, and do not anticipate becoming, a USRPHC. However, because the determination of whether we are a USRPHC depends on the fair market value of our U.S. real property interests relative to the fair market value of other business assets, there can be no assurance that we have not been a USRPHC in the past and will not become a USRPHC in the future. Even if we became a USRPHC, a Non-U.S. Holder would not be subject to U.S. federal income tax on a sale, exchange or other disposition of our common stock by reason of our status as USRPHC so long as our common stock is regularly traded on an established securities market and such Non-U.S. Holder does not own and is not deemed to own (directly, indirectly or constructively) more than 5% of our common stock at any time during the shorter of the five year period ending on the date of disposition and the Non-U.S. Holder's holding period. However, no assurance can be provided that our common stock will be regularly traded on an established securities market for purposes of the rules described above. Prospective investors are encouraged to consult their own tax advisors regarding the possible consequences to them if we are, or were to become, a USRPHC.

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Additional Withholding and Reporting Requirements

        Legislation enacted in March 2010 and related guidance (commonly referred to as "FATCA") will impose, in certain circumstances, U.S. federal withholding at a rate of 30% on payments of (a) dividends on our common stock on or after July 1, 2014, and (b) gross proceeds from the sale or other disposition of our common stock on or after January 1, 2017. In the case of payments made to a "foreign financial institution" as defined under FATCA (including, among other entities, an investment fund), the tax generally will be imposed, subject to certain exceptions, unless such institution (i) enters into (or is otherwise subject to) and complies with an agreement with the U.S. government (a "FATCA Agreement") or (ii) complies with an intergovernmental agreement between the United States and a foreign jurisdiction (an "IGA"), in either case to, among other things, collect and provide to the U.S. or other relevant tax authorities certain information regarding U.S. account holders of such institution. In the case of payments made to a foreign entity that is not a foreign financial institution, the tax generally will be imposed, subject to certain exceptions, unless such foreign entity provides the withholding agent with a certification that it does not have any "substantial U.S. owner" (generally, any specified U.S. person that directly or indirectly owns more than a specified percentage of such entity) or that identifies its substantial U.S. owners. If our common stock is held through a foreign financial institution that enters into (or is otherwise subject to) a FATCA Agreement, such foreign financial institution (or, in certain cases, a person paying amounts to such foreign financial institution) generally will be required, subject to certain exceptions, to withhold such tax on payments of dividends and proceeds described above made to (x) a person (including an individual) that fails to comply with certain information requests or (y) a foreign financial institution that has not entered into (and is not otherwise subject to) a FATCA Agreement and is not required to comply with FATCA pursuant to applicable foreign law enacted in connection with an IGA.

        Prospective investors should consult their own tax advisors regarding the possible impact of these rules on their investment in our common stock, and the entities through which they hold our common stock, including, without limitation, the process and deadlines for meeting the applicable requirements to prevent the imposition of this 30% withholding tax under FATCA.

Backup Withholding and Information Reporting

        We must report annually to the IRS and to each Non-U.S. Holder the gross amount of the distributions on our common stock paid to the holder and the tax withheld, if any, with respect to the distributions. Non-U.S. Holders may have to comply with specific certification procedures to establish that the holder is not a United States person (as defined in the Code) in order to avoid backup withholding at the applicable rate, currently 28%, with respect to dividends on our common stock. Dividends paid to Non-U.S. Holders subject to the U.S. withholding tax, as described above under the section titled "—Distributions on Our Common Stock", generally will be exempt from U.S. backup withholding.

        Information reporting and backup withholding will generally apply to the proceeds of a disposition of our common stock by a Non-U.S. Holder effected by or through the U.S. office of any broker, U.S. or foreign, unless the holder certifies its status as a Non-U.S. Holder and satisfies certain other requirements, or otherwise establishes an exemption. Generally, information reporting and backup withholding will not apply to a payment of disposition proceeds to a Non-U.S. Holder where the transaction is effected outside the United States through a non-U.S. office of a broker. However, for information reporting purposes, dispositions effected through a non-U.S. office of a broker with substantial U.S. ownership or operations generally will be treated in a manner similar to dispositions effected through a U.S. office of a broker. Prospective investors should consult their own tax advisors regarding the application of the information reporting and backup withholding rules to them.

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        Copies of information returns may be made available to the tax authorities of the country in which the Non-U.S. Holder resides or, in which the Non- U.S. Holder is incorporated, under the provisions of a specific treaty or agreement.

        Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules from a payment to a Non-U.S. Holder can be refunded or credited against the Non-U.S. Holder's U.S. federal income tax liability, if any, provided that an appropriate claim is timely filed with the IRS.

Federal Estate Tax

        Common stock owned (or treated as owned) by an individual who is not a citizen or a resident of the United States (as defined for U.S. federal estate tax purposes) at the time of death will be included in the individual's gross estate for U.S. federal estate tax purposes unless an applicable estate or other tax treaty provides otherwise, and therefore, may be subject to U.S. federal estate tax. The test for whether an individual is a resident of the United States for federal estate tax purposes differs from the test used for U.S. federal income tax purposes. Some individuals, therefore, may be "Non-U.S. Holders" for U.S. federal income tax purposes, but not for U.S. federal estate tax purposes, and vice versa.

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UNDERWRITING

        Citigroup Global Markets Inc. and Cowen and Company, LLC are acting as joint book-running managers of the offering and as representatives of the underwriters named below. Subject to the terms and conditions stated in the underwriting agreement dated the date of this prospectus, each underwriter named below has severally agreed to purchase, and we have agreed to sell to that underwriter, the number of shares set forth opposite the underwriter's name.

Underwriter
  Number
of Shares

Citigroup Global Markets, Inc.

   

Cowen and Company, LLC

   

Stifel, Nicolaus & Company, Incorporated

   

Needham & Company, LLC

   
     

Total

   
     

        The underwriting agreement provides that the obligations of the underwriters to purchase the shares included in this offering are subject to approval of legal matters by counsel and to other conditions. The underwriters are obligated to purchase all the shares (other than those covered by the over-allotment option described below) if they purchase any of the shares.

        Shares sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus. Any shares sold by the underwriters to securities dealers may be sold at a discount from the initial public offering price not to exceed $    per share. If all the shares are not sold at the initial offering price, the underwriters may change the offering price and the other selling terms. The representatives have advised us that the underwriters do not intend to make sales to discretionary accounts.

        If the underwriters sell more shares than the total number set forth in the table above, we have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to                additional shares at the public offering price less the underwriting discount. The underwriters may exercise the option solely for the purpose of covering over-allotments, if any, in connection with this offering. To the extent the option is exercised, each underwriter must purchase a number of additional shares approximately proportionate to that underwriter's initial purchase commitment. Any shares issued or sold under the option will be issued and sold on the same terms and conditions as the other shares that are the subject of this offering.

        We, our officers and directors, certain of our employees and our other stockholders have agreed that, for a period of 180 days from the date of this prospectus, we and they will not, without the prior written consent of Citigroup Global Markets Inc. and Cowen and Company, LLC, dispose of or hedge any shares or any securities convertible into or exchangeable for our common stock. Citigroup Global Markets Inc. and Cowen and Company, LLC in their sole discretion may release any of the securities subject to these lock-up agreements at any time, which, in the case of officers and directors, shall be with notice.

        Prior to this offering, there has been no public market for our shares. Consequently, the initial public offering price for the shares was determined by negotiations between us and the representatives. Among the factors considered in determining the initial public offering price were our results of operations, our current financial condition, our future prospects, our markets, the economic conditions in and future prospects for the industry in which we compete, our management, and currently prevailing general conditions in the equity securities markets, including current market valuations of publicly traded companies considered comparable to our company. We cannot assure you, however, that the price at which the shares will sell in the public market after this offering will not be lower than

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the initial public offering price or that an active trading market in our shares will develop and continue after this offering.

        We have applied to have our shares listed on the NASDAQ Global Market under the symbol GNCA.

        The following table shows the underwriting discounts and commissions that we are to pay to the underwriters in connection with this offering. These amounts are shown assuming both no exercise and full exercise of the underwriters' over-allotment option.

 
  Paid by Genocea  
 
  No Exercise   Full Exercise  

Per share

  $     $    

Total

  $     $    

        We estimate that our portion of the total expenses of this offering will be $        million. We have agreed to reimburse the underwriters for certain expenses in an amount up to $            .

        In connection with the offering, the underwriters may purchase and sell shares in the open market. Purchases and sales in the open market may include short sales, purchases to cover short positions, which may include purchases pursuant to the over-allotment option, and stabilizing purchases.

    Short sales involve secondary market sales by the underwriters of a greater number of shares than they are required to purchase in the offering.

    "Covered" short sales are sales of shares in an amount up to the number of shares represented by the underwriters' over-allotment option.

    "Naked" short sales are sales of shares in an amount in excess of the number of shares represented by the underwriters' over-allotment option.

    Covering transactions involve purchases of shares either pursuant to the underwriters' over-allotment option or in the open market in order to cover short positions.

    To close a naked short position, the underwriters must purchase shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering.

    To close a covered short position, the underwriters must purchase shares in the open market or must exercise the over-allotment option. In determining the source of shares to close the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the over-allotment option.

    Stabilizing transactions involve bids to purchase shares so long as the stabilizing bids do not exceed a specified maximum.

        Purchases to cover short positions and stabilizing purchases, as well as other purchases by the underwriters for their own accounts, may have the effect of preventing or retarding a decline in the market price of the shares. They may also cause the price of the shares to be higher than the price that would otherwise exist in the open market in the absence of these transactions. The underwriters may conduct these transactions on the NASDAQ Global Market, in the over-the-counter market or otherwise. If the underwriters commence any of these transactions, they may discontinue them at any time.

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Conflicts of Interest

        The underwriters are full-service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing and brokerage activities. Certain of the underwriters and their respective affiliates may, from time to time, engage in transactions with and perform services for us in the ordinary course of their business for which they may receive customary fees and reimbursement of expenses. In the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (which may include bank loans and/or credit default swaps) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investments and securities activities may involve securities and/or instruments of ours or our affiliates. The underwriters and their affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

        We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make because of any of those liabilities.

    Notice to Prospective Investors in the European Economic Area

        In relation to each member state of the European Economic Area that has implemented the Prospectus Directive (each, a relevant member state), with effect from and including the date on which the Prospectus Directive is implemented in that relevant member state (the relevant implementation date), an offer of shares described in this prospectus may not be made to the public in that relevant member state other than:

    to any legal entity which is a qualified investor as defined in the Prospectus Directive;

    to fewer than 100 or, if the relevant member state has implemented the relevant provision of the 2010 PD Amending Directive, 150 natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the relevant Dealer or Dealers nominated by us for any such offer; or

    in any other circumstances falling within Article 3(2) of the Prospectus Directive,

provided that no such offer of shares shall require us or any underwriter to publish a prospectus pursuant to Article 3 of the Prospectus Directive.

        For purposes of this provision, the expression an "offer of securities to the public" in any relevant member state means the communication in any form and by any means of sufficient information on the terms of the offer and the shares to be offered so as to enable an investor to decide to purchase or subscribe for the shares, as the expression may be varied in that member state by any measure implementing the Prospectus Directive in that member state, and the expression "Prospectus Directive" means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the relevant member state) and includes any relevant implementing measure in the relevant member state. The expression 2010 PD Amending Directive means Directive 2010/73/EU.

        The sellers of the shares have not authorized and do not authorize the making of any offer of shares through any financial intermediary on their behalf, other than offers made by the underwriters

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with a view to the final placement of the shares as contemplated in this prospectus. Accordingly, no purchaser of the shares, other than the underwriters, is authorized to make any further offer of the shares on behalf of the sellers or the underwriters.

    Notice to Prospective Investors in the United Kingdom

        This prospectus is only being distributed to, and is only directed at, persons in the United Kingdom that are qualified investors within the meaning of Article 2(1)(e) of the Prospectus Directive that are also (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Order) or (ii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (each such person being referred to as a "relevant person"). This prospectus and its contents are confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other persons in the United Kingdom. Any person in the United Kingdom that is not a relevant person should not act or rely on this document or any of its contents.

    Notice to Prospective Investors in France

        Neither this prospectus nor any other offering material relating to the shares described in this prospectus has been submitted to the clearance procedures of the Autorité des Marchés Financiers or of the competent authority of another member state of the European Economic Area and notified to the Autorité des Marchés Financiers . The shares have not been offered or sold and will not be offered or sold, directly or indirectly, to the public in France. Neither this prospectus nor any other offering material relating to the shares has been or will be:

    released, issued, distributed or caused to be released, issued or distributed to the public in France; or

    used in connection with any offer for subscription or sale of the shares to the public in France.

        Such offers, sales and distributions will be made in France only:

    to qualified investors ( investisseurs qualifiés ) and/or to a restricted circle of investors ( cercle restreint d'investisseurs ), in each case investing for their own account, all as defined in, and in accordance with articles L.411-2, D.411-1, D.411-2, D.734-1, D.744-1, D.754-1 and D.764-1 of the French Code monétaire et financier ;

    to investment services providers authorized to engage in portfolio management on behalf of third parties; or

    in a transaction that, in accordance with article L.411-2-II-1°-or-2°-or 3° of the French Code monétaire et financier and article 211-2 of the General Regulations ( Règlement Général ) of the Autorité des Marchés Financiers , does not constitute a public offer ( appel public à l'épargne ).

        The shares may be resold directly or indirectly, only in compliance with articles L.411-1, L.411-2, L.412-1 and L.621-8 through L.621-8-3 of the French Code monétaire et financier .

    Notice to Prospective Investors in Australia

        No prospectus or other disclosure document (as defined in the Corporations Act 2001 (Cth) of Australia ("Corporations Act")) in relation to the common stock has been or will be lodged with the Australian Securities & Investments Commission ("ASIC"). This document has not been lodged with

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ASIC and is only directed to certain categories of exempt persons. Accordingly, if you receive this document in Australia:

    (a)
    you confirm and warrant that you are either:

    (i)
    a "sophisticated investor" under section 708(8)(a) or (b) of the Corporations Act;

    (ii)
    a "sophisticated investor" under section 708(8)(c) or (d) of the Corporations Act and that you have provided an accountant's certificate to us which complies with the requirements of section 708(8)(c)(i) or (ii) of the Corporations Act and related regulations before the offer has been made;

    (iii)
    a person associated with the company under section 708(12) of the Corporations Act; or

    (iv)
    a "professional investor" within the meaning of section 708(11)(a) or (b) of the Corporations Act, and to the extent that you are unable to confirm or warrant that you are an exempt sophisticated investor, associated person or professional investor under the Corporations Act any offer made to you under this document is void and incapable of acceptance; and

    (b)
    you warrant and agree that you will not offer any of the common stock for resale in Australia within 12 months of that common stock being issued unless any such resale offer is exempt from the requirement to issue a disclosure document under section 708 of the Corporations Act.

    Notice to Prospective Investors in Hong Kong

        The shares may not be offered or sold in Hong Kong by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), or (ii) to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a "prospectus" within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong) and no advertisement, invitation or document relating to the shares may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.

    Notice to Prospective Investors in Japan

        The shares offered in this prospectus have not been and will not be registered under the Financial Instruments and Exchange Law of Japan. The shares have not been offered or sold and will not be offered or sold, directly or indirectly, in Japan or to or for the account of any resident of Japan (including any corporation or other entity organized under the laws of Japan), except (i) pursuant to an exemption from the registration requirements of the Financial Instruments and Exchange Law and (ii) in compliance with any other applicable requirements of Japanese law.

    Notice to Prospective Investors in Singapore

        This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares may not be circulated or distributed, nor may

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the shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the SFA), (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA, in each case subject to compliance with conditions set forth in the SFA.

        Where the shares are subscribed or purchased under Section 275 of the SFA by a relevant person which is:

    a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or

    a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor,

shares, debentures and units of shares and debentures of that corporation or the beneficiaries' rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the shares pursuant to an offer made under Section 275 of the SFA except:

    to an institutional investor (for corporations, under Section 274 of the SFA) or to a relevant person defined in Section 275(2) of the SFA, or to any person pursuant to an offer that is made on terms that such shares, debentures and units of shares and debentures of that corporation or such rights and interest in that trust are acquired at a consideration of not less than $0.2 million (or its equivalent in a foreign currency) for each transaction, whether such amount is to be paid for in cash or by exchange of securities or other assets, and further for corporations, in accordance with the conditions specified in Section 275 of the SFA;

    where no consideration is or will be given for the transfer; or

    where the transfer is by operation of law.

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LEGAL MATTERS

        The validity of the issuance of our common stock offered in this prospectus will be passed upon for us by Ropes & Gray LLP, Boston, Massachusetts. Certain legal matters in connection with this offering will be passed upon for the underwriters by Cooley, LLP, Boston, Massachusetts.


EXPERTS

        The financial statements of Genocea Biosciences, Inc. at December 31, 2011 and 2012 and for the years then ended, appearing in this Prospectus and Registration Statement, have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.


WHERE YOU CAN FIND MORE INFORMATION

        We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the shares of common stock offered hereby. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement or the exhibits and schedules filed therewith. For further information with respect to us and the common stock offered hereby, reference is made to the registration statement and the exhibits and schedules filed therewith. Statements contained in this prospectus regarding the contents of any contract or any other document that is filed as an exhibit to the registration statement are not necessarily complete, and each such statement is qualified in all respects by reference to the full text of such contract or other document filed as an exhibit to the registration statement. A copy of the registration statement and the exhibits and schedules filed therewith may be inspected without charge at the public reference room maintained by the SEC, located at 100 F Street N.E., Washington, D.C. 20549, and copies of all or any part of the registration statement may be obtained from such offices upon the payment of the fees prescribed by the SEC. Please call the SEC at 1-800-SEC-0330 for further information about the public reference room. The SEC also maintains a website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address is www.sec.gov.

        Upon completion of this offering, we will become subject to the information and periodic reporting requirements of the Exchange Act and, in accordance therewith, will file periodic reports, proxy statements and other information with the SEC. Such periodic reports, proxy statements and other information will be available for inspection and copying at the public reference room and website of the SEC referred to above.

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Genocea Biosciences, Inc.

Index to Financial Statements

 
  Pages

Report of independent registered public accounting firm

  F-2

Balance sheets as of December 31, 2011 and 2012 and as of September 30, 2013 (unaudited) and September 30, 2013 pro forma (unaudited)

 
F-3

Statements of operations and comprehensive loss for the years ended December 31, 2011 and 2012, the nine months ended September 30, 2012 and 2013 (unaudited) and the period from August 16, 2006 (inception) to September 30, 2013 (unaudited)

 
F-4

Statements of redeemable convertible preferred stock and stockholders' deficit for the years ended December 31, 2011 and 2012, the nine months ended September 30, 2013 (unaudited) and September 30, 2012 pro forma (unaudited) and the period from August 16, 2006 (inception) to September 30, 2013 (unaudited)

 
F-5

Statements of cash flows for the years ended December 31, 2011 and 2012, the nine months ended September 30, 2012 and 2013 (unaudited) and the period from August 16, 2006 (inception) to September 30, 2013 (unaudited)

 
F-6

Notes to financial statements

 
F-7

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of
Genocea Biosciences, Inc.

        We have audited the accompanying balance sheets of Genocea Biosciences, Inc. (a development stage enterprise) (the Company) as of December 31, 2011 and 2012, and the related statements of operations and comprehensive loss, redeemable convertible preferred stock and stockholders' (deficit) equity and cash flows for the years then ended and the statement of redeemable convertible preferred stock and stockholders' (deficit) equity for the period from August 16, 2006 (inception) to December 31, 2012. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

        We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company's internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Genocea Biosciences, Inc. (a development stage enterprise) as of December 31, 2011 and 2012 and the results of its operations and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.

                        /s/ Ernst & Young LLP

Boston, Massachusetts
October 22, 2013

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Genocea Biosciences, Inc.
(A Development Stage Company)

Balance Sheets

(In thousands, except per share data)

 
  December 31,   September 30, 2013  
 
  2011   2012   Actual   Pro Forma  
 
   
   
  (unaudited)
 

Assets

                         

Current assets:

                         

Cash and cash equivalents

  $ 5,742   $ 11,516   $ 12,075   $ 12,075  

Restricted cash

        97          

Prepaid expenses and other current assets

    374     520     787     787  
                   

Total current assets

    6,116     12,133     12,862     12,862  

Property and equipment, net

    634     794     949     949  

Restricted cash

    97     315     315     315  

Other assets

    93     289     500     500  
                   

Total assets

  $ 6,940   $ 13,531   $ 14,626   $ 14,626  
                   

Liabilities, redeemable convertible preferred stock and stockholders' (deficit) equity

                         

Current liabilities:

                         

Accounts payable

  $ 936   $ 1,452   $ 1,597   $ 1,597  

Accrued expenses and other current liabilities

    1,110     919     1,274     1,274  

Deferred revenue

    23         32     32  

Current portion of long-term debt

    154     1,675     224     224  

Current portion of deferred rent

    41     155     64     64  
                   

Total current liabilities

    2,264     4,201     3,191     3,191  

Non-current liabilities:

                         

Long-term debt

    51     2,370     3,054     3,054  

Accrued interest payable

        146          

Deferred rent, net of current portion

        263     237     237  

Warrant to purchase redeemable securities

    339     246     600      
                   

Total liabilities

    2,654     7,226     7,082     6,482  

Commitments and contingencies (Note 12)

                         

Redeemable convertible preferred stock:

                         

Seed convertible preferred stock, $0.001 par value;
Authorized—4,615 shares; Issued and outstanding—4,615 shares at December 31, 2011, December 31, 2012 and September 30, 2013 (unaudited), and no shares issued and outstanding pro forma (unaudited); aggregate liquidation preference of $3,000 at December 31, 2011, 2012 and September 30, 2013 (unaudited), and none pro forma (unaudited)

    3,000     3,000     3,000      

Series A redeemable convertible preferred stock, $0.001 par value;
Authorized—36,662 shares; Issued and outstanding—35,577 shares at December 31, 2011, December 31, 2012 and September 30, 2013 (unaudited), and no shares issued and outstanding pro forma (unaudited); aggregate liquidation preference of $23,125 at December 31, 2011, December 31, 2012 and September 30, 2013 (unaudited), and none pro forma (unaudited)

    23,125     23,125     23,125      

Series B redeemable convertible preferred stock, $0.001 par value;
Authorized—35,099 shares; Issued and outstanding—34,581 shares at December 31, 2011, December 31, 2012 and September 30, 2013 (unaudited), and no shares issued and outstanding pro forma (unaudited); aggregate liquidation preference of $21,723, $23,332 and $24,532 December 31, 2011, December 31, 2012 and September 30, 2013 (unaudited), respectively, and none pro forma (unaudited)

    21,723     23,332     24,532      

Series C redeemable convertible preferred stock, $0.001 par value;
Authorized—53,276; Issued and outstanding—None, 26,293 and 52,586 shares at December 31, 2011, December 31, 2012 and September 30, 2013 (unaudited), respectively; and no shares issued and outstanding pro forma (unaudited); aggregate liquidation preference of $15,250 and $30,500 at December 31, 2012 and September 30, 2013 (unaudited), respectively, and none pro forma (unaudited)

        15,250     30,500      

Stockholders' (deficit) equity:

                         

Common stock, $0.001 par value;
Authorized—191,690 shares; Issued and outstanding—3,510, 3,517 and 3,526 shares at December 31, 2011, December 31, 2012 and September 30, 2013 (unaudited), respectively, and 138,602 shares issued and outstanding pro forma (unaudited)

    4     4     4     139  

Additional paid-in-capital

                81,622  

Deficit accumulated during the development stage

    (43,566 )   (58,406 )   (73,617 )   (73,617 )
                   

Total stockholders' (deficit) equity

    (43,562 )   (58,402 )   (73,613 )   8,144  
                   

Total liabilities, redeemable convertible preferred stock and stockholders' (deficit) equity

  $ 6,940   $ 13,531   $ 14,626   $ 14,626  
                   

   

See accompanying notes to financial statements.

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Genocea Biosciences, Inc.
(A Development Stage Company)

Statements of Operations and Comprehensive Loss

(In thousands, except per share data)

 
   
   
   
   
  Period
from August 16,
2006
(Inception) to
September 30,
2013
 
 
  Years Ended
December 31,
  Nine Months Ended
September 30,
 
 
  2011   2012   2012   2013  
 
   
   
  (unaudited)
  (unaudited)
 

Grant revenue

  $ 1,820   $ 1,977   $ 1,441   $ 711   $ 6,674  

Operating expenses:

                               

Research and development

    13,543     11,240     7,242     11,354     55,781  

General and administrative

    3,004     3,690     2,610     3,113     19,104  
                       

Total operating expenses

    16,547     14,930     9,852     14,467     74,885  
                       

Loss from operations

    (14,727 )   (12,953 )   (8,411 )   (13,756 )   (68,211 )

Other income (expense):

                               

Change in fair value of warrant

    75     93     67     (166 )   224  

Loss on debt extinguishment

                (200 )   (200 )

Interest expense, net

    (33 )   (507 )   (361 )   (338 )   (1,570 )
                       

Other income (expense)

    42     (414 )   (294 )   (704 )   (1,546 )
                       

Net loss

  $ (14,685 ) $ (13,367 ) $ (8,705 ) $ (14,460 ) $ (69,757 )
                       

Comprehensive loss

  $ (14,685 ) $ (13,367 ) $ (8,705 ) $ (14,460 ) $ (69,757 )
                       

Reconciliation of net loss to net loss attributable to common stockholders

                               

Net loss

 
$

(14,685

)

$

(13,367

)

$

(8,705

)

$

(14,460

)

$

(69,757

)

Accretion of redeemable convertible preferred stock to redemption value

    (1,605 )   (1,781 )   (1,204 )   (1,200 )   (5,509 )
                       

Net loss attributable to common stockholders

  $ (16,290 ) $ (15,148 ) $ (9,909 ) $ (15,660 ) $ (75,266 )
                       

Net loss per share attributable to common stockholders—basic and diluted

  $ (4.66 ) $ (4.31 ) $ (2.82 ) $ (4.44 ) $ (27.10 )
                       

Weighted-average number of common shares used in net loss per share attributable to common stockholders—basic and diluted

    3,495     3,513     3,514     3,525     2,777  
                       

Pro forma net loss per share attributable to common stockholders—basic and diluted (unaudited)

        $ (0.17 )       $ (0.13 )      
                             

Weighted-average number of common shares used in pro forma net loss per share attributable to common stockholders—basic and diluted (unaudited)

          88,918           119,674        
                             

   

See accompanying notes to financial statements.

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Genocea Biosciences, Inc.
(A Development Stage Company)
Statements of Redeemable Convertible Preferred Stock and Stockholders' (Deficit) Equity
(In thousands)

 
   
   
  Series A
Redeemable
Convertible
Preferred
Shares
  Series B
Redeemable
Convertible
Preferred
Shares
  Series C
Redeembale
Convertible
Preferred
Shares
   
   
   
   
   
 
 
  Seed Convertible
Preferred
Shares
   
   
   
  Deficit
Accumulated
During the
Development
Stage
   
 
 
  Common Shares    
  Total
Stockholders'
(Deficit)
Equity
 
 
  Additional
Paid-In
Capital
 
 
  Shares   Amount   Shares   Amount   Shares   Amount   Shares   Amount   Shares   Amount  

Balance at August 16, 2006 (inception)

      $       $       $       $       $   $   $   $  

Issuance of common stock (2006)

                                    3,250     3             3  

Issuance of restricted common stock (2006)

                                    9                  

Issuance of Seed Preferred stock, net of issuance costs of $72 (2006)

    4,497     3,000                                         (72 )   (72 )

Conversion of notes payable and accrued interest into Seed Preferred stock (2006)

    118                                                  

Issuance of restricted common stock in exchange for services rendered (2007)

                                    24         3         3  

Issuance of common stock in exchange for license agreement (2007)

                                    128         18         18  

Issuance of restricted common stock (2008)

                                    24         1         1  

Exercise of stock options (2008)

                                    4                  

Issuance of Series A Preferred stock, net of issaunce costs of $352 (2009)

            29,083     18,904                             (321 )   (31 )   (352 )

Conversion of notes payable and accrued interest into Series A Preferred stock (2009)

            6,494     4,221                                      

Exercise of stock options (2009)

                                    8         1         1  

Issuance of Series B Preferred stock, net of issuance costs of $437 (2010)

                    34,581     20,056                     (252 )   (185 )   (437 )

Issuance of common stock in exchange for license agreement (2010)

                                    25         6         6  

Exercise of stock options (2010)

                                    10         2         2  

Stock-based compensation expense

                                            542         542  

Accretion of dividends on redeemable convertible preferred stock

                        62                         (62 )   (62 )

Net loss

                                                (27,245 )   (27,245 )
                                                       

Balance at December 31, 2010

    4,615     3,000     35,577     23,125     34,581     20,118             3,482     3         (27,595 )   (27,592 )

Exercise of stock options

                                    28     1     5         6  

Stock-based compensation expense

                                            314         314  

Accretion of dividends on redeemable convertible preferred stock

                        1,605                     (319 )   (1,286 )   (1,605 )

Net loss

                                                (14,685 )   (14,685 )
                                                       

Balance at December 31, 2011

    4,615     3,000     35,577     23,125     34,581     21,723             3,510     4         (43,566 )   (43,562 )

Issuance of Series C Preferred stock, net of issuance costs of $172

                            26,293     15,250             (172 )       (172 )

Exercise of stock options

                                    7         1         1  

Stock-based compensation expense

                                            307         307  

Accretion of dividends on redeemable convertible preferred stock

                        1,609                     (136 )   (1,473 )   (1,609 )

Net loss

                                                (13,367 )   (13,367 )
                                                       

Balance at December 31, 2012

    4,615     3,000     35,577     23,125     34,581     23,332     26,293     15,250     3,517     4         (58,406 )   (58,402 )

Issuance of Series C Preferred stock (unaudited)

                            26,293     15,250                      

Exercise of stock options (unaudited)

                                    9         2         2  

Stock-based compensation expense (unaudited)

                                            447         447  

Accretion of dividends on redeemable convertible preferred stock (unaudited)

                        1,200                     (449 )   (751 )   (1,200 )

Net loss (unaudited)

                                                (14,460 )   (14,460 )
                                                       

Balance at September 30, 2013 (unaudited)

    4,615   $ 3,000     35,577   $ 23,125     34,581   $ 24,532     52,586   $ 30,500     3,526   $ 4   $   $ (73,617 ) $ (73,613 )

Reclassification of warrants to equity (unaudited)

                                            600         600  

Conversion of redeemable convertible preferred stock into common stock (unaudited)

    (4,615 )   (3,000 )   (35,577 )   (23,125 )   (34,581 )   (24,532 )   (52,586 )   (30,500 )   135,076     135     81,022         81,157  
                                                       

Pro forma balance at September 30, 2013 (unaudited)

      $       $       $       $     138,602   $ 139   $ 81,622   $ (73,617 ) $ 8,144  
                                                       

See accompanying notes to financial statements

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Table of Contents


Genocea Biosciences, Inc.
(A Development Stage Company)

Statements of Cash Flows

(In thousands)

 
  Years Ended December 31,   Nine Months
Ended
September 30,
   
 
 
  Period from
August 16, 2006
(Inception) to
September 30, 2013
 
 
  2011   2012   2012   2013  
 
   
   
  (unaudited)
  (unaudited)
 

Operating activities

                               

Net loss

  $ (14,685 ) $ (13,367 ) $ (8,705 ) $ (14,460 ) $ (69,757 )

Adjustments to reconcile net loss to net cash used in operating activities

                               

Depreciation and amortization

    318     300     231     231     1,521  

Stock-based compensation

    314     307     226     447     1,611  

Stock issued for services

                    21  

Stock issued for interest

                    2  

Stock issued for license agreeement

                    6  

Non-cash interest expense for warrant issuance

                    509  

Change in fair value of warrants liability            

    (75 )   (93 )   (67 )   166     (223 )

Non-cash interest expense

    12     46     31     2     290  

Loss on debt extinguishment

                200     200  

Changes in operating assets and liabilities:

                               

Restricted cash

        (315 )   (315 )   97     (315 )

Prepaid expenses and other current assets            

    (82 )   (145 )   (273 )   (251 )   (729 )

Other long-term assets

        (237 )   (175 )   (170 )   (407 )

Accounts payable

    283     515     10     145     1,564  

Deferred revenue

    (58 )   (23 )   187     32     32  

Accrued expenses

    551     (191 )   (658 )   354     1,274  

Deferred rent

    (66 )   376     38     (116 )   301  

Accrued interest payable

        146     107     (146 )    
                       

Net cash used in operating activities

    (13,488 )   (12,681 )   (9,363 )   (13,469 )   (64,100 )

Investing activities

                               

Purchases of property and equipment

    (318 )   (460 )   (59 )   (386 )   (2,471 )
                       

Net cash used in investing activities

    (318 )   (460 )   (59 )   (386 )   (2,471 )

Financing activities

                               

Proceeds from issuance of notes payable and warrants to purchase redeemable preferred stock

                    4,075  

Proceeds from issuance of preferred stock, net

        15,078     15,078     15,250     71,348  

Proceeds from issuance of long-term debt

        5,000     5,000     3,466     9,047  

Repayment of long-term debt

    (195 )   (1,164 )   (751 )   (4,246 )   (5,781 )

Proceeds from sale of restricted and unrestricted common stock

                    3  

Proceeds from exercise of stock options

    6     1     1     2     12  

Payments for debt issuance costs

                (58 )   (58 )
                       

Net cash (used in) provided by financing activities

    (189 )   18,915     19,328     14,414     78,646  
                       

Net (decrease) increase in cash and cash equivalents

  $ (13,995 ) $ 5,774   $ 9,906   $ 559   $ 12,075  

Cash and cash equivalents at beginning of period

    19,737     5,742     5,742     11,516      
                       

Cash and cash equivalents at end of period

  $ 5,742   $ 11,516   $ 15,648   $ 12,075   $ 12,075  
                       

Supplemental cash flow information

                               

Cash paid for interest

  $ 25   $ 323   $ 237   $ 264   $ 703  
                       

Supplemental disclosure of non-cash financing activities

                               

Accretion of redeemable convertible preferred stock to redemption value

  $ 1,605   $ 1,781   $ 1,205   $ 1,200   $ 5,509  
                       

Leasehold improvements financed by landlord

  $   $ 237   $ 261   $   $  
                       

Conversion of convertible debt and accrued interest to preferred stock

  $   $   $   $   $ 4,298  
                       

   

See accompanying notes to financial statements.

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Table of Contents


Genocea Biosciences, Inc.
(A Development Stage Company)

Notes to Financial Statements

1. Organization and operations

    The Company

        Genocea Biosciences, Inc. (the "Company") is a clinical stage biopharmaceutical company that was incorporated in Delaware on August 16, 2006 and has a principal place of business in Cambridge, Massachusetts. The Company uses its proprietary platform technology called AnTigen Lead Acquisition System ("ATLAS") to discover and develop novel vaccine candidates. The ATLAS proprietary technology platform mimics the human immune response in the laboratory, potentially improving the effectiveness of vaccine discovery and drastically reducing the time needed to create promising vaccines. Using the ATLAS platform, the Company is developing its most advanced product candidate, GEN-003, in a phase 1/2a clinical trial to treat patients with herpes simplex virus type-2 ("HSV-2"). The Company is also developing other product candidates, including GEN-004, which is being developed to prevent infections caused by pneumococcus.

        The Company is in the development stage and is devoting substantially all of its efforts to product research and development, initial market development, and raising capital. The Company has not generated any product revenue related to its primary business purpose to date and is subject to a number of risks similar to those of other development stage companies, including dependence on key individuals, competition from other companies, the need for development of commercially viable products, and the need to obtain adequate additional financing to fund the development of its product candidates. The Company is also subject to a number of risks similar to other companies in the life sciences industry, including regulatory approval of products, uncertainty of market acceptance of products, competition from substitute products and larger companies, the need to obtain additional financing, compliance with government regulations, protection of proprietary technology, dependence on third parties, product liability, and dependence on key individuals.

        As of September 30, 2013, the Company had a deficit accumulated during the development stage of approximately $73.6 million and will require substantial additional capital to fund its research and development and ongoing operating expenses.

    Liquidity

        The Company believes that its cash and cash equivalents of approximately $12.1 million as of September 30, 2013 as well as the additional capital raised in the subsequent debt financing (Note 16) will be sufficient to allow the Company to fund its operations into at least the first quarter of 2014; however, the Company will be required to raise additional capital or obtain financing from other sources to fund operations in the future. As the Company continues to incur losses, a transition to profitability is dependent upon the successful development, approval and commercialization of its product candidates and the achievement of a level of revenues adequate to support the Company's cost structure. The Company may never achieve profitability, and unless and until it does, the Company will continue to need to raise additional capital or obtain financing from other sources, such as partnerships. Management intends to fund future operations through the sale of equity and debt financings and may also seek additional capital through arrangements with strategic partners or other sources. There can be no assurances, however, that additional funding will be available on terms acceptable to the Company, or at all.

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Table of Contents


Genocea Biosciences, Inc.
(A Development Stage Company)

Notes to Financial Statements (continued)

2. Summary of significant accounting policies

    Basis of presentation and use of estimates

        The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). Any reference in these notes to applicable guidance is meant to refer to the authoritative United States generally accepted accounting principles as found in the Accounting Standards Codification ("ASC") and Accounting Standards Update ("ASU") of the Financial Accounting Standards Board ("FASB"). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, the Company's management evaluates its estimates, which include, but are not limited to, estimates related to clinical trial accruals, stock-based compensation expense, warrants to purchase redeemable securities, and reported amounts of revenues and expenses during the reported period. The Company bases its estimates on historical experience and other market-specific or other relevant assumptions that it believes to be reasonable under the circumstances. Actual results may differ from those estimates or assumptions.

        The Company utilizes significant estimates and assumptions in determining the fair value of its common stock ("Common Stock"). The Company utilized various valuation methodologies in accordance with the framework of the 2004 and 2013 American Institute of Certified Public Accountants Technical Practice Aids, Valuation of Privately-Held Company Equity Securities Issued as Compensation , to estimate the fair value of its Common Stock. Each valuation methodology includes estimates and assumptions that require the Company's judgment. These estimates and assumptions include a number of objective and subjective factors, including external market conditions affecting the biotechnology industry sector, the prices at which the Company sold shares of preferred stock, the superior rights and preferences of securities senior to the Company's Common Stock at the time and the likelihood of achieving a liquidity event, such as an initial public offering or a sale of the Company. Significant changes to the key assumptions used in the valuations could result in different fair values of Common Stock at each valuation date and materially affect the financial statements.

    Unaudited interim and inception to date financial data

        The accompanying balance sheet as of September 30, 2013, the statements of operations and comprehensive loss and statements of cash flows for the for the nine months ended September 30, 2012 and 2013 and the period from August 16, 2006 (inception) to September 30, 2013, the statement of redeemable convertible preferred stock and stockholders' (deficit) equity for the nine months ended September 30, 2013 and the related information contained within the notes to the financial statements are unaudited. The interim and inception to date financial statements have been prepared on the same basis as the annual audited financial statements and, in the opinion of management, reflect all adjustments, consisting of normal and recurring adjustments, necessary for the fair presentation of the Company's financial position at September 30, 2013 and results of its operations and its cash flows for the nine months ended September 30, 2012 and 2013 and the period from August 16, 2006 (inception) to September 30, 2013. The results for the nine months ended September 30, 2013 are not necessarily indicative of results to be expected for the year ending December 31, 2013 or any other interim or future period.

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Table of Contents


Genocea Biosciences, Inc.
(A Development Stage Company)

Notes to Financial Statements (continued)

2. Summary of significant accounting policies (continued)

    Unaudited pro forma presentation

        On October 22, 2013, the Company's board of directors authorized the Company to file a registration statement with the Securities and Exchange Commission ("SEC") permitting the Company to sell shares of its Common Stock to the public. Upon the closing of a qualified (as defined in the Company's Articles of Incorporation) initial public offering ("IPO") or otherwise upon the election of the holders of the specified percentage of Preferred Stock, all of the Company's outstanding redeemable convertible preferred stock will automatically convert into Common Stock and the outstanding liability classified warrants to purchase redeemable convertible preferred stock will convert into warrants to purchase Common Stock and will meet the GAAP criteria for equity classification. The unaudited pro forma balance sheet and statement of redeemable convertible preferred stock and stockholders' (deficit) equity as of September 30, 2013 reflect the assumed conversion of all of the outstanding shares of Seed Convertible Preferred Stock ("Seed Preferred Stock"), Series A Redeemable Convertible Preferred Stock ("Series A Preferred Stock"), the Series B Redeemable Convertible Preferred Stock ("Series B Preferred Stock") and the Series C Redeemable Convertible Preferred Stock ("Series C Preferred Stock") (collectively the "Preferred Stock") into shares of Common Stock and the assumed reclassification of the Company's outstanding liability-classified warrants to purchase redeemable securities to equity upon the completion of this proposed offering.

        Unaudited pro forma net loss per share attributable to common stockholders is computed using the weighted-average number of common shares outstanding after giving effect to the conversion of all the outstanding Preferred Stock into shares of Common Stock as if such conversion had occurred at the beginning of the period presented, or the date of original issuance, if later, and excludes the accretion of Preferred Stock to its redemption value. As the years ended December 31, 2011 and December 31, 2012, the nine months ended September 30, 2012 and September 30, 2013 and the period from August 16, 2006 (inception) to September 30, 2013 resulted in net losses, there is no income allocation required under the two-class method or dilution attributed to pro forma weighted average shares outstanding in the calculation of pro forma diluted loss per share attributable to common stockholders.

        As noted above, the unaudited pro forma information reflects the automatic conversion, at the closing of an IPO of the Company's Common Stock, of all outstanding shares of Preferred Stock into shares of Common Stock. The conversion has been reflected assuming a 1-to-1 conversion ratio for all series of Preferred Stock, except for the Series B Preferred Stock, which has a conversion ratio initially set at 1-to-1, but increases based on the accrued but unpaid cumulative preferred stock dividends. As of September 30, 2013, the Series B Preferred Stock has a conversion ratio of 1-to-1.22. For purposes of the unaudited pro forma information included within these financial statements, the conversion of the Series B Preferred Stock has been reflected assuming the conversion ratio in effect as of each balance sheet date or on the date of the assumed conversion (upon IPO) for pro forma net loss per share considerations. See Note 10 for further discussion of the Series B Preferred Stock conversion feature, as well as a discussion of the rights and preferences of the redeemable convertible preferred stock.

    Segment information

        Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group,

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Table of Contents


Genocea Biosciences, Inc.
(A Development Stage Company)

Notes to Financial Statements (continued)

2. Summary of significant accounting policies (continued)

in deciding how to allocate resources and in assessing performance. The Company and the Company's chief operating decision maker view the Company's operations and manage its business in one operating segment, which is the business of developing and commercializing vaccines. The Company operates in only one geographic segment.

    Cash and cash equivalents

        The Company considers all highly liquid investments with maturities of 90 days or less from the purchase date to be cash equivalents. Cash and cash equivalents are held in depository and money market accounts and are reported at fair value.

    Concentrations of credit risk and off-balance sheet risk

        Financial instruments that potentially subject the Company to concentrations of credit risk are primarily cash and cash equivalents. The Company's cash and cash equivalents are held in accounts with financial institutions that management believes are creditworthy. The Company's investment policy includes guidelines on the quality of the institutions and financial instruments and defines allowable investments that the Company believes minimizes the exposure to concentration of credit risk. These amounts at times may exceed federally insured limits. The Company has not experienced any credit losses in such accounts and does not believe it is exposed to any significant credit risk on these funds. The Company has no financial instruments with off-balance sheet risk of loss.

    Deferred initial public offering costs

        Deferred public offering costs, which primarily consist of direct, incremental legal and accounting fees relating to the IPO, are capitalized within other assets. The deferred issuance costs will be offset against IPO proceeds upon the consummation of the offering. In the event the offering is terminated, deferred offering costs will be expensed. The Company has incurred $458 thousand in IPO costs as of September 30, 2013, which are included in other assets.

    Fair value of financial instruments

        The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values. FASB ASC Topic 820, Fair Value Measurement and Disclosures , established a hierarchy of inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the financial instrument based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company's assumptions about the inputs that market participants would use in pricing the financial instrument and are developed based on the best information available in the circumstances. The fair value hierarchy applies only to the valuation inputs used in determining the reported or disclosed fair value of the financial instruments and is not a measure of the investment credit quality. Fair value measurements are classified and disclosed in one of the following three categories:

    Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

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Table of Contents


Genocea Biosciences, Inc.
(A Development Stage Company)

Notes to Financial Statements (continued)

2. Summary of significant accounting policies (continued)

    Level 2—Valuations based on quoted prices for similar assets or liabilities in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

    Level 3—Valuations that require inputs that reflect the Company's own assumptions that are both significant to the fair value measurement and unobservable.

        To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

        Financial instruments measured at fair value on a recurring basis include cash equivalents (Note 3) and warrants to purchase redeemable securities (Note 8).

        An entity may elect to measure many financial instruments and certain other items at fair value at specified election dates. Subsequent unrealized gains and losses on items for which the fair value option has been elected will be reported in net loss. The Company did not elect to measure any additional financial instruments or other items at fair value. The Company is also required to disclose the fair value of financial instruments not carried at fair value. The fair value of the Company's long-term debt (Note 7) is determined using current applicable rates for similar instruments as of the balance sheet dates and assessment of the credit rating of the Company. The carrying value of the Company's long-term debt approximates fair value because the Company's interest rate yield is near current market rates. The Company's long-term debt is considered a Level 3 liability within the fair value hierarchy.

        Except for the valuation methodology utilized to value the warrants to purchase redeemable securities (Note 8), there have been no changes to the valuation methods utilized by the Company during the years ended December 31, 2011 and 2012, the nine months ended September 30, 2012 and 2013, or the period from August 16, 2006 (inception) through September 30, 2013. The Company evaluates transfers between levels at the end of each reporting period. There were no transfers of financial instruments between levels during the years ended December 31, 2011 and 2012, the nine months ended September 30, 2012 and 2013, or the period from August 16, 2006 (inception) through September 30, 2013.

    Property and equipment

        Property and equipment is stated at cost, less accumulated depreciation. Maintenance and repairs that do not improve or extend the lives of the respective assets are expensed to operations as incurred, while costs of major additions and betterments are capitalized. Upon disposal, the related cost and accumulated depreciation is removed from the accounts and any resulting gain or loss is included in the

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Table of Contents


Genocea Biosciences, Inc.
(A Development Stage Company)

Notes to Financial Statements (continued)

2. Summary of significant accounting policies (continued)

results of operations. Depreciation is recorded using the straight-line method over the estimated useful lives of the respective assets, which are as follows:

Asset
  Estimated useful life

Laboratory equipment

  5 years

Furniture and fixtures

  5 years

Office and computer equipment

  3 - 5 years

Leasehold improvements

  Shorter of the useful life or remaining lease term

    Impairment of long-lived assets

        The Company evaluates long-lived assets for potential impairment when events or changes in circumstances indicate the carrying value of the assets may not be recoverable. Recoverability is measured by comparing the book values of the assets to the expected future net undiscounted cash flows that the assets are expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the book value of the assets exceed their fair value. The Company has not recognized any impairment losses through September 30, 2013.

    Revenue recognition

        The Company has generated revenue solely through research and development grants with a private not-for-profit organization and federal agencies for the development and commercialization of product candidates.

        The Company recognizes revenue in accordance with FASB ASC Topic 605, Revenue Recognition ("ASC 605"). Accordingly, revenue is recognized for each unit of accounting when all of the following criteria are met:

    persuasive evidence of an arrangement exist

    delivery has occurred or services have been rendered

    the fee is fixed or determinable

    collectability is reasonably assured

        Amounts received prior to satisfying the revenue recognition criteria are recorded as deferred revenue in the Company's balance sheets. Amounts expected to be recognized as revenue within the 12 months following the balance sheet date are classified as a current liability. Amounts not expected to be recognized as revenue within the 12 months following the balance sheet date are classified as a non-current liability.

    Grant revenue

        The Company has received grants from a private not-for-profit organization and federal agencies. Grant revenue consists of revenue earned from grants to conduct vaccine development research. Funds received in advance of services being performed are recorded as deferred revenue. Revenue under these grants is recognized as research services are performed. Since inception and through

F-12


Table of Contents


Genocea Biosciences, Inc.
(A Development Stage Company)

Notes to Financial Statements (continued)

2. Summary of significant accounting policies (continued)

September 30, 2013, the Company has recognized a total of $6.7 million of revenue related to these grants, and has received a total of $6.5 million in cash receipts.

    Multiple-element arrangements

        The Company analyzes multiple-element arrangements based on the guidance in FASB ASC Topic 605-25, Revenue Recognition—Multiple-Element Arrangements ("ASC 605-25"). The Company applies this guidance to new arrangements as well as existing arrangements that contain multiple deliverables. The Company determines the elements, or deliverables, included in the arrangement and allocates consideration under the arrangement to the various elements based on each element's relative selling price. The identification of individual elements in a multiple-element arrangement and the estimation of the selling price of each element involves significant judgment, including consideration as to whether each delivered element has stand-alone value to the collaborator.

        The Company determines the estimated selling price for deliverables within the arrangement using vendor-specific objective evidence ("VSOE") of selling price, if available, or third-party evidence of selling price if VSOE was not available or the Company's best estimate of selling price, if neither VSOE nor third-party evidence was available. The Company uses its best estimate of a selling price to estimate the selling price for licenses for its technology, know-how, and trademarks since it does not have VSOE or third-party evidence of selling price for these deliverables. In order to determine the best estimate of selling price, the Company considers market conditions, as well as entity-specific factors, including those factors contemplated in negotiating the agreements, as well as internally developed estimates that include assumptions related to the market opportunity, estimated development costs, probability of success, and the time needed to commercialize assays. In validating its best estimate of selling price, the Company evaluates whether changes in the key assumptions used to determine best estimate of selling price would have a significant effect on the allocation of arrangement consideration between deliverables. The Company recognizes consideration allocated to an individual element when all other revenue recognition criteria are met for that element, which generally occurs upon delivery or over the period in which services are provided.

    License agreement

        In 2012, the Company entered into a license agreement with a not-for-profit entity whereby the not-for-profit entity could utilize certain programs discovered or developed by the Company in certain developing countries. The Company did not receive any up-front consideration related to this agreement; however, the Company is entitled to receive reimbursement of a pro rata share of any payments, including milestone payments, that the Company is required to make under license agreements with third parties that comprise these programs. As of September 30, 2013, the licenses from third parties that comprise these programs have not been determined yet as these programs are either in the early stages of development or have not yet been identified. As a result, the Company is not currently eligible to receive any milestone payments under this arrangement.

        Concurrent with the execution of the license agreement, the not-for-profit entity also purchased 4,310,345 shares of the Company's Series C Preferred Stock (Note 10).

        At the inception of the agreement, the Company evaluated whether each potential milestone payment that could be received from the not-for-profit entity for reimbursement of a portion of

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Table of Contents


Genocea Biosciences, Inc.
(A Development Stage Company)

Notes to Financial Statements (continued)

2. Summary of significant accounting policies (continued)

milestones owed to third parties from existing license agreements that could comprise these programs is substantive and at risk to both parties on the basis of the contingent nature of the milestone. The evaluation included an assessment of whether (a) the consideration is commensurate with either (i) the entity's performance to achieve the milestone or (ii) the enhancement of the value of the delivered items as a result of a specific outcome resulting from the entity's performance to achieve the milestone; (b) the consideration related solely to past performance; and (c) the consideration was reasonable relative to all of the deliverables and payment terms within the arrangement. The Company evaluated factors such as the scientific, regulatory, and other risks that must be overcome to achieve the respective milestone, the level of effort and investment required to achieve the respective milestone, and whether the milestone considerations are reasonable relative to all deliverables and payment terms in the arrangement in making this assessment. Substantive, at-risk milestones are recognized as revenue when the milestone is achieved.

        As there was no up-front consideration, there were no amounts to allocate to the various deliverables. The milestones under the arrangement related to reimbursement for milestone payments by the Company owed to third parties for existing license agreements that could comprise these programs are considered to be substantive and at risk and will be recognized when earned. Since the licenses from third parties that could comprise these programs have not been determined yet, the amount and timing of such milestones cannot be determined at this time.

    Research and development expenses

        Research and development costs are charged to expense as incurred in performing research and development activities. The costs include employee compensation costs, facilities and overhead, clinical study and related clinical manufacturing costs, regulatory and other related costs.

        Nonrefundable advanced payments for goods or services to be received in the future for use in research and development activities are deferred and capitalized. The capitalized amounts are expensed as the related goods are delivered or the services are performed.

    Stock-based compensation expense

        The Company accounts for its stock-based compensation awards to employees and directors in accordance with FASB ASC Topic 718, Compensation-Stock Compensation ("ASC 718"). ASC 718 requires all stock-based payments to employees, including grants of employee stock options and restricted stock, to be recognized in the statements of operations and comprehensive loss based on their grant date fair values. Compensation expense related to awards to employees is recognized on a straight-line basis based on the grant date fair value over the associated service period of the award, which is generally the vesting term. Share-based payments issued to non-employees are recorded at their fair values, and are periodically revalued as the equity instruments vest and are recognized as expense over the related service period in accordance with the provisions of ASC 718 and ASC Topic 505, Equity, and are expensed using an accelerated attribution model.

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Table of Contents


Genocea Biosciences, Inc.
(A Development Stage Company)

Notes to Financial Statements (continued)

2. Summary of significant accounting policies (continued)

        The Company estimates the fair value of its stock options using the Black-Scholes option pricing model, which requires the input of subjective assumptions, including (a) the expected stock price volatility, (b) the expected term of the award, (c) the risk-free interest rate, (d) expected dividends and e) the estimated fair value of its Common Stock on the measurement date. Due to the lack of a public market for the trading of its Common Stock and a lack of company specific historical and implied volatility data, the Company has based its estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded. When selecting these public companies on which it has based its expected stock price volatility, the Company selected companies with comparable characteristics to it, including enterprise value, risk profiles, position within the industry, and with historical share price information sufficient to meet the expected term of the stock-based awards. The Company computes historical volatility data using the daily closing prices for the selected companies' shares during the equivalent period of the calculated expected term of the stock-based awards. The Company will continue to apply this process until a sufficient amount of historical information regarding the volatility of its own stock price becomes available. Due to the lack of Company specific historical option activity, the Company has estimated the expected term of its employee stock options using the "simplified" method, whereby, the expected term equals the arithmetic average of the vesting term and the original contractual term of the option. The expected term for non-employee awards is the remaining contractual term of the option. The risk-free interest rates are based on the U.S. Treasury securities with a maturity date commensurate with the expected term of the associated award. The Company has never paid, and does not expect to pay dividends in the foreseeable future. Refer to Basis of presentation and use of estimates in Note 2 for a discussion of the Company's estimated fair value of its Common Stock.

        The Company is also required to estimate forfeitures at the time of grant, and revise those estimates in subsequent periods if actual forfeitures differ from its estimates. The Company uses historical data to estimate forfeitures and records stock-based compensation expense only for those awards that are expected to vest. To the extent that actual forfeitures differ from the Company's estimates, the differences are recorded as a cumulative adjustment in the period the estimates were revised. Stock-based compensation expense recognized in the financial statements is based on awards that are ultimately expected to vest.

    Income taxes

        Income taxes are recorded in accordance with FASB ASC Topic 740, Income Taxes ("ACS 740"), which provides for deferred taxes using an asset and liability approach. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and the tax reporting basis of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. The Company provides a valuation allowance against net deferred tax assets unless, based upon the available evidence, it is more likely than not that the deferred tax assets will be realized. The Company has evaluated available evidence and concluded that the Company may not realize the benefit of its deferred tax assets; therefore a valuation allowance has been established for the full amount of the deferred tax assets.

        The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit will more likely than not be realized. The determination as to whether the tax

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Table of Contents


Genocea Biosciences, Inc.
(A Development Stage Company)

Notes to Financial Statements (continued)

2. Summary of significant accounting policies (continued)

benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. As of December 31, 2011 and 2012, and September 30, 2013, the Company does not have any significant uncertain tax positions. The Company's practice is to recognize interest and/or penalties related to income tax matters in income tax expense.

    Net loss per share attributable to common stockholders

        Basic net loss per share attributable to common stockholders is calculated by dividing net loss attributable to common stockholders by the weighted average shares outstanding during the period, without consideration for common stock equivalents. Net loss attributable to common stockholders is calculated by adjusting the net loss of the Company for cumulative preferred stock dividends and accretion of preferred stock issuance costs. During periods of income, the Company allocates participating securities a proportional share of income determined by dividing total weighted average participating securities by the sum of the total weighted average common shares and participating securities (the "two-class method"). The Company's redeemable convertible preferred stock and restricted stock participate in any dividends declared by the Company and are therefore considered to be participating securities. Participating securities have the effect of diluting both basic and diluted earnings per share during periods of income. During periods of loss, the Company allocates no loss to participating securities because they have no contractual obligation to share in the losses of the Company. Diluted net loss per share attributable to common stockholders is calculated by adjusting weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury-stock and if-converted methods. For purposes of the diluted net loss per share attributable to common stockholders calculation, preferred stock, stock options, unvested restricted stock, and warrants are considered to be common stock equivalents but have been excluded from the calculation of diluted net loss per share attributable to common stockholders, as their effect would be anti-dilutive for all periods presented. Therefore, basic and diluted net loss per share were the same for all periods presented.

    Comprehensive loss

        Comprehensive loss consists of net income or loss and changes in equity during a period from transactions and other events and circumstances generated from non-owner sources. The Company's net loss equals comprehensive loss for all periods presented.

    Recent accounting pronouncements

        The Company did not adopt any new accounting pronouncements during 2013 and there are no new accounting pronouncements that have been issued but not yet adopted, that will have a material effect on the Company's financial statements.

    Subsequent events

        The Company considers events or transactions that occur after the balance sheet date but prior to the date the financial statements are available to be issued for potential recognition or disclosure in the financial statements.

F-16


Table of Contents


Genocea Biosciences, Inc.
(A Development Stage Company)

Notes to Financial Statements (continued)

3. Cash and cash equivalents

        As of December 31, 2011 and 2012 and September 30, 2013, cash and cash equivalents comprise funds in depository and money market accounts.

        The following table presents the cash and cash equivalents carried at fair value in accordance with the hierarchy defined in Note 2 (in thousands):

 
  Total   Quoted
prices in
active
markets
(Level 1)
  Signifinant
other
observable
inputs
(Level 2)
  Significant
unobservable
inputs
(Level 3)
 

December 31, 2011

                         

Cash

  $ 37   $ 37   $   $  

Money Market funds, included in cash equivalents

    5,705     5,705          
                   

Total

  $ 5,742   $ 5,742   $   $  
                   

December 31, 2012

                         

Cash

  $ 512   $ 512   $   $  

Money Market funds, included in cash equivalents

    11,004     11,004          
                   

Total

  $ 11,516   $ 11,516   $   $  
                   

September 30, 2013

                         

Cash

  $ 717   $ 717   $   $  

Money Market funds, included in cash equivalents

    11,358     11,358          
                   

Total

  $ 12,075   $ 12,075   $   $  
                   

        Cash equivalents have been initially valued at the transaction price and subsequently valued, at the end of each reporting period, utilizing third party pricing services or other market observable data. The pricing services utilize industry standard valuation models, including both income and market based approaches and observable market inputs to determine value. The Company validates the prices provided by its third party pricing services by reviewing their pricing methods and obtaining market values from other pricing sources. After completing its validation procedures, the Company did not adjust or override any fair value measurements provided by the pricing services as of December 31, 2011, December 31, 2012 or September 30, 2013.

4. Prepaid expenses and other current assets

        Prepaid expenses and other current assets consist of the following (in thousands):

 
  December 31,    
 
 
  September 30,
2013
 
 
  2011   2012  

Prepaid rent

  $ 76   $ 53   $ 78  

Prepaid tenant improvement costs

            237  

Grant receivable

    187     185     213  

Other

    111     282     259  
               

Total

  $ 374   $ 520   $ 787  
               

F-17


Table of Contents


Genocea Biosciences, Inc.
(A Development Stage Company)

Notes to Financial Statements (continued)

5. Property and equipment, net

        Property and equipment, net consist of the following (in thousands):

 
  December 31,    
 
 
  September 30,
2013
 
 
  2011   2012  

Laboratory equipment

  $ 1,213   $ 1,319   $ 1,691  

Furniture and fixtures

    71     14     14  

Office and computer equipment

    117     128     142  

Leasehold improvements

    223     344     344  
               

Total property and equipment

    1,624     1,805     2,191  

Accumulated depreciation

    (990 )   (1,011 )   (1,242 )
               

Property and equipment, net

  $ 634   $ 794   $ 949  
               

        Depreciation expense was $318 thousand, $300 thousand, $231 thousand, $231 thousand and $1.5 million for the years ended December 31, 2011 and 2012, the nine months ended September 30, 2012 and 2013, and the period from August 16, 2006 (inception) to September 30, 2013, respectively.

6. Accrued expenses and other current liabilities

        Accrued expenses and other current liabilities consisted of the following (in thousands):

 
  December 31,    
 
 
  September 30,
2013
 
 
  2011   2012  

Payroll and employee-related costs

  $ 587   $ 628   $ 180  

Research and development costs

    280     134     546  

Accrued professional fees

    243     157     303  

Other

            245  
               

Total

  $ 1,110   $ 919   $ 1,274  
               

7. Long-term debt

        During 2006, the Company issued $75 thousand of convertible debt to finance its operations. The notes incurred interest at 8% per year. On December 18, 2006, upon the issuance of the Seed Preferred Stock, $75 thousand of notes and $2 thousand of accrued interest converted into 118,277 shares of Seed Preferred Stock in a qualified financing, as defined (Note 10).

        During 2008, the Company entered into note purchase agreements with various investors, which provided for up to $4.0 million in convertible debt to finance the operations of the Company. The notes incurred interest at 8% per year, and were convertible into shares of Series A Preferred Stock. In February 2009, the entire outstanding balance, plus $0.2 million of accrued interest, automatically converted into 6,494,438 shares of Series A Preferred Stock upon the issuance of the Series A Preferred Stock in a qualified financing, as defined (Note 10). In connection with this financing, the Company issued warrants to purchase 1,038,461 shares of Series A Preferred Stock (Note 8) at $0.65 per share.

F-18


Table of Contents


Genocea Biosciences, Inc.
(A Development Stage Company)

Notes to Financial Statements (continued)

7. Long-term debt (continued)

        In November 2008, the Company entered into a Loan and Security Agreement with a financial institution, which provided for up to $250 thousand in debt financing prior to a Series A Preferred Stock financing and up to $1.5 million after a Series A Preferred Stock financing (less the aggregate advances prior to a financing) to finance equipment purchases made by the Company ("Equipment Term Loan"). The Company completed a Series A Preferred Stock financing in February 2009 (Note 10). The Equipment Term Loan provided for a draw-down period on the loan to October 30, 2009. In February 2010, the Company amended the Equipment Term Loan and extended the draw-down period until April 30, 2010. As of April 30, 2010, the Company had drawn $582 thousand under the agreement and no additional amounts are available under the agreement.

        The terms of the Equipment Term Loan provided for repayment of each draw-down over a 42-month term, with interest-only payments for the first 6 months and 36 equal monthly payments of principal and accrued interest thereafter. The Equipment Term Loan bears interest at the greater of the lender's prime rate, plus 3.50% or 8.25%. Should an event of default occur, including the occurrence of a material adverse change, the Company would be liable for immediate repayment.

        In connection with the Equipment Term Loan, the Company issued a warrant to purchase 46,154 shares of Series A Preferred Stock (Note 8) at $0.65 per share. The Equipment Term Loan holds all assets purchased under the program as collateral.

        As of September 30, 2013, the remaining balance of the Equipment Term Loan was repaid.

        In October 2011, the Company entered into a Loan and Security Agreement with a financial institution, which provided for up to $5.0 million in debt financing ("Term Loan"). The Term Loan provided for a draw-down period on the facility through March 1, 2012. On March 1, 2012, the Company drew down the full $5.0 million available under the terms of this arrangement.

        From March 1, 2012 through May 1, 2012, the Company was obligated to make interest-only payments at the greater of the financial institution's prime rate plus 5.00% or 8.00%. The Company began making 36 equal monthly payments of principal and accrued interest thereafter. During the 36-month period, the Term Loan bears interest at the greater of the financial institution's prime rate plus 4.75% or 8.00%. The Company also is obligated to pay 6.50% of the advance on the final repayment date of the draw, which is April 1, 2015. This final payment is being accrued over the term of the debt and is recorded in accrued interest payable on the balance sheets.

        In connection with the Term Loan, the Company issued a fully-exercisable warrant to purchase 517,242 shares of Series B Preferred Stock (Note 8). The Term Loan is collateralized by all the assets of the Company, except for those assets collateralized by the Equipment Term Loan.

        On September 30, 2013, the Company entered into a new loan agreement which provided up to $10.0 million in debt financing ("New Term Loan"). Upon the closing of the New Term Loan, the Company drew down $3.5 million and paid off the remaining balance under the Term Loan. As part of the early repayment, the Company incurred a loss on debt extinguishment of $0.2 million. The New Term Loan provides for a draw-down period on the remaining facility of $6.5 million through December 31, 2013 and is obligated to make interest-only payments for the first 9 months and 33 equal payments of principal and accrued interest thereafter for each advance. The New Term Loan bears interest at a rate of 8% per annum. The Company is also obligated to pay 2% of the advance on the final repayment date of each draw. The final payment will be accrued over the term of the debt and

F-19


Table of Contents


Genocea Biosciences, Inc.
(A Development Stage Company)

Notes to Financial Statements (continued)

7. Long-term debt (continued)

recorded in accrued interest payable on the balance sheets. Should an event of default occur, including the occurrence of a material adverse change, the Company would be liable for immediate repayment of all amounts outstanding, including the 2% final payment associated with each draw.

        In connection with the New Term Loan, the Company issued a warrant to purchase 689,655 shares of Series C Preferred Stock (Note 8) at $0.58 per share. The New Term Loan is collateralized by all the assets of the Company.

        Future principal payments on the New Term Loan are as follows (in thousands):

 
  September 30,
2013
 

2013

  $  

2014

    482  

2015

    1,225  

2016

    1,327  

2017

    466  
       

Total

  $ 3,500  
       

8. Warrants to purchase redeemable securities

        In 2009, the Company issued warrants to purchase 1,038,461 and 46,154 shares of Series A Preferred Stock associated with the issuance of convertible debt and the Equipment Term Loan, respectively (Note 7), at an exercise price of $0.65 per share. The warrants to purchase 1,038,461 shares of Series A Preferred Stock associated with the convertible debt expire on the later of February 11, 2014 or the date of an IPO. The warrant to purchase 46,154 shares of Series A Preferred Stock associated with the Equipment Term Loan expires on the earlier of November 18, 2018 or five years from the date of an IPO.

        In 2011, the Company issued a warrant to purchase 517,242 shares of Series B Preferred Stock at an exercise price of $0.58 per share in connection with the Term Loan (Note 7). Upon signing the arrangement, the warrant was exercisable for 258,621 shares and, on March 1, 2012, the remaining shares under the warrant became exercisable when the Company drew down on the full amount allowable under the facility. The warrant to purchase 517,242 shares of Series B Preferred Stock associated with the Term Loan was determined to be debt issuance costs, and the fair value of $110 thousand on the date of issuance was recorded as a liability, and is being amortized through the statements of operations and comprehensive loss as additional interest expense over the life of the Term Loan. The warrant to purchase the Series B Preferred Stock expires on October 25, 2021.

        On September 30, 2013, the Company issued a warrant to purchase 689,655 shares of Series C Preferred Stock at an exercise price of $0.58 per share in connection with a New Term Loan (Note 7) Upon signing of the arrangement, the full amount of shares subject to such amount were exercisable. The warrant to purchase the 689,655 shares of Series C Preferred Stock associated with the New Term Loan was determined to be debt issuance costs, and the fair value of $188 thousand on the date of issuance was recorded as a liability, and is being amortized on the statement of operations and comprehensive loss as additional interest expense over the life of the New Term Loan. The warrant to purchase the Series C Preferred Stock expires on September 30, 2023.

F-20


Table of Contents


Genocea Biosciences, Inc.
(A Development Stage Company)

Notes to Financial Statements (continued)

8. Warrants to purchase redeemable securities (continued)

        Since the underlying preferred stock is redeemable under certain circumstances, these warrants meet the criteria for liability accounting and, therefore, were reported at fair value on the issuance date and are remeasured at each balance sheet date with changes to fair value being recognized as a component of other income (expense) in the statement of operations.

        Below is a summary of the warrants outstanding (in thousands):

 
  December 31,    
 
 
  September 30,
2013
 
 
  2011   2012  

Warrants to purchase Series A Preferred Stock

    1,085     1,085     1,085  

Warrants to purchase Series B Preferred Stock

    258     517     517  

Warrants to purchase Series C Preferred Stock

            690  
               

Total

    1,343     1,602     2,292  
               

        Each warrant is exercisable on either the physical settlement or net share settlement basis. Upon conversion of the Company's Preferred Stock into shares of Common Stock, the associated warrants to purchase shares of the Company's Preferred Stock will become exercisable into the same number of shares of Common Stock and the exercise price will remain unchanged.

        There were no exercises, cancellations and expirations of warrants during the years ended December 31, 2011 and 2012 and during the nine months ended September 30, 2013.

    Fair value

        The following table presents the warrants to purchase redeemable securities recorded at fair value in accordance with the hierarchy defined in Note 2 (in thousands):

 
  Total   Quoted prices
in active
markets
(Level 1)
  Signifinant
other
observable
inputs
(Level 2)
  Significant
unobservable
inputs
(Level 3)
 

December 31, 2011

                         

Warrants to purchase redeemable securities

  $ 339   $   $   $ 339  
                   

Total

  $ 339   $   $   $ 339  
                   

December 31, 2012

                         

Warrants to purchase redeemable securities

  $ 246   $   $   $ 246  
                   

Total

  $ 246   $   $   $ 246  
                   

September 30, 2013

                         

Warrants to purchase redeemable securities

  $ 600   $   $   $ 600  
                   

Total

  $ 600   $   $   $ 600  
                   

        These warrants are considered Level 3 liabilities because their fair value measurements are based, in part, on significant inputs not observed in the market and reflect the Company's assumptions as to

F-21


Table of Contents


Genocea Biosciences, Inc.
(A Development Stage Company)

Notes to Financial Statements (continued)

8. Warrants to purchase redeemable securities (continued)

the expected volatility of the Company's Preferred Stock. The Company determined the fair value of the warrants to purchase redeemable securities based on input from management and the Board of Directors, which utilized an independent valuation of the Company's enterprise value, determined utilizing an analytical valuation model. Any reasonable changes in the assumptions used in the valuation could materially affect the financial results of the Company.

        The analytical valuation model used for the periods ended December 31, 2011 and 2012 and September 30, 2013 are as follows:

 
  Analytical Valuation Model Used

December 31, 2011

  Probability-Weighted Expected Return Model (PWERM)

December 31, 2012

  Option-Pricing Model (OPM) backsolve method

September 30, 2013

  Hybrid approach based on an OPM backsolve method and the PWERM(1)

(1)
60% of the value was attributed to the OPM backsolve method and 40% was attributed to the PWERM. After the enterprise value was determined, the total enterprise value was then allocated to the various outstanding equity instruments, including the warrants to purchase redeemable securities, utilizing the OPM.

        The following table sets forth a summary of changes in the fair value of the Company's warrants to purchase redeemable securities, which represents a recurring measurement that is classified within Level 3 of the fair value hierarchy wherein fair value is estimated using significant unobservable inputs (in thousands):

 
  Years ended
December 31,
  Nine months ended
September 30,
 
 
  2011   2012   2012   2013  

Beginning balance

  $ 304   $ 339   $ 339   $ 246  

Warrants issued

    110             188  

Change in fair value

    (75 )   (93 )   (67 )   166  
                   

Ending balance

  $ 339   $ 246   $ 272   $ 600  
                   

9. Commitments and contingencies

    Significant Contracts and Agreements

        In August 2006, the Company entered into an agreement to license certain intellectual property from The Regents of the University of California. The agreement required the Company to pay a non-refundable license fee of $25 thousand, and to issue 150,000 shares of common stock to the university. Such consideration was recorded in research and development expenses in 2006. The agreement calls for payments to be made by the Company upon the occurrence of a certain development milestone and a certain commercialization milestone for each distinct product covered by the licensed patents, in addition to certain royalties to be paid on marketed products or sublicense income. There were no other research and development expenses associated with this agreement in any of the other financial periods presented.

F-22


Table of Contents


Genocea Biosciences, Inc.
(A Development Stage Company)

Notes to Financial Statements (continued)

9. Commitments and contingencies (continued)

        In November 2007, the Company entered into an agreement to license certain intellectual property from Harvard University. The agreement required the Company to pay a non-refundable license fee of $75 thousand, and to issue 128,205 shares of common stock to the university. Such consideration, which totaled $93 thousand, was recorded in research and development expenses in 2007. The agreement also calls for payments to be made by the Company upon the occurrence of certain development and regulatory milestones, in addition to certain royalties on marketed products or sub-license income. In addition, the Company must make annual maintenance fee payments, which vary depending on the type of products under development. The Company paid $50 thousand, $83 thousand, none, none and $183 thousand in annual maintenance fees and clinical milestones to Harvard University for the years ended December 31, 2011 and 2012, the nine months ended September 30, 2012 and 2013 and the period from August 16, 2006 (inception) to September 30, 2013, respectively.

        In August 2009, the Company entered into an agreement to license certain intellectual property from Isconova AB, now Novavax. The agreement required the Company to pay a non-refundable license fee of $750 thousand. The Company was also required to pay $200 thousand on the one-year anniversary in 2010. The agreement calls for payments to be made by the Company upon the occurrence of certain development and commercial milestones, in addition to certain royalties to be paid on marketed products or sublicense income. In addition, the Company has entered into a committed funding agreement whereby the Company is obligated to purchase a total of $1.6 million of services on a full-time equivalent basis. These services are expensed as incurred. The Company has expensed $583 thousand, $290 thousand, $290 thousand, none and $1.7 million related to these services for the years ended December 31, 2011 and 2012, the nine months ended September 30, 2012 and 2013 and the period from August 16, 2006 (inception) to September 30, 2013, respectively.

        In January 2010, the Company entered into an agreement to license certain intellectual property from the University of Washington. The agreement required the Company to pay a non-refundable license fee of $20 thousand, and to issue 25,000 shares of common stock to the university. These amounts were recorded in research and development expenses in 2010. The agreement also calls for payments to be made by the Company upon the occurrence of certain development and commercial milestones, in addition to certain royalties on marketed products or sublicense income. In addition, the Company must make annual maintenance fee payments, which vary depending on the number of years from the effective date. The Company has expensed $10 thousand, $15 thousand, $15 thousand, $45 thousand and $90 thousand related to this agreement for the years ended December 31, 2011 and 2012, the nine months ended September 30, 2012 and 2013 and the period from August 16, 2006 (inception) to September 30, 2013, respectively.

    Supply agreement

        In August 2009, the Company entered into a supply agreement with a third party for the manufacture of chemical compounds used in the Company's product candidates. The agreement calls for payments to be made by the Company upon the occurrence of certain clinical milestones, in addition to reimbursement of certain consumables. In June 2013, the Company entered into another supply agreement with the same vendor for the manufacture of chemical compounds to be used in the Company's next clinical trials. The Company has expensed $3.4 million, $180 thousand, $149 thousand, $409 thousand and $6.3 million related to these agreements for the years ended December 31, 2011

F-23


Table of Contents


Genocea Biosciences, Inc.
(A Development Stage Company)

Notes to Financial Statements (continued)

9. Commitments and contingencies (continued)

and 2012, the nine months ended September 30, 2012 and 2013 and the period from August 16, 2006 (inception) to September 30, 2013, respectively.

    Lease commitments

        In April 2007, the Company leased office and laboratory space, and obtained facilities management services under an operating lease (the "2007 Facilities Lease") that was scheduled to expire in March 2012. The Company had an option to extend the lease by two years at a rate of the greater of $53 thousand per month or 95% of the then-current market rate. In December 2009, the Company leased additional space and amended the existing lease agreement. As a result of this amendment, the monthly rent payments were increased for the remaining term of the lease agreement. The Company took possession of this additional space in January 2010. In June 2011, the lease term was extended for an additional nine months from March 2012 and expired on December 31, 2012.

        In October 2008, the Company leased laboratory space that expired on September 30, 2009. In August 2009, the Company extended the lease for an additional six-month period that expired in March 2010. In February 2010, the Company exercised an option to extend the lease for an additional 12-month period, expiring on March 31, 2011 at the same terms as the original lease. Since April 1, 2011, the Company has leased the laboratory space on a month-to-month basis under the same terms as the original lease. As of December 31, 2012, the month-to-month lease was terminated.

        In July 2012, the Company leased office and laboratory space under an operating sublease ("2012 Facilities Sublease") that expires in February 2014. The Company concurrently signed an operating lease for the same space with the master landlord ("2012 Master Facilities Lease") that commences in March 2014 and expires in February 2017.

        As of September 30, 2013, the minimum future lease payments under these operating leases are as follows (in thousands):

 
  Operating
lease
 

2013

  $ 158  

2014

    790  

2015

    976  

2016

    1,012  

2017

    170  
       

Total minimum lease payments

  $ 3,106  
       

        The Company recorded $990 thousand, $1.1 million, $765 thousand, $357 thousand, and $4.7 million in rent expense for the years ended December 31, 2011 and 2012, the nine months ended September 30, 2012 and 2013 and the period from August 16, 2006 (inception) to September 30, 2013, respectively.

F-24


Table of Contents


Genocea Biosciences, Inc.
(A Development Stage Company)

Notes to Financial Statements (continued)

9. Commitments and contingencies (continued)

    Restricted cash related to facilities leases

        Restricted cash related to facilities leases consisted of the following (in thousands):

 
  December 31,    
 
 
  September 30,
2013
 
 
  2011   2012  

2007 Facilities Lease

  $ 97   $ 97   $  

2012 Facilities Sublease

        157     157  

2012 Master Facilities Lease

        158     158  
               

Total

  $ 97   $ 412   $ 315  
               

        The Company had a letter of credit with a financial institution related to a security deposit for the 2007 Facilities Lease for $97 thousand, which was secured by cash on deposit. The 2007 Facilities Lease expired on December 31, 2012, and the amounts under the letter of credit were refunded to the Company in January 2013.

        Additionally, the Company has two outstanding letters of credit with a financial institution related to security deposits for the 2012 Facilities Sublease and the 2012 Master Facilities Lease, for a total of $315 thousand, which are secured by cash on deposit.

    Litigation

        The Company is not a party to any litigation and does not have contingency reserves established for any litigation liabilities.

10. Redeemable convertible preferred stock

        As of December 31, 2012, the total authorized capital stock of the Company was 319,961,649 shares, which included 4,615,385 shares of Seed Preferred Stock, $0.001 par value per share; 36,661,538 shares of Series A Preferred Stock $0.001 par value per share; 35,098,520 shares of Series B Preferred Stock, $0.001 par value per share; and 52,586,206 shares of Series C Preferred Stock, $0.001 par value per share. Upon the issuance of the Series C Preferred Stock in 2012, the terms and conditions of the Series B Preferred Stock, Series A Preferred Stock and the Seed Preferred Stock were modified through an amendment to the Certificate of Incorporation. These adjustments included making the Seed Preferred Stock and Series A Preferred Stock junior to the new Series C Preferred Stock related to redemption and liquidation rights and other changes in voting and corporate governance procedures. These adjustments were not considered material.

        In December 2006, the Company issued 4,615,385 shares of Seed Preferred Stock for $0.65 per share (including 118,277 shares issued through the conversion of promissory notes) (Note 7).

        In February 2009, the Company issued 20,938,102 shares of Series A Preferred Stock in exchange for $4.2 million of convertible notes, including accrued interest, along with gross proceeds of $9.4 million. In addition, in accordance with existing loan agreements (Note 7), the Company issued 1,084,615 warrants to purchase 1,084,615 shares of Series A Preferred Stock (Note 8) at an exercise price of $0.65 per share.

F-25


Table of Contents


Genocea Biosciences, Inc.
(A Development Stage Company)

Notes to Financial Statements (continued)

10. Redeemable convertible preferred stock (continued)

        In December 2009, in accordance with the terms of the Series A Preferred Stock purchase agreement and upon the achievement of defined clinical milestones, the Company issued an additional 14,638,821 shares of Series A Preferred Stock to the Series A Preferred Stock investors, for gross proceeds of $9.5 million at the closing price of the initial issuance of $0.65 per share.

        In December 2010, the Company issued 34,581,278 shares of Series B Preferred Stock for $0.58 per share, resulting in gross proceeds of $20.1 million.

        In September 2012, the Company issued 26,293,103 shares of Series C Preferred Stock for $0.58 per share, resulting in gross proceeds of $15.3 million. In accordance with the terms of the Series C Preferred Stock purchase agreement, the Company will issue an additional 26,293,103 shares of Series C Preferred Stock for $0.58 per share for total gross proceeds of $15.3 million in an additional closing, contingent upon the achievement of defined scientific and corporate milestones, or at the election of the individual holders of the Series C Preferred Stock. These scientific and corporate milestones were achieved in June 2013 and the Company issued the additional shares of Series C Preferred Stock.

General

    Conversion

        Shares of Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock and Seed Preferred Stock are convertible into Common stock initially on a one-for-one basis, adjustable for certain dilutive events. The conversion ratio for the Series B Preferred Stock is also adjustable for accrued or declared but unpaid dividends. Upon conversion and at the election of 60% of the Series B Preferred Stockholders, the accrued dividends may be paid in cash, in which case, the Series B Preferred Stock would be convertible on a one-for-one basis, adjusted for certain dilutive events. The holders of the Series B Preferred Stock have irrevocably elected not to receive cash dividends upon the conversion of such stock. Conversion of all Preferred Stock is automatic upon a qualified financing event that is considered satisfactory by the holders of 66% of the outstanding Series C Preferred Stock and Series B Preferred Stock or election by at least 66% of the outstanding shares of Preferred Stock or voluntary at the option of the Preferred Stockholder. The Preferred Stockholders have irrevocably consented to the automatic conversion of all outstanding shares of Preferred Stock upon the closing of an initial public offering. As of September 30, 2013, all series of Preferred Stock, except for the Series B Preferred Stock, have a 1-for-1 conversion ratio. The Series B Preferred Stock has a 1-for-1.22 conversion ratio as of September 30, 2013.

    Dividends

        Holders of the Series C Preferred Stock, Series B Preferred Stock and Series A Preferred Stock are entitled to receive, when and if declared by the Board of Directors, dividends at the annual rate of 8% of the issue price per share and the Seed Convertible Preferred Shares are entitled to receive, when and if declared by the Board of Directors, dividends at an annual rate of $0.052 per share, subject to adjustment for stock splits, combinations, recapitalizations, or the like, with respect to such shares. Series C Preferred Stock, Series A Preferred Stock and Seed Preferred Stock dividends are

F-26


Table of Contents


Genocea Biosciences, Inc.
(A Development Stage Company)

Notes to Financial Statements (continued)

10. Redeemable convertible preferred stock (continued)

non-cumulative and non-compounding. The Series B Preferred Stock dividends are cumulative and non-compounding.

        The order of preference in the distribution of dividends, when and if declared by the Board of Directors, is made first to the Series C Preferred Stock, then to the Series B Preferred Stock, next to the Series A Preferred Stock, and lastly to the Seed Preferred Stock.

    Liquidation Preference

        Holders of the Series C Preferred Stock and the Series B Preferred Stock have preference in the event of a liquidation or dissolution of the Company equal to $0.58 per share, plus any accrued and/or declared but unpaid dividends. Holders of the Series A Preferred Stock have preference in the event of a liquidation or dissolution of the Company, which preference is junior to the liquidation preference for the Series C Preferred Stock and the Series B Preferred Stock, equal to $0.65 per share, plus any accrued and/or declared but unpaid dividends. Holders of the Seed Preferred Stock have preference in the event of a liquidation or dissolution of the Company, which preference is junior to the liquidation preference of the Series C Preferred Stock, the Series B Preferred Stock and the Series A Preferred Stock, equal to $0.65 per share, plus any declared but unpaid dividends.

        After all preferred stockholders have received their respective initial preference amounts, any assets remaining for distribution shall be distributed to the holders of Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock and Common Stock pro rata in proportion to the total number of shares of Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock and Common Stock, assuming conversion to Common Stock. As of September 30, 2013, the aggregate liquidation value for the Series C Preferred Stock, the Series B Preferred Stock, the Series A Preferred Stock and the Seed Preferred Stock was $30.5 million, $24.5 million, $23.1 million, and $3.0 million, respectively.

    Voting Rights

        Except for matters with specific voting rights, the holders of shares of Preferred Stock vote together with the holders of the Common Stock as a single class on any matter presented to the stockholders of the Company for their action or consideration at any meeting of the stockholders of the Company or by written consent of stockholders in lieu of meetings. The holders of the Preferred Stock are entitled to the number of votes equal to the number of shares of Common Stock into which each share of the Preferred Stock is convertible at the time of such vote. A vote of 66% of the Preferred Stockholders, voting as a single class, is required for any change to the Company's by-laws or number of Directors. In addition, the Preferred Stockholders also have the right to elect five of the eight Directors.

    Redemption Rights

        Each class of Preferred Stock is stated at its then current redemption value as of each balance sheet date presented.

        The Series C Preferred Stock and the Series B Preferred Stock may be redeemed upon written election of the holders of 66% of the Series C Preferred Stock and Series B Preferred Stock on or

F-27


Table of Contents


Genocea Biosciences, Inc.
(A Development Stage Company)

Notes to Financial Statements (continued)

10. Redeemable convertible preferred stock (continued)

after September 28, 2017. The Series C Preferred Stockholders and the Series B Preferred Stockholders will receive, through a series of three installments, $0.58 per share (subject to certain adjustments), plus any accrued or declared but unpaid dividends.

        The Series A Preferred Stock may be redeemed upon written election of 60% of the Series A holders at any date after the redemption in full of the Series C Preferred Stock and Series B Preferred Stock. The holders will receive, through a series of three installments, $0.65 per share (subject to certain adjustments), plus any accrued and/or declared but unpaid dividends.

        In addition, if the Company fails to complete a contractually defined research program under a license agreement with a not-for-profit entity (Note 2—Revenue Recognition), the not-for-profit entity, which is also the holder of 4,310,345 shares of Series C Preferred Stock as of September 30, 2013, has the right to redeem the shares or require the Company to find a third party to purchase the shares at a price equal to, in either case, either the initial purchase price of $0.58 per share or, at the not-for-profit's election, the current fair value as determined by an independent appraisal. In either case, should the Company, over the 12 months following such redemption, subsequently sell substantially all of its stock or assets or complete an IPO at a value greater than 200% of the price paid upon redemption, then the Company must reimburse the not-for-profit entity for the difference. If the Company's stock becomes freely tradable, then this redemption provision is terminated.

11. Common stock

        At December 31, 2012, the Company had authorized 191,000,000 shares of Common Stock, $0.01 par value per share, of which, 3,517,397 shares were issued and outstanding.

General

        The voting, dividend and liquidation rights of the holders of shares of Common Stock are subject to and qualified by the rights, powers and preferences of the holders of shares of preferred stock. The Common Stock has the following characteristics:

    Voting

        The holders of shares of 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. The Common Stockholders have the right to elect one of the eight Directors.

    Dividends

        The holders of shares of Common Stock are entitled to receive dividends, if and when declared by the board of directors. Cash dividends may not be declared or paid to holders of shares of Common Stock until paid on each series of outstanding preferred stock in accordance with their respective terms. As of December 31, 2012, no dividends have been declared or paid since the Company's inception.

    Liquidation

        After payment to the holders of shares of preferred stock of their liquidation preferences, the holders of the Common Stock are entitled to share ratably in the Company's assets available for

F-28


Table of Contents


Genocea Biosciences, Inc.
(A Development Stage Company)

Notes to Financial Statements (continued)

11. Common stock (continued)

distribution to stockholders, in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company or upon the occurrence of a deemed liquidation event.

Founders' stock

        During 2006, the Company issued 2,100,000 shares of restricted Common Stock to certain founders (recipients), for $0.001 per share (par value), for total proceeds of $2 thousand. The restricted stock vested 25% upon issuance, and the remaining 75% vested ratably over four years, during which time the Company had the right to repurchase the unvested shares held by a recipient at the amount paid if the relationship between such recipient and the Company ceased. At December 31, 2012, all of the restricted founders' shares are fully vested and are no longer subject to repurchase by the Company. Also during 2006, the Company issued an additional 1,000,000 shares of Common Stock to founders for $0.001 per share, for total proceeds of $1 thousand. These shares were not subject to repurchase provisions.

Restricted stock

        During 2006 and 2007, the Company's founders and certain employees were issued shares and entered into Stock Restriction and Repurchase Agreements with the Company. Under the terms of the agreements, shares of Common Stock issued are subject to a vesting schedule. Vesting occurs periodically at specified time intervals and specified percentages. All shares of Common Stock become fully vested within four years of the date of distribution. As of September 30, 2013, the Company has issued, and there are outstanding, 58,000 shares of Common Stock under the Stock Restriction and Repurchase Agreements, none of which were subject to repurchase by the Company.

Reserve for future issuance

        The Company has reserved for future issuances the following number of shares of Common Stock (in thousands):

 
  December 31,    
 
 
  September 30,
2013
 
 
  2011   2012  

Conversion of Seed Preferred Stock

    4,615     4,615     4,615  

Conversion of Series A Preferred Stock

    35,577     35,577     35,577  

Conversion of Series B Preferred Stock

    37,453     40,228     42,297  

Conversion of Series C Preferred Stock

        26,293     52,586  

Stock-based compensation awards

    12,846     13,090     22,066  

Warrants to purchase Series A Preferred Stock

    1,085     1,085     1,085  

Warrants to purchase Series B Preferred Stock

    258     517     517  

Warrants to purchase Series C Preferred Stock

            690  
               

Total

    91,834     121,405     159,433  
               

F-29


Table of Contents


Genocea Biosciences, Inc.
(A Development Stage Company)

Notes to Financial Statements (continued)

12. Stock-based compensation

        In December 2006, the Company adopted the Genocea Biosciences, Inc. 2007 Equity Incentive Plan (the "Plan"), under which it may grant incentive stock options ("ISOs"), non-qualified stock options, restricted stock, and stock grants to purchase up to 1,750,000 shares of common stock. In February 2009, the Company amended the Plan to issue up to 7,892,500 shares of Common Stock. In December 2010, the Company amended the Plan to issue up to 4,500,000 additional shares of Common Stock. In August 2011, September 2012, and June 2013 the number of shares available for issuance under the Plan increased by an additional 500,000, 250,000 and 8,984,659 shares, respectively. Under the Plan, ISOs may not be granted with an exercise price less than fair market value of the Company's Common Stock on the date of the grant, and all options generally vest over a four-year period. These options expire ten years after the grant date.

        Terms of stock award agreements, including vesting requirements, are determined by the board of directors, subject to the provisions of the Plan. Options granted by the Company typically vest over a four year period. Certain of the options are subject to acceleration of vesting in the event of certain terminations of employment in connection with certain change of control transactions. The options are exercisable from the date of grant for a period of ten years. For options granted to date, the exercise price equaled the fair market value of the Common Stock as determined by the board of directors on the date of grant.

        During 2011 and 2012, the Company granted a total of 40,000 and 584,613 stock options, respectively, to consultants and members of its Scientific Advisory Board, which are included in the following table. The options generally vest over a four-year period, and have a life of ten years. Certain senior advisors of the Company received options that vest upon the occurrence of certain milestones. Stock options issued to non-employees are accounted for using the fair value method of accounting, and are periodically revalued as the options vest, and are recognized as expense over the related service period. The total expense related to all nonemployee options for the years ended December 31, 2011 and 2012 and the nine months ended September 30, 2012 and 2013 was $(1) thousand, $18 thousand, $13 thousand and $102 thousand, respectively. The total expense related to all nonemployee options from August 16, 2006 (inception) to September 30, 2013 was $325 thousand.

        Total stock-based compensation expense is recognized for stock options granted to employees and non-employees and has been reported in the Company's statements of operations as follows (in thousands):

 
  Year Ended
December 31,
  Nine Months
Ended
September 30,
   
 
 
  Period from
August 16, 2016
(Inception) to
September 30, 2013
 
 
  2011   2012   2012   2013  

Research and development

  $ 117   $ 102   $ 94   $ 210   $ 646  

General and administrative

    197     205     132     237     965  
                       

Total

  $ 314   $ 307   $ 226   $ 447   $ 1,611  
                       

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Table of Contents


Genocea Biosciences, Inc.
(A Development Stage Company)

Notes to Financial Statements (continued)

12. Stock-based compensation (continued)

        The following table summarizes stock option activity for employees and nonemployees (shares in thousands):

 
  Shares   Weighted-
Average
Exercise
Price
  Weighted-
Average
Remaining
Contractual
Term (years)
  Aggregate
Intrinsic
Value
 

Outstanding at December 31, 2011

    12,273   $ 0.19     8.55   $ 12,475  

Granted

    653   $ 0.14              

Exercised

    (7 ) $ 0.19              

Canceled or forfeited

    (373 ) $ 0.23              
                         

Outstanding at December 31, 2012

    12,546   $ 0.19     7.65   $  

Granted (unaudited)

    6,210   $ 0.27              

Exercised (unaudited)

    (9 ) $ 0.18              

Canceled or forfeited (unaudited)

    (20 ) $ 0.19              
                         

Outstanding at September 30, 2013 (unaudited)

    18,727   $ 0.22     7.86   $ 3,193  
                         

Exercisable at December 31, 2012

    7,168   $ 0.19     7.20   $  
                         

Vested or expected to vest at December 31, 2012(1)

    9,359   $ 0.19     6.37   $  
                         

Exercisable at September 30, 2013 (unaudited)

    9,691   $ 0.19     6.88   $ 1,893  
                         

Vested or expected to vest at September 30, 2013 (unaudited)(1)

    16,757   $ 0.22     7.86   $ 2,857  
                         

(1)
This represents the number of vested options at December 31, 2012 and September 30, 2013, plus the number of unvested options expected to vest December 31, 2012 and September 30, 2013, based on the unvested options outstanding at December 31, 2012 and September 30, 2013, as adjusted for the estimated forfeiture rate of 10.52%.

        During the years ended December 31, 2011 and 2012, and the nine months ended September 30, 2012 and 2013, the Company granted stock options to purchase an aggregate of 7,348,451, 653,113, 648,613 and 6,209,805 of its Common Stock, respectively, with a weighted-average grant date fair values of $0.14, $0.11, $0.11 and $0.24, respectively.

        The total intrinsic value of options exercised in the years ended December 31, 2011 and 2012, the nine months ended September 30, 2012 and 2013 and for the period August 16, 2006 (Inception) to September 30, 2013 was di minimis. The total fair value of employee stock options vested in the years ended December 31, 2011 and 2012, the nine months ended September 30, 2012 and 2013 and for the period from August 16, 2006 (inception) to September 30, 2013 was $265 thousand, $339 thousand, $254 thousand, $394 thousand and $1.3 million, respectively. As of September 30, 2013, there was $1.1 million of total unrecognized compensation cost related to employee nonvested stock options granted under the Plan.

F-31


Table of Contents


Genocea Biosciences, Inc.
(A Development Stage Company)

Notes to Financial Statements (continued)

12. Stock-based compensation (continued)

        The total fair value of shares vested and total unrecognized compensation costs related to non-employees in the years ended December 31, 2011 and 2012, the nine months ended September 30, 2012 and 2013 and for the period from August 16, 2006 (inception) to September 30, 2013 was immaterial.

        Total unrecognized compensation cost for employee and non-employee will be adjusted for future forfeitures. The Company expects to recognize that cost over a remaining weighted-average period of three years.

        The Company estimates the fair value of each employee stock award on the grant date using the Black-Scholes option-pricing model based on the following assumptions and the assumptions regarding the fair value of the underlying Common Stock on each measurement date:

 
  Year Ended
December 31,
  Nine Months
Ended
September 30,
 
 
  2011   2012   2012   2013  

Expected volatility

    108.8 %   99.2 %   99.2 %   132.7 %

Risk-free interest rate

    2.83 %   0.99 %   1.23 %   1.73 %

Expected term (in years)

    6.25     6.25     6.25     6.25  

Expected dividend yield

    0 %   0 %   0 %   0 %

13. 401(k) Savings plan

        In 2007, the Company established a defined-contribution savings plan under Section 401(k) of the Internal Revenue Code ("401(k) Plan"). The 401(k) Plan covers all employees who meet defined minimum age and service requirements, and allows participants to defer a portion of their annual compensation on a pretax basis. The Company has not made any contributions to the 401(k) Plan to date.

14. Income taxes

        For the years ended December 31, 2011 and 2012, the nine months ended September 30, 2012 and 2013 and the period from August 16, 2006 (inception) to September 30, 2013, the Company did not record a current or deferred income tax expense or benefit. The Company's losses before income taxes consist solely of domestic losses.

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Table of Contents


Genocea Biosciences, Inc.
(A Development Stage Company)

Notes to Financial Statements (continued)

14. Income taxes (continued)

        Deferred taxes are recognized for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes. The significant components of the Company's deferred tax assets are comprised of the following (in thousands):

 
  Year Ended
December 31,
 
 
  2011   2012  

Deferred tax assets:

             

U.S. and state net operating loss carryforwards

  $ 15,156     20,146  

Research and development credits

    1,570     1,788  

Stock based compensation

    166     229  

Purchased intangibles

    319     294  

Capitalized organizational and start up expenditures

    214     194  

Accruals and other temporary differences

    110     310  
           

Total deferred tax assets

    17,535     22,961  

Less valuation allowance

    (17,535 )   (22,961 )
           

Net deferred tax assets

  $   $  
           

        The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets. Based on the Company's history of operating losses, the Company has concluded that it is more likely than not that the benefit of its deferred tax assets will not be realized. Accordingly, the Company has provided a full valuation allowance for deferred tax assets as of December 31, 2011 and 2012. The valuation allowance increased approximately $5.4 million during the year ended December 31, 2012, due primarily to the generation of net operating losses during the period. The valuation allowance increased approximately $6.1 million during the year ended December 31, 2011, due primarily to the generation of net operating losses during the period.

        A reconciliation of income tax expense computed at the statutory federal income tax rate to income taxes as reflected in the financial statements is as follows:

 
  Year Ended
December 31,
 
 
  2011   2012  

Federal income tax expense at statutory rate

    34.0 %   34.0 %

State income tax, net of federal benefit

    4.8 %   6.8 %

Permanent differences

    (0.2 )%   (0.2 )%

Research and development credit

    3.1 %   0.0 %

Other

    0.0 %   0.0 %

Change in valuation allowance

    (41.7 )%   (40.6 )%
           

Effective tax rate

    0.0 %   0.0 %
           

        As of December 31, 2011 and 2012, the Company had U.S. federal net operating loss carryforwards of approximately $38.9 million and $51.7 million, respectively, which may be available to offset future income tax liabilities and expire at various dates through 2032. As of December 31, 2011

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Table of Contents


Genocea Biosciences, Inc.
(A Development Stage Company)

Notes to Financial Statements (continued)

14. Income taxes (continued)

and 2012, the Company also had U.S. state net operating loss carryforwards of approximately $36.4 million and $49.0 million, respectively, which may be available to offset future income tax liabilities and expire at various dates through 2017.

        As of December 31, 2011 and 2012, the Company had federal research and development tax credit carryforwards of approximately $1.2 million and $1.2 million, respectively, available to reduce future tax liabilities which expire at various dates through 2032. As of December 31, 2011 and 2012, the Company had state research and development tax credit carryforwards of approximately $598 thousand and $929 thousand, respectively, available to reduce future tax liabilities which expire at various dates through 2027.

        Under the provisions of the Internal Revenue Code, the net operating loss and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. Net operating loss and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50 percent, as defined under Sections 382 and 383 of the Internal Revenue Code, respectively, as well as similar state provisions. This could limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. The Company has completed several financings since its inception which may have resulted in a change in control as defined by Sections 382 and 383 of the Internal Revenue Code, or could result in a change in control in the future.

        The Company will recognize interest and penalties related to uncertain tax positions in income tax expense. As of December 31, 2011 and 2012, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in the Company's statements of operations and comprehensive loss.

        For all years through December 31, 2012, the Company generated research credits but has not conducted a study to document the qualified activities. This study may result in an adjustment to the Company's research and development credit carryforwards; however, until a study is completed and any adjustment is known, no amounts are being presented as an uncertain tax position for these two years. A full valuation allowance has been provided against the Company's research and development credits and, if an adjustment is required, this adjustment would be offset by an adjustment to the deferred tax asset established for the research and development credit carryforwards and the valuation allowance.

        The Company files income tax returns in the United States and various state jurisdictions. The federal and state income tax returns are generally subject to tax examinations for the tax years ended December 31, 2009 through December 31, 2012. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service, state or foreign tax authorities to the extent utilized in a future period.

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Genocea Biosciences, Inc.
(A Development Stage Company)

Notes to Financial Statements (continued)

15. Net loss per share applicable to common stockholders

        As described in Note 2, Summary of Significant Accounting Policies, the Company computes basic and diluted earnings (loss) per share using a methodology that gives effect to the impact of outstanding participating securities (the "two-class method"). As the years ended December 31, 2011 and 2012, the six months ended June 30, 2012 and 2013 and the period from August 16, 2006 (inception) to June 30, 2013 resulted in net losses, there is no income allocation required under the two-class method or dilution attributed to weighted average shares outstanding in the calculation of diluted loss per share.

        The following common stock equivalents were excluded from the calculation of net loss per share for the periods presented, due to their anti-dilutive effect (in thousands):

 
   
   
   
   
  Period from
August 16,
2006
(Inception)
to September 30,
2013
 
 
  December 31,   September 30,  
 
  2011   2012   2012   2013  

Preferred stock

    74,773     101,066     101,066     127,359     127,359  

Warrants

    1,343     1,602     1,602     2,292     2,292  

Outstanding options

    12,273     12,546     12,542     18,727     18,727  
                       

Total

    88,389     115,214     115,210     148,378     148,378  
                       

16. Subsequent events

        The Company has completed an evaluation of all subsequent events after the audited balance sheet date of December 31, 2012 through October 22, 2013 and after the unaudited balance sheet date of September 30, 2013 through November 26, 2013, the dates the financial statements were available to be issued, to ensure that this filing includes appropriate disclosure of events both recognized in the financial statements as of December 31, 2012 and September 30, 2013, and events which occurred subsequently but were not recognized in the financial statements.

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                  Shares

Genocea Biosciences, Inc.

Common Stock

LOGO


PRELIMINARY PROSPECTUS

                    , 2013


Citigroup   Cowen and Company



Stifel



Needham & Company

        Through and including                    , 2014 (25 days after the commencement of this offering), all dealers that buy, sell or trade shares of our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This delivery is in addition to a dealer's obligation to deliver a prospectus when acting as an underwriter and with respect to their unsold allotments or subscriptions.

   


Table of Contents


PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13.    Other Expenses of Issuance and Distribution

        The following table sets forth the costs and expenses, other than the underwriting discounts and commissions, payable by the registrant in connection with the sale of common stock being registered. All amounts are estimates except for the SEC registration fee, the Financial Industry Regulatory Authority, or FINRA, filing fee and NASDAQ listing fee.

Item
  Amount to be
paid
 

SEC registration fee

  $ 9,660  

FINRA filing fee

    11,750  

NASDAQ listing fee

                 *

Printing and engraving expenses

                 *

Legal fees and expenses

                 *

Accounting fees and expenses

                 *

Transfer agent fees and expenses

                 *

Miscellaneous expenses

                 *

Total

  $              *
       

*
To be completed by amendment.

Item 14.    Indemnification of Directors and Officers

        Section 145 of the General Corporation Law of the State of Delaware provides as follows:

        A corporation shall have the power to indemnify any person who was or is a party or is 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 the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interest of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his 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 the person did not act in good faith and in a manner which the person 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 conduct was unlawful.

        A corporation shall have the power to indemnify any person who was or is a party or is 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 the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made with respect to any claim, issue or

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matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.

        As permitted by the Delaware General Corporation Law, we have included in our certificate of incorporation a provision to eliminate the personal liability of our directors for monetary damages for breach of their fiduciary duties as directors, subject to certain exceptions. In addition, our certificate of incorporation and by-laws provide that we are required to indemnify our officers and directors under certain circumstances, including those circumstances in which indemnification would otherwise be discretionary, and we are required to advance expenses to our officers and directors as incurred in connection with proceedings against them for which they may be indemnified.

        We intend to enter into indemnification agreements with our directors and officers. These agreements will provide broader indemnity rights than those provided under the Delaware General Corporation Law and our certificate of incorporation. The indemnification agreements are not intended to deny or otherwise limit third-party or derivative suits against us or our directors or officers, but to the extent a director or officer were entitled to indemnity or contribution under the indemnification agreement, the financial burden of a third-party suit would be borne by us, and we would not benefit from derivative recoveries against the director or officer. Such recoveries would accrue to our benefit but would be offset by our obligations to the director or officer under the indemnification agreement.

        The underwriting agreement provides that the underwriters are obligated, under certain circumstances, to indemnify our directors, officers and controlling persons against certain liabilities, including liabilities under the Securities Act. Reference is made to the form of underwriting agreement filed as Exhibit 1.1 hereto.

        We maintain directors' and officers' liability insurance for the benefit of our directors and officers.

Item 15.    Recent Sales of Unregistered Securities

        In the three years preceding the filing of this registration statement, we have issued the following securities that were not registered under the Securities Act.

Sales of Capital Stock

        On June 24, 2013, we issued 26,293,103 shares of Series C preferred stock at a price per share of $0.58 for total consideration of $15,250,000 to 21 investors.

        On September 28, 2012, we issued 26,293,103 shares of Series C preferred stock at a price per share of $0.58 for total consideration of $15,250,000 to 21 investors.

        On December 17, 2010, we issued 34,581,278 shares of Series B preferred stock at a price per share of $0.58 for total consideration of $20,057,141 to 16 investors.

        Issuances of preferred stock were exempt pursuant to Rule 506 and Section 4(2) of the Securities Act.

Sales of Warrants

        On January 3, 2011, we issued warrants to purchase 517,242 shares of our common stock at an exercise price of $0.58 per share to Lighthouse Capital Partners VI, L.P.

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        On September 30, 2013, in connection with the working capital term loan facility with Ares Capital Corporation, we issued warrants to purchase 689,655 shares of our common stock at an exercise price of $0.58 per share to Ares Capital Corporation.

        Sales of warrants were exempt pursuant to Rule 506 and Section 4(2) of the Securities Ac.

Grants and Exercises of Stock Options

        From January 1, 2013 through November 30, 2013, we granted options to purchase a total of 6,661,208 shares of our common stock to employees and non-employees, at a weighted average price of $0.29 per share. During the same period, we issued 378,542 shares of common stock upon the exercise of options to purchase such shares of common stock at a weighted average price of $0.11 per share.

        In 2012, we granted options to purchase a total of 653,113 shares of our common stock to employees and consultants, at a weighted average exercise price of $0.14 per share. In 2012, we issued 6,500 shares of common stock upon the exercise of options to purchase such shares of common stock at a weighted average price of $0.19 per share.

        In 2011, we granted options to purchase a total of 7,348,451 shares of our common stock to employees and consultants, at a weighted average exercise price of $0.18 per share. In 2011, we issued 28,442 shares of common stock upon the exercise of options to purchase such shares of common stock at a weighted average price of $0.19 per share.

        In 2010, we granted options to purchase a total of 3,218,665 shares of our common stock to employees and consultants, at a weighted average exercise price of $0.24 per share. In 2010, we issued 10,000 shares of common stock upon the exercise of options to purchase such shares of common stock at a weighted average price of $0.20 per share.

        Option grants and the issuances of common stock upon exercise of such options were exempt pursuant to Rule 701 and Section 4(2) of the Securities Act.

Item 16.    Exhibits and financial statement schedules

(a)
Exhibits

Exhibit
Number
  Exhibit Index
  1.1 * Form of Underwriting Agreement
  3.1 * Fifth Amended and Restated Certificate of Incorporation (to be effective upon completion of this offering)
  3.2 * Amended and Restated By-laws (to be effective upon completion of this offering)
  3.3   Fourth Amended and Restated Certificate of Incorporation
  3.4   Certificate of Amendment to the Fourth Amended and Restated Certificate of Incorporation
  3.5   By-laws
  4.1   Form of Common Stock Certificate
  4.2   Form of Warrant to Purchase Preferred Stock, dated January 7, 2008
  4.3   Preferred Stock Purchase Warrant, dated October 25, 2011, issued to Lighthouse Capital Partners VI, L.P.
  4.4   Preferred Stock Purchase Warrant, dated September 30, 2013, issued to Ares Capital Corporation
  4.5   Fourth Amended and Restated Registration Rights Agreement
  5.1 * Opinion of Ropes & Gray LLP

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Exhibit
Number
  Exhibit Index
  10.1   Form of Director Indemnification Agreement
  10.2 + Amended and Restated Exclusive License Agreement between Children's Medical Center Corporation and Genocea Biosciences, Inc., dated March 23, 2012
  10.3 + Amended and Restated License Agreement between Genocea Biosciences, Inc. and President and Fellows of Harvard College, dated November 19, 2012
  10.4 + License and Collaboration Agreement between Genocea Biosciences, Inc. and Isconova AB, dated August 5, 2009, as amended on March 19, 2010, June 18, 2010, August 17, 2010, October 19, 2011 and February 6, 2012
  10.5 + Exclusive License Agreement for Escherichia Coli K12 to Deliver Protein to the Macrophage Cytosol between Genocea Biosciences, Inc. and The Regents of the University of California, dated August 18, 2006
  10.6 + Patent License Agreement between Genocea Biosciences, Inc. and University of Washington dated January 27, 2010, as amended on July 19, 2012
  10.7   Loan and Security Agreement, dated September 30, 2013, by and between Ares Capital Corporation and Genocea Biosciences, Inc.
  10.8   Lease, dated as of July 3, 2012, between TBCI, LLC and Genocea Biosciences, Inc.
  10.9   Agreement Regarding Sublease, dated as of July 9, 2012, by TBCI, LLC, FoldRx Pharmaceuticals, Inc., Pfizer Inc. and Genocea Biosciences, Inc.
  10.10   Genocea Biosciences, Inc. Amended and Restated 2007 Equity Incentive Plan, as amended on June 24, 2013
  10.11 Consulting Agreement between Genocea Biosciences, Inc. and George Siber, dated May 16, 2007, as amended on June 30, 2009, December 16, 2010, June 15, 2011 and June 5, 2013
  10.12 Employment Letter Agreement between William Clark and Genocea Biosciences, Inc., dated March 7, 2011
  10.13 Employment Letter Agreement between Seth Hetherington, M.D. and Genocea Biosciences, Inc., dated October 4, 2010
  10.14 Employment Letter Agreement between Paul Giannasca, Ph.D. and Genocea Biosciences, Inc., dated December 21, 2009, as amended on October 24, 2011
  10.15 †* Genocea Biosciences, Inc. 2014 Equity Incentive Plan
  10.16 †* Genocea Biosciences, Inc. Cash Incentive Plan
  10.17 Genocea Biosciences, Inc. Cash Bonus Program for Fiscal Years 2012 and 2013
  10.18 + Amendment No. 2 to Patent License Agreement between Genocea Biosciences, Inc. and University of Washington dated September 12, 2012
  10.19 + Amendment No. 3 to Patent License Agreement between Genocea Biosciences, Inc. and University of Washington dated November 7, 2013
  10.20 Form of Nonstatutory Stock Option Granted Under Genocea Biosciences, Inc.'s 2007 Equity Incentive Plan
  10.21 Form of Incentive Stock Option Granted Under Genocea Biosciences, Inc.'s 2007 Equity Incentive Plan
  23.1   Consent of Ernst & Young LLP
  23.2 * Consent of Ropes & Gray LLP (included in Exhibit 5.1)

*
To be filed by amendment.

Indicates a management contract or compensatory plan.

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Table of Contents

+
Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment and this exhibit has been submitted separately to the SEC.
(b)
Financial statement schedules

        Schedules not listed above have been omitted because the information required to be set forth therein is not applicable or is shown in the financial statements or notes thereto.

Item 17.    Undertakings

        The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

        Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

        The undersigned Registrant hereby undertakes:

        (1)   That for purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

        (2)   That for the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

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Signatures

        Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has duly caused this Registration Statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Cambridge, Commonwealth of Massachusetts, on December 23, 2013.

    GENOCEA BIOSCIENCES, INC.

 

 

By:

 

/s/ WILLIAM CLARK

William Clark
President and Chief Executive Officer

Signatures and Power of Attorney

        We, the undersigned directors and officers of Genocea Biosciences, Inc. (the "Company"), hereby severally constitute and appoint William Clark and Robert E. Farrell, and each of them singly, our true and lawful attorneys, with full power to them, and to each of them singly, to sign for us and in our names in the capacities indicated below, the registration statement on Form S-1 filed herewith, and any and all pre-effective and post-effective amendments to said registration statement, and any registration statement filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, in connection with the registration under the Securities Act of 1933, as amended, of equity securities of the Company, and to file or cause to be filed the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as each of us might or could do in person, and hereby ratifying and confirming all that said attorneys, and each of them, or their substitute or substitutes, shall do or cause to be done by virtue of this Power of Attorney.

        Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement on Form S-1 has been signed by the following persons in the capacities and on the dates indicated.

Signature
 
Title
 
Date

 

 

 

 

 
/s/ WILLIAM CLARK

William Clark
  President and Chief Executive Officer and Director (Principal Executive Officer)   December 23, 2013

/s/ ROBERT E. FARRELL

Robert E. Farrell Jr., CPA

 

Vice President of Finance and Administration (Principal Financial Officer and Principal Accounting Officer)

 

December 23, 2013

/s/ KEVIN BITTERMAN

Kevin Bitterman, Ph.D.

 

Director

 

December 23, 2013

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Signature
 
Title
 
Date

 

 

 

 

 
/s/ KATRINE BOSLEY

Katrine Bosley
  Director   December 23, 2013

/s/ SIMEON J. GEORGE

Simeon J. George, M.D.

 

Director

 

December 23, 2013

/s/ STEPHEN J. HOFFMAN

Stephen J. Hoffman, M.D., Ph.D.

 

Director

 

December 23, 2013

/s/ GEORGE SIBER

George Siber, M.D.

 

Director

 

December 23, 2013

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Table of Contents

Exhibit
Number
  Exhibit Index
  1.1 * Form of Underwriting Agreement
        
  3.1 * Fifth Amended and Restated Certificate of Incorporation (to be effective upon completion of this offering)
        
  3.2 * Amended and Restated By-laws (to be effective upon completion of this offering)

 

3.3

 

Fourth Amended and Restated Certificate of Incorporation

 

3.4

 

Certificate of Amendment to the Fourth Amended and Restated Certificate of Incorporation

 

3.5

 

By-laws
        
  4.1   Form of Common Stock Certificate

 

4.2

 

Form of Warrant to Purchase Preferred Stock, dated January 7, 2008

 

4.3

 

Preferred Stock Purchase Warrant, dated October 25, 2011, issued to Lighthouse Capital Partners VI, L.P.

 

4.4

 

Preferred Stock Purchase Warrant, dated September 30, 2013, issued to Ares Capital Corporation
        
  4.5   Fourth Amended and Restated Registration Rights Agreement
        
  5.1 * Opinion of Ropes & Gray LLP
        
  10.1   Form of Director Indemnification Agreement
        
  10.2 + Amended and Restated Exclusive License Agreement between Children's Medical Center Corporation and Genocea Biosciences, Inc., dated March 23, 2012
        
  10.3 + Amended and Restated License Agreement between Genocea Biosciences, Inc. and President and Fellows of Harvard College, dated November 19, 2012
        
  10.4 + License and Collaboration Agreement between Genocea Biosciences, Inc. and Isconova AB, dated August 5, 2009, as amended on March 19, 2010, June 18, 2010, August 17, 2010, October 19, 2011 and February 6, 2012
        
  10.5 + Exclusive License Agreement for Escherichia Coli K12 to Deliver Protein to the Macrophage Cytosol between Genocea Biosciences, Inc. and The Regents of the University of California, dated August 18, 2006
        
  10.6 + Patent License Agreement between Genocea Biosciences, Inc. and University of Washington dated January 27, 2010, as amended on July 19, 2012

 

10.7

 

Loan and Security Agreement, dated September 30, 2013, by and between Ares Capital Corporation and Genocea Biosciences, Inc.

 

10.8

 

Lease, dated as of July 3, 2012, between TBCI, LLC and Genocea Biosciences, Inc.

 

10.9

 

Agreement Regarding Sublease, dated as of July 9, 2012, by TBCI, LLC, FoldRx Pharmaceuticals, Inc., Pfizer Inc. and Genocea Biosciences, Inc.

 

10.10

 

Genocea Biosciences, Inc. Amended and Restated 2007 Equity Incentive Plan, as amended on June 24, 2013
        
  10.11 Consulting Agreement between Genocea Biosciences, Inc. and George Siber, dated May 16, 2007, as amended on June 30, 2009, December 16, 2010, June 15, 2011 and June 5, 2013
        
  10.12 Employment Letter Agreement between William Clark and Genocea Biosciences, Inc., dated March 7, 2011
 
   

Table of Contents

Exhibit
Number
  Exhibit Index
  10.13 Employment Letter Agreement between Seth Hetherington, M.D. and Genocea Biosciences, Inc., dated October 4, 2010
        
  10.14 Employment Letter Agreement between Paul Giannasca, Ph.D. and Genocea Biosciences, Inc., dated December 21, 2009, as amended on October 24, 2011
        
  10.15 †* Genocea Biosciences, Inc. 2014 Equity Incentive Plan
        
  10.16 †* Genocea Biosciences, Inc. Cash Incentive Plan
        
  10.17 Genocea Biosciences, Inc. Cash Bonus Program for Fiscal Years 2012 and 2013
        
  10.18 + Amendment No. 2 to Patent License Agreement between Genocea Biosciences, Inc. and University of Washington dated September 12, 2012
        
  10.19 + Amendment No. 3 to Patent License Agreement between Genocea Biosciences, Inc. and University of Washington dated November 7, 2013
        
  10.20 Form of Nonstatutory Stock Option Granted Under Genocea Biosciences, Inc.'s 2007 Equity Incentive Plan
        
  10.21 Form of Incentive Stock Option Granted Under Genocea Biosciences, Inc.'s 2007 Equity Incentive Plan
        
  23.1   Consent of Ernst & Young LLP
        
  23.2 * Consent of Ropes & Gray LLP (included in Exhibit 5.1)

*
To be filed by amendment.

Indicates a management contract or compensatory plan.

+
Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment and this exhibit has been submitted separately to the SEC.



Exhibit 3.3

 

FOURTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

 

OF

 

GENOCEA BIOSCIENCES, INC.

 

Genocea Biosciences, Inc., a corporation organized and existing under the laws of the state of Delaware (this “ Corporation ”), hereby certifies as follows:

 

1.                                       This Corporation’s original Certificate of Incorporation was filed with the Secretary of State of Delaware on August 16, 2006 under the name “Genocea, Inc.” and was amended and restated on December 21, 2006, on February 10, 2009 and on December 17, 2010.

 

2.                                       This Fourth Amended and Restated Certificate of Incorporation (the “ Certificate of Incorporation ”) has been duly adopted by this Corporation’s Board of Directors and stockholders in accordance with the applicable provisions of Sections 228, 242 and 245 of the General Corporation Law of the State of Delaware.

 

3.                                       The Certificate of Incorporation of this Corporation is hereby amended and restated to read in full as follows:

 

FIRST :  The name of the corporation is Genocea Biosciences, Inc.

 

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, Delaware 19801 and 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 of Delaware.

 

FOURTH : The total number of shares of all classes of stock which the Corporation has authority to issue is 319,961,649 shares, consisting of 191,000,000  shares of common stock, par value $.001 per share (the “ Common Stock ”), and 128,961,649 shares of preferred stock, of which 4,615,385 shares of preferred stock are designated Seed Convertible Preferred Stock, par value $.001 per share (the “ Seed Preferred Stock ”), 36,661,538 shares of preferred stock are designated Series A Convertible Preferred Stock, par value $.001 per share (the “ Series A Preferred Stock ”), 35,098,520 shares of preferred stock are designated Series B Convertible Preferred Stock par value $.001 per share (the “ Series B Preferred Stock ”) and 52,586,206 shares of preferred stock are designated Series C Convertible Preferred Stock, par value $.001 per share (the “ Series C Preferred Stock ” and, together with the Seed Preferred Stock, the Series A Preferred Stock and the Series B Preferred Stock, the “ Preferred Stock ”).

 

The powers, preferences and rights, and the qualifications, limitations or restrictions thereof, in respect of each class or series of stock of the Corporation shall be as follows:

 



 

Section 1.   Liquidation Rights .

 

(a)                                  Liquidation Payments .

 

(i)                                      In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary (a “ Liquidation ”),  the holders of shares of the Series C Preferred Stock and the Series B Preferred Stock shall be entitled to be paid, prior and in preference to any distribution of any of the assets of the Corporation to the holders of Series A Preferred Stock, Seed Preferred Stock or Common Stock by reason of their ownership thereof, out of the assets of the Corporation available for distribution to holders of the Corporation’s capital stock of all classes, the amount of $0.58 per share of Series C Preferred Stock and $0.58 per share of Series B Preferred Stock (in each case, which amounts shall be subject to equitable adjustment whenever there shall occur a stock dividend, stock split, combination of shares, reclassification or other similar event with respect to the Series C Preferred Stock or the Series B Preferred Stock, as applicable) plus all dividends accrued and/or declared thereon but unpaid, to and including the date full payment shall be tendered to the holders of the Series C Preferred Stock and the Series B Preferred Stock, with respect to such liquidation, dissolution or winding up (the aggregate amount payable to all holders of Series C Preferred Stock in respect of all shares of Series C Preferred Stock pursuant to this Section 1(a)(i) of this Article FOURTH, the “ Series C Liquidation Payment ” and the aggregate amount payable to all holders of Series B Preferred Stock in respect of all shares of Series B Preferred Stock pursuant to this Section 1(a)(i) of this Article FOURTH, the “ Series B Liquidation Payment ”).

 

If the assets of the Corporation shall be insufficient to permit the payment in full to the holders of the Series C Preferred Stock and the Series B Preferred Stock of all amounts so distributable to them, then the entire assets of the Corporation available for such distribution shall be distributed ratably among the holders of the Series C Preferred Stock and the Series B Preferred Stock on a pari passu basis in proportion to the full preferential amount each such holder is otherwise entitled to receive under this Section 1(a)(i) of this Article FOURTH.

 

No payment shall be made with respect to the Series A Preferred Stock, the Seed Preferred Stock or the Common Stock unless and until full payment has been made to the holders of the Series C Preferred Stock and the Series B Preferred Stock of the amounts they are entitled to receive under this Section 1(a)(i) of this Article FOURTH.

 

(ii)                                   After the payments under Section 1(a)(i) of this Article FOURTH have been made in full to the holders of the Series C Preferred Stock and the Series B Preferred Stock, or funds necessary for such payments shall have been set aside by the Corporation in trust for the account of holders of Series C Preferred Stock and Series B Preferred Stock so as to be available for such payments, the holders of shares of the Series A Preferred Stock shall be entitled to be paid, prior and in preference to any distribution of any of the assets of the Corporation to the holders of Seed Preferred Stock or Common Stock by reason of their ownership thereof, out of the remaining assets of the Corporation available for distribution to holders of the Corporation’s capital stock of all classes, the amount of $0.65 per share of Series A Preferred Stock (which amount shall be subject to equitable adjustment whenever there shall occur a stock dividend, stock split, combination of shares, reclassification or other similar

 

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event with respect to the Series A Preferred Stock) plus all dividends accrued and/or declared thereon but unpaid, to and including the date full payment shall be tendered to the holders of the Series A Preferred Stock, with respect to such liquidation, dissolution or winding up (the aggregate amount payable to all holders of Series A Preferred Stock in respect of all shares of Series A Preferred Stock pursuant to this Section 1(a)(ii) of this Article FOURTH, the “ Series A Liquidation Payment ”).

 

If after prior payment in full of the payments to the holders of the Series C Preferred Stock and the Series B Preferred Stock under Section 1(a)(i) of this Article FOURTH the assets of the Corporation shall be insufficient to permit the payment in full to the holders of the Series A Preferred Stock of all amounts so distributable to them, then the entire assets of the Corporation available for such distribution shall be distributed ratably among the holders of the Series A Preferred Stock in proportion to the full preferential amount each such holder is otherwise entitled to receive under this Section 1(a)(ii) of this Article FOURTH.

 

No payment shall be made with respect to the Seed Preferred Stock or the Common Stock unless and until full payment has been made to the holders of the Series A Preferred Stock of the amounts they are entitled to receive under this Section 1(a)(ii) of this Article FOURTH.

 

(iii)                                After the payments under Section 1(a)(ii) of this Article FOURTH have been made in full to the holders of the Series A Preferred Stock, or funds necessary for such payments shall have been set aside by the Corporation in trust for the account of holders of Series A Preferred Stock so as to be available for such payments,  the holders of shares of the Seed Preferred Stock shall be entitled to be paid, prior and in preference to any distribution of any of the assets of the Corporation to the holders of Common Stock by reason of their ownership thereof, out of the remaining assets of the Corporation available for distribution to holders of the Corporation’s capital stock of all classes, an amount of $0.65 per share of Seed Preferred Stock (which amount shall be subject to equitable adjustment whenever there shall occur a stock dividend, stock split, combination of shares, reclassification or other similar event with respect to the Seed Preferred Stock) plus all dividends declared thereon but unpaid, to and including the date full payment shall be tendered to the holders of the Seed Preferred Stock, with respect to such liquidation, dissolution or winding up (the aggregate amount payable to all holders of Seed Preferred Stock in respect of all shares of Seed Preferred Stock pursuant to this Section 1(a)(iii) of this Article FOURTH, the “ Seed Liquidation Payment ”).

 

If after prior payment in full of the payments to the holders of the Series A Preferred Stock under Section 1(a)(ii) of this Article FOURTH the assets of the Corporation shall be insufficient to permit the payment in full to the holders of the Seed Preferred Stock of all amounts so distributable to them, then the assets of the Corporation available for such distribution shall be distributed ratably among the holders of the Seed Preferred Stock in proportion to the full preferential amount each such holder is otherwise entitled to receive under this Section 1(a)(iii) of this Article FOURTH.

 

No payment shall be made with respect to the Common Stock unless and until full payment has been made to the holders of the Seed Preferred Stock of the amounts they are entitled to receive under this Section 1(a)(iii) of this Article FOURTH.

 

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(iv)                               After the payments under Section 1(a)(iii) of this Article FOURTH have been made in full to the holders of the Seed Preferred Stock, or funds necessary for such payments shall have been set aside by the Corporation in trust for the account of holders of Seed Preferred Stock so as to be available for such payments, the remaining assets of the Corporation available for distribution shall be distributed among the holders of the Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock and Common Stock ratably in proportion to the number of shares of Common Stock then held by each such holder on an as converted basis.

 

(v)                                  Upon conversion of shares of Preferred Stock into shares of Common Stock pursuant to Section 2 of this Article FOURTH below, the holders of such Common Stock shall not be entitled to any preferential payment or distribution in case of any liquidation, dissolution or winding up, but shall share ratably in any distribution of the assets of the Corporation to all the holders of Common Stock as provided under Section 1(a)(iv) of this Article FOURTH.

 

(vi)                               The Series C Liquidation Payment, the Series B Liquidation Payment, the Series A Liquidation Payment and the Seed Liquidation Payment payable with respect to shares of Preferred Stock under this Section 1(a) of this Article FOURTH are sometimes hereinafter referred to as “ Preferred Stock Liquidation Payments ”.

 

(b)                                  Distributions Other than Cash .  Whenever any portion of the distributions provided for in this Section 1 of this Article FOURTH shall be payable in property other than cash, the value of such property shall be assessed as the fair market value of such property as determined in good faith by the Board of Directors of the Corporation. The Corporation shall give prompt written notice of such valuation (including the methods used to determine the valuation), to each holder of Preferred Stock.

 

(c)                                   Merger as Liquidation, etc The merger or consolidation of the Corporation into or with another corporation (except one in which the holders of capital stock of the Corporation immediately prior to such merger or consolidation continue to hold a majority in voting power of the capital stock of the surviving corporation (or, if the surviving corporation is a wholly-owned subsidiary, its parent), in which case the provisions of Section 2(h) of this Article FOURTH shall apply), or exclusive license of all or substantially all of the intellectual property of the Corporation without field or material geographic restriction or the sale, lease, transfer or other disposition of all or substantially all of the assets of the Corporation, shall be deemed to be a liquidation, dissolution or winding up of the affairs of the Corporation (a “ Deemed Liquidation ”) for purposes of this Section 1 of this Article FOURTH with respect to the Series C Preferred Stock, the Series B Preferred Stock, the Series A Preferred Stock and the Seed Preferred Stock, unless the holders of at least sixty-six percent (66%) of the then outstanding shares of Series B Preferred Stock and Series C Preferred Stock elect to the contrary; such election to be made by giving notice thereof to the Corporation at least three days before the effective date of such event.  If such notice is given with respect to the Preferred Stock, the provisions of Section 2(h) of this Article FOURTH shall apply.  Unless such election is made with respect to the Preferred Stock, any amounts received by the holders of such Preferred Stock as a result of such merger, consolidation or other transaction shall be deemed to be applied toward, and all consideration received by the Corporation in such merger, consolidation, license, lease, asset sale or other disposition under this Section 1(c) of this Article FOURTH together

 

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with all other available assets of the Corporation shall be distributed toward, to the extent necessary, the Preferred Stock Liquidation Payments in accordance with Section 1 of this Article FOURTH.

 

(d)                                  Notice .  In the event the Corporation shall propose to undertake any liquidation, dissolution or winding up of the affairs of the Corporation including any Deemed Liquidation, the Corporation shall, within ten (10) days after the date the Board of Directors approves such action or twenty (20) days prior to any stockholders’ meeting called to approve such action, whichever is earlier, give each holder of Preferred Stock initial written notice of the proposed action.  Such initial written notice shall describe the material terms and conditions of such proposed action, including a description of the stock, cash and property to be received by the holders of the Preferred Stock and the Common Stock upon consummation of the proposed action and the proposed date of delivery thereof.  If any material change in the facts set forth in the initial notice shall occur, the Corporation shall promptly give each holder of Preferred Stock written notice of such material change.  The Corporation shall not consummate any such proposed liquidation, dissolution or winding up before the expiration of thirty (30) days after the mailing of the initial notice or twenty (20) days after the mailing of any subsequent written notice, whichever is later, provided that any such 30-day or 20-day period may be shortened or waived upon the written consent of the holders of at least sixty-six percent (66%) of the outstanding shares of Series B Preferred Stock and Series C Preferred Stock.  Any holder of outstanding shares of Preferred Stock may waive (as to itself) any notice required by this Section by a written instrument specifically indicating such waiver.

 

(e)                                   Effect of Noncompliance .  In the event the requirements of Section 1(d) of this Article FOURTH are not complied with, the Corporation shall forthwith either cause the closing of the Deemed Liquidation to be postponed until the requirements of such sections have been complied with, or cancel such Deemed Liquidation (to the extent possible under applicable law), in which event the rights, preferences, privileges and restrictions of the holders of Preferred Stock shall revert to and be the same as such rights, preferences, privileges and restrictions existing immediately prior to the date of the first notice referred to in Section 1(d) of this Article FOURTH.

 

(f)                                    Acquisitions Involving Earn-Outs or Multiple Payments .  Notwithstanding Section 1(a) or Section 1(c) of this Article FOURTH, in the event of a Deemed Liquidation in which (y)(1) the consideration (to be) received or (to be) paid does not occur at a single closing, but instead occurs (or is to occur) on more than one occasion (e.g., in a transaction involving earn-out payments) and (2) the up front payment (to be) received at the closing is less than the aggregate Preferred Stock Liquidation Payments and/or (z) any portion of the consideration (to be) payable to the stockholders of the Corporation is placed into an escrow, held back and/or is payable to the stockholders of the Corporation subject to contingencies, then in lieu of the amounts and priorities set forth in Section 1(a) of this Article FOURTH, distributions to the holders of Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock or Seed Preferred Stock, as applicable, shall be made in accordance with the following priorities as such consideration is received:

 

(i)                                      First, to the holders of Series C Preferred Stock and Series B Preferred Stock in accordance with the provisions of Section 1(a)(i) of this Article FOURTH

 

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until the holders of Series C Preferred Stock and Series B Preferred Stock have received an aggregate amount equal to the Series C Liquidation Payment and the Series B Liquidation Payment, as applicable;

 

(ii)                                   Second, to the holders of Series A Preferred Stock in accordance with the provisions of Section 1(a)(ii) of this Article FOURTH until the holders of Series A Preferred Stock have received an aggregate amount equal to the Series A Liquidation Payment;

 

(iii)                                Third, to the holders of Seed Preferred Stock in accordance with the provisions of Section 1(a)(iii) of this Article FOURTH until the holders of Seed Preferred Stock have received an aggregate amount equal to the Seed Liquidation Payment; and

 

(iv)                               Fourth, after the payment of all amounts required to be paid in accordance with clauses (i), (ii) and (iii) above, any funds and assets legally available (or that become available) for distribution, if any, shall be distributed among the holders of Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock and Common Stock in accordance with the provisions of Section 1(a)(iv) of this Article FOURTH;

 

Provided if the amount which any holder of shares of the Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock or Seed Preferred Stock would receive if such holder converted all such shares of Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock or Seed Preferred Stock, as the case may be, into Common Stock immediately prior to such Deemed Liquidation, in accordance with this Section 1(f) of this Article FOURTH with respect to the shares of Common Stock issuable upon conversion of such shares of Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock or Seed Preferred Stock, as the case may be, is greater than the amount such holder would receive if such holder did not so convert such shares of Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock or Seed Preferred Stock, as the case may be, then such holder shall be entitled to be paid such greater amount out of the assets available for distribution in accordance with Section 1(f)(iv) of this Article FOURTH.  For the avoidance of doubt, if, in connection with a Deemed Liquidation, a holder of Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock or Seed Preferred Stock receives payments on its shares of Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock or Seed Preferred Stock, as the case may be, pursuant to this paragraph, then such holder shall not be entitled to also receive the amount payable on its shares of Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock or Seed Preferred Stock, as the case may be, pursuant to Sections 1(f)(i) through 1(f)(iii) of this Article FOURTH.

 

Section 2.   Conversion .  The holders of Preferred Stock shall have conversion rights as follows (the “ Conversion Rights ”):

 

(a)                                  Right to Convert; Conversion Price .  Each share of Preferred Stock shall be convertible, without the payment of any additional consideration by the holder thereof and at the option of the holder thereof, at any time after the date of issuance of such share, at the office of the Corporation or any transfer agent for the Preferred Stock, into such number of fully paid and non-assessable shares of Common Stock as is determined by dividing $0.58 (with respect to the Series C Preferred Stock) (the “ Series C Original Issue Price ”); $0.58 plus all accrued but

 

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unpaid dividends on the date of conversion (with respect to the Series B Preferred Stock) (the “ Series B Original Issue Price ”), provided, however, that all holders of Series B Preferred Stock shall receive such dividends in cash at the time of conversion upon such an election by the holders of at least sixty percent (60%) of the outstanding shares of Series B Preferred Stock, in which case the Series B Original Issue Price shall be $0.58; $0.65 (with respect to the Series A Preferred Stock) (the “ Series A Original Issue Price ”); and $0.65 (with respect to Seed Preferred Stock) (each as adjusted for any stock dividend, stock split, combination of shares, reclassification or other similar event with respect to the Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock and Seed Preferred Stock) by the Series C Conversion Price, Series B Preferred Conversion Price, Series A Preferred Conversion Price and Seed Preferred Conversion Price, respectively, determined as hereinafter provided, in effect at the time of conversion.  The Series C Preferred Conversion Price (the “ Series C Conversion Price ”) shall initially be $0.58 per share.  The Series B Preferred Conversion Price (the “ Series B Preferred Conversion Price ”) shall initially be $0.58 per share.  The Series A Preferred Conversion Price (the “ Series A Preferred Conversion Price ”) shall initially be $0.65 per share.  The Seed Preferred Conversion Price (the “ Seed Preferred Conversion Price ”) shall initially be $0.65 per share.  The Series C Preferred Conversion Price, Series B Preferred Conversion Price, Series A Preferred Conversion Price and Seed Preferred Conversion Price are collectively referred to as the “ Preferred Conversion Price .”  Each such initial Preferred Conversion Price shall be subject to adjustment, in order to adjust the number of shares of Common Stock into which the Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock and Seed Preferred Stock are convertible, as hereinafter provided.

 

The right of conversion with respect to any shares of Preferred Stock which shall have been called for redemption under Section 6 of this Article FOURTH shall terminate at the close of business on the day fixed for redemption unless the Corporation shall default in the payment of the redemption price, in which case the right of conversion with respect to such shares shall continue unless and until such redemption price is paid in full.

 

(b)                                  Automatic Conversion .

 

(i)                                      Each share of Preferred Stock shall automatically be converted into shares of Common Stock at the applicable Preferred Conversion Price then in effect, as the case may be, and any declared but unpaid dividends or in the case of Series B Preferred Stock, accrued but unpaid dividends elected to be paid in cash in accordance with Section 2(a) of this Article FOURTH, shall be paid in cash, upon the closing of a firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, underwritten by a nationally recognized underwriter that is satisfactory to the holders of at least sixty-six percent (66%) of the then outstanding shares of Series B Preferred Stock and Series C Preferred Stock, covering the offer and sale of Common Stock for the account of the Corporation to the public at an offering price per share (after all underwriters’ discounts and commissions, if any) of at least three (3) times the Series C Original Issue Price with net proceeds to the Corporation of not less than $40,000,000 (in the event of which offering, the person(s) entitled to receive the Common Stock issuable upon such conversion of the Preferred Stock shall not be deemed to have converted the Preferred Stock until the closing of such offering) (such public offering, a “ Qualified IPO ”).

 

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(ii)                                   Each share of Preferred Stock shall automatically be converted into shares of Common Stock at the applicable Preferred Conversion Price then in effect, as the case may be, and any dividends declared but unpaid thereon, and, in the case of the Series B Preferred Stock, accrued dividends to the extent an election has been made to be paid such dividends in cash in accordance with Section 2(a) of this Article FOURTH, shall be paid, upon the written election of the holders of at least sixty-six percent (66%) of the then outstanding shares of Preferred Stock to require such mandatory conversion on the date or event specified by such stockholders.

 

(c)                                   Mechanics of Automatic Conversions .  Upon the occurrence of an event specified in Section 2(b) of this Article FOURTH, the Preferred Stock to be converted shall be converted automatically without any further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent; provided , however , that all holders of shares of Preferred Stock being converted shall be given written notice of the occurrence of the event specified in Section 2(b) of this Article FOURTH triggering such conversion, including the date such event occurred (the “ Mandatory Conversion Date ”), and the Corporation shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon such conversion unless certificates evidencing such shares of Preferred Stock being converted are either delivered to the Corporation or its transfer agent, or the holder notifies the Corporation or any transfer agent that such certificates have been lost, stolen, or destroyed and executes an agreement satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection therewith (such certificate, a “ Certificate of Loss ”).  On the Mandatory Conversion Date, all rights with respect to the Preferred Stock so converted shall terminate (except any of the rights of the holder thereof as a holder of Common Stock pursuant to this Certificate of Incorporation or otherwise agreed to between such holder and the Corporation or the other holders of the Corporation’s stock) upon surrender of the holder’s certificate or certificates therefor (or a Certificate of Loss), other than such holder’s rights to receive certificates for the number of shares of Common Stock into which such Preferred Stock has been converted, together (in the case of Sections 2(b)(i) and 2(b)(ii)) with cash in an amount equal to all dividends declared but unpaid on, and, in the case of the Series B Preferred Stock, accrued dividends to the extent an election has been made to be paid such dividends in cash in accordance with Section 2(a) of this Article FOURTH, and any and all other amounts owing with respect to, the shares of Preferred Stock converted to and including the time of conversion.  Upon the automatic conversion of the Preferred Stock pursuant to Section 2(b) of this Article FOURTH, the holders of such Preferred Stock shall surrender the certificates representing such shares (or a Certificate of Loss) at the office of the Corporation or of its transfer agent.  If required of the holders by the Corporation, 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 the holder’s attorney duly authorized in writing.  Upon surrender of such certificates there shall be issued and delivered to such holder, or to such holder’s nominee or nominees, promptly, a certificate or certificates for the number of shares of Common Stock into which the shares of Preferred Stock surrendered were convertible on the Mandatory Conversion Date, together with cash in an amount equal to all dividends declared but unpaid on, and, in the case of the Series B Preferred Stock, accrued dividends to the extent an election has been made to be paid such dividends in cash in accordance with Section 2(a) of this Article FOURTH, and any and all other amounts owing with respect to, the shares of Preferred Stock being converted to and including the time of

 

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conversion. Upon the automatic conversion of the Preferred Stock, all shares of Preferred Stock being converted by any holder thereof shall be aggregated for the purpose of determining the number of shares of Common Stock to which such holder shall be entitled, and no fractional shares of Common Stock shall be issued.  In lieu of any fractional share to which the holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the fair market value of the Common Stock on the Mandatory Conversion Date, as reasonably determined by the Board of Directors in good faith.

 

(d)                                  Mechanics of Optional Conversions .  Before any holder of Preferred Stock shall be entitled to convert the same into shares of Common Stock, the holder shall surrender the certificate or certificates therefor at the office of the Corporation or of any transfer agent designated by the Corporation, or the holder shall notify the Corporation or any transfer agent that such certificates have been lost, stolen, or destroyed and execute a Certificate of Loss, and shall give written notice to the Corporation at such time that the holder elects to convert his or her Preferred Stock and shall state therein (a) the number of Preferred Stock shares to be so converted and (b) the holder’s name or the name or names of the holder’s nominees in which the holder wishes the certificate or certificates for shares of Common Stock to be issued.  On the date of conversion, all rights with respect to the Preferred Stock so converted shall terminate (except any of the rights of the holder thereof as a holder of Common Stock pursuant to this Certificate of Incorporation or otherwise agreed to between such holder and the Corporation or the other holders of the Corporation’s stock) upon surrender of the holder’s certificate or certificates therefor, other than such holder’s rights to receive certificates for the number of shares of Common Stock into which such Preferred Stock has been converted and cash in an amount equal to all dividends declared but unpaid on, and, in the case of the Series B Preferred Stock, accrued dividends to the extent an election has been made to be paid such dividends in cash in accordance with Section 2(a) of this Article FOURTH, and any and all other amounts owing with respect to, the shares of Preferred Stock being converted to and including the time of conversion.  If so required by the Corporation, 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 the holder’s attorney duly authorized in writing.  Upon the optional conversion of the Preferred Stock, all shares of Preferred Stock being converted by any holder thereof shall be aggregated for the purpose of determining the number of shares of Common Stock to which such holder shall be entitled, and no fractional shares of Common Stock shall be issued.  In lieu of any fractional share to which the holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the fair market value of the Common Stock on the date of conversion, as reasonably determined by the Board of Directors in good faith. The Corporation shall, promptly after surrender of the certificate or certificates for conversion, issue and deliver to such holder, or to the holder’s nominee or nominees, a certificate or certificates for the number of shares of Common Stock to which the holder shall be entitled as aforesaid, together with cash in lieu of any fraction of a share and cash in an amount equal to all dividends declared but unpaid thereon and, in the case of the Series B Preferred Stock, accrued dividends to the extent an election has been made to be paid such dividends in cash in accordance with Section 2(a) of this Article FOURTH, and any and all other amounts owing with respect thereto at such time together with a certificate for the remaining number of shares of Preferred Stock if less than all of the shares of Preferred Stock evidenced by the certificate or certificates were converted.  Unless otherwise specified by the holder in the written notice of conversion, such conversion shall be deemed to

 

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have been made immediately prior to the close of business on the date of surrender of the shares of Preferred Stock to be converted, and the person or persons entitled to receive the shares of Common Stock issuable upon conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date.

 

(e)                                   Adjustments to Preferred Conversion Price for Diluting Issues .

 

(i)                                      Special Definitions .  For purposes of this Section 2(e) of this Article FOURTH, the following definitions shall apply:

 

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

 

(2)                                  Original Issue Date ” shall mean the first date on which a share of Series C Preferred Stock is issued.

 

(3)                                  Convertible Securities ” shall mean any evidences of indebtedness, shares of capital stock (other than Common Stock) or other securities directly or indirectly convertible into or exchangeable for Common Stock.

 

(4)                                  Additional Shares of Common Stock ” shall mean all shares of Common Stock issued (or, pursuant to Section 2(e)(iii) of this Article FOURTH, deemed to be issued) by the Corporation after the Original Issue Date, other than:

 

(A)                                shares of Common Stock issued or issuable upon conversion of shares of Seed Preferred Stock, Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock and shares of Common Stock, Options or Convertible Securities issued as a dividend or distribution on Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock;

 

(B)                                until such time as at least 52,586,206 shares of Series C Preferred Stock have been issued, up to 13,142,500 shares of Common Stock and thereafter up to 22,127,159 shares of Common Stock, in each case, issued or issuable to employees, consultants or directors of the Corporation pursuant to a stock purchase or stock option plan or other employee stock bonus arrangement approved by a majority of the Corporation’s Board of Directors, including at least a majority of the Preferred Stock Directors (as hereinafter defined); provided that such numbers may be adjusted upward with the approval of the holders of at least sixty-six percent (66%) of the Series B Preferred Stock and Series C Preferred Stock then outstanding;

 

(C)                                shares of Common Stock issued in consideration for the acquisition or licensing of technology or a corporate partnership transaction, if approved by the Board of Directors, including at least a majority of the Preferred Stock Directors;

 

(D)                                shares of Common Stock issued in equipment leasing or other debt financing transactions, if approved by the Board of Directors, including at least a majority of the Preferred Stock Directors; and

 

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(E)                                 shares of Common Stock issued in the Corporation’s initial public offering.

 

(ii)                                   No Adjustment of Preferred Conversion Price .  Except as set forth in Section 2(e)(vi) of this Article FOURTH, no adjustment in the number of shares of Common Stock into which the Preferred Stock is convertible shall be made, by adjustment to the applicable Preferred Conversion Price in respect of the issuance of Additional Shares of Common Stock (a) unless the consideration per share for an Additional Share of Common Stock (determined pursuant to Section 2(e)(v) of this Article FOURTH) issued or deemed to be issued by the Corporation is less than the applicable Preferred Conversion Price, in effect on the date of, and immediately prior to, the issue of such Additional Share of Common Stock or (b) if prior to such issuance or within twenty (20) days thereafter the Corporation receives written notice from the holders of at least sixty percent (60%) of the outstanding shares of the applicable series of Preferred Stock that no such adjustment in the Preferred Conversion Price for such series of Preferred Stock shall be made.

 

(iii)                                Issue of Securities Deemed Issue of Additional Shares of Common Stock .

 

(1)                                  Options and Convertible Securities .  In the event the Corporation at any time or from time to time after the Original Issue Date shall issue any Options (excluding for all purposes of this Section 2(e)(iii)(1) of this Article FOURTH Options excluded from the definition of Additional Shares of Common Stock in Section 2(e)(vii)(4)(B) of this Article FOURTH) or Convertible 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 (as set forth in the instrument relating thereto without regard to any provisions contained therein for a subsequent adjustment of such number) of Common Stock 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 (assuming the satisfaction of any conditions to convertibility, exercisability or exchangeability, including without limitation, the passage of time), and the applicable Preferred Conversion Price shall be adjusted accordingly, provided that in any such case in which Additional Shares of Common Stock are deemed to be issued:

 

(A)                                no further adjustment in the applicable Preferred Conversion Price shall be made upon the subsequent issue of Convertible Securities or shares of Common Stock upon the exercise of such Options or conversion or exchange of such Convertible Securities;

 

(B)                                if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase or decrease in the consideration payable to the Corporation, or increase or decrease in the number of shares of Common Stock issuable, upon the exercise, conversion or exchange thereof, the applicable Preferred Conversion Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon

 

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any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options or the rights of conversion or exchange under such Convertible Securities;

 

(C)                                upon the expiration of any such Options or any rights of conversion or exchange under such Convertible Securities which shall not have been exercised, the applicable Preferred Conversion Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon such expiration, be recomputed as if:

 

(I)                                    In the case of Convertible Securities or Options for Common Stock, the only Additional Shares of Common Stock issued were the shares of Common Stock, if any, actually issued upon the exercise of such Options or the conversion or exchange of such Convertible Securities and the consideration received therefor was the consideration actually received by the Corporation for the issue of all such Options, whether or not exercised, plus the consideration actually received by the Corporation upon such exercise, or for the issue of all such Convertible Securities which were actually converted or exchanged, plus the additional consideration, if any, actually received by the Corporation upon such conversion or exchange; and

 

(II)                               in the case of Options for Convertible Securities only the Convertible Securities, if any, actually issued upon the exercise thereof were issued at the time of issue of such Options, and the consideration received by the Corporation for the Additional Shares of Common Stock deemed to have been then issued was the consideration actually received by the Corporation for the issue of all such Options, whether or not exercised, plus the consideration deemed to have been received by the Corporation (determined pursuant to Section 2(e)(v) of this Article FOURTH) upon the issue of the Convertible Securities with respect to which such Options were actually exercised;

 

(D)                                no readjustment pursuant to clause (B) or (C) above shall have the effect of increasing the applicable Preferred Conversion Price to an amount which exceeds the lower of (i) the applicable Preferred Conversion Price on the original adjustment date, or (ii) the applicable Preferred Conversion Price that would have resulted from any issuance of Additional Shares of Common Stock between the original adjustment date and such readjustment date (in each case as adjusted for any stock dividend, stock split, combination of shares, reclassification or other similar event);

 

(E)                                 if such record date shall have been fixed and such Options or Convertible Securities are not issued on the date fixed therefor, the adjustment previously made in the applicable Preferred Conversion Price which became effective on such record date shall be canceled as of the close of business on such record date, and thereafter the applicable Preferred Conversion Price shall be adjusted pursuant to this Section 2(e)(iii) of this Article FOURTH as of the actual date of their issuance.

 

(2)                                  Stock Dividends, Stock Distributions and Subdivisions .  In the event the Corporation at any time or from time to time after the Original Issue Date shall declare or pay any dividend or make any other distribution on the Common Stock payable in

 

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Common Stock or effect a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in Common Stock), then and in any such event, Additional Shares of Common Stock shall be deemed to have been issued with respect to the Preferred Stock:

 

(A)                                in the case of any such dividend or distribution, immediately after the close of business on the record date for the determination of holders of any class of securities entitled to receive such dividend or distribution, or

 

(B)                                in the case of any such subdivision, at the close of business on the date immediately prior to the date upon which such corporate action becomes effective.

 

If such record date shall have been fixed and no part of such dividend or distribution shall have been paid on the date fixed therefor, the adjustment previously made to the applicable Preferred Conversion Price which became effective on such record date shall be canceled as of the close of business on such record date, and thereafter the applicable Preferred Conversion Price shall be adjusted pursuant to this Section 2(e)(iii) of this Article FOURTH as of the time of actual payment of such dividend or distribution.

 

(3)                                  Dilutive Financing .  In the event of any merger, business combination, acquisition of a company or its assets, sale of the Corporation’s assets to a third party or a similar transaction, irrespective of corporate form, (A) that the Corporation enters into primarily for the purpose, as determined by the Board of Directors of the Corporation in good faith, of allowing the Corporation to access the cash of a third party and (B) that has an effective consideration per share to the Corporation (based on the cash of such third party accessed by such transaction at the consummation of such transaction divided by the number of Additional Shares of Common Stock issued by the Corporation in such transaction) of less than the Series C Preferred Conversion Price in effect on the date of and immediately prior to such transaction, such transaction shall be considered an issuance of Additional Shares of Common Stock subject to Section 2(e) of this Article FOURTH.

 

(iv)                               Adjustment of Preferred Conversion Price Upon Issuance of Additional Shares of Common Stock .

 

(1)                                  In the event the Corporation shall at any time after the Original Issue Date and prior to the date of a Trigger Financing (as defined below) issue Additional Shares of Common Stock, without consideration or for a consideration per share less than the applicable Series C Conversion Price in effect immediately prior to such issue, then, in lieu of an adjustment under Section 2(e)(iv)(2) of this Article FOURTH, the Series C Conversion Price shall be reduced, concurrently with such issue, to the consideration per share received by the Corporation for such issue or deemed issue of the Additional Shares of Common Stock; provided that if such issuance or deemed issuance was without consideration, then the Corporation shall be deemed to have received an aggregate of $.001 of consideration for all such Additional Shares of Common Stock issued or deemed to be issued.  For purposes of this Section 2(e)(iv)(1), “ Trigger Financing ” shall mean the first to occur of (A) any sale of equity securities by the Corporation to institutional investors, at least one of which is not, at the time of such sale,

 

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a stockholder of the Corporation (the “ New Investor ”) in a transaction (x)  yielding gross proceeds to the Corporation of at least $15,000,000 and (y) in which the New Investor invests no less than $7,000,000 in such equity securities or (B) any sale of equity securities by the Corporation in a transaction deemed to be a Trigger Financing hereunder by the Corporation’s Board of Directors (including the affirmative vote of the JJDC Director (as defined in the Second Amended and Restated Voting Agreement dated on or about September 28, 2012, among the Corporation and certain of its stockholders, as may be amended from time to time (the “ Voting Agreement ”)), for so long as Johnson & Johnson Development Corporation or its successors or assigns is entitled to designate a director of the Corporation pursuant to the Voting Agreement or the Skyline Director (as defined in the Voting Agreement) for so long as Skyline Venture Partners V, L.P. or its successors or assigns is entitled to designate a director of the Corporation pursuant to the Voting Agreement).

 

(2)                                  Subject to Section 2(e)(iv)(1) of this Article FOURTH, in the event that at any time or from time to time after the Original Issue Date, the Corporation shall issue Additional Shares of Common Stock (including, without limitation, Additional Shares of Common Stock deemed to be issued pursuant to Section 2(e)(iii)(1) of this Article FOURTH but excluding Additional Shares of Common Stock deemed to be issued pursuant to Section 2(e)(iii)(2) of this Article FOURTH, which event is dealt with in Section 2(e)(vi)(1) of this Article FOURTH), without consideration or for a consideration per share less than $0.58 per share (subject to appropriate adjustment for any stock split, combination or other similar recapitalization event), then and in such event, the Series C Preferred Conversion Price (after a Trigger Financing), the Series B Preferred Conversion Price, the Series A Preferred Conversion Price and the Seed Preferred Conversion Price, as applicable, shall be reduced, concurrently with such issue, to a price (calculated to the nearest one tenth of one cent) determined in accordance with the following formula:

 

 

where:

 

NCP =                                                              New Series C Preferred Conversion Price, new Series B Preferred Conversion Price, new Series A Preferred Conversion Price or new Seed Preferred Conversion Price, as applicable;

 

P 1   =                                                                        Series C Preferred Conversion Price, Series B Preferred Conversion Price, Series A Preferred Conversion Price or Seed Preferred Conversion Price, as applicable, in effect immediately prior to new issue;

 

Q 1   =                                                                      Number of shares of Common Stock outstanding, or deemed to be outstanding as set forth below, immediately prior to such issue;

 

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P 2   =                                                                        Weighted average price per share received by the Corporation upon such issue;

 

Q 2   =                                                                      Number of shares of Common Stock issued, or deemed to have been issued, in the subject transaction;

 

provided that for the purpose of this Section 2(e)(iv) of this Article FOURTH, all shares of Common Stock issuable upon exercise of Options outstanding immediately prior to such issue and conversion of shares of Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock or Seed Preferred Stock, as applicable, outstanding immediately prior to such issue shall be deemed to be outstanding, and immediately after any Additional Shares of Common Stock are deemed issued pursuant to Section 2(e)(iii) of this Article FOURTH, such Additional Shares of Common Stock shall be deemed to be outstanding.

 

(v)                                  Determination of Consideration .  For purposes of this Section 2(e) of this Article FOURTH, the consideration received by the Corporation for the issue of any Additional Shares of Common Stock shall be computed as follows:

 

(1)                                  Cash and Property :  Such consideration shall:

 

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

 

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

 

(C)                                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 (A) and (B) above, as determined in good faith by the Board of Directors.

 

(2)                                  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 Section 2(e)(iii)(1) of this Article FOURTH, relating to Options and Convertible Securities, shall be determined by dividing (x) 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 (y) 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.

 

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(vi)                               Adjustment for Dividends, Distributions, Subdivisions, Combinations or Consolidations of Common Stock .

 

(1)                                  Stock Dividends, Distributions or Subdivisions .  In the event the Corporation shall be deemed to issue Additional Shares of Common Stock pursuant to Section 2(e)(iii)(2) of this Article FOURTH in a stock dividend, stock distribution or subdivision, the applicable Preferred Conversion Price in effect immediately before such deemed issuance shall, concurrently with the effectiveness of such deemed issuance, be proportionately decreased.

 

(2)                                  Combinations or Consolidations .  In the event the outstanding shares of Common Stock shall be combined or consolidated, by reclassification or otherwise, into a lesser number of shares of Common Stock, the applicable Preferred Conversion Price in effect immediately prior to such combination or consolidation shall, concurrently with the effectiveness of such combination or consolidation, be proportionately increased.

 

(vii)                            Special Mandatory Conversion .

 

(1)                                  Trigger Event .  Subject to Section 2(e)(vii)(2), prior to a Qualified IPO or Deemed Liquidation, in the event that any holder of shares of Preferred Stock does not participate in a Qualified Financing (as defined below) by purchasing in the aggregate, in such Qualified Financing and within the time period specified by the Corporation ( provided that the Corporation has sent to each holder of Preferred Stock at least 10 days written notice of, and the opportunity to purchase its Pro Rata Amount (as defined below) of, the Qualified Financing), such holder’s Pro Rata Amount, then the Applicable Portion (as defined below) of the shares of Preferred Stock held by such holder shall automatically, and without any further action on the part of such holder, be converted into shares of Common Stock at the applicable Preferred Conversion Price in effect immediately prior to the consummation of such Qualified Financing, effective upon, subject to, and concurrently with, the consummation of the Qualified Financing and in accordance with the following order:

 

(A)                                first, the shares of Series C Preferred Stock held by such holder in an amount equal to such holder’s Applicable Portion shall be converted into shares of Common Stock at the Series C Preferred Conversion Price in effect immediately prior to the consummation of such Qualified Financing; provided that if the aggregate number of shares of Series C Preferred Stock held by such holder is less than such holder’s Applicable Portion, then

 

(B)                                second, the shares of Series B Preferred Stock held by such holder in an amount equal to such holder’s Applicable Portion, less the number of shares converted pursuant to Section 2(e)(vii)(1)(A) of this Article FOURTH, shall be converted into shares of Common Stock at the Series B Preferred Conversion Price in effect immediately prior to the consummation of such Qualified Financing; provided that if the aggregate number of shares of Series B Preferred Stock held by such holder is less than such holder’s Applicable Portion less the number of shares converted pursuant to Section 2(e)(vii)(1)(A) of this Article FOURTH, then

 

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(C)                                third, the shares of Series A Preferred Stock held by such holder in an amount equal to such holder’s Applicable Portion, less the number of shares converted pursuant to Section 2(e)(vii)(1)(A) and Section 2(e)(vii)(1)(B) of this Article FOURTH, shall be converted into shares of Common Stock at the Series A Preferred Conversion Price in effect immediately prior to the consummation of such Qualified Financing; provided that if the aggregate number of shares of Series A Preferred Stock held by such holder is less than such holder’s Applicable Portion less the number of shares converted pursuant to Section 2(e)(vii)(1)(A) and Section 2(e)(vii)(1)(B) of this Article FOURTH, then

 

(D)                                fourth, the shares of Seed Preferred Stock held by such holder in an amount equal to such holder’s Applicable Portion, less the number of shares converted pursuant to Section 2(e)(vii)(1)(A), Section 2(e)(vii)(1)(B) and Section 2(e)(vii)(1)(C) of this Article FOURTH, shall be converted into and exchanged for shares of Common Stock at the Seed Preferred Conversion Price in effect immediately prior to the consummation of such Qualified Financing. No fractional shares of Common Stock to which any stockholder would otherwise be entitled resulting from such conversion and exchange shall be issued, but in lieu thereof, each stockholder of the Corporation who otherwise would be entitled to a fraction of a share of Common Stock upon such conversion, reclassification and exchange (except those stockholders who have agreed to waive such payment) shall be entitled to receive a cash payment equal to the product of such fractional interest multiplied by the Common Stock’s fair market value as determined in good faith by the Board of Directors of the Corporation as of the date of such conversion and exchange.

 

For purposes of determining the number of shares of Preferred Stock owned by a holder, and for determining the number of Offered Securities (as defined below) a holder of Preferred Stock has purchased in a Qualified Financing, all shares of Preferred Stock held by Affiliates (as defined below) of such holder shall be aggregated with such holder’s shares and all Offered Securities purchased by Affiliates of such holder shall be aggregated with the Offered Securities purchased by such holder ( provided that no shares or securities shall be attributed to more than one entity or person within any such group of affiliated entities or persons).

 

Notwithstanding the foregoing, the provisions of this Section 2(e)(vii)(1) of this Article FOURTH shall not apply to any shares of Preferred Stock held by the Bill & Melinda Gates Foundation at the time of a Qualified Financing.

 

(2)                                  Purchase Agreement Trigger Events .

 

(A)                                Each share of Preferred Stock held by any holder of Series B Preferred Stock or Series A Preferred Stock who holds, on the date of the Initial Closing (as such term is defined in that certain Series C Convertible Preferred Stock Purchase Agreement by and among the Corporation and certain purchasers of Series C Preferred Stock dated on or about September 28, 2012 (the “ Purchase Agreement ”)), one percent (1%) or more of the outstanding shares of Common Stock (treating all shares of Common Stock issuable upon exercise of Options outstanding on the date hereof or upon conversion of Convertible Securities outstanding (assuming exercise of any outstanding Options therefor)) and fails to purchase such holder’s Pro Rata Amount in the Initial Closing shall immediately following the Initial Closing be automatically converted into shares of Common Stock at a ten-for-one ratio, such that each

 

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ten (10) shares of Preferred Stock held by such holder will be converted into and exchanged for one (1) share of Common Stock and all dividends thereon shall be canceled.  No fractional shares of Common Stock to which any stockholder would otherwise be entitled resulting from such conversion and exchange shall be issued, but in lieu thereof, each stockholder of the Corporation who otherwise would be entitled to a fraction of a share of Common Stock upon such conversion, reclassification and exchange (except those stockholders who have agreed to waive such payment) shall be entitled to receive a cash payment equal to the product of such fractional interest multiplied by the Common Stock’s fair market value as determined in good faith by the Board of Directors of the Corporation as of the date of such conversion and exchange.

 

(B)                                Each share of Preferred Stock held by any Investor (as such term is defined in the Purchase Agreement), or any successor-in-interest to any Investor, that fails to purchase the amount of Series C Preferred Stock required to be purchased by such Investor (or such Investor’s successor-in-interest) at a Second Closing (as defined in the Purchase Agreement) held following the Milestone Event (as defined in the Purchase Agreement), shall immediately following the Second Closing be automatically converted into shares of Common Stock at a ten-for-one ratio, such that each ten (10) shares of Preferred Stock held by such Investor will be converted into and exchanged for one (1) share of Common Stock and all dividends thereon shall be canceled.  No fractional shares of Common Stock to which any Investor would otherwise be entitled resulting from such conversion and exchange shall be issued, but in lieu thereof, each Investor who otherwise would be entitled to a fraction of a share of Common Stock upon such conversion, reclassification and exchange (except those Investors who have agreed to waive such payment) shall be entitled to receive a cash payment equal to the product of such fractional interest multiplied by the Common Stock’s fair market value as determined in good faith by the Board of Directors of the Corporation as of the date of such conversion and exchange.

 

(3)                                  Procedural Requirements .  Upon a conversion pursuant to Section 2(e)(vii)(1) or Section 2(e)(vii)(2) (each a “ Special Mandatory Conversion ”), each holder of shares of Preferred Stock converted pursuant to such Special Mandatory Conversion shall be sent written notice of such Special Mandatory Conversion and the place designated for mandatory conversion of all such shares of Preferred Stock pursuant to this Section 2(e)(vii) of this Article FOURTH.  Upon receipt of such notice, each holder of such shares of Preferred Stock 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 Certificate of Loss) to the Corporation at the place designated in such notice. If so required by the Corporation, 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 Section 2(e)(vii)(1) or Section 2(e)(vii)(2) of this Article FOURTH, including the rights, if any, to receive notices and vote (other than as a holder of Common Stock), will terminate at the time of the Special Mandatory Conversion (notwithstanding the failure of the holder or holders thereof to surrender the certificates for such shares at or prior to such time), except only the rights of the holders thereof, upon surrender of their certificate or certificates therefor (or a Certificate of Loss), to receive the items provided for in the next sentence of this Section 2(e)(vii)(3)of this Article FOURTH.  As soon as practicable

 

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after the Special Mandatory Conversion and the surrender of the certificate or certificates (or a Certificate of Loss) for Preferred Stock so converted, the Corporation shall issue and deliver to such holder, or to his, her or its nominees, a certificate or certificates for the number of full shares of Common Stock issuable on such conversion in accordance with the provisions hereof, together with cash as provided herein in lieu of any fraction of a share of Common Stock otherwise issuable upon such conversion.  Any declared but unpaid dividends, and, in the case of the Series B Preferred Stock, accrued dividends, shall be cancelled.

 

(4)                                  Definitions .  For purposes of this Section 2(e)(vii), the following definitions shall apply:

 

(A)                                Affiliate ” shall mean, with respect to any holder of shares of Preferred Stock, any person, entity or firm which, directly or indirectly, controls, is controlled by or is under common control with such holder, including, without limitation, any entity of which the holder is a partner or member, any partner, officer, director, member or employee of such holder and any venture capital fund now or hereafter existing of which the holder is a partner or member which is controlled by or under common control with one or more general partners of such holder or shares the same management company with such holder.

 

(B)                                Applicable Portion ” shall mean, with respect to any holder of shares of Preferred Stock who fails to purchase his, her or its Pro Rata Amount in a Qualified Financing, a number of shares of Preferred Stock calculated by multiplying the aggregate number of shares of Preferred Stock held by such holder immediately prior to a Qualified Financing by a fraction, the numerator of which is equal to the amount by which such holder’s Pro Rata Amount exceeds the number of Offered Securities actually purchased by such holder in such Qualified Financing, and the denominator of which is equal to such holder’s Pro Rata Amount.

 

(C)                                Offered Securities ” shall mean the equity securities of the Corporation set aside by the Board of Directors of the Corporation (including the affirmative vote of the JJDC Director (as defined in the Voting Agreement), for so long as Johnson & Johnson Development Corporation or its successors or assigns is entitled to designate a director of the Corporation pursuant to the Voting Agreement and the Skyline Director (as defined in the Voting Agreement) for so long as Skyline Venture Partners V, L.P. or its successors or assigns is entitled to designate a director of the Corporation pursuant to the Voting Agreement) for purchase by holders of outstanding shares of Preferred Stock in connection with a Qualified Financing, and offered to such holders.

 

(D)                                Pro Rata Amount ” shall mean, with respect to any holder of Preferred Stock, the lesser of (a) a number of Offered Securities calculated by multiplying the aggregate number of Offered Securities by a fraction, the numerator of which is equal to the number of shares of Preferred Stock owned by such holder, and the denominator of which is equal to the aggregate number of outstanding shares of Preferred Stock immediately prior to such Qualified Financing and (b) the maximum number of Offered Securities that such holder is permitted by the Corporation to purchase in such Qualified Financing, after giving effect to any cutbacks or limitations established by the Board of Directors and applied on a pro rata basis to all holders of Preferred Stock.

 

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(E)                                 Qualified Financing ” shall mean any transaction occurring after the Original Issue Date, involving the issuance or sale of Additional Shares of Common Stock that the Board of Directors of the Corporation (including the affirmative vote of the JJDC Director (as defined in the Voting Agreement), for so long as Johnson & Johnson Development Corporation or its successors or assigns is entitled to designate a director of the Corporation pursuant to the Voting Agreement or the Skyline Director (as defined in the Voting Agreement) for so long as Skyline Venture Partners V, L.P. or its successors or assigns is entitled to designate a director of the Corporation pursuant to the Voting Agreement) determines should be subject to Section 2(e)(vii) of this Article FOURTH.

 

(f)                                    Adjustments for Certain Dividends and Distributions .  In the event that at any time or from time to time after the Original Issue Date the Corporation 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 shares of Common Stock or securities, the issuance of which are deemed to be issuances of Common Stock under Section 2(e)(iii) of this Article FOURTH, then and in each such event provision shall be made so that the holders of Preferred Stock shall receive upon conversion thereof in addition to the number of shares of Common Stock receivable thereupon, the amount of securities of the Corporation that they would have received had their Preferred Stock been converted into Common Stock immediately prior to such event and had they thereafter, during the period from the date of such event to and including the conversion date, retained such securities receivable by them as aforesaid during such period, giving application during such period to all adjustments called for herein.

 

(g)                                   Adjustment for Reclassification, Exchange, or Substitution .  In the event that at any time or from time to time after the Original Issue Date the Common Stock issuable upon the conversion of the applicable Preferred Stock shall be changed into the same or a different number of shares of any class or series of stock or other securities or property, whether by capital reorganization, reclassification, recapitalization or otherwise (other than a subdivision or combination of shares or stock dividend provided for above, or a merger, consolidation, or sale of assets provided for below), then and in each such event the holder of any shares of the applicable Preferred Stock shall have the right thereafter to convert such shares into the kind and amount of shares of stock and other securities and property which such holder would have been entitled to receive upon such reorganization, reclassification, recapitalization or other change by the holder of a number of shares of Common Stock equal to the number of shares of Common Stock into which such shares of the applicable Preferred Stock might have been converted immediately prior to such reorganization, reclassification, recapitalization or change, all subject to further adjustment as provided herein.

 

(h)                                  Adjustment for Merger, Consolidation or Sale of Assets.   In the event that at any time or from time to time after the Original Issue Date the Corporation shall merge or consolidate with or into another entity or sell all or substantially all of its assets, and such consolidation, merger or sale is not treated as a liquidation under Section 1(c) of this Article FOURTH, each share of Preferred Stock shall thereafter be convertible into the kind and amount of shares of stock or other securities or property to which a holder of the number of shares of Common Stock of the Corporation deliverable upon conversion of such Preferred Stock would have been entitled to receive upon such consolidation, merger or sale; and, in such case,

 

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appropriate adjustment (as determined in good faith by the Board of Directors) shall be made in the application of the provisions set forth in this Section 2 with respect to the rights and interest thereafter of the holders of shares of such Preferred Stock, to the end that the provisions set forth in this Section 2 of this Article FOURTH (including provisions with respect to changes in and other adjustments of the applicable Preferred Conversion Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other securities or property thereafter deliverable upon the conversion of such Preferred Stock.

 

(i)                                      No Impairment .  The Corporation shall not without the consent(s) required by Section 3 of this Article FOURTH, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed under this Section 2 of this Article FOURTH by the Corporation but shall at all times in good faith assist in the carrying out of all the provisions of this Section 2 of this Article FOURTH and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of Preferred Stock against impairment.

 

(j)                                     Certificate as to Adjustments .  Upon the occurrence of each adjustment or readjustment of the applicable Preferred Conversion Price pursuant to this Section 2 of this Article FOURTH, the Corporation at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock or Seed Preferred Stock, as applicable, a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based.  The Corporation shall, upon the written request at any time of any holder of Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (i) such adjustments and readjustments, (ii) the applicable Preferred Conversion Price at the time in effect, and (iii) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of each share of Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock or Seed Preferred Stock, as applicable.

 

(k)                                  (i)  Notices of Record Date .  In the event of any taking by the Corporation of a record of the holders of any class or series of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, the Corporation shall mail to each holder of Preferred Stock at least ten (10) days prior to such record date a notice specifying the date on which any such record is to be taken for the purpose of such dividend or distribution.

 

(l)                                      Common Stock Reserved .  The Corporation shall reserve and keep available, free from pre-emptive rights, out of its authorized but unissued Common Stock, solely for the purpose of effecting the conversion of Preferred Stock, such number of shares of Common Stock as shall from time to time be sufficient to effect conversion of the Preferred Stock.  If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all the then outstanding shares of Preferred Stock, the Corporation shall promptly take such corporate action as may, in the opinion of its counsel, be

 

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necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose.

 

(m)                              Certain Taxes .  The Corporation shall pay any issue or transfer taxes payable in connection with the conversion of Preferred Stock, provided, however, that the Corporation shall not be required to pay any tax which may be payable in respect of any transfer to a name other than that of the holder of the Preferred Stock.

 

(n)                                  (l)  Closing of Books .  The Corporation shall at no time close its transfer books against the transfer of any Preferred Stock or of any shares of Common Stock issued or issuable upon the conversion of any shares of Preferred Stock in any manner which interferes with the timely conversion or transfer of such Preferred Stock or Common Stock.

 

(o)                                  Validity of Shares .  The Corporation agrees that it will from time to time take all such actions as may be required to assure that all shares of Common Stock which may be issued upon conversion of any Preferred Stock will, upon issuance, be legally and validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof.

 

Section 3.   Restrictions .

 

(a)                                  At all times when at least ten percent (10%) of the Series C Preferred Stock (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) issued remains outstanding, in addition to any other vote required by law or this Certificate of Incorporation, the Corporation shall not take any of the following actions, either directly or indirectly, by amendment, merger, consolidation or otherwise, without the consent of at least sixty percent (60%) of the holders of the then outstanding Series C Preferred Stock:

 

(i)                                      adversely alter or amend the rights, preferences or privileges of the Series C Preferred Stock,  and

 

(ii)                                   increase or decrease the authorized number of shares of Series C Preferred Stock.

 

(b)                                  At all times when at least ten percent (10%) of the Series B Preferred Stock (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) issued remains outstanding, in addition to any other vote required by law or this Certificate of Incorporation, the Corporation shall not take any of the following actions, either directly or indirectly, by amendment, merger, consolidation or otherwise, without the consent of at least sixty percent (60%) of the holders of the then outstanding Series B Preferred Stock:

 

(i)                                      adversely alter or amend the rights, preferences or privileges of the Series B Preferred Stock,  and

 

(ii)                                   increase or decrease the authorized number of shares of Series B Preferred Stock.

 

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(c)                                   At all times when at least ten percent (10%) of the Series A Preferred Stock (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) issued remains outstanding, in addition to any other vote required by law or this Certificate of Incorporation, the Corporation shall not take any of the following actions, either directly or indirectly, by amendment, merger, consolidation or otherwise, without the consent of at least sixty percent (60%) of the holders of the then outstanding Series A Preferred Stock:

 

(i)                                      adversely alter or amend the rights, preferences or privileges of the Series A Preferred Stock, and

 

(ii)                                   increase or decrease the authorized number of shares of Series A Preferred Stock.

 

(d)                                  At all times when at least ten percent (10%) of the Seed Preferred Stock issued remains outstanding, in addition to any other vote required by law or this Certificate of Incorporation, the Corporation shall not take any of the following actions, either directly or indirectly, by amendment, merger, consolidation or otherwise, without the consent of at least sixty percent (60%) of the holders of the then outstanding Seed Preferred Stock:

 

(i)                                      adversely alter or amend the rights, preferences or privileges of the Seed Preferred Stock, and

 

(ii)                                   increase or decrease the authorized number of shares of Seed Preferred Stock.

 

(e)                                   In addition to any other vote required by law or this Certificate of Incorporation, the Corporation shall not take any of the following actions, either directly or indirectly, by amendment, merger, consolidation or otherwise, without the consent of the holders of at least sixty-six percent (66%) of the then outstanding Preferred Stock:

 

(i)                                      create any new class or series of shares having voting rights or other rights, preferences or privileges senior to or on parity with the Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock or Seed Preferred Stock,

 

(ii)                                   effect a merger or corporate reorganization of the Corporation (or any subsidiary) as a result of which the holders of capital stock of the Corporation immediately prior to such transaction hold less than a majority of the outstanding capital stock of the surviving or resulting corporation, or any transaction in which all or substantially all of the assets of the Corporation (or any subsidiary) are sold, transferred or exclusively licensed,

 

(iii)                                effect a voluntary liquidation, winding-up or dissolution of the Corporation or a subsidiary of the Corporation or any bankruptcy filing or similar action by the Corporation or a subsidiary of the Corporation,

 

(iv)                               take any action that would result in a Deemed Liquidation,

 

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(v)                                  amend or waive any provision in the Certificate of Incorporation or Bylaws of the Corporation,

 

(vi)                               redeem or repurchase any shares of the Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock, Seed Preferred Stock or Common Stock, unless such actions are made pursuant to (x) equity incentive agreements with service providers giving the Corporation the right to repurchase shares upon the termination of services or (y) that certain Letter Agreement, dated September 28, 2012, by and between the Corporation and the Bill & Melinda Gates Foundation,

 

(vii)                            guarantee, endorse or otherwise become directly or contingently liable for any debt of any third party,

 

(viii)                         any actions resulting in the creation or acquisition of a wholly-owned subsidiary of the Corporation, unless such action has been approved by a majority of the Board of Directors, including a majority of the Preferred Stock Directors,

 

(ix)                               incur any indebtedness on behalf of the Corporation in excess of $200,000, unless such action has been approved by a majority of the Board of Directors, including a majority of the Preferred Stock Directors,

 

(x)                                  any action resulting in the sale, exclusive license, lease or disposition by the Corporation or a subsidiary of the Corporation of any business, division or other right, asset, clinical program or intellectual property in excess of $50,000, unless such action is in the ordinary course of business or is approved by a majority of the Board of Directors, including a majority of the Preferred Stock Directors,

 

(xi)                               pledge assets of the Corporation to guarantee any debt (other than in the ordinary course of business or pursuant to a transaction approved by a majority of the Board of Directors, including a majority of the Preferred Stock Directors),

 

(xii)                            stop devoting a majority of the efforts of the Corporation or any subsidiary of the Corporation to discovering and developing vaccines, unless such change was included in a business plan approved by the Board of Directors, including a majority of the Preferred Stock Directors,

 

(xiii)                         approve any contract, loan or other agreement between the Corporation or any subsidiary of the Corporation, on one hand, and any officer, director, stockholder or employee of the Corporation or any subsidiary of the Corporation or any family member of such person, on the other hand, including any contract or other agreement for the sale or repurchase of any capital stock, rights, warrants or options of the Corporation or any subsidiary of the Corporation, unless such transaction is made in the ordinary course of business and the terms of such transaction are fair and reasonable and approved by a majority of the Board of Directors, including a majority of the Preferred Stock Directors,

 

(xiv)                        declare or pay any dividends to stockholders of the Corporation,

 

(xv)                           increase or decrease the authorized size of the Board of Directors,

 

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(xvi)                        hire a person to serve as, or terminate the employment of a person who is, the Chief Executive Officer, or amend the terms of any employment agreement with such employee, unless such action has been approved by a majority of the Board of Directors, including a majority of the Preferred Stock Directors, and

 

(xvii)                     agree to take any action listed in clauses (i) through (xvii) above.

 

Section 4.   Voting Rights .

 

(a)                                  Except as otherwise required by law or set forth in this Certificate of Incorporation, the holders of Preferred Stock shall be entitled to notice of any meeting of stockholders and shall vote together with the holders of Common Stock as a single class upon any matter submitted to the stockholders for a vote.  With respect to all questions as to which, under law, stockholders are required to vote by classes or series, the Preferred Stock shall vote separately as a single class and series apart from the Common Stock.  Shares of Common Stock and Preferred Stock shall entitle the holders thereof to the following number of votes on any matter as to which they are entitled to vote:

 

(i)                                      Holders of Common Stock shall have one vote per share; and

 

(ii)                                   Holders of Preferred Stock shall have that number of votes per share as is equal to the number of shares of Common Stock (including fractions of a share) into which each such share of Preferred Stock held by such holder could be converted (without giving effect to the conversion of any accrued but unpaid dividends) on the date for determination of stockholders entitled to vote at the meeting or on the date of any written consent.

 

(b)                                  Any provision of the By-Laws of the Corporation to the contrary notwithstanding, the number of directors constituting the whole Board of Directors of the Corporation shall not be fixed at a number other than eight (8) without the prior written consent of the holders of at least sixty-six percent (66%) of the Preferred Stock then outstanding as provided in Section 3(e) of this Article FOURTH.  The Board of Directors shall not delegate any of its powers or duties to any committee of the Board of Directors without the consent of at least a majority of the Preferred Stock Directors.

 

(c)                                   At all times during which shares of Preferred Stock remain outstanding, the holders of the outstanding shares of Preferred Stock shall have the exclusive right, separately from the Common Stock to elect five (5)  directors of the Corporation (the “ Preferred Stock Directors ”).  The Preferred Stock Directors shall be elected by the vote or written consent of the holders of at least sixty-six percent (66%) of the outstanding Preferred Stock.  If a Preferred Stock Director shall cease to serve as a director for any reason, another director elected by the holders of the Preferred Stock shall replace such director.  Any Preferred Stock Director may be removed, with or without cause, and a replacement Preferred Stock Director may be elected in his stead, at any time by the affirmative vote at a meeting duly called for the purpose, or by written consent, of the holders of more than sixty-six percent (66%) of the outstanding Preferred Stock.

 

(d)                                  The holders of the outstanding shares of Common Stock shall have the exclusive right, separately from the Preferred Stock, to elect one director of the Corporation (the

 

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Common Stock Director ”).  The Common Stock Director shall be elected by the vote or written consent of the holders of a majority of the outstanding Common Stock.  If the Common Stock Director shall cease to serve as a director for any reason, another director elected by the holders of the Common Stock shall replace such director. The Common Stock Director may be removed, with or without cause, and a replacement Common Stock Director may be elected in his stead, at any time by the affirmative vote at a meeting duly called for the purpose, or by written consent, of the holders of a majority of the outstanding Common Stock.

 

(e)                                   All other directors of the Corporation shall be elected by the holders of the Common Stock and Preferred Stock voting together as a single class, with the holders of Preferred Stock to have that number of votes as is determined in accordance with Section 4(a)(ii) of this Article FOURTH.

 

Section 5.   Dividends .

 

(a)                                  From and after the date of the issuance of any shares of Series C Preferred Stock, dividends at the rate per annum of 8% of the Series C Original Issue Price shall accrue on such shares of Series C Preferred Stock (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) (the “ Series C Preferred Dividend ”). Series C Preferred Dividends shall accrue quarterly, whether or not declared but shall be noncumulative and non-compounding; provided however, that except as set forth in the following sentence of this Section 5(a) or in Section 1(a) or Section 6(a) of this Article FOURTH, such Series C Preferred Dividends shall be payable only when, as, and if declared by the Board of Directors and the Corporation shall be under no obligation to pay such Series C Preferred Dividends. The Corporation shall not declare, pay or set aside any dividends on shares of Series B Preferred Stock, Series A Preferred Stock, Seed Preferred Stock or Common 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 the Certificate of Incorporation) the holders of the Series C Preferred Stock then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Series C Preferred Stock in an amount at least equal to the amount of the aggregate Series C Preferred Dividends then accrued on such share of Series C Preferred Stock and not previously paid and, in the case of a dividend payable on shares of Common Stock, the dividend which would have been payable to such holder if the shares of Series C Preferred Stock held by such holder had been converted into Common Stock on the record date for the determination of holders of Common Stock entitled to receive such dividend.

 

(b)                                  From and after the date of the issuance of any shares of Series B Preferred Stock, dividends at the rate per annum of eight percent (8%) of the Series B Original Issue Price shall accrue on such shares of Series B Preferred Stock (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) (the “ Series B Preferred Dividend ”). Series B Preferred Dividends shall accrue daily, whether or not declared and shall be cumulative and non-compounding; provided however, that except as set forth in the following sentence of this Section 5(b) or in Section 1(a) or Section 6(a) of this Article FOURTH, such Series B Preferred Dividends shall be payable only when, as, and if declared by the Board of Directors and the

 

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Corporation shall be under no obligation to pay such Series B Preferred Dividends. The Corporation shall not declare, pay or set aside any dividends on shares of Series A Preferred Stock, Seed Preferred Stock or Common 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 the Certificate of Incorporation) the holders of the Series B Preferred Stock then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Series B Preferred Stock in an amount at least equal to the amount of the aggregate Series B Preferred Dividends then accrued on such share of Series B Preferred Stock and not previously paid and, in the case of a dividend payable on shares of Common Stock, the dividend which would have been payable to such holder if the shares of Series B Preferred Stock held by such holder had been converted into Common Stock on the record date for the determination of holders of Common Stock entitled to receive such dividend. The Series B Preferred Dividend shall continue to accrue even if the Corporation does not have lawfully available funds to pay such Series B Preferred Dividend at the time of accrual.

 

(c)                                   No dividend shall be declared or paid on shares of Series A Preferred Stock unless the provisions of Section 5(a) and 5(b) of this Article FOURTH above are satisfied.  From and after the date of the issuance of any shares of Series A Preferred Stock, dividends at the rate per annum of 8% of the Series A Original Issue Price shall accrue on such shares of Series A Preferred Stock (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) (the “ Series A Preferred Dividend ”).  Series A Preferred Dividends shall accrue quarterly, whether or not declared but shall be non-cumulative and non-compounding; provided however, that except as set forth in the following sentence of this Section 5(c) or in Section 1(a) or Section 6(a) of this Article FOURTH, such Series A Preferred Dividends shall be payable only when, as, and if declared by the Board of Directors and the Corporation shall be under no obligation to pay such Series A Preferred Dividends.  The Corporation shall not declare, pay or set aside any dividends on shares of Seed Preferred Stock or Common 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 the Certificate of Incorporation) the holders of the Series A Preferred Stock then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Series A Preferred Stock in an amount at least equal to the amount of the aggregate Series A Preferred Dividends then accrued on such share of Series A Preferred Stock and not previously paid and, and, in the case of a dividend payable on shares of Common Stock, the dividend which would have been payable to such holder if the shares of Series A Preferred Stock held by such holder had been converted into Common Stock on the record date for the determination of holders of Common Stock entitled to receive such dividend.

 

(d)                                  No dividend shall be declared or paid on shares of Common Stock unless the provisions of Section 5(a), Section 5(b) and Section 5(c) above are satisfied and the Corporation shall declare and pay at the same time to each holder of Seed Preferred Stock a dividend equal to $0.052 per share of Seed Preferred Stock per annum, plus all dividends, previously declared and unpaid on the Seed Preferred Stock (respectively, the “ Seed Preferred Dividend ” and together with the Series A Preferred Dividend and the Series B Preferred Dividend, the “ Preferred Dividend ”), plus the dividend which would have been payable to such holder if the shares of Seed Preferred Stock held by such holder had been converted into

 

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Common Stock on the record date for the determination of holders of Common Stock entitled to receive such dividend.

 

(e)                                   The calculation of the applicable Preferred Dividend shall be computed (y) on the number of days since such Preferred Stock respectively, was issued and outstanding (z) and shall include any accrued but unpaid dividends thereon.  Prior to payment of any dividend pursuant to this Section 5 of this Article FOURTH, the Corporation shall provide a statement to each holder of Preferred Stock as of the date of declaration of such dividend, indicating the amount of the Preferred Dividend as applicable, owing on each such share and stipulating an appropriate mechanism by which the holder of such share of Preferred Stock may contest the calculation of the Preferred Dividend.

 

(f)                                    No dividends shall be declared or paid on the Common Stock or Preferred Stock except as set forth in Section 1(a), Section 6(a) or Section 5 of this Article FOURTH.

 

Section 6.   Redemption .

 

(a)                                  At the written election of holders of at least sixty-six percent (66%) of the outstanding shares of Series C Preferred Stock and Series B Preferred Stock at any time on or after the date that is 90 days before fifth anniversary of the Original Issue Date (the “ Series C/Series B Redemption Election ”), the Corporation shall be required to redeem all, but not less than all, of the outstanding shares of Series C Preferred Stock and Series B Preferred Stock in three annual installments, upon the terms set forth in this Section 6 of this Article FOURTH.  The first installment of such redemption shall occur on a date (the “ First Series C/Series B Redemption Date ”) specified in the Series C/Series B Redemption Election, which shall be not less than ninety (90) days after the date of the Series C/Series B Redemption Election, and the second and third installments of such redemption shall occur on the first and second anniversaries, respectively, of the First Series C/Series B Redemption Date.  The Corporation shall redeem one-third of the outstanding shares of Series C Preferred Stock and Series B Preferred Stock held by each holder on the First Series C/Series B Redemption Date, one-half of the remaining outstanding shares of Series C Preferred Stock and Series B Preferred Stock then held by each holder on the first anniversary thereof and all of the remaining shares of Series C Preferred Stock and Series B Preferred Stock on the second anniversary thereof.  On each such redemption date, the holders shall surrender the certificate or certificates for the shares to be redeemed duly endorsed for transfer or with duly executed stock transfer powers sufficient to permit transfer attached at the offices of the Corporation or of any transfer agent for the Series C Preferred Stock and Series B Preferred Stock, or the holder shall notify the Corporation or any transfer agent that such certificates have been lost, stolen, or destroyed and execute a Certificate of Loss.  The Corporation shall, as soon as practicable thereafter, issue and deliver to each holder a certificate or certificates for the balance of the shares not being redeemed.  The redemption price per share of Series C Preferred Stock shall be equal to $0.58 (as adjusted for any stock dividend, stock split, combination of shares, reclassification or other similar event with respect to the Series C Preferred Stock) (the “ Series C Redemption Price ”) plus all dividends declared but unpaid on such share on the applicable redemption date.  The redemption price per share of Series B Preferred Stock shall be equal to $0.58 (as adjusted for any stock dividend, stock split, combination of shares, reclassification or other similar event with respect to the

 

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Series B Preferred Stock) (the “ Series B Redemption Price ”) plus all dividends accrued and/or declared but unpaid on such share on the applicable redemption date.

 

(b)                                  If at any time following the redemption in full of all shares of Series C Preferred Stock and Series B Preferred Stock subject to a redemption request, the Corporation receives the written election of holders of at least sixty percent (60%) of the outstanding shares of Series A Preferred Stock (the “ Series A Redemption Election ”), the Corporation shall be required to redeem all, but not less than all, of the outstanding shares of Series A Preferred Stock in three annual installments, upon the terms set forth in this Section 6 of this Article FOURTH.  The first installment of such redemption shall occur on a date (the “ First Series A Redemption Date ”) specified in the Series A Redemption Election, which shall be not less than ninety (90) days after the date of the Series A Redemption Election, and the second and third installments of such redemption shall occur on the first and second anniversaries, respectively, of the First Series A Redemption Date.  The Corporation shall redeem one-third of the outstanding shares of Series A Preferred Stock held by each holder on the First Series A Redemption Date, one-half of the remaining outstanding shares of Series A Preferred Stock then held by each holder on the first anniversary thereof and all of the remaining shares on the second anniversary thereof.  On each such redemption date, the holders shall surrender the certificate or certificates for the shares to be redeemed duly endorsed for transfer or with duly executed stock transfer powers sufficient to permit transfer attached at the offices of the Corporation or of any transfer agent for the Series A Preferred Stock, or the holder shall notify the Corporation or any transfer agent that such certificates have been lost, stolen, or destroyed and execute a Certificate of Loss.  The Corporation shall, as soon as practicable thereafter, issue and deliver to each holder a certificate or certificates for the balance of the shares not being redeemed.  The redemption price per share of Series A Preferred Stock shall be equal to $0.65 (as adjusted for any stock dividend, stock split, combination of shares, reclassification or other similar event with respect to the Series A Preferred Stock) (the “ Series A Redemption Price ”) plus all dividends accrued and/or declared but unpaid on such share on the applicable redemption date.

 

(c)                                   Notice of any redemption pursuant to this Section 6 of this Article FOURTH shall be sent by first class mail, postage prepaid, to each holder of record of the Series C Preferred Stock, Series B Preferred Stock or Series A Preferred Stock, as applicable, not less than thirty days nor more than sixty days prior to the First Series C/Series B Redemption Date or First Series A Redemption Date, as applicable, at the address of such holder as it appears on the books of the Corporation.  Such notice shall set forth (i) the First Series C/Series B Redemption Date or First Series A Redemption Date, as applicable, the dates of the second and third installments of such redemption, and the place of redemption; and (ii) the number of shares to be redeemed on each date of redemption and the redemption price calculated in accordance with Section 6(a) and Section 6(b) of this Article FOURTH, on each such date.  The Corporation shall be obligated to redeem the Series C Preferred Stock, Series B Preferred Stock or Series A Preferred Stock, as applicable, on the dates and in the amounts set forth in the notice; provided, however, that any holder of Series C Preferred Stock, Series B Preferred Stock or Series A Preferred Stock, as applicable, may convert any or all of the shares owned by such holder into Common Stock in accordance with Section 4 of this Article FOURTH at any time prior to the date of redemption of such shares.  The Corporation, if advised before the close of business on the relevant redemption date by written notice from any holder of record of Series C Preferred Stock, Series B Preferred Stock or Series A Preferred Stock to be redeemed, as applicable, shall

 

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credit against the number of shares of Series C Preferred Stock, Series B Preferred Stock or Series A Preferred Stock required to be redeemed from such holder, as applicable, and shall not redeem, the number of shares of Series C Preferred Stock, Series B Preferred Stock or Series A Preferred Stock, as applicable, which shall have been converted by such holder on or before such date and which shall not previously have been credited against any redemption.

 

(d)                                  If, on or before a redemption date, the funds necessary for such redemption shall have been set aside by the Corporation and deposited with a bank or trust company, in trust for the pro rata benefit of the holders of the Series C Preferred Stock, Series B Preferred Stock or Series A Preferred Stock that has been called for redemption, then, notwithstanding that any certificates for shares that have been called for redemption shall not have been surrendered for cancellation, the shares represented thereby shall no longer be deemed outstanding from and after such redemption date, and all rights of holders of such shares so called for redemption shall forthwith, after such redemption date, cease and terminate with respect to such shares, excepting only the right to receive the redemption funds therefor to which they are entitled.  Any interest accrued on funds so deposited and unclaimed by stockholders entitled thereto shall be paid to such stockholders at the time their respective shares are redeemed or to the Corporation at the time unclaimed amounts are paid to it.  In case the holders of shares of Series C Preferred Stock, Series B Preferred Stock or Series A Preferred Stock, as applicable, which shall have been called for redemption shall not, within one year after the final redemption date, claim the amounts so deposited with respect to the redemption thereof, any such bank or trust company shall, upon demand, pay over to the Corporation such unclaimed amounts and thereupon such bank or trust company shall be relieved of all responsibility in respect thereof to such holder and such holder shall look only to the Corporation for the payment thereof.  Any funds so deposited with a bank or trust company which shall not be required for such redemption by reason of the exercise subsequent to the date of such deposit of the right of conversion of any shares or otherwise shall be returned to the Corporation forthwith.

 

(e)                                   If the funds of the Corporation legally available for redemption of shares of Series C Preferred Stock, Series B Preferred Stock or Series A Preferred Stock, as applicable, on a redemption date are insufficient to redeem the total number of shares of Series C Preferred Stock, Series B Preferred Stock or Series A Preferred Stock submitted for redemption, those funds which are legally available will be used to redeem the maximum possible number of whole shares among the holders of such shares, based ratably on the aggregate Series C Preferred Stock, Series B Redemption Price or Series A Redemption Price, as applicable which each such holder would be entitled to redeem on such redemption date.  The shares of Series C Preferred Stock, Series B Preferred Stock or Series A Preferred Stock, as applicable, not redeemed shall remain outstanding and entitled to all rights and preferences provided herein.  At any time thereafter when additional funds of the Corporation are legally available for the redemption of such shares of Series C Preferred Stock, Series B Preferred Stock or Series A Preferred Stock, as applicable, such funds will be used, at the end of the next succeeding fiscal quarter, to redeem the balance of such shares, or such portion thereof for which funds are then legally available.

 

(f)                                    In the event that funds are unavailable on the redemption date for any reason, then all unredeemed shares shall remain outstanding and entitled to all rights and preferences provided herein, and the Corporation shall pay interest on the Series C Redemption Price, Series B Redemption Price or Series A Redemption Price applicable to such unredeemed

 

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shares at the rate of eight percent (8%) per annum, with such interest to accrue daily in arrears; provided , however , that in no event shall such interest exceed the maximum permitted under applicable law (the “ Maximum Permitted Rate ”).  In the event that fulfillment of any provision hereof results in such rate of interest being in excess of the Maximum Permitted Rate, the amount of interest required to be paid hereunder shall automatically be reduced to eliminate such excess; provided , however , that any subsequent increase in the Maximum Permitted Rate shall be retroactively effective to the applicable redemption date to the extent permitted by law.  All interest accrued in accordance with this Section 6 shall be compounded annually and shall be due and payable upon redemption of shares in accordance with this Section 6.

 

Section 7.   No Reissuance of Preferred Stock .  No shares of Preferred Stock acquired by the Corporation by reason of redemption, purchase, conversion or otherwise shall be reissued, and all such shares shall be canceled, retired and eliminated from the shares which the Corporation shall be authorized to issue.

 

Section 8.   Notices .  All notices required or permitted to be sent pursuant to this Article FOURTH shall be deemed sufficient if contained in a written instrument and delivered in person or duly sent by first-class mail postage prepaid (other than in the case of notices to or from any non-U.S. resident) or by fax or any recognized express international courier service, addressed to the intended recipient at the recipient’s address as it appears on the books of the Corporation.

 

Section 9.   Waiver of Certain Provisions .  The observance of any provision of this Certificate of Incorporation that affects the Series A Preferred Stock hereof may be waived by the affirmative vote of the holders of at least sixty percent (60%) of the outstanding shares of the Series A Preferred Stock.  The observance of any provision of this Certificate of Incorporation that affects the Series B Preferred Stock hereof may be waived by the affirmative vote of the holders of at least sixty percent (60%) of the outstanding shares of the Series B Preferred Stock. The observance of any provision of this Certificate of Incorporation that affects the Series C Preferred Stock hereof may be waived by the affirmative vote of the holders of at least sixty percent (60%) of the outstanding shares of the Series C Preferred Stock.

 

FIFTH :  In furtherance of and not in limitation of powers conferred by statute, it is further provided that:

 

(a)                                  Subject to the limitations and exceptions, if any, contained in the By-Laws of the Corporation and the requirements of Section 3(c) of Article FOURTH hereof, the By-Laws may be adopted, amended or repealed by the Board of Directors of the Corporation with, and only with, the approval of a majority of the directors then in office;

 

(b)                                  Elections of directors need not be by written ballot unless, and only to the extent, otherwise provided in the By-Laws;

 

(c)                                   Subject to any applicable requirements of law, the books of the Corporation may be kept outside the State of Delaware at such locations as may be designated by the Board of Directors or in the By-Laws of the Corporation; and

 

(d)                                  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

 

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or written consent of a majority of all outstanding shares of voting stock of the Corporation, voting together as a single class on an as-converted basis, irrespective of the provisions of Section 242(b)(2) of the Delaware General Corporate Law.

 

SIXTH :  The Corporation shall indemnify each person who at any time is, or shall have been, a director or officer of the Corporation and was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement incurred in connection with any such action, suit or proceeding, to the maximum extent permitted by the General Corporation Law of the State of Delaware, as the same exists or may hereafter be amended.  In furtherance of and not in limitation of the foregoing, the Corporation shall advance expenses, including attorneys’ fees, incurred by an officer or director of the Corporation in defending any civil, criminal, administrative or investigative action, suit or proceeding in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such advances if it shall be ultimately determined that he is not entitled to be indemnified by the Corporation.  The foregoing right of indemnification shall in no way be exclusive of any other rights of indemnification to which any such director or officer may be entitled, under any By-Law, agreement, vote of directors or stockholders or otherwise.  No amendment to or repeal of the provisions of this Article SIXTH shall deprive a director or officer of the benefit hereof with respect to any act or failure to act occurring prior to such amendment or repeal.

 

SEVENTH :  No director of the Corporation shall be personally liable to the Corporation or to any of its stockholders for monetary damages arising out of such director’s breach of his fiduciary duty as a director of the Corporation, except to the extent that the elimination or limitation of such liability is not permitted by the General Corporation Law of the State of Delaware, as the same exists or may hereafter be amended.  No amendment to or repeal of the provisions of this Article SEVENTH shall deprive any director of the Corporation of the benefit hereof with respect to any act or failure to act of such director occurring prior to such amendment or repeal.

 

EIGHTH :  To the maximum extent permitted from time to time under the laws of the State of Delaware, the Corporation renounces any interest or expectancy of the Corporation in, or in being offered an opportunity to participate in, business opportunities that are from time to time are being presented to its officers, directors or stockholders, other than (i) those officers, directors or stockholders who are employees of the Corporation and (ii) those opportunities demonstrated by the Corporation to have been presented to such officers, directors or stockholders expressly as a result of their activities as a director, officer or stockholder of the Corporation.  No amendment or repeal of this provision shall apply to or have any effect on the liability or alleged liability of any officer, director or stockholder of the Corporation for or with respect to any opportunities which such officer, director or stockholder becomes aware of prior to such amendment or repeal.  This Article EIGHTH, shall terminate and no longer be applicable upon the closing of a firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended.

 

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NINTH :  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.”

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Corporation has caused this Fourth Amended and Restated Certificate of Incorporation to be signed by William Clark, its Chief Executive Officer, this 27th day of September, 2012.

 

 

 

GENOCEA BIOSCIENCES, INC.

 

 

 

 

 

By:

/s/ William Clark

 

 

Name:

William Clark

 

 

Title:

Chief Executive Officer

 

[Signature Page for Genocea Biosciences, Inc. Fourth Amended and Restated Certificate of Incorporation]

 




Exhibit 3.4

 

CERTIFICATE OF AMENDMENT

 

TO

 

THE CERTIFICATE OF INCORPORATION

 

OF

 

GENOCEA BIOSCIENCES, INC.

 


 

Pursuant to Section 242 of the

General Corporation Law of the State of Delaware

 


 

GENOCEA BIOSCIENCES, INC. , a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), hereby certifies as follows:

 

FIRST:  Article Fourth of the Fourth Amended and Restated Certificate of Incorporation of the Corporation (the “ Certificate ”) is hereby amended and restated to read as follows:

 

FOURTH : The total number of shares of all classes of stock which the Corporation has authority to issue is 320,651,304 shares, consisting of 191,689,655 shares of common stock, par value $.001 per share (the “ Common Stock ”), and 129,651,304 shares of preferred stock, of which 4,615,385 shares of preferred stock are designated Seed Convertible Preferred Stock, par value $.001 per share (the “ Seed Preferred Stock ”), 36,661,538 shares of preferred stock are designated Series A Convertible Preferred Stock, par value $.001 per share (the “ Series A Preferred Stock ”), 35,098,520 shares of preferred stock are designated Series B Convertible Preferred Stock par value $.001 per share (the “ Series B Preferred Stock ”) and 53,275,861 shares of preferred stock are designated Series C Convertible Preferred Stock, par value $.001 per share (the “ Series C Preferred Stock ” and, together with the Seed Preferred Stock, the Series A Preferred Stock and the Series B Preferred Stock, the “ Preferred Stock ”).

 

SECOND:  The following new Subsection (g) is hereby added to Section 6 of Article Fourth of the Certificate:

 

“(g) Notwithstanding anything to the contrary in this Section 6 of Article FOURTH , the Corporation shall not be obligated to redeem any shares of Preferred Stock or any other shares of its capital stock pursuant to the provisions of this Section 6 of Article FOURTH at any time when the Corporation is prohibited from doing so pursuant to the terms of that certain Loan and Security Agreement, by and between the Corporation, as borrower, and Ares Capital Corporation, as lender, dated on or about September 30, 2013, as amended.”

 



 

THIRD:  That the remaining provisions of the Certificate not affected by the aforementioned amendment shall remain in full force and not be affected by this Certificate of Amendment.

 

FOURTH:  That the Amendment of the Certificate of Incorporation of the Corporation effected by this Certificate was duly authorized by the stockholders of the Corporation, after first having been declared advisable by the Board of Directors of the Corporation, all in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.

 

[ Remainder of Page Intentionally Left Blank ]

 



 

IN WITNESS WHEREOF, GENOCEA BIOSCIENCES, INC., has caused this Certificate to be executed this 30th day of September, 2013.

 

 

 

GENOCEA BIOSCIENCES, INC.

 

 

 

 

 

By:

/s/ William D. Clark

 

Name:

William D. Clark

 

Title:

Chief Executive Officer

 




Exhibit 3.5

 

BYLAWS

 

ARTICLE I — MEETINGS OF STOCKHOLDERS

 

1.1                                Place of Meetings .  Meetings of stockholders of Genocea, Inc. (the “ Company ”) shall be held at any place, within or outside the State of Delaware, determined by the Company’s board of directors (the “ Board ”).  The Board may, in its sole discretion, determine that a meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Section 211(a)(2) of the Delaware General Corporation Law (the “ DGCL ”).  In the absence of any such designation or determination, stockholders’ meetings shall be held at the Company’s principal executive office.

 

1.2                                Annual Meeting .  An annual meeting of stockholders shall be held for the election of directors at such date and time as may be designated by resolution of the Board from time to time.  Any other proper business may be transacted at the annual meeting.  The Company shall not be required to hold an annual meeting of stockholders, provided that (i) the stockholders are permitted to act by written consent under the Company’s certificate of incorporation and these bylaws, (ii) the stockholders take action by written consent to elect directors and (iii) the stockholders unanimously consent to such action or, if such consent is less than unanimous, 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.

 

1.3                                Special Meeting .  A special meeting of the stockholders may be called at any time by the Board, Chairperson of the Board, Chief Executive Officer or President (in the absence of a Chief Executive Officer) or by one or more stockholders holding shares in the aggregate entitled to cast not less than 10% of the votes at that meeting.

 

If any person(s) other than the Board calls a special meeting, the request shall:

 

(i)                                      be in writing;

 

(ii)                                   specify the time of such meeting and the general nature of the business proposed to be transacted; and

 

(iii)                                be delivered personally or sent by registered mail or by facsimile transmission to the Chairperson of the Board, the Chief Executive Officer, the President (in the absence of a Chief Executive Officer) or the Secretary of the Company.

 

The officer(s) receiving the request shall cause notice to be promptly given to the stockholders entitled to vote at such meeting, in accordance with these bylaws, that a meeting will be held at the time requested by the person or persons calling the meeting.  No business may be transacted at such special meeting other than the business specified in such notice to stockholders.  Nothing contained in this paragraph of this section 1.3 shall be construed as limiting, fixing, or affecting the time when a meeting of stockholders called by action of the Board may be held.

 

1.4                                Notice of Stockholders’ Meetings .  Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which

 



 

shall state the place, if any, date and hour of the meeting, the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called.  Except as otherwise provided in the DGCL, the certificate of incorporation or these bylaws, the written notice of any meeting of stockholders 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.

 

1.5                                Quorum .  Except as otherwise provided by law, the certificate of incorporation or these bylaws, at each meeting of stockholders the presence in person or by proxy of the holders of shares of stock having a majority of the votes which could be cast by the holders of all outstanding shares of stock entitled to vote at the meeting shall be necessary and sufficient to constitute a quorum.  If, however, such quorum is not present or represented at any meeting of the stockholders, then either (i) the chairperson of the meeting, or (ii) the stockholders entitled to vote at the meeting, present in person or represented by proxy, shall have the power to adjourn the meeting from time to time, in the manner provided in section 1.6 , until a quorum is present or represented.

 

1.6                                Adjourned Meeting; Notice .  Any meeting of stockholders, annual or special, may adjourn from time to time to reconvene at the same or some other place, and notice need not be given of the adjourned meeting if the time, place, if any, thereof, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken.  At the adjourned meeting, the Company may transact any business which might have been transacted at the original meeting.  If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

 

1.7                                Conduct of Business .  Meetings of stockholders shall be presided over by the Chairperson of the Board, if any, or in his or her absence by the Vice Chairperson of the Board, if any, or in the absence of the foregoing persons by the Chief Executive Officer, or in the absence of the foregoing persons by the President, or in the absence of the foregoing persons by a Vice President, or in the absence of the foregoing persons by a chairperson designated by the Board, or in the absence of such designation by a chairperson chosen at the meeting.  The Secretary shall act as secretary of the meeting, but in his or her absence the chairperson of the meeting may appoint any person to act as secretary of the meeting.  The chairperson of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of business.

 

1.8                                Voting .  The stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of section 1.10 of these bylaws, subject to Section 217 (relating to voting rights of fiduciaries, pledgors and joint owners of stock) and Section 218 (relating to voting trusts and other voting agreements) of the DGCL.

 

Except as maybe otherwise provided in the certificate of incorporation, each stockholder entitled to vote at any meeting of stockholders shall be entitled to one vote for each share of capital stock held by such stockholder which has voting power upon the matter in question.

 

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Voting at meetings of stockholders need not be by written ballot and, unless otherwise required by law, need not be conducted by inspectors of election unless so determined by the holders of shares of stock having a majority of the votes which could be cast by the holders of all outstanding shares of stock entitled to vote thereon which are present in person or by proxy at such meeting.  If authorized by the Board, such requirement of a written ballot shall be satisfied by a ballot submitted by electronic transmission (as defined in section 7.2 of these bylaws), provided that any such electronic transmission must either set forth or be submitted with information from which it can be determined that the electronic transmission was authorized by the stockholder or proxy holder.

 

Except as otherwise required by law, the certificate of incorporation or these bylaws, in all matters other than the election of directors, the affirmative vote of a majority of the voting power of the shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders.  Except as otherwise required by law, the certificate of incorporation or these bylaws, directors shall be elected by a plurality of the voting power of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors.

 

1.9                                Stockholder Action by Written Consent Without a Meeting .  Unless otherwise provided in the certificate of incorporation, any action required by the DGCL to be taken at any annual or special meeting of stockholders of a corporation, or any action which may be taken at any annual or special meeting of such stockholders, 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 thereon were present and voted.

 

An electronic transmission (as defined in section 7.2 ) consenting to an action to be taken and transmitted by a stockholder or proxy holder, or by a person or persons authorized to act for a stockholder or proxy holder, shall be deemed to be written, signed and dated for purposes of this section, provided that any such electronic transmission sets forth or is delivered with information from which the Company can determine (i) that the electronic transmission was transmitted by the stockholder or proxy holder or by a person or persons authorized to act for the stockholder or proxy holder and (ii) the date on which such stockholder or proxy holder or authorized person or persons transmitted such electronic transmission.

 

In the event that the Board shall have instructed the officers of the Company to solicit the vote or written consent of the stockholders of the Company, an electronic transmission of a stockholder written consent given pursuant to such solicitation may be delivered to the Secretary or the President of the Company or to a person designated by the Secretary or the President.  The Secretary or the President of the Company or a designee of the Secretary or the President shall cause any such written consent by electronic transmission to be reproduced in paper form and inserted into the corporate records.

 

Prompt notice of the taking of the 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

 

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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 Company as provided in Section 228 of the DGCL.  In the event that the action which is consented to is such as would have required the filing of a certificate under any provision of the DGCL, if such action had been voted on by stockholders at a meeting thereof, the certificate filed under such provision shall state, in lieu of any statement required by such provision concerning any vote of stockholders, that written consent has been given in accordance with Section 228 of the DGCL.

 

1.10                         Record Date for Stockholder Notice; Voting; Giving Consents .  In order that the Company may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board 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 and which record date:

 

(i)                                      in the case of determination of stockholders entitled to notice of or to vote at any meeting of stockholders or adjournment thereof, shall, unless otherwise required by law, not be more than sixty nor less than ten days before the date of such meeting;

 

(ii)                                   in the case of determination of stockholders entitled to express consent to corporate action in writing without a meeting, shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the Board; and

 

(iii)                                in the case of determination of stockholders for any other action, shall not be more than 60 days prior to such other action.

 

If no record date is fixed by the Board:

 

(i)                                      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;

 

(ii)                                   the record date for determining stockholders entitled to express consent to corporate action in writing without a meeting when no prior action of the Board is required by law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Company in accordance with applicable law, or, if prior action by the Board is required by law, shall be at the close of business on the day on which the Board adopts the resolution taking such prior action; and

 

(iii)                                the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto.

 

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 that the Board may fix a new record date for the adjourned meeting.

 

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1.11                         Proxies .  Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period.  The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212 of the DGCL.

 

1.12                         List of Stockholders Entitled to Vote .  The officer who has charge of the stock ledger of the Company shall prepare and make, at least ten 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.  The Company shall not be required to include electronic mail addresses or other electronic contact information on such list.  Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting for a period of at least ten days prior to the meeting: (i) 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 (ii) during ordinary business hours, at the Company’s principal place of business.  In the event that the Company determines to make the list available on an electronic network, the Company may take reasonable steps to ensure that such information is available only to stockholders of the Company.  If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected 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.

 

ARTICLE II — DIRECTORS

 

2.1                                Powers .  The business and affairs of the Company shall be managed by or under the direction of the Board, except as may be otherwise provided in the DGCL or the certificate of incorporation.

 

2.2                                Number of Directors .  The Board shall consist of one or more members, each of whom shall be a natural person.  Unless the certificate of incorporation fixes the number of directors, the number of directors shall be determined from time to time by resolution of the Board.  No reduction of the authorized number of directors shall have the effect of removing any director before that director’s term of office expires.

 

2.3                                Election, Qualification and Term of Office of Directors .  Except as provided in section 2.4 of these bylaws, and subject to sections 1.2 and 1.9 of these bylaws, directors shall be elected at each annual meeting of stockholders.  Directors need not be stockholders unless so required by the certificate of incorporation or these bylaws.  The certificate of incorporation or these bylaws may prescribe other qualifications for directors.  Each director shall hold office until such director’s successor is elected and qualified or until such director’s earlier death, resignation or removal.

 

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2.4                                Resignation and Vacancies .  Any director may resign at any time upon notice given in writing or by electronic transmission to the Company.  A resignation is effective when the resignation is delivered unless the resignation specifies a later effective date or an effective date determined upon the happening of an event or events.  A resignation which is conditioned upon the director failing to receive a specified vote for reelection as a director may provide that it is irrevocable.  Unless otherwise provided in the certificate of incorporation or these bylaws, when one or more directors resign from the Board, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective.

 

Unless otherwise provided in the certificate of incorporation or these bylaws:

 

(i)                                      Vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director.

 

(ii)                                   Whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the provisions of the certificate of incorporation, vacancies and newly created directorships of such class or classes or series may be filled by a majority of the directors elected by such class or classes or series thereof then in office, or by a sole remaining director so elected.

 

If at any time, by reason of death or resignation or other cause, the Company should have no directors in office, then any officer or any stockholder or an executor, administrator, trustee or guardian of a stockholder, or other fiduciary entrusted with like responsibility for the person or estate of a stockholder, may call a special meeting of stockholders in accordance with the provisions of the certificate of incorporation or these bylaws, or may apply to the Court of Chancery for a decree summarily ordering an election as provided in Section 211 of the DGCL.

 

If, at the time of filling any vacancy or any newly created directorship, the directors then in office constitute less than a majority of the whole Board (as constituted immediately prior to any such increase), the Court of Chancery may, upon application of any stockholder or stockholders holding at least 10% of the voting stock at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office as aforesaid, which election shall be governed by the provisions of Section 211 of the DGCL as far as applicable.

 

A director elected to fill a vacancy shall be elected for the unexpired term of his or her predecessor in office and until such director’s successor is elected and qualified, or until such director’s earlier death, resignation or removal.

 

2.5                                Place of Meetings; Meetings by Telephone .  The Board may hold meetings, both regular and special, either within or outside the State of Delaware.

 

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Unless otherwise restricted by the certificate of incorporation or these bylaws, members of the Board, or any committee designated by the Board, may participate in a meeting of the Board, or any committee, by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.

 

2.6                                Conduct of Business .  Meetings of the Board shall be presided over by the Chairperson of the Board, if any, or in his or her absence by the Vice Chairperson of the Board, if any, or in the absence of the foregoing persons by a chairperson designated by the Board, or in the absence of such designation by a chairperson chosen at the meeting.  The Secretary shall act as secretary of the meeting, but in his or her absence the chairperson of the meeting may appoint any person to act as secretary of the meeting.

 

2.7                                Regular Meetings .  Regular meetings of the Board may be held without notice at such time and at such place as shall from time to time be determined by the Board.

 

2.8                                Special Meetings; Notice .  Special meetings of the Board for any purpose or purposes may be called at any time by the Chairperson of the Board, the Chief Executive Officer, the President, the Secretary or any two directors.

 

Notice of the time and place of special meetings shall be:

 

(i)                                      delivered personally by hand, by courier or           by telephone;

 

(ii)                                   sent by United States first-class mail, postage prepaid;

 

(iii)                                sent by facsimile; or

 

(iv)                               sent by electronic mail,

 

directed to each director at that director’s address, telephone number, facsimile number or electronic mail address, as the case may be, as shown on the Company’s records.

 

If the notice is (i) delivered personally by hand, by courier or by telephone, (ii) sent by facsimile or (iii) sent by electronic mail, it shall be delivered or sent at least 24 hours before the time of the holding of the meeting.  If the notice is sent by United States mail, it shall be deposited in the United States mail at least four days before the time of the holding of the meeting.  Any oral notice may be communicated to the director.  The notice need not specify the place of the meeting (if the meeting is to be held at the Company’s principal executive office) nor the purpose of the meeting.

 

2.9                                Quorum; Voting .  At all meetings of the Board, a majority of the total authorized number of directors shall constitute a quorum for the transaction of business.  If a quorum is not present at any meeting of the Board, then the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present.  A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for that meeting.

 

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The vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board, except as may be otherwise specifically provided by statute, the certificate of incorporation or these bylaws.

 

If the certificate of incorporation provides that one or more directors shall have more or less than one vote per director on any matter, every reference in these bylaws to a majority or other proportion of the directors shall refer to a majority or other proportion of the votes of the directors.

 

2.10                         Board Action by Written Consent Without a Meeting .  Unless otherwise restricted by the certificate of incorporation or these bylaws, any action required or permitted to be taken at any meeting of the Board, or of any committee thereof, may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing or by electronic transmission and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board 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.

 

2.11                         Fees and Compensation of Directors .  Unless otherwise restricted by the certificate of incorporation or these bylaws, the Board shall have the authority to fix the compensation of directors.

 

2.12                         Removal of Directors .  Unless otherwise restricted by statute, the certificate of incorporation or these bylaws, any director or the entire Board 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.

 

No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of such director’s term of office.

 

ARTICLE III — ARTICLE III — COMMITTEES

 

3.1                                Committees of Directors .  The Board may designate one or more committees, each committee to consist of one or more of the directors of the Company.  The Board 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 thereof 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 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 or in these bylaws, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Company, and may authorize the seal of the Company to be affixed to all papers that may require it; but no such committee shall have the power or authority to (i) approve or adopt, or recommend to the stockholders, any action or matter (other than the election or removal of directors) expressly required by the DGCL to be submitted to stockholders for approval, or (ii) adopt, amend or repeal any bylaw of the Company.

 

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3.2                                Committee Minutes .  Each committee shall keep regular minutes of its meetings and report the same to the Board when required.

 

3.3                                Meetings and Actions of Committees .  Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of:

 

(i)                                      section 2.5 (Place of Meetings; Meetings by Telephone);

 

(ii)                                   section 2.7 (Regular Meetings);

 

(iii)                                section 2.8 (Special Meetings; Notice);

 

(iv)                               section 2.9 (Quorum; Voting);

 

(v)                                  section 2.10 (Board Action by Written Consent Without a Meeting); and

 

(vi)                               section 7.5 (Waiver of Notice)

 

with such changes in the context of those bylaws as are necessary to substitute the committee and its members for the Board and its members.  However :

 

(i)                                      the time of regular meetings of committees may be determined either by resolution of the Board or by resolution of the committee;

 

(ii)                                   special meetings of committees may also be called by resolution of the Board; and

 

(iii)                                notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee.  The Board may adopt rules for the government of any committee not inconsistent with the provisions of these bylaws.

 

3.4                                Subcommittees .  Unless otherwise provided in the certificate of incorporation, these bylaws or the resolutions of the Board 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.

 

ARTICLE IV — OFFICERS

 

4.1                                Officers .  The officers of the Company shall be a President and a Secretary.  The Company may also have, at the discretion of the Board, a Chairperson of the Board, a Vice Chairperson of the Board, a Chief Executive Officer, one or more Vice Presidents, a Chief Financial Officer, a Treasurer, one or more Assistant Treasurers, one or more Assistant Secretaries, and any such other officers as may be appointed in accordance with the provisions of these bylaws.  Any number of offices may be held by the same person.

 

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4.2                                Appointment of Officers .  The Board shall appoint the officers of the Company, except such officers as may be appointed in accordance with the provisions of section 4.3 of these bylaws.

 

4.3                                Subordinate Officers .  The Board may appoint, or empower the Chief Executive Officer or, in the absence of a Chief Executive Officer, the President, to appoint, such other officers and agents as the business of the Company may require.  Each of such officers and agents shall hold office for such period, have such authority, and perform such duties as are provided in these bylaws or as the Board may from time to time determine.

 

4.4                                Removal and Resignation of Officers .  Any officer may be removed, either with or without cause, by an affirmative vote of the majority of the Board at any regular or special meeting of the Board or, except in the case of an officer chosen by the Board, by any officer upon whom such power of removal may be conferred by the Board.

 

Any officer may resign at any time by giving written notice to the Company.  Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice.  Unless otherwise specified in the notice of resignation, the acceptance of the resignation shall not be necessary to make it effective.  Any resignation is without prejudice to the rights, if any, of the Company under any contract to which the officer is a party.

 

4.5                                Vacancies in Offices .  Any vacancy occurring in any office of the Company shall be filled by the Board or as provided in section 4.3 .

 

4.6                                Representation of Shares of Other Corporations .  Unless otherwise directed by the Board, the President or any other person authorized by the Board or the President is authorized to vote, represent and exercise on behalf of the Company all rights incident to any and all shares of any other corporation or corporations standing in the name of the Company.  The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority.

 

4.7                                Authority and Duties of Officers .  Except as otherwise provided in these bylaws, the officers of the Company shall have such powers and duties in the management of the Company as may be designated from time to time by the Board and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the Board.

 

ARTICLE V — INDEMNIFICATION

 

5.1                                Indemnification of Directors and Officers in Third Party Proceedings .  Subject to the other provisions of this Article V , the Company shall indemnify, to the fullest extent permitted by the DGCL, as now or hereinafter in effect, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (a “ Proceeding ”) (other than an action by or in the right of the Company) by reason of the fact that such person is or was a director or officer of the Company, or is or was a director or officer of the Company serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments,

 

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fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such Proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful.  The termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had reasonable cause to believe that such person’s conduct was unlawful.

 

5.2                                Indemnification of Directors and Officers in Actions by or in the Right of the Company .  Subject to the other provisions of this Article V , the Company shall indemnify, to the fullest extent permitted by the DGCL, as now or hereinafter in effect, any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Company to procure a judgment in its favor by reason of the fact that such person is or was a director or officer of the Company, or is or was a director or officer of the Company serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Company; except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Company unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.

 

5.3                                Successful Defense .  To the extent that a present or former director or officer of the Company has been successful on the merits or otherwise in defense of any action, suit or proceeding described in section 5.1 or section 5.2 , or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection therewith.

 

5.4                                Indemnification of Others .  Subject to the other provisions of this Article V , the Company shall have power to indemnify its employees and agents to the extent not prohibited by the DGCL or other applicable law.  The Board shall have the power to delegate to such person or persons the determination of whether employees or agents shall be indemnified.

 

5.5                                Advanced Payment of Expenses .  Expenses (including attorneys’ fees) incurred by an officer or director of the Company in defending any Proceeding shall be paid by the Company in advance of the final disposition of such Proceeding upon receipt of an undertaking by or on behalf of the person to repay such amounts if it shall ultimately be determined that the person is not entitled to be indemnified under this Article V or the DGCL.  Such expenses (including attorneys’ fees) incurred by former directors and officers or other employees and

 

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agents may be so paid upon such terms and conditions, if any, as the Company deems appropriate.

 

5.6                                Limitation on Indemnification and Advancement of Expenses .  Subject to the requirements in section 5.3 and the DGCL, the Company shall not be required to provide indemnification or, with respect to clauses (i), (iii) and (iv) below, advance expenses to any person pursuant to this Article V :

 

(i)                                      in connection with any Proceeding (or part thereof) initiated by such person except (i) as otherwise required by law, (ii) in specific cases if the Proceeding was authorized by the Board, or (iii) as is required to be made under section 5.7 ;

 

(ii)                                   in connection with any Proceeding (or part thereof) against such person providing for an accounting or disgorgement of profits pursuant to the provisions of Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar provisions of any federal, state or local statutory law or common law;

 

(iii)                                for amounts for which payment has actually been made to or on behalf of such person under any statute, insurance policy or indemnity provision, except with respect to any excess beyond the amount paid; or

 

(iv)                               if prohibited by applicable law.

 

5.7                                Determination; Claim .  If a claim for indemnification or advancement of expenses under this Article V is not paid in full within 60 days after a written claim therefor has been received by the Company, the claimant 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 suit, the Company shall have the burden of proving that the claimant was not entitled to the requested indemnification or advancement of expenses under applicable law.

 

5.8                                Non-Exclusivity of Rights .  The indemnification and advancement of expenses provided by, or granted pursuant to, this Article V shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under the certificate of incorporation or any statute, bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office.  The Company is specifically authorized to enter into individual contracts with any or all of its directors, officers, employees or agents respecting indemnification and advancement of expenses, to the fullest extent not prohibited by the DGCL or other applicable law.

 

5.9                                Insurance .  The Company may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the Company would have the power to indemnify such person against such liability under the provisions of the DGCL.

 

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5.10                         Survival .  The rights to indemnification and advancement of expenses conferred by this Article V shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

 

5.11                         Effect of Repeal or Modification .  Any repeal or modification of this Article V 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.

 

5.12                         Certain Definitions .  For purposes of this Article V , references to the “ Company ” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article V with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued.  For purposes of this Article V , references to “ other enterprises ” shall include employee benefit plans; references to “ fines ” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and 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 such person reasonably believed to be in the interest 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 Article V .

 

ARTICLE VI — STOCK

 

6.1                                Stock Certificates; Partly Paid Shares .  The shares of the Company shall be represented by certificates, provided that the Board may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares.  Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Company.  Every holder of stock represented by certificates shall be entitled to have a certificate signed by, or in the name of the Company by the Chairperson of the Board or Vice-Chairperson of the Board, or the President or a Vice- President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Company representing the number of shares registered in certificate form.  Any or all of the signatures on the certificate may be a facsimile.  In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Company with the same effect as if such person were such officer, transfer agent or registrar at the date of issue.  The Company shall not have power to issue a certificate in bearer form.

 

The Company may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor.  Upon the face or back of each

 

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stock certificate issued to represent any such partly paid shares, or upon the books and records of the Company in the case of uncertificated partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated.  Upon the declaration of any dividend on fully paid shares, the Company shall declare a dividend upon partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon.

 

6.2                                Special Designation on Certificates .  If the Company is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences, and the 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 the certificate that the Company shall issue to represent such class or series of stock; provided that, except as otherwise provided in Section 202 of the DGCL, in lieu of the foregoing requirements there may be set forth on the face or back of the certificate that the Company shall issue to represent such class or series of stock a statement that the Company will furnish without charge to each stockholder who so requests the powers, the designations, the preferences, and the 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.

 

6.3                                Lost Certificates .  Except as provided in this section 6.3 , no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the Company and cancelled at the same time.  The Company may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Company may require the owner of the lost, stolen or destroyed certificate, or such owner’s legal representative, to give the Company a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.

 

6.4                                Dividends .  The Board, subject to any restrictions contained in the certificate of incorporation or applicable law, may declare and pay dividends upon the shares of the Company’s capital stock.  Dividends may be paid in cash, in property, or in shares of the Company’s capital stock, subject to the provisions of the certificate of incorporation.

 

The Board may set apart out of any of the funds of the Company available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve.

 

6.5                                Stock Transfer Agreements .  The Company shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the Company to restrict the transfer of shares of stock of the Company of any one or more classes owned by such stockholders in any manner not prohibited by the DGCL.

 

6.6                                Registered Stockholders .  The Company:

 

(i)                                      shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner;

 

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(ii)                                   shall be entitled to hold liable for calls and assessments the person registered on its books as the owner of shares; and

 

(iii)                                shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.

 

6.7                                Transfers .  Transfers of record of shares of stock of the Company shall be made only upon its books by the holders thereof, in person or by an attorney duly authorized, and upon the surrender of a certificate or certificates for a like number of shares, properly endorsed.

 

ARTICLE VII — MANNER OF GIVING NOTICE AND WAIVER

 

7.1                                Notice of Stockholder Meetings .  Notice of any meeting of stockholders, if mailed, is given when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the Company’s records.  An affidavit of the Secretary or an Assistant Secretary of the Company or of the transfer agent or other agent of the Company that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

 

7.2                                Notice by Electronic Transmission .  Without limiting the manner by which notice otherwise may be given effectively to stockholders pursuant to the DGCL, the certificate of incorporation or these bylaws, any notice to stockholders given by the Company under any provision of the DGCL, the certificate of incorporation or these bylaws shall be effective if given by a form of electronic transmission consented to by the stockholder to whom the notice is given.  Any such consent shall be revocable by the stockholder by written notice to the Company.  Any such consent shall be deemed revoked if:

 

(i)                                      the Company is unable to deliver by electronic transmission two consecutive notices given by the Company in accordance with such consent; and

 

(ii)                                   such inability becomes known to the Secretary or an Assistant Secretary of the Company or to the transfer agent, or other person responsible for the giving of notice.

 

However, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action.

 

Any notice given pursuant to the preceding paragraph shall be deemed given:

 

(i)                                      if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice;

 

(ii)                                   if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice;

 

(iii)                                if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and

 

15



 

(iv)                               if by any other form of electronic transmission, when directed to the stockholder.

 

An affidavit of the Secretary or an Assistant Secretary or of the transfer agent or other agent of the Company that the notice has been given by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

 

An “ electronic transmission ” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved, and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.

 

Notice by a form of electronic transmission shall not apply to Sections 164,296,311,312 or 324 of the DGCL.

 

7.3                                Notice to Stockholders Sharing an Address .  Except as otherwise prohibited under the DGCL, without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders given by the Company under the provisions of the DGCL, the certificate of incorporation or these bylaws shall be effective if given by a single written notice to stockholders who share an address if consented to by the stockholders at that address to whom such notice is given.  Any such consent shall be revocable by the stockholder by written notice to the Company.  Any stockholder who fails to object in writing to the Company, within 60 days of having been given written notice by the Company of its intention to send the single notice, shall be deemed to have consented to receiving such single written notice.

 

7.4                                Notice to Person with Whom Communication is Unlawful .  Whenever notice is required to be given, under the DGCL, the certificate of incorporation or these bylaws, to any person with whom communication is unlawful, the giving of such notice to such person shall not be required and there shall be no duty to apply to any governmental authority or agency for a license or permit to give such notice to such person.  Any action or meeting which shall be taken or held without notice to any such person with whom communication is unlawful shall have the same force and effect as if such notice had been duly given.  In the event that the action taken by the Company is such as to require the filing of a certificate under the DGCL, the certificate shall state, if such is the fact and if notice is required, that notice was given to all persons entitled to receive notice except such persons with whom communication is unlawful.

 

7.5                                Waiver of Notice .  Whenever notice is required to be given under any provision of the DGCL, the certificate of incorporation or 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 before or after the time of the event for which notice is to be given, shall be deemed equivalent to notice.  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.  Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice

 

16



 

or any waiver by electronic transmission unless so required by the certificate of incorporation or these bylaws.

 

ARTICLE VIII — GENERAL MATTERS

 

8.1                                Fiscal Year .  The fiscal year of the Company shall be fixed by resolution of the Board and may be changed by the Board.

 

8.2                                Seal .  The Company may adopt a corporate seal, which shall be in such form as may be approved from time to time by the Board.  The Company may use the corporate seal by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.

 

8.3                                Annual Report .  The Company shall cause an annual report to be sent to the stockholders of the Company to the extent required by applicable law.  If and so long as there are fewer than 100 holders of record of the Company’s shares, the requirement of sending an annual report to the stockholders of the Company is expressly waived (to the extent permitted under applicable law).

 

8.4                                Construction; Definitions .  Unless the context requires otherwise, the general provisions, rules of construction, and definitions in the DGCL shall govern the construction of these bylaws.  Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term “person” includes both a corporation and a natural person.

 

ARTICLE IX — AMENDMENTS

 

These bylaws may be adopted, amended or repealed by the stockholders entitled to vote.  However, the Company may, in its certificate of incorporation, confer the power to adopt, amend or repeal bylaws upon the directors.  The fact that such power has been so conferred upon the directors shall not divest the stockholders of the power, nor limit their power to adopt, amend or repeal bylaws.

 

A bylaw amendment adopted by stockholders which specifies the votes that shall be necessary for the election of directors shall not be further amended or repealed by the Board.

 

17




Exhibit 4.1

 

THIS CERTIFIES THAT is the owner of CUSIP DATED COUNTERSIGNED AND REGISTERED: COMPUTERSHARE TRUST COMPANY, N.A. TRANSFER AGENT AND REGISTRAR, FULLY-PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK OF Genocea Biosciences, 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. COMMON STOCK PAR VALUE $0.001 COMMON STOCK THIS CERTIFICATE IS TRANSFERABLE IN CANTON, MA, JERSEY CITY, NJ AND COLLEGE STATION, TX SEE REVERSE FOR CERTAIN DEFINITIONS Certificate Number Shares GENOCEA BIOSCIENCES, INC. INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE Vice President Finance and Administration By AUTHORIZED SIGNATURE AUGUST 2006 DELAWARE GENOCEA BIOSCIENCES, INC. President and CEO ZQ|CERT#|COY|CLS|RGSTRY|ACCT#|TRANSTYPE|RUN#|TRANS# 372427 10 4 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 Genocea Bioscience, Inc. PO BOX 43004, Providence, RI 02940-3004 CUSIP XXXXXX XX X Holder ID XXXXXXXXXX Insurance Value 1,000,000.00 Number of Shares 123456 DTC 12345678 123456789012345

 


The IRS requires that we report the cost basis of certain shares acquired after January 1, 2011. If your shares were covered by the legislation and you have sold or transferred the shares and requested a specific cost basis calculation method, we have processed as requested. If you did not specify a cost basis calculation method, we have defaulted to the first in, first out (FIFO) method. Please visit our website or consult your tax advisor if you need additional information about cost basis. If you do not keep in contact with us or do not have any activity in your account for the time periods specified by state law, your property could 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. GENOCEA BIOSCIENCES, 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. Signature(s) Guaranteed: Medallion Guarantee Stamp THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (Banks, Stockbrokers, Savings and Loan Associations and Credit Unions) WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM, PURSUANT TO S.E.C. RULE 17Ad-15. 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.

 

 



Exhibit 4.2

 

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THE ACT AND SUCH LAWS OR (1) REGISTRATION UNDER APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED AND (2) AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY IS FURNISHED TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED.

 

GENOCEA BIOSCIENCES, INC.

 

WARRANT TO PURCHASE PREFERRED STOCK

 

This certifies that, for value received,            (the “ Holder ”) is entitled to subscribe for and purchase a number of fully paid and nonassessable shares of Warrant Stock (as defined below) of Genocea Biosciences, Inc., a Delaware corporation (the “ Company ”), subject to the provisions and upon the terms and conditions set forth herein and in the Note Purchase Agreement (as defined below), equal to 20% of the Holder’s Initial Note Amount divided by either, (i) the lowest price at which Financing Securities are sold at the Financing if conversion is triggered by a Financing, or (ii) $0.65, if conversion is triggered by a Company Sale Transaction (subject to adjustment from time to time pursuant to the provisions of Section 5 hereof) at the Warrant Price (as defined in Section 2 hereof). Warrant Stock shall mean either, pursuant to the terms of the Note Purchase Agreement, (i) Financing Securities, if conversion is triggered by a Financing, or (ii) Seed Preferred Shares if conversion is triggered by a Company Sale Transaction.

 

This Warrant  is one of the “Financing Warrants” referred to in that certain Note Purchase Agreement, dated as of January 7, 2008 (as amended, restated or otherwise modified from time to time, the “Note Purchase Agreement”), among the Company and the Purchasers from time to time party thereto and is subject to the terms and conditions set forth therein with respect hereto, which terms and conditions are incorporated herein by reference.  The Holder hereof is entitled to the benefits and subject to the conditions set forth in the Note Purchase Agreement and may enforce the agreements of the Company contained therein, and exercise the respective remedies provided for thereby or otherwise available in respect hereof, all in accordance with the respective terms thereof.  Capitalized terms used herein but not otherwise defined herein shall have the meanings assigned thereto in the Note Purchase Agreement.

 

If the Warrant Stock issuable upon exercise of this Warrant shall be converted into shares of the Company’s Common Stock pursuant to the Company’s Certificate of Incorporation (the “Certificate”), this Warrant shall thereafter entitle the Holder to purchase that number of shares of Common Stock into which the number of shares of Warrant Stock for which this Warrant is exercisable would have converted had such shares of Warrant Stock been issued immediately prior to the conversion pursuant to the Certificate at a price per share equal to the Warrant Price at the time of such conversion divided by the number of shares of Common Stock into which each share of Warrant Stock so converted.

 



 

1.                                       Term of Warrant .  The purchase right represented by this warrant (hereinafter the “Warrant”) is exercisable, in whole or in part, at any time during the period commencing on the closing of the Financing and continuing until the later of (a) 5 years from the date of the Financing or (b) an initial public offering of stock by the Company.  If a Company Sale Transaction occurs prior to a Financing, the Warrant shall be exercisable for Seed Preferred Shares on the terms described herein and in the Note Purchase Agreement.

 

2.               Warrant Price .  The initial exercise price of this Warrant shall be equal to either, (i) the lowest price at which Financing Securities are sold at the Financing if conversion is triggered by a Financing, or (ii) $0.65, if conversion is triggered by a Company Sale Transaction (subject to adjustment from time to time pursuant to the provisions of Section 5 hereof)  (the “ Warrant Price ”).

 

3.               Method of Exercise; Payment; Issuance of New Warrant .

 

(a)                                  The purchase right represented by this Warrant may be exercised by the holder hereof during the term of this Warrant, in whole or in part, by the surrender of this Warrant (with the notice of exercise form attached hereto as Exhibit 1 duly executed) at the principal office of the Company and by the payment to the Company, by check or wire transfer, of an amount equal to the then applicable Warrant Price per share multiplied by the number of shares then being purchased.  The Company agrees that the shares so purchased shall be deemed to be issued to the holder hereof as the record owner of such shares as of the close of business on the date on which this Warrant shall have been surrendered and payment made for such shares as aforesaid.  In the event of any exercise of this Warrant, certificates for the shares of stock so purchased shall be delivered to the holder hereof within 15 days thereafter and, unless this Warrant has been fully exercised or expired, a new Warrant representing the portion of the shares, if any, with respect to which this Warrant shall not then have been exercised, shall also be issued to the holder hereof within such 15 day period.

 

(b)                                  Net Issue Exercise

 

(i)                                      In lieu of exercising this Warrant in the manner set forth in Section 3(a) above, Holder may elect to receive shares of Warrant Stock equal to the value of this Warrant (or the portion thereof being canceled) by surrender of this Warrant at the principal office of the Company together with notice of such election, in which event the Company shall issue to Holder a number of shares of the Warrant Stock computed using the following formula:

 

 

Where X = The number of shares of Warrant Stock to be issued to Holder.

 

Y = The number of shares of Warrant Stock purchasable under this Warrant.

 

A = The fair market value of one share of the Warrant Stock.

 

B = Warrant Price (as adjusted to the date of such calculations).

 

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(ii)                                   For purposes of this Section, fair market value of the Warrant Stock shall mean the price per share which the Company could obtain from a willing buyer for shares sold by the Company from authorized but unissued shares, as such price shall be determined by the Board of Directors Company.

 

4.               Stock Fully Paid; Reservation of Shares .  All Warrant Stock or other stock which may be issued upon the exercise of this Warrant will, upon issuance, be fully paid and nonassessable, and free from all taxes, liens and charges with respect to the issue thereof.  During the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized, and reserved for the purpose of the issuance upon exercise of the purchase rights evidenced by this Warrant a sufficient number of shares of its Warrant Stock to provide for the exercise of the rights represented by this Warrant.  The issuance of this Warrant and any shares of Warrant Stock issuable upon exercise of this Warrant will not be subject to pre-emptive rights of any holder of record of stock, or of securities exchangeable for or convertible into stock, of the Company on the date hereof except such rights as have been waived prior to the issuance hereof.

 

5.               Adjustment of Purchase Price and Number of Shares .  The kind of securities purchasable upon the exercise of this Warrant, the Warrant Price and the number of shares purchasable upon exercise of this Warrant shall be subject to adjustment from time to time upon the occurrence of certain events as follows:

 

(a)                                  Reclassification, Consolidation or Merger . If there occurs any capital reorganization or any reclassification of the Company’s capital stock, any consolidation or merger of the Company with or into another company, the sale or conveyance of all or substantially all of the assets of the Company to another entity, or the liquidation, dissolution or winding up of the Company, this Warrant shall thereafter entitle the Holder to purchase the same kind and amounts of securities and other assets which the Holder would have received as a holder of shares if this Warrant had been fully exercised immediately prior to such transaction or any applicable record date for such transaction.  Appropriate adjustments shall be made with respect to the rights and interests of the Holder under this Warrant to the end that the provisions hereof shall thereafter apply as reasonably as they may to the securities or assets thereafter deliverable upon the exercise hereof.  As a condition thereto, the successor company (if other than the Company) resulting from such consolidation or merger or the entity purchasing such assets shall assume the foregoing obligations by written instrument in form and substance reasonably satisfactory to the Company and delivered to the Holder.  The provisions hereof shall be binding upon such successor company regardless of whether such successor company expressly assumes this Warrant.  The provisions of this subsection (a) shall similarly apply to successive consolidations, mergers and transfers.

 

(b)                                  Subdivision or Combination of Shares .  If the Company at any time while this Warrant remains outstanding and unexpired shall subdivide or combine its Warrant Stock, the number of shares of Warrant Stock subject to this Warrant and the Warrant Price shall be proportionately adjusted, so that the aggregate Warrant Price of this Warrant shall remain the same.

 

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(c)                                   Adjustments for Certain Dividends and Distributions .  If the Company declares and pays any dividends or distributions on its Warrant Stock (or on its Common Stock if this Warrant shall have become a Warrant for Common Stock pursuant to the terms hereof), other than those payable in Warrant Stock (or payable in its Common Stock if this Warrant shall have become a Warrant for Common Stock pursuant to the terms hereof) or ordinary cash dividends, this Warrant shall thereafter entitle the Holder to receive upon exercise, in addition to the shares purchased under this Warrant, an amount of cash or other property so declared and paid which is equal to the amount the Holder would have received if this Warrant had been exercised immediately prior to the record date for such dividend or distribution.

 

(d)                                  Stock Dividends . Upon any subdivision or combination of outstanding shares of Warrant Stock (or of Common Stock if this Warrant shall have become a Warrant for Common Stock pursuant to the terms hereof), and upon any dividend or other distribution payable in shares of Warrant Stock (or payable in Common Stock if this Warrant shall have become a Warrant for Common Stock pursuant to the terms hereof), the number of shares subject to purchase hereunder shall be adjusted by multiplying the number of shares subject to purchase hereunder immediately prior to such event by a fraction, the numerator of which is the number of shares of Warrant Stock (or the number of shares of Common Stock if this Warrant shall have become a Warrant for Common Stock pursuant to the terms hereof) outstanding immediately subsequent to such event and the denominator of which is the number of shares of Warrant Stock (or the number of shares of Common Stock if this Warrant shall have become a Warrant for Common Stock pursuant to the terms hereof) outstanding immediately prior to such event, and the Warrant Price shall thereupon be proportionately decreased or increased so that the total consideration payable upon full exercise of this Warrant shall be unchanged, except that in no event shall the Warrant Price be reduced below the par value per share of the shares issuable hereunder.

 

(e)                                   Exercise upon a Sale of the Company .  If, prior to a Financing, there is a Company Sale Transaction, the Warrant shall be immediately exercisable into Seed Preferred Shares, at an exercise price equal to $0.64 per share.

 

6.               Notice of Adjustments .  Whenever the Warrant Price shall be adjusted pursuant to Section 5 hereof, the Company shall prepare a certificate signed by its president or chief financial officer setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated, the Warrant Price after giving effect to such adjustment and the number of shares then purchasable upon exercise of this Warrant, and shall cause copies of such certificate to be mailed (by first class mail, postage prepaid) to the holder of this Warrant at the address specified in Section 10(d) hereof, or at such other address as may be provided to the Company in writing by the holder of this Warrant.

 

7.               Fractional Shares .  No fractional shares of Warrant Stock will be issued in connection with any exercise hereunder, but in lieu of such fractional shares the Company shall make a cash payment therefor upon the basis of the Warrant Price then in effect.

 

8.               Compliance with the Act .  The Holder, by acceptance hereof, agrees that this Warrant and the shares of Warrant Stock to be issued upon exercise hereof are being acquired for investment for such holder’s own account and not with a view toward distribution thereof, and that it will

 

4



 

not offer, sell or otherwise dispose of this Warrant or any shares of Warrant Stock to be issued upon exercise hereof unless this Warrant has been registered under the Act and applicable state securities laws or (i) registration under applicable state securities laws is not required and (ii) an opinion of counsel satisfactory to the Company is furnished to the Company to the effect that registration under the Act is not required.

 

9.               Transfer of Warrant .  This Warrant and the rights granted hereunder may not be transferred or succeeded to by any person without the prior written consent of the Company, except that any Holder may transfer the rights granted hereunder, without the consent of the Company, to any other Holder or any general or limited partner, officer or other affiliate of any Holder.  Subject to compliance with the foregoing sentence and to the provisions of Section 8 hereof, this Warrant and all rights hereunder shall be transferable, in whole or in part, at the office of the Company by the holder hereof in person or by duly authorized attorney, upon surrender of this Warrant properly endorsed.  The last holder of this Warrant as registered on the books of the Company may be treated by the Company and all persons dealing with this Warrant as the absolute owner hereof for any purposes and as the person entitled to exercise the rights represented by this Warrant or to transfer hereof on the books of the Company, any notice to the contrary notwithstanding, unless and until such holder seeks to transfer registered ownership of this Warrant on the books of the Company and such transfer is effected.

 

10.        Miscellaneous .

 

(a)                                  No Rights as Shareholder .  The Holder of this Warrant shall not be entitled to vote or receive dividends or be deemed the holder of Warrant Stock or any other securities of the Company which may at any time be issuable on the exercise hereof for any purpose, nor shall anything contained herein be construed to confer upon the Holder of this Warrant, as such, any of the rights of a shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value or change of stock to no par value, consolidation, merger, conveyance or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until the Warrant shall have been exercised or converted and the shares purchasable upon the exercise hereof shall have become deliverable, as provided herein.

 

(b)                                  Replacement .  On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement, or bond reasonably satisfactory in form and amount to the Company or, in the case of mutilation, on surrender and cancellation of this Warrant, the Company, at its expense, will execute and deliver, in lieu of this Warrant, a new Warrant of like tenor.

 

(c)                                   Notice of Capital Changes .  In case:

 

(i)                                      the Company shall declare any dividend or distribution payable to the holders of its Warrant Stock;

 

5



 

(ii)                                   there shall be any capital reorganization or reclassification of the capital stock of the Company, or consolidation or merger of the Company with, or sale of all or substantially all of its assets to, another corporation or business organization; or

 

(iii)                                there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company;

 

then, in any one or more of said cases, the Company shall give the holder of this Warrant written notice, in the manner set forth in subparagraph (d) below, of the date on which a record shall be taken for such dividend, or distribution or for determining shareholders entitled to vote upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up and of the date when any such transaction shall take place, as the case may be.  Such written notice shall be given at least 30 days prior to the transaction in question and not less than 20 days prior to the record date in respect thereof.

 

(d)                                  Notice .  Any notice given to either party under this Warrant shall be in writing, and any notice hereunder shall be deemed to have been given upon the earlier of delivery thereof by hand delivery, by courier, or by standard form of telecommunication or three (3) business days after the mailing thereof if sent registered mail with postage prepaid, addressed to the Company at its principal executive offices and to the holder at its address set forth in the Company’s books and records or at such other address as the holder may have provided to the Company in writing.

 

(e)                                   Modifications None of the terms or provisions of this Warrant may be excluded, modified, waived or amended except by a written instrument duly executed by Purchasers holding Notes representing a majority of the aggregate Note Amount outstanding and the Company setting forth the provision so excluded, modified or amended.

 

(f)                                    No Impairment .  The Company will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions in the Warrant.

 

(g)                                   Governing Law .  This Warrant shall be governed by and construed under the laws of The Commonwealth of Massachusetts.

 

6



 

IN WITNESS WHEREOF, this Warrant is executed as of this 7th day of January, 2008.

 

 

 

GENOCEA BIOSCIENCES, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

7



 

EXHIBIT 1

 

NOTICE OF EXERCISE

 

TO:                            GENOCEA BIOSCIENCES, INC.

 

The undersigned hereby elects to purchase           shares of Warrant Stock of GENOCEA BIOSCIENCES, INC. pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price of such shares in full.

 

Please issue a certificate or certificates representing said shares of Warrant Stock in the name of the undersigned or in such other name as is specified below:

 

 

(Name)

 

 

 

(Address)

 

The undersigned represents that the aforesaid shares of Warrant Stock are being acquired for the account of the undersigned for investment and not with a view to, or for resale in connection with, the distribution thereof and that the undersigned has no present intention of distributing or reselling such shares.

 

 

 

 

 

Signature

 

8




Exhibit 4.3

 

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ 1933 ACT ”), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS IN ACCORDANCE WITH THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR SOME OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS IS AVAILABLE WITH RESPECT THERETO.

 

PREFERRED STOCK PURCHASE WARRANT

 

Warrant No.                       

 

Number of Shares: a maximum of 517,242

 

 

Series B Convertible Preferred Stock

 

 

Subject to determination as set for the below

 

GENOCEA BIOSCIENCES, INC.

 

Effective as of October 25, 2011

 

Void after October 25, 2021

 

1.                                       Issuance .  This Preferred Stock Purchase Warrant (the “ Warrant ”) is issued to LIGHTHOUSE CAPITAL PARTNERS VI, L.P. by GENOCEA BIOSCIENCES, INC. , a Delaware corporation (hereinafter with its successors called the “ Company ”).

 

2.                                       Purchase Price; Number of Shares .

 

(a)                                  The registered holder of this Warrant (the “ Holder ”), is entitled upon surrender of this Warrant with the subscription form annexed hereto duly executed, at the principal office of the Company, to purchase from the Company, at a price per share of $0.58 (the “ Purchase Price ”), up to a maximum of 517,242 fully paid and nonassessable shares of the Company’s Series B Convertible Preferred Stock, $0.001 par value (the “ Preferred Stock ”).  Commencing on the date hereof, 258,621 (the “ Exercise Quantity ”) of shares of Preferred Stock are immediately available for purchase hereunder.

 

(b)                                  On the Commitment Termination Date, the Exercise Quantity shall automatically be increased by such additional number of shares as is equal to (A) 3% of the amount of Aggregate Advances funded under the Loan Agreement, if any, divided by (B) the Purchase Price.

 

In addition to other terms which may be defined herein, the following terms, as used in this Warrant, shall have the following meanings:

 

(i)                                     “Aggregate Advances” means the aggregate original dollar amount of Advances made under the Loan Agreement, whether such Advances are outstanding or prepaid, at the time of any scheduled adjustment to the Exercise Quantity.

 

(ii)                                 “Loan Agreement” means that certain Loan and Security Agreement No. 2151 dated October 25, 2011 between the Company and Lighthouse Capital Partners VI, L.P..

 

Any term not defined herein shall have the meaning as set forth in the Loan Agreement.

 

Until such time as this Warrant is exercised in full or expires, the Purchase Price and the securities issuable upon exercise of this Warrant are subject to adjustment as hereinafter provided.  The person or persons in whose name or

 

1



 

names any certificate representing shares of Preferred Stock is issued hereunder shall be deemed to have become the holder of record of the shares represented thereby as at the close of business on the date this Warrant is exercised with respect to such shares, whether or not the transfer books of the Company shall be closed.

 

3.                                       Payment of Purchase Price .  The Purchase Price may be paid (i) in cash or by check, (ii) by the surrender by the Holder to the Company of any promissory notes or other obligations issued by the Company, with all such notes and obligations so surrendered being credited against the Purchase Price in an amount equal to the principal amount thereof plus accrued interest to the date of surrender, or (iii) by any combination of the foregoing.

 

4.                                       Net Issue Election .  The Holder may elect to receive, without the payment by the Holder of any additional consideration, shares of Preferred Stock equal to the value of this Warrant or any portion hereof by the surrender of this Warrant or such portion to the Company, with the net issue election notice annexed hereto duly executed, at the principal office of the Company.  Thereupon, the Company shall issue to the Holder such number of fully paid and nonassessable shares of Preferred Stock as is computed using the following formula:

 

 

where:             X =                              the number of shares of Preferred Stock to be issued to the Holder pursuant to this Section 4 .

 

Y =                              the number of shares of Preferred Stock covered by this Warrant in respect of which the net issue election is made pursuant to this Section 4 .

 

A =                              the Fair Market Value (defined below) of one share of Preferred Stock, as determined at the time the net issue election is made pursuant to this Section 4 .

 

B =                              the Purchase Price in effect under this Warrant at the time the net issue election is made pursuant to this Section 4 .

 

Fair Market Value ” of a share of Preferred Stock (or fully paid and nonassessable shares of the Company’s common stock, $0.001 par value (the “ Common Stock ”) if the Preferred Stock has been automatically converted into Common Stock) as of the date that the net issue election is made (the “ Determination Date ”) shall mean:

 

(i)                                     If the net issue election is made in connection with and contingent upon the closing of the sale of the Company’s Common Stock to the public in a public offering pursuant to a Registration Statement under the 1933 Act (a “ Public Offering ”), and if the Company’s Registration Statement relating to such Public Offering (“ Registration Statement ”) has been declared effective by the Securities and Exchange Commission, then the initial “Price to Public” specified in the final prospectus with respect to such offering multiplied by the number of shares of Common Stock into which each share of Preferred Stock is then convertible.

 

(ii)                                 If the net issue election is not made in connection with and contingent upon a Public Offering, then as follows:

 

(a)                                  If traded on a securities exchange or NASDAQ market or system, the fair market value of the Common Stock shall be deemed to be the average of the closing or last reported sale prices of the Common Stock on such exchange or market over the five day period ending five trading days prior to the Determination Date, and the fair market value of the Preferred Stock shall be deemed to be such fair market value of the Common Stock multiplied by the number of shares of Common Stock into which each share of Preferred Stock is then convertible;

 

(b)                                  If otherwise traded in an over-the-counter market, the fair market value of the Common Stock shall be deemed to be the average of the closing ask prices of the Common Stock over the five day

 

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period ending five trading days prior to the Determination Date, and the fair market value of the Preferred Stock shall be deemed to be such fair market value of the Common Stock multiplied by the number of shares of Common Stock into which each share of Preferred Stock is then convertible; and

 

(c)                                   If there is no public market for the Common Stock, then fair market value shall be determined in good faith by the Company’s Board of Directors.

 

5.                                       Partial Exercise .  This Warrant may be exercised in part, and the Holder shall be entitled to receive a new warrant, which shall be dated as of the date of this Warrant, covering the number of shares in respect of which this Warrant shall not have been exercised.

 

6.                                       Fractional Shares .  In no event shall any fractional share of Preferred Stock be issued upon any exercise of this Warrant.  If, upon exercise of this Warrant in its entirety, the Holder would, except as provided in this Section 6 , be entitled to receive a fractional share of Preferred Stock, then the Company shall make a cash payment therefor upon the basis of the Purchase Price then in effect.

 

7.                                       Expiration Date; Automatic Exercise.                             This Warrant shall expire at the close of business on October     , 2021, and shall be void thereafter (the “ Expiration Date ”).  Notwithstanding the foregoing, this Warrant shall automatically be deemed to be exercised in full pursuant to the provisions of Section 4 hereof, without any further action on behalf of the Holder, immediately prior to the time this Warrant would otherwise expire pursuant to the preceding sentence.

 

8.                                       Reserved Shares; Valid Issuance .  The Company covenants that it will at all times from and after the date hereof reserve and keep available such number of its authorized shares of Preferred Stock and Common Stock free from all preemptive or similar rights therein, as will be sufficient to permit, respectively, the exercise of this Warrant in full and the conversion into shares of Common Stock of all shares of Preferred Stock receivable upon such exercise.  The Company further covenants that such shares as may be issued pursuant to such exercise and/or conversion will, upon issuance, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issuance thereof.

 

9.                                       Stock Splits and Dividends .  If after the date hereof the Company shall subdivide the Preferred Stock, by split-up or otherwise, or combine the Preferred Stock, or issue additional shares of Preferred Stock in payment of a stock dividend on the Preferred Stock, the number of shares of Preferred Stock issuable on the exercise of this Warrant shall forthwith be proportionately increased in the case of a subdivision or stock dividend, or proportionately decreased in the case of a combination, and the Purchase Price shall forthwith be proportionately decreased in the case of a subdivision or stock dividend, or proportionately increased in the case of a combination.

 

10.                                Adjustments for Diluting Issuances .  The other antidilution rights applicable to the Preferred Stock of the Company are set forth in the Amended and Restated Certificate of Incorporation, as amended from time to time (the “ Articles ”), a true and complete copy in its current form which is attached hereto as Exhibit A . Such rights shall not be restated, amended or modified in any manner which affects the Holder adversely and differently than the holders of Preferred Stock without such Holder’s prior written consent.  The Company shall promptly provide the Holder hereof with any restatement, amendment or modification to the Articles promptly after the same has been made.

 

11.                                Mergers and Reclassifications .  If after the date hereof the Company shall enter into any Reorganization (as hereinafter defined), then, as a condition of such Reorganization, lawful provisions shall be made, and duly executed documents evidencing the same from the Company or its successor shall be delivered to the Holder, so that the Holder shall thereafter have the right to purchase, at a total price not to exceed that payable upon the exercise of this Warrant in full, the kind and amount of shares of stock and other securities and property receivable upon such Reorganization by a holder of the number of shares of Preferred Stock which might have been purchased by the Holder immediately prior to such Reorganization, and in any such case appropriate provisions shall be made with respect to the rights and interest of the Holder to the end that the provisions hereof (including without limitation, provisions for the adjustment of the Purchase Price and the number of shares issuable hereunder and the provisions relating to the net issue election) shall thereafter be applicable in relation to any shares of stock or other securities and property thereafter deliverable upon exercise hereof.  For the purposes of this Section 11 , the term

 

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Reorganization ” shall include without limitation any reclassification, capital reorganization or change of the Preferred Stock (other than as a result of a subdivision, combination or stock dividend provided for in Section 9 hereof), or any consolidation of the Company with, or merger of the Company into, another corporation or other business organization (other than a merger in which the Company is the surviving corporation and which does not result in any reclassification or change of the outstanding Preferred Stock), or any sale or conveyance to another corporation or other business organization of all or substantially all of the assets of the Company.

 

12.                                Certificate of Adjustment .  Whenever the Purchase Price is adjusted, as herein provided, the Company shall promptly deliver to the Holder a certificate of the Company’s chief financial officer setting forth the Purchase Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

 

13.                                Notices of Record Date, Etc.   In the event of:

 

(a)                                  any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase, sell or otherwise acquire or dispose of any shares of stock of any class or any other securities or property, or to receive any other right;

 

(b)                                  any reclassification of the capital stock of the Company, capital reorganization of the Company, consolidation or merger involving the Company, or sale or conveyance of all or substantially all of its assets; or

 

(c)                                   any voluntary or involuntary dissolution, liquidation or winding-up of the Company;

 

then in each such event the Company will provide or cause to be provided to the Holder a written notice thereof.  Such notice shall be provided at least twenty (20) business days prior to the date specified in such notice on which any such action is to be taken.

 

14.                                Representations, Warranties and Covenants .  This Warrant is issued and delivered by the Company and accepted by each Holder on the basis of the following representations, warranties and covenants made by the Company:

 

(a)                                  The Company has all necessary authority to issue, execute and deliver this Warrant and to perform its obligations hereunder.  This Warrant has been duly authorized issued, executed and delivered by the Company and is the valid and binding obligation of the Company, enforceable in accordance with its terms.

 

(b)                                  The shares of Preferred Stock issuable upon the exercise of this Warrant have been duly authorized and reserved for issuance by the Company and, when issued in accordance with the terms hereof, will be validly issued, fully paid and nonassessable.

 

(c)                                   The issuance, execution and delivery of this Warrant do not, and the issuance of the shares of Preferred Stock upon the exercise of this Warrant in accordance with the terms hereof will not, (i) violate or contravene the Company’s Articles or by-laws, or any law, statute, regulation, rule, judgment or order applicable to the Company, (ii) violate, contravene or result in a breach or default under any contract, agreement or instrument to which the Company is a party or by which the Company or any of its assets are bound or (iii) require the consent or approval of or the filing of any notice or registration with any person or entity.

 

(d)                                  As long as this Warrant is, or any shares of Preferred Stock issued upon exercise of this Warrant or any shares of Common Stock issued upon conversion of such shares of Preferred Stock are, issued and outstanding, the Company will provide to the Holder the financial and other information described in the Loan Agreement.

 

(e)                                   So long as this Warrant has not terminated, Holder shall be entitled to receive such financial and other information as the Holder would be entitled to receive pursuant to Section 2 of the Company’s Amended and Restated Investor Rights Agreement if Holder were a “Major Investor” (as defined therein), provided,

 

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however, that the Company may exclude from such financial and other information any information that the Company determines in good faith reasonably needs to be excluded to preserve the attorney-client privileges or to protect highly confidential proprietary information.

 

(f)                                    As of the date hereof, the authorized capital stock of the Company consists of (i) 123,740,317 shares of Common Stock, of which [3,503,747] shares are issued and outstanding and 517,242 shares are reserved for issuance upon the exercise of this Warrant with respect to Common Stock and the conversion of the Preferred Stock into Common Stock if this Warrant is exercised with respect to Preferred Stock, (ii) 4,615,385 shares of Seed Convertible Preferred Stock, all of which are issued and outstanding shares, (iii) 36,661,538 shares of Series A Convertible Preferred Stock, of which 35,576,923 are issued and outstanding shares, and (iv) 60,517,240 shares of Series B Convertible Preferred Stock, of which 34,581,278 are issued and outstanding shares.  Attached hereto as Exhibit B is a capitalization table summarizing the capitalization of the Company.  Once per calendar quarter, the Company will provide Holder with a current capitalization table indicating changes, if any, to the number of outstanding shares of common stock and preferred stock.

 

15.                                Confidentiality .  The Holder agrees to keep confidential all information, materials, notes, documents and copies concerning the business of the Company provided in accordance with the terms of this Warrant or to the Holder as a result of the Holder’s status as a stockholder of the Company upon exercise of the Warrant (the “Information”).  Notwithstanding the foregoing, the Holder shall be permitted to disclose Information (i) to its officers, managers, members, partners, directors, employees, agents and representatives provided that such Information shall remain confidential; (ii) to the extent required by applicable laws and regulations or by any subpoena or similar legal process, or to the extent requested by any governmental agency or authority, after notice to the Company to the extent the Holder is not advised by counsel that providing such notice would be a breach of applicable law or regulations; (iii) to the extent such Information (A) becomes publicly available other than as a result of a breach of this Section 15 , (B) becomes available to the Holder on a non-confidential basis from a source other than the Company or (C) was available to the Holder on a non-confidential basis prior to its disclosure to the Holder by the Company; (iv) to the extent the Company shall have consented to such disclosure in writing; (v) in connection with the assignment of this Warrant provided that the recipient of the Information agrees to maintain the confidentiality of the Information; or (vi) in connection with the exercise of its rights and remedies under this Warrant.  The provisions of this Section 15 shall survive the termination, expiration or exercise of this Warrant.

 

16.                                Registration Rights .  The Company and the Holder agree to enter into the Amendment to Second Amended and Restated Registration Rights Agreement attached hereto as Exhibit C .

 

17.                                Voting Agreement .  The Company and the Holder agree to enter into the Amendment to the Amended and Restated Voting Agreement attached hereto as Exhibit D.

 

18.                                Amendment .  The terms of this Warrant may be amended, modified or waived only with the written consent of the Holder and the Company.

 

19.                                Representations and Covenants of the Holder .  This Warrant has been entered into by the Company in reliance upon the following representations and covenants of the Holder, which by its execution hereof the Holder hereby confirms:

 

(a)                                  Investment Purpose .  The right to acquire Preferred Stock or the Preferred Stock issuable upon exercise of the Holder’s rights contained herein will be acquired for investment and not with a view to the sale or distribution of any part thereof, and the Holder has no present intention of selling or engaging in any public distribution of the same except pursuant to a registration or exemption.

 

(b)                                  Accredited Investor .  Holder is an “accredited investor” within the meaning of the Securities and Exchange Rule 501 of Regulation D, as presently in effect.

 

(c)                                   Private Issue .  The Holder understands (i) that the Preferred Stock issuable upon exercise of the Holder’s rights contained herein is not registered under the 1933 Act or qualified under applicable state securities laws on the ground that the issuance contemplated by this Warrant will be exempt from the

 

5



 

registration and qualifications requirements thereof, and (ii) that the Company’s reliance on such exemption is predicated on the representations set forth in this Section 19 .

 

(d)                                  Financial Risk .  The Holder has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment and has the ability to bear the economic risks of its investment.

 

20.                                Notices, Transfers, Etc.

 

(a)                                  Any notice or written communication required or permitted to be given to the Holder may be given by certified mail or delivered to the Holder at the address most recently provided by the Holder to the Company.

 

(b)                                  Subject to compliance with applicable federal and state securities laws, this Warrant may be transferred by the Holder with respect to any or all of the shares purchasable hereunder.  Upon surrender of this Warrant to the Company, together with the assignment notice annexed hereto duly executed, for transfer of this Warrant as an entirety by the Holder, the Company shall issue a new warrant of the same denomination to the assignee.  Upon surrender of this Warrant to the Company, together with the assignment hereof properly endorsed, by the Holder for transfer with respect to a portion of the shares of Preferred Stock purchasable hereunder, the Company shall issue a new warrant to the assignee, in such denomination as shall be requested by the Holder hereof, and shall issue to such Holder a new warrant covering the number of shares in respect of which this Warrant shall not have been transferred.

 

(c)                                   In case this Warrant shall be mutilated, lost, stolen or destroyed, the Company shall issue a new warrant of like tenor and denomination and deliver the same (i) in exchange and substitution for and upon surrender and cancellation of any mutilated Warrant, or (ii) in lieu of any Warrant lost, stolen or destroyed, upon receipt of an affidavit of the Holder or other evidence reasonably satisfactory to the Company of the loss, theft or destruction of such Warrant

 

21.                                No Impairment .  The Company will not, by amendment of its Articles or through any reclassification, capital reorganization, consolidation, merger, sale or conveyance of assets, dissolution, liquidation, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance of performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder.

 

22.                                No Rights as Shareholder .  Except as set forth herein, the Holder shall not be entitled to vote or receive dividends or be deemed the holder of Preferred Stock or any other securities of the Company which may at any time be issuable on the exercise hereof for any purpose, nor shall anything contained herein be construed to confer upon the Holder any of the rights of a shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value or change of stock to no par value, consolidation, merger, conveyance or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until the Warrant shall have been exercised or converted and the shares purchasable upon the exercise hereof shall have become deliverable, as provided herein.

 

23.                                Governing Law .  The provisions and terms of this Warrant shall be governed by and construed in accordance with the internal laws of the State of California without giving effect to its principles regarding conflicts of laws.

 

24.                                Successors and Assigns .  This Warrant shall be binding upon the Company’s successors and assigns and shall inure to the benefit of the Holder’s successors, legal representatives and permitted assigns.

 

25.                                Business Days .  If the last or appointed day for the taking of any action required or the expiration of any rights granted herein shall be a Saturday or Sunday or a legal holiday in California or Massachusetts, then

 

6



 

such action may be taken or right may be exercised on the next succeeding day which is not a Saturday or Sunday or such a legal holiday.

 

26.                                Qualifying Public Offering .  If the Company shall effect a firm commitment underwritten public offering of shares of Common Stock which results in the conversion of the Preferred Stock into Common Stock pursuant to the Company’s Articles in effect immediately prior to such offering, then, effective upon such conversion, this Warrant shall change from the right to purchase shares of Preferred Stock to the right to purchase shares of Common Stock, and the Holder shall thereupon have the right to purchase, at a total price equal to that payable upon the exercise of this Warrant in full, the number of shares of Common Stock which would have been receivable by the Holder upon the exercise of this Warrant for shares of Preferred Stock immediately prior to such conversion of such shares of Preferred Stock into shares of Common Stock, and in such event appropriate provisions shall be made with respect to the rights and interest of the Holder to the end that the provisions hereof (including, without limitation, the provisions for the adjustment of the Purchase Price and of the number of shares purchasable upon exercise of this Warrant and the provisions relating to the net issue election) shall thereafter be applicable to any shares of Common Stock deliverable upon the exercise hereof.

 

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27.                                Value .  The Company and the Holder agree that the value of this Warrant on the date of grant is $100.

 

 

GENOCEA BIOSCIENCES, INC.

 

 

 

 

 

 

By:

/s/ William D. Clark

 

 

 

 

Name:

William D. Clark

 

 

 

 

Title:

CEO

 



 

Subscription

 

To:

 

 

 

 

 

Date:

 

 

 

The undersigned hereby subscribes for                                    shares of Preferred Stock covered by this Warrant.  The certificate(s) for such shares shall be issued in the name of the undersigned or as otherwise indicated below:

 

 

 

 

Signature

 

 

 

 

 

Name for Registration

 

 

 

 

 

Mailing Address

 

 



 

Net Issue Election Notice

 

To:

 

 

Date:                                   

 

The undersigned hereby elects under Section 4 to surrender the right to purchase shares of Preferred Stock pursuant to this Warrant.  The certificate(s) for such shares issuable upon such net issue election shall be issued in the name of the undersigned or as otherwise indicated below:

 

 

 

 

Signature

 

 

 

 

 

Name for Registration

 

 

 

 

 

Mailing Address

 

 


 

Assignment

 

For value received                                                                                hereby sells, assigns and transfers unto

 

 

[Please print or typewrite name and address of Assignee]

 

 

the within Warrant, and does hereby irrevocably constitute and appoint                                                                      its attorney to transfer the within Warrant on the books of the within named Company with full power of substitution on the premises.

 

 

Dated:

 

 

 

 

 

 

Signature

 

 

 

 

 

Name for Registration

 

 

 

 

 

In the Presence of:

 

 

 

 

 

 



 

EXHIBIT A

 

THIRD AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

 

OF

 

GENOCEA BIOSCIENCES, INC.

 

Genocea Biosciences, Inc., a corporation organized and existing under the laws of the state of Delaware (this “ Corporation ”), hereby certifies as follows:

 

1.                                       This Corporation’s original Certificate of Incorporation was filed with the Secretary of State of Delaware on August 16, 2006 under the name “Genocea, Inc.” and was amended and restated on December 21, 2006 and on February 10, 2009.

 

2.                                       This Third Amended and Restated Certificate of Incorporation (the “ Certificate of Incorporation ”) has been duly adopted by this Corporation’s Board of Directors and stockholders in accordance with the applicable provisions of Sections 228, 242 and 245 of the General Corporation Law of the State of Delaware.

 

3.                                       The Certificate of Incorporation of this Corporation is hereby amended and restated to read in full as follows:

 

FIRST :  The name of the corporation is Genocea Biosciences, Inc.

 

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, and 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 of Delaware.

 

FOURTH : The total number of shares of all classes of stock which the Corporation has authority to issue is 225,534,480 shares, consisting of 123,740,317 shares of common stock, par value $.001 per share (the “ Common Stock ”), and 101,794,163 shares of preferred stock, of which 4,615,385 shares of preferred stock are designated Seed Convertible Preferred Stock, par value $.001 per share (the “ Seed Preferred Stock ”), 36,661,538 shares of preferred stock are designated Series A Convertible Preferred Stock, par value $.001 per share (the “ Series A Preferred Stock ”) and 60,517,240 shares of preferred stock are designated Series B convertible Preferred Stock par value $.001 per share ( the “ Series B Preferred Stock ”) and, together with the Seed Preferred Stock and the Series A Preferred Stock, the “ Preferred Stock ”).

 



 

The powers, preferences and rights, and the qualifications, limitations or restrictions thereof, in respect of each class or series of stock of the Corporation shall be as follows:

 

Section 1 Liquidation Rights .

 

(a)                                  Liquidation Payments .

 

(i)                                      In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary (a “ Liquidation ”), the holders of shares of the Series B Preferred Stock shall be entitled to be paid, prior and in preference to any distribution of any of the assets of the Corporation to the holders of Series A Preferred Stock, Seed Preferred Stock or Common Stock by reason of their ownership thereof, out of the assets of the Corporation available for distribution to holders of the Corporation’s capital stock of all classes, the amount of $0.58 per share of Series B Preferred Stock (which amount shall be subject to equitable adjustment whenever there shall occur a stock dividend, stock split, combination of shares, reclassification or other similar event with respect to the Series B Preferred Stock) plus all dividends accrued and/or declared thereon but unpaid, to and including the date full payment shall be tendered to the holders of the Series B Preferred Stock, with respect to such liquidation, dissolution or winding up (the aggregate amount payable to all holders of Series B Preferred Stock in respect of all shares of Series B Preferred Stock pursuant to this Subsection 1(a)(i) of this Article FOURTH, “ Series B Liquidation Payment ”).

 

If the assets of the Corporation shall be insufficient to permit the payment in full to the holders of the Series B Preferred Stock of all amounts so distributable to them, then the entire assets of the Corporation available for such distribution shall be distributed ratably among the holders of the Series B Preferred Stock in proportion to the full preferential amount each such holder is otherwise entitled to receive under this Subsection 1(a)(i) of this Article FOURTH.

 

No payment shall be made with respect to the Series A Preferred Stock, the Seed Preferred Stock or the Common Stock unless and until full payment has been made to the holders of the Series B Preferred Stock of the amounts they are entitled to receive under this Subsection 1(a)(i) of this Article FOURTH.

 

(ii)                                   After the payments under Section 1(a)(i) of this Article FOURTH have been made in full to the holders of the Series B Preferred Stock, or funds necessary for such payments shall have been set aside by the Corporation in trust for the account of holders of Series B Preferred Stock so as to be available for such payments, the holders of shares of the Series A Preferred Stock shall be entitled to be paid, prior and in preference to any distribution of any of the assets of the Corporation to the holders of Seed Preferred Stock or Common Stock by reason of their ownership thereof, out of the remaining assets of the Corporation available for

 

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distribution to holders of the Corporation’s capital stock of all classes, the amount of $0.65 per share of Series A Preferred Stock (which amount shall be subject to equitable adjustment whenever there shall occur a stock dividend, stock split, combination of shares, reclassification or other similar event with respect to the Series A Preferred Stock) plus all dividends accrued and/or declared thereon but unpaid, to and including the date full payment shall be tendered to the holders of the Series A Preferred Stock, with respect to such liquidation, dissolution or winding up (the aggregate amount payable to all holders of Series A Preferred Stock in respect of all shares of Series A Preferred Stock pursuant to this Subsection 1(a)(ii) of this Article FOURTH, the “ Series A Liquidation Payment ”).

 

If after prior payment in full of the payments to the holders of the Series B Preferred Stock under Section 1(a)(i) of this Article FOURTH the assets of the Corporation shall be insufficient to permit the payment in full to the holders of the Series A Preferred Stock of all amounts so distributable to them, then the entire assets of the Corporation available for such distribution shall be distributed ratably among the holders of the Series A Preferred Stock in proportion to the full preferential amount each such holder is otherwise entitled to receive under this Subsection 1(a)(ii) of this Article FOURTH.

 

No payment shall be made with respect to the Seed Preferred Stock or the Common Stock unless and until full payment has been made to the holders of the Series A Preferred Stock of the amounts they are entitled to receive under this Subsection 1(a)(ii) of this Article FOURTH.

 

(iii)                                After the payments under Section 1(a)(ii) of this Article FOURTH have been made in full to the holders of the Series A Preferred Stock, or funds necessary for such payments shall have been set aside by the Corporation in trust for the account of holders of Series A Preferred Stock so as to be available for such payments, the holders of shares of the Seed Preferred Stock shall be entitled to be paid, prior and in preference to any distribution of any of the assets of the Corporation to the holders of Common Stock by reason of their ownership thereof, out of the remaining assets of the Corporation available for distribution to holders of the Corporation’s capital stock of all classes, an amount of $0.65 per share of Seed Preferred Stock (which amount shall be subject to equitable adjustment whenever there shall occur a stock dividend, stock split, combination of shares, reclassification or other similar event with respect to the Seed Preferred Stock) plus all dividends declared thereon but unpaid, to and including the date full payment shall be tendered to the holders of the Seed Preferred Stock, with respect to such liquidation, dissolution or winding up (the aggregate amount payable to all holders of Seed Preferred Stock in respect of all shares of Seed Preferred Stock pursuant to this Subsection 1(a)(iii) of this Article FOURTH, the “ Seed Liquidation Payment ”).

 

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If after prior payment in full of the payments to the holders of the Series A Preferred Stock under Section 1(a)(ii) of this Article FOURTH the assets of the Corporation shall be insufficient to permit the payment in full to the holders of the Seed Preferred Stock of all amounts so distributable to them, then the assets of the Corporation available for such distribution shall be distributed ratably among the holders of the Seed Preferred Stock in proportion to the full preferential amount each such holder is otherwise entitled to receive under this Subsection 1(a)(iii) of this Article FOURTH.

 

No payment shall be made with respect to the Common Stock unless and until full payment has been made to the holders of the Seed Preferred Stock of the amounts they are entitled to receive under this Subsection 1(a)(iii) of this Article FOURTH.

 

(iv)                               After the payments under Section 1(a)(iii) of this Article FOURTH have been made in full to the holders of the Seed Preferred Stock, or funds necessary for such payments shall have been set aside by the Corporation in trust for the account of holders of Seed Preferred Stock so as to be available for such payments, the remaining assets of the Corporation available for distribution shall be distributed among the holders of the Series B Preferred Stock, Series A Preferred Stock and Common Stock ratably in proportion to the number of shares of Common Stock then held by each such holder on an as converted basis.

 

(v)                                  Upon conversion of shares of Preferred Stock into shares of Common Stock pursuant to Section 2 of this Article FOURTH below, the holders of such Common Stock shall not be entitled to any preferential payment or distribution in case of any liquidation, dissolution or winding up, but shall share ratably in any distribution of the assets of the Corporation to all the holders of Common Stock as provided under Subsection 1(a)(iv) of this Article FOURTH.

 

(vi)                               The Series B Liquidation Payment, the Series A Liquidation Payment and the Seed Liquidation Payment payable with respect to shares of Preferred Stock under this Subsection 1(a) of this Article FOURTH are sometimes hereinafter referred to as “ Preferred Stock Liquidation Payments ”.

 

(b)   Distributions Other than Cash .  Whenever any portion of the distributions provided for in this Section 1 of this Article FOURTH shall be payable in property other than cash, the value of such property shall be assessed as the fair market value of such property as determined in good faith by the Board of Directors of the Corporation. The Corporation shall give prompt written notice of such valuation (including the methods used to determine the valuation), to each holder of Preferred Stock.

 

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(c)   Merger as Liquidation, etc The merger or consolidation of the Corporation into or with another corporation (except one in which the holders of capital stock of the Corporation immediately prior to such merger or consolidation continue to hold a majority in voting power of the capital stock of the surviving corporation (or, if the surviving corporation is a wholly-owned subsidiary, its parent), in which case the provisions of Subsection 2(f) of this Article FOURTH shall apply), or exclusive license of all or substantially all of the intellectual property of the Corporation without field or material geographic restriction or the sale, lease, transfer or other disposition of all or substantially all of the assets of the Corporation, shall be deemed to be a liquidation, dissolution or winding up of the affairs of the Corporation (a “ Deemed Liquidation ”) for purposes of this Section 1 of this Article FOURTH with respect to the Series B Preferred Stock, the Series A Preferred Stock and the Seed Preferred Stock, unless the holders of at least sixty percent (60%) of the then outstanding shares of the Series B Preferred Stock elect to the contrary; such election to be made by giving notice thereof to the Corporation at least three days before the effective date of such event.  If such notice is given with respect to the Preferred Stock, the provisions of Subsection 2(f) of this Article FOURTH shall apply.  Unless such election is made with respect to the Preferred Stock, any amounts received by the holders of such Preferred Stock as a result of such merger, consolidation or other transaction shall be deemed to be applied toward, and all consideration received by the Corporation in such merger, consolidation, license, lease, asset sale or other disposition under this Subsection 1(c) of this Article FOURTH together with all other available assets of the Corporation shall be distributed toward, to the extent necessary, the Preferred Stock Liquidation Payments in accordance with Section 1 of this Article FOURTH.

 

(d)   Notice .  In the event the Corporation shall propose to undertake any liquidation, dissolution or winding up of the affairs of the Corporation including any Deemed Liquidation, the Corporation shall, within ten (10) days after the date the Board of Directors approves such action or twenty (20) days prior to any stockholders’ meeting called to approve such action, whichever is earlier, give each holder of Preferred Stock initial written notice of the proposed action.  Such initial written notice shall describe the material terms and conditions of such proposed action, including a description of the stock, cash and property to be received by the holders of the Preferred Stock and the Common Stock upon consummation of the proposed action and the proposed date of delivery thereof.  If any material change in the facts set forth in the initial notice shall occur, the Corporation shall promptly give each holder of Preferred Stock written notice of such material change.  The Corporation shall not consummate any such proposed liquidation, dissolution or winding up before the expiration of thirty (30) days after the mailing of the initial notice or twenty (20) days after the mailing of any subsequent written notice, whichever is later, provided that any such 30-day or 20-day period may be shortened or waived upon the written consent of the holders of at least sixty percent (60%) of the outstanding shares of Series B Preferred Stock.  Any holder of outstanding shares of Preferred Stock may

 

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waive (as to itself) any notice required by this Subsection by a written instrument specifically indicating such waiver.

 

(e) Effect of Noncompliance .  In the event the requirements of Subsection 1(d) of this Article FOURTH are not complied with, the Corporation shall forthwith either cause the closing of the Deemed Liquidation to be postponed until the requirements of such sections have been complied with, or cancel such Deemed Liquidation (to the extent possible under applicable law), in which event the rights, preferences, privileges and restrictions of the holders of Preferred Stock shall revert to and be the same as such rights, preferences, privileges and restrictions existing immediately prior to the date of the first notice referred to in Subsection 1(d) of this Article FOURTH.

 

(f) Acquisitions Involving Earn-Outs or Multiple Payments .  Notwithstanding Section 1(a) or Section 1(c) of this Article FOURTH, in the event of a Deemed Liquidation in which (y)(1) the consideration (to be) received or (to be) paid does not occur at a single closing, but instead occurs (or is to occur) on more than one occasion (e.g., in a transaction involving earn-out payments) and (2) the up front payment (to be) received at the closing is less than the aggregate Preferred Stock Liquidation Payments and/or (z) any portion of the consideration (to be) payable to the stockholders of the Corporation is placed into an escrow, held back and/or is payable to the stockholders of the Corporation subject to contingencies, then in lieu of the amounts and priorities set forth in Section 1(a) of this Article FOURTH, distributions to the holders of Series B Preferred Stock, Series A Preferred Stock or Seed Preferred Stock, as applicable, shall be made in accordance with the following priorities as such consideration is received:

 

(i)                                      First, to the holders of Series B Preferred Stock in accordance with the provisions of Subsection 1(a)(i) of this Article FOURTH until the holders of Series B Preferred Stock have received an aggregate amount equal to the Series B Liquidation Payment;

 

(ii)                                   Second, to the holders of Series A Preferred Stock in accordance with the provisions of Subsection 1(a)(ii) of this Article FOURTH until the holders of Series A Preferred Stock have received an aggregate amount equal to the Series A Liquidation Payment;

 

(iii)                                Third, to the holders of Seed Preferred Stock in accordance with the provisions of Subsection 1(a)(iii) of this Article FOURTH until the holders of Seed Preferred Stock have received an aggregate amount equal to the Seed Liquidation Payment; and

 

(iv)                               Fourth, after the payment of all amounts required to be paid in accordance with clauses (i), (ii) and (iii) above, any funds and assets legally available (or that become available) for distribution, if any, shall be distributed among the holders of Series B Preferred Stock, Series A Preferred Stock and Common Stock in accordance with the provisions of Subsection 1(a)(iv) of this Article FOURTH;

 

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Provided if the amount which any holder of shares of the Series B Preferred Stock, Series A Preferred Stock or Seed Preferred Stock would receive if such holder converted all such shares of Series B Preferred Stock, Series A Preferred Stock or Seed Preferred Stock, as the case may be, into Common Stock immediately prior to such Deemed Liquidation, in accordance with this Subsection 1(f) of this Article FOURTH with respect to the shares of Common Stock issuable upon conversion of such shares of Series B Preferred Stock, Series A Preferred Stock or Seed Preferred Stock, as the case may be, is greater than the amount such holder would receive if such holder did not so convert such shares of Series B Preferred Stock, Series A Preferred Stock or Seed Preferred Stock, as the case may be, then such holder shall be entitled to be paid such greater amount out of the assets available for distribution in accordance with Subsection 1(f)(iv) of this Article FOURTH.  For the avoidance of doubt, if, in connection with a Deemed Liquidation, a holder of Series B Preferred Stock, Series A Preferred Stock or Seed Preferred Stock receives payments on its shares of Series B Preferred Stock, Series A Preferred Stock or Seed Preferred Stock, as the case may be, pursuant to this paragraph, then such holder shall not be entitled to also receive the amount payable on its shares of Series B Preferred Stock, Series A Preferred Stock or Seed Preferred Stock, as the case may be, pursuant to Subsections 1(f)(i) through 1(f)(iii) of this Article FOURTH.

 

Section 2 Conversion .  The holders of Preferred Stock shall have conversion rights as follows (the “ Conversion Rights ”):

 

(a)   Right to Convert; Conversion Price .  Each share of Preferred Stock shall be convertible, without the payment of any additional consideration by the holder thereof and at the option of the holder thereof, at any time after the date of issuance of such share, at the office of the Corporation or any transfer agent for the Preferred Stock, into such number of fully paid and non-assessable shares of Common Stock as is determined by dividing $0.58 plus all accrued but unpaid dividends on the date of conversion (with respect to the Series B Preferred Stock) (the “ Series B Original Issue Price ”), provided, however, that all holders of Series B Preferred Stock shall receive such dividends in cash at the time of conversion upon such an election by the holders of at least sixty percent (60%) of the outstanding shares of Series B Preferred Stock, in which case the Series B Original Issue Price shall be $0.58; $0.65 (with respect to the Series A Preferred Stock) (the “ Series A Original Issue Price ”); and $0.65 (with respect to Seed Preferred Stock) (each as adjusted for any stock dividend, stock split, combination of shares, reclassification or other similar event with respect to the Series B Preferred Stock, Series A Preferred Stock and Seed Preferred Stock) by the Series B Preferred Conversion Price, Series A Preferred Conversion Price and Seed Preferred Conversion Price, respectively, determined as hereinafter provided, in effect at the time of conversion.  The Series B Preferred Conversion Price (the “ Series B Preferred Conversion Price ”) shall initially be $0.58 per share.  The Series A Preferred Conversion Price (the “ Series A Preferred Conversion Price ”) shall initially be $0.65

 

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per share.  The Seed Preferred Conversion Price (the “ Seed Preferred Conversion Price ”) shall initially be $0.65 per share.  The Series B Preferred Conversion Price, Series A Preferred Conversion Price and Seed Preferred Conversion Price are collectively referred to as the “ Preferred Conversion Price .”  Each such initial Preferred Conversion Price shall be subject to adjustment, in order to adjust the number of shares of Common Stock into which the Series B Preferred Stock, Series A Preferred Stock and Seed Preferred Stock are convertible, as hereinafter provided.

 

The right of conversion with respect to any shares of Preferred Stock which shall have been called for redemption under Section 6 of this Article FOURTH shall terminate at the close of business on the day fixed for redemption unless the Corporation shall default in the payment of the redemption price, in which case the right of conversion with respect to such shares shall continue unless and until such redemption price is paid in full.

 

(b)   Automatic Conversion .

 

(i)  Each share of Preferred Stock shall automatically be converted into shares of Common Stock at the applicable Preferred Conversion Price then in effect, as the case may be, and any declared but unpaid dividends or in the case of Series B Preferred Stock, accrued but unpaid dividends elected to be paid in cash in accordance with Section 2(a) of this Article FOURTH, shall be paid in cash, upon the closing of a firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, underwritten by a nationally recognized underwriter that is satisfactory to the holders of at least a majority of the then outstanding shares of Series B Preferred Stock, covering the offer and sale of Common Stock for the account of the Corporation to the public at an offering price per share (after all underwriters’ discounts and commissions, if any) of at least three (3) times the Series B Original Issue Price with net proceeds to the Corporation of not less than $40,000,000 (in the event of which offering, the person(s) entitled to receive the Common Stock issuable upon such conversion of the Preferred Stock shall not be deemed to have converted the Preferred Stock until the closing of such offering) (such public offering, a “ Qualified IPO ”).

 

(ii) Each share of Seed Preferred Stock and Series A Preferred Stock shall automatically be converted into shares of Common Stock at the applicable Preferred Conversion Price then in effect, as the case may be, and any declared but unpaid dividends thereon shall be paid, upon the written election of the holders of at least sixty percent (60%) of the then outstanding shares of Series A Preferred Stock to require such mandatory conversion on the date or event specified by such stockholders.  Each share of Series B Preferred Stock shall automatically be converted into shares of Common Stock at the Series B Preferred Conversion Price then in effect, and any accrued but unpaid dividends thereon elected to be paid in cash in accordance with Section 2(a) of this Article FOURTH shall be paid, upon the written election of

 

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the holders of at least sixty percent (60%) of the then outstanding shares of Series B Preferred Stock to require such mandatory conversion on the date or event specified by such stockholders.

 

(iii) Each share of Series B Preferred Stock held by any Investor (as such term is defined in that certain Series B Convertible Preferred Stock Purchase Agreement by and among the Corporation and certain purchasers of Series B Preferred Stock dated on or about December 17, 2010 (the “ Purchase Agreement ”)), or any successor-in-interest to any Investor, that fails to purchase the amount of Series B Preferred Stock required to be purchased by such Investor (or such Investor’s successor-in-interest) at a Second Closing (as defined in the Purchase Agreement) pursuant to the Purchase Agreement, shall immediately following the Second Closing be automatically converted into shares of Common Stock at the Series B Preferred Conversion Price then in effect and all dividends thereon shall be canceled.

 

(c)   Mechanics of Automatic Conversions .  Upon the occurrence of an event specified in Subsection 2(b) of this Article FOURTH, the Preferred Stock to be converted shall be converted automatically without any further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent; provided , however , that all holders of shares of Preferred Stock being converted shall be given written notice of the occurrence of the event specified in Subsection 2(b) of this Article FOURTH triggering such conversion, including the date such event occurred (the “ Mandatory Conversion Date ”), and the Corporation shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon such conversion unless certificates evidencing such shares of Preferred Stock being converted are either delivered to the Corporation or its transfer agent, or the holder notifies the Corporation or any transfer agent that such certificates have been lost, stolen, or destroyed and executes an agreement satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection therewith (such certificate, a “ Certificate of Loss ”).  On the Mandatory Conversion Date, all rights with respect to the Preferred Stock so converted shall terminate (except any of the rights of the holder thereof as a holder of Common Stock pursuant to this Certificate of Incorporation or otherwise agreed to between such holder and the Corporation or the other holders of the Corporation’s stock) upon surrender of the holder’s certificate or certificates therefor (or a Certificate of Loss), other than such holder’s rights to receive certificates for the number of shares of Common Stock into which such Preferred Stock has been converted, together (in the case of Subsections 2(b)(i) and 2(b)(ii)) with cash in an amount equal to all dividends declared but unpaid on, and, in the case of the Series B Preferred Stock, accrued dividends to the extent an election has been made to be paid such dividends in cash in accordance with Section 2(a) of this Article FOURTH, and any and all other amounts owing with respect to, the shares of Preferred Stock converted to and including the time of conversion.  Upon the automatic conversion of the Preferred Stock pursuant to Section 2(b) of this Article FOURTH, the holders of such Preferred Stock shall surrender the certificates representing such shares (or a Certificate of Loss) at the office of the Corporation or

 

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of its transfer agent.  If required of the holders by the Corporation, 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 the holder’s attorney duly authorized in writing.  Upon surrender of such certificates there shall be issued and delivered to such holder, or to such holder’s nominee or nominees, promptly, a certificate or certificates for the number of shares of Common Stock into which the shares of Preferred Stock surrendered were convertible on the Mandatory Conversion Date, together with cash in an amount equal to all dividends declared but unpaid on, and, in the case of the Series B Preferred Stock, accrued dividends to the extent an election has been made to be paid such dividends in cash in accordance with Section 2(a) of this Article FOURTH, and any and all other amounts owing with respect to, the shares of Preferred Stock being converted to and including the time of conversion. Upon the automatic conversion of the Preferred Stock, all shares of Preferred Stock being converted by any holder thereof shall be aggregated for the purpose of determining the number of shares of Common Stock to which such holder shall be entitled, and no fractional shares of Common Stock shall be issued.  In lieu of any fractional share to which the holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the fair market value of the Common Stock on the Mandatory Conversion Date, as reasonably determined by the Board of Directors in good faith.

 

(d)   Mechanics of Optional Conversions .  Before any holder of Preferred Stock shall be entitled to convert the same into shares of Common Stock, the holder shall surrender the certificate or certificates therefor at the office of the Corporation or of any transfer agent designated by the Corporation, or the holder shall notify the Corporation or any transfer agent that such certificates have been lost, stolen, or destroyed and execute a Certificate of Loss, and shall give written notice to the Corporation at such time that the holder elects to convert his or her Preferred Stock and shall state therein (a) the number of Preferred Stock shares to be so converted and (b) the holder’s name or the name or names of the holder’s nominees in which the holder wishes the certificate or certificates for shares of Common Stock to be issued.  On the date of conversion, all rights with respect to the Preferred Stock so converted shall terminate (except any of the rights of the holder thereof as a holder of Common Stock pursuant to this Certificate of Incorporation or otherwise agreed to between such holder and the Corporation or the other holders of the Corporation’s stock) upon surrender of the holder’s certificate or certificates therefor, other than such holder’s rights to receive certificates for the number of shares of Common Stock into which such Preferred Stock has been converted and cash in an amount equal to all dividends declared but unpaid on, and, in the case of the Series B Preferred Stock, accrued dividends to the extent an election has been made to be paid such dividends in cash in accordance with Section 2(a) of this Article FOURTH, and any and all other amounts owing with respect to, the shares of Preferred Stock being converted to and including the time of conversion.  If so required by the Corporation, certificates surrendered for conversion shall be endorsed or accompanied by written instrument or instruments of transfer, in form satisfactory to

 

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the Corporation, duly executed by the registered holder or by the holder’s attorney duly authorized in writing.  Upon the optional conversion of the Preferred Stock, all shares of Preferred Stock being converted by any holder thereof shall be aggregated for the purpose of determining the number of shares of Common Stock to which such holder shall be entitled, and no fractional shares of Common Stock shall be issued.  In lieu of any fractional share to which the holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the fair market value of the Common Stock on the date of conversion, as reasonably determined by the Board of Directors in good faith. The Corporation shall, promptly after surrender of the certificate or certificates for conversion, issue and deliver to such holder, or to the holder’s nominee or nominees, a certificate or certificates for the number of shares of Common Stock to which the holder shall be entitled as aforesaid, together with cash in lieu of any fraction of a share and cash in an amount equal to all dividends declared but unpaid thereon and, in the case of the Series B Preferred Stock, accrued dividends to the extent an election has been made to be paid such dividends in cash in accordance with Section 2(a) of this Article FOURTH, and any and all other amounts owing with respect thereto at such time together with a certificate for the remaining number of shares of Preferred Stock if less than all of the shares of Preferred Stock evidenced by the certificate or certificates were converted.  Unless otherwise specified by the holder in the written notice of conversion, such conversion shall be deemed to have been made immediately prior to the close of business on the date of surrender of the shares of Preferred Stock to be converted, and the person or persons entitled to receive the shares of Common Stock issuable upon conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date.

 

(e)   Adjustments to Preferred Conversion Price for Diluting Issues .

 

(i)   Special Definitions .  For purposes of this Subsection 2(e) of this Article FOURTH, the following definitions shall apply:

 

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

 

(2)  “ Original Issue Date ” shall mean the first date on which a share of Series B Preferred Stock is issued.

 

(3)  “ Convertible Securities ” shall mean any evidences of indebtedness, shares of capital stock (other than Common Stock) or other securities directly or indirectly convertible into or exchangeable for Common Stock.

 

(4)  “ Additional Shares of Common Stock ” shall mean all shares of Common Stock issued (or, pursuant to Subsection 2(e)(iii) of this Article FOURTH, deemed to be issued) by the Corporation after the Original Issue Date, other than:

 

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(A)  shares of Common Stock issued or issuable upon conversion of shares of Seed Preferred Stock, Series A Preferred Stock or Series B Preferred Stock and shares of Common Stock, Options or Convertible Securities issued as a dividend or distribution on Series A Preferred Stock or Series B Preferred Stock;

 

(B)  up to 12,392,500 shares of Common Stock issued or issuable to employees, consultants or directors of the Corporation pursuant to a stock purchase or stock option plan or other employee stock bonus arrangement approved by a majority of the Corporation’s Board of Directors, including at least a majority of the Preferred Stock Directors (as hereinafter defined); and provided that such number may be adjusted upward with the approval of the holders of at least sixty percent (60%) of the Series B Preferred Stock then outstanding;

 

(C) shares of Common Stock issued in consideration for the acquisition or licensing of technology or a corporate partnership transaction, if approved by the Board of Directors, including at least a majority of the Preferred Stock Directors;

 

(D) shares of Common Stock issued in equipment leasing or other debt financing transactions, if approved by the Board of Directors, including at least a majority of the Preferred Stock Directors; and

 

(E) shares of Common Stock issued in the Company’s initial public offering.

 

(ii)   No Adjustment of Preferred Conversion Price .  Except as set forth in Subsection 2(e)(vi) of this Article FOURTH, no adjustment in the number of shares of Common Stock into which the Preferred Stock is convertible shall be made, by adjustment to the applicable Preferred Conversion Price in respect of the issuance of Additional Shares of Common Stock (a) unless the consideration per share for an Additional Share of Common Stock (determined pursuant to Subsection 2(e)(v) of this Article FOURTH) issued or deemed to be issued by the Corporation is less than the applicable Preferred Conversion Price, in effect on the date of, and immediately prior to, the issue of such Additional Share of Common Stock or (b) if prior to such issuance or within twenty (20) days thereafter the Corporation receives written notice from the holders of at least sixty percent (60%) of the outstanding shares of the applicable series of Preferred Stock that no such adjustment in the Preferred Conversion Price for such series of Preferred Stock shall be made.

 

(iii)   Issue of Securities Deemed Issue of Additional Shares of Common Stock.

 

(1)   Options and Convertible Securities . In the event the Corporation at any time or from time to time after the Original Issue Date shall issue any Options

 

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(excluding for all purposes of this Subsection 2(e)(iii)(1) of this Article FOURTH Options excluded from the definition of Additional Shares of Common Stock in Subsection 2(e)(i)(4)(B) of this Article FOURTH) or Convertible 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 (as set forth in the instrument relating thereto without regard to any provisions contained therein for a subsequent adjustment of such number) of Common Stock 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 (assuming the satisfaction of any conditions to convertibility, exercisability or exchangeability, including without limitation, the passage of time), and the applicable Preferred Conversion Price shall be adjusted accordingly, provided that in any such case in which Additional Shares of Common Stock are deemed to be issued:

 

(A)  no further adjustment in the applicable Preferred Conversion Price shall be made upon the subsequent issue of Convertible Securities or shares of Common Stock upon the exercise of such Options or conversion or exchange of such Convertible Securities;

 

(B)  if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase or decrease in the consideration payable to the Corporation, or increase or decrease in the number of shares of Common Stock issuable, upon the exercise, conversion or exchange thereof, the applicable Preferred Conversion Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options or the rights of conversion or exchange under such Convertible Securities;

 

(C)  upon the expiration of any such Options or any rights of conversion or exchange under such Convertible Securities which shall not have been exercised, the applicable Preferred Conversion Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon such expiration, be recomputed as if:

 

(I)  In the case of Convertible Securities or Options for Common Stock, the only Additional Shares of Common Stock issued were the shares of Common Stock, if any, actually issued upon the exercise of such Options or the conversion or exchange of such Convertible Securities and the consideration received therefor was the consideration actually received by the Corporation for the issue of all such Options, whether or not exercised, plus the consideration actually received by the Corporation upon such exercise, or

 

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for the issue of all such Convertible Securities which were actually converted or exchanged, plus the additional consideration, if any, actually received by the Corporation upon such conversion or exchange; and

 

(II)  in the case of Options for Convertible Securities only the Convertible Securities, if any, actually issued upon the exercise thereof were issued at the time of issue of such Options, and the consideration received by the Corporation for the Additional Shares of Common Stock deemed to have been then issued was the consideration actually received by the Corporation for the issue of all such Options, whether or not exercised, plus the consideration deemed to have been received by the Corporation (determined pursuant to Subsection 2(e)(v) of this Article FOURTH) upon the issue of the Convertible Securities with respect to which such Options were actually exercised;

 

(D)  no readjustment pursuant to clause (B) or (C) above shall have the effect of increasing the applicable Preferred Conversion Price to an amount which exceeds the lower of (i) the applicable Preferred Conversion Price on the original adjustment date, or (ii) the applicable Preferred Conversion Price that would have resulted from any issuance of Additional Shares of Common Stock between the original adjustment date and such readjustment date (in each case as adjusted for any stock dividend, stock split, combination of shares, reclassification or other similar event);

 

(E)  if such record date shall have been fixed and such Options or Convertible Securities are not issued on the date fixed therefor, the adjustment previously made in the applicable Preferred Conversion Price which became effective on such record date shall be canceled as of the close of business on such record date, and thereafter the applicable Preferred Conversion Price shall be adjusted pursuant to this Subsection 2(e)(iii) of this Article FOURTH as of the actual date of their issuance.

 

(2)   Stock Dividends, Stock Distributions and Subdivisions . In the event the Corporation at any time or from time to time after the Original Issue Date shall declare or pay any dividend or make any other distribution on the Common Stock payable in Common Stock or effect a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in Common Stock), then and in any such event, Additional Shares of Common Stock shall be deemed to have been issued with respect to the Preferred Stock:

 

(A)  in the case of any such dividend or distribution, immediately after the close of business on the record date for the determination of holders of any class of securities entitled to receive such dividend or distribution, or

 

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(B)  in the case of any such subdivision, at the close of business on the date immediately prior to the date upon which such corporate action becomes effective.

 

If such record date shall have been fixed and no part of such dividend or distribution shall have been paid on the date fixed therefor, the adjustment previously made to the applicable Preferred Conversion Price which became effective on such record date shall be canceled as of the close of business on such record date, and thereafter the applicable Preferred Conversion Price shall be adjusted pursuant to this Subsection 2(e)(iii) of this Article FOURTH as of the time of actual payment of such dividend or distribution.

 

(3)   Dilutive Financing .  In the event of any merger, business combination, acquisition of a company or its assets, sale of the Corporation’s assets to a third party or a similar transaction, irrespective of corporate form, (A) that the Corporation enters into primarily for the purpose, as determined by the Board of Directors of the Corporation in good faith, of allowing the Corporation to access the cash of a third party and (B) that has an effective consideration per share to the Corporation (based on the cash of such third party accessed by such transaction at the consummation of such transaction divided by the number of Additional Shares of Common Stock issued by the Corporation in such transaction) of less than the Series B Preferred Conversion Price in effect on the date of and immediately prior to such transaction, such transaction shall be considered an issuance of Additional Shares of Common Stock subject to Section 2(e) of this Article FOURTH.

 

(iv)   Adjustment of Preferred Conversion Price Upon Issuance of Additional Shares of Common Stock .  In the event that at any time or from time to time after the Original Issue Date, the Corporation shall issue Additional Shares of Common Stock (including, without limitation, Additional Shares of Common Stock deemed to be issued pursuant to Subsection 2(e)(iii)(1) of this Article FOURTH but excluding Additional Shares of Common Stock deemed to be issued pursuant to Subsection 2(e)(iii)(2) of this Article FOURTH, which event is dealt with in Subsection 2(e)(vi)(1) of this Article FOURTH), without consideration or for a consideration per share less than $0.58 per share (subject to appropriate adjustment for any stock split, combination or other similar recapitalization event), then and in such event, the Series B Preferred Conversion Price, the Series A Preferred Conversion Price and the Seed Preferred Conversion Price, as applicable, shall be reduced, concurrently with such issue, to a price (calculated to the nearest one tenth of one cent) determined in accordance with the following formula:

 

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where:

 

NCP =                                                            New Series B Preferred Conversion Price, new Series A Preferred Conversion Price or new Seed Preferred Conversion Price, as applicable;

 

P 1 =                                                                              Series B Preferred Conversion Price, Series A Preferred Conversion Price or Seed Preferred Conversion Price, as applicable, in effect immediately prior to new issue;

 

Q 1 =                                                                       Number of shares of Common Stock outstanding, or deemed to be outstanding as set forth below, immediately prior to such issue;

 

P 2 =                                                                         Weighted average price per share received by the Corporation upon such issue;

 

Q 2 =                                                                         Number of shares of Common Stock issued, or deemed to have been issued, in the subject transaction;

 

provided that for the purpose of this Subsection 2(e)(iv) of this Article FOURTH, all shares of Common Stock issuable upon exercise of Options outstanding immediately prior to such issue and conversion of shares of Series B Preferred Stock, Series A Preferred Stock or Seed Preferred Stock, as applicable, outstanding immediately prior to such issue shall be deemed to be outstanding, and immediately after any Additional Shares of Common Stock are deemed issued pursuant to Subsection 2(e)(iii) of this Article FOURTH, such Additional Shares of Common Stock shall be deemed to be outstanding.

 

(v)   Determination of Consideration .  For purposes of this Subsection 2(e) of this Article FOURTH, the consideration received by the Corporation for the issue of any Additional Shares of Common Stock shall be computed as follows:

 

(1)   Cash and Property :  Such consideration shall:

 

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

 

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

 

(C)  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 (A) and (B) above, as determined in good faith by the Board of Directors.

 

(2)   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 2(e)(iii)(1) of this Article FOURTH, relating to Options and Convertible Securities, shall be determined by dividing (x) 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 (y) 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.

 

(vi)   Adjustment for Dividends, Distributions, Subdivisions, Combinations or Consolidations of Common Stock .

 

(1)   Stock Dividends, Distributions or Subdivisions .  In the event the Corporation shall be deemed to issue Additional Shares of Common Stock pursuant to Subsection 2(e)(iii)(2) of this Article FOURTH in a stock dividend, stock distribution or subdivision, the applicable Preferred Conversion Price in effect immediately before such deemed issuance shall, concurrently with the effectiveness of such deemed issuance, be proportionately decreased.

 

(2)   Combinations or Consolidations .  In the event the outstanding shares of Common Stock shall be combined or consolidated, by reclassification or otherwise, into a lesser number of shares of Common Stock, the applicable Preferred Conversion Price in effect immediately prior to such combination or consolidation shall, concurrently with the effectiveness of such combination or consolidation, be proportionately increased.

 

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(vii)   Special Mandatory Conversion

 

(1)                                  Trigger Event .  Prior to a Qualified IPO or Deemed Liquidation, in the event that any holder of shares of Preferred Stock does not participate in a Qualified Financing (as defined below) by purchasing in the aggregate, in such Qualified Financing and within the time period specified by the Corporation ( provided that the Corporation has sent to each holder of Preferred Stock at least 10 days written notice of, and the opportunity to purchase its Pro Rata Amount (as defined below) of, the Qualified Financing), such holder’s Pro Rata Amount, then the Applicable Portion (as defined below) of the shares of Preferred Stock held by such holder shall automatically, and without any further action on the part of such holder, be converted into shares of Common Stock at the applicable Preferred Conversion Price in effect immediately prior to the consummation of such Qualified Financing, effective upon, subject to, and concurrently with, the consummation of the Qualified Financing and in accordance with the following order:

 

(A) first, the shares of Series B Preferred Stock held by such holder in an amount equal to such holder’s Applicable Portion shall be converted into shares of Common Stock at the Series B Preferred Conversion Price in effect immediately prior to the consummation of such Qualified Financing; provided that if the aggregate number of shares of Series B Preferred Stock held by such holder is less than such holder’s Applicable Portion, then

 

(B) second, the shares of Series A Preferred Stock held by such holder in an amount equal to such holder’s Applicable Portion, less the number of shares converted pursuant to Section 2(e)(vii)(1)(A) of this Article FOURTH, shall be converted into shares of Common Stock at the Series A Preferred Conversion Price in effect immediately prior to the consummation of such Qualified Financing; provided that if the aggregate number of shares of Series A Preferred Stock held by such holder is less than such holder’s Applicable Portion less the number of shares converted pursuant to Section 2(e)(vii)(1)(A) of this Article FOURTH, then

 

(C) third, the shares of Seed Preferred Stock held by such holder in an amount equal to such holder’s Applicable Portion, less the number of shares converted pursuant to Sections 2(e)(vii)(1)(A) and 2(e)(vii)(1)(B) of this Article FOURTH, shall be converted into shares of Common Stock at the Seed Preferred Conversion Price in effect immediately prior to the consummation of such Qualified Financing.

 

For purposes of determining the number of shares of Preferred Stock owned by a holder, and for determining the number of Offered Securities (as defined below) a holder of Preferred Stock has purchased in a Qualified Financing, all shares of Preferred Stock held by Affiliates (as defined below) of such holder shall be aggregated with such holder’s shares and all Offered Securities

 

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purchased by Affiliates of such holder shall be aggregated with the Offered Securities purchased by such holder ( provided that no shares or securities shall be attributed to more than one entity or person within any such group of affiliated entities or persons).  Such conversion is referred to herein as a “ Special Mandatory Conversion .”

 

(2)                                  Procedural Requirements .  Upon a Special Mandatory Conversion, each holder of shares of Preferred Stock converted pursuant to Subsection 2(e)(vii)(a) of this Article FOURTH shall be sent written notice of such Special Mandatory Conversion and the place designated for mandatory conversion of all such shares of Preferred Stock pursuant to this Section 2(e)(vii) of this Article FOURTH.  Upon receipt of such notice, each holder of such shares of Preferred Stock 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 Certificate of Loss) to the Corporation at the place designated in such notice. If so required by the Corporation, 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 2(e)(vii)(a) of this Article FOURTH, including the rights, if any, to receive notices and vote (other than as a holder of Common Stock), will terminate at the time of the Special Mandatory Conversion (notwithstanding the failure of the holder or holders thereof to surrender the certificates for such shares at or prior to such time), except only the rights of the holders thereof, upon surrender of their certificate or certificates therefor (or a Certificate of Loss), to receive the items provided for in the next sentence of this Subsection 2(e)(vii)(b) of this Article FOURTH.  As soon as practicable after the Special Mandatory Conversion and the surrender of the certificate or certificates (or a Certificate of Loss) for Preferred Stock so converted, the Corporation shall issue and deliver to such holder, or to his, her or its nominees, a certificate or certificates for the number of full shares of Common Stock issuable on such conversion in accordance with the provisions hereof, together with cash as provided herein 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, and, in the case of the Series B Preferred Stock, accrued dividends to the extent an election has been made to be paid such dividends in cash in accordance with Section 2(a) of this Article FOURTH, on the shares of Preferred Stock converted.

 

(3)                                  Definitions .  For purposes of this Section 2(e)(vii), the following definitions shall apply:

 

(A)                                Affiliate ” shall mean, with respect to any holder of shares of Preferred Stock, any person, entity or firm which, directly or indirectly, controls, is controlled by or is under common control with such holder, including, without limitation, any

 

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entity of which the holder is a partner or member, any partner, officer, director, member or employee of such holder and any venture capital fund now or hereafter existing of which the holder is a partner or member which is controlled by or under common control with one or more general partners of such holder or shares the same management company with such holder.

 

(B)                                Applicable Portion shall mean, with respect to any holder of shares of Preferred Stock who fails to purchase his, her or its Pro Rata Amount in a Qualifying Offering, a number of shares of Preferred Stock calculated by multiplying the aggregate number of shares of Preferred Stock held by such holder immediately prior to a Qualified Financing by a fraction, the numerator of which is equal to the amount by which such holder’s Pro Rata Amount exceeds the number of Offered Securities actually purchased by such holder in such Qualified Financing, and the denominator of which is equal to such holder’s Pro Rata Amount.

 

( C)                                Offered Securities ” shall mean the equity securities of the Corporation set aside by the Board of Directors of the Corporation (including the affirmative vote of the JJDC Director (as defined in the Amended and Restated Voting Agreement dated on or about December 17, 2010 among the Corporation and certain of its stockholders, as may be amended from time to time (the “ Voting Agreement ”)), for so long as Johnson & Johnson Development Corporation or its successors or assigns is entitled to designate a director of the Corporation pursuant to the Voting Agreement and the Skyline Director (as defined in the Voting Agreement) for so long as Skyline Venture Partners V, L.P. or its successors or assigns is entitled to designate a director of the Corporation pursuant to the Voting Agreement) for purchase by holders of outstanding shares of Preferred Stock in connection with a Qualified Financing, and offered to such holders.

 

(D)                                Pro Rata Amount ” shall mean, with respect to any holder of Preferred Stock, the lesser of (a) a number of Offered Securities calculated by multiplying the aggregate number of Offered Securities by a fraction, the numerator of which is equal to the number of shares of Preferred Stock owned by such holder, and the denominator of which is equal to the aggregate number of outstanding shares of Common Stock (for the purpose of this definition, treating all shares of Common Stock issuable upon exercise of Options outstanding immediately prior to such Qualified Financing or upon conversion of Convertible Securities outstanding (assuming exercise of any outstanding Options therefor) immediately prior to such Qualified Financing as outstanding) and (b) the maximum number of Offered Securities that such holder is permitted by the Corporation to purchase in such Qualified Financing, after giving effect to any cutbacks or limitations established by the Board of Directors and applied on a pro rata basis to all holders of Preferred Stock.

 

(E)                                 Qualified Financing ” shall mean any transaction occurring after the Original Issue Date, involving the issuance or sale of Additional Shares of

 

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Common Stock that the Board of Directors of the Corporation, including the affirmative vote of the JJDC Director and the Skyline Director, determines should be subject to Section 2(e)(vii) of this Article FOURTH.

 

(d)  Adjustments for Certain Dividends and Distributions .  In the event that at any time or from time to time after the Original Issue Date the Corporation 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 shares of Common Stock or securities, the issuance of which are deemed to be issuances of Common Stock under Subsection 2(e)(iii) of this Article FOURTH, then and in each such event provision shall be made so that the holders of Preferred Stock shall receive upon conversion thereof in addition to the number of shares of Common Stock receivable thereupon, the amount of securities of the Corporation that they would have received had their Preferred Stock been converted into Common Stock immediately prior to such event and had they thereafter, during the period from the date of such event to and including the conversion date, retained such securities receivable by them as aforesaid during such period, giving application during such period to all adjustments called for herein.

 

(e)  Adjustment for Reclassification, Exchange, or Substitution .  In the event that at any time or from time to time after the Original Issue Date the Common Stock issuable upon the conversion of the applicable Preferred Stock shall be changed into the same or a different number of shares of any class or series of stock or other securities or property, whether by capital reorganization, reclassification, recapitalization or otherwise (other than a subdivision or combination of shares or stock dividend provided for above, or a merger, consolidation, or sale of assets provided for below), then and in each such event the holder of any shares of the applicable Preferred Stock shall have the right thereafter to convert such shares into the kind and amount of shares of stock and other securities and property which such holder would have been entitled to receive upon such reorganization, reclassification, recapitalization or other change by the holder of a number of shares of Common Stock equal to the number of shares of Common Stock into which such shares of the applicable Preferred Stock might have been converted immediately prior to such reorganization, reclassification, recapitalization or change, all subject to further adjustment as provided herein.

 

(f)  Adjustment for Merger, Consolidation or Sale of Assets.   In the event that at any time or from time to time after the Original Issue Date the Corporation shall merge or consolidate with or into another entity or sell all or substantially all of its assets, and such consolidation, merger or sale is not treated as a liquidation under Subsection 1(c) of this Article FOURTH, each share of Preferred Stock shall thereafter be convertible into the kind and amount of shares of stock or other securities or property to which a holder of the number of shares of Common Stock of the Corporation deliverable upon conversion of such Preferred Stock would have been entitled to receive upon such consolidation, merger or sale; and, in such case,

 

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appropriate adjustment (as determined in good faith by the Board of Directors) shall be made in the application of the provisions set forth in this Section 2 with respect to the rights and interest thereafter of the holders of shares of such Preferred Stock, to the end that the provisions set forth in this Section 2 of this Article FOURTH (including provisions with respect to changes in and other adjustments of the applicable Preferred Conversion Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other securities or property thereafter deliverable upon the conversion of such Preferred Stock.

 

(g)  No Impairment .  The Corporation shall not without the consent(s) required by Section 3 of this Article FOURTH, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed under this Section 2 of this Article FOURTH by the Corporation but shall at all times in good faith assist in the carrying out of all the provisions of this Section 2 of this Article FOURTH and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of Preferred Stock against impairment.

 

(h)  Certificate as to Adjustments .  Upon the occurrence of each adjustment or readjustment of the applicable Preferred Conversion Price pursuant to this Section 2 of this Article FOURTH, the Corporation at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of Series B Preferred Stock, Series A Preferred Stock or Seed Preferred Stock, as applicable, a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based.  The Corporation shall, upon the written request at any time of any holder of Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (i) such adjustments and readjustments, (ii) the applicable Preferred Conversion Price at the time in effect, and (iii) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of each share of Series B Preferred Stock, Series A Preferred Stock or Seed Preferred Stock, as applicable.

 

(i)  Notices of Record Date .  In the event of any taking by the Corporation of a record of the holders of any class or series of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, the Corporation shall mail to each holder of Preferred Stock at least ten (10) days prior to such record date a notice specifying the date on which any such record is to be taken for the purpose of such dividend or distribution.

 

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(j)  Common Stock Reserved .  The Corporation shall reserve and keep available, free from pre-emptive rights, out of its authorized but unissued Common Stock, solely for the purpose of effecting the conversion of Preferred Stock, such number of shares of Common Stock as shall from time to time be sufficient to effect conversion of the Preferred Stock.  If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all the then outstanding shares of Preferred Stock, the Corporation shall promptly take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose.

 

(k)  Certain Taxes .  The Corporation shall pay any issue or transfer taxes payable in connection with the conversion of Preferred Stock, provided, however, that the Corporation shall not be required to pay any tax which may be payable in respect of any transfer to a name other than that of the holder of the Preferred Stock.

 

(l)  Closing of Books .  The Corporation shall at no time close its transfer books against the transfer of any Preferred Stock or of any shares of Common Stock issued or issuable upon the conversion of any shares of Preferred Stock in any manner which interferes with the timely conversion or transfer of such Preferred Stock or Common Stock.

 

(m)  Validity of Shares .  The Corporation agrees that it will from time to time take all such actions as may be required to assure that all shares of Common Stock which may be issued upon conversion of any Preferred Stock will, upon issuance, be legally and validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof.

 

Section 3 . Restrictions .

 

(a)                                  At all times when at least ten percent (10%) of the Series B Preferred Stock (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) issued remains outstanding, in addition to any other vote required by law or this Certificate of Incorporation, the Corporation shall not take any of the following actions, either directly or indirectly, by amendment, merger, consolidation or otherwise, without the consent of at least sixty percent (60%) of the holders of the then outstanding Series B Preferred Stock:

 

(i) adversely alter or amend the rights, preferences or privileges of the Series B Preferred Stock,

 

(ii) increase or decrease the authorized number of shares of Series B Preferred Stock,

 

(iii) increase or decrease the authorized size of the Board of Directors,

 

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(iv) appoint or replace any At-Large Director (as defined in the Voting Agreement),

 

(v) hire a person to serve as, or terminate the employment of a person who is, the Chief Executive Officer, President, Chief Financial Officer or Chief Operating Officer of the Corporation or any subsidiary of the Corporation, or amend the terms of any employment agreement with such employee,

 

(vi) amend any provision of this Certificate of Incorporation relative only to the Series B Preferred Stock or amend or waive any provision of the Bylaws of the Corporation relative only to the Series B Preferred Stock, and

 

(vii) create any new class or series of shares having voting rights or other rights, preferences or privileges senior to the Series B Preferred Stock other than any new class or series of shares entitled to receive a liquidation preference for each share equal to not more than the consideration per share paid for such shares (as such price may be adjusted for stock dividends, stock splits, combinations of shares, reclassifications or other similar events with respect to such shares) plus accrued and/or unpaid dividends thereon with or without the right to receive distributions ratably after all Preferred Stock Liquidation Payments have been paid.

 

(b)                              At all times when at least ten percent (10%) of the Series A Preferred Stock (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) issued remains outstanding, in addition to any other vote required by law or this Certificate of Incorporation, the Corporation shall not take any of the following actions, either directly or indirectly, by amendment, merger, consolidation or otherwise, without the consent of at least sixty percent (60%) of the holders of the then outstanding Series A Preferred Stock:

 

(i) adversely alter or amend the rights, preferences or privileges of the Series A Preferred Stock, and

 

(ii) increase or decrease the authorized number of shares of Series A Preferred Stock.

 

(c)                                   At all times when at least ten percent (10%) of the Seed Preferred Stock issued remains outstanding, in addition to any other vote required by law or this Certificate of Incorporation, the Corporation shall not take any of the following actions, either directly or indirectly, by amendment, merger, consolidation or otherwise, without the consent of at least sixty percent (60%) of the holders of the then outstanding Seed Preferred Stock:

 

(i) adversely alter or amend the rights, preferences or privileges of the Seed Preferred Stock, and

 

(ii) increase or decrease the authorized number of shares of Seed Preferred Stock.

 

(d)                                  In addition to any other vote required by law or this Certificate of Incorporation, the Corporation shall not take any of the following actions, either directly or indirectly, by

 

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amendment, merger, consolidation or otherwise, without the consent of at least a majority of the holders of the then outstanding Preferred Stock:

 

(i) create any new class or series of shares having voting rights or other rights, preferences or privileges senior to or on parity with the Series B Preferred Stock, Series A Preferred Stock or Seed Preferred Stock,

 

(ii) effect a merger or corporate reorganization as a result of which the holders of capital stock of the Corporation immediately prior to such transaction hold less than a majority of the outstanding capital stock of the surviving or resulting corporation, or any transaction in which all or substantially all of the assets of the Corporation are sold, transferred or exclusively licensed,

 

(iii) effect a voluntary liquidation, winding-up or dissolution of the Corporation or a subsidiary of the Corporation or any bankruptcy filing or similar action by the Corporation or a subsidiary of the Corporation,

 

(iv) take any action that would result in a Deemed Liquidation,

 

(v) amend or waive any provision in the Certificate of Incorporation or Bylaws of the Corporation,

 

(vi) redeem or repurchase any shares of the Series A Preferred Stock, Seed Preferred Stock or Common Stock, unless such actions are made pursuant to equity incentive agreements with service providers giving the Corporation the right to repurchase shares upon the termination of services,

 

(vii) issue, incur or guarantee any debt in excess of $100,000 unless such action is approved by the majority of the Preferred Stock Directors,

 

(viii) any actions resulting in the investment in or acquisition of any entity which is not a wholly-owned subsidiary of the Corporation,

 

(ix) any action resulting in the purchase, license, lease or acquisition by the Corporation or a subsidiary of the Corporation of any business, division, rights or assets for consideration in excess of $100,000,

 

(x) any action resulting in the sale, exclusive license, lease or disposition by the Corporation or a subsidiary of the Corporation of any business, division or other right, asset, clinical program or intellectual property in excess of $100,000 unless such action is approved by a majority of the Preferred Stock Directors,

 

(xi) any action resulting in a capital expenditure by the Corporation in excess of $100,000 that was not included in the budget plan approved by the Board of Directors,

 

(xii) adopt or amend any Corporation equity incentive plan,

 

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(xiii) issue any options (other than options issued pursuant to any Corporation equity incentive plan),

 

(xiv) reprice the exercise price of any options issued by the Corporation,

 

(xv) approve any business plan of the Corporation, or material changes to the business plan, unless the business plan or any material change is approved by a majority of the Preferred Stock Directors,

 

(xvi) any action commencing or settling litigation (i) relating primarily to material intellectual property of the Corporation or (ii) in which $500,000 is at stake for the Corporation,

 

(xvii) change the accounting methods or policies (other than as required by U.S. generally accepted accounting principles) or the accounting auditors of the Corporation or any subsidiary of the Corporation, unless such change is approved by the majority of the Preferred Stock Directors,

 

(xviii) pledge assets of the Corporation to guarantee any debt (other than in connection with a capital lease or a financing approved by at least a majority of the holders of the then outstanding Preferred Stock),

 

(xix) stop devoting a majority of the efforts of the Corporation or any subsidiary of the Corporation to discovering and developing vaccines, unless such change was included in a business plan approved by the Board of Directors,

 

(xx) approve any action that would impair the ability of the Corporation to satisfy the rights, preferences or privileges of the Preferred Stock,

 

(xxi) approve any contract or other agreement between the Corporation or any subsidiary of the Corporation, on one hand, and any officer, director, stockholder or employee of the Corporation or any subsidiary of the Corporation or any family member of such person, on the other hand, including any contract or other agreement for the sale or repurchase of any capital stock, rights, warrants or options of the Corporation or any subsidiary of the Corporation,

 

(xxii) declare or pay any dividends to stockholders of the Corporation,

 

(xxiii) grant any exclusive distribution rights to any entity that is not a subsidiary of the Corporation, and

 

(xxiv) agree to take any action listed in clauses (i) through (xxiii) above.

 

Section 4 Voting Rights .

 

(a)  Except as otherwise required by law or set forth in this Certificate of Incorporation, the holders of Preferred Stock shall be entitled to notice of any meeting of stockholders and shall vote together with the holders of Common Stock as a single class upon any matter submitted to the stockholders for a vote.  With respect to all questions as to which,

 

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under law, stockholders are required to vote by classes or series, the Preferred Stock shall vote separately as a single class and series apart from the Common Stock.  Shares of Common Stock and Preferred Stock shall entitle the holders thereof to the following number of votes on any matter as to which they are entitled to vote:

 

(i)  Holders of Common Stock shall have one vote per share; and

 

(ii)  Holders of Preferred Stock shall have that number of votes per share as is equal to the number of shares of Common Stock (including fractions of a share) into which each such share of Preferred Stock held by such holder could be converted (without giving effect to the conversion of any accrued but unpaid dividends) on the date for determination of stockholders entitled to vote at the meeting or on the date of any written consent.

 

(b)  Any provision of the By-Laws of the Corporation to the contrary notwithstanding, the number of directors constituting the whole Board of Directors of the Corporation shall not be fixed at a number other than seven without the prior written consent of the holders of at least sixty percent (60%) of the Series B Preferred Stock then outstanding as provided in Section 3(a) of this Article FOURTH.  The Board of Directors shall not delegate any of its powers or duties to any committee of the Board of Directors without the consent of at least a majority of the Preferred Stock Directors.

 

(c)  At all times during which shares of Series B Preferred Stock remain outstanding, the holders of the outstanding shares of Series B Preferred Stock shall have the exclusive right, separately from the Common Stock, Seed Preferred Stock and Series A Preferred Stock, to elect two directors of the Corporation (the “ Series B Preferred Stock Directors ”).  The Series B Preferred Stock Directors shall be elected by the vote or written consent of the holders of at least a majority of the outstanding Series B Preferred Stock.  If a Series B Preferred Stock Director shall cease to serve as a director for any reason, another director elected by the holders of the Series B Preferred Stock shall replace such director.  Any Series B Preferred Stock Director may be removed, with or without cause, and a replacement Series B Preferred Stock Director may be elected in his stead, at any time by the affirmative vote at a meeting duly called for the purpose, or by written consent, of the holders of more than sixty percent (60%) of the outstanding Series B Preferred Stock.

 

(d)  At all times during which shares of Series A Preferred Stock remain outstanding, the holders of the outstanding shares of Series A Preferred Stock shall have the exclusive right, separately from the Common Stock, Seed Preferred Stock and Series B Preferred Stock, to elect three directors of the Corporation (the “ Series A Preferred Stock Directors ”).  The Series A Preferred Stock Directors shall be elected by the vote or written consent of the holders of at least a majority of the outstanding Series A Preferred Stock.  If a Series A Preferred Stock Director shall cease to serve as a director for any reason, another director elected by the holders of the Series A Preferred Stock shall replace such director.  Any Series A Preferred Stock

 

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Director may be removed, with or without cause, and a replacement Series A Preferred Stock Director may be elected in his stead, at any time by the affirmative vote at a meeting duly called for the purpose, or by written consent, of the holders of more than sixty percent (60%) of the outstanding Series A Preferred Stock.

 

(e) The holders of the outstanding shares of Common Stock shall have the exclusive right, separately from the Seed Preferred Stock, Series A Preferred Stock and Series B Preferred Stock, to elect one director of the Corporation (the “ Common Stock Director ”).  The Common Stock Director shall be elected by the vote or written consent of the holders of a majority of the outstanding Common Stock.  If the Common Stock Director shall cease to serve as a director for any reason, another director elected by the holders of the Common Stock shall replace such director. Any Common Stock Director may be removed, with or without cause, and a replacement Common Stock Director may be elected in his stead, at any time by the affirmative vote at a meeting duly called for the purpose, or by written consent, of the holders of a majority of the outstanding Common Stock.

 

(f)  All other directors of the Corporation shall be elected by the holders of the Common Stock and Preferred Stock voting together as a single class, with the holders of Preferred Stock to have that number of votes as is determined in accordance with Section 4(a)(ii) of this Article FOURTH.

 

Section 5.  Dividends .

 

(a)  From and after the date of the issuance of any shares of Series B Preferred Stock, dividends at the rate per annum of eight percent (8%) of the Original Issue Price shall accrue on such shares of Series B Preferred Stock (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) (the “ Series B Preferred Dividend ”).  Series B Preferred Dividends shall accrue daily, whether or not declared and shall be cumulative and non-compounding; provided however, that except as set forth in the following sentence of this Section 5(a) or in Section 1(a) or Section 6(a) of this Article FOURTH, such Series B Preferred Dividends shall be payable only when, as, and if declared by the Board of Directors and the Corporation shall be under no obligation to pay such Series B Preferred Dividends.  The Corporation shall not declare, pay or set aside any dividends on shares of Series A Preferred Stock, Seed Preferred Stock or Common 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 the Certificate of Incorporation) the holders of the Series B Preferred Stock then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Series B Preferred Stock in an amount at least equal to the amount of the aggregate Series B Preferred Dividends then accrued on such share of Series B Preferred Stock and not previously paid.  The Series B Preferred Dividend shall continue to accrue even if the

 

29



 

Corporation does not have lawfully available funds to pay such Series B Preferred Dividend at the time of accrual.

 

(b)  No dividend shall be declared or paid on shares of Series A Preferred Stock unless the provisions of Section 5(a) of this Article FOURTH above are satisfied.  From and after the date of the issuance of any shares of Series A Preferred Stock, dividends at the rate per annum of 8% of the Series A Original Issue Price shall accrue on such shares of Series A Preferred Stock (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) (the “ Series A Preferred Dividend ”).  Series A Preferred Dividends shall accrue quarterly, whether or not declared but shall be non-cumulative and non-compounding; provided however, that except as set forth in the following sentence of this Section 5(b) or in Section 1(a) or Section 6(a) of this Article FOURTH, such Series A Preferred Dividends shall be payable only when, as, and if declared by the Board of Directors and the Corporation shall be under no obligation to pay such Series A Preferred Dividends.  The Corporation shall not declare, pay or set aside any dividends on shares of Seed Preferred Stock or Common 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 the Certificate of Incorporation) the holders of the Series A Preferred Stock then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Series A Preferred Stock in an amount at least equal to the sum of (i) the amount of the aggregate Series A Preferred Dividends then accrued on such share of Series A Preferred Stock and not previously paid and (ii) (A) in the case of a dividend on Common Stock or Seed Preferred Stock, that dividend per share of Series A Preferred Stock as would equal the product of (1) 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 (2) the number of shares of Common Stock issuable upon conversion of a share of Series A Preferred Stock, in each case calculated on the record date for determination of holders entitled to receive such dividend or (B) in the case of a dividend on any class or series that is not convertible into Common Stock, at a rate per share of Series A Preferred Stock determined by (1) 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 (2) multiplying such fraction by an amount equal to the Series A Original Issue Price); 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 Series A Preferred Stock pursuant to this Section 1 shall be calculated based upon the dividend on the class or series of capital stock that would result in the highest Series A Preferred Stock dividend.

 

30


 

(c) No dividend shall be declared or paid on shares of Common Stock unless the provisions of Section 5(a) and 5(b) above are satisfied and the Corporation shall declare and pay at the same time to each holder of Seed Preferred Stock a dividend equal to $0.052 per share of Seed Preferred Stock per annum, plus all dividends, previously declared and unpaid on the Seed Preferred Stock (respectively, the “ Seed Preferred Dividend ” and together with the Series A Preferred Dividend and the Series B Preferred Dividend, the “ Preferred Dividend ”), plus the dividend which would have been payable to such holder if the shares of Seed Preferred Stock held by such holder had been converted into Common Stock on the record date for the determination of holders of Common Stock entitled to receive such dividend.

 

(d) The calculation of the applicable Preferred Dividend shall be computed (y) on the number of days since such Preferred Stock respectively, was issued and outstanding (z) and shall include any accrued but unpaid dividends thereon.  Prior to payment of any dividend pursuant to this Section 5 of this Article FOURTH, the Corporation shall provide a statement to each holder of Preferred Stock as of the date of declaration of such dividend, indicating the amount of the Preferred Dividend as applicable, owing on each such share and stipulating an appropriate mechanism by which the holder of such share of Preferred Stock may contest the calculation of the Preferred Dividend.

 

( e )  No dividends shall be declared or paid on the Common Stock or Preferred Stock except as set forth in Section 1(a) , Section 6(a)  or Section 5 of this Article FOURTH.

 

Section 6 Redemption .

 

(a)  At the written election of holders of at least a majority of the outstanding shares of Series B Preferred Stock at any time on or after the date that is 90 days before fifth anniversary of the Original Issue Date (the “ Series B Redemption Election ”), the Corporation shall be required to redeem all, but not less than all, of the outstanding shares of Series B Preferred Stock in three annual installments, upon the terms set forth in this Section 6 of this Article FOURTH.  The first installment of such redemption shall occur on a date (the “ First Series B Redemption Date ”) specified in the Series B Redemption Election, which shall be not less than ninety (90) days after the date of the Series B Redemption Election, and the second and third installments of such redemption shall occur on the first and second anniversaries, respectively, of the First Series B Redemption Date.  The Corporation shall redeem one-third of the outstanding shares of Series B Preferred Stock held by each holder on the First Series B Redemption Date, one-half of the remaining outstanding shares of Series B Preferred Stock then held by each holder on the first anniversary thereof and all of the remaining shares of Series B Preferred Stock on the second anniversary thereof.  On each such redemption date, the holders shall surrender the certificate or certificates for the shares to be redeemed duly endorsed for transfer or with duly executed stock transfer powers sufficient to permit transfer attached at the offices of the Corporation or of any transfer agent for the Series B Preferred Stock, or the holder

 

31



 

shall notify the Corporation or any transfer agent that such certificates have been lost, stolen, or destroyed and execute a Certificate of Loss.  The Corporation shall, as soon as practicable thereafter, issue and deliver to each holder a certificate or certificates for the balance of the shares not being redeemed.  The redemption price per share of Series B Preferred Stock shall be equal to $0.58 (as adjusted for any stock dividend, stock split, combination of shares, reclassification or other similar event with respect to the Series B Preferred Stock) (the “ Series B Redemption Price ”) plus all dividends accrued and/or declared but unpaid on such share on the applicable redemption date.

 

(b) If at any time following the redemption in full of all shares of Series B Preferred Stock subject to a redemption request, the Corporation receives the written election of holders of at least sixty percent (60%) of the outstanding shares of Series A Preferred Stock (the “ Series A Redemption Election ”), the Corporation shall be required to redeem all, but not less than all, of the outstanding shares of Series A Preferred Stock in three annual installments, upon the terms set forth in this Section 6 of this Article FOURTH.  The first installment of such redemption shall occur on a date (the “ First Series A Redemption Date ”) specified in the Series A Redemption Election, which shall be not less than ninety (90) days after the date of the Series A Redemption Election, and the second and third installments of such redemption shall occur on the first and second anniversaries, respectively, of the First Series A Redemption Date.  The Corporation shall redeem one-third of the outstanding shares of Series A Preferred Stock held by each holder on the First Series A Redemption Date, one-half of the remaining outstanding shares of Series A Preferred Stock then held by each holder on the first anniversary thereof and all of the remaining shares on the second anniversary thereof.  On each such redemption date, the holders shall surrender the certificate or certificates for the shares to be redeemed duly endorsed for transfer or with duly executed stock transfer powers sufficient to permit transfer attached at the offices of the Corporation or of any transfer agent for the Series A Preferred Stock, or the holder shall notify the Corporation or any transfer agent that such certificates have been lost, stolen, or destroyed and execute a Certificate of Loss.  The Corporation shall, as soon as practicable thereafter, issue and deliver to each holder a certificate or certificates for the balance of the shares not being redeemed.  The redemption price per share of Series A Preferred Stock shall be equal to $0.65 (as adjusted for any stock dividend, stock split, combination of shares, reclassification or other similar event with respect to the Series A Preferred Stock) (the “ Series A Redemption Price ”) plus all dividends accrued and/or declared but unpaid on such share on the applicable redemption date.

 

(c)  Notice of any redemption shall be sent by first class mail, postage prepaid, to each holder of record of the Series B Preferred Stock or Series A Preferred Stock, as applicable, not less than thirty days nor more than sixty days prior to the First Series B Redemption Date or First Series A Redemption Date, as applicable, at the address of such holder as it appears on the books of the Corporation.  Such notice shall set forth (i) the First Series B Redemption Date or

 

32



 

First Series A Redemption Date, as applicable, the dates of the second and third installments of such redemption, and the place of redemption; and (ii) the number of shares to be redeemed on each date of redemption and the redemption price calculated in accordance with Subsection 6(a) and 6(b) of this Article FOURTH, on each such date.  The Corporation shall be obligated to redeem the Series B Preferred Stock or Series A Preferred Stock, as applicable, on the dates and in the amounts set forth in the notice; provided, however, that any holder of Series B Preferred Stock or Series A Preferred Stock, as applicable, may convert any or all of the shares owned by such holder into Common Stock in accordance with Section 4 of this Article FOURTH at any time prior to the date of redemption of such shares.  The Corporation, if advised before the close of business on the relevant redemption date by written notice from any holder of record of Series B Preferred Stock or Series A Preferred Stock to be redeemed, as applicable, shall credit against the number of shares of Series B Preferred Stock or Series A Preferred Stock required to be redeemed from such holder, as applicable, and shall not redeem, the number of shares of Series B Preferred Stock or Series A Preferred Stock, as applicable, which shall have been converted by such holder on or before such date and which shall not previously have been credited against any redemption.

 

(d)  If, on or before a redemption date, the funds necessary for such redemption shall have been set aside by the Corporation and deposited with a bank or trust company, in trust for the pro rata benefit of the holders of the Series B Preferred Stock or Series A Preferred Stock that has been called for redemption, then, notwithstanding that any certificates for shares that have been called for redemption shall not have been surrendered for cancellation, the shares represented thereby shall no longer be deemed outstanding from and after such redemption date, and all rights of holders of such shares so called for redemption shall forthwith, after such redemption date, cease and terminate with respect to such shares, excepting only the right to receive the redemption funds therefor to which they are entitled.  Any interest accrued on funds so deposited and unclaimed by stockholders entitled thereto shall be paid to such stockholders at the time their respective shares are redeemed or to the Corporation at the time unclaimed amounts are paid to it.  In case the holders of shares of Series B Preferred Stock or Series A Preferred Stock, as applicable, which shall have been called for redemption shall not, within one year after the final redemption date, claim the amounts so deposited with respect to the redemption thereof, any such bank or trust company shall, upon demand, pay over to the Corporation such unclaimed amounts and thereupon such bank or trust company shall be relieved of all responsibility in respect thereof to such holder and such holder shall look only to the Corporation for the payment thereof.  Any funds so deposited with a bank or trust company which shall not be required for such redemption by reason of the exercise subsequent to the date of such deposit of the right of conversion of any shares or otherwise shall be returned to the Corporation forthwith.

 

33



 

(e)  If the funds of the Corporation legally available for redemption of shares of Series B Preferred Stock or Series A Preferred Stock, as applicable, on a redemption date are insufficient to redeem the total number of shares of Series B Preferred Stock or Series A Preferred Stock submitted for redemption, those funds which are legally available will be used to redeem the maximum possible number of whole shares among the holders of such shares, based ratably on the aggregate Series B Redemption Price or Series A Redemption Price, as applicable which each such holder would be entitled to receive on such redemption date.  The shares of Series B Preferred Stock or Series A Preferred Stock, as applicable, not redeemed shall remain outstanding and entitled to all rights and preferences provided herein.  At any time thereafter when additional funds of the Corporation are legally available for the redemption of such shares of Series B Preferred Stock or Series A Preferred Stock, as applicable, such funds will be used, at the end of the next succeeding fiscal quarter, to redeem the balance of such shares, or such portion thereof for which funds are then legally available.

 

(f)  In the event that funds are unavailable on the redemption date for any reason, then all unredeemed shares shall remain outstanding and entitled to all rights and preferences provided herein, and the Corporation shall pay interest on the Series B Redemption Price or Series A Redemption Price applicable to such unredeemed shares at the rate of eight percent (8%) per annum, with such interest to accrue daily in arrears; provided , however , that in no event shall such interest exceed the maximum permitted under applicable law (the “ Maximum Permitted Rate ”).  In the event that fulfillment of any provision hereof results in such rate of interest being in excess of the Maximum Permitted Rate, the amount of interest required to be paid hereunder shall automatically be reduced to eliminate such excess; provided , however , that any subsequent increase in the Maximum Permitted Rate shall be retroactively effective to the applicable redemption date to the extent permitted by law.  All interest accrued in accordance with this Section 6 shall be compounded annually and shall be due and payable upon redemption of shares in accordance with this Section 6.

 

Section 7 No Reissuance of Preferred Stock .  No shares of Preferred Stock acquired by the Corporation by reason of redemption, purchase, conversion or otherwise shall be reissued, and all such shares shall be canceled, retired and eliminated from the shares which the Corporation shall be authorized to issue.

 

Section 8 Notices .  All notices required or permitted to be sent pursuant to this Article FOURTH shall be deemed sufficient if contained in a written instrument and delivered in person or duly sent by first-class mail postage prepaid (other than in the case of notices to or from any non-U.S. resident) or by fax or any recognized express international courier service, addressed to the intended recipient at the recipient’s address as it appears on the books of the Corporation.

 

Section 9.   Waiver of Certain Provisions .  The observance of any provision of this Certificate of Incorporation that affects the Series A Preferred Stock hereof may be waived by

 

34



 

the affirmative vote of the holders of at least sixty percent (60%) of the outstanding shares of the Series A Preferred Stock.  The observance of any provision of this Certificate of Incorporation that affects the Series B Preferred Stock hereof may be waived by the affirmative vote of the holders of at least sixty percent (60%) of the outstanding shares of the Series B Preferred Stock.

 

FIFTH :  In furtherance of and not in limitation of powers conferred by statute, it is further provided that:

 

(a)  Subject to the limitations and exceptions, if any, contained in the By-Laws of the Corporation and the requirements of Section 3(c) of Article FOURTH hereof, the By-Laws may be adopted, amended or repealed by the Board of Directors of the Corporation with, and only with, the approval of a majority of the directors then in office;

 

(b)  Elections of directors need not be by written ballot unless, and only to the extent, otherwise provided in the By-Laws;

 

(c)  Subject to any applicable requirements of law, the books of the Corporation may be kept outside the State of Delaware at such locations as may be designated by the Board of Directors or in the By-Laws of the Corporation; and

 

(d)  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 or written consent of a majority of all outstanding shares of voting stock of the Corporation, voting together as a single class on an as-converted basis, irrespective of the provisions of Section 242(b)(2) of the Delaware General Corporate Law.

 

SIXTH :  The Corporation shall indemnify each person who at any time is, or shall have been, a director or officer of the Corporation and was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement incurred in connection with any such action, suit or proceeding, to the maximum extent permitted by the General Corporation Law of the State of Delaware, as the same exists or may hereafter be amended.  In furtherance of and not in limitation of the foregoing, the Corporation shall advance expenses, including attorneys’ fees, incurred by an officer or director of the Corporation in defending any civil, criminal, administrative or investigative action, suit or proceeding in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such advances if it shall be ultimately determined that he is not entitled to be indemnified by the Corporation.  The foregoing right of indemnification shall in no way be exclusive of any other rights of indemnification to

 

35



 

which any such director or officer may be entitled, under any By-Law, agreement, vote of directors or stockholders or otherwise.  No amendment to or repeal of the provisions of this Article SIXTH shall deprive a director or officer of the benefit hereof with respect to any act or failure to act occurring prior to such amendment or repeal.

 

SEVENTH :  No director of the Corporation shall be personally liable to the Corporation or to any of its stockholders for monetary damages arising out of such director’s breach of his fiduciary duty as a director of the Corporation, except to the extent that the elimination or limitation of such liability is not permitted by the General Corporation Law of the State of Delaware, as the same exists or may hereafter be amended.  No amendment to or repeal of the provisions of this Article SEVENTH shall deprive any director of the Corporation of the benefit hereof with respect to any act or failure to act of such director occurring prior to such amendment or repeal.

 

EIGHTH :  To the maximum extent permitted from time to time under the laws of the State of Delaware, the Corporation renounces any interest or expectancy of the Corporation in, or in being offered an opportunity to participate in, business opportunities that are from time to time are being presented to its officers, directors or stockholders, other than (i) those officers, directors or stockholders who are employees of the Corporation and (ii) those opportunities demonstrated by the Corporation to have been presented to such officers, directors or stockholders expressly as a result of their activities as a director, officer or stockholder of the Corporation.  No amendment or repeal of this provision shall apply to or have any effect on the liability or alleged liability of any officer, director or stockholder of the Corporation for or with respect to any opportunities which such officer, director or stockholder becomes aware of prior to such amendment or repeal.  This Article EIGHTH, shall terminate and no longer be applicable upon the closing of a firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended.

 

NINTH :  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.”

 

[ Signature Page Follows ]

 

36



 

IN WITNESS WHEREOF, the Corporation has caused this Third Amended and Restated Certificate of Incorporation to be signed by William Clark, its Chief Business Officer, this 17th day of December, 2010.

 

 

 

GENOCEA BIOSCIENCES, INC.

 

 

 

 

 

 

By:

/s/ William Clark

 

Name:

William Clark

 

Title:

Chief Business Officer

 



 

EXHIBIT B

 

Capitalization Table

 

Genocea Biosciences

Cap Table 10/24/2011

 

 

 

 

 

 

 

 

 

 

 

round whole shares

 

 

 

 

 

 

 

Investor

 

Common

 

Seed/Series A

 

Series A Warrants

 

Total

 

New Series B Shares

 

Option Pool

 

Total Fully diluted

 

Fully diluted %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Polaris

 

 

 

10,520,677

 

399,909

 

10,920,586

 

8,156,493

 

 

 

19,077,079

 

16.15

%

Lux

 

1,000,000

 

10,520,677

 

587,931

 

12,108,608

 

4,655,172

 

 

 

16,763,780

 

14.19

%

Other Common

 

2,510,897

 

 

 

 

 

2,510,897

 

 

 

 

 

2,510,897

 

2.13

%

Morningside

 

 

 

923,077

 

28,926

 

952,003

 

863,876

 

 

 

1,815,879

 

1.54

%

Other Seed/Series A

 

 

 

381,723

 

67,849

 

449,572

 

 

 

 

 

449,572

 

0.38

%

Auriga Ventures III

 

 

 

4,615,385

 

 

 

4,615,385

 

2,864,252

 

 

 

7,479,637

 

6.33

%

Cycad Group

 

 

 

3,846,154

 

 

 

3,846,154

 

4,111,014

 

 

 

7,957,168

 

6.73

%

SR One

 

 

 

9,230,769

 

 

 

9,230,769

 

5,728,503

 

 

 

14,959,272

 

12.66

%

JJDC

 

 

 

 

 

 

 

 

17,241,379

 

 

 

17,241,379

 

14.59

%

Skyline

 

 

 

 

 

 

 

 

12,931,034

 

 

 

12,931,034

 

10.94

%

MPH

 

 

 

 

 

 

 

 

3,793,103

 

 

 

3,793,103

 

3.21

%

Alexandria

 

 

 

153,846

 

 

 

153,846

 

172,414

 

 

 

326,260

 

0.28

%

ESOP

 

 

 

 

 

 

 

 

 

 

 

12,846,350

 

12,846,350

 

10.87

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

3,510,897

 

40,192,308

 

1,084,615

 

44,787,820

 

60,517,240

 

12,846,350

 

118,151,410

 

100

%

 


 

EXHIBIT C

 

GENOCEA BIOSCIENCES, INC.

 

AMENDMENT NO. 1 TO

 

SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

THIS AMENDMENT NO. 1 ( the “ Amendment ”) is made as of October     , 2011, by and among GENOCEA BIOSCIENCES, INC. , a Delaware corporation (the “ Company ”), Lighthouse Capital Partners VI, L.P. (“ Lighthouse ”) and the Investors set forth on the signature pages hereto and to amend that certain Second Amended and Restated Registration Rights Agreement, dated as of December 17, 2010 (the “ Registration Agreement ”) by and among the Company and the Investors.  Capitalized terms used herein but not otherwise defined shall have the meanings given to such terms in the Registration Agreement.

 

The Company and the Investors are parties to the Registration Agreement.  In connection with a working capital credit facility with Lighthouse, (the “ Financing ”), the Company will issue a warrant to Lighthouse (the “ Warrant ”) to acquire shares of the Company’s Series B Convertible Preferred Stock, par value $0.001 per share (the “ Series B Preferred Stock ”).

 

As a condition to the Financing, the Company has agreed to grant Lighthouse certain registration rights with respect to the shares of the Company’s Common Stock issuable upon conversion of the Series B Preferred Stock, and the Investors desire to amend the Registration Agreement to include Lighthouse as a party to the Registration Agreement with respect to certain provisions thereunder.

 

The Registration Agreement may be amended only by the written agreement of the Company and the Holders of at least sixty percent (60%) of all the Registrable Shares (voting on an as converted to Common Stock basis) then in voting power; and

 

The Investors listed on the signature pages hereto hold at least sixty percent (60%) of all the Registrable Shares (voting on an as converted to Common Stock basis);

 

NOW, THEREFORE , in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.              The definition of “Registrable Shares” set forth in Section 1(h) of the Registration Agreement shall be amended in its entirety as set forth below:

 

“Registrable Shares” means (1) the Common Stock issuable upon conversion of the Preferred Stock held by an Investor, (2) any Common Stock purchased by an Investor (or its permitted transferees) pursuant to Section 3 of the Investor Rights Agreement of even date herewith by and among the Corporation and the Investors (or Common Stock issuable with respect to other securities so purchased), (3) solely for purposes of Sections 3, 5, 7, 8, 9, 10, 12, 15, 16, 17, 18, 19, 20 and 22, the Common Stock issuable upon conversion of the Preferred Stock held by Lighthouse Capital Partners VI, L. P. (or its permitted transferees) and (4) any Common Stock of the Corporation issued as a dividend or other distribution with respect to, or in exchange or in replacement of, such Preferred Stock or Common Stock.  Notwithstanding the foregoing, Disqualified Shares shall not be included in the definition of Registrable Shares.”

 

2.              The definitions of “Holder” and “Investor” shall be amended to include Lighthouse Capital VI, L.P. for purposes of Sections 3, 5, 7, 8, 9, 10, 12, 15, 16, 17, 18, 19, 20 and 22 of the Agreement such that Lighthouse Capital Partners VI, L.P. shall be a party to the Agreement with respect to such sections and this Amendment.

 



 

3.            All notices and other communications under the Registration Agreement shall be made to Lighthouse at the address specified below and thereafter at such other address, notice of which is given in accordance with Section 21 of the Registration Agreement:

 

Lighthouse Capital Partners VI, L.P.

3555 Alameda de las Pulgas, Suite 200

Menlo Park, California 94025

Attn: Contract Administration

Phone: (650) 233-1001

Fax: (650) 233-0114

 

4.              This Amendment may be executed in any number of counterparts, each such counterpart shall be deemed to be an original instrument, and all such counterparts together shall constitute but one agreement. Any such counterpart may contain one or more signature pages. This Amendment may be executed by facsimile signature pages.

 

5.             The Registration Agreement as modified herein shall remain in full force and effect as so modified.

 



 

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

 

GENOCEA BIOSCIENCES, INC.

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

Name:

 

 

 

 

 

 

 

Title:

 

 

 

 

 

Agreed and Accepted:

 

 

 

 

 

LIGHTHOUSE CAPITAL PARTNERS VI, L.P.

 

 

 

 

 

 

By:

LIGHTHOUSE MANAGEMENT PARTNERS VI, L.L.C. ,

 

its general partner

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

Name:

 

 

 

 

 

 

 

Title:

 

 

 

 



 

INVESTOR:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

Name:

 

 

 

 

 

 

 

Title:

 

 

 

 



 

EXHIBIT D

 

GENOCEA BIOSCIENCES, INC.

 

AMENDMENT NO. 1 TO THE

AMENDED AND RESTATED VOTING AGREEMENT

 

THIS AMENDMENT NO. 1 (the “ Amendment ”) is made as of October     , 2011, by and among GENOCEA BIOSCIENCES, INC. , a Delaware corporation (the “ Company ”), Lighthouse Capital Partners VI, L.P. (“ Lighthouse ”) and the Investors set forth on the signature pages hereto and it amends that certain Amended and Restated Voting Agreement, dated as of December 17, 2010 (the “ Voting Agreement ”) by and among the Company and the Investors.  Capitalized terms used herein but not otherwise defined shall have the meanings given to such terms in the Voting Agreement.

 

The Company and the Investors are parties to the Voting Agreement.  In connection with a working capital credit facility with Lighthouse (the “ Financing ”), the Company will issue a warrant to Lighthouse (the “ Warrant ”) to acquire shares of the Company’s Series B Convertible Preferred Stock, par value $0.001 per share (the “ Series B Preferred Stock ”);

 

In connection with the Financing, Lighthouse has agreed to be bound by certain obligations with respect to the shares of Series B Preferred Stock issued upon exercise of the Warrant and the Company’s Common Stock issuable upon conversion of the Series B Preferred Stock, and the Investors desire to amend the Voting Agreement to include Lighthouse with respect to certain provisions thereunder;

 

The Voting Agreement may be amended only by the written agreement of the Company and the Holders of at least sixty percent (60%) in voting power of the then outstanding Series B Preferred Stock and sixty percent (60%) in voting power of the then outstanding Series A Preferred Stock, and, in each case, Common Stock issued upon conversion of shares of such series of Preferred Stock other than Disqualified Shares; and

 

The Investors listed on the signature pages hereto hold at least sixty percent (60%) in voting power of the then outstanding Series B Preferred Stock and sixty percent (60%) in voting power of the then outstanding Series A Preferred Stock, and, in each case, Common Stock issued upon conversion of shares of such series of Preferred Stock other than Disqualified Shares;

 

NOW, THEREFORE , in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.              A new Section 17 shall be added and shall read in its entirety as follows:

 

“Effective upon Lighthouse Capital Partners VI, L.P.’s exercise of its right to purchase shares of Series B Preferred Stock under that certain Preferred Stock Purchase Warrant dated October       , 2011, for purposes of Sections 3, 5, 7, 8, 9, 10, 12, 13 and 14, Lighthouse Capital Partners VI, L.P. shall be deemed to be an “Investor”, a “Stockholder” and a party to this Agreement.”

 

2.              All notices and other communications under the Voting Agreement shall be made to Lighthouse at the address specified below and thereafter at such other address, notice of which is given in accordance with Section 6 of the Voting Agreement:

 

Lighthouse Capital Partners VI, L.P.

3555 Alameda de las Pulgas, Suite 200

Menlo Park, California 94025

 



 

Attn: Contract Administration

Phone: (650) 233-1001

Fax: (650) 233-0114

 

3.              This Amendment may be executed in any number of counterparts, each such counterpart shall be deemed to be an original instrument, and all such counterparts together shall constitute but one agreement. Any such counterpart may contain one or more signature pages. This Amendment may be executed by facsimile signature pages.

 

4.             The Voting Agreement as modified herein shall remain in full force and effect as so modified.

 

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

 

 

GENOCEA BIOSCIENCES, INC.

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

Agreed and Accepted:

 

 

 

 

 

 

 

 

LIGHTHOUSE CAPITAL PARTNERS VI, L.P.

 

 

 

 

 

 

By:

LIGHTHOUSE MANAGEMENT PARTNERS VI, L.L.C. ,

 

its general partner

 

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 



 

INVESTOR:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

Name:

 

 

 

 

 

 

 

Title:

 

 

 

 




Exhibit 4.4

 

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ 1933 ACT ”), OR ANY APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED UNLESS SUCH SALE OR TRANSFER IS IN ACCORDANCE WITH THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS OR SOME OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND APPLICABLE LAWS IS AVAILABLE WITH RESPECT THERETO.

 

PREFERRED STOCK PURCHASE WARRANT

 

Warrant No.

Number of Shares: a maximum of 689,655

 

Series C Convertible Preferred Stock

 

GENOCEA BIOSCIENCES, INC.

 

Effective as of September 30, 2013

 

1.                                       Issuance .  This Preferred Stock Purchase Warrant (the “ Warrant ”) is issued to ARES CAPITAL CORPORATION by GENOCEA BIOSCIENCES, INC. , a Delaware corporation (hereinafter with its successors called the “ Company ”).

 

2.                                       Purchase Price; Number of Shares .  The registered holder of this Warrant (the “ Holder ”), is entitled upon surrender of this Warrant with the subscription form annexed hereto duly executed, at the principal office of the Company, to purchase from the Company, at a price per share of $0.58 (the “ Purchase Price ”), up to a maximum of 689,655 fully paid and nonassessable shares of the Company’s Series C Convertible Preferred Stock, $0.001 par value (the “ Preferred Stock ”).  Commencing on the date hereof, all 689,655 shares of Preferred Stock are immediately available for purchase hereunder.

 

In addition to other terms which may be defined herein, the term “ Loan Agreement ,” as used in this Warrant, shall mean that certain Loan and Security Agreement No. V13111 dated September 30, 2013 between the Company and Ares Capital Corporation.  Any term not defined herein shall have the meaning as set forth in the Loan Agreement.

 

Until such time as this Warrant is exercised in full or expires, the Purchase Price and the securities issuable upon exercise of this Warrant are subject to adjustment as hereinafter provided.  The person or persons in whose name or names any certificate representing shares of Preferred Stock is issued hereunder shall be deemed to have become the holder of record of the shares represented thereby as at the close of business on the date this Warrant is exercised with respect to such shares, whether or not the transfer books of the Company shall be closed.

 

3.                                       Payment of Purchase Price .  The Purchase Price may be paid (i) in cash or by check, (ii) by the surrender by the Holder to the Company of any promissory notes or other obligations issued by the Company, with all such notes and obligations so surrendered being credited against the Purchase Price in an amount equal to the principal amount thereof plus accrued interest to the date of surrender, or (iii) by any combination of the foregoing.

 

4.                                       Net Issue Election .  The Holder may elect to receive, without the payment by the Holder of any additional consideration, shares of Preferred Stock equal to the value of this Warrant or any portion hereof by the surrender of this Warrant or such portion to the Company, with the net issue election notice annexed hereto duly executed, at the principal office of the Company.  Thereupon, the Company shall issue to the Holder such number of fully paid and nonassessable shares of Preferred Stock as is computed using the following formula:

 



 

 

where:             X =                              the number of shares of Preferred Stock to be issued to the Holder pursuant to this Section 4 .

 

Y =                              the number of shares of Preferred Stock covered by this Warrant in respect of which the net issue election is made pursuant to this Section 4 .

 

A =                              the Fair Market Value (defined below) of one share of Preferred Stock, as determined at the time the net issue election is made pursuant to this Section 4 .

 

B =                              the Purchase Price in effect under this Warrant at the time the net issue election is made pursuant to this Section 4 .

 

Fair Market Value ” of a share of Preferred Stock (or fully paid and nonassessable shares of the Company’s common stock, $0.001 par value (the “ Common Stock ”) if the Preferred Stock has been automatically converted into Common Stock) as of the date that the net issue election is made (the “ Determination Date ”) shall mean:

 

(i)                                     If the net issue election is made in connection with and contingent upon the closing of the sale of the Company’s Common Stock to the public in a public offering pursuant to a Registration Statement under the 1933 Act (a “ Public Offering ”), and if the Company’s Registration Statement relating to such Public Offering (“ Registration Statement ”) has been declared effective by the Securities and Exchange Commission, then the initial “Price to Public” specified in the final prospectus with respect to such offering multiplied by the number of shares of Common Stock into which each share of Preferred Stock is then convertible.

 

(ii)                                 If the net issue election is not made in connection with and contingent upon a Public Offering, then as follows:

 

(a)                                  If traded on a securities exchange or NASDAQ market or system, the fair market value of the Common Stock shall be deemed to be the average of the closing or last reported sale prices of the Common Stock on such exchange or market over the five day period ending five trading days prior to the Determination Date, and the fair market value of the Preferred Stock shall be deemed to be such fair market value of the Common Stock multiplied by the number of shares of Common Stock into which each share of Preferred Stock is then convertible;

 

(b)                                  If otherwise traded in an over-the-counter market, the fair market value of the Common Stock shall be deemed to be the average of the closing ask prices of the Common Stock over the five day period ending five trading days prior to the Determination Date, and the fair market value of the Preferred Stock shall be deemed to be such fair market value of the Common Stock multiplied by the number of shares of Common Stock into which each share of Preferred Stock is then convertible; and

 

(c)                                   If there is no public market for the Common Stock, then fair market value shall be determined in good faith by the Company’s Board of Directors.

 

5.                                       Partial Exercise .  This Warrant may be exercised in part, and the Holder shall be entitled to receive a new warrant, which shall be dated as of the date of this Warrant, covering the number of shares in respect of which this Warrant shall not have been exercised.

 

6.                                       Fractional Shares .  In no event shall any fractional share of Preferred Stock be issued upon any exercise of this Warrant.  If, upon exercise of this Warrant in its entirety, the Holder would, except as provided in this Section 6 , be entitled to receive a fractional share of Preferred Stock, then the Company shall make a cash payment therefor upon the basis of the Purchase Price then in effect.

 

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7.                                       Expiration Date; Automatic Exercise.                             This Warrant shall expire at the earlier of (i) close of business on September 30, 2023, and (ii) immediately prior to the closing of a Deemed Liquidation (as hereinafter defined), and shall be void thereafter (the “ Expiration Date ”).  Notwithstanding the foregoing, this Warrant shall automatically be deemed to be exercised in full pursuant to the provisions of Section 4 hereof, without any further action on behalf of the Holder, immediately prior to the time this Warrant would otherwise expire pursuant to the preceding sentence.  The term “ Deemed Liquidation ,” as used in this Warrant, shall mean the merger or consolidation of the Company into or with another corporation (except one in which the holders of capital stock of the Company immediately prior to such merger or consolidation continue to hold a majority in voting power of the capital stock of the surviving corporation (or, if the surviving corporation is a wholly-owned subsidiary, its parent)), or exclusive license of all or substantially all of the intellectual property of the Company without field or material geographic restriction or the sale, lease, transfer or other disposition of all or substantially all of the assets of the Company.

 

8.                                       Reserved Shares; Valid Issuance .  The Company covenants that it will at all times from and after the date hereof reserve and keep available such number of its authorized shares of Preferred Stock and Common Stock free from all preemptive or similar rights therein, as will be sufficient to permit, respectively, the exercise of this Warrant in full and the conversion into shares of Common Stock of all shares of Preferred Stock receivable upon such exercise.  The Company further covenants that such shares as may be issued pursuant to such exercise and/or conversion will, upon issuance, be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issuance thereof.

 

9.                                       Stock Splits and Dividends .  If after the date hereof the Company shall subdivide the Preferred Stock, by split-up or otherwise, or combine the Preferred Stock, or issue additional shares of Preferred Stock in payment of a stock dividend on the Preferred Stock, the number of shares of Preferred Stock issuable on the exercise of this Warrant shall forthwith be proportionately increased in the case of a subdivision or stock dividend, or proportionately decreased in the case of a combination, and the Purchase Price shall forthwith be proportionately decreased in the case of a subdivision or stock dividend, or proportionately increased in the case of a combination.

 

10.                                Adjustments for Diluting Issuances .  The other antidilution rights applicable to the Preferred Stock of the Company are set forth in the Company’s Amended and Restated Certificate of Incorporation, as amended from time to time (the “ Articles ”), a true and complete copy in its current form which is attached hereto as Exhibit A . Such rights shall not be restated, amended or modified in any manner which affects the Holder adversely and differently than the holders of Preferred Stock without such Holder’s prior written consent.

 

11.                                Reclassifications and Reorganizations .  If after the date hereof the Company shall enter into any Reorganization (as hereinafter defined), then, as a condition of such Reorganization, lawful provisions shall be made, and duly executed documents evidencing the same from the Company or its successor shall be delivered to the Holder, so that the Holder shall thereafter have the right to purchase, at a total price not to exceed that payable upon the exercise of this Warrant in full, the kind and amount of shares of stock and other securities and property receivable upon such Reorganization by a holder of the number of shares of Preferred Stock which might have been purchased by the Holder immediately prior to such Reorganization, and in any such case appropriate provisions shall be made with respect to the rights and interest of the Holder to the end that the provisions hereof (including without limitation, provisions for the adjustment of the Purchase Price and the number of shares issuable hereunder and the provisions relating to the net issue election) shall thereafter be applicable in relation to any shares of stock or other securities and property thereafter deliverable upon exercise hereof.  For the purposes of this Section 11 , the term “ Reorganization ” shall include without limitation any reclassification, capital reorganization or change of the Preferred Stock (other than as a result of a subdivision, combination or stock dividend provided for in Section 9 hereof); provided , however , that the term “ Reorganization ” shall not include a Deemed Liquidation.

 

12.                                Certificate of Adjustment .  Whenever the Purchase Price is adjusted, as herein provided, the Company shall promptly deliver to the Holder a certificate of the Company’s chief financial officer setting forth the Purchase Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

 

13.                                Notices of Record Date, Etc.   In the event of:

 

3



 

(a)                                  any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or any right to subscribe for, purchase, sell or otherwise acquire or dispose of any shares of stock of any class or any other securities or property, or to receive any other right;

 

(b)                                  any Deemed Liquidation, reclassification of the capital stock of the Company, capital reorganization of the Company, consolidation or merger involving the Company, or sale or conveyance of all or substantially all of its assets; or

 

(c)                                   any voluntary or involuntary dissolution, liquidation or winding-up of the Company;

 

then in each such event the Company will provide or cause to be provided to the Holder a written notice thereof.  Such notice shall be provided at least twenty (20) business days prior to the date specified in such notice on which any such action is to be taken.

 

14.                                Representations, Warranties and Covenants .  This Warrant is issued and delivered by the Company and accepted by each Holder on the basis of the following representations, warranties and covenants made by the Company:

 

(a)                                  The Company has all necessary authority to issue, execute and deliver this Warrant and to perform its obligations hereunder.  This Warrant has been duly authorized issued, executed and delivered by the Company and is the valid and binding obligation of the Company, enforceable in accordance with its terms.

 

(b)                                  The shares of Preferred Stock issuable upon the exercise of this Warrant have been duly authorized and reserved for issuance by the Company and, when issued in accordance with the terms hereof, will be validly issued, fully paid and nonassessable.

 

(c)                                   The issuance, execution and delivery of this Warrant do not, and the issuance of the shares of Preferred Stock upon the exercise of this Warrant in accordance with the terms hereof will not, (i) violate or contravene the Company’s Articles or by-laws, or any law, statute, regulation, rule, judgment or order applicable to the Company or (ii) violate, contravene or result in a breach or default under any contract, agreement or instrument to which the Company is a party or by which the Company or any of its assets are bound.

 

15.                                Information; Confidentiality .  So long as the Holder holds this Warrant and/or any of the shares of Preferred Stock or Common Stock, the Company shall deliver to the Holder such information as the Holder may reasonably request for purposes of the Holder’s compliance with regulatory, accounting and reporting requirements applicable to the Holder.  Until such time as the Company becomes a reporting company under the Securities Exchange Act of 1934, as amended, so long as the Holder holds this Warrant and/or any of the shares of Preferred Stock or Common Stock: (a) the Company shall deliver to the Holder within 45 days after the end of each of the first three quarters of each fiscal year, the Company’s quarterly, unaudited financial statements and within 180 days after the end of each fiscal year, the Company’s annual, audited financial statements and (b) in the event of an equity financing transaction by the Company, the Company shall deliver to the Holder notice of such equity financing, together with a copy of all materials delivered to the offerees and purchasers thereunder in connection with such transaction, including capitalization tables and information relating to the valuation of the Company.  The Holder agrees to keep confidential all information, materials, notes, documents and copies concerning the business of the Company provided in accordance with the terms of this Warrant or to the Holder as a result of the Holder’s status as a stockholder of the Company upon exercise of the Warrant (the “ Information ”).  Notwithstanding the foregoing, the Holder shall be permitted to disclose Information (i) to its officers, managers, members, partners, directors, employees, affiliates, agents and representatives and the officers, managers, members, partners, directors, employees, agents and representatives of its affiliates (collectively “Representatives”), provided that such Information shall remain confidential and the recipient shall be bound by an obligation of confidentiality (imposed by professional ethics rules or otherwise) with respect to the Information; (ii) to the extent required by applicable laws and regulations or by any subpoena or similar legal process, or to the extent requested by any governmental agency or regulatory authority, after notice to the Company to the extent the Holder may provide such notice without breach of applicable law, rule, regulations or order; (iii) to the extent such Information (A) becomes publicly available other than as a result of a breach of this Section 15 , (B) becomes available to the Holder or its

 

4



 

Representatives from a source other than the Company not known to be under an obligation of confidentiality to the Company with respect to such information or (C) was available to the Holder or its Representatives prior to its disclosure to the Holder by the Company; (iv) to the extent the Company shall have consented to such disclosure in writing; (v) in connection with the assignment of this Warrant provided that the recipient of the Information agrees to maintain the confidentiality of the Information; or (vi) in connection with the exercise of its rights and remedies under this Warrant.  The Holder shall not use the Information in violation of United States federal securities laws.  The provisions of this Section 15 shall survive the termination, expiration or exercise of this Warrant.

 

16.                                Registration Rights .  The Company and the Holder agree to enter into the Amendment to the Third Amended and Restated Registration Rights Agreement attached hereto as Exhibit B .

 

17.                                Voting Agreement .  The Company and the Holder agree to enter into the Amendment to the Second Amended and Restated Voting Agreement attached hereto as Exhibit C.

 

18.                                Amendment .  The terms of this Warrant may be amended, modified or waived only with the written consent of the Holder and the Company.

 

19.                                Representations and Covenants of the Holder .  This Warrant has been entered into by the Company in reliance upon the following representations and covenants of the Holder, which by its execution hereof the Holder hereby confirms:

 

(a)                                  Investment Purpose .  The right to acquire Preferred Stock or the Preferred Stock issuable upon exercise of the Holder’s rights contained herein will be acquired for investment and not with a view to the sale or distribution of any part thereof, and the Holder has no present intention of selling or engaging in any public distribution of the same except pursuant to a registration or exemption.

 

(b)                                  Accredited Investor .  Holder is an “accredited investor” within the meaning of the Securities and Exchange Rule 501 of Regulation D, as presently in effect.

 

(c)                                   Private Issue .  The Holder understands (i) that the Preferred Stock issuable upon exercise of the Holder’s rights contained herein is not registered under the 1933 Act or qualified under applicable state securities laws on the ground that the issuance contemplated by this Warrant will be exempt from the registration and qualifications requirements thereof, and (ii) that the Company’s reliance on such exemption is predicated on the representations set forth in this Section 19 .

 

(d)                                  Financial Risk .  The Holder has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment and has the ability to bear the economic risks of its investment.

 

20.                                Notices, Transfers, Etc.

 

(a)                                  Any notice or written communication required or permitted to be given to the Holder may be given by certified mail or delivered to the Holder at the address most recently provided by the Holder to the Company.

 

(b)                                  Subject to compliance with applicable federal and state securities laws, this Warrant may be transferred by the Holder with respect to any or all of the shares purchasable hereunder.  Upon surrender of this Warrant to the Company, together with the assignment notice annexed hereto duly executed, for transfer of this Warrant as an entirety by the Holder, the Company shall issue a new warrant of the same denomination to the assignee.  Upon surrender of this Warrant to the Company, together with the assignment hereof properly endorsed, by the Holder for transfer with respect to a portion of the shares of Preferred Stock purchasable hereunder, the Company shall issue a new warrant to the assignee, in such denomination as shall be requested by the Holder hereof, and shall issue to such Holder a new warrant covering the number of shares in respect of which this Warrant shall not have been transferred.

 

5



 

(c)                                   In case this Warrant shall be mutilated, lost, stolen or destroyed, the Company shall issue a new warrant of like tenor and denomination and deliver the same (i) in exchange and substitution for and upon surrender and cancellation of any mutilated Warrant, or (ii) in lieu of any Warrant lost, stolen or destroyed, upon receipt of an affidavit of the Holder or other evidence reasonably satisfactory to the Company of the loss, theft or destruction of such Warrant

 

21.                                No Impairment .  The Company will not, by amendment of its Articles or through any reclassification, capital reorganization, consolidation, merger, sale or conveyance of assets, dissolution, liquidation, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance of performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder.

 

22.                                No Rights as Shareholder .  Except as set forth herein, the Holder shall not be entitled to vote or receive dividends or be deemed the holder of Preferred Stock or any other securities of the Company which may at any time be issuable on the exercise hereof for any purpose, nor shall anything contained herein be construed to confer upon the Holder any of the rights of a shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value or change of stock to no par value, consolidation, merger, conveyance or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or otherwise until the Warrant shall have been exercised or converted and the shares purchasable upon the exercise hereof shall have become deliverable, as provided herein.

 

23.                                Governing Law .  The provisions and terms of this Warrant shall be governed by and construed in accordance with the internal laws of the State of New York without giving effect to its principles regarding conflicts of laws.

 

24.                                Successors and Assigns .  This Warrant shall be binding upon the Company’s successors and assigns and shall inure to the benefit of the Holder’s successors, legal representatives and permitted assigns.

 

25.                                Business Days .  If the last or appointed day for the taking of any action required or the expiration of any rights granted herein shall be a Saturday or Sunday or a legal holiday in New York or Massachusetts, then such action may be taken or right may be exercised on the next succeeding day which is not a Saturday or Sunday or such a legal holiday.

 

26.                                Qualifying Public Offering .  If the Company shall effect a firm commitment underwritten public offering of shares of Common Stock which results in the conversion of the Preferred Stock into Common Stock pursuant to the Company’s Articles in effect immediately prior to such offering, then, effective upon such conversion, this Warrant shall change from the right to purchase shares of Preferred Stock to the right to purchase shares of Common Stock, and the Holder shall thereupon have the right to purchase, at a total price equal to that payable upon the exercise of this Warrant in full, the number of shares of Common Stock which would have been receivable by the Holder upon the exercise of this Warrant for shares of Preferred Stock immediately prior to such conversion of such shares of Preferred Stock into shares of Common Stock, and in such event appropriate provisions shall be made with respect to the rights and interest of the Holder to the end that the provisions hereof (including, without limitation, the provisions for the adjustment of the Purchase Price and of the number of shares purchasable upon exercise of this Warrant and the provisions relating to the net issue election) shall thereafter be applicable to any shares of Common Stock deliverable upon the exercise hereof.

 

27.                                Value .  The Company and the Holder agree that the value of this Warrant on the date of grant is $100.

 

[Signature Page Follows]

 

6



 

IN WITNESS WHEREOF, the parties have executed this Warrant as of the date set forth above.

 

 

 

GENOCEA BIOSCIENCES, INC.

 

 

 

 

 

By:

/s/ William D. Clark

 

Name:

William D. Clark

 

Title:

President and Chief Executive Officer

 

 

 

 

 

ARES CAPITAL CORPORATION

 

 

 

By:

/s/ Daniel F. Nguyen

 

 

 

 

Name:

Daniel F. Nguyen

 

Title:

Authorized Signatory

 

7



 

Subscription

 

To:

 

 

 

 

 

Date:

 

 

 

The undersigned hereby subscribes for                                    shares of Preferred Stock covered by this Warrant.  The certificate(s) for such shares shall be issued in the name of the undersigned or as otherwise indicated below:

 

 

 

Signature

 

 

 

 

 

Name for Registration

 

 

 

 

 

Mailing Address

 

 



 

Net Issue Election Notice

 

To:

 

 

 

Date:

 

 

 

The undersigned hereby elects under Section 4 to surrender the right to purchase shares of Preferred Stock pursuant to this Warrant.  The certificate(s) for such shares issuable upon such net issue election shall be issued in the name of the undersigned or as otherwise indicated below:

 

 

 

Signature

 

 

 

 

 

Name for Registration

 

 

 

 

 

Mailing Address

 

 



 

Assignment

 

For value received                                                                                hereby sells, assigns and transfers unto

 

 

[Please print or typewrite name and address of Assignee]

 

 

the within Warrant, and does hereby irrevocably constitute and appoint                                                                      its attorney to transfer the within Warrant on the books of the within named Company with full power of substitution on the premises.

 

 

Dated:

 

 

 

 

 

 

 

 

Signature

 

 

 

 

 

Name for Registration

 

 

 

 

 

In the Presence of:

 

 

 

 

 

 


 

EXHIBIT A

 

Amended and Restated Certificate of Incorporation

 

See attached pages.

 



 

FOURTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

 

OF

 

GENOCEA BIOSCIENCES, INC.

 

Genocea Biosciences, Inc., a corporation organized and existing under the laws of the state of Delaware (this “ Corporation ”), hereby certifies as follows:

 

1.                                       This Corporation’s original Certificate of Incorporation was filed with the Secretary of State of Delaware on August 16, 2006 under the name “Genocea, Inc.” and was amended and restated on December 21, 2006, on February 10, 2009 and on December 17, 2010.

 

2.                                       This Fourth Amended and Restated Certificate of Incorporation (the “ Certificate of Incorporation ”) has been duly adopted by this Corporation’s Board of Directors and stockholders in accordance with the applicable provisions of Sections 228, 242 and 245 of the General Corporation Law of the State of Delaware.

 

3.                                       The Certificate of Incorporation of this Corporation is hereby amended and restated to read in full as follows:

 

FIRST :  The name of the corporation is Genocea Biosciences, Inc.

 

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, Delaware 19801 and 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 of Delaware.

 

FOURTH : The total number of shares of all classes of stock which the Corporation has authority to issue is 319,961,649 shares, consisting of 191,000,000  shares of common stock, par value $.001 per share (the “ Common Stock ”), and 128,961,649 shares of preferred stock, of which 4,615,385 shares of preferred stock are designated Seed Convertible Preferred Stock, par value $.001 per share (the “ Seed Preferred Stock ”), 36,661,538 shares of preferred stock are designated Series A Convertible Preferred Stock, par value $.001 per share (the “ Series A Preferred Stock ”), 35,098,520 shares of preferred stock are designated Series B Convertible Preferred Stock par value $.001 per share (the “ Series B Preferred Stock ”) and 52,586,206 shares of preferred stock are designated Series C Convertible Preferred Stock, par value $.001 per share (the “ Series C Preferred Stock ” and, together with the Seed Preferred Stock, the Series A Preferred Stock and the Series B Preferred Stock, the “ Preferred Stock ”).

 

The powers, preferences and rights, and the qualifications, limitations or restrictions thereof, in respect of each class or series of stock of the Corporation shall be as follows:

 

3



 

Section 1.   Liquidation Rights.

 

(a)                                  Liquidation Payments .

 

(i)                                      In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary (a “ Liquidation ”),  the holders of shares of the Series C Preferred Stock and the Series B Preferred Stock shall be entitled to be paid, prior and in preference to any distribution of any of the assets of the Corporation to the holders of Series A Preferred Stock, Seed Preferred Stock or Common Stock by reason of their ownership thereof, out of the assets of the Corporation available for distribution to holders of the Corporation’s capital stock of all classes, the amount of $0.58 per share of Series C Preferred Stock and $0.58 per share of Series B Preferred Stock (in each case, which amounts shall be subject to equitable adjustment whenever there shall occur a stock dividend, stock split, combination of shares, reclassification or other similar event with respect to the Series C Preferred Stock or the Series B Preferred Stock, as applicable) plus all dividends accrued and/or declared thereon but unpaid, to and including the date full payment shall be tendered to the holders of the Series C Preferred Stock and the Series B Preferred Stock, with respect to such liquidation, dissolution or winding up (the aggregate amount payable to all holders of Series C Preferred Stock in respect of all shares of Series C Preferred Stock pursuant to this Section 1(a)(i) of this Article FOURTH, the “ Series C Liquidation Payment ” and the aggregate amount payable to all holders of Series B Preferred Stock in respect of all shares of Series B Preferred Stock pursuant to this Section 1(a)(i) of this Article FOURTH, the “ Series B Liquidation Payment ”).

 

If the assets of the Corporation shall be insufficient to permit the payment in full to the holders of the Series C Preferred Stock and the Series B Preferred Stock of all amounts so distributable to them, then the entire assets of the Corporation available for such distribution shall be distributed ratably among the holders of the Series C Preferred Stock and the Series B Preferred Stock on a pari passu basis in proportion to the full preferential amount each such holder is otherwise entitled to receive under this Section 1(a)(i) of this Article FOURTH.

 

No payment shall be made with respect to the Series A Preferred Stock, the Seed Preferred Stock or the Common Stock unless and until full payment has been made to the holders of the Series C Preferred Stock and the Series B Preferred Stock of the amounts they are entitled to receive under this Section 1(a)(i) of this Article FOURTH.

 

(ii)                                   After the payments under Section 1(a)(i) of this Article FOURTH have been made in full to the holders of the Series C Preferred Stock and the Series B Preferred Stock, or funds necessary for such payments shall have been set aside by the Corporation in trust for the account of holders of Series C Preferred Stock and Series B Preferred Stock so as to be available for such payments, the holders of shares of the Series A Preferred Stock shall be entitled to be paid, prior and in preference to any distribution of any of the assets of the Corporation to the holders of Seed Preferred Stock or Common Stock by reason of their ownership thereof, out of the remaining assets of the Corporation available for distribution to holders of the Corporation’s capital stock of all classes, the amount of $0.65 per share of Series A Preferred Stock (which amount shall be subject to equitable adjustment whenever there shall occur a stock dividend, stock split, combination of shares, reclassification or other similar

 

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event with respect to the Series A Preferred Stock) plus all dividends accrued and/or declared thereon but unpaid, to and including the date full payment shall be tendered to the holders of the Series A Preferred Stock, with respect to such liquidation, dissolution or winding up (the aggregate amount payable to all holders of Series A Preferred Stock in respect of all shares of Series A Preferred Stock pursuant to this Section 1(a)(ii) of this Article FOURTH, the “ Series A Liquidation Payment ”).

 

If after prior payment in full of the payments to the holders of the Series C Preferred Stock and the Series B Preferred Stock under Section 1(a)(i) of this Article FOURTH the assets of the Corporation shall be insufficient to permit the payment in full to the holders of the Series A Preferred Stock of all amounts so distributable to them, then the entire assets of the Corporation available for such distribution shall be distributed ratably among the holders of the Series A Preferred Stock in proportion to the full preferential amount each such holder is otherwise entitled to receive under this Section 1(a)(ii) of this Article FOURTH.

 

No payment shall be made with respect to the Seed Preferred Stock or the Common Stock unless and until full payment has been made to the holders of the Series A Preferred Stock of the amounts they are entitled to receive under this Section 1(a)(ii) of this Article FOURTH.

 

(iii)                                After the payments under Section 1(a)(ii) of this Article FOURTH have been made in full to the holders of the Series A Preferred Stock, or funds necessary for such payments shall have been set aside by the Corporation in trust for the account of holders of Series A Preferred Stock so as to be available for such payments,  the holders of shares of the Seed Preferred Stock shall be entitled to be paid, prior and in preference to any distribution of any of the assets of the Corporation to the holders of Common Stock by reason of their ownership thereof, out of the remaining assets of the Corporation available for distribution to holders of the Corporation’s capital stock of all classes, an amount of $0.65 per share of Seed Preferred Stock (which amount shall be subject to equitable adjustment whenever there shall occur a stock dividend, stock split, combination of shares, reclassification or other similar event with respect to the Seed Preferred Stock) plus all dividends declared thereon but unpaid, to and including the date full payment shall be tendered to the holders of the Seed Preferred Stock, with respect to such liquidation, dissolution or winding up (the aggregate amount payable to all holders of Seed Preferred Stock in respect of all shares of Seed Preferred Stock pursuant to this Section 1(a)(iii) of this Article FOURTH, the “ Seed Liquidation Payment ”).

 

If after prior payment in full of the payments to the holders of the Series A Preferred Stock under Section 1(a)(ii) of this Article FOURTH the assets of the Corporation shall be insufficient to permit the payment in full to the holders of the Seed Preferred Stock of all amounts so distributable to them, then the assets of the Corporation available for such distribution shall be distributed ratably among the holders of the Seed Preferred Stock in proportion to the full preferential amount each such holder is otherwise entitled to receive under this Section 1(a)(iii) of this Article FOURTH.

 

No payment shall be made with respect to the Common Stock unless and until full payment has been made to the holders of the Seed Preferred Stock of the amounts they are entitled to receive under this Section 1(a)(iii) of this Article FOURTH.

 

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(iv)                               After the payments under Section 1(a)(iii) of this Article FOURTH have been made in full to the holders of the Seed Preferred Stock, or funds necessary for such payments shall have been set aside by the Corporation in trust for the account of holders of Seed Preferred Stock so as to be available for such payments, the remaining assets of the Corporation available for distribution shall be distributed among the holders of the Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock and Common Stock ratably in proportion to the number of shares of Common Stock then held by each such holder on an as converted basis.

 

(v)                                  Upon conversion of shares of Preferred Stock into shares of Common Stock pursuant to Section 2 of this Article FOURTH below, the holders of such Common Stock shall not be entitled to any preferential payment or distribution in case of any liquidation, dissolution or winding up, but shall share ratably in any distribution of the assets of the Corporation to all the holders of Common Stock as provided under Section 1(a)(iv) of this Article FOURTH.

 

(vi)                               The Series C Liquidation Payment, the Series B Liquidation Payment, the Series A Liquidation Payment and the Seed Liquidation Payment payable with respect to shares of Preferred Stock under this Section 1(a) of this Article FOURTH are sometimes hereinafter referred to as “ Preferred Stock Liquidation Payments ”.

 

(b)                                  Distributions Other than Cash .  Whenever any portion of the distributions provided for in this Section 1 of this Article FOURTH shall be payable in property other than cash, the value of such property shall be assessed as the fair market value of such property as determined in good faith by the Board of Directors of the Corporation. The Corporation shall give prompt written notice of such valuation (including the methods used to determine the valuation), to each holder of Preferred Stock.

 

(c)                                   Merger as Liquidation, etc The merger or consolidation of the Corporation into or with another corporation (except one in which the holders of capital stock of the Corporation immediately prior to such merger or consolidation continue to hold a majority in voting power of the capital stock of the surviving corporation (or, if the surviving corporation is a wholly-owned subsidiary, its parent), in which case the provisions of Section 2(h) of this Article FOURTH shall apply), or exclusive license of all or substantially all of the intellectual property of the Corporation without field or material geographic restriction or the sale, lease, transfer or other disposition of all or substantially all of the assets of the Corporation, shall be deemed to be a liquidation, dissolution or winding up of the affairs of the Corporation (a “ Deemed Liquidation ”) for purposes of this Section 1 of this Article FOURTH with respect to the Series C Preferred Stock, the Series B Preferred Stock, the Series A Preferred Stock and the Seed Preferred Stock, unless the holders of at least sixty-six percent (66%) of the then outstanding shares of Series B Preferred Stock and Series C Preferred Stock elect to the contrary; such election to be made by giving notice thereof to the Corporation at least three days before the effective date of such event.  If such notice is given with respect to the Preferred Stock, the provisions of Section 2(h) of this Article FOURTH shall apply.  Unless such election is made with respect to the Preferred Stock, any amounts received by the holders of such Preferred Stock as a result of such merger, consolidation or other transaction shall be deemed to be applied toward, and all consideration received by the Corporation in such merger, consolidation, license, lease, asset sale or other disposition under this Section 1(c) of this Article FOURTH together

 

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with all other available assets of the Corporation shall be distributed toward, to the extent necessary, the Preferred Stock Liquidation Payments in accordance with Section 1 of this Article FOURTH.

 

(d)                                  Notice .  In the event the Corporation shall propose to undertake any liquidation, dissolution or winding up of the affairs of the Corporation including any Deemed Liquidation, the Corporation shall, within ten (10) days after the date the Board of Directors approves such action or twenty (20) days prior to any stockholders’ meeting called to approve such action, whichever is earlier, give each holder of Preferred Stock initial written notice of the proposed action.  Such initial written notice shall describe the material terms and conditions of such proposed action, including a description of the stock, cash and property to be received by the holders of the Preferred Stock and the Common Stock upon consummation of the proposed action and the proposed date of delivery thereof.  If any material change in the facts set forth in the initial notice shall occur, the Corporation shall promptly give each holder of Preferred Stock written notice of such material change.  The Corporation shall not consummate any such proposed liquidation, dissolution or winding up before the expiration of thirty (30) days after the mailing of the initial notice or twenty (20) days after the mailing of any subsequent written notice, whichever is later, provided that any such 30-day or 20-day period may be shortened or waived upon the written consent of the holders of at least sixty-six percent (66%) of the outstanding shares of Series B Preferred Stock and Series C Preferred Stock.  Any holder of outstanding shares of Preferred Stock may waive (as to itself) any notice required by this Section by a written instrument specifically indicating such waiver.

 

(e)                                   Effect of Noncompliance .  In the event the requirements of Section 1(d) of this Article FOURTH are not complied with, the Corporation shall forthwith either cause the closing of the Deemed Liquidation to be postponed until the requirements of such sections have been complied with, or cancel such Deemed Liquidation (to the extent possible under applicable law), in which event the rights, preferences, privileges and restrictions of the holders of Preferred Stock shall revert to and be the same as such rights, preferences, privileges and restrictions existing immediately prior to the date of the first notice referred to in Section 1(d) of this Article FOURTH.

 

(f)                                    Acquisitions Involving Earn-Outs or Multiple Payments .  Notwithstanding Section 1(a) or Section 1(c) of this Article FOURTH, in the event of a Deemed Liquidation in which (y)(1) the consideration (to be) received or (to be) paid does not occur at a single closing, but instead occurs (or is to occur) on more than one occasion (e.g., in a transaction involving earn-out payments) and (2) the up front payment (to be) received at the closing is less than the aggregate Preferred Stock Liquidation Payments and/or (z) any portion of the consideration (to be) payable to the stockholders of the Corporation is placed into an escrow, held back and/or is payable to the stockholders of the Corporation subject to contingencies, then in lieu of the amounts and priorities set forth in Section 1(a) of this Article FOURTH, distributions to the holders of Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock or Seed Preferred Stock, as applicable, shall be made in accordance with the following priorities as such consideration is received:

 

(i)                                      First, to the holders of Series C Preferred Stock and Series B Preferred Stock in accordance with the provisions of Section 1(a)(i) of this Article FOURTH

 

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until the holders of Series C Preferred Stock and Series B Preferred Stock have received an aggregate amount equal to the Series C Liquidation Payment and the Series B Liquidation Payment, as applicable;

 

(ii)                                   Second, to the holders of Series A Preferred Stock in accordance with the provisions of Section 1(a)(ii) of this Article FOURTH until the holders of Series A Preferred Stock have received an aggregate amount equal to the Series A Liquidation Payment;

 

(iii)                                Third, to the holders of Seed Preferred Stock in accordance with the provisions of Section 1(a)(iii) of this Article FOURTH until the holders of Seed Preferred Stock have received an aggregate amount equal to the Seed Liquidation Payment; and

 

(iv)                               Fourth, after the payment of all amounts required to be paid in accordance with clauses (i), (ii) and (iii) above, any funds and assets legally available (or that become available) for distribution, if any, shall be distributed among the holders of Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock and Common Stock in accordance with the provisions of Section 1(a)(iv) of this Article FOURTH;

 

Provided if the amount which any holder of shares of the Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock or Seed Preferred Stock would receive if such holder converted all such shares of Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock or Seed Preferred Stock, as the case may be, into Common Stock immediately prior to such Deemed Liquidation, in accordance with this Section 1(f) of this Article FOURTH with respect to the shares of Common Stock issuable upon conversion of such shares of Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock or Seed Preferred Stock, as the case may be, is greater than the amount such holder would receive if such holder did not so convert such shares of Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock or Seed Preferred Stock, as the case may be, then such holder shall be entitled to be paid such greater amount out of the assets available for distribution in accordance with Section 1(f)(iv) of this Article FOURTH.  For the avoidance of doubt, if, in connection with a Deemed Liquidation, a holder of Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock or Seed Preferred Stock receives payments on its shares of Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock or Seed Preferred Stock, as the case may be, pursuant to this paragraph, then such holder shall not be entitled to also receive the amount payable on its shares of Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock or Seed Preferred Stock, as the case may be, pursuant to Sections 1(f)(i) through 1(f)(iii) of this Article FOURTH.

 

Section 2.   Conversion.   The holders of Preferred Stock shall have conversion rights as follows (the “ Conversion Rights ”):

 

(a)                                  Right to Convert; Conversion Price .  Each share of Preferred Stock shall be convertible, without the payment of any additional consideration by the holder thereof and at the option of the holder thereof, at any time after the date of issuance of such share, at the office of the Corporation or any transfer agent for the Preferred Stock, into such number of fully paid and non-assessable shares of Common Stock as is determined by dividing $0.58 (with respect to the Series C Preferred Stock) (the “ Series C Original Issue Price ”); $0.58 plus all accrued but

 

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unpaid dividends on the date of conversion (with respect to the Series B Preferred Stock) (the “ Series B Original Issue Price ”), provided, however, that all holders of Series B Preferred Stock shall receive such dividends in cash at the time of conversion upon such an election by the holders of at least sixty percent (60%) of the outstanding shares of Series B Preferred Stock, in which case the Series B Original Issue Price shall be $0.58; $0.65 (with respect to the Series A Preferred Stock) (the “ Series A Original Issue Price ”); and $0.65 (with respect to Seed Preferred Stock) (each as adjusted for any stock dividend, stock split, combination of shares, reclassification or other similar event with respect to the Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock and Seed Preferred Stock) by the Series C Conversion Price, Series B Preferred Conversion Price, Series A Preferred Conversion Price and Seed Preferred Conversion Price, respectively, determined as hereinafter provided, in effect at the time of conversion.  The Series C Preferred Conversion Price (the “ Series C Conversion Price ”) shall initially be $0.58 per share.  The Series B Preferred Conversion Price (the “ Series B Preferred Conversion Price ”) shall initially be $0.58 per share.  The Series A Preferred Conversion Price (the “ Series A Preferred Conversion Price ”) shall initially be $0.65 per share.  The Seed Preferred Conversion Price (the “ Seed Preferred Conversion Price ”) shall initially be $0.65 per share.  The Series C Preferred Conversion Price, Series B Preferred Conversion Price, Series A Preferred Conversion Price and Seed Preferred Conversion Price are collectively referred to as the “ Preferred Conversion Price .”  Each such initial Preferred Conversion Price shall be subject to adjustment, in order to adjust the number of shares of Common Stock into which the Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock and Seed Preferred Stock are convertible, as hereinafter provided.

 

The right of conversion with respect to any shares of Preferred Stock which shall have been called for redemption under Section 6 of this Article FOURTH shall terminate at the close of business on the day fixed for redemption unless the Corporation shall default in the payment of the redemption price, in which case the right of conversion with respect to such shares shall continue unless and until such redemption price is paid in full.

 

(b)                                  Automatic Conversion .

 

(i)                                      Each share of Preferred Stock shall automatically be converted into shares of Common Stock at the applicable Preferred Conversion Price then in effect, as the case may be, and any declared but unpaid dividends or in the case of Series B Preferred Stock, accrued but unpaid dividends elected to be paid in cash in accordance with Section 2(a) of this Article FOURTH, shall be paid in cash, upon the closing of a firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, underwritten by a nationally recognized underwriter that is satisfactory to the holders of at least sixty-six percent (66%) of the then outstanding shares of Series B Preferred Stock and Series C Preferred Stock, covering the offer and sale of Common Stock for the account of the Corporation to the public at an offering price per share (after all underwriters’ discounts and commissions, if any) of at least three (3) times the Series C Original Issue Price with net proceeds to the Corporation of not less than $40,000,000 (in the event of which offering, the person(s) entitled to receive the Common Stock issuable upon such conversion of the Preferred Stock shall not be deemed to have converted the Preferred Stock until the closing of such offering) (such public offering, a “ Qualified IPO ”).

 

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(ii)                                   Each share of Preferred Stock shall automatically be converted into shares of Common Stock at the applicable Preferred Conversion Price then in effect, as the case may be, and any dividends declared but unpaid thereon, and, in the case of the Series B Preferred Stock, accrued dividends to the extent an election has been made to be paid such dividends in cash in accordance with Section 2(a) of this Article FOURTH, shall be paid, upon the written election of the holders of at least sixty-six percent (66%) of the then outstanding shares of Preferred Stock to require such mandatory conversion on the date or event specified by such stockholders.

 

(c)                                   Mechanics of Automatic Conversions .  Upon the occurrence of an event specified in Section 2(b) of this Article FOURTH, the Preferred Stock to be converted shall be converted automatically without any further action by the holders of such shares and whether or not the certificates representing such shares are surrendered to the Corporation or its transfer agent; provided , however , that all holders of shares of Preferred Stock being converted shall be given written notice of the occurrence of the event specified in Section 2(b) of this Article FOURTH triggering such conversion, including the date such event occurred (the “ Mandatory Conversion Date ”), and the Corporation shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon such conversion unless certificates evidencing such shares of Preferred Stock being converted are either delivered to the Corporation or its transfer agent, or the holder notifies the Corporation or any transfer agent that such certificates have been lost, stolen, or destroyed and executes an agreement satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection therewith (such certificate, a “ Certificate of Loss ”).  On the Mandatory Conversion Date, all rights with respect to the Preferred Stock so converted shall terminate (except any of the rights of the holder thereof as a holder of Common Stock pursuant to this Certificate of Incorporation or otherwise agreed to between such holder and the Corporation or the other holders of the Corporation’s stock) upon surrender of the holder’s certificate or certificates therefor (or a Certificate of Loss), other than such holder’s rights to receive certificates for the number of shares of Common Stock into which such Preferred Stock has been converted, together (in the case of Sections 2(b)(i) and 2(b)(ii)) with cash in an amount equal to all dividends declared but unpaid on, and, in the case of the Series B Preferred Stock, accrued dividends to the extent an election has been made to be paid such dividends in cash in accordance with Section 2(a) of this Article FOURTH, and any and all other amounts owing with respect to, the shares of Preferred Stock converted to and including the time of conversion.  Upon the automatic conversion of the Preferred Stock pursuant to Section 2(b) of this Article FOURTH, the holders of such Preferred Stock shall surrender the certificates representing such shares (or a Certificate of Loss) at the office of the Corporation or of its transfer agent.  If required of the holders by the Corporation, 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 the holder’s attorney duly authorized in writing.  Upon surrender of such certificates there shall be issued and delivered to such holder, or to such holder’s nominee or nominees, promptly, a certificate or certificates for the number of shares of Common Stock into which the shares of Preferred Stock surrendered were convertible on the Mandatory Conversion Date, together with cash in an amount equal to all dividends declared but unpaid on, and, in the case of the Series B Preferred Stock, accrued dividends to the extent an election has been made to be paid such dividends in cash in accordance with Section 2(a) of this Article FOURTH, and any and all other amounts owing with respect to, the shares of Preferred Stock being converted to and including the time of

 

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conversion. Upon the automatic conversion of the Preferred Stock, all shares of Preferred Stock being converted by any holder thereof shall be aggregated for the purpose of determining the number of shares of Common Stock to which such holder shall be entitled, and no fractional shares of Common Stock shall be issued.  In lieu of any fractional share to which the holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the fair market value of the Common Stock on the Mandatory Conversion Date, as reasonably determined by the Board of Directors in good faith.

 

(d)                                  Mechanics of Optional Conversions .  Before any holder of Preferred Stock shall be entitled to convert the same into shares of Common Stock, the holder shall surrender the certificate or certificates therefor at the office of the Corporation or of any transfer agent designated by the Corporation, or the holder shall notify the Corporation or any transfer agent that such certificates have been lost, stolen, or destroyed and execute a Certificate of Loss, and shall give written notice to the Corporation at such time that the holder elects to convert his or her Preferred Stock and shall state therein (a) the number of Preferred Stock shares to be so converted and (b) the holder’s name or the name or names of the holder’s nominees in which the holder wishes the certificate or certificates for shares of Common Stock to be issued.  On the date of conversion, all rights with respect to the Preferred Stock so converted shall terminate (except any of the rights of the holder thereof as a holder of Common Stock pursuant to this Certificate of Incorporation or otherwise agreed to between such holder and the Corporation or the other holders of the Corporation’s stock) upon surrender of the holder’s certificate or certificates therefor, other than such holder’s rights to receive certificates for the number of shares of Common Stock into which such Preferred Stock has been converted and cash in an amount equal to all dividends declared but unpaid on, and, in the case of the Series B Preferred Stock, accrued dividends to the extent an election has been made to be paid such dividends in cash in accordance with Section 2(a) of this Article FOURTH, and any and all other amounts owing with respect to, the shares of Preferred Stock being converted to and including the time of conversion.  If so required by the Corporation, 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 the holder’s attorney duly authorized in writing.  Upon the optional conversion of the Preferred Stock, all shares of Preferred Stock being converted by any holder thereof shall be aggregated for the purpose of determining the number of shares of Common Stock to which such holder shall be entitled, and no fractional shares of Common Stock shall be issued.  In lieu of any fractional share to which the holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the fair market value of the Common Stock on the date of conversion, as reasonably determined by the Board of Directors in good faith. The Corporation shall, promptly after surrender of the certificate or certificates for conversion, issue and deliver to such holder, or to the holder’s nominee or nominees, a certificate or certificates for the number of shares of Common Stock to which the holder shall be entitled as aforesaid, together with cash in lieu of any fraction of a share and cash in an amount equal to all dividends declared but unpaid thereon and, in the case of the Series B Preferred Stock, accrued dividends to the extent an election has been made to be paid such dividends in cash in accordance with Section 2(a) of this Article FOURTH, and any and all other amounts owing with respect thereto at such time together with a certificate for the remaining number of shares of Preferred Stock if less than all of the shares of Preferred Stock evidenced by the certificate or certificates were converted.  Unless otherwise specified by the holder in the written notice of conversion, such conversion shall be deemed to

 

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have been made immediately prior to the close of business on the date of surrender of the shares of Preferred Stock to be converted, and the person or persons entitled to receive the shares of Common Stock issuable upon conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date.

 

(e)                                   Adjustments to Preferred Conversion Price for Diluting Issues .

 

(i)                                      Special Definitions .  For purposes of this Section 2(e) of this Article FOURTH, the following definitions shall apply:

 

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

 

(2)                                  Original Issue Date ” shall mean the first date on which a share of Series C Preferred Stock is issued.

 

(3)                                  Convertible Securities ” shall mean any evidences of indebtedness, shares of capital stock (other than Common Stock) or other securities directly or indirectly convertible into or exchangeable for Common Stock.

 

(4)                                  Additional Shares of Common Stock ” shall mean all shares of Common Stock issued (or, pursuant to Section 2(e)(iii) of this Article FOURTH, deemed to be issued) by the Corporation after the Original Issue Date, other than:

 

(A)                                shares of Common Stock issued or issuable upon conversion of shares of Seed Preferred Stock, Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock and shares of Common Stock, Options or Convertible Securities issued as a dividend or distribution on Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock;

 

(B)                                until such time as at least 52,586,206 shares of Series C Preferred Stock have been issued, up to 13,142,500 shares of Common Stock and thereafter up to 22,127,159 shares of Common Stock, in each case, issued or issuable to employees, consultants or directors of the Corporation pursuant to a stock purchase or stock option plan or other employee stock bonus arrangement approved by a majority of the Corporation’s Board of Directors, including at least a majority of the Preferred Stock Directors (as hereinafter defined); provided that such numbers may be adjusted upward with the approval of the holders of at least sixty-six percent (66%) of the Series B Preferred Stock and Series C Preferred Stock then outstanding;

 

(C)                                shares of Common Stock issued in consideration for the acquisition or licensing of technology or a corporate partnership transaction, if approved by the Board of Directors, including at least a majority of the Preferred Stock Directors;

 

(D)                                shares of Common Stock issued in equipment leasing or other debt financing transactions, if approved by the Board of Directors, including at least a majority of the Preferred Stock Directors; and

 

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(E)                                 shares of Common Stock issued in the Corporation’s initial public offering.

 

(ii)                                   No Adjustment of Preferred Conversion Price .  Except as set forth in Section 2(e)(vi) of this Article FOURTH, no adjustment in the number of shares of Common Stock into which the Preferred Stock is convertible shall be made, by adjustment to the applicable Preferred Conversion Price in respect of the issuance of Additional Shares of Common Stock (a) unless the consideration per share for an Additional Share of Common Stock (determined pursuant to Section 2(e)(v) of this Article FOURTH) issued or deemed to be issued by the Corporation is less than the applicable Preferred Conversion Price, in effect on the date of, and immediately prior to, the issue of such Additional Share of Common Stock or (b) if prior to such issuance or within twenty (20) days thereafter the Corporation receives written notice from the holders of at least sixty percent (60%) of the outstanding shares of the applicable series of Preferred Stock that no such adjustment in the Preferred Conversion Price for such series of Preferred Stock shall be made.

 

(iii)                                Issue of Securities Deemed Issue of Additional Shares of Common Stock .

 

(1)                                  Options and Convertible Securities .  In the event the Corporation at any time or from time to time after the Original Issue Date shall issue any Options (excluding for all purposes of this Section 2(e)(iii)(1) of this Article FOURTH Options excluded from the definition of Additional Shares of Common Stock in Section 2(e)(vii)(4)(B) of this Article FOURTH) or Convertible 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 (as set forth in the instrument relating thereto without regard to any provisions contained therein for a subsequent adjustment of such number) of Common Stock 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 (assuming the satisfaction of any conditions to convertibility, exercisability or exchangeability, including without limitation, the passage of time), and the applicable Preferred Conversion Price shall be adjusted accordingly, provided that in any such case in which Additional Shares of Common Stock are deemed to be issued:

 

(A)                                no further adjustment in the applicable Preferred Conversion Price shall be made upon the subsequent issue of Convertible Securities or shares of Common Stock upon the exercise of such Options or conversion or exchange of such Convertible Securities;

 

(B)                                if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase or decrease in the consideration payable to the Corporation, or increase or decrease in the number of shares of Common Stock issuable, upon the exercise, conversion or exchange thereof, the applicable Preferred Conversion Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon

 

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any such increase or decrease becoming effective, be recomputed to reflect such increase or decrease insofar as it affects such Options or the rights of conversion or exchange under such Convertible Securities;

 

(C)                                upon the expiration of any such Options or any rights of conversion or exchange under such Convertible Securities which shall not have been exercised, the applicable Preferred Conversion Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon such expiration, be recomputed as if:

 

(I)                                    In the case of Convertible Securities or Options for Common Stock, the only Additional Shares of Common Stock issued were the shares of Common Stock, if any, actually issued upon the exercise of such Options or the conversion or exchange of such Convertible Securities and the consideration received therefor was the consideration actually received by the Corporation for the issue of all such Options, whether or not exercised, plus the consideration actually received by the Corporation upon such exercise, or for the issue of all such Convertible Securities which were actually converted or exchanged, plus the additional consideration, if any, actually received by the Corporation upon such conversion or exchange; and

 

(II)                               in the case of Options for Convertible Securities only the Convertible Securities, if any, actually issued upon the exercise thereof were issued at the time of issue of such Options, and the consideration received by the Corporation for the Additional Shares of Common Stock deemed to have been then issued was the consideration actually received by the Corporation for the issue of all such Options, whether or not exercised, plus the consideration deemed to have been received by the Corporation (determined pursuant to Section 2(e)(v) of this Article FOURTH) upon the issue of the Convertible Securities with respect to which such Options were actually exercised;

 

(D)                                no readjustment pursuant to clause (B) or (C) above shall have the effect of increasing the applicable Preferred Conversion Price to an amount which exceeds the lower of (i) the applicable Preferred Conversion Price on the original adjustment date, or (ii) the applicable Preferred Conversion Price that would have resulted from any issuance of Additional Shares of Common Stock between the original adjustment date and such readjustment date (in each case as adjusted for any stock dividend, stock split, combination of shares, reclassification or other similar event);

 

(E)                                 if such record date shall have been fixed and such Options or Convertible Securities are not issued on the date fixed therefor, the adjustment previously made in the applicable Preferred Conversion Price which became effective on such record date shall be canceled as of the close of business on such record date, and thereafter the applicable Preferred Conversion Price shall be adjusted pursuant to this Section 2(e)(iii) of this Article FOURTH as of the actual date of their issuance.

 

(2)                                  Stock Dividends, Stock Distributions and Subdivisions .  In the event the Corporation at any time or from time to time after the Original Issue Date shall declare or pay any dividend or make any other distribution on the Common Stock payable in

 

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Common Stock or effect a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in Common Stock), then and in any such event, Additional Shares of Common Stock shall be deemed to have been issued with respect to the Preferred Stock:

 

(A)                                in the case of any such dividend or distribution, immediately after the close of business on the record date for the determination of holders of any class of securities entitled to receive such dividend or distribution, or

 

(B)                                in the case of any such subdivision, at the close of business on the date immediately prior to the date upon which such corporate action becomes effective.

 

If such record date shall have been fixed and no part of such dividend or distribution shall have been paid on the date fixed therefor, the adjustment previously made to the applicable Preferred Conversion Price which became effective on such record date shall be canceled as of the close of business on such record date, and thereafter the applicable Preferred Conversion Price shall be adjusted pursuant to this Section 2(e)(iii) of this Article FOURTH as of the time of actual payment of such dividend or distribution.

 

(3)                                  Dilutive Financing .  In the event of any merger, business combination, acquisition of a company or its assets, sale of the Corporation’s assets to a third party or a similar transaction, irrespective of corporate form, (A) that the Corporation enters into primarily for the purpose, as determined by the Board of Directors of the Corporation in good faith, of allowing the Corporation to access the cash of a third party and (B) that has an effective consideration per share to the Corporation (based on the cash of such third party accessed by such transaction at the consummation of such transaction divided by the number of Additional Shares of Common Stock issued by the Corporation in such transaction) of less than the Series C Preferred Conversion Price in effect on the date of and immediately prior to such transaction, such transaction shall be considered an issuance of Additional Shares of Common Stock subject to Section 2(e) of this Article FOURTH.

 

(iv)                               Adjustment of Preferred Conversion Price Upon Issuance of Additional Shares of Common Stock .

 

(1)                                  In the event the Corporation shall at any time after the Original Issue Date and prior to the date of a Trigger Financing (as defined below) issue Additional Shares of Common Stock, without consideration or for a consideration per share less than the applicable Series C Conversion Price in effect immediately prior to such issue, then, in lieu of an adjustment under Section 2(e)(iv)(2) of this Article FOURTH, the Series C Conversion Price shall be reduced, concurrently with such issue, to the consideration per share received by the Corporation for such issue or deemed issue of the Additional Shares of Common Stock; provided that if such issuance or deemed issuance was without consideration, then the Corporation shall be deemed to have received an aggregate of $.001 of consideration for all such Additional Shares of Common Stock issued or deemed to be issued.  For purposes of this Section 2(e)(iv)(1), “ Trigger Financing ” shall mean the first to occur of (A) any sale of equity securities by the Corporation to institutional investors, at least one of which is not, at the time of such sale,

 

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a stockholder of the Corporation (the “ New Investor ”) in a transaction (x)  yielding gross proceeds to the Corporation of at least $15,000,000 and (y) in which the New Investor invests no less than $7,000,000 in such equity securities or (B) any sale of equity securities by the Corporation in a transaction deemed to be a Trigger Financing hereunder by the Corporation’s Board of Directors (including the affirmative vote of the JJDC Director (as defined in the Second Amended and Restated Voting Agreement dated on or about September 28, 2012, among the Corporation and certain of its stockholders, as may be amended from time to time (the “ Voting Agreement ”)), for so long as Johnson & Johnson Development Corporation or its successors or assigns is entitled to designate a director of the Corporation pursuant to the Voting Agreement or the Skyline Director (as defined in the Voting Agreement) for so long as Skyline Venture Partners V, L.P. or its successors or assigns is entitled to designate a director of the Corporation pursuant to the Voting Agreement).

 

(2)                                  Subject to Section 2(e)(iv)(1) of this Article FOURTH, in the event that at any time or from time to time after the Original Issue Date, the Corporation shall issue Additional Shares of Common Stock (including, without limitation, Additional Shares of Common Stock deemed to be issued pursuant to Section 2(e)(iii)(1) of this Article FOURTH but excluding Additional Shares of Common Stock deemed to be issued pursuant to Section 2(e)(iii)(2) of this Article FOURTH, which event is dealt with in Section 2(e)(vi)(1) of this Article FOURTH), without consideration or for a consideration per share less than $0.58 per share (subject to appropriate adjustment for any stock split, combination or other similar recapitalization event), then and in such event, the Series C Preferred Conversion Price (after a Trigger Financing), the Series B Preferred Conversion Price, the Series A Preferred Conversion Price and the Seed Preferred Conversion Price, as applicable, shall be reduced, concurrently with such issue, to a price (calculated to the nearest one tenth of one cent) determined in accordance with the following formula:

 

where:

 

NCP =                                                              New Series C Preferred Conversion Price, new Series B Preferred Conversion Price, new Series A Preferred Conversion Price or new Seed Preferred Conversion Price, as applicable;

 

P 1   =                                                                        Series C Preferred Conversion Price, Series B Preferred Conversion Price, Series A Preferred Conversion Price or Seed Preferred Conversion Price, as applicable, in effect immediately prior to new issue;

 

Q 1   =                                                                      Number of shares of Common Stock outstanding, or deemed to be outstanding as set forth below, immediately prior to such issue;

 

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P 2   =                                                                        Weighted average price per share received by the Corporation upon such issue;

 

Q 2   =                                                                      Number of shares of Common Stock issued, or deemed to have been issued, in the subject transaction;

 

provided that for the purpose of this Section 2(e)(iv) of this Article FOURTH, all shares of Common Stock issuable upon exercise of Options outstanding immediately prior to such issue and conversion of shares of Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock or Seed Preferred Stock, as applicable, outstanding immediately prior to such issue shall be deemed to be outstanding, and immediately after any Additional Shares of Common Stock are deemed issued pursuant to Section 2(e)(iii) of this Article FOURTH, such Additional Shares of Common Stock shall be deemed to be outstanding.

 

(v)                                  Determination of Consideration .  For purposes of this Section 2(e) of this Article FOURTH, the consideration received by the Corporation for the issue of any Additional Shares of Common Stock shall be computed as follows:

 

(1)                                  Cash and Property :  Such consideration shall:

 

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

 

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

 

(C)                                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 (A) and (B) above, as determined in good faith by the Board of Directors.

 

(2)                                  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 Section 2(e)(iii)(1) of this Article FOURTH, relating to Options and Convertible Securities, shall be determined by dividing (x) 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 (y) the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision

 

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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.

 

(vi)                               Adjustment for Dividends, Distributions, Subdivisions, Combinations or Consolidations of Common Stock .

 

(1)                                  Stock Dividends, Distributions or Subdivisions .  In the event the Corporation shall be deemed to issue Additional Shares of Common Stock pursuant to Section 2(e)(iii)(2) of this Article FOURTH in a stock dividend, stock distribution or subdivision, the applicable Preferred Conversion Price in effect immediately before such deemed issuance shall, concurrently with the effectiveness of such deemed issuance, be proportionately decreased.

 

(2)                                  Combinations or Consolidations .  In the event the outstanding shares of Common Stock shall be combined or consolidated, by reclassification or otherwise, into a lesser number of shares of Common Stock, the applicable Preferred Conversion Price in effect immediately prior to such combination or consolidation shall, concurrently with the effectiveness of such combination or consolidation, be proportionately increased.

 

(vii)                            Special Mandatory Conversion .

 

(1)                                  Trigger Event .  Subject to Section 2(e)(vii)(2), prior to a Qualified IPO or Deemed Liquidation, in the event that any holder of shares of Preferred Stock does not participate in a Qualified Financing (as defined below) by purchasing in the aggregate, in such Qualified Financing and within the time period specified by the Corporation ( provided that the Corporation has sent to each holder of Preferred Stock at least 10 days written notice of, and the opportunity to purchase its Pro Rata Amount (as defined below) of, the Qualified Financing), such holder’s Pro Rata Amount, then the Applicable Portion (as defined below) of the shares of Preferred Stock held by such holder shall automatically, and without any further action on the part of such holder, be converted into shares of Common Stock at the applicable Preferred Conversion Price in effect immediately prior to the consummation of such Qualified Financing, effective upon, subject to, and concurrently with, the consummation of the Qualified Financing and in accordance with the following order:

 

(A)                                first, the shares of Series C Preferred Stock held by such holder in an amount equal to such holder’s Applicable Portion shall be converted into shares of Common Stock at the Series C Preferred Conversion Price in effect immediately prior to the consummation of such Qualified Financing; provided that if the aggregate number of shares of Series C Preferred Stock held by such holder is less than such holder’s Applicable Portion, then

 

(B)                                second, the shares of Series B Preferred Stock held by such holder in an amount equal to such holder’s Applicable Portion, less the number of shares converted pursuant to Section 2(e)(vii)(1)(A) of this Article FOURTH, shall be converted into shares of Common Stock at the Series B Preferred Conversion Price in effect immediately prior to the consummation of such Qualified Financing; provided that if the aggregate number of shares of Series B Preferred Stock held by such holder is less than such holder’s Applicable

 

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Portion less the number of shares converted pursuant to Section 2(e)(vii)(1)(A) of this Article FOURTH, then

 

(C)                                third, the shares of Series A Preferred Stock held by such holder in an amount equal to such holder’s Applicable Portion, less the number of shares converted pursuant to Section 2(e)(vii)(1)(A) and Section 2(e)(vii)(1)(B) of this Article FOURTH, shall be converted into shares of Common Stock at the Series A Preferred Conversion Price in effect immediately prior to the consummation of such Qualified Financing; provided that if the aggregate number of shares of Series A Preferred Stock held by such holder is less than such holder’s Applicable Portion less the number of shares converted pursuant to Section 2(e)(vii)(1)(A) and Section 2(e)(vii)(1)(B) of this Article FOURTH, then

 

(D)                                fourth, the shares of Seed Preferred Stock held by such holder in an amount equal to such holder’s Applicable Portion, less the number of shares converted pursuant to Section 2(e)(vii)(1)(A), Section 2(e)(vii)(1)(B) and Section 2(e)(vii)(1)(C) of this Article FOURTH, shall be converted into and exchanged for shares of Common Stock at the Seed Preferred Conversion Price in effect immediately prior to the consummation of such Qualified Financing. No fractional shares of Common Stock to which any stockholder would otherwise be entitled resulting from such conversion and exchange shall be issued, but in lieu thereof, each stockholder of the Corporation who otherwise would be entitled to a fraction of a share of Common Stock upon such conversion, reclassification and exchange (except those stockholders who have agreed to waive such payment) shall be entitled to receive a cash payment equal to the product of such fractional interest multiplied by the Common Stock’s fair market value as determined in good faith by the Board of Directors of the Corporation as of the date of such conversion and exchange.

 

For purposes of determining the number of shares of Preferred Stock owned by a holder, and for determining the number of Offered Securities (as defined below) a holder of Preferred Stock has purchased in a Qualified Financing, all shares of Preferred Stock held by Affiliates (as defined below) of such holder shall be aggregated with such holder’s shares and all Offered Securities purchased by Affiliates of such holder shall be aggregated with the Offered Securities purchased by such holder ( provided that no shares or securities shall be attributed to more than one entity or person within any such group of affiliated entities or persons).

 

Notwithstanding the foregoing, the provisions of this Section 2(e)(vii)(1) of this Article FOURTH shall not apply to any shares of Preferred Stock held by the Bill & Melinda Gates Foundation at the time of a Qualified Financing.

 

(2)                                  Purchase Agreement Trigger Events .

 

(A)                                Each share of Preferred Stock held by any holder of Series B Preferred Stock or Series A Preferred Stock who holds, on the date of the Initial Closing (as such term is defined in that certain Series C Convertible Preferred Stock Purchase Agreement by and among the Corporation and certain purchasers of Series C Preferred Stock dated on or about September 28, 2012 (the “ Purchase Agreement ”)), one percent (1%) or more of the outstanding shares of Common Stock (treating all shares of Common Stock issuable upon exercise of Options outstanding on the date hereof or upon conversion of Convertible Securities

 

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outstanding (assuming exercise of any outstanding Options therefor)) and fails to purchase such holder’s Pro Rata Amount in the Initial Closing shall immediately following the Initial Closing be automatically converted into shares of Common Stock at a ten-for-one ratio, such that each ten (10) shares of Preferred Stock held by such holder will be converted into and exchanged for one (1) share of Common Stock and all dividends thereon shall be canceled.  No fractional shares of Common Stock to which any stockholder would otherwise be entitled resulting from such conversion and exchange shall be issued, but in lieu thereof, each stockholder of the Corporation who otherwise would be entitled to a fraction of a share of Common Stock upon such conversion, reclassification and exchange (except those stockholders who have agreed to waive such payment) shall be entitled to receive a cash payment equal to the product of such fractional interest multiplied by the Common Stock’s fair market value as determined in good faith by the Board of Directors of the Corporation as of the date of such conversion and exchange.

 

(B)                                Each share of Preferred Stock held by any Investor (as such term is defined in the Purchase Agreement), or any successor-in-interest to any Investor, that fails to purchase the amount of Series C Preferred Stock required to be purchased by such Investor (or such Investor’s successor-in-interest) at a Second Closing (as defined in the Purchase Agreement) held following the Milestone Event (as defined in the Purchase Agreement), shall immediately following the Second Closing be automatically converted into shares of Common Stock at a ten-for-one ratio, such that each ten (10) shares of Preferred Stock held by such Investor will be converted into and exchanged for one (1) share of Common Stock and all dividends thereon shall be canceled.  No fractional shares of Common Stock to which any Investor would otherwise be entitled resulting from such conversion and exchange shall be issued, but in lieu thereof, each Investor who otherwise would be entitled to a fraction of a share of Common Stock upon such conversion, reclassification and exchange (except those Investors who have agreed to waive such payment) shall be entitled to receive a cash payment equal to the product of such fractional interest multiplied by the Common Stock’s fair market value as determined in good faith by the Board of Directors of the Corporation as of the date of such conversion and exchange.

 

(3)                                  Procedural Requirements .  Upon a conversion pursuant to Section 2(e)(vii)(1) or Section 2(e)(vii)(2) (each a “ Special Mandatory Conversion ”), each holder of shares of Preferred Stock converted pursuant to such Special Mandatory Conversion shall be sent written notice of such Special Mandatory Conversion and the place designated for mandatory conversion of all such shares of Preferred Stock pursuant to this Section 2(e)(vii) of this Article FOURTH.  Upon receipt of such notice, each holder of such shares of Preferred Stock 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 Certificate of Loss) to the Corporation at the place designated in such notice. If so required by the Corporation, 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 Section 2(e)(vii)(1) or Section 2(e)(vii)(2) of this Article FOURTH, including the rights, if any, to receive notices and vote (other than as a holder of Common Stock), will terminate at the time of the Special Mandatory Conversion (notwithstanding the failure of the holder or holders thereof to surrender the certificates for such

 

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shares at or prior to such time), except only the rights of the holders thereof, upon surrender of their certificate or certificates therefor (or a Certificate of Loss), to receive the items provided for in the next sentence of this Section 2(e)(vii)(3)of this Article FOURTH.  As soon as practicable after the Special Mandatory Conversion and the surrender of the certificate or certificates (or a Certificate of Loss) for Preferred Stock so converted, the Corporation shall issue and deliver to such holder, or to his, her or its nominees, a certificate or certificates for the number of full shares of Common Stock issuable on such conversion in accordance with the provisions hereof, together with cash as provided herein in lieu of any fraction of a share of Common Stock otherwise issuable upon such conversion.  Any declared but unpaid dividends, and, in the case of the Series B Preferred Stock, accrued dividends, shall be cancelled.

 

(4)                                  Definitions .  For purposes of this Section 2(e)(vii), the following definitions shall apply:

 

(A)                                Affiliate ” shall mean, with respect to any holder of shares of Preferred Stock, any person, entity or firm which, directly or indirectly, controls, is controlled by or is under common control with such holder, including, without limitation, any entity of which the holder is a partner or member, any partner, officer, director, member or employee of such holder and any venture capital fund now or hereafter existing of which the holder is a partner or member which is controlled by or under common control with one or more general partners of such holder or shares the same management company with such holder.

 

(B)                                Applicable Portion ” shall mean, with respect to any holder of shares of Preferred Stock who fails to purchase his, her or its Pro Rata Amount in a Qualified Financing, a number of shares of Preferred Stock calculated by multiplying the aggregate number of shares of Preferred Stock held by such holder immediately prior to a Qualified Financing by a fraction, the numerator of which is equal to the amount by which such holder’s Pro Rata Amount exceeds the number of Offered Securities actually purchased by such holder in such Qualified Financing, and the denominator of which is equal to such holder’s Pro Rata Amount.

 

(C)                                Offered Securities ” shall mean the equity securities of the Corporation set aside by the Board of Directors of the Corporation (including the affirmative vote of the JJDC Director (as defined in the Voting Agreement), for so long as Johnson & Johnson Development Corporation or its successors or assigns is entitled to designate a director of the Corporation pursuant to the Voting Agreement and the Skyline Director (as defined in the Voting Agreement) for so long as Skyline Venture Partners V, L.P. or its successors or assigns is entitled to designate a director of the Corporation pursuant to the Voting Agreement) for purchase by holders of outstanding shares of Preferred Stock in connection with a Qualified Financing, and offered to such holders.

 

(D)                                Pro Rata Amount ” shall mean, with respect to any holder of Preferred Stock, the lesser of (a) a number of Offered Securities calculated by multiplying the aggregate number of Offered Securities by a fraction, the numerator of which is equal to the number of shares of Preferred Stock owned by such holder, and the denominator of which is equal to the aggregate number of outstanding shares of Preferred Stock immediately prior to such Qualified Financing and (b) the maximum number of Offered Securities that such

 

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holder is permitted by the Corporation to purchase in such Qualified Financing, after giving effect to any cutbacks or limitations established by the Board of Directors and applied on a pro rata basis to all holders of Preferred Stock.

 

(E)                                 Qualified Financing ” shall mean any transaction occurring after the Original Issue Date, involving the issuance or sale of Additional Shares of Common Stock that the Board of Directors of the Corporation (including the affirmative vote of the JJDC Director (as defined in the Voting Agreement), for so long as Johnson & Johnson Development Corporation or its successors or assigns is entitled to designate a director of the Corporation pursuant to the Voting Agreement or the Skyline Director (as defined in the Voting Agreement) for so long as Skyline Venture Partners V, L.P. or its successors or assigns is entitled to designate a director of the Corporation pursuant to the Voting Agreement) determines should be subject to Section 2(e)(vii) of this Article FOURTH.

 

(f)                                    Adjustments for Certain Dividends and Distributions .  In the event that at any time or from time to time after the Original Issue Date the Corporation 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 shares of Common Stock or securities, the issuance of which are deemed to be issuances of Common Stock under Section 2(e)(iii) of this Article FOURTH, then and in each such event provision shall be made so that the holders of Preferred Stock shall receive upon conversion thereof in addition to the number of shares of Common Stock receivable thereupon, the amount of securities of the Corporation that they would have received had their Preferred Stock been converted into Common Stock immediately prior to such event and had they thereafter, during the period from the date of such event to and including the conversion date, retained such securities receivable by them as aforesaid during such period, giving application during such period to all adjustments called for herein.

 

(g)                                   Adjustment for Reclassification, Exchange, or Substitution .  In the event that at any time or from time to time after the Original Issue Date the Common Stock issuable upon the conversion of the applicable Preferred Stock shall be changed into the same or a different number of shares of any class or series of stock or other securities or property, whether by capital reorganization, reclassification, recapitalization or otherwise (other than a subdivision or combination of shares or stock dividend provided for above, or a merger, consolidation, or sale of assets provided for below), then and in each such event the holder of any shares of the applicable Preferred Stock shall have  the right thereafter to convert such shares into the kind and amount of shares of stock and other securities and property which such holder would have been entitled to receive upon such reorganization, reclassification, recapitalization or other change by the holder of a number of shares of Common Stock equal to the number of shares of Common Stock into which such shares of the applicable Preferred Stock might have been converted immediately prior to such reorganization, reclassification, recapitalization or change, all subject to further adjustment as provided herein.

 

(h)                                  Adjustment for Merger, Consolidation or Sale of Assets.   In the event that at any time or from time to time after the Original Issue Date the Corporation shall merge or consolidate with or into another entity or sell all or substantially all of its assets, and such consolidation, merger or sale is not treated as a liquidation under Section 1(c) of this Article

 

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FOURTH, each share of Preferred Stock shall thereafter be convertible into the kind and amount of shares of stock or other securities or property to which a holder of the number of shares of Common Stock of the Corporation deliverable upon conversion of such Preferred Stock would have been entitled to receive upon such consolidation, merger or sale; and, in such case, appropriate adjustment (as determined in good faith by the Board of Directors) shall be made in the application of the provisions set forth in this Section 2 with respect to the rights and interest thereafter of the holders of shares of such Preferred Stock, to the end that the provisions set forth in this Section 2 of this Article FOURTH (including provisions with respect to changes in and other adjustments of the applicable Preferred Conversion Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other securities or property thereafter deliverable upon the conversion of such Preferred Stock.

 

(i)                                      No Impairment .  The Corporation shall not without the consent(s) required by Section 3 of this Article FOURTH, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed under this Section 2 of this Article FOURTH by the Corporation but shall at all times in good faith assist in the carrying out of all the provisions of this Section 2 of this Article FOURTH and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion Rights of the holders of Preferred Stock against impairment.

 

(j)                                     Certificate as to Adjustments .  Upon the occurrence of each adjustment or readjustment of the applicable Preferred Conversion Price pursuant to this Section 2 of this Article FOURTH, the Corporation at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock or Seed Preferred Stock, as applicable, a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based.  The Corporation shall, upon the written request at any time of any holder of Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (i) such adjustments and readjustments, (ii) the applicable Preferred Conversion Price at the time in effect, and (iii) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of each share of Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock or Seed Preferred Stock, as applicable.

 

(k)                                  (i)  Notices of Record Date .  In the event of any taking by the Corporation of a record of the holders of any class or series of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, the Corporation shall mail to each holder of Preferred Stock at least ten (10) days prior to such record date a notice specifying the date on which any such record is to be taken for the purpose of such dividend or distribution.

 

(l)                                      Common Stock Reserved .  The Corporation shall reserve and keep available, free from pre-emptive rights, out of its authorized but unissued Common Stock, solely for the purpose of effecting the conversion of Preferred Stock, such number of shares of Common Stock as shall from time to time be sufficient to effect conversion of the Preferred

 

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Stock.  If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all the then outstanding shares of Preferred Stock, the Corporation shall promptly take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose.

 

(m)                              Certain Taxes .  The Corporation shall pay any issue or transfer taxes payable in connection with the conversion of Preferred Stock, provided, however, that the Corporation shall not be required to pay any tax which may be payable in respect of any transfer to a name other than that of the holder of the Preferred Stock.

 

(n)                                  (l)  Closing of Books .  The Corporation shall at no time close its transfer books against the transfer of any Preferred Stock or of any shares of Common Stock issued or issuable upon the conversion of any shares of Preferred Stock in any manner which interferes with the timely conversion or transfer of such Preferred Stock or Common Stock.

 

(o)                                  Validity of Shares .  The Corporation agrees that it will from time to time take all such actions as may be required to assure that all shares of Common Stock which may be issued upon conversion of any Preferred Stock will, upon issuance, be legally and validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof.

 

Section 3.   Restrictions .

 

(a)                                  At all times when at least ten percent (10%) of the Series C Preferred Stock (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) issued remains outstanding, in addition to any other vote required by law or this Certificate of Incorporation, the Corporation shall not take any of the following actions, either directly or indirectly, by amendment, merger, consolidation or otherwise, without the consent of at least sixty percent (60%) of the holders of the then outstanding Series C Preferred Stock:

 

(i)                                      adversely alter or amend the rights, preferences or privileges of the Series C Preferred Stock,  and

 

(ii)                                   increase or decrease the authorized number of shares of Series C Preferred Stock.

 

(b)                                  At all times when at least ten percent (10%) of the Series B Preferred Stock (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) issued remains outstanding, in addition to any other vote required by law or this Certificate of Incorporation, the Corporation shall not take any of the following actions, either directly or indirectly, by amendment, merger, consolidation or otherwise, without the consent of at least sixty percent (60%) of the holders of the then outstanding Series B Preferred Stock:

 

(i)                                      adversely alter or amend the rights, preferences or privileges of the Series B Preferred Stock,  and

 

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(ii)                                   increase or decrease the authorized number of shares of Series B Preferred Stock.

 

(c)                                   At all times when at least ten percent (10%) of the Series A Preferred Stock (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) issued remains outstanding, in addition to any other vote required by law or this Certificate of Incorporation, the Corporation shall not take any of the following actions, either directly or indirectly, by amendment, merger, consolidation or otherwise, without the consent of at least sixty percent (60%) of the holders of the then outstanding Series A Preferred Stock:

 

(i)                                      adversely alter or amend the rights, preferences or privileges of the Series A Preferred Stock, and

 

(ii)                                   increase or decrease the authorized number of shares of Series A Preferred Stock.

 

(d)                                  At all times when at least ten percent (10%) of the Seed Preferred Stock issued remains outstanding, in addition to any other vote required by law or this Certificate of Incorporation, the Corporation shall not take any of the following actions, either directly or indirectly, by amendment, merger, consolidation or otherwise, without the consent of at least sixty percent (60%) of the holders of the then outstanding Seed Preferred Stock:

 

(i)                                      adversely alter or amend the rights, preferences or privileges of the Seed Preferred Stock, and

 

(ii)                                   increase or decrease the authorized number of shares of Seed Preferred Stock.

 

(e)                                   In addition to any other vote required by law or this Certificate of Incorporation, the Corporation shall not take any of the following actions, either directly or indirectly, by amendment, merger, consolidation or otherwise, without the consent of the holders of at least sixty-six percent (66%) of the then outstanding Preferred Stock:

 

(i)                                      create any new class or series of shares having voting rights or other rights, preferences or privileges senior to or on parity with the Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock or Seed Preferred Stock,

 

(ii)                                   effect a merger or corporate reorganization of the Corporation (or any subsidiary) as a result of which the holders of capital stock of the Corporation immediately prior to such transaction hold less than a majority of the outstanding capital stock of the surviving or resulting corporation, or any transaction in which all or substantially all of the assets of the Corporation (or any subsidiary) are sold, transferred or exclusively licensed,

 

(iii)                                effect a voluntary liquidation, winding-up or dissolution of the Corporation or a subsidiary of the Corporation or any bankruptcy filing or similar action by the Corporation or a subsidiary of the Corporation,

 

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(iv)                               take any action that would result in a Deemed Liquidation,

 

(v)                                  amend or waive any provision in the Certificate of Incorporation or Bylaws of the Corporation,

 

(vi)                               redeem or repurchase any shares of the Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock, Seed Preferred Stock or Common Stock, unless such actions are made pursuant to (x) equity incentive agreements with service providers giving the Corporation the right to repurchase shares upon the termination of services or (y) that certain Letter Agreement, dated September 28, 2012, by and between the Corporation and the Bill & Melinda Gates Foundation,

 

(vii)                            guarantee, endorse or otherwise become directly or contingently liable for any debt of any third party,

 

(viii)                         any actions resulting in the creation or acquisition of a wholly-owned subsidiary of the Corporation, unless such action has been approved by a majority of the Board of Directors, including a majority of the Preferred Stock Directors,

 

(ix)                               incur any indebtedness on behalf of the Corporation in excess of $200,000, unless such action has been approved by a majority of the Board of Directors, including a majority of the Preferred Stock Directors,

 

(x)                                  any action resulting in the sale, exclusive license, lease or disposition by the Corporation or a subsidiary of the Corporation of any business, division or other right, asset, clinical program or intellectual property in excess of $50,000, unless such action is in the ordinary course of business or is approved by a majority of the Board of Directors, including a majority of the Preferred Stock Directors,

 

(xi)                               pledge assets of the Corporation to guarantee any debt (other than in the ordinary course of business or pursuant to a transaction approved by a majority of the Board of Directors, including a majority of the Preferred Stock Directors),

 

(xii)                            stop devoting a majority of the efforts of the Corporation or any subsidiary of the Corporation to discovering and developing vaccines, unless such change was included in a business plan approved by the Board of Directors, including a majority of the Preferred Stock Directors,

 

(xiii)                         approve any contract, loan or other agreement between the Corporation or any subsidiary of the Corporation, on one hand, and any officer, director, stockholder or employee of the Corporation or any subsidiary of the Corporation or any family member of such person, on the other hand, including any contract or other agreement for the sale or repurchase of any capital stock, rights, warrants or options of the Corporation or any subsidiary of the Corporation, unless such transaction is made in the ordinary course of business and the terms of such transaction are fair and reasonable and approved by a majority of the Board of Directors, including a majority of the Preferred Stock Directors,

 

(xiv)                        declare or pay any dividends to stockholders of the Corporation,

 

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(xv)                           increase or decrease the authorized size of the Board of Directors,

 

(xvi)                        hire a person to serve as, or terminate the employment of a person who is, the Chief Executive Officer, or amend the terms of any employment agreement with such employee, unless such action has been approved by a majority of the Board of Directors, including a majority of the Preferred Stock Directors, and

 

(xvii)                     agree to take any action listed in clauses (i) through (xvii) above.

 

Section 4.   Voting Rights .

 

(a)                                  Except as otherwise required by law or set forth in this Certificate of Incorporation, the holders of Preferred Stock shall be entitled to notice of any meeting of stockholders and shall vote together with the holders of Common Stock as a single class upon any matter submitted to the stockholders for a vote.  With respect to all questions as to which, under law, stockholders are required to vote by classes or series, the Preferred Stock shall vote separately as a single class and series apart from the Common Stock.  Shares of Common Stock and Preferred Stock shall entitle the holders thereof to the following number of votes on any matter as to which they are entitled to vote:

 

(i)                                      Holders of Common Stock shall have one vote per share; and

 

(ii)                                   Holders of Preferred Stock shall have that number of votes per share as is equal to the number of shares of Common Stock (including fractions of a share) into which each such share of Preferred Stock held by such holder could be converted (without giving effect to the conversion of any accrued but unpaid dividends) on the date for determination of stockholders entitled to vote at the meeting or on the date of any written consent.

 

(b)                                  Any provision of the By-Laws of the Corporation to the contrary notwithstanding, the number of directors constituting the whole Board of Directors of the Corporation shall not be fixed at a number other than eight (8) without the prior written consent of the holders of at least sixty-six percent (66%) of the Preferred Stock then outstanding as provided in Section 3(e) of this Article FOURTH.  The Board of Directors shall not delegate any of its powers or duties to any committee of the Board of Directors without the consent of at least a majority of the Preferred Stock Directors.

 

(c)                                   At all times during which shares of Preferred Stock remain outstanding, the holders of the outstanding shares of Preferred Stock shall have the exclusive right, separately from the Common Stock to elect five (5)  directors of the Corporation (the “ Preferred Stock Directors ”).  The Preferred Stock Directors shall be elected by the vote or written consent of the holders of at least sixty-six percent (66%) of the outstanding Preferred Stock.  If a Preferred Stock Director shall cease to serve as a director for any reason, another director elected by the holders of the Preferred Stock shall replace such director.  Any Preferred Stock Director may be removed, with or without cause, and a replacement Preferred Stock Director may be elected in his stead, at any time by the affirmative vote at a meeting duly called for the purpose, or by written consent, of the holders of more than sixty-six percent (66%) of the outstanding Preferred Stock.

 

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(d)                                  The holders of the outstanding shares of Common Stock shall have the exclusive right, separately from the Preferred Stock, to elect one director of the Corporation (the “ Common Stock Director ”).  The Common Stock Director shall be elected by the vote or written consent of the holders of a majority of the outstanding Common Stock.  If the Common Stock Director shall cease to serve as a director for any reason, another director elected by the holders of the Common Stock shall replace such director. The Common Stock Director may be removed, with or without cause, and a replacement Common Stock Director may be elected in his stead, at any time by the affirmative vote at a meeting duly called for the purpose, or by written consent, of the holders of a majority of the outstanding Common Stock.

 

(e)                                   All other directors of the Corporation shall be elected by the holders of the Common Stock and Preferred Stock voting together as a single class, with the holders of Preferred Stock to have that number of votes as is determined in accordance with Section 4(a)(ii) of this Article FOURTH.

 

Section 5.   Dividends .

 

(a)                                  From and after the date of the issuance of any shares of Series C Preferred Stock, dividends at the rate per annum of 8% of the Series C Original Issue Price shall accrue on such shares of Series C Preferred Stock (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) (the “ Series C Preferred Dividend ”). Series C Preferred Dividends shall accrue quarterly, whether or not declared but shall be noncumulative and non-compounding; provided however, that except as set forth in the following sentence of this Section 5(a) or in Section 1(a) or Section 6(a) of this Article FOURTH, such Series C Preferred Dividends shall be payable only when, as, and if declared by the Board of Directors and the Corporation shall be under no obligation to pay such Series C Preferred Dividends. The Corporation shall not declare, pay or set aside any dividends on shares of Series B Preferred Stock, Series A Preferred Stock, Seed Preferred Stock or Common 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 the Certificate of Incorporation) the holders of the Series C Preferred Stock then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Series C Preferred Stock in an amount at least equal to the amount of the aggregate Series C Preferred Dividends then accrued on such share of Series C Preferred Stock and not previously paid and, in the case of a dividend payable on shares of Common Stock, the dividend which would have been payable to such holder if the shares of Series C Preferred Stock held by such holder had been converted into Common Stock on the record date for the determination of holders of Common Stock entitled to receive such dividend.

 

(b)                                  From and after the date of the issuance of any shares of Series B Preferred Stock, dividends at the rate per annum of eight percent (8%) of the Series B Original Issue Price shall accrue on such shares of Series B Preferred Stock (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) (the “ Series B Preferred Dividend ”). Series B Preferred Dividends shall accrue daily, whether or not declared and shall be cumulative and non-compounding; provided however, that except as set forth in the following sentence of this

 

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Section 5(b) or in Section 1(a) or Section 6(a) of this Article FOURTH, such Series B Preferred Dividends shall be payable only when, as, and if declared by the Board of Directors and the Corporation shall be under no obligation to pay such Series B Preferred Dividends. The Corporation shall not declare, pay or set aside any dividends on shares of Series A Preferred Stock, Seed Preferred Stock or Common 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 the Certificate of Incorporation) the holders of the Series B Preferred Stock then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Series B Preferred Stock in an amount at least equal to the amount of the aggregate Series B Preferred Dividends then accrued on such share of Series B Preferred Stock and not previously paid and, in the case of a dividend payable on shares of Common Stock, the dividend which would have been payable to such holder if the shares of Series B Preferred Stock held by such holder had been converted into Common Stock on the record date for the determination of holders of Common Stock entitled to receive such dividend. The Series B Preferred Dividend shall continue to accrue even if the Corporation does not have lawfully available funds to pay such Series B Preferred Dividend at the time of accrual.

 

(c)                                   No dividend shall be declared or paid on shares of Series A Preferred Stock unless the provisions of Section 5(a) and 5(b) of this Article FOURTH above are satisfied.  From and after the date of the issuance of any shares of Series A Preferred Stock, dividends at the rate per annum of 8% of the Series A Original Issue Price shall accrue on such shares of Series A Preferred Stock (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) (the “ Series A Preferred Dividend ”).  Series A Preferred Dividends shall accrue quarterly, whether or not declared but shall be non-cumulative and non-compounding; provided however, that except as set forth in the following sentence of this Section 5(c) or in Section 1(a) or Section 6(a) of this Article FOURTH, such Series A Preferred Dividends shall be payable only when, as, and if declared by the Board of Directors and the Corporation shall be under no obligation to pay such Series A Preferred Dividends.  The Corporation shall not declare, pay or set aside any dividends on shares of Seed Preferred Stock or Common 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 the Certificate of Incorporation) the holders of the Series A Preferred Stock then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Series A Preferred Stock in an amount at least equal to the amount of the aggregate Series A Preferred Dividends then accrued on such share of Series A Preferred Stock and not previously paid and, and, in the case of a dividend payable on shares of Common Stock, the dividend which would have been payable to such holder if the shares of Series A Preferred Stock held by such holder had been converted into Common Stock on the record date for the determination of holders of Common Stock entitled to receive such dividend.

 

(d)                                  No dividend shall be declared or paid on shares of Common Stock unless the provisions of Section 5(a), Section 5(b) and Section 5(c) above are satisfied and the Corporation shall declare and pay at the same time to each holder of Seed Preferred Stock a dividend equal to $0.052 per share of Seed Preferred Stock per annum, plus all dividends, previously declared and unpaid on the Seed Preferred Stock (respectively, the “ Seed Preferred Dividend ” and together with the Series A Preferred Dividend and the Series B Preferred

 

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Dividend, the “ Preferred Dividend ”), plus the dividend which would have been payable to such holder if the shares of Seed Preferred Stock held by such holder had been converted into Common Stock on the record date for the determination of holders of Common Stock entitled to receive such dividend.

 

(e)                                   The calculation of the applicable Preferred Dividend shall be computed (y) on the number of days since such Preferred Stock respectively, was issued and outstanding (z) and shall include any accrued but unpaid dividends thereon.  Prior to payment of any dividend pursuant to this Section 5 of this Article FOURTH, the Corporation shall provide a statement to each holder of Preferred Stock as of the date of declaration of such dividend, indicating the amount of the Preferred Dividend as applicable, owing on each such share and stipulating an appropriate mechanism by which the holder of such share of Preferred Stock may contest the calculation of the Preferred Dividend.

 

(f)                                    No dividends shall be declared or paid on the Common Stock or Preferred Stock except as set forth in Section 1(a), Section 6(a) or Section 5 of this Article FOURTH.

 

Section 6.   Redemption .

 

(a)                                  At the written election of holders of at least sixty-six percent (66%) of the outstanding shares of Series C Preferred Stock and Series B Preferred Stock at any time on or after the date that is 90 days before fifth anniversary of the Original Issue Date (the “ Series C/Series B Redemption Election ”), the Corporation shall be required to redeem all, but not less than all, of the outstanding shares of Series C Preferred Stock and Series B Preferred Stock in three annual installments, upon the terms set forth in this Section 6 of this Article FOURTH.  The first installment of such redemption shall occur on a date (the “ First Series C/Series B Redemption Date ”) specified in the Series C/Series B Redemption Election, which shall be not less than ninety (90) days after the date of the Series C/Series B Redemption Election, and the second and third installments of such redemption shall occur on the first and second anniversaries, respectively, of the First Series C/Series B Redemption Date.  The Corporation shall redeem one-third of the outstanding shares of Series C Preferred Stock and Series B Preferred Stock held by each holder on the First Series C/Series B Redemption Date, one-half of the remaining outstanding shares of Series C Preferred Stock and Series B Preferred Stock then held by each holder on the first anniversary thereof and all of the remaining shares of Series C Preferred Stock and Series B Preferred Stock on the second anniversary thereof.  On each such redemption date, the holders shall surrender the certificate or certificates for the shares to be redeemed duly endorsed for transfer or with duly executed stock transfer powers sufficient to permit transfer attached at the offices of the Corporation or of any transfer agent for the Series C Preferred Stock and Series B Preferred Stock, or the holder shall notify the Corporation or any transfer agent that such certificates have been lost, stolen, or destroyed and execute a Certificate of Loss.  The Corporation shall, as soon as practicable thereafter, issue and deliver to each holder a certificate or certificates for the balance of the shares not being redeemed.  The redemption price per share of Series C Preferred Stock shall be equal to $0.58 (as adjusted for any stock dividend, stock split, combination of shares, reclassification or other similar event with respect to the Series C Preferred Stock) (the “ Series C Redemption Price ”) plus all dividends declared but unpaid on such share on the applicable redemption date.  The redemption price per share of Series B Preferred Stock shall be equal to $0.58 (as adjusted for any stock dividend,

 

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stock split, combination of shares, reclassification or other similar event with respect to the Series B Preferred Stock) (the “ Series B Redemption Price ”) plus all dividends accrued and/or declared but unpaid on such share on the applicable redemption date.

 

(b)                                  If at any time following the redemption in full of all shares of Series C Preferred Stock and Series B Preferred Stock subject to a redemption request, the Corporation receives the written election of holders of at least sixty percent (60%) of the outstanding shares of Series A Preferred Stock (the “ Series A Redemption Election ”), the Corporation shall be required to redeem all, but not less than all, of the outstanding shares of Series A Preferred Stock in three annual installments, upon the terms set forth in this Section 6 of this Article FOURTH.  The first installment of such redemption shall occur on a date (the “ First Series A Redemption Date ”) specified in the Series A Redemption Election, which shall be not less than ninety (90) days after the date of the Series A Redemption Election, and the second and third installments of such redemption shall occur on the first and second anniversaries, respectively, of the First Series A Redemption Date.  The Corporation shall redeem one-third of the outstanding shares of Series A Preferred Stock held by each holder on the First Series A Redemption Date, one-half of the remaining outstanding shares of Series A Preferred Stock then held by each holder on the first anniversary thereof and all of the remaining shares on the second anniversary thereof.  On each such redemption date, the holders shall surrender the certificate or certificates for the shares to be redeemed duly endorsed for transfer or with duly executed stock transfer powers sufficient to permit transfer attached at the offices of the Corporation or of any transfer agent for the Series A Preferred Stock, or the holder shall notify the Corporation or any transfer agent that such certificates have been lost, stolen, or destroyed and execute a Certificate of Loss.  The Corporation shall, as soon as practicable thereafter, issue and deliver to each holder a certificate or certificates for the balance of the shares not being redeemed.  The redemption price per share of Series A Preferred Stock shall be equal to $0.65 (as adjusted for any stock dividend, stock split, combination of shares, reclassification or other similar event with respect to the Series A Preferred Stock) (the “ Series A Redemption Price ”) plus all dividends accrued and/or declared but unpaid on such share on the applicable redemption date.

 

(c)                                   Notice of any redemption pursuant to this Section 6 of this Article FOURTH shall be sent by first class mail, postage prepaid, to each holder of record of the Series C Preferred Stock, Series B Preferred Stock or Series A Preferred Stock, as applicable, not less than thirty days nor more than sixty days prior to the First Series C/Series B Redemption Date or First Series A Redemption Date, as applicable, at the address of such holder as it appears on the books of the Corporation.  Such notice shall set forth (i) the First Series C/Series B Redemption Date or First Series A Redemption Date, as applicable, the dates of the second and third installments of such redemption, and the place of redemption; and (ii) the number of shares to be redeemed on each date of redemption and the redemption price calculated in accordance with Section 6(a) and Section 6(b) of this Article FOURTH, on each such date.  The Corporation shall be obligated to redeem the Series C Preferred Stock, Series B Preferred Stock or Series A Preferred Stock, as applicable, on the dates and in the amounts set forth in the notice; provided, however, that any holder of Series C Preferred Stock, Series B Preferred Stock or Series A Preferred Stock, as applicable, may convert any or all of the shares owned by such holder into Common Stock in accordance with Section 4 of this Article FOURTH at any time prior to the date of redemption of such shares.  The Corporation, if advised before the close of business on the relevant redemption date by written notice from any holder of record of Series C Preferred

 

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Stock, Series B Preferred Stock or Series A Preferred Stock to be redeemed, as applicable, shall credit against the number of shares of Series C Preferred Stock, Series B Preferred Stock or Series A Preferred Stock required to be redeemed from such holder, as applicable, and shall not redeem, the number of shares of Series C Preferred Stock, Series B Preferred Stock or Series A Preferred Stock, as applicable, which shall have been converted by such holder on or before such date and which shall not previously have been credited against any redemption.

 

(d)                                  If, on or before a redemption date, the funds necessary for such redemption shall have been set aside by the Corporation and deposited with a bank or trust company, in trust for the pro rata benefit of the holders of the Series C Preferred Stock, Series B Preferred Stock or Series A Preferred Stock that has been called for redemption, then, notwithstanding that any certificates for shares that have been called for redemption shall not have been surrendered for cancellation, the shares represented thereby shall no longer be deemed outstanding from and after such redemption date, and all rights of holders of such shares so called for redemption shall forthwith, after such redemption date, cease and terminate with respect to such shares, excepting only the right to receive the redemption funds therefor to which they are entitled.  Any interest accrued on funds so deposited and unclaimed by stockholders entitled thereto shall be paid to such stockholders at the time their respective shares are redeemed or to the Corporation at the time unclaimed amounts are paid to it.  In case the holders of shares of Series C Preferred Stock, Series B Preferred Stock or Series A Preferred Stock, as applicable, which shall have been called for redemption shall not, within one year after the final redemption date, claim the amounts so deposited with respect to the redemption thereof, any such bank or trust company shall, upon demand, pay over to the Corporation such unclaimed amounts and thereupon such bank or trust company shall be relieved of all responsibility in respect thereof to such holder and such holder shall look only to the Corporation for the payment thereof.  Any funds so deposited with a bank or trust company which shall not be required for such redemption by reason of the exercise subsequent to the date of such deposit of the right of conversion of any shares or otherwise shall be returned to the Corporation forthwith.

 

(e)                                   If the funds of the Corporation legally available for redemption of shares of Series C Preferred Stock, Series B Preferred Stock or Series A Preferred Stock, as applicable, on a redemption date are insufficient to redeem the total number of shares of Series C Preferred Stock, Series B Preferred Stock or Series A Preferred Stock submitted for redemption, those funds which are legally available will be used to redeem the maximum possible number of whole shares among the holders of such shares, based ratably on the aggregate Series C Preferred Stock, Series B Redemption Price or Series A Redemption Price, as applicable which each such holder would be entitled to redeem on such redemption date.  The shares of Series C Preferred Stock, Series B Preferred Stock or Series A Preferred Stock, as applicable, not redeemed shall remain outstanding and entitled to all rights and preferences provided herein.  At any time thereafter when additional funds of the Corporation are legally available for the redemption of such shares of Series C Preferred Stock, Series B Preferred Stock or Series A Preferred Stock, as applicable, such funds will be used, at the end of the next succeeding fiscal quarter, to redeem the balance of such shares, or such portion thereof for which funds are then legally available.

 

(f)                                    In the event that funds are unavailable on the redemption date for any reason, then all unredeemed shares shall remain outstanding and entitled to all rights and preferences provided herein, and the Corporation shall pay interest on the Series C Redemption

 

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Price, Series B Redemption Price or Series A Redemption Price applicable to such unredeemed shares at the rate of eight percent (8%) per annum, with such interest to accrue daily in arrears; provided , however , that in no event shall such interest exceed the maximum permitted under applicable law (the “ Maximum Permitted Rate ”).  In the event that fulfillment of any provision hereof results in such rate of interest being in excess of the Maximum Permitted Rate, the amount of interest required to be paid hereunder shall automatically be reduced to eliminate such excess; provided , however , that any subsequent increase in the Maximum Permitted Rate shall be retroactively effective to the applicable redemption date to the extent permitted by law.  All interest accrued in accordance with this Section 6 shall be compounded annually and shall be due and payable upon redemption of shares in accordance with this Section 6.

 

Section 7.   No Reissuance of Preferred Stock .  No shares of Preferred Stock acquired by the Corporation by reason of redemption, purchase, conversion or otherwise shall be reissued, and all such shares shall be canceled, retired and eliminated from the shares which the Corporation shall be authorized to issue.

 

Section 8.   Notices .  All notices required or permitted to be sent pursuant to this Article FOURTH shall be deemed sufficient if contained in a written instrument and delivered in person or duly sent by first-class mail postage prepaid (other than in the case of notices to or from any non-U.S. resident) or by fax or any recognized express international courier service, addressed to the intended recipient at the recipient’s address as it appears on the books of the Corporation.

 

Section 9.   Waiver of Certain Provisions .  The observance of any provision of this Certificate of Incorporation that affects the Series A Preferred Stock hereof may be waived by the affirmative vote of the holders of at least sixty percent (60%) of the outstanding shares of the Series A Preferred Stock.  The observance of any provision of this Certificate of Incorporation that affects the Series B Preferred Stock hereof may be waived by the affirmative vote of the holders of at least sixty percent (60%) of the outstanding shares of the Series B Preferred Stock. The observance of any provision of this Certificate of Incorporation that affects the Series C Preferred Stock hereof may be waived by the affirmative vote of the holders of at least sixty percent (60%) of the outstanding shares of the Series C Preferred Stock.

 

FIFTH :  In furtherance of and not in limitation of powers conferred by statute, it is further provided that:

 

(a)            Subject to the limitations and exceptions, if any, contained in the By-Laws of the Corporation and the requirements of Section 3(c) of Article FOURTH hereof, the By-Laws may be adopted, amended or repealed by the Board of Directors of the Corporation with, and only with, the approval of a majority of the directors then in office;

 

(b)            Elections of directors need not be by written ballot unless, and only to the extent, otherwise provided in the By-Laws;

 

(c)            Subject to any applicable requirements of law, the books of the Corporation may be kept outside the State of Delaware at such locations as may be designated by the Board of Directors or in the By-Laws of the Corporation; and

 

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(d)            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 or written consent of a majority of all outstanding shares of voting stock of the Corporation, voting together as a single class on an as-converted basis, irrespective of the provisions of Section 242(b)(2) of the Delaware General Corporate Law.

 

SIXTH :  The Corporation shall indemnify each person who at any time is, or shall have been, a director or officer of the Corporation and was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement incurred in connection with any such action, suit or proceeding, to the maximum extent permitted by the General Corporation Law of the State of Delaware, as the same exists or may hereafter be amended.  In furtherance of and not in limitation of the foregoing, the Corporation shall advance expenses, including attorneys’ fees, incurred by an officer or director of the Corporation in defending any civil, criminal, administrative or investigative action, suit or proceeding in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such advances if it shall be ultimately determined that he is not entitled to be indemnified by the Corporation.  The foregoing right of indemnification shall in no way be exclusive of any other rights of indemnification to which any such director or officer may be entitled, under any By-Law, agreement, vote of directors or stockholders or otherwise.  No amendment to or repeal of the provisions of this Article SIXTH shall deprive a director or officer of the benefit hereof with respect to any act or failure to act occurring prior to such amendment or repeal.

 

SEVENTH :  No director of the Corporation shall be personally liable to the Corporation or to any of its stockholders for monetary damages arising out of such director’s breach of his fiduciary duty as a director of the Corporation, except to the extent that the elimination or limitation of such liability is not permitted by the General Corporation Law of the State of Delaware, as the same exists or may hereafter be amended.  No amendment to or repeal of the provisions of this Article SEVENTH shall deprive any director of the Corporation of the benefit hereof with respect to any act or failure to act of such director occurring prior to such amendment or repeal.

 

EIGHTH :  To the maximum extent permitted from time to time under the laws of the State of Delaware, the Corporation renounces any interest or expectancy of the Corporation in, or in being offered an opportunity to participate in, business opportunities that are from time to time are being presented to its officers, directors or stockholders, other than (i) those officers, directors or stockholders who are employees of the Corporation and (ii) those opportunities demonstrated by the Corporation to have been presented to such officers, directors or stockholders expressly as a result of their activities as a director, officer or stockholder of the Corporation.  No amendment or repeal of this provision shall apply to or have any effect on the liability or alleged liability of any officer, director or stockholder of the Corporation for or with respect to any opportunities which such officer, director or stockholder becomes aware of prior to such amendment or repeal.  This Article EIGHTH, shall terminate and no longer be applicable

 

34



 

upon the closing of a firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended.

 

NINTH :  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.”

 

[Signature Page Follows]

 

35



 

IN WITNESS WHEREOF, the Corporation has caused this Fourth Amended and Restated Certificate of Incorporation to be signed by William Clark, its Chief Executive Officer, this 27th day of September, 2012.

 

 

 

GENOCEA BIOSCIENCES, INC.

 

 

 

 

 

 

 

 

By:

/s/ William Clark

 

 

 

Name:

William Clark

 

 

 

Title:

Chief Executive Officer

 



 

EXHIBIT B

 

GENOCEA BIOSCIENCES, INC.

 

AMENDMENT NO. 1 TO

 

THIRD AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

THIS AMENDMENT NO. 1 ( the “ Amendment ”) is made as of [                      ], 2013, by and among GENOCEA BIOSCIENCES, INC. , a Delaware corporation (the “ Company ”), ARES CAPITAL CORPORATION (“ Ares ”) and the Investors set forth on the signature pages hereto and to amend that certain Third Amended and Restated Registration Rights Agreement, dated as of September 28, 2012 (the “ Registration Agreement ”) by and among the Company and the Investors.  Capitalized terms used herein but not otherwise defined shall have the meanings given to such terms in the Registration Agreement.

 

The Company and the Investors are parties to the Registration Agreement.  In connection with a credit facility with Ares, (the “ Financing ”), the Company will issue a warrant to Ares (the “ Warrant ”) to acquire shares of the Company’s Series C Convertible Preferred Stock, par value $0.001 per share (the “ Series C Preferred Stock ”).

 

As a condition to the Financing, the Company has agreed to grant Ares certain registration rights with respect to the shares of the Company’s Common Stock issuable upon conversion of the Series C Preferred Stock, and the Investors desire to amend the Registration Agreement to include Ares as a party to the Registration Agreement with respect to certain provisions thereunder.

 

The Registration Agreement may be amended only by the written agreement of the Company and the Holders of at least sixty-six percent (66%) of all the Registrable Shares (voting on an as converted to Common Stock basis) then in voting power; and

 

The Investors listed on the signature pages hereto hold at least sixty-six percent (66%) of all the Registrable Shares (voting on an as converted to Common Stock basis);

 

NOW, THEREFORE , in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.                                       The definition of “Registrable Shares” set forth in Section 1(h) of the Registration Agreement shall be amended in its entirety as set forth below:

 

“Registrable Shares” means (1) the Common Stock issuable upon conversion of the Preferred Stock held by an Investor, (2) any Common Stock purchased by an Investor (or its permitted transferees) pursuant to Section 3 of the Investor Rights Agreement of even date herewith by and among the Corporation and the Investors (or Common Stock issuable with respect to other securities so purchased), (3) solely for purposes of Sections 3, 5, 7, 8, 9, 10, 12, 15, 16, 17, 18, 19, 20 and 22, the Common Stock issuable upon conversion of (A) the Preferred Stock held by Lighthouse Capital Partners VI, L. P. (or its permitted transferees) and (B) the Preferred Stock held by Ares Capital Corporation (or its permitted transferees) and (4) any Common Stock of the Corporation issued as a dividend or other distribution with respect to, or in exchange or in replacement of, such Preferred Stock or Common Stock.  Notwithstanding the foregoing, Disqualified Shares shall not be included in the definition of Registrable Shares.”

 

2.                                       The definitions of “Holder” and “Investor” shall be amended to include Ares Capital Corporation for purposes of Sections 3, 5, 7, 8, 9, 10, 12, 15, 16, 17, 18, 19, 20 and 22 of the Agreement such that Ares Capital Corporation shall be a party to the Agreement with respect to such sections and this Amendment.

 

3.                                   All notices and other communications under the Registration Agreement shall be made to Ares at the address specified below and thereafter at such other address, notice of which is given in accordance with Section 21 of the Registration Agreement:

 

Ares Capital Corporation

 



 

One North Wacker Drive, 48 th  Floor

Chicago, IL  60606

Attention:  Legal Department

Tel. 312.252.7500

Fax 312.252.7501

 

4.                                       This Amendment may be executed in any number of counterparts, each such counterpart shall be deemed to be an original instrument, and all such counterparts together shall constitute but one agreement. Any such counterpart may contain one or more signature pages. This Amendment may be executed by facsimile signature pages.

 

5.                                       The Registration Agreement as modified herein shall remain in full force and effect as so modified.

 



 

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

 

 

GENOCEA BIOSCIENCES, INC.

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

 

 

Agreed and Accepted:

 

 

 

ARES CAPITAL CORPORATION

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 



 

INVESTOR:

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 



 

EXHIBIT C

 

GENOCEA BIOSCIENCES, INC.

 

AMENDMENT NO. 1 TO THE

SECOND AMENDED AND RESTATED VOTING AGREEMENT

 

THIS AMENDMENT NO. 1 (the “ Amendment ”) is made as of [                      ], 2013, by and among GENOCEA BIOSCIENCES, INC. , a Delaware corporation (the “ Company ”), ARES CAPITAL CORPORATION (“ Ares ”) and the Investors set forth on the signature pages hereto and it amends that certain Second Amended and Restated Voting Agreement, dated as of September 28, 2012 (the “ Voting Agreement ”) by and among the Company and the Investors.  Capitalized terms used herein but not otherwise defined shall have the meanings given to such terms in the Voting Agreement.

 

The Company and the Investors are parties to the Voting Agreement.  In connection with a credit facility with Ares (the “ Financing ”), the Company will issue a warrant to Ares (the “ Warrant ”) to acquire shares of the Company’s Series C Convertible Preferred Stock, par value $0.001 per share (the “ Series C Preferred Stock ”);

 

In connection with the Financing, Ares has agreed to be bound by certain obligations with respect to the shares of Series C Preferred Stock issued upon exercise of the Warrant and the Company’s Common Stock issuable upon conversion of the Series C Preferred Stock, and the Investors desire to amend the Voting Agreement to include Ares with respect to certain provisions thereunder;

 

The Voting Agreement may be amended only by the written agreement of the Company and the Holders of at least sixty-six percent (66%) in voting power of the then outstanding Preferred Stock and Common Stock issued upon conversion of shares of Preferred Stock other than Disqualified Shares; and

 

The Investors listed on the signature pages hereto hold at least sixty-six percent (66%) in voting power of the then outstanding Preferred Stock and Common Stock issued upon conversion of shares of Preferred Stock other than Disqualified Shares;

 

NOW, THEREFORE , in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.                                       A new sentence shall be added to the end of Section 16 and shall read in its entirety as follows:

 

“Effective upon Ares Capital Corporation’s exercise of its right to purchase shares of Series C Preferred Stock under that certain Preferred Stock Purchase Warrant dated [                      ], for purposes of Sections 1, 3, 4, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 16, Ares Capital Corporation shall be deemed to be an “Investor”, a “Stockholder” and a party to this Agreement.”

 

2.                                       All notices and other communications under the Voting Agreement shall be made to Ares at the address specified below and thereafter at such other address, notice of which is given in accordance with Section 5 of the Voting Agreement:

 

Ares Capital Corporation

One North Wacker Drive, 48 th  Floor

Chicago, IL  60606

Attention:  Legal Department

Tel. 312.252.7500

Fax 312.252.7501

 



 

3.                                       This Amendment may be executed in any number of counterparts, each such counterpart shall be deemed to be an original instrument, and all such counterparts together shall constitute but one agreement. Any such counterpart may contain one or more signature pages. This Amendment may be executed by facsimile signature pages.

 

4.                                       The Voting Agreement as modified herein shall remain in full force and effect as so modified.

 



 

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

 

 

GENOCEA BIOSCIENCES, INC.

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

 

 

 

Agreed and Accepted:

 

 

 

ARES CAPITAL CORPORATION

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 



 

INVESTOR:

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 




Exhibit 4.5

 

FOURTH AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

 

This Fourth Amended and Restated Registration Rights Agreement (this “ Agreement ”) is entered into as of October 21, 2013, by and among Genocea Biosciences, Inc., a Delaware corporation (the “ Corporation ”), and the persons and entities listed on Exhibit A hereto (the “ Investors ”).

 

WHEREAS, the Corporation and the Investors are parties to that certain Third Amended and Restated Registration Rights Agreement dated as of September 28, 2012 (the “ Prior Agreement ”).

 

WHEREAS, the Corporation and the Investors desire to amend and restate the Prior Agreement on the terms set forth herein in order to grant to the Investors the registration rights set forth herein.

 

WHEREAS, in accordance with Section 22(b) of the Prior Agreement, this Agreement has been executed by the Corporation and the holders of at least sixty-six percent (66%) in voting power of the then outstanding Registrable Shares (as defined in the Prior Agreement).

 

NOW, THEREFORE, in consideration of the premises and the mutual agreements hereinafter set forth, the parties hereby agree to amend and restate the Prior Agreement in its entirety as follows:

 

SECTION 1.                             Definitions .  As used in this Agreement, the following terms shall have the following meanings:

 

(a)                                  The term “ 1934 Act ” means the Securities Exchange Act of 1934, as amended.

 

(b)                                  The “ Affiliate ” of any Holder (or any transferee of any Holder) means (i) any general or limited partner, retired partner or affiliated fund of any Holder (or transferee) that is a partnership, (ii) any member or former member of any Holder that is a limited liability company, (iii) any family member or trust for the benefit of any Holder that is an individual, or (iv) any person or entity that, directly or indirectly, through one or more intermediaries, controls, or is controlled by, or is under common control with, such Holder or transferee, including, without limitation, any venture capital fund now or hereafter existing of which the Holder or transferee is a partner or member which is controlled by or under common control with one or more general partners of such Holder or transferee or shares the same management company with such Holder or transferee.

 

(c)                                   The term “ Common Stock ” means the Corporation’s Common Stock, $.001 par value per share.

 

(d)                                  The term “ Disqualified Shares ” means shares of Common Stock issued upon conversion of Preferred Stock (i) pursuant to ARTICLE FOURTH, Section 2(a) of the Certificate of Incorporation of the Corporation (the “ Certificate of Incorporation ”) within a sixty (60) day period prior to the closing of a transaction pursuant to which such shares would otherwise have been converted pursuant to ARTICLE FOURTH, Section 2(e)(vii) of the

 



 

Certificate of Incorporation; or (ii) pursuant to ARTICLE FOURTH, Section 2(e)(vii) of the Certificate of Incorporation.

 

(e)                                   The term “ Holder ” means any holder of Registrable Shares, which for the avoidance of doubt, shall include Lighthouse Capital VI, L.P. (“ Lighthouse ”) for purposes of Sections 3, 5, 7, 8, 9, 10, 12, 15, 16, 17, 18, 19, 20 and 22 of this Agreement from and after such time as Lighthouse has exercised its right to purchase shares of Series B Preferred Stock under that certain Preferred Stock Warrant dated October 25, 2011.

 

(f)                                    The term “ Preferred Stock ” shall mean the Series C Preferred Stock, Series B Preferred Stock, Series A Convertible Preferred Stock and the Seed Preferred Stock.

 

(g)                                   The terms “ register ,” “ registered ,” and “ registration ” refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act and the declaration or ordering of effectiveness of such registration statement.

 

(h)                                  The term “ Registrable Shares ” means (1) the Common Stock issuable upon conversion of the Preferred Stock held by an Investor, (2) any Common Stock purchased by an Investor (or its permitted transferees) pursuant to Section 3 of the Investor Rights Agreement of even date herewith by and among the Corporation and the Investors (or Common Stock issuable with respect to other securities so purchased), (3) solely for purposes of Sections 3, 5, 7, 8, 9, 10, 12, 15, 16, 17, 18, 19, 20 and 22, the Common Stock issuable upon conversion of (A) the Preferred Stock held by Lighthouse Capital Partners VI, L. P. (or its permitted transferees) and (B) the Preferred Stock held by Ares Capital Corporation (or its permitted transferees) and (4) any Common Stock of the Corporation issued as a dividend or other distribution with respect to, or in exchange or in replacement of, such Preferred Stock or Common Stock.  Notwithstanding the foregoing, Disqualified Shares shall not be included in the definition of Registrable Shares. As to any particular Registrable Shares, such shares shall cease to be Registrable Shares when (i) a registration statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement, (ii) all securities of the Corporation held by the Holder thereof may be distributed without volume limitation or other restrictions on transfer under Rule 144 (including without application of paragraphs (c), (e) (f) and (h) of Rule 144) or (iii) such securities shall have ceased to be outstanding.

 

In addition, for purposes of all calculations and notices under this Agreement, and all other provisions of this Agreement where the context permits, a holder of Preferred Stock shall be deemed the Holder of the Registrable Shares issuable upon conversion thereof, and such Preferred Stock shall be deemed outstanding Registrable Shares hereunder.  Notwithstanding the foregoing, nothing in this Agreement shall require the Corporation actually to register any shares of Preferred Stock.

 

(i)                                      The term “ Rule 144 ” means Rule 144 promulgated under the Securities Act.

 

(j)                                     The term “ SEC ” means the Securities and Exchange Commission.

 

(k)                                  The term “ Securities Act ” means the Securities Act of 1933, as amended.

 

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(l)                                      The term “ Seed Preferred Stock ” shall mean the Corporation’s Seed Convertible Preferred Stock, par value $.001 per share.

 

(m)                              The term “ Series A Preferred Stock ” shall mean the Corporation’s Series A Convertible Preferred Stock, par value $.001 per share.

 

(n)                                  The term “ Series B Preferred Stock ” shall mean the Corporation’s Series B Convertible Preferred Stock, par value $.001 per share.

 

(o)                                  The term “ Series C Preferred Stock ” shall mean the Corporation’s Series C Convertible Preferred Stock, par value $.001 per Share.

 

SECTION 2.                             Request for Registration .  If at any time after the earlier to occur of (i) the third anniversary of the date of the Prior Agreement and (ii) the date 180 days after the closing of the first public offering of the Corporation’s securities, the Corporation shall receive a written request (specifying that it is being made pursuant to this Section 2) that the Corporation file a registration statement under the Securities Act, or a similar document pursuant to any other statute then in effect corresponding to the Securities Act, such request received from one or more Holders that hold, in the aggregate, more than 50% of the then outstanding shares of Registrable Shares, requesting a registration with a reasonably anticipated aggregate price to the public of at least $5,000,000, then the Corporation shall promptly notify all other Holders of such request and shall use its best efforts to cause all Registrable Shares that Holders have requested be registered to be registered under the Securities Act on Form S-1 or any other available form the use of which is approved by the Holders of a majority of the Registrable Shares that are to be included in such registration.

 

Notwithstanding the foregoing, (A) the Corporation shall not be obligated to effect a registration pursuant to this Section 2 during the period starting with the date ninety (90) days prior to the Corporation’s estimated date of filing of, and ending on a date one hundred eighty (180) days following the effective date of, a registration statement pertaining to an underwritten public offering of securities for the account of the Corporation, provided that the Corporation notifies the initiating Holders in writing of such registration and underwriting within thirty (30) days following their request and is actively employing in good faith its best efforts to cause such registration statement to become effective and that the Corporation’s estimate of the date of filing such registration statement is made in good faith; (B) the Corporation shall not be obligated to effect more than two registrations at the request of the Holders of Preferred Stock pursuant to this Section 2, provided , that a registration will not be counted as “effected” for purposes of this Section 2 until such time as the applicable registration statement has been declared effective by the SEC, unless the Holders initiating such registration withdraw their request for such registration, elect not to pay the registration expenses therefor, and forfeit their right to one registration statement pursuant to this Section 2, in which case such withdrawn registration statement shall be counted as “effected” for purposes of this Section 2; provided further , however, that if at the time of such withdrawal, the Holders have learned of a material adverse change in the condition, business, or prospects of the Corporation 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 such withdrawn registration statement shall not be counted as “effected” for purposes of this Section 2; and (C) if the Corporation shall furnish to

 

3



 

the Holders a certificate signed by the President of the Corporation stating that in the good faith judgment of the Board of Directors it would be seriously detrimental to the Corporation or its stockholders for a registration statement to be filed in the near future, then the Corporation’s obligation to use its best efforts to file a registration statement shall be deferred for a period not to exceed ninety (90) days; provided , however , that the Corporation shall not be permitted to so defer its obligation more than once in any twelve (12) month period.

 

SECTION 3.                             Corporation Registration .  If at any time the Corporation proposes to register any of its Common Stock under the Securities Act in connection with the public offering of such securities for its own account or for the accounts of stockholders other than Holders, solely for cash on a form that would also permit the registration of the Registrable Shares, the Corporation shall, each such time, promptly give each Holder written notice of such determination.  Upon the written request of any Holder given within twenty (20) days after giving of any such notice by the Corporation, the Corporation shall, subject to the limitations set forth in Section 8, use its best efforts to cause to be registered under the Securities Act all of the Registrable Shares that each such Holder has requested be registered; provided , that the Corporation shall have the right to postpone or withdraw any registration statement relating to an offering in which the Holders are eligible to participate under this Section 3 without any liability or obligation to the Holders under this Section 3.

 

SECTION 4.                             Obligations of the Corporation .  Whenever required under Section 2, Section 3 or Section 11 to use its best efforts to effect the registration of any Registrable Shares, the Corporation shall, as expeditiously as reasonably possible:

 

(a)                                  Prepare and file with the SEC a registration statement with respect to such Registrable Shares and use its best efforts to cause such registration statement to become effective, and, upon the request of the Holders of a majority of the Registrable Shares registered thereunder, keep such registration statement effective for a period of up to one hundred eighty (180) days or, if earlier, until the distribution contemplated in the registration statement has been completed; provided , however , that (i) such 180-day period shall be extended for a period of time equal to the period the Holder refrains from selling any securities included in such registration at the request of an underwriter of Common Stock (or other securities) of the Corporation; and (ii) in the case of any registration of Registrable Shares on Form S-3 which are intended to be offered on a continuous or delayed basis, subject to compliance with applicable SEC rules, such 180-day period shall be extended for up to ninety (90) days, if necessary, to keep the registration statement effective until all such Registrable Shares 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 provisions of the Securities Act with respect to 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, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of such Registrable Shares owned by them.

 

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(d)                                  Use its best 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 appropriate for the distribution of the securities covered by the registration statement, provided that the Corporation shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions, and further provided that (anything in this Agreement to the contrary notwithstanding with respect to the bearing of expenses) if any jurisdiction in which the securities shall be qualified shall require that expenses incurred in connection with the qualification of the securities in that jurisdiction be borne by selling stockholders, then such expenses shall be payable by selling stockholders pro rata, to the extent required by such jurisdiction.

 

(e)                                   Provide a transfer agent for the Common Stock no later than the effective date of the first registration of any Registrable Shares.

 

(f)                                    Otherwise use its best efforts to comply with all applicable rules and regulations of the SEC.

 

(g)                                   Use its best efforts either (i) to cause all such Registrable Shares to be listed on a national securities exchange (if such securities are not already so listed) and on each additional national securities exchange on which similar securities issued by the Corporation are then listed, if the listing of such securities is then permitted under the rules of such exchange, or (ii) to secure designation of all such Registrable Shares as a Nasdaq “national market system security” within the meaning of Rule 11Aa2-1 of the SEC or, failing that, to secure listing on Nasdaq for such Registrable Shares and, without limiting the generality of the foregoing, to arrange for at least two (2) market makers to register as such with respect to Registrable Shares with the Financial Industry Regulatory Authority.

 

(h)                                  Enter into such customary agreements (including an underwriting agreement in customary form) and take such other actions as the selling Holders of Registrable Shares shall reasonably request in order to expedite or facilitate the disposition of such Registrable Shares.

 

(i)                                      Make available for inspection by any selling Holder of Registrable Shares, by any underwriter participating in any disposition to be effected pursuant to such registration statement and by any attorney, accountant or other agent retained by any such selling Holder or any such underwriter, all pertinent financial and other records and pertinent corporate documents and properties of the Corporation, and cause all of the Corporation’s officers, directors and employees to supply all information reasonably requested by any such selling Holder, underwriter, attorney, accountant or agent in connection with such registration statement.

 

(j)                                     Use reasonable efforts to prevent the issuance of any stop order suspending the effectiveness of such registration statement or of any order preventing or suspending the use of any preliminary prospectus and, if any such order is issued, to obtain the lifting thereof at the earliest reasonable time.

 

5



 

(k)                                  Make such representations and warranties to the selling Holders of Registrable Shares and the underwriters as are customarily made by issuers to selling stockholders and underwriters, as the case may be, in primary underwritten public offerings.

 

SECTION 5.                             Furnish Information .  It shall be a condition precedent to the obligations of the Corporation to take any action pursuant to this Agreement with respect to the registration of any Holder’s Registrable Shares that such Holder shall take such actions and furnish to the Corporation such information regarding itself, the Registrable Shares held by it, and the intended method of disposition of such securities, as the Corporation shall reasonably request and as shall be required in connection with any registration, qualification or compliance referred to in this Agreement, including, without limitation (i) in connection with an underwritten offering, enter into an appropriate underwriting agreement containing terms and provisions then customary in agreements of that nature, (ii) enter into such custody agreements, powers of attorney and related documents at such time and on such terms and conditions as may then be customarily required in connection with such offering and (iii) distribute the Registrable Shares only in accordance with and in the manner of the distribution contemplated by the applicable registration statement and prospectus.  In addition, the Holders shall promptly notify the Corporation of any request by the Commission or any state securities commission or agency for additional information or for such registration statement or prospectus to be amended or supplemented.

 

SECTION 6.                             Expenses of Demand Registration .  All expenses incurred in connection with any registration pursuant to Section 2 or Section 11 (excluding underwriters’ discounts and commissions), including, without limitation, all registration and qualification fees, printers’ and accounting fees, fees and disbursements of counsel for the Corporation, and the reasonable fees and disbursement of one special counsel for the selling Holders collectively, shall be borne by the Corporation whether or not the registration statement to which such registration expenses relate becomes effective; provided , however , that the Corporation shall not be required to pay for any expenses of any registration proceeding begun pursuant to Section 2 if the registration request is subsequently withdrawn at the request of the Holders of a majority of the Registrable Shares to be registered (in which case all participating Holders shall bear such expenses pro rata based upon the number of Registrable Shares that were to be included in the withdrawn registration), unless the Holders of a majority of the Registrable Shares agree to forfeit their right to one demand registration pursuant to Section 2; provided further , however, that if at the time of such withdrawal, the Holders have learned of a material adverse change in the condition, business, or prospects of the Corporation 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 retain their rights pursuant to Section 2.

 

SECTION 7.                             Corporation Registration Expenses .  All expenses (excluding underwriters’ discounts and commissions) incurred in connection with any registration pursuant to Section 3, including, without limitation, any additional registration and qualification fees and any additional fees and disbursements of counsel to the Corporation that result from the inclusion of securities held by the selling Holders in such registration and the reasonable fees and disbursements, not to exceed $30,000, of one special counsel for the selling Holders collectively, shall be borne by the Corporation whether or not the registration statement to which such registration expenses relate becomes effective.

 

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SECTION 8.                             Underwriting Requirements .

 

(a)                                  In connection with any offering under Section 3 involving an underwriting of shares being issued by the Corporation, the Corporation shall not be required to include any Holder’s Registrable Shares in such underwriting unless such Holder accepts the terms of the underwriting as agreed upon between the Corporation and the underwriters selected by it, and then only in such quantity as will not, in the reasonable opinion of the underwriters, jeopardize the success of the offering by the Corporation.  If the total amount of securities that all Holders request to be included in an underwritten offering under Section 3 exceeds the amount of securities that the underwriters reasonably believe compatible with the success of the offering, the Corporation may exclude some or all of the Registrable Shares from such registration and underwriting, provided , however , that the Registrable Shares shall not be reduced below 30% of the total amount of securities offered in the registration unless the registration is for the initial public offering of Corporation securities.  The number of Registrable Shares of the Holders to be included in such underwriting and registration shall not be reduced unless all other securities (excluding those of the Corporation) are first entirely excluded from the underwriting and registration; provided, however, that the Holders of sixty-six percent (66%) of all Registrable Shares may consent to a reduction in the number of Registrable Shares to be included in the underwriting and registration.  If there is a reduction of the number of Registrable Shares pursuant to this Section 8(a), such reduction shall be made in accordance with Section 12 hereto.

 

(b)                                  With respect to any underwriting of shares to be registered under Section 2 or Section 11, the selling Holders who initiate the request for registration shall have the right to designate the managing underwriter or underwriters, subject to the consent of the Corporation which shall not be unreasonably withheld or delayed.  In connection with any underwritings of shares to be registered under Section 3, the Corporation shall have the right to designate the managing underwriter or underwriters.

 

SECTION 9.                             Delay of Registration .  No Holder shall have any right to take any action to restrain, enjoin, or otherwise delay any registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Agreement.

 

SECTION 10.                      Indemnification .  In the event any Registrable Shares are included in a registration statement under this Agreement:

 

(a)                                  To the extent permitted by law, the Corporation will indemnify and hold harmless each Holder requesting or joining in a registration, the partners, members, officers, directors and stockholders of such Holder, legal counsel and accountants for such Holder, any underwriter (as defined in the Securities Act) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the 1934 Act, against any losses, claims, damages or liabilities, joint or several, to which they may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based on (i) any untrue or alleged untrue statement of any material fact contained in such registration statement, including, without limitation, any prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the 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

 

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violation by the Corporation of any rule or regulation promulgated under the Securities Act applicable to the Corporation and relating to action or inaction required of the Corporation in connection with any such registration; and will promptly reimburse each such Holder, underwriter, controlling person or other aforementioned person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability, or action, provided , however , that the indemnity agreement contained in this Section 10(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Corporation (which consent shall not be unreasonably withheld or delayed) nor shall the Corporation be liable to any such Holder, underwriter, controlling person or other aforementioned person in any such case for any such loss, claim, damage, liability or action to the extent that it (A) arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in connection with such registration statement, preliminary prospectus, final prospectus, or amendments or supplements thereto, in reliance upon and in conformity with written information furnished to the Corporation expressly for use in connection with such registration by or on behalf of such Holder, underwriter, controlling person or other aforementioned person or (B) is caused by such Holder’s disposition of Registrable Shares during any period during which such Holder is obligated to discontinue any disposition of Registrable Shares under Section 20.

 

(b)                                  To the extent permitted by law, each Holder requesting or joining in a registration, severally and not jointly, will indemnify and hold harmless the Corporation, each of its directors, each of its officers who has signed the registration statement, each person, if any, who controls the Corporation within the meaning of the Securities Act, legal counsel and accountants for the Corporation and any underwriter (within the meaning of the Securities Act) for the Corporation against any losses, claims, damages or liabilities to which the Corporation or any such director, officer, controlling person, legal counsel, accountant or underwriter may become subject, under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon (i) any untrue statement or alleged untrue statement of any material fact contained in such registration statement, including any prospectus or final prospectus contained therein or any amendments or supplements thereto or (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information relating to and furnished to the Corporation by such Holder expressly for use in connection with such registration; and will promptly reimburse the Corporation or any such director, officer, controlling person, legal counsel, accountant or underwriter for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided , however , that the indemnity agreement contained in this Section 10(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of such Holder (which consent shall not be unreasonably withheld or delayed) and provided further that no Holder shall have any liability under this Section 10(b) in excess of the net proceeds actually received by such Holder in the relevant public offering, when aggregated with any amounts contributed by a Holder under Section 10(d).

 

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(c)                                   Promptly after receipt by an indemnified party under this Section 10 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 10, notify the indemnifying party in writing of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties.  The failure to notify an indemnifying party promptly of the commencement of any such action, if prejudicial to his ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 10 to the extent the indemnifying party is prejudiced by a delay of such notification, but the omission so to notify the indemnifying party will not relieve him of any liability that he may have to any indemnified party otherwise than under this Section 10.

 

(d)                                  If the indemnification provided for in this Section 10 is required by its terms but is for any reason held to be unavailable to or otherwise insufficient to hold harmless an indemnified party under Section 10(a) or Section 10(b) in respect of any losses, claims, damages, liabilities or expenses referred to herein, then each applicable indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of any losses, claims, damages, liabilities or expenses referred to herein in such proportion as is appropriate to reflect the relative fault of the Corporation and the selling Holders in connection with the statements or omissions described in such Section 10(a) or Section 10(b) which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations.  The relative fault of the Corporation and the selling Holders shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Corporation or the selling Holders and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.  The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in this Section 10, any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim.  The provisions set forth in Section 10(c) with respect to notice of commencement of any action shall apply if a claim for contribution is to be made under this Section 10(d); provided , however , that no additional notice shall be required with respect to any action for which notice has been given under subsection Section 10(c) for purposes of indemnification.  The Corporation and the selling Holders agree that it would not be just and equitable if contribution pursuant to this Section 10 were determined solely by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in this paragraph.  Notwithstanding the provisions of this Section 10(d), no Holder shall be required to contribute an amount in excess of the net proceeds actually received by such Holder in the relevant public offering, when aggregated with any amounts contributed by a Holder under Section 10(b).  No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.

 

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SECTION 11.                      Registrations on Form S-3 .

 

(a)                                  If (i) the Corporation shall receive a written request (specifying that it is being made pursuant to this Section 11) from one or more Holders that the Corporation file a registration statement on Form S-3 (or any successor form to Form S-3 regardless of its designation) for a public offering of Registrable Shares the reasonably anticipated aggregate price to the public of which would equal or exceed $3,000,000, and (ii) the Corporation is a registrant entitled to use Form S-3 (or any successor form to Form S-3) to register such shares, then the Corporation shall promptly notify all other Holders of such request and shall use its best efforts to cause all Registrable Shares that Holders have requested be registered to be registered on Form S-3 (or any successor form to Form S-3).

 

(b)                                  Notwithstanding the foregoing, (i) the Corporation shall not be obligated to effect a registration pursuant to this Section 11 during the period starting with the date ninety (90) days prior to the Corporation’s estimated date of filing of, and ending on a date one hundred eighty (180) days following the effective date of, a registration statement pertaining to an underwritten public offering of securities for the account of the Corporation, provided that the Corporation notifies the initiating Holders in writing of such registration and underwriting within thirty (30) days following their request and is actively employing in good faith its best efforts to cause such registration statement to become effective and that the Corporation’s estimate of the date of filing such registration statement is made in good faith; (ii) the Corporation shall not be obligated to effect more than two registrations pursuant to this Section 11 in any twelve (12) month period; and (iii) if the Corporation shall furnish to the Holders a certificate signed by the President of the Corporation stating that in the good faith judgment of the Board of Directors it would be seriously detrimental to the Corporation or its stockholders for a registration statement to be filed in the near future, then the Corporation’s obligation to use its best efforts to file a registration statement shall be deferred for a period not to exceed ninety (90) days; provided , however , that the Corporation shall not be permitted to so defer its obligation more than once in any twelve (12) month period.

 

(c)                                   The Holders’ rights to registration under this Section 11 are in addition to, and not in lieu of, their rights to registration under Section 2 and Section 3 of this Agreement.

 

SECTION 12.                      Priority .  With respect to any registration pursuant to Section 2, Section 3 or Section 11, the Corporation may include in such registration any Registrable Shares; provided, however , that if the managing underwriter advises the Corporation that marketing factors require a limitation on the number of shares to be underwritten, then the number of Registrable Shares, proposed to be included in such registration shall be included in the following order:

 

(a)                                  first, Registrable Shares issuable upon conversion of Series C Preferred Stock requested to be included in such registration (or, if necessary, each Holder’s pro rata share of such Registrable Shares based upon the total amount of such Registrable Shares requested to be registered);  and

 

(b)                                  second, all other Registrable Shares (or, if necessary, each Holder’s pro rata share of such Registrable Shares based upon the total amount of such Registrable Shares requested to be registered).

 

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SECTION 13.       Limitation on Corporation Offerings .  The Corporation shall not register securities for sale for its own account (or, except as permitted by Section 15, any securities other than Registrable Shares) in any registration requested pursuant to Section 2 or Section 11 unless permitted to do so by the written consent of the Holders of sixty-six percent (66%) of the Registrable Shares as to which registration has been requested and unless the inclusion of securities for the account of the Corporation would not require a reduction in the number of Registrable Shares to be included in such registration, as determined by the managing underwriter.

 

SECTION 14.       Reports Under Securities Exchange Act of 1934 .  With a view to making available to the Holders the benefits of Rule 144 and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Corporation to the public without registration, the Corporation agrees to use its best efforts to:

 

(a)           make and keep public information available, as those terms are understood and defined in Rule 144, at all times subsequent to ninety (90) days after the effective date of the first registration statement covering an underwritten public offering filed by the Corporation;

 

(b)           file with the SEC in a timely manner all reports and other documents, if any, required of the Corporation under the Securities Act and the 1934 Act; and

 

(c)           furnish to any Holder forthwith upon request a written statement by the Corporation that it has complied with the reporting requirements of Rule 144 (at any time after ninety (90) days after the effective date of said first registration statement filed by the Corporation), and of the Securities Act and the 1934 Act (at any time after it has become subject to such reporting requirements), a copy of the most recent annual or quarterly report of the Corporation, and such other reports and documents so filed by the Corporation as may be reasonably requested in availing any such Holder to take advantage of any rule or regulation of the SEC permitting the selling of any such securities without registration.

 

SECTION 15.       Limitations in Connection with Future Grants of Registration Rights .  Without the prior written consent of the Holders of at least sixty-six percent (66%) in voting power of all the outstanding Registrable Shares held by Investors, the Corporation shall not grant rights to any person or entity: (i) to cause the Corporation to register any of such person’s or entity’s securities of the Corporation; (ii) to include such person’s or entity’s securities of the Corporation in any registration statement filed under Section 2 or Section 11 hereof; (iii) to include such person’s or entity’s securities of the Corporation in any registration statement described in Section 3 hereof, unless, in the case of each of (i), (ii) and (iii), under the terms of such agreement, such person or entity may include such securities in any such registration only to the extent that the inclusion of his or its securities will not reduce the amount of Registrable Shares of the Holders which is included in such registration; or (iv) otherwise to cause the registration of such person’s or entity’s securities of the Corporation in any manner which are superior to or pari passu with the registration rights granted herein to the Holders.

 

SECTION 16.       Transfer of Registration Rights .  The registration rights and obligations of any Holder (and of any transferee of any Holder, or its transferees, of the rights under this Agreement in accordance with this Section 16) under this Agreement with respect to any

 

11



 

Registrable Shares may be transferred to any transferee who acquires at least 500,000 shares of Preferred Stock and Registrable Shares held by such Holder; provided , however , that the transfer of registration rights to any Affiliate of any Holder will not be subject to such requirement as to minimum shareholding; provided, further, that (a) such rights and obligations may not be transferred to any entity whose primary line of business is directly competitive with the primary line of business of the Corporation, as determined in good faith by the Board of Directors, (b) the Corporation shall be given written notice by the Holder at the time of any permitted transfer stating the name and address of the transferee and identifying the securities with respect to which the rights and obligations under this Agreement are being assigned and (c) the transferee shall execute an agreement to be bound by the terms of this Agreement.

 

SECTION 17:       Restrictions on Transfer .

 

(a)             The Preferred Stock and the Registrable Shares (collectively, “ Restricted Securities ”) shall not be sold, pledged, or otherwise transferred, and the Corporation 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 Shares held by such Holder to agree to take and hold such securities subject to the provisions and upon the conditions specified in this Agreement.

 

(b)             Each certificate or instrument representing (i) the Preferred Stock, (ii) the Registrable Shares, 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 17(c)) be stamped or otherwise imprinted with a legend substantially in the following form:

 

THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.

 

The Holders consent to the Corporation 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 17.

 

(c)             The holder of each certificate representing Restricted Securities, by acceptance thereof, agrees to comply in all respects with the provisions of this Section 17.  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, the Holder thereof shall give notice to the Corporation of such Holder’s intention to effect such sale, pledge, or transfer.  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 Corporation, 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 Corporation, addressed to the Corporation, 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

 

12



 

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 Corporation 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 Corporation.  The Corporation will not require such a 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; provided that each transferee agrees in writing to be subject to the terms of this Section 17.  Each certificate or instrument evidencing the Restricted Securities transferred as above provided shall bear, except if such transfer is made pursuant to SEC Rule 144, the appropriate restrictive legend set forth in Section 17(b), except that such certificate shall not bear such restrictive legend if, in the opinion of counsel for such Holder and the Corporation, such legend is not required in order to establish compliance with any provisions of the Securities Act.

 

SECTION 18.       Mergers, Etc .  The Corporation shall not, directly or indirectly, enter into any merger, consolidation or reorganization in which the Corporation shall not be the surviving corporation unless the proposed surviving corporation shall, prior to such merger, consolidation or reorganization, agree in writing to assume the obligations of the Corporation under this Agreement, and for that purpose references hereunder to “Registrable Shares” shall be deemed to be references to the securities which the Holders would be entitled to receive in exchange for Registrable Shares under any such merger, consolidation or reorganization; provided , however , that the provisions of this Agreement shall not apply in the event of any merger, consolidation or reorganization in which the Corporation is not the surviving corporation if the Holders of Registrable Shares are entitled to receive in exchange therefor (i) cash, or (ii) securities of the acquiring corporation which may be immediately sold to the public without registration under the Securities Act.

 

SECTION 19.       Stand-Off Agreement .  In connection with the initial public offering of the Corporation’s securities pursuant to a registration statement under the Securities Act, each Holder, if requested by the Corporation and the managing underwriter of such offering by the Corporation, shall agree, by executing and delivering such form of agreement as the Corporation and such underwriter shall reasonably request, not to sell publicly or otherwise transfer or dispose of any Registrable Shares, Disqualified Shares, or other securities of the Corporation held by such Holder prior to the effective date of such registration statement for a specified period of time immediately following the effective date of such registration statement, such period of time not to exceed one hundred eighty (180) days; provided that:

 

(a)           to the extent that the rules of the Financial Industry Regulatory Authority, Inc. relating to such extensions (or any successor rules thereto) remain in effect, such one-hundred eighty (180) day period may be extended on one (1) occasion by the managing underwriter to the extent necessary to prevent the managing underwriter(s) from violating FINRA Rule 2711(f)(4) or any successor provisions or amendments thereto; and

 

13



 

(b)           such agreement shall not apply to resales of the Corporation’s securities purchased by a Holder in a public market, and

 

(c)           all persons who hold shares of Common Stock, or securities convertible into or exchangeable or exercisable for shares of Common Stock, which in aggregate represent one percent (1%) or more of the shares of Common Stock then outstanding (which 1% shall include all securities convertible into or exchangeable or exercisable for shares of Common Stock, on an as converted, exchanged or exercised basis) (any such person, a “ 1% Stockholder ”), and all officers and directors of the Corporation, enter into similar agreements.

 

Any discretionary waiver or termination of the restrictions of such agreements (including this Agreement) by the Corporation or the managing underwriter (other than discretionary waivers or releases up to an amount of fifty thousand dollars ($50,000) due to financial hardship) shall apply to all persons subject to such agreements on a pro rata basis, based upon the number of Shares held by such person subject to such agreements.  The stand-off agreement provided for by this Section 19 is in addition to any other similar agreement that may exist between any Restricted Stockholder and the Corporation.

 

SECTION 20.       Future Events .  The Corporation will notify each Holder participating in a registration of the occurrence of any of the following events of which the Corporation is actually aware, and when so notified, each Holder will immediately discontinue any disposition of Registrable Shares until notified by the Corporation that such event is no longer applicable:

 

(a)           the issuance by the Commission or any state securities commission or agency of any stop order suspending the effectiveness of the registration statement or the initiation of any proceedings for that purpose (in which case the Corporation will make reasonable efforts to obtain the withdrawal of any such order or the cessation of any such proceedings); or

 

(b)           the existence of any fact which makes untrue any material statement made in the registration statement or prospectus or any document incorporated therein by reference or which requires the making of any changes in the registration statement or prospectus or any document incorporated therein by reference in order to make the statements therein not misleading (in which case the Corporation will make reasonable efforts to amend the applicable document to correct the deficiency).

 

SECTION 21.       Notices .  All notices, requests, consents and other communications hereunder (“ Notices ”) to any party shall be contained in a written instrument addressed to such party at the address set forth below or such other address as may hereafter be designated in writing by the addressee to the addressor listing all parties and shall be deemed given (a) when delivered in person or duly sent by fax showing confirmation of receipt, (b) three days after being duly sent by first class mail postage prepaid (other than in the case of Notices to or from any non-U.S. resident, which Notices must be sent in the manner specified in clause (a) or (c)), or (c) two days after being duly sent by recognized express international courier service:

 

if to the Corporation, to:

 

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Genocea Biosciences, Inc.

Cambridge Discovery Park

100 Acorn Park Drive, 5 th  Floor

Cambridge, MA 02140

Fax: (617) 876-8192

 

with a copy to:

 

Marc Rubenstein

Ropes & Gray LLP

Prudential Tower

800 Boylston Street

Boston, MA 02199-3600

Fax: (617) 951-7050

 

if to the Investors, to their respective addresses set forth on signature pages to this Agreement.

 

SECTION 22.       Miscellaneous .

 

(a)           This Agreement states the entire agreement of the parties concerning the subject matter hereof, and supersedes all prior agreements, written or oral, between or among them concerning such subject matter.

 

(b)           This Agreement may be amended, and compliance with any provision of this Agreement may be omitted or waived, only by the written agreement of the Corporation and the Holders of at least sixty-six percent (66%) of all the Registrable Shares (voting on an as converted to Common Stock basis) then in voting power; provided, however, that no amendment or waiver may treat one Investor or group of Investors more adversely than any other Investor or group of Investors without the consent of such Investor or the consent of the Holders of a majority in voting power of the then outstanding Registrable Shares held by the Investor or group of Investors adversely affected by such amendment or waiver.

 

(c)           This Agreement shall be governed by, and construed and enforced in accordance with, the substantive laws of the State of Delaware, without regard to its principles of conflicts of laws.

 

(d)           This Agreement may be executed in any number of counterparts, each such counterpart shall be deemed to be an original instrument, and all such counterparts together shall constitute but one agreement.  Any such counterpart may contain one or more signature pages.  This Agreement may be executed by facsimile signature pages.

 

SECTION 23.       Aggregation of Stock .  All shares of Preferred Stock and Common Stock  of the Corporation held or acquired by Affiliates of a Holder shall be aggregated for the purpose of determining the availability of any rights under this Agreement.

 

15



 

 [ Signature Pages Follow ]

 

16



 

IN WITNESS WHEREOF, the parties have executed this Fourth Amended and Restated Registration Rights Agreement as a contract under seal as of the date first written above.

 

 

THE CORPORATION:

 

 

GENOCEA BIOSCIENCES, INC.

 

 

 

 

 

By:

 /s/ William Clark

 

 

Name: William Clark

 

 

Title: Chief Executive Officer

 

[ Corporation Signature Page to Genocea Biosciences, Inc. Fourth Amended and Restated Registration Rights Agreement ]

 



 

By executing this page in the space provided as of the date first written above, the undersigned hereby agree (i) that each is an “ Investor ” as defined in the Fourth Amended and Restated Registration Rights Agreement dated as of the date first above written, by and among Genocea Biosciences, Inc. and the parties named therein (the “Fourth A&R Registration Rights Agreement”), (ii) that each is a party to the Registration Rights Agreement for all purposes and (iii) that each is bound by all terms and conditions of the Fourth A&R Registration Rights Agreement.

 

 

THE INVESTOR :

 

 

CVF, LLC

 

 

 

By:

/s/ Richard H. Robb

 

 

Name: Richard H. Robb

 

 

Title: Manager

 

 

[Exhibit A to the Genocea Biosciences, Inc. Fourth Amended and Restated Registration Rights Agreement ]

 



 

By executing this page in the space provided as of the date first written above, the undersigned hereby agree (i) that each is an “ Investor ” as defined in the Fourth Amended and Restated Registration Rights Agreement dated as of the date first above written, by and among Genocea Biosciences, Inc. and the parties named therein (the “Fourth A&R Registration Rights Agreement”), (ii) that each is a party to the Registration Rights Agreement for all purposes and (iii) that each is bound by all terms and conditions of the Fourth A&R Registration Rights Agreement.

 

 

THE INVESTOR :

 

 

BILL & MELINDA GATES FOUNDATION

 

 

 

By:

/s/ Julie Sunderland

 

 

Name: Julie Sunderland

 

 

Title: Director, Program-Related Investments

 

[ Investor Signature Page to the Genocea Biosciences, Inc. Second Amended and Restated Registration Rights Agreement ]

 



 

By executing this page in the space provided as of the date first written above, the undersigned hereby agree (i) that each is an “ Investor ” as defined in the Fourth Amended and Restated Registration Rights Agreement dated as of the date first above written, by and among Genocea Biosciences, Inc. and the parties named therein (the “Fourth A&R Registration Rights Agreement”), (ii) that each is a party to the Registration Rights Agreement for all purposes and (iii) that each is bound by all terms and conditions of the Fourth A&R Registration Rights Agreement.

 

 

THE INVESTOR :

 

 

JOHNSON & JOHNSON DEVELOPMENT CORPORATION

 

 

 

By:

/s/ K. Asish Xavier

 

 

Name: Asish K. Xavier

 

 

Title: VP, Venture Investments

 

[ Investor Signature Page to the Genocea Biosciences, Inc. Second Amended and Restated Registration Rights Agreement ]

 


 

By executing this page in the space provided as of the date first written above, the undersigned hereby agree (i) that each is an “ Investor ” as defined in the Fourth Amended and Restated Registration Rights Agreement dated as of the date first above written, by and among Genocea Biosciences, Inc. and the parties named therein (the “Fourth A&R Registration Rights Agreement”), (ii) that each is a party to the Registration Rights Agreement for all purposes and (iii) that each is bound by all terms and conditions of the Fourth A&R Registration Rights Agreement.

 

 

THE INVESTOR :

 

 

MP HEALTHCARE VENTURE MANAGEMENT, INC

 

 

 

By:

/s/ Jeffrey B. Moore

 

 

Name: Jeffrey B. Moore

 

 

Title: Vice President

 

[ Investor Signature Page to the Genocea Biosciences, Inc. Second Amended and Restated Registration Rights Agreement ]

 



 

By executing this page in the space provided as of the date first written above, the undersigned hereby agree (i) that each is an “ Investor ” as defined in the Fourth Amended and Restated Registration Rights Agreement dated as of the date first above written, by and among Genocea Biosciences, Inc. and the parties named therein (the “Fourth A&R Registration Rights Agreement”), (ii) that each is a party to the Registration Rights Agreement for all purposes and (iii) that each is bound by all terms and conditions of the Fourth A&R Registration Rights Agreement.

 

 

THE INVESTOR :

 

 

SKYLINE VENTURE PARTNERS V, L.P.

 

By: Skyline Venture Management V, LLC

 

Its: General Partner

 

 

 

By:

/s/ John G. Freund

 

 

Name: John G. Freund

 

 

Title: Managing Director

 

[ Investor Signature Page to the Genocea Biosciences, Inc. Second Amended and Restated Registration Rights Agreement ]

 



 

By executing this page in the space provided as of the date first written above, the undersigned hereby agree (i) that each is an “ Investor ” as defined in the Fourth Amended and Restated Registration Rights Agreement dated as of the date first above written, by and among Genocea Biosciences, Inc. and the parties named therein (the “Fourth A&R Registration Rights Agreement”), (ii) that each is a party to the Registration Rights Agreement for all purposes and (iii) that each is bound by all terms and conditions of the Fourth A&R Registration Rights Agreement.

 

 

THE INVESTOR :

 

 

S.R. ONE, LIMITED

 

 

 

By:

/s/ Brian Gallagher

 

 

Name: Brian Gallagher

 

 

Title: Vice President & Partner

 

[ Investor Signature Page to the Genocea Biosciences, Inc. Second Amended and Restated Registration Rights Agreement ]

 



 

By executing this page in the space provided as of the date first written above, the undersigned hereby agree (i) that each is an “ Investor ” as defined in the Fourth Amended and Restated Registration Rights Agreement dated as of the date first above written, by and among Genocea Biosciences, Inc. and the parties named therein (the “Fourth A&R Registration Rights Agreement”), (ii) that each is a party to the Registration Rights Agreement for all purposes and (iii) that each is bound by all terms and conditions of the Fourth A&R Registration Rights Agreement.

 

 

THE INVESTOR :

 

 

Auriga Ventures III FCPR

 

By: Auriga Partners SA, as Managing Company of Auriga Ventures III FCPR

 

 

 

By:

/s/ Jacques Chatain

 

 

 

 

 

 

Name:

Jacques Chatain

 

 

Title:

General Partner

 

[ Investor Signature Page to the Genocea Biosciences, Inc. Second Amended and Restated Registration Rights Agreement ]

 



 

By executing this page in the space provided as of the date first written above, the undersigned hereby agree (i) that each is an “ Investor ” as defined in the Fourth Amended and Restated Registration Rights Agreement dated as of the date first above written, by and among Genocea Biosciences, Inc. and the parties named therein (the “Fourth A&R Registration Rights Agreement”), (ii) that each is a party to the Registration Rights Agreement for all purposes and (iii) that each is bound by all terms and conditions of the Fourth A&R Registration Rights Agreement.

 

 

THE INVESTOR :

 

 

CYCAD GROUP, LLC

 

a California limited liability company

 

 

 

By:

K. Leonard Judson

 

 

Name:

K. Leonard Judson

 

 

Title:

Partner & Managing Director

 

[ Investor Signature Page to the Genocea Biosciences, Inc. Second Amended and Restated Registration Rights Agreement ]

 



 

By executing this page in the space provided as of the date first written above, the undersigned hereby agree (i) that each is an “ Investor ” as defined in the Fourth Amended and Restated Registration Rights Agreement dated as of the date first above written, by and among Genocea Biosciences, Inc. and the parties named therein (the “Fourth A&R Registration Rights Agreement”), (ii) that each is a party to the Registration Rights Agreement for all purposes and (iii) that each is bound by all terms and conditions of the Fourth A&R Registration Rights Agreement.

 

 

THE INVESTORS :

 

 

LUX VENTURES II, L.P.

 

By: Lux Venture Partners II, L.P., Its General Partner

 

By: Lux Venture Associates II, LLC, Its General Partner

 

By: Lux Capital Management, LLC, Its Sole Member

 

 

 

By:

/s/ Robert Paull

 

 

Name: Robert Paull

 

 

Title: Managing Director

 

 

 

LUX VENTURES II SIDECAR, L.P.

 

By: Lux Venture Partners II, L.P., Its General Partner

 

By: Lux Venture Associates II, LLC, Its General Partner

 

By: Lux Capital Management, LLC, Its Sole Member

 

 

 

By:

/s/ Robert Paull

 

 

Name: Robert Paull

 

 

Title: Managing Director

 

 

 

LUX VENTURES II SIDECAR II LLC

 

By: Lux Venture Partners II, L.P., Its Manager

 

By: Lux Venture Associates II, LLC, Its General Partner

 

By: Lux Capital Management, LLC, Its Sole Member

 

 

 

By:

/s/ Robert Paull

 

 

Name: Robert Paull

 

 

Title: Managing Director

 

[ Investor Signature Page to the Genocea Biosciences, Inc. Second Amended and Restated Registration Rights Agreement ]

 



 

 

LUX VENTURES II SIDECAR III LLC

 

By: Lux Venture Partners II, L.P., Its Manager

 

By: Lux Venture Associates II, LLC, Its General Partner

 

By: Lux Capital Management, LLC, Its Sole Member

 

 

 

By:

/s/ Robert Paull

 

 

Name: Robert Paull

 

 

Title: Managing Director

 

[ Investor Signature Page to the Genocea Biosciences, Inc. Second Amended and Restated Registration Rights Agreement ]

 



 

By executing this page in the space provided as of the date first written above, the undersigned hereby agree (i) that each is an “ Investor ” as defined in the Fourth Amended and Restated Registration Rights Agreement dated as of the date first above written, by and among Genocea Biosciences, Inc. and the parties named therein (the “Fourth A&R Registration Rights Agreement”), (ii) that each is a party to the Registration Rights Agreement for all purposes and (iii) that each is bound by all terms and conditions of the Fourth A&R Registration Rights Agreement.

 

 

THE INVESTORS :

 

POLARIS VENTURE PARTNERS FOUNDERS’ FUND V, L.P.

POLARIS VENTURE PARTNERS SPECIAL FOUNDERS’ FUND V, L.P.

POLARIS VENTURE PARTNERS V, L.P.

POLARIS VENTURE PARTNERS ENTREPRENEURS’ FUND V, L.P.

 

 

 

By:

Polaris Venture Management Co. V, L.L.C.,

 

 

as General Partner for each of the above Investors

 

 

 

By:

/s/ John Gannon

 

 

Name: John Gannon

 

 

Title: Member

 

[ Investor Signature Page to the Genocea Biosciences, Inc. Second Amended and Restated Registration Rights Agreement ]

 



 

EXHIBIT A

 

INVESTORS

 

ALEXANDRIA EQUITIES, LLC

AURIGA VENTURES III FCPR

CVF, LLC

CYCAD GROUP, LLC

BILL & MELINDA GATES FOUNDATION

JOHNSON & JOHNSON DEVELOPMENT CORPORATION

LUX VENTURES II SIDECAR II LLC

LUX VENTURES II SIDECAR III LLC

LUX VENTURES II SIDECAR, L.P.

LUX VENTURES II, L.P.

MORNINGSIDE VENTURE (V) INVESTMENTS LIMITED

MP HEALTHCARE VENTURE MANAGEMENT, INC.

POLARIS VENTURE PARTNERS ENTREPRENEURS’ FUND V, L.P.

POLARIS VENTURE PARTNERS FOUNDERS’ FUND V, L.P.

POLARIS VENTURE PARTNERS SPECIAL FOUNDERS’ FUND V, L.P.

POLARIS VENTURE PARTNERS V, L.P.

S.R. ONE, LIMITED

SKYLINE VENTURE PARTNERS V, L.P.

DOMINIC AUCI

PETER BARTON HUTT

ADAM KALISH

ROBERT PAULL

WILLIAM SAHLMAN

BRYAN WHITE

 

[Exhibit A to the Genocea Biosciences, Inc. Fourth Amended and Restated Registration Rights Agreement ]

 




Exhibit 10.1

 

FORM OF INDEMNIFICATION AGREEMENT

 

THIS INDEMNIFICATION AGREEMENT (the “ Agreement ”) is made and entered into as of [  ] between Genocea Biosciences, Inc., a Delaware corporation (the “ Company ”), and [   ] (“ Indemnitee ”).

 

WITNESSETH THAT:

 

WHEREAS, highly competent persons have become more reluctant to serve corporations as director 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, although the furnishing of liability insurance to protect persons serving the Company and its subsidiaries from certain liabilities 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 By-laws and Certificate of Incorporation of the Company require indemnification of the directors of the Company.  Indemnitee may also be entitled to indemnification pursuant to the General Corporation Law of the State of Delaware (“ DGCL ”).  The By-laws and  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 of directors, officers and other persons with respect to indemnification;

 

WHEREAS, the uncertainties relating to liability 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’s 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 By-laws and Certificate of Incorporation of the Company and any resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder; and

 



 

WHEREAS, Indemnitee does not regard the protection available under the Company’s By-laws and Certificate of Incorporation and insurance as adequate in the present circumstances, and may not be willing to serve as an officer or director without adequate protection, and the Company desires Indemnitee 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 he be so indemnified; and

 

WHEREAS, Indemnitee has certain rights to indemnification and/or insurance provided by other entities and/or organizations which Indemnitee and such other entities and/or organizations 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 condition to Indemnitee’s willingness to serve on the Board.

 

NOW, THEREFORE, in consideration of Indemnitee’s agreement to serve as a director from and after the date hereof, the parties hereto agree as follows:

 

1.             Indemnity of Indemnitee .  The Company hereby agrees to hold harmless and indemnify Indemnitee to the fullest extent permitted by law, as such may be amended from time to time.  In furtherance of the foregoing indemnification, and without limiting the generality thereof:

 

(a)           Proceedings Other Than Proceedings by or in the Right of the Company .  Indemnitee shall be entitled to the rights of indemnification provided in this Section l(a)  if, by reason of his Corporate Status (as hereinafter defined), the Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding (as hereinafter defined) other than a Proceeding by or in the right of the Company.  Pursuant to this Section 1(a) , Indemnitee shall be indemnified against all Expenses (as hereinafter defined), judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him, or on his behalf, in connection with such Proceeding or any claim, issue or matter therein, if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and with respect to any criminal Proceeding, had no reasonable cause to believe the Indemnitee’s conduct was unlawful.

 

(b)           Proceedings by or in the Right of the Company .  Indemnitee shall be entitled to the rights of indemnification provided in this Section 1(b)  if, by reason of his Corporate Status, the Indemnitee is, or is threatened to be made, a party to or participant in any Proceeding brought by or in the right of the Company.  Pursuant to this Section 1(b) , Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by the Indemnitee, or on the Indemnitee’s behalf, in connection with such Proceeding if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in or not opposed to the best interests of the Company; provided, however, if applicable law so provides, no indemnification against such Expenses shall be made in respect of any claim, issue or matter in such Proceeding as to which Indemnitee shall have been adjudged to be liable to the Company unless and to the extent that the Court of Chancery of the State of Delaware shall determine that such indemnification may be made.

 

(c)           Indemnification for Expenses of a Party Who is Wholly or Partly Successful .  Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a party to and is successful, on the merits or

 



 

otherwise, in any Proceeding, he shall be indemnified to the maximum extent permitted by law, as such may be amended from time to time, against all Expenses actually and reasonably incurred by him or on his behalf 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 him or on his behalf in connection with each successfully resolved claim, issue or matter.  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.

 

(d)    If (i) Indemnitee is or was affiliated with one or more venture capital funds that has invested in the Company (an “ Appointing Stockholder ”), (ii) the Appointing Stockholder is, or is threatened to be made, a party to or a participant in any proceeding, and (iii) the Appointing Stockholder’s involvement in the proceeding is related to Indemnitee’s service to the Company as a director of the Company or any direct or indirect subsidiaries of the Company, then, to the extent resulting from any claim based on the Indemnitee’s service to the Company as a director or other fiduciary of the Company, the Appointing Stockholder will be entitled to indemnification hereunder for Expenses to the same extent as Indemnitee.

 

2.             Additional Indemnity .  In addition to, and without regard to any limitations on, the indemnification provided for in Section 1 of this Agreement, the Company shall and hereby does indemnify and hold harmless Indemnitee against all Expenses, judgments, penalties, fines and amounts paid in settlement actually and reasonably incurred by him or on his behalf if, by reason of his Corporate Status, he 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), including, without limitation, all liability arising out of the negligence or active or passive wrongdoing of Indemnitee.  The only limitation that shall exist upon the Company’s obligations pursuant to this Agreement shall be that the Company shall not be obligated to make any payment to Indemnitee that is finally determined (under the procedures, and subject to the presumptions, set forth in Sections 6 and 7 hereof) to be unlawful.

 

3.             Contribution .

 

(a)           Whether or not the indemnification provided in Sections 1 and 2 hereof is available, in respect of any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), the Company shall pay, in the first instance, the entire amount of any judgment or settlement of such action, suit or proceeding without requiring Indemnitee to contribute to such payment and the Company hereby waives and relinquishes any right of contribution it may have against Indemnitee.  The Company shall not enter into any settlement of any action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding) unless such settlement provides for a full and final release of all claims asserted against Indemnitee.

 

(b)           Without diminishing or impairing the obligations of the Company set forth in the preceding subparagraph, if, for any reason, Indemnitee shall elect or be required to pay all or any portion of any judgment or settlement in any threatened, pending or completed action, suit or proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), the Company shall contribute to the amount of

 



 

Expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction from which such action, suit or proceeding arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of the Company and all officers, directors or employees of the Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, in connection with the events that resulted in such expenses, judgments, fines or settlement amounts, as well as any other equitable considerations which the Law may require to be considered.  The relative fault of the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such action, suit or proceeding), on the one hand, and Indemnitee, on the other hand, shall be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary and the degree to which their conduct is active or passive.

 

(c)           The Company hereby agrees to fully indemnify and hold Indemnitee harmless from any claims of contribution which may be brought by officers, directors or employees of the Company, other than Indemnitee, who may be jointly liable with Indemnitee.

 

(d)           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 and Indemnitee 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 directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).

 

4.             Indemnification for Expenses of a Witness .  Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is, by reason of his Corporate Status, a witness, or is made (or asked to) respond to discovery requests, in any Proceeding to which Indemnitee is not a party, he shall be indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith.

 

5.             Advancement of Expenses .  Notwithstanding any other provision of this Agreement, the Company shall advance all Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding by reason of Indemnitee’s Corporate Status within thirty (30) days after the receipt by the Company of a statement or statements from Indemnitee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding.  Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by a written undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately be determined that

 



 

Indemnitee is not entitled to be indemnified against such Expenses.  Any advances and undertakings to repay pursuant to this Section 5 shall be unsecured and interest free.

 

6.             Procedures and Presumptions for Determination of Entitlement to Indemnification .  It is the intent of this Agreement to secure for Indemnitee rights of indemnity that are as favorable as may be permitted under the DGCL and public policy of the State of Delaware.  Accordingly, the parties agree that the following procedures and presumptions shall apply in the event of any question as to whether Indemnitee is entitled to indemnification under this Agreement:

 

(a)           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.  The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board of Directors in writing that Indemnitee has requested indemnification.  Notwithstanding the foregoing, any failure of Indemnitee to provide such a request to the Company, or to provide such a request in a timely fashion, shall not relieve the Company of any liability that it may have to Indemnitee unless, and to the extent that, such failure actually and materially prejudices the interests of the Company.

 

(b)           Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 6(a)  hereof, a determination with respect to Indemnitee’s entitlement thereto shall be made in the specific case by one of the following four methods, which shall be at the election of the board:  (1) by a majority vote of the disinterested directors, even though less than a quorum, (2) by a committee of disinterested directors designated by a majority vote of the disinterested directors, even though less than a quorum, (3) if there are no disinterested directors or if the disinterested directors so direct, by independent legal counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to the Indemnitee, or (4) if so directed by the Board of Directors, by the stockholders of the Company.  For purposes hereof, disinterested directors are those members of the board of directors of the Company who are not parties to the action, suit or proceeding in respect of which indemnification is sought by Indemnitee.

 

(c)           If the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 6(b)  hereof, the Independent Counsel shall be selected as provided in this Section 6(c) .  The Independent Counsel shall be selected by the Board of Directors.  Indemnitee may, within 10 days after such written notice of selection shall have been given, deliver to the Company 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 13 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 a written objection is made and substantiated, the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit.  If, within 20 days after submission by Indemnitee of a written request for indemnification pursuant to Section 6(a)  hereof, no Independent Counsel shall have been selected and not objected to, either the Company or Indemnitee may petition the Court of Chancery of the State of Delaware or other court of

 



 

competent jurisdiction for resolution of any objection which shall have been made by the Indemnitee to the Company’s selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the court or by such other person as the 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 6(b)  hereof.  The Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 6(b)  hereof, and the Company shall pay all reasonable fees and expenses incident to the procedures of this Section 6(c) , regardless of the manner in which such Independent Counsel was selected or appointed.

 

(d)            In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement.  Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.  Neither the failure of the Company (including by its directors or independent legal 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 legal 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.

 

(e)            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 officers of the Enterprise (as hereinafter defined) 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 the Enterprise.  In addition, the knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.  Whether or not the foregoing provisions of this Section 6(e)  are satisfied, it shall in any event be presumed that Indemnitee has at all times acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company.  Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

 

(f)             If the person, persons or entity empowered or selected under Section 6 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 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 such determination with respect to entitlement to indemnification in good faith requires such additional time to obtain or evaluate documentation and/or information relating thereto; and provided, further, that the foregoing provisions of this Section 6(f)  shall not apply if the determination of entitlement to indemnification is to be made by the stockholders

 



 

pursuant to Section 6(b)  of this Agreement and if (A) within fifteen (15) days after receipt by the Company of the request for such determination, the Board of Directors or the Disinterested Directors, if appropriate, resolve 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.

 

(g)            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 Independent Counsel, member of the Board of Directors or stockholder of the Company shall act reasonably and in good faith in making a determination regarding the Indemnitee’s entitlement to indemnification under this Agreement.  Any costs or expenses (including attorneys’ fees and disbursements) incurred by 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.

 

(h)            The Company acknowledges that a settlement or other disposition short of final judgment may be successful if it permits a party to avoid expense, delay, distraction, disruption and uncertainty.  In the event that any action, claim or proceeding to which Indemnitee is a party is resolved in any manner other than by adverse judgment against Indemnitee (including, without limitation, settlement of such action, claim or proceeding with or without payment of money or other consideration) it shall be presumed that Indemnitee has been successful on the merits or otherwise in such action, suit or proceeding.  Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion by clear and convincing evidence.

 

(i)            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 he 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 his conduct was unlawful.

 

7.             Remedies of Indemnitee .

 

(a)           In the event that (i) a determination is made pursuant to Section 6 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 5 of this Agreement, (iii) no determination of entitlement to indemnification is made pursuant to Section 6(b)  of this Agreement within 90 days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to this Agreement within ten (10) days after receipt by the Company of a written request therefor or (v) payment of indemnification is not

 



 

made within ten (10) days after a determination has been made that Indemnitee is entitled to indemnification or such determination is deemed to have been made pursuant to Section 6 of this Agreement, Indemnitee shall be entitled to an adjudication in an appropriate court of the State of Delaware, or in any other court of competent jurisdiction, of Indemnitee’s entitlement to such indemnification.  Indemnitee shall commence such proceeding seeking an adjudication within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 7(a) .  The Company shall not oppose Indemnitee’s right to seek any such adjudication.

 

(b)           In the event that a determination shall have been made pursuant to Section 6(b)  of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding commenced pursuant to this Section 7 shall be conducted in all respects as a de novo trial on the merits, and Indemnitee shall not be prejudiced by reason of the adverse determination under Section 6(b) .

 

(c)           If a determination shall have been made pursuant to Section 6(b)  of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding commenced pursuant to this Section 7 , absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s misstatement not materially misleading in connection with the application for indemnification, or (ii) a prohibition of such indemnification under applicable law.

 

(d)           In the event that Indemnitee, pursuant to this Section 7 , seeks a judicial adjudication of his rights under, or to recover damages for breach of, this Agreement, or to recover under any directors’ and officers’ liability insurance policies maintained by the Company, the Company shall pay on his behalf, in advance, any and all expenses (of the types described in the definition of Expenses in Section 13 of this Agreement) actually and reasonably incurred by him in such judicial adjudication, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of expenses or insurance recovery.

 

(e)           The Company shall be precluded from asserting in any judicial proceeding commenced pursuant to this Section 7 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement.  The Company shall 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 therefore) advance, to the extent not prohibited by law, such expenses to Indemnitee, which are incurred by Indemnitee in connection with any action brought by Indemnitee for indemnification or advance of Expenses from the Company under this Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company, regardless of whether Indemnitee ultimately is determined to be entitled to such indemnification, advancement of Expenses or insurance recovery, as the case may be.

 

(f)            Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement to indemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding.

 


 

 

8.             Non-Exclusivity; Survival of Rights; Insurance; Primacy of Indemnification; Subrogation .

 

(a)           The rights of indemnification 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 By-laws, any agreement, a vote of stockholders, a resolution of directors or otherwise, of the Company.  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 such Indemnitee in his Corporate Status prior to such amendment, alteration or repeal.  To the extent that a change in the DGCL, whether by statute or judicial decision, permits greater indemnification than would be afforded currently under  the Certificate of Incorporation, By-laws 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 or fiduciaries of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that such person serves at the request of the Company, 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 director, officer, employee, agent or fiduciary 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 the commencement of such proceeding 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 the Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.

 

(c)           The Company hereby acknowledges that Indemnitee has or may have in the future certain rights to indemnification, advancement of expenses and/or insurance provided by other entities and/or organizations (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 terms of this Agreement and the Certificate of Incorporation or Bylaws of the Company (or any other 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 8(c).

 

(d)           Except as provided in paragraph (c) above, in the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee (other than against the Fund Indemnitors), 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.

 

(e)           Except as provided in paragraph (c) above, the Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

 

(f)            Except as provided in paragraph (c) above, the 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, employee or agent of any other corporation, 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, partnership, joint venture, trust, employee benefit plan or other enterprise.

 

9.             Exception to Right of Indemnification . Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any indemnity in connection with any claim made against 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, provided, that the foregoing shall not affect the rights of Indemnitee or the Fund Indemnitors set forth in Section 8(c) above;

 

(b)           for 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 Securities Exchange Act of 1934, as amended, or similar provisions of state statutory law or common law;

 

(c)           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 of Directors of the Company 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;

 

(d)           with respect to remuneration paid to Indemnitee if it is determined by final judgment or other final adjudication that such remuneration was in violation of law (and,

 



 

in this respect, both the Company and Indemnitee have been advised that the Securities and Exchange Commission believes that indemnification for liabilities arising under the federal securities laws is against public policy and is, therefore, unenforceable and that claims for indemnification should be submitted to appropriate courts for adjudication, as indicated in the last paragraph of this Section 9 below);

 

(e)           a final judgment or other final adjudication is made that Indemnitee’s conduct was in bad faith, knowingly fraudulent or deliberately dishonest or constituted willful misconduct (but only to the extent of such specific determination); or

 

(f)            on account of conduct that is established by a final judgment as constituting a breach of Indemnitee’s duty of loyalty to the Company or resulting in any personal profit or advantage to which Indemnitee is not legally entitled.

 

For purposes of this Section 9, a final judgment or other adjudication may be reached in either the underlying proceeding or action in connection with which indemnification is sought or a separate proceeding or action to establish rights and liabilities under this Agreement.

 

Any provision herein to the contrary notwithstanding, the Company shall not be obligated pursuant to the terms of this Agreement to indemnify Indemnitee or otherwise act in violation of any undertaking appearing in and required by the rules and regulations promulgated under the Securities Act of 1933, as amended (the “Act”), or in any registration statement filed with the SEC under the Act.  Indemnitee acknowledges that paragraph (h) of Item 512 of Regulation S-K currently generally requires the Company to undertake in connection with any registration statement filed under the Act to submit the issue of the enforceability of Indemnitee’s rights under this Agreement in connection with any liability under the Act on public policy grounds to a court of appropriate jurisdiction and to be governed by any final adjudication of such issue.  Indemnitee specifically agrees that any such undertaking shall supersede the provisions of this Agreement and to be bound by any such undertaking.

 

10.           Duration of Agreement .  All agreements and obligations of the Company contained herein shall continue during the period Indemnitee is an officer or director of the Company (or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise) and shall continue thereafter without limitation at any time that the Indemnitee is or becomes subject to any Proceeding (or any proceeding commenced under Section 7 hereof) by reason of his Corporate Status, whether or not he is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement.  This Agreement shall be binding upon and inure to the benefit of and be enforceable by the parties hereto and their respective successors (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), assigns, spouses, heirs, executors and personal and legal representatives.

 

11.          Security .  To the extent requested by Indemnitee and approved by the Board of Directors of the Company, the Company may at any time and from time to time provide security to Indemnitee for the Company’s obligations hereunder through an irrevocable bank line of credit, funded trust or other collateral.  Any such security, once provided to Indemnitee, may not be revoked or released without the prior written consent of the Indemnitee.

 



 

12.          Enforcement .

 

(a)           The Company expressly confirms and agrees that it has entered into this Agreement and assumes the obligations imposed on it hereby in order to induce Indemnitee to serve as an officer or director of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as an officer or director of the Company.

 

(b)           This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof.

 

13.          Definitions .  For purposes of this Agreement:

 

(a)           “ Corporate Status ” describes the status of a person who is or was a director, officer, employee, agent or fiduciary of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving at the express written request of the Company.

 

(b)           “ Disinterested Director ” means 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.

 

(c)           “ Enterprise ” shall mean the Company and any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise that Indemnitee is or was serving at the express written request of the Company as a director, officer, employee, agent or fiduciary.

 

(d)           “ Expenses ” shall include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, participating, or being or preparing to be a witness in a Proceeding, or responding to, or objecting to, a request to provide discovery in any Proceeding.  Expenses also shall include Expenses incurred in connection with any appeal resulting from any Proceeding and any federal, state, local or foreign taxes imposed on the Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, including without limitation the premium, security for, and other costs relating to any cost bond, supersede as bond, or other appeal bond or its equivalent.  Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.

 

(e)           “ Independent Counsel ” means 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 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.

 

(f)            “ Proceeding ” includes any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether brought by or in the right of the Company or otherwise and whether civil, criminal, administrative or investigative, in which Indemnitee was, is or will be involved as a party or otherwise, by reason of the fact that Indemnitee is or was an officer or director of the Company, by reason of any action taken by him or of any inaction on his part while acting as an officer or director of the Company, or by reason of the fact that he is or was serving at the request of the Company as a director, officer, employee, agent or fiduciary of another corporation, partnership, joint venture, trust or other Enterprise; in each case whether or not he is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement; including one pending on or before the date of this Agreement, but excluding one initiated by an Indemnitee pursuant to Section 7 of this Agreement to enforce his rights under this Agreement.

 

14.          Severability .  The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.  Without limiting the generality of the foregoing, this Agreement is intended to confer upon Indemnitee indemnification rights to the fullest extent permitted by applicable laws.  In the event any provision hereof conflicts with any applicable law, such provision shall be deemed modified, consistent with the aforementioned intent, to the extent necessary to resolve such conflict.

 

15.          Modification and Waiver .  No supplement, modification, termination or amendment of this Agreement shall be binding unless executed in writing by both of 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 hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

 

16.          Notice By Indemnitee .  Indemnitee agrees promptly to notify the Company in writing upon being served with or otherwise receiving any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification covered hereunder.  The failure to so notify the Company shall not relieve the Company of any obligation which it may have to Indemnitee under this Agreement or otherwise unless and only to the extent that such failure or delay materially prejudices the Company.

 

17.          Notices .  All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given:  (a) upon personal delivery to the party to be notified, (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and if not so confirmed, then on the 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) day after deposit with a nationally recognized

 



 

overnight courier, specifying next day delivery, with written verification of receipt.  All communications shall be sent:

 

(a)                                  To Indemnitee at the address set forth below Indemnitee signature hereto.

 

(b)                                  To the Company at:

 

Genocea Biosciences, Inc.

Cambridge Discovery Park

100 Acorn Park Drive, 5 th  Floor

Cambridge, MA 02140
Attention:

 

or to such other address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.

 

18.          Counterparts .  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same Agreement.  This Agreement may also be executed and delivered by facsimile signature and in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

19.          Headings .  The headings of the paragraphs 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.

 

20.          Governing 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. 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 Chancery Court of the State of Delaware (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.

 

SIGNATURE PAGE TO FOLLOW

 



 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of the day and year first above written.

 

 

 

GENOCEA BIOSCIENCES, INC.

 

 

 

COMPANY

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

 

INDEMNITEE

 

 

 

 

 

Name:

 

 

 

Address:

 


 



EXHIBIT 10.2

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

AMENDED AND RESTATED EXCLUSIVE LICENSE AGREEMENT

 

BETWEEN

 

CHILDREN’S MEDICAL CENTER CORPORATION

 

AND

 

GENOCEA BIOSCIENCES, INC.

 

Dated March 23, 2012 and Supplemented with a Side Letter dated March 23, 2012

 



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

TABLE OF CONTENTS

 

ARTICLE I.

 

DEFINITIONS

 

3

ARTICLE II.

 

GRANT

 

9

ARTICLE III.

 

DUE DILIGENCE AND RELATED MATTERS

 

15

ARTICLE IV.

 

ROYALTIES AND OTHER PAYMENTS

 

17

ARTICLE V.

 

REPORTS, RECORDS AND RELATED MATTERS

 

20

ARTICLE VI.

 

PATENT PROSECUTION

 

23

ARTICLE VII.

 

INFRINGEMENT

 

25

ARTICLE VIII.

 

UNIFORM INDEMNIFICATION AND INSURANCE PROVISIONS

 

27

ARTICLE IX.

 

COMPLIANCE WITH LAWS; EXPORT CONTROLS

 

30

ARTICLE X.

 

NON-USE OF NAMES AND PUBLICATIONS

 

31

ARTICLE XI.

 

ASSIGNMENT

 

31

ARTICLE XII.

 

DISPUTE RESOLUTION AND ARBITRATION

 

32

ARTICLE XIII.

 

TERM AND TERMINATION

 

33

ARTICLE XIV.

 

OWNERSHIP

 

35

ARTICLE XV.

 

PAYMENTS, NOTICES, AND OTHER COMMUNICATIONS

 

35

ARTICLE XVI.

 

GENERAL PROVISIONS

 

36

ARTICLE XVII.

 

CONFIDENTIALITY

 

38

 

 

 

Appendix 1

 

Patent Rights

 

 

 

 

 

 

 

Appendix 2

 

Development Plan

 

 

 

 

 

 

 

Appendix 3

 

MTA

 

 

 

 

 

 

 

Appendix 4

 

Collaboration Agreement

 

 

 

i



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

AMENDED AND RESTATED EXCLUSIVE LICENSE AGREEMENT

 

This Amended and Restated Exclusive License Agreement (“Agreement”) is made and entered into as of the date last signed below (the “Effective Date”), by and between CHILDREN’S MEDICAL CENTER CORPORATION, a charitable corporation duly organized and existing under the laws of the Commonwealth of Massachusetts and having its principal office at 300 Longwood Avenue, Boston, Massachusetts, 02115, U.S.A. (hereinafter referred to as “CMCC”), and Genocea Biosciences, Inc., a business corporation organized and existing under the laws of the State of Delaware and having its principal office at 161 First Street, Suite 2C, Cambridge, MA 02142, U.S.A. (hereinafter referred to as “Licensee”).  CMCC and Licensee may be referred to individually as “Party” and collectively as the “Parties”.

 

WHEREAS, Licensee and Children’s Hospital Boston (“CHB”) entered into a Material Transfer Agreement, dated September 17, 2008 and attached and incorporated as Appendix 3 hereto (the “MTA”), whereby a collaborative research project was performed by the Parties;

 

WHEREAS, CHB and Licensee were each funded by separate awards from PATH Vaccine Solutions (“PVS”) and such awards contained provisions for granting a non-exclusive license to certain rights to PVS in the developing world as further described in the “Children’s Hospital Collaborative Research Agreement,” dated June 19, 2008 and attached and incorporated herein as Appendix 4 (the “Collaboration Agreement”);

 

WHEREAS, the conduct of the Research Plan as defined in the MTA has resulted in the creation of Research Plan Intellectual Property (as defined in the MTA) including the Patent Rights (as that term shall be defined hereafter), and the Licensee wishes to negotiate a license with CMCC to CMCC’s interest in the Research Plan Intellectual Property that, as of the Effective Date of this Agreement, has been discovered, conceived, made, developed or reduced to practice;

 

WHEREAS, CMCC is a joint owner (along with Licensee) of certain Research Plan Intellectual Property developed under the MTA and the Collaboration Agreement referenced above and has the right to grant exclusive licenses to its rights under the Patent Rights, subject only to a royalty-

 

1



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

free, non-exclusive license granted to the United States Government for those inventions and ensuing patents developed with U.S. Government funding, and certain laws and regulations relating to federally funded projects and institutions and the PVS License as defined below;

 

WHEREAS, in furtherance of its charitable and research missions and those laws and regulations, CMCC desires to have the Patent Rights utilized to promote the public interest and to further that goal is willing to grant a license to Licensee on the terms and conditions described herein;

 

WHEREAS, Licensee is experienced in the development of products similar to the technology which is the subject of this Agreement and desires to engage in the commercial development, production, manufacture, marketing and sale of Licensed Products (as that term shall be defined hereafter) and/or the use of Licensed Processes (as that term shall be defined hereafter) via the implementation of a development program as described in this Agreement;

 

WHEREAS, CMCC and Licensee are parties to that certain Exclusive License Agreement, effective as of February 18, 2010, as amended by Amendment No. 1 to Exclusive License Agreement, dated as of March 30, 2011 (the “Original Agreement”) pursuant to which CMCC granted to Licensee an exclusive license to CMCC’s rights, within a designated territory and for a prescribed field of use, relating to certain licensed products and processes within the scope of the Patent Rights; and

 

WHEREAS, the Parties now desire to modify their arrangements under the Original Agreement pursuant to the terms and conditions of this Agreement.

 

NOW, THEREFORE, in consideration of the promises and the mutual covenants contained herein, the Parties hereto agree as follows:

 

ARTICLE 0.                                                 AMENDMENT AND RESTATEMENT

 

CMCC and Licensee hereby agree that, as of the Effective Date, the Original Agreement is hereby amended and restated in its entirety as set forth in this Agreement, and the Original Agreement shall be of no further force or effect from and after the Effective Date, provided that

 

2



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

except as expressly provided herein, nothing in this Agreement shall affect the rights and obligations of the Parties under the Original Agreement with respect to periods prior to the Effective Date, all of which shall survive in accordance with their terms.

 

ARTICLE I.                                                   DEFINITIONS

 

For the purpose of this Agreement, the following words and phrases shall have the meanings set forth below:

 

A.                                     “Affiliate” shall mean any company or other legal entity actually controlling, controlled by or under common control with a Party.  For purposes of the definition of “Affiliate” the term “control” shall mean: (i) in the case of a corporate entity, the ability to effect the election of directors, or in the case of a for-profit entity direct or indirect ownership of at least a majority of the stock or participating shares entitled to vote for the election of directors of that entity, in any case coupled with active managerial involvement and accountability for directing the business and affairs of that entity; (ii) in the case of a partnership, the power customarily held by a managing partner to direct the management and policies of such partnership, provided that such power is actively exercised; or (iii) in the case of a joint venture, whether in corporate, partnership or other legal form, a prevailing joint economic interest coupled with a managerial role entailing active direction, control and accountability with respect to the business and affairs of the entity.

 

B.                                     “Chargeback Payments” shall mean payments made by Licensee, its Affiliates, its agents, or its Sublicensees to wholesalers to cover the difference between the price charged for a Licensed Product to such wholesaler and the price charged for such Licensed Product to group purchasing organizations, managed health care organizations or to federal, state/provincial, local and other governments, including their agencies, who are the final customer and who will be an end user of the Licensed Product.

 

3



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

C.                                     “Combination Product(s) or Process(es)” shall mean a product or process that includes a Licensed Product or Licensed Process sold in combination with another component(s) whose manufacture, use or sale by an unlicensed party would not constitute an infringement of the Patent Rights licensed in this Agreement.

 

D.                                     “Commercially Reasonable Efforts” shall mean, with respect to the efforts to be expended by Licensee to any objective for maintaining the priority of rapid and effective development, Licensee shall use diligent efforts and resources consistent with practices used in the Licensee’s industry for a product which is of similar commercial potential at a similar state in its development or product life, taking into account issues of efficacy, safety, market size, the competitiveness of alternative products in the marketplace, any legal or technical difficulties directly related to such product development, the patent and other proprietary position of the product, regulatory approvals, and the actual and/or projected profitability of the product.  It is understood that, for the purposes of this definition of “Commercially Reasonable Efforts”, the commercial potential of a product may change from time to time based upon certain changing considerations, including without limitation changing scientific, business, marketing and return on investment considerations.

 

E.                                      “Developing Countries” shall mean (i) those countries identified by the World Bank as of June 19, 2008 as having “low income economies” or “lower-middle income economies” and (ii) Argentina, Brazil, Chile, Mexico, and South Africa, provided these five countries specifically listed herein are not reclassified as “high income economies” by the World Bank as of the date that a license is granted to PVS pursuant to the Collaboration Agreement.

 

F.                                       “Fair Market Value” shall mean, with respect to a valuation required by any provision of this Agreement, the price which a willing buyer would pay, on an arm’s length basis, for all rights and related intellectual property assets which comprise the assets, data, or rights being valued, in light of all relevant factors

 

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including, without limitation, the status of development and reasonably anticipated risks and costs of further development and the market potential for the commercialization of such assets, data or rights.  In any case where Fair Market Value must be determined but is not determined by good faith negotiations between the Parties in sixty (60) days, the determination will be made by an independent third party accounting firm to be mutually agreed upon by the Parties.  In the event that the Parties cannot agree upon an independent third party accounting firm within twenty (20) days, Fair Market Value will be determined by a panel of three (3) independent third party accounting firms, one chosen by Licensee, one chosen by CMCC and one chosen at the mutual agreement of the two chosen firms.  Any such determination will be binding and conclusive upon the Parties and the Parties will split the costs of such determination.

 

G.                                     “Field of Use” shall mean the prevention and treatment of Streptococcus pneumoniae .

 

H.                                    “First Commercial Sale” shall mean, with respect to each country: (i) the first sale of any Licensed Product or Licensed Process by Licensee or any Sublicensee, following approval of such Licensed Product’s or Licensed Process’s marketing by the appropriate governmental agency, if any such approval is necessary, for the country in which the sale is to be made; or (ii) when governmental approval is not required, the first sale by Licensee or any Sublicensee in that country of the Licensed Product or Licensed Process.

 

I.                                         “Licensed Product” shall mean:

 

1.                                       Any product or part thereof in the Field of Use the manufacture, use or sale of which is covered by any Valid Claim in the country in which it is manufactured, used or sold; or

 

2.                                       Any product or part thereof in the Field of Use the manufacture or use of which uses a “Licensed Process” as that term shall be defined hereafter; or

 

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

3.                                       Any service provided for or on behalf of a third party on a fee-for-service basis that entails the practice of a Licensed Process.

 

J.                                         “Licensed Process” shall mean any process the practice of which is covered by any Valid Claim.

 

K.                                    “Licensee” shall mean Licensee and its successors and assignees permitted by this Agreement (including Affiliates where they are assignees permitted by this Agreement).

 

L.                                      “Net Sales” shall mean the gross amounts recognized for sales, leases, or other transfers of Licensed Products by Licensee, its Affiliates, its agents, or its Sublicensees for any Licensed Products to a final customer who will be an end user of the Licensed Product and is not an Affiliate or Sublicensee, in accordance with generally accepted accounting principles or the then-current internal accounting standard used by the Licensee and/or its Affiliates, less the following amounts (if not previously deducted from gross amounts invoiced):

 

1.                                       credits and allowances for price adjustment, rejection, uncollectible amounts or return of Licensed Products previously sold;

 

2.                                       Chargeback Payments, fees, rebates, and quantity and cash discounts to purchasers allowed and taken, including, without limitation, payments made to buying groups;

 

3.                                       amounts for third party transportation, insurance, handling or shipping charges to purchasers;

 

4.                                       taxes, duties and other governmental charges levied on or measured by the sale of Licensed Products, whether absorbed by Licensee or paid by the purchaser so long as Licensee’s price is reduced thereby, but not franchise or income taxes of any kind whatsoever;

 

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

5.                                       for any sale in which the United States government, on the basis of its royalty-free license pursuant to 35 USC Sec. 202(c) to any Patent Right, requires that the gross sales price of any Licensed Product subject to such Patent Right, be reduced by the amount of such royalty owed Licensor, the amount of such royalty.

 

Licensee shall make periodic adjustments to the amounts described in (1) through (5) above, to its initial accruals of such amounts applied to prior periods, in order to reflect amounts actually incurred or deducted by the Licensee; provided, however, that Licensee shall use the same accrual method that is used for its own financial accounting purposes.  Net Sales also includes the Fair Market Value of any non-cash consideration received by Licensee (as defined herein) or any Sublicensee in exchange for the sale, lease, or transfer of Licensed Products.

 

Neither consideration deemed to be a Sublicensee Payment nor the transfer of a Licensed Product within Licensee or between Licensee and an Affiliate or a Sublicensee for sale by the transferee shall be considered a Net Sale for purposes of ascertaining royalty charges.  In such circumstances, the gross amounts invoiced and resulting Net Sales price shall be based upon the sale of the Licensed Product by the transferee.

 

M.                                  “Patent Rights” shall mean all of the following intellectual property which CMCC owns or has rights to during the Term of this Agreement as hereafter defined:

 

1.                                       The United States and foreign patent applications listed in Appendix 1 attached hereto and incorporated herein by reference and divisionals and continuations thereof.

 

2.                                       The United States and foreign patents issued from the applications listed in Appendix 1 and from divisionals and continuations of those applications.

 

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

3.                                       Claims of United States and foreign continuation-in-part applications, and of the resulting patents, which are directed to the subject matter specifically described in the United States and foreign patent applications described in Appendix 1.

 

4.                                       Claims of all later filed foreign patent applications, and of the resulting patents, which are directed to the subject matter specifically described in the United States patent and/or patent applications described in subparagraphs 1, 2 or 3 of this ARTICLE I, Paragraph M.

 

5.                                       Any reissues, divisions, amendments or extensions of the United States or foreign patents described in subparagraphs 1, 2, 3 or 4 of this ARTICLE I, Paragraph M.

 

N.                                     “PVS License” shall mean the non-exclusive license granted by CHB to PVS pursuant to the Collaboration Agreement, as attached and incorporated herein as Appendix 4.  Such rights to PVS include a non-exclusive royalty-free license, with the right to sublicense, to (i) develop, make or have made, and use a pneumococcal T cell based protein vaccine in the world and (ii) use market, promote, distribute and sell a pneumococcal T cell-based protein vaccine in Developing Countries as defined in Paragraph E of this ARTICLE I.

 

O.                                     “Sublicensee” shall mean a person or entity unaffiliated with Licensee to whom Licensee has granted an arm’s length sublicense under this Agreement.

 

P.                                       “Sublicensee Payments” shall mean any payments received by Licensee from a Sublicensee (whether in the form of cash, Fair Market Value of cash equivalents or Fair Market Value of securities of Sublicensee or any other third party) in consideration of permitting the Sublicensee to practice the Patent Rights licensed to Licensee hereunder, including but not limited to sublicense issue fees, any lump sum payments, milestone payments, technology transfer payments or other similar fees; provided , however , that Sublicensee Payments shall not include any

 

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(i) royalty or profit-sharing payments; provided further , however , that Sublicensee Payments shall include profit-sharing payments if Licensee receives royalty payments based on Net Sales of Licensed Products in addition to profit-sharing payments from a Sublicensee in a contractual arrangement with such Sublicensee, (ii) reimbursement of patent prosecution expenses that have not been recovered prior to the sublicense, (iii) funded research arrangements after the Effective Date of this Agreement (including without limitation any amounts received by Licensee from PVS), (iv) amounts received by Licensee for the Fair Market Value of the sale of its equity securities to Sublicensee, or (5) the attributed value of any cross-license granted by a Sublicensee to Licensee to the extent such cross-license provides Licensee with freedom to operate with respect to a Licensed Product or Licensed Process (but not excluding any monetary consideration actually received from such Sublicensee on account of such cross-license).

 

Q.                                     “Territory” shall mean world-wide.

 

R.                                     “Term” shall have the meaning stated in Paragraph A of ARTICLE XIII.

 

S.                                       “Valid Claim” means an issued, unexpired claim or pending claim of a Patent Right, which issued claim or pending claim has not been revoked or held unenforceable, unpatentable or invalid by a decision of a court or other governmental agency of competent jurisdiction, which is not appealable or has not been appealed within the time allowed for appeal, and which has not been abandoned, disclaimed, denied or admitted to be invalid or unenforceable through reissue, re-examination or disclaimer or other final, irrevocable action.

 

ARTICLE II.                                              GRANT

 

A.                                     Subject to the terms of this Agreement, CMCC hereby grants to Licensee, under CMCC’s one-half ownership interest in the Patent Rights, subject to the rights granted to PVS under the PVS License as set forth in Appendix 4 and the rights retained by CMCC pursuant to ARTICLE II, Paragraph B below, the worldwide

 

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right and exclusive license, with the right to sublicense, to import, make, have made, use, lease, offer for sale, sell and otherwise export the Licensed Products, and to practice the Licensed Processes, in the Territory for the Field of Use during the Term, unless sooner terminated as provided in this Agreement.

 

B.                                     Notwithstanding anything above to the contrary, CMCC shall retain a royalty-free, non-exclusive, right to practice and use, and to license for a nominal fee (such as shipping and handling charges) to academic nonprofit research organizations to practice and/or use the Patent Rights for their own Licensed Products and Licensed Processes, for research, educational, clinical and/or charitable purposes only.  Any such license shall specifically exclude and prohibit any commercialization of the Patent Rights, including any of such organization’s own Licensed Products and Licensed Processes.  For clarity, nothing in this Paragraph B or elsewhere in this Agreement obligates Licensee or any Sublicensee to transfer or otherwise provide any of their respective Licensed Products or Licensed Processes to CMCC or any other third party.

 

C.                                     Notwithstanding any other provision of this Agreement, the license and any sublicense shall be subject to the rights of the United States government, if any, under Public Law 96-517, 97-226, and 98-620, codified at 35 U.S.C. sec. 200-212 and any regulations promulgated thereunder; the obligations of CMCC under applicable laws and regulations; and Licensee’s warranty to comply with all applicable laws and regulations.

 

D.                                     Licensee agrees that Licensed Products leased or sold in the United States shall be manufactured substantially in the United States to the extent required by applicable law.  Upon the First Commercial Sale and thereafter, Licensee’s annual report to CMCC shall substantiate Licensee’s compliance with this provision.  To support exclusivity for Licensee consistent with this Agreement, CMCC hereby agrees that, except as provided in Paragraph B of this ARTICLE II, and the grant under the PVS License, it shall not, without Licensee’s prior written consent

 

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(which Licensee shall have no obligation to give and shall be given at Licensee’s sole discretion) grant to any other commercial party a license to make, have made, use, lease and/or sell Licensed Products, or to use the Licensed Processes in the Field of Use, during the period of time in which this Agreement is in effect, except as required by laws affecting the rights of the United States Government.

 

E.                                      The license granted hereunder shall not be construed to confer any rights upon Licensee by implication, estoppel or otherwise as to any inventions, discoveries, know-how, technology or other intellectual property not described in Paragraph A of this ARTICLE II.

 

F.                                       In the event that Licensee uses any non-public information it has acquired in the course of prosecution of the Patent Rights from CMCC and/or patent counsel prosecuting the Patent Rights, or non-public information Licensee has provided, or recommendations made by Licensee that have been implemented in whole or in part with respect to prosecution of the Patent Rights, to formally challenge CMCC’s joint ownership of the Patent Rights before any applicable regulatory authority, without CMCC’s consent, then CMCC may immediately terminate this Agreement upon written notice to Licensee.  Any assignment or sublicense granted by Licensee of the rights granted to it hereunder shall contain a substantially similar provision applicable to the assignee or Sublicensee.

 

G.                                     Nothing in this Agreement shall be construed to limit or constrain CMCC, or any officer, director, employee, member of its medical staff, or of any CMCC Affiliate, from continuing to engage in related research; or from the development of related or unrelated inventions, discoveries, rights or technology, and from practicing, licensing or sublicensing related or unrelated intellectual property rights arising from their own inventions occurring after the Effective Date of this Agreement; or from academic publication related thereto; or from entering into agreements and other relationships with other persons or organizations related to matters not regarding the Patent Rights, Licensed Products and Licensed

 

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Processes in the Field of Use and matters otherwise not within the scope of this Agreement.

 

H.                                    If, during the Term of this Agreement, CMCC makes any discovery or invention that CMCC reasonably believes to be patentable that is not included within the scope of the license to the Patent Rights granted hereunder but is dominated by the Patent Rights, CMCC shall use reasonable efforts to offer Licensee an option to exclusively license CMCC’s rights to such discovery or invention, whether or not patentable, under which license Licensee may fully exploit (including without limitation, develop, manufacture and commercialize) such discovery or invention on an exclusive basis.  Upon Licensee’s acceptance of such option, which acceptance must be made within forty-five (45) days of receipt of notice from CMCC of any such discovery or invention, CMCC and Licensee shall negotiate the terms of such exclusive license in good faith for at least one hundred and eighty (180) days from the time of CMCC’s disclosure of such discovery and invention and CMCC shall use good faith commercially reasonable efforts to reach agreement with Licensee on the terms of such definitive license agreement.  If the Parties are unable to reach agreement after such good faith negotiations, CMCC shall be free, and without any obligations to Licensee, to offer such rights to any other party.

 

I.                                         Licensee shall have the right to enter into sublicensing agreements with respect to any of the rights, privileges, and licenses granted hereunder, subject to the terms and conditions hereof: CMCC agrees that, in the event CMCC terminates this Agreement for any reason provided hereafter, then CMCC shall provide to known Sublicensees, no less than thirty (30) days prior to the effective date of said termination, written notice of said termination at the address specified by Licensee in the notice provided to CMCC under Paragraph J of this ARTICLE II.  If the Sublicensee, during that thirty (30) day period, provides to CMCC authorized and written notice that the Sublicensee: (i) reaffirms the terms and

 

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conditions of this Agreement as it relates to the rights the Sublicensee has been granted under the sublicense; (ii) agrees to abide by all of the terms and conditions of this Agreement applicable to Sublicensees and to discharge directly all pertinent obligations of Licensee which Licensee is obligated hereunder to discharge; and (iii) acknowledges that CMCC shall have no obligations to the Sublicensee other than its pertinent obligations set forth in this Agreement with regard to Licensee, then, provided that the Sublicensee has fulfilled (i), (ii) and (iii) herein and Sublicensee is not in material breach of its sublicense, CMCC shall grant to such Sublicensee a license with rights and on terms equivalent to the sublicense rights and terms which the Licensee shall have previously granted to said Sublicensee, to the extent that those rights were granted by CMCC to the Licensee under this Agreement.  In any event, the Sublicensee shall remain a Sublicensee under this Agreement for a period of at least sixty (60) days following notice by CMCC under this Paragraph I.  For the avoidance of doubt, a Sublicensee will be considered in material breach of its sublicense if Sublicensee has committed an outstanding uncured payment default or an outstanding uncured breach of its diligence obligations under such sublicense.

 

J.                                         In any event, Licensee agrees that any sublicense granted by it shall impose obligations on the Sublicensee consistent with Licensee’s obligations to CMCC under ARTICLES II (Grant), VII (Infringement), VIII (Uniform Indemnification and Insurance Provisions), IX (Compliance with Laws; Export Controls), and X, Paragraph A, (Non-Use of Names and Publications) of this Agreement (such flow-down obligations collectively, the “CMCC Obligations”).  The CMCC Obligations shall be binding upon the Sublicensee for the benefit of CMCC and Licensee.  In addition, every sublicense shall (1) contain requirements for commercially reasonable due diligence efforts from the Sublicensees in the development or exploitation of the Patent Rights, or the sale of Licensed Products, as specifically applicable, and (2) obligate Licensee to use Commercially Reasonable Efforts to enforce those provisions consistent with achieving

 

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Licensee’s obligations pursuant to this Agreement.  The Licensee’s sublicenses shall also make CMCC a third-party beneficiary of the sublicense, with the right, but not the obligation, to enforce the CMCC Obligations in the event Licensee fails to, provided that CMCC has provided Licensee sixty (60) days’ written notice to Licensee of CMCC’s belief that Sublicensee has not complied with CMCC Obligations and within such sixty (60) day period, Licensee has not either (i) reasonably shown that such CMCC Obligations are being complied with or such non-compliance is immaterial or (ii) made reasonable efforts to enforce such CMCC Obligations with respect to the defaulting Sublicensee.  Licensee agrees to provide to CMCC notice of any sublicense granted hereunder or amendments related thereto and to forward to CMCC a copy of any and all fully executed sublicense agreements or amendments within thirty (30) days after execution.  Regarding such copies, Licensee may reasonably redact confidential information of Licensee or Sublicensee only to the extent that it does not impair CMCC’s ability to ensure Licensee’s or Sublicensee’s compliance with the terms of this Agreement.  Licensee further agrees to forward to CMCC annually a copy of such reports received by Licensee from its Sublicensees during the preceding twelve (12) month period as shall be pertinent to a royalty accounting under the applicable sublicense and compliance with the other terms of this Agreement.

 

K.                                    Licensee shall advise CMCC in writing of any consideration received from Sublicensees, and, at CMCC’s reasonable request, provide such information in an electronic or other format recognizable by CMCC’s data processing systems.  Licensee shall not accept from any Sublicensee anything of value in lieu of cash payments to discharge Sublicensee’s payment obligations (if any) under any sublicense granted under this Agreement, without the express written permission of CMCC, which permission shall not be unreasonably withheld but may take into account a reasonable valuation for purposes of Licensee’s payment obligations to CMCC.

 

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ARTICLE III.                                         DUE DILIGENCE AND RELATED MATTERS

 

A.                                     Licensee, upon execution of this Agreement, shall use Commercially Reasonable Efforts in good faith to bring at least one (1) Licensed Product to market as soon as reasonably practicable, consistent with sound and legal business practices and judgment, through a program using Commercially Reasonable Efforts for the exploitation of the Patent Rights.  Licensee shall use Commercially Reasonable Efforts to obtain all necessary government approvals for the manufacture, use, sale and distribution of Licensed Products.  Thereafter, Licensee agrees that until expiration or termination of this Agreement, Licensee shall use Commercially Reasonable Efforts to keep Licensed Products reasonably available to the public, in quantities sufficient to meet market demand, in the Territory.  In the event Licensee decides not to exploit, either directly or indirectly, a licensed Patent Right in a given country of the Territory, it shall promptly inform CMCC in writing and the license granted to it hereunder with respect to that Patent Right in that country in the Territory will immediately terminate.

 

B.                                     Licensee shall use Commercially Reasonable Efforts to accomplish the specific tasks set forth in Appendix 2 attached hereto in accordance with the timeframe set forth therein (such Appendix 2 is hereby incorporated by reference and is referred to herein as the “Development Plan”)

 

C.                                     Licensee shall use Commercially Reasonable Efforts to accomplish the specific requirements of the Development Plan, including the Diligence Specifications set forth in this Paragraph C (the “Diligence Specifications”).  The Diligence Specifications shall be part of the Development Plan and the timeframes for such Diligence Specifications shall be treated as definitive.

 

1.                                       Determine protective efficacy of Licensed Products in mouse colonization or systemic models within [* * *].  The Parties acknowledge and agree that Licensee has completed this Diligence Specification as of [* * *].

 

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2.                                       Nominate top 2-3 Licensed Products for vaccine formulation within [* * *] of accomplishing Diligence Specification 1.

 

3.                                       Final formulation of Licensed Product for pre-IND studies within [* * *] of accomplishing Diligence Specification 2.

 

4.                                       Completion of toxicology lots of nominated Licensed Products for in vivo toxicology studies within [* * *] of accomplishing Diligence Specification 3.

 

D.                                     In the event Licensee fails to meet any of the objective(s) set forth in the Development Plan, including without limitation the Diligence Specifications, in a timely manner, CMCC shall notify Licensee thereof in writing, and Licensee shall have sixty (60) days following such notification to establish to the reasonable satisfaction of CMCC that (i) it has met such objective(s); or (ii) a revision to the Development Plan is necessary and appropriate as contemplated below in Paragraph E.  In the event Licensee fails to establish the same to CMCC’s reasonable satisfaction, CMCC shall have the right in its sole discretion to terminate in whole or in part the license granted to Licensee under this Agreement effective immediately.

 

E.                                      Notwithstanding anything above to the contrary, CMCC shall not unreasonably withhold its consent to any revision of the objective(s) or timing of the Development Plan, when requested in writing in advance by Licensee and the request is supported by evidence reasonably acceptable to CMCC: (i) of technical difficulties or delays that Licensee could not reasonably have avoided; (ii) that Licensee is proposing and will implement satisfactory and effective means of addressing such difficulties or delays, including sufficient financial and technical resources; and (iii) that Licensee, its Affiliates and/or Sublicensees have in good faith made Commercially Reasonable Efforts and expended commercially

 

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reasonable and adequate resources to meet said objective and will continue to do so.

 

F.                                       If, during the Term of this Agreement, Licensee makes any discovery or invention that Licensee reasonably believes to be patentable and is not within the scope of the license to the Patent Rights granted to it hereunder but is dominated by the Patent Rights, Licensee shall, as a condition of this license, confidentially disclose such discovery or invention to CMCC, on usual and customary terms necessary to protect its patentability or its confidentiality as a trade secret.  CMCC shall have the right to review in advance of filing any related patent application by or on behalf of Licensee or any assignee of Licensee, for purposes of evaluating the relatedness to the Patent Rights.  Recognizing that CMCC enters into this Agreement in furtherance of its charitable academic research mission, Licensee shall use good faith and reasonable efforts to enter into with CMCC a non-exclusive license or permit CMCC, as applicable, including for no more than a nominal fee, to practice such discovery or invention, whether or not patented, solely for CMCC internal and academic research purposes.  For the avoidance of doubt, any license granted under this ARTICLE III, Paragraph F by Licensee to CMCC shall not grant CMCC, its Affiliates or its sublicensees any right to use or practice the licensed rights for commercial purposes.

 

ARTICLE IV.                                          ROYALTIES AND OTHER PAYMENTS

 

A.                                     For the rights, privileges and exclusive license granted hereunder, Licensee shall pay to CMCC the following amounts in the manner hereinafter provided.  Unless expressly stated otherwise in this Agreement, periodic payment obligations listed below shall endure through the Term of this Agreement, unless this Agreement shall be sooner terminated as hereinafter provided.

 

1.                                       A license amendment fee of [* * *], and such fee is due within thirty (30) days after the Effective Date of this Agreement.

 

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2.                                       As of the Effective Date Licensee has paid in full the license issue fee of [* * *], which license issue fee was deemed earned and due within thirty (30) days of the effective date of the Original Agreement.

 

3.                                       Licensee shall make the following one-time payments to CMCC in connection with the first occurrence of the following events (“Milestones”):

 

(a)                                  [* * *] upon the [* * *] by Licensee or any Sublicensee with respect to a Licensed Product;

 

(b)                                  [* * *] upon the [* * *] by Licensee or any Sublicensee with respect to a Licensed Product; and

 

(c)                                   [* * *] upon the [* * *] of a Licensed Product.

 

Licensee will promptly notify CMCC in writing of the achievement of any of the foregoing Milestones by Licensee or any of its Sublicensees, and will require its Sublicensees to provide it with prompt written notice upon their achievement of any of the foregoing Milestones.  CMCC may invoice Licensee for the applicable Milestone payment after receipt of such notice, and Licensee shall pay such invoice within forty-five (45) days after its receipt thereof.

 

B.                                     During the Term, Licensee shall pay CMCC running royalties in an amount equal to [* * *] of Net Sales of Licensed Products or Licensed Processes used, leased or sold by and/or for Licensee (including its Affiliates) or any Sublicensees (“Running Royalties”); provided , however , to the extent that a license or licenses is required by Licensee to third party patents or other intellectual property (i) in order to practice the Patent Rights, or (ii) in order to manufacture or sell Licensed Products without such activities (as described in clause (i) or (ii) of this sentence) resulting in the infringement of such third party intellectual property, Licensee

 

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may, for each such required license, deduct from the Running Royalties owed to CMCC an amount up to [* * *] of the royalties due to each third party for such intellectual property rights; provided further , that no single Running Royalty payment owed to CMCC may be reduced by more than [* * *] as a result of any such deduction.  Licensee may not deduct, as a result of any such required third party license, a greater percentage of royalties from those owed to CMCC than the percentage deducted from such third party from whom such license is required as described in this Paragraph.  Notwithstanding anything in this ARTICLE IV, Paragraph B, the Running Royalty owed to CMCC by Licensee shall not be reduced below [* * *] of the Net Sales of Licensed Products or Licensed Processes.

 

1.                                       No multiple royalties shall be payable on account of any Licensed Product or Licensed Process, its manufacture, use, lease or sale being covered by more than one Patent Rights patent application or Patent Rights issued patent licensed under this Agreement.  In the event that any patent or claim thereof included within the Patent Rights is no longer a Valid Claim, then all obligations to pay royalties based on that patent or claim or any claim patentably indistinct therefrom will cease as of the date such patent or claim is no longer a Valid Claim.

 

2.                                       For purposes of calculating royalties, in the event that a Licensed Product includes [* * *], then Net Sales of the [* * *] shall be calculated using one of the following methods:

 

(a)                                  [* * *]; or

 

(b)                                  In the event that no such [* * *] during the applicable accounting period, Net Sales for purposes of determining royalties payable hereunder shall be calculated by [* * *].

 

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C.                                     In the event Licensee has granted sublicenses under this Agreement, Licensee shall pay to CMCC the relevant percentage as set forth below of Sublicensee Payments: (i) [* * *] of Sublicensee Payments received by Licensee any time prior to [* * *]; and (ii) [* * *] of Sublicensee Payments received by Licensee any time after [* * *].

 

D.                                     Royalty payments shall be paid in United States dollars in Boston, Massachusetts, or at such other place as CMCC may reasonably designate consistent with the laws and regulations controlling in any foreign country.  If currency conversion shall be required in connection with the payments of royalties or other amounts hereunder, the conversion shall be made by using the exchange rate prevailing at Bank of America on the last business day of the calendar quarterly reporting period to which such royalty payments relate.

 

E.                                      Licensee shall make payment of the amounts specified in this ARTICLE IV to CMCC within forty-five (45) days after March 31, June 30, September 30 and December 31 each year during the Term of this Agreement, covering the quantity of Licensed Products sold by Licensee during the preceding calendar quarter (in the case of royalties payable under ARTICLE IV, Paragraph B) and covering the percentage of any Sublicensee Payment (as calculated in accordance with ARTICLE IV, Paragraph C) received during the preceding calendar quarter.  The last such payment shall be made within forty-five (45) days after termination of this Agreement.  The royalty payments set forth in this Agreement shall, if overdue, bear interest until payment at a per annum rate of two and a half percent (2.5%) above the prime rate in effect at Bank of America on the due date.  The payment of such interest shall not foreclose CMCC from exercising any other rights it may have as a consequence of the lateness of any payment.

 

ARTICLE V.                                               REPORTS, RECORDS AND RELATED MATTERS

 

A.                                     Licensee shall keep, and shall require its Affiliates and Sublicensees to keep, full, true and accurate books and records, including books of account in accordance

 

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with generally accepted accounting principles, in sufficient detail to enable CMCC to determine Licensee’s compliance with this Agreement, including diligence with respect to development, and the royalty and other amounts payable to CMCC under this Agreement.  Said books and records, including books of account, shall be kept at Licensee’s principal place of business or the principal place of business of the appropriate division of Licensee to which this Agreement relates.  Said books and the supporting data shall be retained for at least four (4) years following the end of the calendar year to which they pertain.

 

B.                                     CMCC shall have the right to inspect, copy and audit, on five (5) business days’ notice, the books described above from time to time to verify the reports provided for herein or compliance in other respects with this Agreement.  CMCC or its agents shall perform such inspection, copying and auditing at CMCC’s expense during Licensee’s regular business hours.  CMCC may exercise its rights under this Paragraph B of ARTICLE V no more than one (1) time in any twelve-month period unless for cause.

 

C.                                     Until the later of First Commercial Sale of a Licensed Product or the achievement of the last development Milestone, and for such later periods as CMCC shall by written request from time to time require, Licensee shall provide to CMCC, at least annually, reasonable detail regarding the activities of Licensee and Licensee’s Affiliates and Sublicensees relative to achieving the objectives set forth in the Development Plan in a timely manner, including but not limited to, financial expenditures to achieve said objectives; research and development activities; names, addresses and actions of all Sublicensees and Affiliates; the progress of obtaining regulatory approvals; strategic alliances and manufacturing, sublicensing and marketing efforts.  Licensee shall report no more than quarterly.

 

D.                                     After First Commercial Sale, within ninety days (90) after the end of each calendar quarter, Licensee shall deliver to CMCC, at Licensee’s expense, true and accurate reports for the said preceding quarter, giving such particulars of the

 

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business conducted by Licensee, its Affiliates and its Sublicensees under this Agreement as shall be pertinent to CMCC determining compliance with this Agreement, including a royalty accounting hereunder and to verify Licensee’s activities with respect to achieving the objectives of the Development Plan described in ARTICLE III above.  Licensee shall provide these reports in an electronic or other format compatible with CMCC’s data processing and/or license management systems (e.g., Microsoft Excel) as CMCC may reasonably specify.  Such Reports shall include at least the following:

 

1.                                       Number of Licensed Products and Licensed Processes manufactured and sold and a breakdown indicating numbers sold to CHB.

 

2.                                       Total Net Sales for Licensed Products and Licensed Processes sold, by country.

 

3.                                       Accounting for all Licensed Products and Licensed Processes disposed of for no consideration, such as those distributed for, as the case may be, test marketing, sampling and promotional uses, clinical trial purposes, regulatory approval or compliance, compassionate uses, global access programs intended to provide Licensed Product at reduced prices in the developing world, or other similar uses.

 

4.                                       Applicable deductions including but not limited to e.g. Chargeback Payments, and rebates.

 

5.                                       Total royalties payable to CMCC.

 

6.                                       Names and addresses of all Sublicensees of Licensee.

 

7.                                       Payments received by Licensee from Affiliates and Sublicensees.

 

8.                                       Licensed Products manufactured and sold to the U.S. Government, segregating those sold at a profit from those sold at cost in light of any

 

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royalty-free, non-exclusive license that may heretofore have been granted to the U.S. Government.

 

9.                                       A listing, with brief descriptions, of any intellectual property required to be disclosed pursuant to ARTICLE III, Paragraph F.

 

E.                                      On or before the ninetieth (90th) day following the close of Licensee’s fiscal year, Licensee shall provide CMCC with Licensee’s certified financial statements for the preceding fiscal year, including without limitation all statements reflecting profits and losses from operations, cash balances, and any management letter.

 

F.                                       Licensee acknowledges that policies of CMCC, Harvard Medical School and affiliated organizations, relating to, inter alia, conflicts of interest and intellectual property, may affect certain direct and indirect arrangements between inventors and Licensee or related organizations.  During the Term of this Agreement and for so long as a CHB-inventor of the Patent Rights is affiliated with CHB or Harvard Medical School, Licensee shall notify CMCC in writing at least 30 days before Licensee, or any Affiliate of Licensee, or any organization owned, controlled or influenced by a substantial shareholder (>5%), officer or director of Licensee, enters into any agreement other than this Agreement with or involving such CHB-inventor, or his or her family, relatives or members or staff of his or her laboratory, whether relating to sponsored research, consulting, board membership, securities, or otherwise.  Licensee’s notice to CMCC shall include a detailed description of all proposed terms and conditions.  Licensee shall not enter into such an agreement if it would violate such policies unless the terms and conditions of the agreement have been duly approved pursuant to such policies.

 

ARTICLE VI.                                          PATENT PROSECUTION

 

A.                                     Licensee shall apply for, seek prompt issuance of, and maintain during the Term of this Agreement the Patent Rights set forth in Appendix 1 using counsel reasonably acceptable to CMCC.  The specifications of any such patent

 

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application and any patent issuing thereon shall state, to the extent applicable, “This invention was made with government support under [contract] awarded by [Federal agency].  The government has certain rights in this invention.” The prosecution, filing and maintenance of all Patent Rights applications and patents shall be the primary responsibility of Licensee and at Licensee’s sole expense.  CMCC will be copied on all patent prosecution correspondence.  CMCC shall have reasonable opportunities to comment on and to advise Licensee regarding such prosecution and shall reasonably cooperate with Licensee at Licensee’s sole expense, in the preparation, filing, prosecution and maintenance of the Patent Rights.

 

B.                                     Licensee shall reimburse CMCC for all patent costs, past, present and future incurred by CMCC for the preparation, filing, prosecution and maintenance of patents underlying the Patent Rights.  After the Effective Date, CMCC shall not incur any such patent prosecution expenses related to the Patent Rights without Licensee’s prior written consent except for those Patent Rights CMCC has the right to prosecute pursuant to Paragraph C and D of this ARTICLE VI.  Upon request of CMCC, and only upon such request, Licensee agrees to have CMCC’s patent counsel directly bill Licensee and Licensee shall directly pay such invoices in compliance with such counsel’s customary business terms, but in any event within thirty (30) days.

 

C.                                     If, in any country, Licensee elects to no longer pay the expenses of a patent application or patent included within Patent Rights, Licensee shall notify CMCC not less than thirty (30) days prior to such action (but no less than sixty (60) days prior to the date that a response related to such patent application or patent is due) and, in such event, the license granted to Licensee hereunder with respect to such patent or patent application in such country will immediately cease.  Such notice shall not relieve Licensee from responsibility to pay such patent related expenses incurred by Licensee prior to the expiration of the notice period (or such longer

 

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period specified in Licensee’s notice).  CMCC may elect to continue paying such patent related expenses, at its own expense, and Licensee will execute all documents CMCC may reasonably request for such purposes; however no such action will change the Parties’ respective ownership interests in the relevant patent or patent application.

 

D.                                     In the event Licensee elects not to pursue, maintain or retain a particular Patent Right(s) listed in Appendix 1 in any country in the Territory, then Licensee shall immediately notify CMCC in writing and, subject to the rights of the United States government and any other contractual obligations to research sponsors, Licensee will authorize CMCC to assume the filing, prosecution and/or maintenance of such application or patent in such country at CMCC’s expense.  In such event, Licensee shall provide to CMCC any authorization necessary to permit CMCC to pursue and/or maintain such Patent Right and Licensee’s license under this Agreement to that Patent Right in such country will immediately cease.  CMCC shall then be free to license its one-half ownership interest in the applicable Patent Right(s) to any third party without any obligations to Licensee (other than those obligations with respect to Joint Inventions as set forth in the MTA and ARTICLE XIV of this Agreement).

 

ARTICLE VII.                                     INFRINGEMENT

 

A.                                     Licensee and CMCC shall each inform the other promptly in writing of any alleged infringement by a third party of the Patent Rights in the Field of Use and of any available evidence thereof.

 

B.                                     During the Term of this Agreement, CMCC shall have the right, but shall not be obligated, to prosecute at its own expense any infringement of the Patent Rights and, in furtherance of such right, Licensee hereby agrees that CMCC may include Licensee as a party plaintiff in any such suit, without expense to Licensee.  No settlement, consent judgment or other voluntary final disposition of the suit that adversely affects the rights of Licensee under this Agreement may be entered into

 

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without the consent of Licensee.  The total cost of any infringement action commenced or defended solely by CMCC shall be borne by CMCC.  Any recovery or damages for past infringement derived therefrom will first be applied to CMCC and Licensee’s expenses, including reasonable attorney’s fees, in connection therewith, and any balance remaining then will be divided eighty percent (80%) to CMCC and twenty percent (20%) to Licensee.

 

C.                                     If within three (3) months after having been notified with sufficient facts of any alleged infringement, CMCC shall have been unsuccessful in persuading the alleged infringer to desist and shall not have brought and shall not be diligently prosecuting an infringement action, or if CMCC notifies Licensee of its intention not to bring suit against any alleged infringer then, provided that the exclusive license granted to Licensee in ARTICLE II is still in effect for such relevant Patent Rights, Licensee shall have the right, but shall not be obligated, to prosecute at its own expense any infringement of the Patent Rights.  CMCC hereby agrees that Licensee may include CMCC as a party plaintiff in any such suit, without expense to CMCC.  No settlement, consent judgment or other voluntary final disposition of the suit may be entered into without the consent of CMCC, which consent shall not be unreasonably withheld.  Licensee shall indemnify CMCC against any order for costs that may be made against CMCC in such proceedings to the extent that such order does not relate to or arise from CMCC’s negligence, reckless misconduct or intentional misconduct during such proceeding.

 

D.                                     In the event Licensee shall undertake the enforcement and/or defense of the Patent Rights by litigation pursuant to Paragraph C of this ARTICLE VII, Licensee may withhold up to fifty percent (50%) of the payments otherwise thereafter due to CMCC under ARTICLE IV above and apply the same toward reimbursement of up to fifty percent (50%) of Licensee’s expenses, including reasonable attorney’s fees, in connection therewith provided that Licensee sends a quarterly report to

 

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CMCC detailing such expenses, offset and withholdings.  Any recovery of damages by Licensee for each such suit shall be applied first in satisfaction of any unreimbursed expenses and legal fees of CMCC and Licensee relating to such suit and next toward reimbursement of CMCC for any payments under ARTICLE IV past due or withheld and applied pursuant to this ARTICLE VII.  Any balance remaining will then be divided eighty percent (80%) to Licensee and twenty percent (20%) to CMCC.

 

E.                                      In the event that a declaratory judgment action alleging invalidity or non-infringement of any of the Patent Rights shall be brought against Licensee, CMCC, at its option, shall have the right, within thirty (30) days after commencement of such action, to intervene and participate along with Licensee in the defense of the action at its own expense.

 

F.                                       In any infringement suit which either Party may institute to enforce the Patent Rights pursuant to this Agreement, the other Party hereto shall cooperate in all reasonable respects and, to the extent reasonably possible, have its employees testify when requested and make available relevant records, papers, information, samples, specimens, and the like.

 

G.                                     Licensee shall, during the exclusive period of this Agreement, have the sole right subject to the terms and conditions hereof to sublicense any alleged infringer for future use of the Patent Rights to the extent licensed by this Agreement.  Any upfront fees paid to Licensee as part of such a sublicense shall be shared between Licensee and CMCC in accordance with the terms of ARTICLE IV, Paragraph C as if they were Sublicensee Payments under this Agreement.

 

ARTICLE VIII.                                UNIFORM INDEMNIFICATION AND INSURANCE PROVISIONS

 

A.                                     Licensee shall indemnify, defend and hold harmless CMCC, its Affiliates, current or future directors, trustees, officers, faculty, medical and professional staff, employees, students and agents and their respective successors, heirs and assigns

 

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(the “Indemnitees”), against any claim, liability, cost, damage, deficiency, loss, expense or obligation of any kind or nature (including without limitation reasonable attorneys’ fees and other costs and expenses of litigation) incurred by or imposed upon the Indemnitees or any one of them in connection with any claims, suits, actions, demands or judgments arising out of any theory of product liability (including, but not limited to, actions in the form of tort, warranty, or strict liability) concerning any product, process or service made, used or sold by the Licensee, its Affiliates or its Sublicensees or any agents thereof pursuant to any right or license granted to the Licensee under this Agreement.

 

B.                                     Licensee’s indemnification under ARTICLE VIII, Paragraph A above shall not apply to any liability, damage, loss or expense to the extent that it is directly attributable to the negligent activities, reckless misconduct or intentional misconduct of the Indemnitees.

 

C.                                     Licensee agrees, at its own expense, to provide attorneys reasonably acceptable to CMCC to defend against any actions brought or filed against any party indemnified hereunder with respect to the subject of indemnity contained herein, whether or not such actions are rightfully brought.

 

D.                                     Beginning at the time as any such product, process or service is being commercially distributed or sold (other than for the purpose of obtaining regulatory approvals) by Licensee or by a Sublicensee, Affiliate or agent of Licensee, Licensee shall, at its sole cost and expense, procure and maintain commercial general liability insurance in amounts not less than $2,000,000 per incident and $2,000,000 annual aggregate and naming the Indemnitees as additional insureds.  Such commercial general liability insurance shall provide (i) product liability coverage and (ii) contractual liability coverage for Licensee’s indemnification under ARTICLE VIII, Paragraphs A through C of this Agreement.  If Licensee elects to self-insure all or part of the limits described above (including deductibles or retentions which are in excess of $250,000 annual

 

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aggregate), such self-insurance program must be acceptable to CMCC and the Risk Management Foundation of the Harvard Medical Institutions, Inc.  The minimum amount of insurance coverage required under this ARTICLE VIII, Paragraph D, shall not be construed to create a limit of Licensee’s liability with respect to its indemnification under ARTICLE VIII, Paragraphs A through C of this Agreement.

 

E.                                      Licensee shall provide CMCC with written evidence of such insurance upon request of CMCC.  Licensee shall provide CMCC with written notice at least fifteen (15) days prior to the cancellation, non-renewal or material change in such insurance.  Notwithstanding any other term of this Agreement, if Licensee does not obtain replacement insurance providing comparable coverage within such fifteen (15) day period, CMCC shall have the right to terminate this Agreement effective at the end of such fifteen (15) day period without notice of any additional waiting periods.

 

F.                                       Licensee shall maintain such commercial general liability insurance during (i) the period that any such product, process or service is being commercially distributed or sold (other than for the purpose of obtaining regulatory approvals) by Licensee or by a Sublicensee, Affiliate or agent of Licensee and (ii) a reasonable period after the period referred to above, which in no event shall be less than fifteen (15) years.

 

G.                                     The provisions of this ARTICLE VIII shall survive expiration or termination of this Agreement.

 

H.                                    CMCC MAKES NO WARRANTY, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR ANY EXPRESS OR IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, OR WARRANTY OF NON-INFRINGEMENT, WITH RESPECT TO ANY MATTER WITHIN THE SCOPE

 

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OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION ANY WARRANTY WITH RESPECT TO THE PATENT RIGHTS, LICENSED PRODUCTS, OR ANY PATENT, TRADEMARK, SOFTWARE, TRADE SECRET, TANGIBLE RESEARCH PROPERTY, INFORMATION OR DATA LICENSED OR OTHERWISE PROVIDED TO LICENSEE HEREUNDER, AND HEREBY DISCLAIMS THE SAME.

 

ARTICLE IX.                                         COMPLIANCE WITH LAWS; EXPORT CONTROLS

 

Licensee shall comply with all applicable laws and regulations, including, without limitation, statutes and regulations affecting drug testing, development, marketing and distribution; laws and implementing regulations of the Department of Commerce governing intellectual property in federally-funded inventions; and Export Administration Regulations of the United States Department of Commerce issued pursuant to the Export Administration Act of 1979 (50 App. U.S.C. §2401 et seq.).  Licensee understands and acknowledges that transfer of certain technical data, computer software, laboratory prototypes and other commodities is subject to United States laws and regulations controlling their export, some of which prohibit or require a license for the export of certain types of technical data, to certain specified countries.  CMCC neither represents that a license shall not be required, nor that if required, it shall be issued.  Licensee hereby agrees and gives written assurance that it will comply with all United States laws and regulations, and any applicable similar laws and regulations of any other country, controlling the export of commodities and technical data, that it will be solely responsible for any violation of such by Licensee and/or its Affiliates and/or Sublicensees and that it will defend and hold CMCC, its Affiliates and their officers, directors, employees, agents, and medical staff harmless in accordance with the process set forth in Paragraphs B and C of ARTICLE VIII in the event of any legal action of any nature occasioned by such violation and any action by any governmental agency or authority, or any other party, relating to any asserted illegality or regulatory violation in the development, production, approval, marketing, sale, storage, manufacture, distribution, export or commercialization of Licensed Products or Licensed Processes by the Licensee, its Affiliates and/or its Sublicensees.

 

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ARTICLE X.                                              NON-USE OF NAMES AND PUBLICATIONS

 

A.                                     Licensee represents and agrees that it will not use the name, names, logos or trademarks of the CMCC or any of its Affiliates, nor the name or photograph or other depiction of any employee or member of the staff of CMCC or such Affiliates, nor any adaptation of any of the foregoing, in any advertising, promotional, or sales literature without, in each case, prior written consent from CMCC and from the individual staff member, employee, or student if such individual’s name, photograph or depiction is used.  Notwithstanding the above, Licensee may state that it is licensed by CMCC under one or more patents and/or applications consistent with this Agreement, and Licensee may comply with disclosure requirements of all applicable laws relating to its business, including United States and state security laws.  In addition, Licensee may refer to publications by employees of CMCC in the scientific literature.

 

B.                                     CMCC agrees to use reasonable efforts to provide Licensee with any draft publications or presentations that are submitted to the Technology & Innovation Development Office of CMCC by Dr. Richard Malley directly related to the Patent Rights under CMCC’s retained rights under ARTICLE II, Paragraph B at least thirty (30) days prior to its anticipated publication or presentation.  Licensee shall have the right to review such publication or presentation to identify Licensee’s non-public information.

 

ARTICLE XI.                                         ASSIGNMENT

 

A.                                     CMCC may assign this Agreement at any time without the prior consent of Licensee.  Except as otherwise provided herein, this Agreement is not assignable or delegable, in whole or in part, by Licensee without the prior written consent of CMCC acting through an authorized designee, and any purported assignment otherwise shall be void and of no effect.

 

B.                                     Notwithstanding the foregoing, in the event Licensee merges with another entity, is acquired by another entity, or sells all or substantially all of its assets to another

 

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entity, Licensee may assign its rights and obligations hereunder to the surviving or acquiring entity if: (i) Licensee is not then in breach of this Agreement; (ii) the proposed assignee has, or will have, immediately upon assignment, sufficient available resources to carry out the Development Plan; (iii) Licensee provides to CMCC written notice of the assignment at least five (5) days prior to the effective date of the assignment; and, CMCC receives from the assignee, in writing, at least five (5) days prior to the effective date of the assignment, a reaffirmation of the terms of this Agreement, an agreement to be bound by the terms of this Agreement and an agreement to perform the obligations of Licensee under this Agreement.

 

C.                                     In addition, the license granted to Licensee under ARTICLE II shall include the right to have some or all of Licensee’s rights or obligations under this Agreement performed or exercised by one or more of Licensee’s Affiliates, provided that any act or omission taken or made by an Affiliate of Licensee under this Agreement shall be deemed an act or omission by Licensee under this Agreement.

 

ARTICLE XII.                                    DISPUTE RESOLUTION AND ARBITRATION

 

A.                                     Any and all claims, disputes or controversies arising under, out of, or in connection with this Agreement, which have not been resolved by good faith negotiations between the Parties shall be resolved by final and binding arbitration in Boston, Massachusetts in accordance with the rules then obtaining applicable to the appointment of a single arbitrator of the American Health Lawyers Association, or in the event such arbitration is not then available under those rules, the rules of the American Arbitration Association (“AAA”).  All expenses and costs of the arbitrators and the arbitration in connection therewith will be shared equally, except that each Party will bear the costs of its prosecution and defense, including without limitation attorneys’ fees and the production of witnesses and other evidence.  Any award rendered in such arbitration shall be final and may be enforced by either Party.

 

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B.                                     Notwithstanding the foregoing, nothing in this Agreement shall be construed to waive any rights or timely performance of any obligations existing under this Agreement, including without limitation Licensee’s obligations to make royalty and other payments, and also, unless the license granted in ARTICLE II has been terminated, Licensee’s obligation to continue due diligence and development obligations.  Notwithstanding any other provision of this Agreement, Licensee agrees that it shall not withhold or offset such payments, and agrees that Licensee’s sole remedy for alleged breaches by CMCC is pursuant to this ARTICLE XII.

 

ARTICLE XIII.                               TERM AND TERMINATION

 

A.                                     The “Term” of this Agreement shall be [* * *] or [* * *], whichever period is the longer term.

 

B.                                     Notwithstanding ARTICLE XII of this Agreement, CMCC may terminate this Agreement immediately upon the bankruptcy, judicially declared insolvency, liquidation, dissolution or cessation of operations of Licensee; or the filing of any voluntary petition for bankruptcy, dissolution, liquidation or winding-up of the affairs of Licensee; or any assignment by Licensee for the benefit of creditors; or the filing of any involuntary petition for bankruptcy, dissolution, liquidation or winding-up of the affairs of Licensee which is not dismissed within ninety (90) days of the date on which it is filed or commenced; or upon any final judicial or administrative determination that this Agreement violates, or if continued would violate, in a substantial manner, any provision of the Federal Internal Revenue Code, applicable rights of the United States or obligations of CMCC under Title 15 of the United States Code, or other Federal or State laws applicable to CMCC; or in the circumstances providing for immediate termination of the license granted to Licensee hereunder as described in ARTICLE III, Paragraph D or in ARTICLE VI, Paragraph C or D of this Agreement.

 

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C.                                     CMCC may terminate this Agreement upon thirty (30) days prior written notice in the event of Licensee’s failure to pay to CMCC royalties or any payments due and payable hereunder in a timely manner, unless Licensee shall make all such payments to CMCC within said thirty (30) day period.  Notwithstanding ARTICLE XII of this Agreement upon the expiration of the thirty (30) day period, if Licensee shall not have made all such payments to CMCC, the rights, privileges and licenses granted hereunder shall terminate without further action by CMCC.

 

D.                                     Except as otherwise provided in Paragraphs B and C above, in the event that Licensee shall default in the performance of any of its material obligations under this Agreement, and the default has not been remedied to CMCC’s reasonable satisfaction within sixty (60) days after the date of CMCC’s notice to Licensee in writing of such default, CMCC may, by written notice to Licensee, terminate this Agreement effective immediately or upon such date as CMCC, in its sole discretion, shall designate in such notice.

 

E.                                      Licensee shall have the right to terminate this Agreement in its entirety, or on a country-by-country and Licensed Product-by-License Product basis, at any time upon ninety (90) days’ prior written notice to CMCC, upon payment by Licensee of all amounts due CMCC through the effective date of termination.  This right is in addition to, and separate from, Licensee’s rights under ARTICLE VI, Paragraph C and Licensee’s rights under ARTICLE VI, Paragraph D.

 

F.                                       Upon expiration or termination of this Agreement for any reason, all of the rights, privileges and licenses granted hereunder shall terminate without further action by either Party, except that nothing herein shall be construed to release either Party from any obligation that matured prior to the effective date of, or that expressly survives, such termination or expiration.  For clarity, upon expiration or termination of this Agreement for any reason, Licensee’s obligation to pay royalties or any other amount to CMCC under this Agreement (other than any

 

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such payments that matured prior to the effective date of such termination) shall immediately cease.

 

G.                                     If Licensee terminates this Agreement due to adverse results in clinical or other testing of Licensed Products or Licensed Processes, Licensee shall make available to CMCC, for purposes of its evaluation of the future viability of the technology, a summary of such results together with copies of any government-mandated reports, such as FDA safety reports, made in connection with the decision to terminate development.

 

ARTICLE XIV.                                OWNERSHIP

 

The Parties acknowledge that, notwithstanding anything to the contrary contained in this Agreement or in the MTA, the Patent Rights are and shall at all times remain Joint Inventions (as defined in the MTA) and as such, are jointly owned by Licensee and CMCC and each Party has an undivided one-half ownership interest therein.  Except as expressly set forth in this Agreement, either Party may fully exploit or non-exclusively license their rights in the Patent Rights and/or their rights in any other Joint Inventions to third parties without accounting to, or seeking the consent of, the other.  For clarity, except as expressly contemplated in ARTICLE III, Paragraph F, nothing herein shall grant CMCC any right or license with respect to Licensee’s interest in the Joint Inventions.  The provisions of this ARTICLE XIV shall survive expiration or termination of this Agreement.

 

ARTICLE XV.                                     PAYMENTS, NOTICES, AND OTHER COMMUNICATIONS

 

All notices, reports and/or other communications made in accordance with this Agreement shall be sufficiently made or given if delivered by hand, delivered by facsimile (with mechanical confirmation of transmission), or sent by overnight receipted mail, postage prepaid, or by reasonable, customary and reliable commercial overnight carrier in general usage, and addressed as follows:

 

In the case of CMCC:

 

Director:

 

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Technology and Innovation Development Office

 

Children’s Hospital Boston

 

300 Longwood Avenue

 

Boston, MA 02115

 

Payments shall be transmitted by reliable means to the same addressee, payable to Children’s Hospital Boston.

 

Wire transfers for CMCC can be made directly to:

 

Bank Name:  Bank of America, 100 Federal Street, Boston, MA

 

ABA#:  #-#-#

 

Account name:  Children’s Hospital IDE Receipts Account

 

Bank Account Number:  #-##

 

Attention:  Bruce Balter (phone #-#-#)

 

Reference:  Technology & Innovation Development Office

 

In the case of Licensee:

 

Genocea Biosciences, Inc.

 

Attention:  Chief Executive Officer

 

161 First Street Suite 2C

 

Cambridge, MA 02142, USA

 

Telephone: (617) 876-8191

 

Fax: (617) 876-8192

 

or such other address as either Party shall notify the other in writing.  NOTICE SHALL BE EFFECTIVE UPON RECEIPT.

 

ARTICLE XVI.                                GENERAL PROVISIONS

 

A.                                     All rights and remedies hereunder will be cumulative and not alternative.  This Agreement shall be construed and governed by the laws of the Commonwealth of Massachusetts.

 

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B.                                     This Agreement may be amended only by written agreement signed by the Parties.

 

C.                                     It is expressly agreed by the Parties hereto that CMCC and Licensee are independent contractors and nothing in this Agreement is intended to create an employer relationship, joint venture, or partnership between the Parties.  No Party has the authority to bind the other.

 

D.                                     This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all proposals, representations, negotiations, agreements and other communications between the Parties, whether written or oral, with respect to the subject matter hereof.  Where inconsistent with the terms of any contemporaneous related agreements (such as sponsored research agreements), terms in this Agreement shall control.

 

E.                                      If any provisions of this Agreement shall be held to be invalid, illegal or unenforceable, the Parties hereto shall substitute, by mutual consent, valid provisions for such invalid, illegal or unenforceable provisions, which valid provisions in their effect are sufficiently similar to the invalid, illegal or unenforceable provisions that it can be reasonably assumed that the Parties would have entered into this Agreement with such valid provisions.  In the event such valid provisions cannot be agreed upon, the invalidity, illegality or unenforceability of one or several provisions of this Agreement shall not affect the validity of this Agreement as a whole.

 

F.                                       This Agreement may be executed in any number of counterparts, each of which shall be deemed an original as against the Party whose signature appears thereon, but all of which taken together shall constitute but one and the same instrument.

 

G.                                     The failure of either Party to assert a right to which it is entitled, or to insist upon compliance with any term or condition of this Agreement, shall not constitute a

 

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waiver of that right or excuse a similar subsequent failure to perform any such term or condition by the other Party.

 

H.                                    Licensee agrees to mark any Licensed Products sold in the United States with all applicable United States patent numbers.  All Licensed Products shipped to or sold in other countries shall be marked in such a manner as to conform with the patent laws and practices of the country of manufacture or sale.

 

I.                                         Each party hereto agrees to execute, acknowledge and deliver such further instruments as may be reasonably necessary to carry out the purposes and intent of this Agreement.

 

J.                                         The paragraph headings contained in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

 

K.                                    The signatories below each warrant that he or she is duly authorized to execute this Agreement.

 

ARTICLE XVII.                           CONFIDENTIALITY

 

A.                                     Each Party agrees, during the Term and for five (5) years after termination of this Agreement, to maintain and protect the confidentiality of the Confidential Information of the other Party.  “Confidential Information” shall mean (i) non-public information acquired by Licensee from CMCC pursuant to ARTICLE II, Paragraph F, (ii) information disclosed or made available to or otherwise obtained by CMCC pursuant to ARTICLE III, Paragraphs B, C, D or F, ARTICLE IV, Paragraph C, ARTICLE V, Paragraphs B, C, D, E, or F, or ARTICLE XIII, Paragraph G and (iii) all other information relevant to the subject matter of this Agreement which (A) is either marked by the Party disclosing it (“Disclosing Party”) as confidential or proprietary or with a similar legend at the time of disclosure to the Party receiving such information hereunder (“Receiving Party”) or (B) is of such a nature and is disclosed in such a manner that a reasonable

 

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person would know it to be the confidential or proprietary information of the Disclosing Party.  The Receiving Party agrees to use the Disclosing Party’s Confidential Information only as necessary to fulfill the Receiving Party’s obligations or to exercise the rights granted to it under this Agreement and for no other purpose.  Furthermore, the Receiving Party agrees not to disclose the Disclosing Party’s Confidential Information to any third-party without the prior written consent of the Disclosing Party, except that either Party may disclose Confidential Information of the other Party (1) to its Affiliates, and to its and their respective directors, employees, consultants, and agents in each case who have a specific need to know such Confidential Information for purposes of this Agreement and who are bound by obligations of confidentiality and restrictions on use similarly protective of the Disclosing Party’s Confidential Information as those set forth herein, or (2) to the extent such disclosure is required for a Party (a) to comply with applicable law or regulation or the order of a court of competent jurisdiction, (b) to defend itself from litigation brought against it by the other Party or to prosecute litigation relating to a breach of the Agreement by the other Party, or (c) to comply with the rules of the U.S. Securities and Exchange Commission, any stock exchange or similar listing entity applicable to such Party; provided, however, that in the case of each of clauses 2(a), (b), and (c) above, the Receiving Party provides prior written notice of such disclosure to the Disclosing Party and takes reasonable and lawful actions to avoid or minimize the degree of such disclosure.  Notwithstanding any other provision of this Agreement, Licensee may disclose and use Confidential Information of CMCC as necessary to file or prosecute the Patent Rights and may also disclose this Agreement to any third party in connection with a financing transaction or due diligence inquiry involving Licensee; provided, however, that any such third party is bound by reasonable obligations of confidentiality and restrictions on use similar to those set forth herein.  Similarly, notwithstanding any other term of this Agreement, and in addition to its rights under subparagraphs (1) and (2) above of this ARTICLE XVII, Paragraph A, CMCC shall have the right to disclose the nature, terms and a

 

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copy of the Agreement to oversight bodies of CMCC, such as the institutional review board or conflicts of interest committee of CMCC, as necessary to comply with its obligations to such bodies and to disclose the general nature of the Agreement (without including any of the financial terms or any other specific terms or language from the Agreement, but including reasonable detail about its overall structure and business goals) in standard organizational communications issued by CMCC, such as the annual report of the Technology and Innovation Development Office and publications of the Office of Public Affairs (not to be construed as press releases).

 

B.                                     The Parties’ obligations under this ARTICLE XVII shall not apply to any information which:

 

1.                                       at the time of disclosure is already in the public domain;

 

2.                                       after disclosure hereunder enters the public domain, except through breach of this Agreement by the Receiving Party;

 

3.                                       the Receiving Party can demonstrate was rightfully in the Receiving Party’s possession prior to the time of disclosure by or on behalf of the Disclosing Party hereunder, and was not acquired directly or indirectly from the Disclosing Party;

 

4.                                       becomes available to the Receiving Party from a third-party who, to the knowledge of the Receiving Party, is not legally or contractually prohibited from disclosing such Confidential Information;

 

5.                                       the Receiving Party can demonstrate was developed by or for the Receiving Party independently of the disclosure of Confidential Information by the Disclosing Party or its Affiliates.

 

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C.                                     Licensee and CMCC agree that the confidentiality obligations hereunder shall require that each Party use confidentiality procedures and practices to protect the other Party’s Confidential Information as each would use for its own confidential information, but at least a reasonable degree of care.

 

D.                                     Licensee agrees that nothing herein shall prevent CMCC from disclosing or publishing CMCC’s own Confidential Information (other than this Agreement), or create any legal liability to Licensee for doing so.

 

E.                                      The provisions of this ARTICLE XVII shall survive expiration or termination of this Agreement for the period of time specified in the first sentence of ARTICLE XVII, Paragraph A.

 

[ Signature Page Follows ]

 

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be effective as of the date last written below.

 

CHILDREN’S MEDICAL CENTER CORPORATION

GENOCEA BIOSCIENCES, INC.

 

 

By:

/s/ Erik Halvorsen

 

By:

/s/ Chip Clark

 

 

 

 

 

 

 

 

 

 

Name:

Erik Halvorsen, Ph.D.

 

Name:

Chip Clark

 

 

 

 

 

 

 

 

 

 

Title:

Executive Director, TIDO

 

Title:

President & CEO

 

 

 

 

 

 

 

 

 

 

Date:

March 29, 2012

 

Date:

March 23, 2012

 

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Appendix 1

 

PATENT RIGHTS

 

Serial Number

 

Filing Type

 

Filing Date

[* * *]

 

 

 

 

[* * *]

 

[* * *]

 

[* * *]

[* * *]

 

[* * *]

 

[* * *]

[* * *]

 

[* * *]

 

[* * *]

[* * *]

 

 

 

 

[* * *]

 

[* * *]

 

[* * *]

[* * *]

 

 

 

 

[* * *]

 

[* * *]

 

[* * *]

[* * *]

 

[* * *]

 

[* * *]

[* * *]

 

 

 

 

[* * *]

 

[* * *]

 

[* * *]

[* * *]

 

[* * *]

 

[* * *]

[* * *]

 

[* * *]

 

[* * *]

[* * *]

 

[* * *]

 

[* * *]

[* * *]

 

 

 

 

[* * *]

 

[* * *]

 

[* * *]

[* * *]

 

 

 

 

[* * *]

 

[* * *]

 

[* * *]

 

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Appendix 2

 

DEVELOPMENT PLAN

 

[* * *].

 



 

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Appendix 3

 

CMCC # 7876

 

Material Transfer Agreement

 

THIS AGREEMENT is entered into this          day of September 2008, (“Effective Date”) by and between CHILDREN’S HOSPITAL BOSTON, a charitable corporation duly organized and existing under the laws of the Commonwealth of Massachusetts and having a principal place of business located at 300 Longwood Avenue, Boston, Massachusetts (“Hospital”) and Genocea Biosciences, Inc., a corporation duly organized and existing under the laws of the State of Delaware and having a principal place of business located at 161 First Street, Suite 2c Cambridge, MA 02142 (“Company”).

 

WHEREAS, through expenditure of substantial effort and resources, Company has developed and/or controls a high-throughput system for in vitro screening of proven effectors of immunity (e.g. libraries of efficacious T cells) to identify their specific target antigens from the complete proteome of any disease-causing agent (the “High Throughput System”);

 

WHEREAS, through expenditure of substantial effort and resources, Richard Malley, M.D., (“Hospital Principal Investigator”) has determined that a whole cell vaccine (WCV) made from killed unencapsulated pneumococcal cells, as well as purified antigens, can protect animals against colonization via CD4 +  T H l7 responses;

 

WHEREAS, Company and Hospital (including Hospital Principal Investigator) agree that identification of effective antigens (e.g., T cell antigens) useful in vaccine systems is particularly challenging and that application of the High Throughput System to the problem of identifying pneumococcal T-cell antigens would be of mutual interest and benefit to Hospital and to Company and may further the practice of medicine and the research mission of Hospital in a manner consistent with its status as a non-profit, tax-exempt, teaching hospital;

 

WHEREAS, Hospital and Company are willing to collaborate and conduct research in the fie1d of pneumococcal T cell-based protein vaccines and wish to enter into this Agreement to conduct a research project entitled, Novel high-throughput screening platform to develop a pneumococcal protein-based vaccine (“Research Plan”).  Hospital Principal Investigator and Company regard this project as a scientific collaboration and treat matters of authorship and experimental plans as such;

 

NOW, THEREFORE, the parties agree as follows:

 

1.                                       Hospital/Principal Investigator Responsibilities.

 

(a)                                  Principal Investigator agrees to participate in Research Plan described in Appendix A.  The scope of participation and timeframe of participation is expected to commence and terminate in accordance with the collaborative research agreement with PATH Vaccine

 

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Solutions (“PVS”) dated June 19, 2008 between PVS and Hospital and in accordance with the collaborative research agreement with PVS dated April 21, 2008 between PVS and Company, and may be extended and additional material added by amendment(s) mutually agreed to by Hospital and Company in writing.

 

(b)                                  Principal Investigator shall provide to Company certain written information, materials and data (collectively “Hospital Material”) as necessary for the performance of the Research Plan, and/or as otherwise agreed by the parties and as listed in Appendix B.

 

2.                                       Company Responsibilities.

 

(a)                                  Company agrees to participate in Research Plan described in Appendix A.  The scope of participation and timeframe of participation is expected to commence and terminate in accordance with the collaborative research agreement with PVS dated June 19, 2008 between PVS and Hospital and in accordance with the collaborative research agreement with PVS dated April 21, 2008 between PVS and Company, and may be extended and additional material added by amendment(s) mutually agreed to by Hospital and Company in writing.

 

(b)                                  Company shall provide to Hospital Principal Investigator written information, materials and data (collectively, “Company Material”) as necessary for the performance of the Research Plan and/or as otherwise agreed by the parties and as listed in Appendix C.

 

3.                                       Confidentiality of Hospital/Company Materials.   The parties agree Hospital/Company Material shall constitute Confidential Information (as defined below in Section 5(a)(1)), and in the case of Hospital, to use such Material for research purposes only and in the case of Company, to use such Material for research and development purposes only.

 

4.                                       Publications.   The parties encourage academic publications to issue as a result of the performance of the Research Plan.  In anticipation of a continuing collaborative relationship as a result of this Agreement, the parties agree that authorship of future publications shall be determined on a case by case basis in accordance with accepted academic standards.  In the event a party publishes independently of the other, such party shall provide copies of publications arising or related to the Research Plan (“Publications”) to the other party at least 30 days in advance of submission for publication.  The party receiving such copy shall have the right to (a) request a sixty (60) day delay in publication in order to submit a patent application on any disclosed subject matter or otherwise protect any patentable information, and (b) edit the publication in a manner reasonably acceptable to the independently submitting party to protect confidential information.  All such Publications will include the following acknowledgment of PVS’s financial support of the Research Program: “Funded in whole or in part by Program for Appropriate Technology in Health (PATH)”.  The parties agree that PVS may publish the Data after a time period of twelve (12) months after completion of the Research Plan, subject to the procedures and limitations set forth in the applicable collaborative research agreements between Hospital and PVS and between Company and PVS.

 


 

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5.                                       Intellectual Property.

 

(a)                                  Definitions .

 

(1)                                  “Confidential Information” shall mean all scientific, technical, financial or business information owned, possessed or used by the disclosing party that (a) is marked or if orally disclosed must be followed up by in writing within thirty (30) days that is treated by the disclosing party as confidential or proprietary, or (b) a person skilled in the industry would reasonably know is confidential; including without limitation, data, development and marketing plans, regulatory and business strategies, financial information, and forecasts, information of third parties that a party has an obligation to keep confidential and Hospital Materials, in the case of Hospital, and Company Materials, in the case of Company.

 

(2)                                  For purposes of this Agreement, the term “Data” shall mean any and all information, materials and results arising from the performance of the Research Plan (“Data”).  Each Party shall promptly provide Data obtained in performance of the Research Plan to the other Party.  Subject to Section 4 concerning publication, it is appreciated that all Data are considered to be Confidential Information and shall be avidly protected as such by the Party obtaining the Data.  Data shall be presented to the other Party in a common technical document format similar to Data provided by Company to PVS.

 

(3)                                  “Research Plan Intellectual Property” shall mean any product, know how, information, discovery, invention, patent or patent application including related reissues, divisionals, continuations, and continuations-in-part) that is discovered, conceived, made, developed or reduced to  practice either jointly, or by Hospital, or Company individually by performance of the Research Plan detailed in Appendix A.  Each party shall promptly disclose to the other party under confidentiality the invention or discovery of any Research Plan Intellectual Property.  Each party shall also disclose to the other party the intent to file for intellectual property protection, including patents and provisional patents, on solely-owned Research Plan Intellectual Property (“Sole Inventions”).

 

(b)                                  Confidentiality Obligations .

 

(1)                                  Subject to the terms of this Agreement, neither party shall, directly or indirectly, publish, disseminate or otherwise disclose, or deliver or make available to any third party, or use any Confidential Information of the disclosing party, other than in furtherance of the purposes of this Agreement.  Each party shall exercise all reasonable precautions to protect the integrity and confidentiality of the disclosing party’s Confidential Information.  The receiving party may disseminate or permit access to Confidential Information only to Company or Hospital personnel (as applicable) who have a need-to-know such Confidential Information in the course of the performance of their duties under this Agreement and who are bound to obligations of confidentiality and non-use of the Confidential Information that are at least as restrictive as those set forth in this Agreement.  This obligation shall continue, for five (5) years following the date of termination of this Agreement, but may be modified by written agreement.

 



 

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(2)                                  Further, during the course of the parties’ performance of the Research Plan, each party may have their respective employees working on the other party’s site to further the objectives of the Research Plan.  In this capacity, it is expected that such employee will receive or be exposed to, and may learn about the existence of, certain Confidential Information that is not related to the Research Plan (“Non-Research Plan Confidential Information”).  It is expressly agreed that such Non-Research Plan Confidential Information shall not , without the prior written consent of the disclosing party, be used for any purpose, including the purposes of this Agreement.  For the avoidance of doubt, Company Materials and Hospital Materials shall not constitute Non-Research Plan Confidential Information.

 

(3)                                  Neither party shall have any obligations of confidentiality and non-use with respect to any portion of the Confidential Information which:  (a) is or later becomes generally available to the public by use, publication or the like, through no-fault of the receiving party; (b) is obtained by the receiving party from a third party who had the legal right to disclose such Confidential Information to the receiving party without obligation of confidentiality; (c) is in receiving party’s prior possession without obligation of confidentiality, as evidenced by receiving party’s contemporaneously dated written records; or (d) is independently developed by the receiving party without use of the disclosing party’s Confidential Information.  In the event that either party is required by order of a court or other government entity having jurisdiction to disclose any Confidential Information, the receiving party shall give the disclosing party prompt notice thereof so that the disclosing party may seek an appropriate protective order.  The receiving party shall reasonably cooperate with the disclosing party in its efforts to seek such a protective order.  If any such order does not fully preclude disclosure of the Confidential Information, the receiving party shall make such disclosure only to the extent that such disclosure is legally required.

 

(4)                                  In the event a receiving party performs unauthorized work (e.g., work outside the Purpose and/or work with Non-Research Plan Confidential Information) utilizing any Confidential Information of the other party, all data and any inventions or discoveries, whether patentable or not, arising from such unauthorized work are and shall be the sole and exclusive property of the disclosing party, and the receiving party shall and hereby does assign its entire right, title and interest, in any such data; inventions or discoveries to the disclosing party.  For the avoidance of doubt, inventions pursuant to this Section 5(b)(4) shall not Constitute Research Plan Intellectual Property and shall be referred to as “Non-Research Plan IP”.

 

(c)                                   Ownership .

 

(1)                                  Each party shall own all right, title and interest to that Research Plan Intellectual Property that it solely invented, such inventorship to be determined consistent with U.S. patent law whether or not the invention has been patented.  Each party shall ensure that its respective inventor(s) assign his/her ownership interest in the Sole Invention to the party by which he/she was employed when the Sole Invention was created.

 

(2)                                  Each party shall unilaterally decide whether its Sole Invention should be patented, where it should be patented (i.e. United States and/or certain foreign countries) and

 



 

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when it is appropriate to seek patent protection.  Patent applications or patents for Sole Inventions shall be filed, prosecuted and maintained by the party whose personnel solely created or invented the Sole Invention and patent costs for such patent applications and patents shall be borne by the party whose personnel created or invented the Sole Invention.

 

(3)                                  In the event a party elects not to prosecute or maintain any patent application described herein (excluding Non-Research Plan IP), that party (the “Declining Party”) shall notify the other party (the “Non-Declining Party”) at least thirty (30) days prior to taking or not taking, any action which would result in abandonment, withdrawal or lapse of such patent or patent application; in such event, the Non-Declining Party may thereafter file, prosecute or maintain the patent or patent application.  The Non-Declining Party shall reimburse the Declining Party for any expenses the Declining Party incurs in evaluating, prosecuting, maintaining or consulting with Company with regard to any patent application described herein.

 

(4)                                  The parties shall jointly own the Research Plan Intellectual Property that they jointly invented (“Joint Inventions”).  Hospital and Company shall collaborate to maintain proper record of inventorship on Joint Inventions, such inventorship to be determined consistent with US patent law whether or not the inventions has been patented.  All patent applications on Joint Inventions shall be assigned to both Company and Hospital and each party shall ensure that its respective inventor(s) assign his/her ownership interest in the patent rights to the party by which he/she was employed when the Joint Invention was created.  Company shall assume sole responsibility for filing, prosecution, maintenance and defense/enforcement of Joint Inventions.

 

(5)                                  “Background Intellectual Property” shall mean all intellectual property related to the Research Plan developed, and/or owned and/or acquired by a party or outside the purview of this Agreement, before the date the Research Plan commenced.  The Background Intellectual Property of a party shall remain the separate intellectual property of such party.  No rights to Background Intellectual Property are conferred by this Agreement, other than a limited license right to use Background Intellectual Property solely as required to perform the Research Plan.  Any such limited license right shall and does terminate immediately upon completion of the relevant work under the Research Plan.

 

(6)                                  Company and Hospital each acknowledge the funding contribution of PVS to each party and its mission to make vaccines and technologies accessible, available, and affordable to the developing countries.  Therefore, Hospital and Company hereby jointly grant to PVS at no additional cost a non-exclusive royalty-free license, with the right to sublicense, to the Research Plan Intellectual Property including any patent rights related thereto to:  i) develop, make or have made, and use a pneumococcal T-cell based protein vaccine in the world; and ii) use, market, promote, distribute and sell a pneumococcal T-cell based protein vaccine in Developing Countries (“PVS License”).  “Developing Countries” shall mean (i) those countries identified by the World Bank as of April 21, 2008 (i.e., the effective date of the collaborative research agreement between PVS and Company) as having “‘low-income economies” or “lower-middle income economies” and (ii) Argentina, Brazil, Chile, Mexico and South Africa, provided these five countries specifically listed herein are not reclassified as “high income economies” by the World Bank as of the date that the license is granted to PVS pursuant to this Agreement.

 



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

6.                                       License Rights and Terms.   Hospital shall and hereby does grant to Company a fully paid up, nonexclusive right to Hospital’s rights in any invention made under this Agreement solely for internal research and development purposes (inclusive of permitting third parties to conduct such research and development on Company’s behalf).  Hospital hereby grants to Company an exclusive option to negotiate an exclusive license to Hospital’s interest in any and all Research Plan Intellectual Property (the “Option”).  Company shall have sixty (60) days (the “Option Term”) after receipt of written notice from Hospital of a relevant invention, to exercise this Option.  In addition to the exclusivity during the Option Term, once the option has been exercised, Hospital shall not negotiate with any third party for rights to the optioned invention for a period of twelve (12) months, extendible by agreement of the Parties if licensing negotiations between the Parties are proceeding (the “Negotiation Term”).  Should the Negotiation Term expire without license terms being agreed to, then Hospital shall have no further obligation to Company with respect to licensing that invention, and shall be free to enter into licenses with any third parties except that Hospital shall notify Company if and when it enters into any third party license to the invention.  Any license to Hospital’s rights in Research Plan Intellectual Property negotiated pursuant to this provision shall include articles directed to the following:

 

(a)                                  Rights of the United States government reserved under Public Laws 96-517, 97-256, and 98-620, codified at 35 U-.S.C. 200-212, and any regulations promulgated thereunder, if appropriate.

 

(b)                                  Requirement for due diligence in the development of the subject matter claimed in the licensed patent(s) -for public use.

 

(c)                                   Reservation of the unrestricted right of Hospital to use subject matter claimed in the licensed patent(s) for academic research purposes.

 

(d)                                  The CRICO Uniform Indemnification and Insurance provisions then in effect.

 

(e)                                   Licensing fees, royalties, and/or other payments that reflect the respective contributions of the parties to the licensed technology and similar, contemporary agreements between for-profit and non-profit institutions.

 

7.                                       Communications.   Requests and notices regarding this agreement shall be given in writing, to the following addresses with a copy to Hospital Principal Investigator:

 

To Hospital

 

Fernando Vallés, J.D.

Corporate Sponsored Research Officer

Children’s Hospital

300 Longwood Avenue

Boston MA 02115

 



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

To Company

 

Genocea Biosciences, Inc,

c/o Chief Executive Officer

161 First Street, Suite 2C

Cambridge, MA 02142

 

8.                                       Use of Names.   Each party agrees not to use of refer to this Agreement in any promotional activity, or to use the names of the other party, its employees, or Hospital Principal Investigator without prior written permission.  However, each party shall have the right to acknowledge in scientific publications and other scientific communications the source of materials used in the collaboration.

 

9.                                       Term.   This Agreement shall be effective for the period given in Article l(a) above.

 

10.                                General Provisions

 

(a)                                  All rights and remedies, hereunder will be cumulative and not alternative, and this Agreement shall be construed and governed by the laws of the Commonwealth of Massachusetts.

 

(b)                                  This Agreement may be amended only by written agreement signed by both parties.

 

(c)                                   Company and Hospital agree to conduct the Research Plan in accordance with all applicable Federal, State and local laws and regulations, as well as with applicable regulations of Hospital.

 

(d)                                  It is expressly agreed by the parties hereto that Hospital and Company are independent contractors and nothing in this Agreement is intended to create an employer relationship, joint venture, or partnership between the parties.  Neither party has the authority to bind the other.

 

(e)                                   If any provisions of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be impaired thereby.

 

(f)                                    EXCEPT AS PROVIDED HEREIN, HOSPITAL, MAKES NO WARRANTY, EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF MERCHANTABILITY OR ANY IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO ANY PATENT, TRADEMARK, SOFTWARE, TRADE SECRET, TANGIBLE RESEARCH PROPERTY, INFORMATION, MATERIAL OR DATA PROVIDED TO COMPANY HEREUNDER AND HEREBY DISCLAIMS THE SAME.  HOSPITAL SHALL NOT BE LIABLE FOR ANY DIRECT, CONSEQUENTIAL OR OTHER DAMAGES SUFFERED BY COMPANY RESULTING FROM COMPANY’S USE OF ANY PATENT, TRADEMARK, SOFTWARE, TRADE SECRET, TANGIBLE RESEARCH PROPERTY, INFORMATION, MATERIAL OR DATA PROVIDED TO COMPANY HEREUNDER.

 



 

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(g)                                   This Agreement may be executed in any number of counterparts, each of which shall be deemed an original as against the party whose signature appears thereon, but all of which taken together shall constitute but one and the same instrument.

 

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

 

(i)                                      The paragraph headings contained in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

 



 

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

 

CHILDREN’S HOSPITAL

COMPANY

 

 

 

 

By:

/s/ Carleen Brunelli, Ph.D., MBA

 

By:

/s/ Robert Paull

 

 

 

 

Title:

Carleen Brunelli, Ph.D., MBA

Title:

President

Vice President of Research Administration

 

 

 

 

 

 

Date:

Sept 5, 2008

 

Date:

9.17.08

 

 

HOSPITAL PRINCIPAL INVESTIGATOR ACKNOWLEDGMENT:

 

By:

/s/ HOSPITAL PRINCIPAL INVESTIGATOR

 

 

 

 

Date:

9/8/08

 

 



 

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APPENDIX A
RESEARCH PLAN

 

[ · ]

 

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APPENDIX B

 

[* * *]

 

55



 

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APPENDIX C

 

Company Responsibilities

 

[†]

 

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Appendix 4

 

CHILDREN’S HOSPITAL COLLABORATIVE RESEARCH AGREEMENT

 

[ ·   · ]

 

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Side Letter

 

March 23, 2012

 

Erik Halvorsen, PhD

Executive Director

Technology and Innovation Development Office

Children’s Hospital Boston

300 Longwood Avenue

Boston, MA 02115

 

Re:                              Share of Sublicense Payments

 

Erik,

 

As you know, Genocea Biosciences, Inc. (“ Genocea ”) and Children’s Medical Center Corporation (“ CMCC ”) are parties to that certain Amended and Restated Exclusive License Agreement, dated March 23, 2012 (the “ Agreement ”).  The purpose of this letter is to confirm the parties’ understanding with respect to certain financial terms in the Agreement.  Capitalized terms used but not otherwise defined herein shall have the same meaning attributed to them in the Agreement.

 

To the best of Genocea’s knowledge as of the Effective Date of the Agreement, neither Genocea nor its Affiliates is under an active license agreement with any third party licensor of patent rights (“ Licensor ”) to make, have made, use, sell or import a multi-component vaccine product that also falls under the definition of a Licensed Product which obligates Genocea or any Affiliate to pay to such Licensor a percentage of any sublicensing payment or other non-royalty sublicensing income (e.g., up-front license fees, lump sum payments, milestone payments or technology transfer payments) that they receive (“ Non-Royalty Sublicensing Income ”) that is [* * *] the [* * *] of such amount that Genocea is also required to make to CMCC as a Sublicensee Payment pursuant to Article IV Paragraph C of the Agreement.

 

In the event the foregoing statement is subsequently discovered to be inaccurate, Genocea shall pay to CMCC: (a) the difference between the single highest percentage of any Non-Royalty Sublicensing Income paid by Genocea or any Affiliate to any Licensor(s) and the [* * *] of such amount owed to CMCC pursuant the Agreement, and (b) the interest on such difference at the same rate as described in the third sentence of Article IV Paragraph E of the Agreement, calculated from the Effective Date until the date such amount is paid.  Genocea will make the aforementioned payments to CMCC within thirty (30) days after Genocea becomes aware or is made aware of the inaccuracy.  For clarity, Genocea shall only be obligated to make the aforementioned payments if the percentage of the Non-Royalty Sublicensing Income paid to any Licensor(s) is greater than [* * *].  In addition to the foregoing remedy, in the event Genocea’s statement is inaccurate, until expiration or termination of the Agreement CMCC will also be

 

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entitled to receive the benefit of the single highest percentage rate referenced in (a) above in connection with the calculation of, and its receipt of, any subsequent Sublicensee Payments instead of [* * *].

 

The Parties agree that the discovery that the foregoing statements by Genocea in paragraph two of this letter are inaccurate will not be considered a breach of the Agreement by Genocea or constitute grounds for termination of the Agreement by CMCC unless it is determined in a legal or alternative dispute process that such statements were an intentional, fraudulent, or grossly negligent misrepresentation.  Notwithstanding the foregoing CMCC shall have the right to terminate the Agreement pursuant to Article XIII Paragraph C of the Agreement if the aforementioned amounts in paragraph three of this letter are not timely paid to CMCC.  Genocea’s sole and entire obligation, and CMCC’s sole and exclusive remedy, in the event that Genocea’s statements in paragraph two above are determined to be inaccurate is contained herein this letter.

 

To monitor compliance with Genocea’s statements under this letter, Paragraphs A and B of Article V of the Agreement apply mutatis mutandis .

 

Genocea acknowledges its agreement to the foregoing terms by the signature of its duly authorized representative below.  If you agree to the terms of this letter, please acknowledge your agreement by having a duly authorized representative of CMCC sign below and return a copy to me.

 

 

Sincerely,

 

 

 

/s/ Chip Clark

 

 

 

Chip Clark

 

C EO, Genocea Biosciences, Inc.

 

Acknowledged and Agreed:

 

CHILDREN’S MEDICAL CENTER CORPORATION

 

 

By:

/s/ Erik Halvorsen

 

 

 

 

Name:

Erik Halvorsen, Ph.D.

 

 

 

 

Title:

Director of Technology and Business Development

 

 

 

 

Date:

March 29, 2012

 

 




EXHIBIT 10.3

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

AMENDED AND RESTATED LICENSE AGREEMENT

 

This Amended and Restated License Agreement (“Agreement”) is entered into as of this 19th day of November, 2012 (the “Amended and Restated Effective Date”), by and between Genocea Biosciences, Inc., a company formed under the laws of the State of Delaware, having a place of business at Cambridge Discovery Park, 100 Acorn Park Drive, 5 th  Floor, Cambridge, MA 02140 (“Licensee”) and President and Fellows of Harvard College, an educational and charitable corporation existing under the laws and the constitution of the Commonwealth of Massachusetts, having a place of business at Holyoke Center, Suite 727, 1350 Massachusetts Avenue, Cambridge, Massachusetts 02138 (“Harvard”).

 

WHEREAS, Harvard is the owner of the Patent Rights and Harvard Technology Transfer Materials (as defined below) and has the right to grant licenses thereunder; and

 

WHEREAS, Harvard desires to have products developed and commercialized under such patent rights and materials to benefit the public; and

 

WHEREAS, Licensee has represented to Harvard, in order to induce Harvard to enter into this Agreement, that Licensee shall commit itself to commercially reasonable efforts to develop and commercialize products based on the Patent Rights and Harvard Technology Transfer Materials;

 

WHEREAS, Harvard and Licensee previously entered into that certain License Agreement, dated November 30, 2007 (the “Original Effective Date”), pursuant to which Licensee obtained a license under the Patent Rights and Harvard Technology Transfer Materials (the “Original Agreement”); and

 

WHEREAS, the parties now desire to modify their arrangements under the Original Agreement, all on the terms and conditions set forth herein.

 

NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows:

 

0.             Amendment and Restatement.

 

Licensee and Harvard hereby agree that, effective as of the Amended and Restated Effective Date, the Original Agreement is hereby amended and restated in its entirety as set forth in this Agreement, and the Original Agreement shall be of no further force or effect from and after the Amended and Restated Effective Date, except as expressly provided herein, provided, that nothing in this Agreement shall affect the rights and obligations of the parties under the Original Agreement with respect to periods prior to the Amended and Restated Effective Date, all of which shall survive in accordance with their terms.

 

1



 

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1.                                       Definitions.

 

Whenever used in this Agreement with an initial capital letter, the terms defined in this Article 1, whether used in the singular or the plural, shall have the meanings specified below.

 

1.1          “Affiliate” shall mean, with respect to an entity, any person, organization or entity controlling, controlled by or under common control with, such entity.  For purposes of this definition only, “control” of another person, organization or entity shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the activities, management or policies of such person, organization or entity, whether through the ownership of voting securities, by contract or otherwise.  Without limiting the foregoing, control shall be presumed to exist when a person, organization or entity (i) owns or directly controls fifty percent (50%) or more of the outstanding voting stock or other ownership interest of the other organization or entity, or (ii) possesses, directly or indirectly, the power to elect or appoint fifty percent (50%) or more of the members of the governing body of the organization or other entity.  The parties acknowledge that in the case of certain entities organized under the laws of certain countries outside of the United States, the maximum percentage ownership permitted by law for a foreign investor may be less than fifty percent (50%), and that in such cases such lower percentage shall be substituted in the preceding sentence.

 

1.2          “Calendar Quarter” shall mean each of the periods of three (3) consecutive calendar months ending on March 31, June 30, September 30 and December 31, for so long as this Agreement is in effect.

 

1.3          “Development Milestones” shall mean the development and commercialization milestones set forth in Exhibit 1.3 hereto, as such milestones may be adjusted pursuant to Section 3.4.

 

1.4          “Development Plan” shall mean the plan for the development and commercialization of Licensed Products attached hereto as Exhibit 1.4, as such plan may be adjusted from lime to time pursuant to Section 3.2.

 

1.5          “Direct Development Costs” shall mean the costs incurred, on a cash basis, by Licensee with respect to the development of Licensed Products in accordance with the Development Plan, such as:

 

1.5.1       Costs for development activities conducted to procure data necessary for regulatory filings to obtain marketing approval from a Regulatory Authority, including, but not limited to, research, formulation development and testing, clinical development activities, data management, toxicology and planning and execution of clinical trials;

 

1.5.2       costs for regulatory filings necessary to obtain marketing approval from a Regulatory Authority;

 

2



 

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1.5.3       insurance premiums paid for commercial insurance to the extent such insurance directly relates to development activities conducted pursuant to the Development Plan (i.e., if insurance covers risks other than risks related to development of the Licensed Product, then only an appropriate portion of such premiums shall be included); and

 

1.5.4       capital expenditures to the extent directly attributable to the development of Licensed Products.

 

1.5.5       the fully burdened costs of labor for the percentage of the individuals’ time spent on such development activities.

 

To the extent a cost is associated with activities in addition to development of Licensed Products then only the appropriate portion of such costs devoted to the development of Licensed Products shall be included as Direct Development Costs.

 

1.6          “FDA” shall mean the United States Food and Drug Administration.

 

1.7          “Harvard Technology Transfer Materials” shall mean the protocols and other materials listed in Exhibit 1.7 hereto, as such Exhibit may be supplemented and updated from time to time by mutual written agreement of the parties.  Effective upon each such agreement by the parties, Exhibit 1.7 shall be amended automatically to include any such additional protocols and other materials.  Within thirty (30) days after the Original Effective Date, Harvard shall deliver the initial set of Harvard Technology Transfer Materials to Licensee.

 

1.8          “IND” shall mean an investigational new drug application, clinical study application, clinical trial exemption or similar application or submission for approval to conduct human clinical investigations filed with a Regulatory Authority.

 

1.9          “Infringed Patent” shall mean (a) an issued and unexpired patent that has not been abandoned, held invalid, revoked, held or rendered unenforceable or lost through an interference proceeding, and (b) a pending claim of a pending patent application that (i) has been asserted and continues to be prosecuted in good faith, (ii) has not been abandoned or finally rejected without the possibility of appeal or refiling, and (iii) has not been pending for more than five (5) years; which in either case would be infringed by the identification, discovery, development, manufacture, use or sale of a Licensed Product.

 

1.10        “Initiation” or “Initiate” shall mean, with respect to a Phase I Clinical Trial, a Phase II Clinical Trial or a Phase III Clinical Trial, the administration of the first dose to the first patient in such clinical trial.

 

1.11        “Licensed Method” shall mean any method, the practice of which would, but for the grant of rights hereunder, infringe a Valid Claim (in the case of a Valid Claim that has not yet issued, assuming that such Valid Claim has issued).

 

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1.12        “Licensed Product” shall mean any Type I Licensed Product or any Type II Licensed Product.

 

1.13        “Licensed Services” shall mean any service provided for or on behalf of a third party on a fee-for-service basis that entails the practice of a Licensed Method.

 

1.14        “Net Sales” shall mean the gross amount invoiced by or on behalf of Licensee, its Affiliates and Sublicensees (in each case, the “Invoicing Entity”) on sales, leases or other transfers of Licensed Products, less the following to the extent applicable on such sales, leases or other transfers of Licensed Products and not previously deducted from the gross invoice price: (a) customary trade, quantity or cash discounts to the extent actually allowed and taken; (b) amounts actually repaid or credited by reason of rejection or return of any previously sold, leased or otherwise transferred Licensed Products; (c) customer freight charges that are paid by or on behalf of the Invoicing Entity; and (d) to the extent separately stated on purchase orders, invoices or other documents of sale, any sales, value added or similar taxes, custom duties or other similar governmental charges levied directly on the production, sale, transportation, delivery or use of a Licensed Product that are paid by or on behalf of the Invoicing Entity, but not including any tax levied with respect to income; provided that:

 

1.14.1     in the event that an Invoicing Entity receives non-cash consideration for any Licensed Products or in the case of transactions not at arm’s length with a non-Affiliate of Invoicing Entity, Net Sales shall be calculated based on the fair market value of such consideration or transaction, assuming an arm’s length transaction made in the ordinary course of business; and

 

1.14.2     sales of Licensed Products by an Invoicing Entity to its Affiliate or Sublicensee for resale by such Affiliate or Sublicensee shall not be deemed Net Sales.  Instead, Net Sales shall be determined based on the gross amount invoiced by such Affiliate or Sublicensee on resale of Licensed Products to a third party purchaser.

 

Notwithstanding the foregoing, the following shall not be included in Net Sales: (1) Licensed Products provided by Licensee, its Affiliates or Sublicensees for administration to patients enrolled in clinical trials or distributed through a not-for-profit foundation at no charge to eligible patients provided that Licensee, its Affiliates, or Sublicensees receive no consideration from such clinical trials or not-for-profit foundation for such use of Licensed Products and (2) Licensed Products used as samples to promote additional Net Sales, in amounts consistent with normal business practices of Licensee, its Affiliates or Sublicensees, provided that Licensee, its Affiliates, or Sublicensees receive no consideration for such samples.

 

Further, Net Sales shall be adjusted as follows:

 

In the event a Licensed Product is [* * *] as defined below, Net Sales of the [* * *] , where [* * *] .  If, in a specific country, the relevant Licensed Product is [* * *] in such country.  As used above, the term [* * *] means [* * *] .  Without limiting any of the foregoing, Net Sales shall be determined in accordance with normally accepted accounting principles, such as GAAP,

 

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IFRS or similar accounting principles, on a basis consistent with the audited consolidated financial statements of Licensee, its Affiliates, or its Sublicensees, as applicable.

 

1.15        “Non-Royalty Sublicense Income” shall mean any payments or other consideration that Licensee or any of its Affiliates receives in connection with a Sublicense, other than royalties based on Net Sales or Service Income or the receipt of a portion of profits derived from the sale of Licensed Products or the performance of Licensed Services.  In the event that Licensee or an Affiliate of Licensee receives non-cash consideration in connection with a Sublicense or in the case of transactions not at arm’s length, Non-Royalty Sublicense Income shall be calculated based on the fair market value of such consideration or transaction, at the time of the transaction, assuming an arm’s length transaction made in the ordinary course of business.  Non-Royalty Sublicense Income shall not include (a) amounts received from a Sublicensee that are committed to cover future industry standard, fully burdened costs to be incurred by Licensee or any of its Affiliates in the performance of research and development activities to be performed by Licensee or any of its Affiliates under a Sublicense agreement in connection with a Licensed Product or a product expected to become a Licensed Product, (b) equity investments in Licensee to the extent such payment reflects the fair market value of such securities, (c) amounts received from a Sublicensee in connection with a bona fide, fully repayable, market rate loan made by Sublicensee to Licensee, (d) the attributed value of any cross-license granted by a Sublicensee to Licensee to the extent such cross-license provides Licensee with freedom to operate with respect to a Licensed Product or a product expected to become a Licensed Product (but not excluding any consideration actually received from such Sublicensee on account of such cross-license), (e) payments made to reimburse Licensee for any amounts paid by it to Harvard under Section 6.2 of this Agreement or (1) payments made to reimburse Licensee for the costs of Licensee’s full time equivalents who market and promote Licensed Products and Licensed Services and sell Licensed Products, which reflect the fair market value of such services and are substantiated by any report delivered by Licensee to any such Sublicensee to claim such reimbursement.

 

1.16        “Patent Rights” shall mean, in each case to the extent owned and controlled by Harvard: (a) the patent applications listed on Exhibit 1.15; (b) any patent or patent application that claims priority to and is a divisional, continuation, reissue, renewal, reexamination, substitution or extension of any patent application identified in (a); (c) any patents issuing on any patent application identified in (a) or (b), including any reissues, renewals, reexaminations, substitutions or extensions thereof; (d) any claim of a continuation-in-part application or patent that is entitled to the priority date of, and is directed specifically to subject matter specifically described in, at least one of the patents or patent applications identified in (a), (b) or (c); and (e) any foreign counterpart (including PCTs) of any patent or patent application identified in (a), (b) or (c) or of the claims identified in (d).

 

1.17        “Phase I Clinical Trial” shall mean a clinical trial in any country involving the initial introduction of an investigational new drug into humans, typically designed to determine the metabolism and pharmacologic actions of the drug in humans, the side effects associated with increasing doses, and, if possible, to gain early evidence on effectiveness.  In the United

 

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States, “Phase I Clinical Trial” means a human clinical trial that satisfies the requirements of 21 C.F.R. § 312.21(a).

 

1.18        “Phase II Clinical Trial” shall mean a human clinical trial in any country conducted to evaluate the effectiveness of a drug for a particular indication or indications in patients with the disease or condition under study and, possibly, to determine the common short-term side effects and risks associated with the drug.  In the United States, “Phase II Clinical Trial” means a human clinical trial that satisfies the requirements of 21 C.F.R. § 312.21(b).

 

1.19        “Phase III Clinical Trial” shall mean a human clinical trial in any country, whether controlled or uncontrolled, that is performed after preliminary evidence suggesting effectiveness of the drug under evaluation has been obtained, and intended to gather the additional information about effectiveness and safety that is needed to evaluate the overall benefit-risk relationship of the drug and to provide an adequate basis for physician labeling.  In the United Slates, “Phase III Clinical Trial means a human clinical trial that satisfies the requirements of 21 C.F.R. § 312.21(c).

 

1.20        “Regulatory Authority” shall mean any applicable government regulatory authority involved in granting approvals for the manufacturing and/ marketing of a Licensed Product, including, in the United States, the FDA.

 

1.21        “Service Income” shall mean the gross amount invoiced by or on behalf of an Invoicing Entity (as defined in Section 1.14) for the performance of Licensed Services; provided that:

 

1.21.1     in any performance of Licensed Services by an Invoicing Entity for its Affiliate, Service Income shall be equal to the fair market value of the Licensed Services performed, assuming an arm’s length transaction made in the ordinary course of business; and

 

1.21.2     in the event that an Invoicing Entity received non-case consideration for any Licensed Services or in the case of transactions not at arm’s length with a non-Affiliate of Invoicing Entity, Service Income shall be calculated based on the fair market value of such consideration or transaction, assuming an arm’s length transaction made in the ordinary course of business.

 

1.22        “Sublicense” shall mean: (a) any right granted, license given or agreement entered into by Licensee to or with any other person or entity (or by a Sublicensee to or with a further Sublicensee in accordance with Section 2.3.2.4), under or with respect to or authorizing any use of any of the Patent Rights, or otherwise authorizing the development, manufacture, marketing, distribution, use and/or sale of Licensed Products or the performance of Licensed Services; or (b) any option or other right granted by Licensee to any other person or entity (or by a Sublicensee to or with a further Sublicensee in accordance with Section 2.3.2.4) to negotiate for or receive any of the rights described under clause (a), including in connection with a standstill agreement; in each case regardless of whether such grant of rights, license given or agreement entered into is referred to or is described as a sublicense.

 

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

1.23        “Sublicensee” shall mean any person or entity granted a Sublicense, other than an Affiliate.

 

1.24        “Third Party Proposed Product” shall mean a Type II Licensed Product for vaccination against or treatment of an organism or disease for which Licensee is not developing or commercializing a Licensed Product.

 

1.25        “Type I Licensed Product” shall mean any product, the manufacture, use, sale, marketing or importation of which falls within the scope of a Valid Claim in the country in which it is manufactured, used, sold, marketed or imported.

 

1.26        “Type II Licensed Product” shall mean any product that is not a Type I Licensed Product, but is identified or discovered through the use of a Licensed Method.

 

1.27        “Valid Claim” shall mean: (a) a claim of an issued and unexpired patent within the Patent Rights that has not been (i) held permanently revoked, unenforceable, unpatentable or invalid by a decision of a court or governmental body of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, (ii) rendered unenforceable through disclaimer or otherwise, (iii) abandoned or (iv) lost through an interference proceeding; or (b) a pending claim of a pending patent application within the Patent Rights that (i) has been asserted and continues to be prosecuted in good faith, (ii) has not been abandoned or finally rejected without the possibility of appeal or refiling, and (iii) has not been pending for more than five (5) years from the date of issuance of the first substantive patent office action considering the patentability of such claim by the applicable patent office in such country (at which time such pending claim shall cease to be a Valid Claim for purposes of this Agreement unless and until such claim becomes a claim of an issued patent).

 

2.                                       License Grants.

 

2.1          Licenses .

 

2.1.1       Exclusive License.  Subject to the terms and conditions set forth in this Agreement, Harvard hereby grants to Licensee an exclusive, worldwide, royalty-bearing license, sublicensable solely in accordance with Sections 2.2 and 2.3, under the Patent Rights solely (a) to identify, discover, develop, make, have made, use, market, offer for sale, sell, have sold and import Type I and Type II Licensed Products and (b) to perform Licensed Services; provided, however, that:

 

2.1.1.1            Harvard shall retain the right to make and use Type I and Type II Licensed Products, and to grant licenses to other not-for-profit research organizations the right to make and use Type I Licensed Products, for internal research, teaching and other educational purposes and not for the purpose of commercial manufacture, distribution or provision of services for a fee; and

 

2.1.1.2            the United States federal government shall retain rights in the Patent Rights pursuant to 35 U.S.C. §§ 200-212 and 37 C.F.R. § 401 et seq., and any right

 

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

granted in this Agreement greater than that permitted under 35 U.S.C. §§ 200-212 or 37 C.F.R. § 401 et seq. shall be subject to modification as may be required to conform to the provisions of those statutes and regulations.

 

2.1.2       Non-Exclusive License.  Subject to the terms and conditions set forth in this Agreement, Harvard hereby grants to Licensee a non-exclusive, worldwide, license under its rights in and to the Harvard Technology Transfer Materials solely for use in identifying, discovering, developing, making, having made, using, marketing, offering for sale, selling, having sold and importing any Type I Licensed Product or Type II Licensed Product.  Notwithstanding anything contained herein or in any other agreement to the contrary, ownership of inventions discovered or invented using the Harvard Technology Transfer Materials shall follow inventorship and inventorship shall be determined in accordance with United States patent law; provided, however, that Licensee’s ownership of any such discovery or invention shall not affect its obligations under this Agreement, including its obligations under Section 4.5.2.

 

2.2          Sublicenses to Affiliates.  The licenses granted to Licensee under Section 2.1 shall include the right to have some or all of Licensee’s rights or obligations under this Agreement performed or exercised by one or more of Licensee’s Affiliates (for so long each such Affiliate remains an Affiliate of Licensee), provided that:

 

2.2.1       no such Affiliate shall be entitled to grant, directly or indirectly, to any third party any right of whatever nature under, or with respect to, or permitting any use or exploitation of, any of the Patent Rights or the Harvard Technology Transfer Materials, including any right to develop, manufacture, market or sell Licensed Products or to practice Licensed Methods unless Licensee has assigned the rights under this Agreement to such Affiliate pursuant to Section 11.12 because, in such event, such Affiliate will be the Licensee under this Agreement; and

 

2.2.2       any act or omission taken or made by an Affiliate of Licensee under this Agreement shall be deemed an act or omission by Licensee under this Agreement.

 

2.3          Other Sublicenses .

 

2.3.1       Sublicense Grant.  Licensee shall be entitled to grant Sublicenses to Sublicensees under the license granted pursuant to Section 2.1.1 subject to the terms of this Section 2.3.  Any such Sublicense shall be on terms and conditions in compliance with and not inconsistent with the terms of this Agreement.  Such Sublicenses shall only be made for consideration and in bona-fide arm’s length transactions.

 

2.3.2       Sublicense Agreements.  Sublicenses under this Section 2.3 shall be granted only pursuant to written agreements, which shall be subject to and consistent with the terms and conditions of this Agreement.  Such Sublicense agreements shall contain, among other things, provisions to the following effect:

 

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

2.3.2.1            all provisions necessary to ensure Licensee’s ability to comply with Licensee’s obligation under or not violate the provisions of Sections 4.4, 4.5, 4.6, 5.1, 5.3, 5.4, 8.1 and 11.1;

 

2.3.2.2            a section substantially the same as Article 9 (Indemnification), which also shall state that the Indemnitees (as defined in Section 9.1) are intended third party beneficiaries of such Sublicense agreement for the purpose of enforcing such indemnification;

 

2.3.2.3            in the event of termination of the license set forth in Section 2.1.1 above (in whole or in part (e.g., termination of the license as to a Licensed Product or in a particular country)), any existing Sublicense shall terminate to the extent of such terminated license; provided, however, that, for each Sublicensee, upon termination of the license, if the Sublicensee is not then in breach of the Sublicense agreement such that Licensee would have the right to terminate such Sublicense agreement, such Sublicensee shall have the right to obtain a license from Harvard on the same terms and conditions as set forth herein, which shall not impose any representations, warranties, obligations or liabilities on Harvard that are not included in this Agreement, provided that (a) the scope of the license granted directly by Harvard to such Sublicensee shall be coextensive with the scope of the license granted by Licensee to such Sublicensee, (b) if the Sublicense granted to such Sublicensee was non-exclusive, such Sublicensee shall not have the right to participate in the prosecution or enforcement of the Patent Rights under the license granted to it directly by Harvard and (c) if there are more than one Sublicensee, each Sublicensee that is granted a direct license shall be responsible for a pro rata share of the reimbursement due under Section 6.2.3 of this Agreement (based on the number of direct licenses under the Patent Rights in effect on the date of reimbursement);

 

2.3.2.4            the Sublicensee shall only be entitled to sublicense its rights under such Sublicense agreement on the terms set forth in this Section 2.3; and

 

2.3.2.5            the Sublicensee shall not be entitled to assign the Sublicense agreement without the prior written consent of Harvard, except that Sublicensee may assign the Sublicense agreement to a successor in connection with the merger, consolidation or sale of all or substantially all of its assets or that portion of its business to which the Sublicense agreement relates; provided, however, that any permitted assignee agrees in writing in a manner reasonably satisfactory to Harvard to be bound by the terms of such Sublicense agreement.

 

2.3.3       Delivery of Sublicense Agreement.  Licensee shall furnish Harvard with a fully executed copy, redacted with respect to matters not relevant to Harvard’s interests, of any such Sublicense agreement or further Sublicense agreement under Section 2.3.2.4, promptly after its execution.  Harvard shall keep all such Sublicense agreements and their terms confidential and shall use them solely for the purpose of monitoring Licensee’s and Sublicensees’ compliance with their obligations hereunder and enforcing Harvard’s rights under this Agreement.

 

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. WHERE TWO PAGES OF MATERIAL HAVE BEEN OMITTED, THE REDACTED MATERIAL IS MARKED WITH [†].

 

2.3.4       Breach by Sublicensee.  During the term of this Agreement, Licensee shall be responsible for any breach of a Sublicense agreement by a Sublicensee (or further Sublicense agreement under Section 2.3.2.4) that results in a material breach of this Agreement.  Licensee may elect (a) to cure such breach in accordance with Section 10.2.3.1 of this Agreement or (b) to enforce its rights by terminating such Sublicense agreement in accordance with the terms thereof.  Licensee shall indemnify Harvard for, and hold it harmless from, any and all damages or losses caused to Harvard as a result of any such breach by a Sublicensee or further Sublicensee.

 

2.4          Improvements.  In the future event that Harvard owns and controls patents and/or patent applications (a) for which one of the inventors is Dr. Darren Higgins or Dr. Michael Starnbach, (b) that are not Patent Rights and (c) that include claims that are dominated by any Valid Claims, Licensee may notify Harvard in writing that it wishes to obtain a license under such patents and/or patent applications solely with respect to those claims that are dominated by such Valid Claims.  Harvard will grant Licensee a license under such claims by amending this Agreement to include such claims in the definition of Patent Rights if (i) Harvard is not, at the time of its receipt of Licensee’s notice, subject to any legal or pre-existing contractual obligations or restraints that would prevent it from granting the requested license and (ii) the inventor(s) do(es) not reasonably object to the grant of the requested license.  Licensee shall not be required to pay any additional upfront consideration for such license, except for a license issuance fee to be agreed upon by the parties.  The other financial terms of this Agreement (e.g., maintenance fees, milestone payments, royalty payments and payments on account of Non-Royalty Sublicense Income) will apply to the requested license.

 

2.5          [†].

 

2.6          No Other Grant of Rights.  Except as expressly provided in this Agreement, nothing in this Agreement shall be construed to confer any ownership interest, license or other rights upon Licensee by implication, estoppel or otherwise as to any technology, intellectual property rights, products or biological materials of Harvard or any other entity, regardless of whether such technology, intellectual property rights, products or biological materials are dominant, subordinate or otherwise related to any Patent Rights.

 

3.                                       Development and Commercialization.

 

3.1          Diligence.  Licensee shall use commercially reasonable efforts and shall cause its Sublicensees to use commercially reasonable efforts: (a) to develop Licensed Products in accordance with the Development Plan; (b) to introduce Licensed Products into the commercial market; and (c) to market Licensed Products following such introduction into the market.  In addition, Licensee, by itself or through its Affiliates or Sublicensees, also shall achieve each of the Development Milestones referenced in the then-current version of Exhibit 1.3 within the time periods specified therein.  Harvard’s right to take any action against Licensee in connection

 

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

with a failure to achieve any such Development Milestones shall be limited to those rights set forth in Section 3.4 or, if and to the extent applicable, Section 10.2.3.  The parties acknowledge and agree that if Licensee, by itself or through its Affiliates or Sublicensees, meets its obligations in the preceding sentence then Licensee will be deemed to have also met its development obligations under (a) above.

 

3.2          Modification of Development Plan.  Licensee may modify the then applicable Development Plan from time to time to improve Licensee’s ability to meet the Development Milestones.

 

3.3          Reporting.  Within sixty (60) days after the end of each calendar year.  Licensee shall furnish Harvard with a written report summarizing its, its Affiliates’ and its Sublicensees’ efforts during the prior year to develop and commercialize Licensed Products, including without limitation: (a) research and development activities; (b) commercialization efforts; and (c) marketing efforts.  Each report shall contain a description of Licensee’s efforts in compliance with its obligations under Section 3.1, and a discussion of intended efforts for the then current year.  Together with each report.  Licensee shall provide Harvard with a copy of the then current Development Plan.

 

3.4          Failure.   If Licensee believes that it will not achieve one or more Development Milestones with respect to Licensed Products, it may notify Harvard in writing in advance of the relevant deadline.  Licensee shall include with such notice an explanation of the reasons for such failure, a proposal for extending and/or amending the relevant milestone(s), and a detailed written plan for promptly achieving such extended and/or amended milestone(s).  If Licensee does not provide Harvard with a reasonable explanation of its failure to meet the relevant Development Milestone(s) (and lack of finances shall not constitute reasonable basis for such failure) or does not provide Harvard with a reasonable proposed extension and/or amendment, Harvard may notify Licensee in writing of Licensee’s failure to meet the relevant Development Milestone(s) and, in such event, shall allow Licensee ninety (90) days to cure such failure.  Subject to the last sentence of this section, Licensee’s failure to cure within such ninety (90) day period shall constitute a material breach of this Agreement (a ‘‘Development Breach”) entitling Harvard to proceed solely under this Section 3.4.  In the event of a Development Breach where the relevant Development Milestone pertains to a Type I Licensed Product, Harvard shall have the right, in lieu of its rights under Section 10.2.3, to terminate the licenses granted in this Agreement only as they apply to Type I Licensed Products.  In the event Licensee (a) commits a Development Breach with respect to two Type II Licensed Products or (b) commits a Development Breach with respect to one Type II Licensed Product after already having committed a Development Breach with respect to a Type I Licensed Product, Harvard shall have the right, in lieu of its rights under Section 10.2.3, only to convert the license granted in Section 2.1.1 as it applies to Type II Licensed Products and Licensed Services into a non-exclusive, non-transferable, worldwide license (without the right to sublicense).  Notwithstanding the foregoing, if Licensee does provide Harvard with an explanation of its failure to meet the relevant Development Milestone(s) and a proposed extension and/or amendment that is reasonably

 

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

acceptable to Harvard, Exhibit 1.3 shall be amended automatically to incorporate such extension and/or amendment, as applicable.  For clarity, if and only if Licensee fails to achieve a Development Milestone and does not avail itself of any aspect of the procedure set forth in this Section 3.4 (e.g., by failing to notify Harvard in accordance with the first sentence of this Section 3.4), such failure to achieve the Development Milestone shall be a material breach that entitles Harvard to proceed under Section 10.2.3.

 

4.                                       Consideration for Grant of License

 

4.1          Equity.

 

4.1.1       Grant.  As partial consideration for the licenses granted hereunder, within thirty (30) days after the Original Effective Date, Licensee shall issue to Harvard such amount of common stock of Licensee that constitutes [* * *] of the outstanding common stock of Licensee, on a Fully Diluted Basis, after giving effect to such issuance (the “Shares”).  “Fully Diluted Basis” shall mean, as of the Original Effective Date, the number of shares of common stock of Licensee then outstanding (assuming conversion of all outstanding stock other than common stock into common stock) plus the number of shares of common stock of Licensee issuable upon exercise or conversion of then outstanding convertible securities, options, rights or warrants of Licensee (which shall be determined without regard to whether such securities arc then vested, exercisable or convertible).  Harvard acknowledges that all certificates representing the shares described in this Section may bear customary securities legends requiring compliance with the Securities Act of 1933 and related slate securities laws upon any transfer of such shares.

 

4.1.2       Representations and Warranties.  Licensee hereby represents and warrants to Harvard that:

 

4.1.2.1            the capitalization table attached hereto as Exhibit 4.1.2.1 (the “Cap Table”) sets forth all of the outstanding capital stock of Licensee on a Fully-Diluted Basis as of the Original Effective Date;

 

4.1.2.2            other than as set forth in the Cap Table, as of the Original Effective Date, there were no outstanding shares of capital stock, convertible securities, outstanding warrants, options or other rights to subscribe for, purchase or acquire from Licensee any capital stock of Licensee and there were no contracts or binding commitments providing for the issuance of, or the granting of rights to acquire, any capital stock of Licensee or under which Licensee was obligated to issue any of its securities; and

 

4.1.2.3            the Shares, when issued pursuant to the terms of the Original Agreement, became, upon such issuance, duly authorized, validly issued, fully paid and nonassessable.

 

4.2          License Fee.  As partial consideration for the licenses granted hereunder, Licensee shall pay Harvard a non-refundable license fee of [* * *] within thirty (30) days after the Original Effective Date.  The license fee paid under this Section 4.2 shall be creditable

 

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

against any amount that is payable to Harvard under Section 4.6 on account of an upfront sublicense fee or milestone payment paid by a Sublicensee to Licensee.

 

4.3          License Maintenance Fees.  As partial consideration for the licenses granted hereunder, Licensee shall pay Harvard non-refundable annual license maintenance fees as follows:

 

4.3.1       [* * *] due and payable on the first anniversary of the Original Effective Date;

 

4.3.2       [* * *] due and payable on the second anniversary of the Original Effective Date;

 

4.3.3       [* * *] due and payable on the third anniversary of the Original Effective Date; and

 

4.3.4       [* * *] for Type I Licensed Products and [* * *] for Type II Licensed Products due and payable on the fourth anniversary of the Original Effective Date and on each subsequent anniversary of the Original Effective Date during the Term.

 

Each license maintenance fee paid under this Section 4.3 shall be creditable against the royalties that are payable to Harvard under Section 4.5.

 

4.4          Milestones.

 

4.4.1       As partial consideration for the licenses granted hereunder, Licensee shall pay Harvard the following milestone payments as specified in Section 4.4.2, regardless of whether such milestone is achieved by Licensee, its Affiliate or a Sublicensee:

 

4.4.1.1            [* * *] upon [* * *] with respect to the first Type I Licensed Product;

 

4.4.1.2            [* * *] upon [* * *] with respect to the first Type I Licensed Product;

 

4.4.1.3            [* * *] upon [* * *] with respect to the first Type I Licensed Product; and

 

4.4.1.4            [* * *] upon the [* * *] with respect to the first Type I Licensed Product.

 

With respect to the first three (3) Type II Licensed Products to achieve a milestone set forth above, Licensee shall pay Harvard [* * *] of the amount due with respect to a Type I Licensed Product for meeting the same milestone.  With respect to each subsequent Type II Licensed Product to achieve such milestone, Licensee shall pay Harvard [* * *] of the amount due with respect to a Type I Licensed Product for meeting the same milestone.

 

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

4.4.2       Licensee shall notify Harvard in writing within thirty (30) days following the achievement of each milestone described in Section 4.4.1, and shall make the appropriate milestone payment within thirty (30) days after the achievement of such milestone.

 

4.4.3       The milestones set forth in Section 4.4 are intended to be successive.  In the event that a Licensed Product is not required to undergo the testing or other event associated with a particular milestone (“Skipped Milestone”), such Skipped Milestone shall be deemed to have been achieved upon the achievement by such Licensed Product of the next successive milestone (“Achieved Milestone”).  Subject to Section 4.4.2, payment for any Skipped Milestone that is owed in accordance with the provisions of this Section 4.4.3 shall be due within thirty (30) days after the achievement of the Achieved Milestone.

 

4.4.4       Each milestone payment made under this Section 4.4 shall be creditable against any amount that is payable to Harvard under Section 4.6 on account of any amount paid by a Sublicensee to Licensee for upfront or milestone payments.

 

4.5          Royalties.

 

4.5.1       Type I Licensed Products.  As partial consideration for the license granted under Section 2.1.1, Licensee shall pay Harvard an amount equal to the following percentages of Net Sales with respect to Type I Licensed Products and of Service Income:

 

4.5.1.1            for Net Sales and Service Income by Licensee and its Affiliates, [* * *] of such Net Sales and Service Income: and

 

4.5.1.2            for Net Sales and Service Income by a Sublicensee, the greater of (a) [* * *] of such Net Sales and Service Income and (b) [* * *] of royalties payable by such Sublicensee to Licensee on account of such Net Sales and Service Income.

 

4.5.2       Type II Licensed Products.  As partial consideration for the license granted under Section 2.1.2, Licensee shall pay Harvard an amount equal to the following percentages of Net Sales with respect to Type II Licensed Products:

 

4.5.2.1           for Net Sales by Licensee and its Affiliates, [* * *] of such Net Sales; and

 

4.5.2.2            for Net Sales by a Sublicensee, the greater of (a) [* * *] of such Net Sales and (b) [* * *] of royalties payable by such Sublicensee to Licensee on account of such Net Sales.

 

Such royalties shall be payable under this Agreement on a Licensed Product by Licensed Product and country by country basis until [* * *] have passed since the date of [* * *] in each such country.

 

4.5.3       Third Party Royalty Set Off.  In the event that Licensee or a Sublicensee is required to obtain a license from a third party to an Infringed Patent in order to identify,

 

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

discover, develop, manufacture, use or sell a Type I or Type II Licensed Product, and Licensee or a Sublicensee obtains such a license after arm’s length negotiations, Licensee may offset [* * *] of any royalties paid under such third party license with respect to sales of Type I or Type II Licensed Products against the royalty payments that are due to Harvard pursuant to Section 4.5.1 or 4.5.2 with respect to sales of such Type I or Type II Licensed Product in such country.  Notwithstanding the above, (a) the royalty payments to Harvard with respect to a Licensed Product that is the subject of an offset under this Section 4.5.3 may not be reduced by more than [* * *] of the amount otherwise due with respect to such Type I or Type II Licensed Product, (b) the offset that Licensee is entitled to make against royalty payments due to Harvard may not be greater than any offset that Licensee or a Sublicensee, as applicable, is entitled to make against royalty payments due to a third party licensee on account of royalty payments made under or by virtue of this Agreement and (c) in the event that a Sublicensee is required to obtain a license from a third party as described above, the percentage offset that Licensee is entitled to make against royalty payments due to Harvard with respect to Net Sales by such Sublicensee may not be greater than any percentage offset that such Sublicensee actually makes against royalty payments due to Licensee with respect to such Net Sales.

 

4.5.4       Bad Debt.  If, after exercising good faith, commercially reasonable collection efforts, Licensee is unable to collect any amount related to the sale, lease or other transfer of Licensed Products and/or related to the performance of Licensed Services for which it has previously paid royalties hereunder, Licensee shall be entitled to deduct any royalty previously paid with respect to such uncollected amount from the royalty payment due by Licensee in the next Calendar Quarter, which deduction shall be set forth in the corresponding report under Section 5.1 below.  If, at any time after such deduction Licensee does collect any of such amounts, such collected amounts shall be included as Net Sales or Service Income in the Calendar Quarter in which they are collected and Licensee shall pay Harvard royalties thereon accordingly.

 

4.6          Non-Royalty Sublicense Income.  As partial consideration for the licenses granted hereunder.  Licensee shall pay Harvard an amount equal to [* * *] of all Non-Royalty Sublicense Income.  Notwithstanding the foregoing, if a Sublicense is part of a transaction in which [* * *] to be attributed to the Sublicense as part of the overall transaction.  In such event, the amount payable to Harvard under this Section 4.6 with respect to Non-Royalty Sublicense Income received in connection with such transaction shall be determined by the following equation:

 

(x)(y)  [* * *] = A

where:

(x) is the [* * *] ;

(y) is the [* * *] ;

and A is the amount to be paid to Harvard.

 

4.7          No Multiple Payments.  Only a single royalty shall be due and payable by Licensee under this Agreement with respect to a Licensed Product or Licensed Service regardless of whether the Licensed Product or Licensed Service is covered by more than one

 

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

Valid Claim.

 

5.                                       Reports; Payments; Records.

 

5.1          Reports and Payments.

 

5.1.1       Reports.  Within sixty (60) days after the conclusion of each Calendar Quarter commencing with the first Calendar Quarter in which Net Sales or Service Income are generated or Non-Royalty Sublicense Income is received, Licensee shall deliver to Harvard a report containing the following information (in each instance, with a Licensed Product-by-Licensed Product and Licensed Service-by-Licensed Service breakdown):

 

5.1.1.1           the number of units of Licensed Products sold, leased or otherwise transferred by Licensee, its Affiliates and Sublicensees for the applicable Calendar Quarter (with a breakdown by type of Licensed Products - i.e., Type I Licensed Products and Type II Licensed Products);

 

5.1.1.2            the gross amount invoiced for Licensed Products sold, leased or otherwise transferred by Licensee, its Affiliates and Sublicensees during the applicable Calendar Quarter (with a breakdown by type of Licensed Products) and Licensed Services performed;

 

5.1.1.3            a calculation of Net Sales and Service Income for the applicable Calendar Quarter, including an itemized listing of applicable deductions;

 

5.1.1.4           a detailed accounting of all Non-Royalty Sublicense Income received during the applicable Calendar Quarter and amounts received from Sublicenses that Licensee excluded from Non-Royalty Sublicense Income pursuant to Section 1.14 (a) - (f); and

 

5.1.1.5            the total amount payable to Harvard in U.S. Dollars in Net Sales, Service Income, and Non-Royalty Sublicense Income for the applicable Calendar Quarter, together with the exchange rates used for conversion.

 

Each such report shall be certified on behalf of Licensee by its Chief Financial Officer, President or Chief Executive Officer as true, correct and complete in all material respects.  If no amounts are due to Harvard for a particular Calendar Quarter, the report shall so state.

 

5.1.2       Payment.  Within sixty (60) days after the end of each Calendar Quarter.  Licensee shall pay Harvard all amounts due with respect to Net Sales, Service Income, and Non- Royalty Sublicense Income for the applicable Calendar Quarter.

 

5.2          Payment Currency.  All payments due under this Agreement shall be payable in U.S. Dollars.  Conversion of foreign currency to U.S. Dollars shall be made at the conversion rate existing in the United States (as reported in the Wall Street Journal) on the last working day of the applicable Calendar Quarter.  Such payments shall be without deduction of exchange, collection or other charges.

 

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5.3          Records.  Licensee shall maintain, and shall cause its Affiliates and Sublicensees to maintain, complete and accurate records of Licensed Products that are made, used or sold and Licensed Services that are performed under this Agreement, any amounts payable to Harvard in relation to such Licensed Products and Licensed Services, and all Non-Royalty Sublicense Income received by Licensee, which records shall contain sufficient information to permit Harvard to confirm the accuracy of any reports or notifications delivered to Harvard under Section 5.1.  Licensee, its Affiliates and/or its Sublicensees, as applicable, shall retain such records relating to a given Calendar Quarter for at least five (5) years after the conclusion of that Calendar Quarter, during which time Harvard shall have the right, at its expense, to cause an independent, certified public accountant to inspect such records during normal business hours for the sole purpose of verifying any reports and payments delivered under this Agreement.  Such accountant shall not disclose to Harvard any information other than information relating to the accuracy of reports and payments delivered under this Agreement.  The parties shall reconcile any underpayment or overpayment within thirty (30) days after the accountant delivers the results of the audit.  In the event that any audit performed under this Section 5.3 reveals an underpayment in excess of five percent (5%) in any calendar year, the audited entity shall bear the full cost of such audit.  Harvard may exercise its rights under this Section 5.3 only once every year per audited entity and only with reasonable prior notice to the audited entity.

 

5.4          Late Payments.  Any payments by Licensee that are not paid on or before the date such payments are due under this Agreement shall bear interest at the lower of (a) one and one half percent (1.5%) per month and (b) the maximum rate allowed by law.  Interest shall accrue beginning on the first day following the due date for payment and shall be compounded quarterly.  Payment of such interest by Licensee shall not limit, in any way.  Harvard’s right to exercise any other remedies Harvard may have as a consequence of the lateness of any payment.

 

5.5          Payment Method.  Each payment due to Harvard under this Agreement shall be paid by check or wire transfer of funds to Harvard’s account in accordance with written instructions provided by Harvard.  If made by wire transfer, such payments shall be marked so as to refer to this Agreement.

 

5.6          Withholding and Similar Taxes.  All amounts to be paid to Harvard pursuant to this Agreement shall be without deduction of exchange, collection, or other charges, and, specifically, without deduction of withholding or similar taxes or other government imposed fees or taxes, except as permitted in the definition of Net Sales.

 

6.                                       Intellectual Property.

 

6.1          Title.  The entire right, title and interest in the Patent Rights and Harvard Technology Transfer Materials shall be owned solely by Harvard.

 

6.2          Patent Filing, Prosecution and Maintenance.

 

6.2.1       Patent Rights.  Harvard shall be responsible for the preparation, filing, prosecution, protection and maintenance of and, subject to Licensee meeting its payment

 

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obligations under Section 6.2.3, shall prepare, file, prosecute, protect and maintain all Patent Rights, using patent counsel reasonably acceptable to Licensee.  With respect to Patent Rights, Harvard shall: (a) use independent patent counsel reasonably acceptable to Licensee and instruct such patent counsel to furnish the Licensee with copies of all correspondence relating to the Patent Rights from the United States Patent and Trademark Office (USPTO) and any other patent office, as well as copies of all proposed responses to such correspondence in time for Licensee to review and comment on such response; (b) give Licensee an opportunity to review’ the text of each patent application before filing; (c) consult with Licensee with respect thereto; (d) supply Licensee with a copy of the application as filed, together with notice of its filing date and serial number; (e) keep Licensee advised of the status of actual and prospective patent filings; and (f) provide advance copies of any papers related to the filing, prosecution, protection and maintenance of such patent filings.  Harvard shall give Licensee the opportunity to provide comments on and make requests of Harvard concerning the preparation, filing, prosecution, protection and maintenance of the Patent Rights, and shall consider such comments and requests in good faith.

 

6.2.2       Past Expenses.  Within thirty (30) days after its receipt of an invoice from Harvard, Licensee shall reimburse Harvard for all documented, out-of-pocket expenses incurred by Harvard through the end of the last full Calendar Quarter before the Original Effective Date (the “Past Expense Period”) with respect to the preparation, filing, prosecution, protection and maintenance of the Patent Rights.

 

6.2.3       Future Expenses.  Subject to Section 6.2.4 below, within thirty (30) days after its receipt of each invoice from Harvard, Licensee shall reimburse Harvard for all documented, out-of-pocket expenses inclined by Harvard pursuant to Section 6.2.1, including those incurred between the end of the Past Expense Period and the Original Effective Date.

 

6.2.4       Abandonment.  Should Licensee decide that it does not wish to pay for the preparation, filing, prosecution, protection or maintenance of any Patent Rights in a country (“Abandoned Patent Rights”), Licensee shall provide Harvard with prompt written notice of such election.  Ninety (90) days after receipt of such notice by Harvard, Licensee shall be released from its obligation to reimburse Harvard for the expenses incurred thereafter as to such Abandoned Patent Rights.  In the event of Licensee’s abandonment of any Patent Rights, Harvard may terminate (at any time upon written notice) the license granted to Licensee hereunder with respect to such Abandoned Patent Rights.  In such case, Licensee will have no rights whatsoever to exploit such Abandoned Patent Rights and the claims of such Abandoned Patent Rights shall cease to constitute Valid Claims.  Harvard shall then be free, without further notice or obligation to Licensee, to grant rights in and to such Abandoned Patent Rights to third parties.

 

6.2.5       Small Entity Designation.  If Licensee, its Affiliates, any Sublicensee and/or any holder of an option to obtain a Sublicense does not qualify, or at any point during the term of this Agreement ceases to qualify, as an entity entitled to pay lesser fees as provided by the USPTO (i.e., a “small entity”) or the patent office of any other country.  Licensee shall so

 

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notify Harvard immediately, in order to enable Harvard to comply with regulations regarding payment of fees with respect to Patent Rights.

 

6.2.6       Marking.  Licensee, its Affiliates and Sublicensees shall mark all Licensed Products sold or otherwise disposed of in such a manner as to conform with the patent laws and practice of the country to which such products arc shipped or in which such products are sold.

 

7.                                       Enforcement of Patent Rights.

 

7.1          Notice.  In the event either party becomes aware of any possible or actual infringement of any Patent Rights relating to Licensed Products or a Licensed Service that are not solely within the scope of rights granted to a third party under Section 2.5 (an “Infringement”), that party shall promptly notify the other party and provide it with details regarding such Infringement.

 

7.2          Suit by Licensee.  Licensee shall have the first right, but not the obligation, to take action in the prosecution, prevention or termination of any Infringement.  Before Licensee commences an action with respect to any Infringement, Licensee shall consider in good faith the views of Harvard and potential effects on the public interest in making its decision whether to sue.  Should Licensee elect to bring suit against an infringer, Licensee shall keep Harvard reasonably informed of the progress of the action and shall give Harvard a reasonable opportunity in advance to consult with Licensee and offer its views about major decisions affecting the litigation.  Licensee shall give careful consideration to those views, but shall have the right to control the action; provided, however, that if Licensee fails to defend in good faith the validity and/or enforceability of the Patent Rights in the action or, or if Licensee’s license to a Valid Claim in the suit terminates, Harvard may elect to take control of the action pursuant to Section 7.3.  Should Licensee elect to bring suit against an infringer and Harvard is joined as party plaintiff in any such suit, Harvard shall have the right to approve the counsel selected by Licensee to represent Licensee and Harvard, such approval not to be unreasonably withheld.  The expenses of such suit or suits that Licensee elects to bring, including any expenses of Harvard reasonably incurred in conjunction with the prosecution of such suits or the settlement thereof, shall be paid for entirely by Licensee and Licensee shall hold Harvard free, clear and harmless from and against any and all costs of such litigation, including attorney’s fees.  Licensee shall not compromise or settle such litigation without the prior written consent of Harvard, which consent shall not be unreasonably withheld or delayed.  In the event Licensee exercises its right to sue pursuant to this Section 7.2, it shall first reimburse itself out of any sums recovered in such suit or in settlement thereof for all costs and expenses of every kind and character, including reasonable attorney’s fees, necessarily incurred in the prosecution of any such suit.  If, after such reimbursement, any funds shall remain from said recovery, then Harvard shall receive an amount equal to twenty percent (20%) of such funds and the remaining eighty percent (80%) of such funds shall be retained by Licensee.

 

7.3          Suit by Harvard.  If Licensee does not lake action in the prosecution, prevention, or termination of any Infringement pursuant to Section 7.2 above, and has not commenced

 

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negotiations with the infringer for the discontinuance of said Infringement, within ninety (90) days after receipt of notice to Licensee by Harvard of the existence of an Infringement, Harvard may elect to do so.  Should Harvard elect to bring suit against an infringer and Licensee is joined as party plaintiff in any such suit, Licensee shall have the right to approve the counsel selected by Harvard to represent Harvard, such approval not to be unreasonably withheld.  The expenses of such suit or suits that Harvard elects to bring, including any expenses of Licensee reasonably incurred in conjunction with the prosecution of such suits or the settlement thereof, shall be paid for entirely by Harvard and Harvard shall hold Licensee free, clear and harmless from and against any and all costs of such litigation, including attorney’s fees.  Harvard shall not compromise or settle such litigation without the prior written consent of Licensee, which consent shall not be unreasonably withheld or delayed.  In the event Harvard exercises its right to sue pursuant to this Section 7.3, it shall first reimburse itself out of any sums recovered in such suit or in settlement thereof for all costs and expenses of every kind and character, including reasonable attorney’s fees, necessarily incurred in the prosecution of any such suit.  If, after such reimbursement, any funds shall remain from said recovery, then Licensee shall receive an amount equal to twenty percent (20%) of such funds and the remaining eighty percent (80%) of such funds shall be retained by Harvard.

 

7.4          Own Counsel.  Each party shall always have the right to be represented by counsel of its own selection and at its own expense in any suit instituted under this Article 7 by the other party for Infringement.

 

7.5          Cooperation.  Each party agrees to cooperate fully in any action under this Article 7 that is controlled by the other party, provided that the controlling party reimburses the cooperating party promptly for any costs and expenses incurred by the cooperating party in connection with providing such assistance.

 

7.6          Standing.  If a party lacks standing and the other party has standing to bring any such suit, action or proceeding, then such other party shall do so at the request of and at the expense of the requesting party.  If either party determines that it is necessary or desirable for another party to join any such suit, action or proceeding, the other party shall execute all papers and perform such other acts as may be reasonably required in the circumstances.

 

7.7          Declaratory Judgment.  If a declaratory judgment action is brought naming Licensee and/or any of its Affiliates or Sublicensees as a defendant and alleging invalidity or unenforceability of any claims within the Patent Rights, Licensee shall promptly notify Harvard in writing and Harvard may elect, upon written notice to Licensee within thirty (30) days after Harvard receives notice of the commencement of such action, to take over the sole defense of the invalidity or unenforceability aspect of the action at its own expense and shall reasonably consider all comments of Licensee concerning such action.

 

8.                                       Warranties; Limitation of Liability.

 

8.1          Compliance with Law.  Licensee represents and warrants that it will comply, and will ensure that its Affiliates and Sublicensees comply, with all local, state, and international

 

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laws and regulations relating to the development, manufacture, use, sale and importation of Licensed Products and the performance of Licensed Services.  Without limiting the foregoing, Licensee represents and warrants that it will comply, and will ensure that its Affiliates and Sublicensees comply, with all United States export control laws and regulations.

 

8.2          No Warranty.

 

8.2.1       NOTHING CONTAINED HEREIN SHALL BE DEEMED TO BE A WARRANTY BY HARVARD THAT IT CAN OR WILL BE ABLE TO OBTAIN PATENTS ON PATENT APPLICATIONS INCLUDED IN THE PATENT RIGHTS,  OR THAT ANY OF THE PATENT RIGHTS WILL AFFORD ADEQUATE OR COMMERCIALLY WORTHWHILE PROTECTION.

 

8.2.2       HARVARD MAKES NO REPRESENTATION THAT THE PRACTICE OF THE PATENT RIGHTS OR USE OF THE HARVARD TECHNOLOGY TRANSFER MATERIALS OR THE DEVELOPMENT, MANUFACTURE, USE, SALE OR IMPORTATION OF ANY LICENSED PRODUCT OR THE PRACTICE OF ANY LICENSED METHOD, OR ANY ELEMENT THEREOF, WILL NOT INFRINGE THE PATENT OR PROPRIETARY RIGHTS OF ANY THIRD PARTY.

 

8.2.3       EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY MAKES ANY WARRANTY WITH RESPECT TO ANY TECHNOLOGY, PATENTS, GOODS, SERVICES, RIGHTS OR OTHER SUBJECT MATTER OF THIS AGREEMENT AND HEREBY DISCLAIMS WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT WI TH RESPECT TO ANY AND ALL OF THE FOREGOING.

 

8.3          Limitation of Liability.

 

8.3.1       Except with respect to Licensee’s indemnification obligations under Article 9, neither party will be liable to the other with respect to any subject matter of this Agreement under any contract, negligence, strict liability or other legal or equitable theory for (a) any indirect, incidental, consequential or punitive damages or lost profits or (b) cost of procurement of substitute goods, technology or services.

 

8.3.2       Harvard’s aggregate liability for all damages of any kind arising out of or relating to this Agreement or its subject matter shall not exceed the amounts paid to Harvard under this Agreement.

 

9.                                       Indemnification.

 

9.1          Indemnity.

 

9.1.1       Licensee shall indemnify, defend and hold harmless Harvard and its current or former directors, governing board members, trustees, officers, faculty, medical and

 

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professional staff, employees, students, and agents and their respective successors, heirs and assigns (collectively, the “Indemnitees”) from and against any claim, liability, cost, expense, damage, deficiency, loss or obligation or any kind or nature (including, without limitation, reasonable attorney’s fees and other costs and expenses of litigation) by or owed to a third party (collectively, “Claims”), based upon, arising out of, (a) practice by Licensee, its Affiliates and Sublicensees of the Patent Rights or (b) the development, manufacture, distribution, sale or use of Licensed Products or the performance of Licensed Services, including without limitation any cause of action relating to product liability concerning any product, process, or service made, used or sold pursuant to any right or license granted under this Agreement; provided, however, that the above indemnification shall not apply to any Claim to the extent that it is directly attributable to the gross negligence or intentional misconduct of any Indemnitee.

 

9.1.2       Licensee shall, at its own expense, provide attorneys reasonably acceptable to Harvard to defend against any actions brought or filed against any Indemnitee hereunder with respect to the subject of indemnity contained herein, whether or not such actions are rightfully brought.  Any Indemnitee seeking indemnification hereunder shall promptly notify Licensee of such Claim; provided, however, that failure to so notify Licensee will relieve Licensee from liability for indemnification only if and to the extent Licensee did not otherwise promptly learn of such Claim and such failure results in additional costs, expenses or liability of Licensee or the inability to defend any such Claim under Section 9.1.  The Indemnitees shall provide Licensee, at Licensee’s expense, with reasonable assistance and full information with respect to such Claim and give Licensee sole control of the defense or settlement of any Claim for which Licensee acknowledges full responsibility under this Section 9.1; provided, however, that (a) Licensee shall not settle any such Claim which will adversely impact Harvard’s interest in the Patent Rights, admit any liability on the part of an Indemnitee or impose any obligations on any Indemnitee without the prior written consent of Harvard, which consent shall not be unreasonably withheld, and (b) any Indemnitee shall have the right to retain its own counsel, at the expense of Licensee, if representation of such Indemnitee by the counsel retained by Licensee would be inappropriate because of actual or potential differences in the interests of such Indemnitee and any other party represented by such counsel.  Notwithstanding the foregoing, in no event shall Licensee be required to pay the expenses of more than one counsel for the Indemnitees in addition to counsel retained by Licensee.  Licensee agrees to keep Harvard informed of the progress in the defense and disposition of such claim, suit or action and to consult with Harvard with regard to any proposed settlement.  Notwithstanding the foregoing, Licensee shall have no obligations for any Claim if the Indemnitee seeking indemnification makes any admission, settlement or other communication regarding such Claim without the prior written consent of Licensee, in its sole discretion.

 

9.2          Insurance.

 

9.2.1       Beginning at the time any Licensed Product is being commercially distributed or sold (other than for the purpose of obtaining regulatory approvals) or any Licensed Service is being performed by Licensee, or by an Affiliate, Sublicensee or agent of Licensee, Licensee shall, at its sole cost and expense, procure and maintain commercial general liability

 

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insurance in amounts not less than $5,000,000 per incident and $5,000,000 annual aggregate and naming the Indemnitees as additional insureds.  During clinical trials of any such Licensed Product, Licensee shall, at its sole cost and expense, procure and maintain commercial general liability insurance in amounts not less than $3,000,000 per incident and $3,000,000 annual aggregate, naming the Indemnitees as additional insureds.  Such commercial general liability insurance shall provide: (a) product liability coverage and (b) broad form contractual liability coverage for Licensee’s indemnification under this Agreement.

 

9.2.2       If Licensee elects to self-insure all or part of the limits described above in Section 9.2.1 (including deductibles or retentions which are in excess of $250,000 annual aggregate) such self-insurance program must be acceptable to Harvard and the Risk Management Foundation of the Harvard Medical Institutions, Inc. in their commercially reasonable discretion.  The minimum amounts of insurance coverage required shall not be construed to create a limit o! Licensee’s liability with respect to its indemnification under this Agreement.

 

9.2.3       Licensee shall provide Harvard with written evidence of such insurance upon request of Harvard.  Licensee shall provide Harvard with written notice at least fifteen (15) days prior to the cancellation, non-renewal or material change in such insurance; if Licensee does not obtain replacement insurance providing comparable coverage within thirty (30) days after such notice, Harvard shall have the right to terminate this Agreement effective at the end of such thirty (30) day period without notice or any additional waiting periods.

 

9.2.4       Licensee shall maintain such commercial general liability insurance beyond the expiration or termination of this Agreement during: (a) the period that any Licensed Product is being commercially distributed or sold or any Licensed Service is being performed by Licensee, or an Affiliate, Sublicensee or agent of Licensee; and (b) a reasonable period after the period referred to in (a) above which in no event shall be less than five (5) years.

 

10.                                Term and Termination.

 

10.1        Term.  The term of this Agreement shall commence on the Original Effective Date and, unless earlier terminated as provided in this Article 10, shall continue in full force and effect on a Licensed Product by Licensed Product, Licensed Service by Licensed Service and country by country basis until the expiration of the last to expire Valid Claim.

 

10.2        Termination.

 

10.2.1     Termination Without Cause.  Licensee may terminate this Agreement upon ninety (90) days prior written notice to Harvard, as to Type I or Type II Licensed Products, or as to both.  All rights and licenses granted herein shall survive such termination as to the type of Licensed Product that is not terminated.  In the event of a termination with respect to Type II Licensed Products, Licensee’s obligations under Sections 4.4, 4.5.2, 4.6 and Articles 5 and 9 shall survive such termination with respect to Type II Licensed Products that were identified or discovered through the use of a Licensed Method, which use was made prior to such termination.

 

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10.2.2     Termination for Patent Challenge.  Harvard may terminate this Agreement immediately, as to Type I or Type II Licensed Products or both, upon written notice to Licensee if Licensee commences an action in which it challenges the validity, enforceability or scope of any of the Patent Rights.  All rights and licenses granted herein shall survive such termination as to the Licensed Product that is not terminated.

 

10.2.3     Termination for Default.

 

10.2.3.1         Subject to Section 3.4, in the event that cither party commits a material breach of its obligations under this Agreement and fails to cure that breach within ninety (90) days after receiving written notice thereof, the other party may terminate this Agreement in its entirety immediately upon written notice to the party in breach; provided, however, that in the event that Licensee has materially breached its obligations under this Agreement (such as a failure to achieve an applicable Development Milestone without availing itself of any aspect of the procedure set forth in Section 3.4) solely with respect any given Type I Licensed Product and not with respect to any Type II Licensed Products, then Harvard shall consider in good faith, but in its sole discretion, terminating only the rights and licenses granted herein with respect to Type I Licensed Products, and either leaving as is or converting to non-exclusive the rights and licenses granted herein with respect to Type II Licensed Products and Licensed Services.

 

10.2.3.2         If Licensee defaults in its obligations under Section 9.2 to procure and maintain insurance or, if Licensee has in any event failed to comply with the notice requirements contained therein, then Harvard may terminate this Agreement immediately without notice or additional waiting period.

 

10.2.4     Bankruptcy.  Harvard may terminate this Agreement upon notice to Licensee if Licensee becomes judicially declared insolvent, is adjudged bankrupt, applies for judicial or extra judicial settlement with its creditors, makes an assignment for the benefit of its creditors, voluntarily files for bankruptcy or has a receiver or trustee (or the like) in bankruptcy appointed by reason of its insolvency, or in the event an involuntary bankruptcy action is filed against Licensee and not dismissed within ninety (90) days, or if the other party becomes the subject of liquidation or dissolution proceedings or otherwise discontinues business.

 

10.3        Effect of Termination.

 

10.3.1     Termination of Rights.  Upon termination of this Agreement in whole or in part by either party pursuant to any of the provisions of Sections 3.4 or 10.2: (a) the rights and licenses granted to Licensee under Article 2 with respect to the terminated Licensed Products and/or Licensed Services, as applicable, shall terminate and, in the event that the Agreement is terminated in whole, all rights in and to and under the Patent Rights shall revert to Harvard; and (b) any existing agreements that contain a Sublicense with respect to the terminated Licensed Products shall terminate to the extent of such Sublicense; provided, however, that, for each Sublicensee, upon termination of the Sublicense agreement with such Sublicensee, if the Sublicensee is not then in breach of its Sublicense agreement with Licensee such that Licensee would have the right to terminate such Sublicense, such Sublicensee shall have the right to obtain

 

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a license from Harvard on the same terms and conditions as set forth herein, which shall not impose any representations, warranties, obligations or liabilities on Harvard that arc not included in this Agreement provided that (a) the scope of the license granted directly by Harvard to such Sublicensee shall be co-extensive with the scope of the license granted by Licensee to such Sublicensee, (b) if the Sublicense granted to such Sublicensee was non-exclusive, such Sublicensee shall not have the right to participate in the prosecution or enforcement of the Patent Rights under the license granted to it directly by Harvard and (c) if there are more than one Sublicensee, each Sublicensee that is granted a direct license shall be responsible for a pro rata share of the reimbursement due under Section 6.2.3 of this Agreement (based on the number of direct licenses under the Patent Rights in effect on the date of reimbursement).

 

10.3.2     Accruing Obligations.  Termination or expiration of this Agreement shall not relieve the parties of obligations accruing prior to such termination or expiration, including obligations to pay amounts accruing hereunder up to the date of termination or expiration.  After the date of termination or expiration (except in the case of termination by Harvard pursuant to Section 10.2.2, 10.2.3 or 10.2.4), Licensee, its Affiliates and Sublicensees (a) may sell Licensed Products then in stock and (b) may complete the production of Licensed Products then in the process of production and sell the same; provided that, in the case of both (a) and (b), Licensee shall pay the applicable royalties and payments to Harvard in accordance with Article 4, provide reports and audit rights to Harvard pursuant to Article 5 and maintain insurance in accordance with the requirements of Section 9.2.

 

10.4        Survival.  The parties’ respective rights, obligations and duties under Articles 5, 9 and 10 and Section 4.5.2, as well as any rights, obligations and duties which by their nature extend beyond the expiration or termination of this Agreement, shall survive any expiration or termination of this Agreement.  In addition, Licensee’s obligations under Section 4.6 with respect to Sublicenses granted prior to termination of the Agreement shall survive termination.

 

11.                                Miscellaneous.

 

11.1        Preference for United States Industry.  During the period of exclusivity of this license in the United States, Licensee shall comply with 37 C.F.R. § 401.14(i) or any successor rule or regulation.  Upon Licensee’s request.  Harvard agrees to make reasonable efforts to assist Licensee in obtaining a waiver of the requirements imposed by such rules or regulations.

 

11.2        Security Interest.  If Licensee enters into any agreement under which Licensee grants to or otherwise creates in any third party a security interest in this Agreement or any of the rights granted to Licensee herein (“Security Agreement”), and there occurs a default under the terms of such Security Agreement, if such default is not cured within any applicable cure period that may be provided under such Security Agreement, and any such third party takes any action under the Security Agreement to take title to the secured property, such action shall be deemed a default under this Agreement and be subject to the terms of Section 10.2.3.

 

11.3        Use of Name.  Licensee shall not, and shall ensure that its Affiliates and Sublicensees shall not, use the name or insignia of Harvard or the name of any of Harvard

 

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officers, faculty, other researchers or students, or any adaptation of such names, in any advertising, promotional or sales literature, including without limitation any press release or any document employed to obtain funds, without the prior written approval of Harvard.  This restriction shall not apply to any information required by law to be disclosed to any governmental entity.

 

11.4        Entire Agreement.  This Agreement is the sole agreement with respect to the subject matter hereof and except as expressly set forth herein, supersedes all other agreements and understandings between the parties with respect to the same.

 

11.5        Notices.  Unless otherwise specifically provided, all notices required or permitted by this Agreement shall be in writing and may be delivered personally, or may be sent by facsimile, overnight delivery or certified mail, return receipt requested, to the following addresses, unless the parties arc subsequently notified of any change of address in accordance with this Section 11.5:

 

If to
Licensee:

Genocea Biosciences, Inc.
Cambridge Discovery Park
100 Acorn Park Drive, 5
th  Floor

Cambridge, Massachusetts 02140

 

 

 

Attn:  President

 

 

If to Harvard:

Office of Technology Development
Harvard University
Holyoke Center 727
1350 Massachusetts Avenue
Cambridge, Massachusetts 02138

Attn.: Chief Technology Development Officer

 

Any notice shall be deemed to have been received as follows: (a) by personal delivery, upon receipt; (b) by facsimile or overnight delivery, one business day after transmission or dispatch; (c) by certified mail, as evidenced by the return receipt.  If notice is sent by facsimile, a confirming copy of the same shall be sent by mail to (lie same address.

 

11.6        Governing Law and Jurisdiction.  This Agreement will be governed by, and construed in accordance with, the substantive laws of the Commonwealth of Massachusetts, without giving effect to any choice or conflict of law provision, except that questions affecting the construction and effect of any patent shall be determined by the law of the country in which the patent shall have been granted.  Any action, suit or other proceeding arising under or relating to this Agreement (a “Suit”) shall be brought in a court of competent jurisdiction in the Commonwealth of Massachusetts, and the Parties hereby consent to the sole jurisdiction of the state and federal courts sitting in the Commonwealth of Massachusetts.  Each party agrees not to raise any objection at any time to the laying or maintaining of the venue of any Suit in any of the

 

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specified courts, irrevocably waives any claim that Suit has been brought in any inconvenient forum and further irrevocably waives the right to object, with respect to any Suit, that such court does not have any jurisdiction over such party.

 

11.7        Binding Effect.  This Agreement shall be binding upon and inure to the benefit of the parties and their respective legal representatives, successors and permitted assigns.

 

11.8        Headings.  Section and subsection headings are inserted for convenience of reference only and do not form a part of this Agreement.

 

11.9        Counterparts.  The parties may execute this Agreement in two or more counterparts, each of which shall be deemed an original.

 

11.10      Amendment; Waiver.  This Agreement may be amended, modified, superseded or canceled, and any of the terms may be waived, only by a written instrument executed by each party or, in the case of waiver, by the party waiving compliance.  The delay or failure of either party at any time or times to require performance of any provisions hereof shall in no manner affect the rights at a later time to enforce the same.  No waiver by either party of any condition or of the breach of any term contained in this Agreement, whether by conduct, or otherwise, in any one or more instances, shall be deemed to be, or considered as a further or continuing waiver of any such condition or of the breach of such term or any other term of this Agreement.

 

11.11      No Agency or Partnership.  Nothing contained in this Agreement shall give either party the right to bind the other, or be deemed to constitute either party as agent for or partner of the other or any third party.

 

11.12      Assignment and Successors.  This Agreement may not be assigned by either party without the consent of the other, which consent shall not be unreasonably withheld, except that each party may, without such consent, assign this Agreement and the rights, obligations and interests of such party to any of its Affiliates, to any purchaser of all or substantially all of its assets or the portion of its business to which the subject matter of this Agreement relates, or to any successor corporation resulting from any merger or consolidation of such party with or into such corporation; provided, in each case, that the assignee agrees in writing to be bound by the terms of this Agreement.  Any assignment purported or attempted to be made in violation of the terms of this Section 11.12 shall be null and void and of no legal effect.

 

11.13      Force Majeure.  Neither party will be responsible for delays resulting from causes beyond the reasonable control of such party, including, without limitation, fire, explosion, flood, war, strike, or riot, provided that the nonperforming party uses commercially reasonable efforts to avoid or remove such causes of nonperformance and continues performance under this Agreement with reasonable dispatch whenever such causes are removed.

 

11.14      Interpretation.  Each party hereto acknowledges and agrees that: (a) it and/or its counsel reviewed and negotiated the terms and provisions of this Agreement and has contributed to its revision; (b) the rule of construction to the effect that any ambiguities are resolved against

 

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the drafting party shall not be employed in the interpretation of this Agreement; and (c) the terms and provisions of this Agreement shall be construed fairly as to both parties hereto and not in favor of or against either party, regardless of which party was generally responsible for the preparation of this Agreement.

 

11.15      Severability.  If any provision of this Agreement is or becomes invalid or is ruled invalid by any court of competent jurisdiction or is deemed unenforceable, it is the intention of the parties that the remainder of this Agreement shall not be affected.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF , the parties have caused this Agreement to be executed by their duly authorized representatives as of the date first written above.

 

 

 

 

President and Fellows of Harvard College

 

Genocea Biosciences, Inc.

 

 

 

 

 

 

By:

/s/ Cristin L. Rothfuss

 

By:

/s/ Chip Clark

 

 

 

Name:

Cristin L. Rothfuss

 

Name:

Chip Clark

 

 

 

Title:

Director of Technology Transactions — Office of

 

Title:

President and CEO

Technology Development — Harvard University

 

 

 

 

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Exhibit 1.3

 

Development Milestones

 

Type I Licensed Products

 

a.                                       [* * *]

 

b.                                       [* * *]

 

c.                                        [* * *]

 

Type II Licensed Products

 

1.                                       Development Milestones for the First Type II Licensed Product

 

a.                                       [* * *]

 

b.                                       [* * *]

 

2.                                       Development Milestones for the Second Type II Licensed Product

 

a.                                       [* * *]

 

b.                                       [* * *]

 

c.                                       [* * *]

 

d.                                       [* * *]

 

For the avoidance of doubt, all references above and elsewhere in the Agreement to the “first’’ Type II Licensed Product are meant to refer to any Type II Licensed Product that reaches the applicable Development Milestone first (including any extensions or adjustments to such Development Milestone agreed to by the parties in accordance with Section 3.4 of the Agreement), and not just to the first in the series of Licensed Products that Genocea seeks to develop towards such Development Milestone.  The parties acknowledge and agree that the Licensed Product that ultimately achieves a particular Development Milestone may be different (e.g., different antigens, different indication) from the Licensed Product that Genocea initially sought or intended to develop towards that same Development Milestone.  The same concepts apply with equal force to all references in the Agreement to the “second” Type II Licensed Product.

 



 

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Exhibit 1.4

 

Development Plan

 

Development Plan for the First Type II Licensed Product

 

All times in the development plan below date from the Original Effective Date, and represent best estimates for the completion of each task.

 

Task

 

Completion Date

[* * *]

 

[* * *] months

[* * *]

 

[* * *] months

[* * *]

 

[* * *] months

[* * *]

 

[* * *] months

[* * *]

 

[* * *] months

 

Within [* * *] after the [* * *] with respect to the [ * * *] , Licensee shall provide Harvard with an updated Development Plan for the further development of such Licensed Product.

 



 

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Exhibit 1.7

 

Harvard Technology Transfer Materials

 

1.                                      [†].

 




EXHIBIT 10.4

 

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Execution Copy

 

LICENSE AND COLLABORATION AGREEMENT

 

by and between

 

GENOCEA BIOSCIENCES, INC.

 

and

 

ISCONOVA AB

 

August 5, 2009 and amended as of March 19, 2010 (Amendment 1); June 18, 2010 (Amendment 2); August 17, 2010 (Amendment 3); October 19, 2011 (Amendment 4); and February 6, 2012 (Amendment 5)

 



 

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Exhibit A —

 

Isconova Patents

Exhibit B

 

Research and Phase 1 Supply Plan

Exhibit C-1 -

 

Development and Scale-Up Plan

Exhibit C-2 -

 

Terms of Research, Pre-Clinical and Clinical Supplies

Exhibit D -

 

Supply and Manufacturing Agreement

Exhibit E -

 

Isconova Commercial Partner Agreement

 



 

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LICENSE AND COLLABORATION AGREEMENT

 

This License and Collaboration Agreement (this “ Agreement ”) dated the 5th day of August, 2009 (the “ Effective Date ”) is by and between Genocea Biosciences, Inc., a Delaware corporation having its principal office at 161 First Street, Suite 2C, Cambridge, MA 02142, United States of America (“ Genocea ”), and Isconova AB, a corporation organized and existing under the laws of Sweden and having a principal place of business at Uppsala Science Park, SE- 751 83 Uppsala, Sweden (“ Isconova ”).  Genocea and Isconova may each be referred to herein individually as a “ Party ” and collectively as the “ Parties .”

 

INTRODUCTION

 

WHEREAS, Genocea is in the business of discovering, developing and commercializing vaccine products that incorporate certain antigens owned or otherwise Controlled by Genocea;

 

WHEREAS, Isconova owns or otherwise controls certain intellectual property relating to the Licensed Adjuvant (as defined below); and

 

WHEREAS, Genocea and Isconova desire to collaborate, on the terms and conditions set forth herein, in certain aspects of the Development of vaccine product candidates which incorporate one or more Genocea Antigens (defined below in Section 1.35 ) and the Licensed Adjuvant (such candidates, the “ Licensed Products ”) and to provide for Genocea to further research, develop, manufacture and commercialize such Licensed Products as provided for herein,

 

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth below and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereby agree as follows:

 

ARTICLE 1
DEFINITIONS

 

Except as otherwise explicitly specified to the contrary, (a) references to a Section, Article, Exhibit or Schedule means a Section or Article of, or Schedule or Exhibit to this Agreement, unless another agreement is specified, (b) the word “including” will be construed as “including without limitation,” (c) references to a particular statute or regulation include all rules and regulations thereunder and any predecessor or successor statute, rules or regulations, in each case, as amended or otherwise modified from time to time, (d) words in the singular or plural form include the plural and singular form, respectively, (e) words of any gender include each other gender, (f) “or” is disjunctive but not necessarily exclusive, (g) the word “will” shall be construed to have the same meaning and effect as the word “shall,” (h) whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified, and (i) references to a particular person include such person’s successors and assigns to the extent not prohibited by this Agreement.

 

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When used in this Agreement, each of the following terms shall have the meanings set forth in this ARTICLE 1 :

 

1.1                                “Affiliate” means, with respect to a subject entity, another entity that, directly or indirectly, controls, is controlled by, or is under common control with such subject entity, for so long as such control exists.  For purposes of this definition only, “control” means ownership, directly or indirectly through one or more Affiliates, of at least fifty percent (50%) of the equity securities of the entity entitled to vote in the election of directors (or, in the case of an entity that is not a corporation, in the election of the corresponding managing authority, or in the case of a partnership, the status as a general partner) or any other arrangement whereby an entity controls or has the right to control the board of directors or equivalent governing body or management of a corporation or other entity.

 

1.2                                “Agreement Term” means the period commencing on the Effective Date and ending upon the termination of this Agreement with respect to all countries in the Territory, in accordance with Section 9.1 .

 

1.3                                “Applicable Law” means the applicable laws, rules and regulations, including any rules, regulations, guidelines or other requirements of the Regulatory Authorities, that may be in effect from time to time in the Territory.

 

1.4                                “Bankruptcy Code” means Title 11, United States Code, as amended, or analogous provisions of Applicable Law outside the United States.

 

1.5                                “Business Day” means a day other than a Saturday, a Sunday or a day on which banking institutions in Boston, Massachusetts or Sweden are closed.

 

1.6                                “Change of Control” means, with respect to a Party, (i) a merger or consolidation of such Party with a Third Party which results in the voting securities of such Party outstanding immediately prior thereto ceasing to represent at least fifty percent (50%) of the combined voting power of the surviving entity immediately after such merger or consolidation, or (ii) a transaction or series of related transactions in which a Third Party, together with its Affiliates, becomes the beneficial owner of fifty percent (50%) or more of the combined voting power of the outstanding securities of such Party, or (iii) the sale or other transfer to a Third Party of all or substantially all of such Party’s business to which the subject matter of this Agreement relates.

 

1.7                                “Clinical Supplies” means supplies of Licensed Product Manufactured by or on behalf of Genocea in compliance with GLP and GMP and meeting the FDA Guidance for Biologies License Applications (BLA), Product License Applications/Establishment License Applications, New Drug Applications, and supplements and amendments to those applications to Center for Biologies Evaluation and Research (CBER) and EMEA guidances, in each case, if required given the intended use, and ready to be used for the conduct of pre-clinical or human clinical trials of such Licensed Product in the Field.

 

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1.8                                “Clinical Trial” means a study in humans that is conducted in accordance with GCP and is designed to generate data in support of an NDA and/or BLA for a Licensed Product.  For illustration purposes solely, any Phase 1 Clinical Trial, Phase 2 Clinical Trial, Phase 3 Clinical Trial or Post-Approval Clinical Trial shall be considered a Clinical Trial hereunder.

 

1.9                                “Collaboration IP” means (a) any and all ideas, information, Know-How, data research results, writings, inventions, discoveries, modifications, enhancements, derivatives, new uses, developments, techniques, materials, compounds, products, designs, processes or other technology or intellectual property, whether or not patentable or copyrightable, in each case, that is not an Improvement to then-existing Genocea Technology, Isconova Technology or Joint Technology and is developed by either Party, its Affiliates or Third Parties acting on their behalf while performing activities under this Agreement, and (b) all Patent Rights and other intellectual property rights in any of the foregoing.

 

1.10                         “Combination Product” means any Licensed Product containing another active component so as to be a combination product (whether packaged together or in the same formulation).

 

1.11                         “Commercial Supplies” means supplies of Licensed Product in final packaged form Manufactured by or on behalf of Genocea in compliance with GMP and meeting FDA Guidance for Biologies License Applications, Product License Applications/Establishment License Applications, New Drug Applications, and supplements and amendments to those applications to Center for Biologics Evaluation and Research (CBER) and EMEA guidances, in each case, if required given the intended use, and ready to be offered for commercial sale or Commercialized by Genocea and/or its Affiliates or Sublicensees, for use in the Field in the Territory.

 

1.12                         “Commercialization” means any and all activities using, constituting, importing, marketing, distributing, offering for sale and selling Licensed Products in the Field in the Territory following or in expectation of receipt of Regulatory Approval (but excluding Development) and shall include Promotion as well as activities required to fulfill ongoing regulatory obligations, including adverse event reporting but excluding any Post-Approval Clinical Trials.  When used as a verb, “Commercialize” means to engage in Commercialization.

 

1.13                         “Commercially Reasonable Efforts” means, with respect to the efforts to be expended by any Party with respect to any objective, those reasonable, diligent, good faith efforts to accomplish such objective as would normally be exerted or employed by a similarly-situated comparable company to accomplish a similar objective under similar circumstances.  With respect to any objective relating to the Development, Manufacture and/or Commercialization of a Licensed Product by any Party, “Commercially Reasonable Efforts” shall mean the carrying out of obligations in a diligent and sustained manner using such effort and employing such resources as would normally be exerted or employed by a similarly-situated comparable company for a product of similar market potential, and at a similar stage of its Development or product life, taking into consideration safety and efficacy, costs, the nature of the Licensed Product, the clinical setting in which it is expected to be used, competitiveness of the marketplace, regulatory environment, the patent or other proprietary position of the Licensed

 

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Product, and other conditions then prevailing.  To the extent that the performance of a Party’s obligations hereunder is adversely affected by the other Party’s failure to perform, in whole or in part, its obligations hereunder, the impact of such Party’s failure shall be taken into account in determining whether the other Party has used its Commercially Reasonable Efforts to perform any such affected obligations.  Commercially Reasonable Efforts shall be determined on a country-by-country basis.

 

1.14                         “Confidential Information” means, with respect to each Party, proprietary data or information that belongs in whole or in part to such Party, its Affiliates or Sublicensees, and is disclosed to the other Party, including all Isconova Technology, Genocea Technology and Joint Technology and any information designated as Confidential Information of such Party hereunder.  Confidential Information shall not include (as determined by competent documentation) information that:

 

(a)                                  was, without any wrongdoing under contract, agreement, or law by the receiving Party, its Affiliates or its Sublicensees, known by the receiving Party or its Affiliates prior to its date of disclosure to the receiving Party; or

 

(b)                                  either before or after the date of the disclosure to the receiving Party is lawfully disclosed to the receiving Party or its Affiliates by sources (other than the disclosing Party) rightfully in possession of the Confidential Information; or

 

(c)                                   either before or after the date of the disclosure to the receiving Party or its Affiliates becomes published or generally known to the public (including information known to the public through the sale of products in the ordinary course of business) through no fault or omission on the part of the receiving Party, its Affiliates or its Sublicensees; or

 

(d)                                  is independently developed by or for the receiving Party or its Affiliates without reference to or reliance upon the Confidential Information.

 

1.15                         “Contract Quarters” shall mean the three-month periods ending respectively on March 31, June 30, September 30 and December 31 of each Contract Year.

 

1.16                         “Contract Year” means each calendar year during the Agreement Term; provided, however, that the first Contract Year shall begin on the Effective Date and end on December 31, 2009.  Each Contract Year shall be divided into four (4) Contract Quarters.

 

1.17                         “Control” or “Controlled” means with respect to any (a) material, item of information, method, data or other Know-How or (b) Patent Rights or other intellectual property right, the possession (whether by ownership or license, other than pursuant to this Agreement) by a Party or its Affiliates of the ability to grant to the other Party access or a license as provided herein under such item or right, other than as a result of the rights granted hereunder and without, in the case of such rights that are licensed from a Third Party, violating the terms of any agreement or other arrangement with any Third Party existing before or after the Effective Date.

 

4



 

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1.18                         “Deliverables” means the information and materials to be delivered by Isconova to Genocea as further described in the Research and Phase 1 Supply Plan and the Development and Scale-Up Plan, including Matrix-M for all Clinical Trials.

 

1.19                         “Development” means all pre-clinical, non-clinical or clinical research or other activities performed by or on behalf of either Party with respect to a Licensed Product in the Field in the Territory in an indication, or for the purpose of obtaining Regulatory Approval with respect to such indication, from the Effective Date until Regulatory Approval of such Licensed Product is obtained for the indication being studied including: (a) early pre-clinical testing of a Licensed Product and research regarding the Licensed Adjuvant; (b) toxicology, regulatory affairs, pre-clinical studies and clinical trials in accordance with the GLPs, GCPs and GMPs or other designated quality standards and Applicable Laws; and (c) all Manufacturing activities (until such time as Manufacturing of Commercial Supplies commences) relating to developing the ability to Manufacture Licensed Product, including process and formulation development, process validation, manufacturing scale-up, manufacturing and analytical development, and quality assurance and quality control.  When used as a verb, “Develop” means to engage in Development.

 

1.20                         “Development and Scale-Up Plan” means the plan describing the development and scale-up activities, responsibilities and timelines to be undertaken by Isconova during the period of the Research Term not covered by the Research and Phase 1 Supply Plan, which is attached hereto as Exhibit C-1 and which may be modified in accordance with the terms of Section 4.2.

 

1.21                         “Disease” means a disease, disorder or condition in humans.

 

1.22                         “Disease Fields” means, from time to time, all Exclusive Disease Fields, Time-Limited Exclusive Disease Fields and Non-Exclusive Disease Fields, each being a “Disease Field”.  For the avoidance of doubt, a Excluded Time-Limited Exclusive Disease Field shall not be considered a Disease Field hereunder.

 

1.23                         “Drug Master File” means a Drug Master File filed with the FDA as described in 21 C.F.R. §314.420.

 

1.24                         “EMEA” means the Regulatory Agency known as either the European Medicines Agency or the European Agency for the Evaluation of Medicinal Products, or a successor agency with responsibilities comparable to those of the European Medicines Agency or the European Agency for the Evaluation of Medicinal Products.

 

1.25                         “Excluded Diseases” means the following diseases: (a) respiratory syncytial virus (RSV), (b) influenza (seasonal and pandemic) and (c) rabies.

 

1.26                         “Excluded Time-Limited Exclusive Disease Fields” means the following diseases: streptococcus pneumoniae and (b) herpes zoster (shingles).

 

1.27                         “Exclusive Disease Field” shall have the meaning set forth in Section 2.1.1.

 

5



 

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1.28                         “Exclusive Field” means (i) the treatment, prevention and/or modulation by use of a vaccine, of the following Diseases: (a) herpes simplex (HSV) and (b) Chlamydia and (ii) any and all research uses and applications related to the Development, Manufacture and Commercialization of Licensed Products for HSV and Chlamydia.

 

1.29                         “Executive Officers” means the Chief Executive Officer of Genocea (or a designee of such Chief Executive Officer) and the Chief Executive Officer of Isconova (or a designee of such Chief Executive Officer).

 

1.30                         “FDA” means the United States Food and Drug Administration, or a successor agency in the United States with responsibilities comparable to those of the United States Food and Drug Administration.

 

1.31                         “Field” means the Exclusive Field, the Time-Limited Exclusive Field, and the Non-Exclusive Field.

 

1.32                         “First Commercial Sale” means, with respect to a given Licensed Product in a country in the Territory, the first commercial sale in an arms’ length transaction of such Licensed Product to a Third Party by or on behalf of Genocea, its Affiliate or its Sublicensee in such country following receipt of applicable Regulatory Approval of such Licensed Product in such country.

 

1.33                         “FTE” means the equivalent of one person working full-time for a twelve (12) month period in a research or other relevant capacity, with full-time being defined as at least 1760 hours per year.  In the interests of clarity, a single individual who works more than 1760 hours in a single year shall be treated as one (1) FTE regardless of the number of hours worked.  Any individual who devotes less than 1760 hours per year shall be treated as an FTE on a pro-rata basis, which shall be determined by dividing the actual number of hours worked per year by 1760.

 

1.34                         “GCP” means the international ethical and scientific quality standards for designing, conducting, recording, and reporting trials that involve the participation of human subjects.  In the United States, GCP shall be based on Good Clinical Practices established through FDA guidances (including ICH E6).

 

1.35                         “Genocea Antigen” means any antigen (a) owned or otherwise Controlled by Genocea and (b) believed to trigger an immune response causing the production of antibodies and/or cytokine or T-cell responses in humans as a defense against or treatment for a Disease Field.

 

1.36                         “Genocea Collaboration IP” means any and all Collaboration IP created, conceived or reduced to practice, and, in the case of patentable Collaboration IP, Invented, (a) solely by either Party, its Affiliates or Third Parties acting on its behalf or (b) jointly by the Parties, their respective Affiliates or by Third Parties acting on their behalf, which relates in any way to (a) a Genocea Antigen or (b) the development or use of antigens in the formulation of vaccine products; provided, however, that Genocea Collaboration IP shall not include any Collaboration IP that is Isconova Collaboration IP.

 

6



 

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1.37                         “Genocea Improvements” means any and all Improvements to the Genocea Technology created, conceived or reduced to practice, and, in the case of patentable Improvements, Invented, (i)  solely by either Party, its respective Affiliates, or by Third Parties acting on its behalf, while performing activities under this Agreement or (ii) jointly by the Parties, their respective Affiliates, agents or by Third Parties acting on their behalf, while performing activities under this Agreement; provided, however, that Genocea Improvements shall not include any Improvement that is an Isconova Improvement or Joint Improvement.

 

1.38                         “Genocea Know-How” means any Know-How (other than Genocea Improvements and Genocea Collaboration IP) that is either Controlled by Genocea on the Effective Date or comes within Genocea’s Control during the Agreement Term that at any time during the Agreement Term is necessary or useful for, or otherwise related to, the exploitation of the Genocea Antigen or Licensed Product in the Field, including the Development, Manufacturing or Commercialization of such Licensed Product in the Field.

 

1.39                         “Genocea Patent Rights” means (a) any Patent Rights Controlled by Genocea or any of its Affiliates that cover a Genocea Antigen; (b) any Patent Rights resulting from Genocea Improvements or Genocea Collaboration IP and (c) any other patents or patent applications Controlled by Genocea as of the Effective Date or during the Agreement Term, that are necessary or useful for, or otherwise related to, the exploitation of the Genocea Antigen or Licensed Product in the Field, including the Development, Manufacturing or Commercialization of such Licensed Product in the Field.

 

1.40                         “Genocea Technology” means Genocea Patent Rights, Genocea Know-How, Genocea Improvements, and Genocea Collaboration IP.

 

1.41                         “GLP” means the current Good Laboratory Practice (or similar standards) for the performance of laboratory activities for pharmaceutical products as are required by applicable Regulatory Authorities.  In the United States, Good Laboratory Practices are established through FDA regulations (including 21 CFR Part 58), FDA guidances, FDA current review and inspection standards and current industry standards.

 

1.42                         “GMP” means current Good Manufacturing Practices.  In the United States, GMP shall be as defined under the rules and regulations of the FDA, as the same may be amended from time to time.

 

1.43                         “Improvements” means (a) any and all ideas, information, Know-How, data research results, writings, inventions, discoveries, modifications, enhancements, derivatives, new uses, developments, techniques, materials, compounds, products, designs, processes or other technology or intellectual property, whether or not patentable or copyrightable, in each case, that is an improvement or modification to then-existing Isconova Technology, Genocea Technology, or Joint Technology and is developed by, solely or jointly, either Party, its Affiliates or Third Parties acting on their behalf while performing activities under this Agreement, and (b) all Patent Rights and other intellectual property rights in any of the foregoing.

 

7



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

1.44                         “IND” means an Investigational New Drug Application, as defined in the Food Drug & Cosmetics Act, or similar application or submission that is required to be filed with any Regulatory Authority before beginning clinical testing of a Licensed Product in human subjects.

 

1.45                         “Invented” means the act of invention by inventors, as determined in accordance with U.S. patent laws.

 

1.46                         “Isconova Collaboration IP” means any and all Collaboration IP created, conceived or reduced to practice, and, in the case of patentable Collaboration IP, Invented, (a) solely by either Party, its Affiliates or Third Parties acting on its behalf or (b) jointly by the Parties, their respective Affiliates, or by Third Parties acting on their behalf which relates in any way to (a) the Licensed Adjuvant or (b) the development or use of adjuvants in the formulation of vaccine products; provided, however, that Isconova Collaboration IP shall not include any Collaboration IP that is Genocea Collaboration IP.

 

1.47                         “Isconova Improvements” means any and all Improvements to the Isconova Technology created, conceived or reduced to practice, and, in the case of patentable Improvements, Invented, either (i) solely by either Party, their respective Affiliates, agents or by Third Parties acting on their behalf, while performing activities under this Agreement or (ii) jointly by the Parties, their respective Affiliates, agents or by Third Parties acting on their behalf, while performing activities under this Agreement; provided, however, that Isconova Improvements shall not include any Improvement that is an Genocea Improvement or Joint Improvement.

 

1.48                         “Isconova Know-How” means Know-How (other than Isconova Improvements and Isconova Collaboration IP) that is either Controlled by Isconova on the Effective Date or comes within Isconova’s Control during the Agreement Term that at any time during the Agreement Term is necessary or useful for, or otherwise related to, the exploitation of the Licensed Adjuvant or Licensed Product in the Field, including the Development, Manufacturing or Commercialization of such Licensed Product in the Field.

 

1.49                         “Isconova Patent Rights” means (a) the Patent Rights listed in Exhibit A ; (b) any Patent Rights Controlled by Isconova or any of its Affiliates that cover the Licensed Adjuvant; (c) any Patent Rights resulting from Isconova Improvements or Isconova Collaboration IP and (d) any other patents or patent applications Controlled by Isconova as of the Effective Date or during the Agreement Term, other than the Isconova Patent Rights, that is necessary or useful for, or otherwise related to, the exploitation of the Licensed Adjuvant or Licensed Product in the Field, including the Development, Manufacturing or Commercialization of such Licensed Product in the Field.

 

1.50                         “Isconova Technology” means Isconova Know-How, Isconova Patent Rights, Isconova Improvements, and Isconova Collaboration IP.

 

1.51                         “Joint Collaboration IP” means any and all Collaboration IP created, conceived or reduced to practice, and, in the case of patentable Collaboration IP, Invented, jointly by Isconova

 

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

and Genocea, their respective Affiliates, agents or by Third Parties acting on their behalf, while performing activities under this Agreement; provided, however, that Joint Collaboration IP shall not include any Collaboration IP that is Isconova Collaboration IP or Genocea Collaboration IP.

 

1.52                         “Joint Improvements” means any and all Improvements to the Joint Technology created, conceived or reduced to practice, and, in the case of patentable Improvements, Invented, (a) jointly by Isconova and Genocea, their respective Affiliates, agents or Sublicensees or by Third Parties acting on their behalf, while performing activities under this Agreement or (b) solely by either Party, its Affiliates, or by Third Parties acting on their behalf while performing activities under this Agreement; provided, however, that Joint Improvements shall not include any Improvement that is a Genocea Improvement or Isconova Improvement.

 

1.53                         “Joint Patent Rights” means any Patent Rights resulting from any Joint Improvements or Joint Collaboration IP.

 

1.54                         “Joint Technology” means Joint Improvements, Joint Patent Rights, and Joint Collaboration IP.

 

1.55                         “Know-How” means any non-public, proprietary invention, discovery, process, method, composition, formula, procedure, protocol, technique, result of experimentation or testing, information, data, material, technology or other know-how, whether or not patentable or copyrightable.  Know-How shall not include any Patent Rights with respect thereto.

 

1.56                         “Legitimate Business Reasons” has the meaning set forth in Section 2.1.2(a) .

 

1.57                         “Licensed Adjuvant” means an adjuvant Controlled by Isconova which incorporates or is developed from Matrix-A, Matrix-C and/or Matrix-M technology.

 

1.58                         “Licensed Know-How” means all Isconova Know-How and all of Isconova’s rights in the Joint Collaboration IP.

 

1.59                         “Licensed Patent Right” means all Isconova Patent Rights and all of Isconova’s rights in the Joint Collaboration IP.

 

1.60                         “Licensed Product” means any vaccine product containing both the Licensed Adjuvant and one or more Genocea Antigens; provided, however a Licensed Product may include a combination vaccine product for two or more Disease Fields but not a combination vaccine product for a Disease Field and a field that is not a Disease Field.

 

1.61                         “Licensed Technology” means all Isconova Technology and all of Isconova’s rights in any Joint Technology.

 

1.62                         “Major Market Territory” means each of (a) the United States, (b) any of the following countries: United Kingdom, France, Germany, Spain and Italy and (c) Japan.

 

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

1.63                         “Manufacturing” means, as applicable, all activities associated with the production, manufacture, processing, filling, finishing, packaging, labeling, shipping, and storage of Licensed Products, including process and formulation development, process validation, stability testing, manufacturing scale-up, pre-clinical, clinical and commercial manufacture and analytical development, product characterization, quality assurance and quality control, whether such activities are conducted by a Party, its Affiliates or a Third Party contractor of such Party.  When used as a verb, “Manufacture” means to engage in Manufacturing.

 

1.64                         “Matrix-A” means a component of the Matrix M adjuvant that is produced by mixing together HPLC-purified fraction A from Quillaja saponin bark, cholesterol and phosphatidyl choline to form Iscom particles.

 

1.65                         “Matrix-C” means a component of the Matrix M adjuvant that is produced by mixing together HPLC-purified fraction C from Quillaja saponin bark, cholesterol and phosphatidyl choline to form Iscom particles.

 

1.66                         “Matrix-M” means a suspension of Matrix A and Matrix C particles that are combined in varying ratios of Matrix A to Matrix C.

 

1.67                         Net Sales” means the gross amount invoiced for any sale of any Licensed Product sold by Genocea, and its respective Affiliates and Sublicensees, to Third Parties anywhere within the Territory, less the following deductions, in each case to the extent specifically related to the Licensed Product and taken by, or otherwise paid for or accrued by, the seller of the Licensed Product: (a) trade, cash, promotional and quantity discounts and wholesaler fees; (b) taxes on sales (such as excise, sales or use taxes or value added taxes) to the extent imposed upon and paid directly with respect to the sales price (and excluding national, sales or local taxes based on income); (c) freight, insurance, packing costs and other transportation charges to the extent included in the invoice price to the buyer of the Licensed Products; (d) amounts repaid or credits taken by reason of damaged goods, rejections, defects, expired dating, recalls or returns or because of retroactive price reductions; (e) charge back payments and rebates granted to (i) managed healthcare organizations, (ii) federal, state or provincial or local governments or other agencies, (iii) purchasers and reimbursers or (iv) trade customers, including wholesalers and chain and pharmacy buying groups; and (v) documented custom duties actually paid by the seller of the Licensed Product.  The transfer of Licensed Products between or among Genocea, Isconova and their Affiliates and Sublicensees shall be excluded from the computation of Net Sales.

 

Notwithstanding the foregoing, in the event a Licensed Product is [* * *], Net Sales shall be [* * *], where [* * *].

 

1.68                         “New Drug Application” or “NDA” means a New Drug Application filed with the FDA as described in 21 C.F.R. § 314, a Biological License Application (BLA) pursuant to 21 C.F.R. § 601.2, or any equivalent or any corresponding application for Regulatory Approval (not including pricing and reimbursement approval) in any country or regulatory jurisdiction other than the United States.

 

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

1.69                         “Non-Exclusive Field” means (i) the treatment, prevention and/or modulation by use of a vaccine, of up to five (5) Diseases (each Disease which, from time to time, is in the Non-Exclusive Field pursuant to the terms of this Agreement, a “Non-Exclusive Disease Field”) and (ii) any and all research uses and applications related to the Development, Manufacture and Commercialization of Licensed Products for such Diseases.

 

1.70                         “Non-Exclusive Disease Field” shall have the meaning set forth in Section 1.69 .

 

1.71                         “Non-Prosecuting Party” means, with respect to a particular Patent Right, the Party which is not the Prosecuting Party.

 

1.72                         “Patent Procurement Costs” means the fees and expenses paid by the Parties or their Affiliates to outside legal counsel and experts, and Prosecuting fees, incurred after the Effective Date, in connection with the Prosecution of Isconova Patent Rights, Joint Patent Rights and Genocea Patent Rights, including the costs of patent interference, reexamination, reissue, opposition and revocation proceedings.

 

1.73                         “Patent Rights” means all patents (including all reissues, extensions, substitutions, confirmations, re-registrations, re-examinations, invalidations, supplementary protection certificates, and patents of addition) and patent applications (including all provisional applications, continuations, continuations-in-part, and divisions), in each case, anywhere in the world.

 

1.74                         “Phase 1 Clinical Trial” means a study of a Licensed Product in human subjects or patients, with the endpoint of determining initial tolerance, safety and/or pharmacokinetic information, including immunogenicity endpoints in single dose, single ascending dose, multiple dose and/or multiple ascending dose regimens.  A Phase 1 Clinical Trial shall be deemed initiated hereunder upon the dosing of the first human subject

 

1.75                         “Phase 2 Clinical Trial” means a study of a Licensed Product in human patients to determine initial efficacy and to perform dose range finding before embarking on a Phase 3 Clinical Trial.  A Phase 2 Clinical Trial shall be deemed initiated hereunder upon the dosing of the first human subject.

 

1.76                         “Phase 3 Clinical Trial” means a pivotal study in human patients with a defined dose or a set of defined doses of a Licensed Product performed to gain evidence with statistical significance of the efficacy of such product in a target population, and to obtain expanded evidence of safety for such product that is needed to evaluate the overall benefit-risk relationship of such product, to form the basis for approval of an NDA by a Regulatory Authority and to provide an adequate basis for physician labeling, as described in 21 C.F.R. 312.21 (c), as amended from time to time, or the corresponding regulation in jurisdictions other than the United States.  A Phase 3 Clinical Trial shall be deemed initiated hereunder upon the dosing of the first human subject.

 

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THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

1.77                         “Post-Approval Clinical Trial” means (i) any Clinical Trial conducted to satisfy a requirement of a Regulatory Authority in order to maintain a Regulatory Approval and (ii) any Clinical Trial conducted after the first Regulatory Approval in the same indication for which the Licensed Product received Regulatory Approval in the Territory.

 

1.78                         “Pre-Clinical Data” means all data stemming from research and development activities related to a Licensed Product conducted prior to the commencement of a Clinical Trial relating to such Licensed Product.

 

1.79                         “Product Trademarks” means the trademarks, service marks, accompanying logos, trade dress and indicia of origin used in connection with the distribution, marketing, Promotion and sale of each Licensed Product in the Territory.  For purposes of clarity, the term Product Trademarks shall not include the corporate names and logos of either Party and shall include any internet domain names incorporating such Product Trademarks.

 

1.80                         “Promotion” means those activities, including detailing normally undertaken by a Party’s sales force to implement marketing plans and strategies, aimed at encouraging the appropriate use of a particular Licensed Product in a specific indication.  When used as a verb, “Promote” means to engage in Promotion.

 

1.81                         “Prosecuting Party” means, with respect to a particular Patent Right, the Party having primary responsibility for and control over Prosecuting such Patent Right, pursuant to Section 7.1.1(a) .

 

1.82                         “Regulatory Approval” means the approval necessary for the commercial manufacture, distribution, marketing, Promotion, offer for sale, use, import, export, and sale of a Licensed Product in a regulatory jurisdiction, excluding, where required, separate pricing and reimbursement approvals.

 

1.83                         “Regulatory Authority” means any applicable supranational, national, regional, state or local regulatory agency, department, bureau, commission, counsel, or other government entity involved in granting of Regulatory Approval for a Licensed Product in a regulatory jurisdiction within the Territory, including the FDA and the EMEA.

 

1.84                         “Research and Phase 1 Supply Plan” means the plan describing the activities, responsibilities, deliverables and timelines to be undertaken by the Parties during the period of the Research Term that includes preclinical activities and all other activities up to the initiation of the Phase 1 Clinical Trial, which is attached hereto as Exhibit B , and which may be modified in accordance with the terms of Section 4.3 .

 

1.85                         “Research Term” means the period of time beginning on the Effective Date and continuing until the earlier of: (a) delivery of the Deliverables and (b) Genocea’s notification to Isconova that no further activities will take place under the Research and Phase 1 Supply Plan and the Development and Scale-Up Plan.

 

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1.86                         “Royalty Term” means, on a Licensed Product-by-Licensed Product and country-by-country basis, the period of time beginning on the date of First Commercial Sale of a Licensed Product in a particular country and ending on the later of: (a) [* * *] after the [* * *] and (b) [* * *].

 

1.87                         “Scientist FTE Rate” means USD$[* * *] per FTE per Contract Year; provided that if the Contract Year is less than twelve months, the FTE Rate shall be pro-rated appropriately to reflect the shorter Contract Year.  Scientist FTE Rate shall be applied to services provided by scientific staff who are not senior scientists, as described in Section 1.88 .

 

1.88                         “Senior Scientist FTE Rate” means USD$[* * *] per FTE per Contract Year; provided that if the Contract Year is less than twelve months, the FTE Rate shall be pro-rated appropriately to reflect the shorter Contract Year.  Senior scientist rate shall be applied to services provided by staff with associate professor level of academic level (Sw. Docent ) or corresponding.

 

1.89                         “Sublicensee” means a sublicensee of all or part of the rights licensed to a Party under and in compliance with the terms of this Agreement.

 

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

 

1.91                         “Third Party” means any person or entity other than a Party or any of its Affiliates,

 

1.92                         “Time-Limited Exclusive Field” means (i) the treatment, prevention and/or modulation by use of a vaccine, of up to three (3) Diseases (each Disease which, from time to time, is in the Time-Limited Exclusive Field pursuant to the terms of this Agreement, a “Time-Limited Exclusive Disease Field”) and (ii) any and all research uses and applications related to the Development, Manufacture and Commercialization of Licensed Products for such Diseases.

 

1.93                         “Time-Limited Exclusive Field Date” has the meaning set forth in Section 2.1.2(a) .

 

1.94                         “Time-Limited Exclusive Disease Field” shall have the meaning set forth in Section 1.92 .

 

1.95                         “U.S. GAAP” means generally accepted accounting principles in the United States.

 

1.96                         “Valid Claim” means a claim or pending claim of a Patent Right, which claim or pending claim has not been revoked or held unenforceable, unpatentable or invalid by a decision of a court or other governmental agency of competent jurisdiction, which is not appealable or has not been appealed within the time allowed for appeal, and which has not been abandoned, disclaimed, denied or admitted to be invalid or unenforceable through reissue, re-examination or disclaimer or other final, irrevocable action, unless Genocea has been directly involved in any such action and provided that , on a country-by-country basis, a claim pending for more than eight (8) years shall not be considered to be a Valid Claim for purposes of this Agreement unless

 

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and until such a claim issues, at which time such claim shall become a Valid Claim, effective as of the patent’s date of issue.

 

1.97                         Additional Definitions.  The following terms have the meanings set forth in the corresponding Sections of this Agreement:

 

Term

 

Section

“620 Patents”

 

10.2.1

“703 Patents”

 

10.2.1

“Agreement”

 

Introduction

“Audited Party”

 

6.10.4(a)

“Auditing Party”

 

6.10.4(a)

“Breaching Party”

 

9.2

“Clinical Trial Data”

 

3.3.3

“CSL”

 

10.2.1

“CSL Allegations”

 

10.2.1

“Defending Party”

 

7.3.3

“Development Milestone”

 

6.3

“Development Milestone Payment”

 

6.3

“Disease Field Exchange Request”

 

2.2.3

“Effective Date”

 

Introduction

“Evaluation Supplies”

 

5.3.1

“Exchange Field Candidate”

 

2.2.3

“Final Decision”

 

6.11.1

“Genocea”

 

Introduction

“Genocea Indemnitees”

 

10.6.2

“Indemnitee”

 

10.6.3

“Infringement Claim”

 

7.3.1

“Initiation”

 

6.3

“Insolvent Party”

 

9.3

“IP”

 

9.9

“Isconova”

 

Introduction

“Isconova Indemnitees”

 

10.6.1

“JSC”

 

4.4

“License”

 

11.16

“Licensed Products”

 

Recitals

“Lock-Up Period”

 

11.2

“Losses”

 

10.6.1

“NewCo”

 

11.4

“Non-Exclusive Option Field”

 

2.1.3

“Non-Exclusive Option Field Candidate”

 

2.1.3(a)

“Non-Exclusive Option Field Selection Request”

 

2.1.3(a)

“Partnership”

 

6.4.1

“Party” or “Parties”

 

Introduction

“Prosecuting” or “Prosecution”

 

7.1.1(a)

“Royalty Report”

 

6.7

“Secondary Prosecution Activities”

 

7.1.1(e)

 

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Term

 

Section

“SPC”

 

7.7

“Supply and Manufacturing Agreement”

 

5.3.3

“Time-Limited Exclusive Field Date”

 

2.1.2(a)

“Time-Limited Exclusive Option Field”

 

2.1.2

“Time-Limited Exclusive Option Field Candidate”

 

2.1.2(a)

“Time-Limited Exclusive Option Field Selection Request”

 

2.1.2(a)

“Trademarks”

 

3.1.4

 

ARTICLE 2
SELECTION AND EXCHANGE OF DISEASE FIELDS IN THE FIELDS

 

2.1                                Selection of Disease Fields .

 

2.1.1.                   Selection of Exclusive Disease Fields.   The Exclusive Disease Fields shall be: (1) herpes simplex virus (HSV) and (2) Chlamydia.  For clarity, Genocea may not exchange these Exclusive Disease Fields unless otherwise mutually agreed to by the Parties in writing.

 

2.1.2.                   Selection of Time-Limited Exclusive Fields.   Until twelve (12) months after the Effective Date, Genocea shall have the right, at any time, to appoint up to three (3) Time-Limited Exclusive Disease Fields (each such additional field as they may be exchanged pursuant to the terms hereof, an “Time-Limited Exclusive Option Field” and collectively, the “Time-Limited Exclusive Option Fields” ) subject to compliance with the procedure in Section 2.1.2(a)  of this Agreement.  This notwithstanding, Genocea shall use reasonable efforts to appoint the Time-Limited Exclusive Option Fields by December 31, 2009.  At no time during the Agreement Term shall there be more than three (3) Time-Limited Exclusive Option Fields unless otherwise mutually agreed to by the Parties in writing.

 

(a)                                  Procedures for Selection of Time-Limited Exclusive Option Fields .  Prior to the designation of any Disease as a Time-Limited Exclusive Field hereunder, Genocea shall deliver a written notice to Isconova stating the Disease (the “ Time-Limited Exclusive Option Field Candidate ”) that Genocea has chosen to designate as a Time-Limited Exclusive Option Field (the “ Time-Limited Exclusive Option Field Selection Request ”).  Within twenty (20) Business Days of Isconova’s receipt of a Time-Limited Exclusive Option Field Selection Request, Isconova shall notify Genocea if the said Time-Limited Exclusive Option Field Candidate is not available to license to Genocea for Legitimate Business Reasons, as defined in the next sentence, which notice shall describe the Legitimate Business Reason that such Time-Limited Exclusive Option Field Candidate is not available.  The Parties agree that Isconova shall be entitled to deny a Time-Limited Exclusive Option Field Candidate only under the following circumstances: (i) if Isconova had already granted to a Third Party a license under the Licensed Technology for the development or commercialization of a vaccine

 

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product for the prevention, treatment or modulation in humans of the Disease set forth in the Time-Limited Exclusive Option Field Selection Request; (ii) if Isconova has agreed with a Third Party on the material terms for the grant of a license described in clause (i); or (iii) if Isconova has commenced bona fide practical and demonstrable development work using the Licensed Technology for such Disease against a written development plan or other documentation for such purpose (the foregoing, collectively, the “ Legitimate Business Reasons ”).  Genocea acknowledges that Isconova may be under duty of confidentiality not to disclose the identity of such Third Party.

 

Upon ten (10) Business Days’ prior written notice by Genocea, Isconova shall permit an independent auditor appointed by Genocea, at Genocea’s expense, to have access during normal business hours and no more than once a year to such records as may be reasonably necessary to verify Isconova’s determination that Time-Limited Exclusive Option Field Candidate is not available for a Legitimate Business Reason.  The auditor shall execute a non-disclosure agreement with Isconova’s to treat all information it receives during its inspection in confidence.  The auditor shall disclose to Genocea only whether Isconova had a Legitimate Business Reason to refuse to accept the Time-Limited Exclusive Option Field Candidate.  No other information shall be shared by the auditor without the prior consent of Isconova unless disclosure is required by law.

 

If Isconova notifies Genocea within such 20-Business Day period that the Time-Limited Exclusive Option Field Candidate is not available, the Time-Limited Exclusive Option Field Selection Request shall be deemed rightfully denied by Isconova (subject to Genocea’s right to have such determination audited in accordance with the preceding paragraph), and the Time-Limited Exclusive Option Field Candidate will not become a Time-Limited Exclusive Option Field.  If any Time-Limited Exclusive Option Field Selection Request is rightfully denied by Isconova, Genocea shall have the right to nominate any other Time-Limited Exclusive Option Field Candidate.  If Isconova either (i) does not respond to a Time-Limited Exclusive Option Field Selection Request within twenty (20) Business Days of receipt or (ii) notifies Genocea that there is not a Legitimate Business Reason to deny the Time-Limited Exclusive Option Field Candidate, the Time-Limited Exclusive Option Field Candidate referenced in the Time-Limited Exclusive Option Field Selection Request shall automatically become designated as a Time-Limited Exclusive Option Field (and therefore, a Time-Limited Exclusive Disease Field) under this Agreement as of the earlier of: (i) the date Genocea receives such notice from Isconova or (ii) twenty (20) Business Days after Isconova’s receipt of the Time-Limited Exclusive Option Field Selection Request (the “ Time-Limited Exclusive Field Date ”).

 

2.1.3.                   Selection of Non-Exclusive Fields Until twenty-four (24) months after the Effective Date, Genocea shall have the right, at any time, to appoint up to five (5) Non-

 

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Exclusive Disease Fields (each such additional field as they may be exchanged pursuant to the terms hereof, an “Non-Exclusive Option Field” and collectively, the “Non-Exclusive Option Fields” ) subject to compliance with the procedure in Section 2.1.3(a)  of this Agreement.  At no time during the Agreement Term shall there be more than five (5) Non-Exclusive Option Fields unless otherwise mutually agreed to by the Parties in writing.

 

(a)                                  Procedures for Selection of Non-Exclusive Option Fields .  Prior to the designation of any Disease as a Non-Exclusive Option Field hereunder, Genocea shall deliver a written notice to Isconova stating the Disease (the “ Non-Exclusive Option Field Candidate ”) that Genocea has chosen to designate as an Option Field (the “ Non-Exclusive Option Field Selection Request ”).  Within twenty (20) Business Days of Isconova’s receipt of an Non-Exclusive Option Field Selection Request, Isconova shall notify Genocea if Isconova, at the time of Isconova’s receipt of such request, (i) Isconova had already granted to a Third Party an exclusive license under the Licensed Technology for the development or commercialization of a vaccine product for the prevention, treatment or modulation in humans of the Disease set forth in the Non-Exclusive Field Option Field Selection Request or (ii) Isconova has agreed with a Third Party on the material terms for the grant of a license described in clause (i).  Genocea acknowledges that Isconova may be under duty of confidentiality not to disclose the identity of such Third Party.

 

If Isconova notifies Genocea within such time period that the events in either clause (i) or (ii) of this Section apply, the Non-Exclusive Option Field Selection Request shall be deemed rightfully denied by Isconova and the Non-Exclusive Option Field Candidate will not become a Non-Exclusive Option Field.  If any Non-Exclusive Option Field Selection Request is rightfully denied by Isconova, Genocea shall have the right to nominate any other Non-Exclusive Option Field Candidate.  For the avoidance of doubt, Isconova can only deny a Non-Exclusive Option Field Selection Request if the events in either clause (i) or (ii) of this Section apply.  If Isconova either (i) does not respond to a Non-Exclusive Option Field Selection Request within twenty (20) Business Days of receipt or (ii) notifies Genocea that the events set forth in clause (i) or (ii) of Section 2.1.3(a)  do not apply, the Non-Exclusive Option Field Candidate referenced in the Non-Exclusive Option Field Selection Request shall automatically become designated as a Non-Exclusive Option Field (and therefore, a Non-Exclusive Disease Field) under this Agreement as of the earlier of: (i) the date Genocea receives such notice from Isconova or (ii) twenty (20) Business Days after Isconova’s receipt of the Non-Exclusive Option Field Selection Request.

 

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2.2                                Exchange of Time-Limited Exclusive Option Fields and Non-Exclusive Option Fields .

 

2.2.1.                   Exchange of Time-Limited Exclusive Option Fields .  Until the earlier of: (a) twenty-four (24) months following the Effective Date and (b) the date on which three (3) Exchange Field Candidates have been accepted as Time-Limited Exclusive Fields (and therefore, Time-Limited Exclusive Disease Fields) by Isconova pursuant to Section 2.2.3 , Genocea shall have the right to replace the Disease underlying one or more of the Time-Limited Exclusive Fields with another Disease subject to compliance with the procedure in Section 2.2.3 of this Agreement.

 

2.2.2.                   Exchange of Non-Exclusive Option Fields .  Until the earlier of: (a) twenty-four (24)  months following the Effective Date and (b) the date on which five (5) Exchange Field Candidates have been accepted as Non-Exclusive Option Fields (and therefore, Non-Exclusive Disease Fields) by Isconova pursuant to Section 2.2.3 .  Genocea shall have the right to replace the Disease underlying one or more of the Non-Exclusive Option Fields for another Disease subject to compliance with the procedure in Section 2.2.3 of this Agreement.

 

2.2.3.                   Procedures for Exchange of Disease Field .  Prior to the replacement of any Time-Limited Exclusive Disease Field or Non-Exclusive Disease Field pursuant to Section 2.2.1 or Section 2.2.2 , Genocea shall deliver a written notice to Isconova stating the Disease (the “Exchange Field Candidate” ) with which Genocea would like to replace a Disease that, at the time, then underlies a Time-Limited Exclusive Disease Field or Non-Exclusive Disease Field, as the case may be, ( “Disease Field Exchange Request” ).  Following a Disease Field Exchange Request, the procedures for selecting Time-Limited Exclusive Option Fields in Section 2.1.2(a)  and Non-Exclusive Option Fields in Section 2.1.3(a) , as the case may be, will apply with necessary changes ( mutatis mutandis ).  For this purpose, such provisions shall be applied by treating all references in such sections to the “Time-Limited Exclusive Option Field Candidate” and the “Non-Exclusive Option Field Candidate”, respectively, as though they were references to the Exchange Field Candidate referenced in the Disease Field Exchange Request.

 

2.2.4.                   Effects of Exchange .  In the event that Genocea exchanges a Time-Limited Exclusive Field or Non-Exclusive Field as set out above, all licenses granted to Genocea under this Agreement with respect to the replaced Time-Limited Exclusive Field or Non-Exclusive Field, as the case may be, shall terminate.

 

2.3                                Excluded Disease Fields .  Notwithstanding anything to the contrary above, Genocea agrees and acknowledges (i) that the prevention, treatment or modulation in humans of the Excluded Diseases are fully reserved for Isconova, and shall not be available to Genocea as Time-Limited Exclusive Disease Fields or Non-Exclusive Option Disease Fields, and (ii) that the prevention, treatment or modulation in humans of the Excluded Time-Limited Exclusive Field Diseases are partly reserved for Isconova, and shall only be available to Genocea as Non-Exclusive Option Disease Fields.

 

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ARTICLE 3
LICENSES, RELATED GRANTS OF RIGHTS AND INTELLECTUAL PROPERTY OWNERSHIP

 

3.1                                Grants of Rights to Genocea .

 

3.1.1.                   Exclusive License .  Subject to the terms and conditions of this Agreement, Isconova hereby grants to Genocea and its Affiliates during the Agreement Term an exclusive (even with respect to Isconova), royalty-bearing license, with the right to grant sublicenses pursuant to Section 3.1.5 below, under the Licensed Technology to import, make, have made, use, sell, offer for sale and otherwise exploit Licensed Products in the Exclusive Field in the Territory and otherwise exploit the Licensed Know-How in connection therewith.  For avoidance of doubt, (i) such license includes the right to Develop, Manufacture and Commercialize Licensed Products in the Exclusive Field in the Territory and shall not grant Genocea the right to Develop, Manufacture and Commercialize the Licensed Adjuvants other than as part of a Licensed Product, (ii) Genocea may Develop and Manufacture Licensed Adjuvants to the extent necessary to Develop or Manufacture Licensed Products, and (iii) Genocea may Commercialize Licensed Adjuvants forming part of a Licensed Product; however , Genocea may in no event transfer or otherwise make available any Licensed Adjuvants on a stand alone basis other than to Sublicensees.  This notwithstanding, Genocea shall have the right to Develop, Manufacture and Commercialize the Licensed Adjuvant as otherwise set forth in this Agreement, the Supply and Manufacturing Agreement and any other written agreement entered into by the Parties.

 

3.1.2.                   Time-Limited Exclusive License .  Subject to the terms and conditions of this Agreement, Isconova hereby grants to Genocea and its Affiliates during the Agreement Term an exclusive (even with respect to Isconova), limited in time (as set forth below), royalty-bearing license, with the right to grant sublicenses pursuant to Section 3.1.5 below, under the Licensed Technology to import, make, have made, use, sell, offer for sale and otherwise exploit Licensed Products in the Time-Limited Exclusive Field in the Territory and otherwise exploit the Licensed Know-How in connection therewith.  This license shall be exclusive, on a Time-Limited Exclusive Field by Time-Limited Exclusive Field basis, until the [* * *] anniversary of the Time-Limited Exclusive Field Date for such Time-Limited Exclusive Field (including any Time-Limited Exclusive Field exchanged for any Time-Limited Exclusive Field pursuant to Section 2.2.3 ; provided , however that any such exchange will not prolong the [* * *] exclusivity period, i.e. the [* * *] period will run from the applicable Time-Exclusive Field Date regardless of any exchange within that Time-Limited Exclusive Field), after which this license shall automatically become non-exclusive , provided , however , that with respect to the Joint Technology which comprises part of the Licensed Technology hereunder, the grant of rights to Genocea and its Affiliates by Isconova shall continue to be exclusive (even with respect to Isconova) in the Time-Limited Exclusive Field in the Territory.  During this [* * *] exclusivity period, Isconova further undertakes not to license to a Third Party nor for any Third Party’s benefit engage in the research or development of any Licensed Products within the Time-Limited Exclusive Field.

 

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3.1.3.                   Non-Exclusive License .  Subject to the terms and conditions of this Agreement, Isconova hereby grants to Genocea and its Affiliates during the Agreement Term a non-exclusive, royalty-bearing license, with the right to grant sublicenses pursuant to Section 3.1.5 below, under the Licensed Technology to import, make, have made, use, sell, offer for sale and otherwise exploit Licensed Products in the Non-Exclusive Field in the Territory and otherwise exploit the Licensed Know-How in connection therewith; provided , however , that with respect to the Joint Technology which comprises part of the Licensed Technology hereunder, the grant of rights to Genocea and its Affiliates by Isconova shall be exclusive (even with respect to Isconova) in the Non-Exclusive Field in the Territory.

 

3.1.4.                   Limited Right to use Isconova’s Trademarks .  Subject to the terms and conditions of this Agreement, Isconova hereby grants to Genocea and its Affiliates during the Agreement Term the non-exclusive, sublicenseable and non-transferable right to use Isconova’s trademark(s) for the Licensed Adjuvants, as applicable from time to time (the “Trademarks” ) in connection with the Manufacture and Commercialization of Licensed Products in the Field in the Territory, provided , however , (a) that such use shall be in accordance with Isconova’s branding and trademark policy as applicable from time to time as long as such policy has been provided by Isconova to Genocea, and (b) that Genocea may only sublicense its rights to the Trademarks to those parties to whom it sublicenses the license granted in Section 3.1.1 .  Other than Genocea’s limited right to use the Trademarks as set forth in this Section 3.1.4 , nothing in this Agreement shall be construed as a grant, assignment or transfer of any Trademarks or any of the intellectual property rights therein or relating thereto.

 

3.1.5.                   Sublicenses .  Genocea shall have the right to sublicense the rights granted by Isconova to Genocea in Sections 3.1.1 through 3.1.3 : provided that , unless Genocea obtains Isconova’s prior written consent, Genocea shall only be able to sublicense such rights to (i) one (1) Third Party in each country in the Territory and (ii) those Third Parties who are engaged for the distribution of Licensed Products on behalf of Genocea, including but not limited to wholesalers, retailers and distributors of Licensed Products.  For the avoidance of doubt, a Third Party Sublicensee who is granted a sublicense by Genocea under this Section 3.1.5 shall not be able to sub-sublicense their sublicensed rights to any Third Party other than those Third Parties who are engaged for the distribution of Licensed Products by the Third Party Sublicensee (including but not limited to wholesalers, retailers and distributors of Licensed Products) without Isconova’s prior written consent.  Each sublicense granted by Genocea pursuant to this Section 3.1.5 shall be subject and subordinate to the terms and conditions of this Agreement and shall contain terms and conditions consistent with those in this Agreement, including confidentiality and indemnity obligations comparable to those set forth herein.  Genocea shall cause any Sublicensee to execute an Isconova Commercial Partner Agreement, in the form attached hereto as Exhibit E .  Genocea remains primarily responsible for the performance of its Sublicensees under this Agreement.  If this Agreement terminates for any reason, any Sublicensee of Genocea that is then not in default shall, from the

 

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effective date of such termination, automatically become a direct licensee of Isconova with respect to and on the same terms as the rights originally sublicensed to the Sublicensee by Genocea, and Isconova agrees that it shall confirm the foregoing in writing at the request and for the benefit of the Sublicensee, as further set forth in the Isconova Commercial Partner Agreement.  Notwithstanding the foregoing, under no circumstances shall Isconova have obligations to any Sublicensee that are greater than those owed to Genocea hereunder as a result of the preceding sentence.

 

(a)                                  Supply Agreements and Related Arrangements with Sublicensees .  At Genocea’s request, Isconova shall enter into a supply and manufacturing agreement with any Sublicensee of Genocea under which Isconova will manufacture and supply Licensed Adjuvants directly to such Sublicensee on the same terms as those set forth in this Agreement and the Supply and Manufacturing Agreement.  In addition, Isconova shall, at Genocea’s election, deliver Licensed Adjuvants manufactured hereunder or under the Supply and Manufacturing Agreement to Genocea or a Sublicensee of Genocea.

 

3.1.6.                   Right to Reference .  Isconova hereby grants to Genocea a “Right to Reference,” as that term is defined in 21 C.F.R. § 314.3(b), to any data Controlled by Isconova or its Affiliates that relates to the Isconova Technology or to any Licensed Product, and Isconova shall provide a signed statement to this effect, if requested by Genocea, in accordance with 21 C.F.R. § 314.50(g)(3).

 

3.2                                Grant of Rights to Data to Isconova

 

3.2.1.                   Pre-Clinical and Clinical Data .  Genocea hereby grants Isconova a non-exclusive, worldwide, royalty-free, perpetual limited license to Pre-Clinical Data and Clinical Trial Data solely for, and limited to, the use by Isconova of such Pre-Clinical Data and Clinical Trial Data for (i) its own internal research purposes, (ii) marketing and publishing purposes and (iii) to engage in fundraising activities with private or governmental investors, funders or grantors who have entered into confidentiality agreements no less restrictive than the confidentiality provisions of this Agreement; provided , however that Isconova can only use Pre-Clinical Data and Clinical Trial Data pursuant to clause (ii) of this Section 3.2.1 if, prior to each use of such data, Isconova presents its intended use of the Pre-Clinical Data and/or Clinical Trial Data to Genocea and receives Genocea’s written consent for such specific marketing and/or publishing use. Such written consent shall not be unreasonably withheld or delayed.

 

3.2.2.                   Adjuvant Data .  For the avoidance of doubt, Isconova shall be free to Develop, Manufacture and Commercialize adjuvant products, designs or processes or analytical procedures and related data arising from the Development activities performed under this Agreement; provided that notwithstanding anything to the contrary in this Agreement, activities conducted by Isconova under this Section 3.2.2 are subject to the licenses granted to Genocea in Section 3.1.1 above and subject to the confidentiality provisions set forth in ARTICLE 8 herein.

 

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3.2.3.                   Adjuvant Data in Combination with Antigen Data .  Subject to Genocea’s prior written consent, which is not to be unreasonably withheld or delayed, Isconova shall have the right to include data which both (i) arises from Development activities performed under this Agreement and (ii) relates to the Licensed Adjuvant in any Drug Master File Isconova may file with either the FDA or other Regulatory Authorities; provided , however , that in no event shall the data included in a Drug Master File pursuant to this Section 3.2.3 include identifying characteristics of any Genocea Antigens and that, furthermore, Genocea shall have the right to review such filings prior to their submission and redact any antigen-related information from the data prior to its disclosure to Isconova under this Section 3.2.3 .

 

3.3                                Ownership of and Rights to Intellectual Property .

 

3.3.1.                   Ownership of Improvements/Collaboration IP .  Each Party agrees promptly to disclose to the other Party all Improvements and all Collaboration IP made by or under authority of such Party under this Agreement.  As between the Parties, (a) title to all Genocea Improvements and Genocea Collaboration IP shall be owned by Genocea, (b) title to all Isconova Improvements and Isconova Collaboration IP shall be owned by Isconova, and (c) title to all Joint Improvements and Joint Collaboration IP shall be jointly owned by Genocea and Isconova.

 

(a)                                  Reciprocal Assignment of Rights .  Isconova hereby assigns, and Isconova shall cause its employees, consultants, and agents to assign, its right, title, and interest in and to all Genocea Improvements to Genocea.  Genocea hereby assigns, and Genocea shall cause its employees, consultants, and agents to assign, its right, title, and interest in and to all Isconova Improvements to Isconova.

 

(b)                                  Further Assurances .  Each Party shall, at its own expense, take such actions and execute such document as may be necessary to carry out the effects of this Section 3.3.1 .

 

3.3.2.                   Joint Improvements/Collaboration IP .  Subject to the rights herein, each Party shall have the right to practice and exploit Joint Improvements and Joint Collaboration IP, without any obligation to account to the other for profits, or to obtain any approval of the other Party to license, assign or otherwise exploit Joint Improvements and Joint Collaboration IP, by reason of joint ownership thereof, and each Party hereby waives any right it may have under the laws of any jurisdiction to require any such approval or accounting; and to the extent there are any Applicable Laws that prohibit such a waiver, each Party will be deemed to so consent.  Each Party agrees to be named as a party, if necessary, to bring or maintain a lawsuit involving a Joint Improvement or Joint Collaboration IP.

 

3.3.3.                   Data .  All data generated in the course of Clinical Trials of Licensed Products hereunder ( “Clinical Trial Data” ) shall be owned by Genocea and deemed “Genocea Know-How.”  Isconova hereby assigns, and Isconova shall cause its employees,

 

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consultants, and agents to assign, its right, title, and interest in and to such data and information to Genocea.

 

3.3.4.                   Genocea IP .  Genocea is and shall remain the sole owner of the Genocea Technology.

 

3.3.5.                   Isconova IP .  Isconova is and shall remain the sole owner of the Isconova Technology.

 

3.3.6.                   Disputes as to Ownership of Improvements and Collaboration IP .  Should the Parties fail to agree regarding ownership of Improvements and/or Collaboration IP arising out of this Agreement, the Parties shall have the right to dispute resolution as set forth in Section 11.3 of this Agreement.

 

3.4                                No Other Rights .  Except as otherwise provided in this Agreement, neither Party shall obtain any ownership interest or other right in any Know-How or Patent Rights owned or Controlled by the other Party.  For the avoidance of doubt, each Party reserves all rights not expressly granted herein, and any express reservations of rights set forth herein shall not be construed as limiting such reservation or conferring by implication, estoppel or otherwise any grant or license or other right under any patent or other right of intellectual property or confidential information other than those rights expressly set forth herein.

 

ARTICLE 4
RESEARCH PROGRAM

 

4.1                                Scope of Research .  Genocea and Isconova will collaborate during the Research Term to conduct research to assist in the identification, evaluation and Development of vaccine product candidates containing both the Licensed Adjuvant and one or more Genocea Antigens pursuant to the Research and Phase 1 Supply Plan and the Development and Scale-Up Plan.

 

4.2                                Development and Scale-Up Plan .  Isconova’s internal Development activities during the Research Term will be performed in accordance with the Development and Scale-Up Plan and the terms and conditions set forth in this Agreement, including this ARTICLE 4 .  Isconova undertakes to work diligently and shall use Commercially Reasonable Efforts to perform activities under the Development and Scale-Up Plan in accordance with the timelines set forth in the Development and Scale-Up Plan.  The Development and Scale-Up Plan may only be amended by written agreement of both Parties; provided that, notwithstanding the foregoing, Isconova may amend the Development and Scale-Up Plan solely as it pertains to the product and process designs of the Matrix-A, Matrix-C and Matrix-M technologies, in its sole discretion, at any time during the Research Term, further provided that Isconova shall notify Genocea prior to making such modifications and that no such modifications may adversely affect the core activities, deliverables or timelines of the Development and Scale-Up Plan without Genocea’s prior written consent.  Isconova will at all times during the Research Term maintain the necessary financial and human resources to complete the activities of Isconova set forth in the Development and Scale-Up Plan.

 

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4.3                                Research and Phase 1 Supply Plan .  All research conducted in connection with this Agreement will be performed by Genocea and Isconova in accordance with the Research and Phase 1 Supply Plan and the terms and conditions set forth in this Agreement, including this ARTICLE 4 .  Each Party shall use Commercially Reasonable Efforts to perform activities allocated to it under the Research and Phase 1 Supply Plan in accordance with the timeline set forth in the Research and Phase 1 Supply Plan.  The Research and Phase 1 Supply Plan sets forth an estimated timeline and the allocation of responsibilities between Genocea and Isconova.  Any Changes to the “ Phase I Supply Plan ” in the Research and Phase I Supply Plan require the Parties’ mutual agreement.  Genocea reserves the right to modify the “ Research ” section in the Research and Phase I Supply Plan, in its sole discretion, provided , however, that any material changes in the support or effort requested from Isconova requires the Parties’ mutual agreement.  For the avoidance of doubt, specialized services such as animal studies, non-GLP tox studies or other services requiring extensive laboratory work are not included in the Research and Phase I Supply Plan, and are outside the scope of this Agreement.  If Genocea should request such specialized services from Isconova, a separate agreement governing the provision of such services will be required before such services are provided by Isconova.

 

4.4                                Meetings .  The Parties shall establish a joint steering committee (“ JSC ”) that will be responsible for overseeing the activities under the Development and Scale-Up Plan, the Research and Phase 1 Supply Plan and any results of pre-clinical activities and Clinical Trials conducted pursuant to this Agreement.  The JSC will be comprised of at least two (2) representatives from each Party who are familiar with the Parties’ relationship under this Agreement shall meet, either in person or via teleconference, initially once a month.  Meetings in person shall alternate between Boston, MA, USA and Uppsala, Sweden, unless agreed otherwise.

 

4.5                                Records .

 

4.5.1.                   Generally .  Each Party shall maintain scientific records, in sufficient detail and in good scientific manner appropriate for patent and regulatory purposes, which shall fully and properly reflect all work done and results achieved in the performance of the Research and Phase 1 Supply Plan and the Development and Scale-Up Plan by such Party.  Each Party shall have the right, during normal business hours and upon reasonable notice, to inspect and copy (or request the other Party to copy) all records of the other Party maintained in connection with the work done and results achieved in the performance of the Research and Phase 1 Supply Plan and Development and Scale-Up Plan, but solely to the extent access to such records is necessary for a Party to exercise its rights under this Agreement.  All such records and the information disclosed therein shall be deemed Confidential Information pursuant to Section 1.14 and ARTICLE 8 .

 

4.5.2.                   Electronic Records .  Upon Genocea’s request, Isconova will provide Genocea reasonable assistance for Genocea to convert records provided by Isconova to Genocea into electronic form.  In addition, upon Genocea’s request, Isconova will use templates for recordkeeping provided by Genocea reasonably necessary to assist Genocea in making electronic filings with Regulatory Authorities.

 

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ARTICLE 5
PRODUCT DEVELOPMENT, MANUFACTURING, AND COMMERCIALIZATION

 

5.1                                General .  Subject to the terms set forth hereunder, Genocea shall have sole authority over and exclusive control of the Development, Manufacture and Commercialization of any and all Licensed Products.  As such, Genocea shall be entitled to utilize the services of Third Parties in whatever manner it chooses to perform such Development, Manufacturing and Commercialization activities hereunder.

 

5.2                                Regulatory Matters .  Genocea shall develop a regulatory strategy for the Licensed Products and prepare all submissions, documents or other correspondence to be submitted to the applicable Regulatory Authorities.  Genocea shall oversee, monitor, coordinate, file, and hold in its name all NDAs and/or BLAs, all communications with and submissions to Regulatory Authorities and all Regulatory Approvals with respect to Licensed Products.  Isconova shall be informed about timing and content of any material communication with Regulatory Authorities which include the Licensed Adjuvant.  Genocea shall have sole responsibility for interfacing, corresponding and meeting with the applicable Regulatory Authorities with respect to Licensed Products.  Isconova shall use its best efforts to promptly, upon Genocea’s request, assist Genocea with the activities described in this Section, and such assistance shall include, but not be limited to, Isconova’s timely delivery of any data, information, correspondence or other materials requested by Genocea.  Notwithstanding anything in the foregoing, Genocea shall have no obligation to seek Regulatory Approval for any Licensed Product.

 

5.3                                Manufacturing and Supply of Licensed Adjuvants .

 

5.3.1.                   Evaluation Supplies .  Isconova shall manufacture and supply to Genocea all Licensed Adjuvants reasonably requested by Genocea for its evaluation of each Disease Field prior to the commencement of a GLP toxicity study for a Licensed Product in each such Disease Field (such supplies of Licensed Adjuvants, the “ Evaluation Supplies ”).  The terms of supply of Evaluation Supplies pursuant to this Section are set forth in Exhibit C-2 .

 

5.3.2.                   Clinical Supplies .  Subject to the terms of this Agreement, Isconova shall manufacture and supply to Genocea all Licensed Adjuvants required for the Manufacture of Clinical Supplies necessary for Clinical Trials and all other Development activities, including pre-clinical research.  The terms of supply of Clinical Supplies pursuant to this Section are set forth in Exhibit C-2 .

 

5.3.3.                   Commercial Supply .  Isconova will manufacture and supply to Genocea all Licensed Adjuvants required for the Manufacture of Commercial Supplies pursuant to the terms of a separate Supply and Manufacturing Agreement entered into on the date hereof, a form of which is attached hereto as Exhibit D (the “ Supply and Manufacturing Agreement ”).

 

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5.3.4.                   Manufacturing Generally .  All Licensed Adjuvants supplied to Genocea for inclusion in Clinical Supplies and Commercial Supplies will be Manufactured in accordance with GLP and GMP, as applicable, and Applicable Law.  In addition, the manufacturing process used for such Licensed Adjuvants shall be in accordance with the IND, NDA or other Regulatory Approval, as applicable, for the Licensed Product.

 

5.4                                Commercialization Responsibilities .

 

5.4.1.                   General .  Genocea shall have sole and exclusive control over all matters relating to the Commercialization of the Licensed Products.

 

5.4.2.                   Branding of Licensed Products .  Genocea shall, at its sole discretion, select and own all trademarks and trade dress used in connection with the Commercialization of any Licensed Products, and all goodwill associated therewith.  Isconova shall, and shall cause its Affiliates not to, use or seek to register, anywhere in the world, any trademarks which are confusingly similar to any trademarks, trade names, trade dress or logos used by or on behalf of Genocea, its Affiliates or Sublicensees.

 

5.4.3.                   Branding of Licensed Adjuvants .  Subject to the terms of Section 5.4.2 .  Isconova shall, at its sole discretion, select and own all trademarks and trade dress used in connection with the Licensed Adjuvants, and all goodwill associated therewith.  Genocea shall not, and shall cause its Affiliates and Sublicensees not to, use or seek to register, anywhere in the world, any trademarks which are confusingly similar to any trademarks (including the Trademarks), trade names, trade dress or logos used by or on behalf of Isconova, its Affiliates or Sublicensees.

 

5.4.4.                   Diligence Efforts within the Exclusive Field .  Genocea undertakes to work diligently and agrees to use Commercially Reasonable Efforts consistent with prudent business judgment and consistent with business and market conditions to research, Develop and otherwise carry out the Commercialization of Licensed Products within the Exclusive Field.  During Genocea’s Development of Licensed Product(s) within the Exclusive Field, Genocea shall keep Isconova informed of the progress of the Development.  Such information shall be given in a bi-annual written progress report describing the program status, achieved results and program timelines.  Upon ten (10) business days’ prior written notice by Isconova, Genocea shall permit an independent auditor appointed by Isconova, at Isconova’s expense, to have access during normal business hours and no more than once a year to such records as may be reasonably necessary to verify Genocea’s compliance with this Section.  The auditor shall execute a non-disclosure agreement with Genocea to treat all information it receives during its inspection in confidence.

 

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ARTICLE 6
FINANCIAL PROVISIONS

 

6.1                                Initial Payments .  As consideration for the selection of the Exclusive Fields and the Time-Limited Exclusive Fields, Genocea shall pay to Isconova a non-creditable, non-refundable fee of [* * *] payable in two installments of: (i) [* * *], due and payable on the Effective Date, and (ii) [* * *], due and payable on the first (1 st ) anniversary of Effective Date.

 

6.2                                Upfront Payments .  Prior to the commencement of any GLP toxicity study for the first Licensed Product by Genocea, its Affiliates or a Sublicensee in each of the Non-Exclusive Disease Fields, Genocea shall pay to Isconova an upfront, non-creditable, non-refundable fee of [* * *].

 

For the avoidance of doubt, payments under this Section 6.2 shall only be payable by Genocea once for each unique Disease Field, irrespective of the number of Licensed Products in any given Disease Field that become the subject of a GLP toxicity study.

 

6.3                                Development Milestones .  Subject to the terms and conditions set forth in this Agreement including, without limitation, Section 6.8 below, Genocea shall pay Isconova a milestone payment (each, an “ Development Milestone Payment ”) for the first Licensed Product in each unique Disease Field to achieve the following events, whether such event is achieved by Genocea, its Affiliates or a Sublicensee (each, an “ Development Milestone ”) in the particular amounts specified below within thirty (30) Business Days after the occurrence of the relevant Development Milestone:

 

Development Milestone

 

Milestone Payment

A) [* * *]

 

USD $

[* * *]

B) [* * *]

 

USD $

[* * *]

C) [* * *]

 

USD $

[* * *]

D) [* * *]

 

USD $

[* * *]

 

As used in the table above, “Initiation” of a Clinical Trial shall mean that that the first human subject has received the first dose in such Clinical Trial.

 

Irrespective of the number of Licensed Products that achieve a Development Milestone, Genocea shall only be obligated to make a Development Milestone Payment once for the first Licensed Product in each unique Disease Field to reach the Development Milestone.  For the avoidance of doubt, in the event that the first Licensed Product should reach one milestone but not the next, then Genocea shall make such Development Milestone Payments due for the second Licensed Product to reach this next Development Milestone.  Example : The first Licensed Product in a unique Disease Area reaches Development Milestones A and B, but not C.  If a second Licensed Product in the same Disease Field should reach Development Milestone C, for the second Licensed Product Genocea would pay Isconova for Development Milestone C (but not for Development Milestone A and B).

 

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6.4                                Royalty Payments .  In consideration for the licenses granted to Genocea under Section 3.1.1 , Genocea shall pay to Isconova Royalties on Net Sales of Licensed Products in the Territory as set forth in Section 6.4.1 below.

 

6.4.1.                   Royalty Rates .  Genocea shall pay to Isconova royalties on a Licensed Product-by-Licensed Product and country-by-country basis in the amount of the applicable royalty rates set forth in the following table.  Such royalties rates are dependent on both (a) the stage of Development of a Licensed Product, during which Genocea enters into a definitive agreement with a Third Party, if any, pursuant to which the Third Party shall perform or control a substantial part of or all of the Development and Commercialization activities with regards to such Licensed Product and such country(-ies) (such agreement, a “ Partnership ”); provided , however , that agreements with Third Party service providers (e.g. contract manufacturers, development and/or formulation services providers, pre-clinical service providers and clinical service providers) shall not constitute a Partnership hereunder; and (b) the Net Sales obtained by Genocea, its Affiliates or Sublicensees from the sale of each Licensed Product in the Territory during each Contract Year.  For example, if Genocea enters into a Partnership for Licensed Products A, B and C for China, but not for Licensed Products D, E and F, then a Partnership shall be deemed to exist solely with respect to Licensed Products A, B, C in China, but not for (i) Licensed Products A, B, C in any other country in the Territory or (ii) Licensed Products D, E and F anywhere in the Territory.

 

 

 

Stage of Licensed Product’s Development upon Genocea’s Entry into a
Partnership for such Licensed Product

 

 

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

Portion of Net Sales of Licensed Product in a Contract Year

 

 

 

 

 

 

 

 

 

Under $[* * *]

 

[* * *]%

 

[* * *]%

 

[* * *]%

 

[* * *]%

 

Over $[* * *]

 

[* * *]%

 

[* * *]%

 

[* * *]%

 

[* * *]%

 

 

The royalty rates set forth in the table above shall apply only to that portion of the Net Sales in a Contract Year of a particular Licensed Product that fall within the indicated range.  For example, if the Net Sales of a particular Licensed Product (for which Genocea entered into a Partnership following submission of an IND but prior to the commencement of a Phase 3 Clinical Trial) equal $1.25 billion, the total royalty for such Licensed Product during the corresponding Contract Year would be equal to the specified royalty rate for the first $[* * *] of Net Sales of such Licensed Product ([* * *]) and the specified royalty rate for the second $[* * *] of Net Sales ([* * *]): ($[* * *]%) + ($[* * *]%) = $[* * *] million.

 

6.4.2.                   Adjustment in Royalty Rates due to no Valid Claim .  If, during the Royalty Term, on a Licensed Product-by-Licensed Product and country-by-country basis, a Licensed Product is not covered (in whole or in party), or is not made, does not use or is not used by a process covered by (in whole or by part), one or more Valid Claims of one or more of the Isconova Patent Rights or Joint Patent Rights, then the applicable royalty rate

 

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under Section 6.4.1 , as otherwise adjusted pursuant to this Agreement, will be reduced by [* * *].  Further, any such reduction will not apply retroactively and shall thus only apply to future royalties (i.e. royalties that yet not have accrued at the date when no Valid Claim remain)

 

6.4.3.                   Expiration of Royalty Period .  After the Royalty Term has expired for any Licensed Product in any country in the Territory, no further royalties shall be payable in respect of sales of such Licensed Product in such country and thereafter, the licenses granted to Genocea under Section 3.1 with respect to such Licensed Product shall be fully paid-up, perpetual, irrevocable, royalty-free, non-exclusive licenses; provided, however, that if Genocea terminates this Agreement pursuant to Section 9.4 , or if Isconova terminates this Agreement due to circumstances set forth in Sections 9.2 9.3 9.4 ,  Genocea shall, as from the effective date of termination, no longer be granted any licenses hereunder.

 

6.4.4.                   Cumulative Royalties .  The obligation to pay royalties under this Agreement shall be imposed only once with respect to a single unit of a Licensed Product regardless of how many Valid Claims included within Licensed Patent Rights would, but for this Agreement, be infringed by the Manufacture or Commercialization of such Licensed Product.

 

6.5                                Adjustment due to Third Party Payments .  If, during the Term, Genocea enters into an agreement with a Third Party(ies) to obtain a license under a patent(s) or other right(s) or otherwise makes a payment to a Third Party(ies) in exchange for right(s) that Genocea needs in order to practice or use the Isconova Technology, then Genocea may offset the amount of royalties or other payments (which shall include without limitation milestone payments, upfront payments and any payments owed to such Third Party due to a court order) payable by Genocea to such Third Party with respect to a Licensed Product against amounts Genocea is obligated to pay Isconova under Sections 6.3, 6.4 and 6.6 for such Licensed Product; provided that (i) in no such event will any such offset reduce the payments otherwise due to Isconova under Section 6.4 by more than [* * *] in any Contract Quarter, (ii) in no such event will any such offset reduce the payments due to Isconova under Section 6.3 or 6.6 by more than [* * *] in any Contract Quarter and (iii) any such reduction will not apply retroactively and shall thus only apply to future payments (e.g. with respect to royalties, only those royalties that yet not have accrued at the date when Genocea notifies Isconova of it having entered into a Third Party agreement or having a payment obligation to a Third Party for the Isconova Technology).  Amounts not used to offset payments owed to Isconova pursuant to this Section 6.5 as a result of clause (i) or clause (ii) of the proviso of the immediately preceding sentence may be carried over to future Contract Quarters until the full offset is realized.  In no event shall Isconova be liable to pay to Genocea any amounts not used for set-off.

 

6.6                                Sublicensing Income .  Upon any sublicense by Genocea of the rights granted to it under Section 3.1 herein, Genocea shall be obligated to pay Isconova [* * *] of the amount equal to (i) any initial, signing or upfront fees received by Genocea from such Sublicensee as consideration for the grant of rights under the sublicense less (ii) the amount included in any such initial,

 

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signing or upfront fee for reimbursement of actual patent prosecution expenses or funded research and development and less (iii) any payments owed, based on the receipt of such initial, signing or upfront payment, by Genocea to Third Parties under the terms of any agreement in effect as of the Effective Date, For example, if Genocea receives a sublicense fee of an upfront $500,000, including a reimbursement of patent prosecution expenses of $13,000, and Genocea is bound to pay [* * *] of any such sublicense fee to a Third Party, then Isconova will be entitled to sublicensing income of: [* * *] X [* * *].  For clarity, the Parties agree that payments that are due as a direct result of Genocea sublicensing its rights hereunder and that are not dependable on the success or development of products or services based on such sublicensed rights, shall be deemed as “upfront fees” regardless of when payment actually is made (e.g. if Genocea receives a signing fee payable in three installments).  As an illustration, the payments pursuant to Sections 6.1 and 6.2 above, if received by Genocea from a Sublicensee, would qualify as upfront payments for the purposes of this Section 6.6 .

 

6.7                                Reports and Royalty Payments .  Within sixty (60) days after the beginning of each Contract Quarter during the Royalty Term, Genocea shall deliver to Isconova a report setting forth for the previous Contract Quarter the following information on a Licensed Product-by-Licensed Product and country-by-country basis in the Territory: (a) the gross sales and Net Sales of Licensed Product, (b) the number of units sold by Genocea, its Affiliates or Sublicensees, (c) the basis for any adjustments to the royalty payable for the sale of each Licensed Product, and (d) the royalty due hereunder for the sales of each Licensed Product (the “ Royalty Report ”).  The total royalty due for the sale of Licensed Products during such Contract Quarter shall be remitted at the time such report is made.  No such reports or royalty shall be due for any Licensed Product before the First Commercial Sale of such Licensed Product.

 

6.8                                Research Funding .  Genocea shall pay to Isconova in total [* * *] payable as follows: (i) $[* * *] in equal monthly installments for each remaining month in 2009 following the Effective Date and (ii) $[* * *] in equal monthly installments during the period from January 1, 2010 until March 31, 2012. The Research Funding shall be used solely for the performance of activities under the Research and Phase 1 Supply Plan and the Development and Scale-Up Plan and, for the avoidance of doubt, solely to fund Development and research activities for human (and not veterinary) applications in accordance with such Research and Phase 1 Supply Plan and Development and Scale-Up Plan.  Notwithstanding anything to the contrary above, the Parties agree that this restriction shall only apply to the allocation and use of the Research Funding as such, and shall not be construed as limiting or affecting the ownership of any Isconova Technology and Joint Technology created, conceived, reduced to practice or Invented hereunder.  Isconova’s ownership and/or rights to the Isconova Technology and Joint Technology shall exclusively be governed by the provisions in Section 3.3 .  and Isconova’s use of the Isconova Technology and Joint Technology shall be subject only to the licenses granted to Genocea in Sections 3.1.1 through 3.1.3 .  Isconova shall during the Research Term allocate not less than two (2) dedicated FTEs for Isconova’s research work for Genocea hereunder and each such dedicated FTE shall be paid through Research Funding.  During the Research Term, Isconova shall, within fifteen (15) days after the end of each month, deliver to Genocea a report setting forth the number of Isconova FTEs that worked on activities under the Development and Scale-Up Plan and the Research and Phase 1 Supply Plan, as well as other costs and expenses of Isconova evidencing recourses spent on Isconova’s research work hereunder.  Researching Funding

 

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payments shall be made within fifteen (15) days after the end of each calendar month.

 

6.9                   Repayment of Research Funding .  Interest shall accrue on the amounts of Research Funding actually paid to Isconova at [* * *], however capped at [* * *] percent.  Isconova shall repay the Research Funding plus interest as follows.  Isconova shall pay to Genocea [* * *] of any monetary consideration received by Isconova from Third Parties in connection with the development or commercialization of vaccine products within the human field such as initial, signing or upfront fees, milestones and royalties; provided that Isconova shall not be obliged to pay to Genocea any portion of (i) payments received by Isconova for reimbursement of actual patent prosecution expenses or funded research and development, or (ii) research grants from not-for-profit organizations, including the EU.  Further, at Genocea’s election, all outstanding amounts paid by Genocea to Isconova as Research Funding under Section 6.8 together with accrued interest shall be deducted from any milestone payments owed by Genocea to Isconova pursuant to Section 6.3 above at the time such milestone payment(s) are due; provided , however that no milestone payment owed by Genocea to Isconova hereunder may be reduced by more than [* * *] and provided further , however that no deduction may be made from a payment owed to Isconova for the achievement of milestone A in Section 6.3 above ( Initiation of the first Phase 1 Clinical Trial of the Licensed Product ).  If Isconova has not repaid the Research Funding plus accrued interest by December 31, 2015, Genocea may, by thirty (30) days’ written prior notice, request that Isconova pay any outstanding amount (at Genocea’s option) in cash or by set-off against deliveries of License Adjuvants.  Notwithstanding anything to the contrary above, in no event shall Isconova be obliged to repay to Genocea with an amount exceeding the Research Funding actually paid by Genocea, plus interest as set out above.

 

6.10                         Payment Provisions Generally .

 

6.10.1.            Taxes and Withholding .  If laws, rules or regulations require withholding of income taxes or other taxes imposed upon payments set forth in this ARTICLE 6 , Genocea shall make such withholding payments as required and subtract such withholding payments from the payments set forth in this ARTICLE 6 .  Genocea shall submit appropriate proof of payment of the withholding taxes to Isconova within a reasonable period of time.  At the request of Isconova, Genocea shall give Isconova such reasonable assistance, which shall include the provision of appropriate certificates of such deductions made together with other supporting documentation as may be required by the relevant tax authority, to enable Isconova to claim exemption from such withholding or other tax imposed or obtain a repayment thereof or reduction thereof and shall upon request provide such additional documentation from time to time as is reasonably required to confirm the payment of tax.

 

6.10.2.            Payment and Currency Exchange .

 

(a)                                  All amounts payable and calculations hereunder shall be in United States dollars and shall be paid by bank wire transfer in immediately available funds to such bank account as may be designated in writing by Isconova or Genocea, as applicable, from time to time.  Whenever for the purposes of calculating the royalties or costs payable hereunder conversion from any foreign currency shall be required, all amounts shall first be calculated in the currency of sale or

 

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currency of incurrence and then converted into United States dollars by applying the average monthly rate of exchange listed in the New York edition of The Wall Street Journal for the final month of the applicable Contract Quarter.

 

(b)                                  Where royalty amounts are due for Net Sales in a country where, for reasons of currency, tax or other regulations, transfer of foreign currency out of such country is prohibited, Genocea has the right to place Isconova’s royalties in a bank account in such country in the name of and under the sole control of Isconova; provided , however , that the bank selected be reasonably acceptable to Isconova and that Genocea inform Isconova of the location, account number, amount and currency of money deposited therein.  After Isconova has been so notified, those monies shall be considered as royalties duly paid to Isconova and will be completely controlled by Isconova.

 

(c)                                   When in any country in the Territory the law or regulations prohibit both the transmittal and the deposit of royalties on sales in such country, royalty payments due on Net Sales shall be suspended for as long as such prohibition is in effect and as soon as such prohibition ceases to be in effect, all royalties that Genocea would have been under an obligation to transmit or deposit but for the prohibition shall forthwith be deposited or transmitted, to the extent allowable.

 

6.10.3.            Records .  Each Party shall keep and maintain accurate and complete records which are relevant to costs, expenses, sales and payments throughout the Territory used to determine payments to be made under this Agreement, and such records shall be maintained for a period of three (3) years from creation of individual records for examination at the other Party’s expense by an independent certified public accountant selected by the other Party as described in Section 6.10.4 .  A Party’s right to complete a final audit upon termination or expiration of this Agreement shall expire three (3) years after such termination or expiration.  Any records or accounting information received from the other Party shall be Confidential Information of the disclosing Party for purposes of ARTICLE 8 of this Agreement.  Results of any such audit shall be provided to both Parties, subject to ARTICLE 8 of this Agreement.

 

6.10.4.            Audits and Interim Reviews .

 

(a)                                  Subject to the provisions of Section 6.10.3 , either Party may request (such requesting party, the “ Auditing Party ”) that a independent certified public accountant mutually agreed upon by the Parties, which is not either Party’s independent accounting firm, perform an audit or interim review of the other Party’s books (such other Party, the “ Audited Party ”) as they relate to this Agreement in order to express an opinion regarding such Party’s accounting for revenues, costs and expenses, as applicable, under this Agreement.  Such audits or review shall be conducted at the expense of the Auditing Party.  However, and without prejudice to any other remedy or action available due to breach of this Agreement, if the audit should determine a discrepancy between royalty or other

 

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payments reported and the royalty or payments actually due resulting in the underpayment of royalties or payments of more than five percent (5%) then the cost and expense of the audit shall be borne by the Audited Party.

 

(b)                                  Upon ten (10) Business Days’ prior written notice from the Auditing Party, the Audited Party shall permit such accounting firm to examine the relevant books and records of the Audited Party, including any Affiliates, as may be reasonably necessary to verify the reports and information submitted by the Audited Party and the accuracy of any Royalty Report.  An examination by a Party under this Section 6.10.4 (whether of the Audited Party or its Affiliates) shall occur not more than once in any Contract Year and shall be limited to the pertinent books and records for any Contract Year ending not more than thirty-six (36) months before the date of the request.  The accounting firm shall be provided access to such books and records at the Audited Party’s facility(ies) where such books and records are normally kept and such examination shall be conducted during the Audited Party’s normal business hours.  The Audited Party may require the accounting firm to sign a standard non-disclosure agreement with terms that are not inconsistent with the terms of this Agreement before providing the accounting firm access to the Audited Party’s facilities or records.  Upon completion of the audit, the accounting firm shall provide both Genocea and Isconova a written report disclosing whether the reports submitted by the Audited Party are correct or incorrect and the specific details concerning any discrepancies.  No other information shall be provided to the Auditing Party.  If the accountant determines that, based on errors in the reports so submitted, any report prepared in accordance with this Agreement is incorrect, the Parties shall promptly revise the report and the associated Royalty Report or Reconciliation Statement and any additional amount owed by one Party to the other shall be paid within thirty (30) days after receipt of the accountant’s report, along with interest as provided in Section 6.10.5 ; provided , however , that no such interest shall be payable if the errors leading to the Royalty Report being incorrect were in the reports provided by the Party to receive such additional amount.  In the event of any sublicense or transfer of rights with respect to the Licensed Adjuvant or Licensed Products by a Party under this Agreement, the sublicensor or transferor shall provide for audit rights by the other Party to this Agreement in accordance with this Section 6.10.4 .

 

6.10.5.            Payments Between the Parties .  In the event that (a) any payment hereunder (including any royalty payment due by Genocea to Isconova under this Agreement) is made after the date such payment was due pursuant to the terms of this Agreement (other than the extent that a payment that is the subject of a good faith dispute between the Parties that has been outstanding for no more than sixty (60) Business Days), and (b) such payment is overdue by more than fifteen (15) Business Days, the paying Party shall pay interest to the other Party at the lesser of (i) the interest rate of one and a half (1.5%)

 

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percent a month or (ii) the highest rate permitted by applicable law from the date that such additional amount should have first been paid.

 

6.11                         Suspension of Royalty/Milestone Payments .  In the event that (i) any Third Party commences any proceeding against Genocea, Isconova and/or any Sublicensee related to the Isconova Technology which results in the enjoinment of the research, development, commercialization and/or sale of a Licensed Product which is not a Final Decision (as defined in Section 6.11.1 below) and (ii) the underlying claim of such proceeding in clause (i) is not directly and principally attributable to activities conducted by Genocea outside the scope of the rights granted to Genocea in Section 3.1 .  Genocea (a) may suspend further payments of royalties and milestones due to Isconova hereunder; (b) may request (and upon such request, Isconova shall conduct) a Technology Transfer as described in Section 6.3(c) of the Supply and Manufacturing Agreement and (c) Genocea shall be relieved of its obligation to order its purchase requirements of Licensed Adjuvants from Isconova and may receive supply of Licensed Adjuvants from a party or parties of Genocea’s choosing.

 

6.11.1.            If a court or other governmental agency of competent jurisdiction has made a final decision (including a decision confirming a settlement) or taken a final action which is not appealable or has not been appealed within the time allowed for appeal (a “ Final Decision ”) and such Final Decision results in the enjoinment of the research, development, commercialization and/or sale of a Licensed Product, Genocea may terminate this Agreement immediately upon written notice to Isconova.  If, pursuant to the Final Decision, Genocea is not enjoined from the research, development, commercialization and/or sale of a Licensed Product and Genocea elects not to terminate this Agreement pursuant to any applicable provision other than this Section 6.11.1 , then Genocea shall, as of the date of such Final Decision, resume (or continue, as the case may be) the payment of royalties and milestones to Isconova under ARTICLE 6 (subject to any reductions in accordance with this Agreement including, without limitation Sections 6.4.2 and 6.4.2 ) due after such date; provided , however that if Genocea has previously elected to request a Technology Transfer under this Section 6.11 , Genocea shall continue to be relieved of its obligation to order its purchase requirements of Licensed Adjuvants from Isconova and may receive supply of Licensed Adjuvants from a party or parties of Genocea’s choosing.  In the event of Genocea terminating this Agreement as set out in this Section 6.11.1 above, (i) the license granted to Isconova pursuant to Section 3.2 shall terminate, (ii) the licenses granted to Genocea under Section 3.1 shall continue in perpetuity and shall become royalty-free, worldwide, fully paid-up, irrevocable licenses with the right to sublicense; (iii) Genocea shall have the right to immediately terminate the Supply and Manufacturing Agreement pursuant to Section 6.2(a)  of such agreement and, to the extent not already performed, Isconova shall perform a Technology Transfer as set forth in Section 6.3(c)  of such agreement upon Genocea’s request; (iv) Genocea shall have no obligation to pay any royalties or milestones arising under this Agreement after the effective date of such termination; (v) Isconova shall continue to be solely responsible for all royalty, milestone, and other payments owed to any other Third Party licensor pursuant to an agreement executed by Isconova prior to the Effective Date and

 

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(vi) any tangible manifestations or embodiments of Genocea’s Confidential Information provided by or behalf of Genocea pursuant to this Agreement shall be promptly returned by Isconova to Genocea or destroyed by Isconova.  Nothing in this Section 6.11 shall limit any other legal or equitable remedies that Genocea may have hereunder.

 

ARTICLE 7
INTELLECTUAL PROPERTY PROTECTION AND RELATED MATTERS

 

7.1                                Prosecution of Patent Rights .

 

7.1.1.                   Isconova Patent Rights and Joint Patent Rights .  The following terms shall apply to all Isconova Patent Rights owned by Isconova and all Joint Patent Rights.

 

(a)                                  Primary Responsibility .  Isconova, through counsel of its choosing, shall have primary responsibility for and control over obtaining, filing, prosecuting (including any interferences, reissue proceedings, re-examinations, oppositions, and revocations), and maintaining (collectively, “ Prosecuting ” or, when used as a noun, “ Prosecution ”) throughout the Territory the Isconova Patent Rights (and, for clarity, will be the “Prosecuting Party” with respect to the Isconova Patent Rights), and Genocea shall cooperate with Isconova in regard thereto.  Genocea, through counsel of its choosing, shall have primary responsibility for and control over Prosecuting throughout the Territory the Joint Patent Rights (and, for clarity, will be the “Prosecuting Party” with respect to the Joint Patent Rights), and Isconova shall cooperate with Genocea in regard thereto.  If the Prosecuting Party elects to abandon (except in the course of Prosecution to pursue such subject matter or claim in a continuing application) any subject matter or claim that relates to any of the rights licensed to the Non-Prosecuting Party hereunder, the Prosecuting Party shall so notify the Non-Prosecuting Party promptly (but no less than 30 days prior to any deadlines for Prosecution) in writing of its intention in good time to enable the Non-Prosecuting Party to meet any deadlines by which an action must be taken to preserve any such rights in such subject matter or claim, and the Non-Prosecuting Party shall be entitled to acquire control of Prosecuting such subject matter or claim and be deemed the Prosecuting Party with respect thereto.

 

(b)                                  Additional Obligations .  The Prosecuting Party shall keep the Non-Prosecuting Party reasonably informed of Prosecution.  In addition, the Prosecuting Party shall invite the Non-Prosecuting Party to comment on any material issues relating to Prosecution well in advance of a relevant deadline and shall take into due consideration the Non-Prosecuting Party’s comments and suggestions with respect to any material actions to be taken by the Prosecuting Party.

 

(c)                                   Common Interest .  All information exchanged between the Parties or between the Parties’ outside patent counsel regarding Prosecution of the Isconova

 

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Patent Rights or Joint Patent Rights shall be deemed Confidential Information.  In addition, the Parties acknowledge and agree that, with regard to such Prosecution of the Isconova Patent Rights or Joint Patent Rights, the interests of the Parties as licensor and licensee are to obtain the strongest patent protection possible, and as such, are aligned and are legal in nature.  The Parties agree and acknowledge that they have not waived, and nothing in this Agreement constitutes a waiver of, any legal privilege concerning the Isconova Patent Rights or Joint Patent Rights, including privilege under the common interest doctrine and similar or related doctrines.

 

(d)                                  Election Not to Continue Prosecution; Abandonment .  If a Prosecuting Party elects (i) not to Prosecute patent applications for the Isconova Patent Rights or Joint Patent Rights under its Prosecution control in any country, or (ii) not to continue the Prosecution of any Isconova Patent Right or Joint Patent Right under its Prosecution control in a particular country in the Territory, or (iii) not to Prosecute patent applications for the Joint Patent Rights under its Prosecution control in a particular country following a written request from the Non-Prosecuting Party to Prosecute in such country, or (iv) not to Prosecute patent applications for the Joint Patent Rights under its Prosecution control reasonably sufficient to protect the Licensed Adjuvant and Licensed Product following a written notice from the Non-Prosecuting Party setting forth the Non-Prosecuting Party’s good faith analysis of the insufficiency of the Prosecuting Party’s patent applications, then the Prosecuting Party shall so notify the Non-Prosecuting Party promptly (but no less than 30 days prior to the date that a response is due) in writing of its intention in good time to enable the Non-Prosecuting Party to meet any deadlines by which an action must be taken to establish or preserve any such rights in such patent in such country, and the Prosecuting Party shall permit the Non-Prosecuting Party, should the Non-Prosecuting Party choose to do so, to Prosecute or otherwise pursue such Isconova Patent Rights or Joint Patent Rights in such country in the Non-Prosecuting Party’s own name, and the Prosecuting Party shall cooperate with the Non-Prosecuting Party in regard thereto.  For clarity, the provisions (iii)  and (iv)  above in this Section 7.1.1(d)  shall apply only to non-Prosecution or abandonment with respect to the Joint Patent Rights, and not the Isconova Patent Rights.

 

(e)                                   No Grant of Conflicting or Superior Rights .  Isconova covenants and agrees that it shall not grant any Third Party any right to control the Prosecution of the Isconova Patent Rights or to approve or consult with respect to any Patent Rights licensed to Genocea hereunder, in any case, that is more favorable than the rights granted to Genocea hereunder or otherwise conflicts with Genocea’s rights hereunder.  For the avoidance of doubt, if Isconova chooses (i) not to Prosecute patent applications for the Isconova Patent Rights under its Prosecution control in any country and/or (ii) not to continue the Prosecution of any Isconova Patent Right under its Prosecution control in a particular country in the Territory, Genocea shall have the exclusive secondary right to take the action(s) in clauses (i) and (ii) of this sentence (such actions collectively, the “ Secondary

 

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Prosecution Activities ”) and Isconova shall not allow any Third Party to perform any Secondary Prosecution Activity unless Genocea has informed Isconova in writing that it has elected to not perform such Secondary Prosecution Activity.  Notwithstanding the above, Genocea agrees that Isconova’s covenant and Genocea’s rights to Secondary Prosecution Activities herein is granted to the extent that such covenant and rights are not in conflict with Isconova’s prior agreement with Crucell Holland B.V. dated December 21, 2006 as such agreement exists on the Effective Date, and that Isconova may have undertakings towards Crucell Holland B.V. that may take precedence over Genocea’s rights herein.  Genocea further agrees that Isconova shall be free to disclose to future licensees of the Licensed Technology that an Isconova licensee has rights to Secondary Prosecution Activities as set out herein under appropriate terms of confidentiality and provided that Isconova does not disclose to such future licensees Genocea’s identity.

 

7.1.2.                   Genocea Patent Rights .  Genocea, through counsel of its choosing, shall have the sole responsibility for and control over Prosecuting throughout the Territory the Genocea Patent Rights, but shall have no obligation to Prosecute such Patent Rights.

 

7.1.3.                   Cooperation .  Each Party hereby agrees: (a) to make its employees, agents and consultants reasonably available to the other Party (or to the other Party’s authorized attorneys, agents or representatives), to the extent reasonably necessary to enable such Party to undertake patent Prosecution as contemplated by this Agreement; (b) to cooperate, if necessary and appropriate, with the other Party in gaining patent term extensions wherever applicable to Patent Rights that are subject to this Agreement; and (c) to endeavor in good faith to coordinate its efforts with the other Party to minimize or avoid interference with the Prosecution of the other Party’s patent applications that are subject to this Agreement.

 

7.1.4.                   Patent Procurement Costs .

 

(a)                                  All Patent Procurement Costs related to Prosecuting Patent Rights hereunder shall be shared by the Parties as follows: (a) Patent Procurement Costs relating to the Prosecution of Genocea Patent Rights in the Territory shall be paid for by Genocea, (b) Patent Procurement Costs relating to the Prosecution of Joint Patent Rights in the Territory shall be borne equally by the Parties, and (c) Patent Procurement Costs relating to the Prosecution of Isconova Patent Rights in the Territory shall be borne by Isconova.  This notwithstanding, should Isconova choose not to Prosecute Isconova Patent Rights and Genocea choose to Prosecute such Patent Rights as set forth in Section 7.1.1(d) , then Genocea shall bear the costs related to such Prosecution, and Genocea may off-set its Procurement Costs related to such Patent Rights on a country-by-country basis from the royalty amounts attributable to the country in question that Genocea would otherwise owe Isconova hereunder.

 

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(b)                                  Notwithstanding anything else in this Section 7.1.4 , any Patent Procurement Costs owed by Isconova to any other Third Party licensor pursuant to an agreement executed by Isconova prior to the Effective Date shall be borne solely by Isconova.

 

7.2                                Enforcement of Patent Rights .

 

7.2.1.                   Notification .  Each Party shall promptly report in writing to the other Party during the Agreement Term any (a) known or suspected infringement of any Isconova Patent Rights, Joint Patent Rights or Genocea Patent Rights claiming or relating to the Licensed Adjuvant or the Licensed Products, by a Third Party or (b) unauthorized use or misappropriation of any Confidential Information, including Isconova Technology, Joint Technology and Genocea Technology claiming or relating to the Licensed Adjuvant or Licensed Products, by a Third Party of which it becomes aware and shall provide the other Party with all available evidence supporting such infringement, or unauthorized use or misappropriation.

 

7.2.2.                   Rights to Enforce .

 

(a)                                  Isconova Technology .  The following terms shall apply to all Isconova Patent Rights, Isconova Improvements and Isconova Know-How owned by Isconova and, with respect to other Isconova Technology (excluding Isconova Collaboration IP) to the extent permitted by other applicable Third Party licenses.  In respect of Licensed Products in the Territory, Isconova shall have the first right, but not the obligation, to take any reasonable measures it deems appropriate to stop infringing activities in the Field in the Territory with respect to (including initiating or prosecuting an infringement or other appropriate suit or action against any Third Party who at any time has infringed, or is suspected of infringing, or defending any declaratory judgment action with respect to) any Isconova Patent Rights claiming or relating to Licensed Products or of using without proper authorization any Isconova Know-How or Isconova Improvements.  In the event that Isconova elects not to take action pursuant to this Section 7.2.2(a) , Isconova shall so notify Genocea promptly in writing of its intention in good time to enable Genocea to meet any deadlines by which an action must be taken to establish or preserve any enforcement rights, and Genocea shall have the right, but not the obligation, to take any such reasonable measures to stop such infringing activities by such alleged infringer.

 

(b)                                  Isconova Collaboration IP: Joint Technology .  The following terms shall apply to all Joint Technology and all Isconova Collaboration IP.  In respect of Licensed Products in the Territory, Genocea shall have the first right, but not the obligation, to take any reasonable measures it deems appropriate to stop infringing activities in the Field in the Territory with respect to (including initiating or prosecuting an infringement or other appropriate suit or action against any Third Party who at any time has infringed, or is suspected of infringing, or defending any declaratory judgment action with respect to) any Joint Patent

 

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Rights claiming or relating to Licensed Products or of using without proper authorization any Joint Improvements, Joint Collaboration IP or Isconova Collaboration IP.  In the event that Genocea elects not to take action pursuant to this Section 7.2.2(b) , Genocea shall so notify Isconova promptly in writing of its intention in good time to enable Isconova to meet any deadlines by which an action must be taken to establish or preserve any enforcement rights, and Isconova shall have the right, but not the obligation, to take any such reasonable measures to stop such infringing activities by such alleged infringer.  In any enforcement action involving Joint Technology, the Parties agree to be joined as parties to such enforcement action if necessary to enable the enforcement action.

 

(c)                                   Genocea Technology .  The following terms shall apply to all Genocea Patent Rights, Genocea Improvements, Genocea Collaboration IP and Genocea Know How owned by Genocea and, with respect to other Genocea Technology, to the extent permitted by the applicable licenses.  Genocea shall have the sole right, but not the obligation, to take any reasonable measures it deems appropriate to stop infringing activities in the Field in the Territory, including initiating or prosecuting an infringement or other appropriate suit or action against any Third Party who at any time has infringed, or is suspected of infringing, or defending any declaratory judgment action with respect to, any Genocea Patent Rights claiming or relating to Licensed Products or of using without proper authorization any Genocea Know-How, Genocea Improvements or Genocea Collaboration IP.

 

7.2.3.                   Procedures: Expenses and Recoveries .  The Party having the right to initiate any infringement suit under Section 7.2.2(a)  or 7.22(b)  above shall have the sole and exclusive right to select counsel for any such suit (which counsel shall be reasonably acceptable to the other Party) and shall pay all expenses of the suit, including attorneys’ fees and court costs and reimbursement of the other Party’s reasonable out-of-pocket expense in rendering assistance requested by the initiating Party.  If required under Applicable Law in order for the initiating Party to initiate or maintain such suit, or if either Party is unable to initiate or prosecute such suit solely in its own name or it is otherwise advisable to obtain an effective legal remedy, in each case, the other Party shall join as a party to the suit and shall execute and cause its Affiliates to execute all documents necessary for the initiating Party to initiate litigation to prosecute and maintain such action.  The initiating Party will keep the other Party reasonably informed of the status of the infringement suit.  At the initiating Party’s request, the other Party shall provide reasonable assistance to the initiating Party in connection with an infringement suit at no charge to the initiating Party except for reimbursement by the initiating Party of reasonable out-of-pocket expenses incurred in rendering such assistance.  The non-initiating Party may participate and be represented in any such suit by its own counsel at its own expense.  If the Parties obtain from a Third Party, in connection with such suit under Section 7.2.2(a)  or 7.2.2(b) , any damages, license fees, royalties or other compensation (including any amount received in settlement of such litigation), such amounts shall be allocated as follows:

 

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(a)                                  to reimburse each Party for all expenses of the suit, including attorneys’ fees and disbursements, court costs and other litigation expenses; and

 

(b)                                  eighty percent (80%) of the balance will be paid to the initiating Party and the remaining balance shall be paid to the non-initiating Party.

 

7.3                                Claimed Infringement of Third Party Rights .

 

7.3.1.                   Notice .  In the event that a Third Party at any time provides written notice of a claim to, or brings an action, suit or proceeding against, any Party, or any of their respective Affiliates or Sublicensees, claiming infringement of such Third Party’s patent rights or unauthorized use or misappropriation of its know-how based upon an assertion or claim arising out of the Development, Manufacture or Commercialization of a Licensed Product in the Territory (“ Infringement Claim ”), such Party shall promptly notify the other Party of the Infringement Claim or the commencement of such action, suit or proceeding, enclosing a copy of the Infringement Claim and all papers served.  Each Party agrees to make available to the other Party its advice and counsel regarding the technical merits of any such claim at no cost to the other Party and to offer reasonable assistance to the other Party at no cost to the other Party.

 

7.3.2.                   Right to Defend .  Genocea shall have the right, but not the obligation, to defend any Infringement Claim brought against Genocea or its Affiliates or Sublicensees arising out of the Development, Manufacture or Commercialization of a Licensed Product in the Territory.  With respect to any such Infringement Claim brought against Isconova or its Affiliates, Isconova shall notify Genocea, and the Parties, in good faith, shall determine who should defend such suit.  All litigation costs and expenses incurred by the Defending Party (as defined below) in connection with such Infringement Claim, and all damages, payments and other amounts awarded against, or payable by, either Party under any settlement with such Third Party shall be borne by the Defending Party,

 

7.3.3.                   Procedure .  The Party having the obligation or first right to defend an Infringement Claim shall be referred to as the “ Defending Party .”  The Defending Party shall have the sole and exclusive right to select counsel for any Infringement Claim; provided that such counsel shall be reasonably acceptable to the other Party.  The Defending Party shall keep the other Party fully informed of any such claims, shall consult with the other Party with respect to the strategy and conduct of any defense of such claims, and shall provide the other Party with copies of all documents filed in, and all written communications relating to, any suit brought in connection with such claims, which copies of documents filed or communications sent by the Defending Party will be provided in advance of filing or sending.  The other Party may provide comments and suggestions with respect to any material actions to be taken by the Defending Party, and the Defending Party shall reasonably consider all comments and suggestions and shall take all prosecution actions reasonably recommended by the other Party.  The other Party may also participate and be represented in any such claim or related suit, at its own expense.  The other Party shall have the sole and exclusive right to control the defense of an Infringement Claim in the event the Defending Party fails to exercise its right to

 

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assume such defense within thirty (30) days following written notice from the other Party of such Infringement Claim.  No Party shall settle any claims or suits involving rights of another Party (or rights of such Party to the extent they are licensed to such other Party) without obtaining the prior written consent of such other Party, which consent shall not be unreasonably withheld.

 

7.3.4.                   Limitations .  EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN SECTION 10.6 , THE FOREGOING STATES THE ENTIRE RESPONSIBILITY OF ISCONOVA AND GENOCEA, AND THE SOLE AND EXCLUSIVE REMEDY OF ISCONOVA OR GENOCEA, AS THE CASE MAY BE, IN THE CASE OF ANY CLAIMED INFRINGEMENT OF ANY THIRD PARTY PATENT RIGHTS OR UNAUTHORIZED USE OR MISAPPROPRIATION OF ANY THIRD PARTY’S KNOW-HOW.

 

7.4                                Other Infringement Resolutions .  In the event of a dispute or potential dispute that has not ripened into a demand, claim or suit of the types described in Sections 7.2 and 7.3 of this Agreement ( e.g. , actions seeking declaratory judgments and revocation proceedings), the same principles governing control of the resolution of the dispute, consent to settlements of the dispute, and implementation of the settlement of the dispute shall apply.

 

7.5                                Product Trademarks & Product Designation .  Genocea shall select and own the Product Trademarks for each Licensed Product and shall be solely responsible for filing and maintaining the Product Trademarks in the Territory.  Genocea shall assume full responsibility, at its sole cost and expense, for any infringement of a Product Trademark for a Licensed Product by a Third Party (and shall retain in full any recoveries for such infringement) and shall defend and indemnify Isconova for and against any claims of infringement of the rights of a Third Party by Isconova’s use of a Product Trademark in connection with a Licensed Product in accordance with the terms of this Agreement.  In addition, Genocea shall have the right to select the product designation or generic name for the Licensed Product.

 

7.6                                Marking .  Each Party agrees to mark, and to require any Affiliate or Sublicensee, to mark any Licensed Product (or their containers or labels) made, sold, or otherwise distributed by it or them with any notice of patent rights necessary or desirable under Applicable Law to enable the Licensed Patent Rights to be enforced to their full extent in any country where Licensed Products are made, used, sold, or offered for sale.

 

7.7                                Patent Term Extensions .  The Parties shall use reasonable efforts to obtain all available supplementary protection certificates (“ SPC ”) and other extensions of the Isconova Patent Rights and Joint Patent Rights (including those available under the Hatch-Waxman Act).  Each Party shall execute such authorizations and other documents and take such other actions as may be reasonably requested by the other Party to obtain such extensions.  The Parties shall cooperate with each other in gaining patent term restorations, extensions or SPCs wherever applicable to Isconova Patent Rights or Joint Patent Rights.  The Party first eligible to seek patent term restoration or extension of any such Patent Rights or any SPC related thereto may do so; provided that, if in any country the first Party has an option to extend the patent term for only

 

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one of several patents, the first Party shall consult with the other Party before making the election.  If more than one patent is eligible for extension or patent term restoration, the Parties shall select in good faith a strategy that shall maximize patent protection and commercial value for each Licensed Product.  All filings for such extensions and certificates shall be made by the Party to whom responsibility for Prosecution of the Isconova Patent Rights or Joint Patent Rights are assigned; provided that, in the event that the Party to whom such responsibility is assigned elects not to file for an extension or SPC, such Party shall (a) inform the other Party of its intention not to file, (b) grant the other Party the right to file for such extension or SPC in the Patent Rights’ owner’s name, and (c) provide all necessary assistance in connection therewith.

 

ARTICLE 8
CONFIDENTIALITY

 

8.1                                Confidential Information .

 

8.1.1.                   Confidentiality .  All Confidential Information disclosed by a Party to the other Party during the Agreement Term shall be used by the receiving Party solely in connection with the activities contemplated by this Agreement, shall be maintained in confidence by the receiving Party and, except as set forth in this ARTICLE 8 , shall not otherwise be disclosed by the receiving Party to any other person, firm, or agency, governmental or private, without the prior written consent of the disclosing Party.  Isconova and Genocea each agrees that it shall provide Confidential Information received from the other Party only to its employees, consultants and advisors, and to the employees, consultants and advisors of such Party’s Affiliates or Sublicensees, and Third Parties acting on behalf of such Party, who have both (i) a need to know such Confidential Information in order to perform activities pursuant to this Agreement and (ii) an obligation, which shall be no less stringent than those obligations contained in this ARTICLE 8 , to treat such information and materials as confidential.  Each Party shall be responsible for a breach of this ARTICLE 8 by its Affiliates, Sublicensee, Third Parties acting on behalf of such Party, and their respective employees, consultants and advisors.  All obligations of confidentiality imposed under this ARTICLE 8 shall expire seven (7) years following termination or expiration of this Agreement.

 

8.1.2.                   Authorized Disclosure .  Notwithstanding the provisions of Section 8.1.1 and Section 8.2 , each Party may disclose Confidential Information belonging to the other Party to the extent such disclosure is reasonably necessary to:

 

(a)                                  comply with Applicable Laws;

 

(b)                                  Prosecute patent applications as contemplated by this Agreement;

 

(c)                                   defend or prosecute litigation in accordance with ARTICLE 7 ; provided that the receiving Party provides prior written notice of such disclosure to the disclosing Party and takes reasonable and lawful actions to avoid or minimize the degree of such disclosure;

 

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(d)                                  make filings and submissions to, or correspond or communicate with, any Regulatory Authority or clinical registry, including for purposes of obtaining authorizations to conduct clinical trials of, and to Commercialize, Licensed Products pursuant to this Agreement; and

 

(e)                                   exercise its rights hereunder; provided such disclosure is covered by terms of confidentiality similar to those set forth herein.

 

In the event a Party shall deem it reasonably necessary to disclose Confidential Information belonging to the other Party pursuant to this Section 8.1.2 , such Party shall to the extent possible give reasonable advance notice of such disclosure to the other Party and take reasonable measures to ensure confidential treatment of such information.

 

8.1.3.                   Additional Authorized Use of Confidential Information .  The Parties acknowledge that they each may engage in fundraising activities with private investors.  In such event, the Parties may disclose the existence of this Agreement, including its terms and subject matter, under terms of confidentiality no less strict than those contained in this Agreement, to such investors or potential investors in or potential licensees of the disclosing Party conducting due diligence in each instance.

 

8.2                                Publication Review .  Except as required by law, from and after the Effective Date, and subject to Section 3.2.1 , Genocea shall have the sole right to publish or present the results of any work relating to the Licensed Products in the Field.

 

8.3                                Public Announcements and Use of Names .  No disclosure of the existence of, or the terms of, this Agreement, including the names of the Parties, may be made by either Party, and no Party shall use the name, trademark, trade name or logo of the other Party or its employees in any publicity, news release or disclosure relating to this Agreement or its subject matter, in each case, without the prior written permission of the other Party, which permission shall not be unreasonably withheld or delayed, and except as may be required by law, governmental regulations, or valid order of a court or other governmental authority, or by stock market regulations or expressly permitted by the terms hereof, including Section 8.1.2 , and except that either Party may disclose the existence and terms of this Agreement, including the names of the Parties, to any potential partner or investor under appropriate terms of confidentiality.  Notwithstanding the foregoing, Genocea, in its sole discretion, may determine the timing and content of any press release with respect to activities conducted hereunder beginning with the Phase 1 Clinical Trials with respect to each Licensed Product and all activities thereafter; provided that Genocea may not use Isconova’s name in any such press release without the prior written consent of Isconova, except for the limited purpose of identifying Isconova as the licensor of the Licensed Technology.

 

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ARTICLE 9
TERM AND TERMINATION

 

9.1                                Term .  The term of this Agreement shall commence on the Effective Date and expire, unless this Agreement is terminated earlier in accordance with this ARTICLE 9 or Section 6.11 , on a Licensed Product-by-Licensed Product and country-by-country basis, upon the expiration of the Royalty Term with respect to the sale of such Licensed Product in such country in the Territory.  Upon the expiration of this Agreement pursuant to this Section 9.1 , all licenses granted by Isconova under this Agreement for such Licensed Product in such country shall become fully paid-up, perpetual, non-exclusive, sublicensable (subject to Section 3.1.5 ).  irrevocable, royalty-free licenses.

 

9.2                                Termination for Cause .  Except as otherwise set forth in this Section, either Party may terminate this Agreement, in its entirety or, at the terminating Party’s option, on a Licensed Product-by-Licensed Product or country-by-country basis, at any time during the term of this Agreement upon written notice to the other Party if such Party (the “ Breaching Party ”) is in breach of its material obligations hereunder and has not cured such breach within [* * *] days after notice requesting cure of the breach; provided that , notwithstanding the foregoing, in the event of a breach of a material obligation that is capable of being cured, but is not reasonably capable of being cured within the [* * *]-day cure period, if the Breaching Party (i) proposes within such [* * *]-day period a written plan to cure such breach within a defined time frame, (ii) makes Commercially Reasonable Efforts to cure such default and to implement such written cure plan, then the non-breaching Party may not terminate this Agreement until: (i) after an additional [* * *]-day period following the [* * *]-day cure period or (ii) until the Breaching Party ceases, in the other Party’s sole reasonable opinion, to diligently pursue such cure in accordance with such plan, whichever occurs first.  Notwithstanding the foregoing, in the event that Genocea breaches its obligations under Section 5.4.4 of this Agreement and such breach is not cured within the applicable periods set forth in this Section, Isconova’s sole remedy as a result of such breach shall be to convert the license granted pursuant to Section 3.1.1 from an exclusive license to a non-exclusive license for that portion of the Exclusive Field with respect to which Genocea has breached such Section 5.4.4 (i.e.  HSV or Chlamydia, as applicable).  Isconova acknowledges that a material breach by Isconova of its obligations under Sections 4.2 or 6.8 (and such breach is not cured within the applicable periods set forth in this Section) shall be deemed a breach by Isconova of its material obligations hereunder, without limiting other breaches of this Agreement being deemed a breach of Isconova’s material obligations hereunder,

 

9.3                                Termination on Insolvency .  This Agreement may be terminated upon written notice of a Party to the other Party (the “ Insolvent Party ”) at any time during the Agreement Term upon the filing or institution of bankruptcy, reorganization, liquidation or receivership proceedings, or upon an assignment of a substantial portion of the assets for the benefit of creditors by the Insolvent Party; provided , however , that in the event of any involuntary bankruptcy or receivership proceeding such right to terminate shall only become effective if the Insolvent Party consents to the involuntary bankruptcy or receivership or such proceeding is not dismissed within [* * *] days after the filing thereof.

 

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9.4                                Termination for Challenge .  In the event that Genocea or any of its Affiliates commences any proceeding which seeks to have any of the Isconova Patent Rights revoked or declared invalid, un-patentable, or unenforceable, Isconova may terminate this Agreement immediately upon written notice to Genocea.

 

9.5                                Termination for Convenience .  At any time, Genocea may terminate this Agreement, on a country-by-country or Licensed Product-by-Licensed Product basis or in its entirety, for any reason, upon [* * *] days’ advance written notice to Isconova.  Such termination shall not give rise to the payment of any penalty, damages or indemnity by Genocea and aside from those obligations explicitly intended to survive termination of this Agreement set forth in Section 9.10 below, upon such termination Genocea shall have no further obligations to Isconova hereunder.

 

9.6                                Effects of Termination .

 

9.6.1.                   Termination by Isconova .  Without limiting any other legal or equitable remedies that Isconova may have, if Isconova terminates this Agreement in accordance with Section 9.2 , Section 9.3 or Section 9.4 , then (i) all licenses granted to Genocea under this Agreement shall terminate, (ii) the licenses granted to Isconova under Section 3.2 shall continue in perpetuity, (iii) Isconova shall have the right to immediately terminate the Supply and Manufacturing Agreement pursuant to Section 6.2(a)  of such agreement; and (iv) any tangible manifestations and embodiments of Isconova’s Confidential Information provided by or on behalf of Isconova pursuant to this Agreement shall be promptly returned by Genocea to Isconova or destroyed by Genocea.

 

9.6.2.                   Termination by Genocea for Material Breach .  Without limiting any other legal or equitable remedies that Genocea may have, if Isconova is the Breaching Party and Genocea terminates this Agreement in accordance with Section 9.2 , then (i) the license granted to Isconova pursuant to Section 3.2 shall terminate, (ii) the licenses granted to Genocea under Section 3.1 shall continue in perpetuity; provided that Genocea will remain bound by its obligations hereunder with respect to records, audit and indemnity, (iii) all future royalties payable by Genocea under this Agreement shall be reduced by [* * *], (iv) Genocea shall have the right to immediately terminate the Supply and Manufacturing Agreement pursuant to Section 6.2(a)  of such agreement (with the effect that Section 6.3(c)  of such agreement shall apply); (v) Genocea shall have no obligation to pay any milestones arising under this Agreement after the effective date of such termination; (vi) Isconova shall continue to be solely responsible for all royally, milestone, and other payments owed to any other third party licensor pursuant to an agreement executed by Isconova prior to the Effective Date and (vii) any tangible manifestations or embodiments of Genocea’s Confidential Information provided by or behalf of Genocea pursuant to this Agreement shall be promptly returned by Isconova to Genocea or destroyed by Isconova.

 

9.6.3.                   Termination by Genocea for Insolvency .  Without limiting any other legal or equitable remedies that Genocea may have, if Isconova is the Insolvent Party and Genocea terminates this Agreement in accordance with Section 9.3 , then (i) the license granted to Isconova pursuant to Section 3.2 shall terminate, (ii) the licenses granted to

 

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Genocea under Section 3.1 , shall continue, in perpetuity, provided that Genocea will remain bound by its obligations hereunder with respect to payment of royalty, milestones, records, audit and indemnity; (iii) for the avoidance of doubt, Genocea’s rights and Isconova’s obligations under Section 6.8 shall survive; (iv) Isconova shall continue to be solely responsible for all royalty, milestone, and other payments owed to any other third party licensor pursuant to an agreement executed by Isconova prior to the Effective Date and (v) any tangible manifestations or embodiments of Genocea’s Confidential Information provided by or behalf of Genocea pursuant to this Agreement shall be promptly returned by Isconova to Genocea or destroyed by Isconova.

 

9.6.4.                   Other Effects of Termination .  In the event that, with respect to a particular country and/or Licensed Product, Isconova terminates this Agreement for cause under Section 9.2 or Section 9.3 or Genocea terminates this Agreement for convenience under Section 9.5 , all licenses granted to Genocea under this Agreement with respect to the applicable country or Licensed Product shall terminate.

 

9.7                                Sell-Down .  If Genocea, its Affiliates or Sublicensees at the time of termination of this Agreement for any reason possess Licensed Product, have started the Manufacture thereof or have accepted orders therefor, Genocea, its Affiliates or Sublicensees shall have the right, for up to one (1) year following the date of termination, to sell their inventories thereof, complete the Manufacture thereof and Commercialize such fully-Manufactured Licensed Product, in order to fulfill such accepted orders or distribute such fully-Manufactured Licensed Product, subject to the obligation of Genocea to pay Isconova the royalty payments as provided in ARTICLE 6 of this Agreement.

 

9.8                                Transfer of Records .  Upon expiration of this Agreement or in the event that Genocea terminates this Agreement for cause under Section 9.2 , Isconova will continue to maintain all records described in Section 4.5 or transfer them to Genocea, as requested by Genocea.

 

9.9                                Rights in Bankruptcy .  All rights and licenses granted under or pursuant to this Agreement by Isconova or Genocea, including those set forth in ARTICLE 3 , are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the U.S. Bankruptcy Code or analogous provisions of Applicable Law outside the United States, licenses of right to “intellectual property” as defined under Section 101 of the U.S. Bankruptcy Code or analogous provisions of Applicable Law outside the United States (hereinafter “ IP ”).  The Parties agree that Genocea or Isconova, as applicable, as licensee of such rights under this Agreement, shall retain and may fully exercise all of its rights and elections under the U.S. Bankruptcy Code or any other provisions of Applicable Law outside the United States that provide similar protection for IP.  Upon the bankruptcy of Isconova or Genocea, the non-bankrupt Party shall further be entitled to a complete duplicate of (or complete access to, as appropriate) any such IP, and such IP, if not already in such Party’s possession, shall be promptly delivered to such Party.

 

9.10                         Effect of Expiration or Termination; Survival .  Expiration or termination of this Agreement shall not relieve the Parties of any obligation accruing prior to such expiration or termination.  The provisions of ARTICLE 8 ( Confidentiality ), ARTICLE 9 ( Term and

 

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Termination ), ARTICLE 11 ( Miscellaneous Provisions ) and Sections 3.3 ( Ownership of Improvements/Collaboration IP ), 10.4 ( Warranty Disclaimer ), 10.5 ( No Consequential Damages ), 10.6 ( Indemnification and Insurance ), as well as Sections 7.1 ( Prosecution of Patent Rights ), 7.2 ( Enforcement of Patent Rights ), 7.3 ( Claimed Infringement of Third Party Rights ) and 7.5 ( Product Trademarks & Product Designation ) shall survive any expiration or termination of this Agreement.  Any expiration or early termination of this Agreement shall be without prejudice to the rights of either Party against the other accrued or accruing under this Agreement before termination.

 

ARTICLE 10
REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

 

10.1                         Mutual Representations and Warranties .  Each Party hereby represents and warrants to the other Party that as of the Effective Date:

 

10.1.1.            It is duly organized and validly existing under the laws of its jurisdiction of incorporation or formation and has full corporate or other power and authority to enter into this Agreement and to carry out the provisions hereof.  Further, except for any Regulatory Approvals, pricing or reimbursement approvals, manufacturing approvals or similar approvals necessary for the Development, Manufacture or Commercialization of the Licensed Products, all necessary consents, approvals and authorizations of all government authorities required to be obtained by such Party as of the Effective Date in connection with the execution, delivery and performance of this Agreement have been obtained by the Effective Date;

 

10.1.2.            It is duly authorized to execute and deliver this Agreement and to perform its obligations hereunder, and the person or persons executing this Agreement on its behalf has been duly authorized to do so by all requisite corporate action;

 

10.1.3.            This Agreement is legally binding upon it and enforceable in accordance with its terms.  The execution, delivery and performance of this Agreement by it does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party and by which it may be bound; and

 

10.1.4.            It shall at all times comply in all material respects with all Applicable Laws relating to its activities under this Agreement.

 

10.2                         Isconova Representations and Warranties .  Isconova hereby represents and warrants to Genocea that as of the Effective Date:

 

10.2.1.            Isconova has disclosed to Genocea (i) information and documents in its possession relating to all allegations made against Isconova and its Affiliate AdVet AB by the Australian company CSL Ltd.  (“ CSL ”) regarding the Licensed Technology (the “ CSL Allegations ”) and (ii) that the so-called Iscom IV patents (EP 0436620B1, W09003184, US5679354 and filings related thereto) (collectively herein the “ 620

 

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Patents ”) and the patent publication W09611711 and patents related thereto (the “ 703 Patents ”) are proprietary to CSL and that Isconova does not Control the ‘620’ or ‘703’ Patents nor otherwise has any rights to grant licenses under the ‘620 Patents’ or ‘703 Patents’ for human use, including within the Field.  Isconova has disclosed to Genocea all material information relating to the ‘620 Patents and ‘703 Patents, and the CSL Allegations that were in Isconova’s possession as of the Effective Date, and that any documents relating to the CSL Allegations against Isconova and its Affiliate AdVet AB contain accurate information on the claims alleged by CSL against Isconova and its Affiliates on or prior to the Effective Date, and that Isconova has not omitted any material documents relating to the correspondence between Isconova’s and CSL’s attorneys in this matter.  Except for claims made in the CSL Allegations regarding the ‘620 Patent’ and the ‘703 Patent’, the practice of the Matrix-A, Matrix-C and Matrix-M technologies by Isconova and by Genocea in accordance with the terms of this Agreement does not infringe the Patent Rights of any Third Party.

 

10.2.2.            Isconova solely owns or has an exclusive license in the Field to the Isconova Patent Rights existing as of the Effective Date and is entitled to grant the licenses specified herein.  Isconova has not previously assigned, transferred, conveyed or otherwise encumbered its right, title and interest in the Licensed Technology in a manner that conflicts with any rights granted to Genocea hereunder.  During the Agreement Term, Isconova shall not encumber the rights granted to Genocea hereunder with respect to the Licensed Patent Rights in a manner that conflicts with any right granted to Genocea hereunder.

 

10.2.3.            Except for the CSL Allegations, Isconova has not received any claims from a Third Party that the Licensed Patent Rights or the use thereof in the Field infringes or shall infringe any Third Party patent or other proprietary right.

 

10.2.4.            Other than as set forth above in relation to the CSL Allegations, the ‘620 Patents’ and the ‘703 Patents’, there are no claims, judgments or settlements against or owed by Isconova or its Affiliates or pending or threatened claims or litigation relating to the Licensed Technology that would impact activities under this Agreement.

 

10.2.5.            As of the Effective Date, neither Isconova, any of its respective employees, its Affiliates nor its agents, in their capacity as such, have been disqualified or debarred by the FDA, pursuant to 21 U.S.C.  §§ 335(a) or (b), or been charged with or convicted under United States law for conduct relating to the development or approval, or otherwise relating to the regulation of any Licensed Product under the Generic Drug Enforcement Act of 1992, or any other relevant law, rule, or regulation or been disbarred, disqualified, or convicted under or for any equivalent or similar applicable foreign law, rule, or regulation.

 

10.2.6.            The Isconova Patent Rights have been filed and diligently prosecuted in accordance with all Applicable Laws in the Territory and have been maintained, with all applicable fees with respect thereto having been paid.

 

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10.2.7.            Each of the issued Isconova Patent Rights is valid and enforceable.  Isconova does, however, not give any representations or warranties that any patent applications in the Licensed Patent Right will grant.

 

10.3                         Genocea Representations and Warranties .  Genocea represents and warrants to Isconova that as of the Effective Date, and to the best knowledge of Genocea or its Affiliates, there are no claims, judgments or settlements against or owed by Genocea or its Affiliates or pending or threatened claims or litigation relating to the Genocea Technology that would impact activities under this Agreement.

 

10.4                         Warranty Disclaimer .  EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATION OR EXTENDS ANY WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, TO THE OTHER PARTY WITH RESPECT TO ANY TECHNOLOGY OR OTHER SUBJECT MATTER OF THIS AGREEMENT AND HEREBY DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT WITH RESPECT TO ANY AND ALL OF THE FOREGOING.  EACH PARTY HEREBY DISCLAIMS ANY REPRESENTATION OR WARRANTY THAT THE DEVELOPMENT, MANUFACTURE OR COMMERCIALIZATION OF ANY LICENSED PRODUCT UNDER THIS AGREEMENT SHALL BE SUCCESSFUL.

 

10.5                         No Consequential Damages .  NEITHER PARTY HERETO SHALL BE LIABLE FOR SPECIAL, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER, INCLUDING LOST PROFITS ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF SUCH DAMAGES.  NOTHING IN THIS SECTION 10.5 IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF EITHER PARTY OR TO LIMIT A PARTY’S LIABILITY FOR BREACHES OF ITS OBLIGATION REGARDING CONFIDENTIALITY UNDER ARTICLE 8 .

 

10.6                         Indemnification and Insurance .

 

10.6.1.            Indemnification by Genocea .  Genocea shall indemnify, hold harmless, and defend Isconova, its Affiliates, and their respective directors, officers, employees and agents and their respective successors, heirs and assigns (collectively, the “ Isconova Indemnitees ”) from and against any and all Third Party claims, suits, losses, liabilities, damages, costs, fees and expenses (including reasonable attorneys’ fees and expenses of litigation and costs for enforcing this indemnity) (collectively, the “ Losses ”) to the extent arising out of or resulting from (a) any material breach of any representation or warranty made by Genocea in this Agreement, or any material breach of any covenant or agreement of Genocea in or pursuant to this Agreement or (b) any claims of any nature relating to Development, Manufacturing, and Commercialization activities performed by, on behalf of or under the authority of Genocea, its Affiliates or Sublicensees under this Agreement with the exception of those activities performed by Isconova pursuant to the

 

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terms of this Agreement.  Notwithstanding the foregoing, Genocea shall have no obligation to indemnify the Isconova Indemnitees to the extent that the Losses arise out of or result from, directly or indirectly, any breach of, or inaccuracy in, any representation or warranty made by Isconova in this Agreement, or any breach or violation of any covenant or agreement of Isconova in or pursuant to this Agreement, or the negligence or willful misconduct by or of any of the Isconova Indemnitees.

 

10.6.2.            Indemnification by Isconova .  Isconova shall indemnify, hold harmless, and defend Genocea, its Affiliates, and their respective directors, officers, employees and agents and their respective successors, heirs and assigns (“ Genocea Indemnitees ”) from and against any and all Losses to the extent arising out of or resulting from (a) any material breach of any representation or warranty made by Isconova in this Agreement, or any material breach of any covenant or agreement of Isconova in or pursuant to this Agreement or (b) any claims of any nature relating to any activities performed by, on behalf of or under the authority of Isconova under this Agreement with the exception of those activities performed by Genocea pursuant to the terms of this Agreement.  Notwithstanding the foregoing, Isconova shall have no obligation to indemnify the Genocea Indemnitees to the extent that the Losses arise out of or result from, directly or indirectly, any breach of, or inaccuracy in, any representation or warranty made by Genocea in this Agreement, or any breach or violation of any covenant or agreement of Genocea in or pursuant to this Agreement, or the negligence or willful misconduct by or of any of the Genocea Indemnitees.

 

10.6.3.            Indemnification Procedure .  In the event of any such claim against any Genocea Indemnitee or Isconova Indemnitee (individually, an “ Indemnitee ”), the indemnified Party shall promptly notify the other Party in writing of the claim and the indemnifying Party shall manage and control, at its sole expense, the defense of the claim and its settlement.  The Indemnitee shall cooperate with the indemnifying Party and may, at its option and expense, be represented in any such action or proceeding.  The indemnifying Party shall not be liable for any settlements, litigation costs or expenses incurred by any Indemnitee without the indemnifying Party’s prior written authorization.  Notwithstanding the foregoing, if the indemnifying Party believes that any of the exceptions to its obligation of indemnification of the Indemnitees set forth in Section 10.6.1 or 10.6.2 may apply, the indemnifying Party shall promptly notify the Indemnitees, which may be represented in any such action or proceeding by separate counsel at their expense; provided that the indemnifying Party shall be responsible for payment of such expenses if the Indemnitees are ultimately determined to be entitled to indemnification from the indemnifying Party.  Any other provision of this ARTICLE 10 to the contrary, no Indemnitee under this Agreement shall be required to waive a conflict of interest under any applicable rules of professional ethics or responsibility if such waiver would be required for a single law firm to defend both the indemnifying Party and one or more Indemnitees.  In such case, the indemnifying Party shall provide a defense of the affected Indemnitees through a separate law firm reasonably acceptable to the affected Indemnitees at the indemnifying Party’s expense.

 

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10.6.4.            Joint Defendants .  If a product liability suit is brought against either Party relating in any way to a Licensed Product, and it is not clear from the allegations in the complaint or the known facts surrounding the allegations in the complaint as to whether a claim exists for which there is a right of indemnification pursuant to Section 10.6.1 or 10.6.2 above, then Genocea shall be responsible for controlling the defense of such suit in the first instance.  During such period that Genocea is controlling such defense, with regard to the costs of such defense, including attorneys’ fees, Genocea and Isconova each shall be responsible for 50% of all such costs.  No settlement, consent judgment or other voluntary final disposition of any such suit may be entered into without the prior written consent of Isconova, which consent shall not be unreasonably withheld or delayed.  If, at any time in the course of such suit, it becomes apparent from discovery or otherwise that a claim exists for which indemnification may be obtained in accordance with Section 10.6.1 or 10.6.2 above, then the indemnification provisions of either Section 10.6.1 or above, whichever is applicable, and the indemnification procedures of Section 10.6.3 shall become applicable and govern further proceedings in the suit.

 

10.6.5.            Insurance .  As of the Effective Date and throughout the term of this Agreement, each Party shall procure and maintain, at its sole cost and expense, commercial general liability insurance to cover its indemnification obligation under Section 10.6.1 or 10.6.2 above, as applicable in amounts not less than US$ [* * *] per incident and US$ [* * *] annual aggregate.  Such insurance shall be procured with carriers having an A.M.  Best Rating of A-VII or better.  The minimum amounts of insurance coverage required under this Section 10.6.5 shall not be construed to create a limit on Genocea’s and Isconova’s liability with respect to their respective indemnification obligations under Sections 10.6.1 and 10.6.2 above.

 

ARTICLE 11
MISCELLANEOUS PROVISIONS

 

11.1                         Option to Acquire Isconova’s Human Business .  Isconova grants to Genocea an exclusive option to negotiate during a period of nine (9) months from the Effective Date an agreement under which Genocea would acquire the entire rights and operations of Isconova’s business in the human field.  Isconova’ business in the human field means the development, manufacture, marketing and sales, of Isconova adjuvant technology for the use in human vaccines and the research, development and commercialization of human vaccines using Isconova adjuvant technology.  During this nine-month option period, the Parties undertake to negotiate, in good faith, such agreement.  The parties shall aim to meet in person (or by telephone) within thirty (30) days from the date when Genocea has provided a proposal to Isconova.  Both Parties agree to be well prepared for such negotiations with a view to discuss with an open mind the merging of Genocea with Isconova’s human business.  To the extent practically possible, the Parties shall do their best to procure that majority shareholders participate in the negotiations.  For the avoidance of doubt, the undertaking in this Section 11.1 does not constitute a binding commitment on the Parties to enter into an agreement regarding the transactions contemplated herein.  There will be no agreement between the Parties with respect

 

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to the transactions set forth in this Section 11.1 until the receipt of all necessary management approvals of Isconova and Genocea and execution of a mutually acceptable definitive agreement by the Parties.

 

11.2                         Change of Control of Isconova .  During the Agreement Term, Isconova shall, upon becoming aware of a process or negotiation that may lead to a Change of Control of Isconova, including but not limited to an unsolicited Third Party proposal regarding a potential Change of Control of Isconova or any decision by Isconova’s shareholders, Board of Directors and/or officers to commence a process or negotiation that may lead to a Change of Control of Isconova, immediately notify Genocea in writing of any such circumstance.  Such written notice shall include, if available and applicable, the identity of the proposed Third Party who would take action to cause the Change of Control of Isconova and the terms of any offer(s).  Isconova shall allow Genocea and/or its Affiliates to make a competing or initial offer to enter into a Change of Control transaction with Isconova and Isconova shall reasonably and in good faith evaluate such offer.  In addition, if at any time during the Agreement Term, (i) Genocea and/or its Affiliates makes an unsolicited proposal to Isconova regarding a potential Change of Control of Isconova, and (ii) pays to Isconova an exclusive negotiation fee of U.S. Dollars [* * *], Isconova agrees that, during the 180-day period following such request (the “ LockUp Period ”), Isconova will exclusively negotiate with Genocea and/or its Affiliates in good faith the terms of a definitive agreement that would cause Genocea or its Affiliates to enter into a transaction with Isconova that would result in a Change of Control of Isconova; provided that only one such lock up period may occur during the Term of this Agreement and provided further , that any offer made by Genocea in response to Isconova’s notice delivered pursuant to the terms of this Section 11.1 shall not initiate a Lock-Up Period.  Genocea acknowledges that any acceptance of an offer by Genocea and/or its Affiliates under this Section 11.1 shall be subject to Isconova’s receipt of necessary shareholder approval to such offer.

 

11.3                         Dispute Resolution; Governing Law .

 

11.3.1.            Disputes .  Unless otherwise set forth in this Agreement, in the event of any dispute arising under this Agreement between the Parties, the Parties may refer such dispute to the respective Executive Officers, and such Executive Officers shall attempt in good faith to resolve such dispute.  If the Parties are unable to resolve a given dispute pursuant to this Section 11.3.1 within sixty (60) days of referring such dispute to the Executive Officers, either Party shall be free to pursue any remedy that may be available to it at law or in equity.

 

11.3.2.            Jurisdiction .  All disputes arising out of or in connection with the present contract shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one (1) arbitrator appointed in accordance with the said Rules.  The arbitrator may grant injunctive or other relief in such dispute or controversy.  The decision of the arbitrator shall be final, conclusive and binding on the Parties to the arbitration.  Judgment may be entered on the arbitrator’s decision in any court of competent jurisdiction.  The Parties agree that, any provision of applicable law notwithstanding, they will not request and the arbitrator shall have no authority to award,

 

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punitive or exemplary damages against either Party.  The costs of the arbitration, including administrative and arbitrator’s fees, as well as the other Party’s reasonable attorneys’ fees and expert witness fees shall be borne by the losing Party.  Nothing in this Section 11.3.2 shall preclude either Party from seeking interim or provisional relief in the form of a temporary restraining order, preliminary injunction, or other interim relief concerning a dispute prior to or during an arbitration pursuant to this Section 11.3.2 necessary to protect the interests of such Party.  If the arbitration is initiated by Isconova, the place of arbitration shall be Boston, MA, USA, and if the arbitration is initiated by Genocea, the place of the arbitration shall be Stockholm, Sweden.  The arbitration proceedings shall be conducted in English.

 

11.3.3.            Governing Law .  This Agreement shall be construed and the respective rights of the Parties determined according to the substantive laws of the Commonwealth of Massachusetts notwithstanding the provisions governing conflict of laws under such Massachusetts law to the contrary.

 

11.4                         Assignment .  Except as provided in this Section 11.4 , this Agreement may not be assigned or otherwise transferred, nor may any right or obligation hereunder be assigned or transferred, by either Party without the consent of the other Party; provided , however , that without the other Party’s consent, (i) Genocea may assign this Agreement and its rights and obligations hereunder in whole or in part to an Affiliate or pursuant to a Change of Control of Genocea, (ii) Isconova may assign this Agreement and its rights and obligations hereunder in whole or in part to a wholly-owned Affiliate subsidiary of Isconova; provided that Isconova shall guarantee and remain responsible for the performance and all obligations of such Affiliate assignee under this Agreement, and that such Affiliate assignee shall in no event assign this Agreement and its rights and obligations hereunder in whole or in part, including, without limitation to an Affiliate or pursuant to a Change of Control, without Genocea’s prior written consent which shall be conditioned in part on Genocea’s reasonable satisfaction that the assignee has sufficient reasonable resources to comply with all of Isconova’s obligations under this Agreement and (iii) Isconova may assign this Agreement and its rights and obligations hereunder in whole or in part pursuant to a Change of Control of Isconova; provided , however , that Genocea’s prior written consent must be obtained to Isconova’s assignment of this Agreement or any of Isconova’s rights and/or obligations hereunder to an entity or an affiliate of an entity who has announced the development and/or commercialization of, or Isconova is aware is developing and/or commercializing, a product for the treatment, prevention and/or modulation of a Disease Field.  For the avoidance of doubt, the Parties agree that the condition in clause (ii) above which allows Genocea to withhold consent to an assignment if Genocea is not reasonably satisfied with the assignee’s capabilities to meet its obligations hereunder does not allow Genocea to unreasonably withhold or delay its consent to an assignment of this Agreement by an Affiliate assignee of Isconova in a bona-fide transaction, such as a restructuring and/or exit of Isconova’s human business (e.g. trough a major trade sale, initial public offering, venture capital investment).  To the extent that the assigning Party survives as a legal entity, the assigning Party shall remain responsible for the performance by its assignee of this Agreement or any obligations hereunder so assigned to such assignee; provided , that any assigning Party hereunder shall not be

 

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bound by this obligation in the event where an assignee has, to the non-assigning Party’s reasonable satisfaction, sufficient reasonable resources to comply with all of the assigning Party’s obligations under this Agreement.  In addition, Isconova shall not assign any interest in the Licensed Technology to any Third Party or Affiliate, and Genocea shall not assign any interest in the Joint Technology to any Third Party or Affiliate, unless such assignee agrees in writing that such assignment is subject to the terms and conditions of this Agreement and the rights granted to Genocea and Isconova, respectively, hereunder.

 

By way of non-limiting example of the application of this Section 11.4 , Isconova may wish to reorganize and divide its business into a human business and a veterinary business, and, for this purpose, Isconova may set up a wholly-owned subsidiary (“ NewCo ”).  In that case, Isconova would be entitled to assign the Agreement and its rights and obligations thereunder in whole or in part to NewCo without needing Genocea’s prior consent.  Following such assignment, Isconova would guarantee NewCo’s performance under the Agreement as if Isconova had remained a party to the Agreement.  Isconova would be precluded from subsequently transferring a majority of the shares in NewCo to a Third Party without Genocea’s prior consent.  Likewise, NewCo would be precluded from assigning the Agreement to Third Party without Genocea’s prior consent.  Genocea would be precluded from unreasonably withholding or delaying its consent as described above if the transaction is a bona fide transaction.  In this particular case, Isconova would remain bound by its guarantee on behalf of NewCo until NewCo or a purchaser and/or assignee of NewCo would have, to Genocea’s reasonable satisfaction, sufficient reasonable resources to comply with all of Isconova’s/NewCo’s obligations under the Agreement.  Thus, Isconova would be released from this guarantee (i) upon Genocea’s consent to (a) an assignment by NewCo of the Agreement to a Third Party or (b) Change of Control of NewCo (e.g. a transfer of the majority of the shares of NewCo to a Third Party), or (ii) in the event that NewCo would receive, to Genocea’s reasonable satisfaction, sufficient reasonable resources to comply with all of Isconova’s/NewCo’s obligations under the Agreement (e.g. after a financing round).

 

11.5                         Amendments .  This Agreement and the Exhibits referred to in this Agreement constitute the entire agreement between the Parties with respect to the subject matter hereof and supersede all previous arrangements with respect to the subject matter hereof, whether written or oral.  Any amendment or modification to this Agreement shall be made in writing signed by both Parties.

 

11.6                         Notices .  Any consent, notice or report required or permitted to be given or made under this Agreement by one of the Parties hereto to the other shall be in writing and (a) delivered by hand, (b) sent by nationally recognized overnight delivery service, (c) sent by registered or certified mail, return receipt requested, postage prepaid, or (d) sent by facsimile transmission confirmed by prepaid, registered or certified mail letter, and shall be deemed to have been properly served to the addressee upon receipt of such written communication, in any event to the following addresses:

 

If to Genocea:

 

Genocea Biosciences, Inc.

 

 

161 First Street

 

 

Suite 2C

 

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Cambridge, MA 02142, USA

 

 

Attn: Chief Executive Officer

 

 

Telephone: (617) 876-8191

 

 

Fax: (617)876-8192

 

 

 

with a copy to:

 

Ropes & Gray LLP

 

 

One International Place

 

 

Boston, MA 02110, USA

 

 

Attn: Marc A. Rubenstein

 

 

Telephone: +1 617 951-7000

 

 

Fax: +1 617 235-0706

 

 

 

If to Isconova:

 

Isconova AB

 

 

Uppsala Science Park, SE-751 83 Uppsala,

 

 

Sweden

 

 

Attn: CEO

 

 

Telephone: +46 18 57 24 00

 

 

Fax: +46 18 57 24 01

 

 

 

with a copy to:

 

Advokatfirman Lindahl KB

 

 

SE-751 42 Uppsala, Sweden

 

 

Attn: Mikael Smedeby and Hugo Norlén

 

 

Telephone: +46 18 16 18 50

 

 

Fax: +46 16 14 46 79

 

Either Party may change its address to which notices shall be sent by giving notice to the other Party in the manner herein provided.

 

11.7                         Force Majeure .  No failure or omission by either Party in the performance of any obligation of this Agreement shall be deemed a breach of this Agreement or create any liability if the same shall arise from any cause or causes beyond the reasonable control of such Party, including the following; acts of god; acts or omissions of any government; any rules, regulations or orders issued by any governmental authority or by any officer, department, agency or instrumentality thereof; fire; storm; flood; earthquake; accident; war; terrorist act; rebellion; insurrection; riot; and invasion; provided that such Party provides notice to the other Party of such an event, and the non-performing Party uses Commercially Reasonable Efforts to cure such failure or omission resulting from one of the above causes as soon as is practicable; provided further that, in the event the suspension of performance continues for ninety (90) days, and such failure to perform would constitute a material breach of this Agreement in the absence of such force majeure event, the non-affected Party may terminate this Agreement for the nonperforming Party’s material breach.

 

11.8                         Compliance with Applicable Laws .  Neither Party shall export any technology licensed to it by the other Party under this Agreement except in compliance with United States export

 

55



 

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laws and regulations.  The Parties shall at all times comply with all material laws and regulations applicable to its activities under this Agreement.

 

11.9                         Independent Contractors .  It is understood and agreed that the relationship between the Parties is that of independent contractors and that nothing in this Agreement shall be construed as authorization for either Genocea or Isconova to act as agent for the other.  Nothing herein contained shall be deemed to create an employment, agency, joint venture or partnership relationship between the Parties or any of their agents or employees for any purpose, including tax purposes, or to create any other legal arrangement that would impose liability upon one Party for the act or failure to act of the other Party.  Neither Party shall have any express or implied power to enter into any contracts or commitments or to incur any liabilities in the name of, or on behalf of, the other Party, or to bind the other Party in any respect whatsoever.

 

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

 

11.11                  No Strict Construction .  This Agreement has been prepared jointly and shall not be strictly construed against either Party.

 

11.12                  Headings .  The captions or headings of the sections or other subdivisions hereof are inserted only as a matter of convenience or for reference and shall have no effect on the meaning of the provisions hereof.

 

11.13                  No Implied Waivers; Rights Cumulative .  No failure on the part of Genocea or Isconova to exercise, and no delay in exercising, any right, power, remedy or privilege under this Agreement, or provided by statute or at law or in equity or otherwise, shall impair, prejudice or constitute a waiver of any such right, power, remedy or privilege or be construed as a waiver of any breach of this Agreement or as an acquiescence therein, nor shall any single or partial exercise of any such right, power, remedy or privilege preclude any other or further exercise thereof or the exercise of any other right, power, remedy or privilege.

 

11.14                  Severability .  If any provision hereof should be held invalid, illegal or unenforceable in any respect in any jurisdiction, the Parties hereto shall substitute, by mutual consent, valid provisions for such invalid, illegal or unenforceable provisions, which valid provisions in their economic effect are sufficiently similar to the invalid, illegal or unenforceable provisions that it can be reasonably assumed that the Parties would have entered into this Agreement with such valid provisions.  In case such valid provisions cannot be agreed upon, the invalid, illegal or unenforceable of one or several provisions of this Agreement shall not affect the validity of this Agreement as a whole, unless the invalid, illegal or unenforceable provisions are of such essential importance to this Agreement that it is to be reasonably assumed that the Parties would not have entered into this Agreement without the invalid, illegal or unenforceable provisions.

 

56



 

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11.15                  No Third Party Beneficiaries .  No person or entity other than Genocea, Isconova and their respective Affiliates and permitted assignees hereunder shall be deemed an intended beneficiary hereunder or have any right to enforce any obligation of this Agreement.

 

11.16                  Execution in Counterparts .  This Agreement may be executed in counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original, and all of which counterparts, taken together, shall constitute one and the same instrument.

 

[Signature page follows]

 

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IN WITNESS WHEREOF, the Parties have executed this License and Collaboration Agreement as of the date first set forth above.

 

 

GENOCEA BIOSCIENCES, INC.

 

 

 

 

 

By:

/s/ M. Leavenworth Bakali

 

Name:

M. Leavenworth Bakali

 

Title:

President and CEO

 

 

 

 

 

 

 

ISCONOVA AB

 

 

 

 

 

 

 

By:

/s/ Ulf Tossman

 

Name:

Ulf Tossman

 

Title:

Board Director

 

 

 

 

 

 

 

By:

/s/ Benet Falk

 

Name:

Benet Falk

 

Title:

President and CEO

 

 

 

 

 

 

 

By:

/s/ Eva-Lotta Allen

 

Name:

Eva-Lotta Allen

 

Title:

Non-Executive Director

 

58


 

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Exhibit A – Isconova Patent Rights

 

Catchword

 

Full title

 

Claim category

 

First Priority date
/Lapsing date

 

Number

 

Status

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

 

1



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.  WHERE EIGHT PAGES OF MATERIAL HAVE BEEN OMITTED, THE REDACTED MATERIAL IS MARKED WITH [†].

 

Exhibit  B – Research and Phase 1 Supply Plan

 

[†]

 

1



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. WHERE TWENTY-ONE PAGES OF MATERIAL HAVE BEEN OMITTED, THE REDACTED MATERIAL IS MARKED WITH [ · ].

 

Exhibit C–l – Development and Scale-Up Plan

 

[ · ]

 

1



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

Exhibit C–2 – Terms of Research. Preclinical and Clinical Supplies

 

Definitions:

 

[* * *]

 

 

 

Firm Orders:

 

[* * *]

 

 

 

Availability:

 

[* * *]

 

 

 

Price for supplies of Research Reagents:

 

[* * *]

 

 

 

Price for supplies of Preclinical or Clinical Supplies:

 

[* * *]

 

 

 

Quantities of Clinical Supplies:

 

 

 

 

 

Delivery :

 

[* * *]

 

1



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

Exhibit D – Supply and Manufacturing Agreement

 

1


 

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Execution Copy

 

SUPPLY AND MANUFACTURING AGREEMENT

 

BY AND BETWEEN

 

GENOCEA BIOSCIENCES, INC.

 

AND

 

ISCONOVA AB

 

1



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

TABLE OF CONTENTS

 

ARTICLE 1 DEFINITIONS

2

 

 

ARTICLE 2 SUPPLY

3

 

 

ARTICLE 4 PRICE AND PAYMENT

11

 

 

ARTICLE 5 ACCEPTANCE AND REJECTION; INFRINGEMENT

12

 

 

ARTICLE 6 TERM AND TERMINATION

14

 

 

ARTICLE 7 CONFIDENTIALITY

17

 

 

ARTICLE 8 WARRANTIES AND CONVENANTS

17

 

 

ARTICLE 9 INDEMNITIES AND DAMAGES

17

 

 

ARTICLE 10 DISCLAIMER

18

 

 

ARTICLE 11 MISCELLANEOUS

19

 



 

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SUPPLY AND MANUFACTURING AGREEMENT

 

This SUPPLY AND MANUFACTURING AGREEMENT (this “ Agreement ”) is entered into as of August 5, 2009, (the “ Effective Date ”) by and between GENOCEA BIOSCIENCES, INC.   (“ Purchaser ”) and ISCONOVA AB (“ Supplier ” and collectively with Purchaser, the “ Parties ” and each a “ Party ”).

 

WHEREAS, Purchaser and Supplier have entered into a License and Collaboration Agreement, dated as of the date hereof (the “ LCA ”) pursuant to which Purchaser is licensing rights to certain assets from Supplier, including, without limitation, the Licensed Adjuvant (as defined in the LCA);

 

WHEREAS, the LCA contemplates that the Parties will enter into this Agreement on the Effective Date for (as defined in the LCA), pursuant to which Supplier will manufacture and supply to Purchaser Licensed Adjuvants necessary for the manufacture of the Licensed Products (as defined in the LCA) to be commercially sold; and

 

WHEREAS, Purchaser and Supplier wish to set forth their mutual agreements and understandings regarding the manufacture and supply of the Licensed Adjuvants.

 

NOW, THEREFORE, for and in consideration of the premises and the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto do hereby agree as follows:

 

ARTICLE 1
DEFINITIONS

 

1.1                                Definitions .  Any capitalized terms not defined in this Agreement shall have the same meaning ascribed to them in the LCA.

 

1.2                                Construction of Certain Terms and Phrases .  Except as otherwise explicitly specified to the contrary, (a) references to a Section, Article, Exhibit or Schedule means a Section or Article of, or Schedule or Exhibit to this Agreement, unless another agreement is specified, (b) the word “including” will be construed as “including without limitation,” (c) references to a particular statute or regulation include all rules and regulations thereunder and any predecessor or successor statute, rules or regulations, in each case, as amended or otherwise modified from time to time, (d) words in the singular or plural form include the plural and singular form, respectively, (e) words of any gender include each other gender, (f) “or” is disjunctive but not necessarily exclusive, (g) the word “will” shall be construed to have the same meaning and effect as the word “shall,” (h) whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified, and (i) references to a particular person include such person’s successors and assigns to the extent not prohibited by this Agreement.

 



 

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ARTICLE 2
SUPPLY

 

2.1                                Manufacture .  Subject to the terms of this Agreement, Supplier shall Manufacture and deliver Licensed Adjuvants to Purchaser in such quantities and at such times as ordered by Purchaser.  The Licensed Adjuvants supplied by Supplier pursuant to this Agreement shall meet the specifications jointly agreed to by Supplier and Purchaser as described in the Quality Agreement (the “ Adjuvant Specifications ”) and once agreed upon, the Adjuvant Specifications will be considered as Exhibit A attached hereto and shall be incorporated herein by reference.  The Adjuvant Specifications may be amended from time to time in accordance with this Agreement and the timelines in the Development and Scale-Up Plan.  The Licensed Adjuvants shall be manufactured and delivered in accordance with the Quality Agreement (as defined in Section 3.2 ).  During the Term (as defined in Section 6.1 herein), Supplier shall at all times maintain the resources necessary to Manufacture Licensed Adjuvants and shall provide, at its own expense, all labor and all materials, including, without limitation, all raw materials and ingredients, required for the Manufacture of Licensed Adjuvants (such materials, the “ Materials ”).

 

2.2                                Manufacturing Scale-Up .  Supplier shall scale up its Manufacturing processes as such processes relate to the Licensed Adjuvant in accordance with the Development and Scale-Up Plan (as defined in the LCA).  Isconova undertakes to work diligently and shall use Commercially Reasonable Efforts to perform activities under the Development and Scale-Up Plan in accordance with the timeline set forth in the Development and Scale-Up Plan.  In the event that Supplier fails, for any reason not directly attributable to Purchaser, to perform such actions in accordance with such timetable, Purchaser shall be entitled to require Supplier to take the actions described in Section 6.3(c) in order to enable Purchaser to obtain Licensed Adjuvants from an alternate supplier.  Isconova will at all times during the Research Term maintain the necessary financial and human resources to complete the activities of Isconova set forth in the Development and Scale-Up Plan.

 

2.3                                Forecasts .  Beginning at least eighteen (18) months prior to the anticipated date of First Commercial Sale of a Licensed Product (the “ Launch ”), Purchaser shall submit to Supplier a forecast of Licensed Adjuvants that Purchaser anticipates ordering from Supplier during the eighteen (18) month period following the date of submission (broken down by Licensed Product and by 3-month periods, i.e.  quarters), and Purchaser shall thereafter update such forecast on a rolling eighteen (18) months basis every third (3 rd ) month thereafter (each, a “ Rolling Forecast ”).  Purchaser shall place purchase orders for at least the quantity of Licensed Adjuvants specified in the first three (3) months of each such Rolling Forecast, (such specified amount the “ Binding Forecast ”), subject , however to Section 2.4,   and the remaining fifteen (15) months shall be a good faith estimate.  Except as set forth in the immediately preceding sentence, Purchaser shall not be required to order any fixed minimum quantity of Licensed Adjuvants or any quantity of Licensed Adjuvants for which it does not actually have a need, notwithstanding any forecast or prior course of dealing.

 



 

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2.4                                Ramp-Up .  Purchaser agrees and acknowledges that Supplier has a lead-time to ramp-up its manufacturing process of [* * *], and that, notwithstanding anything to the contrary in this Agreement, for quarters following the first four (4) consecutive quarters in

 

which Purchaser has place Firm Orders, Supplier shall not be obliged to supply Purchaser under this Agreement with quantities of Licensed Adjuvants exceeding (i) [* * *] of the average amount of Licensed Adjuvants specified in the Binding Forecasts for the preceding [* * *] in which Purchaser placed Firm Orders (as defined in Section 2.5 (a)  and (ii) [* * *] of the average amount of Licensed Adjuvants specified in the Binding Forecasts for the preceding [* * *] in which Purchaser placed Firm Orders.

 

2.5                                Orders and Delivery .

 

(a)                                  Orders .  Purchaser shall place its orders for Licensed Adjuvants with Supplier by submitting a purchase order which sets forth (i) the quantity of Licensed Adjuvants ordered for delivery; and (ii) the delivery date for that order which shall be at least forty-five (45) days from the date such order (an “ Order ”).  Unless Supplier notifies Purchaser in writing within ten (10) Business Days of receipt of an Order that it is unable to deliver Licensed Adjuvants in accordance with such Order (such notice, a “ Capacity Constraint Notice ”), Supplier shall be deemed to have accepted such Order as a binding order (a “ Firm Order ”).  If Supplier delivers a Capacity Constraint Notice to Purchaser, such notice shall indicate the portion of such Order Supplier cannot supply by the requested delivery date and propose alternate delivery dates.  Parties shall use commercially reasonable efforts during the fifteen (15) Business Day period following delivery of the Capacity Constraint Notice to mutually agree upon a date(s) of delivery; provided, however, that Purchaser shall have no obligation to accept any alternate delivery dates.  If, after the 15 Business Day period referenced in the preceding sentence, the Parties do not reach agreement on a delivery date, Purchaser shall have the right to exercise its rights pursuant to Section 2.7 below.  Notwithstanding anything to the contrary in this Section 2.51.1(a) . if (i) such Order subject to a Capacity Constraint Notice is an Excess Order (as described in Section 2.5(d)  below) and (ii) the portion of such Order that Supplier cannot supply by the requested delivery date is no more than the number of Licensed Adjuvants requested by Purchaser which exceed the amount set forth in the Binding Forecast, then, with respect to the portion of the Order that exceeds the Binding Forecast only, Section 2.5(d)  below, and not Section 2.7 , shall apply in the event of any inability of Supplier to supply Licensed Adjuvants by Purchaser’s requested delivery date.

 

(b)                                  Cancellation of Orders .  Purchaser may cancel any Firm Order (in whole or in part) at any time prior to the delivery for any quantity of Licensed Adjuvant that Supplier has not completed Manufacturing pursuant to such Firm Order at the time that notice of cancellation is received by Supplier; provided that if Supplier has commenced but not completed the Manufacture of Licensed Adjuvants pursuant to such Firm Order, Purchaser shall reimburse Supplier for Material and labor costs in respect of any works-in-progress pursuant to such cancelled Firm Order (or part thereof) at the time notice of cancellation is received by Supplier.

 



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

(c)                                   Delivery Terms .  All Licensed Adjuvants shall be delivered [* * *] (the “ Facility ”).  Time is of the essence for all deliveries of Licensed Adjuvants.  Packaging requirements will be mutually agreed upon between the Parties.

 

(d)                                  Excess Orders .  In the event that the actual amount of Licensed Adjuvants ordered by Purchaser in any Order exceed those set forth in the Binding Forecast (an “ Excess Order ”), Supplier shall use Commercially Reasonable Efforts to accept and supply such excess amount, Supplier shall notify Purchaser in writing within twelve (12) Business Days of receipt of an Excess Order as to whether it is able to deliver all of the Excess Order.  If Supplier cannot deliver the entire quantify ordered in the Excess Order, such notice shall indicate the portion of the Excess Order that Supplier cannot supply by the requested delivery date and shall specify alternate delivery dates for such portion.

 

(e)                                   Late Delivery .  If Supplier fails to deliver any Licensed Adjuvants within [* * *] days after the delivery date set forth on a Firm Order (the “ Firm Delivery Date ”), in addition to any remedies Purchaser may have under this Agreement, Supplier shall give Purchaser a credit to be applied to the purchase price owed for such Licensed Adjuvants (a “ Late Delivery Credit ”).  The amount of the Late Delivery Credit will vary based on the number of days a delivery follows the Firm Delivery Date, and will equal the following percentage of the purchase price for the Licensed Adjuvants that are delivered late:

 

Number of Days Late

 

Late Delivery Credit

[* * *]

 

[* * *]% of the purchase price for late Licensed Adjuvants

[* * *]

 

[* * *]% of the purchase price for late Licensed Adjuvants

 

Purchaser may apply the Late Delivery Credit to reduce (a) the amount due to Supplier under the invoice for late-delivered Licensed Adjuvants or (b) future payments due by Purchaser to Supplier under this Agreement, if any.

 

2.6                                Shortage of Supply .  If, at any time during the Term of this Agreement, Supplier (i) supplies Licensed Adjuvants to one or more Third Parties (as defined in the LCA) in addition to Purchaser and (ii) Supplier does not have the capacity to supply all purchasers of Licensed Adjuvants with the quantity of Licensed Adjuvants ordered by each such purchaser, Supplier shall deliver to Purchaser a percentage of all Licensed Adjuvants in Supplier’s supply equal to [* * *] divided by [* * *]; provided , however that during the first two (2) years after the first Firm Order placed by Purchaser under this Agreement, Supplier shall always fulfill Purchaser’s Firm Order for Licensed Adjuvants in full (or to the maximum extent possible) prior to fulfilling the orders of any other purchaser.  Supplier shall, at all times during the Term of this Agreement, possess a supply of Licensed Adjuvants in an amount more than or equal to the quantity of Licensed Adjuvants set forth in the preceding Binding Forecast.

 

2.7                                Alternative Supply .  Subject to Section 2.4 ,  Purchaser shall be relieved of its obligation to order its purchase requirements of Licensed Adjuvants from Supplier if Supplier, for any

 



 

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reason not directly attributable to Purchaser, is unable, becomes aware that it will be unable or is unwilling to supply Licensed Adjuvants meeting Purchaser’s Binding Forecast for any period of time and does not cure such failure within forty-five (45) days following Purchaser’s written notice to Supplier or Supplier’s written notice to Purchaser.  In any such event, after the 45-day cure period, Purchaser shall have the right to request a Technology Transfer under the terms of Section 6.3(c)  regardless of whether Purchaser has elected to terminate this Agreement.  Once Purchaser has requested that Supplier conduct a Technology Transfer, Purchaser shall have no obligation to place any further Orders for Licensed Adjuvants from Supplier and may receive its supply of Licensed Adjuvants from a party or parties designated under Section 6.3(c).

 

2.8                                Cooperation of the Parties .  Supplier shall inform Purchaser promptly of any problems that could reasonably be expected to prevent Supplier from supplying the Licensed Adjuvants in accordance with the Rolling Forecast and/or a Firm Order.

 

2.9                                Records and Samples .  Supplier shall maintain all records relating to its obligations hereunder as required by current Good Manufacturing Practices (“ cGMPs ”) and current Good Laboratory Practices (“ cGLPs ”), as applicable, and Applicable Law for such time periods referenced thereby.  Supplier shall make such records available to Purchaser for Purchaser’s inspection and copying promptly following a written request by Purchaser.  In addition, Supplier shall retain a file sample properly stored from each lot or batch of Licensed Adjuvants supplied to Purchaser hereunder in accordance with cGMPs.

 

ARTICLE 3
COMPLIANCE, QUALITY AND ENVIRONMENTAL

 

3.1                                Sub-Manufacturers .  Any party listed on Exhibit B attached hereto and any additional Third Party who Supplier may, from time to time, designate as a sub-manufacturer under this Agreement (each such party, a “ Sub-Manufacturer ”) shall be able to conduct activities to assist with the performance of Supplier’s duties hereunder; provided , however that before any party is designated as a Sub-Manufacturer under this Agreement (i) Purchaser must give its written consent to such designation, such consent not to be unreasonably withheld, (ii) the proposed Sub-Manufacturer must agree to perform in accordance with the Development and Scale-Up Plan (as defined in the LCA) and the Quality Agreement, (iii) the proposed Sub-Manufacturer must agree in writing to transfer to Supplier all know-how and other information necessary or useful in the manufacturing and production of Licensed Adjuvants supplied hereunder, including, without limitation, the preparation, testing and storage of such Licensed Adjuvants and the handling, storage and disposal of any residues or wastes generated thereby so that in the event that Purchaser elects to exercise its rights related to Technology Transfer under Section 6.3(c)  below, Purchaser will be able to manufacture (or have manufactured) the Licensed Adjuvant in a manner substantially identical to the manner such manufacturing was conducted under this Agreement; (iv) the Sub-Manufacturer must agree in writing that, in the event that Purchaser terminates this Agreement under Section 6.2(a)  or Section 6.2(d), any and all agreements between it and Supplier related to the manufacture of Licensed Adjuvant will be assigned to Purchaser with respect to the supply of Licensed Adjuvants provided under this Agreement provided , however that in the case of the agreement between Supplier and [* * *] which has been

 



 

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entered into prior to the Effective Date, Supplier shall have twelve (12) months from the Effective Date to receive [* * *] written agreement to such subassignment.  Notwithstanding anything hereunder or anything in an agreement between a Sub-Manufacturer and Supplier, Supplier shall remain liable for any breach of this Agreement by any of its Sub-Manufacturers.

 

3.2                                Compliance with Law .  In the performance of its obligation to supply Licensed Adjuvants to Purchaser under this Agreement, Supplier shall (i) comply with all Applicable Laws, including those in any Regulatory Approval of any Regulatory Authority (including without limitation, cGMPs as applicable in each relevant country as defined in national and international accepted GMP compendia including PIC/C, WHO GMP Guide and Guide to Good Manufacturing Practices for Medicinal Products as promulgated under European Directive 91/356/EEC), (ii) manufacture the Licensed Adjuvants according to the Adjuvant Specifications, and (iii) obtain and comply with all Regulatory Approvals that are necessary for Supplier to perform its obligations hereunder.  Prior to the production of any cGMP supplies by Isconova under this Agreement, including without limitation the Preclinical Supplies, the Parties shall execute a Quality Agreement which shall have the table of contents attached hereto as Exhibit G and upon execution, such Quality Agreement shall be considered Exhibit G hereof in its entirety and attached hereto (the “ Quality Agreement ”).

 

3.3                                Manufacturing Quality .  All Licensed Adjuvants shall be manufactured in accordance with the Quality Agreement.  All Licensed Adjuvants shall be manufactured at Supplier’s facility or a designated facility of a Sub-Manufacturer (“ Supplier Facility ”) unless otherwise mutually agreed upon by the Parties.  Supplier shall sample and analyze all Materials upon receipt to ensure that such Materials are free of defects and meet the applicable specifications therefor.  Supplier shall take all necessary steps to prevent contamination and cross contamination of Licensed Adjuvants.  Licensed Adjuvants shall be unadulterated and free from contamination, diluents and foreign matter in any amount.  Supplier shall perform the quality control tests with respect to Licensed Adjuvants in accordance with the methods of analysis that have been suitably qualified and approved as set forth in the Quality Agreement (the “ Methods of Analysis ”), the cost of the same to be included in the price hereinafter specified.  Once established pursuant to the Quality Agreement, the Methods of Analysis will be considered as Exhibit C attached hereto and shall be incorporated herein by reference.  The Methods of Analysis may be amended from time to time in accordance with this Agreement Supplier shall promptly, upon completion of such tests, deliver to Purchaser a copy of the record of such tests performed on, and a Certificate of Analysis for, each shipment of Licensed Adjuvant to Purchaser.  Supplier shall deliver a representative sample from each shipment of Licensed Adjuvant to Purchaser’s designated representative by the date specified by such representative.

 

3.4                                Testing by Purchaser .  Purchaser may test the Licensed Adjuvant samples in accordance with the applicable Methods of Analysis.  If the analysis of any Licensed Adjuvant performed by or for Purchaser differs from Supplier’s analysis of the same sampled batch, Purchaser shall advise Supplier and Supplier and Purchaser agree to consult with each other in order to explain and resolve the discrepancy between each other’s determination.  If, after good faith attempt by the Parties to do so, such consultation does not resolve the discrepancy, an independent,

 



 

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reputable laboratory designated by Purchaser shall repeat the applicable Methods of Analysis on representative samples from such delivery of Licensed Adjuvant provided by or for Purchaser.  The costs of the independent laboratory referred to above shall be borne by (i) Purchaser if such laboratory determines that the Licensed Adjuvant conforms to the Adjuvant Specifications or (ii) Supplier if such laboratory determines that the Licensed Adjuvant does not conform to the Adjuvant Specifications.

 

(a)                                  If an independent laboratory determines that the Licensed Adjuvant does not conform to the Adjuvant Specifications, Purchaser may request in writing, and Supplier shall promptly send, a new delivery of Licensed Adjuvant (of similar quantity as to the amount of such Licensed Adjuvant being analyzed as set forth above) to Purchaser.  Purchaser shall not be obligated to pay for any Licensed Adjuvant (and if Purchaser has paid for such Licensed Adjuvant, Supplier shall promptly reimburse Purchaser) that an independent laboratory, in accordance with Section 3.4,   has determined does not conform to the Adjuvant Specifications.

 

3.5                                Samples and Record Retention .  Supplier shall retain records and retention samples of each shipped batch of Licensed Adjuvant for at least five (5) years after the delivery date of such Licensed Adjuvant and shall make the same available to Purchaser upon request.  During and after the term of this Agreement Supplier shall assist Purchaser with respect to any complaint, issue or investigation relating to a Licensed Adjuvant.

 

3.6                                Inspection .

 

(a)                                  By Purchaser .  Supplier shall give access to representatives of Purchaser, at all reasonable times during regular business hours, to the Supplier Facility and any other facility in which Licensed Adjuvants are Manufactured, tested and/or stored, and to all Manufacturing records with respect to Licensed Adjuvants, for the purpose of inspection.  Purchaser shall have the right while at any such Supplier Facility to inspect and copy Supplier’s records, permits, and licenses to evaluate work practices and compliance with all Applicable Laws, including but not limited to applicable regulations, occupational health and safety, and environmental laws and regulations, cGMP, cGLP and warehousing practices and procedures.  Notwithstanding any inspection performed by Purchaser, Supplier shall remain solely responsible for operating its facilities and for complying with its obligations under this Agreement.  Neither the rights granted to Purchaser pursuant to this Section 3.6. nor any inspection performance by Purchaser, shall impose any liability on Purchaser.

 

(b)                                  By Regulatory Authorities .  During Supplier’s normal business hours, Supplier will allow any Regulatory Authority to inspect the facilities of Supplier and any Third Party supplier where Licensed Adjuvants are manufactured and to review required documentation.  Supplier will immediately notify Purchaser of any inspection of such facilities by a Regulatory Authority that is reasonably related to Supplier’s performance hereunder or the subject matter of this Agreement, and Purchaser shall be given the opportunity to attend the portions of the summary, or wrap-up, meeting related to Licensed Adjuvants with such Regulatory Authority at the conclusion of such site inspection.  Supplier will provide to Purchaser a copy of any report or other written communications received from such Regulatory Authority in connection with such

 



 

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visit or inspection, and any written communications received from any Regulatory Authority relating to the Licensed Adjuvants or the manufacturing of Licensed Adjuvants within thirty (30) days after receipt thereof.

 

3.7                                Regulatory Approvals .  Each Party shall provide all documents or information reasonably requested by the other Party to support the other Party’s efforts to obtain, maintain, or defend Regulatory Approvals related to the Licensed Adjuvants or Licensed Products.

 

3.8                                Adverse Drug Experience Reporting .  The Parties agree to use commercially reasonable efforts to reach agreement on Adverse Event Reporting Procedures which will be set forth in Exhibit D attached hereto (as the same may be amended from time to time by notice in writing from Purchaser to Supplier, the “ Adverse Event Reporting Procedures ”) at least three (3) months prior to Launch but shall reach such agreement no later than one (1) month prior to Launch.  Supplier shall fully, accurately and promptly provide Purchaser with all data known to it at any time during the term of this Agreement or thereafter, which data indicate that any Licensed Product is or may be unsafe, lacks utility, or otherwise does not meet specifications in accordance with the Adverse Event Reporting Procedures, including, without limitation, any data or information received from Third Party partners or purchasers of Supplier that the Licensed Adjuvant is or may be unsafe, lacks utility, or otherwise does not meet specifications in accordance with the Adverse Event Reporting Procedures.  Purchaser shall solely determine whether such information is required to be reported to FDA and any other Regulatory Authority.

 

3.9                                Recalls .

 

(a)                                  Notification .  In the event that Supplier has any information, whether received directly or indirectly, which (i) may result in a Regulatory Authority issuing or requesting a recall or similar action in connection with the Licensed Product, or (ii) may result in the need for a recall or market withdrawal of the Licensed Product (each of the events in clause (i) and (ii), a “ Recall ”) Supplier shall promptly notify Purchaser in writing.  Supplier shall conduct an investigation as soon as reasonably practicable to determine the cause of any quality issue that has the reasonable potential to lead to a Recall and provide Purchaser with a written investigation report as soon as reasonably practicable and, in any case, in time to meet any required regulatory timeframe specified by Purchaser.

 

(b)                                  Responsibility .  Purchaser shall have sole discretion over whether and under what circumstances to require the Recall of Licensed Products.  Purchaser shall make all contacts with relevant Regulatory Authorities and shall be responsible for coordinating all activities in connection with any recall or withdrawal of any Licensed Products. In the event that Purchaser initiates a Recall, Purchaser shall promptly notify Supplier.  Supplier shall cooperate with Purchaser in executing any Recall.  Purchaser shall keep Supplier fully informed of any such Recall, shall consult with Supplier with respect to the strategy and conduct of any Recall.  Purchaser shall reasonably consider all comments and suggestions by Supplier.  To the extent permitted by Applicable Law, Supplier may also participate and be represented in any such Recall, at its own expense if such Recall substantially relates to the Manufacturing activities performed by Supplier under this Agreement.

 


 

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(c)                                   Costs of Recall .  Supplier shall reimburse Purchaser for all reasonable costs incurred by Purchaser in implementing a Recall of a Licensed Product resulting from (i) the failure of any Licensed Adjuvant to meet Adjuvant Specifications at the time of delivery of Licensed Adjuvant by Supplier or (ii) Supplier’s failure to manufacture any Licensed Adjuvant in accordance with cGMP and all other Applicable Laws.  Purchaser shall be responsible for the costs incurred in implementing any other Recall.  Any dispute between the Parties as to which Party is responsible for the costs of a Recall will be governed by the dispute resolution mechanism in Section 10.1 below.

 

3.10                         Environmental, Occupational Health and Safety .  Supplier shall report to Purchaser as soon as possible after any of the following incidents related to the Manufacturing operations hereunder occurs:

 

(i)                                      fatalities and/or significant injuries or occupational illness;

 

(ii)                                   property damage in excess of US$50,000;

 

(iii)                                inspections by any environmental protection agency or occupational health and safety agency; or

 

(iv)                               requests for information, notices of violations or other significant governmental and safety agency communications relating to environmental, occupational health and safety compliance.

 

Supplier shall have title to and be responsible for disposing in an environmentally safe manner ail residue and waste resulting from the Manufacturing operations performed hereunder.  Supplier shall not use Purchaser’s trademarks or trade dress to identify any waste materials or residues.

 

3.11                         Change Management

 

(a)                                  During the Term, if Supplier or Purchaser wishes to or is required by a Regulatory Authority to make a change to: (i) the Licensed Adjuvant or Adjuvant Specifications; or (ii) the manufacturing process for the Licensed Adjuvant (each a “ Manufacturing Change ”), it shall submit to the other Party in writing details of the requested Manufacturing Change.

 

(b)                                  For Manufacturing Changes that are required by Applicable Law, including any requirement of a Regulatory Authority, or for safely considerations (“ Required Changes ”), the Parties shall cooperate in making such Required Changes promptly.  The costs of implementing such Required Change shall be borne by Supplier.

 

(c)                                   If Supplier wishes to make a Manufacturing Change that is not a Required Change (a “ Discretionary Change ”), the Parties shall discuss such Discretionary Change and Purchaser may accept or reject such Discretionary Change; provided that any rejection must be based on material and objective reasons, which should be documented in sufficient detail for

 



 

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Supplier’s review.  For sixty (60) days after any rejection by the Purchaser, the Parties shall enter into good faith negotiations and use Commercially Reasonable Efforts to address Purchaser’s reasons for rejecting the Discretionary Change.  If no resolution has been reached by the end of this sixty-day period, the proposal shall be deemed rejected.  Notwithstanding anything to the contrary in this Section 3.11(c) ,  the Purchaser can reject any Discretionary Change that would require any additional Regulatory Approvals, action by any Regulatory Authority or change to the Adjuvant Specifications.  If Purchaser accepts such Discretionary Change, Supplier shall be entitled to make such Discretionary Change and shall, unless agreed otherwise by the Parties, bear all the costs of its implementation.

 

(d)                                  If Purchaser wishes to make a Discretionary Change, the Parties shall discuss such Discretionary Change and, unless Supplier has a reasonable objection, subject to the Parties agreeing upon reasonable timelines and procedures for implementing such Discretionary Change, Supplier shall implement such Discretionary Change.  Unless otherwise agreed by the Parties, Purchaser shall bear all reasonable costs incurred by Supplier in connection with the implementation of a Discretionary Change requested by Purchaser.  Payment for such costs shall be made by Purchaser within forty-five (45) days of receipt of an invoice therefore, together with reasonably detailed supporting documentation of such costs.

 

ARTICLE 4
PRICE AND PAYMENT

 

4.1                                Price .  During the first Contract Year and, unless adjusted pursuant to Section 4.3 .  for the Term of the Agreement, the price payable by the Purchaser to Supplier for the Manufacture and supply of the Licensed Adjuvants required for one (1) dose of the relevant Licensed Product shall be US $[* * *] (as adjusted from time to time, the “ Dose Price ”).  The Dose Price is equal to [* * *].  The Initial Dose Price may be adjusted from time to time pursuant to Section 4.3 .  In the event a vaccine included in the Commodity Vaccine Basket is no longer included on the CDC’s dose price list or for any other reason is mutually agreed by the Parties to no longer be applicable to the Dose Price, the Parties shall in good faith mutually agree either on the replacement of such vaccine with another vaccine with similar characteristics or to lower the number of vaccines which comprise the Commodity Vaccine Basket.

 

4.2                                Most Favored Nations Price Adjustment .  Notwithstanding any provision herein to the contrary, if at any time Supplier makes sales of any product substantially similar to the Licensed Adjuvant (including but not limited to, a ISCOM technology-based Matrix-M adjuvant) to any Third Party for use in a commercially sold vaccine product within the Field at a price per milligram of active substance lower than the price per milligram of active substance then in effect hereunder for the Licensed Adjuvant, or on payment and delivery terms more favorable than those in effect hereunder, such lower price and/or more favorable terms shall be made available to Purchaser hereunder, with respect to Purchaser’s inventory of Licensed Adjuvants as well as future purchases of Licensed Adjuvants, for so long as Supplier continues to make sales to such Third Party at such lower price and/or on such more favorable terms.

 



 

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4.3                                Adjustment to Prices .

 

(a)                                  In the event that [* * *] of the Commodity Vaccine Basket should deviate by [* * *] or more from the Dose Price at any given time during the Term of this Agreement (such event, a “ Price Deviation ”), either Party may request a price adjustment as set forth in Section 4.3(b)  (a “ Price Adjustment ”).

 

(b)                                  Price Adjustment Calculation .  If, in accordance with Section 4.3 , a Party (“ Requesting Party ”) believes that the Dose Price should be adjusted as a result of a Price Deviation, before or on September 1 of each Contract Year, Requesting Party shall provide for the other Party’s review and approval the computation of any Price Adjustment (as determined in accordance with Section 4.1 ). Requesting Party shall also provide to the other Party the methodology Requesting Party used in making such computation together with documentary evidence supporting the Price Adjustment.  Upon the other Party’s approval of such Price Adjustment, the new prices will be effective as of January 1 of the following Contract Year and the Parties will attach a new Exhibit F hereto reflecting such new prices.  If the other Party has rejected any Price Adjustment by Requesting Party, Requesting Party may exercise its rights under the dispute resolution mechanism in Section 11.1 below.

 

4.4                                Payments: Delay in Payment .  Supplier shall deliver to Purchaser at the address set forth in Section 11.5 an invoice for shipments of Licensed Adjuvants to Purchaser as the same is shipped.  Each invoice shall reflect the actual quantity of the Licensed Adjuvants shipped and the price thereof as computed in accordance with this ARTICLE 4.  Within forty-five (45) days following receipt of each invoice, Purchaser shall pay to Supplier the amount specified in such invoice.  All payments hereunder shall be made in U.S.  Dollars and by electronic transfer to an account specified by Supplier.  Any amounts not paid when due shall be deemed delinquent and will accrue interest from the due date to the actual date of payment at the lesser of (i) two (2) percent per month and (ii) the maximum rate permitted by Applicable Law.  Upon the delay of any payment(s) that are not being contested in good faith by Purchaser for a longer period of time than the cure period set forth in Section 6.2(a) ,  Supplier may withhold further deliveries of Licensed Adjuvants until Purchaser has remedied its default in full.

 

4.5                                Payment Disputes .  All billing and payment disputes between the Parties, including a dispute regarding the calculation of any Price Adjustment, shall be resolved in accordance with the dispute resolution procedures in Section 11.1 below.

 

ARTICLE 5
ACCEPTANCE AND REJECTION; INFRINGEMENT

 

5.1                                Acceptance and Rejection .  Within thirty (30) Business Days following its receipt of a shipment of Licensed Adjuvants pursuant to a Firm Order, Purchaser must notify Supplier in writing if Purchaser rejects the Licensed Adjuvants because it believes that the Licensed Adjuvants does not comply with the Adjuvant Specifications, cGMP or a requirement under the Quality Agreement.  Subject to Section 5.2 below, if Purchaser does not so notify Supplier within such period, Purchaser shall be deemed to have accepted the Licensed Adjuvants as meeting Adjuvant Specifications and the applicable requirements hereunder.

 



 

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5.2                                Latent Defects .  If any Licensed Adjuvant delivered by Supplier to Purchaser contains a Latent Defect (as defined below), then Purchaser will notify Supplier in writing within five (5) Business Days after the date on which such Latent Defect is first detected by Purchaser.  “ Latent Defect ” means any defect that (a) causes any Licensed Adjuvant supplied by Supplier to Purchaser pursuant to this Agreement to fail to conform with the Adjuvant Specifications, cGMP or a requirement under the Quality Agreement and (b) cannot be ascertained by the exercise of reasonable diligence by Purchaser upon receipt of such Licensed Adjuvant; provided, however, that if Purchaser does not notify Supplier of a Latent Defect in a Licensed Adjuvant within the Licensed Adjuvant’s shelf life (which shall be mutually agreed upon by the Parties), Purchaser shall be deemed to have accepted the Licensed Adjuvants as meeting Adjuvant Specifications and the applicable requirements hereunder, and Purchaser abstains from any right to claim liability against Supplier pursuant to Section 5.1 above or this Section 5.2 .

 

5.3                                Rejection Procedure .  If Purchaser rejects all or part of any shipment of Licensed Adjuvants pursuant to Section 5.1 or Section 5.2 above, then, unless Supplier informs Purchaser to the contrary within twelve (12) Business Days after receipt of Purchaser’s written rejection notice, Supplier will be deemed to have accepted the above-mentioned rejection.

 

(a) If Supplier accepts Purchaser’s rejection, Supplier shall, at Purchaser’s option, either (i) utilize Commercially Reasonable Efforts to supply replacement Licensed Adjuvants at no additional charge within one (1) month after receipt of Purchaser’s rejection notice or (ii) credit or refund to Purchaser the cost paid to Supplier by Purchaser for such non-conforming Licensed Adjuvants, or, if the invoice has not been paid, cancel the invoice.  In either case, such non-conforming Licensed Adjuvants shall be disposed of at Supplier’s cost.

 

(b) If Supplier does not accept Purchaser’s rejection, and there is a dispute as to whether all, or a portion, of any shipment of Licensed Adjuvants is non-compliant, such dispute shall be resolved by having an independent, mutually acceptable, qualified Third Party (the “ Independent Expert ”) examine the respective Licensed Adjuvants.  At Supplier’s cost, Supplier will provide a representative final Licensed Adjuvant sample and master reference standard for such Licensed Adjuvant to the Independent Expert.  If the Independent Expert determines that the Licensed Adjuvant is non-compliant, then Section 5.3(a)  shall apply.  The Party against whose position the Independent Expert rules shall bear any out-of-pocket costs relating to the Independent Expert incurred by the other Party.  In the event that the Independent Expert rules against Purchaser, Purchaser shall remit payment for the respective Licensed Adjuvants to Supplier within thirty (30) days of such ruling.  During the time any dispute under this Section 5.3(b)  is pending resolution, Purchaser shall not be obligated to pay any invoice for the Licensed Adjuvants that is the subject of the dispute and no interest on such payment will accrue under Section 4.4 .

 

5.4                                Shortfall .  If Supplier’s delivery fails to deliver to Purchaser the full amount of Licensed Adjuvants specified in an accepted Firm Order, Supplier shall, at Purchaser’s option without any undue delay either (a) deliver to Purchaser the quantity of shorted Licensed Adjuvants at Supplier’s expense or (b) credit or refund Purchaser for the full price of the amount of shortfall.

 



 

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5.5                                Infringement .  In the event that it is reasonably likely that a claim will be successfully brought by a Third Party to a court or other governmental agency of competent jurisdiction that the Manufacture, storage, importation, sale, offer for sale or use of the Licensed Adjuvant infringes any patent or other proprietary right of any Third Party, Supplier shall promptly, at its own expense and option, either: a) procure for Purchaser the right to continue the storage, importation, sale, offer for sale or use of such Licensed Adjuvant; b) replace the relevant Licensed Adjuvant with non-infringing Licensed Adjuvants of equivalent function and performance; or c) modify such Licensed Adjuvants so that they become non-infringing without detracting from function or performance.  If the Parties disagree on whether the occurrence and/or success of a claim described in the preceding sentence is reasonably likely, the Parties will engage mutually agreeable patent counsel to deliver a final determination as to the reasonable likelihood of such a successful claim, and the Parties will split the costs related to such counsel equally.  Any action taken by Supplier under clause (a), (b) or (c) of the first sentence of this Section 5.5 must not result in any change to the Adjuvant Specifications and if Supplier cannot take necessary action under such clauses within ninety (90) days of the date of the infringement claim, Purchaser shall be relieved of its obligation to order its purchase requirements of Licensed Adjuvants from Supplier as set forth in Section 2.7 and Purchaser may request (and upon such request, Supplier will grant) a Technology Transfer pursuant to Section 6.3(c) .  Supplier’s obligations hereunder shall not apply to any infringement claim arising directly and principally attributable from activities conducted by Purchaser in a manner inconsistent with Purchaser’s rights under this Agreement and/or the LCA.  Notwithstanding anything to the contrary in this Agreement or Section 5.4, in the event that Section 6.11 of the LCA (including without limitation Section 6.11.1) is applicable to an infringement claim hereunder, the terms of such Section 6.11 shall apply, as applicable, to such claim; provided , however that, in addition to all rights of Purchaser under Section 6.11 of the LCA, in the event that any Third Party commences any proceeding against Purchaser, Supplier and/or any Sublicensee related to the Isconova Technology which results in the enjoinment of the research, development, commercialization and/or sale of a Licensed Product and (ii) the underlying claim of such proceeding in clause (i) is not directly and principally attributable to activities conducted by Purchaser outside the scope of the rights granted to Purchaser in Section 3.1 of the LCA, Purchaser shall have the right to immediately terminate this Agreement pursuant to Section 6.2(a)  and, to the extent not already performed, Supplier shall perform a Technology Transfer as set forth in Section 6.3(c)  upon Genocea’s request,

 

5.6                                Rights Intact .  Notwithstanding anything in this ARTICLE 5, nothing in this ARTICLE 5 shall be deemed a sole remedy of Purchaser under this Agreement or usurp or affect, in any way, Purchaser’s ability to exercise its rights under this Agreement, including but not limited to Purchaser’s rights set forth in ARTICLE 6 to terminate this Agreement in accordance with the terms therein.

 



 

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ARTICLE 6
TERM AND TERMINATION

 

6.1                                Term .  Unless earlier terminated as provided in this ARTICLE 6, the term of this Agreement (the “ Term ”) shall commence on the Effective Date and continue until the termination or expiration of the LCA in accordance with its terms.

 

6.2                                Termination .

 

(a)                                  Default .  If either Party commits a material breach of the Agreement (which, for the avoidance of doubt, will include any material breach by Supplier of the Quality Agreement), the other Party may, without prejudice to any other right or remedy, and after giving the breaching Party [* * *] (45) days’ written notice of the breach, terminate the Agreement.  This Agreement shall not be so terminated if the breaching Party has cured the breach within such 45-day period.  Such termination shall not give rise to the payment of any penalty, damages or indemnity by the terminating Party.

 

(b)                                  Termination Without Cause .  Purchaser may terminate this Agreement at any time without cause upon [* * *] days’ prior written notice to Supplier.  Such termination shall not give rise to the payment of any penalty, damages or indemnity by Purchaser.

 

(c)                                   Termination for Regulatory Action .  Purchaser may terminate this Agreement immediately if FDA or any other Regulatory Authority takes any action, the result of which is to prohibit or restrict the Manufacture, storage, importation, sale, offer for sale or use of the Licensed Adjuvant.  Such termination shall not give rise to the payment of any penalty, damages or indemnity by Purchaser.

 

(d)                                  Termination for Bankruptcy .  If either Party (the “ Insolvent Party ”), by voluntary or involuntary action goes into liquidation, dissolves or files a petition for bankruptcy or suspension of payments, is adjudicated bankrupt, has a receiver or trustee appointed for its property or estate, becomes insolvent or makes an assignment for the benefit of creditors, the other Party shall be entitled by notice in writing to the Insolvent Party to terminate this Agreement forthwith.  Such termination shall not give rise to the payment of any penalty, damages or indemnity by the terminating Party.

 

6.3                                Effects of Termination .

 

(a)  Completion of Orders .  In the event of any termination of this Agreement other than by Supplier due to Sections 6.2(a)  or 6.2(d)  hereunder, (i) Supplier shall deliver, at Purchaser’s request, any Licensed Adjuvants manufactured for Purchaser pursuant to an Order placed prior to the effective date of termination but not yet delivered, and (ii) Supplier shall prepare and submit to Purchaser an invoice for all Licensed Adjuvants delivered by Supplier to Purchaser, including Licensed Adjuvants delivered pursuant to clause (i) of this Section 6.3 ,  which at the time of the effective date of termination were not paid for by Purchaser, and Purchaser shall within [* * *]

 



 

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days following receipt of the invoice referred to in clause (ii) of this Section 6.3 pay the full amount of such invoice to Supplier.

 

(b)  Escrow .  Supplier shall ensure that any and all reasonably available know-how actually used by Supplier in the manufacturing and production of Licensed Adjuvants supplied hereunder, including, without limitation, the preparation, testing and storage of such Licensed Adjuvants and the handling, storage and disposal of any residues or wastes generated thereby for the supply of Licensed Adjuvants (collectively, the “ Escrow Materials ”), is placed in escrow with a mutually agreeable third party escrow agent in the United States of America within [* * *] days of the first delivery of Licensed Adjuvants to Purchaser.  At such time Supplier shall provide Purchaser with an index of the Escrow Materials that have been supplied to the escrow agent.  If there are any material changes in the Escrow Materials, including the production process or any documents that have been supplied to the escrow agent, Supplier shall promptly file revised documentation with the escrow agent, and send a revised index of Escrow Materials to both Purchaser and the escrow agent.  The costs for the escrow agent shall be borne by Purchaser, and each Party shall carry their respective costs in connection with activities related to the escrow arrangement.  Supplier shall at all times be entitled to gain access to the Escrow Materials to make back-up copies thereof.

 

(c)  Release of Escrow Materials and Technology Transfer .  If this Agreement is terminated by Purchaser in accordance with Sections 6.2(a)  or 6.2(d)  hereunder, Supplier hereby agrees (i) that, within fifteen (15) days of the termination of this Agreement, (A) the Escrow Materials shall be released into the possession of Purchaser and/or to Third Party manufacturers designated by Purchaser and (B) to the extent such information is not included in the Escrow Materials, to disclose to Purchaser (or to Third Party manufacturers designated by Purchaser) any and all reasonably available know-how necessary or useful in the manufacturing and production of Licensed Adjuvants supplied hereunder, including, without limitation, the preparation, testing and storage of such Licensed Adjuvants and the handling, storage and disposal of any residues or wastes generated thereby and deliver to Purchaser (or to Third Party manufacturers designated by Purchaser) all physical embodiments (including all documents and samples) of such know-how, (ii) immediately upon such termination, Supplier will grant to Purchaser a non-exclusive, perpetual, worldwide license (with the right to grant sublicenses) under the Licensed Technology to make, or have made, Licensed Adjuvants in the Field in the Territory, solely for the purpose of fulfilling Supplier’s responsibilities hereunder and under the LCA, and (iii) to provide Purchaser with technology transfer assistance in order to enable Purchaser to successfully manufacture Licensed Adjuvants necessary for the manufacture of Licensed Products whether Purchaser manufactures at its own facilities or contracts with Third Party manufacturers for the supply of Licensed Adjuvants, including the assistance described in Section 6.3(c)(i)  below (clauses (i), (ii) and (iii) of this sentence collectively, a “ Technology Transfer ”).

 

(i)                                      Manufacturing Transition .  As soon as practicable after the termination of this Agreement, Supplier shall also provide Purchaser with technical assistance reasonably requested by Purchaser to transition manufacturing of Licensed Adjuvants to Purchaser (or to Third Party manufacturers designated by Purchaser) including, without limitation, (A) making

 



 

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arrangements for Purchaser or its designee to observe Supplier’s existing manufacturing and testing processes, (B) making appropriate personnel available to Purchaser at reasonable times and places upon reasonable notice for the purpose of assisting Purchaser to understand and use the know-how described in this Section 6.3 to establish fully functional and cGMP compliant production facilities for the manufacture of Licensed Adjuvants, and (C) transitioning to Purchaser relationships with any Third Party supplier, vendors and contractors, to the extent such relationships are necessary or useful for the manufacture of Licensed Adjuvants, including the assignment to Purchaser, if legally possible, of contracts between Supplier and such Third Party supplier, vendors and contractors; provided , however , that Supplier shall not be obliged transfer or assign any relationships with Third Party supplier, vendors and contractors for commodity services or products generally available on the market.

 

(ii)                                   Term of Supplier’s Obligations . Supplier’s technology transfer obligations under this Section 6.3(c)  shall endure until Purchaser has established at least one cGMP compliant manufacturing facility (either itself or through Third Party manufacturers designated by Purchaser) capable of manufacturing the Licensed Adjuvants in sufficient quantities and of sufficient quality to support Regulatory Approval and commercialization of each Licensed Product.

 

(iii)                                Confidential Information .  To the extent that the Escrow Materials and any other information or materials disclosed by Supplier to Purchaser in a Technology Transfer under these Sections 6.3(b)  and (c)  constitutes Confidential Information of Supplier, it shall be subject to the provisions of ARTICLE 7 and any designated alternative Third Party supplier shall be required to enter into a confidentiality agreement with Supplier containing substantially the same terms as ARTICLE 7.

 

6.4                                Survival. In the event of any termination or expiration of this Agreement, each of the provisions of ARTICLE 1, 6, 7, 8, 9, 10 and 11 and Sections 2.9 , 3.5 3.7 3.8 ,  and 3.9 and other terms that by their nature are intended to survive, shall survive the termination or expiration of this Agreement and continue to be enforceable.  In no event shall termination of this Agreement release either Party from any accrued obligation, including Purchaser’s obligation to pay any amounts that became due on or before the effective date of termination.

 

ARTICLE 7
CONFIDENTIALITY

 

All information provided by one Party to the other Party in connection with this Agreement (including, without limitation, the Adjuvant Specifications and Rolling and Binding Forecasts) is subject to the confidentiality and non-use obligations under Article 8 of the LCA, which are hereby incorporated into this Agreement by reference.  The Adjuvant Specifications shall be deemed to have been provided by the Purchaser and shall be the Confidential Information of the Purchaser.

 



 

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ARTICLE 8
WARRANTIES AND COVENANTS

 

8.1                                General Representations and Warranties .  Each Party makes representations and warranties to the other Party in the LCA that relate to this Agreement, and those representations and warranties are hereby incorporated by reference.

 

8.2                                Additional Representations and Warranties of Supplier .  Supplier hereby represents, warrants, and covenants to Purchaser that:

 

(a) with respect to each delivery of Licensed Adjuvants, at the time of such delivery, the Licensed Adjuvants (i) have been Manufactured, stored and shipped in accordance with all Applicable Laws in effect at the time of Manufacture; (ii) conform to the Adjuvant Specifications and cGMP, are free from defects in materials and workmanship; (iii) are not adulterated or misbranded; and (iv) have been shipped and stored in accordance with approved procedures agreed between the Parties; provided , however that nothing in this Section 8.2(a)  shall, or is intended to, alter Purchaser’s rights under ARTICLE 5.

 

(b) it has good and marketable title to all Licensed Adjuvants and the Licensed Adjuvants are free from all liens, charges, encumbrances and security interests;

 

(c) Except for claims made in the CSL Allegations and the ‘620 Patent and the ‘703 Patent (as such terms are defined in the LCA), the Manufacture, use, importation, offer for sale and sale of Licensed Adjuvants do not infringe any intellectual property rights of any Third Party; and

 

(d) it did not use in any capacity the services of any person debarred under the U.S.  Generic Drug Enforcement Act, 21 USA §335a(k)(l) and further it did not use any person who has been convicted of a crime as defined under the Generic Drug Enforcement Act in connection with the Manufacture of Licensed Adjuvants or any service rendered to Purchaser.

 

ARTICLE 9
INDEMNITIES AND DAMAGES

 

9.1                                Indemnifications

 

(a)                                  Supplier shall indemnify, hold harmless, and defend Purchaser, its Affiliates, and their respective directors, officers, employees and agents and their respective successors, heirs and assigns (together, the “ Purchaser Indemnitees ”) from and against any and all Third Party claims, suits, losses, liabilities, damages, costs, fees and expenses (including reasonable attorneys’ fees and expenses of litigation and costs for enforcing this indemnity) (“ Losses ”) to the extent arising out of or resulting from (i) any material breach of any representation, warranty, covenant or other obligations of Supplier, its Affiliates or its Sub-Manufacturers under this Agreement, (ii) any Recall attributable to the performance of Supplier, its Affiliates or its Sub-Manufacturers, (iii) the negligent acts or omissions of Supplier, its Affiliates or its Sub-

 



 

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Manufacturers, and (iv) the failure of Supplier, its Affiliates or its Sub-Manufacturers to comply with any Applicable Law, except, in each case (i) through (iv), to the extent any such Losses are indemnifiable by Purchaser under Section 9.1(b).

 

(b)                                  Purchaser shall indemnify, hold harmless, and defend Supplier, its Affiliates, and their respective directors, officers, employees and agents and their respective successors, heirs and assigns (together, the “ Supplier Indemnitees ”) from and against any and all Losses to the extent arising out of or resulting from, directly or indirectly, (i) any material breach of any representation, warranty, covenant or other obligations of Purchaser under this Agreement (ii) the negligent acts or omissions of Purchaser, (iii) Purchaser’s failure to comply with any Applicable Law or (iv) any claims of any nature relating to Manufacturing activities performed by, on behalf of or under the authority of Purchaser with the exception of those activities performed by Supplier, its Affiliates or its Sub-Manufacturers pursuant to the terms of this Agreement, except , in each case (i) through (iv), to the extent any such Losses are indemnifiable by Supplier under Section 9.1(a) .

 

9.2                                Indemnification Process.  In the event a third party brings a claim against any Purchaser Indemnitees or Supplier Indemnitees, such claim will be handled in the manner provided in Section 10.6.3 of the LCA.

 

9.3                                Limitation of Liability .  NEITHER PARTY HERETO SHALL BE LIABLE FOR SPECIAL, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER, INCLUDING LOST PROFITS ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF SUCH DAMAGES.  NOTHING IN THIS SECTION 9.3 IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF EITHER PARTY OR TO LIMIT A PARTY’S LIABILITY FOR BREACHES OF ITS OBLIGATION REGARDING CONFIDENTIALITY UNDER ARTICLE 7.

 

9.4                                Insurance .  The Parties will maintain insurance as provided in Section 10,6 of the LCA.

 

ARTICLE 10
DISCLAIMER

 

EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATION OR EXTENDS ANY WARRANTY OF ANY KIND, EITHER EXPRESS OR IMPLIED, TO THE OTHER PARTY WITH RESPECT TO ANY TECHNOLOGY OR OTHER SUBJECT MATTER OF THIS AGREEMENT AND HEREBY DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT WITH RESPECT TO ANY AND ALL OF THE FOREGOING.

 


 

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ARTICLE 11
MISCELLANEOUS

 

11.1                         Dispute Resolution; Governing Law .

 

(a)  Disputes .  Unless otherwise set forth in this Agreement, in the event of any dispute arising under this Agreement between the Parties, the Parties may refer such dispute to the respective Executive Officers, and such Executive Officers shall attempt in good faith to resolve such dispute.  If the Parties are unable to resolve a given dispute pursuant to this Section 11.1 within sixty (60) days of referring such dispute to the Executive Officers, either Party shall be free to pursue any remedy that may be available to it at law or in equity.

 

(b)  Jurisdiction .  All disputes arising out of or in connection with the present contract shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one (1) arbitrator appointed in accordance with the said Rules.  The arbitrator may grant injunctive or other relief in such dispute or controversy.  The decision of the arbitrator shall be final, conclusive and binding on the Parties to the arbitration.  Judgment may be entered on the arbitrator’s decision in any court of competent jurisdiction.  The Parties agree that, any provision of applicable law notwithstanding, they will not request and the arbitrator shall have no authority to award, punitive or exemplary damages against either Party.  The costs of the arbitration, including administrative and arbitrator’s fees, as well as the other Party’s reasonable attorneys’ fees and expert witness fees shall be borne by the losing Party. Nothing in this Section 10.1 shall preclude either Party from seeking interim or provisional relief in the form of a temporary restraining order, preliminary injunction, or other interim relief concerning a dispute prior to or during an arbitration pursuant to this Section 11.1 necessary to protect the interests of such Party.  If the arbitration is initiated by Supplier, the place of arbitration shall be Boston, MA, USA, and if the arbitration is initiated by Purchaser, the place of the arbitration shall be Stockholm, Sweden.  The arbitration proceedings shall be conducted in English.

 

(c)  Governing Law .  This Agreement shall be construed and the respective rights of the Parties determined according to the substantive laws of the Commonwealth of Massachusetts notwithstanding the provisions governing conflict of laws under such Massachusetts law to the contrary.

 

11.2                         Assignment .  No Party may assign, delegate or otherwise transfer this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other Party; provided that either Party may assign this Agreement to the same extent as the LCA is permitted to be assigned under Section 11.4 of the LCA.

 

11.3                         Successors .  Subject to Section 11.2 .  the Agreement will be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns, each of which successors and permitted assigns will be deemed to be a Party hereto for all purposes hereof.

 



 

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11.4                         Amendments .  This Agreement and the Exhibits referred to in this Agreement constitute the entire agreement between the Parties with respect to the subject matter hereof and supersede all previous arrangements with respect to the subject matter hereof, whether written or oral.  Any amendment or modification to this Agreement shall be made in writing signed by both Parties (except as may be specifically provided in the LCA).

 

11.5                         Notices .  Any consent, notice or report required or permitted to be given or made under this Agreement by one of the Parties hereto to the other shall be in writing and (a) delivered by hand, (b) sent by nationally recognized overnight delivery service, (c) sent by registered or certified mail, return receipt requested, postage prepaid, or (d) sent by facsimile transmission confirmed by prepaid, registered or certified mail letter, and shall be deemed to have been properly served to the addressee upon receipt of such written communication, in any event to the following addresses:

 

If to Purchaser:

Genocea Biosciences, Inc.

 

161 First Street

 

Suite 2C

 

Cambridge, MA 02142

 

Attn: Chief Executive Officer

 

Telephone: (617) 876-8191

 

Fax: (617) 876-8192

 

 

with a copy to:

Ropes & Gray LLP

 

One International Place

 

Boston, MA 02110

 

Attn: Marc A. Rubenstein

 

Telephone: (617) 951-7000

 

Fax: (617) 235-0706

 

 

If to Supplier:

Isconova AB

 

Uppsala Science Park, SE-751 83 Uppsala, Sweden

 

Attn: CEO

 

Telephone: +46 18 57 24 00

 

Fax: +46 18 57 24 01

 

 

with a copy to:

Advokatfirman Lindahl KB

 

SE-751 42 Uppsala, Sweden

 

Attn: Mikael Smedeby and Hugo Norlén

 

Telephone: +46 18 16 18 50

 

Fax: +46 16 14 46 79

 

Either Party may change its address to which notices shall be sent by giving notice to the other Party in the manner herein provided.

 



 

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11.6                         Force Majeure .  No failure or omission by either Party in the performance of any obligation of this Agreement shall be deemed a breach of this Agreement or create any liability if the same shall arise from any cause or causes beyond the reasonable control of such Party, including the following: acts of god: acts or omissions of any government; any rules, regulations or orders issued by any governmental authority or by any officer, department, agency or instrumentality thereof; fire; storm; flood; earthquake; accident; war; terrorist act; rebellion; insurrection; riot; and invasion; provided that such Party provides notice to the other Party of such an event, and the non-performing Party uses Commercially Reasonable Efforts to cure such failure or omission resulting from one of the above causes as soon as is practicable; provided further that, in the event the suspension of performance continues for ninety (90) days, and such failure to perform would constitute a material breach of this Agreement in the absence of such force majeure event, the non-affected Party may terminate this Agreement for the nonperforming Party’s material breach.

 

11.7                         Independent Contractors .  It is understood and agreed that the relationship between the Parties is that of independent contractors and that nothing in this Agreement shall be construed as authorization for either Party to act as agent for the other.  Nothing herein contained shall be deemed to create an employment, agency, joint venture or partnership relationship between the Parties or any of their agents or employees for any purpose, including tax purposes, or to create any other legal arrangement that would impose liability upon one Party for the act or failure to act of the other Party.  Neither Party shall have any express or implied power to enter into any contracts or commitments or to incur any liabilities in the name of, or on behalf of, the other Party, or to bind the other Party in any respect whatsoever.

 

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

 

11.9                         No Strict Construction .  This Agreement has been prepared jointly and shall not be strictly construed against either Party.

 

11.10                  Headings .  The captions or headings of the sections or other subdivisions hereof are inserted only as a matter of convenience or for reference and shall have no effect on the meaning of the provisions hereof.

 

11.11                  No Implied Waivers; Rights Cumulative .  No failure on the part of either Party to exercise, and no delay in exercising, any right, power, remedy or privilege under this Agreement, or provided by statute or at law or in equity or otherwise, shall impair, prejudice or constitute a waiver of any such right, power, remedy or privilege or be construed as a waiver of any breach of this Agreement or as an acquiescence therein, nor shall any single or partial exercise of any such right, power, remedy or privilege preclude any other or further exercise thereof or the exercise of any other right, power, remedy or privilege.

 

11.12                  Severability .  If any provision hereof should be held invalid, illegal or unenforceable in any respect in any jurisdiction, the Parties hereto shall substitute, by mutual consent, valid

 



 

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provisions for such invalid, illegal or unenforceable provisions, which valid provisions in their economic effect are sufficiently similar to the invalid, illegal or unenforceable provisions that it can be reasonably assumed that the Parties would have entered into this Agreement with such valid provisions.  In case such valid provisions cannot be agreed upon, the invalid, illegal or unenforceable of one or several provisions of this Agreement shall not affect the validity of this Agreement as a whole, unless the invalid, illegal or unenforceable provisions are of such essential importance to this Agreement that it is to be reasonably assumed that the Parties would not have entered into this Agreement without the invalid, illegal or unenforceable provisions.

 

11.13                  No Third Party Beneficiaries .  No person or entity other than each Party and their respective Affiliates and permitted assignees hereunder shall be deemed an intended beneficiary hereunder or have any right to enforce any obligation of this Agreement.

 

11.14                  No Transfer of Intellectual Property .  Except pursuant to Section 6.3(c)  each Party agrees that no Intellectual Property (as such term is defined in the LCA) is being transferred to the other Party as a result of this Agreement and any transfer of Intellectual Property between the Parties relating to the transactions contemplated by this Agreement shall be as set forth in the LCA.

 

11.15                  Execution in Counterparts .  This Agreement may be executed in counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original, and all of which counterparts, taken together, shall constitute one and the same instrument.

 



 

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IN WITNESS WHEREOF, the Parties have caused their duly authorized representatives to execute this Agreement as of the Effective Date.

 

 

GENOCEA BIOSCIENCES, INC.

 

 

 

 

 

By:

/s/ M. Leavenworth Bakali

 

Name:

M. Leavenworth Bakali

 

Title:

President and CEO

 

 

 

 

 

 

 

ISCONOVA AB

 

 

 

 

 

 

 

By:

/s/ Ulf Tossmann

 

Name:

Ulf Tossmann

 

Title:

Board of Director

 

 

 

 

 

 

 

By:

/s/ Benet Falk

 

Name:

Benet Falk

 

Title:

President and CEO

 

 

 

 

 

 

 

By:

/s/ Eva-Lotta Allen

 

Name:

Eva-Lotta Allen

 

Title:

Non-Executive Director

 

 

1



 

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Exhibit Index

 

to

 

Supply and Manufacturing Agreement

 

Exhibit A                                              Adjuvant Specifications

Exhibit B                                              Sub-Manufacturers

Exhibit C                                              Methods of Analysis

Exhibit D                                              Adverse Event Reporting Procedures

Exhibit E                                               Commodity Vaccine Basket

Exhibit F                                                [Reserved]

Exhibit G                                              Quality Agreement

 

1



 

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EXHIBIT A

 

Adjuvant Specifications

 

[Reserved]

 

1



 

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EXHIBIT B

 

Sub-Manufacturers

 

[* * *]

 

1



 

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EXHIBIT C

 

Methods of Analysis

 

[Reserved]

 

1



 

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EXHIBIT D

 

Adverse Event Reporting Procedures

 

[Reserved]

 

1


 

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EXHIBIT E

 

Commodity Vaccine Basket

 

[* * *]

 

1



 

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EXHIBIT F

 

[Reserved]

 

1



 

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EXHIBIT G

 

Quality Agreement

 

1



 

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Exhibit E — Commercial Partner Agreement

 

Effective as of […] by and between;

 

Isconova AB, a corporation organized and existing under the laws of Sweden and having a principal place of business at Uppsala Science Park, SE-751 83 Uppsala, Sweden (“ Isconova ”), and

 

[...] (the “ Commercial Partner ”).

 

1.                                       Commercial Partner hereby acknowledges that Isconova has licensed certain Licensed Technology, to Genocea Biosciences, Inc. within the Field (“Genocea”) relating to Licensed Adjuvants under a License Agreement effective as of [...], a copy of which is attached hereto (the ‘‘License”).

 

2.                                       The Parties hereby acknowledge that all terms not otherwise defined herein shall have the same meanings as set forth in the hereto-attached version of the License.

 

3.                                       Isconova agrees that, in the event that Genocea shall be found in material breach of its obligations to Isconova under the License and as a result of such material breach, the License is terminated by Isconova in accordance with its terms, Commercial Partner shall be allowed to continue to Develop, Manufacture and Commercialize as allowed hereunder and in the License, as long as Commercial Partner agrees to pay, directly to Isconova, all amounts (including royalties and milestone payments) to which Isconova would have been entitled to receive under the License as a result of Commercial Partner’s activities in association with the Licensed Products.

 

4.                                       If Commercial Partner is notified, by Isconova or Genocea or otherwise, that the License has been terminated, such termination shall not affect the rights of the Commercial Partner to Develop, Manufacture, and Commercialize Licensed Products in accordance with the terms of this Agreement.  Further, from the effective date of such termination, Commercial Partner shall, if so requested by Commercial Partner in writing, automatically become a direct licensee of Isconova in relation to the Licensed Technology with respect to and on the same terms as the rights originally sublicensed to Commercial Partner by Genocea.  Notwithstanding the foregoing, under no circumstances shall Isconova have obligations to Commercial Partner that are greater than those owed by Isconova to Genocea under the License as a result of the preceding sentence.  To the extent that the foregoing constitutes a grant of rights under the Licensed Technology, such rights shall be contingent and, in the event of a failure to make any such payments or any other material breach by the Commercial Partner, terminate upon thirty (30) days after Commercial Partner’s receipt of prior written notification describing the nature of Commercial Partner’s breach if such breach is not cured during such 30-day period.

 



 

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5.                                       No more than once every year, in order to monitor the Commercial Partner’s royalty payments pursuant to Section 3 above, the Licensor may cause, at its own cost and expense, an independent certified public accountant to inspect during normal business hours the Commercial Partner’s records of sales of Licensed Products for the past three (3) years and any amounts paid or payable to Isconova in relation to such Licensed Products.  The parties shall reconcile any underpayment or overpayment within thirty (30) days after the accountant delivers the results of the audit.  In the event that any such audit performed reveals any underpayment in excess of five percent (5%) during any royalty period being subject to audit, then the Commercial Partner shall bear the full cost of any such audit.

 

6.                                       Except as required by law, no Party shall originate any publication, news release or other public announcement, written or oral, whether in the public press, or stockholders’ reports, or otherwise relating to the contents of this Commercial Partner Agreement without the prior written approval of the other Party, which approval shall not be unreasonably withheld.

 

7.                                       This Commercial Partner Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts without reference to conflict of laws principles.  All disputes arising out of or in connection with the present contract shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one (1) arbitrator appointed in accordance with the said Rules.  The costs of the arbitration, including administrative and arbitrator’s fees, as well as the other party’s reasonable attorneys’ fees and expert witness fees shall be borne by the losing party.  The place of arbitration shall be Stockholm, Sweden.  The arbitration proceedings shall be conducted in English.

 



 

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In witness whereof, the undersigned parties have duly executed this Commercial Partner Agreement, effective as of the date first above written.

 

Isconova AB

 

[Commercial Partner]

 

 

 

By:

 

By:

 

 

 

Printed Name:

 

Printed Name:

 

 

 

Title:

 

Title:

 

Acknowledgement

 

The content of this Commercial Partner Agreement is hereby acknowledged

 

Genocea Biosciences, Inc.

 

 

 

 

 

By:

 

By:

 

 

 

Printed Name:

 

Printed Name:

 

 

 

Title:

 

Title

 

1



 

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Amendment 1

 

 

March 19, 2010

 

Isconova AB

Uppsala Science Park, SE-751 83 Uppsala,

Sweden

Attn: Lena Söderström CEO

 

Re:                              License and Collaboration Agreement by and between Genocea Biosciences, Inc. and Isconova AB

 

Dear Lena:

 

I am writing to memorialize our conversation and agreement regarding certain provisions of the License and Collaboration Agreement referred to above (the “Agreement”).  Unless otherwise defined below, capitalized terms used in this letter will have the meaning given to them in the Agreement.  As we discussed, the terms described in this letter will govern the price to be paid by Genocea for Clinical Supplies for the Phase I clinical trial for Herpes Simplex Virus 2 (the “Phase I Supplies”) notwithstanding our differing interpretations of the language in Exhibit C-2 of the Agreement.  Specifically, we agree that Genocea will pay to Isconova [* * *]% of the total production cost for Phase I Supplies, excl. VAT, so that Genocea’s share of such total production costs are equal to approximately SEK[* * *] (Genocea’s share of such total production costs, the “Supply Payment”) as Genocea’s full payment obligation for the Phase I Supplies.  The basis for this amount is set forth in the schedules attached to this letter, and Genocea’s [* * *]% contribution will be paid as set forth in the following paragraph.

 

Genocea will make a payment on account representing 1/3 of the Supply Payment (approximately $ [* * *] USD ) within ten days from the date of this letter and receipt of invoice thereof from Isconova.  Isconova will apply such payment against payments made by Isconova to third parties for the production of Phase I Supplies (it being understood that Isconova will pay its invoices in SEK, and that the corresponding sums paid in USD may differ slightly due to the applicable exchange rate) until such payments to third parties equal twice the amount of the initial made by Genocea.  After Isconova has made payments to third parties for Phase I Supplies

 

1



 

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equal to twice the initial payment made by Genocea, Isconova will invoice Genocea each month (payment terms: 10 days net) for the costs representing [* * *]% of the amounts incurred by Isconova to third parties during the prior month for production of Phase 1 Supplies.

 

For clarity, it is agreed that the payment of the Supply Payment will not affect Genocea’s obligations to pay the amounts otherwise owed by Genocea to Isconova pursuant to Section 6.8 of the Agreement

 

In addition, in order to avoid future misunderstanding regarding the cost of clinical supplies, we agree to promptly commence good faith negotiations of an amendment to Exhibit C-2 to clarify the language of Exhibit C-2 regarding die price to be paid for Preclinical and Clinical Supplies to be supplied by Isconova to Genocea other than the Phase I Supplies.

 

Except as modified by this letter, we agree that the provisions of the Agreement shall remain in full force and effect.  We appreciate the strong relationship that our two companies have formed, and we look forward to continuing to work with Isconova.

 

If you are in agreement with the provisions set forth in this letter, please countersign this letter where indicated below and return it to my attention at your earliest convenience.

 

 

Very truly yours,

 

 

 

GENOCEA BIOSCIENCES, INC.

 

 

 

 

 

By:

/s/ Mustpha Leavenworth Bakali

 

Mustapha Leavenworth Bakali

 

President and CEO

 

 

 

AGREED:

 

 

 

 

 

ISCONOVA AB

 

 

 

 

 

 

 

 

By:

/s/ Lena Söderström

 

 

 

Lena Söderström

 

 

 

President and CEO

 

 

 

 



 

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Amendment 2

 

 

June 18, 2010

 

VIA FEDERAL EXPRESS

 

CONFIDENTIAL

 

Lena Söderström

Chief Executive Officer

Isconova AB

Uppsala Science Park

SE-751 83 Uppsala

Sweden

 

Re: Selection of Disease Fields pertaining to the License and Collaboration Agreement by and between Genocea Biosciences, Inc. and Isconova AB dated August 5th, 2009

 

Dear Lena,

 

We are writing with respect to the above referenced agreement.  All capitalized terms used below have the meaning given to the in such agreement.

 

Pursuant to Article 2, Section 2.1.2 of the above referenced agreement, Genocea Biosciences hereby designates the following three Diseases as Time Limited Exclusive Option Field Candidates:

 

1.                                       [* * *]

2.                                       [* * *]

3.                                       [* * *]

 

Pursuant to Article 2, Section 2.1.3 and Section 3 of the above referenced agreement, Genocea Biosciences hereby designates the following Disease as a Non-Exclusive Option Field Candidate:

 

1 .                                       [* * *]

 


 

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Pursuant to Sections 2.1.2 and 2.1.3, Isconova has twenty business days from the date of this letter which is the Time Limited Exclusive Field Date, to notify Genocea of the availability of a license to these Diseases.  Please let us know your response on the above disease nominations.

 

Regards,

 

 

/s/ Robert E. Farrell, Jr.

 

 

 

Robert E. Farrell, Jr.

 

Vice President Finance & Administration

 

 

cc: Marc Rubenstein, Ropes & Gray

cc: Mikael Smedeby, Advokatfirman Lindhal KB

 

Genocea Biosciences, Inc  |  161 First Street. Suite 2C  |  Cambridge MA 02139

 



 

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Bob Farrell

 

From:

Staph Bakali

 

 

Sent:

Thursday, June 24, 2010 4:34 AM

To:

Lena Söderström

Cc:

Bob Farrell

 

 

Subject:

RE: Genocea Field Nominations: Strictly Confidential

 

 

Thanks Lena. You rapid response is much appreciated. All the best Staph

 

From: Lena Söderström [mailto:Lena.Soderstrom@isconova.se]

Sent: Thursday, June 24, 2010 3:50 AM

To: Staph Bakali

Cc: Bob Farrell

Subject: SV: Genocea Field Nominations: Strictly Confidential Hi Staph,

 

Thanks for your nomination. I hereby confirm your nomination for the three time limited and one non-exclusive field - they are all available.

Looking forward to get more information about the plans for the future.

Have a nice week end.

Lena

 

Från: Staph Bakali [staph.bakali@genocea.com]

Skickat: den 18 juni 2010 17:44

Till: Lena Söderström

Kopia: Bob Farrell

Ämne: Genocea Field Nominations: Strictly Confidential

 

Hi Lena,

 

Good to talk with you yesterday- please find attached our formal nomination for the 3 time limited exclusive fields and one non-exclusive field.

 

We look forward to your confirmation.

 

All the best

Staph

 

Staph Leavenworth Bakali

President & CEO

Genocea Biosciences

161 First Street, Suite 2C

Cambridge, MA 02142

staph.bakali@genocea.com

617.876.8191 ext 201 (w)

617.599.4220 (c)

 



 

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Amendment 3

 

 

August 17, 2010

 

VIA FED EX

 

STRICTLY CONFIDENTIAL

 

Lena Söderström

Chief Executive Officer

Isconova AB

Uppsala Science Park

SE-751 83 Uppsala

Sweden

 

Re:  Amendment to License and Collaboration Agreement by and between Genocea Biosciences, Inc. and Isconova AB dated August 5, 2009 (the “Agreement”)

 

Dear Lena,

 

We are writing with respect to the above referenced Agreement.  All capitalized terms used below have the meaning given to the in Agreement.

 

By your signature below, Isconova AB agrees that Section 1.26(b) of the Agreement (“herpes zoster (shingles)”) shall be replaced with “varicella zoster”.

 

Except as modified by this letter, you agree that the Agreement shall remain in full force and effect in accordance with its terms.

 

Regards,

 

GENOCEA BIOSCIENCES, INC.

 

 

 

 

By:

/s/ Mustpha Leavenworth Bakali_

 

Mustapha Leavenworth Bakali

 

Chie f Executive Officer

 

 

 

 

AGREED:

 

 

 

 

ISCONOVA AB

 

 

 

 

By:

/s/ Lena Söderström

 

 



 

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Lena Söderström

 

Chief Executive Office

 

 

 

cc: Marc Rubenstein, Ropes & Gray LLP

 

 



 

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Amendment 4

 

Amendment No. 4
to the
Isconova License and Collaboration Agreement

 

October 19, 2011

 

STRICTLY CONFIDENTIAL

 

Russell Greig, PhD

Acting Chief Executive Officer

Isconova AB

Kungsgatan 109

SE-753 18 Uppsala

Sweden

 

Re:  Amendment to License and Collaboration Agreement by and between Genocea Biosciences, Inc. and Isconova AB dated August 5, 2009 (the “Agreement”)

 

Dear Russell,

 

We are writing with respect to the above referenced Agreement.  All capitalized terms used below have the meaning given to the in Agreement.

 

By your signature below, Isconova AB agrees to extend the period in which Genocea Biosciences, Inc. can nominate one (1) additional Non-Exclusive Field under Section 2.1.3(a) of the Agreement for six (6) months past the initial expiration of the twenty four (24) month evaluation period, to February 5, 2012.

 

Except as modified by this letter, you agree that the Agreement shall remain in full force and effect in accordance with its terms.

 

Regards,

 

GENOCEA BIOSCIENCES, INC.

 

 

 

 

 

 

 

By:

/s/ Chip Clark

 

Chip Clark

 

President and Chief Executive Officer

 

 

 

 

 

 

 

AGREED:

 

 



 

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ISCONOVA AB

 

 

 

 

 

By:

/s/ Russell Greig

 

Russell Greig, PhD

 

Acting Chief Executive Officer

 

 

 

cc: Marc Rubenstein, Ropes & Gray LLP

 

 



 

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Amendment 5

 

Amendment No. 5
to the
Isconova License and Collaboration Agreement

 

February 6, 2012

 

Isconova AB

Uppsala Science Park, SE-751 83 Uppsala,

Sweden

Attn: Gerd Rundstrom, Chief Operating Officer

 

Dear Gerd,

 

Following our phone conversation this morning, I wanted to memorialize our understanding of the additional costs related to costs of the clinical and tox batch supply for our pre-clinical and Phase 1 studies.  This letter will amend the agreement of costs per the signed letter between Genocea and Isconova dated March 19, 2010.  In that letter, the total projected costs for expected to be [* * *] SEK, where Genocea would be responsible for [* * *]% of the costs.  The revised total final costs are now projected to be [* * *] SEK per attachment A, which Genocea has agreed to be responsible for [* * *]% or [* * *] SEK.

 

Except as modified by this letter, all other provisions in the Agreement remain unchanged.  If you are in agreement of the provisions set forth in this letter, please sign this letter and return it to my attention.

 

Sincerely,

 

Genocea Biosciences, Inc.

 

 

By:

/s/ Robert E. Farrell Jr.

 

Robert E. Farrell Jr. CPA

 

Vice President Finance & Admin

 

 

 

 

 

AGREED:

 

 



 

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Isconova AB

 

 

 

 

 

 

By:

/s/ Gerd Rundstrom

 

Gerd Rundstrom

 

Chief Operating Officer

 

 




 

EXHIBIT 10.5

 

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UNIVERSITY OF CALIFORNIA, BERKELEY

 

OFFICE OF TECHNOLOGY LICENSING

 

 

 

EXCLUSIVE LICENSE

 

BETWEEN

 

GENOCEA INC.

 

AND

 

THE REGENTS OF THE UNIVERSITY OF CALIFORNIA

 

FOR

 

ESCHERICHIA COLI K12 TO DELIVER PROTEIN TO THE MACROPHAGE

CYTOSOL

 

 

 

UC Case No,: B98-039

 

U.S. Patent Nos.: 6,004,815; 6,287,556;

 

6,599.502; and Patent Appl. No.: 10/627,452

 

 



 

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TABLE OF CONTENTS

 

1.

BACKGROUND

1

 

 

 

2.

DEFINITIONS

2

 

 

 

3.

GRANT

4

 

 

 

4.

SUBLICENSES

5

 

 

 

5.

LICENSE ISSUE FEE

8

 

 

 

6.

ROYALTIES AND MILESTONES

8

 

 

 

7.

DUE DILIGENCE

10

 

 

 

8.

PROGRESS AND ROYALTY REPORTS

12

 

 

 

9.

BOOKS AND RECORDS

13

 

 

 

10.

LIFE OF THE AGREEMENT

13

 

 

 

11.

TERMINATION BY REGENTS

14

 

 

 

12.

TERMINATION BY LICENSEE

14

 

 

 

13.

DISPOSITION OF LICENSED PRODUCTS UPON TERMINATION

15

 

 

 

14.

PATENT PROSECUTION AND MAINTENANCE

15

 

 

 

15.

MARKING

16

 

 

 

16.

USE OF NAMES AND TRADEMARKS

16

 

 

 

17.

LIMITED WARRANTIES

17

 

 

 

18.

PATENT INFRINGEMENT

17

 

 

 

19.

INDEMNIFICATION

19

 

 

 

20.

EXPORT CONTROLS

20

 

 

 

21.

GOVERNMENT APPROVAL OR REGISTRATION

21

 

 

 

22.

ASSIGNMENT

21

 

 

 

23.

NOTICES

21

 

 

 

24.

LATE PAYMENTS

22

 

 

 

25.

WAIVER

22

 

 

 

26.

CONFIDENTIALITY

22

 

 

 

27.

FORCE MAJEURE

23

 

 

 

28.

SEVERABILITY

23

 



 

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29.

APPLICABLE LAW; VENUE; ATTORNEYS’ FEES

23

 

 

 

30.

SCOPE OF AGREEMENT

24

 

2



 

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UNIVERSITY OF CALIFORNIA, BERKELEY

OFFICE OF TECHNOLOGY LICENSING

 


 

EXCLUSIVE LICENSE AGREEMENT FOR

ESCHERICHIA COLI K12 TO DELIVER PROTEIN TO THE MACROPHAGE

CYTOSOL

 

 

UC Case No.: B98-039

 

U.S. Patent Nos.: 6,004,815; 6287,556;

 

6,599,502; and Patent Appl. No.: 10/627,452

 


 

This exclusive license agreement (“Agreement”) is effective August 18, 2006 (“Effective Date”), by and between THE REGENTS OF THE UNIVERSITY OF CALIFORNIA, a California corporation, having its systemwide administrative offices at 1111 Franklin Street, 12th Floor, Oakland, California 94607-5200, acting through its Office of Technology Licensing, at the University of California, Berkeley, 2150 Shattuck Avenue, Suite 510, Berkeley, CA 94720-1620 (“REGENTS”) and Genocea , Inc. a Delaware corporation having a principal place of business at 140 East 45th Street, 30th Floor, New York, NY 10017 (“LICENSEE”). The parties agree as follows:

 

1.                                       BACKGROUND

 

1.1.                             REGENTS has an assignment of the ESCHERICHIA COLI K12 TO DELIVER PROTEIN TO THE MACROPHAGE CYTOSOL invented by Daniel Portnoy, Ph.D. and Darren Higgins, Ph.D., employed by the University of California, Berkeley (the “INVENTION”), as described in REGENTS’ Case No. B98-039 and to the patents and patent applications under REGENTS’ PATENT RIGHTS as defined below, which are directed to the INVENTION.

 

1.2.                             LICENSEE has discussed with REGENTS its commercialization strategy for the INVENTION and business strategy in order to evaluate its capabilities as a LICENSEE.

 

1.3.                             The development of the INVENTION was sponsored in part by various grants by U.S. Government agencies, and as a consequence, REGENTS elected to retain title to the INVENTION subject to the rights of the U.S. Government under 35 USC 200-212 and implementing regulations, including that REGENTS, in turn, has granted back to the U.S. Government a non-exclusive, non-transferable irrevocable, paid-up license to practice or have practiced the INVENTION for or

 

1



 

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on behalf of the U.S. Government throughout the world. This U.S. Government grant is NIH Contract No. R01 A127655-10.

 

1.4.                             REGENTS and LICENSEE wish to have the INVENTION perfected and marketed as soon as possible so that products resulting therefrom may be available for public use and benefit.

 

1.5.                             LICENSEE wishes to acquire a license under REGENTS’ PATENT RIGHTS for the purpose of undertaking development and to manufacture, use, sell, offer for sale and import LICENSED PRODUCTS as defined below.

 

2.                                       DEFINITIONS

 

2.1.                             “Regents’ Patent Rights” means the following patents and patent applications:

 

(a)                                  U.S. patent 6,004,815 (U.C. Case No.: B98-039-1) issued on Dec. 21, 1999 as “Bacteria Expressing Nonsecreted Cytolysin as Intracellular Microbial Delivery Vehicles to Eukaryotic Cells”; and

 

(b)                                  U.S. patent 6,287,556 (U.C. Case No.: B98-039-2) issued on Sept. 11, 2001 as “Intracellular Delivery Vehicles”; and

 

(c)                                   U.S. patent 6,599,502 (U.C. Case No.: B98-039-3) issued on July 29, 2003 as “Intracellular Delivery Vehicles”; and

 

(d)                                  U.S. patent application serial number 10/627,452 (U.C. Case No.: B98-039-4) entitled, “Intracellular Delivery Vehicles” filed on July 25, 2003 and any patents issuing therefrom; and

 

(e)                                   and/or any patents or patent applications, including, divisions, continuations, continued prosecution applications, all renewals, reissues, and extensions, re-examinations or claims in continuations-in-part applications, that are entitled to the priority filing date of any of the above-referenced U.S. patents or applications or substitutes for such patents or applications.

 

2.2.                             “LICENSED PRODUCTS” means any product, apparatus, or kit or component part thereof or other material (i) produced by, or used in the practice of the Licensed Method, or (ii) the manufacture, sale, offer for sale or import of which, in either case in the absence of the license agreement, would be an infringement of:

 

(a)                                  A valid claim of any issued, unexpired patent within Regents’ Patent Rights.  A claim within Regents’ Patent Rights shall be presumed to be valid unless and until it has been held to be invalid by a final judgment of

 

2



 

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a court of competent jurisdiction from which no appeal can be or is taken; or

 

(b)                                  A claim being prosecuted in a patent application that has been pending for less than five years (provided that Regents are pursuing such claim in good faith) within Regents’ Patent Rights directed to the Invention (collectively (a) and (b), a “Valid Claim”).

 

2.3.                             “LICENSED METHOD” means any method or process that is covered by Regents’ Patent Rights, or any method or process the use or practice of which would constitute an infringement of any Valid Claims within Regents’ Patent Rights.

 

2.4.                             “LICENSED FIELD OF USE” means all fields.

 

2.5.                             “NET SALES” means the gross invoice amount actually received by, and the value of non-cash consideration actually supplied to, LICENSEE for SALES of LICENSED PRODUCTS, LICENSED SERVICES, and LICENSED METHODS, less the sum of the following actual and customary deductions where applicable: cash, trade or quantity discounts; sales, use, tariff, import/export duties or other excise taxes when included in gross sales, but not value-added taxes assessed or income taxes derived from such sales; transportation charges; and allowances or credits to customers because of rejections or returns. For purposes of calculating NET SALES, a SALE to a sublicensee for end use by the sublicensee will be treated as a SALE at list price.

 

2.6.                             “AFFILIATE” of LICENSEE means any entity that, directly or indirectly, Controls LICENSEE, is Controlled by LICENSEE, or is under common Control with LICENSEE. “Control” means (i) having the actual, present capacity to elect a majority of the directors of such affiliate, (ii) having the power to direct more than fifty percent (50%) of the voting rights entitled to elect directors, or (iii) in any country where the local law will not permit foreign equity participation of a majority, ownership or control, directly or indirectly, of the maximum percentage of such outstanding stock or voting rights permitted by local law.

 

2.7.                             “LICENSED TERRITORY” means United States of America, its territories and possessions, and any foreign countries where REGENTS’ PATENT RIGHTS are filed.

 

2.8.                             “SALE” means, for LICENSED PRODUCTS and LICENSED SERVICES, the act of selling, leasing or otherwise transferring, providing, or furnishing such product or service, and for LICENSED METHOD, the act of performing such method, for any use or for any consideration. Correspondingly, “SELL” means to make or cause to be made a SALE, and “SOLD” means to have made or caused to be made a SALE.

 

3



 

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2.9.                             “LICENSED SERVICE” means a service provided using Licensed Products or Licensed Method. This excludes research funding, FTEs and like support.

 

2.10.                      “DERIVED PRODUCT(S)” means any product which includes but is not limited to a polypeptide or nucleotide sequence, biological organism, or chemical entity identified in the practice of Licensed Method or Licensed Service(s).

 

2.11.                      “Technology in Screening Capacity” means the practice of LICENSED METHOD to identify any polynucleotide, polypeptide, biological organism, or chemical entity in isolation or as a component of other matter.

 

3.                                       GRANT

 

3.1.                             Subject to the limitations set forth in this Agreement, including the license granted to the U.S. Government and the rights reserved in Paragraph 3.3, REGENTS hereby grants and LICENSEE hereby accepts an exclusive license under REGENTS’ PATENT RIGHTS to make, use, offer for SALE, import, and SELL LICENSED PRODUCTS and LICENSED SERVICES, and to practice LICENSED METHOD, in the LICENSED FIELD OF USE in the LICENSED TERRITORY.

 

3.2.                             The licenses under Paragraph 3.1 will be exclusive for a term commencing on the Effective Date and ending on the date of the last-to-expire patent or last to be abandoned patent application licensed under REGENTS’ PATENT RIGHTS, whichever is later.

 

3.3.                             Nothing in this Agreement will be deemed to limit the right of REGENTS to publish any and all technical data resulting from any research performed by REGENTS relating to the INVENTION, and to make and use the INVENTION, LICENSED PRODUCTS, and LICENSED SERVICES and practice LICENSED METHOD and associated technology and to allow other educational and non-profit institutions to do so for educational and research purposes.

 

3.4.                             LICENSEE will have a continuing responsibility to keep REGENTS informed of the large/small entity status, as defined in 15 U.S.C. 632, of itself and its sublicensees.

 

3.5.                             The INVENTION was funded in part by the U.S. Government. In accordance with 35 USC 200-212 and implementing regulations, to the extent required by law or regulation, any products covered by patent applications or patents claiming the INVENTION and sold in the United States will be substantially manufactured in the United States.

 

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4.                                       SUBLICENSES

 

4.1                                REGENTS also grants to LICENSEE the right to sublicense to third parties the right to make, use, offer for SALE, import, and SELL LICENSED PRODUCTS and LICENSED SERVICES, and to practice LICENSED METHOD, provided that LICENSEE has exclusive rights under this Agreement at the time of sublicensing.

 

Every such sublicense will include:

 

(a)                                  a statement setting forth the date upon which LICENSEE’s exclusive rights, privileges, and license hereunder will expire; and

 

(b)                                  as applicable, all the rights of, and require the performance of all the obligations due to, REGENTS (and, if applicable, the United States Government) under this Agreement other than those rights and obligations specified in Article 5 (License Issue Fee) and Article 6 (Royalties and Milestones).

 

4.2.                             LICENSEE will pay to REGENTS [* * *] of any cash consideration, and of the cash equivalent of all other consideration, due to LICENSEE for the grant of rights under each sublicense if the Sublicense only conveys rights to the Regents’ Patent Rights. If a Sublicense conveys rights to patents other than Regents’ Patent Rights then LICENSEE will pay to REGENTS [* * *] of any cash consideration, and of the cash equivalent of all other consideration that is due to LICENSEE. Sublicense revenue shall not include any amounts received by LICENSEE for equity, debt, research and development, the license or sublicense of any intellectual property other than the Regents’ Patent Rights, or reimbursement for patent or other expenses.

 

4.3.                             LICENSEE will notify REGENTS of each sublicense granted hereunder and furnish to REGENTS a copy of each such sublicense agreement.

 

4.4.                             For purposes of this Agreement LICENSEE shall be deemed to include all its AFFILIATES and SALES by AFFILIATES shall be treated the same as SALES by LICENSEE.

 

4.5.                             For the purposes of this Agreement, the operations of all sublicensees and AFFILIATES shall be deemed to be the operations of LICENSEE, for which LICENSEE shall be responsible.

 

4.6.                             LICENSEE will collect and guarantee payment of all monies and other consideration due REGENTS from sublicensees and AFFILIATES, and deliver all reports due REGENTS and received from sublicensees and AFFILIATES.

 

4.7.                             Upon termination of this Agreement for any reason, all sublicenses that are granted by LICENSEE pursuant to this Agreement where the sublicensee is in compliance with its sublicense agreement as of the date of such termination will

 

5



 

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remain in effect and will be assigned to REGENTS, except that REGENTS will not be bound to perform any duties or obligations set forth in any sublicenses that extend beyond the duties and obligations of REGENTS set forth in this Agreement.

 

4.8.                             If after five (5) years from Effective Date, REGENTS (to the extent of the actual knowledge of the licensing professional responsible for administration of this case) or a third party discovers and notifies that licensing professional that the INVENTION is useful for an application covered by the LICENSED FIELD OF USE other than human therapeutics, prophylactics or diagnostics or derivative animal therapeutics, prophylactics, or diagnostics (the “New Application”), but for which LICENSED PRODUCTS have not been developed or are not currently under development by LICENSEE, then REGENTS, as represented by the Office of Technology Licensing, shall give written notice to LICENSEE, except for: 1) information that is subject to restrictions of confidentiality with third parties, and 2) information which originates with REGENTS’ personnel who do not assent to its disclosure to LICENSEE, unless LICENSEE agrees to hold such information in confidence.

 

LICENSEE shall have one hundred and twenty (120) days to give REGENTS written notice stating whether LICENSEE elects to develop LICENSED PRODUCTS for the New Application.

 

If LICENSEE elects to develop and commercialize the proposed LICENSED PRODUCTS for the New Application, LICENSEE shall submit progress reports to REGENTS pursuant to Article 8 of this Agreement.

 

If LICENSEE elects not to develop and commercialize the proposed LICENSED PRODUCTS for use in the New Application, REGENTS may seek (a) third party(ies) to develop and commercialize the proposed LICENSED PRODUCTS for the New Application. If REGENTS is successful in finding a third party, it shall refer such third party to LICENSEE. If the third party requests a sublicense under this Agreement, then LICENSEE shall report the request to REGENTS within thirty (30) days from the date of such written request. If the request results in a sublicense, then LICENSEE shall report it to REGENTS pursuant to the Paragraph 4.3 of this Agreement.

 

If LICENSEE refuses to grant a sublicense to the third party, then within thirty (30) days after such refusal LICENSEE shall submit to REGENTS a report specifying the license terms proposed by the third party and a written justification for LICENSEE’s refusal to grant the proposed sublicense. If REGENTS determines that the terms of the sublicense proposed by the third party are reasonable under the totality of the circumstances, taking into account LICENSEE’s LICENSED PRODUCTS in development, then REGENTS shall have the right to grant to the third party a license to make, have made, use, sell,

 

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offer for sale and import products for use in the New Application at substantially the same terms last proposed to LICENSEE by the third party providing royalty rates are at least equal to those paid by LICENSEE, provided that REGENTS shall pay to LICENSEE 50% of the net consideration after reimbursement of costs, received by REGENTS from such third party.

 

7


 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

5.                                       LICENSE ISSUE FEE

 

5.1.                             Upon execution of this Agreement, LICENSEE shall pay to REGENTS an upfront fee of $[* * *] due on the Effective Date of this Agreement.

 

Within nine (9) months of the Effective Date of this Agreement, LICENSEE shall issue to REGENTS in REGENTS’ street name “Shellwater & Co.” such number of shares of common stock of LICENSEE equal to [* * *] of the founders stock according to the attached cap table on a pre-financing basis. Receipt of equity is subject to Office of the President approval.

 

6.                                       ROYALTIES AND MILESTONES

 

6.1.                             In countries where manufacture, sale, offer for sale, import, or use of Licensed Products is [* * *], the royalty rate shall be:

 

[* * *] of Net Sales for any Derived Product(s) by LICENSEE derived from use of Technology in Screening Capacity which may not be reduced by any provision of the this Agreement.

 

[* * *] of Net Sales of any Licensed Product by LICENSEE which may not be reduced to less than [* * *] by any term or provision of the this Agreement. The minimum annual royalty (MAR) shall be $[* * *] due upon the first occurrence of Net Sales of Licensed Product and annually thereafter. The MAR shall be creditable and carry forwardable against future royalties.

 

[* * *] of Net Sales from Licensed Service by LICENSEE which may not be reduced by any provision of this Agreement.

 

If a product is both a Licensed Product and a Derived Product, it shall only be subject to the royalty payable as a Licensed Product.

 

No matter how many Licensed Patents are involved in any one such product or service, only one royalty, the higher royalty of those listed above, shall be due.

 

REGENTS shall not be entitled to any royalties on Sales of Licensed Products or Derived Products or Licensed Services by Sublicensees, but shall be entitled to the percentage of sublicense royalties and other fees received by LICENSEE set forth in paragraph 4.2 of this Agreement.

 

6.2.                             Combined Product Adjustment:

In the event LICENSED PRODUCT(S) is sold in a combination package or kit containing other active products, such as antibodies, antigens, enzymes, or other products material to the efficacy or function of the LICENSED PRODUCT(S).NET SALES, for purposes of determining royalty payments on the combination

 

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package, shall be calculated using one of the following methods on a country-by-country basis:

 

(a)                                  [* * *]; or

(b)                                  [* * *].

 

6.3.                             Royalties to Third Parties:

In the event a LICENSED PRODUCT(S) is combined with technology covered by other licensed patents necessary for sales to end users, whether by LICENSEE or its sublicensee, LICENSEE may credit up to [* * *] of royalties that LICENSEE is paying to third parties on LICENSEE’s NET SALES of that LICENSED PRODUCT to the royalty due REGENTS. In no event shall the royalty due to REGENTS under this adjustment be less than [* * *] of the Set Royalty [* * *] when combined with any and all other provisions within this Agreement that may reduce the Royalty Rate on Licensed Product(s).

 

6.4.                             Royalties accruing to REGENTS will be paid to REGENTS quarterly within sixty (60) days after the end of each calendar quarter.

 

6.5.                             LICENSEE shall pay a maintenance fee of $[* * *] due on the third anniversary of Effective Date and annually thereafter. No further maintenance fees shall be due following the first occurrence of Net Sales of Licensed Product(s) or Licensed Service(s) provided the annual Net Sales of Licensed Services exceed $[* * *].

 

6.6.                             All payments due REGENTS will be payable in United States dollars. When LICENSED PRODUCTS, LICENSED SERVICES, or LICENSED METHOD are SOLD for monies other than United States dollars, earned royalties will first be determined in the foreign currency of the country in which the SALE was made and then converted into equivalent United States dollars. The exchange rate will be that rate quoted in the Wall Street Journal on the last business day of the reporting period.

 

6.7.                             Payments due for SALES occurring in any country outside the United States will not be reduced by any taxes, fees, or other charges imposed by the government of such country on the remittance of royalty income. LICENSEE will also be responsible for all bank transfer charges.

 

6.8.                             LICENSEE will make all payments under this Agreement by check payable to “The Regents of the University of California” and forward it to REGENTS at the address shown in Article 23 (Notices).

 

6.9.                             If any patent or patent application, or any claim thereof, included within REGENTS’ PATENT RIGHTS expires or is held invalid in a final decision by a court of competent jurisdiction and last resort and from which no appeal has been or can be taken, all obligation to pay royalties based on such patent, patent

 

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application or claim, or any claims patentably indistinct therefrom will cease as of the date of such expiration or final decision. LICENSEE will not, however, be relieved from paying any royalties that accrued before such expiration or decision or that are based on another Valid Claim not expired or involved in such decision.

 

6.10.                      No earned royalties will be collected or paid hereunder on SALES to, or for use by, the United States Government.

 

6.11.                      Milestone Payments for Licensed Product(s):

 

Milestone payments as follows: Licensee shall pay to Regents milestone fees within thirty (30) days following each milestone event for each Licensed Product according to the following schedule:

 

(a)                                  Licensee shall pay to Regents a milestone payment of [* * *] upon [* * *] for the first Licensed Product by LICENSEE and [* * *] for [* * *] for each subsequent Licensed Product which is a chemically or biologically distinct compound or biologic by LICENSEE. The above payments in this Paragraph 6.11(a) for any given chemical or biological entity will only be paid once.

 

(b)                                  Licensee shall pay to Regents a milestone payment of [* * *] upon [* * *] by LICENSEE and [* * *] for [* * *] that is a chemically or biologically distinct compound or biologic by LICENSEE. The above payments for any given chemical or biological entity will only be paid once. The above payments in this Paragraph 6.11(b) for any given chemical or biological entity will only be paid once.

 

7.                                       DUE DILIGENCE

 

7.1.                             LICENSEE shall provide Commercialization and Development plans to REGENTS in form similar to that provided to LICENSEE’s Board of Directors or investors.

 

7.2.                             LICENSEE, upon execution of this Agreement, will diligently proceed with the development, manufacture, and SALE of LICENSED PRODUCTS, LICENSED SERVICES, and LICENSED METHOD, and will diligently market them in quantities sufficient to meet the market demand.

 

7.3.                             LICENSEE shall be deemed to be diligently proceeding if it shall (i) fund research and/or development of technology that is reasonably necessary for commercialization of the Regents’ Patent Rights in each calendar year in at least the amounts provided below (such funding shall include internal or external research and/or development funded by or provided for the benefit of LICENSEE

 

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(“Research Funding”)), or (ii) successfully commercialize and obtain annual revenues from Licensed Services in at least the amounts provided below.

 

 

Research Funding:

 

 

 

2007

$

[* * *]

 

 

2008

$

[* * *]

 

 

2009

$

[* * *]

 

 

2010 and thereafter

$

[* * *]

 

 

 

 

 

 

Licensed Service Revenues:

 

 

 

2008

$

[* * *]

 

 

2009

$

[* * *]

 

 

2010 and thereafter

$

[* * *]

 

 

7.4.                             Subject to overriding obligations to the U.S. Government, if LICENSEE is unable to meet any of its diligence obligations set forth in Paragraphs 7.1, 7.2, 7.3, or 7.4 then REGENTS will so notify LICENSEE of failure to perform. LICENSEE will have the right and option to extend the target date of any such due diligence obligation for a period of six (6) months upon the payment of [* * *] within thirty (30) days of the date to be extended for each such extension option exercised by LICENSEE. LICENSEE may further extend the target date of any diligence obligation for an additional six (6) months upon payment of an additional [* * *]. Additional extensions may be granted only by mutual written agreement of the parties to this Agreement. These payments are in addition to the minimum royalty payments specified in Paragraph 6.1. Should LICENSEE opt not to extend the diligence obligation or fail to meet it by the extended target date, then REGENTS will have the right and option either to terminate this Agreement at any time after 10 years from the effective date or to reduce LICENSEE’s exclusive license to a non-exclusive royalty-bearing license at any time after 3 years from the effective date. This right, if exercised by REGENTS, supersedes the rights granted in Article 3. The right to terminate this Agreement or reduce LICENSEE’s exclusive license granted hereunder to a non-exclusive license will be REGENTS sole remedy for breach of this Article 7.

 

7.5.                             At the request of either party, any controversy or claim arising out of or relating to the diligence provisions of this Article 7 will be settled by arbitration conducted in San Francisco, California in accordance with the then current Licensing Agreement Arbitration Rules of the American Arbitration Association. Judgment upon the award rendered by the arbitrator(s) will be binding on the parties and may be entered by either party in the court or forum having jurisdiction. In determination of due diligence, the arbitrator may determine solely the issues of fact or law with respect to termination of LICENSEE’s rights under this

 

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Agreement but will not have the authority to award monetary damages or grant equitable relief.

 

7.6.                             To exercise either the right to terminate this Agreement or to reduce the license to a non-exclusive license for lack of diligence under Paragraph 7.4, REGENTS will give LICENSEE written notice of the deficiency. LICENSEE thereafter has sixty (60) days to cure the deficiency or to request arbitration. If REGENTS has not received a written request for arbitration or satisfactory tangible evidence that the deficiency has been cured by the end of the sixty (60) - day period, then REGENTS may, at its option, either terminate the Agreement at any time after 10 years from the effective date or reduce LICENSEE’s exclusive license to a non-exclusive license at any time after 3 years from the effective date by giving written notice to LICENSEE. These notices will be subject to Article 23 (Notices).

 

8.                                       PROGRESS AND ROYALTY REPORTS

 

8.1.                             For the period beginning January 1 st  2007, LICENSEE will submit to REGENTS a semi-annual progress report covering LICENSEE’s activities related to the development and testing of all LICENSED PRODUCTS, LICENSED SERVICES and LICENSED METHOD and the obtaining of necessary governmental approvals, if any, for marketing in the United States. These progress reports will be made for all development activities until the first SALE occurs in the United States.

 

8.2.                             Each progress report will be a detailed summary of activities of LICENSEE’s progress in development of LICENSED PRODUCTS, LICENSED SERVICES, and LICENSED METHOD, and in meeting its diligence obligations under Article 7 similar in form to what LICENSEE presents to its Board of Directors or investors, and will include the following: summary of work completed and in progress; current schedule of anticipated events and milestones, including diligence milestones under Paragraph 7.4.

 

8.3.                             LICENSEE also will report to REGENTS in its immediately subsequent progress and royalty reports, the date of first SALE.

 

8.4.                             After the first SALE anywhere in the world, LICENSEE will make quarterly royalty reports to REGENTS within sixty (60) days after the quarters ending March 31, June 30, September 30, and December 31, of each year. Each such royalty report will include at least the following:

 

(a)                                  The number of LICENSED PRODUCTS manufactured and the number SOLD;

(b)                                  Gross revenue from SALE of LICENSED PRODUCTS, LICENSED SERVICES and LICENSED METHOD;

(c)                                   NET SALES pursuant to Paragraph 2.5;

 

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(d)                                  Total royalties due REGENTS; and

(e)                                   Names and addresses of any AFFILIATES with activities falling under this Agreement, and new sublicensees along with a summary of the material terms of each new sublicense agreement entered into during the reporting quarter.

 

8.5.                             If no SALES have occurred during the report period, a statement to this effect is required in the royalty report for that period.

 

9.                                       BOOKS AND RECORDS

 

9.1.                             LICENSEE will keep full, true, and accurate books of accounts containing all particulars that may be necessary for the purpose of showing the amount of royalties payable to REGENTS and LICENSEE’s compliance with other obligations under this Agreement. Said books of accounts will be kept at LICENSEE’s principal place of business or the principal place of business of the appropriate division of LICENSEE to which this Agreement relates. Said books and the supporting data will be open at all reasonable times during normal business hours upon reasonable notice, for five (5) years following the end of the calendar year to which they pertain, to the inspection and audit by representatives of REGENTS for the purpose of verifying LICENSEE’s royalty statement or compliance in other respects with this Agreement but not more often than once in any twelve (12) month period. Such representative will be bound to hold all information in confidence except as necessary to communicate LICENSEE’s non-compliance with this Agreement to REGENTS.

 

9.2.                             The fees and expenses of REGENTS’ representatives performing such an examination will be borne by REGENTS. However, if an error in underpaid royalties to REGENTS of more than five percent (5%) of the total royalties due for any year is discovered, then the fees and expenses of these representatives will be borne by LICENSEE.

 

10.                                LIFE OF THE AGREEMENT

 

10.1.                      Unless otherwise terminated by the operation of law or by acts of the parties in accordance with the terms of this Agreement, this Agreement will be in force from the Effective Date and will remain in effect for the life of the last-to-expire patent or last-to-be-abandoned patent application licensed under this Agreement, whichever is later.

 

10.2.                      Any termination of this Agreement shall not affect the rights and obligations set forth in the following articles:

 

Article 2                                                                            Definitions

Article 4                                                                            Sublicenses

 

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Article 9                                                                            Books and Records

Article 10                                                                     Life of the Agreement

Article 13                                                                     Disposition of Licensed Products Upon Termination

Article 16                                                                     Use of Names and Trademarks

Article 17                                                                     Limited Warranties

Article 19                                                                     Indemnification

Article 23                                                                     Notices

Article 24                                                                     Late Payments

Article 26                                                                     Confidentiality

Article 29                                                                     Applicable Law; Venue; Attorney’s Fees

 

10.3.                      Any termination of this Agreement will not relieve LICENSEE of its obligation to pay any monies due or owing at the time of such termination and will not relieve any obligations, of either party to the other party, established prior to termination.

 

11.                                TERMINATION BY REGENTS

 

11.1.                      If LICENSEE should violate or fail to perform any term of this Agreement in any material respect, then REGENTS may give written notice of such default (“Notice of Default”) to LICENSEE. If LICENSEE should fail to repair such default or to request arbitration in the case of breach of a diligence requirement under Article 7 within sixty (60) days of the effective date of such notice, REGENTS will have the right to terminate this Agreement and the licenses herein by a second written notice (“Notice of Termination”) to LICENSEE. If LICENSEE shall request arbitration in the case of breach of a diligence requirement under Article 7, this Agreement may not be terminated by REGENTS until such Arbitration is resolved. If a Notice of Termination is sent to LICENSEE, this Agreement will automatically terminate on the effective date of such notice. Such termination will not relieve LICENSEE of its obligation to pay any royalty or license fees owing at the time of such termination and will not impair any accrued rights of REGENTS. These notices will be subject to Article 23 (Notices).

 

12.                                TERMINATION BY LICENSEE

 

12.1.                      LICENSEE will have the right at any time to terminate this Agreement in whole or as to any portion of REGENTS’ PATENT RIGHTS by giving notice in writing to REGENTS. Such notice of termination will be subject to Article 23 (Notices) and termination of this Agreement will be effective thirty (30) days after the effective date of such notice.

 

12.2.                      Any termination pursuant to Paragraph 12.1 will not relieve LICENSEE of any obligation or liability accrued hereunder prior to such termination or rescind anything done by LICENSEE or any payments made to REGENTS hereunder

 

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prior to the time such termination becomes effective, and such termination will not affect in any manner any rights of REGENTS arising under this Agreement prior to such termination.

 

13.                                DISPOSITION OF LICENSED PRODUCTS UPON TERMINATION

 

13.1.                      Upon termination of this Agreement, for a period of one hundred and eighty (180) days after the date of termination LICENSEE may complete and SELL any partially made LICENSED PRODUCTS and continue to render any previously commenced LICENSED SERVICES, and continue the practice of LICENSED METHOD only to the extent necessary to do so; provided, however, that all such SALES will be subject to the terms of this Agreement including, but not limited to, the payment of royalties at the rate and at the time provided herein and the rendering of reports thereon.

 

14.                                PATENT PROSECUTION AND MAINTENANCE

 

14.1.                      REGENTS will diligently prosecute and maintain the United States and foreign patent applications and patents under REGENTS’ PATENT RIGHTS, subject to LICENSEE’S reimbursement of REGENTS’ out of pocket costs, and all patent applications and patents under REGENTS’ PATENT RIGHTS will be held in the name of REGENTS. REGENTS will have sole responsibility for retaining and instructing patent counsel, but continued use of such counsel at any point in the patent prosecution process subsequent to initial filing of a U.S. patent application covering the INVENTION shall be subject to the approval of LICENSEE. If LICENSEE rejects three (3) of REGENTS’ choice of prosecution counsel, then REGENTS may select new prosecution counsel without LICENSEE’s consent. REGENTS shall promptly provide LICENSEE with copies of all relevant documentation so that LICENSEE may be currently informed and apprised of the continuing prosecution and LICENSEE agrees to keep this documentation confidential. LICENSEE may comment upon such documentation and REGENTS and its patent counsel shall consider such comments in good faith, provided, however, that if LICENSEE after having been provided such documentation has not commented upon such documentation in reasonable time for REGENTS to sufficiently consider LICENSEE’s comments prior to the deadline for filing a response with the relevant government patent office, REGENTS will be free to respond appropriately without consideration of LICENSEE’s comments. LICENSEE and LICENSEE’s patent counsel will have the right to consult with patent counsel chosen by REGENTS.

 

14.2.                      REGENTS will use reasonable efforts to prepare or amend any patent application to include claims reasonably requested by LICENSEE to protect the LICENSED PRODUCTS contemplated to be SOLD or to be practiced under this Agreement.

 

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14.3.                      Subject to Paragraph 14.4, all past, present, and future costs for preparing, filing, prosecuting, and maintaining all United States and foreign patent applications, and patents under REGENTS’ PATENT RIGHTS will be borne by LICENSEE, so long as the licenses granted to LICENSEE herein are exclusive. LICENSEE will fully reimburse REGENTS for half of all outstanding patent costs within three (3) months of Effective Date and the remainder within nine (9) months of Effective Date.

 

Payments are due within thirty (30) days after receipt of invoice from REGENTS. If, however, REGENTS reduces the exclusive licenses granted herein to non-exclusive licenses pursuant to Paragraph 7.5 and REGENTS grants additional license(s), the costs of preparing, filing, prosecuting and maintaining such patent applications and patents will be divided equally among the licensed parties from the effective date of each subsequently granted license agreement.

 

14.4.                      LICENSEE’s obligation to underwrite and to pay all domestic and foreign patent filing, prosecution, and maintenance costs will continue for so long as this Agreement remains in effect, provided, however, that LICENSEE may terminate its obligations with respect to any given patent application or patent in any or all designated countries upon three (3) months’ written notice to REGENTS. REGENTS will use its best efforts to curtail patent costs when such a notice is received from LICENSEE. REGENTS may continue prosecution and/or maintenance of such applications or patents at its sole discretion and expense; provided, however, that LICENSEE will have no further right or licenses thereunder.

 

15.                                MARKING

 

15.1.                      LICENSEE will mark all products made, used or SOLD under this Agreement, or their containers, in accordance with applicable patent marking laws.

 

16.                                USE OF NAMES AND TRADEMARKS

 

16.1.                      Nothing contained in this Agreement will be construed as conferring any right to use in advertising, publicity or other promotional activities any name, trademark, trade name, or other designation of either party hereto by the other (including any contraction, abbreviation, or simulation of any of the foregoing). Unless required by law or consented to in writing by REGENTS, the use by LICENSEE of the name “The Regents of the University of California” or the name of any University of California campus in advertising, publicity or other promotional activities is expressly prohibited.

 

16



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

17.                                LIMITED WARRANTIES

 

17.1.                      REGENTS warrants to LICENSEE that it has the lawful right to grant this license and, to the extent of the actual knowledge of the licensing professional responsible for administering this Agreement as of the Effective Date, that it is the sole owner of all right, title, and interest in and to the Invention.

 

17.2.                      This license and the associated INVENTION are provided WITHOUT WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY, EXPRESSED OR IMPLIED. REGENTS MAKES NO REPRESENTATION OR WARRANTY THAT THE INVENTION, REGENTS’ PATENT RIGHTS, LICENSED PRODUCTS, LICENSED SERVICES OR LICENSED METHOD WILL NOT INFRINGE ANY PATENT OR OTHER PROPRIETARY RIGHT.

 

17.3.                      IN NO EVENT WILL REGENTS BE LIABLE FOR ANY INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES RESULTING FROM EXERCISE OF THIS LICENSE OR THE USE OF THE INVENTION, REGENTS’ PATENT RIGHTS, LICENSED METHOD, LICENSED SERVICES OR LICENSED PRODUCTS.

 

17.4.                      Nothing in this Agreement is or will be construed as:

 

(a)                                  A warranty or representation by REGENTS as to the validity, enforceability or scope of any REGENTS PATENT RIGHTS; or

 

(b)                                  A warranty or representation that anything made, used, or SOLD under any license granted in this Agreement is or will be free from infringement of patents of third parties; or

 

(c)                                   An obligation to bring or prosecute actions or suits against third parties for patent infringement, except as provided in Article 18; or

 

(d)                                  Conferring by implication. estoppel, or otherwise any license or rights under any patents of REGENTS other than REGENTS’ PATENT RIGHTS as defined herein, regardless of whether such patents are dominant or subordinate to REGENTS’ PATENT RIGHTS; or

 

(e)                                   An obligation to furnish any know-how not provided in the patents and patent applications under REGENTS’ PATENT RIGHTS.

 

18.                                PATENT INFRINGEMENT

 

18.1.                      In the event that LICENSEE learns of the substantial infringement of any REGENTS’ PATENT RIGHTS under this Agreement, LICENSEE will promptly provide REGENTS with notice and reasonable evidence of such infringement

 

17


 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

(“Infringement Notice”). During the period and in a jurisdiction where LICENSEE has exclusive rights under this Agreement, neither party will notify a third party, including the infringer, of the infringement without first obtaining consent of the other party, which consent will not be unreasonably withheld. Both parties will use diligent efforts, in cooperation with each other, to terminate such infringement without litigation.

 

18.2.                      If the infringing activity of potential commercial significance has not been abated within ninety (90) days following the effective date of the Infringement Notice, LICENSEE may institute suit for patent infringement against the infringer. REGENTS may voluntarily join such suit at its own expense, but may not thereafter commence suit against the infringer for the acts of infringement that are the subject of LICENSEE’s suit or any judgment rendered in that suit. LICENSEE may not join REGENTS in a suit initiated by LICENSEE without REGENTS’ prior written consent. If, in a suit initiated by LICENSEE, REGENTS is involuntarily joined other than by LICENSEE, LICENSEE will pay any costs incurred by REGENTS arising out of such suit, including but not limited to, any legal fees of counsel that REGENTS selects and retains to represent it in the suit who shall be reasonably acceptable to LICENSEE, provided that if LICENSEE rejects two (2) of REGENTS choices of legal counsel then REGENTS may select such counsel without LICENSEE’S consent.

 

18.3.                      If, within a hundred and twenty (120) days following the effective date of the Infringement Notice, the infringing activity of potential commercial significance has not been abated and if LICENSEE has not brought suit against the infringer, REGENTS may institute suit for patent infringement against the infringer. If REGENTS institutes such suit, LICENSEE may not join such suit without REGENTS’ consent and may not thereafter commence suit against the infringer for the acts of infringement that are the subject of REGENTS’ suit or any judgment rendered in that suit.

 

18.4.                      Such legal action as is decided upon will be at the expense of the party on account of whom suit is brought and all recoveries recovered thereby will belong to such party, provided that legal action brought jointly by REGENTS and LICENSEE and participated in by both, will be at the joint expense of the parties and all recoveries will be allocated in the following order: a) to each party reimbursement in equal amounts of the attorney’s costs, fees, and other related expenses to the extent each party paid for such costs, fees, and expenses until all such costs, fees, and expenses are consumed for each party; and b) any remaining amount shared jointly by them in proportion to the share of expenses paid by each party, but in no event will REGENTS’ share be less than ten percent (10%) of such remaining amount if REGENTS is a party.

 

Each party will cooperate with the other in litigation instituted hereunder but at the expense of the party on account of whom suit is brought. Such litigation will

 

18



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

be controlled by the party bringing the action, except that REGENTS may be represented by counsel of its choice in any suit brought by LICENSEE.

 

18.5.                      Any agreement made by LICENSEE for the purposes of settling litigation or other dispute shall comply with the requirements of Article 4 (Sublicenses) of this Agreement.

 

19.                                INDEMNIFICATION

 

19.1.                      LICENSEE will, and will require its sublicensees to, indemnify, hold harmless, and defend REGENTS and its officers, employees, and agents; sponsor(s) of the research that led to the INVENTION; and the inventors of any patents and patent applications under REGENTS PATENT RIGHTS and their employers against any and all claims, suits, losses, damages, costs, fees, and expenses resulting from or arising out of exercise of this license or any sublicense. This indemnification will include, but not be limited to, any product liability.

 

19.2.                      LICENSEE, at its sole cost and expense, will insure its activities in connection with any work performed hereunder and will obtain, keep in force, and maintain the following insurance:

 

(a)                                  Commercial Form General Liability Insurance (contractual liability included) with limits as follows:

 

From and after the Effective Date of this Agreement:

 

Each Occurrence

 

$

500,000

 

Products/Completed Operations Aggregate

 

$

1,000,000

 

Personal and Advertising Injury

 

$

500,000

 

General Aggregate

 

$

1,000,000

 

 

From and after the date LICENSEE shall commence clinical trials of any Licensed Product or Derived Product:

 

Each Occurrence

 

$

5,000,000

 

Products/Completed Operations Aggregate

 

$

10,000,000

 

Personal and Advertising Injury

 

$

5,000,000

 

General Aggregate

 

$

10,000,000

 

 

If the above insurance is written on a claims-made form, it shall continue for three (3) years following termination or expiration of this Agreement. The insurance shall have a retroactive date of placement prior to or coinciding with the commencement of the insurance requirements of this Paragraph 19.2(a); and

 

19



 

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

(b)                                  Worker’s Compensation as legally required in the jurisdiction in which LICENSEE is doing business.

 

19.3.                      The coverage and limits referred to in Subparagraphs 19.2a and 19.2b above will not in any way limit the liability of LICENSEE under this Article. Upon the execution of this Agreement, LICENSEE will furnish REGENTS with certificates of insurance evidencing compliance with all requirements. Such certificates will:

 

(a)                                  provide for thirty (30) days’ (ten (10) days for non-payment of premium) advance written notice to REGENTS of any cancellation of insurance coverages; LICENSEE will promptly notify REGENTS of any material modification of the insurance coverages;

 

(b)                                  indicate that REGENTS has been endorsed as an additional insured under the coverage described above in Subparagraph 19.2; and

 

(c)                                   include a provision that the coverage will be primary and will not participate with, nor will be excess over, any valid and collectable insurance or program of self-insurance maintained by REGENTS.

 

19.4.                      REGENTS will promptly notify LICENSEE in writing of any claim or suit brought against REGENTS for which REGENTS intends to invoke the provisions of this Article 19. LICENSEE will keep REGENTS informed of its defense of any claims pursuant to this Article 19.

 

20.                                EXPORT CONTROLS

 

20.1.                      LICENSEE understands that REGENTS is subject to United States laws and regulations (including the Arms Export Control Act, as amended, and the Export Administration Act of 1979), controlling the export of technical data, computer software, laboratory prototypes and other commodities, and REGENTS’ obligations under this Agreement are contingent on compliance with such laws and regulations. The transfer of certain technical data and commodities may require a license from the cognizant agency of the United States Government and/or written assurances by LICENSEE that LICENSEE will not export such technical data and/or commodities to certain foreign countries without prior approval of such agency. REGENTS neither represents that a license will not be required nor that, if required, it will be issued.

 

20.2.                      LICENSEE shall comply with all applicable international, national, state, regional, and local laws and regulations in performing its obligations hereunder and in its use, manufacture, Sale, or import of the LICENSED PRODUCTS, LICENSED SERVICES, or practice of the LICENSED METHOD. LICENSEE will observe all applicable United States and foreign laws with respect to the transfer of LICENSED PRODUCTS and related technical data and the provision

 

20



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

of LICENSED SERVICES to foreign countries including without limitation, the International Traffic in Arms Regulations (ITAR) and the Export Administration Regulations. LICENSEE shall manufacture LICENSED PRODUCTS and practice the LICENSED METHOD in compliance with applicable government importation laws and regulations of a particular country for LICENSED PRODUCTS made outside the particular country in which such LICENSED PRODUCTS are used, Sold, or otherwise exploited.

 

21.                                GOVERNMENT APPROVAL OR REGISTRATION

 

21.1.                      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 will assume all legal obligations to do so. LICENSEE will notify REGENTS if it becomes aware that this Agreement is subject to a United States or foreign government reporting or approval requirement. LICENSEE will 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.

 

22.                                ASSIGNMENT

 

22.1.                      This Agreement is binding upon and shall inure to the benefit of REGENTS, its successors and assigns. This Agreement will be personal to LICENSEE and assignable by LICENSEE only with the written consent of REGENTS, except that LICENSEE may freely assign this Agreement to an acquirer of all or substantially all of LICENSEE’s stock, assets or the portion of LICENSEE’s business to which this Agreement relates.

 

23.                                NOTICES

 

23.1.                      All notices under this Agreement will be deemed to have been fully given and effective when done in writing and delivered in person, or mailed by registered or certified U.S. mail, or deposited with a carrier service requiring signature by recipient, and addressed as follows:

 

To REGENTS:

 

Office of Technology Licensing

 

 

2150 Shattuck Avenue, Suite 510

 

 

Berkeley, CA 94720-1620

 

 

Attn.: Director (UC Case No.: B98-039)

 

 

 

To LICENSEE:

 

Genocea, Inc.

 

 

c/o Lux Capital

 

 

140 East 45th Street, 30th Floor

 

 

New York, NY 10017

 

 

Attn.: Robert Paull

 

Either party may change its address upon written notice to the other party.

 

 

21



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

24.                                LATE PAYMENTS

 

24.1.                      If monies owed to REGENTS under this Agreement are not received by REGENTS when due, LICENSEE will pay to REGENTS interest charges at a rate of ten percent (10%) per annum. Such interest will be calculated from the date payment was due until actually received by REGENTS. Such accrual of interest will be in addition to, and not in lieu of, enforcement of any other rights of REGENTS related to such late payment. Acceptance of any late payment will not constitute a waiver under Article 25 (Waiver) of this Agreement.

 

25.                                WAIVER

 

25.1.                      The failure of either party to assert a right hereunder or to insist upon compliance with any term or condition of this Agreement will not constitute a waiver of that right or excuse a similar subsequent failure to perform any such term or condition by the other party. None of the terms and conditions of this Agreement can be waived except by the written consent of the party waiving compliance.

 

26.                                CONFIDENTIALITY

 

26.1.                      Each party will hold the other party’s proprietary business and technical information, patent prosecution material and other proprietary information, including the negotiated terms of this Agreement, in confidence and against disclosure to third parties with at least the same degree of care as it exercises to protect its own data and license agreements of a similar nature. This obligation will expire five (5) years after the termination or expiration of this Agreement.

 

26.2.                      Nothing contained herein will in any way restrict or impair the right of LICENSEE or REGENTS to use, disclose, or otherwise deal with any information or data which:

 

(a)                                  at the time of disclosure to a receiving party is generally available to the public or thereafter becomes generally available to the public by publication or otherwise through no act of the receiving party;

 

(b)                                  the receiving party can show by written record was in its possession prior to the time of disclosure to it hereunder and was not acquired directly or indirectly from the disclosing party;

 

(c)                                   is independently made available to the receiving party without restrictions as a matter of right by a third party; or

 

(d)                                  is subject to disclosure under the California Public Records Act or other requirements of law.

 

22



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

26.3.                      REGENTS will be free to release to the inventors and senior administrators employed by REGENTS the terms and conditions of this Agreement upon their request. If such release is made, REGENTS will inform such employees of the confidentiality obligations set forth above and will request that they do not disclose such terms and conditions to others. Should a third party inquire whether a license to REGENTS’ PATENT RIGHTS is available, REGENTS may disclose the existence of this Agreement and the extent of the grant in Articles 3 and 4 to such third party, but will not disclose the name of LICENSEE unless LICENSEE has already made such disclosure publicly.

 

26.4.                      LICENSEE and REGENTS agree to destroy or return to the disclosing party proprietary information received from the other in its possession within fifteen (15) days following the effective date of termination of this Agreement. However, each party may retain one copy of proprietary information of the other solely for archival purposes in non-working files for the sole purpose of verifying the ownership of the proprietary information, provided such proprietary information will be subject to the confidentiality provisions set forth in Article 26. LICENSEE and REGENTS agree to provide each other, within thirty (30) days following termination of this Agreement, with a written notice that proprietary information has been returned or destroyed.

 

27.                                FORCE MAJEURE

 

27.1.                      Except for LICENSEE’s obligation to make any payments to REGENTS hereunder, the parties to this Agreement shall be excused from any performance required hereunder if such performance is rendered impossible or unfeasible due to any catastrophes or other major events beyond their reasonable control, including, without limitation, war, riot, and insurrection; laws, proclamations, edicts, ordinances, or regulations; strikes, lockouts, or other serious labor disputes; and floods, fires, explosions, or other natural disasters. When such events have abated, the parties respective obligations hereunder will resume.

 

28.                                SEVERABILITY

 

28.1.                      The provisions of this Agreement are severable, and in the event that any provision of this Agreement will be determined to be invalid or unenforceable under any controlling body of law, such invalidity or enforceability will not in any way affect the validity or enforceability of the remaining provisions hereof.

 

29.                                APPLICABLE LAW; VENUE; ATTORNEYS’ FEES

 

29.1.                      THIS AGREEMENT WILL BE CONSTRUED, INTERPRETED, AND APPLIED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, excluding any choice of law rules that would direct the application of the laws of another jurisdiction, but the scope and validity of any

 

23



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

patent or patent application under REGENTS’ PATENT RIGHTS will be determined by the applicable law of the country of such patent or patent application. Any legal action brought by the parties relating to this Agreement will be conducted in San Francisco, California. The prevailing party in any legal action under this Agreement will be entitled to recover its reasonable attorneys’ fees in addition to its costs and necessary disbursements.

 

30.                                SCOPE OF AGREEMENT

 

30.1.                      This Agreement incorporates the entire agreement between the parties with respect to the subject matter hereof, and this Agreement may be altered or modified only by written amendment duly executed by the parties hereto.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement in duplicate originals by their duly authorized officers or representatives.

 

 

THE REGENTS OF THE

GENOCEA, INC.

UNIVERSTY OF CALIFORNIA

 

 

 

 

 

By

/s/ Veronica Lanier

 

By

/s/ Robert Paull

 

Veronica Lanier

 

 

 

Acting Director

 

Robert Paull

 

Office of Technology Licensing

 

 

 

 

Acting President

 

 

 

Date

September 1, 2006

 

Date

8/30/06

 

24



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

GENOCEA, INC. CAPITALIZATION TABLE - Confidential Information

 

FOUNDERS’ STOCK (Common Stock Capitalization Before Series A Preferred Stock Financing)

 

 

% of Founders’ Stock

 

# of Shares of Common Stock

[* * *]

 

 

 

 

25




EXHIBIT 10.6

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

PATENT LICENSE AGREEMENT

 

BETWEEN

 

GENOCEA BIOSCIENCES, INC.

 

AND

 

UNIVERSITY OF WASHINGTON

 

FOR

 

“THE USE OF HERPES SIMPLEX VIRUS TYPE 2 ANTIGENS AS IMMUNOPROPHYLAXIS OR IMMUNOTHERAPY TO PREVENT OR TREAT HSV INFECTIONS IN HUMANS”

 

UWTT REF# 2158-2670DL, 2473-3146DL and 2709-3649DL

 

UWTT AGREEMENT# 22557A

 

Dated January 27, 2010 and as amended on July 19, 2012 (Amendment No. 1)

 



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

TABLE OF CONTENTS

 

1

Definitions

2

 

 

 

2

Term

5

 

 

 

3

Grant of License

5

 

 

 

4

Applications and Patents

8

 

 

 

5

Commercialization

9

 

 

 

6

Payments, Reimbursements, Reports, and Records

10

 

 

 

7

Infringement

12

 

 

 

8

Patent Validity

13

 

 

 

9

Termination

14

 

 

 

10

Release, Indemnification, and Insurance

17

 

 

 

11

Representations and Warranties

18

 

 

 

12

Damages

19

 

 

 

13

Amendment and Waiver

20

 

 

 

14

Assignment

20

 

 

 

15

Confidentiality

20

 

 

 

16

Construction

21

 

 

 

17

Enforceability

22

 

 

 

18

Third-Party Beneficiaries

22

 

 

 

19

Language

22

 

 

 

20

Notices

22

 

 

 

21

Patent Marking

22

 

 

 

22

Publicity

23

 

 

 

23

Relationship of Parties

23

 

 

 

24

Security Interest

23

 

 

 

25

Survival

23

 

 

 

26

Collection Costs and Attorneys’ Fees

24

 

 

 

27

Applicable Law

24

 

 

 

28

Forum Selection

24

 

 

 

29

Dispute Resolution

24

 

 

 

30

Entire Agreement

26

 

i



 

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Exhibit A

27

 

 

Exhibit B

32

 

 

Exhibit C

33

 

ii



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

PATENT LICENSE AGREEMENT

 

This patent license agreement (the “ Agreement ”) is dated and effective as of January 27, 2010 (the “ Effective Date ”) and is made by and between the University of Washington, a public institution of higher education and an agency of the state of Washington, acting through UW TechTransfer, Technology Licensing (“ University ”), and Genocea Biosciences, Inc., a Delaware corporation with its principal place of business at 161 First Street, Suite 2C, Cambridge, MA 02142 (“ Company ”), (individually each a “ Party ” or collectively, the “ Parties ”).

 

Background

 

Whereas, University has the rights to certain technology made in the course of University research relating to the use of Herpes Simplex Virus Type 2 (“ HSV2 ”) antigens as immunoprophylaxis or immunotherapy to prevent or treat HSV infections in humans;

 

Whereas, the Fred Hutchinson Cancer Research Center (“ FHCRC ”) is a joint owner of certain Licensed Patents, but has granted University the sole right to commercialize their rights in such Licensed Patents under an inter-institutional agreement with University dated April 28, 2009 (“ Inter-Institutional Agreement ”);

 

Whereas, University has entered into an option agreement dated as of May 11, 2009 with a Third Party whereby such Third Party has an option to obtain a license granting: (i) co-exclusive rights to Subset A and (ii) tri-exclusive rights to Subset B of Licensed Patents (such Third Party, “ Third Party A ” and such option agreement, “ Option Agreement A ”);

 

Whereas, University has entered into in an option agreement dated as of May 28, 2008 with a Third Party whereby such Third Party has an option to obtain non-exclusive rights to Subset B of Licensed Patents (such Third Party, “ Third Party B ”, and such option agreement, “ Option Agreement B ”);

 

Whereas, Corixa Corporation, prior to its acquisition by GlaxoSmithKline Biologicals North America, was originally a joint owner of certain Licensed Patents as set forth in Exhibit A but has now transferred and assigned its share of the title, rights and interests in the Licensed Patents to University on the condition that University undertakes for the entire life of the patents assigned not to use or assert or allow any licensee to use or assert said patents against Corixa Corporation or any company member of the Glaxo Group of companies;

 

Whereas, Company and University entered into a confidentiality agreement with an effective date of August 10, 2007 (“ CDA ”) and an option agreement with an effective date of June 30, 2008 (“ Option Agreement ”);

 

Whereas, Company now desires a license to the Licensed Patents granting (i) co-exclusive rights to Subset A of Licensed Patents and (ii) tri-exclusive rights to Subset B of Licensed Patents in the Field of Use; and

 



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

Whereas, University is willing to grant to Company such a license on the terms set forth below.

 

NOW, THEREFORE, the Parties agree that:

 

1                                          Definitions.

 

For purposes of interpreting this Agreement, the following terms have the following meanings ascribed to them:

 

1.1                                Affiliate ” means an entity that is controlled by Company.  For the purposes of this Section 1.1, “controlled by” means either: a) the right to exercise 50% or more of the voting rights of such entity, or b) the power to direct or cause the direction of the management or policies of such entity.

 

1.2                                Background Patents ” means those patents listed in Section A1.3 of attached Exhibit A that are owned or controlled by University that are necessary to practice the inventions claimed in the Licensed Patents pursuant to Sections 1.8(a) - (c) and for each such patent, extensions and term restorations (including supplemental protection certificates), registrations, confirmations, renewals, re-examinations, reissues, and inventors certificates thereof, and foreign counterparts of such patent.

 

1.3                                Co-Exclusive ” means, with respect to a license, that such license may only be granted to Company and one Third Party.

 

1.4                                Confidential Information ” means, subject to the terms of this Agreement, any proprietary information or materials (biological, chemical, or otherwise) of the Parties not generally known to the public, including any information comprised by those materials, and including without limitation the inventions covered by the Licensed Patents and the business plans or reports of the Company and/or its Affiliates.  Confidential information does not include any information that:

 

1.4.1                      is or becomes part of the public domain through no fault of receiving Party;

 

1.4.2                      is known to receiving Party prior to the disclosure by the disclosing Party, as evidenced by documentation;

 

1.4.3                      is publicly released as authorized under this Agreement by University, its employees or agents;

 

1.4.4                      is subsequently obtained by a Party from a Third Party who is authorized to have such information; or

 

2



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

1.4.5                      is independently developed by a Party without reliance on any portion of the Confidential Information received from the disclosing Party and without any breach of this Agreement as evidenced by documentation.

 

1.5                                Event of Force Majeure ” means an unforeseeable act that prevents a Party from performing one or more of its duties under this Agreement and that is beyond of the reasonable control of the Party.  An Event of Force Majeure includes acts of war or of nature, insurrection and riot, and labor strikes.  An Event of Force Majeure does not mean a Party’s inability to obtain a Third Party’s consent to any act or omission.

 

1.6                                Fair Market Value ” means the average closing price that the stock in question is publicly trading at for 20 days prior to the announcement of its purchase by the Sublicensee(s), or, if the stock is not publicly traded, the value of such stock as determined in good faith by the board of directors of Company.

 

1.7                                Field of Use ” means therapy that is administered to prevent or treat HSV2 infection.

 

1.8                                Licensed Patents ” means: (a) the patent(s) and patent application(s) described in Section Al of attached Exhibit A and any corresponding patent(s) issued during the term of this Agreement by the United States Patent and Trademark Office or any like foreign body with respect to such patent application(s); (b) for each patent application described in Subsection (a), any continuations, continuation-in-part (to the extent such claims are supported by a patent or patent application) set forth in Section Al of Exhibit A to benefit from the priority date of such patent or patent application), continued prosecutions, divisionals, substitutions thereof, and foreign counterparts of each of the foregoing; (c) for each patent described in Subsection (a), extensions and term restorations (including supplemental protection certificates), registrations, confirmations, renewals, re-examinations, reissues, and inventors certificates thereof, and foreign counterparts of each of the foregoing; and (d) Background Patents.

 

1.9                                Licensed Product ” means any product that is covered by one or more Valid Claims in a Licensed Patent.

 

1.10                         Net Sales ” means the gross amount invoiced or otherwise received by Company, Affiliates and its Sublicensees for sales, leases, and other dispositions of Licensed Products less (i) all trade, quantity, and cash discounts actually allowed, (ii) all credits and allowances actually granted due to rejections, returns, billing errors, and retroactive price reductions, (iii) duties, and (iv) excise, sale and use taxes, and equivalent taxes to the extent not reimbursable; provided that in no event shall the transfer of Licensed Products by Company or Affiliate to an Affiliate or Sublicensee be included in the calculation of Net Sales unless such transfer is in exchange for cash consideration and Company receives no further compensation for the sale of such Licensed Products by such Affiliate or Sublicensee.  Subject to this Section 1.10, on sales of Licensed Products made in other than an arms-length transaction, the value of the Net Sales attributed to such transaction shall be based upon the fair market value (as reasonably determined by

 

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Company) of the consideration which would have been received in an arms-length transaction, based on sales of like quantity and quality products on or about the time of this transaction.

 

1.11                         Royalty Term ” means, on a Licensed Product-by-Licensed Product and country-by-country basis, the period of time commencing on the Effective Date and extending until the earlier of (a) the termination of this Agreement, pursuant to and to the extent set forth in Article 9 hereof, and (b) the date on which the manufacture, import, use or sale of such Licensed Product is no longer covered by a Valid Claim of a Licensed Patent in such country.

 

1.12                         Sublicense ” means the grant by Company to a Third Party of any license, option, first right to negotiate, or other right granted under the Licensed Patents, in whole or in part.  For the avoidance of doubt, any arm’s length Third Party distributor (“ Distributor ”) to which Company or any Sublicensees sells a Licensed Product for resale of Licensed Product by the Distributor, and where Distributor has no other rights other than to resell Licensed Product, and for which resale Company and Sublicensees receive no further consideration (including but not limited to royalties and/or commissions) beyond the price for the initial sale to the Distributor, shall not be a considered a Sublicense.

 

1.13                         Sublicensee ” means a Third Party holding a Sublicense under the Licensed Patents.

 

1.14                         Sublicensing Consideration ” means all consideration, including but not limited to upfront fees, milestone payments, maintenance fees, non-cash consideration, and premiums over Fair Market Value of stock, but excluding the sharing of profits and royalties based on sales or orders of Licensed Products, payable by each Sublicensee for the grant of a Sublicense.  For avoidance of doubt, consideration paid to Company by Sublicensees for the performance of bona fide product development work, research work, marketing or promotional work, clinical studies and regulatory approvals performed by Company, pursuant to and as supported by an express agreement including a performance plan and commensurate budget is not deemed to be Sublicensing Consideration.  For the avoidance of doubt, consideration paid to Company by Sublicensee under an agreement which both includes a Sublicense and sets forth the terms under which the activities described in the preceding sentence will be provided by the Company shall not be deemed Sublicensing Consideration only to the extent such consideration is explicitly paid by Sublicensee for the performance of such activities and not for the grant of the Sublicense.

 

1.15                         Subset A of Licensed Patents ” means the patents and patent applications listed in Section Al.1 of Exhibit A.

 

1.16                         Subset B of Licensed Patents ” means the patents and patent applications listed in Section A1.2 of Exhibit A.

 

1.17                         Territory ” means worldwide.

 

1.18                         Third Party ” means an individual or entity other than University, Company and Affiliates.

 

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1.19                         Tri-Exclusive ” means, with respect to a license, that such license may only be granted to Company and two Third Parties.

 

1.20                         Valid Claim ” means (a) a claim in an issued and unexpired patent included in the Licensed Patents that: (i) has not been revoked or held unenforceable, unpatentable or invalid by a decision of a court or other governmental agency of competent jurisdiction, and not subject to appeal, (ii) has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise and (iii) has not been lost through an interference, reexamination or reissue proceeding or (b) a pending claim of a pending patent application included in the Licensed Patents which has not been cancelled, withdrawn or abandoned or finally rejected by an administrative agency action from which no appeal can be taken.

 

2                                          Term.

 

The term of this Agreement will commence on the Effective Date and, unless terminated earlier as provided in Article 9, will expire on the date on which no Valid Claim in a Licensed Patent is pending or subsisting in any country in the Territory.

 

3                                          Grant of License.

 

3.1                                Company’s Rights .

 

3.1.1                      Subject to the terms and conditions of this Agreement, University hereby grants to Company, and Company hereby accepts, a Co-Exclusive license under the Subset A of the Licensed Patents and a Tri-Exclusive license under Subset B of the Licensed Patents to manufacture, have manufactured on Company’s behalf, use, offer to sell or sell, offer to lease or lease, import, or otherwise offer to dispose or dispose of Licensed Products in the Field of Use in the Territory.  Company may extend the license granted in the preceding sentence to any Affiliate provided that the Affiliate consents in writing to be bound by this Agreement to the same extent as Company.  Company agrees to deliver such contract to University within 30 days following execution thereof.  No provision of this Agreement grants Company or its Affiliates, by implication, estoppel or otherwise, any rights other than the rights expressly granted in this Agreement to a Licensed Patent, or to any other University-owned technology, patent applications, or patents.

 

3.1.2                      Notwithstanding Subsection 3.1.3, in the event that Third Party B does not exercise the option set forth in Option Agreement B to obtain non-exclusive rights to Subset B of Licensed Patents, the license under Subset B of Licensed Patents granted to Company in Subsection 3.1.1 will become a Co-Exclusive license unless Company, within [* * *] of being notified in writing of such license conversion by University, elects to maintain its Tri-Exclusive license to such rights.  If Company does not elect to maintain a Tri-Exclusive license to Subset B of Licensed Patents, notwithstanding anything to the contrary in Section A4 of Exhibit A, Company and University will amend this Agreement and Company will become responsible for [* * *].

 

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3.1.3                      If any rights under the Licensed Patents become available (the “Available Rights”) including without limitation as a result of Third Party A or Third Party B not obtaining a license under Option Agreement A or Option Agreement B, respectively, UW TechTransfer will endeavor to notify Company and Company may also inquire as to whether any Available Rights exist.  Upon Company’s inquiry as to whether any Available Rights exist, UW TechTransfer shall respond with information regarding Available Rights within 20 days following such inquiry.  Following the Company’s receipt of notice of Available Rights, Company can request that University enter into negotiations with Company regarding the grant of the Available Rights and University shall use good faith commercially reasonable efforts to negotiate with Company for a license to the Available Rights.

 

3.1.4                      Company shall have the right, exercisable from time to time during the term of this Agreement, to Sublicense its rights under this Agreement but only on an exclusive basis.  For the avoidance of doubt, Company shall not have the right to Sublicense the same scope of rights more than once at a time, but shall have the right to simultaneously enter into multiple Sublicenses provided the scope of rights granted in each such Sublicense differ, either with regards to the types of rights granted, the field of use or the territory.  Company, without University’s prior written consent, may not grant Sublicensees the right to grant sublicenses or the right to enforce Licensed Patents; provided, however that Company may grant Sublicensees the right to grant resale rights to Distributors.  Company shall remain responsible for its obligations under this Agreement, and shall ensure that the Sublicense agreement: (i) contains terms and conditions requesting Sublicensee to comply with the applicable terms and conditions under this Agreement (including a release substantially similar to that provided by Company in Section 10.1, a warranty substantially similar to that provided by Company in Section 11.1; University disclaimers and exclusions of warranties under Subsections 11.3.1 and 11.3.2; and limitations of remedies and damages substantially similar to those provided by Company in Article 12); and (ii) specifically incorporates provisions of this Agreement regarding obligations pertaining to indemnification, use of names and insurance.  Company shall deliver to University a true, correct, and complete copy of any Sublicense agreement or other agreement under which Company purports or intends to grant Sublicense rights at least 30 days after the execution of the agreement.  Company shall not enter into such agreement if the terms of the agreement are materially inconsistent in any respect with the terms of this Agreement.  Any Sublicense made in violation of this Subsection will be void.

 

3.2                                The United States Government’s Rights .  The inventions covered in the Licensed Patents arose, in whole or in part, from federally supported research and the federal government of the United States of America has certain rights in and to the Licensed Patents as those rights are described in Chapter 18, Title 35 of the United States Code and accompanying regulations, including Part 401, Chapter 37 of the Code of Federal Regulation.  The Parties’ rights and obligations under this Agreement to any government-funded inventions, including the grant of

 

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license set forth in Subsection 3.1.1, are subject to the applicable terms of the aforementioned United States laws.

 

3.3                                University’s Reservation of Rights .  University reserves all rights not expressly granted to Company under this Agreement.  In addition, University retains for itself and FHCRC an irrevocable, nonexclusive license to make, have made, and use products, processes, and other subject matter covered by the Licensed Patents in the Field of Use for academic research, instructional, or any other academic purpose.  Expressly included within this reservation of rights is the right (i) to use the Licensed Patents in sponsored research or collaborative research with any Third Party but only to the extent no such Third Party is granted any rights to the Licensed Patents or to commercialize Licensed Products, (ii) to grant material transfer agreements to materials whose composition of matter is covered by the Licensed Patents where the use of such materials is restricted to academic research, instructional, or any other academic purpose, and (iii) to publish any information included in the Licensed Patents or any other information that may result from University or FHCRC’s research.  If a patent application for any intellectual property arising from any rights retained under this Section 3.3 is filed by University, and UW TechTransfer is aware that such intellectual property has arisen as a result of retained rights (with no obligation for diligence except at Company’s reasonable request), University shall, as soon as administratively practicable (including without limitation, within 10 days of Company’s inquiry during the Term), notify Company and shall make commercially reasonable efforts to grant Company a license under such rights as available on commercially reasonable terms to manufacture, have manufactured on Company’s behalf, use, offer to sell or sell, offer to lease or lease, import or otherwise offer to dispose or dispose of Licensed Products in the Field of Use in the Territory.  For the avoidance of doubt, no right reserved pursuant to this Section 3.3 shall give University any right (i) to commercialize any Licensed Product or (ii) to grant any Third Party the right to commercialize any Licensed Product.

 

3.4                                Reservation of Rights for Humanitarian Purposes .  To the extent required under 35 U.S.C. §200 et seq., in exceptional circumstances, University retains the right to require Company to grant sublicenses to responsible applicants in the Field of Use under the Licensed Patents on terms that are reasonable under the circumstances; or, if Company fails to grant a license, to grant the license itself, if University determines (i) such action is necessary to meet health or safety needs that are not reasonably satisfied by Company; or (ii) the action is necessary to meet requirements for public use specified by federal regulations, and such requirements are not reasonably satisfied by Company.  Notwithstanding anything in this Section 3.4, University shall not require the granting of a sublicense, and shall not grant the license itself, unless such grant is required by U.S. federal law and the responsible applicant has first used commercially reasonable good faith efforts to negotiate the terms of such sublicense in good faith with Company.  No sublicense granted under this Section 3.4 shall be deemed a Sublicense under Section 3.1.4 and therefore, such grant shall not affect Company’s ability to grant a Sublicense of the same rights to a Third Party in the same Field of Use in the same Territory.

 

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4                                          Applications and Patents.

 

4.1                                Pre-Agreement Patent Filings and Licensed Product Sales .  Company represents that, to its knowledge, as of the Effective Date, it has not and does not manufacture, have manufactured, use, offer to sell or sell, offer to lease or lease, import, or otherwise offer to dispose or dispose of (a) any product or good that infringes (including under the doctrine of equivalents) a claim in any Licensed Patent, or (b) any product or good that is made using a process or machine that infringes (including under the doctrine of equivalents) a claim in a Licensed Patent.

 

4.2                                Patent Application Filings during the Term of this Agreement .

 

4.2.1                      University retains the sole and exclusive right to file or otherwise prosecute Licensed Patents and University shall not grant any right to file or otherwise prosecute Licensed Patents to any other Third Party or licensee of the Licensed Patents including, without limitation, Third Party A and Third Party B.  As set out in Section A4 of Exhibit A, Company shall pay, or reimburse University for paying, a pro rata share of all reasonable and necessary costs (including attorneys’ and application fees) incurred prior to, on, or after the Effective Date to apply for, prosecute, enforce, and maintain Licensed Patents including the costs of interferences, oppositions, re-examinations, and patent litigation.

 

4.2.2                      University, in consultation with Company, shall determine in which countries University will file, or cause to be filed, Licensed Patents.  Subject to Company’s compliance with Section A.4, (i) University shall request patent counsel to inform Company of the status of the prosecution of the Licensed Patents, including delivering to Company written communications from the patent office, (ii) University shall consult with the Company on the prosecution of the Licensed Patents, and (iii) Company’s suggestions and requests regarding patent prosecution, including the countries in which Licensed Patents are filed, will be reasonably considered and included unless University reasonably deems such action(s) to be materially adverse to University’s rights to the Licensed Patents.  In no event shall Company file a patent application for a Licensed Patent where all of the inventors are under University policy obligated to assign their rights in such patent application to University.  In the event that University inventors and Company inventors invent an invention jointly (as determined by U.S. patent laws), University and Company shall discuss in good faith whether and how to proceed with respect to any corresponding patent applications.

 

4.2.3                      No provision of this Agreement limits, conditions, or otherwise affects University’s right to prosecute Licensed Patents in any country.

 

4.3                                Maintenance of Licensed Patents .  Subject to Company’s compliance with Section A4 of attached Exhibit A, University shall take all commercially reasonable actions to cause each Licensed Patent to remain or be valid and subsisting.

 

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4.4                                Ownership of the Licensed Patents .  No provision of this Agreement grants Company any rights, titles, or interests (except for the grant of license in Subsection 3.1.1 of this Agreement) in the Licensed Patents, notwithstanding Company’s payment of all or any portion of the patent prosecution, maintenance, and related costs.

 

4.5                                Relative Rights .  University shall offer and grant other licensees of the Licensed Patents substantially similar rights and obligations to those granted to Company with respect to such licensee’s involvement in patent prosecution and reimbursement of patent prosecution costs as set forth in this Section 4.  In the event that University grants to another licensee more favorable rights with respect to such licensee’s involvement in patent prosecution and/or reimbursement of patent prosecution costs as set forth in this Section 4, then Company shall be entitled to the same rights as such other licensee.

 

5                                          Commercialization.

 

5.1                                Commercialization and Performance Milestones .  Company shall use its commercially reasonable efforts, consistent with reasonable business practices and judgment, to commercialize the inventions covered by the Licensed Patents and to make and sell Licensed Products within a reasonable period of time.  Unless excused by the occurrence of an Event of Force Majeure during the term of this Agreement, Company shall perform, or shall cause to happen or be performed, the performance milestones described in Section A2 of attached Exhibit A.

 

5.2                                Covenants Regarding the Manufacture of Licensed Products .  Company hereby covenants and agrees that the manufacture, use, sale, or transfer of Licensed Products will comply with all applicable federal and state laws, including all federal export laws and regulations.  Company hereby further covenants and agrees that, to the extent required by 35 United States Code Section 204, it shall, and it shall cause each Sublicensee, to substantially manufacture in the United States of America all products embodying or produced through the use of an invention that is subject to the rights of the federal government of the United States of America.

 

5.3                                Commercialization Reports .  Throughout the term of this Agreement and no later than 45 days after each yearly anniversary of the Effective Date, Company shall deliver to University written reports containing a summary of Company’s and Sublicensees’ efforts and plans to commercialize the inventions covered by the Licensed Patents and to make, have made on its behalf, use, offer to sell or sell, offer to lease or lease, import, or otherwise offer to dispose or dispose of Licensed Products.  Company shall not be obligated to prepare such commercialization reports in years Company delivers to University a written sales report under Section 6.4 provided that such obligation will resume if sales of Licensed Products ceases.  In relation to each of the performance milestones described in Section A2 of attached Exhibit A, each commercialization report will include reasonably sufficient information to demonstrate Company’s compliance with those performance milestones and will set out general timeframes and plans for those milestones which have not yet been met.

 

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5.4                                Use of Names and Trademarks or the Names of Faculty, Staff, or Students .   Unless otherwise specified herein, Company or Sublicensee shall not have any right or license to use the name or trademarks of University or FHCRC or the names or identities of any member of the faculty, staff, or student body of University or FHCRC.  Company shall not use, and shall not permit a Sublicensee to use, any such trademarks, names, or identities without University’s or FHCRC’s and, as the case may be, such member’s prior written approval.

 

5.5                                Use of Company’s Name and Trademarks .  Unless otherwise specified herein, University shall not have any right or license to use the name or trademarks of Company.

 

6                                          Payments, Reimbursements, Reports, and Records.

 

6.1                                Payments .  Company shall deliver to University the payments specified in Sections A3 and A4 of attached Exhibit A.  Company shall make such payments by check, wire transfer, or any other mutually agreed-upon and generally accepted method of payment.  All checks to University will be made payable to “University of Washington” and will be mailed to the address specified in Article 20 (Notices) of this Agreement and will include the University agreement number 22557A.  Upon request, University shall deliver to Company written wire transfer instructions.

 

6.2                                Currency and Checks .  All computations and payments made under this Agreement will be in United States dollars.  The exchange rate for the currency into dollars as reported in the Wall Street Journal as the New York foreign exchange mid-range rate on the last business day of the month in which the transaction was entered into will be used for determining the dollar value of transactions conducted in non-United States dollar currencies.

 

6.3                                Late Payments .  University may charge Company a late fee for all amounts owed to University that are overdue by 30 days or more unless such amount is disputed pursuant to this Section 6.3.  The late fee will be computed as the United States prime rate plus two percent (2%), compounded monthly, as set forth by The Wall Street Journal (Western edition) on the date on which such payment is due, of the outstanding, unpaid balance.  The payment of a late fee will not foreclose or limit University from exercising any other rights it may have as a consequence of the lateness of any payment.  The Parties agree to negotiate in good faith to resolve any dispute regarding payments within a reasonable period of time, but not to exceed 90 days, and during such time of good faith negotiations, the disputed payment shall not be considered late under this Agreement.  In the event such dispute is resolved in University’s favor, Company agrees to pay University the disputed amounts within 30 days of the resolution.  If payment is not made to University within this 30-day period, the payment will be considered overdue by 30 days or more under this Section 6.3.  In the event the Parties fail to resolve a payment dispute, the parties shall have all available remedies under Section 29 of this Agreement and at law.

 

6.4                                Sales Reports .  Within 45 days after the last day of each calendar quarter commencing the calendar quarter after Company effects its first commercial sale of a Licensed Product and during the term of this Agreement, Company shall deliver to University a written

 

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sales report (a copy of the form of which is attached as Exhibit B) recounting the number and Net Sales (expressed in U. S. dollars) of all sales, leases, or other dispositions of Licensed Products, whether made by Company or a Sublicensee, during such calendar quarter.  Included in that report shall be the names of Distributors, and the number and type of Licensed Products sold to such Distributor.  Company shall deliver such written report to University even if Company is not required hereunder to pay to University a payment for sales, leases, or other dispositions of Licensed Products during the calendar quarter.

 

6.5                                Records Retention and Audit Rights .

 

6.5.1                      Records Retained .  Throughout the term of this Agreement and for five years thereafter, Company, at its expense, shall keep and maintain and shall cause each Sublicensee to keep and maintain complete and accurate records of all sales, leases, and other dispositions of Licensed Products during the term of this Agreement and all other records related to this Agreement.

 

6.5.2                      Auditing Rights .  No more than once per every twelve-month period during the Term, Company shall permit, at the reasonable request of University, one or more accountants selected exclusively by the University (“ Accountants ”) to have access to Company’s records and books of account pertaining to this Agreement.  Accountants’ access will be during ordinary working hours to audit Company’s records for any payment period ending prior to such request, the correctness of any report or payment made under this Agreement, or to obtain information as to the payments due for any period in the case of failure of Company to report or make payment pursuant to the terms of this Agreement or to verify Company’s compliance with its payment obligations hereunder.

 

6.5.3                      Scope of Disclosure .  Accountants shall not disclose to University any information relating to the business of Company except that which is necessary to inform University of: the accuracy or inaccuracy of Company’s reports and payments; compliance or noncompliance by Company with the terms and conditions of this Agreement; and the extent of any inaccuracy or noncompliance.

 

6.5.4                      Accountant Copies .  Should Accountants believe there is an inaccuracy in any of Company’s payments or noncompliance by Company with any terms and conditions, Accountants shall have the right to make and retain copies (including photocopies) of any pertinent portions of the records and books of account.

 

6.5.5                      Costs of Audit .  If Company’s royalties calculated for any calendar year quarterly period are under-reported by more than five percent (5%), the costs of any audit and review initiated by University will be borne by Company; otherwise, University shall bear the costs of any audit initiated by University.

 

6.5.6                      Audit of Sublicensees .  Company shall use commercially reasonable efforts to cause each Sublicensee that sells, leases, or otherwise disposes of Licensed

 

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Products to grant University the same or similar right and obligations with respect to inspection and audit of Sublicensee’s records as University is granted with respect to Company’s records under this Section 6.5.  To the extent that Company does not have the right to grant University the right to audit a Sublicensee’s books and records hereunder, Company shall obtain for itself such right and, at the request of University, Company shall exercise such audit right with respect to such Sublicensee using auditors reasonably acceptable to University and provide the results of such audit for inspection by University pursuant to this Section 6.5, such results to be sufficient for University to confirm the amounts owed to University in connection with such Sublicense.  The Accountants shall provide a copy of their audit report to University and to Company, provided that University agrees to enter into a confidentiality agreement with such Sublicensee with respect to such audit report, provided that if Sublicensee and University cannot come to terms on such confidentiality agreement within 30 days, it shall not prevent University from viewing such report on terms of confidentiality and non-use no less restrictive upon University than University’s obligations to Company for Company Confidential Information.

 

7                                          Infringement.

 

7.1                                Third-Party Infringement of a Licensed Patent .

 

7.1.1                      Notice of Third Party’s Infringement .  If a Party learns of substantial, credible evidence that a Third Party is infringing a Licensed Patent in the Field of Use in the Territory, that Party will promptly deliver written notice of the possible infringement to the other Party, describing in detail all relevant information to which that Party has access or control suggesting infringement of the Licensed Patent.

 

7.1.2                      University Right to Institute Action .  If University, in accordance with the terms and conditions of this Agreement, chooses to institute suit against an alleged infringer, University may bring such suit in its own name (or, if required by law, in its and Company’s name) and at its own expense, and Company shall, but at University’s expense for Company’s reasonable associated expenses, fully and promptly cooperate and assist University in connection with any such suit.  All license fees, royalties, damages, awards, or settlement proceeds arising from such a University-initiated action will be solely for the account of University.  University shall inform Company in advance of its decision to institute such suit, and the parties shall consult in good faith as to potential strategy or strategies to manage infringement prior to any during any such suit.

 

7.1.3                      No Obligation to Institute Action; Company’s Step-In Rights .  If University decides not to institute such suit, University shall, within the earlier of (i) sixty (60) days of the date University was reasonably aware or notified of the possible infringement and (ii) twenty (20) business days before the time limit to respond, if any, set forth in the applicable laws and regulations for the filing of such actions, notify Company, as well as its then-current other licensee(s) under the applicable Licensed Patent (collectively, the “Licensees”). In such event, the Licensees shall have the right

 

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(but not the obligation) to institute such suit, and at a Licensee’s request, University shall provide the Licensees with necessary documentation and assistance to facilitate the Licensees’ efforts therefore, including facilitating correspondence between the Licensees.

 

In any prosecution initiated by Company, Company must notify the other Licensees of the existence of such legal action and allow the other Licensees to join as plaintiff.  In addition, in the event other Licensee(s) instigates an infringement prosecution, Company hereby consents to being joined as a plaintiff in such suit solely for the purpose of procuring standing to bring the action and at the sole expense of the initiating Licensee(s).  Company acknowledges that it and the other Licensees, if applicable, will need to mutually agree upon matters related to the prosecution, including without limitation, litigation strategy and the allocation of expenses and recovery; provided , however that (1) priority for leading any action shall be given in the following order: (a) unless the Licensees have otherwise mutually agreed, to the Licensee paying all or a substantial portion of the expenses related to such prosecution if the other Licensee(s) are unwilling or unable to be reasonably responsible for such costs, (b) to the Licensee(s) having a marketed product with respect to which such Third Party infringement is or may be competitive; (c) to the Licensee(s) with a product in development with respect to which such Third Party infringement is or may be competitive and (2) if reasonably requested by a Licensee, University shall facilitate the Licensees’ discussions on such matters.

 

Company shall not initiate any suit against Corixa Corporation or any company member of the Glaxo Group of companies for infringement of those certain Licensed Patents annotated as being patents formerly co-owned by Corixa Corporation in Section A1 of Exhibit A.  Company shall not settle any suits or actions in any manner relating to the Licensed Patents that would materially adversely affect the rights of University under this Agreement without obtaining the prior written consent of University.  Notwithstanding anything in this Agreement, including this Section 7.1.3, if it is reasonably determined that University is an indispensible party to a legal action initiated pursuant to this Section 7.1.3, University agrees to be joined as plaintiff in such suit solely for the purpose of procuring standing to bring the action and at, to the extent such expenses are reasonable, the sole expense of the initiating Licensee(s).  University agrees that all Licensees will be bound by the identical terms of this Section 7.1.3 and have the same rights and obligations as Company hereunder.

 

8                                          Patent Validity.

 

8.1                                Notice and Investigation of Third Party Challenges .  If any Third Party challenges the validity or enforceability of any of the Licensed Patents, the Party learning of such challenge shall immediately notify the other Party.

 

8.2                                Tender to University of Third Party Actions .  In the event of Third Party legal action challenging the validity or enforceability of any of the Licensed Patents, University, at its sole discretion, shall have the right to assume and control the sole defense of the claim at University’s expense.  If University opts not to assume and control the sole defense of the claim, it shall notify the Licensees by the earlier of (i) within forty-five (45) days after University’s awareness of such legal action and (ii) twenty (20) business days before the time limit to

 

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respond, if any, set forth in the applicable laws and regulations for the filing of such actions and shall simultaneously disclose to all Licensees the identities of all other Licensees.  In such event, the Licensees shall have the right (but not the obligation) to defend such claim, and at a Licensee’s request, University shall provide the Licensees with necessary documentation and assistance to facilitate the Licensees’ efforts therefore, including facilitating correspondence between the Licensees.

 

If Company elects to defend such claim, Company must notify the other Licensees and allow the other Licensees to join such defense.  In addition, in the event other Licensee(s) elect to defend such claim, Company hereby consents to being joined in such suit as a party solely for the purpose of procuring standing to defend the claim and at the sole expense of the defending Licensee(s).  Company acknowledges that it and the other Licensees, if applicable, will need to mutually agree upon matters related to the defense, including without limitation, strategy and the allocation of expenses; provided , however that (1) priority for leading any defense shall be given in the following order: (a) unless the Licensees have otherwise mutually agreed, to the Licensee paying all or a substantial portion of the expenses related to such prosecution if the other Licensee(s) are unwilling or unable to be reasonably responsible for such costs, (b) to the Licensee(s) having a marketed product covered by a Valid Claim of a challenged Licensed Patent(s); (c) to the Licensee(s) with a product in development covered by a Valid Claim of a challenged Licensed Patent(s); and (d) to the Licensee(s) who have been granted rights under the Licensed Patents in a specific subpart of the Field of Use that either falls within the scope of asserted claim or would be adversely affected by a declaratory judgment in favor of the Third Party asserting the claim and (2) if reasonably requested by a Licensee, University shall facilitate the Licensees’ discussions on such matters.

 

Licensees shall not settle any suits or actions in any manner relating to the Licensed Patents that would materially adversely affect the rights of University or FHCRC under this Agreement without obtaining the prior written consent of University.  Notwithstanding anything in this Agreement, including this Section 8.2, if it is reasonably determined that University is an indispensible party to a legal action initiated pursuant to this Section 8.2, University agrees to be joined in such suit solely for the purpose of procuring standing to bring the action and at, to the extent such expenses are reasonable, the sole expense of the initiating Licensee(s).  University agrees that all Licensees will be bound by the identical terms of this Section 8.2 and have the same rights and obligations as Company hereunder.

 

8.3                                Enforceability of Licensed Patents .  Notwithstanding challenge by any Third Party, any Licensed Patent will be enforceable under this Agreement until such Licensed Patent is determined to be invalid.

 

9                                         Termination.

 

9.1                                By University .

 

9.1.1                      If Company breaches one or more of its material obligations under this Agreement, University may deliver to Company a written notice of default.  University

 

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may terminate this Agreement by delivering to Company a written notice of termination if the default has not cured in full within 60 days of the delivery to Company of the notice of default.

 

9.1.2                      University may terminate this Agreement by delivering to Company a written notice of termination at least 10 days prior to the date of termination if Company (i) becomes insolvent; (ii) voluntarily files or has filed against it a petition under applicable bankruptcy or insolvency laws that Company fails to have released within 30 days after filing; (iii) proposes any dissolution, composition, or financial reorganization with creditors or if a receiver, trustee, custodian, or similar agent is appointed; (iv) makes a general assignment for the benefit of creditors; or (v) if Company challenges the validity of the Licensed Patents.

 

9.2                                By Company .  Company may terminate this Agreement in its entirety, or on a Licensed Patent-by-Licensed Patent and country-by-country basis, at any time by delivering to University a written notice of termination at least 60 days prior to the effective date of termination.

 

9.3                                Effect of Termination .

 

9.3.1                      After termination of this Agreement by University under Section 9.1 or by Company under Section 9.2, Company shall not make, have made, use, offer to sell or sell, offer to lease or lease, import, or otherwise offer to dispose or dispose of Licensed Products.  If Company terminates its rights to some but not all of the Licensed Patents under Section 9.2, then Company shall not make, have made, use, offer to sell or sell, offer to lease or lease, import, or otherwise offer to dispose or dispose of any product that is covered by a Valid Claim in a terminated Licensed Patent in the terminated country(ies).

 

9.3.2                      Upon the effective date of termination of a Licensed Patent(s) due to Company’s termination of the Agreement or such Licensed Patent(s) pursuant to Section 9.2 or the University’s termination of the Agreement pursuant to Section 9.1, Company shall no longer be required to reimburse University any part of the costs related to such removed patents or patent applications.  For the avoidance of doubt, with respect to such terminated Licensed Patent(s), after the effective date of termination, any filing, prosecution and/or maintenance activities related to such terminated Licensed Patent(s) shall be conducted at University’s sole expense and will not be part of the Licensed Patents.  Notwithstanding anything in this Section 9.3.2, Company shall be able to make, have made, use, offer to sell or sell, offer to lease or lease, import, or otherwise offer to dispose or dispose of any product if such product is not covered by an issued, enforceable claim in the terminated Licensed Patent, provided this shall in no way limit University’s rights to sue Company for infringement should a claim later issue, including under 35 U.S.C. § 154(d) for periods of time during which claims were published but not issued.

 

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9.3.3                      Within 60 days after the end of the calendar quarter following the expiration or termination of this Agreement, Company shall submit a final report to University.  Any payments, including those incurred but not yet paid (such as the pro-rata minimum annual royalty, and those related to patent expense incurred as of the date of termination but not yet paid), due to University shall become immediately due and payable upon termination or expiration.

 

9.3.4                      At any time within 30 days following termination of this Agreement, a Sublicensee may notify University that it wishes to enter into a direct license with University in order to retain its rights to the Licensed Patents granted to it under its Sublicense (such 30-day period following termination, the “ Initial Notice Period ”).  Following receipt of such notice, University and Sublicensee shall enter into a license agreement the terms of which shall be substantially similar to the terms of this Agreement; and the scope of such direct license, the licensed territory or the duration of the license grant shall be comparable to the corresponding terms granted by the Company to such Sublicensee; provided that such Sublicensee will be granted at least the same scope of rights as it obtained from Company under its Sublicense.  For the sake of clarity, the financial terms, including without limitation, the running royalty rate and milestone payments, shall be identical to the corresponding financial terms set forth in this Agreement.  Notwithstanding the foregoing, each Sublicensee’s right to enter into such direct license shall be conditioned upon:

 

(a)                                  such Sublicensee informing University in writing, pursuant to Article 20 (Notices), that it wishes to enter into such direct license with University, within the Initial Notice Period;

 

(b)                                  such Sublicensee being in good standing with Company under its Sublicense, and such Sublicense not being the subject of a reasonable dispute between Sublicensee and Company, or between Company and University under this Agreement;

 

(c)                                   such Sublicense having been validly entered into by Company and Sublicensee pursuant to the terms of Section 3.1.2;

 

(d)                                  such Sublicensee using reasonable efforts to certify or otherwise demonstrate that the conditions set forth in subsections 9.3.4(a), 9.3.4(b), and 9.3.4(c) have been met within 30 days of expiration of the Initial Notice Period (or within such longer period of time as University agrees is reasonable under the circumstances, based on the nature and extent of any documentation reasonably requested by University; and

 

(e)                                   such negotiations for a direct license not exceeding 180 days from the end of the 30-day (or longer, if applicable) period described in subsection 9.3.4(d) (subject to extension of said 180-day period by mutual written agreement of University and Sublicensee).

 

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University may, at its sole discretion, waive any of these requirements.  If all of the conditions set forth in this subsection 9.3.4 are met, then Sublicensee will be granted such direct license by University.  If any condition set forth in this subsection 9.3.4 is not met, then after expiration of any time period granted to Sublicensee with respect to meeting such condition, Sublicensee shall not make, have made, use, offer to sell or sell, offer to lease or lease, import, or otherwise offer to dispose or dispose of Licensed Products and University shall be free to license or not license Licensed Patents to such Sublicensee according to its sole discretion.

 

University shall solely offer any other licensee of the Licensed Patents substantially similar or less favorable terms with respect to the following provisions: (i) length of cure period for any default by such licensee; (ii) notice period for termination by University due to such licensee’s insolvency or other related event (such events described in clauses (i) — (v) of Section 9.1.2); (iii) notice period for such licensee’s right to terminate any aspect of the license arrangement for convenience; (iv) ability to terminate any aspect of the license agreement for convenience (e.g. on a Licensed Patent-by-Licensed Patent basis) (v) rights under the license arrangement and/or to the Licensed Patents after termination; (vi) types of payments due by such licensee to the University after termination; and (vii) terms pursuant to which a sublicensee of such licensee may establish a license arrangement with the University after termination of the licensee’s license arrangement.  For the avoidance of doubt, University will not offer any other licensee of the Licensed Patents any rights concerning termination or effects of termination that vary from Company’s rights hereunder to the extent that such licensee’s rights materially adversely affect Company’s rights under this Agreement.  In the event that University grants to another licensee more favorable rights with respect to any of the provisions outlined above in (i)-(vii), then Company shall be entitled to the same rights as such other licensee.

 

10                                   Release, Indemnification, and Insurance.

 

10.1                         Company’s Release .  Subject to the proviso below in this Article 10, for itself and its employees, Company hereby releases University and FHCRC and their regents, employees, students and agents forever from any suits, actions, claims, liabilities, demands, damages, losses, or expenses (including reasonable attorneys’ and investigative expenses and collectively, “ Losses ”) relating to or arising out of (i) the manufacture, use, lease, sale, or other disposition of a Licensed Product to the extent such Losses arise from or result from Company’s exercise of the license granted in Section 3.1; or (ii) the assigning or sublicensing of Company’s rights under this Agreement; provided , however that notwithstanding anything to the contrary in this Article 10, the Company shall not release University and/or FHCRC and/or their regents, employees, students and agents forever from any suits, actions, claims, liabilities, demands, damages, losses, or expenses (including reasonable attorneys’ and investigative expenses) relating to or arising out of the negligence or willful misconduct by the University and/or FHCRC and/or their respective regents, employees, students and agents.

 

10.2                         Company’s Indemnification .  Throughout the term of this Agreement and thereafter, Company shall indemnify, defend, and hold University and FHCRC and their respective regents, employees, students and agents harmless from all Losses, relating to or arising out of the manufacture, use, lease, sale, or other disposition of a Licensed Product to the

 

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extent such Losses arise from or result from Company’s exercise of the license granted in Section 3.1, including, without limitation, personal injury, property damage, breach of contract and warranty and products-liability claims relating to a Licensed Product.  This indemnification by Company excludes Losses that arise out of or result from, directly or indirectly, the negligence or willful misconduct by the University and/or FHCRC and/or their respective regents, employees, students and agents.

 

10.3                         Company’s Insurance .

 

10.3.1               Throughout the term of this Agreement, or during such period as the Parties shall agree in writing, Company shall maintain, and shall cause each Sublicensee to maintain, in full force and effect comprehensive general liability (CGL) insurance, with single claim limits consistent with industry standards.  Such insurance policy will include coverage for claims that may be asserted by University against Company under Section 10.2.  Such insurance policy must name University as an additional insured and will require the insurer to deliver written notice to University at the address set forth in Article 20 (Notices) of this Agreement, at least 45 days prior to the termination of the policy.  Company shall deliver to University a copy of the certificate of insurance for such policy.

 

10.3.2               No later than 30 days prior to the initiation of human clinical trials with respect to Licensed Product(s), Company shall provide to University certificates evidencing the existence and amount of clinical trials liability insurance.  Company shall issue irrevocable instructions to its insurance agent and to the issuing insurance company to notify University of any discontinuance or lapse of such insurance not less than 45 days prior to the time that any such discontinuance is due to become effective.  Company shall provide University a copy of such instructions upon their transmittal to the insurance agent and issuing insurance company.  Company shall further provide University, at least annually, proof of continued coverage.

 

11                                   Representations and Warranties.

 

11.1                         Mutual Representations and Warranties .  Each Party represents and warrants to the other Party that it has full corporate power and authority to execute, deliver, and perform this Agreement, and that no other corporate proceedings by such Party are necessary to authorize the Party’s execution or delivery of this Agreement.

 

11.2                         University Representations and Warranties .  University represents and warrants to Company that, to the best of UW TechTransfer’s knowledge, as of the Effective Date:

 

11.2.1               the execution, delivery and performance of this Agreement by University does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party and by which it may be bound, including but not limited to Option Agreement A and Option Agreement B;

 

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11.2.2               University has not granted any right to file or otherwise prosecute Licensed Patents to any Third Party; and

 

11.2.3               University is entitled to grant the licenses specified herein.  University has not previously assigned, transferred, conveyed or otherwise encumbered its right, title and interest in the Licensed Patents in a manner that conflicts with any rights granted to Company hereunder.

 

11.3                         Disclaimers .

 

11.3.1               EXCEPT AS EXPRESSLY SET FORTH IN SECTIONS 11.1 AND 11.2 OF THIS AGREEMENT, UNIVERSITY AND FHCRC DISCLAIM AND EXCLUDE ALL WARRANTIES, EXPRESS AND IMPLIED, CONCERNING EACH LICENSED PATENT AND EACH LICENSED PRODUCT, INCLUDING, WITHOUT LIMITATION, WARRANTIES OF NON-INFRINGEMENT AND THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

 

11.3.2               University and FHCRC expressly disclaim any warranties concerning and makes no representations:

 

(a)                                  that the Licensed Patent(s) will be approved or will issue;

 

(b)                                  concerning the validity or scope of any Licensed Patent; or

 

(c)                                   that the manufacture, use, sale, lease or other disposition of a Licensed Product will not infringe a Third Party’s patent or violate a Third Party’s intellectual property rights.

 

12                                   Damages.

 

12.1                         Remedy Limitation EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, IN NO EVENT SHALL (A) UNIVERSITY OR FHCRC BE LIABLE FOR PERSONAL INJURY OR PROPERTY DAMAGES ARISING IN CONNECTION WITH COMPANY’S EXERCISE OF THE LICENSE GRANTED IN SECTION 3.1 OR (B) EITHER COMPANY, UNIVERSITY OR FHCRC BE LIABLE FOR LOST PROFITS, LOST BUSINESS OPPORTUNITY, LOST DATA OR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND.

 

12.2                         Damage Cap IN NO EVENT WILL UNIVERSITY’S TOTAL LIABILITY FOR THE BREACH OR NONPERFORMANCE OF THIS AGREEMENT EXCEED THE AMOUNT OF PAYMENTS PAID TO UNIVERSITY UNDER SECTION A3 OF EXHIBIT A.  THIS LIMITATION WILL APPLY TO CONTRACT, TORT, AND ANY OTHER CLAIM OF WHATEVER NATURE.

 

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13                                   Amendment and Waiver.

 

This Agreement may be amended from time to time only by a written instrument signed by the Parties.  No term or provision of this Agreement will be waived and no breach excused unless such waiver or consent will be in writing and signed by the Party claimed to have waived or consented.  No waiver of a breach will be deemed to be a waiver of a different or subsequent breach.

 

14                                   Assignment.

 

The rights and licenses granted by University in this Agreement are personal to Company and may not be assigned or otherwise transferred without the written consent of University, which will not be unreasonably withheld.  The preceding sentence notwithstanding, Company, without the prior approval of University, may assign all, but no less than all, its rights and delegate all, but no less than all, its duties under this Agreement to a Third Party if the assignment is made to such Third Party as a part of and in connection with (A) the sale by Company of all or substantially all of its assets to the Third Party, (B) the sale, transfer, or exchange by the shareholders, partners, or equity owners of Company of a majority interest in Company to the Third Party, or (C) the merger of Company into the Third Party.  Company shall deliver to University written notice of the proposed assignment (along with material information about the terms of the assignment and assignee) at least 30 days prior to the effective date of the event described in part (A), (B) or (C) of this paragraph.  Except as provided above, Company shall not assign its interest or delegate its duties under this Agreement, unless University consents to the assignment, or delegation.  Any assignment or delegation attempted to be made in violation of this article will be void.  Absent the consent of all the Parties to this Agreement, an assignment or delegation will not release the assigning or delegating Party from its obligations under this Agreement.

 

This Agreement will inure to the benefit of Company and University and their respective permitted assignees and trustees.

 

15                                   Confidentiality.

 

15.1                         Form of Transfer .  Confidential Information may be conveyed in tangible or intangible form.  Disclosing Party must clearly mark its Confidential Information “confidential.” If disclosing Party communicates Confidential Information in non-written form, it shall reduce such communications to writing, clearly mark it “confidential”, and provide a copy to receiving Party no later than 30 days after original communication at the address in Article 20 (Notices).

 

15.2                         No Unauthorized Disclosure of Confidential Information .  Beginning on the Effective Date and continuing throughout the term of this Agreement and thereafter for a period of three (3) years, receiving Party shall not disclose or otherwise make known or available to any Third Party any disclosing Party Confidential Information, without the express prior written consent of disclosing Party.  Notwithstanding the foregoing, receiving Party shall be permitted to disclose disclosing Party Confidential Information to (i) actual or potential investors, lenders,

 

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consultants, collaborators, Sublicensees, or development partners, which disclosure will be made under conditions of confidentiality and limited use; and (ii) its attorney or agent as reasonably required.  University shall be permitted to disclose Company Confidential Information to FHCRC; provided , however that such disclosure will be made under conditions of confidentiality and limited use and any such disclosed Company Confidential Information will be deemed and treated as Confidential Information of University under the Inter-Institutional Agreement.  In no event shall receiving Party incorporate or otherwise use disclosing Party’s Confidential Information in connection with any patent application filed by or on behalf of receiving Party.  Receiving Party shall restrict the use of disclosing Party’s Confidential Information exclusively to the terms of this Agreement.  Receiving Party shall use reasonable procedures to safeguard disclosing Party’s Confidential Information.  In the case where Company is the receiving Party, Company acknowledges and agrees that its confidentiality obligations also apply equally to its Sublicensees.

 

15.3                         Access to University Information .  University is an agency of the state of Washington and is subject to the Washington Public Records Act, RCW 42.56 et seq., (“Act”), and no obligation assumed by University under this Agreement shall be deemed to be inconsistent with University’s obligations as defined under the Act and as interpreted by University in its sole discretion.  If University receives a request for public records under the Act for documents containing Company Confidential Information, and if University concludes that the documents are not otherwise exempt from public disclosure, University will provide Company notice of the request before releasing such documents.  Such notice will be provided in a timely manner to afford Company sufficient time to review such documents and/or seek a protective order, at Company’s expense utilizing the procedures described in RCW 42.56.540.  University shall have no obligation to protect Company Confidential Information from disclosure in response to a request for public records.

 

15.4                         Disclosure as Required by Law .  Either Party shall have the right to disclose the other Party’s Confidential Information as required by law or valid court order, provided that such Party shall inform the Party who owns such Confidential Information prior to such disclosure and shall limit the scope and recipient of disclosure to the extent required by such law or court order.

 

16                                   Construction.

 

The headings preceding and labeling the sections of this Agreement are for the purpose of identification only and will not in any event be employed or used for the purpose of construction or interpretation of any portion of this Agreement.  As used herein and where necessary, the singular includes the plural and vice versa, and masculine, feminine, and neuter expressions are interchangeable.

 

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17                                   Enforceability.

 

If a court of competent jurisdiction adjudges a provision of this Agreement unenforceable, invalid, or void, such determination will not impair the enforceability of any of the remaining provisions hereof and the provisions will remain in full force and effect.

 

18                                   Third-Party Beneficiaries.

 

FHCRC is not a party to this Agreement but is an intended Third Party beneficiary, where indicated, of Sections 3.3, 5.4, 8.2, 10.1, 10.2, 11.3, 12.1 and 15.2 of this Agreement.  No person or entity other than FHCRC and the Parties and, with respect to Company, its permitted assignees hereunder, shall be deemed an intended beneficiary hereunder or have any right to enforce any obligation of this Agreement.

 

19                                   Language.

 

Unless otherwise expressly provided in this Agreement, all notices, reports, and other documents and instruments that a Party hereto elects or is required by the terms of this Agreement to deliver to the other Party hereto will be in English.

 

20                                   Notices.

 

All notices, requests, and other communications that a Party is required or elects to deliver will be in writing and will be delivered personally, or by facsimile or electronic mail (provided such delivery is confirmed), or by a recognized overnight courier service or by United States mail, first-class, certified or registered, postage prepaid, return receipt requested, to the other Party at its address set forth below or to another address as a Party may designate by notice given pursuant to this article:

 

If to University:                                                           UW TechTransfer
ATTN:  Director, Technology Licensing
4311 11
th  Avenue NE, Suite 50
Seattle, WA 98105-4608
Facsimile No.:  206-685-4767

 

If to Company:                    Genocea Biosciences, Inc.
Attn:  Chief Executive Officer
161 First Street, Suite 2C
Cambridge, MA 02142
Phone No.:  (617) 876-8191
Facsimile No.:  (617) 876-8192

 

21                                   Patent Marking.

 

To the extent allowed under applicable law, Company shall mark, or shall require that its Sublicensees mark, all material forms of Licensed Product(s) or packaging pertaining thereto

 

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made and sold by Company in the United States with patent marking conforming to 35 U.S.C. §287(a), as amended from time to time.  Such marking shall further identify the pendency of any U.S. patent application and/or any issued U.S. or foreign patent forming any part of the Licensed Patents.  Licensed Product(s) shipped to or sold in other countries will be marked in such a manner as to provide notice to potential infringers pursuant to the patent law and practice of the country of manufacture or sale.

 

22                                   Publicity.

 

Each Party shall have the right to report in its customary publications and presentations that University and Company have entered into a license agreement for the technology covered by the Licensed Patents.  However, neither Party shall have the right to use the logos of the other Party without the other Party’s prior written consent and neither Party shall imply any endorsement by such Party by the other Party, including in the aforementioned publications and presentations.

 

The Parties will cooperate with one another to review and respond to any press release or similar communication proposed by the other Party regarding the non-confidential subject matter of this Agreement.  The specific content and timing of such press releases or similar communication is subject to mutual agreement by the Parties, which will not be unreasonably withheld.  Further, University and Company shall issue a joint press release regarding this Agreement, subject to both Party’s review and approval of the specific content thereof, and such press release shall include specific mention of the contributions of University personnel and University in developing the technology in a prominent portion of the press release.  Company shall provide University with appropriate quotes for such press release.  University may post the press release in digital and print publications as well as on University’s own website.

 

23                                   Relationship of Parties.

 

In entering into, and performing their duties under, this Agreement, the Parties are acting as independent contractors and independent employers.  No provision of this Agreement shall create or be construed as creating a partnership, joint venture, or agency relationship between the Parties.  No Party shall have the authority to act for or bind the other Party in any respect.

 

24                                   Security Interest.

 

Company shall not grant, or permit any person to assert or perfect, a security interest in the Licensed Patents.

 

25                                  Survival.

 

Immediately upon the termination or expiration of this Agreement all of the Parties’ rights under this Agreement will terminate; provided, however, Company’s obligations that have accrued prior to the effective date of termination or expiration of this Agreement ( e.g ., the obligation to report and make payments on sales, leases, or dispositions of Licensed Products and

 

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to reimburse University for costs) and the obligations specified in Sections 6.1 and 6.4 will survive.  The obligations and rights set forth in Sections 6.5, 9.3 and Articles 11, 12, 15, 17, 20, 25, 26, 27, 28, 29 and 30 will survive the termination or expiration of this Agreement.

 

26                                   Collection Costs and Attorneys’ Fees.

 

If it is determined that a Party has materially breached one or more of the terms of this Agreement, the other Party may recover from the breaching Party all of its reasonable costs (including attorneys’ fees) incurred to enforce the terms of this Agreement.

 

27                                   Applicable Law.

 

The internal laws of the state of Washington will govern the validity, construction, and enforceability of this Agreement, without giving effect to the conflict of laws principles thereof.

 

28                                   Forum Selection.

 

A suit, claim, or other action to enforce the terms of this Agreement will be brought exclusively in the state and federal courts of King County, Washington.  Company hereby submits to the jurisdiction of that court and waives any objections it may have to that court asserting jurisdiction over Company or its assets and property.

 

29                                   Dispute Resolution

 

The Parties agree that any and all disputes and controversies arising from, connected with, or relating to this Agreement, including relating to the construction, meaning, performance or effect of this Agreement or any breach thereof (collectively “Disputes”) will be resolved in accordance with the terms of this Article 29 as follows:

 

29.1                         Informal Dispute Resolution .  Prior to initiating formal dispute resolution procedures, the Parties will first attempt to resolve any Dispute directly through good faith negotiations.  Either Party may deliver to the other a written notice requiring negotiation of the Dispute (“Notice to Negotiate”).  The Parties will seek to resolve Disputes through negotiations, but may, during this informal dispute resolution period, escalate the resolution of any Dispute internally as necessary or appropriate to Company’s Chief Executive Officer and University’s Vice Provost for UW TechTransfer, or their authorized representatives.  If the Dispute has not been resolved within 15 business days after the delivery of a Notice to Negotiate, either Party may by written notice (“Notice to Mediate”), request to mediate the Dispute in accordance with Section 29.2 (Mediation), subject to the other Party’s consent.  If the Parties do not agree to mediate the Dispute after a failure to resolve the Dispute pursuant to this Section 29.1, the matter shall be resolved, subject to either Party’s initiation, by binding arbitration under Section 29.3 for Disputes directly related to the determination of the applicable pro rata percentages under Section A3.8 and, for all other Disputes, by any remedies available to the Parties under this Agreement or under law.  To the fullest extent permitted by law, the Parties will conduct the negotiations in confidence.

 

24



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

29.2                         Mediation .  Subject to the Parties’ mutual agreement to mediate the Dispute pursuant to Section 29.1 (Informal Dispute Resolution), the Parties agree to retain the services of a mutually acceptable Third Party mediator to mediate the resolution of the Dispute.  Unless the Parties otherwise agree in writing, the mediator will be resident in the city in which the University is situated, and all meetings regarding the mediation will be held either by video or telephone conference or by in-person meetings held in such city.  No Party will unreasonably withhold acceptance of a mediator, and the selection of a mediator will be made within 15 business days following the delivery of the Notice to Mediate pursuant to Section 29.1 (Informal Dispute Resolution) above.  If a mediator is not appointed, or if, following the appointment of a mediator, the Dispute is not resolved within thirty (30) days, or such extended period that the Parties may agree to in writing, after the delivery of the Notice to Mediate, then (i) if the matter involves the determination of the applicable percentages under Section A3.8, the matter shall be resolved by binding arbitration under Section 29.3, and (ii) if the matter does not involve the determination of the applicable percentages under Section A3.8, neither Party will be required to pursue arbitration under Section 29.3 and either Party may pursue any options available to them under this Agreement and/or commence litigation pursuant to Section 29.4 (Litigation) below.  To the fullest extent permitted by law, the Parties agree to maintain the mediation proceedings in confidence; and share the costs of the mediator and the mediation facilities equally.  To the fullest extent permitted by law, the Parties agree to maintain the mediation proceedings in confidence; and share the costs of the mediator and the mediation facilities equally, although each Party will bear the costs of its presentation including without limitation its attorneys’ fees and fees associated with the production of any information for such presentation.  All communications during the mediation referred to in this Section 29.2 including any documents or information prepared and exchanged solely for the purposes of that mediation, will be considered to be “without prejudice” and will not be admissible in any subsequent litigation.

 

29.3                         Arbitration .  Any Dispute directly related to the determination of the applicable pro rata percentages under Section A3.8 not resolved pursuant to Section 29.1 (Informal Dispute Resolution) or Section 29.2 (Mediation), shall be settled by arbitration administered by the American Arbitration Association under its Commercial Arbitration Rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.  The place of arbitration shall be Seattle, Washington.  The number of arbitrators shall be limited to one.  All expenses and costs of the arbitrators and the arbitration in connection therewith will be shared equally, except that each party will bear the costs of its prosecution and defense, including without limitation attorneys’ fees and the production of witnesses and other evidence.

 

29.4                         Litigation .  Any Party may seek (i) interim measure of protection, including injunctive relief, prior to or during the negotiation or mediation of Disputes, and (ii) final resolution, from the courts sitting in the city in which University is situated regarding any Dispute, and each Party irrevocably and unconditionally attorns to the exclusive jurisdiction of such courts, and all courts competent to hear appeals therefrom, for that purpose.

 

25



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

30                                   Entire Agreement.

 

This Agreement (including all attachments, exhibits, and amendments) is the final and complete understanding between the Parties concerning licensing the Licensed Patents.  This Agreement supersedes any and all prior or contemporaneous negotiations, representations, and agreements, whether written or oral, including the Option Agreement, concerning the Licensed Patents.  However, the obligations of nonuse and nondisclosure for Confidential Information disclosed pursuant to the CDA shall survive until August 10, 2012.  Confidential Information disclosed pursuant to this Agreement shall be governed by the terms of this Agreement.  This Agreement may not be modified in any manner, except by written agreement signed by an authorized representative of both Parties.

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their respective authorized representatives.

 

University of Washington

 

Genocea Biosciences, Inc.

 

 

 

 

By:

/s/ Fiona Wills

 

By:

/s/ M. Leavenworth Bakali

 

 

 

 

 

Name:

Fiona Wills

 

Name:

M. Leavenworth Bakali

 

 

 

 

 

Title:

Director of Technology Licensing

 

Title:

President & CEO

 

 

 

 

 

Date:

January 27, 2010

 

Date:

26 January 2010

 

26



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

Exhibit A

 

Exclusive Patent License Schedule

 

A1.                              Licensed Patents:

 

A1.1 Subset A of Licensed Patents

 

 

 

 

 

 

 

 

 

UW Ref. No.

 

Serial Number

 

Filing Type

 

Filing Date

 

Notes

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

 

 

 

 

 

 

 

 

 

 

A1.2 Subset B of Licensed Patents

 

UW Ref. No.

 

Serial Number

 

Filing Type

 

Filing Date

 

Notes

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

 

 

 

 

 

 

 

 

 

 

A1.3. Background Patents

 

UW Ref. No.

 

Serial Number

 

Filing Type

 

Filing Date

 

Notes

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

 

 



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

 

 

A2.                              Performance Milestones (Section 5.1): Company shall meet the following performance milestones.

 

A2.1                       [* * *];

 

A2.2                       [* * *];

 

A2.3                       [* * *].

 

A2.4                       [* * *].

 

A3.                              Payments (Section 6.1):

 

A3.1                       Up-front Payment .  Company shall pay to University within 30 days of the Effective Date [* * *] as an up-front payment.  This up-front payment shall be non-refundable and not creditable against future royalty obligations.

 

A3.2                       Annual Maintenance Fee .  Within 30 days after each anniversary of the Effective Date during the term of this Agreement Company shall pay to University an annual payment according to the schedule below.  This annual payment shall be non-refundable and not creditable against Company’s other royalty obligations.

 

A3.2.1.  In 2011, Company shall pay University [* * *];

 

A3.2.2.  In 2012, Company shall pay University [* * *]; and

 

A3.2.3.  In 2013 and each year following [until Company pays minimum annual royalties pursuant to Section A3.4], Company shall pay University [* * *].

 

A3.3                       Running Royalty Payments .  During the Royalty Term, Company shall pay to University within 45 days after the last day of each calendar quarter during the term of this Agreement an amount equal to [* * *] of the Net Sales during such quarter as a running royalty payment.

 

A3.4                       Minimum Annual Royalties .  Beginning the first full calendar year following first commercial sale of a Licensed Product and for the term of this Agreement, Company shall pay minimum annual royalties in the amount of [* * *] to be creditable against running royalty payments for the preceding twelve months on a non-cumulative basis.  Minimum annual royalty payments for each year will be due in full and payable on the anniversary of the Effective Date of the relevant calendar year.  If this Agreement is terminated prior to the payment of a minimum annual royalty in any given year, the amount due for that minimum annual royalty payment will be prorated on the basis of the number of full quarters that have elapsed prior to termination since the last payment of a minimum annual royalty.

 



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

A3.5                       Financial Milestones .  Company shall pay to University the following non- cumulative and non-refundable milestone achievement payments within 30 days of achieving the corresponding milestone, whether achieved by Company or a Sublicensee.

 

A3.5.1.  [* * *];

 

A3.5.2.  [* * *];

 

A3.5.3.  [* * *]; and

 

A3.5.4.  [* * *].

 

A3.6                       Equity .  The Parties shall enter into a Stock Purchase Agreement and/or other agreements as they deem necessary and desirable pursuant to which Company shall issue to University [* * *] shares of its common stock within 30 days of the Effective Date.  Each share shall have voting rights and shall be non-assessable.

 

A3.7                       Third Party Royalties .  If Company is required to pay royalties to a Third Party based on Company’s manufacture, use, or sale of Licensed Product subject to one or more patents of such Third Party then the royalties Company pays to University may be reduced by [* * *] of such royalties actually paid to the Third Party provided that use of any Third Party patent is required for such manufacture, use, or sale of Licensed Product, and provided that the royalty to the University shall not fall below [* * *].

 

A3.8                       Sublicensing Consideration .  In addition to the running royalty payments due on Net Sales by any Sublicensee pursuant to Subsection A3.3 of this Exhibit A, Company shall pay to University a percentage of all Sublicensing Consideration received for a Sublicense according to the schedule below.  [* * *] For the avoidance of doubt, any failure by Company to pay University an amount under this Section A3.8 which is actively being disputed pursuant to Article 29 shall not be deemed a breach or default by Company of its obligations under this Agreement.

 

A3.8.1.  [* * *]:

 

A3.8.1.1. [* * *];

 

A3.8.1.2. [* * *];

 

A3.8.1.3.  [* * *];

 

A3.8.1.4.  [* * *].

 

A4.                              Patent Cost Reimbursement: Subject to the terms of this Agreement, Company shall pay, or reimburse University for paying, a [* * *] share [* * *] of all reasonable and necessary out-of-pocket costs (including attorneys’ and application fees) incurred prior to, on, or after the Effective Date to apply for, prosecute, enforce, and maintain Licensed Patents, including the

 



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

reasonable out-of-pocket costs of interferences, oppositions, and re-examinations.  One half of the initial invoice for amounts subject to reimbursement that were incurred prior to the Effective Date hereunder (a summary of such amounts is attached hereto as Exhibit C) shall be due within 30 days of the Effective Date and one half shall be due on or before the first anniversary of the Effective Date; all other reimbursements shall be paid in cash within 30 days of Company’s receipt of University’s invoice setting forth such reimbursable expenses in reasonable detail (with supporting documentation, as appropriate).

 


 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

Exhibit B

 

Royalty Report Form

 

Date

 

Company Name & Address

 

License Number

 

 

 

 

 

Reporting Period:

 

 

Report Due Date:

 

 

This report must be submitted regardless of whether royalties are owed.  Please do not leave any column blank.  State all information requested below.

 

Product Description

 

Royalty Rate

 

Quantity/
Net Sales

 

Royalty Due

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Report Completed by:

 

 

Total Royalties Due:

 

 

 

 

 

 

Telephone Number:

 

 

 

 

 

 

 

 

 

If you have questions please contact:

 

 

 

Please make check payable to: University of Washington

 



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

Exhibit C

 

Patent Costs Incurred as of the Effective Date

 



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

Patent Expense Estimate for Agreement 22557A

 

Total Expenses: [* * *] Company Portion: [* * *]

 

Background Patents

[* * *] of Background Patents patent expenses: [* * *]

 

IP Reference:

 

Expense Total:

 

Company Portion:

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

 

 

[* * *]

 

[* * *]

 

 

Subset A

[* * *] of Subset A patent expenses: [* * *]

 

IP Reference:

 

Expense Total:

 

Company Portion:

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

 

 

[* * *]

 

[* * *]

 

 



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

Patent Expense Estimate for Genocea Agreement

 

Subset B

[* * *] of Subset B patent expenses: [* * *]

 

IP Reference:

 

Expense Total:

 

Company Portion:

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

 

 

[* * *]

 

[* * *]

 

 



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

Amendment No. 1 to Patent License Agreement

between

the University of Washington

and

Genocea Biosciences, Inc.

 

This Amendment No. 1 is made and entered into as of July 19, 2012, by and between the University of Washington, a public institution of higher education and an agency of the State of Washington, acting through UW Center for Commercialization, Technology Licensing (“University”), and Genocea Biosciences, Inc., a Delaware corporation with its principal place of business at 161 First Street, suite 2C, Cambridge, MA 02142 (“Company”).  University and Company are referred to individually as a “Party” and collectively as the “Parties”.

 

WHEREAS, University and Company are Parties to a certain Patent License Agreement (the “Agreement”) with an Effective Date of January 23, 2010 with University reference 22557A;

 

WHEREAS, Company has informed University, through a Revised Termination Letter dated May 31, 2012, that it wishes to terminate its license to selected Licensed Patents under the Agreement;

 

WHEREAS, University and Company, through this Amendment No. 1, wish to update Licensed Patents and confirm the Co-Exclusive or exclusive nature of Company’s license thereto;

 

NOW, THEREFORE the Parties hereto agree as follows:

 

1.               The original Termination Letter dated April 26, 2012 is null and void, and this Amendment No. 1 controls with respect to identifying Licensed Patents.

 

2.               Unless otherwise defined herein, capitalized terms used in this Amendment No. 1 have the meanings set forth in the Agreement.

 

3.               Pursuant to Section 3.1.2 of the Agreement, University and Company hereby confirm (i) conversion of Company’s Tri-Exclusive license to Subset B of Licensed Patents to a Co-Exclusive license; and (ii) Company’s assumption of [* * *] of all reasonable and necessary out-of-pocket patent costs incurred for such converted Co-Exclusive Licensed Patents as of June 1, 2011, the date on which University notified Company of the possibility of conversion.  Table A1.1 (a) below, “Updated Subset A of Licensed Patents”, lists all Licensed Patents subject to a Co-Exclusive license as of the Effective Date of this Amendment No. 1, including Licensed Patents remaining in Subset A, Licensed Patents formerly in Subset B, and Licensed Patents filed subsequent to the Effective Date of the Agreement.

 

4.               University and Company hereby confirm grant of a Co-Exclusive license to Background Patents, as set forth in Table 1.3 below, to manufacture, have manufactured on Company’s behalf, use, offer to sell or sell, offer to lease or lease, import, or otherwise offer to dispose or dispose of Licensed Products in the Field of Use in the Territory.  [Specific grant of a Tri-Exclusive license to Background Patents was inadvertently omitted from the Agreement.]

 



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

5.               Further, subject to the terms and conditions of the Agreement, University hereby grants to Company, and Company hereby accepts, an exclusive license to Subset C of Licensed Patents, as set forth in new Table A1.1 (b) below, to manufacture, have manufactured on Company’s behalf, use, offer to sell or sell, offer to lease or lease, import, or otherwise offer to dispose or dispose of Licensed Products in the Field of Use in the Territory.  Company assumes all reasonable and necessary out-of-pocket costs (including attorneys’ and application fees) incurred prior to, on, or after the Effective Date of this Amendment No. 1 to apply for, prosecute, enforce, and maintain Subset C of Licensed Patents, including the reasonable out-of-pocket costs of interferences, oppositions, and re-examinations.

 

6.               Table A1.1 “Subset A of Licensed Patents”, Table A1.2 “Subset B of Licensed Patents”, and Table 1.3 “Background Patents” are hereby deleted in their entirety and replaced as follows:

 

Canady ID

 

New UW ID

 

Previous UW ID

 

Appl Number

 

Patent No.

 

Filing

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

 

A1.1 (b)     New Subset C of Licensed Patents; exclusively licensed to Genocea

 

Canady ID

 

New UW ID

 

Previous UW ID

 

Appl Number

 

Patent No.

 

Filing

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

 

A1.2                       Updated (as of May 31, 2012) Subset B of Licensed Patents

[No Licensed Patents in Subset B.]

 

A1.3                       Updated (as of May 31, 2012) Background Patents; Co-Exclusively licensed to Genocea

 

Canady ID

 

New UW ID

 

Previous UW ID

 

Appl Number

 

Patent No.

 

Filing

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

[* * *]

 

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their respective authorized representatives.

 

University of Washington

 

Genocea Biosciences, Inc.

 

 

 

By:

/s/ Angela Loihl

 

By:

/s/ William D. Clark

 

 

 

 

 

Name:

Angela Loihl

 

Name:

William D. Clark

 

 

 

 

 

Title:

Associate Director

 

Title:

President & CEO

 

 

 

 

 

Date:

7/11/2012

 

Date:

July 19, 2012

 




Exhibit 10.7

 

LOAN AND SECURITY AGREEMENT

No. V13111

 

This Loan and Security Agreement (this “Loan Agreement”), made as of September 30, 2013 by and between Ares Capital Corporation (“Lender”), with offices at 245 Park Avenue, 44 th  Floor, New York, NY 10167, and Genocea Biosciences, Inc. (“Borrower”), a Delaware corporation with its principal place of business at 100 Acorn Park Drive, 5 th  Floor, Cambridge, MA 02140.

 

In consideration of the promises set forth herein, Lender and Borrower agree upon the following terms and conditions:

 

1.                                       General Definitions

 

The following capitalized words, terms and /or phrases shall have the meanings set forth thereafter and such meanings shall be applicable to the singular and plural form thereof giving effect to the numerical difference:

 

A.                                     “Account” means any “account,” as defined in the UCC, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest and, in any event, shall include all accounts receivable, book debts, rights to payment, and other forms of obligations now owned or hereafter received or acquired by or belonging or owing to Borrower (including under any trade name, style or division thereof), whether or not arising out of goods or software sold or licensed or services rendered by Borrower or from any other transaction (including any such obligation that may be characterized as an account or contract right under the UCC), and all of Borrower’s rights in, to and under all purchase orders or receipts now owned or hereafter acquired by it for goods or services, and all of Borrower’s rights to any goods represented by any of the foregoing (including unpaid seller’s rights of rescission, replevin, reclamation and stoppage in transit and rights to returned, reclaimed or repossessed goods), and all monies due or to become due to Borrower under all purchase orders and contracts for the sale of goods or the performance of services or both by Borrower or in connection with any other transaction (whether or not yet earned by performance on the part of Borrower), now in existence or hereafter occurring, including the right to receive the proceeds of said purchase orders and contracts, and all collateral security and guarantees of any kind given by any Person with respect to any of the foregoing.

 

B.                                     “Account Debtor” means any Person obligated on an Account.

 

C.                                     “Additional Documentation” has the meaning set forth in Section 5.2.

 

D.                                     “Affiliate” means, as applied to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, that Person.  For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”), as applied to any Person, means the possession, directly or indirectly, of the power (i) to vote ten percent (10%) or more of the securities having ordinary voting power for the election of directors of such Person or (ii) to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting securities or by contract or otherwise.

 

E.                                      “Borrower’s Liabilities” means all obligations and liabilities of Borrower to Lender (including without limitation all debts, claims, and indebtedness) whether primary, secondary, direct, contingent, fixed or otherwise, heretofore, now and/or from time to time hereafter owing, due or payable, however evidenced, created, incurred, acquired or owing and however arising, whether under this Loan Agreement and/or any promissory note or other instrument issued pursuant hereto or the “Other Agreements” (hereinafter defined), or by oral agreement or operation of law or otherwise, but specifically excluding any obligations and liabilities under the Warrant.

 

F.                                       “Business Day” means any day of the year that is not a Saturday, Sunday or a day on which banks are not required or authorized to close in New York City or Chicago, Illinois.

 

G.                                     “Cash” means all cash, money (as defined in the UCC), currency, and liquid funds, wherever held, in which Borrower now or hereafter acquires any right, title, or interest.

 

H.                                    “Change of Control” means, at any time prior to the closing of a public offering of the equity securities of Borrower, (i) the current shareholders of Borrower cease to beneficially own and control, directly or indirectly on a fully diluted basis, a majority of the economic and voting interests in Borrower’s capital stock or other ownership interests or (ii) any Person or group other than the current shareholders of Borrower shall have the right to elect a majority of the seats on Borrower’s board of directors; in each case, other than as a result of

 

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Borrower’s issuance of capital stock for cash (or conversion of debt) to venture capital firms, private equity, institutional and strategic investors if Borrower provides Lender with the names of such investors at least ten (10) days prior to such issuance.  For the avoidance of doubt, a Change of Control may only occur before, and not at any time on or after, the closing of a public offering of the equity securities of Borrower.

 

I.                                         “Charges” means all national, federal, state, county, city, municipal and/or other governmental taxes, levies, assessments, charges, liens, claims or encumbrances upon and/or relating to the Collateral, Borrower’s Liabilities, Borrower’s business, Borrower’s ownership and/or use of any of its assets, and/or Borrower’s income and/or gross receipts.

 

J.                                         “Chattel Paper” means any “chattel paper,” as defined in the UCC, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.

 

K.                                    “Cleanup” means all actions required to: (1) clean up, remove, treat or remediate Hazardous Materials in the indoor or outdoor environment; (2) prevent the release of Hazardous Materials so that they do not migrate, endanger or threaten to endanger public health or welfare or the indoor or outdoor environment; (3) perform pre-remedial studies and investigations and post-remedial monitoring and care; or (4) respond to any government requests for information or documents in any way relating to cleanup, removal, treatment or remediation or potential cleanup, removal, treatment or remediation of Hazardous Materials in the indoor or outdoor environment.

 

L.                                      “Collateral” has the meaning set forth in Section 5.1.

 

M.                                  “Controlled Account” has the meaning set forth in Section 5.4(a).

 

N.                                     “Copyright License” means any written agreement granting any right to use any Copyright or Copyright registration, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.

 

O.                                     “Copyrights” means all of the following property, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest: (i) all copyrights, whether registered or unregistered, held pursuant to the laws of the United States or of any other country; (ii) all registrations, applications and recordings in the United States Copyright Office or in any similar office or agency of the United States or of any other country; (iii) all continuations, renewals or extensions thereof; and (iv) all registrations to be issued under any pending applications.

 

P.                                       “Default” means any condition or event that, after notice or lapse of time or both, would constitute an Event of Default.

 

Q.                                     “Deposit Accounts” means any “deposit accounts,” as defined in the UCC, and in any event includes any checking account, savings account, or certificate of deposit now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.

 

R.                                     “Documents” means any “documents,” as defined in the UCC, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.

 

S.                                       “DOL Regulations” has the meaning set forth in Section 6.1(o).

 

T.                                      “Environmental Claim” means any claim, action, cause of action, investigation or notice (written or oral) by any Person alleging potential liability (including, without limitation, an obligation to conduct a Cleanup or potential liability for investigatory costs, Cleanup costs, governmental response costs, natural resources damages, property damages, personal injuries, or penalties) arising out of, based on or resulting from (a) the presence or release of any Hazardous Materials at any location, whether or not owned, leased or operated by Borrower or any of its Subsidiaries, or (b) circumstances forming the basis of any violation, or alleged violation, of any Environmental Law.

 

U.                                     “Environmental Laws” means all federal, state, local and foreign laws and regulations relating to pollution or protection of human health (but excluding occupational safety and health, to the extent regulated by the Occupational Safety and Hazard Act of 1970) or the environment, including, without limitation, laws relating to releases or threatened releases of Hazardous Materials or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, release, disposal, transport or handling of Hazardous Materials, laws and regulations with regard to recordkeeping, notification, disclosure and reporting requirements respecting Hazardous Materials and laws relating to the management or use of natural resources.

 

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V.                                     “ERISA” has the meaning set forth in Section 6.1(o).

 

W.                                  “Equipment” means any “equipment”, as defined in the UCC, and in any event shall include but not be limited to computers and peripherals, laboratory equipment, manufacturing equipment,  networking equipment, switching and backbone equipment, servers and routers and other hardware, including disk drives and laser printers, office furniture, fixtures, office equipment, test and other equipment, and software, and all accessions, additions, attachments, accessories and improvements thereof and all replacements and/or substitutions therefore.

 

X.                                     “Event of Default” has the meaning set forth in Section 8.1.

 

Y.                                     “Excess Interest” has the meaning set forth in Section 9.9.

 

Z.                                      “Financials” means those financial statements described in Section 7.3.

 

AA.                            “Fixtures” means any “fixtures,” as defined in the UCC, together with all right, title and interest of Borrower in and to all extensions, improvements, betterments, accessions, renewals, substitutes, and replacements of, and all additions and appurtenances to any of the foregoing property, and all conversions of the security constituted thereby, immediately upon any acquisition or release thereof or any such conversion, as the case may be, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.

 

BB.                            “Funding Request” has the meaning set forth in Section 2.1.

 

CC.                            “GAAP” means generally accepted accounting principles in the United States, in effect from time to time, consistently applied.

 

DD.                            “General Intangibles” means any “general intangibles,” as defined in the UCC, and, in any event, shall include all right, title and interest which Borrower may now or hereafter have in or under any rights to payment; payment intangibles; software; proprietary or confidential information; business records and materials; customer lists; interests in partnerships, joint ventures, business associations, corporations, and limited liability companies; permits; claims in or under insurance policies (including unearned premiums and retrospective premium adjustments); and rights to receive tax refunds and other payments and rights of indemnification now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.

 

EE.                              “Goods” means any “goods,” as defined in the UCC, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.

 

FF.                                “Hazardous Materials” means all substances defined as Hazardous Substances, Oils, Pollutants or Contaminants in the National Oil and Hazardous Substances Pollution Contingency Plan, 40 C.F.R. § 300.5, or defined as such by, or regulated as such under, any Environmental Law.

 

GG.                            “Indemnified Liabilities” has the meaning set forth in Section 7.5.

 

HH.                          “Indemnified Taxes” has the meaning set forth in Section 2.6.

 

II.                                    “Initial Tranche” has the meaning set forth in Section 2.1.

 

JJ.                                    “Instruments” means any “instrument,” as defined in the UCC, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.

 

KK.                          “Intellectual Property” means all Copyrights; Trademarks; Patents; and Licenses; and applications therefor and reissues, extensions, or renewals thereof; and Borrower’s goodwill associated with any of the foregoing; together with Borrower’s rights to sue for past, present and future infringement of Intellectual Property and the goodwill associated therewith.

 

LL.                              “Inventory” means any “inventory,” as defined in the UCC, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest, and, in any event, shall include all Goods and other personal property that are held by or on behalf of Borrower for sale or lease or are furnished or are to be furnished under a contract of service, or that constitute raw materials, work in process or materials used or consumed or to be used or consumed in Borrower’s business, or the processing, packaging, promotion, delivery or shipping of the same, and all finished goods, whether or not the same is in transit or in the constructive, actual or exclusive possession of Borrower or is held by others for Borrower’s account, including all property covered by purchase orders and contracts with suppliers and all Goods billed and held by suppliers and all such property that may be in the possession or custody of any carriers, forwarding agents, truckers, warehousemen, vendors, selling agents or other Persons.

 

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MM.                      “Investment Property” means all “investment property,” as defined in the UCC, and in any event includes any certificated security, uncertificated security, money market funds, bonds, mutual funds, and U.S. Treasury bills or notes, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.

 

NN.                            “Joint Venture” means a corporation, partnership, limited liability company or other entity in which any Person other than the Borrower or any of its Subsidiaries holds, directly or indirectly, an equity interest together with Borrower.

 

OO.                            “Letter of Credit Rights” means any “letter of credit rights,” as defined in the UCC, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest, including any right to payment or performance under any letter of credit.

 

PP.                                “License” means any Copyright License, Patent License, Trademark License or other license of rights or interests now held or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest and any renewals or extensions thereof.

 

QQ.                            “Loan” has the meaning set forth in Section 2.2.

 

RR.                            “Material Adverse Effect” means a material adverse effect upon (i) the business, operations, properties, assets, results of operations or condition (financial or otherwise) of Borrower after the date hereof, (ii) the prospect of repayment of any portion of Borrower’s Liabilities, when due, (iii) the validity, perfection or priority of Lender’s security interest in the Collateral, (iv) the enforceability of any material provision of this Loan Agreement or any Other Agreement or (v) the ability of Lender to enforce its rights and remedies with respect to Borrower’s Liabilities under this Loan Agreement or any Other Agreement.

 

SS.                                “Material Investor” means any venture capital, private equity, institutional or strategic investor now or hereafter holding or having the ability to control 10% or more of the voting securities of Borrower and their respective affiliates.

 

TT.                              “Material Investor Event” means that any Material Investor shall (i) sell, transfer or otherwise assign the majority of its interest in Borrower to an unaffiliated passive investor, and such Material Investor is not replaced at such time by an existing or new, active Material Investor having comparable experience and assets under management, (ii) fail to participate in a material manner in future financing rounds of Borrower and Borrower is not able to replace this investor with another investor with comparable experience and assets under management, or (iii) have its representative resign from the Board of Directors of Borrower and such Material Investor does not replace the representative director within sixty (60) days, except that a failure of Johnson & Johnson Development Corporation, Lux Ventures II, L.P., Lux Ventures Sidecar, L.P., Lux Ventures II Sidecar II, LLC or Lux Venture II Sidecar III LLC to replace a representative director upon his or her resignation from the Board of Directors shall not constitute a Material Investor Event.

 

UU.                            “Non-U.S. Lender” has the meaning set forth in Section 2.6.

 

VV.                            “Other Agreements” means all agreements, instruments and documents , including, without limitation, the Warrants, any notes, guaranties, letters of credit, mortgages, deeds of trust, pledges, powers of attorney, consents, assignments, contracts, notices, security agreements, leases, warrants, account pledge and control agreements, fee arrangements and financing statements, and all other written matter heretofore, in each case, now and/or from time to time hereafter executed by and/or on behalf and/or for the benefit of Borrower and delivered to Lender in connection with a Loan, as the same may from time to time be amended, modified, supplemented or restated.

 

WW.                      “Patent License” means any written agreement granting any right with respect to any invention on which a Patent is in existence or a Patent application is pending, in which agreement Borrower now holds or hereafter acquires any interest.

 

XX.                            “Patents” means all of the following property, now owned or hereafter acquired by Borrower: (a) all letters patent of, or rights corresponding thereto, in the United States or in any other country, all registrations and recordings thereof, and all applications for letters patent of, or rights corresponding thereto, in the United States or any other country, including registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country; (b) all reissues, continuations, continuations-in-part or extensions thereof; (c) all petty patents, divisionals, and patents of addition; and (d) all patents to be issued under any such applications.

 

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YY.                            “Permitted Debt” means (i) Borrower’s indebtedness to Lender under this Loan Agreement or any of the Other Agreements; (ii) indebtedness to trade creditors incurred in the ordinary course of business on ordinary trade terms and accrued expenses incurred in the ordinary course of business; (iii) other indebtedness for equipment financing in an aggregate outstanding principal amount not to exceed $150,000 at any time; (iv) unsecured, subordinated indebtedness of Borrower to new or existing investors or strategic partners, subject to a subordination agreement satisfactory to Lender in its sole reasonable discretion; (v) obligations incurred as a result of endorsing negotiable instruments in the ordinary course of business, (vi) reimbursement obligations of Borrower arising in connection with letters of credit relating to lease obligations, not to exceed $475,000 in the aggregate, or (vii) any extension, renewal, refinancing, modification, amendment or restatement of the indebtedness described in clauses (iii) and (vi) above, provided that the principal amount of, and interest rate on, such indebtedness may not be increased.

 

ZZ.                              “Permitted Joint Venture” means a Joint Venture in which (1) Borrower controls (as the term “control” is determined in the second sentence of the definition of “Affiliate” hereunder) such Joint Venture, and (2) the aggregate liability of the Borrower and/or its Subsidiaries with respect to, and in connection with, any such Joint Venture, at any time outstanding does not exceed $1,000,000, and not to exceed $3,000,000 in the aggregate for all Permitted Joint Ventures.

 

AAA.                   “Permitted Liens” means all (i) Charges for amounts not yet delinquent or being contested in good faith by appropriate proceedings and for which adequate reserves have been made in accordance with GAAP; (ii) statutory liens of landlords, carriers, warehousemen, mechanics and materialmen incurred in the ordinary course of business for sums not yet delinquent or that are being contested in good faith by appropriate proceedings being diligently conducted and for which Borrower maintains adequate reserves in accordance with GAAP; (iii) liens arising from judgments, decrees or attachments in circumstances which do not constitute an Event of Default; (iv) the following deposits, to the extent made in the ordinary course of business: deposits under worker’s compensation, unemployment insurance, social security and other similar laws, or to secure the performance of bids, tenders or contracts (other than for the repayment of borrowed money) or to secure indemnity, performance or other similar bonds for the performance of bids, tenders or contracts (other than for the repayment of borrowed money) or to secure statutory obligations (other than liens arising under ERISA or environmental liens) or surety or appeal bonds, or to secure indemnity, performance or other similar bonds; (v) banker’s liens, rights of setoff and similar liens arising by operation of law on deposits made in the ordinary course of business, provided such liens do not arise in respect of borrowed money; (vi) non-exclusive licenses and sublicenses granted by Borrower or any of its Subsidiaries in the ordinary course of business or exclusive licenses and sublicenses thereof where such exclusivity is with respect to geographic location, fields of use, customized products for specific customers and/or time-based, as approved by Borrower’s Board of Directors; (vii) Liens securing Borrower’s reimbursement obligations under Borrower’s letters of credit described in clause (vi) of definition of Permitted Debt; and (viii) liens arising in connection with indebtedness described in clause (iii) or (vii) of the definition of Permitted Debt on any Equipment (and any accessions, attachments, replacements or improvements thereon) which was acquired or financed by Borrower or any of its Subsidiaries to secure the purchase price of such Equipment, provided that the lien is confined solely to the Equipment so acquired or financed, and improvements thereon and the proceeds thereof.

 

A.                                     “Person” means any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, unincorporated organization, association, corporation, institution, entity, party or government (whether national, federal, state, county, city, municipal or otherwise, including without limitation, any instrumentality, division, agency, body or department thereof).

 

B.                                     “Proceeds” means “proceeds,” as defined in the UCC.

 

C.                                     “Receivables” means (i) all of Borrower’s Accounts, Instruments, Documents, Chattel Paper, Supporting Obligations, letters of credit, proceeds of any letter of credit, and Letter of Credit Rights, and (ii) all customer lists, software, and business records related thereto.

 

D.                                     “Register” has the meaning set forth in Section 9.6.

 

E.                                      “Required Permit” means a permit issued or reasonably required under laws applicable to the business of Borrower or any of its Subsidiaries, affiliates or joint ventures reasonably necessary and material to the business of Borrower.

 

F.                                       “Second Tranche” has the meaning set forth in Section 2.1.

 

G.                                     “Securities Account” means any “securities account”, as defined in the UCC, and in any event includes any account to which a financial asset is or may be credited in accordance with an agreement under which

 

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the Person maintaining the account undertakes to treat the Person for whom the account is maintained as entitled to exercise the rights that comprise the financial asset.

 

H.                                    “Securitization” has the meaning set forth in Section 9.6.

 

I.                                         “Subsidiary” means, with respect to any Person, any corporation, partnership, limited liability company, association, joint venture or other business entity of which more than fifty percent (50%) of the total voting power of shares of stock or other ownership interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Person or Persons (whether directors, managers, trustees or other Persons performing similar functions) having the power to direct or cause the direction of the management and policies thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof.

 

J.                                         “Supporting Obligations” means any “supporting obligations,” as defined in the UCC, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.

 

K.                                    “Term Loan” has the meaning set forth in Section 2.1.

 

L.                                      “Terminal Payment” shall mean an amount which is two percent (2%) of the original principal amount of the relevant Loan (or in the case of partial prepayment, the amount of principal so prepaid, in which case the Terminal Payment due at maturity will be reduced by the amount of the Terminal Payment previously paid).

 

M.                                  “Trademark License” means any written agreement granting any right to use any Trademark or Trademark registration, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest.

 

N.                                     “Trademarks” means all of the following property, now owned or hereafter acquired by Borrower or in which Borrower now holds or hereafter acquires any interest: (a) all trademarks, tradenames, corporate names, business names, trade styles, service marks, logos, other source or business identifiers, prints and labels on which any of the foregoing have appeared or appear, and designs of like nature, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and any applications in connection therewith, including registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any state thereof or any other country or any political subdivision thereof, (b) all reissues, extensions or renewals thereof, and (c) all rights in World Wide Web addresses, uniform resource locators and domain names and applications and registrations therefor.

 

O.                                     “UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York, provided that if by reason of mandatory provisions of law, the perfection, the effect of perfection or non-perfection or the priority of the security interest granted hereunder in any Collateral or the availability of any remedy hereunder is governed by the Uniform Commercial Code as in effect in any other jurisdiction(s), then  “UCC” shall mean the Uniform Commercial Code as in effect on or after the date hereof in such other jurisdiction(s) for the purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection, or priority or availability of such remedy.

 

P.                                       “Warrant” has the meaning set forth in Section 2.5(b).

 

2.                                       The Loans

 

2.1                                Term Loan. On the terms and subject to the conditions contained in this Loan Agreement, including those listed in Section 2.5, Lender shall loan to Borrower, a term loan (the “Term Loan”), in the amount of up to Ten Million Dollars ($10,000,000), the proceeds of which are to be used to repay the LightHouse Capital Partners debt facility in full and for working capital and general operating purposes.  The Term Loan shall be funded in two tranches, as follows: (i) on the date hereof, the initial advance (the “Initial Tranche”) in an amount of Three Million Five Hundred Thousand Dollars ($3,500,000), and (ii) not later than December 31, 2013, an additional advance (the “Second Tranche”) in an amount of up to Six Million Five Hundred Thousand Dollars ($6,500,000), which, in the case of the Second Tranche, will be made pursuant to a funding request submitted to Lender in the form attached hereto as Exhibit B (the “Funding Request”) not later than 9:00 a.m. (prevailing Chicago time) not less than five (5) Business Days prior to the date of such proposed borrowing. In no event shall the aggregate amount of the advances made hereunder exceed Ten Million Dollars ($10,000,000).  This is not a revolving line of credit and Borrower may not repay and re-borrow the amounts advanced or to be advanced under this Section 2.1.  Each tranche shall be repaid in forty-two (42) monthly installments as follows: (i) commencing on the first Business Day of the first month after funding such tranche, nine (9) monthly payments of interest only (paid in arrears), then

 

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(ii) commencing on first Business Day of the tenth month after the date of funding such tranche, thirty-three (33) equal monthly payments of principal, together with interest thereon (paid in arrears), then (iii) on the first Business Day of the forty-second month after the date of funding such tranche, the Terminal Payment. All such payments to be made on the first Business Day of each month commencing on the first Business Day of the month following the date of such borrowing.

 

2.2                                Evidence and Nature of Loans.   Each advance in respect of the Term Loan to be made by Lender to Borrower pursuant to this Loan Agreement (each, a “Loan”) will be evidenced by one or more promissory notes (in form and substance reasonably satisfactory to Lender) to be executed and delivered by Borrower to Lender before or concurrently with Lender’s disbursement of such Loan to or for the account of Borrower.

 

2.3                                Use of Proceeds. Borrower warrants and represents to Lender that Borrower shall use the proceeds of each Loan and any advances made pursuant to the Other Agreements solely for legal and proper corporate purposes (duly authorized by its Board of Directors) and consistent with all applicable laws and statutes.

 

2.4                                Direction to Remit.   Borrower hereby authorizes and directs Lender to disburse, for and on behalf of Borrower and for Borrower’s account, the proceeds of the Loan to such Person or Persons as an officer or director of Borrower shall direct, whether in writing or orally.

 

2.5                                Conditions Precedent.   (a) The following conditions precedent must be met before each Loan is made hereunder: (i) No event, condition or change that has had, or could reasonably be expected to have, a Material Adverse Effect shall exist, (ii) The representations and warranties contained in this Loan Agreement and in the Other Agreements shall be true and correct in all material respects on and as of the date of such Loan (provided, that representations and warranties which speak to another date, shall be true and correct as of such date; provided, further, that, any representation and warranty that is qualified by materiality in the text thereof shall be true and correct (after giving effect to any qualification therein) in all respects on such respective dates), (iii) As of  the date of such Loan, no Default or Event of Default shall exist or would result from the making of such Loan, and (iv) Such additional documents and information as Lender may reasonably request from Borrower from time to time.

 

(b)  In addition, the following conditions precedent must be met before the initial Loan is made hereunder:  (i) Payment of all fees required under this Loan Agreement or the Other Agreements, (ii) Receipt by Lender of satisfactory release documents from all conflicting secured creditors (other than holders of Permitted Liens), (iii) Receipt by Lender of appropriate filings and other means of perfecting its security interest in the Collateral, including, but not limited to, specific assignments of Collateral consisting of instruments or evidenced by titles, (iv) Lender shall have received copies of  the certificates and evidences of insurance contemplated under Section 5.6 and the Financials described in Section 7.3, (v) Receipt by Lender of such proof of free and clear ownership of the Collateral, as may be reasonably requested by Lender, (vi) Reserved, (vii) Delivery by Borrower of a reasonably satisfactory landlord waiver duly executed and delivered by Borrower’s Cambridge, Massachusetts landlord, (viii) Receipt by Lender of a Warrant to purchase 689,655 shares of Borrower’s Series C Preferred Stock at a purchase price of $0.58 per share in form and substance satisfactory to Lender (the “Warrant”), and (ix) Delivery by Borrower of a legal opinion of counsel to Borrower relating to this Loan Agreement and the Other Agreements in form and substance reasonably satisfactory to Lender.

 

(c) The following conditions precedent must be met before the second Tranche is made hereunder: (i) Borrower shall have filed a registration statement of on S-1 for an initial public offering of its stock and is actively pursuing such stock offering thereunder, or (ii) is or making progress (as determined by Lender in its sole discretion) toward the execution of, and funding under, a term sheet from a growth equity fund, inside investors or a pharmaceutical partner, in either case Borrower shall be seeking to raise a net amount not less than $20 million through such equity offering(s) and which transaction(s) would be expected to close and fund on or before April 30, 2014.

 

2.6                                Payments and Taxes .  All payments made by Borrower under this Loan Agreement or any Other Agreement shall be made free and clear of and without deduction for all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any governmental authority (including any interest, additions to tax or penalties applicable thereto) other than any taxes imposed on or measured by Lender’s overall net income and franchise taxes imposed on it (in lieu of net income taxes), by a jurisdiction (or any political subdivision thereof) as a result of Lender being organized or resident, conducting business (other than a business deemed to arise from Lender having executed, delivered or performed its obligations or received a payment under, or enforced, or otherwise with respect to, this Loan Agreement or any Other Agreement) or having its principal office in such jurisdiction (“Indemnified Taxes”).  If any Indemnified Taxes shall be required by law to be withheld or deducted from or in respect of any sum payable under this Loan Agreement or any Other Agreement to Lender (w) an additional amount shall be payable as may be necessary so that, after making all required withholdings or deductions (including withholdings or deductions applicable to additional sums payable under this

 

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Section) Lender receives an amount equal to the sum it would have received had no such withholdings or deductions been made, (x) Borrower shall make such withholdings or deductions, (y) Borrower shall pay the full amount withheld or deducted to the relevant taxing authority or other authority in accordance with applicable law and (z) Borrower shall deliver to Lender evidence of such payment.  If Borrower fails to pay any Indemnified Taxes when due to the appropriate taxing authority or fails to remit to Lender the required evidence of payment, Borrower shall further indemnify Lender for any incremental taxes, interest, costs or penalties that may become payable by Lender as a result of any such failure.  In addition, the Borrower shall pay any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement to the relevant governmental authority in accordance with applicable law.  Borrower’s obligation hereunder shall survive the termination of this Loan Agreement. Each Lender that is not organized under the laws of the United States of America or any state thereof (a “Non-U.S. Lender”) shall: (i) deliver to Borrower two copies of either (A) in the case of Non-U.S. Lender claiming exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of “portfolio interest”, United States Internal Revenue Service Form W-8BEN (together with a certificate representing that such Non-U.S. Lender is not a bank for purposes of Section 881(c) of the Code, is not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of Borrower and is not a controlled foreign corporation related to Borrower (within the meaning of Section 864(d)(4) of the Code)), or (B) Internal Revenue Service Form W-8BEN or Form W-8ECI, in each case properly completed and duly executed by such Non-U.S. Lender claiming complete exemption from, or reduced rate of, U.S. federal withholding tax on payments by Borrower under this Agreement; and (ii) deliver to Borrower two further copies of any such form or certification (or any applicable successor form) promptly upon the obsolescence or invalidity of any form previously delivered by such Non-U.S. Lender.  Notwithstanding any other provision of this paragraph, a Non-U.S. Lender shall not be required to deliver any form pursuant to this paragraph that such Non-U.S. Lender is not legally able to deliver.  Each Lender that is entitled to an exemption from or reduction of non-U.S. withholding tax under the law of the jurisdiction in which Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to Borrower, at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate; provided, that such Lender is legally entitled to complete, execute and deliver such documentation and in such Lender’s reasonable judgment such completion, execution or submission would not materially prejudice the legal position of such Lender.  Borrower shall make all payments hereunder in recognition of such exemption or reduction in rate based on the documentation set forth above.

 

3.                                       Interest, Fees and Repayment

 

3.1                                Interest.   Each advance in respect of the Loan shall bear interest payable monthly in arrears on the first Business Day of each month, calculated on the basis of a 360 day year and actual days elapsed at a rate equal to 8% per annum.  In no event shall interest accrue or be payable in connection with any Loan in an amount in excess of that permitted under applicable law.  If the note(s) so provide, the interest thereunder may be precomputed for the period ending when payments thereunder are due and on the assumption that all payments will be made on their respective due dates.  Payments due under any note and not made by their scheduled due date for a period in excess of two (2) Business Days thereafter shall be overdue and shall be subject to a service charge in an amount equal to five percent (5%) of the delinquent amount, but not more than the maximum rate permitted by law, whichever is less; provided, that Borrower shall not be obligated to pay such late charge if payments were overdue as a result of any technical or electronic errors in transferring funds from Borrower’s account.  During the continuance of an Event of Default all outstanding Borrower’s Liabilities in respect of the Loans shall bear interest (payable on demand) at a rate that is five percent (5%) per annum in excess of the Loan interest rate applicable to each Loan and other Borrower’s Liabilities from time to time.

 

3.2                                Fees.   Borrower agrees to pay to Lender a fee of $35,000 to cover due diligence and other costs and expenses, including legal expenses, incurred in connection with the Loan, of which Lender acknowledges receipt of $35,000.  All fees payable hereunder shall be fully earned and nonrefundable when due and payable hereunder.

 

3.3                                Repayment.   Borrower’s Liabilities are absolute and unconditional and are not subject to counterclaim, set-off or rights of rescission.  All costs, fees and expenses payable pursuant to this Loan Agreement or any of the Other Agreements shall be payable by Borrower to Lender or to such other Person or Persons designated by Lender, on demand.  All amounts payable to Lender hereunder shall be received by 2:00 p.m. (prevailing New York time) at Lender’s principal place of business specified at the beginning of this Loan Agreement or at such other place or

 

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places as Lender may designate in writing to Borrower. All payments to Persons other than Lender shall be payable at such place or places as Lender designates in writing to Borrower.

 

3.4                                Application of Payments.   Provided that an Event of Default does not exist, the application of payments received by Lender pursuant to this Loan Agreement shall be applied first to all late charges, fees and expenses then due and payable; second to interest then due and payable; third to the principal of the Loan then due and payable, fourth to the remaining principal of the Loan then outstanding together with unpaid interest accrued thereon and finally, to any other Borrower’s Liabilities then outstanding.  During the continuance of an Event of Default, Lender shall have the continuing and exclusive right to apply all such payments received by Lender to any portion of Borrower’s Liabilities, including to any of Borrower’s Liabilities arising under any of the Other Agreements.  Solely for the purpose of computing interest earned by Lender, payments received by Lender shall be applied as aforesaid on the Business Day following receipt by Lender.  Checks or other items of payment received after 2:00 p.m. (prevailing New York time) shall be deemed received the following Business Day.

 

4.                                       Term and Prepayment

 

4.1                                Term.   This Loan Agreement shall be in effect until the indefeasible payment in full to Lender of all Borrower’s Liabilities (other than inchoate indemnity or reimbursement obligations).  Except as provided below, Borrower has no right to prepay Borrower’s Liabilities.

 

4.2                                Voluntary Prepayment .  Borrower may, upon at least five (5) days prior written notice to Lender (stating the proposed date of prepayment, which date shall then be the due date for such Loan (or the portion of such Loan proposed to be repaid)), prepay the outstanding principal amount of the Loan then outstanding in whole, or in part, by paying to Lender, in immediately available funds, an amount equal to the sum of (i) the outstanding principal amount of the Loan (or the amount of the Loan proposed to be repaid), (ii) all accrued and unpaid interest, fees and expenses on the Loan (or the amount of the Loan proposed to be repaid) through the date of prepayment, and (iii)  (A) if such prepayment is made on or prior to the last day of the twelfth month of the relevant Loan, a prepayment premium equal to two percent (2%) of the principal amount being prepaid; and (B) if such prepayment is made after the last day of the twelfth month after the date of the relevant Loan but prior to the maturity date of such Loan, a prepayment premium equal to one percent (1%) of the principal amount being prepaid, and (iv) the Terminal Payment relating to the principal amount of the Loan to be prepaid; provided that any partial prepayment shall be in a principal amount of at least $1,000,000.

 

5.                                       Collateral and Security

 

5.1                                Grant of Security Interest.   To further secure to Lender the prompt full and faithful payment and performance of Borrower’s Liabilities and the prompt, full and complete performance by Borrower of each of its covenants and duties under this Loan Agreement and the Other Agreements (other than the Warrant), Borrower grants to Lender, a valid, first priority continuing security interest in and lien upon all of the following ( except as to assets or property with Permitted Liens, upon which a lien which may be other than a first priority lien is granted ), whether now owned or hereafter acquired and wherever located:

 

(i)                                      All Receivables;

 

(ii)                                   All Equipment;

 

(iii)                                All Fixtures;

 

(iv)                               All General Intangibles (other than Intellectual Property);

 

(v)                                  All Inventory;

 

(vi)                               All Investment Property;

 

(vii)                            All Deposit Accounts and Securities Accounts;

 

(viii)                         All Cash;

 

(ix)                               All Documents;

 

(x)                                  All Proceeds from the sale, transfer or other disposition of Intellectual Property;

 

(xi)                               All other Goods and tangible and intangible personal property of Borrower other than Intellectual Property, whether now or hereafter owned or existing, leased, consigned by or to, or acquired by, Borrower and wherever located, and

 

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(xii)                            to the extent not otherwise included, all Proceeds of each of the foregoing and all accessions to, substitutions and replacements for, and rents, profits and products of each of the foregoing and all attachments, accessories, accessions, replacements, substitutions, additions or improvements to any of the foregoing, wherever located and all products and proceeds of the foregoing including without limitation proceeds of insurance policies insuring the foregoing and all books and records with respect thereto;

 

(all of the foregoing personal property is hereinafter sometimes individually and sometimes collectively referred to as “Collateral”). Notwithstanding anything herein contained or construed to the contrary, Borrower is not granting to Lender, and Lender is not receiving from Borrower, any grant of a security interest in (i) any of the outstanding capital stock or other equity interests of any directly owned Subsidiary of Borrower organized under the laws of any jurisdiction other than the United States, any State thereof or the District of Columbia in excess of sixty-five percent (65%) of the voting power of all classes of such capital stock or other equity interests of such Subsidiary entitled to vote, (ii)  any particular asset if the pledge thereof or the security interest therein is prohibited or restricted by applicable law, rule or regulation (including any requirement to obtain the consent of any governmental authority, regulatory authority or third party), (iii) any specifically identified asset in which Lender agrees in writing, and in its sole discretion not to take a security interest or (iv) any of Borrower’s now owned or hereafter acquired Intellectual Property (other than a security interest in the Proceeds from the sale, transfer or other disposition of Intellectual Property); provided , however , that Borrower may continue to enter into the following arrangements, which shall not be considered a sale, transfer or disposition of Intellectual Property : (x) non-exclusive licenses, sub-licenses and similar arrangements with respect to its Intellectual Property in the ordinary course of Borrower’s business and (y) exclusive licenses and sublicenses thereof where such exclusivity is with respect to geographic location, fields of use, customized products for specific customers and/or time-based, as approved by Borrower’s Board of Directors, as long as (i) Borrower does not encumber for the benefit of a party other than Lender any Proceeds of such license or other fees payable to Borrower under any such license or arrangement, and (ii) no such license or arrangement shall prohibit or restrict Borrower (or any successor or assign) from disposing of any Intellectual Property that is the subject of any such license or arrangement.  Borrower shall make appropriate entries upon its financial statements and its books and records disclosing Lender’s security interest in the Collateral.

 

5.2                                Further Assurances.   Borrower shall execute and/or deliver to Lender, at any time and from time to time hereafter at the request of Lender, all agreements, instruments, UCC financing statements (or other required perfection instruments), documents and other written matter (hereinafter individually and/or collectively, referred to as “Additional Documentation”) that Lender reasonably may request, in a form and substance reasonably acceptable to Lender, to perfect and maintain Lender’s security interest in the Collateral and to consummate the transactions contemplated in or by this Loan Agreement and the Other Agreements. In the event that Borrower fails to deliver such Additional Documentation or notify Lender in writing that it objects to such Additional Documentation  as being unreasonable within five (5) Business Days after notice from Lender, Borrower, irrevocably, (a) hereby makes, constitutes and appoints Lender (and all Persons designated by Lender for that purpose) as Borrower’s true and lawful attorney (and agent-in-fact) to sign the name of Borrower on the Additional Documentation and to deliver the Additional Documentation to such Persons as Lender, in its reasonable discretion, may elect, (b) authorizes the filing of any such Additional Documentation by Lender or its agents, whether paper or electronic, (c) hereby ratifies and confirms the filing of Additional Documentation by Lender or its agent, paper or electronic, occurring prior to the date hereof, and (d) declares that Borrower has the present intention to authenticate and process any such Additional Documentation, whether paper or electronic, and whether or not filed by Lender or its agents after the date hereof.

 

5.3                                Inspection of Collateral.   Lender (by any of its officers, employees and/or agents) shall have the right, at any time or times during Borrower’s usual business hours, to inspect the Collateral and all related records (and the premises upon which it is located) and to verify the amount and condition of or any other and all financial records and matters whether or not relating to the Collateral at its own cost and expense; provided, however, that during the continuance of an Event of Default, all costs, fees and expenses incurred by Lender, or for which Lender has become obligated, in connection with such inspection and/or verification shall be payable by Borrower to Lender. Borrower shall use commercially reasonable efforts to cause its employees and agents to cooperate with Lender in all inspections.

 

5.4                                Controlled Accounts; Proceeds of Collateral.   (a) Subject to subsection (b) below, Borrower shall deliver, or cause to be delivered to Lender, an account control agreement in form and substance reasonably satisfactory to Lender and duly authorized, executed and delivered by Borrower and each bank or financial institution where Borrower maintains a deposit or securities account, other than any such account supporting Borrower’s

 

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reimbursement obligations under a letter of credit as provided in clause (vi) of the definition of Permitted Debt (each a “Controlled Account”); provided, however, that Lender will not exercise its right to control amounts in a Controlled Account unless an Event of Default has occurred and is continuing .

 

(b) With respect to any deposit or securities account (other than any such account supporting Borrower’s reimbursement obligations under a letter of credit as provided in clause (vi) of the definition of Permitted Debt) in existence at the closing of the Initial Tranche, Borrower shall deliver an account control agreement in form and substance reasonably satisfactory to Lender and duly authorized, executed and delivered by Borrower and each bank or financial institution no later than October 4, 2013.

 

(c)  All proceeds arising from the disposition of any Collateral by Borrower shall be deposited in a Controlled Account within two (2) Business Days after receipt by Borrower.  Nothing in this Section limits the restrictions on disposition of Collateral set forth elsewhere in this Loan Agreement.

 

5.5                                Third Party Claims. Lender, in its sole discretion, without waiving or releasing any obligation, liability or duty of Borrower under this Loan Agreement or the Other Agreements or any Event of Default, may (but shall be under no obligation to) at any time or times hereafter, pay, acquire and/or accept an assignment of any security interest, lien, encumbrance or claim asserted (other than Permitted Liens) by any Person against the Collateral. All sums paid by Lender in respect thereof and all costs, fees and expenses, including reasonable attorneys’ fees, court costs, expenses and other charges relating thereto incurred by Lender on account thereof, shall be payable by Borrower to Lender upon demand.

 

5.6                                Insurance. Borrower shall maintain at its own expense the following minimum insurance coverages, which shall be provided by insurance carriers with an AM Best rating of A, Class X or as otherwise acceptable to Lender and with such deductibles and exclusions as approved by Lender:  (1)  All risk property damage insurance covering the Collateral which shall include, but not be limited to, fire and extended coverage and where applicable mechanical breakdown and electrical malfunction, and which shall be written in amount not less than the current replacement cost; and, (2) Commercial general liability insurance which may include excess liability insurance written on occurrence basis with a limit of not less than $2,000,000, and (3) workers’ compensation insurance in accordance with statutory limits and employers’ liability coverage which may include excess liability in an amount not less than $500,000.

 

Any insurance carried and maintained in accordance with this Loan Agreement shall be endorsed to provide that:  (i) Lender shall be loss payee with respect to the property insurance described in subsection (1) of the prior paragraph (and such insurance shall provide that the interest of Lender shall not be invalidated by any act or neglect of Lender, Borrower or other Person), and Lender shall be an additional insured with respect to the liability insurance described in subsection (2) of the prior paragraph; and (ii) The insurers thereunder waive all rights of subrogation against Lender, any right of setoff and counterclaim and any other right to deduction due to outstanding premiums, whether by attachment or otherwise; and (iii) Such insurance shall be primary without right of contribution of any other insurance carried by or on behalf of Lender; and (iv) Inasmuch as such policies are written to cover more than one insured, all terms, conditions, insuring agreements and endorsements (other than the limits of liability) shall operate in the same manner as if there were a separate policy covering each insured; and (v) If such insurance is canceled for any reason whatsoever, including nonpayment of premium, or any substantial change is made in the coverage that affects the interests of Lender, such cancellation or change shall not be effective as to Lender until thirty (30) days after receipt by Lender of written notice sent by registered mail from such insurer of such cancellation or change; providing, however, that such thirty (30) day period shall be reduced to ten (10) days in the case where cancellation results from the nonpayment of premiums.  Effective upon the occurrence and during the continuance of an Event of Default, Borrower appoints Lender as Borrower’s true and lawful attorney (and agent-in fact) for the purpose of making, settling and adjusting claims under such policies, endorsing the name of Borrower on any check, draft, instrument or other item of payment for the proceeds of such policies and for making all determinations and decisions with respect to such policies.

 

On or before the initial funding by Lender hereunder, and at each policy anniversary date, Borrower shall arrange to furnish Lender with appropriate Certificates of Insurance.  Such Certificates of Insurance shall be executed by each insurer or by an authorized representative of each insurer, and shall identify insurers, the type of insurance, the insurance limits and the policy term and shall specifically list the special endorsements (i) through (v) above.

 

In case of the failure to procure or maintain such insurance, Lender shall have the right, but not the obligation, to obtain such insurance and any premium paid by Lender shall be immediately due and payable by Borrower to Lender.  The maintenance of any policy or policies of insurance pursuant to this Section shall not limit any obligation or liability of Borrower pursuant to any other Sections or provisions of this Loan Agreement.

 

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5.7                                Charges on Collateral. Borrower shall not permit any Charges (other than Permitted Liens) to arise, or to remain, and Borrower shall pay promptly when due, and discharge, such Charges.  If Borrower, at any time or times hereafter, fails to pay such Charges (other than Permitted Liens) when due or to obtain such discharges, Borrower shall so advise Lender thereof in writing. Lender may, without waiving or releasing any obligation or liability of Borrower hereunder or any Event of Default, in its sole discretion, at any time or times thereafter, make such payment, or any part thereof, or obtain such discharge and take any other action with respect to such Charges (other than Permitted Liens) which Lender deems advisable. All sums so paid by Lender and any expenses, including reasonable attorneys’ fees, court costs, expenses and other charges relating thereto, shall be payable by Borrower to Lender upon demand.

 

5.8                                UCC Filing Authorization .  Borrower hereby authorizes Lender and its counsel and other representatives to file, at any time on or after the date hereof, UCC financing statements and continuation statements, and amendments to financing statements, in any jurisdictions and with any filing offices as Lender may determine, in its sole discretion, are necessary or advisable to perfect the security interests granted to Lender hereunder and under the Other Agreements. Such financing statements may describe the Collateral in the same manner as described herein or therein or may contain an indication or description of Collateral that describes such property in any other manner as Lender may determine is necessary or advisable to ensure the perfection of the security interest in the Collateral.

 

5.9                                Accounts .  So long as no Event of Default has occurred and is continuing, subject to Section 7.4, Borrower may settle, adjust or compromise any claim, offset, counterclaim or dispute with any Account Debtor.  At any time that an Event of Default has occurred and is continuing, Lender may, at its option, notify Borrower in writing that Lender intends to have the exclusive right to settle, adjust or compromise any claim, offset, counterclaim or dispute with Account Debtors or grant any credits, discounts or allowances and on and after such notice from Lender to Borrower, Lender shall have such exclusive right until such Event of Default is cured or waived.

 

6.                                          Warranties and Representations

 

6.1                                Borrower Representations .  Borrower warrants and represents to Lender, as of the date hereof and as of the date of any Loan made hereunder, and agrees and covenants to Lender that:

 

(a)          Borrower is and at all times hereafter shall be (i) a Person having that legal name and organizational structure as set forth above, duly organized and existing and in good standing under the laws of the state of its organization as set forth above and (ii) qualified or licensed to do business in all other states in which the laws require Borrower to be so qualified and/or licensed, except in such states where the failure to be so qualified or licensed would not reasonably be expected to have a Material Adverse Effect;

 

(b)          Borrower is duly authorized and empowered to enter into, execute, deliver and perform this Loan Agreement and the Other Agreements and the execution, delivery and/or performance by Borrower of this Loan Agreement and the Other Agreements, and the use by Borrower of the proceeds of the Loans hereunder, shall not, by the lapse of time, the giving of notice or otherwise, conflict with or constitute a violation of any applicable law (including, without limitation, Regulation U or Regulation X of the Board of Governors of the Federal Reserve System or any other regulation thereof) or a breach of any provision contained in Borrower’s organizational documents or contained in any material agreement, instrument or document to which Borrower is a party or give rise to or result in any default thereunder;

 

(c)           This Loan Agreement is (and when executed or delivered, each Other Agreement will be) the legally valid and binding obligation of Borrower, enforceable against Borrower in accordance with its respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally or by equitable principles (whether enforcement is sought in equity or at law);

 

(d)          Except as disclosed to Lender in writing prior to the date hereof, there are no actions or proceedings which are pending, or to its knowledge threatened, against Borrower which could reasonably be expected to have a Material Adverse Effect.  Borrower is not in breach of or a party to any contract or agreement or subject to any charge, restriction, judgment, decree or order which has or could reasonably be expected to have a Material Adverse Effect, nor is Borrower in default with respect to any indenture, security agreement, mortgage, deed or other similar agreement relating to the borrowing of monies to which it is a party or by which it is bound;

 

(e)           Borrower has and is in good standing with respect to all licenses, patents, copyrights, trademarks, trade names, governmental permits, certificates, consents and franchises necessary to continue to conduct its business as previously conducted by it and to own or lease and operate its properties as now owned or leased by it except, in each case, where failure to be in good standing or to obtain such licenses, permits, certificates, consents or franchises could not reasonably be expected to have a Material Adverse Effect;

 

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(f)            The financial statements delivered by Borrower to Lender prior to the date hereof and the Financials delivered by Borrower to Lender pursuant to Section 7.3 fairly and accurately present the assets, liabilities and financial conditions and results of operations of Borrower as of the dates and for the periods stated therein and have been prepared in accordance with GAAP (subject to, in the case of interim financial statements, the absence of footnotes and normal year-end adjustments in connection with the audited financial statements for the periods covered by such interim financial statements), and no event, condition or change that has had, or could reasonably be expected to have, a Material Adverse Effect has occurred since the date of this Loan Agreement;

 

(g)           As to the Accounts and other Collateral, (i) Borrower has and at all times hereafter shall have good, indefeasible and merchantable title to and ownership of the Collateral and the Accounts described and/or listed on any certificate or schedule relating to the Accounts delivered to Lender, free and clear of all liens, claims, security interests and encumbrances except those of Lender and Permitted Liens; (ii) Borrower, promptly on demand by Lender, shall deliver to Lender all evidence of ownership of, including without limitation, vendor invoices and proofs of payment thereof, certificates of title to and applications for title to, any Collateral; (iii) Borrower shall keep and maintain the Collateral in good operating condition and repair, ordinary wear and tear excepted, and shall make all necessary replacements thereof and renewals thereto so that the value and operating efficiency thereof shall at all times be maintained and preserved; and (iv) Borrower shall not permit any such items to become a fixture to real estate or accession to any other Person’s personal property.

 

(h)          As to Lender’s security interest, (i) Lender’s security interest in the Collateral is now and at all times hereafter shall be perfected and have a first priority (subject to Permitted Liens); (ii) the offices and/or locations where Borrower keeps the Collateral and Borrower’s books and records concerning the Collateral are at the locations identified to Lender in writing and Borrower shall not remove such books and records and/or the Collateral therefrom to any other location unless Borrower gives Lender written notice thereof at least thirty (30) days prior thereto and the same is within the contiguous forty-eight (48) states of the United States of America; and (iii) the addresses identified to Lender in writing as Borrower’s chief executive office and principal place(s) of business are Borrower’s sole offices and place(s) of business, and Borrower, by written notice delivered to Lender at least thirty (30) days prior thereto, shall advise Lender of any change thereto.

 

(i)              Borrower is not an “investment company” or a company “controlled” by an “investment company”, as such terms are defined in the Investment Company Act of 1940.

 

(j)             All income and other tax returns and reports required to be filed by Borrower have been timely filed, and all taxes shown on such tax returns to be due and payable and all other assessments, fees and governmental charges upon Borrower and its properties, assets, income, businesses and franchises have been paid when due and payable, except to the extent that such taxes, assessments, charges or claims (i) are being contested in good faith by appropriate proceedings (promptly instituted and diligently conducted) so long as such reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made therefor and (ii) such proceeding shall stay the attachment, sale, disposition, foreclosure or forfeiture of any asset of Borrower in connection with any such contested tax, assessment, charge or claim .  All necessary and appropriate estimated payments (including any interest and penalties) in respect of assessed tax liability under Borrower’s state and federal tax returns have been made on a timely basis .

 

(k)          As of the date hereof and of each Loan (i) the sum of Borrower’s debt (including contingent liabilities) does not exceed the present fair saleable value of Borrower’s present assets; (ii) Borrower’s capital is not unreasonably small in relation to its business as it exists and as is contemplated at such time; and (iii) Borrower has not incurred and does not intend to incur, or believe that it will incur, debts beyond its ability to pay such debts as they become due.

 

(l)              No information furnished to Lender by or on behalf of Borrower for use in connection with the transactions contemplated hereby, taken as a whole for the relevant period, contains, any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein not materially misleading in light of the circumstances in which the same were made.  Any projections contained in such materials are based upon good faith estimates and assumptions believed by Borrower to be reasonable at the time made.  There are no facts known to Borrower that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect.

 

(m)      Borrower has provided to Lender on or prior to the date hereof a schedule that correctly identifies the ownership interest (including all options, warrants and other rights to acquire capital stock) of Borrower and each of its Subsidiaries as of the date hereof.

 

(n)          (i) Borrower (A) has been and is in compliance in all material respects with all applicable Environmental Laws;

 

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(B) has not received any communication, whether from a governmental authority or otherwise, alleging that Borrower is not in such compliance, which noncompliance could reasonably be expected to have a Material Adverse Effect, and there are no past or present actions, activities, circumstances conditions, events or incidents that may prevent or interfere with such compliance in the future; (ii) there is no Environmental Claim pending or, to the best knowledge of Borrower, threatened against Borrower or against any Person whose liability for any Environmental Claim Borrower has or may have retained or assumed either contractually or by operation of law and which could reasonably be expected to have a Material Adverse Effect; and (iii) there are no past or present actions, activities, circumstances, conditions, events or incidents, including, without limitation, the release, threatened release or presence of any Hazardous Material, which could reasonably be expected to form the basis of any Environmental Claim against Borrower or, to the best knowledge of Borrower, against any Person whose liability for any Environmental Claim Borrower has or may have retained or assumed either contractually or by operation of law and which could reasonably be expected to have a Material Adverse Effect.

 

(o)          (i) Borrower is an “operating company” within the meaning of the regulations of the United States Department of Labor included within 29 CFR Section 2510.3-101 (the “DOL Regulations”) or is in compliance with such other exception as may be available under such regulations to prevent the assets of Borrower from being treated as the assets of any employee benefit plan for purposes of the DOL Regulations and (ii) neither Borrower nor any Subsidiary of Borrower maintains or is obligated to make contributions to any employee benefit plan that is subject to Title IV of the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute (“ERISA”).

 

7.                                       Affirmative and Negative Covenants

 

7.1                                Affirmative Covenants .  Borrower shall, and shall cause each of its Subsidiaries to: (a) preserve and keep in full force and effect its existence and all rights and franchises, licenses and permits material to its business, (b) pay all income and other taxes and assessments imposed upon it or any of its properties or assets or in respect of any of its income, businesses or franchises before any penalty or fine accrues thereon, except for those that are being contested in good faith and for which adequate reserves are maintained in accordance with GAAP and such proceeding shall stay the attachment, sale, disposition, foreclosure or forfeiture of any asset of Borrower in connection with any such contested tax, assessment, charge or claim , (c) comply in all material respects with the requirements of all applicable laws, rules, regulations and orders of any governmental authority, (d) keep adequate books of record and account, in which complete entries shall be made of all financial transactions and the assets and of its business, (e) on or prior to September 30, 2013 (and promptly after the establishment of any new facilities or co-host locations), deliver to Lender duly executed landlord or collateral access agreements, in form and substance satisfactory to Lender, for all premises (including offices and co-host locations) at which any Collateral is located (other than Borrower’s offices in Cambridge, Massachusetts for which a landlord agreement was delivered to Lender on or prior to the date hereof), (f) promptly take all necessary Cleanup action on, under or affecting any property owned, leased or operated by Borrower in accordance with all applicable laws and the applicable policies, orders and directives of all federal, state and local governmental authorities, and conduct and complete such Cleanup action in material compliance with all applicable Environmental Laws, and (g) if Borrower had not closed an equity financing in an amount of at least $40 million pursuant to its filing of a registration statement on Form S-1 on or prior to March 31, 2014, then, on or before April 30, 2014 (or such later date as may be consented to by Lender (such consent not to be (i) subject to or conditioned upon the payment of any fee or (ii) unreasonably withheld, conditioned or delayed)), Borrower shall have entered into, closed and funded under an executed term sheet for an equity financing from an alternative financing source (inclusive of growth equity funds, inside investors or pharmaceutical partners) for an amount not less than $20 million.

 

7.2                                Negative Covenants   Borrower shall not, and shall not permit any of its Subsidiaries to: (a) grant a security interest in, assign, sell or transfer any of the Collateral or any of its Intellectual Property to any Person or permit, grant, or suffer or permit a lien, claim or encumbrance upon any of the Collateral or Intellectual Property, except for (i) Permitted Liens, (ii) the sale of Inventory and obsolete or unneeded Equipment in the ordinary course of business, or upon Lender’s prior written consent or (iii) non-exclusive licenses or sublicenses of Borrower’s Intellectual Property in the ordinary course of business or exclusive licenses and sublicenses thereof where such exclusivity is with respect to geographic location, fields of use, customized products for specific customers and/or time-based, as approved by Borrower’s Board of Directors, and any such license is otherwise in compliance with Section 5.1 hereof; (b) permit or suffer any Charges to attach to or affect any of the Collateral (other than Permitted Liens); (c) permit or suffer any receiver, trustee or assignee for the benefit of creditors to be appointed to take possession of any of the Collateral; (d) merge or consolidate with or acquire any Person without the prior written consent of Lender; (e) make an equity investment in, or a loan, advance or capital contribution to, any Person, other than travel advances to employees in the ordinary course of business and investments in newly-formed Subsidiaries

 

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with the consent of Lender; (f) incur or permit or suffer to exist any indebtedness for borrowed money or for the deferred purchase price for property or services (other than Permitted Debt); (g) voluntarily prepay any indebtedness prior to its scheduled maturity other than pursuant to the terms hereof; (h) make or pay (i) any dividend or other distribution, direct or indirect, on account of any shares of any class of stock of Borrower or (ii) any redemption, retirement or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any class of stock of Borrower or any outstanding warrants, options or other rights to acquire such shares; provided, however, that this restriction shall not apply to (x) the repurchase of shares of Borrower’s common stock from employees, directors and other Persons performing services for Borrower pursuant to agreements under which Borrower has the option to repurchase such shares upon the termination of such Person’s services for Borrower, provided that (A) at the time of any such repurchase, and after giving effect thereto, no Event of Default exists and (B) the aggregate cash paid in connection with such repurchases during any year during the term hereof does not exceed $100,000 or (y) any redemption or repurchase of shares of Borrower’s preferred stock or common stock issued upon conversion of such preferred stock from the Bill & Melinda Gates Foundation pursuant to the Letter Agreement between the Borrower and the Bill & Melinda Gates Foundation, dated as of September 28, 2012; (i) enter into any transaction with any Affiliate or any other transaction (including, without limitation, any sale of assets) not in the ordinary course of its business, except for Permitted Joint Ventures; (j) make a change in the nature of its business, such that Borrower ceases to generate a majority of its revenue from the business of development, design, license, co-development and sale of its T-cell vaccines and immunotherapies for a range of infectious diseases, cancers and autoimmune diseases ; (k) without thirty (30) days’ prior written notice to Lender, make any change in its legal name or state of formation or organization; (l) adopt or otherwise become obligated to contribute to any employee benefit plan that is subject to Title IV of ERISA; or (m) take any action or fail to take an action if, as a result of such action or inaction, Borrower would fail to qualify as an “operating company” within the meaning of the DOL Regulations or otherwise comply with such other exception as may be available under such regulations to prevent the assets of Borrower from being treated as the assets of any employee benefit plan for purposes of the DOL Regulations.

 

7.3                                Covenants Regarding Financial Statements .  Borrower shall cause to be furnished to Lender, (i) the unqualified, audited fiscal year end financial statements of Borrower (which shall not contain any “going concern” exception (other than such exception if based upon (i) the history of accumulated losses and related impact upon the amount of cash shown on the financial statements of Borrower, (ii) the need to raise additional financing or (iii) the impending maturity (not in excess of 120 days) of the second tranche Loan in 2017) or any exception relating to scope of review) no later than June 30 of the subsequent fiscal year, provided that Borrower shall provide to Lender unaudited annual financial statements no later than 90 days after the fiscal year end, (ii) no later than 30 days after the end of each calendar month, the internally prepared monthly financial statements of Borrower, certified by Borrower’s chief financial officer, each containing consolidated and consolidating profit and loss statements for the month then ended and for Borrower’s fiscal year to date, consolidated and consolidating balance sheets as at the last day of such month and a consolidated statement of cash flows for the month then ended and for Borrower’s fiscal year to date, each of which will be presented in a trending monthly format with fiscal year to date subtotals,  (iii)summary monthly bank statements, no later than 30 days after the related month end, reflecting month-end cash balances, (iv) a monthly Compliance and Disclosure Certificate, substantially in the form of Exhibit A attached hereto, (v) promptly upon Borrower’s Board of Directors approval thereof, copies of Borrower’s annual operating plan and any revisions thereto; (vi) copies of materials provided to Borrower’s Board of Directors in connection with regular and special meetings thereof (excluding any materials subject to attorney-client privilege and attorney work-product); (vii) updated capitalization tables, together with any amendments or restatements of the certificate of incorporation or investor rights agreement of Borrower promptly following each round of equity or convertible debt issuance by Borrower, and (viii) such other financial and business information of Borrower as Lender may reasonably require (excluding any materials subject to attorney-client privilege and attorney work-product), including such other financial and operating performance data as is provided to its outside investors or commercial lenders and, if applicable, required to be provided to shareholders by the Securities and Exchange Commission. Each financial statement to be furnished to Lender must be prepared in accordance with GAAP, except for normal year-end adjustments and the absence of footnotes in unaudited interim financial statements. Borrower also agrees to promptly provide to Lender notice of, and such other data and information (financial and otherwise) at any time and from time to time relating to, any legal actions or proceedings pending, or to its knowledge, threatened against Borrower or the occurrence of any event or change that has, or could reasonably be expected to have, a Material Adverse Effect. Financial statements may be delivered via electronic mail to Lender.

 

7.4                                Further Covenants .  (a)  Borrower may not grant any credit, discount, allowance or extension , or enter into any agreement for any of the foregoing with Account Debtors, except for credits, discounts, allowances or extensions made or given in the ordinary course of Borrower’s business in accordance with Borrower’s historic credit and collection practices and policies without the prior consent of Lender.

 

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(b) Effective upon the occurrence and during the continuance of an Event of Default, Lender shall have the right to verify the validity, amount or any other matter relating to any Accounts, by mail, telephone, facsimile transmission or otherwise.

 

7.5                                Indemnification and Liability . Borrower shall indemnify and hold Lender and Lender’s directors, officers, employees and agents harmless from and against all claims, debts, liabilities, demands, obligations, actions, causes of action, penalties, reasonable and documented out-of-pocket costs and expenses (including reasonable attorneys’ fees), of every nature, character and description (the “Indemnified Liabilities”), which Lender may sustain or incur arising out of the Collateral, any Borrower’s Liabilities, any relationship or agreement between Lender and Borrower, or any other matter, cause or thing whatsoever occurred, done, omitted or suffered to be done by Lender relating to Borrower or Borrower’s Liabilities (except any such Indemnified Liabilities arising from the gross negligence or willful misconduct of Lender). If any third-party suit or proceeding is instituted by or against Lender with respect to any Collateral or relating to Borrower, Borrower shall, without expense to Lender, make available Borrower and its officers, employees and agents and Borrower’s books and records, to the extent that Lender may deem them reasonably necessary in order to prosecute or defend any such suit or proceeding. Borrower’s obligation hereunder shall survive termination of this Loan Agreement.

 

8.                                       Default

 

8.1                                Events of Default .  The occurrence of any one of the following events shall constitute a default (“Event of Default”): (a) if Borrower fails to pay any principal of any Loans when due and payable or fails to pay any other Borrower’s Liabilities within two (2) Business Days after the same are due and payable; (b) if any representation, warranty, financial statement, statement, report or certificate made, deemed made or delivered by Borrower, or any of its officers, employees or agents, to Lender is not true and correct in any material respect when made, deemed made or delivered (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof); (c) if Borrower fails or neglects to perform, keep or observe any term, provision, condition or covenant contained in this Loan Agreement or in the Other Agreements which is required to be performed, kept or observed by Borrower, other than the payment of Borrower’s Liabilities, and, in the case of any covenant contained in Section 7.1, the same is not cured within fifteen (15) days (provided that, notwithstanding the foregoing, the cure period for a breach of Section 7.1(g) shall be five (5) Business Days); (d) if any of the Collateral or any other of Borrower’s other material assets are attached, seized, subjected to a writ or distress warrant, or are levied upon, and such attachment, seizure, writ, warrant or levy is not removed within fifteen (15) days, or come within the possession of any receiver, trustee, custodian or assignee for the benefit of creditors; (e) [Reserved]; (f) if a petition under the Bankruptcy Code or any similar law or regulation shall be filed by or against Borrower and, in the case of any involuntary proceeding, such proceeding shall continue undismissed or unstayed for thirty (30) days, or if Borrower shall make an assignment for the benefit of its creditors or if any case or proceeding is filed by Borrower for its dissolution or liquidation; (g) if Borrower is enjoined, restrained or in any way prevented by court order from conducting all or any material part of its business affairs and such injunction, restraint or other court-ordered impediment to conducting business continues for fifteen (15) days; (h) if an application is made by Borrower or any Person for the appointment of a receiver, trustee or custodian for the Collateral or any other of Borrower’s assets and, in the case of any application made by any Person other than Borrower, such application is not dismissed within fifteen (15) days; (i) if Borrower becomes aware of a notice of lien or Charges (other than with respect to Permitted Liens) being filed of record with respect to any of the Collateral by any Person and such notice of lien or Chargers is not removed within fifteen (15) days of Borrower ascertaining knowledge thereof; (j) if any Change of Control shall occur; (k) if any money judgment, writ or warrant of attachment or similar process for an aggregate of at least $50,000 (if not adequately covered by insurance as to which a solvent and unaffiliated insurance company has acknowledged coverage) shall be entered or filed against Borrower or any of its Subsidiaries or any of their respective assets and such judgment, writ or warrant of attachment or similar process shall remain unsatisfied and unstayed for a period of fifteen (15) days; (l) this Loan Agreement or any Other Agreement shall for any reason fail or cease to be valid and binding on, or enforceable against, Borrower or any other party thereto or Borrower shall so assert; (m) this Loan Agreement or any Other Agreement shall for any reason cease to be in full force and effect or cease to create a valid and enforceable lien and security interest on any Collateral purported to be covered thereby or any such lien and security interest shall fail or cease to be a perfected and first priority lien and security interest (subject to Permitted Liens); (n) if Borrower is in default (i) in the payment of any of Borrower’s debt to Lender under any Other Agreement; or (ii) in the payment of any debt to any Person other than Lender in excess of $100,000 or, in the case of clause (i) or (ii), any other event shall occur or condition shall exist under any agreement or instrument relating to any such debt and such default, condition or event gives the holders of such debt (or any agent or trustee on their behalf) the then current right to accelerate such indebtedness; (o)  Borrower changes the nature of its business such that it ceases to generate a

 

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majority of its revenue from the development, design, license, co-development and sale of its T-cell vaccines and immunotherapies for a range of infectious diseases, cancers and autoimmune diseases; (p) any of the Chief Executive Officer, Vice President of Development, Chief Medical Officer, Vice President of Business Development or Vice President of Finance is terminated, resigns or is no longer actively involved in the day to day management of Borrower and Borrower’s Board of Directors fails to designate an interim replacement promptly and fails to appoint a permanent replacement having comparable experience within: (i) ninety (90) days for non-C level employees and (ii) one hundred twenty (120) days  for C-level employees (which periods may be extended by Lender in its reasonable discretion in 30 to 60 day increments, not to exceed an aggregate of 180 days), provided that in no event may two of the positions listed above be vacant at the same time for a period greater than sixty (60) days; (q) prior to the closing of an initial public offering of Borrower’s equity securities, a Material Investor Event occurs, (r) Borro wer becomes engaged in litigation or regulatory proceedings which, could reasonably be expected to result in a Material Adverse Effect; (s) any Required Permit shall have been revoked, rescinded, suspended, modified in an adverse manner or not renewed in the ordinary course, provided any such occurrence would reasonably be expected to have a Material Adverse Effect or (t) a Material Adverse Effect upon the Intellectual Property of Borrower or its Subsidiaries (including a material breach, termination or revocation of licenses under which Borrower has licensed Intellectual Property from third parties) occurs. Borrower shall provide written notice of any events or circumstances which would give rise to an Event of Default under this Section 8.1 promptly (but in no event more than two (2) Business Days) after becoming aware of such events or circumstances.  Failure of Borrower to give such notice promptly shall constitute an Event of Default.

 

8.2                                Lender’s Rights and Remedies .  Upon an Event of Default under Section 8.1(f), without notice by Lender to, or demand by Lender of, Borrower, all Borrower’s Liabilities shall be automatically accelerated and shall be due and payable forthwith and any other commitments to provide any financing hereunder shall automatically terminate, and upon any other Event of Default, without notice by Lender, to or demand by Lender of, Borrower, Lender may accelerate all Borrower’s Liabilities and same shall be due and payable forthwith and/or Lender may terminate any other commitments to provide any financing hereunder. Lender may, in its sole discretion: (a) exercise any one or more of the rights and remedies accruing to a lender under the UCC or other applicable law of the relevant state or states or other applicable jurisdiction, and in equity, and under any other instrument or agreement now or in the future entered into between Lender and Borrower, including under this Loan Agreement and the Other Agreements; (b) enter, with or without process of law and without breach of the peace, any premises where the Collateral or the books and records of Borrower related thereto is or may be located, and without charge or liability to Lender therefor seize and remove the Collateral (and copies of Borrower’s books and records relating to the Collateral) from said premises and/or remain upon said premises and use the same (together with said books and records) for the purpose of collecting, preparing and disposing of the Collateral; (c) sell, lease, license or otherwise dispose of the Collateral or any part thereof by one or more contracts at one or more public or private sales for cash or credit, provided, however, that Borrower shall be credited with the net proceeds of such sale(s) only when such proceeds are actually received by Lender; and (d) require Borrower to assemble the Collateral and make it available to Lender at a place or places to be designated by Lender which is reasonably convenient to Lender and Borrower.

 

In addition, at any time an Event of Default exists, Lender may, in its reasonable discretion, enforce Borrower’s rights against any Account Debtor, secondary obligor or other obligor in respect of any of the Accounts.  Without limiting the generality of the foregoing, at any time or times that an Event of Default exists, Lender may, in its reasonable discretion, at such time or times (1) notify Account Debtors, secondary obligors or other obligors in respect thereof that the Accounts have been assigned to Lender and that Lender has a security interest therein and Lender may direct any or all Account Debtors, secondary obligors and other obligors to make payment of Accounts directly to Lender, (2) extend the time of payment of, compromise, settle or adjust for cash, credit, return of merchandise or otherwise, and upon any terms or conditions, all Accounts or other obligations included in the Collateral and thereby discharge or release the Account Debtor or any secondary obligors or other obligors in respect thereof without affecting any Borrower’s Liabilities, (3) demand, collect or enforce payment of any Accounts or such other obligations, but without any duty to do so, and Lender shall not be liable for any failure to collect or enforce the payment thereof and (4) take whatever other action Lender may deem necessary or desirable for the protection of its interests.  At any time that an Event of Default exists, at Lender’s request, all invoices and statements sent to any Account Debtor shall state that the Accounts and such other obligations have been assigned to Lender and are payable directly and only to Lender and Borrower shall deliver to Lender such originals of documents evidencing the sale and delivery of goods or the performance of services giving rise to any Accounts as Lender may reasonably require.

 

All of Lender’s rights and remedies under this Loan Agreement and the Other Agreements are cumulative and non-exclusive. Exercise or partial exercise by Lender of one or more of its rights or remedies shall not be deemed an

 

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election, nor bar Lender from subsequent exercise or partial exercise of any other rights or remedies. Lender agrees to give written notice of any sale to Borrower at least ten (10) days prior to any public sale or at least ten (10) days before the time after which any private sale may be held. Borrower agrees that Lender may purchase any such Collateral (including by way of credit bid), and may postpone or adjourn any such sale from time to time by an announcement at the time and place of sale or by announcement at the time and place of such postponed or adjourned sale, without being required to give a new notice of sale. Borrower agrees that Lender has no obligation to preserve rights against prior parties to the Collateral.

 

8.3                                Power of Attorney.   Borrower grants to Lender an irrevocable power of attorney coupled with an interest (in addition to such other powers of attorney granted to Lender elsewhere in this Loan Agreement), authorizing and permitting Lender at any time during the continuance of an Event of Default, at its option, but without obligation, with or without notice to Borrower, and at Borrower’s expense, to execute on behalf of Borrower any Additional Documentation, or such other instruments or documents as may be reasonably necessary in order to exercise a right of Borrower or Lender, including, but not limited to, the execution of any proof of claim in bankruptcy, any notice of lien, claim of mechanic’s or other lien, or assignment or satisfaction of mechanic’s or other lien, or to take control in any manner of any cash or non-cash proceeds of Collateral and take any action or pay any sum required of Borrower pursuant to this Loan Agreement and any Other Agreement.  In no event shall Lender’s rights under the foregoing power of attorney or any of Lender’s other rights under this Loan Agreement be deemed to indicate that Lender is in control of Borrower’s business, management or properties.

 

9.                                       General Provisions

 

9.1                                Notices. All notices, demands or other communications required or permitted to be given or delivered under or by reason of the provisions hereof shall be in writing and shall be deemed to have been given when (i) delivered personally to the recipient, (ii) sent via facsimile transmission, (iii) the next Business Day after having been sent to the recipient by reputable overnight courier service (charges prepaid) or (iv) four (4) Business Days after having been mailed to the recipient by certified or registered mail, return receipt requested and postage prepaid.  Such notices, demands and other communications shall be sent to the parties hereunder at their respective addresses and transmission numbers indicated on the signature page hereof, or to such other address or to the attention of such other Person as the recipient party has specified by prior written notice to the sending party.

 

9.2                                Severability. If any court of competent jurisdiction holds any provision of this Loan Agreement to be void or unenforceable, such defect shall not affect the remainder of this Loan Agreement, which shall continue in full force and effect.

 

9.3                                Integration; Modification. This Loan Agreement, the Other Agreements and such other written agreements, documents and instruments as may be executed in connection herewith or pursuant hereto are the final, entire and complete agreement between Borrower and Lender and supersede all prior and contemporaneous negotiations and oral representations and agreements, all of which are merged and integrated in this Loan Agreement and the Other Agreements. There are no oral understandings, representations or agreements between the parties which are not set forth in this Loan Agreement or the Other Agreements or in other written instruments, documents or agreements signed by the parties in connection herewith. If any provision contained in this Loan Agreement is in conflict with, or inconsistent with, any provision in the Other Agreements, the provision contained in this Loan Agreement shall govern and control, it being the intent of the parties, however, that the terms of each of the Loan Agreement and the Other Agreements shall remain in full force and effect. This Loan Agreement and the Other Agreements may not be modified, altered or amended except by an agreement in writing signed by Borrower and Lender.

 

9.4                                Time of Essence. Time is of the essence in the performance by Borrower of each and every obligation under this Loan Agreement.

 

9.5                                Attorneys’ Fees and Other Costs. Borrower shall reimburse Lender for all reasonable and documented out-of-pocket costs and expenses, including, but not limited to, reasonable attorneys’ fees and all filing, recording, search, title insurance, appraisal, audit, and other reasonable costs incurred by Lender in connection with any amendment or waiver to this Loan Agreement or any Other Agreement; seeking to enforce any of its rights hereunder against Borrower or the Collateral, including in bankruptcy; enforcing Lender’s security interest in the Collateral, and  representing Lender in all such matters.  Borrower’s obligation hereunder shall survive termination of this Loan Agreement.

 

9.6                                Benefit of Agreement; Assignment.   The provisions of this Loan Agreement shall be binding upon and inure to the benefit of the respective successors, assigns and representatives of Borrower and Lender; provided, however, that Borrower may not assign or transfer any of its rights or obligations under this Loan Agreement

 

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without Lender’s prior written consent, and any prohibited assignment shall be void. Borrower hereby consents to Lender’s sale, assignment, pledge, transfer or other disposition, at any time and from time to time hereafter, of this Loan Agreement, or the Other Agreements, or of any portion thereof, including, without limitation, Lender’s rights, titles, interests, remedies, powers and/or duties.  Borrower hereby acknowledges that Lender and its Affiliates may securitize the Loan (a “Securitization”) through the pledge of the Loan as collateral security for loans to Lender or its Affiliates or through the sale of the Loan or the issuance of direct or indirect interests in the Loan to their controlled Affiliates, which loans to Lender or its Affiliates or direct or indirect interests will be rated by Moody’s, S&P or one or more other rating agencies.  Borrower shall, to the extent commercially reasonable, cooperate with Lender and its Affiliates to effect any and all Securitizations.  Notwithstanding the foregoing, no such Securitization shall release Lender from any of its obligations hereunder or substitute any pledgee, secured party or any other party to such Securitization for Lender as a party hereto. Borrower shall establish and maintain a record of ownership (the “Register”) in which it agrees to register by book entry Lender’s and each initial and subsequent assignee’s interest in each Loan, and in the right to receive any payments hereunder and any assignment of any such interest.  Notwithstanding anything to the contrary contained in this Loan Agreement, the Loans (including the notes in respect of such Loans) are registered obligations and the right, title, and interest of Lender and its assignees in and to such Loans shall be transferable upon notation of such transfer in the Register , pursuant to Borrower’s obligation above .  In no event is any note to be considered a bearer instrument or bearer obligation.  This Section shall be construed so that the Loans are at all times maintained in “registered form” within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Internal Revenue Code and any related regulations (or any successor provisions of the Code or such regulations).

 

9.7                                Joint and Several Liability . If Borrower consists of more than one Person, their liability shall be joint and several, and the compromise of any claim with, or the release of, any Borrower shall not constitute a compromise with, or a release of, any other Borrower.

 

9.8                                Headings; Interpretation.   Section headings are only used in this Loan Agreement for convenience. The term “including”, whenever used in this Loan Agreement, shall mean “including but not limited to”. This Loan Agreement has been fully reviewed and negotiated between the parties and no uncertainty or ambiguity in any term or provision of this Loan Agreement shall be construed strictly against Lender or Borrower under any rule of construction or otherwise.

 

9.9                                Interest Laws. Notwithstanding any provision to the contrary contained in this Loan Agreement or any Other Agreement, Borrower shall not be required to pay, and Lender shall not be permitted to collect, any amount of interest in excess of the maximum amount of interest permitted by applicable law (“Excess Interest”).  If any Excess Interest is provided for or determined by a court of competent jurisdiction to have been provided for in this Loan Agreement or in any Other Agreement, then in such event:  (1) the provisions of this subsection shall govern and control; (2) Borrower shall not be obligated to pay any Excess Interest; (3) any Excess Interest that Lender may have received hereunder or under any Other Agreement shall be, at such Lender’s option, (a) applied as a credit against the outstanding principal balance of Borrower’s Liabilities or accrued and unpaid interest (not to exceed the maximum amount permitted by law), (b) refunded to the payor thereof, or (c) any combination of the foregoing; (4) the interest rate(s) provided for herein or in any Other Agreement shall be automatically reduced to the maximum lawful rate allowed from time to time under applicable law, and this Loan Agreement and the Other Agreements shall be deemed to have been and shall be, reformed and modified to reflect such reduction; and (5) Borrower shall not have any action against Lender for any damages arising out of the payment or collection of any Excess Interest.

 

9.10                         No Implied Waivers.   Lender’s failure at any time or times to exercise any rights or remedies or to require strict performance by Borrower of any provision of this Loan Agreement shall not waive, affect or diminish any right of Lender thereafter to demand strict compliance and performance therewith and all rights and remedies shall continue in full force and effect until all Borrower’s Liabilities have been fully and indefeasibly paid and performed. Any suspension or waiver by Lender of an Event of Default shall not suspend, waive or affect any other Event of Default, whether the same is prior or subsequent thereto and whether of the same or of a different type. No waiver by Lender of any Event of Default or of any of the undertakings, agreements, warranties, covenants and representations of Borrower contained in this Loan Agreement or the Other Agreements shall be effective unless specifically waived by an instrument in writing signed by an officer of Lender.

 

9.11                         Acceptance by Lender.   This Loan Agreement shall become effective upon acceptance by Lender, in writing, at its principal place of business as set forth above. If so accepted by Lender, this Loan Agreement and the Other Agreements shall be deemed to have been made at said place of business.

 

9.12                         Increased Costs If due to any change in law there shall be: (a) any increase in the cost to Lender or its parent of making or maintaining the Loans; (b) any increase in the amount of capital required or maintained, or

 

19



 

expected to be maintained, by Lender or its parent and the amount of such capital is increased by or based upon the existence of the Loans outstanding hereunder; or (c) any decrease in the effective rate of return on the capital of Lender or its parent of making or maintaining the Loans, then within ten (10) days after written demand by Lender, Borrower shall pay to Lender such additional amount or amounts as will compensate Lender or its parent therefor, it being understood and agreed, however, that Lender shall not be entitled to such compensation as a result of Lender’s compliance with, or pursuant to any request or directive to comply with, any such applicable law as in effect on the date hereof.  Upon determining in good faith that any additional amounts will be payable pursuant to this Section, Lender will, as promptly as practicable upon ascertaining knowledge thereof, give written notice thereof to Borrower, which notice shall set forth in reasonable detail the basis of the calculation of such additional amounts, which statement shall be conclusive for all purposes in the absence of manifest error.  The failure to give any such notice, with respect to a particular event, within the time frame specified herein, shall not release or diminish any of Borrower’s obligations to pay additional amounts pursuant to this Section for amounts accrued or incurred after the date of such notice with respect to such event.  If any change in law shall make it unlawful for Lender to continue to maintain the Loans, or for Borrower to comply with its obligations in respect of the Loans, Borrower shall forthwith, upon Lender’s demand, prepay the Loans in full, together with accrued interest thereon and payment of any compensation required pursuant to this Section. Lender shall submit to Borrower a written statement setting forth the basis for determining such amounts, which statement shall be conclusive for all purposes in the absence of manifest error.

 

9.13                         LAW AND VENUE.   THIS LOAN AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS AND DECISIONS OF THE STATE OF NEW YORK. BORROWER CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF COOK, STATE OF ILLINOIS. BORROWER WAIVES ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST BORROWER BY LENDER OR TO ASSERT THAT ANY ACTION INSTITUTED BY LENDER OR BORROWER IN SUCH COURT IS AN IMPROPER VENUE OR SUCH ACTION SHOULD BE TRANSFERRED TO A MORE CONVENIENT FORUM.

 

9.14                         WAIVER OF TRIAL BY JURY . BORROWER AND LENDER EACH WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING TO, THIS LOAN AGREEMENT AND THE OTHER AGREEMENTS WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.

 

9.15                         USA Patriot Act .  Lender hereby notifies Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), it is required to obtain, verify and record information that identifies Borrower, which information includes the name and address of Borrower and other information that will allow Lender to identify Borrower in accordance with the Patriot Act.  Borrower agrees to provide all such information to Lender upon request by Lender at any time.

 

9.16                         CONFIDENTIALITY .  (a)  The provisions of this Loan Agreement and the Other Agreements shall be held in strictest confidence by Borrower and shall not be publicized or disclosed in any manner whatsoever; provided, however , that Borrower may disclose this Loan Agreement and the Other Agreements (i) in confidence to its officers, directors, employees, agents, advisors, attorneys, accountants, auditors, insurers, tax preparers, and financial advisors, (ii) insofar as such disclosure may be necessary to enforce its terms, (ii) if Lender consents in writing to any such proposed disclosure, (iii) as may be required by the rules, regulations, schedules and forms of the U.S. Securities and Exchange Commission in connection with any filings made with the U.S. Securities and Exchange Commission, (iv) pursuant to the order of any court or administrative agency in any pending legal or administrative proceeding, or otherwise as required by law, regulation, compulsory legal process or as requested by a governmental authority and (vi) in public disclosures by Borrower.

 

(b)  In handling any confidential information, Lender and all employees and agents of Lender shall exercise the same degree of care that Lender exercises with respect to its own proprietary information of the same types to maintain the confidentiality of any non-public information thereby received or received pursuant to this Loan Agreement except that disclosure of such information may be made (i) to the subsidiaries or Affiliates of Lender in connection with their present or prospective business relations with Borrower, (ii) to prospective transferees or purchasers of any interest in the Loans, provided that they have entered into a comparable confidentiality agreement in favor of Borrower and have delivered a copy to Borrower, (iii) as required by law, regulations, rule or order, subpoena, judicial order or similar order (provided, however, that, to the extent permitted, Lender shall use commercially reasonable efforts to provide Borrower with notice of its intent to disclose any confidential information in accordance with this clause (iii), so as to allow Borrower to obtain a protective order or similar court

 

20


 

protection), (iv) as may be required in connection with the examination, audit or similar investigation of Lender, and (v) as Lender may determine in connection with the enforcement of any remedies hereunder.  Confidential information hereunder shall not include information that either:  (x) is generally available to the public, or was known to Lender when disclosed by Borrower, or becomes generally available to the public after disclosure to Lender through no fault of Lender; (y) is disclosed to Lender by a third party, provided Lender does not have actual knowledge that such third party is prohibited from disclosing such information; or (z) is developed by Lender without reference to the confidential information of Borrower.

 

[Signature Page Follows]

 

21



 

In Witness Whereof , this Loan and Security Agreement has been duly executed as of the day and year first above written.

 

 

Borrower:

 

 

 

Accepted By:

 

 

 

 

 

 

 

 

 

Borrower:

 

GENOCEA BIOSCIENCES, INC.

 

Lender:

 

ARES CAPITAL CORPORATION

 

 

 

 

 

 

 

By:

 

/s/ William D. Clark

 

By:

 

/s/ Daniel F. Nguyen

 

 

 

 

 

 

 

Name:

 

William D. Clark

 

Name:

 

Daniel F. Nguyen

Title:

 

President and Chief Executive Officer

 

Title:

 

Authorized Signatory

 

 

 

 

 

 

 

Address for Notices:

 

100 Acorn Park Drive, 5 th  Floor
Cambridge, MA 02140

 

Address for Notices:

 

One North Wacker Drive, 48 th  Floor
Chicago, IL 60606

 

 

 

 

 

 

Attention: Legal Department 

Telephone:

 

617.876.8191

 

Telephone

 

312.252.7500

Facsimile:

 

617.876.8192

 

Facsimile:

 

312.252.7501

 

22



 

EXHIBIT A

 

Officer’s Compliance and Disclosure Certificate

(attachment to monthly financial reports)

 

Reference is hereby made to the Loan and Security Agreement (together with all instruments, documents and agreements entered into in connection therewith, the “Loan Documents”) by and between Ares Capital Corporation (“Lender”) and Genocea Biosciences, Inc. (“Borrower”). Capitalized terms used herein without definition have the meanings assigned to them in the Loan Documents.  The undersigned,                                   , the duly elected and acting                                      of Borrower hereby certifies to Lender in his/her capacity as an officer of Borrower and not in his/her individual capacity, that:

 

(i)                                      FINANCIAL STATEMENTS - General .  The attached financial statements fairly reflect the financial condition of Borrower in all material respects in accordance with GAAP, except for normal year-end adjustments and the absence of footnotes (in the case of unaudited interim financial statements) and as otherwise disclosed on the attached Schedule of Financial Statement Exceptions (if none, so state on said Schedule) and unless otherwise disclosed in writing to Lender, there has been no material adverse change in the assets, liabilities or financial condition of Borrower since                              , 201_;

 

(ii)                                   FINANCIAL STATEMENTS — Off-Balance Sheet .  All material financial obligations and contingent obligations of Borrower not otherwise listed and itemized on the attached financial statements, are disclosed on the attached Schedule of Financial Statement Exceptions , including but not limited to material off-balance sheet leasing obligations, and guarantees of financial obligations of Borrower, its affiliates, subsidiaries, officers and related parties (if none, so state on said Schedule);

 

(iii)                                FINANCIAL STATEMENTS — Related Party Transactions .  All material related party transactions, including but not limited to loans, receivables or payables due to/from Borrower’s officers or employees, affiliates, subsidiaries, or other related parties, are disclosed on the attached Schedule of Financial Statement Exceptions (if none, so state on said Schedule);

 

(iv)                               ACCOUNTS .  All Deposit Accounts and Securities Accounts maintained by Borrower are Controlled Accounts.  There are no Deposit Accounts or Securities Accounts maintained by Borrower for which there is not an account control agreement among Borrower, Lender and the relevant financial institution.

 

(v)                                  COMPLIANCE WITH APPLICABLE LAW .  Except as noted on the attached Schedule of Compliance Issues , there are no material events whereby, Borrower or, to the knowledge of Borrower,  Borrower’s directors, employees, affiliates, subsidiaries or other related parties are acting or conducting business contrary to applicable local, state, or national laws in the country or countries in which said parties are conducting business;

 

(vi)                               REQUIRED PERMITS, WITHDRAWALS, OR ADVERSE TEST RESULTS .  Except as noted on the attached Schedule of Compliance Issues , there are no material events, to the knowledge of Borrower, whereby (A) a governmental regulatory authority has instituted any proceeding to revoke or suspend any Required Permits, or order the withdrawal of any of Borrower’s products or to enjoin Borrower from manufacturing, selling, distributing any of Borrower’s products, (B) Borrower is required to recall, or will voluntarily withdraw, any of Borrower’s products from any market, or (C) any adverse test results have occurred in connection with any of Borrower’s products, which could reasonably be expected to have a Material Adverse Effect;

 

(vii)                            ABSENCE OF DEFAULT .  Except as noted on the attached Schedule of Compliance Issues , no Default or Event of Default exists on the date hereof.  To the knowledge of Borrower, there are no circumstances which could reasonably result in a breach, termination or revocation of licenses under which Borrower has licensed Intellectual Property from third parties.  There has been no amendment, modification or restatement of any licenses under which Borrower has licensed Intellectual Property from third parties, except as has been disclosed to Lender (with copies thereof); and

 

23



 

(viii)                         LITIGATION/REGULATORY MATTERS .  There are no actions, suits or proceedings pending or, to the knowledge of Borrower and the undersigned, threatened against Borrower in any court or before any governmental commission, board or authority which could reasonably be expected to have a Material Adverse Effect (separately or in the aggregate) on the ability of Borrower to perform its obligations under the any of Loan Documents.  Borrower is involved in such litigation and other disputes as are listed on the attached Schedule of Compliance Issues (if none, so state on said Schedule).

 

The undersigned has executed this certificate as of                                               , 201  .

 

Signature:

 

 

 

 

By (printed name and title):

 

 

 

24



 

SCHEDULE OF FINANCIAL STATEMENT EXCEPTIONS

 

Category of Disclosure

 

Financial Date

 

Comments (if none, state “none”)

General Exceptions:

 

 

 

 

 

 

 

 

 

Off-Balance Sheet:

 

 

 

 

 

 

 

 

 

Related Party Transactions:

 

 

 

 

 

SCHEDULE OF COMPLIANCE ISSUES

 

Parties Involved

 

Date of filing/incident

 

Nature of Dispute or Issue (if none, state “none)”

 

 

 

 

 

Compliance Issues:

 

 

 

 

 

 

 

 

 

Litigation Issues:

 

 

 

 

 

 

Signatory Initials:

 

 

 

 

25



 

EXHIBIT B

 

FUNDING REQUEST NO.     

FOR

LOAN AND SECURITY AGREEMENT NO. V13111

BY AND BETWEEN

ARES CAPITAL CORPORATION, AS LENDER

AND

GENOCEA BIOSCIENCES, INC., AS BORROWER

 

Borrower hereby requests an advance under the terms of the above described Loan and Security Agreement (the “Loan Agreement”) in the original principal amount of                                    Dollars ($                                ).

 

Borrower hereby acknowledges and agrees that the representations and warranties as set forth in the Loan Agreement are as if fully set forth herein, and further agrees that all Conditions Precedent to the making of an advance by Lender set forth in the Loan Agreement either have been satisfied, waived or will be satisfied as a result of Lender making this advance.  Borrower represents and warrants that there has been no material adverse change in Borrower’s financial condition, internal organization and/or business prospects since the later of the date of the Loan Agreement or the date of the last advance made by Lender thereunder.

 

The advance requested hereby shall be secured by the Collateral, as defined in the Loan Agreement.

 

The undersigned certifies that the undersigned is a duly authorized signatory of Borrower, and that as such the undersigned is authorized to execute this request on behalf of Borrower.

 

 

 

Genocea Biosciences, Inc.

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Its:

 

 

 

 

 

Date:

 

 

26




Exhibit 10.8

 

LEASE

 

OF PREMISES AT CAMBRIDGE DISCOVERY PARK

 

CAMBRIDGE, MASSACHUSETTS

 

FROM

 

TBCI, LLC, AS TRUSTEE OF 100 DISCOVERY PARK REALTY TRUST

 

TO

 

GENOCEA BIOSCIENCES, INC.

 



 

TABLE OF CONTENTS

 

 

Page

 

 

SUMMARY OF BASIC TERMS

1

 

 

ARTICLE I

5

 

 

ARTICLE II

11

Section 2.1 Lease Of The Premises

11

Section 2.2 Common Rights

12

Section 2.3 Parking

12

Section 2.4 Lease Term

13

Section 2.5 Security Deposit

13

Section 2.6 Lease Amendment

14

Section 2.7 Pre-Term Occupancy

14

 

 

ARTICLE III

15

Section 3.1 Condition of Premises

15

Section 3.2 Tenant Improvements; Allowance

15

Section 3.3 Signs

15

 

 

ARTICLE IV

15

Section 4.1 Base Rent

15

Section 4.2 Certain Additional Rent

16

Section 4.3 Taxes

16

Section 4.4 Insurance Costs

17

Section 4.5 Operating Costs

17

Section 4.6 Tenant’s Utility Costs

17

Section 4.7 Tenant’s Audit Rights

17

 

 

ARTICLE V

18

Section 5.1 Permitted Use

18

Section 5.2 Restrictions on Use

18

Section 5.3 Hazardous Materials

19

Section 5.4 Rooftop Equipment

20

 

 

ARTICLE VI

20

Section 6.1 Landlord’s Services

20

Section 6.2 Extraordinary Use

21

Section 6.3 Interruption; Delay

22

Section 6.4 Additional Services

22

Section 6.5 Landlord’s Indemnity

22

 

 

ARTICLE VII

22

Section 7.1 Rent

22

Section 7.2 Utilities

22

Section 7.3 No Waste

23

Section 7.4 Maintenance; Repairs; and Yield-Up

23

Section 7.5 Alterations by Tenant

23

Section 7.6 Trade Fixtures and Equipment

24

Section 7.7 Compliance with Laws

24

Section 7.8 Contents at Tenant’s Risk

24

Section 7.9 Exoneration, Indemnification, Hold Harmless and Insurance

25

Section 7.10 Landlord’s Access

25

 

i



 

Section 7.11 No Liens

26

Section 7.12 Compliance with Rules and Regulations

26

Section 7.13 Further Construction

26

 

 

ARTICLE VIII

27

Section 8.1 Subletting and Assignment

27

 

 

ARTICLE IX

29

Section 9.1 Subordination to Mortgages and Ground Leases

29

Section 9.2 Lease Superior at Mortgagee’s or Ground Lessor’s Election

29

Section 9.3 Notice to Mortgagee and Ground Lessor

29

Section 9.4 Limitations on Obligations of Mortgagees, Ground Lessors and Successors

29

Section 9.5 Estoppel Certificate By Tenant

30

Section 9.6 Amendment of Declaration

30

 

 

ARTICLE X

30

Section 10.1 Damage From Casualty

30

Section 10.2 Abatement of Rent

31

Section 10.3 Landlord’s Right to Terminate

31

 

 

ARTICLE XI

32

Section 11.1 Eminent Domain; Right to Terminate and Abatement in Rent

32

Section 11.2 Restoration

32

Section 11.3 Landlord to Control Eminent Domain Action

32

 

 

ARTICLE XII

33

Section 12.1 Event of Default

33

Section 12.2 Landlord’s Remedies

33

Section 12.3 Reimbursement of Landlord

34

Section 12.4 Landlord’s Right to Perform Tenant’s Covenants

34

Section 12.5 Cumulative Remedies

35

Section 12.6 Expenses of Enforcement

35

Section 12.7 Landlord’s Default

35

Section 12.8 Limitation of Landlord’s Liability

36

Section 12.9 Late Payment and Administrative Expense

36

 

 

ARTICLE XIII

36

Section 13.1 Brokers

36

Section 13.2 Quiet Enjoyment

36

Section 13.3 Tenant’s Request for Landlord’s Action

37

Section 13.4 Notices

37

Section 13.5 Waiver of Subrogation

37

Section 13.6 Entire Agreement; Execution; Time of the Essence and Headings and Table of Contents

37

Section 13.7 Partial Invalidity

37

Section 13.8 No Waiver

38

Section 13.9 Holdover

38

Section 13.10 When Lease Becomes Binding

38

Section 13.11 Recordation

38

Section 13.12 Financial Statements; Certain Representations and Warranties of Tenant

38

Section 13.13 Confidentiality

39

Section 13.14 Summary of Basic Terms

39

 

ii



 

Exhibits :

 

A –1

 

Property Description (Project)

A – 2

 

Property Description (Parcel 100)

B

 

Site Plan

C

 

Building Floor Plan (Fifth Floor)

C – 1

 

Building Floor Plan (First Floor)

D

 

Rules and Regulations

E

 

Form of Letter of Credit

F

 

Secretary’s Certificate

 

iii



 

SUMMARY OF BASIC TERMS

 

LEASE

 

OF PREMISES AT CAMBRIDGE DISCOVERY PARK,
CAMBRIDGE, MASSACHUSETTS

 

TO

 

GENOCEA BIOSCIENCES, INC.

 

DATED AS OF JULY 3, 2012

 

The following is a summary of certain basic terms of this Lease which is intended for the convenience and reference of the parties.  Capitalized terms used, but not defined, in this Summary of Basic Terms, have their defined meanings in this Lease.  In addition, some of the following items or terms are incorporated into this Lease by reference to the item or term or to this ‘Summary of Basic Terms”.

 

1.                                       Landlord :  TBCI, LLC, a Massachusetts limited liability company, as Trustee of 100 Discovery Park Realty Trust, a Massachusetts nominee trust.

 

2.                                       Tenant :  Genocea Biosciences, Inc., a Delaware corporation.

 

3A.                              Premises :  All of the leasable space on the fifth floor of the Building, as depicted on Exhibit C and a storage room on the first floor of the Building, as depicted on Exhibit C-1 .  The Building and the Other Buildings which are currently part of the Project are depicted on Exhibit B .

 

3B.                              Building :  The six-floor building identified as Building 100 on Exhibit B .

 

3C.                              Project :  The land described in Exhibit A-1 and depicted on Exhibit B (the “ Land ”), together with the Building, the Other Buildings and any other improvements now or hereafter thereon, now commonly known as Cambridge Discovery Park, Cambridge, Massachusetts, together with other areas used from time to time for parking for the Buildings.  The fee simple interest in the Land is owned by BHX, LLC, as Trustee of Acorn Park Holdings Realty Trust, a Massachusetts nominee trust (“ Ground Lessor ”).  Ground Lessor has submitted the entire Project to an Amended and Restated Declaration of Easements, Covenants, Conditions and Restrictions for Cambridge Discovery Park (as the same may be amended from time to time, the “ Declaration ”) dated December 21, 2009, recorded with the Middlesex South District Registry of Deeds in Book 54081, Page 298 and filed with the Middlesex South Registry District of the Land Court as Document No. 1522053.  Ground Lessor has leased the portion of the Land on which the Building is situated, being more particularly described in Exhibit A-2 (“ Parcel 100 ”), subject to and with the benefit of the Declaration, to Landlord pursuant to a Ground Lease dated March 22, 2005 by Ground Lessor and Landlord, notice of which is recorded with the Middlesex South District Registry of Deeds in Book 44910, Page 119 and filed with the Middlesex South Registry District of the Land Court as Document No. 1349427.

 

3D.                              Leasable Square Footage of the Premises :  (which includes a proportionate share of the Floor Area of the Common Areas of the Building, as provided for in this Lease).  An agreed upon 23,666 square feet.

 



 

3E.                               Leasable Square Footage of the Building :  An agreed upon 128,601 square feet.

 

3F.                                Leasable Square Footage of the Project :  An agreed upon 330,457 square feet, consisting of (i) an agreed upon 128,601 square feet in the Building, and (ii) an agreed upon 201,856 square feet in the Other Buildings.  The Leasable Square Footage of the Project may change from time to time as additional Other Buildings are constructed.

 

4.                                       Allowance :  Landlord shall provide Tenant an allowance for the payment of costs of alterations and improvements to the Premises (the “ Allowance ”) equal to $10 per square foot multiplied by the Leasable Square Footage of the Premises ($236,660.00).

 

5.                                       Lease Term :  From March 1, 2014 through February 28, 2017.

 

6.                                       Permitted Use :  Subject to applicable Legal Requirements, the Premises may be used for general office, vivarium, and laboratory purposes only and for no other purpose.

 

7.                                       Security Deposit :  $315,546.68, in the form of cash or letter of credit.

 

8.                                       Tenant’s Parking Allocation :  35 parking spaces, which spaces shall be allocated and available to Tenant throughout the Lease Term, provided that Tenant may, by written notice given to Landlord not later than December 31, 2013, reduce Tenant’s Parking Allocation on a one-time basis to not less than 25 parking spaces as specified in such notice.

 

9.                                       Base Rent :  Base Rent shall be as follows:

 

PERIOD

 

ANNUAL
RATE

 

MONTHLY
RATE

 

PSF
RATE

 

March 1, 2014 - August 31, 2014

 

$

740,000.00

 

$

61,666.67

 

$

40.00

 

September 1, 2014 - February 28, 2015

 

$

946,640.00

 

$

78,886.67

 

$

40.00

 

March 1, 2015 - February 29, 2016

 

$

982,139.00

 

$

81,844.92

 

541.50

 

March 1, 2016 - February 28, 2017

 

$

1,017,638.00

 

$

84,803.17

 

$

43.00

 

 

NOTE:  The Base Rent for the period March 1, 2014 - August 31, 2014 is based on 18,500 square feet.

 

10A.                       Additional Rent :  (a) Tenant’s Project Share of (i) Project Taxes, (ii) Project Insurance Costs and (iii) Project Operating Costs, (b) Tenant’s Building Share of (i) Building Taxes, (ii) Building Insurance Costs and (iii) Building Operating Costs, (c) Tenant’s Utility Costs (to the extent not paid directly to the utility provider), and/or (d) Other Additional Rent.

 

10B.                       Tenant’s Utility Costs :  Tenant shall be responsible for the payment of the costs of all utility services provided to the Premises and/or the HVAC equipment and systems exclusively serving the Premises (“ Tenant’s Utility Costs ”), as provided in Section 4.6.

 

10C.                      Other Additional Rent :  Includes all fees, charges (including parking charges), expenses, fines, assessments, interest or other sums payable by Tenant pursuant to this Lease other than (a) Tenant’s Project Share of (i) Project Taxes, (ii) Project Insurance Costs and (iii) Project Operating Costs, (b) Tenant’s Building Share of (i) Building Taxes, (ii) Building Insurance Costs and (iii) Building Operating Costs and (c) Tenant’s Utility Costs due under this Lease.

 

11.                                Utilities :  To be separately metered or submetered to the Premises.

 

2



 

12.                                Brokers :  The Bulfinch Companies, Inc., having an office at First Needham Place, 250 First Avenue, Suite 200, Needham, MA 02494-2805, and Colliers International, having an office at 160 Federal Street, Boston, MA 02110.

 

13A.                       Tenant’s Address For Notices, Telephone Number, Fax Number and Taxpayer Identification No .:

 

Prior to the commencement of Tenant’s sublease with FoldRx:

 

Robert E. Farrell, Jr., CPA
Genocea Biosciences
Vice President Finance and Admin.
161 First St.
Cambridge, MA 02139
Telephone:  (617) 876-8191; Fax:  (617) 500-0969

 

After the commencement of Tenant’s sublease with FoldRx:

 

Genocea Biosciences, Inc.
100 Discovery Park, 5th Floor
Cambridge, MA 02140
Attn:  Robert E. Farrell, Jr., CPA
Telephone:  (617) 876-8191; Fax:  (617) 876-8192

 

Tenant T.I.D.  51-0596811

 

with a copy to

 

Anderson & Kreiger LLP
One Canal Park, Suite 200
Cambridge, MA 02141
Attn:  David L Wiener
Telephone:  (617) 621-6500; Fax:  (617) 621-6670

 

136.                         Landlord’s Address for Notices :

 

TBCI, LLC, as Trustee of 100 Discovery Park Realty Trust
c/o The Bulfinch Companies, Inc.
First Needham Place
250 First Avenue, Suite 200
Needham, MA 02494
Attention: Robert A. Schlager
Telephone:  (781) 707-4000; Fax:  (781) 707-4001

 

with a copy to

 

TBCI, LLC, as Trustee of 100 Discovery Park Realty Trust
c/o The Bulfinch Companies, Inc.
First Needham Place
250 First Avenue, Suite 200
Needham, MA 02494

 

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Attention:  Mark R. DiOrio, Esq.
Telephone:  (781) 707-4000; Fax:  (781) 707-4001

 

and

 

Vorys, Sater, Seymour and Pease LLP
301 E. Fourth Street, Suite 3500
Cincinnati, OH 45202
Attn:  Charles C. Bissinger, Jr., Esq.
Telephone:  (513) 723-4000; Fax:  (513) 723-4056

 

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LEASE

 

THIS LEASE (this “Lease”), made as of the 3rd day of July, 2012, between TBCI, LLC, a Massachusetts limited liability company, as Trustee of 100 Discovery Park Realty Trust, a Massachusetts nominee trust, and GENOCEA BIOSCIENCES, INC , a Delaware corporation, is as follows:

 

W I T N E S S E T H :

 

ARTICLE I

 

CERTAIN DEFINITIONS

 

In addition to the words and terms defined elsewhere in this Lease, the following words and terms shall have in this Lease the meanings set forth in this Article (whether or not underscored):

 

Additional Rent ” has the meaning set forth in Item 10A of the Summary of Basic Terms.

 

Allowance ” has the meaning set forth in Item 4 of the Summary of Basic Terms.

 

Bankruptcy Laws ” means any existing or future bankruptcy, insolvency, reorganization, dissolution, liquidation or arrangement or readjustment of debt law or any similar existing or future law of any applicable jurisdiction, or any laws amendatory thereof or supplemental thereto, including, without limitation, the United States Bankruptcy Code of 1978, as amended (11 U.S.C. Section 101 et seq .), as any or all of the foregoing may be amended or supplemented from time to time.

 

Base Rent ” has the meaning set forth in Item 9 of the Summary of Basic Terms.

 

Brokers ” has the meaning set forth in Item 12 of the Summary of Basic Terms.

 

Building ” has the meaning set forth in Item 3B of the Summary of Basic Terms.

 

Building Insurance Costs ” means those Insurance Costs which directly relate to, or are primarily for the benefit of, the Building, as reasonably determined by Landlord.

 

Building Operating Costs ” means those Operating Costs which directly relate to, or are primarily for the benefit of, the Building, as reasonably determined by Landlord.

 

Building Taxes ” means those Taxes attributable to the value of the Building, as reasonably determined by Landlord.

 

Building 200 ” means the building identified as such on Exhibit B .

 

Buildings ” means, collectively, the Building and the Other Buildings.

 

Business Day ” means Monday through Friday, except holidays.  The term “holiday” means (a) the federal day of celebration of the following holidays: New Year’s Day, President’s Day, Memorial Day, July 4th, Labor Day, Thanksgiving, Christmas and (b) the Friday after Thanksgiving.

 

Common Areas ” means all areas of the Project, as designated by Landlord from time to time, located inside or outside of the Buildings, which are not intended for the use of a single tenant and which are intended (a) for the non-exclusive common use of Landlord, Tenant and other tenants of portions of the Project and their respective Invitees and/or (b) to serve the Project, including but not limited to the

 

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Common Areas, as defined in the Declaration Common Areas include, without limitation, common lobbies of multi-tenant Buildings, common restroom facilities of multi-tenant Buildings, elevators and stairwells of multi-tenant Buildings, the Food Service Area, if any, sidewalks, the Parking Areas, access drives, landscaped areas, utility rooms, storage rooms and utility lines and systems and the Common Facilities.

 

Common Facilities ” means those facilities, if any, located on the Project which Landlord designates from time to time as “common facilities,” including, but not limited to, building systems, pipes, ducts, wires, conduits, meters, HVAC equipment and systems, electrical systems and equipment, plumbing lines and facilities, and mechanical rooms.

 

Declaration ” has the meaning set forth in Item 3C of the Summary of Basic Terms.

 

Environmental Law ” means the Comprehensive Environmental Response, Compensation, and Liability Act (“ CERCLA ”), 42 U.S.C. §9601 et seq ., the Resource Conservation and Recovery Act, 42 U.S.C. §6901 et seq ., the Hazardous Materials Transportation Act, 49 U.S.C. §1802 et seq ., the Toxic Substances Control Act, 15 U.S.C §2601 et seq., the Federal Water Pollution Control Act, 33 U.S.C. §1251 et seq ., the Clean Water Act, 33 U.S.C. §1321 et seq ., the Clean Air Act, 42 U.S.C. §7401 et seq ., the Massachusetts Oil and Hazardous Material Release Prevention and Response Act, Chapter 21E of the Massachusetts General Laws, all regulations promulgated thereunder, and any other federal, state, county, municipal, local or other statute, taw, ordinance or regulation (including any state or local board of health rules, regulation, or code), or any common law (including common law that may impose strict liability or liability based on negligence), which may relate to or deal with human health, the environment, natural resources, or Hazardous Materials, all as may be from time to time amended or modified.

 

Event of Default ” any of the events listed in Section 12.1.

 

Floor Area ” means, as of the date of determination, the floor area of the Building, Other Buildings, Common Areas or Premises, as applicable, measured from the outside face of all exterior walls and the center line of all other walls, as determined by Landlord’s Architect in accordance with the Standard Method of Measuring Floor Area in Office Buildings (BOMA Z65.1-1996).

 

FoldRx ” means FoldRx Pharmaceuticals, Inc., a Delaware corporation.

 

FoldRx Lease ” means the lease dated September 18, 2006, as amended, by Landlord and FoldRx for the Premises.

 

Food Service Area ” means any space in any of the Buildings designated by Landlord and/or Other Landlords from time to time as a food service area for the non-exclusive common use of Tenant and other tenants of portions of the Project and their respective Invitees, rather than for the exclusive use of a single tenant or for the exclusive use of tenants of a single Building.

 

Food Service Costs ” means the total costs to Landlord and/or Other Landlords (net of any revenue realized by Landlord from food service operations) of providing food service in the Food Service Area, if any, including but not limited to any subsidy paid to a food service operator, all costs of operating, maintaining and repairing the Food Service Area, all costs of utility services provided to the Food Service Area, and any such costs allocated to Landlord and/or Other Landlords pursuant to the Declaration.

 

GAAP ” means generally accepted accounting principles, consistently applied.

 

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Genocea Sublease ” means the Sublease Agreement dated on or about even date herewith by FoldRx and Tenant, by which FoldRx subleases the Premises to Tenant for a term expiring February 28, 2014.

 

Ground Lessor ” has the meaning set forth in Item 3C of the Summary of Basic Terms.

 

Hazardous Materials ” means, at any time, (a) any “hazardous substance” as defined in §101(14) of CERCLA (42 U.S.C. §9601(14)) or regulations promulgated thereunder; (b) any “solid waste,” “hazardous waste,” or “infectious waste,” as such terms are defined in any Environmental Law at such time; (c) asbestos, urea-formaldehyde, polychlorinated biphenyls (“PCBs”), bio-medical materials or waste, nuclear fuel or material, chemical waste, radioactive material, explosives, known carcinogens, petroleum products and by-products and other dangerous, toxic or hazardous pollutants, contaminants, chemicals, materials or substances which may be hazardous to human or animal health or the environment or which are listed or identified in, or regulated by, any Environmental Law, and (d) any additional substances or materials which at such time are classified or considered to be hazardous or toxic under any Environmental Law.

 

Insurance Costs ” means the costs of insuring the entire Project, including without limitation the Buildings and other improvements now or hereafter situated thereon, and all operations conducted in connection therewith, with such policies, coverages and companies and in such limits as may be selected by Landlord and/or Other Landlords (and/or which may be required by their lenders), including, but not limited to, fire insurance with extended or with all-risk coverage, comprehensive public liability insurance covering personal injury, deaths and property damage with a personal injury endorsement covering false arrest, detention or imprisonment, malicious prosecution, libel and slander, and wrongful entry or eviction, rent loss or business interruption insurance, worker’s compensation insurance, plate glass insurance, contractual liability insurance, boiler insurance, and fidelity bonds.

 

Invitees ” means employees, workers, visitors, guests, customers, suppliers, agents, contractors, representatives, licensees and other invitees.

 

Land ” means the land described in Exhibit A-1 and depicted on Exhibit B .

 

Landlord ” means TBCI, LLC, a Massachusetts limited liability company, as Trustee of 100 Discovery Park Realty Trust, a Massachusetts nominee trust.

 

Landlord’s Architect ” means ADD, Inc. or any other architect or architectural firm(s) designated by Landlord.

 

Leasable Square Footage ” means, (a) when used with respect to the Premises, the sum of (i) the Floor Area of the Premises, plus (ii) Tenant’s Building Share of the Floor Area of the Common Areas of the Building, and (b) when used with respect any of the Buildings, the Floor Area of such of the Buildings.

 

Lease Term ” means the period beginning at 12:01 A.M. on March 1, 2014 and ending at 11:59 P.M. on February 28, 2017.

 

Legal Requirements ” means all applicable laws, statutes, rules, regulations and requirements of governmental authorities, including, but not limited to, zoning taws and building codes.

 

Operating Costs ” means all reasonable costs, expenses and disbursements of every kind and nature (except Taxes and Insurance Costs) which Landlord and/or Other Landlords shall pay or become

 

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obligated to pay in connection with operating, managing, maintaining, repairing or replacing the Project or elements thereof, all as reasonably determined by Landlord, including such costs, expenses and disbursements as are allocated to Landlord and/or Other Landlords pursuant to the Declaration.  Operating Costs shall include, by way of illustration, but not be limited to: all charges payable by Landlord and/or Other Landlords in connection with the maintenance and repair of the Project, all charges payable by Landlord and/or Other Landlords to provide janitorial service to the Project; all charges payable by Landlord and/or Other Landlords in connection with the maintenance, repair and replacement of HVAC equipment and systems; all charges payable by Landlord and/or Other Landlords to provide utility services to the Project, except to the extent excluded pursuant to clauses (f) or (g) below, all costs related to the operation of any shuttle or other transportation service between the Project and public transportation stations; all costs incurred in connection with traffic mitigation and/or compliance with the PTDM Plan for the Project and any other transportation demand management plans and/or applicable Legal Requirements in connection with traffic mitigation and/or transportation demand management; all costs related to any police details at any entrances to the Project, all costs related to removal of trash, debris, and refuse, all costs related to removal of snow and ice; all costs of pest and vermin control, all costs of providing, maintaining, repairing and replacing of paving, curbs, walkways, landscaping, planters, roofs, walls, drainage, utility lines, security systems and other equipment; all costs of painting the exterior and Common Areas of the Building; all costs of repaving, resurfacing, and restriping Parking Areas and drives; all costs of lighting, cleaning, waterproofing, repairing and maintaining Common Areas, Common Facilities and other portions of the Project; all surcharges, costs and expenses that may result from any Environmental Laws or other laws, rules, regulations, guidelines or orders, except to the extent excluded pursuant to clause (k) below; all costs of licenses, permits and inspection fees, except to the extent directly attributable to the space of a particular tenant or arising in connection with new improvements or alterations; all legal, accounting, inspection and consulting fees, except to the extent excluded pursuant to clauses (e), (m) or (w) below; except to the extent excluded below, all costs of capital repairs or replacements (but not improvements) hereafter made to the Building or Common Areas, amortized over their expected useful life and based upon and including a market rate of interest, the foregoing being in accordance with GAAP; all costs of wages, salaries and benefits of operating personnel engaged in managing and operating the Project, to the extent reasonably allocable to the Project, including welfare, retirement, vacations and other compensation and fringe benefits and payroll taxes; the Food Service Costs; all costs for communications devices and/or services used in managing and operating the Project, to the extent reasonably allocable to the Project; the amount of any insurance deductible paid by Landlord and/or Other Landlords in connection with an insured loss; and management fees equal to five percent (5%) of gross rents (which management fees may be payable to an affiliate of Landlord).  However, notwithstanding the above, the following specific items shall not be included:  (a) the cost of alterations to space in the Buildings leased to others; (b) debt service and ground rent payments; (c) any cost or expenditure for which Landlord and/or Other Landlords are reimbursed by insurance proceeds or eminent domain proceeds; (d) costs for which Landlord and/or Other Landlords are reimbursed under warranties provided by contractors, vendors or manufacturers who have warranty obligations; (e) leasing commissions, attorneys’ fees and collection costs related to negotiation and enforcement of tenant leases; (f) the cost of providing gas and electrical service to space leased to tenants; (g) expenses which are billed directly, or reasonably allocable to any tenant of the Building or Project; (h) salaries and bonuses of officers and executives of Landlord and/or Other Landlords and administrative employees above the revel of property manager or building supervisor and Landlord’s or Other Landlords’ general overhead; (i) the cost of any work or service performed on an extra-cost basis for any tenant of the Building or Project; (j) any cost, other than the management fee provided for above, otherwise included in Operating Costs representing an amount paid to a person or entity affiliated with Landlord and/or Other Landlords which is in excess of the amount which would have been paid on an arms-length basis in the absence of such relationship; (k) any costs necessary to cure any violation of any Legal Requirement existing as of the date of this Lease, including any violation of Environmental Laws; (l) depreciation, other than the amortization of capital repairs or replacements hereafter made as provided

 

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above; (m) costs of selling, syndicating, financing, mortgaging or hypothecating any of Landlord’s and/or Other Landlords’ interest in the Project; (n) all income or corporate excise taxes assessed against Landlord and/or Other Landlords; (o) costs of developing and constructing any new building at the Project or any addition to or expansion of any of the Buildings; (p) costs of renovating any Building (but not ordinary maintenance, repairs and replacements of elements of the Buildings); (q) costs of capital improvements, except to the extent required by a Legal Requirement becoming effective after the date of this Lease or made to effect future savings in Operating Costs (but, in such event, only to the extent of the savings); (r) costs arising from Landlord’s and/or Other Landlords’ negligence or willful misconduct; (s) marketing costs incurred in connection with the marketing of the Project; (t) rental concessions granted to specific tenants and expenses incurred in renovating or otherwise improving or decorating, painting or redecorating space for specific tenants; (u) attorneys’ fees, costs and disbursements and other expenses incurred in connection with negotiating or enforcing any ground lease related to all or any portion of the Project or in connection with any default by Landlord or Other Landlord under any such ground lease or the Declaration; (v) costs related to maintaining Landlord’s or Other Landlord’s existence as a corporation, partnership or other entity or related to internal entity accounting or internal legal matters; (w) costs incurred due to a violation of applicable laws by Landlord relating to the Property or violations by Landlord or Other Landlords of the terms and conditions of any lease in the Building or in the Project; (x) overtime HVAC costs or excess electricity costs that are separately charged to other tenants and occupants in the Project, including without limitation Tenant; (y) the cost of overtime or other expenses to Landlord or Other Landlords in curing their defaults; (z) any bad debt loss, rent loss, or reserves for bad debts or rent loss; (aa) attorneys’ fees and other costs and expenses awarded to any tenant pursuant to any lease, or incurred as a result of Landlord’s or Other Landlord’s failure to maintain any insurance required under any lease; (bb) reserves with respect to any anticipated Operating Costs; (cc) costs of acquisition and/or installation of sculpture, paintings or other objects of art; (dd) except to the extent the same pertain to the operation, repair, maintenance and management of the Building or the Project, Landlord’s or Other Landlord’s general overhead expenses; and (dd) that portion, if any, of rent associated with management office space that is allocable to management of buildings other than the Building.

 

Operator ” has the definition set forth in Section 2.3(b).

 

Other Additional Rent ” has the meaning set forth in Item 10C of the Summary of Basic Terms.

 

Other Buildings ” means the buildings other than the Building located in the Project from time to time, including Building 200, Parking Garage A and any building hereafter developed and constructed in the Project.  A building hereafter developed and constructed in the Project will be included in the Other Buildings from and after such time as a certificate of occupancy is issued for such building.

 

Other Landlords ” means, collectively, (a) 200 Discovery Park, LLC, a Massachusetts limited liability company, its successors and assigns, as the owner of Building 200, (b) Parking Garage A Owner, (c) BHX, LLC, as Trustee of Acorn Park I Realty Trust, its successors and assigns, as the owner of the leasehold interest under the Ground Lease from Ground Lessor dated November 17, 2000, notice of which is recorded with the Middlesex South District Registry of Deeds in Book 32042, Page 546 and filed with the Middlesex South Registry District of the Land Court as Document No. 1155608, as amended, and (d) each “Additional Party” (as defined in the Declaration).

 

Parking Areas ” means those portions of the Project which may be used for parking as depicted on the Site Plan, as such areas may be changed by Landlord and/or Other Landlords from time to time.  The Parking Areas include Parking Garage A.

 

Parking Garage A ” means the building identified as such on Exhibit B .

 

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Parking Garage A Owner ” means Parking Garage A, LLC, a Massachusetts limited liability company, its successors and assigns, as the owner of Parking Garage A.

 

Permitted Transferee ” means (a) an entity controlling, controlled by or under common control with Tenant, (b) an entity which succeeds to Tenant’s business by merger, consolidation or other form of corporate reorganization, (c) an entity which acquires all or substantially all of Tenant’s assets or stock, or (d) an entity which acquires an equity interest in Tenant, controlling or otherwise, provided that the day-to-day operating management and control of such entity is unchanged from that of Tenant immediately prior to such acquisition.  Notwithstanding the foregoing, an entity may not become a Permitted Transferee through or as a part of a bankruptcy or other similar insolvency proceeding.

 

Permitted Use ” has the meaning set forth in Item 6 of the Summary of Basic Terms.

 

Person ” means any individual, partnership, joint venture, trust, limited liability company, business trust, joint stock company, unincorporated association, corporation, institution, or entity, including any governmental authority.

 

Premises ” has the meaning set forth in Item 3A of the Summary of Basic Terms.

 

Project ” has the meaning set forth in Item 3C of the Summary of Basic Terms.

 

Protect Insurance Costs ” means all Insurance Costs other than (a) Building Insurance Costs and (b) Insurance Costs which relate solely to, or are primarily for the benefit of, any of the Other Buildings, as reasonably determined by Landlord.

 

Protect Operating Costs ” means all Operating Costs other than (a) Building Operating Costs and (b) Operating Costs which relate solely to, or are primarily for the benefit of, any of the Other Buildings, as reasonably determined by Landlord.

 

Project Taxes ” means those Taxes attributable to the value of the Land.

 

Rooftop Equipment ” means supplemental HVAC equipment and telecommunications equipment and related appurtenances and cabling used in connection with Tenants business at the Premises.

 

Rules and Regulations ” means the rules and regulations promulgated by Landlord and Other Landlords with respect to the Project, a copy of which is Exhibit D hereto, as the same may be modified by Landlord and Other Landlords from time to time upon notice to Tenant.

 

Security Deposit ” has the meaning set forth in Item 7 of the Summary of Basic Terms.

 

Site Plan ” means the site plan attached hereto as Exhibit B which depicts the approximate size and layout of the Land, the Building, Building 200 and Parking Garage A.

 

Summary of Basic Terms ” means the Summary of Basic Terms which is affixed to this Lease immediately after the table of contents of this Lease.

 

Tax Fiscal Year ” means July 1 through June 30 next following, or such other tax period as may be established by law for the payment of Taxes.

 

Taxes ” means (a) all taxes, assessments, betterments, water or sewer entrance fees and charges including general, special, ordinary and extraordinary, or any other charges (including charges for the use

 

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of municipal services if billed separately from other taxes), levied, assessed or imposed at any time by any governmental authority upon or against the Land, the Buildings, or the fixtures, signs and other improvements thereon then comprising the Project and (b) all attorneys’ fees, appraisal fees and other fees, charges, costs and/or expenses incurred in connection with any proceedings related to the amount of the Taxes, the tax classification and/or the assessed value of the Project.  This definition of Taxes is based upon the present system of real estate taxation in the Commonwealth of Massachusetts; if taxes upon rentals or any other basis shall be substituted, in whole or in part, for the present ad valorem real estate taxes, the term “Taxes” shall be deemed changed to the extent to which there is such a substitution for the present ad valorem real estate taxes, as if the Building were Landlord’s sole asset.  For purposes of this definition of Taxes, if assessments may be paid in installments, only the current installments of such assessments shall be included in Taxes.  Taxes shall not include franchise, estate, inheritance, succession, capital levy, transfer, income, corporate, gift or excess profits taxes assessed on Landlord or the Project.

 

Tenant ” means Genocea Biosciences, Inc., a Delaware corporation, its permitted successors and permitted assigns.

 

Tenant Improvements ” has the meaning set forth in Section 3.2.

 

Tenant’s Building Share ” means the amount (expressed as a percentage) equal to (a) the Leasable Square Footage of the Premises divided by (b) the Leasable Square Footage of the Building.  The percentage determined by the preceding sentence shall be rounded upward to the nearest one-tenth of one percent (0.1%).  Initially, Tenant’s Building Share shall be 18.4% (23,666/128,601).  Tenant’s Building Share shall be recalculated at any time at which the Leasable Square Footage of either the Premises or the Building is changed: provided that there shall be no recalculation unless there is a physical expansion or contraction in the Premises or the Building.

 

Tenant’s Parking Charges ” has the definition set forth in Section 2.3(b).

 

Tenant’s Project Share ” means the amount (expressed as a percentage) equal to (a) the Leasable Square Footage of the Premises divided by (b) the Leasable Square Footage of the Buildings; provided, however, that for purposes of determining Tenant’s Project Share of the Food Service Costs, Tenants Project Share means the amount (expressed as a percentage) equal to (i) the Floor Area of the Premises divided by (ii) the Floor Area of all leased and occupied space in the Buildings.  The percentage determined by the preceding sentence shall be rounded upward to the nearest one-tenth of one percent (0.1%).  Initially, Tenant’s Project Share (other than with respect to Food Service Costs) shall be 7.2% (23,666/330,457) Tenant’s Project Share (other than with respect to Food Service Costs) shall be recalculated at any time at which the Leasable Square Footage of either the Premises or the Buildings is changed, provided that there shall be no recalculation unless there is a physical expansion or contraction in the Premises or a Building or a Building is added or demolished.  Tenant’s Project Share with respect to Food Service Costs shall be recalculated upon each change in the level of occupancy of the Buildings.

 

Tenant’s Share ” means, as applicable, Tenants Building Share or Tenant’s Project Share.

 

Tenants Utility Costs ” has the meaning set forth in Item 10B of the Summary of Basic Terms.

 

ARTICLE II
LEASE OF PREMISES

 

Section 2.1                           Lease Of The Premises .  Landlord does hereby lease the Premises to Tenant, and Tenant hereby leases the Premises from Landlord, upon and subject to the terms and provisions of this Lease and all zoning ordinances, and easements, restrictions, and conditions of record.  Tenant shall have

 

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the right, in connection with its use of the Premises, to use the water neutralizer and emergency generator serving the Premises as of the date of this Lease for their intended purposes.

 

Section 2.2                           Common Rights .  The Premises are leased subject to, and with the benefit of, the non-exclusive right to use in common with others at any time entitled thereto the Common Areas and Common Facilities for all such purposes as such areas may be reasonably designated, but only in connection with lawful business in the Building and in accordance with the Rules and Regulations.  Landlord and/or Other Landlords shall have the right from time to time to designate or change the number, locations, size or configuration of the Buildings, including, without limitation, the Common Areas, exits and entrances, and to modify or replace the Common Facilities, and to permit expansion and new construction therein, provided that the same will not cause an unreasonable interference with Tenant’s use and enjoyment of the Premises.  Tenant shall not have the right to use those portions of the Common Areas designated from time to time by Landlord and/or Other Landlords as for the exclusive use of one or more other tenants, provided that Landlord shall not, and shall not permit any Other Landlords to, make such a designation as would cause an unreasonable interference with Tenant’s use and enjoyment of the Premises.  Landlord may, but shall not be required to, provide or share in Amenity Facilities (as defined in the Declaration) as Common Areas within the Project from time to time.  Prior to providing or accepting any Amenity Facility, other than the existing Food Service Area, as a Common Area, Landlord will consult with Tenant, but Landlord may provide or accept any such Amenity Facility in the exercise of Landlord’s discretion; provided, however, that if Landlord accepts any such Amenity Facility, it shall provide for the use thereof to Tenant and all other tenants at the Building on a non-discriminatory basis.  Tenant shall have access to the Premises (which includes passenger and freight elevator service) twenty-four hours per day, 7 days per week, 365 days per year, subject to Landlord’s reasonable security requirements, if any, from time to time.

 

Section 2.3                           Parking.

 

(a)                                  Tenant’s Invitees are authorized to use Tenant’s Parking Allocation (as set forth in the Summary of Basic Terms).  Landlord represents to Tenant that Landlord has rights in Parking Garage A consistent with Tenant’s rights under this Section, as provided for in the Declaration.  Tenant shall pay to or at the direction of Landlord a monthly parking charge, in addition to Base Rent, for each parking space that Tenant is authorized to use based on the fair market charge for similar spaces in the market area of the Project, as determined and adjusted by Parking Garage A Owner from time to time.  Tenant shall not (i) permit any of Tenant’s Invitees (other than visitors) to park in spaces designated as “visitor” spaces, (ii) permit any of Tenant’s Invitees to park in spaces designated as “reserved” spaces (unless reserved for Tenant), (iii) permit the total number of passenger automobiles parked in Parking Garage A by Tenant’s Invitees, at any time, to exceed the number specified in Item 8 of the Summary of Basic Terms, (iv) permit any passenger vehicles of Tenant’s Invitees to park in any Parking Areas other than Parking Garage A, and (v) except for delivery trucks using designated loading and unloading facilities, permit any of Tenant’s Invitees to park any vehicle on the Project other than passenger automobiles.  Landlord and/or Other Landlords may, from time to time, designate one or more spaces in Parking Garage A as reserved for the exclusive use of one or more of the tenants of the Project and/or for Landlord’s and/or Other Landlords’ Invitees, so long as Landlord causes to be available to Tenant the parking required by this Section.

 

(b)                                  Landlord assigns to Parking Garage A Owner any and all right, title and interest with respect to the parking charges for the parking spaces that Tenant is authorized to use (such parking charges being called “ Tenant’s Parking Charges ”).  Landlord hereby directs Tenant to pay Tenant’s Parking Charges to Parking Garage A Owner or to an operator of Parking Garage A designated by Parking Garage A Owner (an “ Operator ”), which payments shall satisfy Tenant’s obligations under this Lease with respect to Tenant’s Parking Charges as if they had been made directly to Landlord.  Tenant

 

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acknowledges that Landlord has assigned to Parking Garage A Owner any and all right, title and interest with respect to Tenant’s Parking Charges, and shall pay Tenant’s Parking Charges to Parking Garage A Owner or the Operator when due.

 

Section 2.4                           Lease Term .  The Lease Term shall commence at 12:01 A.M on March 1, 2014 and shall end at 11:59 P M on February 28, 2017.

 

Section 2.5                           Security Deposit.

 

(a)                                  Tenant shall deliver to Landlord one-half of the $315,546.68 Security Deposit, or $157,773.34, simultaneously with the execution and delivery of this Lease, and shall deliver to Landlord the other one-half of the Security Deposit on or before March 1, 2014.  The Security Deposit shall be in the form of cash or a letter of credit which satisfies the conditions of Section 2.5(b) (“ Letter of Credit ”).  If the Security Deposit is in the form of a Letter of Credit, then the one-half of the Security Deposit to be made on or before March 1, 2014 shall be accomplished by (i) Tenant causing a Letter of Credit in the amount of $315,546.68 to be issued and delivered to Landlord, in which event Landlord shall return to Tenant within two Business Days thereafter the Letter of Credit in the amount of $157,773.34 delivered to Landlord upon the execution of this Lease, (ii) Tenant causing a second Letter of Credit in the amount of $157,773.34 to be issued and delivered to Landlord, or (iii) Tenant causing an amendment to the existing Letter of Credit to be issued so that the Letter of Credit, as amended, is in the amount of $315,546.68.

 

(b)                                  If the Security Deposit is in the form of a Letter of Credit, such Letter of Credit must satisfy all of the following conditions:  (i) the Letter of Credit must be in the exact form attached hereto as Exhibit E , or in such other form as Landlord may have approved, with an expiration date not less than one (1) year after the date of the Letter of Credit; (ii) the beneficiary of the Letter of Credit must be Landlord or Landlord’s designee; (iii) the Letter of Credit must be irrevocable, unconditional and transferable one or more times without charge; and (iv) the Letter of Credit must be issued by Silicon Valley Bank, Citizens Bank, or another bank reasonably satisfactory to Landlord.  If, at any time, the issuer of the Letter of Credit gives notice of its election not to renew, extend and/or reissue the Letter of Credit, then Tenant shall, by the earlier of (A) thirty (30) days after such notice or (B) five (5) Business Days prior to the expiration of the term of the Letter of Credit, deliver to Landlord (1) a replacement Letter of Credit satisfying all of the above conditions or (2) cash in the full amount of the expiring Letter of Credit; and if Tenant fails to timely deliver to Landlord a replacement Letter of Credit as provided above or cash in the full amount of the expiring Letter of Credit, such failure shall constitute an Event of Default and, in addition to any other rights which Landlord might have by reason of such Event of Default, Landlord may draw on the Letter of Credit and hold the proceeds of such drawing as the Security Deposit.  If (x) any proceedings under the Bankruptcy Code, receivership or any insolvency law are instituted with the issuer of the Letter of Credit as debtor or (y) the bank issuing the Letter of Credit is taken over by the Federal Deposit Insurance Corporation, the Resolution Trust Corporation or a similar entity, then Landlord may draw on the Letter of Credit and hold the proceeds of such drawing as part of the Security Deposit, unless Tenant either provides cash in lieu of the Letter of Credit or provides a new Letter of Credit issued by a bank reasonably satisfactory to Landlord.

 

(c)                                   The Security Deposit is security for the faithful performance and observance by Tenant of the terms, provisions and conditions of this Lease and is not an advance payment of rent.  If an Event of Default occurs, Landlord may use, apply or retain the whole or any part of the Security Deposit to the extent required for payment of any Base Rent, Additional Rent, or any other sum as to which Tenant is in default or for any sum which Landlord may expend or may be required to expend by reason of the occurrence of an Event of Default, including, but not limited to, any damage or deficiency accrued before or after summary proceedings or other re-entry by Landlord, including the costs of such proceeding or re-entry and further including, without limitation, reasonable attorneys’ fees.  Landlord

 

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shall always have the right to apply the Security Deposit, or any part thereof, as aforesaid, without prejudice to any other remedy or remedies which Landlord may have, or Landlord may pursue any other such remedy or remedies in lieu of applying the Security Deposit or any part thereof.  No interest shall be payable on the Security Deposit and Landlord shall have the right to commingle the Security Deposit with other funds of Landlord, but Landlord shall keep the Security Deposit free from the claims of Landlord’s creditors.  If Landlord shall apply the Security Deposit in whole or in part, Tenant shaft within ten (10) days after written demand pay to Landlord the amount so applied to restore the Security Deposit to its original amount.  Because elements of Additional Rent may be subject to annual reconciliation based on actual amounts determined to be due, in addition to the other rights provided herein to Landlord regarding the Security Deposit, Landlord shall have the right, in its discretion, upon the end of the Lease and delivery of the Premises in accordance with the terms hereof, to hold a portion of the Security Deposit equal to no more than twenty percent (20%) of any estimated amounts previously payable by Tenant in respect of Additional Rent for the preceding year until completion of such reconciliation (but in no event more than ninety (90) days after expiration of the Lease Term), at which time Landlord has the right to deduct any amounts then determined to be due from the remaining Security Deposit and return promptly thereafter any balance of the Security Deposit to Tenant; provided, however, that Landlord may not withhold from the Security Deposit an amount greater than the amount which Landlord reasonably estimates will be owing by Tenant upon completion of such reconciliation.  The portion of the Security Deposit held by Landlord that is not subject to the foregoing reconciliation shall be returned to Tenant not later than sixty (60) days following the expiration or earlier termination of the Lease Term.  If the remaining Security Deposit is not sufficient to pay Tenant’s obligations hereunder, Tenant shall pay the same within thirty (30) days of billing from Landlord.  In the event of a sale or other transfer of the Project, or leasing of the entire Project including the Premises subject to Tenant’s tenancy hereunder,  Landlord shall transfer the Security Deposit then remaining at no additional cost to Tenant to the vendee or lessee, such vendee or lessee shall thereupon become entitled to the rights and subject to the obligations of the landlord under this Lease (including the obligations with respect to the Security Deposit), and Landlord shall thereupon be released from all liability for the return of such Security Deposit to Tenant.  In such event, Landlord shall cause the transferee of the Security Deposit to issue a written acknowledgement of receipt thereof and Tenant agrees after receipt of such notice to look solely to the new landlord for the return of the Security Deposit then remaining.  Tenant further covenants that it will not assign or encumber or attempt to assign or encumber the Security Deposit and that neither Landlord nor its successors or assigns shall be bound by any such assignment, encumbrance, attempted assignment or attempted encumbrance.

 

Section 2.6                           Lease Amendment .  If, pursuant to any provision of this Lease, there results a change in any of the terms or amounts in the Summary of Basic Terms (including, without limitation, the Leasable Square Footage of the Premises, the Leasable Square Footage of the Building, the Leasable Square Footage of the Project, the Allowance, the Base Rent, Tenant’s Building Share or Tenant’s Project Share) then in effect, Landlord and Tenant will promptly execute a written amendment to, and restatement of, the Summary of Basic Terms, substituting the changed (or confirmed) terms and recomputed amounts in lieu of each of the applicable terms and amounts then in effect which have been changed.  As of the effective date of the amendment to the Summary of Basic Terms, the changed terms (and recomputed amounts) will be effective for all purposes of this Lease, and the amended and restated Summary of Basic Terms will be a part of, and incorporated into, this Lease.

 

Section 2.7                           Pre-Term Occupancy .  As of the date of this Lease, the Premises are leased by Landlord to FoldRx under the FoldRx Lease.  Tenant intends to occupy the Premises as a subtenant under the Genocea Sublease.  The FoldRx Lease (and the Genocea Sublease) will expire on February 28, 2014, and the Lease Term will commence immediately upon such expiration, on March 1, 2014.  If the FoldRx Lease (and therefore the Genocea Sublease) should terminate prior to February 28, 2014 for any reason other than a default by Tenant under the Genocea Sublease, then Tenant may continue to occupy the

 

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Premises from the effective date of such termination through February 28, 2014, provided that such occupancy shall be on and subject to the terms and conditions of the FoldRx Lease (assuming that the FoldRx Lease had not terminated), including but not limited to the Base Rent and Additional Rent provided for in the FoldRx Lease.

 

ARTICLE III
CONDITION OF PREMISES; SIGNS

 

Section 3.1                           Condition of Premises .  Upon commencement of the Lease Term, Tenant shall accept possession of the Premises in its then current condition, as is, and Landlord will not have any obligation to make any alterations or improvements to the Premises to prepare the Premises for Tenant’s occupancy.

 

Section 3.2                           Tenant Improvements; Allowance .  Tenant may make initial alterations and improvements to the Premises (the “ Tenant Improvements ”), on and subject to the terms and conditions set forth in Section 7.5.  Tenant may perform the Tenant Improvements prior to commencement of the Lease Term.  Tenant shall perform the Tenant Improvements in a good and workmanlike manner, in accordance with all Legal Requirements, and in accordance with Section 7.5.  For purposes of approval of plans and specifications contemplated by Section 7.5, Landlord acknowledges that Tenant has submitted to Landlord, and Landlord has approved, (a) the progress drawing prepared by Interstate Electrical Services dated July 2, 2012 and (b) the HVAC plans prepared by Environmental Systems, Inc. (undated).  Landlord will provide an amount up to the Allowance to or for the benefit of Tenant to pay or reimburse Tenant for costs of designing and performing the Tenant Improvements.  Disbursement of the Allowance to or at the direction of Tenant shall be conditioned on the subject Tenant improvements having been performed in accordance with the provisions of this Lease, and shall be subject to Landlord’s receipt of a request for payment in form and with backup reasonably satisfactory to Landlord, including but not limited to such certifications, lien waivers and other documents from Tenant, Tenant’s contractor and Tenant’s architect as Landlord may reasonably require.  Landlord may inspect the subject Tenant Improvements as a condition to making any requested disbursement of the Allowance to confirm the status of such Tenant Improvements and that such Tenant Improvements have been performed in accordance with the provisions of this Lease.  Tenant may not qualify for disbursement of the Allowance prior to commencement of the Lease Term, but the Tenant Improvements for which Tenant may qualify for disbursement of the Allowance may have been performed prior to commencement of the Lease Term.

 

Section 3.3                           Signs .  Tenant shall have the right, at Landlord’s cost, to be identified on the tenant directory at the main entrance of the Building.  Tenant shall also have the right, at Tenant’s cost, to install signage at Tenant’s entrance to the Premises (which shall not be subject to Landlord’s approval).  Except for the signs permitted under this Section, Tenant shall not erect any signs which are visible from the exterior of the Building.  Tenant shall not erect signs except in compliance with all applicable Legal Requirements.  Tenant shall be solely responsible for confirming that any proposed sign is in compliance with all such requirements.  Tenant shall maintain its signs (other Than signs for which Landlord is responsible hereunder) in good repair and condition.  Upon termination of this Lease, Tenant shall promptly remove all Tenant’s signage installed at its expense and restore all damage related to the installation, existence and/or removal of such signage.

 

ARTICLE IV
BASE RENT; ADDITIONAL RENT

 

Section 4.1                           Base Rent .  Tenant shall pay Base Rent in the amounts set forth in Item 9 of the Summary of Basic Terms.  Base Rent shall be payable in equal monthly installments of one-twelfth (1/12th) of the annual Base Rent then in effect and shall be paid without offset for any reason, in advance,

 

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on the first day of each calendar month during the Lease Term.  Base Rent and Additional Rent shall be paid as specified by Landlord either (i) by an “electronic funds transfer” system arranged by and among Tenant, Tenant’s bank and Landlord, or (ii) by check sent to Landlord’s office c/o “Robert A. Schlager,” or at such other place as Landlord shall from time to time designate in writing.  The parties acknowledge and agree that the obligations owing by Tenant under this Section 4.1 are rent reserved under this Lease, for all purposes hereunder, and are rent reserved within the meaning of Section 502(b)(6) of the Bankruptcy Code or any successor provision thereto.

 

Section 4.2                           Certain Additional Rent .  Tenant shall pay, without offset for any reason, all payments of Additional Rent payable by Tenant to Landlord hereunder.  If Tenant fails to pay any Additional Rent, Landlord shall have all the rights and remedies available for failure to pay Base Rent.  The parties acknowledge and agree that the obligations owing by Tenant under this Section are rent reserved under this Lease, for all purposes hereunder, and are rent reserved within the meaning of Section 502(b)(6) of the Bankruptcy Code or any successor provision thereto.

 

Section 4.3                           Taxes .

 

(a)                                  Tenant shall pay to Landlord, as Additional Rent, an amount equal to Tenant’s Share of Taxes (being Tenant’s Building Share of Building Taxes and Tenant’s Project Share of Project Taxes).  Such amounts shall be estimated in good faith by Landlord at the end of each Tax Fiscal Year, and shall be payable to Landlord in equal estimated monthly installments on the first day of each calendar month during the Lease Term (prorated for any partial months), subject to readjustment from time to time as reasonably determined by Landlord and when the actual amounts are determined.  After readjustment, any shortage shall be due and payable by Tenant within thirty (30) days of written demand by Landlord and any excess shall, unless an Event of Default then exists, be credited against future Additional Rent obligations, or refunded within ninety (90) days if the Lease Term has ended and Tenant has no further obligations to Landlord.  If the taxing authority provides an estimated tax bill, then monthly installments of Taxes shall be based thereon until the final tax bill is ascertained.  Landlord shall furnish to Tenant, upon Tenant’s request, but not more than once in any year, a copy of the most recent tax bill and any estimated tax bill.

 

(b)                                  If, after Tenant shall have made any payment under this Section 4.3, Landlord shall receive a refund (the “ Refund ”) of any portion of the Taxes paid on account of any Tax Fiscal Year in which such payments shall have been made as a result of an abatement of such Taxes, by final determination of legal proceedings, settlement or otherwise, Landlord shall, within thirty (30) days after receiving the Refund, pay to Tenant (unless an Event of Default then exists) an amount equal to (i) Tenant’s Share of the Refund, which payment to Tenant shall be appropriately adjusted if Tenant’s Share of Taxes covered a shorter period than covered by the Refund less (ii) Tenant’s Share of all expenses incurred by Landlord in connection with such proceedings (including, but not limited to, attorneys’ fees, costs and appraisers’ fees).  Landlord shall have sole control of all tax abatement proceedings.

 

(c)                                   Tenant’s obligation in respect of Taxes shall be prorated for any partial Tax Fiscal Year at the beginning or end of the Lease Term.  If the final tax bill for the Tax Fiscal Year in which such expiration or termination of this Lease occurs shall not have been received by Landlord, then within thirty (30) days after the receipt of the tax bill for such Tax Fiscal Year.  Landlord and Tenant shall make appropriate adjustments of estimated payments.

 

(d)                                  Without limiting the generality of the foregoing, Tenant shall pay all rent and personal property taxes attributable to its signs or any other personal property including but not limited to its trade fixtures, the existing or any future floor coverings, wall treatments and light fixtures in the Premises.

 

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Section 4.4                           Insurance Costs .  Tenant shall pay to Landlord, as Additional Rent, amounts equal to Tenant’s Project Share of Project Insurance Costs and Tenant’s Building Share of Building Insurance Costs.  Tenant’s Project Share of Project Insurance Costs and Tenant’s Building Share of Building Insurance Costs shall be estimated in good faith by Landlord at the end of each calendar year, and shall be payable in equal estimated monthly installments on the first day of each calendar month during the Lease Term (prorated for any partial-months), subject to readjustment from time to time as reasonably determined by Landlord and also when actual Project insurance Costs and Building Insurance Costs are determined.  After a readjustment, any shortage shall be due and payable by Tenant within thirty (30) days of written demand by Landlord and any excess shall, unless an Event of Default then exists, be credited against future Additional Rent obligations, or refunded promptly if the Lease Term has ended and Tenant has no further obligations to Landlord.  Landlord shall provide Tenant upon request with reasonable supporting documentation for the Insurance Costs.

 

Section 4.5                           Operating Costs .  Tenant shall pay to Landlord, as Additional Rent, amounts equal to Tenant’s Project Share of Project Operating Costs and Tenant’s Building Share of Building Operating Costs.  For purposes of determining Tenants Project Share of Project Operating Costs far any year during which the Project is less than ninety-five percent (95%) occupied, the actual Project Operating Costs shall be equitably adjusted to reflect ninety-five percent (95%) occupancy and normal, ongoing operation.  For purposes of determining Tenants Building Share of Building Operating Costs for any year during which the Building is less than ninety-five percent (95%) occupied, the actual Building Operating Costs shall be equitably adjusted to reflect ninety-five percent (95%) occupancy and normal, ongoing operation.  Tenants Project Share of Project Operating Costs and Tenant’s Building Share of Building Operating Casts shall be estimated in good faith by Landlord at the end of each calendar year, and shall be payable in equal estimated monthly installments on the first day of each calendar month during the Lease Term (prorated for any partial months), subject to readjustment from time to time as determined by Landlord and also when actual Project Operating Costs and Building Operating Costs are determined.  After a readjustment, any shortage shall be due and payable by Tenant within thirty (30) days of written demand by Landlord and any excess shall, unless an Event of Default then exists, be credited against future Additional Rent obligations, or refunded promptly if the Lease Term has ended and Tenant has no further obligations to Landlord.  Landlord shall provide tenant upon request with reasonable supporting documentation for the Operating Costs and access to Landlord’s books and records in the event of an audit as provided in Section 4.7.

 

Section 4.6                           Tenant’s Utility Costs .  Landlord shall, to the extent practical and at its sole expense, cause the Premises to be separately metered or submetered for electric and gas use, including, without limitation, with respect to all variable air volume (“ VAV ”) boxes and pre-healers, HVAC equipment and systems, lighting and outlets serving the Premises, such that Tenant’s Utility Costs are allocated based on the actual use of such utilities within the Premises.  Tenant shall pay for utilities serving the Premises in accordance with Section 7.2.

 

Section 4.7                           Tenant’s Audit Rights .  Annually, Landlord shall furnish to Tenant a report setting forth in reasonable detail the Project Operating Costs, Building Operating Costs, Project Insurance Costs, Building Insurance Costs, Project Taxes and Building Taxes for the immediately preceding calendar year (in the case of Operating Costs and Insurance Costs) or Tax Fiscal Year (in the case of Taxes).  Tenant shall have the right to audit Landlord’s books and records relating to Operating Costs, Insurance Costs and/or Taxes with respect to the period covered by each such report by delivering a notice of its intention to perform such audit to Landlord within ninety (90) days after Tenant’s receipt of such report, in which event Tenant shall perform such audit within one hundred twenty (120) days after Tenant’s receipt of such report.  If, as a result of such audit, Tenant believes that it is entitled to receive a refund of any Additional Rent paid by Tenant in respect of Operating Costs, Insurance Costs and/or Taxes, Tenant shall deliver to Landlord, no later than one hundred thirty (130) days after Tenant’s receipt of the aforesaid

 

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report, a notice demanding such a refund, together with a statement of the grounds for each such demand and the amount of each proposed refund.  The cost of any such audit shall be paid by Tenant, except that, if it is established that the Additional Rent in respect of Operating Costs, Insurance Costs or Taxes charged to Tenant for the period in question was overstated by more than five percent (5.0%), the reasonable cost of such audit shall be paid or reimbursed to Tenant by Landlord.  An overstatement shall not be deemed to exist due to a Refund.  Any audit shall be performed by either (a) Tenant’s regular employees or (b) a reputable certified public accountant reasonably acceptable to Landlord whose compensation is not, directly or indirectly, contingent in whole or in part on the results of the audit.  If Landlord determines that a report previously furnished by Landlord was in error, Landlord may furnish a corrective or supplemental report to Tenant within two years after the original report was furnished, and if such corrective or supplemental report results in increased Additional Rent, the periods for Tenant to request and perform an audit of Landlord’s books and records relating to Operating Costs.  Insurance Costs and/or Taxes with respect to the period covered by the corrective or supplemental report shall be reinstated and commence as of Tenant’s receipt of such corrective or supplemental report.  Landlord shall make available all books and records required by Tenant for its audit at Landlord’s office in Needham, Massachusetts during normal business hours.

 

ARTICLE V
USE OF PREMISES

 

Section 5.1                           Permitted Use .  Tenant shall use and occupy the Premises only for the Permitted Use.  Landlord does not make any representation or warranty to Tenant that Tenants use of the Premises for the Permitted Use will comply with Legal Requirements, and Tenant is responsible for confirming such compliance.

 

Section 5.2                           Restrictions on Use .  Tenant shall use the Premises in a careful, safe and proper manner, shall not commit or suffer any waste on or about the Project, and shall not make any use of the Project which is prohibited by or contrary to any Legal Requirements or the Declaration, or which would cause a public or private nuisance.  Tenant, at its own expense, shall obtain any and all permits, approvals and licenses necessary for use of the Premises, and if requested by Tenant, Landlord shall, at no out-of-pocket cost to Landlord, cooperate with Tenant to obtain the same.  Tenant shall not overload the floors or other structural parts of the Building, the maximum floor loading being 100 pounds per square foot, and shall not commit or suffer any act or thing on the Project which is illegal, dangerous, or which unreasonably disturbs other tenants.  Tenant shall not do or permit to be done any act or thing on the Project which will invalidate or be in conflict with any insurance policies, or which will increase the rate of any insurance, covering the Building or any of the Other Buildings.  If, because of Tenant’s failure to comply with the provisions of this Section or due to any use of the Premises or activity of Tenant In or about the Project, the Insurance Costs are increased, Tenant shall pay Landlord the amount of such increase.  Tenant shall cause any fire lanes located within the Project to be kept free of all parking associated with its business or occupancy Tenant shall conduct its business at all times so as not to annoy or be offensive to other tenants and occupants of the Project, the parties hereby agreeing that (i) Tenant’s keeping of animals in the Premises as provided in Tenant’s Permitted Use and (ii) the fact that Tenant may conduct animal experimentation in the Premises which may be offensive to other tenants and occupants of the Project shall not constitute a nuisance or otherwise be a basis for a default of Tenant under this Section 5.2.  Landlord shall notify the other tenants in the Project that Tenant’s Permitted Use of the Premises includes its vivarium use.  Tenant shall not permit the emission of any objectionable noise or odor from the Premises and shall at its own cost install such extra sound-proofing or noise control systems and odor control systems, as may be needed to eliminate such objectionable noise, vibrations and odors, if any, emanating from the Premises being heard, felt or smelled outside the Premises.  Tenant shall not place any file cabinets, bookcases, partitions, shelves or other furnishings or equipment in a location which blocks any windows Landlord shall use commercially reasonable efforts to include

 

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provisions similar to those set forth above in this Section 5.2 in leases with other tenants of the Project, subject to such changes as Landlord may negotiate in good faith.

 

Section 5.3                           Hazardous Materials .

 

(a)                                  Tenant (i) will not conduct any activity on the Premises that will use or produce any Hazardous Materials, except for such activities that are both (1) part of the ordinary course of Tenant’s business activities and (2) conducted in accordance with all Environmental Laws; (ii) will not use the Premises in any manner for the storage of any Hazardous Materials except for storage of such materials that are both (1) used in the ordinary course of Tenant’s business and (2) properly stored in a manner and location satisfying all Environmental Laws; (iii) will not install any underground tanks of any type; and (iv) will not permit any Hazardous Materials to be brought onto the Premises, except in the ordinary course of Tenant’s business and in compliance with all Environmental Laws.  If any Hazardous Materials are brought or found on the Premises in violation of the above provisions of this Section, the same shall be immediately removed by Tenant, with proper disposal, and all required cleanup procedures shall be diligently undertaken pursuant to all Environmental Laws.  If at any time during or after the Lease Term the Premises are found to be so contaminated or subject to such conditions as a result of Tenant’s failure to comply with the foregoing provisions, Tenant shall defend and hold Landlord harmless from all claims, demands, actions, liabilities, costs, expenses, damages and obligations of any nature arising from or as a result of the use of the Premises by Tenant or its Invitees Tenant will maintain on the Premises a list of all materials stored at the Premises for which a material safety data sheet (an “ MSDS ”) was issued by the producers or manufacturers thereof, together with copies of the MSDS’s for such materials, and shall deliver such list and MSDS copies to Landlord upon Landlord’s request therefor.  Except for Hazardous Materials that existed in or on the Premises as of the date of this Lease, Tenant shall remove all Hazardous Materials from the Premises in accordance with the applicable standard required by the Environmental Laws for premises with a laboratory use before the earlier of the date Tenant vacates the Premises and the date Tenant’s right to possess the Premises ends.  Landlord may, upon at least five (5) business days’ prior written notice to Tenant (or a shorter period of prior written notice in the case of emergencies), enter the Premises and conduct environmental inspections and tests therein as it may reasonably require from time to time, provided that Landlord shall use reasonable efforts to minimize the interference with Tenant’s business, which may include conducting such inspections and tests after normal business hours if required by Tenant.  Such inspections and tests shall be conducted at Landlord’s expense, unless they reveal the presence of Hazardous Materials in violation of the above provisions of this Section or that Tenant has not complied with the requirements of this Section, in which case Tenant shall reimburse Landlord for the reasonable cost thereof within ten (10) days after Landlord’s request therefor.

 

(b)                                  In connection with FoldRx’s discontinuance of occupancy of the Premises, FoldRx has (i) submitted to the Radiation Control Program of the Department of Public Health of the Commonwealth of Massachusetts a request for termination of Materials License No 55-0255 with supporting documents and (ii) obtained from the Radiation Control Program of the Department of Public Health of the Commonwealth of Massachusetts an Amendment No. 04 dated October 19, 2011 terminating License No 55-0558 (collectively, the “ Decommissioning Materials ”).  Landlord has furnished a copy of the Decommissioning Materials to Tenant.  Tenant shall not be responsible for the removal or remediation of any radioactive material in or on the Premises as of the date of this Lease.

 

(c)                                   Landlord represents to Tenant that Landlord has not received any written notice, demand, claim, citation, complaint, request for information or similar communication with respect to the existence of Hazardous Materials at the Project in violation of Environmental Laws.  The parties acknowledge that Tenant will apply for a transfer of its existing 2012 Flammable Materials Permit from the City of Cambridge Fire Department for application to the Premises.  Landlord will not take any action

 

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that would reduce the amount of flammable materials that can be stored in the Premises pursuant to such permit.

 

Section 5.4                           Rooftop Equipment .  At no additional rent to Tenant, but otherwise at Tenant’s cost, Tenant shall have the right to install and maintain Rooftop Equipment on the roof of the Building for Tenant’s use in connection with Tenant’s business (provided that Tenant shall not be permitted to make any alterations or installations that, in Landlord’s reasonable judgment, could invalidate or otherwise adversely affect any roof warranty), subject to (a) Legal Requirements, (b) the terms and conditions of this Lease (including, but not limited to, Section 5.2 and Article VII), and (c) Landlord’s written approval (not to be unreasonably withheld, conditioned or delayed) of the size and location of such Rooftop Equipment, together with the plans and specifications therefor.  Tenant shall have access to the roof of the Building for the purpose of installing, using, maintaining, repairing and replacing Rooftop Equipment, subject to Landlord’s reasonable requirements.  Tenant shall not allow any third parties, other than affiliates of Tenant and permitted subtenants and assignees, to use any Rooftop Equipment installed by Tenant.

 

ARTICLE VI
LANDLORD’S SERVICES

 

Section 6.1                           Landlord’s Services .  Landlord shall furnish to the Building the services set forth below in this Section, subject to the conditions stated in this Lease.  The cost of certain of these services are to be (i) paid by Tenant, as provided in this Lease, or (ii) included in Operating Costs, Insurance Costs or Taxes, as applicable

 

(a)                                  Building .  Landlord shall maintain and keep in good condition and repair the exterior and structure of the Building, the Common Areas of the Building and mechanical elements of the Building, including the roof and roof structure, the elevators, and the utility lines and systems outside the Building (except to the extent those utility lines or systems are the property or responsibility of the applicable utility company).  Landlord shall use commercially reasonable efforts to enforce its rights under the Declaration to cause Parking Garage A and the landscaping of the Project to be maintained in good condition and repair.

 

(b)                                  Systems .  Subject to Tenant’s obligations under Section 7.4, Landlord shall operate, maintain and keep in good condition and repair the heating, ventilating and air conditioning system, the plumbing system and the electrical system of the Building, including without limitation the HVAC and air handling systems serving the Premises.  Landlord shall provide heating and air conditioning services to the Premises to heat and cool the Premises at temperatures in accordance with ASHRAE standards from 8.00 a.m. to 6:00 p.m., Monday through Friday, and 8:00 a.m. to 1.00 p.m., on Saturdays, excluding holidays, and at such other times as Tenant may reasonably request.

 

(c)                                   Water and Sewer .  Cold and hot water at standard Building temperatures will be available for ordinary drinking, cleaning, sanitary, lavatory and laboratory purposes.  Landlord may install a water meter at Landlord’s expense and thereby measure Tenant’s water consumption.  Tenant shall pay Landlord, as Additional Rent, within thirty (30) days after invoice the cost of all water consumption so metered, including without limitation any and all sewer rents, taxes or levies assessed by any governmental authority or utility in connection with metered consumption.  Such meter and installation equipment shall be maintained in good working order and repair at Tenant’s expense.  Any water or sewer services charged directly to other tenants of the Building shall not be included in Operating Costs.

 

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(d)                                  Elevators .  Landlord will provide three automatic operatorless elevators in the Building (two passenger elevators and one freight elevator).

 

(e)                                   Common Areas .  Landlord shall provide heating and air conditioning for the Common Areas inside the Building during business hours.  Landlord shall clean, provide lighting, repair, maintain and provide janitorial services for the Common Areas in order to maintain the Common Areas in first class order and condition.  Notwithstanding the above, any damage to the Common Areas or Common Facilities caused by any of Tenant’s Invitees shall be the sole responsibility of Tenant, subject to Section 13.5.  Landlord shall use commercially reasonable efforts to enforce its rights under the Declaration to cause the exterior Common Areas to be maintained in good condition and repair, including snow and ice removal from access drives and walkways.

 

(f)                                    Waste Removal .  Landlord shall provide or arrange for ordinary and reasonable waste removal services for the Building, provided that Tenant shall, at Tenant’s cost, arrange for the removal of all biohazardous waste from the Premises in accordance with Legal Requirements.  In the event that Landlord determines that Tenant’s quantity of waste is excessive in comparison to other tenants of the Building, or, in the event that Landlord determines that Tenant’s waste is other than waste generated by typical office, laboratory (including vivarium) use, Landlord may bill Tenant directly as Additional Rent for any such additional cost therefor or require that Tenant be responsible for disposing of its own waste.

 

(g)                                   Janitorial Services .  Landlord shall supply or cause to be supplied routine janitorial services for the Common Areas.  Such services may be revised from time to time by Landlord in its commercially reasonable discretion.

 

(h)                                  Taxes .  Landlord shall pay or cause to be paid all Taxes levied upon or with respect to the Project.

 

(i)                                      Utilities .  To the extent any utilities that serve the Premises are not billed directly by the utility provider to Tenant, Landlord shall pay or cause to be paid all such utilities.

 

(j)                                     Insurance .  Landlord shall procure and maintain, or cause to be procured and maintained, in full force and effect fire, casualty and extended coverage insurance with respect to the Project, with vandalism and malicious mischief endorsements, liability insurance with respect to the Common Areas, rent loss insurance and such other insurance upon or with respect to the Project as Landlord and/or Other Landlords determine to be necessary, appropriate and/or desirable (comparable to other similar properties in the City of Cambridge) or is required by Landlord’s and/or Other Landlords’ lender, all with such limits of coverage as Landlord, Other Landlords or their lender may deem necessary, appropriate and/or desirable.

 

(k)                                  Security .  Landlord will provide security for the Building, and will use commercially reasonable efforts to enforce its rights under the Declaration to cause security to be provided for the Project, consistent with the nature and character of the Project: provided that Landlord will not be responsible to Tenant, any of Tenant’s Invitees or any third party for any breach of security.

 

(l)                                      Shuttle Service .  Landlord shall operate, or cause to be operated, a shuttle service between the Project and the public transportation station in the vicinity of the Project.

 

Section 6.2                           Extraordinary Use .  Tenant acknowledges that the services to be supplied by Landlord after occupancy by Tenant will be sufficient only for ordinary office and laboratory uses.  Any

 

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additional capacity or structural support, as determined by Landlord, needed for uses beyond such uses, shall be subject to Landlord’s prior written approval, which approval shall not be unreasonably withheld.

 

Section 6.3                           Interruption; Delay .  Landlord shall have no responsibility or liability for failure or interruption of any such repairs or services referred to in this Article VI, or for any interruption in utility services, caused by breakage,  accident, strikes, repairs, inability after exercise of reasonable diligence to obtain supplies or otherwise furnish services, or for any cause or causes beyond the reasonable control of Landlord (but Landlord, in respect of those matters for which Landlord is responsible, will use reasonable efforts to restore such services or make such repairs as soon as possible), nor in any event for any indirect or consequential damages; and failure or omission on the part of Landlord to furnish such service or make such repair shall not be construed as an eviction of Tenant, nor render Landlord liable in damages, nor entitle Tenant to an abatement of Base Rent or Additional Rent, nor release Tenant from the obligation to fulfill any of its covenants under this Lease, except as provided in Articles X and XI with respect to eminent domain and damage by fire or other casualty.

 

Section 6.4                           Additional Services .  Should Tenant request any additional services, Tenant agrees to pay to Landlord as Additional Rent therefor Landlord’s actual costs for providing such service, plus an additional fifteen percent (15%) of such costs as an administrative fee, within thirty (30) days of Landlord’s billing Tenant therefor.

 

Section 6.5                           Landlord’s Indemnity .  Subject to Section 13.5, Landlord will indemnify and hold Tenant (and any and all Persons claiming by, through or under Tenant) harmless from and against all liabilities, claims, costs and expenses, including reasonable attorneys’ fees, arising from (i) any breach of this Lease by Landlord or any of Landlord’s Invitees or other Person claiming by, through or under Landlord; and/or (ii) any misconduct or negligence of Landlord or any of Landlord’s Invitees, or any accident, injury or damage occurring in, on or about the Project which results or is claimed to have resulted from any misconduct or negligence of Landlord or any of Landlord’s Invitees.  This indemnification and hold harmless agreement shalt survive the termination of this Lease.

 

ARTICLE VII
CERTAIN OBLIGATIONS OF TENANT

 

Section 7.1                           Rent .  Tenant will promptly pay the Base Rent and Additional Rent, including without limitation any and all fees, charges, expenses, fines, assessments or other sums payable by Tenant to Landlord (or to the applicable provider of utilities) at the time and in the manner provided for in this Lease, all of which shall be deemed to be obligations to pay Base Rent or Additional Rent.

 

Section 7.2                           Utilities .  In addition to gas and electricity which is the subject of Section 4.6 and water and sewer which is the subject of Section 6.1(c), Landlord reserves the right at its expense to cause any or all of Tenant’s other utilities to be separately metered or submetered.  In the event that Tenant is billed directly by a utility provider, then Tenant shall pay such bills directly to such utility provider prior to their due dates.  In the event Tenant’s utility usage is separately metered or sub-metered by Landlord, Tenant shall pay the billed charges therefor to Landlord as Additional Rent within thirty (30) days of Landlord’s billing therefor.  In the event Tenant’s utility usage is not separately metered, then, except for Tenant’s Utility Costs, Tenant shall pay for such usage as a part of the Operating Costs.  Tenant agrees that its use of electric current shall never exceed the capacity of existing feeders, risers and wiring installations in the Building.  Tenant shall not make or perform any alterations to wiring, installations, lighting fixtures or other electrical facilities in any manner without the prior written consent of Landlord, which Landlord will not unreasonably withhold or delay.  Any risers or wiring to meet Tenant’s excess electrical requirements, if requested by Tenant and approved by Landlord, will be installed by Landlord at Tenant’s expense.

 

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Section 7.3                           No Waste .  Tenant shall not overload, damage or deface the Premises nor shall it suffer or permit the same to be done, nor shall it commit any waste.

 

Section 7.4                           Maintenance; Repairs; and Yield-Up.

 

(a)                                  Except for items that are Landlord’s responsibility under Section 6.1, Tenant will keep the Premises neat and clean and maintain the same in good repair, condition and appearance, subject to damage by fire or other casualty and reasonable wear and tear excepted Tenant’s obligation to so maintain and repair the Premises shall apply to all of the Premises, including, without limitation, all doors, glass, fixtures, interior walls, floors, ceilings, and any other systems exclusively serving the Premises, other than the HVAC and air handling systems serving the Premises, and the water neutralizer and emergency generator referenced in Section 2.1.  There is excepted from Tenant’s obligations under this Section only (a) damage to such portions of the Premises not the responsibility of Tenant under this Lease and originally constructed by Landlord, and (b) repairs and work which are otherwise the specific responsibility of Landlord hereunder.  At the end of the Lease Term or sooner termination of this Lease, Tenant shall peaceably surrender and deliver up the Premises, together with the water neutralizer and emergency generator referenced in Section 2.1, to Landlord, broom clean, with all utilities safety capped, and in good repair and condition, subject to reasonable wear and tear and damage by fire or other casualty, and remove all signs and lettering and all personal property, goods and effects belonging to Tenant or anyone claiming through or under Tenant.  Tenant shall cause all maintenance and repair work to conform to Legal Requirements Tenant shall keep the Premises clear of all filth, trash and refuse.  If Tenant fails to perform Tenant’s obligations under the above provisions of this Section, then Landlord will have the right (but not the obligation), without waiving any default by Tenant, to cause such obligations to be performed upon not less than five (5) business days prior written notice to Tenant (or a shorter period of prior written notice, or a contemporaneous written notice, if appropriate in Landlord’s reasonable judgment in light of the nature of Tenant’s obligations to be performed), giving Tenant the opportunity to have its representative observe the performance of such obligations if practical, and if Landlord causes any of such obligations to be performed as permitted above, the costs and expenses reasonably incurred by Landlord in connection therewith shall be due and payable by Tenant to Landlord as Additional Rent upon demand.

 

(b)                                  Tenant shall keep any and all Rooftop Equipment neat and clean and maintain any and all Rooftop Equipment in good repair and condition.  At the end of the Lease Term or sooner termination of this Lease, Tenant shall, at Tenant’s cost, remove the Rooftop Equipment, repair any and all damage to the roof and other parts of the Building resulting from such removal and restore the roof and other parts of the Building affected by the Rooftop Equipment to the same condition as existed prior to the installation of such Rooftop Equipment.

 

Section 7.5                           Alterations by Tenant .  Tenant will not make any change in, or addition to, the Premises without first obtaining, on each occasion, Landlord’s consent in writing as provided below (which consent shall not be unreasonably withheld, conditioned or delayed), and then only at Tenant’s expense (subject to Landlord’s obligation to pay the Allowance), and in a lawful manner and upon such terms and conditions as Landlord, by such writing, shall reasonably approve, which shall include, without limitation, (a) maintenance of insurance in form and substance reasonably satisfactory to Landlord, and (b) compliance with Sections 7.9, 7.11 and 7.13; provided that Landlord’s consent shall not be required for non-structural alterations costing less than $25,000 per alteration and costing less than $50,000 in the aggregate in any calendar year.  Any alteration or addition shall be consistent in appearance with the rest of the Building and the Project and shall be made only after duly obtaining (and providing to Landlord copies of) all required permits and licenses from all governmental authorities.  Tenant will deliver to Landlord in writing a schedule setting forth the details and location of all such proposed alterations or additions and detailed plans and specifications.  The contractor(s) performing the work shall be subject to

 

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Landlord’s approval, which will not be unreasonably withheld.  If required by Landlord’s lender, Tenant shall provide a statutory lien bond with respect to such work.  All approved repairs, installations, alterations, additions or other improvements made by Tenant shall be made in a good and workmanlike manner, between such hours as approved in writing by Landlord, and in such a way that utilities will not be interrupted and other tenants and occupants of the Project will not suffer unreasonable inconvenience or interference as determined by Landlord.  Tenant’s Invitees shall be given such reasonable access to other portions of the Building and the mechanical systems as may be necessary or appropriate to perform such work.  Both during and after the performance of any such work, Landlord shall have free access to any and all mechanical installations in the Premises, including, but not limited to, air conditioning, fans, ventilating systems, machine rooms and electrical closets, and Tenant agrees not to construct or permit the installation of partitions and/or other obstructions in the Premises which might interfere with Landlord’s free access to the Premises or Building, or impede the free flow of air to and from air vents and other portions of the heating, ventilating and air conditioning systems in the Building.  Unless Landlord elects otherwise at the time in which it grants its consent thereto, but subject to Section 7.6, all installations, alterations, additions or improvements in or to the Premises shall be the property of Landlord and shall remain upon, and be surrendered with, the Premises at the end of the Lease Term or sooner termination of this Lease.

 

Section 7.6                           Trade Fixtures and Equipment .  Any trade fixtures installed in, or attached to, the Premises by, and at the expense of, Tenant, and any Rooftop Equipment, shall remain the property of Tenant, if the same may be removed without damage to, or destruction of, the Premises.  Tenant shall have the right, at any time and from time to time during the Lease Term, to remove any and all of its trade fixtures which it may have installed in, or attached to, the Premises, during the Lease Term, and any Rooftop Equipment.  In addition, prior to the end of the Lease Term or sooner termination of this Lease; Tenant shall remove all of Tenant’s trade fixtures, Rooftop Equipment, and voice or data cabling or wiring, unless Landlord gives Tenant a written waiver for same (if Tenant requests, Landlord shall state in writing whether it will grant a waiver at the time Tenant installs a trade fixture).  At any time that Tenant removes any of its trade fixtures, Tenant shall promptly repair the Building as a result of any damage to, or destruction of, the Building caused by the removal of any of its trade fixtures.  Notwithstanding the above provisions of this Section 7.6 to the contrary, Tenant shall surrender the water neutralizer and the emergency generator with the Premises as provided in Section 7.4.

 

Section 7.7                           Compliance with Laws .  Tenant, in its use of the Premises and at its sole expense, shall comply with all Legal Requirements, including, without limitation, all Legal Requirements related to the use, storage, discharge release, removal or existence of Hazardous Materials.  Tenant agrees that the Premises shall be kept in a sanitary and safe condition in accordance with all Legal Requirements.

 

Section 7.8                           Contents at Tenant’s Risk .  All inventory, equipment, goods, merchandise, furniture, fixtures and property of every kind which may be on or about the Premises, and all Rooftop Equipment, shall be at the sole risk and hazard of Tenant, and if the whole or any part thereof shall be destroyed or damaged by fire, water or otherwise, or by the use or abuse of water or by the leaking or bursting of water pipes, or by rising water, or by roof or other structural leak, or by loss of electrical service, or in any other way or manner, no part of such loss or damage shall be charged to or borne by Landlord in any case whatsoever, except that the foregoing shall not exculpate the Landlord from its own negligent acts or omissions.  Tenant agrees to maintain full and adequate insurance coverage on all of its property at the Premises and in the remainder of the Building, including physical damage, theft and business interruption insurance, or Tenant shall be a self-insurer thereof, in which case Tenant shall so advise Landlord in writing and shall be fully responsible for all such damage, and shall indemnify and save harmless Landlord from any loss, cost, expense, damage or liability resulting from Tenant’s failure to have such insurance as required in this Lease.  Such insurance on Tenant’s property shall contain a waiver of subrogation clause in favor of Landlord, or shall name Landlord as an additional insured for the

 

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sole purpose of preventing a subrogation claim against Landlord.  If Tenant is a self-insurer, in whole or in part, Landlord shall be entitled to the same benefits it would have enjoyed had insurance covering the loss in full with a waiver of subrogation clause been in effect, or as if the Landlord has been named on insurance covering the loss in full as an additional insured for the purpose of preventing a subrogation claim.

 

Section 7.9                           Exoneration, Indemnification, Hold Harmless and Insurance .  Tenant will exonerate, indemnify, defend, save and hold harmless Landlord (and any and all Persons claiming by, through or under Landlord) from and against all claims, proceedings, defenses thereof, liabilities, costs, and expenses of any kind and nature, including reasonable legal fees, arising from: (i) any breach of this Lease by Tenant or any of Tenant’s Invitees or other Person claiming by, through or under Tenant, and/or (ii) any misconduct or negligence of any of Tenant’s Invitees, or arising from any accident, injury or damage occurring in, on or about the Project, which such accident, damage or injury results from the negligence or misconduct on the part of any of Tenant’s Invitees.  This exoneration, indemnification and hold harmless agreement shall survive the termination of this Lease.

 

During the Lease Term and any period of holding over, Tenant shall maintain in full force and effect a policy of commercial general liability insurance under which Landlord (and its designees) and Landlord’s mortgagee(s) are named as additional insureds.  Such insurance policy shall be non-cancelable with respect to Landlord without at least thirty (30) days prior written notice to Landlord (to the extent that such a provision is then generally available in insurance policies), and Tenant shall deliver to Landlord prior to commencement of the Lease Term and thereafter at least thirty (30) days prior to the expiration of any then effective coverage a satisfactory written certificate of insurance coverages or the renewal or replacement of such coverages.  The minimum limits of liability of such insurance shall be One Million Dollars ($1,000,000.00) combined single limits for bodily injury and property damage, each occurrence, and One Million Dollars ($1,000,000.00) limits for personal injury, together with an overall umbrella coverage of an additional Four Million Dollars ($4,000,000.00).  Tenant shall not permit any contractor to do any work at or furnish any materials to be incorporated into the Premises without first delivering to Landlord satisfactory evidence of the Contractor’s commercial general liability insurance, worker’s compensation insurance, automobile insurance and, if required by Landlord’s lender, statutory lien bonds, each reasonably acceptable to Landlord and complying with any insurance specifications provided by Landlord.  All insurance requirements imposed upon Tenant or its contractors under this Lease shall be subject to the further requirement that the forms of coverage and the insurers providing the insurance be licensed in the Commonwealth of Massachusetts, be in sound financial condition, carry an A- or better Best’s rating.  and be reasonably acceptable to Landlord.  Tenant agrees that Landlord shall not be responsible or liable to Tenant, or to those Persons claiming by, through or under Tenant, for any loss or damage that may be occasioned by or through the acts or omissions of Persons occupying or using adjoining premises or any part of the Project, or otherwise, or for any loss or damage resulting to Tenant or those Persons claiming by, through or under Tenant, or its or their property, except that the foregoing shall not exculpate the Landlord from acts of its own negligence.

 

Section 7.10                    Landlord’s Access .  Landlord and its representatives shall have the right without charge to it and without reduction in Base Rent or Additional Rent, upon reasonable notice (which shall be at least 24 hours’ notice, except in case of an emergency), at reasonable times and in such manner as shall not unreasonably interfere with Tenant’s business, to enter the Premises for the purpose of showing the Premises to prospective purchasers, tenants (during the last year of the Lease Term) and lenders and investigating repair or maintenance problems and to make such repairs or changes as Landlord deems advisable, and to maintain, use, repair, replace, relocate or introduce pipes, ducts, wires, meters and any other Landlord’s fixtures serving or to serve the Premises or other parts of the Project (which shall be installed above ceilings, behind walls, or in other areas which do not interfere with Tenant’s business), or to maintain or repair any portion of the Project, and, in case of an emergency, whether resulting from

 

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circumstances in the Premises or elsewhere on the Project, Landlord or its representatives may enter the Premises (forcibly, if necessary) at any time to take such measures as may be needed to cope with such emergency.  Such access shall include, but not be limited to, the right to open floors, walls, ceilings, and building systems for the foregoing purposes provided that Landlord shall use commercially reasonable efforts to minimize the amount of time it requires access to the Premises in connection with maintenance, repairs or changes as aforesaid.  Landlord shall repair all such portions of the Premises as may be damaged due to Landlord’s entry as provided herein.  Other than where impractical in case of an emergency, Landlord shall give Tenant reasonable opportunity to have a Tenant’s representative accompany Landlord during any access to the Premises by Landlord pursuant to this Section.  In the event that any such repairs, work or other activities undertaken as herein provided interferes with Tenant’s operations to such a material extent (in the exercise of Tenant’s reasonable business judgment) that Tenant ceases its operations at the Premises for a period in excess of two (2) consecutive Business Days, all rental obligations and other charges thereafter shall be equitably adjusted for so long as such interference continues.

 

Section 7.11                    No Liens .  Tenant shall not permit any mechanics’, laborers’ or materialmen’s liens to stand against the Project or Tenant’s interests in the Premises, this Lease, or the estate created hereby for any labor or materials furnished to Tenant or claimed to have been furnished to Tenant in connection with work of any character performed or claimed to have been performed in or on the Premises by or at the direction or sufferance of Tenant, unless such lien is bonded over to Landlord’s reasonable satisfaction.  Landlord may condition the right of Tenant to do any work which could result in a lien upon the Project or Tenant’s interests in the Premises, this Lease, or the estate created hereby on the delivery and recording of statutory lien bonds (if required by Landlord’s lender) or indemnities satisfactory to Landlord.

 

Section 7.12                    Compliance with Rules and Regulations .  Tenant covenants that all of its Invitees will comply with the Rules and Regulations and all other reasonable rules and regulations as Landlord may from time to time hereafter promulgate to regulate the conduct generally of all the tenants of the Building.  Landlord, however, shall have the reasonable right to change the Rules and Regulations and to waive any one or more of them in the case of any one or more tenants.  Landlord shall enforce the Rules and Regulations, if at all, in a non-discriminatory manner.

 

Section 7.13                    Further Construction .  Landlord shall have the right, but not the obligation, to construct an expansion or additional phase of the Building (an “ Addition ”).  If Landlord elects to construct an Addition, Tenant shall cooperate with Landlord in connection with Landlord’s plans to construct the Addition and the construction of the Addition, and neither Tenant nor any of its Invitees shall take any action which will interfere with such plans or construction unless the same results in a breach of this Lease by Landlord.  Without limiting the generality of the foregoing, Tenant agrees to provide (at no cost to Tenant) such assistance and cooperation as Landlord may request, from time to time, in order for Landlord to timely obtain all licenses, permits, approvals and certificates of occupancy as may be necessary and/or appropriate in connection with an Addition.  Landlord shall plan the construction of any Addition and related staging in a manner reasonable under the circumstances to minimize any material interference with Tenant’s access to and/or use of the Premises during the performance of such construction, which planning shall include reasonable advance written notice to Tenant of Landlord’s construction activities which are likely to disturb Tenant’s ongoing experiments or lab work in the Premises to facilitate the taking of protective steps by Tenant, and Landlord shall use commercially reasonable efforts to ensure that such construction work, once undertaken, minimizes any material interference with Tenant’s access to and/or use of the Premises.  Tenant acknowledges that, from time to time, dust, noise, vibrations and interruptions to power and other utilities (including water and sewer) and/or inability to maintain the temperature in the Building at customary levels may, among other construction-related interference, occur on a temporary basis (not to exceed more than two (2)

 

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consecutive business days) in connection with the construction of an Addition.  Tenant is responsible to safeguard, insure and protect adequately its property (including any sensitive electronic equipment and computers) during the construction process and Landlord shall not be liable to Tenant for any damage or loss suffered by Tenant as a result of Landlord’s construction activities provided that they are undertaken in a manner consistent with this Section.  Tenant shall notify Landlord if any such construction-related interference should occur.  Upon receipt of written notice from Tenant, Landlord shall undertake those measures reasonable under the circumstances to minimize any material interference with Tenant’s access and/or use of the Premises during the performance of any such construction by Landlord.  Notwithstanding the foregoing, in the event that any such work or other activities undertaken as herein provided interferes with Tenant’s operations to such a material extent (in the exercise of Tenant’s reasonable business judgment) that Tenant ceases its operations at the Premises for a period in excess of two (2) consecutive Business Days, all rental obligations and other charges thereafter shall be equitably abated for so long as such interference continues.  In no event shall Tenant be required to relocate its operations to other premises as a result of any Addition.

 

ARTICLE VIII
SUBLETTING AND ASSIGNMENT

 

Section 8.1                           Subletting and Assignment .

 

(a)                                  Except as hereinafter set forth, Tenant shall not assign, mortgage, pledge or encumber this Lease nor sublet all or any part of the Premises, nor permit or allow the use of all or any part of the Premises by third party users, such as concessionaires, without, on each occasion, obtaining Landlord’s written consent thereto.  However, Landlord understands that Tenant intends to have third parties manage and operate the vivarium and the chip tank within the Premises, and occupancy of portions of the Premises by such third parties shall not be considered a sublease or other agreement for which Landlord’s consent is required pursuant to the immediately preceding sentence.  Landlord will not unreasonably withhold, condition or delay its consent to any assignment of this Lease or sublease of all or any part of the Premises under the circumstance described in Section 8.1(b)(i), and Landlord will consent to the sublease or all or a portion of the Premises, or the assignment of this Lease, to a Permitted Transferee under the circumstances described in Section 8.1(b)(ii); otherwise, the consent of Landlord to an assignment, sublease or other transaction covered by this Section 8.1(a) will be within Landlord’s sole discretion.  As used herein, the term “assign” or “assignment” shall be deemed to include, without limitation: (i) any transfer of Tenant’s interest in this Lease by operation of law or the merger or consolidation of Tenant with or into any other firm or corporation, or (ii) the transfer or sale of a controlling interest in Tenant (whether in a single transaction or a series of transactions), and whether by sale of its capital stock or otherwise, other than by reason of a sale of a portion of the capital stock of Tenant to raise capital (including any IPO) which does not result in a change in the day-to-day control of Tenant.

 

(b)                                  (i)                                      Landlord will not unreasonably withhold or delay its consent to any assignment of this Lease or any sublease of all or any part of the Premises, so long as (A) the assignment or sublease will not violate the terms of the Declaration; (B) the assignee or subtenant and its proposed use is of a character consistent with the Project; (C) the assignee’s or subtenant’s proposed use is permitted under the terms of this Lease; (D) the assignee or subtenant is qualified to do business in the Commonwealth of Massachusetts; (E) Tenant pays to Landlord all of Landlord’s reasonable expenses arising out of such assignment or sublease, including, without limitation, reasonable attorneys’ fees (not to exceed $3,000); (F) there does not then exist an Event of Default; (G) each of Landlord’s mortgagees has consented in writing to such assignment or sublease if such mortgagee’s consent is required pursuant to the terms of the applicable financing documents; (H) if a sublease, there are not more than a total of three (3) subtenants, including the proposed subtenant under the proposed sublease, in occupancy of the

 

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Premises or portions thereof; and (I) if a sublease, the proposed sublease prohibits any assignment of the sublease or any sub-sublease of any portion of the Premises without the prior written consent of Landlord.

 

(ii)                                   Landlord will consent to a sublease of all or any portion of the Premises, or an assignment of this Lease, to a Permitted Transferee, so long as (1) the subtenant or assignee is qualified to do business in the Commonwealth of Massachusetts; (2) Tenant pays to Landlord all of Landlord’s reasonable expenses arising out of such sublease or assignment, including, without limitation, reasonable attorneys’ fees (not to exceed $3,000); and (3) there does not then exist an Event of Default and no Event of Default will be created as a result of the proposed sublease or assignment or the proposed use by the subtenant or assignee.

 

(c)                                   In the event of any permitted assignment of this Lease or sublease of all or any part of the Premises by Tenant, Tenant shall be jointly and severally liable with the new tenant for the payment of any and all Base Rent and Additional Rent which may become due by the terms of this Lease and for the performance of all covenants, agreements and conditions on the part of Tenant to be performed hereunder.  Tenant shall also pay to Landlord fifty percent (50%) of any rent received as a result of the assignment or sublease which exceeds the Base Rent and Additional Rent payable hereunder on a per square foot basis, after taking into account the costs of the assignment or sublease, including without limitation broker fees, attorneys’ fees, free rent concessions and build out costs, amortized on a straight-line basis over the remaining Lease Term.  No such assignment or sublease shall be valid or effective unless and until (i) the new tenant and Tenant execute and deliver to Landlord an agreement, in form and substance reasonably satisfactory to Landlord, pursuant to which inter alia , such new tenant (A) in the case of an assignment, assumes all of the obligations of Tenant under this Lease, (B) if a sublease, agrees to execute and deliver such estoppel certificates and subordination agreements in the same forms as Landlord may require of Tenant under this Lease, (C) if a sublease, acknowledges that Landlord has no obligations to new tenant under this Lease, the sublease or otherwise and (D) agrees to maintain the same insurance coverages as the insurance coverages which Tenant is required to maintain under this Lease and to provide evidence thereof to Landlord in accordance with the terms of this Lease; and (ii) the new tenant delivers to Landlord evidence of the insurance coverages required to be maintained by such new tenant under the agreement referenced in clause (i) above.  No modification of the terms of this Lease or any course of dealing between Landlord and any assignee or sublessee of Tenant’s interest herein shall operate to release or impair Tenant’s obligations hereunder.

 

(d)                                  Notwithstanding anything to the contrary contained in this Article VIII or other provisions of this Lease, in the event that Tenant seeks Landlord’s consent to an assignment of this Lease, other than to a Permitted Transferee, or a sublease of fifty percent (50%) or more of the Premises, Landlord, at its option and within ten (10) business days following receipt of Tenant’s request for Landlord’s consent, may terminate this Lease (or if the request is for a sublease of less than all of the Premises, at Landlord’s option, Landlord may terminate this Lease as to the portion requested to be sublet and Landlord and Tenant shall execute an amendment to this Lease to modify the Premises and to adjust Base Rent and Tenant’s Share based upon the approximate remaining leasable square footage to the Leasable Square Footage of the Building and the Project).  In such an event, Landlord may enter into a new lease with the proposed assignee or sublessee or any other party on any terms and provisions acceptable to Landlord in Landlord’s sole discretion for the Premises or the portion of the Premises released from this Lease.  Notwithstanding the above provisions of this Section 8.1(d) to the contrary, if Landlord exercises its option to terminate this Lease in whole or in part under this Section 8.1(d), Tenant may, by written notice given to Landlord within five (5) Business Days after Landlord exercises such option, withdraw Tenant’s request for Landlord’s consent to the subject assignment or sublease, in which event this Lease shall not terminate.

 

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(e)                                   Tenant shall not enter into any arrangements with any subtenant or assignee to circumvent, or which have the effect of circumventing, (i) Tenant obligation to share rents received from a sublease or assignment or (ii) any other provisions of this Article VIII.

 

ARTICLE IX
RIGHTS OF MORTGAGEES AND GROUND LESSORS; ESTOPPEL CERTIFICATES

 

Section 9.1                           Subordination to Mortgages and Ground Leases .  Tenant agrees that this Lease is and shall be and remain subordinate to the lien of any present or future mortgage or mortgages, or ground lease, upon the Project, irrespective of the time of execution or time of recording of any such mortgage or mortgages, or ground lease, and to all renewals, extensions, and modifications therefor or amendments thereto; provided, however, that as a condition to such subordination to any present or future mortgage or ground lease, the mortgagee or ground lessor must agree in writing not to disturb Tenant’s possession of the Premises pursuant to the terms of this Lease so long as no Event of Default exists.  Tenant agrees that it will, upon ten (10) Business Days’ advance written request from Landlord or any holder of a mortgage on all or a portion of the Project or the ground lessor thereof, execute, acknowledge, and deliver any and all commercially reasonable instruments reasonably deemed necessary or desirable by Landlord, or such holder to give effect to, or notice of, such subordination, provided that such subordination includes a non-disturbance agreement for the benefit of Tenant on commercially reasonable terms and conditions specified by the mortgagee or ground lessor.  Without limiting the generality of the immediately preceding sentence, Tenant shall, contemporaneously with the execution of this Lease, (a) enter into a Subordination, Non-Disturbance and Attornment Agreement with Irish Bank Resolution Corporation Limited in mutually agreed form, and (b) enter into a Subordination, Non-Disturbance and Attornment Agreement with Ground Lessor in mutually agreed form.

 

Section 9.2                           Lease Superior at Mortgagee’s or Ground Lessor’s Election .  At the request in writing of any mortgagee, or ground lessor, of the Project, this Lease shall be deemed superior to such mortgage, or ground lease, whether this Lease was executed before or after such mortgage, or ground lease, and Tenant shall execute such commercially reasonable documents to effect the foregoing in recordable form as such mortgagee, or ground lessor, shall request.

 

Section 9.3                           Notice to Mortgagee and Ground Lessor .  Upon receipt of a written request from Landlord or any holder of a mortgage, on all or any part of the Project, or the ground lessor thereof, Tenant will thereafter send any such holder copies of all notices (including, but not limited to, notices of default or termination) given by Tenant to Landlord in accordance with any provision of this Lease.  In the event of any failure by Landlord to perform, fulfill or observe any agreement by Landlord herein or any breach by Landlord of any representation or warranty of Landlord herein, any such holder may at its election cure such failure or breach for and on behalf of Landlord within the same period of time provided herein for Landlord to cure the same or such longer period as may be reasonably necessary to cure the default.  In the event of any inconsistency between this Section and any similar provision in a Subordination, Non-Disturbance and Attornment Agreement entered into by Tenant and any mortgagee or ground lessor, the provisions of the Subordination, Non-Disturbance and Attornment Agreement shall be controlling.

 

Section 9.4                           Limitations on Obligations of Mortgagees, Ground Lessors and Successors .  Tenant agrees that the holder of a mortgage or ground lease or any successor-in-interest to any of them or to Landlord shall not be (a) bound by any payment of an installment of Base Rent or Additional Rent which may have been made more than thirty (30) days before the due date of such installment, (b) bound by any amendment or modification to this Lease made without the consent of the holder of a mortgage or ground lease or such successor in interest; (c) liable for any previous act or omission of Landlord (or its predecessors in interest) except for any obligations of Landlord to perform maintenance or repairs of a

 

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continuing nature the need for which first arises prior to the time that such holder succeeds to Landlord’s interest under the Lease and which continues after such holder succeeds to Landlord’s interest under this Lease; (d) responsible for any monies owing by Landlord to the credit of Tenant or subject to any credits, offsets, claims, counterclaims, demands or defenses which Tenant may have against Landlord (or any of its predecessors in interest); (e) bound by any covenant to undertake or complete any construction of the Premises or any portion thereof; or (f) obligated to make any payment to Tenant other than any security deposit actually delivered to holder of a mortgage or ground lease or such successor in interest.  Further, Tenant agrees that it will not seek to terminate this Lease by reason of any act or omission of Landlord until Tenant shall have given written notice of such act or omission to the holder of such mortgage or ground lease (at such holder’s last address furnished to Tenant) and following the giving of such notice such holder shall have the right, but shall not be obligated, to remedy such act or omission within the same time period provided for in this Lease for Landlord to cure the same or such longer period as may be reasonably necessary to cure the same.  In the event of any inconsistency between this Section and any similar provision in a Subordination, Non-Disturbance and Attornment Agreement entered into by Tenant and any mortgagee or ground lessor, the provisions of the Subordination, Non-Disturbance and Attornment Agreement shall be controlling.

 

Section 9.5                           Estoppel Certificate By Tenant .  Tenant agrees, at any time and from time to time, within ten (10) Business Days after written request by Landlord or any holder of a mortgage on all or a portion of the Project or the ground lessor thereof, (a) to execute, acknowledge and deliver to Landlord a statement in writing certifying that (except as may be otherwise specified by Tenant): (i) this Lease is presently in full force and effect and unmodified; (ii) Tenant has accepted possession of the Premises; (iii) any improvements required by the terms of this Lease to be made by Landlord have been completed to the satisfaction of Tenant; (iv) no rent under this Lease has been paid more than thirty (30) days in advance of its due date; (v) the addresses for notices to be sent to Tenant is as set forth in this Lease or as specified in such certificate; (vi) Tenant as of the date of executing the certificate has no charge, lien or claim of offset under this Lease, or otherwise, against rents or other charges due or to become due hereunder; (vii) Tenant is not in default under this Lease; (viii) to the best of Tenant’s knowledge, Landlord is not in default of this Lease; and (ix) such other information as Landlord may reasonably request about this Lease or Tenant’s occupancy; and (b) to deliver information in form satisfactory to Landlord and such holder or ground lessor concerning Tenant’s operations as may be found in Tenant’s then-most-recent annual audited financial statement, but only if such recipients agree in writing to keep such information confidential.

 

Section 9.6                           Amendment of Declaration .  Tenant agrees that the Declaration may be amended from time to time without the consent of Tenant, so long as such amendment does not materially adversely affect the use and enjoyment of the Premises by Tenant pursuant to this Lease, materially increase Tenant’s obligations in respect of Additional Rent, or further restrict Tenant’s ability to sublease or assign this Lease.  All references herein to the Declaration shall be references to the Declaration as amended from time to time.  Landlord shall provide Tenant with copies of any future amendments of the Declaration.

 

ARTICLE X
CASUALTY

 

Section 10.1                    Damage From Casualty .

 

(a)                                  If any portion of the Premises or the Building affecting Tenant’s use of the Premises is damaged by fire or other casualty, Tenant shall give Landlord written notice of such casualty promptly after Tenant becomes aware of such casualty.  Within sixty (60) days after Tenant gives Landlord written notice of such casualty or Landlord otherwise becomes aware of such casualty, Landlord

 

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shall reasonably estimate, and give Tenant written notice of, the period commencing with the date of such notice (the “ Restoration Period ”) that Landlord anticipates will be reasonably required to perform the restoration work which is the responsibility of Landlord as provided below.  If Landlord reasonably estimates that the Restoration Period will be longer than one year (or if less than one year, longer than the remaining Lease Term), then either Landlord or Tenant may terminate this Lease by giving to the other written notice of termination within ten (10) days after Landlord gives Tenant written notice of such estimate.  Such notice of termination shall be effective on the date thereof, and if Tenant is then occupying the Premises, Tenant shall thereafter have a reasonable period of time in which to vacate the Premises.  If (i) Landlord reasonably estimates that the Restoration Period will be one year or shorter, or (ii) Landlord reasonably estimates that the Restoration Period will be longer than one year but neither Landlord nor Tenant exercises its right to terminate this Lease as set forth above, then this Lease shall not terminate; and in such event, Landlord shall, unless Landlord exercises its termination right pursuant to Section 103, with reasonable dispatch, repair or rebuild so much of the Premises (and Building, as applicable) as were originally constructed by Landlord (or its predecessor) to substantially their condition immediately prior to the casualty (subject, however, to Legal Requirements then in existence), and Tenant shall concurrently (to the extent practical and consistent with good construction practices) (i) repair and restore so much of the Premises as were constructed by Tenant or are the responsibility of Tenant under this Lease and (ii) repair and restore its fixtures and personal property (but only to the extent of the proceeds of insurance carried or required by this Lease to be carried by Tenant).

 

(b)                                  If, pursuant to Section 10.1(a), Landlord is required to restore the Premises (and Building, as applicable) and Landlord fails to substantially complete such restoration by the end of the Restoration Period (subject to extension for delays beyond the reasonable control of Landlord), then Tenant shall have the right to terminate this Lease upon thirty (30) days prior written notice to Landlord.  If Landlord fails to substantially complete such restoration work within such thirty (30) day period, then this Lease shall terminate as of such thirtieth (30th) day.

 

(c)                                   Notwithstanding any other provisions of this Section 10.1 to the contrary, Landlord shall not be obligated to commence repair or restoration work prior to receipt of sufficient insurance proceeds, nor shall Landlord be required to expend sums in excess of “net recovered insurance proceeds”.  The term “ net recovered insurance proceeds ” shall mean the amount of any insurance proceeds actually recovered by Landlord, less the cost of obtaining the same (including attorneys’ fees and appraisal fees) and less the amount thereof required to be paid to a mortgagee or ground lessor.

 

Section 10.2                    Abatement of Rent .  In the event that the provisions of Section 10.1 shall become applicable, the Base Rent, Tenant’s Project Share of Taxes and Project Operating Costs, and Tenant’s Building Share of Building Operating Costs shall be abated or reduced proportionately for the period in which, by reason of any such damage or destruction, there is substantial interference with the operation of the business of Tenant in the Premises, having regard to the extent to which Tenant may be required to discontinue its business in the Premises, and such abatement or reduction shall continue (but may be adjusted from time to time based on the extent of the interference with Tenant’s operations) for the period commencing with such destruction or damage and ending with the substantial completion by Landlord of such work, repair and/or reconstruction as Landlord is obligated to do if it does not otherwise terminate this Lease pursuant to this Article X.

 

Section 10.3                    Landlord’s Right to Terminate .  Notwithstanding the foregoing, Landlord may terminate this Lease following:  (a) damage or destruction to the Premises to the extent of thirty (30%) or more of the cost of replacement thereof; or (b) the refusal of the applicable insurance carrier to pay funds sufficient for the cost to repair or replace or the refusal of any applicable mortgagee or ground lessor to release the insurance proceeds for such purposes.  Landlord may exercise the right to so terminate this Lease by written notice to Tenant given within sixty (60) days after the date of the damage or sixty (60)

 

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days after the date Landlord receives written notice of such damage, whichever is later.  Such notice of termination shall be effective on the date thereof.

 

ARTICLE XI
EMINENT DOMAIN

 

Section 11.1                    Eminent Domain; Right to Terminate and Abatement in Rent .  If the Premises or any part thereof, or the whole or any substantial part of the Building, shall be taken, or if a conveyance shall be made in anticipation thereof, for any street or other public use, by action of the municipal, state, federal or other authorities, or shall receive any substantial direct or consequential damage for which Landlord or Tenant shall be entitled to compensation by reason of anything lawfully done in pursuance of any public authority, after the execution hereof and before the expiration of the Lease Term, then this Lease and the Lease Term shall terminate at the election of either party (given by written notice to the other party within ninety (90) days of the taking or within ninety (90) days of notice of the taking to Landlord), and such election may be made in case of any such taking notwithstanding the entire interest of Landlord may have been divested by such taking, and if neither party so elects, then in case of any such taking or destruction of, or damage to, the Premises, rendering the same or any part thereof unfit for use and occupation, a just proportion of the Base Rent and Additional Rent according to the nature and extent of the injury sustained by the Premises as determined by Landlord, shall be suspended or abated until the Premises or, in case of such taking, what may remain thereof, shall have been put in proper condition for use and occupation.  To the extent that the Premises, upon having been put in proper condition for use and occupation are smaller, the Base Rent shall be reduced for the balance of the Lease Term in the same proportion which the reduction in space bears to the original Leasable Square Footage of the Premises.  In the event of a taking of any portion of the Building, Tenant’s Share shall be recomputed.

 

Section 11.2                    Restoration .  If this Lease is not terminated as provided in Section 11.1, Landlord shall apply so much of the available proceeds of the eminent domain award as are required to restore the Project and the Premises to a condition, to the extent practical, substantially the same as that immediately preceding the taking, but subject to zoning laws and building codes then in existence.  If the available proceeds of the eminent domain award are insufficient, in Landlord’s judgment, for that purpose, Landlord shall have no obligation to expend funds in excess of said proceeds and Landlord shall have the right to select which portions of the Project, if any, shall be restored; provided that if Landlord does not elect to restore the Premises, then Tenant may exercise its termination rights as aforesaid.  The term “ available proceeds ” shall mean the amount of the award paid to Landlord, less cost of obtaining the same (including attorneys’ fees and appraisal fees) and less the amount thereof required to be paid to a mortgagee or ground lessor.  In the event Landlord fails to commence restoration of the Project and/or the Premises within sixty (60) days after the taking and diligently prosecute the same to completion, Tenant shall have the right to terminate the Lease upon sixty (60) days’ prior written notice to Landlord.

 

Section 11.3                    Landlord to Control Eminent Domain Action .  Landlord reserves all rights to compensation for damage to the Premises or any part thereof, or the leasehold hereby created, heretofore accrued or hereafter to accrue, by reason of any taking for public use of the Premises or any portion thereof, or right appurtenant thereto, or privilege or easement in, through, under or over the same, and by way of confirmation of the foregoing Tenant hereby assigns all rights to such damages heretofore accrued or hereafter accruing during the Lease Term to Landlord.  Provided, however, nothing herein contained shall limit Tenant’s right to any separate award for the taking of personal property, moving and other relocation expenses, or other items the payment of which shall not reduce the award payable to Landlord.

 

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ARTICLE XII
DEFAULT AND REMEDIES

 

Section 12.1                    Event of Default .  As used herein, “Event of Default” shall mean the occurrence and/or existence of any one or more of the following:  (a)(i) Tenant shall fail to pay any installment of Base Rent, Additional Rent or any other amount due under this Lease on or before the date on which the same becomes due and payable, and such failure continues for five (5) days after written notice from Landlord thereof or (ii) Landlord having given the notice specified in the foregoing clause (a)(i) to Tenant twice in any twelve (12) month period, Tenant shall fail, on a third occasion within the twelve (12) months following the giving of the first such notice by Landlord, to pay any installment of Base Rent, Additional Rent or any other amount due under this Lease on or before the date on which the same becomes due and payable; or (b) Tenant shall neglect or fail to perform or observe any of the other covenants or undertakings herein on its part to be performed or observed and such neglect or failure shall continue for thirty (30) days after written notice to Tenant; provided, however, that if the default is other than a default under clause (a) above, or clauses (c) through (i) below, and is such that it cannot be cured within thirty (30) days, but is capable of being cured, such thirty (30) day period shall be extended by up to sixty (60) additional days provided that Tenant commences to cure such default within said thirty (30) day period, continues to do so diligently, and thereafter completes such cure within not more than ninety (90) days following the notice of default; or (c) there is filed by Tenant any case, petition, proceeding or other action under any Bankruptcy Law; or (d) any other proceedings shall be instituted against Tenant under any Bankruptcy Law and not be dismissed within sixty (60) days; or (e) Tenant shall execute an assignment of its property for the benefit of its creditors; or (f) a receiver, custodian or other similar officer for Tenant shall be appointed and not be discharged within sixty (60) days; or (g) the estate hereby created shall be taken by execution or by other process of law and is not redeemed by Tenant within thirty (30) days thereafter; or (h) an assignment or sublease in violation of the terms of this Lease; or (i) any other event constituting an Event of Default under other Sections of this Lease.

 

Section 12.2                    Landlord’s Remedies.

 

(a)                                  Upon the occurrence of an Event of Default, Landlord may, immediately or at any time thereafter (notwithstanding any license or waiver of any former breach or waiver of the benefit hereof, or consent in a former instance), and without further demand or notice, in person or by agent or attorney, enter the Premises or any part thereof and repossess the same as of its former estate, or terminate this Lease by written notice to Tenant, and in either event expel Tenant and those claiming through or under it and remove their effects without being deemed guilty of any manner of trespass and without prejudice to any remedy which might otherwise be used for arrears of Base Rent or Additional Rent or breach of covenant, and upon entry or written notice of termination, or automatic termination, both as aforesaid, this Lease shall terminate and Landlord, in addition to all other remedies which it may have at law or equity, and not in limitation thereof, shall have the remedies provided in this Article XII.

 

(b)                                  If, pursuant to Section 12.2(a), Landlord terminates Tenant’s right of possession of the Premises without terminating this Lease, then Tenant shall pay to Landlord during the remainder of the Lease Term the Base Rent and Additional Rent in installments as and when the same become due and payable, subject to reduction by any rent actually received by Landlord as a result of a re-letting of the Premises (net of the reasonable and customary costs of re-letting, including remodeling costs, brokerage commissions and attorneys’ fees).  Landlord shall exercise commercially reasonable efforts to re-let the Premises to mitigate damages, and Landlord may re-let the Premises or any part or parts thereof, either in the name of Landlord or otherwise for a term or terms which may, at Landlord’s option, be less than or exceed the period which would otherwise have constituted the balance of the Lease Term and may grant concessions or free rent.  The good faith failure of Landlord to re-let the Premises or any part or parts thereof, or, if the Premises are re-let, the good faith failure to collect the rents due under such re-letting,

 

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shall not release or affect Tenant’s liability for damage so long as Landlord does not act arbitrarily or capriciously.  Any suit brought to collect the amount of the deficiency for any month or other period shall not prejudice in any way the right of Landlord to collect the deficiency for any subsequent month or period by a similar proceeding.  Landlord, at Landlord’s option, may make such alterations, repairs, replacements and decorations on the Premises as Landlord in Landlord’s sole but reasonable judgment considers advisable and necessary for the purpose of re-letting the Premises, and the making of such alterations or decorations shall not operate or be construed to release Tenant from liability hereunder.

 

(c)                                   If, pursuant to Section 12.2(a), Landlord terminates this Lease, Tenant shall forthwith pay to Landlord as damages, in addition to all sums which were due prior to the date of such termination, a sum equal to the amount by which the Base Rent and Additional Rent for the remainder of the Lease Term exceeds the fair rental value of the Premises for the remainder of the Lease Term, discounted to present value using a then market rate of interest as reasonably determined by Landlord.  For the purposes of computing damages payable pursuant to this Section 12.2(c), the Additional Rent with respect to Taxes, Insurance Costs and Operating Costs for the remainder of the Lease Term will be assumed to be the product of such Additional Rent for the most recently ended fiscal, calendar or lease year, as the case may be, times the number of years remaining of the Lease Term.

 

(d)                                  Tenant will be responsible to Landlord for all expenses which Landlord may incur in connection with the enforcement of Landlord’s rights after an Event of Default, including, without limitation, reasonable legal expenses, attorneys’ fees, brokerage fees, and the cost of putting the Premises in good order or preparing the same for rental.

 

(e)                                   Tenant shall not be liable for consequential damages under this Lease, except such as arise from a holdover by Tenant.  No Person executing this Lease on behalf of Tenant, nor any officer, director or employee of Tenant, shall have any personal liability hereunder.

 

Section 12.3                    Reimbursement of Landlord .  Upon the occurrence of an Event of Default, Tenant will, in addition to paying Landlord all amounts due under the terms and provisions of this Lease, including, without limitation, Section 12.9, reimburse Landlord for all reasonable expenses incurred by Landlord in collecting such rent or in obtaining possession of, or in re-letting the Premises, or in defending any action, including expenses for reasonable counsel fees and commissions.  Tenant further agrees that, if on termination of this Lease by expiration or otherwise, Tenant shall fail to remove any of its property from the Premises as provided for herein, Landlord shall be authorized, in its sole option, and in Tenant’s name and on its behalf, either (a) to cause such property to be removed and placed in storage for the account and at the expense of Tenant; or (b) to sell such property at public or private sale, with or without notice, and to apply the proceeds thereof, after the payment of all expenses of removal, storage and sale, to the indebtedness, if any, of Tenant to Landlord, the surplus, if any, to be paid to Tenant.  All sums payable by Tenant under this Article XII shall be deemed Additional Rent.

 

Section 12.4                    Landlord’s Right to Perform Tenant’s Covenants .  Tenant covenants and agrees that, if it shall at any time fail to make any payment or perform any other act on its part to be made or performed as in this Lease provided, Landlord, in its sole discretion may after due notice to, or demand upon, Tenant, make any payment or perform any other act on the part of Tenant to be made and performed as in this Lease provided, in such manner and to such extent as Landlord may reasonably deem desirable, and in exercising any such rights, Landlord may pay necessary and incidental costs and expenses, employ counsel, and incur and pay reasonable attorneys’ fees.  The making of any such payment or the performing of any other act by Landlord pursuant to this Article shall not waive, or release Tenant from, any obligations of Tenant in this Lease contained.  All sums so paid by Landlord and all reasonably necessary and incidental costs and expenses in connection with the performance of any such act by Landlord shall, except as otherwise in this Lease expressly provided, be payable to Landlord on

 

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demand, and Tenant covenants to pay any such sum or sums promptly, and Landlord shall have (in addition to any other right or remedy of Landlord) the same rights and remedies in the event of the non-payment thereof by Tenant as in the case of default by Tenant in the payment of the Base Rent.  Whenever practicable, Landlord, before proceeding as provided in this Section, shall give Tenant notice in writing of the failure of Tenant which Landlord proposes to remedy, and shall allow Tenant such length of time as may be reasonable in the circumstances, consistent with any grace periods contained herein, but not exceeding ten (10) Business Days from the giving of notice, to remedy the failure itself and, if Tenant shall not remedy the failure in the time so allowed, Landlord shall be deemed to have given “due notice” and may proceed as provided in this Section; provided, however, that nothing in this Section shall prevent Landlord from acting without notice to Tenant in case of any emergency wherein there is danger to property or person or where there may exist any violation of Legal Requirements including but not limited to the presence of Hazardous Materials, in which event no notice shall be required.

 

Section 12.5                    Cumulative Remedies .  The specified remedies to which Landlord may resort under the terms of this Lease, or under the provisions of applicable law, are cumulative and not intended to be exclusive of any other remedies or means of redress to which Landlord may be lawfully entitled in case of any breach or threatened breach by Tenant of any provisions of this Lease.  The failure of Landlord to insist in any one or more cases upon the strict performance of any of the covenants of this Lease or to exercise any option contained herein shall not be construed as a waiver or a relinquishment for the future of such covenant or option.  Receipt by Landlord of any Base Rent or Additional Rent payment with knowledge of the breach of any covenants hereof shall not be deemed a waiver of such breach.  No waiver by Landlord of any provision of this Lease shall be deemed to have been made unless expressed in writing and signed by it.  In addition to the other remedies provided in this Lease, landlord shall be entitled to restraint by injunction of any violation or attempted or threatened violation of any of the covenants, conditions or provisions of this Lease.

 

Section 12.6                    Expenses of Enforcement .  Tenant agrees to pay all reasonable expenses and reasonable attorneys’ fees incurred by Landlord in enforcing any obligation or any remedies hereunder including, without limitation, in connection with collection of Base Rent or Additional Rent, recovery by Landlord of the Premises, or in any litigation in which Landlord shall become involved by reason of any act or negligence of any of Tenant’s Invitees or any breach of this Lease by Tenant.  Landlord agrees to pay all reasonable expenses and reasonable attorneys’ fees incurred by Tenant in enforcing any obligation or any remedies hereunder including any litigation in which Tenant shall become involved by reason of any act or negligence of Landlord or any breach of this Lease by Landlord.

 

Section 12.7                    Landlord’s Default .  Landlord shall not be deemed to be in default hereunder unless such default shall remain uncured for more than thirty (30) days following written notice from Tenant to Landlord specifying the nature of such default, or such longer period as may be reasonably required to correct such default, provided that Landlord is diligently prosecuting such cure to completion.  In no event whatsoever shall Landlord be liable for consequential or any indirect damages.  The provisions of this Section are further subject to the provisions of Articles X and XI dealing with eminent domain and fire and other casualty, and Section 6.3 dealing with interruption of services.  If Landlord fails to cure any default by Landlord within the period provided above in this Section, Tenant may give Landlord an additional written notice confirming that the default has not been cured and that Tenant intends to cure such default, and, if Landlord fails to cure such default within ten (10) days after such notice, Tenant may, without waiving the default, take such steps as are reasonably appropriate to cure the default, recover from Landlord the reasonable cost of such cure, and, if Landlord concedes, or a court determines, Tenant’s right to recover such cost setoff such cost against the Base Rent and Additional Rent next coming due.  In no event shall Tenant have the right to terminate this Lease by reason of a default by Landlord, except as expressly provided herein.

 

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Section 12.8                    Limitation of Landlord’s Liability .  The obligations of Landlord hereunder shall be binding upon Landlord and each succeeding owner of Landlord’s interest hereunder only during the period of such ownership, and Landlord and each succeeding owner shall have no liability whatsoever except for its obligations during each such respective period.  Tenant hereby agrees for itself and each succeeding holder of Tenant’s interest, or any portion thereof, hereunder, that any judgment, decree or award for money damages obtained against Landlord or any succeeding owner of Landlord’s interest, which is in any manner related to this Lease, the Premises or Tenant’s use and occupancy of the Premises or the Common Areas, or the remainder of the Project, shall be satisfied out of Landlord’s equity in the land and buildings then comprising the Project to the extent then owned by Landlord and such succeeding owner, and further agrees to look only to such assets (or proceeds thereof or interest or profits therefrom) and to no other assets of Landlord, or such succeeding owner, for satisfaction.  Neither Landlord nor any Person executing this Lease on behalf of Landlord, nor any partner, limited or general, or any officer, director employee, member, trustee, beneficiary, or owner of Landlord, nor any subsequent Landlord, or any partner, limited or general, or any officer, director, employee, member, trustee, beneficiary, or owner of any subsequent Landlord shall have any personal liability hereunder.  The remedies provided to Tenant in this Lease are exclusive, and Landlord will not be liable under any theory of recovery, whether based on contract, tort or otherwise.

 

Section 12.9                    Late Payment and Administrative Expense .  If Tenant shall fail to pay Base Rent, Additional Rent or other charges after the same become due and payable under this Lease, such unpaid amounts shall bear interest from the due date thereof to the date of payment at the lesser of (a) a per annum rate equal to three percent (3%) plus the prime rate of Bank of America (or any successor) in effect on the day the payment became due and subject to change thereafter or (b) the maximum rate permitted by applicable law (“ Interest Payment ”).  In addition, if Landlord is required to redeposit any check which is returned for insufficient funds or if Tenant shall fail to pay Base Rent, Additional Rent or other charges on or before the date on which the same become due and payable, then Tenant shall also pay to Landlord an administrative expense charge (“ Administrative Expense ”) of five percent (5.0%) of the amount thereof for each calendar month or part thereof after the due date of such payment until such payment is received by Landlord.  The provisions herein for Interest Payment and Administrative Expense shall not be construed to relieve Tenant of the obligation to pay Base Rent, Additional Rent and all other charges when due under this Lease and shall be in addition to and not in limitation of Landlord’s other remedies as provided for in this Lease.  Notwithstanding the foregoing, during each calendar year of the Lease Term, Tenant shall be allowed one (1) grace period during which it shall not be required to pay the Interest Payment or the Administrative Expense provided it pays to Tenant all Base Rent and Additional Rent then due within five (5) days after written notice from Landlord.

 

ARTICLE XIII
MISCELLANEOUS PROVISIONS

 

Section 13.1                    Brokers .  Each party represents that it has not dealt with any Person in connection with the Premises or the negotiation or execution of this Lease other than officers, employees and attorneys of Landlord and Brokers.  Each party shall indemnify and save harmless the other from and against all claims, liabilities, costs and expenses incurred as a result of any breach of the foregoing representation.  The broker’s fees payable to Brokers for this Lease shall be payable by Landlord subject to and in accordance with the terms of a separate agreement between Landlord and Brokers.

 

Section 13.2                    Quiet Enjoyment .  Tenant shall, upon paying all Base Rent and Additional Rent due hereunder and observing and performing all of the terms, covenants and conditions on Tenant’s part to be observed and performed, peaceably and quietly have and hold the Premises without hindrance or molestation by any Person or Persons lawfully claiming by, through or under, Landlord, subject, however, to the terms of this Lease.

 

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Section 13.3                    Tenant’s Request for Landlord’s Action .  In the event that at Tenant’s request Landlord takes any action which is not required of Landlord pursuant to this Lease, Tenant shall pay as Additional Rent Landlord’s reasonable attorneys’ fees, expenses and disbursements in connection with such action, with payment to be made by Tenant within thirty (30) days after billing therefor by Landlord.  Landlord will give Tenant a good faith estimate of such costs of any such action prior to commencing such action.

 

Section 13.4                    Notices .  Any notice, demand, request or statement required or intended to be given or delivered under the terms of this Lease shall be in writing, shall be addressed to the party to be notified at the address or addresses set forth in the Summary of Basic Terms or at such other address in the continental United States as each party may designate for itself from time to time by notice hereunder, and shall be deemed to have been given, delivered or served upon the earliest of (a) three (3) days following deposit in the U.S. Mail, with proper postage prepaid, certified or registered, return receipt requested, (b) the next business day after delivery to a regularly scheduled overnight delivery carrier with delivery fees either prepaid or an arrangement, satisfactory with such carrier, made for the payment of such fees, or (c) receipt of notice given by telecopy or personal delivery.

 

Section 13.5                    Waiver of Subrogation .  Landlord and Tenant hereby release each other, to the extent of their respective insurance coverages, from any and all liability for any loss or damage caused by fire, any of the extended coverage casualties, or other casualties insured against, even if such fire or other casualty shall be brought about by the fault or negligence of the party benefited by the release or its agents, provided, however, this release shall be in force and effect only with respect to loss or damage occurring during such time as the policies of fire, extended coverage and other insurance, maintained by the releasing party shall contain a clause, or be subject to a statutory provision, to the effect that such release shall not affect said policies or the right of the releasing party to recover thereunder.  Each party agrees that its fire, extended coverage, and other insurance policies will include such a clause.  To the extent that Tenant is a self-insurer with respect to personal property, the provisions of Section 7.8 shall be applicable.

 

Section 13.6                    Entire Agreement; Execution; Time of the Essence and Headings and Table of Contents .  This Lease together with all Exhibits referred to herein and the Summary of Basic Terms, sets forth the entire agreement between the parties hereto and cannot be modified or amended, except in a writing duly executed by the respective parties.  This Lease, together with all Exhibits referred to herein and the Summary of Basic Terms, supersedes all previous written and oral negotiations, understandings and agreements regarding the subject matter of this Lease.  Neither Landlord nor any Person acting on behalf of Landlord has made any representations to Tenant on which Tenant has relied in entering into this Lease except any representations expressly stated in this Lease.  This Lease is executed as a sealed instrument and in multiple counterparts, all copies of which are identical, and any one of which is to be deemed to be complete in itself and may be introduced in evidence or used for any purpose without the production of any other copy.  Time is of the essence with respect to the obligations of Tenant and Landlord to be performed within a specific time frame in this Lease.  The headings throughout this Lease and the Table of Contents are for convenience of reference only, and shall in no way be held or deemed to define, limit, explain, describe, modify or add to the interpretation, construction or meaning of any provision of this Lease.

 

Section 13.7                    Partial Invalidity .  If any term or condition of this Lease or its application to any Person or circumstance shall to any extent be in violation of or unenforceable under any law, rule, regulation or order (including any court order) now existing or hereafter enacted or entered by any court or other governmental entity having competent jurisdiction (including after all appeals therefrom), the remainder of this Lease, or the application of such term or condition to Persons or circumstances other

 

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than those as to which it is invalid or unenforceable, shall not be affected thereby and shall be enforceable to the fullest extent not prohibited by law.

 

Section 13.8                    No Waiver .  No assent, express or implied, by Landlord to any breach of any agreement or condition herein contained on the part of Tenant to be performed or observed, and no waiver, express or implied, of any such agreement or condition shall be deemed to be a waiver of or an assent to any succeeding breach of the same or any other agreement or condition; the acceptance by Landlord of Base Rent or Additional Rent due hereunder (whether such payment is made by Tenant or another Person), or silence by Landlord as to any breach, shall not be construed as waiving any of Landlord’s rights hereunder unless such waiver shall be in writing.  No payment by Tenant or acceptance by Landlord of a lesser amount than shall be due Landlord from Tenant shall be deemed to be anything but payment on account, and the acceptance by Landlord of a check for a lesser amount with an endorsement or statement thereon, or upon a letter accompanying said check, that said lesser amount is payment in full shall not be deemed an accord and satisfaction, and Landlord may accept said check without prejudice to recover the balance due or pursue any other remedy.

 

Section 13.9                    Holdover .  If Tenant remains in the Premises beyond the expiration of this Lease at the end of the Lease Term, or sooner following an early termination as provided for herein, such holding over shall not be deemed to create any tenancy, but Tenant shall be a daily Tenant at sufferance only subject to all of Tenant’s obligations set forth herein, but at a Base Rent equal to one and one-half (1½) times the Base Rent then most recently in effect and Additional Rent and other charges provided for under this Lease, with such Base Rent and Additional Rent to be charged on a monthly basis for each calendar month or portion thereof for which Tenant holds over, without proration for a partial calendar month.  The acceptance of a purported rent check following termination shall not constitute the creation of a tenancy at will, it being agreed that Tenant’s status shall remain that of a daily Tenant at sufferance, at the aforesaid daily rate Tenant shall also pay to Landlord all damages, if any, sustained by reason of any such holding over.  Otherwise, such holding over shall be on the terms and conditions set forth in this Lease as far as applicable.

 

Section 13.10             When Lease Becomes Binding .  The submission of this document for examination and negotiation does not constitute an offer to lease or a reservation or an option for the Premises, and this document shall become effective and binding only upon the execution and delivery hereof by both Landlord and Tenant and the making of one-half of the Security Deposit by Tenant with Landlord in accordance with Section 2.5.  All negotiations, considerations, representations and understandings between Landlord and Tenant are incorporated herein and may be modified or altered only by agreement in writing between Landlord and Tenant, and no act or omission of any employee or agent of Landlord shall alter, change or modify any of the provisions hereof.

 

Section 13.11             Recordation .  Tenant shall not record this Lease with any registry of deeds or land court, and any such recordation will be void and constitute an Event of Default under this Lease.

 

Section 13.12             Financial Statements; Certain Representations and Warranties of Tenant .  No more than once per year, if requested by Landlord, Tenant shall provide to Landlord, any actual or potential mortgagee and any actual or potential ground lessor or any representative of any of the foregoing, copies of Tenant’s annual audited financial statements.  Tenant represents and warrants to Landlord, its successors and assigns that: (a) all financial statements of Tenant previously provided to Landlord (or available to Landlord on Tenant’s web site) have been prepared in accordance with GAAP (except for footnotes), were true, complete and correct as of their respective dates and fairly and accurately reflect the financial condition of Tenant; (b) there has been no material adverse change in the financial condition of Tenant subsequent to the date(s) of such financial statements; (c) all financial statements of Tenant as required to be provided to Landlord under this Section 13.12 after the dale hereof

 

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(or available to Landlord on Tenant’s web site) will be prepared in accordance with GAAP (except for footnotes), will be true, complete and correct as of their respective dates and will fairly and accurately reflect the financial conditions of the Tenant; (d) Tenant is a corporation organized and existing in good standing under the laws of the State of Delaware and is authorized to transact business in the Commonwealth of Massachusetts; (e) the execution, delivery and performance of this Lease by Tenant has been duly authorized; and (f) this Lease is valid and binding upon the Tenant and is enforceable against Tenant in accordance with the terms hereof.

 

Section 13.13             Confidentiality .  Tenant acknowledges that the terms under which Landlord has leased the Premises to Tenant, (including, without limitation, the rental rate(s), term and other financial and business terms, constitute confidential information of Landlord (“ Landlord’s Confidential Information ”).  Tenant covenants and agrees to keep Landlord’s Confidential Information confidential; provided, however, that (a) Landlord’s Confidential Information may be disclosed by Tenant to those of its stockholders, officers, employees, attorneys, accountants, lenders and financial advisors (collectively, “representatives”) who need to know such information in connection with Tenant’s lease, use and occupancy of the Premises and for financial reporting and credit related activities and in connection with a merger or sale of Tenant or substantially all of the assets of Tenant (it being understood that Tenant shall inform the representatives of the confidential nature of Landlord’s Confidential Information and that the representatives shall be directed by Tenant to treat Landlord’s Confidential Information confidentially in accordance with the terms of this Section), and (b) unless required by applicable law, any other disclosure of such information may only be made if Landlord consents in writing prior to any such disclosure.  Landlord acknowledges that, in connection with this Lease, Tenant is furnishing to Landlord information regarding Tenant and Tenant’s operations which is not a matter of public record and is not generally available to the public (“ Tenant’s Confidential Information ”).  Landlord covenants and agrees to keep Tenant’s Confidential Information confidential; provided, however, that (a) Tenant’s Confidential Information may be disclosed by Landlord to Landlord’s representatives who need to know such information in connection with Landlord’s business (it being understood that Landlord shall inform the representatives of the confidential nature of Tenant’s Confidential Information and that the representatives shall be directed by Landlord to treat Tenant’s Confidential Information confidentially in accordance with the terms of this Section), and (b) unless required by applicable law, any other disclosure of such information may only be made if Tenant consents in writing prior to any such disclosure.

 

Section 13.14             Summary of Basic Terms .  The Summary of Basic Terms which is affixed to this Lease sets forth certain basic terms and information which is thereafter referred to in the main text of this Lease.  Every reference to the Summary of Basic Terms, or to a particular item thereon, shall have the effect of incorporating the Summary, or the particular item thereof, into the main text of this Lease.

 

[Signature Page Follows]

 

39



 

Tenant and Landlord, each by its duly authorized officer, have signed this Lease as of the date first set forth above.

 

 

TENANT:

 

 

 

 

 

GENOCEA BIOSCIENCES, INC.

 

 

 

 

 

 

 

By:

/s/ Robert Farrell Jr.

 

Name:

Robert Farrell Jr.

 

Title:

VP Finance & Admin

 

 

Duly Authorized

 

 

 

 

 

 

 

LANDLORD:

 

 

 

 

TBCI, LLC, as Trustee of 100 Discovery Park Realty Trust

 

 

 

 

 

 

 

By:

/s/ Robert A. Schlager

 

Name:

Robert A. Schlager

 

Title:

Treasurer of

 

 

Duly Authorized

 



 

EXHIBIT A-1

 

PROPERTY DESCRIPTION (PROJECT)

 



 

EXHIBIT A-I

 

Building 35 Property Parcel 1/Lot 1 on the Survey

 

Four contiguous parcels of Land (the last two being registered land) situated on the Northerly side of said Acorn Park as follows:

 

PARCEL 1

 

SOUTHERLY: by Acorn Park by three lines measuring respectively 121.70 feet, 205.26 feet and 98.84 feet;

 

WESTERLY: by land of Marshall B. Dalton and others, trustees, 193.45 feet;

 

NORTHERLY: by Lot Y4 as shown on the plan hereinafter mentioned by two lines measuring respectively 119 feet and 15.48 feet;

 

NORTHEASTERLY: 45.38 FEET;

 

NORTHWESTERLY: again, 295.58 feet, said last two lines being along land of Marshall B. Dalton and others, Trustees, shown on said plan as a parcel containing 7,001 square feet, and being the Parcel 2 herein described;

 

NORTHERLY: again, by Lot 337 as shown on said plan, 37.27 feet; and

 

EASTERLY: by land now or late of New England Mutual Life Insurance Company, 329.27 feet.

 

Said parcel is shown on a “Plan of Land in Cambridge and Arlington, Massachusetts”, dated Aug. 17, 1958, by William S. Crocker, Inc., Civil Engineers, recorded with said Deeds as Plan No. 251 of 1957, in Book 8915, Page 81, and the same contains according to said Plan 119,627 square feet.

 

Excepting that portion of Lot 1 designated as “Proposed Building 100 Ground Lease Area” as shown on a plan entitled “Cambridge Discovery Park in Cambridge, Massachusetts - Building 100 Ground Lease Plan”, prepared by BSC Group, Inc., dated February 7, 2005, a copy of which is attached to the Notice of Lease dated March 22, 2005, between BHX, LLC, as Trustee of Acorn Park Holdings Realty Trust, as landlord, and BHX, LLC, as Trustee of 100 Discovery Park Realty Trust, as tenant, which was recorded with the Middlesex South Registry of Deeds on March 31, 2005 as Instrument No. 83766, and filed with the Middlesex South Registry District of the Land Court as Document No. 1369427.

 

PARCEL 2/Lot 2 on the Survey

 

SOUTHWESTERLY: 45.38 feet;

 

SOUTHEASTERLY: 295.58 feet; said last two lines being along land now or formerly of Marshall B. Dalton and others, Trustees, shown on said plan as land of West Cambridge Trust, and being the First Parcel herein described;

 

NORTHERLY: by Lot 342 as shown on Land Court Subdivision Plan 4351z, being Parcel 3 herein described, by two lines measuring respectively 60.73 feet and 123.34 feet;

 

NORTHWESTERLY: by Lot 340 as shown on Land Court Subdivision Plan 4351 Y, being Parcel 4 herein described, 81.98 feet;

 



 

NORTHWESTERLY: more WESTERLY by Lot Y3 as shown on Land Court Subdivision Plan 4351x, 64.19 feet;

 

Said parcel shown on said plan dated August 17, 1956 as the parcel containing 7001 square feet.

 

PARCEL 3/Lot 3 on the Survey

 

NORTHERLY: on land now or late of Bolton, being Lot 341 on Land Court Subdivision Plan 4351z, 236.14 feet;

 

SOUTHERLY: by what was known as the Northerly line of Alewife Brook Parkway, being Parcel 2 herein described, by two lines measuring respectively 60.73 feet and 123.34 feet; and

 

SOUTHWESTERLY: by Lot 340 as shown on said Plan, being Parcel 4 herein described, 61.13 feet.

 

Said parcel is shown as Lot 342 on said Subdivision Plan 4351z, filed in the South Registry District of Middlesex County with Certificate of Title No. 97885 and comprises the premises described in said Certificate of Title.

 

PARCEL 4/Lot 4 on the Survey

 

SOUTHERLY: by what was known as the Northerly line of Alewife Brook Parkway, being Parcel 2 herein described, 81.98 feet;

 

NORTHWESTERLY: Lots Y3 and Y2 as shown on Plan hereinafter mentioned, 54.61 feet; and

 

NORTHEASTERLY: by Lot 339 on said Plan, a portion of which comprises Parcel 3 herein described 61.13 feet.

 

Said parcel is shown as Lot 340 on Subdivision Plan 4351y filed in said Registry District with Certificate of Title No. 93873, and comprises the premises described in said Certificate of Title.

 

The aforesaid four contiguous parcels are shown as Lot 1 containing 119, 627± square feet; Lot 2 containing 7,001± square feet; Lot 3 containing 2,912± square feet; and Lot 4 containing 1.634± square feet respectively on a plan entitled “Plan of Land in Arlington, Belmont and Cambridge, Massachusetts prepared for Arthur D. Little, Inc. by Boston Survey Consultants” dated October 31, 1978 and recorded with the Middlesex South Registry of Deeds as Plan No. 338 of 1978 In Book 13674, Page End (the “Master Plan”).

 

Buildings 20, 20A and 32 Property

 

PARCEL 5/Lot 7 on the Survey

 

A certain parcel of land situated on the Southerly and Easterly sides of Acorn Park and at the Southeasterly corner of Acorn Park and Concord Turnpike, partly in Cambridge and partly in Arlington, both in Middlesex County, Massachusetts, with the buildings thereon situated and bounded as described as follows:

 

NORTHERLY: by Acorn Park by three lines measuring respectively 39.63 feet, 209.61 feet and 289.03 feet;

 

WESTERLY: by said Acorn Park by two lines measuring respectively 309.53 feet and 63.35 feet;

 



 

NORTHWESTERLY: on the junction of Acorn Park and Concord Turnpike by a curved line having a radius of 30 feet, 50.79 feet;

 

NORTHERLY: again, on Concord Turnpike 39.67 feet,

 

SOUTHERLY: by land of the Commonwealth of Massachusetts, 66.17 feet;

 

EASTERLY: by the same land by two lines measuring respectively about 390 feet and 225.70 feet;

 

SOUTHERLY: again, by the same land, by three lines measuring respectively 239.60 feet, 282.46 feet, and 58.57 feet;

 

WESTERLY: again, by land now or late of Kingman and others, Trustees, 113.12 feet;

 

NORTHERLY: by land late of New England Mutual Life Insurance Company, 159.96 feet; and

 

WESTERLY: again, by the same land, 125 feet.

 

Said premises comprise a portion of the premises shown on the following three plans; one dated May 4, 1953, by William S. Crocker, Civil Engineer, recorded with Middlesex South District Deeds, Book 8110, Page 322, as Plan #1334 of 1953; one dated August 17, 1956, by William S. Crocker, Inc. Civil Engineer, recorded with said Deeds, Book 8915, Page 81, as Plan #251 of 1957; and one dated December 10, 1959, by William S. Crocker, Inc., recorded with said Deeds, Book 9608, Page 81, as Plan #843 of 1960, and said premises contain according to said plans about 125,497 square feet.

 

The aforesaid parcel is shown as Lot 7 containing 125,504± square feet on the Master Plan.

 

Building 25 Property

 

PARCEL 6/Lot 12 on the Survey

 

A certain parcel of land with the buildings thereon situated on the Northerly side of Acorn Park, in Cambridge, Middlesex County, Massachusetts, bounded and described as follows:

 

SOUTHERLY: by Acorn Park by two lines measuring respectively 52.86 feet and 77.15 feet,

 

WESTERLY: by land now or formerly of New England Mutual Life Insurance Company 126.34 feet;

 

NORTHERLY: by the same land, 130 feet; and

 

EASTERLY:  by the same land, 125 feet.

 

Said premises are shown on a plan marked “Plan of Land in Cambridge, Mass.” dated Dec. 10, 1959, Revised Feb. 26, 1960, by William S. Crocker, Inc., recorded with Middlesex South District Deeds, Book 9608, Page 67, and contain according to said plan, 16,285 square feet

 

The aforesaid parcel is shown as Lot 12 containing 16,285 + square feet on the Master Plan.

 

Three parcels of land situated on either side of Acorn Park (the first two of said parcels are contiguous) bounded and described as follows:

 



 

PARCEL 7/Lot 13 on the Survey

 

A certain parcel of land with the buildings thereon situated on Concord Turnpike and on Acorn Park, partly in Cambridge and partly in Arlington, both Middlesex County, Massachusetts, bounded and described as follows:

 

NORTHERLY: on Concord Turnpike, 1.83 feet;

 

NORTHEASTERLY: on the junction of Concord Turnpike and Acorn Park by a curved line having a radius of 30 feet measuring 43.45 feet;

 

EASTERLY: on Acorn Park 327.98 feet;

 

SOUTHEASTERLY: on the same by a curved line having a radius of 30 feet measuring 39.41 feet;

 

SOUTHERLY: on the same 323.47 feet;

 

WESTERLY: on other land now or formerly of Gerald W. Blakeley, Jr. et als, Trustees, 329.27 feet;

 

NORTHERLY: on registered land of now or formerly Marshall B. Dalton and others, Trustees, being Lot 337 as shown on Land Court Subdivision Plan 4351 W and a part of Lot F as shown on Land Court, Subdivision Plan 4351 L, by two lines measuring respectively 336.51 feet and 99.75 feet; and

 

WESTERLY: on the same land 43.45 feet.

 

Said parcel is shown on a plan designated “West Cambridge Industrial Center, Arlington and Cambridge, Mass.” dated May 4, 1953, by William S. Crocker, Civil Engineer, recorded with said Deeds in Book 8110, Page 322, as Plan No. 1334 of 1953, and contains according to said plan, 135,000 square feet.

 

Excluded from said Parcel 7 hereinabove described Is a certain parcel of land with the buildings thereon situated on the Southerly side of Acorn Park, in Cambridge, Middlesex County, Massachusetts, bounded and described as follows (and being shown as Lot 12 on the survey).

 

SOUTHERLY: by Acorn Park by two lines measuring respectively 52.86 feet and 77.15 feet;

 

WESTERLY: by land now or formerly of New England Mutual Life insurance Company 126.34 feet;

 

NORTHERLY: by the same land, 130 feet: and

 

EASTERLY: by the same land, 125 feet.

 

Said premises are shown on a plan marked, “Plan of Land in Cambridge, Mass.” dated Dec. 10, 1959, Revised Feb 26, 1960, by William S. Crocker, Inc., recorded with Middlesex South District Deeds, Book 9608, Page 67, and contain according to said plan 16,285 square feet.

 

PARCEL 8/Lot 14 on the Survey

 

A parcel of land with the buildings thereon situated on Concord Turnpike, partly in Arlington and partly in Cambridge both in Middlesex County, Massachusetts, bounded and described as follows:

 

NORTHEASTERLY: by the Southwesterly line of Concord Turnpike, 408.79 feet,

 



 

EASTERLY: by land formerly of Herbert F. Allen and now of New England Mutual Life Insurance Company, 43.45 feet;

 

SOUTHERLY: by what was formerly land of the Commonwealth of Massachusetts and in part land now or formerly of said New England Mutual Life insurance Company and land now or formerly of Gerald W. Blakeley, Jr and others Trustees, 473.53 feet; and

 

NORTHWESTERLY: by lot 338 as shown on the plan hereinafter mentioned, 222 feet.

 

Said parcel is shown as Lot 337 on said plan.

 

All of said boundaries are determined by the Land Court to be located as shown on a subdivision plan, as approved by the Land Court, filed in the Land Registration Office, a copy of a portion of which numbered 4351W is filed in the South Registry District of Middlesex County with Certificate of Title No. 81357 in Registration Book 537, Page 7, being the same premises described in Certificate of Title No. 81357 in said Registry District.

 

PARCEL 9/Lot 15 on the Survey

 

A parcel of land situated on the Southerly side of Acorn Park in Cambridge, Middlesex County, Massachusetts, bounded and described as follows:

 

NORTHERLY: by Acorn Park, 160 feet;

 

EASTERLY: by other land now or formerly of Marshall B. Dalton et al, Trustees, 125 feet;

 

SOUTHERLY: by the same land, 159.96 feet; and

 

WESTERLY: by land now or late of Kingman and others Trustees 125 feet.

 

Said premises are shown on a plan marked “Plan of Land in Cambridge, Mass.” dated Dec. 10, 1959, by William S. Crocker, Inc. recorded with said Deeds in Book 9608, Page 81, as plan 843 of 1960 and contain 19,189± square feet according to said plan.

 

The aforesaid three parcels are shown as Lot 13 containing 118,715± square feet Lot 14 containing 49,972 + square feet; and Lot 15 containing 19,189 + square feet, respectively on the Master Plan.

 

Two contiguous parcels of land situated on the Southerly side of Acorn Park in Cambridge, Middlesex County, Mass., bounded and described as follows:

 

PARCEL 10/Lot 5 on the Survey

 

A parcel of land on the Southerly side of Acorn Park (formerly called Burton Street) in said Cambridge shown on Plan of West Cambridge Industrial Center, Arlington and Cambridge, Massachusetts, dated May 4, 1953 by William S. Crocker, Civil Engineer, said Plan being recorded with said Deeds Book 8110, Page 322, bounded and described as follows:

 

NORTHERLY: on Acorn Park (as laid out and shown on said Plan which layout has since been changed Northerly of its location on said Plan) 91.35 feet.

 

EASTERLY: on land now or formerly of Eugene A. Kingman, et al Trustees 219.72 feet;

 


 

SOUTHERLY:  on land of the Commonwealth of Massachusetts, 91.43 feet; and

 

WESTERLY: on the same 218.82 feet.

 

Containing according to said Plan 19,950 feet.

 

PARCEL 11/Lot 6 on the Survey

 

A parcel of land in said Cambridge bounded and described as follows:

 

Beginning at a point in the western end of Acorn Park, thence running by a line in Acorn Park as now laid out south 89° 26’ 46” East a distance of 85.15 feet;

 

thence about easterly by a curved line with a radius of 2168.28 feet, by a line in Acorn Park, as now laid out, a distance of 209.61 feet;

 

thence turning and running southwesterly by the southeasterly line of Acorn Park, as now laid out and by land now or formerly of Marshall B. Dalton et als, Trustees, a distance of 287.36 feet

 

thence turning and running north 16° 22’ 16” west by land now or formerly of the Commonwealth of Massachusetts and the end of Acorn Park as now laid out, a distance of 38.10 feet to the point of beginning.

 

Said parcel is shown on plan designated “Plan of Land in Cambridge, Massachusetts” August 17, 1956, by William S. Crocker, Inc., Civil Engineer, recorded with said Deeds, Book 8915, Page 81 and contains according to said Plan, 3,727 square feet

 

Excluded however, from Parcel 11 hereinabove described is a portion of which is bounded and described as follows:

 

A triangular parcel of land situated on the Southerly side of said Acorn Park bounded and described as follows:

 

NORTHEASTERLY: by said Acorn Park, 199.84 feet

 

SOUTHERLY: by a lot containing 18,016 square feet of land on a plan hereinbelow referred to, being land now or formerly of Marshal B. Dalton et als, Trustees, 195.99 feet; and

 

WESTERLY: by the remainder of the second parcel above described being a lot containing 2,541 square feet shown on the plan hereinafter mentioned, 18.40 feet.

 

Said parcel is shown on a plan entitled “Plan of Land in Cambridge, Mass.” dated Dec. 10, 1959 by William S. Crocker, Inc. recorded with said Deeds Book 9608, Page 81 and containing according to said plan, 1,179 square feet more or less.

 

The aforesaid parcels 10 and 11 are shown as Lot 5 containing 19,950 square feet and Lot 6 containing 2,541 + square feet respectively on the Master Plan.

 

PARCEL 12/Lot 8 on the Survey

 

SOUTHEASTERLY: by land now or formerly of the Commonwealth of Massachusetts — Metropolitan District Commission — Alewife Brook Parkway, 460.82, feet;

 



 

SOUTHERLY: by Lot 1 as shown on plan hereinafter mentioned 120.64 feet;

 

WESTERLY: by land now or formerly of Lancaster H. Heustis, 637.31 feet; and

 

NORTHEASTERLY: by land now or formerly of First National Stores, Inc. and of Franklin Wyman et al., 712.37 feet.

 

Said parcel is shown as Lot 2 on said Plan (Land Court Plan No. 25650B).

 

All of said boundaries are determined by the Court to be located as shown on a subdivision plan, as approved by the Court, filed in the Land Registration Office, a copy of which is filed in the Registry of Deeds for the South Registry District of Middlesex County in Registration Book 592, Page 155, which Certificate 92505.

 

Excepting that portion of Lot 8 designated as “Proposed Building 100 Ground Lease Area” as shown on a plan entitled “Cambridge Discovery Park in Cambridge, Massachusetts - Building 100 Ground Lease Plan”, prepared by BSC Group, Inc., dated February 7, 2005, a copy of which is attached to the Notice of Lease dated March 22, 2005, between BHX, LLC, as Trustee of Acorn Park Holdings Realty Trust, as landlord, and BHX, LLC, as Trustee of 100 Discovery Park Realty Trust, as tenant, which was recorded with the Middlesex South Registry of Deeds on March 31, 2005 as Instrument No. 63766, and filed with the Middlesex South Registry District of the Land Court as Document No. 1369427.

 

PARCEL 13/Lot 9 on the Survey

 

SOUTHERLY: by the Northerly line of Alewife Brook Parkway, 134.48 feet;

 

SOUTHWESTERLY: by land now or formerly of Henry O. Cushman, 111.64 feet;

 

NORTHWESTERLY: by lot P as shown on plan hereinafter mentioned, 57.83 feet; and

 

NORTHEASTERLY: by lot Y3 on said plan.

 

Said parcel is shown as Lot Y4 on said plan (Land Court Plan No. 4351X).

 

Excepting that portion of Lot 9 designated as “Proposed Building 100 Ground Lease Area” as shown on a plan entitled “Cambridge Discovery Park In Cambridge, Massachusetts - Building 100 Ground Lease Plan”, prepared by BSC Group, Inc., dated February 7, 2005, a copy of which is attached to the Notice of Lease dated March 22, 2005, between BHX, LLC, as Trustee of Acorn Park Holdings Realty Trust, as landlord, and BHX, LLC, as Trustee of 100 Discovery Park Realty Trust, as tenant, which was recorded with the Middlesex South Registry of Deeds on March 31, 2005 as Instrument No. 63766, and filed with the Middlesex South Registry District of the Land Court as Document No. 1369427.

 

Together with the right to use the right of way over a strip of said Lot Y3 twenty feet in width located along the southerly and southeasterly boundary of said Lot Y-3 so as to permit ingress to and egress from said Lot Y-4 over the twenty foot right of way leading from Lot Y-3 to the Concord Turnpike, as set forth in Document No. 280072, and shown on Land Court Plan No. 4351X.

 

PARCEL 14/Lot 10 on the Survey

 

SOUTHERLY: by the Northerly line of Alewife Brook Parkway 64.19 feet;

 

SOUTHWESTERLY: by Lot Y4 as shown on said plan hereinafter mentioned, 195.60 feet;

 



 

NORTHWESTERLY: by Lot P on said plan, 100 feet;

 

NORTHEASTERLY: by Lot W and X1 on said plan, 160.98 feet,

 

SOUTHEASTERLY: 25 feet;

 

NORTHEASTERLY: 80 feet, by Lot Y2 on said plan; and

 

SOUTHEASTERLY: by Lot 338 on said plan, 29.61 feet.

 

Said parcel is shown as Lot Y3 on said plan.  (Plan No 4351x).

 

All of said boundaries are determined by the Court to be located as shown on a subdivision plan, as approved by the Court, filed in the land Registration Office, a copy of which is filed in the Registry of Deeds for the South Registry District of Middlesex County in Registration Book 537, Page 6, with Certificate 81356.

 

The right and easement, appurtenant to the above-described premises (Lot Y3on Land Court Plan No. 4351 X) to use the right of way over the twenty foot way leading from Lot Y-3 to the Concord Turnpike as set forth in Document No. 255039 and shown on Plan No 4351 U.

 

PARCEL 15/Lot 11 on the Survey

 

That parcel beginning at a point in Cambridge in the Westerly boundary of land now or late of Gerald W. Blakeley, Jr., et al, Trustees, distant 193.45 feet on bearing south 16°22’16” East from the easterly corner of land now or late of Marshall B.  Dalton, et al, Trustees (Land Court Case No. 25650);

 

Thence running north 89°26’46” west by land now or formerly of the Commonwealth of Massachusetts a distance of 478.21 feet to land now or later of said Dalton, et al, trustees;

 

Thence turning and running in a northeasterly direction by a line with a radius of 5453.83 feet, a distance of 383.87 feet to a point;

 

Thence turning slightly and running north 65°11’23” east a distance of 76.95 feet to a point;

 

Thence turning and running south 16°22’16” east, a distance of 193.45 feet to the point of beginning, containing 42,868 square feet according to said plan.

 

Excepting that portion of Lot 11 designated as “Proposed Building 100 Ground Lease Area” as shown on a plan entitled “Cambridge Discovery Park in Cambridge, Massachusetts - Building 100 Ground Lease Plan”, prepared by BSC Group, Inc., dated February 7, 2005, a copy of which is attached to the Notice of Lease dated March 22, 2005, between BHX, LLC, as Trustee of Acorn Park Holdings Realty Trust, as landlord, and BMX, LLC, as Trustee of 100 Discovery Park Realty Trust, as tenant, which was recorded with the Middlesex South Registry of Deeds on March 31, 2005 as Instrument No. 63766, and filed with the Middlesex South Registry District of the Land Court as Document No. 1369427.

 

PARCEL 16/Lot X1 on the Survey

 

That certain parcel of land situated in Cambridge in the County of Middlesex and said Commonwealth, bounded and deserted as follows:

 

SOUTHEASTERLY: by Lot F as shown on plan hereinafter mentioned, 135 feet;

 



 

SOUTHWESTERLY: 80 feet; and

 

SOUTHEASTERLY: 15 feet, by Lot X-2 on said plan;

 

SOUTHWESTERLY: by Lot Y-1 on said plan, 90 feet;

 

NORTHWESTERLY: by Lot W on said plan, 150 feet; and

 

NORTHEASTERLY: by Lots R and Q on said plan, 170 feet.

 

Said parcel is shown as Lot X-1 on said plan.

 

All of said boundaries are determined by the Court to be located as shown on a subdivision plan, as approved by the Court, filed in the land Registration Office, a copy of which is filed in the Registry of Deeds for the South Registry District of Middlesex County in Registration Book 530, Page 158, with Certificate 80108 (Plan 4351V).

 

Together with the right to use the right of way twenty feet wide and one hundred eight feet long extending northwesterly from the said premises to the State Highway as shown on Land Court Plan 4351V in common with others entitled thereto, for all purposes for which private ways are commonly used in the City of Cambridge.

 

PARCEL 17/Lot W on the Survey

 

Also another certain parcel of land situated in said Cambridge, bounded and described as follows:

 

SOUTHWESTERLY: by Lot Y as shown on plan hereinafter mentioned, 70.98 feet;

 

NORTHWESTERLY: by Lot P on said Plan, 150 feet;

 

NORTHEASTERLY: by Lot Ron said plan, 70.98 feet; and

 

SOUTHEASTERLY: by Lot X on said plan, 150 feet.

 

Said parcel is shown as Lot W on said plan.

 

All of said boundaries are determined by the Court to be located as shown on a subdivision plan, as approved by the Court, filed in the land Registration Office, a copy of which is filed in the Registry of Deeds for the South Registry District of Middlesex County in Registration Book 495, Page 381, with Certificate 74199 (Plan 4351 U).

 

PARCEL 18/Acorn Park Drive

 

The right and easement, appurtenant to Parcels 1-17, inclusive, and Parcels 19, 20 and 22, described in this Exhibit A, to use that portion of Acorn Park Road, owned by AP Cambridge Partners II LLC and located partly in Cambridge and partly in Belmont for access to and from Frontage Road A (a public way) to and from the insured premises on foot and by vehicle and for all purposes for which streets may be used in Cambridge and Belmont, for utilities and for flowage all as set forth in and in accordance with the terms and conditions of that certain document entitled “Declaration, Amendment and Restatement of Easements”, dated November 17, 2000 and filed as Document No. 1155607, and recorded on November 17, 2000 in Book 32042, Page 496.

 



 

PARCEL 19/No. 243 Concord Turnpike

 

All that certain tract or parcel of land with the improvements thereon lying, situate and being in Middlesex County, Massachusetts and being more particularly described as follows:

 

A certain parcel of land situate on the State Highway, sometimes called the Concord Turnpike, in said Cambridge, bounded and described as follows:

 

NORTHEASTERLY: on said State Highway, two hundred (200) feet;

 

NORTHWESTERLY: on the boundary line between Cambridge and Belmont, three hundred and twenty (320) feet more or less;

 

SOUTHWESTERLY: on the brook, two hundred and fifty-three (253) feet more or less; and

 

SOUTHEASTERLY: on land now or late of Dutchland Farms, Inc., three hundred and forty (340) feet more or less; containing one and 68/100 (1 68/100) acres and being shown as Lot C on a plan by Fred A. Joyce, Surveyor, dated November 9, 1936, and recorded with the Middlesex South Registry of Deeds in Book 6079, Page 253.

 

PARCEL 20/Lot 16 on the Survey

 

A parcel of land situate in the City of Cambridge, County of Middlesex, Commonwealth of Massachusetts and more particularly bounded as follows:

 

SOUTHERLY: by Lot No. 6, 189.42 feet;

 

SOUTHWESTERLY: by the same, 424.14 feet;

 

WESTERLY: by the same, 208.10 feet:

 

NORTHWESTERLY: by the same, 318.00 feet;

 

NORTHEASTERLY: by Lot No. 243, 253.94 feet.

 

NORTHERLY: by land now or formerly Ferdinand F. Martignetti, et al, 78.77 feet; and

 

EASTERLY: by Lot No 2, 633.29 feet.

 

Said parcel is shown as Lot 5 on that certain subdivision plan entitled “Land Court Subdivision Plan of Land in Cambridge/Belmont Massachusetts Middlesex County October 24, 2000”, and prepared by the BSC Group, filed as Land Court Plan No. 20345-G, a copy of which is on file at the office of the Land Court Engineers containing 6.61 acres, more or less.

 

PARCEL 21/As shown on the Survey

 

Title in and to the fee of that portion of Acorn Park in Arlington lying between Lots 7 and 13 as shown on the Master Plan.  (Being also Lots 7 and 13 as shown on the Survey)

 



 

PARCEL 22:

 

Lot X2/Y2

 

Two (2) parcels of land situated off Concord Turnpike (Route 2) in the City of Cambridge, Middlesex County, Massachusetts

 

Lot X 2

 

Southeasterly by lot F as shown on plan hereinafter mentioned, fifteen feet,

 

Southwesterly by lot Y2 on said plan, eighty feet; and

 

Northwesterly, fifteen feet, and

 

Northeasterly, eighty feet, by lot X1 on said plan

 

Said parcel is shown as lot X2 on said plan.

 

All of said boundaries are determined by the Court to be located as shown on a subdivision plan, as approved by the Court, filed in the Land Registration Office, a copy of which is filed in the Registry of Deeds for the South Registry District of Middlesex County in Registration Book 530, Page 158, with Certificate No. 80108 (Land Court Plan 4351V).

 

Parcel II (Lot Y 2)

 

Southeasterly by lot F as shown on plan hereinafter mentioned, twenty-five feet,

 

Southwesterly, eighty feet, and

 

Northwesterly, twenty-five feet, by lot Y1 on said plan; and

 

Northeasterly by lot X2 on said plan, eighty feet.

 

Said parcel is shown as lot Y2 on said plan.

 

All of said boundaries are determined by the Court to be located as shown on a subdivision plan, as approved by the Court, filed in the Land Registration Office, a copy of which is filed in the Registry of Deeds for the South Registry District of Middlesex County in Registration Book 530, Page 158, with Certificate No 80108 (Land Court Plan 4351V).

 

PARCEL 23:

 

The rights and easements, appurtenant to the Parcels described in this Exhibit A, as set forth in that certain DECLARATION OF EASEMENTS, COVENANTS, CONDITIONS AND RESTRICTIONS FOR CAMBRIDGE DISCOVERY PARK by BHX, LLC, as Trustee of Acorn Park Holdings Realty Trust, dated March 22, 2005, and recorded with the Middlesex South County Registry of Deeds on March 31, 2005 in Book 44910, Page 58, and filed with said Registry District as Document No 1369429.

 



 

EXHIBIT A-2

 

PROPERTY DESCRIPTION (PARCEL 100)

 



 

EXHIBIT A-2

 

BUILDING 100 GROUND LEASE AREA

 

A certain parcel of land situated on the northerly side of Acorn Park Drive in the City of Cambridge, in the County of Middlesex, Commonwealth of Massachusetts, bounded and described as follows:

 

Beginning at a point in the northerly line of Acorn Park Drive, said point lying S 89° 27’ 22” E a distance of two hundred eighteen and eighty-seven hundredths (218.87) feet from the most southeasterly corner of Parcel 12 / Lot 8 as shown on a plan referenced below, thence

 

N 00° 00’ 00” E a distance of severity-seven and twenty-four hundredths (77.24) feet to a point; thence

 

N 31° 27’ 14” E a distance of one hundred twenty-three and fifty-one hundredths (123.51) feet to a point; thence

 

NORTHEASTERLY and curving to the right along the arc of a curve having a radius of eighty-two and no hundredths (82.00) feet, a length of sixty-seven and eighteen hundredths (67.18) feet to a point; thence

 

NORTHEASTERLY and curving to the right along the arc of a curve having a radius of eight hundred eighty-four and no hundredths (884.00) feet, a length of one hundred thirty-five and thirty hundredths (135.30) feet to a point; thence

 

S 00° 00’ 00” W a distance of ninety-four and ninety hundredths (94.00) feet to a point on the northerly face of Proposed Building 100; thence

 

N 90° 00’ 00” E a distance of fourteen and no hundredths (14.00) feet to a point at the northeast corner of Proposed Building 100; thence

 

S 00° 00’ 00” W a distance of one hundred forty-four and seventy-six hundredths (144.76) feet in part by the easterly face of Proposed Building 100; thence

 

N 89° 27’ 22” W a distance of two hundred sixty-six and one hundredth (266.01) feet to the point of beginning, the previous course bounding on Acorn Park Drive as shown on plan hereafter mentioned.

 

The above described parcel of land contains an area of 52,656 S.F., more or less and is more particularly shown on a plan entitled:  “Cambridge Discovery Park in Cambridge Massachusetts — Building 100 Ground Lease Plan”, prepared by The BSC Group, Inc. and dated February 7, 2005, Dwg. No. 2467-21, a copy of which is attached to the Notice of Lease dated March 22, 2005, between BHX, LLC, as Trustee of Acorn Park Holdings Trust, as landlord and BHX, LLC as Trustee of 100 Discovery Park Realty Trust, as tenant which was recorded on March 31, 2005, in Book 44910, Page 119, and filed as Document No. 1369427.

 

Parcel II:

 

The right and easement, appurtenant to Parcel I, described in this Exhibit A, to use Acorn Park Road, a private way, now or formerly owned by AP Cambridge Partners II LLC, and located partly in Cambridge and partly in Belmont for access to and from Frontage Road A (a public way) to and from the insured premises on foot and by vehicle and for all purposes for which streets may be used in Cambridge and Belmont, for utilities and for flowage all as set forth in and in accordance with the terms and conditions of that certain document entitled “Declaration, Amendment and Restatement of Easements”, dated November 17, 2000, and filed as Document No. 1155607, and recorded on November 17, 2000, as Instrument No. 1138, in Book 32042, Page 496.

 



 

Parcel III:

 

The right and easement, appurtenant to Parcel I described in this Exhibit A, to use that portion of the road or way known as Acorn Park, which is private and located in Arlington, for access to and from the insured premises on foot and by vehicle and for all purposes for which streets may be used in Arlington, and for utilities installation.

 

Parcel IV:

 

The rights and easements, appurtenant to Parcel I described in this Exhibit A, as set forth in that certain DECLARATION OF EASEMENTS, COVENANTS, CONDITIONS AND RESTRICTIONS FOR CAMBRIDGE DISCOVERY PARK by BHX, LLC, as Trustee of Acorn Park Holdings Realty Trust, dated March 22, 2005, and recorded on March 31, 2005, in Book 44910, Page 58, and filed as Document No. 1369429.

 



 

EXHIBIT B

 

SITE PLAN

 


 

 


 

EXHIBIT C

 

BUILDING FLOOR PLAN (FIFTH FLOOR)

 



 

 



 

EXHIBIT C-1

 

BUILDING FLOOR PLAN (FIRST FLOOR)

 


 

 


 

EXHIBIT D

 

RULES AND REGULATIONS

 

TBCI, LLC, as Trustee of 100 Discovery Park Realty Trust, and BHX, LLC, as Trustee of Acorn Park I Realty Trust (collectively, “ Landlord ”), hereby promulgate the rules and regulations (the “ Rules and Regulations ”) set forth below with respect to the use of the buildings (the “ Buildings ”) and related amenities located at and known as Cambridge Discovery Park, Cambridge, Massachusetts (the “ Property ”) by tenants (collectively, the “ Tenants ,” and individually, a “ Tenant ”) of the Buildings.  Any space within the Buildings leased by a Tenant is called “Premises.”  The Rules and Regulations are as follows:

 

1.                                       Sidewalks, doorways, vestibules, stairways, elevators, corridors, halls and other similar areas within the common areas of the Property (the “ Common Areas ”) shall not be obstructed by any Tenant or used for any purpose other than ingress and egress to and from the portion of the Property leased by the applicable Tenant and for going from one part of the Property to another part of the Property.

 

2.                                       Except for any signs approved by Landlord, no sign, advertisement, notice or other lettering shall be exhibited, inscribed, painted or affixed by a Tenant on or to any window, door, corridor or other part of the Buildings which is visible from outside of the Premises without the prior written consent of Landlord.

 

3.                                       Landlord will provide and maintain a directory board in a Common Area identifying the Tenants.  Without the prior written consent of Lender, no Tenant shall be entitled to maintain any other directory or identifying sign in any Common Area.

 

4.                                       Movement of furniture, office equipment or any bulky material which requires movement through the Common Areas of the Buildings shall be restricted to such hours as Landlord may reasonably designate, and such movement shall be subject to such restrictions as Landlord may reasonably impose.

 

5.                                       Landlord shall have the authority to limit the weight of, and to prescribe and restrict the positioning and manner of installation of, safes, file cabinets and other heavy equipment.

 

6.                                       No Tenant shall use, or permit any person making or receiving any delivery to its Premises to use, any hand trucks except those equipped with rubber tires and side guards.

 

7.                                       Subject to applicable security restrictions imposed by any governmental body for which Tenant is performing services, all locks for doors in each Tenant’s Premises shall be building standard and no Tenant shall place any additional lock or locks on any door in its Premises without Landlord’s prior written consent.  All requests for duplicate keys shall be made through Landlord and charged to the Tenant.  Upon termination of a Tenant’s tenancy, the Tenant shall deliver to Landlord all keys to the Tenant’s Premises, to interior doors within the Tenant’s Premises, to doors within the Common Areas and to exterior Building doors which have been furnished to or obtained by the Tenant.

 

8.                                       Corridor doors, when not in use, shall be kept closed.

 

9.                                       Each Tenant shall lock all doors of its Premises leading to Common Areas at the close of its working day.

 



 

10.                                No curtains, blinds, draperies or other window treatments shall be attached to or hung in any window of the Premises of a Tenant on an exterior wall of the Buildings or on an interior wall of any Building dividing the Premises from Common Areas without the prior written consent of Landlord, which consent shall not be unreasonably withheld.

 

11.                                Plumbing fixtures and appliances shall be used only for the purposes for which they were designed and constructed, and no sweepings, rubbish, rags or other material shall be thrown or placed therein.  The cost of repairing any damage resulting from misuse of the plumbing fixtures or appliances by a Tenant or its employees, agents or invitees shall be borne by the responsible Tenant.

 

12.                                No Tenant shall use or permit the use of its Premises, or any part thereof, for lodging, for manufacturing, for any immoral or illegal purpose, or for any other purpose which is not permitted by the terms of its lease.

 

13.                                No vending machines shall be allowed in any Premises without the prior written consent of Landlord, except for vending machines for the sole use of Tenant, its employees and invitees.

 

14.                                Each Tenant shall, at its expense, provide artificial light and electric current for the employees of Landlord and/or Landlord’s contractors while performing janitorial or other cleaning, maintenance or repair services in the Tenant’s Premises.

 

15                                   No Tenant will make or permit any of its employees, agents or invitees to make any improper noises in the Buildings or to otherwise interfere in any way with other Tenants or persons having business with them.

 

16.                                No Tenant shall cause any unnecessary janitorial labor or services by reason of the Tenant’s willful misconduct or carelessness or indifference in the preservation of good order and cleanliness.

 

17.                                No birds or animals of any kind shall be brought onto or kept on the Property, other than laboratory animals used in a Tenants permitted use of its Premises in accordance with applicable laws.

 

18.                                Without the prior written consent of Landlord, no Tenant shall use the name of the Project or any picture of the Project or Buildings in any materials promoting or advertising the business of the Tenant, except that each Tenant may use the address of the Project as the address of its business.

 

19.                                Each Tenant shall cooperate with Landlord to assure the effective operation of the heating and air conditioning systems serving the Tenant’s Premises and the Buildings.  Without limiting the generality of the immediately preceding sentence, each Tenant will, at the request of Landlord, close its window treatments when the sun’s rays fall directly on windows of its Premises.

 

20.                                Neither Landlord nor the Property manager will be responsible for lost or stolen money, jewelry or other personal property from any areas of the Property, regardless of whether the loss or theft occurs when the area in question is locked.

 

21.                                Landlord may, in its discretion, institute security measures in the operation of the Property, and Tenants will comply with all such security measures.  Such security measures may include, but are not limited to, requiring persons entering the Building or the Property to identify themselves to a watchman or other person designated by Landlord and to sign in and sign out of the Property, denying

 



 

access to persons who are not properly identified or appear suspicious, and conducting fire or other emergency drills.  The exercise of such security measures by Landlord and any resulting interruption of a Tenant’s business shall not constitute an eviction or disturbance of a Tenant’s use and possession of its Premises, render Landlord liable to the Tenant for damages, or relieve a Tenant from its obligations under its lease.

 

22.                                No bicycles or vehicles shall be brought into or kept in any Building.  All bicycles and vehicles brought onto the Property shall be driven and parked only in designated, paved areas.

 

23.                                Parking on the Property shall be subject to the restrictions set forth in this paragraph and, with respect to any particular Tenant, to any additional restrictions on parking set forth in such Tenant’s lease.  Each Tenant and such Tenant’s employees, agents and invitees shall have the right, in common with others and in connection with the conduct of Tenant’s business at the Property, to park passenger vehicles on portions of the Property which have been striped for parking, provided, however that (a) no Tenant or its employees or agents may park in any space marked “visitor,” and (b) no Tenant or its employees agents or invitees may park in any space marked “reserved,” unless reserved for such Tenant, and (c) persons parking their vehicles will do so exclusively within the marked parking space lines.  No Tenant or its employees, agents or invitees shall have a right to park vehicles on the Property for purposes other than in connection with the Tenant’s business at the Property.  Landlord shall have no responsibility to any Tenant or any Tenant’s employees, agents or invitees for any theft, loss of or damage to any vehicle or its contents on the Property.  Each Tenant’s parking rights, except as otherwise expressly provided in its lease, are in common with other Tenants and on a first come, first served basis, and, except as otherwise expressly provided in its lease or other written agreements with Landlord, no Tenant has the right to any designated parking spaces or to any particular number of parking spaces.

 

24.                                All vehicles brought onto the Property by Tenant, its employees, agents, customers and invitees shall be in good condition and appearance and shall be drivable.  No such vehicles shall be leaking oil or other fluids.

 

25                                   Each Tenant will deposit its garbage, trash and refuse only in approved trash containers within the Tenant’s Premises or in designated trash receptacles placed by Landlord within the Common Areas.  No Tenant shall deposit any hazardous, flammable or explosive substances in any trash receptacle on the Property

 

Landlord reserves the right to rescind, alter or waive any of the Rules and Regulations, and to adopt such additional rules and regulations as part of the Rules and Regulations, from time to time as Landlord reasonably deems it appropriate for the safety, protection, care and cleanliness of the Property, the operation thereof, the preservation of good order therein or the protection and comfort of the Tenants and their employees, agents and invitees.  An alteration or waiver of any of the Rules and Regulations in favor of one Tenant shall not, other than with the consent of Landlord, operate as an alteration or waiver in favor of any other Tenant.  Landlord shall not be responsible to any Tenant for the non-observance or violation by any other Tenant of any of the Rules and Regulations, nor for the enforcement of any of the Rules and Regulations against any other Tenant.  No Tenant shall have the right to enforce any of the Rules and Regulations against any other Tenant

 



 

EXHIBIT E

 

BENEFICIARY:
TBCI, LLC
AS TRUSTEE OF 100 DISCOVERY PARK REALTY TRUST
C/O THE BULFINCH COMPANIES, INC. FIRST NEEDHAM PLACE
250 FIRST AVENUE, SUITE 200
NEEDHAM, MA 02494
ATTN:  ROBERT SCHLAGER

 

APPLICANT:
GENOCEA BIOSCIENCES, INC.
161 FIRST STREET, SUITE 2C
CAMBRIDGE, MA 02139

 

AMOUNT:

 

US$157,773.34 (ONE HUNDRED FIFTY SEVEN THOUSAND SEVEN HUNDRED SEVENTY THREE AND 34/100 US DOLLARS)

 

EXPIRATION DATE: FEBRUARY 28, 2014

 

LOCATION:

SANTA CLARA, CALIFORNIA

 

LADIES AND GENTLEMEN:

 

WE HEREBY ESTABLISH OUR IRREVOCABLE STANDBY LETTER OF CREDIT NO. SVBSF          IN YOUR FAVOR.  THIS LETTER OF CREDIT IS AVAILABLE BY SIGHT PAYMENT WITH OURSELVES ONLY AGAINST PRESENTATION AT THE BANK’S OFFICE (AS DEFINED BELOW) OF THE FOLLOWING DOCUMENTS:

 

1.               THE ORIGINAL OF THIS LETTER OF CREDIT AND ALL AMENDMENT(S), IF ANY.

 

2.               YOUR SIGHT DRAFT, IN WHOLE OR IN PART DRAWN ON US IN THE FORM ATTACHED HERETO AS EXHIBIT “A” .

 

3                  A DATED STATEMENT PURPORTEDLY SIGNED BY AN AUTHORIZED REPRESENTATIVE OF THE BENEFICIARY, FOLLOWED BY HIS/HER PRINTED NAME AND DESIGNATED TITLE, STATING ANY OF THE FOLLOWING WITH INSTRUCTIONS IN BRACKETS THEREIN COMPLIED WITH:

 

(A.)                 “AN “EVENT OF DEFAULT” (AS DEFINED IN THE LEASE) HAS OCCURRED BY GENOCEA BIOSCIENCES, INC., AS TENANT UNDER THAT CERTAIN LEASE AGREEMENT DATED                   [INSERT DATE] BY AND BETWEEN TENANT, AND BENEFICIARY, AS LANDLORD.  FURTHERMORE THIS IS TO CERTIFY THAT THE TERMS AND CONDITIONS OF THE LEASE AUTHORIZE LANDLORD TO NOW DRAW DOWN ON THE LETTER OF CREDIT.”

 

OR

 

(B.)                 “BENEFICIARY HAS RECEIVED A NOTICE FROM SILICON VALLEY BANK THAT ITS IRREVOCABLE LETTER OF CREDIT NUMBER SVBSF                                    WILL NOT BE EXTENDED AND APPLICANT HAS FAILED TO PROVIDE A

 



 

REPLACEMENT LETTER OF CREDIT’ SATISFACTORY TO BENEFICIARY AT LEAST THIRTY (30) DAYS PRIOR TO THE CURRENT EXPIRATION DATE.”

 

THE LEASE MENTIONED ABOVE IS FOR IDENTIFICATION PURPOSES ONLY AND 15 NOT INTENDED THAT SAID LEASE BE INCORPORATED HEREIN OR FORM PART OF THIS LETTER OF CREDIT.

 

PARTIAL AND MULTIPLE DRAWINGS ARE ALLOWED.

 

THIS LETTER OF CREDIT MUST ACCOMPANY ANY DRAWINGS HEREUNDER FOR ENDORSEMENT OF THE DRAWING AMOUNT AND WILL BE RETURNED TO BENEFICIARY UNLESS IT IS FULLY UTILIZED.

 

THIS LETTER OF CREDIT SHALL BE AUTOMATICALLY EXTENDED FOR AN ADDITIONAL PERIOD OF ONE YEAR, WITHOUT AMENDMENT, FROM THE PRESENT AND/OR EACH FUTURE EXPIRATION DATE UNLESS AT LEAST SIXTY (60) DAYS PRIOR TO THE THEN CURRENT EXPIRATION DATE WE SEND YOU A NOTICE BY REGISTERED MAIL/OVERNIGHT COURIER SERVICE AT THE ABOVE ADDRESS (OR SUCH OTHER ADDRESS AS BENEFICIARY MAY FROM TIME TO TIME DESIGNATE IN A NOTICE DELIVERED TO SILICON VALLEY BANK AT THE BANK’S OFFICE) THAT THIS LETTER OF CREDIT WILL NOT BE EXTENDED BEYOND THE THEN-CURRENT EXPIRATION DATE.  BUT IN ANY EVENT THIS LETTER OF CREDIT WILL NOT BE EXTENDED BEYOND FEBRUARY 28, 2017 WHICH SHALL BE THE FINAL EXPIRATION DATE OF THIS LETTER OF CREDIT

 

THE DATE THIS LETTER OF CREDIT EXPIRES IN ACCORDANCE WITH THE ABOVE PROVISION IS THE ‘‘FINAL EXPIRATION DATE”.  UPON THE OCCURRENCE OF THE FINAL EXPIRATION DATE THIS LETTER OF CREDIT SHALL FULLY AND FINALLY EXPIRE AND NO PRESENTATIONS MADE UNDER THIS LETTER OF CREDIT AFTER SUCH DATE WILL BE HONORED.

 

THIS LETTER OF CREDIT IS TRANSFERABLE WITHOUT COST TO THE BENEFICIARY ONE OR MORE TIMES BY THE ISSUING BANK, AT THE REQUEST OF THE BENEFICIARY, BUT IN EACH INSTANCE ONLY TO A SINGLE BENEFICIARY AS TRANSFEREE AND ONLY UP TO THE THEN AVAILABLE AMOUNT IN FAVOR OF ANY NOMINATED TRANSFEREE THAT IS THE SUCCESSOR IN INTEREST TO BENEFICIARY (“TRANSFEREE”), ASSUMING SUCH TRANSFER TO SUCH TRANSFEREE WOULD BE IN COMPLIANCE WITH THEN APPLICABLE LAW AND REGULATION, INCLUDING BUT NOT LIMITED TO THE REGULATIONS OF THE U.S. DEPARTMENT OF TREASURY AND U.S. DEPARTMENT OF COMMERCE.  AT THE TIME OF TRANSFER, THE ORIGINAL LETTER OF CREDIT AND ORIGINAL AMENDMENT(S), IF ANY, MUST BE SURRENDERED TO US AT OUR ADDRESS INDICATED IN THIS LETTER OF CREDIT TOGETHER WITH OUR LETTER OF TRANSFER DOCUMENTATION AS PER ATTACHED EXHIBIT “B” DULY EXECUTED.  THE CORRECTNESS OF THE SIGNATURE AND TITLE OF THE PERSON SIGNING THE TRANSFER FORM MUST BE VERIFIED BY BENEFICIARY’S BANK.  APPLICANT SHALL PAY OUR TRANSFER FEE OF ¼ OF 1% OF THE TRANSFER AMOUNT (MINIMUM US$250.00) UNDER THIS LETTER OF CREDIT.  ANY REQUEST FOR TRANSFER WILL BE EFFECTED BY US SUBJECT TO THE ABOVE CONDITIONS. HOWEVER, ANY REQUEST FOR TRANSFER IS NOT CONTINGENT UPON APPLICANT’S ABILITY TO PAY OUR TRANSFER FEE.  ANY TRANSFER OF THIS LETTER OF

 



 

CREDIT MAY NOT CHANGE THE PLACE OR DATE OF EXPIRATION OF THE LETTER OF CREDIT FROM OUR ABOVE SPECIFIED OFFICE.  EACH TRANSFER SHALL BE EVIDENCED BY OUR ENDORSEMENT ON THE REVERSE OF THE LETTER OF CREDIT AND WE SHALL FORWARD THE ORIGINAL OF THE LETTER OF CREDIT SO ENDORSED TO THE TRANSFEREE.

 

DRAFT(S) AND DOCUMENTS MUST INDICATE THE NUMBER OF THIS LETTER OF CREDIT.

 

ALL DEMANDS FOR PAYMENT SHALL BE MADE BY PRESENTATION OF THE ORIGINAL APPROPRIATE DOCUMENTS DURING REGULAR BUSINESS HOURS ON A BUSINESS DAY AT OUR OFFICE (THE “BANK’S OFFICE”) AT:  SILICON VALLEY BANK, 3003 TASMAN DRIVE, MAIL SORT HF210, SANTA CLARA, CALIFORNIA 95054, ATTENTION:  GLOBAL FINANCIAL SERVICES STANDBY LETTER OF CREDIT DEPARTMENT; OR BY FACSIMILE TRANSMISSION AT (408) 969-6510 OR (408) 496-2418 AND SIMULTANEOUSLY UNDER TELEPHONE ADVICE TO: (408) 654-6274 OR (408) 654-7716, ATTENTION STANDBY LETTER OF CREDIT NEGOTIATION DEPARTMENT WITH ORIGINALS TO FOLLOW BY OVERNIGHT COURIER SERVICE, PROVIDED, HOWEVER, THE BANK WILL DETERMINE HONOR OR DISHONOR ON THE BASIS OF PRESENTATION BY FACSIMILE ALONE, AND WILL NOT EXAMINE THE ORIGINALS.

 

AS USED HEREIN, THE TERM “BUSINESS DAY” MEANS A DAY ON WHICH WE ARE OPEN AT OUR ABOVE ADDRESS IN SANTA CLARA, CALIFORNIA TO CONDUCT OUR LETTER OF CREDIT BUSINESS NOTWITHSTANDING ANY PROVISION TO THE CONTRARY IN THE ISP98 (AS HEREINAFTER DEFINED).  IF THE EXPIRATION DATE OR THE FINAL EXPIRATION DATE IS NOT A BUSINESS DAY THEN SUCH DATE SHALL BE AUTOMATICALLY EXTENDED TO THE NEXT SUCCEEDING DATE WHICH IS A BUSINESS DAY.

 

WE HEREBY ENGAGE WITH YOU THAT DRAFT(S) DRAWN AND/OR DOCUMENTS PRESENTED UNDER AND IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THIS LETTER OF CREDIT SHALL BE DULY HONORED UPON PRESENTATION TO SILICON VALLEY BANK.  IF PRESENTED ON OR BEFORE THE EXPIRATION DATE OF THIS LETTER OF CREDIT.

 

IF ANY INSTRUCTIONS ACCOMPANYING A DRAWING UNDER THIS LETTER OF CREDIT REQUEST THAT PAYMENT IS TO BE MADE BY TRANSFER TO YOUR ACCOUNT WITH ANOTHER BANK, WE WILL ONLY EFFECT SUCH PAYMENT BY FED WIRE TO A U.S. REGULATED BANK, AND WE AND/OR SUCH OTHER BANK MAY RELY ON AN ACCOUNT NUMBER SPECIFIED IN SUCH INSTRUCTIONS EVEN IF THE NUMBER IDENTIFIES A PERSON OR ENTITY DIFFERENT FROM THE INTENDED PAYEE.

 

EXCEPT SO FAR AS OTHERWISE EXPRESSLY STATED HEREIN, THIS LETTER OF CREDIT IS SUBJECT TO THE INTERNATIONAL STANDBY PRACTICE ISP98, INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION NO. 590.

 

SILICON VALLEY BANK,

 

 

 

 

(FOR BANK USE ONLY)

 

(FOR BANK USE ONLY)

 



 

EXHIBIT “A”

 

SIGHT DRAFT/BILL OF EXCHANGE

 

DATE:

 

 

REF NO.

 

 

 

AT SIGHT OF THIS DRAFT

 

 

 

 

PAY TO THE ORDER OF

 

US$

U.S. DOLLARS

 

 

 

“DRAWN UNDER SILICON VALLEY BANK , SANTA CLARA, CALIFORNIA, IRREVOCABLE STANDBY LETTER OF CREDIT NUMBER NO. SVBSF            DATED                  , 20   ”

 

 

 

TO:

SILICON VALLEY BANK

 

 

3003 TASMAN DRIVE

[INSERT NAME OF BENEFICIARY]

 

SANTA CLARA, CA 95054

 

 

 

 

Authorized Signature

 

GUIDELINES TO PREPARE THE SIGHT DRAFT OR BILL OF EXCHANGE:

 

1.

 

DATE

INSERT ISSUANCE DATE OF DRAFT OR BILL OF EXCHANGE.

 

 

 

 

2.

 

REF. NO.

INSERT YOUR REFERENCE NUMBER IF ANY.

 

 

 

 

3.

 

PAY TO THE ORDER OF:               INSERT NAME OF BENEFICIARY.

 

 

 

 

4.

 

US$

INSERT AMOUNT OF DRAWING IN NUMERALS/FIGURES.

 

 

 

 

5.

 

U.S. DOLLARS

INSERT AMOUNT OF DRAWING IN WORDS.

 

 

 

 

6.

 

LETTER OF CREDIT NUMBER             INSERT THE LAST DIGITS OF OUR STANDBY L/C NUMBER THAT PERTAINS TO THE DRAWING.

 

 

 

 

7.

 

DATED

INSERT THE ISSUANCE DATE OF OUR STANDBY L/C.

 

NOTE:  BENEFICIARY SHOULD ENDORSE THE BACK OF THE SIGHT DRAFT OR BILL OF EXCHANGE AS YOU WOULD A CHECK.

 

IF YOU NEED FURTHER ASSISTANCE IN COMPLETING THIS SIGHT DRAFT OR BILL OF EXCHANGE, PLEASE CALL OUR L/C PAYMENT SECTION AND ASK FOR: JOHN DOSSANTOS AT (408) 654-6274 OR ENRICO NICOLAS AT (408) 654-7127 OR EVELIO BARAIRO AT (408) 654-3035

 



 

EXHIBIT “B”

 

DATE:

 

 

 

 

TO:

SILICON VALLEY BANK

 

 

3003 TASMAN DRIVE

RE: IRREVOCABLE STANDBY LETTER

 

SANTA CLARA, CA 95054

OF CREDIT NO.      ISSUED BY SILICON

 

ATTN:

INTERNATIONAL DIVISION

VALLEY BANK, SANTA CLARA

 

 

STANDBY LETTERS OF CREDIT

L/C AMOUNT:

 

GENTLEMEN:

 

FOR VALUE RECEIVED, THE UNDERSIGNED BENEFICIARY HEREBY IRREVOCABLY TRANSFERS TO:

 

(NAME OF TRANSFEREE)
(ADDRESS)

 

ALL RIGHTS OF THE UNDERSIGNED BENEFICIARY TO DRAW UNDER THE ABOVE LETTER OF CREDIT UP TO ITS AVAILABLE AMOUNT AS SHOWN ABOVE AS OF THE DATE OF THIS TRANSFER.

 

BY THIS TRANSFER, ALL RIGHTS OF THE UNDERSIGNED BENEFICIARY IN SUCH LETTER OF CREDIT ARE TRANSFERRED TO THE TRANSFEREE.  TRANSFEREE SHALL HAVE THE SOLE RIGHTS AS BENEFICIARY THEREOF, INCLUDING SOLE RIGHTS RELATING TO ANY AMENDMENTS, WHETHER INCREASES OR EXTENSIONS OR OTHER AMENDMENTS, AND WHETHER NOW EXISTING OR HEREAFTER MADE.  ALL AMENDMENTS ARE TO BE ADVISED DIRECT TO THE TRANSFEREE WITHOUT NECESSITY OF ANY CONSENT OF OR NOTICE TO THE UNDERSIGNED BENEFICIARY.

 

THE ORIGINAL OF SUCH LETTER OF CREDIT IS RETURNED HEREWITH, AND WE ASK YOU TO ENDORSE THE TRANSFER ON THE REVERSE THEREOF, AND FORWARD IT DIRECTLY TO THE TRANSFEREE WITH YOUR CUSTOMARY NOTICE OF TRANSFER.

 

SINCERELY,

 

SIGNATURE AUTHENTICATED

 

 

 

 

 

The name(s), title(s), and signature(s) conform to that/those on file with us for the company and the signature(s) is/are authorized to execute this instrument.

 

We further confirm that the company has been identified applying the appropriate due diligence and enhanced due diligence as required by BSA and all its subsequent amendments.

 

 

(BENEFICIARY’S NAME)

 

 

 

 

 

(SIGNATURE OF BENEFICIARY)

 

 

 

 

 

 

(NAME AND TITLE)

 

 

 

 

 

 

 

(Name of Bank)

 

 

 

 

 

(Address of Bank)

 

 

 

 

 

(City, State, ZIP Code)

 

 

 

 

 

(Authorized Name and Title)

 



 

EXHIBIT F

 

SECRETARY’S CERTIFICATE

 

The undersigned hereby certifies that he/she is the Secretary of Genocea Biosciences, Inc., a Delaware corporation (the “ Corporation ”), and that the execution and delivery of the foregoing lease by Robert E. Farrell, the Vice President of Finance and Administration of the Corporation, has been duly authorized by a vote of the board of directors of the Corporation which is in full force and effect as of this day and that Robert E. Farrell has in fact signed the foregoing lease.

 

[Signature Page Follows]

 



 

 

/s/ Marc A. Rubenstein

 

Marc A. Rubenstein, Secretary

 

Date: July 9, 2012

 

[ Signature Page to Secretary’s Certificate ]

 




Exhibit 10.9

 

Execution Copy

 

AGREEMENT REGARDING SUBLEASE

 

THIS AGREEMENT REGARDING SUBLEASE (this “ Agreement ”) is made and entered into as of the 9th day of July, 2012 by TBCI, LLC, a Massachusetts limited liability company, as Trustee of 100 Discovery Park Realty Trust, a Massachusetts nominee trust (“ Landlord ”) FOLDRX PHARMACEUTICALS, INC., a Delaware corporation (“ Tenant ”) PFIZER INC., a Delaware corporation (“ Pfizer ”) and GENOCEA BIOSCIENCES, INC., a Delaware corporation (“ Subtenant ”).

 

Recitals

 

A.                                     Landlord and Tenant are parties to a Lease dated September 18, 2006, as amended by a First Amendment of Lease dated June 5, 2007 and a Second Amendment of Lease (the “ Second Amendment ”) dated March 31, 2008 (as so amended, the “ Prime Lease ”), pursuant to which Landlord has leased to Tenant all of the leasable space on the fifth floor and a storage room on the first floor, containing 23,666 leasable square feet (the “ Premises ”), in the building known as Building 100 in the project known as Cambridge Discovery Park, Cambridge, Massachusetts;

 

B.                                     Landlord, Tenant and Pfizer entered into a Landlord, Tenant and Acquiror Agreement dated October 18, 2010, with respect to the Prime Lease, pursuant to which, among other filings, Landlord consented to the transaction by which Tenant became a wholly-owned subsidiary of Pfizer;

 

C.                                     Tenant desires to sublease the Premises to Subtenant pursuant to a Sublease Agreement (the “ Sublease ”) dated on or about even date herewith between Tenant and Subtenant, a copy of which is Exhibit A hereto;

 

D.                                     Pursuant to Section 8.1 of the Prime Lease, Tenant may not sublease any portion of the Prime Premises without the written consent of Landlord, and therefore, Tenant has requested Landlord’s consent to the Sublease;

 

E.                                      Subtenant and Landlord desire to enter into a direct Lease, the term of which would begin immediately following expiration of the term of the Prime Lease; (the “ New Direct Lease ”);

 

F.                                       Tenant is unwilling to agree to a Sublease term, the duration of which would end concurrently with expiration of the Prime Lease, unless Landlord enters into this Agreement; and

 

G.                                     The parties desire to enter into this Agreement to provide for Landlord’s consent to the Sublease and terms and conditions applicable to such consent.

 

Statement of Agreement

 

For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 



 

1.                                       Consent by Landlord . Landlord consents to the Sublease, on and subject to the terms and conditions of this Agreement. Such consent applies only to the Sublease, and not to any further sublease of all or any portion of the Prime Premises or to any assignment of the Prime Lease or the Sublease. Subtenant shall not assign the Sublease or further sublease all or any portion of the Premises without the prior written consent of Landlord, which shall be subject to the same conditions as are set forth in Section 8.1 of the Prime Lease. Landlord waives all rights to terminate the Prime Lease pursuant to Section 8.1(d)  of the Prime Lease as a result of the Sublease.

 

2.                                       Continuing Effect of Prime Lease . The Prime Lease remains in full force and effect and unchanged in any respect, except as provided in this Agreement.

 

3.                                       Representations Regarding Sublease; Amendments . Tenant and Subtenant represent and warrant to Landlord that a true, correct and complete copy of the Sublease is attached as Exhibit A hereto, and that the Sublease constitutes the entire agreement of Tenant and Subtenant with respect to the sublease of the Premises by Tenant to Subtenant. The Sublease will not be modified or amended without the prior written consent of Landlord, which Landlord will not unreasonably withhold, condition or delay.

 

4.                                       Priority of Prime Lease . The Prime Lease is superior to the Sublease in all respects. The Sublease imposes no obligations upon Landlord, and in no event shall Landlord be deemed a party to the Sublease.

 

5.                                       General Obligations of Subtenant to Landlord . Subtenant agrees, for the benefit of Landlord, to comply with each and every covenant, agreement and condition on the part of Tenant to be performed under the Prime Lease with respect to the Premises, other than the obligation to pay rent and those provisions of the obligations in respect of the security deposit under the Prime Lease that are explicitly excluded from the Sublease pursuant to the second paragraph of Section 10(a) of the Sublease.

 

6.                                       Surrender Obligations . As of the date of this Agreement, Tenant has vacated the Prime Premises and, in connection therewith, Tenant has decommissioned the Prime Premises and (a) furnished to Landlord and Subtenant that certain “Divestiture Environmental Site Assessment”, dated November 15, 2011, prepared by Environmental Resources Management (ERM) with respect to the decommissioning of the Premises and (b) submitted to the Radiation Control Program of the Department of Public Health of the Commonwealth of Massachusetts a request for termination of Materials License No. 55-0255 with supporting documents and (c) obtained from the Radiation Control Program of the Department of Public Health of the Commonwealth of Massachusetts an Amendment No. 04 dated October 19, 2011 terminating License No. 55-0558 (collectively, the “ Decommissioning Report Materials ”). On the basis of the Decommissioning Report Materials and Landlord’s inspection of the Premises, (i) Landlord acknowledges that, as of the date of this Agreement, the Prime Premises are in a condition that would satisfy Tenant’s surrender obligations under Section 7.4 of the Prime Lease.

 

7.                                       In consideration, among other things, of Tenant’s agreement to a Sublease term, the duration of which would end concurrently with expiration of the Prime Lease, and in recognition of the fact that the contemplated direct lease between Landlord and Subtenant makes

 

2



 

impractical any restoration, decommissioning and surrender of possession by Tenant, Landlord agrees, for the benefit of Tenant, as follows:

 

(1)                                  Tenant has fully complied with any and all requirements of the Prime Lease regarding restoration, decommissioning, surrender of possession and delivery at the end of the Lease Term of the Prime Premises and Tenant shall not be obligated to perform any of such obligations after the date of this Agreement and, subject to the foregoing, Tenant shall remain responsible directly to Landlord only for compliance with those obligations of Tenant under Section 7.4 of the Prime Lease requiring Tenant to maintain the Prime Premises in good repair, condition and appearance, subject to damage by fire or other casualty;

 

(2)                                  From and after the date of this Agreement, Tenant shall not be responsible for and shall be released from performing any restoration, removals or other alterations in or to the Prime Premises or the Building, including, without limitation, the removal of all or any portions of any alterations, fixtures and improvements;

 

(3)                                  Tenant shall not be responsible for and shall be released from any and all liability arising out of any failure by Subtenant to vacate the Premises at the end of the Lease Term of the Prime Lease and for any failure by Subtenant to satisfy any removal, restoration, decommissioning or other requirement relating to surrender of the Prime Premises, any such failure shall not be deemed a holdover by Tenant as Tenant under the Prime Lease and Landlord shall look solely to Subtenant for the performance of such obligations under the Prime Lease;

 

(4)                                  Tenant’s only remaining payment obligations under the Prime Lease shall be payment of the following in accordance with the terms and conditions of the Prime Lease:  Base Rent and the following items of Additional Rent under the Prime Lease:  (a) Tenant’s Project Share under the Prime Lease of (i) Project Taxes, (ii) Project Insurance Costs and (iii) Project Operating Costs and of (b) Tenant’s Building Share of (i) Building Taxes, (ii) Building Insurance Costs and (iii) Building Operating Costs and (c) Tenant’s Utility Costs and of (d) the costs of incurred by Landlord to maintain the Prime Premises in good repair, condition and appearance to the extent not performed by Subtenant or Tenant as required by the Prime Lease and this Agreement, which obligations shall continue, subject, however, to the conditions set forth above; and

 

(5)                                  Landlord agrees, for the benefit of Tenant and Pfizer, that the obligations of Tenant for the performance of any obligations (other than the elements of rent described in paragraph (4) above) under the Prime Lease accruing from and after the date of this Agreement, shall be limited to the amount of the security deposit under the Prime Lease.

 

8.                                       Improvements by Subtenant . Pursuant to the New Direct Lease, Landlord is permitting Subtenant to make those alterations and improvements to the Premises during the term of the Sublease (and prior to commencement of the term of the New Direct Lease) shown on Exhibit B attached hereto, on and subject to the terms and conditions of the New Direct Lease. Tenant and Pfizer acknowledge and agree that Subtenant may make such alterations and improvements to the Premises during the term of the Sublease.

 

3



 

9.                                       Remaining Allowance . Pursuant to the Second Amendment, Landlord has agreed to provide to Tenant an allowance equal to the remaining balance of $26,217 (the “ Expansion Allowance ”) to pay costs of tenant improvements to the portion of the Premises that was added to the Premises by the Second Amendment (the “ Expansion Space ”) and which Subtenant intends to make, and which Landlord has approved pursuant to the New Direct Lease, which will follow immediately after the expiration or earlier termination of the Sublease. Landlord agrees to make the Expansion Allowance available to Tenant for the purpose of applying toward an allowance to be provided by Tenant to Subtenant under the Sublease to pay costs of tenant improvements to the Expansion Space. At the request of Tenant, Landlord shall disburse the Expansion Allowance directly to or for the benefit of Subtenant to pay costs of tenant improvements to the Expansion Space, with such disbursements to be subject to the conditions set forth in Section 2 of the Second Amendment to the Prime Lease.

 

10.                                Insurance . Landlord (and its designees) shall be a named as an additional insured under Subtenant’s insurance policies with respect to the Premises and shall receive certificates evidencing such insurance upon execution hereof and thereafter upon five days’ written request, which insurance shall not be cancelable on less than 30 days’ prior written notice to Landlord (to the extent that such a provision is then generally available in insurance policies). Subtenant shall comply with the insurance requirements of the Prime Lease with respect to the Premises; provided that this Section shall not operate to relieve or modify Tenant’s obligations under the Prime Lease.

 

11.                                Release:  Indemnification . Subtenant releases Landlord (and any and all persons claiming by, through or under Landlord) from any liability for any loss or damage of any kind or for any injury to or death of persons or damage to property of Subtenant or any other person from any cause whatsoever by reason of the use, occupancy or enjoyment of the Premises by Subtenant or any person therein or holding under Subtenant. Subtenant shall exonerate, defend, indemnify, save and hold harmless Landlord (and any and all persons claiming by, through or under Landlord) from and against all claims, actions, proceedings, demands, defenses thereof, damages, costs and expenses and liability of any kind or nature whatsoever, including, without limitation, reasonable attorneys’ fees, direct and indirect damages and consequential damages arising from:  (i) any such real or claimed loss or damage or liability; (ii) any breach of the Sublease or this Agreement by Subtenant or those for whom Subtenant is responsible; and (iii) all liens, claims and demands occurring in, or at the Premises, or arising out of the use, occupancy or enjoyment of the Premises, or any repairs or alterations which may be made to the Premises, or occasioned in whole or in part by any act, omission, or negligence of Subtenant, its agents, contractors, licensees, servants, employees, or invitees of Subtenant or Subtenant’s contractors or licensees, or persons coming into the Premises for the purpose of visiting or dealing with any one or more of the foregoing, or arising from any accident, injury or damage occurring outside of the Premises but in, on or about the Landlord’s property due to the negligence or willful misconduct of Subtenant or Subtenant’s contractors or licensees, or persons coming into the Premises for the purpose of visiting or dealing with any one or more of the foregoing (except that to the extent required by applicable Massachusetts law, the foregoing shall not apply to Landlord’s negligent acts or omissions). The above provisions of this Section shall not operate to release (a) Tenant from any liabilities or obligations which Tenant might have to Subtenant under the Sublease or otherwise, (b) Landlord from any liabilities or obligations which

 

4



 

Landlord might have to Tenant under the Prime Lease or otherwise, or (c) Landlord from any liabilities to Subtenant for Landlord’s intentional torts.

 

12.                                Estoppel Certificates . Tenant and Subtenant shall, from time to time, upon not less than ten business days’ prior written request by Landlord, execute, acknowledge and deliver to Landlord and/or other third parties designated by Landlord a statement in writing addressed to such party as Landlord shall designate in its notice to Tenant and/or Subtenant, certifying that the Sublease is unmodified and in full force and effect and that Subtenant has no defenses, offsets or counterclaims against its obligations to pay the rent and to perform its other covenants under the Sublease (or, if there have been any permitted modifications thereunder, that the same is in full force and effect as modified and stating the modifications and, if there are any defenses, offsets, counterclaims or defaults, setting them forth in reasonable detail), the dates to which rent has been paid, a statement that Tenant and/or Subtenant is not in default under the Sublease (or if in default, the nature of such default, in reasonable detail), and any additional factual information reasonably requested by Landlord. Any such statement delivered pursuant to this Section may be relied upon by any prospective purchaser or mortgagee.

 

13.                                Notices .  Each of Tenant and Subtenant shall, simultaneously upon the mailing of any default notice to the other under the Sublease, give a copy of the same to Landlord in accordance with Section 13.4 of the Prime Lease. For purpose of notices under this Agreement, the address of Subtenant shall be as follows (subject to change of address in accordance with Section 13.4 of the Prime Lease):

 

Genocea Biosciences, Inc.

100 Discovery Park, 5 th  Floor

Cambridge, MA 02140

Attn:  Robert E. Farrell, Jr., CPA

 

With a copy to:

 

David L. Wiener

Anderson & Kreiger LLP

One Canal Park

Cambridge, MA 02141

 

14.                                Reimbursement of Costs . Tenant shall be responsible for paying all Landlord’s reasonable costs and expenses including attorneys’ fees (not to exceed $3,000), in connection with drafting and executing this Agreement and reviewing the Sublease, and all such amounts shall be paid by Tenant as a condition to execution of this Agreement by Landlord.

 

15.                                Binding Effect . This Agreement shall be binding upon the parties hereto and their respective successors and assigns.

 

16.                                Entire Agreement . This Agreement, together with the Prime Lease and the Sublease, constitutes the entire agreement among the parties regarding the subject matter hereof. This Agreement shall not be modified or amended other than by an instrument in writing signed by all parties.

 

5



 

17.                                Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts.

 

18.                                Counterparts . This Agreement may be signed in multiple counterpart originals, which counterparts, when assembled with the signatures of all parties, shall constitute one document.

 

[ signatures on following page ]

 

6



 

Executed as a sealed instrument as of the date first written above.

 

 

TBCI, LLC, as Trustee of 100 Discovery

 

Park Realty Trust

 

 

 

 

 

By:

/s/ Robert A. Schlager

 

Name:

Robert A. Schlager

 

Title:

Treasurer & VP

 

 

 

FOLDRX PHARMACEUTICALS, INC.

 

 

 

 

 

By:

/s/ Bradford A. Lewin

 

Name:

Bradford A. Lewin

 

Title:

Vice President

 

 

 

 

PFIZER INC.

 

 

 

 

 

By:

/s/ Tom Donatelli

 

Name:

Tom Donatelli

 

Title:

Vice President

 

 

 

 

GENOCEA BIOSCIENCES, INC.

 

 

 

 

 

By:

/s/ Robert S. Farrell, Jr.

 

Name:

Robert S. Farrell, Jr.

 

Title:

VP Finance & Admin

 



 

EXHIBIT A

 

(Copy of Sublease)

 

A-1


 

Execution Copy

 

SUBLEASE AGREEMENT

 

THIS SUBLEASE AGREEMENT (this “ Sublease ”) is made as of the 9th day of July, 2012 (the “ Reference Date ”), by and between FoldRx Pharmaceuticals, Inc., a Delaware corporation, having an office at c/o Pfizer Inc. Corporate Real Estate Services 235 East 42nd Street New York, NY 10017 (“ Sublandlord ”), and Genocea Biosciences, Inc., a Delaware corporation, having an office at 161 First Street, Cambridge, Massachusetts 02139 (“ Subtenant ”).

 

W I T N E S S E T H:

 

WHEREAS, by that certain Lease dated as of September 18, 2006, as amended by that certain First Amendment of Lease, dated as of June 5, 2007 (the “ Overlease First Amendment ”) and as further amended by that certain Second Amendment of Lease, dated as of March 31, 2008 (the “ Overlease Second Amendment ”) (collectively as so amended, the “ Overlease ”), TBCI, LLC, a Massachusetts limited liability company, as Trustee of 100 Discovery Park Realty Trust, a Massachusetts nominee trust, as successor in interest to BHX, LLC, a Massachusetts limited liability company, as Trustee of 100 Discovery Park Realty Trust, a Massachusetts nominee trust (the “ Overlandlord ”) is leasing to Sublandlord, as Tenant, approximately 23,666 square feet of leasable area, being the entirety of the leasable area of the fifth (5th) floor of the building identified in the Overlease as Building 100, which building is depicted in Exhibit B of the original Overlease (the “ Building ”) of the “ Project ” as defined in the Overlease, commonly known as Cambridge Discovery Park, Cambridge, Massachusetts, at the rent and upon and subject to the terms and conditions set forth in the Overlease; and

 

WHEREAS, Subtenant desires to sublet from Sublandlord the entirety of the leasable area of the fifth floor of the Building being leased by Sublandlord (the “ Subleased Premises ”), subject to the terms and conditions of this Sublease; and

 

WHEREAS, Subtenant desires to enter into a direct Lease with Overlandlord, the term of which would begin immediately following expiration of the term of the Overlease; and

 

WHEREAS, Sublandlord is unwilling to agree with Subtenant and Overlandlord to a Sublease term, the duration of which would end concurrently with expiration of the Overlease, unless Overlandlord agrees in writing that Sublandlord upon execution and delivery of this Sublease has satisfied all surrender, restoration and other Overlease payment and performance obligations, except only as expressly provided in Section 24 of this Sublease.

 

NOW, THEREFORE, the parties hereto, for themselves, their permitted successors and assigns, mutually covenant and agree as follows:

 

1.                                       Defined Terms;  Subleased Premises .

 

(a)                                  Terms with initial capital letters not defined in this Sublease shall have the meanings set forth in the Overlease.

 



 

(b)                                  Sublandlord does hereby sublease to Subtenant, and Subtenant does hereby sublease from Sublandlord, for the Term (as defined below) and upon the conditions hereinafter provided, the Subleased Premises, which shall be deemed to contain twenty three thousand six hundred sixty six (23,666) square feet of leasable area (the “ Subleased Premises Leasable Square Footage ”), as more particularly shown on Schedule 1(b)  attached hereto (the “Floor Plan”), together with the appurtenant right to use the Common Areas of the Building and the Project to the extent to which Sublandlord has such rights with respect to the Subleased Premises pursuant to the terms of the Overlease. Notwithstanding anything to the contrary, Sublandlord’s sublease of the Subleased Premises is subject to the condition precedent in favor of Sublandlord that Overlandlord enters into an agreement and consent with Sublandlord in form and content satisfactory to Sublandlord in its discretion inter   alia containing the terms set forth in Section 24 of this Sublease (the “ Overlandlord Consent ”).

 

(c)                                   Tenant shall use and occupy only that portion of the Premises labeled in the Floor Plan as the occupied portion of the Subleased Premises (such portion, the “ Occupied Portion of Subleased Premises ”). Provided that Subtenant uses and occupies only the Occupied Portion of the Premises, Subtenant’s Share as set forth in Section 5(d)(i)  of this Sublease shall be calculated using eighteen thousand (18,000) square feet of leasable area, as the numerator in the fraction referenced in Section 5(d)(i) . However, Subtenant’s responsibilities and obligations otherwise shall include and apply to the entire Subleased Premises, including, without limitation, all responsibilities and obligations under Section 10(b)  of this Sublease.

 

(d)                                  During the Term, Subtenant shall have, at no additional cost or charge payable by Subtenant hereunder, an exclusive license to use all furniture, telecommunications and laboratory equipment which are owned by Sublandlord and located within the Occupied Portion of the Premises as of the Commencement Date (defined below) (collectively, the “ Licensed Property ”), in their “as is” “where is” condition and “with all faults,” in connection with the conduct of Subtenant’s business at the Subleased Premises in accordance with the Permitted Use and other requirements of the Overlease and applicable Legal Requirements (as defined in the Overlease and expressly including, without limitation, all municipal codes and ordinances). Notwithstanding the license granted to Subtenant pursuant to this Section 1(d), the Licensed Property shall remain the property of Sublandlord at all times during the Term, provided, however, that if there shall then be no default by Subtenant hereunder, Sublandlord shall convey the Licensed Property to Subtenant without representations, warranties or recourse whatsoever, at the end of the Term in its then “as is” “where is” condition and “with all faults”, for the sum of $1.00 and Subtenant shall accept the Licensed Property. Subtenant shall remove the Licensed Property from the Subleased Premises at Subtenant’s sole cost and expense prior to the Expiration Date (defined below), unless both Sublandlord and Subtenant are not required to so remove the Licensed Property under the express written terms of the Overlease or under the Overlandlord Consent, which Overlandlord Consent shall be in form and content acceptable to Sublandlord in its discretion. Notwithstanding anything to the contrary, nothing herein shall require Sublandlord to convey any furniture, equipment or other Licensed Property, which under the terms of the Overlease is not owned by Sublandlord or which is to be surrendered to or relinquished to Overlandlord or is to remain in the Subleased Premises under the terms of this Sublease or the Overlease. At all times during the Term, Subtenant shall maintain the Licensed Property as required to keep it in clean and good condition, ordinary wear and tear excepted, shall comply at its sole cost and expense with all Legal Requirements applicable to the Licensed

 

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Property, and shall keep the Licensed Property insured under the insurance policy required to be maintained pursuant to the Overlease and shall pay all costs associated with the Licensed Property (including, without limitation, payment of all telephone and telecommunications charges). Except for the Licensed Property to be surrendered or relinquished to Overlandlord, following its assignment to Subtenant at the end of the Sublease Term, Subtenant shall have the right to dispose of any Licensed Property in its sole discretion without providing notice to or obtaining the consent of Sublandlord.

 

2.                                       Term .

 

(a)                                  The term of this Sublease (the “ Term ”) shall commence on the last to occur of (i) the date this Sublease is fully executed by Sublandlord and Subtenant, (ii) the date Overlandlord consents to this Sublease pursuant to Section 24 hereof, (iii) the date Sublandlord delivers possession of the Subleased Premises to Subtenant in accordance with Section 3 hereof (the “ Delivery Date ”), which date shall occur no later than one (1) Business Day following the last to occur of the actions described in clauses (i) and (ii) (such last date, the “ Commencement Date ”), and shall end at 11:59 P.M. (local time at the Building) on February 28, 2014 (as applicable, the “ Expiration Date ”), or in any event on such earlier date upon which said Term may expire or be terminated pursuant to any of the conditions or limitations or other provisions of this Sublease or pursuant to law.

 

(b)                                  It is presently anticipated that the Subleased Premises will be delivered to Subtenant in accordance with Section 3 hereof no later than July 9, 2012 (the “ Anticipated Delivery Date ”). Notwithstanding the foregoing, if Sublandlord does not deliver possession of the Subleased Premises by the Anticipated Delivery Date, Sublandlord shall not have any liability whatsoever, and this Sublease shall not be rendered void or voidable as a result thereof.

 

(c)                                   Promptly after the Delivery Date and the Commencement Date are known, Sublandlord and Subtenant shall execute an acknowledgement thereof in the form attached hereto as Schedule 2(c) .

 

3.                                       Condition of Subleased Premises .

 

(a)                                  Sublandlord subleases to Subtenant, and Subtenant hires from Sublandlord, the Subleased Premises, upon and subject to the terms and conditions herein set forth, in its “as is,” “where is,” “with all faults” condition on the Reference Date hereof, subject to normal wear and tear arising after the date hereof but nonetheless broom clean and with the fallen light fixture in the Subleased Premises repaired and re-installed. Without limiting the foregoing, Sublandlord shall not be required to make or pay or reimburse Subtenant for any Alterations (defined below), improvements, repairs or decorations to the Subleased Premises at the time possession is given to Subtenant or at any time during the Term of this Sublease, or any extension thereof. Sublandlord shall not be required to provide any allowance for any improvements, repairs, decorations, painting or carpeting. However, Sublandlord shall provide the Sublease Improvement Allowance Credit and the Steam Generator Allowance Credit as provided in Section 4(b)(ii)  and Section 4(b)(iii), respectively.

 

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(b)                                  Subtenant acknowledges that the Occupied Portion of Subleased Premises as shown in the Floor Plan are located within a larger area of space on the fifth (5th) floor of the Building within the Subleased Premises. Subtenant covenants and agrees that although Subtenant shall be in control of and responsible for the entire Subleased Premises shall not use or occupy any of the floor area within the larger area of space on the fifth (5th) floor of the Building outside of the Occupied Portion of Subleased Premises shown on the Floor Plan. Subtenant agrees that Sublandlord shall not be required to construct walls separating the Occupied Portion of Subleased Premises from the remainder of the Subleased Premises, either at the time possession is given to Subtenant or at any time during the Term of this Sublease.

 

(c)                                   Subtenant represents that it has thoroughly examined the Subleased Premises, base building systems serving the Subleased Premises (including but not limited to, HVAC, electrical, plumbing and life safety), laboratory equipment and the Licensed Property. Subtenant further acknowledges that except as otherwise expressly set forth in this Sublease, no representation or warranty, either express or implied, written or oral, has been made by Sublandlord with respect to the condition of the Subleased Premises, or any of the other personal property, fixtures or equipment within the Subleased Premises or the suitability of the Subleased Premises for any use or purpose by Subtenant, all of which are accepted by Subtenant “as is,” “where is,” “with all faults.”

 

(d)                                  Subtenant acknowledges that Sublandlord has made available, as a courtesy only, following Subtenant’s request therefore a certain decommissioning report for Subtenant’s review, which report may incorporate or refer to documents, files, materials, data and information relating to the decommissioning of the laboratory and vivarium equipment and facilities within the Subleased Premises (collectively, together with such report, “ Decommissioning Information ”). Subtenant acknowledges and agrees that the Decommissioning Information has been provided to Subtenant on the conditions that Subtenant shall not be entitled to rely thereon, that such Decommissioning Information shall not be deemed to constitute a representation or warranty of any kind whatsoever and that any reliance thereon shall be at Subtenant’s sole risk. Notwithstanding that Sublandlord has disclosed the Decommissioning information to Subtenant, Subtenant agrees that Sublandlord is not and shall not be obligated to provide, compile, prepare, formulate or update any documents, files, materials, data and information relating to the operation or decommissioning of the laboratory and vivarium equipment and facilities or any privileged or confidential information or attorney- client communications or attorney work product. In the event Subtenant receives any such information, Subtenant shall keep such information strictly confidential. Nothing in this Section 3(d) , however, shall diminish any obligations of Subtenant in any separate confidentiality agreement. The receipt by Subtenant of the Decommissioning Information or any other information from Sublandlord shall not constitute (or be deemed to constitute) a waiver of any confidentiality or privilege applicable to such information and Sublandlord may assert at any time such confidentiality or privilege with respect to such information notwithstanding that Subtenant received information. Subtenant further acknowledges, and agrees that Decommissioning Information or other information may have been prepared by parties other than Sublandlord, that Sublandlord makes no representation or warranty whatsoever, express or implied, as to the completeness, content, validity or accuracy thereof and that Sublandlord has not made any independent investigation or verification of any such Decommissioning Information. Subtenant forever and irrevocably releases Sublandlord, its affiliates and each of

 

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their respective officers, directors, employees, affiliates, representatives and agents from any and all claims, demands, causes of action, judgments, losses, damages, liabilities, costs and expenses (including without limitation attorney’s fees whether suit is instituted or not), whether known or unknown, liquidated or contingent arising out of (i) Decommissioning Information or opinions made or furnished by or on behalf of Sublandlord (except only for any representations of Sublandlord that are expressly set forth in this Agreement), (ii) any information contained in, omitted from, or that should have been contained in, the Decommissioning Information, or any information which was not disclosed by Sublandlord whether or not requested by Subtenant, and (iii) failure or refusal by Sublandlord to disclose or provide Decommissioning Information or opinions. Subtenant agrees that it shall rely solely upon Subtenant’s own investigations into and of the Subleased Premises (including, without limitation, the laboratory and vivarium equipment and facilities within the Subleased Premises) in its evaluation of this Sublease and the Subleased Premises.

 

4.                                       Monthly Base Rent .

 

(a)                                  The annual base rent (“ Annual Base Rent ”), and monthly base rent (“ Monthly Base Rent ”) shall be as set forth in the table below. Subtenant hereby agrees to pay Monthly Base Rent to Sublandlord in advance for each month during the Term. Subject to the abatement provisions set forth in Section 4(b) , Subtenant shall pay Monthly Base Rent commencing on the Commencement Date and continuing thereafter on the first (1st) day of each and every calendar month during the Term of this Sublease.

 

Period

 

Annual Base Rent*

 

Monthly Base Rent

 

Commencement Date through October 31, 2012**

 

$

630,000.00

 

$

52,500.00

 

November 1, 2012 through the Expiration Date.

 

$

630,000.00

 

$

52,500.00

 

 


*Based on the agreed leasable square footage of the Occupied Portion of Subleased Premises (18,000 square feet) for twelve (12) full calendar months.

 

**Subject to the terms of Section 4(b) , the Annual Base Rent (of $630,000.00) and Monthly Base Rent (of $52,500.00) are subject to abatement and application of credits described therein.

 

(b)                                  Provided no Event of Default under this Sublease by Subtenant occurs, Sublandlord grants to Subtenant:

 

(i)                                      An abatement of the Monthly Base Rent which otherwise would be due and payable, such abatement beginning on the Commencement Date and ending on October 31, 2012; provided, however, that in the event of any delay in the Commencement Date beyond July 9, 2012 not arising in whole or material part out of any act or omission of Subtenant, and provided that such delay does not relate in whole or in part to negotiation, execution or delivery of the Overlandlord Consent, or negotiation or approval of the terms set forth in Section 24 , such October 31, 2012 date shall be extended one day for each day of delay.

 

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(ii)                                   An improvements allowance in the form of a credit towards the Monthly Base Rent otherwise payable hereunder (the “ Sublease Improvements Allowance Credit ”) in the total amount of Twenty Six Thousand Two Hundred Seventeen and No/100ths Dollars ($26,217.00), subject to and conditioned on the following. Subtenant shall be entitled to the Sublease Improvements Allowance Credit to the extent that:  (i) Sublandlord receives a corresponding amount out of the remaining balance of the Tenant Improvements Allowance under item 4B of the “Summary of Basic Terms” of the Overlease (but not including any Excess Tenant Improvements Allowance thereunder) and Section 2 of the Overlease Second Amendment, and (ii) Subtenant satisfies the conditions for disbursement of such remaining balance as set forth in Section 2 of the Overlease Second Amendment, complies with Section 7.5 of the Overlease and satisfies the requirements of Section 3.1 of the Overlease for disbursement of such remaining balance of the Tenant Improvements Allowance and (iii) Subtenant submits to Sublandlord an application for payment accompanied by copies of invoices for costs, together with such certifications, lien waivers and other documents from Subtenant, its contractors, engineers, architect and materials suppliers as may reasonably be required by Sublandlord or Overlandlord, and documentation of prior payment by Subtenant of actual out of pocket costs for Sublease Improvements in the amount of the Sublease Improvements Allowance Credit. Such Sublease Improvements Allowance Credit shall be applied to the first and immediately following installments of Monthly Base Rent due and payable under this Sublease beginning on November 1, 2012 (until the entire Sublease Improvements Allowance Credit is exhausted).

 

(iii)                                A conditional credit towards the Monthly Base Rent otherwise payable hereunder (the “ Steam Generator Allowance Credit ”) in the maximum total amount of Sixty Thousand and No/100ths Dollars ($60,000.00) to be applied to the first and immediately following installments of Monthly Base Rent due and payable under this Sublease (after application of the Sublease Improvements Allowance Credit until the “Allowable Amount” of the Steam Generator Allowance Credit is exhausted), provided that:  the amount of such Steam Generator Allowance Credit shall be applied by Tenant to actual out of pocket costs and expenses with respect to the repair, replacement or removal of the steam generator and/or installation of humidification units within the vivarium facility within the Subleased Premises as described in the list of Sublease Improvements as defined in Section 8(a) hereof and attached hereto as Schedule 8(a). In no event shall Sublandlord be required to disburse or provide a Steam Generator Allowance

 

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Credit in an amount greater than Sixty Thousand and No/100ths Dollars ($60,000.00).

 

(c)                                   If the obligation of Subtenant to pay Rent (defined below) hereunder begins on a day other than on the first day of a calendar month, rent from such date until the first day of the following calendar month shall be prorated at the per diem rate of the monthly installment for each day based on the number of days of such month within the Term and shall be due and payable on the Commencement Date. The Annual Base Rent, Monthly Base Rent, Additional Rent (defined below) and any other charges herein reserved or payable by Subtenant hereunder (collectively “ Rent ”) shall be paid to Sublandlord at the following address:  Pfizer, Inc., 235 E. 42nd Street, New York, New York 10017, Attention:  Terence Hales, or at such other place as Sublandlord may designate in writing, in lawful money of the United States without demand therefor and without deduction, setoff or abatement whatever, except as expressly provided in this Sublease. Rent for any partial month during the Term shall be prorated based upon the number of days in such month. Subtenant acknowledges and agrees that the obligations of Subtenant to pay Rent under this Sublease shall be separate and independent covenants and agreements.

 

(d)                                  In the event that any installment of Rent is not received by Sublandlord within five (5) days following the date due, Subtenant shall pay to Sublandlord an administrative fee equal to five percent (5%) of the overdue payment. In addition, unpaid Rent shall bear interest at the Default Rate (hereinafter defined) from the date due until paid; provided that nothing contained herein shall be construed as permitting Sublandlord to charge or receive interest in excess of the maximum rate then allowed by law. The term “ Default Rate ” means the greater of fifteen percent (15%) per annum or the rate per annum which is five (5) whole percentage points higher than the prime rate published in the Money Rates section of the Wall Street Journal (the “ Prime Rate ”). Sublandlord shall have the right to apply payments, regardless of Subtenant’s designation, to satisfy any obligations of Subtenant hereunder, in such order and amount as Sublandlord may elect in its sole discretion. Any payment by Subtenant or acceptance by Sublandlord of a lesser amount than shall be due shall be treated as a payment on account. The acceptance by Sublandlord of a lesser amount with an endorsement or statement thereon, or in a letter accompanying such a check, that such lesser amount is payment in full, shall be given no effect, and Sublandlord may accept such check without prejudice to any other rights or remedies which Sublandlord may have against Subtenant.

 

(e)                                   Rent shall be paid without notice or demand, and without setoff, counterclaim, defense, abatement, suspension, deferment, reduction or deduction, except as expressly provided in this Sublease. SUBTENANT WAIVES ALL RIGHTS (I) TO ANY ABATEMENT, SUSPENSION, DEFERMENT, REDUCTION OR DEDUCTION OF OR FROM RENT, AND (II) TO QUIT, TERMINATE OR SURRENDER THIS SUBLEASE OR THE SUBLEASED PREMISES OR ANY PART THEREOF, EXCEPT AS EXPRESSLY PROVIDED HEREIN. SUBTENANT HEREBY ACKNOWLEDGES AND AGREES THAT THE OBLIGATIONS OF SUBTENANT HEREUNDER SHALL BE SEPARATE AND INDEPENDENT COVENANTS AND AGREEMENTS, THAT RENT SHALL CONTINUE TO BE PAYABLE IN ALL EVENTS AND THAT THE OBLIGATIONS OF SUBTENANT HEREUNDER SHALL CONTINUE UNAFFECTED, UNLESS THE REQUIREMENT TO PAY OR PERFORM THE SAME SHALL HAVE

 

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BEEN TERMINATED OR REDUCED PURSUANT TO AN EXPRESS PROVISION OF THIS SUBLEASE. SUBLANDLORD AND SUBTENANT EACH ACKNOWLEDGES AND AGREES THAT THE INDEPENDENT NATURE OF THE OBLIGATIONS OF SUBTENANT HEREUNDER REPRESENTS FAIR, REASONABLE, AND ACCEPTED COMMERCIAL PRACTICE WITH RESPECT TO THE TYPE OF PROPERTY SUBJECT TO THIS SUBLEASE, AND THAT THIS AGREEMENT IS THE PRODUCT OF FREE AND INFORMED NEGOTIATION DURING WHICH BOTH SUBLANDLORD AND SUBTENANT 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 SUBTENANT ARE A MATERIAL INDUCEMENT TO SUBLANDLORD ENTERING INTO THIS SUBLEASE.

 

5.                                       Additional Rent .

 

(a)                                  The term “ Additional Rent means collectively any and all amounts, charges, expenses, fines, assessments, interest or other sums (other than Annual Base Rent and Monthly Base Rent), required to be paid by Subtenant under this Sublease, including, without limitation, the following.

 

(b)                                  From and after earlier of (i) the date on which Subtenant first operates for business from the Occupied Portion of Subtenant Premises, or (ii) the thirty-first (31st) day following the Delivery Date, Subtenant agrees to pay to Sublandlord, as Additional Rent under this Sublease, Subtenant’s Share (as defined below) of the amount of any “Additional Rent” and “Other Additional Rent” (as such terms are defined in the Overlease) payable by Sublandlord under the Overlease, including, without limitation, (a) Tenant’s Project Share of (i) Project Taxes, (ii) Project Insurance Costs and (iii) Project Operating Costs, (b) Tenant’s Building Share of (i) Building Taxes, (ii) Building Insurance Costs and (iii) Building Operating Costs, (c) Tenant’s Utility Costs, and/or (d) Other Additional Rent including all fees, charges (including parking charges for any spaces leased by Subtenant), expenses, fines, assessments, interest or other sums payable by Tenant pursuant to the Overlease, including, without limitation, pursuant to Items 10A, 10B, 10C and 11 of the Summary of Basic Terms, Section 3.1(a) (to the extent applicable to the Sublease Improvements or to any other Alterations made by or on behalf of Subtenant), and Sections 4.3, 4.4, 4.5, 4.6, 6.1(c), 6.1(f), 6.4, and 7.2 of the Overlease.

 

(c)                                   Subtenant shall also pay to Sublandlord, as Additional Rent, within thirty (30) days of Subtenant’s receipt of an invoice, all other amounts payable by Sublandlord pursuant to the Overlease (other than Base Rent under the Overlease) which are attributable to the Subleased Premises and the Term of this Sublease or attributable to Subtenant or any person claiming by, through or under Subtenant or any of their respective affiliates, principals, officers, directors, employees, subtenants, licensees, agents, contractors and invitees (each, a “Subtenant Party”). Such amounts shall include without limitation, as Additional Rent, charges for or related to Alterations made by or at the direction of Subtenant, charges for over standard, after hours, additional and unusual services, for janitorial and/or cleaning services, charges for trash removal, charges by Overlandlord for furnishing excess HVAC or other utilities to the Subleased

 

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Premises, costs incurred by Overlandlord in repairing damage to the Building caused by Subtenant or any Subtenant Party, increased insurance premiums due as a result of Subtenant’s use and/or occupancy of the Subleased Premises; and amounts charged, expended or incurred by Overlandlord on account of any default or holdover by Subtenant under this Sublease which gives rise to a default under the Overlease. Subtenant’s obligation to pay Additional Rent shall survive the expiration or earlier termination of this Sublease.

 

(d)                                  For purposes of this Sublease, the term “ Subtenant’s Share ” means:

 

(i)                                      Seventy six and six/100ths percent (76.06%) of the following items of Additional Rent under the Overlease:  (a) Tenant’s Project Share under the Overlease of (i) Project Taxes, (ii) Project Insurance Costs and (iii) Project Operating Costs and of (b) Tenant’s Building Share of (i) Building Taxes, (ii) Building Insurance Costs and (iii) Building Operating Costs; and

 

(ii)                                   One hundred percent (100%) of all items under the Overlease other than the items listed in Section 5(d)(i) of this Sublease, including, without limitation, the following items under the Overlease:  Utilities, Tenant’s Utility Costs, Other Additional Rent, payments arising under Section 3.1(a) (to the extent applicable to the Sublease Improvements or to any other Alterations made by or on behalf of Subtenant), under Sections 6.1(c), 6.1(f), 6.4, and 7.2 of the Overlease, payments, expenses, fines, assessments, interest or other sums payable by Tenant pursuant to Section 5(c)  of this Sublease and any and all other provisions of this Sublease, means One hundred percent (100%). Additional Rent pursuant to Section 5(a)  of this Sublease shall be apportioned during the year in which the Term of this Sublease commences and during the year in which such Term shall end, such that Subtenant shall be obligated to pay a proportionate share of such Additional Rental for the Subleased Premises which is attributable to the number of days of the Term hereof which are included in the period of which such Additional Rental is payable by Sublandlord under the Overlease.

 

(e)                                   Sublandlord shall give Subtenant copies of all relevant statements and bills received by Sublandlord pursuant to the applicable provisions of the Overlease, together with a statement of the amount of Additional Rent, if any, which Subtenant is required to pay under this section. Subtenant shall pay Additional Rent within thirty (30) days following Subtenant’s receipt of Sublandlord’s statement(s) therefor.

 

6.                                       Deposit; Letter of Credit .

 

(a)                                  Simultaneously with Subtenant’s execution of this Sublease, Subtenant shall deposit with Sublandlord a sum equal to three (3) installment payments of the Monthly Base Rent due and payable during the period beginning November 1, 2012 through the Expiration Date (being One Hundred Fifty-seven Thousand Five Hundred and 00/100ths Dollars

 

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($157,500.00)) in immediately available funds or in the form of a letter of credit in accordance with this Section 6 (as renewed and/or replaced pursuant to this Section 6 , the “ Letter of Credit ”), as security for the performance of the obligations of Subtenant hereunder (such deposit, the “ Security Deposit ”), as security for the payment and performance by Subtenant of all Subtenant’s obligations, covenants, conditions and agreements under this Sublease. Subtenant’s failure to timely deliver the Security Deposit to Sublandlord shall constitute a default under this Sublease, without any notice or cure period under Article 13 . If the Security Deposit is delivered in the form of a Letter of Credit, such Letter of Credit (i) shall be irrevocable and shall be issued by Silicon Valley Bank or by a commercial bank reasonably acceptable to Sublandlord that has an office for presentment in the City of Boston, Massachusetts or New York, New York, in the form attached as Schedule 6 , except as otherwise approved by Sublandlord in Sublandlord’s sole discretion, (ii) shall require only the presentation to the issuer of a certificate of the holder of the Letter of Credit stating that Sublandlord is entitled to draw on the Letter of Credit pursuant to the terms of this Sublease, (iii) shall be payable to Sublandlord or its successors in interest as the Sublandlord and shall be freely transferable without cost to Sublandlord, any such successor or any lender holding a collateral assignment of Sublandlord’s interest in the Sublease, (iv) shall be for an initial term of not less than one year and contain a provision that such term shall be automatically renewed for one successive period equal to the remainder of the Term unless the issuer shall, at least 45 days prior to the scheduled expiration date, give Sublandlord notice of such non-renewal, and (v) shall otherwise be in form and substance reasonably acceptable to Sublandlord as set forth in Schedule 6. Notwithstanding the foregoing, the term of the Letter of Credit for the final period shall be for a term ending not earlier than the date sixty (60) days after the last day of the Term. Subtenant acknowledges that Sublandlord may be required to pledge the proceeds of the Letter of Credit to any lender holding a collateral assignment of Sublandlord’s interest in the Sublease and agrees to provide Sublandlord with such documentation as Sublandlord may reasonably request, and to cooperate with Sublandlord as is necessary, to evidence the consent to such pledge by the issuer of the Letter of Credit.

 

(b)                                  Sublandlord shall be entitled to draw upon the Letter of Credit for its full amount (i) if Subtenant shall be in default under the Sublease, after the expiration of any applicable notice or cure period (or if Subtenant has failed to timely pay rent or perform any of its other obligations under the Sublease and transmittal of a default notice or running of any cure period is barred or tolled by applicable law), (ii) if, not less than 30 days before the scheduled expiration of the Letter of Credit, Subtenant has not delivered to Sublandlord a new Letter of Credit in accordance with this Section 6 (which failure shall be deemed a default without notice or cure period) or (iii) if the credit rating of the long-term debt of the issuer of the Letter of Credit (according to Moody’s or similar national rating agency) is downgraded to a grade below investment rate), or if the issuer of the Letter of Credit shall enter into any supervisory agreement with any governmental authority, or if the issuer of the Letter of Credit shall fail to meet any capital requirements imposed by applicable law. Sublandlord may, but shall not be obligated to, apply the amount so drawn to the extent necessary to cure Subtenant’s default under the Sublease and/or make any payments due to Sublandlord hereunder on account of such default, including without limitation any unpaid Rent, any damages arising from a termination of this Sublease in accordance with its terms, and for any damages arising from any rejection of this Sublease in a bankruptcy proceeding commenced by or against Subtenant. Any amount drawn in excess of the amount applied by Sublandlord pursuant to the immediately preceding sentence shall be held by

 

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Sublandlord as a security deposit for the performance by Subtenant of its obligations hereunder. Said security deposit may be mingled with other funds of Sublandlord, and no fiduciary relationship shall be created with respect to such deposit, nor shall Sublandlord be liable to pay Subtenant interest thereon. If Subtenant shall fail to perform any of its obligations under this Sublease beyond applicable notice and cure periods, Sublandlord may, but shall not be obliged to, apply the security deposit to the extent necessary to cure the default and/or make any payments due to Sublandlord hereunder on account of such default. After any such application by Sublandlord of the Letter of Credit or security deposit, Subtenant shall reinstate the Letter of Credit to the amount originally required to be maintained hereunder, upon demand (and, upon such reinstatement, Sublandlord shall return any cash security deposit then being held by Sublandlord to Subtenant). For purposes of this Section 6 , a default shall also include any default that is prevented or delayed from ripening into an default due to Sublandlord’s inability to give any required notice or the tolling of any grace or cure period caused by any stay or injunction arising from the bankruptcy of Subtenant.

 

(c)                                   In the event of a sale, assignment or other transfer of Sublandlord’s interest in the Sublease, Sublandlord shall have the right to transfer the Security Deposit to the transferee (“ New Sublandlord ”) and Sublandlord shall thereupon be released by Subtenant from all liability for the return of such security; and Subtenant agrees to look to the New Sublandlord solely for the return of said security. The provisions hereof shall apply to every transfer or assignment made of the Security Deposit to a New Sublandlord. Subtenant further covenants that it will not assign or encumber or attempt to assign or encumber the Letter of Credit or the monies deposited herein as security, and that neither Sublandlord nor its successors or assigns shall be bound by any assignment, encumbrance, attempted assignment or attempted encumbrance.

 

7.                                       Use; Access . Subtenant shall use and occupy the Subleased Premises solely for general office, vivarium and laboratory purposes only, in accordance with the use permitted under the Overlease and the applicable zoning regulations and all other applicable laws, and for no other purposes whatsoever. Subtenant, subject to the provisions of the Overlease and this Sublease, shall have access to the Subleased Premises twenty four (24) hours per day, three hundred sixty five (365) days per year subject to force majeure, the requirements and rights of Overlandlord under the Overlease; reasonable security measures and limitations on access in emergencies and for the protection of persons and property.

 

8.                                       Alterations .

 

(a)                                  Following the Commencement Date, subject to prior express written approval by Overlandlord and Sublandlord, Subtenant shall have the right to make non-structural Alterations to the Subleased Premises (the “ Sublease Improvements ”) described in Schedule 8(a ). Sublandlord shall not unreasonably withhold its consent to such Sublease Improvements, provided that Overlandlord has given its prior written consent to Sublandlord, but such consent shall be subject to removal of such Sublease Improvements and restoration of the Subleased Premises as and to the extent provided in Section 8(d)  of this Sublease. The Sublease Improvements shall be carried out in accordance with the terms of this Sublease, the Overlease (including, without limitation the Alterations provisions thereof set forth in Section 7.5 and the provisions of Section 7.13 thereof), and all applicable laws. The Sublease Improvements (and any other Alterations) shall be performed by Subtenant, at its sole risk and expense. Without

 

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limiting any requirements of the Overlease, Subtenant shall submit to Sublandlord for Sublandlord’s approval:  (i) a set of design/development plans sufficient for Landlord to approve Subtenant’s proposed design of the Sublease Improvements (including, without limitation, demolition, improvements and installations) and, (ii) thereafter, a full set of detailed construction drawings for the Sublease Improvements. Sublandlord’s review of any such plans (whether for the Sublease Improvements or any other Alterations) is solely for the benefit of Sublandlord, and neither Subtenant nor any third party shall have the right to rely upon Sublandlord’s approval thereof for any other purpose whatsoever. In connection with the performance of the Sublease Improvements, Sublandlord shall provide, subject to and in accordance with Section 4(b)(ii)  of this Sublease, a Sublease Improvements Allowance Credit to be applied by Subtenant to payment of the actual out of pocket costs of construction of the Sublease Improvements and, subject to and in accordance with Section 4(b)(iii)  of this Sublease, a Steam Generator Allowance Credit to actual out of pocket costs and expenses with respect to the repair, replacement or removal of the steam generator and/or installation of humidification units within the vivarium facility within the Subleased Premises. The Sublease Improvements Allowance Credit and Steam Generator Allowance Credit shall be made available, as set forth respectively in Section 4(b)(ii)  and Section 4(b)(iii)  of this Sublease. Notwithstanding anything to the contrary, (i) neither Sublandlord nor Overlandlord shall be responsible for the payment of any labor, materials or other costs or expenses of the Sublease Improvements (or any other Alterations), or of the repair, replacement or removal of the steam generator and/or installation of humidification units and (ii) without diminishing the generality and scope of Section 10(c)  of this Sublease, the obligations of Overlandlord under Section 3.1 of the Overlease shall not be obligations of Sublandlord under this Sublease.

 

(b)                                  Except for the Sublease Improvements so approved in writing by Sublandlord and Overlandlord, Subtenant shall not make any alteration, improvement, decoration, or installation (collectively, “ Alterations ”) in or to the Subleased Premises, without in each instance obtaining the prior written consent of Overlandlord and Sublandlord (which consent of Sublandlord may be withheld or conditioned in its sole and absolute discretion if restoration of the Subleased Premises to the condition existing prior to the making of such Alterations or Sublease Improvements, removal of such Alterations or Sublease Improvements or payment of any kind by Sublandlord is or may be required by Overlandlord as a consequence thereof and which consent of Sublandlord shall not be unreasonably withheld or conditioned, provided that the written consent of Overlandlord pursuant to Section 8.1(d)  of the Overlease is in form satisfactory to Sublandlord in its sole discretion and satisfies the requirements of Section 24 of this Sublease). If any Alterations are made by Subtenant without complying with the terms of the Overlease and this Sublease, or without obtaining the prior written consent of the Overlandlord and Sublandlord, Overlandlord and/or Sublandlord may remove same, and may repair and restore the Subleased Premises and any damage arising from such removal, and Subtenant shall be liable for any and all costs and expenses incurred by Overlandlord and/or Sublandlord in the performance of such work. In no event shall Subtenant make any Alterations in or to the Subleased Premises if to do so would constitute a default under the Overlease.

 

(c)                                   If any Alterations are consented to by Overlandlord and Sublandlord, Subtenant may have such Alterations performed strictly in accordance with the requirements and conditions of the Overlease including, without limitation, Sections 7.5 and 7.13 thereof, and in a good and workmanlike manner by contractors of its own choice, at its cost and expense,

 

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provided that Subtenant has obtained written approval of the contractor by Overlandlord and Sublandlord, which approval of Sublandlord will not be unreasonably withheld, conditioned or delayed if the contractor is properly licensed, adequately bonded and insured, and experienced in performing Alterations of the type approved. The design of and plans for all Alterations undertaken by Subtenant shall also be subject to prior written approval of Overlandlord and Sublandlord in accordance with the standards set forth in the Overlease and shall not be commenced until such approval is obtained. If any Alterations are consented to by Overlandlord and Sublandlord, Subtenant shall comply with all applicable provisions of the Overlease with respect to the performance of such Alterations. With reasonable notice to Subtenant, Overlandlord and Sublandlord shall at all times have the right to inspect the work performed by any contractor selected by Subtenant during normal business hours.

 

(d)                                  Unless, and only to the extent that the terms of the Overlandlord Consent expressly provide otherwise, upon the expiration or earlier termination of this Sublease, Subtenant shall surrender the Subleased Premises, together with all Alterations and other improvements, including, without limitation, plumbing, lighting, electrical, HVAC, telecommunications (unless Sublandlord otherwise directs), and other items used in the operation of the Subleased Premises), free of Hazardous Materials and biological materials brought upon, used, handled, stored, kept, or disposed of on the Subleased Premises by Subtenant or a Subtenant Party, and subject only to reasonable wear and tear and to damage, if any, by fire or other casualty. All Alterations in or upon the Subleased Premises made by Subtenant shall become part of and remain in the Subleased Premises upon such expiration or termination without compensation, allowance or credit to Subtenant; provided, however, that upon the expiration or earlier termination of this Sublease, (i) in the event Subtenant makes Alterations in or to the Subleased Premises in violation of the provisions set forth in this Section 8 , or (ii) if the terms of the Overlease or the Sublandlord’s or Overlandlord’s consent to any Alterations or to the Sublease Improvements require (or permit the Overlandlord or Sublandlord to require), upon the expiration or earlier termination of the Overlease or this Sublease, removal of such Alterations, the Sublease Improvements or any portion(s) thereof, and/or the restoration of the Subleased Premises by reason of the installation or removal of such Alterations, Sublease Improvements or any portion(s) thereof, Subtenant shall remove said Alterations and/or Sublease Improvements and thereafter repair all damage resulting from such removal and restore the Subleased Premises to the condition as of the date possession was delivered to Subtenant (or such other condition as required by this Sublease, Sublandlord’s consent, the Overlease or the Overlandlord’s consent, as applicable). If Subtenant fails or refuses to remove such Alterations and/or Sublease Improvements, or fails to repair and restore the Subleased Premises, Overlandlord or Sublandlord may cause the same to be removed, and repairs and restoration to be made, in which event Subtenant shall reimburse to the party who caused said Alterations and/or Sublease Improvements to be removed and repairs made, the cost of such removal, repairs and restoration, together with any and all damages which Overlandlord or Sublandlord may suffer and sustain by reason of Subtenant’s failure or refusal to remove said Alterations and/or Sublease Improvements including, without limitation, holdover rent and damages. Subtenant shall surrender to Sublandlord all keys and combinations to locks which Subtenant is permitted to leave. If the Term of this Sublease (or any portion thereof) expires at or about the date of the expiration of the Overlease (or any portion thereof), and if Sublandlord is required under or pursuant to the terms of the Overlease to remove any Alterations and/or Sublease Improvements, Subtenant shall permit Sublandlord to enter the Subleased Premises for a reasonable period of

 

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time prior to the expiration of this Sublease for the purpose of removing its Alterations and/or Sublease Improvements and restoring the Subleased Premises as required. The foregoing however, shall not excuse or relieve Subtenant of the obligation to remove such Alterations and Sublease Improvements prior to expiration of the Term of this Sublease if their removal is required at the expiration of the term of the Overlease. The obligations of Subtenant as provided in this paragraph shall survive the expiration or earlier termination of this Sublease.

 

(e)                                   Decommissioning Requirements . Except as otherwise expressly provided in the Overlandlord Consent, at least three (3) months prior to the expiration or earlier termination of this Sublease, Subtenant shall deliver to Sublandlord a narrative description of the actions proposed to be taken (or required to be taken by any governmental authority) by Subtenant to surrender the Subleased Premises at the expiration or earlier termination of this Sublease, free from any residual impact from Hazardous Materials or biological materials associated with the Subtenant’s operation of the Subleased Premises (the “Surrender Plan”). Such Surrender Plan shall be accompanied by a current listing of (i) all Hazardous Materials licenses and permits held by or on behalf of Subtenant with respect to the Subleased Premises, and (ii) all Hazardous Materials and biological materials used, stored, handled, treated, generated, released or disposed of from the Subleased Premises, and shall be subject to review and approval by Sublandlord. In connection with the review and approval of the Surrender Plan, upon the request of Sublandlord, Subtenant shall deliver to Sublandlord or its consultant such additional information concerning Hazardous Materials and biological materials as Sublandlord shall request. On or before such surrender, Subtenant shall deliver to Sublandlord and Overlandlord, in the form of a final report that includes the results of all analytical testing performed pursuant to the Surrender Plan, as evidence that the approved Surrender Plan shall have been satisfactorily completed. Sublandlord and Overlandlord shall have the unrestricted right to deliver such Surrender Plan and any report by Sublandlord’s environmental consultant with respect to the surrender of the Subleased Premises to third parties who have a legitimate need to review such report. If Subtenant shall fail to prepare or submit a Surrender Plan approved by Sublandlord, or if Subtenant shall fail to complete the approved Surrender Plan, or if such Surrender Plan, whether or not approved by Sublandlord, shall fail to adequately address any residual impact from Hazardous Materials or biological materials associated with the Subtenant’s operation of the Subleased Premises, such failure shall be deemed a failure to vacate in accordance with this Sublease, and Sublandlord shall retain all remedies available under this Sublease, at law or equity including, without limitation, the right to collect rent on a holdover basis, and Sublandlord shall have the right to take such actions as Sublandlord may deem reasonable or appropriate to assure that the Subleased Premises are surrendered free from impact from Hazardous Materials or biological materials associated with the Subtenant’s operation of the Subleased Premises, the cost of which actions shall be reimbursed by Subtenant as Additional Rent.

 

9.                                       Subtenant’s Personal Property . Except as otherwise expressly provided in the Overlandlord Consent, upon the expiration or earlier termination of this Sublease, Subtenant shall remove all of its furniture, furnishings and equipment (including the Licensed Property, if conveyed to Subtenant pursuant to Section l(d) ), shall repair all damage resulting from such removal or its use of the Subleased Premises, and shall (subject to the provisions of Section 8 above) surrender the Subleased Premises, as so required, in good condition, subject only to reasonable wear and tear and to damage, if any, by fire or other casualty. In the event Subtenant

 

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does not do so, Overlandlord or Sublandlord may, at its option, remove the same (and repair any damage occasioned thereby and restore the Subleased Premises as aforesaid) and dispose thereof or warehouse the same, and Subtenant shall pay the cost of such removal, repair, restoration, delivery or warehousing to Sublandlord, or Sublandlord may treat said property as having been conveyed to Sublandlord, with this Sublease constituting a bill of sale therefor, without further payment or credit by Sublandlord to Subtenant. All personal property in or about the Subleased Premises owned by Subtenant or any other party shall be at the risk of Subtenant only, and Sublandlord shall not be liable for any loss or damage thereto or theft thereof. If the Licensed Property is not conveyed to Subtenant, Subtenant shall pay all costs of removal thereof as Additional Rent. The obligations of Subtenant as provided in this section shall survive the expiration or earlier termination of this Sublease.

 

10.                                Terms of Overlease .

 

(a)                                  Except as herein otherwise expressly provided, all of the terms, provisions, covenants and conditions of the Overlease are incorporated herein by reference and hereby made a part of and are superior to this Sublease, provided that in construing such terms, provisions, covenants and conditions of the Overlease as incorporated herein, the term “Landlord” as used in the Overlease shall refer to Sublandlord hereunder and its successors and assigns; the term “Tenant” as used in the Overlease shall refer to Subtenant hereunder; and the term “Premises” shall refer to the Subleased Premises. Subtenant shall be obligated, however, to pay only the Rent and Security Deposit provided for in this Sublease and not the amounts of rent, rental escalations and security deposit provided to be paid by Sublandlord under the Overlease (but Subtenant shall pay the Additional Rent under Section 5 of this Sublease, even if such Additional Rent may also constitute additional rent under the Overlease, subject, however, to the limitations specified in Section 5 of this Sublease). In addition, any provisions in the Overlease allowing or purporting to allow Sublandlord any rent concessions or abatements or construction or improvements allowances, or granting Sublandlord any option or right to expand the Premises under the Overlease, extend the term of the Overlease or any other option, shall not apply to this Sublease.

 

Notwithstanding anything to the contrary contained herein, the following provisions of the Overlease shall not apply to Subtenant:  Summary of Basic Terms Sections 2, 3A, 3D, 4A, 4B, 5A, 5B, 5C, 7, 9, 12, 13A. Lease Sections 2.5, 2.4(b), 2.4(c), the first sentence of Section 3.1(b) (but only to the extent that Subtenant shall be obligated to pay to Sublandlord the fee described therein, which Subtenant shall pay if demanded by Overlandlord or charged to Sublandlord as Tenant under this paragraph of the Overlease), 3.1(c) (to the extent that an “Excess Improvements Allowance” is to be repaid by Tenant by an increase in Base Rent), 3.1(d) (to the extent that Section 3.1(d) shall be construed as allowing any pre-Term occupancy by Subtenant), 3.1(e) (to the extent of designations of representatives), 3.1(f) and 4.1.

 

(b)                                  As between the parties hereto, Subtenant, with respect to the Subleased Premises, hereby assumes all of the obligations of Sublandlord, as Tenant, under the Overlease applicable during the Term and during any period before or after the Term during which Subtenant occupies the Subleased Premises. To the extent practicable, Subtenant shall perform affirmative covenants which are also covenants of Sublandlord under the Overlease at least five (5) business days prior to the date when Sublandlord’s performance is required under the

 

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Overlease. Without limiting the generality of the foregoing, Subtenant shall be responsible for all maintenance, repairs and replacements to the Subleased Premises and its equipment to the extent Sublandlord is obligated to perform the same under the Overlease, and Subtenant shall comply with all laws, orders, and regulations of all applicable governmental authorities that are applicable to the Subleased Premises during any and all of the period of Subtenant’s access to the Subleased Premises prior to the Commencement Date, during the Term and during any hold over occupancy, or are applicable to Subtenant’s particular use or manner of use of the Subleased Premises, including, laws governing handicapped access or architectural barriers, and all rules, regulations and guidelines promulgated under such laws, as amended from time to time and Subtenant shall perform all defense, indemnification and hold harmless obligations so assumed for the benefit of both Sublandlord and Overlandlord with respect to this Sublease and the Term hereunder. In the event Subtenant desires to take any action and the Overlease would require Sublandlord to obtain the consent of Overlandlord before undertaking any such action of the same kind, Subtenant shall not undertake the same without the prior written consent of Sublandlord and Overlandlord, and Sublandlord may condition its consent upon the receipt of Overlandlord’s consent to same. Sublandlord shall have all of the rights and remedies of Overlandlord under the Overlease as against Subtenant.

 

(c)                                   Notwithstanding anything to the contrary, Sublandlord does not assume any obligation to perform the provisions of the Overlease to be performed by Overlandlord (including, without limitation, the provision or performance of services, maintenance, repairs. Utilities, improvements or allowances), and Sublandlord is not making the same representations and warranties, if any, made by Overlandlord in the Overlease. Sublandlord shall not be liable to Subtenant for any default, failure or delay on the part of Overlandlord in the performance or observance by Overlandlord of any of its obligations under the Overlease, nor shall such default by Overlandlord affect this Sublease or waive or defer the performance of any of Subtenant’s obligations hereunder, except to the extent that such default by Overlandlord excuses performance of Sublandlord under the Overlease. Sublandlord shall reasonably cooperate with Subtenant, at no cost to Sublandlord, in seeking to obtain the performance of Overlandlord pursuant to the Overlease. However, such cooperation shall not require Sublandlord to litigate or pursue other proceedings against Overlandlord. Subtenant shall not receive any abatement of Rent under this Sublease because of the Overlandlord’s failure to perform any of its obligations under the Overlease, except that if Sublandlord receives an abatement of rent from the Overlandlord relating to the Subleased Premises, Subtenant shall receive a proportionate benefit of such abatement of rent to the extent same is allocable to Rent payable hereunder.

 

(d)                                  Subtenant acknowledges that it has received a true copy of the Overlease (including all amendments, but with financial and other confidential information redacted), that it has reviewed the same, and that it is familiar with the contents thereof. Subtenant further acknowledges and understands that notwithstanding anything to the contrary herein, in the event that the Overlease is terminated for any reason, this Sublease shall also be automatically and simultaneously terminated, and thereupon, except as otherwise expressly provided in the Overlandlord Consent, Subtenant shall vacate and surrender the Subleased Premises in accordance with all terms of the Overlease and this Sublease; provided, however, that if the Overlease terminates as a result of a default or breach by Subtenant under this Sublease, then Subtenant shall be liable to Sublandlord for the damages suffered as a result of such termination and such liability shall survive such termination. Notwithstanding anything in this Sublease to

 

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the contrary:  (i) if the Subleased Premises are damaged or destroyed and Overlandlord exercises any option Overlandlord may have to terminate the Overlease, this Sublease shall terminate as of the date of the termination of the Overlease and (ii) if the Overlease gives Sublandlord any right to terminate the Overlease in the event of the partial or total damage, destruction, or condemnation of the Premises or the building or project of which the Premises are a part, the exercise of such right by Sublandlord shall not constitute a default or breach hereunder, and upon such exercise this Sublease shall also be automatically and simultaneously terminated and thereupon, except as otherwise expressly provided in the Overlandlord Consent, Subtenant shall vacate and surrender the Subleased Premises in accordance with all terms of the Overlease and this Sublease and thereafter the parties shall be relieved of any further liability or obligation under this Sublease other than any obligation that expressly survives a termination of this Sublease by its terms.

 

(e)                                   There shall be no presumption that terms of the Overlease are not applicable to construing the provisions of this Sublease based upon the inclusion or omission of specific provisions in this Sublease (it being understood, however, that to the extent of any conflict between the terms of this Sublease and the terms of the Overlease, the terms of this Sublease shall control). Subtenant shall not commit any act or omission which would violate any term or condition of the Overlease. Except as provided in this Sublease or the Overlandlord’s written consent to this Sublease, Subtenant shall not have any authority to contact or make any agreement with Overlandlord regarding the Subleased Premises or the Overlease. Provided that Subtenant has not defaulted under this Sublease or the Overlandlord Consent:  (i) Sublandlord covenants that during the Sublease Term, Sublandlord shall perform Sublandlord’s material obligations arising under the Overlease, (subject to any reduction, waiver or release of such obligations under the Overlandlord Consent) which are not to be performed by Subtenant, so as to keep the Overlease free from material default by Sublandlord as the tenant thereunder; provided, however, that in no event shall Sublandlord be in breach of the covenant set forth in this Section 10(e)  if the default in question arises out of the acts or omissions of any subtenant, Subtenant or any Subtenant Party, and (ii) Sublandlord shall not enter into any amendment or modification of the Overlease that would materially and adversely affect any right granted to Subtenant under this Sublease.

 

11.                                Casualty;  Eminent Domain . In the event of a fire or other casualty affecting the Building or the Subleased Premises, or of a taking of all or a part of the Building or Subleased Premises under the power of eminent domain:  (i) Sublandlord shall not have any obligation to repair or restore the Subleased Premises or any Alterations, Licensed Property or personal property; (ii) Subtenant shall be entitled only to a proportionate abatement of Monthly Base Rent, Additional Rent and other charges to the extent Sublandlord receives a corresponding abatement of rent under the Overlease during the time and to the extent the Occupied Portion of the Subleased Premises are unfit for occupancy for the purposes permitted under this Sublease and not occupied by Subtenant as a result thereof; (iii) Subtenant shall not, by reason thereof, have a right to terminate this Sublease unless the Overlease shall be terminated; and (iv) Sublandlord reserves the right to terminate the Overlease and this Sublease in connection with any right granted to it under Articles X and XI of the Overlease whether or not the Subleased Premises is damaged or the subject of a taking. In the event Overlandlord or Sublandlord exercises the right to terminate the Overlease as the result of any such fire, casualty or taking,

 

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Sublandlord shall provide Subtenant with a copy of the relevant termination notice and this Sublease shall terminate on the date upon which the Overlease terminates.

 

12.                                Holdover . Except as otherwise expressly provided in the Overlandlord Consent, in the event Subtenant is in possession of the Subleased Premises after the expiration or earlier termination of this Sublease, then Subtenant, at Sublandlord’s option, shall be deemed to be occupying the Subleased Premises at sufferance at a Monthly Base Rental equal to the greater of two hundred percent (200%) of (i) the Monthly Base Rental in effect prior to expiration or termination or (ii) the Base Rent provided for under Section 13.9 of the Overlease, with such Base Rent to be charged on a monthly basis for each calendar month or portion thereof for which Tenant holds over, without proration for a partial calendar month, and Subtenant shall otherwise remain subject to all of the conditions, provisions and obligations of this Sublease insofar as the same are applicable to a tenancy at sufferance, including, without limitation, the payment of all Additional Rent and all other amounts due from Subtenant to Sublandlord hereunder. The acceptance of a purported rent check following termination shall not constitute the creation of a tenancy at will, it being agreed that Subtenant’s status shall remain that of a subtenant at sufferance. No holding over by Subtenant after the expiration or termination of this Sublease shall be construed to extend or renew the Term or in any other manner be construed as permission by Sublandlord to holdover. Subtenant shall indemnify and hold Sublandlord harmless from and against any and all damages (actual, consequential or otherwise), losses, costs and expenses, including reasonable attorneys’ fees, incurred by Sublandlord arising out of or in any way attributable to such holding over and/or failure to deliver the Subleased Premises in the condition required by this Sublease on the expiration or earlier termination of the Term of this Sublease. Nothing contained herein shall be construed as consent by Sublandlord to any holding over. Subtenant’s obligations hereunder shall survive the expiration or earlier termination of this Sublease.

 

Except as otherwise expressly provided in the Overlandlord Consent, at the end of the Term or sooner termination of this Sublease, Tenant shall peaceably surrender and deliver up the Subleased Premises, together with the water neutralizer and emergency generator as provided in Section 7.4 of the Overlease, vacant, broom clean, with all utilities safely capped and in good repair and condition, subject to reasonable wear and tear and damage by fire or other casualty. Not later than two (2) business days prior to the end of the Term or sooner termination of this Sublease, Subtenant shall remove all signs and lettering and all trade fixtures and personal property, goods and effects belonging to Subtenant or anyone claiming through or under Subtenant (and shall also remove the Licensed Property unless Sublandlord expressly elects otherwise in writing), shall promptly repair the Subleased Premises and Building as a result of any damage to, or destruction caused by such removal and shall cause all maintenance and repair work of Subtenant to conform to Legal Requirements. Unless Overlandlord or Sublandlord elects otherwise, all installations, alterations, additions or improvements in or to the Subleased Premises shall be the property of Overlandlord and shall remain upon, and be surrendered with, the Subleased Premises at the end of the Term or sooner termination of this Sublease. Subtenant’s failure to comply with the foregoing and with any and all other surrender requirements of the Overlease shall be deemed to constitute a holdover under this Sublease.

 

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13.                                Events of Default .

 

(a)                                  Each of the following events shall constitute an “ Event of Default ” under this Sublease:

 

(i)                                      Subtenant breaches or defaults in the performance of any obligation of Subtenant under the Overlandlord Consent;

 

(ii)                                   Subtenant fails to pay when due Rent or any other amount due hereunder and such failure continues for three (3) days after written notice thereof;

 

(iii)                                Subtenant fails to perform or observe any other obligation, covenant or agreement set forth in this Sublease and such failure continues for seven (7) days after written notice thereof, unless the default is curable but cannot be cured with reasonable diligence within such period and the Subtenant commences and diligently proceeds with rectifying such default thereunder and completes the cure of such default within the earlier of (x) thirty (30) days following Subtenant’s receipt of the original written notice of such default or (y) ten (10) days in advance of the time for completion of a cure thereof under the terms of the Overlease;

 

(iv)                               The institution in a court of competent jurisdiction of proceedings for reorganization, liquidation, or involuntary dissolution by Subtenant, or for its adjudication as a bankrupt or insolvent, or for the appointment of a receiver of the property of Subtenant, provided that proceedings are not dismissed, and any receiver, trustee or liquidator appointed therein is not discharged within sixty (60) days after the institution of said proceedings;

 

(v)                                  Any purported or attempted assignment or other transfer of this Sublease or further sublet of the Subleased Premises or permission to use the Subleased Premises in contravention of this Sublease or the Overlease; or

 

(vi)                               Subtenant fails to vacate and surrender the Subleased Premises as and when required under the terms of this Sublease.

 

(b)                                  Upon the occurrence of an Event of Default, Sublandlord shall have, in addition to any other rights and remedies available to it under this Sublease and/or at law and/or in equity, the following remedies:

 

(i)                                      If this Sublease is terminated due to an Event of Default, then unless and until Sublandlord elects lump sum liquidated damages described in (ii) below Subtenant covenants, as an additional cumulative obligation after any such termination, to pay punctually to Sublandlord all the sums and perform all the obligations which

 

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Subtenant covenants in this Sublease to pay and to perform in the same manner and to the same extent and at the same time as if this Sublease had not been terminated. In calculating the amounts to be paid by Subtenant pursuant to the preceding sentence Subtenant shall be credited with the net proceeds of any rent then actually received by Sublandlord from a reletting of the Subleased Premises after deducting all sums provided for in this Sublease to be paid by Subtenant and not then paid.

 

(ii)                                   If this Sublease is terminated due to an Event of Default, then Subtenant covenants, as an additional cumulative obligation after termination, to pay forthwith to Sublandlord at Sublandlord’s election made by written notice to Subtenant at any time within one year after termination, as liquidated damages a single lump sum payment equal to the sum of (i) all sums provided for in this Sublease to be paid by Subtenant and not then paid at the time of such election, plus (ii) the present value (calculated at the Federal Reserve discount rate or equivalent) of the excess of all of the rent reserved for the residue of the Term over all of the fair market rent reasonably projected by Sublandlord to be received on account of the Subleased Premises during such period, which rent from reletting shall be reduced by reasonable projections of vacancies and by Sublandlord’s reletting expenses described above to the extent not theretofore paid to Sublandlord.

 

(iii)                                Any and all rights and remedies of Overlandlord set forth in the Overlease in connection with a default by Sublandlord thereunder which continues after the expiration of any applicable cure period therein.

 

(iv)                               In addition, without limiting the foregoing, in the event Sublandlord reasonably believes that Subtenant’s failure to cure a breach under this Section 13 shall cause a default by Sublandlord to occur under the Overlease and Subtenant has not commenced to cure such breach or has commenced but ceased the cure of such default, Sublandlord shall specifically have the right, upon giving Subtenant not less than two (2) business days prior written notice thereof, to cure such breach or default and be reimbursed by Subtenant as Additional Rent hereunder for all out-of-pocket expenses (including attorneys’ fees) incurred by Sublandlord in connection therewith upon demand and presentation of invoices therefor. All rights and remedies of Sublandlord herein enumerated shall be cumulative and none shall exclude any other right allowed by law or in equity and said rights and remedies may be exercised and enforced concurrently and whenever and as often as occasion therefor arises.

 

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14.                                Insurance .  Subtenant shall obtain and maintain all insurance types and coverages as specified in the Overlease to be obtained and maintained by Sublandlord, as tenant thereunder, in amounts not less than those specified in the Overlease. All policies of insurance required to be obtained by Subtenant shall name Overlandlord and Sublandlord and its affiliates as additional insureds and/or loss payees (as applicable) therein in accordance with the Overlease. Subtenant’s insurance shall be primary to Overlandlord’s and Sublandlord’s and its affiliates’ insurance. Subtenant shall deliver to Sublandlord on or before the Commencement Date and annually thereafter on the anniversary of the Commencement Date, certificates reflecting that Subtenant has obtained and is maintaining the required insurance coverages in the appropriate amounts. Anything in this Sublease to the contrary notwithstanding, Sublandlord and Subtenant (and its affiliates) each hereby waive any and all rights of recovery, claims, actions or causes of action against the other and the officers, directors, partners, members, agents and employees of each of them, and Subtenant hereby waives any and all rights of recovery, claims, actions or causes of action against Overlandlord and its officers, directors, partners, members, agents and employees for any loss or damage that may occur to the Subleased Premises, any improvements therein and any personal property of Subtenant or any person in the Subleased Premises or in the Building, by reason of fire, the elements or any other cause insured against (or required to be insured against by the terms of this Sublease) under property insurance policies, regardless of cause or origin, including negligence, except in any case which would render this waiver void under law, to the extent that such loss or damage is actually recovered under said insurance policies (or would have been recovered had the insurance required by this Sublease been maintained). Subtenant agrees to obtain, for the benefit of Overlandlord and Sublandlord (and its affiliates), appropriate waiver of subrogation rights and endorsements from its property insurer. Such required insurance shall be written by companies of recognized financial standing which are legally qualified to issue such insurance in the jurisdiction where the Building is located and all insurance must be procured with carriers having an A.M. Best rating of A- VII or better.

 

15.                                Subtenant’s Covenants . Subtenant covenants and agrees that Subtenant will not do anything which would constitute a default under the Overlease or omit to do anything which Subtenant is obligated to do under the terms of this Sublease and which would constitute a default under the Overlease.

 

16.                                Waiver of Claims and Indemnification . Subtenant hereby releases and waives any and all claims against Overlandlord and Sublandlord and each of their respective officers, directors, partners, members, agents, affiliates and employees (the “ Indemnitees ”) for injury or damage to person, property or business sustained in or about the Building or the Subleased Premises by Subtenant other than by reason of negligence or willful misconduct of Overlandlord or Sublandlord and except in any case which would render this release and waiver void under applicable Legal Requirements. Subtenant shall and hereby does indemnify and hold the Indemnitees harmless from and against any and all actions, claims, demands, damages, liabilities and expenses (including, without limitation, reasonable attorneys’ fees and expenses) (“ Losses ”) asserted against, imposed upon or incurred by the Indemnitees by reason of (a) any default caused, suffered or permitted by Subtenant or any Subtenant Party, of any of the terms, covenants or conditions of the Overlease or this Sublease, or (b) any damage or injury to persons or property occurring upon or in connection with the use or occupancy of the Subleased Premises (including, but not limited to any Losses arising out of the making of the Subleased

 

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Improvements by Subtenant, its agents and employees) other than those arising from the gross negligence of willful misconduct of the Indemnitees, as applicable, or (c) any work or thing whatsoever done or condition created by Subtenant or any Subtenant Party in, on or about the Subleased Premises or the Building, or (d) any other act or omission of Subtenant or any Subtenant Party. The provisions of this Section 16 shall survive the expiration or earlier termination of this Sublease.

 

17.                                Environmental Matters .

 

(a)                                  Subtenant shall comply with all the requirements of Section 5.3(a) of the Overlease. In addition, Subtenant shall comply with the instructions for use, storage and disposal provided by the manufacturer of any Hazardous Materials used, stored or disposed by Subtenant. Subtenant further covenants that, should Subtenant, its agents, servants or employees bring upon, use, handle, store, keep, or dispose of biological materials on the Subleased Premises, Subtenant will conduct its operations at the Subleased Premises in strict compliance with the Centers for Disease Control and Prevention/National Institute for Public Health’s Biosafety in Microbiological and Biomedical Laboratories guidelines. Notwithstanding the above, Subtenant hereby acknowledges that the use, handling, storage, keeping, or disposal of biological materials requiring a level of containment greater than Biosafety Level 2, as defined in the above referenced guidance, is prohibited.

 

(b)                                  Subtenant shall not cause or permit any other Hazardous Material to be used, stored, generated or disposed of on or in the Subleased Premises by Subtenant or the Subtenant Parties without first obtaining Sublandlord’s written consent. If Hazardous Materials are used, stored, generated or disposed of on or in the Subleased Premises except as permitted above, if the use, storage, generation or disposal of Hazardous Materials on the Subleased Premises result in contamination of the Subleased Premises or any other property, or if the Subleased Premises or any other property become the subject of an Environmental Claim (as defined herein) relating to Subtenant’s use and operation of the Subleased Premises or to Subtenant’s use, storage, generation or disposal of Hazardous Materials, Subtenant shall indemnify and hold harmless the Sublandlord from any and all actions, claims, damages, fines, judgments, penalties, costs, liabilities or losses (including, without limitation, a decrease in value of the Subleased Premises, damages caused by loss or restriction of leasable or usable space, or any damages caused by adverse impact on marketing of the space, and any and all sums paid for settlement of claims, attorney’s fees, consultant and expert fees) arising during or after the Term. This indemnification includes, without limitation, any and all costs incurred by Sublandlord because of any investigation of the site or any cleanup, removal or restoration required under applicable Environmental Laws or mandated by a federal, state, or local agency or political subdivision. Without limitation of the foregoing, if Subtenant or any of the Subtenant Parties cause or permits the presence of any Hazardous Material on the Subleased Premises in violation of this Section 17 , or that results in an Environmental Claim, Subtenant shall promptly, and at its sole expense, take any and all necessary actions to return the Subleased Premises to the condition existing prior to the presence of any such Hazardous Material on the Subleased Premises. Subtenant shall first obtain Sublandlord’s written approval for any such remedial action. Except for Hazardous Materials that existed in or on the Subleased Premises as of the Commencement Date, Subtenant shall remove all Hazardous Materials from the Subleased Premises in a manner

 

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acceptable to Sublandlord before the earlier of the date Subtenant vacates the Subleased Premises and the date Subtenant’s right to possess the Subleased Premises ends.

 

(c)                                   Subtenant does hereby covenant to Sublandlord that Subtenant will obtain all permits, licenses and other governmental authorizations (“Environmental Permits”) required to conduct its operations in compliance with all applicable Environmental Laws, and that all such Environmental Permits and any required financial assurance will be in full force and effect as of the day that Subtenant commences operations at the Subleased Premises. Subtenant shall maintain at the Subleased Premises a list of all materials stored at the Subleased Premises for which a material safety data sheet (“MSDS”) was issued by the producers or manufacturers thereof, together with copies of the MSDSs for such materials, and shall deliver such list and all MSDS copies to Sublandlord upon Sublandlord’s request therefor.

 

(d)                                  Sublandlord may, upon reasonable notice to Subtenant (and in no case with less than 24 hours’ advance notice except for emergencies), enter the Subleased Premises and conduct environmental inspections and tests therein as it may reasonably require from time to time, provided that Sublandlord shall use reasonable efforts to minimize the interference with Subtenant’s business. Such inspections and tests shall be conducted at Sublandlord’s expense, unless they reveal the presence of Hazardous Materials in violation of the above provisions of this Section or that Subtenant has not complied with the requirements of this Section 17 or with any Environmental Law, in which case Subtenant shall reimburse Sublandlord for the cost thereof within ten (10) days after Landlord’s request therefor. Subtenant shall, at its sole cost and expense, promptly and satisfactorily remediate any environmental conditions identified by such inspection in accordance with all Environmental Laws.

 

(e)                                   Subtenant shall assume full responsibility for reporting any release, spill, leak, discharge, disposal, pumping, pouring, emission, emptying, injecting, leaching, dumping or escaping (“ Release ”) or threat of Release of any Hazardous Materials at the Subleased Premises to the appropriate environmental agencies and immediately provide notice of such Release or threat of Release to Sublandlord. Subtenant shall assume full responsibility for any and all investigations, clean-up, remediations and other actions required in connection with any Release or threat of Release arising out of any act or omission of Subtenant or any of the Subtenant Parties, including, without limitation, to restore the Subleased Premises, the Premises under the Overlease and any adjoining property affected by such Release, and shall indemnify and hold Sublandlord and Overlandlord harmless from any Environmental Claims in relation thereto. Subtenant shall take all necessary precautions to avoid any such Release or threat of Release. The terms and conditions of this Subsection 17(e)  and obligations of Subtenant hereunder shall survive any expiration of termination of this Sublease.

 

(f)                                    As used in this Section 17 , the following terms shall have the following meanings:

 

(i)                                      Environmental Laws ” means the Comprehensive Environmental Response, Compensation, and liability Act (“CERCLA”), 42 U.S.C. §9601 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. §6901 et seq., the Hazardous Materials Transportation Act, 49 U.S.C. §1802 et seq., the Toxic Substances Control Act, 15 U.S.C. §2601 et seq., the Federal Water Pollution Control Act, 33 U.S.C. §1251 et seq., the Clean Water Act, 33 U.S.C. §1321 et seq., the Clean Air Act, 42 U.S.C. §7401 et seq., the Occupational Safety and

 

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Health Act, 29 U.S.C. §651 et. seq. the Massachusetts Oil and Hazardous Material Release Prevention and Response Act, Chapter 21 E of the Massachusetts General Laws, all regulations promulgated thereunder, and any other federal, state, county, municipal, local or other statute, law, ordinance or regulation (including any state or local board of health rules, regulation, or code), or any common law (including common law that may impose strict liability or liability based on negligence), which may relate to or deal with human health, the environment, natural resources, or Hazardous Materials, all as may be from time to time amended or modified, and any other law related to environmental matters or liability with respect to or affecting the Subleased Premises or the Building, whether in effect now or in the future.

 

(ii)                                   Hazardous Materials ” (or any derivation thereof) means those materials defined as such in Article 1 of the Overlease and any and all hazardous materials, toxic substances, chemicals, contaminants, pollutants, solid wastes or waste, as defined by any Environmental Law, and also includes, but is not limited to, any asbestos, lead paint, mold, radon, petroleum, petroleum products (including without limitation, oil), petroleum by products, reactive materials, ignitable materials, corrosive materials, hazardous chemicals, hazardous waste, toxic substances, toxic chemicals, chemicals, pesticides, radioactive materials, polychlorinated byphenols, methane, biological materials, soil vapor (but only to the extent soil vapor is caused by a Release), gas (but only to the extent gas is caused by a Release), and any other element, compound, mixture, solution, substance, material, waste or the like which may pose a present or potential danger to human health and safety, biota or the environment.

 

(iii)                                Environmental Claim ” means any claim, action, cause of action, investigation or notice (written or oral) by any person or entity alleging potential liability (including, without limitation, potential liability for investigatory costs, cleanup costs, governmental response costs, natural resources damages, property damages, personal injuries, or penalties) arising out of, based on or resulting from (a) the presence, Release or threatened Release of or exposure to any Hazardous Material, or (b) circumstances forming the basis of any violation, or alleged violation, of any Environmental Law.

 

18.                                Assignment and Sublease . Subtenant shall not assign, mortgage, pledge or otherwise encumber, directly or indirectly, this Sublease, the Subleased Premises or any interest therein, allow any transfer thereof or any lien upon Subtenant’s interest by operation of law or otherwise, further sublet the Subleased Premises or any part thereof, or permit the occupancy of the Subleased Premises or any part thereof by anyone other than Subtenant, without in each instance obtaining the prior written consent of Overlandlord and Sublandlord in their respective discretion. If Sublandlord consents thereto, Sublandlord shall use reasonable efforts to obtain the consent of Overlandlord under the Overlease; provided, however, Subtenant shall reimburse Sublandlord for any costs incurred by Sublandlord with respect thereto. Sublandlord shall consent to an assignment or subletting to a “Permitted Transferee” as defined below, provided that Subtenant gives Sublandlord reasonable advance written notice of such intended assignment which notice shall include copies of the proposed assignment or subletting agreement and all related non-confidential documentation as applicable and further provided that Overlandlord consents in writing to such assignment or subletting to such Permitted Transferee. No assignment or subletting (including, without limitation, any assignment or subletting to a Permitted Transferee) shall relieve Subtenant from Subtenant’s obligations and agreements hereunder and Subtenant shall continue to be liable as a principal and not as guarantor or surety to the same

 

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extent as though no assignment or subletting had been made. Further, no permitted assignment or sublease (including, without limitation, any assignment or subletting to a Permitted Transferee) shall be effective unless and until any and all defaults of Subtenant hereunder shall have been cured. If Subtenant is a corporation or a partnership with a corporate general partner, then, except for a transfer to a Permitted Transferee, any event resulting in a dissolution, merger, consolidation or other reorganization of Subtenant (or such corporate general partner), or the sale or transfer or relinquishment of the interest of shareholders who, as of the date of this Sublease, own a controlling interest of the capital stock of Subtenant (or such corporate general partner), shall be deemed a prohibited assignment. “Permitted Transferee” means (a) an entity (other than an Affiliate of Subtenant) which succeeds to Tenant’s business by merger, consolidation or other form of corporate reorganization or (b) an entity (other than an Affiliate of Subtenant) which acquires all or substantially all of Tenant’s assets or stock. Notwithstanding the foregoing, an entity may not become a Permitted Transferee through or as a part of a bankruptcy or other similar insolvency proceeding. For purposes of this Section 18 , “ Affiliate ” means, except as otherwise provided in this Sublease, with respect to any Person, any other Person which, directly or indirectly, controls, is controlled by or is under common control with such Person. For purposes of the foregoing definition, “control” (including correlative meanings of “controlled by” and “under common control with”) shall mean possession, directly or indirectly, of the power to direct or cause the direction of the management policies of the entity in question, whether through ownership of voting securities, partnership interests, membership interests or by contract or otherwise; and “ Person ” means a natural person, corporation, partnership, limited liability company, association, trustee, authority or other legal entity.

 

19.                                Brokers . Sublandlord and Subtenant hereby represent and warrant to each other that it has had no dealings with any real estate broker, agent or finder in connection with the negotiation of this Sublease except Cushman & Wakefield and Colliers International, who represented Sublandlord and Subtenant, respectively (collectively, the “ Broker ”), and that it knows of no other real estate broker, agent or finder who is entitled to a commission in connection with this Sublease. Each party agrees to indemnify, defend and hold harmless the other party from and against any and all claims, demands, losses, liabilities, judgments, costs and expenses (including, without limitation, reasonable attorneys’ fees) with respect to any leasing commission or equivalent compensation alleged to be owing on account of the indemnifying party’s dealing with any real estate broker, agent or finder other than the Broker. Sublandlord shall pay to Broker a commission for procuring this Sublease pursuant to a separate agreement between Broker and Sublandlord.

 

20.                                Entire Agreement;  No Waiver;  Modification of Sublease . This Sublease contains all of the covenants, agreements, terms, provisions, conditions, warranties and understandings relating to the leasing of the Subleased Premises and Sublandlord’s obligations in connection therewith, and neither Sublandlord nor any agent or representative of Sublandlord has made or is making, and Subtenant in executing and delivering this Sublease is not relying upon, any warranties, representations, promises or statements whatsoever, except to the extent expressly set forth in this Sublease. All understandings, correspondence, negotiations and agreements, written or oral, if any, heretofore had between the parties are merged into this Sublease, which alone fully and completely expresses the agreement of the parties. The failure of Sublandlord to insist in any instance upon the strict keeping, observance or performance of any covenant, agreement, term, provision or condition of this Sublease or to exercise any election herein contained shall

 

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not be construed as a waiver or relinquishment for the friture of such covenant, agreement, term, provision, condition or election, but the same shall continue and remain in full force and effect. No amendment, waiver or modification of this Sublease or any covenant, agreement, term, provision or condition hereof shall be deemed to have been made unless expressed in writing and signed by Subtenant and Sublandlord and consented to by Overlandlord. No surrender of possession of the Subleased Premises or of any part thereof or of any remainder of the Term of this Sublease shall release Subtenant from any of its obligations hereunder unless accepted by Sublandlord in writing. The receipt and retention by Sublandlord of Rent from anyone other than Subtenant shall not be deemed a waiver of the breach by Subtenant of any covenant, agreement, term or provision of this Sublease, or as the acceptance of such other person as a tenant, or as a release of Subtenant of the covenants, agreements, terms, provisions and conditions herein contained. The receipt and retention by Sublandlord of any Rent with knowledge of the breach of any covenant, agreement, term, provision or condition herein contained shall not be deemed a waiver of such breach.

 

21.                                Quiet Enjoyment . Provided no Event of Default exists hereunder, Subtenant shall peaceably and quietly hold and enjoy the Subleased Premises against Sublandlord and all persons claiming by, through or under Sublandlord for the Sublease Term herein described, subject to the terms and conditions of this Sublease.

 

22.                                Successors and Assigns . If Subtenant shall include more than one person, the obligations of all such persons under this Sublease shall be joint and several and the provisions of this Sublease shall individually apply to each person comprising Subtenant. The obligations of this Sublease shall bind and benefit the permitted successors and assigns of the parties with the same effect as if mentioned in each instance where a party hereto is named or referred to.

 

23.                                Notices . Any and all communications (“ Notice ”) delivered hereunder shall be in writing and shall be personally delivered, or sent by United States mall postage prepaid as registered or certified mail, return receipt requested, or sent by reputable overnight courier service, and delivered to the following address:

 

If to Overlandlord:

 

TBCI, LLC, as Trustee of 100 Discovery Park Realty Trust

c/o The Bulfinch Companies, Inc.

First Needham Place

250 First Avenue, Suite 200

Needham, MA 02494

 

Attention:  Robert A. Schlager

 

with copies to:

 

TBCI, LLC, as Trustee of 100 Discovery Park Realty Trust

c/o The Bulfinch Companies, Inc.

First Needham Place

250 First Avenue, Suite 200

Needham, MA 02494

 

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Attention:  Mark R. DiOrio, Esq.

 

and

 

Vorys, Sater, Seymour and Pease LLP

301 E. Fourth Street, Suite 3500

Cincinnati, OH 45202

Attention:  Charles C. Bissinger, Jr., Esq.

 

If to Sublandlord:

 

Pfizer Inc.

Corporate Real Estate Services

235 East 42nd Street

New York, NY 10017

Attention:  Terence Hales

 

and to:

 

Pfizer Inc.

Legal Division

235 East 42nd Street

New York, NY 10017

Attention:  William C. Longa

 

and to:

 

DLA Piper LLP (US)

500 8th Street, NW

Washington, DC 20004

Attention:  Jeffrey R. Keitelman

 

If to Subtenant:

 

Prior to the Commencement Date :

 

Genocea Biosciences, Inc.

161 First Street

Cambridge, MA 02139

Attention:  Robert E. Farrell, Jr., CPA

 

On or after the Commencement Date :

 

Genocea Biosciences, Inc.

100 Discovery Park

Cambridge, MA 02140

Attention:  Robert E. Farrell, Jr., CPA

 

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With a copy to:

 

Anderson  & Kreiger LLP

One Canal Park, Suite 200

Cambridge, MA 02141

Attention:  David L. Wiener

 

or to such other address and attention as any of the above shall notify the others in writing. Any Notice shall be deemed delivered on the date it is personally delivered (or delivery is refused), the business day after deposited with a national, reputable overnight courier service for next day delivery, or three (3) business days after being sent by United States mall in accordance with the foregoing.

 

24.                                Overlandlord’s Consent;  Default Notices . This Sublease shall be subject to obtaining the written consent of Overlandlord as required by Section 8.1 of the Overlease in the form attached hereto as Schedule 24 . Other than the costs, fees and charges required by Overlandlord to be paid in connection with any consent of Overlandlord required pursuant to this Sublease or the Overlease, Subtenant shall comply, at Subtenant’s sole cost and expense, with any and all other requirements or conditions required by Overlandlord, this Sublease or the Overlease in connection with such consent. Sublandlord and Subtenant agree to promptly provide the other party with any notices received from Overlandlord of a claimed default with respect to the Subleased Premises. In the event that the written consent of Overlandlord is not in the form attached hereto as Schedule 24 , this Sublease shall, at the option of Sublandlord, be null and void.

 

25.                                Inspection . Sublandlord reserves the right, upon reasonable prior notice of not less than 24 hours’ advance notice except for emergencies, to enter the Subleased Premises for the purpose of inspecting the Subleased Premises, exhibiting the Subleased Premises to persons having a legitimate interest therein, or curing any default by Subtenant under this Sublease.

 

26.                                Force Majeure . If Sublandlord or Subtenant is in any way delayed or prevented from performing any obligation (except, with respect to Subtenant, its obligation to timely pay Rent, any obligation set forth in the provisions hereunder pertaining to Subtenant’s maintaining insurance policies, or any holdover) due to fire, act of God, governmental act or failure to act, strike, labor dispute, inability to procure materials or any cause beyond its reasonable control (whether similar or dissimilar to the foregoing events), then the time for performance of such obligation shall, to the extent permitted by the Overlease, be excused for the period of such delay or prevention and extended for a period equal to the period of such delay or prevention.

 

27.                                Parking . Subject to Overlandlord’s provision to Sublandlord of the parking rights which Sublandlord is granted under the Overlease, Sublandlord agrees to make available to Subtenant up to thirty two (32) parking permits (the “ Parking Permits ”) for the unreserved parking of standard passenger automobiles, at the rates specified in the Overlease in the Parking Areas specified in the Overlease (the “ Parking Area ”). Subtenant shall not sell, assign or permit anyone other than Subtenant’s personnel to use any of the Parking Permits.

 

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28.                                Limit of Sublandlord’s Liability . Notwithstanding anything to the contrary contained in this Sublease, neither Sublandlord, its affiliated companies nor its and their partners, members, officers, directors, employees, agents, servants and contractors (collectively, the “ Sublandlord Parties ”), shall be liable for any losses, costs, damages or injury to person or property or resulting from the loss of use thereof sustained by Subtenant or any Subtenant Party, based on, arising out of, or resulting from, any cause whatsoever, including any due to the Building becoming out of repair, or due to the occurrence of any accident or event in or about the Building, or due to any act or neglect of Overlandlord or any tenant or occupant of the Building or any other person. Notwithstanding the foregoing provision of this Section, Sublandlord shall not be released from liability to Subtenant for any physical injury to any natural person caused by Sublandlord’s negligence or willful misconduct to the extent such injury is not covered by insurance either carried by Subtenant (or such person) or required by this Sublease to be carried by Subtenant; provided that neither Sublandlord nor any Sublandlord Party shall under any circumstances be liable for any exemplary, punitive, consequential or indirect damages (or for any interruption of or loss to business). Notwithstanding anything to the contrary set forth in this Sublease, if Subtenant or any other Subtenant Party is awarded a judgment or other remedy against Sublandlord, the recourse for satisfaction of the same shall be limited to execution against the aggregate amount of Monthly Base Rent paid by Subtenant to Sublandlord under this Sublease over the Sublease Term. No other asset of Sublandlord or any other Sublandlord Party shall be available to satisfy, or be subject to, such judgment or other remedy, nor shall any such person be held to have any personal liability for satisfaction or any claim or judgment.

 

29.                                Limitation on Personal Liability . No present or future partner, member, director, officer, shareholder, employee, advisor, affiliate or agent of or in Sublandlord or Subtenant or any affiliate of Sublandlord or Subtenant shall have any personal liability, directly or indirectly, under or in connection with this Sublease or any agreement made or entered into under or in connection with the provisions of this Sublease, or any amendment or amendments to the foregoing made at any time or times, heretofore or hereafter.

 

30.                                Waiver; Consent to Service; Venue . SUBLANDLORD, SUBTENANT, AND ANY AND ALL GENERAL PARTNERS OF SUBTENANT EACH WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT IN CONNECTION WITH ANY MATTER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS SUBLEASE, THE RELATIONSHIP OF SUBLANDLORD AND SUBTENANT HEREUNDER, SUBTENANT’S USE OR OCCUPANCY OF THE SUBLEASED PREMISES, AND/OR ANY CLAIM OF INJURY OR DAMAGE. SUBTENANT FURTHER WAIVES ANY RIGHT TO RAISE ANY NON-COMPULSORY COUNTERCLAIM IN ANY ACTION OR PROCEEDING INSTITUTED BY SUBLANDLORD. THIS SUBLEASE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS. SUBTENANT CONSENTS TO SERVICE OF PROCESS AND ANY PLEADING RELATING TO ANY SUCH ACTION AT THE SUBLEASED PREMISES; PROVIDED, HOWEVER, THAT NOTHING HEREIN SHALL BE CONSTRUED AS REQUIRING SUCH SERVICE AT THE SUBLEASED PREMISES. SUBLANDLORD, SUBTENANT, AND ALL SUCH GENERAL PARTNERS EACH WAIVES ANY OBJECTION TO THE VENUE OF ANY ACTION FILED IN ANY COURT SITUATED IN THE JURISDICTION IN WHICH THE BUILDING IS LOCATED, AND WAIVES ANY RIGHT, CLAIM OR POWER, UNDER THE DOCTRINE OF FORUM NON

 

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CONVENIENS OR OTHERWISE, TO TRANSFER ANY SUCH ACTION TO ANY OTHER COURT.

 

31.                                Subtenant’s Authority . Subtenant represents and warrants to Sublandlord that Subtenant is a duly organized corporation, limited liability company or partnership, is in good standing under the laws of the jurisdiction of its formation, is qualified to do business and is in good standing in the jurisdiction in which the Building is located, has the power and authority to enter into this Sublease, and that all corporate, limited liability company or partnership action, as applicable, requisite to authorize Subtenant to enter into this Sublease has been duly taken.

 

32.                                Estoppel . Sublandlord hereby represents to Subtenant that (i) the Overlease is in full force and effect; (ii) Sublandlord has no knowledge of and has received no notice from the Overlandlord of default by Sublandlord under the Overlease which default remains uncured on the date hereof; (iii) to Sublandlord’s actual knowledge, neither Sublandlord nor Overlandlord is now in default under the Overlease; and (iv) a true, correct and complete copy of the Overlease (with financial and confidential information redacted) is attached hereto as Schedule 32 .

 

33.                                Signs . Subject to Overlandlord’s prior written approval, Sublandlord shall permit Subtenant to use the portion of the Building’s tenant directory allocated to Sublandlord under the Overlease. In addition, subject to Overlandlord’s prior written approval of the design, size and location thereof and the requirements of all applicable laws and the terms and conditions of the Overlease, Subtenant shall have the right to install signage with Subtenant’s name and logo on (or, if required by Overlandlord, adjacent to) the entrance doors of the Subleased Premises. All signage shall satisfy and be in accordance with all applicable Legal Requirements and restrictions and the Overlease. All signage of Subtenant as may be approved and installed pursuant to this Sublease shall be at the expense of Sublandlord.

 

34.                                No Option; No Partnership . The submission of this Sublease by Subtenant for examination does not constitute a reservation of or option for the Subleased Premises, and this Sublease shall become effective only when it is executed and delivered by Sublandlord and Subtenant and consented to in writing by Overlandlord in accordance herewith. Nothing contained in this Sublease shall be construed as creating a partnership or joint venture between Subtenant and Sublandlord, or to create any other relationship between the parties other than that of Subtenant and Sublandlord.

 

35.                                Interpretation; Governing Law . The Schedules attached to this Sublease are a part of this Sublease. Section and subsection headings are for convenience only, and not for use in interpreting this Sublease. If a court finds any provision of this Sublease unenforceable, all other provisions shall remain enforceable, and such unenforceable provision shall be deemed severed from this Sublease. This Sublease shall be construed and governed in accordance with the laws of The Commonwealth of Massachusetts. The term “Business Day”, as used herein, means a calendar day other than a Saturday, Sunday or legal holiday (i) observed by the state in which the Premises is located, or (ii) on which federally chartered banks located in Boston, MA are closed for business.

 

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36.                                Contingency . Notwithstanding any provision in this Sublease to the contrary, if the Commencement Date has not occurred within one (1) year after the date of this Sublease, this Sublease shall automatically terminate on the first (1 st ) anniversary of the date hereof.

 

37.                                Remedies . The rights and remedies mentioned in this Sublease are in addition to, and do not deprive a party of, any other rights at law or in equity.

 

38.                                Counterparts . To facilitate execution, this Sublease may be executed in as many counterparts as may be required, and it shall not be necessary that the signature of each party, or that the signatures of all persons required to bind any party, appear on each counterpart; but it shall be sufficient that the signature of each party, or that the signatures of the persons required to bind any party, appear on one or more of such counterparts. All counterparts shall collectively constitute a single agreement.

 

[signature page follows]

 

31


 

IN WITNESS WHEREOF, Sublandlord and Subtenant have duly executed this Sublease of the day and year first above written as a sealed Massachusetts instrument.

 

 

SUBLANDLORD:

 

 

 

 

 

FOLDRX PHARMACEUTICALS, INC.

 

a Delaware Corporation

 

 

 

 

 

By:

/s/ Bradford A. Lewin

 

Name: Bradford A. Lewin

 

Title: Vice President

 

 

 

SUBTENANT:

 

 

 

GENOCEA BIOSCIENCES, INC.,

 

a Delaware corporation

 

 

 

 

 

By:

/s/ Robert E. Farrell, Jr.

 

Name:

Robert E. Farrell, Jr.

 

Title: Its

VP Finance & Admin

 

32



 

Schedule 1(b)

 

Floor Plan of Subleased Premises

 

[See Attached]

 

33



 

 

34



 

Schedule 2(c)

 

Sublease Commencement Date Acknowledgement

 

THIS SUBLEASE COMMENCEMENT DATE AND DELIVERY DATE ACKNOWLEDGEMENT (“ Acknowledgement ”) is entered into as of                             , 2012, by and between [                        ] (“ Sublandlord ”), and GENOCEA BIOSCIENCES, INC. (“ Subtenant ”);

 

W I T N E S S E T H :

 

WHEREAS, Sublandlord and Subtenant have entered into that certain Sublease Agreement dated as of                 , 2012 (the “ Sublease ”), pursuant to which Subtenant has leased from Sublandlord the entirety of the fifth (5th) floor of the Building identified in the Sublease, deemed to contain 23,666 square feet of leasable area for a Term ending on February 28, 2014.

 

WHEREAS, pursuant to Section 2(c)  of the Sublease, Sublandlord and Subtenant have agreed to enter into this Acknowledgement to acknowledge the occurrence of the Commencement Date and Delivery Date under the Sublease.

 

NOW, THEREFORE, the parties hereto, for themselves, their permitted successors and assigns, mutually covenant and agree that the Commencement Date under the Sublease is                         , 2012 and the Delivery Date under the Sublease is                                   , 2012.

 

[Signature page follows]

 

35



 

IN WITNESS WHEREOF , Sublandlord and Subtenant have duly executed this acknowledgement as of the day and year first above written.

 

 

SUBLANDLORD:

 

 

 

 

 

a

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

SUBTENANT:

 

 

 

GENOCEA BIOSCIENCES, INC.,

 

a Delaware corporation

 

 

 

 

 

By:

 

 

Name:

 

 

Title: Its

 

 

36



 

Schedule 6

 

Form of Letter of Credit

 

BENEFICIARY:

FOLDRx PHARMACEUTICALS, INC.

c/o PFIZER INC.

235 EAST 42ND STREET

NEW YORK, NEW YORK 10017

 

APPLICANT:

GENOCEA BIOSCIENCES INC

161 FIRST STREET SUITE 2C

CAMBRIDGE, MA 02139

 

AMOUNT:             US$157,500.00 (ONE HUNDRED FIFTY SEVEN THOUSAND FIVE HUNDRED EXACTLY)

 

EXPIRATION DATE:

              (TBD – ONE YEAR FROM L/C ISSUANCE, WITH AUTOMATIC RENEWAL)

 

LOCATION:   SANTA CLARA, CALIFORNIA

 

LADIES AND GENTLEMEN:

 

WE HEREBY ESTABLISH OUR IRREVOCABLE STANDBY LETTER OF CREDIT NO. SVBSF             IN YOUR FAVOR THIS LETTER OF CREDIT IS AVAILABLE BY SIGHT PAYMENT WITH OURSELVES ONLY AGAINST PRESENTATION AT THE BANK’S OFFICE (AS DEFINED BELOW) OF THE FOLLOWING DOCUMENTS:

 

1.               THE ORIGINAL OF THIS LETTER OF CREDIT AND ALL AMENDMENT(S), IF ANY.

2.               YOUR SIGHT DRAFT, IN WHOLE OR IN PART DRAWN ON US IN THE FORM ATTACHED HERETO AS EXHIBIT “A” .

3.               A DATED STATEMENT PURPORTEDLY SIGNED BY AN AUTHORIZED REPRESENTATIVE OF THE BENEFICIARY, FOLLOWED BY HIS/HER PRINTED NAME AND DESIGNATED TITLE, STATING ANY OF THE FOLLOWING WITH INSTRUCTIONS IN BRACKETS THEREIN COMPLIED WITH:

 

(A.)                             “WE ARE ENTITLED T DRAW ON THE LETTER OF CREDIT PURSUANT TO THE TERMS OF THAT CERTAIN SUBLEASE BY AND BETWEEN FOLDRx PHARMACEUTICALS, INC., AS SUBLANDLORD, AND GENOCEA BIOSCIENCES INC, AS SUBTENANT.”

OR

(B.)                             “WE HEREBY CERTIFY THAT WE RECEIVED A NOTICE FROM SILICON VALLEY BANK THAT ITS IRREVOCABLE LETTER OF CREDIT NUMBER SVBSF              WILL NOT BE EXTENDED AND APPLICANT HAS FAILED TO PROVIDE A

 

37



 

REPLACEMENT LETTER OF CREDIT SATISFACTORY TO BENEFICIARY WITHIN FORTY FIVE (45) DAYS PRIOR TO THE CURRENT EXPIRATION DATE.”

 

THE SUBLEASE MENTIONED ABOVE IS FOR IDENTIFICATION PURPOSES ONLY AND IS NOT INTENDED THAT SAID SUBLEASE BE INCORPORATED HEREIN OR FORM PART OF THIS LETTER OF CREDIT.

 

PARTIAL AND MULTIPLE DRAWINGS ARE ALLOWED.

 

THIS LETTER OF CREDIT MUST ACCOMPANY ANY DRAWINGS HEREUNDER FOR ENDORSEMENT OF THE DRAWING AMOUNT AND WILL BE RETURNED TO BENEFICIARY UNLESS IT IS FULLY UTILIZED.

 

THIS LETTER OF CREDIT SHALL BE AUTOMATICALLY EXTENDED FOR AN ADDITIONAL PERIOD TO FINALLY EXPIRE ON APRIL 28, 2014, WITHOUT AMENDMENT, FROM THE PRESENT EXPIRATION DATE UNLESS AT LEAST SIXTY (60) DAYS PRIOR TO THE THEN CURRENT EXPIRATION DATE WE SEND YOU A NOTICE BY REGISTERED MAIL/OVERNIGHT COURIER SERVICE AT THE ABOVE ADDRESS (OR SUCH OTHER ADDRESS AS BENEFICIARY MAY FROM TIME TO TIME DESIGNATE IN A NOTICE DELIVERED TO SILICON VALLEY BANK AT THE BANK’S OFFICE) THAT THIS LETTER OF CREDIT WILL NOT BE EXTENDED BEYOND THE THEN-CURRENT EXPIRATION DATE. BUT IN ANY EVENT THIS LETTER OF CREDIT WILL NOT BE EXTENDED BEYOND APRIL 28, 2014 WHICH SHALL BE THE FINAL EXPIRATION DATE OF THIS LETTER OF CREDIT.

 

THE DATE THIS LETTER OF CREDIT EXPIRES IN ACCORDANCE WITH THE ABOVE PROVISION IS THE “FINAL EXPIRATION DATE”. UPON THE OCCURRENCE OF THE FINAL EXPIRATION DATE THIS LETTER OF CREDIT SHALL FULLY AND FINALLY EXPIRE AND NO PRESENTATIONS MADE UNDER THIS LETTER OF CREDIT AFTER SUCH DATE WILL BE HONORED.

 

THIS LETTER OF CREDIT IS TRANSFERABLE WITHOUT COST TO THE BENEFICIARY ONE OR MORE TIMES BY THE ISSUING BANK, AT THE REQUEST OF THE BENEFICIARY, BUT IN EACH INSTANCE ONLY TO A SINGLE BENEFICIARY AS TRANSFEREE AND ONLY UP TO THE THEN AVAILABLE AMOUNT IN FAVOR OF ANY NOMINATED TRANSFEREE THAT IS THE SUCCESSOR IN INTEREST TO BENEFICIARY (“TRANSFEREE”), ASSUMING SUCH TRANSFER TO SUCH TRANSFEREE WOULD BE IN COMPLIANCE WITH THEN APPLICABLE LAW AND REGULATION, INCLUDING BUT NOT LIMITED TO THE REGULATIONS OF THE U. S. DEPARTMENT OF TREASURY AND U.S. DEPARTMENT OF COMMERCE. AT THE TIME OF TRANSFER, THE ORIGINAL LETTER OF CREDIT AND ORIGINAL AMENDMENT(S), IF ANY, MUST BE SURRENDERED TO US AT OUR ADDRESS

 

38



 

INDICATED IN THIS LETTER OF CREDIT TOGETHER WITH OUR LETTER OF TRANSFER DOCUMENTATION AS PER ATTACHED EXHIBIT “B” DULY EXECUTED. THE CORRECTNESS OF THE SIGNATURE AND TITLE OF THE PERSON SIGNING THE TRANSFER FORM MUST BE VERIFIED BY BENEFICIARY’S BANK. APPLICANT SHALL PAY OUR TRANSFER FEE OF 1/4 OF 1% OF THE TRANSFER AMOUNT (MINIMUM US$250.00) UNDER THIS LETTER OF CREDIT. ANY REQUEST FOR TRANSFER WILL BE EFFECTED BY US SUBJECT TO THE ABOVE CONDITIONS. HOWEVER ANY REQUEST FOR TRANSFER IS NOT CONTINGENT UPON APPLICANT’S ABILITY TO PAY OUR TRANSFER FEE. ANY TRANSFER OF THIS LETTER OF CREDIT MAY NOT CHANGE THE PLACE OR DATE OF EXPIRATION OF THE LETTER OF CREDIT FROM OUR ABOVE SPECIFIED OFFICE. EACH TRANSFER SHALL BE EVIDENCED BY OUR ENDORSEMENT ON THE REVERSE OF THE LETTER OF CREDIT AND WE SHALL FORWARD THE ORIGINAL OF THE LETTER OF CREDIT SO ENDORSED TO THE TRANSFEREE.

 

DRAFT(S) AND DOCUMENTS MUST INDICATE THE NUMBER OF THIS LETTER OF CREDIT.

 

ALL DEMANDS FOR PAYMENT SHALL BE MADE BY PRESENTATION OF THE ORIGINAL APPROPRIATE DOCUMENTS DURING REGULAR BUSINESS HOURS ON A BUSINESS DAY AT OUR OFFICE (THE “BANK’S OFFICE”) AT:  SILICON VALLEY BANK, 3003 TASMAN DRIVE, MALL SORT HF210, SANTA CLARA, CALIFORNIA 95054, ATTENTION:  GLOBAL FINANCIAL SERVICES - STANDBY LETTER OF CREDIT DEPARTMENT; OR BY FACSIMILE TRANSMISSION AT:  (408) 969-6510 OR (408) 496-2418 AND SIMULTANEOUSLY UNDER TELEPHONE ADVICE TO:  (408) 654- 6274 OR (408) 654-7716, ATTENTION:  STANDBY LETTER OF CREDIT NEGOTIATION DEPARTMENT WITH ORIGINALS TO FOLLOW BY OVERNIGHT COURIER SERVICE, PROVIDED, HOWEVER, THE BANK WILL DETERMINE HONOR OR DISHONOR ON THE BASIS OF PRESENTATION BY FACSIMILE ALONE, AND WILL NOT EXAMINE THE ORIGINALS.

 

AS USED HEREIN, THE TERM “BUSINESS DAY” MEANS A DAY ON WHICH WE ARE OPEN AT OUR ABOVE ADDRESS IN SANTA CLARA, CALIFORNIA TO CONDUCT OUR LETTER OF CREDIT BUSINESS. NOTWITHSTANDING ANY PROVISION TO THE CONTRARY IN THE ISP98 (AS HEREINAFTER DEFINED), IF THE EXPIRATION DATE OR THE FINAL EXPIRATION DATE IS NOT A BUSINESS DAY THEN SUCH DATE SHALL BE AUTOMATICALLY EXTENDED TO THE NEXT SUCCEEDING DATE WHICH IS A BUSINESS DAY.

 

WE HEREBY ENGAGE WITH YOU THAT DRAFT(S) DRAWN AND/OR DOCUMENTS PRESENTED UNDER AND IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THIS LETTER OF CREDIT SHALL BE DULY HONORED UPON PRESENTATION TO SILICON VALLEY BANK, IF PRESENTED ON OR BEFORE THE EXPIRATION DATE OF THIS LETTER OF CREDIT.

 

IF ANY INSTRUCTIONS ACCOMPANYING A DRAWING UNDER THIS LETTER OF CREDIT REQUEST THAT PAYMENT IS TO BE MADE BY TRANSFER TO YOUR

 

39



 

ACCOUNT WITH ANOTHER BANK, WE WILL ONLY EFFECT SUCH PAYMENT BY FED WIRE TO A U.S. REGULATED BANK, AND WE AND/OR SUCH OTHER BANK MAY RELY ON AN ACCOUNT NUMBER SPECIFIED IN SUCH INSTRUCTIONS EVEN IF THE NUMBER IDENTIFIES A PERSON OR ENTITY DIFFERENT FROM THE INTENDED PAYEE.

 

EXCEPT SO FAR AS OTHERWISE EXPRESSLY STATED HEREIN, THIS LETTER OF CREDIT IS SUBJECT TO THE INTERNATIONAL STANDBY PRACTICE ISP98, INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION NO. 590.

 

 

 

 

 

SILICON VALLEY BANK,

 

 

 

 

 

 

 

 

(FOR BANK USE ONLY)

 

(FOR BANK USE ONLY)

 

40



 

EXHIBIT “A”

 

(i)

 

(ii)                                   SIGHT DRAFT/BILL OF EXCHANGE

 

DATE:

 

 

REF. NO.

 

 

 

AT SIGHT OF THIS BILL OF EXCHANGE

 

 

 

PAY TO THE ORDER OF

 

 

US$

 

 

 

 

U.S. DOLLARS

 

 

 

“DRAWN UNDER SILICON VALLEY BANK , SANTA CLARA, CALIFORNIA, IRREVOCABLE STANDBY LETTER OF CREDIT NUMBER NO. SVBSF               DATED                     , 20             ”

 

TO:

SILICON VALLEY BANK

 

 

 

 

 

 

 

 

 

3003 TASMAN DRIVE

 

[INSERT NAME OF BENEFICIARY]

 

SANTA CLARA, CA 95054

 

 

 

 

 

 

 

Authorized Signature

 

GUIDELINES TO PREPARE THE SIGHT DRAFT OR BILL OF EXCHANGE:

 

1.               DATE            INSERT ISSUANCE DATE OF DRAFT OR BILL OF EXCHANGE.

2.               REF. NO.         INSERT YOUR REFERENCE NUMBER IF ANY.

3.               PAY TO THE ORDER OF: INSERT NAME OF BENEFICIARY

4.               US$            INSERT AMOUNT OF DRAWING IN NUMERALS/FIGURES.

5.               U.S. DOLLARS          INSERT AMOUNT OF DRAWING IN WORDS.

6.              LETTER OF CREDIT NUMBER INSERT THE LAST DIGITS OF OUR STANDBY L/C NUMBER THAT PERTAINS TO THE DRAWING.

7.               DATED         INSERT THE ISSUANCE DATE OF OUR STANDBY L/C.

 

NOTE:          BENEFICIARY SHOULD ENDORSE THE RACK OF THE SIGHT DRAFT OR BILL OF EXCHANGE AS YOU WOULD A CHECK.

 

IF YOU NEED FURTHER ASSISTANCE IN COMPLETING THIS SIGHT DRAFT OR BILL OF EXCHANGE, PLEASE CALL OUR L/C PAYMENT SECTION AND ASK FOR:  JOHN DOSSANTOS AT (408) 654-6274 OR ENRICO NICOLAS AT (408) 654-7127 OR EVELIO RARAIRO AT (408) 654-3035.

 

41



 

EXHIBIT “B”

 

DATE:

 

  TO:

SILICON VALLEY BANK

 

 

 

 

3003 TASMAN DRIVE

 

RE:

IRREVOCABLE STANDBY LETTER OF CREDIT

 

SANTA CLARA, CA 95054

 

 

NO.

ISSUED BY

 

ATTN: INTERNATIONAL DIVISION

 

 

SILICON VALLEY BANK, SANTA CLARA

 

            STANDBY LETTERS OF CREDIT

 

 

L/C AMOUNT:

 

GENTLEMEN:

 

FOR VALUE RECEIVED, THE UNDERSIGNED BENEFICIARY HEREBY IRREVOCABLY TRANSFERS TO:

 

(NAME OF TRANSFEREE)
(ADDRESS)

 

ALL RIGHTS OF THE UNDERSIGNED BENEFICIARY TO DRAW UNDER THE ABOVE LETTER OF CREDIT UP TO ITS AVAILABLE AMOUNT AS SHOWN ABOVE AS OF THE DATE OF THIS TRANSFER.

 

BY THIS TRANSFER, ALL RIGHTS OF THE UNDERSIGNED BENEFICIARY IN SUCH LETTER OF CREDIT ARE TRANSFERRED TO THE TRANSFEREE.  TRANSFEREE SHALL HAVE THE SOLE RIGHTS AS BENEFICIARY THEREOF, INCLUDING SOLE RIGHTS RELATING TO ANY AMENDMENTS, WHETHER INCREASES OR EXTENSIONS OR OTHER AMENDMENTS, AND WHETHER NOW EXISTING OR HEREAFTER MADE.  ALL AMENDMENTS ARE TO BE ADVISED DIRECT TO THE TRANSFEREE WITHOUT NECESSITY OF ANY CONSENT OF OR NOTICE TO THE UNDERSIGNED BENEFICIARY.

 

THE ORIGINAL OF SUCH LETTER OF CREDIT IS RETURNED HEREWITH, AND WE ASK YOU TO ENDORSE THE TRANSFER ON THE REVERSE THEREOF, AND FORWARD IT DIRECTLY TO THE TRANSFEREE WITH YOUR CUSTOMARY NOTICE OF TRANSFER.

 

SINCERELY,

 

SIGNATURE AUTHENTICATED

 

 

 

 

 

The name(s), title(s), and signature(s) conform to that/those on file with us for the company and the signature(s) is/are authorized to execute this instrument.

 

We further confirm that the company has been identified applying the appropriate due diligence and enhanced due diligence as required by BSA and all its subsequent amendments.

(BENEFICIARY’S NAME)

 

 

 

 

 

(SIGNATURE OF BENEFICIARY)

 

 

 

 

 

(NAME AND TITLE)

 

 

 

 

 

 

(Name of Bank)

 

 

 

 

 

 

 

 

(Address of Bank)

 

 

 

 

 

 

 

 

(City, State, ZIP Code)

 

 

 

 

 

 

 

 

(Authorized Name and Title)

 

 

 

 

 

 

 

 

(Authorized Signature)

 

 

 

 

 

 

 

 

(Telephone number)

 

42



 

Schedule 8(a)

 

List and Description of Sublease Improvements

 

43


 

BASIS OF DESIGN

 

Genocea

 

Acorn Park
Cambridge, MA

 

Thursday, June 21, 2012

 



 

TABLE OF CONTENTS

 

Section 1 - HVAC Systems
Section 2 - Electrical Systems

 

2



 

Genocea
Basis of Design

 

Section 1 - HVAC Systems

 

General:

 

The following Design criteria are contingent on owner/base building provided equipment performance.

 

A.                                     Design Criteria

 

1.               Outdoor Design Criteria

 

a.               Summer

91 degrees Fahrenheit design dry bulb

74 degrees Fahrenheit design wet bulb

b.               Winter

0 degrees Fahrenheit design dry bulb

 

B.                                     Indoor Design Criteria

 

1.               Existing office and support areas

 

a.               Summer

74 degrees Fahrenheit design dry bulb (+/-3 degrees)

b.               Winter

70 degrees Fahrenheit design dry bulb (+/- 3 degrees)

 

2.               Existing and new Laboratory areas

 

a.               Summer

72 degrees F design dry bulb (+/- 2 degrees)

b.               Winter

70 degrees F design dry bulb (+/- 2 degrees)

 

3.               Animal Areas

 

a.               Summer

72 degrees F design dry bulb (+/- 2 degrees).

b.               Winter

72 degrees F design dry bulb (+/- 2 degrees).

 

C.                                     Humidity

 

1.               Office Areas & Support Areas

a.               Summer

55% RH +/-15%

b.               Winter

No added humidity

 

2.               Lab Areas

 

a.               Summer

50% RH +/-15%

b.               Winter

 

3



 

No added humidity

 

3.               Animal holding rooms

 

a.               Summer

50% RH +/-15%

b.               Winter

50% RH +/-15%

Wash rooms no control

 

D.                                     Ventilation Criteria

 

1.               Office Areas, Support Areas

 

a. Office and support areas will be provided with a minimum of 20 CFM per person.

 

2.               Laboratory Areas

 

a. Lab areas will be provided with a minimum of six to eight outside air changes/hour. The actual air change rate may be higher where additional make-up air is required for hood exhaust or to meet design cooling loads.

 

3.               Animal Areas

 

a.               Animal areas were designed with a minimum of 12-15 outside air changes/hour in holding rooms and procedure rooms. 8-10 ACH in corridors and clean storage areas.

b.               Animal holding rooms are mechanically backup using a dedicated unit.

 

4                  Toilet rooms

 

a.               A minimum exhaust rate of 75 cfm per fixture

 

E.                                     Space Pressurization Criteria

 

1.         The facility will be maintained at a slight positive pressure with respect to atmosphere to minimize uncontrolled infiltration.

 

2.         Office areas will be maintained at a higher positive pressure than surrounding laboratories.

 

3.         Laboratory areas will be maintained at a negative pressure relative to surrounding spaces including offices and corridors.

 

4.         Animal area will be maintained at a negative pressure relative to surrounding areas.

 

F.                                      Space Filtration Criteria

 

1.         Lab and animal area’s supply air shall have 30% efficient Pre-filters and 85% cartridge filters.

 

2.         Office area RTU’s filter with 30% extended surface filters

 

G.                                    Building System Components

 

1.         Office & Support Areas

 

These areas shall be served by the house rooftop unit currently servicing this office area.

 

4



 

2.         Existing roof mounted exhaust fans and exhaust ductwork system shall provide exhaust for restrooms, labs and animal areas.

 

3.         Animal areas and general Lab areas.

 

These areas will be served by two existing make up air units and one dedicated back up unit. These units are manufactured by Aaon.

 

4.         Two (2) new supplemental cooling only units shall provide sensible cooling equipment areas and Lab 1.

 

5.         Air distribution shall be provided by complete supply ductwork systems terminating in 2’ x 2’ lay in style diffusers.

 

6.         Humidifier system for the animal areas shall be Dri steem self generating connected to existing modified RO system, existing steam boiler and piping system is to be abandoned.

 

H.                                    Ductwork

 

1.         All new ductwork per the [SMACNA guide].

 

2.         Supply Duct sizing based on pressure drops of 0.15” per 100’

 

3.         Exhaust Duct sizing based on pressure drops of 0.2” per 100’

 

a.               8’ - Maximum Flex Duct run

 

I.                                         Insulation

 

1.                                       All new Insulation shall be per Massachusetts code.

 

Section 2 - Electrical Systems

 

A.                                     Codes and Standard

 

1.         Codes and standards pertaining to this section will include, but not be limited to the following:

 

a.               National Electrical Code NFPA 70

b.               Massachusetts 527 CMR 12.00 (Amendments to NEC)

c.                National Fire Protection Association (NFPA).

 

B.                                     Demolition and Make Safe

 

1.         Major demolition is not anticipated, removal of various circuits may be required for the installation of equipment circuits.

 

C.                                     Electrical Distribution

 

1.         Existing Distribution serving the tenant space is a 277/480V 3 phase 4 wire system supplied from a base building electrical switchboard. Step-down to 120/208V local power panels are through dry type transformers 480 primary 120/208V secondary.

 

5



 

D.                                     New Distribution for Lab equipment

 

1.         New sub-panel(s) will be provided if necessary to provide additional pole space for lab equipment.

 

E.                                     HVAC Power Wiring

 

1.         New circuits will be provided for the two additional supplemental split systems.

 

2.         All roof top equipment installed in liquid tight conduit with Nema-3r rated disconnects.

 

F.                                      Light Fixtures

 

1.         Existing fixtures to remain “as-is” in the office and lab areas.

 

2.         New egress lighting will be installed in a portion of the “unfinished” area.

 

G.                                    Outlets and Devices

 

1.         Benchtop equipment will be powered from the existing wiremold.

 

2.         Equipment areas and equipment requiring dedicated circuits will have wall outlets per the equipment matrix.

 

H.                                    Low voltage systems

 

1. Detection Systems.

 

a.               The existing fire alarm system will be used with all code required initiating and notification devices being “existing to remain”. New devices will be provided where required.

b.               Gas Detection Systems. (NIC)

c.                Access Systems. (NIC)

d.               Security intrusion detection systems (NIC).

e.                Alarm monitoring (NIC)

 

1. Low Voltage and Alarm Systems.

 

a.               Voice/Data Systems (NIC).

b.               Public address and music systems (NIC).

c.                MATV television systems (NIC).

d.               CCTV system (NIC).

e.                Duress system (NIC).

f.                 Door position monitor system (NIC).

g.                Interlock system for doors:  (NIC)

 

I. Standby Power

 

1.         The tenant space has a roof mounted generator 60KW 120/208volt non-life safety backup generator.

 

2.         Distribution is provided through panel SBH and SBL.

 

3.         Emergency circuits has been included per the equipment matrix.

 

6



 

J. Project Requirements/Testing

 

1. Electrical testing of new circuits.

 

2. Electrical startup/commissioning of new systems (if applicable).

 

K. Project Engineering

 

1. Design, engineering and stamped drawings by a registered Massachusetts engineer

 

2. Drawings completed in CAD format

 

3. Construction control affidavits

 

4. Record drawings will be provided

 

5. Job Insurance requirements

 

7



 

 

56



 

 

57



 

 

58



 

 

59



 

 

60



 

 

61



 

 

62


 

Schedule 24

 

Form of Overlandlord’s Consent to Sublease

 

AGREEMENT REGARDING SUBLEASE

 

THIS AGREEMENT REGARDING SUBLEASE (this “ Agreement ”) is made and entered into as of the        day of July, 2012 by TBCI, LLC, a Massachusetts limited liability company, as Trustee of 100 Discovery Park Realty Trust, a Massachusetts nominee trust (“ Landlord ”), FOLDRX PHARMACEUTICALS, INC., a Delaware corporation (“ Tenant ”), PFIZER INC., a Delaware corporation (“ Pfizer ”), and GENOCEA BIOSCIENCES, INC., a Delaware corporation (“ Subtenant ”).

 

Recitals

 

A.                                     Landlord and Tenant are parties to a Lease dated September 18, 2006, as amended by a First Amendment of Lease dated June 5, 2007 and a Second Amendment of Lease (the “ Second Amendment ”) dated March 31, 2008 (as so amended, the “ Prime Lease ”), pursuant to which Landlord has leased to Tenant all of the leasable space on the fifth floor and a storage room on the first floor, containing 23,666 leasable square feet (the “ Premises ”), in the building known as Building 100 in the project known as Cambridge Discovery Park, Cambridge, Massachusetts;

 

B.                                     Landlord, Tenant and Pfizer entered into a Landlord, Tenant and Acquiror Agreement dated October 18, 2010, with respect to the Prime Lease, pursuant to which, among other things, Landlord consented to the transaction by which Tenant became a wholly-owned subsidiary of Pfizer;

 

C.                                     Tenant desires to sublease the Premises to Subtenant pursuant to a Sublease Agreement (the “ Sublease ”) dated on or about even date herewith between Tenant and Subtenant, a copy of which is Exhibit A hereto;

 

D.                                     Pursuant to Section 8.1 of the Prime Lease, Tenant may not sublease any portion of the Prime Premises without the written consent of Landlord, and therefore, Tenant has requested Landlord’s consent to the Sublease;

 

E.                                      Subtenant and Landlord desire to enter into a direct Lease, the term of which would begin immediately following expiration of the term of the Prime Lease; (the “ New Direct Lease ”);

 

F.                                       Tenant is unwilling to agree to a Sublease term, the duration of which would end concurrently with expiration of the Prime Lease, unless Landlord enters into this Agreement; and

 

G.                                     The parties desire to enter into this Agreement to provide for Landlord’s consent to the Sublease and terms and conditions applicable to such consent.

 

Statement of Agreement

 

For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 



 

1.                                       Consent by Landlord . Landlord consents to the Sublease, on and subject to the terms and conditions of this Agreement. Such consent applies only to the Sublease, and not to any further sublease of all or any portion of the Prime Premises or to any assignment of the Prime Lease or the Sublease. Subtenant shall not assign the Sublease or further sublease all or any portion of the Premises without the prior written consent of Landlord, which shall be subject to the same conditions as are set forth in Section 8.1 of the Prime Lease. Landlord waives all rights to terminate the Prime Lease pursuant to Section 8. 1(d)  of the Prime Lease as a result of the Sublease.

 

2.                                       Continuing Effect of Prime Lease . The Prime Lease remains in full force and effect and unchanged in any respect, except as provided in this Agreement.

 

3.                                       Representations Regarding Sublease; Amendments . Tenant and Subtenant represent and warrant to Landlord that a true, correct and complete copy of the Sublease is attached as Exhibit A hereto, and that the Sublease constitutes the entire agreement of Tenant and Subtenant with respect to the sublease of the Premises by Tenant to Subtenant. The Sublease will not be modified or amended without the prior written consent of Landlord, which Landlord will not unreasonably withhold, condition or delay.

 

4.                                       Priority of Prime Lease The Prime Lease is superior to the Sublease in all respects. The Sublease imposes no obligations upon Landlord, and in no event shall Landlord be deemed a party to the Sublease.

 

5.                                       General Obligations of Subtenant to Landlord . Subtenant agrees, for the benefit of Landlord, to comply with each and every covenant, agreement and condition on the part of Tenant to be performed under the Prime Lease with respect to the Premises, other than the obligation to pay rent and those provisions of the obligations in respect of the security deposit under the Prime Lease that are explicitly excluded from the Sublease pursuant to the second paragraph of Section 10(a) of the Sublease.

 

6.                                       Surrender Obligations . As of the date of this Agreement, Tenant has vacated the Prime Premises and, in connection therewith, Tenant has decommissioned the Prime Premises and (a) furnished to Landlord and Subtenant that certain “Divestiture Environmental Site Assessment”, dated November 15, 2011, prepared by Environmental Resources Management (ERM) with respect to the decommissioning of the Premises and (b) submitted to the Radiation Control Program of the Department of Public Health of the Commonwealth of Massachusetts a request for termination of Materials License No. 55-0255 with supporting documents and (c) obtained from the Radiation Control Program of the Department of Public Health of the Commonwealth of Massachusetts an Amendment No. 04 dated October 19, 2011 terminating License No. 55-0558 (collectively, the “ Decommissioning Report Materials ”). On the basis of the Decommissioning Report Materials and Landlord’s inspection of the Premises, (i) Landlord acknowledges that, as of the date of this Agreement, the Prime Premises are in a condition that would satisfy Tenant’s surrender obligations under Section 7.4 of the Prime Lease.

 

7.                                       In consideration, among other things, of Tenant’s agreement to a Sublease term, the duration of which would end concurrently with expiration of the Prime Lease, and in recognition of the fact that the contemplated direct lease between Landlord and Subtenant makes

 

45



 

impractical any restoration, decommissioning and surrender of possession by Tenant, Landlord agrees, for the benefit of Tenant, as follows:

 

(1)                                  Tenant has fully complied with any and all requirements of the Prime Lease regarding restoration, decommissioning, surrender of possession and delivery at the end of the Lease Term of the Prime Premises and Tenant shall not be obligated to perform any of such obligations after the date of this Agreement and, subject to the foregoing, Tenant shall remain responsible directly to Landlord only for compliance with those obligations of Tenant under Section 7.4 of the Prime Lease requiring Tenant to maintain the Prime Premises in good repair, condition and appearance, subject to damage by fire or other casualty;

 

(2)                                  From and after the date of this Agreement, Tenant shall not be responsible for and shall be released from performing any restoration, removals or other alterations in or to the Prime Premises or the Building, including, without limitation, the removal of all or any portions of any alterations, fixtures and improvements;

 

(3)                                  Tenant shall not be responsible for and shall be released from any and all liability arising out of any failure by Subtenant to vacate the Premises at the end of the Lease Term of the Prime Lease and for any failure by Subtenant to satisfy any removal, restoration, decommissioning or other requirement relating to surrender of the Prime Premises, any such failure shall not be deemed a holdover by Tenant as Tenant under the Prime Lease and Landlord shall look solely to Subtenant for the performance of such obligations under the Prime Lease;

 

(4)                                  Tenant’s only remaining payment obligations under the Prime Lease shall be payment of the following in accordance with the terms and conditions of the Prime Lease:  Base Rent and the following items of Additional Rent under the Prime Lease:  (a) Tenant’s Project Share under the Prime Lease of (i) Project Taxes, (ii) Project Insurance Costs and (iii) Project Operating Costs and of (b) Tenant’s Building Share of (i) Building Taxes, (ii) Building Insurance Costs and (iii) Building Operating Costs and (c) Tenant’s Utility Costs and of (d) the costs of incurred by Landlord to maintain the Prime Premises in good repair, condition and appearance to the extent not performed by Subtenant or Tenant as required by the Prime Lease and this Agreement, which obligations shall continue, subject, however, to the conditions set forth above; and

 

(5)                                  Landlord agrees, for the benefit of Tenant and Pfizer, that the obligations of Tenant for the performance of any obligations (other than the elements of rent described in paragraph (4) above) under the Prime Lease accruing from and after the date of this Agreement, shall be limited to the amount of the security deposit under the Prime Lease.

 

8.                                       Improvements by Subtenant . Pursuant to the New Direct Lease, Landlord is permitting Subtenant to make those alterations and improvements to the Premises during the term of the Sublease (and prior to commencement of the term of the New Direct Lease) shown on Exhibit B attached hereto, on and subject to the terms and conditions of the New Direct Lease. Tenant and Pfizer acknowledge and agree that Subtenant may make such alterations and improvements to the Premises during the term of the Sublease.

 

9.                                       Remaining Allowance . Pursuant to the Second Amendment, Landlord has agreed to provide to Tenant an allowance equal to the remaining balance of $26,217 (the “ Expansion

 

46



 

Allowance ”) to pay costs of tenant improvements to the portion of the Premises that was added to the Premises by the Second Amendment (the “ Expansion Space ”) and which Subtenant intends to make, and which Landlord has approved pursuant to the New Direct Lease, which will follow immediately after the expiration or earlier termination of the Sublease. Landlord agrees to make the Expansion Allowance available to Tenant for the purpose of applying toward an allowance to be provided by Tenant to Subtenant under the Sublease to pay costs of tenant improvements to the Expansion Space. At the request of Tenant, Landlord shall disburse the Expansion Allowance directly to or for the benefit of Subtenant to pay costs of tenant improvements to the Expansion Space, with such disbursements to be subject to the conditions set forth in Section 2 of the Second Amendment to the Prime Lease.

 

10.                                Insurance . Landlord (and its designees) shall be a named as an additional insured under Subtenant’s insurance policies with respect to the Premises and shall receive certificates evidencing such insurance upon execution hereof and thereafter upon five days’ written request, which insurance shall not be cancelable on less than 30 days’ prior written notice to Landlord (to the extent that such a provision is then generally available in insurance policies). Subtenant shall comply with the insurance requirements of the Prime Lease with respect to the Premises; provided that this Section shall not operate to relieve or modify Tenant’s obligations under the Prime Lease.

 

11.                                Release;  Indemnification . Subtenant releases Landlord (and any and all persons claiming by, through or under Landlord) from any liability for any loss or damage of any kind or for any injury to or death of persons or damage to property of Subtenant or any other person from any cause whatsoever by reason of the use, occupancy or enjoyment of the Premises by Subtenant or any person therein or holding under Subtenant. Subtenant shall exonerate, defend, indemnify, save and hold harmless Landlord (and any and all persons claiming by, through or under Landlord) from and against all claims, actions, proceedings, demands, defenses thereof, damages, costs and expenses and liability of any kind or nature whatsoever, including, without limitation, reasonable attorneys’ fees, direct and indirect damages and consequential damages arising from:  (i) any such real or claimed loss or damage or liability; (ii) any breach of the Sublease or this Agreement by Subtenant or those for whom Subtenant is responsible; and (iii) all liens, claims and demands occurring in, or at the Premises, or arising out of the use, occupancy or enjoyment of the Premises, or any repairs or alterations which may be made to the Premises, or occasioned in whole or in part by any act, omission, or negligence of Subtenant, its agents, contractors, licensees, servants, employees, or invitees of Subtenant or Subtenant’s contractors or licensees, or persons coming into the Premises for the purpose of visiting or dealing with any one or more of the foregoing, or arising from any accident, injury or damage occurring outside of the Premises but in, on or about the Landlord’s property due to the negligence or willful misconduct of Subtenant or Subtenant’s contractors or licensees, or persons coming into the Premises for the purpose of visiting or dealing with any one or more of the foregoing (except that to the extent required by applicable Massachusetts law, the foregoing shall not apply to Landlord’s negligent acts or omissions). The above provisions of this Section shall not operate to release (a) Tenant from any liabilities or obligations which Tenant might have to Subtenant under the Sublease or otherwise, (b) Landlord from any liabilities or obligations which Landlord might have to Tenant under the Prime Lease or otherwise, or (c) Landlord from any liabilities to Subtenant for Landlord’s intentional torts.

 

47



 

12.                                Estoppel Certificates . Tenant and Subtenant shall, from time to time, upon not less than ten business days’ prior written request by Landlord, execute, acknowledge and deliver to Landlord and/or other third parties designated by Landlord a statement in writing addressed to such party as Landlord shall designate in its notice to Tenant and/or Subtenant, certifying that the Sublease is unmodified and in full force and effect and that Subtenant has no defenses, offsets or counterclaims against its obligations to pay the rent and to perform its other covenants under the Sublease (or, if there have been any permitted modifications thereunder, that the same is in full force and effect as modified and stating the modifications and, if there are any defenses, offsets, counterclaims or defaults, setting them forth in reasonable detail), the dates to which rent has been paid, a statement that Tenant and/or Subtenant is not in default under the Sublease (or if in default, the nature of such default, in reasonable detail), and any additional factual information reasonably requested by Landlord. Any such statement delivered pursuant to this Section may be relied upon by any prospective purchaser or mortgagee.

 

13.                                Notices . Each of Tenant and Subtenant shall, simultaneously upon the mailing of any default notice to the other under the Sublease, give a copy of the same to Landlord in accordance with Section 13.4 of the Prime Lease. For purpose of notices under this Agreement, the address of Subtenant shall be as follows (subject to change of address in accordance with Section 13.4 of the Prime Lease):

 

Genocea Biosciences, Inc.

100 Discovery Park, 5 th  Floor

Cambridge, MA 02140

Attn:  Robert E. Farrell. Jr.. CPA

 

With a copy to:

 

David L. Wiener

Anderson & Kreiger LLP

One Canal Park

Cambridge, MA 02141

 

14.                                Reimbursement of Costs . Tenant shall be responsible for paying all Landlord’s reasonable costs and expenses including attorneys’ fees (not to exceed $3,000), in connection with drafting and executing this Agreement and reviewing the Sublease, and all such amounts shall be paid by Tenant as a condition to execution of this Agreement by Landlord

 

15.                                Binding Effect . This Agreement shall be binding upon the parties hereto and their respective successors and assigns.

 

16.                                Entire Agreement . This Agreement, together with the Prime Lease and the Sublease, constitutes the entire agreement among the parties regarding the subject matter hereof.

 

This Agreement shall not be modified or amended other than by an instrument in writing signed by all parties.

 

48



 

17.                                Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts.

 

18.                                Counterparts . This Agreement may be signed in multiple counterpart originals, which counterparts, when assembled with the signatures of all parties, shall constitute one document.

 

[signatures on following page]

 

49



 

Executed as a sealed instrument as of the date first written above.

 

 

TBCI, LLC, as Trustee of 100 Discovery Park Realty Trust

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

FOLDRX PHARMACEUTICALS, INC.

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

PFIZER INC.

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

GENOCEA BIOSCIENCES, INC.

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

50



 

EXHIBIT A

 

(Copy of Sublease)

 

Attached.

 



 

EXHIBIT  B

 

(Subtenant’s Plans)

 

Attached.

 



 

Schedule 32

 

Copy of the Overlease

 

A copy of the Overlease is attached hereto

 

53


 

LEASE

 

OF PREMISES AT CAMBRIDGE DISCOVERY PARK

 

CAMBRIDGE, MASSACHUSETTS

 

FROM

 

BHX, LLC, AS TRUSTEE OF 100 DISCOVERY PARK REALTY TRUST

 

TO

 

FOLDRX PHARMACEUTICALS, INC.

 



 

TABLE OF CONTENTS

 

SUMMARY OF BASIC TERMS

iii

ARTICLE I CERTAIN DEFINITIONS

1

ARTICLE II LEASE OF PREMISES

8

Section 2.1

Lease Of The Premises

8

Section 2.2

Common Rights

8

Section 2.3

Parking

9

Section 2.4

Lease Term: Early Termination: Extension Term

9

Section 2.5

Security Deposit

10

Section 2.6

Lease Amendment

12

Section 2.7

Right of First Opportunity

13

ARTICLE III TENANT IMPROVEMENTS WORK: SIGNS

14

Section 3.1

Tenant Improvements Work

14

Section 3.2

Signs

16

ARTICLE IV BASE RENT: ADDITIONAL RENT

17

Section 4.1

Base Rent

17

Section 4.2

Certain Additional Rent

19

Section 4.3

Taxes

19

Section 4.4

Insurance Costs

20

Section 4.5

Operating Costs

20

Section 4.6

Tenant’s Utility Costs

20

Section 4.7

Tenant’s Audit Rights

21

ARTICLE V USE OF PREMISES

21

Section 5.1

Permitted Use

21

Section 5.2

Restrictions on Use

21

Section 5.3

Hazardous Materials

22

ARTICLE VI LANDLORD’S SERVICES

23

Section 6.1

Landlord’s Services

23

Section 6.2

Extraordinary Use

24

Section 6.3

Interruption: Delay

24

Section 6.4

Additional Services

24

ARTICLE VII CERTAIN OBLIGATIONS OF TENANT

25

Section 7.1

Rent

25

Section 7.2

Utilities

25

Section 7.3

No Waste

25

Section 7.4

Maintenance: Repairs; and Yield-Up

25

Section 7.5

Alterations by Tenant

26

Section 7.6

Trade Fixtures and Equipment

26

Section 7.7

Compliance with Laws

27

Section 7.8

Contents at Tenant’s Risk

27

Section 7.9

Exoneration, Indemnification, Hold Harmless and Insurance

27

Section 7.10

Landlord’s Access

28

Section 7.11

No Liens

29

Section 7.12

Compliance with Rules and Regulations

29

Section 7.13

Use of Union Labor

29

Section 7.14

Further Construction

29

ARTICLE VIII SUBLETTING AND ASSIGNMENT

30

Section 8.1

Subletting and Assignment

30

ARTICLE IX RIGHTS OF MORTGAGEES AND GROUND LESSORS: ESTOPPEL CERTIFICATES

32

Section 9.1

Subordination to Mortgages and Ground Leases

32

Section 9.2

Lease Superior at Mortgagee’s or Ground Lessor’s Election

32

Section 9.3

Notice to Mortgagee and Ground Lessor

32

Section 9.4

Limitations on Obligations of Mortgagees, Ground Lessors and Successors

33

Section 9.5

Estoppel Certificate By Tenant

33

 



 

Section 9.6

Amendment of Declaration

34

ARTICLE X CASUALTY

34

Section 10.1

Damage From Casualty

34

Section 10.2

Abatement of Rent

35

Section 10.3

Landlord’s Right to Terminate

35

ARTICLE XI EMINENT DOMAIN

35

Section 11.1

Eminent Domain: Right to Terminate and Abatement in Rent

35

Section 11.2

Restoration

36

Section 11.3

Landlord to Control Eminent Domain Action

36

ARTICLE XII DEFAULT AND REMEDIES

36

Section 12.1

Event of Default

36

Section 12.2

Landlord’s Remedies

37

Section 12.3

Reimbursement of Landlord

38

Section 12.4

Landlord’s Right to Perform Tenant’s Covenants

38

Section 12.5

Cumulative Remedies

39

Section 12.6

Expenses of Enforcement

39

Section 12.7

Landlord’s Default

39

Section 12.8

Limitation of Landlord’s Liability

40

Section 12.9

Late Payment and Administrative Expense

40

ARTICLE XIII MISCELLANEOUS PROVISIONS

41

Section 13.1

Brokers

41

Section 13.2

Quiet Enjoyment

41

Section 13.3

Tenant’s Request for Landlord’s Action

41

Section 13.4

Notices

41

Section 13.5

Waiver of Subrogation

41

Section 13.6

Entire Agreement; Execution; Time of the Essence and Headings and Table of Contents

42

Section 13.7

Partial Invalidity

42

Section 13.8

No Waiver

42

Section 13.9

Holdover

42

Section 13.10

When Lease Becomes Binding

43

Section 13.11

Recordation

43

Section 13.12

Financial Statements: Certain Representations and Warranties of Tenant

43

Section 13.13

Confidentiality

43

Section 13.14

Summary of Basic Terms

44

 

Exhibits:

A - 1

Property Description (Project)

A - 2

Property Description (Parcel 100)

B

Site Plan

C

Building Floor Plan

C - 1

Locations of Water Neutralizer and Emergency Generator

D

Rules and Regulations

E

Form of Letter of Credit

F

Subordination, Non-Disturbance and Attornment Agreement with The Union Labor Life Insurance Company

G

Subordination, Non-Disturbance and Attornment Agreement with BHX, LLC, as Trustee of Acorn Park Holdings Realty Trust

H

Secretary’s Certificate

 

ii



 

SUMMARY OF BASIC TERMS

 

LEASE

 

OF PREMISES AT CAMBRIDGE DISCOVERY PARK,
CAMBRIDGE, MASSACHUSETTS

 

TO

 

FOLDRX PHARMACEUTICALS, INC.

 

DATED AS OF SEPTEMBER 18, 2006

 


 

The following i s a summary of certain basic terms of this Lease which is intended for the convenience and reference of the parties. Capitalized terms used, but not defined, in this Summary of Basic Terms, have their defined meanings in this Lease. In addition, some of the following items or terms are incorporated into this Lease by reference to the item or term or to this “Summary of Basic Terms”.

 

1.                                       Landlord :  BHX, LLC, a Massachusetts limited liability company, as Trustee of 100 Discovery Park Realty Trust, a Massachusetts nominee trust.

 

2.                                       Tenant :  FoldRx Pharmaceuticals, Inc., a Delaware corporation.

 

3A.                              Premises :  That portion of the fifth floor of the Building depicted as the Premises on Exhibit C . The Building and the Other Buildings which are currently part of the Project are depicted on Exhibit B .

 

3B.                              Building :  The six-floor building identified as Building 100 on Exhibit B .

 

3C.                              Project :  The land described in Exhibit A-1 and depicted on Exhibit B (the “ Land ”), together with the Building, the Other Buildings and any other improvements now or hereafter thereon, now commonly known as Cambridge Discovery Park, Cambridge, Massachusetts, together with other areas used from time to time for parking for the Buildings. The fee simple interest in the Land is owned by BHX, LLC, as Trustee of Acorn Park Holdings Realty Trust, a Massachusetts nominee trust (“ Ground Lessor ”).  Ground Lessor has submitted the entire Project to a Declaration of Easements, Covenants, Conditions and Restrictions for Cambridge Discovery Park (the “ Declaration ”) dated March 22, 2005, recorded with the Middlesex South District Registry of Deeds in Book 44910 Page 58 and filed with the Middlesex South Registry District of the Land Court as Document No. 1369429. Ground Lessor has leased the portion of the Land on which the Building is situated, being more particularly described in Exhibit A-2 (“ Parcel 100 ”), subject to and with the benefit of the Declaration, to Landlord pursuant to a Ground Lease dated March 22, 2005 by Ground Lessor and Landlord, notice of which is recorded with the Middlesex South District Registry of Deeds in Book 44910, Page 119 and filed with the Middlesex South Registry District of

 



 

the Land Court as Document No. 01369427. Ground Lessor has leased all of the Land other than Parcel 100 (the “ Residual Parcel ”), subject to and with the benefit of the Declaration, to BHX, LLC, as Trustee of Acorn Park I Realty Trust (“Residual Landlord”), pursuant to a Ground Lease dated November 17, 2000, notice of which is recorded with the Middlesex South District Registry of Deeds in Book 32042, Page 546 and filed with the Middlesex South Registry District of the Land Court as Document No. 1155608, as amended (the “ Residual Ground Lease ”). As contemplated by Section 2.2 of the Declaration, Residual Landlord may from time to time create one or more additional parcels (each, an “ Additional Parcel ”) out of the Residual Parcel by (i) amending the Residual Ground Lease to release the subject Additional Parcel, and (ii) causing Ground Lessor to ground lease the subject Additional Parcel to Residual Landlord’s nominee (each an “ Additional Landlord ”). Residual Landlord and each Additional Landlord are collectively called “ Other Landlords ”).

 

3D.                              Leasable Square Footage of the Premises :  (which includes a proportionate share of the Floor Area of the Common Areas of the Building, as provided for in this Lease):  An agreed upon 16,070 square feet.

 

3E.                               Leasable Square Footage of the Building :  An agreed upon 129,117 square feet.

 

3F.                                Leasable Square Footage of the Project :  An agreed upon 397,349 square feet, consisting of (i) an agreed upon 129,117 square feet in the Building, and (ii) an agreed upon 268,232 square feet in the Other Buildings.  The Leasable Square Footage of the Project may change from time to time as Other Buildings are altered or demolished and as additional Other Buildings are constructed.

 

4A.                              Tenant Improvements Work :  Tenant shall perform the Tenant Improvements Work as set forth in Section 3.1.

 

4B.                              Tenant Improvements Allowance :  Landlord shall provide Tenant an allowance for the payment of Tenant Improvements Costs (the “ Tenant Improvements Allowance ”) equal to $135.00 per square foot multiplied by the Leasable Square Footage of the Premises ($2,169,450.00).  All Tenant Improvements Costs in excess of the Tenant Improvements Allowance shall be paid for by Tenant.  If Tenant requests within seven days after the date of this Lease, the Tenant Improvements Allowance shall be increased by up to $15.00 per square foot multiplied by the Leasable Square Footage of the Premises (up to $241,050.00); provided, however, that the aggregate amount of any such increase in the Tenant Improvements Allowance (the “ Excess Tenant Improvements Allowance ”) shall be repaid by Tenant to Landlord by increasing the monthly installments of Base Rent by an amount which would fully amortize the Excess Tenant Improvements Allowance, with interest at the rate of twelve and one - half percent (12.5%) per annum (including capitalized interest on the Excess Tenant Improvements Allowance from disbursement until commencement of amortization), in equal consecutive monthly installments of principal and interest over the Initial Term, commencing with the Rent Commencement Date.

 

iv



 

5A.                              Lease Term :  From the Commencement Date until the end of the seventh Lease Year (February 28, 2014), subject to early termination in accordance with Section 2.4(b) and Section 2.4(c) and subject to extension in accordance with Section 2.4(d).

 

5B.                              Commencement Date :  January 15, 2007.

 

5C.                              Rent Commencement Date :  March 1, 2007, subject to extension by one day for each day of delay by Landlord in approving the Tenant Improvements Plans beyond the time provided in Section 3.1(a) or in delivering possession of the Premises as required by Section 3.1(d).

 

5D.                              Early Termination:  Tenant shall have the right to terminate the Lease Term as of the end of the fifth Lease Year in accordance with Section 2.4(b). Landlord shall have the right to terminate the Lease Term as of the end of the fifth Lease Year in accordance with Section 2.4(c).

 

5E.                               Right of Extension :  Tenant shall have the right to extend the Lease Term for one term of five (5) years in accordance with Section 2.4(d).

 

6.                                       Permitted Use :  Subject to applicable Legal Requirements, the Premises may be used for general office, vivarium and laboratory purposes only and for no other purpose.

 

7.                                       Security Deposit:  $               in the form of cash or letter of credit, subject to reduction as provided in Section 2.5(c).

 

8.                                       Tenant’s Parking Allocation :  2 parking spaces per 1,000 leasable square feet of the Premises (32 parking spaces).

 

9.                                       Base Rent :  Base Rent shall not be charged for the portion of the initial Term from the Commencement Date until the Rent Commencement Date. From the Rent Commencement Date through the end of the Initial Term, Base Rent shall be as follows:

 

PERIOD

 

ANNUAL
RATE

 

MONTHLY
RATE

 

PSF
RATE

 

First through third Lease Years

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fourth through seventh Lease Years

 

 

 

 

 

 

 

 

If the Tenant Improvements Allowance includes any Excess Tenant Improvements Allowance, the monthly installments of Base Rent shall be increased by reason of the Excess Tenant Improvements Allowance as provided in item 4B of the Summary of Basic Terms. The Base Rent during each Extension Term will be determined in accordance with Section 4.1(b).

 

10A                          Additional Rent :  (a) Tenant’s Project Share of (i) Project Taxes, (ii) Project Insurance Costs and (iii) Project Operating Costs, (b) Tenant’s Building Share of (i) Building

 

v



 

Taxes, (ii) Building Insurance Costs and (iii) Building Operating Costs, (c) Tenant’s Utility Costs, and/or (d) Other Additional Rent.

 

10B.                       Tenant’s Utility Costs :  Tenant shall be responsible for the payment of the costs of all utility services provided to the Premises and/or the HVAC equipment and systems exclusively serving the Premises (“ Tenant’s Utility Costs ”), as provided in Section 4.6.

 

10C.                       Other Additional Rent :  Includes all fees, charges (including parking charges), expenses, fines, assessments, interest or other sums payable by Tenant pursuant to this Lease other than (a) Tenant’s Project Share of (i) Project Taxes, (ii) Project Insurance Costs and (iii) Project Operating Costs, (b) Tenant’s Building Share of (i) Building Taxes, (ii) Building Insurance Costs and (iii) Building Operating Costs and (c) Tenant’s Utility Costs due under this Lease.

 

11.                                Utilities:  To be separately metered or submetered to the Premises at Landlord’s expense before the Commencement Date.

 

12.                                Brokers:  The Bulfinch Companies, Inc., having an office at First Needham Place, 250 First Avenue, Suite 200, Needham, MA 02494-2805, and Richards Barry Joyce & Partners, having an office at 53 State Street, Boston, MA 02109.

 

13A.                       Tenant’s Address For Notices, Telephone Number, Fax Number and Taxpayer Identification No.:

 

Prior to Commencement Date:

 

FoldRx Pharmaceuticals, Inc.

300 Technology Square, 4 th  Floor

Cambridge, MA 02139

Attn:  Chief Business Officer

Telephone:  (617) 252-5500; Fax:  (617) 252-5501

 

From and after Commencement Date:

 

FoldRx Pharmaceuticals, Inc.

100 Discovery Park, 5 th  Floor

Cambridge, MA 02140

Attn:  Chief Business Officer

Telephone:  (617) 252-5500; Fax:  (617) 252-5501

 

Tenant T.I.D.#53-0206027

 

13B.                       Landlord’s Address for Notices :

 

BHX, LLC, as Trustee of 100 Discovery Park Realty Trust

c/o The Bulfinch Companies, Inc.

First Needham Place

 

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250 First Avenue, Suite 200

Needham, MA 02494

Attention:  Robert A Schlager

Telephone:  (781) 707-4000; Fax:  (781) 707-4001

 

with a copy to:

 

BHX, LLC, as Trustee of 100 Discovery Park Realty Trust

c/o The Bulfinch Companies, Inc.

First Needham Place

250 First Avenue, Suite 200

Needham, MA 02494

Attention:  Mark R. DiOrio, Esq.

Telephone:  (781) 707-4000; Fax:  (781) 707-4001

 

and

 

Vorys, Sater, Seymour and Pease LLP

Suite 2000, Atrium Two

221 E. Fourth Street

Cincinnati, OH 45202

Attn:  Charles C. Bissinger, Jr., Esq.

Telephone:  (513) 723-4000; Fax:  (513) 723-4056

 

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LEASE

 

THIS LEASE (this “Lease”), made as of the 18 th  day of September, 2006, between BHX, LLC, a Massachusetts limited liability company, as Trustee of 100 Discovery Park Realty Trust, a Massachusetts nominee trust, and FOLDRX PHARMACEUTICALS, INC., a Delaware corporation, is as follows.

 

W I T N E S S E T H:

 

ARTICLE I
CERTAIN DEFINITIONS

 

In addition to the words and terms defined elsewhere in this Lease, the following words and terms shall have in this Lease the meanings set forth in this Article (whether or not underscored):

 

Additional Rent ” has the meaning set forth in Item 10A of the Summary of Basic Terms.

 

Bankruptcy Laws ” means any existing or future bankruptcy, insolvency, reorganization, dissolution, liquidation or arrangement or readjustment of debt law or any similar existing or future law of any applicable jurisdiction, or any laws amendatory thereof or supplemental thereto, including, without limitation, the United States Bankruptcy Code of 1978, as amended (11 U.S.C. Section 101 et. seq.), as any or all of the foregoing may be amended or supplemented from time to time.

 

“Base Rent ” has the meaning set forth in item 9 of the Summary of Basic Terms.

 

Brokers ” has the meaning set forth in item 12 of the Summary of Basic Terms.

 

Building ” has the meaning set forth in Item 3B of the Summary of Basic Terms.

 

Building Insurance Costs ” means those Insurance Costs which directly relate to, or are primarily for the benefit of, the Building, as reasonably determined by Landlord.

 

Building Operating Costs ” means those Operating Costs which directly relate to, or are primarily for the benefit of, the Building, as reasonably determined by Landlord.

 

Building Taxes ” means those Taxes attributable to the value of the Building, as reasonably determined by Landlord.

 

Buildings ” means, collectively, the Building and the Other Buildings.

 

Business Day ” means Monday through Friday, except holidays. The term “holiday” shall mean (a) the federal day of celebration of the following holidays:  New Year’s Day, President’s Day, Memorial Day, July 4th, Labor Day, Thanksgiving, Christmas and (b) the Friday after Thanksgiving.

 



 

Commencement Date ” has the meaning set forth in Item 5B of the Summary of Basic Terms.

 

Common Areas ” means all areas of the Project, as designated by Landlord from time to time, located inside or outside of the Buildings, which are not intended for the use of a single tenant and which are intended (a) for the non-exclusive common use of Landlord, Tenant and other tenants of portions of the Project and their respective Invitees and/or (b) to serve the Project, including but not limited to the Common Areas, as defined in the Declaration. Common Areas include, without limitation, common lobbies of multi-tenant Buildings, common restroom facilities of multi-tenant Buildings, elevators and stairwells of multi-tenant Buildings, the Food Service Area, if any, sidewalks, the Parking Areas, access drives, landscaped areas, utility rooms, storage rooms and utility lines and systems and the Common Facilities.

 

Common Facilities ” means those facilities, if any, located on the Project which Landlord designates from time to time as “common facilities,’’ including, but not limited to, building systems, pipes, ducts, wires, conduits, meters, HVAC equipment and systems, electrical systems and equipment, plumbing lines and facilities, and mechanical rooms.

 

Declaration ” has the meaning set forth in Item 3C of the Summary of Basic Terms.

 

Environmental Law ” means the Comprehensive Environmental Response, Compensation, and Liability Act (“ CERCLA ”), 42 U.S.C. §9601 et seq. , the Resource Conservation and Recovery Act, 42 U.S.C. §6901 et seq., the Hazardous Materials Transportation Act, 49 U.S.C. §1802 et seq., the Toxic Substances Control Act, 15 U.S.C. §2601 et seq., the Federal Water Pollution Control Act, 33 U.S.C. §1251 et seq., the Clean Water Act, 33 U.S.C. §1321 et seq., the Clean Air Act, 42 U.S.C. §7401 et seq., the Massachusetts Oil and Hazardous Material Release Prevention and Response Act, Chapter 21E of the Massachusetts General Laws, all regulations promulgated thereunder, and any other federal, state, county, municipal, local or other statute, law, ordinance or regulation (including any state or local board of health rules, regulation, or code), or any common law (including common law that may impose strict liability or liability based on negligence), which may relate to or deal with human health, the environment, natural resources, or Hazardous Materials, all as may be from time to time amended or modified.

 

Event of Default ” any of the events listed in Section 12.1.

 

Excess Tenant Improvements Allowance ” has the meaning set forth in Item 4B of the Summary of Basic Terms.

 

Extension Term ” means (a) the period of time beginning at the end of the Initial Term and ending at 11:59 p.m. on the last day of the twelfth Lease Year.

 

Floor Area ” means, as of the date of determination, the floor area of the Building, Other Buildings, Common Areas or Premises, as applicable, measured from the outside face of all exterior walls and the center line of all other walls, as determined by Landlord’s Architect in accordance with a modified BOMA standard for measuring floor areas in office buildings (ANSI/BOMA Z65.1 - 2006).

 

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Food Service Area ” means any space in any of the Buildings designated by Landlord and/or Other Landlords from time to time as a food service area for the non-exclusive common use of Tenant and other tenants of portions of the Project and their respective Invitees, rather than for the exclusive use of a single tenant or for the exclusive use of tenants of a single Building.

 

Food Service Costs ” means the total costs to Landlord and/or Other Landlords (net of any revenue realized by Landlord from food service operations) of providing food service in the Food Service Area, if any, including but not limited to any subsidy paid to a food service operator, all costs of operating, maintaining and repairing the Food Service Area, all costs of utility services provided to the Food Service Area, and any such costs allocated to Landlord and/or Other Landlords pursuant to the Declaration.

 

GAAP ” means generally accepted accounting principles, consistently applied.

 

Ground Lessor ” has the meaning set forth in Item 3C of the Summary of Basic Terms.

 

Hazardous Materials ” means, at any time, (a) any “hazardous substance” as defined in §101(14) of CERCLA (42 U.S.C. §9601(14)) or regulations promulgated thereunder; (b) any “solid waste,” “hazardous waste,” or “infectious waste,” as such terms are defined in any Environmental Law at such time; (c) asbestos, urea-formaldehyde, polychlorinated biphenyls (“PCBs”), bio-medical materials or waste, nuclear fuel or material, chemical waste, radioactive material, explosives, known carcinogens, petroleum products and by-products and other dangerous, toxic or hazardous pollutants, contaminants, chemicals, materials or substances which may be hazardous to human or animal health or the environment or which are listed or identified in, or regulated by, any Environmental Law; and (d) any additional substances or materials which at such time are classified or considered to be hazardous or toxic under any Environmental Law.

 

Initial Term ” means the period beginning at 12:01 A.M. on the Commencement Date and ending at 11:59 P.M. on the last day of the seventh Lease Year; subject, however, to early termination in accordance with Section 2.4(b) and Section 2.4(c).

 

Insurance Costs ” means the costs of insuring the entire Project, including without limitation the Buildings and other improvements now or hereafter situated thereon, and all operations conducted in connection therewith, with such policies, coverages and companies and in such limits as may be selected by Landlord and/or Other Landlords (and/or which may be required by their lenders), including, but not limited to, fire insurance with extended or with all-risk coverage, comprehensive public liability insurance covering personal injury, deaths and property damage with a personal injury endorsement covering false arrest, detention or imprisonment, malicious prosecution, libel and slander, and wrongful entry or eviction, rent loss or business interruption insurance, worker’s compensation insurance, plate glass insurance, contractual liability insurance, boiler insurance, and fidelity bonds.

 

Invitees ” means employees, workers, visitors, guests, customers, suppliers, agents, contractors, representatives, licensees and other invitees.

 

Land ” has the meaning set forth in Item 3C of the Summary of Basic Terms.

 

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Landlord ” means BHX, LLC, a Massachusetts limited liability company, as Trustee of 100 Discovery Park Realty Trust, a Massachusetts nominee trust.

 

Landlord’s Architect ” means ADD, Inc. or any other architect or architectural firm(s) designated by Landlord.

 

Leasable Square Footage ” means, (a) when used with respect to the Premises, the sum of (i) the Floor Area of the Premises, plus (ii) Tenant’s Building Share of the Floor Area of the Common Areas of the Building, and (b) when used with respect any of the Buildings, the Floor Area of such of the Buildings.

 

Lease Term ” means the Initial Term and, if Tenant timely and properly exercises its right to extend pursuant to Section 2.4(d), the Extension Term; subject, however, to early termination in accordance with Section 2.4(b) and Section 2.4(c).

 

Lease Year ” means the twelve (12) month period beginning on the Rent Commencement Date and on each anniversary of the Rent Commencement Date throughout the Lease Term.

 

Legal Requirements ” means all applicable laws, statutes, rules, regulations and requirements of governmental authorities, including, but not limited to, zoning laws and building codes.

 

Operating Costs ” means all reasonable costs, expenses and disbursements of every kind and nature (except Taxes and Insurance Costs) which Landlord and/or Other Landlords shall pay or become obligated to pay in connection with operating, managing, maintaining, repairing or replacing the Project or elements thereof, all as reasonably determined by Landlord, including such costs, expenses and disbursements as are allocated to Landlord and/or Other Landlords pursuant to the Declaration. Operating Costs shall include, by way of illustration, but not be limited to:  all charges payable by Landlord and/or Other Landlords in connection with the maintenance and repair of the Project; all charges payable by Landlord and/or Other Landlords to provide janitorial service to the Project; all charges payable by Landlord and/or Other Landlords in connection with the maintenance, repair and replacement of HVAC equipment and systems; all charges payable by Landlord and/or Other Landlords to provide utility services to the Project, except to the extent excluded pursuant to clauses (f) or (g) below; all costs related to the operation of any shuttle or other transportation service between the Project and public transportation stations; all costs incurred in connection with traffic mitigation and/or compliance with the PTDM Plan for the Project and any other transportation demand management plans and/or applicable Legal Requirements in connection with traffic mitigation and/or transportation demand management; all costs related to any police details at any entrances to the Project; all costs related to removal of trash, debris, and refuse; all costs related to removal of snow and ice; all costs of pest and vermin control; all costs of providing, maintaining, repairing and replacing of paving, curbs, walkways, landscaping, planters, roofs, walls, drainage, utility lines, security systems and other equipment; all costs of painting the exterior and Common Areas of the Building; all costs of repaving, resurfacing, and restriping Parking Areas and drives; all costs of lighting, cleaning, waterproofing, repairing and maintaining Common Areas, Common Facilities and other portions of the Project; all surcharges, costs and expenses that may result from any

 

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Environmental Laws or other laws, rules, regulations, guidelines or orders, except to the extent excluded pursuant to clause (k) below; all costs of licenses, permits and inspection fees, except to the extent directly attributable to the space of a particular tenant or arising in connection with new improvements or alterations; all legal, accounting, inspection and consulting fees, except to the extent excluded pursuant to clauses (e) or (m) below; except to the extent excluded below, all costs of capital repairs or replacements (but not improvements) hereafter made to the Building or Common Areas, amortized over their expected useful life based upon and including a market rate of interest; all costs of wages, salaries and benefits of operating personnel engaged in managing and operating the Project, to the extent reasonably allocable to the Project, including welfare, retirement, vacations and other compensation and fringe benefits and payroll taxes; the Food Service Costs; all costs for communications devices and/or services used in managing and operating the Project, to the extent reasonably allocable to the Project; the amount of any insurance deductible paid by Landlord and/or Other Landlords in connection with an insured loss; and management fees equal to five percent (5.0%) of gross rents (which management fees may be payable to an affiliate of Landlord). However, notwithstanding the above, the following specific items shall not be included; (a) the cost of alterations to space in the Buildings leased to others; (b) debt service and ground rent payments; (c) any cost or expenditure for which Landlord and/or Other Landlords are reimbursed by insurance proceeds or eminent domain proceeds; (d) costs for which Landlord and/or Other Landlords are reimbursed under warranties provided by contractors who have warranty obligations; (e) leasing commissions, attorneys’ fees and collection costs related to negotiation and enforcement of tenant leases unless the matter involves enforcing compliance with rules and regulations or other standards or requirements for the benefit of all tenants of the Building or Project; (f) the cost of providing gas and electrical service to space leased to tenants; (g) expenses which are billed directly, or reasonably allocable exclusively, to any tenant of the Building or Project; (h) salaries and bonuses of officers and executives of Landlord and/or Other Landlords and administrative employees above the level of property manager or building supervisor and Landlord’s or Other Landlords’ general overhead; (i) the cost of any work or service performed on an extra-cost basis for any tenant of the Building or Project; (j) any cost, other than the management fee provided for above, otherwise included in Operating Costs representing an amount paid to a person or entity affiliated with Landlord and/or Other Landlords which is in excess of the amount which would have been paid on an arms-length basis in the absence of such relationship; (k) any costs necessary to cure any violation of any Legal Requirement existing as of the Commencement Date, including any violation of Environmental Laws; (l) depreciation, other than the amortization of capital repairs or replacements hereafter made as provided above; (m) costs of selling, syndicating, financing, mortgaging or hypothecating any of Landlord’s and/or Other Landlords’ interest in the Project; (n) all income or corporate excise taxes assessed against Landlord and/or Other Landlords; (o) costs of developing and constructing any new building at the Project or any addition to or expansion of any of the Buildings; (p) costs of renovating any Building (but not ordinary maintenance, repairs and replacements of elements of the Buildings); (q) costs of capital improvements, except to the extent required by a Legal Requirements becoming effective after the date of this Lease or made to effect future savings in Operating Costs (but, in such event, only to the extent of the savings); and (r) costs arising from Landlord’s and/or Other Landlords’ negligence or willful misconduct.

 

Other Additional Rent ” has the meaning set forth in Item 10C of the Summary of Basic Terms.

 

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Other Buildings ” means the buildings other than the Building located in the Project from time to time, including any building hereafter developed and constructed in the Project and excluding any building hereafter demolished. A building hereafter developed and constructed in the Project will be included in the Other Buildings from and after such time as a certificate of occupancy is issued for such building. A building hereafter demolished will be excluded from the Other Buildings from and after such time as such building is unoccupied and is designated for demolition by Landlord.

 

Other Landlords ” has the meaning set forth in Item 3C of the Summary of Basic Terms.

 

Parking Areas ” means those portions of the Project which may be used for parking as depicted on the Site Plan, as such areas may be changed by Landlord and/or Other Landlords from time to time, excluding any parking garage now or hereafter existing under, and as a part of, any of the Other Buildings.

 

Permitted Transferee ” means (a) an entity controlling, controlled by or under common control with Tenant, (b) an entity which succeeds to Tenant’s business by merger, consolidation or other form of corporate reorganization, or (c) an entity which acquires all or substantially all of Tenant’s assets or stock; provided, however, that an entity may not become a Permitted Transferee through or as a part of a bankruptcy or other similar insolvency proceeding.

 

Permitted Use ” has the meaning set forth in Item 6 of the Summary of Basic Terms.

 

Person ” means any individual, partnership, joint venture, trust, limited liability company, business trust, joint stock company, unincorporated association, corporation, institution, or entity, including any governmental authority.

 

Premises ” has the meaning set forth in Item 3A of the Summary of Basic Terms.

 

Project ” has the meaning set forth in Item 3C of the Summary of Basic Terms.

 

Project Insurance Costs ” means all Insurance Costs other than (a) Building Insurance Costs and (b) Insurance Costs which relate solely to, or are primarily for the benefit of, any of the Other Buildings, as reasonably determined by Landlord.

 

Project Operating Costs ” means all Operating Costs other than (a) Building Operating Costs and (b)            Operating Costs which relate solely to, or are primarily for the benefit of, any of the Other Buildings, as reasonably determined by Landlord.

 

Project Taxes ” means those Taxes attributable to the value of the Land.

 

Rent Commencement Date ” has the meaning set forth in Item 5C of the Summary of Basic Terms.

 

Rules and Regulations ” means the rules and regulations promulgated by Landlord and Other Landlords with respect to the Project, a copy of which is Exhibit D hereto, as the same may be modified by Landlord and Other Landlords from time to time upon notice to Tenant.

 

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Security Deposit ” has the meaning set forth in Item 7 of the Summary of Basic Terms.

 

Site Plan ” means the site plan attached hereto as Exhibit B which depicts the approximate size and layout of the Land, the existing Buildings, the Building and the existing Parking Areas.

 

Summary of Basic Terms ” means the Summary of Basic Terms which is affixed to this Lease immediately after the table of contents of this Lease.

 

Tax Fiscal Year ” shall mean July 1 through June 30 next following, or such other tax period as may be established by law for the payment of Taxes.

 

Taxes ” shall mean (a) all taxes, assessments, betterments, water or sewer entrance fees and charges including general, special, ordinary and extraordinary, or any other charges (including charges for the use of municipal services if billed separately from other taxes), levied, assessed or imposed at any time by any governmental authority upon or against the Land, the Buildings, or the fixtures, signs and other improvements thereon then comprising the Project and (b) all attorneys’ fees, appraisal fees and other fees, charges, costs and/or expenses incurred in connection with any proceedings related to the amount of the Taxes, the tax classification and/or the assessed value of the Project. This definition of Taxes is based upon the present system of real estate taxation in the Commonwealth of Massachusetts; if taxes upon rentals or any other basis shall be substituted, in whole or in part, for the present ad valorem real estate taxes, the term “Taxes” shall be deemed changed to the extent to which there is such a substitution for the present ad valorem real estate taxes. For purposes of this definition of Taxes, if assessments may be paid in installments, only the current installments of such assessments shall be included in Taxes.

 

Tenant ” means FoldRx Pharmaceuticals, Inc., a Delaware corporation, its permitted successors and permitted assigns.

 

Tenant Improvements Allowance ” has the meaning set forth in Item 4B of the Summary of Basic Terms.

 

Tenant Improvements Costs ” means all costs of designing and performing the Tenant Improvements Work, including but not limited to a $50,000 fee payable to Landlord to compensate Landlord for its time and expenses in connection with the inspection and review of the Tenant Improvements Work as provided in Section 3.1(b).

 

Tenant Improvements Plans ” means the plans and specifications for the Tenant Improvements Work, to be prepared and adopted as provided in Section 3.1(a), as the same may be modified from time to time pursuant to the terms of this Lease. Such plans may include plans for installing such information and telecommunications lines as Tenant reasonably requires for its use of the Premises.

 

Tenant Improvements Work ” means the work to be performed by Tenant pursuant to the Tenant Improvements Plans.

 

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Tenant’s Building Share ” means the amount (expressed as a percentage) equal to (a) the Leasable Square Footage of the Premises divided by (b) the Leasable Square Footage of the Building. The percentage determined by the preceding sentence shall be rounded upward to the nearest one - tenth of one percent (0.1%). Initially, Tenant’s Building Share shall be 12.5% (16,070/129,117). Tenant’s Building Share shall be recalculated at any time at which the Leasable Square Footage of either the Premises or the Building is changed.

 

Tenant’s Project Share ” means the amount (expressed as a percentage) equal to (a) the Leasable Square Footage of the Premises divided by (b) the Leasable Square Footage of the Buildings; provided, however, that for purposes of determining Tenant’s Project Share of the Food Service Costs, Tenant’s Project Share means the amount (expressed as a percentage) equal to (i) the Floor Area of the Premises divided by (ii) the Floor Area of all leased and occupied space in the Buildings. The percentage determined by the preceding sentence shall be rounded upward to the nearest one-tenth of one percent (0.1%). Initially, Tenant’s Project Share (other than with respect to Food Service Costs) shall be 4.1% (16,070/397,349). Tenant’s Project Share shall be recalculated at any time at which the Leasable Square Footage of either the Premises or the Buildings is changed, and Tenant’s Project Share with respect to Food Service Costs shall be recalculated upon each change in the level of occupancy of the Buildings.

 

Tenant’s Share ” means, as applicable, Tenant’s Building Share or Tenant’s Project Share.

 

Tenant’s Utility Costs ” has the meaning set forth in Item 10B of the Summary of Basic Terms.

 

ARTICLE II
LEASE OF PREMISES

 

Section 2.1             Lease Of The Premises .  Landlord does hereby lease the Premises to Tenant, and Tenant hereby leases the Premises from Landlord, upon and subject to the terms and provisions of this Lease and all zoning ordinances, and easements, restrictions, and conditions of record. Tenant shall have the right, appurtenant to the Premises, to install, as part of the Tenant Improvements Work, a water neutralizer and an emergency generator serving the Premises at the locations Identified in Exhibit C-1, and to use such water neutralizer and emergency generator for their intended purposes.

 

Section 2.2             Common Rights .  The Premises are leased subject to, and with the benefit of, the non-exclusive right to use in common with others at any time entitled thereto the Common Areas and Common Facilities for all such purposes as such areas may be reasonably designated, but only in connection with lawful business in the Building and in accordance with the Rules and Regulations. Landlord and/or Other Landlords shall have the right from time to time to designate or change the number, locations, size or configuration of the Buildings, including, without limitation, the Common Areas, exits and entrances, and to modify or replace the Common Facilities, and to permit expansion and new construction therein, provided that the same would not have a material adverse effect on Tenant’s use and enjoyment of the Premises. Tenant shall not have the right to use those portions of the Common Areas designated from time to time by Landlord and/or Other Landlords as for the exclusive use of one or more other tenants,

 

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provided that Landlord shall not, and shall not permit any Other Landlords to, make such a designation as would materially adversely affect Tenant’s use and enjoyment of the Premises. Landlord may, but shall not be required to, provide or share in Amenity Facilities (as defined in the Declaration) as Common Areas within the Project from time to time. Prior to providing or accepting any Amenity Facility, other than the existing Food Service Area, as a Common Area, Landlord will consult with Tenant, but Landlord may provide or accept any such Amenity Facility in the exercise of Landlord’s discretion.

 

Section 2.3             Parking . Subject to the Rules and Regulations, Tenant’s Invitees are authorized to use 2 parking spaces in the Parking Areas per 1,000 leasable square feet of the Premises. There shall be no charge to Tenant for the use of surface parking spaces (“Surface Spaces”) in the Parking Areas. For the use of parking spaces in any garage/structured parking facility (“Structured Spaces”) now or hereafter included in the Parking Areas, (a) there shall be no charge for the first thirty (30) months after the Commencement Date, and (b) after the first thirty (30) months after the Commencement Date, Tenant shall pay to or at the direction of Landlord a monthly parking charge, in addition to Base Rent, for each Structured Space based on the fair market charge for similar spaces in the market area of the Project, as determined and adjusted by Landlord and/or Other Landlords from time to time in their reasonable discretion. Upon request, Landlord shall provide Tenant with such market analysis or other information as was used to determine the fair market charge for Structured Spaces. At such times that the parking spaces allocated to the Building (as determined pursuant to Section 4.2(f) of the Declaration) include both Surface Spaces and Structured Spaces, the proportion of Tenant’s parking spaces that will be Structured Spaces shall not exceed the proportion of the parking spaces allocated to the Building that are Structured Spaces. Tenant shall not (i) permit any of Tenant’s Invitees (other than visitors) to park in spaces designated as ‘‘visitor” spaces, (ii) permit any of Tenant’s invitees to park in spaces designated as “reserved” spaces (unless reserved for Tenant), (iii) permit the total number of passenger automobiles parked in the Parking Areas by Tenant’s Invitees, at any time, to exceed 2 per 1,000 square feet of the Premises, and (iv) except for delivery trucks using designated loading and unloading facilities, permit any of Tenant’s Invitees to park any vehicle on the Project other than passenger automobiles. Landlord and/or Other Landlords may, from time to time, designate one or more spaces in the Parking Areas as reserved for the exclusive use of one or more of the tenants of the Project and/or for Landlord’s and/or Other Landlords’ Invitees, so long as Landlord causes to be available to Tenant the parking required by this Section.

 

Section 2.4             Lease Term;  Early Termination;  Extension Term .

 

(a)           The Lease Term shall commence at 12:01 A.M. on the Commencement Date and shall end at 11:59 P.M. on the last day of the Initial Term, subject to Tenant’s right to early termination pursuant to Section 2.4(b), Landlord’s right to early termination pursuant to Section 2.4(c), and Tenant’s right to extend pursuant to Section 2.4(d).

 

(b)           Tenant has the option, exercisable by written notice given to Landlord, together with payment of the early termination fee provided for below, not later than the end of the fourth Lease Year, to terminate the Lease Term as of the end of the fifth Lease Year.  In order to exercise such early termination option, Tenant’s notice of exercise must be accompanied by an early termination fee equal to the unamortized portion of the Leasing Costs (as defined below),

 

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as of the end of the fifth Lease Year, determined by (x) amortizing the Leasing Costs (excluding any Excess Tenant Improvements Allowance), with interest at the rate of 9% per annum, in equal monthly payments of principal and interest over the period from the Rent Commencement Date to the end of the seventh Lease Year, and (y) including the then unamortized Excess Tenant Improvements Allowance.  As used herein, “ Leasing Costs ” means the sum of (i) the principal amount of the Tenant Improvements Allowance provided by Landlord to Tenant (including the Excess Tenant Improvements Allowance, if any), (ii) the brokerage fees paid by Landlord to Brokers for this Lease, and (iii) attorneys’ fees and other out-of-pocket costs incurred by Landlord in negotiating and entering into this Lease. At the request of Tenant at any time after all Leasing Costs are paid by Landlord, Landlord will provide to Tenant an accounting of the Leasing Costs and of the early termination fee.

 

(c)           Landlord has the option, exercisable by written notice given to Tenant not later than the end of the fourth Lease Year, to terminate the Lease Term as of the end of the fifth Lease Year. Neither Landlord nor Tenant shall be required to pay an early termination fee upon a termination by Landlord pursuant to this Section 2.4(c).

 

(d)           Provided an Event of Default does not then exist and neither Tenant nor Landlord has exercised its early termination option pursuant to Section 2.4(b) or Section 2.4(c), Tenant shall have the right to extend the Lease Term for one period of five (5) years by giving Landlord written notice specifying such extension, which notice must be received by Landlord not more than eighteen (18) months nor less than twelve (12) months prior to the expiration date of the Initial Term. If such extension becomes effective, the Lease Term shall be automatically extended upon the same terms and conditions except that (i) Base Rent shall be payable for such Extension Term as set forth in Section 4.1(b), (ii) there shall be no further right to extend or renew beyond the Extension Term, and (iii) there shall be no early termination option.

 

Section 2.5             Security Deposit

 

(a)           Simultaneously with the execution and delivery of this Lease, Tenant shall deliver to Landlord the Security Deposit, which shall be in the form of cash or a letter of credit which satisfies the conditions of Section 2.5(b) (“ Letter of Credit ”). Upon such delivery, Landlord shall remit to Tenant the lesser of (i) the actual cost paid by Tenant for the Letter of Credit, as supported by evidence reasonably satisfactory to Landlord, or (ii) $20,000.

 

(b)           If the Security Deposit is in the form of a Letter of Credit, such Letter of Credit must satisfy all of the following conditions:  (i) the Letter of Credit must be in the exact form attached hereto as Exhibit E , or in such other form as Landlord may have approved, with an expiration date not less than one (1) year after the date of the Letter of Credit; (ii) the beneficiary of the Letter of Credit must be Landlord or Landlord’s designee; (iii) the Letter of Credit must be irrevocable, unconditional and transferable one or more times without charge; and (iv) the Letter of Credit must by issued by Silicon Valley Bank or another bank reasonably satisfactory to Landlord. If, at any time, the issuer of the Letter of Credit gives notice of its election not to renew, extend and/or reissue the Letter of Credit, then Tenant shall, by the earlier of (A) thirty (30) days after such notice or (B) five (5) Business Days prior to the expiration of the term of the Letter of Credit, deliver to Landlord (1) a replacement Letter of Credit satisfying all of the above conditions or (2) cash in the full amount of the expiring Letter of Credit; and if Tenant fails to

 

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timely deliver to Landlord a replacement Letter of Credit as provided above or cash in the full amount of the expiring Letter of Credit, such failure shall constitute an Event of Default and, in addition to any other rights which Landlord might have by reason of such Event of Default, Landlord may draw on the Letter of Credit and hold the proceeds of such drawing as the Security Deposit. If (x) any proceedings under the Bankruptcy Code, receivership or any insolvency law are instituted with the issuer of the Letter of Credit as debtor or (y) the bank issuing the Letter of Credit is taken over by the Federal Deposit Insurance Corporation, the Resolution Trust Corporation or a similar entity, then Landlord may draw on the Letter of Credit and hold the proceeds of such drawing as part of the Security Deposit, unless Tenant either provides cash in lieu of the Letter of Credit or provides a new Letter of Credit issued by a bank reasonably satisfactory to Landlord.

 

(c)           The amount of the Security Deposit shall be subject to reduction as provided in this Section 2.5(c).  The initial amount of the Security Deposit upon execution and delivery of this Lease shall be $2,100,000. At such time, if any, on or after the date of this Lease as Tenant receives an additional equity investment representing cash on its balance sheet of not less than and provides to Landlord evidence of such equity investment reasonably satisfactory to Landlord, provided that there does not then exist an Event of Default or fact or circumstance which, with the passage of time, the giving of notice or both, could become an Event of Default, and provided further that Tenant has then paid to Landlord the first monthly installment of Base Rent in the amount of $         the amount of the Security Deposit shall be reduced to $         (such reduction being called the “ First Reduction ”).  As of the date which is thirty (30) months after the Commencement Date, provided that Landlord has previously qualified for the First Reduction and there does not then exist an Event of Default or fact or circumstance which, with the passage of time, the giving of notice or both, could become an Event of Default, the amount of the Security Deposit shall be reduced from $         to $         (such reduction being called the “ Second Reduction ”). As of the date which is forty-two (42) months after the Commencement Date, provided that Landlord has previously qualified for the First Reduction and the Second Reduction and there does not then exist an Event of Default or fact or circumstance which, with the passage of time, the giving of notice or both, could become an Event of Default, the amount of the Security Deposit shall be reduced from $         to $        .  If, upon any reduction in the amount of the Security Deposit as provided above, the Security Deposit is then in the form of a Letter of Credit, then such reduction in the amount of the Security Deposit shall be accomplished by Tenant causing the Issuing bank to issue (i) a replacement Letter of Credit in an amount reflecting the reduced amount of the Security Deposit, whereupon Landlord shall return the replaced Letter of Credit to the issuing bank, or (ii) an amendment of the Letter of Credit reflecting the reduced amount of the Security Deposit.

 

(d)           The Security Deposit is security for the faithful performance and observance by Tenant of the terms, provisions and conditions of this Lease and is not an advance payment of rent.  If an Event of Default occurs, Landlord may use, apply or retain the whole or any part of the Security Deposit to the extent required for payment of any Base Rent, Additional Rent, or any other sum as to which Tenant is in default or for any sum which Landlord may expend or may be required to expend by reason of the occurrence of an Event of Default, including, but not limited to, any damage or deficiency accrued before or after summary proceedings or other re-entry by Landlord, including the costs of such proceeding or re-entry and further including, without limitation, reasonable attorney’s fees. Landlord shall always have the right to apply the

 

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Security Deposit, or any part thereof, as aforesaid, without prejudice to any other remedy or remedies, which Landlord may have, or Landlord may pursue any other such remedy or remedies in lieu of applying the Security Deposit or any part thereof. No interest shall be payable on the Security Deposit and Landlord shall have the right to commingle the Security Deposit with other funds of Landlord, but Landlord shall keep the Security Deposit free from the claims of Landlord’s creditors.  If Landlord shall apply the Security Deposit in whole or in part, Tenant shall within ten (10) days after demand pay to Landlord the amount so applied to restore the Security Deposit to its original amount.  Because elements of Additional Rent may be subject to annual reconciliation based on actual amounts determined to be due, in addition to the other rights provided herein to Landlord regarding the Security Deposit, Landlord shall have the right, in its discretion, upon the end of the Lease and delivery of the Premises in accordance with the terms hereof, to hold a portion of the Security Deposit equal to no more than twenty percent (20%) of any estimated amounts previously payable by Tenant in respect of Additional Rent for the preceding Lease Year until completion of such reconciliation (but in no event more than ninety (90) days after expiration of the Lease Term), at which time Landlord has the right to deduct any amounts then determined to be due from the remaining Security Deposit and return any balance of the Security Deposit to Tenant; provided, however, that Landlord may not withhold from the Security Deposit an amount greater than the amount which Landlord reasonably estimates will be owing by Tenant upon completion of such reconciliation. If the remaining Security Deposit is not sufficient to pay Tenant’s obligations hereunder, Tenant shall pay the same within thirty (30) days of billing from Landlord.  In the event of a sale or other transfer of the Project, or leasing of the entire Project including the Premises subject to Tenant’s tenancy hereunder, Landlord shall transfer the Security Deposit then remaining at no additional cost to Tenant to the vendee or lessee, such vendee or lessee shall thereupon become entitled to the rights and subject to the obligations of the landlord under this Lease (including the obligations with respect to the Security Deposit), and Landlord shall thereupon be released from all liability for the return of such Security Deposit to Tenant. In such event, Landlord shall cause the transferee of the Security Deposit to issue a written acknowledgement of receipt thereof and Tenant agrees after receipt of such notice to look solely to the new landlord for the return of the Security Deposit then remaining. Tenant further covenants that it will not assign or encumber or attempt to assign or encumber the Security Deposit and that neither Landlord nor its successors or assigns shall be bound by any such assignment, encumbrance, attempted assignment or attempted encumbrance.

 

Section 2.6             Lease Amendment .  If, pursuant to Sections 2.4, 2.7, 8.1 or 11.1 or any other provision of this Lease, there results a change in any of the terms or amounts in the Summary of Basic Terms (including, without limitation, the Leasable Square Footage of the Premises, the Leasable Square Footage of the Building, the Leasable Square Footage of the Project, the Tenant Improvements Allowance, the Excess Tenant Improvements Allowance (if applicable), the Base Rent, Tenant’s Building Share or Tenant’s Project Share) then in effect, Landlord and Tenant will promptly execute a written amendment to, and restatement of, the Summary of Basic Terms, substituting the changed (or confirmed) terms and recomputed amounts in lieu of each of the applicable terms and amounts then in effect which have been changed. As of the effective date of the amendment to the Summary of Basic Terms, the changed terms (and recomputed amounts) will be effective for all purposes of this Lease, and the amended and restated Summary of Basic Terms will be a part of, and incorporated into, this Lease.

 

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Section 2.7             Right of First Opportunity .

 

(a)           Grant of Right .  The leasable space on the fifth floor of the Building other than the Premises, containing approximately 7,563 leasable square feet (the “ ROFO Space ”), is presently unleased. Landlord shall have the free right to enter into the first lease of all portions of the ROFO Space and to renew and extend any such lease, whether such renewal or extension is provided for in such lease or accomplished by an amendment of such lease or by a new lease (each such first lease of all or any portion of the ROFO Space, including any such renewal or extension, being called a ‘‘ First Lease ”). However, subject to Landlord’s right to enter into each First Lease, Tenant shall have, and Landlord hereby grants to Tenant, a right of first opportunity to lease any ROFO Space when it becomes available after termination of the applicable First Lease, on and subject to the terms and conditions set forth in this Section 2.7. Other than a First Lease, Landlord will not enter into any lease of any ROFO Space with a tenant other than Tenant (a “ Third-Party Lease ”), unless and until Landlord has given to Tenant a Notice of Availability with respect to such ROFO Space and Tenant has failed to exercise its right to lease such ROFO Space pursuant to Section 2.7(b).

 

(b)           Mechanics for Exercise of Right . From time to time during the Lease Term as any ROFO Space is, becomes or is about to become available for lease after termination of the applicable First Lease, Landlord shall give written notice to Tenant (a “ Notice of Availability ”) specifying such ROFO Space, the date on or about which such ROFO Space is expected to become available for lease, the effective rent (including Base Rent and Additional Rent, if applicable) at which Landlord is willing to lease the ROFO Space, and such other terms which Landlord desires to specify. Tenant will not disclose to third parties, other than Tenant’s employees, consultants and other agents who have a need to know, the contents of any Notice of Availability, and Tenant shall cause all such employees, consultants or agents to respect the confidentiality of the contents thereof. Unless an Event of Default then exists, Tenant shall have the right, exercisable by written notice given by Tenant and received by Landlord within ten (10) Business Days after Landlord gives to Tenant the subject Notice of Availability, to lease all of such ROFO Space specified in the Notice of Availability on the terms specified therein.

 

(c)           Addition of Space to Lease . If Tenant exercises its right to lease any ROFO Space pursuant to Section 2.7(b), then, as of the date which is the later of (i) ten (10) days after Tenant’s exercise of its right to lease such ROFO Space or (ii) the date specified in the Notice of Availability, such ROFO Space shall be added to and become a part of the Premises and subject to the terms and conditions of this Lease; provided, however, that the ROFO Space shall be provided by Landlord to Tenant in “as is” condition, without any responsibility by Landlord to make any improvements or alterations to the ROFO Space, but with the HVAC, electric and plumbing systems serving the ROFO Space in good working order; and provided, further, that the terms and conditions of this Lease with respect to such ROFO Space shall be modified by the terms and conditions specified in the subject Notice of Availability. Promptly after Tenant exercises its right to lease any ROFO Space pursuant to Section 2.7(b), Landlord and Tenant shall enter into an amendment of this Lease incorporating such ROFO Space as part of the Premises and incorporating the terms specified in the subject Notice of Availability with respect to such ROFO Space.

 

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(d)           Lapse of Right . If, after Landlord gives Tenant a Notice of Availability with respect to any ROFO Space, Landlord does not receive Tenant’s notice of exercise pursuant to Section 2.7(b) within the time specified therein, Tenant’s right of first opportunity provided for in this Section 2.7 with respect to such ROFO Space shall lapse and terminate and Landlord shall be free to enter into a Third-Party Lease with respect to such ROFO Space; provided, however, that (i) if Landlord does not enter into a Third-Party Lease for such ROFO Space at an effective rent at least 90% of that set forth in the Notice of Availability within one year after giving the Notice of Availability or (ii) when such Third-Party Lease terminates, Tenant’s right of first opportunity with respect to such ROFO Space shall be reinstated and again be effective. For purposes of Tenant’s right of first opportunity, a Third-Party Lease shall not be considered to have terminated if the term thereof is renewed or extended, whether the extension or renewal is provided for in the Third-Party Lease or accomplished by an amendment of such lease, or by a new lease.

 

(e)           Termination of Right . Tenant’s right of first opportunity provided for in this Section 2.7 shall terminate twelve (12) months before the expiration of the Lease Term. For purposes of determining the expiration of the Lease Term for purposes of this Section 2.7(e), the Extension Term shall be included only if Tenant has effectively exercised its right to extend for the Extension Term pursuant to Section 2.4(d). Tenant may exercise its right of first opportunity pursuant to Section 2.7(b) less than twelve (12) months before the expiration of the initial Term only if, prior to the exercise of such right, Tenant shall have made a timely and effective exercise of its right to extend the Lease Term in accordance with Section 2.4(d).

 

(f)            Rights Personal to Party Executing this Lease . The rights in this Section 2.7 are personal to FoldRx Pharmaceuticals, Inc. and are not assignable or transferable, other than to a Permitted Transferee. Tenant’s rights under this Section 2.7 will lapse and be of no further force or effect upon any assignment of this Lease, other than to a Permitted Transferee.

 

(g)           Event of Default . Landlord shall have no obligation to give any Notice of Availability to Tenant at any time that an Event of Default exists, and Tenant shall have no rights under this Section 2.7 if an Event of Default exists on the date on which Tenant attempts to exercise its right to lease any ROFO Space.

 

ARTICLE III
TENANT IMPROVEMENTS WORK;  SIGNS

 

Section 3.1             Tenant Improvements Work .

 

(a)           Tenant Improvements Plans . Tenant, in consultation with Landlord, shall prepare or cause to be prepared, and shall submit to Landlord for review and approval the Tenant Improvements Plans. Landlord shall fully cooperate with Tenant in developing the Tenant Improvements Plans in order to expedite the preparation and approval of the Tenant Improvements Plans. Within five (5) Business Days after receipt of the Tenant Improvements Plans, Landlord shall, by written notice to Tenant, approve or disapprove the Tenant Improvements Plans. Landlord will not unreasonably disapprove proposed Tenant Improvements Plans, in any disapproval of Tenant Improvements Plans, Landlord shall specify in reasonable detail the respects in which the Tenant Improvements Plans are not satisfactory to Landlord and

 

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the changes which Landlord desires in order that the Tenant Improvements Plans will be satisfactory to Landlord. After receiving any such notice of disapproval from Landlord with respect to the Tenant Improvements Plans, Tenant will revise the Tenant Improvements Plans as reasonably requested by Landlord and will resubmit the revised Tenant Improvements Plans to Landlord for review and approval in accordance with the procedures set forth above. After approval of the Tenant Improvements Plans by Landlord, Tenant may make changes to the Tenant Improvements Plans only with the prior written approval of Landlord, which approval shall not be unreasonably withheld, conditioned or delayed. Landlord may have an architect and/or engineer selected by Landlord review the Tenant Improvements Plans and/or any proposed changes thereto, and all reasonable fees and charges of such architect and/or engineer in connection with such review shall be paid by Tenant as Additional Rent within thirty (30) days after Tenant is billed therefor. Tenant shall be fully responsible for compliance of the Tenant Improvements Plans with all Legal Requirements and for assuring that the Tenant Improvements Plans provide for Tenant Improvements Work that will comply with all Legal Requirements and will satisfy Tenant’s requirements. Landlord’s approval of the Tenant Improvements Plans shall not constitute a certification, representation or warranty by Landlord that the Tenant Improvements Plans are adequate, complete or in compliance with Legal Requirements.

 

(b)           Performance of Tenant Improvements Work . Tenant shall perform the Tenant Improvements Work diligently and continuously, in a good and workmanlike manner, substantially in accordance with the Tenant Improvements Plans, and in compliance with all Legal Requirements. Tenant shall perform the Tenant Improvements Work in such a manner as not to unreasonably disturb the other tenant of the Building, The Smithsonian Institution Astrophysical Observatory, in the use and enjoyment of its premises. Without limiting the generality of the immediately preceding sentence, Tenant shall, at the request of Landlord, schedule those elements of the Tenant Improvements Work which unreasonably disturb or are likely to unreasonably disturb the other tenant of the Building to be performed during hours other than normal business hours. Landlord shall cooperate with Tenant (at no cost to Landlord) in signing or consenting to applications for such building permits or other permits as may be required for the Tenant Improvements Work. The contractor(s) performing the Tenant Improvements Work shall be subject to the prior written approval of Landlord, which approval shall be given or denied within five (5) Business Days after Tenant proposes a contractor in writing and shall not be unreasonably withheld or conditioned. Landlord may conduct such inspections of the Tenant Improvements Work as Landlord, in its sole discretion, determines. Tenant shall pay to Landlord a fee of $50,000 to compensate Landlord for its time and expenses in connection with the inspection and review of the Tenant Improvements Work, such amount to be paid monthly based on Tenant Improvements Costs incurred. All such inspections and reviews are for the sole benefit of Landlord, and Landlord shall have no liability or obligation to Tenant or any other Person with respect to the Tenant Improvements Work.

 

(c)           Responsibility for Costs . Landlord shall disburse the Tenant Improvements Allowance for application to the payment of Tenant Improvements Costs actually incurred by Tenant, subject to the following terms and conditions, and Tenant shall be responsible for all Tenant Improvements Costs in excess of the Tenant Improvements Allowance; provided, however, that the Excess Tenant Improvements Allowance, if any, included in the Tenant Improvements Allowance shall be repaid by Tenant to Landlord by an increase in Base Rent as

 

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provided in Item 4B of the Summary of Basic Terms. Disbursement of the Tenant Improvements Allowance to or at the direction of Tenant to pay or reimburse Tenant for Tenant Improvements Costs shall be conditioned on the subject Tenant Improvements Work having been performed in accordance with the provisions of this Lease, and shall be subject to Landlord’s receipt of a request for payment in form and with backup reasonably satisfactory to Landlord, including but not limited to such certifications, lien waivers and other documents from Tenant, Tenant’s contractor and Tenant’s architect as Landlord may reasonably require. Landlord shall make disbursements of the Tenant Improvements Allowance to or at the direction of Tenant within fifteen (15) days after receipt of Tenant’s written request and reasonably satisfactory backup documentation. Landlord may inspect the Tenant Improvements Work as a condition to making any requested disbursement of the Tenant Improvements Allowance to confirm the status of the Tenant Improvements Work and that the Tenant Improvements Work has been performed in accordance with the provisions of this Lease.

 

(d)           Pre-Term Occupancy . Landlord shall deliver possession of the Premises to Tenant upon the full execution of this Lease and the delivery of the Security Deposit in accordance with Section 2.5 for the purpose of planning and performing the Tenant Improvements Work and otherwise preparing the Premises for occupancy by Tenant. Tenant’s occupancy of the Premises prior to the Commencement Date shall be at Tenant’s own risk. From the delivery of possession of the Premises by Landlord to Tenant until the Rent Commencement Date, Tenant shall be subject to the insurance obligations set forth in Sections 7.8 and 7.9 and to all other obligations of Tenant under this Lease, other than the obligation to pay Base Rent and Additional Rent, and, prior to entry by Tenant, Tenant shall furnish Landlord with a certificate of insurance confirming its procurement of the insurance required by Sections 7.8 and 7.9.

 

(e)           Construction Representatives . Each of Landlord and Tenant shall have a construction representative who shall be the primary contact person for such party during the design and construction process and who shall be authorized to make day-to-day decisions in the design and construction process. Landlord’s construction representative shall be Robert A. Schlager. Tenant’s construction representative shall be Anna Baia (Forward Ventures). Each of Landlord and Tenant may change its construction representative by written notice given to the other from time to time.

 

(f)            Common Area Work . Landlord, at its sole cost and expense, shall complete all work required in the common hallways, lobbies, stairways and corridors serving the Premises before the Commencement Date, in a good and workmanlike manner consistent with a first-class office and laboratory building.

 

Section 3.2             Signs . Tenant shall have the right (at Landlord’s cost) to be identified on the signs at both entrances to the Project, provided that each such sign complies with the provisions of this Section and other applicable provisions of this Lease. The location, design, shape, size, materials, color and type and all other matters related to each of Tenant’s signs (other than Tenant’s right to a sign) shall be subject to Landlord’s prior written approval following submission by Tenant to Landlord of detailed plans therefor, which approval Landlord will not unreasonably withhold.  All costs of obtaining permits and approvals, creating, installing, illuminating, maintaining, repairing, and/or replacing any such sign shall be paid by Tenant. Except for the signs permitted under this Section, Tenant shall not erect any signs which

 

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are visible from the exterior of the Building. Tenant shall not erect signs except in compliance with all applicable Legal Requirements. Tenant shall be solely responsible for confirming that any proposed sign is in compliance with all such requirements. Tenant shall be identified (at Landlord’s cost) on the tenant directory in the main lobby of the Building, in the lobby on the fifth floor of the Building, and on the entrance to the Premises. Any signs located in the interior of the Building outside of the Premises (i) shall comply with all applicable Legal Requirements and the sign criteria included in the Rules and Regulations, and (ii) shall have been approved of in writing and in advance by Landlord (not to be unreasonably withheld or delayed) following submission of detailed Plans by Tenant to Landlord. Tenant shall maintain its signs (other than signs for which Landlord is responsible hereunder) in good repair and condition. Upon termination of this Lease, Tenant shall promptly remove all Tenant’s signage installed at its expense and restore all damage related to the installation, existence and/or removal of such signage.

 

ARTICLE IV
BASE RENT;  ADDITIONAL RENT

 

Section 4.1             Base Rent .

 

(a)           Commencing on the Rent Commencement Date, Tenant shall pay Base Rent in the amounts set forth in Item 9 of the Summary of Basic Terms; provided that if the First Reduction of the Security Deposit is to occur prior to the date on which the first monthly installment of Base Rent would be due, the first monthly installment of Base Rent in the amount of $46,870.83 shall be paid in advance as a condition of such First Reduction.

 

(b)           (i)            The annual Base Rent per square foot for the Extension Term will be ninety percent (90%) of the annual Market Rent per square foot, determined in accordance with this Section 4.1(b); provided, however, that in no event shall the annual Base Rent per square foot for the Extension Term be less than the annual Base Rent per square foot for the last Lease Year of the Initial Term. Within sixty (60) days after Tenant gives to Landlord written notice of exercise of the extension option pursuant to Section 2.4(d), Landlord and Tenant shall simultaneously exchange proposals setting forth their opinions as to the annual fair market base rent per square foot for the Premises for the Extension Term (the “ Market Rent ”). Landlord and Tenant shall negotiate in good faith for fifteen (15) days after such exchange of proposals (such period being herein called the “ Negotiation Period ”) to attempt to agree upon the Market Rent, and, in the course of such negotiations, each party may from time to time submit modified proposals to the other. If the parties agree upon the Market Rent prior to the determination of the arbitrator pursuant to Section 4.1(b)(ii), whether such agreement is reached during or after the Negotiation Period, the Market Rent shall be as so agreed.

 

(ii)           If the parties are unable to agree upon the Market Rent within the Negotiation Period, then each party shall, upon selection of an arbitrator pursuant to Section 4.1(b)(iii), simultaneously exchange and submit to the arbitrator for binding arbitration a proposal as to the Market Rent. The “Market Rent” shall be determined as of the commencement of the Extension Term at the then current arms-length negotiated base rents being charged to new (or renewal tenants for renewals and extensions which do not have pre-negotiated contract rents) for comparable space in comparable buildings located in the market area of the Project, taking into

 

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account and giving effect to, in determining comparability, without limitation, such considerations as lease term and the age, size, location, condition, and amenities of the Building. The Market Rent may include escalations at various points during the Extension Term. For purposes of such determination, the Premises shall be considered to be vacant and to be rented as a whole for its highest and best use with the degree of finishes and level of leasehold improvements then generally afforded as “building standard” by landlords in the City of Cambridge. The arbitrator shall also consider and incorporate into the computation the existing improvements to the Premises. Neither party shall be deemed under any compulsion to rent or lease space. The arbitrator shall not have the right to modify any other provision of the Lease except Base Rent. Within thirty (30) days after both parties have submitted such proposals to the arbitrator, the arbitrator shall select one of the proposals as more closely approximating the Market Rent appropriate for the Extension Term, and, unless the parties have then agreed upon the Market Rent, the proposed Market Rent set forth in such proposal selected by the arbitrator shall be deemed to be the Market Rent.

 

(iii)          If the parties are unable to agree upon the Market Rent within the Negotiation Period, then the parties shall, within fifteen (15) days after the end of the Negotiation Period (such fifteen (15) day period being herein called the “ Selection Period ”), attempt to agree upon an arbitrator to whom to submit the determination of Market Rent for binding arbitration pursuant to Section 4.1(b)(ii).  If the parties are unable to agree upon an arbitrator within the Selection Period, then, at the end of the Selection Period, each party shall select an arbitrator and, within fifteen (15) days after the end of the Selection Period, the arbitrators shall agree upon an arbitrator to whom the determination of Market Rent shall be submitted for binding arbitration pursuant to Section 4.1(b)(ii). If such arbitrators are unable to agree promptly upon an arbitrator, an arbitrator shall be selected by the American Arbitration Association. Any arbitrator selected by either party, by the arbitrators selected by the parties or by the American Arbitration Association shall be independent of both parties and shall have such experience, either as a licensed real estate broker or salesperson or as an appraiser, as would qualify such arbitrator as an expert with respect to leasing terms in the City of Cambridge. Such arbitrator shall make the determination required pursuant to Section 4.1(b)(ii) within thirty (30) days of selection. The parties shall share equally the fees and expenses of the arbitrator to whom the determination of Market Rent is submitted. Landlord and Tenant shall each pay the fee of the arbitrator selected by it. In making its determination of Market Rent, the arbitrator shall not make any downward adjustment to account for any savings to be realized by Landlord with respect to leasing commissions or tenant improvements.

 

(c)           Base Rent shall be payable in equal monthly installments of one-twelfth (1/12 th ) of the annual Base Rent then in effect (prorated for any partial months) and shall be paid without offset for any reason, in advance, on the first day of each calendar month from and after the Rent Commencement Date. Base Rent and Additional Rent shall be paid as specified by Landlord either (i) by an “electronic funds transfer” system arranged by and among Tenant, Tenant’s bank and Landlord, or (ii) by check sent to Landlord’s office c/o “Robert A. Schlager,” or at such other place as Landlord shall from time to time designate in writing. The parties acknowledge and agree that the obligations owing by Tenant under this Section 4.1 are rent reserved under this Lease, for all purposes hereunder, and are rent reserved within the meaning of Section 502(b)(6) of the Bankruptcy Code or any successor provision thereto.

 

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Section 4.2             Certain Additional Rent . Tenant shall pay, without offset for any reason, all payments of Additional Rent payable by Tenant to Landlord hereunder. If Tenant fails to pay any Additional Rent, Landlord shall have all the rights and remedies available for failure to pay Base Rent. The parties acknowledge and agree that the obligations owing by Tenant under this Section are rent reserved under this Lease, for all purposes hereunder, and are rent reserved within the meaning of Section 502(b)(6) of the Bankruptcy Code or any successor provision thereto.

 

Section 4.3             Taxes.

 

(a)           Commencing on the Commencement Date, Tenant shall pay to Landlord, as Additional Rent, an amount equal to Tenant’s Share of Taxes (being Tenant’s Building Share of Building Taxes and Tenant’s Project Share of Project Taxes). Such amounts shall be estimated in good faith by Landlord at the end of each Tax Fiscal Year, and shall be payable to Landlord in equal estimated monthly installments on the first day of each calendar month during the Lease Term (prorated for any partial months), subject to readjustment from time to time as reasonably determined by Landlord and when the actual amounts are determined. After readjustment, any shortage shall be due and payable by Tenant within thirty (30) days of demand by Landlord and any excess shall, unless an Event of Default then exists, be credited against future Additional Rent obligations, or refunded if the Lease Term has ended and Tenant has no further obligations to Landlord. If the taxing authority provides an estimated tax bill, then monthly installments of Taxes shall be based thereon until the final tax bill is ascertained. Landlord shall furnish to Tenant, upon Tenant’s request, but not more than once in any year, a copy of the most recent tax bill and any estimated tax bill.

 

(b)           If, after Tenant shall have made any payment under this Section 4.3, Landlord shall receive a refund (the “ Refund ”) of any portion of the Taxes paid on account of any Tax Fiscal Year in which such payments shall have been made as a result of an abatement of such Taxes, by final determination of legal proceedings, settlement or otherwise, Landlord shall, within thirty (30) days after receiving the Refund, pay to Tenant (unless an Event of Default then exists) an amount equal to (i) Tenant’s Share of the Refund, which payment to Tenant shall be appropriately adjusted if Tenant’s Share of Taxes covered a shorter period than covered by the Refund, less (ii) Tenant’s Share of all expenses incurred by Landlord in connection with such proceedings (including, but not limited to, attorneys’ fees, costs and appraisers’ fees). Landlord shall have sole control of all tax abatement proceedings.

 

(c)           If the Rent Commencement Date is not on July 1, or the expiration or termination of this Lease is not on June 30, Tenant’s obligation in respect of Taxes shall be prorated.  If the final tax bill for the Tax Fiscal Year in which such expiration or termination of this Lease occurs shall not have been received by Landlord, then within thirty (30) days after the receipt of the tax bill for such Tax Fiscal Year, Landlord and Tenant shall make appropriate adjustments of estimated payments.

 

(d)           Without limiting the generality of the foregoing, Tenant shall pay all rent and personal property taxes attributable to its signs or any other personal property including but not limited to its trade fixtures, the existing or any future floor coverings, wall treatments and light fixtures in the Premises.

 

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Section 4.4             Insurance Costs . Commencing on the Rent Commencement Date, Tenant shall pay to Landlord, as Additional Rent, amounts equal to Tenant’s Project Share of Project Insurance Costs and Tenant’s Building Share of Building Insurance Costs. Tenant’s Project Share of Project Insurance Costs and Tenant’s Building Share of Building Insurance Costs shall be estimated in good faith by Landlord at the end of each calendar year, and shall be payable in equal estimated monthly installments on the first day of each calendar month during the Lease Term (prorated for any partial months), subject to readjustment from time to time as reasonably determined by Landlord and also when actual Project Insurance Costs and Building Insurance Costs are determined. After a readjustment, any shortage shall be due and payable by Tenant within thirty (30) days of demand by Landlord and any excess shall, unless an Event of Default then exists, be credited against future Additional Rent obligations, or refunded promptly if the Lease Term has ended and Tenant has no further obligations to Landlord. Landlord shall provide Tenant upon request with reasonable supporting documentation for the Insurance Costs.

 

Section 4.5             Operating Costs . Commencing on the Rent Commencement Date, Tenant shall pay to Landlord, as Additional Rent, amounts equal to Tenant’s Project Share of Project Operating Costs and Tenant’s Building Share of Building Operating Costs. For purposes of determining Tenant’s Project Share of Project Operating Costs for any year during which the Project is less than ninety-five percent (95%) occupied, the actual Project Operating Costs shall be equitably adjusted to reflect ninety-five percent (95%) occupancy and normal, ongoing operation. For purposes of determining Tenant’s Building Share of Building Operating Costs for any year during which the Building is less than ninety-five percent (95%) occupied, the actual Building Operating Costs shall be equitably adjusted to reflect ninety-five percent (95%) occupancy and normal, ongoing operation. Tenant’s Project Share of Project Operating Costs and Tenant’s Building Share of Building Operating Costs shall be estimated in good faith by Landlord at the end of each calendar year, and shall be payable in equal estimated monthly installments on the first day of each calendar month during the Lease Term (prorated for any partial months), subject to readjustment from time to time as determined by Landlord and also when actual Project Operating Costs and Building Operating Costs are determined. After a readjustment, any shortage shall be due and payable by Tenant within thirty (30) days of demand by Landlord and any excess shall, unless an Event of Default then exists, be credited against future Additional Rent obligations, or refunded promptly if the Lease Term has ended and Tenant has no further obligations to Landlord. Landlord shall provide Tenant upon request with reasonable supporting documentation for the Operating Costs and access to Landlord’s books and records in the event of an audit as provided in Section 4.7.

 

Section 4.6             Tenant’s Utility Costs . Landlord shall, to the extent practical and at its sole expense, cause the Premises to be separately metered or submetered for electric and gas use, including, without limitation, with respect to all variable air volume (“ VAV ”) boxes and pre-heaters, HVAC equipment and systems, lighting and outlets serving the Premises, such that Tenant’s Utility Costs are allocated based on the actual use of such utilities within the Premises. If the Premises are separately metered or submetered such that the utility provider bills Tenant directly for Tenant’s Utility Costs, Tenant shall pay Tenant’s Utility Costs directly to the utility provider promptly as due and payable. If the Premises are separately metered or submetered such that the utility provider bills Landlord for electric service provided to the Building and Landlord bills Tenant for Tenant’s Utility Costs, Tenant shall pay such bills for Tenant’s Utility Costs within thirty (30) days after receipt.

 

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Section 4.7             Tenant’s Audit Rights . Annually, Landlord shall furnish to Tenant a report setting forth in reasonable detail the Project Operating Costs, Building Operating Costs, Project Insurance Costs, Building Insurance Costs, Project Taxes and Building Taxes for the immediately preceding calendar year (in the case of Operating Costs and Insurance Costs) or Tax Fiscal Year (in the case of Taxes). Tenant shall have the right to audit Landlord’s books and records relating to Operating Costs, Insurance Costs and/or Taxes with respect to the period covered by each such report by delivering a notice of its intention to perform such audit to Landlord within sixty (60) days after Tenant’s receipt of such report, in which event Tenant shall perform such audit within ninety (90) days after Tenant’s receipt of such report. If, as a result of such audit, Tenant believes that it is entitled to receive a refund of any Additional Rent paid by Tenant in respect of Operating Costs, Insurance Costs and/or Taxes, Tenant shall deliver to Landlord, no later than ninety (90) days after Tenant’s receipt of the aforesaid report, a notice demanding such a refund, together with a statement of the grounds for each such demand and the amount of each proposed refund. The cost of any such audit shall be paid by Tenant, except that, if it is established that the Additional Rent in respect of Operating Costs, Insurance Costs and Taxes charged to Tenant for the period in question was overstated by more than five percent (5.0%), the reasonable cost of such audit shall be paid or reimbursed to Tenant by Landlord. An overstatement shall not be deemed to exist due to a Refund. Any audit shall be performed by either (a) Tenant’s regular employees or (b) a reputable certified public accountant reasonably acceptable to Landlord whose compensation is not, directly or indirectly, contingent in whole or in part on the results of the audit. If Landlord determines that a report previously furnished by Landlord was in error, Landlord may furnish a corrective or supplemental report to Tenant within two years after the original report was furnished, and if such corrective or supplemental report results in increased Additional Rent, the periods for Tenant to request and perform an audit of Landlord’s books and records relating to Operating Costs, Insurance Costs and/or Taxes with respect to the period covered by the corrective or supplemental report shall be reinstated and commence as of Tenant’s receipt of such corrective or supplemental report.

 

ARTICLE V
USE OF PREMISES

 

Section 5.1             Permitted Use . Tenant shall use and occupy the Premises only for the Permitted Use. Landlord does not make any representation or warranty to Tenant that Tenant’s use of the Premises for the Permitted Use will comply with Legal Requirements, and Tenant is responsible for confirming such compliance.

 

Section 5.2             Restrictions on Use . Tenant shall use the Premises in a careful, safe and proper manner, shall not commit or suffer any waste on or about the Project, and shall not make any use of the Project which is prohibited by or contrary to any Legal Requirements or the Declaration, or which would cause a public or private nuisance. Tenant, at its own expense, shall obtain any and all permits, approvals and licenses necessary for use of the Premises. Tenant shall not overload the floors or other structural parts of the Building; and shall not commit or suffer any act or thing on the Project which is illegal, dangerous, or which unreasonably disturbs other tenants. Tenant shall not do or permit to be done any act or thing on the Project which will invalidate or be in conflict with any insurance policies, or which will increase the rate of any insurance, covering the Building or any of the Other Buildings. If, because of Tenant’s failure to comply with the provisions of this Section or due to any use of the Premises or activity of Tenant

 

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in or about the Project, the Insurance Costs are increased, Tenant shall pay Landlord the amount of such increase. Tenant shall cause any fire lanes located within the Project to be kept free of all parking associated with its business or occupancy. Tenant shall conduct its business at all times so as not to annoy or be offensive to other tenants and occupants of the Project. Tenant shall not permit the emission of any objectionable noise or odor from the Premises and shall at its own cost install such extra sound-proofing or noise control systems and odor control systems, as may be needed to eliminate noise, vibrations and odors, if any, emanating from the Premises being heard, felt or smelled outside the Premises. Tenant shall not place any file cabinets, bookcases, partitions, shelves or other furnishings or equipment in a location which blocks any windows. Landlord shall use commercially reasonable efforts to include provisions similar to those set forth above in this Section 5.2 in leases with other tenants of the Project, subject to such changes as Landlord may negotiate in good faith.

 

Section 5.3             Hazardous Materials.

 

(a)           Tenant (i) will not conduct any activity on the Premises that will use or produce any Hazardous Materials, except for such activities that are both (1) part of the ordinary course of Tenants business activities and (2) conducted in accordance with all Environmental Laws; (ii) will not use the Premises in any manner for the storage of any Hazardous Materials except for storage of such materials that are both (1) used in the ordinary course of Tenant’s business and (2) properly stored in a manner and location satisfying all Environmental Laws; (iii) will not install any underground tanks of any type; and (iv) will not permit any Hazardous Materials to be brought onto the Premises, except in the ordinary course of Tenant’s business and in compliance with all Environmental Laws. If any Hazardous Materials are brought or found on the Premises in violation of the above provisions of this Section, the same shall be immediately removed by Tenant, with proper disposal, and all required cleanup procedures shall be diligently undertaken pursuant to all Environmental Laws. If at any time during or after the Lease Term the Premises are found to be so contaminated or subject to such conditions as a result of Tenant’s failure to comply with the foregoing provisions, Tenant shall defend and hold Landlord harmless from all claims, demands, actions, liabilities, costs, expenses, damages and obligations of any nature arising from or as a result of the use of the Premises by Tenant or its Invitees. Tenant will maintain on the Premises a list of all materials stored at the Premises for which a material safety data sheet (an “ MSDS ”) was issued by the producers or manufacturers thereof, together with copies of the MSDS’s for such materials, and shall deliver such list and MSDS copies to Landlord upon Landlord’s request therefor. Except for Hazardous Materials that existed in or on the Premises as of the Commencement Date, Tenant shall remove all Hazardous Materials from the Premises in a manner acceptable to Landlord before the earlier of the date Tenant vacates the Premises and the date Tenant’s right to possess the Premises ends. Landlord may, upon reasonable notice to Tenant (and in no case with less than 24 hours’ advance notice except for emergencies), enter the Premises and conduct environmental inspections and tests therein as it may reasonably require from time to time, provided that Landlord shall use reasonable efforts to minimize the interference with Tenant’s business. Such inspections and tests shall be conducted at Landlord’s expense, unless they reveal the presence of Hazardous Materials in violation of the above provisions of this Section or that Tenant has not complied with the requirements of this Section, in which case Tenant shall reimburse Landlord for the cost thereof within ten (10) days after Landlord’s request therefor.

 

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(b)           Landlord represents to Tenant that Landlord has not received any written notice, demand, claim, citation, complaint, request for information or similar communication with respect to the existence of Hazardous Materials at the Project in violation of Environmental Laws.

 

ARTICLE VI
LANDLORD’S SERVICES

 

Section 6.1             Landlord’s Services . Landlord shall furnish to the Building the services set forth below in this Section, subject to the conditions stated in this Lease. The cost of certain of these services are to be (i) paid by Tenant, as provided in this Lease, or (ii) included in Operating Costs, Insurance Costs or Taxes, as applicable.

 

(a)           Building . Landlord shall maintain and keep in good condition and repair the exterior and structure of the Building and mechanical elements of the Building, including the roof and roof structure, and the utility lines and systems outside the Building (except to the extent those utility lines or systems are the property or responsibility of the applicable utility company).

 

(b)           Systems . Subject to Tenant’s obligations under Section 7.4, Landlord shall operate, maintain and repair the heating, ventilating and air conditioning system, the plumbing system and the electrical system of the Building. Landlord shall provide heating and air conditioning services to the Premises to heat and cool the Premises at temperatures in accordance with ASHRAE standards from 8:00 a.m. to 6:00 p.m., Monday through Friday, and 8:00 a.m. to 1:00 p.m., on Saturdays, excluding holidays, and at such other times as Tenant may reasonably request.

 

(c)           Water and Sewer . Cold and hot water at standard Building temperatures will be available for ordinary drinking, cleaning, sanitary, lavatory and laboratory purposes. Landlord may install a water meter at Tenant’s expense and thereby measure Tenant’s water consumption. Tenant shall pay Landlord, as Additional Rent, within thirty (30) days after invoice the cost of all water consumption so metered, including without limitation any and all sewer rents, taxes or levies assessed by any governmental authority or utility in connection with metered consumption. Such meter and installation equipment shall be maintained in good working order and repair at Tenant’s expense. Any water or sewer services charged directly to other tenants of the Building shall not be included in Operating Costs.

 

(d)           Elevators . Landlord will provide three automatic operatorless elevators in the Building (two passenger elevators and one freight elevator).

 

(e)           Common Areas . Landlord shall provide heating and air conditioning for the Common Areas inside the Building during business hours. Landlord shall clean, provide lighting, repair, maintain and provide janitorial services for the Common Areas including, to the extent reasonable, the Parking Areas, in order to maintain the Common Areas. Notwithstanding the above, any damage to the Common Areas or Common Facilities caused by any of Tenant’s Invitees shall be the sole responsibility of Tenant.

 

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(f)            Waste Removal . Landlord shall provide or arrange for ordinary and reasonable waste removal services for the Building. In the event that Landlord determines that Tenant’s quantity of waste is excessive in comparison to other tenants of the Building, or, in the event that Landlord determines that Tenant’s waste is other than waste generated by typical office use, Landlord may bill Tenant directly as Additional Rent for any such additional cost therefor or require that Tenant be responsible for disposing of its own waste.

 

(g)           Janitorial Services . Landlord shall supply or cause to be supplied routine janitorial services for the Common Areas. Such services may be revised from time to time by Landlord in its commercially reasonable discretion.

 

(h)           Taxes . Landlord shall pay or cause to be paid all Taxes levied upon or with respect to the Project.

 

(i)            Insurance . Landlord shall procure and maintain, or cause to be procured and maintained, in full force and effect fire, casualty and extended coverage insurance with respect to the Project, with vandalism and malicious mischief endorsements, liability insurance with respect to the Common Areas, rent loss insurance and such other insurance upon or with respect to the Project as Landlord and/or Other Landlords determine to be necessary, appropriate and/or desirable (comparable to other similar properties in the City of Cambridge) or is required by Landlord’s and/or Other Landlords’ lender, all with such limits of coverage as Landlord, Other Landlords or their lender may deem necessary, appropriate and/or desirable.

 

Section 6.2             Extraordinary Use . Tenant acknowledges that the services to be supplied by Landlord after occupancy by Tenant will be sufficient only for ordinary office, vivarium and laboratory uses. Any additional capacity or structural support, as determined by Landlord, needed for uses beyond such uses, shall be subject to Landlord’s prior written approval, which approval shall not be unreasonably withheld.

 

Section 6.3             Interruption;  Delay . Landlord shall have no responsibility or liability for failure or interruption of any such repairs or services referred to in this Article VI, or for any interruption in utility services, caused by breakage, accident, strikes, repairs, inability after exercise of reasonable diligence to obtain supplies or otherwise furnish services, or for any cause or causes beyond the reasonable control of Landlord (but Landlord, in respect of those matters for which Landlord is responsible, will use reasonable efforts to restore such services or make such repairs as soon as possible), nor in any event for any indirect or consequential damages; and failure or omission on the part of Landlord to furnish such service or make such repair shall not be construed as an eviction of Tenant, nor render Landlord liable in damages, nor entitle Tenant to an abatement of Base Rent or Additional Rent, nor release Tenant from the obligation to fulfill any of its covenants under this Lease, except as provided in Articles X and XI with respect to eminent domain and damage by fire or other casualty.

 

Section 6.4             Additional Services . Should Tenant request any additional services, Tenant agrees to pay to Landlord as Additional Rent therefor Landlord’s actual costs for providing such service, plus an additional fifteen (15%) percent of such costs as an administrative fee, within thirty (30) days of Landlord’s billing Tenant therefor.

 

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ARTICLE VII
CERTAIN OBLIGATIONS OF TENANT

 

Section 7.1             Rent . Tenant will promptly pay the Base Rent and Additional Rent, including without limitation any and all fees, charges, expenses, fines, assessments or other sums payable by Tenant to Landlord (or to the applicable provider of utilities) at the time and in the manner provided for in this Lease, all of which shall be deemed to be obligations to pay Base Rent or Additional Rent.

 

Section 7.2             Utilities . In addition to gas and electricity which is the subject of Section 4.6 and water and sewer which is the subject of Section 6.1(c), Landlord reserves the right at its expense to cause any or all of Tenant’s other utilities to be separately metered or submetered. In the event that Tenant is billed directly by a utility provider, then Tenant shall pay such bills directly to such utility provider prior to their due dates.  In the event Tenant’s utility usage is separately metered or sub-metered by Landlord, Tenant shall pay the billed charges therefor to Landlord as Additional Rent within thirty (30) days of Landlord’s billing therefor. In the event Tenant’s utility usage is not separately metered, then, except for Tenant’s Utility Costs, Tenant shall pay for such usage as a part of the Operating Costs. Tenant agrees that its use of electric current shall never exceed the capacity of existing feeders, risers and wiring installations in the Building. Tenant shall not make or perform any alterations to wiring, installations, lighting fixtures or other electrical facilities in any manner without the prior written consent of Landlord, which Landlord will not unreasonably withhold or delay. Any risers or wiring to meet Tenant’s excess electrical requirements, if requested by Tenant and approved by Landlord, will be installed by Landlord at Tenant’s expense.

 

Section 7.3             No Waste . Tenant shall not overload, damage or deface the Premises nor shall it suffer or permit the same to be done, nor shall it commit any waste.

 

Section 7.4             Maintenance;  Repairs; and Yield-Up . Except for items that are Landlord’s responsibility under Section 6.1, Tenant will keep the Premises neat and clean and maintain the same in good repair, condition and appearance, subject to damage by fire or other casualty. Tenant’s obligation to so maintain and repair the Premises shall apply to all of the Premises, including, without limitation, all doors, glass, fixtures, interior walls, floors, ceilings, and any other systems exclusively serving the Premises, other than the HVAC system serving the Premises, and the water neutralizer and emergency generator installed by Tenant pursuant to Section 2.1. There is excepted from Tenant’s obligations under this Section only (a) damage to such portions of the Premises not the responsibility of Tenant under this Lease and originally constructed by Landlord, and (b) repairs and work which are otherwise the specific responsibility of Landlord hereunder. At the end of the Lease Term or sooner termination of this Lease, Tenant shall peaceably surrender and deliver up the Premises, together with the water neutralizer and emergency generator installed by Tenant pursuant to Section 2.1, to Landlord, broom clean, with all utilities safely capped, and in good repair and condition, subject to reasonable wear and tear and damage by fire or other casualty, and remove all signs and lettering and all personal property, goods and effects, belonging to Tenant or anyone claiming through or under Tenant. Tenant shall cause all maintenance and repair work to conform to Legal Requirements. Tenant shall keep the Premises clear of all filth, trash and refuse. If Tenant fails to perform Tenant’s obligations under the above provisions of this Section, then Landlord will have the right (but not

 

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the obligation), without waiving any default by Tenant, to cause such obligations to be performed upon not less than three (3) days prior written notice to Tenant (or a shorter period of prior written notice, or a contemporaneous written notice, if appropriate in Landlord’s reasonable judgment in light of the nature of Tenant’s obligations to be performed), giving Tenant the opportunity to have its representative observe the performance of such obligations if practical, and if Landlord causes any of such obligations to be performed as permitted above, the costs and expenses reasonably incurred by Landlord in connection therewith shall be due and payable by Tenant to Landlord as Additional Rent upon demand.

 

Section 7.5             Alterations by Tenant . Tenant will not make any change in, or addition to, the Premises without first obtaining, on each occasion, Landlord’s consent in writing as provided below (which consent shall not be unreasonably withheld), and then only at Tenant’s expense, and in a lawful manner and upon such terms and conditions as Landlord, by such writing, shall reasonably approve, which shall include, without limitation, (a) maintenance of insurance in form and substance reasonably satisfactory to Landlord, and (b) compliance with Sections 7.9, 7.11 and 7.13; provided that Landlord’s consent shall not be required for non-structural alterations costing less than $25,000 per alteration and costing less than $50,000 in the aggregate in any calendar year. Any alteration or addition shall be consistent in appearance with the rest of the Building and the Project and shall be made only after duly obtaining (and providing to Landlord copies of) all required permits and licenses from all governmental authorities. Tenant will deliver to Landlord in writing a schedule setting forth the details and location of all such proposed alterations or additions and detailed plans and specifications. The contractor(s) performing the work shall be subject to Landlord’s approval, which will not be unreasonably withheld. If required by Landlord’s lender, Tenant shall provide a statutory lien bond with respect to such work. All approved repairs, installations, alterations, additions or other improvements made by Tenant shall be made in a good and workmanlike manner, between such hours as approved in writing by Landlord, and in such a way that utilities will not be interrupted and other tenants and occupants of the Project will not suffer unreasonable inconvenience or interference as determined by Landlord. Tenant’s Invitees shall be given such reasonable access to other portions of the Building and the mechanical systems as may be necessary or appropriate to perform such work. Both during and after the performance of any such work, Landlord shall have free access to any and all mechanical installations in the Premises, including, but not limited to, air conditioning, fans, ventilating systems, machine rooms and electrical closets; and Tenant agrees not to construct or permit the installation of partitions and/or other obstructions in the Premises which might interfere with Landlord’s free access to the Premises or Building, or impede the free flow of air to and from air vents and other portions of the heating, ventilating and air conditioning systems in the Building. Unless Landlord elects otherwise, but subject to Section 7.6, all installations, alterations, additions or improvements in or to the Premises shall be the property of Landlord and shall remain upon, and be surrendered with, the Premises at the end of the Lease Term or sooner termination of this Lease.

 

Section 7.6             Trade Fixtures and Equipment . Any trade fixtures installed in, or attached to, the Premises by, and at the expense of, Tenant, shall remain the property of Tenant, if the same may be removed without damage to, or destruction of, the Premises. Tenant shall have the right, at any time and from time to time during the Lease Term, to remove any and all of its trade fixtures which it may have installed in, or attached to, the Premises, during the Lease Term. In addition, prior to the end of the Lease Term or sooner termination of this Lease, Tenant shall

 

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remove all of Tenant’s trade fixtures unless Landlord gives Tenant a written waiver for same (if Tenant requests, Landlord shall state in writing whether it will grant a waiver at the time Tenant installs a trade fixture). At any time that Tenant removes any of its trade fixtures, Tenant shall promptly repair the Building as a result of any damage to, or destruction of, the Building caused by the removal of any of its trade fixtures. Notwithstanding the above provisions of this Section 7.6 to the contrary, Tenant shall surrender the water neutralizer and the emergency generator with the Premises as provided in Section 7.4.

 

Section 7.7             Compliance with Laws . Tenant, in its use of the Premises and at its sole expense, shall comply with all Legal Requirements, including, without limitation, all Legal Requirements related to the use, storage, discharge, release, removal or existence of Hazardous Materials. Tenant agrees that the Premises shall be kept in a sanitary and safe condition in accordance with all Legal Requirements.

 

Section 7.8             Contents at Tenant’s Risk . All inventory, equipment, goods, merchandise, furniture, fixtures and property of every kind which may be on or about the Premises shall be at the sole risk and hazard of Tenant, and if the whole or any part thereof shall be destroyed or damaged by fire, water or otherwise, or by the use or abuse of water or by the leaking or bursting of water pipes, or by rising water, or by roof or other structural leak, or by loss of electrical service, or in any other way or manner, no part of such loss or damage shall be charged to or borne by Landlord in any case whatsoever, except that the foregoing shall not exculpate the Landlord from its own negligent acts or omissions. Tenant agrees to maintain full and adequate insurance coverage on all of its property at the Premises and in the remainder of the Building, including physical damage, theft and business interruption insurance, or Tenant shall be a self-insurer thereof, in which case Tenant shall so advise Landlord in writing and shall be fully responsible for all such damage, and shall indemnify and save harmless Landlord from any loss, cost, expense, damage or liability resulting from Tenant’s failure to have such insurance as required in this Lease. Such insurance on Tenant’s property shall contain a waiver of subrogation clause in favor of Landlord, or shall name Landlord as an additional insured for the sole purpose of preventing a subrogation claim against Landlord. If Tenant is a self-insurer, in whole or in part, Landlord shall be entitled to the same benefits it would have enjoyed had insurance covering the loss in full with a waiver of subrogation clause been in effect, or as if the Landlord has been named on insurance covering the loss in full as an additional insured for the purpose of preventing a subrogation claim.

 

Section 7.9             Exoneration, Indemnification, Hold Harmless and Insurance . Tenant will exonerate, indemnify, defend, save and hold harmless Landlord (and any and all Persons claiming by, through or under Landlord) from and against all claims, proceedings, defenses thereof, liabilities, costs, and expenses of any kind and nature, including legal fees, arising from:  (i) any breach of this Lease by Tenant or any of Tenant’s Invitees or other Person claiming by, through or under Tenant; and/or (ii) any misconduct or negligence of any of Tenant’s Invitees, or arising from any accident, injury or damage occurring in, on or about the Project, which such accident, damage or injury results from the negligence or misconduct on the part of any of Tenant’s invitees. This exoneration, indemnification and hold harmless agreement shall survive the termination of this Lease.

 

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From and after any pre-term occupancy by Tenant, if any, allowed by Landlord, and thereafter during the Lease Term and any period of holding over, Tenant shall maintain in full force and effect a policy of commercial general liability insurance under which Landlord (and its designees) and Landlord’s mortgagee(s) are named as additional insureds. Each such policy shall be non-cancelable with respect to Landlord without thirty (30) days prior written notice to Landlord, and Tenant shall deliver to Landlord prior to any pre-term occupancy, prior to the Commencement Date and thereafter at least thirty (30) days prior to the expiration of any then effective coverage a satisfactory written certificate of insurance coverages or the renewal or replacement of such coverages. The minimum limits of liability of such insurance shall be One Million Dollars ($1,000,000.00) combined single limits for bodily injury and property damage, each occurrence, and Three Million Dollars ($3,000,000.00) limits for personal injury, together with an overall umbrella coverage of an additional Two Million Dollars ($2,000,000.00). Tenant shall not permit any contractor to do any work at or furnish any materials to be incorporated into the Premises, whether or not included in the Tenant Improvements Work, without first delivering to Landlord satisfactory evidence of the Contractor’s commercial general liability insurance, worker’s compensation insurance, automobile insurance and, if required by Landlord’s lender, statutory lien bonds, each reasonably acceptable to Landlord and complying with any insurance specifications provided by Landlord. All insurance requirements imposed upon Tenant or its contractors under this Lease shall be subject to the further requirement that the forms of coverage and the insurers providing the insurance be licensed in the Commonwealth of Massachusetts, be in sound financial condition, carry an A- or better Best’s rating, and be reasonably acceptable to Landlord. Tenant agrees that Landlord shall not be responsible or liable to Tenant, or to those Persons claiming by, through or under Tenant, for any loss or damage that may be occasioned by or through the acts or omissions of Persons occupying or using adjoining premises or any part of the Project, or otherwise, or for any loss or damage resulting to Tenant or those Persons claiming by, through or under Tenant, or its or their property, except that the foregoing shall not exculpate the Landlord from acts of its own negligence.

 

Section 7.10           Landlord’s Access . Landlord and its representatives shall have the right without charge to it and without reduction in Base Rent or Additional Rent, upon reasonable notice (which shall be at least 24 hours’ notice, except in case of an emergency), at reasonable times and in such manner as shall not unreasonably interfere with Tenant’s business, to enter the Premises for any reasonable purpose (including, without limitation, showing the Premises to prospective purchasers, tenants (during the last year of the Lease Term) and lenders) and to make entry for the purpose of investigating repair or maintenance problems and to make such repairs or changes as Landlord deems advisable, and to maintain, use, repair, replace, relocate or introduce pipes, ducts, wires, meters and any other Landlord’s fixtures serving or to serve the Premises or other parts of the Project (which shall be installed above ceilings, behind walls, along existing columns, or in other areas which do not interfere with Tenant’s business), or to maintain or repair any portion of the Project, and, in case of an emergency, whether resulting from circumstances in the Premises or elsewhere on the Project, Landlord or its representatives may enter the Premises (forcibly, if necessary) at any time to take such measures as may be needed to cope with such emergency. Such access shall include, but not be limited to, the right to open floors, walls, ceilings, and building systems for the foregoing purposes. Other than where impractical in case of an emergency, Landlord shall give Tenant reasonable opportunity to have a Tenant’s representative accompany Landlord during any access to the Premises by Landlord pursuant to this Section.

 

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Section 7.11           No Liens . Tenant shall not permit any mechanics’, laborers’ or materialmen’s liens to stand against the Project or Tenant’s interests in the Premises, this Lease, or the estate created hereby for any labor or materials furnished to Tenant or claimed to have been furnished to Tenant in connection with work of any character performed or claimed to have been performed in or on the Premises by or at the direction or sufferance of Tenant.  Landlord may condition the right of Tenant to do the Tenant Improvements Work or to do any other work which could result in a lien upon the Project or Tenant’s interests in the Premises, this Lease, or the estate created hereby on the delivery and recording of statutory lien bonds (if required by Landlord’s lender) or indemnities satisfactory to Landlord.

 

Section 7.12           Compliance with Rules and Regulations . Tenant covenants that all of its Invitees will comply with the Rules and Regulations and all other reasonable rules and regulations as Landlord may from time to time hereafter promulgate to regulate the conduct generally of all the tenants of the Building. Landlord, however, shall have the reasonable right to change the Rules and Regulations and to waive any one or more of them in the case of any one or more tenants. Landlord shall enforce the Rules and Regulations, if at all, in a non-discriminatory manner.

 

Section 7.13           Use of Union Labor . The Building is subject to financing which requires that only contractors and subcontractors subject to collective bargaining agreements with unions affiliated with the AFL-CIO Building and Construction Trades Department (or any successor organization) may be employed to perform the following work with respect to the Building to the extent such work is the responsibility of Landlord or is funded directly or indirectly from proceeds of a loan made by The Union Labor Life Insurance Company to Landlord:  (i) construction of any kind as to new buildings and new structures (including parking structures); (ii) any major renovation, rehabilitation or improvement of existing buildings and structures, including any major alteration or expansion of the Premises, including tenant improvements related to such work; (iii) replacement of any roof; (iv) major repair or replacement of any HVAC system; (v) elevator or escalator repair or maintenance; and (vi) repair, replacement or installation of electric panel boards and entry service cables.

 

Section 7.14           Further Construction . Landlord shall have the right, but not the obligation, to construct an expansion or additional phase of the Building (an “ Addition ”). If Landlord elects to construct an Addition, Tenant shall cooperate with Landlord in connection with Landlord’s plans to construct the Addition and the construction of the Addition, and neither Tenant nor any of its Invitees shall take any action which will interfere with such plans or construction. Without limiting the generality of the foregoing, Tenant agrees to provide (at no cost to Tenant) such assistance and cooperation as Landlord may request, from time to time, in order for Landlord to timely obtain all licenses, permits, approvals and certificates of occupancy as may be necessary and/or appropriate in connection with an Addition. Landlord shall plan the construction of any Addition and related staging in a manner reasonable under the circumstances to minimize any material interference with Tenant’s access to and/or use of the Premises during the performance of such construction, which planning shall include reasonable advance written notice (at least two Business Days in the case of interruptions to power or other utilities) to Tenant of Landlord’s construction activities which are likely to disturb Tenant’s ongoing experiments or lab work in the Premises to facilitate the taking of protective steps by Tenant. Tenant acknowledges that, from time to time, dust, noise, vibrations and interruptions to power and

 

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other utilities (including water and sewer) and/or inability to maintain the temperature in the Building at customary levels may, among other construction-related interference, occur on a temporary basis in connection with the construction of an Addition. Tenant is responsible to safeguard, insure and protect adequately its property (including any sensitive electronic equipment and computers) during the construction process and Landlord shall not be liable to Tenant for any direct or indirect damage or loss suffered by Tenant as a result of Landlord’s construction activities provided that they are undertaken in a manner consistent with this Section. Tenant shall notify Landlord if any such construction-related interference should occur. Upon receipt of written notice from Tenant, Landlord shall undertake those measures reasonable under the circumstances to minimize any material interference with Tenant’s access and/or use of the Premises during the performance of any such construction by Landlord. Tenant shall not be entitled to any abatement of rent or to claim any constructive eviction as a result of Landlord’s construction activities if Landlord has complied with the requirements of this Section.

 

ARTICLE VIII
SUBLETTING AND ASSIGNMENT

 

Section 8.1             Subletting and Assignment.

 

(a)           Except as hereinafter set forth, Tenant shall not assign, mortgage, pledge or encumber this Lease nor sublet all or any part of the Premises, nor permit or allow the use of all or any part of the Premises by third party users, such as concessionaires, without, on each occasion, obtaining Landlord’s written consent thereto. Landlord will not unreasonably withhold, condition or delay its consent to any assignment of this Lease or sublease of all or any part of the Premises under the circumstance described in Section 8.1(b)(i), and Landlord will consent to the assignment of this Lease to a Permitted Transferee under the circumstances described in Section 8.1(b)(ii); otherwise, the consent of Landlord to an assignment, sublease or other transaction covered by this Section 8.1(a) will be within Landlord’s sole discretion. As used herein, the term “assign” or “assignment” shall be deemed to include, without limitation: (i) any transfer of Tenant’s interest in this Lease by operation of law or the merger or consolidation of Tenant with or into any other firm or corporation; or (ii) the transfer or sale of a controlling interest in Tenant (whether in a single transaction or a series of transactions) and whether by sale of its capital stock or otherwise, other than by reason of a sale of a portion of the capital stock of Tenant to raise capital which does not result in a change in the day-to-day control of Tenant.

 

(b)           (i) Landlord will not unreasonably withhold or delay its consent to any assignment of this Lease or any sublease of all or any part of the Premises, so long as (A) the assignment or sublease will not violate the terms of the Declaration; (B) the assignee or subtenant and its proposed use is of a character consistent with the Project; (C) the assignee’s or subtenant’s proposed use is permitted under the terms of this Lease; (D) the assignee or subtenant is qualified to do business in the Commonwealth of Massachusetts and has all applicable permits and licenses to do business from the Premises; (E) Tenant pays to Landlord all of Landlord’s reasonable expenses arising out of such assignment or sublease, including, without limitation, reasonable attorneys’ fees (not to exceed $3,000); (F) there does not then exist an Event of Default; (G) each of Landlord’s mortgagees has consented in writing to such assignment or sublease if such mortgagee’s consent is required pursuant to the terms of the applicable financing documents; (H) if a sublease, there are not more than a total of three (3)

 

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subtenants, including the proposed subtenant under the proposed sublease, in occupancy of the Premises or portions thereof; and (I) if a sublease, the proposed sublease prohibits any assignment of the sublease or any sub-sublease of any portion of the Premises without the prior written consent of Landlord.

 

(ii)           Landlord will consent to an assignment of this Lease to a Permitted Transferee, so long as:  (1) the assignee is qualified to do business in the Commonwealth of Massachusetts and has all applicable permits and licenses to do business from the Premises; (2) Tenant pays to Landlord all of Landlord’s reasonable expenses arising out of such assignment, including, without limitation, reasonable attorneys’ fees (not to exceed $3,000); and (3) there does not then exist an Event of Default and no Event of Default will be created as a result of the proposed assignment or the proposed use by the assignee.

 

(c)           In the event of any permitted assignment of this Lease or sublease of all or any part of the Premises by Tenant, Tenant shall be jointly and severally liable with the new tenant for the payment of any and all Base Rent and Additional Rent which may become due by the terms of this Lease and for the performance of all covenants, agreements and conditions on the part of Tenant to be performed hereunder. Tenant shall also pay to Landlord fifty percent (50%) of any rent received as a result of the assignment or sublease which exceeds the Base Rent and Additional Rent payable hereunder on a per square foot basis, after taking into account the costs of the assignment or sublease amortized on a straight-line basis, over the remaining Lease Term. No such assignment or sublease shall be valid or effective unless and until (i) the new tenant and Tenant execute and deliver to Landlord an agreement, in form and substance reasonably satisfactory to Landlord, pursuant to which inter alia, such new tenant (A) assumes all of the obligations of Tenant under this Lease, (B) if a sublease, agrees to execute and deliver such estoppel certificates and subordination agreements in the same forms as Landlord may require of Tenant under this Lease, (C) if a sublease, acknowledges that Landlord has no obligations to new tenant under this Lease, the sublease or otherwise and (D) agrees to maintain the same insurance coverages as the insurance coverages which Tenant is required to maintain under this Lease and to provide evidence thereof to Landlord in accordance with the terms of this Lease; and (ii) the new tenant delivers to Landlord evidence of the insurance coverages required to be maintained by such new tenant under the agreement referenced in clause (i) above. No modification of the terms of this Lease or any course of dealing between Landlord and any assignee or sublessee of Tenant’s interest herein shall operate to release or impair Tenant’s obligations hereunder.

 

(d)           Notwithstanding anything to the contrary contained in this Article VIII or other provisions of this Lease, in the event that Tenant seeks Landlord’s consent to an assignment of this Lease, other than to a Permitted Transferee, or a sublease of twenty-five percent (25%) or more of the Premises, Landlord, at its option, may terminate this Lease (or if the request is for a sublease of less than all of the Premises, at Landlord’s option, Landlord may terminate this Lease as to the portion requested to be sublet and Landlord and Tenant shall execute an amendment to this Lease to modify the Premises and to adjust Base Rent and Tenant’s Share based upon the approximate remaining leasable square footage to the Leasable Square Footage of the Building and the Project). In such an event, Landlord may enter into a new lease with the proposed assignee or sublessee or any other party on any terms and provisions acceptable to Landlord in Landlord’s sole discretion for the Premises or the portion of the Premises released from this Lease. Notwithstanding the above provisions of this Section 8.1(d) to the contrary, if Landlord

 

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exercises its option to terminate this Lease in whole or in part under this Section 8.1(d), Tenant may, by written notice given to Landlord within three (3) Business Days after Landlord exercises such option, withdraw Tenant’s request for Landlord’s consent to the subject assignment or sublease, in which event this Lease shall not terminate.

 

(e)           Tenant shall not enter into any arrangements with any subtenant or assignee to circumvent, or which have the effect of circumventing, (i) Tenant obligation to share rents received from a sublease or assignment or (ii) any other provisions of this Article VIII.

 

ARTICLE IX
RIGHTS OF MORTGAGEES AND GROUND LESSORS;  ESTOPPEL CERTIFICATES

 

Section 9.1             Subordination to Mortgages and Ground Leases . Tenant agrees that this Lease is and shall be and remain subordinate to the lien of any present or future mortgage or mortgages, or ground lease, upon the Project, irrespective of the time of execution or time of recording of any such mortgage or mortgages, or ground lease, and to all renewals, extensions, and modifications therefor or amendments thereto; provided, however, that as a condition to such subordination to any present or future mortgage or ground lease, the mortgagee or ground lessor must agree in writing not to disturb Tenant’s possession of the Premises pursuant to the terms of this Lease so long as no Event of Default exists. Tenant agrees that it will, upon five (5) Business Days’ advance written request from Landlord or any holder of a mortgage on all or a portion of the Project or the ground lessor thereof, execute, acknowledge, and deliver any and all instruments reasonably deemed necessary or desirable by Landlord, or such holder to give effect to, or notice of, such subordination, provided that such subordination includes a non-disturbance agreement for the benefit of Tenant on commercially reasonable terms and conditions specified by the mortgagee or ground lessor. Without limiting the generality of the immediately preceding sentence, Tenant shall, contemporaneously with the execution of this Lease, (a) enter into a Subordination, Non- Disturbance and Attornment Agreement with The Union Labor Life Insurance Company in the form of Exhibit F , and (b) enter into a Subordination, Non-Disturbance and Attornment Agreement with Ground Lessor in the form of Exhibit G . Upon five (5) Business Days’ written request from Landlord, any holder of a mortgage or ground lease on the Project or any successor in interest to Landlord, whether by purchase, foreclosure, deed in lieu of foreclosure or otherwise, Tenant shall enter into a recognition and attornment agreement, in the form reasonably requested by such party, with such party.

 

Section 9.2             Lease Superior at Mortgagee’s or Ground Lessor’s Election . At the request in writing of any mortgagee, or ground lessor, of the Project, this Lease shall be deemed superior to such mortgage, or ground lease, whether this Lease was executed before or after such mortgage, or ground lease, and Tenant shall execute such documents to effect the foregoing in recordable form as such mortgagee, or ground lessor, shall request.

 

Section 9.3             Notice to Mortgagee and Ground Lessor . Upon receipt of a written request from Landlord or any holder of a mortgage, on all or any part of the Project, or the ground lessor thereof, Tenant will thereafter send any such holder copies of all notices (including, but not limited to, notices of default or termination) given by Tenant to Landlord in accordance with any provision of this Lease. In the event of any failure by Landlord to perform, fulfill or observe any agreement by Landlord herein or any breach by Landlord of any representation or warranty of

 

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Landlord herein, any such holder may at its election cure such failure or breach for and on behalf of Landlord within thirty (30) days after the time provided herein for Landlord to cure the same or such longer period as may be reasonably necessary to cure the default.  In the event of any inconsistency between this Section and any similar provision in a Subordination, Non-Disturbance and Attornment Agreement entered into by Tenant and any mortgagee or ground lessor, the provisions of the Subordination, Non-Disturbance and Attornment Agreement shall be controlling.

 

Section 9.4             Limitations on Obligations of Mortgagees, Ground Lessors and Successors . Tenant agrees that the holder of a mortgage or ground lease or any successor-in-interest to any of them or to Landlord shall not be:  (a) bound by any payment of an installment of Base Rent or Additional Rent which may have been made more than thirty (30) days before the due date of such installment; (b) bound by any amendment or modification to this Lease made without the consent of the holder of a mortgage or ground lease or such successor in interest; (c) liable for any previous act or omission of Landlord (or its predecessors in interest); (d) responsible for any monies owing by Landlord to the credit of Tenant or subject to any credits, offsets, claims, counterclaims, demands or defenses which Tenant may have against Landlord (or any of its predecessors in interest); (e) bound by any covenant to undertake or complete any construction of the Premises or any portion thereof; or (f) obligated to make any payment to Tenant other than any security deposit actually delivered to holder of a mortgage or ground lease or such successor in interest. Further, Tenant agrees that it will not seek to terminate this Lease by reason of any act or omission of Landlord until Tenant shall have given written notice of such act or omission to the holder of such mortgage or ground lease (at such holder’s last address furnished to Tenant) and following the giving of such notice such holder shall have the right, but shall not be obligated, to remedy such act or omission within thirty (30) days after the time period provided for in this Lease for Landlord to cure the same or such longer period as may be reasonably necessary to cure the same. In the event of any inconsistency between this Section and any similar provision in a Subordination, Non-Disturbance and Attornment Agreement entered into by Tenant and any mortgagee or ground lessor, the provisions of the Subordination, Non-Disturbance and Attornment Agreement shall be controlling.

 

Section 9.5             Estoppel Certificate By Tenant . Tenant agrees, at any time and from time to time, within ten (10) Business Days after written request by Landlord or any holder of a mortgage on all or a portion of the Project or the ground lessor thereof, (a) to execute, acknowledge and deliver to Landlord a statement in writing certifying that (except as may be otherwise specified by Tenant):  (i) this Lease is presently in full force and effect and unmodified; (ii) Tenant has accepted possession of the Premises; (iii) any improvements required by the terms of this Lease to be made by Landlord have been completed to the satisfaction of Tenant; (iv) no rent under this Lease has been paid more than thirty (30) days in advance of its due date; (v) the addresses for notices to be sent to Tenant is as set forth in this Lease or as specified in such certificate; (vi) Tenant as of the date of executing the certificate has no charge, lien or claim of offset under this Lease, or otherwise, against rents or other charges due or to become due hereunder; (vii) Tenant is not in default under this Lease; (viii) to the best of Tenant’s knowledge, Landlord is not in default of this Lease; and (ix) such other information as Landlord may reasonably request about this Lease or Tenant’s occupancy; and (b) to deliver information in form satisfactory to Landlord and such holder or ground lessor concerning

 

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Tenant’s operations as may be reasonably requested, including but not limited to historic and current financial statements of Tenant, but only if such recipients agree in writing to keep such information confidential.

 

Section 9.6             Amendment of Declaration . Tenant agrees that the Declaration may be amended from time to time without the consent of Tenant, so long as such amendment does not materially adversely affect the use and enjoyment of the Premises by Tenant pursuant to this Lease, materially increase Tenant’s obligations in respect of Additional Rent, or further restrict Tenant’s ability to sublease or assign this Lease. All references herein to the Declaration shall be references to the Declaration as amended from time to time. Landlord shall provide Tenant with copies of any future amendments of the Declaration.

 

ARTICLE X
CASUALTY

 

Section 10.1           Damage From Casualty.

 

(a)           If any portion of the Premises or the Building affecting Tenant’s use of the Premises is damaged by fire or other casualty, Tenant shall give Landlord written notice of such casualty promptly after Tenant becomes aware of such casualty. Within sixty (60) days after Tenant gives Landlord written notice of such casualty or Landlord otherwise becomes aware of such casualty, Landlord shall reasonably estimate, and give Tenant written notice of, the period commencing with the date of such notice (the “ Restoration Period ”) that Landlord anticipates will be reasonably required to perform the restoration work which is the responsibility of Landlord as provided below. If Landlord reasonably estimates that the Restoration Period will be longer than one year (or if less than one year, longer than the remaining Lease Term (as it may have been extended)), then either Landlord or Tenant may terminate this Lease by giving to the other written notice of termination within ten (10) days after Landlord gives Tenant written notice of such estimate. Such notice of termination shall be effective on the date thereof, and if Tenant is then occupying the Premises, Tenant shall thereafter have a reasonable period of time in which to vacate the Premises. If (i) Landlord reasonably estimates that the Restoration Period will be one year or shorter, or (ii) Landlord reasonably estimates that the Restoration Period will be longer than one year but neither Landlord nor Tenant exercises its right to terminate this Lease as set forth above, then this Lease shall not terminate; and in such event, Landlord shall, unless Landlord exercises its termination right pursuant to Section 10.3, with reasonable dispatch, repair or rebuild so much of the Premises (and Building, as applicable) as were originally constructed by Landlord to substantially their condition immediately prior to the casualty (subject, however, to Legal Requirements then in existence), and Tenant shall concurrently (to the extent practical and consistent with good construction practices) (i) repair and restore so much of the Premises as were constructed by Tenant or are the responsibility of Tenant under this Lease and (ii) repair and restore its fixtures and personal property (but only to the extent of the proceeds of insurance carried or required by this Lease to be carried by Tenant).

 

(b)           If, pursuant to Section 10.1(a), Landlord is required to restore the Premises (and Building, as applicable) and Landlord fails to substantially complete such restoration by the end of the Restoration Period (subject to extension for delays described in Section 10.1(c) and for delays beyond the reasonable control of Landlord), then Tenant shall have the right to terminate

 

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this Lease upon thirty (30) days prior written notice to Landlord. If Landlord fails to substantially complete such restoration work within such thirty (30) day period, then this Lease shall terminate as of such thirtieth (30 th ) day.

 

(c)           Landlord shall not be responsible for any delay in commencement of restoration which may result from delays in adjustment or collection of insurance proceeds, provided that Landlord has proceeded diligently in attempting to collect the same. Notwithstanding any other provisions of this Section 10.1 to the contrary, Landlord shall not be obligated to commence repair or restoration work prior to receipt of sufficient insurance proceeds, nor shall Landlord be required to expend sums in excess of “net recovered insurance proceeds”. The term “ net recovered insurance proceeds ” shall mean the amount of any insurance proceeds actually recovered by Landlord, less the cost of obtaining the same (including attorneys’ fees and appraisal fees) and less the amount thereof required to be paid to a mortgagee or ground lessor.

 

Section 10.2           Abatement of Rent . In the event that the provisions of Section 10.1 shall become applicable, the Base Rent, Tenant’s Project Share of Taxes and Project Operating Costs, and Tenant’s Building Share of Building Operating Costs shall be abated or reduced proportionately for the period in which, by reason of any such damage or destruction, there is substantial interference with the operation of the business of Tenant in the Premises, having regard to the extent to which Tenant may be required to discontinue its business in the Premises, and such abatement or reduction shall continue (but may be adjusted from time to time based on the extent of the interference with Tenant’s operations) for the period commencing with such destruction or damage and ending with the substantial completion by Landlord of such work, repair and/or reconstruction as Landlord may do.

 

Section 10.3           Landlord’s Right to Terminate . Notwithstanding the foregoing, Landlord may terminate this Lease following:  (a) damage or destruction to the Premises to the extent of thirty (30%) or more of the cost of replacement thereof; or (b) the refusal of the applicable insurance carrier to pay funds sufficient for the cost to repair or replace or the refusal of any applicable mortgagee or ground lessor to release the insurance proceeds for such purposes. Landlord may exercise the right to so terminate this Lease by written notice to Tenant given within sixty (60) days after the date of the damage or sixty (60) days after the date Landlord receives written notice of such damage, whichever is later. Such notice of termination shall be effective on the date thereof.

 

ARTICLE XI
EMINENT DOMAIN

 

Section 11.1           Eminent Domain:  Right to Terminate and Abatement in Rent . If the Premises or any part thereof, or the whole or any substantial part of the Building, shall be taken, or if a conveyance shall be made in anticipation thereof, for any street or other public use, by action of the municipal, state, federal or other authorities, or shall receive any substantial direct or consequential damage for which Landlord or Tenant shall be entitled to compensation by reason of anything lawfully done in pursuance of any public authority, after the execution hereof and before the expiration of the Lease Term, then this Lease and the Lease Term shall terminate at the election of either party (given by written notice to the other party within ninety (90) days of the taking or within ninety (90) days of notice of the taking to Landlord), and such election

 

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may be made in case of any such taking notwithstanding the entire interest of Landlord may have been divested by such taking; and if neither party so elects, then in case of any such taking or destruction of, or damage to, the Premises, rendering the same or any part thereof unfit for use and occupation, a just proportion of the Base Rent according to the nature and extent of the injury sustained by the Premises as determined by Landlord, shall be suspended or abated until the Premises or, in case of such taking, what may remain thereof, shall have been put in proper condition for use and occupation. To the extent that the Premises, upon having been put in proper condition for use and occupation are smaller, the Base Rent shall be reduced for the balance of the Lease Term in the same proportion which the reduction in space bears to the original Leasable Square Footage of the Premises. In the event of a taking of any portion of the Building, Tenant’s Share shall be recomputed.

 

Section 11.2           Restoration .  If this Lease is not terminated as provided in Section 11.1, Landlord shall apply so much of the available proceeds of the eminent domain award as are required to restore the Project and the Premises to a condition, to the extent practical, substantially the same as that immediately preceding the taking, but subject to zoning laws and building codes then in existence. If the available proceeds of the eminent domain award are insufficient, in Landlord’s judgment, for that purpose, Landlord shall have no obligation to expend funds in excess of said proceeds and Landlord shall have the right to select which portions of the Project, if any, shall be restored. The term “ available proceeds ” shall mean the amount of the award paid to Landlord, less cost of obtaining the same (including attorneys’ fees and appraisal fees) and less the amount thereof required to be paid to a mortgagee or ground lessor.  In the event Landlord fails to commence restoration of the Project and/or the Premises within sixty (60) days after the taking, Tenant shall have the right to terminate the Lease upon sixty (60) days’ prior written notice to Landlord.

 

Section 11.3           Landlord to Control Eminent Domain Action . Landlord reserves all rights to compensation for damage to the Premises or any part thereof, or the leasehold hereby created, heretofore accrued or hereafter to accrue, by reason of any taking for public use of the Premises or any portion thereof, or right appurtenant thereto, or privilege or easement in, through, under or over the same, and by way of confirmation of the foregoing Tenant hereby assigns all rights to such damages heretofore accrued or hereafter accruing during the Lease Term to Landlord. Provided, however, nothing herein contained shall limit Tenant’s right to any separate award for the taking of personal property, moving and other relocation expenses, or other items the payment of which shall not reduce the award payable to Landlord.

 

ARTICLE XII
DEFAULT AND REMEDIES

 

Section 12.1           Event of Default . As used herein, “Event of Default” shall mean the occurrence and/or existence of any one or more of the following:  (a) (i) Tenant shall fail to pay any installment of Base Rent, Additional Rent or any other amount due under this Lease on or before the date on which the same becomes due and payable, and such failure continues for five (5) days after written notice from Landlord thereof or (ii) Landlord having given the notice specified in the foregoing clause (a)(i) to Tenant twice in any twelve (12) month period, Tenant shall fail, on a third occasion within the twelve (12) months following the giving of the first such notice by Landlord, to pay any installment of Base Rent, Additional Rent or any other amount

 

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due under this Lease on or before the date on which the same becomes due and payable; or (b) Tenant shall neglect or fail to perform or observe any of the other covenants or undertakings herein on its part to be performed or observed and such neglect or failure shall continue for thirty (30) days after notice to Tenant; provided, however, that if the default is other than a default under clause (a) above, or clauses (c) through (i) below, and is such that it cannot be cured within thirty (30) days, but is capable of being cured, such thirty (30) day period shall be extended by up to sixty (60) additional days provided that Tenant commences to cure such default within said thirty (30) day period, continues to do so diligently, and thereafter completes such cure within not more than ninety (90) days following the notice of default; or (c) there is filed by Tenant any case, petition, proceeding or other action under any Bankruptcy Law; or (d) any other proceedings shall be instituted against Tenant under any Bankruptcy Law and not be dismissed within sixty (60) days; or (e) Tenant shall execute an assignment of its property for the benefit of its creditors; or (f) a receiver, custodian or other similar officer for Tenant shall be appointed and not be discharged within sixty (60) days; or (g) the estate hereby created shall be taken by execution or by other process of law and is not redeemed by Tenant within thirty (30) days thereafter; or (h) an assignment or sublease in violation of the terms of this Lease; or (i) any other event constituting an Event of Default under other Sections of this Lease.

 

Section 12.2           Landlord’s Remedies.

 

(a)           Upon the occurrence of an Event of Default, Landlord may, immediately or at any time thereafter (notwithstanding any license or waiver of any former breach or waiver of the benefit hereof, or consent in a former instance), and without further demand or notice, in person or by agent or attorney, enter the Premises or any part thereof and repossess the same as of its former estate, or terminate this Lease by written notice to Tenant, and in either event expel Tenant and those claiming through or under it and remove their effects (forcibly, if necessary) without being deemed guilty of any manner of trespass and without prejudice to any remedy which might otherwise be used for arrears of Base Rent or Additional Rent or breach of covenant, and upon entry or written notice of termination, or automatic termination, both as aforesaid, this Lease shall terminate and Landlord, in addition to all other remedies which it may have at law or equity, and not in limitation thereof, shall have the remedies provided in this Article XII.

 

(b)           If, pursuant to Section 12.2(a), Landlord terminates Tenant’s right of possession of the Premises without terminating this Lease, then Tenant shall pay to Landlord during the remainder of the Lease Term the Base Rent and Additional Rent in installments as and when the same become due and payable, subject to reduction by any rent actually received by Landlord as a result of a re-letting of the Premises (net of the reasonable and customary costs of re-letting, including remodeling costs, brokerage commissions and attorneys’ fees). Landlord shall exercise commercially reasonable efforts to re-let the Premises to mitigate damages, and Landlord may re-let the Premises or any part or parts thereof, either in the name of Landlord or otherwise for a term or terms which may, at Landlord’s option, be less than or exceed the period which would otherwise have constituted the balance of the Lease Term and may grant concessions or free rent.  The good faith failure of Landlord to re-let the Premises or any part or parts thereof, or, if the Premises are re-let, the good faith failure to collect the rents due under such re-letting, shall not release or affect Tenant’s liability for damage so long as Landlord does not act arbitrarily or capriciously. Any suit brought to collect the amount of the deficiency for any month or other

 

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period shall not prejudice in any way the right of Landlord to collect the deficiency for any subsequent month or period by a similar proceeding. Landlord, at Landlord’s option, may make such alterations, repairs, replacements and decorations on the Premises as Landlord in Landlord’s sole but reasonable judgment considers advisable and necessary for the purpose of re-letting the Premises, and the making of such alterations or decorations shall not operate or be construed to release Tenant from liability hereunder.

 

(c)           If, pursuant to Section 12.2(a), Landlord terminates this Lease, Tenant shall forthwith pay to Landlord as damages, in addition to all sums which were due prior to the date of such termination, a sum equal to the amount by which the Base Rent and Additional Rent for the remainder of the Lease Term exceeds the fair rental value of the Premises for the remainder of the Lease Term, discounted to present value using a then market rate of interest as reasonably determined by Landlord. For the purposes of computing damages payable pursuant to this Section 12.2(c), the Additional Rent with respect to Taxes, Insurance Costs and Operating Costs for the remainder of the Lease Term will be assumed to be the product of such Additional Rent for the most recently ended fiscal, calendar or lease year, as the case may be, times the number of years remaining of the Lease Term.

 

(d)           Tenant will be responsible to Landlord for all expenses which Landlord may incur in connection with the enforcement of Landlord’s rights after an Event of Default, including, without limitation, reasonable legal expenses, attorneys’ fees, brokerage fees, and the cost of putting the Premises in good order or preparing the same for rental.

 

Section 12.3           Reimbursement of Landlord . Upon the occurrence of an Event of Default, Tenant will, in addition to paying Landlord all amounts due under the terms and provisions of this Lease, including, without limitation, Section 12.9, reimburse Landlord for all reasonable expenses incurred by Landlord in collecting such rent or in obtaining possession of, or in re-letting the Premises, or in defending any action, including expenses for reasonable counsel fees and commissions. Tenant further agrees that, if on termination of this Lease by expiration or otherwise, Tenant shall fail to remove any of its property from the Premises as provided for herein, Landlord shall be authorized, in its sole option, and in Tenant’s name and on its behalf, either (a) to cause such property to be removed and placed in storage for the account and at the expense of Tenant; or (b) to sell such property at public or private sale, with or without notice, and to apply the proceeds thereof, after the payment of all expenses of removal, storage and sale, to the indebtedness, if any, of Tenant to Landlord, the surplus, if any, to be paid to Tenant. All sums payable by Tenant under this Article XII shall be deemed Additional Rent.

 

Section 12.4           Landlord’s Right to Perform Tenant’s Covenants . Tenant covenants and agrees, that, if it shall at any time fail to make any payment or perform any other act on its part to be made or performed as in this Lease provided, Landlord, in its sole discretion may after due notice to, or demand upon, Tenant, make any payment or perform any other act on the part of Tenant to be made and performed as in this Lease provided, in such manner and to such extent as Landlord may reasonably deem desirable, and in exercising any such rights, Landlord may pay necessary and incidental costs and expenses, employ counsel, and incur and pay reasonable attorneys’ fees. The making of any such payment or the performing of any other act by Landlord pursuant to this Article shall not waive, or release Tenant from, any obligations of Tenant in this Lease contained. All sums so paid by Landlord and all reasonably necessary and incidental costs

 

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and expenses in connection with the performance of any such act by Landlord shall, except as otherwise in this Lease expressly provided, be payable to Landlord on demand, and Tenant covenants to pay any such sum or sums promptly, and Landlord shall have (in addition to any other right or remedy of Landlord) the same rights and remedies in the event of the non-payment thereof by Tenant as in the case of default by Tenant in the payment of the Base Rent. Whenever practicable, Landlord, before proceeding as provided in this Section, shall give Tenant notice in writing of the failure of Tenant which Landlord proposes to remedy, and shall allow Tenant such length of time as may be reasonable in the circumstances, consistent with any grace periods contained herein, but not exceeding ten (10) Business Days from the giving of notice, to remedy the failure itself and, if Tenant shall not remedy the failure in the time so allowed, Landlord shall be deemed to have given “due notice” and may proceed as provided in this Section; provided, however, that nothing in this Section shall prevent Landlord from acting without notice to Tenant in case of any emergency wherein there is danger to property or person or where there may exist any violation of Legal Requirements including but not limited to the presence of Hazardous Materials, in which event no notice shall be required.

 

Section 12.5           Cumulative Remedies . The specified remedies to which Landlord may resort under the terms of this Lease, or under the provisions of applicable law, are cumulative and not intended to be exclusive of any other remedies or means of redress to which Landlord may be lawfully entitled in case of any breach or threatened breach by Tenant of any provisions of this Lease. The failure of Landlord to insist in any one or more cases upon the strict performance of any of the covenants of this Lease or to exercise any option contained herein shall not be construed as a waiver or a relinquishment for the future of such covenant or option. Receipt by Landlord of any Base Rent or Additional Rent payment with knowledge of the breach of any covenants hereof shall not be deemed a waiver of such breach. No waiver by Landlord of any provision of this Lease shall be deemed to have been made unless expressed in writing and signed by it.  In addition to the other remedies provided in this Lease, Landlord shall be entitled to restraint by injunction of any violation or attempted or threatened violation of any of the covenants, conditions or provisions of this Lease.

 

Section 12.6           Expenses of Enforcement . Tenant agrees to pay all reasonable expenses and reasonable attorneys’ fees incurred by Landlord in enforcing any obligation or any remedies hereunder including, without limitation, in connection with collection of Base Rent or Additional Rent, recovery by Landlord of the Premises, or in any litigation in which Landlord shall become involved by reason of any act or negligence of any of Tenant’s Invitees or any breach of this Lease by Tenant. Landlord agrees to pay all reasonable expenses and reasonable attorneys’ fees incurred by Tenant in enforcing any obligation or any remedies hereunder including any litigation in which Tenant shall become involved by reason of any act or negligence of Landlord or any breach of this Lease by Landlord.

 

Section 12.7           Landlord’s Default . Landlord shall not be deemed to be in default hereunder unless such default shall remain uncured for more than thirty (30) days following written notice from Tenant to Landlord specifying the nature of such default, or such longer period as may be reasonably required to correct such default.  Landlord’s liability to keep, maintain, and repair shall always be limited to the cost of making such repair or accomplishing such maintenance or repair.  In no event whatsoever shall Landlord be liable for consequential or any indirect damages.  The provisions of this Section are further subject to the provisions of

 

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Articles X and XI dealing with eminent domain and fire and other casualty, and Section 6.3 dealing with interruption of services.  If Landlord fails to cure any default by Landlord within the period provided above in this Section, Tenant may give Landlord an additional written notice confirming that the default has not been cured and that Tenant intends to cure such default, and, if Landlord fails to cure such default within ten (10) days after such notice, Tenant may, without waiving the default, take such steps as are reasonably appropriate to cure the default, recover from Landlord the reasonable cost of such cure, and, if Landlord concedes, or a court determines, Tenant’s right to recover such cost, setoff such cost against the Base Rent and Additional Rent next coming due. In no event shall Tenant have the right to terminate this Lease by reason of a default by Landlord, except as expressly provided herein.

 

Section 12.8           Limitation of Landlord’s Liability . The obligations of Landlord hereunder shall be binding upon Landlord and each succeeding owner of Landlord’s interest hereunder only during the period of such ownership, and Landlord and each succeeding owner shall have no liability whatsoever except for its obligations during each such respective period. Tenant hereby agrees for itself and each succeeding holder of Tenant’s interest, or any portion thereof, hereunder, that any judgment, decree or award obtained against Landlord or any succeeding owner of Landlord’s interest, which is in any manner related to this Lease, the Premises or Tenant’s use and occupancy of the Premises or the Common Areas, or the remainder of the Project, whether at law or in equity, shall be satisfied out of Landlord’s equity in the land and buildings then comprising the Project to the extent then owned by Landlord and such succeeding owner, and further agrees to look only to such assets (or proceeds thereof) and to no other assets of Landlord, or such succeeding owner, for satisfaction.  Neither Landlord nor any Person executing this Lease on behalf of Landlord, nor any partner, limited or general, or any officer, director, employee, member, trustee, beneficiary, or owner of Landlord, nor any subsequent Landlord, or any partner, limited or general, or any officer, director, employee, member, trustee, beneficiary, or owner of any subsequent Landlord shall have any personal liability hereunder. The remedies provided to Tenant in this Lease are exclusive, and Landlord will not be liable under any theory of recovery, whether based on contract, tort or otherwise.

 

Section 12.9           Late Payment and Administrative Expense . If Tenant shall fail to pay Base Rent, Additional Rent or other charges after the same become due and payable under this Lease, such unpaid amounts shall bear interest from the due date thereof to the date of payment at the lesser of (a) a per annum rate equal to three percent (3%) plus the prime rate of Bank of America (or any successor) in effect on the day the payment became due and subject to change thereafter or (b) the maximum rate permitted by applicable law (“ Interest Payment ”). In addition, if Landlord is required to redeposit any check which is returned for insufficient funds or if Tenant shall fail to pay Base Rent, Additional Rent or other charges on or before the date on which the same become due and payable, then Tenant shall also pay to Landlord an administrative expense charge (“ Administrative Expense ) of five percent (5.0%) of the amount thereof for each calendar month or part thereof after the due date of such payment until such payment is received by Landlord. The provisions herein for Interest Payment and Administrative Expense shall not be construed to relieve Tenant of the obligation to pay Base Rent, Additional Rent and all other charges when due under this Lease and shall be in addition to and not in limitation of Landlord’s other remedies as provided for in this Lease.

 

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ARTICLE XIII
MISCELLANEOUS PROVISIONS

 

Section 13.1           Brokers . Each party represents that it has not dealt with any Person in connection with the Premises or the negotiation or execution of this Lease other than officers, employees and attorneys of Landlord and Brokers. Each party shall indemnify and save harmless the other from and against all claims, liabilities, costs and expenses incurred as a result of any breach of the foregoing representation. The broker’s fees payable to Brokers for this Lease shall be payable by Landlord subject to and in accordance with the terms of a separate agreement between Landlord and Brokers.

 

Section 13.2           Quiet Enjoyment . Tenant shall, upon paying all Base Rent and Additional Rent due hereunder and observing and performing all of the terms, covenants and conditions on Tenant’s part to be observed and performed, peaceably and quietly have and hold the Premises without hindrance or molestation by any Person or Persons lawfully claiming by, through or under, Landlord, subject, however, to the terms of this Lease.

 

Section 13.3           Tenant’s Request for Landlord’s Action . In the event that at Tenant’s request Landlord takes any action which is not required of Landlord pursuant to this Lease, Tenant shall pay as Additional Rent Landlord’s reasonable attorneys’ fees, expenses and disbursements in connection with such action, with payment to be made by Tenant within thirty (30) days after billing therefor by Landlord. Landlord will give Tenant a good faith estimate of such costs of any such action prior to commencing such action.

 

Section 13.4           Notices . Any notice, demand, request or statement required or intended to be given or delivered under the terms of this Lease shall be in writing, shall be addressed to the party to be notified at the address or addresses set forth in the Summary of Basic Terms or at such other address in the continental United States as each party may designate for itself from time to time by notice hereunder, and shall be deemed to have been given, delivered or served upon the earliest of (a) three (3) days following deposit in the U.S. Mail, with proper postage prepaid, certified or registered, return receipt requested, (b) the next business day after delivery to a regularly scheduled overnight delivery carrier with delivery fees either prepaid or an arrangement, satisfactory with such carrier, made for the payment of such fees, or (c) receipt of notice given by telecopy or personal delivery.

 

Section 13.5           Waiver of Subrogation . Landlord and Tenant hereby release each other, to the extent of their respective insurance coverages, from any and all liability for any loss or damage caused by fire, any of the extended coverage casualties, or other casualties insured against, even if such fire or other casualty shall be brought about by the fault or negligence of the party benefited by the release or its agents, provided, however, this release shall be in force and effect only with respect to loss or damage occurring during such time as the policies of fire, extended coverage and other insurance, maintained by the releasing party shall contain a clause, or be subject to a statutory provision, to the effect that such release shall not affect said policies or the right of the releasing party to recover thereunder. Tenant agrees that its fire, extended coverage, and other insurance policies will include such a clause. To the extent that Tenant is a self-insurer with respect to personal property, the provisions of Section 7.8 shall be applicable.

 

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Section 13.6           Entire Agreement; Execution; Time of the Essence and Headings and Table of Contents . This Lease together with all Exhibits referred to herein and the Summary of Basic Terms, sets forth the entire agreement between the parties hereto and cannot be modified or amended, except in a writing duly executed by the respective parties. This Lease, together with all Exhibits referred to herein and the Summary of Basic Terms, supersedes all previous written and oral negotiations, understandings and agreements regarding the subject matter of this Lease. Neither Landlord nor any Person acting on behalf of Landlord has made any representations to Tenant on which Tenant has relied in entering into this Lease except any representations expressly stated in this Lease. This Lease is executed as a sealed instrument and in multiple counterparts, all copies of which are identical, and any one of which is to be deemed to be complete in itself and may be introduced in evidence or used for any purpose without the production of any other copy. Time is of the essence with respect to the obligations of Tenant and Landlord to be performed within a specific time frame in this Lease. The headings throughout this Lease and the Table of Contents are for convenience of reference only, and shall in no way be held or deemed to define, limit, explain, describe, modify or add to the interpretation, construction or meaning of any provision of this Lease.

 

Section 13.7           Partial Invalidity .  If any term or condition of this Lease or its application to any Person or circumstance shall to any extent be in violation of or unenforceable under any law, rule, regulation or order (including any court order) now existing or hereafter enacted or entered by any court or other governmental entity having competent jurisdiction (including after all appeals therefrom), the remainder of this Lease, or the application of such term or condition to Persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby and shall be enforceable to the fullest extent not prohibited by law.

 

Section 13.8           No Waiver . No assent, express or implied, by Landlord to any breach of any agreement or condition herein contained on the part of Tenant to be performed or observed, and no waiver, express or implied, of any such agreement or condition shall be deemed to be a waiver of or an assent to any succeeding breach of the same or any other agreement or condition; the acceptance by Landlord of Base Rent or Additional Rent due hereunder (whether such payment is made by Tenant or another Person), or silence by Landlord as to any breach, shall not be construed as waiving any of Landlord’s rights hereunder unless such waiver shall be in writing. No payment by Tenant or acceptance by Landlord of a lesser amount than shall be due Landlord from Tenant shall be deemed to be anything but payment on account, and the acceptance by Landlord of a check for a lesser amount with an endorsement or statement thereon, or upon a letter accompanying said check, that said lesser amount is payment in full shall not be deemed an accord and satisfaction, and Landlord may accept said check without prejudice to recover the balance due or pursue any other remedy.

 

Section 13.9           Holdover . If Tenant remains in the Premises beyond the expiration of this Lease at the end of the Lease Term, or sooner following an early termination as provided for herein, such holding over shall not be deemed to create any tenancy, but Tenant shall be a daily Tenant at sufferance only subject to all of Tenant’s obligations set forth herein, but at a Base Rent equal to one and one-half (1½) times the Base Rent then most recently in effect and Additional Rent and other charges provided for under this Lease, with such Base Rent and Additional Rent to be charged on a monthly basis for each calendar month or portion thereof for which Tenant holds over, without proration for a partial calendar month. The acceptance of a

 

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purported rent check following termination shall not constitute the creation of a tenancy at will, it being agreed that Tenant’s status shall remain that of a daily Tenant at sufferance, at the aforesaid daily rate. Tenant shall also pay to Landlord all damages, if any, sustained by reason of any such holding over. Otherwise, such holding over shall be on the terms and conditions set forth in this Lease as far as applicable.

 

Section 13.10        When Lease Becomes Binding . The submission of this document for examination and negotiation does not constitute an offer to lease or a reservation or an option for the Premises, and this document shall become effective and binding only upon the execution and delivery hereof by both Landlord and Tenant and the making of the Security Deposit by Tenant with Landlord in accordance with Section 2.5. All negotiations, considerations, representations and understandings between Landlord and Tenant are incorporated herein and may be modified or altered only by agreement in writing between Landlord and Tenant, and no act or omission of any employee or agent of Landlord shall alter, change or modify any of the provisions hereof.

 

Section 13.11        Recordation . Tenant shall not record this Lease with any registry of deeds or land court, and any such recordation will be void and constitute an Event of Default under this Lease. However, at the request of either party, the parties shall execute and record a statutory form notice of this Lease.

 

Section 13.12        Financial Statements;  Certain Representations and Warranties of Tenant . No more than once per year, if requested by Landlord, Tenant shall provide to Landlord, any actual or potential mortgagee and any actual or potential ground lessor or any representative of any of the foregoing, copies of Tenant’s annual financial statements, certified as true and correct by the president or chief financial officer of Tenant. Tenant represents and warrants to Landlord, its successors and assigns that:  (a) all financial statements of Tenant previously provided to Landlord (or available to Landlord on Tenant’s web site) have been prepared in accordance with GAAP (except for footnotes), were true, complete and correct as of their respective dates and fairly and accurately reflect the financial condition of Tenant; (b) there has been no material adverse change in the financial condition of Tenant subsequent to the date(s) of such financial statements; (c) all financial statements of Tenant provided to Landlord after the date hereof (or available to Landlord on Tenant’s web site) will be prepared in accordance with GAAP (except for footnotes), will be true, complete and correct as of their respective dates and will fairly and accurately reflect the financial conditions of the Tenant; (d) Tenant is a corporation organized and existing in good standing under the laws of the State of Delaware and is authorized to transact business in the Commonwealth of Massachusetts; (e) the execution, delivery and performance of this Lease by Tenant has been duly authorized; and (f) this Lease is valid and binding upon the Tenant and is enforceable against Tenant in accordance with the terms hereof.

 

Section 13.13        Confidentiality . Tenant acknowledges that the terms under which Landlord has leased the Premises to Tenant, (including, without limitation, the rental rate(s), term and other financial and business terms, constitute confidential information of Landlord (“ Landlord’s Confidential Information ”). Tenant covenants and agrees to keep Landlord’s Confidential Information confidential; provided, however, that (a) Landlord’s Confidential Information may be disclosed by Tenant to those of its officers, employees, attorneys, accountants, lenders and financial advisors (collectively, “representatives”) who need to know such information in connection with Tenant’s use and occupancy of the Premises and for

 

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financial reporting and credit related activities (it being understood that Tenant shall inform the representatives of the confidential nature of Landlord’s Confidential Information and that the representatives shall be directed by Tenant to treat Landlord’s Confidential Information confidentially in accordance with the terms of this Section), and (b) unless required by applicable law, any other disclosure of such information may only be made if Landlord consents in writing prior to any such disclosure. Landlord acknowledges that, in connection with this Lease, Tenant is furnishing to Landlord information regarding Tenant and Tenant’s operations which is not a matter of public record and is not generally available to the public (“ Tenant’s Confidential Information ”).  Landlord covenants and agrees to keep Tenant’s Confidential Information confidential; provided, however, that (a) Tenant’s Confidential Information may be disclosed by Landlord to Landlord’s representatives who need to know such information in connection with Landlord’s business (it being understood that Landlord shall inform the representatives of the confidential nature of Tenant’s Confidential Information and that the representatives shall be directed by Landlord to treat Tenant’s Confidential Information confidentially in accordance with the terms of this Section), and (b) unless required by applicable law, any other disclosure of such information may only be made if Tenant consents in writing prior to any such disclosure.

 

Section 13.14        Summary of Basic Terms . The Summary of Basic Terms which is affixed to this Lease sets forth certain basic terms and information which is thereafter referred to in the main text of this Lease. Every reference to the Summary of Basic Terms, or to a particular item thereon, shall have the effect of incorporating the Summary, or the particular item thereof, into the main text of this Lease.

 

Tenant and Landlord, each by its duly authorized officer, have signed this Lease as of the date first set forth above.

 

 

TENANT:

 

 

 

 

FOLDRX PHARMACEUTICALS, INC.

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

Duly Authorized

 

 

 

 

LANDLORD:

 

 

 

 

BHX, LLC, as Trustee of 100 Discovery Park Realty Trust

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

Duly Authorized

 

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Exhibit A-1

 

PROPERTY DESCRIPTION (PROJECT)

 



 

Building 35 Property Parcel 1/Lot 1 on the Survey

 

Four contiguous parcels of Land (the last two being registered land) situated on the Northerly side of said Acorn Park as follows:

 

PARCEL 1

 

SOUTHERLY:  by Acorn Park by three lines measuring respectively 121.70 feet, 205.26 feet and 98.84 feet;

 

WESTERLY:  by land now or formerly of Marshall B. Dalton and others, Trustees, 193.45 feet;

 

NORTHERLY:  by Lot Y4 as shown on the plan hereinafter mentioned by two lines measuring respectively 119 feet and 15.48 feet;

 

NORTHEASTERLY:  45.38 feet;

 

NORTHWESTERLY:  295.58 feet, said two tines being along land of Marshall B. Dalton and others, Trustees, shown on said plan as a parcel containing 7,001 square feet, and being the Parcel 2 herein described;

 

NORTHERLY:  again, by Lot 337 as shown on said plan, 37.27 feet; and

 

EASTERLY:  by land now or late of New England Mutual Life Insurance Company, 329.27 feet.

 

Said parcel is shown on a “Plan of Land in Cambridge and Arlington, Massachusetts”, dated Aug. 17, 1956, by William S. Crocker, Inc., Civil Engineer, recorded with said Deeds as Plan No. 251 of 1957, in Book 8915, Page 81, and the same contains according to said Plan 119,627 square feet.

 

PARCEL 2/Lot 2 on the Survey

 

SOUTHWESTERLY:  45.38 feet;

 

SOUTHEASTERLY:  295.58 feet; said last two lines being along land now or formerly of Marshall B. Dalton and others, Trustees, shown on said plan as land of West Cambridge Trust, and being the First Parcel herein described;

 

NORTHERLY:  by Lot 342 as shown on Land Court Subdivision Plan 4351z, being Parcel 3 herein described, by two lines measuring respectively 60.73 feet and 123.34 feet;

 

NORTHWESTERLY:  by Lot 340 as shown on Land Court Subdivision Plan 4351 Y, being Parcel 4 herein described, 81.98 feet;

 

NORTHWESTERLY:  more WESTERLY by Lot Y3 as shown on Land Court Subdivision Plan 4351x, 64.19 feet;

 

Said parcel shown on said plan dated August 17,1956 as the parcel containing 7001 square feet

 



 

PARCEL 3/Lot 3 on the Survey

 

NORTHERLY:  on land now or late of Bolton, being Lot 341 on Land Court Subdivision Plan 4351z, 236.14 feet;

 

SOUTHERLY:  by what was known as the Northerly line of Alewife Brook Parkway, being Parcel 2 herein described, by two lines measuring respectively 60.73 feet and 123.34 feet; and

 

SOUTHWESTERLY:  by Lot 340 as shown on said Plan, being Parcel 4 herein described, 61.13 feet.

 

Said parcel is shown as Lot 342 on said Subdivision Plan 4351z, filed in the South Registry District of Middlesex County with Certificate of Title No. 97885 and comprises the premises described in said Certificate of Title.

 

PARCEL 4/Lot 4 on the Survey

 

SOUTHERLY:  by what was known as the Northerly line of Alewife Brook Parkway, being Parcel 2 herein described, 81 98 feet;

 

NORTHWESTERLY:  Lots Y3 and Y2 as shown on Plan hereinafter mentioned, 54.61 feet; and

 

NORTHEASTERLY:  by Lot 339 on said Plan, a portion of which comprises Parcel 3 herein described 61.13 feet.

 

Said parcel is shown as Lot 340 on Subdivision Plan 4351 y filed in said Registry District with Certificate of Title No 93873, and comprises the premises described in said Certificate of Title.

 

The aforesaid four contiguous parcels are shown as Lot 1 containing 119, 627± square feet; Lot 2 containing 7,001 ± square feet; Lot 3 containing 2,912± square feet; and Lot 4 containing 1,634± square feet respectively on a plan entitled “Plan of Land in Arlington, Belmont and Cambridge, Massachusetts prepared for Arthur D. Little, Inc. by Boston Survey Consultants” dated October 31, 1978 and recorded with the Middlesex South Registry of Deeds as Plan No. 338 of 1978 in Book 13674, Page End (the “Master Plan”).

 

Buildings 20, 20A and 32 Property

 

PARCEL 5/Lot 7 on the Survey

 

A certain parcel of land situated on the Southerly and Easterly sides of Acorn Park and at the Southeasterly corner of Acorn Park and Concord Turnpike, partly in Cambridge and partly in Arlington, both in Middlesex County, Massachusetts, with the buildings thereon situated and bounded and described as follows:

 

NORTHERLY:  by Acorn Park by three lines measuring respectively 39.63 feet, 209.61 feet and 289.03 feet;

 

2



 

WESTERLY:  by said Acorn Park by two lines measuring respectively 309.53 feet and 63.35 feet;

 

NORTHWESTERLY:  on the junction of Acorn Park and Concord Turnpike by a curved line having a radius of 30 feet, 50.79 feet;

 

NORTHERLY:  again, on Concord Turnpike 39.67 feet;

 

SOUTHERLY:  by land of the Commonwealth of Massachusetts, 66.17 feet;

 

EASTERLY:  by the same land by two lines measuring respectively about 390 feet and 225.70 feet;

 

SOUTHERLY:  again, by the same land, by three lines measuring respectively 239.60 feet, 282.46 feet, and 58.57 feet;

 

WESTERLY:  again, by land now or late of Kingman and others, Trustees, 113.12 feet;

 

NORTHERLY:  by land late of New England Mutual Life Insurance Company, 159.96 feet; and

 

WESTERLY:  again, by the same land, 125 feet.

 

Said premises comprise a portion of the premises shown on the following three plans; one dated May 4,1953, by William S. Crocker, Civil Engineer, recorded with Middlesex South District Deeds, Book 8110, Page 322, as Plan #1334 of 1953; one dated August 17, 1956, by William S. Crocker, Inc. Civil Engineer, recorded with said Deeds, Book 8915, Page 81, as Plan #251 of 1957; and one dated December 10, 1959, by William S. Crocker, Inc., recorded with said Deeds, Book 9608, Page 81, as Plan #843 of 1960, and said premises contain according to said plans about 125,497 square feet.

 

The aforesaid parcel is shown as Lot 7 containing 125,504+ square feet on the Master Plan.

 

Building 25 Property

 

PARCEL 6/Lot 12 on the Survey

 

A certain parcel of land with the buildings thereon situated on the Northerly side of Acorn Park, in Cambridge, Middlesex County, Massachusetts, bounded and described as follows:

 

SOUTHERLY:  by Acorn Park by two lines measuring respectively 52.86 feet and 77.15 feet;

 

WESTERLY:  by land now or formerly of New England Mutual Life Insurance Company 126.34 feet;

 

NORTHERLY:  by the same land, 130 feet; and

 

EASTERLY:  by the same land, 125 feet.

 

3



 

Said premises are shown on a plan marked “Plan of Land in Cambridge, Mass.” dated Dec. 10, 1959, Revised Feb. 26, 1960, by William S. Crocker, Inc., recorded with Middlesex South District Deeds, Book 9608, Page 67, and contain according to said plan, 16,285 square feet

 

The aforesaid parcel is shown as Lot 12 containing 16,285± square feet on the Master Plan.

 

Three parcels of land situated on either side of Acorn Park (the first two of said parcels are contiguous) bounded and described as follows:

 

PARCEL 7/Lot 13 on the Survey

 

A certain parcel of land with the buildings thereon situated on Concord Turnpike and on Acorn Park, partly in Cambridge and partly in Arlington, both Middlesex County, Massachusetts, bounded and described as follows:

 

NORTHERLY:  on Concord Turnpike, 1.83 feet;

 

NORTHEASTERLY:  on the junction of Concord Turnpike and Acorn Park by a curved line having a radius of 30 feet measuring 43.45 feet;

 

EASTERLY:  on Acorn Park 327.96 feet;

 

SOUTHEASTERLY:  on the same by a curved line having a radius of 30 feet measuring 39.41 feet;

 

SOUTHERLY:  on the same 323.47 feet;

 

WESTERLY:  on other land now or formerly of Gerald W. Blakeley, Jr. et als, Trustees, 329.27 feet

 

NORTHERLY:  on registered land of now or formerly Marshall B. Dalton and others, Trustees, being Lot 337 as shown on Land Court Subdivision Plan 4351 W and a part of Lot F as shown on Land Court, Subdivision Plan 4351 L, by two lines measuring respectively 336.51 feet and 99.75 feet; and

 

WESTERLY:  on the same land 43.45 feet.

 

Said parcel is shown on a plan designated “West Cambridge Industrial Center, Arlington and Cambridge, Mass.” dated May 4, 1953, by William S. Crocker, Civil Engineer, recorded with said Deeds in Book 8110, Page 322, as Plan No. 1334 of 1953, and contains according to said plan 135,000 square feet.

 

Excluded from said Parcel 7 hereinabove described is a certain parcel of land with the buildings thereon situated on the Southerly side of Acorn Park, in Cambridge, Middlesex County, Massachusetts, bounded and described as follows (and being shown as Lot 12 on the survey).

 

SOUTHERLY:  by Acorn Park by two lines measuring respectively 52.86 feet and 77.15 feet;

 

4



 

WESTERLY:  by land now or formerly of New England Mutual Life insurance Company 126.34 feet;

 

NORTHERLY:  by the same land, 130 feet; and

 

EASTERLY:  by the same land, 125 feet.

 

Said premises are shown on a plan marked, “Plan of Land in Cambridge, Mass.”, dated Dec. 10, 1959, Revised Feb 26, 1960, by William S. Crocker, Inc., recorded with Middlesex South District Deeds, Book 9608, Page 67, and contain according to said plan 16,285 square feet.

 

PARCEL 8/Lot 14 on the Survey

 

A parcel of land with the buildings thereon situated on Concord Turnpike, partly in Arlington and partly in Cambridge both in Middlesex County, Massachusetts, bounded and described as follows:

 

NORTHEASTERLY:  by the Southwesterly line of Concord Turnpike, 408.79 feet;

 

EASTERLY:  by land formerly of Herbert F. Alien and now of New England Mutual Life Insurance Company, 43.45 feet;

 

SOUTHERLY:  by what was formerly land of the Commonwealth of Massachusetts and in part land now or formerly of said New England Mutual Life Insurance Company and land now or formerly of Gerald W. Blakeley, Jr and others Trustees, 473.53 feet; and

 

NORTHWESTERLY:  by lot 338 as shown on the plan hereinafter mentioned, 222 feet.

 

Said parcel is shown as Lot 337 on said plan.

 

All of said boundaries are determined by the Land Court to be located as shown on a subdivision plan, as approved by the Land Court, filed in the Land Registration Office, a copy of a portion of which numbered 4351W is filed in the South Registry District of Middlesex County with Certificate of Title No. 81357 in Registration Book 537, Page 7, being the same premises described in Certificate of Title No. 81357 in said Registry District.

 

PARCEL 9/Lot 15 on the Survey

 

A parcel of land situated on the Southerly side of Acorn Park in Cambridge, Middlesex County, Massachusetts, bounded and described as follows:

 

NORTHERLY:  by Acorn Park, 160 feet;

 

EASTERLY:  by other land now or formerly of Marshall B. Dalton et al, Trustees, 125 feet;

 

SOUTHERLY:  by the same land, 159.96 feet; and

 

WESTERLY:  by land now or late of Kingman and others Trustees 125 feet.

 

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Said premises are shown on a plan marked “Plan of Land in Cambridge, Mass.” dated Dec. 10, 1959, by William S. Crocker, Inc. recorded with said Deeds in Book 9608, Page 81, as plan 843 of 1960 and contain 19,189± square feet according to said plan.

 

The aforesaid three parcels are shown as Lot 13 containing 118,715+ square feet; Lot 14 containing 49,972± square feet; and Lot 15 containing 19,189± square feet, respectively on the Master Plan.

 

Two contiguous parcels of land situated on the Southerly side of Acorn Park in Cambridge, Middlesex County, Mass., bounded and described as follows:

 

PARCEL 10/Lot 5 on the Survey

 

A parcel of land on the Southerly side of Acorn Park (formerly called Burton Street) in said Cambridge shown on Plan of West Cambridge Industrial Center, Arlington and Cambridge, Massachusetts, dated May 4, 1953 by William S. Crocker, Civil Engineer, said Plan being recorded with said Deeds Book 8110, Page 322, bounded and described as follows:

 

NORTHERLY:  on Acorn Park (as laid out and shown on said Plan which layout has since been changed Northerly of its location on said Plan) 91.35 feet;

 

EASTERLY:  on land now or formerly of Eugene A. Kingman, et al Trustees 219.72 feet;

 

SOUTHERLY:  on land of the Commonwealth of Massachusetts, 91.43 feet; and

 

WESTERLY:  on the same 218.82 feet.

 

Containing according to said Plan 19,950 feet.

 

PARCEL 11/Lot 6 on the Survey

 

A parcel of land in said Cambridge bounded and described as follows:

 

Beginning at a point in the western end of Acorn Park, thence running by a line in Acorn Park as now laid out south 89° 26’ 46” East a distance of 85.15 feet;

 

thence about easterly by a curved line with a radius of 2168.28 feet, by a line in Acorn Park, as now laid out, a distance of 209.61 feet;

 

thence turning and running southwesterly by the southeasterly line of Acorn Park, as now laid out and by land now or formerly of Marshall B. Dalton et als, Trustees, a distance of 287.36 feet

 

thence turning and running north 16° 22’ 16’’ west by land now or formerly of the Commonwealth of Massachusetts and the end of Acorn Park as now laid out, a distance of 38.10 feet to the point of beginning.

 

Said parcel is shown on plan designated “Plan of Land in Cambridge and Arlington, Massachusetts” dated August 17, 1956, by William S. Crocker, Inc., Civil Engineer, recorded with said Deeds, Book 8915, Page 81 and contains according to said Plan, 3,727 square feet.

 

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Excluded however, from Parcel 11 hereinabove described is a portion of which is bounded and described as follows:

 

A triangular parcel of land situated on the Southerly side of said Acorn Park bounded and described as follows:

 

NORTHEASTERLY:  by said Acorn Park, 199.64 feet;

 

SOUTHERLY:  by a lot containing 18,016 square feet of land on a plan hereinbelow referred to, being land now or formerly of Marshall B. Dalton et als, Trustees, 195.99 feet; and

 

WESTERLY:  by the remainder of the second parcel above described being a lot containing 2,541 square feet shown on the plan hereinafter mentioned, 18.40 feet.

 

Said parcel is shown on a plan entitled “Plan of Land in Cambridge, Mass.” dated Dec. 10, 1959 by William S. Crocker, Inc. recorded with said Deed’s Book 9608, Page 81 and containing according to said plan, 1,179 square feet more or less.`

 

The aforesaid parcels 10 and 11 are shown as Lot 5 containing 19,950 square feet and Lot 6 containing 2,541 + square feet respectively on the Master Plan.

 

PARCEL 12/Lot 8 on the Survey

 

SOUTHEASTERLY:  by land now or formerly of The Commonwealth of Massachusetts Metropolitan District Commission-Alewife Brook Parkway, 460.82 feet;

 

SOUTHERLY:  by Lot 1 as shown on plan hereinafter mentioned 120.64 feet;

 

WESTERLY:  by land now or formerly of Lancaster H. Heustis, 637.31 feet; and

 

NORTHEASTERLY:  by land now or formerly of First National Stores, Inc. and of Franklin Wyman et al., 712.37 feet.

 

Said parcel is shown as Lot 2 on said plan (Plan # 25650B).

 

All of said boundaries are determined by the Court to be located as shown on a subdivision plan, as approved by the Court, filed in the Land Registration Office, a copy of which is filed in the Registry of Deeds for the South Registry District of Middlesex County in Registration Book 592, Page 155 with Certificate No. 92505.

 

PARCEL 13/Lot 9 on the Survey

 

SOUTHERLY:  by the Northerly line of Alewife Brook Parkway, 134.48 feet;

 

SOUTHWESTERLY:  by land now or formerly of Henry O. Cushman, 111.64 feet;.

 

NORTHWESTERLY:  by Lot P as shown on plan hereinafter mentioned, 57 83 feet, and

 

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NORTHEASTERLY:  by Lot Y3 as shown on said plan, 195.60 feet. Said parcel is shown as Lot Y4 on said plan. (Plan No. 4351x)

 

The right and easement, appurtenant to the above-described premises (Lot Y4 on Land Court Plan No. 4351 X) to use the right of way over a strip of said Lot Y3 twenty feet in width located along the southerly and southeasterly boundary of said Lot Y-3 so as to permit ingress to and egress from said Lot Y-4 over the twenty foot right of way leading from Lot Y-3 to the Concord Turnpike set forth in Document No. 280072, and shown on said plan.

 

PARCEL 14/Lot 10 on the Survey

 

SOUTHERLY:  by the Northerly line of Alewife Brook Parkway 64.19 feet;

 

SOUTHWESTERLY:  by Lot Y4 as shown on said plan hereinafter mentioned, 195.60 feet;

 

NORTHWESTERLY:  by Lot P on said plan, 100 feet;

 

NORTHEASTERLY:  by Lot W and X1 on said plan, 160.98 feet;

 

SOUTHEASTERLY:  25 feet;

 

NORTHEASTERLY:  80 feet, by Lot Y2 on said plan; and

 

SOUTHEASTERLY:  by Lot 338 on said plan, 29.61 feet.

 

Said parcel is shown as Lot Y3 on said plan. (Plan No. 4351x).

 

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All of said boundaries are determined by the Court to be located as shown on a subdivision plan, as approved by the Court, filed in the land Registration Office, a copy of which is filed in the Registry of Deeds for the South Registry District of Middlesex County in Registration Book 537, Page 6, with Certificate 81356.

 

The right and easement, appurtenant to the above-described premises (Lot Y3 on Land Court Plan No. 4351 X) to use the right of way over the twenty foot way leading from Lot Y-3 to the Concord Turnpike as set forth in Document No. 255039 and shown on Plan No. 4351 U.

 

PARCEL 15/Lot 11 on the Survey

 

That parcel beginning at a point in Cambridge in the Westerly boundary of land now or late of Gerald W. Blakeley, Jr., et als, Trustees, distant 193.45 feet on bearing south 16° 22’ 16” (16° 40’ 22” Plan) East from the easterly corner of land now or late of Marshall B. Dalton, et als, Trustees (Land Court Case No. 25650);

 

Thence running north 89° 26’ 46” west by land now or formerly of the Commonwealth of Massachusetts at a distance of 478.21 feet to land now or late of said Dalton, et als, Trustees;

 

Thence turning and running in a northeasterly direction by a line with a radius of 5453.83 feet, a distance of 383.87 feet to a point;

 

Thence turning slightly and running north 65° 11’ 23” (64° 53’ 17” Plan) east a distance of 76.95 feet to a point;

 

Thence turning and running south 16° 22’ 16” (16° 53’ 17” Plan) east, a distance of 193.45 feet to the point of beginning containing 42,868 square feet according to said plan.

 

The aforesaid four constituent parcels are shown as Lot 8 containing 198,340 ± square feet, Lot 9 containing 12,654 ± square feet, Lot 10 containing 21,05 1 ± square feet, and Lot 11 containing 42,868± square feet respectively on the Master Plan.

 

PARCEL16/Lot X1 on the Survey

 

That certain parcel of land situated in Cambridge in the County of Middlesex and said Commonwealth, bounded and described as follows:

 

SOUTHEASTERLY:  by Lot F as shown on plan hereinafter mentioned, 135 feet;

 

SOUTHWESTERLY:  80 feet; and

 

SOUTHEASTERLY:  15 feet, by Lot X-2 on said plan;

 

SOUTHWESTERLY:  by Lot Y-1 on said plan, 90 feet;

 

NORTHWESTERLY:  by Lot W on said plan, 150 feet; and

 

NORTHEASTERLY:  by Lots R and Q on said plan, 170 feet.

 

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Said parcel is shown as Lot X-1 on said plan

 

All of said boundaries are determined by the Court to be located as shown on a subdivision plan, as approved by the Court, filed in the land Registration Office, a copy of which is filed in the Registry of Deeds for the South Registry District of Middlesex County in Registration Book 530, Page 158, with Certificate 80108 (Plan 4351V).

 

Together with the right to use the right of way twenty feet wide and one hundred eight feet long extending northwesterly from the said premises to the State Highway as shown on Land Court Plan 4351V in common with others entitled thereto, for all purposes for which private ways are commonly used in the City of Cambridge.

 

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PARCEL 17/Lot W on the Survey

 

Also another certain parcel of land situated in said Cambridge, bounded and described as follows:

 

SOUTHWESTERLY by Lot Y as shown on plan hereinafter mentioned, 70.98 feet;

 

NORTHWESTERLY by Lot P on said Plan, 150 feet;

 

NORTHEASTERLY by Lot R on said plan, 70.98 feet; and

 

SOUTHEASTERLY by Lot X on said plan, 150 feet.

 

Said parcel is shown as Lot W on said plan

 

All of said boundaries are determined by the Court to be located as shown on a subdivision plan, as approved by the Court, filed in the land Registration Office, a copy of which is filed in the Registry of Deeds for the South Registry District of Middlesex County in Registration Book 495, Page 381, with Certificate 74199 (Plan 4351 U).

 

PARCEL 18/Acorn Park Drive

 

The right and easement, appurtenant to Parcels 1-17, inclusive, and Parcels 19, 20 and 22, described in this Exhibit A, to use that portion of Acorn Park Road, owned by AP Cambridge Partners II LLC and located partly in Cambridge and partly in Belmont for access to and from Frontage Road A (a public way) to and from the insured premises on foot and by vehicle and for all purposes for which streets may be used in Cambridge and Belmont, for utilities and for flowage all as set forth in and in accordance with the terms and conditions of that certain document entitled “Declaration, Amendment and Restatement of Easements,” dated November 17, 2000 and filed as Document No. 1155607, and recorded on November 17, 2000 as Instrument No. 1138.

 

PARCEL 19/No. 243 Concord Turnpike

 

All that certain tract or parcel of land with the improvements thereon lying, situate and being in Middlesex County, Massachusetts and being more particularly described as follows:

 

A certain parcel of land situate on the State Highway, sometimes called the Concord Turnpike, in said Cambridge, bounded and described as follows:

 

NORTHEASTERLY:  on said State Highway, two hundred (200) feet;

 

NORTHWESTERLY:  on the boundary line between Cambridge and Belmont, three hundred and twenty (320) feet more or less;

 

SOUTHWESTERLY:  on the brook, two hundred and fifty-three (253) feet more or less; and

 

SOUTHEASTERLY:  on land now or late of Dutchland Farms, Inc., three hundred and forty (340) feet more or less; containing one and 68/100 (1 68/100) acres and being shown as Lot C on

 

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a plan by Fred A. Joyce, Surveyor, dated November 9, 1936, and recorded with the Middlesex South Registry of Deeds in Book 6079, Page 253.

 

PARCEL 20/Lot 16 on the Survey

 

A parcel of land situate in the City of Cambridge, County of Middlesex, Commonwealth of Massachusetts and more particularly bounded as follows:

 

SOUTHERLY:  by Lot No. 6,189.42 feet;

 

SOUTHWESTERLY: by the same, 424.14 feet;

 

WESTERLY:  by the same, 208.10 feet:

 

NORTHWESTERLY:  by the same, 318.00 feet;

 

NORTHEASTERLY:  by Lot No. 243, 253.94 feet;

 

NORTHERLY:  by land now or formerly Ferdinand F. Martignetti, et al, 78.77 feet; and

 

EASTERLY:  by Lot No. 2, 633.29 feet.

 

Said parcel is shown as Lot 5 on that certain subdivision plan entitled “Land Court Subdivision Plan of Land in Cambridge/Belmont Massachusetts Middlesex County October 24, 2000”, and prepared by the BSC Group, filed as Land Court Plan No. 20345-G, a copy of which is on file at the office of the Land Court Engineers containing 6.61 acres, more or less.

 

PARCEL 21/As shown on the Survey

 

Title in and to the fee of that portion of Acorn Park in Arlington lying between Lots 7 and 13 as shown on the Master Plan. (Being also Lots 7 and 13 as shown on the Survey)

 

Parcel 22

 

Lot X2/Y2:

 

Two (2) parcels of land situated off Concord Turnpike (Route 2) in the City of Cambridge, Middlesex County, Massachusetts

 

Lot X 2

 

Southeasterly by lot F as shown on plan hereinafter mentioned, fifteen feet;

 

Southwesterly by lot Y2 on said plan, eighty feet; and

 

Northwesterly, fifteen feet, and

 

Northeasterly, eighty feet, by lot X1 on said plan.

 

Said parcel is shown as lot X2 on said plan.

 

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All of said boundaries are determined by the Court to be located as shown on a subdivision plan, as approved by the Court, filed in the Land Registration Office, a copy of which is filed in the Registry of Deeds for the South Registry District of Middlesex County in Registration Book 530, Page 158, with Certificate No. 80108 (Land Court Plan 4351V).

 

Parcel II (Lot Y 2)

 

Southeasterly by lot F as shown on plan hereinafter mentioned, twenty-five feet;

 

Southwesterly, eighty feet; and

 

Northwesterly, twenty-five feet, by lot Y1 on said plan; and

 

Northeasterly by lot X2 on said plan, eighty feet.

 

Said parcel is shown as lot Y2 on said plan.

 

All of said boundaries are determined by the Court to be located as shown on a subdivision plan, as approved by the Court, filed in the Land Registration Office, a copy of which is filed in the Registry of Deeds for the South Registry District of Middlesex County in Registration Book 530, Page 158, with Certificate No. 80108 (Land Court Plan 4351V).

 

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EXHIBIT A-2

 

PROPERTY DESCRIPTION (PARCEL 100)

 



 

A certain parcel of land situated on the northerly side of Acorn Park Drive in the City of Cambridge, in the County of Middlesex, Commonwealth of Massachusetts, bounded and described as follows:

 

Beginning at a point in the northerly line of Acorn Park Drive, said point lying S 89° 27’ 22” E a distance of two hundred eighteen and eighty-seven hundredths (218.87) feet from the most southeasterly corner of Parcel 12 / Lot 8 as shown on a plan referenced below; thence

 

N 00° 00’ 00” E

 

a distance of seventy-seven and twenty-four hundredths (77.24) feet to a point; thence

 

 

 

N 31° 27’ 14” E

 

a distance of one hundred twenty-three and fifty-one hundredths (123.51) feet to a point; thence

 

 

 

Northeasterly

 

and curving to the right along the arc of a curve having a radius of eighty-two and no hundredths (82.00) feet, a length of sixty-seven and eighteen hundredths (67.18) feet to a point; thence

 

 

 

Northeasterly

 

and curving to the right along the arc of a curve having a radius of eight hundred eighty-four and no hundredths (884.00) feet, a length of one hundred thirty-five and thirty hundredths (135.30) feet to a point; thence

 

 

 

S 00° 00’ 00” W

 

a distance of ninety-four and ninety hundredths (94.90) feet to a point on the northerly face of Proposed Building 100; thence

 

 

 

N 90° 00’ 00” E

 

a distance of fourteen and no hundredths (14.00) feet to a point at the northeast corner of Proposed Building 100; thence

 

 

 

S 00° 00’ 00” W

 

a distance of one hundred forty-four and seventy-six hundredths (144.76) feet in part by the easterly face of Proposed Building 100; thence

 

 

 

N 89° 27’ 22” W

 

a distance of two hundred sixty-six and one hundredth (266.01) feet to the point of beginning, the previous course bounding on Acorn Park Drive as shown on plan hereafter mentioned

 

The above described parcel of land contains an area of 52,656 S.F., more or less and is more particularly shown on a plan entitled:  “Cambridge Discovery Park in Cambridge Massachusetts — Building 100 Ground Lease Plan”, prepared by The BSC Group, Inc. and dated February 7, 2005, Dwg. No. 2467-21, a copy of which is attached to the Notice of Lease dated March, 2005, between BHX, LLC, as Trustee of Acorn Park Holdings Trust, as landlord and BHX, LLC as Trustee of 100 Discovery Park Realty Trust, as tenant which is recorded and filed herewith.

 



 

Exhibit B

 

SITE PLAN

 



 

 



 

EXHIBIT C

 

BUILDING FLOOR PLAN

 



 

 


 

EXHIBIT C-1

 

LOCATIONS OF WATER NEUTRAL1ZER AND EMERGENCY GENERATOR

 



 

 

 



 

 



 

EXHIBIT D

 

RULES AND REGULATIONS

 

BHX, LLC, as Trustee of 100 Discovery Park Realty Trust, and BHX, LLC, as Trustee of Acorn Park I Realty Trust (collectively, “ Landlord ”), hereby promulgate the rules and regulations (the “ Rules and Regulations ”) set forth below with respect to the use of the buildings (the “ Buildings ”) and related amenities located at and known as Cambridge Discovery Park, Cambridge, Massachusetts (the “ Property ”) by tenants (collectively, the “ Tenants ”) and individually, a “ Tenant ”) of the Buildings.  Any space within the Buildings leased by a Tenant is called “ Premises .” The Rules and Regulations are as follows:

 

1.              Sidewalks, doorways, vestibules, stairways, elevators, corridors, halls and other similar areas within the common areas of the Property (the “ Common Areas ”) shall not be obstructed by any Tenant or used for any purpose other than ingress and egress to and from the portion of the Property leased by the applicable Tenant and for going from one part of the Property to another part of the Property.

 

2.             No sign, advertisement, notice or other lettering shall be exhibited, inscribed, painted or affixed by a Tenant on or to any window, door, corridor or other part of the Buildings which is visible from outside of the Premises without the prior written consent of Landlord.

 

3.             Landlord will provide and maintain a directory board in a Common Area identifying the Tenants. Without the prior written consent of Lender, no Tenant shall be entitled to maintain any other directory or identifying sign in any Common Area.

 

4.             Movement of furniture, office equipment or any bulky material which requires movement through the Common Areas of the Buildings shall be restricted to such hours as Landlord may reasonably designate, and such movement shall be subject to such restrictions as Landlord may reasonably impose.

 

5.             Landlord shall have the authority to limit the weight of, and to prescribe and restrict the positioning and manner of installation of, safes, file cabinets and other heavy equipment.

 

6.             No Tenant shall use, or permit any person making or receiving any delivery to its Premises to use, any hand trucks except those equipped with rubber tires and side guards.

 

7.             Subject to applicable security restrictions imposed by any governmental body for which Tenant is performing services, all locks for doors in each Tenant’s Premises shall be building standard and no Tenant shall place any additional lock or locks on any door in its Premises without Landlord’s prior written consent. All requests for duplicate keys shall be made through Landlord and charged to the Tenant. Upon termination of a Tenant’s tenancy, the Tenant shall deliver to Landlord all keys to the Tenant’s Premises, to interior doors within the Tenant’s Premises, to doors within the Common Areas and to exterior Building doors which have been furnished to or obtained by the Tenant.

 

8.             Corridor doors, when not in use, shall be kept closed.

 



 

9.             Each Tenant shall lock all doors of its Premises leading to Common Areas at the close of its working day.

 

10.          No curtains, blinds, draperies or other window treatments shall be attached to or hung in any window of the Premises of a Tenant on an exterior wall of the Buildings or on an interior wall of any Building dividing the Premises from Common Areas without the prior written consent of Landlord, which consent shall not be unreasonably withheld.

 

11.          Plumbing fixtures and appliances shall be used only for the purposes for which they were designed and constructed, and no sweepings, rubbish, rags or other material shall be thrown or placed therein. The cost of repairing any damage resulting from misuse of the plumbing fixtures or appliances by a Tenant or its employees, agents or invitees shall be borne by the responsible Tenant.

 

12.          No Tenant shall use or permit the use of its Premises, or any part thereof, for lodging, for manufacturing, for any immoral or illegal purpose, or for any other purpose which is not permitted by the terms of its lease.

 

13.          No vending machines shall be allowed in any Premises without the prior written consent of Landlord, except for vending machines for the sole use of Tenant, its employees and invitees.

 

14.          Each Tenant shall, at its expense, provide artificial light and electric current for the employees of Landlord and/or Landlord’s contractors while performing janitorial or other cleaning, maintenance or repair services in the Tenant’s Premises.

 

15.          No Tenant will make or permit any of its employees, agents or invitees to make any improper noises in the Buildings or to otherwise interfere in any way with other Tenants or persons having business with them.

 

16.          No Tenant shall cause any unnecessary janitorial labor or services by reason of the Tenant’s willful misconduct or carelessness or indifference in the preservation of good order and cleanliness.

 

17.          No birds or animals of any kind shall be brought onto or kept on the Property, other than laboratory animals used in a Tenant’s permitted use of its Premises in accordance with applicable laws.

 

18.          Without the prior written consent of Landlord, no Tenant shall use the name of the Project or any picture of the Project or Buildings in any materials promoting or advertising the business of the Tenant, except that each Tenant may use the address of the Project as the address of its business.

 

19.          Each Tenant shall cooperate with Landlord to assure the effective operation of the heating and air conditioning systems serving the Tenant’s Premises and the Buildings. Without limiting the generality of the immediately preceding sentence, each Tenant will, at the request of Landlord, close its window treatments when the sun’s rays fall directly on windows of its Premises.

 

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20.          Neither Landlord nor the Property manager will be responsible for lost or stolen money, jewelry or other personal property from any areas of the Property, regardless of whether the loss or theft occurs when the area in question is locked.

 

21.          Landlord may, in its discretion, institute security measures in the operation of the Property, and Tenants will comply with all such security measures. Such security measures may include, but are not limited to, requiring persons entering the Building or the Property to identify themselves to a watchman or other person designated by Landlord and to sign in and sign out of the Property, denying access to persons who are not properly identified or appear suspicious, and conducting fire or other emergency drills. The exercise of such security measures by Landlord and any resulting interruption of a Tenant’s business shall not constitute an eviction or disturbance of a Tenant’s use and possession of its Premises, render Landlord liable to the Tenant for damages, or relieve a Tenant from its obligations under its lease.

 

22.          No bicycles or vehicles shall be brought into or kept in any Building. All bicycles and vehicles brought onto the Property shall be driven and parked only in designated, paved areas.

 

23.          Parking on the Property shall be subject to the restrictions set forth in this paragraph and, with respect to any particular Tenant, to any additional restrictions on parking set forth in such Tenant’s lease. Each Tenant and such Tenant’s employees, agents and invitees shall have the right, in common with others and in connection with the conduct of Tenant’s business at the Property, to park passenger vehicles on portions of the Property which have been striped for parking; provided, however that (a) no Tenant or its employees or agents may park in any space marked “visitor,” and (b) no Tenant or its employees, agents or invitees may park in any space marked “reserved,” unless reserved for such Tenant, and (c) persons parking their vehicles will do so exclusively within the marked parking space lines. No Tenant or its employees, agents or invitees shall have a right to park vehicles on the Property for purposes other than in connection with the Tenant’s business at the Property. Landlord shall have no responsibility to any Tenant or any Tenant’s employees, agents or invitees for any theft, loss of or damage to any vehicle or its contents on the Property. Each Tenant’s parking rights, except as otherwise expressly provided in its lease, are in common with other Tenants and on a first come, first served basis, and, except as otherwise expressly provided in its lease or other written agreements with Landlord, no Tenant has the right to any designated parking spaces or to any particular number of parking spaces.

 

24.          All vehicles brought onto the Property by Tenant, its employees, agents, customers and invitees shall be in good condition and appearance and shall be drivable. No such vehicles shall be leaking oil or other fluids.

 

25.          Each Tenant will deposit its garbage, trash and refuse only in approved trash containers within the Tenant’s Premises or in designated trash receptacles placed by Landlord within the Common Areas. No Tenant shall deposit any hazardous, flammable or explosive substances in any trash receptacle on the Property.

 

Landlord reserves the right to rescind, alter or waive any of the Rules and Regulations, and to adopt such additional rules and regulations as part of the Rules and Regulations, from time to

 

3



 

time as Landlord reasonably deems it appropriate for the safety, protection, care and cleanliness of the Property, the operation thereof, the preservation of good order therein or the protection and comfort of the Tenants and their employees, agents and invitees. An alteration or waiver of any of the Rules and Regulations in favor of one Tenant shall not, other than with the consent of Landlord, operate as an alteration or waiver in favor of any other Tenant. Landlord shall not be responsible to any Tenant for the non-observance or violation by any other Tenant of any of the Rules and Regulations, nor for the enforcement of any of the Rules and Regulations against any other Tenant. No Tenant shall have the right to enforce any of the Rules and Regulations against any other Tenant.

 

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EXHIBIT E

 

FORM OF LETTER OF CREDIT

 

<NAME OF FINANCIAL INSTITUTION>

 

Irrevocable Letter of Credit Form

 

Date;                             , 2006

Amount:  $2,100,000.00 USD

 

Letter of Credit No.

 

Beneficiary:                              BHX, LLC, as Trustee of 100 Discovery Park Realty Trust

c/o The Bulfinch Companies, Inc.

First Needham Place

260 First Avenue, Suite 200

Needham, MA 02494

Attn:  Robert A. Schlager

 

Ladies and Gentlemen:

 

We hereby establish our unconditional, irrevocable Letter of Credit No.                    in your favor and for the account of FoldRx Pharmaceuticals, Inc., whereby we irrevocably authorize you to draw on us from time to time at sight prior to the expiration hereof, and in the manner provided herein, up to Two Million One Hundred Thousand and No/100 Dollars ($2,100,000.00 USD). Such drawing(s) will be unconditionally available to you upon your presentation of your draft(s) (which draft(s) shall have been signed by one purporting to be a duly authorized representative of the Beneficiary) on which shall be indicated “Drawn under <Name of Financial Institution> Letter of Credit No.                             ,” together with your certification to us that either (i) an “Event of Default” has occurred under a certain Lease between BHX, LLC, as Trustee of 100 Discovery Park Realty Trust and FoldRx Pharmaceuticals, Inc., or (ii) you are otherwise entitled to draw upon this Letter of Credit under the terms of said Lease. Multiple partial drawings are permitted.

 

Each draft is to be accompanied by a copy of this Letter of Credit and shall be honored when presented between 9:00 a.m. and 5:00 p.m. on any business day (by which is meant any day other than Saturday, Sunday or any day <Name of Financial Institution> is prohibited from conducting commercial banking transactions) at <Name of Financial Institution> office at <Address of Financial Institution>.

 

This Letter of Credit sets forth in full the terms of our undertaking and such undertaking shall not in any way be modified, amended, or amplified by reference to any documents, instruments, or agreements referred to herein, or in which this Letter of Credit is referred, or to which this Letter of Credit relates. Any such reference shall not be deemed to incorporate herein the terms of any such referenced documents, instruments, or agreements.

 



 

If a drawing by Beneficiary hereunder does not, in any instance, conform to the terms and conditions of this Letter of Credit, we shall give Beneficiary immediate notice that the attempted negotiation was not effected in accordance with the terms and conditions of this Letter of Credit, stating the reasons therefor, and that we are holding any documents at Beneficiary’s disposal or are returning same to Beneficiary, as we may elect.  Upon being notified that the attempted negotiation was not effected in accordance with this Letter of Credit, Beneficiary may attempt to correct any such non-conforming demand for payment if, and to the extent that, Beneficiary is entitled (without regard to the provisions of this sentence) and able to do so within the terms of this Letter of Credit.

 

This Letter of Credit may be transferred, in whole, but not in part, without charge one or more times upon receipt of Beneficiary’s written instructions.

 

This Letter of Credit shall remain in full force and effect until 5:00 p.m. Eastern Time on                       , 20     <insert date which is not less than one year after the date of this Letter of Credit>. This Letter of Credit shall be automatically renewed, extended and/or reissued after                     , 200    , for successive one (1) year periods unless we provide Beneficiary with not less than sixty (60) days prior written notice to the attention of Robert A. Schlager at the above listed address (or any address and/or to the attention of any other party of which new addresses and/or such new party the Beneficiary notifies us) that we elect not to renew, extend and/or reissue this Letter of Credit.

 

This Letter Of Credit is subject to the Uniform Customs and Practices for Documentary Credits (1993 revision), I.C.C. Publication No. 500.

 

 

 

 

 

 

By:

 

 

 

Duly Authorized

 

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EXHIBIT F

 

SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT

WITH THE UNION LABOR LIFE INSURANCE COMPANY

 

THIS AGREEMENT, made and entered into as of the 18th day of September, 2006, by and between THE UNION LABOR LIFE INSURANCE COMPANY, with its principal office at 1625 Eye Street, N.W., Washington, D.C. 20006 (hereinafter called “Mortgagee”) and FOLDRX PHARMACEUTICALS, INC., a Delaware corporation, with its principal office at 300 Technology Square, 4 th  Floor, Cambridge, MA 02139 (hereinafter called “Lessee”)

 

WITNESSETH:

 

WHEREAS, BHX, LLC, a Massachusetts limited liability company, as Trustee of 100 Discovery Park Realty Trust, a Massachusetts nominee trust, created under a Declaration of Trust dated January 28, 2005 and recorded with the Middlesex South District Registry of Deeds in Book 44574, Page 151 and filed with the Middlesex South Registry District of the Land Court as Document 21850 (“Lessor”), is the ground lessee under a Ground Lease dated as of March 22, 2005 with BHX, LLC, as Trustee of Acorn Park Holdings Realty Trust, a Massachusetts nominee trust, created under a Declaration of Trust dated November 17, 2000 and recorded with the Middlesex South District Registry of Deeds in Book 32042, Page 457 and filed with the Middlesex South Registry District of the Land Court on November 17, 2000 as Document 1155604, as the ground lessor, with respect to the parcel of real property described in Exhibit A hereto (“Parcel 100”);

 

WHEREAS, Lessor, as landlord, and Lessee, as tenant, are parties to that certain Lease dated September 15, 2006 (the “Lease”), pursuant to which Lessee is leasing from Lessor approximately 16,070 leasable square feet of space in the building located on Parcel 100 (the “Demised Premises”);

 

WHEREAS, Lessor has encumbered Parcel 100 as security for a loan from Mortgagee to Lessor, which loan is evidenced by a Promissory Note dated March 22, 2005 (the “Note”) made by Lessor in favor of Mortgagee, and which Note is secured by, among other things, a Leasehold Mortgage and Security Agreement dated of even date with the Note and recorded with the Middlesex South District Registry of Deeds in Book 32043 Page 573 and filed with the Middlesex South Registry District of the Land Court as Document No. 1155611 ( the “Mortgage”), an Assignment of Leases and Rents dated of even date with the Note, recorded with the Middlesex South District Registry of Deeds in Book 32043 Page 1 and filed with the Middlesex South Registry District of the Land Court as Document No. 1155612 (the “ Assignment of Leases and Rents ”), and a Uniform Commercial Code Financing Statement naming Mortgagee as Secured Party and Lessor as Debtor, recorded with the Middlesex South District Registry of Deeds in Book 01230 Page 56 and filed with the Middlesex South Registry District of the Land Court as Document No. 1155613 (the “ Financing Statement ”) (the Mortgage, the Assignment of Leases and Rents and the Financing Statement are collectively referred to as the “ Security Documents ”); and

 



 

WHEREAS, Lessee and Mortgagee have agreed to the following with respect to their mutual rights and obligations pursuant to the Lease and the Mortgage;

 

NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00) paid by each party to the other and the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto do hereby covenant and agree as follows:

 

(1)                                  Lessee’s interest in the Lease and all rights of Lessee thereunder shall be and are hereby declared subject and subordinate to the Security Documents and their terms. The term “Mortgage” as used herein shall also include any amendment, supplement, modification, renewal or replacement thereof, the term “Assignment of Leases and Rents” as used herein shall also include any amendment, supplement, modification, renewal or replacement thereof, and the term “Financing Statement” as used herein shall also include any amendment, supplement, modification, renewal or replacement thereof.

 

(2)                                  In the event of any foreclosure of the Mortgage or any conveyance in lieu of foreclosure, provided that the Lessee shall not then be in default beyond any grace period under the Lease, Lessee shall not be made a party in any action or proceeding to remove or evict Lessee or to disturb its possession, nor shall the leasehold estate of Lessee created by the Lease be affected in any way, and the Lease shall continue in full force and effect as a direct lease between Lessee and Mortgagee.

 

(3)                                  After the receipt by Lessee of notice from Mortgagee of any foreclosure of the Mortgage or any conveyance in lieu of foreclosure, Lessee will thereafter attorn to and recognize Mortgagee as its substitute Lessor, and having thus attorned, Lessee’s possession shall not thereafter be disturbed provided, and so long as, Lessee shall continue to timely pay all rentals under the Lease and otherwise observe and perform the covenants, terms and conditions of the Lease.

 

(4)                                  Lessee shall not prepay any of the rents under the Lease more than one month in advance except with the prior written consent of Mortgagee.

 

(5)                                  In no event shall Mortgagee be liable for any act or omission of the Lessor, nor shall Mortgagee be subject to any offsets or deficiencies which Lessee may be entitled to assert against Lessor as a result of any act or omissions of Lessor occurring prior to Mortgagee’s obtaining possession of the Demised Premises.

 

(6)                                  No conveyance of Lessor’s interest in the Demised Premises or any part thereof to Lessee shall, insofar as Mortgagee is concerned, cause the fee estate and leasehold estate created by the Lease to merge, rather said estates shall remain separate and distinct and the Lease shall continue in full force and effect notwithstanding the vesting of the leasehold and fee estates in any single person or entity by reason of such conveyances otherwise.

 

(7)                                  The Lease may not be amended, altered, or terminated (by reason of Lessor default, the exercise of a right of termination, or otherwise) without the prior written consent of Mortgagee.

 

2



 

(8)                                  This Agreement and its terms shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, including without limitation, any purchaser at any foreclosure sale.

 

(9)                                  Any notices to be given by Mortgagee or Lessee to the other hereunder shall be given in accordance with the notice provision of the Lease at the following addresses (as such addresses may be changed by notice hereunder):

 

If to Mortgagee:                                                                                                        The Union Labor Life Insurance Company

Real Estate Investment Banking Group

1625 Eye Street, N.W.

Washington, D.C. 20006-4001

Attention:  Herbert A. Kolben, Senior Vice President

Telecopy:  (202) 682-7932

 

If to Lessee:                                                                                                                              Prior to commencement of Lease:

 

FoldRx Pharmaceuticals, Inc.

300 Technology Square, 4 th  Floor

Cambridge, MA 02139

Attention:  Chief Business Officer

Telecopy:  617 252 5501

 

After commencement of Lease:

 

FoldRx Pharmaceuticals, Inc.

100 Discovery Park, 5 th  Floor

Cambridge, MA 02140

Attention:  Chief Business Officer

Telecopy:  617 252 5501

 

IN WITNESS WHEREOF, this Agreement has been fully executed under seal on the day and year first above written.

 

 

THE UNION LABOR LIFE INSURANCE COMPANY, a Maryland corporation

 

 

 

By:

/s/ Herbert A. Kolben

 

Name:

Herbert A. Kolben

 

Title:

Senior Vice President

 

 

 

FOLDRX PHARMACEUTICALS, INC.

 

 

 

By:

/s/ Richard Labaudiniere

 

Name:

 

 

Title:

Chief Executive Officer

 

3



 

                                                , SS:

 

I,                                             , a Notary Public in and for                                                     , do hereby certify that                            who is personally well known to me to be the person authorized to act on behalf of the Mortgagee, subscribed to in the foregoing instrument bearing date on the 29 day of September 2006, personally appeared before me in said jurisdiction and acknowledged the same to be the act and deed of Lessor for the purposes therein expressed.

 

GIVEN under my hand and seal this 29 day of September, 2006.

 

 

 

 

 

Donna J. Farrar

 

Notary Public, District of Columbia

 

My Commission Expires 09-30-2009

 

 

Middlesex, ss:

 

 

On this day 16 day of September, 2006, before me, the undersigned notary public, personally appeared R. Labaudiniere, CEO of FoldRx Pharmaceuticals, Inc., a Delaware corporation, proved to me through satisfactory evidence of identification, which were Mass. DL, to be the person whose name is signed on the preceding or attached document, and acknowledged to me that he signed voluntarily for its stated purpose.

 

GIVEN under my hand and seal this 16 day of September, 2006.

 

 

 

 

Therich A. Besong

 

Notary Public

 

My Commission Expires December 1, 2011

 

Commonwealth of Massachusetts

 

4



 

EXHIBIT G

 

SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
WITH BHX, LLC, AS TRUSTEE OF ACORN PARK HOLDINGS REALTY TRUST

 

THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (this “ Agreement ”) is entered into as of the 18 th  day of September, 2006 by BHX, LLC, a Massachusetts limited liability company, as Trustee of Acorn Park Holdings Realty Trust, a Massachusetts nominee trust (“ Ground Lessor ”). BHX, LLC, a Massachusetts limited liability company, as Trustee of 100 Discovery Park Realty Trust, a Massachusetts nominee trust (“ Landlord ”), and FOLDRX PHARMACEUTICALS, INC., a Delaware corporation (“ Tenant ”).

 

Recitals

 

A.                                     Ground Lessor, as lessor, and Landlord, as lessee, are parties to a Ground Lease dated March 22 , 2005 (the “ Ground Lease ”), pursuant to which Ground Lessor leased to Landlord the land described in Exhibit A hereto.

 

B.                                     Landlord and Tenant are entering into a Lease of even date herewith (the “ Operating Lease ”), pursuant to which Landlord is leasing to Tenant, and Tenant is leasing from Landlord, approximately 16,070 leasable square feet of space in the building located on such land (the “ Premises ”).

 

C.                                     Ground Lessor, Landlord and Tenant desire to enter into this Agreement in order to address certain matters regarding the relationship between the Ground Lease and the Operating Lease.

 

Statement of Agreement

 

For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Ground Lessor, Landlord and Tenant agree as follows:

 

1.                                       Consent Not Required . Ground Lessor confirms that Ground Lessor’s consent is not required for Landlord and Tenant to enter into the Operating Lease.

 

2.                                       Subordination . Subject to the terms of this Agreement, the Operating Lease is and shall be subject and subordinate in all respects to the Ground Lease.

 

3.                                       Non-Disturbance and Attornment . Termination of the Ground Lease shall not result in termination of the Operating Lease.  In the event that the Ground Lease is terminated, (a) the Operating Lease shall remain in full force and effect and shall continue as a direct lease between Ground Lessor and Tenant, on and subject to the terms and conditions of the Operating Lease, (b) Ground Lessor shall recognize the Operating Lease and Tenant’s rights thereunder, and shall not disturb Tenant’s use and occupancy of the Premises on and subject to the terms and conditions of the Operating Lease, and (c) Tenant shall be bound to Ground Lessor under the Operating Lease and shall attorn to Ground Lessor as landlord under the Operating Lease. The above provisions of this Section 3 are not intended to imply that Ground Lessor has any right to

 



 

terminate the Ground Lease by reason of any default thereunder by Landlord, and Ground Lessor acknowledges that termination of the Ground Lease is not available to Ground Lessor as a remedy for default by Landlord under the Ground Lease.

 

4.                                       Captions . The headings to the Sections of this Agreement have been inserted for convenience of reference only and shall in no way modify or restrict any provisions hereof or be used to construe any such provisions.

 

5.                                       Partial Invalidity . If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws, such provision shall be fully severable, and this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Agreement.

 

6.                                       Multiple Counterparts . This Agreement may be executed in multiple counterparts, each of which will be an original, but all of which, taken together, will constitute one and the same Agreement.

 

7.                                       Governing Law . This Agreement will be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts.

 

Executed as a sealed instrument as of the date first written above.

 

 

BHX, LLC, as Trustee of Acorn Park Holdings Realty Trust

 

 

 

 

 

By:

/s/ Robert A. Schlager

 

Name:

Robert A. Schlager

 

Title:

Member

 

 

 

BHX, LLC, as Trustee of 100 Discovery Park Realty Trust

 

Reviewed Legal Dept.

 

 

 

By:

/s/ Robert A. Schlager

 

Name:

Robert A. Schlager

 

Title:

Member

 

 

 

FOLDRX PHARMACEUTICALS, INC.

 

 

 

 

 

By:

/s/ Richard Labaudiniere

 

Name:

Richard Labaudiniere

 

Title:

CEO

 

2



 

EXHIBIT H

 

SECRETARY’S CERTIFICATE

 

The undersigned hereby certifies that he/she is the Secretary of FoldRx Pharmaceuticals, Inc., a Delaware corporation (the “Corporation”), and that the execution and delivery of the foregoing lease by Richard Labaudiniere, Ph.D. the Chief Executive Officer of the Corporation, has been duly authorized by a vote of the Board of Director of the Corporation which is in full force and effect as of this day and that Richard Labaudiniere has in fact signed the foregoing lease.

 

 

 

Secretary, Jeffrey M. Wiesen, Esq.

 

 

 

 

 

Date:  September 18, 2006

 

 


 

FIRST AMENDMENT OF LEASE

 

THIS FIRST AMENDMENT OF LEASE (this “ Amendment ”) is made as of the 5 th  day of June, 2007, by BHX, LLC, a Massachusetts limited liability company, as Trustee of 100 Discovery Park Realty Trust, a Massachusetts nominee trust (“ Landlord ”), and FOLDRX PHARMACEUTICALS, INC., a Delaware corporation (“ Tenant ”).

 

Recitals

 

A.                                     Landlord and Tenant are parties to a Lease dated September 18, 2006 (the “ Lease ”), pursuant to which Landlord has leased to Tenant space on the fifth floor in Building 100 of the project commonly known as Cambridge Discovery Park, Cambridge, Massachusetts. All capitalized terms used in this Amendment which are defined in the Lease and not otherwise defined in this Amendment shall have the meanings given in the Lease.

 

B.                                     In the course of performing the Tenant Improvements Work, disagreements arose between Landlord and Tenant regarding (i) the buildout of the common corridor on the fifth floor of the Building as depicted in Exhibit A hereto (the “ Common Corridor ”), and (ii) the installation of a water neutralizer as contemplated by Section 2.1 of the Lease (the “ Water Neutralizer ”).

 

C.                                     Landlord and Tenant resolved such disagreements by (i) agreeing that Tenant would design and construct the Common Corridor, subject to reimbursement as set forth below; (ii) agreeing to relocate the Water Neutralizer, with Tenant constructing the Water Neutralizer room and related sewer line, subject to reimbursement as set forth below, and (iii) agreeing to adjust the square footage of the Premises as set forth below.

 

D.                                     Landlord and Tenant desire to enter into this Amendment in order to memorialize the above resolution of such disagreements.

 

Statement of Amendment

 

For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree as follows:

 

1.                                       Common Corridor .

 

(a)                                  Completion of Common Corridor Work; Maintenance Responsibilities .  In conjunction with the design and construction of the Tenant Improvements Work, Tenant has designed and constructed the Common Corridor. Landlord has fully inspected the Common Corridor, has approved its design and construction, and has accepted the Common Corridor in its current, as-built condition. No further construction work is required of Landlord or Tenant in respect of the Common Corridor, and the Common Corridor will be maintained and repaired by Landlord from and after the date hereof in accordance with Article VI of the Lease, with reimbursement for the cost of such maintenance and repairs in accordance with Section 4.5 of the Lease.

 

(b)                                  Cost Reimbursement . The Common Corridor work is separate from the Tenant Improvements Work, and Tenant shall account for the costs of designing and constructing the

 



 

Common Corridor (the “ Corridor Costs ”) separately from the Tenant Improvements Costs. Landlord shall provide Tenant an allowance of up to $80,000 for the actual Corridor Costs (the “ Corridor Allowance ”). Landlord shall disburse the Corridor Allowance for application to the payment of Corridor Costs actually incurred by Tenant, subject to the following terms and conditions, and Tenant shall be responsible for all Corridor Costs in excess of the Corridor Allowance. Disbursement of the Corridor Allowance to or at the direction of Tenant to pay or reimburse Tenant for Corridor Costs shall be subject to Landlord’s receipt of a request for payment in form and with backup reasonably satisfactory to Landlord, including but not limited to such certifications, lien waivers and other documents from Tenant, Tenant’s contractor and Tenant’s architect as Landlord may reasonably require. Landlord shall make disbursements of the Corridor Allowance to or at the direction of Tenant within fifteen (15) days after receipt of Tenant’s written request and reasonably satisfactory backup documentation.

 

2.                                       Water Neutralizer.

 

(a)                                  Completion of Water Neutralizer Work; Maintenance Responsibilities .  Tenant has installed the Water Neutralizer at the location depleted in Exhibit B hereto, and has designed and constructed the area in which the Water Neutralizer is located (the “ Water Neutralizer Area ”).  Further, Tenant has installed a sewer line running from the Water Neutralizer Area to the public sewer lines in the location depicted in Exhibit B hereto (the “ Sewer Line ”). Landlord has fully inspected the Water Neutralizer Area and Sewer Line, has approved their design and construction, and has accepted the Water Neutralizer Area and Sewer Line in their current, as-built condition. No further construction work is required of Landlord or Tenant in respect of the Water Neutralizer Area and Sewer Line, and the Water Neutralizer Area and Sewer Line (excluding the Water Neutralizer) will be maintained and repaired by Landlord from and after the date hereof in accordance with Article VI of the Lease, with reimbursement for the cost of such maintenance and repairs in accordance with Section 4.5 of the Lease.

 

(b)                                  Cost Reimbursement .  The work on the Water Neutralizer Area and the Sewer Line shall not be part of the Tenant Improvements Work, and Tenant shall account for the costs of designing and constructing the Water Neutralizer Area and the Sewer Line (the “ Water Neutralizer Improvements Costs ”) separately from the Tenant Improvement Costs and separately from the costs of installing the Water Neutralizer. Landlord shall provide Tenant an allowance of up to $     for the actual Water Neutralizer Improvements Costs (the “ Water Neutralizer Area Allowance ”).  Landlord shall disburse the Water Neutralizer Area Allowance for application to the payment of Water Neutralizer Improvements Costs actually incurred by Tenant, subject to the following terms and conditions, and Tenant shall be responsible for all Water Neutralizer Improvements Costs in excess of the Water Neutralizer Area Allowance and all costs of installing the Water Neutralizer. Disbursement of the Water Neutralizer Area Allowance to or at the direction of Tenant to pay or reimburse Tenant for Water Neutralizer Improvements Costs shall be subject to Landlord’s receipt of a request for payment in form and with backup reasonably satisfactory to Landlord, including but not limited to such certifications, lien waivers and other documents from Tenant, Tenant’s contractor and Tenants architect as Landlord may reasonably require. Landlord shall make disbursements of the Water Neutralizer Area Allowance to or at the direction of Tenant within fifteen (15) days after receipt of Tenants written request and reasonably satisfactory backup documentation.

 

2



 

3.                                       Modification of Leasable Square Footages . The Premises’ as-built location and area varies slightly from that described in the Lease. In addition, the Leasable Square Footage of the Building and the Leasable Square Footage of the Project vary slightly from those set forth in the Lease. Accordingly, the Lease is amended as follows:

 

(i)                                      Exhibit C to the Lease is deleted in its entirety and Exhibit C to this Amendment is substituted in place thereof.

 

(ii)                                   Items 3D, 3E and 3F of the Summary of Basic Terms are deleted in its entirety and the following substituted in place thereof:

 

3D.                              Leasable Square Footage of the Premises :  (which includes a proportionate share of the Floor Area of the Common Areas of the Building, as provided for in this Lease):  An agreed upon 16,105 square feet.

 

3E.                               Leasable Square Footage of the Building :  An agreed upon 128,601 square feet.

 

3F.                                Leasable Square Footage of the Project An agreed upon 396,833 square feet, consisting of (i) an agreed upon 128,601 square feet in the Building, and (ii) an agreed upon 268,232 square feet in the Other Buildings. The Leasable Square Footage of the Project may change from time to time as Other Buildings are altered or demolished and as additional Other Buildings are constructed.

 

(iii)                                Item 4B of the Summary of Basic Terms is amended to change the Tenant Improvements Allowance from $2,169,450.00 to $2,174,175.00.

 

(iv)                               The Base Rent schedule set forth in Item 9 of the Summary of Basic Terms is deleted in its entirely and the following substituted in place thereof:

 

PERIOD

 

ANNUAL RATE

 

MONTHLY
RATE

 

PSF RATE

 

First through third Lease Years

 

$

5

 

 

 

 

 

Fourth through seventh Lease Years

 

$

 

 

 

 

 

 

 

(v)                                  The third sentence of the definition of Tenants Building Share in Article I of the Lease is deleted in its entirety and the following substituted in place thereof;

 

Initially, Tenant’s Building Share shall be 12.6% (16,105/128,601).

 

(vi)                               The third sentence of the definition of Tenant’s Project Share in Article I of the Lease is deleted in its entirety and the following substituted in place thereof:

 

Initially, Tenant’s Project Share (other than with respect to Food Service Costs) shall be 4.1% (16,105/396,833).

 

3



 

4.                                       Excess Tenant Improvements Allowance . The parties acknowledge that Tenant did not exercise its right under Item 4B of the Summary of Basic Terms to request the Excess Tenant Improvements Allowance, and that there shall be no Excess Tenant Improvements Allowance.

 

5.                                       Additional Rent . As of the date of this Amendment, Landlord estimates that (a) Tenant’s Share of Taxes (being Tenant’s Building Share of Building Taxes and Tenant’s Project Share of Project Taxes) for the 2007 Tax Fiscal Year (ending June 30, 2007) will be $57,978 (on an annualized basis, to be prorated for the portion of the Lease Term after the Rent Commencement Date falling within such Tax Fiscal Year), (b) Tenants Project Share of Project Insurance Costs and Tenants Building Share of Building Insurance Costs for calendar year 2007 will be $8,053 (on an annualized basis, to be prorated for the portion of the Lease Term after the Rent Commencement Date falling within calendar 2007), and (c) Tenants Project Share of Project Operating Costs and Tenants Building Share of Building Operating Costs for calendar year 2007 will be $135,282 (on an annualized basis, to be prorated for the portion of the Lease Term after the Rent Commencement Date failing within calendar 2007). Therefore, until further notice as contemplated by Section 4.3, Section 4.4 or Section 4.5 of the Lease, the monthly installments of Additional Rent payable under Section 4.3, Section 4.4 and Section 4.5 of the Lease shall be in the aggregate amount of $16,776.04 each.

 

6.                                       I nconsistencies; Continuing Effect of Lease . To the extent that the provisions of this Amendment are inconsistent with the provisions of the Lease, the provisions of this Amendment will control and the Lease will be deemed to be amended hereby. Except as amended by this Amendment, the provisions of the Lease remain in full force and effect.  The Corridor Allowance and the Water Neutralizer Area Allowance are each separate and apart from the Tenant Improvements Allowance and Excess Tenant Improvements Allowance, and in no way modify or reduce the Tenant Improvements Allowance or Excess Tenant Improvements Allowance or modify Base Rent.

 

7.                                       Multiple Counterparts . This Amendment may be executed in multiple counterparts, each of which will be an original, but all of which, taken together, will constitute one and the same Amendment.

 

IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment as of the date first set forth above.

 

 

BHX, LLC, as Trustee of 100 Discovery Park Realty Trust

 

 

 

By:

/s/Robert A. Schlager

 

Name:

Robert A. Schlager

 

Title:

Member and not individually

 

 

 

FOLDRX PHARMACEUTICALS, INC.

 

 

 

By:

/s/Richard Labaudiniere

 

Name:

Richard Labaudiniere

 

Title:

CEO

 

4



 

EXHIBIT A - Floor Plan Showing Common Corridor

EXHIBIT B - Floor Plan Showing Water Neutralizer Area and Sewer Line

EXHIBIT C - Floor Plan Showing the Premises

 

5



 

SECOND AMENDMENT OF LEASE

 

THIS SECOND AMENDMENT OF LEASE (this “ Amendment ”) is made as of the 31 st  day of March, 2008, by TBCI, LLC, a Massachusetts limited liability company, successor to BHX, LLC, as Trustee of 100 Discovery Park Realty Trust, a Massachusetts nominee trust (“ Landlord ”), and FOLDRX PHARMACEUTICALS, INC., a Delaware corporation (“ Tenant ”).

 

Recitals

 

A.                                     Landlord and Tenant are parties to a Lease dated September 18, 2006, as amended by a First Amendment of Lease dated June 5, 2007 (the “ Lease ”), pursuant to which Landlord has leased to Tenant space on the fifth floor in Building 100 of the project commonly known as Cambridge Discovery Park, Cambridge, Massachusetts (such space being called the “ Original Space ”). All capitalized terms used in this Amendment which are defined in the Lease and not otherwise defined in this Amendment shall have the meanings given in the Lease.

 

B.                                     Landlord and Tenant desire to amend the Lease to add to the Premises all of the leasable space on the fifth floor of the building other than the Original Space, containing an agreed upon 7,561 leasable square feet of space (the “ Expansion Space ”), on and subject to the terms and conditions set forth below.

 

Statement of Amendment

 

For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree as follows:

 

1.                                       Addition of Expansion Space to Premises . The Expansion Space shall be added to the Premises as of the earlier of (a) August 1, 2008 or (b) the date on which Tenant begins to conduct business in the Expansion Space (the earlier of such dates being called the “ Expansion Date ”).

 

2.                                       Tenant Improvements to Expansion Space . Tenant may make tenant improvements to the Expansion Space on and subject to the terms and conditions set forth in Section 7.5 of the Lease. Tenant shall be permitted access to the Expansion Space prior to the Expansion Date for the purpose of performing tenant improvements and otherwise preparing the Expansion Space for Tenant’s occupancy, which access shall be on and subject to the terms and conditions of the Lease other than the obligation to pay Base Rent and Additional Rent with respect to the Expansion Space. Landlord shall provide Tenant an allowance (the “ Expansion Allowance ”) for the payment of costs of the tenant improvements to the Expansion Space (“ Expansion Costs ”) in the amount of $1,020,735.00 ($135.00 per square foot); provided that Tenant acknowledges and agrees that Landlord has previously expended $994,518.00 of the Expansion Allowance to pay Expansion Costs, and that the remaining balance of the Expansion Allowance is $26,217.00. Landlord shall disburse the Expansion Allowance for application to the payment of Expansion Costs actually incurred by Tenant, subject to the following terms and conditions, and Tenant shall be responsible for all Expansion Costs in excess of the Expansion Allowance. Disbursement of the Expansion Allowance to or at the direction of Tenant to pay or reimburse Tenant for Expansion Costs shall be conditioned on the subject work having been performed in accordance with Section 7.5 of the Lease, and shall be subject to Landlord’s receipt

 



 

of a request for payment in form and with backup reasonably satisfactory to Landlord, including but not limited to such certifications, lien waivers and other documents from Tenant, Tenant’s contractor and Tenant’s architect as Landlord may reasonably require. Landlord shall make disbursements of the Expansion Allowance to or at the direction of Tenant within 15 days after receipt of Tenant’s written request and reasonably satisfactory backup documentation. Landlord may inspect the subject work as a condition to making any requested disbursement of the Expansion Allowance to confirm the status of the work and that the work has been performed in accordance with the applicable provisions of the Lease.

 

3.                                       Base Rent for Expansion Space.  The Base Rent for the Expansion Space shall be the same per square foot Base Rent as is charged for the Original Space. The Base Rent for the Expansion Space shall commence as of the Expansion Date.

 

4.                                       Additional Rent for Expansion Space . As of the Expansion Date, in order to reflect the expansion of the Premises to include the Expansion Space, Tenant’s Building Share shall increase to 18.4% (23,666/128,601) and Tenant’s Project Share shall increase to 6.0% (23,666/396,833). From and after May 1, 2008, Tenant shall be responsible for Tenant’s Utility Costs with respect to the Expansion Space.

 

5.                                       Security Deposit . Within three Business Days after the full execution of this Amendment, Tenant shall make an additional Security Deposit in the amount of $   thereby increasing the amount of the Security Deposit from $             to $                .  Such increase in the amount of the Security Deposit shall be accomplished by Tenant causing the bank that issued the Letter of Credit to issue (i) a replacement Letter of Credit in an amount reflecting the increased amount of the Security Deposit, whereupon Landlord shall return the replaced Letter of Credit to the issuing bank, or (ii) an amendment of the Letter of Credit reflecting the increased amount of the Security Deposit. The increased Security Deposit shall not be subject to reduction.

 

6.                                       Parking Allocation . As of the Expansion Date, Tenant’s parking allocation is changed from 2 parking spaces per 1,000 leasable square feet of the Premises (32 parking spaces on the basis of the Original Space) to 2 parking spaces per 1,000 leasable square feet of the Original Space and 1.5 parking spaces per 1,000 leasable square feet of the Expansion Space (i.e., 11 parking spaces), for a total of 43 parking spaces.

 

7.                                       Elimination of Early Termination Options . The early termination options provided for in Item 5D of the Summary of Basic Terms and Sections 2.4(b) and 2.4(c) of the Lease are eliminated.

 

8.                                       Elimination of Right of First Opportunity . The right of first opportunity provided for in Section 2.7 of the Lease is eliminated.

 

9.                                       Specific Amendments of Lease . In furtherance of the above provisions of this Amendment, the Lease is amended as follows:

 

a.                                       Item 3A . Effective as of the Expansion Date, ítem 3A of the Summary of Basic Terms is deleted and the following substituted in place thereof:

 

2



 

3A.                              Premises :  All of the leasable space on the fifth floor of the Building. The Building and the Other Buildings which are currently part of the Project are depicted on Exhibit B .

 

b.                                       Item 3D .  Effective as of the Expansion Date, Item 3D of the Summary of Basic Terms is deleted and the following substituted in place thereof:

 

3B.                              Leasable Square Footage of the Premises (which include a proportionate share of the Floor Area of the Common Areas of the Building, as provided for in this Lease):  An agreed upon 23,666 square feet

 

c.                                        Item 5A . Item 5A of the Summary of Basic Terms is deleted and the following substituted in place thereof:

 

5A.                              Lease Term :                             From the Commencement Date until the end of the seventh Lease Year (February 28, 2014), subject to extension in accordance with Section 2.4(d).

 

d.                                       Item 5D . Item 5D of the Summary of Basic Terms is deleted.

 

e.                                        item 5F . The following Item 5F is added to the Summary of Basic Terms:

 

5F.                                Expansion Date :  The earlier of (i) August 1, 2008 or (ii) the date on which Tenant begins to conduct business in that portion of the fifth floor of the Building not originally included in the Premises.

 

f.                                         Item 7 .  Item 7 of the Summary of Basic Terms is deleted and the following substituted in place thereof:

 

7.                                       Security Deposit :  $          in the form of cash or letter of credit.

 

g.                                        Item 8 .  Effective as of the Expansion Date, Item 8 of the Summary of Basic Terms is deleted and the following substituted in place thereof:

 

8.                                       Tenant’s Parking Allocation :  2 parking spaces per 1,000 square feet with respect to 16,105 leasable square feet of the Premises and 1.5 parking spaces per 1,000 square feet with respect to 7,561 leasable square feet of the Premises (43 parking spaces).

 

h.                                       Item 9 .  The Base Rent schedule set forth in Item 9 of the Summary of Basic Terms is deleted and the following substituted in place thereof:

 

Period

 

Annual Rate

 

Monthly Rate

 

PSF Rate

 

March 1, 2007 until Expansion Date

 

 

 

 

 

 

 

Expansion Date through February 28, 2010

 

$

 

 

 

 

 

March 1, 2010 through February 28, 2014

 

 

 

 

 

 

 

 

3



 

i.                                           Section 2.3 .  Section 2.3 of the Lease is deleted and the following substituted in place thereof:

 

Section 2.3 Parking .  Subject to the Rules and Regulations, Tenant’s Invitees are authorized to use 43 parking spaces in the Parking Areas (determined on the basis of 2 parking spaces per 1,000 square feet with respect to 16,105 leasable square feet of the Premises and 1.5 parking spaces per 1,000 square feet with respect to 7,561 leasable square feet of the Premises. There shall be no charge to Tenant for the use of surface parking spaces (“ Surface Spaces ”) in the Parking Areas. For the use of parking spaces in any garage/structured parking facility (“ Structured Spaces ”) now or hereafter included In the Parking Areas, (a) there shall be no charge for the first thirty (30) months after the Commencement Date, and (b) after the first thirty (30) months after the Commencement Date, Tenant shall pay to or at the direction of Landlord a monthly parking charge, in addition to Base Rent, for each Structured Space based on the fair market charge for similar spaces in the market area of the Project, as determined and adjusted by Landlord and/or Other Landlords from time to time in their reasonable discretion. Upon request, Landlord shall provide Tenant with such market analysis or other information as was used to determine the fair market charge for Structured Spaces. At such times that the parking spaces allocated to the Building (as determined pursuant to Section 4.2(f) of the Declaration) include both Surface Spaces and Structured Spaces, the proportion of Tenants parking spaces that will be Structured Spaces shall not exceed the proportion of the parking spaces allocated to the Building that are Structured Spaces. Tenant shall not (i) permit any of Tenant’s Invitees (other than visitors) to park in spaces designated as “visitor” spaces, (ii) permit any of Tenant’s Invitees to park in spaces designated as “reserved” spaces (unless reserved for Tenant), (iii) permit the total number of passenger automobiles parked in the Parking Areas by Tenant’s Invitees, at any time, to exceed 43, and (iv) except for delivery trucks using designated loading and unloading facilities, permit any of Tenant’s Invitees to park any vehicle on the Project other than passenger automobiles. Landlord and/or Other Landlords may, from time to time, designate one or more spaces in the Parking Areas as reserved for the exclusive use of one or more of the tenants of the Project and/or for Landlord’s and/or Other Landlords’ Invitees, so long as Landlord causes to be available to Tenant the parking required by this Section.

 

j.                                          Section 2.4(b) . Section 2.4(b) of the Lease is deleted.

 

k.                                       Section 2.4(c) . Section 2.4(c) of the Lease is deleted.

 

l.                                           Section 2.5(c) . Section 2.5(c) of the Lease is deleted.

 

m.                                   Section 2.7 . Section 2.7 of the Lease is deleted.

 

10.                                Notice of Lease; SNDA Agreement . Promptly after the full execution of this Amendment:  (a) Landlord and Tenant shall execute, acknowledge and record an amendment of the Notice of Lease previously executed by them with respect to the Lease to evidence the addition of the Expansion Space to the Premises; (b) Landlord, Tenant and Anglo Irish Bank Corporation plc shall enter into a Subordination, Non-Disturbance and Attornment Agreement under which, among other things, Anglo Irish Bank Corporation plc shall agree not to disturb

 

4



 

Tenant’s possession of the Premises (including the Expansion Space) pursuant to the Lease absent an Event of Default under the Lease; and (c) Landlord shall cause Ground Lessor to acknowledge that the Subordination, Non-Disturbance and Attornment Agreement dated September 18, 2006 by Ground Lessor, Landlord and Tenant shall remain in full force and effect with respect to the Lease as amended by the Amendment.

 

11.                                Inconsistencies; Continuing Effect of Lease . To the extent that the provisions of this Amendment are inconsistent with the provisions of the Lease, the provisions of this Amendment will control and the Lease will be deemed to be amended hereby. Except as amended by this Amendment, the provisions of the Lease remain in full force and effect.

 

12.                                Multiple Counterparts .  This Amendment may be executed in multiple counterparts, each of which will be an original, but all of which, taken together, will constitute one and the same Amendment.

 

IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment as of the date first set forth above.

 

 

TBCI, LLC, as Trustee of 100 Discovery Park Realty Trust

 

 

 

By:

/s/Robert A. Schlager

 

Name

Robert A. Schlager

 

Title:

Treasurer

 

 

 

FOLDRX PHARMACEUTICALS, INC.

 

 

 

By:

/s/Richard Labaudiniere

 

Name:

Richard Labaudiniere

 

Title:

President & CEO

 

Ground Lessor acknowledges that the Subordination, Non-Disturbance and Attornment Agreement dated September 18, 2006 by Ground Lessor, Landlord and Tenant shall remain in full force and effect with respect to the Lease as amended by the Amendment.

 

 

BHX, LLC, as Trustee of Acorn Park Holdings Realty Trust

 

 

 

By:

/s/Robert A. Schlager

 

Name

Robert A. Schlager

 

Title:

Member and not individually

 

5


 

EXHIBIT  B

 



 

 



 

 



 

 



 

 



 

THE BULFINCH COMPANIES, INC.

 

First Needham Place, 250 First Avenue, Suite 200,

Needham. MA 02494-2805 Tel:  (781) 707-4000 Fax:

(781) 707-4001 E-Mail:mrd@bulfinch.com

 

Mark R. DiOrio

General Counsel and Senior Vice President

Investment Real Estate

 

 

October 18, 2010

 

VIA ELECTRONIC MAIL ( GSchnitzler@mintz.com )

 

Mr. Gabriel Schnitzler, Esquire

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

5 Palo Alto Square - 6th Floor

3000 El Camino Real

Palo Alto, CA 94306-2155

 

Re:                              Lease dated as of September 18, 2006 by and between TBCI, LLC (as successor-in-interest to BHX, LLC), as Trustee of 100 Discovery Park Realty Trust and FoldRx Pharmaceuticals, Inc. (“Tenant”), as amended by a First Amendment of Lease dated as of June 5, 2007 and a Second Amendment of Lease dated as of March 31, 2008 (the “Lease”) with respect to an agreed upon 23,666 square feet of fifth floor space located at 100 Acorn Park Drive, Cambridge, Massachusetts (the “Property”)

 

Dear Gabe:

 

I am pleased to inform you that Landlord’s lender has consented to the transaction by which Tenant will become a wholly owned subsidiary of Pfizer, Inc. Accordingly, enclosed is a fully executed copy of the Landlord, Tenant and Acquiror Agreement. For your convenience, I am also forwarding a copy directly to Chris Adams.

 

Thank you for your assistance on this transaction.

 

Sincerely,

 

Mark R. DiOrio

General Counsel and Senior Vice President

 

Enclosure

 

cc:                                 Robert A. Schlager (w/o enclosure)

Eric D. Schlager (w/o enclosure)

James P. Cronin (w/o enclosure)

Chris Adams, Ph.D., Chief Business Officer, FoldRx Pharmaceuticals, Inc. (w/enclosure)

Donald J. Shuller, Esquire (w/enclosure)

 



 

LANDLORD, TENANT AND ACQUIROR AGREEMENT

 

THIS LANDLORD, TENANT AND ACQUIROR AGREEMENT (“Agreement”) is entered into as of October 18, 2010, by and among TBCI, LLC, as Trustee of 100 Discovery Park Realty Trust (“Landlord”), FoldRx Pharmaceuticals, Inc., a Delaware corporation (“Tenant”) and Pfizer Inc., a Delaware corporation (“Acquiror”).

 

Reference is made to a Lease (“Lease”) dated as of September 18, 2006 by and between Landlord (as successor to BHX, LLC) and Tenant, as amended by a First Amendment of Lease dated as of June 5,2007 and a Second Amendment of Lease dated as of March 31, 2008 for premises on the fifth floor of the building (“Premises”) located at 100 Acorn Park Drive, Cambridge, MA 02140 (“Landlord’s Property”).  Terms not otherwise defined herein shall have the meaning as set forth in the Lease.

 

Reference is further made to that certain Agreement and Plan of Merger by and among Acquiror, Fast Acquisition Corp., Tenant, and Augustine Lawlor dated as of August 30, 2010, 2010 (the “Merger Agreement”), pursuant to which Tenant shall become a wholly-owned subsidiary of Acquiror (the “Acquisition”).

 

For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord, Tenant and Acquiror agree as follows:

 

1.                                       Conditioned upon and subject to the terms and provisions of this Agreement, Landlord hereby consents to the Acquisition.

 

2.                                       Tenant and Acquiror recognize Landlord as the Landlord under the Lease.

 

3.                                       Notwithstanding the acquisition of Tenant by Acquiror, Tenant agrees that it will continue to be bound by and under the Lease and liable directly to Landlord for all obligations of Tenant under the Lease, including, without limitation, all obligations to pay Base Rent and Additional Rent and all other amounts due under the Lease and to perform all other requirements of “Tenant” under the Lease.

 

4.                                       Tenant and Acquiror represent and warrant to Landlord that the Lease is ratified and confirmed and remains in full force and effect, unchanged. Tenant represents and warrants to Landlord that to Tenant’s knowledge (i) Landlord is in full compliance with Landlord’s obligations under the Lease, (ii) all Landlord’s work, if any, under the Lease has been fully and satisfactorily performed, and (iii) that all contributions required by the Lease to be paid by Landlord for improvements to the Premises have been paid in full.  Landlord represents and warrants to Tenant and Acquiror that to Landlord’s knowledge Tenant is in full compliance with Tenant’s obligations under the Lease.

 

5.                                       The Lease and this Agreement shall be governed and construed in accordance with the laws of the Commonwealth of Massachusetts.

 

6.                                       This Agreement may be signed in multiple originals and/or may be separately signed and assembled and contain the signatures of all the parties, with each counterpart constituting an original document.  Tenant confirms to Landlord that notices to Tenant shall be

 



 

as provided in the Lease. Acquiror confirms to Landlord that notices to Acquiror shall be sent in the manner provided for in the Lease addressed as follows:

 

Pfizer Inc.

235 East 42nd Street

New York, New York 10017

Attention:  Senior Vice President and General Counsel

Facsimile:  212-309-0546

 

7.                                       The individuals executing this Agreement on behalf of Tenant and Acquiror, respectively, represent and warrant to Landlord that such execution has been duly authorized by all necessary votes and directives, does not breach any other agreement or law and that Tenant shall continue to be bound to the obligations of Tenant under the Lease.

 

8.                                       Tenant and Acquiror each agree that it will execute and deliver to Landlord, without cost or expense to Landlord, any further instruments which are deemed advisable by Landlord in connection with the Acquisition or this Agreement to confirm the terms thereof or hereof.

 

EXECUTED as a sealed instrument as of the date first written above.

 

 

TENANT:

 

FOLDRX PHARMACEUTICALS, INC.

 

 

 

By:

/s/Richard Labaudiniere

 

Print Name:

Richard Labaudiniere

 

Its:

President & CEO

 

Duly authorized

 

 

 

ACQUIROR:

 

PFIZER INC.

 

 

 

By:

/s/ David Reid

 

Print Name:

David Reid

 

Its:

Attorney-in-Fact

 

Duly authorized

 

 

 

LANDLORD:

 

TBCI, LLC, AS TRUSTEE OF 100

 

DISCOVERY PARK REALTY TRUST

 

 

 

By:

/s/ Robert A. Schlager

 

Print Name:

Robert A. Schlager

 

Its:

Treasurer and Vice President

 

Duly authorized

 

2


 

AUTHORIZED PERSON’S CERTIFICATE

 

The undersigned hereby certifies that he/she is the Director, Finance of FoldRx Pharmaceuticals, Inc., a Delaware corporation, and that the execution and delivery of the foregoing Landlord, Tenant and Acquiror Agreement by Richard Labaudiniere, the President & CEO of FoldRx Pharmaceuticals, Inc., has been duly authorized by any necessary corporate action, which is in full force and effect as of this day and that Richard Labaudiniere has in fact signed the foregoing Landlord, Tenant and Acquiror Agreement.

 

Seal

ATTEST:

 

 

 

/s/ By Authorized Signatory

 

                                                                     , Authorized

 

 

Person

 

 

 

Dated: As of Sept 20, 2010

 

 

4



 

AUTHORIZED PERSON’S CERTIFICATE

 

The undersigned hereby certifies that he/she is the Assistant Secretary of Pfizer Inc., a Delaware corporation, and that the execution and delivery of the foregoing Landlord, Tenant and Acquiror Agreement by David Reid, Attorney-in-Fact for Pfizer Inc., has been duly authorized by any necessary corporate action, which is in full force and effect as of this day and that David Reid has in fact signed the foregoing Landlord, Tenant and Acquiror Agreement.

 

Seal

ATTEST:

 

 

 

/s/Sue Grant

 

Susan Grant, Authorized Person

 

 

Dated: As of October 6 , 2010

 

 

5



 

EXHIBIT  B

 

(Subtenant’s Plans)

 

B-1



 

 

2



 

 

3



 

 

4



 

 

5



 

 

6



 

 

7




Exhibit 10.10

 

Genocea Biosciences, Inc.

AMENDED AND RESTATED 2007 EQUITY INCENTIVE PLAN

 

1.                                       DEFINED TERMS

 

Exhibit A, which is incorporated by reference, defines the terms used in the Plan and sets forth certain operational rules related to those terms.

 

2.                                       PURPOSE

 

The Plan has been established to advance the interests of the Company by providing for the grant to Participants of Stock-based Awards.

 

3.                                       ADMINISTRATION

 

The Administrator has discretionary authority, subject only to the express provisions of the Plan, to interpret the Plan; determine eligibility for and grant Awards; determine, modify or waive the terms and conditions of any Award; prescribe forms, rules and procedures; and otherwise do all things necessary to carry out the purposes of the Plan.  Determinations of the Administrator made under the Plan will be conclusive and will bind all parties.

 

4.                                       LIMITS ON AWARDS UNDER THE PLAN

 

(a)                                  Number of Shares .  A maximum of 7,892,500 shares of Stock may be delivered in satisfaction of Awards under the Plan.  The number of shares of Stock delivered in satisfaction of Awards shall, for purposes of the preceding sentence, be determined net of shares of Stock withheld by the Company in payment of the exercise price of the Award or in satisfaction of tax withholding requirements with respect to the Award.  The limit set forth in this Section 4(a) shall be construed to comply with Section 422.  To the extent consistent with the requirements of Section 422, Stock issued under awards of an acquired company that are converted, replaced or adjusted in connection with the acquisition shall not reduce the number of shares available for Awards under the Plan.

 

(b)                                  Type of Shares .  Stock delivered by the Company under the Plan may be authorized but unissued Stock or previously issued Stock acquired by the Company.  No fractional shares of Stock will be delivered under the Plan.

 



 

5.                                       ELIGIBILITY AND PARTICIPATION

 

The Administrator will select Participants from among those key Employees and directors of, and consultants and advisors to, the Company or its Affiliates who, in the opinion of the Administrator, are in a position to make a significant contribution to the success of the Company and its Affiliates.  Eligibility for ISOs is limited to employees of the Company or of a “parent corporation” or “subsidiary corporation” of the Company as those terms are defined in Section 424 of the Code.

 

6.                                       RULES APPLICABLE TO AWARDS

 

(a)                                  All Awards

 

(1)  Award Provisions .  The Administrator will determine the terms of all Awards, subject to the limitations provided herein.  By accepting (or, under such rules as the Administrator may prescribe, being deemed to have accepted) an Award, the Participant agrees to the terms of the Award and the Plan.  Notwithstanding any provision of this Plan to the contrary, awards of an acquired company that are converted, replaced or adjusted in connection with the acquisition may contain terms and conditions that are inconsistent with the terms and conditions specified herein, as determined by the Administrator.

 

(2)  Term of Plan .  No Awards may be made after February 10 (day before plan adopted), 2019, but previously granted Awards may continue beyond that date in accordance with their terms.

 

(3)  Transferability .  Neither ISOs nor, except as the Administrator otherwise expressly provides in accordance with the second sentence of this Section 6(a)(3), other Awards may be transferred other than by will or by the laws of descent and distribution, and during a Participant’s lifetime ISOs (and, except as the Administrator otherwise expressly provides in accordance with the second sentence of this Section 6(a)(3), other Awards requiring exercise) may be exercised only by the Participant.  The Administrator may permit Awards other than ISOs to be transferred by gift, subject to such limitations as the Administrator may impose.

 

(4)  Vesting, Etc.    The Administrator may determine the time or times at which an Award will vest or become exercisable and the terms on which an Award requiring exercise will remain exercisable.  Without limiting the foregoing, the Administrator may at any time accelerate the vesting or exercisability of an Award, regardless of any adverse or potentially adverse tax consequences resulting from such acceleration.  Unless the Administrator expressly provides otherwise, however, the following rules will apply: immediately upon the cessation of the Participant’s Employment, each Award requiring exercise that is then held by the Participant or by the Participant’s permitted transferees, if any, will cease to be exercisable and will terminate, and all other Awards that are then held by the Participant or by the Participant’s permitted transferees, if any, to the extent not already vested will be forfeited, except that:

 

2



 

(A)  subject to (B) and (C) below, all Stock Options and SARs held by the Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation of the Participant’s Employment, to the extent then exercisable, will remain exercisable for the lesser of (i) a period of three months or (ii) the period ending on the latest date on which such Stock Option or SAR could have been exercised without regard to this Section 6(a)(4), and will thereupon terminate;

 

(B)  all Stock Options and SARs held by a Participant or the Participant’s permitted transferees, if any, immediately prior to the Participant’s death, to the extent then exercisable, will remain exercisable for the lesser of (i) the one year period ending with the first anniversary of the Participant’s death or (ii) the period ending on the latest date on which such Stock Option or SAR could have been exercised without regard to this Section 6(a)(4), and will thereupon terminate; and

 

(C)  all Stock Options and SARs held by a Participant or the Participant’s permitted transferees, if any, immediately prior to the cessation of the Participant’s Employment will immediately terminate upon such cessation if the Administrator in its sole discretion determines that such cessation of Employment has resulted for reasons which cast such discredit on the Participant as to justify immediate termination of the Award.

 

(5)  Taxes .  The Administrator will make such provision for the withholding of taxes as it deems necessary and may require that the exercise or vesting of an Award, or the delivery of Stock, cash or other property under an Award, be conditioned on the payment by the Participant or another person of all required withholding taxes.  The Administrator may, but need not, hold back shares of Stock from an Award or permit a Participant to tender previously owned shares of Stock in satisfaction of tax withholding requirements (but not in excess of the minimum withholding required by law).

 

(6)  Dividend Equivalents, Etc.   The Administrator may provide for the payment of amounts in lieu of cash dividends or other cash distributions with respect to Stock subject to an Award.  Any entitlement to dividend equivalents or similar entitlements shall be established and administered consistent either with exemption from, or compliance with, the requirements of Section 409A.

 

(7)  Rights Limited .  Nothing in the Plan will be construed as giving any person the right to continued employment or service with the Company or its Affiliates, or any rights as a stockholder except as to shares of Stock actually issued under the Plan.  The loss of existing or potential profit in Awards will not constitute an element of damages in the event of termination of Employment for any reason, even if the termination is in violation of an obligation of the Company or any Affiliate to the Participant.

 

(8)  Transfer Restrictions .  If, when any shares of Stock are issued in connection with the exercise or grant of an Award, the Company is a party to an agreement

 

3



 

restricting the transfer of any outstanding shares of its Stock, the exercise or grant of such Award shall, unless otherwise expressly specified by the Administrator, be subject to the conditions (i) that the shares of Stock so acquired shall be made subject to the transfer restrictions set forth in that agreement (or if more than one such agreement is then in effect, the agreement specified by the Administrator) and (ii) that the Participant shall execute a joinder to such agreement.  When any shares of Stock are issued in connection with the exercise or grant of an Award, the exercise or grant of such Award shall, unless otherwise expressly specified by the Administrator, be subject to a condition that the Participant must agree, for himself or herself and his or her heirs and legal representatives, to any “lock-up” or similar agreements requested by the Company in connection with a public offering of the shares of the Company’s Stock

 

(9)  Coordination with Other Plans .  Awards under the Plan may be granted in tandem with, or in satisfaction of or substitution for, other Awards under the Plan or awards made under other compensatory plans or programs of the Company or its Affiliates.  For example, but without limiting the generality of the foregoing, awards under other compensatory plans or programs of the Company or its Affiliates may be settled in Stock (including, without limitation, Unrestricted Stock) if the Administrator so determines, in which case the shares delivered shall be treated as awarded under the Plan (and shall reduce the number of shares thereafter available under the Plan in accordance with the rules set forth in Section 4).

 

(10)  Section 409A .  Each Award shall contain such terms as the Administrator determines, and shall be construed and administered, such that the Award either (i) qualifies for an exemption from the requirements of Section 409A to the extent applicable, or (ii) satisfies such requirements.

 

(11)   Certain Requirements of Corporate Law .  Awards shall be granted and administered consistent with the requirements of applicable Delaware law relating to the issuance of stock and the consideration to be received therefor, and with the applicable requirements of the stock exchanges or other trading systems on which the Stock is listed or entered for trading, in each case as determined by the Administrator.

 

(b)                                  Awards Requiring Exercise

 

(1)  Time And Manner Of Exercise .  Unless the Administrator expressly provides otherwise, an Award requiring exercise by the holder will not be deemed to have been exercised until the Administrator receives a notice of exercise (in form acceptable to the Administrator) signed by the appropriate person and accompanied by any payment required under the Award.  If the Award is exercised by any person other than the Participant, the Administrator may require satisfactory evidence that the person exercising the Award has the right to do so.

 

(2)  Exercise Price .  The exercise price (or the base value from which appreciation is to be measured) of each Award requiring exercise shall be 100% (in the case of an ISO granted to a ten-percent shareholder within the meaning of subsection (b)(6) of

 

4



 

Section 422, 110%) of the fair market value of the Stock subject to the Award, determined as of the date of grant, or such higher amount as the Administrator may determine in connection with the grant.  Fair market value shall be determined by the Administrator consistent with the applicable requirements of Section 422 and Section 409A.

 

(3)  Payment Of Exercise Price .  Where the exercise of an Award is to be accompanied by payment, payment of the exercise price shall be by cash or check acceptable to the Administrator, or, if so permitted by the Administrator and if legally permissible, (i) through the delivery of shares of Stock that have been outstanding for at least six months (unless the Administrator approves a shorter period) and that have a fair market value equal to the exercise price, (ii) at such time, if any, as the Stock is publicly traded, through a broker-assisted exercise program acceptable to the Administrator, (iii) by other means acceptable to the Administrator, or (iv) by any combination of the foregoing permissible forms of payment.  The delivery of shares in payment of the exercise price under clause (i) above may be accomplished either by actual delivery or by constructive delivery through attestation of ownership, subject to such rules as the Administrator may prescribe.

 

(4)  Maximum Term .  Awards requiring exercise will have a maximum term not to exceed ten (10) years from the date of grant.

 

7.                                       EFFECT OF CERTAIN TRANSACTIONS

 

(a)                                  Mergers,  etc.   Except as otherwise provided in an Award, the following provisions shall apply in the event of a Covered Transaction:

 

(1)   Assumption or Substitution .  If the Covered Transaction is one in which there is an acquiring or surviving entity, the Administrator may provide for the assumption of some or all outstanding Awards or for the grant of new awards in substitution therefor by the acquiror or survivor or an affiliate of the acquiror or survivor.

 

(2)   Cash-Out of Awards .  If the Covered Transaction is one in which holders of Stock will receive upon consummation a payment (whether cash, non-cash or a combination of the foregoing), the Administrator may provide for payment (a “cash-out”), with respect to some or all Awards or any portion thereof, equal in the case of each affected Award or portion thereof to the excess, if any, of (A) the fair market value of one share of Stock (as determined by the Administrator in its reasonable discretion) times the number of shares of Stock subject to the Award or such portion, over (B) the aggregate exercise or purchase price, if any, under the Award or such portion (in the case of an SAR, the aggregate base value above which appreciation is measured), in each case on such payment terms (which need not be the same as the terms of payment to holders of Stock) and other terms, and subject to such conditions, as the Administrator determines; provided , that the Administrator shall not exercise its discretion under this Section 7(a)(2) with respect to an Award or portion thereof providing for “nonqualified deferred compensation” subject to Section 409A in a manner that would constitute an extension

 

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or acceleration of, or other change in, payment terms if such change would be inconsistent with the applicable requirements of Section 409A.

 

(3)  Termination or Acceleration of Certain Awards .  If the Covered Transaction (whether or not there is an acquiring or surviving entity) is one in which there is no assumption, substitution or cash-out, for each Award requiring exercise, the Administrator in its sole discretion may choose one of the following actions:

 

(i) terminate the Award upon the occurrence of the Covered Transaction or

 

(ii) make the Award fully exercisable with the delivery of any shares of Stock remaining deliverable under each outstanding Award of Stock Units (including Restricted Stock Units and Performance Awards to the extent consisting of Stock Units) accelerated and such shares to be delivered prior to the Covered Transaction on a basis that gives the holder of the Award a reasonable opportunity, as determined by the Administrator, following exercise of the Award or the delivery of the shares, as the case may be, to participate as a stockholder in the Covered Transaction; provided , that to the extent acceleration pursuant to this Section 7(a)(3)(ii) of an Award subject to Section 409A would cause the Award to fail to satisfy the requirements of Section 409A, the Award shall not be accelerated and the Administrator in lieu thereof shall take such steps as are necessary to ensure that payment of the Award is made in a medium other than Stock and on terms that as nearly as possible, but taking into account adjustments required or permitted by this Section 7, replicate the prior terms of the Award.

 

(4)  Termination of Awards Upon Consummation of Covered Transaction .  Each Award will terminate upon consummation of the Covered Transaction, other than the following:  (i) Awards assumed pursuant to Section 7(a)(1) above; (ii) Awards converted pursuant to the proviso in Section 7(a)(3)(ii) above into an ongoing right to receive payment other than Stock; and (iii) outstanding shares of Restricted Stock (which shall be treated in the same manner as other shares of Stock, subject to Section 7(a)(5) below).

 

(5)  Additional Limitations .  Any share of Stock and any cash or other property delivered pursuant to Section 7(a)(2) or Section 7(a)(3)(ii) above with respect to an Award may, in the discretion of the Administrator, contain such restrictions, if any, as the Administrator deems appropriate to reflect any performance or other vesting conditions to which the Award was subject and that did not lapse (and were not satisfied) in connection with the Covered Transaction.  In the case of Restricted Stock that does not vest in connection with the Covered Transaction, the Administrator may require that any amounts delivered, exchanged or otherwise paid in respect of such Stock in connection with the Covered Transaction be placed in escrow or otherwise made subject to such restrictions as the Administrator deems appropriate to carry out the intent of the Plan.

 

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(b)                                  Changes in and Distributions With Respect to Stock

 

(1)  Basic Adjustment Provisions .  In the event of a stock dividend, stock split or combination of shares (including a reverse stock split), recapitalization or other change in the Company’s capital structure, the Administrator shall make appropriate adjustments to the maximum number of shares specified in Section 4(a) that may be delivered under the Plan and will also make appropriate adjustments to the number and kind of shares of stock or securities subject to Awards then outstanding or subsequently granted, any exercise prices relating to Awards and any other provision of Awards affected by such change.

 

(2)  Certain Other Adjustments .  The Administrator may also make adjustments of the type described in Section 7(b)(1) above to take into account distributions to stockholders other than those provided for in Section 7(a) and 7(b)(1), or any other event, if the Administrator determines that adjustments are appropriate to avoid distortion in the operation of the Plan and to preserve the value of Awards made hereunder, having due regard for the qualification of ISOs under Section 422 and the requirements of Section 409A, where applicable.

 

(3)  Continuing Application of Plan Terms .  References in the Plan to shares of Stock will be construed to include any stock or securities resulting from an adjustment pursuant to this Section 7.

 

8.                                       LEGAL CONDITIONS ON DELIVERY OF STOCK

 

The Company will not be obligated to deliver any shares of Stock pursuant to the Plan or to remove any restriction from shares of Stock previously delivered under the Plan until: (i) the Company is satisfied that all legal matters in connection with the issuance and delivery of such shares have been addressed and resolved; (ii) if the outstanding Stock is at the time of delivery listed on any stock exchange or national market system, the shares to be delivered have been listed or authorized to be listed on such exchange or system upon official notice of issuance; and (iii) all conditions of the Award have been satisfied or waived.  If the sale of Stock has not been registered under the Securities Act of 1933, as amended, the Company may require, as a condition to exercise of the Award, such representations or agreements as counsel for the Company may consider appropriate to avoid violation of such Act.  The Company may require that certificates evidencing Stock issued under the Plan bear an appropriate legend reflecting any restriction on transfer applicable to such Stock, and the Company may hold the certificates pending lapse of the applicable restrictions.

 

9.                                       AMENDMENT AND TERMINATION

 

The Administrator may at any time or times amend the Plan or any outstanding Award for any purpose which may at the time be permitted by law, and may at any time terminate the Plan as to any future grants of Awards; provided , that except as otherwise expressly provided in the Plan the Administrator may not, without the Participant’s consent, alter the terms of an Award so as to affect materially and adversely the Participant’s rights under the Award, unless

 

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the Administrator expressly reserved the right to do so at the time of the Award.  Any amendments to the Plan shall be conditioned upon stockholder approval only to the extent, if any, such approval is required by law (including the Code), as determined by the Administrator.

 

10.                                OTHER COMPENSATION ARRANGEMENTS

 

The existence of the Plan or the grant of any Award will not in any way affect the Company’s right to Award a person bonuses or other compensation in addition to Awards under the Plan.

 

11.                                MISCELLANEOUS

 

(a)                                  Waiver of Jury Trial .   By accepting an Award under the Plan, each Participant waives any right to a trial by jury in any action, proceeding or counterclaim concerning any rights under the Plan and any Award, or under any amendment, waiver, consent, instrument, document or other agreement delivered or which in the future may be delivered in connection therewith, and agrees that any such action, proceedings or counterclaim shall be tried before a court and not before a jury.  By accepting an Award under the Plan, each Participant certifies that no officer, representative, or attorney of the Company has represented, expressly or otherwise, that the Company would not, in the event of any action, proceeding or counterclaim, seek to enforce the foregoing waivers.

 

(b)                                  Limitation of Liability .   Notwithstanding anything to the contrary in the Plan, neither the Company, nor any Affiliate, nor the Administrator, nor any person acting on behalf of the Company, any Affiliate, or the Administrator, shall be liable to any Participant or to the estate or beneficiary of any Participant or to any other holder of an Award by reason of any acceleration of income, or any additional tax, asserted by reason of the failure of an Award to satisfy the requirements of Section 422 or Section 409A or by reason of Section 4999 of the Code; provided, that nothing in this Section 11(b) shall limit the ability of the Administrator or the Company to provide by separate express written agreement with a Participant for a gross-up payment or other payment in connection with any such tax or additional tax.

 

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EXHIBIT A

 

Definition of Terms

 

The following terms, when used in the Plan, will have the meanings and be subject to the provisions set forth below:

 

“Administrator”:   The Board, except that the Board may delegate its authority under the Plan to a committee of the Board, in which case references herein to the Board shall refer to such committee.  The Board may delegate (i) to one or more of its members such of its duties, powers and responsibilities as it may determine; (ii) to one or more officers of the Company the power to grant rights or options to the extent permitted by Section 157(c) of the Delaware General Corporation Law; and (iii) to such Employees or other persons as it determines such ministerial tasks as it deems appropriate.  In the event of any delegation described in the preceding sentence, the term “Administrator” shall include the person or persons so delegated to the extent of such delegation.

 

“Affiliate” :  Any corporation or other entity that stands in a relationship to the Company that would result in the Company and such corporation or other entity being treated as one employer under Section 414(b) and Section 414(c) of the Code, except that in determining eligibility for the grant of a Stock Option or SAR by reason of service for an Affiliate, Sections 414(b) and 414(c) of the Code shall be applied by substituting “at least 50%” for “at least 80%” under Section 1563(a)(1), (2) and (3) of the Code and Treas. Regs. § 1.414(c)-2; provided , that to the extent permitted under Section 409A, “at least 20%” shall be used in lieu of “at least 50%”; and further provided , that the lower ownership threshold described in this definition (50% or 20% as the case may be) shall apply only if the same definition of affiliation is used consistently with respect to all compensatory stock options or stock awards (whether under the Plan or another plan). The Company may at any time by amendment provide that different ownership thresholds (consistent with Section 409A) apply but any such change shall not be effective for twelve (12) months.

 

“Award”:   Any or a combination of the following:

 

(i) Stock Options.

 

(ii) SARs.

 

(iii) Restricted Stock

 

(iv) Unrestricted Stock.

 

(v) Stock Units, including Restricted Stock Units.

 

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(vi) Performance Awards.

 

(vii)  Awards (other than Awards described in (i) through (vi) above) that are convertible into or otherwise based on Stock.

 

“Board”:   The Board of Directors of the Company.

 

“Code”:   The U.S. Internal Revenue Code of 1986 as from time to time amended and in effect, or any successor statute as from time to time in effect.

 

“Company”:   Genocea Biosciences, Inc., a Delaware Corporation.

 

“Covered Transaction”:  Any of (i) a consolidation, merger, or similar transaction or series of related transactions, including a sale or other disposition of stock, in which the Company is not the surviving corporation or which results in the acquisition of all or substantially all of the Company’s then outstanding common stock by a single person or entity or by a group of persons and/or entities acting in concert, (ii) a sale or transfer of all or substantially all the Company’s assets, or (iii) a dissolution or liquidation of the Company.  Where a Covered Transaction involves a tender offer that is reasonably expected to be followed by a merger described in clause (i) (as determined by the Administrator), the Covered Transaction shall be deemed to have occurred upon consummation of the tender offer.

 

“Employee”:   Any person who is employed by the Company or an Affiliate.

 

“Employment”:  A Participant’s employment or other service relationship with the Company and its Affiliates.  Employment will be deemed to continue, unless the Administrator expressly provides otherwise, so long as the Participant is employed by, or otherwise is providing services in a capacity described in Section 5 to the Company or its Affiliates.  If a Participant’s employment or other service relationship is with an Affiliate and that entity ceases to be an Affiliate, the Participant’s Employment will be deemed to have terminated when the entity ceases to be an Affiliate unless the Participant transfers Employment to the Company or its remaining Affiliates.

 

“ISO”:   A Stock Option intended to be an “incentive stock option” within the meaning of Section 422.  Each option granted pursuant to the Plan will be treated as providing by its terms that it is to be a non-incentive stock option unless, as of the date of grant, it is expressly designated as an ISO.

 

“Participant”:   A person who is granted an Award under the Plan.

 

“Performance Award” :  An Award subject to specified criteria, other than the mere continuation of Employment or the mere passage of time, the satisfaction of which is a condition for the grant, exercisability, vesting or full enjoyment of the Award.

 

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“Plan”:   The Genocea Amended and Restated 2007 Equity Incentive Plan as from time to time amended and in effect.

 

“Restricted Stock”:   Stock subject to restrictions requiring that it be redelivered or offered for sale to the Company if specified conditions are not satisfied.

 

“Restricted Stock Unit”:   A Stock Unit that is, or as to which the delivery of Stock or cash in lieu of Stock is, subject to the satisfaction of specified performance or other vesting conditions.

 

“SAR”:   A right entitling the holder upon exercise to receive an amount (payable in cash or in shares of Stock of equivalent value) equal to the excess of the fair market value of the shares of Stock subject to the right over the base value from which appreciation under the SAR is to be measured.

 

“Section 409A”:   Section 409A of the Code.

 

“Section 422”:   Section 422 of the Code.

 

“Stock”:   Common Stock of the Company, par value $ .001 per share.

 

“Stock Option”:   An option entitling the holder to acquire shares of Stock upon payment of the exercise price.

 

“Stock Unit” :  An unfunded and unsecured promise, denominated in shares of Stock, to deliver Stock or cash measured by the value of Stock in the future.

 

“Unrestricted Stock”:   Stock not subject to any restrictions under the terms of the Award .

 

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AMENDMENT TO

 

GENOCEA BIOSCIENCES, INC.

AMENDED AND RESTATED

2007 EQUITY INCENTIVE PLAN

 

June 24, 2013

 

Genocea Biosciences, Inc. sponsors the Genocea Biosciences, Inc. Amended and Restated 2007 Equity Incentive Plan (the “ Plan ”).  The Plan is hereby amended as set forth below:

 

1.                                       The first sentence of Section 4(a) is amended by deleting it in its entirety and replacing it with the following:

 

“A maximum of 22,127,159 shares of Stock may be delivered in satisfaction of Awards under the Plan.”

 

2.                                       Except as amended above, the Plan shall remain in full force and effect.

 

IN WITNESS WHEREOF, Genocea Biosciences, Inc. has executed this Plan Amendment as of the date first written above.

 

 

Genocea Biosciences , Inc.

 

 

 

 

 

 

 

By:

/s/ William Clark

 

Name:

William Clark

 

Title :

Chief Executive Officer

 




Exhibit 10.11

 

GENOCEA BIOSCIENCES, INC.

 

CONSULTING AGREEMENT

 

This Consulting Agreement (this “Agreement”) is entered into as of May 16, 2007, by and between Genocea Biosciences, Inc. (the “ Company ”) and George Siber (“ Consultant ”).  The Company desires to retain Consultant as an independent contractor to perform consulting services for the Company, and Consultant is willing to perform such services, on the terms described below.  In consideration of the mutual promises contained herein, the parties agree as follows:

 

1.               Services and Compensation .  Consultant agrees to perform for the Company the services described in Exhibit A (the “ Services ”), and the Company agrees to pay Consultant the compensation described in Exhibit A for Consultant’s performance of the Services.

 

2.               Confidentiality .

 

A.             Definition .  “ Confidential Information ” means any non-public information that relates to the actual or anticipated business or research and development of the Company, technical data, trade secrets or know-how, including, but not limited to, research, product plans or other information regarding the Company’s products or services and markets therefore, customer lists and customers (including, but not limited to, customers of the Company on whom Consultant called or with whom Consultant became acquainted during the term of this Agreement), software, developments, inventions, processes, formulas, technology, designs, drawings, engineering, hardware configuration information, marketing, finances or other business information.  Confidential Information does not include information that (i) is known to Consultant at the time of disclosure to Consultant by the Company as evidenced by written records of Consultant, (ii) was or becomes publicly known and made generally available through no wrongful act of Consultant, or (iii) has been rightfully received by Consultant from a third party who is authorized to make such disclosure.

 

B.             Nonuse and Nondisclosure .  Consultant will not, during or subsequent to the term of this Agreement, (i) use the Confidential Information for any purpose whatsoever other than the performance of the Services on behalf of the Company, or (ii) disclose the Confidential Information to any third party. Consultant agrees that all Confidential Information will remain the sole property of the Company. Consultant also agrees to take all reasonable precautions to prevent any unauthorized disclosure of such Confidential Information.

 

C.             Former Client Confidential Information .  Consultant agrees that Consultant will not, during the term of this Agreement, improperly use or disclose any proprietary information or trade secrets of any former or current employer of Consultant or other person or entity with which Consultant has an agreement or duty to keep in confidence information acquired by Consultant, if any.  Consultant also agrees that Consultant will not bring onto the Company’s premises any unpublished document or proprietary information belonging to any such employer, person or entity unless consented to in writing by such employer, person or entity..

 



 

D.             Third Party Confidential Information .  Consultant recognizes that the Company has received and in the future will receive from third parties their confidential or proprietary information subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain limited purposes.  Consultant agrees that during the term of this Agreement and thereafter, Consultant owes the Company and such third parties a duty to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person, firm or corporation or to use it except as necessary in carrying out the Services and consistent with the Company’s agreement with such third party.

 

E.              Return of Materials .  Upon the termination of this Agreement, or upon the Company’s earlier request, Consultant will deliver to the Company all of the Company’s property, including but not limited to all electronically stored information and passwords to access such property, or Confidential Information that Consultant may have in Consultant’s possession or control.

 

3.               Ownership .

 

A.             Assignment .  Consultant agrees that all copyrightable material, notes, records, drawings, designs, inventions, improvements, developments, discoveries and trade secrets conceived, discovered, developed or reduced to practice by Consultant, solely or in collaboration with others, (x) during the term of this Agreement, (y) in performing the Services under this Agreement, and (z) that relate directly to those aspects of the business of the Company that Consultant is directed to undertake, investigate or experiment with or that Consultant becomes associated with in work, investigation or experimentation in the Company’s line of business (collectively, “ Inventions ”), are the sole property of the Company.  Consultant also agrees to assign (or cause to be assigned) and hereby assigns fully to the Company all Inventions and any copyrights, patents, mask work rights or other intellectual property rights relating to all Inventions.

 

B.             Further Assurances .  Subject to Consultant’s other personal and professional commitments with respect to periods after the term of this Agreement, Consultant agrees to assist the Company, or its designee, at the Company’s expense, to secure the Company’s rights in Inventions and any copyrights, patents, mask work rights or other intellectual property rights relating to all Inventions in any and all countries, including the disclosure to the Company of all pertinent information and data with respect to all Inventions, the execution of all applications, specifications, oaths, assignments and all other instruments that the Company may deem necessary in order to apply for and obtain such rights and in order to assign and convey to the Company, its successors, assigns and nominees the sole and exclusive right, title and interest in and to all Inventions, and any copyrights, patents, mask work rights or other intellectual property rights relating to all Inventions.  The Company and Consultant agree that the time required to fulfill the obligations required pursuant to this Section 3.A will be considered time devoted to the performance of the Services.  In the event that after the term of this Agreement Consultant is required to devote more than a de minimis amount of time to assisting the Company pursuant to this Section 3(B), Consultant and the Company will negotiate in good faith to determine appropriate additional compensation to be paid to Consultant in consideration for such assistance.  Consultant also agrees that Consultant’s obligation to execute or cause to be

 

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executed any such instrument or papers only shall continue after the termination of this Agreement.

 

C.             Pre-Existing Materials .  Subject to Section 3.A , Consultant agrees that if, in the course of performing the Services, Consultant incorporates into any Invention developed under this Agreement any pre-existing invention, improvement, development, concept, discovery or other proprietary information owned by Consultant or in which Consultant has an interest, (i) Consultant will inform Company, in writing before incorporating such invention, improvement, development, concept, discovery or other proprietary information into any Invention, and (ii) the Company is hereby granted a nonexclusive, royalty-free, perpetual, irrevocable, worldwide license to make, have made, modify, use and sell such item as part of or in connection with such Invention.  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.

 

D.             Attorney-in-Fact .  Consultant agrees that, if the Company is unable because of Consultant’s unavailability, dissolution, mental or physical incapacity, or for any other reason, to secure Consultant’s signature for the purpose of applying for or pursuing any application for any United States or foreign patents or mask work or copyright registrations covering the Inventions assigned to the Company in Section 3.A , then Consultant hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Consultant’s agent and attorney-in-fact, to act for and on Consultant’s behalf to execute and file any such applications and to do all other lawfully permitted acts to further the prosecution and issuance of patents, copyright and mask work registrations with the same legal force and effect as if executed by Consultant.

 

4.               Conflicting Obligations .

 

A.             Conflicts .  Consultant certifies that Consultant has outstanding obligations to Wyeth Pharmaceuticals that Consultant believes, based upon the current business, products and prospective products of the Company, is not in conflict with any of the provisions of this Agreement or would preclude Consultant from complying with the provisions of this Agreement.  Consultant will not enter into any agreement during the term of this Agreement that materially affects Consultant’s ability to perform the Services. Consultant’s violation of this Section 4.A will be considered a material breach subject to Section 6.B .

 

B.             Substantially Similar Designs .  In view of Consultant’s access to the Company’s trade secrets and proprietary know-how, Consultant agrees that Consultant will not, without the Company’s prior written approval, design identical or substantially similar products or technologies as those developed under this Agreement for any third party during the term of this Agreement and for a period of 12 months after the termination of this Agreement.  Consultant acknowledges that the obligations in this Section 4 are ancillary to Consultant’s nondisclosure obligations under Section 2 .

 

5.               Reports .  Consultant also agrees that Consultant will, from time to time during the term of this Agreement or any extension thereof, keep the Company advised as to Consultant’s progress in performing the Services under this Agreement.  Consultant further agrees that

 

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Consultant will, as requested by the Company, prepare written reports with respect to such progress.  The Company and Consultant agree that the time required to prepare such written reports will be considered time devoted to the performance of the Services.

 

6.               Term and Termination .

 

A.             Term .  The term of this Agreement will begin on the date of this Agreement and will continue until the earlier of (i) two years from the date of execution of this Agreement or (ii) termination as provided in Section 6.B .

 

B.             Termination .  Either party may terminate this Agreement upon giving the other party 14 days’ prior written notice of such termination pursuant to Section 11.E of this Agreement.  The Company may terminate this Agreement immediately in writing and without prior notice if Consultant refuses to or is unable to perform the Services or is in breach of any material provision of this Agreement.

 

C.             Survival .  Upon such termination, all rights and duties of the Company and Consultant toward each other shall cease except:

 

(1)          The Company will pay, within 10 days after the effective date of termination, all amounts owing to Consultant for Services rendered prior to the termination date and related expenses, if any, submitted in accordance with the Company’s policies and in accordance with the provisions of Section 1 ; and

 

(2)          Section 2 (Confidentiality), Section 3 (Ownership), Section 4 (Conflicting Obligations), Section 7 (Independent Contractor; Benefits), Section 8 (Indemnification), Section 9 (Nonsolicitation) and Section 10 (Equitable Relief) will survive termination of this Agreement.  Consultant’s ownership of all stock options vested on the effective date of termination and all rights pertaining thereto shall also survive termination.

 

7.               Independent Contractor; Benefits .

 

A.             Independent Contractor .  It is the express intention of the Company and Consultant that Consultant performs the Services as an independent contractor to the Company.  Nothing in this Agreement shall in any way be construed to constitute Consultant as an agent, employee or representative of the Company except to the extent needed for the performance of the Services.  Without limiting the generality of the foregoing, Consultant is not authorized to bind the Company to any liability or obligation or to represent that Consultant has any such authority.  Consultant agrees to furnish tools and materials necessary to accomplish this Agreement and shall incur expenses associated with performance, except as expressly provided in Exhibit A .  Consultant acknowledges and agrees that Consultant is obligated to report as income all compensation received by Consultant pursuant to this Agreement.  Consultant agrees to and acknowledges the obligation to pay all self-employment and other taxes on such income.

 

B.             Benefits .  The Company and Consultant agree that Consultant will receive no Company-sponsored benefits from the Company.  If Consultant is reclassified by a state or federal agency or court as the Company’s employee, Consultant will become a reclassified employee and will receive no benefits from the Company, except those mandated by state or

 

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federal law, even if by the terms of the Company’s benefit plans or programs of the Company in effect at the time of such reclassification, Consultant would otherwise be eligible for such benefits.

 

8.               Indemnification .  Consultant agrees to indemnify and hold harmless the Company and its directors, officers and employees from and against all losses, damages, liabilities, costs and expenses, including reasonable attorneys’ fees and other legal expenses, arising directly from any violation or claimed violation of a third party’s rights by Consultant resulting in whole or in part from the Company’s use of the work product of Consultant under this Agreement.

 

9.               Nonsolicitation .  From the date of this Agreement until 12 months after the termination of this Agreement (the “ Restricted Period ”), Consultant will not, without the Company’s prior written consent, directly or indirectly, solicit or encourage any employee or contractor of the Company or its affiliates to terminate employment with, or cease providing services to, the Company or its affiliates.  During the Restricted Period, Consultant will not, whether for Consultant’s own account or for the account of any other person, firm, corporation or other business organization, intentionally interfere with any person who is or during the period of Consultant’s engagement by the Company was a partner, supplier, customer or client of the Company or its affiliates.

 

10.        Equitable Relief .  Consultant agrees that either the Company or Consultant may petition a court for provisional relief, including injunctive relief, including, but not limited to, where either the Company or Consultant alleges or claims a violation of this Agreement between Consultant and the Company or any other agreement regarding trade secrets, confidential information or nonsolicitation.  Consultant understands that any breach or threatened breach of such an agreement (including this Agreement) will cause irreparable injury and that money damages will not provide an adequate remedy therefore and both Consultant and the Company hereby consent to the issuance of an injunction.

 

11.        Miscellaneous .

 

A.             Governing Law .  This Agreement shall be governed by the laws of Massachusetts without regard to Massachusetts’ conflicts of law rules.

 

B.             Assignability .  Except as otherwise provided in this Agreement, Consultant may not sell, assign or delegate any rights or obligations under this Agreement.

 

C.             Entire Agreement .  This Agreement constitutes the entire agreement between the parties with respect to the subject matter of this Agreement and supersedes all prior written and oral agreements between the parties regarding the subject matter of this Agreement.

 

D.             Headings .  Headings are used in this Agreement for reference only and shall not be considered when interpreting this Agreement.

 

E.              Notices .  Any notice or other communication required or permitted by this Agreement to be given to a party shall be in writing and shall be deemed given if delivered personally or by commercial messenger or courier service, or mailed by U.S. registered or certified mail (return receipt requested), to the party at the party’s address written below or at

 

5



 

such other address as the party may have previously specified by like notice.  If by mail, delivery shall be deemed effective three business days after mailing in accordance with this Section 11.E .

 

(1)          If to the Company, to:

 

Genocea Biosciences, Inc
161 First Street, Suite2C
Cambridge, MA 02142

 

(2)          If to Consultant, to the address for notice on the signature page to this Agreement or, if no such address is provided, to the last address of Consultant provided by Consultant to the Company, with a copy to Berkowitz, Trager & Trager, LLC, 275 Madison Avenue, 36 th  Floor, New York, New York 10016, Attn: Steven T. Gersh, Esq.

 

F.               Attorneys’ Fees .  In any court action at law or equity that is brought by one of the parties to this Agreement to enforce or interpret the provisions of this Agreement, the prevailing party will be entitled to reasonable attorneys’ fees, in addition to any other relief to which that party may be entitled.

 

G.             Severability .  If any provision of this Agreement is found to be illegal or unenforceable, the other provisions shall remain effective and enforceable to the greatest extent permitted by law.

 

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

 

 

CONSULTANT

COMPANY

 

 

 

 

By:

/s/ George R. Siber

 

By:

/s/ Robert Paull

Name: George R. Siber

Name: Robert Paull

 

6



 

EXHIBIT A

 

Services and Compensation

 

1.               Services .  The Services shall include, but shall not be limited to, the following:

 

1)                                      Determining the general scientific and business direction of the Company,

 

2)                                      Recruiting Scientific Advisory Board Members and Consultants to the Company,

 

3)                                      Recruiting full-time management and scientific personnel to the Company,

 

4)                                      Reviewing the goals of the Company and developing strategies for achieving them,

 

5)                                      Identifying and developing relationships with potential strategic partners,

 

6)                                      Interacting with potential investors, stockholders and strategic corporate partners,

 

7)                                      Identifying and reviewing promising scientific developments and intellectual property,

 

8)                                      Providing advice, support, theories, techniques and improvements in the Company’s scientific research and product development activities,

 

9)                                      Identifying and bringing to the Company’s attention technologies, intellectual property and scientific developments in the Field(1), and

 

10)                               Identifying and helping the Company apply for third party government financing.

 

Subject to approval, Consultant will serve as the Chairman of the Company’s Board of Directors until such time as a successor is duly elected.  Consultant shall devote at least four business days per month on site at the Company’s offices or other locations as mutually agreed.  In addition, Consultant shall be available to provide timely and ongoing correspondence with the Company via email or telephone.  Notwithstanding anything to the contrary contained in this Agreement, in no event will Consultant be required to devote in excess of 40 hours per month to rendering the Services.

 

2.               Compensation .

 

A.             Throughout the term of this Agreement the Company will pay Consultant a fee of $10,416 per month in consideration for rendering the Services.  All such payments will be made monthly within ten days after the close of the calendar month.

 

B.             The Company will reimburse Consultant for all reasonable expenses incurred by Consultant in performing the Services pursuant to this Agreement as evidenced by timely and

 


(1) Field is defined as:  Immunotherapeutic approaches for the treatment of infectious diseases, cancer, autoimmune diseases and related disorders.

 

7



 

proper receipts and records.  Payments for reimbursement of reasonable expenses will be made monthly within 15 days of receipt of a documented expense report of said expenses.

 

C.             The Company will recommend at the first meeting of the Company’s Board of Directors following the effective date of this Agreement that the Company grant Consultant (at no cost to Consultant) a Restricted Stock Grant of 24,000 shares of the Company’s Common Stock vesting over the first 12 months of the term of this Agreement in equal monthly installments.

 

Further the Company will also recommend at the first meeting of the Company’s Board of Directors following the effective date of this Agreement that the Company grant Consultant a Nonqualified Stock Option to purchase 120,000 shares of the Company’s Common Stock at a price per share equal to the fair market value per share of the Common Stock on the date of grant, as determined by the Company’s Board of Directors in its sole discretion (the “Option”).  25% of the shares subject to the Option shall vest 12 months after the date Consultant begins providing the Services (provided that this Agreement has not been terminated prior to such date) and no shares shall vest before such date.  The remaining shares subject to the Option shall vest monthly over the next 36 months in equal monthly amounts subject to Consultant’s continuing to provide the Services on each such vesting date.  The Option will be exercisable until the first to occur of (x) the date that is four years after the termination of this Agreement for any reason, and (y) the date that is seven years from the data of the grant of the Option.

 

Both grants will be subject to the terms and conditions of the Company’s 2006 Stock Plan and the forms of restricted stock purchase and option agreements thereunder, including vesting requirements.  No right to any stock is earned or accrued until such time that vesting occurs, nor does the grant confer any right to continue vesting or engagement.

 

8



 

This Exhibit A is accepted and agreed as of May 16, 2007.

 

 

CONSULTANT

COMPANY

 

 

 

 

By:

/s/ George R. Siber

 

By:

/s/ Robert Paull

Name: George R. Siber

Name: Robert Paull

 

9



 

 

June 30, 2009

 

George R. Siber, M.D.

 

Dear George:

 

Genocea Biosciences, Inc. (the “Company”) would like to extend the term of your Consulting Agreement (the “Consulting Agreement”) that you and the Company entered into on May 16, 2007.  The term of the Consulting Agreement currently expires on May 16, 2009.

 

By your countersignature to this letter, you hereby agree that the term of the Consulting Agreement is extended until June 17, 2011 unless terminated earlier in accordance with Section 6.B of the Consulting Agreement.  The terms and conditions of the Consulting Agreement shall remain in full force and effect during the extension period, and you are expected to continue providing the consulting services detailed in Exhibit A of the Consulting Agreement (“Exhibit A”) throughout the extension period; provided, however, that Section 1 of Exhibit A shall be amended as follows:

 

The last paragraph of Section 1 shall be deleted in its entirety and replaced with the following language:  “Throughout the extension period, Consultant will continue to serve as the Chairman of the Company’s Board of Directors until such time as a successor is duly elected.  Consultant shall devote one business day per week on site at the Company’s Cambridge, Massachusetts office or such other mutually agreed upon location.  In addition, Consultant will use best efforts to make himself available to provide timely and ongoing correspondence with the Company via e-mail or telephone, in all cases subject to the needs of the Company and his other personal and professional commitments.  In no event will Consultant be required to devote in excess of 40 hours per month (exclusive of travel time) to rendering the Services, provided that the Company and Consultant acknowledge that, as has occurred in the past, there may be key periods of activity, such as financing and business development activities, that require Consultant to devote more than 40 hours per month, however, any commitment of Consultant’s time in excess of 40 hours per month shall be agreed mutually by the Company and Consultant.”

 

In addition to the monthly fee payable to you pursuant to Section 2(A) of Exhibit A, and in addition to the continued reimbursement of your expenses pursuant to Section 2(B) of Exhibit A, as further consideration for your services to be rendered during the extension of the Consulting Agreement, subject to approval by the Board at the first regularly scheduled meeting of the Board following the date you return an executed copy of this letter to me, the Company will grant you a Non-Qualified Stock Option (the “Option”) to purchase a number of shares of

 

10


 

the Company’s common stock that, when aggregated with all other shares of the Company’s common stock owned by you or that are subject to options held by you, equals one percent (1%) of the Company’s “Fully Diluted Equity.”  As used herein, the term “Fully Diluted Equity” shall mean (i) the number of outstanding shares of capital stock of the Company calculated on an as-converted to common stock basis, plus (ii) the number of shares subject to outstanding convertible securities calculated on an as-converted to common stock basis, plus (iii) the maximum number of shares of Series A Preferred Stock issuable at the Second Closing, as defined in the Series A Convertible Preferred Stock Purchase Agreement dated as of February 11, 2009, by and among the Company and the Investors (as defined in such Stock Purchase Agreement), such that the total value of the shares of Series A Preferred Stock is $23,125,000, plus (iv) the number of shares subject to options to acquire shares of the Company’s capital stock calculated on an as-converted to common stock basis.  The per share exercise price of the Option shall equal the fair market value per share of the common stock on the date of the grant, as determined by the Board.  The Option will be deemed to have commenced vesting, and, subject to your continuing performance of your consulting services in accordance with the terms of this letter and the Consulting Agreement, will continue to vest, in forty-eight equal monthly installments commencing March 1, 2009 and continuing through and including February 1, 2013.

 

The Option shall otherwise be subject to the terms and conditions of the Company’s Amended and Restated 2007 Equity Incentive Plan.

 

In the event of a conflict between the terms of this letter and the terms specified in the Consulting Agreement, the terms of this letter shall govern.

 

If you agree with the terms of this letter and the extension of the Consulting Agreement, please sign and date this letter in the space provided below.  A duplicate original is enclosed for your records.

 

 

Sincerely

 

 

 

GENOCEA BIOSCIENCES, INC.

 

 

 

 

 

By:

/s/ Mustapha Leavenworth Bakali

 

Mustapha Leavenworth Bakali

 

CEO & President

 

 

 

 

Agreed to and accepted:

 

 

 

Signature:

/s/ George R. Siber

 

 

George R. Siber, M.D.

 

 

 

Dated as of June 30th, 2009

 

 

11



 

GENOCEA BIOSCIENCES, INC.

 

SECOND AMENDMENT TO CONSULTING AGREEMENT

 

This Second Amendment to Consulting Agreement (the “ Amendment ”) is made as of the 16th day of December, 2010 by and among Genocea Biosciences, Inc., a Delaware corporation (the “ Company ”) and George Siber (the “ Consultant ”).  Capitalized terms used herein but not otherwise defined shall have the meanings given to such terms in the Consulting Agreement (as defined below).

 

WHEREAS, the Company and the Consultant are parties to that certain Consulting Agreement, dated as of May 16, 2007, as amended on June 30, 2009 (the “ Consulting Agreement ”);

 

WHEREAS, the Consulting Agreement may be amended by written agreement signed by the Company and the Consultant; and

 

WHEREAS, the Company and the Consultant desire to amend the Consulting Agreement as set forth herein.

 

NOW, THEREFORE, in consideration of the mutual covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the undersigned agree to amend the Consulting Agreement as follows:

 

1)              Compensation .  A new paragraph 2.D shall be added at the end of Exhibit A and shall read as follows:

 

“(D) Upon the first meeting of the Company’s Board of Directors that occurs after December 16, 2010, the Company will recommend that the Company grant Consultant (at no cost to Consultant) a nonqualified stock option on terms consistent with the Company’s standard form of nonqualified stock option to purchase 526,340 shares of common stock of the Company (the “ Shares ”) at a price equal to the fair market value of the Shares on the date of grant, as determined by the Company’s Board of Directors in its sole discretion.  The Shares shall vest as follows:

 

(i)                                      25% of the Shares shall vest immediately.

 

(ii)                                   If (a) the Company enters into a definitive research, development, collaboration or licensing agreement (a “ Development Agreement ”) with Johnson & Johnson or any other party or parties by December 31, 2011, (b) the Consultant is actively involved in participating in scientific meetings and/or discussions with the other party or parties to such Development Agreement and (c) the Company receives payments from Johnson & Johnson or any other party or parties in connection with such Development Agreement that, in the aggregate, equal at least $9,000,000 (excluding R & D FTE funding) within 365 days after the date on which the Company entered into such Development Agreement, 25% of the Shares shall vest at the expiration of such 365 day period, provided , that

 

12



 

the Consultant is providing the Services on the date of vesting and provided, further , that the number of Shares vesting pursuant to this Paragraph 2(D)(i)  will be pro-rated and rounded down to the nearest whole share to align with the percentage of payments received by the Company in connection with such Development Agreement within such 365 day period.  For example, if the Company receives $8,000,000 or 88.8% of the $9,000,000 within 365 days after the date on which it enters into such Development Agreement, 88.8% of the Shares that would otherwise vest in accordance with this Paragraph 2(D)(i) , or 116,847 Shares, shall vest.

 

(iii)                                Upon the earlier of (1) the date that is 365 days after the date on which the Company enters into a second Development Agreement with a party or parties, other than the party or parties to the Development Agreement referenced in Paragraph 2(D)(ii) , provided , that (a) such agreement is entered into no later than December 31, 2011, (b) the Consultant is actively involved in participating in scientific meetings and/or discussions with the other party or parties to such Development Agreement and (c) the Company receives payments in connection with such Development Agreement that, in the aggregate, equal at least $10,000,000 (excluding R & D FTE funding) within 365 days after entering such Development Agreement or (2) the date on which the Company receives non-dilutive funding of no less than $5,000,000, 25% of the Shares shall vest, provided that the Consulting is providing the Services on the date of vesting and provided, further , that any Shares vesting pursuant to Paragraph 2(D)(iii)(1)  will be pro-rated and rounded down to the nearest whole share to align with the percentage of payments received in connection with such Development Agreement within such 365 day period.  For example, if the Company receives $8,000,000 or 80% of the $10,000,000 within 365 days after the date on which it enters into such Development Agreement, 80% of the Shares that would otherwise vest in accordance with Paragraph 2(D)(iii)(1) , or 105,268 Shares, shall vest.

 

(iv)                               If the Company’s Investigational New Drug application for the HSV2-Tx program is filed with the United States Food and Drug Administration (“ FDA ”) and is accepted by the FDA no later than January 31, 2012, then 25% of the Shares shall vest on the date of such acceptance, provided that the Consultant is providing the Services on such date.”

 

2)              Miscellaneous .

 

a)                                      Continuation of Agreement .  Except as amended hereby, the Consulting Agreement shall remain in full force and effect.

 

b)                                      Entire Agreement .  The Consulting Agreement, as amended hereby, constitutes the entire agreement between Consultant and the Company with regard to the subject matter hereof.  The Consulting Agreement, as amended hereby, is

 

13



 

the complete, final, and exclusive embodiment of their agreement with regard to the subject matter thereof and supersedes any prior oral discussions or written communications and agreements.

 

c)                                       Severability .  Whenever possible, each provision of the Consulting Agreement, as amended hereby, will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of the Consulting Agreement, as amended hereby, is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but the Consulting Agreement, as amended hereby, and will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provisions had never been contained in the Consulting Agreement or this Amendment.

 

d)                                      Governing Law .  This Amendment shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, without regard to conflicts of law principles thereof.

 

e)                                       Counterparts .  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 and the same instrument.  This Amendment may also be executed and delivered by facsimile signature and in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

[Remainder of page intentionally left blank.]

 

14



 

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

 

 

 

COMPANY

 

 

 

 

 

/s/ William D. Clark

 

Name:

William D. Clark

 

Title:

President and Chief Executive Officer

 

 

 

 

 

CONSULTANT

 

 

 

 

 

/s/ George Siber

 

Name:

George Siber

 



 

GENOCEA BIOSCIENCES, INC.

 

THIRD AMENDMENT TO CONSULTING AGREEMENT

 

This Third Amendment to Consulting Agreement (the “ Amendment ”) is made as of the 15th day of June, 2011 (the “ Amendment Date ”) by and between Genocea Biosciences, Inc., a Delaware corporation (the “ Company ”) and George Siber (the “ Consultant ”).  Capitalized terms used herein but not otherwise defined shall have the meanings given to such terms in the Consulting Agreement (as defined below).

 

WHEREAS, the Company and the Consultant are parties to that certain Consulting Agreement, dated as of May 16, 2007, as amended on June 30, 2009 and December 16, 2010 (the “ Consulting Agreement ”);

 

WHEREAS, the term of the Consulting Agreement currently expires on June 17, 2011;

 

WHEREAS, the Consulting Agreement may be amended by written agreement signed by the Company and the Consultant; and

 

WHEREAS, the Company and the Consultant desire to amend the Consulting Agreement as set forth herein.

 

NOW, THEREFORE, in consideration of the mutual covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the undersigned agree to amend the Consulting Agreement as follows:

 

3)              Term .  As of the Amendment Date, the term of the Consulting Agreement is extended until June 17, 2013.

 

4)              Change of Control .  A new paragraph 2.E shall be added at the end of Exhibit A and shall read as follows:

 

“(E)  All Options granted to the Consultant by the Company pursuant to the Agreement will become vested and exercisable in full if (i) the Consultant is still employed by the Company at the time of a “Change of Control” (as defined below) and (ii) within twelve (12) months following such Change of Control, the Company or its successor terminates this Agreement without “Cause” (as defined below).  For purposes of clarity, if this Agreement expires by its term within twelve (12) months following a “Change of Control” and the Company or its successor does not offer to extend the term of this Agreement on substantially the same terms as provided herein, such failure shall be considered a termination without Cause and shall result in all Options granted to the Consultant to become vested and exercisable in full pursuant to this Section (E).  The period for exercising such Options shall be as set forth in the applicable stock option plan, certificate or agreement.  All Options outstanding on the date hereof shall be deemed amended hereby to include the provisions of this Section (E).

 



 

“Change of Control” shall mean (i) a merger or consolidation in which (A) the Company is a constituent party, or (B) 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 in the case of either clause (A) or (B) any such merger or consolidation involving the Company or a subsidiary of the Company in which the beneficial owners of the shares of capital stock of the Company outstanding immediately prior to such merger or consolidation continue beneficially to own, immediately following such merger or consolidation, at least a majority by voting power of the capital stock of (x) the surviving or resulting corporation or (y) 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; (ii) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Company or a Company subsidiary of all or substantially all the assets of the Company and the Company subsidiaries taken as a whole (except in connection with a merger or consolidation not constituting a Change of Control under clause (i) or where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned Company subsidiary); or (iii) the sale or transfer, in a single transaction or series of related transactions, by the stockholders of the Company of more than 50% by voting power of the then-outstanding capital stock of the Company to any person or entity or group of affiliated persons or entities.

 

“Cause” shall mean: (i) commission of, or indictment or conviction of, any felony or any other crime involving dishonesty; (ii) participation in any fraud, deliberate and substantial misconduct, breach of duty of loyalty or breach of fiduciary duty against the Company; (iii) intentional and substantial damage to any property of the Company; (iv) serious misconduct by the Consultant; (v) unsatisfactory performance of the Consultant’s duties; or (vi) the Consultant’s breach of any material provision of this Agreement, the invention and non-disclosure agreement or non-competition and non-solicitation agreement executed by the Consultant with the Company.

 

5)              Miscellaneous .

 

a)                                      Continuation of Agreement .  Except as amended hereby, the Consulting Agreement shall remain in full force and effect.

 

b)                                      Entire Agreement .  The Consulting Agreement, as amended hereby, constitutes the entire agreement between Consultant and the Company with regard to the subject matter hereof.  The Consulting Agreement, as amended hereby, is the complete, final, and exclusive embodiment of their agreement with regard to the subject matter thereof and supersedes any prior oral discussions or written communications and agreements.

 

c)                                       Severability .  Whenever possible, each provision of the Consulting Agreement, as amended hereby, will be interpreted in such manner as to be effective and

 



 

valid under applicable law, but if any provision of the Consulting Agreement, as amended hereby, is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but the Consulting Agreement, as amended hereby, and will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provisions had never been contained in the Consulting Agreement or this Amendment.

 

d)                                      Governing Law .  This Amendment shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, without regard to conflicts of law principles thereof.

 

e)                                       Counterparts .  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 and the same instrument.  This Amendment may also be executed and delivered by facsimile signature and in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

[Remainder of page intentionally left blank.]

 



 

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

 

 

 

COMPANY

 

 

 

 

 

/s/ William D. Clark

 

Name:

William D. Clark

 

Title:

President & CEO

 

 

 

 

 

CONSULTANT

 

 

 

 

 

/s/ George Siber

 

Name:

George Siber

 



 

GENOCEA BIOSCIENCES, INC.

 

FOURTH AMENDMENT TO CONSULTING AGREEMENT

 

This Fourth Amendment to Consulting Agreement (the “ Amendment ”) is made as of the 5th day of June, 2013 (the “ Amendment Date ”) by and between Genocea Biosciences, Inc., a Delaware corporation (the “ Company ”) and George Siber (the “ Consultant ”).  Capitalized terms used herein but not otherwise defined shall have the meanings given to such terms in the Consulting Agreement (as defined below).

 

WHEREAS, the Company and the Consultant are parties to that certain Consulting Agreement, dated as of May 16, 2007, as amended on June 30, 2009 and December 16, 2010 (the “ Consulting Agreement ”);

 

WHEREAS, the term of the Consulting Agreement currently expires on June 17, 2013;

 

WHEREAS, the Consulting Agreement may be amended by written agreement signed by the Company and the Consultant; and

 

WHEREAS, the Company and the Consultant desire to amend the Consulting Agreement as set forth herein.

 

NOW, THEREFORE, in consideration of the mutual covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the undersigned agree to amend the Consulting Agreement as follows:

 

6)              Term .  As of the Amendment Date, the term of the Consulting Agreement is extended until June 17, 2015.

 

7)              Miscellaneous .

 

a)                                      Continuation of Agreement .  Except as amended hereby, the Consulting Agreement shall remain in full force and effect.

 

b)                                      Entire Agreement .  The Consulting Agreement, as amended hereby, constitutes the entire agreement between Consultant and the Company with regard to the subject matter hereof.  The Consulting Agreement, as amended hereby, is the complete, final, and exclusive embodiment of their agreement with regard to the subject matter thereof and supersedes any prior oral discussions or written communications and agreements.

 

c)                                       Severability .  Whenever possible, each provision of the Consulting Agreement, as amended hereby, will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of the Consulting Agreement, as amended hereby, is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but the Consulting Agreement, as amended hereby, and will be reformed, construed and enforced in such

 



 

jurisdiction as if such invalid, illegal or unenforceable provisions had never been contained in the Consulting Agreement or this Amendment.

 

d)                                      Governing Law .  This Amendment shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, without regard to conflicts of law principles thereof.

 

e)                                       Counterparts .  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 and the same instrument.  This Amendment may also be executed and delivered by facsimile signature and in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

[Remainder of page intentionally left blank.]

 



 

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

 

 

 

COMPANY

 

 

 

 

 

/s/ Robert E. Farrell, Jr.

 

Name:

Robert E. Farrell, Jr.

 

Title:

VP Finance and Admin

 

 

 

 

 

CONSULTANT

 

 

 

 

 

/s/ George R. Siber

 

Name:

George Siber

 




Exhibit 10.12

 

 

Genocea Biosciences, Inc.

 

March 7, 2011

 

William D. Clark

 

Dear Chip:

 

I am pleased to offer you a position with Genocea Biosciences, Inc. (the “Company”), as President and Chief Executive Officer, reporting directly to the Board of Directors (the “Board”).  You will additionally serve as a director on the Board for so long as you remain employed by the Company as its President and Chief Executive Officer, and you will be deemed to have resigned from the Board at the time you cease to be the President and Chief Executive Officer of the Company for any reason.  You will be expected to devote your full business time and your best professional efforts to the performance of your duties and responsibilities to the Company, and to abide by all Company policies and procedures as in effect from time to time.  You will be expected to perform all of the customary duties of your position, together with such other duties as may reasonably be assigned to you from time to time.  Moreover, during your employment with the Company, you will be expected to conduct your business activities at all times in accordance with the highest legal, ethical and professional standards.

 

You shall be paid at an annual base rate of $320,000 per year in accordance with Genocea’s standard payroll practices.  You shall additionally be eligible to receive a discretionary, performance-based bonus with a target of up to 40% of your annual base salary.  Payment of this bonus, if any, will be subject to criteria determined and approved by the Board in its sole discretion.

 

As an employee, you will also be eligible to participate in the Company’s standard employee benefit programs.  You should note that the Company may modify or terminate employee benefits from time to time as it deems necessary.  You will accrue vacation at the rate of 4 weeks per year, to be taken at such time as the needs of the Company’s business reasonably permit.  You shall not, however, be allowed to carry over unused vacation from one year to the next.

 

Subject to approval by the Board, at the first regularly scheduled meeting of the Board following the effective date hereof, the Company will grant you an option (the “Option”) to Purchase Four Million Fifty-Two Thousand Seven Hundred Seventy (4,052,770) shares of the Company’s common stock, in order to bring your cumulative equity position to 4.5% of the Company’s fully diluted shares.  The per share exercise price of each Option shall equal the fair market value per share of the common stock on the date of the grant, as determined by the Board.  Twenty-five percent (25%) of the shares subject to the Option shall vest twelve (12) months after the date of the grant, subject to your continuing employment with the Company, and no shares shall vest before such date.  The remaining shares shall vest monthly over the next 36 months, in equal monthly amounts, subject to your continuing employment with the Company.

 



 

You will also be eligible for annual grants of Options, said grants to be made in the sole discretion of the Board.  Each of the Options shall be granted under, and shall be subject to the terms and conditions of, the Company’s 2007 Stock Plan.

 

All Options granted to you by the Company will become vested and exercisable in full if you are still employed by the Company at the time of a “Change of Control” (as defined below) and within twelve (12) months following such “Change of Control”, the Company or its successor terminates your employment without “Cause” (as defined below) or you voluntarily terminate your employment for “Good Reason” (as defined below).  The period for exercising such Options shall be as set forth in the applicable stock option plan, certificate or agreement.

 

A “Change of Control” shall mean, for purposes of the foregoing paragraph, (i) a merger or consolidation in which (A) the Company is a constituent party, or (B) 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 in the case of either clause (A) or (B) any such merger or consolidation involving the Company or a subsidiary of the Company in which the beneficial owners of the shares of capital stock of the Company outstanding immediately prior to such merger or consolidation continue beneficially to own, immediately following such merger or consolidation, at least a majority by voting power of the capital stock of (x) the surviving or resulting corporation or (y) 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; (ii) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Company or a Company subsidiary of all or substantially all the assets of the Company and the Company subsidiaries taken as a whole (except in connection with a merger or consolidation not constituting a Change of Control under clause (i) or where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned Company subsidiary); or (iii) the sale or transfer, in a single transaction or series of related transactions, by the stockholders of the Company of more than 50% by voting power of the then-outstanding capital stock of the Company to any person or entity or group of affiliated persons or entities.

 

In the event that your employment were to be terminated by you for “Good Reason” or by the Company without “Cause” (each, as defined below), you will receive severance of twelve (12) months of your salary then in effect.  Your severance payment will be made in the form of salary continuation in accordance with the following paragraph.

 

Any obligation of the Company to provide you severance payments following termination is conditioned on your signing an effective release of claims in the form provided by the Company (the “Employee Release”) following the termination of your employment, which release shall not apply to (i) claims for indemnification in your capacity as an officer or director of the Company under the Company’s Certificate of Incorporation, By-laws or written agreement, if any, providing for director or officer indemnification, (ii) rights to receive insurance payments under any policy maintained by the Company and (iii) rights to receive retirement benefits that are accrued and fully vested at the time of your termination.  Any severance payments to be made in the form of salary continuation pursuant to the terms of this Agreement shall be payable in accordance with the normal payroll practices of the Company, and will begin at the Company’s next regular payroll period following the effective date of the Employee Release, but shall be retroactive to the date of termination.

 

As used in this letter, “Cause” shall mean: (a) commission of, or indictment or conviction of, any felony or any other crime involving dishonesty; (b) participation in any fraud, deliberate and substantial misconduct, breach of duty of loyalty or breach of fiduciary duty against the Company; (c) intentional and

 



 

substantial damage to any property of the Company; (d) serious misconduct by you;  (e) unsatisfactory performance of your duties; or (f) your breach of any material provision of this Agreement, the invention and non-disclosure agreement or non-competition and non-solicitation agreement executed by you with the Company.  Termination of your employment with Cause at any time will result in no severance pay.

 

As used in this letter, “Good Reason” shall mean: (1) a material and adverse diminution of your duties with the Company, or (2) a material breach by the Company of this Agreement; provided, neither of the foregoing shall qualify as Good Reason unless, within 30 days of the occurrence of the event you claim so qualifies, you shall have provided the Board of Directors of the Company with written notice specifying in detail the basis for such claim, and afforded it a reasonable opportunity to cure the claimed Good Reason, and the Company fails to cure such Good Reason within 30 days of its receipt of your notice; provided further, no termination for Good Reason shall so qualify unless you shall terminate your employment at the Company no more than 30 days following the expiration of the Company’s cure period.

 

The Company is excited about your joining and looks forward to a mutually beneficial and productive relationship.  Nevertheless, you should be aware that your employment with the Company is for no specified period, and constitutes at-will employment.  As a result, you are free to resign at any time, for any reason or for no reason.  Similarly, the Company is free to conclude its employment relationship with you at any time, with or without cause, and with or without notice.

 

The Company reserves the right to conduct background investigations and/or reference checks on all of its potential employees.  Your continued employment, therefore, is contingent upon a clearance of such a background investigation and/or reference check, if any.

 

We also ask that, if you have not already done so, you disclose to the Company any and all agreements relating to your prior employment that may affect your eligibility to be employed by the Company as its President and Chief Executive Officer or limit the manner in which you may carry out your duties.  It is the Company’s understanding that any such agreements will not prevent you from performing the duties of your position and you represent that such is the case.  Moreover, you agree that, during the term of your full-time employment with the Company, you 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 your employment, nor will you engage in any other activities that conflict with your obligations to the Company.  Similarly, you agree not to bring any third party confidential information to the Company, including that of your former employer, and that in performing your duties for the Company you will not in any way utilize any such information.

 

The Company maintains a smoke-free, drug-free workplace policy and supports equal employment opportunities for all of its employees.  As a Company employee, you will be expected to abide by the Company’s rules and standards.

 

As a condition of your employment, you are also required to sign and comply with an At-Will Employment, Confidential Information, Invention Assignment and Non-Competition Agreement which requires, among other provisions, the assignment of patent rights to any invention made during your employment at the Company, non-disclosure of Company proprietary information and an agreement not to engage in competitive activities with the Company through the twelve-month period following the termination of your employment.  Please note that we must receive your signed Agreement promptly.

 



 

To accept the Company’s offer, please sign and date this letter in the space provided below.  A duplicate original is enclosed for your records.  If you accept our offer, your first day of employment as President and Chief Executive Officer, and your compensation arrangements as recited herein, will be retroactive to January 26, 2011.

 

This letter, along with any agreements relating to proprietary rights between you and the Company, set forth the terms of your employment with the Company and supersede any prior representations or agreements including, but not limited to, any representations made during your recruitment, interviews or pre-employment negotiations, whether written or oral.  This letter, including, but not limited to, its at-will employment provision, may not be modified or amended except by a written agreement signed by the Chairman of the Board of the Company and you.

 

We look forward to your favorable reply and to working with you at Genocea Biosciences, Inc.

 

 

Sincerely,

 

 

 

 

 

/s/ Kevin Bitterman

 

Name:

Kevin Bitterman

 

Title:

Director and Chairman of the Compensation Committee

 

 

 

 

Agreed to and accepted:

 

 

 

Signature:

/s/ William D. Clark

 

 

 

 

Printed Name:

William D. Clark

 

 

 

Date:

March 7, 2011

 

 

Enclosures

Duplicate Original Letter

At-Will Employment, Confidential Information, Invention Assignment and Non-Competition Agreement

 




Exhibit 10.13

 

 

October 4, 2010

 

Seth V. Hetherington

 

Dear Seth:

 

I am pleased to offer you a position with Genocea Biosciences, Inc. (the “Company”), as Chief Medical Officer (CMO) reporting to the CEO. Your primary responsibilities will be leading and directing the Research & Development efforts of the company. As CMO you will also be expected to provide scientific leadership, formulate and recommend to the Board of Directors the Company’s portfolio strategy, as well as oversee the company’s external scientific partnerships. If you decide to join the Company, you shall be paid on a semi-monthly basis at an annual base rate of $315,000 to be paid in accordance with Genocea’s standard payroll practices. You will also be eligible for a discretionary performance-based bonus with a target of up to 30% of your annual salary subject to criteria to be determined and approved by the Board of Directors of the Company.

 

Due to your commuting to the Boston area, the Company will allow you to commute from your home in North Carolina and work 5 days per week in Cambridge Mass until June 30, 2011. The Company will be flexible to allow you to work on Friday’s in North Carolina on occasion but not the norm.  During this time, the Company will reimburse you for your hotel/ rented apartment and coach airfare, transportation to and from Logan airport, and cost of parking at the Raleigh Durham airport.

 

Additionally, the Company will reimburse you for reasonable expenses associated with the transport of your household (“relocation package”), upon submission of supporting documentation and receipts, including:

 

·                   Full reimbursement of reasonable moving expenses including the actual cost of packing, shipping, unpacking and placing household goods from one residence.  This includes full value insurance.

 

·                   One trip to Boston (spouse included) for the purpose of finding a residence.  Reimbursement of hotel, coach airfare, rental car, and incidental expenses.

 

·                   Temporary storage of household goods (not to exceed 90 days).

 

The expenses eligible for reimbursement under this letter in any year shall not affect any expenses eligible for reimbursement or in-kind benefits in any other year.  Your rights under this letter concerning reimbursements are not subject to liquidation or exchange for any other benefit.

 



 

In addition, you will receive a one-time sign-on bonus of $60,000 to be paid upon relocation.  If you decide to leave the Company without Good Reason  or you are terminated for Causewithin 12 months of employment, you will be responsible to pay back the sign-on bonus

 

As an employee, you will also be eligible to participate in the Company’s standard employee benefit programs. You should note that the Company may modify job titles, salaries, and benefits from time to time as it deems necessary.

 

Subject to approval by the Board, at the first regularly scheduled meeting of the Board following the Effective Date, the Company will grant you an option (the “Option”) to purchase 880,202(1.67% of fully diluted) shares of the Company’s common stock. The per share exercise price of each Option shall equal the fair market value per share of the common stock on the date of the grant, as determined by the Company’s Board. Twenty-five percent (25%) of the shares subject to the Options shall vest twelve (12) months after the date of the grant, subject to your continuing employment with the Company, and no shares shall vest before such date. The remaining shares shall vest monthly over the next thirty-six (36) months, in equal monthly amounts, subject to your continuing employment with the Company.

 

Additionally, at the first regularly scheduled meeting of the Board following the Effective Date, the Company will grant you an option to purchase 304,067 (0.58% of fully diluted) shares of the Company’s common stock (the “Milestone Option”) subject to vesting upon attainment of the following milestone as described in this paragraph. The Milestone Option will be met upon the achievement of the initiation of the HSV2 Therapeutic Phase 1 trial. The per share exercise price of each Option shall equal the fair market value per share of the common stock on the date of the grant, as determined by the Company’s Board.

 

You will also be eligible for annual grants of Options, said grants to be made in the sole discretion of the Board. Each of the Options shall be granted under, and shall be subject to the terms and conditions of, the Company’s 2007 Stock Plan.

 

All options granted to you by the Company will become vested and exercisable in full if you are still employed by the Company at the time of a “change of control” (as defined below) and within twelve (12) months following such “change of control”, the Company or its successor terminates your employment without “Cause” (as defined below) or you voluntarily terminate your employment for “Good Reason” (as defined below). The period for exercising such Options shall be as set forth in the applicable stock option plan, certificate or agreement.

 

A “Change of Control” shall mean, for purposes of the foregoing paragraph, (i) a merger or consolidation in which (A) the Company is a constituent party, or (B) 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 in the case of either clause (A) or (B) any such merger or consolidation involving the Company or a subsidiary of the Company in which the beneficial owners of the shares of capital stock of the Company outstanding immediately prior to such merger or consolidation continue beneficially to own, immediately following such merger or consolidation, at least a majority by voting power of the capital stock of (x) the surviving or resulting corporation or (y) 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; (ii) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Company or a Company subsidiary of all or substantially all the assets of the Company and the Company subsidiaries taken as a whole (except in

 



 

connection with a merger or consolidation not constituting a Change of Control under clause (i) or where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned Company subsidiary); or (iii) the sale or transfer, in a single transaction or series of related transactions, by the stockholders of the Company of more than 50% by voting power of the then-outstanding capital stock of the Company to any person or entity or group of affiliated persons or entities.

 

In the event that your employment were to be terminated by you for “Good Reason” or, after nine (9) months of your employment, by the Company without “Cause” (each, as defined below), you will receive severance of six (6) months of salary then in effect, together with reimbursement for the cost of up to six (6) months of COBRA premiums for continued health benefit coverage (for so long as you are eligible for such coverage through COBRA). Your severance payment will be made in the form of salary continuation in accordance with the following paragraph.

 

Any obligation of the Company to provide you severance payments or other benefits following termination is conditioned on your signing an effective release of claims in the form provided by the Company (the “Employee Release”) following the termination of your employment, which release shall not apply to (i) claims for indemnification in your capacity as an officer or director of the Company under the Company’s Certificate of Incorporation, By-laws or written agreement, if any, providing for director or officer indemnification, (ii) rights to receive insurance payments under any policy maintained by the Company and (iii) rights to receive retirement benefits that are accrued and fully vested at the time of your termination. Any severance payments to be made in the form of salary continuation pursuant to the terms of this Agreement shall be payable in accordance with the normal payroll practices of the Company, and will begin at the Company’s next regular payroll period following the effective date of the Employee Release, but shall be retroactive to the date of termination. You agree to provide the Company prompt notice of your eligibility to participate in the health plan and, if applicable, dental plan of any employer. You further agree to repay any overpayment of health benefit premiums made by the Company hereunder.

 

It is intended that this letter shall conform with all applicable Section 409A requirements to the extent Section 409A applies to any provisions of the letter, and that payments be interpreted as exempt from Section 409A where possible.  Accordingly, in interpreting, construing or applying any provisions of the Letter, the same shall be construed in such manner as shall meet and comply with Section 409A, and in the event of any inconsistency with Section 409A, the same shall be reformed so as to meet the requirements of Section 409A.

 

As used in this letter, “Cause” shall mean: (a) commission of, or indictment or conviction of, any felony or any other crime involving dishonesty; (b) participation in any fraud, deliberate and substantial misconduct, breach of duty of loyalty or breach of fiduciary duty against the Company; (c) intentional and substantial damage to any property of the Company; (d) serious misconduct by you which reflects adversely upon the company; (e) unsatisfactory performance of your material duties; or (f) your breach of any material provision of this Agreement, the invention and non-disclosure agreement or non-competition and non-solicitation agreement executed by you with the Company.  Provided, however, that neither section (e) nor (f) shall constitute “Cause” unless within 30 days of the occurrence of the event the Company claims so qualifies, the Company shall have provided you with written notice specifying in detail the basis for such claim, and a reasonable opportunity to cure the claimed unsatisfactory performance or breach, and you fail to cure such unsatisfactory performance or breach within 30 days of your receipt of the Company’s notice.  Termination of your employment with Cause at any time or without Cause in the first nine (9) months of your employment will result in no severance pay.

 



 

As used in this letter, “Good Reason” shall mean: (1) a material and adverse diminution of your duties with the Company, (2) a material breach by the Company of this Agreement; provided, none of the foregoing shall qualify as Good Reason unless, within 30 days of the occurrence of the event you claim so qualifies, you shall have provided the Board of Directors of the Company with written notice specifying in detail the basis for such claim, and a reasonable opportunity to cure the claimed Good Reason, and the Company fails to cure such Good Reason within 30 days of its receipt of your notice; provided further, no termination for Good Reason shall so qualify unless you shall terminate your employment at the Company no more than 30 days following the expiration of the Company’s cure period.

 

The Company is excited about your joining and looks forward to a mutually beneficial and productive relationship. Nevertheless, you should be aware that your employment with the Company is for no specified period and constitutes at-will employment. As a result, you are free to resign at any time, for any reason or for no reason. Similarly, the Company is free to conclude its employment relationship with you at any time, with or without cause, and with or without notice.

 

The Company reserves the right to conduct background investigations and/or reference checks on all of its potential employees. Your job offer, therefore, is contingent upon a clearance of such a background investigation and/or reference check, if any.

 

For purposes of federal immigration law, you will be required to provide to the Company documentary evidence of your identity and eligibility for employment in the United States. Such documentation must be provided to us within three (3) business days of your date of hire, or our employment relationship with you may be terminated.

 

We also ask that, if you have not already done so, you disclose to the Company any and all agreements relating to your prior employment that may affect your eligibility to be employed by the Company or limit the manner in which you may be employed. It is the Company’s understanding that any such agreements will not prevent you from performing the duties of your position and you represent that such is the case. Moreover, you agree that, during the term of your full-time employment with the Company, you 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 your employment, nor will you engage in any other activities that conflict with your obligations to the Company. Similarly, you agree not to bring any third party confidential information to the Company, including that of your former employer, and that in performing your duties for the Company you will not in any way utilize any such information.

 

The Company maintains a smoke-free, drug-free workplace policy and supports equal employment opportunities for all of its employees. As a Company employee, you will be expected to abide by the Company’s rules and standards.

 

As a condition of your employment, you are also required to sign and comply with an At-Will Employment, Confidential Information, Invention Assignment and Non-Competition Agreement which requires, among other provisions, the assignment of patent rights to any invention made during your employment at the Company, non-disclosure of Company proprietary information and an agreement not to engage in competitive activities with the Company through the twelve-month period following the termination of your employment. Please note that we must receive your signed Agreement before your first day of employment.

 



 

To accept the Company’s offer, please sign and date this letter in the space provided below. A duplicate original is enclosed for your records. If you accept our offer, your first day of employment will be on or before January 1, 2011 .

 

This letter, along with any agreements relating to proprietary rights between you and the Company, set forth the terms of your employment with the Company and supersede any prior representations or agreements including, but not limited to, any representations made during your recruitment, interviews or pre-employment negotiations, whether written or oral. This letter, including, but not limited to, its at-will employment provision, may not be modified or amended except by a written agreement signed by the Chief Executive Officer of the Company and you.

 

We look forward to your favorable reply and to working with you at Genocea Biosciences, Inc.

 

 

Sincerely,

 

 

 

 

 

/s/ Russell G. Greig

 

Russell G. Greig

 

Interim CEO & President

 

 

 

 

 

Agreed to and accepted:

 

 

 

 

 

Signature:

/s/ Seth Hetherington, M.D.

 

 

 

 

 

 

Printed Name:

Seth Hetherington, M.D.

 

 

 

 

 

Date:

October 26, 2010

 

 

 

 

Enclosures

Duplicate Original Letter

At-Will Employment, Confidential Information, Invention Assignment and Non-Competition Agreement

 




Exhibit 10.14

 

 

Genocea Biosciences, Inc.

 

December 21, 2009

 

Paul J. Giannasca, Ph.D.

 

Dear Paul:

 

I am pleased to offer you a position with Genocea Biosciences, Inc. (the “Company”), as Vice President, Development reporting to the CEO. If you decide to join the Company, you shall be paid on a semi-monthly basis at an annual base rate of $235,000 to be paid in accordance with Genocea’s standard payroll practices.  You will also be eligible for a discretionary performance-based bonus with a target of up to 25% of your annual salary ; subject to criteria to be determined and approved by the Board of Directors of the Company.

 

As an employee, you will also be eligible to participate in the Company’s standard employee benefit programs.  You should note that the Company may modify job titles, salaries, and benefits from time to time as it deems necessary.

 

Subject to approval by the Board, at the first regularly scheduled meeting of the Board following the Effective Date, the Company will grant you an option (the “Option”) to purchase 289,350 shares of the Company’s common stock (the “Option Shares”). The per share exercise price of the Option shall equal the fair market value per share of the common stock on the date of the grant, as determined by the Company’s Board. Twenty-five percent (25%) of the shares subject to the Options shall vest twelve (12) months after your vesting begins, subject to your continuing employment with the Company, and no shares shall vest before such date.  The remaining shares shall vest monthly over the next thirty-six (36) months, in equal monthly amounts, subject to your continuing employment with the Company.  You will also be eligible for annual grants of Options, said grants to be made in the sole discretion of the Board.  Each of the Options shall be granted under, and shall be subject to the terms and conditions of, the Company’s 2007 Stock Plan.

 

This Agreement is subject to the terms and conditions of the Company 2007 Stock Plan and all other plans, agreements and policies.  It is agreed and understood, however, that the provisions of this Agreement shall control and take precedence in the event of any conflict with any other agreement, plan or policy.

 

The Company is excited about your joining and looks forward to a mutually beneficial and productive relationship.  Nevertheless, you should be aware that your employment with the Company is for no specified period and constitutes at-will employment.  As a result, you are free to resign at any time, for any reason or for no reason.  Similarly, the Company is free to conclude its employment relationship with you at any time, with or without cause, and with or without notice.

 



 

The Company reserves the right to conduct background investigations and/or reference checks on all of its potential employees.  Your job offer, therefore, is contingent upon a clearance of such a background investigation and/or reference check, if any.

 

For purposes of federal immigration law, you will be required to provide to the Company documentary evidence of your identity and eligibility for employment in the United States.  Such documentation must be provided to us within three (3) business days of your date of hire, or our employment relationship with you may be terminated.

 

We also ask that, if you have not already done so, you disclose to the Company any and all agreements relating to your prior employment that may affect your eligibility to be employed by the Company or limit the manner in which you may be employed.  It is the Company’s understanding that any such agreements will not prevent you from performing the duties of your position and you represent that such is the case.  Moreover, you agree that, except as stated above regarding your initial part-time employment, during the term of your full-time employment with the Company, you 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 your employment, nor will you engage in any other activities that conflict with your obligations to the Company.  Similarly, you agree not to bring any third party confidential information to the Company, including that of your former employer, and that in performing your duties for the Company you will not in any way utilize any such information.

 

The Company maintains a smoke-free, drug-free workplace policy and supports equal employment opportunities for all of its employees.  As a Company employee, you will be expected to abide by the Company’s rules and standards.

 

As a condition of your employment, you are also required to sign and comply with an At-Will Employment, Confidential Information, Invention Assignment and Non-Competition Agreement which requires, among other provisions, the assignment of patent rights to any invention made during your employment at the Company, non-disclosure of Company proprietary information and an agreement not to engage in competitive activities with the Company through the twelve-month period following the termination of your employment.  Please note that we must receive your signed Agreement before your first day of employment.

 

To accept the Company’s offer, please sign and date this letter in the space provided below.  A duplicate original is enclosed for your records.  If you accept our offer, your first day of employment will be on or before January 25, 2010.

 

This letter, along with any agreements relating to proprietary rights between you and the Company, set forth the terms of your employment with the Company and supersede any prior representations or agreements including, but not limited to, any representations made during your recruitment, interviews or pre-employment negotiations, whether written or oral.  This letter, including, but not limited to, its at-will employment provision, may not be modified or amended except by a written agreement signed by the Chief Executive Officer of the Company and you.  This offer of employment will terminate if it is not accepted, signed and returned by 5:00 p.m. on December 23, 2009. We look forward to your favorable reply and to working with you at Genocea Biosciences, Inc.

 



 

 

 

Sincerely,

 

 

 

 

 

 

 

 

/s/ Staph Leavenworth Bakali

 

 

Staph Leavenworth Bakali

 

 

CEO & President

 

 

 

 

 

 

Agreed to and accepted:

 

 

 

 

Signature:

/s/ Paul Giannasca

 

 

 

 

 

 

Printed Name:

Paul Giannasca

 

 

 

 

 

Date:

22 Dec 2009

 

 

 

 

Enclosuresp

Duplicate Original Letter

At-Will Employment, Confidential Information, Invention Assignment and Non-Competition Agreement

 



 

 

Genocea Biosciences, Inc.

 

October 24, 2011

 

Paul Giannasca Ph.D.

 

Dear Paul:

 

Reference is hereby made to your offer letter dated as of December 21, 2009 (the “Offer Letter”) with Genocea Biosciences, Inc. (the “Company”).  This letter amends the terms and provisions of your Offer Letter (together, the “Agreement”).

 

If you are still employed by the Company at the effective time of an “Upside Change of Control” (as defined below) and, within twelve (12) months following such Upside Change of Control, the Company or its successor terminates your employment without “Cause” (as defined below) or you voluntarily terminate your employment for “Good Reason” (as defined below) (each, a “Termination Date”), any Options granted to you by the Company that would vest within twelve (12)  months of the Termination Date will become immediately vested and exercisable in full on such Termination Date.  The period for exercising such Options shall be as set forth in the applicable stock option plan, certificate or agreement.

 

In the event that your employment is terminated at any time by you for “Good Reason” or by the Company without “Cause” (each, as defined below), you will receive severance compensation equal to two (2) months of your base salary then in effect, together with reimbursement for the cost of up to two (2) months of COBRA premiums for continued health benefit coverage (for so long as you are eligible for such coverage through COBRA and are not able to participate in the health or dental insurance plan of another employer).  You agree to provide the Company prompt notice of your eligibility to participate in the health plan and, if applicable, dental plan of any new employer.  You further agree to repay any overpayment of health and dental benefit premiums made by the Company hereunder.

 

Notwithstanding the preceding paragraph, in the event that your employment is terminated  by you for “Good Reason” or by the Company without “Cause” (each, as defined below), in each case within twelve (12) months following an Upside Change of Control, you will receive severance compensation equal to six (6) months of your base salary then in effect, together with reimbursement for the cost of up to six (6) months of COBRA premiums for continued health benefit coverage (for so long as you are eligible for such coverage through COBRA and are not able to participate in the health or dental insurance plan of another employer).  You agree to provide the Company prompt notice of your eligibility to participate in the health plan and, if applicable, dental plan of any new employer (in the aggregate, the

 



 

“Severance Payments”).  You further agree to repay any overpayment of health and dental benefit premiums made by the Company hereunder.  For purposes of clarity, if you receive any compensation or other payments under this paragraph, you will not be entitled to receive any compensation or other payments under the preceding paragraph.

 

Any obligation of the Company to provide you severance payments and/or accelerated Options vesting under this Agreement is conditioned on your signing an effective release of claims in a form provided by the Company (the “Employee Release”) following the termination of your employment, which release shall not apply to (i) claims for indemnification in your capacity as an officer of the Company under the Company’s Certificate of Incorporation, By-laws or written agreement, if any, (ii) rights to insurance coverage under any liability policy maintained by the Company, and (iii) rights to receive retirement benefits that are accrued and fully vested at the time of termination of employment.  Any severance payments to be made in the form of salary continuation pursuant to the terms of this Agreement shall be payable in accordance with the normal payroll practices of the Company, and will begin at the Company’s next regular payroll period following the effective date of the Employee Release, but shall be retroactive to the date of termination.

 

Notwithstanding anything to the contrary in this Agreement, if at the time of the termination of your employment you are a “specified employee,” as defined below, any and all amounts payable under this Agreement on account of such separation from service that would (but for this provision) be payable within six (6) months following the date of termination, shall instead be paid on the next business day following the expiration of such six (6) month period or, if earlier, upon your death; except (A) to the extent of amounts that do not constitute a deferral of compensation within the meaning of Treasury Regulation Section 1.409A-1(b) (including without limitation by reason of the safe harbor set forth in Section 1.409A-1(b)(9)(iii), as determined by the Company in its reasonable good faith discretion); (B) benefits which qualify as excepted welfare benefits pursuant to Treasury Regulation Section 1.409A-1(a)(5); or (C) other amounts or benefits that are not subject to the requirements of Section 409A of the Internal Revenue Code, as amended.  For purposes of this Agreement, all references to “termination of employment” and correlative phrases shall be construed to require a “separation from service” (as defined in Section 1.409A-1(h) of the Treasury regulations after giving effect to the presumptions contained therein), and the term “specified employee” means an individual determined by the Company to be a specified employee under Treasury Regulation Section 1.409A-1(i).  Each payment made under this Agreement shall be treated as a separate payment, and the right to a series of installment payments under this Agreement is to be treated as a right to a series of separate payments.

 

As used in this Agreement, “Triggering Event” shall mean, for purposes of the foregoing paragraph, (i) a merger or consolidation in which (A) the Company is a constituent party, or (B) a subsidiary of the Company is a constituent party and the Company issues shares of the subsidiary’s capital stock pursuant to such merger or consolidation, except in the case of either clause (A) or (B) any such merger or consolidation involving the Company or a subsidiary of the Company in which the beneficial owners of the shares of capital stock of the Company outstanding immediately prior to such merger or consolidation continue beneficially to own, immediately following such merger or consolidation, at least a majority by voting power of the capital stock of (x) the surviving or resulting corporation or (y) 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; (ii) the sale, lease, transfer, exclusive license not in the ordinary course of business, or other disposition, in a single transaction or series of related transactions, by the Company or a Company subsidiary, of all or substantially all the assets of the Company and the Company subsidiaries taken as a whole (except in connection with a merger or consolidation not constituting a Change of

 



 

Control under clause (i) or where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned Company subsidiary); or (iii) the sale or transfer, in a single transaction or series of related transactions, by the stockholders of the Company of more than 50% by voting power of the then-outstanding capital stock of the Company to any person or entity or group of affiliated persons or entities.  As used in this Agreement, “Upside Change of Control” shall mean any Triggering Event in which (A) in the case of a Triggering Event described in clause (ii) above, if all required payments in connection with such Triggering Event were made, including all Severance Payments and all other obligations required to be satisfied prior to a distribution of remaining proceeds to equity holders were satisfied, the remaining proceeds from such Triggering Event are sufficient to pay to the Company’s holders of preferred stock not less than the full payment of the “Preferred Stock Liquidation Payments” as such term is defined in the Company’s Third Amended and Restated Certificate of Incorporation, as amended from time to time (the “Certificate of Incorporation”), including payments valued pursuant to Subsection 1(b) of ARTICLE FOURTH of the Certificate of Incorporation (the “Preferred Stock Liquidation Payments”) or (B) in all other cases, the proceeds received or receivable by the Company’s holders of preferred stock from such event is not less than the Preferred Stock Liquidation Payments.

 

As used in this Agreement, “Cause” shall mean: (a) commission of any felony or any other crime involving dishonesty; (b) participation in any fraud, deliberate and substantial misconduct, breach of the duty of loyalty, or breach of fiduciary duty against the Company; (c) intentional and substantial damage to any property of the Company; (d) serious misconduct;  (e) substantially unsatisfactory performance of your duties to the Company; or (f) your breach of any material provision of this Agreement, the invention and non-disclosure agreement or the non-competition and non-solicitation agreement executed by you with the Company.  Termination of your employment with Cause at any time will result in no severance compensation paid to you.

 

As used in this Agreement, “Good Reason” shall mean, without your consent: (1) a material and adverse diminution of your duties with the Company, or (2) a material breach by the Company of the terms of this Agreement; provided, neither of the foregoing shall qualify as Good Reason unless, within thirty (30) days of the occurrence of the event you claim so qualifies, you shall have provided the Board of Directors of the Company with written notice specifying in detail the basis for such claim, and afforded it a reasonable opportunity to cure the claimed Good Reason, and the Company fails to cure such Good Reason within thirty (30) days of its receipt of your notice; and provided further, no termination for Good Reason shall so qualify unless you terminate your employment at the Company no more than thirty (30) days following the expiration of the Company’s cure period.

 

This Agreement, together with any agreements relating to proprietary rights between you and the Company, set forth all of the terms of your employment with the Company and supersede any prior representations or agreements.

 

Your signature below indicates that you agree to and accept the terms of this Agreement.

 

 

Sincerely,

 

 

 

 

 

/s/ William D. Clark

 

William Clark

 

President & Chief Executive Officer

 



 

Agreed to and accepted:

 

 

 

 

Signature:

/s/ Paul Giannasca

 

 

 

 

Printed Name:

Paul Giannasca

 

 

 

Date:

7 Nov 2011

 

 




Exhibit 10.17

 

GENOCEA BIOSCIENCES, INC.

 

CASH BONUS PROGRAM

FOR FISCAL YEARS 2012 AND 2013

 

This Cash Bonus Program (the “Bonus Program”) has been established by Genocea Biosciences, Inc. (the “Company”) to provide for cash bonus awards (each, a “Bonus”) for each of fiscal year 2012 and 2013 (each, a “Performance Period”) to certain executive officers and other key employees of the Company to promote and reward the achievement of key strategic business goals and individual performance goals.

 

The Bonus Program is administered by the Board of Directors of the Company (the “Board”) and its delegates.  The Board and its delegates, to the extent of such delegation, are referred to herein as the “Administrator”.  Any interpretation or decision by the Administrator with respect to the Bonus Program or any Bonus will be final and conclusive as to all persons.

 

Executive officers and other key employees of the Company and its subsidiaries are eligible to participate in the Bonus Program.  The Administrator will select, from among those eligible, the persons who will from time to time participate in the Bonus Program (each, a “Participant”).

 

The Administrator in its discretion shall establish the performance goals for each Performance Period and shall determine the extent to which such performance goals have been satisfied for a Performance Period based on its qualitative and quantitative assessment of performance.  Performance goals may include either individual or corporate goals, or both individual and corporate goals.  The weightings of the individual and corporate performance goals under the Bonus Program, to the extent applicable, shall be determined for each Participant and each Performance Period by the Administrator.

 

The Administrator shall determine a Participant’s target Bonus (the “Target”) for each Performance Period.  The Target will be expressed as a percentage of the Participant’s annual base salary.  The Administrator in its discretion may award a Bonus to a Participant in excess of 100% of the Target if the Administrator determines, in its discretion, that achievement of the performance goals during the applicable Performance Period exceeded the target level of performance and may, in its discretion, award a Bonus that is less than the Target if it determines, in its discretion, that achievement of performance goals was at a level less than such target level of performance.

 

The Administrator shall determine the amount of any Bonus to be paid hereunder based on the Administrator’s determination of the level of the achievement of the performance goals.  Except as otherwise determined by the Administrator, all payments under the Bonus Program will be made, if at all, not later than March 15 th  of the calendar year following the calendar year in which the Performance Period ends.  The Administrator may, but need not, provide that a Bonus payment will not be made unless the Participant has remained employed with the Company and its subsidiaries through the date of payment.

 

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All payments under the Bonus Program will be subject to reduction for applicable tax and other legally or contractually required withholdings.

 

The Board may amend the Bonus Program at any time and from time to time.  The Board may at any time terminate the Bonus Program.

 

The Bonus Program will be effective for fiscal years 2012 and 2013.  The Bonus Program shall not be construed to require the adoption of a similar Bonus Program for future fiscal years.

 

2




EXHIBIT 10.18

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

CONFIDENTIAL

 

Amendment No. 2 to Patent License Agreement
between the University of Washington and Genocea Biosciences, Inc.

 

This Amendment No. 2 is made and entered into as of September 12, 2012, by and between the University of Washington, a public institution of higher education and an agency of the State of Washington, acting through UW Center for Commercialization, Technology Licensing (“University”), and Genocea Biosciences, Inc., a Delaware corporation with its principal place of business at 100 Acorn Park Drive, 5th floor, Cambridge, MA 02140 (“Company”).  University and Company are referred to individually as a “Party” and collectively as the “Parties”.

 

WHEREAS, University and Company are Parties to a certain Patent License Agreement with an Effective Date of January 23, 2010, as amended by Amendment No. 1 dated July 19, 2012 (the “Agreement”);

 

WHEREAS, University and Company, through this Amendment No. 2, wish to update Section A3.5 “Financial Milestones” of the Agreement based on the outcome of ongoing research on antigenicity of the C-terminus of gD2 in the laboratory of Dr. David Koelle (the “Research”, as further described in Appendix A);

 

NOW, THEREFORE the Parties hereto agree as follows:

 

1.                                       Unless otherwise defined herein, capitalized terms used in this Amendment No. 2 have the meanings set forth in the Agreement.

 

2.                                       Milestone A3.5.1 in Section A3.5 is deleted in its entirety and replaced with the following:

 

[* * *]

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their respective authorized representatives.

 

University of Washington

 

Genocea Biosciences, Inc.

 

 

 

By:

/s/ Angela Loihl

 

By:

/s/ William D. Clark

 

 

 

 

 

Name:

Angela Loihl

 

Name:

William D. Clark

 

 

 

 

 

Title:

Associate Director

 

Title:

President & CEO

 

 

 

 

 

Date:

9/12/2012

 

Date:

9/17/2012

 

1



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

CONFIDENTIAL

 

Appendix A

 

Research Summary

 

UW has IP pending in the US patent office concerning compositions of HSV-2 glycoprotein D, also called gD2, encoded by gene US6, for use as a vaccine to prevent or treat HSV-2 infections of humans.  The native gD2 is about 393 amino acids long.  Many previous candidate vaccines have synthesized AA 1-340 in eukaryotic cells; the C-terminal part was genetically deleted to improve manufacturing yield.  Further, the eukaryotic cells automatically cleave off AA 1-25 as a biologically inherent process during protein expression, yielding a final vaccine composition of AA 26-339.  The core discovery, published in PNAS in 2003, is that there is a 9 amino acid epitope in the C terminal domain, AA 365-373, that is recognized by human CD8 T-cells.  The discovery suggests that improved candidate gD2-based vaccines should contain the C-terminal domain.  These human CD8 T-cells are frozen in the lab and can be re-used for more experiments.  The US patent office is restricting allowed claims to relatively short sections of gD2.  UW C4C, UW-retained counsel, and a potential licensee see value in extending allowed claims to longer versions of gD2, containing both the discovered CD8 epitope at AA 365-373, and other more N-terminal regions which also have scientific rationale for inclusion.  Dr. Koelle will conduct the following work to develop supporting data for the filing of a new Licensed Patent covering longer versions of gD2.

 

In the proposed experiments, Dr. Koelle will consult with counsel and potential licensee to determine the AA composition (left and right ends) of interest.  Dr. Koelle will clone the relevant portions of gD2 DNA and sequence-confirm the correct clones.  Dr. Koelle will prepare prototype vaccines of various gD2 regions in a DNA vaccine format.  The lab will create human-like cell lines that are competent to interact with human CD8+ T-cells, as first published by our in 2001.  These cell lines will further be treated with the different candidate gD2 vaccine prototypes and appropriate positive and negative controls.  The expected result is that the CD8 T-cells specific for gD2 AA 365-373 will have intact and full recognition of longer pieces of gD2 and full length gD2, as long as they contain AA 365-373.  Thus, allowance of claims to proposed vaccines of various and longer lengths will be supported by experimental data.

 

2




EXHIBIT 10.19

 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

CONFIDENTIAL

 

Amendment No. 3 to Patent License Agreement
between
the University of Washington
and
Genocea Biosciences, Inc.

 

This Amendment No. 3 is made and entered into as of November 7 , 2013, by and between the University of Washington, a public institution of higher education and an agency of the State of Washington, acting through UW Center for Commercialization, Technology Licensing (“University”), and Genocea Biosciences, Inc., a Delaware corporation with its principal place of business at 100 Acorn Park Drive, 5th floor, Cambridge, MA 02140 (“Company”).  University and Company are referred to individually as a “Party”, and collectively as the “Parties”.

 

WHEREAS, University and Company are Parties to a certain Patent License Agreement with an Effective Date of January 23, 2010, as amended by Amendments No. 1 and No. 2 (the “Agreement”);

 

WHEREAS, University and Company, through this Amendment No. 3, wish to amend certain financial terms of the Agreement;

 

NOW, THEREFORE the Parties hereto agree as follows:

 

1.                                       Unless otherwise defined herein, capitalized terms used in this Amendment No. 3 have the meanings set forth in the Agreement.

 

2.                                       Sections A3.7 and A3.8 of Appendix A are hereby deleted in their entirety and replaced as follows:

 

A3.7               Third Party Royalties .  If Company is required to pay royalties to a Third Party based on Company’s manufacture, use, or sale of Licensed Product subject to one or more patents of such Third Party then the royalties Company pays to University may be reduced by [* * *] of such royalties actually paid to the Third Party provided that use of any Third Party patent is required for such manufacture, use, or sale of Licensed Product, or Licensed Product is otherwise subject to a Third Party license, and provided that the royalty to the University shall not fall below [* * *].

 

A3.8               Sublicensing Consideration .  In addition to the running royalty payments due on Net Sales by any Sublicensee pursuant to Subsection A3.3 of this Exhibit A, Company shall pay to University a percentage of all Sublicensing Consideration received for a Sublicense according to the schedule below.  [* * *]  For the avoidance of doubt, any failure by Company

 

1



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

CONFIDENTIAL

 

to pay University an amount under this Section A3.8 which is actively being disputed pursuant to Article 29 shall not be deemed a breach or default by Company of its obligations under this Agreement.

 

[* * *]

 

2



 

THIS EXHIBIT HAS BEEN REDACTED AND IS THE SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST.  REDACTED MATERIAL IS MARKED WITH [* * *] AND HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

CONFIDENTIAL

 

IN WITNESS WHEREOF, the Parties have caused this Amendment No. 3 to be duly executed by their respective authorized representatives.

 

University of Washington

 

Genocea Biosciences, Inc.

 

 

 

 

 

 

By:

/s/ Fiona Willis

 

By:

/s/ Robert E. Farrell Jr.

 

 

 

 

 

Name:

Fiona Willis, Ph.D, MBA

 

Name:

Robert E. Farrell Jr.

 

 

 

 

 

Title:

Director of Technology Licensing

 

Title:

Vice President of Finance and Administration

 

 

 

 

 

Date:

11/07/13

 

Date:

11/6/2013

 

3




Exhibit 10.20

 

Form of Nonstatutory Stock Option

Granted Under Genocea Biosciences, Inc.’s 2007 Equity Incentive Plan

 

1.                                       Grant of Option.

 

This certificate evidences a nonstatutory stock option (this “Stock Option”) granted by Genocea Biosciences, Inc., a Delaware corporation (the “Company”), on [ · ] to [ · ] (the “Participant”) pursuant to the Company’s 2007 Equity Incentive Plan (as from time to time in effect, the “Plan”).  Under this Stock Option, the Participant may purchase, in whole or in part, on the terms herein provided, a total of [ · ] shares of common stock of the Company (the “Shares”) at [ · ] per Share.  The latest date on which this Stock Option, or any part thereof, may be exercised is [ · ] (the “Final Exercise Date”).  The Stock Option evidenced by this certificate is intended to be, and is hereby designated, a nonstatutory option, that is, an option that does not qualify as an incentive stock option as defined in section 422 of the Internal Revenue Code of 1986, as amended from time to time (the “Code”).

 

Vesting Schedule :  This Stock Option is exercisable [ · ]; provided, however, that such vesting on any such date shall be contingent upon the holder’s having been employed by or engaged as consultant to the Company or one of its subsidiaries continuously from the date of grant through such vesting date.

 

Notwithstanding the foregoing, upon termination of the Participant’s [Employment]/ [Consulting Agreement] any portion of this Stock Option that is not then exercisable will immediately expire and the remainder of this Stock Option will remain exercisable for three months (unless termination of the Participant’s Employment resulted from reasons that in the determination of the Administrator cast such discredit on the Participant as to justify immediate forfeiture of this Stock Option, in which case this entire Option shall immediately expire and no portion thereof shall remain exercisable); provided, that any portion of this Stock Option held by the Participant immediately prior to the Participant’s death, to the extent then exercisable, will remain exercisable for one year following the Participant’s death; and further provided, that in no event shall any portion of this Stock Option be exercisable after the Final Exercise Date.

 

2.                                       Exercise of Stock Option.

 

Each election to exercise this Stock Option shall be in writing, signed by the Participant or the Participant’s executor, administrator, or legally appointed representative (in the event of the Participant’s incapacity) or the person or persons to whom this Stock Option is transferred by will or the applicable laws of descent and distribution (collectively, the “Option Holder”), and received by the Company at its principal office, accompanied by this certificate and payment in full as provided in the Plan.  Subject to the further terms and conditions provided in the Plan, the purchase price may be paid as follows: (i) by delivery of cash or check acceptable to the Administrator; (ii) upon and following an initial public offering of the Company, through a broker-assisted exercise program acceptable to the Administrator; or (iii) through any combination of the foregoing.  In the event that this Stock Option is exercised by an Option Holder other than the Participant, the Company will be under no obligation to deliver Shares

 

1



 

hereunder unless and until it is satisfied as to the authority of the Option Holder to exercise this Stock Option.

 

3.                                       Restrictions on Transfer of Shares.

 

If at the time this Stock Option is exercised the Company or any of its shareholders is a party to any agreement restricting the transfer of any outstanding shares of the Company’s common stock, the Administrator may provide that this Stock Option may be exercised only if the Shares so acquired are made subject to the transfer restrictions set forth in that agreement (or if more than one such agreement is then in effect, the agreement or agreements specified by the Administrator).

 

4.                                       Withholding; Agreement to Provide Security.

 

If at the time this Stock Option is exercised the Company determines that under applicable law and regulations it could be liable for the withholding of any federal or state tax upon exercise or with respect to a disposition of any Shares acquired upon exercise of this Stock Option, this Stock Option may not be exercised unless the person exercising this Stock Option remits to the Company any amounts determined by the Company to be required to be withheld upon exercise (or makes other arrangements satisfactory to the Company for the payment of such taxes).

 

5.                                       Nontransferability of Stock Option.

 

This Stock Option is not transferable by the Participant otherwise than by will or the laws of descent and distribution, and is exercisable during the Participant’s lifetime only by the Participant (or in the event of the Participant’s incapacity, the person or persons legally appointed to act on the Participant’s behalf).

 

6.                                       Provisions of the Plan.

 

This Stock Option is subject to the provisions of the Plan, which are incorporated herein by reference.  A copy of the Plan as in effect on the date of the grant of this Stock Option has been furnished to the Participant.  By exercising all or any part of this Stock Option, the Participant agrees to be bound by the terms of the Plan and this certificate.  All initially capitalized terms used herein will have the meaning specified in the Plan, unless another meaning is specified herein.

 

2



 

IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its duly authorized officer.

 

 

GENOCEA BIOSCIENCES, INC.

 

 

 

 

 

[ · ]

 

[ · ]

 

 

Dated:  [ · ]

 

 

 

 

Acknowledged

 

 

 

 

 

[ · ]

 

 

Dated:  [ · ]

 

 

3


 



Exhibit 10.21

 

Form of Incentive Stock Option

Granted Under Genocea Biosciences, Inc.’s 2007 Equity Incentive Plan

 

1.                                       Grant of Option.

 

This certificate evidences an incentive stock option (this “Stock Option”) granted by Genocea Biosciences, Inc., a Delaware corporation (the “Company”), on [ · ] to [ · ], an employee of the Company (the “Participant”) pursuant to the Company’s 2007 Equity Incentive Plan (as from time to time in effect, the “Plan”).  Under this Stock Option, the Participant may purchase, in whole or in part, on the terms herein provided, a total of [ · ] shares of common stock of the Company (the “Shares”) at [ · ] per Share, which is not less than the fair market value of the Shares on the date of grant of this Stock Option.  The latest date on which this Stock Option, or any part thereof, may be exercised is [ · ] (the “Final Exercise Date”).  The Stock Option evidenced by this certificate is intended to be an incentive stock option as defined in section 422 of the Internal Revenue Code of 1986, as amended from time to time (the “Code”).

 

Vesting Schedule This Stock Option shall vest [ · ]; provided , however, that such vesting on any such date shall be contingent upon the holder’s having been employed by or engaged as an employee with the Company or one of its subsidiaries continuously from the date of grant through such vesting date.

 

Notwithstanding the foregoing, upon termination of the Participant’s Employment, any portion of this Stock Option that is not then exercisable will immediately expire and the remainder of this Stock Option will remain exercisable for three months (unless termination of the Participant’s Employment resulted from reasons that in the determination of the Administrator cast such discredit on the Participant as to justify immediate forfeiture of this Stock Option, in which case this entire Option shall immediately expire and no portion thereof shall remain exercisable); provided , that any portion of this Stock Option held by the Participant immediately prior to the Participant’s death, to the extent then exercisable, will remain exercisable for one year following the Participant’s death; and further provided , that in no event shall any portion of this Stock Option be exercisable after the Final Exercise Date.

 

2.                                       Exercise of Stock Option.

 

Each election to exercise this Stock Option shall be in writing, signed by the Participant or the Participant’s executor, administrator, or legally appointed representative (in the event of the Participant’s incapacity) or the person or persons to whom this Stock Option is transferred by will or the applicable laws of descent and distribution (collectively, the “Option Holder”), and received by the Company at its principal office, accompanied by this certificate and payment in full as provided in the Plan.  Subject to the further terms and conditions provided in the Plan, the purchase price may be paid as follows:  (i) by delivery of cash or check acceptable to the Administrator; (ii) upon and following an initial public offering of the Company, through a broker-assisted exercise program acceptable to the Administrator; or (iii) through any combination of the foregoing.  In the event that this Stock Option is exercised by an Option Holder other than the Participant, the Company will be under no obligation to deliver Shares

 

1



 

hereunder unless and until it is satisfied as to the authority of the Option Holder to exercise this Stock Option.

 

3.                                       Notice of Disposition.

 

The person exercising this Stock Option shall notify the Company when making any disposition of the Shares acquired upon exercise of this Stock Option, whether by sale, gift or otherwise.

 

4.                                       Restrictions on Transfer of Shares.

 

If at the time this Stock Option is exercised the Company or any of its stockholders is a party to any agreement restricting the transfer of any outstanding shares of the Company’s common stock, the Administrator may provide that this Stock Option may be exercised only if the Shares so acquired are made subject to the transfer restrictions set forth in that agreement (or if more than one such agreement is then in effect, the agreement or agreements specified by the Administrator).

 

5.                                       Withholding; Agreement to Provide Security.

 

If at the time this Stock Option is exercised the Company determines that under applicable law and regulations it could be liable for the withholding of any federal or state tax upon exercise or with respect to a disposition of any Shares acquired upon exercise of this Stock Option, this Stock Option may not be exercised unless the person exercising this Stock Option remits to the Company any amounts determined by the Company to be required to be withheld upon exercise (or makes other arrangements satisfactory to the Company for the payment of such taxes) and gives such security as the Company deems adequate to meet its potential liability for the withholding of tax upon a disposition of the Shares and agrees to augment such security from time to time in any amount reasonably determined by the Company to be necessary to preserve the adequacy of such security.

 

6.                                       Nontransferability of Stock Option.

 

This Stock Option is not transferable by the Participant otherwise than by will or the laws of descent and distribution and is exercisable during the Participant’s lifetime only by the Participant (or in the event of the Participant’s incapacity, the person or persons legally appointed to act on the Participant’s behalf). Participant may not sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant for the sale of otherwise dispose of or transfer any shares of the Company’s stock in connection with any public offering of the Company’s capital stock for a period of at least 180 days.

 

7.                                       Provisions of the Plan.

 

This Stock Option is subject to the provisions of the Plan, which are incorporated herein by reference.  A copy of the Plan as in effect on the date of the grant of this Stock Option has been furnished to the Participant.  By exercising all or any part of this Stock Option, the Participant agrees to be bound by the terms of the Plan and this certificate. All initially

 

2



 

capitalized terms used herein will have the meaning specified in the Plan, unless another meaning is specified herein.

 

IN WITNESS WHEREOF, the Company has caused this instrument to be executed by its duly authorized officer.

 

 

GENOCEA BIOSCIENCES, INC.

 

By

 

 

 

 

 

[ · ]

 

[ · ]

 

 

Dated: [ · ]

 

 

 

 

Acknowledged and agreed:

 

 

 

 

 

[ · ]

 

 

Dated: [ · ]

 

 

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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 October 22, 2013, in the Registration Statement (Form S-1) and related Prospectus of Genocea Biosciences, Inc. for the registration of shares of its common stock.

    /s/ Ernst & Young

Boston, Massachusetts

 

 

December 20, 2013

 

 



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Consent of Independent Registered Public Accounting Firm