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As filed with the Securities and Exchange Commission on June 22, 2018.

Registration No. 333-               


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



FORM S-1
REGISTRATION STATEMENT
Under
The Securities Act of 1933



RUBIUS THERAPEUTICS, 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)
  46-2688109
(I.R.S. Employer
Identification Number)



325 Vassar Street, Suite 1A
Cambridge, MA 02139
(617) 679-9600

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



Pablo J. Cagnoni, Chief Executive Officer
325 Vassar Street, Suite 1A
Cambridge, MA 02139
(617) 679-9600

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



Copies to:

Stuart M. Cable, Esq.
Arthur R. McGivern, Esq.
Goodwin Procter LLP
100 Northern Avenue
Boston, MA 02210
(617) 570-1000

 

Torben Straight Nissen
Andrew Oh
Rubius Therapeutics, Inc.
325 Vassar Street, Suite 1A
Cambridge, MA 02139
(617) 679-9600

 

Peter N. Handrinos, Esq.
Wesley C. Holmes, Esq.
Latham & Watkins LLP
200 Clarendon Street
Boston, MA 02116
(617) 948-6000



Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this registration statement.

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, as amended, 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, please 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, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth 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

Emerging Growth Company  ý

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act.  o



CALCULATION OF REGISTRATION FEE

       
 
Title of each class of securities
to be registered

  Proposed maximum
aggregate offering
price(1)(2)

  Amount of
registration fee

 

Common Stock, par value $0.001 per share

  $200,000,000   $24,900

 

(1)    Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.

(2)   Includes the offering price of shares that the underwriters may purchase pursuant to an option to purchase additional shares.



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 that specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this registration statement shall become effective on such date as the 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. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to completion, dated June 22, 2018

               shares

LOGO

Common stock



This is an initial public offering of common stock of Rubius Therapeutics, Inc. We are selling              shares of common stock. We anticipate that the initial public offering price will be between $              and $              per share.

Prior to this offering, there has been no public market for our common stock. We have applied to list our common stock on The Nasdaq Global Market under the symbol "RUBY."

We are an "emerging growth company" under applicable Securities and Exchange Commission rules and will be subject to reduced public company reporting requirements.

 
  Per share   Total  

Initial public offering price

  $                  $                 

Underwriting discounts and commissions(1)

  $                  $                 

Proceeds, before expenses, to us

  $                  $                 

(1)    We refer you to "Underwriting" beginning on page 212 for additional disclosure regarding total underwriting compensation.

We have granted the underwriters an option for a period of up to 30 days to purchase up to              additional shares of our common stock.

Investing in our common stock involves risks that are described in the "Risk factors" section beginning on page 11 of this prospectus.

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

The underwriters expect to deliver the shares of common stock to investors on                       , 2018.



J.P. Morgan   Morgan Stanley   Jefferies   Leerink Partners

Table of Contents

Table of contents

 
  Page

Prospectus summary

  1

Risk factors

  11

Special note regarding forward-looking statements

  80

Use of proceeds

  82

Dividend policy

  84

Capitalization

  85

Dilution

  88

Selected consolidated financial data

  91

Management's discussion and analysis of financial condition and results of operations

  93

Business

  114

Management

  174

Executive compensation

  183

Director compensation

  193

Certain relationships and related party transactions

  194

Principal stockholders

  197

Description of capital stock

  200

Shares eligible for future sale

  206

Material U.S. federal income tax considerations for non-U.S. holders of common stock

  208

Underwriting

  212

Legal matters

  221

Experts

  221

Where you can find more information

  221

Index to consolidated financial statements

  F-1

We are responsible for the information contained in this prospectus. We have not, and the underwriters have not, authorized anyone to provide you with any other information other than in this prospectus, and we take no responsibility for, and the underwriters have not taken 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 its date.

Through and including                             , 2018 (the 25th day after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

For investors outside the United States: Neither we nor any of the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. You are required to inform yourselves about and to observe any restrictions relating to this offering and the distribution of this prospectus outside of the United States.

This prospectus contains references to our trademarks and to trademarks belonging to other entities. Solely for convenience, trademarks and trade names referred to in this prospectus, including logos, artwork and other visual displays, may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensor to these trademarks and trade names. We do not intend our use or display of other companies' trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

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Prospectus summary

Overview

We are pioneering the development of a new class of medicines, Red Cell Therapeutics, or RCTs. Based on our vision that human red blood cells are the foundation of the next significant innovation in medicine, we have designed a proprietary platform to genetically engineer and culture RCTs that are selective, potent and ready-to-use cellular therapies. We believe that our RCTs will provide life-changing or life-saving benefits for patients with severe diseases across multiple therapeutic areas.

We have generated hundreds of RCTs using our highly versatile and proprietary cellular therapy platform, the Rubius Erythrocyte Design, or RED, Platform. We are utilizing our universal engineering and manufacturing processes to advance a broad pipeline of RCT product candidates into clinical trials in rare diseases, cancer and autoimmune diseases. We plan to file an investigational new drug application, or IND, for our first product candidate in the first quarter of 2019 and INDs for additional RCT product candidates during 2019, 2020 and thereafter. Since our founding by Flagship Pioneering in 2013, we have raised approximately $240 million in capital and attracted a talented group of seasoned leaders to execute our strategy.

Our proprietary RED Platform

Red blood cells, or RBCs, are unique as they lack a nucleus, are not cleared from circulation by the immune system and have a well-characterized biodistribution as they are generally sequestered in the vasculature, spleen and liver. Our discoveries and innovations in genetic engineering and cell culture processes allow us to leverage these inherent benefits of RBCs. We believe our RED Platform and RCTs represent a transformative step in the evolution of cellular therapies because they are designed to confer desirable attributes for a next-generation cellular therapy, including the following:

Broad applications across many therapeutic areas, focusing initially on rare diseases, cancer and autoimmune diseases.

Advantageous tolerability since RCTs lack a nucleus and, as a result, we believe our RCT product candidates will pose less risk than other cellular therapies, which have caused cytokine release syndrome, neurotoxicity and mortality and carry the potential risk of inducing oncogenicity.

Ready-to-use cellular therapies that can be transfused into approximately 95% of patients since they are produced from O negative donor blood stem cells.

Defined life in circulation and convenient dosing as RBCs have a circulating time of approximately 120 days.

Predictable biodistribution as RBCs normally reside only in the vasculature, the spleen and the liver, and do not otherwise extravasate into other healthy tissues.

Efficient product engine that provides a consistent product design and discovery approach.

Scalable and flexible manufacturing with an ability to manufacture up to thousands of doses in bioreactors from a single donor, depending upon the therapeutic application.

Although our RCT product candidates are at a preclinical stage of development and will require substantial resources to demonstrate technical feasibility and establish clinical and regulatory validation, we believe

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that our RED Platform could provide beneficial treatments for our target indications, many of which have few, if any, effective treatments.

Our universal and proprietary process allows us to generate a wide variety of allogeneic, ready-to-use RCT product candidates through the following steps: (1) obtaining CD34+ hematopoietic precursor cells from the blood of O negative donors; (2) genetically engineering the cells to express biotherapeutic proteins within the cell or on the cell surface of the RCTs; (3) expanding the number of cells and differentiating them into reticulocytes, which are enucleated RBC precursors; and (4) formulating, characterizing and storing doses of the resulting RCT product candidate for later infusion into patients. By modifying only one of our initial manufacturing steps in which we add a gene or genes that encode biotherapeutic proteins within the cell or on the cell surface of RCTs, we are able to rapidly develop new RCTs designed to treat different diseases.

GRAPHIC

We have invested considerably to scale the process of RCT manufacturing, which we believe will allow for the reliable production of RCT products to support both our development and, eventually, commercial requirements. We have and continue to build a broad portfolio of patent applications, know how, trade secrets, and other intellectual property that covers our platform technologies and product discoveries, the breadth and depth of which is a strategic asset with the potential to provide us with competitive advantages.

Initial therapeutic areas of focus

Based upon the totality of scientific and preclinical work to date, we believe that RCTs have broad potential therapeutic applications. Our initial focus will be advancing RCT product candidates with unique benefits for patients suffering from rare diseases, cancer and autoimmune diseases based on three modalities — cellular shielding, potent cell-cell interaction and tolerance induction.

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Select RCT Modalities to Treat Rare Diseases, Cancer and Autoimmune Diseases

GRAPHIC

Rare diseases:   We engineer RCTs that express potent enzymes within the cell for the treatment of patients suffering from rare enzyme deficiency diseases. As they are located within the RCT, these enzymes are shielded from being neutralized by the immune system, thereby allowing the enzymes to degrade and clear the pathogenic metabolites that build up in such diseases. We believe these RCTs may have a longer and sustained treatment duration and could avoid the immune-driven reduction in efficacy and induction of adverse events associated with other therapies.

Cancer:   We engineer RCTs for potent cell-cell interaction by expressing hundreds of thousands of copies of one or more proteins on the cellular surface to drive enhanced and synergistic activation of both the adaptive and innate immune systems, as well as to enable treatment localization in the tumor. We believe these RCTs could be transformative therapies for patients with solid and hematological cancers.

Autoimmune diseases:   We engineer RCTs that express specific autoimmune disease-causing antigens within the cell or on the cell surface in order to induce immune tolerance. We believe these RCTs could prevent immune damage that causes these diseases.

Our product candidate pipeline

We are building a broad and diverse pipeline of RCT product candidates with an initial focus in rare diseases, cancer and autoimmune diseases. We plan to file an IND for RTX-134 for the treatment of phenylketonuria in the first quarter of 2019 and INDs for additional RCT product candidates during 2019, 2020 and thereafter. Our first product candidates were selected based on: potential to address unmet medical needs; feasibility as determined by our preclinical research and development efforts; potential to rapidly achieve proof-of-concept based on easy-to-measure validated regulatory endpoints; and significant commercial potential.

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An overview of our programs and their status is illustrated below:

GRAPHIC

Our strategy

Our vision is to pioneer the creation of life-changing or life-saving and ready-to-use RCTs for patients with severe diseases. To achieve our vision, we are executing a strategy with the following key elements:

Establish RCTs as a new class of medicines, demonstrating their potential across three initial product categories: rare diseases, cancer and autoimmune diseases;

Efficiently advance multiple additional RCTs as product categories are validated following positive early proof-of-concept;

Pursue accelerated paths to marketing authorization;

Build a leading, fully integrated cellular therapy company;

Further strengthen our position as the pioneer of RCTs through continuous platform expansion and improvement;

Expand patient access to RCTs through strategic partnerships; and

Maintain a strong culture, continuously attract new talent and build the world's leading center for red cell biology research and engineering.

Rubius and Flagship Pioneering

Rubius Therapeutics was founded by Flagship Pioneering. Our RED Platform builds upon the research and findings of Flagship Pioneering's VentureLabs innovation team along with the discoveries of academic founders. The biological basis of the platform stemmed from the ability to differentiate donor-derived CD34+ hematopoietic precursor cells into enucleated RBCs with unprecedented efficiency. Flagship

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Pioneering's VentureLabs innovation team recognized the potential to develop this approach into an optimal framework for cellular therapies and invented methods to engineer RCTs to express biotherapeutic proteins within the cell or on the cell surface.

Risks associated with our business

Our business is subject to a number of risks of which you should be aware before making an investment decision. These risks are discussed more fully in the "Risk factors" section of this prospectus immediately following this prospectus summary. These risks include the following:

We have incurred net losses in every year since our inception, we anticipate that we will continue to incur net losses in the future, and we will require additional capital to fund our operations.

We have a limited operating history, which may make it difficult to evaluate our technology and product development capabilities and predict our future performance.

Our RCT product candidates are based on a new technology, which makes it difficult to predict the time and cost of development and of subsequently obtaining regulatory approval, if at all. Our business is highly dependent on the success of our initial product candidates. All of our product candidates will require significant additional nonclinical and clinical development before we can seek regulatory approval for and launch a product commercially.

Positive results from early preclinical studies of our product candidates are not necessarily predictive of the results of later preclinical studies and any future clinical trials of our product candidates. If we cannot replicate the positive results from our earlier preclinical studies of our product candidates in our future clinical trials, we may be unable to successfully develop, obtain regulatory approval for and commercialize our product candidates.

Clinical development involves a lengthy and expensive process, with an uncertain outcome. We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of any product candidates.

The FDA, the EMA and other regulatory authorities may implement additional regulations or restrictions on the development and commercialization of our product candidates, which may be difficult to predict.

If we are unable to obtain and maintain patent protection for any product candidates we develop or for our RED Platform, our competitors could develop and commercialize products or technology similar or identical to ours, and our ability to successfully commercialize any product candidates we may develop, and our technology may be adversely affected. Third-party claims of intellectual property infringement may prevent or delay our product commercialization efforts.

Our product candidates are uniquely manufactured. If we or any of our third-party manufacturers encounter difficulties in manufacturing our product candidates, our ability to provide supply of our product candidates for clinical trials or our products for patients, if approved, could be delayed or stopped, or we may be unable to maintain a commercially viable cost structure.

We are acquiring and establishing our own manufacturing facility and infrastructure in addition to or in lieu of relying on contract manufacturing organizations for the manufacture of our product candidates, which will be costly and time-consuming, and which may not be successful. We do not have experience as a company managing a manufacturing facility, and failure to successfully operate our planned manufacuturing facility could adversely affect our business.

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For additional information about the risks we face, please see the section of this prospectus captioned "Risk factors."

Implications of being an emerging growth company

We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act, or the JOBS Act, enacted in April 2012. For so long as we remain an emerging growth company, we are permitted and intend to rely on certain exemptions from various public company reporting requirements, including not being required to have our internal control over financial reporting audited by our independent registered public accounting firm pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments not previously approved. In particular, in this prospectus, we have provided only two years of audited financial statements and have not included all of the executive compensation related information that would be required if we were not an emerging growth company. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock.

We will remain an emerging growth company until the earlier to occur of (1) the last day of the fiscal year (a) following the fifth anniversary of the closing of this offering; (b) in which we have total annual gross revenues of at least $1.07 billion; or (c) in which we are deemed to be a "large accelerated filer," under the rules of the U.S. Securities and Exchange Commission, or SEC, which means the market value of our equity securities that is held by non-affiliates exceeds $700 million as of the prior June 30 th ; and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

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 provision allows an emerging growth company to delay the adoption of some accounting standards until those standards would otherwise apply to private companies. We have elected not to "opt out" of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that we either (i) irrevocably elect to "opt out" of such extended transition period or (ii) no longer qualify as an emerging growth company. While we have not made such an irrevocable election, we have not delayed the adoption of any applicable accounting standards.

Company and other information

We were incorporated under the laws of the State of Delaware in 2013. Our principal executive office is located at 325 Vassar Street, Suite 1A, Cambridge, Massachusetts 02139, and our telephone number is (617) 679-9600. Our website address is www.rubiustx.com. We do not incorporate the information on or accessible through our website into this prospectus, and you should not consider any information on, or that can be accessed through, our website as part of this prospectus.

This summary highlights information contained elsewhere in 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 consolidated financial statements and the related notes appearing at the end of this prospectus, "Risk factors" and "Management's discussion and analysis of financial condition and results of operations." Unless otherwise stated, all references to "us," "our," "Rubius Therapeutics," "we," the "company" and similar designations refer to Rubius Therapeutics, Inc. together with its consolidated subsidiary.

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The offering

Common stock offered by us                 shares

Common stock to be outstanding immediately after this offering

 

              shares (or              shares if the underwriters exercise their option to purchase additional shares in full)

Underwriters' option to purchase additional shares

 

We have granted a 30-day option to the underwriters to purchase up to an aggregate of              additional shares of common stock.

Use of proceeds

 

We estimate that we will receive net proceeds from the sale of shares of our common stock in this offering of approximately $              million, or $              million if the underwriters exercise their option to purchase additional shares in full, assuming an initial public offering price of $              per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net proceeds from this offering, together with our existing cash, cash equivalents and marketable securities: to purchase, renovate and customize the manufacturing facility for which we have entered into a letter of intent to purchase; to advance RTX-134 through a Phase 1/2a clinical proof-of-concept trial; to advance and expand our research and development pipeline, including early discovery efforts and IND-enabling studies, and to initiate additional proof-of-concept trials in rare diseases, cancer and autoimmune diseases; and for working capital and other general corporate purposes. For a more complete description of our intended use of the proceeds from this offering, see "Use of proceeds."

Risk factors

 

You should carefully read the "Risk factors" section of this prospectus beginning on page 11 for a discussion of factors that you should consider before deciding to invest in our common stock.

Proposed Nasdaq Global Market symbol

 

"RUBY"

The number of shares of our common stock to be outstanding after this offering is based on 15,006,379 shares of our common stock outstanding as of June 15, 2018 and gives effect to the conversion of all

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outstanding shares of our preferred stock into an aggregate of 51,845,438 shares of our common stock upon the closing of this offering, and excludes:

11,976,919 shares of common stock issuable upon the exercise of stock options outstanding as of June 15, 2018 under our 2014 Stock Incentive Plan, as amended, or 2014 Plan, at a weighted average exercise price of $5.25 per share;

135,567 shares of common stock issuable upon the exercise of warrants outstanding as of June 15, 2018 to purchase shares of preferred stock that will become warrants to purchase shares of common stock, at a weighted average exercise price of $0.73 per share, in connection with this offering;

35,697 shares of common stock available for future issuance as of June 15, 2018 under our 2014 Plan, which will cease to be available for issuance at the time that our 2018 Stock Option and Incentive Plan, or 2018 Plan, becomes effective;

              shares of common stock that will become available for future issuance under the 2018 Plan upon the effectiveness of the registration statement of which this prospectus is a part; and

              shares of common stock that will become available for future issuance under our 2018 Employee Stock Purchase Plan upon the effectiveness of the registration statement of which this prospectus is a part.

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

the filing of our amended and restated certificate of incorporation effective upon the closing of this offering;

the adoption of our amended and restated bylaws, which will become effective on the date on which the registration statement of which this prospectus is part is declared effective;

a one-for-              reverse stock split of our common stock effected on                           ;

the conversion of all outstanding shares of preferred stock into an aggregate of 51,845,438 shares of common stock upon the closing of this offering;

no exercise of outstanding options and warrants after June 15, 2018; and

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

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Summary consolidated financial data

You should read the following summary consolidated financial data together with our consolidated financial statements and the related notes appearing at the end of this prospectus and the "Selected consolidated financial data" and "Management's discussion and analysis of financial condition and results of operations" sections of this prospectus. We have derived the consolidated statement of operations data for the years ended December 31, 2016 and 2017 from our audited consolidated financial statements appearing at the end of this prospectus. The consolidated statement of operations data for the three months ended March 31, 2017 and 2018 and the consolidated balance sheet data as of March 31, 2018 have been derived from our unaudited consolidated financial statements appearing at the end of this prospectus and have been prepared on the same basis as the audited consolidated financial statements. In the opinion of management, the unaudited data reflects all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the financial information in those statements. Our historical results are not necessarily indicative of the results that may be expected in the future.

 
   
   
   
   
 
 
  Year ended
December 31,
  Three months ended
March 31,
 
 
  2016
  2017
  2017
  2018
 
 
  (in thousands, except per share data)
 

Consolidated statement of operations data:

                         

Revenue

  $   $   $   $  

Operating expenses:

                         

Research and development

    8,403     21,226     3,681     9,650  

General and administrative

    2,449     22,038     1,102     5,797  

Total operating expenses

    10,852     43,264     4,783     15,447  

Loss from operations

    (10,852 )   (43,264 )   (4,783 )   (15,447 )

Other income (expense):

                         

Change in fair value of preferred stock warrant liability

    1     (785 )   (24 )   (43 )

Interest expense

    (149 )   (309 )   (50 )   (83 )

Interest income and other expense, net

    (16 )   511         318  

Total other income (expense), net

    (164 )   (583 )   (74 )   192  

Net loss

    (11,016 )   (43,847 )   (4,857 )   (15,255 )

Accretion of Series A redeemable convertible preferred stock to redemption value

    (748 )   (656 )   (376 )    

Net loss attributable to common stockholders

  $ (11,764 ) $ (44,503 ) $ (5,233 ) $ (15,255 )

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

  $ (1.63 ) $ (5.55 ) $ (0.68 ) $ (1.83 )

Weighted average common shares outstanding, basic and diluted(1)

    7,201     8,024     7,662     8,355  

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

        $ (0.94 )       $ (0.27 )

Pro forma weighted average common shares outstanding, basic and diluted (unaudited)(1)

          45,711           55,453  

(1)    See Note 13 to our consolidated financial statements appearing at the end of this prospectus for details on the calculation of basic and diluted net loss per share attributable to common stockholders and unaudited basic and diluted pro forma net loss per share attributable to common stockholders.

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  As of March 31, 2018  
 
  Actual
  Pro forma(2)
  Pro forma
as adjusted(3)

 
 
  (in thousands)
 

Consolidated balance sheet data:

               

Cash, cash equivalents and marketable securities

  $ 192,623   $192,623   $                

Working capital(1)

    182,276   182,276                   

Total assets

    209,730   209,730                   

Long-term debt, net of discount, including current portion

    5,454   5,454                   

Preferred stock warrant liability

    909                     

Convertible preferred stock

    240,776                     

Total stockholders' equity (deficit)

    (55,526 ) 186,159                   

(1)    We define working capital as current assets less current liabilities.

(2)    The pro forma consolidated balance sheet data give effect to (i) the conversion of all outstanding shares of our preferred stock into an aggregate of 51,845,438 shares of common stock upon the closing of this offering and (ii) all outstanding warrants to purchase shares of preferred stock becoming warrants to purchase shares of common stock upon the closing of this offering.

(3)    The pro forma as adjusted balance sheet data give further effect to our issuance and sale of                           shares of our common stock in this offering at an assumed initial public offering price of $              per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The pro forma as adjusted information discussed above is illustrative only and will change based on the actual initial public offering price and other terms of this offering determined at pricing. A $1.00 increase (decrease) in the assumed initial public offering price of $              per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted amount of each of cash, cash equivalents and marketable securities, working capital, total assets and total stockholders' equity by $               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. An increase (decrease) of 1,000,000 shares in the number of shares offered by us, as set forth on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted amount of each of cash, cash equivalents and marketable securities, working capital, total assets and total stockholders' equity by $               million, assuming no change in the assumed initial public offering price per share and after deducting estimated 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 described below, as well as the other information in this prospectus, including our consolidated financial statements and the related notes and "Management's discussion and analysis of financial condition and results of operations," before deciding whether to invest in our common stock. The occurrence of any of the events or developments described below could harm our business, financial condition, results of operations and growth prospects. In such an event, the market price of our common stock could decline and you may lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations .

Risks related to our business, technology and industry

We have incurred net losses in every year since our inception and anticipate that we will continue to incur net losses in the future .

We are a preclinical-stage biopharmaceutical company with a limited operating history. Investment in biopharmaceutical product development is highly speculative because it entails substantial upfront capital expenditures and significant risk that any potential product candidate will fail to demonstrate adequate effect or an acceptable safety profile, gain regulatory approval and become commercially viable. We have no products in clinical development or approved for commercial sale and have not generated any revenue from product sales to date, and we continue to incur significant research and development and other expenses related to our ongoing operations. As a result, we are not profitable and have incurred losses in each period since our inception in 2013. For the years ended December 31, 2016 and 2017 and the three months ended March 31, 2018, we reported net losses of $11.0 million, $43.8 million and $15.3 million, respectively. As of March 31, 2018, we had an accumulated deficit of $76.2 million. We expect to continue to incur significant losses for the foreseeable future, and we expect these losses to increase as we continue our research and development of, and seek regulatory approvals for, our product candidates. We anticipate that our expenses will increase substantially if, and as, we:

conduct clinical trials for our product candidates;

further develop our RED Platform;

continue to discover and develop additional product candidates;

maintain, expand and protect our intellectual property portfolio;

hire additional clinical, scientific manufacturing and commercial personnel;

establish in-house manufacturing capabilities;

establish a commercial manufacturing source and secure supply chain capacity sufficient to provide commercial quantities of any product candidates for which we may obtain regulatory approval;

acquire or in-license other product candidates and technologies;

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

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

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add operational, financial and management information systems and personnel, including personnel to support our product development and planned future commercialization efforts, as well as to support our transition to a public company.

To become and remain profitable, we or any potential future collaborator must develop and eventually commercialize products with significant market potential at an adequate profit margin after cost of goods sold and other expenses. This will require us to be successful in a range of challenging activities, including completing preclinical studies and clinical trials, obtaining marketing approval for product candidates, manufacturing, marketing and selling products for which we may obtain marketing approval and satisfying any post-marketing requirements. We may never succeed in any or all of these activities and, even if we do, we may never generate revenue that is significant or large enough to achieve profitability. 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 decrease the value of our company and could impair our ability to raise capital, maintain our research and development efforts, expand our business or continue our operations. A decline in the value of our company also could cause you to lose all or part of your investment.

Even if we succeed in commercializing one or more of our product candidates, we will continue to incur substantial research and development and other expenditures to develop and market additional product candidates. We may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenue. Our prior losses and expected future losses have had and will continue to have an adverse effect on our stockholders' equity and working capital.

We will require additional capital to fund our operations and if we fail to obtain necessary financing, we will not be able to complete the development and commercialization of our product candidates .

Our operations have consumed substantial amounts of cash since inception. We expect to continue to spend substantial amounts to conduct further research and development and preclinical or nonclinical testing and studies and clinical trials of our current and future programs, to seek regulatory approvals for our product candidates and to launch and commercialize any products for which we receive regulatory approval, including potentially building our own commercial organization. As of March 31, 2018, we had $192.6 million of cash, cash equivalents and marketable securities. Based on our current operating plan, we believe that the net proceeds from this offering, together with our existing cash, cash equivalents and marketable securities, will enable us to fund our operating expenses, capital expenditure requirements, including the purchase, renovation and customization of the manufacturing facility for which we have entered into a letter of intent to purchase, and debt service payments through                . However, our future capital requirements and the period for which our existing resources will support our operations may vary significantly from what we expect, and we will in any event require additional capital in order to complete clinical development of any of our current programs. Our monthly spending levels will vary based on new and ongoing development and corporate activities. Because the length of time and activities associated with development of our product candidates is highly uncertain, we are unable to estimate the actual funds we will require for development and any approved marketing and commercialization activities. Our future funding requirements, both near and long-term, will depend on many factors, including, but not limited to:

the initiation, progress, timing, costs and results of preclinical or nonclinical testing and studies and clinical trials for our product candidates;

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the clinical development plans we establish for these product candidates;

the number and characteristics of product candidates that we develop or may in-license;

the terms of any collaboration agreements we may choose to conclude;

the outcome, timing and cost of meeting regulatory requirements established by the U.S. Food and Drug Administration, or FDA, the European Medicines Agency, or EMA, and other comparable foreign regulatory authorities;

the cost of filing, prosecuting, defending and enforcing our patent claims and other intellectual property rights;

the cost of defending intellectual property disputes, including patent infringement actions brought by third parties against us or our product candidates;

the effect of competing technological and market developments;

the costs of establishing and maintaining a supply chain for the development and manufacture of our product candidates;

the cost and timing of establishing, expanding and scaling manufacturing capabilities; and

the cost of establishing sales, marketing and distribution capabilities for any product candidates for which we may receive regulatory approval in regions where we choose to commercialize our products on our own.

We do not have any committed external source of funds or other support for our development efforts and we cannot be certain that additional funding will be available on acceptable terms, or at all. Until we can generate sufficient product or royalty revenue to finance our cash requirements, which we may never do, we expect to finance our future cash needs through a combination of public or private equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements and other marketing or distribution arrangements. If we raise additional funds through public or private equity offerings, the terms of these securities may include liquidation or other preferences that adversely affect our stockholders' rights. Further, to the extent that we raise additional capital through the sale of common stock or securities convertible into or exchangeable for common stock, your ownership interest will be diluted. If we raise additional capital through debt financing, we would be subject to fixed payment obligations and may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional capital through marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish certain valuable rights to our product candidates, technologies, future revenue streams or research programs or grant licenses on terms that may not be favorable to us. We also could be required to seek collaborators for one or more of our current or future product candidates at an earlier stage than otherwise would be desirable or relinquish our rights to product candidates or technologies that we otherwise would seek to develop or commercialize ourselves. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the development or commercialization of one or more of our products or product candidates or one or more of our other research and development initiatives. Any of the above events could significantly harm our business, prospects, financial condition and results of operations and cause the price of our common stock to decline.

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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.

We may seek additional capital through a combination of public and private equity offerings, debt financings, strategic partnerships and alliances and licensing arrangements. 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. The incurrence of indebtedness would result in increased fixed payment obligations and could involve certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. If we raise additional funds through strategic partnerships and alliances and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies or product candidates or grant licenses on terms unfavorable to us.

We have a limited operating history, which may make it difficult to evaluate our technology and product development capabilities and predict our future performance.

We are early in our development efforts and we have not initiated clinical trials for any of our product candidates. We were formed in 2013, have no products approved for commercial sale and have not generated any revenue from product sales. Our ability to generate product revenue or profits, which we do not expect will occur for many years, if ever, will depend on the successful development and eventual commercialization of our product candidates, which may never occur. We may never be able to develop or commercialize a marketable product.

All of our programs require additional preclinical research and development, clinical development, regulatory approval in multiple jurisdictions, obtaining manufacturing supply, capacity and expertise, building of a commercial organization, substantial investment and significant marketing efforts before we generate any revenue from product sales. Other programs of ours require additional discovery research and then preclinical development. In addition, our product candidates must be approved for marketing by the FDA or certain other health regulatory agencies, including the EMA, before we may commercialize any product.

Our limited operating history, particularly in light of the rapidly evolving cellular therapeutics field, may make it difficult to evaluate our technology and industry and predict our future performance. Our short history as an operating company makes any assessment of our future success or viability subject to significant uncertainty. We will encounter risks and difficulties frequently experienced by early-stage companies in rapidly evolving fields. If we do not address these risks successfully, our business will suffer. Similarly, we expect that our financial condition and operating results will fluctuate significantly from quarter to quarter and year to year due to a variety of factors, many of which are beyond our control. As a result, our shareholders should not rely upon the results of any quarterly or annual period as an indicator of future operating performance.

In addition, as an early-stage company, we have encountered unforeseen expenses, difficulties, complications, delays and other known and unknown circumstances. As we advance our product candidates, we will need to transition from a company with a research focus to a company capable of supporting clinical development and if successful, commercial activities. We may not be successful in such a transition.

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Our business is highly dependent on the success of our initial product candidates targeting rare diseases, cancer and autoimmune diseases. All of our product candidates will require significant additional nonclinical and clinical development before we can seek regulatory approval for and launch a product commercially .

Our business and future success depends on our ability to obtain regulatory approval of and then successfully launch and commercialize our initial product candidates targeting rare diseases, cancer and autoimmune diseases, including RTX-134, RTX-212 and others that may be selected from preclinical programs. We plan to file an investigational new drug application, or IND, for our first product candidate in the first quarter of 2019 and INDs for additional RCT product candidates during 2019, 2020 and thereafter. In particular, RTX-134, as our first planned clinical program, may experience preliminary complications surrounding trial execution, such as complexities surrounding regulatory acceptance of our IND, trial design and establishing trial protocols, patient recruitment and enrollment, quality and supply of clinical doses, safety issues or shorter than expected circulation time of RTX-134 in vivo .

All of our product candidates are in the early stages of development and will require additional nonclinical and clinical development, regulatory review and approval in multiple jurisdictions, substantial investment, access to sufficient commercial manufacturing capacity and significant marketing efforts before we can generate any revenue from product sales. In addition, because RTX-134 is our most advanced product candidate, if RTX-134 encounters safety, efficacy, supply or manufacturing problems, developmental delays, regulatory or commercialization issues or other problems, our development plans and business would be significantly harmed.

The successful development of cellular therapeutics, such as our RCTs, is highly uncertain .

Successful development of cellular therapeutics, such as our RCTs, is highly uncertain and is dependent on numerous factors, many of which are beyond our control. Cellular therapeutics that appear promising in the early phases of development may fail to reach the market for several reasons, including:

nonclinical or preclinical testing or study results may show our RCTs to be less effective than desired or to have harmful or problematic side effects or toxicities;

clinical trial results may show our RCTs to be less effective than expected (e.g., a clinical trial could fail to meet its primary endpoint(s)) or to have unacceptable side effects or toxicities;

clinical trial results may show that the relatively long circulating time of our RCTs, expected to be up to approximately 120 days, compared to other therapeutics may have unacceptable side effects, toxicities or other negative consequences;

failure to receive the necessary regulatory approvals or a delay in receiving such approvals. Among other things, such delays may be caused by slow enrollment in clinical trials, patients dropping out of trials, length of time to achieve trial endpoints, additional time requirements for data analysis, or biologics license application, or BLA, preparation, discussions with the FDA, an FDA request for additional nonclinical or clinical data, or unexpected safety or manufacturing issues;

manufacturing costs, formulation issues, pricing or reimbursement issues, or other factors that make our RCT therapies uneconomical; and

proprietary rights of others and their competing products and technologies that may prevent our RCT therapies from being commercialized.

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The length of time necessary to complete clinical trials and to submit an application for marketing approval for a final decision by a regulatory authority may be difficult to predict for cellular therapies, in large part because of the limited regulatory history.

Even if we are successful in obtaining market approval, commercial success of any approved products will also depend in large part on the availability of insurance coverage and adequate reimbursement from third-party payors, including government payors, such as the Medicare and Medicaid programs, and managed care organizations, which may be affected by existing and future healthcare reform measures designed to reduce the cost of healthcare. Third-party payors could require us to conduct additional studies, including post-marketing studies related to the cost-effectiveness of a product, to qualify for reimbursement, which could be costly and divert our resources. If government and other healthcare payors were not to provide adequate insurance coverage and reimbursement levels for one any of our products once approved, market acceptance and commercial success would be reduced.

In addition, if any of our products is approved for marketing, we will be subject to significant regulatory obligations regarding the submission of safety and other post-marketing information and reports and registration, and will need to continue to comply (or ensure that our third-party providers comply) with current good manufacturing practices, or cGMPs, and good clinical practices, or GCPs, for any clinical trials that we conduct post-approval. In addition, there is always the risk that we or a regulatory authority might identify previously unknown problems with a product post-approval, such as adverse events of unanticipated severity or frequency. Compliance with these requirements is costly and any failure to comply or other issues with our product candidates' post-approval could have a material adverse effect on our business, financial condition and results of operations.

Our RCT product candidates are based on a new technology, which makes it difficult to predict the time and cost of development and of subsequently obtaining regulatory approval, if at all.

Our RCT technology is relatively new and no products based on genetically engineered red cells have been approved to date in the United States or the European Union. As such it is difficult to accurately predict the developmental challenges we may incur for our product candidates as they proceed through product discovery or identification, preclinical studies and clinical trials. In addition, because we have not commenced clinical trials, we have not yet been able to assess safety in humans, and there may be short-term or long-term effects from treatment with any product candidates that we develop that we cannot predict at this time. Also, animal models may not exist for some of the diseases we choose to pursue in our programs. Furthermore, cellular therapies, such as our RCT product candidates, have a limited circulating time in animals as they are recognized as foreign by the host animal and therefore cleared by the complement-mediated reticuloendothelial system, which limits the safety and toxicology assessments that we can conduct in preclinical species. As a result of these factors, it is more difficult for us to predict the time and cost of product candidate development, and we cannot predict whether the application of our RED Platform, or any similar or competitive cellular technologies, will result in the identification, development, and regulatory approval of any products. There can be no assurance that any development problems we experience in the future related to our RED Platform or any of our research programs will not cause significant delays or unanticipated costs, or that such development problems can be solved. Any of these factors may prevent us from completing our preclinical studies or any clinical trials that we may initiate or commercializing any product candidates we may develop on a timely or profitable basis, if at all.

The clinical trial requirements of the FDA, the EMA and other regulatory authorities and the criteria these regulators use to determine the safety and efficacy of a product candidate vary substantially according to

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the type, complexity, novelty and intended use and market of the product candidate. No products based on genetically engineered red cells have been approved to date by regulators. As a result, the regulatory approval process for product candidates such as ours is uncertain and may be more expensive and take longer than the approval process for product candidates based on other, better known or more extensively studied technologies. It is difficult to determine how long it will take or how much it will cost to obtain regulatory approvals for our product candidates in either the United States or the European Union or other regions of the world or how long it will take to commercialize our product candidates. Delay or failure to obtain, or unexpected costs in obtaining, the regulatory approval necessary to bring a potential product candidate to market could decrease our ability to generate sufficient product revenue, and our business, financial condition, results of operations and prospects may be harmed.

The FDA, the EMA and other regulatory authorities may implement additional regulations or restrictions on the development and commercialization of our product candidates, which may be difficult to predict.

The FDA, the EMA and regulatory authorities in other countries have each expressed interest in further regulating biotechnology products, such as cellular therapies. Agencies at both the federal and state level in the United States, as well as the U.S. Congressional committees and other governments or governing agencies, have also expressed interest in further regulating the biotechnology industry. Such action may delay or prevent commercialization of some or all of our product candidates. Adverse developments in clinical trials of cellular therapy products conducted by others may cause the FDA or other oversight bodies to change the requirements for approval of any of our product candidates. Similarly, the EMA governs the development of cellular therapies in the European Union and may issue new guidelines concerning the development and marketing authorization for cellular therapy products and require that we comply with these new guidelines. These regulatory review agencies and committees and the new requirements or guidelines they promulgate may lengthen the regulatory review process, require us to perform additional studies or trials, increase our development costs, lead to changes in regulatory positions and interpretations, delay or prevent approval and commercialization of our product candidates or lead to significant post-approval limitations or restrictions. As we advance our product candidates, we will be required to consult with these regulatory agencies and comply with applicable requirements and guidelines. If we fail to do so, we may be required to delay or discontinue development of such product candidates. These additional processes may result in a review and approval process that is longer than we otherwise would have expected. Delays as a result of an increased or lengthier regulatory approval process or further restrictions on the development of our product candidates can be costly and could negatively impact our ability to complete clinical trials and commercialize our current and future product candidates in a timely manner, if at all.

Clinical development involves a lengthy and expensive process, with an uncertain outcome. We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of any product candidates .

To obtain the requisite regulatory approvals to commercialize any product candidates, we must demonstrate through extensive preclinical studies and clinical trials that our products are safe and effective in humans. Clinical testing is expensive, difficult to design and implement and can take many years to complete, and its outcome is inherently uncertain. We may be unable to establish clinical endpoints that applicable regulatory authorities would consider clinically meaningful, and a clinical trial can fail at any stage of testing. The outcome of nonclinical studies and early clinical trials may not be predictive of the success of later clinical trials, and interim results of a clinical trial do not necessarily predict final results. Differences in trial design between early-stage clinical trials and later-stage clinical trials make it difficult to extrapolate the results of earlier clinical trials to later clinical trials. Moreover,

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nonclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in nonclinical studies and clinical trials have nonetheless failed to obtain marketing approval of their products.

Successful completion of clinical trials is a prerequisite to submitting a BLA to the FDA, a Marketing Authorization Application, or MAA, to the EMA, and similar marketing applications to comparable foreign regulatory authorities, for each product candidate and, consequently, the ultimate approval and commercial marketing of any product candidates. We do not know whether any of our clinical trials will begin or be completed on schedule, if at all.

We may experience delays in completing our preclinical or nonclinical testing and studies and initiating or completing clinical trials. We also may experience numerous unforeseen events during, or as a result of, any future clinical trials that we could conduct that could delay or prevent our ability to receive marketing approval or commercialize our product candidates, including:

we may be unable to generate sufficient preclinical, toxicology, or other in vivo or in vitro data to support the initiation of clinical trials;

regulators or institutional review boards, or IRBs, or ethics committees may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site;

we may experience delays in reaching, or fail to reach, agreement on acceptable terms with prospective trial sites and prospective contract research organizations, or CROs, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;

clinical trials of any product candidates may fail to show safety, purity or potency, or produce negative or inconclusive results and we may decide, or regulators may require us, to conduct additional nonclinical studies or clinical trials or we may decide to abandon product development programs;

the number of patients required for clinical trials of any product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate or participants may drop out of these clinical trials or fail to return for post-treatment follow-up at a higher rate than we anticipate;

we may need to add new or additional clinical trial sites;

our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all, or may deviate from the clinical trial protocol or drop out of the trial, which may require that we add new clinical trial sites or investigators;

the cost of preclinical or nonclinical testing and studies and clinical trials of any product candidates may be greater than we anticipate or greater than our available financial resources;

the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient or inadequate;

RCTs may circulate longer or shorter in humans than anticipated;

our product candidates may have undesirable side effects or other unexpected characteristics, causing us or our investigators, regulators or IRBs or ethics committees to suspend or terminate the trials, or reports may arise from preclinical or clinical testing of other therapies for rare diseases, cancer and

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clinical trials of our product candidates may produce negative or inconclusive results, which may result in our deciding, or regulators requiring us, to conduct additional clinical trials or abandon product development programs; and

the FDA or other regulatory authorities may require us to submit additional data such as long-term toxicology studies or impose other requirements before permitting us to initiate a clinical trial.

We could also encounter delays if a clinical trial is suspended or terminated by us, the IRBs of the institutions in which such trials are being conducted, or the FDA or other regulatory authorities, or recommended for suspension or termination by the Data Safety Monitoring Board, or DSMB, for such trial. A suspension or termination may be imposed due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a product or treatment, failure to establish or achieve clinically meaningful trial endpoints, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. Many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates. Further, the FDA or other regulatory authorities may disagree with our clinical trial design and our interpretation of data from clinical trials, or may change the requirements for approval even after they have reviewed and commented on the design for our clinical trials.

Our product development costs will increase if we experience delays in clinical testing or marketing approvals. We do not know whether any of our preclinical or nonclinical testing and studies or clinical trials will begin as planned, will need to be restructured or will be completed on schedule, or at all. Significant preclinical or nonclinical testing and studies or clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize our product candidates and may allow our competitors to bring products to market before we do, potentially impairing our ability to successfully commercialize our product candidates and harming our business and results of operations. Any delays in our nonclinical or future clinical development programs may harm our business, financial condition and prospects significantly.

Preclinical development is uncertain. Our preclinical programs may experience delays or may never advance to clinical trials, which would adversely affect our ability to obtain regulatory approvals or commercialize these programs on a timely basis or at all, which would have an adverse effect on our business .

All of product candidates are still in the preclinical stage, and their risk of failure is high. Before we can commence clinical trials for a product candidate, we must complete extensive preclinical testing and studies that support our planned INDs in the United States, or similar applications in other jurisdictions. We cannot be certain of the timely completion or outcome of our preclinical testing and studies and cannot predict if the FDA or other regulatory authorities will accept our proposed clinical programs or if the outcome of our preclinical testing and studies will ultimately support the further development of our programs. As a result, we cannot be sure that we will be able to submit INDs or similar applications for our preclinical programs on the timelines we expect, if at all, and we cannot be sure that submission of INDs or similar applications will result in the FDA or other regulatory authorities allowing clinical trials to begin.

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Our planned clinical trials or those of our future collaborators may reveal significant adverse events not seen in our preclinical or nonclinical studies and may result in a safety profile that could inhibit regulatory approval or market acceptance of any of our product candidates .

Before obtaining regulatory approvals for the commercial sale of any products, we must demonstrate through lengthy, complex and expensive preclinical studies and clinical trials that our product candidates are both safe and effective for use in each target indication. Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical trial process. The results of preclinical studies and early clinical trials of our product candidates may not be predictive of the results of later-stage clinical trials. In addition, initial success in clinical trials may not be indicative of results obtained when such trials are completed. There is typically an extremely high rate of attrition from the failure of product candidates proceeding through clinical trials. Our RCTs are produced from O negative donor blood stem cells and we believe can therefore be used as allogeneic therapies in approximately 95% of patients. However, following repeated dosing some patients may develop antibodies to blood antigens on our RCTs. These antibodies could reduce the efficacy of our RCTs or result in undesirable side effects. Product candidates in later stages of clinical trials also may fail to show the desired safety and efficacy profile despite having progressed through nonclinical studies and initial clinical trials. A number of companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or unacceptable safety issues, notwithstanding promising results in earlier trials. Most product candidates that commence clinical trials are never approved as products and there can be no assurance that any of our current or future clinical trials will ultimately be successful or support further clinical development of any of our product candidates.

We intend to develop RTX-212, and may develop future product candidates, in combination with one or more cancer therapies. The uncertainty resulting from the use of our product candidates in combination with other cancer therapies may make it difficult to accurately predict side effects in future clinical trials.

If significant adverse events or other side effects are observed in any of our current or future clinical trials, we may have difficulty recruiting patients to our clinical trials, patients may drop out of our trials, or we may be required to abandon the trials or our development efforts of one or more product candidates altogether. Although our RCTs are designed to be enucleated, a small percentage may retain a nucleus, which could result in unexpected or undesirable side effects. We, the FDA or other applicable regulatory authorities, or an IRB may suspend clinical trials of a product candidate at any time for various reasons, including a belief that subjects in such trials are being exposed to unacceptable health risks or adverse side effects. Some potential therapeutics developed in the biotechnology industry that initially showed therapeutic promise in early-stage trials have later been found to cause side effects that prevented their further development. Even if the side effects do not preclude the drug from obtaining or maintaining marketing approval, undesirable side effects may inhibit market acceptance of the approved product due to its tolerability versus other therapies. Any of these developments could materially harm our business, financial condition and prospects.

Positive results from early preclinical studies of our product candidates are not necessarily predictive of the results of later preclinical studies and any future clinical trials of our product candidates. If we cannot replicate the positive results from our earlier preclinical studies of our product candidates in our later preclinical studies and future clinical trials, we may be unable to successfully develop, obtain regulatory for and commercialize our product candidates.

Any positive results from our preclinical studies of our product candidates may not necessarily be predictive of the results from required later preclinical studies and clinical trials. Similarly, even if we are able to complete our planned preclinical studies or any future clinical trials of our product candidates

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according to our current development timeline, the positive results from such preclinical studies and clinical trials of our product candidates may not be replicated in subsequent preclinical studies or clinical trial results.

Many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in late-stage clinical trials after achieving positive results in early-stage development and we cannot be certain that we will not face similar setbacks. These setbacks have been caused by, among other things, preclinical and other nonclinical findings made while clinical trials were underway, or safety or efficacy observations made in preclinical studies and clinical trials, including previously unreported adverse events. Moreover, preclinical, nonclinical and clinical data are often susceptible to varying interpretations and analyses and many companies that believed their product candidates performed satisfactorily in preclinical studies and clinical trials nonetheless failed to obtain FDA or EMA approval.

If we encounter difficulties enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected .

We may experience difficulties in patient enrollment in our clinical trials for a variety of reasons. The timely completion of clinical trials in accordance with their protocols depends, among other things, on our ability to enroll a sufficient number of patients who remain in the study until its conclusion. The enrollment of patients depends on many factors, including:

the severity of the disease under investigation;

the patient eligibility and exclusion criteria defined in the protocol;

the size of the patient population required for analysis of the trial's primary endpoints;

the proximity of patients to trial sites;

the design of the trial;

our ability to recruit clinical trial investigators with the appropriate competencies and experience;

clinicians' and patients' perceptions as to the potential advantages and risks of the product candidate being studied in relation to other available therapies, including any new drugs that may be approved for the indications we are investigating;

the efforts to facilitate timely enrollment in clinical trials;

the patient referral practices of physicians;

the ability to monitor patients adequately during and after treatment;

our ability to obtain and maintain patient consents; and

the risk that patients enrolled in clinical trials will drop out of the trials before completion.

Genetically defined diseases generally, and especially those for which our current rare disease product candidates are targeted, have low incidence and prevalence. For example, only 15,000 patients in the United States and a total of 50,000 worldwide have been diagnosed with phenylketonuria, or PKU. This could pose obstacles to the timely recruitment and enrollment of a sufficient number of eligible patients into our proposed clinical and the other risks described above.

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In addition, our clinical trials will compete with other clinical trials for product candidates that are in the same therapeutic areas as our product candidates, and this competition will reduce the number and types of patients available to us, because some patients who might have opted to enroll in our trials may instead opt to enroll in a trial being conducted by one of our competitors. Since the number of qualified clinical investigators is limited, we expect to conduct some of our clinical trials at the same clinical trial sites that some of our competitors use, which will reduce the number of patients who are available for our clinical trials in such clinical trial site. Moreover, because our product candidates represent a departure from more commonly used methods for our targeted therapeutic areas, potential patients and their doctors may be inclined to use conventional therapies, rather than enroll patients in any future clinical trial.

Delays in patient enrollment may result in increased costs or may affect the timing or outcome of the planned clinical trials, which could prevent completion of these trials and adversely affect our ability to advance the development of our product candidates.

Interim top-line and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.

From time to time, we may publish interim top-line or preliminary data from our clinical trials. Interim data from clinical trials that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Preliminary or top-line data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, interim and preliminary data should be viewed with caution until the final data are available. Adverse differences between preliminary or interim data and final data could significantly harm our business prospects.

If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of our business .

We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. Our research and development activities involve the use of biological and hazardous materials and produce hazardous waste products. We generally contract with third parties for the disposal of these materials and wastes. We cannot eliminate the risk of contamination or injury from these materials, which could cause an interruption of our commercialization efforts, research and development efforts and business operations, environmental damage resulting in costly clean-up and liabilities under applicable laws and regulations governing the use, storage, handling and disposal of these materials and specified waste products. Although we believe that the safety procedures utilized by our third-party manufacturers for handling and disposing of these materials generally comply with the standards prescribed by these laws and regulations, we cannot guarantee that this is the case or eliminate the risk of accidental contamination or injury from these materials. In such an event, we may be held liable for any resulting damages and such liability could exceed our resources and state or federal or other applicable authorities may curtail our use of certain materials and/or interrupt our business operations. Furthermore, environmental laws and regulations are complex, change frequently and have tended to become more stringent. We cannot predict the impact of such changes and cannot be certain of our future compliance. In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair our research, development or production efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions.

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Although we maintain workers' compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials or other work-related injuries, this insurance may not provide adequate coverage against potential liabilities. We do not carry specific biological waste or hazardous waste insurance coverage, workers compensation or property and casualty and general liability insurance policies that include coverage for damages and fines arising from biological or hazardous waste exposure or contamination.

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 testing our product candidates in clinical trials and will face an even greater risk if we commercialize any products. For example, we may be sued if our product candidates cause or are perceived to cause injury or are found to be otherwise unsuitable during clinical trials, 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 or 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. Even successful defense would require significant financial and management resources. Regardless of the merits or eventual outcome, liability claims may result in:

inability to bring a product candidate to the market;

decreased demand for our products;

injury to our reputation;

withdrawal of clinical trial participants and inability to continue clinical trials;

initiation of investigations by regulators;

costs to defend the related litigation;

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;

exhaustion of any available insurance and our capital resources;

the inability to commercialize any product candidate; and

decline in our share price.

Since we have not yet commenced clinical trials, we do not yet hold clinical trial or product liability insurance. Our inability to obtain 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, alone or with collaborators. If and when coverage is secured, our insurance policies may also have various exclusions, and we may be subject to a product liability claim for which we have no coverage. We may have to pay any amounts awarded by a court or negotiated in a settlement that exceed our coverage

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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. Even if our agreements with any future corporate collaborators entitle us to indemnification against losses, such indemnification may not be available or adequate should any claim arise.

The market opportunities for our product candidates may be limited to those patients who are ineligible for or have failed prior treatments and may be small, and our estimates of the prevalence of our target patient populations may be inaccurate .

Cancer therapies are sometimes characterized as first-line, second-line or third-line, and the FDA often approves new therapies initially only for third-line use. Initial approvals for new cancer therapies are often restricted to later lines of therapy for patients with advanced or metastatic disease, limiting the number of patients who may be eligible for such new therapies, which may include our product candidates.

Our projections of both the number of people who have the diseases we are targeting, as well as the subset of people with these diseases in a position to receive our therapies, if approved, are based on our beliefs and estimates. These estimates have been derived from a variety of sources, including scientific literature, input from key opinion leaders, patient foundations, or secondary market research databases, and may prove to be incorrect. Further, new studies may change the estimated incidence or prevalence of these diseases. The number of patients may turn out to be lower than expected. Additionally, the potentially addressable patient population for our product candidates may be limited or may not be amenable to treatment with our product candidates. For instance, we expect our product candidates targeting rare diseases to target the smaller patient populations that suffer from the respective diseases we seek to treat. Even if we obtain significant market share for our product candidates, because certain of the potential target populations are small, we may never achieve profitability without obtaining regulatory approval for additional indications.

We expect to develop RTX-212, and potentially future product candidates, in combination with other therapies, and safety or supply issues with combination-use products may delay or prevent development and approval of our product candidates .

We intend to develop RTX-212, and likely other product candidates, in combination with one or more cancer therapies, both approved and unapproved. Even if any product candidate we develop were to receive marketing approval or be commercialized for use in combination with other existing therapies, we would continue to be subject to the risks that the FDA or similar regulatory authorities outside of the United States could revoke approval of the therapy used in combination with our product candidate or that safety, efficacy, manufacturing or supply issues could arise with these existing therapies. Combination therapies are commonly used for the treatment of cancer, and we would be subject to similar risks if we develop any of our product candidates for use in combination with other drugs or for indications other than cancer. Similarly, if the therapies we use in combination with our product candidates are replaced as the standard of care for the indications we choose for any of our product candidates, the FDA or similar regulatory authorities outside of the United States may require us to conduct additional clinical trials. The occurrence of any of these risks could result in our own products, if approved, being removed from the market or being less successful commercially.

We may also evaluate RTX-212 or any other future product candidates in combination with one or more cancer therapies that have not yet been approved for marketing by the FDA or similar regulatory authorities outside of the United States. We will not be able to market and sell RTX-212 or any product candidate we develop in combination with any such unapproved cancer therapies that do not ultimately obtain marketing approval. The regulations prohibiting the promotion of products for unapproved uses are

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complex and subject to substantial interpretation by the FDA and other government agencies. In addition, there are additional risks similar to the ones described for our products currently in development and clinical trials that result from the fact that such cancer therapies are unapproved, such as the potential for serious adverse effects, delay in their clinical trials and lack of FDA approval.

If the FDA or similar regulatory authorities outside of the United States do not approve these other drugs or revoke their approval of, or if safety, efficacy, manufacturing, or supply issues arise with, the drugs we choose to evaluate in combination with RTX-212 or any product candidate we develop, we may be unable to obtain approval of or market RTX-212 or any product candidate we develop.

Cellular therapies are a novel approach and negative perception of any product candidates that we develop could adversely affect our ability to conduct our business or obtain regulatory approvals for such product candidates .

Cellular therapies in general, and RCTs in particular, remain novel and unproven therapies, with no genetically engineered red cell therapy approved to date in the United States or the European Union. RCTs may not gain the acceptance of the public or the medical community. For example, CAR-Ts and other cellular therapies have in some cases caused severe side effects and even mortality and their broader use may therefore be limited. Although our RCTs are fundamentally different than these earlier cellular therapies, they may be viewed in the same vein, limiting their market acceptance. Further, with respect to our RTX-212 program the use of potent T cell and NK cell stimulation as a potential treatment for solid or hematological cancers is a recent scientific development and may not become broadly accepted by physicians, patients, hospitals, cancer treatment centers and others in the medical community.

Our success will depend upon physicians who specialize in the treatment of diseases targeted by our product candidates prescribing treatments that involve the use of our product candidates in lieu of, or in addition to, existing treatments with which they are more familiar and for which greater clinical data may be available. Adverse events in clinical trials of our product candidates or in clinical trials of others developing similar products and the resulting publicity, as well as any other adverse events in the field of cellular therapies, could result in a decrease in demand for any product that we may develop. In addition, responses by the U.S., state or foreign governments to negative public perception or ethical concerns may result in new legislation or regulations that could limit our ability to develop or commercialize any product candidates, obtain or maintain regulatory approval or otherwise achieve profitability. More restrictive statutory regimes, government regulations or negative public opinion would have an adverse effect on our business, financial condition, results of operations and prospects and may delay or impair the development and commercialization of our product candidates or demand for any products we may develop.

We face significant competition from other biotechnology and pharmaceutical companies, and our operating results will suffer if we fail to compete effectively .

The biopharmaceutical industry is characterized by intense competition and rapid innovation. Our competitors may be able to develop other compounds, drugs, cellular or gene therapies that are able to achieve similar or better results. Our potential competitors include major multinational pharmaceutical companies, established biotechnology companies, specialty pharmaceutical companies and universities and other research institutions. Many of our competitors have substantially greater financial, technical and other resources, such as larger research and development staff, experienced marketing and manufacturing organizations and well-established sales forces. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large, established companies. Established pharmaceutical companies may also invest heavily to accelerate discovery and development of novel therapeutics or to in-license novel therapeutics that could make the product candidates that we

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develop obsolete. Mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated in our competitors. Competition may increase further as a result of advances in the commercial applicability of technologies and greater availability of capital for investment in these industries. Our competitors, either alone or with collaborative partners, may succeed in developing, acquiring or licensing on an exclusive basis drug, biologic, cellular or gene therapy products that are more effective, safer, more easily commercialized or less costly than our product candidates or may develop proprietary technologies or secure patent protection that we may need for the development of our technologies and products. We believe the key competitive factors that will affect the development and commercial success of our product candidates are efficacy, safety, tolerability, reliability, convenience of use, price and reimbursement.

We anticipate competing with the largest biopharmaceutical companies in the world, such as Novartis AG, Gilead Sciences, Inc., Celgene Corporation, Amgen Inc., F. Hoffman-La Roche AG (Roche), Johnson & Johnson, and Pfizer Inc., which are all currently conducting research in cellular therapies and all of which have greater financial and human resources than we currently have. In addition to these fully integrated biopharmaceutical companies, we also compete with those companies whose products target the same indications as our product candidates. Many third parties compete with us in developing various approaches to cancer therapy. They include pharmaceutical companies, biotechnology companies, academic institutions and other research organizations. Any treatments developed by our competitors could be superior to our RCT product candidates. It is possible that these competitors will succeed in developing technologies that are more effective than our RCTs or that would render our cancer targeted RCTs obsolete or noncompetitive. We anticipate that we will face increased competition in the future as additional companies enter our market and scientific developments surrounding other cancer therapies continue to accelerate.

In addition, we have identified four companies that are leveraging the red blood cell as a platform. Erytech Pharma SA is using hypotonic enzyme loading to create products for use in cancer, rare disease and immunology. There are three other companies that rely on loading proteins into mature red cells: Orphan Technologies Ltd., which is developing a range of products aimed at rare diseases; EryDel SpA, which is in late-stage development of dexamethasone loaded RBCs for the treatment of ataxia telangiectasia; and SQZ Biotechnologies Companies, which is pursuing preclinical applications in cancer, enzyme replacement therapy and immune tolerance. Beyond red blood cell-based competition, there are companies developing engineered enzymes and specializing in rare diseases, such as Aeglea BioTherapeutics, Inc., which has a product candidate in a Phase 1 trial for the treatment of hyperargininemia, and a number of gene therapy companies, such as Alnylam Pharmaceuticals, Inc., that are primarily focused on liver diseases. Homology Medicines, Inc. recently declared that it is in IND-enabling studies with a gene therapy product candidate and expects to initiate a clinical trial in PKU by 2019. Finally, Synlogic, Inc., one of several companies developing engineered probiotic therapeutics to treat inborn errors of metabolism, has a product candidate in a Phase 1 trial for the treatment of urea cycle disorders and a preclinical program for the treatment of PKU.

Even if we obtain regulatory approval to market our product candidates, the availability and price of our competitors' products could limit the demand and the price we are able to charge for our product candidates. We may not be able to implement our business plan if the acceptance of our product candidates is inhibited by price competition or the reluctance of physicians to switch from existing methods of treatment to our product candidates, or if physicians switch to other new drug or biologic products or choose to reserve our product candidates for use in limited circumstances. For additional information regarding our competition, see "Business—Competition."

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Even if a product candidate we develop receives marketing approval, it may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success .

If any product candidate we develop receives marketing approval, whether as a single agent or in combination with other therapies, it may nonetheless fail to gain sufficient market acceptance by physicians, patients, third-party payors, and others in the medical community. For example, other cancer treatments like chemotherapy, radiation therapy and immunotherapy are well established in the medical community, and doctors may continue to rely on these therapies. If the product candidates we develop do not achieve an adequate level of acceptance, we may not generate significant product revenues and we may not become profitable. The degree of market acceptance of any product candidate, if approved for commercial sale, will depend on a number of factors, including:

efficacy, safety and potential advantages compared to alternative treatments;

convenience and ease of administration compared to alternative treatments;

the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;

public perception of new therapies, including cellular therapies;

the strength of marketing and distribution support;

the ability to offer our products, if approved, for sale at competitive prices;

the ability to obtain sufficient third-party insurance coverage and adequate reimbursement, including with respect to the use of the approved product as a combination therapy;

adoption of a companion diagnostic and/or complementary diagnostic; and

the prevalence and severity of any side effects.

We will need to grow the size of our organization, and we may experience difficulties in managing this growth .

As of June 15, 2018, we had 83 full-time employees. As our research, development, manufacturing and commercialization plans and strategies develop, and as we transition into operating as a public company, we expect to need additional managerial, operational, sales, marketing, financial and other personnel. Future growth would impose significant added responsibilities on members of management, including:

identifying, recruiting, compensating, integrating, maintaining and motivating additional employees;

managing our internal research and development efforts effectively, including identification of clinical candidates, scaling our manufacturing process and navigating the clinical and FDA review process for our product candidates; and

improving our operational, financial and management controls, reporting systems and procedures.

Our future financial performance and our ability to commercialize our product candidates will depend, in part, on our ability to effectively manage any future growth, and our management may also have to divert a disproportionate amount of its attention away from day-to-day activities in order to devote a substantial amount of time to managing these growth activities.

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We currently rely, and for the foreseeable future will continue to rely, in substantial part on certain organizations, advisors and consultants to provide certain services, including many aspects of regulatory affairs, clinical management and manufacturing. There can be no assurance that the services of these organizations, advisors and consultants will continue to be available to us on a timely basis when needed, or that we can find qualified replacements. In addition, if we are unable to effectively manage our outsourced activities or if the quality or accuracy of the services provided by consultants is compromised for any reason, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain regulatory approval of our product candidates or otherwise advance our business. There can be no assurance that we will be able to manage our existing consultants or find other competent outside contractors and consultants on economically reasonable terms, or at all.

If we are not able to effectively expand our organization by hiring new employees and expanding our groups of consultants and contractors, we may not be able to successfully implement the tasks necessary to further develop and commercialize our product candidates and, accordingly, may not achieve our research, development and commercialization goals.

If we lose key management personnel, or if we fail to recruit additional highly skilled personnel, our ability to identify and develop new or next generation product candidates will be impaired, could result in loss of markets or market share and could make us less competitive .

Our ability to compete in the highly competitive biotechnology and pharmaceutical industries depends upon our ability to attract and retain highly qualified managerial, scientific and medical personnel. We are highly dependent on our management, scientific and medical personnel, including David R. Epstein, our Chairman, Pablo J. Cagnoni, our Chief Executive Officer, Torben Straight Nissen, our President, Andrew Oh, our Chief Financial Officer, Chris Carpenter, our Chief Medical Officer and Spencer Fisk, our Senior Vice President of Manufacturing. The loss of the services of any of our executive officers, other key employees, and other scientific and medical advisors, and our inability to find suitable replacements could result in delays in product development and harm our business.

We conduct our operations at our facilities in Cambridge, Massachusetts. This region is headquarters to many other biopharmaceutical companies and many academic and research institutions. Competition for skilled personnel in our market is intense and may limit our ability to hire and retain highly qualified personnel on acceptable terms or at all.

To induce valuable employees to remain at our company, in addition to salary and cash incentives, we have provided restricted stock and stock options that vest over time. The value to employees of stock options that vest over time may be significantly affected by movements in our stock price that are beyond our control, and may at any time be insufficient to counteract more lucrative offers from other companies. Despite our efforts to retain valuable employees, members of our management, scientific and development teams may terminate their employment with us on short notice. Employment of our key employees is at-will, which means that any of our employees could leave our employment at any time, with or without notice. We do not maintain "key man" insurance policies on the lives of these individuals or the lives of any of our other employees. Our success also depends on our ability to continue to attract, retain and motivate highly skilled junior, mid-level and senior managers as well as junior, mid-level and senior scientific and medical personnel.

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Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses .

Our operations, and those of our CROs, contract manufacturing organizations, or CMOs, and other contractors and consultants, could be subject to earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, fires, extreme weather conditions, medical epidemics and other natural or man-made disasters or business interruptions, for which we are predominantly self-insured. The occurrence of any of these business disruptions could seriously harm our operations and financial condition and increase our costs and expenses. We rely on third-party manufacturers to produce and process our product candidates on a patient by patient basis. Our ability to obtain clinical supplies of our product candidates could be disrupted if the operations of these suppliers are affected by a man-made or natural disaster or other business interruption.

Regulators globally are also imposing greater monetary fines for privacy violations. For example, in 2016, the European Union adopted a new regulation governing data practices and privacy called the General Data Protection Regulation, or GDPR, which becomes effective on May 25, 2018. The GDPR applies to any company that collects and uses personal data in connection with offering goods or services to individuals in the European Union or the monitoring of their behavior. Non-compliance with the GDPR may result in monetary penalties of up to €20 million or 4% of worldwide revenue, whichever is higher. The GDPR and other changes in laws or regulations associated with the enhanced protection of certain types of personal data, such as healthcare data or other sensitive information, could greatly increase the cost of providing our product candidates, if approved, or even prevent us from offering our product candidates, if approved, in certain jurisdictions.

Our internal computer systems, or those used by our CROs, CMOs or other contractors or consultants, may fail or suffer security breaches .

Despite the implementation of security measures, our internal computer systems and those of our future CROs, CMOs and other contractors and consultants are vulnerable to damage from computer viruses and unauthorized access. While we have not experienced any such material system failure or security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs and our business operations. For example, the loss of clinical trial data from completed or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. Likewise, we currently rely on third parties for the manufacture of our product candidates and to conduct clinical trials, and similar events relating to their computer systems could also have a material adverse effect on our business. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and the further development and commercialization of our product candidates could be delayed.

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

We are exposed to the risk of employee fraud or other illegal activity by our employees, independent contractors, consultants, commercial partners and vendors. Misconduct by these parties could include intentional, reckless and/or negligent conduct that fails to comply with the laws of the FDA and other similar foreign regulatory bodies, provide true, complete and accurate information to the FDA and other similar foreign regulatory bodies, comply with manufacturing standards we have established, comply with healthcare fraud and abuse laws in the United States and similar foreign fraudulent misconduct laws, or

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report financial information or data accurately or to disclose unauthorized activities to us. If we obtain FDA approval of 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 patients, as well as proposed and future sales, marketing and education programs.

Our relationships with healthcare providers and physicians and third-party payors will be subject to applicable anti-kickback, fraud and abuse and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings .

Healthcare providers, physicians and third-party payors in the United States and elsewhere play a primary role in the recommendation and prescription of pharmaceutical products. Arrangements with third-party payors and customers can expose pharmaceutical manufactures to broadly applicable fraud and abuse and other healthcare laws and regulations, including, without limitation, the federal Anti-Kickback Statute and the federal False Claims Act, which may constrain the business or financial arrangements and relationships through which such companies sell, market and distribute pharmaceutical products. In particular, the promotion, sales and marketing of healthcare items and services, as well as certain business arrangements in the healthcare industry, are subject to extensive laws designed to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, structuring and commission(s), certain customer incentive programs and other business arrangements generally. Activities subject to these laws also involve the improper use of information obtained in the course of patient recruitment for clinical trials. The applicable federal, state and foreign healthcare laws and regulations 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 healthcare program, such as the Medicare and Medicaid programs. A person or entity can be found guilty of violating the statute without actual knowledge of the statute or specific intent to violate it. In addition, a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act, or FCA. The Anti-Kickback Statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on the one hand and prescribers, purchasers, and formulary managers on the other. There are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution;

federal civil and criminal false claims laws and civil monetary penalty laws, including the FCA, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, false or fraudulent claims for payment to, or approval by Medicare, Medicaid, or other federal healthcare programs, knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim or an obligation to pay or transmit money to the federal government, or knowingly concealing or knowingly and improperly avoiding or decreasing or concealing an obligation to pay money to the federal government. Manufacturers can be held liable under the FCA even when they do not submit claims directly to government payors if they are deemed to "cause" the submission of false or fraudulent claims. The FCA also permits a private individual acting as a "whistleblower" to bring actions on behalf of the federal government alleging violations of the FCA and to share in any monetary recovery;

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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 healthcare 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 healthcare 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, healthcare benefits, items or services relating to healthcare matters. Similar to the federal Anti-Kickback Statute, a person or entity can be found guilty of violating HIPAA without actual knowledge of the statute or specific intent to violate it;

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and their respective implementing regulations, which impose, among other things, requirements on certain covered healthcare providers, health plans, and healthcare 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. HITECH also created new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys' fees and costs associated with pursuing federal civil actions;

the federal Physician Payment Sunshine Act, created under the Patient Protection and Affordable Care Act, and its implementing regulations, which require 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, or HHS, 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;

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

analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, and may be broader in scope than their federal equivalents; state and foreign laws that require pharmaceutical companies to comply with the pharmaceutical industry's voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers; state and foreign laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.

The distribution of pharmaceutical products is subject to additional requirements and regulations, including extensive record-keeping, licensing, storage and security requirements intended to prevent the unauthorized sale of pharmaceutical products.

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The scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of healthcare reform, especially in light of the lack of applicable precedent and regulations. Federal and state enforcement bodies have recently increased their scrutiny of interactions between healthcare companies and healthcare providers, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry. Ensuring business arrangements comply with applicable healthcare laws, as well as responding to possible investigations by government authorities, can be time- and resource-consuming and can divert a company's attention from the business.

The failure to comply with any of these laws or regulatory requirements subjects entities to possible legal or regulatory action. Depending on the circumstances, failure to meet applicable regulatory requirements can result in civil, criminal and administrative penalties, damages, fines, disgorgement, individual imprisonment, possible exclusion from participation in federal and state funded healthcare programs, contractual damages and the curtailment or restricting of our operations, as well as additional reporting obligations and oversight if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws. Any action for violation of these laws, even if successfully defended, could cause a pharmaceutical manufacturer to incur significant legal expenses and divert management's attention from the operation of the business. Prohibitions or restrictions on sales or withdrawal of future marketed products could materially affect business in an adverse way.

Effective upon the completion of this offering, we will adopt a code of business conduct and ethics, but it is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent inappropriate conduct 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. Efforts to ensure that our business arrangements will comply with applicable healthcare 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 healthcare laws and 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, disgorgement, monetary fines, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of our operations, any of which could adversely affect our ability to operate our business and our results of operations. In addition, the approval and commercialization of any of our product candidates outside the United States will also likely subject us to foreign equivalents of the healthcare laws mentioned above, among other foreign laws.

We may not be successful in our efforts to identify additional product candidates. Due to our limited resources and access to capital, we must prioritize development of certain product candidates, which may prove to be wrong and may adversely affect our business .

Although we intend to explore other therapeutic opportunities, in addition to the product candidates that we are currently developing, we may fail to identify viable new product candidates for clinical development for a number of reasons. If we fail to identify additional potential product candidates, our business could be materially harmed.

Research programs to pursue the development of our existing and planned product candidates for additional indications and to identify new product candidates and disease targets require substantial technical, financial and human resources whether or not they are ultimately successful. Our research

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programs may initially show promise in identifying potential indications and/or product candidates, yet fail to yield results for clinical development for a number of reasons, including:

the research methodology used may not be successful in identifying potential indications and/or product candidates;

potential product candidates may, after further study, be shown to have harmful adverse effects or other characteristics that indicate they are unlikely to be effective drugs; or

it may take greater human and financial resources than we will possess to identify additional therapeutic opportunities for our product candidates or to develop suitable potential product candidates through internal research programs, thereby limiting our ability to develop, diversify and expand our product portfolio.

Because we have limited financial and human resources, we intend to initially focus on research programs and product candidates for a limited set of indications. As a result, we may forego or delay pursuit of opportunities with other product candidates or for other indications that later prove to have greater commercial potential or a greater likelihood of success. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities.

Accordingly, there can be no assurance that we will ever be able to identify additional therapeutic opportunities for our product candidates or to develop suitable potential product candidates through internal research programs, which could materially adversely affect our future growth and prospects. We may focus our efforts and resources on potential product candidates or other potential programs that ultimately prove to be unsuccessful.

If we fail to develop additional product candidates, our commercial opportunity will be limited.

Developing and obtaining regulatory approval for and commercializing any additional product candidates we identify will require substantial additional funding beyond the net proceeds from this offering and is prone to the risks of failure inherent in medical product development. We cannot provide you any assurance that we will be able to successfully advance additional product candidates, if any, through the development process.

Even if we receive FDA approval to market additional product candidates for the treatment of the diseases we target, we cannot assure you that any such product candidates will be successfully commercialized, widely accepted in the marketplace or more effective than other commercially available alternatives. If we are unable to successfully develop and commercialize additional product candidates, our commercial opportunity will be limited. Moreover, a failure in obtaining regulatory approval of additional product candidates may have a negative effect on the approval process of other product candidates of ours or result in losing approval of any approved product candidate.

A variety of risks associated with marketing our product candidates internationally could materially adversely affect our business .

We plan to seek regulatory approval of our product candidates outside of the United States and, accordingly, we expect that we will be subject to additional risks related to operating in foreign countries if we obtain the necessary approvals, including:

differing regulatory requirements in foreign countries;

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unexpected changes in tariffs, trade barriers, price and exchange controls and other regulatory requirements;

economic weakness, including inflation, or political instability in particular foreign economies and markets;

compliance with tax, employment, immigration and labor laws for employees living or traveling abroad;

foreign taxes, including withholding of payroll taxes;

foreign currency fluctuations, which could result in increased operating expenses and reduced revenue, and other obligations incident to doing business in another country;

difficulties staffing and managing foreign operations;

workforce uncertainty in countries where labor unrest is more common than in the United States;

potential liability under the Foreign Corrupt Practices Act, or FCPA, or comparable foreign regulations;

challenges enforcing our contractual and intellectual property rights, especially in those foreign countries that do not respect and protect intellectual property rights to the same extent as the United States;

production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and

business interruptions resulting from geo-political actions, including war and terrorism.

These and other risks associated with our international operations may materially adversely affect our ability to attain or maintain profitable operations.

We currently have no marketing and sales organization and have no experience in marketing products. If we are unable to establish marketing and sales capabilities or enter into agreements with third parties to market and sell our product candidates, we may not be able to generate product revenue .

We currently have no sales, marketing or distribution capabilities and have no experience in marketing products. We intend to develop an in-house marketing organization and sales force, which will require significant capital expenditures, management resources and time. We will have to compete with other pharmaceutical and biotechnology companies to recruit, hire, train and retain marketing and sales personnel.

In addition to establishing internal sales, marketing and distribution capabilities, we will pursue collaborative arrangements regarding the sales and marketing of our products, however, there can be no assurance that we will be able to establish or maintain such collaborative arrangements, or if we are able to do so, that they will have effective sales forces. Any revenue we receive will depend upon the efforts of such third parties, which may not be successful. We may have little or no control over the marketing and sales efforts of such third parties and our revenue from product sales may be lower than if we had commercialized our product candidates ourselves. We also face competition in our search for third parties to assist us with the sales and marketing efforts of our product candidates.

There can be no assurance that we will be able to develop in-house sales and distribution capabilities or establish or maintain relationships with third-party collaborators to commercialize any product in the United States or overseas.

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Comprehensive tax reform legislation could adversely affect our business and financial condition.

On December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act, or the TCJA, that significantly reforms the Internal Revenue Code of 1986, as amended. The TCJA, among other things, contains significant changes to corporate taxation, including reduction of the corporate tax rate from a top marginal tax rate of 35% to a flat rate of 21%, limitation of the tax deduction for interest expense to 30% of adjusted earnings (except for certain small businesses), limitation of the deduction for net operating losses to 80% of annual taxable income and elimination of net operating loss carrybacks and modifying or repealing many business deductions and credits (including reducing the business tax credit for certain clinical testing expenses incurred in the testing of certain drugs for rare diseases or conditions generally referred to as "orphan drugs"). We continue to examine the impact this tax reform legislation may have on our business. However, the effect of the TCJA on our business, whether adverse or favorable, is uncertain and may not become evident for some period of time. We urge investors to consult with their legal and tax advisers regarding the implications of the TCJA on an investment in our common stock.

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

As of December 31, 2017, we had U.S. federal and state net operating loss carryforwards of $38.2 million and $37.9 million, respectively, which begin to expire in 2033 and 2034, respectively. As of December 31, 2017, we also had U.S. federal and state research and development tax credit carryforwards of $0.9 million and $0.4 million, respectively, which begin to expire in 2034 and 2030, respectively. These net operating loss and tax credit carryforwards could expire unused and be unavailable to offset future taxable income or tax liabilities, respectively. In addition, in general, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, or the Code, and corresponding provisions of state law, a corporation that undergoes an "ownership change" is subject to limitations on its ability to utilize its pre-change net operating loss carryforwards or tax credits, or NOLs or credits, to offset future taxable income or taxes. For these purposes, an ownership change generally occurs where the aggregate stock ownership of one or more stockholders or groups of stockholders who owns at least 5% of a corporation's stock increases its ownership by more than 50 percentage points over its lowest ownership percentage within a specified testing period. Our existing NOLs or credits may be subject to 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 or credits could be further limited by Sections 382 and 383 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 Sections 382 and 383 of the Code. Our NOLs or credits may also be impaired under state law. Accordingly, we may not be able to utilize a material portion of our NOLs or credits. Furthermore, our ability to utilize our NOLs or credits is conditioned upon our attaining profitability and generating U. S. federal and state taxable income. As described above under "Risk factors—Risks related to our business, technology and industry," we have incurred significant net losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future; and therefore, we do not know whether or when we will generate the U.S. federal or state taxable income necessary to utilize our NOLs or credits that are subject to limitation by Sections 382 and 383 of the Code. The reduction of the corporate tax rate under the TCJA caused a reduction in the economic benefit of our net operating loss carryforwards and other deferred tax assets available to us. Under the TCJA, net operating loss carryforwards generated after December 31, 2017 will not be subject to expiration.

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Unstable market and economic conditions may have serious adverse consequences on our business, financial condition and stock price.

As widely reported, global credit and financial markets have experienced extreme volatility and disruptions in the past several years, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability. There can be no assurance that further deterioration in credit and financial markets and confidence in economic conditions will not occur. Our general business strategy may be adversely affected by any such economic downturn, volatile business environment or continued unpredictable and unstable market conditions. If the current equity and credit markets deteriorate, or do not improve, it may make any necessary debt or equity financing more difficult, more costly, and more dilutive. Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial performance and stock price and could require us to delay or abandon clinical development plans. In addition, there is a risk that one or more of our current service providers, manufacturers and other partners may not survive these difficult economic times, which could directly affect our ability to attain our operating goals on schedule and on budget.

As of March 31, 2018, we had cash, cash equivalents and marketable securities of $192.6 million. While we are not aware of any downgrades, material losses, or other significant deterioration in the fair value of our cash equivalents and marketable securities since March 31, 2018, no assurance can be given that further deterioration of the global credit and financial markets would not negatively impact our current portfolio of cash equivalents or our ability to meet our financing objectives. Furthermore, our stock price may decline due in part to the volatility of the stock market and the general economic downturn.

Risks related to government regulation

We are very early in our development efforts. All of our product candidates are still in preclinical development. If we are unable to advance our product candidates to clinical development, obtain regulatory approval and ultimately commercialize our product candidates or experience significant delays in doing so, our business will be materially harmed .

We are very early in our development efforts, and all of our product candidates are still in preclinical development. We have invested substantially all of our efforts and financial resources in the identification and preclinical development of RCTs, including the development of our initial product candidates, RTX-134, RTX-212, RTX-Uricase/URAT1 and RTX-CBS. Our ability to generate product revenues, which we do not expect will occur for many years, if ever, will depend on the successful development and eventual commercialization of our product candidates, which may never occur. We currently generate no revenue from sales of any products, and we may never be able to develop or commercialize a marketable product. In addition, certain of our product candidate development programs contemplate the development of companion diagnostics, which are assays or tests to identify an appropriate patient population. Companion diagnostics are subject to regulation as medical devices and must themselves be approved for marketing by the FDA or certain other foreign regulatory agencies before we may commercialize our products. The success of our product candidates will depend on several factors, including the following:

successful completion of preclinical studies;

approval of INDs for our planned clinical trials or future clinical trials;

successful enrollment in, and completion of, clinical trials;

successful development of companion diagnostics for use with certain of our product candidates;

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receipt of regulatory approvals from applicable regulatory authorities;

establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers for clinical supply and commercial manufacturing;

obtaining and maintaining patent and trade secret protection or regulatory exclusivity for our product candidates;

launching commercial sales of our product candidates, if and when approved, whether alone or in collaboration with others;

acceptance of the product candidates, if and when approved, by patients, the medical community and third-party payors;

effectively competing with other therapies;

obtaining and maintaining third-party insurance coverage and adequate reimbursement;

enforcing and defending intellectual property rights and claims; and

maintaining a continued acceptable safety profile of the product candidates following approval.

If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize our product candidates, which would materially harm our business. If we do not receive regulatory approvals for our product candidates, we may not be able to continue our operations.

We may rely on third parties to conduct investigator-sponsored clinical trials of our product candidates. Any failure by a third party to meet its obligations with respect to the clinical development of our product candidates may delay or impair our ability to obtain regulatory approval for other product candidates .

We may rely on academic and private non-academic institutions to conduct and sponsor clinical trials relating to our product candidates. We will not control the design or conduct of the investigator-sponsored trials, and it is possible that the FDA or non-U.S. regulatory authorities will not view these investigator-sponsored trials as providing adequate support for future clinical trials, whether controlled by us or third parties, for any one or more reasons, including elements of the design or execution of the trials or safety concerns or other trial results.

Such arrangements will likely provide us certain information rights with respect to the investigator-sponsored trials, including access to and the ability to use and reference the data, including for our own regulatory filings, resulting from the investigator-sponsored trials. However, we would not have control over the timing and reporting of the data from investigator-sponsored trials, nor would we own the data from the investigator-sponsored trials. If we are unable to confirm or replicate the results from the investigator-sponsored trials or if negative results are obtained, we would likely be further delayed or prevented from advancing further clinical development of our product candidates. Further, if investigators or institutions breach their obligations with respect to the clinical development of our product candidates, or if the data proves to be inadequate compared to the first-hand knowledge we might have gained had the investigator-sponsored trials been sponsored and conducted by us, then our ability to design and conduct any future clinical trials ourselves may be adversely affected.

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Additionally, the FDA or non-U.S. regulatory authorities may disagree with the sufficiency of our right of reference to the preclinical, manufacturing or clinical data generated by these investigator-sponsored trials, or our interpretation of preclinical, manufacturing or clinical data from these investigator-sponsored trials. If so, the FDA or other non-U.S. regulatory authorities may require us to obtain and submit additional preclinical, manufacturing, or clinical data before we may initiate our planned trials and/or may not accept such additional data as adequate to initiate our planned trials.

Obtaining and maintaining regulatory approval of our product candidates in one jurisdiction does not mean that we will be successful in obtaining regulatory approval of our product candidates in other jurisdictions .

Obtaining and maintaining regulatory approval of our product candidates in one jurisdiction does not guarantee that we will be able to obtain or maintain regulatory approval in any other jurisdiction, while a failure or delay in obtaining regulatory approval in one jurisdiction may have a negative effect on the regulatory approval process in others. For example, even if the FDA grants marketing approval of a product candidate, comparable regulatory authorities in foreign jurisdictions must also approve the manufacturing, marketing and promotion of the product candidate in those countries. Approval procedures vary among jurisdictions and can involve requirements and administrative review periods different from, and greater than, those in the United States, including additional nonclinical studies or clinical trials as clinical trials conducted in one jurisdiction may not be accepted by regulatory authorities in other jurisdictions. In many jurisdictions outside the United States, a product candidate must be approved for reimbursement before it can be approved for sale in that jurisdiction. In some cases, the price that we intend to charge for our products is also subject to approval.

We may also submit marketing applications in other countries. Regulatory authorities in jurisdictions outside of the United States have requirements for approval of product candidates with which we must comply prior to marketing in those jurisdictions. Obtaining foreign regulatory approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties and costs for us and could delay or prevent the introduction of our products in certain countries. If we fail to comply with the regulatory requirements in international markets and/or receive applicable marketing approvals, our target market will be reduced and our ability to realize the full market potential of our product candidates will be harmed.

If we are not able to obtain, or if there are delays in obtaining, required regulatory approvals for our product candidates, we will not be able to commercialize, or will be delayed in commercializing, our product candidates, and our ability to generate revenue will be materially impaired .

Our product candidates and the activities associated with their development and commercialization, including their design, testing, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, promotion, sale, distribution, import and export are subject to comprehensive regulation by the FDA and other regulatory agencies in the United States and by comparable authorities in other countries. Before we can commercialize any of our product candidates, we must obtain marketing approval. We have not received approval to market any of our product candidates from regulatory authorities in any jurisdiction and it is possible that none of our product candidates or any product candidates we may seek to develop in the future will ever obtain regulatory approval. We, as a company, have no experience in filing and supporting the applications necessary to gain regulatory approvals and expect to rely on third-party CROs and/or regulatory consultants to assist us in this process. Securing regulatory approval requires the submission of extensive preclinical and clinical data and supporting information to the various regulatory authorities for each therapeutic indication to establish the drug candidate's safety and efficacy.

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Securing regulatory approval also requires the submission of information about the drug manufacturing process to, and inspection of manufacturing facilities by, the relevant regulatory authority. Our product candidates may not be effective, may be only moderately effective or may prove to have undesirable or unintended side effects, toxicities or other characteristics that may preclude our obtaining marketing approval or prevent or limit commercial use.

The process of obtaining regulatory approvals, both in the United States and abroad, is expensive, may take many years if additional clinical trials are required, if approval is obtained at all, and can vary substantially based upon a variety of factors, including the type, complexity and novelty of the product candidates involved. Changes in marketing approval policies during the development period, changes in or the enactment of additional statutes or regulations, or changes in regulatory review for each submitted IND, Premarket Approval, or PMA, BLA or equivalent application types, may cause delays in the approval or rejection of an application. The FDA and comparable authorities in other countries have substantial discretion in the approval process and may refuse to accept any application or may decide that our data are insufficient for approval and require additional preclinical, clinical or other studies. Our product candidates could be delayed in receiving, or fail to receive, regulatory approval for many reasons, including the following:

the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials;

we may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that a drug candidate is safe and effective for its proposed indication or a related companion diagnostic is suitable to identify appropriate patient populations;

the results of clinical trials may not meet the level of statistical significance required by the FDA or comparable foreign regulatory authorities for approval;

we may be unable to demonstrate that a product candidate's clinical and other benefits outweigh its safety risks;

the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials;

the data collected from clinical trials of our product candidates may not be sufficient to support the submission of an BLA or other submission or to obtain regulatory approval in the United States or elsewhere;

the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes or facilities of third-party manufacturers with which we contract for clinical and commercial supplies; and

the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval.

Of the large number of drugs in development, only a small percentage successfully complete the FDA or foreign regulatory approval processes and are commercialized. The lengthy approval process as well as the unpredictability of future clinical trial results may result in our failing to obtain regulatory approval to market our product candidates, which would significantly harm our business, results of operations and prospects.

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We expect the novel nature of our product candidates to create further challenges in obtaining regulatory approval. As a result, our ability to develop product candidates and obtain regulatory approval may be significantly impacted.

For example, the general approach for FDA approval of a new biologic or drug is for sponsors to seek licensure or approval based on dispositive data from well-controlled, Phase 3 clinical trials of the relevant product candidate in the relevant patient population. Phase 3 clinical trials typically involve hundreds of patients, have significant costs and take years to complete. We believe that we may be able to utilize FDA's accelerated approval program for our product candidates given the limited alternatives for treatments for certain rare diseases, cancer and autoimmune diseases, but the FDA may not agree with our plans.

The FDA may also require a panel of experts, referred to as an Advisory Committee, to deliberate on the adequacy of the safety and efficacy data to support approval. The opinion of the Advisory Committee, although not binding, may have a significant impact on our ability to obtain approval of any product candidates that we develop based on the completed clinical trials.

Moreover, approval of genetic or biomarker diagnostic tests may be necessary in order to advance some of our product candidates to clinical trials or potential commercialization. In the future regulatory agencies may require the development and approval of such tests. Accordingly, the regulatory approval pathway for such product candidates may be uncertain, complex, expensive and lengthy, and approval may not be obtained.

In addition, even if we were to obtain approval, regulatory authorities may approve any of our product candidates for fewer or more limited indications than we request, may not approve the price we intend to charge for our products, may grant approval contingent on the performance of costly post-marketing clinical trials, or may approve a product candidate with a label that does not include the labeling claims necessary or desirable for the successful commercialization of that product candidate. Any of the foregoing scenarios could materially harm the commercial prospects for our product candidates.

If we experience delays in obtaining approval or if we fail to obtain approval of our product candidates, the commercial prospects for our product candidates may be harmed and our ability to generate revenues will be materially impaired.

Our product candidates may cause undesirable side effects that could delay or prevent their regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following marketing approval, if any .

Undesirable side effects caused by our product candidates could cause us to interrupt, delay or halt preclinical studies or could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other regulatory authorities. While we have not yet initiated clinical trials for any of our product candidates, as is the case with many treatments for rare diseases, cancer and autoimmune diseases, it is likely that there may be side effects associated with their use. Results of our trials could reveal a high and unacceptable severity and prevalence of these or other side effects. In such an event, our trials could be suspended or terminated and the FDA or comparable foreign regulatory authorities could order us to cease further development of or deny approval of our product candidates for any or all targeted indications. The treatment-related side effects could affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims. Any of these occurrences may harm our business, financial condition and prospects significantly.

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Further, clinical trials by their nature utilize a sample of the potential patient population. With a limited number of patients and limited duration of exposure, rare and severe side effects of our product candidates may only be uncovered with a significantly larger number of patients exposed to the product candidate. If our product candidates receive marketing approval and we or others identify undesirable side effects caused by such product candidates (or any other similar drugs) after such approval, a number of potentially significant negative consequences could result, including:

regulatory authorities may withdraw or limit their approval of such product candidates;

regulatory authorities may require the addition of labeling statements, such as a "boxed" warning or a contraindication;

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

we may be required to change the way such product candidates are distributed or administered, conduct additional clinical trials or change the labeling of the product candidates;

regulatory authorities may require a Risk Evaluation and Mitigation Strategy, or REMS, plan to mitigate risks, which could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools;

we may be subject to regulatory investigations and government enforcement actions;

we may decide to remove such product candidates from the marketplace;

we could be sued and held liable for injury caused to individuals exposed to or taking our product candidates; and

our reputation may suffer.

We believe that any of these events could prevent us from achieving or maintaining market acceptance of the affected product candidates and could substantially increase the costs of commercializing our product candidates, if approved, and significantly impact our ability to successfully commercialize our product candidates and generate revenues.

Breakthrough Therapy Designation, Fast Track Designation or Regenerative Medicine Advanced Therapy Designation by the FDA, even if granted for any of our product candidates, may not lead to a faster development, regulatory review or approval process, and it does not increase the likelihood that any of our product candidates will receive marketing approval in the United States.

We may seek a Breakthrough Therapy Designation for some of our product candidates. A breakthrough therapy is defined as a therapy that is intended, alone or in combination with one or more other therapies, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the therapy may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. For therapies that have been designated as breakthrough therapies, interaction and communication between the FDA and the sponsor of the trial can help to identify the most efficient path for clinical development while minimizing the number of patients placed in ineffective control regimens. Therapies designated as breakthrough therapies by the FDA may also be eligible for priority review and accelerated approval. Designation as a breakthrough therapy is within the discretion of the FDA. Accordingly, even if we believe one of our product candidates meets the criteria for designation as a breakthrough therapy, the FDA may

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disagree and instead determine not to make such designation. In any event, the receipt of a Breakthrough Therapy Designation for a product candidate may not result in a faster development process, review or approval compared to therapies considered for approval under conventional FDA procedures and does not assure ultimate approval by the FDA. In addition, even if one or more of our product candidates qualify as breakthrough therapies, the FDA may later decide that such product candidates no longer meet the conditions for qualification or decide that the time period for FDA review or approval will not be shortened.

We may seek Fast Track Designation for some of our product candidates. If a therapy is intended for the treatment of a serious or life-threatening condition and the therapy demonstrates the potential to address unmet medical needs for this condition, the therapy sponsor may apply for Fast Track Designation. The FDA has broad discretion whether or not to grant this designation, so even if we believe a particular product candidate is eligible for this designation; we cannot assure you that the FDA would decide to grant it. Even if we do receive Fast Track Designation, we may not experience a faster development process, review or approval compared to conventional FDA procedures. The FDA may withdraw Fast Track Designation if it believes that the designation is no longer supported by data from our clinical development program. Fast Track Designation alone does not guarantee qualification for the FDA's priority review procedures.

We may seek Regenerative Medicine Advanced Therapy, or RMAT, designation for one or more of our product candidates. In 2017, the FDA established the RMAT designation as part of its implementation of the 21st Century Cures Act to expedite review of any drug that meets the following criteria: it qualifies as a RMAT, which is defined as a cell therapy, therapeutic tissue engineering product, human cell and tissue product, or any combination product using such therapies or products, with limited exceptions; it is intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition; and preliminary clinical evidence indicates that the drug has the potential to address unmet medical needs for such a disease or condition. Like Breakthrough Therapy Designation, RMAT designation provides potential benefits that include more frequent meetings with FDA to discuss the development plan for the product candidate, and eligibility for rolling review and priority review. Products granted RMAT designation may also be eligible for accelerated approval on the basis of a surrogate or intermediate endpoint reasonably likely to predict long-term clinical benefit, or reliance upon data obtained from a meaningful number of sites, including through expansion to additional sites. RMAT-designated products that receive accelerated approval may, as appropriate, fulfill their post-approval requirements through the submission of clinical evidence, clinical trials, patient registries, or other sources of real world evidence, such as electronic health records; through the collection of larger confirmatory data sets; or via post-approval monitoring of all patients treated with such therapy prior to approval of the therapy. There is no assurance that we will be able to obtain RMAT designation for any of our product candidates. RMAT designation does not change the FDA's standards for product approval, and there is no assurance that such designation will result in expedited review or approval or that the approved indication will not be narrower than the indication covered by the designation. Additionally RMAT designation can be revoked if the criteria for eligibility cease to be met as clinical data emerges.

We may seek priority review designation for one or more of our other product candidates, but we might not receive such designation, and even if we do, such designation may not lead to a faster development or regulatory review or approval process.

If the FDA determines that a product candidate offers a treatment for a serious condition and, if approved, the product would provide a significant improvement in safety or effectiveness, the FDA may designate the product candidate for priority review. A priority review designation means that the goal for the FDA to

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review an application is six months, rather than the standard review period of ten months. We may request priority review for our product candidates. The FDA has broad discretion with respect to whether or not to grant priority review status to a product candidate, so even if we believe a particular product candidate is eligible for such designation or status, the FDA may decide not to grant it. Moreover, a priority review designation does not necessarily result in expedited development or regulatory review or approval process or necessarily confer any advantage with respect to approval compared to conventional FDA procedures. Receiving priority review from the FDA does not guarantee approval within the six-month review cycle or at all.

We may fail to obtain and maintain orphan drug designations from the FDA for our current and future product candidates, as applicable.

Our strategy includes filing for orphan drug designation where available for our product candidates. Under the Orphan Drug Act, the FDA may grant orphan drug designation to a drug or biologic intended to treat a rare disease or condition, which is defined as one occurring in a patient population of fewer than 200,000 in the United States, or a patient population greater than 200,000 in the United States where there is no reasonable expectation that the cost of developing the drug or biologic will be recovered from sales in the United States. In the United States, orphan drug designation entitles a party to financial incentives, such as opportunities for grant funding toward clinical trial costs, tax advantages and user-fee waivers. In addition, if a product that has orphan drug designation subsequently receives the first FDA approval for the disease for which it has such designation, the product is entitled to orphan drug exclusivity, which means that the FDA may not approve any other applications, including a full new drug application, or NDA, or BLA, to market the same drug or biologic for the same indication for seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity or where the original manufacturer is unable to assure sufficient product quantity.

In addition, exclusive marketing rights in the United States may be limited if we seek approval for an indication broader than the orphan-designated indication or may be lost if the FDA later determines that the request for designation was materially defective or if we are unable to assure sufficient quantities of the product to meet the needs of patients with the orphan-designated disease or condition. Further, even if we obtain orphan drug exclusivity for a product, that exclusivity may not effectively protect the product from competition because different drugs with different active moieties may receive and be approved for the same condition, and only the first applicant to receive approval will receive the benefits of marketing exclusivity. Even after an orphan-designated product is approved, the FDA can subsequently approve a later drug with the same active moiety for the same condition if the FDA concludes that the later drug is clinically superior if it is shown to be safer, more effective or makes a major contribution to patient care. Orphan drug designation neither shortens the development time or regulatory review time of a drug, nor gives the drug any advantage in the regulatory review or approval process. In addition, while we may seek orphan drug designation for our product candidates, we may never receive such designations.

Even if we receive regulatory approval of any product candidates or therapies, we will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with our product candidates .

If any of our product candidates are approved, they will be subject to ongoing regulatory requirements for manufacturing, labeling, packaging, storage, advertising, promotion, sampling, record-keeping, export, import, conduct of post-marketing studies and submission of safety, efficacy and other post-market information, including both federal and state requirements in the United States and requirements of comparable foreign regulatory authorities. In addition, we will be subject to continued compliance with cGMP and GCP requirements for any clinical trials that we conduct post-approval.

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Manufacturers and manufacturers' facilities are required to comply with extensive FDA, and comparable foreign regulatory authority requirements, including ensuring that quality control and manufacturing procedures conform to cGMP regulations. As such, we and our contract manufacturers will be subject to continual review and inspections to assess compliance with cGMP and adherence to commitments made in any BLA, other marketing application, and previous responses to inspection observations. Accordingly, we and others with whom we work must continue to expend time, money, and effort in all areas of regulatory compliance, including manufacturing, production and quality control.

Any regulatory approvals that we receive for our product candidates may be subject to limitations on the approved indicated uses for which the product may be marketed or to the 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 product candidate. The FDA may also require a risk evaluation and mitigation strategies, or REMS, program as a condition of approval of our product candidates, which could entail requirements for long-term patient follow-up, a medication guide, physician communication plans or additional elements to ensure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. In addition, if the FDA or a comparable foreign regulatory authority approves our product candidates, we will have to comply with requirements including submissions of safety and other post-marketing information and reports and registration.

The FDA may impose consent decrees or withdraw approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market. Later discovery of previously unknown problems with our product candidates, including adverse events of unanticipated severity or frequency, or with our third-party manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new safety information; imposition of post-market studies or clinical trials to assess new safety risks; or imposition of distribution restrictions or other restrictions under a REMS program. Other potential consequences include, among other things:

restrictions on the marketing or manufacturing of our products, 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 license approvals;

product seizure or detention or refusal to permit the import or export of our product candidates; and

injunctions or the imposition of civil or criminal penalties.

The FDA strictly regulates marketing, labeling, advertising, and promotion of products that are placed on the market. Products may be promoted only for the approved indications and in accordance with the provisions of the approved label. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses and a company that is found to have improperly promoted off-label uses may be subject to significant liability. The policies of the FDA and of other regulatory authorities may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained which would adversely affect our business, prospects and ability to achieve or sustain profitability.

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We also cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative or executive action, either in the United States or abroad. For example, certain policies of the current administration may impact our business and industry. Namely, the current administration has taken several executive actions, including the issuance of a number of executive orders, that could impose significant burdens on, or otherwise materially delay, the FDA's ability to engage in routine regulatory and oversight activities, such as implementing statutes through rulemaking, issuance of guidance and review and approval of marketing applications. It is difficult to predict how these executive actions, including any executive orders, will be implemented, and the extent to which they will impact the FDA's ability to exercise its regulatory authority. If these executive actions impose constraints on FDA's ability to engage in oversight and implementation activities in the normal course, our business may be negatively impacted.

Healthcare insurance coverage and reimbursement may be limited or unavailable in certain market segments for our product candidates, if approved, which could make it difficult for us to sell any product candidates or therapies profitably .

The success of our product candidates, if approved, depends on the availability of adequate coverage and reimbursement from third-party payors. In addition, because our product candidates represent new approaches to the treatment of the diseases they target, we cannot be sure that coverage and reimbursement will be available for, or accurately estimate the potential revenue from, our product candidates or assure that coverage and reimbursement will be available for any product that we may develop.

Patients who are provided medical treatment for their conditions generally rely on third-party payors to reimburse all or part of the costs associated with their treatment. Adequate coverage and reimbursement from governmental healthcare programs, such as Medicare and Medicaid, and commercial payors are critical to new product acceptance.

Government authorities and third-party payors, such as private health insurers and health maintenance organizations, decide which drugs and treatments they will cover and the amount of reimbursement. Coverage and reimbursement 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.

In the United States, no uniform policy of coverage and reimbursement for products exists among third-party payors. As a result, obtaining coverage and reimbursement approval of a product from a government or other third-party payor is a time-consuming and costly process that could require us to provide to each payor supporting scientific, clinical and cost-effectiveness data for the use of our products on a payor-by-payor basis, with no assurance that coverage and adequate reimbursement will be obtained. Even if we obtain coverage for a given product, the resulting reimbursement payment rates might not be adequate for us to achieve or sustain profitability or may require co-payments that patients find unacceptably high. Additionally, third-party payors may not cover, or provide adequate reimbursement for,

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long-term follow-up evaluations required following the use of product candidates. Patients are unlikely to use our product candidates unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of our product candidates. Because our product candidates may have a higher cost of goods than conventional therapies, and may require long-term follow-up evaluations, the risk that coverage and reimbursement rates may be inadequate for us to achieve profitability may be greater. There is significant uncertainty related to insurance coverage and reimbursement of newly approved products. It is difficult to predict at this time what third-party payors will decide with respect to the coverage and reimbursement for our product candidates.

Payment methodologies may be subject to changes in healthcare legislation and regulatory initiatives. For example, the Middle Class Tax Relief and Job Creation Act of 2012 required that the Centers for Medicare & Medicaid Services, the agency responsible for administering the Medicare program, or CMS, reduce the Medicare clinical laboratory fee schedule by 2% in 2013, which served as a base for 2014 and subsequent years. In addition, effective January 1, 2014, CMS also began bundling the Medicare payments for certain laboratory tests ordered while a patient received services in a hospital outpatient setting. Additional state and federal healthcare reform measures are expected to be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for certain pharmaceutical products or additional pricing pressures.

Moreover, increasing efforts by governmental and third-party payors in the United States and abroad to cap or reduce healthcare costs may cause such organizations to limit both coverage and the level of reimbursement for newly approved products and, as a result, they may not cover or provide adequate payment for our product candidates. There has been increasing legislative and enforcement interest in the United States with respect to specialty drug pricing practices. Specifically, there have been several recent U.S. Congressional inquiries and proposed federal and state legislation designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drugs. We expect to experience pricing pressures in connection with the sale of any of our product candidates due to the trend toward managed healthcare, the increasing influence of health maintenance organizations, cost containment initiatives and additional legislative changes.

Ongoing healthcare legislative and regulatory reform measures may have a material adverse effect on our business and results of operations .

Changes in regulations, statutes or the interpretation of existing regulations could impact our business in the future by requiring, for example: (i) changes to our manufacturing arrangements; (ii) additions or modifications to product labeling; (iii) the recall or discontinuation of our products; or (iv) additional record-keeping requirements. If any such changes were to be imposed, they could adversely affect the operation of our business.

In the United States, there have been and continue to be a number of legislative initiatives to contain healthcare costs. For example, in March 2010, the Patient Protection and Affordable Care Act, or the ACA, was passed, which substantially changes the way healthcare is financed by both governmental and private insurers, and significantly impacts the U.S. pharmaceutical industry. The ACA, among other things, subjects biological products to potential competition by lower-cost biosimilars, addresses a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected, increases the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program and extends the rebate program to individuals

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enrolled in Medicaid managed care organizations, establishes annual fees and taxes on manufacturers of certain branded prescription drugs, and creates a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer's outpatient drugs to be covered under Medicare Part D.

Some of the provisions of the ACA have yet to be fully implemented, while certain provisions have been subject to judicial and Congressional challenges, as well as efforts by the current administration to repeal or replace certain aspects of the ACA.

These laws, and future state and federal healthcare reform measures may be adopted in the future, any of which may result in additional reductions in Medicare and other healthcare funding and otherwise affect the prices we may obtain for any of our product candidates for which we may obtain regulatory approval or the frequency with which any such product candidate is prescribed or used.

European Union drug marketing and reimbursement regulations may materially affect our ability to market and receive coverage for our products in the European member states .

We intend to seek approval to market our product candidates in both the United States and in selected foreign jurisdictions. If we obtain approval in one or more foreign jurisdictions for our product candidates, we will be subject to rules and regulations in those jurisdictions. In some foreign countries, particularly those in the European Union, the pricing of pharmaceutical products is subject to governmental control and other market regulations which could put pressure on the pricing and usage of our product candidates. In these countries, pricing negotiations with governmental authorities can take considerable time after obtaining marketing approval of a product candidate. In addition, market acceptance and sales of our product candidates will depend significantly on the availability of adequate coverage and reimbursement from third-party payors for our product candidates and may be affected by existing and future healthcare reform measures.

Much like the Anti-Kickback Statute prohibition in the United States, the provision of benefits or advantages to physicians to induce or encourage the prescription, recommendation, endorsement, purchase, supply, order or use of medicinal products is also prohibited in the European Union. The provision of benefits or advantages to physicians is governed by the national anti-bribery laws of European Union Member States, such as the UK Bribery Act 2010. Infringement of these laws could result in substantial fines and imprisonment.

Payments made to physicians in certain European Union Member States must be publicly disclosed. Moreover, agreements with physicians often must be the subject of prior notification and approval by the physician's employer, his or her competent professional organization and/or the regulatory authorities of the individual European Union Member States. These requirements are provided in the national laws, industry codes or professional codes of conduct, applicable in the European Union Member States. Failure to comply with these requirements could result in reputational risk, public reprimands, administrative penalties, fines or imprisonment.

In addition, in most foreign countries, including the European Economic Area, the proposed pricing for a drug must be approved before it may be lawfully marketed. The requirements governing drug pricing and reimbursement vary widely from country to country. For example, the European Union provides options for its member states to restrict the range of medicinal products for which their national health insurance systems provide reimbursement and to control the prices of medicinal products for human use. Reference pricing used by various European Union member states and parallel distribution, or arbitrage between

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low-priced and high-priced member states, can further reduce prices. A member state may approve a specific price for the medicinal product or it may instead adopt a system of direct or indirect controls on the profitability of the company placing the medicinal product on the market. In some countries, we may be required to conduct a clinical trial or other studies that compare the cost-effectiveness of any of our product candidates to other available therapies in order to obtain or maintain reimbursement or pricing approval. 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. Historically, products launched in the European Union do not follow price structures of the United States and generally prices tend to be significantly lower. 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. If pricing is set at unsatisfactory levels or if reimbursement of our products is unavailable or limited in scope or amount, our revenues from sales by us or our strategic partners and the potential profitability of any of our product candidates in those countries would be negatively affected.

European data collection is governed by restrictive regulations governing the use, processing, and cross-border transfer of personal information .

The collection and use of personal health data in the European Union is governed by the provisions of the Data Protection Directive, and as of May 2018 the GDPR. These directives impose several requirements relating to the consent of the individuals to whom the personal data relates, the information provided to the individuals, notification of data processing obligations to the competent national data protection authorities and the security and confidentiality of the personal data. The Data Protection Directive and GDPR also impose strict rules on the transfer of personal data out of the European Union to the United States. Failure to comply with the requirements of the Data Protection Directive, the GDPR, and the related national data protection laws of the European Union Member States may result in fines and other administrative penalties. The GDPR introduces new data protection requirements in the European Union and substantial fines for breaches of the data protection rules. The GDPR regulations may impose additional responsibility and liability in relation to personal data that we process and we may be required to put in place additional mechanisms ensuring compliance with the new data protection rules. This may be onerous and adversely affect our business, financial condition, results of operations and prospects.

Laws and regulations governing any international operations we may have in the future may preclude us from developing, manufacturing and selling certain products outside of the United States and require us to develop and implement costly compliance programs.

If we expand our operations outside of the United States, we must dedicate additional resources to comply with numerous laws and regulations in each jurisdiction in which we plan to operate. The FCPA prohibits any U.S. individual or business from paying, offering, authorizing payment or offering of anything of value, directly or indirectly, to any foreign official, political party or candidate for the purpose of influencing any act or decision of the foreign entity in order to assist the individual or business in obtaining or retaining business. The FCPA also obligates companies whose securities are listed in the United States to comply with certain accounting provisions requiring the company to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations.

Compliance with the FCPA is expensive and difficult, particularly in countries in which corruption is a recognized problem. In addition, the FCPA presents particular challenges in the pharmaceutical industry, because, in many countries, hospitals are operated by the government, and doctors and other hospital

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employees are considered foreign officials. Certain payments to hospitals in connection with clinical trials and other work have been deemed to be improper payments to government officials and have led to FCPA enforcement actions.

Various laws, regulations and executive orders also restrict the use and dissemination outside of the United States, or the sharing with certain non-U.S. nationals, of information classified for national security purposes, as well as certain products and technical data relating to those products. If we expand our presence outside of the United States, it will require us to dedicate additional resources to comply with these laws, and these laws may preclude us from developing, manufacturing, or selling certain products and product candidates outside of the United States, which could limit our growth potential and increase our development costs.

The failure to comply with laws governing international business practices may result in substantial civil and criminal penalties and suspension or debarment from government contracting. The Securities and Exchange Commission, or SEC, also may suspend or bar issuers from trading securities on U.S. exchanges for violations of the FCPA's accounting provisions.

We are subject to certain U.S. and foreign anti-corruption, anti-money laundering, export control, sanctions, and other trade laws and regulations. We can face serious consequences for violations .

Among other matters, U.S. and foreign anti-corruption, anti-money laundering, export control, sanctions, and other trade laws and regulations, which are collectively referred to as Trade Laws, prohibit companies and their employees, agents, clinical research organizations, legal counsel, accountants, consultants, contractors, and other partners from authorizing, promising, offering, providing, soliciting, or receiving directly or indirectly, corrupt or improper payments or anything else of value to or from recipients in the public or private sector. Violations of Trade Laws can result in substantial criminal fines and civil penalties, imprisonment, the loss of trade privileges, debarment, tax reassessments, breach of contract and fraud litigation, reputational harm, and other consequences. We have direct or indirect interactions with officials and employees of government agencies or government-affiliated hospitals, universities, and other organizations. We also expect our non-U.S. activities to increase in time. We plan to engage third parties for clinical trials and/or to obtain necessary permits, licenses, patent registrations, and other regulatory approvals and we can be held liable for the corrupt or other illegal activities of our personnel, agents, or partners, even if we do not explicitly authorize or have prior knowledge of such activities.

Risks related to our intellectual property

If we are unable to obtain and maintain patent protection for any product candidates we develop or for our RED Platform, our competitors could develop and commercialize products or technology similar or identical to ours, and our ability to successfully commercialize any product candidates we may develop, and our technology may be adversely affected.

Our success depends in large part on our ability to obtain and maintain patent protection in the United States and other countries with respect to our product candidates, RED Platform and other technologies we may develop. We seek to protect our proprietary position by in-licensing intellectual property and filing patent applications in the United States and abroad relating to our product candidates and RED Platform, as well as other technologies that are important to our business. Given that the development of our technology and product candidates is at an early stage, our intellectual property portfolio with respect to certain aspects of our technology and product candidates is also at an early stage. For example, we do not own or in-license any issued patents directed to the composition of matter of any of the RCT product candidates that we have thus far developed using our RED Platform. In addition, we do not own or

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in-license any issued patents covering the methods and processes of our RED Platform. We have filed or intend to file patent applications on these aspects of our technology and our product candidates; however, there can be no assurance that any such patent applications will issue as granted patents. Furthermore, in some cases, we have only filed provisional patent applications on certain aspects of our technology and product candidates and each of these provisional patent applications is not eligible to become an issued patent until, among other things, we file a non-provisional patent application within 12 months of the filing date of the applicable provisional patent application. Any failure to file a non-provisional patent application within this timeline could cause us to lose the ability to obtain patent protection for the inventions disclosed in the associated provisional patent applications.

Composition of matter patents for biological and pharmaceutical products are generally considered to be the strongest form of intellectual property protection for those types of products, as such patents provide protection without regard to any method of use. We cannot be certain, however, that the claims in our pending patent applications covering the composition of matter of our product candidates will be considered patentable by the United States Patent and Trademark Office, or the USPTO, or by patent offices in foreign countries, or that the claims in any of our issued patents will be considered valid and enforceable by courts in the United States or foreign countries. Furthermore, in some cases, we may not be able to obtain issued claims covering compositions of matter relating to our product candidates and RED Platform, as well as other technologies that are important to our business, and instead may need to rely on filing patent applications with claims covering a method of use and/or method of manufacture. Method of use patents protect the use of a product for the specified method. This type of patent does not prevent a competitor from making and marketing a product that is identical to our product for an indication that is outside the scope of the patented method. Moreover, even if competitors do not actively promote their products for our targeted indications, physicians may prescribe these products "off-label" for those uses that are covered by our method of use patents. Although off-label prescriptions may infringe or contribute to the infringement of method of use patents, the practice is common and such infringement is difficult to prevent or prosecute. There can be no assurance that any such patent applications will issue as granted patents, and even if they do issue, such patent claims may be insufficient to prevent third parties, such as our competitors, from utilizing our technology. Any failure to obtain or maintain patent protection with respect to our product candidates and RED Platform could have a material adverse effect on our business, financial condition, results of operations, and prospects.

If any of our owned or in-licensed patent applications do not issue as patents in any jurisdiction, we may not be able to compete effectively.

Changes in either the patent laws or their interpretation in the United States and other countries may diminish our ability to protect our inventions, obtain, maintain, and enforce our intellectual property rights and, more generally, could affect the value of our intellectual property or narrow the scope of our owned and licensed patents. With respect to our patent portfolio, as of March of 2018, all of the patent rights that we own or in-license are currently pending patent applications except that we own one issued U.S. patent directed to methods of treating phenylketonuria with RTX-134. With respect to both in-licensed and owned intellectual property, we cannot predict whether the patent applications we and our licensors are currently pursuing will issue as patents in any particular jurisdiction or whether the claims of any issued patents will provide sufficient protection from competitors or other third parties.

The patent prosecution process is expensive, time-consuming, and complex, and we may not be able to file, prosecute, maintain, enforce, or license all necessary or desirable patents and patent applications at a reasonable cost or in a timely manner. It is also possible that we will fail to identify patentable aspects of our research and development output in time to obtain patent protection. Although we enter into

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non-disclosure and confidentiality agreements with parties who have access to confidential or patentable aspects of our research and development output, such as our employees, corporate collaborators, outside scientific collaborators, contract research organizations, contract manufacturers, consultants, advisors and other third parties, any of these parties may breach such agreements and disclose such output before a patent application is filed, thereby jeopardizing our ability to seek patent protection. In addition, our ability to obtain and maintain valid and enforceable patents depends on whether the differences between our inventions and the prior art allow our inventions to be patentable over the prior art. Furthermore, publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. Therefore, we cannot be certain that we or our licensors were the first to make the inventions claimed in any of our owned or licensed patents or pending patent applications, or that we or our licensors were the first to file for patent protection of such inventions.

If the scope of any patent protection we obtain is not sufficiently broad, or if we lose any of our patent protection, our ability to prevent our competitors from commercializing similar or identical technology and product candidates would be adversely affected.

The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions, and has been the subject of much litigation in recent years. As a result, the issuance, scope, validity, enforceability, and commercial value of our patent rights are highly uncertain. Our owned or in-licensed pending and future patent applications may not result in patents being issued which protect our product candidates, RED Platform technology, or other technologies or which effectively prevent others from commercializing competitive technologies and product candidates.

No consistent policy regarding the scope of claims allowable in patents in the biotechnology field has emerged in the United States. The patent situation outside of the United States is even more uncertain. Changes in either the patent laws or their interpretation in the United States and other countries may diminish our ability to protect our inventions and enforce our intellectual property rights, and more generally could affect the value of our intellectual property. In particular, our ability to stop third parties from making, using, selling, offering to sell, or importing products that infringe our intellectual property will depend in part on our success in obtaining and enforcing patent claims that cover our technology, inventions and improvements. 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 products and the methods used to manufacture those products. Moreover, even our issued patents do not guarantee us the right to practice our technology in relation to the commercialization of our products. The area of patent and other intellectual property rights in biotechnology is an evolving one with many risks and uncertainties, and third parties may have blocking patents that could be used to prevent us from commercializing our patented product candidates and practicing our proprietary technology. Our issued patent and those that may issue in the future may be challenged, invalidated, or circumvented, which could limit our ability to stop competitors from marketing related products or limit the length of the term of patent protection that we may have for our product candidates. In addition, the rights granted under any issued patents may not provide us with protection or competitive advantages against competitors with similar technology. Furthermore, our competitors may independently develop similar technologies. For these reasons, we may have competition for our product candidates. Moreover, because of the extensive time required for development, testing and regulatory review of a potential product, it is possible that,

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before any particular product candidate can be commercialized, any related patent may expire or remain in force for only a short period following commercialization, thereby reducing any advantage of the patent.

Moreover, the coverage claimed in a patent application can be significantly reduced before the patent is issued, and its scope can be reinterpreted after issuance. Even if patent applications we own or license issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors or other third parties from competing with us, or otherwise provide us with any competitive advantage. Any patents that we own or in-license may be challenged, narrowed, circumvented, or invalidated by third parties. Consequently, we do not know whether our product candidates, RED Platform technologies or other technologies will be protectable or remain protected by valid and enforceable patents. Our competitors or other third parties may be able to circumvent our patents by developing similar or alternative technologies or products in a non-infringing manner which could materially adversely affect our business, financial condition, results of operations and prospects.

The issuance of a patent is not conclusive as to its inventorship, scope, validity, or enforceability, and patents that we own or license may be challenged in the courts or patent offices in the United States and abroad. We or our licensors may be subject to a third party preissuance submission of prior art to the USPTO or to foreign patent authorities or become involved in opposition, derivation, revocation, reexamination, post-grant and inter partes review, or interference proceedings or other similar proceedings challenging our owned or licensed patent rights. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate or render unenforceable, our owned or in-licensed patent rights, allow third parties to commercialize our product candidates, RED Platform technologies or other technologies and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third-party patent rights. Moreover, we, or one of our licensors, may have to participate in interference proceedings declared by the USPTO to determine priority of invention or in post-grant challenge proceedings, such as oppositions in a foreign patent office, that challenge our or our licensor's priority of invention or other features of patentability with respect to our owned or in-licensed patents and patent applications. Such challenges may result in loss of patent rights, loss of exclusivity, or in patent claims being narrowed, invalidated, or held unenforceable, which could limit our ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our product candidates, RED Platform and other technologies. Such proceedings also may result in substantial cost and require significant time from our scientists and management, even if the eventual outcome is favorable to us.

In addition, given the amount of time required for the development, testing, and regulatory review of new product candidates, patents protecting such product candidates might expire before or shortly after such product candidates are commercialized. As a result, our intellectual property may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.

We may in the future co-own patent rights relating to future product candidates and our RED Platform with third parties. Some of our in-licensed patent rights are, and may in the future be, co-owned with third parties. In addition, our licensors may co-own the patent rights we in-license with other third parties with whom we do not have a direct relationship. Our exclusive rights to certain of these patent rights are dependent, in part, on inter-institutional or other operating agreements between the joint owners of such patent rights, who are not parties to our license agreements. For example, under our license agreement with the Whitehead Institute for Biomedical Research, or WIBR, as amended (or the WIBR License) we license certain patents rights co-owned by WIBR and Tufts University, or Tufts. Our rights to Tufts' interest in such patent rights depends on an inter-institutional agreement between WIBR and Tufts, pursuant to which WIBR controls the licensing of such patent rights. If our licensors do not have exclusive control of

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the grant of licenses under any such third-party co-owners' interest in such patent rights or we are otherwise unable to secure such exclusive rights, such co-owners may be able to license their rights to other third parties, including our competitors, and our competitors could market competing products and technology. In addition, we may need the cooperation of any such co-owners of our patent rights in order to enforce such patent rights against third parties, and such cooperation may not be provided to us. Any of the foregoing could have a material adverse effect on our competitive position, business, financial conditions, results of operations, and prospects.

Our rights to develop and commercialize our product candidates and RED Platform are subject, in part, to the terms and conditions of licenses granted to us by others.

We rely upon licenses to certain patent rights and proprietary technology from third parties that are important or necessary to the development of our product candidates and RED Platform. For example, under the WIBR License, WIBR grants us an exclusive, worldwide, sublicensable license under three patent families to research, develop, make, and commercialize products and processes covered by such patent rights for all uses. The portfolio of patent rights licensed to us under the WIBR License is directed, in part, to the in vitro production of red blood cells, including the use of the enzyme sortase to conjugate a protein of interest to the cell surface. Patent rights that we in-license may be subject to a reservation of rights by one or more third parties. For example, our in-licensed patent rights from WIBR under the WIBR License were funded in part by the U.S. government. As a result, the U.S. government may have certain rights to such intellectual property. Furthermore, pursuant to a Defense Advanced Research Projects Agency Agreement between WIBR and a global biopharmaceutical company, the biopharmaceutical company funded research resulting in one of the patent families licensed to us under the WIBR License and retained a worldwide, irrevocable, non-exclusive, royalty-free right to use the inventions and technologies covered by this patent family for research and development purposes. See the section titled "Business—Licenses" for additional information.

In addition, subject to the terms of any such license agreements, we do not have the right to control the preparation, filing, prosecution and maintenance, and we may not have the right to control the enforcement, and defense of patents and patent applications covering the technology that we license from third parties. For example, under the WIBR License, WIBR controls prosecution of the patent rights licensed to us, and we control enforcement of the patent rights. We cannot be certain that our in-licensed patent applications (and any patents issuing therefrom) that are controlled by our licensors will be prepared, filed, prosecuted, maintained, enforced, and defended in a manner consistent with the best interests of our business. If our licensors fail to prosecute, maintain, enforce, and defend such patents rights, or lose rights to those patent applications (or any patents issuing therefrom), the rights we have licensed may be reduced or eliminated, our right to develop and commercialize any of our product candidates and RED Platform technologies that are subject of such licensed rights could be adversely affected, and we may not be able to prevent competitors from making, using and selling competing products. Moreover, we cannot be certain that such activities by our licensors have been or will be conducted in compliance with applicable laws and regulations or will result in valid and enforceable patents or other intellectual property rights. In addition, even where we have the right to control patent prosecution of patents and patent applications we have licensed to and from third parties, we may still be adversely affected or prejudiced by actions or inactions of our licensees, our licensors and their counsel that took place prior to the date upon which we assumed control over patent prosecution.

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Some intellectual property may have been discovered through government funded programs and thus may be subject to federal regulations such as "march-in" rights, certain reporting requirements and a preference for U.S.-based companies. Compliance with such regulations may limit our exclusive rights, and limit our ability to contract with non-U.S. manufacturers.

Our in licensed patent rights from WIBR under the WIBR License were funded in part by the U.S. government and are therefore subject to certain federal regulations. When new technologies are developed with U.S. government funding, the U.S. government generally obtains certain rights in any resulting patents, including a non-exclusive license authorizing the U.S. government to use the invention or to have others use the invention on its behalf. The U.S. government's rights may also permit it to disclose the funded inventions and technology to third parties and to exercise march in rights to use or allow third parties to use the technology we have licensed that was developed using U.S. government funding. The U.S. government may exercise its march in rights if it determines that action is necessary because we fail to achieve practical application of the government-funded technology, or because action is necessary to alleviate health or safety needs, to meet requirements of federal regulations, or to give preference to U.S. industry. In addition, our rights in such inventions may be subject to certain requirements to manufacture products embodying such inventions in the United States in certain circumstances and if this requirement is not waived. Any exercise by the U.S. government of such rights or by any third party of its reserved rights could have a material adverse effect on our competitive position, business, financial condition, results of operations, and prospects.

If we fail to comply with our obligations in the agreements under which we license intellectual property rights from third parties or otherwise experience disruptions to our business relationships with our licensors, we could lose license rights that are important to our business.

The WIBR License imposes, and we expect our future license agreements will impose, various development, diligence, commercialization, and other obligations on us in order to maintain the licenses. In spite of our efforts, WIBR or a future licensor might conclude that we have materially breached our obligations under such license agreements and seek to terminate the license agreements, thereby removing or limiting our ability to develop and commercialize products and technology covered by these license agreements. If these in-licenses are terminated, or if the underlying patent rights licensed thereunder fail to provide the intended exclusivity, competitors or other third parties would have the freedom to seek regulatory approval of, and to market, products identical to ours and we may be required to cease our development and commercialization of certain of our product candidates or of our current RED Platform technologies. Any of the foregoing could have a material adverse effect on our competitive position, business, financial conditions, results of operations, and prospects.

Moreover, disputes may arise regarding intellectual property subject to a licensing agreement, including:

the scope of rights granted under the license agreement and other interpretation-related issues;

the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement;

the sublicensing of patent and other rights under our collaborative development relationships;

our diligence obligations under the license agreement and what activities satisfy those diligence obligations;

the inventorship and ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners;

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whether and the extent to which inventors are able to contest the assignment of their rights to our licensors; and

the priority of invention of patented technology.

The agreements under which we currently license intellectual property or technology from third parties are complex, and certain provisions in such agreements may be susceptible to multiple interpretations. The resolution of any contract interpretation disagreement that may arise could narrow what we believe to be the scope of our rights to the relevant intellectual property or technology, or increase what we believe to be our financial or other obligations under the relevant agreement, either of which could have a material adverse effect on our business, financial condition, results of operations, and prospects. Moreover, if disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements on commercially acceptable terms, we may be unable to continue to utilize our RED Platform or successfully develop and commercialize the affected product candidates, which could have a material adverse effect on our business, financial conditions, results of operations, and prospects.

We may not be able to protect our intellectual property and proprietary rights throughout the world.

Filing, prosecuting, and defending patents on our product candidates, RED Platform technologies and other technologies in all countries throughout the world would be prohibitively expensive, and the laws of foreign countries may not protect our rights to the same extent as the laws of the United States. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States, or from selling or importing products made using our inventions in and into the United States or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we have patent protection but enforcement is not as strong as that in the United States. These products may compete with our products, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets, and other intellectual property protection, particularly those relating to biotechnology products, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our intellectual property and proprietary rights generally. Proceedings to enforce our intellectual property and proprietary rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly, could put our patent applications at risk of not issuing, and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property and proprietary rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

Many countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In addition, many countries limit the enforceability of patents against government agencies or government contractors. In these countries, the patent owner may have limited remedies, which could materially diminish the value of such patent. If we or any of our licensors is forced to grant a license to third parties with respect to any patents relevant to our business, our competitive position may be impaired, and our business, financial condition, results of operations, and prospects may be adversely affected.

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Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment, and other requirements imposed by government patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.

Periodic maintenance fees, renewal fees, annuity fees, and various other government fees on patents and applications will be due to be paid to the USPTO and various government patent agencies outside of the United States over the lifetime of our owned or licensed patents and applications. In certain circumstances, we rely on our licensing partners to pay these fees due to U.S. and non-U.S. patent agencies. The USPTO and various non-U.S. government agencies require compliance with several procedural, documentary, fee payment, and other similar provisions during the patent application process. We are also dependent on our licensors to take the necessary action to comply with these requirements with respect to our licensed intellectual property. In some cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules. There are situations, however, in which non-compliance can result in abandonment or lapse of the patent or patent application, resulting in a partial or complete loss of patent rights in the relevant jurisdiction. In such an event, potential competitors might be able to enter the market with similar or identical products or technology, which could have a material adverse effect on our business, financial condition, results of operations, and prospects.

Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our products.

Changes in either the patent laws or interpretation of the patent laws in the United States could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents. Assuming that other requirements for patentability are met, prior to March 2013, in the United States, the first to invent the claimed invention was entitled to the patent, while outside the United States, the first to file a patent application was entitled to the patent. After March 2013, under the Leahy-Smith America Invents Act, or the America Invents Act, enacted in September 2011, the United States transitioned to a first inventor to file system in which, assuming that other requirements for patentability are met, the first inventor to file a patent application will be entitled to the patent on an invention regardless of whether a third party was the first to invent the claimed invention. A third party that files a patent application in the USPTO after March 2013, but before us could therefore be awarded a patent covering an invention of ours even if we had made the invention before it was made by such third party. This will require us to be cognizant going forward of the time from invention to filing of a patent application. Since patent applications in the United States and most other countries are confidential for a period of time after filing or until issuance, we cannot be certain that we or our licensors were the first to either (i) file any patent application related to our product candidates, RED Platform or other technologies or (ii) invent any of the inventions claimed in our or our licensor's patents or patent applications.

The America Invents Act also includes a number of significant changes that affect the way patent applications will be prosecuted and also may affect patent litigation. These include allowing third party submission of prior art to the USPTO during patent prosecution and additional procedures to attack the validity of a patent by USPTO administered post-grant proceedings, including post-grant review, inter partes review, and derivation proceedings. Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in United States federal courts necessary to invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid even though the same evidence would be insufficient to invalidate the claim if first presented in a district court action. Accordingly, a third party may attempt to use the USPTO procedures to invalidate our patent claims that would not have been invalidated if first challenged by the third party as a defendant in a district court action. Therefore, the America Invents Act and its implementation could

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increase the uncertainties and costs surrounding the prosecution of our owned or in-licensed patent applications and the enforcement or defense of our owned or in-licensed issued patents, all of which could have a material adverse effect on our business, financial condition, results of operations, and prospects.

In addition, the patent positions of companies in the development and commercialization of biologics and pharmaceuticals are particularly uncertain. Recent U.S. Supreme Court rulings have narrowed the scope of patent protection available in certain circumstances and weakened the rights of patent owners in certain situations. This combination of events has created uncertainty with respect to the validity and enforceability of patents, once obtained. Depending on future actions by the U.S. Congress, the federal courts, and the USPTO, the laws and regulations governing patents could change in unpredictable ways that could have a material adverse effect on our existing patent portfolio and our ability to protect and enforce our intellectual property in the future.

Issued patents covering our product candidates, and any patents that may issue covering our RED Platform technologies and other technologies, could be found invalid or unenforceable if challenged in court or before administrative bodies in the United States or abroad.

If we or one of our licensors initiated legal proceedings against a third party to enforce a patent covering our product candidates, RED Platform technologies or other technologies, the defendant could counterclaim that such patent is invalid or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement, during prosecution. Third parties may raise claims challenging the validity or enforceability of our owned or in-licensed patents before administrative bodies in the United States or abroad, even outside the context of litigation. Such mechanisms include re-examination, post-grant review, inter partes review, interference proceedings, derivation proceedings, and equivalent proceedings in foreign jurisdictions (e.g., opposition proceedings). Such proceedings could result in the revocation of, cancellation of, or amendment to our patents in such a way that they no longer cover our product candidates, RED Platform technologies, or other technologies. The outcome following legal assertions of invalidity and unenforceability is unpredictable. With respect to the validity question, for example, we cannot be certain that there is no invalidating prior art, of which we or our licensing partners and the patent examiner were unaware during prosecution. If a third party were to prevail on a legal assertion of invalidity or unenforceability, we would lose at least part, and perhaps all, of the patent protection on our product candidates, RED Platform or other technologies. Such a loss of patent protection would have a material adverse impact on our business, financial condition, results of operations, and prospects.

If we do not obtain patent term extension and/or data exclusivity for any product candidates we may develop, our business may be materially harmed.

Depending upon the timing, duration and specifics of any FDA marketing approval of any product candidates we may develop, one or more of our owned or in-licensed U.S. patents may be eligible for limited patent term extension under the Hatch-Waxman Act. The Hatch-Waxman Act permits a patent term extension of up to five years as compensation for patent term lost during the FDA regulatory review process. A patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval, only one patent may be extended and only those claims covering the approved drug, a method for using it, or a method for manufacturing it may be extended. Similar extensions as compensation for patent term lost during regulatory review processes are also available in

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certain foreign countries and territories, such as in Europe under a Supplementary Patent Certificate. However, we may not be granted an extension in the United States and/or foreign countries and territories because of, for example, failing to exercise due diligence during the testing phase or regulatory review process, failing to apply within applicable deadlines, failing to apply prior to expiration of relevant patents, or otherwise failing to satisfy applicable requirements. Moreover, the applicable time period or the scope of patent protection afforded could be less than we request. If we are unable to obtain patent term extension or the term of any such extension is shorter than what we request, our competitors may obtain approval of competing products following our patent expiration, and our business, financial condition, results of operations and prospects could be materially harmed.

We may be subject to claims challenging the inventorship of our patents and other intellectual property.

We or our licensors may be subject to claims that former employees, collaborators or other third parties have an interest in our owned or in-licensed patent rights, trade secrets, or other intellectual property as an inventor or co-inventor. For example, we or our licensors may have inventorship disputes arise from conflicting obligations of employees, consultants or others who are involved in developing our product candidates, RED Platform or other technologies. Litigation may be necessary to defend against these and other claims challenging inventorship or our or our licensors' ownership of our owned or in-licensed patent rights, trade secrets or other intellectual property. If we or our licensors fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, intellectual property that is important to our product candidates, RED Platform and other technologies. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees. Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and prospects.

If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.

In addition to seeking patents for our product candidates, RED Platform and other technologies, we also rely on trade secrets and confidentiality agreements to protect our unpatented know-how, technology, and other proprietary information and to maintain our competitive position. Trade secrets and know-how can be difficult to protect. We expect our trade secrets and know-how to over time be disseminated within the industry through independent development, the publication of journal articles describing the methodology, and the movement of personnel from academic to industry scientific positions.

We currently, and may continue in the future continue to, rely on third parties to assist us in developing and manufacturing our product candidates. Accordingly, we must, at times, share know-how and trade secrets, including those related to our RED Platform, with them. We may in the future also enter into research and development collaborations with third parties that may require us to share know-how and trade secrets under the terms of our research and development partnerships or similar agreements. We seek to protect our know-how, trade secrets and other proprietary technology, in part, by entering into non-disclosure and confidentiality agreements, and including in our vendor and service agreements terms protecting our confidential information, know-how and trade secrets, with parties who have access to such information, such as our employees, scientific collaborators, contract research organizations, contract manufacturers, consultants, advisors and other third parties. We also enter into confidentiality and invention or patent assignment agreements with our employees and consultants as well as train our employees not to bring or use proprietary information or technology from former employers to us or in their work, and we remind former employees when they leave their employment of their confidentiality

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obligations. However, we cannot guarantee that we have entered into such agreements with each party that may have or have had access to our trade secrets or proprietary technology and processes. We also seek to preserve the integrity and confidentiality of our data and other confidential information by maintaining physical security of our premises and physical and electronic security of our information technology systems.

Despite our efforts, any of the aforementioned parties may breach the agreements and disclose our proprietary information, including our trade secrets, or there may be a lapses or failures in our physical and electronic security systems which lead to our proprietary information being disclosed, and we may not be able to obtain adequate remedies in the event of any such breaches. Monitoring unauthorized uses and disclosures is difficult, and we do not know whether the steps we have taken to protect our proprietary technologies will be effective. If any of our scientific advisors, employees, contractors and consultants who are parties to these agreements breaches or violates the terms of any of these agreements, we may not have adequate remedies for any such breach or violation, and we could lose our trade secrets as a result. Moreover, if confidential information that is licensed or disclosed to us by our partners, collaborators, or others is inadvertently disclosed or subject to a breach or violation, we may be exposed to liability to the owner of that confidential information. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive, and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor or other third party, we would have no right to prevent them from using that technology or information to compete with us. If any of our trade secrets were to be disclosed to or independently developed by a competitor or other third party, our competitive position would be materially and adversely harmed.

We may not be successful in obtaining, through acquisitions, in-licenses or otherwise, necessary rights to our product candidates, RED Platform technologies or other technologies.

We currently have rights to certain intellectual property, through licenses from third parties, to develop our product candidates and RED Platform technologies. Some pharmaceutical companies, biotechnology companies, and academic institutions are competing with us in the field of cellular therapeutics and red cell technologies and may have patents and have filed and are likely filing patent applications potentially relevant to our business. In order to avoid infringing these third-party patents, we may find it necessary or prudent to obtain licenses to such patents from such third party intellectual property holders. We may also require licenses from third parties for certain technologies that we are evaluating for use with our current or future product candidates. However, we may be unable to secure such licenses or otherwise acquire or in-license any compositions, methods of use, processes, or other intellectual property rights from third parties that we identify as necessary for our current or future product candidates and our RED Platform at a reasonable cost or on reasonable terms, if at all. The licensing or acquisition of third party intellectual property rights is a competitive area, and several more established companies may pursue strategies to license or acquire third party intellectual property rights that we may consider attractive or necessary. These established companies may have a competitive advantage over us due to their size, capital resources and greater clinical development and commercialization capabilities. In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us. We also may be unable to license or acquire third party intellectual property rights on terms that would allow us to make an appropriate return on our investment or at all.

If we are unable to successfully obtain rights to required third party intellectual property rights or maintain the existing intellectual property rights we have, we may be required to expend significant time and resources to redesign our technology, product candidates, or the methods for manufacturing them or

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to develop or license replacement technology, all of which may not be feasible on a technical or commercial basis. If we are unable to do so, we may be unable to develop or commercialize the affected product candidates or continue to utilize our existing RED Platform technology, which could harm our business, financial condition, results of operations, and prospects significantly.

We may be subject to claims that our employees, consultants, or advisors have wrongfully used or disclosed alleged trade secrets of their current or former employers or claims asserting ownership of what we regard as our own intellectual property.

Many of our employees, consultants, and advisors are currently or were previously employed at universities or other biotechnology or pharmaceutical companies, including our licensors, competitors and potential competitors. Although we try to ensure that our employees, consultants, and advisors do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or these individuals have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such individual's current or former employer. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management.

In addition, while it is our policy to require our employees and contractors who may be involved in the conception or development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops intellectual property that we regard as our own. The assignment of intellectual property rights may not be self-executing, or the assignment agreements may be breached, and we may be forced to bring claims against third parties, or defend claims that they may bring against us, to determine the ownership of what we regard as our intellectual property. Such claims could have a material adverse effect on our business, financial condition, results of operations, and prospects.

Third-party claims of intellectual property infringement, misappropriation or other violation against us, our licensors or our collaborators may prevent or delay the development and commercialization of our product candidates, RED Platform and other technologies.

The field of cellular therapeutics is competitive and dynamic. Due to the focused research and development that is taking place by several companies, including us and our competitors, in this field, the intellectual property landscape is in flux, and it may remain uncertain in the future. As such, there may be significant intellectual property related litigation and proceedings relating to our owned and in-licensed, and other third party, intellectual property and proprietary rights in the future.

Our commercial success depends in part on our, our licensors' and our collaborators' ability to avoid infringing, misappropriating and otherwise violating the patents and other intellectual property rights of third parties. There is a substantial amount of complex litigation involving patents and other intellectual property rights in the biotechnology and pharmaceutical industries, as well as administrative proceedings for challenging patents, including interference, derivation and reexamination proceedings before the USPTO or oppositions and other comparable proceedings in foreign jurisdictions. As discussed above, recently, due to changes in U.S. law referred to as patent reform, new procedures including inter partes review and post-grant review have been implemented. As stated above, this reform adds uncertainty to the possibility of challenge to our patents in the future.

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Numerous U.S. and foreign issued patents and pending patent applications owned by third parties exist relating to red cell technologies and therapeutic proteins, including enzymes, and in the fields in which we are developing our product candidates. As the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that our product candidates, RED Platform technologies and other technologies may give rise to claims of infringement of the patent rights of others. We cannot assure you that our product candidates, RED Platform technologies and other technologies that we have developed, are developing or may develop in the future will not infringe existing or future patents owned by third parties. We may not be aware of patents that have already been issued and that a third party, for example, a competitor in the fields in which we are developing our product candidates, RED Platform and other technologies might assert are infringed by our current or future product candidates, RED Platform or other technologies, including claims to compositions, formulations, methods of manufacture or methods of use or treatment that cover our product candidates, RED Platform or other technologies. It is also possible that patents owned by third parties of which we are aware, but which we do not believe are relevant to our product candidates, RED Platform or other technologies, could be found to be infringed by our product candidates, RED Platform or other technologies. In addition, because patent applications can take many years to issue, there may be currently pending patent applications that may later result in issued patents that our product candidates, RED Platform or other technologies may infringe. We cannot provide any assurances that third-party patents do not exist which might be enforced against our current technology, including our RED Platform technologies, manufacturing methods, product candidates, or future methods or products resulting in either an injunction prohibiting our manufacture or future sales, or, with respect to our future sales, an obligation on our part to pay royalties and/or other forms of compensation to third parties, which could be significant.

Third parties may have patents or obtain patents in the future and claim that the manufacture, use or sale of our product candidates, RED Platform or other technologies infringes upon these patents. We are aware of an issued patent outside the United States that is directed to erythrocytes that comprise exogeneous polypeptides. While we believe that we have reasonable defenses against a claim of infringement, including that certain claims in this patent are invalid, there can be no assurance that we will prevail in any such action by the holder of the patent. In the event that any third party claims that we infringe their patents or that we are otherwise employing their proprietary technology without authorization and initiates litigation against us, even if we believe such claims are without merit, a court of competent jurisdiction could hold that such patents are valid, enforceable and infringed by our product candidates, RED Platform or other technologies. In this case, the holders of such patents may be able to block our ability to commercialize the applicable product candidate or technology unless we obtain a license under the applicable patents, or until such patents expire or are finally determined to be held invalid or unenforceable. Such a license may not be available on commercially reasonable terms or at all. Even if we are able to obtain a license, the license would likely obligate us to pay license fees or royalties or both, and the rights granted to us might be non-exclusive, which could result in our competitors gaining access to the same intellectual property. If we are unable to obtain a necessary license to a third-party patent on commercially reasonable terms, we may be unable to commercialize our product candidates, RED Platform, or other technologies, or such commercialization efforts may be significantly delayed, which could in turn significantly harm our business.

Defense of infringement claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of management and other employee resources from our business, and may impact our reputation. In the event of a successful claim of infringement against us, we may be enjoined from further developing or commercializing our infringing product candidates, RED Platform, or other technologies. In addition, we may have to pay substantial damages, including treble damages and

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attorneys' fees for willful infringement, obtain one or more licenses from third parties, pay royalties and/or redesign our infringing product candidates or technologies, which may be impossible or require substantial time and monetary expenditure. In that event, we would be unable to further develop and commercialize our product candidates, RED Platform, or other technologies, which could harm our business significantly.

Engaging in litigation to defend against third parties alleging that we have infringed, misappropriated or otherwise violated their patents or other intellectual property rights is very expensive, particularly for a company of our size, and time-consuming. Some of our competitors may be able to sustain the costs of litigation or administrative proceedings more effectively than we can because of greater financial resources. Patent litigation and other proceedings may also absorb significant management time. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings against us could impair our ability to compete in the marketplace. The occurrence of any of the foregoing could have a material adverse effect on our business, financial condition or results of operations.

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

Competitors may infringe our patents or the patents of our licensing partners, or we may be required to defend against claims of infringement. In addition, our patents or the patents of our licensing partners also may become involved in inventorship, priority or validity disputes. To counter or defend against such claims can be expensive and time-consuming. In an infringement proceeding, a court may decide that a patent owned or in-licensed by us is invalid or unenforceable, the other party's use of our patented technology falls under the safe harbor to patent infringement under 35 U.S.C. §271(e)(1), or may refuse to stop the other party from using the technology at issue on the grounds that our owned and in-licensed patents do not cover the technology in question. An adverse result in any litigation proceeding could put one or more of our owned or in-licensed patents at risk of being invalidated or interpreted narrowly. Even if we establish infringement, the court may decide not to grant an injunction against further infringing activity and instead award only monetary damages, which may or may not be an adequate remedy. 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.

Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses and could distract our personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions, or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing, or distribution activities. We may not have sufficient financial or other resources to conduct such litigation or proceedings adequately. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources and more mature and developed intellectual property portfolios. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace.

If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected.

Our registered or unregistered trademarks or trade names may be challenged, infringed, circumvented or declared generic or determined to be infringing on other marks. We may not be able to protect our rights

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to these trademarks and trade names, which we need to build name recognition among potential partners or customers in our markets of interest. At times, competitors or other third parties may adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion. If we assert trademark infringement claims, a court may determine that the marks we have asserted are invalid or unenforceable, or that the party against whom we have asserted trademark infringement has superior rights to the marks in question. In this case, we could ultimately be forced to cease use of such trademarks. In addition, there could be potential trade name or trademark infringement claims brought by owners of other registered trademarks or trademarks that incorporate variations of our registered or unregistered trademarks or trade names. Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively and our business may be adversely affected. Our efforts to enforce or protect our proprietary rights related to trademarks, trade secrets, domain names, copyrights or other intellectual property may be ineffective and could result in substantial costs and diversion of resources and could adversely affect our business, financial condition, results of operations and prospects.

Intellectual property rights do not necessarily address all potential threats.

The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations and may not adequately protect our business or permit us to maintain our competitive advantage. For example:

others may be able to make products that are similar to our product candidates or utilize similar technology but that are not covered by the claims of the patents that we license or may own;

we, or our current or future licensors or collaborators, might not have been the first to make the inventions covered by the issued patent or pending patent application that we license or own now or in the future;

we, or our current or future licensors or collaborators, might not have been the first to file patent applications covering certain of our or their inventions;

others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our owned or licensed intellectual property rights;

it is possible that our current or future pending owned or licensed patent applications will not lead to issued patents;

issued patents that we hold rights to may be held invalid or unenforceable, including as a result of legal challenges by our competitors or other third parties;

our competitors or other third parties might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets;

we may not develop additional proprietary technologies that are patentable;

the patents of others may harm our business; and

we may choose not to file a patent in order to maintain certain trade secrets or know-how, and a third party may subsequently file a patent covering such intellectual property.

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Should any of these events occur, they could have a material adverse effect on our business, financial condition, results of operations and prospects.

Risks related to our reliance on third parties

We will rely on third parties to conduct our clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines or comply with regulatory requirements, we may not be able to obtain regulatory approval of or commercialize any potential product candidates .

We will depend upon third parties, including independent investigators, to conduct our clinical trials under agreements with universities, medical institutions, CROs, strategic partners and others. We expect to have to negotiate budgets and contracts with CROs and trial sites, which may result in delays to our development timelines and increased costs.

We will rely heavily on third parties over the course of our clinical trials, and, as a result, will have limited control over the clinical investigators and limited visibility into their day-to-day activities, including with respect to their compliance with the approved clinical protocol. Nevertheless, we are responsible for ensuring that each of our trials is conducted in accordance with the applicable protocol, legal and regulatory requirements and scientific standards, and our reliance on third parties does not relieve us of our regulatory responsibilities. We and these third parties are required to comply with GCP requirements, which are regulations and guidelines enforced by the FDA and comparable foreign regulatory authorities for product candidates in clinical development. Regulatory authorities enforce these GCP requirements through periodic inspections of trial sponsors, clinical investigators and trial sites. If we or any of these third parties fail to comply with applicable GCP requirements, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to suspend or terminate these trials or perform additional nonclinical studies or clinical trials before approving our marketing applications. We cannot be certain that, upon inspection, such regulatory authorities will determine that any of our clinical trials comply with the GCP requirements. In addition, our clinical trials must be conducted with biologic product produced under cGMP, requirements and may require a large number of patients.

Our failure or any failure by these third parties to comply with these regulations or to recruit a sufficient number of patients may require us to repeat clinical trials, which would delay the regulatory approval process. Moreover, our business may be implicated if any of these third parties violates federal or state fraud and abuse or false claims laws and regulations or healthcare privacy and security laws.

Any third parties conducting our future clinical trials will not be our employees and, except for remedies that may be available to us under our agreements with such third parties, we cannot control whether or not they devote sufficient time and resources to our ongoing nonclinical and clinical programs. These third parties may also have relationships with other commercial entities, including our competitors, for whom they may also be conducting clinical trials or other product development activities, which could affect their performance on our behalf. If these third parties do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements or for other reasons, our clinical trials may be extended, delayed or terminated and we may not be able to complete development of, obtain regulatory approval of or successfully commercialize our product candidates. As a result, our financial results and the commercial prospects for our product candidates would be harmed, our costs could increase and our ability to generate revenue could be delayed.

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If any of our relationships with these third-party CROs or others terminate, we may not be able to enter into arrangements with alternative CROs or other third parties or to do so on commercially reasonable terms. Switching or adding additional CROs involves additional cost and requires management time and focus. In addition, there is a natural transition period when a new CRO begins work. As a result, delays may occur, which can materially impact our ability to meet our desired clinical development timelines. Though we carefully manage our relationships with our CROs, there can be no assurance that we will not encounter similar challenges or delays in the future or that these delays or challenges will not have a material adverse impact on our business, financial condition and prospects.

We expect to rely on third parties to manufacture our clinical supply of product candidates, and we intend to rely on third parties to produce and process our products, if approved .

We currently rely on outside vendors to supply raw materials and other important components, such as CD34+ precursor cells and lentiviral vectors, that are used to manufacture our product candidates. We have not yet caused any product candidates to be manufactured or processed on a commercial scale and may not be able to do so for any of our product candidates. We will make changes as we work to optimize the manufacturing process for our product candidates, and we cannot be sure that even minor changes in the process will result in therapies that are safe and effective.

The facilities used to manufacture our product candidates must be approved by the FDA or other foreign regulatory agencies pursuant to inspections that will be conducted after we submit an application to the FDA or other foreign regulatory agencies. We do not currently control the manufacturing process of, and are currently completely dependent on, our contract manufacturing partners for compliance with regulatory requirements, known as cGMP requirements, for manufacture of our product candidates. If and when our manufacturing facility becomes operational, we will be responsible for compliance with cGMP requirements. If we or our contract manufacturers cannot successfully manufacture in conformance with our specifications and the strict regulatory requirements of the FDA or other regulatory authorities, we and they will not be able to secure and/or maintain regulatory approval for their manufacturing facilities with respect to the manufacture of our product candidates. In addition, we have no control over the ability of our contract manufacturers to maintain adequate quality control, quality assurance and qualified personnel. If the FDA or a comparable foreign regulatory authority does not approve these facilities for the manufacture of our product candidates or if it withdraws any such approval in the future, we may need to find alternative manufacturing facilities, which would significantly impact our ability to develop, obtain regulatory approval for or market our product candidates, if approved.

For more information, see "Risk factors—Risks related to manufacturing and supply" below.

Our future collaborations may be important to our business. If we are unable to maintain any of these collaborations, or if these collaborations are not successful, our business could be adversely affected .

We have limited capabilities for product development and do not yet have any capability for sales, marketing or distribution. Accordingly, we may enter into collaborations with other companies to provide us with important technologies and funding for our programs and technology, and we may receive additional technologies and funding under these and other collaborations in the future. Any future collaborations we enter into, may pose a number of risks, including the following:

collaborators have significant discretion in determining the efforts and resources that they will apply;

collaborators may not perform their obligations as expected;

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collaborators may not pursue development and commercialization of any product candidates that achieve regulatory approval or may elect not to continue or renew development or commercialization programs or license arrangements based on clinical trial results, changes in the collaborators' strategic focus or available funding, or external factors, such as a strategic transaction that may divert resources or create competing priorities;

collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate for clinical testing;

collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products and product candidates if the collaborators believe that the competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours;

product candidates discovered in collaboration with us may be viewed by our collaborators as competitive with their own product candidates or products, which may cause collaborators to cease to devote resources to the commercialization of our product candidates;

collaborators may fail to comply with applicable regulatory requirements regarding the development, manufacture, distribution or marketing of a product candidate or product;

collaborators with marketing and distribution rights to one or more of our product candidates that achieve regulatory approval may not commit sufficient resources to the marketing and distribution of such product or products;

disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course of development, might cause delays or terminations of the research, development or commercialization of product candidates, might lead to additional responsibilities for us with respect to product candidates, or might result in litigation or arbitration, any of which would be time-consuming and expensive;

collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation;

collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability;

if a collaborator of ours is involved in a business combination, the collaborator might deemphasize or terminate the development or commercialization of any product candidate licensed to it by us; and

collaborations may be terminated by the collaborator, and, if terminated, we could be required to raise additional capital to pursue further development or commercialization of the applicable product candidates.

If our potential future collaborations do not result in the successful discovery, development and commercialization of products or if one of our collaborators terminates its agreement with us, we may not receive any future research funding or milestone or royalty payments under the collaboration. If we do not receive the funding we expect under these agreements, our development of our technology and product candidates could be delayed and we may need additional resources to develop product candidates and our

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technology. All of the risks relating to product development, regulatory approval and commercialization described in this prospectus also apply to the activities of our therapeutic collaborators.

Additionally, if one of our potential future collaborators terminates its agreement with us, we may find it more difficult to attract new collaborators and our perception in the business and financial communities could be adversely affected.

Collaborations are complex and time-consuming to negotiate and document. In addition, there have been a significant number of recent business combinations among large pharmaceutical companies that have resulted in a reduced number of potential future collaborators. We face significant competition in seeking appropriate collaborators. Our ability to reach a definitive agreement for a collaboration will depend, among other things, upon our assessment of the collaborator's resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator's evaluation of a number of factors. If we are unable to reach agreements with suitable collaborators on a timely basis, on acceptable terms, or at all, we may have to curtail the development of a product candidate, reduce or delay its development program or one or more of our other development programs, delay its potential commercialization or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our own expense. If we elect to increase our expenditures to fund development or commercialization activities on our own, we may need to obtain additional expertise and additional capital, which may not be available to us on acceptable terms, or at all. If we fail to enter into collaborations or do not have sufficient funds or expertise to undertake the necessary development and commercialization activities, we may not be able to further develop our product candidates, bring them to market and generate revenue from sales of drugs or continue to develop our technology, and our business may be materially and adversely affected.

Risks related to manufacturing and supply

Cell therapies rely on the availability of specialty raw materials, which may not be available to us on acceptable terms or at all.

Our product candidates require certain specialty raw materials, some of which we obtain from small companies with limited resources and experience to support a commercial product. In addition, those suppliers normally support blood-based hospital businesses and generally do not have the capacity to support commercial products manufactured under cGMP by biopharmaceutical firms. The suppliers may be ill-equipped to support our needs, especially in non-routine circumstances like an FDA inspection or medical crisis, such as widespread contamination. We do not currently have contracts in place with all of the suppliers that we may need at any point in time, and if needed, may not be able to contract with them on acceptable terms or at all. Accordingly, we may experience delays in receiving key raw materials to support clinical or commercial manufacturing.

Our product candidates are uniquely manufactured. If we or any of our third-party manufacturers encounter difficulties in manufacturing our product candidates, our ability to provide supply of our product candidates for clinical trials or our products for patients, if approved, could be delayed or stopped, or we may be unable to maintain a commercially viable cost structure .

The manufacturing process used to produce our product candidates is complex and novel and it has not yet been validated for clinical and commercial production. As a result of these complexities, the cost to manufacture our product candidates is higher than traditional small molecule chemical compounds and monoclonal antibodies and the manufacturing process is less reliable and is more difficult to reproduce. Furthermore, our manufacturing process development and scale-up is at an early stage. The actual cost to

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manufacture and process our product candidates could be greater than we expect and could materially and adversely affect the commercial viability of our product candidates.

Our manufacturing process may be susceptible to logistical issues associated with the collection of hematopoietic precursor cells from donors procurement of lentiviral vectors and plasmids sourced from various suppliers and shipment to the RCT product candidate manufacturing site as well as shipment of the final product to clinical centers, manufacturing issues associated with interruptions in the manufacturing process, contamination, equipment or reagent failure, improper installation or operation of equipment, vendor or operator error, inconsistency in cell growth, and variability in product characteristics. Even minor deviations from normal manufacturing processes could result in reduced production yields, lot failures, product defects, product recalls, product liability claims and other supply disruptions. If microbial, viral, or other contaminations are discovered in our product candidates or in the manufacturing facilities in which our product candidates are made, production at such manufacturing facilities may be interrupted for an extended period of time to investigate and remedy the contamination. Further, as product candidates are developed through preclinical to late-stage clinical trials toward approval and commercialization, it is common that various aspects of the development program, such as manufacturing methods, are altered along the way in an effort to optimize processes and results. Such changes carry the risk that they will not achieve these intended objectives, and any of these changes could cause our product candidates to perform differently and affect the results of planned clinical trials or other future clinical trials.

Although we continue to optimize our manufacturing process for our RCT product candidates, doing so is a difficult and uncertain task, and there are risks associated with scaling to the level required for advanced clinical trials or commercialization, including, among others, cost overruns, potential problems with process scale-up, process reproducibility, stability issues, lot consistency, and timely availability of reagents and/or raw materials. We ultimately may not be successful in transferring our production system from our contract manufacturer to any manufacturing facilities we establish ourselves, or our contract manufacturer may not have the necessary capabilities to complete the implementation and development process. If we are unable to adequately validate or scale-up the manufacturing process for our product candidates with our current manufacturer, we will need to transfer to another manufacturer and complete the manufacturing validation process, which can be lengthy. If we are able to adequately validate and scale-up the manufacturing process for our product candidates with a contract manufacturer, we will still need to negotiate with such contract manufacturer an agreement for commercial supply and it is not certain we will be able to come to agreement on terms acceptable to us. As a result, we may ultimately be unable to reduce the cost of goods for our product candidates to levels that will allow for an attractive return on investment if and when those product candidates are commercialized.

The manufacturing process for any products that we may develop is subject to the FDA and foreign regulatory authority approval process, and we will need to contract with manufacturers who can meet all applicable FDA and foreign regulatory authority requirements on an ongoing basis. If we or our CMOs are unable to reliably produce products to specifications acceptable to the FDA or other regulatory authorities, we may not obtain or maintain the approvals we need to commercialize such products. Even if we obtain regulatory approval for any of our product candidates, there is no assurance that either we or our CMOs will be able to manufacture the approved product to specifications acceptable to the FDA or other regulatory authorities, to produce it in sufficient quantities to meet the requirements for the potential launch of the product, or to meet potential future demand. Any of these challenges could delay completion of clinical trials, require bridging clinical trials or the repetition of one or more clinical trials, increase clinical trial costs, delay approval of our product candidates, impair commercialization efforts, increase our cost of goods, and have an adverse effect on our business, financial condition, results of operations and

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growth prospects. Our future success depends on our ability to manufacture our products on a timely basis with acceptable manufacturing costs, while at the same time maintaining good quality control and complying with applicable regulatory requirements, and an inability to do so could have a material adverse effect on our business, financial condition, and results of operations. In addition, we could incur higher manufacturing costs if manufacturing processes or standards change, and we could need to replace, modify, design, or build and install equipment, all of which would require additional capital expenditures. Specifically, because our product candidates may have a higher cost of goods than conventional therapies, the risk that coverage and reimbursement rates may be inadequate for us to achieve profitability may be greater.

We are planning to acquire and establish our own manufacturing facility and infrastructure in addition to or in lieu of relying on CMOs for the manufacture of our product candidates, which will be costly, time-consuming, and which may not be successful.

We have entered into a letter of intent to purchase a 135,000 square foot manufacturing facility located in the Northeastern United States as an alternative or in addition to our reliance on CMOs for the manufacture of our product candidates. If the purchase is completed, we plan to renovate and customize the manufacturing facility for our use. We expect that development of our own manufacturing facility will provide us with enhanced control of material supply for both clinical trials and commercialization, enable the more rapid implementation of process changes, and allow for better long-term margins. However, we have no experience as a company in developing a manufacturing facility and may never be successful in developing our own manufacturing facility or capability. As a result, we will also need to hire additional personnel to manage our operations and facilities and develop the necessary infrastructure to continue the research and development, and eventual commercialization, if approved, of our product candidates. We, as a company, have no experience in setting up, building or eventually managing a manufacturing facility. If we failed to select the correct location, or if we fail to complete the planned purchase, or fail to complete the planned renovation and customization in an efficient manner, or fail to recruit the required personnel and generally manage our growth effectively, the development and production of our product candidates could be curtailed or delayed. We may establish multiple manufacturing facilities as we expand our commercial footprint to multiple geographies, which may lead to regulatory delays or prove costly. Even if we are successful, our manufacturing capabilities could be affected by cost-overruns, unexpected delays, equipment failures, labor shortages, natural disasters, power failures and numerous other factors that could prevent us from realizing the intended benefits of our manufacturing strategy and have a material adverse effect on our business.

In addition, the FDA, the EMA and other foreign regulatory authorities may require us to submit samples of any lot of any approved product together with the protocols showing the results of applicable tests at any time. Under some circumstances, the FDA, the EMA or other foreign regulatory authorities may require that we not distribute a lot until the relevant agency authorizes its release. Slight deviations in the manufacturing process, including those affecting quality attributes and stability, may result in unacceptable changes in the product that could result in lot failures or product recalls. Lot failures or product recalls could cause us to delay product launches or clinical trials, which could be costly to us and otherwise harm our business, financial condition, results of operations and prospects. Problems in our manufacturing process could restrict our ability to meet market demand for our products.

We also may encounter problems hiring and retaining the experienced scientific, quality-control and manufacturing personnel needed to operate our manufacturing processes, which could result in delays in production or difficulties in maintaining compliance with applicable regulatory requirements.

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Any problems in our manufacturing process or facilities could make us a less attractive collaborator for potential partners, including larger pharmaceutical companies and academic research institutions, which could limit our access to additional attractive development programs.

We do not have experience as a company managing a manufacturing facility.

Operating our own manufacturing facility will require significant resources, and we do not have experience as a company in managing a manufacturing facility. In part because of this lack of experience, we cannot be certain that our manufacturing plans will be completed on time, if at all, or if manufacturing of product candidates from our own manufacturing facility for our planned clinical trials will begin or be completed on time, if at all. In part because of our inexperience, we may have unacceptable or inconsistent product quality success rates and yields, and we may be unable to maintain adequate quality control, quality assurance and qualified personnel. In addition, if we switch from our current CMOs to our own manufacturing facility for one or more of our product candidates in the future, we may need to conduct additional preclinical studies to bridge our modified product candidates to earlier versions. Failure to successfully obtain and operate our planned manufacturing facility could adversely affect the commercial viability of our product candidates.

We are dependent on suppliers for some of our components, precursor cells and materials used to manufacture our product candidates .

We currently depend on suppliers for some of the components and precursor cells necessary for our product candidates and our suppliers of precursor cells depend on the availability of human donors. We cannot be sure that these suppliers will remain in business, that they will be able to identify and recruit adequate numbers of donors, that they will be able to meet our supply needs, or that they will not be purchased by one of our competitors or another company that is not interested in continuing to produce these materials for our intended purpose. There are, in general, relatively few alternative sources of supply for these components and precursor cells. These vendors may be unable or unwilling to meet our future demands for our clinical trials or commercial sale. Establishing additional or replacement suppliers for these components and precursor cells could take a substantial amount of time and it may be difficult to establish replacement suppliers who meet regulatory requirements. Any disruption in supply from a supplier or manufacturing location could lead to supply delays or interruptions which would damage our business, financial condition, results of operations and prospects.

If we are able to find a replacement supplier, the replacement supplier would need to be qualified and may require additional regulatory authority approval, which could result in further delay. While we seek to maintain adequate inventory of the components, precursor cells and other materials used to manufacture our products, any interruption or delay in the supply of components, precursor cells or other materials, or our inability to obtain components, precursor cells or materials from alternate sources at acceptable prices in a timely manner, could impair our ability to meet the demand of our customers and cause them to cancel orders.

In addition, as part of the FDA's approval of our product candidates, we will also require FDA approval of the individual components of our process, which include the manufacturing processes and facilities of our suppliers.

Our reliance on these suppliers subjects us to a number of risks that could harm our business, and financial condition, including, among other things:

interruption of product candidate or commercial supply resulting from modifications to or discontinuation of a supplier's operations;

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delays in product shipments resulting from uncorrected defects, reliability issues, or a supplier's variation in a component;

a lack of long-term supply arrangements for key components with our suppliers;

inability to obtain adequate supply in a timely manner, or to obtain adequate supply on commercially reasonable terms;

difficulty and cost associated with locating and qualifying alternative suppliers for our components and precursor cells in a timely manner;

production delays related to the evaluation and testing of products from alternative suppliers, and corresponding regulatory qualifications;

delay in delivery due to our suppliers prioritizing other customer orders over ours; and

fluctuation in delivery by our suppliers due to changes in demand from us or their other customers.

If any of these risks materialize, our manufacturing costs could significantly increase and our ability to meet clinical and commercial demand for our products could be impacted.

Risks related to our common stock and this offering

We do not know whether an active, liquid and orderly trading 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 .

Prior to this offering there has been no public market for shares of our common stock. Although we have applied to list our common stock on The Nasdaq Global Market, an active trading market for our shares may never develop or be sustained following this offering. You may not be able to sell your shares quickly or at the market price if trading in shares of our common stock is not active. The initial public offering price for our common stock will be determined through negotiations with the underwriters, and the negotiated price may not be indicative of the market price of the common stock after the offering. As a result of these and other factors, you may be unable to resell your shares of our common stock at or above the initial public offering price. 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.

The price of our stock may be volatile, and you could lose all or part of your investment .

The trading price of our common stock following this offering is likely to be highly volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control, including limited trading volume. In addition to the factors discussed in this "Risk factors" section and elsewhere in this prospectus, these factors include:

the commencement, enrollment or results of our ongoing and planned clinical trials of our product candidates or any future clinical trials we may conduct, or changes in the development status of our product candidates;

any delay in our regulatory filings for our product candidates and any adverse development or perceived adverse development with respect to the applicable regulatory authority's review of such filings;

adverse results from or delays in clinical trials of our product candidates;

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our decision to initiate a clinical trial, not to initiate a clinical trial or to terminate an existing clinical trial;

adverse regulatory decisions, including failure to receive regulatory approval of our product candidates;

changes in laws or regulations applicable to our products, including but not limited to clinical trial requirements for approvals;

adverse developments concerning our manufacturers;

our inability to obtain adequate product supply for any approved product or inability to do so at acceptable prices;

our inability to establish collaborations, if needed;

our failure to commercialize our product candidates;

additions or departures of key scientific or management personnel;

unanticipated serious safety concerns related to the use of our product candidates;

introduction of new products or services by our competitors;

announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by us or our competitors;

our ability to effectively manage our growth;

the size and growth of our initial target markets;

actual or anticipated variations in quarterly operating results;

our cash position;

our failure to meet the estimates and projections of the investment community or that we may otherwise provide to the public;

publication of research reports about us or our industry, or cellular therapies in particular, or positive or negative recommendations or withdrawal of research coverage by securities analysts;

changes in the market valuations of similar companies;

overall performance of the equity markets;

sales of our common stock by us or our stockholders in the future;

trading volume of our common stock;

adoption of new accounting standards;

ineffectiveness of our internal controls;

disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies;

significant lawsuits, including patent or stockholder litigation;

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general political and economic conditions; and

other events or factors, many of which are beyond our control.

In addition, the stock market in general, and the market for biopharmaceutical companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Broad market and industry factors may negatively affect the market price of our common stock, regardless of our actual operating performance. If the market price of our common stock after this offering does not exceed the initial public offering price, you may not realize any return on your investment in us and may lose some or all of your investment. In the past, securities class action litigation has often been instituted against companies following periods of volatility in the market price of a company's securities. This type of litigation, if instituted, could result in substantial costs and a diversion of management's attention and resources, which would harm our business, operating results or financial condition.

We do not intend to pay dividends on our common stock so any returns will be limited to the value of our stock .

We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. Any return to stockholders will therefore be limited in the foreseeable future to the appreciation of their stock.

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

Immediately following the completion of this offering, our executive officers, directors and their affiliates and 5% stockholders will beneficially hold, in the aggregate, approximately         % of our outstanding voting stock (assuming no exercise of the underwriters' option to purchase additional shares). Therefore, even after this offering, these stockholders will have the ability to influence us through this ownership position. These stockholders may be able to determine all matters requiring stockholder approval. For example, these stockholders may be able to control elections of directors, amendments of our organizational documents, or approval of any merger, sale of assets, or other major corporate transaction. This may prevent or discourage unsolicited acquisition proposals or offers for our common stock that you may feel are in your best interest as one of our stockholders.

If you purchase our common stock in this offering, you will incur immediate and substantial dilution in the net tangible book value of your shares .

The initial public offering price will be substantially higher than the pro forma as adjusted net tangible book value per share of our common stock after this offering. Investors purchasing common stock in this offering will pay a price per share that substantially exceeds the pro forma as adjusted net tangible book value per share after this offering. As a result, investors purchasing common stock in this offering will incur immediate dilution of $              per share, based on an assumed initial public offering price of $              per share, which is the midpoint of the price range set forth on the cover page of this prospectus, representing the difference between our pro forma as adjusted net tangible book value per share after giving effect to this offering and the assumed initial public offering price. Further, investors purchasing common stock in this offering will contribute approximately         % of the total amount invested by stockholders since our inception, but will own only approximately         % of the shares of common stock outstanding after this offering.

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This dilution is due to our investors who purchased shares prior to this offering having paid substantially less when they purchased their shares than the price offered to the public in this offering. To the extent outstanding stock options or warrants are exercised, new stock options or warrants are issued, or we issue additional shares of common stock in the future, there will be further dilution to new investors. As a result of the dilution to investors purchasing common stock in this offering, investors may receive significantly less than the purchase price paid in this offering, if anything, in the event of our liquidation. For a further description of the dilution that you will experience immediately after this offering, see "Dilution."

We are an emerging growth company, and we cannot be certain if the reduced reporting 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 Jumpstart Our Business Startups Act, or the JOBS Act, enacted in April 2012. 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, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in this prospectus and our periodic reports and proxy statements and exemptions from the requirements of holding nonbinding advisory votes on executive compensation and stockholder approval of any golden parachute payments not previously approved. We could be an emerging growth company for up to five years following the year in which we complete this offering, although circumstances could cause us to lose that status earlier. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of this offering; (b) in which we have total annual gross revenue of at least $1.07 billion; or (c) in which we are deemed to be a large accelerated filer, which requires the market value of our common stock that is held by non-affiliates to exceed $700 million as of the prior June 30 th ; and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. We cannot predict if investors will find our common stock less attractive because we may 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.

Under the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have elected not to "opt out" of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that we either (i) irrevocably elect to "opt out" of such extended transition period or (ii) no longer qualify as an emerging growth company. This may make comparison of our financial statements with the financial statements of another public company that is not an emerging growth company, or an emerging growth company that has opted out of using the extended transition period, difficult or impossible because of the potential differences in accounting standards used.

We will incur significant increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives .

As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. We will be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, which will require, among other things, that we file with the Securities and Exchange Commission, or the SEC, annual, quarterly and current reports with respect to our business and financial condition. In addition, the Sarbanes-Oxley Act, as well as rules subsequently adopted by the SEC and The

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Nasdaq Global Market to implement provisions of the Sarbanes-Oxley Act, impose significant requirements on public companies, including requiring establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices. Further, in July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, was enacted. There are significant corporate governance and executive compensation related provisions in the Dodd-Frank Act that require the SEC to adopt additional rules and regulations in these areas, such as "say on pay" and proxy access. Recent legislation permits emerging growth companies to implement many of these requirements over a longer period and up to five years from the pricing of this offering. We intend to take advantage of this new legislation but cannot guarantee that we will not be required to implement these requirements sooner than budgeted or planned and thereby incur unexpected expenses. Stockholder activism, the current political environment and the current high level of government intervention and regulatory reform may lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact the manner in which we operate our business in ways we cannot currently anticipate.

We expect the rules and regulations applicable to public companies to substantially increase our legal and financial compliance costs and to make some activities more time-consuming and costly. If these requirements divert the attention of our management and personnel from other business concerns, they could have a material adverse effect on our business, financial condition and results of operations. The increased costs will decrease our net income or increase our net loss, and may require us to reduce costs in other areas of our business or increase the prices of our products or services. For example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to incur substantial costs to maintain the same or similar coverage. We cannot predict or estimate the amount or timing of additional costs we may incur to respond to these requirements. The impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.

Sales of a substantial number of shares of our common stock by our existing stockholders in the public market could cause our stock price to fall .

If our existing stockholders sell, or indicate an intention to sell, substantial amounts of our common stock in the public market after the lock-up and other legal restrictions on resale discussed in this prospectus lapse, the trading price of our common stock could decline. Based on shares of common stock outstanding as of June 15, 2018, upon the closing of this offering we will have outstanding a total of                       shares of common stock. Of these shares, only the shares of common stock sold in this offering by us, plus any shares sold upon exercise of the underwriters' option to purchase additional shares, will be freely tradable without restriction in the public market immediately following this offering.

The lock-up agreements pertaining to this offering will expire 180 days from the date of this prospectus, subject to earlier release of all or a portion of the shares subject to such agreements by the representatives of the underwriters in their sole discretion. After the lock-up agreements expire, based upon the number of shares of common stock, on an as-converted basis, outstanding as of June 15, 2018, up to an additional                       shares of common stock will be eligible for sale in the public market. Approximately         % of these additional shares are held by directors, executive officers and other affiliates and will be subject to certain limitations of Rule 144 under the Securities Act of 1933, as amended, or the Securities Act.

In addition, shares of common stock that are either subject to outstanding options or reserved for future issuance under our existing equity compensation plans will become eligible for sale in the public market to the extent permitted by the provisions of various vesting schedules, the lock-up agreements and Rule 144

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and Rule 701 under the Securities Act. If these additional shares of common stock are sold, or if it is perceived that they will be sold, in the public market, the trading price of our common stock could decline. Additionally, the number of shares of our common stock reserved for issuance under our 2018 Stock Option and Incentive Plan will automatically increase on January 1, 2019 and each January 1 thereafter by 4% of the number of shares of common stock outstanding on the immediately preceding December 31 or such lesser number of shares determined by our compensation committee. Unless our board of directors elects not to increase the number of shares available for future grant each year, our stockholders may experience additional dilution.

After this offering, the holders of 56,845,438 shares of our common stock as of June 15, 2018 will be entitled to rights with respect to the registration of their shares under the Securities Act, subject to the 180-day lock-up agreements described above. See "Description of capital stock—Registration rights." Registration of these shares under the Securities Act would result in the shares becoming freely tradable without restriction under the Securities Act, except for shares held by affiliates, as defined in Rule 144 under the Securities Act. Any sales of securities by these stockholders could have a material adverse effect on the trading price of our common stock.

We have broad discretion in the use of our existing cash, cash equivalents and marketable securities and the net proceeds from this offering and may not use them effectively .

Our management will have broad discretion in the application of our existing cash, cash equivalents and marketable securities and the net proceeds from this offering, including for any of the purposes described in the section entitled "Use of proceeds," and you will not have the opportunity as part of your investment decision to assess whether such proceeds are being used appropriately. Because of the number and variability of factors that will determine our use of our existing cash, cash equivalents and marketable securities and the net proceeds from this offering, their ultimate use may vary substantially from their currently intended use. Our management might not apply our existing cash, cash equivalents and marketable securities and the net proceeds from this offering in ways that ultimately increase the value of your investment. The failure by our management to apply these funds effectively could harm our business. Pending their use, we may invest the net proceeds from this offering in short-term, investment-grade, interest-bearing securities. These investments may not yield a favorable return to our stockholders. If we do not invest or apply the net proceeds from this offering in ways that enhance stockholder value, we may fail to achieve expected financial results, which could cause our stock price to decline.

Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or our guidance .

Our quarterly and annual operating results may fluctuate significantly in the future, which makes it difficult for us to predict our future operating results. From time to time, we may enter into license or collaboration agreements with other companies that include development funding and significant upfront and milestone payments and/or royalties, which may become an important source of our revenue. Accordingly, our revenue may depend on development funding and the achievement of development and clinical milestones under current and any potential future license and collaboration agreements and sales of our products, if approved. These upfront and milestone payments may vary significantly from period to period and any such variance could cause a significant fluctuation in our operating results from one period to the next.

In addition, we measure compensation cost for stock-based awards made to employees, directors and non-employee consultants based on the fair value of the award on either the grant date or service completion date, and we recognize the cost as an expense over the recipient's service period. Because the

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variables that we use as a basis for valuing stock-based awards change over time, including our underlying stock price and stock price volatility, the magnitude of the expense that we must recognize may vary significantly.

Furthermore, our operating results may fluctuate due to a variety of other factors, many of which are outside of our control and may be difficult to predict, including the following:

the timing and cost of, and level of investment in, research and development activities relating to our current and any future product candidates, which will change from time to time;

our ability to enroll patients in clinical trials and the timing of enrollment;

the cost of manufacturing our current and any future product candidates, which may vary depending on FDA guidelines and requirements, the quantity of production and the terms of our agreements with manufacturers;

expenditures that we may incur to acquire or develop additional product candidates and technologies;

the timing and outcomes of clinical trials for our current product candidates and any other future product candidates or competing product candidates;

competition from existing and potential future products that compete with our current product candidates and any other future product candidates, and changes in the competitive landscape of our industry, including consolidation among our competitors or partners;

any delays in regulatory review or approval of our current product candidates or any other future product candidates;

the level of demand for our current product candidates and any other future product candidates, if approved, which may fluctuate significantly and be difficult to predict;

the risk/benefit profile, cost and reimbursement policies with respect to our products candidates, if approved, and existing and potential future products that compete with our current product candidates and any other future product candidates;

our ability to commercialize our current product candidates and any other future product candidates, if approved, inside and outside of the United States, either independently or working with third parties;

our ability to adequately support future growth;

potential unforeseen business disruptions that increase our costs or expenses;

future accounting pronouncements or changes in our accounting policies; and

the changing and volatile global economic environment.

The cumulative effect of these factors could result in large fluctuations and unpredictability in our quarterly and annual operating results. As a result, comparing our operating results on a period-to-period basis may not be meaningful. Investors should not rely on our past results as an indication of our future performance. This variability and unpredictability could also result in our failing to meet the expectations of industry or financial analysts or investors for any period. If our revenue or operating results fall below the expectations of analysts or investors or below any forecasts we may provide to the market, or if the forecasts we provide to the market are below the expectations of analysts or investors, the price of our

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common stock could decline substantially. Such a stock price decline could occur even when we have met any previously publicly stated revenue and/or earnings guidance we may provide.

Anti-takeover provisions under our charter documents and Delaware law could delay or prevent a change of control which could limit the market price of our common stock and may prevent or frustrate attempts by our stockholders to replace or remove our current management .

Our amended and restated certificate of incorporation and amended and restated bylaws, which are to become effective at or prior to the closing of this offering, contain provisions that could delay or prevent a change of control of our company or changes in our board of directors that our stockholders might consider favorable. Some of these provisions include:

a board of directors divided into three classes serving staggered three-year terms, such that not all members of the board will be elected at one time;

a prohibition on stockholder action through written consent, which requires that all stockholder actions be taken at a meeting of our stockholders;

a requirement that special meetings of stockholders be called only by the chairman of the board of directors, the chief executive officer, or by a majority of the total number of authorized directors;

advance notice requirements for stockholder proposals and nominations for election to our board of directors;

a requirement that no member of our board of directors may be removed from office by our stockholders except for cause and, in addition to any other vote required by law, upon the approval of not less than two-thirds of all outstanding shares of our voting stock then entitled to vote in the election of directors;

a requirement of approval of not less than two-thirds of all outstanding shares of our voting stock to amend any bylaws by stockholder action or to amend specific provisions of our certificate of incorporation; and

the authority of the board of directors to issue preferred stock on terms determined by the board of directors without stockholder approval and which preferred stock may include rights superior to the rights of the holders of common stock.

In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporate Law, which may prohibit certain business combinations with stockholders owning 15% or more of our outstanding voting stock. These anti-takeover provisions and other provisions in our amended and restated certificate of incorporation and amended and restated bylaws could make it more difficult for stockholders or potential acquirers to obtain control of our board of directors or initiate actions that are opposed by the then-current board of directors and could also delay or impede a merger, tender offer or proxy contest involving our company. These provisions could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing or cause us to take other corporate actions you desire. Any delay or prevention of a change of control transaction or changes in our board of directors could cause the market price of our common stock to decline.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline .

The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. Securities and industry analysts do not currently,

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and may never, publish research on our company. If no securities or industry analysts commence coverage of our company, the trading price for our stock would likely be negatively impacted. In the event securities or industry analysts initiate coverage, if one or more of the analysts who covers us downgrades our stock or publishes inaccurate or unfavorable research about our business, our stock price may decline. If one or more of these analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading volume to decline.

Our amended and restated certificate of incorporation will designate specific courts as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us.

Pursuant to our amended and restated certificate of incorporation, as will be in effect upon the completion of this offering, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Chancery Court does not have jurisdiction, the federal district court for the District of Delaware or other state courts of 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 or other wrongdoing by any of our directors, officers, employees or agents to us or our stockholders; (3) any action asserting a claim against us arising pursuant to any provision of the General Corporation Law of the State of Delaware or our certificate of incorporation or bylaws; (4) any action to interpret, apply, enforce or determine the validity of our certificate of incorporation or bylaws; or (5) any action asserting a claim governed by the internal affairs doctrine. Our amended and restated certificate of incorporation will further provide that, unless we consent in writing to the selection of an alternative forum, the United States District Court for the District of Massachusetts will be the exclusive forum for any private action asserting violations by us or any of our directors or officers of the Securities Act or the Exchange Act, or the rules and regulations promulgated thereunder, and of all suits in equity and actions at law brought to enforce any liability or duty created by those statutes or the rules and regulations under such statutes. The forum selection clauses in our amended and restated certificate of incorporation may limit our stockholders' ability to obtain a favorable judicial forum for disputes with us.

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Special note regarding forward-looking statements

This prospectus contains forward-looking statements that are based on management's beliefs and assumptions and on information currently available to management. Some of the statements in the section captioned "Prospectus summary," "Risk factors," "Management's discussion and analysis of financial condition and results of operations," "Business" and elsewhere in this prospectus contain forward-looking statements. In some cases, you can identify forward-looking statements by the following words: "may," "will," "could," "would," "should," "expect," "intend," "plan," "anticipate," "believe," "estimate," "predict," "project," "potential," "continue," "ongoing" or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words.

These statements involve risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Although we believe that we have a reasonable basis for each forward-looking statement contained in this prospectus, we caution you that these statements are based on a combination of facts and factors currently known by us and our projections of the future, about which we cannot be certain. Forward-looking statements in this prospectus include, but are not limited to, statements about:

the success, cost and timing of our product development activities and clinical trials, including statements regarding the timing of initiation and completion of studies or trials and related preparatory work, the period during which the results of the trials will become available, and our research and development programs;

our ability to advance any product candidate into or successfully complete any clinical trial;

our ability or the potential to successfully manufacture our product candidates for clinical trials or for commercial use, if approved;

the potential for our identified research priorities to advance our technologies;

our ability to maintain regulatory approval, if obtained, of any of our current or future product candidates, and any related restrictions, limitations and/or warnings in the label of an approved product candidate;

the ability to license additional intellectual property relating to our product candidates and to comply with our existing license agreements;

our ability to commercialize our products in light of the intellectual property rights of others;

developments relating to cellular therapies, including red blood cell therapies;

the success of competing therapies that are or become available;

our ability to obtain funding for our operations, including funding necessary to complete further development and commercialization of our product candidates;

the commercialization of our product candidates, if approved;

our plans to research, develop and commercialize our product candidates;

our ability to attract collaborators with development, regulatory and commercialization expertise;

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future agreements with third parties in connection with the commercialization of our product candidates and any other approved product;

the size and growth potential of the markets for our product candidates, and our ability to serve those markets;

the rate and degree of market acceptance of our product candidates;

regulatory developments in the United States and foreign countries;

our ability to contract with third-party suppliers and manufacturers and their ability to perform adequately;

our ability to attract and retain key scientific or management personnel;

the accuracy of our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;

the impact of laws and regulations; and

our expectations regarding our ability to obtain and maintain intellectual property protection for our product candidates.

In addition, you should refer to the "Risk factors" section of this prospectus for a discussion of other important factors that may cause actual results to differ materially from those expressed or implied by the forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this prospectus will prove to be accurate. Furthermore, if the forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. 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 these forward-looking statements as representing our views as of any date subsequent to the date of this prospectus.

The market data and certain other statistical information used throughout this prospectus are based on independent industry publications, governmental publications, reports by market research firms or other independent sources that we believe to be reliable sources. 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. We are responsible for all of the disclosure contained in this prospectus, and we believe these industry publications and third-party research, surveys and studies are reliable. While we are not aware of any misstatements regarding any third-party information presented in this prospectus, their estimates, in particular, as they relate to projections, involve numerous assumptions, are subject to risks and uncertainties, and are subject to change based on various factors, including those discussed under the section entitled "Risk factors" and elsewhere in this prospectus. Some data are also based on our good faith estimates.

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Use of proceeds

We estimate that the net proceeds to us from the sale of the shares of our common stock in this offering will be approximately $               million, or approximately $               million if the underwriters exercise their option to purchase additional shares in full, assuming an initial public offering price of $              per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

A $1.00 increase (decrease) in the assumed initial public offering price of $              per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) the net proceeds to us from this offering 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. An increase (decrease) of 1,000,000 shares in the number of shares offered by us, as set forth on the cover page of this prospectus, would increase (decrease) the net proceeds to us from this offering by approximately $               million, assuming no change in the assumed initial public offering price per share and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We do not expect that a change in the initial public offering price or the number of shares by these amounts would have a material effect on our uses of the proceeds from this offering, although it may accelerate the time at which we will need to seek additional capital.

We intend to use the net proceeds from this offering, together with our existing cash, cash equivalents and marketable securities, as follows:

approximately $               million to purchase, renovate and customize the manufacturing facility for which we have entered into a letter of intent to purchase;

approximately $               million to advance RTX-134 through a Phase 1/2a clinical proof-of-concept trial;

approximately $               million to advance and expand our research and development pipeline, including early discovery efforts and IND-enabling studies, and to initiate additional proof-of-concept trials in rare diseases, cancer and autoimmune diseases; and

the remaining proceeds for working capital and other general corporate purposes.

Based on our current plans, we believe the net proceeds from this offering, together with our existing cash, cash equivalents and marketable securities, will enable us to fund our operating expenses, capital expenditure requirements, including the purchase, renovation and customization of the manufacturing facility for which we have entered into a letter of intent to purchase, and debt service payments through              .

We cannot specify with certainty all of the particular uses for the net proceeds to be received upon the closing of this offering. Due to uncertainties inherent in the product development process, it is difficult to estimate the exact amounts of the net proceeds that will be used for any particular purpose. We may use our existing cash, cash equivalents and marketable securities to fund our operations, any of which may alter the amount of net proceeds used for a particular purpose. In addition, the amount, allocation 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 clinical trials and the timing of regulatory submissions. Accordingly, we will have broad discretion in using these proceeds. Pending their uses, we plan to invest

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the net proceeds from this offering in short- and immediate-term, interest-bearing obligations, investment-grade instruments, certificates of deposit or direct or guaranteed obligations of the U.S. government.

The expected net proceeds from this offering, together with our existing cash, cash equivalents and marketable securities, will not be sufficient for us to fund any of our product candidates through regulatory approval, and we will need to raise additional capital to complete the development and commercialization of our product candidates. We expect to finance our cash needs through a combination of equity offerings, debt financings and potential collaborations, license and development agreements. We could expend our available capital resources at a rate greater than we currently expect.

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Dividend policy

We have never declared or paid any cash dividends on our common stock or any other securities. We anticipate that we will retain all available funds and any future earnings, if any, for use in the operation of our business and do not anticipate paying cash dividends in the foreseeable future. In addition, pursuant to our loan and security agreement with Pacific Western Bank, or PWB, we are prohibited from paying cash dividends without the prior written consent of PWB and future debt instruments may materially restrict our ability to pay dividends on our common stock. 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 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, cash equivalents and marketable securities and our capitalization as of March 31, 2018:

on an actual basis;

on a pro forma basis to give effect to (i) the conversion of all outstanding shares of our preferred stock into an aggregate of 51,845,438 shares of common stock upon the closing of this offering, (ii) all outstanding warrants to purchase shares of preferred stock becoming warrants to purchase shares of common stock upon the closing of this offering and (iii) the filing and effectiveness of our amended and restated certificate of incorporation; and

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

The pro forma as adjusted information below is illustrative only, and our capitalization following the closing of this offering will change based on the actual initial public offering price and other terms of this offering determined at pricing. You should read the information in this table together with our consolidated financial statements and the related notes appearing at the end of this prospectus and the "Selected consolidated financial data" and "Management's discussion and analysis of financial condition and results of operations" sections of this prospectus.

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  As of March 31, 2018  
 
  Actual

  Pro forma

  Pro forma
as adjusted

 
 
  (In thousands, except share and per
share data)

 

Cash, cash equivalents and marketable securities

  $ 192,623   $ 192,623   $              

Preferred stock warrant liability

 
$

909
 
$

 
$

           
 

Long-term debt, net of discount, including current portion

    5,454     5,454                  

Convertible preferred stock (Series A, B and C), $0.001 par value; 51,981,005 shares authorized, 51,845,438 shares issued and outstanding, actual; no shares authorized, issued or outstanding, pro forma and pro forma as adjusted

    240,776                      

Stockholders' equity (deficit):

                   

Preferred stock, $0.001 par value; no shares authorized, issued or outstanding, actual; 10,000,000 shares authorized and no shares issued or outstanding, pro forma and pro forma as adjusted

                         

Common stock, $0.001 par value; 75,000,000 shares authorized, 14,997,067 shares issued and outstanding, actual; 150,000,000 shares authorized, 66,842,505 shares issued and outstanding, pro forma; 150,000,000 shares authorized,                shares issued and outstanding, pro forma as adjusted

    15     67                  

Additional paid-in capital

    20,738     262,371                  

Accumulated other comprehensive loss

    (45 )   (45 )      

Accumulated deficit

    (76,234 )   (76,234 )                

Total stockholders' equity (deficit)

    (55,526 )   186,159                  

Total capitalization

  $ 191,613   $ 191,613   $              

A $1.00 increase (decrease) in the assumed initial public offering price of $              per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted amount of each of cash, cash equivalents and marketable securities, additional paid-in capital, total stockholders' equity and total capitalization by $               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. An increase (decrease) of 1,000,000 shares in the number of shares offered by us, as set forth on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted amount of each of cash, cash equivalents and marketable securities, additional paid-in capital, total stockholders' equity and total capitalization by $               million, assuming no change in the assumed initial public offering price per share and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The table above does not include:

7,443,885 shares of common stock issuable upon the exercise of stock options outstanding as of March 31, 2018 under our 2014 Stock Incentive Plan, as amended, or 2014 Plan, at a weighted average

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135,567 shares of common stock issuable upon the exercise of warrants outstanding as of March 31, 2018 to purchase shares of preferred stock that will become warrants to purchase shares of common stock, at a weighted average exercise price of $0.73 per share, in connection with this offering;

204,019 shares of common stock available for future issuance as of March 31, 2018 under our 2014 Plan, which will cease to be available for issuance at the time that our 2018 Stock Option and Incentive Plan, or 2018 Plan, becomes effective;

                shares of common stock that will become available for future issuance under our 2018 Plan upon the effectiveness of the registration statement of which this prospectus is a part; and

                shares of common stock that will become available for future issuance under our 2018 Employee Stock Purchase Plan upon the effectiveness of the registration statement of which this prospectus is a part.

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Dilution

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

Our historical net tangible book value (deficit) as of March 31, 2018 was $(56.3) million, or $(3.76) per share of common stock. Our historical net tangible book value (deficit) is the amount of our total tangible assets less our total liabilities and the carrying value of our preferred stock, which is not included within stockholders' equity (deficit). Historical net tangible book value (deficit) per share represents historical net tangible book value (deficit) divided by the 14,997,067 shares of common stock outstanding as of March 31, 2018.

Our pro forma net tangible book value as of March 31, 2018 was $185.4 million, or $2.77 per share of common stock. Pro forma net tangible book value represents the amount of our total tangible assets less our total liabilities, after giving effect to (i) the conversion of all outstanding shares of our preferred stock into an aggregate of 51,845,438 shares of common stock upon the closing of this offering and (ii) all outstanding warrants to purchase shares of preferred stock becoming warrants to purchase shares of common stock upon the closing of this offering. Pro forma net tangible book value per share represents pro forma net tangible book value divided by the total number of shares outstanding as of March 31, 2018, after giving effect to the pro forma adjustments described above.

After giving further effect to our issuance and sale of                       shares of our common stock in this offering at an assumed initial public offering price of $              per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as of March 31, 2018 would have been $               million, or $              per share. This represents an immediate increase in pro forma as adjusted net tangible book value per share of $              to existing stockholders and immediate dilution of $              in pro forma as adjusted net tangible book value per share to new investors purchasing common stock in this offering. Dilution per share to new investors is determined by subtracting pro forma as adjusted net tangible book value per share after this offering from the assumed 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 (deficit) per share as of March 31, 2018

  $ (3.76 )                 

Increase per share attributable to the pro forma adjustments described above

    6.53                   

Pro forma net tangible book value per share as of March 31, 2018

    2.77                   

Increase in pro forma as adjusted net tangible book value per share attributable to new investors purchasing common stock in this offering

                        

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

                        

Dilution per share to new investors purchasing common stock in this offering

        $                

The dilution information discussed above is illustrative only and will change based on the actual initial public offering price and other terms of this offering determined at pricing. A $1.00 increase (decrease) in the assumed initial public offering price of $              per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) our pro forma as adjusted net

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tangible book value per share after this offering by $              and dilution per share to new investors purchasing common stock in this offering by $              , 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. An increase of 1,000,000 shares in the number of shares offered by us, as set forth on the cover page of this prospectus, would increase our pro forma as adjusted net tangible book value per share after this offering by $              and decrease the dilution per share to new investors purchasing common stock in this offering by $              , assuming no change in the assumed initial public offering price per share and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. A decrease of 1,000,000 shares in the number of shares offered by us, as set forth on the cover page of this prospectus, would decrease our pro forma as adjusted net tangible book value per share after this offering by $              and increase the dilution per share to new investors purchasing common stock in this offering by $              , assuming no change in the assumed initial public offering price and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

If the underwriters exercise their option to purchase additional shares in full, our pro forma as adjusted net tangible book value per share after this offering would be $              , representing an immediate increase in pro forma as adjusted net tangible book value per share of $              to existing stockholders and immediate dilution in pro forma as adjusted net tangible book value per share of $              to new investors purchasing common stock in this offering, assuming an initial public offering price of $              per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The following table summarizes, as of March 31, 2018, on the pro forma as adjusted basis described above, the total number of shares of common stock purchased from us on an as converted to common stock basis, the total consideration paid or to be paid and the average price per share paid or to be paid by existing stockholders and by new investors in this offering at an assumed initial public offering price of $              per share, which is the midpoint of the price range set forth on the cover page of this prospectus, before deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. As the table shows, new investors purchasing common stock 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

 
 
  Number

  Percentage

  Amount

  Percentage

 

Existing stockholders

                              % $                             % $              

New investors

                                                                $              

Total

                  100.0 % $                 100.0 %                

A $1.00 increase (decrease) in the assumed initial public offering price of $              per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) the total consideration paid by new investors by $               million and, in the case of an increase, would increase the percentage of total consideration paid by new investors by                        percentage points and, in the case of a decrease, would decrease the percentage of total consideration paid by new investors by                        percentage points, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same. An increase (decrease) of 1,000,000 shares in the number of shares offered by us, as set forth on the cover page of this prospectus, would increase

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(decrease) the total consideration paid by new investors by $               million and, in the case of an increase, would increase the percentage of total consideration paid by new investors by                        percentage points and, in the case of a decrease, would decrease the percentage of total consideration paid by new investors by                        percentage points, assuming no change in the assumed initial public offering price.

The table above assumes no exercise of the underwriters' option to purchase additional shares in this offering. If the underwriters' option to purchase additional shares is exercised in full, the number of shares of our common stock held by existing stockholders would be reduced to              % of the total number of shares of our common stock outstanding after this offering, and the number of shares of common stock held by new investors purchasing common stock in this offering would be increased to         % of the total number of shares of our common stock outstanding after this offering.

The tables and discussion above are based on the number of shares of our common stock outstanding as of March 31, 2018, and exclude:

7,443,885 shares of common stock issuable upon the exercise of stock options outstanding as of March 31, 2018 under our 2014 Stock Incentive Plan, as amended, or 2014 Plan, at a weighted average exercise price of $2.82 per share (which does not include options to purchase an aggregate of 4,542,346 shares of common stock, at a weighted average exercise price of $9.22 per share, that were granted subsequent to March 31, 2018);

135,567 shares of common stock issuable upon the exercise of warrants outstanding as of March 31, 2018 to purchase shares of preferred stock that will become warrants to purchase shares of common stock, at a weighted average exercise price of $0.73 per share, in connection with this offering;

204,019 shares of common stock available for future issuance as of March 31, 2018 under our 2014 Plan, which will cease to be available for issuance at the time that our 2018 Stock Option and Incentive Plan, or 2018 Plan, becomes effective;

              shares of common stock that will become available for future issuance under our 2018 Plan upon the effectiveness of the registration statement of which this prospectus is a part; and

              shares of common stock that will become available for future issuance under our 2018 Employee Stock Purchase Plan upon the effectiveness of the registration statement of which this prospectus is a part.

To the extent that outstanding stock options or warrants are exercised, new stock options or warrants are issued, or we issue additional shares of common stock in the future, there will be further dilution to new investors. In addition, we may choose to raise additional capital because of market conditions or strategic considerations, even if we believe that we have sufficient funds for our current or future operating plans. If we raise additional capital through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our stockholders.

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Selected consolidated financial data

You should read the following selected consolidated financial data together with our consolidated financial statements and the related notes appearing at the end of this prospectus and the "Management's discussion and analysis of financial condition and results of operations" section of this prospectus. We have derived the consolidated statement of operations data for the years ended December 31, 2016 and 2017 and the consolidated balance sheet data as of December 31, 2016 and 2017 from our audited consolidated financial statements appearing at the end of this prospectus. The consolidated statement of operations data for the three months ended March 31, 2017 and 2018 and the consolidated balance sheet data as of March 31, 2018 have been derived from our unaudited consolidated financial statements appearing at the end of this prospectus and have been prepared on the same basis as the audited consolidated financial statements. In the opinion of management, the unaudited data reflects all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the financial information in those statements. Our historical results are not necessarily indicative of the results that may be expected in the future.

 
   
   
   
   
 
 
  Year ended
December 31,
  Three months ended
March 31,
 
 
  2016
  2017
  2017
  2018
 
 
  (in thousands, except per share data)
 

Consolidated statement of operations data:

                         

Revenue

  $   $   $   $  

Operating expenses:

                         

Research and development

    8,403     21,226     3,681     9,650  

General and administrative

    2,449     22,038     1,102     5,797  

Total operating expenses

    10,852     43,264     4,783     15,447  

Loss from operations

    (10,852 )   (43,264 )   (4,783 )   (15,447 )

Other income (expense):

                         

Change in fair value of preferred stock warrant liability

    1     (785 )   (24 )   (43 )

Interest expense

    (149 )   (309 )   (50 )   (83 )

Interest income and other expense, net

    (16 )   511         318  

Total other income (expense), net

    (164 )   (583 )   (74 )   192  

Net loss

   
(11,016

)
 
(43,847

)
 
(4,857

)
 
(15,255

)

Accretion of Series A redeemable convertible preferred stock to redemption value

    (748 )   (656 )   (376 )    

Net loss attributable to common stockholders

  $ (11,764 ) $ (44,503 ) $ (5,233 ) $ (15,255 )

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

  $ (1.63 ) $ (5.55 ) $ (0.68 ) $ (1.83 )

Weighted average common shares outstanding, basic and diluted(1)

    7,201     8,024     7,662     8,355  

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

        $ (0.94 )       $ (0.27 )

Pro forma weighted average common shares outstanding, basic and diluted (unaudited)(1)

          45,711           55,453  

(1)    See Note 13 to our consolidated financial statements appearing at the end of this prospectus for details on the calculation of basic and diluted net loss per share attributable to common stockholders and unaudited basic and diluted pro forma net loss per share attributable to common stockholders.

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  As of December 31,    
 
 
  As of March 31,
2018

 
 
  2016
  2017
 
 
  (in thousands)
 

Consolidated balance sheet data:

                   

Cash, cash equivalents and marketable securities

  $ 6,834   $ 104,288   $ 192,623  

Working capital(1)

    4,035     97,830     182,276  

Total assets

    7,989     107,687     209,730  

Long-term debt, net of discount, including current portion

    3,924     5,441     5,454  

Preferred stock warrant liability

    67     866     909  

Convertible preferred stock

    19,067     139,790     240,776  

Total stockholders' deficit

    (17,124 )   (43,687 )   (55,526 )

(1)    We define working capital as current assets less current liabilities.

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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 "Selected consolidated financial data" section of this prospectus and our consolidated financial statements and related notes appearing at the end of 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 pioneering the development of a new class of medicines, Red Cell Therapeutics, or RCTs. Based on our vision that human red blood cells are the foundation of the next significant innovation in medicine, we have designed a proprietary platform to genetically engineer and culture RCTs that are selective, potent and ready-to-use cellular therapies. We believe that our RCTs will provide life-changing or life-saving benefits for patients with severe diseases across multiple therapeutic areas.

We have generated hundreds of RCTs using our highly versatile and proprietary cellular therapy platform, the Rubius Erythrocyte Design, or RED, Platform. We are utilizing our universal engineering and manufacturing processes to advance a broad pipeline of RCT product candidates into clinical trials in rare diseases, cancer and autoimmune diseases. We plan to file an investigational new drug application, or IND, for our first product candidate in the first quarter of 2019 and INDs for additional RCT product candidates during 2019, 2020 and thereafter. Since our founding by Flagship Pioneering in 2013, we have raised approximately $240 million in capital and attracted a talented group of seasoned leaders to execute our strategy.

Since our inception, we have focused substantially all of our resources on building our proprietary RED Platform, establishing and protecting our intellectual property portfolio, conducting research and development activities, developing our manufacturing process and manufacturing drug product material, organizing and staffing our company, business planning, raising capital and providing general and administrative support for these operations. We do not have any products approved for sale and have not generated any revenue from product sales. To date, we have funded our operations with proceeds from the sale of preferred stock and issuance of debt. Through March 31, 2018, we had received gross proceeds of $239.4 million from sales of our preferred stock and $5.5 million from borrowings under a loan and security agreement. Since our inception, we have incurred significant operating losses. Our ability to generate any product revenue or product revenue sufficient to achieve profitability will depend on the successful development and eventual commercialization of one or more of our product candidates. We reported net losses of $11.0 million and $43.8 million for the years ended December 31, 2016 and 2017, respectively, and of $15.3 million for the three months ended March 31, 2018. As of March 31, 2018, we had an accumulated deficit of $76.2 million. We expect to continue to incur significant expenses and increasing operating losses for at least the next several years. We expect that our expenses and capital requirements will increase substantially in connection with our ongoing activities, particularly if and as we:

conduct clinical trials for our product candidates;

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further develop our RED Platform;

continue to discover and develop additional product candidates;

maintain, expand and protect our intellectual property portfolio;

hire additional clinical, scientific manufacturing and commercial personnel;

expand in-house manufacturing capabilities, including through the purchase, renovation and customization of a manufacturing facility;

establish a commercial manufacturing source and secure supply chain capacity sufficient to provide commercial quantities of any product candidates for which we may obtain regulatory approval;

acquire or in-license other product candidates and technologies;

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

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

add operational, financial and management information systems and personnel, including personnel to support our product development and planned future commercialization efforts, as well as to support our transition to a public company.

We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for our product candidates. If we obtain regulatory approval for any of our product candidates, we expect to incur significant expenses related to developing our commercialization capability to support product sales, marketing and distribution. Further, following the closing of this offering, we expect to incur additional costs associated with operating as a public company.

As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more of our product candidates.

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 or maintain profitability. Even if we are able to generate product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.

We believe that the net proceeds from this offering, together with our existing cash, cash equivalents and marketable securities, will enable us to fund our operating expenses, capital expenditure requirements, including the purchase, renovation and customization of the manufacturing facility for which we have entered into a letter of intent to purchase, and debt service payments through                   . See "—Liquidity and capital resources."

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Components of our results of operations

To date, we have not generated any revenue from product sales and do not expect to generate any revenue from the sale of products in the near future. If our development efforts for our product candidates are successful and result in regulatory approval or license or collaboration agreements with third parties, we may generate revenue in the future from product sales, payments from collaboration or license agreements that we may enter into with third parties, or any combination thereof.

Research and development expenses consist primarily of costs incurred for our research activities, including our drug discovery efforts, and the development of our product candidates, which include:

employee-related expenses, including salaries, related benefits and stock-based compensation expense for employees engaged in research and development functions;

expenses incurred in connection with the preclinical and clinical development of our product candidates and research programs, including under agreements with third parties, such as consultants, contractors and contract research organizations, or CROs;

the cost of developing and scaling our manufacturing process and manufacturing drug products for use in our preclinical studies and clinical trials, including under agreements with third parties, such as consultants, contractors and contract manufacturing organizations, or CMOs;

laboratory supplies and research materials;

facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities and insurance; and

payments made under third-party licensing agreements.

We expense research and development costs as incurred. Advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. The prepaid amounts are expensed as the related goods are delivered or the services are performed.

Our direct external research and development expenses are tracked on a program-by-program basis and consist of costs that include fees, reimbursed materials and other costs paid to consultants, contractors, CMOs and CROs in connection with our preclinical and clinical development and manufacturing activities. We do not allocate employee costs, costs associated with our discovery efforts, laboratory supplies and facilities expenses, including depreciation or other indirect costs, to specific product development programs because these costs are deployed across multiple programs and our platform technology and, as such, are not separately classified.

Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect that our research and development expenses will increase substantially in connection with our planned preclinical and clinical development activities in the near term and in the future. At this time, we cannot accurately estimate or know the nature, timing and costs of the efforts that

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will be necessary to complete the preclinical and clinical development of any of our product candidates. The successful development and commercialization of our product candidates is highly uncertain. This is due to the numerous risks and uncertainties associated with product development and commercialization, including the following:

the timing and progress of preclinical and clinical development activities;

the number and scope of preclinical and clinical programs we decide to pursue;

raising additional funds necessary to complete preclinical and clinical development of and commercialize our drug candidates;

the progress of the development efforts of parties with whom we may enter into collaboration arrangements;

our ability to maintain our current research and development programs and to establish new ones;

our ability to establish new licensing or collaboration arrangements;

the successful initiation and completion of clinical trials with safety, tolerability and efficacy profiles that are satisfactory to the U.S. Food and Drug Administration, or FDA, or any comparable foreign regulatory authority;

the receipt and related terms of regulatory approvals from applicable regulatory authorities;

the availability of specialty raw materials for use in production of our product candidates;

our ability to consistently manufacture our product candidates for use in clinical trials;

our ability to establish and operate a manufacturing facility, or secure manufacturing supply through relationships with third parties;

our ability to obtain and maintain patents, trade secret protection and regulatory exclusivity, both in the United States and internationally;

our ability to protect our rights in our intellectual property portfolio;

the commercialization of our product candidates, if and when approved;

obtaining and maintaining third-party insurance coverage and adequate reimbursement;

the acceptance of our product candidates, if approved, by patients, the medical community and third-party payors;

competition with other products; and

a continued acceptable safety profile of our therapies following approval.

A change in the outcome of any of these variables with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate. We may never succeed in obtaining regulatory approval for any of our product candidates.

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General and administrative expenses consist primarily of salaries and related costs, including stock-based compensation, for personnel in executive, finance and administrative functions. General and administrative expenses also include direct and allocated facility-related costs as well as professional fees for legal, patent, consulting, investor and public relations, accounting and audit services. We anticipate that our general and administrative expenses will increase in the future as we increase our headcount to support our continued research activities and development of our product candidates. We also anticipate that we will incur increased accounting, audit, legal, regulatory, compliance and director and officer insurance costs as well as investor and public relations expenses associated with operating as a public company.

In connection with our loan and security agreement with Pacific Western Bank, we issued warrants to purchase Series A and Series B preferred stock. We classify these warrants as a liability on our consolidated balance sheet that we remeasure to fair value at each reporting date, and we recognize changes in the fair value of the warrant liability as a component of other income (expense) in our consolidated statements of operations and comprehensive loss. We will continue to recognize changes in the fair value of the warrant liability until the warrants are exercised, expire or qualify for equity classification.

Upon the closing of this offering, the preferred stock warrants will become exercisable for common stock instead of preferred stock, and the fair value of the warrant liability at that time will be reclassified to additional paid-in capital. As a result, subsequent to the closing of this offering, we will no longer remeasure the fair value of the warrant liability at each reporting date.

Interest expense consists of interest expense on outstanding borrowings under our loan and security agreement as well as amortization of debt discount and debt issuance costs.

Interest income consists of interest earned on our invested cash balances. We expect our interest income to increase as we invest the cash received from the sale of Series C preferred stock in February 2018 and the net proceeds from this offering.

Other income (expense) consists of miscellaneous income and expense unrelated to our core operations.

Since our inception, we have not recorded any income tax benefits for the net losses we have incurred in each year or for our research and development tax credits, as we believe, based upon the weight of available evidence, that it is more likely than not that all of our net operating loss carryforwards and tax credits will not be realized. As of December 31, 2017, we had U.S. federal and state net operating loss carryforwards of $38.2 million and $37.9 million, respectively, which may be available to offset future taxable income and begin to expire in 2033 and 2034, respectively. As of December 31, 2017, we also had U.S. federal and state research and development tax credit carryforwards of $0.9 million and $0.4 million, respectively, which may be available to offset future tax liabilities and begin to expire in 2034 and 2030, respectively. We have recorded a full valuation allowance against our net deferred tax assets at each balance sheet date.

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On December 22, 2017, the Tax Cuts and Jobs Act, or the TCJA, was signed into United States law. The TCJA includes a number of changes to existing tax law, including, among other things, a permanent reduction in the federal corporate income tax rate from a top marginal tax rate of 35% to a flat rate of 21%, effective as of January 1, 2018, as well as limitation of the deduction for net operating losses to 80% of annual taxable income and elimination of net operating loss carrybacks, in each case, for losses arising in taxable years beginning after December 31, 2017 (though any such net operating losses may be carried forward indefinitely). The federal tax rate change resulted in a reduction in the gross amount of our deferred tax assets and liabilities recorded as of December 31, 2017, and a corresponding reduction in our valuation allowance. As a result, no income tax expense or benefit was recognized as of the enactment date of the TCJA.

Results of operations

The following table summarizes our results of operations for the three months ended March 31, 2017 and 2018:

 
   
   
   
 
 
  Three months ended
March 31,
   
 
 
  2017
  2018
  Change
 
 
  (in thousands)
 

Revenue

  $   $   $  

Operating expenses:

                   

Research and development

    3,681     9,650     5,969  

General and administrative

    1,102     5,797     4,695  

Total operating expenses

    4,783     15,447     10,664  

Loss from operations

    (4,783 )   (15,447 )   (10,664 )

Other income (expense):

                   

Change in fair value of preferred stock warrant liability

    (24 )   (43 )   (19 )

Interest expense

    (50 )   (83 )   (33 )

Interest income and other expense, net

        318     318  

Total other income (expense), net

    (74 )   192     266  

Net loss

  $ (4,857 ) $ (15,255 ) $ (10,398 )

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  Three months ended
March 31,
   
 
 
  2017
  2018
  Change
 
 
  (in thousands)
 

Direct research and development expenses by program:

                   

RTX-134

  $   $ 1,673   $ 1,673  

Platform development, early-stage research and unallocated expenses:

                   

Personnel related

    849     2,252     1,403  

Stock-based compensation expense

    675     409     (266 )

External manufacturing and research

    1,303     2,429     1,126  

Laboratory supplies and research materials

    514     1,794     1,280  

Facility related and other

    340     1,093     753  

Total research and development expenses

  $ 3,681   $ 9,650   $ 5,969  

Research and development expenses were $3.7 million for the three months ended March 31, 2017, compared to $9.7 million for the three months ended March 31, 2018. The increase in direct costs related to our RTX-134 program of $1.7 million was primarily due to contract manufacturing costs incurred in preparation for our planned Phase 1/2a clinical trial of RTX-134 in patients with phenylketonuria. The increase in personnel-related costs of $1.4 million was due to increased headcount in our research and development function. The decrease in stock-based compensation expense of $0.3 million was due to vesting in 2017 of stock-based awards issued to non-employee consultants engaged in research and development activities. Upon vesting, we no longer record stock-based compensation expense related to the vested portion of the awards. The increase in external manufacturing and research costs of $1.1 million was primarily due to our efforts to improve our manufacturing capabilities, preparation for clinical-scale production and an expansion of our in vivo testing to support clinical candidate selection. The increase in laboratory supplies and research materials of $1.3 million was primarily due to increases in platform development, manufacturing process and drug discovery activities as well as an increase in the volume and cost of bioprocessing materials as we scale up our manufacturing process. The increase in facility-related and other expenses of $0.8 million was primarily due to an increase in facilities costs resulting from entering into a lease of office and laboratory space in July 2017 and the increased costs of supporting a larger group of research and development personnel and their research efforts.

 
   
   
   
 
 
  Three months ended
March 31,
   
 
 
  2017
  2018
  Change
 
 
  (in thousands)
 

Personnel related

  $ 285   $ 976   $ 691  

Stock-based compensation expense

    185     3,048     2,863  

Professional and consultant fees

    575     1,451     876  

Facility related and other

    57     322     265  

Total general and administrative expenses

  $ 1,102   $ 5,797   $ 4,695  

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General and administrative expenses for the three months ended March 31, 2017 were $1.1 million, compared to $5.8 million for the three months ended March 31, 2018. The increase in general and administrative expenses of $4.7 million was primarily due to an increase in stock-based compensation expense of $2.9 million. The increase in stock-based compensation expense was primarily due to the recognition of compensation expense of $2.6 million for the three months ended March 31, 2018 for stock-based awards granted in 2017 to the chairman of our board of directors as compared to $0.2 million of compensation expense recognized in the same period in 2017. All of the stock-based awards issued to the chairman of our board of directors were issued for his services as a consultant and are being accounted for as non-employee stock-based awards. At the end of each reporting period prior to completion of the services, we remeasure the fair value of any unvested portion of the awards and adjust the expense accordingly. As a result, changes in the fair value of our common stock impact the amount of stock-based compensation expense that we recognize for these awards. The remaining increase in stock-based compensation expense of $0.5 million was primarily due to increased headcount in our general and administrative function in the second half of 2017 as well as an increase in the number of awards granted and the per share grant-date fair value of such awards. Personnel-related costs increased by $0.7 million as a result of the increase in headcount in our general and administrative function. Professional and consultant fees increased by $0.9 million primarily due to consulting fees paid to the chairman of our board of directors for his services as a consultant, increased patent costs and increases in accounting, audit and legal fees incurred as we prepare to operate as a public company. The increase in facility-related and other expenses of $0.3 million was primarily due to an increase in facilities costs resulting from entering into a lease of office and laboratory space in July 2017.

The change in the fair value of our preferred stock warrant liability was not significant during each of the three months ended March 31, 2017 or 2018.

Interest expense for the three months ended March 31, 2017 and 2018 consisted of interest on the outstanding borrowings under our loan and security agreement and was not significant for either period.

Interest income for the three months ended March 31, 2018 was $0.3 million due to interest earned on invested cash balances. We did not invest our cash balances during the three months ended March 31, 2017.

Other expense was not significant during the three months ended March 31, 2017 or 2018.

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The following table summarizes our results of operations for the years ended December 31, 2016 and 2017:

 
   
   
   
 
 
  Year ended
December 31,
   
 
 
  2016
  2017
  Change
 
 
  (in thousands)
 

Revenue

  $   $   $  

Operating expenses:

                   

Research and development

    8,403     21,226     12,823  

General and administrative

    2,449     22,038     19,589  

Total operating expenses

    10,852     43,264     32,412  

Loss from operations

    (10,852 )   (43,264 )   (32,412 )

Other income (expense):

                   

Change in fair value of preferred stock warrant liability

    1     (785 )   (786 )

Interest expense

    (149 )   (309 )   (160 )

Interest income and other expense, net

    (16 )   511     527  

Total other expense, net

    (164 )   (583 )   (419 )

Net loss

  $ (11,016 ) $ (43,847 ) $ (32,831 )
 
   
   
   
 
 
  Year ended
December 31,
   
 
 
  2016
  2017
  Change
 
 
  (in thousands)
 

Direct research and development expenses by program:

                   

RTX-134

  $   $ 809   $ 809  

Platform development, early-stage research and unallocated expenses:

                   

Personnel related

    2,828     5,278     2,450  

Stock-based compensation expense

    107     1,756     1,649  

External manufacturing and research

    3,450     6,594     3,144  

Laboratory supplies and research materials

    1,160     4,123     2,963  

Facility related and other

    858     2,666     1,808  

Total research and development expenses

  $ 8,403   $ 21,226   $ 12,823  

Research and development expenses were $8.4 million for the year ended December 31, 2016, compared to $21.2 million for the year ended December 31, 2017. The increase in direct costs related to our RTX-134 program of $0.8 million was primarily due to contract manufacturing costs incurred with a supplier of lentiviral vectors. The increases in personnel-related costs and stock-based compensation expense of $2.5 million and $1.6 million, respectively, were primarily due to increased headcount in our research and development function as well as an increase in the number of awards granted and the per share fair value of such awards. The increase in external manufacturing and research costs of $3.1 million was primarily due to our efforts to improve and scale our manufacturing capabilities, preparation for clinical-scale production and an expansion of our in vivo testing to support clinical candidate selection. The increase in

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laboratory supplies and research materials of $3.0 million was primarily due to increases in platform development, manufacturing process and drug discovery activities as well as an increase in the volume and cost of bioprocessing materials as we scale up our manufacturing process. The increase in facility-related and other expenses of $1.8 million was primarily due to an increase in facilities costs resulting from entering into leases of office and laboratory space in September 2016 and July 2017.

 
   
   
   
 
 
  Year ended
December 31,
   
 
 
  2016
  2017
  Change
 
 
  (in thousands)
 

Personnel related

  $ 560   $ 2,301   $ 1,741  

Stock-based compensation expense

    40     16,147     16,107  

Professional and consultant fees

    1,465     3,149     1,684  

Facility related and other

    384     441     57  

Total general and administrative expenses

  $ 2,449   $ 22,038   $ 19,589  

General and administrative expenses for the year ended December 31, 2016 were $2.4 million, compared to $22.0 million for the year ended December 31, 2017. The increase in general and administrative expenses of $19.6 million was primarily due to an increase in stock-based compensation expense of $16.1 million. The increase in stock-based compensation expense was primarily due to the recognition of compensation expense of $15.7 million for stock-based awards granted to the chairman of our board of directors during the year ended December 31, 2017. All of the stock-based awards issued to the chairman of our board of directors were for his services as a consultant and are being accounted for as non-employee stock-based awards. At the end of each reporting period prior to completion of the services, we remeasure the fair value of any unvested portion of the awards and adjust the expense accordingly. As a result, changes in the fair value of our common stock impact the amount of stock-based compensation expense that we recognize for these awards. The stock-based compensation expense recognized for these awards during 2017 reflects the vesting of approximately one-half of the awards. Stock-based compensation expense related to the unvested portion of the awards will be recognized over the remaining two-year service period of the awards. The remaining increase in stock-based compensation expense in 2017 was primarily due to increased headcount in our general and administrative function as well as an increase in the number of awards granted and the per share grant-date fair value of such awards. Personnel-related costs increased by $1.7 million as a result of the increase in headcount in our general and administrative function. Professional and consultant fees increased by $1.7 million primarily due to consulting fees paid to the chairman of our board of directors for his services as a consultant as well as increased patent costs and professional fees relating to accounting, audit and legal fees as well as costs associated with ongoing business activities and our preparations to operate as a public company.

The change in the fair value of our preferred stock warrant liability was $0.8 million during the year ended December 31, 2017 and was due primarily to the increase in the value of our preferred stock.

Interest expense was $0.1 million for the year ended December 31, 2016, compared to $0.3 million for the year ended December 31, 2017. The increase in interest expense was due to an increase of $1.5 million in

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outstanding borrowings under our loan and security agreement during the year ended December 31, 2017 as well as higher interest rates applicable to outstanding borrowings during the year ended December 31, 2017.

Interest income for the year ended December 31, 2017 was $0.6 million due to interest earned on invested cash balances. We did not invest our cash balances during the year ended December 31, 2016.

Other expense was not significant for the years ended December 31, 2016 and 2017.

Liquidity and capital resources

Since our inception, we have incurred significant operating losses. We have not yet commercialized any of our product candidates and we do not expect to generate revenue from sales of any product candidates for several years, if at all. To date, we have funded our operations with proceeds from the sales of preferred stock and borrowings under our loan and security agreement. Through March 31, 2018, we had received gross proceeds of $239.4 million from sales of our preferred stock and $5.5 million from borrowings under a loan and security agreement. As of March 31, 2018, no amounts remained available for borrowing under the loan and security agreement. As of March 31, 2018, we had cash, cash equivalents and marketable securities of $192.6 million.

The following table summarizes our sources and uses of cash for each of the periods presented:

 
   
   
   
   
 
 
  Year ended
December 31,
  Three months ended
March 31,
 
 
  2016
  2017
  2017
  2018
 
 
  (in thousands)
 

Cash used in operating activities

  $ (9,502 ) $ (21,938 ) $ (3,092 ) $ (10,889 )

Cash used in investing activities

    (443 )   (2,251 )   (271 )   (56,978 )

Cash provided by financing activities

    15,418     121,693     28     100,990  

Net increase (decrease) in cash, cash equivalents and restricted cash

  $ 5,473   $ 97,504   $ (3,335 ) $ 33,123  

During the three months ended March 31, 2018, operating activities used $10.9 million of cash, primarily resulting from our net loss of $15.3 million, partially offset by net non-cash charges of $3.7 million, primarily consisting of stock-based compensation expense, and net cash provided by changes in our operating assets and liabilities of $0.7 million. Net cash provided by changes in our operating assets and liabilities for the three months ended March 31, 2018 consisted primarily of a $0.7 million increase in accounts payable and accrued expenses and other current liabilities.

During the three months ended March 31, 2017, operating activities used $3.1 million of cash, primarily resulting from our net loss of $4.9 million, partially offset by net non-cash charges of $0.9 million, primarily consisting of stock-based compensation expense, and net cash provided by changes in our operating assets and liabilities of $0.8 million. Net cash provided by changes in our operating assets and

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liabilities for the three months ended March 31, 2017 consisted primarily of a $0.9 million increase in accounts payable and accrued expenses and other current liabilities.

During the year ended December 31, 2017, operating activities used $21.9 million of cash, primarily resulting from our net loss of $43.8 million, partially offset by net non-cash charges of $19.2 million, primarily consisting of stock-based compensation expense, and net cash provided by changes in our operating assets and liabilities of $2.7 million. Net cash provided by changes in our operating assets and liabilities for the year ended December 31, 2017 consisted primarily of a $3.4 million increase in accounts payable and accrued expenses and other current liabilities, partially offset by a $0.6 million increase in prepaid expenses and other current assets.

During the year ended December 31, 2016, operating activities used $9.5 million of cash, primarily resulting from our net loss of $11.0 million, partially offset by net non-cash charges of $0.4 million and net cash provided by changes in our operating assets and liabilities of $1.1 million. Net cash provided by changes in our operating assets and liabilities for the year ended December 31, 2016 consisted primarily of a $1.2 million increase in accounts payable and accrued expenses and other current liabilities.

Changes in accounts payable, accrued expenses and other current liabilities and prepaid expenses in both periods were generally due to growth in our business, the advancement of our research programs and the timing of vendor invoicing and payments.

During the three months ended March 31 2018, net cash used in investing activities was $57.0 million, consisting of purchases of marketable securities of $56.1 million and purchases of property and equipment of $0.8 million.

During the three months ended March 31 2017, net cash used in investing activities was $0.3 million, consisting of purchases of property and equipment. The purchases of property and equipment in both periods related to equipment purchases as we expanded our discovery and manufacturing activities.

During the years ended December 31, 2017 and 2016, net cash used in investing activities was $2.3 million and $0.4 million, respectively, due to purchases of property and equipment. The purchases of property and equipment during the year ended December 31, 2017 related to equipment purchases as we expanded our discovery and manufacturing activities.

During the three months ended March 31, 2018, net cash provided by financing activities was $101.0 million, consisting primarily of proceeds from the issuance of preferred stock.

Cash provided by financing activities in the three months ended March 31, 2017 was less than $0.1 million.

During the year ended December 31, 2017, net cash provided by financing activities was $121.7 million, consisting primarily of proceeds from the issuance of preferred stock of $120.1 million and borrowings of $1.5 million under our loan and security agreement.

During the year ended December 31, 2016, net cash provided by financing activities was $15.4 million, consisting primarily of proceeds from the issuance of preferred stock of $11.4 million and borrowings of $4.0 million under our loan and security agreement.

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In November 2015, we entered into a loan and security agreement, or, as amended, the 2015 Credit Facility, with Pacific Western Bank. Through March 31, 2018, we had borrowed an aggregate of $5.5 million under the 2015 Credit Facility. As of March 31, 2018, no amounts remained available for borrowing under the 2015 Credit Facility. As of March 31, 2018, borrowings under the 2015 Credit Facility bore interest at an annual rate equal to the bank's prime rate plus 1.25%, subject to a floor of 4.5%, and were repayable in monthly interest-only payments through May 2018 and in equal monthly payments of principal and accrued interest from June 2018 until the maturity date in November 2019. As of March 31, 2018, the interest rate applicable to borrowings under the 2015 Credit Facility was 6.0%.

In May 2018, we entered into a further amendment to the 2015 Credit Facility to modify the interest rate and extend the interest-only payment period and the maturity date. Commencing in May 2018, outstanding borrowings under the 2015 Credit Facility bear interest at an annual rate equal to the bank's prime rate plus 0.75%, subject to a floor of 5.5%, and are repayable in monthly interest-only payments through May 2019 and in equal monthly payments of principal plus accrued interest from June 2019 until the maturity date in November 2020. As of May 24, 2018, the interest rate applicable to borrowings under the 2015 Credit Facility was 5.5%.

Borrowings under the 2015 Credit Facility are collateralized by substantially all of our personal property, other than our intellectual property. There are no financial covenants associated with the 2015 Credit Facility; however, we are subject to certain affirmative and negative covenants to which we will remain subject until maturity. These covenants include limitations on our ability to incur additional indebtedness. Obligations under the 2015 Credit Facility are subject to acceleration upon the occurrence of specified events of default, including a material adverse change in our business, operations or financial or other condition.

We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance the preclinical activities and clinical trials for our product candidates in development. In addition, upon the closing of this offering, we expect to incur additional costs associated with operating as a public company. The timing and amount of our operating and capital expenditures will depend largely on:

the timing and progress of preclinical and clinical development activities;

the commencement, enrollment or results of the planned clinical trials of our product candidates or any future clinical trials we may conduct, or changes in the development status of our product candidates;

the timing and outcome of regulatory review of our product candidates;

our decision to initiate a clinical trial, not to initiate a clinical trial or to terminate an existing clinical trial;

changes in laws or regulations applicable to our product candidates, including but not limited to clinical trial requirements for approvals;

developments concerning our CMOs;

our ability to obtain materials to produce adequate product supply for any approved product or inability to do so at acceptable prices;

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our decision to acquire and establish a manufacturing facility for supply of product candidates for clinical trials and for commercial supply;

the costs and timing associated with the purchase, renovation and customization of our planned multi-suite manufacturing facility;

our ability to establish collaborations if needed;

the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any of our product candidates for which we obtain marketing approval;

the legal patent costs involved in prosecuting patent applications and enforcing patent claims and other intellectual property claims;

additions or departures of key scientific or management personnel;

unanticipated serious safety concerns related to the use of our product candidates; and

the terms and timing of any collaboration, license or other arrangement, including the terms and timing of any milestone payments thereunder.

We believe that the net proceeds from this offering, together with our existing cash, cash equivalents and marketable securities, will enable us to fund our operating expenses, capital expenditure requirements, including the purchase, renovation and customization of the manufacturing facility for which we have entered into a letter of intent to purchase, and debt service payments through                   . We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. 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 of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or drug candidates, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, limit, reduce or terminate our research, product development or future commercialization efforts, or grant rights to develop and market drug candidates that we would otherwise prefer to develop and market ourselves.

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Contractual obligations and commitments

The following table summarizes our contractual obligations as of December 31, 2017 and the effects that such obligations are expected to have on our liquidity and cash flows in future periods:

 
   
   
   
   
   
 
 
  Payments due by period  
 
  Total
  Less than
1 year

  1 to 3
years

  4 to 5
years

  More than
5 years

 
 
  (in thousands)
 

Operating lease commitments(1)

  $ 3,328   $ 1,376   $ 1,405   $ 547   $  

Debt obligations(2)

    5,887     2,428     3,459          

Total(3)

  $ 9,215   $ 3,804   $ 4,864   $ 547   $  

(1)    Amounts in table reflect payments due for our leases of office and laboratory space in Cambridge, Massachusetts under two operating lease agreements that expire in December 2018 and September 2021.

(2)    Amounts in table reflect the contractually required principal and interest payments payable under the 2015 Credit Facility. For purposes of this table, the interest due under the 2015 Credit Facility was calculated using an assumed interest rate of 5.75% per annum, which was the interest rate in effect as of December 31, 2017.

(3)    In January 2018, we entered into a new lease for office and laboratory space in Cambridge, Massachusetts. The lease term is expected to commence on November 1, 2018 and expires eight years from the commencement date. We are not the legal owner of the leased space. However, we are deemed to be the owner of the leased space during the construction period because of certain indemnification provisions within the lease. As a result, as of March 31, 2018, we capitalized approximately $11.0 million (equal to the estimated fair value of our leased portion of the premises) as construction-in-progress within property and equipment and recorded a corresponding build-to-suit facility lease financing obligation on our consolidated balance sheet. As a result of the new lease, our contractual obligations will increase by $0.6 million in 2018, $3.8 million in 2019, $3.9 million in 2020, $4.0 million in 2021, $4.1 million in 2022, $4.3 million in 2023, $4.4 million in 2024, $4.5 million in 2025 and $3.9 million in 2026. Such amounts are not reflected in the table above.

We enter into contracts in the normal course of business with CROs, CMOs and other third parties for preclinical research studies, clinical trials and testing and manufacturing services. These contracts do not contain minimum purchase commitments and are cancelable by us upon prior written notice. Payments due upon cancellation consist only of payments for services provided or expenses incurred, including noncancelable obligations of our service providers, up to the date of cancellation. These payments are not included in the table above as the amount and timing of such payments are not known.

We have also entered into a license agreement with the Whitehead Institute for Biomedical Research under which we are obligated to make aggregate milestone payments of up to $1.6 million upon the achievement of specified preclinical, clinical and regulatory milestones as well as royalty payments. We have not included future payments under this agreement in the table above since the payment obligations under this agreement are contingent upon future events, such as our achievement of specified milestones or generating product sales. As of December 31, 2017 and March 31, 2018, we were unable to estimate the timing or likelihood of achieving these milestones or generating future product sales. For additional information, see "Business—Licenses."

Critical accounting policies and significant judgments and estimates

Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States, or GAAP. The preparation of our consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, costs and expenses and the disclosure of contingent assets and liabilities in our financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from

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other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are described in more detail in Note 2 to our consolidated financial statements appearing at the end of this prospectus, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial statements.

As part of the process of preparing our consolidated financial statements, we are required to estimate our accrued research and development expenses. This process involves reviewing open contracts and purchase orders, communicating with our applicable personnel to identify services that have been performed on our behalf 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 actual costs. The majority of our service providers invoice us in arrears for services performed, on a pre-determined schedule or when contractual milestones are met; however, some require advance payments. We make estimates of our accrued expenses as of each balance sheet date in the consolidated financial statements based on facts and circumstances known to us at that time. We periodically confirm the accuracy of the estimates with the service providers and make adjustments if necessary. Examples of estimated accrued research and development expenses include fees paid to:

vendors in connection with preclinical development activities;

CMOs in connection with the process development and scale-up activities and the production of preclinical and clinical trial materials; and

CROs in connection with clinical trials.

We base the expense recorded related to contract research and manufacturing on our estimates of the services received and efforts expended pursuant to quotes and contracts with multiple CMOs and CROs that supply materials and conduct services. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the expense. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, we adjust the accrual or prepaid expense accordingly. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting amounts that are too high or too low in any particular period. To date, there have not been any material adjustments to our prior estimates of accrued research and development expenses.

We measure stock-based awards granted to employees and directors based on their fair value on the date of the grant using the Black-Scholes option-pricing model for options or the difference between the purchase price per share of the award, if any, and the fair value of our common stock for restricted common stock awards. Compensation expense for those awards is recognized over the requisite service period, which is generally the vesting period of the respective award. We use the straight-line method to record the expense of awards with service-based vesting conditions. We use the graded-vesting method to record the expense of awards with both service-based and performance-based vesting conditions, commencing when achievement of the performance condition becomes probable.

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We measure the fair value of stock-based awards granted to non-employees on the date that the related service is complete, which is generally the vesting date of the award. Prior to the service completion date, compensation expense is recognized over the period during which services are rendered by such non-employees. At the end of each financial reporting period prior to the service completion date, the fair value of these awards is remeasured using the then-current fair value of our common stock and updated assumption inputs in the Black-Scholes option-pricing model for options or the difference between the purchase price per share of the award, if any, and the then-current fair value of our common stock for restricted common stock awards.

In addition, for restricted stock awards under which restricted common stock is purchased by the holder with a promissory note treated as a nonrecourse note for accounting purposes, we measure the fair value of the award using the Black-Scholes option-pricing model.

The Black-Scholes option-pricing model uses as inputs the fair value of our common stock and assumptions we make for the volatility of our common stock, the expected term of our common stock options, the risk-free interest rate for a period that approximates the expected term of our common stock options, and our expected dividend yield.

As there has been no public market for our common stock to date, the estimated fair value of our common stock has been determined by our board of directors as of the date of each option grant, with input from management, considering our most recently available third-party valuations of common stock, and our board of directors' assessment of additional objective and subjective factors that it believed were relevant and which may have changed from the date of the most recent valuation through the date of the grant. These third-party valuations were performed in accordance with the guidance outlined in the American Institute of Certified Public Accountants' Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation . Our common stock valuations were prepared using either an option pricing method, or OPM, or a hybrid method, both of which used market approaches to estimate our enterprise value. The OPM treats common stock and preferred stock as call options on the total equity value of a company, with exercise prices based on the value thresholds at which the allocation among the various holders of a company's securities changes. Under this method, the common stock has value only if the funds available for distribution to stockholders exceeded the value of the preferred stock liquidation preferences at the time of the liquidity event, such as a strategic sale or a merger. A discount for lack of marketability of the common stock is then applied to arrive at an indication of value for the common stock. The hybrid method is a probability-weighted expected return method, PWERM, where the equity value in one or more scenarios is calculated using an OPM. The PWERM is a scenario-based methodology that estimates the fair value of common stock based upon an analysis of future values for the company, assuming various outcomes. The common stock value is based on the probability-weighted present value of expected future investment returns considering each of the possible outcomes available as well as the rights of each class of stock. The future value of the common stock under each outcome is discounted back to the valuation date at an appropriate risk-adjusted discount rate and probability weighted to arrive at an indication of value for the common stock. These third-party valuations were performed at various dates, which resulted in valuations of our common stock of $0.19 per share as of December 14, 2016, $1.65 per share as of May 1, 2017, $2.87 per share as of June 30, 2017, $4.74 as of February 9, 2018, $8.66 as of March 26, 2018 and $12.98 as of May 31, 2018. In addition to

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considering the results of these third-party valuations, our board of directors considered various objective and subjective factors to determine the fair value of our common stock as of each grant date, including:

the prices at which we sold shares of preferred stock and the superior rights and preferences of the preferred stock relative to our common stock at the time of each grant;

the progress of our research and development programs, including the status and results of preclinical studies for our product candidates and progress of our development of manufacturing processes;

our stage of development and commercialization and our business strategy;

external market conditions affecting the biopharmaceutical industry and trends within the biopharmaceutical industry;

our financial position, including cash on hand, and our historical and forecasted performance and operating results;

the lack of an active public market for our common stock and our preferred stock;

the likelihood of achieving a liquidity event, such as an initial public offering, or IPO, or sale of our company in light of prevailing market conditions; and

the analysis of IPOs and the market performance of similar companies in the biopharmaceutical industry.

The assumptions underlying these valuations represented management's best estimate, which involved inherent uncertainties and the application of management's judgment. As a result, if we had used significantly different assumptions or estimates, the fair value of our common stock and our stock-based compensation expense could have been materially different.

Once a public trading market for our common stock has been established in connection with the closing of this offering, it will no longer be necessary for our board of directors to estimate the fair value of our common stock in connection with our accounting for granted stock options and other such awards we may grant, as the fair value of our common stock will be determined based on the quoted market price of our common stock.

The following table summarizes by grant date the number of shares subject to options and restricted common stock awards granted between January 1, 2017 and June 18, 2018, the per share exercise price of

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the options, the fair value of common stock on each grant date, and the per share estimated fair value of the awards:

 
   
   
   
   
   
 
Grant date
  Type of award
  Number of
shares
subject to
award

  Per share
exercise price of
options or
purchase price of
restricted stock

  Per share
fair value
of common
stock on
grant date

  Per share
estimated fair
value of
award on
grant date

 

January 25, 2017

  Option     15,000   $ 0.19   $ 0.19   $ 0.13  

January 27, 2017

  Restricted stock—non-employee     3,667,014   $ 0.19   $ 0.19   $ 0.13 (2)

April 3, 2017

  Option     115,000   $ 0.19   $ 0.48 (1) $ 0.39  

April 3, 2017

  Restricted stock     460,000   $ 0.19   $ 0.48 (1) $ 0.39  

May 16, 2017

  Option     524,500   $ 1.65   $ 2.51 (1) $ 1.87  

May 16, 2017

  Option—non-employee     20,000   $ 1.65   $ 2.51 (1) $ 2.19 (2)

May 16, 2017

  Restricted stock—non-employee     1,100,000   $ 1.65   $ 2.51 (1) $ 1.85 (2)

August 24, 2017

  Option     631,000   $ 2.87   $ 3.65 (1) $ 2.62  

October 25, 2017

  Option     792,000   $ 2.87   $ 4.61 (1) $ 3.48  

October 25, 2017

  Option—non-employee     215,292   $ 2.87   $ 4.61 (1) $ 4.04 (2)

February 15, 2018

  Option     2,436,000   $ 4.74   $ 7.35 (1) $ 5.47  

February 15, 2018

  Option—non-employee     7,500   $ 4.74   $ 7.35 (1) $ 6.37 (2)

March 29, 2018

  Option     396,000   $ 8.66   $ 8.66   $ 5.83  

April 2, 2018

  Option     95,000   $ 8.66   $ 8.66   $ 5.83  

April 3, 2018

  Option     55,000   $ 8.66   $ 8.66   $ 5.83  

April 11, 2018

  Option—non-employee     3,803,846   $ 8.66   $ 8.66   $ 7.19 (2)

June 6, 2018

  Option     586,000   $ 12.98   $ 12.98   $ 8.77  

June 6, 2018

  Option—non-employee     2,500   $ 12.98   $ 12.98   $ 10.81 (2)

(1)    At the time of the option grants on April 3, 2017, May 16, 2017, August 24, 2017, October 25, 2017 and February 15, 2018, our board of directors determined that the fair value of our common stock of $0.19 per share, $1.65 per share, $2.87 per share, $2.87 per share and $4.74 per share calculated in the valuations as of December 14, 2016, May 1, 2017, June 30, 2017 and February 9, 2018, respectively, reasonably reflected the per share fair value of our common stock as of the grant date. However, as described below, the fair value of common stock at the date of these grants was adjusted in connection with retrospective fair value assessments for accounting purposes.

(2)    For purposes of recording stock-based compensation for grants of options or restricted stock to non-employees, we measure the fair value of the award on the service completion date (vesting date). At the end of each reporting period prior to completion of the services, we remeasure the value of any unvested portion of the award based on the then-current fair value of the award and adjust the expense accordingly. Amounts in this column reflect only the grant-date fair value of awards to non-employees.

In the course of preparing for this offering, in March 2018, we performed a retrospective fair value assessment and concluded that the fair value of our common stock underlying stock options and restricted common stock that we granted on April 3, 2017, May 16, 2017, August 24, 2017, October 25, 2017 and February 15, 2018 was $0.48 per share as of April 3, 2017, $2.51 per share as of May 16, 2017, $3.65 per share as of August 24, 2017, $4.61 per share as of October 25, 2017 and $7.35 per share as of February 15, 2018 for accounting purposes. We applied the fair values of our common stock from our retrospective fair value assessments to determine the fair value of these awards and calculate stock-based compensation expense for accounting purposes. These reassessed values were based, in part, upon third-party valuations of our common stock prepared as of each grant date on a retrospective basis. The third-party valuations were prepared using either the OPM or the hybrid method and used market approaches to determine our enterprise value.

We classify warrants to purchase shares of our Series A and Series B preferred stock as liabilities on our consolidated balance sheets as these warrants are free-standing financial instruments that may require us to transfer assets upon exercise. The warrants were initially recorded at fair value on the date of grant, and they are subsequently remeasured to fair value at each balance sheet date. Changes in fair value of

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the warrants are recognized as a component of other income (expense) in our consolidated statements of operations and comprehensive loss. We will continue to adjust the liability for changes in fair value until the warrants are exercised, expire or qualify for equity classification.

We utilize the Black-Scholes option-pricing model, which incorporates assumptions and estimates to value the preferred stock warrants. We assess these assumptions and estimates on a quarterly basis as additional information impacting the assumptions is obtained. Estimates and assumptions impacting the fair value measurement include the fair value per share of the underlying Series A and Series B preferred stock, the remaining contractual term of the warrants, risk-free interest rate, expected dividend yield and expected volatility of the price of the underlying preferred stock. The most significant assumption in the Black-Scholes option-pricing model impacting the fair value of the preferred stock warrants is the fair value of our preferred stock as of each remeasurement date. We determine the fair value per share of the underlying preferred stock by taking into consideration our most recent sales of our preferred stock as well as additional factors that we deem relevant. As of December 31, 2016 and 2017 and March 31, 2018, the fair value of the Series A preferred stock was $0.60 per share, $6.73 per share and $7.06 per share, respectively, and as of December 31, 2017 and March 31, 2018, the fair value of the Series B preferred stock was $9.88 per share and $10.06 per share, respectively. We have historically been a private company and lack company-specific historical and implied volatility information of our stock. Therefore, we estimate expected stock volatility based on the historical volatility of publicly traded peer companies for a term equal to the remaining contractual term of the warrants. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve for time periods approximately equal to the remaining contractual term of the warrants. We have estimated a 0% dividend yield based on the expected dividend yield and the fact that we have never paid or declared dividends.

Upon the closing of this offering, the preferred stock warrants will become exercisable for common stock instead of preferred stock and the fair value of the warrant liability at that time will be reclassified to additional paid-in capital.

Off-balance sheet arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Recently issued accounting pronouncements

A description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations or cash flows is disclosed in Note 2 to our consolidated financial statements appearing at the end of this prospectus.

Quantitative and qualitative disclosures about market risks

As of December 31, 2017, we had cash and cash equivalents of $104.3 million, which consisted of cash and money market funds. As of March 31, 2018, we had cash, cash equivalents and marketable securities of $192.6 million, which consisted of cash, money market funds, U.S. treasury notes and U.S. government agency bonds. Interest income is sensitive to changes in the general level of interest rates; however, due to the nature of these investments, an immediate 10% change in interest rates would not have a material effect on the fair market value of our investment portfolio.

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As of December 31, 2017 and March 31, 2018, we had $5.5 million of borrowings outstanding under the 2015 Credit Facility. Commencing in May 2018, outstanding borrowings under the 2015 Credit Facility bear interest at a variable rate equal to the bank's prime rate plus 0.75%, subject to a floor of 5.5%. An immediate 10% change in the prime rate would not have had a material impact on our debt-related obligations, financial position or results of operations.

We are not currently exposed to significant market risk related to changes in foreign currency exchange rates; however, we have contracted with and may continue to contract with foreign vendors that are located in Europe and Australia. Our operations may be subject to fluctuations in foreign currency exchange rates in the future.

Inflation generally affects us by increasing our cost of labor. We do not believe that inflation had a material effect on our business, financial condition or results of operations during the years ended December 31, 2016 and 2017 or the three months ended March 31, 2018.

Emerging growth company status

The Jumpstart Our Business Startups Act of 2012 permits an "emerging growth company" such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have elected not to "opt out" of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that we either (i) irrevocably elect to "opt out" of such extended transition period or (ii) no longer qualify as an emerging growth company. While we have not made such an irrevocable election, we have not delayed the adoption of any applicable accounting standards.

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Business

Overview

We are pioneering the development of a new class of medicines, Red Cell Therapeutics, or RCTs. Based on our vision that human red blood cells are the foundation of the next significant innovation in medicine, we have designed a proprietary platform to genetically engineer and culture RCTs that are selective, potent and ready-to-use cellular therapies. We believe that our RCTs will provide life-changing or life-saving benefits for patients with severe diseases across multiple therapeutic areas.

We have generated hundreds of RCTs using our highly versatile and proprietary cellular therapy platform, the Rubius Erythrocyte Design, or RED, Platform. We are utilizing our universal engineering and manufacturing processes to advance a broad pipeline of RCT product candidates into clinical trials in rare diseases, cancer and autoimmune diseases. Common design and manufacturing elements of our RCTs should enable us to achieve significant advantages in product development. We are establishing end-to-end manufacturing capabilities and plan to develop commercial infrastructure to further establish Rubius Therapeutics as a leading, fully integrated cellular therapy company.

Our RED Platform builds upon the research and findings of Flagship Pioneering's VentureLabs innovation team along with the discoveries of Professors Harvey Lodish and Hidde Ploegh of the Whitehead Institute for Biomedical Research at MIT. This work demonstrated the ability to differentiate donor-derived CD34+ hematopoietic precursor cells into enucleated RBCs with unprecedented efficiency at a small, laboratory scale. Based on this foundation, Flagship Pioneering's VentureLabs innovation team recognized the potential for RBCs as an optimal framework for cellular therapies and invented methods to engineer RCTs to express biotherapeutic proteins within the cell or on the cell surface.

Building upon these early discoveries, we have developed the RED Platform, which enables us to engineer and culture RCT product candidates with a wide array of biotherapeutic proteins and biological functions that enable their use across multiple therapeutic areas. We have also invested considerably to scale the process of RCT manufacturing, which we believe will allow for the production of large quantities of reliable and reproducible RCT products from the initial stages of development through to commercial scale. We have and continue to build a broad portfolio of patent applications, know how, trade secrets, and other intellectual property that covers both our platform technologies as well as product discoveries, the breadth and depth of which is a strategic asset that could provide us with competitive advantages.

Although our RCT product candidates are at a preclinical stage of development and will require substantial resources to demonstrate technical feasibility and to establish clinical and regulatory validation, we believe that our RED Platform could provide beneficial treatments for our target indications, many of which have few, if any, effective treatments. Our initial focus will be advancing RCT product candidates with unique benefits for patients suffering from rare diseases, cancer and autoimmune diseases based on three modalities — cellular shielding, potent cell-cell interaction and tolerance induction.

Rare Diseases:   We engineer RCTs that express potent enzymes within the cell for the treatment of patients suffering from rare enzyme deficiency diseases. As they are located within the RCT, these enzymes are shielded from being neutralized by the immune system, thereby allowing the enzymes to degrade and clear the pathogenic metabolites that build up in such diseases. We believe these RCTs may have a longer and sustained treatment duration and could avoid the immune-driven reduction in efficacy and induction of adverse events associated with other therapies.

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Cancer:   We engineer RCTs for potent cell-cell interaction by expressing hundreds of thousands of copies of one or more proteins on the cellular surface to drive enhanced and synergistic activation of both the adaptive and innate immune systems, as well as to enable treatment localization in the tumor. We believe these RCTs could be transformative therapies for patients with solid and hematological cancers.

Autoimmune Diseases:   We engineer RCTs that express specific autoimmune disease-causing antigens within the cell or on the cell surface in order to induce immune tolerance. We believe these RCTs could prevent immune damage that causes these diseases.

Our product candidates are allogeneic, making them ready-to-use, and we expect them to have a predictable biodistribution and an approximate circulation time of up to 120 days, which should enable us to deliver well-tolerated and convenient cellular therapies to a broad patient population.

We are developing our initial RCT product candidates for phenylketonuria, or PKU, chronic refractory gout, homocystinuria and a wide range of solid and hematological cancers. Pending positive clinical data based on validated, approvable endpoints, we plan to advance these RCT product candidates as well as a broader portfolio of rare disease and cancer therapies toward registration. We are also in the early stages of assessing our RCT product candidates for the treatment of autoimmune diseases. We plan to seek orphan drug designation as well as pursue breakthrough therapy or Regenerative Medicine Advanced Therapy, or RMAT, designations for our RCT portfolio where appropriate, which we believe may shorten the time to market. We plan to file an investigational new drug application, or IND, for RTX-134 for the treatment of PKU in the first quarter of 2019 and INDs for additional RCT product candidates during 2019, 2020 and thereafter.

Since we commenced operations in 2013, we have attracted a talented group of seasoned leaders to execute our strategy. Our leadership team has more than 200 years of combined experience at pharmaceutical and biotechnology companies, has been involved in filing more than a combined 80 INDs and 20 submissions for product approval and has launched more than 30 pharmaceutical products. Additionally, we have raised approximately $240 million in capital from Flagship Pioneering, major mutual funds, healthcare-dedicated funds and other leading investors that share our commitment to establishing RCTs as a new transformative class of medicines.

Utilizing RBCs to create cellular therapies

Red blood cells, or RBCs, are the most ubiquitous cells in the human body, constituting over 80% of the body's cells and playing a critical role in the delivery of oxygen to tissues. To constantly replenish this population of critical cells, the human body generates approximately 2.5 million RBCs every second. RBCs represent the first example of a transformative cellular therapy as physicians have been transfusing blood to patients since the early 1800s. Today, the focus around cellular therapies has largely been directed toward T cell and other lymphocyte-based therapies. We believe that RBC-based therapies will transform the cellular therapy landscape as they may represent the ideal cell type for the creation of versatile, well-tolerated and ready-to-use cellular therapies. We believe such therapies could avoid many of the complications and risks often associated with earlier generation cellular therapies, including the emerging category of T cell based therapies. These distinct characteristics of RBCs support their potential to serve as the foundation for a cellular therapy:

a predictable circulating time of approximately 120 days;

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a well-characterized and controllable biodistribution as RBCs are generally sequestered in the vasculature, spleen and liver, except in the leaky neo-vasculature of tumors through which RBCs can enter the tumor microenvironment and be engineered to bind to tumor cells;

the well-established use of O negative blood as a universal source that can be transfused into approximately 95% of people;

the presence of certain surface markers, such as CD47, on RBCs provide what are referred to as "don't eat me" signals, preventing the immune system from clearing RBCs from circulation; and

since RBCs are enucleated, they do not pose a risk of uncontrolled cell division or oncogenicity following transfusion.

Today, blood transfusions remain one of the most commonly performed medical procedures, with approximately 85 million units of blood transfused worldwide each year. Significant infrastructure exists within most hospitals and outpatient infusion centers worldwide to support the administration of blood and blood-derived products. We intend to leverage this infrastructure to administer our products if approved.

Our proprietary RED Platform

We are pioneering the creation of a new transformative class of medicines that leverage the benefits of RBCs to provide cellular therapies to patients suffering from severe diseases across multiple therapeutic areas. As RBCs are enucleated, they have generally been considered simple oxygen delivery vehicles, rather than the backbone of a versatile cellular therapy platform. Past attempts at RBC-based therapies, such as applying hypotonic loading or cell swelling to load an enzyme or protein into RBCs, have had limited therapeutic applications, proven difficult to scale and reduced the in vivo half-life of the loaded RBCs.

Our discoveries and innovations in genetic engineering and cell culture processes have made it possible to now use RBCs as a foundation for the creation and development of a new class of cellular therapies. By modifying only one of our initial manufacturing steps in which we add a gene or genes that encode biotherapeutic proteins within the cell or on the cell surface of RCTs, we are able to rapidly develop new RCTs designed to treat different diseases. This approach allows for the consistent generation of product candidates and a preclinical evaluation process that we believe has the potential to create a broad range of therapeutics in an efficient manner — for example, RTX-134 required only nine months from product design to identification as our lead RCT product candidate. Our uniform approach should also enable us to leverage common chemistry, manufacturing and controls, or CMC, and toxicology data packages to shorten development timelines. While the initial focus of our RED Platform will be in rare diseases, cancer and autoimmune diseases, we believe the versatility of our platform will enable us to expand into broader therapeutic areas in the future.

The RED Platform allows us to generate a wide variety of allogeneic, ready-to-use RCT product candidates with a universal and proprietary process through the following steps: (1) obtaining CD34+ hematopoietic precursor cells from the blood of O negative donors; (2) genetic engineering of the cells to express biotherapeutic proteins within the cell or on the cell surface of the RCTs; (3) expanding the number of cells

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and differentiating them into reticulocytes, which are enucleated RBC precursors; and (4) formulating, characterizing and storing doses of the resulting RCT product candidate for later infusion into patients.

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A significant advantage of differentiating the cells into reticulocytes is the ability to separate the genetic modification from the final RCT product candidate through the biological process of enucleation, a property unique to reticulocytes. Enucleation involves the ejection of the nucleus from the cell, and with it, all the DNA it contains, leaving behind an RCT that expresses the protein or proteins that confer the intended therapeutic benefit. We believe this absence of genetic material may reduce the safety risks associated with RCTs as compared with current cellular therapies.

Limitations of previous and current cellular therapies

The field of tissue, cell and regenerative therapy has a long history, starting with blood transfusions in the early 1800s, followed by organ and bone marrow transplants in the middle of the 20 th  century and later the approval of cellular therapy products ranging from epidermal transplantation for wound care to mesenchymal stem cells for the treatment of graft versus host disease and dendritic cells for the treatment of prostate cancer.

Most recently, several biotechnology companies and academic groups have demonstrated that a type of cell therapy known as chimeric antigen receptor T cells, or CAR-Ts, where a patient's own T cells are genetically engineered to recognize and attack specific cancer cells, are capable of powerful and sometimes curative therapeutic effects. In addition, some groups are studying the adoptive transfer and activation of natural killer cells, or NK cells, for treatment of solid and hematologic cancers, while others are attempting to expand and engineer regulatory T cells ex vivo for the treatment of autoimmune diseases.

A range of issues have historically limited the use of cellular therapies:

Limited therapeutic application:   Given the specialized nature of these prior cellular therapies, they have been designed for specific indications and lack the inherent flexibility to be applied broadly across multiple therapeutic areas.

Potentially serious side effects:   Many previous and current cellular therapies can cause serious side effects, including cytokine release syndrome, neurotoxicity and mortality. These alternative cellular therapies contain a nucleus and retain the ability to expand and differentiate post-injection, potentially raising concern of uncontrolled cell division and transformation.

Unpredictable pharmacokinetics and biodistribution:   Current cellular therapies have an uncertain lifetime post-infusion. In some cases, the therapeutic benefits wane quickly. In others, the cells will continue to divide, expand and potentially transform unpredictably over an extended period of time.

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Costly manufacturing and delayed treatment:   Most previous and current cellular therapies are autologous, meaning they must be derived from a patient's own cells to avoid rejection by the immune system. This results in a strictly customized, one-to-one manufacturing process for each individual patient, which is costly and difficult to scale, and a complex supply chain that can delay treatment for critically ill patients. Moreover, this approach does not allow for an industrialized effort that can be leveraged to rapidly develop additional product candidates.

Advantages and versatility of our RED Platform and RCTs

Our discoveries and innovations in genetic engineering and cell culture processes allows us to leverage the inherent benefits of RBCs. We believe our RED Platform and RCTs represent a transformative step in the evolution of cellular therapies as they are designed to confer desirable attributes for a next-generation cellular therapy, including the following:

Broad therapeutic applications:   We have engineered hundreds of RCTs to have therapeutic potential across many areas, such as rare diseases, cancer, autoimmune diseases, cardiovascular diseases, metabolic diseases and infectious diseases. These RCTs can be designed to express immune-shielded enzymes or other proteins within the cell and diverse proteins on the cell surface, including combinations of proteins for (1) potent cell-cell interaction with T cells, NK cells or other cells; (2) tissue localization; and (3) induction of immune tolerance.

Advantageous tolerability:   Since RCTs lack a nucleus, they possess no genetic material and do not divide following infusion into patients. As a result, we believe our RCT product candidates will pose less risks than those associated with other cellular therapies, which have caused cytokine release syndrome, neurotoxicity and mortality and carry the potential risk of inducing oncogenicity.

Ready-to-use cellular therapies:   O negative donor blood is routinely used for blood transfusions and can be transfused into approximately 95% of people. Similarly, RCTs are produced from O negative donor blood stem cells and are therefore allogeneic, ready-to-use cellular therapies that we believe will be tolerated by almost all patients.

Defined life in circulation and convenient dosing:   RBCs have a circulating time of approximately 120 days. We expect our RCTs to benefit from this long circulation time, resulting in more consistent pharmacodynamics and convenient dosing regimens thereby improving compliance and real-life efficacy. Furthermore, a single proposed RCT dose will constitute less than 1% of normal red cells in a patient's circulation.

Predictable biodistribution:   RBCs normally reside only in the vasculature, the spleen and the liver and do not otherwise extravasate into other healthy tissues. In patients with cancer, however, RBCs leave the blood vessels via leaky tumor neo-vasculature and enable us to target tumors with our RCTs. Further, the biodistribution into the spleen allows for RCTs designed to act as tumor antigen presenting cells to stimulate the immune system to mount an attack against cancer. Lastly, we believe that the biodistribution of RCTs expressing autoimmune disease-causing antigens to specialized cells in the liver can induce tolerance and improve the signs and symptoms of autoimmune diseases. We anticipate that this predictable biodistribution will allow RCTs to trigger on-target desired effects while avoiding off-tissue engagement.

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Efficient product engine:   Our RED Platform provides a consistent product design and discovery approach where simply changing the added gene or genes that encode the biotherapeutic proteins that confer the intended therapeutic benefit allows us to develop new product candidates targeting different diseases.

Scalable and flexible manufacturing:   We manufacture RCTs in bioreactors that we intend to scale to thousands of liters. A single donor will allow us to manufacture up to thousands of doses. As a result, we expect the cost of goods sold for RCTs to be significantly lower than existing cellular therapies, such as CAR-Ts. We manufacture RCTs using well-characterized and validated lentiviral vectors. Cellular engineering approaches, such as viral and non-viral transduction systems and mRNA delivery, can also be applied to RCTs which may provide additional product benefits and cost advantages.

Our strategy

Our vision is to pioneer the creation of life-changing or life-saving and ready-to-use RCTs for patients with severe diseases. To achieve our vision, we are executing a strategy with the following key elements:

Establish RCTs as a new class of medicines, demonstrating their potential across three initial product categories: rare diseases, cancer and autoimmune diseases. We apply a rigorous and capital-efficient approach to prioritize our product candidate pipeline, focusing on unmet need, feasibility, speed to proof-of-concept, easy-to-measure validated endpoints and commercial potential. Based on these criteria and the extensive preclinical data that we have generated, in the first quarter of 2019, we plan to file an IND for RTX-134 for the treatment of PKU and INDs for additional RCT product candidates during 2019, 2020 and thereafter.

Efficiently advance multiple additional RCTs as product categories are validated following positive early proof-of-concept. We expect that early clinical success of our initial RCT product candidates could translate to other programs within the product category, validating our approach and enabling a rapid and efficient expansion of our rare disease, cancer and autoimmune disease product categories. For example, positive early clinical proof-of-concept for RTX-134 will validate the benefits of our approach for treating rare enzyme deficiency diseases using cellular shielding of potent enzymes and support our ability to successfully develop additional RCTs within this product category.

Pursue accelerated paths to marketing authorization. We are pursuing indications with high unmet medical needs that may allow us to pursue accelerated paths to product registration, such as breakthrough therapy designation or RMAT designation by the FDA. Similarly, we expect to pursue accelerated routes to marketing authorization in Europe and other regions.

Build a leading, fully integrated cellular therapy company. We are discovering, developing, manufacturing and may commercialize RCT products within certain product categories, such as rare diseases, due to the limited commercial infrastructure required to serve these markets. Following potential approval of additional RCT products, we will leverage this commercial infrastructure to deliver our therapies to patients.

Further strengthen our position as the pioneer of RCTs through continuous platform expansion and improvement. Our proprietary RED Platform allows us to rapidly identify new product candidates and includes a universal manufacturing process for all RCT product candidates. We will continue to invest in enhancing our platform and deepening our expertise in stem cell and red cell biology and optimizing the pharmacology of RCTs with the goal of delivering new therapies targeting additional indications. We plan to leverage our first-mover advantage in manufacturing RCTs as we scale-up our proprietary manufacturing platform. To fully support later-stage clinical development and commercial launch, we plan to ensure

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control over our supply chain, in part, through our intention to acquire and establish a multi-suite manufacturing facility.

Expand patient access to RCTs through strategic partnerships. Given the breadth of the therapeutic opportunity for RCTs, we believe entering into select strategic partnerships in a subset of therapeutic areas may provide an attractive avenue for expanding patient access to RCTs. The global reach and operational expertise within certain pharmaceutical companies may complement our growing organization in areas such as clinical operations and commercialization.

Maintain a strong culture, continuously attract new talent and build the world's leading center for red cell biology research and engineering. We are located in one of the world's leading hubs for biopharmaceutical innovation, which enables us access to world-class talent, leading academic investigators and key opinion leaders. We have leveraged our location to attract scientific talent and experienced, innovative leaders and have built a strong culture that is committed to delivering on our vision. In addition, we have assembled a scientific advisory board of leaders with deep expertise in red cell biology, process development and manufacturing as well as clinical experience across the therapeutic areas that we are initially targeting. We will continue to build a team of employees, advisors and collaborators with experience in the discovery, development, manufacture and commercialization of cellular therapies.

Initial therapeutic areas of focus

Based upon the totality of scientific and preclinical work to date, we believe that RCTs have broad potential therapeutic applications. Our initial focus will be advancing RCT product candidates with unique benefits for patients suffering from rare diseases, cancer and autoimmune diseases based on three modalities — cellular shielding, potent cell-cell interaction and tolerance induction.


Select RCT Modalities to Treat Rare Diseases, Cancer and Autoimmune Diseases

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Rare diseases

We believe that RCTs may be used to treat certain rare diseases caused by a single genetic defect that results in the inactivation of a critical metabolic enzyme or bioactive protein. Manufacturing the missing protein or enzyme and infusing it into the patient may potentially correct this deficiency, but unfortunately many of these proteins or enzymes are highly immunogenic or poorly tolerated by patients, thereby limiting or, in some cases, preventing their therapeutic use. While biopharmaceutical companies are

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developing gene therapies for the treatment for several diseases caused by single genetic defects, this approach has historically been associated with unpredictable outcomes, including inconsistent efficacy and the potential for toxicity. In contrast, RCTs may provide the following benefits to patients suffering from rare diseases:

Highly active therapy through cellular shielding:   RCT product candidates engineered to express enzymes and other proteins within the cell, including poorly tolerated non-human enzymes, effectively hide these proteins from the immune system, thereby shielding them from being neutralized or causing severe adverse effects, such as anaphylaxis. We expect these cellular shielding RCT product candidates will provide well-tolerated and predictable therapeutic benefits, which may enable their chronic use and adoption as the preferred treatment option for a number of rare diseases.

Convenient dosing regimen:   Based on RBCs' approximate circulation time of 120 days, we expect our RCT product candidates will have substantially longer half-lives in patients compared to current treatments, many of which require a daily or weekly treatment regimen. This expected extended in vivo half-life would allow for a more convenient dosing regimen of monthly to quarterly infusions, which may drive higher compliance with therapy and improve real-life efficacy.

Our initial RCT product candidates in rare diseases include RTX-134 for the treatment of PKU, for which we have conducted a pre-IND meeting with the FDA and expect to file an IND in the first quarter of 2019. We anticipate RTX-134 will be followed by RTX-Uricase/URAT1 for the treatment of chronic refractory gout and RTX-CBS for the treatment of symptomatic homocystinuria.

Cancer

We believe that RCTs will have broad therapeutic applicability across a range of both solid and hematological cancers. Beyond standard chemotherapy and radiotherapy treatments that have historically been the mainstay of care, a growing number of small molecule, antibody, nanoparticle and cellular therapies are now being applied to the treatment of cancer. While extraordinary lifespan and quality of life gains have been made, many cancer patients fail to respond to therapy or relapse over time due to cellular escape mechanisms that make specific tumors unresponsive to these treatments. RCTs may provide the following benefits to cancer patients:

Immune activation through potent cell-cell interaction:   Our RCT product candidates have been engineered to directly engage the adaptive immune system through T cell activation and the innate immune system through NK cell activation, thereby stimulating these cells to attack and kill tumors. We have observed in vitro and in vivo that our RCT product candidates bind and activate multiple existing and emerging immuno-oncology targets. Due to the high copy number of the expressed protein, which results in strong binding to cellular receptors and the ability to co-express multiple proteins on the surface of each RCT, surface-engineered RCTs may either (i) elicit potent immunostimulatory effects in hot tumors, which are immunogenic tumors due to higher rates of mutations, T cell infiltration or checkpoint proteins, or (ii) enable cold tumors, or non-immunogenic tumors, to become hot and then drive immunostimulatory effects.

Tumor starvation:   We have developed RCT product candidates that express enzymes designed to deplete essential amino acids from the tumor microenvironment. This approach can starve a fast-growing tumor of a metabolite that is essential for its growth and proliferation. This approach has shown potential in certain pediatric cancers although enzymes used for this approach are often highly immunogenic and poorly tolerated. We believe that shielding these enzymes from the immune system can reduce immunogenic side effects, prolong therapeutic exposure and thus lead to a more efficacious therapy.

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Tumor targeting and killing:   Our RCT product candidates have been generated with high copy numbers of tumor-binding and tumor-killing proteins on their surface. By virtue of the high copy number and presentation of these proteins via membrane attachment, we believe that these RCT product candidates will demonstrate high target binding strength on the surface of cancer cells and drive potent anti-tumor responses. As RCTs distribute into tumors via leaky neo-vasculature, we believe that this tumor targeting and tumor cell killing approach will drive robust response rates. Furthermore, the ability to selectively engage immune cells in the tumor microenvironment may limit the on-target/off-tissue side effects seen with other immuno-oncology therapies.

We are developing a cancer pipeline of RCTs targeting T cells, NK cells, dendritic cells and tumor cells. Our first RCT product candidate in cancer is RTX-212, which we expect to initially study in patients who have progressed on checkpoint inhibitor therapy across a range of solid tumor types and in patients with acute myeloid leukemia following hematopoietic stem cell transplant. Additionally, we are advancing tumor-targeted RTX-4-1BBL for the treatment of multiple cancers, such as esophageal cancer and non-small cell lung cancer, as well as RCTs that function as artificial antigen-presenting cells with an initial focus on treating tumors that express the tumor-associated antigens NY-ESO-1, MAGE-A peptides and hTERT.

Autoimmune diseases

Our RCT product candidates have shown potential in preclinical studies for the treatment of autoimmune diseases. Available therapies for autoimmune diseases have significant limitations because these therapies are required to be administered on a chronic, lifelong basis. Many patients fail to respond adequately and many patients' diseases will eventually progress despite continued therapy, requiring new approaches to treat their disease. Furthermore, these existing treatments are associated with side effects that include opportunistic infections, lymphoma and in some cases severe and even fatal infusion reactions. We believe RCTs can be designed to more specifically modulate complex counter-regulatory immune responses and enable greater efficacy with lower toxicity, potentially providing treatments for a number of diseases with high unmet need. Specifically, RCTs may provide the following benefits to patients suffering from autoimmune diseases:

Induction of peripheral tolerance:   We believe the processing of RCTs that express autoimmune disease-causing antigens by specialized cells in the liver can induce tolerance and improve the signs and symptoms of autoimmune diseases. Our preclinical data suggests that RBCs are capable of inducing peripheral tolerance to RBC-bound antigens, which is the ability to prevent these antigens from triggering dangerous responses to the body's own tissues. We have observed the feasibility of this approach in preclinical studies in models of neurodegeneration and diabetes and believe that many proteins presented on RCTs should benefit from this tolerance induction. We believe our autoimmune RCT product candidates have the potential to be curative therapies for antigen-induced autoimmune diseases, such as pemphigus vulgaris, Type 1 diabetes and hemophilia with acquired coagulation factor inhibitors.

Cytokine neutralization:   The high copy number and thereby high local density of a binding protein on the surface of an RCT enables efficient sequestration and neutralization of soluble targets in circulation. This may also limit off-target effects by confining the binding protein to the vasculature through expression on the RCT cell surface. In preclinical studies, we have observed the ability of RCTs to bind cytokines and foreign proteins with high affinity and thereby neutralize their function. For example, we have observed the ability of an RCT that expresses an anti-TNF-alpha protein on its cell surface, to neutralize lethal doses of TNF-alpha in preclinical studies.

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Antibody clearance:   High affinity capture of antibodies on RCTs could allow for effective neutralization and clearance of pathological antibodies for the potential treatment of autoimmune diseases, such as idiopathic thrombocytopenia. Clearance may be enhanced when surface binding is complemented with a surface-expressed protease, resulting in the destruction of the pathological antibody. We have observed the ability of RCTs to bind to circulating antibodies both in vitro and in vivo . We have also co-expressed antibody binders and proteases on the surface of RCTs and observed that they are active.

Targeting and inhibiting immune cells:   We have engineered RCTs to induce the inhibition of immune cells through targeting of these cells and activation of checkpoint inhibitor targets on their cell surfaces.

We have generated RCT product candidates that express antigens either within the cell or on the cell surface, which we believe could treat antigen-specific autoimmune diseases, such as pemphigus vulgaris and Type 1 diabetes. We are currently assessing these RCT product candidates and expect to select our first clinical candidate for treatment of autoimmune diseases in 2019.

Our product candidate pipeline

We are building a broad and diverse pipeline of RCT product candidates in rare diseases, cancer and autoimmune diseases. We plan to file an IND for RTX-134 for the treatment of PKU in the first quarter of 2019 and INDs for additional RCT product candidates during 2019, 2020 and thereafter. Our first product candidates were selected based on: potential to address unmet medical needs; feasibility as determined by our preclinical research and development efforts; potential to rapidly achieve proof-of-concept based on easy-to-measure validated regulatory endpoints; and significant commercial potential.

An overview of our programs and their status is illustrated below:

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Rare diseases

Our initial rare disease programs target enzyme deficiencies with limited treatment options. Our RED Platform allows us to explore a broader range of human, non-human, engineered and combinations of enzymes with higher activity than those available to companies developing native or pegylated products. Clinical trials in rare disease indications are of a relatively short duration, of modest size and employ validated biomarkers that can be used to highlight initial efficacy and support product approval.

RTX-134 for treatment of classic and moderate phenylketonuria

Indication / opportunity

PKU is caused by a deficiency of functional phenylalanine hydroxylase, or PAH, which is the enzyme that breaks down dietary phenylalanine, or Phe. Phe is an essential amino acid found in many foods including milk, eggs, beef and soybeans. Patients with PKU are unable to break down Phe and the resulting high levels of Phe can cause motor dysfunction, psychiatric disorders and irreversible brain damage.

Newborn screening programs, which were implemented in the 1960s and 1970s, are used throughout the developed world to identify children with PKU and, as a result, virtually all patients with PKU under the age of 40 have been diagnosed at birth. It has been estimated that the incidence of PKU in the United States is one in 12,707, which translates to approximately 300 cases per year with an overall prevalence of 15,000. It has also been estimated that the prevalence of PKU in the E.U. is 25,000. Worldwide, the estimated prevalence is 50,000. The clinical presentation of PKU ranges from mild to severe, with blood Phe levels measured to determine disease severity. In Classic PKU, Phe levels are 1,200  m mol/L or greater; in Moderate PKU, Phe levels range from 600 to 1,200 m mol/L; and in Mild PKU, Phe levels are below 600 m mol/L.

Patients with Classic PKU comprise approximately 40% of all PKU patients in the United States, are at greatest health risk and are the most difficult to treat. Typical symptoms in children with Classic PKU include seizures, behavioral problems and delayed development. Without proper treatment, progressive motor dysfunction is inevitable. Studies have indicated that for each 300 m mol/L rise in average Phe for those aged five to eight years, patient's IQ fell by four to six points. Adults with Classic PKU exhibit a range of symptoms, including deterioration in executive function (such as language, memory, learning), attention deficit issues, depression, anxiety, impaired affect and autistic features and Parkinsonian-like tremors. These manifestations of the disease result in a profoundly impaired quality of life and an inability to comply with treatment, potentially resulting in further deterioration of executive function.

Patients with Moderate PKU represent approximately 20% of all PKU patients in the United States. They can often manage their disease by adhering to a tightly restricted, protein free diet. However, if the disease is not managed diligently, these patients remain at risk of intellectual disability and are likely to exhibit signs of neuropsychological disturbances. Patients with Mild PKU, who represent the remaining 40% of all U.S. PKU patients, are at a lower risk for impairments in executive function but may still benefit from treatment if Phe levels are above 120 m mol/L.

Our initial target patient population for RTX-134 will be Classic and Moderate PKU patients with Phe levels greater than or equal to 600 m mol/L.

Limitations of current therapies

Treatment in the first decade of life is essential in realizing optimal clinical outcomes for PKU patients. The current mainstay of therapy for PKU is an extreme restriction of dietary Phe and requires that patients purchase expensive and unpalatable specially formulated medical foods. Since breast milk contains Phe,

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pediatric patients are started on a low Phe regimen at birth and plasma levels are monitored weekly until age five. In general, with great effort, parents are able to manage the diet of the youngest children with PKU and most are well controlled.

Target Phe levels in adolescence and adulthood are less clear but it is generally accepted in the United States that patients with Phe levels below 600 m mol/L are at lower risk of cognitive impairment over time. Guidelines suggest that dietary restrictions should continue indefinitely, however compliance tends to wane as patients age and enter school. Adolescents with PKU may find it challenging to comply with the extreme dietary restrictions that are required to control their Phe levels, and since they are undergoing active neural maturation they are particularly at risk of cognitive impairment. Only a minority of adult patients are well controlled based upon diet alone. Once dietary compliance falters, the odds that a patient will return to treatment becomes less likely over time. In addition, the long-term outcome of extreme protein restriction in patients is not clear and there are clinical studies ongoing to assess the impact on bone and renal health.

Sapropterin dihydrochloride, or sapropterin, is currently the only therapy that is approved in the United States to treat PKU. Sapropterin is an oral synthetic version of BH4, a cofactor that is required for PAH activity. Administering this cofactor can be helpful for patients with existing but ineffective PAH. Clinical data, however, suggests that sapropterin is not fully effective in lowering high serum levels of Phe back to normal levels and it must be used in conjunction with a low Phe diet. Sapropterin is used in fewer than 15% of PKU patients, in part due to lack of efficacy in patients with more severe Classic PKU.

Phenylalanine ammonia lyase, or PAL, is a naturally occurring enzyme that is primarily found in some plants and fungi and which converts Phe to ammonia and trans-cinnamic acid, or TCA. TCA is subsequently cleared from the body through urinary excretion. Although administration of PAL has been shown to reduce Phe levels in preclinical studies and clinical trials of PKU patients, it has also been found to be highly immunogenic.

Pegvaliase, a pegylated version of PAL, was approved in May 2018 by the FDA to reduce blood phenylalanine concentrations in adult patients with phenylketonuria who have uncontrolled blood phenylalanine concentrations greater than 600 micromol per liter on existing management. However, in its registrational trials, neutralizing antibodies were detected in 249 out of 284, or 88%, of the patients and many of the patients that participated in the first phase (PRISM 1) failed to reach the target of a 20% reduction in Phe, which was the entry criteria for the placebo-controlled phase (PRISM 2). In addition, pegvaliase caused hypersensitivity reactions and anaphylaxis, which necessitated an extended tolerization schedule resulting in months of delay to reach a therapeutic dose. The drug's black box warning label indicates that the first injection should be administered under the supervision of a healthcare provider equipped to manage anaphylaxis, and then should be administered as a daily subcutaneous injection, which makes compliance with the treatment regimen difficult, particularly as patients go through this extended tolerization period. Physicians are instructed, per the black box warning label, to prescribe auto-injectable epinephrine, and patients are instructed to carry one at all times while on therapy.

Pegvaliase is expected to be priced at $488 per unit wholesale acquisition cost, and BioMarin expects that, when taking compliance and discounts into account, the cost per patient per year will be $192,000. Even in the absence of pegvaliase treatment, the cost of care for PKU patients can add up to more than $100,000 per year, which can include costs for medical foods and current therapies. Additional inpatient mental health and residential medical facility care for patients can cost between $60,000 and $200,000 per year depending on the patient's level of intellectual and functional disability. These are only the most significant

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direct costs and do not include the indirect economic impact of an impaired ability to work or maintain meaningful employment.

Overall, treatment options for the majority of Classic and Moderate PKU patients are limited. We believe that an RCT product candidate that expresses PAL has the potential to overcome the limitations of existing therapies and offer relief to patients suffering from PKU.

Product candidate description and preclinical data

RTX-134 is an RCT product candidate that we have genetically engineered to express PAL in the cytosol of the RCT. We expect RTX-134 will reduce Phe to clinically meaningful levels through infrequent, low volume intravenous infusions. We plan to apply for orphan drug designation for RTX-134.

In preclinical studies, we have observed that PAL is highly active when expressed in the cytosol of RTX-134 as measured both by reduction in Phe and concomitant generation of TCA. We have also observed that Phe uptake into RTX-134 is not rate limiting for its activity.


In Vitro Reduction of High Levels of Phe and Concomitant Generation of TCA by RTX-134 in Human Serum

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In preclinical mouse studies, we observed that PAL expressing murine RCTs, or mRCT-GFP-PAL, have a circulation time of approximately 50 days, which is equivalent to the normal circulating time of mouse RBCs. Based upon this finding, we expect RTX-134 to have an approximate circulating time of up to 120 days in PKU patients, the normal circulating time of human RBCs.

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Circulation Time of mRCT-GFP-PAL

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Based on available clinical data from PKU patients and our preclinical data, we have developed a pharmacodynamic model for RTX-134 to project the RTX-134 starting dose in the first clinical trial in PKU patients that will reduce Phe levels below 360 m mol/L and 600 m mol/L, which are the target Phe levels in the United States and Europe, respectively. We project that the PAL activity of RTX-134 is two to 3-fold higher than necessary to achieve the targeted clinical response.


Pharmacodynamic Model Informs PAL Activity Target for RTX-134

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Clinical development

Following a pre-IND meeting with the FDA, we have established a path for the clinical trial of RTX-134 in patients with PKU. As part of our pre-IND meeting, the FDA clarified its requirements for IND-enabling, nonclinical pharmacology and toxicology studies. We expect to complete these studies by late 2018. The FDA also reviewed the RTX-134 manufacturing process, product release criteria and clinical trial design, which provided us with guidance to begin preparing for this trial. We believe this guidance will lay the foundation for the manufacturing of future RCT product candidates that we intend to advance into clinical trials.

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In our initial open-label, Phase 1/2a trial of RTX-134, we expect to enroll approximately 25 to 35 adult PKU patients to identify the preliminary safety profile, an active dose and dosing interval. We are designing this clinical trial to begin dosing at what we believe is an active dose. RTX-134 efficacy in PKU patents will be determined by measuring reduction in Phe, the efficacy endpoint in the pivotal trials of sapropterin and pegvaliase. Additional endpoints include RTX-134 pharmacokinetic and pharmacodynamic measurements. We expect this trial to take approximately 12 months to enroll and plan to report data from the trial in 2019. Assuming successful Phase 1/2a trial results, we expect to advance RTX-134 to a registrational trial using an adaptive Phase 2/3 design as well as begin a pediatric trial.

RTX-Uricase/URAT1 for treatment of chronic refractory gout

Indication / opportunity

Gout is a metabolic and inflammatory disease often affecting middle-aged to elderly men and postmenopausal women. After years of repetitive attacks, patients develop chronic refractory gout, which is characterized by the buildup of tophi, or deposits of uric acid crystals in the joints, kidney and heart. Tophi can lead to the development of chronic arthritis and an increased risk of developing kidney stones, chronic renal insufficiency and cardiovascular disease. Once patients reach this stage, they generally suffer multiple attacks every year.

The prevalence of gout increases with age and risk factors include insulin resistance, obesity, and a diet rich in meat and seafood. The number of patients diagnosed with gout in the United States is estimated to be approximately eight million and is increasing with population growth. In Europe, prevalence is equal or close to that in the United States at this time. Approximately 50,000 to 60,000 gout patients in the United States per year fail all therapy and are considered chronic refractory.

Limitations of current therapies

Patients who experience at least two attacks per year or present with tophi are considered candidates for uric acid-lowering therapy. Three classes of therapies are currently approved for decreasing uric acid levels: xanthine oxidase inhibitors, uricosuric agents and uricase agents.

The first-line standard of care for gout is xanthine oxidase inhibition, which blocks uric acid synthesis, and is an effective treatment option for many. For patients who require more control or who are contraindicated, the uricosuric agent, lesinurad, may be prescribed. Lesinurad is an oral inhibitor of URAT1, which is the transporter that mediates reuptake of uric acid from the proximal tubules of the kidney and drives renal elimination of uric acid. Lesinurad carries a black box warning associated with renal toxicity and is contraindicated in patients with renal impairment.

Chronic refractory patients are candidates for pegloticase, which converts uric acid into allantoin, which is then excreted via the kidneys. Pegloticase is the only currently approved uricase agent available for the treatment of chronic refractory gout. Pegloticase, while generally considered effective, has several shortcomings. It carries a black box warning for anaphylaxis and there have been serious cardiovascular events associated with pegloticase. Furthermore, its administration is inconvenient with patients having to undergo a four-hour premedication/infusion process once every two weeks.

The economic burden of chronic refractory gout is driven by a combination of emergency room visits, bedridden days and recurring loss of economic productivity. Over time, the progression of the disease may result in long-term disability. Beyond these costs, patients with recurring attacks and higher serum uric acid levels also suffer high rates of hypertension, renal impairment, chronic kidney disease, dyslipidemia and ischemic heart disease.

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Overall, treatment options for the majority of the chronic refractory gout patients are limited. We believe that an RCT product candidate that expresses uricase has the potential to overcome the limitations of existing therapies and offer relief from debilitating and crippling pain to the tens of thousands of patients suffering from chronic refractory gout. Based on the expected tolerability profile, RCT-Uricase/URAT1 may also have applications in a broader chronic gout population as prior lines of therapy carry black box safety warnings.

Product candidate description and preclinical data

RTX-Uricase/URAT1 is an RCT product candidate that we have genetically engineered to express hundreds of thousands of copies of uricase and URAT1, a uric acid transporter that ensures optimal uptake of uric acid into the cell. We expect that RTX-Uricase/URAT1 will augment a patient's ability to clear uric acid, meaningfully reduce uric acid levels in the blood, and reduce the frequency of painful attacks and number of tophi. We also believe that the shielding of uricase in our RCT will avoid the safety concerns associated with the administration of pegloticase. We anticipate that RTX-Uricase/URAT1 will require monthly or less frequent dosing with low volume intravenous infusions. We plan to file for orphan drug designation given the small, well-defined patient population and the unmet need.

Similar to the clinical candidate development approach that we used for RTX-134, we have developed a pharmacodynamic model for RTX-Uricase/URAT1 and have determined the target uricase activity needed to achieve clinically meaningful reductions in uric acid. As part of our lead development and optimization process, we have demonstrated that RCTs expressing uricase or URAT1 meet the targeted expression and activity levels and have demonstrated co-expression of uricase and URAT1 for RTX-Uricase/URAT1.

Clinical development

We plan to study RTX-Uricase/URAT1 in patients with chronic refractory gout. Based on recent trials for other product candidates for the treatment of chronic refractory gout and pending confirmation with the FDA, we estimate that a Phase 1/2a trial comprised of approximately 25 patients would enable dose escalation and expansion cohorts with the objectives of determining the safety profile, appropriate RTX-Uricase/URAT1 dose and dosing interval needed to achieve serum uric acid of less than 6 mg/dL. At uric acid levels below 6 mg/dL, uric acid crystals do not form and crystals already formed begin to dissolve. This target goal for demonstrating efficacy in chronic treatment refractory gout patients has been accepted by the FDA and the EMA and was the basis for approval of pegloticase.

RTX-CBS for treatment of homocystinuria

Indication / opportunity

Homocystinuria refers to a group of enzyme deficiency disorders that result in elevated levels of circulating homocysteine, or Hcy, and its metabolites. The majority of homocystinuria patients suffer mutations of a gene that regulates the production of the enzyme known as cystathionine beta-synthase, or CBS, which is required for the conversion of Hcy to cystathionine.

Homocysteine is a highly reactive amino acid that can cause lipid peroxidation and DNA damage, cellular metabolic disruption, programmed cell death and immune activation, which all contribute to atherogenesis, or the formation of abnormal plaques in the inner lining of blood vessels. Elevated levels of homocysteine result in a wide range of deforming and debilitating symptoms. By age three, failure to thrive is generally apparent and partial dislocation of the lens of the eyes and severe myopia are common. Without treatment, children may suffer from progressive and severe neurodegeneration. In addition, many of these children will develop psychiatric disturbances and experience seizures. A failure to effectively treat patients

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over time can also result in aberrant musculoskeletal development, including Marfanoid features, characterized by abnormally long limbs and digits and scoliosis, or spinal curvature. Patients with homocystinuria suffer from extreme hypertension and are at an elevated risk for the development of thromboembolisms. If untreated, approximately 50% of patients will have a thromboembolic event and the overall mortality rate is approximately 20% by age 30.

The signs and symptoms of homocystinuria typically develop within the first year of life, but some mildly affected patients may not develop symptoms until later in life, particularly because this is a progressive disorder. Patient population estimates range widely, but the National Organization for Rare Disorders suggests a worldwide prevalence of 1:344,000, which when applied to the combined U.S. and E.U. population of 830 million would suggest an initial treatment market of approximately 2,400 diagnosed patients in these regions. However, this is potentially an underrepresentation of the true population size as the literature suggests that current newborn screening tests may not be adequately sensitive or specific. This suggestion is further reinforced by the fact that patients may present with thromboembolism later in life, without a prior diagnosis. Finally, studies based on genotyping rather than clinical diagnosis conducted in Europe suggest a much higher prevalence of potentially asymptomatic patients. The burden and cost of care for homocystinuria is high as the major clinical manifestations of the disease include mental retardation, dislocation of the optic lens, skeletal deformity and potentially fatal thromboembolic crises.

Limitations of current therapies

The general therapeutic goal for homocystinuria is to reduce serum and cellular Hcy accumulation and thus limit the development of existing symptoms and prevent the onset of new symptoms. Early diagnosis, treatment and aggressive diet restriction have been shown to slow the progression of disease as well as to reverse some of the symptoms. Treatment practice varies widely and compliance with diet drops with age. High-dose pyridoxine, or vitamin B6, is a treatment capable of relieving some clinical symptoms of disease for approximately half of all homocystinuria patients. Even for those for whom it is effective, though, it carries the significant limitations of requiring a moderately restrictive diet and the risk of overdosing. Meanwhile, patients who do not respond to vitamin B6 treatment remain subjected to a stringent protein restricted diet along with a methionine-free amino acid formulation supplement, which they are often not able to maintain.

An oral betaine anhydrous solution is the only approved drug for homocystinuria. Physicians' use of betaine varies widely in practice and there is preclinical data to suggest that patients become non-responsive to betaine supplementation resulting in waning efficacy over time.

Overall, treatment options for most patients with homocystinuria are limited. We believe that an RCT product candidate that expresses CBS has the potential to overcome the limitations of existing therapies and offer relief to patients diagnosed with homocystinuria and ultimately reduce the risk of thromboembolisms and cardiac events in those patients that present without symptoms.

Product candidate description and review of preclinical data

RTX-CBS is an RCT product candidate that we have genetically engineered to express hundreds of thousands of copies of CBS in the cytosol of the cell. We expect RTX-CBS will replace the patient's missing or ineffective enzymes and rapidly drop total plasma homocysteine, or tHcy, levels to clinically meaningful targets through infrequent, low volume intravenous infusions.

Similar to RTX-134 and RTX-Uricase/URAT1, we have established a pharmacodynamic model to determine the target CBS activity required for clinical activity and to project clinical dose levels and frequency. CBS

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expression refinement in RTX-CBS is still ongoing and we are characterizing the transport of Hcy and serine into RTX-CBS and secretion of cystathionine out of the cell to determine whether or not co-expression of a transporter may be required.

Clinical development

Our target indication for RTX-CBS will be the treatment of patients suffering from symptomatic homocystinuria who are unresponsive to vitamin B6 therapy. Pending confirmation by the FDA, we expect that reduction in plasma tHcy levels to be below 50 m M will be an acceptable primary endpoint for our Phase 1/2a and registrational trials. We plan to conduct a Phase 1/2a trial of RTX-CBS in 20 to 25 children diagnosed with symptomatic homocystinuria based on genetic confirmation of CBS mutation and plasma tHcy equal or greater than 100 m M. The Phase 1/2a trial of RTX-CBS will include dose escalation and expansion cohorts to determine the safety profile, appropriate dose and dosing interval of RTX-CBS necessary to maintain plasma tHcy below clinical target levels. As the disease is primarily diagnosed in pediatric patients and can be lethal, we will explore the potential for obtaining a rare pediatric disease priority review voucher from the FDA.

Rare diseases discovery research

Our RED Platform has generated RCT product candidates that shield immunogenic enzymes and express transporters on their surface. As a result, we believe that we can design RCTs to address many rare diseases where pathogenic metabolites build up. We are using the same RCT product candidate development approach as applied for RTX-134, RTX-Uricase/URAT1 and RTX-CBS to develop a portfolio of RCTs for treatment of a range of rare diseases. One example is RTX-OxOx, which expresses oxalate oxidase for the treatment of second-line hyperoxaluria, a condition characterized by recurrent kidney and bladder stones, which can result in end stage renal disease in severe cases. A further example is RTX-ALAD, which expresses delta-aminolevulinic acid dehydratase for the treatment of acute intermittent porphyria, a disease characterized by bouts of pain, nausea and disorientation, which can require hospitalization and result in long-term neurological damage. Arginase deficiency is another rare disease caused by pathogenic metabolite build up that can cause poor growth, seizures, spasticity, developmental delay, loss of developmental milestones and intellectual disability, which we believe our RCTs may be able to treat.

Cancer

We believe that RCTs will have broad therapeutic applicability across a range of both solid and hematological cancers and are developing a pipeline of RCTs that target T cells, NK cells, dendritic cells, tumor cells, or combinations thereof. Our initial RCT product candidates in cancer are based on a 4-1BBL backbone, a ligand that binds to and activates the co-stimulatory receptor 4-1BB, an important regulator of the immune system.

Our lead product candidate for the treatment of cancer is RTX-212, a combination RCT expressing both 4-1BBL and IL-15TP, a fusion of the IL-15 and IL-15 receptor alpha, which synergizes with 4-1BBL to activate and expand both T cells and NK cells. We believe that RTX-212 provides a potentially transformative and differentiated approach to treating patients suffering from solid or hematological tumors that respond to immunotherapies as well as tumors that are or have become resistant or refractory to immunotherapies, including checkpoint inhibitors. We expect to initially study RTX-212 in patients who have progressed on checkpoint inhibitor therapy across a range of solid tumor types and in patients with acute myeloid leukemia following a hematopoietic stem cell transplant.

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We are also exploring tumor-targeted RCTs that co-express 4-1BBL and single-chain variable fragments, or scFvs, that bind to tumor antigens. We expect tumor-targeted RTX-4-1BBL to provide a potent, selective and potentially safe treatment for hot tumors either as a monotherapy or in combination with checkpoint inhibitors. We plan to study RTX-4-1BBL for the treatment of a broad range of vascular, hot tumors that express certain tumor antigens.

Additionally, we are advancing RCTs that function as artificial antigen presenting cells, or aAPCs. Our initial focus is on displaying tumor antigens fused to major histocompatibility complex class I, or MHC I, on the surface of RCTs that also express 4-1BBL. We expect to study one or more of these RTX-aAPCs in patients with tumors that express these antigens.

RTX-212 and tumor-targeted RTX-4-1BBL

RTX-212 has been engineered to act as a combination therapy that stimulates both the adaptive and innate arms of the immune system. We believe this synergistic activity has the potential to provide the following therapeutic benefits:

Improved anti-tumor activity in tumors that are responsive to immunotherapy through broad and sustained activation of the immune system:   RTX-212 drives robust stimulation of both T cells and NK cells as 4-1BBL and IL-15TP are simultaneously presented in high copy numbers to these immune cells, thereby simulating the natural immune synapse formation between the APC and the T cell, as well as the tumor cell and the NK cell. Our expected circulation time for RTX-212 should drive continuous immune system stimulation for the duration of treatment. We expect this to result in improved response rates, progression free survival, or PFS, and overall survival, either as monotherapy or in combination with checkpoint inhibitors.

Prevention of resistance to immunotherapy:   T cells recognize and kill cancer cells via MHC I. A recognized mechanism of tumor resistance to checkpoint inhibitors is loss of MHC I expression which makes the cancer less susceptible to T cell mediated killing. However, loss of MHC I makes the tumor susceptible to recognition and killing by the NK cells that have been expanded and activated by RTX-212. We therefore expect that RTX-212 used either alone or in combination with immunotherapies will prevent the emergence of resistance to T cell mediated killing through potent NK cell activation and expansion.

Efficacious in tumors that are resistant or refractory to immunotherapy:   We expect RTX-212 to provide therapeutic benefits to patients who have progressed on checkpoint inhibitors. In these patients, we expect that RTX-212 will promote tumor killing through NK cell and T cell activation and expansion.

Tolerability:   We expect RTX-212 to be confined to the vasculature, spleen and liver and, because of its leaky neo-vasculature, the tumor itself. We believe this makes RTX-212 less likely to trigger on-target/off-tissue effects. Direct systemic administration of cytokines, including IL-15 and other interleukins, is currently limited by safety and tolerability concerns which result in a narrower therapeutic window.

We have engineered tumor-targeted RTX-4-1BBL to act as a potent, localized and therefore selective stimulator of T cells in the tumor microenvironment. We believe that this potent, localized and selective activation of the adaptive immune system has the potential to provide the following therapeutic benefits:

Improved anti-tumor activity in vascular, hot tumors:   We expect tumor-targeted RTX-4-1BBL to access the tumor microenvironment through leaky neo-vasculature, bind to specific antigens on tumors and drive greater stimulation of activated T cells in the tumor microenvironment than anti-4-1BB agonists previously tested by others. By virtue of the high copy number and cell surface presentation of tumor antigen binding scFvs, we believe that tumor-targeted RTX-4-1BBL will demonstrate high target binding

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Safety and tolerability:   We expect tumor-targeted RTX-4-1BBL to selectively localize in tumors that express the targeted tumor antigen. We believe this reduces the likelihood of triggering on-target/off-tissue effects. Direct systemic administration of co-stimulatory agonists, including anti-4-1BB agonistic monoclonal antibodies, by others has resulted in broad systemic biodistribution and caused significant side effects thereby limiting their therapeutic use. We believe that tumor-targeted RTX-4-1BBL will overcome these limitations.

RTX-212 and tumor-targeted RTX-4-1BBL for treatment of solid tumors

Current therapies and their limitations

Checkpoint inhibitors, such as anti-programmed death receptor-1 antibodies, or anti-PD-1 antibodies, act by inhibiting tumor suppression of the adaptive immune system in cancer patients and have significantly extended survival in multiple solid tumor types, particularly in patients with advanced cancers. The vast potential of checkpoint inhibitors is highlighted by market projections that estimate sales for this class of drugs could reach $50 billion in 2024. Despite the encouraging efficacy of checkpoint inhibition for some patients, overall response rates remain relatively low and range, on average, from 25% to 50%. Unfortunately, even when patients do respond, many still progress within six to 12 months depending on the cancer and the therapeutic intervention. Clinicians and biopharmaceutical companies are increasingly evaluating combination therapies to improve response rates and to expand the size of the treatable population.

Preclinical data for tumor-targeted RTX-4-1BBL

We have observed that RTX-4-1BBL, which expresses 4-1BBL on the cell surface, drives potent T cell activation as measured by a standard in vitro assay in which intracellular signaling of NFkB, a protein complex that controls immune system responses, is measured using Jurkat cells, a human T cell line. As presented in the following chart, we observed activation up to 15-fold more potent than the activation generated by the agonistic anti-4-1BB monoclonal antibody, utomilumab, which others have tested in cancer patients. We used RCT-CTRL, a cultured red cell that does not express an active protein, as a negative control. Furthermore, we observed in this in vitro assay that increasing the copy number of the 4-1BBL protein on RTX-4-1BBL results in a clear dose-response for immune activation. We have therefore engineered the expression of 4-1BBL on our RCT product candidates to maximize T cell activation.

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NFkB Activation by RTX-4-1BBL in Jurkat Cells

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We observed that RTX-4-1BBL stimulates primary CD8+ and CD4+ T cells to proliferate and become activated, as measured by the production of two cytokines released by activated T cells that are central to the human immune response, interferon gamma (IFN g ) and tumor necrosis factor alpha (TNF a ). RTX-4-1BBL stimulated a four to six-fold and two to three-fold increase in CD8+ and CD4+ T cells, respectively, and up to a three-fold increase in IFN g and TNF a production. In contrast, utomilumab alone did not stimulate any measurable proliferation and only minimal activation of T cells when compared to RCT-CTRL. We believe that the potent T cell stimulating activity of RTX-4-1BBL is due to high expression of 4-1BBL on the cell surface in its natural, trimeric conformation, simulating the immune synapse that is formed between APCs and T cells.

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In Vitro Proliferation and Activation of Primary CD8+ and CD4+ T Cells by RTX-4-1BBL

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In preclinical mouse studies, we have observed that a murine version of RTX-4-1BBL, or mRCT-4-1BBL, drove potent stimulation of CD8+ T cells and key subpopulations of CD8+ T cells, such as proliferating CD8+ memory T cells, CD8+ effector T cells and Granzyme B+ CD8+ T cells, which are important for improved and sustained clinical response rates in cancer patients. The data presented in the following charts suggests that mRCT-4-1BBL is sufficient to stimulate close to maximal T cell activation and proliferation because the mRCT-4-1BBL drove similar levels of activation and proliferation of CD8+ T cells in vivo as a 25-fold higher dose of 3H3, an anti-mouse 4-1BB agonistic monoclonal antibody ( a 4-1BB mAb). The negative controls phosphate buffered saline, or PBS, and a murine control RCT that does not express an active protein, or mRCT-CTRL, did not stimulate in vivo proliferation of CD8+ T cells. We believe this data supports our belief that high expression of 4-1BBL on the cell surface in its natural, trimeric conformation, drives RTX-4-1BBL's potent T cell stimulating activity.

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In Vivo Proliferation of CD8+ T cells and Subsets Thereof by mRCT-4-1BBL

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In a mouse model of liver toxicity, we observed favorable tolerability of mRCT-4-1BBL. Levels of the liver enzymes aspartate transaminase, or AST, and alanine transasminase, or ALT, were not significantly elevated following administration of mRCT-4-1BBL, as compared to administration of a mRCT-CTRL. In contrast, we observed significant elevations of the liver enzymes after administration of a 4-1BB mAb. This indicates that the potent stimulation of CD8+ T cells we observed in vivo with mRCT-4-1BBL was not accompanied by the liver toxicities that have been associated with administration of other anti-4-1BB agonists.

Liver Toxicity in Mice of mRCT-4-1BBL Compared to a 4-1BB Agonist mAb

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We believe that co-expressing a tumor antigen binding scFv and 4-1BBL on our RCTs can drive potent anti-tumor response. As shown in the following chart, we observed that RTX- a EpCAM, an RCT that expresses a tumor antigen binding (EpCAM) scFv on the cell surface, effectively binds in vitro to the EpCAM-expressing cancer cell lines for breast cancer (MCF7), colon cancer (HT-29) and liver cancer (HepG2), as compared to RCT-CTRL that does not co-express an scFv. We are in the process of testing further tumor-binding RCTs with the objective of co-expressing a tumor antigen binding scFv with 4-1BBL to develop additional tumor targeting RTX-4-1BBL product candidates.

Binding of RTX- a EpCAM to EpCAM Expressing Cancer Cell Lines

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Preclinical data for RTX-212

RTX-212 co-expresses 4-1BBL and IL-15TP on the cell surface. Using the Jurkat human T cell line, we confirmed that the potent T cell activation that we observed for RTX-4-1BBL was maintained for RTX-212 when 4-1BBL is co-expressed with IL-15TP, as shown in the following chart. Importantly, we showed that the same level of T cell activation was not induced by utomilumab. As expected, the control RCT, or RCT-CTRL, was also inactive.


NFkB Activation by RTX-212 and RTX-4-1BBL in Jurkat Cells

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Additionally, we have observed in vitro that RTX-212 can potently expand CD8+ T cells, NK cells and key subsets of these cells to a substantially greater extent than RTX-4-1BBL or RTX-IL-15TP alone, as shown in the following charts. In the presence of T cell receptor stimulation with an anti-CD3 antibody, we measured a greater than six-fold expansion of CD8+ memory cells with RTX-212, which compared favorably to utomilumab, recombinant human IL-15 (rhIL-15), a combination of utomilumab and rh1L-15, and RCT-CTRL. In the absence of T cell stimulation with an anti-CD3 antibody, we observed a synergistic effect from the combination of the 4-1BBL and IL-15TP co-expressed on RTX-212 in expanding both CD8+ memory and NK cells by approximately nine-fold. This was substantially higher than utomilumab, rhIL-15, a combination of utomilumab and rhIL-15, RTX-IL-15TP and RTX-4-1BBL.

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Our in vivo studies of a murine surrogate of RTX-212, mRCT-212 administered intravenously, or i.v., in a B16F10 lung metastasis mouse model provide further evidence in support of RTX-212. In this model, tumor cells were injected intravenously to establish metastases in the lung and then mice were treated with mRCT-212 alone or in combination with an anti-PD-1 antibody. mRCT-212 administered i.v. as a monotherapy reduced tumor burden in mice compared to those treated with mRCT-CTRL, mRCT-4-1BBL and mRCT-IL-15TP (left chart below), thereby indicating the potential synergy that may be achieved by expressing both 4-1-BBL and IL-15TP on the cell surface of mRCT-212. In a separate study mRCT-212 administered i.v. in combination with the anti-PD-1 antibody significantly reduced tumor burden in mice compared to those treated with the negative control mRCT-CTRL, as well as the anti-PD-1 antibody alone (right chart below).

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Activity of mRCT-212 in a B16F10 Lung Metastasis Mouse Model

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Additionally, mRCT-212 administered i.v. as a monotherapy or in combination with an anti-PD-1 antibody reduced tumor burden in a CT26 colon cancer mouse model. Treatment with the combination of mRCT-212 plus anti-PD-1 resulted in a higher number of mice with stable disease or tumor regression compared to mRCT-212 or anti-PD-1 treatment alone.


Activity of mRCT-212 in a CT26 Colon Cancer Mouse Model

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In summary, we have observed that the combination of 4-1BBL and IL-15TP on RTX-212 induces potent expansion and activation of CD8+ T cells, NK cells, and key subsets of these cells. In addition, these RTX-212-mediated effects were much higher than those obtained with utomilumab, rhIL-15, a combination of utomilumab and rhIL-15, RTX-4-1BBL or RTX-IL-15TP, suggesting the synergy of the combination on RTX-212 for expanding key cell types from both the adaptive and innate arms of the immune system. This potent activity translated into efficacy of mRCT-212 administered in in vivo cancer models of lung metastasis and colon cancer both as a monotherapy and in combination with an anti-PD-1 antibody. We

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believe that the ability of RTX-212 to stimulate both the innate and adaptive immune systems will translate into therapeutic benefits for patients with solid and hematological cancers.

Clinical development

While checkpoint inhibitors have revolutionized cancer treatment, their limitations are becoming increasingly evident. Responses are confined to certain tumor types and only a limited portion of patients are cured. Currently, the challenge in immunotherapy is to extend the efficacy of checkpoint inhibitors across more tumor types as well as increase the rate and duration of response. By stimulating both arms of the immune system, RTX-212 could be an ideal combination therapy for checkpoint inhibitors to both improve and extend responses.

The MHC complex is an important nexus in the immune system because it is the way T cells recognize and kill cancer cells but it also blocks the killing function of NK cells. A common means of resistance to checkpoint inhibitors is loss of MHC expression making the cancer invisible to T cells but as a result it becomes susceptible to NK cell dependent killing. Initial clinical development of RTX-212 will focus on the patient population who has progressed on checkpoint inhibitor therapy due to loss of MHC expression.

Pending discussions with the FDA, we expect that our Phase 1/2a trial in solid tumors will have three parts: monotherapy safety and dose finding; safety and dose finding in combination with an anti-PD-1 antibody; and cohort expansions at the recommended Phase 2 dose of the combination. The cohort expansions will enroll patients who have progressed on checkpoint inhibitor therapy and have lost MHC expression. Tumor types to be included will likely be melanoma, non-small cell lung cancer, renal cell carcinoma, bladder cancer, and head and neck cancer. Success in this population would lead to pivotal studies and development in earlier lines of therapy.

RTX-212 for hematological cancer: relapsing or refractory acute myeloid leukemia, post-HSCT

Current therapies and their limitations

Acute myeloid leukemia, or AML, is characterized by proliferation of myeloid blasts. They replace the bone marrow so that there is minimal production of platelets, red cells and neutrophils. It is primarily a disease of the elderly with a median age of diagnosis of 68. In 2017, there were more than 20,000 new cases of AML and more than 10,000 deaths caused by AML in the United States.

Standard first-line AML treatment has been unchanged for over 40 years: a regimen of intensive induction and consolidation therapy. Although most patients respond, the majority relapse over time. Therefore, many younger patients with AML undergo hematopoietic stem cell transplant, or HSCT, which can be curative if the transplant is successful. In 2016, more than 3,500 AML patients underwent allogeneic-HSCT in the United States and over 6,200 underwent the procedure in Europe.

Recently, additional therapies have been approved for treatment of AML, such as gemtuzumab ozogamicin, CPX-351, and, for patients with specific mutations, midostaurin and enasidenib. Although these therapies improve response rates and enable more patients to bridge to transplant, overall survival rates remain low.

Clinical development

The effectiveness of allogeneic HSCT depends on both the killing of residual tumor by high dose chemotherapy and on graft versus leukemia effects. NK cells are a critical component of the graft versus leukemia effect. After bone marrow ablation and allogeneic transplantation, NK cells are the first lymphocyte population to recover, but their killing and cytokine-secreting functions are limited when compared to the NK cells of healthy donors. The rate of return and function of NK cells are correlated with

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treatment outcome post-allogeneic HSCT, so increasing the number and function of NK cells post-allogeneic HSCT to stimulate the graft versus leukemia effect has the potential to increase survival in patients receiving allogeneic HSCT for treatment of AML. As discussed above, 4-1BBL and IL-15TP induce proliferation and maturation of NK cells, supporting the testing of RTX-212 in the post-allogeneic HSCT setting.

We plan to conduct a Phase 2 trial of RTX-212 administered to AML patients post-allogeneic HSCT using the monotherapy dose determined in our initial Phase 1 trial of RTX-212 in solid tumors. Pending feedback from our pre-IND meeting with the FDA, we believe the primary endpoint will be relapse-free survival.

RCTs functioning as artificial antigen presenting cells (aAPCs)

We have created RCT product candidates that function as artificial APCs, or RTX-aAPCs, with the potential to induce selective anti-tumor killing by stimulating the immune system to target tumors in an antigen-specific manner.

RCTs permit us to present a variety of proteins in their native state and RTX-aAPCs take advantage of this as they co-express an MHC that presents a tumor-specific peptide to the immune system together with a costimulatory protein, such as 4-1BBL, that stimulates the adaptive immune system. This mimics the normal T cell-APC interaction via the T cell receptor, or TCR, and has shown high levels of T cell expansion and activation in preclinical studies. CD8+ cytotoxic T cells respond to antigens in association with MHC I molecules, and CD4+ helper T cells respond to antigens in association with MHC II molecules. MHC I and MHC II tumor antigen presentation combined with potent co-stimulation has the potential to generate sustained tumor-specific killing.


RTX-aAPCs Mimic the APC-T Cell Interaction to Provide Antigen Specific Cancer Therapies

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We have observed that murine RCT-MHC I (ovalbumin) co-expressed with 4-1BBL on the cell surface, or mRCT-aAPC (ova), activates ovalbumin-specific T cells in vitro and in vivo, supporting the ability to potently and selectively expand and activate an antigen-specific T cell in a dose dependent manner (increasing cell number per dose from right to left in the following charts) using our RCTs.

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Activation of Ovalbumin-Specific T Cells with mRCT-aAPC (ova)

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We have also observed that ovalbumin-specific T cells, or OTI-T cells, that are expanded and activated by mRCT-aAPC (ova) selectively kill ovalbumin-expressing tumor cells, or EG7.OVA cells, while the parental cells that do not express ovalbumin are not attacked and killed.


Activity of OT1-T Cells Expanded With mRCT-aAPC (ova)

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Furthermore, we have observed in vivo in mice that mRCT-aAPC (ova) specifically expand and activate OTI-T cells in circulation and in the spleen. Importantly, we find that the majority of the OTI-T cells display a central memory phenotype, which has been found to be a key population driving the effectiveness of T cell based therapies. In addition, a large proportion of these cells are found to traffic to lymph nodes, supporting their potential to effectively mobilize within the body and to the tumor to support a robust anti-tumor response. In contrast, mRCT-4-1-BBL without MHC I (ovalbumin) on the cell surface does not expand or activate OTI-T cells, thereby indicating that mRCT-aAPCs mimic the function of antigen presenting cells in vivo .

The ability to significantly expand and activate a tumor specific T cell population to kill tumors in vivo shares characteristics with CAR-T therapies which administer a tumor specific T cell population that can expand, sometimes uncontrollably, in the patient. By controlling the RTX-aAPC dose, we believe that we can more effectively control the expansion of the tumor specific T cells and potentially the tolerability and effects of the therapy.

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The potential applications of RTX-aAPCs span both solid and hematological cancers and there are many known tumor antigens common to certain cancers that can be targeted for development. Over the mid-term, patient specific antigens can be sequenced to create personalized therapies. We believe that this may provide a more reliable and scalable approach to personalized cellular therapy using known tumor antigens, such as NY-ESO-1, MAGE-A peptides and hTERT, or patient specific tumor antigens to deliver a more effective treatment than vaccines or neo-antigen approaches.

Cancer discovery research

Our RED Platform provides significant potential to develop and advance a broad portfolio of RCTs for treatment of cancer. We are evaluating RCT product candidates that target tumors by expressing proteins that bind specifically to known tumor antigens, such as CD33, CD38, CD123 and EpCAM. These tumor-targeting RCT product candidates can be designed to kill tumors directly or to starve and thereby kill tumors by degrading metabolites that are critical for tumor proliferation. In addition, we are evaluating a range of combinations of co-stimulatory ligands, such as OX40-L, ICOS-L and GITR-L, and cytokines, such as IL-12, IL-18 and IL-21. We believe that these approaches may provide therapeutic benefits to patients with solid or hematological cancers.

Autoimmune diseases

RCT product candidates for the induction of antigen-specific tolerance

We have generated RCT product candidates that express antigens within the cell and on the cell surface and believe that this represents a powerful antigen-presenting platform for the potential treatment of antigen-specific autoimmune diseases where the antigen is well-known and dominant. Examples of some antigen-induced autoimmune diseases include pemphigus vulgaris, Type 1 diabetes, myasthenia gravis, neuromyelitis optica, bullous pemphigoid, membranous glomerulonephritis and celiac disease. We are assessing several tolerance inducing RCT product candidates and expect to select our first clinical candidate for the treatment of an autoimmune disease in 2019.

Current therapies and their limitations

Over the past two decades, considerable progress has been made in the treatment of a range of autoimmune disorders with many patients enjoying an improvement in quality of life as a result. Despite their success, current therapeutic approaches to autoimmune diseases are either generally or specifically immunosuppressive and expose patients to an increased risk of opportunistic infection and hematological cancers, as is the case with JAK inhibitors, anti-TNF antibodies and anti-CD20 targeted antibodies. In up to one third of cases, patients with autoimmune diseases fail to respond to treatment, and most responding patients ultimately lose response over time.

While the triggers of most autoimmune diseases remain unknown, it is generally understood that clinical disease is the result of a loss of tolerance to one's own cells. The accepted model of disease assumes a genetic susceptibility triggered by an environmental event, which leads to a breakdown of T cell-mediated immune suppression. In principle, restoration of peripheral tolerance should provide patients with a partial or complete cure.

A range of competitive approaches to peripheral tolerance restoration have been investigated over the last few decades. These include the oral administration and direct injection of a protein or peptide with or without immunosuppression, the creation of peptide bearing nanoparticles and the adoptive transfer of engineered regulatory T cells. Thus far, these approaches have not proven to be successful in late-stage clinical trials, but the field continues to progress. Direct administration of peptides and nanoparticles suffer

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biodistribution, stability, presentation and orientation challenges which limit the effectiveness of cell-cell signaling. To date, adoptive transfer approaches are all autologous and are hampered by some of the same handling and scalability issues that limit the application of other cellular therapies. By contrast, RCT breakdown by antigen presenting cells in the liver is thought to recapitulate the normal process of self / non-self recognition training that would lead to tolerance induction. When compared with contemporary and historical approaches of tolerance induction, RCTs could represent a clinically meaningful step forward.

Preclinical data

In a commonly used preclinical mouse model of neurodegeneration, the experimental autoimmune encephalomyelitis model, or EAE model, we have observed induction of peripheral tolerance using a murine RCT displaying the model-specific antigen associated with neuronal demyelination, the MOG 35-55 peptide. In the experiment depicted below, murine RCT-MOG, or mRCT-MOG, and control mouse RBCs were administered to mice at a disease score of one. The mRCT-MOG-treated animals were brought back to an average disease score of zero, while control animals continued to progress to limited disability. More significantly, as depicted in the second experiment, following treatment with mRCT-MOG and control mouse RBCs at a disease score of three, indicating that the animals were paralyzed, we observed a remarkable recovery curve following treatment with murine RCT-MOG. In effect, mice exhibiting paralysis were made to walk again.


mRCT-MOG Effect on Mice with Moderate EAE (Left) and Paralyzed EAE Mice (Right)

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Upon examination of the histopathology, the difference in the damage to spinal cord tissue between the control and treated mice was notable. In addition, treatment with mRCT-MOG cells was found to dramatically reduce the infiltration of pathogenic Th1 and Th17 CD4+ cells that have been shown to drive disease progression.

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Effect of mRCT-MOG on Th1 and Th17 Cells in the Spinal Cord in EAE Mice

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In further preclinical studies in EAE mice, we observed that mouse RBCs and mRCT-MOG cells are taken up by antigen presenting cells, such as dendritic cells (DC) and Kupffer cells within the liver, and that mRCT-MOG upregulates PD-L1, an immunosuppressive marker, on APCs, while control mouse RBCs do not. The above findings suggest that red blood cell uptake into APCs promotes an immunosuppressive phenotype that then drives the reduction in pathogenic Th1 and Th17 T cells in the spinal cord, thereby providing evidence for the mechanism of action for RCT-driven tolerance induction.


Effect of mRCT-MOG in Immunosuppressive on the Phenotype of APCs in EAE Mice

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Beyond observations of therapeutic effects in this disease model, we have generated evidence of the development of immunologic memory following treatment with mRCT-MOG, suggesting the possibility of a cure. Using the EAE animal model, mice were first treated with either mRCT-MOG or control mouse RBCs on Days 5 and 17. Following a 40-day washout period after which the administered mouse RBCs were no longer in circulation, the EAE mice were re-challenged with MOG peptide to re-stimulate an immune response. We observed a clear improvement in survival between the mRCT-MOG treated group and the control group, indicating that RCT-MOG treated animals maintained immunological memory which protected them from the re-challenge.

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Survival of Previously mRCT-MOG Treated EAE Mice After a Second MOG Challenge

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The ability of antigen-presenting RBCs to drive tolerance induction in a preclinical model of Type 1 diabetes was recently demonstrated by our collaborators, Professors Hidde Ploegh and Harvey Lodish. In their study, NOD/ShiltJ mice, a strain genetically engineered to develop Type 1 diabetes after 10 to 13 weeks, were either treated with control RBCs or with RBCs that displayed a peptide consisting of the amino acids 9-23 of insulin B-chain on the cell surface. All mice receiving control RBCs became hyperglycemic while most mice receiving RBCs displaying the insulin peptide were protected from Type 1 diabetes onset and remained normoglycemic.

Overall, we and our collaborators have generated compelling preclinical evidence in support of applying antigen-expressing RCT product candidates to induce antigen-specific tolerance for the treatment of a range of autoimmune diseases.

Autoimmune disease discovery research

Beyond developing RCTs that express one or more antigens for the treatment in antigen-induced autoimmune diseases, we are exploring the potential to apply RCT product candidates to stimulate specific populations of regulatory T cells directly and direct the immune system back to a more tolerogenic state. We have also created RCT constructs that clear lethal doses of TNF-alpha and botulinum toxin from the bloodstream of mice, suggesting that RCTs may also provide therapeutic benefits to patients suffering from severe inflammatory diseases.

Manufacturing

We have industrialized the production of RCTs by developing and scaling up a manufacturing process by which hematopoietic progenitor cells are expanded, then genetically engineered and subsequently differentiated and matured into fully enucleated RCTs that express biotherapeutic proteins within the cell or on the cell surface. Our standard RCT manufacturing process includes the following steps:

(1)    Donors are screened for infectious diseases according to regulatory guidelines and are typed for major blood group antigens. O negative blood donors are selected and administered granulocyte colony stimulating factor to mobilize their bone marrow.

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(2)    CD34+ hematopoietic precursor cells are isolated from universal donor blood, collected by apheresis and purified.

(3)    These precursor cells are expanded and then transduced using a lentiviral vector encoding one or more chosen biotherapeutic proteins.

(4)   The cells are then exposed to a defined media formulation to promote further expansion and differentiation until they differentiate and mature into enucleated reticulocytes. At this stage, the enucleated reticulocytes are RCTs that express one or more biotherapeutic proteins in the cytosol or on the cell surface.

(5)    The RCTs are purified to separate the mature RCTs from nucleated erythroid precursor cells, formulated and stored at 4°C or frozen.

A single donor will allow us to manufacture up to thousands of doses. With approximately 7% of the U.S. population having an O negative blood type, we believe that there is ample supply of CD34+ hematopoietic precursor cells needed to produce our RCTs. Additionally, due to the inherent properties of RBCs, RCTS can be manufactured in large bioreactors using our proprietary cell culture processes, which could result in the cost of goods sold being significantly lower than other cellular therapies.

The FDA has reviewed our RCT manufacturing process, including in-process control parameters, as part of the RTX-134 pre-IND meeting. Based on guidance from the FDA, we have established a path to production of current good manufacturing practices, or cGMP, grade RTX-134 for clinical use. We expect to be able to use the same or similar manufacturing processes for all our future RCT product candidates, which would enable us to bring RCTs into clinical development in an accelerated manner.

Based on our expertise in red cell biology and advice from leading hematologists and blood transfusion experts, we have developed RCT product release criteria to determine the purity, viability, red cell identity and potency of each RCT batch. These release criteria have been reviewed and accepted for clinical use by the FDA.

We are manufacturing RCTs in single use bioreactors, which enable us to control critical process parameters and thereby produce consistent RCTs that meet the established product release criteria. We currently use external suppliers for lentiviral vector production but have established an internal lentiviral vector production process. We are currently working to further increase yields and to scale into larger bioreactors.

In addition to the standard RCT manufacturing process, we have developed alternative proprietary processes for engineering hematopoietic precursor cells and maturing these into RCTs. These processes may be utilized in the production of future RCTs.

Suppliers and contract manufacturing organizations

We have entered into a clinical supply agreement with a contract manufacturing organization, or CMO, located in the United States to produce cGMP grade RTX-134 for our initial clinical trials and expect that such production will commence by the end of 2018. We have secured options for additional manufacturing suites for cGMP production of the RCT product candidates that are projected to begin clinical trials in 2019 and 2020. We anticipate that these arrangements will be sufficient for the manufacture of our product candidates until our planned manufacturing facility is established and operational.

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We have also entered into agreements with a supplier of cGMP grade plasmids for lentiviral production as well as a supplier of lentiviral vector. We have secured cGMP lentiviral vector production slots that we believe will be sufficient to supply RTX-134 drug product for our planned Phase 1/2a trial in PKU patients, and we are securing additional lentiviral production slots for the additional RCT product candidates that are projected to enter clinical trials.

Expanding our manufacturing capacity and supply chain

We have signed a letter of intent to purchase a 135,000 square foot GMP manufacturing facility located in the Northeastern United States that we currently anticipate will close by fall of 2018. We plan to renovate and customize this facility to contain multiple RCT GMP manufacturing suites and two lentiviral vector GMP manufacturing suites, which will enable us to manufacture multiple RCTs as well as lentiviral vectors in a cGMP compliant manner for the clinical supply and, if approved, expand capacity for commercial supply of our RCT product candidates. We plan to utilize this facility to provide clinical supply for the pivotal trial of RTX-134 in patients suffering from PKU and in parallel provide clinical supply for additional clinical trials with other RCT product candidates. We believe the acquisition of this manufacturing facility could increase our internal RCT manufacturing capacity to over 8,000 liters by 2020. Should we decide to extend our current CMO agreement for RCT manufacturing, we believe that our total RCT manufacturing capacity could exceed 18,000 liters by 2020.

Intellectual property

We believe the breadth and depth of our intellectual property is a strategic asset that has the potential to provide us with a significant competitive advantage. 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 our collaborators or other third parties. Our policy is to seek to protect our proprietary position by, among other methods, filing patent applications in the United States and in jurisdictions outside of the United States related to our proprietary technology, inventions, improvements and product candidates that are important to the development and implementation of our business. We also rely on trade secrets and know-how relating to our proprietary technology and product candidates, continuing innovation and in-licensing opportunities to develop, strengthen and maintain our proprietary position in the field of engineered red cell therapeutics. We additionally rely on data exclusivity, market exclusivity and patent term extensions when available and plan to seek and rely on regulatory protection afforded through orphan drug designations. Our commercial success may depend in part on our ability to obtain and maintain patent and other proprietary protection for our technology, inventions and improvements; to preserve the confidentiality of our trade secrets; to maintain our licenses to use intellectual property owned by third parties; to defend and enforce our proprietary rights, including our patents; and to operate without infringing on the valid and enforceable patents and other proprietary rights of third parties.

We believe that we have a strong global intellectual property position and possess substantial know-how and trade secrets relating to our proprietary product candidates, technology and platform, including related manufacturing processes and technology. As for our product candidates, platform, and the processes we develop and commercialize, in the normal course of business, we pursue, as appropriate, patent protection or trade secret protection relating to compositions, methods of use, treatment of indications, dosing, formulations and methods of manufacturing. As of June 15, 2018, our patent portfolio consists of 21 patent families, including one owned U.S. issued patent, 37 owned or in-licensed U.S. pending patent applications (including provisional applications), and 33 owned or in-licensed pending patent

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applications in jurisdictions outside of the United States (including Patent Cooperation Treaty, or PCT, applications) that, in many cases, are counterparts to the foregoing U.S. patents and patent applications. Our objective is to continue to expand our portfolio of patents and patent applications in order to protect our product candidates and certain aspects of our RED Platform and our manufacturing processes. Examples of the products and technology areas covered by our intellectual property portfolio are described below.

Disease-related intellectual property

The disease-related patent rights in our intellectual property portfolio relate to pathological conditions and disorders and provide coverage for RCT product candidates to specifically address those conditions and the associated disease states. The disease-related patent applications for our lead programs include those described below. Each of the disease-related patent rights and applications described below are owned by us and are not licensed from any third party:

RTX-134 for phenylketonuria

Our RTX-134 program targets phenylketonuria, for which we have developed an RCT product candidate that expresses phenylalanine ammonia lyase, or PAL, an enzyme that metabolizes phenylalanine.

This aspect of our patent portfolio relates to RCTs that express PAL, methods of treating diseases ( e.g. , phenylketonuria) that involve accumulation of phenylalanine and methods of making of RCTs that express PAL.

Currently, the patent rights relating to this technology include one issued U.S. patent related to methods of treating phenylketonuria with RTX-134, three pending U.S. patent applications and seven pending international patent applications (or the Seven National Stage Applications) related to RCT compositions of matter, methods of treating elevated phenylalanine levels and method of making RTX-134. We expect the issued patent and patent applications in this portfolio, if issued, to expire in 2034, excluding any patent term adjustments or extensions.

RTX-Uricase/URAT1 for chronic refractory gout

Our RTX-Uricase/URAT1 program targets chronic refractory gout, for which we have developed an RCT product candidate that expresses uricase, an enzyme that metabolizes uric acid, and URAT1, a uric acid transporter.

This aspect of our patent portfolio relates to RCTs that express uricase and other enzymes that degrade uric acid, methods of treating diseases, for example, chronic refractory gout, that involve accumulation of uric acid, and methods of making RCTs, including RTX-Uricase/URAT1, that degrade uric acid.

Currently, the patent rights relating to this technology includes three pending U.S. patent applications and seven pending international patent applications (i.e., the Seven National Stage Applications) related to RCT compositions of matter, methods of treating chronic refractory gout and methods of making engineered erythroid cells that express enzymes that degrade uric acid. We expect the patent applications in this portfolio, if issued, to expire between 2034 and 2039, without taking into account any patent term adjustments or extensions we may obtain.

RTX-Cystathionine beta synthase (CBS) for homocystinuria

Our RTX-CBS program targets homocystinuria, for which we have developed an RCT product candidate that expresses cystathionine beta synthase, an enzyme that metabolizes homocysteine.

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This aspect of our patent portfolio relates to RCTs that express CBS and other enzymes that reduce homocysteine levels, methods of treating homocystinuria, methods of reducing homocysteine levels and methods of making RCTs, including RTX-CBS, that reduce homocysteine levels.

Currently, the patent rights relating to this technology includes three pending U.S. patent applications and seven pending international patent applications (i.e., the Seven National Stage Applications) related to RCT compositions of matter, methods of treating homocystinuria and methods of making engineered erythroid cells comprising enzymes that reduce homocysteine. We expect the patent applications in this portfolio, if issued, to expire between 2034 and 2039, without taking into account any patent term adjustments or extensions we may obtain.

Additional rare disease intellectual property

In addition to our rare disease programs in PKU, chronic refractory gout and homocystinuria, our patent applications also relate to novel RCT compositions and their use for treating additional disorders that would benefit from enzyme replacement therapy, including disorders in carbohydrate metabolism, amino acid metabolism, organic acid metabolism, mitochondrial metabolism, fatty acid metabolism, purine-pyrimidine metabolism, steroid metabolism, peroxisomal function and lysosomal storage.

We expect the patent applications in this portfolio, if issued, to expire in 2034, without taking into account any patent term adjustments or extensions we may obtain.

RTX-212 for certain oncology indications

We have developed an RCT product candidate that co-express 4-1BBL and IL-15TP (a fusion of the cytokine IL-15 and IL-15 receptor alpha) for the treatment of patients suffering from hematological or solid cancers that have lost response to conventional therapies, including anti-PD-1 therapies or other checkpoint inhibitors, and prevent the emergence of resistance to checkpoint inhibitors and other IO therapies.

This aspect of our patent portfolio relates to RCTs that express 4-1BBL, RCTs that express IL-15 or IL-15TP and RCTs that co-express 4-1BBL and IL-15TP, methods of activating CD8+ T cells and NK cells, methods of treating cancer and methods of making RCTs that express 4-1BBL and IL-15TP, including RTX-212.

Currently, the patent rights relating to this technology includes five pending U.S. patent applications and one pending international patent application related to RCT compositions of matter, methods of activating immune cells, methods of treatment and method of making RTX-212. We expect the patent applications in this portfolio, if issued, to expire between 2037 and 2039, without taking into account any patent term adjustments or extensions we may obtain.

Additional oncology intellectual property

We own disease-related patent applications directed to RCTs for use in oncology, including immuno-oncology. These patent applications relate to RCT compositions that comprise a variety of agents, including anti-tumor antibodies, tumor starvation enzymes, pro-apoptotic proteins, costimulatory molecules, immune checkpoint inhibitors, tumor antigens, MHC molecules and numerous combinations thereof. These patent applications also cover the use of RCTs to treat cancer, including lung cancer, melanoma, renal cancer, bladder cancer, gastric cancer, squamous cell carcinoma, Hodgkin lymphoma, hepatocellular carcinoma, Merkel cell carcinoma, colorectal cancer and acute myeloid leukemia, as well as various relapsed or refractory cancers.

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These disease-related patent applications include patent applications directed to RCTs that function as artificial antigen-presenting cells. These applications cover RCTs expressing combinations of MHC, antigen and a costimulatory molecule, methods of activating an antigen-specific T cell and methods of treating cancer by inducing a tumor-specific immune response.

We expect the patent applications in this portfolio, if issued, to expire between 2034 and 2038, without taking into account any patent term adjustments or extensions we may obtain.

Autoimmune disease intellectual property

We own disease-related patent applications directed to RCTs for use in treating autoimmune diseases. These patent applications relate to RCT compositions having autoimmune antigens, anti-cytokine antibodies, agents for cleaving autoimmune antibodies and numerous combinations thereof. The RCTs covered by these patent applications operate through various mechanisms, including through induction of tolerance to self-antigens, clearance of autoimmune antibodies from the bloodstream, clearance of cytokines from the bloodstream and inactivation of autoimmune antibodies. The patent applications also cover the use of these RCTs to treat a number of diseases, such as pemphigus vulgaris, Type 1 diabetes, membranous nephropathy, myasthenia gravis, celiac disease and neuromyelitis optica.

We expect the patent applications in this portfolio, if issued, to expire between 2035 and 2038, without taking into account any patent term adjustments or extensions we may obtain.

Cardio-metabolic disorders intellectual property

We own a disease-related PCT application directed to RCT compositions and their use in treating cardiac disorders and metabolic disorders, including diabetes, obesity heart failure, atherosclerosis and hemophilia. We expect that any national phase patent applications filed in connection with this PCT application, if issued, to expire in 2037, without taking into account any patent term adjustments or extensions we may obtain.

Infectious disease intellectual property

We own disease-related patent applications directed to RCT compositions and their use in treating infectious diseases, such as a viral infection ( e.g. , cytomegalovirus or HIV) or a bacterial infection ( e.g. , bacteremia). We expect the patent applications in this portfolio, if issued, to expire between 2037 and 2039 without taking into account any patent term adjustments or extensions we may obtain.

Platform-related intellectual property

In addition to the disease-related intellectual property, our intellectual property portfolio also includes know-how and patent applications directed to the RED Platform and other technologies developed internally and exclusively in-licensed from the WIBR that relate to the engineering and culturing of RCTs. Exemplary platform technologies that are the subject of such patent applications include:

methods related to the in vitro production of enucleated red blood cells;

gene editing and transcriptional modulation systems for engineering RCTs;

targeted lipid nanoparticle compositions and RNA delivery techniques;

amplifiable nucleic acid constructs for optimizing protein production;

methods for chemically conjugating biotherapeutic proteins to cell surfaces; and

methods for increasing percent enucleation during RCT production.

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These platform technologies, and our intellectual property protection related thereto, are broadly applicable to our RCT product candidates.

We continually assess and refine our intellectual property strategy as we develop new platform technologies and product candidates. To that end, we are prepared to file additional patent applications if our intellectual property strategy requires such filings, or where we seek to adapt to competition or seize business opportunities. Further, we are prepared to file patent applications, as we consider appropriate under the circumstances, relating to the new technologies that we develop. In addition to filing and prosecuting patent applications in the United States, we often file counterpart patent applications in additional countries where we believe such foreign filing is likely to be beneficial, including but not limited to Australia, Brazil, Canada, China, Europe, Hong Kong, India, Israel and Japan.

Individual patents extend for varying periods of time, depending upon the date of filing of the patent application, the date of patent issuance and the legal term of patents in the countries in which they are obtained. Generally, patents issued for applications filed in the United States are effective for 20 years from the earliest effective filing date. In addition, in certain instances, a patent term can be extended to recapture a portion of the term effectively lost as a result of the FDA regulatory review period. The restoration period cannot be longer than five years and the total patent term, including the restoration period, must not exceed 14 years following FDA approval. The duration of patents outside of the United States varies in accordance with provisions of applicable local law, but typically is also 20 years from the earliest effective filing date. However, the actual protection afforded by a patent varies on a product-by-product basis, from country-to-country, and depends upon many factors, including the type of patent, the scope of its coverage, the availability of regulatory-related extensions, the availability of legal remedies in a particular country and the validity and enforceability of the patent.

Trademark protection

As of June 15, 2018, our trademark portfolio contains approximately 37 registrations and pending applications. For the mark RUBIUS THERAPEUTICS, we have pending applications in the United States, Canada and Brazil as well as an International Registration designating China, the E.U., India, Japan and Russia. In addition, we have a U.S. trademark registration and a pending U.S. application for the RUBIUS mark. For the RCT mark, we have a pending U.S. application as well as an International Registration designating China, the E.U., India, Japan and Russia. In addition, we have a pending application for this mark in Canada. We also have pending U.S. and Canadian applications for the mark RED CELL THERAPEUTICS as well as an International Registration designating China, the E.U., India, Japan and Russia. Finally, we have pending U.S. and Canadian trademark applications for the RED PLATFORM mark as well as a pending international application designating China, the E.U., India, Japan and Russia.

Trade secrets

We may also rely, in some circumstances, on trade secrets to protect our technology and aspects of our platform. However, trade secrets are difficult to protect. We seek to protect our technology and product candidates, in part, by entering into confidentiality agreements with those who have access to our confidential information, including our employees, contractors, consultants, collaborators and advisors. We also seek to preserve the integrity and confidentiality of our proprietary technology and processes by maintaining physical security of our premises and physical and electronic security of our information technology systems. Although 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 may be independently discovered

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by competitors. To the extent that our employees, contractors, consultants, collaborators and advisors 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. For this and more comprehensive risks related to our proprietary technology, inventions, improvements and products, please see the section on "Risk factors—Risks related to intellectual property."

Licenses

In January 2016, we entered into an exclusive license with WIBR that grants us an exclusive, worldwide, sublicensable license under patent rights comprising two patent families to research, develop, make and commercialize products and processes covered by such patent rights for all uses, or the WIBR License. The WIBR License also includes an option to for us to exclusively negotiate with WIBR for a license to certain improvement technologies related to the licensed subject matter. The WIBR License was amended in December 2017 to grant us an exclusive license to the commercialization rights under a third patent family jointly owned by WIBR and Tufts University, or Tufts. As of June 15, 2018, the patent portfolio licensed from WIBR consists of 11 U.S. and foreign patent applications. We expect these WIBR-licensed patent applications, if issued, to expire between 2034 and 2038, without taking into account any patent term adjustments or extensions that may be obtained.

The patent rights licensed to us under the WIBR License are directed, in part, to the in vitro production of RBCs and the use of the enzyme sortase to conjugate a protein of interest to the cell surface. We have certain diligence obligations under the WIBR License, which include using commercially reasonable efforts to develop and commercialize any products under the patents and achieving certain milestones as further described in the WIBR License. Additionally, under certain circumstances, we may in the future be obligated to negotiate in good faith field-limited, non-exclusive sublicenses to allow third parties to exploit the patent rights licensed to us under the WIBR License to develop and commercialize products that are not competitive with our products or product candidates.

WIBR retains the right with respect to all three patent families licensed to us to (i) to practice the patent rights licensed under the agreement for research, teaching and educational purposes, including sponsored research and collaboration, and (ii) to grant non-exclusive licenses to academic and not-for-profit research institutes to practice under the patent rights for research, teaching and educational purposes (excluding sponsored research), while Tufts retains such rights only with respect to the patent family that it co-owns. Pursuant to a Defense Advanced Research Projects Agency agreement between WIBR and a global biopharmaceutical company, the biopharmaceutical company funded research resulting in one of the licensed patent families and WIBR granted the right to retain a worldwide, irrevocable, non-exclusive, royalty-free right to use this patent family for research and development purposes. In addition, under the WIBR agreement, the U.S. federal government retains a royalty-free, non-exclusive, non-transferable license to practice any government-funded invention claimed in the patent rights, as set forth in 35 U.S.C. §§ 201-211 and Executive Order 12591.

As partial consideration for the license, we issued 366,667 shares of our common stock to WIBR. In addition, we paid WIBR an upfront payment and are required to pay annual license maintenance fees, creditable against royalties and milestone payments. We are obligated to pay to WIBR low single-digit royalties based on annual net sales by us, our affiliates and our sublicensees of licensed products and licensed services that are covered by a valid claim of the licensed patent rights at the time and in the country of sale. On a country-by-country basis, upon expiration of the last valid claim of the licensed patent rights covering such licensed product or licensed service in such country, our license becomes royalty-free, perpetual and irrevocable with respect to such country. Based on the progress we make in the

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advancement of products covered by the licensed patent rights, we are required to make aggregate milestone payments of up to $1.6 million upon the achievement of specified preclinical, clinical and regulatory milestones. In addition, we are required to pay to WIBR a percentage of the non-royalty payments that we receive from sublicensees of the patent rights licensed to us by WIBR. This percentage varies from low single digits to low double digits and will be based upon the clinical stage of the product at the time of the sublicense.

Under the WIBR License, WIBR controls the prosecution and maintenance of the patent rights licensed to us and we have the right to review and comment on such prosecution and maintenance. We have the first right to enforce the patent rights licensed to us against third party infringers. We may terminate the WIBR License for convenience upon three months prior written notice to WIBR. WIBR may terminate the WIBR License upon written notice to us if we, along with our affiliates and sublicensees, cease to carry on business related to the WIBR License for more than six months. WIBR may terminate the WIBR License for our material breach that remains uncured for sixty days after receiving notice thereof, if we fail to pay amounts due under the agreement within thirty days after receiving notice of such failure, or if we challenge the validity or enforceability of any of the licensed patent rights.

Competition

In addition to the product specific competitors that are described for each of the initial targets we are pursuing, we have identified four companies that are leveraging the RBC as a platform. Erytech Pharma SA is using hypotonic enzyme loading to create products for use in cancer, rare diseases and immunology. The company has completed a successful Phase 3 program in acute lymphoblastic leukemia, recently failed a Phase 2 trial in acute myeloid leukemia, and completed a successful Phase 2 program in pancreatic cancer. We believe that there are three fundamental challenges with hypotonic loading:

The hypotonic loading process may be challenging to scale as it requires delivery of hypotonically loaded blood to the patient within 72 hours of acquisition of the blood. Thus, while not autologous, it suffers from many of the shortcomings of autologous therapy.

Therapeutic interventions are limited to agents that can be loaded into, as opposed to expressed on, the cell surface of RBCs.

Hypotonic loading may damage the cell and impact circulating half-life.

There are three other companies that rely on loading of mature RBCs: Orphan Technologies Ltd., which is developing a range of products aimed at rare diseases; EryDel SpA, which is in late-stage development of dexamethasone loaded RBCs for the treatment of ataxia telangiectasia; and SQZ Biotechnologies, which is pursuing preclinical applications in cancer, enzyme replacement therapy and immune tolerance. Taking an alternative approach, Kanyos Bio, Inc. and Anokion SA are developing proteins that, when injected, fuse in vivo to the RBC binding peptide glycophorin A. The applications are preclinical, with a focus on peripheral tolerance induction.

Outside of RBC-based competition, there are companies developing engineered enzymes and specializing in rare diseases, such as Aeglea BioTherapeutics Inc., which has a product candidate in a Phase 1 trial for the treatment of hyperargininemia, and a number of gene therapy companies, such as Alnylam Pharmaceuticals, Inc. that are primarily focused on liver diseases. Homology Medicines, Inc. recently declared that it is in IND-enabling studies with a gene therapy construct and expect to initiate a clinical trial in PKU in the first quarter of 2019. In addition, Synlogic, Inc. is one of several companies developing engineered probiotic therapeutics to treat inborn errors of metabolism and has a product candidate in a

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Phase 1 trial for the treatment of urea cycle disorders and a preclinical program for the treatment of PKU. Finally, we anticipate competing with the largest biopharmaceutical companies in the world, such as Novartis AG, Gilead Sciences, Inc., Celgene Corporation, Amgen Inc., F. Hoffman-La Roche AG (Roche), Johnson & Johnson, and Pfizer Inc., which are all currently conducting research in cellular therapies.

Government regulation

Government authorities in the United States at the federal, state and local level and in other countries regulate, among other things, the research, development, testing, manufacture, quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, post-approval monitoring and reporting, marketing and export and import of drug and biological products, such RTX-134 and RTX-212, and any future product candidates. Generally, before a new drug or biologic can be marketed, considerable data demonstrating its quality, safety and efficacy must be obtained, organized into a format specific for each regulatory authority, submitted for review and approved by the regulatory authority.

U.S. biological product development

In the United States, the FDA regulates biological products under the Federal Food, Drug, and Cosmetic Act, or FDCA, the Public Health Service Act, or PHSA, and regulations thereunder. Biologics are also subject to other federal, state and local statutes and regulations. The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state and local statutes and regulations requires the expenditure of substantial time and financial resources. Failure to comply with the applicable U.S. requirements at any time during the product development process, approval process or post-market may subject an applicant to administrative or judicial sanctions. These sanctions could include, among other actions, the FDA's refusal to approve pending applications, withdrawal of an approval, a clinical hold, untitled or warning letters, product recalls or market withdrawals, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement and civil or criminal penalties. Any agency or judicial enforcement action could have a material adverse effect on us.

The FDA categorizes human cell- or tissue-based products as either minimally manipulated or more than minimally manipulated, and has determined that more than minimally manipulated products must be approved by the FDA through the biologics license application, or BLA, process before they may be legally marketed in the United States. The process required by the FDA before a biologic may be marketed in the United States generally involves the following:

completion of extensive preclinical studies in accordance with applicable regulations, including studies conducted in accordance with good laboratory practice, or GLP, requirements;

submission to the FDA of an IND, which must become effective before human clinical trials may begin;

approval by an institutional review board, or IRB, or independent ethics committee at each clinical trial site before each trial may be initiated;

performance of adequate and well-controlled human clinical trials in accordance with applicable IND regulations, good clinical practice, or GCP, requirements and other clinical trial-related regulations to establish the safety and efficacy of the investigational product for each proposed indication;

submission to the FDA of a BLA;

a determination by the FDA within 60 days of its receipt of a BLA to accept the filing for review;

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satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities where the biologic will be produced to assess compliance with cGMP requirements and, if applicable, current Good Tissue Practices, or cGTP, to assure that the facilities, methods and controls are adequate to preserve the drug or biologic's identity, strength, quality and purity;

potential FDA audit of the nonclinical and clinical trial sites that generated the data in support of the BLA; and

FDA review and approval of the BLA, including consideration of the views of any FDA advisory committee, prior to any commercial marketing or sale of the biological product in the United States.

The preclinical and clinical testing and approval process requires substantial time, effort and financial resources, and we cannot be certain that any approvals for RTX-134 and RTX-212 and any future product candidates will be granted on a timely basis, or at all.

Preclinical studies and IND

Preclinical studies include laboratory evaluation of product chemistry and formulation, as well as in vitro and animal studies to assess safety and in some cases to establish a rationale for therapeutic use. The conduct of preclinical studies is subject to federal regulations and requirements, including GLP regulations for safety and toxicology studies.

An IND is a request for authorization from the FDA to administer an investigational product to humans and must become effective before human clinical trials may begin. An IND sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data, any available clinical data or literature and plans for clinical studies, among other things, to the FDA as part of an IND. An IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA raises concerns or questions related to one or more proposed clinical trials and places the trial on clinical hold before such time. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. If the FDA's concerns are not resolved, submission of an IND may not result in the FDA allowing clinical trials to commence. With gene therapy protocols, if the FDA allows the IND to proceed, but a RAC decides that full public review of the protocol is warranted, the FDA will request at the completion of its IND review that sponsors delay initiation of the protocol until after completion of the RAC review process.

In addition to the IND submission process, sponsors of certain clinical studies of cells containing recombinant or synthetic nucleic acid molecules, including human gene transfer studies, must comply with the NIH's Guidelines for Research Involving Recombinant or Synthetic Nucleic Acid Molecules, or NIH Guidelines. The NIH Guidelines set forth the principles and requirements for NIH and institutional oversight of research with recombinant or synthetic nucleic acid molecules, including the standards for investigators and institutions to follow to ensure the safe handling and containment of such molecules. In April 2016, modifications to the NIH Guidelines went into effect, pursuant to which only a subset of human gene transfer protocols are subject to review by the RAC. Specifically, under the modified NIH Guidelines, RAC review of the protocol will be required only in exceptional cases where an oversight body such as an Institutional Biosafety Committee, or IBC, which provides local review and oversight of research utilizing recombinant or synthetic nucleic acid molecules, or an IRB determines that the protocol would significantly benefit from RAC review, and the protocol (a) uses a new vector, genetic material, or delivery methodology that represents a first-in-human experience and thus presents an unknown risk, and/or (b) relies on preclinical safety data that were obtained using a new preclinical model system of unknown and unconfirmed value, and/or (c) involves a proposed vector, gene construct, or method of delivery associated

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with possible toxicities that are not widely known and that may render it difficult for oversight bodies to evaluate the protocol rigorously. The RAC review proceedings are public, and reports are posted publicly to the website for the NIH's Office of Biotechnology Activities. Although compliance with the NIH Guidelines is mandatory for research conducted at or sponsored by institutions receiving NIH funding of recombinant or synthetic nucleic acid molecule research, many companies and other institutions not otherwise subject to the NIH Guidelines voluntarily follow them. Independent of RAC review, the NIH Guidelines also require all human gene transfer protocols subject to the NIH Guidelines to be registered with NIH, with limited exemptions. A study subject to the NIH Guidelines may not begin until the IBC approves the protocol, and the IBC cannot approve the protocol until confirmation from the NIH that such registration is complete. In the event that RAC review is warranted, the protocol registration process cannot be completed until RAC review has taken place.

Clinical trials

The clinical stage of development involves the administration of the investigational product to healthy volunteers or patients under the supervision of qualified investigators, generally physicians not employed by or under the trial sponsor's control, in accordance with GCP requirements, which include the requirement that all research subjects provide their informed consent for their participation in any clinical trial. 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 and assess efficacy. Each protocol, and any subsequent amendments to the protocol, must be submitted to the FDA as part of the IND. Furthermore, each clinical trial must be reviewed and approved by an IRB for each institution at which the clinical trial will be conducted to ensure that the risks to individuals participating in the clinical trials are minimized and are reasonable in relation to anticipated benefits. The IRB also approves the informed consent form that must be provided to each clinical trial subject or his or her legal representative, and must monitor the clinical trial until completed. There also are requirements governing the reporting of ongoing clinical trials and completed clinical trial results to public registries.

A sponsor who wishes to conduct a clinical trial outside of the United States may, but need not, obtain FDA authorization to conduct the clinical trial under an IND. If a foreign clinical trial is not conducted under an IND, the sponsor may submit data from the clinical trial to the FDA in support of a BLA or NDA. The FDA will accept a well-designed and well-conducted foreign clinical trial not conducted under an IND if the trial was conducted in accordance with GCP requirements, and the FDA is able to validate the data through an onsite inspection if deemed necessary.

Clinical trials generally are conducted in three sequential phases, known as Phase 1, Phase 2 and Phase 3, and may overlap.

Phase 1 clinical trials generally involve a small number of healthy volunteers or disease-affected patients who are initially exposed to a single dose and then multiple doses of the product candidate. The primary purpose of these clinical trials is to assess the metabolism, pharmacologic action, side effect tolerability and safety of the drug.

Phase 2 clinical trials involve studies in disease-affected patients to determine the dose required to produce the desired benefits. At the same time, safety and further pharmacokinetic and pharmacodynamic information is collected, possible adverse effects and safety risks are identified and a preliminary evaluation of efficacy is conducted.

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Phase 3 clinical trials generally involve a large number of patients at multiple sites and are designed to provide the data necessary to demonstrate the effectiveness of the product for its intended use, its safety in use and to establish the overall benefit and risk relationship of the product and provide an adequate basis for product labeling.

Post-approval trials, sometimes referred to as Phase 4 clinical trials, may be conducted after initial marketing approval. These trials are used to gain additional experience from the treatment of patients in the intended therapeutic indication. In certain instances, the FDA may mandate the performance of Phase 4 clinical trials as a condition of approval of a BLA.

Progress reports detailing the results of the clinical trials, among other information, must be submitted at least annually to the FDA and written IND safety reports must be submitted to the FDA and the investigators for serious and unexpected suspected adverse events, findings from other studies or animal or in vitro testing that suggest a significant risk for human subjects and any clinically important increase in the rate of a serious suspected adverse reaction over that listed in the protocol or investigator brochure.

Phase 1, Phase 2 and Phase 3 clinical trials may not be completed successfully within any specified period, if at all. The FDA or the sponsor may suspend or terminate 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 drug or biologic has been associated with unexpected serious harm to patients. Additionally, some clinical trials are overseen by an independent group of qualified experts organized by the clinical trial sponsor, known as a data safety monitoring board or committee. This group provides authorization for whether a trial may move forward at designated check points based on access to certain data from the trial. Concurrent with clinical trials, companies usually complete additional animal studies and also must develop additional information about the chemistry and physical characteristics of the drug or biologic as well as finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements. The manufacturing process must be capable of consistently producing quality batches of the product and companies must develop methods for testing the identity, strength, quality and purity of the final product, among other things. Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to demonstrate that the product candidates do not undergo unacceptable deterioration over their shelf life.

BLA and FDA review process

Following completion of the clinical trials, data are analyzed to assess whether the investigational product is safe and effective for the proposed indicated use or uses. The results of preclinical studies and clinical trials are then submitted to the FDA as part of a BLA, a request for approval to market the biological product for one or more specified indications, along with proposed labeling, chemistry and manufacturing information to ensure product quality and other relevant data. The application may include both negative and ambiguous results of preclinical studies and clinical trials, as well as positive findings. Data may come from company-sponsored clinical trials intended to test the safety and efficacy of a product's use or from a number of alternative sources, including studies initiated by investigators. To support marketing approval, the data submitted must be sufficient in quality and quantity to establish the safety and efficacy of the investigational product to the satisfaction of FDA. FDA approval of a BLA must be obtained before a biologic may be marketed in the United States.

Under the Prescription Drug User Fee Act, or PDUFA, as amended, each BLA must be accompanied by a user fee. The FDA adjusts the PDUFA user fees on an annual basis. According to the FDA's fee schedule,

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effective through September 30, 2018, the user fee for an application requiring clinical data, such as a BLA or NDA, is $2,421,495. The sponsor of an approved BLA is also subject to an annual prescription drug program fee, which for fiscal year 2018 is $304,162. 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. Additionally, no user fees are assessed on BLAs for products designated as orphan drugs, unless the product also includes a non-orphan indication.

The FDA reviews all submitted BLAs before it accepts them for filing, and may request additional information rather than accepting the BLA for filing. The FDA must make a decision on accepting a BLA for filing within 60 days of receipt. Once the submission is accepted for filing, the FDA begins an in-depth review of the BLA. Under the goals and policies agreed to by the FDA under PDUFA, the FDA has ten months, from the filing date, in which to complete its initial review of an original BLA and respond to the applicant, and six months from the filing date of an original BLA designated for priority review. The FDA does not always meet its PDUFA goal dates for standard and priority BLAs, and the review process is often extended by FDA requests for additional information or clarification.

Before approving a BLA, the FDA will conduct a pre-approval inspection of the manufacturing facilities for the new product to determine whether they comply with cGMP requirements and, if applicable, cGTP requirements. These are FDA regulations that govern the methods used in, and the facilities and controls used for, the manufacture of human cells, tissues, and cellular and tissue based products, or HCT/Ps, which are human cells or tissue intended for implantation, transplant, infusion, or transfer into a human recipient. The primary intent of the cGTP requirements is to ensure that cell and tissue based products are manufactured in a manner designed to prevent the introduction, transmission and spread of communicable disease. FDA regulations also require tissue establishments to register and list their products with the FDA and, when applicable, to evaluate donors through screening and testing. The FDA will not approve the product unless it determines that the manufacturing processes and facilities are in compliance with cGMP and cGTP requirements and adequate to assure consistent production of the product within required specifications. The FDA also may audit data from clinical trials to ensure compliance with GCP requirements. Additionally, the FDA may refer applications for novel products or products which 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, if any. The FDA is not bound by recommendations of an advisory committee, but it considers such recommendations when making decisions on approval. The FDA likely will reanalyze the clinical trial data as part of the review process, which could result in extensive discussions between the FDA and the applicant during the process.

After the FDA evaluates a BLA, it will issue an approval letter or a Complete Response Letter, or CRL. An approval letter authorizes commercial marketing of the drug or biologic with specific prescribing information for specific indications. A CRL indicates that the review cycle of the application is complete and the application will not be approved in its present form. A CRL usually describes all of the specific deficiencies in the BLA identified by the FDA. The CRL may require additional clinical data, additional pivotal Phase 3 clinical trial(s) or other significant and time-consuming requirements related to clinical trials, preclinical studies or manufacturing. If a CRL is issued, the applicant may either resubmit the BLA, addressing all of the deficiencies identified in the letter, or withdraw the application. Even if such data and information are submitted, the FDA may decide that the BLA does not satisfy the criteria for approval. Data obtained from clinical trials are not always conclusive and the FDA may interpret data differently than we interpret the same data.

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If regulatory approval of a product is granted, such approval will be granted for particular indications and may entail limitations on the indicated uses for which such product may be marketed. For example, the FDA may approve the BLA with a Risk Evaluation and Mitigation Strategy, or REMS, to ensure the benefits of the product outweigh its risks. A REMS is a safety strategy to manage a known or potential serious risk associated with a medicine and to enable patients to have continued access to such medicines by managing their safe use, and could include medication guides, physician communication plans or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. The FDA also may condition approval on, among other things, changes to proposed labeling or the development of adequate controls and specifications. Once approved, the FDA may withdraw the product approval if compliance with pre- and post-marketing requirements is not maintained or if problems occur after the product reaches the marketplace. The FDA may require one or more Phase 4 post-market studies or surveillance to further assess and monitor the product's safety and effectiveness after commercialization, and may limit further marketing of the product based on the results of these post-marketing studies. In addition, new government requirements, including those resulting from new legislation, may be established, or the FDA's policies may change, which could impact the timeline for regulatory approval or otherwise impact ongoing development programs.

Orphan drug designation

Under the Orphan Drug Act, the FDA may grant orphan drug designation to a biological product intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000 individuals in the United States, or more than 200,000 individuals in the United States and for which there is no reasonable expectation that the cost of developing and making the product available in the United States for this type of disease or condition will be recovered from sales of the product.

Orphan drug designation must be requested before submitting a BLA. After the FDA grants orphan drug designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by the FDA. Orphan drug designation does not convey any advantage in or shorten the duration of the regulatory review and approval process.

If a product that has orphan drug designation subsequently receives the first FDA approval for the disease or condition for which it has such designation, the product is entitled to orphan drug exclusivity, which means that the FDA may not approve any other applications to market the same drug for the same indication for seven years from the date of such approval, except in limited circumstances. A product will not be considered the "same drug" if it is clinically superior to a product that has orphan drug exclusivity. Moreover, competitors may receive approval of either a different product for the same indication or the same product for a different indication, but which could be used off-label in the orphan indication. Orphan drug exclusivity also could block the approval of one of our products for seven years if a competitor obtains approval before we do for the same product, as defined by the FDA, for the same indication we are seeking approval, or if our product is determined to be contained within the scope of the competitor's product for the same indication or disease. If one of our products designated as an orphan drug receives marketing approval for an indication broader than that which is designated, it may not be entitled to orphan drug exclusivity.

Expedited development and review programs

The FDA has several programs that are intended to expedite or facilitate the process for reviewing new drugs and biologics that meet certain criteria. Specifically, new biologics are eligible for fast track designation if they are intended to treat a serious or life-threatening condition and preclinical or clinical data demonstrate the potential to address unmet medical needs for the condition. Fast track designation

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applies to both the product and the specific indication for which it is being studied. The sponsor can request the FDA to designate the product for fast track status any time before receiving BLA approval, but ideally no later than the pre-BLA meeting.

Any product submitted to the FDA for marketing, including under a fast track program, may be eligible for other types of FDA programs intended to expedite development and review, such as priority review and accelerated approval. Any product is eligible for priority review if it treats a serious or life-threatening condition and, if approved, would provide a significant improvement in safety and effectiveness compared to available therapies. The FDA will attempt to direct additional resources to the evaluation of an application for a new drug or biologic designated for priority review in an effort to facilitate the review.

A product may also be eligible for accelerated approval if it treats a serious or life-threatening condition and generally provides a meaningful advantage over available therapies. In addition, it must demonstrate an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, or IMM, that is reasonably likely to predict an effect on IMM or other clinical benefit. As a condition of approval, the FDA may require that a sponsor of a drug or biologic receiving accelerated approval perform adequate and well-controlled post-marketing clinical trials. If the FDA concludes that a drug or biologic shown to be effective can be safely used only if distribution or use is restricted, it will require such post-marketing restrictions, as it deems necessary to assure safe use of the product.

Additionally, a drug or biologic may be eligible for designation as a breakthrough therapy if the product is intended, alone or in combination with one or more other drugs or biologics, to treat a serious or life-threatening condition and preliminary clinical evidence indicates that the product may demonstrate substantial improvement over currently approved therapies on one or more clinically significant endpoints. The benefits of breakthrough therapy designation include the same benefits as fast track designation, plus intensive interaction and guidance from the FDA. The breakthrough therapy designation is a distinct status from both accelerated approval and priority review, but these can also be granted to the same product candidate if the relevant criteria are met. The FDA must take certain actions, such as holding timely meetings and providing advice, intended to expedite the development and review of an application for approval of a breakthrough therapy. All requests for breakthrough therapy designation will be reviewed within 60 days of receipt, and FDA will either grant or deny the request.

Fast track designation, priority review, accelerated approval and breakthrough therapy designation do not change the standards for approval, but may expedite the development or approval process.

Regenerative medicine advanced therapy designation

As part of the 21st Century Cures Act, Congress recently amended the FDCA to create an accelerated approval pathway for certain regenerative medicine therapies, which include cell therapies, therapeutic tissue engineering products, human cell and tissue products, and combination products using any such therapies or products. Regenerative medicine therapies do not include those human cells, tissues and cellular and tissue based products regulated solely under section 361 of the Public Health Service Act and 21 CFR Part 1271. The new program is intended to facilitate efficient development and expedite review of RMATs, which are intended to treat, modify, reverse, or cure a serious or life-threatening disease or condition.

A sponsor may request that the FDA designate a drug as an RMAT concurrently with or at any time after submission of an IND. The FDA has 60 calendar days to determine whether the drug meets the criteria, including whether there is preliminary clinical evidence indicating that the product has the potential to

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address unmet medical needs for a serious or life-threatening disease or condition. The FDA generally expects preliminary clinical evidence to be obtained from clinical investigations specifically conducted to assess the effects of the therapy on a serious condition, which could include well-designed retrospective studies or clinical case series, as appropriate, but the RMAT designation does not require evidence to indicate that the drug may offer a substantial improvement over existing therapies. Advantages of RMAT designation include all of the benefits of the fast track and breakthrough therapy designation programs, including early interactions with sponsors. In addition, a product that receives RMAT designation may be eligible for priority review, and the FDA may grant accelerated approval to products that have RMAT designation based on (1) previously agreed-upon surrogate or intermediate endpoints that are reasonably likely to predict long-term clinical benefit; or (2) reliance upon data obtained from a meaningful number of sites, including through expansion to additional sites, as appropriate. Another benefit of RMAT designation is that may enable to the sponsor to meet post-approval requirements beyond the completion of traditional confirmatory clinical trials. The FDA has indicated that post-approval requirements for RMATs receiving accelerated approval can potentially be met through:

Clinical evidence, clinical studies, patient registries or other sources of real world evidence, such as electronic health records;

The collection of larger confirmatory data sets; or

Post-approval monitoring of all patients treated with such therapy prior to approval of the therapy.

As with breakthrough designation, an RMAT designation is not the same as an approval and does not change the statutory standards for demonstration of safety and effectiveness needed for marketing approval.

Pediatric information

Under the Pediatric Research Equity Act, or PREA, certain BLAs and certain supplements to a BLA must contain data to assess the safety and efficacy of the drug 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 pediatric data or full or partial waivers. The Food and Drug Administration Safety and Innovation Act amended the FDCA to require that a sponsor who is planning to submit a marketing application for a drug that includes a new active ingredient, new indication, new dosage form, new dosing regimen or new route of administration submit an initial Pediatric Study Plan, or PSP, within 60 days of an end-of-Phase 2 meeting or, if there is no such meeting, as early as practicable before the initiation of the Phase 3 or Phase 2/3 trial. The initial PSP must include an outline of the pediatric trial or trials that the sponsor plans to conduct, including trial objectives and design, age groups, relevant endpoints and statistical approach, or a justification for not including such detailed information, and any request for a deferral of pediatric assessments or a full or partial waiver of the requirement to provide data from pediatric studies along with supporting information. The FDA and the sponsor must reach an agreement on the PSP. A sponsor can submit amendments to an agreed-upon initial PSP at any time if changes to the pediatric plan need to be considered based on data collected from preclinical studies, early-phase clinical trials and/or other clinical development programs.

Post-marketing requirements

Following approval of a new product, the manufacturer and the approved product are subject to continuing regulation by the FDA, including, among other things, monitoring and record-keeping activities, reporting of adverse experiences, complying with promotion and advertising requirements, which include restrictions on

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promoting drugs for unapproved uses or patient populations (known as "off-label use") and limitations on industry-sponsored scientific and educational activities. Although physicians may prescribe legally available drugs for off-label uses, manufacturers may not market or promote such uses. Prescription drug promotional materials must be submitted to the FDA in conjunction with their first use. Further, if there are any modifications to the drug or biologic, including changes in indications, labeling or manufacturing processes or facilities, the applicant may be required to submit and obtain FDA approval of a new BLA or BLA supplement, which may require the development of additional data or preclinical studies and clinical trials.

The FDA may also place other conditions on approvals including the requirement for a Risk Evaluation and Mitigation Strategy, or REMS, to assure the safe use of the 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 an approved REMS, if required. A REMS could include medication guides, physician communication plans or elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. Any of these limitations on approval or marketing could restrict the commercial promotion, distribution, prescription or dispensing of products. Product approvals may be withdrawn for non-compliance with regulatory standards or if problems occur following initial marketing.

FDA regulations require that biological products be manufactured in specific approved facilities and in accordance with cGMP regulations and, in some cases, cGTP regulations. We rely, and expect to continue to rely, on third parties for the production of clinical and commercial quantities of our products in accordance with cGMP and cGTP regulations. These manufacturers must comply with cGMP and cGTP regulations that require, among other things, quality control and quality assurance, the maintenance of records and documentation and the obligation to investigate and correct any deviations from cGMP or cGTP. Manufacturers and other entities involved in the manufacture and distribution of approved drugs or biologics are required to register their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMP and, if applicable, cGTP requirements and other laws. Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain cGMP and cGTP compliance. Other post-approval requirements applicable to biological products, include reporting of cGMP deviations that may affect the identity, potency, purity and overall safety of a distributed product, record-keeping requirements, reporting of adverse effects, reporting updated safety and efficacy information, and complying with electronic record and signature requirements.

After a BLA is approved, the product also may be subject to official lot release. As part of the manufacturing process, the manufacturer is required to perform certain tests on each lot of the product before it is released for distribution. If the product is subject to official release by the FDA, the manufacturer submits samples of each lot of product to the FDA together with a release protocol showing a summary of the history of manufacture of the lot and the results of all of the manufacturer's tests performed on the lot. The FDA also may perform certain confirmatory tests on lots of some products, such as viral vaccines, before releasing the lots for distribution by the manufacturer. In addition, the FDA conducts laboratory research related to the regulatory standards on the safety, purity, potency, and effectiveness of biological products.

To help reduce the increased risk of the introduction of adventitious agents, the PHS Act emphasizes the importance of manufacturing controls for products whose attributes cannot be precisely defined. The PHS Act also provides authority to the FDA to immediately suspend biologics licenses in situations where there exists a danger to public health, to prepare or procure products in the event of shortages and critical public health needs, and to authorize the creation and enforcement of regulations to prevent the introduction or spread of communicable diseases within the United States.

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Discovery of previously unknown problems or the failure to comply with the applicable regulatory requirements may result in restrictions on the marketing of a product or withdrawal of the product from the market as well as possible civil or criminal sanctions. Failure to comply with the applicable U.S. requirements at any time during the product development process, approval process or after approval, may subject an applicant or manufacturer to administrative or judicial civil or criminal sanctions and adverse publicity. FDA sanctions could include refusal to approve pending applications, withdrawal of an approval, clinical hold, warning or untitled letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, mandated corrective advertising or communications with doctors, debarment, restitution, disgorgement of profits, or civil or criminal penalties. Any agency or judicial enforcement action could have a material adverse effect on us.

Biological product manufacturers and other entities involved in the manufacture and distribution of approved biological products are required to register their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMP and, if applicable, cGTP requirements and other laws. Accordingly, manufacturers must continue to expend time, money, and effort in the area of production and quality control to maintain cGMP compliance. Discovery of problems with a product after approval may result in restrictions on a product, manufacturer, or holder of an approved BLA, including withdrawal of the product from the market. In addition, changes to the manufacturing process or facility generally require prior FDA approval before being implemented and other types of changes to the approved product, such as adding new indications and additional labeling claims, are also subject to further FDA review and approval.

U.S. patent term restoration and marketing exclusivity

Depending upon the timing, duration and specifics of FDA approval of RTX-134 and RTX-212 and any future product candidates, some of our U.S. patents may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as the Hatch-Waxman Amendments. The Hatch-Waxman Amendments permit restoration of the patent term of up to five years as compensation for patent term lost during product development and FDA regulatory review process. Patent-term restoration, however, cannot extend the remaining term of a patent beyond a total of 14 years from the product's approval date. The patent-term restoration period is generally one-half the time between the effective date of an IND and the submission date of a BLA plus the time between the submission date of a BLA and the approval of that application, except that the review period is reduced by any time during which the applicant failed to exercise due diligence. Only one patent applicable to an approved product is eligible for the extension and the application for the extension must be submitted prior to the expiration of the patent. The United States Patent and Trademark Office, in consultation with the FDA, reviews and approves the application for any patent term extension or restoration. In the future, we may apply for restoration of patent term for our currently owned or licensed patents to add patent life beyond its current expiration date, depending on the expected length of the clinical trials and other factors involved in the filing of the relevant BLA.

An abbreviated approval pathway for biological products shown to be similar to, or interchangeable with, an FDA-licensed reference biological product was created by the Biologics Price Competition and Innovation Act of 2009 as part of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, or the ACA. This amendment to the PHSA, in part, attempts to minimize duplicative testing. Bio similarity, which requires that the biological product be highly similar to the reference product notwithstanding minor differences in clinically inactive components and that there be no clinically meaningful differences between the product and the reference product in terms of safety,

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purity and potency, can be shown through analytical studies, animal studies and a clinical trial or trials. Interchangeability requires that a biological product be biosimilar to the reference product and that the product can be expected to produce the same clinical results as the reference product in any given patient and, for products administered multiple times to an individual, that the product and the reference product may be alternated or switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biological product without such alternation or switch. Complexities associated with the larger, and often more complex, structure of biological products as compared to small molecule drugs, as well as the processes by which such products are manufactured, pose significant hurdles to implementation that are still being worked out by the FDA.

A reference biological product is granted four and twelve year exclusivity periods from the time of first licensure of the product. The FDA will not accept an application for a biosimilar or interchangeable product based on the reference biological product until four years after the date of first licensure of the reference product, and the FDA will not approve an application for a biosimilar or interchangeable product based on the reference biological product until twelve years after the date of first licensure of the reference product. "First licensure" typically means the initial date the particular product at issue was licensed in the United States. Date of first licensure does not include the date of licensure of (and a new period of exclusivity is not available for) a biological product if the licensure is for a supplement for the biological product or for a subsequent application by the same sponsor or manufacturer of the biological product (or licensor, predecessor in interest, or other related entity) for a change (not including a modification to the structure of the biological product) that results in a new indication, route of administration, dosing schedule, dosage form, delivery system, delivery device or strength, or for a modification to the structure of the biological product that does not result in a change in safety, purity or potency. Therefore, one must determine whether a new product includes a modification to the structure of a previously licensed product that results in a change in safety, purity or potency to assess whether the licensure of the new product is a first licensure that triggers its own period of exclusivity. Whether a subsequent application, if approved, warrants exclusivity as the "first licensure" of a biological product is determined on a case-by-case basis with data submitted by the sponsor.

Pediatric exclusivity is another type of regulatory market exclusivity in the United States. Pediatric exclusivity, if granted, adds six months to existing regulatory exclusivity periods. This six-month exclusivity may be granted based on the voluntary completion of a pediatric trial in accordance with an FDA-issued "Written Request" for such a trial.

European Union drug development

In the E.U., our future products also may be subject to extensive regulatory requirements. As in the United States, medicinal products can be marketed only if a marketing authorization from the competent regulatory agencies has been obtained.

Similar to the United States, the various phases of preclinical and clinical research in the E.U. are subject to significant regulatory controls. Although the E.U. Clinical Trials Directive 2001/20/EC has sought to harmonize the E.U. clinical trials regulatory framework, setting out common rules for the control and authorization of clinical trials in the E.U., the E.U. Member States have transposed and applied the provisions of the Directive differently. This has led to significant variations in the member state regimes. Under the current regime, before a clinical trial can be initiated it must be approved in each of the E.U. countries where the trial is to be conducted by two distinct bodies: the National Competent Authority, or NCA, and one or more Ethics Committees, or ECs.

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The E.U. clinical trials legislation currently is undergoing a transition process mainly aimed at harmonizing and streamlining clinical trial authorization, simplifying adverse event reporting procedures, improving the supervision of clinical trials and increasing their transparency. Recently enacted Clinical Trials Regulation E.U. No 536/2014 ensures that the rules for conducting clinical trials in the E.U. will be identical.

European Union drug marketing

Much like the Anti-Kickback Statute prohibition in the United States discussed below, the provision of benefits or advantages to physicians to induce or encourage the prescription, recommendation, endorsement, purchase, supply, order or use of medicinal products is also prohibited in the European Union. The provision of benefits or advantages to physicians is governed by the national anti-bribery laws of E.U. Member States, such as the UK Bribery Act 2010. Infringement of these laws could result in substantial fines and imprisonment.

Payments made to physicians in certain E.U. Member States must be publicly disclosed. Moreover, agreements with physicians often must be the subject of prior notification and approval by the physician's employer, his or her competent professional organization and the regulatory authorities of the individual E.U. Member States. These requirements are provided in the national laws, industry codes or professional codes of conduct, applicable in the E.U. Member States. Failure to comply with these requirements could result in reputational risk, public reprimands, administrative penalties, fines or imprisonment.

European Union drug review and approval

In the European Economic Area, or EEA, which is comprised of all 28 E.U. Member States (except Croatia) and also Norway, Iceland and Liechtenstein, medicinal products can only be commercialized after obtaining a Marketing Authorization, or MA. There are two types of marketing authorizations.

The Community MA is issued by the European Commission through the Centralized Procedure, based on the opinion of the Committee for Medicinal Products for Human Use of the European Medicines Agency, or EMA, and is valid throughout the entire territory of the EEA. The Centralized Procedure is mandatory for certain types of products, such as biotechnology medicinal products, orphan medicinal products, advanced-therapy medicines, such as gene therapy, somatic cell therapy or tissue-engineered medicines and medicinal products containing a new active substance indicated for the treatment of HIV, AIDS, cancer, neurodegenerative disorders, diabetes, autoimmune and other immune dysfunctions and viral diseases. The Centralized Procedure is optional for products containing a new active substance not yet authorized in the EEA, or for products that constitute a significant therapeutic, scientific or technical innovation or which are in the interest of public health in the E.U.

National MAs, which are issued by the competent authorities of the Member States of the EEA and only cover their respective territory, are available for products not falling within the mandatory scope of the Centralized Procedure. Where a product has already been authorized for marketing in a Member State of the EEA, this National MA can be recognized in another Member States through the Mutual Recognition Procedure. If the product has not received a National MA in any Member State at the time of application, it can be approved simultaneously in various Member States through the Decentralized Procedure. Under the Decentralized Procedure, an identical dossier is submitted to the competent authorities of each of the Member States in which the MA is sought, one of which is selected by the applicant as the Reference Member State, or RMS. The competent authority of the RMS prepares a draft assessment report, a draft summary of the product characteristics, or SPC, and a draft of the labeling and package leaflet, which are sent to the other Member States (referred to as the Member States

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    Concerned) for their approval. If the Member States Concerned raise no objections, based on a potential serious risk to public health, to the assessment, SPC, labeling, or packaging proposed by the RMS, the product is subsequently granted a national MA in all the Member States (i.e., in the RMS and the Member States Concerned).

Under the above described procedures, before granting the MA, the EMA or the competent authorities of the Member States of the EEA make an assessment of the risk-benefit balance of the product on the basis of scientific criteria concerning its quality, safety and efficacy.

European Union new chemical entity exclusivity

In the E.U., new chemical entities, sometimes referred to as new active substances, qualify for eight years of data exclusivity upon marketing authorization and an additional two years of market exclusivity. The data exclusivity, if granted, prevents regulatory authorities in the E.U. from referencing the innovator's data to assess a generic application for eight years, after which generic marketing authorization can be submitted, and the innovator's data may be referenced, but not approved for two years. The overall ten-year period will be extended to a maximum of 11 years if, during the first eight years of those ten years, the marketing authorization holder obtains an authorization for one or more new therapeutic indications which, during the scientific evaluation prior to their authorization, are determined to bring a significant clinical benefit in comparison with currently approved therapies.

European Union orphan drug designation and exclusivity

In the E.U., the EMA's Committee for Orphan Medicinal Products grants orphan drug designation to promote the development of products that are intended for the diagnosis, prevention or treatment of life-threatening or chronically debilitating conditions affecting not more than 5 in 10,000 persons in the E.U. community (or where it is unlikely that the development of the medicine would generate sufficient return to justify the investment) and for which no satisfactory method of diagnosis, prevention or treatment has been authorized (or, if a method exists, the product would be a significant benefit to those affected).

In the E.U., orphan drug designation entitles a party to financial incentives such as reduction of fees or fee waivers and ten years of market exclusivity is granted following medicinal product approval. This period may be reduced to six years if the orphan drug designation criteria are no longer met, including where it is shown that the product is sufficiently profitable not to justify maintenance of market exclusivity. Orphan drug designation must be requested before submitting an application for marketing approval. Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process.

European data collection

The collection and use of personal health data in the E.U. is governed by the provisions of the Data Protection Directive, and as of May 2018 the General Data Protection Regulation, or the GDPR. This directive imposes several requirements relating to the consent of the individuals to whom the personal data relates, the information provided to the individuals, notification of data processing obligations to the competent national data protection authorities and the security and confidentiality of the personal data. The Data Protection Directive and the GDPR also impose strict rules on the transfer of personal data out of the E.U. to the United States. Failure to comply with the requirements of the Data Protection Directive, the GDPR, and the related national data protection laws of the E.U. Member States may result in fines and other administrative penalties. The GDPR introduces new data protection requirements in the E.U. and substantial fines for breaches of the data protection rules. The GDPR regulations may impose additional

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responsibility and liability in relation to personal data that we process and we may be required to put in place additional mechanisms ensuring compliance with the new data protection rules. This may be onerous and adversely affect our business, financial condition, results of operations and prospects.

Rest of the world regulation

For other countries outside of the E.U. and the United States, the requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary from country to country. Additionally, the clinical trials must be conducted in accordance with GCP requirements and the applicable regulatory requirements and the ethical principles that have their origin in the Declaration of Helsinki.

If we fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution.

Additional laws and regulations governing international operations

If we further expand our operations outside of the United States, we must dedicate additional resources to comply with numerous laws and regulations in each jurisdiction in which we plan to operate. The Foreign Corrupt Practices Act, or FCPA, prohibits any U.S. individual or business from paying, offering, authorizing payment or offering of anything of value, directly or indirectly, to any foreign official, political party or candidate for the purpose of influencing any act or decision of the foreign entity in order to assist the individual or business in obtaining or retaining business. The FCPA also obligates companies whose securities are listed in the United States to comply with certain accounting provisions requiring the company to maintain books and records that accurately and fairly reflect all transactions of the corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations.

Compliance with the FCPA is expensive and difficult, particularly in countries in which corruption is a recognized problem. In addition, the FCPA presents particular challenges in the pharmaceutical industry, because, in many countries, hospitals are operated by the government, and doctors and other hospital employees are considered foreign officials. Certain payments to hospitals in connection with clinical trials and other work have been deemed to be improper payments to government officials and have led to FCPA enforcement actions.

Various laws, regulations and executive orders also restrict the use and dissemination outside of the United States, or the sharing with certain non-U.S. nationals, of information classified for national security purposes, as well as certain products and technical data relating to those products. If we expand our presence outside of the United States, it will require us to dedicate additional resources to comply with these laws, and these laws may preclude us from developing, manufacturing, or selling certain products and product candidates outside of the United States, which could limit our growth potential and increase our development costs.

The failure to comply with laws governing international business practices may result in substantial civil and criminal penalties and suspension or debarment from government contracting. The Securities and Exchange Commission also may suspend or bar issuers from trading securities on U.S. exchanges for violations of the FCPA's accounting provisions.

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Coverage and reimbursement

Successful commercialization of new drug and biologic products depends in part on the extent to which reimbursement for those drug and biologic products will be available from government health administration authorities, private health insurers and other organizations. These bodies decide which drug and biologic products they will pay for and establish reimbursement levels. The availability and extent of reimbursement by governmental and private payors is essential for most patients to be able to afford a drug or biologic product. Sales of drug and biologic products depend substantially, both domestically and abroad, on the extent to which the costs of these products are paid for by health maintenance, managed care, pharmacy benefit and similar healthcare management organizations, or reimbursed by government health administration authorities, private health coverage insurers and other third-party payors.

In the United States, the important decisions about reimbursement for new drug and biologic products are made by the Centers for Medicare & Medicaid Services, or CMS, an agency within the U.S. Department of Health and Human Services, or HHS, as well as major health insurers. CMS decides whether and to what extent a new product will be covered and reimbursed under Medicare, and private payors tend to follow CMS to a substantial degree. However, no uniform policy of coverage and reimbursement for drug and biologic products exists among third-party payors and coverage and reimbursement levels for drug and biologic products can differ significantly from payor to payor.

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003, also called the Medicare Modernization Act, or the MMA, established the Medicare Part D program to provide a voluntary prescription drug and biologic benefit to Medicare beneficiaries. Under Part D, Medicare beneficiaries may enroll in prescription drug plans offered by private entities that provide coverage of outpatient prescription drugs and biologics. Unlike Medicare Parts A and B, Part D coverage is not standardized. Part D prescription drug plan sponsors are not required to pay for all covered Part D drugs and biologics, and each drug plan can develop its own formulary that identifies which drugs and biologics it will cover, and at what tier or level. However, Part D prescription drug formularies must include products within each therapeutic category and class of covered Part D drugs, though not necessarily all the drugs and biologics in each category or class. Any formulary used by a Part D prescription drug plan must be developed and reviewed by a pharmacy and therapeutic committee. Government payment for some of the costs of prescription drugs and biologics may increase demand for products for which we obtain marketing approval. Any negotiated prices for any of our products covered by a Part D prescription drug plan will likely be lower than the prices we might otherwise obtain. Moreover, while the MMA applies only to drug benefits for Medicare beneficiaries, private payors often follow Medicare coverage policy and payment limitations in setting their own payment rates. Any reduction in payment that results from the MMA may result in a similar reduction in payments from non-governmental payors.

For a drug or biologic product to receive federal reimbursement under the Medicaid or Medicare Part B programs or to be sold directly to U.S. government agencies, the manufacturer must extend discounts to entities eligible to participate in the 340B drug pricing program. The required 340B discount on a given product is calculated based on the average manufacturer price, or AMP, and Medicaid rebate amounts reported by the manufacturer. As of 2010, the ACA expanded the types of entities eligible to receive discounted 340B pricing, although under the current state of the law these newly eligible entities (with the exception of children's hospitals) will not be eligible to receive discounted 340B pricing on orphan drugs. As 340B drug pricing is determined based on AMP and Medicaid rebate data, the revisions to the Medicaid rebate formula and AMP definition described above could cause the required 340B discount to increase. The American Recovery and Reinvestment Act of 2009 provides funding for the federal government to

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compare the effectiveness of different treatments for the same illness. The plan for the research was published in 2012 by 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 are made to Congress. Although the results of the comparative effectiveness studies 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 our product candidates. It is also possible that comparative effectiveness research demonstrating benefits in a competitor's drug could adversely affect the sales of our product candidates. If third-party payors do not consider our products to be cost-effective compared to other available therapies, they may not cover our products after approval as a benefit under their plans or, if they do, the level of payment may not be sufficient to allow us to sell our drugs on a profitable basis.

These current laws and state and federal healthcare reform measures that may be adopted in the future may result in additional reductions in Medicare and other healthcare funding and otherwise affect the prices we may obtain for any product candidates for which we may obtain regulatory approval or the frequency with which any such product candidate is prescribed or used.

Outside of the United States, the pricing of pharmaceutical products is subject to governmental control as part of national health systems in many countries. In general, the prices of drug and biologic products under such systems are substantially lower than in the United States. Other countries allow companies to fix their own prices for drug and biologic products, but monitor and control company profits. Efforts to control prices and utilization of pharmaceutical products and medical devices will likely continue as countries attempt to manage healthcare expenditures. Accordingly, in markets outside the United States the reimbursement for our products may be reduced compared with the United States.

Other healthcare laws

Healthcare providers, physicians and third party payors will play a primary role in the recommendation and prescription of any products for which we obtain marketing approval. Arrangements with third party payors, healthcare providers and physicians may expose a pharmaceutical or biologics manufacturer to broadly applicable fraud and abuse and other healthcare laws and regulations. In the United States, these laws include, without limitation, state and federal anti-kickback, false claims, physician transparency and patient data privacy and security laws and regulations, including but not limited to those described below:

the federal Anti-Kickback Statute makes it illegal for any person, including a prescription drug or biologic manufacturer (or a party acting on its behalf) to knowingly and willfully solicit receive, offer or pay any remuneration (including any kickback, bribe or rebate), directly or indirectly, overtly or covertly, in cash or in kind, that is intended to induce or reward referrals including the purchase, recommendation, order or prescription of a particular drug for which payment may be made under a federal healthcare program, such as the Medicare and Medicaid programs. Violation of the statute does not require actual knowledge of the statute or specific intent to violate it. In addition, the government may assert that a claim, including items or services resulting from a violation of the federal Anti-Kickback Statute, constitutes a false or fraudulent claim for purposes of the False Claims Act;

the federal civil and criminal false claims laws and civil monetary penalty laws, including the False Claims Act, impose criminal and civil penalties, including through civil "qui tam" or "whistleblower" actions, against individuals or entities for, among other things, knowingly presenting, or causing to be presented, claims for payment or approval from Medicare, Medicaid, or other federal healthcare programs that are false or fraudulent; knowingly making or causing a false statement material to a false or fraudulent claim or an obligation to pay money to the federal government; or knowingly concealing or knowingly and improperly avoiding or decreasing such an obligation. Similar to the federal Anti-Kickback

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    Statute, a person or entity does not need to have actual knowledge of these statutes or specific intent to violate them in order to have committed a violation;

the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, created additional federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare 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 healthcare 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, healthcare benefits, items or services relating to healthcare matters;

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and their respective implementing regulations, impose requirements on certain covered healthcare providers, health plans and healthcare 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;

the federal Physician Payments Sunshine Act, created under the ACA, and its implementing regulations, which require manufacturers of drugs, devices, biologicals and medical supplies for which payment is available under Medicare, Medicaid or the Children's Health Insurance Program to report annually to the HHS under the Open Payments Program, information related to payments or other transfers of value made to physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; and

analogous state and foreign laws and regulations, such as state and foreign 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 healthcare items or services reimbursed by any third-party payor, including commercial insurers; state laws that require pharmaceutical and biologics manufacturers to comply with 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 healthcare providers and other potential referral sources; state laws that require drug and biologic manufacturers to file reports with states regarding pricing and marketing information, such as the tracking and reporting of gifts, compensations and other remuneration and items of value provided to healthcare professionals and entities; state and local laws requiring the registration of pharmaceutical sales representatives; and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.

Because of the breadth of these laws and the narrowness of the statutory exceptions and regulatory safe harbors available, it is possible that some of our business activities could be subject to challenge under one or more of such laws. Efforts to ensure that business arrangements comply with applicable healthcare laws involve substantial costs. It is possible that governmental and enforcement authorities will conclude that our business practices do not comply with current or future statutes, regulations or case law interpreting applicable fraud and abuse or other healthcare laws and 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

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administrative penalties, damages, disgorgement, monetary fines, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, integrity and oversight agreements to resolve allegations of non-compliance, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of operations, any of which could adversely affect our ability to operate our business. In addition, commercialization of any of our products outside the United States will also likely be subject to foreign equivalents of the healthcare laws mentioned above, among other foreign laws.

Current and future healthcare reform legislation

In both the United States and certain foreign jurisdictions, there have been a number of legislative and regulatory changes to the healthcare system. In particular, in 2010 the ACA was enacted, which, among other things, increased the minimum Medicaid rebates owed by most manufacturers under the Medicaid Drug Rebate Program, extended the Medicaid Drug Rebate Program to utilization of prescriptions of individuals enrolled in Medicaid managed care organizations, subjected manufacturers to new annual fees and taxes for certain branded prescription drugs, and provided incentives to programs that increase the federal government's comparative effectiveness research.

There have been a number of significant changes to the ACA and its implementation. The Tax Cuts and Jobs Act of 2017, or Tax Act, includes a provision effective January 1, 2019 repealing the tax-based shared responsibility payment imposed by the ACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the "individual mandate". Further, on January 20, 2017, President Trump signed an Executive Order directing federal agencies with authorities and responsibilities under the ACA to waive, defer, grant exemptions from, or delay the implementation of any provision of the ACA that would impose a fiscal burden on states or a cost, fee, tax, penalty or regulatory burden on individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices. On October 13, 2017, President Trump signed an Executive Order terminating the cost-sharing subsidies that reimburse insurers under the ACA. Several state Attorneys General filed suit to stop the administration from terminating the subsidies, but their request for a restraining order was denied by a federal judge in California on October 25, 2017. Moreover, on January 22, 2018, President Trump signed a continuing resolution on appropriations for fiscal year 2018 that delayed the implementation of certain ACA-mandated fees, including the so called "Cadillac" tax on certain high cost employer-sponsored insurance plans, the annual fee imposed on certain health insurance providers based on market share, and the medical device excise tax on non-exempt medical devices. The Bipartisan Budget Act of 2018 also amends the ACA, effective January 1, 2019, by increasing the point-of-sale discount that is owed by pharmaceutical manufacturers who participate in Medicare Part D and closing the coverage gap in most Medicare drug plans, commonly referred to as the "donut hole". Similarly, CMS recently proposed regulations that would give states greater flexibility in setting benchmarks for insurers in the individual and small group marketplaces, which may have the effect of relaxing the essential health benefits required under the ACA for plans sold through such marketplaces.

In addition, other legislative changes have been proposed and adopted in the United States since the ACA was enacted. In August 2011, the Budget Control Act of 2011, among other things, created measures for spending reductions by Congress. A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation's automatic reduction to several government programs. This includes aggregate reductions of Medicare payments to providers of 2% per fiscal year, which went into effect in 2013, and, due to subsequent legislative amendments, will remain in effect through 2027 unless additional Congressional action is taken. The American Taxpayer Relief Act of 2012 further reduced Medicare payments to several providers, including hospitals and cancer treatment centers, and increased

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the statute of limitations period for the government to recover overpayments to providers from three to five years. Legislative and regulatory proposals, and enactment of laws, at the foreign, federal and state levels, directed at containing or lowering the cost of healthcare, will continue into the future.

Employees

As of June 15, 2018, we had 83 full-time employees, 29 of our employees have Ph.D. or M.D. degrees and 65 of our employees are engaged in research and development activities. None of our employees are represented by labor unions or covered by collective bargaining agreements. We consider our relationship with our employees to be good.

Facilities

We lease a facility containing 10,000 square feet of laboratory and office space, which is located at 325 Vassar Street, Suite 1A, Cambridge, Massachusetts. The lease expires in September 2021, subject to one option to extend the lease for five years. We also sublease approximately 12,000 square feet of laboratory and office space at 99 Erie Street, Cambridge, Massachusetts. The sublease expires in December 2018. We have entered into a lease for approximately 48,000 square feet of office and laboratory space at 399 Binney Street, Cambridge, Massachusetts. The lease term is expected to commence on November 1, 2018, following the completion of construction, and will expire eight years from the commencement date.

We have signed a letter of intent to purchase a 135,000 square foot manufacturing facility located in the Northeastern United States, the acquisition of which we currently anticipate will close by fall of 2018.

Legal proceedings

We are not currently a party to any material legal proceedings.

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Management

The following table sets forth the name, age and position of each of our executive officers and directors, as of June 15, 2018:

 
   
   
Name
  Age
  Position
Executive officers:        
Pablo J. Cagnoni, M.D.    55   Chief Executive Officer, Director
Torben Straight Nissen, Ph.D.    46   President, Director*
Andrew M. Oh   47   Chief Financial Officer
Christopher L. Carpenter, M.D., Ph.D.    62   Chief Medical Officer
Non-employee directors:        
David R. Epstein   56   Chairman, Director
Noubar B. Afeyan, Ph.D.    55   Director
Francis Cuss, M.B., B.Chir., FRCP   63   Director
Robert S. Langer, Sc.D.    69   Director
Roger Pomerantz, M.D.    61   Director
Michael Rosenblatt, M.D.    70   Director
Catherine A. Sohn, Pharm.D.    65   Director
Jonathan R. Symonds, CBE   59   Director

*      Will resign from our board of directors at or prior to the effectiveness of the registration statement of which this prospectus is a part.

Executive officers

Pablo J. Cagnoni, M.D. has served as our Chief Executive Officer and as a member of our board of directors since June 2018. From April 2018 to June 2018, Dr. Cagnoni served as an advisor to our company. Dr. Cagnoni also serves on the board of directors of CRISPR Therapeutics AG and Tango Therapeutics, Inc., both biotechnology companies. Since May 2015, Dr. Cagnoni has served as President and Chief Executive Officer of Tizona Therapeutics, Inc., a biotechnology company. Dr. Cagnoni previously served as President of Onyx Pharmaceuticals, Inc. from October 2013 to April 2015, and as Executive Vice President, Global Research and Development and Technical Operations from April 2013 to October 2013. Dr. Cagnoni also served in management roles at the following biotechnology companies: Senior Vice President and Global Head of Clinical Development at Novartis AG from October 2009 to April 2013, Senior Vice President and Chief Medical Officer at Allos Therapeutics, Inc. from March 2007 to September 2009, and Chief Medical Officer and Vice President of Clinical Research and Medical Affairs at OSI Pharmaceuticals, Inc. from July 2004 to March 2007. Dr. Cagnoni was also Assistant Professor of Medicine and Assistant Director of the Pharmacology Laboratory at the University of Colorado Bone Marrow Transplant Program. Dr. Cagnoni received an M.D. from the University of Buenos Aires School of Medicine. He continued with post-doctoral work in Hematology and Oncology at the Mount Sinai Medical Center in New York and in Stem Cell Transplantation at the University of Colorado Health Sciences Center. We believe Dr. Cagnoni's experience in the biotechnology industry qualifies him to serve on our board of directors.

Torben Straight Nissen, Ph.D. has served as our President and as a member of our board of directors since November 2016. Since November 2016, Dr. Straight Nissen has also served as Venture Partner at Flagship Pioneering, which conceives, creates, resources and develops first-in-category life sciences companies. Prior to joining our company, from July 2011 to November 2016, Dr. Straight Nissen held senior management roles with Pfizer Inc., a pharmaceutical company, serving as Vice President, Worldwide

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Research and Development Strategic Portfolio Management and Planning from July 2015 to November 2016, Head of Strategy, Portfolio and Operations of the Biotherapeutics Research & Development Division from January 2014 to July 2015 and as Executive Director and Chief Operating Officer of the Centers for Therapeutic Innovation from July 2011 to January 2014. Dr. Straight Nissen received a Ph.D. in biotechnology from the Technical University of Denmark/Carlsberg Research Laboratory and an M.S. in chemical engineering from the Technical University of Denmark. We believe that Dr. Straight Nissen's experience serving in senior research and development, operational and strategic roles in both large pharmaceutical and emerging biotechnology companies qualify him to serve on our board of directors. Dr. Straight Nissen will resign from our board of directors at or prior to the effectiveness of the registration statement of which this prospectus is a part.

Andrew M. Oh has served as our Chief Financial Officer since December 2017. Prior to joining our company, Mr. Oh served as the Co-Founder, Chief Investment Officer and Chief Operating Officer of Leerink Pharmaceutical Investments, a private asset management company focused on investing in public healthcare stocks, from January 2014 to December 2017, and as Senior Global Pharmaceutical Analyst and Portfolio Manager for Fidelity Investments from May 2006 to March 2013. Mr. Oh received an M.B.A. from Northwestern University's Kellogg School of Management and a B.A. in biology from Washington University in St. Louis.

Christopher L. Carpenter, M.D., Ph.D. has served as our Chief Medical Officer since September 2017. Prior to joining our company, Dr. Carpenter held various roles at GlaxoSmithKline plc, a pharmaceutical company, serving as the Senior Vice President and Head of the Cancer Epigentics Discovery Performance Unit from November 2013 to August 2017 and the Project Physician leader from April 2011 to November 2013. Dr. Carpenter holds a Ph.D. in pharmacology and an M.D. from the University of Southern California and a B.S. in biology from Stanford University. Dr. Carpenter completed his residency in internal medicine at University of Texas Southwestern, his hematology/oncology fellowship at Massachusetts General Hospital and a post-doctoral fellowship in Lewis Cantley's laboratory at Weill Cornell Medical College.

Non-employee directors

David R. Epstein has served as our Chairman and as a member of our board of directors since January 2017. Since January 2017, Mr. Epstein has also served as Executive Partner at Flagship Pioneering. Mr. Epstein also serves on the boards of directors of International Flavors and Fragrances, Inc., Evelo Biosciences, Inc. and Axcella Health Inc., as chairman. From January 2010 to July 2016, Mr. Epstein served as Chief Executive Officer of Novartis Pharmaceuticals Corporation, a pharmaceutical company and a division of Novartis AG. Mr. Epstein received an M.B.A. from Columbia Business School and a B.S. in pharmacy from Rutgers University. We believe that Mr. Epstein's extensive experience serving in executive roles in the life sciences industry and leading the development and commercialization of numerous therapeutics qualify him to serve on our board of directors.

Noubar B. Afeyan, Ph.D. has served as a member of our board of directors since 2013. Previously, Dr. Afeyan served as our President from April 2013 to May 2014 and as the Chairman of our board of directors from April 2013 to December 2014 and from July 2016 to January 2017. In 1999, Dr. Afeyan founded Flagship Pioneering and serves as its Senior Managing Partner and Chief Executive Officer. Since May, 2014, Dr. Afeyan has served on the board of directors of Evelo Biosciences, Inc. and since October 2010, on the board of Seres Therapeutics, Inc. He has previously served on the boards of numerous privately and publicly held companies, including BIND Therapeutics, Inc., BG Medicine, Inc. and Eleven Biotherapeutics, Inc. He received a Ph.D. in biochemical engineering from the Massachusetts Institute of Technology and a B.S. in chemical engineering from McGill University. Dr. Afeyan is currently a visiting

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lecturer of business administration at Harvard Business School and was previously a senior lecturer at the Massachusetts Institute of Technology's Sloan School of Management where he taught courses on technology-entrepreneurship, innovation and leadership. We believe that Dr. Afeyan's significant experience co-founding, leading and investing in numerous biotechnology companies make him qualified to serve on our board of directors.

Francis Cuss, M.B., B.Chir., FRCP has served as a member of our board of directors since January 2018. Dr. Cuss is currently retired from full-time operational roles. Previously, he served as the Executive Vice President, Chief Scientific Officer and Head of Research and Development of Bristol Myers Squibb Co., a pharmaceutical company, from July 2013 to March 2017 and as the Senior Vice President and Head of Research of Bristol Myers Squibb from April 2010 to June 2013. From November 2017 to November 2018, Dr. Cuss served as an advisor to Biogen Inc. and since September 2017, Dr. Cuss has served on the board of directors of Novo Holdings A/S. Dr. Cuss received a B.A./M.A. in natural sciences and an M.B., B.Chir. in medicine from Cambridge University. We believe that Dr. Cuss' broad experience in pharmaceutical research, clinical development and executive management within globally-operating biopharmaceutical companies make him qualified to serve on our board of directors.

Robert S. Langer, Sc.D. has served as a member of our board of directors and as a member of our scientific advisory board since December 2014. Since 2005, he has served as a David H. Koch Institute Professor at the Massachusetts Institute of Technology. Dr. Langer is co-founder and serves on the board of directors and scientific advisory board of PureTech Health plc. Since December 2009, Dr. Langer has served on the board of directors of Kala Pharmaceuticals, Inc. and since 2010, on the board of Moderna Therapeutics, Inc., which he also co-founded. He has previously served on the board of Momenta Pharmaceuticals, Inc. Since 2013, Dr. Langer has served as director, consultant and advisor to various companies and institutions. Dr. Langer received a Sc.D. in chemical engineering from the Massachusetts Institute of Technology and a B.S. in chemical engineering from Cornell University. We believe that Dr. Langer's academic work, his extensive medical and scientific knowledge and experience and his previous service on public company boards of directors qualify him to serve as a member of our board of directors.

Roger Pomerantz, M.D. has served as a member of our board of directors since December 2014 and as Venture Partner at Flagship Pioneering since July 2014. Dr. Pomerantz has served as President and Chief Executive Officer of Seres Therapeutics, Inc., a biotechnology company, since June 2014 and as chairman of its board of directors since November 2013. From January 2011 to September 2013, Dr. Pomerantz served as Worldwide Head of Licensing and Acquisitions and Senior Vice President at Merck & Co., Inc., or Merck, a pharmaceutical company, where he oversaw licensing and acquisitions for Merck Research Laboratories, the research and development division of Merck. Since April 2014, he has served on the board of directors of ContraFect Corporation and since March 2018, on the board of Intec Pharma LTD. Dr. Pomerantz received an M.D. from Johns Hopkins School of Medicine and a B.A. in biochemistry from Johns Hopkins University. We believe that Dr. Pomerantz' academic and clinical experience, including his role in the regulatory approval of therapeutic drugs, his knowledge of the pharmaceutical industry and his experience as chief executive officer of a public biotechnology company qualify him to serve on our board of directors.

Michael Rosenblatt, M.D. has served as a member of our board of directors since December 2014 and as Chief Medical Officer of Flagship Pioneering since September 2016. From December 2009 to June 2016, he served as the Executive Vice President and Chief Medical Officer of Merck. Dr. Rosenblatt has served on the boards of directors of Radius Health, Inc. and ProScript. Dr. Rosenblatt received an M.D. from Harvard Medical School and an A.B in chemistry from Columbia University. We believe that Dr. Rosenblatt's

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extensive medical and scientific knowledge and his experience in clinical development and executive management in the pharmaceutical industry qualify him to serve as a member of our board of directors.

Catherine A. Sohn, Pharm.D. has served as a member of our board of directors since January 2018. Since January 2011, Dr. Sohn has consulted for pharmaceutical, biotechnology, medical device and consumer healthcare companies in the areas of business strategy, business development and strategic product development at Sohn Health Strategies, LLC, which she founded. Since November 2012, Dr. Sohn has served on the board of directors of Landec Corporation, a public biomaterials and food company and since July 2012 on the board of Jazz Pharmaceuticals plc. Dr. Sohn served on the board of Neuralstem, Inc., a public biopharmaceutical company from January 2014 to May 2017. From 1982 to 2010, Dr. Sohn spent 28 years at GlaxoSmithKline plc and its predecessor companies, SmithKline Beecham and SK&F, serving as Senior Vice President from 2003 until 2010. Dr. Sohn received a Pharm.D. from the University of California, San Francisco. We believe that Dr. Sohn is qualified to serve on our board of directors because of her experience with product development, strategic marketing and business development transactions in the pharmaceutical industry.

Jonathan R. Symonds, CBE has served as a member of our board of directors since March 2018. Since April 2014, he has been the Chairman of HSBC Bank plc, a large international banking and financial institution, and a senior independent director of HSBC Holdings. Mr. Symonds served as the Chief Financial Officer of Novartis AG from September 2009 to January 2014. Since November 2014, he has served as the Chairman of Proteus Digital Health, Inc., a digital medicine company. From May 2014 to June 2017, Mr. Symonds served as Chairman of Innocoll Holdings PLC, a specialty pharmaceutical company, and since October 2014, as a director of Genomics England plc, a government organization leading a genomics project. Mr. Symonds received a B.A. in business finance and an honorary doctorate in law from the University of Hertfordshire. We believe that Mr. Symonds is qualified to serve on our board of directors because of his experience as a senior finance executive in large publicly held biopharmaceutical companies.

Composition of our board of directors

Upon effectiveness of the registration statement of which this prospectus is a part, our board of directors will consist of nine members, each of whom are members pursuant to the board composition provisions of our certificate of incorporation and agreements with our stockholders, including the second amended and restated voting agreement with holders of our preferred stock. These board composition provisions will terminate upon the completion of this offering. Upon the termination of these provisions, there will be no further contractual obligations regarding the election of our directors. Our nominating and corporate governance committee and our board of directors may therefore consider a broad range of factors relating to the qualifications and background of nominees. Our nominating and corporate governance committee's and our board of directors' priority in selecting board members is the identification of persons who will further the interests of our stockholders through their established record of professional accomplishment, the ability to contribute positively to the collaborative culture among board members, knowledge of our business, understanding of the competitive landscape, and professional and personal experiences and expertise relevant to our growth strategy. Our directors hold office until their successors have been elected and qualified or until the earlier of their resignation or removal. Our amended and restated certificate of incorporation that will become effective upon the closing of this offering and our amended and restated bylaws that will become effective on the date on which the registration statement of which this prospectus is a part is declared effective by the SEC also provide that our directors may be removed only for cause by the affirmative vote of the holders of at least two-thirds 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,

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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.

Director independence

Our board of directors has determined that all members of the board of directors, except Dr. Cagnoni and Mr. Epstein, are independent directors, including for purposes of the rules of The Nasdaq Global Market and the Securities and Exchange Commission, or SEC. In making such independence determination, our board of directors considered the relationships that each non-employee director has with us and all other facts and circumstances that our board of directors deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director. In considering the independence of the directors listed above, our board of directors considered the association of our directors with the holders of more than 5% of our common stock. Upon the completion of this offering, we expect that the composition and functioning of our board of directors and each of our committees will comply with all applicable requirements of The Nasdaq Global Market and the rules and regulations of the SEC. There are no family relationships among any of our directors or executive officers. Dr. Cagnoni and Mr. Epstein are not independent directors under these rules because they are each executive officers of our company.

Staggered board

In accordance with the terms of our amended and restated certificate of incorporation that will become effective upon the closing of this offering and our amended and restated bylaws that will become effective on the date on which the registration statement of which this prospectus is a part is declared effective by the SEC, our board of directors will be divided into three staggered classes of directors and each will be assigned to one of the three classes. At each annual meeting of the stockholders, a class of directors will be elected for a three-year term to succeed the directors of the same class whose terms are then expiring. The terms of the directors will expire upon the election and qualification of successor directors at the annual meeting of stockholders to be held during the years 2019 for Class I directors, 2020 for Class II directors and 2021 for Class III directors.

Our Class I directors will be David R. Epstein, Robert S. Langer and Roger Pomerantz;

Our Class II directors will be Noubar B. Afeyan, Michael Rosenblatt and Catherine A. Sohn; and

Our Class III directors will be Pablo J. Cagnoni, Francis Cuss and Jonathan R. Symonds.

Our amended and restated certificate of incorporation that will become effective upon the closing of this offering and our amended and restated bylaws that will become effective on the date the registration statement of which this prospectus is a part is declared effective by the SEC will provide that the number of directors shall be fixed from time to time by a resolution of the majority of our board of directors.

The division of our board of directors into three classes with staggered three-year terms may delay or prevent stockholder efforts to effect a change of our management or a change in control.

Board leadership structure and board's role in risk oversight

David Epstein is our current Chairman of the board of directors, and we plan to keep this role separated from the role of Chief Executive Officer following the completion of this offering. We believe that separating these positions allows our Chief Executive Officer to focus on setting the overall strategic direction of the company, expanding the organization to deliver on our strategy and overseeing our

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day-to-day business, while allowing a chairman of the board to lead the board of directors in its fundamental role of providing strategic advice. Our board of directors recognizes the time, effort and energy that the Chief Executive Officer is required to devote to his position in the current business environment, as well as the commitment required to serve as our chairman, particularly as the board of directors' oversight responsibilities continue to grow. While our amended and restated bylaws and corporate governance guidelines do not require that our chairman and Chief Executive Officer positions be separate, our board of directors believes that having separate positions is the appropriate leadership structure for us at this time.

Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. We face a number of risks, including risks relating to our financial condition, development and commercialization activities, operations, strategic direction and intellectual property as more fully discussed in the section entitled "Risk factors" appearing elsewhere in this prospectus. Management is responsible for the day-to-day management of risks we face, while our board of directors, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, our board of directors has the responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed.

The role of the board of directors in overseeing the management of our risks is conducted primarily through committees of the board of directors, as disclosed in the descriptions of each of the committees below and in the charters of each of the committees. The full board of directors (or the appropriate board committee in the case of risks that are under the purview of a particular committee) discusses with management our major risk exposures, their potential impact on us, and the steps we take to manage them. When a board committee is responsible for evaluating and overseeing the management of a particular risk or risks, the chairman of the relevant committee reports on the discussion to the full board of directors during the committee reports portion of the next board meeting. This enables the board of directors and its committees to coordinate the risk oversight role, particularly with respect to risk interrelationships.

Committees of our board of directors

Our board of directors has established an audit committee, a compensation committee and a nominating and corporate governance committee, each of which will operate pursuant to a charter adopted by our board of directors and will be effective upon the effectiveness of the registration statement of which this prospectus is a part. Upon the effectiveness of the registration statement of which this prospectus is a part, the composition and functioning of all of our committees will comply with all applicable requirements of the Sarbanes-Oxley Act of 2002, Nasdaq and SEC rules and regulations.

Audit committee

Roger Pomerantz, Catherine A. Sohn and Jonathan R. Symonds will serve on the audit committee, which will be chaired by Mr. Symonds. Our board of directors has determined that each of Dr. Pomerantz, Dr. Sohn and Mr. Symonds are "independent" for audit committee purposes as that term is defined in the rules of the SEC and the applicable Nasdaq rules, and each has sufficient knowledge in financial and auditing matters to serve on the audit committee. Our board of directors has designated Mr. Symonds as an "audit committee financial expert," as defined under the applicable rules of the SEC. The audit committee's responsibilities include:

appointing, approving the compensation of, and assessing the independence of our independent registered public accounting firm;

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pre-approving auditing and permissible non-audit services, and the terms of such services, to be provided by our independent registered public accounting firm;

reviewing the overall audit plan with our independent registered public accounting firm and members of management responsible for preparing our financial statements;

reviewing and discussing with management and our 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;

coordinating the oversight and 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 our independent registered public accounting firm whether our audited financial statements shall be included in our Annual Report on Form 10-K;

monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to our financial statements and accounting matters;

preparing the audit committee report required by SEC rules to be included in our annual proxy statement;

reviewing all related person transactions for potential conflict of interest situations and approving all such transactions; and

reviewing quarterly earnings releases.

Compensation committee

Noubar B. Afeyan, Francis Cuss and Catherine A. Sohn will serve on the compensation committee, which will be chaired by Dr. Afeyan. Our board of directors has determined that each member of the compensation committee is "independent" as defined in the applicable Nasdaq rules. The compensation committee's responsibilities include:

annually reviewing and recommending to the board of directors the corporate goals and objectives relevant to the compensation of our principal executive officer;

evaluating the performance of our principal executive officer in light of such corporate goals and objectives and based on such evaluation: (i) determining cash compensation of our principal executive officer; and (ii) reviewing and approving grants and awards to our principal executive officer under equity-based plans;

reviewing and approving the cash compensation and grants and awards to our other executive officers and all other direct reports to our Chief Executive Officer, but excluding our principal executive officer;

reviewing and establishing our overall management compensation, philosophy and policy;

overseeing and administering our compensation and similar plans;

evaluating and assessing potential and current compensation advisors in accordance with the independence standards identified in the applicable Nasdaq rules;

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reviewing and approving our policies and procedures for the grant of equity-based awards;

reviewing and recommending to the board of directors the compensation of our directors, including the chairman of our board of directors;

preparing the compensation committee report required by SEC rules, if and when required, to be included in our annual proxy statement; and

reviewing and approving the retention, termination or compensation of any consulting firm or outside advisor to assist in the evaluation of compensation matters.

Nominating and corporate governance committee

Roger Pomerantz, Michael Rosenblatt and David R. Epstein will serve on the nominating and corporate governance committee, which will be chaired by Dr. Rosenblatt. Our board of directors has determined that each of Dr. Pomerantz and Dr. Rosenblatt is "independent" as defined in the applicable Nasdaq rules. We have determined that Mr. Epstein is not independent as that term is defined under the rules and regulations of Nasdaq, and we intend to rely on the phase-in schedules set forth in Nasdaq Marketplace Rule 5615(b)(1) with respect to the independence of our nominating and corporate governance committee, which allows a company listing on the exchange in connection with its initial public offering to phase in its compliance with Nasdaq independent committee requirements such that all members of the nominating and corporate governance committee shall be independent within one year of listing. 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;

reviewing the composition of the board of directors to ensure that it is composed of members containing the appropriate skills and expertise to advise us;

identifying individuals qualified to become members of the board of directors;

determining the independence of directors nominated each year for election or re-election to the board of directors;

determining whether candidates for audit committee meet financial literacy requirements;

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 code of business conduct and ethics and a set of corporate governance guidelines; and

overseeing the evaluation of our board of directors and management.

Our board of directors may from time to time establish other committees.

Compensation committee interlocks and insider participation

None of the members of our compensation committee has at any time during the prior three years been one of our officers or employees. None of our executive officers currently serves, or in the past fiscal year

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has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our board of directors or compensation committee.

Corporate governance

We have adopted a written code of business conduct and ethics, effective upon the effectiveness of the registration statement of which this prospectus is a part, that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. Following the effectiveness of the registration statement of which this prospectus is a part, a current copy of the code will be posted on the investor relations section of our website, which is located at www.rubiustx.com. If we make any substantive amendments to, or grant any waivers from, the code of business conduct and ethics for any officer or director, we will disclose the nature of such amendment or waiver on our website or in a current report on Form 8-K.

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Executive compensation

Executive compensation overview

Historically, our executive compensation program has reflected our growth and development-oriented corporate culture. To date, the compensation of our chairman and our other executive officers identified in the 2017 Summary Compensation Table below, who we refer to as the named executive officers, has consisted of a combination of base salary, bonuses and long-term incentive compensation in the form of restricted common stock awards and stock options. Our named executive officers who are full-time employees, like all other full-time employees, are eligible to participate in our health and welfare benefit plans. As we transition from a private company to a publicly traded company, we will evaluate our compensation values and philosophy and compensation plans and arrangements as circumstances require. At a minimum, we expect to review executive compensation annually with input from a compensation consultant. As part of this review process, we expect the board of directors and the compensation committee to apply our values and philosophy, while considering the compensation levels needed to ensure our executive compensation program remains competitive. We will also review whether we are meeting our retention objectives and the potential cost of replacing a key employee.

2017 summary compensation table

The following table presents information regarding the total compensation awarded to, earned by, and paid to our named executive officers for services rendered to us in all capacities for the years indicated.

 
   
   
   
   
   
   
   
 
Name and principal position
  Year
  Salary
($)

  Bonus
($)(3)

  Stock
awards
($)(4)

  Option
awards
($)(5)

  All other
compensation
($)

  Total
($)

 

David R. Epstein

    2017         1,107,570     2,508,917 (6)   870,189 (6)   500,055 (7)   4,986,731  

Chairman (Principal

                                           

Executive Officer) (1)

                                           

Torben Straight Nissen, Ph.D. 

   
2017
   
350,000
   
122,500
   
178,009
   
44,872
   
840

(8)
 
696,221
 

President

                                           

Christopher L. Carpenter, M.D. 

   
2017
   
113,750
   
44,727
   
   
2,607,485
   
75,000

(9)
 
2,840,962
 

Chief Medical Officer (2)

                                           

(1)    Mr. Epstein currently serves as our Chairman and as a non-employee consultant. Mr. Epstein will cease to be our Principal Executive Officer upon Dr. Cagnoni's assuming the role of our Chief Executive Officer in June 2018.

(2)    Dr. Carpenter commenced employment with us in September 2017. His annual base salary for 2017 was $390,000.

(3)    The amounts reported represent bonuses based upon the Board's assessment of the achievement of company and individual performance objectives for the year ended December 31, 2017, which were paid in February 2018. For Mr. Epstein, the amount reported also includes a one-time cash bonus in the amount of $612,570 which was forgone at Mr. Epstein's election in exchange for the issuance of 213,439 shares of common stock.

(4)   The amounts reported represent the aggregate grant-date fair value of the restricted common stock awards made in 2017, calculated in accordance with Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 718. The assumptions used in calculating the grant-date fair value are set forth in Note 10 to our audited consolidated financial statements appearing at the end of this prospectus.

(5)    The amounts reported represent the aggregate grant-date fair value of stock options awarded in 2017, calculated in accordance with FASB ASC Topic 718. The assumptions used in calculating the grant-date fair value are set forth in Note 10 to our audited consolidated financial statements appearing at the end of this prospectus.

(6)   The awards underlying these amounts represent all equity incentive awards issued to Mr. Epstein in 2017 and were issued to Mr. Epstein for his services as a non-employee consultant and, as such, are being accounted for as non-employee stock-based awards in accordance with the FASB ASC Topic 505-50. Stock-based compensation expense for these awards is recognized based on the fair value of the award on the date that the related service is complete, which is generally the vesting date of the award. As a result, the total amount of stock-based compensation expense recognized related to these awards differs from the grant-date fair value of the awards presented in the table. For a

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discussion of the aggregate stock-based compensation expense recognized in our consolidated statement of operations for awards granted to Mr. Epstein during the year ended December 31, 2017, see "Management's discussion and analysis of financial condition and results of operations."

(7)    The amount reported represents $375,000 in retainer payments made to Mr. Epstein for his services as a consultant and $125,055 in payments for living accommodations for Mr. Epstein, both pursuant to the terms of his consulting agreement with us. Mr. Epstein's annual retainer commencing August 1, 2017 was $900,000.

(8)   The amount reported represents long-term disability insurance premiums and group term life insurance premiums in excess of statutory limits.

(9)   The amount reported represents company-paid relocation expenses.

Employment and consulting arrangements with our named executive officers

David R. Epstein

On June 21, 2018, we entered into a second amended and restated chairman agreement with Mr. Epstein, or the Chairman Agreement, which sets forth the terms of his consulting arrangement with us. Pursuant to the terms of the Chairman Agreement, Mr. Epstein serves as chairman of our board of directors and has agreed to dedicate approximately 50 working days per year to us. As compensation for Mr. Epstein's services, we pay the limited liability company of which Mr. Epstein is the managing member a base retainer of $495,000 per year and Mr. Epstein will be granted a stock option each year with a grant date fair value of approximately $405,000, which options will be fully vested upon grant. In addition, upon the date that this registration statement becomes effective, Mr. Epstein will be granted an option to purchase a number of shares of our common stock equal to approximately 2% of our equity on a fully diluted basis, or the Initial Option. The Initial Option will vest in full on the third anniversary of the date of grant, subject to Mr. Epstein's continued service through such date; provided, however, in the event that Mr. Epstein's service is terminated (i) by us for any reason other than Cause (as defined in the Chairman Agreement) or (ii) due to Mr. Epstein's death or disability, in each case prior to the third anniversary of the grant date of the Initial Option, a pro-rated portion of the shares underlying the Initial Option will vest and become exercisable, with such pro-ration based upon the number of days elapsed between the grant date of the Initial Option and the date of termination of Mr. Epstein's service. Pursuant to the terms of the Chairman Agreement, the full principal amount of, and accrued interest on, the two promissory notes issued by Mr. Epstein to us was forgiven as of June 21, 2018. The Chairman Agreement contains non-competition provisions that apply during the term of Mr. Epstein's service and for one year thereafter.

Other named executive officers

In addition, effective upon the closing of this offering, we intend to enter into employment agreements with Drs. Straight Nissen and Carpenter that provide for specified payments and benefits in connection with a termination of employment in certain circumstances. Our goal in providing these severance and change in control payments and benefits is to offer sufficient cash continuity protection such that the named executive officers who are our employees will focus their full time and attention on the requirements of the business rather than the potential implications for their respective positions. We prefer to have certainty regarding the potential severance amounts payable to the named executive officers, rather than negotiating severance at the time that a named executive officer's employment terminates. We have also determined that accelerated vesting provisions with respect to outstanding equity awards in connection with a qualifying termination of employment in certain circumstances are appropriate because they encourage our named executive officers to stay focused on the business in those circumstances, rather than focusing on the potential implications for them personally. The employment agreements with our named executive officers require the named executive officers to execute a separation agreement containing a general release of claims in favor of us to receive any severance payments and benefits.

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Torben Straight Nissen, Ph.D.

Under the employment agreement with Dr. Straight Nissen, or the Nissen Employment Agreement, he will continue to serve as our President on an at-will basis. Dr. Straight Nissen currently receives a base salary of $400,000 per year, which is subject to periodic review and adjustment. Dr. Straight Nissen is also eligible for an annual performance bonus targeted at 45% of his base salary and is eligible to participate in the employee benefit plans generally available to our employees, subject to the terms of those plans. Pursuant to the terms of the Nissen Employment Agreement, Dr. Straight Nissen is eligible to receive a special one-time retention bonus of $120,000, provided that he remains employed by us through November 30, 2018, which will be paid at the time that 2018 annual cash incentive bonuses are paid to our other executive officers (but in no event later than March 15, 2019).

The Nissen Employment Agreement further provides that (x) if Dr. Straight Nissen's employment is terminated by us without Cause (as defined in the Nissen Employment Agreement) on or prior to November 30, 2018 or (y) Dr. Straight Nissen resigns for any reason on or prior to January 29, 2019, provided that he has not been offered the position of chief executive officer of another Flagship portfolio company, Dr. Straight Nissen will be eligible to receive: (i) base salary continuation for 12 months following termination, or the Initial Severance Payments, and (ii) accelerated vesting of 50% of the unvested portion of all stock options and other stock-based awards held by him that are subject to time-based vesting, or the Time-Based Equity Awards. Payment of the Initial Severance Payments shall immediately cease if Dr. Straight Nissen breaches the terms of the Employee Non-Competition, Non-Solicitation, Confidentiality and Assignment Agreement, or the Restrictive Covenants Agreement, between him and us. In addition, in the event that Dr. Straight Nissen's employment is terminated by us without Cause or if we change Dr. Straight Nissen's title, in each case prior to November 30, 2018, (i) we will pay Dr. Straight Nissen (A) an amount equal to his base salary on the date of termination or title change through November 30, 2018 plus (B) an amount equal to his annual cash incentive compensation for the full year of 2018 and (ii) the portion of all Time-Based Equity Awards held by him that would have vested or become exercisable had he remained employed by us through January 29, 2019 shall immediately vest and/or become exercisable.

In the event that Dr. Straight Nissen's employment is terminated by us without Cause following November 30, 2018 or Dr. Straight Nissen resigns for Good Reason (as defined in the Nissen Employment Agreement) following January 29, 2019, he will be entitled to receive: (i) base salary continuation for nine months following termination, or the Nissen Severance Payments, and, (ii) if Dr. Straight Nissen is enrolled in our health care program immediately prior to the date of termination and properly elects to receive COBRA benefits, nine months of COBRA premiums for himself and his eligible dependents at our normal rate of contribution for employees for coverage at the level in effect immediately prior to the date of termination (or a monthly cash payment in lieu thereof if we determine we cannot pay such amounts without potentially violating applicable law). Payment of the Nissen Severance Payments shall immediately cease if Dr. Straight Nissen breaches the terms of the Restrictive Covenants Agreement between him and us. In lieu of the severance payments and benefits set forth in the first sentence of this paragraph, in the event Dr. Straight Nissen's employment is terminated by us without Cause or he resigns for Good Reason, in each case within 12 months following a Change in Control (as defined in the Nissen Employment Agreement), he will be entitled to receive: (i) a lump sum cash amount equal to one times the sum of (A) his current base salary (or his base salary in effect prior to the Change in Control, if higher) plus (B) his target annual cash incentive compensation for the year of termination, (ii) if Dr. Straight Nissen is enrolled in our health care program immediately prior to the date of termination and properly elects to receive COBRA benefits, 12 months of COBRA premiums for himself and his eligible dependents at our normal rate of contribution for employees for coverage at the level in effect immediately prior to the date

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of termination (or a monthly cash payment in lieu thereof if we determine we cannot pay such amounts without potentially violating applicable law), and (iii) except as otherwise provided in the applicable award agreement, accelerated vesting of 100% of all Time-Based Equity Awards.

Christopher L. Carpenter, M.D.

Under the employment agreement with Dr. Carpenter, or the Carpenter Employment Agreement, he will continue to serve as our Chief Medical Officer on an at-will basis. Dr. Carpenter currently receives a base salary of $390,000 per year, which is subject to periodic review and adjustment. Dr. Carpenter is also eligible for an annual performance bonus targeted at 40% of his base salary and is eligible to participate in the employee benefit plans generally available to our employees, subject to the terms of those plans.

The Carpenter Employment Agreement further provides that if Dr. Carpenter's employment is terminated by us without Cause (as defined in the Carpenter Employment Agreement) or Dr. Carpenter resigns for Good Reason (as defined in the Carpenter Employment Agreement), he will be entitled to receive: (i) base salary continuation for nine months following termination, or the Carpenter Severance Payments, and, (ii) if Dr. Carpenter is enrolled in our health care program immediately prior to the date of termination and properly elects to receive COBRA benefits, nine months of COBRA premiums for himself and his eligible dependents at our normal rate of contribution for employees for coverage at the level in effect immediately prior to the date of termination (or a monthly cash payment in lieu thereof if we determine we cannot pay such amounts without potentially violating applicable law). Payment of the Carpenter Severance Amount shall immediately cease if Dr. Carpenter breaches the terms of the Restrictive Covenants Agreement between him and us. In lieu of the severance payments and benefits set forth above, in the event Dr. Carpenter's employment is by us without Cause or he resigns for Good Reason, in either case within 12 months following a Change in Control (as defined in the Carpenter Employment Agreement), he will be entitled to receive: (i) a lump sum cash amount equal to one times the sum of (A) his current base salary (or his base salary in effect prior to the Change in Control, if higher) plus (B) his target annual cash incentive compensation for the year of termination, (ii) if Dr. Carpenter is enrolled in our health care program immediately prior to the date of termination and properly elects to receive COBRA benefits, 12 months of COBRA premiums for himself and his eligible dependents at our normal rate of contribution for employees for coverage at the level in effect immediately prior to the date of termination (or a monthly cash payment in lieu thereof if we determine we cannot pay such amounts without potentially violating applicable law), and (iii) except as otherwise provided in the applicable award agreement, accelerated vesting of 100% of all Time-Based Equity Awards held by Dr. Carpenter.

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Outstanding equity awards at 2017 fiscal year-end

The following table sets forth information concerning outstanding equity awards held by each of our named executive officers as of December 31, 2017. All equity awards set forth in the table below were granted under our 2014 Stock Incentive Plan, as amended, or the 2014 Plan.

 
   
   
   
   
   
   
   
 
 
  Option awards   Stock awards  
 
   
   
  Equity incentive
plan awards:
number of
securities
underlying
unexercised
unearned
options (#)

   
   
   
   
 
 
   
   
   
   
  Number of
shares or
units of
stock that
have not
vested (#)

  Market value
of shares
or units
of stock that
have not
vested ($)(1)

 
 
  Number of securities
underlying unexercised
options (#)
   
   
 
 
  Option
exercise
price ($)

  Option
expiration
date

 
Name
  Exercisable
  Unexercisable
 

David R. Epstein

                        3,667,014 (2)      

                        1,100,000 (2)      

        215,292 (2)       2.87     10/24/2027          

Torben Straight Nissen

                        1,050,000 (3)      

            350,000 (4)   0.18     11/28/2026          

                        460,000 (5)      

            115,000 (4)   0.19     4/2/2027          

Christopher L. Carpenter

        750,000 (6)       2.87     10/24/2027          

(1)    The market value of our common stock is based on an assumed initial public offering price of $              per share, which is the midpoint of the estimated price range set forth on the cover page of this prospectus.

(2)    The shares underlying these awards vest 50% on January 2, 2018, then in 24 equal monthly installments thereafter.

(3)    Represents shares acquired upon the exercise of a stock option with an early exercise feature. The shares vested 25% on November 21, 2017, then in 12 equal quarterly installments thereafter.

(4)   The shares underlying these stock options vest upon the closing, within a specified period, of certain specified transactions.

(5)    This restricted common stock award vests 25% on April 3, 2018, then in 12 equal quarterly installments thereafter.

(6)   The shares underlying this option vest 25% on September 18, 2018, then in 12 equal quarterly installments thereafter.

Compensation risk assessment

We believe that although a portion of the compensation provided to our executive officers and other employees is performance-based, our executive compensation program does not encourage excessive or unnecessary risk taking. This is primarily due to the fact that our compensation programs are designed to encourage our executive officers and other employees to remain focused on both short-term and long-term strategic goals, in particular in connection with our pay-for-performance compensation philosophy. As a result, we do not believe that our compensation programs are reasonably likely to have a material adverse effect on us.

Employee benefit and equity compensation plans

2018 Stock Option and Incentive Plan

Our 2018 Stock Option and Incentive Plan, or our 2018 Plan, was adopted by our board of directors in                  2018, approved by our stockholders in                   2018 and will become effective on the date immediately prior to the date on which the registration statement of which this prospectus is a part is declared effective by the SEC. Our 2018 Plan will replace our 2014 Plan as our board of directors has determined not to make additional awards under the 2014 Plan following the consummation of our initial public offering. Our 2018 Plan allows the compensation committee to make equity-based incentive awards to our officers, employees, directors and consultants.

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We have initially reserved              shares of our common stock, or the Initial Limit, for the issuance of awards under our 2018 Plan, plus the shares of common stock remaining available for issuance under our 2014 Plan. This limit is subject to adjustment in the event of a stock split, stock dividend or other change in our capitalization. Our 2018 Plan provides that the number of shares reserved and available for issuance thereunder will automatically increase on January 1, 2019 and each January 1 thereafter by         % of the number of shares of common stock outstanding on the immediately preceding December 31 or such lesser number of shares determined by the compensation committee, or the Annual Increase.

The shares we issue under our 2018 Plan will be authorized but unissued shares or shares that we reacquire. The shares of common stock underlying any awards that are forfeited, cancelled, held back upon exercise or settlement of an award to satisfy the exercise price or tax withholding, reacquired by us prior to vesting, satisfied without the issuance of stock, expire or are otherwise terminated (other than by exercise) under our 2018 Plan and our 2014 Plan will be added back to the shares of common stock available for issuance under our 2018 Plan. The maximum number of shares that may be issued as incentive stock options may not exceed                           , cumulatively increased on January 1, 2019 and on each January 1 thereafter by the lesser of the Annual Increase, or shares. The grant date fair value of all awards made under our 2018 Plan and all other cash compensation paid by us to any non-employee director in any calendar year shall not exceed $              .

Our 2018 Plan will be administered by our compensation committee. Our compensation committee has full power to select, from among the individuals eligible for awards, the individuals to whom awards will be granted, to make any combination of awards to participants, and to determine the specific terms and conditions of each award, subject to the provisions of our 2018 Plan. Persons eligible to participate in our 2018 Plan will be those full or part-time officers, employees, non-employee directors, and consultants as selected from time to time by our compensation committee in its discretion.

Our 2018 Plan permits the granting of both options to purchase common stock intended to qualify as incentive stock options under Section 422 of the Code and options that do not so qualify. The option exercise price of each option will be determined by our compensation committee but may not be less than 100% of the fair market value of our common stock on the date of grant. The term of each option will be fixed by our compensation committee and may not exceed ten years from the date of grant. Our compensation committee will determine at what time or times each option may be exercised.

Our compensation committee may award stock appreciation rights subject to such conditions and restrictions as it may determine. Stock appreciation rights entitle the recipient to cash or shares of common stock equal to the value of the appreciation in our stock price over the exercise price. The exercise price may not be less than 100% of the fair market value of our common stock on the date of grant. The term of each stock appreciation right will be fixed by our compensation committee and may not exceed ten years from the date of grant. Our compensation committee will determine at what time or times each stock appreciation right may be exercised.

Our compensation committee may award restricted shares of common stock and restricted stock units to participants subject to such conditions and restrictions as it may determine. These conditions and restrictions may include the achievement of certain performance goals and/or continued employment with us through a specified vesting period.

Our compensation committee may also grant shares of common stock that are free from any restrictions under our 2018 Plan. Unrestricted stock may be granted to participants in recognition of past services or for other valid consideration and may be issued in lieu of cash compensation due to such participant. Our

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compensation committee may grant cash bonuses under our 2018 Plan to participants, subject to the achievement of certain performance goals.

Our 2018 Plan provides that upon the effectiveness of a "sale event," as defined in our 2018 Plan, an acquirer or successor entity may assume, continue or substitute outstanding awards under our 2018 Plan. To the extent that awards granted under our 2018 Plan are not assumed or continued or substituted by the successor entity, except as may be otherwise provided in the relevant award certificate, all awards with time-based vesting, conditions or restrictions shall become fully vested and nonforfeitable as of the effective time of the sale event, and all awards with conditions and restrictions relating to the attainment of performance goals may become vested and nonforfeitable in connection with a sale event in the compensation committee's discretion or to the extent specified in the relevant award certificate. Upon the effective time of the sale event, all outstanding awards granted under our 2018 Plan shall terminate. In the event of such termination, individuals holding options and stock appreciation rights will be permitted to exercise such options and stock appreciation rights (to the extent exercisable) within a specified period of time prior to the sale event. In addition, in connection with the termination of our 2018 Plan upon a sale event, we may make or provide for a payment, in cash or in kind, to participants holding vested and exercisable options and stock appreciation rights equal to the difference between the per share cash consideration payable to stockholders in the sale event and the exercise price of the options or stock appreciation rights and we may make or provide for a payment, in cash or in kind, to participants holding other vested awards.

Our board of directors may amend or discontinue our 2018 Plan and our compensation committee may amend or cancel outstanding awards for purposes of satisfying changes in law or any other lawful purpose, but no such action may adversely affect rights under an award without the holder's consent. Certain amendments to our 2018 Plan require the approval of our stockholders.

No awards may be granted under our 2018 Plan after the date that is ten years from the effective date of our 2018 Plan. No awards under our 2018 Plan have been made prior to the date hereof.

2014 Stock Incentive Plan

Our 2014 Plan was approved by our board of directors and our stockholders on October 10, 2014 and was most recently amended on June 6, 2018. Under our 2014 Plan, we have reserved for issuance an aggregate of 19,152,328 shares of our common stock, which number is subject to adjustment in the event of a stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off or other similar change in capitalization or event.

The shares we issue under our 2014 Plan are authorized but unissued shares or treasury shares. The shares of common stock underlying any awards that are terminated, surrendered or cancelled without having been fully exercised, forfeited in whole or in part or for which shares of common stock are not issued under our 2014 Plan are currently added to the shares of common stock available for issuance under our 2014 Plan. Following this offering, such shares will be added to the shares available under our 2018 Plan.

Our board of directors has acted as administrator of our 2014 Plan. The administrator has full power to select, from among the individuals eligible for awards, the individuals to whom awards will be granted, and to determine the specific terms and conditions of each award, subject to the provisions of our 2014 Plan. Persons eligible to participate in our 2014 Plan are our employees, officers, directors, consultants and advisors as selected from time to time by the administrator in its discretion.

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Our 2014 Plan permits the granting of (1) options to purchase common stock intended to qualify as incentive stock options under Section 422 of the Code and (2) options that do not so qualify. The option exercise price of each option is determined by the administrator but may not be less than 100% of the fair market value of the common stock on the date of grant. The term of each option is fixed by the administrator and may not exceed ten years from the date of grant. The administrator determines at what time or times each option may be exercised. In addition, our 2014 Plan permits the granting of stock appreciation rights, restricted shares of common stock, restricted stock units and other stock-based awards.

Our 2014 Plan provides that upon the occurrence of a "reorganization event," as defined in our 2014 Plan, except to the extent otherwise provided in the relevant award agreement or another agreement between us and the participant, the administrator may take one of the following actions as to all (or any portion of) outstanding awards other than restricted stock on such terms as the administrator determines: (i) provide that such awards shall be assumed, or substantially equivalent awards shall be substituted, by the acquiring or succeeding corporation, (ii) upon written notice to a participant, provide that all of the participant's unexercised awards will terminate immediately prior to the consummation of such reorganization event unless exercised by the participant (to the extent then exercisable) within a specified period following the date of such notice, (iii) provide that outstanding awards shall become exercisable, realizable, or deliverable, or restrictions applicable to an award shall lapse, in whole or in part prior to or upon such reorganization event, (iv) in the event of a reorganization event under the terms of which holders of common stock will receive a cash payment, make or provide for a cash payment to participants with respect to each award held by a participant equal to (A) the number of shares of common stock subject to the vested portion of the award (after giving effect to any acceleration) multiplied by (B) the excess, if any, of (x) the price per share in the reorganization event over (y) the exercise, measurement or purchase price of such award and any applicable tax withholdings, in exchange for the termination of such award, (v) provide that, in connection with a liquidation or dissolution of the company, awards shall convert into the right to receive liquidation proceeds (if applicable, net of the exercise, measurement or purchase price thereof and any applicable tax withholdings) and (vi) any combination of the foregoing. Upon the occurrence of a reorganization event other than a liquidation or dissolution, our repurchase and other rights with respect to outstanding restricted stock shall inure to the benefit of our successor and shall, unless the administrator determines otherwise, apply to the cash, securities or other property which the common stock was converted into or exchanged for pursuant to such reorganization event in the same manner and to the same extent as they applied to such restricted stock; provided, however, that the administrator may provide for termination or deemed satisfaction of such repurchase or other rights applicable to the award. Upon the occurrence of a reorganization event involving the liquidation or dissolution of the company, except to the extent specifically provided to the contrary in the award agreement or any other agreement between a participant and us, all restrictions and conditions on all restricted stock then outstanding shall automatically be deemed terminated or satisfied.

No awards may be granted under our 2014 Plan after the date that is ten years from the earlier of the date our 2014 Plan was adopted by the board of directors or approved by our stockholders. Our board of directors has determined not to make any further awards under our 2014 Plan following the closing of this offering.

2018 Employee Stock Purchase Plan

Our 2018 Employee Stock Purchase Plan, or our ESPP, was adopted by our board of directors in                                  2018, approved by our stockholders in                            2018 and will become effective on the date immediately prior to the date on which the registration statement of which this

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prospectus is a part is declared effective by the SEC. Our ESPP initially reserves and authorizes the issuance of up to a total of              shares of common stock to participating employees. Our ESPP provides that the number of shares reserved and available for issuance will automatically increase on each January 1, beginning on January 1, 2019 and ending on January 1, 2028, by the lesser of (i)               shares of common stock, (ii)           % of the outstanding shares of common stock on the immediately preceding December 31 or (iii) such lesser number of shares as determined by the administrator of our ESPP. This number is subject to adjustment in the event of a stock split, stock dividend or other change in our capitalization. All employees are eligible to participate in our ESPP. Any employee who owns five percent or more of the voting power or value of our shares of common stock is not eligible to purchase shares under our ESPP. We may make one or more offerings each year to our employees to purchase shares under our ESPP. Offerings will usually begin on each                           and                            and will continue for six-month periods, referred to as offering periods. Each eligible employee may elect to participate in any offering by submitting an enrollment form at least 15 days before the relevant offering date.

Each employee who is a participant in our ESPP may purchase shares by authorizing payroll deductions of up to         % of his or her eligible compensation during an offering period. Unless the participating employee has previously withdrawn from the offering, his or her accumulated payroll deductions will be used to purchase shares of common stock on the last business day of the offering period at a price equal to         % of the fair market value of the shares on the first business day or the last business day of the offering period, whichever is lower, provided that no more than              shares of common stock may be purchased by any one employee during each offering period. Under applicable tax rules, an employee may purchase no more than $25,000 worth of shares of common stock, valued at the start of the purchase period, under our ESPP in any calendar year.

The accumulated payroll deductions of any employee who is not a participant on the last day of an offering period will be refunded. An employee's rights under our ESPP terminate upon voluntary withdrawal from the plan or when the employee ceases employment with us for any reason.

Our ESPP may be terminated or amended by our board of directors at any time. An amendment that increases the number of shares of common stock authorized under our ESPP and certain other amendments require the approval of our stockholders.

Executive Incentive bonus plan

In                           2018, our board of directors adopted the Senior Executive Cash Incentive Bonus Plan, or the Bonus Plan. Our Bonus Plan provides for bonus payments based upon the attainment of performance targets established by our compensation committee. The payment targets will be related to financial and operational measures or objectives with respect to our company, or the Corporate Performance Goals, as well as individual performance objectives.

Our compensation committee may select Corporate Performance Goals, including, but not limited to, the following: cash flow (including, but not limited to, operating cash flow and free cash flow); revenue; corporate revenue; earnings before interest, taxes, depreciation and amortization; net income (loss) (either before or after interest, taxes, depreciation and/or amortization); changes in the market price of our common stock; economic value-added; development, clinical, regulatory or commercial milestones; acquisitions or strategic transactions; operating income (loss); return on capital, assets, equity, or investment; stockholder returns; return on sales; gross or net profit levels; productivity; expense efficiency; margins; operating efficiency; customer satisfaction; working capital; earnings (loss) per share of our common stock; bookings, new bookings or renewals; sales or market shares; number of customers; number

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of new customers or customer references; operating income and/or net annual recurring revenue, any of which may be measured in absolute terms, as compared to any incremental increase, in terms of growth, as compared to results of a peer group, against the market as a whole, compared to applicable market indices and/or measured on a pre-tax or post-tax basis.

Each executive officer who is selected to participate in our Bonus Plan will have a target bonus opportunity set for each performance period. The bonus formulas will be adopted in each performance period by the compensation committee and communicated to each executive officer. The Corporate Performance Goals will be measured at the end of each performance period after our financial reports have been published. If the Corporate Performance Goals and individual performance objectives are met, payments will be made as soon as practicable following the end of each performance period. Subject to the rights contained in any agreement between the executive officer and us, an executive officer must be employed by us on the bonus payment date to be eligible to receive a bonus payment. Our Bonus Plan also permits the compensation committee to approve additional bonuses to executive officers in its sole discretion.

401(k) plan

Effective as of January 1, 2018, we adopted a tax-qualified retirement plan that provides eligible employees with an opportunity to save for retirement on a tax-advantaged basis. All participants' interests in their contributions are 100% vested when contributed. We provide a matching contribution of 50% of employee contributions up to 6%, with a maximum of $8,000 per year. Matching contributions vest after one year of service. Contributions are allocated to each participant's individual account and are then invested in selected investment alternatives according to the participants' directions. The retirement plan is intended to qualify under Section 401(a) of the Code.

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Director compensation

Director compensation

The following table presents the total compensation for each person who served as a non-employee member of our board of directors, and received compensation for such service during the year ended December 31, 2017, other than Mr. Epstein. Other than as set forth in the table and described more fully below, we did not pay any compensation, make any equity awards or non-equity awards to, or pay any other compensation to any of the non-employee members of our board of directors in 2017 for their services as members of the board of directors. We reimburse non-employee members of our board of directors for reasonable travel expenses. Amounts paid to Mr. Epstein, our Chairman and principal executive officer, and Dr. Straight Nissen, our President and a director, for their service in their respective roles during 2017 is presented above in the "2017 summary compensation table."

 
   
   
 
Name
  All other
compensation ($)

  Total ($)
 

Noubar B. Afeyan, Ph.D.(1)

         

Peter Barton Hutt(2)

         

Robert S. Langer, Sc.D.(3)

    28,159 (4)   28,159  

Harvey Lodish, Ph.D.(5)

    24,000 (6)   24,000  

Roger Pomerantz, M.D.(2)

         

Michael Rosenblatt, M.D.(2)

         

(1)    Dr. Afeyan did not hold any outstanding equity awards as of December 31, 2017.

(2)    As of December 31, 2017, Mr. Hutt, Dr. Pomerantz and Dr. Rosenblatt, each held options to purchase 150,000 shares of our common stock and 112,500 shares subject to each such option were vested as of such date. Mr. Hutt resigned from his role as director on January 31, 2018.

(3)    As of December 31, 2017, Dr. Langer held options to purchase 300,000 shares of our common stock and 225,000 shares subject to such options were vested as of such date.

(4)   Represents consulting fees paid to Dr. Langer pursuant to the terms of a Scientific Advisory Board Consulting Agreement with the company. Pursuant to the Scientific Advisory Board Consulting Agreement, Dr. Langer was granted an option to purchase 150,000 shares of common stock and receives consulting fees of $12,500 per quarter for his services on our Scientific Advisory Board.

(5)    As of December 31, 2017, Dr. Lodish held unvested options to purchase 37,500 shares of common stock. Dr. Lodish resigned from his role as director on January 31, 2018.

(6)   Represents consulting fees paid to Dr. Lodish pursuant to the terms of a Founder Consulting Agreement with the company. Pursuant to the Founder Consulting Agreement, Dr. Lodish receives consulting fees of $2,000 per month for his services on our Scientific Advisory Board.

Non-employee director compensation policy

In connection with this offering, we intend to adopt a non-employee director compensation policy that will become effective as of the completion of this offering that will be designed to enable us to attract and retain, on a long-term basis, highly qualified non-employee directors. Under the policy, each director who is not an employee or officer will be paid cash compensation from and after the completion of this offering.

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Certain relationships and related party transactions

Other than the compensation agreements and other arrangements described under "Executive compensation" and "Director compensation" in this prospectus and the transactions described below, since January 1, 2015, there has not been and there is not currently proposed, any transaction or series of similar transactions to which we were, or will be, a party in which the amount involved exceeded, or will exceed, $120,000 and in which any director, executive officer, holder of five percent (5%) or more of any class of our capital stock or any member of the immediate family of, or entities affiliated with, any of the foregoing persons, had, or will have, a direct or indirect material interest.

Sales of securities

Series A preferred stock financing

From October 2014 to December 2016, we issued and sold to investors in a private placement an aggregate of 29,570,662 shares of our Series A preferred stock at a purchase price of $0.60 per share, for aggregate consideration of approximately $17.7 million.

Series B preferred stock financing

In June 2017, we issued and sold to investors in a private placement an aggregate of 14,362,344 shares of our Series B preferred stock at a purchase price of $8.39 per share, for aggregate consideration of approximately $120.5 million.

Series C preferred stock financing

In February 2018, we issued and sold to investors in a private placement an aggregate of 7,912,432 shares of our Series C preferred stock at a purchase price of $12.79 per share, for aggregate consideration of approximately $101.2 million.

The following table sets forth the aggregate number of these securities acquired by our directors, executive officers and the listed holders of more than 5% of our capital stock. Each share of our preferred stock identified in the following table will convert into one share of common stock in connection with this offering. Our director, Noubar B. Afeyan, Ph.D. is affiliated with all entities affiliated with Flagship Pioneering Funds. Our director, David Epstein, is a member of Flagship V GP and Flagship Opportunities GP. Our former director, James Gilbert, is a Senior Partner at Flagship Pioneering.

 
   
   
   
   
 
Participant(1)
  Common stock
  Series A
preferred
stock

  Series B
preferred
stock

  Series C
preferred
stock

 

5% stockholders:

                         

Entities affiliated with Flagship Pioneering Funds(2)

    5,000,000     29,153,995     2,969,739     1,172,792  

Directors and executive officers:

                         

James Gilbert(3)

        416,667          

(1)    Additional details regarding these stockholders and their equity holdings are provided under the caption "Principal stockholders."

(2)    Flagship Pioneering Funds consists of Flagship VentureLabs IV LLC, Flagship Ventures Fund IV, L.P., Flagship Ventures Fund IV-Rx, L.P., Flagship Ventures Fund V, LP, Flagship V VentureLabs Rx Fund, LP, and Flagship Ventures Opportunities Fund I, L.P.

(3)    Mr. Gilbert served on our board of directors as the Chairman from December 2014 until January 2017.

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Services agreement

In April 2013, we entered into a services agreement with Flagship Ventures Management, Inc., or Flagship Management, an affiliate of the Flagship Pioneering Funds, under which Flagship Management provides us with personnel, advisory and administrative services on an as-needed basis. From April 2013 to March 31, 2018, we paid Flagship Management an aggregate of $3,368,006 for services provided under the services agreement, inclusive of the services provided by Avak Kahvejian, Ph.D., who served as our President from May 2015 through November 2016. Our payments to Flagship Management were $700,876, $833,676 and $1,022,219 during the years ended December 31, 2015, 2016 and 2017, respectively. Our directors who are affiliated with Flagship Pioneering are set forth in the table above.

Second amended and restated investors' rights agreement

We are a party to a second amended and restated investors' rights agreement, dated as of February 23, 2018, with holders of our preferred stock, including holders of five percent (5%) or more of our capital stock and entities affiliated with our directors. The investor rights agreement provides these holders the right, following the completion of this offering, to demand that we file a registration statement or request that their shares be covered by a registration statement that we are otherwise filing. The investor rights agreement also provides a right of first refusal to purchase future securities sold by us, which such right shall terminate immediately prior to the consummation of this offering. See "Description of capital stock—Registration rights" for additional information regarding these registration rights.

Second amended and restated voting agreement

We are party to a second amended and restated voting agreement, dated as of February 23, 2018, with certain of our stockholders, pursuant to which the following directors were elected to serve as members on our board of directors and, as of the date of this prospectus, continue to so serve: David Epstein, Torben Straight Nissen, Noubar B. Afeyan, Francis Cuss, Robert S. Langer, Roger Pomerantz, Michael Rosenblatt and Catherine Sohn.

The voting agreement will terminate upon the closing of this offering, and members previously elected to our board of directors pursuant to this agreement will continue to serve as directors until they resign, are removed or their successors are duly elected by the holders of our common stock. The composition of our board of directors after this offering is described in more detail under "Management—Composition of our board of directors."

Promissory notes

On January 27, 2017, we loaned David Epstein $696,733 to purchase shares of our common stock pursuant to a promissory note and a restricted stock agreement, each between us and Mr. Epstein dated January 27, 2017. On May 16, 2017, we loaned Mr. Epstein $1,815,000 to purchase shares of our common stock pursuant to a promissory note and a restricted stock agreement, each between us and Mr. Epstein dated May 16, 2017. The January 27, 2017 promissory note provides that the unpaid principal amount of the loan bears interest at 1.97% annually, and the May 16, 2017 promissory note provides that the unpaid principal amount of the loan bears interest at 2.04% annually. Interest is payable annually or is converted to principal and payable at the maturity date. The maturity date of the promissory notes occurs on the earliest of (i) seven years from the issuance date of the notes; (ii) 60 days following the date of termination of services by the borrower; and (iii) immediately prior to an initial filing of a registration statement by us. The promissory notes are partial-recourse and secured by a pledge of the shares of

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common stock purchased with the promissory notes. On June 21, 2018, the original principal balance of $2,511,713 and all interest that had accrued thereon, totaling $60,180, was forgiven by us.

On April 3, 2017, we loaned Torben Straight Nissen a total of $239,400 to purchase shares of our common stock pursuant to two promissory notes between us and Dr. Straight Nissen, dated April 3, 2017, and two restricted stock agreements between us and Dr. Straight Nissen, dated April 3, 2017. Both promissory notes provide that the unpaid principal amount of the loans bear interest at 2.05% annually, and interest is payable annually or is converted to principal and payable at the maturity date. The maturity date of the promissory notes occurs on the earliest of (i) seven years from the issuance date of the notes; (ii) 60 days following the date of termination of employment of the borrower; and (iii) immediately prior to an initial filing of a registration statement by us. The promissory notes are partial-recourse and are secured by a pledge of the shares of our common stock purchased with the promissory notes. On June 21, 2018, Dr. Straight Nissen repaid $245,405 to us, representing the outstanding principal balance of the promissory notes and all interest that had accrued thereon.

Indemnification agreements

In connection with this offering, we intend to enter into agreements to indemnify our directors and executive officers. These agreements will, among other things, require us to indemnify these individuals for certain expenses (including attorneys' fees), judgments, fines and settlement amounts reasonably incurred by such person in any action or proceeding, including any action by or in our right, on account of any services undertaken by such person on behalf of our company or that person's status as a member of our board of directors to the maximum extent allowed under Delaware law.

Policies for approval of related party transactions

Our board of directors reviews and approves transactions with directors, officers and holders of five percent or more of our voting securities and their affiliates, each a related party. Prior to this offering, the material facts as to the related party's relationship or interest in the transaction are disclosed to our board of directors prior to their consideration of such transaction, and the transaction is not considered approved by our board of directors unless a majority of the directors who are not interested in the transaction approve the transaction. Further, when stockholders are entitled to vote on a transaction with a related party, the material facts of the related party's relationship or interest in the transaction are disclosed to the stockholders, who must approve the transaction in good faith.

In connection with this offering, we expect to adopt a written related party transactions policy that such transactions must be approved by our audit committee. This policy will become effective on the date on which the registration statement of which this prospectus is a part is declared effective by the SEC. Pursuant to this policy, the audit committee has the primary responsibility for reviewing and approving or disapproving "related party transactions," which are transactions between us and related persons in which the aggregate amount involved exceeds or may be expected to exceed $120,000 and in which a related person has or will have a direct or indirect material interest. For purposes of this policy, a related person will be defined as a director, executive officer, nominee for director, or greater than 5% beneficial owner of our common stock, in each case since the beginning of the most recently completed year, and their immediate family members.

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Principal stockholders

The following table sets forth certain information known to us regarding beneficial ownership of our capital stock as of June 15, 2018, as adjusted to reflect the sale of common stock offered by us in this offering, for:

each person or group of affiliated persons known by us to be the beneficial owner of more than five percent of our capital stock;

each of our named executive officers;

each of our directors and our director nominee; and

all of our executive officers and directors and our director nominee as a group.

To the extent that the underwriters sell more than                  shares in this offering, the underwriters have the option to purchase up to an additional                  shares at the initial public offering price less the underwriting discounts and commissions.

Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Under those rules, beneficial ownership includes any shares as to which the individual or entity has sole or shared voting power or investment power, and includes securities that the individual or entity has the right to acquire, such as through the exercise of stock options, within 60 days of June 15, 2018. Except as noted by footnote, and subject to community property laws where applicable, we believe, based on the information provided to us, that the persons and entities named in the table below have sole voting and investment power with respect to all common stock shown as beneficially owned by them.

The percentage of beneficial ownership prior to this offering in the table below is based on 66,851,817 shares of common stock deemed to be outstanding as of June 15, 2018, assuming the conversion of all outstanding shares of our preferred stock upon the closing of this offering into an aggregate of 51,845,438 shares of common stock upon the closing of this offering, and the percentage of beneficial ownership at this offering in the table below is based on                  shares of common stock assumed to be outstanding after the closing of the offering. The information in the table below assumes no exercise of the underwriters' option to purchase additional shares.

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Except as otherwise noted below, the address for persons listed in the table is c/o Rubius Therapeutics, Inc., 325 Vassar Street, Suite 1A, Cambridge, Massachusetts, 02139.

 
   
   
   
 
 
   
  Percentage of
shares beneficially
owned
 
 
  Number of shares
beneficially
owned prior to
and after offering

 
Name and address of beneficial owner
  Prior to
offering

  After
offering

 

5% stockholders:

                   

Entities affiliated with Flagship Pioneering Funds(1)

    38,296,526     57.3%     %  

Entities affiliated with FMR LLC(2)

    3,556,583     5.3%     %  

Named executive officers and directors:

   
 
   
 
   
 
 

Pablo J. Cagnoni, M.D.

            %  

David R. Epstein(3)

    5,119,488     7.6%     %  

Torben Straight Nissen, Ph.D.(4)

    1,860,000     2.8%     %  

Christopher L. Carpenter, M.D., Ph.D. 

            %  

Noubar B. Afeyan, Ph.D.(1)

    38,296,526     57.3%     %  

Francis Cuss, M.B., M.Chir., FRCP

            %  

Robert S. Langer, Sc.D.(5)

    262,500     *     %  

Roger Pomerantz, M.D.(5)

    131,250     *     %  

Michael Rosenblatt, M.D.(5)

    131,250     *     %  

Catherine A. Sohn, Pharm.D. 

            %  

Jonathan Symonds, CBE

            %  

All executive officers and directors as a group (12 persons) (6)

    45,801,014     67.8%     %  

*      Represents beneficial ownership of less than one percent.

(1)    Consists of (a) 5,000,000 shares of common stock held by Flagship VentureLabs IV L.L.C. ("Flagship VentureLabs"), (b) 15,323,593 shares of common stock issuable upon conversion of the Series A preferred stock held by Flagship Ventures Fund IV, L.P. ("Flagship Fund IV"), (c) 3,830,402 shares of common stock issuable upon conversion of the Series A preferred stock held by Flagship Ventures Fund IV-Rx, L.P. ("Flagship Fund IV-Rx"), (d) 5,789,414 shares of common stock issuable upon conversion of the Series A, B and C preferred stock held by Flagship Ventures Fund V, L.P. ("Flagship Fund V"), (e) 5,789,414 shares of common stock issuable upon conversion of the Series A, B and C preferred stock held by Flagship V VentureLabs Rx Fund, L.P. ("Flagship Fund V-Rx"), and (f) 2,563,703 shares of common stock issuable upon conversion of the Series B and C preferred stock held by Flagship Ventures Opportunities Fund I, L.P. ("Flagship Opportunities" and together with Flagship VentureLabs, Flagship Fund IV, Flagship Fund IV-Rx, and Flagship Fund V, the "Flagship Funds"). Flagship Fund IV is a member of Flagship VentureLabs and also serves as its manager. The general partner of each of Flagship Fund IV and Flagship Fund IV-Rx is Flagship Ventures Fund IV General Partner LLC ("Flagship Fund IV GP"), the general partner of Flagship Fund V and Flagship Fund V-Rx is Flagship Ventures Fund V General Partner LLC ("Flagship Fund V GP"), and the general partner of Flagship Opportunities is Flagship Ventures Opportunities Fund I General Partner LLC ("Flagship Opportunities GP" and together with Flagship Fund IV GP, and Flagship Fund V GP, the "Flagship General Partners"). Noubar Afeyan, Ph.D. is one of our directors and a member of the Flagship General Partners. Dr. Afeyan, Ph.D. and Edwin M. Kania, Jr. are the managers of Flagship Fund IV GP and each of these individuals may be deemed to share voting and investment power with respect to all shares held by Flagship Fund IV and Flagship Fund IV-Rx. In addition, Dr. Afeyan serves as the managing member of the Flagship V GP, and Flagship Opportunities GP and may be deemed to possess sole voting and investment control over the shares held by Flagship Fund V, Flagship Fund V-Rx, and Flagship Opportunities. None of the Flagship General Partners directly own any of the shares held by the Flagship Funds, and each of the Flagship General Partners, Dr. Afeyan and Edwin Kania Jr. disclaims beneficial ownership of such shares except to the extent of its or his pecuniary interest therein. The mailing address of the Flagship Funds is 55 Cambridge Parkway, Suite 800E, Cambridge, MA 02142.

(2)    Consists of (a) 1,230,288 shares of common stock issuable upon conversion of the Series B and C preferred stock held by Fidelity Growth Commingled Pool ("Fidelity Growth Commingled Pool"), (b) 1,865,277 shares of common stock issuable upon conversion of the Series B and C preferred stock held by Fidelity Mt. Vernon St. Trust: Fidelity Growth Company Fund ("Fidelity Growth Company Fund") and (c) 461,018 shares of common stock issuable upon conversion of the Series B and C preferred stock held by Fidelity Mt. Vernon St. Trust: Fidelity Series Growth Company Fund ("Fidelity Series Growth Company Fund" and together with Fidelity Growth Commingled Pool and Fidelity Growth Company Fund, the "FMR Funds"). The FMR Funds are managed by direct or indirect subsidiaries of FMR LLC. Abigail P. Johnson is a Director, the Vice Chairman, the Chief Executive Officer and the President of FMR LLC. Members of the Johnson family, including Abigail P. Johnson, are the predominant owners, directly or through trusts, of Series B voting common shares of FMR LLC, representing 49% of the voting power of FMR LLC. The Johnson family group and all other Series B shareholders have entered into a shareholders' voting agreement under which all Series B voting common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through their ownership of voting common shares and the execution of the shareholders' voting agreement, members of the Johnson family may be

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deemed, under the Investment Company Act of 1940, to form a controlling group with respect to FMR LLC. Neither FMR LLC nor Abigail P. Johnson has the sole power to vote or direct the voting of the shares owned directly by the various investment companies registered under the Investment Company Act ("Fidelity Funds") advised by Fidelity Management & Research Company ("FMR Co"), a wholly owned subsidiary of FMR LLC, which power resides with the Fidelity Funds' Boards of Trustees. Fidelity Management & Research Company carries out the voting of the shares under written guidelines established by the Fidelity Funds' Boards of Trustees. The mailing address of the FMR Funds is 245 Summer Street, Boston, MA 02210.

(3)    Consists of (a) 213,439 shares of common stock, (b) 4,767,014 shares of restricted common stock, and (c) 139,035 shares of common stock underlying options exercisable within 60 days of June 15, 2018.

(4)   Consists of shares of restricted common stock.

(5)    Consists of shares of common stock underlying options exercisable within 60 days of June 15, 2018.

(6)   Consists of (a) 33,296,526 shares of common stock issuable upon conversion of Series A, B and C preferred stock (b) 5,213,439 shares of common stock, (c) 6,627,014 shares of restricted common stock, and (d) 664,035 shares of common stock underlying options exercisable within 60 days of June 15, 2018.

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Description of capital stock

The following descriptions are summaries of the material terms of our amended and restated certificate of incorporation, which will be effective upon the closing of this offering and amended and restated bylaws, which will be effective on the date of the effectiveness of the registration statement of which this prospectus is a part. The descriptions of the common stock and preferred stock give effect to changes to our capital structure that will occur immediately prior to the completion of this offering. We refer in this section to our amended and restated certificate of incorporation as our certificate of incorporation, and we refer to our amended and restated bylaws as our bylaws.

General

Upon completion of this offering, our authorized capital stock will consist of 150,000,000 shares of common stock, par value $0.001 per share, and 10,000,000 shares of preferred stock, par value $0.001 per share, all of which shares of preferred stock will be undesignated.

As of June 15, 2018, 15,006,379 shares of our common stock and 51,845,438 shares of preferred stock were outstanding and held by 68 stockholders of record. This amount does not take into account the conversion of all outstanding shares of our preferred stock into common stock upon the closing of this offering.

Common stock

The holders of our common stock are entitled to one vote for each share held on all matters submitted to a vote of the stockholders. The holders of our common stock do not have any cumulative voting rights. Holders of our common stock are entitled to receive ratably any dividends declared by our board of directors out of funds legally available for that purpose, subject to any preferential dividend rights of any outstanding preferred stock. Our common stock has no preemptive rights, conversion rights or other subscription rights or redemption or sinking fund provisions.

In the event of our liquidation, dissolution or winding up, holders of our common stock will be entitled to share ratably in all assets remaining after payment of all debts and other liabilities and any liquidation preference of any outstanding preferred stock. The shares to be issued by us in this offering will be, when issued and paid for, validly issued, fully paid and non-assessable.

Preferred stock

Upon the completion of this offering, all outstanding shares of our preferred stock will be converted into shares of our common stock. Upon the consummation of this offering, our board of directors will have the authority, without further action by our stockholders, to issue up to 10,000,000 shares of preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions thereof. These rights, preferences and privileges could include dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences, sinking fund terms and the number of shares constituting, or the designation of, such series, any or all of which may be greater than the rights of common stock. The issuance of our preferred stock could adversely affect the voting power of holders of common stock and the likelihood that such holders will receive dividend payments and payments upon our liquidation. In addition, the issuance of preferred stock could have the effect of delaying, deferring or preventing a change in control of our company or other corporate action. Immediately after consummation of this

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offering, no shares of preferred stock will be outstanding, and we have no present plan to issue any shares of preferred stock.

Stock options

As of June 15, 2018, options to purchase 11,976,919 shares of our common stock, at a weighted average exercise price of $5.25 per share, were outstanding.

Warrants

As of June 15, 2018, warrants to purchase up to 133,333 shares of our Series A preferred stock, at an exercise price of $0.60 per share, and warrants to purchase up to 2,234 shares of our Series B preferred stock, at an exercise price of $8.39 per share, were outstanding.

Upon the closing of this offering, and after giving effect to the conversion of our preferred stock into common stock, the warrants to purchase our Series A and Series B preferred stock will become exercisable for an aggregate of up to 135,567 shares of our common stock, at a weighted average exercise price of $0.73. All of the warrants provide for adjustments in the event of specified mergers, reorganizations, reclassifications, stock dividends, stock splits or other changes in our corporate structure. The warrants to purchase shares of our Series A preferred stock expire on November 20, 2025, and the warrants to purchase shares of our Series B preferred stock expire on May 19, 2027.

Registration rights

Upon the completion of this offering, the holders of 56,845,438 shares of our common stock, including those issuable upon the conversion of preferred stock will be entitled to rights with respect to the registration of these securities under the Securities Act. These rights are provided under the terms of an investors' rights agreement between us and holders of our preferred stock. The investors' rights agreement includes demand registration rights, short-form registration rights and piggyback registration rights. All fees, costs and expenses of underwritten registrations under this agreement will be borne by us and all selling expenses, including underwriting discounts and selling commissions, will be borne by the holders of the shares being registered.

Demand registration rights

Beginning 180 days after the effective date of this registration statement, the holders of 56,845,438 shares of our common stock, including those issuable upon the conversion of preferred stock upon closing of this offering, are entitled to demand registration rights. Under the terms of the investors' rights agreement, we will be required, upon the written request of holders of at least 25% of these securities that would result in an aggregate offering price of at least $3.0 million, to file a registration statement and use best efforts to effect the registration of all or a portion of these shares for public resale. We are required to effect only two registrations pursuant to this provision of the investors' rights agreement.

Short-form registration rights

Pursuant to the investors' rights agreement, if we are eligible to file a registration statement on Form S-3, upon the written request of at least 30% of these holders to sell registrable securities at an aggregate price of at least $5.0 million, we will be required to use commercially reasonable efforts to effect a registration of such shares. We are required to effect only two registrations in any twelve-month period

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pursuant to this provision of the investors' rights agreement. The right to have such shares registered on Form S-3 is further subject to other specified conditions and limitations.

Piggyback registration rights

Pursuant to the investors' rights agreement, if we register any of our securities either for our own account or for the account of other security holders, the holders of these shares are entitled to include their shares in the registration. Subject to certain exceptions contained in the investors' rights agreement, we and the underwriters may limit the number of shares included in the underwritten offering to the number of shares which we and the underwriters determine in our sole discretion will not jeopardize the success of the offering.

Indemnification

Our investors' rights agreement contains customary cross-indemnification provisions, under which we are obligated to indemnify holders of registrable securities in the event of material misstatements or omissions in the registration statement attributable to us, and they are obligated to indemnify us for material misstatements or omissions attributable to them.

Expiration of registration rights

The demand registration rights and short form registration rights granted under the investors' rights agreement will terminate on the fifth anniversary of the completion of this offering or at such time after this offering when the holders' shares may be sold without restriction pursuant to Rule 144 within a three-month period.

Anti-takeover effects of our certificate of incorporation and bylaws and Delaware law

Our certificate of incorporation and bylaws include a number of provisions that may have the effect of delaying, deferring or preventing another party from acquiring control of us and encouraging persons considering unsolicited tender offers or other unilateral takeover proposals to negotiate with our board of directors rather than pursue non-negotiated takeover attempts. These provisions include the items described below.

Board composition and filling vacancies

Our certificate of incorporation provides for the division of our board of directors into three classes serving staggered three-year terms, with one class being elected each year. Our certificate of incorporation also provides that directors may be removed only for cause and then only by the affirmative vote of the holders of two-thirds or more of the shares then entitled to vote at an election of directors. Furthermore, any vacancy on our board of directors, however occurring, including a vacancy resulting from an increase in the size of our board, may only be filled by the affirmative vote of a majority of our directors then in office even if less than a quorum. The classification of directors, together with the limitations on removal of directors and treatment of vacancies, has the effect of making it more difficult for stockholders to change the composition of our board of directors.

No written consent of stockholders

Our certificate of incorporation provides that all stockholder actions are required to be taken by a vote of the stockholders at an annual or special meeting, and that stockholders may not take any action by written consent in lieu of a meeting. This limit may lengthen the amount of time required to take stockholder

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actions and would prevent the amendment of our bylaws or removal of directors by our stockholders without holding a meeting of stockholders.

Meetings of stockholders

Our certificate of incorporation and bylaws provide that only a majority of the members of our board of directors then in office may call special meetings of stockholders and only those matters set forth in the notice of the special meeting may be considered or acted upon at a special meeting of stockholders. Our bylaws limit the business that may be conducted at an annual meeting of stockholders to those matters properly brought before the meeting.

Advance notice requirements

Our bylaws establish advance notice procedures with regard to stockholder proposals relating to the nomination of candidates for election as directors or new business to be brought before meetings of our stockholders. These procedures provide that notice of stockholder proposals must be timely given in writing to our corporate secretary prior to the meeting at which the action is to be taken. Generally, to be timely, notice must be received at our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary date of the annual meeting for the preceding year. Our bylaws specify the requirements as to form and content of all stockholders' notices. These requirements may preclude stockholders from bringing matters before the stockholders at an annual or special meeting.

Amendment to certificate of incorporation and bylaws

Any amendment of our certificate of incorporation must first be approved by a majority of our board of directors, and if required by law or our certificate of incorporation, must thereafter be approved by a majority of the outstanding shares entitled to vote on the amendment and a majority of the outstanding shares of each class entitled to vote thereon as a class, except that the amendment of the provisions relating to stockholder action, board composition, limitation of liability and the amendment of our bylaws and certificate of incorporation must be approved by not less than two-thirds of the outstanding shares entitled to vote on the amendment, and not less than two-thirds of the outstanding shares of each class entitled to vote thereon as a class. Our bylaws may be amended by the affirmative vote of a majority of the directors then in office, subject to any limitations set forth in the bylaws; and may also be amended by the affirmative vote of at least two-thirds of the outstanding shares entitled to vote on the amendment, or, if our board of directors recommends that the stockholders approve the amendment, by the affirmative vote of the majority of the outstanding shares entitled to vote on the amendment, in each case voting together as a single class.

Undesignated preferred stock

Our certificate of incorporation provides for 10,000,000 authorized shares of preferred stock. The existence of authorized but unissued shares of preferred stock may enable our board of directors to discourage an attempt to obtain control of us by means of a merger, tender offer, proxy contest or otherwise. For example, if in the due exercise of its fiduciary obligations, our board of directors were to determine that a takeover proposal is not in the best interests of our stockholders, our board of directors could cause shares of preferred stock to be issued without stockholder approval in one or more private offerings or other transactions that might dilute the voting or other rights of the proposed acquirer or insurgent stockholder or stockholder group. In this regard, our certificate of incorporation grants our board of directors broad power to establish the rights and preferences of authorized and unissued shares of preferred stock. The issuance of shares of preferred stock could decrease the amount of earnings and assets available for distribution to holders of shares of common stock. The issuance may also adversely

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affect the rights and powers, including voting rights, of these holders and may have the effect of delaying, deterring or preventing a change in control of us.

Choice of forum

Our certificate of incorporation provides that, unless we consent in writing to the selection of an alternative form, the Court of Chancery of the State of Delaware (or, if the Chancery Court does not have jurisdiction, the federal district court for the District of Delaware or other state courts of 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 or other wrongdoing by any of our directors, officers, employees or agents to us or our stockholders; (3) any action asserting a claim against us arising pursuant to any provision of the General Corporation Law of the State of Delaware or our certificate of incorporation or bylaws; (4) any action to interpret, apply, enforce or determine the validity of our certificate of incorporation or bylaws; or (5) any action asserting a claim governed by the internal affairs doctrine. Our certificate of incorporation also provides that any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed to have notice of and to have consented to this choice of forum provision. It is possible that a court of law could rule that the choice of forum provision contained in our restated certificate of incorporation is inapplicable or unenforceable if it is challenged in a proceeding or otherwise.

In addition, our certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the United States District Court for the District of Massachusetts will be the exclusive forum for any private action asserting violations by us or any of our directors or officers of the Securities Act, or the rules and regulations promulgated thereunder, and of all suits in equity and actions at law brought to enforce any liability or duty created by those statutes or the rules and regulations under such statutes. If any action the subject matter of which is within the scope of the preceding sentence is filed in a court other than the United States District Court for the District of Massachusetts, the plaintiff or plaintiffs shall be deemed by this provision of our certificate of incorporation to have consented to removal of the action by us to the United States District Court for the District of Massachusetts, in the case of an action filed in a state court and to have consented to transfer of the action to the United States District Court for the District of Massachusetts.

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. 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, our 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, but not the outstanding voting stock owned by the interested stockholder; or

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at or after the time the stockholder became interested, the business combination was approved by our board of directors 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.

Section 203 defines a business combination to include:

any merger or consolidation involving the corporation and the interested stockholder;

any sale, transfer, lease, pledge or other disposition involving the interested stockholder of 10% or more of the assets of the corporation;

subject to exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;

subject to exceptions, any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder;

the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation; and

In general, Section 203 defines an interested stockholder as any entity or person beneficially owning 15% or more of the outstanding voting stock of the corporation and any entity or person affiliated with or controlling or controlled by the entity or person.

Nasdaq Global Market listing

We have applied to list our common stock on The Nasdaq Global Market under the symbol "RUBY."

Transfer agent and registrar

The transfer agent and registrar for our common stock will be                       .

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Shares eligible for future sale

Prior to this offering, there has been no public market for our shares. Future sales of our common stock in the public market, or the availability of such shares for sale in the public market, could adversely affect market prices prevailing from time to time. As described below, only a limited number of shares will be available for sale shortly after this offering due to contractual and legal restrictions on resale. Nevertheless, sales of our common stock in the public market after such restrictions lapse, or the perception that those sales may occur, could adversely affect the prevailing market price at such time and our ability to raise equity capital in the future.

Based on the number of shares outstanding as of June 15, 2018, upon the completion of this offering,                  shares of our common stock will be outstanding. Of the outstanding shares, all of the shares sold in this offering will be freely tradable, except that any shares held by our affiliates, as that term is defined in Rule 144 under the Securities Act, may only be sold in compliance with the limitations described below. 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, summarized below.

Rule 144

In general, a person who has beneficially owned restricted stock for at least six months would be entitled to sell their securities provided that (i) such person is not deemed to have been one of our affiliates at the time of, or at any time during the 90 days preceding, a sale and (ii) we are subject to the Securities Exchange Act of 1934, as amended, or the Exchange Act, periodic reporting requirements for at least 90 days before the sale. Persons who have beneficially owned restricted shares for at least six months but who are our affiliates at the time of, or any time during the 90 days preceding, a sale, would be subject to additional restrictions, by which such person would be entitled to sell within any three-month period only a number of securities that does not exceed the greater of either of the following:

1% of the number of shares then outstanding, which will equal approximately                  shares immediately after this offering, assuming no exercise of the underwriters' option to purchase additional shares, based on the number of shares outstanding as of June 15, 2018; 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;

provided, in each case, that we are subject to the Exchange Act periodic reporting requirements for at least 90 days before the sale. Such sales both by affiliates and by non-affiliates must also comply with the manner of sale, current public information and notice provisions of Rule 144.

Rule 701

Rule 701 under the Securities Act, as in effect on the date of this prospectus, permits resales of shares in reliance upon Rule 144 but without compliance with certain restrictions of Rule 144, including the holding period requirement. Most of our employees, executive officers or directors who purchased shares under a written compensatory plan or contract may be entitled to rely on the resale provisions of Rule 701, but all

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holders of Rule 701 shares are required to wait until 90 days after the date of this prospectus before selling their shares.

However, substantially all Rule 701 shares are subject to lock-up agreements as described below and under "Underwriting" included elsewhere in this prospectus and will become eligible for sale upon the expiration of the restrictions set forth in those agreements.

Lock-up agreements

We, our directors and executive officers and holders of substantially all of our common stock have signed a lock-up agreement that prevent us and them from selling any of our common stock or any securities convertible into or exercisable or exchangeable for common stock for a period of not less than 180 days from the date of this prospectus without the prior written consent of the representatives of the underwriters, subject to certain exceptions. See the section entitled "Underwriting" appearing elsewhere in this prospectus for more information.

Registration rights

Upon completion of this offering, certain holders of our securities will be entitled to various rights with respect to registration of their shares under the Securities Act. Registration of these shares under the Securities Act would result in these shares becoming fully tradable without restriction under the Securities Act immediately upon the effectiveness of the registration. See the section entitled "Description of capital stock—Registration rights" appearing elsewhere in this prospectus for more information.

Equity incentive plans

We intend to file one or more registration statements on Form S-8 under the Securities Act to register our shares issued or reserved for issuance under our equity incentive plans. The first such registration statement is expected to be filed soon after the date of this prospectus and will automatically become effective upon filing with the SEC. Accordingly, shares registered under such registration statement will be available for sale in the open market, unless such shares are subject to vesting restrictions with us or the lock-up restrictions described above. As of June 15, 2018, we estimate that such registration statement on Form S-8 will cover approximately                  shares.

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Material U.S. federal income tax considerations for non-U.S. holders of common stock

The following discussion is a summary of the material U.S. federal income tax considerations applicable to non-U.S. holders (as defined below) with respect to their ownership and disposition of shares of our common stock issued pursuant to this offering. For purposes of this discussion, a non-U.S. holder means a beneficial owner of our common stock that is for U.S. federal income tax purposes:

a non-resident alien individual;

a foreign corporation or any other foreign organization taxable as a corporation for U.S. federal income tax purposes; or

a foreign estate or trust, the income of which is not subject to U.S. federal income tax on a net income basis.

This discussion does not address the tax treatment of partnerships or other entities that are pass-through entities for U.S. federal income tax purposes or persons that hold their common stock through partnerships or other pass-through entities. A partner in a partnership or other pass-through entity that will hold our common stock should consult his, her or its tax advisor regarding the tax consequences of acquiring, holding and disposing of our common stock through a partnership or other pass-through entity, as applicable.

This discussion is based on current provisions of the U.S. Internal Revenue Code of 1986, as amended, which we refer to as the Code, existing and proposed U.S. Treasury Regulations promulgated thereunder, current administrative rulings and judicial decisions, all as in effect as of the date of this prospectus and, all of which are subject to change or to differing interpretation, possibly with retroactive effect. Any such change or differing interpretation could alter the tax consequences to non-U.S. holders described in this prospectus. There can be no assurance that the Internal Revenue Service, which we refer to as the IRS, will not challenge one or more of the tax consequences described herein. We assume in this discussion that a non-U.S. holder holds shares of our common stock as a capital asset within the meaning of Section 1221 of the Code, generally property held for investment.

This discussion does not address all aspects of U.S. federal income taxation that may be relevant to a particular non-U.S. holder in light of that non-U.S. holder's individual circumstances nor does it address any U.S. state, local or non-U.S. taxes, the alternative minimum tax, the Medicare tax on net investment income, the rules regarding qualified small business stock within the meaning of Section 1202 of the Code, or any other aspect of any U.S. federal tax other than the income tax. This discussion also does not consider any specific facts or circumstances that may apply to a non-U.S. holder and does not address the special tax rules applicable to particular non-U.S. holders, such as:

insurance companies;

tax-exempt or governmental organizations;

financial institutions;

brokers or dealers in securities;

regulated investment companies;

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pension plans;

"controlled foreign corporations," "passive foreign investment companies," and corporations that accumulate earnings to avoid U.S. federal income tax;

"qualified foreign pension funds," or entities wholly owned by a "qualified foreign pension fund";

persons deemed to sell our common stock under the constructive sale provisions of the Code;

persons that hold our common stock as part of a straddle, hedge, conversion transaction, synthetic security or other integrated investment; and

certain U.S. expatriates.

This discussion is for general information only and is not tax advice. Accordingly, all prospective non-U.S. holders of our common stock should consult their tax advisors with respect to the U.S. federal, state, local and non-U.S. tax consequences of the purchase, ownership and disposition of our common stock.

Distributions on our common stock

Distributions, if any, on our common stock will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. If a distribution exceeds our current and accumulated earnings and profits, the excess will be treated as a tax-free return of the non-U.S. holder's investment, up to such holder's tax basis in the common stock. Any remaining excess will be treated as capital gain, subject to the tax treatment described below in "Gain on sale or other taxable disposition of our common stock." Any such distributions will also be subject to the discussions below under the sections titled "Backup withholding and information reporting" and "Withholding and information reporting requirements—FATCA."

Subject to the discussion in the following two paragraphs in this section, dividends paid to a non-U.S. holder generally will be subject to withholding of U.S. federal income tax at a 30% rate or such lower rate as may be specified by an applicable income tax treaty between the United States and such holder's country of residence.

Dividends that are treated as effectively connected with a trade or business conducted by a non-U.S. holder within the United States and, if an applicable income tax treaty so provides, that are attributable to a permanent establishment or a fixed base maintained by the non-U.S. holder within the United States, are generally exempt from the 30% withholding tax if the non-U.S. holder satisfies applicable certification and disclosure requirements. However, such U.S. effectively connected income, net of specified deductions and credits, is taxed at the same graduated U.S. federal income tax rates applicable to United States persons (as defined in the Code). Any U.S. effectively connected income received by a non-U.S. holder that is a corporation may also, under certain circumstances, be subject to an additional "branch profits tax" at a 30% rate or such lower rate as may be specified by an applicable income tax treaty between the United States and such holder's country of residence.

A non-U.S. holder of our common stock who claims the benefit of an applicable income tax treaty between the United States and such holder's country of residence generally will be required to provide a properly executed IRS Form W-8BEN or W-8BEN-E (or successor form) to the applicable withholding agent and satisfy applicable certification and other requirements. Non-U.S. holders are urged to consult their tax advisors regarding their entitlement to benefits under a relevant income tax treaty. A non-U.S. holder that

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is eligible for a reduced rate of U.S. withholding tax under an income tax treaty may obtain a refund or credit of any excess amounts withheld by timely filing a U.S. tax return with the IRS.

Gain on sale or other taxable disposition of our common stock

Subject to the discussions below under "Backup withholding and information reporting" and "Withholding and information reporting requirements—FATCA," a non-U.S. holder generally will not be subject to any U.S. federal income tax on any gain realized upon such holder's sale or other taxable disposition of shares of our common stock unless:

the gain is effectively connected with the non-U.S. holder's conduct of a U.S. trade or business and, if an applicable income tax treaty so provides, is attributable to a permanent establishment or a fixed-base maintained by such non-U.S. holder in the United States, in which case the non-U.S. holder generally will be taxed on a net income basis at the graduated U.S. federal income tax rates applicable to United States persons (as defined in the Code) and, if the non-U.S. holder is a foreign corporation, the branch profits tax described above in "Distributions on our common stock" also may apply;

the non-U.S. holder is a nonresident alien individual who is present in the United States for 183 days or more in the taxable year of the disposition and certain other conditions are met, in which case the non-U.S. holder will be subject to a 30% tax (or such lower rate as may be specified by an applicable income tax treaty between the United States and such holder's country of residence) on the net gain derived from the disposition, which may be offset by certain U.S. source capital losses of the non-U.S. holder, if any (even though the individual is not considered a resident of the United States), provided that the non-U.S. holder has timely filed U.S. federal income tax returns with respect to such losses; or

we are, or have been, at any time during the five-year period preceding such sale of other taxable disposition (or the non-U.S. holder's holding period, if shorter) a "U.S. real property holding corporation," unless our common stock is regularly traded on an established securities market and the non-U.S. holder holds no more than 5% of our outstanding common stock, directly or indirectly, actually or constructively, during the shorter of the 5-year period ending on the date of the disposition or the period that the non-U.S. holder held our common stock. Generally, a corporation is a U.S. real property holding corporation only if the fair market value of its U.S. real property interests 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, we do not believe that we are, or have been, a U.S. real property holding corporation, or that we are likely to become one in the future. 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.

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 such holder and the tax withheld, if any, with respect to such 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 with respect to dividends on our common stock. Dividends paid to non-U.S. holders subject to withholding of U.S. federal income tax, as described above in "Distributions on our common stock," generally will be exempt from U.S. backup withholding.

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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.

Non-U.S. holders should consult their tax advisors regarding the application of the information reporting and backup withholding rules to them. Copies of information returns may be made available to the tax authorities of the country in which the non-U.S. holder resides or 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 filed with the IRS in a timely manner.

Withholding and information reporting requirements—FATCA

Provisions of the Code commonly referred to as the Foreign Account Tax Compliance Act, or FATCA, generally impose a U.S. federal withholding tax at a rate of 30% on payments of dividends on, or gross proceeds from the sale or other disposition of, our common stock paid to a foreign entity unless (i) if the foreign entity is a "foreign financial institution," such foreign entity undertakes certain due diligence, reporting, withholding, and certification obligations, (ii) if the foreign entity is not a "foreign financial institution," such foreign entity identifies certain of its U.S. investors, if any, or (iii) the foreign entity is otherwise exempt under FATCA. Under applicable U.S. Treasury regulations, withholding under FATCA currently applies to payments of dividends on our common stock, but will only apply to payments of gross proceeds from a sale or other disposition of our common stock made after December 31, 2018. Under certain circumstances, a non-U.S. holder may be eligible for refunds or credits of this withholding tax. An intergovernmental agreement between the United States and an applicable foreign country may modify the requirements described in this paragraph. Non-U.S. holders should consult their tax advisors regarding the possible implications of this legislation 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 the 30% withholding tax under FATCA.

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Underwriting

We are offering the shares of common stock described in this prospectus through a number of underwriters. J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, Jefferies LLC and Leerink Partners LLC are acting as joint book-running managers of the offering and as representatives of the underwriters. We have entered into an underwriting agreement with the underwriters. Subject to the terms and conditions of the underwriting agreement, we have agreed to sell to the underwriters, and each underwriter has severally agreed to purchase, at the public offering price less the underwriting discounts and commissions set forth on the cover page of this prospectus, the number of shares of common stock listed next to its name in the following table:

 
   
Name
  Number of
shares

J.P. Morgan Securities LLC

           

Morgan Stanley & Co. LLC

           

Jefferies LLC

           

Leerink Partners LLC

           

Total

           

The underwriters are committed to purchase all the common shares offered by us if they purchase any shares. The underwriting agreement also provides that if an underwriter defaults, the purchase commitments of non-defaulting underwriters may also be increased or the offering may be terminated.

The underwriters propose to offer the common shares directly to the public at the initial public offering price set forth on the cover page of this prospectus and to certain dealers at that price less a concession not in excess of $              per share. Any such dealers may resell shares to certain other brokers or dealers at a discount of up to $              per share from the initial public offering price. After the initial offering of the shares to the public, if all of the common shares are not sold at the initial public offering price, the underwriters may change the offering price and the other selling terms.

The underwriters have an option to buy up to                  additional shares of common stock from us to cover sales of shares by the underwriters which exceed the number of shares specified in the table above. The underwriters have 30 days from the date of this prospectus to exercise this option to purchase additional shares. If any shares are purchased with this option to purchase additional shares, the underwriters will purchase shares in approximately the same proportion as shown in the table above. If any additional shares of common stock are purchased, the underwriters will offer the additional shares on the same terms as those on which the shares are being offered.

The underwriting fee is equal to the public offering price per share of common stock less the amount paid by the underwriters to us per share of common stock. The underwriting fee is $               per share. The following table shows the per share and total underwriting discounts and commissions to be paid to the

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underwriters assuming both no exercise and full exercise of the underwriters' option to purchase additional shares.

 
   
   
 
 
  Without option
to purchase
additional shares
exercise

  With full option
to purchase
additional shares
exercise

 

Per Share

  $             $            

Total

  $             $            

We estimate that the total expenses of this offering, including registration, filing and listing fees, printing fees and legal and accounting expenses, but excluding the underwriting discounts and commissions, will be approximately $              . We have also agreed to reimburse the underwriters for certain of their expenses in an amount up to $                .

A prospectus in electronic format may be made available on the web sites maintained by one or more underwriters, or selling group members, if any, participating in the offering. The underwriters may agree to allocate a number of shares to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives to underwriters and selling group members that may make Internet distributions on the same basis as other allocations.

We have agreed that we will not (i) offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase or otherwise dispose of, directly or indirectly, or file with the Securities and Exchange Commission a registration statement under the Securities Act relating to, any shares of our common stock or securities convertible into or exchangeable or exercisable for any shares of our common stock, or publicly disclose the intention to make any offer, sale, pledge, disposition or filing, or (ii) enter into any swap or other arrangement that transfers all or a portion of the economic consequences associated with the ownership of any shares of common stock or any such other securities (regardless of whether any of these transactions are to be settled by the delivery of shares of common stock or such other securities, in cash or otherwise), in each case without the prior written consent of the representatives for a period of 180 days after the date of this prospectus.

Our directors and executive officers, and certain of our significant shareholders have entered into lock-up agreements with the underwriters prior to the commencement of this offering pursuant to which each of these persons or entities, with limited exceptions, for a period of 180 days after the date of this prospectus, may not, without the prior written consent of the representatives, (1) offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any shares of our common stock or any securities convertible into or exercisable or exchangeable for our common stock (including, without limitation, common stock or such other securities which may be deemed to be beneficially owned by such directors, executive officers, managers and members in accordance with the rules and regulations of the SEC and securities which may be issued upon exercise of a stock option or warrant); or (2) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the common stock or such other securities, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of common stock or such other securities, in cash or otherwise; or (3) make any demand for or exercise any right with respect to the registration of any shares of our common stock or any security convertible into or exercisable or exchangeable for our common stock.

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The restrictions described in the immediately preceding paragraph do not apply to, subject to certain limitations:

transfers of shares of common stock or any security convertible into common stock as a bona fide gift or gifts, or to a charitable organization or educational institution in a transaction not involving a disposition for value;

transfers, distributions or dispositions of shares of common stock to members or stockholders of the transferor, any member of the immediate family of the transferor or any trust for the direct or indirect benefit of the transferor or the immediate family of the transferor in a transaction not involving a disposition for value;

transactions relating to shares of common stock or other securities acquired in the public offering of the securities offered by this prospectus (other than any issuer-directed shares of common stock purchased in the public offering of the securities offered by this prospectus by an officer or director of the company) or in open market transactions after the pricing of the public offering of the securities offered by this prospectus;

transfers or dispositions of shares of common stock or other securities to any corporation, partnership, limited liability company or other entity, in each case, all of the beneficial ownership interests of which are held by the undersigned or the immediate family of the undersigned in a transaction not involving a disposition for value;

transfers or dispositions of shares of common stock or other securities (x) by will, other testamentary document or intestate succession to the legal representative, heir, beneficiary or a member of the immediate family of the transferor upon the death of the transferor, or (y) by operation of law pursuant to a domestic order or negotiated divorce settlement;

transfers or dispositions of common stock or any security convertible into or exercisable or exchangeable for common stock to us pursuant to any contractual arrangement in effect on the date of such lock-up agreement that provides for the repurchase of the transferor's common stock or other securities by us or in connection with the termination of the transferor's employment with or service to us;

transfers or dispositions of shares of common stock or other securities to us in connection with the conversion of any convertible preferred stock into, or the exercise of any option or warrant for, shares of common stock;

transfers or dispositions of shares of common stock or other securities to a nominee or custodian of a person or entity to whom a disposition or transfer would be permissible under the seven preceding paragraphs;

the establishment of a trading plan pursuant to Rule 10b5-1 under the Exchange Act for the transfer of shares of common stock; or

transfers or dispositions of shares of common stock or such other securities pursuant to a bona fide tender offer for shares of our capital stock, merger, consolidation or other similar transaction made to all holders of our securities involving a change of control (as defined in the lock-up agreement) of us (including, without limitation, the entering into of any lock-up, voting or similar agreement pursuant to which the transferor may agree to transfer, sell, tender or otherwise dispose of shares of common stock or other securities in connection with such transaction) that has been approved by our board of directors.

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We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act of 1933.

We have applied to list our common stock on The Nasdaq Global Market under the symbol "RUBY."

In connection with this offering, the underwriters may engage in stabilizing transactions, which involves making bids for, purchasing and selling shares of common stock in the open market for the purpose of preventing or retarding a decline in the market price of the common stock while this offering is in progress. These stabilizing transactions may include making short sales of the common stock, which involves the sale by the underwriters of a greater number of shares of common stock than they are required to purchase in this offering, and purchasing shares of common stock on the open market to cover positions created by short sales. Short sales may be "covered" shorts, which are short positions in an amount not greater than the underwriters' option to purchase additional shares referred to above, or may be "naked" shorts, which are short positions in excess of that amount. The underwriters may close out any covered short position either by exercising their option to purchase additional shares, in whole or in part, or by purchasing shares in the open market. In making this determination, the underwriters will consider, among other things, the price of shares available for purchase in the open market compared to the price at which the underwriters may purchase shares through the option to purchase additional shares. 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 common stock in the open market that could adversely affect investors who purchase in this offering. To the extent that the underwriters create a naked short position, they will purchase shares in the open market to cover the position.

The underwriters have advised us that, pursuant to Regulation M of the Securities Act of 1933, they may also engage in other activities that stabilize, maintain or otherwise affect the price of the common stock, including the imposition of penalty bids. This means that if the representatives of the underwriters purchase common stock in the open market in stabilizing transactions or to cover short sales, the representatives can require the underwriters that sold those shares as part of this offering to repay the underwriting discount received by them.

These activities may have the effect of raising or maintaining the market price of the common stock or preventing or retarding a decline in the market price of the common stock, and, as a result, the price of the common stock may be higher than the price that otherwise might exist in the open market. If the underwriters commence these activities, they may discontinue them at any time. The underwriters may carry out these transactions on The Nasdaq Global Market, in the over-the-counter market or otherwise.

Prior to this offering, there has been no public market for our common stock. The initial public offering price will be determined by negotiations between us and the representatives of the underwriters. In determining the initial public offering price, we and the representatives of the underwriters expect to consider a number of factors including:

the information set forth in this prospectus and otherwise available to the representatives;

our prospects and the history and prospects for the industry in which we compete;

an assessment of our management;

our prospects for future earnings;

the general condition of the securities markets at the time of this offering;

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the recent market prices of, and demand for, publicly traded common stock of generally comparable companies; and

other factors deemed relevant by the underwriters and us.

Neither we nor the underwriters can assure investors that an active trading market will develop for our common stock, or that the shares will trade in the public market at or above the initial public offering price.

Other than in the United States, no action has been taken by us or the underwriters that would permit a public offering of the securities offered by this prospectus in any jurisdiction where action for that purpose is required. The securities offered by this prospectus may not be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in connection with the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are advised to inform themselves about and to observe any restrictions relating to the offering and the distribution of this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered by this prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.

Notice to prospective investors in the European Economic Area

In relation to each Member State of the European Economic Area (each, a "Relevant Member State"), no offer of shares may be made to the public in that Relevant Member State other than:

A.     to any legal entity which is a qualified investor as defined in the Prospectus Directive;

B.     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 representatives; or

C.     in any other circumstances falling within Article 3(2) of the Prospectus Directive,

provided that no such offer of shares shall require the company or the representatives to publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to Article 16 of the Prospectus Directive.

Each person in a Relevant Member State who initially acquires any shares or to whom any offer is made will be deemed to have represented, acknowledged and agreed that it is a "qualified investor" within the meaning of the law in that Relevant Member State implementing Article 2(1)(e) of the Prospectus Directive. In the case of any shares being offered to a financial intermediary as that term is used in Article 3(2) of the Prospectus Directive, each such financial intermediary will be deemed to have represented, acknowledged and agreed that the shares acquired by it in the offer have not been acquired on a non-discretionary basis on behalf of, nor have they been acquired with a view to their offer or resale to, persons in circumstances which may give rise to an offer of any shares to the public other than their offer or resale in a Relevant Member State to qualified investors as so defined or in circumstances in which the prior consent of the representatives has been obtained to each such proposed offer or resale.

The company, the representatives and their affiliates will rely upon the truth and accuracy of the foregoing representations, acknowledgements and agreements.

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This prospectus has been prepared on the basis that any offer of shares in any Relevant Member State will be made pursuant to an exemption under the Prospectus Directive from the requirement to publish a prospectus for offers of shares. Accordingly any person making or intending to make an offer in that Relevant Member State of shares which are the subject of the offering contemplated in this prospectus may only do so in circumstances in which no obligation arises for the company or any of the underwriters to publish a prospectus pursuant to Article 3 of the Prospectus Directive in relation to such offer. Neither the company nor the underwriters have authorized, nor do they authorize, the making of any offer of shares in circumstances in which an obligation arises for the company or the underwriters to publish a prospectus for such offer.

For the purpose of the above provisions, the expression "an offer to the public" in relation to any shares 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 the shares, as the same may be varied in the Relevant Member State by any measure implementing the Prospectus Directive in the Relevant Member State and the expression "Prospectus Directive" means Directive 2003/71/EC (including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member States) and includes any relevant implementing measure in the Relevant Member State and the expression "2010 PD Amending Directive" means Directive 2010/73/EU.

Notice to prospective investors in the United Kingdom

In addition, in the United Kingdom, this document is being distributed only to, and is directed only at, and any offer subsequently made may only be directed at persons who are "qualified investors" (as defined in the Prospectus Directive) (i) who have professional experience in matters relating to investments falling within Article 19 (5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order") and/or (ii) who are high net worth companies (or persons to whom it may otherwise be lawfully communicated) falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons").

Any person in the United Kingdom that is not a relevant person should not act or rely on the information included in this document or use it as basis for taking any action. In the United Kingdom, any investment or investment activity that this document relates to may be made or taken exclusively by relevant persons. 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 Switzerland

The shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange, or the SIX, or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the shares or the offering may be publicly distributed or otherwise made publicly available in Switzerland.

Neither this document nor any other offering or marketing material relating to this offering, our Company, or the shares have been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of shares will not be supervised by, the Swiss Financial Market Supervisory Authority, and the offer of shares has not been and will not be authorized under the

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Swiss Federal Act on Collective Investment Schemes, or CISA. The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of shares.

Notice to prospective investors in the Dubai International Financial Centre

This prospectus relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority, or DFSA. This prospectus is intended for distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this prospectus nor taken steps to verify the information set forth herein and has no responsibility for this prospectus. The shares to which this prospectus relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the shares offered should conduct their own due diligence on the shares. If you do not understand the contents of this prospectus you should consult an authorized financial advisor.

Notice to prospective investors in Australia

No placement document, prospectus, product disclosure statement or other disclosure document has been lodged with the Australian Securities and Investments Commission, in relation to this offering. This prospectus does not constitute a prospectus, product disclosure statement or other disclosure document under the Corporations Act 2001, or the Corporations Act, and does not purport to include the information required for a prospectus, product disclosure statement or other disclosure document under the Corporations Act.

Any offer in Australia of the shares may only be made to persons, or the Exempt Investors, who are "sophisticated investors" (within the meaning of section 708(8) of the Corporations Act), "professional investors" (within the meaning of section 708(11) of the Corporations Act) or otherwise pursuant to one or more exemptions contained in section 708 of the Corporations Act so that it is lawful to offer the shares without disclosure to investors under Chapter 6D of the Corporations Act.

The shares applied for by Exempt Investors in Australia must not be offered for sale in Australia in the period of 12 months after the date of allotment under this offering, except in circumstances where disclosure to investors under Chapter 6D of the Corporations Act would not be required pursuant to an exemption under section 708 of the Corporations Act or otherwise or where the offer is pursuant to a disclosure document which complies with Chapter 6D of the Corporations Act. Any person acquiring shares must observe such Australian on-sale restrictions. This prospectus contains general information only and does not take account of the investment objectives, financial situation or particular needs of any particular person. It does not contain any securities recommendations or financial product advice. Before making an investment decision, investors need to consider whether the information in this prospectus is appropriate to their needs, objectives and circumstances, and, if necessary, seek expert advice on those matters.

Notice to prospective investors in Hong Kong

The shares have not been offered or sold, and will not be offered or sold, in Hong Kong, by means of any document, other than (a) to "professional investors" as defined in the SFO (Cap. 571) of Hong Kong and any rules made under that Ordinance; or (b) in other circumstances which do not result in the document being a "prospectus" as defined in the Companies Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance. No advertisement, invitation or document relating to the shares has been or may be issued or has been or may be in the possession of

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any person for the purposes of issue, 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 of Hong Kong (except if permitted to do so under the securities 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" as defined in the SFO and any rules made under that Ordinance.

Notice to prospective investors in Japan

The shares have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948, as amended) and, accordingly, will not be offered or sold, directly or indirectly, in Japan, or for the benefit of any Japanese Person or to others for re-offering or resale, directly or indirectly, in Japan or to any Japanese Person, except in compliance with all applicable laws, regulations and ministerial guidelines promulgated by relevant Japanese governmental or regulatory authorities in effect at the relevant time. For the purposes of this paragraph, "Japanese Person" shall mean any person resident in Japan, including any corporation or other entity organized under the laws of Japan.

Notice to prospective investors in Singapore

This prospectus has not been registered as a prospectus with the MAS. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of shares may not be circulated or distributed, nor may 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 SFA, Chapter 289 of Singapore, or 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.

Where the shares are subscribed or purchased under Section 275 of the SFA by a relevant person which is:

(a)    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

(b)   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,

securities (as defined in Section 239(1) of the SFA) 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:

(a)    to an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;

(b)   where no consideration is or will be given for the transfer;

(c)    where the transfer is by operation of law;

(d)   as specified in Section 276(7) of the SFA; or

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(e)    as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 of Singapore.

Notice to prospective investors in Canada

The shares may be sold only to purchasers purchasing, or deemed to be purchasing, that are accredited investors, as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are permitted clients, as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the shares must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser's province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser's province or territory for particulars of these rights or consult with a legal advisor.

Pursuant to section 3A.3 (or, in the case of securities issued or guaranteed by the government of a non-Canadian jurisdiction, section 3A.4) of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.

Other relationships

Certain of the underwriters and their affiliates have provided in the past to us and our affiliates and may provide from time to time in the future certain commercial banking, financial advisory, investment banking and other services for us and such affiliates in the ordinary course of their business, for which they have received and may continue to receive customary fees and commissions. In addition, from time to time, certain of the underwriters and their affiliates may effect transactions for their own account or the account of customers, and hold on behalf of themselves or their customers, long or short positions in our debt or equity securities or loans, and may do so in the future.

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Legal matters

The validity of the shares of common stock offered by this prospectus will be passed upon for us by Goodwin Procter LLP, Boston, Massachusetts. Certain legal matters related to this offering will be passed upon for the underwriters by Latham & Watkins LLP. Certain partners of Latham & Watkins LLP have an indirect interest in less than 1% of our common stock through investments in entities that, in turn, have investments in Rubius Therapeutics, Inc.

Experts

The financial statements as of December 31, 2017 and 2016 and for the years then ended included in this prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

Where you can find more information

We have filed with the SEC a registration statement on Form S-1 (File Number 333-              ) under the Securities Act with respect to the common stock we are offering by this prospectus. This prospectus does not contain all of the information included in the registration statement. For further information pertaining to us and our common stock, you should refer to the registration statement and to its exhibits. Whenever we make reference in this prospectus to any of our contracts, agreements or other documents, the references are not necessarily complete, and you should refer to the exhibits attached to the registration statement for copies of the actual contract, agreement or other document.

Upon the completion of the offering, we will be subject to the informational requirements of the Exchange Act and will file annual, quarterly and current reports, proxy statements and other information with the SEC. You can read our SEC filings, including the registration statement, at the SEC's website at www.sec.gov. You may also read and copy any document we file with the SEC at its public reference facility at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. We also maintain a website at www.rubiustx.com. Upon completion of the offering, you may access, free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendment to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC.

You may also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference facilities.

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Index to consolidated financial statements

 
  Page
 

Report of independent registered public accounting firm

    F-2  

Consolidated balance sheets

    F-3  

Consolidated statements of operations and comprehensive loss

    F-4  

Consolidated statements of convertible preferred stock and stockholders' deficit

    F-5  

Consolidated statements of cash flows

    F-6  

Notes to consolidated financial statements

    F-7  

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Rubius Therapeutics, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Rubius Therapeutics, Inc. and its subsidiary as of December 31, 2017 and 2016, and the related consolidated statements of operations and comprehensive loss, of convertible preferred stock and stockholders' deficit and of cash flows for the years then ended, including the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

Boston, Massachusetts
April 13, 2018

We have served as the Company's auditor since 2016.

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Rubius Therapeutics, Inc.
Consolidated balance sheets

 
   
   
   
   
 
 
  December 31,    
  Pro forma
March 31,
2018

 
(In thousands, except share and per share amounts)
  March 31,
2018

 
  2016
  2017
 
 
   
   
  (unaudited)
  (unaudited)
 

Assets

                         

Current assets:

                         

Cash and cash equivalents

  $ 6,834   $ 104,288   $ 136,471   $ 136,471  

Marketable securities

            56,152     56,152  

Prepaid expenses and other current assets

    53     700     838     838  

Restricted cash

            122     122  

Total current assets

    6,887     104,988     193,583     193,583  

Property and equipment, net

    868     2,415     14,251     14,251  

Restricted cash

    234     284     1,102     1,102  

Deferred offering costs

            794     794  

Total assets

  $ 7,989   $ 107,687   $ 209,730   $ 209,730  

Liabilities, Convertible Preferred Stock and Stockholders' Equity (Deficit)

                         

Current liabilities:

                         

Accounts payable

  $ 1,180   $ 2,033   $ 2,910   $ 2,910  

Accrued expenses and other current liabilities

    739     2,986     5,341     5,341  

Current portion of long-term debt

    933     2,139     3,056     3,056  

Total current liabilities

    2,852     7,158     11,307     11,307  

Long-term debt, net of discount and current portion

    2,991     3,302     2,398     2,398  

Deferred rent

    136     158     163     163  

Preferred stock warrant liability

    67     866     909      

Liability for early exercise of stock options

        100     100     100  

Lease liability, net of current portion

            9,603     9,603  

Total liabilities

    6,046     11,584     24,480     23,571  

Commitments and contingencies (Note 12)

                         

Convertible preferred stock (Series A, B and C), $0.001 par value; 29,703,995 and 44,070,808 shares authorized at December 31, 2016 and 2017, respectively, and 51,981,005 shares authorized at March 31, 2018 (unaudited); 29,570,662 and 43,933,006 shares issued and outstanding at December 31, 2016 and 2017, respectively, and 51,845,438 shares issued and outstanding at March 31, 2018 (unaudited); liquidation preference of $138,242 at December 31, 2017 and $239,442 at March 31, 2018 (unaudited); no shares issued or outstanding, pro forma at March 31, 2018 (unaudited)

   
19,067
   
139,790
   
240,776
   
 

Stockholders' equity (deficit):

                         

Common stock, $0.001 par value; 45,500,000 and 65,000,000 shares authorized at December 31, 2016 and 2017, respectively, and 75,000,000 shares authorized at March 31, 2018 (unaudited); 7,886,292 and 14,977,317 shares issued and outstanding at December 31, 2016 and 2017, respectively, and 14,997,067 shares issued and outstanding at March 31, 2018 (unaudited); 66,842,505 shares issued and outstanding, pro forma at March 31, 2018 (unaudited)

    8     15     15     67  

Additional paid-in capital

        17,277     20,738     262,371  

Accumulated other comprehensive loss

            (45 )   (45 )

Accumulated deficit

    (17,132 )   (60,979 )   (76,234 )   (76,234 )

Total stockholders' equity (deficit)

    (17,124 )   (43,687 )   (55,526 )   186,159  

Total liabilities, convertible preferred stock and stockholders' equity (deficit)

  $ 7,989   $ 107,687   $ 209,730   $ 209,730  

   

The accompanying notes are an integral part of these consolidated financial statements.

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Rubius Therapeutics, Inc.
Consolidated statements of operations and comprehensive loss

 
   
   
   
   
 
 
  Year ended
December 31,
  Three months ended
March 31,
 
(In thousands, except share and per share amounts)
 
  2016
  2017
  2017
  2018
 
 
   
   
  (unaudited)
  (unaudited)
 

Revenue

  $   $   $   $  

Operating expenses:

                         

Research and development

    8,403     21,226     3,681     9,650  

General and administrative

    2,449     22,038     1,102     5,797  

Total operating expenses

    10,852     43,264     4,783     15,447  

Loss from operations

    (10,852 )   (43,264 )   (4,783 )   (15,447 )

Other income (expense):

                         

Change in fair value of preferred stock warrant liability

    1     (785 )   (24 )   (43 )

Interest expense

    (149 )   (309 )   (50 )   (83 )

Interest income and other expense, net

    (16 )   511         318  

Total other income (expense), net

    (164 )   (583 )   (74 )   192  

Net loss

    (11,016 )   (43,847 )   (4,857 )   (15,255 )

Accretion of Series A redeemable convertible preferred stock to redemption value

    (748 )   (656 )   (376 )    

Net loss attributable to common stockholders

  $ (11,764 ) $ (44,503 ) $ (5,233 ) $ (15,255 )

Net loss per share attributable to common stockholders, basic and diluted

  $ (1.63 ) $ (5.55 ) $ (0.68 ) $ (1.83 )

Weighted average common shares outstanding, basic and diluted

    7,200,581     8,023,785     7,661,727     8,355,276  

Pro forma net loss per share attributable to common stockholders, basic and diluted (unaudited)

        $ (0.94 )       $ (0.27 )

Pro forma weighted average common shares outstanding, basic and diluted (unaudited)

          45,710,931           55,453,255  

Comprehensive loss:

                         

Net loss

  $ (11,016 ) $ (43,847 ) $ (4,857 ) $ (15,255 )

Other comprehensive loss:

                         

Unrealized losses on marketable securities, net of tax of $0

                (45 )

Comprehensive loss

  $ (11,016 ) $ (43,847 ) $ (4,857 ) $ (15,300 )

   

The accompanying notes are an integral part of these consolidated financial statements.

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Rubius Therapeutics, Inc.
Consolidated statements of convertible preferred stock and stockholders' deficit

 
   
   
   
   
   
   
   
   
   
 
 
   
   
   
   
   
   
   
   
   
 
 
   
   
   
   
   
   
   
   
   
 
 
   
   
   
   
   
   
   
   
   
 
 
   
   
   
   
   
   
   
   
   
 
 
   
   
   
   
   
   
   
   
   
 
 
  Convertible
preferred stock
   
   
   
   
  Accumulated
other
compre-
hensive
loss

   
   
 
 
   
  Common stock   Additional
paid-in
capital

   
  Total
stockholders'
deficit

 
(In thousands, except share amounts)
   
  Accumulated
deficit

 
  Shares
  Amount
   
  Shares
  Amount
 

Balances at December 31, 2015

    10,487,329   $ 6,882         7,505,000   $ 8   $   $   $ (5,570 ) $ (5,562 )

Issuance of Series A redeemable convertible preferred stock, net of issuance costs of $13

    19,083,333     11,437                              

Issuance of common stock for technology license

                366,667         55             55  

Issuance of common stock upon exercise of stock options

                14,625                      

Stock-based compensation expense

                        147             147  

Accretion of Series A redeemable convertible preferred stock to redemption value

        748                 (202 )       (546 )   (748 )

Net loss

                                (11,016 )   (11,016 )

Balances at December 31, 2016

    29,570,662     19,067         7,886,292     8             (17,132 )   (17,124 )

Issuance of Series B convertible preferred stock, net of issuance costs of $433

    14,362,344     120,067                              

Issuance of common stock upon exercise of stock options

                250,572         37             37  

Issuance of common stock for one-time bonus payment

                213,439                      

Issuance of restricted common stock upon early exercise of stock options

                1,400,000     1     (1 )            

Issuance of restricted common stock

                5,227,014     6     (6 )            

Stock-based compensation expense

                        17,903             17,903  

Accretion of Series A redeemable convertible preferred stock to redemption value

        656                 (656 )           (656 )

Net loss

                                (43,847 )   (43,847 )

Balances at December 31, 2017

    43,933,006     139,790         14,977,317     15     17,277         (60,979 )   (43,687 )

Issuance of Series C convertible preferred stock, net of issuance costs of $214

    7,912,432     100,986                              

Issuance of common stock upon exercise of stock options

                19,750         4             4  

Stock-based compensation expense

                        3,457             3,457  

Unrealized losses on marketable securities, net of tax of $0

                            (45 )       (45 )

Net loss

                                (15,255 )   (15,255 )

Balances at March 31, 2018 (unaudited)

    51,845,438   $ 240,776         14,997,067   $ 15   $ 20,738   $ (45 ) $ (76,234 ) $ (55,526 )

   

The accompanying notes are an integral part of these consolidated financial statements.

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Rubius Therapeutics, Inc.
Consolidated statements of cash flows

 
   
   
   
   
 
 
  Year ended
December 31,
  Three months ended
March 31,
 
(In thousands)
  2016
  2017
  2017
  2018
 
 
   
   
  (unaudited)
  (unaudited)
 

Cash flows from operating activities:

                         

Net loss

  $ (11,016 ) $ (43,847 ) $ (4,857 ) $ (15,255 )

Adjustments to reconcile net loss to net cash used in operating activities:

                         

Stock-based compensation expense

    147     17,903     860     3,457  

Depreciation and amortization expense

    118     447     48     227  

Issuance of common stock for technology license

    55              

Change in fair value of preferred stock warrant liability

    (1 )   785     24     43  

Accretion of discount on marketable securities

                (49 )

Loss on disposal of property and equipment

    29              

Non-cash interest expense

    27     42     6     13  

Changes in operating assets and liabilities:

                         

Prepaid expenses and other current assets

    (36 )   (647 )   (17 )   (138 )

Accounts payable

    589     1,110     937     452  

Accrued expenses and other current liabilities

    618     2,247     (76 )   206  

Deferred rent

    (32 )   22     (17 )   155  

Net cash used in operating activities

    (9,502 )   (21,938 )   (3,092 )   (10,889 )

Cash flows from investing activities:

                         

Purchases of property and equipment

    (443 )   (2,251 )   (271 )   (830 )

Purchases of marketable securities

                (56,148 )

Net cash used in investing activities

    (443 )   (2,251 )   (271 )   (56,978 )

Cash flows from financing activities:

                         

Proceeds from issuance of redeemable convertible and convertible preferred stock, net of issuance costs

    11,437     120,067         100,986  

Proceeds from issuance of common stock upon exercise of stock options

        37     28     4  

Proceeds from sale of restricted common stock

        100          

Payments of debt issuance costs

    (19 )   (11 )        

Proceeds from borrowings under loan and security agreement

    4,000     1,500          

Net cash provided by financing activities

    15,418     121,693     28     100,990  

Net increase (decrease) in cash, cash equivalents and restricted cash

    5,473     97,504     (3,335 )   33,123  

Cash, cash equivalents and restricted cash at beginning of period

    1,595     7,068     7,068     104,572  

Cash, cash equivalents and restricted cash at end of period

  $ 7,068   $ 104,572   $ 3,733   $ 137,695  

Supplemental cash flow information:

                         

Cash paid for interest

  $ 115   $ 265   $ 50   $ 79  

Supplemental disclosure of non-cash investing and financing information:

                         

Accretion of Series A redeemable convertible preferred stock to redemption value

  $ 748   $ 656   $ 376   $  

Purchases of property and equipment included in accounts payable

  $ 266   $ 9   $   $ 223  

Landlord incentives for leasehold improvements recorded as deferred rent

  $ 100   $   $   $  

Issuance of preferred stock warrant in connection with loan and security agreement

  $   $ 14   $   $  

Amounts capitalized under build-to-suit lease transaction

  $   $   $   $ 11,019  

Deferred offering costs included in accounts payable and accrued expenses

  $   $   $   $ 794  

   

The accompanying notes are an integral part of these consolidated financial statements.

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Rubius Therapeutics, Inc.
Notes to consolidated financial statements

1.     Nature of the business and basis of presentation

Rubius Therapeutics, Inc. ("Rubius" or the "Company") is a therapeutics company focused on using its platform to develop red cell therapeutics for the treatment of patients with severe diseases. Rubius was incorporated in April 2013 as VL26, Inc. under the laws of the State of Delaware. In January 2015, the Company changed its name to Rubius Therapeutics, Inc.

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations, the ability to establish clinical- and commercial-scale manufacturing processes and the ability to secure additional capital to fund operations. In addition, the Company is subject to uncertainty regarding the performance and safety of red cell therapeutics in humans. Product candidates currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. Even if the Company's drug development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from product sales.

The accompanying consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business. Through December 31, 2017 and March 31, 2018 (unaudited), the Company has funded its operations with proceeds from sales of convertible preferred stock and borrowings under a loan and security agreement. Since inception, the Company has incurred recurring losses, including net losses of $11.0 million for the year ended December 31, 2016, $43.8 million for the year ended December 31, 2017 and $15.3 million for the three months ended March 31, 2018 (unaudited). As of December 31, 2017 and March 31, 2018 (unaudited), the Company had an accumulated deficit of $61.0 million and $76.2 million, respectively. The Company expects to continue to generate operating losses in the foreseeable future. As of April 13, 2018, the issuance date of the annual consolidated financial statements for the year ended December 31, 2017, the Company expected that its cash and cash equivalents, together with the $101.2 million of gross proceeds it received from the sale of Series C convertible preferred stock in February 2018 (see Note 7), would be sufficient to fund its operating expenses, capital expenditure requirements and debt service payments through at least 12 months from the issuance date of the annual consolidated financial statements.

As of May 24, 2018 (unaudited), the issuance date of the interim consolidated financial statements for the three months ended March 31, 2018, the Company expects that its cash, cash equivalents and marketable securities will be sufficient to fund its operating expenses, capital expenditure requirements and debt service payments through at least 12 months from the issuance date of the interim consolidated financial statements.

The Company is seeking to complete an initial public offering ("IPO") of its common stock. Upon the completion of a qualified public offering on specified terms, the Company's outstanding convertible preferred stock will automatically convert into shares of common stock (see Note 7).

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Rubius Therapeutics, Inc.
Notes to consolidated financial statements (Continued)

In the event the Company does not complete an IPO, the Company expects to seek additional funding through private equity financings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. The Company may not be able to obtain financing on acceptable terms, or at all, and the Company may not be able to enter into collaborations or other arrangements. The terms of any financing may adversely affect the holdings or the rights of the Company's stockholders. If the Company is unable to obtain funding, the Company could be forced to delay, reduce or eliminate some or all of its research and development programs, product portfolio expansion or commercialization efforts, which could adversely affect its business prospects. Although management continues to pursue these plans, there is no assurance that the Company will be successful in obtaining sufficient funding on terms acceptable to the Company to fund continuing operations, if at all.

The Company's consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP").

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation.

2.     Summary of significant accounting policies

    Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, the accrual of research and development expenses, the valuation of common stock, the valuation of stock-based awards and the valuation of the preferred stock warrant liability. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates as there are changes in circumstances, facts and experience. Actual results may differ from those estimates or assumptions.

    Unaudited interim financial information

The accompanying consolidated balance sheet as of March 31, 2018, the consolidated statements of operations and comprehensive loss and of cash flows for the three months ended March 31, 2017 and 2018, and the consolidated statement of convertible preferred stock and stockholders' deficit for the three months ended March 31, 2018 are unaudited. The unaudited interim consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company's financial position as of March 31, 2018 and the results of its operations and its cash flows for the three months ended March 31, 2017 and 2018. The financial data and other information disclosed in these notes related to the three months ended March 31, 2017 and 2018 are also unaudited. The results for the three months ended March 31, 2018 are not necessarily indicative of results to be expected for the year ending December 31, 2018, any other interim periods, or any future year or period.

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Rubius Therapeutics, Inc.
Notes to consolidated financial statements (Continued)

    Unaudited pro forma information

The accompanying unaudited pro forma consolidated balance sheet as of March 31, 2018 has been prepared to give effect, upon the closing of a qualified IPO, to (i) the automatic conversion of all outstanding shares of convertible preferred stock into 51,845,438 shares of common stock and (ii) all warrants to purchase convertible preferred stock becoming warrants to purchase common stock as if the proposed IPO had occurred on March 31, 2018.

In the accompanying consolidated statements of operations and comprehensive loss, the unaudited pro forma basic and diluted net loss per share attributable to common stockholders for the year ended December 31, 2017 and three months ended March 31, 2018 have been prepared to give effect, upon the closing of a qualified IPO, to (i) the automatic conversion of all outstanding shares of convertible preferred stock into shares of common stock and (ii) all warrants to purchase convertible preferred stock becoming warrants to purchase common stock as if the proposed IPO had occurred on the later of January 1, 2017 or the issuance date of the convertible preferred stock or preferred stock warrants.

    Concentrations of credit risk and of significant suppliers

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents. As of December 31, 2017 and March 31, 2018 (unaudited), the Company did not maintain cash balances in excess of federally insured limits. The Company's cash equivalents as of December 31, 2017 consisted of U.S. government money market funds, and its cash equivalents as of March 31, 2018 (unaudited) consisted of U.S. government money market funds and U.S. government agency bonds. The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

The Company relies, and expects to continue to rely, on a small number of vendors to manufacture supplies and raw materials for its development programs. These programs could be adversely affected by a significant interruption in these manufacturing services or the availability of raw materials.

    Deferred offering costs

The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After consummation of an equity financing, these costs are recorded in stockholders' equity (deficit) as a reduction of additional paid-in capital generated as a result of the offering. Should the in-process equity financing be abandoned, the deferred offering costs will be expensed immediately as a charge to operating expenses in the statements of operations and comprehensive loss. The Company did not record any deferred offering costs as of December 31, 2016 and 2017. As of March 31, 2018 (unaudited), deferred offering costs of $0.8 million were recorded in the consolidated balance sheet.

    Deferred financing costs

The Company capitalizes certain legal and other third-party fees that are directly associated with obtaining access to capital under credit facilities. Deferred financing costs incurred in connection with obtaining access to capital are recorded in prepaid expenses and other current assets and are amortized over the term of the credit facility. Deferred financing costs related to a recognized debt liability are recorded as a

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Rubius Therapeutics, Inc.
Notes to consolidated financial statements (Continued)

reduction of the carrying amount of the debt liability and amortized to interest expense using the effective interest method over the repayment term.

    Cash equivalents

The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents.

    Restricted cash

As of December 31, 2016, the Company held a certificate of deposit of less than $0.1 million to collateralize a credit card account with its bank. As of December 31, 2016 and 2017 and March 31, 2018 (unaudited), the Company maintained letters of credit totaling $0.2 million, $0.3 million and $1.2 million, respectively, for the benefit of the landlords of its leased properties. The Company was required to maintain separate cash balances of $0.2 million, $0.3 million and $1.2 million as of December 31, 2016 and 2017 and March 31, 2018 (unaudited), respectively, to secure the letters of credit. Related to these separate cash balances, the Company classified $0.2 million, $0.3 million and $1.1 million as restricted cash (non-current) in its consolidated balance sheet as of December 31, 2016 and 2017 and March 31, 2018 (unaudited), respectively, and classified $0.1 million as restricted cash (current) in its consolidated balance sheet as of March 31, 2018 (unaudited).

    Property and equipment

Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization expense is recognized using the straight-line method over the estimated useful life of each asset as follows:

 
   
 
  Estimated useful life
Laboratory equipment   5 years
Computer equipment   3 years
Furniture and fixtures   7 years
Leasehold improvements   Shorter of life of lease or 10 years

Costs for capital assets not yet placed into service are capitalized as construction-in-progress and depreciated once placed into service. Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation and amortization are removed from the accounts and any resulting gain or loss is included in loss from operations. Expenditures for repairs and maintenance are charged to expense as incurred.

    Impairment of long-lived assets

Long-lived assets consist of property and equipment. Long-lived assets to be held and used are tested for recoverability whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. Factors that the Company considers in deciding when to perform an impairment review include significant underperformance of the business in relation to expectations, significant negative industry or economic trends and significant changes or planned changes in the use of the assets. If an impairment review is performed to evaluate a long-lived asset group for recoverability, the

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Rubius Therapeutics, Inc.
Notes to consolidated financial statements (Continued)

Company compares forecasts of undiscounted cash flows expected to result from the use and eventual disposition of the long-lived asset group to its carrying value. An impairment loss would be recognized in loss from operations when estimated undiscounted future cash flows expected to result from the use of an asset group are less than its carrying amount. The impairment loss would be based on the excess of the carrying value of the impaired asset group over its fair value, determined based on discounted cash flows. The Company did not record any impairment losses on long-lived assets during the years ended December 31, 2016 or 2017 or the three months ended March 31, 2017 or 2018 (unaudited).

    Fair value measurements

Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The Company's cash equivalents and marketable securities, consisting of money market funds, U.S. treasury notes and U.S. government agency bonds, and preferred stock warrant liability are carried at fair value, determined according to the fair value hierarchy described above (see Note 3). The carrying values of the Company's accounts payable and accrued expenses approximate their fair values due to the short-term nature of these liabilities. The carrying value of the Company's long-term debt approximates its fair value due to its variable interest rate, which approximates a market interest rate.

    Marketable securities

The Company's marketable securities are classified as available-for-sale and are carried at fair value, with the unrealized gains and losses reported as a component of accumulated other comprehensive income (loss) in stockholders' equity (deficit). Realized gains and losses and declines in value determined to be other than temporary are based on the specific identification method and are included as a component of other income (expense), net in the consolidated statements of operations and comprehensive loss. The Company classifies its marketable securities with maturities beyond one year as short-term, based on their highly liquid nature and because such marketable securities are available for current operations.

The Company evaluates its marketable securities with unrealized losses for other-than-temporary impairment. When assessing marketable securities for other-than-temporary declines in value, the Company

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Rubius Therapeutics, Inc.
Notes to consolidated financial statements (Continued)

considers such factors as, among other things, how significant the decline in value is as a percentage of the original cost, how long the market value of the investment has been less than its original cost, the Company's ability and intent to retain the investment for a period of time sufficient to allow for any anticipated recovery in fair value and market conditions in general. If any adjustment to fair value reflects a decline in the value of the investment that the Company considers to be "other than temporary," the Company reduces the investment to fair value through a charge to the statement of operations and comprehensive loss. No such adjustments were necessary during the periods presented.

    Classification and accretion of convertible preferred stock

The carrying value of the Company's Series A redeemable convertible preferred stock was being accreted to its redemption value from the date of issuance of such shares through the earliest date of redemption. During the year ended December 31, 2017, the redemption rights were removed from the Series A redeemable convertible preferred stock (see Note 7), and as such, the Company no longer records adjustments to the carrying value of its outstanding convertible preferred stock for accretion to redemption value. The Company's Series A, Series B and Series C convertible preferred stock are classified outside of stockholders' equity (deficit) because the holders of such shares have liquidation rights in the event of a deemed liquidation that, in certain situations, is not solely within the control of the Company.

    Segment information

The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions. The Company is developing red cell therapeutics for the treatment of patients with severe diseases. All of the Company's tangible assets are held in the United States.

    Research and development costs

Research and development costs are expensed as incurred. Research and development expenses consist of costs incurred in performing research and development activities, including salaries and bonuses, stock-based compensation, employee benefits, facilities costs, laboratory supplies, depreciation, manufacturing expenses and external costs of vendors engaged to conduct preclinical development activities and clinical trials as well as the cost of licensing technology.

Upfront payments and milestone payments made for the licensing of technology are expensed as research and development in the period in which they are incurred. Advance payments for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. The prepaid amounts are expensed as the related goods are delivered or the services are performed.

    Research and manufacturing contract costs and accruals

The Company has entered into various research and development and manufacturing contracts. These agreements are generally cancelable, and related payments are recorded as the corresponding expenses are incurred. The Company records accruals for estimated ongoing costs. When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the research studies or clinical trials and manufacturing activities, including the phase or completion of events, invoices received and contracted costs. Significant judgments and estimates are made in determining the accrued balances at the end of any

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Rubius Therapeutics, Inc.
Notes to consolidated financial statements (Continued)

reporting period. Actual results could differ from the Company's estimates. The Company's historical accrual estimates have not been materially different from the actual costs.

    Patent costs

All patent-related costs incurred in connection with filing and prosecuting patent applications are expensed as incurred due to the uncertainty about the recovery of the expenditure. Amounts incurred are classified as general and administrative expenses.

    Stock-based compensation

The Company measures stock-based awards granted to employees and directors based on the fair value on the date of grant using the Black-Scholes option-pricing model for options or the difference between the purchase price per share of the award, if any, and the fair value of the Company's common stock for restricted common stock awards. Compensation expense for those awards is recognized over the requisite service period, which is generally the vesting period of the respective award. The Company uses the straight-line method to record the expense of awards with service-based vesting conditions. The Company uses the graded-vesting method to record the expense of awards with both service-based and performance-based vesting conditions, commencing when achievement of the performance condition becomes probable.

The Company measures the fair value of stock-based awards granted to non-employees on the date that the related service is complete, which is generally the vesting date of the award. Prior to the service completion date, compensation expense is recognized over the period during which services are rendered by such non-employees. At the end of each financial reporting period prior to the service completion date, the fair value of these awards is remeasured using the then-current fair value of the Company's common stock and updated assumption inputs in the Black-Scholes option-pricing model for options or the difference between the purchase price per share of the award, if any, and the then-current fair value of the Company's common stock for restricted common stock awards.

In addition, for restricted stock awards under which restricted common stock is purchased by the holder with a promissory note treated as a nonrecourse note for accounting purposes, the Company measures the fair value of the award using the Black-Scholes option-pricing model.

The Company classifies stock-based compensation expense in its consolidated statements of operations and comprehensive loss in the same manner in which the award recipient's payroll costs are classified or in which the award recipient's service payments are classified.

    Comprehensive loss

Comprehensive loss includes net loss as well as other changes in stockholders' equity (deficit) that result from transactions and economic events other than those with stockholders. For the years ended December 31, 2016 and 2017 and the three months ended March 31, 2017 (unaudited), there was no difference between net loss and comprehensive loss in the accompanying consolidated financial statements. For the three months ended March 31, 2018 (unaudited), the Company's only element of other comprehensive loss was unrealized losses on marketable securities.

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Rubius Therapeutics, Inc.
Notes to consolidated financial statements (Continued)

    Net Income (loss) per share

The Company follows the two-class method when computing net income (loss) per share, as the Company has issued shares that meet the definition of participating securities. The two-class method determines net income (loss) per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to common stockholders for the period to be allocated between common and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed.

Basic net income (loss) per share attributable to common stockholders is computed by dividing the net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted net income (loss) attributable to common stockholders is computed by adjusting net income (loss) attributable to common stockholders to reallocate undistributed earnings based on the potential impact of dilutive securities. Diluted net income (loss) per share attributable to common stockholders is computed by dividing the diluted net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding for the period, including potential dilutive common shares assuming the dilutive effect of common stock equivalents.

The Company's convertible preferred stock contractually entitles the holders of such shares to participate in dividends but does not contractually require the holders of such shares to participate in losses of the Company. Accordingly, in periods in which the Company reports a net loss, such losses are not allocated to such participating securities. In periods in which the Company reports a net loss attributable to common stockholders, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. The Company reported a net loss attributable to common stockholders for the years ended December 31, 2016 and 2017 and for the three months ended March 31, 2017 and 2018 (unaudited).

    Income taxes

The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the consolidated financial statements or in the Company's tax returns. Deferred tax assets and liabilities are determined on the basis of the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies.

The Company accounts for uncertainty in income taxes recognized in the consolidated financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax

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Rubius Therapeutics, Inc.
Notes to consolidated financial statements (Continued)

position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed more-likely-than-not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the consolidated financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate as well as the related net interest and penalties.

    Recently adopted accounting pronouncements

In August 2014, the Financial Accounting Standards Board ("FASB") issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern ("ASU 2014-15"). The amendments in this update explicitly require a company's management to assess an entity's ability to continue as a going concern and to provide related footnote disclosures in certain circumstances. For both public and nonpublic entities, the new standard is effective for annual periods ending after December 15, 2016 and for interim periods thereafter. The Company adopted ASU 2014-15 as of the required effective date of December 31, 2016. This guidance relates to footnote disclosure only, and its adoption had no impact on the Company's financial position, results of operations or cash flows.

In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"). ASU 2016-09 involves several aspects of the accounting for share-based transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross share compensation expense with actual forfeitures recognized as they occur and certain classifications on the statement of cash flows. Certain of these changes are required to be applied retrospectively, while other changes are required to be applied prospectively. For public entities, this guidance was effective for annual reporting periods beginning after December 15, 2016 and for interim periods within those fiscal years. For nonpublic entities, this guidance was effective for annual periods beginning after December 15, 2017 and for interim periods within those fiscal years. As early adoption was permitted, the Company adopted ASU 2016-09 as of January 1, 2017 and has elected to account for forfeitures as they occur rather than apply an estimated forfeiture rate to stock-based compensation expense. The adoption of this guidance had no impact on the Company's financial position, results of operations or cash flows.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash ("ASU 2016-18"). ASU 2016-18 requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. Entities will also be required to reconcile such total to amounts on the balance sheet and disclose the nature of the restrictions. For public entities, this guidance is effective for annual reporting periods beginning after December 15, 2017 and interim periods within those fiscal years. For nonpublic entities, this guidance is effective for annual reporting periods beginning after December 15, 2018 and interim periods within those fiscal years. As early adoption was permitted, the Company adopted this standard retrospectively as of January 1, 2017. Restricted cash is now included as a component of cash, cash equivalents and restricted cash on the Company's consolidated statement of cash flows. Upon the adoption of ASU 2016-18, the amount of cash and cash equivalents previously presented on the consolidated statements of cash flows for the year ended December 31, 2016 increased by $0.1 million as

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Rubius Therapeutics, Inc.
Notes to consolidated financial statements (Continued)

of beginning of the year and by $0.2 million as of end of the year to reflect the inclusion of restricted cash in the amount reported for changes in cash, cash equivalents and restricted cash.

In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting ("ASU 2017-09"). The amendments in ASU 2017-09 clarify that modification accounting is required only if the fair value, the vesting conditions, or the classification of the awards (as equity or liability) changes as a result of the changes in terms or conditions. This guidance is effective for all entities for annual reporting periods beginning after December 15, 2017 and interim periods within those fiscal years. As early adoption was permitted, the Company adopted this standard as of January 1, 2017. The adoption of this guidance had no impact on the Company's financial position, results of operations or cash flows.

    Recently issued accounting pronouncements

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) ("ASU 2016-02"), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less may be accounted for similar to existing guidance for operating leases today. For public entities, the guidance is effective for annual reporting periods beginning after December 15, 2018 and for interim periods within those fiscal years. For nonpublic entities, the guidance is effective for annual reporting periods beginning after December 15, 2019 and for interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted for all entities. The Company is currently evaluating whether to early-adopt ASU 2016-02 and evaluating the impact that the adoption of ASU 2016-02 will have on its consolidated financial statements.

In July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815) I. Accounting for Certain Financial Instruments with Down Round Features II. Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception ("ASU 2017-11"). Part I applies to entities that issue financial instruments such as warrants, convertible debt or convertible preferred stock that contain down-round features. Part II replaces the indefinite deferral for certain mandatorily redeemable noncontrolling interests and mandatorily redeemable financial instruments of nonpublic entities contained within Accounting Standards Codification ("ASC") Topic 480 with a scope exception and does not impact the accounting for these mandatorily redeemable instruments. For public entities, this guidance is required to be adopted for annual periods beginning after December 15, 2018, including interim periods within those fiscal years. For nonpublic entities, this guidance is effective for annual periods beginning after December 15, 2019 and for interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal

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Rubius Therapeutics, Inc.
Notes to consolidated financial statements (Continued)

year that includes that interim period. The Company is currently evaluating the impact that the adoption of ASU 2017-11 will have on its consolidated financial statements.

3.     Marketable securities and fair value measurements

Marketable securities by security type consisted of the following (in thousands):

 
   
   
   
   
 
 
  March 31, 2018 (unaudited)  
 
  Amortized
cost

  Gross
unrealized
gains

  Gross
unrealized
losses

  Fair
value

 

U.S. treasury notes (due within one year)

  $ 41,193   $   $ (35 ) $ 41,158  

U.S. government agency bonds (due within one year)

    15,004         (10 )   14,994  

  $ 56,197   $   $ (45 ) $ 56,152  

The Company did not have any marketable securities as of December 31, 2016 or 2017.

The following tables present the Company's fair value hierarchy for its assets and liabilities, which are measured at fair value on a recurring basis (in thousands):

 
   
   
   
   
 
 
  Fair value measurements at
December 31, 2016 using:
 
 
  Level 1
  Level 2
  Level 3
  Total
 

Liabilities:

                         

Preferred stock warrant liability

  $   $   $ 67   $ 67  


 
   
   
   
   
 
 
  Fair value measurements at
December 31, 2017 using:
 
 
  Level 1
  Level 2
  Level 3
  Total
 

Assets:

                         

Cash equivalents:

                         

Money market funds

  $ 104,288   $   $   $ 104,288  

Liabilities:

                         

Preferred stock warrant liability

  $   $   $ 866   $ 866  

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Rubius Therapeutics, Inc.
Notes to consolidated financial statements (Continued)


 
   
   
   
   
 
 
  Fair value measurements at
March 31, 2018 (unaudited) using:
 
 
  Level 1
  Level 2
  Level 3
  Total
 

Assets:

                         

Cash equivalents:

                         

Money market funds

  $ 122,979   $   $   $ 122,979  

U.S. government agency bonds

        13,492         13,492  

Marketable securities:

                         

U.S. government agency bonds

        14,994         14,994  

U.S. treasury notes

        41,158         41,158  

  $ 122,979   $ 69,644   $   $ 192,623  

Liabilities:

                         

Preferred stock warrant liability

  $   $   $ 909   $ 909  

Money market funds were valued by the Company based on quoted market prices, which represent a Level 1 measurement within the fair value hierarchy. U.S. treasury notes and U.S. government agency bonds were valued by the Company using quoted prices in active markets for similar securities, which represent a Level 2 measurement within the fair value hierarchy. During the years ended December 31, 2016 and 2017 or the three months ended March 31, 2018 (unaudited), there were no transfers between Level 1, Level 2 and Level 3.

The preferred stock warrant liability in the table above consisted of the fair value of warrants to purchase Series A and Series B convertible preferred stock (see Note 8) and was based on significant inputs not observable in the market, which represent a Level 3 measurement within the fair value hierarchy. The Company's valuation of the preferred stock warrants utilized the Black-Scholes option-pricing model, which incorporates assumptions and estimates to value the preferred stock warrants. The Company assesses these assumptions and estimates on a quarterly basis as additional information impacting the assumptions was obtained. Changes in the fair value of the preferred stock warrants are recognized as other income (expense) in the consolidated statements of operations and comprehensive loss.

The quantitative elements associated with the Company's Level 3 inputs impacting the fair value measurement of the preferred stock warrant liability include the fair value per share of the underlying Series A and Series B convertible preferred stock, the remaining contractual term of the warrants, risk-free interest rate, expected dividend yield and expected volatility of the price of the underlying preferred stock. The most significant assumption in the Black-Scholes option-pricing model impacting the fair value of the preferred stock warrants is the fair value of the Company's convertible preferred stock as of each remeasurement date. The Company determines the fair value per share of the underlying preferred stock by taking into consideration its most recent sales of its convertible preferred stock as well as additional factors that the Company deems relevant. As of December 31, 2016 and 2017 and March 31, 2018 (unaudited), the fair value of the Series A convertible preferred stock was $0.60 per share, $6.73 per share and $7.06 per share, respectively. As of December 31, 2017 and March 31, 2018 (unaudited), the fair value of the Series B convertible preferred stock was $9.88 per share and $10.06 per share, respectively. The Company historically has been a private company and lacks company-specific historical and implied

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Rubius Therapeutics, Inc.
Notes to consolidated financial statements (Continued)

volatility information of its stock. Therefore, it estimates its expected stock volatility based on the historical volatility of publicly traded peer companies for a term equal to the remaining contractual term of the warrants. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve for time periods approximately equal to the remaining contractual term of the warrants. The Company has estimated a 0% dividend yield based on the expected dividend yield and the fact that the Company has never paid or declared dividends.

The following table provides a roll-forward of the aggregate fair values of the Company's preferred stock warrants for which fair value is determined by Level 3 inputs (in thousands):

 
   
 
 
  Preferred stock
warrant liability

 

Fair value at December 31, 2015

  $ 68  

Change in fair value

    (1 )

Fair value at December 31, 2016

    67  

Issuance of warrants to purchase shares of Series B convertible preferred stock

    14  

Change in fair value

    785  

Fair value at December 31, 2017

    866  

Change in fair value

    43  

Fair value at March 31, 2018 (unaudited)

  $ 909  

4.    Property and equipment, net

Property and equipment, net consisted of the following (in thousands):

 
   
   
   
 
 
  December 31,    
 
 
  March 31,
2018

 
 
  2016
  2017
 
 
  (unaudited)
 

Laboratory equipment

  $ 831   $ 2,751   $ 3,515  

Leasehold improvements

    117     117     117  

Computer equipment

    57     57     57  

Construction-in-progress

        74     11,373  

    1,005     2,999     15,062  

Less: Accumulated depreciation and amortization

    (137 )   (584 )   (811 )

  $ 868   $ 2,415   $ 14,251  

Construction-in-progress as of March 31, 2018 (unaudited) included $11.0 million related to the Company's build-to-suit lease (see Note 12). Depreciation and amortization expense was $0.1 million and $0.4 million for the years ended December 31, 2016 and 2017, respectively. Depreciation and amortization expense was less than $0.1 million and $0.2 million for the three months ended March 31, 2017 and 2018 (unaudited), respectively.

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Rubius Therapeutics, Inc.
Notes to consolidated financial statements (Continued)

5.     Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

 
   
   
   
 
 
  December 31,    
 
 
  March 31,
2018

 
 
  2016
  2017
 
 
  (unaudited)
 

Accrued employee compensation and benefits

  $ 253   $ 1,339   $ 607  

Accrued external research and development expenses

    237     1,230     1,924  

Accrued lease liability, current portion

            1,566  

Accrued professional fees

    178     219     1,181  

Other

    71     198     63  

  $ 739   $ 2,986   $ 5,341  

6.     Loan and security agreement

As of December 31, 2016 and 2017 and March 31, 2018 (unaudited), long-term debt consisted of the following (in thousands):

 
   
   
   
 
 
  December 31,    
 
 
  March 31,
2018

 
 
  2016
  2017
 
 
  (unaudited)
 

Principal amount of long-term debt

  $ 4,000   $ 5,500   $ 5,500  

Less: Current portion of long-term debt

    (933 )   (2,139 )   (3,056 )

Long-term debt, net of current portion

    3,067     3,361     2,444  

Debt discount

    (76 )   (59 )   (46 )

Long-term debt, net of discount and current portion

  $ 2,991   $ 3,302   $ 2,398  

In November 2015, the Company entered into a loan and security agreement, as amended (the "2015 Credit Facility"), with Pacific Western Bank ("PWB"). The 2015 Credit Facility initially provided for borrowings of up to $2.0 million under one or more term loans as well as additional borrowings of up to $2.0 million under one or more additional term loans, for aggregate maximum borrowings of $4.0 million. Under the 2015 Credit Facility, the Company borrowed $2.0 million in January 2016 and an additional $2.0 million in September 2016. Prior to the amendment of the 2015 Credit Facility in May 2017, borrowings under the 2015 Credit Facility bore interest at an annual rate equal to the bank's prime rate plus 1.25%, subject to a floor of 4.5%, and were repayable in monthly interest-only payments through May 2017 and in equal monthly payments of principal plus accrued interest from June 2017 until the maturity date in November 2019.

In May 2017, the Company entered into an amendment to the 2015 Credit Facility under which the aggregate maximum borrowings were increased to $7.0 million, which amount could be borrowed through June 30, 2017. The amendment to the 2015 Credit Facility was accounted for as a debt modification, rather than a debt extinguishment, based on a comparison of the present value of the cash flows under the terms

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Rubius Therapeutics, Inc.
Notes to consolidated financial statements (Continued)

of the debt immediately before and after the amendment, which resulted in a change of less than 10%. As a result, issuance costs paid to the lender in connection with the amendment were recorded as a reduction of the carrying amount of the debt liability and were not significant. Unamortized issuance costs as of the date of the modification will be amortized to interest expense using the effective interest method over the revised repayment term. Issuance costs paid to third parties were recorded as expense and were not significant.

In May 2017, the Company borrowed an additional $1.5 million under the 2015 Credit Facility, which resulted in aggregate borrowings of $5.5 million. As of December 31, 2017 and March 31, 2018 (unaudited), there were no additional amounts that could be borrowed by the Company under the 2015 Credit Facility. Borrowings under the 2015 Credit Facility bear interest at an annual rate equal to the bank's prime rate plus 1.25%, subject to a floor of 4.5%, and are repayable in monthly interest-only payments through May 2018 and in equal monthly payments of principal plus accrued interest from June 2018 until the maturity date in November 2019.

As of December 31, 2016 and 2017 and March 31, 2018 (unaudited), the interest rate applicable to borrowings under the 2015 Credit Facility was 5.0%, 5.75% and 6.0%, respectively. During the years ended December 31, 2016 and 2017 and the three months ended March 31, 2018 (unaudited), the weighted average effective interest rate on outstanding borrowings under the 2015 Credit Facility was approximately 5%, 6% and 7%, respectively.

Borrowings under the 2015 Credit Facility are collateralized by substantially all of the Company's personal property, other than its intellectual property. There are no financial covenants associated with the 2015 Credit Facility; however, the Company is subject to certain affirmative and negative covenants restricting the Company's activities, including limitations on dispositions, mergers or acquisitions; encumbering its intellectual property; incurring indebtedness or liens; paying dividends; making certain investments; and engaging in certain other business transactions. The obligations under the 2015 Credit Facility are subject to acceleration upon the occurrence of specified events of default, including a material adverse change in the Company's business, operations or financial or other condition.

As of December 31, 2017 and March 31, 2018 (unaudited), the estimated future principal payments due were as follows (in thousands):

 
   
 
Year ending December 31,
   
 

2018

  $ 2,139  

2019

    3,361  

  $ 5,500  

In May 2018 (unaudited), the Company further amended the 2015 Credit Facility to extend the interest-only payment period through May 2019, to extend the maturity date until November 2020 and to adjust the interest rate to an annual rate equal to the bank's prime rate plus 0.75%, subject to a floor of 5.5% (see Note 16).

In connection with the initial borrowing in January 2016 under the 2015 Credit Facility, the Company issued to PWB warrants to purchase up to 133,333 shares of Series A redeemable convertible preferred stock, at

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Rubius Therapeutics, Inc.
Notes to consolidated financial statements (Continued)

an exercise price of $0.60 per share, subject to adjustment upon specified dilutive issuances. The warrants became exercisable in proportion to the borrowings made by the Company under the credit facility. As of December 31, 2016 and 2017 and March 31, 2018 (unaudited), the warrants were exercisable for the full amount of specified shares and expire on November 20, 2025. The fair value of the warrants on the issuance date of $0.1 million was recorded as a deferred financing cost and as a preferred stock warrant liability (see Note 8).

In connection with the amendment to the 2015 Credit Facility in May 2017, the Company issued to PWB warrants to purchase up to 2,234 shares of Series B convertible preferred stock, at an exercise price of $8.39 per share, subject to adjustment upon specified dilutive issuances. The warrants were immediately exercisable upon issuance and expire on May 19, 2027. The fair value of the warrants on the issuance date of less than $0.1 million was recorded as a debt discount and as a preferred stock warrant liability (see Note 8).

7.     Convertible preferred stock

The Company has issued Series A redeemable convertible preferred stock (the "Series A Preferred Stock"), Series B convertible preferred stock (the "Series B Preferred Stock") and Series C convertible preferred stock (the "Series C Preferred Stock"). The Series A Preferred Stock, the Series B Preferred Stock and the Series C Preferred Stock are collectively referred to as the "Preferred Stock". Upon issuance of the Series A Preferred Stock, the holders of such shares were entitled to receive cumulative dividends of 8.0% per year, compounding annually, and such shares were redeemable at the option of the holder after five years from issuance date of the Series A Preferred Stock. In connection with the issuance and sale of Series B Preferred Stock, the holders of Series A Preferred Stock agreed to remove the cumulative dividend rights and redemption features of the Series A Preferred Stock. The change to the terms of the Series A Preferred Stock was accounted for as a modification, rather than an extinguishment, of the Series A Preferred Stock based on a comparison of the fair value of the stock immediately before and after the change in terms, which resulted in a fair value change of less than 10%. This modification did not have any impact on the Company's consolidated financial statements. For periods after the June 2017 date of the modification of the Series A Preferred Stock, the Company no longer accretes the carrying value of the Series A Preferred Stock to redemption value as such shares are no longer redeemable.

In July 2016, the Company issued and sold 9,083,333 shares of Series A Preferred Stock at a price of $0.60 per share for gross proceeds of $5.4 million. In December 2016, the Company issued and sold 10,000,000 additional shares of Series A Preferred Stock to the same investor at a price of $0.60 per share for gross proceeds of $6.0 million. The Company incurred issuance costs in connection with these transactions of less than $0.1 million.

In June 2017, the Company issued and sold 14,362,344 shares of Series B Preferred Stock at a price of $8.39 per share for gross proceeds of $120.5 million. The Company incurred issuance costs in connection with the Series B Preferred Stock of $0.4 million.

In February 2018, the Company issued and sold 7,912,432 shares of Series C Preferred Stock at a price of $12.79 per share for gross proceeds of $101.2 million. The Company incurred issuance costs in connection with the Series C Preferred Stock of $0.2 million.

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Rubius Therapeutics, Inc.
Notes to consolidated financial statements (Continued)

Upon issuance of each class of Preferred Stock, the Company assessed the embedded conversion and liquidation features of the shares and determined that such features did not require the Company to separately account for these features. The Company also concluded that no beneficial conversion feature existed on the issuance date of each class of Preferred Stock.

As of each balance sheet date, the Preferred Stock consisted of the following (in thousands, except share amounts):

 
   
   
   
   
   
 
 
  December 31, 2016  
 
  Preferred stock
authorized

  Preferred stock
issued and
outstanding

  Carrying
value

  Liquidation
preference

  Common stock
issuable upon
conversion

 

Series A Preferred Stock

    29,703,995     29,570,662   $ 19,067   $ 19,088     29,570,662  

    29,703,995     29,570,662   $ 19,067   $ 19,088     29,570,662  


 
   
   
   
   
   
 
 
  December 31, 2017  
 
  Preferred stock
authorized

  Preferred stock
issued and
outstanding

  Carrying
value

  Liquidation
preference

  Common stock
issuable upon
conversion

 

Series A Preferred Stock

    29,703,995     29,570,662   $ 19,723   $ 17,742     29,570,662  

Series B Preferred Stock

    14,366,813     14,362,344     120,067     120,500     14,362,344  

    44,070,808     43,933,006   $ 139,790   $ 138,242     43,933,006  


 
   
   
   
   
   
 
 
  March 31, 2018 (unaudited)  
 
  Preferred stock
authorized

  Preferred stock
issued and
outstanding

  Carrying
value

  Liquidation
preference

  Common stock
issuable upon
conversion

 

Series A Preferred Stock

    29,703,995     29,570,662   $ 19,723   $ 17,742     29,570,662  

Series B Preferred Stock

    14,364,578     14,362,344     120,067     120,500     14,362,344  

Series C Preferred Stock

    7,912,432     7,912,432     100,986     101,200     7,912,432  

    51,981,005     51,845,438   $ 240,776   $ 239,442     51,845,438  

The holders of Preferred Stock have the following rights and preferences:

    Voting

The holders of Preferred Stock are entitled to vote, together with the holders of common stock as a single class, on matters submitted to stockholders for a vote. The holders of Preferred Stock are entitled to the number of votes equal to the number of shares of common stock into which each such share of Preferred Stock could convert.

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Rubius Therapeutics, Inc.
Notes to consolidated financial statements (Continued)

    Conversion

Each share of Preferred Stock is convertible into shares of common stock at the option of the holder at any time after the date of issuance. Each share of Preferred Stock will be automatically converted into shares of common stock, at the applicable conversion ratio then in effect, upon either (i) the closing of a firm commitment public offering with at least $50.0 million of gross proceeds to the Company and at a price of at least $12.79 per share, subject to appropriate adjustment in the event of any stock split, stock dividend, combination or other similar recapitalization, or (ii) the vote or written consent of the holders of at least a majority of the then-outstanding shares of Preferred Stock, voting together as a single class.

The conversion ratio of each series of Preferred Stock is determined by dividing the Original Issue Price of each series by the Conversion Price of each series. The Original Issue Price is $0.60 per share for Series A Preferred Stock, $8.39 per share for Series B Preferred Stock and $12.79 per share for Series C Preferred Stock. The Conversion Price is $0.60 per share for Series A Preferred Stock, $8.39 per share for Series B Preferred Stock and $12.79 per share for Series C Preferred Stock, subject to appropriate adjustment in the event of any stock split, stock dividend, combination or other similar recapitalization and other adjustments as set forth in the Company's certificate of incorporation, as amended and restated. As a result, as of December 31, 2017 and March 31, 2018 (unaudited), each outstanding share of Preferred Stock was convertible into common stock on a one-for-one basis.

    Dividends

The holders of Preferred Stock are entitled to receive noncumulative dividends if and when declared by the Company's board of directors. The Company may not declare, pay or set aside any dividends on shares of any other series of capital stock of the Company, other than dividends on common stock payable in common stock, unless the holders of the Series A, Series B and Series C Preferred Stock first receive, or simultaneously receive, a dividend on each outstanding share of Series A, Series B and Series C Preferred Stock. No dividends were declared or paid during the years ended December 31, 2016 or 2017 or the three months ended March 31, 2018 (unaudited).

    Liquidation

In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Company or Deemed Liquidation Event (as described below), the holders of shares of Preferred Stock will receive, in preference to any distribution to the holders of common stock, an amount per share equal to the greater of (i) the Original Issue Price per share of the respective share of Preferred Stock, plus all dividends declared but unpaid on such shares, or (ii) the amount the holders would receive if the Preferred Stock were converted into common stock prior to such liquidation event. In the event that the assets available for distribution to the Company's stockholders are not sufficient to permit payment to the holders of Preferred Stock in the full amount to which they are entitled, the assets available for distribution will be distributed on a pro rata basis among the holders of the Series A, Series B and Series C Preferred Stock. After the payment of all preferential amounts to the holders of the Preferred Stock, then, to the extent available, the remaining assets available for distribution shall be distributed among the holders of the common stock ratably based on the number of shares of common stock held by each holder.

Unless the holders of at least a majority of the then-outstanding shares of Preferred Stock, voting together as a single class on an as-converted basis, elect otherwise, a Deemed Liquidation Event shall include a merger or consolidation (other than one in which stockholders of the Company own a majority by voting

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Rubius Therapeutics, Inc.
Notes to consolidated financial statements (Continued)

power of the outstanding shares of the surviving or acquiring corporation) or a sale, lease, transfer, exclusive license or other disposition of all or substantially all of the assets of the Company.

8.     Warrants to purchase preferred stock

In November 2015, the Company issued warrants to purchase up to 133,333 shares of Series A Preferred Stock in connection with the 2015 Credit Facility (see Note 6). The warrants are exercisable at a price of $0.60 per share and have a contractual term of ten years from issuance. The fair value of the warrants on the issuance date of $0.1 million was recorded as a deferred financing cost and as a preferred stock warrant liability.

In May 2017, the Company issued warrants to purchase up to 2,234 shares of Series B Preferred Stock in connection with the amendment to the 2015 Credit Facility (see Note 6). The warrants are exercisable at a price of $8.39 per share and have a contractual term of ten years from issuance. The fair value of the warrants on the issuance date of less than $0.1 million was recorded as a debt discount and as a preferred stock warrant liability.

The Company remeasures the fair value of the liability for these preferred stock warrants at each reporting date and records any adjustments as other income (expense). The warrants outstanding at each reporting date were remeasured using the Black-Scholes option-pricing model (see Note 3), and the resulting change in fair value was recorded in other income (expense) in the Company's consolidated statements of operations and comprehensive loss. For the years ended December 31, 2016 and 2017, the Company recorded other income of less than $0.1 million and other expense of $0.8 million, respectively, to reflect the change in fair value of these preferred stock warrants. For each of the three months ended March 31, 2017 and 2018 (unaudited), the Company recorded other expense of less than $0.1 million to reflect the change in fair value of these preferred stock warrants.

9.     Common stock

Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company's stockholders. Common stockholders are not entitled to receive dividends, unless declared by the board of directors.

10.   Stock-based compensation

    2014 Stock Incentive Plan

The Company's 2014 Stock Incentive Plan (the "2014 Plan") provides for the Company to sell or issue incentive stock options or nonqualified stock options, restricted stock, restricted stock units and other equity awards to employees, directors and consultants of the Company. The 2014 Plan is administered by the board of directors or, at the discretion of the board of directors, by a committee of the board of directors. The exercise prices, vesting and other restrictions are determined at the discretion of the board of directors, or its committee if so delegated.

Stock options granted under the 2014 Plan with service-based vesting conditions generally vest over three or four years and expire after ten years. The 2014 Plan allows for the early exercise of unvested stock options, subject to certain restrictions, including the ability of the Company to repurchase such options upon an option holder's termination of employment with the Company if such options have not yet vested. Restricted stock granted under the 2014 Plan with service-based vesting conditions generally vest over three or four years.

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Rubius Therapeutics, Inc.
Notes to consolidated financial statements (Continued)

The total number of shares of common stock that may be issued under the 2014 Plan was 4,600,000 and 13,028,304 shares as of December 31, 2016 and 2017, respectively, of which 1,256,019 shares remained available for future issuance as of December 31, 2017. During the three months ended March 31, 2018, the Company increased the number of shares of common stock authorized for issuance under the 2014 Plan from 13,028,304 shares to 14,778,304 shares. As of March 31, 2018 (unaudited), 204,019 shares remained available for future issuance under the 2014 Plan. Shares that are expired, terminated, surrendered or canceled without having been fully exercised will be available for future awards under the 2014 Plan.

The exercise price for stock options granted is not less than the fair value of common shares as determined by the board of directors as of the date of grant. The Company's board of directors values the Company's common stock, taking into consideration its most recently available valuation of common stock performed by third parties as well as additional factors which may have changed since the date of the most recent contemporaneous valuation through the date of grant.

    Stock option valuation

The fair value of stock option grants is estimated using the Black-Scholes option-pricing model. The Company historically has been a private company and lacks company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. For options with service-based vesting conditions, the expected term of the Company's stock options has been determined utilizing the "simplified" method for awards that qualify as "plain-vanilla" options. The expected term of stock options granted to non-employees is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.

The following table presents, on a weighted average basis, the assumptions used in the Black-Scholes option-pricing model to determine the fair value of stock-based awards granted to employees and directors:

 
   
   
   
   
 
  Year ended
December 31,
  Three months ended
March 31,
 
  2016
  2017
  2017
  2018
 
   
   
  (unaudited)

  (unaudited)

Risk-free interest rate

    1.81%     2.05%   2.16%   2.61%

Expected volatility

    77.2%     75.6%   76.0%   74.0%

Expected dividend yield

           

Expected term (in years)

    6.25     6.39   6.25   6.25

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Rubius Therapeutics, Inc.
Notes to consolidated financial statements (Continued)

The following table presents the assumptions used in the Black-Scholes option-pricing model to determine the fair value of stock awards granted to non-employees:

 
   
   
   
   
 
  Year ended December 31,
  Three months ended March 31,
 
  2016
  2017
  2017
  2018
 
   
   
  (unaudited)

  (unaudited)

Risk-free interest rate

  2.35% - 2.45%   2.02% - 2.31%   2.14% - 2.40%   2.02% - 2.73%

Expected volatility

  81% - 85%   74% - 85%   74% - 85%   73% - 85%

Expected dividend yield

       

Expected term (in years)

  8 - 10   6 - 10   7 - 10   6 - 10

Fair value of common stock

  $0.18 - $0.19   $0.19 - $6.28   $0.19 - $0.48   $6.28 - $8.66

The following table summarizes the Company's option activity since December 31, 2016:

 
   
   
   
   
 
 
  Number of
shares

  Weighted
average
exercise
price

  Weighted
average
contractual
term

  Aggregate
intrinsic
value

 
 
   
   
  (in years)
  (in thousands)
 

Outstanding as of December 31, 2016

    4,159,165   $0.17     9.21   $ 86  

Granted

    2,312,792   2.43              

Exercised

    (1,650,572 ) 0.18              

Forfeited

    (159,750 ) 0.19              

Outstanding as of December 31, 2017

    4,661,635   $1.29     8.64   $ 23,264  

Granted

    2,839,500   5.29              

Exercised

    (19,750 ) 0.22              

Forfeited

    (37,500 ) 0.15              

Outstanding as of March 31, 2018 (unaudited)

    7,443,885   $2.82     9.07   $ 43,452  

                       

Vested and expected to vest as of December 31, 2017

    4,661,635   $1.29     8.64   $ 23,264  

Vested and expected to vest as of March 31, 2018 (unaudited)

    7,443,885   $2.82     9.07   $ 43,452  

Options exercisable as of December 31, 2017

    1,153,819   $0.16     7.55   $ 7,062  

Options exercisable as of March 31, 2018 (unaudited)

    1,371,475   $0.39     7.51   $ 11,336  

The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company's common stock for those stock options that had exercise prices lower than the fair value of the Company's common stock. The aggregate intrinsic value of stock options exercised during the years ended December 31, 2016 and 2017 was less than $0.1 million and $3.7 million, respectively. The aggregate intrinsic value of stock options exercised during the three months ended March 31, 2017 and 2018 (unaudited) was $0.1 million and $0.2 million, respectively.

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Rubius Therapeutics, Inc.
Notes to consolidated financial statements (Continued)

The weighted average grant-date fair value of stock options granted during the years ended December 31, 2016 and 2017 was $0.12 per share and $2.74 per share, respectively. The weighted average grant-date fair value of stock options granted during the three months ended March 31, 2017 and 2018 (unaudited) was $0.13 per share and $5.52 per share, respectively.

In April 2017, an executive officer early exercised an option to purchase 1,400,000 shares of common stock, at an exercise price of $0.18 per share, for cash proceeds of $0.1 million and a promissory note for $0.2 million (see Note 14). The employee received shares of restricted common stock upon such exercise. The unvested shares of restricted common stock issued upon exercise are subject to the Company's repurchase right at the lesser of the original exercise price per share or the fair value of such shares on the repurchase date. The $0.1 million of cash proceeds from the early exercise of this stock option was recorded as a liability in the Company's consolidated balance sheet and will be reclassified to stockholders' equity (deficit) as the shares vest and the Company's repurchase rights related to such shares lapse. The promissory note is partial-recourse, but was treated as nonrecourse for accounting purposes. As a result, (i) this early exercise of common stock with a promissory note continued to be accounted for as an outstanding stock option and (ii) no receivable for amounts due under the promissory note was recorded on the Company's consolidated balance sheet. Stock-based compensation expense related to this award is being recognized over the requisite service period of the award based on the grant-date fair value of the award, which was determined using the Black-Scholes option-pricing model. On June 21, 2018 (unaudited), the principal balance of $0.2 million and all interest that had accrued thereon, totaling less than $0.1 million, was repaid in full by the executive officer and the promissory note was terminated (see Note 16).

During the years ended December 31, 2016 and 2017, the Company granted options for the purchase of an aggregate of 465,000 shares of common stock with performance-based vesting conditions. As of December 31, 2016 and 2017 and March 31, 2018 (unaudited), the achievement of these performance conditions was determined not to be probable, and, therefore, the Company did not record any compensation expense related to these stock options during the years ended December 31, 2016 and 2017 or the three months ended March 31, 2018 (unaudited).

    Restricted common stock

The Company has granted restricted common stock with service-based vesting conditions. Shares of unvested restricted common stock may not be sold or transferred by the holder. These restrictions lapse

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Rubius Therapeutics, Inc.
Notes to consolidated financial statements (Continued)

according to the time-based vesting conditions of each award. The following table summarizes the Company's restricted common stock award activity since December 31, 2016:

 
   
   
 
 
  Shares
  Weighted average
grant-date
fair value

 

Unvested restricted common stock as of December 31, 2016

    348,120   $ 0.001  

Issued

    5,227,014     0.514  

Vested

    (348,120 )   0.001  

Unvested restricted common stock as of December 31, 2017

    5,227,014   $ 0.514  

Issued

         

Vested

    (2,582,132 )   0.526  

Unvested restricted common stock as of March 31, 2018 (unaudited)

    2,644,882   $ 0.502  

In the table above, the number of shares of unvested restricted common stock outstanding as of December 31, 2017 and March 31, 2018 (unaudited) excludes 1,050,000 shares and 962,500 shares, respectively, of restricted common stock that remained unvested as of those dates related to the early exercise of a stock option during the year ended December 31, 2017 in exchange for 1,400,000 shares of restricted common stock. As of December 31, 2017, shares of unvested restricted common stock totaled 6,277,014 shares, consisting of 5,227,014 shares from unvested restricted common stock awards and 1,050,000 shares from the early exercise of a stock option. As of March 31, 2018 (unaudited), shares of unvested restricted common stock totaled 3,607,382 shares, consisting of 2,644,882 shares from unvested restricted common stock awards and 962,500 shares from the early exercise of a stock option.

The aggregate intrinsic value of restricted stock awards is calculated as the positive difference between the prices paid, if any, of the restricted stock awards and the fair value of the Company's common stock. The aggregate intrinsic value of restricted stock awards that vested during the years ended December 2016 and 2017 was $0.1 million and $0.9 million, respectively. The aggregate intrinsic value of restricted stock awards that vested during the three months ended March 31, 2017 and 2018 (unaudited) was $0.2 million and $14.9 million, respectively.

In April 2017, the Company sold 460,000 shares of restricted common stock, at a price of $0.19 per share, to an executive officer in exchange for a promissory note in the principal amount of $0.1 million (see Note 14). The promissory note is partial-recourse, but was treated as nonrecourse for accounting purposes and, as such, (i) this purchase of common stock with a promissory note was accounted for as if it were a stock option grant and (ii) no receivable for amounts due under the promissory note was recorded on the Company's consolidated balance sheet. Stock-based compensation expense related to this award is being recognized over the requisite service period of the award based on the grant-date fair value of the award, which was determined using the Black-Scholes option-pricing model. On June 21, 2018 (unaudited), the principal balance of $0.1 million and all interest that had accrued thereon, totaling less than $0.1 million, was repaid in full by the executive officer and the promissory note was terminated (see Note 16).

In January 2017 and May 2017, the Company sold 3,667,014 shares and 1,100,000 shares, respectively, of restricted common stock at prices of $0.19 per share and $1.65 per share, respectively, to the chairman of

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Rubius Therapeutics, Inc.
Notes to consolidated financial statements (Continued)

the Company's board of directors in exchange for two promissory notes totaling $2.5 million (see Note 14). The promissory notes are partial-recourse, but were treated as nonrecourse for accounting purposes and, as such, (i) each of these purchases of common stock with a promissory note was accounted for as if it were a stock option grant and (ii) no receivable for amounts due under the promissory note was recorded on the Company's consolidated balance sheet. All of the stock-based awards issued to the chairman of the Company's board of directors were issued for his services as a consultant and are being accounted for as non-employee stock-based awards. As a result, stock-based compensation expense related to the awards is being recognized over the requisite service period of the award based on the remeasured fair value of the award at each reporting period, which is determined using the Black-Scholes option-pricing model. The aggregate amount of stock-based compensation expense related to these restricted stock awards recognized during the year ended December 31, 2017 was $14.2 million. The aggregate amount of stock-based compensation expense related to these restricted stock awards recognized during the three months ended March 31, 2017 and 2018 (unaudited) was $0.2 million and $2.5 million, respectively. On June 21, 2018 (unaudited), the aggregate principal balance of both promissory notes of $2.5 million and all interest that had accrued thereon, totaling $0.1 million, was forgiven by the Company and the promissory notes were terminated (see Note 16).

    Stock-based compensation

The Company recorded stock-based compensation expense in the following expense categories of its consolidated statements of operations and comprehensive loss (in thousands):

 
   
   
   
   
 
  Year ended
December 31,
  Three months ended
March 31,
 
  2016
  2017
  2017
  2018
 
   
   
  (unaudited)

  (unaudited)

Research and development expenses

  $ 107   $ 1,756   $675   $409

General and administrative expenses

    40     16,147   185   3,048

  $ 147   $ 17,903   $860   $3,457

In October 2017, the Company issued 213,439 shares of common stock to the Company's chairman of its board of directors as payment of a one-time bonus that was payable, at his election, in cash or shares of common stock. The shares were issued out of the 2014 Plan. In connection with this issuance, the Company recorded $1.0 million of stock-based compensation expense, equal to the aggregate fair value of this common stock on the date of issuance.

As of December 31, 2017, total unrecognized compensation cost related to the unvested employee and director stock-based awards was $5.3 million, which is expected to be recognized over a weighted average period of 3.6 years. As of March 31, 2018 (unaudited), total unrecognized compensation cost related to the unvested employee and director stock-based awards was $18.9 million, which is expected to be recognized over a weighted average period of 3.7 years.

As of December 31, 2017, there were outstanding unvested service-based stock options held by non-employees for the purchase of 330,917 shares of common stock. As of December 31, 2017, there were 4,767,104 shares of unvested restricted common stock held by non-employees. As of March 31, 2018

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Rubius Therapeutics, Inc.
Notes to consolidated financial statements (Continued)

(unaudited), there were outstanding unvested service-based stock options held by non-employees for the purchase of 203,669 shares of common stock. As of March 31, 2018 (unaudited), there were 2,184,882 shares of unvested restricted common stock held by non-employees. Amounts expensed during the remaining vesting periods of the stock-based awards held by non-employees will be determined based on the fair value of the awards at the time of vesting.

11.   Income taxes

    2017 U.S. tax reform

On December 22, 2017, the Tax Cuts and Jobs Act (the "TCJA") was signed into United States law. The TCJA includes a number of changes to existing tax law, including, among other things, a permanent reduction in the federal corporate income tax rate from a top marginal tax rate of 35% to a flat rate of 21%, effective as of January 1, 2018, as well as limitation of the deduction for net operating losses to 80% of annual taxable income and elimination of net operating loss carrybacks, in each case, for losses arising in taxable years beginning after December 31, 2017 (though any such net operating losses may be carried forward indefinitely). The federal tax rate change resulted in a reduction in the gross amount of the Company's deferred tax assets and liabilities recorded as of December 31, 2017 and a corresponding reduction in the Company's valuation allowance. As a result, no income tax expense or benefit was recognized as of the enactment date of the TCJA.

The staff of the Securities and Exchange Commission issued Staff Accounting Bulletin No. 118 to address the application of GAAP in situations when a registrant does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the TCJA. The Company is still in the process of analyzing the impact to the Company of the TCJA and its analysis is not yet complete. Where the Company has been able to make reasonable estimates of the effects related to the TCJA, the Company has recorded provisional amounts.

In connection with the initial analysis of the impact of the TCJA, the Company remeasured its deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21% for federal tax purposes. The remeasurement of the Company's deferred tax assets and liabilities was offset by a change in the valuation allowance. All of the Company's recorded income tax benefits and provisions related to the TCJA are provisional. The provisional amounts recorded by the Company are based on guidance, interpretations and other information available as of April 13, 2018. The impact of the changes in U.S. tax law may be refined as further guidance, interpretations or information becomes available or upon completion by the Company of its evaluation of the impact of the changes in U.S. tax law. Provisional amounts will be finalized no later than the fourth quarter of 2018, which is one year from when the TCJA was signed into law. The ultimate impact to the Company's consolidated financial statements of the TCJA may differ from the provisional amounts. During the three months ended March 31, 2018 (unaudited), the Company did not make any adjustments to the provisional amounts recorded as a result of the TCJA.

    Income taxes

During the years ended December 31, 2016 and 2017 and the three months ended March 31, 2017 and 2018 (unaudited), the Company recorded no income tax benefits for the net operating losses incurred or for the

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Rubius Therapeutics, Inc.
Notes to consolidated financial statements (Continued)

research and development tax credits generated in each year, due to its uncertainty of realizing a benefit from those items.

All of the Company's operating losses since inception have been generated in the United States.

A reconciliation of the U.S. federal statutory income tax rate to the Company's effective income tax rate is as follows:

 
   
   
 
 
  Year ended
December 31,
 
 
  2016
  2017
 

Federal statutory income tax rate

    (34.0)%     (34.0)%  

State taxes, net of federal benefit

    (5.2 )   (3.2 )

Federal and state research and development tax credits

    (0.9 )   (1.4 )

Stock-based compensation expense

    0.2     12.8  

Other

    (0.1 )   0.7  

Remeasurement of deferred taxes due to the Tax Cuts and Jobs Act

        11.1  

Increase in deferred tax asset valuation allowance

    40.0     14.0  

Effective income tax rate

    0.0%     0.0%  

Net deferred tax assets consisted of the following (in thousands):

 
   
   
 
 
  December 31,  
 
  2016
  2017
 

Deferred tax assets:

             

Net operating loss carryforwards

  $ 5,608   $ 10,422  

Research and development tax credit carryforwards

    222     1,241  

Accrued expenses

    124     413  

Capitalized intellectual property costs

    307     367  

Capitalized research and development expense

    205     131  

Stock-based compensation expense

    31     375  

Total deferred tax assets

    6,497     12,949  

Deferred tax liabilities:

             

Depreciation and other

    (43 )   (374 )

Total deferred tax liabilities

    (43 )   (374 )

Valuation allowance

   
(6,454

)
 
(12,575

)

Net deferred tax assets

  $   $  

As of December 31, 2017, the Company had U.S. federal and state net operating loss carryforwards of $38.2 million and $37.9 million, respectively, which may be available to offset future taxable income and begin to expire in 2033 and 2034, respectively. As of December 31, 2017, the Company also had U.S.

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Rubius Therapeutics, Inc.
Notes to consolidated financial statements (Continued)

federal and state research and development tax credit carryforwards of $0.9 million and $0.4 million, respectively, which may be available to offset future tax liabilities and begin to expire in 2034 and 2030, respectively. During the three months ended March 31, 2018 (unaudited), gross deferred tax assets, before valuation allowance, increased by approximately $4.2 million due to the operating loss incurred by the Company during that period.

Utilization of the U.S. federal and state net operating loss carryforwards and research and development tax credit carryforwards may be subject to a substantial annual limitation under Sections 382 and 383 of the Internal Revenue Code of 1986, and corresponding provisions of state law, due to ownership changes that have occurred previously or that could occur in the future. These ownership changes may limit the amount of carryforwards that can be utilized annually to offset future taxable income or tax liabilities. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain stockholders or public groups in the stock of a corporation by more than 50% over a three-year period. The Company has not conducted a study to assess whether a change of control has occurred or whether there have been multiple changes of control since inception due to the significant complexity and cost associated with such a study. If the Company has experienced a change of control, as defined by Section 382, at any time since inception, utilization of the net operating loss carryforwards or research and development tax credit carryforwards would be subject to an annual limitation under Section 382, which is determined by first multiplying the value of the Company's stock at the time of the ownership change by the applicable long-term tax-exempt rate, and then could be subject to additional adjustments, as required. Any limitation may result in expiration of a portion of the net operating loss carryforwards or research and development tax credit carryforwards before utilization. Further, until a study is completed by the Company and any limitation is known, no amounts are being presented as an uncertain tax position.

The Company has evaluated the positive and negative evidence bearing upon its ability to realize the deferred tax assets. Management has considered the Company's history of cumulative net losses incurred since inception and its lack of commercialization of any products or generation of any revenue from product sales since inception and has concluded that it is more likely than not that the Company will not realize the benefits of the deferred tax assets. Accordingly, a full valuation allowance has been established against the net deferred tax assets as of December 31, 2016 and 2017 and March 31, 2018 (unaudited). Management reevaluates the positive and negative evidence at each reporting period.

Changes in the valuation allowance for deferred tax assets during the years ended December 31, 2016 and 2017 related primarily to the increase in net operating loss carryforwards and research and development tax credit carryforwards in 2016 and 2017, and the impact of the TCJA in 2017, and were as follows (in thousands):

 
   
   
 
 
  Year ended
December 31,
 
 
  2016
  2017
 

Valuation allowance as of beginning of year

  $ 2,048   $ 6,454  

Decreases recorded as benefit to income tax provision

        (4,887 )

Increases recorded to income tax provision

    4,406     11,008  

Valuation allowance as of end of year

  $ 6,454   $ 12,575  

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Rubius Therapeutics, Inc.
Notes to consolidated financial statements (Continued)

As of December 31, 2016 and 2017 and March 31, 2018 (unaudited), the Company had not recorded any amounts for unrecognized tax benefits. The Company's policy is to record interest and penalties related to income taxes as part of its income tax provision. As of December 31, 2016 and 2017 and March 31, 2018 (unaudited), the Company had no accrued interest or penalties related to uncertain tax positions and no amounts had been recognized in the Company's consolidated statements of operations and comprehensive loss. The Company files income tax returns in the U.S. and Massachusetts, as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal and state jurisdictions, where applicable. There are currently no pending tax examinations. The Company is open to future tax examination under statute from 2014 to the present; however, carryforward attributes that were generated prior to January 1, 2014 may still be adjusted upon examination by federal, state or local tax authorities if they either have been or will be used in a future period.

12.   Commitments and contingencies

    Operating leases

The Company leases its office and laboratory facilities in Cambridge, Massachusetts under two noncancelable operating leases that expire in December 2018 and September 2021. The lease agreements include lease incentives, payment escalations and rent holidays, which are accrued or deferred as appropriate such that rent expense for each lease is recognized on a straight-line basis over the terms of occupancy. Rent expense for the years ended December 31, 2016 and 2017 was $0.4 million and $1.0 million, respectively. Rent expense for the three months ended March 31, 2017 and 2018 (unaudited) was $0.2 million and $0.3 million, respectively.

Future minimum lease payments under operating leases as of December 31, 2017 are as follows (in thousands):

 
   
 
Year ending December 31,
   
 

2018

  $ 1,376  

2019

    692  

2020

    713  

2021

    547  

2022

     

  $ 3,328  

    Build-to-suit lease

In January 2018, the Company entered into a lease for office and laboratory space in Cambridge, Massachusetts. The lease term is expected to commence on November 1, 2018 and expires eight years from the commencement date. The Company is entitled to one five-year option to extend. The initial annual base rent is approximately $3.8 million, and such amount will increase during the initial term by 3% annually on the anniversary of the commencement date. The Company is obligated to pay its portion of real estate taxes and costs related to the premises, including costs of operations, maintenance, repair, replacement and management of the new leased premises. In connection with the lease, the Company maintains a letter of credit for the benefit of the landlord in the amount of $0.9 million, which is secured by a cash deposit

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Rubius Therapeutics, Inc.
Notes to consolidated financial statements (Continued)

of the same amount. The lease agreement allows for a landlord-provided tenant improvement allowance of $9.4 million to be applied to the costs of the construction of the leasehold improvements.

The Company is not the legal owner of the leased space. However, in accordance with ASC 840, Leases , the Company is deemed to be the owner of the leased space during the construction period because of certain indemnification provisions within the lease agreement. As a result, as of March 31, 2018 (unaudited), the Company capitalized approximately $11.0 million (equal to the estimated fair value of its leased portion of the premises) as construction-in-progress within property and equipment and recorded a corresponding build-to-suit facility lease financing obligation. As of March 31, 2018 (unaudited), the current portion of the lease financing obligation of $1.6 million was classified within accrued expenses and other current liabilities and the remaining $9.4 million was classified as a lease liability, net of current portion, on its consolidated balance sheet. The construction is expected to be completed in the fourth quarter of 2018, at which time the Company will assess and determine if the assets and corresponding liability should be de-recognized.

As of March 31, 2018 (unaudited), minimum commitments under this lease are as follows (in thousands):

 
   
 
Year ending December 31,
   
 

Remainder of 2018

  $ 626  

2019

    3,778  

2020

    3,891  

2021

    4,008  

2022

    4,128  

Thereafter

    16,995  

  $ 33,426  

    License agreement with the Whitehead Institute for Biomedical Research

In 2016, the Company entered into a license agreement with the Whitehead Institute for Biomedical Research ("WIBR") under which the Company was granted an exclusive, sublicensable, nontransferable license under two patent families related to the development of the Company's red cell therapies (the "WIBR License"). Under the terms of the WIBR License, the Company paid a nonrefundable upfront fee of less than $0.1 million and issued 366,667 shares of common stock, with a fair value of $0.1 million, as partial consideration for the license. The WIBR License was amended in December 2017 to grant the Company an exclusive license under a third patent family jointly owned by WIBR and Tufts University. Under this amendment, the Company paid a nonrefundable fee of less than $0.1 million as consideration for the addition of the third patent family to the WIBR License.

The Company is obligated to pay WIBR annual license maintenance fees of less than $0.1 million as well as patent-related costs, including legal fees, and low single-digit royalties based on annual net sales of licensed products and licensed services by the Company and its sublicensees. Based on the progress the Company makes in the advancement of products covered by the licensed patent rights, the Company is required to make aggregate milestone payments of up to $1.6 million upon the achievement of specified preclinical, clinical and regulatory milestones. In addition, the Company is required to pay to WIBR a percentage of the non-royalty payments that it receives from sublicensees of the patent rights licensed by WIBR. This percentage varies from low single-digit to low double-digit percentages and will be based upon

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Rubius Therapeutics, Inc.
Notes to consolidated financial statements (Continued)

the clinical stage of the product that is the subject of the sublicense. Royalties shall be paid by the Company on a licensed product-by-licensed product and country-by-country basis, beginning on the first commercial sale of such licensed product in such country until expiration of the last valid patent claim covering such licensed product in such country.

The Company has the right to terminate the WIBR License in its entirety, on a patent-by-patent or country-by-country basis, at will upon three months' notice to WIBR. WIBR may terminate the agreement upon breach of contract or in the event of the Company's bankruptcy, liquidation, insolvency or cessation of business related to the license.

    401(k) Plan

In January 2018, the Company established a defined-contribution plan under Section 401(k) of the Internal Revenue Code (the "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 pre-tax basis. The Company will make matching contributions at a rate of 50% of each employee's contribution up to a maximum employee contribution of 6% of eligible plan compensation. For the three months ended March 31, 2018 (unaudited), the Company made matching contributions of $0.1 million.

    Indemnification agreements

In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, contract research organizations, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its board of directors and certain of its executive officers that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. The Company has not incurred any material costs as a result of such indemnifications and is not currently aware of any indemnification claims.

    Legal proceedings

The Company is not currently party to any material legal proceedings. At each reporting date, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. The Company expenses as incurred the costs related to such legal proceedings.

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Rubius Therapeutics, Inc.
Notes to consolidated financial statements (Continued)

13.   Net loss and unaudited pro forma net loss per share

    Net loss per share

Basic and diluted net loss per share attributable to common stockholders was calculated as follows (in thousands, except share and per share amounts):

 
   
   
   
   
 
 
  Year ended
December 31,
  Three months ended
March 31,
 
 
  2016
  2017
  2017
  2018
 
 
   
   
  (unaudited)
  (unaudited)
 

Numerator:

                         

Net loss

  $ (11,016 ) $ (43,847 ) $ (4,857 ) $ (15,255 )

Accretion of Series A redeemable convertible preferred stock to redemption value

    (748 )   (656 )   (376 )    

Net loss attributable to common stockholders

  $ (11,764 ) $ (44,503 ) $ (5,233 ) $ (15,255 )

Denominator:

                         

Weighted average common shares outstanding, basic and diluted

    7,200,581     8,023,785     7,661,727     8,355,276  

Net loss per share attributable to common stockholders, basic and diluted

  $ (1.63 ) $ (5.55 ) $ (0.68 ) $ (1.83 )

Upon the issuance of Series A Preferred Stock, the holders of such shares were entitled to cumulative dividends of 8.0% per year, compounding annually. In connection with the issuance and sale of Series B Preferred Stock in June 2017, the holders of Series A Preferred Stock agreed to remove the cumulative dividend and redemption rights associated with the Series A Preferred Stock. Accordingly, for periods prior to June 2017, the calculation of net loss attributable to common stockholders included the accretion of Series A redeemable convertible preferred stock to redemption value.

The Company's potential dilutive securities, which include convertible preferred stock, warrants to purchase convertible preferred stock, unvested restricted common stock, vested restricted stock purchased with promissory notes and common stock options, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per

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Rubius Therapeutics, Inc.
Notes to consolidated financial statements (Continued)

share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:

 
  Year ended
December 31,
  Three months ended
March 31,
 
 
  2016
  2017
  2017
  2018
 
 
   
   
  (unaudited)
  (unaudited)
 

Convertible preferred stock (as converted to common stock)

    29,570,662     43,933,006     29,570,662     51,845,438  

Warrants to purchase convertible preferred stock (as converted to common stock)

    133,333     135,567     133,333     135,567  

Restricted common stock(1)

    348,120     6,277,014     3,875,349     6,627,014  

Stock options to purchase common stock

    4,159,165     4,661,635     3,835,280     7,443,885  

    34,211,280     55,007,222     37,414,624     66,051,904  

(1)    Includes unvested restricted stock and vested restricted stock issued for promissory notes.

    Unaudited pro forma net loss per share

The unaudited pro forma basic and diluted net loss per share attributable to common stockholders for the year ended December 31, 2017 and the three months ended March 31, 2018 has been prepared to give effect to adjustments arising upon the completion of a qualified IPO. The unaudited pro forma net loss attributable to common stockholders used in the calculation of unaudited pro forma basic and diluted net loss per share attributable to common stockholders does not include the effects of the accretion of Series A redeemable convertible preferred stock to redemption value or the change in the fair value of the warrant liability because the calculation gives effect to (i) the automatic conversion of all outstanding shares of convertible preferred stock into shares of common stock and (ii) all warrants to purchase convertible preferred stock becoming warrants to purchase common stock as if the proposed IPO had occurred on the later of January 1, 2017 or the issuance date of the convertible preferred stock or preferred stock warrants.

The unaudited pro forma basic and diluted weighted average common shares outstanding used in the calculation of unaudited pro forma basic and diluted net loss per share attributable to common stockholders for the year ended December 31, 2017 and the three months ended March 31, 2018 has been prepared to give effect, upon a qualified initial public offering, to the automatic conversion of all outstanding shares of convertible preferred stock into common stock as if the proposed initial public offering had occurred on the later of January 1, 2017 or the issuance date of the convertible preferred stock.

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Rubius Therapeutics, Inc.
Notes to consolidated financial statements (Continued)

Unaudited pro forma basic and diluted net loss per share attributable to common stockholders was calculated as follows (in thousands, except share and per share amounts):

 
   
   
 
 
  Year ended
December 31, 2017

  Three months ended
March 31, 2018

 
 
  (unaudited)
  (unaudited)
 

Numerator:

             

Net loss attributable to common stockholders

  $ (44,503 ) $ (15,255 )

Accretion of Series A redeemable convertible preferred stock to redemption value          

    656      

Change in fair value of preferred stock warrant liability

    785     43  

Pro forma net loss attributable to common stockholders

  $ (43,062 ) $ (15,212 )

Denominator:

             

Weighted average common shares outstanding, basic and diluted

    8,023,785     8,355,276  

Pro forma adjustment to reflect automatic conversion of convertible preferred stock into common stock upon the completion of the proposed initial public offering

    37,687,146     47,097,979  

Pro forma weighted average common shares outstanding, basic and diluted                   

    45,710,931     55,453,255  

Pro forma net loss per share attributable to common stockholders, basic and diluted

  $ (0.94 ) $ (0.27 )

14.   Related parties

In April 2013, the Company entered into a services agreement with Flagship Ventures Management, Inc. ("Flagship"), an affiliate of one of its principal stockholders, to provide general and administrative services to the Company, including certain consulting services and the provision of employee health and dental benefit plans for the Company's employees. The Company recorded general and administrative expense and made cash payments for services received under this agreement of $0.8 million and $0.9 million during the years ended December 31, 2016 and 2017, respectively. As of December 31, 2016 and 2017, there were no amounts payable to Flagship for costs related to the services agreement. The Company recorded general and administrative expense and made cash payments for services received under this agreement of $0.3 million and $0.2 million during the three months ended March 31, 2017 and 2018 (unaudited), respectively. As of March 31, 2018 (unaudited), there were no amounts payable to Flagship for costs related to the services agreement.

During the year ended December 31, 2017, the Company paid $0.1 million to Flagship for reimbursement of Series B Preferred Stock financing costs. During the years ended December 31, 2016 and 2017, the Company remitted less than $0.1 million and $0.1 million, respectively, of amounts withheld from employees for the health and dental benefits provided by Flagship to the Company's employees. During each of the three months ended March 31, 2017 and 2018 (unaudited), the Company remitted less than

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Rubius Therapeutics, Inc.
Notes to consolidated financial statements (Continued)

$0.1 million of amounts withheld from employees for the health and dental benefits provided by Flagship to the Company's employees.

In January 2017, the Company loaned $0.7 million to the chairman of its board of directors to purchase shares of common stock pursuant to a promissory note and a restricted stock agreement (see Note 10). In May 2017, the Company loaned $1.8 million to the chairman of its board of directors to purchase shares of common stock pursuant to a promissory note and a restricted stock agreement (see Note 10). The January 2017 promissory note provides that the unpaid principal amount of the loan bears interest at 1.97% annually, and the May 2017 promissory note provides that the unpaid principal amount of the loan bears interest at 2.04% annually. Interest is payable annually or is converted to principal and payable at the maturity date. The maturity date of the promissory notes occurs on the earliest of (i) seven years from the issuance date of the notes, (ii) 60 days following the date of termination of services of the borrower, and (iii) immediately prior to an initial filing of a registration statement by the Company. The promissory notes are partial-recourse and secured by a pledge of the shares of common stock purchased with the promissory notes. As of December 31, 2017 and March 31, 2018 (unaudited), no amounts were due to the Company and no amounts had been received by the Company as repayment of these promissory notes. On June 21, 2018 (unaudited), the aggregate principal balance of both promissory notes of $2.5 million and all interest that had accrued thereon, totaling $0.1 million, was forgiven by the Company and the promissory notes were terminated (see Note 16).

In April 2017, the Company loaned $0.2 million to an executive officer of the Company to purchase shares of common stock pursuant to two promissory notes and two restricted stock agreements (see Note 10). The promissory notes provide that the unpaid principal amount of the loans bear interest at 2.05% annually, and interest is payable annually or is converted to principal and payable at the maturity date. The maturity date of the promissory notes occurs on the earliest of (i) seven years from the issuance date of the notes, (ii) 60 days following the date of termination of employment of the borrower, and (iii) immediately prior to an initial filing of a registration statement by the Company. The promissory notes are partial-recourse and secured by a pledge of the shares of common stock purchased with the promissory notes. As of December 31, 2017 and March 31, 2018 (unaudited), no amounts were due to the Company and no amounts had been received by the Company as repayment of these promissory notes. On June 21, 2018 (unaudited), the aggregate principal balance of both promissory notes of $0.2 million and all interest that had accrued thereon, totaling less than $0.1 million, was repaid in full by the executive officer and the promissory notes were terminated (see Note 16).

15.   Subsequent events

For its consolidated financial statements as of December 31, 2017 and for the year then ended, the Company evaluated subsequent events through April 13, 2018, the date on which those financial statements were issued.

    Lease of office and laboratory space

In January 2018, the Company entered into a lease for office and laboratory space in Cambridge, Massachusetts. The lease term is expected to commence on November 1, 2018 and expires eight years from the commencement date. The initial annual base rent is approximately $3.8 million, and such amount will increase by 3% annually on the anniversary of the commencement date. The Company is obligated to pay

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Rubius Therapeutics, Inc.
Notes to consolidated financial statements (Continued)

its portion of real estate taxes and costs related to the premises, including costs of operations, maintenance, repair, replacement and management of the new leased premises. In connection with the lease, the Company maintains a letter of credit for the benefit of the landlord in the amount of $0.9 million, which is secured by a cash deposit of the same amount. The lease agreement allows for a landlord-provided tenant improvement allowance of $9.4 million to be applied to the costs of the construction of the leasehold improvements.

    Increase in authorized number of shares of common stock

In February 2018, the Company increased the number of authorized shares of common stock from 65,000,000 shares to 75,000,000 shares. On April 11, 2018, the Company increased the number of authorized shares of common stock from 75,000,000 shares to 78,800,000 shares.

    Issuance and sale of Series C convertible preferred stock

In February 2018, the Company issued and sold 7,912,432 shares of Series C Preferred Stock, at a price of $12.79 per share, for gross proceeds of $101.2 million. The terms of the Series C Preferred Stock are substantially the same as the terms of the Series A and Series B Preferred Stock, except for the liquidation preference per share, which is equal to the per share price paid. In connection with the issuance, the Company increased the number of authorized shares of preferred stock from 44,070,808 shares to 51,981,005 shares.

    Increase in shares available for issuance under the 2014 Plan

In February 2018, the Company increased the number of shares of common stock authorized for issuance under the 2014 Plan from 13,028,304 shares to 14,528,304 shares. In March 2018, the Company increased the number of shares of common stock authorized for issuance under the 2014 Plan from 14,528,304 shares to 14,778,304 shares. On April 11, 2018, the Company increased the number of shares authorized for issuance under the 2014 Plan from 14,778,304 shares to 18,582,150 shares.

    Grants of stock options under the 2014 Plan

From January 1, 2018 to April 11, 2018, the Company granted options for the purchase of an aggregate of 2,982,000 shares of common stock, at a weighted average exercise price of $5.46 per share, to employees and directors. The aggregate grant-date fair value of these options was $16.5 million, which is expected to be recognized as stock-based compensation expense over a period of approximately four years.

From January 1, 2018 to April 11, 2018, the Company granted options for the purchase of an aggregate of 3,811,346 shares of common stock, at a weighted average exercise price of $8.65 per share, to non-employees. The aggregate grant-date fair value of these options was $27.4 million, and the options vest over approximately four years. Amounts to be expensed during the vesting periods of these options will be determined based on the fair value of the awards at the time of vesting.

16.   Subsequent events (unaudited)

For its interim consolidated financial statements as of March 31, 2018 and for the three months then ended, the Company evaluated subsequent events through May 24, 2018, the date on which those financial statements were issued.

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Rubius Therapeutics, Inc.
Notes to consolidated financial statements (Continued)

    Amendment to 2015 Credit Facility

In May 2018, the Company entered into an amendment to the 2015 Credit Facility to modify the interest rate and extend the interest-only payment period and the maturity date. Outstanding borrowings under the 2015 Credit Facility, as amended, bear interest at an annual rate equal to the bank's prime rate plus 0.75%, subject to a floor of 5.5%, and are repayable in monthly interest-only payments through May 2019 and in equal monthly payments of principal plus accrued interest from June 2019 until the maturity date in November 2020.

    Increase in authorized number of shares

In June 2018, the Company increased the number of authorized shares of common stock from 78,800,000 shares to 79,000,000 shares.

    Increase in shares available for issuance under 2014 Plan

In June 2018, the Company increased the number of shares authorized for issuance under the 2014 Plan from 18,582,150 shares to 19,152,328 shares.

    Forgiveness of promissory notes issued by chairman of the board of directors

On June 21, 2018, the Company forgave the aggregate principal balance of $2.5 million and all interest that had accrued thereon, totaling $0.1 million, related to two promissory notes that were issued by the chairman of the board of directors in January 2017 and May 2017 for the purchase of shares of the Company's common stock (see Note 14).

The Company accounts for these purchases of common stock with promissory notes as stock option grants (see Note 10). The forgiveness of these promissory notes by the Company will result in the recognition of incremental stock-based compensation expense of $1.2 million during the three months ended June 30, 2018, which represents the change in the fair value of the vested portion of the awards resulting from the forgiveness. Stock-based compensation expense related to these awards will continue to be recognized over the requisite service period of the awards, based on the remeasured fair value of the awards at each reporting period.

    Repayment of promissory notes issued by executive officer

On June 21, 2018, an executive officer repaid in full the aggregate principal balance of $0.2 million and all interest that had accrued thereon, totaling less than $0.1 million, related to two promissory notes that were issued by the executive officer in April 2017 for the early exercise of a stock option and for the purchase of shares of the Company's common stock (see Note 14).

The Company accounts for this early exercise of a stock option with a promissory note and this purchase of common stock with a promissory note as stock option grants (see Note 10). The repayment of the notes by the executive officer will not have an impact on the Company's consolidated statement of operations and comprehensive loss during the three months ended June 30, 2018. Stock-based compensation expense for these awards will continue to be recognized over the requisite service period of the awards, based on the grant-date fair value of the awards.

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                 shares

LOGO

Common stock

Prospectus

J.P. Morgan   Morgan Stanley   Jefferies   Leerink Partners

                           , 2018


Table of Contents

Part II

Information not required in prospectus

Item 13.    Other expenses of issuance and distribution.

The following table sets forth the fees and expenses, other than underwriting discounts and commissions, payable in connection with the registration of the common stock hereunder. All amounts are estimates, except the SEC registration fee and FINRA filing fee.

 
   
 
 
  Amount
to be paid

 

SEC registration fee

  $ 24,900  

FINRA filing fee

    30,500  

Nasdaq Global Market listing fee

               *  

Printing and mailing

               *  

Legal fees and expenses

               *  

Accountant's fees and expenses

               *  

Transfer agent and registrar fees and expenses

               *  

Miscellaneous

               *  

Total

  $            *  

*      To be completed by amendment.

Item 14.    Indemnification of directors and officers.

Section 145 of the Delaware General Corporation Law (the "DGCL") authorizes a corporation to indemnify its directors and officers against liabilities arising out of actions, suits and proceedings to which they are made or threatened to be made a party by reason of the fact that they have served or are currently serving as a director or officer to a corporation. The indemnity may cover expenses (including attorneys' fees) judgments, fines and amounts paid in settlement actually and reasonably incurred by the director or officer in connection with any such action, suit or proceeding. Section 145 permits corporations to pay expenses (including attorneys' fees) incurred by directors and officers in advance of the final disposition of such action, suit or proceeding. In addition, Section 145 provides that a corporation has the power to purchase and maintain insurance on behalf of its directors and officers against any liability asserted against them and incurred by them in their capacity as a director or officer, or arising out of their status as such, whether or not the corporation would have the power to indemnify the director or officer against such liability under Section 145.

We have adopted provisions in our certificate of incorporation to be in effect upon the closing of this offering and bylaws to be in effect upon the effectiveness of this registration statement that limit or eliminate the personal liability of our directors to the fullest extent permitted by the DGCL, as it now exists or may in the future be amended. Consequently, a director will not be personally liable to us or our stockholders for monetary damages or breach of fiduciary duty as a director, except for liability for:

any breach of the director's duty of loyalty to us or our stockholders;

any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;

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any unlawful payments related to dividends or unlawful stock purchases, redemptions or other distributions; or

any transaction from which the director derived an improper personal benefit.

These limitations of liability do not alter director liability under the federal securities laws and do not affect the availability of equitable remedies, such as an injunction or rescission.

In addition, our bylaws provide that:

we will indemnify our directors, officers and, in the discretion of our board of directors, certain employees to the fullest extent permitted by the DGCL, as it now exists or may in the future be amended; and

we will advance reasonable expenses, including attorneys' fees, to our directors and, in the discretion of our board of directors, to our officers and certain employees, in connection with legal proceedings relating to their service for or on behalf of us, subject to limited exceptions.

We have entered into indemnification agreements with each of our directors and intend to enter into such agreements with our executive officers. These agreements provide that we will indemnify each of our directors, our executive officers and, at times, their affiliates to the fullest extent permitted by Delaware law. We will advance expenses, including attorneys' fees (but excluding judgments, fines and settlement amounts), to each indemnified director, executive officer or affiliate in connection with any proceeding in which indemnification is available and we will indemnify our directors and officers for any action or proceeding arising out of that person's services as a director or officer brought on behalf of us or in furtherance of our rights. Additionally, certain of our directors or officers may have certain rights to indemnification, advancement of expenses or insurance provided by their affiliates or other third parties, which indemnification relates to and might apply to the same proceedings arising out of such director's or officer's services as a director referenced herein. Nonetheless, we have agreed in the indemnification agreements that our obligations to those same directors or officers are primary and any obligation of such affiliates or other third parties to advance expenses or to provide indemnification for the expenses or liabilities incurred by those directors are secondary.

We also maintain general liability insurance which covers certain liabilities of our directors and officers arising out of claims based on acts or omissions in their capacities as directors or officers, including liabilities under the Securities Act of 1933, as amended (the "Securities Act").

The underwriting agreement filed as Exhibit 1.1 to this registration statement provides for indemnification of us and our directors and officers by the underwriters against certain liabilities under the Securities Act and the Securities Exchange Act of 1934.

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:

(a)   Issuances of capital stock

Set forth below is information regarding securities we have issued within the past three years that were not registered under the Securities Act.

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On January 28, 2016, we issued and sold to an accredited investor an aggregate of 366,667 shares of our common stock in connection with the WIBR License.

From January 2017 to May 2017, we issued and sold an aggregate of 6,627,014 shares of our restricted common stock to certain of our directors and officers at prices per share ranging from $0.18 to $1.65 for aggregate consideration of $2,851,133.

In October 2017, we issued 213,439 shares of common stock to our chairman as payment of a one-time bonus of $612,570, which was payable, at his election, in cash or shares of common stock.

In the second and third closing of sales of our Series A preferred stock in July 2016 and December 2016, we issued and sold an aggregate of 19,083,333 shares of Series A preferred stock at a price per share of $0.60 for aggregate cash consideration of approximately $11.4 million.

In June 2017, we issued and sold an aggregate of 14,362,344 Series B preferred shares at a price per share of $8.39 for aggregate cash consideration of approximately $120.5 million.

In February 2018, we issued and sold an aggregate of 7,912,432 Series C preferred shares at a price per share of $12.79 for aggregate cash consideration of approximately $101.2 million.

No underwriters were involved in the foregoing sales of securities. Unless otherwise stated, the sales of securities described above were deemed to be exempt from registration pursuant to Section 4(a)(2) of the Securities Act, including Regulation D and Rule 506 promulgated thereunder, as transactions by an issuer not involving a public offering. All of the purchasers in these transactions represented to us in connection with their purchase that they were acquiring the securities for investment and not distribution, that they could bear the risks of the investment and could hold the securities for an indefinite period of time. Such purchasers received written disclosures that the securities had not been registered under the Securities Act and that any resale must be made pursuant to a registration or an available exemption from such registration. All of the foregoing securities are deemed restricted securities for the purposes of the Securities Act.

(b)   Grants and exercises of stock options

We have granted stock options to purchase an aggregate of 12,813,103 shares of our common stock, with exercise prices ranging from $0.15 to $12.98 per share, to employees, directors and consultants pursuant to the 2014 Plan. Since June 22, 2015, 1,694,259 shares of common stock have been issued upon the exercise of stock options pursuant to the 2014 Plan, including 1,400,000 shares issued pursuant to an early exercise resulting in the issuance of restricted common stock.

The issuances of the securities described above were deemed to be exempt from registration pursuant to Section 4(a)(2) of the Securities Act or Rule 701 promulgated under the Securities Act as transactions pursuant to compensatory benefit plans. The shares of common stock issued upon the exercise of options are deemed to be restricted securities for purposes of the Securities Act.

(c)   Warrants to purchase capital stock

On November 20, 2015, we issued a warrant to purchase up to 133,333 shares of Series A preferred stock, which was amended and restated on May 19, 2017. On May 19, 2017, we issued a warrant to purchase shares of Series B preferred stock, which was amended and restated on September 13, 2017 as a warrant to purchase up to 2,234 shares of Series B preferred stock.

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Item 16.    Exhibits and financial statement schedules.

(a)
Exhibits
 
   
Exhibit
number

  Description
  1.1 * Form of Underwriting Agreement.
        
  3.1   Amended and Restated Certificate of Incorporation of Registrant, as currently in effect.
        
  3.2   Form of Amended and Restated Certificate of Incorporation of Registrant, to be in effect upon completion of this offering.
        
  3.3   Bylaws of Registrant, as currently in effect.
        
  3.4   Form of Amended and Restated Bylaws of Registrant, to be in effect upon the effectiveness of this registration statement.
        
  4.1 * Specimen Common Stock Certificate.
        
  4.2   Second Amended and Restated Investors' Rights Agreement among the Registrant and certain of its stockholders, dated February 23, 2018.
        
  4.3   Amended and Restated Warrant to Purchase Stock, dated May 19, 2017, issued by the Registrant to PacWest Bancorp.
        
  4.4   Amended and Restated Second Warrant to Purchase Stock, dated September 13, 2017, issued by the Registrant to PacWest Bancorp.
        
  5.1 * Opinion of Goodwin Procter LLP.
        
  10.1 # Amended and Restated 2014 Stock Incentive Plan, and form of award agreements thereunder.
        
  10.2 *# 2018 Stock Option and Incentive Plan, and form of award agreements thereunder.
        
  10.3 * 2018 Employee Stock Purchase Plan.
        
  10.4 # Senior Executive Cash Incentive Bonus Plan.
        
  10.5 *# Non-Employee Director Compensation Policy.
        
  10.6 *# Employment Agreement between the Registrant and Pablo J. Cagnoni, M.D., to be in effect upon the effectiveness of this registration statement.
        
  10.7 *# Employment Agreement between the Registrant and Torben Straight Nissen, Ph.D., to be in effect upon the effectiveness of this registration statement.
        
  10.8 *# Employment Agreement between the Registrant and Andrew M. Oh, to be in effect upon the effectiveness of this registration statement.
        
  10.9 *# Employment Agreement between the Registrant and Christopher L. Carpenter, M.D., Ph.D., to be in effect upon the effectiveness of this registration statement.
        
  10.10 # Second Amended and Restated Chairman Agreement between the Registrant and David R. Epstein.
        
  10.11 Lease Agreement between the Registrant and ARE-MA Region No. 58 LLC, dated January 18, 2018.
        
  10.12   Loan and Security Agreement between the Registrant and Pacific Western Bank, dated November 20, 2015, as amended to date.
 
   

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Exhibit
number

  Description
  10.13 Exclusive Patent License Agreement between the Registrant and the Whitehead Institute for Biomedical Research, dated January 28, 2016, as amended to date.
        
  10.14 # Form of Indemnification Agreement between the Registrant and each of its directors.
        
  10.15 # Form of Indemnification Agreement between the Registrant and each of its executive officers.
        
  10.16 * Manufacturing Facility Purchase and Sale Agreement between the Registrant and         dated              , 2018.
        
  21   List of Subsidiaries of Registrant.
        
  23.1   Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm.
        
  23.2 * Consent of Goodwin Procter LLP (included in Exhibit 5.1).
        
  24   Power of Attorney (included on signature page).

*      To be filed by amendment.

†      Application has been made to the Securities and Exchange Commission for confidential treatment of certain provisions. Omitted material for which confidential treatment has been requested has been filed separately with the Securities and Exchange Commission.

#      Indicates a management contract or any compensatory plan, contract or arrangement.

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(b)
Financial statements schedules:

Schedules 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.

Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, or the 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 Registrant hereby undertakes that:

(a)    The Registrant will provide to the underwriter at the closing as specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.

(b)   For purposes of determining any liability under the Securities Act of 1933, as amended, the information omitted from a form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in the form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933, as amended, shall be deemed to be part of this registration statement as of the time it was declared effective.

(c)    For the purpose of determining any liability under the Securities Act of 1933, as amended, 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, 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, Massachusetts, on the 22nd day of June, 2018.

    RUBIUS THERAPEUTICS, INC.

 

 

By:

 

/s/ PABLO J. CAGNONI

Pablo J. Cagnoni, M.D.
Chief Executive Officer

Power of attorney and signatures

Each individual whose signature appears below hereby constitutes and appoints Pablo J. Cagnoni, Torben Straight Nissen and Andrew Oh as such person's true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, for such person in such person's name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement (or any Registration Statement for the same offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933), and to file the same, with all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission granting unto each said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as such person might or could do in person, hereby ratifying and confirming all that any said attorney-in-fact and agent, or any substitute or substitutes of any of them, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement and Power of Attorney has been signed by the following person in the capacities and on the date indicated.

Name
 
Title
 
Date
 

 

 

 

 

 

 

 
/s/ PABLO J. CAGNONI

Pablo J. Cagnoni, M.D.
  Chief Executive Officer, Director (Principal Executive Officer)     June 22, 2018  

/s/ DAVID R. EPSTEIN

David R. Epstein

 

Chairman, Director

 

 

June 22, 2018

 

/s/ TORBEN STRAIGHT NISSEN

Torben Straight Nissen, Ph.D.

 

President, Director

 

 

June 22, 2018

 

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Name
 
Title
 
Date
 

 

 

 

 

 

 

 
/s/ ANDREW M. OH

Andrew M. Oh
  Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)     June 22, 2018  

/s/ NOUBAR B. AFEYAN

Noubar B. Afeyan, Ph.D.

 

Director

 

 

June 22, 2018

 

/s/ FRANCIS CUSS

Francis Cuss, M.B., B.Chir., FRCP

 

Director

 

 

June 22, 2018

 

/s/ ROBERT S. LANGER

Robert S. Langer, Sc.D.

 

Director

 

 

June 22, 2018

 

/s/ ROGER POMERANTZ

Roger Pomerantz, M.D.

 

Director

 

 

June 22, 2018

 

/s/ MICHAEL ROSENBLATT

Michael Rosenblatt, M.D.

 

Director

 

 

June 22, 2018

 

/s/ CATHERINE A. SOHN

Catherine A. Sohn, Pharm.D.

 

Director

 

 

June 22, 2018

 

/s/ JONATHAN R. SYMONDS

Jonathan R. Symonds, CBE

 

Director

 

 

June 22, 2018

 

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Exhibit 3.1

 

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

 

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

 

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

 

DOES HEREBY CERTIFY:

 

1.              That the name of this corporation is Rubius Therapeutics, Inc., and that this corporation was originally incorporated pursuant to the General Corporation Law on April 26, 2013, under the name VL26, Inc.

 

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

 

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

 

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

 

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

 

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

 

FOURTH: The total number of shares of all classes of stock which the Corporation shall have authority to issue is 130,781,005 consisting of (i) 78,800,000 shares of Common Stock, $0.001 par value per share (“ Common Stock ”), and (ii) 51,981,005 shares of Preferred Stock, $0.001 par value per share (“ Preferred Stock ”), of which 29,703,995 shares are hereby designated “Series A Preferred Stock”, 14,364,578 shares are hereby designated “Series B Preferred Stock” and 7,912,432 shares are hereby designated “Series C Preferred Stock.”

 



 

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

 

A.             COMMON STOCK

 

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

 

2.              Voting . The holders of the Common Stock are entitled to one vote for each share of Common Stock held at all meetings of stockholders (and written actions in lieu of meetings); provided , however , that, except as otherwise required by law, holders of Common Stock, as such, shall not be entitled to vote on any amendment to the Certificate of Incorporation that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to the Certificate of Incorporation or pursuant to the General Corporation Law. The number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by (in addition to any vote of the holders of one or more series of Preferred Stock that may be required by the terms of the Certificate of Incorporation) the affirmative vote of the holders of shares of capital stock of the Corporation representing a majority of the votes represented by all outstanding shares of capital stock of the Corporation entitled to vote, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law.

 

B.             PREFERRED STOCK

 

The Series A Preferred Stock, the Series B Preferred Stock and the Series C Preferred Stock shall have the following rights, preferences, powers, privileges and restrictions, qualifications and limitations. Unless otherwise indicated, references to “Sections” or “Subsections” in this Part B of this Article Fourth refer to sections and subsections of Part B of this Article Fourth.

 

1.              Dividends .

 

The Corporation shall not declare, pay or set aside any dividends on shares of any other class or series of capital stock of the Corporation (other than dividends on shares of Common Stock payable in shares of Common Stock) unless (in addition to the obtaining of any consents required elsewhere in the Certificate of Incorporation) the holders of the Series A Preferred Stock then outstanding, the holders of Series B Preferred Stock then outstanding and the holders of Series C Preferred Stock then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, as applicable, in an amount at least equal to (i) in the case of a dividend on Common Stock or any class or series that is convertible into Common Stock, that dividend per share of Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, as applicable, as would equal the product of (A) the dividend payable on each share of such class or series determined, if applicable, as if all shares of such class or series had been converted into

 

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Common Stock and (B) the number of shares of Common Stock issuable upon conversion of a share of Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock, as applicable, in each case calculated on the record date for determination of holders entitled to receive such dividend or (ii) in the case of a dividend on any class or series that is not convertible into Common Stock, at a rate per share of Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, as applicable, determined by (A) dividing the amount of the dividend payable on each share of such class or series of capital stock by the original issuance price of such class or series of capital stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to such class or series) and (B) multiplying such fraction by an amount equal to the Series A Original Issue Price, Series B Original Issue Price or Series C Original Issue Price (each as defined below), as applicable; 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, Series B Preferred Stock and Series C 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, Series B Preferred Stock dividend or Series C Preferred Stock dividend, as applicable. The “ S eries A Original Issue Price ” shall mean $0.60 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series A Preferred Stock. The “ S eries B Original Issue Price ” shall mean $8.39 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series B Preferred Stock. The “ S eries C Original Issue Price ” shall mean $12.79 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series C Preferred Stock.

 

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

 

2.1           Preferential Payments to Holders of Preferred Stock . In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event (as defined below), the holders of shares of Series A Preferred Stock then outstanding, the holders of shares of Series B Preferred Stock then outstanding and the holders of shares of Series C Preferred Stock then outstanding shall be entitled to be paid, on a pari passu basis, out of the assets of the Corporation available for distribution to its stockholders before any payment shall be made to the holders of Common Stock by reason of their ownership thereof, an amount per share equal to (i) in the case of the Series A Preferred Stock, the greater of (A) the Series A Original Issue Price, plus any dividends declared but unpaid thereon, or (B) such amount per share as would have been payable had all shares of Series A Preferred Stock been converted into Common Stock pursuant to Section 4 immediately prior to such liquidation, dissolution, winding up or Deemed Liquidation Event (the amount payable pursuant to this clause (i) is hereinafter referred to as the “ Series A Liquidation Amount ”), (ii) in the case of the Series B Preferred Stock, the greater of (A) the Series B Original Issue Price, plus any dividends declared but unpaid thereon, or (B) such amount per share as would have been payable had all shares of Series B Preferred Stock been converted into Common Stock pursuant to Section 4 immediately prior to such liquidation, dissolution, winding up or Deemed Liquidation Event (the amount payable pursuant to this clause (ii) is hereinafter referred to as the “ Series B Liquidation

 

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Amount ”) and (iii) in the case of the Series C Preferred Stock, the greater of (A) the Series C Original Issue Price, plus any dividends declared but unpaid thereon, or (B) such amount per share as would have been payable had all shares of Series C Preferred Stock been converted into Common Stock pursuant to Section 4 immediately prior to such liquidation, dissolution, winding up or Deemed Liquidation Event (the amount payable pursuant to this clause (iii) is hereinafter referred to as the “ Series C Liquidation Amount ”). If upon any such voluntary or involuntary liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares of Series A Preferred Stock, the holders of shares of Series B Preferred Stock and the holders of shares of Series C Preferred Stock the full amount to which they shall be entitled under this Subsection 2.1 , the holders of shares of Series A Preferred Stock, the holders of shares of Series B Preferred Stock, and the holders of shares of Series C Preferred Stock shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

 

2.2           Payments to Holders of Common Stock . In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation or Deemed Liquidation Event, after the payment of all preferential amounts required to be paid to the holders of shares of Series A Preferred Stock, the holders of shares of Series B Preferred Stock and the holders of shares of Series C Preferred Stock, the remaining assets of the Corporation available for distribution to its stockholders shall be distributed among the holders of shares of Common Stock, pro rata based on the number of shares held by each such holder.

 

2.3           Deemed Liquidation Events .

 

2.3.1        Definition . Each of the following events shall be considered a “ Deemed Liquidation Event ” unless the holders of a majority in voting power of the outstanding shares of Preferred Stock, voting together as a single class, elect otherwise by written notice sent to the Corporation at least ten (10) days prior to the effective date of any such event:

 

(a)            a merger or consolidation in which

 

(i)             the Corporation is a constituent party or

 

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

 

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

 

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(provided that, for the purpose of this Subsection 2.3.1 , all shares of Common Stock issuable upon exercise of Options (as defined below) outstanding immediately prior to such merger or consolidation or upon conversion of Convertible Securities (as defined below) outstanding immediately prior to such merger or consolidation shall be deemed to be outstanding immediately prior to such merger or consolidation and, if applicable, converted or exchanged in such merger or consolidation on the same terms as the actual outstanding shares of Common Stock are converted or exchanged); or

 

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

 

2.3.2        Effecting a Deemed Liquidation Event .

 

(a)            The Corporation shall not have the power to effect a Deemed Liquidation Event referred to in Subsection 2.3.1(a)(i)  unless the agreement or plan of merger or consolidation for such transaction (the “ Merger Agreement ”) provides that the consideration payable to the stockholders of the Corporation shall be allocated among the holders of capital stock of the Corporation in accordance with Subsections 2.1 and 2.2 .

 

(b)            In the event of a Deemed Liquidation Event referred to in Subsection 2.3.1(a)(ii)  or 2.3.1(b) , if the Corporation does not effect a dissolution of the Corporation under the General Corporation Law within ninety (90) days after such Deemed Liquidation Event, then (i) the Corporation shall send a written notice to each holder of Preferred Stock no later than the ninetieth (90 th ) day after the Deemed Liquidation Event advising such holders of their right (and the requirements to be met to secure such right) pursuant to the terms of the following clause (ii)  to require the redemption of such shares of Preferred Stock and (ii) if the holders of a majority in voting power of the then outstanding shares of Preferred Stock, voting together as a single class, so request in a written instrument delivered to the Corporation not later than one hundred twenty (120) days after such Deemed Liquidation Event, the Corporation shall use the consideration received by the Corporation for such Deemed Liquidation Event (net of any retained liabilities associated with the assets sold or technology licensed, as determined in good faith by the Board of Directors), together with any other assets of the Corporation available for distribution to its stockholders, all to the extent permitted by Delaware law governing distributions to stockholders (the “ Available Proceeds ”), on the one hundred fiftieth (150 th ) day after such Deemed Liquidation Event (the “ Redemption Date ”), to redeem all outstanding shares of Series A Preferred Stock at a price per share equal to the Series A Liquidation Amount, all outstanding shares of Series B Preferred Stock at a price per share equal to the Series B Liquidation Amount and all outstanding shares of Series C Preferred Stock at a price per share equal to the Series C Liquidation Amount. Notwithstanding the foregoing, in the event of a redemption pursuant to the preceding sentence, if the Available Proceeds are not sufficient to redeem all outstanding shares of Preferred Stock, the Corporation shall redeem a pro

 

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rata portion of each holder’s shares of Preferred Stock to the fullest extent of such Available Proceeds, based on the respective amounts which would otherwise be payable in respect of the shares to be redeemed if the Available Proceeds were sufficient to redeem all such shares, and shall redeem the remaining shares to have been redeemed as soon as practicable after the Corporation has funds legally available therefor. The Corporation shall send written notice of the mandatory redemption (the “ Redemption Notice ”) to each holder of record of Preferred Stock not less than forty (40) days prior to the Redemption Date. The Redemption Notice shall state: (i) the number of shares of each series of Preferred Stock held by the holder that the Corporation shall redeem on the Redemption Date specified in the Redemption Notice, (ii) the Redemption Date and the Series A Liquidation Amount, the Series B Liquidation Amount and the Series C Liquidation Amount, (iii) the date upon which the holder’s right to convert such shares terminates (as determined in accordance with Subsection 4.1 ), and (iv) for holders of shares in certificated form, that the holder is to surrender to the Corporation, in the manner and at the place designated, his, her or its certificate or certificates representing the shares of Preferred Stock to be redeemed. On or before the Redemption Date, each holder of shares of Preferred Stock, unless such holder has exercised his, her or its right to convert such shares as provided in Section 4 , shall, if a holder of shares in certificated form, surrender the certificate or certificates representing such shares (or, if such registered holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate) to the Corporation, in the manner and at the place designated in the Redemption Notice, and thereupon the Series A Liquidation Amount, the Series B Liquidation Amount and the Series C Liquidation Amount, as the case may be, for such shares shall be payable to the order of the person whose name appears on such certificate or certificates as the owner thereof. In the event less than all of the shares of Preferred Stock represented by a certificate are redeemed, a new certificate representing the unredeemed shares of Preferred Stock shall promptly be issued to such holder. If the Redemption Notice shall have been duly given, and if on the Redemption Date the Series A Liquidation Amount, the Series B Liquidation Amount and the Series C Liquidation Amount, as the case may be, payable upon redemption of the shares of Preferred Stock to be redeemed on the Redemption Date is paid or tendered for payment or deposited with an independent payment agent so as to be available therefor in a timely manner, then notwithstanding that any certificates evidencing any of the shares of Preferred Stock so called for redemption shall not have been surrendered, dividends with respect to such shares of Preferred Stock shall cease to accrue after the Redemption Date and all rights with respect to such shares shall forthwith after the Redemption Date terminate, except only the right of the holders to receive the Series A Liquidation Amount, the Series B Liquidation Amount and the Series C Liquidation Amount, as the case may be, without interest upon surrender of any such certificate or certificates therefor. Prior to the distribution or redemption provided for in this Subsection 2.3.2(b) , the Corporation shall not expend or dissipate the consideration received for such Deemed Liquidation Event, except to discharge expenses incurred in connection with such Deemed Liquidation Event or in the ordinary course of business.

 

2.3.3        Amount Deemed Paid or Distributed . The amount deemed paid or distributed to the holders of capital stock of the Corporation upon any such merger, consolidation, sale, transfer, exclusive license, other disposition or redemption shall be the cash or the value of the property, rights or securities paid or distributed to such holders by the Corporation or the

 

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acquiring person, firm or other entity. The value of such property, rights or securities shall be determined in good faith by the Board of Directors, including the Lead Preferred Director (as defined below).

 

2.3.4        Allocation of Escrow and Contingent Consideration . In the event of a Deemed Liquidation Event pursuant to Subsection 2.3.1(a)(i) , if any portion of the consideration payable to the stockholders of the Corporation is payable only upon satisfaction of contingencies (the “ Additional Consideration ”), the Merger Agreement shall provide that (a) the portion of such consideration that is not Additional Consideration (such portion, the “ Initial Consideration ”) shall be allocated among the holders of capital stock of the Corporation in accordance with Subsections 2.1 and 2.2 as if the Initial Consideration were the only consideration payable in connection with such Deemed Liquidation Event; and (b) any Additional Consideration which becomes payable to the stockholders of the Corporation upon satisfaction of such contingencies shall be allocated among the holders of capital stock of the Corporation in accordance with Subsections 2.1 and 2.2 after taking into account the previous payment of the Initial Consideration as part of the same transaction. For the purposes of this Subsection 2.3.4 , consideration placed into escrow or retained as holdback to be available for satisfaction of indemnification or similar obligations in connection with such Deemed Liquidation Event shall be deemed to be Additional Consideration.

 

3.              Voting .

 

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

 

3.2           Election of Directors . The holders of record of a majority in voting power of the then outstanding shares of Preferred Stock, voting together as a single class, shall be entitled to elect one (1) director of the Corporation (the “ Lead Preferred Director ”). Any director elected as provided in the preceding sentence may be removed without cause by, and only by, the affirmative vote of the holders of the shares of the class or series of capital stock entitled to elect such director or directors, given either at a special meeting of such stockholders duly called for that purpose or pursuant to a written consent of stockholders. If the holders of record of shares of Preferred Stock fail to elect a sufficient number of directors to fill all directorships for which they are entitled to elect directors, voting together as a single class, pursuant to the first sentence of this Subsection 3.2 , then any directorship not so filled shall remain vacant until such time as the holders of the Preferred Stock elect a person to fill such directorship by vote or written consent in lieu of a meeting; and no such directorship may be filled by stockholders of the Corporation other than by the stockholders of the Corporation that are entitled to elect a person to fill such directorship, voting together as a single class. The holders of record of a majority in voting power of the then outstanding shares of Common Stock

 

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

 

3.3           Preferred Stock Protective Provisions . At any time when shares of Preferred Stock are outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without (in addition to any other vote required by law or the Certificate of Incorporation or By-laws of the Corporation) the written consent or affirmative vote of the holders of a majority in voting power of the then outstanding shares of Preferred Stock, given in writing or by a vote at a meeting, consenting or voting (as the case may be) together as a single class, and any such act or transaction entered into without such consent or vote shall be null and void ab initio , and of no force or effect:

 

3.3.1      liquidate, dissolve or wind-up the business and affairs of the Corporation, effect any merger or consolidation or any other Deemed Liquidation Event, or consent to any of the foregoing;

 

3.3.2      amend, alter or repeal any provision of the Certificate of Incorporation or By-laws of the Corporation;

 

3.3.3      create, or authorize the creation of, or issue or obligate itself to issue shares of, any additional class or series of capital stock unless the same ranks junior to the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock with respect to the distribution of assets on the liquidation, dissolution or winding up of the Corporation, the payment of dividends and rights of redemption, or increase or decrease the authorized number of shares of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, or Preferred Stock or increase the authorized number of shares of any additional class or series of capital stock unless the same ranks junior to the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock with respect to the distribution of assets on the liquidation, dissolution or winding up of the Corporation, the payment of dividends and rights of redemption;

 

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

 

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Series C Preferred Stock in respect of the distribution of assets on the liquidation, dissolution or winding up of the Corporation, the payment of dividends or rights of redemption, if such reclassification, alteration or amendment would render such other security senior to or pari passu with the Series A Preferred Stock, Series B Preferred Stock and/or Series C Preferred Stock in respect of any such right, preference or privilege;

 

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

 

3.3.6      create, or authorize the creation of, or issue, or authorize the issuance of any debt security or permit any subsidiary to take any such action with respect to any debt security unless such debt security has received the prior approval of the Board of Directors, including the approval of the Lead Preferred Director;

 

3.3.7      create, or hold capital stock in, any subsidiary that is not wholly owned (either directly or through one or more other subsidiaries) by the Corporation, or sell, transfer or otherwise dispose of any capital stock of any direct or indirect subsidiary of the Corporation, or permit any direct or indirect subsidiary to sell, lease, transfer, exclusively license or otherwise dispose (in a single transaction or series of related transactions) of all or substantially all of the assets of such subsidiary; or

 

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

 

3.4           Series A Preferred Stock Protective Provisions . At any time when shares of Series A Preferred Stock are outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, without (in addition to any other vote required by law or the Certificate of Incorporation or By-laws of the Corporation) the written consent or affirmative vote of the holders of a majority of the then outstanding shares of Series A Preferred Stock, given in writing or by a vote at a meeting, consenting or voting (as the case may be) as a separate class, and any such act or transaction entered into without such consent or vote shall be null and void ab initio , and of no force or effect:

 

3.4.1      amend, alter or repeal any provision of the Certificate of Incorporation or By-laws of the Corporation in a manner that adversely affects the powers, preferences or rights of the Series A Preferred Stock; provided, however, for the avoidance of doubt, that any amendment of the Certificate of Incorporation to authorize a new series of capital stock that is senior to or on parity with the Series A Preferred Stock with respect to dividends, liquidation, redemption and/or voting shall not be deemed to adversely affect the Series A Preferred Stock; or

 

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3.4.2      approve, authorize or effect a Deemed Liquidation Event, pursuant to which the holders of Series A Preferred Stock will be entitled to receive consideration per share of Series A Preferred Stock with a value (as determined in good faith by the Board of Directors) that is less than the Series A Original Issue Price.

 

3.5           Series B Preferred Stock Protective Provisions . At any time when shares of Series B Preferred Stock are outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, without (in addition to any other vote required by law or the Certificate of Incorporation or By-laws of the Corporation) the written consent or affirmative vote of the holders of a majority of the then outstanding shares of Series B Preferred Stock, given in writing or by a vote at a meeting, consenting or voting (as the case may be) as a separate class, and any such act or transaction entered into without such consent or vote shall be null and void ab initio , and of no force or effect:

 

3.5.1      amend, alter or repeal any provision of the Certificate of Incorporation or By-laws of the Corporation in a manner that adversely affects the powers, preferences or rights of the holders of the Series B Preferred Stock; provided, however, for the avoidance of doubt, that any amendment of the Certificate of Incorporation to authorize a new series of capital stock that is senior to or on parity with the Series B Preferred Stock with respect to dividends, liquidation, redemption and/or voting shall not be deemed to adversely affect the Series B Preferred Stock; or

 

3.5.2      approve, authorize or effect a Deemed Liquidation Event, pursuant to which the holders of Series B Preferred Stock will be entitled to receive consideration per share of Series B Preferred Stock with a value (as determined in good faith by the Board of Directors) that is less than the Series B Original Issue Price.

 

3.6           Series C Preferred Protective Provisions . At any time when shares of Series C Preferred Stock are outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, without (in addition to any other vote required by law or the Certificate of Incorporation or By-laws of the Corporation) the written consent or affirmative vote of the holders of a majority of the then outstanding shares of Series C Preferred Stock, given in writing or by a vote at a meeting, consenting or voting (as the case may be) as a separate class, and any such act or transaction entered into without such consent or vote shall be null and void ab initio , and of no force or effect:

 

3.6.1      amend, alter or repeal any provision of the Certificate of Incorporation or By-laws of the Corporation in a manner that adversely affects the powers, preferences or rights of the holders of the Series C Preferred Stock; provided, however, for the avoidance of doubt, that any amendment of the Certificate of Incorporation to authorize a new series of capital stock that is senior to or on parity with the Series C Preferred Stock with respect to dividends, liquidation, redemption and/or voting shall not be deemed to adversely affect the Series C Preferred Stock; or

 

3.6.2      approve, authorize or effect a Deemed Liquidation Event, pursuant to which the holders of Series C Preferred Stock will be entitled to receive

 

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consideration per share of Series C Preferred Stock with a value (as determined in good faith by the Board of Directors) that is less than the Series C Original Issue Price.

 

4.              Optional Conversion .

 

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

 

4.1           Right to Convert .

 

4.1.1      Conversion Ratios .

 

(a)            Each share of Series A Preferred Stock shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing the Series A Original Issue Price by the Series A Conversion Price (as defined below) in effect at the time of conversion. The “ Series A Conversion Price ” shall initially be equal to $0.60. Such initial Series A Conversion Price, and the rate at which shares of Series A Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment as provided below.

 

(b)            Each share of Series B Preferred Stock shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing the Series B Original Issue Price by the Series B Conversion Price (as defined below) in effect at the time of conversion. The “ Series B Conversion Price ” shall initially be equal to $8.39. Such initial Series B Conversion Price, and the rate at which shares of Series B Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment as provided below.

 

(c)            Each share of Series C Preferred Stock shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing the Series C Original Issue Price by the Series C Conversion Price (as defined below) in effect at the time of conversion. The “ Series C Conversion Price ” shall initially be equal to $12.79. Such initial Series C Conversion Price, and the rate at which shares of Series C Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment as provided below.

 

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

 

4.2           Fractional Shares . No fractional shares of Common Stock shall be issued upon conversion of the Preferred Stock. In lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction

 

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multiplied by the fair market value of a share of Common Stock as determined in good faith by the Board of Directors, including the Lead Preferred Director. Whether or not fractional shares would be issuable upon such conversion shall be determined on the basis of the total number of shares of Preferred Stock the holder is at the time converting into Common Stock and the aggregate number of shares of Common Stock issuable upon such conversion.

 

4.3           Mechanics of Conversion .

 

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

 

4.3.2      Reservation of Shares . The Corporation shall at all times when Preferred Stock shall be outstanding, reserve and keep available out of its authorized but unissued capital stock, for the purpose of effecting the conversion of the Preferred Stock, such number of its duly authorized shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of Preferred Stock, the Corporation shall take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to

 

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such number of shares as shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to the Certificate of Incorporation. Before taking any action which would cause an adjustment reducing the Series A Conversion Price, the Series B Conversion Price or the Series C Conversion Price below the then par value of the shares of Common Stock issuable upon conversion of the Series A Preferred Stock, the Series B Preferred Stock or the Series C Preferred Stock, as the case may be, the Corporation will take any corporate action which may, in the opinion of its counsel, be necessary in order that the Corporation may validly and legally issue fully paid and nonassessable shares of Common Stock at such adjusted Series A Conversion Price, Series B Conversion Price or Series C Conversion Price, as applicable.

 

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

 

4.3.4      No Further Adjustment . Upon any such conversion, no adjustment to the Series A Conversion Price, the Series B Conversion Price or the Series C Conversion Price shall be made for any declared but unpaid dividends on the Series A Preferred Stock, the Series B Preferred Stock or the Series C Preferred Stock, as the case may be, surrendered for conversion or on the Common Stock delivered upon conversion.

 

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

 

4.4           Adjustments to Conversion Price for Diluting Issues .

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(iv)           shares of Common Stock issued in an initial public offering of Common Stock under the Securities Act of 1933, as amended (the “ Securities Act ”);

 

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

 

(vi)           shares of Common Stock or Convertible Securities actually issued upon the exercise

 

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

 

(vii)          shares of Common Stock, Options or Convertible Securities issued to suppliers or third-party service providers in connection with the provision of goods or services pursuant to transactions approved by the Board of Directors, including the Lead Preferred Director; or

 

(viii)         shares of Common Stock, Options or Convertible Securities issued in connection with sponsored research, a collaboration, technology license, development, marketing or other similar agreements or strategic partnerships approved by the Board of Directors, including the Lead Preferred Director.

 

4.4.2      No Adjustment of Conversion Price . No adjustment in the Series A Conversion Price shall be made as the result of the issuance or deemed issuance of Additional Shares of Common Stock if the Corporation receives written notice from the holders of a majority of the then outstanding shares of Series A Preferred Stock agreeing that no such adjustment shall be made as the result of the issuance or deemed issuance of such Additional Shares of Common Stock. No adjustment in the Series B Conversion Price shall be made as the result of the issuance or deemed issuance of Additional Shares of Common Stock if the Corporation receives written notice from the holders of a majority of the then outstanding shares of Series B Preferred Stock agreeing that no such adjustment shall be made as the result of the issuance or deemed issuance of such Additional Shares of Common Stock. No adjustment in the Series C Conversion Price shall be made as the result of the issuance or deemed issuance of Additional Shares of Common Stock if the Corporation receives written notice from the holders of a majority of the then outstanding shares of Series C Preferred Stock agreeing that no such adjustment shall be made as the result of the issuance or deemed issuance of such Additional Shares of Common Stock.

 

4.4.3      Deemed Issue of Additional Shares of Common Stock .

 

(a)            If the Corporation at any time or from time to time after the Series C Original Issue Date shall issue any Options or Convertible Securities (excluding Options or Convertible Securities which are themselves Exempted Securities) or shall fix a record date for the determination of holders of any class of securities entitled to receive any such Options or Convertible Securities, then the maximum number of shares of Common Stock

 

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(as set forth in the instrument relating thereto, assuming the satisfaction of any conditions to exercisability, convertibility or exchangeability but without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date.

 

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

 

(c)            If the terms of any Option or Convertible Security (excluding Options or Convertible Securities which are themselves Exempted Securities), the issuance of which did not result in an adjustment to the Series A Conversion Price, the Series B Conversion Price, or the Series C Conversion Price pursuant to the terms of Subsection 4.4.4 (either because the consideration per share (determined pursuant to Subsection 4.4.5 ) of the Additional Shares of Common Stock subject thereto was equal to or greater than the Series A Conversion Price, the Series B Conversion Price or the Series C Conversion Price, as the case may be, then in effect, or because such Option or Convertible Security was issued before the Series C Original Issue Date), are revised after the Series C Original Issue Date as a result of an amendment to such terms or any other adjustment pursuant to the provisions of such Option or Convertible Security (but excluding automatic adjustments to such terms pursuant to anti-dilution or similar provisions of such Option or Convertible Security) to provide for either

 

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(1) any increase in the number of shares of Common Stock issuable upon the exercise, conversion or exchange of any such Option or Convertible Security or (2) any decrease in the consideration payable to the Corporation upon such exercise, conversion or exchange, then such Option or Convertible Security, as so amended or adjusted, and the Additional Shares of Common Stock subject thereto (determined in the manner provided in Subsection 4.4.3(a) ) shall be deemed to have been issued effective upon such increase or decrease becoming effective.

 

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

 

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

 

4.4.4      Adjustment of Conversion Price Upon Issuance of Additional Shares of Common Stock . In the event the Corporation shall at any time or from time to time after the Series C Original Issue Date issue Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Subsection 4.4.3 ), without consideration or for a consideration per share less than the Series A Conversion Price, the Series B Conversion Price and/or the Series C Conversion Price, each as in effect immediately prior to such issue, then the Series A Conversion Price, the Series B Conversion Price and/or the Series C Conversion Price, as the case may be, shall be reduced, concurrently

 

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with such issue, to a price (calculated to the nearest one-hundredth of a cent) determined in accordance with the following formula:

 

CP 2  = CP 1  * (A + B) ÷ (A + C).

 

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

 

(a)            “CP 2 ” shall mean (1) in the case of an adjustment to the Series A Conversion Price, the Series A Conversion Price in effect immediately after such issue of Additional Shares of Common Stock, (2) in the case of an adjustment to the Series B Conversion Price, the Series B Conversion Price in effect immediately after such issue of Additional Shares of Common Stock and (3) in the case of an adjustment to the Series C Conversion Price, the Series C Conversion Price in effect immediately after such issue of Additional Shares of Common Stock;

 

(b)            “CP 1 ” shall mean (1) in the case of an adjustment to the Series A Conversion Price, the Series A Conversion Price in effect immediately prior to such issue of Additional Shares of Common Stock , (2) in the case of an adjustment to the Series B Conversion Price, the Series B Conversion Price in effect immediately prior to such issue of Additional Shares of Common Stock and (3) in the case of an adjustment to the Series C Conversion Price, the Series C Conversion Price in effect immediately prior to such issue of Additional Shares of Common Stock;

 

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

 

(d)            “B” shall mean the number of shares of Common Stock that would have been issued if such Additional Shares of Common Stock had been issued at a price per share equal to CP 1  (determined by dividing the aggregate consideration received by the Corporation in respect of such issue by CP 1 ); and

 

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

 

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

 

(a)            Cash and Property : Such consideration shall:

 

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

 

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(ii)            insofar as it consists of property other than cash, be computed at the fair market value thereof at the time of such issue, as determined in good faith by the Board of Directors, including the Lead Preferred Director; and

 

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

 

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

 

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

 

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

 

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Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4.8          Adjustment for Merger or Reorganization, etc . Subject to the provisions of Subsection 2.3 , if there shall occur any reorganization, recapitalization, reclassification, consolidation or merger involving the Corporation in which the Common Stock (but not the Preferred Stock) is converted into or exchanged for securities, cash or other property (other than a transaction covered by Subsections 4.5 , 4.6 or 4.7 ), then, following any such reorganization, recapitalization, reclassification, consolidation or merger, each share of Preferred Stock shall thereafter be convertible in lieu of the Common Stock into which it was convertible prior to such event into the kind and amount of securities, cash or other property which a holder of the number of shares of Common Stock of the Corporation issuable upon conversion of one share of the applicable series of Preferred Stock immediately prior to such reorganization, recapitalization, reclassification, consolidation or merger would have been entitled to receive pursuant to such transaction; and, in such case, appropriate adjustment (as determined in good faith by the Board of Directors, including the Lead Preferred Director) shall be made in the application of the provisions in this Section 4 with respect to the rights and interests thereafter of the holders of the applicable series of Preferred Stock, to the end that the provisions set forth in this Section 4 (including provisions with respect to changes in and other adjustments of the Series A Conversion Price, the Series B Conversion Price or the Series C Conversion Price, as

 

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the case may be) shall thereafter be applicable, as nearly as reasonably may be, in relation to any securities or other property thereafter deliverable upon the conversion of the applicable series of Preferred Stock. For the avoidance of doubt, nothing in this Subsection 4.8 shall be construed as preventing the holders of Preferred Stock from seeking any appraisal rights to which they are otherwise entitled under the General Corporation Law in connection with a merger triggering an adjustment hereunder, nor shall this Subsection 4.8 be deemed conclusive evidence of the fair value of the shares of Preferred Stock in any such appraisal proceeding.

 

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

 

4.10        Notice of Record Date . In the event:

 

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

 

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

 

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

 

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

 

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or other property deliverable upon such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up, and the amount per share and character of such exchange applicable to the Preferred Stock and the Common Stock. Such notice shall be sent at least ten (10) days prior to the record date or effective date for the event specified in such notice.

 

5.             Mandatory Conversion .

 

5.1          Trigger Events . Upon either (a) the closing of the sale of shares of Common Stock to the public at a price per share equal or greater than $12.79 (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Common Stock) in a firm-commitment underwritten public offering pursuant to an effective registration statement under the Securities Act resulting in at least $50,000,000 of gross proceeds to the Corporation or (b) the date and time, or the occurrence of an event, specified by vote or written consent of (i) the holders of a majority in voting power of the then outstanding shares of Preferred Stock, voting together as a single class, (ii) solely in the event of the mandatory conversion of the Preferred Stock pursuant to clause (b)(i)  of this Section 5.1 in connection with either (1) the consummation of a Deemed Liquidation Event pursuant to which the holders of Series B Preferred Stock will be entitled to receive consideration per share of Series B Preferred Stock with a value (as determined in good faith by the Board of Directors) that is less than the Series B Original Issue Price or (2) the closing of the sale of shares of Common Stock to the public at a price per share less than $8.39 (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Common Stock) in a firm-commitment underwritten public offering pursuant to an effective registration statement under the Securities Act, then such conversion shall in addition require the vote or written consent of (A) the holders of a majority of the outstanding shares of Series A Preferred Stock voting as a separate class, (B) the holders of a majority of the outstanding shares of Series B Preferred Stock voting as a separate class and (C) the holders of a majority of the outstanding shares of Series C Preferred Stock voting as a separate class and (iii) solely in the event of the mandatory conversion of the Preferred Stock pursuant to clause (b)(i)  of this Section 5.1 in connection with either (1) the consummation of a Deemed Liquidation Event pursuant to which the holders of Series C Preferred Stock will be entitled to receive consideration per share of Series C Preferred Stock with a value (as determined in good faith by the Board of Directors) that is less than the Series C Original Issue Price, but equal to or greater than the Series B Original Issue Price or (2) the closing of the sale of shares of Common Stock to the public at a price per share less than $12.79 (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Common Stock) but equal to or greater than $8.39 (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Common Stock) in a firm-commitment underwritten public offering pursuant to an effective registration statement under the Securities Act, then such conversion shall in addition require the vote or written consent of (A) the holders of a majority of the outstanding shares Series A Preferred Stock voting as a separate class and (B) the holders of a majority of the outstanding shares of Series C Preferred Stock voting as a separate class, (the time of such closing or the date and time specified or the time of the event specified in such vote or written consent is referred to herein as the “ Mandatory Conversion Time ”), then (x) all outstanding shares of Preferred Stock shall automatically be converted into shares of Common Stock, at the then effective conversion rate as

 

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calculated pursuant to Subsection 4.1.1 and (y) such shares may not be reissued by the Corporation.

 

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

 

6.             No Redemption . None of the shares of Preferred Stock shall be redeemable at the option of the holder thereof.

 

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

 

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

 

24



 

the holders of a majority of the shares of Series A Preferred Stock then outstanding. Any of the rights, powers, preferences and other terms of the Series B Preferred Stock set forth herein may be waived, either prospectively or retrospectively, on behalf of all holders of Series B Preferred Stock by the affirmative written consent or vote of the holders of a majority of the shares of Series B Preferred Stock then outstanding. Any of the rights, powers, preferences and other terms of the Series C Preferred Stock set forth herein may be waived, either prospectively or retrospectively, on behalf of all holders of Series C Preferred Stock by the affirmative written consent or vote of the holders of a majority of the shares of Series C Preferred Stock then outstanding. Any of the rights, powers, preferences and other terms of the Preferred Stock, together as a single class, set forth herein, except as otherwise provided in this Section 8, may be waived, either prospectively or retrospectively, on behalf of all holders of Preferred Stock by the affirmative written consent or vote of the holders of a majority in voting power of the shares of Preferred Stock then outstanding, voting together as a single class.

 

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

 

FIFTH: Subject to any additional vote required by the Certificate of Incorporation or By-laws of the Corporation, in furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to make, repeal, alter, amend and rescind any or all of the By-laws of the Corporation.

 

SIXTH: Subject to any additional vote required by the Certificate of Incorporation, the number of directors of the Corporation shall be determined in the manner set forth in the By-laws of the Corporation.

 

SEVENTH: Elections of directors need not be by written ballot unless the By-laws of the Corporation shall so provide.

 

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

 

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

 

Any repeal or modification of the foregoing provisions of this Article Ninth by the stockholders of the Corporation shall not adversely affect any right or protection of a director

 

25



 

of the Corporation existing at the time of, or increase the liability of any director of the Corporation with respect to any acts or omissions of such director occurring prior to, such repeal or modification.

 

TENTH: The Corporation renounces any interest or expectancy of the Corporation in, or in being offered an opportunity to participate in, any Excluded Opportunity. An “ Excluded Opportunity ” is any matter, transaction or interest that is presented to, or acquired, created or developed by, or which otherwise comes into the possession of, (i) any director of the Corporation who is not an employee of the Corporation or any of its subsidiaries, or (ii) any holder of Preferred Stock or any partner, member, director, stockholder, employee or agent of any such holder, other than someone who is an employee of the Corporation or any of its subsidiaries (collectively, “ Covered Persons ”), unless such matter, transaction or interest is presented to, or acquired, created or developed by, or otherwise comes into the possession of, a Covered Person expressly and solely in such Covered Person’s capacity as a director of the Corporation.

 

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

 

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

 

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

 

3.             Claims by Directors and Officers . If a claim for indemnification or advancement of expenses under this Article Eleventh is not paid in full within thirty (30) days after a written claim therefor by the Indemnified Person has been received by the Corporation,

 

26



 

the Indemnified Person may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the Corporation shall have the burden of proving that the Indemnified Person is not entitled to the requested indemnification or advancement of expenses under applicable law.

 

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

 

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

 

6.             Non-Exclusivity of Rights . The rights conferred on any person by this Article Eleventh shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of the certificate of incorporation, bylaw, agreement, vote of stockholders or disinterested directors or otherwise.

 

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

 

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

 

27



 

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

 

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

 

*  *  *

 

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

 

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

 

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IN WITNESS WHEREOF , this Amended and Restated Certificate of Incorporation has been executed by a duly authorized officer of this corporation on April 11, 2018.

 

 

By:

/s/ Torben Straight Nissen, Ph.D.

 

Name: Torben Straight Nissen, Ph.D.

 

Title: President

 



 

CERTIFICATE OF AMENDMENT

TO

AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

OF

RUBIUS THERAPEUTICS, INC.

 

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

 

DOES HEREBY CERTIFY:

 

1.             The Board of Directors of the Company has duly adopted resolutions pursuant to Section 242 of the General Corporation Law of the State of Delaware setting forth a proposed amendment to the Amended and Restated Certificate of Incorporation of the Company (the “Certificate of Incorporation”), and declaring said amendment to be advisable.  This amendment amends the Certificate of Incorporation as follows:

 

That the first paragraph of Article FOURTH of the Certificate of Incorporation be amended and restated in its entirety to read as follows:

 

FOURTH:           The total number of shares of all classes of stock which the Corporation shall have authority to issue is 130,981,005 consisting of (i) 79,000,000 shares of Common Stock, $0.001 par value per share (“ Common Stock ”), and (ii) 51,981,005 shares of Preferred Stock, $0.001 par value per share (“ Preferred Stock ”), of which 29,703,995 shares are hereby designated “Series A Preferred Stock”, 14,364,578 shares are hereby designated “Series B Preferred Stock” and 7,912,432 shares are hereby designated “Series C Preferred Stock”.

 

2.             The requisite stockholders of the Company have duly approved said proposed amendment by written consent in accordance with Sections 228 and 242 of the General Corporation Law of the State of Delaware.

 

[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY.]

 



 

IN WITNESS WHEREOF, this Certificate of Amendment to the Amended and Restated Certificate of Incorporation has been executed by a duly authorized officer of the Company on this 6 th  day of June, 2018.

 

 

 

RUBIUS THERAPEUTICS, INC.

 

 

 

 

 

By:

/s/ Torben Straight Nissen

 

Name: Torben Straight Nissen

 

Title: President

 




Exhibit 3.2

 

AMENDED AND RESTATED

 

CERTIFICATE OF INCORPORATION

 

OF

 

RUBIUS THERAPEUTICS, INC.

 

Rubius Therapeutics, Inc., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), hereby certifies as follows:

 

1.                                       The name of the Corporation is Rubius Therapeutics, Inc.  The date of the filing of its original Certificate of Incorporation with the Secretary of State of the State of Delaware was April 26, 2013 (the “Original Certificate”).  The name under which the Corporation filed the Original Certificate was VL26, Inc.

 

2.                                       This Amended and Restated Certificate of Incorporation (the “Certificate”) amends, restates and integrates the provisions of the Amended and Restated Certificate of Incorporation that was filed with the Secretary of State of the State of Delaware on April 11, 2018  (the “Amended and Restated Certificate”), and was duly adopted in accordance with the provisions of Sections 228, 242 and 245 of the General Corporation Law of the State of Delaware (the “DGCL”).

 

3.                                       The text of the Amended and Restated Certificate is hereby amended and restated in its entirety to provide as herein set forth in full.

 

ARTICLE I

 

The name of the Corporation is Rubius Therapeutics, Inc.

 

ARTICLE II

 

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

 

ARTICLE III

 

The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the DGCL.

 



 

ARTICLE IV

CAPITAL STOCK

 

The total number of shares of capital stock which the Corporation shall have authority to issue is one hundred sixty million (160,000,000) of which (i) one hundred fifty million (150,000,000) shares shall be a class designated as common stock, par value $0.001 per share (the “Common Stock”), and (ii) ten million (10,000,000) shares shall be a class designated as undesignated preferred stock, par value $0.001 per share (the “Undesignated Preferred Stock”).

 

Except as otherwise provided in any certificate of designations of any series of Undesignated Preferred Stock, the number of authorized shares of the class of Common Stock or Undesignated Preferred Stock may from time to time be increased or decreased (but not below the number of shares of such class outstanding) by the affirmative vote of the holders of a majority in voting power of the outstanding shares of capital stock of the Corporation irrespective of the provisions of Section 242(b)(2) of the DGCL.

 

The powers, preferences and rights of, and the qualifications, limitations and restrictions upon, each class or series of stock shall be determined in accordance with, or as set forth below in, this Article IV.

 

A.  COMMON STOCK

 

Subject to all the rights, powers and preferences of the Undesignated Preferred Stock and except as provided by law or in this Certificate (or in any certificate of designations of any series of Undesignated Preferred Stock):

 

(a)                                  the holders of the Common Stock shall have the exclusive right to vote for the election of directors of the Corporation (the “Directors”) and on all other matters requiring stockholder action, each outstanding share entitling the holder thereof to one vote on each matter properly submitted to the stockholders of the Corporation for their vote; provided , however , that, except as otherwise required by law, holders of Common Stock, as such, shall not be entitled to vote on any amendment to this Certificate (or on any amendment to a certificate of designations of any series of Undesignated Preferred Stock) that alters or changes the powers, preferences, rights or other terms of one or more outstanding series of Undesignated Preferred Stock if the holders of such affected series  of Undesignated Preferred Stock are entitled to vote, either separately or together with the holders of one or more other such series, on such amendment pursuant to this Certificate (or pursuant to a certificate of designations of any series of Undesignated Preferred Stock) or pursuant to the DGCL;

 

(b)                                  dividends may be declared and paid or set apart for payment upon the Common Stock out of any assets or funds of the Corporation legally available for the payment of dividends, but only when and as declared by the Board of Directors or any authorized committee thereof; and

 

2



 

(c)                                   upon the voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the net assets of the Corporation shall be distributed pro rata to the holders of the Common Stock.

 

B.  UNDESIGNATED PREFERRED STOCK

 

The Board of Directors or any authorized committee thereof is expressly authorized, to the fullest extent permitted by law, to provide by resolution or resolutions for, out of the unissued shares of Undesignated Preferred Stock, the issuance of the shares of Undesignated Preferred Stock in one or more series of such stock, and by filing a certificate of designations pursuant to applicable law of the State of Delaware, to establish or change from time to time the number of shares of each such series, and to fix the designations, powers, including voting powers, full or limited, or no voting powers, preferences and the relative, participating, optional or other special rights of the shares of each series and any qualifications, limitations and restrictions thereof.

 

ARTICLE V

 

STOCKHOLDER ACTION

 

1.                                       Action without Meeting .  Any action required or permitted to be taken by the stockholders of the Corporation at any annual or special meeting of stockholders of the Corporation must be effected at a duly called annual or special meeting of stockholders and may not be taken or effected by a written consent of stockholders in lieu thereof.  Notwithstanding anything herein to the contrary, the affirmative vote of not less than two thirds (2/3) of the outstanding shares of capital stock entitled to vote thereon, and the affirmative vote of not less than two thirds (2/3) of the outstanding shares of each class entitled to vote thereon as a class, shall be required to amend or repeal any provision of this Article V, Section 1.

 

2.                                       Special Meetings .  Except as otherwise required by statute and subject to the rights, if any, of the holders of any series of Undesignated Preferred Stock, special meetings of the stockholders of the Corporation may be called only by the Board of Directors acting pursuant to a resolution approved by the affirmative vote of a majority of the Directors then in office, and special meetings of stockholders may not be called by any other person or persons.  Only those matters set forth in the notice of the special meeting may be considered or acted upon at a special meeting of stockholders of the Corporation.

 

ARTICLE VI

 

DIRECTORS

 

1.                                       General .  The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors except as otherwise provided herein or required by law.

 

3



 

2.                                       Election of Directors .  Election of Directors need not be by written ballot unless the By-laws of the Corporation (the “By-laws”) shall so provide.

 

3.                                       Number of Directors; Term of Office .  The number of Directors of the Corporation shall be fixed solely and exclusively by resolution duly adopted from time to time by the Board of Directors.  The Directors, other than those who may be elected by the holders of any series of Undesignated Preferred Stock, shall be classified, with respect to the term for which they severally hold office, into three classes.  The initial Class I Directors of the Corporation shall be David R. Epstein, Robert S. Langer, and Roger Pomerantz; the initial Class II Directors of the Corporation shall be Noubar B. Afeyan, Michael Rosenblatt, and Catherine A. Sohn; and the initial Class III Directors of the Corporation shall be Pablo J. Cagnoni, Francis Cuss, and Jonathan R. Symonds. The initial Class I Directors shall serve for a term expiring at the annual meeting of stockholders to be held in 2019, the initial Class II Directors shall serve for a term expiring at the annual meeting of stockholders to be held in 2020, and the initial Class III Directors shall serve for a term expiring at the annual meeting of stockholders to be held in 2021. The mailing address of each person who is to serve initially as a director is c/o Rubius Therapeutics, Inc., 325 Vassar Street, Suite 1A, Cambridge, Massachusetts 02139.  At each annual meeting of stockholders, Directors elected to succeed those Directors whose terms expire shall be elected for a term of office to expire at the third succeeding annual meeting of stockholders after their election.  Notwithstanding the foregoing, the Directors elected to each class shall hold office until their successors are duly elected and qualified or until their earlier resignation, death or removal.

 

Notwithstanding the foregoing, whenever, pursuant to the provisions of Article IV of this Certificate, the holders of any one or more series of Undesignated Preferred Stock shall have the right, voting separately as a series or together with holders of other such series, to elect Directors at an annual or special meeting of stockholders, the election, term of office, filling of vacancies and other features of such directorships shall be governed by the terms of this Certificate and any certificate of designations applicable to such series.

 

Notwithstanding anything herein to the contrary, the affirmative vote of not less than two thirds (2/3) of the outstanding shares of capital stock entitled to vote thereon, and the affirmative vote of not less than two thirds (2/3) of the outstanding shares of each class entitled to vote thereon as a class, shall be required to amend or repeal any provision of this Article VI, Section 3.

 

4.                                       Vacancies .  Subject to the rights, if any, of the holders of any series of Undesignated Preferred Stock to elect Directors and to fill vacancies in the Board of Directors relating thereto, any and all vacancies in the Board of Directors, however occurring, including, without limitation, by reason of an increase in the size of the Board of Directors, or the death, resignation, disqualification or removal of a Director, shall be filled solely and exclusively by the affirmative vote of a majority of the remaining Directors then in office, even if less than a quorum of the Board of Directors, and not by the stockholders.  Any Director appointed in accordance with the preceding sentence shall hold office for the remainder of the full term of the class of Directors in which the new directorship was created or the vacancy occurred and until such Director’s successor shall have been duly elected and qualified or until his or her earlier

 

4



 

resignation, death or removal.  Subject to the rights, if any, of the holders of any series of Undesignated Preferred Stock to elect Directors, when the number of Directors is increased or decreased, the Board of Directors shall, subject to Article VI, Section 3 hereof, determine the class or classes to which the increased or decreased number of Directors shall be apportioned; provided , however , that no decrease in the number of Directors shall shorten the term of any incumbent Director.  In the event of a vacancy in the Board of Directors, the remaining Directors, except as otherwise provided by law, shall exercise the powers of the full Board of Directors until the vacancy is filled.

 

5.                                       Removal .  Subject to the rights, if any, of any series of Undesignated Preferred Stock to elect Directors and to remove any Director whom the holders of any such series have the right to elect, any Director (including persons elected by Directors to fill vacancies in the Board of Directors) may be removed from office (i) only with cause and (ii) only by the affirmative vote of the holders of not less than two thirds (2/3) of the outstanding shares of capital stock then entitled to vote at an election of Directors.  At least forty-five (45) days prior to any annual or special meeting of stockholders at which it is proposed that any Director be removed from office, written notice of such proposed removal and the alleged grounds thereof shall be sent to the Director whose removal will be considered at the meeting.

 

ARTICLE VII

 

LIMITATION OF LIABILITY

 

A Director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of his or her fiduciary duty as a Director, except for liability (a) for any breach of the Director’s duty of loyalty to the Corporation or its stockholders, (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (c) under Section 174 of the DGCL or (d) for any transaction from which the Director derived an improper personal benefit.  If the DGCL is amended after the effective date of this Certificate to authorize corporate action further eliminating or limiting the personal liability of Directors, then the liability of a Director of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended.

 

Any amendment, repeal or modification of this Article VII by either of (i) the stockholders of the Corporation or (ii) an amendment to the DGCL, shall not adversely affect any right or protection existing at the time of such amendment, repeal or modification with respect to any acts or omissions occurring before such amendment, repeal or modification of a person serving as a Director at the time of such amendment, repeal or modification.

 

Notwithstanding anything herein to the contrary, the affirmative vote of not less than two thirds (2/3) of the outstanding shares of capital stock entitled to vote thereon, and the affirmative vote of not less than two thirds (2/3) of the outstanding shares of each class entitled to vote thereon as a class, shall be required to amend or repeal any provision of this Article VII.

 

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ARTICLE VIII

 

AMENDMENT OF BY-LAWS

 

1.                                       Amendment by Directors .  Except as otherwise provided by law, the By-laws of the Corporation may be amended or repealed by the Board of Directors by the affirmative vote of a majority of the Directors then in office.

 

2.                                       Amendment by Stockholders .  Except as otherwise provided therein, the By-laws of the Corporation may be amended or repealed at any annual meeting of stockholders, or special meeting of stockholders called for such purpose, by the affirmative vote of not less than two thirds (2/3) of the outstanding shares of capital stock entitled to vote on such amendment or repeal, voting together as a single class; provided, however, that if the Board of Directors recommends that stockholders approve such amendment or repeal at such meeting of stockholders, such amendment or repeal shall only require the affirmative vote of the majority of the outstanding shares of capital stock entitled to vote on such amendment or repeal, voting together as a single class.

 

ARTICLE IX

 

AMENDMENT OF CERTIFICATE OF INCORPORATION

 

The Corporation reserves the right to amend or repeal this Certificate in the manner now or hereafter prescribed by statute and this Certificate, and all rights conferred upon stockholders herein are granted subject to this reservation.  Except as otherwise required by this Certificate or by law, whenever any vote of the holders of capital stock of the Corporation is required to amend or repeal any provision of this Certificate, such amendment or repeal shall require the affirmative vote of the majority of the outstanding shares of capital stock entitled to vote on such amendment or repeal, and the affirmative vote of the majority of the outstanding shares of each class entitled to vote thereon as a class, at a duly constituted meeting of stockholders called expressly for such purpose.

 

[End of Text]

 

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THIS AMENDED AND RESTATED CERTIFICATE OF INCORPORATION is executed as of this [     ] day of [      ], 2018.

 

 

RUBIUS THERAPEUTICS, INC.

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

Signature Page to Amended and Restated Certificate of Incorporation

 




Exhibit 3.3

 

BY-LAWS

 

OF

 

VL26, INC.

 



 

TABLE OF CONTENTS

 

 

Page

ARTICLE I

 

 

 

STOCKHOLDERS

1

1.1

Place of Meetings

1

1.2

Annual Meeting

1

1.3

Special Meetings

1

1.4

Notice of Meetings

1

1.5

Voting List

1

1.6

Quorum

2

1.7

Adjournments

2

1.8

Voting and Proxies

2

1.9

Action at Meeting

3

1.10

Conduct of Meetings

3

1.11

Action without Meeting

4

 

 

 

ARTICLE II

 

 

 

DIRECTORS

5

2.1

General Powers

5

2.2

Number, Election and Qualification

5

2.3

Chairman of the Board; Vice Chairman of the Board

5

2.4

Tenure

5

2.5

Quorum

5

2.6

Action at Meeting

5

2.7

Removal

5

2.8

Vacancies

6

2.9

Resignation

6

2.10

Regular Meetings

6

2.11

Special Meetings

6

2.12

Notice of Special Meetings

6

2.13

Meetings by Conference Communications Equipment

6

2.14

Action by Consent

7

2.15

Committees

7

2.16

Compensation of Directors

7

 

 

 

ARTICLE III

 

 

 

OFFICERS

7

3.1

Titles

7

3.2

Election

8

3.3

Qualification

8

3.4

Tenure

8

3.5

Resignation and Removal

8

 



 

3.6

Vacancies

8

3.7

President; Chief Executive Officer

8

3.8

Vice Presidents

8

3.9

Secretary and Assistant Secretaries

9

3.10

Treasurer and Assistant Treasurers

9

3.11

Salaries

9

3.12

Delegation of Authority

9

 

 

 

ARTICLE IV

 

 

 

CAPITAL STOCK

10

4.1

Issuance of Stock

10

4.2

Stock Certificates; Uncertificated Shares

10

4.3

Transfers

11

4.4

Lost, Stolen or Destroyed Certificates

11

4.5

Record Date

11

4.6

Regulations

12

 

 

 

ARTICLE V

 

 

 

GENERAL PROVISIONS

12

5.1

Fiscal Year

12

5.2

Corporate Seal

12

5.3

Waiver of Notice

12

5.4

Voting of Securities

12

5.5

Evidence of Authority

12

5.6

Certificate of Incorporation

12

5.7

Severability

12

5.8

Pronouns

12

 

 

 

ARTICLE VI

 

 

 

 

 

AMENDMENTS

13

6.1

By the Board of Directors

13

6.2

By the Stockholders

13

 

ii



 

ARTICLE I

 

STOCKHOLDERS

 

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

 

1.2                                Annual Meeting .  The annual meeting of stockholders for the election of directors and for the transaction of such other business as may properly be brought before the meeting shall be held on a date and at a time designated by the Board of Directors, the Chairman of the Board, the Chief Executive Officer or the President (which date shall not be a legal holiday in the place where the meeting is to be held).

 

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

 

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

 

1.5                                Voting List . The Secretary shall prepare, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, for a period of at least 10 days prior to the meeting: (a) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (b) during

 



 

ordinary business hours, at the principal place of business of the corporation. If the meeting is to be held at a physical location (and not solely by means of remote communication), then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be 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. The list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them.

 

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

 

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

 

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

 

2



 

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

 

1.10                         Conduct of Meetings .

 

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

 

(b)                                          Rules, Regulations and Procedures . The Board of Directors may adopt by resolution such rules, regulations and procedures for the conduct of any meeting of stockholders of the corporation as it shall deem appropriate including, without limitation, such guidelines and procedures as it may deem appropriate regarding the participation by means of remote communication of stockholders and proxyholders not physically present at a meeting. Except to the extent inconsistent with such rules, regulations and procedures as adopted by the Board of Directors, the chairman of any meeting of stockholders shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the chairman of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders of record of the corporation, their duly authorized and constituted proxies or such other persons as shall be determined; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (v) limitations on the time allotted to questions or comments by participants. Unless and to the extent determined by the Board of Directors or the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

 

3



 

1.11                         Action without Meeting .

 

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

 

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

 

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

 

4



 

ARTICLE II

 

DIRECTORS

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5



 

of stock may be removed without cause only by vote of the holders of a majority of the outstanding shares of such class or series.

 

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

 

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

 

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

 

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

 

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

 

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

 

6



 

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

 

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

 

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

 

ARTICLE III

 

OFFICERS

 

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

 

7


 

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

 

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

 

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

 

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

 

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

 

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

 

3.8                                Vice Presidents .  Each Vice President shall perform such duties and possess such powers as the Board of Directors or the Chief Executive Officer may from time to time

 

8



 

prescribe. The Board of Directors may assign to any Vice President the title of Executive Vice President, Senior Vice President or any other title selected by the Board of Directors.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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ARTICLE IV

 

CAPITAL STOCK

 

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

 

4.2                                Stock Certificates; Uncertificated Shares .  The shares of the corporation shall be represented by certificates, provided that the Board of Directors may provide by resolution or resolutions that some or all of any or all classes or series of the corporation’s stock shall be uncertificated shares.  Every holder of stock of the corporation represented by certificates shall be entitled to have a certificate, in such form as may be prescribed by law and by the Board of Directors, representing the number of shares held by such holder registered in certificate form. Each such certificate shall be signed in a manner that complies with Section 158 of the General Corporation Law of the State of Delaware.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE V

 

GENERAL PROVISIONS

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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ARTICLE VI

 

AMENDMENTS

 

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

 

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

 

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Exhibit 3.4

 

AMENDED AND RESTATED

 

BY-LAWS

 

OF

 

RUBIUS THERAPEUTICS, INC.

 

(the “Corporation”)

 

ARTICLE I

 

Stockholders

 

SECTION 1.                             Annual Meeting .  The annual meeting of stockholders (any such meeting being referred to in these By-laws as an “Annual Meeting”) shall be held at the hour, date and place within or without the United States which is fixed by the Board of Directors, which time, date and place may subsequently be changed at any time by vote of the Board of Directors.  If no Annual Meeting has been held for a period of thirteen (13) months after the Corporation’s last Annual Meeting, a special meeting in lieu thereof may be held, and such special meeting shall have, for the purposes of these By-laws or otherwise, all the force and effect of an Annual Meeting.  Any and all references hereafter in these By-laws to an Annual Meeting or Annual Meetings also shall be deemed to refer to any special meeting(s) in lieu thereof.

 

SECTION 2.                             Notice of Stockholder Business and Nominations .

 

(a)                                  Annual Meetings of Stockholders .

 

(1)                                  Nominations of persons for election to the Board of Directors of the Corporation and the proposal of other business to be considered by the stockholders may be brought before an Annual Meeting (i) by or at the direction of the Board of Directors or (ii) by any stockholder of the Corporation who was a stockholder of record at the time of giving of notice provided for in this By-law, who is entitled to vote at the meeting, who is present (in person or by proxy) at the meeting and who complies with the notice procedures set forth in this By-law as to such nomination or business.  For the avoidance of doubt, the foregoing clause (ii) shall be the exclusive means for a stockholder to bring nominations or business properly before an Annual Meeting (other than matters properly brought under Rule 14a-8 (or any successor rule) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), and such stockholder must comply with the notice and other procedures set forth in Article I, Section 2(a)(2) and (3) of this By-law to bring such nominations or business properly before an Annual Meeting.  In addition to the other requirements set forth in this By-law, for any proposal of business to be considered at an Annual Meeting, it must be a proper subject for action by stockholders of the Corporation under Delaware law.

 

(2)                                  For nominations or other business to be properly brought before an Annual Meeting by a stockholder pursuant to clause (ii) of Article I, Section 2(a)(1) of this By-law, the stockholder must (i) have given Timely Notice (as defined below)

 



 

thereof in writing to the Secretary of the Corporation, (ii) have provided any updates or supplements to such notice at the times and in the forms required by this By-law and (iii) together with the beneficial owner(s), if any, on whose behalf the nomination or business proposal is made, have acted in accordance with the representations set forth in the Solicitation Statement (as defined below) required by this By-law.  To be timely, a stockholder’s written notice shall be received by the Secretary at the principal executive offices of the Corporation not later than the close of business on the ninetieth (90th) day nor earlier than the close of business on the one hundred twentieth (120th) day prior to the one-year anniversary of the preceding year’s Annual Meeting; provided , however , that in the event the Annual Meeting is first convened more than thirty (30) days before or more than sixty (60) days after such anniversary date, or if no Annual Meeting were held in the preceding year, notice by the stockholder to be timely must be received by the Secretary of the Corporation not later than the close of business on the later of the ninetieth (90th) day prior to the scheduled date of such Annual Meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made (such notice within such time periods shall be referred to as “Timely Notice”).  Notwithstanding anything to the contrary provided herein, for the first Annual Meeting following the initial public offering of common stock of the Corporation, a stockholder’s notice shall be timely if received by the Secretary at the principal executive offices of the Corporation not later than the close of business on the later of the ninetieth (90th) day prior to the scheduled date of such Annual Meeting or the tenth (10th) day following the day on which public announcement of the date of such Annual Meeting is first made or sent by the Corporation.  Such stockholder’s Timely Notice shall set forth:

 

(A)                                as to each person whom the stockholder proposes to nominate for election or reelection as a director, (i) the name, age, business address and residence address of the nominee, (ii) the principal occupation or employment of the nominee, (iii) the class and number of shares of the Corporation that are held of record or are beneficially owned by the nominee and any derivative positions held or beneficially held by the nominee, (iv) whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of the nominee with respect to any securities of the Corporation, and a description of any other agreement, arrangement or understanding (including any short position or any borrowing or lending of shares), the effect or intent of which is to mitigate loss to, or to manage the risk or benefit of share price changes for, or to increase or decrease the voting power of the nominee, (v) a description of all arrangements or understandings between or among the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nominations are to be made by the stockholder or concerning the nominee’s potential service on the Board of Directors, (vi) a written statement executed by the nominee acknowledging that as a director of the corporation, the nominee will owe fiduciary duties under Delaware law with respect to the Corporation and its stockholders, and (vii) all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act (including such person’s

 

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written consent to being named in the proxy statement as a nominee and to serving as a director if elected);

 

(B)                                as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting, the text, if any, of any resolutions or By-law amendment proposed for adoption, and any material interest in such business of each Proposing Person (as defined below);

 

(C)                                (i) the name and address of the stockholder giving the notice, as they appear on the Corporation’s books, and the names and addresses of the other Proposing Persons (if any) and (ii) as to each Proposing Person, the following information: (a) the class or series and number of all shares of capital stock of the Corporation which are, directly or indirectly, owned beneficially or of record by such Proposing Person or any of its affiliates or associates (as such terms are defined in Rule 12b-2 promulgated under the Exchange Act), including any shares of any class or series of capital stock of the Corporation as to which such Proposing Person or any of its affiliates or associates has a right to acquire beneficial ownership at any time in the future, (b) all Synthetic Equity Interests (as defined below) in which such Proposing Person or any of its affiliates or associates, directly or indirectly, holds an interest including a description of the material terms of each such Synthetic Equity Interest, including without limitation, identification of the counterparty to each such Synthetic Equity Interest and disclosure, for each such Synthetic Equity Interest, as to (x) whether or not such Synthetic Equity Interest conveys any voting rights, directly or indirectly, in such shares to such Proposing Person, (y) whether or not such Synthetic Equity Interest is required to be, or is capable of being, settled through delivery of such shares and (z) whether or not such Proposing Person and/or, to the extent known, the counterparty to such Synthetic Equity Interest has entered into other transactions that hedge or mitigate the economic effect of such Synthetic Equity Interest, (c) any proxy (other than a revocable proxy given in response to a public proxy solicitation made pursuant to, and in accordance with, the Exchange Act), agreement, arrangement, understanding or relationship pursuant to which such Proposing Person has or shares a right to, directly or indirectly, vote any shares of any class or series of capital stock of the Corporation, (d) any rights to dividends or other distributions on the shares of any class or series of capital stock of the Corporation, directly or indirectly, owned beneficially by such Proposing Person that are separated or separable from the underlying shares of the Corporation, and (e) any performance-related fees (other than an asset based fee) that such Proposing Person, directly or indirectly, is entitled to based on any increase or decrease in the value of shares of any class or series of capital stock of the Corporation or any Synthetic Equity Interests (the disclosures to be made pursuant to the foregoing clauses (a) through (e) are referred to, collectively, as “Material Ownership Interests”) and (iii) a description of the material terms of all agreements, arrangements or understandings (whether or not in writing) entered into by any Proposing Person or any of its affiliates or associates with any other

 

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person for the purpose of acquiring, holding, disposing or voting of any shares of any class or series of capital stock of the Corporation;

 

(D)                                (i) a description of all agreements, arrangements or understandings by and among any of the Proposing Persons, or by and among any Proposing Persons and any other person (including with any proposed nominee(s)), pertaining to the nomination(s), or other business proposed to be brought before the meeting of stockholders (which description shall identify the name of each other person who is party to such an agreement, arrangement or understanding), and (ii) identification of the names and addresses of other stockholders (including beneficial owners) known by any of the Proposing Persons to support such nominations or other business proposal(s), and to the extent known the class and number of all shares of the Corporation’s capital stock owned beneficially or of record by such other stockholder(s) or other beneficial owner(s); and

 

(E)                                 a statement whether or not the stockholder giving the notice and/or the other Proposing Person(s), if any, will deliver a proxy statement and form of proxy to holders of, in the case of a business proposal, at least the percentage of voting power of all of the shares of capital stock of the Corporation required under applicable law to approve the proposal or, in the case of a nomination or nominations, at least the percentage of voting power of all of the shares of capital stock of the Corporation reasonably believed by such Proposing Person to be sufficient to elect the nominee or nominees proposed to be nominated by such stockholder (such statement, the “Solicitation Statement”).

 

For purposes of this Article I of these By-laws, the term “Proposing Person” shall mean the following persons: (i) the stockholder of record providing the notice of nominations or business proposed to be brought before a stockholders’ meeting, and (ii) the beneficial owner(s), if different, on whose behalf the nominations or business proposed to be brought before a stockholders’ meeting is made.  For purposes of this Section 2 of Article I of these By-laws, the term “Synthetic Equity Interest” shall mean any transaction, agreement or arrangement (or series of transactions, agreements or arrangements), including, without limitation, any derivative, swap, hedge, repurchase or so-called “stock borrowing” agreement or arrangement, the purpose or effect of which is to, directly or indirectly:  (a) give a person or entity economic benefit and/or risk similar to ownership of shares of any class or series of capital stock of the Corporation, in whole or in part, including due to the fact that such transaction, agreement or arrangement provides, directly or indirectly, the opportunity to profit or avoid a loss from any increase or decrease in the value of any shares of any class or series of capital stock of the Corporation, (b) mitigate loss to, reduce the economic risk of or manage the risk of share price changes for, any person or entity with respect to any shares of any class or series of capital stock of the Corporation, (c) otherwise provide in any manner the opportunity to profit or avoid a loss from any decrease in the value of any shares of any class or series of capital stock of the Corporation, or (d) increase or decrease the voting power of any person or entity with respect to any shares of any class or series of capital stock of the Corporation.

 

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(3)                                  A stockholder providing Timely Notice of nominations or business proposed to be brought before an Annual Meeting shall further update and supplement such notice, if necessary, so that the information (including, without limitation, the Material Ownership Interests information) provided or required to be provided in such notice pursuant to this By-law shall be true and correct as of the record date for the meeting and as of the date that is ten (10) business days prior to such Annual Meeting, and such update and supplement shall be received by the Secretary at the principal executive offices of the Corporation not later than the close of business on the fifth (5th) business day after the record date for the Annual Meeting (in the case of the update and supplement required to be made as of the record date), and not later than the close of business on the eighth (8th) business day prior to the date of the Annual Meeting (in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting).

 

(4)                                  Notwithstanding anything in the second sentence of Article I, Section 2(a)(2) of this By-law to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation is increased and there is no public announcement naming all of the nominees for director or specifying the size of the increased Board of Directors made by the Corporation at least ten (10) days before the last day a stockholder may deliver a notice of nomination in accordance with the second sentence of Article I, Section 2(a)(2), a stockholder’s notice required by this By-law shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be received by the Secretary of the Corporation not later than the close of business on the tenth (10th) day following the day on which such public announcement is first made by the Corporation.

 

(b)                                  General .

 

(1)                                  Only such persons who are nominated in accordance with the provisions of this By-law shall be eligible for election and to serve as directors and only such business shall be conducted at an Annual Meeting as shall have been brought before the meeting in accordance with the provisions of this By-law or in accordance with Rule 14a-8 under the Exchange Act.  The Board of Directors or a designated committee thereof shall have the power to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the provisions of this By-law.  If neither the Board of Directors nor such designated committee makes a determination as to whether any stockholder proposal or nomination was made in accordance with the provisions of this By-law, the presiding officer of the Annual Meeting shall have the power and duty to determine whether the stockholder proposal or nomination was made in accordance with the provisions of this By-law.  If the Board of Directors or a designated committee thereof or the presiding officer, as applicable, determines that any stockholder proposal or nomination was not made in accordance with the provisions of this By-law, such proposal or nomination shall be disregarded and shall not be presented for action at the Annual Meeting.

 

(2)                                  Except as otherwise required by law, nothing in this Article I, Section 2 shall obligate the Corporation or the Board of Directors to include in any proxy statement

 

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or other stockholder communication distributed on behalf of the Corporation or the Board of Directors information with respect to any nominee for director or any other matter of business submitted by a stockholder.

 

(3)                                  Notwithstanding the foregoing provisions of this Article I, Section 2, if the nominating or proposing stockholder (or a qualified representative of the stockholder) does not appear at the Annual Meeting to present a nomination or any business, such nomination or business shall be disregarded, notwithstanding that proxies in respect of such vote may have been received by the Corporation.  For purposes of this Article I, Section 2, to be considered a qualified representative of the proposing stockholder, a person must be authorized by a written instrument executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such written instrument or electronic transmission, or a reliable reproduction of the written instrument or electronic transmission, to the presiding officer at the meeting of stockholders.

 

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

 

(5)                                  Notwithstanding the foregoing provisions of this By-law, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this By-law.  Nothing in this By-law shall be deemed to affect any rights of (i) stockholders to have proposals included in the Corporation’s proxy statement pursuant to Rule 14a-8 (or any successor rule), as applicable, under the Exchange Act and, to the extent required by such rule, have such proposals considered and voted on at an Annual Meeting or (ii) the holders of any series of Undesignated Preferred Stock to elect directors under specified circumstances.

 

(c)                                   Notwithstanding anything herein to the contrary, the affirmative vote of not less than two thirds (2/3) of the outstanding shares of capital stock entitled to vote thereon, and the affirmative vote of not less than two thirds (2/3) of the outstanding shares of each class entitled to vote thereon as a class, shall be required to amend or repeal any provision of this Article I, Section 2; provided , however , that if the Board of Directors recommends that stockholders approve such amendment or repeal at such meeting of stockholders, such amendment or repeal shall only require the affirmative vote of a majority of the outstanding shares entitled to vote on such amendment or repeal, voting together as a single class.

 

SECTION 3.                             Special Meetings .  Except as otherwise required by statute and subject to the rights, if any, of the holders of any series of Undesignated Preferred Stock, special meetings of the stockholders of the Corporation may be called only by the Board of Directors acting pursuant to a resolution approved by the affirmative vote of a majority of the Directors then in office.  The Board of Directors may postpone or reschedule any previously scheduled special meeting of stockholders. Only those matters set forth in the notice of the special meeting may be considered or acted upon at a special meeting of stockholders of the Corporation.  Nominations

 

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of persons for election to the Board of Directors of the Corporation and stockholder proposals of other business shall not be brought before a special meeting of stockholders to be considered by the stockholders unless such special meeting is held in lieu of an annual meeting of stockholders in accordance with Article I, Section 1 of these By-laws, in which case such special meeting in lieu thereof shall be deemed an Annual Meeting for purposes of these By-laws and the provisions of Article I, Section 2 of these By-laws shall govern such special meeting.

 

Notwithstanding anything herein to the contrary, the affirmative vote of not less than two thirds (2/3) of the outstanding shares of capital stock entitled to vote thereon, and the affirmative vote of not less than two thirds (2/3) of the outstanding shares of each class entitled to vote thereon as a class, shall be required to amend or repeal any provision of this Article I, Section 3; provided , however , that if the Board of Directors recommends that stockholders approve such amendment or repeal at such meeting of stockholders, such amendment or repeal shall only require the affirmative vote of a majority of the outstanding shares entitled to vote on such amendment or repeal, voting together as a single class.

 

SECTION 4.                             Notice of Meetings; Adjournments .

 

(a)                                  A notice of each Annual Meeting stating the hour, date and place, if any, of such Annual Meeting and the means of remote communication, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting, shall be given not less than ten (10) days nor more than sixty (60) days before the Annual Meeting, to each stockholder entitled to vote thereat by delivering such notice to such stockholder or by mailing it, postage prepaid, addressed to such stockholder at the address of such stockholder as it appears on the Corporation’s stock transfer books.  Without limiting the manner by which notice may otherwise be given to stockholders, any notice to stockholders may be given by electronic transmission in the manner provided in Section 232 of the Delaware General Corporation Law (“DGCL”).

 

(b)                                  Unless otherwise required by the DGCL, notice of all special meetings of stockholders shall be given in the same manner as provided for Annual Meetings, except that the notice of all special meetings shall state the purpose or purposes for which the meeting has been called.

 

(c)                                   Notice of an Annual Meeting or special meeting of stockholders need not be given to a stockholder if a waiver of notice is executed, or waiver of notice by electronic transmission is provided, before or after such meeting by such stockholder or if such stockholder attends such meeting, unless such attendance is for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting was not lawfully called or convened.

 

(d)                                  The Board of Directors may postpone and reschedule any previously scheduled Annual Meeting or special meeting of stockholders and any record date with respect thereto, regardless of whether any notice or public disclosure with respect to any such meeting has been sent or made pursuant to Section 2 of this Article I of these By-laws or otherwise.  In no event shall the public announcement of an adjournment, postponement or rescheduling of any

 

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previously scheduled meeting of stockholders commence a new time period for the giving of a stockholder’s notice under this Article I of these By-laws.

 

(e)                                   When any meeting is convened, the presiding officer may adjourn the meeting if (i) no quorum is present for the transaction of business, (ii) the Board of Directors determines that adjournment is necessary or appropriate to enable the stockholders to consider fully information which the Board of Directors determines has not been made sufficiently or timely available to stockholders, or (iii) the Board of Directors determines that adjournment is otherwise in the best interests of the Corporation.  When any Annual Meeting or special meeting of stockholders is adjourned to another hour, date or place, notice need not be given of the adjourned meeting other than an announcement at the meeting at which the adjournment is taken of the hour, date and place, if any, to which the meeting is adjourned and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting; provided, however, that if the adjournment is for more than thirty (30) days from the meeting date, or if after the adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting shall be given to each stockholder of record entitled to vote thereat and each stockholder who, by law or under the Certificate of Incorporation of the Corporation (as the same may hereafter be amended and/or restated, the “Certificate”) or these By-laws, is entitled to such notice.

 

SECTION 5.                             Quorum .  A majority of the outstanding shares entitled to vote, present in person or represented by proxy, shall constitute a quorum at any meeting of stockholders.  If less than a quorum is present at a meeting, the holders of voting stock representing a majority of the voting power present at the meeting or the presiding officer may adjourn the meeting from time to time, and the meeting may be held as adjourned without further notice, except as provided in Section 4 of this Article I.  At such adjourned meeting at which a quorum is present, any business may be transacted which might have been transacted at the original meeting.  The stockholders present at a duly constituted meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.

 

SECTION 6.                             Voting and Proxies .  Stockholders shall have one vote for each share of stock entitled to vote owned by them of record according to the stock ledger of the Corporation as of the record date, unless otherwise provided by law or by the Certificate.  Stockholders may vote either (i) in person, (ii) by written proxy or (iii) by a transmission permitted by Section 212(c) of the DGCL.  Any copy, facsimile telecommunication or other reliable reproduction of the writing or transmission permitted by Section 212(c) of the DGCL may be substituted for or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission.  Proxies shall be filed in accordance with the procedures established for the meeting of stockholders.  Except as otherwise limited therein or as otherwise provided by law, proxies authorizing a person to vote at a specific meeting shall entitle the persons authorized thereby to vote at any adjournment of such meeting, but they shall not be valid after final adjournment of such meeting.  A proxy with respect to stock held in the name of two or more

 

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persons shall be valid if executed by or on behalf of any one of them unless at or prior to the exercise of the proxy the Corporation receives a specific written notice to the contrary from any one of them.

 

SECTION 7.                             Action at Meeting .  When a quorum is present at any meeting of stockholders, any matter before any such meeting (other than an election of a director or directors) shall be decided by a majority of the votes properly cast for and against such matter, except where a larger vote is required by law, by the Certificate or by these By-laws.  Any election of directors by stockholders shall be determined by a plurality of the votes properly cast on the election of directors.

 

SECTION 8.                             Stockholder Lists .  The Secretary or an Assistant Secretary (or the Corporation’s transfer agent or other person authorized by these By-laws or by law) shall prepare and make, at least ten (10) days before every Annual Meeting or special meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder.  Such list shall be open to the examination of any stockholder, for a period of at least ten (10) days prior to the meeting as provided in the manner, and subject to the terms, set forth in Section 219 of the DGCL (or any successor provision).  The list shall also be open to the examination of any stockholder during the whole time of the meeting as provided by law.

 

SECTION 9.                             Presiding Officer .  The Board of Directors shall designate a representative to preside over all Annual Meetings or special meetings of stockholders, provided that if the Board of Directors does not so designate such a presiding officer, then the Chairman of the Board, if one is elected, shall preside over such meetings.  If the Board of Directors does not so designate such a presiding officer and there is no Chairman of the Board or the Chairman of the Board is unable to so preside or is absent, then the Chief Executive Officer, if one is elected, shall preside over such meetings, provided further that if there is no Chief Executive Officer or the Chief Executive Officer is unable to so preside or is absent, then the President shall preside over such meetings.  The presiding officer at any Annual Meeting or special meeting of stockholders shall have the power, among other things, to adjourn such meeting at any time and from time to time, subject to Sections 4 and 5 of this Article I.  The order of business and all other matters of procedure at any meeting of the stockholders shall be determined by the presiding officer.

 

SECTION 10.                      Inspectors of Elections .  The Corporation shall, in advance of any meeting of stockholders, appoint one or more inspectors to act at the meeting and make a written report thereof.  The Corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act.  If no inspector or alternate is able to act at a meeting of stockholders, the presiding officer shall appoint one or more inspectors to act at the meeting.  Any inspector may, but need not, be an officer, employee or agent of the Corporation.  Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability.  The inspectors shall perform such duties as are required by the DGCL, including the counting of all votes and ballots.  The inspectors may appoint or retain other persons or entities to assist the inspectors in the performance of the duties of the inspectors.  The presiding officer may review all determinations made by the inspectors, and in so doing the

 

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presiding officer shall be entitled to exercise his or her sole judgment and discretion and he or she shall not be bound by any determinations made by the inspectors.  All determinations by the inspectors and, if applicable, the presiding officer, shall be subject to further review by any court of competent jurisdiction.

 

ARTICLE II

 

Directors

 

SECTION 1.                             Powers .  The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors except as otherwise provided by the Certificate or required by law.

 

SECTION 2.                             Number and Terms .  The number of directors of the Corporation shall be fixed solely and exclusively by resolution duly adopted from time to time by the Board of Directors.  The directors shall hold office in the manner provided in the Certificate.

 

SECTION 3.                             Qualification .  No director need be a stockholder of the Corporation.

 

SECTION 4.                             Vacancies .  Vacancies in the Board of Directors shall be filled in the manner provided in the Certificate.

 

SECTION 5.                             Removal .  Directors may be removed from office only in the manner provided in the Certificate.

 

SECTION 6.                             Resignation .  A director may resign at any time by electronic transmission or by giving written notice to the Chairman of the Board, if one is elected, the President or the Secretary.  A resignation shall be effective upon receipt, unless the resignation otherwise provides.

 

SECTION 7.                             Regular Meetings .  The regular annual meeting of the Board of Directors shall be held, without notice other than this Section 7, on the same date and at the same place as the Annual Meeting following the close of such meeting of stockholders.  Other regular meetings of the Board of Directors may be held at such hour, date and place as the Board of Directors may by resolution from time to time determine and publicize by means of reasonable notice given to any director who is not present at the meeting at which such resolution is adopted.

 

SECTION 8.                             Special Meetings .  Special meetings of the Board of Directors may be called, orally or in writing, by or at the request of a majority of the directors, the Chairman of the Board, if one is elected, or the President.  The person calling any such special meeting of the Board of Directors may fix the hour, date and place thereof.

 

SECTION 9.                             Notice of Meetings .  Notice of the hour, date and place of all special meetings of the Board of Directors shall be given to each director by the Secretary or an Assistant Secretary, or in case of the death, absence, incapacity or refusal of such persons, by the Chairman of the Board, if one is elected, or the President or such other officer designated by the Chairman of the Board, if one is elected, or the President.  Notice of any special meeting of the Board of Directors shall be given to each director in person, by telephone, or by facsimile,

 

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electronic mail or other form of electronic communication, sent to his or her business or home address, at least twenty-four (24) hours in advance of the meeting, or by written notice mailed to his or her business or home address, at least forty-eight (48) hours in advance of the meeting.  Such notice shall be deemed to be delivered when hand-delivered to such address, read to such director by telephone, deposited in the mail so addressed, with postage thereon prepaid if mailed, dispatched or transmitted if sent by facsimile transmission or by electronic mail or other form of electronic communications.  A written waiver of notice signed or electronically transmitted before or after a meeting by a director and filed with the records of the meeting shall be deemed to be equivalent to notice of the meeting.  The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because such meeting is not lawfully called or convened.  Except as otherwise required by law, by the Certificate or by these By-laws, neither the business to be transacted at, nor the purpose of, any meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting.

 

SECTION 10.                      Quorum .  At any meeting of the Board of Directors, a majority of the total number of directors shall constitute a quorum for the transaction of business, but if less than a quorum is present at a meeting, a majority of the directors present may adjourn the meeting from time to time, and the meeting may be held as adjourned without further notice.  Any business which might have been transacted at the meeting as originally noticed may be transacted at such adjourned meeting at which a quorum is present.  For purposes of this section, the total number of directors includes any unfilled vacancies on the Board of Directors.

 

SECTION 11.                      Action at Meeting .  At any meeting of the Board of Directors at which a quorum is present, the vote of a majority of the directors present shall constitute action by the Board of Directors, unless otherwise required by law, by the Certificate or by these By-laws.

 

SECTION 12.                      Action by Consent .  Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all members of the Board of Directors consent thereto in writing or by electronic transmission and the writing or writings or electronic transmission or transmissions are filed with the records of the meetings of the Board of Directors.  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.  Such consent shall be treated as a resolution of the Board of Directors for all purposes.

 

SECTION 13.                      Manner of Participation .  Directors may participate in meetings of the Board of Directors by means of conference telephone or other communications equipment by means of which all directors participating in the meeting can hear each other, and participation in a meeting in accordance herewith shall constitute presence in person at such meeting for purposes of these By-laws.

 

SECTION 14.                      Presiding Director .  The Board of Directors shall designate a representative to preside over all meetings of the Board of Directors, provided that if the Board of Directors does not so designate such a presiding director or such designated presiding director is unable to so preside or is absent, then the Chairman of the Board, if one is elected, shall preside over all meetings of the Board of Directors.  If both the designated presiding director, if

 

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one is so designated, and the Chairman of the Board, if one is elected, are unable to preside or are absent, the Board of Directors shall designate an alternate representative to preside over a meeting of the Board of Directors.

 

SECTION 15.                      Committees .  The Board of Directors, by vote of a majority of the directors then in office, may elect one or more committees, including, without limitation, a Compensation Committee, a Nominating & Corporate Governance Committee and an Audit Committee, and may delegate thereto some or all of its powers except those which by law, by the Certificate or by these By-laws may not be delegated.  Except as the Board of Directors may otherwise determine, any such committee may make rules for the conduct of its business, but unless otherwise provided by the Board of Directors or in such rules, its business shall be conducted so far as possible in the same manner as is provided by these By-laws for the Board of Directors.  All members of such committees shall hold such offices at the pleasure of the Board of Directors.  The Board of Directors may abolish any such committee at any time.  Any committee to which the Board of Directors delegates any of its powers or duties shall keep records of its meetings and shall report its action to the Board of Directors.

 

SECTION 16.                      Compensation of Directors .  Directors shall receive such compensation for their services as shall be determined by a majority of the Board of Directors, or a designated committee thereof, provided that directors who are serving the Corporation as employees and who receive compensation for their services as such, shall not receive any salary or other compensation for their services as directors of the Corporation.

 

ARTICLE III

 

Officers

 

SECTION 1.                             Enumeration .  The officers of the Corporation shall consist of a President, a Treasurer, a Secretary and such other officers, including, without limitation, a Chairman of the Board of Directors, a Chief Executive Officer and one or more Vice Presidents (including Executive Vice Presidents or Senior Vice Presidents), Assistant Vice Presidents, Assistant Treasurers and Assistant Secretaries, as the Board of Directors may determine.

 

SECTION 2.                             Election .  At the regular annual meeting of the Board of Directors following the Annual Meeting, the Board of Directors shall elect the President, the Treasurer and the Secretary.  Other officers may be elected by the Board of Directors at such regular annual meeting of the Board of Directors or at any other regular or special meeting.

 

SECTION 3.                             Qualification .  No officer need be a stockholder or a director.  Any person may occupy more than one office of the Corporation at any time.

 

SECTION 4.                             Tenure .  Except as otherwise provided by the Certificate or by these By-laws, each of the officers of the Corporation shall hold office until the regular annual meeting of the Board of Directors following the next Annual Meeting and until his or her successor is elected and qualified or until his or her earlier resignation or removal.

 

SECTION 5.                             Resignation .  Any officer may resign by delivering his or her written or electronically transmitted resignation to the Corporation addressed to the President or the

 

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Secretary, and such resignation shall be effective upon receipt, unless the resignation otherwise provides.

 

SECTION 6.                             Removal .  Except as otherwise provided by law or by resolution of the Board of Directors, the Board of Directors may remove any officer with or without cause by the affirmative vote of a majority of the directors then in office.

 

SECTION 7.                             Absence or Disability .  In the event of the absence or disability of any officer, the Board of Directors may designate another officer to act temporarily in place of such absent or disabled officer.

 

SECTION 8.                             Vacancies .  Any vacancy in any office may be filled for the unexpired portion of the term by the Board of Directors.

 

SECTION 9.                             President .  The President shall, subject to the direction of the Board of Directors, have such powers and shall perform such duties as the Board of Directors may from time to time designate.

 

SECTION 10.                      Chairman of the Board .  The Chairman of the Board, if one is elected, shall have such powers and shall perform such duties as the Board of Directors may from time to time designate.

 

SECTION 11.                      Chief Executive Officer .  The Chief Executive Officer, if one is elected, shall have such powers and shall perform such duties as the Board of Directors may from time to time designate.

 

SECTION 12.                      Vice Presidents and Assistant Vice Presidents .  Any Vice President (including any Executive Vice President or Senior Vice President) and any Assistant Vice President shall have such powers and shall perform such duties as the Board of Directors or the Chief Executive Officer may from time to time designate.

 

SECTION 13.                      Treasurer and Assistant Treasurers .  The Treasurer shall, subject to the direction of the Board of Directors and except as the Board of Directors or the Chief Executive Officer may otherwise provide, have general charge of the financial affairs of the Corporation and shall cause to be kept accurate books of account.  The Treasurer shall have custody of all funds, securities, and valuable documents of the Corporation.  He or she shall have such other duties and powers as may be designated from time to time by the Board of Directors or the Chief Executive Officer.  Any Assistant Treasurer shall have such powers and perform such duties as the Board of Directors or the Chief Executive Officer may from time to time designate.

 

SECTION 14.                      Secretary and Assistant Secretaries .  The Secretary shall record all the proceedings of the meetings of the stockholders and the Board of Directors (including committees of the Board of Directors) in books kept for that purpose.  In his or her absence from any such meeting, a temporary secretary chosen at the meeting shall record the proceedings thereof.  The Secretary shall have charge of the stock ledger (which may, however, be kept by any transfer or other agent of the Corporation).  The Secretary shall have custody of the seal of the Corporation, and the Secretary, or an Assistant Secretary shall have authority to affix it to any instrument requiring it, and, when so affixed, the seal may be attested by his or her signature

 

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or that of an Assistant Secretary.  The Secretary shall have such other duties and powers as may be designated from time to time by the Board of Directors or the Chief Executive Officer.  In the absence of the Secretary, any Assistant Secretary may perform his or her duties and responsibilities.  Any Assistant Secretary shall have such powers and perform such duties as the Board of Directors or the Chief Executive Officer may from time to time designate.

 

SECTION 15.                      Other Powers and Duties .  Subject to these By-laws and to such limitations as the Board of Directors may from time to time prescribe, the officers of the Corporation shall each have such powers and duties as generally pertain to their respective offices, as well as such powers and duties as from time to time may be conferred by the Board of Directors or the Chief Executive Officer.

 

ARTICLE IV

 

Capital Stock

 

SECTION 1.                             Certificates of Stock .  Each stockholder shall be entitled to a certificate of the capital stock of the Corporation in such form as may from time to time be prescribed by the Board of Directors.  Such certificate shall be signed by any two authorized officers of the Corporation.  The Corporation seal and the signatures by the Corporation’s officers, the transfer agent or the registrar may be facsimiles.  In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed on such certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the time of its issue.  Every certificate for shares of stock which are subject to any restriction on transfer and every certificate issued when the Corporation is authorized to issue more than one class or series of stock shall contain such legend with respect thereto as is required by law.  Notwithstanding anything to the contrary provided in these Bylaws, the Board of Directors of the Corporation may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares (except that the foregoing shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation), and by the approval and adoption of these Bylaws the Board of Directors has determined that all classes or series of the Corporation’s stock may be uncertificated, whether upon original issuance, re-issuance, or subsequent transfer.

 

SECTION 2.                             Transfers .  Subject to any restrictions on transfer and unless otherwise provided by the Board of Directors, shares of stock that are represented by a certificate may be transferred on the books of the Corporation by the surrender to the Corporation or its transfer agent of the certificate theretofore properly endorsed or accompanied by a written assignment or power of attorney properly executed, with transfer stamps (if necessary) affixed, and with such proof of the authenticity of signature as the Corporation or its transfer agent may reasonably require.  Shares of stock that are not represented by a certificate may be transferred on the books of the Corporation by submitting to the Corporation or its transfer agent such evidence of transfer and following such other procedures as the Corporation or its transfer agent may require.

 

SECTION 3.                             Record Holders .  Except as may otherwise be required by law, by the Certificate or by these By-laws, the Corporation shall be entitled to treat the record holder of

 

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stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to vote with respect thereto, regardless of any transfer, pledge or other disposition of such stock, until the shares have been transferred on the books of the Corporation in accordance with the requirements of these By-laws.

 

SECTION 4.                             Record Date .  In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof 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 of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date: (a) in the case of determination of stockholders entitled to vote at any meeting of stockholders, shall, unless otherwise required by law, not be more than sixty (60) nor less than ten (10) days before the date of such meeting and (b) in the case of any other action, shall not be more than sixty (60) days prior to such other action.  If no record date is fixed: (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; and (ii) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

 

SECTION 5.                             Replacement of Certificates .  In case of the alleged loss, destruction or mutilation of a certificate of stock of the Corporation, a duplicate certificate may be issued in place thereof, upon such terms as the Board of Directors may prescribe.

 

ARTICLE V

 

Indemnification

 

SECTION 1.                             Definitions .  For purposes of this Article:

 

(a)                                  “Corporate Status” describes the status of a person who is serving or has served (i) as a Director of the Corporation, (ii) as an Officer of the Corporation, (iii) as a Non-Officer Employee of the Corporation, or (iv) as a director, partner, trustee, officer, employee or agent of any other corporation, partnership, limited liability company, joint venture, trust, employee benefit plan, foundation, association, organization or other legal entity which such person is or was serving at the request of the Corporation.  For purposes of this Section 1(a), a Director, Officer or Non-Officer Employee of the Corporation who is serving or has served as a director, partner, trustee, officer, employee or agent of a Subsidiary shall be deemed to be serving at the request of the Corporation.  Notwithstanding the foregoing, “Corporate Status” shall not include the status of a person who is serving or has served as a director, officer, employee or agent of a constituent corporation absorbed in a merger or consolidation transaction with the Corporation with respect to such person’s activities prior to said transaction, unless specifically authorized by the Board of Directors or the stockholders of the Corporation;

 

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(b)                                  “Director” means any person who serves or has served the Corporation as a director on the Board of Directors of the Corporation;

 

(c)                                   “Disinterested Director” means, with respect to each Proceeding in respect of which indemnification is sought hereunder, a Director of the Corporation who is not and was not a party to such Proceeding;

 

(d)                                  “Expenses” means all attorneys’ fees, retainers, court costs, transcript costs, fees of expert witnesses, private investigators and professional advisors (including, without limitation, accountants and investment bankers), travel expenses, duplicating costs, printing and binding costs, costs of preparation of demonstrative evidence and other courtroom presentation aids and devices, costs incurred in connection with document review, organization, imaging and computerization, telephone charges, postage, delivery service fees, and all other disbursements, costs or expenses of the type customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, settling or otherwise participating in, a Proceeding;

 

(e)                                   “Liabilities” means judgments, damages, liabilities, losses, penalties, excise taxes, fines and amounts paid in settlement;

 

(f)                                    “Non-Officer Employee” means any person who serves or has served as an employee or agent of the Corporation, but who is not or was not a Director or Officer;

 

(g)                                   “Officer” means any person who serves or has served the Corporation as an officer of the Corporation appointed by the Board of Directors of the Corporation;

 

(h)                                  “Proceeding” means any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, inquiry, investigation, administrative hearing or other proceeding, whether civil, criminal, administrative, arbitrative or investigative; and

 

(i)                                      “Subsidiary” shall mean any corporation, partnership, limited liability company, joint venture, trust or other entity of which the Corporation owns (either directly or through or together with another Subsidiary of the Corporation) either (i) a general partner, managing member or other similar interest or (ii) (A) fifty percent (50%) or more of the voting power of the voting capital equity interests of such corporation, partnership, limited liability company, joint venture or other entity, or (B) fifty percent (50%) or more of the outstanding voting capital stock or other voting equity interests of such corporation, partnership, limited liability company, joint venture or other entity.

 

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SECTION 2.                             Indemnification of Directors and Officers .

 

(a)                                  Subject to the operation of Section 4 of this Article V of these By-laws, each Director and Officer shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the DGCL, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than such law permitted the Corporation to provide prior to such amendment), and to the extent authorized in this Section 2.

 

(1)                                  Actions, Suits and Proceedings Other than By or In the Right of the Corporation .  Each Director and Officer shall be indemnified and held harmless by the Corporation against any and all Expenses and Liabilities that are incurred or paid by such Director or Officer or on such Director’s or Officer’s behalf in connection with any Proceeding or any claim, issue or matter therein (other than an action by or in the right of the Corporation), which such Director or Officer is, or is threatened to be made, a party to or participant in by reason of such Director’s or Officer’s Corporate Status, if such Director or Officer acted in good faith and in a manner such Director or Officer reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful.

 

(2)                                  Actions, Suits and Proceedings By or In the Right of the Corporation . Each Director and Officer shall be indemnified and held harmless by the Corporation against any and all Expenses that are incurred by such Director or Officer or on such Director’s or Officer’s behalf in connection with any Proceeding or any claim, issue or matter therein by or in the right of the Corporation, which such Director or Officer is, or is threatened to be made, a party to or participant in by reason of such Director’s or Officer’s Corporate Status, if such Director or Officer acted in good faith and in a manner such Director or Officer reasonably believed to be in or not opposed to the best interests of the Corporation; provided, however, that no indemnification shall be made under this Section 2(a)(2) in respect of any claim, issue or matter as to which such Director or Officer shall have been finally adjudged by a court of competent jurisdiction to be liable to the Corporation, unless, and only to the extent that, the Court of Chancery or another court in which such Proceeding was brought shall determine upon application that, despite adjudication of liability, but in view of all the circumstances of the case, such Director or Officer is fairly and reasonably entitled to indemnification for such Expenses that such court deems proper.

 

(3)                                  Survival of Rights .  The rights of indemnification provided by this Section 2 shall continue as to a Director or Officer after he or she has ceased to be a Director or Officer and shall inure to the benefit of his or her heirs, executors, administrators and personal representatives.

 

(4)                                  Actions by Directors or Officers .  Notwithstanding the foregoing, the Corporation shall indemnify any Director or Officer seeking indemnification in connection with a Proceeding initiated by such Director or Officer only if such Proceeding (including any parts of such Proceeding not initiated by such Director or

 

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Officer) was authorized in advance by the Board of Directors of the Corporation, unless such Proceeding was brought to enforce such Officer’s or Director’s rights to indemnification or, in the case of Directors, advancement of Expenses under these By-laws in accordance with the provisions set forth herein.

 

SECTION 3.                             Indemnification of Non-Officer Employees .  Subject to the operation of Section 4 of this Article V of these By-laws, each Non-Officer Employee may, in the discretion of the Board of Directors of the Corporation, be indemnified by the Corporation to the fullest extent authorized by the DGCL, as the same exists or may hereafter be amended, against any or all Expenses and Liabilities that are incurred by such Non-Officer Employee or on such Non-Officer Employee’s behalf in connection with any threatened, pending or completed Proceeding, or any claim, issue or matter therein, which such Non-Officer Employee is, or is threatened to be made, a party to or participant in by reason of such Non-Officer Employee’s Corporate Status, if such Non-Officer Employee acted in good faith and in a manner such Non-Officer Employee reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful.  The rights of indemnification provided by this Section 3 shall exist as to a Non-Officer Employee after he or she has ceased to be a Non-Officer Employee and shall inure to the benefit of his or her heirs, personal representatives, executors and administrators.  Notwithstanding the foregoing, the Corporation may indemnify any Non-Officer Employee seeking indemnification in connection with a Proceeding initiated by such Non-Officer Employee only if such Proceeding was authorized in advance by the Board of Directors of the Corporation.

 

SECTION 4.                             Determination .  Unless ordered by a court, no indemnification shall be provided pursuant to this Article V to a Director, to an Officer or to a Non-Officer Employee unless a determination shall have been made that 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 Corporation and, with respect to any criminal Proceeding, such person had no reasonable cause to believe his or her conduct was unlawful.  Such determination shall be made by (a) a majority vote of the Disinterested Directors, even though less than a quorum of the Board of Directors, (b) a committee comprised of Disinterested Directors, such committee having been designated by a majority vote of the Disinterested Directors (even though less than a quorum), (c) if there are no such Disinterested Directors, or if a majority of Disinterested Directors so directs, by independent legal counsel in a written opinion, or (d) by the stockholders of the Corporation.

 

SECTION 5.                             Advancement of Expenses to Directors Prior to Final Disposition .

 

(a)                                  The Corporation shall advance all Expenses incurred by or on behalf of any Director in connection with any Proceeding in which such Director is involved by reason of such Director’s Corporate Status within thirty (30) days after the receipt by the Corporation of a written statement from such Director 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 such Director and shall be preceded or accompanied by an undertaking by or on behalf of such Director to repay any Expenses so advanced if it shall ultimately be determined that such Director is not entitled to be indemnified against such Expenses.  Notwithstanding the foregoing, the Corporation shall advance all

 

18



 

Expenses incurred by or on behalf of any Director seeking advancement of expenses hereunder in connection with a Proceeding initiated by such Director only if such Proceeding (including any parts of such Proceeding not initiated by such Director) was (i) authorized by the Board of Directors of the Corporation, or (ii) brought to enforce such Director’s rights to indemnification or advancement of Expenses under these By-laws.

 

(b)                                  If a claim for advancement of Expenses hereunder by a Director is not paid in full by the Corporation within thirty (30) days after receipt by the Corporation of documentation of Expenses and the required undertaking, such Director may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and if successful in whole or in part, such Director shall also be entitled to be paid the expenses of prosecuting such claim.  The failure of the Corporation (including its Board of Directors or any committee thereof, independent legal counsel, or stockholders) to make a determination concerning the permissibility of such advancement of Expenses under this Article V shall not be a defense to an action brought by a Director for recovery of the unpaid amount of an advancement claim and shall not create a presumption that such advancement is not permissible. The burden of proving that a Director is not entitled to an advancement of expenses shall be on the Corporation.

 

(c)                                   In any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that the Director has not met any applicable standard for indemnification set forth in the DGCL.

 

SECTION 6.                             Advancement of Expenses to Officers and Non-Officer Employees Prior to Final Disposition .

 

(a)                                  The Corporation may, at the discretion of the Board of Directors of the Corporation, advance any or all Expenses incurred by or on behalf of any Officer or any Non-Officer Employee in connection with any Proceeding in which such person is involved by reason of his or her Corporate Status as an Officer or Non-Officer Employee upon the receipt by the Corporation of a statement or statements from such Officer or Non-Officer Employee 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 such Officer or Non-Officer Employee and shall be preceded or accompanied by an undertaking by or on behalf of such person to repay any Expenses so advanced if it shall ultimately be determined that such Officer or Non-Officer Employee is not entitled to be indemnified against such Expenses.

 

(b)                                  In any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that the Officer or Non-Officer Employee has not met any applicable standard for indemnification set forth in the DGCL.

 

SECTION 7.                             Contractual Nature of Rights .

 

(a)                                  The provisions of this Article V shall be deemed to be a contract between the Corporation and each Director and Officer entitled to the benefits hereof at any time while this

 

19



 

Article V is in effect, in consideration of such person’s past or current and any future performance of services for the Corporation.  Neither amendment, repeal or modification of any provision of this Article V nor the adoption of any provision of the Certificate of Incorporation inconsistent with this Article V shall eliminate or reduce any right conferred by this Article V in respect of any act or omission occurring, or any cause of action or claim that accrues or arises or any state of facts existing, at the time of or before such amendment, repeal, modification or adoption of an inconsistent provision (even in the case of a proceeding based on such a state of facts that is commenced after such time), and all rights to indemnification and advancement of Expenses granted herein or arising out of any act or omission shall vest at the time of the act or omission in question, regardless of when or if any proceeding with respect to such act or omission is commenced.  The rights to indemnification and to advancement of expenses provided by, or granted pursuant to, this Article V shall continue notwithstanding that the person has ceased to be a director or officer of the Corporation and shall inure to the benefit of the estate, heirs, executors, administrators, legatees and distributes of such person.

 

(b)                                  If a claim for indemnification hereunder by a Director or Officer is not paid in full by the Corporation within sixty (60) days after receipt by the Corporation of a written claim for indemnification, such Director or Officer may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim, and if successful in whole or in part, such Director or Officer shall also be entitled to be paid the expenses of prosecuting such claim.  The failure of the Corporation (including its Board of Directors or any committee thereof, independent legal counsel, or stockholders) to make a determination concerning the permissibility of such indemnification under this Article V shall not be a defense to an action brought by a Director or Officer for recovery of the unpaid amount of an indemnification claim and shall not create a presumption that such indemnification is not permissible.  The burden of proving that a Director or Officer is not entitled to indemnification shall be on the Corporation.

 

(c)                                   In any suit brought by a Director or Officer to enforce a right to indemnification hereunder, it shall be a defense that such Director or Officer has not met any applicable standard for indemnification set forth in the DGCL.

 

SECTION 8.                             Non-Exclusivity of Rights .  The rights to indemnification and to advancement of Expenses set forth in this Article V shall not be exclusive of any other right which any Director, Officer, or Non-Officer Employee may have or hereafter acquire under any statute, provision of the Certificate or these By-laws, agreement, vote of stockholders or Disinterested Directors or otherwise.

 

SECTION 9.                             Insurance .  The Corporation may maintain insurance, at its expense, to protect itself and any Director, Officer or Non-Officer Employee against any liability of any character asserted against or incurred by the Corporation or any such Director, Officer or Non-Officer Employee, or arising out of any such person’s Corporate Status, whether or not the Corporation would have the power to indemnify such person against such liability under the DGCL or the provisions of this Article V.

 

SECTION 10.                      Other Indemnification .  The Corporation’s obligation, if any, to indemnify or provide advancement of Expenses to any person under this Article V as a result of such person serving, at the request of the Corporation, as a director, partner, trustee, officer, employee or

 

20



 

agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall be reduced by any amount such person may collect as indemnification or advancement of Expenses from such other corporation, partnership, joint venture, trust, employee benefit plan or enterprise (the “Primary Indemnitor”).  Any indemnification or advancement of Expenses under this Article V owed by the Corporation as a result of a person serving, at the request of the Corporation, as a director, partner, trustee, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall only be in excess of, and shall be secondary to, the indemnification or advancement of Expenses available from the applicable Primary Indemnitor(s) and any applicable insurance policies.

 

ARTICLE VI

 

Miscellaneous Provisions

 

SECTION 1.                             Fiscal Year .  The fiscal year of the Corporation shall be determined by the Board of Directors.

 

SECTION 2.                             Seal .  The Board of Directors shall have power to adopt and alter the seal of the Corporation.

 

SECTION 3.                             Execution of Instruments .  All deeds, leases, transfers, contracts, bonds, notes and other obligations to be entered into by the Corporation in the ordinary course of its business without director action may be executed on behalf of the Corporation by the Chairman of the Board, if one is elected, the President or the Treasurer or any other officer, employee or agent of the Corporation as the Board of Directors or the executive committee of the Board may authorize.

 

SECTION 4.                             Voting of Securities .  Unless the Board of Directors otherwise provides, the Chairman of the Board, if one is elected, the President or the Treasurer may waive notice of and act on behalf of the Corporation (including with regard to voting and actions by written consent), or appoint another person or persons to act as proxy or attorney in fact for the Corporation with or without discretionary power and/or power of substitution, at any meeting of stockholders or shareholders of any other corporation or organization, any of whose securities are held by the Corporation.

 

SECTION 5.                             Resident Agent .  The Board of Directors may appoint a resident agent upon whom legal process may be served in any action or proceeding against the Corporation.

 

SECTION 6.                             Corporate Records .  The original or attested copies of the Certificate, By-laws and records of all meetings of the incorporators, stockholders and the Board of Directors and the stock transfer books, which shall contain the names of all stockholders, their record addresses and the amount of stock held by each, may be kept outside the State of Delaware and shall be kept at the principal office of the Corporation, at an office of its counsel, at an office of its transfer agent or at such other place or places as may be designated from time to time by the Board of Directors.

 

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SECTION 7.                             Certificate .  All references in these By-laws to the Certificate shall be deemed to refer to the Amended and Restated Certificate of Incorporation of the Corporation, as amended and/or restated and in effect from time to time.

 

SECTION 8.                             Exclusive Jurisdiction .  Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law or the Certificate or By-laws, (iv) any action to interpret, apply, enforce or determine the validity of the Certificate or By-laws, or (v) any action asserting a claim against the Corporation governed by the internal affairs doctrine.  Unless the Corporation consents in writing to the selection of an alternative forum, the United States District Court for the District of Massachusetts shall be the sole and exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act of 1933, as amended.  Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Section 8.

 

SECTION 9.                             Amendment of By-laws .

 

(a)                                  Amendment by Directors .  Except as provided otherwise by law, these By-laws may be amended or repealed by the Board of Directors by the affirmative vote of a majority of the directors then in office.

 

(b)                                  Amendment by Stockholders .  Except as otherwise required by these By-laws or by law, these By-laws may be amended or repealed at any Annual Meeting, or special meeting of stockholders called for such purpose in accordance with these By-Laws, by the affirmative vote of a majority of the outstanding shares entitled to vote on such amendment or repeal, voting together as a single class.  Notwithstanding the foregoing, stockholder approval shall not be required unless mandated by the Certificate, these By-laws, or other applicable law.

 

SECTION 10.                      Notices .  If mailed, notice to stockholders shall be deemed given when deposited in the mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the records of the Corporation.  Without limiting the manner by which notice otherwise may be given to stockholders, any notice to stockholders may be given by electronic transmission in the manner provided in Section 232 of the DGCL.

 

SECTION 11.                      Waivers .  A written waiver of any notice, signed by a stockholder or director, or waiver by electronic transmission by such person, whether given before or after the time of the event for which notice is to be given, shall be deemed equivalent to the notice required to be given to such person.  Neither the business to be transacted at, nor the purpose of, any meeting need be specified in such a waiver.

 

Adopted [  ], 2018, subject to and effective upon the effectiveness of the Corporation’s Registration Statement on Form S-1 for its initial public offering.

 

22




Exhibit 4.2

 

EXECUTION VERSION

 

SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 

Rubius Therapeutics, Inc.

 



 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

1.

Definitions

1

 

 

 

2.

Registration Rights

5

 

2.1

Demand Registration

5

 

2.2

Company Registration

6

 

2.3

Underwriting Requirements

7

 

2.4

Obligations of the Company

8

 

2.5

Furnish Information

10

 

2.6

Expenses of Registration

10

 

2.7

Delay of Registration

10

 

2.8

Indemnification

10

 

2.9

Reports Under Exchange Act

12

 

2.10

Limitations on Subsequent Registration Rights

13

 

2.11

“Market Stand off” Agreement

13

 

2.12

Restrictions on Transfer

14

 

2.13

Termination of Registration Rights

16

 

 

 

3.

Information Rights

16

 

3.1

Delivery of Financial Statements

16

 

3.2

Inspection

17

 

3.3

Termination of Information Rights

18

 

3.4

Confidentiality

18

 

 

 

4.

Rights to Future Stock Issuances

18

 

4.1

Right of First Offer

18

 

4.2

Termination

20

 

 

 

5.

Additional Covenants

20

 

5.1

Insurance

20

 

5.2

Employee Agreements

20

 

5.3

Employee Stock

21

 

5.4

Matters Requiring Lead Preferred Director Approval

21

 

5.5

Board Matters

22

 

5.6

Successor Indemnification

22

 

5.7

Expenses of Counsel

22

 

5.8

Indemnification Matters

23

 

5.9

Right to Conduct Activities

23

 

5.10

FCPA

24

 

5.11

Termination of Covenants

24

 

 

 

6.

Miscellaneous

25

 

6.1

Successors and Assigns

25

 

6.2

Governing Law

25

 

i



 

 

6.3

Counterparts

25

 

6.4

Titles and Subtitles

25

 

6.5

Notices

25

 

6.6

Amendments and Waivers

26

 

6.7

Severability

27

 

6.8

Aggregation of Stock

27

 

6.9

Entire Agreement

27

 

6.10

Dispute Resolution

27

 

6.11

Waiver of Jury Trial

27

 

6.12

Delays or Omissions

28

 

6.13

Further Assurances

28

 

6.14

Acknowledgement

28

 

 

 

 

Schedule A

Investors

 

 

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SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 

THIS SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT (the “ Agreement ”) is made as of February 23, 2018, by and among Rubius Therapeutics, Inc., a Delaware corporation (the “ Company ”), and each of the investors listed on Schedule A hereto (each, an “ Investor ,” and together with any subsequent investors, or transferees, who become parties hereto as “Investors” pursuant to Subsection 6.9 , the “ Investors ”).

 

WHEREAS , certain of the Investors (the “ Existing Investors ”) possess registration rights, information rights, rights of first offer, and other rights pursuant to an Amended and Restated Investors’ Rights Agreement, dated as of June 7, 2017, between the Company and such Investors, as amended (the “ Prior Agreement ”);

 

WHEREAS , the Existing Investors desire to amend and restate the Prior Agreement in its entirety and to accept the rights created pursuant to this Agreement in lieu of the rights granted to them under the Prior Agreement; and

 

WHEREAS , concurrently with the execution of this Agreement, the Company and certain of the Investors are entering into a Series C Preferred Stock Purchase Agreement of even date herewith (as the same may be amended and/or restated from time to time, the “ Purchase Agreement ”), pursuant to which such Investors have agreed to purchase shares of Series C Preferred Stock (as defined below).

 

NOW, THEREFORE , the Company and the Existing Investors hereby agree to amend and restate the Prior Agreement in its entirety as set forth herein, and all of the parties hereto further agree as follows:

 

1.                                       Definitions . For purposes of this Agreement:

 

1.1                                Affiliate ” means, (i) with respect to any specified Person, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with such Person, including without limitation any general partner, managing member, officer or director of such Person or any venture capital or other investment fund now or hereafter existing that is controlled by one or more general partners or managing members of, or shares the same management company or investment adviser with, such Person; (ii) with respect to Scottish Mortgage Investment Trust, plc (or any permitted successor in title thereof), Baillie Gifford & Co. and its Affiliates and any Person that receives, directly or indirectly, investment management or management advisory services from Baillie Gifford & Co. or any of its Affiliates; and (iii) with respect to any investment fund advised or sub-advised by a registered investment adviser, any other investment fund advised or sub-advised by the same registered investment adviser.

 

1.2                                Baillie Gifford ” means Baillie Gifford & Co, Baillie Gifford Overseas Limited and/or Scottish Mortgage Investment Trust PLC.

 

1.3                                Baillie Gifford Investor ” means any Investors advised or subadvised by Baillie Gifford or one of its Affiliates.

 



 

1.4                                BlackRock Investor ” means BlackRock Health Sciences Master Unit Trust, BlackRock Health Sciences Trust or BlackRock Health Sciences Opportunities Portfolio, a series of BlackRock Funds.

 

1.5                                CapRe ” means Capital Research and Management Company and any successor or affiliated registered investment adviser to the CapRe Investors.

 

1.6                                CapRe Investor ” means any Investors advised or subadvised by CapRe or one of its Affiliates.

 

1.7                                Common Stock ” means shares of the Company’s common stock, par value $0.001 per share.

 

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

 

1.9                                Derivative Securities ” means any securities or rights convertible into, or exercisable or exchangeable for (in each case, directly or indirectly), Common Stock, including options and warrants.

 

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

 

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

 

1.12                         Fidelity ” means Fidelity Management & Research Company and any successor or affiliated registered investment advisor to the Fidelity Investors.

 

1.13                         Fidelity Investors ” means any Investors advised or subadvised by Fidelity or one of its Affiliates.

 

2



 

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

 

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

 

1.16                         GAAP ” means generally accepted accounting principles in the United States.

 

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

 

1.18                         Immediate Family Member ” means a child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law, including adoptive relationships, of a natural person referred to herein.

 

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

 

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

 

1.21                         Key Employee ” means any executive-level employee (including division director and vice president-level positions) as well as any employee who, either alone or in concert with others, develops, invents, programs, or designs any Company Intellectual Property (as defined in the Purchase Agreement).

 

1.22                         Lead Preferred Director” means the director of the Company that the holders of record of the Preferred Stock are entitled to elect as a separate class pursuant to the Company’s Certificate of Incorporation.

 

1.23                         Major Investor ” means any (i) Investor that, individually or together with such Investor’s Affiliates, holds at least 1,000,000 shares of Series A Preferred Stock (as adjusted for any stock split, stock dividend, combination, or other recapitalization or reclassification effected after the date hereof) or, after the IPO, at least 1,000,000 Registrable Securities (as adjusted for any stock split, stock dividend, combination, or other recapitalization or reclassification effected after the date hereof) issued upon conversion of such shares of Series A Preferred Stock, (ii) any Investor that, individually or together with such Investor’s Affiliates, holds at least 357,568 shares of Series B Preferred Stock (as adjusted for any stock split, stock dividend, combination, or other recapitalization or reclassification effected after the date hereof) or, after the IPO, at least 357,568 Registrable Securities (as adjusted for any stock split, stock dividend, combination, or other recapitalization or reclassification effected after the date hereof) issued upon conversion of such shares of Series B Preferred Stock, (iii) each Fidelity Investor that holds any shares of Preferred Stock or Registrable Securities, (iv) each Baillie Gifford

 

3



 

Investor that holds any shares of Preferred Stock or Registrable Securities, (v) each CapRe Investor that holds any shares of Series C Preferred Stock or Registrable Securities and (vi) any Investor that, individually or together with such Investor’s Affiliates holds at least 234,559 shares of Series C Preferred Stock (as adjusted for any stock split, stock dividend, combination or other recapitalization or reclassification effected after the date hereof) or, after the IPO, at least 234,559 Registrable Securities (as adjusted for any stock split, stock dividend, combination, or other recapitalization or reclassification effected after the date hereof) issued upon conversion of such shares of Series C Preferred Stock.

 

1.24                         New Securities ” means, collectively, equity securities of the Company, whether or not currently authorized, as well as rights, options, or warrants to purchase such equity securities, or securities of any type whatsoever that are, or may become, convertible or exchangeable into or exercisable for such equity securities.

 

1.25                         Person ” means any individual, corporation, partnership, trust, limited liability company, association or other entity.

 

1.26                         Preferred Stock ” means shares of Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock

 

1.27                         Registrable Securities ” means (i) the Common Stock issuable or issued upon conversion of the Preferred Stock; (ii) the Common Stock held by Flagship VentureLabs IV LLC or its Affiliates; (iii) any Common Stock, or any Common Stock issued or issuable (directly or indirectly) upon conversion and/or exercise of any other securities of the Company, held by the Investors or acquired by the Investors after the date hereof; and (iv) any Common Stock issued as (or issuable upon the conversion or exercise of any warrant, right, or other security that is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, the shares referenced in clause (i) , (ii)  and (iii)  above; excluding in all cases, however, any Registrable Securities sold by a Person in a transaction in which the applicable rights under this Agreement are not assigned pursuant to Subsection 6.1 , and excluding for purposes of Section 2 any shares for which registration rights have terminated pursuant to Subsection 2.13 of this Agreement.

 

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

 

1.29                         Restricted Securities ” means the securities of the Company required to bear the legend set forth in Subsection 2.12(b)  hereof.

 

1.30                         SEC ” means the Securities and Exchange Commission.

 

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

 

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

 

4



 

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

 

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

 

1.35                         Series A Preferred Stock ” means shares of the Company’s Series A Preferred Stock, par value $0.001 per share.

 

1.36                         Series B Preferred Stock ” means shares of the Company’s Series B Preferred Stock, par value $0.001 per share.

 

1.37                         Series C Preferred Stock ” means shares of the Company’s Series C Preferred Stock, par value $0.001 per share.

 

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

 

2.1                                Demand Registration .

 

(a)                                  Form S-1 Demand . If at any time after the earlier of (i) five (5) years after the date of this Agreement or (ii) one hundred eighty (180) days after the effective date of the registration statement for the IPO, the Company receives a request from Holders of a majority of the Registrable Securities then outstanding that the Company file a Form S-1 registration statement for which the anticipated aggregate offering price would exceed $10,000,000, then the Company shall (i) within ten (10) days after the date such request is given, give notice thereof (the “ Demand Notice ”) to all Holders other than the Initiating Holders; and (ii) as soon as practicable, and in any event within sixty (60) days after the date such request is given by the Initiating Holders, file a Form S-1 registration statement under the Securities Act covering all Registrable Securities that the Initiating Holders requested to be registered and any additional Registrable Securities requested to be included in such registration by any other Holders, as specified by notice given by each such Holder to the Company within twenty (20) days of the date the Demand Notice is given, and in each case, subject to the limitations of Subsection 2.1(c)  and Subsection 2.3 .

 

(b)                                  Form S-3 Demand . If at any time when it is eligible to use a Form S-3 registration statement, the Company receives a request from Holders of at least thirty percent (30%) of the Registrable Securities then outstanding that the Company file a Form S-3 registration statement with respect to outstanding Registrable Securities of such Holders having an anticipated aggregate offering price of at least $5,000,000, then the Company shall (i) within ten (10) days after the date such request is given, give a Demand Notice to all Holders other than the Initiating Holders; and (ii) as soon as practicable, and in any event within forty-five (45) days after the date such request is given by the Initiating Holders, file a Form S-3 registration statement under the Securities Act covering all Registrable Securities requested to be included in such registration by any other Holders, as specified by notice given by each such Holder to the Company within twenty (20) days of the date the Demand Notice is given, and in each case, subject to the limitations of Subsection 2.1(c)  and Subsection 2.3 .

 

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(c)                                   Notwithstanding the foregoing obligations, if the Company furnishes to Holders requesting a registration pursuant to this Subsection 2.1 a certificate signed by the Company’s president stating that in the good faith judgment of the Company’s Board of Directors it would be materially detrimental to the Company and its stockholders for such registration statement to either become effective or remain effective for as long as such registration statement otherwise would be required to remain effective, because such action would (i) materially interfere with a significant acquisition, corporate reorganization, or other similar transaction involving the Company; (ii) require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (iii) render the Company unable to comply with requirements under the Securities Act or Exchange Act, then the Company shall have the right to defer taking action with respect to such filing, and any time periods with respect to filing or effectiveness thereof shall be tolled correspondingly, for a period of not more than ninety (90) days after the request of the Initiating Holders is given; provided , however , that the Company may not invoke this right more than once in any twelve (12) month period; and provided further that the Company shall not register any securities for its own account or that of any other stockholder during such ninety (90) day period other than an Excluded Registration.

 

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

 

2.2                                Company Registration . If the Company proposes to register (including, for this purpose, a registration effected by the Company for stockholders other than the Holders) any of its securities under the Securities Act in connection with the public offering of such securities

 

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

 

2.3                                Underwriting Requirements .

 

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

 

(b)                                  In connection with any offering involving an underwriting of shares of the Company’s capital stock pursuant to Subsection 2.2 , the Company shall not be required to include any of the Holders’ Registrable Securities in such underwriting unless the Holders accept the terms of the underwriting as agreed upon between the Company and its underwriters, and then only in such quantity as the underwriters in their sole discretion determine will not jeopardize the success of the offering by the Company. If the total number of securities, including Registrable Securities, requested by stockholders to be included in such offering exceeds the number of securities to be sold (other than by the Company) that the underwriters in their reasonable discretion determine is compatible with the success of the offering, then the Company shall be required to include in the offering only that number of such securities,

 

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

 

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

 

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

 

(a)                                  prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its commercially reasonable efforts to cause such registration statement to become effective and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective for a period of up to one hundred eighty (180) days or, if earlier, until the distribution contemplated in the registration statement has been completed; provided , however , that (i) such one hundred eighty (180) day period shall be extended for a period of time equal to the period the Holder refrains, at the request of an underwriter of Common Stock (or other securities) of the Company, from selling any securities included in such registration, and (ii) in the case of any registration of Registrable Securities on Form S-3 that are intended to be offered on a continuous or delayed basis, subject to compliance with applicable SEC rules, such one hundred eighty (180) day period shall be extended, if necessary, to keep the registration statement effective until all such Registrable Securities are sold;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2.6                                Expenses of Registration . All expenses (other than Selling Expenses) incurred in connection with registrations, filings or qualifications pursuant to Section 2 , including all registration, filing, and qualification fees; printers’ and accounting fees; fees and disbursements of counsel for the Company; and the reasonable and documented fees and expenses, not to exceed $20,000, of one counsel for the selling Holders selected by the Holders of a majority of the Registrable Securities to be registered (“ Selling Holder Counsel ”), shall be borne and paid by the Company; provided , however , that the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to Subsection 2.1 if the registration request is subsequently withdrawn at the request of the Holders of a majority of the Registrable Securities to be registered (in which case all selling Holders shall bear such expenses pro rata based upon the number of Registrable Securities that were to be included in the withdrawn registration), unless the Holders of a majority of the Registrable Securities agree to forfeit their right to one registration pursuant to Subsection 2.1(a)  or Subsection 2.1(b) , as the case may be; provided further that if, at the time of such withdrawal, the Holders shall have learned of a material adverse change in the condition, business, or prospects of the Company from that known to the Holders at the time of their request and have withdrawn the request with reasonable promptness after learning of such information then the Holders shall not be required to pay any of such expenses and shall not forfeit their right to one registration pursuant to Subsection 2.1(a)  or Subsection 2.1(b) . All Selling Expenses relating to Registrable Securities registered pursuant to this Section 2 shall be borne and paid by the Holders pro rata on the basis of the number of Registrable Securities registered on their behalf.

 

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

 

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

 

(a)                                  To the extent permitted by law, the Company will indemnify and hold harmless each selling Holder and the partners, members, officers, directors and stockholders of each such Holder; legal counsel, accountants and investment advisers for each such Holder; any underwriter (as defined in the Securities Act) for each such Holder; and each Person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the

 

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

 

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

 

(c)                                   Promptly after receipt by an indemnified party under this Subsection 2.8 of notice of the commencement of any action (including any governmental action) for which a party may be entitled to indemnification hereunder, such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Subsection 2.8 , give the indemnifying party notice of the commencement thereof. The indemnifying party shall have the right to participate in such action and, to the extent the indemnifying party so desires, participate jointly with any other indemnifying party to which notice has been given, and to assume the defense thereof with counsel mutually satisfactory to the parties; provided , however , that an indemnified party (together with all other indemnified parties that may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such action. The failure to give notice to the indemnifying party within a reasonable time of the commencement of any such action shall

 

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relieve such indemnifying party of any liability to the indemnified party under this Subsection 2.8 , to the extent that such failure materially prejudices the indemnifying party’s ability to defend such action. The failure to give notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Subsection 2.8 .

 

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

 

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

 

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

 

2.9                                Reports Under Exchange Act . With a view to making available to the Holders the benefits of SEC Rule 144 and any other rule or regulation of the SEC that may at

 

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any time permit a Holder to sell securities of the Company to the public without registration or pursuant to a registration on Form S-3, the Company shall:

 

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

 

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

 

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

 

2.10                         Limitations on Subsequent Registration Rights . From and after the date of this Agreement, the Company shall not, without the prior written consent of the Holders of a majority of the Registrable Securities then outstanding, enter into any agreement with any holder or prospective holder of any securities of the Company that (i) would provide to such holder the right to include securities in any registration on other than a subordinate basis after all Holders have had the opportunity to include in the registration and offering all shares of Registrable Securities that they wish to so include or (ii) allow such holder or prospective holder to initiate a demand for registration of any securities held by such holder or prospective holder; provided that this limitation shall not apply to any additional Investor who becomes a party to this Agreement in accordance with Subsection 6.9 .

 

2.11                         Market Stand off” Agreement . Each Holder hereby agrees that it will not, without the prior written consent of the managing underwriter, during the period commencing on the date of the final prospectus relating to the IPO and ending on the date specified by the Company and the managing underwriter (such period not to exceed one hundred eighty (180) days plus such additional period up to eighteen (18) additional days as may be requested by the Company or an underwriter to accommodate regulatory restrictions on (1) the publication or other distribution of research reports and (2) analyst recommendations and opinions, including, but not limited to, the restrictions contained in FINRA Rule 2241 or NYSE Rule 472(f)(4), or any successor provisions or amendments thereto), (i) lend; offer; pledge; sell; contract to sell; sell any option or contract to purchase; purchase any option or contract to sell; grant any option,

 

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right, or warrant to purchase; or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable (directly or indirectly) for Common Stock or (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such securities, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or other securities, in cash, or otherwise. The foregoing provisions of this Subsection 2.11 (A) shall apply only to the IPO, (B) shall not apply to shares of Common Stock acquired in the IPO or in the open market following the IPO, (C) shall not apply to the sale of any shares to an underwriter pursuant to an underwriting agreement for such IPO and (D) shall be applicable to the Holders only if all officers and directors of the Company and holders of at least one and one-half percent (1.5%) of the outstanding Common Stock (after giving effect to conversion into Common Stock of all outstanding shares of Preferred Stock) are subject to the same restrictions. The underwriters in connection with such registration are intended third party beneficiaries of this Subsection 2.11 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto. Each Holder further agrees to execute such agreements as may be reasonably requested by the underwriters in connection with such registration that are consistent with this Subsection 2.11 or that are necessary to give further effect thereto. If any of the obligations described in this Subsection 2.11 are waived or terminated with respect to any of the securities of any such Holder, officer, director or stockholder (in any such case, the “ Released Securities ”), the foregoing provisions shall be waived or terminated, as applicable, to the same extent and with respect to the same percentage of securities of each Holder as the percentage of Released Securities represent with respect to the securities held by the applicable Holder, officer, director or stockholder. Notwithstanding the foregoing, the Company and the underwriters may, in their sole discretion, waive or terminate these restrictions with respect to up to that number of shares of Common Stock, in the aggregate for all Holders, officers, directors or stockholders, representing no more than one percent (1%) of the sum of (i) the shares subject to this Subsection 2.11 and (ii) the shares subject to all other lock-up provisions and agreements.

 

2.12                         Restrictions on Transfer .

 

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

 

(b)                                  Each certificate, instrument or book entry representing (i) the Preferred Stock, (ii) the Registrable Securities, and (iii) any other securities issued in respect of the securities referenced in clauses (i) and (ii), upon any stock split, stock dividend, recapitalization, merger, consolidation, or similar event, shall (unless otherwise permitted by the

 

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provisions of Subsection 2.12(c) ) be stamped or otherwise imprinted with a legend substantially in the following form:

 

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

 

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

 

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

 

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

 

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entry shall not bear such restrictive legend if, in the opinion of counsel for such Holder and the Company, such legend is not required in order to establish compliance with any provisions of the Securities Act. Once the Restricted Securities are eligible for transfer pursuant to SEC Rule 144 without regard to Section (c) thereof, the Holder of such Restricted Securities shall have the right to request that the Company remove the applicable restrictive legend set forth in Subsection 2.12(b) , and the Company agrees to promptly comply with such request to remove such legend.

 

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

 

(a)                                  immediately before the closing of a Deemed Liquidation Event, as such term is defined in the Company’s Certificate of Incorporation;

 

(b)                                  such time after the IPO as SEC Rule 144 or another similar exemption under the Securities Act is available for the sale of all of such Holder’s shares without limitation during a three-month period without registration (and without the requirement for the Company to be in compliance with the current public information required under Rule 144(c)(1)); and

 

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

 

3.                                       Information Rights .

 

3.1                                Delivery of Financial Statements . The Company shall deliver to each Major Investor, provided that the Board of Directors has not reasonably determined that such Major Investor is (or, in the case of a Major Investor that is an individual, is employed by or serves as a consultant to) a competitor of the Company (it being understood and agreed that no Fidelity Investor, no Baillie Gifford Investor, no BlackRock Investor and no CapRe Investor shall be deemed a competitor of the Company):

 

(a)                                  as soon as practicable, but in any event within one hundred eighty (180) days after the end of each fiscal year of the Company (i) a balance sheet as of the end of such year, (ii) statements of income and of cash flows for such year and (iii) a statement of stockholders’ equity as of the end of such year, all such financial statements audited and certified by independent public accountants selected by the Company and approved by the Board of Directors, including the Lead Preferred Director

 

(b)                                  as soon as practicable, but in any event within forty-five (45) days after the end of each of the first three (3) quarters of each fiscal year of the Company, unaudited statements of income and of cash flows for such fiscal quarter, and an unaudited balance sheet as of the end of such fiscal quarter, all prepared in accordance with GAAP (except that such financial statements may (i) be subject to normal year-end audit adjustments and (ii) not contain all notes thereto that may be required in accordance with GAAP);

 

(c)                                   as soon as practicable, but in any event within forty-five (45) days after the end of each of the first three (3) quarters of each fiscal year of the Company, a statement showing the number of shares of each class and series of capital stock and securities convertible

 

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into or exercisable for shares of capital stock outstanding at the end of the period, the Common Stock issuable upon conversion or exercise of any outstanding securities convertible or exercisable for Common Stock and the exchange ratio or exercise price applicable thereto, and the number of shares of issued stock options and stock options not yet issued but reserved for issuance, if any, all in sufficient detail as to permit any Major Investor to calculate its percentage equity ownership in the Company, and certified by the chief financial officer or president of the Company as being true, complete and correct; and

 

(d)                                  as soon as practicable, but in any event thirty (30) days before the end of each fiscal year, a budget and business plan for the next fiscal year (collectively, the “ Budget ”), approved by the Board of Directors and prepared on a quarterly basis, including balance sheets, income statements, and statements of cash flow for such quarters and, promptly after prepared, any other budgets or revised budgets prepared by the Company.

 

If, for any period, the Company has any subsidiary whose accounts are consolidated with those of the Company, then in respect of such period the financial statements delivered pursuant to the foregoing sections shall be the consolidated and consolidating financial statements of the Company and all such consolidated subsidiaries.

 

Notwithstanding anything else in this Subsection 3.1 to the contrary, the Company may cease providing the information set forth in this Subsection 3.1 during the period starting with the date sixty (60) days before the Company’s good-faith estimate of the date of filing of a registration statement if it reasonably concludes it must do so to comply with the SEC rules applicable to such registration statement and related offering; provided that the Company’s covenants under this Subsection 3.1 shall be reinstated at such time as the Company is no longer actively employing its commercially reasonable efforts to cause such registration statement to become effective.

 

The Company shall promptly and accurately respond, and shall use its commercially reasonable efforts to cause its transfer agent to promptly respond, to requests for information made on behalf of any Fidelity Investor, Baillie Gifford Investor, BlackRock Investor or CapRe Investor relating to (i) accounting or securities law matters required in connection with its respective audit or (ii) the actual holdings of such Fidelity Investor, Baillie Gifford Investor, BlackRock Investor or CapRe Investor, including in relation to the total outstanding shares; provided, however, that the Company shall not be obligated to provide any such information that could reasonably result in a violation of applicable law, conflict with a confidentiality obligation of the Company or such exclusion is reasonably necessary to preserve the attorney-client privilege.

 

3.2                                Inspection . The Company shall permit each Major Investor (provided that the Board of Directors has not reasonably determined that such Major Investor is, or, in the case of a Major Investor that is an individual, is employed by or serves as a consultant to, a competitor of the Company), at such Major Investor’s expense, to visit and inspect the Company’s properties; examine its books of account and records; and discuss the Company’s affairs, finances, and accounts with its officers, during normal business hours of the Company as may be reasonably requested by the Major Investor so long as the Major Investor is accompanied by a representative of the Company and has provided reasonable advance notification; provided ,

 

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however , that the Company shall not be obligated pursuant to this Subsection 3.2 to provide access to any information that it reasonably and in good faith considers to be a trade secret or confidential information (unless covered by an enforceable confidentiality agreement, in form acceptable to the Company) or the disclosure of which would adversely affect the attorney-client privilege between the Company and its counsel.

 

3.3                                Termination of Information Rights . The covenants set forth in Subsection 3.1 and Subsection 3.2 shall terminate and be of no further force or effect (i) immediately before the consummation of the IPO, (ii) when the Company first becomes subject to the periodic reporting requirements of Section 12(g) or 15(d) of the Exchange Act, or (iii) immediately before a Deemed Liquidation Event, as such term is defined in the Company’s Certificate of Incorporation, whichever event occurs first; provided, that, with respect to clause (iii), the covenants set forth in Section 3.1 shall only terminate if the consideration received by the Investors in such Deemed Liquidation Event is in the form of cash and/or publicly traded securities unless the Investors receive financial information from the acquiring company or other successor to the Company comparable to those set forth in Section 3.1 .

 

3.4                                Confidentiality . Each Investor agrees that such Investor will keep confidential and will not disclose, divulge or use for any purpose (other than to monitor its investment in the Company) any confidential information obtained from the Company pursuant to the terms of this Agreement (including notice of the Company’s intention to file a registration statement), unless such confidential information (a) is known or becomes known to the public in general (other than as a result of a breach of this Subsection 3.4 by such Investor), (b) is or has been independently developed or conceived by such Investor without use of the Company’s confidential information, or (c) is or has been made known or disclosed to such Investor by a third party without a breach of any obligation of confidentiality such third party may have to the Company; provided , however , that an Investor may disclose confidential information (i) to its attorneys, accountants, consultants, and other professionals to the extent necessary to obtain their services in connection with monitoring its investment in the Company; (ii) to any prospective purchaser of any Registrable Securities from such Investor, if such prospective purchaser agrees to be bound by the provisions of this Subsection 3.4 ; (iii) to any existing or prospective Affiliate, partner, member, stockholder or wholly owned subsidiary of such Investor in the ordinary course of business, provided that such Investor informs such Person that such information is confidential and directs such Person to maintain the confidentiality of such information; or (iv) as may otherwise be required by law, provided that such Investor promptly notifies the Company of such disclosure and takes reasonable steps to minimize the extent of any such required disclosure. Notwithstanding the foregoing, in the case of any Fidelity Investor, Baillie Gifford Investor, BlackRock Investor or CapRe Investor, such Investor may identify the Company and the value of such Investor’s security holdings in the Company in accordance with applicable investment reporting and disclosure regulations or internal policies and respond to examinations, demands, requests or reporting requirements of a regulatory authority without prior notice to or consent from the Company.

 

4.                                       Rights to Future Stock Issuances .

 

4.1                                Right of First Offer . Subject to the terms and conditions of this Subsection 4.1 and applicable securities laws, if the Company proposes to offer or sell any New Securities,

 

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the Company shall first offer such New Securities to each Major Investor. A Major Investor shall be entitled to apportion the right of first offer hereby granted to it among itself and its Affiliates in such proportions as it deems appropriate.

 

(a)                                  The Company shall give notice (the “ Offer Notice ”) to each Major Investor, stating (i) its bona fide intention to offer such New Securities, (ii) the number of such New Securities to be offered, and (iii) the price and terms, if any, upon which it proposes to offer such New Securities.

 

(b)                                  By notification to the Company within twenty (20) days after the Offer Notice is given, each Major Investor may elect to purchase or otherwise acquire, at the price and on the terms specified in the Offer Notice, up to that portion of such New Securities which equals the proportion that the Common Stock then held, or issuable (directly or indirectly) upon conversion and/or exercise, as applicable, of the Preferred Stock and any other Derivative Securities then held by such Major Investor bears to the total Common Stock of the Company then outstanding (assuming full conversion and/or exercise, as applicable, of all Preferred Stock and other Derivative Securities). At the expiration of such twenty (20) day period, the Company shall promptly notify each Major Investor that elects to purchase or acquire all the shares available to it (each, a “ Fully Exercising Investor ”) of any other Major Investor’s failure to do likewise. During the ten (10) day period commencing after the Company has given such notice, each Fully Exercising Investor may, by giving notice to the Company, elect to purchase or acquire, in addition to the number of shares specified above, up to that portion of the New Securities for which Major Investors were entitled to subscribe but that were not subscribed for by the Major Investors which is equal to the proportion that the Common Stock issued and held, or issuable (directly or indirectly) upon conversion and/or exercise, as applicable, of Preferred Stock and any other Derivative Securities then held, by such Fully Exercising Investor bears to the Common Stock issued and held, or issuable (directly or indirectly) upon conversion and/or exercise, as applicable, of the Preferred Stock and any other Derivative Securities then held, by all Fully Exercising Investors who wish to purchase such unsubscribed shares. The closing of any sale pursuant to this Subsection 4.1(b)  shall occur within the later of ninety (90) days of the date that the Offer Notice is given and the date of initial sale of New Securities pursuant to Subsection 4.1(c) .

 

(c)                                   If all New Securities referred to in the Offer Notice are not elected to be purchased or acquired as provided in Subsection 4.1(b) , the Company may, during the ninety (90) day period following the expiration of the periods provided in Subsection 4.1(b) , offer and sell the remaining unsubscribed portion of such New Securities to any Person or Persons at a price not less than, and upon terms no more favorable to the offeree than, those specified in the Offer Notice. If the Company does not enter into an agreement for the sale of the New Securities within such period, or if such agreement is not consummated within thirty (30) days of the execution thereof, the right provided hereunder shall be deemed to be revived and such New Securities shall not be offered unless first reoffered to the Major Investors in accordance with this Subsection 4.1 .

 

(d)                                  The right of first offer in this Subsection 4.1 shall not be applicable to Exempted Securities (as defined in the Company’s Certificate of Incorporation).

 

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(e)                                   Notwithstanding any provision hereof to the contrary, in lieu of complying with the provisions of this Subsection 4.1 , the Company may elect to give notice to the Major Investors within thirty (30) days after the issuance of New Securities. Such notice shall describe the type, price, and terms of the New Securities. Each Major Investor shall have twenty (20) days from the date notice is given to elect to purchase up to the number of New Securities that would, if purchased by such Major Investor, maintain such Major Investor’s percentage-ownership position, calculated as set forth in Subsection 4.1 before giving effect to the issuance of such New Securities. The closing of such sale shall occur within sixty (60) days of the date notice is given to the Major Investors.

 

(f)                                    In the event that the rights of a Major Investor to purchase New Securities under this Section 4.1 are waived with respect to a particular offering of New Securities without such Major Investor’s prior written consent (a “ Waived Investor ”) and any Major Investor that participated in waiving such rights (a “ Waiving Investor ”) actually purchases New Securities in such offering, then the Company shall grant, and hereby grants, each Waived Investor the right to purchase, in a subsequent closing of such issuance on the same terms and conditions as such Waiving Investor (but excluding any attendant right to designate a member of or observer to the Company’s Board of Directors), the same percentage of its full pro rata share of such New Securities as the highest percentage of any such purchasing Major Investor.

 

4.2                                Termination . The covenants set forth in Subsection 4.1 shall terminate and be of no further force or effect (i) immediately before the consummation of the IPO, (ii) when the Company first becomes subject to the periodic reporting requirements of Section 12(g) or 15(d) of the Exchange Act, or (iii) immediately before a Deemed Liquidation Event, as such term is defined in the Company’s Certificate of Incorporation, whichever event occurs first.

 

5.                                       Additional Covenants .

 

5.1                                Insurance . The Company shall use its commercially reasonable efforts to maintain in effect, from financially sound and reputable insurers, Directors and Officers liability insurance in an amount and on terms and conditions satisfactory to the Board of Directors, and will use commercially reasonable efforts to cause such insurance policy to be maintained until such time as the Board of Directors determines that such insurance should be discontinued. The policy shall not be cancelable by the Company without the prior approval of the Board of Directors, including the Lead Preferred Director.

 

5.2                                Employee Agreements . The Company will cause (i) each person now or hereafter employed by it or by any subsidiary (or engaged by the Company or any subsidiary as a consultant/independent contractor) with access to confidential information and/or trade secrets to enter into a nondisclosure and proprietary rights assignment agreement and (ii) each Key Employee to enter into a one (1) year noncompetition and nonsolicitation agreement, each in a form acceptable to the Investors holding a majority of the Registrable Securities. In addition, the Company shall not amend, modify, terminate, waive, or otherwise alter, in whole or in part, any of the above-referenced agreements, or any restricted stock agreement between the Company and any employee, without the consent of the Board of Directors.

 

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5.3                                Employee Stock . Unless otherwise approved by the Board of Directors, including the Lead Preferred Director, all future employees and consultants of the Company who purchase, receive options to purchase, or receive awards of shares of the Company’s capital stock after the date hereof shall be required to execute restricted stock or option agreements, as applicable, providing for (i) vesting of shares over a four (4) year period, with the first twenty-five percent (25%) of such shares vesting following twelve (12) months of continued employment or service, and the remaining shares vesting in equal quarterly installments over the following thirty-six (36) months, and (ii) a market stand-off provision substantially similar to that in Subsection 2.11 . In addition, unless otherwise approved by the Board of Directors, including the Lead Preferred Director, the Company shall retain a “right of first refusal” on employee transfers until the IPO and shall have the right to repurchase unvested shares at cost upon termination of employment of a holder of restricted stock.

 

5.4                                Matters Requiring Lead Preferred Director Approval . The Company hereby covenants and agrees with the Investors that it shall not, nor shall it permit any subsidiary to, without approval of the Board of Directors, which approval must include the affirmative vote of the Lead Preferred Director:

 

(a)                                  make any loan or advance to, or own any stock or other securities of, any subsidiary or other corporation, partnership, or other entity unless it is wholly owned by the Company;

 

(b)                                  make any loan or advance to any Person, including, without limitation, any employee or director of the Company or any subsidiary, except advances and similar expenditures in the ordinary course of business or under the terms of an employee stock or option plan approved by the Board of Directors, including the Lead Preferred Director;

 

(c)                                   guarantee, directly or indirectly, any indebtedness except for trade accounts of the Company or any subsidiary arising in the ordinary course of business;

 

(d)                                  make any investment inconsistent with any investment policy approved by the Board of Directors;

 

(e)                                   incur any aggregate indebtedness in excess of $100,000 that is not already included in a budget approved by the Board of Directors, other than trade credit incurred in the ordinary course of business;

 

(f)                                    otherwise enter into or be a party to any transaction with any director, officer, or employee of the Company or any “associate” (as defined in Rule 12b-2 promulgated under the Exchange Act) of any such Person, except for transactions contemplated by this Agreement and the Purchase Agreement; transactions resulting in payments to or by the Company in an aggregate amount less than $60,000 per year; or transactions made in the ordinary course of business and pursuant to reasonable requirements of the Company’s business and upon fair and reasonable terms that are approved by a majority of the Board of Directors;

 

(g)                                   hire, terminate, or change the compensation of the executive officers, including approving any option grants or stock awards to executive officers (other than

 

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changes in the non-equity compensation of the executive officers that are approved by the Compensation Committee of the Board of Directors);

 

(h)                                  change the principal business of the Company, enter new lines of business, or exit the current line of business;

 

(i)                                      sell, assign, license, pledge, or encumber material technology or intellectual property, other than licenses granted in the ordinary course of business;

 

(j)                                     increase the shares of Common Stock reserved for issuance under the Company’s 2014 Stock Incentive Plan or adopt any other equity incentive plan; or

 

(k)                                  enter into any corporate strategic relationship involving the payment, contribution, or assignment by the Company or to the Company of money or assets.

 

5.5                                Board Matters . The Board of Directors shall meet at least quarterly in accordance with an agreed-upon schedule, unless otherwise agreed by a majority of the Board of Directors, including the Lead Preferred Director. The Company shall reimburse the nonemployee directors for all reasonable out-of-pocket travel expenses incurred (consistent with the Company’s travel policy) in connection with attending meetings of the Board of Directors. The Company shall cause to be established, as soon as practicable after such request, and will maintain, an audit and compensation committee, each of which shall consist solely of non-management directors. Each committee of the Board of Directors shall include the Lead Preferred Director, unless the Lead Preferred Director otherwise notifies the Company in writing. Pursuant to the Purchase Agreement, the Company shall enter into an Indemnification Agreement (the “ Indemnification Agreement ”) with each director in a form acceptable to the Board of Directors, including the Lead Preferred Director.

 

5.6                                Successor Indemnification . If the Company or any of its successors or assignees consolidates with or merges into any other Person and is not the continuing or surviving corporation or entity of such consolidation or merger, or the Company transfers all of its assets, then proper provision shall be made so that the successors and assignees of the Company assume the obligations of the Company with respect to indemnification of members of the Board of Directors as in effect immediately before such transaction, whether such obligations are contained in the Company’s By-laws, its Certificate of Incorporation, Indemnification Agreements or elsewhere, as the case may be.

 

5.7                                Expenses of Counsel . In the event of a transaction which is a Sale of the Company (as defined in the Voting Agreement of even date herewith among the Investors and the Company), the reasonable fees and disbursements, not to exceed $50,000, of one counsel for the Major Investors (“ Investor Counsel ”), in their capacities as stockholders, shall be borne and paid by the Company. At the outset of considering a transaction which, if consummated would constitute a Sale of the Company, the Company shall obtain the ability to share with the Investor Counsel (and such counsel’s clients) and shall share the confidential information (including, without limitation, the initial and all subsequent drafts of memoranda of understanding, letters of intent and other transaction documents and related noncompete, employment, consulting and other compensation agreements and plans) pertaining to and memorializing any of the

 

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transactions which, individually or when aggregated with others would constitute the Sale of the Company. The Company shall be obligated to share (and cause the Company’s counsel and investment bankers to share) such materials when distributed to the Company’s executives and/or any one or more of the other parties to such transaction(s). In the event that Investor Counsel deems it appropriate, in its reasonable discretion, to enter into a joint defense agreement or other arrangement to enhance the ability of the parties to protect their communications and other reviewed materials under the attorney client privilege, the Company shall, and shall direct its counsel to, execute and deliver to Investor Counsel and its clients such an agreement in form and substance reasonably acceptable to Investor Counsel. In the event that one or more of the other party or parties to such transactions require the clients of Investor Counsel to enter into a confidentiality agreement and/or joint defense agreement in order to receive such information, then the Company shall share whatever information can be shared without entry into such agreement and shall, at the same time, in good faith work expeditiously to enable Investor Counsel and its clients to negotiate and enter into the appropriate agreement(s) without undue burden to the clients of Investor Counsel.

 

5.8                                Indemnification Matters . The Company hereby acknowledges that one (1) or more of the directors nominated to serve on the Board of Directors by the Investors (each a “ Fund Director ”) may have certain rights to indemnification, advancement of expenses and/or insurance provided by one or more of the Investors and certain of their affiliates (collectively, the “ Fund Indemnitors ”). The Company hereby agrees (a) that it is the indemnitor of first resort (i.e., its obligations to any such Fund Director are primary and any obligation of the Fund Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by such Fund Director are secondary), (b) that it shall be required to advance the full amount of expenses incurred by such Fund Director and shall be liable for the full amount of all expenses, judgments, penalties, fines and amounts paid in settlement by or on behalf of any such Fund Director to the extent legally permitted and as required by the Company’s Certificate of Incorporation or By-laws of the Company (or any agreement between the Company and such Fund Director), without regard to any rights such Fund Director may have against the Fund Indemnitors, and, (c) 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 any such Fund Director with respect to any claim for which such Fund Director 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 such Fund Director against the Company.

 

5.9                                Right to Conduct Activities . The Company acknowledges that certain of the Investors are in the business of venture capital investing and/or are professional investment funds and therefore review the business plans and related proprietary information of many enterprises, including enterprises which may have products or services which compete directly or indirectly with those of the Company. Nothing in this Agreement, including, without limitation, access to the Company’s confidential information, shall preclude or in any way restrict the Investors or their investment advisers or such investment advisers’ other investment advisory clients from investing or participating in any particular enterprise whether or not such enterprise has products or services which compete with those of the Company. The Company hereby agrees

 

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and acknowledges that such Investors (together with their affiliates) invest in numerous portfolio companies, some of which may be deemed competitive with the Company’s business (as currently conducted or as currently propose to be conducted). The Company hereby agrees that, to the extent permitted under applicable law, such Investors shall not be liable to the Company for any claim arising out of, or based upon, (i) the investment by such Investors in any entity competitive with the Company, or (ii) actions taken by any partner, officer or other representative of such Investors to assist any such competitive company, whether or not such action was taken as a member of the board of directors of such competitive company or otherwise, and whether or not such action has a detrimental effect on the Company; provided, however, that the foregoing shall not relieve (x) any of the Investors from liability associated with the unauthorized disclosure of the Company’s confidential information obtained pursuant to this Agreement, or (y) any director or officer of the Company from any liability associated with his or her fiduciary duties to the Company.

 

5.10                         FCPA .              The Company represents that it shall not (and shall not permit any of its subsidiaries or affiliates or any of its or their respective directors, officers, managers, employees, independent contractors, representatives or agents to) promise, authorize or make any payment to, or otherwise contribute any item of value to, directly or indirectly, to any third party, including any Non-U.S. Official (as (as such term is defined in the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “ FCPA ”)), in each case, in violation of the FCPA, the U.K. Bribery Act, or any other applicable anti-bribery or anti-corruption law. The Company further represents that it shall (and shall cause each of its subsidiaries and affiliates to) cease all of its or their respective activities, as well as remediate any actions taken by the Company, its subsidiaries or affiliates, or any of their respective directors, officers, managers, employees, independent contractors, representatives or agents in violation of the FCPA, the U.K. Bribery Act, or any other applicable anti-bribery or anti-corruption law. The Company further represents that it shall (and shall cause each of its subsidiaries and affiliates to) maintain systems of internal controls (including, but not limited to, accounting systems, purchasing systems and billing systems) to ensure compliance with the FCPA, the U.K. Bribery Act, or any other applicable anti-bribery or anti-corruption law. Upon request, the Company agrees to provide responsive information and/or certifications concerning its compliance with applicable anti-corruption laws. The Company shall promptly notify each Investor if the Company becomes aware of any Enforcement Action (as defined in the Purchase Agreement). The Company shall, and shall cause any direct or indirect subsidiary or entity controlled by it, whether now in existence or formed in the future, to comply with the FCPA. The Company shall use its best efforts to cause any direct or indirect subsidiary, whether now in existence or formed in the future, to comply in all material respects with all applicable laws.

 

5.11                         Termination of Covenants . The covenants set forth in this Section 5 , except for Subsection 5.6 and Subsection 5.7 , shall terminate and be of no further force or effect (i) immediately before the consummation of the IPO, (ii) when the Company first becomes subject to the periodic reporting requirements of Section 12(g) or 15(d) of the Exchange Act, or (iii) immediately before a Deemed Liquidation Event, as such term is defined in the Company’s Certificate of Incorporation, whichever event occurs first.

 

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6.                                       Miscellaneous .

 

6.1                                Successors and Assigns . The rights under this Agreement may be assigned (but only with all related obligations) by a Holder to a transferee of Registrable Securities that (i) is an Affiliate of a Holder; (ii) is a Holder’s Immediate Family Member or trust for the benefit of an individual Holder or one or more of such Holder’s Immediate Family Members; or (iii) after such transfer, holds at least 100,000 shares of Registrable Securities (subject to appropriate adjustment for stock splits, stock dividends, combinations, and other recapitalizations) or, if less, all of the Registrable Securities held by such Holder; provided, however, that (x) the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee and the Registrable Securities with respect to which such rights are being transferred; and (y) such transferee agrees in a written instrument delivered to the Company to be bound by and subject to the terms and conditions of this Agreement, including the provisions of Subsection 2.11 . For the purposes of determining the number of shares of Registrable Securities held by a transferee, the holdings of a transferee (1) that is an Affiliate or stockholder of a Holder; (2) who is a Holder’s Immediate Family Member; or (3) that is a trust for the benefit of an individual Holder or such Holder’s Immediate Family Member shall be aggregated together and with those of the transferring Holder; provided further that all transferees who would not qualify individually for assignment of rights shall have a single attorney-in-fact for the purpose of exercising any rights, receiving notices, or taking any action under this Agreement. The terms and conditions of this Agreement inure to the benefit of and are binding upon the respective successors and permitted assignees of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assignees any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided herein.

 

6.2                                Governing Law . This Agreement and any controversy arising out of or relating to this Agreement shall be governed by and construed in accordance with the internal laws of the Commonwealth of Massachusetts, without regard to conflict of law principles that would result in the application of any law other than the law of the Commonwealth of Massachusetts.

 

6.3                                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 instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

 

6.4                                Titles and Subtitles . The titles and subtitles used in this Agreement are for convenience only and are not to be considered in construing or interpreting this Agreement.

 

6.5                                Notices . All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given upon the earlier of actual receipt or: (i) personal delivery to the party to be notified; (ii) when sent, if sent by electronic mail during the recipient’s normal business hours, and if not sent during normal business hours, then on the recipient’s next business day; (iii) five (5) days after having been sent

 

25



 

by registered or certified mail, return receipt requested, postage prepaid; or (iv) one (1) business day after the business day of deposit with a nationally recognized overnight courier, freight prepaid, specifying next-day delivery, with written verification of receipt. All communications shall be sent to the respective parties at their addresses as set forth on Schedule A hereto, or to the Company at 325 Vassar Street, Suite 1A, Cambridge, MA, 02139, ATTN: President, Torben@rubiustx.com, in the case of the Company, or to such email address or address as subsequently modified by written notice given in accordance with this Subsection 6.5 . If notice is given to the Company, a copy shall also be given to Stuart Cable, Goodwin Procter LLP, 100 Northern Avenue, Boston, Massachusetts 02210, (617) 523-1231 (fax), scable@goodwinlaw.com.

 

6.6                                Amendments and Waivers . Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance, and either retroactively or prospectively) only with the written consent of the Company and the holders of a majority of the Registrable Securities then outstanding; provided that (i) (A) Sections 2.11, 3.1 and 3.3 shall not be modified, amended or waived, in whole or in part, in a manner that (x) adversely affects the Fidelity Investors without the prior written consent of the Fidelity Investors holding a majority of the Registrable Securities held by all Fidelity Investors or (y) adversely affects the Baillie Gifford Investors without the prior written consent of the Baillie Gifford Investors holding a majority of the Registrable Securities held by all Baillie Gifford Investors, (B) Sections 1.4, 3.1, 3.4 and 6.6 shall not be modified, amended or waived, in whole or in part, in a manner that adversely affects the BlackRock Investors without the prior written consent of the BlackRock Investors holding a majority of the Registrable Securities held by the BlackRock Investors and (C) Sections 1.5, 1.6, 1.23, 3.1, 3.4 and 6.6 shall not be modified, amended or waived, in whole or in part, in a manner that adversely affects the CapRe Investors without the prior written consent of the CapRe Investors holding a majority of the Registrable Securities held by the CapRe Investors and (ii) the Company may in its sole discretion waive compliance with Subsection 2.12(c)  (and the Company’s failure to object promptly in writing after notification of a proposed assignment allegedly in violation of Subsection 2.12(c)  shall be deemed to be a waiver); and provided further that any provision hereof may be waived by any waiving party on such party’s own behalf, without the consent of any other party. Notwithstanding the foregoing, this Agreement may not be amended or terminated and the observance of any term hereof may not be waived with respect to any Investor without the written consent of such Investor, unless such amendment, termination, or waiver applies to all Investors in the same fashion (it being agreed that a waiver of the provisions of Section 4 with respect to a particular transaction shall be deemed to apply to all Investors in the same fashion if such waiver does so by its terms, notwithstanding the fact that certain Investors may nonetheless, by agreement with the Company, purchase securities in such transaction). The Company shall give prompt notice of any amendment or termination hereof or waiver hereunder to any party hereto that did not consent in writing to such amendment, termination, or waiver. Any amendment, termination, or waiver effected in accordance with this Subsection 6.6 shall be binding on all parties hereto, regardless of whether any such party has consented thereto. No waivers of or exceptions to any term, condition, or provision of this Agreement, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such term, condition, or provision.

 

26



 

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

 

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

 

6.9                                Entire Agreement . This Agreement (including any Schedules and/or Exhibits hereto) constitutes the full and entire understanding and agreement among the parties with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the parties is expressly canceled.

 

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

 

6.11                         Waiver of Jury Trial . EACH PARTY HEREBY WAIVES ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS, THE SECURITIES OR THE SUBJECT MATTER HEREOF OR THEREOF. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS (INCLUDING NEGLIGENCE), BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THIS SECTION HAS BEEN FULLY DISCUSSED BY EACH OF THE PARTIES HERETO AND THESE PROVISIONS WILL NOT BE SUBJECT TO ANY EXCEPTIONS. EACH PARTY HERETO HEREBY FURTHER WARRANTS AND REPRESENTS THAT SUCH PARTY HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

 

27


 

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

 

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

 

6.14                         Acknowledgement . The Company acknowledges that each Investor is in the business of venture capital investing and therefore reviews the business plans and related proprietary information of many enterprises, including enterprises which may have products or services which compete directly or indirectly with those of the Company. Nothing in this Agreement shall preclude or in any way restrict any Investor from investing or participating in any particular enterprise whether or not such enterprise has products or services which compete with those of the Company.

 

[Remainder of Page Intentionally Left Blank]

 

28



 

IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

 

RUBIUS THERAPEUTICS, INC.

 

 

 

 

 

By:

/s/ Torben Straight Nissen

 

Name:

Torben Straight Nissen, Ph.D.

 

Title

President

 

SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

 

INVESTORS:

 

 

 

FLAGSHIP VENTURES FUND IV, L.P.

 

FLAGSHIP VENTURES FUND IV-Rx, L.P.

 

 

 

By its General Partner

 

Flagship Ventures Fund IV General Partner LLC

 

 

 

 

 

By:

/s/ Noubar B. Afeyan

 

Name:

Noubar B. Afeyan, Ph.D.

 

Its:

Manager

 

 

 

 

 

FLAGSHIP VENTURES FUND V, L.P.

 

FLAGSHIP V VENTURELABS Rx FUND, L.P.

 

 

 

By its General Partner

 

Flagship Ventures Fund V General Partner LLC

 

 

 

 

 

By:

/s/ Noubar B. Afeyan

 

Name:

Noubar B. Afeyan, Ph.D.

 

Its:

Manager

 

 

 

 

 

FLAGSHIP VENTURES OPPORTUNITIES FUND I, L.P.

 

 

 

By its General Partner

 

Flagship Ventures Opportunities Fund I General Partner LLC

 

 

 

 

 

By:

/s/ Noubar B. Afeyan

 

Name:

Noubar B. Afeyan, Ph.D.

 

Its:

Manager

 

SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

 

INVESTORS:

 

 

 

ARCH VENTURE FUND IX, L.P.

 

 

 

By:

ARCH Venture Partners IX, L.P.

 

Its:

General Partner

 

 

 

By:

ARCH Venture Partners IX, LLC

 

Its:

General Partner

 

 

 

 

 

By:

/s/ Mark McDonnell

 

Name:

Mark McDonnell

 

Title:

Managing Director

 

 

 

 

 

ARCH VENTURE FUND IX OVERAGE, L.P.

 

 

 

By:

ARCH Venture Partners IX Overage, L.P.

 

Its:

General Partner

 

 

 

By:

ARCH Venture Partners IX, LLC

 

Its:

General Partner

 

 

 

 

 

By:

/s/ Mark McDonnell

 

Name:

Mark McDonnell

 

Title:

Managing Director

 

SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

 

INVESTOR:

 

 

 

SCOTTISH MORTGAGE INVESTMENT TRUST PLC

 

 

 

 

 

By:

/s/ Graham Laybourn

 

Name:

Graham Laybourn

 

Title:

Partner of Baillie Gifford & Co. as agent for and on behalf of Scottish Mortgage Investment Trust PLC

 

SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

 

INVESTORS:

 

 

 

FIDELITY MT. VERNON

 

STREET TRUST: FIDELITY

 

SERIES GROWTH COMPANY

 

FUND

 

 

 

 

 

By:

/s/ Colm Hogan

 

Name:

Colm Hogan

 

Title:

Authorized Signatory

 

 

 

FIDELITY GROWTH

 

COMPANY COMMINGLED

 

POOL

 

 

 

 

 

By:

/s/ Colm Hogan

 

Name:

Colm Hogan

 

Title:

Authorized Signatory

 

 

 

FIDELITY MT. VERNON

 

STREET TRUST: FIDELITY

 

GROWH COMPANY FUND

 

 

 

 

 

By:

/s/ Colm Hogan

 

Name:

Colm Hogan

 

Title:

Authorized Signatory

 

SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

 

INVESTOR:

 

 

 

SMRS-TOPE LLC

 

 

 

By:

HVST-TOPE LLC

 

 

Its Managing Member

 

By:

HarbourVest Partners L.P.

 

 

Its: Manager

 

By:

HarbourVest Partners, LLC

 

 

Its: General Partner

 

 

 

 

 

By:

/s/ Robert M. Wadsworth

 

Name:

Robert M. Wadsworth

 

Title:

Managing Director

 

SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 


 

IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

 

INVESTORS:

 

 

 

ECOR1 CAPITAL FUND, L.P.

 

By:

EcoR1 Capital, LLC, its General Partner

 

 

 

By:

/s/ Oleg Nodelman

 

Name:

Oleg Nodelman

 

Title:

Managing Director

 

 

 

ECOR1 CAPITAL FUND QUALIFIED, L.P.

 

By:

EcoR1 Capital, LLC, its General Partner

 

 

 

By:

/s/ Oleg Nodelman

 

Name:

Oleg Nodelman

 

Title:

Managing Director

 

SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

 

INVESTOR:

 

 

 

ALEXANDRIA VENTURE INVESTMENTS, LLC,

 

a Delaware limited liability company

 

 

 

By: ALEXANDRIA REAL ESTATE EQUITIES, INC., a Maryland corporation, managing member

 

 

 

By:

/s/ Aaron Jacobson

 

Name:

Aaron Jacobson

 

Title:

VP - Corporate Counsel

 

SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

 

INVESTOR:

 

 

 

Q-VENTURES PROGRAM II

 

(CO-INVEST HOLDINGS) LTD.

 

 

 

By:

/s/ Christopher L. Quinn

 

Name:

Christopher L. Quinn

 

Title:

Director

 

SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

 

INVESTOR:

 

 

 

/s/ Mohamed Adel M F Ghanem

 

Mohamed Adel M F Ghanem

 

SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

 

INVESTOR:

 

 

 

/s/ Nathan Jorgensen

 

Nathan Jorgensen

 

SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

 

INVESTOR:

 

 

 

/s/ Ahmed Ali Al-Hammadi

 

Ahmed Ali Al-Hammadi

 

SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

 

INVESTOR:

 

 

 

/s/ Shamana M. Ansari

 

Shamana M. Ansari

 

SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

 

INVESTOR:

 

 

 

SMALLCAP WORLD FUND, INC.

 

 

 

By: Capital Research and Management Company, for and on behalf of SMALLCAP World Fund, Inc.

 

 

 

By:

/s/ Walter R. Burkley

 

Name:

Walter R. Burkley

 

Title:

Authorized Signatory

 

SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 


 

IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

 

INVESTOR:

 

 

 

JANUS HENDERSON GLOBAL LIFE

 

SCIENCES FUND

 

 

 

By:

Janus Capital Management, LLC its

 

investment adviser

 

 

 

By:

/s/ Carmel Wellso

 

Name:

Carmel Wellso

 

Title:

Director of Research

 

SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

 

INVESTOR:

 

 

 

JANUS HENDERSON CAPITAL

 

FUNDS PLC ON BEHALF OF ITS

 

SERIES JANUS HENDERSON

 

GLOBAL LIFE SCIENCES FUND

 

 

 

By:

Janus Capital Management, LLC its

 

investment adviser

 

 

 

By:

/s/ Carmel Wellso

 

Name:

Carmel Wellso

 

Title:

Director of Research

 

SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

 

INVESTOR:

 

 

 

CORMORANT PRIVATE

 

HEALTHCARE FUND I, LP

 

 

 

By:

Cormorant Private Healthcare

 

GP, LLC

 

 

 

By:

/s/ Bihua Chen

 

Name:

Bihua Chen

 

Title:

Managing Member of the GP

 

 

 

 

 

SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

 

INVESTOR:

 

 

 

CORMORANT GLOBAL

 

HEALTHCARE MASTER

 

FUND, LP

 

 

 

By:

Cormorant Global Healthcare

 

GP, LLC

 

 

 

By:

/s/ Bihua Chen

 

Name:

Bihua Chen

 

Title:

Managing Member of the GP

 

SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

 

INVESTOR:

 

 

 

CRMA SPV, L.P.

 

 

 

By:

Cormorant Asset

 

Management, LLC

 

 

 

By:

/s/ Bihua Chen

 

Name:

Bihua Chen, CEO/CIO

 

Title:

Attorney-in-Fact

 

SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

 

INVESTOR:

 

 

 

BLACKROCK HEALTH

 

SCIENCES MASTER UNIT TRUST

 

 

 

By:

BlackRock Capital

 

Management, Inc.

 

Its: Investment Advisor

 

 

 

By:

/s/ Hongying Xie

 

Name:

Hongying Xie (Erin Xie)

 

Title:

Managing Director

 

SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

 

INVESTOR:

 

 

 

BLACKROCK HEALTH

 

SCIENCES TRUST

 

 

 

By:

BlackRock Advisors, LLC

 

Its: Investment Advisor

 

 

 

By:

/s/ Hongying Xie

 

Name:

Hongying Xie (Erin Xie)

 

Title:

Managing Director

 

SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 



 

IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

 

INVESTOR:

 

 

 

BLACKROCK HEALTH

 

SCIENCES OPPORTUNITIES

 

PORTFOLIO, A SERIES OF

 

BLACKROCK FUNDS

 

 

 

By:

BlackRock Advisors, LLC

 

Its: Investment Advisor

 

 

 

By:

/s/ Hongying Xie

 

Name:

Hongying Xie (Erin Xie)

 

Title:

Managing Director

 

SIGNATURE PAGE TO SECOND AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 


 

SCHEDULE A

 

INVESTORS

 

Name and Address

 

Name and Address

 

Flagship Ventures Fund IV, L.P.
c/o Flagship Pioneering

55 Cambridge Parkway, Suite 800E

Cambridge, MA 02142

T: 617.868.1888

Fax: 617.868.1115

E-mail: legalnotices@flagshippioneering.com

 

Flagship Ventures Fund IV-Rx, L.P.
c/o Flagship Pioneering

55 Cambridge Parkway, Suite 800E

Cambridge, MA 02142

T: 617.868.1888

Fax: 617.868.1115

E-mail: legalnotices@flagshippioneering.com

 

Flagship Ventures Opportunities Fund I, L.P.

c/o Flagship Pioneering

55 Cambridge Parkway, Suite 800E

Cambridge, MA 02142

T: 617.868.1888

Fax: 617.868.1115

E-mail: legalnotices@flagshippioneering.com

 

Flagship Ventures Fund V, L.P.

c/o Flagship Pioneering

55 Cambridge Parkway, Suite 800E

Cambridge, MA 02142

T: 617.868.1888

Fax: 617.868.1115

E-mail: legalnotices@flagshippioneering.com

 

Flagship Ventures Fund V, L.P.

c/o Flagship Pioneering

 



 

55 Cambridge Parkway, Suite 800E

Cambridge, MA 02142

T: 617.868.1888

Fax: 617.868.1115

E-mail: legalnotices@flagshippioneering.com

 

James Gilbert

25 Allen Road

Wellesley, MA 02481

Email: jgilbert@flagshippioneering.com

 

ARCH Venture Fund IX, L.P.

c/o ARCH Venture Partners

8755 W. Higgins Road, Suite 1025

Chicago, IL 60631

Attention:  Mark McDonnell

Tel:     (773) 380-6600

Fax:    (773) 380-6606

 

ARCH Venture Fund IX Overage, L.P.

c/o ARCH Venture Partners

8755 W. Higgins Road, Suite 1025

Chicago, IL 60631

Attention:  Mark McDonnell

Tel:     (773) 380-6600

Fax:    (773) 380-6606

Scottish Mortgage Investment Trust PLC

 

c/o Baillie Gifford & Co.

Calton Square, 1 Greenside Row

Edinburgh EH1 3AN

Scotland, the United Kingdom

Keith.Borrows@bailliegifford.com

Christopher.Smith@bailliegifford.com

Peter.Singlehurst@bailliegifford.com

 

Fidelity Growth Company Commingled Pool

Mag & Co.

c/o Brown Brothers Harriman & Co.

Attn: Corporate Actions/Vault

140 Broadway

New York, NY 10005

Email: bbh.fidelity.ca.notifications@bbh.com

 



 

Fidelity Mt. Vernon Street Trust: Fidelity Growth Company Fund

BNY Mellon

Attn: Stacey Wolfe

525 William Penn Place Rm 0400

Pittsburgh, PA 15259

Fax: 412-236-1012

Email: FidelityCorporateEvents@bnymellon.com

 

Fidelity Mt. Vernon Street Trust: Fidelity Series Growth Company Fund
State Street Bank & Trust

PO Box 5756

Boston, MA 02206

Attn: WAVELENGTH + CO Fidelity Mt. Vernon Street Trust: Fidelity Series Growth Company
Fund

Fax: 617-988-9110

Email: SSBCORPACTIONS@StateStreet.com

 

Artal International S.C.A.

10-12 avenue Pasteur

L-2310 Luxembourg

Grand-Duchy of Luxembourg

Attention: Anne Goffard

E-mail: goffard@artal.com

 

SMRS-TOPE LLC

c/o HarbourVest Partners, LLC

One Financial Center, 44th Floor

Boston, MA 02111

Attention: Joel Hwang

E-mail: jhwang@harbourvest.com

 

EcoR1 Capital Fund, LP

409 Illinois Street

San Francisco, CA 94158

Attn: Oleg Nodelman

E-mail: oleg@ecor1cap.com

 

EcoR1 Capital Fund Qualified, LP

409 Illinois Street

San Francisco, CA 94158

Attn: Oleg Nodelman

E-mail: oleg@ecor1cap.com

 

Alexandria Venture Investments, LLC

385 E. Colorado Blvd., Ste. 299

Pasadena, CA 91101

Tel:     (626) 578-0777

 



 

Email: investments@are.com

 

VP Company Investments 2016, LLC

c/o Latham & Watkins LLP

Attention: CFO

555 West Fifth Street, Suite 800

Los Angeles, CA 90013-1021

Fax: 213-891-7123

Email: investment.administration@lw.com

 

Dikigoros Holdings LLC

c/o Latham & Watkins LLP

Attention: Peter N. Handrinos

200 Clarendon Street, 27th Floor

Boston, MA 02116

Fax: 617-948-6061

Email: peter.handrinos@lw.com

 

Q-Ventures Program II (Co-Invest Holdings) Ltd

c/o Walkers Corporate Limited

27 Hospital Road

George Town

Grand Cayman

KY1-9008

Cayman Islands

Email: fga@grovestreet.com

mvisser@whitecase.com

 

Mohamed Adel M F Ghanem

PO Box 23224

5 th  Floor Ooredoo Tower

Corniche Street

West Bay Doha, Qatar

Phone Number: +974 4459 1848

Email: ghanem.mohamed@gmail.com

 

Nathan Jorgensen

Fifth Floor

QIA

Ooredoo Tower

P.O.Box: 23224

Doha, QatarPhone Number: +1-917-504-5152

Email:  nj77@cornell.edu

 



 

Ahmed Ali Al-Hammadi

PO BOX 6821

Doha, Qatar

Phone Number: +974-5580-9809

Email: Ahmed1@gmail.com

 

Shamana M. Ansari

C/O Syed Fahad Haque

PO BOX 23224

Doha, Qatar

Phone Number: +1-805-300-3861

Email: fahad.haque@gmail.com

 

Uprising Investors Fund I, L.P.

580 California St, Ste 2040

San Francisco, CA 94104

Email: andy@uprising.us

 

SMALLCAP World Fund, Inc.

c/o Capital Research and Management Company

333 South Hope Street, 33 rd  Floor

Los Angeles, California 90071

Attention: Erik A. Vayntrub

Email:    erik_vayntrub@capgroup.com

Phone:  (213) 486-9108

Fax:        (213) 486-9041

With a copy (which shall not constitute notice) to:

Christopher Lee

One Market Street, Spear Tower

Suite 3900

San Francisco, California 94105

Email:    christopher.lee@capitalworld.com

Phone:  (415) 646-7058

Fax:        (415) 263-7992

 

Janus Henderson Global Life Sciences Fund

c/o Janus Capital Management, LLC
151 Detroit Street

Denver CO 80206

Attn:      Andy Acker

Email:    andy.acker@janus.com

Copy to:

Legal Department

Email:    ezra.kover@janus.com

 



 

Janus Henderson Capital Funds PLC on behalf of its series Janus Henderson Global Life
Sciences Fund

c/o Janus Capital Management, LLC
151 Detroit Street

Denver CO 80206

Attn:      Andy Acker

Email:    andy.acker@janus.com

Copy to:

Legal Department

Email:    ezra.kover@janus.com

 

Cormorant Private Healthcare Fund I, LP

200 Clarendon Street, 52nd Floor

Boston, MA 02116

 

Cormorant Global Healthcare Master Fund, LP

200 Clarendon Street, 52nd Floor

Boston, MA 02116

 

CRMA SPV, L.P.

200 Clarendon Street, 52nd Floor

Boston, MA 02116

 

BlackRock Health Sciences Master Unit Trust

c/o BlackRock

60 State Street, 19th/20th Floor

Boston, MA 02109

Attn:  Erin Xie

Email:  erin.xie@blackrock.com

With a copy (which shall not constitute notice) to:

c/o BlackRock, Inc.

Office of the General Counsel

40 East 52nd Street

New York, NY 10022

Attn:  David Maryles and Joe Roy

Email:  legaltransactions@blackrock.com

 

BlackRock Health Sciences Trust

c/o BlackRock

60 State Street, 19th/20th Floor

Boston, MA 02109

Attn:  Erin Xie

Email:  erin.xie@blackrock.com

With a copy (which shall not constitute notice) to:

c/o BlackRock, Inc.

Office of the General Counsel

40 East 52nd Street

New York, NY 10022

 



 

Attn:  David Maryles and Joe Roy

Email:  legaltransactions@blackrock.com

 

BlackRock Health Sciences Opportunities Portfolio, a series of BlackRock Funds

c/o BlackRock

60 State Street, 19th/20th Floor

Boston, MA 02109

Attn:  Erin Xie

Email:  erin.xie@blackrock.com

With a copy (which shall not constitute notice) to:

c/o BlackRock, Inc.

Office of the General Counsel

40 East 52nd Street

New York, NY 10022

Attn:  David Maryles and Joe Roy

Email:  legaltransactions@blackrock.com

 




Exhibit 4.3

 

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH APPLICABLE LAW. THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER ARE SUBJECT TO THE RESTRICTIONS ON TRANSFER SET FORTH IN SECTION 4.4 OF THIS WARRANT.

 

This Amended and Restated Warrant amends and restates, in its entirety, that certain Warrant to Purchase Stock issued by the Company to Pacific Western Bank on November 20, 2015 (the “Original Warrant”), in order to reflect (a) clarification of the number of shares, and (b) the transfer of the Original Warrant to PacWest Bancorp.

 

AMENDED AND RESTATED WARRANT TO PURCHASE STOCK

 

 

Corporation:

RUBIUS THERAPEUTICS, INC.

 

Number of Shares:

133,333

 

Class of Stock:

Series A Preferred

 

Initial Exercise Price:

$0.60 per share

 

Original Issue Date:

November 20, 2015

 

Issue Date:

May 19, 2017

 

Expiration Date:

November 20, 2025

 

THIS AMENDED AND RESTATED WARRANT CERTIFIES THAT, for good and valuable consideration, the receipt of which is hereby acknowledged, PACWEST BANCORP or its assignee or transferee (“ Holder ”) is entitled to purchase the number of fully paid and nonassessable shares of the class of securities (the “ Shares ”) of RUBIUS THERAPEUTICS, INC. (the “ Company ”) at the initial exercise price per Share (the “ Warrant Price ”) all as set forth above and as adjusted pursuant to Article 2 of this warrant, subject to the provisions and upon the terms and conditions set forth in this warrant.

 

ARTICLE 1

 

EXERCISE

 

1.1                                Method of Exercise.   Holder may exercise this warrant by delivering this warrant and a duly executed Notice of Exercise in substantially the form attached as Appendix 1 to the principal office of the Company.  Unless Holder is exercising the conversion right set forth in Section 1.2, Holder shall also deliver to the Company a check for the aggregate Warrant Price for the Shares being purchased.

 

1.2                                Conversion Right.   In lieu of exercising this warrant as specified in Section 1.1, Holder may from time to time convert this warrant, in whole or in part, into a number of Shares determined by dividing (a) the aggregate fair market value of the Shares or other securities otherwise issuable upon exercise of this warrant minus the aggregate Warrant Price of such Shares by (b) the fair market value of one Share.  The fair market value of the Shares shall be determined pursuant to Section 1.3.

 



 

1.3                                Fair Market Value.   If the Shares are traded regularly in a public market, the fair market value of the Shares shall be the closing price of the Shares (or the closing price of the Company’s stock into which the Shares are convertible) reported for the business day immediately before Holder delivers its Notice of Exercise to the Company.  If the Shares are not regularly traded in a public market, the Board of Directors of the Company shall determine fair market value in its reasonable good faith judgment.

 

1.4                                Delivery of Certificate and New Warrant.   Promptly after Holder exercises or converts this warrant, the Company shall deliver to Holder certificates for the Shares acquired and, if this warrant has not been fully exercised or converted and has not expired, a new warrant representing the Shares not so acquired.

 

1.5                                Replacement of Warrants.   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 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 shall execute and deliver, in lieu of this warrant, a new warrant of like tenor.

 

1.6                                Repurchase on Sale, Merger, or Consolidation of the Company.

 

1.6.1                      Acquisition . ”  For the purpose of this warrant, “Acquisition” means (a) any sale, license, or other disposition of all or substantially all of the assets (including intellectual property) of the Company, or (b) any reorganization, consolidation, merger or sale of the voting securities of the Company or any other transaction where the holders of the Company’s securities before the transaction beneficially own less than 50% of the outstanding voting securities of the surviving entity after the transaction.

 

1.6.2                      Exercise Upon Acquisition.   Upon the closing of any Acquisition in which the consideration to be received by the Company’s stockholders consists of cash, marketable securities, or a combination of both cash and marketable securities, this warrant shall be deemed to have been automatically converted pursuant to Section 1.2, and thereafter Holder shall participate in the Acquisition on the same terms as other holders of the same class of securities of the Company.

 

1.6.3                      Assumption of Warrant.   Upon the closing of any Acquisition not referred to in Section 1.6.2, the successor entity shall assume the obligations of this warrant, and this warrant shall thereafter be exercisable for the same securities and/or other property as would have been paid for the Shares issuable upon exercise of the unexercised portion of this warrant as if such Shares were outstanding on and as of the closing of such Acquisition, subject to further adjustment from time to time in accordance with the provisions of this warrant.

 

ARTICLE 2

 

ADJUSTMENTS TO THE SHARES

 

2.1                                Stock Dividends, Splits, Etc.   If the Company declares or pays a dividend on its common stock payable in common stock, or other securities, or subdivides the outstanding

 



 

common stock into a greater amount of common stock, then upon exercise of this warrant, for each Share acquired, Holder shall receive, without cost to Holder, the total number and kind of securities to which Holder would have been entitled had Holder owned the Shares of record as of the date the dividend or subdivision occurred.

 

2.2                                Reclassification, Exchange or Substitution.   Upon any reclassification, exchange, substitution, or other event that results in a change of the number and/or class of the securities issuable upon exercise or conversion of this warrant, Holder shall be entitled to receive, upon exercise or conversion of this warrant, the number and kind of securities and property that Holder would have received for the Shares if this warrant had been exercised immediately before such reclassification, exchange, substitution, or other event.  Such an event shall include any automatic conversion of the outstanding or issuable securities of the Company of the same class or series as the Shares to common stock pursuant to the terms of the Company’s Certificate of Incorporation upon the closing of a registered public offering of the Company’s common stock.  The Company or its successor shall promptly issue to Holder a new warrant for such new securities or other property.  The new warrant shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article 2 including, without limitation, adjustments to the Warrant Price and to the number of securities or property issuable upon exercise of the new warrant.  The provisions of this Section 2.2 shall similarly apply to successive reclassifications, exchanges, substitutions, or other events.

 

2.3                                Adjustments for Combinations, Etc.   If the outstanding Shares are combined or consolidated, by reclassification or otherwise, into a lesser number of shares, the Warrant Price shall be proportionately increased.  If the outstanding Shares are combined or consolidated, by reclassification or otherwise, into a greater number of shares, the Warrant Price shall be proportionately decreased.

 

2.4                                Adjustments for Diluting Issuances.   In the event of the issuance (a “ Diluting Issuance ”) by the Company after the Issue Date of securities at a price per share less than the Warrant Price, then the number of shares of common stock issuable upon conversion of the Shares shall be adjusted in accordance with those provisions of the Company’s Certificate of Incorporation that apply to Diluting Issuances.

 

2.5                                Certificate as to Adjustments.   Upon each adjustment of the Warrant Price, the Company at its expense shall promptly compute such adjustment, and furnish Holder with a certificate of its Chief Financial Officer setting forth such adjustment and the facts upon which such adjustment is based.  The Company shall, upon written request, furnish Holder a certificate setting forth the Warrant Price in effect upon the date thereof and the series of adjustments leading to such Warrant Price.

 

2.6                                Fractional Shares.   No fractional Shares shall be issuable upon exercise or conversion of the Warrant and the Number of Shares to be issued shall be rounded down to the nearest whole Share.  If a fractional share interest arises upon any exercise or conversion of the Warrant, the Company shall eliminate such fractional share interest by paying Holder an amount computed by multiplying the fractional interest by the fair market value of a full Share.

 



 

ARTICLE 3

 

REPRESENTATIONS AND COVENANTS OF THE COMPANY

 

3.1                                Representations and Warranties.   The Company hereby represents and warrants to the Holder as follows:

 

(a)                                  The initial Warrant Price referenced on the first page of this warrant is the price per share paid by investors in the Company’s most recent preferred stock financing.

 

(b)                                  All Shares which may be issued upon the exercise of the purchase right represented by this warrant, and all securities, if any, issuable upon conversion of the Shares, shall, upon issuance, be duly authorized, validly issued, fully paid and nonassessable, and free of any liens and encumbrances except for restrictions on transfer provided for herein or under applicable federal and state securities laws.

 

(c)                                   The Company’s capitalization table attached to this warrant is true and complete as of the Issue Date.

 

3.2                                Notice of Certain Events.   The Company shall provide Holder with not less than 10 days prior written notice of, including a description of the material facts surrounding, any of the following events:  (a) declaration of any dividend or distribution upon its common stock, whether in cash, property, stock, or other securities and whether or not a regular cash dividend; (b) offering for subscription pro rata to the holders of any class or series of its stock any additional shares of stock of any class or series or other rights; (c) effecting any reclassification or recapitalization of common stock; or (d) the merger or consolidation with or into any other corporation, or sale, lease, license, or conveyance of all or substantially all of its assets, or liquidation, dissolution or winding up.

 

3.3                                Information Rights.   Prior to an initial public offering of the Company’s common stock and provided Holder holds this warrant and/or any of the Shares, the Company shall deliver to the Holder the financial information required to be delivered to Major Investors (as defined in the IRA) under Section 3.1(a) and 3.1(b) pursuant to that certain Investors Rights Agreement dated as of October 29, 2014 by and among the Company and the investor named therein, as may be amended and/or restated from time to time (the “IRA”).

 

3.4                                Registration Under Securities Act of 1933, as amended.   The Company agrees that the Shares or, if the Shares are convertible into common stock of the Company, such common stock, shall be “Registrable Securities”, and Holder shall be a “Holder” under the IRA.

 

3.5                                Holder Investment Representations .  Holder makes the representations to the Company set forth in Exhibit A hereof in connection with the issuance of this warrant and the Shares (collectively, the “Securities”).

 

3.6                                Market Stand Off .  Holder agrees that it shall be subject to the Market Standoff provisions in Section 2.11 of the IRA.

 



 

3.7                                Company Agreements . Following the exercise of this warrant, upon the request of the Company, Holder shall execute a counterpart signature page to the investor and stockholder agreements governing the rights and obligations in respect of the Company’s Series A Preferred Stock.

 

ARTICLE 4

 

MISCELLANEOUS

 

4.1                                Term: Exercise Upon Expiration.   This warrant is exercisable in whole or in part, at any time and from time to time on or before the Expiration Date set forth above; provided, however, that if the Company completes its initial public offering within the one-year period immediately prior to the Expiration Date, the Expiration Date shall automatically be extended until the first anniversary of the effective date of the Company’s initial public offering.  If this warrant has not been exercised prior to the Expiration Date, this warrant shall be deemed to have been automatically exercised on the Expiration Date by “cashless” conversion pursuant to Section 1.2.

 

4.2                                Legends.   This warrant and the Shares (and the securities issuable, directly or indirectly, upon conversion of the Shares, if any) shall be imprinted with a legend in substantially the following form:

 

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH APPLICABLE LAW.

 

4.3                                Compliance with Securities Laws on Transfer.   This warrant and the Shares issuable upon exercise of this warrant (and the securities issuable, directly or indirectly, upon conversion of the Shares, if any) may not be transferred or assigned in whole or in part without compliance with applicable federal and state securities laws by the transferor and the transferee.  The Company shall not require Holder to provide an opinion of counsel if the transfer is to an affiliate of Holder or if there is no material question as to the availability of current information as referenced in Rule 144(c), Holder represents that it has complied with Rule 144 (d) and (e) in reasonable detail, the selling broker represents that it has complied with Rule 144(f), and the Company is provided with a copy of Holder’s notice of proposed sale.

 

4.4                                Transfer Procedure.   Subject to the provisions of Section 4.3, Holder may transfer all or part of this warrant or the Shares issuable upon exercise of this warrant (or the securities issuable, directly or indirectly, upon conversion of the Shares, if any) by giving the Company notice of the portion of the warrant being transferred setting forth the name, address and taxpayer identification number of the transferee and surrendering this warrant to the Company for reissuance to the transferee(s) (and Holder, if applicable).  No surrender or reissuance shall be required for a transfer to an affiliate of Holder.

 

4.5                                Notices.   All notices and other communications from the Company to the Holder, or vice versa, shall be deemed delivered and effective when given personally or mailed by first-class registered or certified mail, postage prepaid, at such address as may have been furnished to

 



 

the Company or the Holder, as the case may be, in writing by the Company or such Holder from time to time.  All notices to the Holder shall be addressed as follows:

 

PacWest Bancorp

Attn:  Warrant Administrator

406 Blackwell Street, Suite 240

Durham, NC 27701

 

4.6                                Amendments.   This warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought.

 

4.7                                Attorneys’ Fees.   In the event of any dispute between the parties concerning the terms and provisions of this warrant, the party prevailing in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorneys’ fees.

 

4.8                                Governing Law.   This warrant shall be governed by and construed in accordance with the laws of the State of North Carolina, without giving effect to its principles regarding conflicts of law.

 

[Signature Page Follows]

 



 

IN WITNESS WHEREOF, the undersigned has executed this Amended and Restated Warrant to Purchase Stock as of the date set forth above.

 

 

RUBIUS THERAPEUTICS, INC.

 

 

 

 

 

By:

/s/ Joanne M. Protano

 

Name:

Joanne M. Protano

 

Title:

VP Finance, Secretary & Treasurer

 

Acknowledged and agreed:

 

 

 

PACWEST BANCORP

 

 

 

 

 

By:

/s/ Tracie Youngblood

 

Name:

Tracie Youngblood

 

Title:

SVP, Controller

 

 

[Signature Page to Amended and Restated Warrant to Purchase Stock]

 



 

APPENDIX 1

 

NOTICE OF EXERCISE

 

1.                                       The undersigned hereby elects to purchase                shares of the                stock of RUBIUS THERAPEUTICS, INC. pursuant to the terms of the attached warrant, and tenders herewith payment of the purchase price of such shares in full.

 

1.                                       The undersigned hereby elects to convert the attached warrant into shares in the manner specified in the warrant.  This conversion is exercised with respect to                of the shares covered by the warrant.

 

[Strike paragraph that does not apply.]

 

2.                                       Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name as is specified below:

 

 

 

(Holder’s Name)

 

 

 

 

(Address)

 

3.                                       The undersigned represents it is acquiring the shares solely for its own account and not as a nominee for any other party and not with a view toward the resale or distribution thereof except in compliance with applicable securities laws.

 

PACWEST BANCORP or Registered Assignee

 

 

 

 

 

 

 

(Signature)

 

 

 

 

 

 

 

(Date)

 

 



 

EXHIBIT A

 

INVESTMENT REPRESENTATIONS

 

(a)                                  The undersigned is aware of the Company’s business affairs and financial condition, and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities.  The undersigned is purchasing the Securities for its own account for investment purposes only, not as a nominee or agent, and not with a view towards, or for resale in connection with, any “distribution” thereof for purposes of the Securities Act of 1933, as amended (the “Securities Act”).  The undersigned has such knowledge and experience in financial business matters and the undersigned is capable of evaluating the merits and risks of the purchase of the Securities and of protecting its interests in connection therewith.

 

(b)                                  The undersigned understands that the Securities have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of the undersigned’s investment intent as expressed herein.

 

(c)                                   The undersigned further understands that the Securities must be held indefinitely, and the undersigned must therefore bear the economic risk therewith, unless the Securities are subsequently registered under the Securities Act or unless an exemption from registration is otherwise available.  In addition, the undersigned understands that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required.

 

(d)                                  The undersigned is familiar with the provisions of Rule 144, promulgated pursuant to the Securities Act, which, in substance, permits limited public resale of “restricted securities” acquired, directly or indirectly, from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions.

 

(e)                                   The Securities may be resold in certain limited circumstances subject to the provisions of Rule 144, which requires, among other things, the existence of a public market for the Securities, the availability of certain current public information about the Company, the resale occurring not less than one year after a party has purchased and paid for the security to be sold, the sales being effected through a “broker’s transaction” or in transactions directly with a “market maker” and the number of securities being sold during any three-month period not exceeding specified limitations.

 

(f)                                    The undersigned further understands that in the event that all of the applicable requirements of Rule 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required.

 

(g)                                   The undersigned is an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

 




Exhibit 4.4

 

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH APPLICABLE LAW. THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER ARE SUBJECT TO THE RESTRICTIONS ON TRANSFER SET FORTH IN SECTION 4.4 OF THIS WARRANT.

 

This Amended and Restated Second Warrant amends and restates, in its entirety, that certain Second Warrant to Purchase Stock issued by the Company to Pacific Western Bank on May 19, 2017 (the “Original Warrant”), in order to reflect (a) clarification of the number and class of shares and initial exercise price, and (b) the transfer of the Original Warrant to PacWest Bancorp.

 

AMENDED AND RESTATED SECOND WARRANT TO PURCHASE

STOCK

 

 

Corporation:

RUBIUS THERAPEUTICS, INC.

 

Number of Shares:

2,234

 

Class of Stock:

Series B Preferred

 

Initial Exercise Price:

$8.39 per share

 

Original Issue Date:

May 19, 2017

 

Issue Date:

September 13, 2017

 

Expiration Date:

May 19, 2027

 

THIS AMENDED AND RESTATED SECOND WARRANT CERTIFIES THAT, for good and valuable consideration, the receipt of which is hereby acknowledged, P AC W EST B ANCORP or its assignee or transferee (“ Holder ”) is entitled to purchase the number of fully paid and nonassessable shares of the class of securities (the “ Shares ”) of RUBIUS THERAPEUTICS, INC. (the “ Company ”) at the initial exercise price per Share (the “ Warrant Price ”) all as set forth above and as adjusted pursuant to Article 2 of this warrant, subject to the provisions and upon the terms and conditions set forth in this warrant.

 

ARTICLE 1

 

EXERCISE

 

1.1                                        Method of Exercise.  Holder may exercise this warrant by delivering this warrant and a duly executed Notice of Exercise in substantially the form attached as Appendix 1 to the principal office of the Company. Unless Holder is exercising the conversion right set forth in Section 1.2, Holder shall also deliver to the Company a check for the aggregate Warrant Price for the Shares being purchased.

 

1.2                                        Conversion Right. In lieu of exercising this warrant as specified in Section 1.1, Holder may from time to time convert this warrant, in whole or in part, into a number of Shares determined by dividing (a) the aggregate fair market value of the Shares or other securities otherwise issuable upon exercise of this warrant minus the aggregate Warrant Price of such

 

1



 

Shares by (b) the fair market value of one Share.  The fair market value of the Shares shall be determined pursuant to Section 1.3.

 

1.3                                        Fair Market Value. If the Shares are traded regularly in a public market, the fair market value of the Shares shall be the closing price of the Shares (or the closing price of the Company’s stock into which the Shares are convertible) reported for the business day immediately before Holder delivers its Notice of Exercise to the Company. If the Shares are not regularly traded in a public market, the Board of Directors of the Company shall determine fair market value in its reasonable good faith judgment.

 

1.4                                        Delivery of Certificate and New Warrant. Promptly after Holder exercises or converts this warrant, the Company shall deliver to Holder certificates for the Shares acquired and, if this warrant has not been fully exercised or converted and has not expired, a new warrant representing the Shares not so acquired.

 

1.5                                        Replacement of Warrants. 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 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 shall execute and deliver, in lieu of this warrant, a new warrant of like tenor.

 

1.6                                        Repurchase on Sale, Merger, or Consolidation of the Company.

 

   1.6.1                     Acquisition . ” For the purpose of this warrant, “Acquisition” means (a) any sale, license, or other disposition of all or substantially all of the assets (including intellectual property) of the Company, or (b) any reorganization, consolidation, merger or sale of the voting securities of the Company or any other transaction where the holders of the Company’s securities before the transaction beneficially own less than 50% of the outstanding voting securities of the surviving entity after the transaction.

 

   1.6.2                     Exercise Upon Acquisition. Upon the closing of any Acquisition in which the consideration to be received by the Company’s stockholders consists of cash, marketable securities, or a combination of both cash and marketable securities, this warrant shall be deemed to have been automatically converted pursuant to Section 1.2, and thereafter Holder shall participate in the Acquisition on the same terms as other holders of the same class of securities of the Company.

 

   1.6.3                     Assumption of Warrant. Upon the closing of any Acquisition not referred to in Section 1.6.2, the successor entity shall assume the obligations of this warrant, and this warrant shall thereafter be exercisable for the same securities and/or other property as would have been paid for the Shares issuable upon exercise of the unexercised portion of this warrant as if such Shares were outstanding on and as of the closing of such Acquisition, subject to further adjustment from time to time in accordance with the provisions of this warrant.

 

2



 

ARTICLE 2

 

ADJUSTMENTS TO THE SHARES

 

2.1                                        Stock Dividends, Splits, Etc. If the Company declares or pays a dividend on its common stock payable in common stock, or other securities, or subdivides the outstanding common stock into a greater amount of common stock, then upon exercise of this warrant, for each Share acquired, Holder shall receive, without cost to Holder, the total number and kind of securities to which Holder would have been entitled had Holder owned the Shares of record as of the date the dividend or subdivision occurred.

 

2.2                                        Reclassification, Exchange or Substitution. Upon any reclassification, exchange, substitution, or other event that results in a change of the number and/or class of the securities issuable upon exercise or conversion of this warrant, Holder shall be entitled to receive, upon exercise or conversion of this warrant, the number and kind of securities and property that Holder would have received for the Shares if this warrant had been exercised immediately before such reclassification, exchange, substitution, or other event. Such an event shall include any automatic conversion of the outstanding or issuable securities of the Company of the same class or series as the Shares to common stock pursuant to the terms of the Company’s Certificate of Incorporation upon the closing of a registered public offering of the Company’s common stock. The Company or its successor shall promptly issue to Holder a new warrant for such new securities or other property. The new warrant shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article 2 including, without limitation, adjustments to the Warrant Price and to the number of securities or property issuable upon exercise of the new warrant.  The provisions of this Section 2.2 shall similarly apply to successive reclassifications, exchanges, substitutions, or other events.

 

2.3                                        Adjustments for Combinations, Etc. If the outstanding Shares are combined or consolidated, by reclassification or otherwise, into a lesser number of shares, the Warrant Price shall be proportionately increased. If the outstanding Shares are combined or consolidated, by reclassification or otherwise, into a greater number of shares, the Warrant Price shall be proportionately decreased.

 

2.4                                        Adjustments for Diluting Issuances. In the event of the issuance (a “ Diluting Issuance ”) by the Company after the Issue Date of securities at a price per share less than the Warrant Price, then the number of shares of common stock issuable upon conversion of the Shares shall be adjusted in accordance with those provisions of the Company’s Certificate of Incorporation that apply to Diluting Issuances.

 

2.5                                        Certificate as to Adjustments. Upon each adjustment of the Warrant Price, the Company at its expense shall promptly compute such adjustment, and furnish Holder with a certificate of its Chief Financial Officer setting forth such adjustment and the facts upon which such adjustment is based. The Company shall, upon written request, furnish Holder a certificate setting forth the Warrant Price in effect upon the date thereof and the series of adjustments leading to such Warrant Price.

 

2.6                                        Fractional Shares. No fractional Shares shall be issuable upon exercise or conversion of the Warrant and the Number of Shares to be issued shall be rounded down to the nearest whole Share. If a fractional share interest arises upon any exercise or conversion of the Warrant, the Company shall eliminate such fractional share interest by paying Holder an amount computed by multiplying the fractional interest by the fair market value of a full Share.

 

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ARTICLE 3

 

REPRESENTATIONS AND COVENANTS OF THE COMPANY

 

3.1                                        Representations and Warranties. The Company hereby represents and warrants to the Holder as follows:

 

   3.1.1                     The initial Warrant Price referenced on the first page of this warrant is the price per share paid by investors in the Company’s most recent preferred stock financing.

 

   3.1.2                     All Shares which may be issued upon the exercise of the purchase right represented by this warrant, and all securities, if any, issuable upon conversion of the Shares, shall, upon issuance, be duly authorized, validly issued, fully paid and nonassessable, and free of any liens and encumbrances except for restrictions on transfer provided for herein or under applicable federal and state securities laws.

 

3.2                                        Notice of Certain Events. The Company shall provide Holder with not less than 10 days prior written notice of, including a description of the material facts surrounding, any of the following events: (a) declaration of any dividend or distribution upon its common stock, whether in cash, property, stock, or other securities and whether or not a regular cash dividend; (b) offering for subscription pro rata to the holders of any class or series of its stock any additional shares of stock of any class or series or other rights; (c) effecting any reclassification or recapitalization of common stock; or (d) the merger or consolidation with or into any other corporation, or sale, lease, license, or conveyance of all or substantially all of its assets, or liquidation, dissolution or winding up.

 

3.3                                        Information Rights. Prior to an initial public offering of the Company’s common stock and provided Holder holds this warrant and/or any of the Shares, the Company shall deliver to the Holder the financial information required to be delivered to Major Investors (as defined in the IRA) under Section 3.1(a) and 3.1(b) pursuant to that certain Amended and Restated Investors Rights Agreement dated as of June 7, 2017 by and among the Company and the investor named therein, as may be amended and/or restated from time to time (the “IRA”).

 

3.4                                        Registration Under Securities Act of 1933, as amended. The Company agrees that the Shares or, if the Shares are convertible into common stock of the Company, such common stock, shall be “Registrable Securities”, and Holder shall be a “Holder” under the IRA.

 

3.5                                        Holder Investment Representations . Holder makes the representations to the Company set forth in Exhibit A hereof in connection with the issuance of this warrant and the Shares (collectively, the “Securities”).

 

3.6                                        Market Stand Off . Holder agrees that it shall be subject to the Market Standoff provisions in Section 2.11 of the IRA.

 

3.7                                        Company Agreements . Following the exercise of this warrant, upon the request of the Company, Holder shall execute a counterpart signature page to the investor and stockholder agreements governing the rights and obligations in respect of the Company’s Series B Preferred Stock.

 

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ARTICLE 4

 

MISCELLANEOUS

 

4.1                                        Term: Exercise Upon Expiration. This warrant is exercisable in whole or in part, at any time and from time to time on or before the Expiration Date set forth above; provided, however, that if the Company completes its initial public offering within the one-year period immediately prior to the Expiration Date, the Expiration Date shall automatically be extended until the first anniversary of the effective date of the Company’s initial public offering. If this warrant has not been exercised prior to the Expiration Date, this warrant shall be deemed to have been automatically exercised on the Expiration Date by “cashless” conversion pursuant to Section 1.2.

 

4.2                                        Legends. This warrant and the Shares (and the securities issuable, directly or indirectly, upon conversion of the Shares, if any) shall be imprinted with a legend in substantially the following form:

 

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN ACCORDANCE WITH APPLICABLE LAW.

 

4.3                                        Compliance with Securities Laws on Transfer. This warrant and the Shares issuable upon exercise of this warrant (and the securities issuable, directly or indirectly, upon conversion of the Shares, if any) may not be transferred or assigned in whole or in part without compliance with applicable federal and state securities laws by the transferor and the transferee. The Company shall not require Holder to provide an opinion of counsel if the transfer is to an affiliate of Holder or if there is no material question as to the availability of current information as referenced in Rule 144(c), Holder represents that it has complied with Rule 144 (d) and (e) in reasonable detail, the selling broker represents that it has complied with Rule 144(f), and the Company is provided with a copy of Holder’s notice of proposed sale.

 

4.4                                        Transfer Procedure. Subject to the provisions of Section 4.3, Holder may transfer all or part of this warrant or the Shares issuable upon exercise of this warrant (or the securities issuable, directly or indirectly, upon conversion of the Shares, if any) by giving the Company notice of the portion of the warrant being transferred setting forth the name, address and taxpayer identification number of the transferee and surrendering this warrant to the Company for reissuance to the transferee(s) (and Holder, if applicable). No surrender or reissuance shall be required for a transfer to an affiliate of Holder.

 

4.5                                        Notices. All notices and other communications from the Company to the Holder, or vice versa, shall be deemed delivered and effective when given personally or mailed by first- class registered or certified mail, postage prepaid, at such address as may have been furnished to the Company or the Holder, as the case may be, in writing by the Company or such Holder from time to time. All notices to the Holder shall be addressed as follows:

 

PacWest Bancorp

Attn:  Warrant Administrator

 

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406 Blackwell Street, Suite 240

Durham, NC 27701

 

4.6                                        Amendments. This warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought.

 

4.7                                        Attorneys’ Fees. In the event of any dispute between the parties concerning the terms and provisions of this warrant, the party prevailing in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorneys’ fees.

 

4.8                                        Governing Law. This warrant shall be governed by and construed in accordance with the laws of the State of North Carolina, without giving effect to its principles regarding conflicts of law.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the undersigned has executed this Amended and Restated Warrant to Purchase Stock as of the date set forth above.

 

 

RUBIUS THERAPEUTICS, INC.

 

 

 

 

 

By:

/s/ Joanne M. Protano

 

Name:

Joanne M. Protano

 

Title:

VP Finance, Secretary & Treasurer

 

Acknowledged and agreed:

 

 

 

PACWEST BANCORP

 

 

 

 

 

By:

/s/ Tracie Youngblood

 

Name:

Tracie Youngblood

 

Title:

SVP, Controller

 

 

[Signature Page to Amended and Restated Warrant to Purchase Stock]

 



 

APPENDIX 1

 

NOTICE OF EXERCISE

 

1.                                               The undersigned hereby elects to purchase shares of the stock of RUBIUS THERAPEUTICS, INC. pursuant to the terms of the attached warrant, and tenders herewith payment of the purchase price of such shares in full.

 

1.                                               The undersigned hereby elects to convert the attached warrant into shares in the manner specified in the warrant. This conversion is exercised with respect to           of the shares covered by the warrant.

 

[Strike paragraph that does not apply.]

 

2.                                               Please issue a certificate or certificates representing said shares in the name of the undersigned or in such other name as is specified below:

 

 

 

 

(Holder’s Name)

 

 

 

(Address)

 

3.                                               The undersigned represents it is acquiring the shares solely for its own account and not as a nominee for any other party and not with a view toward the resale or distribution thereof except in compliance with applicable securities laws.

 

PACWEST BANCORP or Registered Assignee

 

 

 

(Signature)

 

 

 

 

 

 

(Date)

 

 



 

EXHIBIT A

 

INVESTMENT REPRESENTATIONS

 

(a)                                          The undersigned is aware of the Company’s business affairs and financial condition, and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities. The undersigned is purchasing the Securities for its own account for investment purposes only, not as a nominee or agent, and not with a view towards, or for resale in connection with, any “distribution” thereof for purposes of the Securities Act of 1933, as amended (the “Securities Act”). The undersigned has such knowledge and experience in financial business matters and the undersigned is capable of evaluating the merits and risks of the purchase of the Securities and of protecting its interests in connection therewith.

 

(b)                                          The undersigned understands that the Securities have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of the undersigned’s investment intent as expressed herein.

 

(c)                                           The undersigned further understands that the Securities must be held indefinitely, and the undersigned must therefore bear the economic risk therewith, unless the Securities are subsequently registered under the Securities Act or unless an exemption from registration is otherwise available. In addition, the undersigned understands that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required.

 

(d)                                          The undersigned is familiar with the provisions of Rule 144, promulgated pursuant to the Securities Act, which, in substance, permits limited public resale of “restricted securities” acquired, directly or indirectly, from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions.

 

(e)                                           The Securities may be resold in certain limited circumstances subject to the provisions of Rule 144, which requires, among other things, the existence of a public market for the Securities, the availability of certain current public information about the Company, the resale occurring not less than one year after a party has purchased and paid for the security to be sold, the sales being effected through a “broker’s transaction” or in transactions directly with a “market maker” and the number of securities being sold during any three-month period not exceeding specified limitations.

 

(f)                                            The undersigned further understands that in the event that all of the applicable requirements of Rule 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required.

 

(g)                                           The undersigned is an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

 




Exhibit 10.1

 

RUBIUS THERAPEUTICS,  INC.

 

AMENDED AND RESTATED

 

2014 STOCK INCENTIVE PLAN

 

1.                                       Purpose

 

The purpose of this 2014 Stock Incentive Plan (the “ Plan ”) of Rubius Therapeutics, Inc., a Delaware corporation (the “ Company ”), is to advance the interests of the Company’s stockholders by enhancing the Company’s ability to attract, retain and motivate persons who are expected to make important contributions to the Company and by providing such persons with equity ownership opportunities and performance-based incentives that are intended to better align the interests of such persons with those of the Company’s stockholders.  Except where the context otherwise requires, the term “ Company ” shall include any of the Company’s present or future parent or subsidiary corporations as defined in Sections 424(e) or (f) of the Internal Revenue Code of 1986, as amended, and any regulations thereunder (the “ Code ”) and any other business venture (including, without limitation, joint venture or limited liability company) in which the Company has a controlling interest, as determined by the Board of Directors of the Company (the “ Board ”); provided , however , that such other business ventures shall be limited to entities that, where required by Section 409A of the Code, are eligible issuers of service recipient stock (as defined in Treas. Reg. Section 1.409A-1(b)(5)(iii)(E), or applicable successor regulation).

 

2.                                       Eligibility

 

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

 

3.                                       Administration and Delegation

 

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

 

(b)                                  Appointment of Committees .  To the extent permitted by applicable law, the Board may delegate any or all of its powers under the Plan to one or more committees or

 

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subcommittees of the Board (each, a “ Committee ”).  All references in the Plan to the “ Board ” shall mean the Board or a Committee of the Board to the extent that the Board’s powers or authority under the Plan have been delegated to such Committee.

 

4.                                       Stock Available for Awards

 

(a)                                  Number of Shares .  Subject to adjustment under Section 9, Awards may be made under the Plan for up to 19,152,328 shares of common stock, $0.001 par value per share, of the Company (the “ Common Stock ”), any or all of which Awards may be in the form of Incentive Stock Options (as defined in Section 5(b)).  If any Award expires or is terminated, surrendered or canceled without having been fully exercised, is forfeited in whole or in part (including as the result of shares of Common Stock subject to such Award being repurchased by the Company at the original issuance price pursuant to a contractual repurchase right), or results in any Common Stock not being issued, the unused Common Stock covered by such Award shall again be available for the grant of Awards under the Plan.  Further, shares of Common Stock tendered to the Company by a Participant to exercise an Award or to satisfy tax withholding obligations arising with respect to an Award shall be added to the number of shares of Common Stock available for the grant of Awards under the Plan.  However, in the case of Incentive Stock Options, the two immediately preceding sentences shall be subject to any limitations under the Code.  Shares issued under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares.

 

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

 

5.                                       Stock Options

 

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

 

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

 

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Incentive Stock Option is not an Incentive Stock Option or if the Company converts an Incentive Stock Option to a Nonstatutory Stock Option.

 

(c)                                   Exercise Price .  The Board shall establish the exercise price of each Option and specify the exercise price in the applicable Option agreement. The exercise price shall be not less than 100% of the fair market value per share of Common Stock, as determined by (or in a manner approved by) the Board (“ Fair Market Value ”), on the date the Option is granted.  “ Fair Market Value ” of a share of Common Stock for purposes of the Plan will be determined as follows:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(4)                                  to the extent provided for in the applicable Nonstatutory Stock Option agreement or approved by the Board in its sole discretion, by delivery of a notice of “net exercise” to the Company, as a result of which the Participant would pay the exercise price for the portion of the Option being exercised by cancelling a portion of the Option for such number of shares as is equal to the exercise price divided by the excess of the Fair Market Value on the date of exercise over the Option exercise price per share.

 

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

 

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

 

6.                                       Stock Appreciation Rights

 

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

 

(b)                                  Measurement Price .  The Board shall establish the measurement price of each SAR and specify it in the applicable SAR agreement.  The measurement price shall not be less than 100% of the Fair Market Value on the date the SAR is granted.

 

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

 

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

 

7.                                       Restricted Stock; Restricted Stock Units

 

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

 

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

 

(c)                                   Additional Provisions Relating to Restricted Stock .

 

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

 

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

 

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(d)                                  Additional Provisions Relating to Restricted Stock Units .

 

(1)                                  Settlement .  Upon the vesting of and/or lapsing of any other restrictions (i.e., settlement) with respect to each Restricted Stock Unit, the Participant shall be entitled to receive from the Company one share of Common Stock or (if so provided in the applicable Award agreement) an amount of cash equal to the Fair Market Value of one share of Common Stock.  The Board may, in its discretion, provide that settlement of Restricted Stock Units shall be deferred, on a mandatory basis or at the election of the Participant in a manner that complies with Section 409A of the Code.

 

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

 

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

 

8.                                       Other Stock-Based Awards

 

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

 

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

 

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

 

(a)                                  Changes in Capitalization .  In the event of any stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off or other similar change in capitalization or event, or any dividend or distribution to holders of Common Stock other than an ordinary cash dividend, (i) the number and class of securities available under the Plan, (ii) the number and class of securities and exercise price per share of each outstanding Option, (iii) the share and per-share provisions and the measurement price of each outstanding SAR, (iv) the number of shares subject to and the repurchase price per share subject to each outstanding Restricted Stock Award and (v) the share and per-share-related provisions and the purchase price, if any, of each outstanding Other Stock-Based Award, shall be equitably adjusted by the Company (or substituted Awards may be made, if applicable) in the manner determined by the Board.  Without limiting the generality of the foregoing, in the event the Company effects a split of the Common Stock by means of a stock dividend and the exercise

 

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price of and the number of shares subject to an outstanding Option are adjusted as of the date of the distribution of the dividend (rather than as of the record date for such dividend), then an optionee who exercises an Option between the record date and the distribution date for such stock dividend shall be entitled to receive, on the distribution date, the stock dividend with respect to the shares of Common Stock acquired upon such Option exercise, notwithstanding the fact that such shares were not outstanding as of the close of business on the record date for such stock dividend.

 

(b)                                  Reorganization Events .

 

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

 

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

 

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

 

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

 

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

 

(3)                                  Consequences of a Reorganization Event on Restricted Stock .  Upon the occurrence of a Reorganization Event other than a liquidation or dissolution of the Company, the repurchase and other rights of the Company with respect to outstanding Restricted Stock shall inure to the benefit of the Company’s successor and shall, unless the Board determines otherwise, apply to the cash, securities or other property which the Common Stock was converted into or exchanged for pursuant to such Reorganization Event in the same manner and to the same extent as they applied to such Restricted Stock; provided , however , that the Board may provide for termination or deemed satisfaction of such repurchase or other rights under the instrument evidencing any Restricted Stock or any other agreement between a Participant and the Company, either initially or by amendment.  Upon the occurrence of a Reorganization Event involving the liquidation or dissolution of the Company, except to the extent specifically provided to the contrary in the instrument evidencing any Restricted Stock or any other

 

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agreement between a Participant and the Company, all restrictions and conditions on all Restricted Stock then outstanding shall automatically be deemed terminated or satisfied.

 

10.                                General Provisions Applicable to Awards .

 

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

 

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

 

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

 

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

 

(e)                                   Withholding .  The Participant must satisfy all applicable federal, state, and local or other income and employment tax withholding obligations before the Company will deliver stock certificates or otherwise recognize ownership of Common Stock under an Award.  The Company may decide to satisfy the withholding obligations through additional withholding on salary or wages.  If the Company elects not to or cannot withhold from other compensation, the Participant must pay the Company the full amount, if any, required for withholding or have a broker tender to the Company cash equal to the withholding obligations.  Payment of withholding obligations is due before the Company will issue any shares on exercise, vesting or release from forfeiture of an Award or at the same time as payment of the exercise or purchase price unless the Company determines otherwise.  If provided for in an Award or approved by the Board in its sole discretion, a Participant may satisfy such tax obligations in whole or in part by

 

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delivery (either by actual delivery or attestation) of shares of Common Stock, including shares retained from the Award creating the tax obligation, valued at their Fair Market Value; provided, however , except as otherwise provided by the Board, that the total tax withholding where stock is being used to satisfy such tax obligations cannot exceed the Company’s minimum statutory withholding obligations (based on minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income).  Shares used to satisfy tax withholding requirements cannot be subject to any repurchase, forfeiture, unfulfilled vesting or other similar requirements.

 

(f)                                    Amendment of Award .

 

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

 

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

 

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

 

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

 

11.                                Miscellaneous .

 

(a)                                  No Right to Employment or Other Status .  No person shall have any claim or right to be granted an Award by virtue of the adoption of the Plan, and the grant of an Award shall not be construed as giving a Participant the right to continued employment or any other relationship with the Company.  The Company expressly reserves the right at any time to dismiss or

 

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otherwise terminate its relationship with a Participant free from any liability or claim under the Plan, except as expressly provided in the applicable Award.

 

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

 

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

 

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

 

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

 

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

 

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separation from service and the New Payment Date shall be paid to the Participant in a lump sum on such New Payment Date, and any remaining payments will be paid on their original schedule.

 

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

 

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

 

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

 

* * * *

 

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RUBIUS THERAPEUTICS, INC.
2014 STOCK INCENTIVE PLAN

CALIFORNIA SUPPLEMENT

 

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

 

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

 

1.                                       Additional Limitations on Options .

 

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

 

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

 

2.                                       Additional Limitations for Other Stock-Based Awards .  The terms of all Awards granted to a California Participant under Section 8 of the Plan shall comply, to the extent applicable, with Sections 260.140.42, 260.140.45 and 260.140.46 of the California Code of Regulations.

 

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

 

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

 

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

 

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RUBIUS THERAPEUTICS, INC.

 

INCENTIVE STOCK OPTION AGREEMENT

GRANTED UNDER 2014 STOCK INCENTIVE PLAN

 

1.                                       Grant of Option .

 

This Incentive Stock Option Agreement (the “ Agreement ”) evidences the grant by Rubius Therapeutics, Inc., a Delaware corporation (the “ Company ”), on [           , 20  ] (the “ Grant Date ”) to [           ], an employee of the Company (the “ Participant ”), of an option to purchase, in whole or in part, on the terms provided herein and in the Company’s 2014 Stock Incentive Plan (the “ Plan ”), a total of [         ] shares (the “ Shares ”) of common stock, $0.001 par value per share, of the Company (“ Common Stock ”) at $[        ] per Share.  Unless earlier terminated, this option shall expire at 5:00 p.m., Eastern time, on [          , 20  ] [date is ten years minus one day from grant date] (the “ Final Exercise Da te”).

 

It is intended that the option evidenced by this Agreement shall be an incentive stock option as defined in Section 422 of the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder (the “ Code ”).  Except as otherwise indicated by the context, the term “ Participant ”, as used in this option, shall be deemed to include any person who acquires the right to exercise this option validly under its terms.

 

2.                                       Vesting Schedule .

 

This option will become exercisable (“ vest ”) as to 25% of the original number of Shares on the first anniversary of the Vesting Commencement Date (as defined below) and as to an additional 2.0833% of the original number of Shares at the end of each successive month following the first anniversary of the Vesting Commencement Date until the fourth anniversary of the Vesting Commencement Date.  On the fourth anniversary of the Vesting Commencement Date, this option will be exercisable as to all Shares.  For purposes of this Agreement, “ Vesting Commencement Date ” shall mean [                  ].

 

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

 

3.                                       Exercise of Option .

 

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

 



 

(b)                                  Continuous Relationship with the Company Required .  Except as otherwise provided in this Section 3, this option may not be exercised unless the Participant, at the time he or she exercises this option, is, and has been at all times since the Grant Date, an employee or officer of, or consultant or advisor to, the Company or any parent or subsidiary of the Company as defined in Section 424(e) or (f) of the Code (an “ Eligible Participant ”).

 

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

 

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

 

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

 

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4.                                       Company Right of First Refusal .

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(2)                                  the sale of all or substantially all of the outstanding shares of capital stock, assets or business of the Company, by merger, consolidation, sale of assets or otherwise (other than a merger or consolidation in which all or substantially all of the individuals and entities who were beneficial owners of the Company’s voting securities immediately prior to such transaction beneficially own, directly or indirectly, more than 75% (determined on an as-converted basis) of the outstanding securities entitled to vote generally in the election of directors of the resulting, surviving or acquiring corporation in such transaction).

 

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

 

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

 

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

 

4



 

5.                                       Agreement in Connection with Initial Public Offering .

 

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

 

6.                                       Tax Matters .

 

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

 

(b)                                  Disqualifying Disposition .  If the Participant disposes of Shares acquired upon exercise of this option within two years from the Grant Date or one year after such Shares were acquired pursuant to exercise of this option, the Participant shall notify the Company in writing of such disposition.

 

7.                                       Transfer Restrictions.

 

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

 

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

 

5



 

8.                                       Provisions of the Plan .

 

This option is subject to the provisions of the Plan (including the provisions relating to amendments to the Plan), a copy of which is furnished to the Participant with this option.

 

[Remainder of Page Intentionally Left Blank]

 

6



 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.  The Participant hereby accepts the foregoing option and agrees to the terms and conditions thereof.  The Participant hereby acknowledges receipt of a copy of the Company’s 2014 Stock Incentive Plan.

 

 

COMPANY:

 

 

 

RUBIUS THERAPEUTICS, INC.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

PARTICIPANT:

 

 

 

By:

 

 

 

[Name]

 

 

 

 

 

Address:

[                                                   ]

 

 

[                                                   ]

 

 

 

 

SPOUSAL CONSENT: (1)

 

 

 

By:

 

 

 

Name:

 

 

 

 

Address:

[                                                   ]

 

 

[                                                   ]

 


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

 

SIGNATURE PAGE TO INCENTIVE STOCK OPTION AGREEMENT

 



 

EXHIBIT A

 

NOTICE OF STOCK OPTION EXERCISE

 

[DATE](1)

 

Rubius Therapeutics, Inc.

325 Vassar Street, Suite 1A

Cambridge, MA 02139

 

Attention:  Treasurer

 

Dear Sir or Madam:

 

I am the holder of an Incentive Stock Option granted to me under the Rubius Therapeutics, Inc. (the “ Company ”) 2014 Stock Incentive Plan on [          ](2) for the purchase of [          ](3) shares of Common Stock of the Company at a purchase price of $[          ](4) per share.

 

I hereby exercise my option to purchase [         ](5) shares of Common Stock (the “ Shares ”), for which I have enclosed [          ](6) in the amount of [        ](7).  Please register my stock certificate as follows:

 

 

Name(s):

                                                        (8)

 

 

 

 

 

 

Address:

 

 

 

 

 

 

 


(1)                                  Enter date of exercise.

(2)                                  Enter the date of grant.

(3)                                  Enter the total number of shares of Common Stock for which the option was granted.

(4)                                  Enter the option exercise price per share of Common Stock.

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

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

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

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

 



 

I represent, warrant and covenant as follows:

 

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

 

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

 

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

 

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

 

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

 

Very truly yours,

 

 

 

[Name]

 

9


 

RUBIUS THERAPEUTICS, INC.

 

NONSTATUTORY STOCK OPTION AGREEMENT

GRANTED UNDER 2014 STOCK INCENTIVE PLAN

 

1.             Grant of Option .

 

This Nonstatutory Stock Option Agreement (the “ Agreement ”) evidences the grant by Rubius Therapeutics, Inc., a Delaware corporation (the “ Company ”), on [           , 20  ] (the “ Grant Date ”) to [           ], an employee, consultant or director of the Company (the “ Participant ”), of an option to purchase, in whole or in part, on the terms provided herein and in the Company’s 2014 Stock Incentive Plan (the “ Plan ”), a total of [           ] shares (the “ Shares ”) of common stock, $0.001 par value per share, of the Company (“ Common Stock ”) at $[         ] per Share.  Unless earlier terminated, this option shall expire at 5:00 p.m., Eastern time, on [           , 20  ] [date is ten years minus one day from grant date] (the “ Final Exercise Date ”).

 

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

 

2.             Vesting Schedule .

 

This option will become exercisable (“ vest ”) as to 25% of the original number of Shares on the first anniversary of the Vesting Commencement Date (as defined below) and as to an additional 6.25% of the original number of Shares at the end of each successive quarter following the first anniversary of the Vesting Commencement Date until the fourth anniversary of the Vesting Commencement Date.  On the fourth anniversary of the Vesting Commencement Date, this option will be exercisable as to all Shares.  For purposes of this Agreement, “ Vesting Commencement Date ” shall mean [                  ].

 

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

 

3.             Exercise of Option .

 

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

 



 

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

 

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

 

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

 

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

 

2



 

shall be conclusive.  The Participant’s employment or other relationship shall be considered to have been terminated for “Cause” if the Company determines, within 30 days after the Participant’s resignation, that termination for Cause was warranted.

 

4.             Company Right of First Refusal .

 

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

 

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

 

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

 

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

 

3



 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(2)           the sale of all or substantially all of the outstanding shares of capital stock, assets or business of the Company, by merger, consolidation, sale of assets or otherwise (other than a merger or consolidation in which all or substantially all of the individuals and entities who were beneficial owners of the Company’s voting securities immediately prior to such transaction beneficially own, directly or indirectly, more than 75% (determined on an as-converted basis) of the outstanding securities entitled to vote generally in the election of directors of the resulting, surviving or acquiring corporation in such transaction).

 

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

 

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

 

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

 

4



 

5.             Agreement in Connection with Initial Public Offering .

 

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

 

6.             Withholding .

 

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

 

7.             Transfer Restrictions.

 

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

 

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

 

5



 

8.             Provisions of the Plan .

 

This option is subject to the provisions of the Plan (including the provisions relating to amendments to the Plan), a copy of which is furnished to the Participant with this option.

 

[Remainder of Page Intentionally Left Blank]

 

6



 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.  The Participant hereby accepts the foregoing option and agrees to the terms and conditions thereof.  The Participant hereby acknowledges receipt of a copy of the Company’s 2014 Stock Incentive Plan.

 

 

COMPANY:

 

 

 

RUBIUS THERAPEUTICS, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

PARTICIPANT:

 

 

 

 

 

By:

 

 

 

[Name]

 

 

 

Address:

[                                            ]

 

 

[                                            ]

 

 

 

 

 

SPOUSAL CONSENT: (1)

 

 

 

By:

 

 

 

Name:

 

 

 

 

Address:

[                                            ]

 

 

[                                            ]

 


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

 

Signature Page to Nonstatutory Stock Option Agreement

 



 

EXHIBIT A

 

NOTICE OF STOCK OPTION EXERCISE

 

[DATE](1)

 

Rubius Therapeutics, Inc.

325 Vassar Street, Suite 1A

Cambridge, MA 02139

 

Attention:  Treasurer

 

Dear Sir or Madam:

 

I am the holder of a Nonstatutory Stock Option granted to me under the Rubius Therapeutics, Inc. (the “ Company ”) 2014 Stock Incentive Plan on [          ](2) for the purchase of [          ](3) shares of Common Stock of the Company at a purchase price of $[          ](4) per share.

 

 

I hereby exercise my option to purchase [         ](5) shares of Common Stock (the “ Shares ”), for which I have enclosed [          ](6) in the amount of [        ](7).  Please register my stock certificate as follows:

 

 

Name(s):

                                                                        (8)

 

 

 

 

 

 

 

                                                                             

 

 

 

 

 

 

Address:

                                                                             

 

 

 

 

 

 

 

 

 

 


(1)           Enter date of exercise.

(2)           Enter the date of grant.

(3)           Enter the total number of shares of Common Stock for which the option was granted.

(4)           Enter the option exercise price per share of Common Stock.

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

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

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

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

 



 

I represent, warrant and covenant as follows:

 

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

 

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

 

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

 

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

 

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

 

Very truly yours,

 

 

 

 

[Name]

 

9


 

PARTICIPANT MUST FILE 83(B) ELECTION

 

RUBIUS THERAPEUTICS, INC.

 

RESTRICTED STOCK AGREEMENT
GRANTED UNDER 2014 STOCK INCENTIVE PLAN

 

This Restricted Stock Agreement (the “ Agreement ”) is made this [    ] day of [             ], 2014, between Rubius Therapeutics, Inc., a Delaware corporation (the “ Company ”), and [                        ] (the “ Participant ”).

 

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

 

1.                                       Purchase of Shares .

 

The Company shall issue and sell to the Participant, and the Participant shall purchase from the Company, subject to the terms and conditions set forth in this Agreement and in the Company’s 2014 Stock Incentive Plan (the “ Plan ”), [      ] shares (the “ Shares ”) of common stock, $0.001 par value, of the Company (“ Common Stock ”), at a purchase price of $[     ] per share.  The aggregate purchase price for the Shares shall be paid by the Participant by check payable to the order of the Company or such other method as may be acceptable to the Company.  Upon receipt by the Company of payment for the Shares, the Company shall issue to the Participant one or more certificates in the name of the Participant for that number of Shares purchased by the Participant.  The Participant agrees that the Shares shall be subject to the purchase options set forth in Sections 3 and 6 of this Agreement and the restrictions on transfer set forth in Section 5 of this Agreement.

 

2.                                       Certain Definitions .

 

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

 

(b)                                  Change in Control ” shall mean the sale of all or substantially all of the outstanding shares of capital stock, assets or business of the Company, by merger, consolidation, sale of assets or otherwise (other than a merger or consolidation in which all or substantially all

 


(1)  Delete if acceleration is not being used.

 



 

of the individuals and entities who were beneficial owners of the Company’s voting securities immediately prior to such transaction beneficially own, directly or indirectly, more than 75% (determined on an as-converted basis) of the outstanding securities entitled to vote generally in the election of directors of the resulting, surviving or acquiring corporation in such transaction).

 

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

 

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

 

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

 

3.                                       Purchase Option .

 

(a)                                  In the event that the Participant ceases to provide Service to the Company for any reason or no reason, with or without Cause, prior to the [fourth (4 th )] anniversary of the Vesting Commencement Date, the Company shall have the right and option (the “ Purchase Option ”) to purchase from the Participant, for a sum of [$0.001] per share (the “ Option Price ”), some or all of the Shares as set forth herein.

 

(b)                                  [All] of the Shares shall initially be subject to the Purchase Option.(3)  The Participant shall acquire a vested interest in, and the Company’s Purchase Option shall accordingly lapse with respect to, (i) twenty-five percent (25%) of the Shares upon Participant’s completion of one (1) year of Service measured from the Vesting Commencement Date and (ii) the balance of the Shares in a series of successive equal monthly installments of [1/48] of the

 


(2)  Delete if acceleration is not being used.

(3)  If the Participant will have less than the total amount of shares subject to vesting, replace this with: “[Number] (##) of the Shares shall initially be subject to the Purchase Option.”

 

2



 

Shares upon Participant’s completion of each additional month of Service over the [thirty-six (36)-month] period measured from the first anniversary of the Vesting Commencement Date.

 

(c)                                   [If[, within twelve (12) months] following a Change in Control of the Company, the Participant’s employment with the Company is terminated (i) by the Company without Cause or (ii) by the Participant for Good Reason, then the vesting schedule of the Shares shall be accelerated such that [100%] of Shares then subject to the Purchase Option shall immediately become vested and free from the Purchase Option on the date of such termination.](4)(5)

 

4.                                       Exercise of Purchase Option and Closing .

 

(a)                                  The Company may exercise the Purchase Option by delivering or mailing to the Participant (or Participant’s estate), within 90 days after the termination of the Service of the Participant with the Company, a written notice of exercise of the Purchase Option.  Such notice shall specify the number of Shares to be purchased.  If and to the extent the Purchase Option is not so exercised by the giving of such a notice within such 90-day period, the Purchase Option shall automatically expire and terminate effective upon the expiration of such 90-day period.

 

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

 

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

 

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

 


(4)  Delete Section 3(c) and the associated definitions if the shares are not subject to acceleration.

(5)  To include single-trigger acceleration, add the following in front of the first sentence of Section 3(b): If the Company undergoes a Change in Control, then the vesting schedule of the Shares shall be accelerated by [percentage] ([##]%) of the then Unvested Shares.

 

3



 

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

 

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

 

5.                                       Restrictions on Transfer .

 

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

 

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

 

6.                                       Right of First Refusal .

 

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

 

(b)                                  For 30 days following its receipt of such Transfer Notice, the Company shall have the option to purchase all or part of the Offered Shares at the price and upon the terms set forth in the Transfer Notice.  In the event the Company elects to purchase all or part of the Offered Shares, it shall give written notice of such election to the Participant within such 30-day period.  Within 10 days after such Participant’s receipt of such notice, the Participant shall tender to the Company at its principal offices the certificate or certificates representing the Offered Shares to be purchased by the Company, duly endorsed in blank by the Participant or with duly endorsed stock powers attached thereto, all in a form suitable for transfer of the Offered Shares to the Company.  Promptly following receipt of such certificate or certificates, the Company

 

4



 

shall deliver or mail to the Participant a check in payment of the purchase price for such Offered Shares;  provided that if the terms of payment set forth in the Transfer Notice were other than cash against delivery, the Company may pay for the Offered Shares on the same terms and conditions as were set forth in the Transfer Notice; and provided further that any delay in making such payment shall not invalidate the Company’s exercise of its option to purchase the Offered Shares.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5



 

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

 

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

 

(2)                                  a Change in Control of the Company.

 

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

 

7.                                       Agreement in Connection with Initial Public Offering .

 

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

 

8.                                       Escrow .

 

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

 

6



 

9.                                       Restrictive Legends .

 

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

 

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

 

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

 

10.                                Provisions of the Plan .

 

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

 

11.                                Investment Representations .

 

The Participant represents, warrants and covenants as follows:

 

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

 

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

 

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

 

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

 

(e)                                   The Participant understands that (i) the Shares have not been registered under the Securities Act and are “restricted securities” within the meaning of Rule 144 under the Securities Act; (ii) the Shares cannot be sold, transferred or otherwise disposed of unless they are subsequently registered under the Securities Act or an exemption from registration is then available; (iii) in any event, the exemption from registration under Rule 144 will not be available

 

7



 

for at least one year and even then will not be available unless a public market then exists for the Common Stock, adequate information concerning the Company is then available to the public, and other terms and conditions of Rule 144 are complied with; and (iv) there is now no registration statement on file with the Securities and Exchange Commission with respect to any stock of the Company and the Company has no obligation or current intention to register the Shares under the Securities Act.

 

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

 

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

 

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

 

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

 

13.                                Miscellaneous .

 

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

 

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

 

8



 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

[Remainder of Page Intentionally Left Blank]

 

9



 

IN WITNESS WHEREOF, the parties hereto have executed the Restricted Stock Agreement as of the date and year first above written.  The Participant hereby accepts the foregoing option and agrees to the terms and conditions thereof.  The Participant hereby acknowledges receipt of a copy of the Company’s 2014 Stock Incentive Plan.

 

 

COMPANY:

 

 

 

RUBIUS THERAPEUTICS, INC.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

Address:

620 Memorial Drive, Suite 100W

 

 

Cambridge, MA 02139

 

 

 

PARTICIPANT:

 

 

 

By:

 

 

 

Name:

 

 

 

 

 

Address:

[                                            ]

 

 

[                                            ]

 

 

 

 

 

SPOUSAL CONSENT:

 

 

 

By:

 

 

 

Name:

 

 

 

 

Address:

[                                              ]

 

 

[                                              ]

 

SIGNATURE PAGE TO RESTRICTED STOCK AGREEMENT

GRANTED UNDER STOCK INCENTIVE PLAN

 


 

EXHIBIT A

 

JOINT ESCROW INSTRUCTIONS

 



 

RUBIUS THERAPEUTICS, INC.

 

JOINT ESCROW INSTRUCTIONS

 

[           , 20  ]

 

Rubius Therapeutics, Inc.
620 Memorial Drive, Suite 100W

Cambridge, MA 02139

 

Attention:  Secretary

 

Dear Secretary:

 

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

 

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

 

2.                                       Closing of Purchase .

 

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

 

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

 



 

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

 

4.                                       Duties of Escrow Agent .

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(h)                                  It is understood and agreed that if you believe a dispute has arisen with respect to the delivery and/or ownership or right of possession of the securities held by you hereunder, you are authorized and directed to retain in your possession without liability to anyone all or any part of said securities until such dispute shall have been settled either by

 

A- 2



 

mutual written agreement of the parties concerned or by a final order, decree or judgment of a court of competent jurisdiction after the time for appeal has expired and no appeal has been perfected, but you shall be under no duty whatsoever to institute or defend any such proceedings.

 

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

 

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

 

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

 

COMPANY:

 

Notices to the Company shall be sent to the address set forth in the salutation hereto, Attn: President

 

 

 

HOLDER:

 

Notices to Holder shall be sent to the address set forth below Holder’s signature below.

 

 

 

ESCROW AGENT:

 

Notices to the Escrow Agent shall be sent to the address set forth in the salutation hereto.

 

6.                                       Miscellaneous .

 

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

 

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

 

[Remainder of Page Intentionally Left Blank]

 

A- 3



 

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

 

 

Very truly yours,

 

 

 

 

 

COMPANY:

 

 

 

RUBIUS THERAPEUTICS, INC.

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

HOLDER:

 

 

 

By:

 

 

 

Name:

 

 

 

 

 

Address:

[                                  ]

 

 

[                                  ]

 

 

 

 

 

ESCROW AGENT:

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

Secretary

 

A- 4



 

EXHIBIT B

 

STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE

 



 

STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE

 

FOR VALUE RECEIVED, I hereby sell, assign and transfer unto                                       (         ) shares of Common Stock, $0.001 par value per share, of Rubius Therapeutics, Inc. (the “ Corporation ”) standing in my name on the books of the Corporation represented by Certificate(s) Number            herewith, and do hereby irrevocably constitute and appoint Wilmer Cutler Pickering Hale and Dorr LLP attorney to transfer the said stock on the books of the Corporation with full power of substitution in the premises.

 

Dated:

 

 

 

 

 

 

 

 

PARTICIPANT:

 

 

 

 

 

[Name]

 

 

 

 

 

Name of Spouse (if any):

 

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

 



 

NOTICE ON 83(B) ELECTIONS

 

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

 

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

 

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

 

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

 



 

SECTION 83(B) ELECTION

 

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

 

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

 

[Name]

[Address]

[City, State Zip]

 

Taxpayer Identification Number:

 

15.                                The property with respect to which this election is being made is [      ] shares of common stock, $0.001 par value per share, of Rubius Therapeutics, Inc., a Delaware corporation (the “ Company ”).

 

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

 

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

 

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

 

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

 

7.                                       This statement is executed on                   , 20[  ].

 

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

 

 

 

 

Signature of Taxpayer

 

Signature of Spouse (if any)

 

A- 4



 

SECTION 83(B) ELECTION

 

BACKGROUND INFORMATION

 

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

 

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

 

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

 

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

 




Exhibit 10.4

 

RUBIUS THERAPEUTICS, INC.
SENIOR EXECUTIVE CASH INCENTIVE BONUS PLAN

 

1.                                       Purpose

 

This Senior Executive Cash Incentive Bonus Plan (the “Incentive Plan”) is intended to provide an incentive for superior work and to motivate eligible executives of Rubius Therapeutics, Inc. (the “Company”) and its subsidiaries toward even higher achievement and business results, to tie their goals and interests to those of the Company and its stockholders and to enable the Company to attract and retain highly qualified executives.  The Incentive Plan is for the benefit of Covered Executives (as defined below).

 

2.                                       Covered Executives

 

From time to time, the Compensation Committee of the Board of Directors of the Company (the “Compensation Committee”) may select certain key executives (the “Covered Executives”) to be eligible to receive bonuses hereunder.  Participation in this Plan does not change the “at will” nature of a Covered Executive’s employment with the Company.

 

3.                                       Administration

 

The Compensation Committee shall have the sole discretion and authority to administer and interpret the Incentive Plan.

 

4.                                       Bonus Determinations

 

(a)                                  Corporate Performance Goals .  A Covered Executive may receive a bonus payment under the Incentive Plan based upon the attainment of one or more performance objectives that are established by the Compensation Committee and relate to financial and operational metrics with respect to the Company or any of its subsidiaries (the “Corporate Performance Goals”), including the following:  developmental, clinical or regulatory milestones; cash flow (including, but not limited to, operating cash flow and free cash flow); revenue; corporate revenue; earnings before interest, taxes, depreciation and amortization; net income (loss) (either before or after interest, taxes, depreciation and/or amortization); changes in the market price of the Company’s common stock; economic value-added; acquisitions or strategic transactions; operating income (loss); return on capital, assets, equity, or investment; stockholder returns; return on sales; gross or net profit levels; productivity; expense efficiency; margins; operating efficiency; customer satisfaction; working capital; earnings (loss) per share of the Company’s common stock; bookings, new bookings or renewals; sales or market shares; number of customers, number of new customers or customer references; operating income and/or net annual recurring revenue, any of which may be (A) measured in absolute terms or compared to any incremental increase, (B) measured in terms of growth, (C) compared to another company or companies or to results of a peer group, (D) measured against the market as a whole and/or as compared to applicable market indices and/or (E) measured on a pre-tax or post-tax basis (if applicable).  Further, any Corporate Performance Goals may be used to measure the performance of the Company as a whole or a business unit or other segment of the Company, or one or more

 



 

product lines or specific markets.  The Corporate Performance Goals may differ from Covered Executive to Covered Executive.

 

(b)                                  Calculation of Corporate Performance Goals .  At the beginning of each applicable performance period, the Compensation Committee will determine whether any significant element(s) will be included in or excluded from the calculation of any Corporate Performance Goal with respect to any Covered Executive.  In all other respects, Corporate Performance Goals will be calculated in accordance with the Company’s financial statements, generally accepted accounting principles, or under a methodology established by the Compensation Committee at the beginning of the performance period and which is consistently applied with respect to a Corporate Performance Goal in the relevant performance period.

 

(c)                                   Target; Minimum; Maximum .  Each Corporate Performance Goal shall have a “target” (100 percent attainment of the Corporate Performance Goal) and may also have a “minimum” hurdle and/or a “maximum” amount.

 

(d)                                  Bonus Requirements; Individual Goals .  Except as otherwise set forth in this Section 4(d):  (i) any bonuses paid to Covered Executives under the Incentive Plan shall be based upon objectively determinable bonus formulas that tie such bonuses to one or more performance targets relating to the Corporate Performance Goals, (ii) bonus formulas for Covered Executives shall be adopted in each performance period by the Compensation Committee and communicated to each Covered Executive at the beginning of each performance period and (iii) no bonuses shall be paid to Covered Executives unless and until the Compensation Committee makes a determination with respect to the attainment of the performance targets relating to the Corporate Performance Goals.  Notwithstanding the foregoing, the Compensation Committee may adjust bonuses payable under the Incentive Plan based on achievement of one or more individual performance objectives or pay bonuses (including, without limitation, discretionary bonuses) to Covered Executives under the Incentive Plan based on individual performance goals and/or upon such other terms and conditions as the Compensation Committee may in its discretion determine.

 

(e)                                   Individual Target Bonuses .  The Compensation Committee shall establish a target bonus opportunity for each Covered Executive for each performance period.  For each Covered Executive, the Compensation Committee shall have the authority to apportion the target award so that a portion of the target award shall be tied to attainment of Corporate Performance Goals and a portion of the target award shall be tied to attainment of individual performance objectives.

 

(f)                                    Employment Requirement .  Subject to any additional terms contained in a written agreement between the Covered Executive and the Company, the payment of a bonus to a Covered Executive with respect to a performance period shall be conditioned upon the Covered Executive’s employment by the Company on the bonus payment date.  If a Covered Executive was not employed for an entire performance period, the Compensation Committee may pro rate the bonus based on the number of days employed during such period.

 

5.                                       Timing of Payment

 

(a)                                  With respect to Corporate Performance Goals established and measured on a basis more frequently than annually (e.g., quarterly or semi-annually), the Corporate Performance

 

2



 

Goals will be measured at the end of each performance period after the Company’s financial reports with respect to such period(s) have been published.  If the Corporate Performance Goals and/or individual goals for such period are met, payments will be made as soon as practicable following the end of such period, but not later 74 days after the end of the fiscal year in which such performance period ends.

 

(b)                                  With respect to Corporate Performance Goals established and measured on an annual or multi-year basis, Corporate Performance Goals will be measured as of the end of each such performance period (e.g., the end of each fiscal year) after the Company’s financial reports with respect to such period(s) have been published.  If the Corporate Performance Goals and/or individual goals for any such period are met, bonus payments will be made as soon as practicable, but not later than 74 days after the end of the relevant fiscal year.

 

(c)                                   For the avoidance of doubt, bonuses earned at any time in a fiscal year must be paid no later than 74 days after the last day of such fiscal year.

 

6.                                       Amendment and Termination

 

The Company reserves the right to amend or terminate the Incentive Plan at any time in its sole discretion.

 

3




Exhibi t 10.10

 

June 21, 2018

 

Re:  Second Amended and Restated Chairman Agreement

 

Dear David:

 

This agreement (the “Agreement”) amends and restates the Amended and Restated Chairman Agreement, dated October 3, 2017, between you and Rubius Therapeutics, Inc. (the “Company”) with respect to the position of the Company’s Chairman of the Board (“Chairman”). The terms of your engagement are set forth below.  Except as otherwise specified herein, this Agreement shall be effective as of the date hereof  (the “Restatement Effective Date”), and any changes in the rate of the compensation payable hereunder from that previously in effect shall take effect as of the Restatement Effective Date.

 

1.                                       Position .  You will serve as Chairman, in which  capacity you will undertake a strategic leadership role for the Company, and provide guidance and oversight for the chief executive officer of the Company, who will have responsibility for the Company’s day-to-day operations.  As Chairman, you be a non-employee director and accordingly will be treated as an independent contractor.  As the Company’s Chairman, you will report to and serve at the pleasure of the Company’s Board of Directors (the “Board”).

 

2.                                       Base Retainer .  The Company will pay Remedii LLC, a limited liability company for which you are the Managing Member, a base retainer at the rate of $495,000 per year. All annual base retainer payments will be made in substantially equal monthly installments and will be subject to applicable deductions and withholdings. Your base retainer will be subject to periodic review and adjustments at the Company’s discretion.

 

3.                                       Time Commitment; Non-Competition.   It is understood and agreed that you will dedicate approximately 50 working days per year to the Company.  With respect to your time during which you are not engaged with the Company and/or Flagship Pioneering, Inc. (“Flagship”) (or one of its portfolio companies), you retain the right to provide services to other companies or entities that are not venture capital firms and that are not competitive with Flagship or one of its portfolio companies (as of the time of your involvement to such other companies); provided, that during your engagement with the Company and for a period of one (1) year after any termination of your services hereunder by you, you may not provide services to any business, commercial entity, or enterprise that competes with any business developing or marketing genetically-modified red blood cells or that competes directly or indirectly with the Company (“Competing Services”).  The foregoing shall not prevent you from (i) conducting academic research, teaching or related non-commercial activity and (ii) providing services as an Executive Partner with Flagship, or serving as a board member, founding team member, or advisor to one of Flagship’s portfolio companies. Notwithstanding any other agreement with the Company or Flagship to the contrary, neither the Company nor any of its affiliates shall have any ownership interest, license or other rights in respect to any work product that you produce, create, develop or otherwise contribute to by reason of your permitted service for any person other than the Company or any of its affiliates.

 



 

4.                                       On-Site Presence.  It is understood that, from time to time, your presence might be necessary on site at the Company’s office in Massachusetts; however, it is agreed and understood that you shall not be required to relocate to Massachusetts.  To the extent that you are required to travel in the performance of your duties, you will be reimbursed for the costs incurred in connection therewith, and shall be permitted to fly business class or equivalent.

 

5.                                       Equity

 

(a)  Upon the date the Company’s registration under the Securities Exchange Act of 1934, as amended, relating to the initial public offering of the capital stock of the Company becomes effective, provided that you continue to provides services to the Company in the role of Chairman through such date, you will be granted a one-time stock option award to purchase a number of shares of the Company’s common stock that, as of the grant date, equals approximately 2% of the Company’s equity on a fully diluted basis (the “IPO Option”).  The IPO Option shall have an exercise price equal to the fair market value of the Company’s common stock on the date of grant and shall vest and become exercisable in full on the third anniversary of the grant date, subject to your continued service to the Company through such date; provided, however that the IPO Option shall become fully vested and exercisable upon a Sale Event as defined in the Company’s 2018 Stock Option and Incentive Plan.  In addition, in the event that (i) your service with the Company terminates due to your death or disability or (ii) the Company shall terminate your service for any reason other than Cause (as defined below), in either case prior to the third anniversary of the grant date of the IPO Option, you shall be deemed vested in a pro-rated portion of the IPO Option, based on your actual service from and after the grant date and through and including the date your employment terminates.  You shall be able to exercise the IPO Option, to the extent that it shall have become vested and exercisable in accordance with its terms, until the earlier of (i) one year following the termination of your service as Chairman and (ii) the expiration of the term of such IPO Option.  Notwithstanding the foregoing, the IPO Option shall terminate immediately, whether or not then vested and exercisable, in the event that your services as Chairman are terminated for Cause.

 

(b)  In addition to the IPO Option, immediately following each annual meeting of the Company’s stockholders, you will be granted an annual equity grant of an option to purchase shares of the Company’s common stock with a grant date fair value of approximately $405,000 (each, an “Annual Option” and, together with the IPO Option, the “Options”).  Each Annual Option shall be vested and exercisable in full upon the date of grant.  You will be able to exercise each Annual Option until the earlier of (i) one year following the termination of your service as Chairman and (ii) the expiration of the term of the applicable Annual Option.  Notwithstanding the foregoing, any outstanding Annual Options shall terminate immediately in the event that your services as Chairman are terminated for Cause.

 

(d)  Except as otherwise expressly provided herein, the terms of the Company’s applicable equity incentive plan and each option agreement issued in connection with the Options (such documents, together with the equity incentive plan(s) and equity award agreements governing any other stock-based awards held by you, the “Equity Documents”) shall apply to the Options.

 

(e)  With respect to the Options, Cause shall be defined to mean (A) your continuing failure (except where due to physical or mental incapacity) to substantially perform your duties

 



 

hereunder; (B) your willful misconduct, malfeasance or gross neglect in the performance of your duties hereunder; (C) your commission of a felony or a misdemeanor involving moral turpitude; (D) your material breach of Section 3 or 7 of this Agreement; or (E) your failure to cooperate with a bona fide internal investigation or an investigation by regulatory or law enforcement authorities, after being instructed by the Company to cooperate, or the willful destruction or failure to preserve documents or other materials known to be relevant to such investigation or the inducement of others to fail to cooperate or to produce documents or other materials in connection with such investigation.

 

(f)  On June 21, 2018 (the “Note Forgiveness Date”), the full principal amount of, and accrued interest on, each of the promissory notes issued by you to the Company to facilitate the purchase of restricted stock, dated January 27, 2017 and May 16, 2017, respectively, shall automatically be forgiven.  The Company shall return the original promissory notes to you, or make appropriate notations thereon that such notes shall have been deemed satisfied.  For the avoidance of doubt, you shall be solely responsible for any taxes payable on the amount forgiven and the terms and conditions otherwise applicable in respect of the shares purchased with such notes shall continue in full force and effect following the Note Forgiveness Date, except as expressly provided in this Section 5(f).

 

6.                                       At-Will Relationship; Accrued Obligations .  Your relationship with the Company is “at will,” meaning you or the Company may terminate it at any time for any or no reason.  In the event of your separation from the Company for any reason, the Company shall pay you ( i ) your base retainer through the date of your separation and (ii) the amount of any documented expenses properly incurred by you on behalf of the Company prior to any such termination and not yet reimbursed.

 

7.                                       Confidential Information and Restricted Activities .  By signing this Agreement, you represent that you have carefully read and considered all the terms and conditions of this Agreement, including the restraints imposed on you pursuant to the Company’s form confidential information agreement (the “Confidentiality Agreement”) attached as Exhibit 1, the terms of which are incorporated by reference herein.  You agree without reservation that these restraints are necessary for the reasonable and proper protection of the Company and its affiliates, and that each and every one of the restraints is reasonable in respect to subject matter, length of time and geographic area.  For avoidance of doubt, nothing in this Agreement shall be interpreted or applied to prohibit you from making any good faith report to any governmental agency or other governmental entity concerning any act or omission that you reasonably believe constitutes a possible violation of federal or state law or making other disclosures that are protected under the anti-retaliation or whistleblower provisions of applicable federal or state law or regulation.  In addition, for the avoidance of doubt, pursuant to the federal Defend Trade Secrets Act of 2016, you shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (i) is made (A) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney and (B) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.

 



 

8.                                       Taxes .  You hereby acknowledge that the Company does not have a duty to design its compensation policies in a manner that minimizes your tax liabilities, and you will not make any claim against the Company or the Board related to tax liabilities arising from your compensation.

 

9.                                       Interpretation, Amendment and Enforcement .  This Agreement, including the Confidentiality Agreement and the Equity Documents, constitutes the complete agreement between you and the Company, contains all of the terms of your relationship with the Company and supersedes any prior agreements, representations or understandings (whether written, oral or implied) between you and the Company.  The terms of this Agreement and the resolution of any disputes as to the meaning, effect, performance or validity of this Agreement or arising out of, related to, or in any way connected with this Agreement, your relationship with the Company (the “Disputes”) will be governed by Massachusetts law, excluding laws relating to conflicts or choice of law.  You and the Company submit to the exclusive personal jurisdiction of the federal and state courts located in the Commonwealth of Massachusetts in connection with any Dispute or any claim related to any Dispute.

 

10.                                Assignment .  Neither you nor the Company may make any assignment of this Agreement or any interest in it, by operation of law or otherwise, without the prior written consent of the other; provided, however, that the Company may assign its rights and obligations under this Agreement (including the Confidentiality Agreement) without your consent to any affiliate or to any person or entity with whom the Company shall hereafter effect a reorganization, consolidate with, or merge into or to whom it transfers all or substantially all of its properties or assets.  This Agreement shall inure to the benefit of and be binding upon you and the Company, and each of your and its respective successors, executors, administrators, heirs and permitted assigns.

 

11.                                Miscellaneous .  This Agreement may not be modified or amended, and no breach shall be deemed to be waived, unless agreed to in writing by you and a Board member of the Company.  The headings and captions in this Agreement are for convenience only and in no way define or describe the scope or content of any provision of this Agreement.  The words “ include ,” “ includes ” and “ including ” when used herein shall be deemed in each case to be followed by the words “without limitation.”  This Agreement may be executed in two or more counterparts, each of which shall be an original and all of which together shall constitute one and the same instrument.

 

12.                                Other Terms By signing this Agreement, you represent to the Company that, except as referenced in Section 3 hereof, you have no contractual commitments or other legal obligations that would or may prohibit you from performing your duties for the Company.  With respect to your services for the Company, you shall be entitled to be indemnified in accordance with any indemnification policies established by the Company for the benefit of officers and directors of the Company, including being eligible for coverage under any director and officer liability insurance policies that the Company may have in effect from time to time, on the same terms as apply to the Company’s other officers and directors.

 



 

Please acknowledge, by signing below, that you have accepted this amended and restated Agreement.

 

 

Very truly yours,

 

 

 

 

 

By:

/s/ Noubar B. Afeyan

 

I have read and accept this second amended and restated Agreement on behalf of myself and in my capacity as the Managing Member of Remedii LLC:

 

/s/ David Epstein

 

June 21, 2018

David Epstein

 

Date

17121 Collins Ave, Apt. 2104

 

 

Sunny Isles Beach, Fla. 33160

 

 

 




Exhibit 10.11

 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

LEASE AGREEMENT

 

THIS LEASE AGREEMENT (this “Lease”) is made as of this 18th day of January, 2018, between ARE-MA REGION NO. 58, LLC , a Delaware limited liability company (“ Landlord ”), and RUBIUS THERAPEUTICS, INC. , a Delaware corporation (“ Tenant ”).

 

BASIC LEASE PROVISIONS

 

Building :                                                                    That certain to-be-constructed building to be known as 399 Binney Street, Cambridge, MA 02139

 

Premises :                                                                  That portion of the Building containing approximately 48,192 rentable square feet, consisting of (i) the entire 3 rd  floor, containing approximately 47,136 rentable square feet (the “ Third Floor Space ”), and (ii) a portion of the 4th floor, containing approximately 1,056 rentable square feet (the “ Fourth Floor Space ”), all as shown on Exhibit A .

 

Building :                                                                    The to-be-constructed Building to be located in the Project which shall be known and numbered as 399 Binney Street, One Kendall Square, Cambridge, Massachusetts, and located on the real property owned by Landlord and described on Exhibit B (the “ Property ”).

 

Project :                                                                            The project commonly known as One Kendall Square, located on the Property and property owned by affiliates of Landlord and operated as single mixed-use complex.

 

Base Rent :                                                             $78.00 per rentable square foot of the Premises per year, subject to adjustment as provided in Section 4 below.

 

Rentable Area of Premises : 48,192 rentable square feet

 

Rentable Area of Project : 814,899 rentable square feet

 

Rentable Area of Building : 165,194 rentable square feet

 

Building’s Share of Project : 20.27%

 

Tenant’s Share : 29.17%

 

Security Deposit : $939,744.00

 

Target Commencement Date : November 1, 2018

 

Rent Adjustment Percentage : 3%

 

Base Term :                                                       Beginning on the Commencement Date and ending 96 months from the first day of the first full month following the Commencement Date. For clarity, if the Commencement Date occurs on the first day of a month, the Base Term shall be measured from that date. If the Commencement Date occurs on a day other than the first day of a month, the Base Term shall be measured from the first day of the following month.

 

Permitted Use :                                      Research and development, biotechnical and laboratory use, related office and other related uses consistent with the character of the Project and otherwise in compliance with the provisions of Section 7 hereof.

 

***Confidential Treatment Requested***

 

1



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

Multi-Tenant Laboratory

399 Binney/Rubius

 

Address for Rent Payment:

PO Box 975383

Dallas, TX 75397-5383

Landlord’s Notice Address:

385 East Colorado Boulevard, Suite 299

Pasadena, CA91101

Attention: Corporate Secretary

 

 

Tenant’s Notice Address

Prior to the Commencement Date:

325 Vassar Street

Cambridge, Massachusetts 02139

Attention: Vice President of Finance

Tenant’s Notice Address

After the Commencement Date:

399 Binney Street, 3 rd  Floor

Cambridge, Massachusetts 02142

Attention: Lease Administrator

 

The following Exhibits and Addenda are attached hereto and incorporated herein by this reference:

 

[X] EXHIBIT A - PREMISES DESCRIPTION
[X] EXHIBIT C - WORK LETTER
[X] EXHIBIT E - RULES AND REGULATIONS
[X] EXHIBIT G - ESTOPPEL CERTIFICATE

[X] EXHIBIT B - DESCRIPTION OF PROPERTY
[X] EXHIBIT D - COMMENCEMENT DATE
[X] EXHIBIT F - TENANT’S PERSONAL PROPERTY
[X] EXHIBIT H - FIRST FLOOR EXPANSION PREMISES

 

1.                                       Lease of Premises . Upon and subject to all of the terms and conditions of this Lease, Landlord hereby leases the Premises to Tenant and Tenant hereby leases the Premises from Landlord. The portions of the Project that are for the non-exclusive use of tenants of the Project including, without limitation, public or common lobbies, common chases and conduits, mechanical and utility rooms, hallways, stairways, elevators and common walkways, the common toilets, corridors and elevator lobby of any multi-tenant floor, access roads, driveways, parking areas, loading areas, pedestrian sidewalks, landscaped areas and trash enclosures are collectively referred to herein as the “ Common Areas .” In addition to other rights reserved herein or by law, Landlord reserves the right from time to time, so long as Tenant’s use of the Premises for the Permitted Use or Tenant’s access to the Premises are not materially adversely affected: (i) to make additions to or reconstruction of the Building, Property and Project and to install, use, maintain, repair, replace and relocate for service to the Premises or other parts of the Building, Property and/or Project, pipes, ducts, conduits, wires and appurtenant fixtures, wherever located in the Premises, the Building, the Property or elsewhere in the Project, including without limitation, the installation of such facilities in the plenums of the ceilings of the Premises (or, if there is no drop ceiling, within the space above 10 feet of any floor of the Premises), and coring therefor between the ceiling or top surface of any portion of the Premises, and the space above the Premises in the plenum or below the top of the Premises as aforesaid; and (ii) to modify, relocate or make additions to or reductions from any Common Area or facility.

 

2.                                       Delivery; Acceptance of Premises; Commencement Date . Landlord shall use reasonable efforts to deliver the Premises to Tenant on or before the Target Commencement Date, with Landlord’s Work Tl Substantially Completed so that Tenant can occupy the Premises for the Permitted Use (“ Delivery ” or “ Deliver ”) and with (x) all base Building mechanical, electrical and plumbing systems in good operating condition and repair, and (y) free and clear of all tenants and occupants. If Landlord fails to timely Deliver the Premises, Landlord shall not be liable to Tenant for any loss or damage resulting therefrom, and this Lease shall not be void or voidable except as provided herein. Notwithstanding anything to the contrary contained herein, if Landlord fails to Deliver the Premises to Tenant (i) on or before December 1, 2018 (as such date may be extended for Tenant Delays and Force Majeure delays) (“ Initial Abatement Date ”), Base Rent shall be abated 1 day for each day after the Initial Abatement Date (as such date may be extended for Tenant Delays and Force Majeure delays) that Landlord fails to Deliver the Premises to Tenant, and (ii) on or before the date that is January 1, 2019 (as such date may be extended for Tenant Delays and Force Majeure delays) (“ Second Abatement Date ”), Base Rent shall be abated 2 days for each day after the Second Abatement Date (as such date may be extended for Tenant Delays and Force Majeure delays) that Landlord fails to Deliver the Premises to Tenant. If Landlord does not Deliver the Premises within 120 days of the Target Commencement Date (the “ Outside Date ”) for any reason other than delays due to Force Majeure and Tenant Delays, this Lease may be terminated by Tenant by written notice to Landlord, and if so terminated by Tenant: (a) the Security Deposit, or any balance thereof (i.e., after deducting therefrom all amounts to which Landlord is

 

***Confidential Treatment Requested***

 

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***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

entitled under the provisions of this Lease), shall be returned to Tenant; and (b) neither Landlord nor Tenant shall have any further rights, duties or obligations under this Lease, except with respect to provisions which expressly survive termination of this Lease. As used herein, the terms “ Landlord’s Work ,” “ Tenant Delays ” and “ Tl Substantially Completed ” shall have the meanings set forth for such terms in the Work Letter. “ Force Majeure ” shall have the meaning set forth in Section 34 of this Lease. If Tenant does not elect to terminate this Lease within 5 business days after the Outside Date, such right to terminate this Lease shall be waived and this Lease shall remain in full force and effect and Tenant shall not be entitled to any additional abatement of Base Rent for any period after Outside Date.

 

The “ Commencement Date ” shall be the earlier of: (i) the date Landlord Delivers the Premises to Tenant; or (ii) the date Landlord could have Delivered the Premises but for Tenant Delays. Upon request of Landlord, Tenant shall execute and deliver a written acknowledgment of the Commencement Date and the expiration date of the Term when such are established in the form of the “Acknowledgement of Commencement Date” attached to this Lease as Exhibit D ; provided , however . Tenant’s failure to execute and deliver such acknowledgment shall not affect Landlord’s rights hereunder. The “ Term ” of this Lease shall be the Base Term, as defined above in the Basic Lease Provisions and the Extension Term which Tenant may elect pursuant to Section 40 hereof.

 

Except as set forth in the Work Letter, if applicable: (i) Tenant shall accept the Premises in their condition as of the Commencement Date, subject to all applicable Legal Requirements (as defined in Section 7 hereof); (ii) Landlord shall have no obligation for any defects in the Premises, except as expressly provided in the Work Letter; and (iii) Tenant’s taking possession of the Premises shall be conclusive evidence that Tenant accepts the Premises and that the Premises were in good condition at the time possession was taken. Any occupancy of the Premises by Tenant before the Commencement Date shall be subject to all of the terms and conditions of this Lease, excluding the obligation to pay Base Rent if such access is pursuant to Section 6 of the Work Letter and not for the conduct of Tenant’s business.

 

Tenant agrees and acknowledges that neither Landlord nor any agent of Landlord has made any representation or warranty with respect to the condition of all or any portion of the Premises, the Building or the Project, and/or the suitability of the Premises, the Building or the Project for the conduct of Tenant’s business, and Tenant waives any implied warranty that the Premises, the Building or the Project are suitable for Tenant’s use of the Premises for the Permitted Use. Landlord covenants to deliver Landlord’s Work in the Premises in compliance with applicable Legal Requirements in effect on the date of Delivery. Landlord represents and warrants that the person signing this Lease on behalf of Landlord is duly authorized to execute and deliver this Lease on behalf of Landlord as a legally binding contract of Landlord. Tenant represents and warrants that the person signing this Lease on behalf of Tenant is duly authorized to execute and deliver this Lease on behalf of Tenant as a legally binding contract of Tenant. This Lease constitutes the complete agreement of Landlord and Tenant with respect to the subject matter hereof and supersedes any and all prior representations, inducements, promises, agreements, understandings and negotiations which are not contained herein. Landlord in executing this Lease does so in reliance upon Tenant’s representations, warranties, acknowledgments and agreements contained herein.

 

3.                                       Rent .

 

(a)                                  Base Rent . The Security Deposit shall be due and payable on delivery of an executed copy of this Lease to Landlord. The first full calendar month’s Base Rent shall be due on July 1, 2018. Tenant shall pay to Landlord in advance, without demand, abatement, deduction or set-off, equal monthly installments of Base Rent on or before the first day of each calendar month during the Term hereof, in lawful money of the United States of America, at the office of Landlord for payment of Rent set forth above, or to such other person or at such other place as Landlord may from time to time designate in writing. Payments of Base Rent for any fractional calendar month shall be prorated. If the Commencement Date is other than the first day of a calendar month, the difference between the first full calendar month’s Base Rent paid upon delivery of an executed copy of this Lease by Tenant to Landlord as required above, and the prorated Base Rent for the fractional month in which the Commencement

 

***Confidential Treatment Requested***

 

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***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

Date occurs, shall be applied by Landlord to such first full calendar month after the Commencement Date and Tenant shall pay the remainder of the first full calendar month’s rent to Landlord on or before the first day of such first full calendar month. The obligation of Tenant to pay Base Rent, Additional Rent and any other sums to Landlord and the obligations of Landlord under this Lease are independent obligations. Tenant shall have no right at any time to abate, reduce, or set-off any Rent (as defined in Section 5 ) due hereunder except for any abatement as may be expressly provided in this Lease.

 

(b)                                  Additional Rent . In addition to Base Rent, Tenant agrees to pay to Landlord as additional rent (“ Additional Rent ”): (i) Tenant’s Share of Operating Expenses (as defined in Section 5 ). and (ii) any and all other amounts Tenant assumes or agrees to pay under the provisions of this Lease, including, without limitation, any and all other sums that may become due by reason of any default of Tenant or failure to comply with the agreements, terms, covenants and conditions of this Lease to be performed by Tenant, after any applicable notice and cure period.

 

4.                                       Base Rent Adjustments .

 

(a)                                  Annual Adjustment . Base Rent shall be increased on each annual anniversary of the first day of the first full month during the Term of this Lease (each an “ Adjustment Date ”) by multiplying the Base Rent payable immediately before such Adjustment Date by the Rent Adjustment Percentage and adding the resulting amount to the Base Rent payable immediately before such Adjustment Date. Base Rent, as so adjusted, shall thereafter be due as provided herein. Base Rent adjustments for any fractional calendar month shall be prorated.

 

(b)                                  Additional Tl Allowance . in addition to the Tenant Improvement Allowance (as defined in the Work Letter), Landlord shall, subject to the terms of the Work Letter, make available to Tenant the Additional Tl Allowance (as defined in the Work Letter). Commencing on the Commencement Date and continuing thereafter on the first day of each month during the Base Term, Tenant shall pay the amount necessary to fully amortize the portion of the Additional Tl Allowance actually funded by Landlord, if any, in equal monthly payments with annual interest at a rate of 7.5% per annum over the Base Term, which interest shall begin to accrue on the date that Landlord first disburses such Additional Tl Allowance or any portion(s) thereof (“ Tl Rent ”). Any of the Additional Tl Allowance and applicable interest remaining unpaid as of the expiration or earlier termination of the Lease shall be paid to Landlord in a lump sum at the expiration or earlier termination of this Lease. Tenant, at Tenant’s option, may prepay the Tl Rent in full at any time without penalty.

 

5.                                       Operating Expense Payments . Landlord shall deliver to Tenant a written good faith estimate of Operating Expenses for each calendar year during the Term on or before the date that is 30 days prior to the first day of each calendar year (the “ Annual Estimate ”), which may be revised by Landlord from time to time during such calendar year. Commencing on the Commencement Date and continuing thereafter on the first day of each month during the Term, Tenant shall pay Landlord an amount equal to 1/12th of Tenant’s Share of the Annual Estimate. Payments for any fractional calendar month shall be prorated.

 

The term “ Operating Expenses ” means all costs and expenses of any kind or description whatsoever incurred or accrued each calendar year by Landlord in accordance with Landlord’s (and Landlord’s affiliates) sound real estate accounting practices with respect to the Building and Property (including, without duplication, the Building’s Share of Project with respect to ail costs and expenses of any kind or description incurred or accrued by Landlord with respect to the Project which are not specific to the Building or Property or any other building or property located in the Project) including, without duplication or limitation, (w) Taxes (as defined in Section 9 ). (x) capital repairs, replacements and improvements amortized over the lesser of 10 years or the useful life of such capital items (except for capital repairs, replacements and improvements to the roof, which shall be amortized over 15 years), adjusted to reflect Building operations 24 hours per day, 7 days per week and 365 days per year (provided that those Operating Expenses incurred or accrued by Landlord with respect to any capital repairs, replacements or improvements which are for the intended purpose of promoting sustainability (for example, without limitation, by reducing energy usage at the Project) (a “ Capital Sustainability

 

***Confidential Treatment Requested***

 

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***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

Expenditure ”) may be amortized over a shorter period, at Landlord’s discretion, to the extent the cost of a Capital Sustainability Expenditure is offset by a reduction in Operating Expenses), (y) transportation services, and (z) the costs of Landlord’s third party property manager (not to exceed [ *** ] % of Base Rent) or, if there is no third party property manager, administration rent in the amount of [ *** ] % of Base Rent, excluding only:

 

(a)                                  the original construction costs of the Project and renovation prior to the date of the Lease and costs of correcting defects in such original construction or renovation;

 

(b)                                  capital expenditures for expansion of the Project, and with respect to other capital expenditures, subject to amortization as provided in this Section 5 :

 

(c)                                   interest, principal payments of Mortgage (as defined in Section 27 ) debts of Landlord, financing costs and amortization of funds borrowed by Landlord, whether secured or unsecured and all payments of base rent (but not taxes or operating expenses) under any ground lease or other underlying lease of all or any portion of the Project;

 

(d)                                  depreciation of the Project (except for capital improvements, the cost of which are includable in Operating Expenses);

 

(e)                                   advertising, legal and space planning expenses and leasing commissions and other costs and expenses incurred in procuring and leasing space to tenants for the Project, including any leasing office maintained in the Project, free rent and construction allowances for tenants;

 

(f)                                    legal and other expenses incurred in the negotiation or enforcement of leases;

 

(g)                                   completing, fixturing, improving, renovating, painting, redecorating or other work, which Landlord pays for or performs for other tenants within their premises, and costs of correcting defects in such work;

 

(h)                                  costs of utilities outside normal business hours sold to tenants of the Project;

 

(i)                                      costs to be reimbursed by other tenants of the Project or Taxes to be paid directly by Tenant or other tenants of the Project, whether or not actually paid;

 

(j)                                     salaries, wages, benefits and other compensation paid to (i) personnel of Landlord or its agents or contractors above the position of the person, regardless of title, who has day-today management responsibility for the Project or (ii) officers and employees of Landlord or its affiliates who are not assigned in whole or in part to the operation, management, maintenance or repair of the Project; provided, however, that with respect to any such person who does not devote substantially all of his or her employed time to the Project, the salaries, wages, benefits and other compensation of such person shall be prorated to reflect time spent on matters related to operating, managing, maintaining or repairing the Project in comparison to the time spent on matters unrelated to operating, managing, maintaining or repairing the Project;

 

(k)                                  general organizational, administrative and overhead costs relating to maintaining Landlord’s existence, either as a corporation, partnership, or other entity, including general corporate, legal and accounting expenses;

 

(l)                                      costs (including attorneys’ fees and costs of settlement, judgments and payments in lieu thereof) incurred in connection with disputes with tenants, other occupants, or prospective tenants, and costs and expenses, including legal fees, incurred in connection with negotiations or disputes with employees, consultants, management agents, leasing agents, purchasers or mortgagees of the Building or Property;

 

***Confidential Treatment Requested***

 

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***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

(m)                              costs incurred by Landlord due to the violation by Landlord, its employees, agents or contractors or any tenant of the terms and conditions of any lease of space in the Project or any Legal Requirement (as defined in Section 7 );

 

(n)                                  penalties, fines or interest incurred as a result of Landlord’s inability or failure to make payment of Taxes and/or to file any tax or informational returns when due, or from Landlord’s failure to make any payment of Taxes required to be made by Landlord hereunder before delinquency;

 

(o)                                  overhead and profit increment paid to Landlord or to subsidiaries or affiliates of Landlord for goods and/or services in or to the Project to the extent the same exceeds the costs of such goods and/or services rendered by unaffiliated third parties on a competitive basis;

 

(p)                                  costs of Landlord’s charitable or political contributions, or of fine art maintained at the Project;

 

(q)                                  costs in connection with services (including electricity), items or other benefits of a type which are not standard for the Project and which are not available to Tenant without specific charges therefor, but which are provided to another tenant or occupant of the Project, whether or not such other tenant or occupant is specifically charged therefor by Landlord;

 

(r)                                     costs incurred in the sale or refinancing of the Property or Project;

 

(s)                                    net income taxes of Landlord or the owner of any interest in the Property or Project, franchise, capital stock, gift, estate or inheritance taxes or any federal, state or local documentary taxes imposed against the Property or Project or any portion thereof or interest therein;

 

(t)                                     any expenses otherwise includable within Operating Expenses to the extent actually reimbursed by persons other than tenants of the Project under leases for space in the Project, including, without limitation, expenses actually reimbursed by an insurance companies under insurance policies required to be maintained by Landlord in accordance with Section 17 ;

 

(u)                                  Operating Expense reserves (including reserves for Taxes);

 

(v)                                  rentals of equipment ordinarily considered to be of a capital nature (such as elevators and HVAC systems) except if such equipment is reasonably and customarily leased either temporarily or permanently in the operation of comparable office and laboratory buildings in the Cambridge area, such as lifts;

 

(w)                                any costs or expenses that are duplicative of maintenance and repair costs and expenses actually paid by Tenant in satisfaction of Tenant’s maintenance and repair obligations pursuant to this Lease;

 

(x)                                  costs or expenses occasioned by condemnation that are actually recovered by Landlord in any condemnation awards;

 

(y)                                  costs reimbursed to Landlord under any warranty carried by Landlord for the Project; and

 

(z)                                   costs arising from the gross negligence or willful misconduct of Landlord or its agents, and employees.

 

Within 90 days after the end of each calendar year (or such longer period as may be reasonably required), Landlord shall furnish to Tenant a statement (an “ Annual Statement ”) showing in reasonable detail: (a) the total and Tenant’s Share of actual Operating Expenses for the previous calendar year, and (b) the total of Tenant’s payments in respect of Operating Expenses for such year. If Tenant’s Share of

 

***Confidential Treatment Requested***

 

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***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

actual Operating Expenses for such year exceeds Tenant’s payments of Operating Expenses for such year, the excess shall be due and payable by Tenant as Rent within 30 days after delivery of such Annual Statement to Tenant. If Tenant’s payments of Operating Expenses for such year exceed Tenant’s Share of actual Operating Expenses for such year Landlord shall pay the excess to Tenant within 30 days after delivery of such Annual Statement or credit the excess amount to the next succeeding installments of estimated Operating Expenses, except that after the expiration, or earlier termination of the Term or if Tenant is delinquent in its obligation to pay Rent, Landlord shall pay or credit the excess to Tenant after deducting all other amounts due Landlord.

 

The Annual Statement shall be final and binding upon Tenant unless Tenant, within 120 days after Tenant’s receipt thereof, shall contest any item therein by giving written notice to Landlord, specifying each item contested and the reason therefor. If, during such 120 day period, Tenant reasonably and in good faith questions or contests the accuracy of Landlord’s statement of Tenant’s Share of Operating Expenses, Landlord will provide Tenant with access to Landlord’s books and records relating to the operation of the Project and such information as Landlord reasonably determines to be responsive to Tenant’s questions (the “ Expense Information ”). If after Tenant’s review of such Expense Information, Landlord and Tenant cannot agree upon the amount of Tenant’s Share of Operating Expenses, then Tenant shall have the right to have an independent regionally recognized public accounting firm selected by Tenant and approved by Landlord (which approval shall not be unreasonably withheld or delayed), working pursuant to a fee arrangement other than a contingent fee (at Tenant’s sole cost and expense), audit and/or review the Expense Information for the year in question (the “ Independent Review ”). The results of any such Independent Review shall be binding on Landlord and Tenant. If the Independent Review shows that the payments actually made by Tenant with respect to Operating Expenses for the calendar year in question exceeded Tenant’s Share of Operating Expenses for such calendar year, Landlord shall at Landlord’s option either (i) credit the excess amount to the next succeeding installments of estimated Operating Expenses or (ii) pay the excess to Tenant within 30 days after delivery of such statement, except that after the expiration or earlier termination of this Lease or if Tenant is delinquent in its obligation to pay Rent, Landlord shall pay the excess to Tenant after deducting all other amounts due Landlord. If the Independent Review shows that Tenant’s payments with respect to Operating Expenses for such calendar year were less than Tenant’s Share of Operating Expenses for the calendar year, Tenant shall pay the deficiency to Landlord within 30 days after delivery of such statement. If the Independent Review shows that Tenant has overpaid with respect to Operating Expenses by more than 5% then Landlord shall reimburse Tenant for the reasonable out-of-pocket costs incurred by Tenant for the Independent Review. Operating Expenses for the calendar years in which Tenant’s obligation to share therein begins and ends shall be prorated. Notwithstanding anything set forth herein to the contrary, if the Building is not at least 95% occupied on average during any year of the Term, Tenant’s Share of Operating Expenses for such year that vary with the level of occupancy of the Building shall be computed as though the Building had been 95% occupied on average during such year.

 

Tenant’s Share ” shall be the percentage set forth in the Basic Lease Provisions as Tenant’s Share, and “ Building’s Share of Project ” shall be the percentage set forth in the Basic Lease Provisions as the Building’s Share of Project, each as may be reasonably adjusted by for changes in the physical size of the Premises, Building, Property or Project occurring thereafter. Landlord may cause, on or before the Commencement Date the rentable square footage of the Premises and/or the Building to be re-measured by R.E. Dinneen, based upon the Tl Construction Drawings (as defined in the Work Letter), in accordance with the Standard Method of Measuring Floor Area in Office Buildings as adopted by the Building Owners and Managers Association International (ANSI/BOMA Z65.1-1996), as customarily modified for laboratory properties in the Cambridge, Massachusetts market. If the actual rentable square footage of the Premises or the Building deviates from the amount specified in the definitions of “Premises,” “Rentable Area of Premises” and “Rentable Area of Building” on page 1 of this Lease, then, promptly following such measurement, this Lease shall be amended so as to (i) reflect the actual rentable square footage thereof in the definitions of “Rentable Area of Premises,” “Rentable Area of Building” and “Rentable Area of Project”, and (ii) appropriately adjust the amounts set forth in the definitions of “Tenant’s Share” and “Building’s Share of Project” which were calculated based on the estimated rentable square footage of the Premises, the Building and the Project set forth in the Basis Lease Provisions and the Premises shall not be subject to further re-measurement.

 

***Confidential Treatment Requested***

 

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***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

Landlord may equitably increase Tenant’s Share for any item of expense or cost reimbursable by Tenant that relates to a repair, replacement, or service that benefits only the Premises or only a portion of the Building, Property or Project that includes the Premises or that varies with occupancy or use. Landlord may equitably increase the Building’s Share of Project for any item of expense or cost reimbursable by Tenant that relates to a repair, replacement, or service that benefits only the Building or only a portion of the Property or Project that includes the Building or that varies with occupancy or use of the Building. Base Rent, Tenant’s Share of Operating Expenses and all other amounts payable by Tenant to Landlord hereunder are collectively referred to herein as “ Rent .”

 

6.                                       Security Deposit . Tenant shall deposit with Landlord, upon delivery of an executed copy of this Lease to Landlord, a security deposit (the “ Security Deposit ”) for the performance of all of Tenant’s obligations hereunder in the amount set forth in the Basic Lease Provisions, which Security Deposit shall be in the form of an unconditional, irrevocable and transferable letter of credit (the “ Letter of Credit ”): (i) in form and substance satisfactory to Landlord, (ii) naming Landlord as beneficiary, (iii) expressly allowing Landlord to draw upon it at any time from time to time by delivering to the issuer notice that Landlord is entitled to draw thereunder, (iv) issued by an FDIC-insured financial institution satisfactory to Landlord, and (v) redeemable by presentation of a sight draft in the Commonwealth of Massachusetts or the State of California. If Tenant does not provide Landlord with a substitute Letter of Credit complying with all of the requirements hereof at least 10 days before the stated expiration date of any then current Letter of Credit, Landlord shall have the right to draw the full amount of the current Letter of Credit and hold the funds drawn in cash without obligation for interest thereon as the Security Deposit. The Security Deposit shall be held by Landlord as security for the performance of Tenant’s obligations under this Lease. The Security Deposit is not an advance rental deposit or a measure of Landlord’s damages in case of Tenant’s default. Upon each occurrence of a Default (as defined in Section 20 ). Landlord may use all or any part of the Security Deposit to pay delinquent payments due under this Lease, future rent damages and the cost of any damage, injury, expense or liability caused by such Default, without prejudice to any other remedy provided herein or provided by law. Upon any use of all or any portion of the Security Deposit, Tenant shall pay Landlord within 5 business days of demand the amount that will restore the Security Deposit to the amount set forth in the Basic Lease Provisions. Tenant hereby waives the provisions of any law, now or hereafter in force, which provide that Landlord may claim from a security deposit only those sums reasonably necessary to remedy defaults in the payment of Rent, to repair damage caused by Tenant or to clean the Premises, it being agreed that Landlord may, in addition, claim those sums reasonably necessary to compensate Landlord for any other loss or damage, foreseeable or unforeseeable, caused by the act or omission of Tenant or any officer, employee, agent or invitee of Tenant. Upon bankruptcy or other debtor-creditor proceedings against Tenant, the Security Deposit shall be deemed to be applied first to the payment of Rent and other charges due Landlord for periods prior to the filing of such proceedings. Upon any such use of all or any portion of the Security Deposit, Tenant shall, within 5 business days after demand from Landlord, restore the Security Deposit to its original amount. If Tenant is not then in default under this Lease, the Security Deposit, or any balance thereof (i.e., after deducting therefrom all amounts to which Landlord is entitled under the provisions of this Lease), shall be returned to Tenant (or, at Landlord’s option, to the last assignee of Tenant’s interest hereunder) within 60 days after the expiration or earlier termination of this Lease.

 

If Landlord transfers its interest in the Project or this Lease, Landlord shall either (a) transfer any Security Deposit then held by Landlord to a person or entity assuming Landlord’s obligations under this Section 6. or (b) return to Tenant any Security Deposit then held by Landlord and remaining after the deductions permitted herein. Upon such transfer to such transferee or the return of the Security Deposit to Tenant, Landlord shall have no further obligation with respect to the Security Deposit, and Tenant’s right to the return of the Security Deposit shall apply solely against Landlord’s transferee. The Security Deposit is not an advance rental deposit or a measure of Landlord’s damages in case of Tenant’s default. Landlord’s obligation respecting the Security Deposit is that of a debtor, not a trustee, and no interest shall accrue thereon.

 

***Confidential Treatment Requested***

 

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***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

7.                                       Use .

 

(a)                                  Tenant’s Use . The Premises shall be used solely for the Permitted Use set forth in the Basic Lease Provisions, and in compliance with all laws, orders, judgments, ordinances, regulations, codes, directives, permits, licenses, covenants and restrictions now or hereafter applicable to the Premises, and to the use and occupancy thereof, including, without limitation, the Americans With Disabilities Act, 42 U.S.C. § 12101, et seq. (together with the regulations promulgated pursuant thereto, “ ADA ”) (collectively, “ Legal Requirements ” and each, a “ Legal Requirement ”). The number of control areas in the Premises shall comply with all applicable Legal Requirements. Tenant shall, upon 5 days’ written notice from Landlord, discontinue any use of the Premises which is declared by any Governmental Authority (as defined in Section 9 ) having jurisdiction to be a violation of a Legal Requirement. Tenant will not use or permit the Premises to be used for any purpose or in any manner that would void Tenant’s or Landlord’s insurance, increase the insurance risk, or cause the disallowance of any sprinkler or other credits. Tenant shall not permit any part of the Premises to be used as a “place of public accommodation”, as defined in the ADA or any similar legal requirement. Tenant shall reimburse Landlord promptly upon demand for any additional premium charged for any such insurance policy by reason of Tenant’s failure to comply with the provisions of this Section or otherwise caused by Tenant’s particular use and/or occupancy of the Premises. Tenant shall use the Premises in a careful, safe and proper manner and shall not commit or permit waste, overload the floor or structure of the Premises, or subject the Premises to use that would damage the Premises. Tenant shall not obstruct or interfere with the rights of Landlord or other tenants or occupants of the Project, including, without limitation, conducting or giving notice of any auction, liquidation, or going out of business sale on the Premises. Tenant shall not use or allow the Premises to be used for any unlawful purpose. Tenant shall cause any equipment or machinery to be installed in the Premises so as to reasonably prevent sounds or vibrations from the Premises from extending into Common Areas, or other space in the Project. Tenant shall not place any machinery or equipment weighing 500 pounds or more in or upon the Premises or transport or move such items through the Common Areas of the Building or in the Building elevators without the prior written consent of Landlord. Except as may be provided under the Work Letter, Tenant shall not, without the prior written consent of Landlord, use the Premises in any manner which will require ventilation, air exchange, heating, gas, steam, electricity or water beyond the. existing capacity of the Building as proportionately allocated to the Premises based upon Tenant’s Share as usually furnished for the Permitted Use.

 

From and after the Commencement Date through the expiration of the Term, Tenant shall have access to the Building and the Premises 24 hours a day, 7 days a week, except in the case of emergencies, as the result of Legal Requirements, the performance by Landlord of any installation, maintenance or repairs, or any other temporary interruptions, and otherwise subject to the terms of this Lease.

 

Landlord shall make any alterations or modifications to the Common Areas or the exterior of the Building that are required by Legal Requirements, including the ADA, provided that the costs of such alterations or modifications shall be (i) included as an Operating Expense (subject to the limitations and exclusions contained in Section 5 ) to the extent such Legal Requirement is generally applicable to similar buildings in the area in which the Project is located and was not applicable prior to the date of Substantial Completion of the Shell and Core Improvements (as such terms are defined in the Work Letter), or (ii) at Tenant’s expense to the extent such Legal Requirement is applicable solely by reason of Tenant’s, as compared to other tenants of the Project, particular use of the Premises. Subject to Landlord’s obligation to deliver Landlord’s Work in the Premises in compliance with applicable Legal Requirements, as provided in Section 2 , Tenant, at its sole expense, shall make any alterations or modifications to the interior of the Premises that are required by Legal Requirements (including, without limitation, compliance of the Premises with the ADA). Notwithstanding any other provision herein to the contrary, Tenant shall be responsible for any and all demands, claims, liabilities, losses, costs, expenses, actions, causes of action, damages or judgments, and all reasonable expenses incurred in investigating or resisting the same (including, without limitation, reasonable attorneys’ fees, charges and disbursements and costs of suit) (collectively, “ Claims ”) arising out of or in connection with Legal Requirements applicable to the Premises (except to the extent such violations result from a failure of the Premises to comply with Legal Requirements in effect as of the date of Delivery), and Tenant shall indemnify, defend, hold and save

 

***Confidential Treatment Requested***

 

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***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

Landlord harmless from and against any and all such Claims arising out of or in connection with any failure of the Premises to comply with any Legal Requirement.

 

(b)                                  Energy Use Reporting . Tenant agrees to provide, within 30 days of request by Landlord, such information and documentation as may be needed for compliance with the City of Cambridge Building Energy Use Disclosure Ordinance, Section 8.67.010 et seq. of the Municipal Code of the City of Cambridge (as the same may be amended, the “ Cambridge Building Energy Use Disclosure Ordinance ”), and other such energy or sustainability requirements as may be adopted from time to time by the City of Cambridge or any other governmental authority with jurisdiction over the Building, which information shall include without limitation usage at or by the Premises of electricity, natural gas, steam, hot or chilled water or other energy. Landlord shall report to the applicable governmental authority such energy usage for the Building and other Building information as required by the Cambridge Building Energy Use Disclosure Ordinance.

 

8.                                       Holding Over . If, with Landlord’s express written consent, Tenant retains possession of the Premises after the termination of the Term, (i) unless otherwise agreed in such written consent, such possession shall be subject to immediate termination by Landlord at any time, (ii) all of the other terms and provisions of this Lease (including, without limitation, the adjustment of Base Rent pursuant to Section 4 hereof) shall remain in full force and effect (excluding any expansion or renewal option or other similar right or option) during such holdover period, (iii) Tenant shall continue to pay Base Rent in the amount payable upon the date of the expiration or earlier termination of this Lease or such other amount as Landlord may indicate, in Landlord’s sole and absolute discretion, in such written consent, and (iv) all other payments shall continue under the terms of this Lease. If Tenant remains in possession of the Premises after the expiration or earlier termination of the Term without the express written consent of Landlord, (A) Tenant shall become a tenant at sufferance upon the terms of this Lease except that the monthly rental shall be equal to 150% of Rent in effect during the last 30 days of the Term, and (B) if such occupancy shall continue for more than 30 days, Tenant shall be responsible for all damages suffered by Landlord resulting from or occasioned by Tenant’s holding over, including consequential damages. No holding over by Tenant, whether with or without consent of Landlord, shall operate to extend this Lease except as otherwise expressly provided, and this Section 8 shall not be construed as consent for Tenant to retain possession of the Premises. Acceptance by Landlord of Rent after the expiration of the Term or earlier termination of this Lease shall not result in a renewal or reinstatement of this Lease.

 

9.                                       Taxes . Landlord shall pay, as part of Operating Expenses, all taxes, levies, fees, assessments and governmental charges of any kind, existing as of the Commencement Date or thereafter enacted (collectively referred to as “ Taxes ”), imposed by any federal, state, regional, municipal, local or other governmental authority or agency, including, without limitation, quasi-public agencies (collectively, “ Governmental Authority ”) during the Term, including, without limitation, all Taxes: (i) imposed on or measured by or based, in whole or in part, on rent payable to (or gross receipts received by) Landlord under this Lease and/or from the rental by Landlord of the Building, Property or Project or any portion thereof, or (ii) based on the square footage, assessed value or other measure or evaluation of any kind of the Premises, Building, Property or Project or portion thereof, or (iii) assessed or imposed by or on the operation or maintenance of any portion of the Premises, Building, Property or Project, including parking, or (iv) assessed or imposed by, or at the direction of, or resulting from Legal Requirements, or interpretations thereof, promulgated by, any Governmental Authority, or (v) imposed as a license or other fee, charge, tax or assessment on Landlord’s business or occupation of leasing space in the Building, Property or Project or portion thereof. Landlord may contest by appropriate legal proceedings the amount, validity, or application of any Taxes or liens securing Taxes. If Landlord receives an abatement of Taxes for the Project for a period during the Term, Landlord shall apply such abatement (less the costs of obtaining such abatement, including reasonable attorneys’ fees) as a credit against Operating Expenses for the applicable year. Taxes shall not include any net income taxes or franchise, estate, inheritance, succession, gift or excess profit taxes imposed on Landlord except to the extent such taxes are in substitution for any Taxes payable hereunder, or any penalties for late payment of Taxes. If any such Tax is levied or assessed directly against Tenant, then Tenant shall be responsible for and shall pay the same at such times and in such manner as the taxing authority shall require. Operating Expenses hereunder shall also include the cost of tax monitoring services provided to Landlord with respect to the Building,

 

***Confidential Treatment Requested***

 

10


 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

Property or Project. Tenant shall pay, prior to delinquency, any and all Taxes levied or assessed against any personal property or trade fixtures placed by Tenant in the Premises, whether levied or assessed against Landlord or Tenant. If any Taxes on Tenant’s personal property or trade fixtures are levied against Landlord or Landlord’s property, or if the assessed valuation of the Building, Property or Project is increased by a value attributable to improvements in or alterations to the Premises, whether owned by Landlord or Tenant and whether or not affixed to the real property so as to become a part thereof, higher than the base valuation on which Landlord from time-to-time allocates Taxes to all tenants in the Building, Property or Project, or portion thereof of which the Premises are a part, Landlord shall have the right, but not the obligation, to pay such Taxes. Landlord’s determination of any excess assessed valuation shall be binding and conclusive, absent manifest error. The amount of any such payment by Landlord shall constitute Additional Rent due from Tenant to Landlord immediately upon demand.

 

10.                                Parking and PTDM .

 

(a)                                  Parking and Monthly Parking Charge . Subject to all matters of record, Force Majeure, a Taking (as defined in Section 19 below), the exercise by Landlord of its rights hereunder and upon payment of the Monthly Parking Charge (as defined below) for each parking space commencing on the Commencement Date, Tenant shall have the right, in common with other tenants of the Project to use 0.9 parking spaces per 1,000 rentable square foot of the Premises (“ Tenant’s Parking Allocation ”) in the parking facility located at the One Kendall Square Garage located on Binney Street (the “ OKS Garage ”) to park in those areas designated for non-reserved parking, subject in each case to Landlord’s rules and regulations. Tenant has elected to use all of Tenant’s Parking Allocation commencing on the Commencement Date. Landlord shall not be responsible for enforcing Tenant’s parking rights against any third parties, including other tenants of the Project. The “ Monthly Parking Charge ” shall mean the market rate monthly charge therefor designated by Landlord, adjusted reasonably and no more frequently than once in any 12-month period, based upon the rates charged by comparable parking facilities in the vicinity of the Project, which as. of the date of this Lease such Monthly Parking Charge is equal to $ [ *** ] per space per month, plus applicable taxes.

 

(b)                                  Parking and Transportation Demand Management . Tenant shall, at Tenant’s sole expense, for so long as a parking and traffic demand management plan approved by the City of Cambridge (as amended from time to time, the “ PTDM ”), is applicable to the Project, comply with the PTDM as applicable to the Project, including without limitation, as applicable (i) offer to subsidize mass transit monthly passes for all of its employees who work in the Premises in accordance with the terms set forth in the PTDM; (ii) implement a Commuter Choice Program and the MBTA’s Corporate Pass Plan; (iii) discourage single-occupant vehicle (“ SOV ”) use by its employees; (iv) promote alternative modes of transportation and use of alternative work hours; (v) at Landlord’s request, meet with Landlord and/or its representatives no more frequently than quarterly to discuss transportation programs and initiatives; (vi) participate in annual surveys, monitoring transportation programs and initiatives at the Campus, and, without limitation, achieve a sixty (60%) percent response rate for patron surveys; (vii) cooperate with Landlord in connection with transportation programs and initiatives promulgated pursuant to the PTDM; (viii) provide alternative work programs (such as telecommuting, flex-time and compressed work weeks) to its employees in order to reduce traffic impacts in Cambridge during peak commuter hours; (ix) offer an emergency ride home (“ ERH ”) through the Charles River Transportation Management Association (“ CRTMA ”), or have its own ERH program, for all employees who commute by non-SOV mode at least 3 days a week and who are eligible to park in the parking spaces in the parking facility described above; (x) cooperate with the Cambridge Office of Workforce Development to expand employment opportunities for Cambridge residents; (xi) become a member of the CRTMA and cause the EZ Ride shuttle service to service the Building; (xii) in the event that the single occupancy vehicle and traffic generation modal split limits of the PTDM are exceeded, charge each user of a parking space the market rate for parking in Kendall Square/East Cambridge therefor; (xiii) comply with the requirements of any other parking and traffic demand management plan to which Tenant may be a party from time to time; (xiii) designate an employee transportation coordinator for the Building; and (xiv) otherwise cooperate with Landlord in encouraging employees to seek alternate modes of transportation. The current PTDM applicable to the Project is that certain Parking and Traffic Demand Management Plan dated February 9, 2010 (revised April 15, 2010).

 

***Confidential Treatment Requested***

 

11



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

11.                                Utilities, Services .

 

(a)                                  Generally . Landlord shall provide, or cause to be provided, subject to the terms of this Section 11 , water, electricity, heat, light, power, sewer, and other utilities (including gas and fire sprinklers to the extent the Building is plumbed for such services), and, with respect to the Common Areas, refuse and trash collection and janitorial services (collectively, “ Utilities ”). Tenant shall be responsible for its own janitorial services and refuse and trash collection within the Premises including, without limitation, delivery of its trash and refuse from the Premises to the loading dock of the Building. Landlord shall, as part of Operating Expenses, arrange for collection of office trash and refuse from the loading dock of the Building. Landlord shall pay, as Operating Expenses or subject to Tenant’s reimbursement obligation, for all Utilities used on the Premises, all maintenance charges for Utilities, and any storm sewer charges or other similar charges for Utilities imposed by any Governmental Authority or Utility provider, and any taxes, penalties, surcharges or similar charges thereon. The Premises shall be separately metered, at Landlord’s cost, to measure Tenant’s usage of electricity for lights and plugs. Landlord may cause, at Tenant’s expense, any other Utilities to be separately metered or charged directly to Tenant by the provider. Tenant shall pay directly to the Utility provider, prior to delinquency, any separately metered Utilities and services which may be furnished to Tenant or the Premises during the Term. Tenant shall pay, as part of Operating Expenses, its share of all charges for jointly metered Utilities based upon consumption, as reasonably determined by Landlord. No interruption or failure of Utilities, from any cause whatsoever, shall result in eviction or constructive eviction of Tenant, termination of this Lease or the abatement of Rent. Tenant agrees to limit use of water and sewer with respect to Common Areas to normal restroom use.

 

Landlord’s sole obligation for either providing emergency generators or providing emergency back-up power to Tenant shall be: (i) to provide emergency generators with not less than the stated capacity of the emergency generators located in the Building as of the Commencement Date, and (ii) to contract with a third party to maintain the emergency generators as per the manufacturer’s standard maintenance guidelines. Landlord shall have no obligation to provide Tenant with operational emergency generators or back-up power or to supervise, oversee or confirm that the third party maintaining the emergency generators is maintaining the generators as per the manufacturer’s standard guidelines or otherwise. During any period of replacement, repair or maintenance of the emergency generators when the emergency generators are not operational, including any delays thereto due to the inability to obtain parts or replacement equipment, Landlord shall have no obligation to provide Tenant with an alternative back-up generator or generators or alternative sources of back-up power. Tenant expressly acknowledges and agrees that Landlord does not guaranty that such emergency generators will be operational at all times or that emergency power will be available to the Premises when needed. In no event shall Landlord be liable to Tenant or any other party for any damages of any type, whether actual or consequential, suffered by Tenant or any such other person in the event that any emergency generator or back-up power or any replacement thereof fails or does not provide sufficient power.

 

(b)                                  Compressed Air, Vacuum and Reverse Osmosis Water Systems . Landlord shall provide Tenant with access, pursuant to the terms and conditions of this Lease, to the compressed air, vacuum and reverse osmosis water systems that serve the floor on which the Premises are located. Tenant acknowledges and agrees that such compressed air, vacuum and reverse osmosis water systems shall be shared with other tenants of the Project. Tenant’s obligation to pay its share of ongoing operation costs shall be allocated among Tenant and other user tenants on a pro rata basis, with Tenant’s share based on the ratio of the rentable square footage of the Premises to the sum of the rentable square footages of the Premises and the premises of all other user tenants. Landlord’s sole obligation for providing either compressed air, vacuum or reverse osmosis water systems to Tenant shall be to contract with a third party to maintain the compressed air, vacuum and reverse osmosis water systems as per the manufacturer’s standard maintenance guidelines. Landlord shall have no obligation to supervise, oversee or confirm that the third party maintaining the compressed air, vacuum and reverse osmosis water systems is maintaining the compressed air, vacuum and reverse osmosis water systems as per the manufacturer’s standard guidelines or otherwise. During any period of replacement, repair or maintenance of the compressed air, vacuum and reverse osmosis water systems when the compressed air, vacuum and reverse osmosis water systems are not operational, including any delays thereto due to

 

***Confidential Treatment Requested***

 

12



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

the inability to obtain parts or replacement equipment, Landlord shall have no obligation to provide Tenant with any alternative compressed air, vacuum and reverse osmosis water systems. Tenant expressly acknowledges and agrees that Landlord does not guaranty that such compressed air, vacuum and reverse osmosis water systems will be operational at all times or that compressed air, vacuum and reverse osmosis water systems will be available to the Premises when needed.

 

(c)                                   Acid Neutralization System . Landlord shall provide Tenant with access to the acid neutralization system existing as of the date of this Lease (“ Acid Neutralization System ”) pursuant to the terms and conditions of this Lease. Tenant acknowledges and agrees that the Acid Neutralization System shall be shared with other tenants of the Project. Tenant’s obligation to pay its share of ongoing operation costs shall be allocated among Tenant and other user tenants on a pro rata basis, with Tenant’s share based on the ratio of the rentable square footage of the Premises to the sum of the rentable square footages of the Premises and the premises of all other user tenants, provided, however, that, at any time and from time to time, Landlord may equitably adjust such allocation based on use by Tenant and other tenant users of the Acid Neutralization System. Landlord’s sole obligations for providing the Acid Neutralization System, or any acid neutralization system facilities, to Tenant shall be (the “ Acid Neutralization Obligations ”) to (i) use reasonable efforts to obtain and maintain the permit required from the Massachusetts Water Resources Authority for discharge through the Acid Neutralization System (the “ Discharge Permit ”), provided that Tenant reasonably cooperates with Landlord and provides all information and documents reasonably necessary in connection with the Discharge Permit, and (ii) contract with a third party to maintain the Acid Neutralization System as operating as per the manufacturer’s standard maintenance guidelines. Notwithstanding anything herein to the contrary, if the Acid Neutralization System must be replaced and the cost thereof is not included in such third party maintenance contract, then, Landlord shall replace the Acid Neutralization System, it being acknowledged, however, that Tenant shall be responsible for its share of all costs incurred in connection therewith as an Operating Expense.

 

Tenant shall be solely responsible for the use of the Acid Neutralization System by Tenant, its employees, any contractors, sublessees, invitees or any party other than Landlord or Landlord’s contractors, and Tenant shall be jointly and severally responsible for the use of the Acid Neutralization System with the other user tenants. Tenant shall use, and cause other parties under its control or for which it is responsible to use, the Acid Neutralization System in accordance with this Lease and in accordance with all applicable Legal Requirements, the Discharge Permit and any permits and approvals from Governmental Authorities for or applicable to Tenant’s use of the Acid Neutralization System. Tenant shall not take any action or make any omission that would result in a violation of the Discharge Permit or any other permit or Legal Requirements applicable to the Acid Neutralization System. Tenant’s compliance with applicable permits and Legal Requirements shall include but not be limited to posting signs at all sinks located in the Premises containing applicable notices regarding the use of sink drains for the disposal of chemicals and other Hazardous Materials. Tenant shall maintain a chemical management plan prohibiting the improper discharge or disposal of chemicals. Tenant shall train all laboratory personnel in the Premises on the proper disposal of chemicals and other Hazardous Materials. Landlord reserves the right, at any time and from time to time, to require limitations and restrictions on discharges by Tenant to the Acid Neutralization System as Landlord may reasonably determine to be necessary for the operation of the Acid Neutralization System. Landlord and its contractors and consultants shall be permitted to perform periodic sampling of all substances regulated under permits applicable to the Acid Neutralization System, including without limitation the discharge permit issued by the Massachusetts Water Resources Authority (“ MWRA ”), or as otherwise deemed appropriate by Landlord in its sole discretion. Landlord and its contractors and consultants shall be permitted to perform periodic inspections of the Acid Neutralization System and the discharge points and connections thereto located in the Premises. If requested by Landlord based on conditions pertaining to the Acid Neutralization System, Tenant shall promptly provide updates to its Hazardous Materials List (as defined in Section 30(b)  below) to Landlord. Tenant shall promptly notify Landlord of any changes in the flow volume or properties that could impact the operation of the Acid Neutralization System or compliance with applicable permits or Legal Requirements, including without limitation a discharge known or reasonably believed to be non-compliant, changes in Tenant’s operations in the Premises and addition of new equipment such as cage washers, glass washers or autoclaves.

 

***Confidential Treatment Requested***

 

13



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

The scope of the Surrender Plan (as defined in Section 28 of this Lease) shall include all actions for the proper cleaning, decommissioning and cessation of Tenant’s use of the Acid Neutralization System, and all requirements under this Lease for the surrender of the Premises shall also apply to Tenant’s cessation of use of the Acid Neutralization System, in each case whether at Lease expiration, termination or prior thereto (but Tenant shall not be required to complete the decommissioning of the Acid Neutralization System if other tenants or occupants will continue to use the same after the expiration or earlier termination of the Lease, nor shall Tenant be responsible for or bear any costs of decommissioning arising from the use of the Acid Neutralization System by any party other than Tenant; it being agreed that if multiple tenants use the Acid Neutralization System, then Landlord shall be responsible for completing the decommissioning thereof, and Tenant shall pay to Landlord within thirty (30) days after invoice therefor Tenant’s share of the reasonable, actual costs of decommissioning based on the ratio of the rentable square footage of the Premises to the rentable square footage of the Premises and the premises of all other user tenants). The obligations of Tenant under this Lease with respect to the Acid Neutralization System shall be joint and several with such other tenants as aforesaid, except in the event that Tenant can prove to Landlord’s reasonable satisfaction that neither Tenant nor any Tenant Party caused, contributed to or exacerbated the matter for which Tenant would otherwise be responsible but for this exception. Without in any way limiting the Acid Neutralization Obligations, Landlord shall have no obligation to provide Tenant with operational emergency or back-up acid neutralization facilities or to supervise, oversee or confirm that the. third party maintaining the Acid Neutralization System is maintaining such system as per the manufacturer’s standard guidelines or otherwise. During any period of replacement, repair or maintenance of the Acid Neutralization System when such system is not operational, including any delays thereto due to the inability to obtain parts or replacement equipment, Landlord shall have no obligation to provide Tenant with an alternative back-up system or facilities. Tenant expressly acknowledges and agrees that Landlord does not guaranty that such Acid Neutralization System will be operational at all times or that such system will be available to the Premises when needed. Without in anyway limiting the Acid Neutralization Obligations, in no event shall Landlord be liable to Tenant or any other party for any damages of any type, whether actual or consequential, suffered by Tenant or any such other person in the event that the Acid Neutralization System or back-up system, if any, or any replacement thereof fails or does not operate in a manner that meets Tenant’s requirements.

 

12.                                Alterations and Tenant’s Property . Any alterations, additions, or improvements made to the Premises by or on behalf of Tenant, including additional locks or bolts of any kind or nature upon any doors or windows in the Premises, but excluding installation, removal or realignment of furniture systems, office equipment and telecommunications cabling (other than removal of furniture systems, office equipment and telecommunications cabling owned or paid for by Landlord) not involving any modifications to the structure or connections (other than by ordinary plugs or jacks) to Building Systems (as defined in Section 13 ) (“ Alterations ”) shall be subject to Landlord’s prior written consent, which may be given or withheld in Landlord’s sole discretion if any such Alteration affects the structure or Building Systems, but which shall otherwise not be unreasonably withheld or delayed. Tenant may construct nonstructural Alterations in the Premises that will not affect the operations of any Building Systems, without Landlord’s prior approval if the aggregate cost of all such work in any 12 month period does not exceed $50,000.00 (excluding paint and floor coverings) (a “ Notice-Only Alteration ”), provided Tenant notifies Landlord in writing of such intended Notice-Only Alteration, and such notice shall be accompanied by plans, specifications, work contracts and such other information concerning the nature and cost of the Notice-Only Alteration as may be reasonably requested by Landlord, which notice and accompanying materials shall be delivered to Landlord not less than 15 business days in advance of any proposed construction. If Landlord approves any Alterations, Landlord may impose such commercially reasonable conditions on Tenant in connection with the commencement, performance and completion of such Alterations as Landlord may deem appropriate in Landlord’s reasonable discretion. Any request for approval shall be in writing, delivered not less than 15 business days in advance of any proposed construction, and accompanied by plans, specifications, bid proposals, work contracts and such other information concerning the nature and cost of the alterations as may be reasonably requested by Landlord, including the identities and mailing addresses of all persons performing work or supplying materials. Any disapproval of plans and specifications for Alterations shall be accompanied by a specific statement of the reason(s) therefor. All architects, consultants, contractors and other persons performing

 

***Confidential Treatment Requested***

 

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***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

work or supplying materials shall be subject to Landlord’s prior written approval, such approval not to be unreasonably withheld, conditioned or delayed. Landlord’s right to review plans and specifications and to monitor construction shall be solely for its own benefit, and Landlord shall have no duty to ensure that such plans and specifications or construction comply with applicable Legal Requirements. Tenant shall cause, at its sole cost and expense, all Alterations to comply with insurance requirements and with Legal Requirements and shall implement at its sole cost and expense any alteration or modification required by Legal Requirements as a result of any Alterations. Tenant shall pay to Landlord, as Additional Rent, within 30 days after demand therefor from Landlord, an amount equal to the reasonable out-of-pocket costs incurred by Landlord for plan review, coordination, scheduling and supervision. Before Tenant begins any Alteration, Landlord may post on and about the Premises notices of non-responsibility pursuant to applicable law. Tenant shall reimburse Landlord for, and indemnify and hold Landlord harmless from, any expense incurred by Landlord by reason of faulty work done by Tenant or its contractors, delays caused by such work, or inadequate cleanup.

 

Tenant shall complete all Alterations work free and clear of liens, and shall provide (and cause each contractor or subcontractor to provide) certificates of insurance for workers’ compensation and other coverage in amounts and from an insurance company reasonably satisfactory to Landlord protecting Landlord against liability for personal injury or property damage during construction. Upon completion of any Alterations, Tenant shall deliver to Landlord: (i) sworn statements setting forth the names of all contractors and subcontractors who did the work and final lien waivers from all such contractors and subcontractors; and (ii) “as built” plans for any such Alteration. Notwithstanding anything to the contrary set forth herein, in no event shall Tenant be required to provide Landlord with a payment or performance bond with respect to Tenant’s Work (as defined in the Work Letter).

 

Other than (i) the items, if any, listed on Exhibit F attached hereto, (ii) any items agreed by Landlord in writing to be included on Exhibit F in the future, and (iii) any trade fixtures, machinery, equipment and other personal property not paid for out of the Tl Fund (as defined in the Work Letter) which may be removed without material damage to the Premises, which damage shall be repaired (including capping or terminating utility hook-ups behind walls) by Tenant during the Term (collectively, “ Tenant’s Property ”), all property of any kind paid for with the Tl Fund, all Alterations, real property fixtures, built-in machinery and equipment, built-in casework and cabinets and other similar additions and improvements built into the Premises so as to become an integral part of the Premises, such as fume hoods which penetrate the roof or plenum area, built-in cold rooms, built-in warm rooms, walk-in cold rooms, walk-in warm rooms, deionized water systems, glass washing equipment, autoclaves, chillers, built-in plumbing, electrical and mechanical equipment and systems, and any power generator and transfer switch (collectively, “ Installations ”) shall be and shall remain the property of Landlord during the Term and following the expiration or earlier termination of the Term, shall not be removed by Tenant at any time during the Term and shall remain upon and be surrendered with the Premises as a part thereof in accordance with Section 28 following the expiration or earlier termination of this Lease; provided , however , that Landlord shall, at the time its approval of such Installation is requested, or at the time it receives notice of a Notice-Only Alteration, notify Tenant if it has elected to cause Tenant to remove such Installation upon the expiration or earlier termination of this Lease, except that Landlord shall not require removal of customary office cabling or customary laboratory improvements. If Landlord so elects, Tenant shall remove such Installation upon the expiration or earlier termination of this Lease and restore any damage caused by or occasioned as a result of such removal, including, when removing any of Tenant’s Property which was plumbed, wired or otherwise connected to any of the Building Systems, capping off all such connections behind the walls of the Premises and repairing any holes. During any such restoration period, Tenant shall pay Rent to Landlord as provided herein as if said space were otherwise occupied by Tenant.

 

Tenant acknowledges and agrees that, notwithstanding anything to the contrary contained in this Lease, if Tenant constructs an animal control facility (“ Facility ”) in the Premises, Tenant shall be required, at Tenant’s sole cost and expense, upon the expiration or earlier termination of the Term to restore the portion of the Premises in which the Facility is located to a standard and customary laboratory/office configuration reasonably acceptable to Landlord (the “ Premises Restoration ”). Notwithstanding anything to the contrary contained in this paragraph, if Tenant exercises its Extension Right pursuant to Section 40

 

***Confidential Treatment Requested***

 

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***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

below, then the requirements with respect to the performance of the Premises Restoration pursuant to this paragraph shall be waived.

 

13.                                Landlord’s Repairs . Landlord, as an Operating Expense (subject to the limitations and exclusions contained in Section 5 ), shall maintain, or cause to be maintained, the roof and all of the structural, exterior, parking and other Common Areas of the Project, including HVAC, plumbing, fire sprinklers, elevators and all other building systems serving the Premises and other portions of the Project (“ Building Systems ”), in good operating order and repair, reasonable wear and tear and uninsured losses and damages caused by Tenant, or by any of Tenant’s agents, servants, employees, officers, directors, managers, invitees, contractors, subcontractors, subtenants, assignees or licensees (each, a “ Tenant Party ”, or collectively, “ Tenant Parties ”) excluded. Losses and damages caused by Tenant or any Tenant Party shall be repaired by Landlord, to the extent not covered by insurance, at Tenant’s sole cost and expense to the extent caused by Tenant or any Tenant Party (except as may otherwise be provided in Sections 11(b)  or (c) ). Landlord reserves the right to stop Building Systems services when necessary (i) by reason of accident or emergency, or (ii) for planned repairs, alterations or improvements, which are, in the judgment of Landlord, desirable or necessary to be made, until said repairs, alterations or improvements shall have been completed. Landlord shall have no responsibility or liability for failure to supply Building Systems services during any such period of interruption; provided , however , that Landlord shall, except in case of emergency, make a commercially reasonable effort to give Tenant 48 hours’ advance notice of any planned stoppage of Building Systems services for routine maintenance, repairs, alterations or improvements. Landlord shall use reasonable efforts to minimize interference with Tenant’s operations in the Premises during such planned stoppages of Building Systems and shall use reasonable efforts to coordinate such planned stoppages in advance (except in the case of an emergency) with Tenant. Tenant shall promptly give Landlord written notice of any repair required by Landlord pursuant to this Section, after which Landlord shall have a reasonable opportunity to effect such repair. Landlord shall not be liable for any failure to make any repairs or to perform any maintenance unless such failure shall persist for an unreasonable time after Tenant’s written notice of the need for such repairs or maintenance. Tenant waives its rights under any state or local law to terminate this Lease or to make such repairs at Landlord’s expense and agrees that the parties’ respective rights with respect to such matters shall be solely as set forth herein. Repairs required as the result of fire, earthquake, flood, vandalism, war, or similar cause of damage or destruction shall be controlled by Section 18 .

 

14.                                Tenant’s Maintenance and Repairs . Tenant shall be responsible for its own janitorial services within the Premises, and Tenant shall arrange for its janitorial services provider to deliver office trash and refuse from the Premises to the common trash facility at the loading dock of the Building. In no event shall Tenant or its contractors, agents or service providers dispose of any laboratory refuse or waste or Hazardous Materials (as defined in Section 30 ) to the common trash facility or any other area in the Project. Subject to Section 13 hereof, Tenant, at its expense, shall repair, replace and maintain all portions of the Premises, including, without limitation, entries, doors, ceilings, interior windows, interior walls, and the interior side of demising walls in the condition the same are in on the Commencement Date, reasonable wear and tear and damage by casualty excepted. Such repair and replacement may include capital expenditures and repairs whose benefit may extend beyond the Term. Should Tenant fail to make any such repair or replacement or fail to maintain the Premises, Landlord shall give Tenant notice of such failure. If Tenant fails to commence cure of such failure within 10 days of Landlord’s notice, and thereafter diligently prosecute such cure to completion, Landlord may perform such work and shall be reimbursed by Tenant within 10 days after demand therefor; provided, however, that if such failure by Tenant creates or could reasonably be expected to create an emergency, Landlord may immediately commence cure of such failure and shall thereafter be entitled to recover the costs of such cure from Tenant. Subject to Sections 17 and 18 , Tenant shall bear the full uninsured cost of any repair or replacement to any part of the Project that results from damage caused by Tenant or any Tenant Party and any repair that benefits only the Premises.

 

15.                                Mechanic’s Liens . Tenant shall discharge, by bond or otherwise, any mechanic’s lien filed against the Premises or against the Building, Property or Project for work claimed to have been done for, or materials claimed to have been furnished to, Tenant within 10 business days after written notice is delivered to Tenant of the filing thereof, at Tenant’s sole cost and shall otherwise keep the Premises and

 

***Confidential Treatment Requested***

 

16



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

the Building, Property and Project free from any liens arising out of work performed, materials furnished or obligations incurred by Tenant. Should Tenant fail to discharge any lien described herein, Landlord shall have the right, but not the obligation, to pay such claim or post a bond or otherwise provide security to eliminate the lien as a claim against title to the Building, Property or Project and the cost thereof shall be immediately due from Tenant as Additional Rent within 5 days of demand therefor. If Tenant shall lease or finance the acquisition of office equipment, furnishings, or other personal property of a removable nature utilized by Tenant in the operation of Tenant’s business, Tenant warrants that any Uniform Commercial Code Financing Statement filed as a matter of public record by any lessor or creditor of Tenant will upon its face or by exhibit thereto indicate that such Financing Statement is applicable only to removable personal property of Tenant located within the Premises. In no event shall the address of the Building or Project be furnished on the statement without qualifying language as to applicability of the lien only to removable personal property, located in an identified suite held by Tenant.

 

16.                                Indemnification . Subject to the penultimate paragraph of Section 17 , Tenant hereby indemnifies, and agrees to defend, save and hold Landlord and Landlord’s members, shareholders, partners, officers, directors, managers, employees, agents, contractors, constituent entities, lease signators, successors and assigns harmless from and against any and all Claims for injury or death to persons or damage to property occurring within or about the Premises, Building or Project, arising directly or indirectly out of: (a) the conduct of Tenant’s business or the use or occupancy of the Premises, Building or Project by Tenant or any Tenant Party (including without limitation any act, omission or neglect by Tenant or any Tenant Party), except to the extent caused by the willful misconduct or negligence of Landlord, or (b) a breach or default by Tenant in the performance of any of its obligations hereunder. In the event that any provision of this Lease expressly conflicts with the requirements of M.G.L. Chapter 186, Section 15, the provisions of said statute shall govern to the extent of such conflict. Landlord shall not be liable to Tenant for, and Tenant assumes all risk of damage to, personal property (including, without limitation, loss of records kept within the Premises). Tenant further hereby irrevocably waives any and all Claims for injury to Tenant’s business or loss of income relating to any such damage or destruction of personal property (including, without limitation, any loss of records). Landlord shall not be liable for any damages arising from any act, omission or neglect of any tenant in the Project or of any other third party.

 

17.                                Insurance . Landlord shall maintain all risk property and, if applicable, sprinkler damage insurance covering the full replacement cost of the Building. Landlord shall further procure and maintain commercial general liability insurance with a single loss limit of not less than $2,000,000 for bodily injury and property damage with respect to the Project. Landlord may, but is not obligated to, maintain such other insurance and additional coverages as it may deem necessary, including, but not limited to, flood, environmental hazard and earthquake, loss or failure of building equipment, errors and omissions, rental loss during the period of repair or rebuilding, workers’ compensation insurance and fidelity bonds for employees employed to perform services and insurance for any improvements installed by Tenant or which are in addition to the standard improvements customarily furnished by Landlord without regard to whether or not such are made a part of the Project. All such insurance shall be included as part of the Operating Expenses. The Building and Property may be included in a blanket policy (in which case the cost of such insurance allocable to the Building and Property will be determined by Landlord based upon the insurer’s cost calculations,). Tenant shall also reimburse Landlord for any increased premiums or additional insurance which Landlord reasonably deems necessary as a result of Tenant’s use of the Premises.

 

Tenant, at its sole cost and expense, shall maintain during the Term: ail risk property insurance with business interruption and extra expense coverage, covering the full replacement cost of all property and improvements installed or placed in the Premises by Tenant at Tenant’s expense; workers’ compensation insurance with no less than the minimum limits required by law; employer’s liability insurance with such limits as required by law; and commercial general liability insurance, with a minimum limit of not less than $4,000,000 per occurrence for bodily injury and property damage with respect to the Premises (which coverage amount may be satisfied through a “blanket policy” with an aggregate per location endorsement which specifically provides that the amount of insurance shall not be prejudiced by other losses covered by the policy). The commercial general liability insurance policy shall name

 

***Confidential Treatment Requested***

 

17



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

Landlord, its officers, directors, employees, managers, agents, invitees, contractors, constituent entities and lease signators (collectively, “ Landlord Parties ”) and Alexandria Real Estate Equities, Inc., as additional insureds. The commercial general liability policy of Tenant shall insure on an occurrence and not a claims-made basis; shall be issued by insurance companies which have a rating of not less than policyholder rating of A and financial category rating of at least Class X in “Best’s Insurance Guide”; shall not be cancelable for nonpayment of premium unless at least 10 days prior written notice shall have been given to Landlord; contain a hostile fire endorsement and a contractual liability endorsement; and provide primary coverage to Landlord (any policy issued to Landlord providing duplicate or similar coverage shall be deemed excess over Tenant’s policies). Certificates of insurance showing the limits of coverage required hereunder and showing each of Landlord, Alexandria Real Estate Equities, Inc. and the Landlord Parties designated by Landlord as an additional insured, along with reasonable evidence of the payment of premiums for the applicable period, shall be delivered to Landlord by Tenant upon commencement of the Term and upon each renewal of said insurance. Tenant’s policy may be a “blanket policy” with an aggregate per location endorsement which specifically provides that the amount of insurance shall not be prejudiced by other losses covered by the policy. Tenant shall, at least 5 days prior to the expiration of such policies, furnish Landlord with renewal certificates.

 

In each instance where insurance is to name Landlord as an additional insured, Tenant shall upon written request of Landlord also designate and furnish certificates so evidencing Landlord as additional insured to: (i) any lender of Landlord holding a security interest in the Building, Property or Project or any portion thereof and any servicer in connection therewith, (ii) the landlord under any lease wherein Landlord is tenant of the real property on which the Building, Property or Project is located, if the interest of Landlord is or shall become that of a tenant under a ground or other underlying lease rather than that of a fee owner, and/or (iii) any management company retained by Landlord to manage the Project.

 

The property insurance obtained by Landlord and Tenant shall include a waiver of subrogation by the insurers and all rights based upon an assignment from its insured, against Landlord or Tenant, and their respective officers, directors, employees, managers, agents, invitees and contractors (“ Related Parties ’’), in connection with any loss or damage thereby insured against. Notwithstanding anything in this Lease to the contrary, neither party nor its respective Related Parties shall be liable to the other for loss or damage caused by any risk insured against (or required to be insured against pursuant to this Lease) under property insurance required to be maintained hereunder, and each party waives any claims against the other party, and its respective Related Parties, for such loss or damage. Without limiting the foregoing, such waiver shall apply to the obligations of Tenant to indemnify, hold harmless and defend under Section 16 with respect to losses insured against (or required to be insured against) by property insurance required to be maintained hereunder. The failure of a party to insure its property shall not void this waiver. Landlord and its respective Related Parties shall not be liable for, and Tenant hereby waives all claims against such parties for, business interruption and losses occasioned thereby sustained by Tenant or any person claiming through Tenant resulting from any accident or occurrence in or upon the Premises, Building, Property or Project from any cause whatsoever. If the foregoing waivers shall contravene any law with respect to exculpatory agreements, the liability of Landlord or Tenant shall be deemed not released but shall be secondary to the other’s insurer.

 

Landlord may require insurance policy limits to be raised to conform with requirements of Landlord’s lender and/or to bring coverage limits to levels then being generally required of new tenants within the Project.

 

18.                                Restoration . If, at any time during the Term, the Building or the Premises are damaged or destroyed by a fire or other insured casualty, Landlord shall notify Tenant within 60 days after discovery of such damage as to the amount of time Landlord reasonably estimates it will take to restore the Building or the Premises, as applicable (the “ Restoration Period ”). If the Restoration Period is estimated to exceed 12 months (the “ Maximum Restoration Period ”), Landlord may, in such notice, elect to terminate this Lease as of the date that is 75 days after the date of discovery of such damage or destruction; provided , however , that notwithstanding Landlord’s election to restore, Tenant may elect to terminate this Lease by written notice to Landlord delivered within 5 business days of receipt of a notice

 

***Confidential Treatment Requested***

 

18



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

from Landlord estimating a Restoration Period for the Premises longer than the Maximum Restoration Period. Unless Landlord or Tenant so elects to terminate this Lease, Landlord shall, subject to receipt of sufficient insurance proceeds (with any deductible to be treated as a current Operating Expense), promptly restore the Premises (excluding the improvements installed by Tenant or by Landlord and paid for by Tenant except to the extent to which Landlord receives insurance proceeds for the restoration of improvements from the insurance required to be maintained under Section 17 ), in which case such improvements shall be included as part of Landlord’s restoration), subject to delays arising from the collection of insurance proceeds, from Force Majeure events or as needed to obtain any license, clearance or other authorization of any kind required to enter into and restore the Premises issued by any Governmental Authority having jurisdiction over the use, storage, handling, treatment, generation, release, disposal, removal or remediation of Hazardous Materials (as defined in Section 30 ) in, on or about the Premises (collectively referred to herein as “ Hazardous Materials Clearances ”); provided , however , that if repair or restoration of the Premises is not substantially complete as of the end of the Maximum Restoration Period or, if longer, the Restoration Period, Landlord may, in its sole and absolute discretion, elect not to proceed with such repair and restoration, or Tenant may by written notice to Landlord delivered within 10 business days of the expiration of the Maximum Restoration Period, or if longer, the Restoration Period, elect to terminate this Lease, in either of which events Landlord shall be relieved of its obligation to make such repairs or restoration and this Lease shall terminate as of the date that is 75 days after the later of: (i) discovery of such damage or destruction, or (ii) the date all required Hazardous Materials Clearances are obtained, but Landlord shall retain any Rent paid and the right to any Rent payable by Tenant prior to such election by Landlord or Tenant.

 

Tenant, at its expense, following the date that Landlord makes the Premises available to Tenant for Tenant’s repairs or restoration, shall promptly perform, subject to delays arising from the collection of insurance proceeds, from Force Majeure (as defined in Section 34 ) events or to obtain Hazardous Materials Clearances, all Alterations and other improvements installed by Tenant or by Landlord and paid for by Tenant (except to the extent covered by insurance required to be maintained by Landlord pursuant to Section 17 , in which case such Improvements shall be included as part of Landlord’s restoration, subject to the terms of this Section 18 ). Promptly upon the substantial completion of such Alterations and other improvements, Tenant shall reenter the Premises and commence doing business in accordance with this Lease. Notwithstanding the foregoing, Landlord or Tenant may terminate this Lease if the Premises are damaged during the last year of the Term and Landlord reasonably estimates that it will take more than 2 months to repair such damage; provided, however, that such notice is delivered within 10 business days after the date that Landlord delivers notice to Tenant of the estimated Restoration Period. Notwithstanding anything to the contrary contained in this Lease, Landlord shall also have the right to terminate this Lease if insurance proceeds are not available for such restoration, provided that such unavailability of insurance proceeds is not the result of Landlord’s failure to maintain the insurance policies required to be maintained by Landlord under Section 17 . Rent shall be abated from the date all required Hazardous Materials Clearances are obtained until the Premises are repaired and restored, in the proportion which the area of the Premises, if any, which is not usable by Tenant bears to the total area of the Premises, unless Landlord provides Tenant with other space during the period of repair that is suitable for the temporary conduct of Tenant’s business. In the event that no Hazardous Materials Clearances are required to be obtained with respect to such fire or other casualty, the rent abatement shall commence as of the date of discovery of the damage or destruction. Such abatement shall be the sole remedy of Tenant, and except as provided in this Section 18 , Tenant waives any right to terminate the Lease by reason of damage or casualty loss.

 

The provisions of this Lease, including this Section 18 , constitute an express agreement between Landlord and Tenant with respect to any and all damage to, or destruction of, all or any part of the Premises, or any other portion of the Building, Property or Project, and any statute or regulation which is now or may hereafter be in effect shall have no application to this Lease or any damage or destruction to all or any part of the Premises or any other portion of the Building, Property or Project, the parties hereto expressly agreeing that this Section 18 sets forth their entire understanding and agreement with respect to such matters.

 

***Confidential Treatment Requested***

 

19



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

19.                                Condemnation . If the whole or any material part of the Premises, Building or Property is taken for any public or quasi-public use under governmental law, ordinance, or regulation, or by right of eminent domain, or by private purchase in lieu thereof (a “ Taking ” or “ Taken ”), and the Taking would in Landlord’s reasonable judgment materially interfere with or impair Landlord’s ownership or operation of the Building or Property, or would in the reasonable judgment of Landlord and Tenant either prevent or materially interfere with Tenant’s use of the Premises (as resolved, if the parties are unable to agree, by arbitration by a single arbitrator with the qualifications and experience appropriate to resolve the matter and appointed pursuant to and acting in accordance with the rules of the American Arbitration Association), then upon written notice by Landlord or Tenant to the other this Lease shall terminate and Rent shall be apportioned as of said date. If part of the Premises shall be Taken, and this Lease is not terminated as provided above, Landlord shall promptly restore the Premises and the Building and Property as nearly as is commercially reasonable under the circumstances to their condition prior to such partial Taking and the rentable square footage of the Building, the rentable square footage of the Premises, Tenant’s Share of Operating Expenses, the Building’s Share of Project and the Rent payable hereunder during the unexpired Term shall be reduced to such extent as may be fair and reasonable under the circumstances. Upon any such Taking, Landlord shall be entitled to receive the entire price or award from any such Taking without any payment to Tenant, and Tenant hereby assigns to Landlord Tenant’s interest, if any, in such award. Tenant shall have the right, to the extent that same shall not diminish Landlord’s award, to make a separate claim against the condemning authority (but not Landlord) for such compensation as may be separately awarded or recoverable by Tenant for moving expenses and damage to Tenant’s trade fixtures, if a separate award for such items is made to Tenant. Tenant hereby waives any and all rights it might otherwise have pursuant to any provision of state law to terminate this Lease upon a partial Taking of the Premises, Building, Property or Project.

 

20.                                Events of Default . Each of the following events shall be a material default (“ Default ”) by Tenant under this Lease:

 

(a)                                  Payment Defaults . Tenant shall fail to pay any installment of Rent or any other payment hereunder when due; provided, however, that Landlord will give Tenant notice and an opportunity to cure any failure to pay Rent within 5 business days of any such notice not more than twice in any 12 month period and Tenant agrees that such notice shall be in lieu of and not in addition to, or shall be deemed to be, any notice required by law.

 

(b)                                  Insurance . Any insurance required to be maintained by Tenant pursuant to this Lease shall be canceled or terminated or shall expire or shall be reduced or materially changed, or Landlord shall receive a notice of nonrenewal of any such insurance and Tenant shall fail to obtain replacement insurance before the expiration of the current coverage.

 

(c)                                   Abandonment . Tenant shall abandon the Premises, provided that Tenant shall not be deemed to have abandoned the Premises if (i) Tenant provides Landlord with reasonable advance notice prior to vacating and, at the time of vacating the Premises, Tenant has completed Tenant’s obligations with respect to the Surrender Plan in compliance with Section 28 , (ii) Tenant has made reasonable arrangements with Landlord for the security of the Premises for the balance of the Term, and (iii) Tenant continues during the balance of the Term to satisfy all of its obligations under the Lease as they come due.

 

(d)                                  Improper Transfer . Tenant shall assign, sublease or otherwise transfer or attempt to transfer all or any portion of Tenant’s interest in this Lease or the Premises except as expressly permitted herein, or Tenant’s interest in this Lease shall be attached, executed upon, or otherwise judicially seized and such action is not released within 90 days of the action.

 

(e)                                   Liens . Tenant shall fail to discharge or otherwise obtain the release of any lien placed upon the Premises in violation of this Lease within the time period required pursuant to Section 15 of this Lease.

 

***Confidential Treatment Requested***

 

20


 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

(f)             Insolvency Events . Tenant or any guarantor or surety of Tenant’s obligations hereunder shall: (A) make a general assignment for the benefit of creditors; (B) commence any case, proceeding or other action seeking to have an order for relief entered on its behalf as a debtor or to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, liquidation, dissolution or composition of it or its debts or seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or of any substantial part of its property (collectively a “ Proceeding for Relief ”); (C) become the subject of any Proceeding for Relief which is not dismissed within 90 days of its filing or entry; or (D) die or suffer a legal disability (if Tenant, guarantor, or surety is an individual) or be dissolved or otherwise fail to maintain its legal existence (if Tenant, guarantor or surety is a corporation, partnership or other entity).

 

(g)            Estoppel Certificate or Subordination Agreement . Tenant fails to execute any document required from Tenant under Sections 23 or 27 within 5 days after a second notice requesting such document.

 

(h)            Other Defaults . Tenant shall fail to comply with any provision of this Lease other than those specifically referred to in this Section 20 , and, except as otherwise expressly provided herein, such failure shall continue for a period of 30 days after written notice thereof from Landlord to Tenant.

 

Any notice given under Section 20(h)  hereof shall: (i) specify the alleged default, (ii) demand that Tenant cure such default, (iii) be in lieu of, and not in addition to, or shall be deemed to be, any notice required under any provision of applicable law, and (iv) not be deemed a forfeiture or a termination of this Lease unless Landlord elects otherwise in such notice; provided that if the nature of Tenant’s default pursuant to Section 20(h)  is such that it cannot be cured by the payment of money and reasonably requires more than 30 days to cure, then Tenant shall not be deemed to be in default if Tenant commences such cure within said 30 day period and thereafter diligently prosecutes the same to completion; provided , however , that such cure shall be completed no later than 90 days from the date of Landlord’s notice.

 

21.           Landlord’s Remedies .

 

(a)            Payment By Landlord; Interest . Upon a Default by Tenant hereunder, Landlord may, without waiving or releasing any obligation of Tenant hereunder, make such payment or perform such act. All sums so paid or incurred by Landlord, together with interest thereon, from the date such sums were paid or incurred, at the annual rate equal to 12% per annum or the highest rate permitted by law (the “Default Rate”), whichever is less, shall be payable to Landlord on demand as Additional Rent. Nothing herein shall be construed to create or impose a duty on Landlord to mitigate any damages resulting from Tenant’s Default hereunder.

 

(b)            Late Payment Rent . Late payment by Tenant to Landlord of Rent and other sums due will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult and impracticable to ascertain. Such costs include, but are not limited to, processing and accounting charges and late charges which may be imposed on Landlord under any Mortgage covering the Premises. Therefore, if any installment of Rent due from Tenant is not received by Landlord within 5 days after the date such payment is due, Tenant shall pay to Landlord an additional sum of 6% of the overdue Rent as a late charge. Notwithstanding the foregoing, before assessing a late charge the first time in any calendar year, Landlord shall provide Tenant written notice of the delinquency and will waive the right if Tenant pays such delinquency within 5 days thereafter. The parties agree that this late charge represents a fair and reasonable estimate of the costs Landlord will incur by reason of late payment by Tenant. In addition to the late charge, Rent not paid when due shall bear interest at the Default Rate from the 5th day after the date due until paid.

 

(c)            Remedies . Upon the occurrence of a Default, Landlord, at its option, without further notice or demand to Tenant, shall have in addition to all other rights and remedies provided in this Lease, at law or in equity, the option to pursue any one or more of the following remedies, each and all of which shall be cumulative and nonexclusive, without any notice or demand whatsoever (except as otherwise expressly provided in Section 21fc)(v) with respect to Landlord’s Lump Sum Election). No cure

 

***Confidential Treatment Requested***

 

21



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

in whole or in part of such Default by Tenant after Landlord has taken any action beyond giving Tenant notice of such Default to pursue any remedy provided for herein (including retaining counsel to file an action or otherwise pursue any remedies) shall in any way affect Landlord’s right to pursue such remedy or any other remedy provided Landlord herein or under law or in equity, unless Landlord, in its sole discretion, elects to waive such Default.

 

(i)             This Lease and the Term and estate hereby granted are subject to the limitation that whenever a Default shall have happened and be continuing, Landlord shall have the right, at its election, then or thereafter while any such Default shall continue and notwithstanding the fact that Landlord may have some other remedy hereunder or at law or in equity, to give Tenant written notice of Landlord’s intention to terminate this Lease on a date specified in such notice, which date shall be not less than 5 days after the giving of such notice, and upon the date so specified, this Lease and the estate hereby granted shall expire and terminate with the same force and effect as if the date specified in such notice were the date hereinbefore fixed for the expiration of this Lease, and all rights of Tenant hereunder shall expire and terminate, and Tenant shall be liable as hereinafter in this Section 21(c)  provided. If any such notice is given, Landlord shall have, on such date so specified, the right of re-entry and possession of the Premises and the right to remove all persons and property therefrom and to store such property in a warehouse or elsewhere at the risk and expense, and for the account, of Tenant. Should Landlord elect to re-enter as herein provided or should Landlord take possession pursuant to legal proceedings or pursuant to any notice provided for by law, Landlord may, subject to Section 21(c)(ii)  from time to time re-let the Premises or any part thereof for such term or terms and at such rental or rentals and upon such terms and conditions as Landlord may deem advisable, with the right to make commercially reasonable alterations in and repairs to the Premises.

 

(ii)            Landlord shall be deemed to have satisfied any obligation to mitigate its damages by hiring an experienced commercial real estate broker to market the Premises and directing such broker to advertise and show the Premises to prospective tenants.

 

(iii)           In the event of any termination of this Lease as in this Section 21 provided or as required or permitted by law or in equity, Tenant shall forthwith quit and surrender the Premises to Landlord, and Landlord may, without further notice, enter upon, re-enter, possess and repossess the same by summary proceedings, ejectment or otherwise, and again have, repossess and enjoy the same free of any rights of Tenant, and in any such event Tenant and no person claiming through or under Tenant by virtue of any law or an order of any court shall be entitled to possession or to remain in possession of the Premises.

 

(iv)           If this Lease is terminated or if Landlord shall re-enter the Premises as aforesaid, or in the event of the termination of this Lease, or of re-entry, by or under any proceeding or action or any provision of law by reason of a Default by Tenant, Tenant covenants and agrees forthwith to pay and be liable for, on the days originally fixed in this Lease for the payment thereof, amounts equal to the installments of Base Rent and all Additional Rent as they would, under the terms of this Lease become due if this Lease had not been terminated or if Landlord had not entered or re-entered, as aforesaid, and whether the Premises be relet or remain vacant, in whole or in part, or for a period less than the remainder of the Term, or for the whole thereof, but in the event that the Premises be relet by Landlord, Tenant shall be entitled to a credit in the net amount of rent and other charges received by Landlord in reletting, after deduction of all of Landlord’s expenses incurred in reletting the Premises (including, without limitation, tenant improvement, demising and remodeling costs, brokerage fees and the like), and in collecting the rent in connection therewith, in the following manner: Amounts received by Landlord after reletting, if any, shall first be applied against such Landlord’s expenses, until the same are recovered, and until such recovery, Tenant shall pay, as of each day

 

***Confidential Treatment Requested***

 

22



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

when a payment would fall due under this Lease, the amount which Tenant is obligated to pay under the terms of this Lease (Tenant’s liability prior to any such reletting and such recovery by Landlord no in any way to be diminished as a result of the fact that such reletting might be for a rent higher than the rent provided for in this Lease); when and if such expenses have been completely recovered by Landlord, the amounts received from reletting by Landlord as have not previously been applied shall be credited against Tenant’s obligations as of each day when a payment would fall due under this Lease, and only the net amount thereof shall be payable by Tenant. Further, Tenant shall not be entitled to any credit of any kind for any period after the date when the Term of this Lease is scheduled to expire according to its terms.

 

Actions, proceedings or suits for the recovery of damages, whether liquidated or other damages, under this Lease, or any installments thereof, may be brought by Landlord from time to time at its election, and nothing contained herein shall be deemed to require Landlord to postpone suit until the date when the Term of this Lease would have expired if it had not been terminated hereunder. In addition to other rights, remedies and damages provided in this Lease or at law or in equity, at any time and from time to time following the occurrence of a Default, whether or not this Lease is terminated as aforesaid, Landlord shall be entitled to recover all Base Rent, Additional Rent and other amounts payable to Tenant under this Lease then due or accrued and unpaid.

 

(v)            In addition, Landlord, at its election, notwithstanding any other provision of this Lease, by written notice to Tenant (the “ Lump Sum Election ”), shall be entitled to recover from Tenant, as and for liquidated damages, at any time following any termination of this Lease, a lump sum payment representing, at the time of Landlord’s written notice of its Lump Sum Election, the sum of:

 

(A)           the then present value (calculated in accordance with accepted financial practice using as the discount rate the yield to maturity on United States Treasury Notes as set forth below) of the amount of unpaid Base Rent and Additional Rent that would have been payable pursuant to this Lease for the remainder of the Term following Landlord’s Lump Sum Election if this Lease had not been terminated, and

 

(B)           all other damages and expenses (including attorneys’ fees and expenses), if any, which Landlord shall have sustained by reason of the breach of any provision of this Lease; less

 

(C)           the then present value (calculated in accordance with accepted financial practice using as the discount rate the yield to maturity on United States Treasury Notes as set forth below) of the aggregate net fair market rent plus additional charges payable for the Premises for the remainder of the Term following Landlord’s Lump Sum Election, calculated as of the date of Landlord’s Lump Sum Election, and taking into account reasonable estimates of the future costs to relet any then vacant portions of the Premises (except to the extent that Tenant has actually paid such costs pursuant to this Section 21 ) in order to calculate the net rental revenue that Landlord may expect to obtain for the Premises for the balance of the Term (it being understood that the subtraction of the amounts determined in this paragraph (C) from the then present value of Base Rent and Additional Rent that would have been payable pursuant to this Lease for the remainder of the Term as determined in paragraph (A) shall not be deemed to result in an amount less than zero).

 

Landlord’s recovery under its Lump Sum Election shall be in addition to Tenant’s obligations to pay, and Landlord’s right to recover from Tenant, all Base Rent and Additional Rent due and costs incurred prior to the date of Landlord’s Lump Sum

 

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Election, and shall be in lieu of any Base Rent and Additional Rent which would otherwise have been due under this Section from and after the date of Landlord’s Lump Sum Election. The yield to maturity on United States Treasury Notes having a maturity date that is nearest the date that would have been the last day of the Term of the Lease, as reported in The Wall Street Journal or a comparable publication if it ceases to publish such yields, shall be used in calculating present values for purposes of Landlord’s Lump Sum Election. For the purposes of this Section, if Landlord makes the Lump Sum Election to recover liquidated damages in accordance with this Section, the total Additional Rent shall be computed based upon Landlord’s reasonable estimate of Tenant’s Share of Operating Expenses and other Additional Rent for each 12-month period in what would have been the remainder of the Term of the Lease and any part thereof at the end of such remainder of the Term, but in no event less than the amounts therefor payable for the twelve (12) calendar months (or if less than twelve (12) calendar months have elapsed since the date hereof, the partial year) immediately preceding the date of Landlord’s Lump Sum Election. Amounts of Tenant’s Share of Operating Expenses and any other Additional Rent for any partial year at the beginning of the Term or at the end of what would have been the remainder of the Term shall be prorated.

 

(vi)           Nothing herein contained shall limit or prejudice the right of Landlord, in any bankruptcy or insolvency proceeding, to prove for and obtain as liquidated damages by reason of such termination an amount equal to the maximum allowed by any bankruptcy or insolvency proceedings, or to prove for and obtain as liquidated damages by reason of such termination, an amount equal to the maximum allowed by any statute or rule of law, whether such amount shall be greater or less than the excess referred to above.

 

(vii)          Nothing in this Section 21 shall be deemed to affect the right of either party to indemnifications pursuant to this Lease.

 

(viii)         If Landlord terminates this Lease upon the occurrence of a Default, Tenant will quit and surrender the Premises to Landlord or its agents, and Landlord may, without further notice, enter upon, re-enter and repossess the Premises by summary proceedings, ejectment or otherwise. The words “enter”, “re-enter”, and “re-entry” are not restricted to their technical legal meanings.

 

(ix)           If either party shall be in default in the observance or performance of any provision of this Lease, and an action shall be brought for the enforcement thereof in which it shall be determined that such party was in default, the party in default shall pay to the other party all reasonable, out of pocket fees, costs and other expenses which may become payable as a result thereof or in connection therewith, including reasonable attorneys’ fees and expenses.

 

(x)            If Tenant shall default in the keeping, observance or performance of any covenant, agreement, term, provision or condition herein contained, Landlord, without thereby waiving such default, may perform the same for the account and at the expense of Tenant (a) immediately or at any time thereafter and with only such notice, if any, as may be practicable under the circumstances in the case of an emergency or in case such default will result in a violation of any legal or insurance requirements, or in the imposition of any lien against all or any portion of the Premises or the Project not discharged, released or bonded over to Landlord’s satisfaction by Tenant within the time period required pursuant to Section 15 of this Lease, and (b) in any other case if such default continues after any applicable notice and cure period provided in Section 20 . All reasonable costs and expenses incurred by Landlord in connection with any such performance by it for the account of Tenant and also all reasonable costs and expenses, including attorneys’ fees and disbursements incurred by Landlord in any action or proceeding (including any summary dispossess proceeding) brought by Landlord to

 

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enforce any obligation of Tenant under this Lease and/or right of Landlord in or to the Premises, shall be paid by Tenant to Landlord within 10 days after demand.

 

(xi)           Independent of the exercise of any other remedy of Landlord hereunder or under applicable law, Landlord may conduct an environmental test of the Premises as generally described in Section 30(c) , at Tenant’s expense, to the extent provided in Section 30(c) .

 

(xii)          In addition to any other right or remedy hereunder, upon the occurrence of a Default, Landlord shall have the right to suspend funding of any Tl Allowance or the performance of Landlord’s Work (and such suspension shall constitute a Tenant Delay).

 

(xiii)         In the event that Tenant is in breach or Default under this Lease, whether or not Landlord exercises its right to terminate or any other remedy, Tenant shall reimburse Landlord within 15 days of demand for any out of pocket costs and expenses that Landlord may incur in connection with any such breach or Default, as provided in this Section 21(c) . Such costs shall include reasonable legal fees and costs incurred for the negotiation of a settlement, enforcement of rights or otherwise. Tenant shall also indemnify Landlord against and hold Landlord harmless from all costs, expenses, demands and liability, including without limitation, reasonable legal fees and costs Landlord shall incur if Landlord shall become or be made a party to any claim or action instituted by Tenant against any third party, by any third party against Tenant or by or against any person holding any interest under or using the Premises by license of or agreement with Tenant.

 

(xiv)         Except as otherwise provided in this Section 21 , no right or remedy herein conferred upon or reserved to Landlord is intended to be exclusive of any other right or remedy, and every right and remedy shall be cumulative and in addition to any other legal or equitable right or remedy given hereunder, or now or hereafter existing. No waiver of any provision of this Lease shall be deemed to have been made unless expressly so made in writing expressly waiving such provision. Landlord shall be entitled, to the extent permitted by law, to seek injunctive relief in case of the violation, or attempted or threatened violation, of any provision of this Lease, or to seek a decree compelling observance or performance of any provision of this Lease, or to seek any other legal or equitable remedy. Notwithstanding any contrary provision of this Lease, Tenant shall not be liable to Landlord for any indirect, special or consequential damages, arising from a default by Tenant under this Lease; provided that this sentence shall not apply to Landlord’s damages (x) as expressly provided for in Section 8 , and/or (y) in connection with Tenant’s obligations as more fully set forth in Section 30 .

 

22.           Assignment and Subletting .

 

(a)            General Prohibition . Without Landlord’s prior written consent, which shall not be unreasonably withheld, subject to and on the conditions described in this Section 22 , Tenant shall not, directly or indirectly, voluntarily or by operation of law, assign this Lease or sublease the Premises or any part thereof or mortgage, pledge, or hypothecate its leasehold interest or grant any concession or license within the Premises, and any attempt to do any of the foregoing shall be void and of no effect. If Tenant is a corporation, partnership or limited liability company, the shares or other ownership interests thereof which are not actively traded upon a stock exchange or in the over-the-counter market, a transfer or series of transfers whereby 50% or more of the issued and outstanding shares or other ownership interests of such corporation are, or voting control is, transferred (but excepting transfers upon deaths of individual owners) from a person or persons or entity or entities which were owners thereof at time of execution of this Lease to persons or entities who were not owners of shares or other ownership interests of the corporation, partnership or limited liability company at time of execution of this Lease, shall be deemed an assignment of this Lease requiring the consent of Landlord as provided in this Section 22 . Notwithstanding the foregoing, Tenant shall have the right to (x) obtain financing from institutional or

 

***Confidential Treatment Requested***

 

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individual investors (including venture capital funding and corporate partners) which regularly invest in private biotechnology companies, (y) undergo a public offering, or (z) if Tenant is a public company, transfer shares of Tenant effected through any recognized exchange or through the “over the counter” market, any of which results in a change in control of Tenant without such change of control constituting an assignment under this Section 22 requiring Landlord consent, provided that (i) Tenant notifies Landlord in writing of the financing at least 5 business days prior to the closing of the financing, and (ii) provided that in no event shall such financing result in a change in use of the Premises from the use contemplated by Tenant at the commencement of the Term.

 

The reasons for Landlord’s reasonable withholding of consent shall include but not be limited to: (A) the business or financial reputation of the proposed assignee or sublessee, or the business or financial reputation of any of the respective principals or officers thereof, is objectionable in Landlord’s judgment, (B) the proposed assignee or sublessee is engaged in areas of scientific research or other business concerns that are controversial such that in Landlord’s reasonable judgment they may (i) attract or cause negative publicity for or about the Building or the Project, (ii) negatively affect the reputation of the Building, the Project or Landlord, (iii) attract protestors to the Building or the Project, or (iv) lessen the attractiveness of the Building or the Project to any prospective purchasers or lenders, (C) the proposed use of the Premises by the proposed assignee or sublessee will violate any applicable Legal Requirement, (D) the proposed assignee or sublessee is at that time an occupant of the Project or negotiating with Landlord or an affiliate thereof for the lease of other space in the Project, (E) if the proposed transaction is not a sublease, the proposed assignee does not have a net worth, as of the date of the Transfer, at least equal to the greater of (x) the net worth of Tenant as of the date of the Lease, and (y) the net worth of Tenant immediately prior to the Transfer Date, or otherwise lacks the creditworthiness to support the financial obligations it would incur under the proposed assignment in Landlord’s reasonable judgment, (F) if the proposed transaction is a sublease, the proposed sublessee does not have a creditworthiness, as of the date of transfer, sufficient to support the financial obligations it would incur under the proposed sublease in Landlord’s judgment, (G) the proposed assignee or sublessee is a governmental agency, (H) in Landlord’s judgment the use of the Premises by the proposed assignee or sublessee would entail any alterations that would lessen the value of the leasehold improvements in the Premises, or would require increased services by Landlord, (I) Landlord has experienced previous defaults by or is in litigation with the proposed assignee or sublessee, (J) the proposed assignment or sublease will create a vacancy elsewhere in the Project, or (K) the assignment or sublease is prohibited by the Holder of a Mortgage on the Premises or Project.

 

(b)            Permitted Transfers . If Tenant desires to assign, sublease, hypothecate or otherwise transfer this Lease or sublet the Premises, other than pursuant to Permitted Assignment (as defined below) then at least 15 days, but not more than 45 days, before the date Tenant desires the assignment or sublease to be effective (the “ Assignment Date ”), Tenant shall give Landlord a notice (the “ Assignment Notice ”) containing such information about the proposed assignee or sublessee, including the proposed use of the Premises and any Hazardous Materials proposed to be used, stored handled, treated, generated in or released or disposed of from the Premises, the Assignment Date, any relationship between Tenant and the proposed assignee or sublessee, and all material terms and conditions of the proposed assignment or sublease, including a copy of any proposed assignment or sublease in its final form, and such other information as Landlord may deem reasonably necessary or appropriate to its consideration whether to grant its consent. Landlord may, by giving written notice to Tenant within 15 business days after receipt of the Assignment Notice: (i) grant such consent, (ii) refuse such consent, in its reasonable discretion, subject to the terms and conditions of this Section 22 (provided that Landlord shall further have the right to review and approve or disapprove the proposed form of sublease prior to the effective date of any such subletting), or (iii) if the proposed transaction is a sublease that is not a Permitted Assignment (as defined below) and the subletting concerns (together with all other then effective subleases) 50% or more of the Premises, terminate this Lease with respect to the space described in the Assignment Notice as of the Assignment Date (an “ Assignment Termination ”). If Landlord delivers notice of its election to exercise an Assignment Termination, Tenant shall have the right to withdraw such Assignment Notice by written notice to Landlord of such election within 5 business days after Landlord’s notice electing to exercise the Assignment Termination. If Tenant withdraws such Assignment Notice, this Lease shall continue in full force and effect. If Tenant does not

 

***Confidential Treatment Requested***

 

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withdraw such Assignment Notice, this Lease, and the term and estate herein granted, shall terminate as of the Assignment Date with respect to the space described in such Assignment Notice. No failure of Landlord to exercise any such option to terminate this Lease, or to deliver a timely notice in response to the Assignment Notice, shall be deemed to be Landlord’s consent to the proposed assignment, sublease or other transfer. Tenant shall pay to Landlord a fee equal to Two Thousand Dollars ($2,000) in connection with its consideration of any Assignment Notice and/or its preparation or review of any consent documents.

 

Notwithstanding the foregoing, Tenant shall have the right to assign this Lease or sublease the Premises under this Lease, upon 30 days’ prior written notice to Landlord and without Landlord’s prior written consent, to an entity controlling or controlled by Tenant (a “ Permitted Affiliate Assignment ”); provided , however , that (y) such assignment or subletting is for a bona fide business purpose and not principally for the purpose of transferring the lease, and (z) Landlord shall have the right to approve the form of any such sublease or assignment prior to its execution. In addition, Tenant shall have the right to assign this Lease, upon 30 days prior written notice to Landlord but without obtaining Landlord’s prior written consent and without such assignment being subject to an Assignment Termination, to a corporation or other entity which is a successor-in-interest to Tenant, by way of merger, consolidation or corporate reorganization, or by the purchase of all or substantially all of the assets or the ownership interests of Tenant provided that (i) such merger or consolidation, or such acquisition or assumption, as the case may be, is for a bona fide business purpose and not principally for the purpose of transferring the Lease, and (ii) the net worth (as determined in accordance with GAAP) of the assignee is not less than the net worth (as determined in accordance with GAAP) of Tenant as of the date of Tenant’s most current quarterly or annual financial statements delivered under Section 40(c)  below or filed with the SEC under applicable securities laws, and (iii) such assignee shall agree in writing to assume all of the terms, covenants and conditions of this Lease (a “ Permitted Successor Assignment ”). A Permitted Affiliate Assignment and Permitted Successor Assignment may each be referred to herein as a “ Permitted Assignment ”. For the avoidance of doubt, Landlord shall not have the right to exercise an Assignment Termination with respect to any Permitted Assignment.

 

(c)            Additional Conditions . As a condition to any such assignment or subletting, whether or not Landlord’s consent is required, Landlord may require:

 

(i)             that any assignee or subtenant agree, in writing at the time of such assignment or subletting, that if Landlord gives such party notice that Tenant is in default under this Lease, such party shall thereafter make all payments otherwise due Tenant directly to Landlord, which payments will be received by Landlord without any liability except to credit such payment against those due under the Lease, and any such third party shall agree to attorn to Landlord or its successors and assigns should this Lease be terminated for any reason; provided , however , in no event shall Landlord or its successors or assigns be obligated to accept such attornment; and

 

(ii)            A list of Hazardous Materials, certified by the proposed assignee or sublessee to be true and correct, which the proposed assignee or sublessee intends to use, store, handle, treat, generate in or release or dispose of from the Premises, together with copies of all documents relating to such use, storage, handling, treatment, generation, release or disposal of Hazardous Materials by the proposed assignee or subtenant in the Premises or on the Project, prior to the proposed assignment or subletting, including, without limitation: permits; approvals; reports and correspondence; storage and management plans; plans relating to the installation of any storage tanks to be installed in or under the Project (provided, said installation of tanks shall only be permitted after Landlord has given its written consent to do so, which consent may be withheld in Landlord’s sole and absolute discretion); and all closure plans or any other documents required by any and all federal, state and local Governmental Authorities for any storage tanks installed in, on or under the Project for the closure of any such tanks. Neither Tenant nor any such proposed assignee or subtenant is required, however, to provide Landlord with any portion(s) of the such documents containing information of a

 

***Confidential Treatment Requested***

 

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proprietary nature which, in and of themselves, do not contain a reference to any Hazardous Materials or hazardous activities.

 

(d)            No Release of Tenant, Sharing of Excess Rents . Notwithstanding any assignment or subletting, Tenant and any guarantor or surety of Tenant’s obligations under this Lease shall at all times remain fully and primarily responsible and liable for the payment of Rent and for compliance with all of Tenant’s other obligations under this Lease. If the Rent due and payable by a sublessee or assignee (or a combination of the rental payable under such sublease or assignment plus any bonus or other consideration therefor or incident thereto in any form) exceeds the sum of the rental payable under this Lease, (excluding however, any Rent payable under this Section) and actual and reasonable brokerage fees, legal costs, advertising expenses, free rent or other reasonable concessions and any design or construction fees and tenant improvement costs directly related to and required pursuant to the terms of any such sublease) (“ Excess Rent ”), then Tenant shall be bound and obligated to pay Landlord as Additional Rent hereunder 50% of such Excess Rent within 10 days following receipt thereof by Tenant. If Tenant shall sublet the Premises or any part thereof, Tenant hereby immediately and irrevocably assigns to Landlord, as security for Tenant’s obligations under this Lease, all rent from any such subletting, and Landlord as assignee and as attorney-in-fact for Tenant, or a receiver for Tenant appointed on Landlord’s application, may collect such rent and apply it toward Tenant’s obligations under this Lease; except that, until the occurrence of a Default, Tenant shall have the right to collect such rent.

 

(e)            No Waiver . The consent by Landlord to an assignment or subletting shall not relieve Tenant or any assignees of this Lease or any sublessees of the Premises from obtaining the consent of Landlord to any further assignment or subletting nor shall it release Tenant or any assignee or sublessee of Tenant from full and primary liability under the Lease. The acceptance of Rent hereunder, or the acceptance of performance of any other term, covenant, or condition thereof, from any other person or entity shall not be deemed to be a waiver of any of the provisions of this Lease or a consent to any subletting, assignment or other transfer of the Premises.

 

(f)             Prior Conduct of Proposed Transferee . Notwithstanding any other provision of this Section 22 , if (i) the proposed assignee or sublessee of Tenant has been required by any prior landlord, lender or Governmental Authority to take remedial action in connection with Hazardous Materials contaminating a property, where the contamination resulted from such party’s action or use of the property in question, (ii) the proposed assignee or sublessee is subject to an enforcement order issued by any Governmental Authority in connection with the use, storage, handling, treatment, generation, release or disposal of Hazardous Materials (including, without limitation, any order related to the failure to make a required reporting to any Governmental Authority), or (iii) because of the existence of a pre-existing environmental condition in the vicinity of or underlying the Project, the risk that Landlord would be targeted as a responsible party in connection with the remediation of such pre-existing environmental condition would be materially increased or exacerbated by the proposed use of Hazardous Materials by such proposed assignee or sublessee, Landlord shall have the absolute right to refuse to consent to any assignment or subletting to any such party.

 

23.           Estoppel Certificate . Tenant shall, within 10 business days of written notice from Landlord, execute, acknowledge and deliver a statement in writing in the form of Exhibit G or in any other form reasonably requested by a proposed lender or purchaser, (i) certifying that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification and certifying that this Lease as so modified is in full force and effect) and the dates to which the rental and other charges are paid in advance, if any, (ii) acknowledging, to the best of Tenant’s knowledge, that there are not any uncured defaults on the part of Landlord hereunder, or specifying such defaults if any are claimed, and (iii) setting forth such further information with respect to the status of this Lease or the Premises as may be reasonably requested thereon. Any such statement may be relied upon by any prospective purchaser or encumbrancer of all or any portion of the real property of which the Premises are a part. Tenant’s failure to deliver such statement within such time shall, at the option of Landlord, be conclusive upon Tenant that the Lease is in full force and effect and without modification except as may be represented by Landlord in any certificate prepared by Landlord and delivered to Tenant for execution.

 

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24.           Quiet Enjoyment . So long as Tenant is not in Default under this Lease, Tenant shall, subject to the terms of this Lease, at all times during the Term, have peaceful and quiet enjoyment of the Premises against any person claiming by, through or under Landlord.

 

25.           Prorations . All prorations required or permitted to be made hereunder shall be made on the basis of a 360 day year and 30 day months.

 

26.           Rules and Regulations . Tenant shall, at all times during the Term and any extension thereof, comply with all reasonable rules and regulations (notice of which has been delivered to Tenant) at any time or from time to time established by Landlord covering use of the Premises and the Project or portion thereof of which the Premises are a part. The current rules and regulations are attached hereto as Exhibit E. If there is any conflict between said rules and regulations and other provisions of this Lease, the terms and provisions of this Lease shall control. Landlord shall not have any liability or obligation for the breach of any rules or regulations by other tenants in the Project and shall not enforce such rules and regulations in a discriminatory manner.

 

27.           Subordination .

 

(a)            Subordination, Non-Disturbance and Attornment . This Lease and Tenant’s interest and rights hereunder are hereby made and shall be subject and subordinate at all times to the lien of any Mortgage now existing or hereafter created on or against the Project or the Premises, and all amendments, restatements, renewals, modifications, consolidations, refinancing, assignments and extensions thereof, without the necessity of any further instrument or act on the part of Tenant; provided , however that so long as there is no Default hereunder, Tenant’s right to possession of the Premises shall not be disturbed by the Holder of any such Mortgage. Tenant agrees, at the election of the Holder of any such Mortgage, to attorn to any such Holder. Tenant’s agreement to subordinate this Lease to any future deed of trust or mortgage pursuant to this Section 27 is conditioned upon Landlord delivering to Tenant from the Holder of any such mortgage or deed of trust a commercially reasonable non-disturbance and attornment agreement and Tenant shall not unreasonably withhold, condition or delay its approval of the same. Tenant agrees within 10 business days after demand to execute, acknowledge and deliver such SNDA and such other instruments confirming such subordination, and such instruments of attornment as shall be requested by any such Holder, provided any such instruments contain appropriate non-disturbance provisions assuring Tenant’s quiet enjoyment of the Premises as set forth in Section 24 hereof. Notwithstanding the foregoing, any such Holder may at any time subordinate its Mortgage to this Lease, without Tenant’s consent, by notice in writing to Tenant, and thereupon this Lease shall be deemed prior to such Mortgage without regard to their respective dates of execution, delivery or recording and in that event such Holder shall have the same rights with respect to this Lease as though this Lease had been executed prior to the execution, delivery and recording of such Mortgage and had been assigned to such Holder. The term “ Mortgage ” whenever used in this Lease shall be deemed to include deeds of trust, security assignments, ground leases or other superior leases and any other encumbrances, and any reference to the “ Holder ” of a Mortgage shall be deemed to include the beneficiary under a deed of trust. As of the date of this Lease, there is no existing Mortgage encumbering the Property.

 

(b)            Other Matters . Notwithstanding anything to the contrary herein contained, subject to the provisions of this Section 27 ; (i) nothing in this Section 27 shall affect Tenant’s rights under Section 18 , Section 19 of this Lease, including any termination, abatement or offset rights under such Sections (whether accruing prior to or after any attornment to such mortgagee), and (ii) no holder shall be relieved of its obligations as party-Landlord arising under the Lease from or after the date (“ Succession Date ”) that such Holder first acquires title or possession to the Premises. Tenant agrees that this Lease shall survive the merger of estates of ground (or improvements) lessor and lessee. Until a Holder (either superior or subordinate to this Lease) forecloses Landlord’s equity of redemption (or terminates or succeeds to a new lease in the case of a ground or improvements lease), no Holder shall be liable for failure to perform any of Landlord’s obligations (and such Holder shall thereafter be liable only after it succeeds to and holds Landlord’s interest and then only as limited herein). In the event Tenant alleges that Landlord is in default under any of Landlord’s obligations under this Lease, Tenant agrees to give the

 

***Confidential Treatment Requested***

 

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Holder of any mortgage, by registered mail, a copy of any notice of default that is served upon the Landlord, provided that prior to such notice, Tenant has been notified, in writing of the address of any such holder.

 

(c)            Rent Assignment . If, at any time and from time to time, Landlord assigns this Lease or the Rent payable hereunder to the Holder of any mortgage on the Premises or the Project, or to any other party for the purpose of securing financing (the holder of any such mortgage and any other such financing party are referred to herein as the “ Financing Party ”), whether such assignment is conditional in nature or otherwise, the following provisions shall apply:

 

Except as set forth in clause (ii) below, such assignment to the Financing Party shall not be deemed an assumption by the Financing Party of any obligations of Landlord hereunder unless such Financing Party shall, by written notice to Tenant, specifically otherwise elect;

 

The Financing Party shall be treated as having assumed Landlord’s obligations hereunder (subject to this Section 27 ) only upon foreclosure of its mortgage (or voluntary conveyance by deed in lieu thereof) or the taking of possession of the Premises from and after foreclosure; and

 

The Financing Party shall be responsible for only such breaches under the Lease by Landlord that occur during the period of ownership by the Financing Party after such foreclosure (or voluntary conveyance by deed in lieu thereof) and taking of possession, as aforesaid.

 

Tenant hereby agrees to enter into such reasonable agreements or instruments as may, from time to time, be requested by Landlord in confirmation of the foregoing, subject to the requirements of this Section 27 .

 

(d)            Other Instruments . Where Tenant in this Lease indemnifies or otherwise covenants for the benefit of mortgagees, such agreements are for the benefit of mortgagees as third party beneficiaries; and at the request of Landlord, Tenant from time to time will confirm such matters directly with such Holder.

 

28.           Surrender . Upon the expiration of the Term or earlier termination of Tenant’s right of possession, Tenant shall surrender the Premises to Landlord in the same condition as received, subject to any Alterations or Installations permitted by Landlord to remain in the Premises, free of Hazardous Materials brought upon, kept, used, stored, handled, treated, generated in, or released or disposed of from, the Premises by any person other than Landlord or its officers, directors, employees, managers, agents and contractors (collectively, “ Tenant HazMat Operations ”) and released of all Hazardous Materials Clearances, broom clean, ordinary wear and tear and casualty loss and condemnation covered by Sections 18 and 19 excepted. At least 3 months prior to the surrender of the Premises, Tenant shall deliver to Landlord a narrative description of the actions proposed (or required by any Governmental Authority) to be taken by Tenant in order to surrender the Premises (including any Installations permitted by Landlord to remain in the Premises) at the expiration or earlier termination of the Term, free from any residual impact from the Tenant HazMat Operations and otherwise released for unrestricted use and occupancy (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 any Tenant Party with respect to the Premises, and (ii) all Hazardous Materials used, stored, handled, treated, generated, released or disposed of from the Premises, and shall be subject to the review and approval of Landlord’s environmental consultant. Landlord shall use reasonable efforts to cause Landlord’s environmental consultant to provide Tenant with comments to or approval of, as the case may be, the Surrender Plan within a reasonable time after Tenant delivers the Surrender Plan to Landlord. In connection with the review and approval of the Surrender Plan, upon the request of Landlord, Tenant shall deliver to Landlord or its consultant such additional non-proprietary information concerning Tenant HazMat Operations as Landlord shall request. On or before such surrender, Tenant shall deliver to Landlord evidence that the approved Surrender Plan shall have been satisfactorily completed and Landlord shall have the right, subject to reimbursement at Tenant’s expense as set forth below, to cause Landlord’s environmental consultant to inspect the Premises and perform such additional procedures as may be deemed

 

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reasonably necessary to confirm that the Premises are, as of the effective date of such surrender or early termination of the Lease, free from any residual impact from Tenant HazMat Operations. Tenant shall reimburse Landlord, as Additional Rent, for the actual out-of-pocket expense incurred by Landlord for Landlord’s environmental consultant to review and approve the Surrender Plan and to visit the Premises and verify satisfactory completion of the same, which cost shall not exceed $5,000. Landlord shall have the unrestricted right to deliver such Surrender Plan and any report by Landlord’s environmental consultant with respect to the surrender of the Premises to third parties; provided, however, that Landlord instructs such parties to treat the same as confidential. Tenant may redact Tenant’s proprietary and confidential information pertaining to Tenant’s HazMat Operations from the Surrender Plan.

 

If Tenant shall fail to prepare or submit a Surrender Plan approved by Landlord, or if Tenant shall fail to complete the approved Surrender Plan, or if such Surrender Plan, whether or not approved by Landlord, shall fail to adequately address any residual effect of Tenant HazMat Operations in, on or about the Premises, Landlord shall have the right to take such actions as Landlord may deem reasonable or appropriate to assure that the Premises and the Project are surrendered free from any residual impact from Tenant HazMat Operations, the actual cost of which actions shall be reimbursed by Tenant as Additional Rent, without regard to the limitation set forth in the first paragraph of this Section 28 .

 

Upon the expiration or earlier termination of the Term, Tenant shall immediately return to Landlord all keys and/or access cards to parking, the Building, restrooms or all or any portion of the Premises, Building or Project furnished to or otherwise procured by Tenant. If any such access card or key is lost, Tenant shall pay to Landlord, at Landlord’s election, either the cost of replacing such lost access card or key or the cost of reprogramming the access security system in which such access card was used or changing the lock or locks opened by such lost key. Any of Tenant’s personal property, Tenant’s Property listed on Exhibit F , Alterations and other property of Tenant not so removed by Tenant as permitted or required herein shall be deemed abandoned and may be stored, removed, and disposed of by Landlord at Tenant’s expense, and Tenant waives all claims against Landlord for any damages resulting from Landlord’s retention and/or disposition of such property. All obligations of Tenant hereunder not fully performed as of the termination of the Term, including the obligations of Tenant under Section 30 hereof, shall survive the expiration or earlier termination of the Term, including, without limitation, indemnity obligations, payment obligations with respect to Rent and obligations concerning the condition and repair of the Premises.

 

29.           Waiver of Jury Trial . TENANT AND LANDLORD WAIVE ANY RIGHT TO TRIAL BY JURY OR TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN LANDLORD AND TENANT ARISING OUT OF THIS LEASE OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO.

 

30.           Environmental Requirements .

 

(a)            Prohibition/Compliance/Indemnity . Tenant shall not cause or permit any Hazardous Materials (as hereinafter defined) to be brought upon, kept, used, stored, handled, treated, generated in or about, or released or disposed of from, the Premises, Building, Property or Project in violation of applicable Environmental Requirements (as hereinafter defined) by Tenant or any Tenant Party. If Tenant breaches the obligation stated in the preceding sentence, or if the presence of Hazardous Materials in the Premises during the Term or any holding over results in contamination of the Premises, Building, Property or Project or any adjacent property or if contamination of the Premises, Building, Property or Project or any adjacent property by Hazardous Materials brought into, kept, used, stored, handled, treated, generated in or about, or released or disposed of from, the Premises by anyone other than Landlord and Landlord’s employees, agents and contractors otherwise occurs during the Term or any holding over, Tenant hereby indemnifies and shall defend and hold Landlord, its officers, directors, employees, agents and contractors harmless from any and all actions (including, without limitation, remedial or enforcement actions of any kind, administrative or judicial proceedings, and orders or judgments arising out of or resulting therefrom), costs, claims, damages (including, without limitation, punitive damages and damages based upon diminution in value of the Premises or the Project, or the

 

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loss of, or restriction on, use of the Premises or any portion of the Project), expenses (including, without limitation, attorneys’, consultants’ and experts’ fees, court costs and amounts paid in settlement of any claims or actions), fines, forfeitures or other civil, administrative or criminal penalties, injunctive or other relief (whether or not based upon personal injury, property damage, or contamination of, or adverse effects upon, the environment, water tables or natural resources), liabilities or losses (collectively, “ Environmental Claims ”) which arise during or after the Term as a result of such breach of Tenant’s obligations stated in the preceding sentence or as a result of such contamination. This indemnification of Landlord by Tenant includes, without limitation, costs incurred in connection with any investigation of site conditions or any cleanup, treatment, remedial, removal, or restoration work required by any federal, state or local Governmental Authority because of Hazardous Materials present in the air, soil or ground water above, on, or under the Premises. Without limiting the foregoing, if the presence of any Hazardous Materials on the Premises, Building, Property, Project or any adjacent property caused or permitted by Tenant or any Tenant Party results in any contamination of the Premises, Building, Property, Project or any adjacent property, Tenant shall promptly take all actions at its sole expense and in accordance with applicable Environmental Requirements as are necessary to return the Premises, Building, Property, Project or any adjacent property to the condition existing prior to the time of such contamination, provided that Landlord’s approval of such action shall first be obtained, which approval shall not unreasonably be withheld so long as such actions would not potentially have any material adverse long-term or short-term effect on the Premises, Building, Property or the Project. Notwithstanding anything to the contrary contained in Section 28 or this Section 30 . Tenant shall not be responsible for, and the indemnification and hold harmless obligations set forth in this paragraph shall not apply to (i) contamination in the Premises which Tenant can prove to Landlord’s reasonable satisfaction existed in the Premises prior to the Commencement Date, (ii) the presence of any Hazardous Materials in the Premises which Tenant can prove to Landlord’s reasonable satisfaction migrated from outside the Premises into the Premises, or (iii) contamination caused by Landlord or any Landlord’s employees, agents and contractors, unless in any case, the presence of such Hazardous Materials (x) is the result of a breach by Tenant of any of its obligations under this Lease, or (y) was caused, contributed to or exacerbated by Tenant or any Tenant Party.

 

(b)            Business . Landlord acknowledges that it is not the intent of this Section 30 to prohibit Tenant from using the Premises for the Permitted Use. Tenant may operate its business according to prudent industry practices so long as the use or presence of Hazardous Materials is strictly and properly monitored according to all then applicable Environmental Requirements. As a material inducement to Landlord to allow Tenant to use Hazardous Materials in connection with its business, Tenant agrees to deliver to Landlord prior to the Commencement Date a list identifying each type of Hazardous Materials to be brought upon, kept, used, stored, handled, treated, generated on, or released or disposed of from, the Premises and setting forth any and all governmental approvals or permits required in connection with the presence, use, storage, handling, treatment, generation, release or disposal of such Hazardous Materials on or from the Premises (“ Hazardous Materials List ”). Tenant shall deliver to Landlord an updated Hazardous Materials List at least once a year and shall also deliver an updated list before any new Hazardous Material is brought onto, kept, used, stored, handled, treated, generated on, or released or disposed of from, the Premises. Notwithstanding the foregoing, the Hazardous Materials List shall not be required to include Hazardous Materials contained in products customarily used by tenants in de minimis quantities for ordinary cleaning and office purposes. Tenant shall deliver to Landlord true and correct copies of the following documents (the “ Haz Mat Documents ”) relating to the use, storage, handling, treatment, generation, release or disposal of Hazardous Materials prior to the Commencement Date, or if unavailable at that time, concurrent with the receipt from or submission to a Governmental Authority: permits; approvals; reports and correspondence; storage and management plans, notice of violations of any Legal Requirements; plans relating to the installation of any storage tanks to be installed in or under the Building or Property (provided, said installation of tanks shall only be permitted after Landlord has given Tenant its written consent to do so, which consent may be withheld in Landlord’s sole and absolute discretion); all closure plans or any other documents required by any and all federal, state and local Governmental Authorities for any storage tanks installed in, on or under the Building or Property for the closure of any such tanks; and a Surrender Plan (to the extent surrender in accordance with Section 28 cannot be accomplished in 3 months). Tenant is not required, however, to provide Landlord with any portion(s) of the Haz Mat Documents containing information of a

 

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proprietary nature which, in and of themselves, do not contain a reference to any Hazardous Materials or hazardous activities. It is not the intent of this Section to provide Landlord with information which could be detrimental to Tenant’s business should such information become possessed by Tenant’s competitors.

 

(c)            Tenant Representation and Warranty . Tenant hereby represents and warrants to Landlord that (i) neither Tenant nor any of its legal predecessors has been required by any prior landlord, lender or Governmental Authority at any time to take remedial action in connection with Hazardous Materials contaminating a property which contamination was permitted by Tenant of such predecessor or resulted from Tenant’s or such predecessor’s action or use of the property in question, and (ii) Tenant is not subject to any enforcement order issued by any Governmental Authority in connection with the use, storage, handling, treatment, generation, release or disposal of Hazardous Materials (including, without limitation, any order related to the failure to make a required reporting to any Governmental Authority). If Landlord determines that this representation and warranty was not true as of the date of this lease, Landlord shall have the right to terminate this Lease in Landlord’s sole and absolute discretion.

 

(d)            Testing . Landlord shall have the right to conduct annual tests of the Premises to determine whether any contamination of the Premises, Building, Property or Project has occurred as a result of Tenant’s use. Tenant shall be required to pay the cost of such annual test of the Premises; provided, however, that if Tenant conducts its own tests of the Premises using third party contractors and test procedures acceptable to Landlord which tests are certified to Landlord, Landlord shall accept such tests in lieu of the annual tests to be paid for by Tenant. In addition, at any time, and from time to time, prior to the expiration or earlier termination of the Term, Landlord shall have the right to conduct appropriate tests of the Premises, Building, Property and Project to determine if contamination has occurred as a result of Tenant’s use of the Premises. In connection with such testing, upon the request of Landlord, Tenant shall deliver to Landlord or its consultant such non-proprietary information concerning the use of Hazardous Materials in or about the Premises by Tenant or any Tenant Party. If contamination has occurred for which Tenant is liable under this Section 30 , Tenant shall pay all costs to conduct such tests. If no such contamination is found, Landlord shall pay the costs of such tests (which shall not constitute an Operating Expense). Landlord shall provide Tenant with a copy of all third party, non-confidential reports and tests of the Premises made by or on behalf of Landlord during the Term without representation or warranty and subject to a confidentiality agreement. Tenant shall, at its sole cost and expense, promptly and satisfactorily remediate any environmental conditions identified by such testing for which Tenant is responsible under this Section 30 in accordance with all Environmental Requirements. Landlord’s receipt of or satisfaction with any environmental assessment in no way waives any rights which Landlord may have against Tenant.

 

(e)            Underground Tanks . If underground or other storage tanks storing Hazardous Materials located on the Premises, Building, Property or Project are used by Tenant or are hereafter placed on the Premises, Building, Property or Project by Tenant, Tenant shall install, use, monitor, operate, maintain, upgrade and manage such storage tanks, maintain appropriate records, obtain and maintain appropriate insurance, implement reporting procedures, properly close any underground storage tanks, and take or cause to be taken all other actions necessary or required under applicable state and federal Legal Requirements, as such now exists or may hereafter be adopted or amended in connection with the installation, use, maintenance, management, operation, upgrading and closure of such storage tanks.

 

(f)             Tenant’s Obligations . Tenant’s obligations under this Section 30 shall survive the expiration or earlier termination of the Lease. During any period of time after the expiration or earlier termination of this Lease required by Tenant or Landlord to complete the removal from the Premises of any Hazardous Materials (including, without limitation, the release and termination of any licenses or permits restricting the use of the Premises and the completion of the approved Surrender Plan), Tenant shall continue to pay the full Rent in accordance with this Lease for any portion of the Premises not relet by Landlord in Landlord’s sole discretion, which Rent shall be prorated daily.

 

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(g)            Definitions . As used herein, the term “ Environmental Requirements ” means all applicable present and future statutes, regulations, ordinances, rules, codes, judgments, orders or other similar enactments of any Governmental Authority regulating or relating to health, safety, or environmental conditions on, under, or about the Premises, Building, Property or Project, or the environment, including without limitation, the following: the Comprehensive Environmental Response, Compensation and Liability Act; the Resource Conservation and Recovery Act; and all state and local counterparts thereto, and any regulations or policies promulgated or issued thereunder. As used herein, the term “ Hazardous Materials ” means and includes any substance, material, waste, pollutant, or contaminant listed or defined as hazardous or toxic, or regulated by reason of its impact or potential impact on humans, animals and/or the environment under any Environmental Requirements, asbestos and petroleum, including crude oil or any fraction thereof, natural gas liquids, liquefied natural gas, or synthetic gas usable for fuel (or mixtures of natural gas and such synthetic gas). As defined in Environmental Requirements, Tenant is and shall be deemed to be the “ operator ” of Tenant’s “ facility ” and the “owner” of all Hazardous Materials brought on the Premises by Tenant or any Tenant Party, and the wastes, by-products, or residues generated, resulting, or produced therefrom.

 

31.           Tenant’s Remedies/Limitation of Liability . Landlord shall not be in default hereunder unless Landlord fails to perform any of its obligations hereunder within 30 days after written notice from Tenant specifying such failure (unless such performance will, due to the nature of the obligation, require a period of time in excess of 30 days, then after such period of time as is reasonably necessary). Upon any default by Landlord, Tenant shall give notice by registered or certified mail to any Holder of a Mortgage covering the Premises and to any landlord of any lease of property in or on which the Premises are located and Tenant shall offer such Holder and/or landlord a reasonable opportunity to cure the default, including time to obtain possession of the Project, or portion thereof of which the Premises are a part, by power of sale or a judicial action if such should prove necessary to effect a cure; provided Landlord shall have furnished to Tenant in writing the names and addresses of all such persons who are to receive such notices. All obligations of Landlord hereunder shall be construed as covenants, not conditions; and, except as may be otherwise expressly provided in this Lease, Tenant may not terminate this Lease for breach of Landlord’s obligations hereunder.

 

All obligations of Landlord under this Lease will be binding upon Landlord only during the period of its ownership of the Premises and not thereafter. The term “ Landlord ” in this Lease shall mean only the owner for the time being of the Premises. Upon the transfer by such owner of its interest in the Premises, such owner shall thereupon be released and discharged from all obligations of Landlord thereafter accruing, but such obligations shall be binding during the Term upon each new owner for the duration of such owner’s ownership.

 

32.           Inspection and Access . Landlord and its agents, representatives, and contractors may enter the Premises at any reasonable time to inspect the Premises and to make such repairs as may be required or permitted pursuant to this Lease and for any other business purpose. Landlord and Landlord’s representatives may enter the Premises during business hours on not less than 48 hours advance written notice (except in the case of emergencies in which case no such notice shall be required and such entry may be at any time) for the purpose of effecting any such repairs, inspecting the Premises, showing the Premises to prospective purchasers and, during the last year of the Term, to prospective tenants or for any other business purpose. Landlord may erect a suitable sign on the Premises stating that the Project is available for sale, or in the last 12 months of the Term, that the Premises are available to let. Landlord shall use reasonable efforts to minimize interference with Tenant’s business operations at the Premises in connection with its entry into the Premises under this Section 32 . Landlord may grant and amend easements, make public dedications, designate Common Areas and create restrictions on or about the Premises, Building and Property, provided that no such easement, dedication, designation or restriction materially, adversely affects Tenant’s use or occupancy of the Premises for the Permitted Use. At Landlord’s request, Tenant shall execute such instruments as may be necessary for such easements, dedications or restrictions. Tenant shall at all times, except in the case of emergencies, have the right to escort Landlord or its agents, representatives, contractors or guests while the same are in the Premises, provided such escort does not materially and adversely affect Landlord’s access rights hereunder. Landlord shall use reasonable efforts to comply with Tenant’s reasonable security, confidentiality and

 

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safety requirements with respect to entering restricted portions of the Premises; provided, however, that Tenant has notified Landlord of such security, confidentiality and safety requirements reasonably prior to Landlord’s entry into the Premises and provided further that in no event shall Tenant bar or prohibit access by Landlord and its employees, agents and contractors for the performance of the obligations of Landlord or the exercise of the rights of Landlord under this Lease.

 

33.           Security . Tenant acknowledges and agrees that security devices and services, if any, while intended to deter crime may not in given instances prevent theft or other criminal acts and that Landlord is not providing any security services with respect to the Premises. Tenant agrees that Landlord shall not be liable to Tenant for, and Tenant waives any claim against Landlord with respect to, any loss by theft or any other damage suffered or incurred by Tenant in connection with any unauthorized entry into the Premises or any other breach of security with respect to the Premises. Tenant shall be solely responsible for the personal safety of Tenant’s officers, employees, agents, contractors, guests and invitees while any such person is in, on or about the Premises, Building, Property and/or Project. Tenant shall at Tenant’s cost obtain insurance coverage to the extent Tenant desires protection against such criminal acts.

 

34.           Force Majeure . Neither party shall be responsible or liable for delays in the performance of its obligations hereunder when caused by, related to, or arising out of acts of God, strikes, lockouts, or other labor disputes, embargoes, quarantines, weather, national, regional, or local disasters, calamities, or catastrophes, inability to obtain labor or materials (or reasonable substitutes therefor) at reasonable costs or failure of, or inability to obtain, utilities necessary for performance, governmental restrictions, orders, limitations, regulations, or controls, national emergencies, delay in issuance or revocation of permits, enemy or hostile governmental action, terrorism, insurrection, riots, civil disturbance or commotion, fire or other casualty, and other causes or events beyond the reasonable control of Landlord (“Force Majeure”). Notwithstanding anything to the contrary contained in this Lease, in no event shall any payment obligations of Tenant be delayed, abated, excused or reduced by Force Majeure.

 

35.           Brokers . Landlord and Tenant each represents and warrants that it has not dealt with any broker, agent or other person (collectively, “ Broker ”) in connection with this transaction and that no Broker brought about this transaction other than Newmark Grubb Knight Frank. Landlord and Tenant each hereby agree to indemnify and hold the other harmless from and against any claims by any Broker, other than Newmark Grubb Knight Frank, claiming a commission or other form of compensation by virtue of having dealt with Tenant or Landlord, as applicable, with regard to this leasing transaction. Pursuant to a separate agreement between Landlord and Newmark Grubb Knight Frank, Landlord shall pay the commission of Newmark Grubb Knight Frank in connection with the execution of this Lease by Landlord and Tenant if, as and when such commission is due and payable to Newmark Grubb Knight Frank.

 

36.           Limitation on Landlord’s Liability . NOTWITHSTANDING ANYTHING SET FORTH HEREIN OR IN ANY OTHER AGREEMENT BETWEEN LANDLORD AND TENANT TO THE CONTRARY: (A) LANDLORD SHALL NOT BE LIABLE TO TENANT OR ANY OTHER PERSON FOR (AND TENANT AND EACH SUCH OTHER PERSON ASSUME ALL RISK OF) LOSS, DAMAGE OR INJURY, WHETHER ACTUAL OR CONSEQUENTIAL TO: TENANT’S PERSONAL PROPERTY OF EVERY KIND AND DESCRIPTION, INCLUDING, WITHOUT LIMITATION TRADE FIXTURES, EQUIPMENT, INVENTORY, SCIENTIFIC RESEARCH, SCIENTIFIC EXPERIMENTS, LABORATORY ANIMALS, PRODUCT, SPECIMENS, SAMPLES, AND/OR SCIENTIFIC, BUSINESS, ACCOUNTING AND OTHER RECORDS OF EVERY KIND AND DESCRIPTION KEPT AT THE PREMISES AND ANY AND ALL INCOME DERIVED OR DERIVABLE THEREFROM; (B) THERE SHALL BE NO PERSONAL RECOURSE TO LANDLORD FOR ANY ACT OR OCCURRENCE IN, ON OR ABOUT THE PREMISES OR ARISING IN ANY WAY UNDER THIS LEASE OR ANY OTHER AGREEMENT BETWEEN LANDLORD AND TENANT WITH RESPECT TO THE SUBJECT MATTER HEREOF AND ANY LIABILITY OF LANDLORD HEREUNDER SHALL BE STRICTLY LIMITED SOLELY TO LANDLORD’S INTEREST IN THE PROPERTY OR ANY PROCEEDS FROM SALE OR CONDEMNATION THEREOF AND ANY INSURANCE PROCEEDS PAYABLE IN RESPECT OF LANDLORD’S INTEREST IN THE PROPERTY OR IN CONNECTION WITH ANY SUCH LOSS; AND (C) IN NO EVENT SHALL ANY PERSONAL LIABILITY BE ASSERTED AGAINST ANY OF LANDLORD’S OFFICERS, DIRECTORS,

 

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EMPLOYEES, AGENTS OR CONTRACTORS. UNDER NO CIRCUMSTANCES SHALL LANDLORD OR ANY OF LANDLORD’S OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR CONTRACTORS BE LIABLE FOR INJURY TO TENANT’S BUSINESS OR FOR ANY LOSS OF INCOME OR PROFIT THEREFROM.

 

37.           Severability . If any clause or provision of this Lease is illegal, invalid or unenforceable under present or future laws, then and in that event, it is the intention of the parties hereto that the remainder of this Lease shall not be affected thereby. It is also the intention of the parties to this Lease that in lieu of each clause or provision of this Lease that is illegal, invalid or unenforceable, there be added, as a part of this Lease, a clause or provision as similar in effect to such illegal, invalid or unenforceable clause or provision as shall be legal, valid and enforceable.

 

38.           Signs; Exterior Appearance . Tenant shall not, without the prior written consent of Landlord, which may be granted or withheld in Landlord’s sole discretion: (i) attach any awnings, exterior lights, decorations, balloons, flags, pennants, banners, painting or other projection to any outside wall of the Building, (ii) use any curtains, blinds, shades or screens other than Landlord’s standard window coverings, (iii) coat or otherwise sunscreen the interior or exterior of any windows, (iv) place any bottles, parcels, or other articles on the window sills, (v) place any equipment, furniture or other items of personal property on any exterior balcony, or (vi) paint, affix or exhibit on any part of the Premises, Building, Property or Project any signs, notices, window or door lettering, placards, decorations, or advertising media of any type which can be viewed from the exterior of the Premises. Standard signage on the entrance to the Building, the directory tablet or other lobby signage for the purpose of identifying tenants of the building shall be inscribed, painted or affixed for Tenant by Landlord at the sole cost and expense of Tenant, and shall be of a size, color and type and in a location acceptable to Landlord. Nothing may be placed on the exterior of corridor walls or corridor doors other than Landlord’s standard lettering. The directory tablet shall be provided exclusively for the display of the name and location of tenants.

 

If Landlord installs a monument sign serving the Building (“ Monument Sign ”), and if Tenant is the sole Tenant on the highest occupiable floor of the Building, Tenant shall be entitled, at Tenant’s cost and expense, to signage with Tenant’s name and logo on the top slot of the Monument Sign. Tenant acknowledges and agrees that Tenant’s signage on the Monument Sign including, without limitation, the location, size, color and type, shall be subject to Landlord’s prior written approval, which shall not be unreasonably withheld and shall be consistent with Landlord’s signage program at the Project and applicable Legal Requirements. Tenant shall be responsible, at Tenant’s sole cost and expense, for the maintenance of Tenant’s signage on the Monument Sign, for the removal of Tenant’s signage from the Monument Sign at the expiration or earlier termination of this Lease and for the repair of all damage resulting from such removal.

 

39.           Right to Expand .

 

(a)            Expansion on the Second Floor . Following the first time that Landlord leases the Second Floor Expansion Space to a third party, Tenant shall have a on-going right during the Base Term, but not the obligation, subject to the terms of this Section 39(a) , to expand the Premises (the “Expansion Right”) to include the Second Floor Expansion Space upon the terms and conditions in this Section 39(a) . For purposes of this Section 39(a) , “ Second Floor Expansion Space ” shall mean any space on the second floor of the Building, which is not occupied by a tenant, or which is occupied by a then-existing tenant whose lease is expiring within 6 months or less and such tenant does not wish to renew (whether or not such tenant has a right to renew) its occupancy of such space, or which is occupied by a then-existing tenant whose lease is terminating prior to its scheduled expiration date. If there is any Second Floor Expansion Space in the Building, Landlord shall, at such time as Landlord shall elect prior to marketing such Second Floor Expansion Space for lease by third parties, deliver to Tenant written notice (the “ Expansion Notice ”) of such Second Floor Expansion Space, together with the terms and conditions on which Landlord is prepared to lease Tenant such Second Floor Expansion Space. For the avoidance of doubt, Tenant shall be required to exercise its right under this Section 39(a)  with respect to all of the space described in the Expansion Notice, including any space in addition to the Second Floor Expansion Space that is described in the Expansion Notice, which additional space shall be deemed to

 

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17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

be included as part of the Second Floor Expansion Space. The term of the Lease with respect to the Second Floor Expansion Space may not be co-terminous with the Term of this Lease with respect to the then-existing Premises. Tenant shall have 10 days following receipt of the Expansion Notice to deliver to Landlord written notification (“ Second Floor Acceptance Notice ”) of Tenant’s exercise of the Expansion Right. If Tenant does not deliver a Second Floor Acceptance Notice to Landlord within such 10 day period, then Tenant shall be deemed to have waived its rights under this Section 39(a)  to lease the Second Floor Expansion Space, and Landlord shall have the right to lease the Second Floor Expansion Space to any third party on any terms and conditions acceptable to Landlord. Notwithstanding the foregoing, if Landlord negotiates with a third party economic lease terms materially more favorable (but in no event shall the economic lease terms be considered more favorable unless the difference in net effective base rent is [ *** ] % or greater) than those offered to Tenant in the Expansion Notice, Landlord shall be required to submit the more favorable economic terms to Tenant for its review. Tenant shall have 5 days after receipt of the more favorable terms to accept or reject the revised terms. If Tenant rejects the more favorable terms, Landlord shall have the right to lease the Second Floor Expansion Space to any third party on terms acceptable to Landlord, in its sole and absolute discretion, and Tenant shall be deemed to have waived its rights under this Section 39(a) . Notwithstanding anything to the contrary contained herein, Tenant shall have no right to exercise the Expansion Right and the provisions of this Section 39(a)  shall no longer apply after the date that is 9 months prior to the expiration of the Base Term if Tenant has not exercised its Extension Right pursuant to Section 40 .

 

(b)            Expansion on the First Floor/Basement . Following the first time that Landlord leases the First Floor/Basement Expansion Space to a third party, Tenant shall have the on-going right during the Base Term, but not the obligation, subject to the terms of this Section 39(b) , to expand the Premises (the “ First Floor/Basement Expansion Right ”) to include the First Floor/Basement Expansion Space upon the terms and conditions in this Section 39(b) . For purposes of this Section 39(b) , “ First Floor/Basement Expansion Space ” shall mean that certain space on the first floor of the Building consisting of approximately 25,303 rentable square feet and that certain portion of the basement containing approximately 4,895 rentable square feet, all as shown on Exhibit H attached hereto, which is not occupied by a tenant, or which is occupied by a then-existing tenant whose lease is expiring within 6 months or less and such tenant does not wish to renew (whether or not such tenant has a right to renew) its occupancy of such space, or which is occupied by a then-existing tenant whose lease is terminating prior to its scheduled expiration date. If there is any First Floor/Basement Expansion Space in the Building, Landlord shall, at such time as Landlord shall elect prior to marketing such First Floor/Basement Expansion Space for lease to third parties, deliver to Tenant written notice (the “ First Floor/Basement Expansion Notice ”) of such First Floor/Basement Expansion Space, together with the terms and conditions on which Landlord is prepared to lease Tenant such First Floor/Basement Expansion Space. For the avoidance of doubt, Tenant shall be required to exercise its right under this Section 39(b)  with respect to all of the space described in the First Floor/Basement Expansion Notice, including any space in addition to the First Floor/Basement Expansion Space that is described in the First Floor/Basement Expansion Notice, which additional space shall be deemed to be included as part of the First Floor/Basement Expansion Space. The term of the Lease with respect to the First Floor/Basement Expansion Space may not be co-terminous with the Term of this Lease with respect to the then-existing Premises. Tenant shall have 10 days following receipt of the First Floor/Basement Expansion Notice to deliver to Landlord written notification (“ First Floor/Basement Acceptance Notice ”) of Tenant’s exercise of the First Floor/Basement Expansion Right. If Tenant does not deliver a First Floor/Basement Acceptance Notice to Landlord within such 10 day period, then Tenant shall be deemed to have waived its rights under this Section 39(b)  to lease the First Floor/Basement Expansion Space, and Landlord shall have the right to lease the First Floor/Basement Expansion Space to any third party on any terms and conditions acceptable to Landlord. Notwithstanding the foregoing, if Landlord negotiates with a third party economic lease terms materially more favorable (but in no event shall the economic lease terms be considered more favorable unless the difference in net effective base rent is [ *** ] % or greater) than those offered to Tenant in the First Floor/Basement Expansion Notice, Landlord shall be required to submit the more favorable economic terms to Tenant for its review. Tenant shall have 5 days after receipt of the more favorable terms to accept or reject the revised terms. If Tenant rejects the more favorable terms, Landlord shall have the right to lease the First Floor/Basement Expansion Space to any third party on terms acceptable to Landlord, in its sole and absolute discretion, and Tenant shall be deemed to have

 

***Confidential Treatment Requested***

 

37



 

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Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

waived its rights under this Section 39(b) . Notwithstanding anything to the contrary contained herein, Tenant shall have no right to exercise the First Floor/Basement Expansion Right and the provisions of this Section 39(b)  shall no longer apply after the date that is 9 months prior to the expiration of the Base Term if Tenant has not exercised its Extension Right pursuant to Section 40 .

 

(c)            Amended Lease . If: (i) Tenant fails to timely deliver notice accepting the terms of an Expansion Notice or a First Floor/Basement Expansion Notice, as applicable, or (ii) after the expiration of a period of 10 days after Landlord’s delivery to Tenant of a lease amendment for Tenant’s lease of the Second Floor Expansion Space or the First Floor/Basement Expansion Space, as applicable, no lease amendment for the Second Floor Expansion Space or First Floor/Basement Expansion Space, as applicable, acceptable to both parties, each in their sole and absolute discretion, has been executed, Tenant shall be deemed to have forever waived its right under this Section 39 to lease such Second Floor Expansion Space or First Floor/Basement Expansion Space, as applicable.

 

(d)            Exceptions . Notwithstanding the above, the Expansion Right and the First Floor/Basement Expansion Right shall not be in effect and may not be exercised by Tenant:

 

(i)             during any period of time that Tenant is in Default under any provision of the Lease; or

 

(ii)            if Tenant has been in Default under any provision of the Lease 3 or more times, whether or not the Defaults are cured, during the 12 month period prior to the date on which Tenant seeks to exercise the Expansion Right or First Floor/Basement Expansion Right.

 

(e)            Termination . The Expansion Right and the First Floor/Basement Expansion Right shall terminate and be of no further force or effect even after Tenant’s due and timely exercise of the Expansion Right or First Floor/Basement Expansion Right, as applicable,, if, after such exercise, but prior to the commencement date of the lease of the Second Floor Expansion Space or the First Floor/Basement Expansion Space, as applicable, (i) Tenant fails to timely cure any default by Tenant under the Lease; or (ii) Tenant has Defaulted 3 or more times during the period from the date of the exercise of the Expansion Right or the First Floor/Basement Expansion Right, as applicable, to the date of the commencement of the lease of the Second Floor Expansion Space or the First Floor/Basement Expansion Space, as applicable, whether or not such Defaults are cured.

 

(f)             Rights Personal . The Expansion Right and the First Floor/Basement Expansion Right are personal to Tenant and are not assignable without Landlord’s consent, which may be granted or withheld in Landlord’s sole discretion separate and apart from any consent by Landlord to an assignment of Tenant’s interest in the Lease, except that the Extension Right and the First Floor/Basement Expansion Right may be assigned in connection with any Permitted Assignment of this Lease.

 

(g)            Intentionally Omitted .

 

(h)            No Extensions . The period of time within which the Expansion Right or the First Floor/Basement Expansion Right may be exercised shall not be extended or enlarged by reason of Tenant’s inability to exercise the Expansion Right or First Floor/Basement Expansion Right.

 

40.           Right to Extend Term . Tenant shall have the right to extend the Term of the Lease upon the following terms and conditions:

 

(a)            Extension Right . Tenant shall have 1 right (the “ Extension Right ”) to extend the term of this Lease for 5 years (the “ Extension Term ”) on the same terms and conditions as this Lease (other than Base Rent and the Work Letter) by giving Landlord written notice of its election to exercise the Extension Right at least 9 months prior to the expiration of the Base Term of the Lease.

 

***Confidential Treatment Requested***

 

38



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

Upon the commencement of the Extension Term, Base Rent shall be payable at the Market Rate (as defined below). Base Rent shall thereafter be adjusted on each annual anniversary of the commencement of such Extension Term by a percentage as determined by Landlord and agreed to by Tenant at the time the Market Rate is determined. As used herein, “ Market Rate ” shall mean the then market rental rate for space comparable to the Premises in a building comparable to the Building in the East Cambridge and Kendall Square market area of Cambridge, MA as determined by Landlord and agreed to by Tenant or determined by arbitration as provided below. In addition, Landlord may impose a market rent for the parking rights provided hereunder.

 

Within 30 days of the delivery to Landlord of Tenant’s written notice of Tenant’s election to exercise an Extension Right, Landlord shall deliver to Tenant Landlord’s determination of the Market Rate and rent escalations for the Extension Term. If, on or before the date which is 240 days prior to the expiration of the Base Term of this Lease, Tenant has not agreed with Landlord’s determination of the Market Rate and the rent escalations for the Extension Term, Tenant may by written notice to Landlord given not later than 210 days prior to the expiration of the Base Term of this Lease, elect arbitration as described in Section 40(b)  below. If Tenant does not elect such arbitration, Tenant shall be deemed to have waived any right to extend, or further extend, the Term of the Lease and Tenant’s Extension Right shall terminate.

 

(b)            Arbitration .

 

(i)             Within 10 days of Tenant’s notice to Landlord of its election to arbitrate Market Rate and escalations, each party shall deliver to the other a proposal containing the Market Rate and escalations that the submitting party believes to be correct (“ Extension Proposal ”). If either party fails to timely submit an Extension Proposal, the other party’s submitted proposal shall determine the Base Rent and escalations for the Extension Term. If both parties submit Extension Proposals, then Landlord and Tenant shall meet within 7 days after delivery of the last Extension Proposal and make a good faith attempt to mutually appoint a single Arbitrator (as defined below) to determine the Market Rate and escalations. If Landlord and Tenant are unable to agree upon a single Arbitrator, then each shall, by written notice delivered to the other within 10 days after the meeting, select an Arbitrator. If either party fails to timely give notice of its selection for an Arbitrator, the other party’s submitted proposal shall determine the Base Rent for the Extension Term. The 2 Arbitrators so appointed shall, within 5 business days after their appointment, appoint a third Arbitrator. If the 2 Arbitrators so selected cannot agree on the selection of the third Arbitrator within the time above specified, then either party, on behalf of both parties, may request such appointment of such third Arbitrator by application to any state court of general jurisdiction in the jurisdiction in which the Premises are located, upon 10 days’ prior written notice to the other party of such intent.

 

(ii)            The decision of the Arbitrator(s) shall be made within 30 days after the appointment of a single Arbitrator or the third Arbitrator, as applicable. The decision of the single Arbitrator shall be final and binding upon the parties. The average of the two closest Arbitrators in a three Arbitrator panel shall be final and binding upon the parties. Each party shall pay the fees and expenses of the Arbitrator appointed by or on behalf of such party and the fees and expenses of the third Arbitrator shall be borne equally by both parties. If the Market Rate and escalations are not determined by the first day of the Extension Term, then Tenant shall pay Landlord Base Rent in an amount equal to the Base Rent in effect immediately prior to the Extension Term and increased by the Rent Adjustment Percentage until such determination is made. After the determination of the Market Rate and escalations, the parties shall make any necessary adjustments to such payments made by Tenant. Landlord and Tenant shall then execute an amendment recognizing the Market Rate and escalations for the Extension Term.

 

(iii)           An “ Arbitrator ” shall be any person appointed by or on behalf of either party or appointed pursuant to the provisions hereof and: (i) shall be (A) a member of the

 

***Confidential Treatment Requested***

 

39



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

American Institute of Real Estate Appraisers with not less than 10 years of experience in the appraisal of improved office, high tech and life sciences real estate in the Cambridge, Massachusetts market area, or (B) a licensed commercial real estate broker with not less than 15 years’ experience representing landlords and/or tenants in the leasing of high tech or life sciences space in the Cambridge, Massachusetts market area, (ii) devoting substantially all of their time to professional appraisal or brokerage work, as applicable, at the time of appointment and (iii) be in all respects impartial and disinterested.

 

(c)            Rights Personal . The Extension Right is personal to Tenant and, other than in connection with any Permitted Assignment of this Lease, is not assignable without Landlord’s consent, which may be granted or withheld in Landlord’s sole discretion separate and apart from any consent by Landlord to an assignment of Tenant’s interest in the Lease.

 

(d)            Exceptions . Notwithstanding anything set forth above to the contrary, the Extension Right shall not be in effect and Tenant may not exercise the Extension Right:

 

(i)             during any period of time that Tenant is in Default under any provision of this Lease; or

 

(ii)            if Tenant has been in Default under any provision of this Lease 3 or more times, whether or not the Defaults are cured, during the 12-month period immediately prior to the date that Tenant intends to exercise the Extension Right, whether or not the Defaults are cured; or

 

(iii)           if the party named as Tenant in the Basic Lease Provisions as of the date of this Lease or an assignee pursuant to a Permitted Assignment is not in occupancy of at least 50% of the Premises demised hereunder both at the time of the exercise of any such Extension Right and at the time of the commencement of the Extension Term.

 

(e)            No Extensions . The period of time within which the Extension Right may be exercised shall not be extended or enlarged by reason of Tenant’s inability to exercise the Extension Right.

 

(f)             Termination . The Extension Right shall terminate and be of no further force or effect even after Tenant’s due and timely exercise of an Extension Right, if, after such exercise, but prior to the commencement date of the Extension Term, (i) Tenant fails to timely cure any default by Tenant under this Lease; or (ii) Tenant has Defaulted 3 or more times during the period from the date of the exercise of an Extension Right to the date of the commencement of the Extension Term, whether or not such Defaults are cured.

 

41.           Roof Equipment . As long as Tenant is not in Default under this Lease, Tenant shall have the right at its sole cost and expense, subject to compliance with all Legal Requirements, to install, maintain, and remove on the top of the roof of the Building, in a location determined by Landlord, a dedicated back-up generator serving the Premises (the “ Roof Equipment ”) on the following terms and conditions:

 

(a)            Requirements . Tenant shall submit to Landlord (i) the plans and specifications for the installation of the Roof Equipment, (ii) copies of all required governmental and quasi-governmental permits, licenses, and authorizations that Tenant will and must obtain at its own expense, with the cooperation of Landlord, if necessary for the installation and operation of the Roof Equipment, and (iii) an insurance policy or certificate of insurance evidencing insurance coverage as required by this Lease and any other insurance as reasonably required by Landlord for the installation and operation of the Roof Equipment. Landlord shall not unreasonably withhold or delay its approval for the installation and operation of the Roof Equipment; provided , however , that Landlord may reasonably withhold its approval

 

***Confidential Treatment Requested***

 

40


 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

if the installation or operation of the Roof Equipment (A) may damage the structural integrity of the Building, (B) may void, terminate, or invalidate any applicable roof warranty, (C) may interfere with any service provided by Landlord or any tenant of the Building, (D) may reduce the leasable space in the Building, or (E) is not properly screened from the viewing public.

 

(b)                                  No Damage to Roof . If installation of the Roof Equipment requires Tenant to make any roof cuts or perform any other roofing work, such cuts shall only be made to the roof area of the Building located directly above the Premises and only in the manner designated in writing by Landlord; and any such installation work (including any roof cuts or other roofing work) shall be performed by Tenant, at Tenant’s sole cost and expense by a roofing contractor designated by Landlord. If Tenant or its agents shall otherwise cause any damage to the roof during the installation, operation, and removal of the Roof Equipment such damage shall be repaired promptly at Tenant’s expense and the roof shall be restored in the same condition it was in before the damage. Landlord shall not charge Tenant Additional Rent for the installation and use of the Roof Equipment. If, however, Landlord’s insurance premium or Tax assessment increases as a result of the Roof Equipment, Tenant shall pay such increase as Additional Rent within ten (10) days after receipt of a reasonably detailed invoice from Landlord. Tenant shall not be entitled to any abatement or reduction in the amount of Rent payable under this Lease if for any reason Tenant is unable to use the Roof Equipment. In no event whatsoever shall the installation, operation, maintenance, or removal of the Roof Equipment by Tenant or its agents void, terminate, or invalidate any applicable roof warranty.

 

(c)                                   Protection . The installation, operation, and removal of the Roof Equipment shall be at Tenant’s sole risk. Tenant shall indemnify, defend, and hold Landlord harmless from and against any and all claims, costs, damages, liabilities and expenses (including, but not limited to, attorneys’ fees) of every kind and description that may arise out of or be connected in any way with Tenant’s installation, operation, or removal of the Roof Equipment.

 

(d)                                  Removal . At the expiration or earlier termination of this Lease or the discontinuance of the use of the Roof Equipment by Tenant, Tenant shall, at its sole cost and expense, remove the Roof Equipment from the Building. Tenant shall leave the portion of the roof where the Roof Equipment was located in good order and repair, reasonable wear and tear excepted. If Tenant does not so remove the Roof Equipment, Tenant hereby authorizes Landlord to remove and dispose of the Roof Equipment and charge Tenant as Additional Rent for all costs and expenses incurred by Landlord in such removal and disposal. Tenant agrees that Landlord shall not be liable for any Roof Equipment or related property disposed of or removed by Landlord.

 

(e)                                   No Interference . The Roof Equipment shall not interfere with the proper functioning of any telecommunications equipment or devices that have been installed or will be installed by Landlord or for any other tenant or future tenant of the Building. Tenant acknowledges that other tenant(s) may have approval rights over the installation and operation of telecommunications equipment and devices on or about the roof, and that Tenant’s right to install and operate the Roof Equipment is subject and subordinate to the rights of such other tenants. Tenant agrees that any other tenant of the Building that currently has or in the future takes possession of any portion of the Building will be permitted to install such telecommunication equipment that is of a type and frequency that will not cause unreasonable interference to the Roof Equipment.

 

(f)                                    Relocation . Landlord shall have the right, at its sole cost and expense and after 60 days prior written notice to Tenant, to relocate the Roof Equipment to another site on the roof of the Building as long as such site reasonably meets Tenant’s sight line and interference requirements and does not unreasonably interfere with Tenant’s use and operation of the Roof Equipment.

 

(g)                                   Access . Landlord grants to Tenant the right of ingress and egress on a 24 hour 7 day per week basis to install, operate, and maintain the Roof Equipment. Before receiving access to the roof of the Building, Tenant shall give Landlord at least 24 hours’ advance written or oral notice, except in emergency situations, in which case advance oral notice shall be given by Tenant to Landlord (provided that in emergency situations Tenant shall endeavor to give Landlord at least 2 hours’ advance oral

 

***Confidential Treatment Requested***

 

41



 

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Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

notice). Landlord shall supply Tenant with the name, telephone, and pager numbers of the contact individual(s) responsible for providing access during emergencies.

 

(h)                                  Appearance . If permissible by Legal Requirements, the Roof Equipment shall be painted the same color as the Building so as to render the Roof Equipment virtually invisible from ground level.

 

(i)                                      No Assignment . The right of Tenant to use and operate Roof Equipment shall be personal solely to Rubius Therapeutics, Inc., and (i) no other person or entity shall have any right to use or operate the Roof Equipment, and (ii) Tenant shall not assign, convey, or otherwise transfer to any person or entity any right, title, or interest in all or any portion of the Roof Equipment or the use and operation thereof other than in connection with an assignment of this Lease pursuant to Section 22 .

 

(j)                                     General . Commencing on the date the Roof Equipment is installed, Tenant shall have all of the obligations under this Lease with respect to the portion of the roof on which the Roof Equipment is located as though such portion of the roof were part of the Premises including, without limitation, the delivery of a Surrender Plan pursuant to Section 28 , except that Tenant shall not be required to pay Base Rent with respect to such roof space.

 

42.                                Miscellaneous .

 

(a)                                  Notices . All notices or other communications between the parties shall be in writing and shall be deemed duly given upon delivery or refusal to accept delivery by the addressee thereof if delivered in person, or upon actual receipt if delivered by reputable overnight guaranty courier, addressed and sent to the parties at their addresses set forth above. Landlord and Tenant may from time to time by written notice to the other designate another address for receipt of future notices.

 

(b)                                  Joint and Several Liability . If and when included within the term “ Tenant ,” as used in this instrument, there is more than one person or entity, each shall be jointly and severally liable for the obligations of Tenant.

 

(c)                                   Financial Information . Upon written request from Landlord, Tenant shall furnish Landlord with true and complete copies of (i) Tenant’s most recent unaudited (or, if available, audited) annual financial statements within 180 days of the end of each of Tenant’s fiscal years during the Term, (ii) Tenant’s most recent unaudited quarterly financial statements within 45 days of the end of each of Tenant’s first three fiscal quarters of each of Tenant’s fiscal years during the Term, (iii) at Landlord’s reasonable request from time to time, updated business plans, including cash flow projections and/or pro forma balance sheets and income statements, all of which shall be treated by Landlord as confidential information belonging to Tenant, (iv) corporate brochures and/or profiles prepared by Tenant for prospective investors, and (v) any other financial information or summaries that Tenant typically provides to its lenders or shareholders. If the stock of Tenant is publicly traded on a recognized national exchange, then Tenant’s filing of quarterly and annual financial statements with the SEC shall be deemed to satisfy Tenant’s obligations to deliver financial statements under this Section.

 

(d)                                  Recordation . Neither this Lease nor a memorandum of lease shall be filed by or on behalf of Tenant in any public record. Landlord may prepare and file, and upon request by Landlord Tenant will execute, a memorandum of lease. Nothing contained in this Lease is intended to prohibit Tenant from filing this Lease with the Securities and Exchange Commission (“ SEC ”) to the extent that Tenant is required to do so pursuant to applicable SEC requirements. Prior to any such filing of this Lease, Tenant shall redact the Base Rent and other economic terms to the extent permitted by applicable SEC regulations.

 

(e)                                   Interpretation . The normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Lease or any exhibits or amendments hereto. Words of any gender used in this Lease shall be held and construed

 

***Confidential Treatment Requested***

 

42



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

to include any other gender, and words in the singular number shall be held to include the plural, unless the context otherwise requires. The captions inserted in this Lease are for convenience only and in no way define, limit or otherwise describe the scope or intent of this Lease, or any provision hereof, or in any way affect the interpretation of this Lease.

 

(f)                                    Not Binding Until Executed . The submission by Landlord to Tenant of this Lease shall have no binding force or effect, shall not constitute an option for the leasing of the Premises, nor confer any right or impose any obligations upon either party until execution of this Lease by both parties.

 

(g)                                   Entire Agreement; Amendment . This Lease constitutes the entire agreement between Landlord and Tenant pertaining to the lease of the Premises and supersedes all other agreements, whether oral or written, pertaining to the lease of the Premises, and no other agreements with respect thereto shall be effective. Any amendments or modifications of this Lease shall be in writing and signed by both Landlord and Tenant, and any other attempted amendment or modification of this Lease shall be void.

 

(h)                                  Limitations on Interest . It is expressly the intent of Landlord and Tenant at all times to comply with applicable law governing the maximum rate or amount of any interest payable on or in connection with this Lease. If applicable law is ever judicially interpreted so as to render usurious any interest called for under this Lease, or contracted for, charged, taken, reserved, or received with respect to this Lease, then it is Landlord’s and Tenant’s express intent that all excess amounts theretofore collected by Landlord be credited on the applicable obligation (or, if the obligation has been or would thereby be paid in full, refunded to Tenant), and the provisions of this Lease immediately shall be deemed reformed and the amounts thereafter collectible hereunder reduced, without the necessity of the execution of any new document, so as to comply with the applicable law, but so as to permit the recovery of the fullest amount otherwise called for hereunder.

 

(i)                                      Choice of Law . Construction and interpretation of this Lease shall be governed by the internal laws of the Commonwealth of Massachusetts, excluding any principles of conflicts of laws.

 

(j)                                     Time . Time is of the essence as to the performance of Tenant’s obligations under this Lease.

 

(k)                                  OFAC . Tenant, and, to Tenant’s knowledge, all beneficial owners of Tenant, are currently (a) in compliance with and shall at all times during the Term of this Lease remain in compliance with the regulations of the Office of Foreign Assets Control (“ OFAC ”) of the U.S. Department of Treasury and any statute, executive order, or regulation relating thereto (collectively, the “ OFAC Rules ”), (b) not listed on, and shall not during the Term of this Lease be listed on, the Specially Designated Nationals and Blocked Persons List, Foreign Sanctions Evaders List or the Sectoral Sanctions Identifications List, which are all maintained by OFAC and/or on any other similar list maintained by OFAC or other governmental authority pursuant to any authorizing statute, executive order, or regulation, and (c) not a person or entity with whom a U.S. person is prohibited from conducting business under the OFAC Rules.

 

(l)                                      Incorporation by Reference . All exhibits and addenda attached hereto are hereby incorporated into this Lease and made a part hereof. If there is any conflict between such exhibits or addenda and the terms of this Lease, such exhibits or addenda shall control.

 

(m)                              No Accord and Satisfaction . No payment by Tenant or receipt by Landlord of a lesser amount than the monthly installment of Base Rent or any Additional Rent will be other than on account of the earliest stipulated Base Rent and Additional Rent, nor will any endorsement or statement on any check or letter accompanying a check for payment of any Base Rent or Additional Rent be an accord and satisfaction. Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such Rent or to pursue any other remedy provided in this Lease.

 

***Confidential Treatment Requested***

 

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***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

(n)                                  Hazardous Activities . Notwithstanding any other provision of this Lease, Landlord, for itself and its employees, agents and contractors, reserves the right to refuse to perform any repairs or services in any portion of the Premises which, pursuant to Tenant’s routine safety guidelines, practices or custom or prudent industry practices, require any form of protective clothing or equipment other than safety glasses. In any such case, Tenant shall contract with parties who are acceptable to Landlord, in Landlord’s reasonable discretion, for all such repairs and services, and Landlord shall, to the extent required, equitably adjust Tenant’s Share of Operating Expenses in respect of such repairs or services to reflect that Landlord is not providing such repairs or services to Tenant.

 

(o)                                  “Green” Certification . Tenant acknowledges that Landlord may, but shall not be obligated to, seek to obtain Leadership in Energy and Environmental Design (LEED), WELL Building Standard, or other similar “green” certification with respect to the Project and/or the Premises, and Tenant agrees, at no material cost to Tenant, to reasonably cooperate with Landlord, and to provide such information and/or documentation in Tenant’s possession or control as Landlord may reasonably request, in connection therewith.

 

[Signatures on next page]

 

***Confidential Treatment Requested***

 

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Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the day and year first above written.

 

 

TENANT :

 

 

 

RUBIUS THERAPEUTICS, INC. ,

 

a Delaware corporation

 

 

 

 

 

 

By:

/s/ Joanne M. Protano

 

Print Name:

Joanne M. Protano

 

Title:

VP Finance, Secretary & Treasurer

 

 

 

 

 

LANDLORD:

 

 

 

ARE-MA REGION NO. 58, LLC ,

 

a Delaware limited liability company

 

 

 

By:

ALEXANDRIA REAL ESTATE EQUITIES, LP.,
a Delaware limited partnership,
managing member

 

 

 

 

 

 

 

 

By:

ARE-QRS CORP.,

 

 

 

a Maryland corporation,

 

 

 

general partner

 

 

 

 

 

 

By:

/s/ Jackie Clem

 

Print Name:

Jackie Clem

 

Title:

Senior Vice President RE Legal Affairs

 

***Confidential Treatment Requested***

 

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Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

EXHIBIT A TO LEASE

 

DESCRIPTION OF PREMISES

 

[ *** ]

 

***Confidential Treatment Requested***

 


 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

EXHIBIT B TO LEASE

 

DESCRIPTION OF PROPERTY

 

Real property in the County of Middlesex, Commonwealth of Massachusetts, described as follows:

 

BUILDING 1500 AND 1700:

 

A parcel of land located on the comer of Binney Street and Cardinal Medeiros Avenue in the City of Cambridge, Middlesex County, Commonwealth of Massachusetts, bounded and described as follows:

 

Beginning at the intersection of northerly sideline of Binney Street with the easterly sideline of Cardinal Medeiros Avenue,

 

Thence running N 22° 38’ 34” E along said easterly sideline of Cardinal Medeiros Avenue a distance of 220.97 feet to a point at land now or formerly of Escape Realty Trust;

 

Thence by land now or formerly of said Escape Realty Trust the following three courses:

 

S 67°2A’IT E a distance of 165.49 feet to a point;

 

S 22°38’ 14” W a distance of 55.49 feet to a point; and

 

S 67021’26” E a distance of 24.50 feet to a point at land now or formerly of Calusa, NV.;

 

Thence S 22°38’34” W by land of said Calusa, N. V. a distance of 165.53 feet to a point on the northerly sideline of Binney Street;

 

Thence N 67°22’57’ W along said northerly sideline of Binney Street a distance of 190.00 feet to the point of beginning.

 

Said parcel being shown on a plan of land entitled “Subdivision Plan of Land in Cambridge, Massachusetts, being a Subdivision of Land as shown on Land Court Plan 1991 A,” prepared by Cullman Engineering Co., Inc., dated September 23,1994 and filed as Plan No. 1147 of 1994 in Book 25003, Page 496.

 

Together with the right to park in the garage pursuant to the terms and provisions of a Parking Lease Agreement dated February 15,1996 between Cambridge 1400 Limited Partnership and Old Portland Realty Trust, a notice of which is recorded on February 15,1996 in Book 26053, Page 137, as affected by Assignment and Assumption of Lessee’s Interest Under Parking Lease Agreement dated as of May 1, 1998 and recorded on May 5,1998 in Book 28542, Page 104.

 

Together with the rights and easements set forth in the Easements Agreement dated December 17, 1984 and filed as Document No. 673502, said latter agreement as affected by Amendment to Easements Agreement, dated April 7,2006 and filed as Document No. 1416496.

 

THEATER PARCEL:

 

Four parcels of land in die City of Cambridge, Middlesex County, Massachusetts, more particularly described as follows:

 

Parcel One:

 

That certain parcel of land situated in the City of Cambridge, Middlesex County, Massachusetts, bounded and described as follows:

 

***Confidential Treatment Requested***

 

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***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

Commencing at a point on the easterly side of Cardinal Medeiros Avenue, said point being 220.97 feet northeasterly from the intersection of said easterly side of Cardinal Medeiros Avenue and the northerly side of Binney Street

 

THENCE:

 

N 36° 07 05” E 131.92 feet, on said Cardinal Medeiros Avenue; thence

 

S 53° 08’ 55” E 178.01 feet by land now or formerly of Cambridge Furniture Company, thence

 

S 36° 07* 05” W 129.50 feet by land now or formerly of Trustees of Old Binney Realty Trust, thence

 

N 53° 55’ 46” W 178.00 feet by land now or formerly of Trustees of Old Portland Realty Trust, said point being the point of beginning.

 

The above described parcel is shown on a plan entitled “Plan of Property owned by Old Binney Realty Trust, Cardinal Medeiros Avenue and Binney Street, Cambridge, Massachusetts: dated March 30, 1988, by Cullinan Engineering Co., Inc., Auburn-Boston, Massachusetts, recorded in Middlesex South District Registry of Deeds as Plan 503 of 1988 recorded in Book 18990 at Page 349 and on Plan No. 1147 of 1994 and contains 23,266 square feet, more or less, according to said plan.

 

Together with the right to park in the garage pursuant to the terms and provisions of the lease between Cambridge 1400, Inc., and Escape Realty Trust, notice of which is recorded on December 19,1994 in Book 25047, Page 479, and filed as Document no. 964205, as affected by Assignment and Assumption of Lessee’s Interest under Parking Lease Agreement between Michael T. Reardon, as Trustee of Escape Realty Trust and One Kendall LLC, dated as of May 1,1998, recorded on May 5, 1998 in Book 28542, Page 160 and filed as Document No. 1064503.

 

Parcel Two:

 

A parcel of land situated in the City of Cambridge, Middlesex County, Commonwealth of Massachusetts being more particularly bounded and described as follows:

 

Beginning at a point on the division line between land now or formerly of Trustees of Old Portland Realty Trust and land now or formerly of Kendall Three Realty Trust, said point being S 53°55’46” E, a distance of 178.00 feet from the southeasterly line of Cardinal Medeiros Avenue;

 

THENCE running S 36°07’05” W, by land now or formerly of Calusa, N.V.; a Netherlands Antilles Corporation a distance of SS.50 feet, to a point;

 

THENCE running through land, now or formerly of Old Portland Realty Trust on the following two (2) courses;

 

N 53°52’55” W, a distance of 12.50 feet, to a point and

 

N 36°06’45” E, a distance of 55.49 feet, to a point at land now or formerly of Trustees of Kendall Three Realty Trust;

 

THENCE running by land of said Trustees of Kendall Three Realty Trust, S 53°55’46” E, a distance of 12.51 feet, to the Point of Beginning.

 

Said parcel is shown as Lot A on a plan titled “Subdivision Plan of Land in Cambridge, Massachusetts, being a subdivision of land as shown on Land Court Plan 1991 A, scale: 1” = 40’, September 23,1994” by Cullinan Engineering Co., Inc. Civil Engineers and Land Surveyors, Auburn - Boston, Massachusetts,

 

***Confidential Treatment Requested***

 

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***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

which plan is recorded as Plan No. 1147 of 1994 and contains 694 square feet, more or less, according to said plan.

 

Together with the right to park in the garage pursuant to the terms and provisions of the lease between Cambridge 1400, Inc., and Escape Realty Trust, notice of which is recorded on December 9,1994 in Book 25047, Page 479, as affected by Assignment and Assumption of Lessee’s Interest Under Parking Lease Agreement between Michael T. Reardon, as Trustee of Escape Realty Trust and One Kendall LLC, dated as of May 1,1998, recorded on May 5, 1998 in Book 28542, Page 160 and filed as Document No. 1064503.

 

Parcel Three:

 

A parcel of land situated in the City of Cambridge, Middlesex County, Commonwealth of Massachusetts being more particularly bounded and described as follows:

 

Beginning at a point on the division line between land now or formerly of Trustees of Kendall Three Realty Trust and land now or formerly of Cambridge Furniture Company, said point being S 53° 08’ 55” E, a distance of 178.01 feet from the southeasterly line of Cardinal Medeiros Avenue;

 

THENCE running S 53°08’ 55” E, in part by land of said Cambridge Furniture Company, and in part through land, now or formerly of Calusa, NV.; a Netherlands Antilles Corporation, a distance of 15.03 feet to a point;

 

THENCE running through land of said Calusa, N.V.; a Netherlands Antilles Corporation on the following six (6) courses:

 

S 24° 01’ 50” W, a distance of 19.90 feet, to a point; N 53° 52’ 55” W, a distance of 17.19 feet to a point; S 36° 07’ 05” W, a distance of 159.73 feet, to a point; S 53° 52’ 55” E, a distance of 31.69 feet, to a point; S 24° 12’ 53” W, a distance of 5.74 feet, to a point; and

 

N 53° 52’ 55” W, a distance of22.87 feet, to a point at a land now or formerly of Trustees of Old Portland Realty Trust;

 

THENCE running by land of said Trustees of Old Portland Realty Trust, N 53° 52’ 55” W, a distance of 12.00 feet to a point, and N 36° 07’ 05” E, a distance of 55.50 feet, to a point at land now or formerly of Trustees of Kendall Three Realty Trust;

 

THENCE running by land of said Trustees of Kendall Three Realty Trust, N 36° 07’ 05” E, a distance of 129.50 feet, to the Point of Beginning.

 

Said parcel is shown as Lot B on a plan titled “Subdivision Plan of Land in Cambridge, Massachusetts, being a subdivision of land as shown on Land Court Plan 1991 A, scale: 1”= 40’, September 23, 1994; by Cullinan Engineering Co., Inc. Civil Engineers and Land Surveyors, Auburn, Boston, Massachusetts, which plan is recorded as Plan No. 1147 of 1994 and contains 846 square feet, more or less, according to said plan.

 

Together with the right to park in the garage pursuant to the terms and provisions of the lease between Cambridge 1400, Inc., and Escape Realty Trust, notice of which is recorded on December 9,1994 in Book 25047, Page 479, as affected by Assignment and Assumption of Lessee’s Interest Under Parking Lease Agreement between Michael T. Reardon, as Trustee of Escape Realty Trust and One Kendall LLC, dated as of May 1,1998, recorded on May 5, 1998 in Book 28542, Page 160 and filed as Document No.1064503.

 

***Confidential Treatment Requested***

 

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***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

PARCELS ONE, TWO AND THREE of the Theatre Parcel herein described are shown as Recorded Land Area 24,806 square feet on a Plan prepared for Trustees of Escape Realty Trust dated July 23, 1996 and recorded as Plan No. 699 of 1996.

 

Parcel Four:

 

REGISTERED LAND:

 

A parcel of land situated in the City of Cambridge, Middlesex County, Commonwealth of Massachusetts being more particularly bounded and described as follows:

 

Beginning at a point, being the southwest corner of the parcel herein described at point being 180.00 feet southeasterly of the southeasterly line of Cardinal Medeiros Avenue, and being N 36° 07* 05” E and a distance of 171.15 feet from the northeasterly line of Binney Street.

 

THENCE running through land, now or formerly of Calusa, NV; a Netherlands Antilles Corporation, on the following (6) courses:

 

N 36° 07’ 05” E, a distance of 159.73 feet to a point, said course being 180.00 feet southeasterly of and parallel to the southeasterly line of Cardinal Medeiros Avenue;

 

S 53° 52’ 55” E, a distance of 17.19 feet, to a point;

 

S 24° 01’ 50” W, a distance of 25.55 feet, to a point;

 

N 65° 47’ 07” W, a distance of 18.84 feet, to a point;

 

S 24° 12’ 53” W. a distance of 133.74 feet, to a point; and

 

N 53° 52’ 55” W, a distance of 31.69 feet, to the Point of BegiiHiing.

 

Said parcel containing 2,890 square feet, more or less, according to the plan, and being shown as Lot 1 on a plan titled “Subdivision Plan of Land in Cambridge, Massachusetts, being a subdivision of land as shown on Land Court Plan 1991 A, Scale: 1”-= 40’, September 23,1994” by Cullinan Engineering Co., Inc. Civil Engineers and Land Surveyors, Auburn - Boston, Massachusetts, filed as Plan No. 1991B and also described in Certificate of Tide No. 201102 in Book 1135, Page 152.

 

Together with the right to park in the garage pursuant to the terms and provisions of the lease between Cambridge 1400, Inc., and Escape Realty Trust, notice of which is recorded on December 9,1994 in Book 25047, Page 479, as affected by Assignment and Assumption of Lessee’s Interest Under Parking Lease Agreement between Michael T. Reardon, as Trustee of Escape Realty Trust and One Kendall LLC, dated as of May 1,1998, recorded on May 5,1998 in Book 28542, Page 160 and filed as Document No.1064503.

 

Perimeter of Parcel for Buddings 1500 and 1700

 

Beginning at the intersection of northerly sideline of Binney Street with easterly sideline of Cardinal Medeiros Avenue.

 

Thence running N 22° 38’34” E along said easterly sideline of Cardinal Medeiros Avenue a distance of220.97 feet to a point at land now or formerly of One Kendall LLC;

 

Thence by land now or formerly of said One Kendall IXC the following four courses: S 67° 24’ 17” E a distance of 165.50 feet to a point; S 22° 38’ 14” W distance of 55.49 feet to a point; S 67° 21’ 26” E a distance of 24.50 feet to a point;

 

***Confidential Treatment Requested***

 

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***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

S 22° 38’ 34” W a distance of 165.53 feet to a point on the northerly sideline of Binney Street;

 

Thence N 67°22’57” W along said northerly sideline of Binney Street a distance of 190.00 feet to the point of beginning.

 

Perimeter of Theatre Parcel

 

A parcel of land located on Cardinal Medeiros Avenue in the City of Cambridge, Middlesex County, Commonwealth of Massachusetts, bounded and described as follows:

 

Beginning at a point along easterly sideline of Cardinal Medeiros Avenue, at a distance of 220.97 feet from the intersection of northerly sideline of Binney Street with easterly sideline of Cardinal Medeiros Avenue,

 

Thence running N 22°38’34” E along said easterly sideline of Cardinal Medeiros Avenue a distance of 131.93 feet to a point at land now or formerly of Red Jacket Limited Partnership;

 

Thence S 66°37’26” E a distance of 193.04 feet by land now or formerly of said Red Jacket Limited Partnership to a point at land now or formerly of One Kendall LLC;

 

Thence by land now or formerly of One Kendall LLC the following four courses:

 

S 10°33’ 19” W distance of45.45 feet to a point;

 

N 79°15’ 38” W a distance of 18.84 feet to a point;

 

S 10°44’22” W a distance of 139.48 feet to a point;

 

And N 67°21’26” W a distance of22.87 feet to a point at land now or formerly of Old Kendall Property LLC;

 

Thence by land of said Old Kendall Property LLC the following three courses:

 

N 67°21’26” W a distance of 24.50 feet to a point;

 

N 22°38’14” E a distance of 55.49 feet to a point;

 

And N 67°24’17” W a distance of 165.49 feet to the point of beginning

 

GARAGE PARCEL

 

PARTLY REGISTERED LAND:

 

A parcel of registered and unregistered land located on Binney Street, in the City of Cambridge, Middlesex County, Commonwealth of Massachusetts, bounded and described as follows;

 

Beginning at a point on the northerly sideline of Binney Street, said point being S 67°22’57” E a distance of 190.00 feet from the intersection of said northerly sideline of Binney Street with the easterly sideline of Cardinal Medeiros Avenue.

 

Thence running N 22° 38’ 34’ E along land now or formerly of Trustees of Old Portland Realty Trust a distance of 165.53 feet to a point at land now or formerly of Escape Realty Trust;

 

Thence by land now or formerly of said Escape Realty Trust the following five courses:

 

***Confidential Treatment Requested***

 

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***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

S 67°21’26” E a distance of22.87 feet to a point;

 

N 10°44’22” E a distance of 139.48 feet to a point;

 

S 79°15’38”E a distance of 18.84 feet to a point;

 

N 10°33’19” E a distance of45.45 feet to a point; and

 

N 66°37’26” W a distance of 13.03 feet to a point at land now or formerly of Cambridge Furniture Company;

 

Thence N 22°38’34” E by land of said Cambridge Furniture Company a distance of 109.85 feet to a point;

 

Thence S 67°2P26” E a distance of205.92 feet to a point at land now or formerly of Consolidated Rait Corporation;

 

Thence S 10 44’ 19” W by land now or formerly of said Consolidated Rail Corporation a distance of 510.75 feet to a point on the northerly sideline of Binney Street;

 

Thence N 57°11’37” W along the northerly sideline of Binney Street a distance of 223.54 feet to a point;

 

Thence N 67°22’57” W continuing along said northerly sideline of Binney Street a distance of 81.24 feet to the point of beginning.

 

Including Lot 2 shown on Land Court Plan 1991 B (Registered Land).

 

Together with the rights set forth in Easements Agreement dated December 17,1984, between Old Cambridge Realty Trust and the Old Kendall Trustees, filed as Document No. 673502, as affected by Amendment to Easements Agreement, dated April 7, 2006 and filed as Document No. 1416496.

 

LOT 1B

 

That certain parcel of land situated in the City of Cambridge, Middlesex County, Commonwealth of Massachusetts, bounded and described as follows:

 

Beginning at the northwest corner of Lot 1A, said point being the southwest comer of the parcel herein described:

 

THENCE running N 10°45’46” E, in part by land now or formerly of Linden Park Homes, Inc., in part by Wellington Harrington Memorial Way and in part by land, now or formerly of William Burke & Ruth Burke, a distance of 743.59 feet to a point;

 

THENCE running S 80°26’35” E by Lot 2 on a plan hereinafter described, a distance of 17.00 feet, to a point;

 

THENCE pinning S 10°44’19 W, by land now or formerly of Consolidated Rail Corporation, a distance of 747.58 feet to a point, being the northeast corner of Lot 1 A;

 

THENCE running N 67°21’26” W, by Lot 1 A, a distance of 17.69 feet to the point of beginning.

 

Said parcel being part of Lot 1 shown on a plan by Survey Engineers of Boston tided, “Subdivision Plan of Land in Cambridge, MA” dated January 5, 1987 and recorded as Plan No. 1747 of 1987 in Book 18765, Page 303.

 

***Confidential Treatment Requested***

 

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***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

EXHIBIT C TO LEASE

 

WORK LETTER

 

THIS WORK LETTER (this “ Work Letter ”) is attached to and incorporated into that certain Lease dated January 18, 2018 (the “ Lease ”) by and between ARE-MA REGION NO. 58, LLC , a Delaware limited liability company (“ Landlord ”), and RUBIUS THERAPEUTICS, INC. , a Delaware corporation (“ Tenant ”). Any initially capitalized terms used but not defined herein shall have the meanings given them in the Lease.

 

1.                                       General Requirements; Landlord’s Construction of the Building .

 

(a)                                  Tenant’s Authorized Representative . Tenant designates Joanne Protano and Torben Straight Nissen (either such individual acting alone, “ Tenant’s Representative ”) as the only persons authorized to act for Tenant pursuant to this Work Letter. Landlord shall not be obligated to respond to or act upon any request, approval, inquiry or other communication (“ Communication ”) from or on behalf of Tenant in connection with this Work Letter unless such Communication is in writing from Tenant’s Representative. Tenant may change either Tenant’s Representative at any time upon not less than 5 business days’ advance written notice to Landlord. Neither Tenant nor Tenant’s Representative shall be authorized to direct Landlord’s contractors in the performance of Landlord’s Work (as hereinafter defined).

 

(b)                                  Landlord’s Authorized Representative . Landlord designates William DePippo and Tim White (either such individual acting alone, “ Landlord’s Representative ”) as the only persons authorized to act for Landlord pursuant to this Work Letter. Tenant shall not be obligated to respond to or act upon any request, approval, inquiry or other Communication from or on behalf of Landlord in connection with this Work Letter unless such Communication is in writing from Landlord’s Representative. Landlord may change either Landlord’s Representative at any time upon not less than 5 business days’ advance written notice to Tenant. Landlord’s Representative shall be the sole persons authorized to direct Landlord’s contractors in the performance of Landlord’s Work.

 

(c)                                   Landlord’s Construction of the Building . Landlord shall construct the following improvements on the Land (collectively, the “ Non-TI Project Improvements ”): (i) shell and core improvements for the Building (the “ Shell and Core Improvements ”); and (ii) all landscaping, plaza areas, walkways, driveways, sidewalks, and other improvements for the Project (the “ Site Improvements ”), in accordance with the Shell, Gore and Site Construction Documents (as defined below). Landlord shall construct the Non-TI Project Improvements at its sole cost and expense, except as otherwise expressly set forth herein. The cost of the Tenant Improvements to be undertaken by Landlord shall be paid for in accordance with Section 6 of this Work Letter.

 

(i)                                      Non-TI Project Improvements; Non-TI Construction Manager . The construction manager for the Non-TI Project Improvements is The Richmond Group (“ Non-TI Construction Manager ”). The Non-TI Project Improvements shall be constructed pursuant to the Shell, Core and Site Construction Documents, as the same may be further modified as provided in this Work Letter to include any Landlord Modifications (as such term is defined below) and/or as required by any applicable Governmental Authorities.

 

(ii)                                   Project Architect . Landlord has engaged Perkins & Will as the architect for the Non-TI Project Improvements (the “ Project Architect ”).

 

(iii)                                Shell, Core and Site Construction Documents . The Shell, Core and Site Construction Documents for the construction of the Non-TI Project Improvements, a copy of which were furnished to and approved by Tenant prior to execution of the Lease, are listed on Schedule 1(c)(iii)  (the “ Shell Core and Site Construction Documents ”).

 

***Confidential Treatment Requested***

 

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***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

(iv)                               Landlord Modifications to Shell, Core and Site Construction Documents . It is anticipated that as Landlord completes construction of the Non-TI Project Improvements, Landlord may reasonably require changes to the Shell, Core and Site Construction Documents as Landlord shall desire and/or as may be required to obtain occupancy permits and other governmental approvals and comply with Legal Requirements. Landlord shall be entitled, from time to time, to make any such changes to the Shell, Core and Site Construction Documents (collectively, the “ Landlord Modifications ”), without Tenant’s consent, so long as such Landlord Modifications, if implemented, would not: (i) effect material changes to the design of the Non-TI Project Improvements to the extent that such design affects the Premises or the construction of the Tenant Improvements; or (ii) adversely affect Tenant’s contemplated use or occupancy of the Building or the Project for the Permitted Uses; or (iii) materially increase the costs, or delay the Tl Substantial Completion, of the Tenant Improvements (each as hereinafter defined) beyond the Target Commencement Date (collectively, an “ Adverse Condition ”); provided, however, to the extent a Landlord Modification is necessary to comply with Legal Requirements or is required by any applicable Governmental Authorities in connection with its enforcement of Legal Requirements, such Landlord Modification shall not constitute an Adverse Condition. In the event any such Landlord Modification, if implemented, would create an Adverse Condition, Landlord shall notify Tenant in writing of such Landlord Modifications prior to implementation thereof (which notice shall include Landlord’s description of the Adverse Condition, and the adverse effects and impacts which Landlord believes comprise such Adverse Condition to the extent then known or reasonably anticipated by Landlord), and Tenant shall, within five (5) business days after receipt of Landlord’s notice, notify Landlord of Tenant’s approval or reasonable disapproval thereof with specified reasons for such disapproval. Tenant’s failure to notify Landlord of its approval or reasonable disapproval within such five (5) business day period shall be deemed Tenant’s approval of such proposed Landlord Modifications. In the event such Landlord Modifications, if implemented, would materially increase the costs of the Tenant Improvements, then Landlord and Tenant shall consult and coordinate on ways to minimize the effect of such Landlord Modification on the cost of the Tenant Improvements. If such Landlord Modification was desired by Landlord but not required to obtain occupancy permits and other governmental approvals or to comply with Legal Requirements (a “ Landlord Desired Modification ”) and after such consultation and coordination the effect of such Landlord Desired Modification will be to increase the costs of the Tenant Improvements, such increase in costs shall be borne by Landlord and not counted against the Tl Allowance (as defined in Section 6 of this Work Letter). Tenant shall have no right to make or request, and Landlord shall, in its sole discretion, have no obligation to approve and may disapprove, any changes to the Shell, Core and Site Construction Documents desired by Tenant.

 

(v)                                  Completion of the Non-TI Project Improvements . Landlord shall use commercially reasonable efforts to Substantially Complete the Shell and Core Improvements by November 1, 2018. For purposes of this Work Letter, the term “ Substantially Complete ”, “ Substantially Completed ” or “ Substantial Completion ” with regard to the Shell and Core Improvements shall mean the later to occur of (i) the substantial completion of construction of the Shell and Core improvements, as certified by the Project Architect, pursuant to and evidenced by a fully executed AIA G704 form signed by Landlord, Non-TI Construction Manager and the Project Architect, with the exception of any Punch List Items (as defined below), and (ii) the issuance by the City of Cambridge of a certificate of occupancy for the Shell and Core (unless such certificate is not available due to requirements of the Tenant Improvements or improvements to other tenant spaces that in either case preclude issuance of a certificate of occupancy, in which case a certificate of occupancy shall not be a condition precedent to Substantial Completion, but Landlord shall obtain such a certificate within a reasonable time after such requirements have been satisfied). Punch List Items, shall be diligently completed by Landlord within a reasonable time, provided that Punch List Items which arise due to a delayed delivery of such Punch List Item or material portion thereof shall be completed no later than ninety (90) days after Substantial Completion (except for items which cannot be completed until the Tenant Improvements are completed by Tenant, or for items affected by seasonal conditions, each of which shall be completed as soon as practicable). The term “ Punch List Items ” shall mean minor items of completion, correction or repair with respect to the Non-TI Project

 

***Confidential Treatment Requested***

 

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***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

Improvements, which, by their nature, will not interfere with, or impair in any material respect, Tenant’s use or occupancy of the Project for the purposes contemplated under the Lease, and which will not delay Tenant’s commencement of business operations in the Premises. Following the Substantial Completion of the Shell and Core Improvements, Landlord shall use commercially reasonable efforts to complete any remaining Site Improvements that are not complete as of the date of Substantial Completion of the Shell and Core Improvements as soon as reasonably practicable, which for all seasonal components of the Site Improvements shall be prior to the end of the first full planting season that begins after the date of Substantial Completion of the Shell and Core Improvements.

 

2.                                       Tenant Improvements .

 

(a)                                  Tenant Improvements Defined . As used herein, “ Tenant Improvements ” shall mean all improvements to the Premises and permitted areas of the Project of a fixed and permanent nature as shown on the Tl Construction Drawings (as defined in Section 2(d)  below). Other than Landlord’s Work (as defined in Section 3(a)  below, Landlord shall not have any obligation whatsoever with respect to the finishing of the Premises for Tenant’s use and occupancy.

 

(b)                                  Architects, Consultants and Contractors . Landlord and Tenant hereby acknowledge and agree that: (i) the construction manager for the Tenant Improvements shall be The Richmond Group (the “ Tenant Improvements Construction Manager ”) and any subcontractors for the Tenant Improvements shall be selected by Landlord, and (ii) Perkins & Will shall be the architect (the “ Tl Architect ”) for the Tenant Improvements. Tenant shall have the right to engage at Tenant’s sole cost and expense a tenant’s construction manager (“ Tenant’s Construction Manager ”) to oversee the Tenant Improvements. Tenant’s Construction Manager and the agreement pursuant to which Tenant shall engage Tenant’s Construction Manager shall each be subject to Landlord’s reasonable approval.

 

(c)                                   Tenant’s Design Program . The Tenant Improvements shall include the components listed in the “Tenant” column in the Landlord/Tenant Responsibility Matrix in Schedule 2(c)(i)  (the “ Landlord/Tenant Responsibility Matrix ”). The schematic drawings and outline specifications detailing Tenant’s requirements for the Tenant Improvements attached hereto as Schedule 2(c)(ii)  (the “ Tl Design Program ”) have been approved by both Landlord and Tenant.

 

(d)                                  Working Drawings . Landlord shall cause the Tl Architect to prepare and deliver to Tenant for review and comment the construction plans, specifications and drawings for the Tenant Improvements (“ Tl Construction Drawings ”), which Tl Construction Drawings shall be prepared substantially in accordance with the Tl Design Program approved by Landlord and Tenant (together, the “ Tl Design Drawings ”) and comply in all respects with the Landlord/Tenant Responsibility Matrix and the LEED standards attached hereto as Schedule 2(d)  and the WELL standard attached hereto as Schedule 2(e) . Tenant shall be solely responsible for ensuring that the Tl Construction Drawings reflect Tenant’s requirements for the Tenant Improvements. Tenant shall deliver its written comments on the Tl Construction Drawings to Landlord not later than 10 business days after Tenant’s receipt of the same; provided, however, that Tenant may not disapprove any matter that is consistent with the Tl Design Drawings without submitting a Change Request. Landlord and the Tl Architect shall consider all such comments in good faith and shall, within 10 business days after receipt, notify Tenant how Landlord proposes to respond to such comments, but Tenant’s review rights pursuant to the foregoing sentence shall not delay the design or construction schedule for the Tenant Improvements. Any disputes in connection with such comments shall be resolved in accordance with Section 2(e)  hereof. Provided that the design reflected in the Tl Construction Drawings is consistent with the Tl Design Drawings, Tenant shall approve in writing the Tl Construction Drawings submitted by Landlord, unless Tenant submits a Change Request. Once approved by Tenant, subject to the provisions of Section 4 below, Landlord shall not materially modify the Tl Construction Drawings except as may be reasonably required in connection with the issuance of the Tl Permit (as defined in Section 3(b)  below).

 

(e)                                   Approval and Completion . It is hereby acknowledged by Landlord and Tenant that the Tl Construction Drawings must be completed and approved not later than May 1, 2018, in order for the

 

***Confidential Treatment Requested***

 

3



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

Landlord’s Work to be Tl Substantially Complete by the Target Commencement Date (as defined in the Lease). Upon any dispute regarding the design of the Tenant Improvements, which is not settled within 10 business days after notice of such dispute is delivered by one party to the other, Tenant may make the final decision regarding the design of the Tenant Improvements, provided (i) Tenant acts reasonably and such final decision is either consistent with or a compromise between Landlord’s and Tenant’s positions with respect to such dispute, (ii) that all costs and expenses resulting from any such decision by Tenant shall be payable out of the Tl Fund (as defined in Section 5(e)  below), and (iii) Tenant’s decision will not affect the base Building, structural components of the Building or any Building systems. Any changes to the TI Construction Drawings following Landlord’s and Tenant’s approval of same requested by Tenant shall be processed as provided in Section 4 hereof.

 

3.                                       Performance of Landlord’s Work for the Construction of the Tenant Improvements .

 

(a)                                  Definition of Landlord’s Work . As used herein, “ Landlord’s Work ” shall mean the work of constructing the Tenant Improvements.

 

(b)                                  Commencement and Permitting . Landlord shall commence construction of the Tenant Improvements upon Landlord’s obtaining a building permit (the “ Tl Permit ”) authorizing the construction of the Tenant Improvements consistent with the Tl Construction Drawings approved by Tenant as provided herein. The cost of obtaining the Tl Permit shall be payable from the TI Fund. Tenant shall assist Landlord in obtaining the Tl Permit. If any Governmental Authority having jurisdiction over the construction of Landlord’s Work or any portion thereof shall impose terms or conditions upon the construction thereof that: (i) are inconsistent with Landlord’s obligations hereunder, (ii) increase the cost of constructing Landlord’s Work, or (iii) will materially delay the construction of Landlord’s Work, Landlord and Tenant shall reasonably and in good faith seek means by which to mitigate or eliminate any such adverse terms and conditions.

 

(c)                                   Completion of Landlord’s Work . Landlord shall use commercially reasonably efforts to Tl Substantially Complete the Tenant Improvements by the Target Commencement Date. It is hereby acknowledge by Landlord and Tenant that the permit set based on the Tl Construction Drawings must be completed on or before May 1, 2018, in order for the Tenant Improvement to the Tl Substantially Complete by the Target Commencement Date. Landlord shall substantially complete or cause to be substantially completed Landlord’s Work in a good and workmanlike manner, in accordance with the Tl Permit subject, in each case, to Minor Variations and normal “punch list” items of a non-material nature that do not interfere with Tenant’s use of the Premises (“ Tl Substantially Complete ”, “ Tl Substantially Completed ”, or “ Tl Substantial Completion ”), which punch list items shall be completed by Landlord within sixty (60) days after the date of Tl Substantial Completion. Upon Tl Substantial Completion of Landlord’s Work, Landlord shall require the Tl Architect and the Tenant Improvements Construction Manager to execute and deliver, for the benefit of Tenant and Landlord, a Certificate of Substantial Completion in the form of the American Institute of Architects (“ AIA ”) document G704. For purposes of this Work Letter, “ Minor Variations ” shall mean any modifications reasonably required: (i) to comply with all applicable Legal Requirements and/or to obtain or to comply with any required permit (including the Tl Permit); (ii) to comply with any request by Tenant for modifications to Landlord’s Work; (iii) to comport with good design, engineering, and construction practices that are not material; or (iv) to make reasonable adjustments for field deviations or conditions encountered during the construction of Landlord’s Work.

 

(d)                                  Selection of Materials . Where more than one type of material or structure is indicated on the Tl Construction Drawings approved by Landlord and Tenant, the option will be selected at Landlord’s sole and absolute subjective discretion. As to all building materials and equipment that Landlord is obligated to supply under this Work Letter, Landlord shall select the manufacturer thereof in its sole and absolute subjective discretion.

 

(e)                                   Delivery of the Premises . When Landlord’s Work is Tl Substantially Complete, subject to the remaining terms and provisions of this Section 3(e) . Tenant shall accept the Premises. Tenant’s taking possession and acceptance of the Premises shall not constitute a waiver of: (i) any warranty with

 

***Confidential Treatment Requested***

 

4


 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

respect to workmanship (including installation of equipment) or material (exclusive of equipment provided directly by manufacturers), (ii) any non-compliance of Landlord’s Work with applicable Legal Requirements, or (iii) any claim that Landlord’s Work was not completed substantially in accordance with the Tl Construction Drawings (subject to Minor Variations and such other changes as are permitted hereunder) (collectively, a “ Construction Defect ”). Tenant shall have one year after Tl Substantial Completion within which to notify Landlord of any such Construction Defect discovered by Tenant, and Landlord shall use reasonable efforts to remedy or cause the responsible contractor to remedy any such Construction Defect within 30 days thereafter. Notwithstanding the foregoing, Landlord shall not be in default under the Lease if the applicable contractor, despite Landlord’s reasonable efforts, fails to remedy such Construction Defect within such 30-day period, in which case Landlord shall continue to use reasonable efforts to cause such Construction Defect to be remedied.

 

Tenant shall be entitled to receive the benefit of all construction warranties and manufacturer’s equipment warranties relating to equipment installed in the Premises. If requested by Tenant, Landlord shall attempt to obtain extended warranties from manufacturers and suppliers of such equipment, but the cost of any such extended warranties shall be borne solely out of the Tl Fund. Landlord shall promptly undertake and complete, or cause to be completed, all punch list items.

 

(f)                                    Commencement Date Delay . Except as otherwise provided in the Lease, Delivery of the Premises shall occur when Landlord’s Work has been Tl Substantially Completed, except to the extent that completion of Landlord’s Work shall have been actually delayed by any one or more of the following causes (“ Tenant Delay ”):

 

(i)                                      Tenant’s Representative was not available within 3 business days to give or receive any Communication or to take any other action required to be taken by Tenant within the time period required hereunder;

 

(ii)                                   Tenant’s request for Change Requests (as defined in Section 4(a)  below) whether or not any such Change Requests are actually performed;

 

(iii)                                Construction of any Change Requests;

 

(iv)                               Tenant’s request for materials, finishes or installations requiring unusually long lead times;

 

(v)                                  Tenant’s delay in reviewing, revising or approving plans and specifications beyond the periods set forth herein;

 

(vi)                               Tenant’s delay in providing information critical to the normal progression of Landlord’s Work within the time period required hereunder (or, if no time period is provided for hereunder, 2 business days). Tenant shall provide such information as soon as reasonably possible, but in no event longer than one week after receipt of any request for such information from Landlord;

 

(vii)                            Tenant’s delay in making payments to Landlord for Excess Tl Costs (as defined in Section 5 below);

 

(viii)                         Labor disharmony as a result of non-union labor employed by any contractor or subcontractor engaged by Tenant or any Tenant Party; or

 

(ix)                               Any other act or omission by Tenant or any Tenant Party (as defined in the Lease), or persons employed by any of such persons that continues for more than 2 business days after Landlord’s written notice thereof to Tenant.

 

***Confidential Treatment Requested***

 

5



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

If Delivery is delayed for any of the foregoing reasons, then Landlord shall cause the Tl Architect to certify the date on which the Tenant Improvements would have been completed but for such Tenant Delay and such certified date shall be the date of Delivery.

 

4.                                       Changes . Any changes requested by Tenant to the Tenant Improvements after the delivery and approval by Landlord of the Tl Design Drawings shall be requested and instituted in accordance with the provisions of this Section 4 and shall be subject to the written approval of Landlord and the Tl Architect, such approval not to be unreasonably withheld, conditioned or delayed.

 

(a)                                  Tenant’s Request for Changes . If Tenant shall request changes to the Tenant Improvements (“ Changes ”), Tenant shall request such Changes by notifying Landlord in writing in substantially the same form as the AIA standard change order form (a “ Change Request ”), which Change Request shall detail the nature and extent of any such Change. Such Change Request must be signed by Tenant’s Representative. Landlord shall, before proceeding with any Change, use commercially reasonable efforts to respond to Tenant as soon as is reasonably possible with an estimate of: (i) the time it will take, and (ii) the architectural and engineering fees and costs that will be incurred, to analyze such Change Request (which costs shall be paid from the Tl Fund to the extent actually incurred, whether or not such change is implemented). Landlord shall thereafter submit to Tenant in writing, within 5 business days of receipt of the Change Request (or such longer period of time as is reasonably required depending on the extent of the Change Request), an analysis of the additional cost or savings involved, including, without limitation, architectural and engineering costs and the period of time, if any, that the Change will extend the date on which Landlord’s Work will be Tl Substantially Complete. Any such delay in the completion of Landlord’s Work caused by a Change, including any suspension of Landlord’s Work while any such Change is being evaluated and/or designed, shall be Tenant Delay.

 

(b)                                  Implementation of Changes . If Tenant: (i) approves in writing the cost or savings and the estimated extension in the time for completion of Landlord’s Work, if any, and (ii) deposits with Landlord any Excess Tl Costs required in connection with such Change, Landlord shall cause the approved Change to be instituted. Notwithstanding any approval or disapproval by Tenant of any estimate of the delay caused by such proposed Change, the Tl Architect’s good faith determination of the amount of Tenant Delay in connection with such Change shall be final and binding on Landlord and Tenant.

 

5.                                       Costs .

 

(a)                                  Budget for Tenant Improvements . Before the commencement of construction of the Tenant Improvements, Landlord shall obtain a detailed breakdown by trade of the costs incurred or that will be incurred in connection with the design and construction of the Tenant Improvements (the “ Budget ”). The Budget shall be based upon the Tl Construction Drawings approved by Tenant. If the Budget is greater than the Tl Allowance, the Tl Costs shall be funded on a pari passu basis as costs are incurred in accordance with Sections 5(e)  and 5(f) . below.

 

(b)                                  Tl Allowance . Landlord shall make available for the payment of the Tl Costs a tenant improvement allowance (the “ Tl Allowance ”) of $ [ *** ] per rentable square foot of the Premises. Within 5 business days of receipt of the Budget from Landlord, Tenant shall notify Landlord in writing how much of the Tl Allowance Tenant has elected to receive from Landlord (the “ Tl Allowance Election ”); provided, however that if Tenant does not elect the full amount of the Tl Allowance in the Tl Allowance Election, Tenant may elect to have additional funds, not to exceed any positive amount remaining after subtraction of the amount elected in the Tl Allowance Election from the Tl Allowance, to be made available to pay for the Tenant Improvements as part of the Tl Allowance (if any, the “ Subsequent Tl Allowance Election ”), upon 10 business days’ prior written notice to Landlord, which prior written notice of any Subsequent Tl Allowance Election shall be given, if at all, within 45 days of the date of Tenant’s initial Tl Allowance Election. The Subsequent Tl Allowance Election and Tl Allowance Election (or if no Subsequent Tl Allowance Election is made within the time period required, the Tl Allowance Election itself) shall be final and binding on Tenant, and may not thereafter be modified without Landlord’s consent, which may be granted or withheld in Landlord’s sole and absolute subjective discretion. The Tl Allowance shall be disbursed in accordance with this Work Letter.

 

***Confidential Treatment Requested***

 

6



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

In addition to the Tl Allowance and the Additional Tl Allowance (as hereinafter defined), Landlord shall reimburse Tenant for up to $ [ *** ] per month, beginning as of November 1, 2017, through December 31, 2018, for the actual, reasonable out-of-pocket costs incurred by Tenant for the management and oversight of the Tenant Improvements by Tenant’s third party project manager (the “ PM Allowance ”). Landlord shall disburse the PM Allowance to Tenant on a periodic basis, (but no more than once per month) within 30 days after Landlord’s receipt of Tenant’s invoices reflecting such costs along with evidence of payment reasonably acceptable to Landlord.

 

Tenant shall have no right to the use or benefit (including any reduction to or payment of Base Rent) of any portion of the Tl Allowance not required for the construction of (i) the Tenant Improvements described in the Tl Construction Drawings approved pursuant to Section 2(d)  or (ii) any approved Changes pursuant to Section 4 .

 

(c)                                   Additional Tl Allowance . Landlord shall make available for the payment of Excess Tl Costs an additional tenant allowance (the “ Additional Tl Allowance ”) of $ [ *** ] per rentable square foot of the Premises, which shall, to the extent use, result in Tl Rent pursuant to Section 4(b)  of the Lease. Tenant shall make its election regarding how much of the Additional Tl Allowance elects to receive pursuant to the schedule and terms set forth in Section 5(b)  above with respect to the Tl Allowance.

 

(d)                                  Costs Includable in Tl Fund . The Tl Fund (as defined in Section 5(e)  below) shall be used solely for the payment of design, permits and construction costs in connection with the construction of the Tenant Improvements, including, without limitation, the cost of electrical power and other utilities used in connection with the construction of the Tenant Improvements, the cost of preparing the Tl Design Drawings and the Tl Construction Drawings, all costs set forth in the Budget, including Landlord’s out-of-pocket expenses, costs resulting from Tenant Delays and the cost of Changes (collectively, “ Tl Costs ”). Notwithstanding anything to the contrary contained herein, the Tl Fund shall not be used to purchase any furniture, personal property or other non-building system materials or equipment, including, but not limited to, Tenant’s voice or data cabling, non-ducted biological safety cabinets and other scientific equipment not incorporated into the Tenant Improvements.

 

(e)                                   Excess Tl Costs . Landlord shall have no obligation to bear any portion of the cost of any of the Tenant Improvements except to the extent of the Tl Allowance and the Additional Tl Allowance that Tenant has elected to receive. If at any time the remaining Tl Costs under the then-current Budget exceed the remaining unexpended Tl Allowance and Additional Tl Allowance that Tenant has elected to receive (such excess sometimes referred to herein as “ Excess Tl Costs ”), each party’s obligations for payment shall be as set forth in this Section 5(e)  and in Section 5(f) . The Tl Allowance, the Additional Tl Allowance and Excess Tl Costs are herein referred to as the “ Tl Fund .” As used in this Work Letter, “ Landlord’s Portion ” shall equal the Tl Allowance and the Additional Tl Allowance that Tenant has elected to receive. For purposes of this Work Letter, “ Landlord’s Proportionate Share ” shall mean a fraction, the numerator of which shall be the Landlord’s Portion and the denominator of which shall be the then-current Budget. If at any time Tl Costs under the then-current Budget exceed the Tl Allowance and the portion of the Additional Tl Allowance that Tenant has elected to receive, the difference shall be referred to herein as “ Tenant’s Portion .” For purposes of this Work Letter, “ Tenant’s Proportionate Share ” shall mean a fraction, the numerator of which is Tenant’s Portion and the denominator of which is the then-current Budget. Upon notice to Tenant, Landlord may equitably adjust Landlord’s Proportionate Share and Tenant’s Proportionate Share from time to time based on changes in the anticipated Tl Costs. After the end of each calendar month, beginning with the month in which Landlord obtains the Budget: (i) Landlord shall determine the Tl Costs incurred for the prior calendar month (and if applicable, for the period prior to Lease execution) (collectively, the “ Total Monthly Costs ”), (ii) Tenant shall reimburse Landlord within the time period set forth in Section 5(f)  below for Tenant’s Proportionate Share of Total Monthly Costs, and (iii) Landlord shall pay Landlord’s Proportionate Share of Total Monthly Costs from the remaining amount of the Tl Allowance.

 

(f)                                    Funding Requisition; Reconciliation; Timely Payment . Landlord shall submit to Tenant monthly during the performance of the Tenant Improvements a report (each, a “ Reimbursement Notice ”) setting forth in reasonable detail: (i) a computation of the Tl Costs incurred during the prior

 

***Confidential Treatment Requested***

 

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***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

calendar month, including without limitation costs relating to all requested Changes; (ii) the then-current cumulative Tl Costs; and (iii) Landlord’s calculation of the parties’ respective responsibilities for payment of such costs for such month (i.e., the estimated amounts of Tenant’s Portion and/or Landlord’s Portion due for such month). Each month, Landlord shall prepare a reconciliation of actual Tl Costs with Tl Costs in accordance with the Budget for which Tenant has advanced Tenant’s Proportionate Share, and: (x) in the event of any overpayment by Tenant, then, solely to the extent of any Tenant’s Proportionate Share that Tenant has actually deposited with Landlord, such overpayment shall be credited against the amounts next due hereunder unless construction of the Tenant Improvements is completed, in which case such overpayment shall be promptly refunded to Tenant; and (y) in the event of an underpayment by Tenant, Tenant shall, as a condition precedent to Landlord’s obligation to complete the Tenant Improvements, reimburse Landlord therefor within thirty (30) days of receipt of a Reimbursement Notice. Notwithstanding anything to the contrary set forth in this Section, Tenant shall be fully and solely liable for Tl Costs and the costs of Changes and Minor Variations in excess of the Tl Allowance. Reimbursement Notices may be sent during a calendar month for the prior calendar month and shall be submitted no later than the end of each calendar month for the prior calendar month. Upon final completion of the Tenant Improvements (including all Punch List Items), Landlord shall prepare a final reconciliation consisting of a reconciliation of the total costs of the Tenant Improvements. Tenant shall pay to Landlord the amount of Tenant’s Proportionate Share of Total Monthly Costs as set forth in each Reimbursement Notice within thirty (30) days of receipt of each Reimbursement Notice (or such lesser period as may be required to enable Landlord to comply with the Massachusetts “Prompt Pay” legislation). Such payment by Tenant shall be a condition precedent to Landlord’s obligation to complete the Tenant Improvements. If Tenant fails to pay Tenant’s Proportionate Share of Total Monthly Costs as set forth in any Reimbursement Notice within such period, Landlord shall have all of the rights and remedies set forth in the Lease for nonpayment of Rent (including, but not limited to, the right to interest at the Default Rate and the right to assess a late charge, each in accordance with the terms of the Lease). For purposes of any claims made or litigation instituted with regard to Tenant’s Portion or Tenant’s Proportionate Share of Total Monthly Costs, such amounts shall constitute Rent under the Lease.

 

6.                                       Tenant Access .

 

(a)                                  Tenant’s Access Rights . Landlord hereby agrees to permit Tenant access, at Tenant’s sole risk and expense, to the Building (i) 60 days prior to the Commencement Date to perform any work (“ Tenant’s Work ”) required by Tenant (including, without limitation, installing furniture, fixtures, equipment and cabling in the Premises) other than Landlord’s Work, provided that such Tenant’s Work is coordinated with the Tl Architect and the Tenant Improvements Construction Manager, and complies with the Lease and all other reasonable restrictions and conditions Landlord may impose, and (ii) prior to the completion of Landlord’s Work, to inspect and observe work in process; all such access shall be during normal business hours or at such other times as are reasonably designated by Landlord. Notwithstanding the foregoing, Tenant shall have no right to enter onto the Premises or the Project unless and until Tenant shall deliver to Landlord evidence reasonably satisfactory to Landlord demonstrating that any insurance reasonably required by Landlord in connection with such pre-commencement access (including, but not limited to, any insurance that Landlord may require pursuant to the Lease) is in full force and effect. Any entry and access by Tenant shall comply with all established safety practices of the Tenant Improvements Construction Manager and Landlord.

 

(b)                                  No Interference . Neither Tenant nor any Tenant Party (as defined in the Lease) shall interfere with the performance of Landlord’s Work or the work on the Non-TI Project Improvements, nor with any inspections or issuance of final approvals by applicable Governmental Authorities, and upon any such interference, Landlord shall have the right, in addition to other rights and remedies under the Work Letter or Lease, to exclude Tenant and/or any Tenant Party from the Premises and the Project until Tl Substantial Completion of Landlord’s Work.

 

(c)                                   Labor Harmony . Tenant agrees that any work performed by or on behalf of Tenant or any Tenant Party shall be performed in such manner and by such persons as shall maintain harmonious labor relations at the Project. If labor disharmony arises as a result of non-union labor employed by a subcontractor or other contractor engaged by Tenant or any Tenant Party, and such labor disharmony

 

***Confidential Treatment Requested***

 

8



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

causes a delay in the construction of the Non-TI Project Improvements or Landlord’s Work, such delay shall be a Tenant Delay under this Work Letter. If labor disharmony arises as a result of a contractor or subcontractor engaged by Tenant or any Tenant Party, or if Landlord reasonably believes that a contractor or subcontractor employed by Tenant or any Tenant Party will cause labor disharmony in the Project, Landlord shall have the right, in addition to other rights and remedies under the Work Letter or Lease, to exclude from the Premises and Project such contractor or subcontractor employed by Tenant or any Tenant Party.

 

(d)                                  No Acceptance of Premises . The fact that Tenant may, with Landlord’s consent, enter into the Project prior to the date Landlord’s Work is Tl Substantially Complete for the purpose of performing Tenant’s Work shall not be deemed an acceptance by Tenant of possession of the Premises, but in such event Tenant shall defend with counsel reasonably acceptable by Landlord, indemnify and hold Landlord harmless from and against any loss of or damage to Tenant’s property, completed work, fixtures, equipment, materials or merchandise, and from liability for death of, or injury to, any person, caused by the act or omission of Tenant or any Tenant Party.

 

7.                                       Miscellaneous .

 

(a)                                  Consents . Whenever consent or approval of either party is required under this Work Letter, that party shall not unreasonably withhold, condition or delay such consent or approval, unless expressly set forth herein to the contrary.

 

(b)                                  Modification . No modification, waiver or amendment of this Work Letter or of any of its conditions or provisions shall be binding upon Landlord or Tenant unless in writing signed by Landlord and Tenant.

 

(c)                                   Default . Notwithstanding anything set forth herein or in the Lease to the contrary, Landlord shall not have any obligation to perform any work hereunder or to fund any portion of the Tl Fund during any period Tenant is in Default under the Lease.

 

8.                                       Project Accounting . Tenant may require certain financial information with respect to Operating Expenses, Taxes and this Landlord’s Work to comply with lease accounting requirements applicable to Tenant under generally accepted accounting standards in the United States (“ Special Permitted Use ”). Tenant may require this financial information from the execution of the Lease in connection with Landlord’s Work through completion of the Non-TI Project Improvements and the Tenant Improvements. On a quarterly basis within 15 days of the end of each quarter, Landlord shall provide to Tenant the following (such documents, and any others Landlord may consent to provide including invoices, supporting schedules, and any other document provided or subject to physical inspection, collectively, the “ Disclosed Documents ”):

 

1)                                      an updated report as to certain costs of the Non-TI Project Improvements and the Tenant Improvements (each as defined) for the categories of expense identified in the attached Schedule 8 (collectively, “ Reported Project Costs ”), in the format attached hereto as Schedule 8 , and (b) after final confirmation of the completion of the Non-TI Project Improvements and the Tenant Improvements, a final report with respect to the Reported Project Costs in the format attached hereto as Schedule 8 .

 

2)                                      Financial information with respect to the Landlord’s Work in the form of monthly American Institute of Architects (“ AIA ”) document G702 (to the extent received by Landlord) through completion of the Non-TI Project Improvements and the Tenant Improvements.

 

Landlord shall be available to answer reasonable questions necessary for the Tenant to gain comfort over any cost balances through inquiry and analytics. Tenant may request additional information with respect to the Disclosed Documents and/or the Special Permitted Use directed through Landlord’s Chief Financial Officer, provided that the release of any such information shall be in the Landlord’s sole discretion.

 

***Confidential Treatment Requested***

 

9



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

(a)                                  Any Disclosed Documents provided to Tenant shall be used by Tenant only for the Special Permitted Use and for no other use. Specifically, the Disclosed Documents shall be used only to prepare the financial statements to be disclosed publicly by Tenant and shall not themselves be disclosed to third parties, unless required solely for the purpose of the preparation or audit of such financial statements (the “ Preparing/Auditing Parties ”).

 

(b)                                  Any Disclosed Documents provided to Tenant shall be considered “Confidential Information” and Tenant shall not copy, duplicate, deliver, disclose or transmit the Disclosed Documents or their content to any third party without Landlord’s express prior written approval, except to the Preparing/Auditing Parties solely for the purpose of the preparation or audit of such financial statements, provided, however, that Landlord may request any of the Preparing/Auditing Parties (other than Tenant’s independent registered public accounting firm) and any other third party inspecting or receiving any of the Disclosed Documents to sign a nondisclosure agreement, in a form reasonably acceptable to Landlord and such other third party, prior to such inspection or receipt.

 

(c)                                   To the extent that any Disclosed Document is based upon information received from or prepared by a third party, such Disclosed Document maybe subject to specific limitations regarding its use by third parties, including Tenant.

 

(d)                                  Neither Landlord nor any of its affiliates, employees, agents, successors or assigns (collectively, the “ Landlord Preparers ”), nor any third party that prepared any Disclosed Document, has made or shall be deemed to have made any representations, statements or warranties of any kind as to (i) the accuracy or validity of the information contained in any Disclosed Document; or (ii) the condition or cost of construction of the Project in any respect as a consequence of providing the Disclosed Documents.

 

(e)                                   Tenant is responsible for making its own independent assessment and investigation of the condition and cost of construction of the Non-TI Project Improvements and the Tenant Improvements.

 

(f)                                    To the extent permitted under applicable law, Tenant agrees to indemnify, defend and hold the Landlord Preparers harmless from and against losses, costs, damages, claims or causes of action (including, without limitation, any actions initiated by Tenant shareholders) arising out of any use of the Disclosed Information by Tenant or the Preparing/Auditing Parties, or their respective agents, employees or representatives, including, without limitation, the Special Permitted Use and any use in violation of paragraphs (a) and (b) above.

 

Tenant, for itself and its agents, affiliates, successors and assigns, hereby releases and forever discharges each of the Landlord Preparers from any and all rights, claims and demands at law or in equity, whether direct or indirect, known or unknown, foreseen or unforeseen, at the time of execution of the Lease, which Tenant has or may have in the future, arising out of the financial information provided by Landlord in the Disclosed Documents. With respect to the waiver and release set forth herein relating to unknown and unsuspected claims, Tenant hereby acknowledges that such waiver and release is being made after obtaining the advice of counsel and with full knowledge and understanding of the consequences and effects of such waiver. Nothing set forth herein shall in any way waive or limit any right or obligation of Landlord or of Tenant as otherwise set forth in the Lease which either party now has or may have in the future. Tenant’s agents shall only have access to the Disclosed Documents and other provisions under this Section 8 to the extent such agents are real estate consultants, the Tenant’s independent registered public accounting firm, or other agents reasonably related to the Special Permitted Use. Any Tenant agents for which Tenant desires to share Disclosed Documents or otherwise subject to this Section 8 shall be subject to reasonable approval rights by Landlord, except for Tenant’s independent registered public accounting firm.

 

***Confidential Treatment Requested***

 

10



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

List of Schedules attached to this Work Letter :

 

Schedule 1(c)(iii) - List of Shell Core and Site Construction Documents

Schedule 2(c)(i) - Landlord/Tenant Responsibility Matrix

Schedule 2(c)(ii) - Tl Design Program

Schedule 2(d) - LEED Standards

Schedule 2(e) - Well Building Guidelines

Schedule 8 - Reported Project Costs

 

***Confidential Treatment Requested***

 

11


 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

Schedule 1(c)(iii)

 

List of Shell Gore and Site Construction Documents

 

[ *** ]

 

***Confidential Treatment Requested***

 


 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

 

***Confidential Treatment Requested***

 

18



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

 

***Confidential Treatment Requested***

 

19



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

 

***Confidential Treatment Requested***

 

20



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

 

***Confidential Treatment Requested***

 

21



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

 

***Confidential Treatment Requested***

 

22



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

 

***Confidential Treatment Requested***

 

23



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

 

***Confidential Treatment Requested***

 

24


 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

Schedule 2(c)(i)

 

Landlord/Tenant Responsibility Matrix

 

[ *** ]

 

***Confidential Treatment Requested***

 


 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

Schedule 2(c)(ii)

 

Tl Design Program

 

[ *** ]

 

***Confidential Treatment Requested***

 


 

Mechanical, Electrical, Plumbing and Fire Protection

 

Basis of Design

 

RUBUIS THERAPEUTICS
LEVEL 3
Lab/Office Design
399 Binney Street
Cambridge, MA

 

Prepared by:

 

 

Prepared for:

 

The Richmond Group
77 Main Street
Hopkinton, MA 01748

 

December 05, 2017

 

38



 

FIRE PROTECTION

 

A.                                     System Description:

 

1.                     A new wet pipe sprinkler system will be installed to accommodate the new Architectural layout. The new sprinkler mains will be connected to the existing mains and floor control valve assemblies located in the Stairwells.

 

2. Offices, Open Office areas, Lobby, Conference Rooms, Hallways and Cafe will be designed to Light Hazard Occupancy.

 

3.                     Lab spaces, Storage and Shell space will be designed to Ordinary Hazard Group II occupancy.

 

4.                     Areas with finished ceilings will have concealed sprinklers with white cover plates.

 

5.                     Areas without ceilings will have upright sprinklers.

 

6.                     Glass Wash will have high temperature sprinklers.

 

PLUMBING

 

A.                                     General

 

1.                     Lab waste to run thru Level 2 Tenant space to basement.

 

2.                     C02 and Nitrogen distribution from tank manifold with Regulator at termination point.

 

3.                     Electric water heaters for non-potable and domestic water.

 

4.                     CA, RODI and Vacuum from house system to ceiling panels with quick connect termination for vacuum and pressure regulator and quick connect for CA.

 

5.                     Lab Sinks and fittings etc., by Plumber.

 

6.                     Emergency Showers and Eyewash units with tepid supply and return to house system.

 

7.                     Running trap with sample valve on lab waste at connection to house system.

 

HEATING, VENTILATING AND AIR CONDITIONING

 

A.                                     General

 

1.                     Outside design conditions are 912F DB and 74SF WB (summer) and 0°F DB outside (winter).

 

2.                     See table below for indoor design conditions to be maintained (all volume calculations will be based on a 9’-0” ceiling height):

 

39



 

 

B.                                     Existing Core and Shell Services:

 

1.                     Normal Supply air from AHU-1 thru AHU-3.

 

2.                     Exhaust Air from ERU-1 thru ERU-4.

 

3.                     Hot Water from the central boilers and pumps.

 

4.                     Condenser Water from HX-2 through pumps CWP-4 & CWP-5.

 

5.                     DDCATC System.

 

C.                                     Space HVAC Services:

 

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1.                     Office spaces shall be served by four pipe fan coil units. Ventilation air shall be provided at 20 CFM per person. Constant volume supply valves with no heating coil shall provide the ventilation air.

 

2.                     Each Mass spec shall be provided with a 2” PVC exhaust pipe with a ball valve.

 

3.                     The General Lab shall be provided with Tek-Air fume hood exhaust valves.

 

4.                     The General Lab shall be provided with Variable or constant volume Tek-Air valves.

 

5.                     The General Lab shall have Tek-Air supply valves and Tek-Air general exhaust valves.

 

6.                     The Glass Wash shall have an Envirotec supply and exhaust valve with stainless steel canopy hoods.

 

7.                     The Elevator Lobby shall have an Envirotec supply and exhaust valve.

 

8.                     The Server Room shall be provided with cooling that will be on the generator. No humldification shall be provided.

 

9.                     Lab Spaces shall be provided with lab type diffusers.

 

10.              The Cold Rooms shall be provided with condenser water from the Base Building system.

 

ELECTRICAL

 

A.                                     General

 

1.                     The main service to the building comprises of two 3000 AMP, 480/277 volt electrical switchboards which serve the entire building.

 

2.                     The switchboards support Base Building mechanical equipment, common area lighting/power and tenant bus duct riser. From switchboard in basement there is a 2000 amp 480/277 volt un-metered bus duct risers for tenant which support Tenants in basement through floor three.

 

3.                     Electric service to support Tenant is available from bus duct risers. Tenant is responsible for the bus duct plug in unit disconnect switch(es), utility meter and their associated distribution equipment. Large tenant loads (per Landlords discretion) may come directly from Base Building switchboards via check meter(s).

 

4.                     An optional gas fired 750KW stand-by generator has been provided for building tenant use located on roof. Tenant is responsible, for but not limited to, supply feeder to their space from existing stand-by distribution panelboard (normally off) located in 4* floor Penthouse. Tenant shall supply automatic transfer switch, check meter (per Landlord standards) and associated distribution equipment. The tenant allowance is 4 W/SF.

 

5.                     Emergency egress lighting and exit signs shall be utilize via battery ballast pack and or battery unit from normal panel.

 

41



 

FIRE ALARM

 

A.                                     General

 

1.                     The Fire Alarm system will be an extension of the existing Fire Alarm system within the building.

 

2.                     Existing devices will be relocated to accommodate the new Architectural layout.

 

3.                     New devices will be installed.

 

4.                     Speaker/Strobes will be installed in Open Office areas and Laboratories.

 

5.                     Strobe only devices will be installed in Conference Rooms.

 

42


 

Mechanical, Electrical, Plumbing and Fire Protection

 

Basis of Design

 

RUBUIS THERAPEUTICS
ACF DESIGN
BASEMENT LEVEL
399 Binney Street
Cambridge, MA

 

Prepared by:

 

 

Prepared for:

 

The Richmond Group
77 Main Street
Hopkinton, MA 01748

 

December 05, 2017

 

43



 

 

 

 

 

 

 

FIRE PROTECTION

 

A.                                     System Description:

 

1.                     The Sprinkler System will be an extension of the existing wet sprinkler system distribution within the building.

 

2.                     Classification:

 

Corridors, Toilets - Light Hazard
Vivarium-Ordinary Hazard Group 1

 

3.                     Sprinkler Type:

 

Concealed pendent with white cover plates throughout areas within Scope of Work for this project.
High temperature heads in Cage Wash and Sterilizer area.

 

PLUMBING

 

A.                                     System Description:

 

1.                     Hand wash sinks to be provided in Procedure Rooms with non-potable hot and cold water and sanitary waste.

 

2.                     Dedicated electric water heaters for domestic hot water and non-potable.

 

3.                     No C02 or vacuum required.

 

4.                     RODI to humidifiers.

 

5.                     Toilet / Shower Rooms, Janitor Closet and Kitchenette sink on Domestic Water and Waste system.

 

HEATING, VENTILATING AND AIR CONDITIONING

 

A.                                     General

 

1.                     Outside design conditions are 91SF DB and 74^F WB (summer) and O’F DB outside (winter).

 

2.                     See table below for indoor design conditions to be maintained (all volume calculations will be based on a 9’-0” ceiling height).

 

44



 

 

 

 

 

 

 

 

B.                                     Existing Core and Shell Services:

 

1.                     Normal Supply air from AHU-4.

 

2.                     Chilled Water from CH-1 and CH-2 pumps and CHWP-1 thru CHWP-7.

 

3.                     Hot Water from the central boilers and pumps.

 

4.                     Condenser Water from HX-2 through pumps CWP-4 & CWP-5.

 

5.                     DDCATC System.

 

C.                                     Holding Room Services (all on emergency power):

 

1.                     Back up holding exhaust fan shall be provided. Fan shall be on standby power.

 

2.                     Back up 100% outdoor heat pump on standby power.

 

3.                     Each HP outside air intake will be supplied with an electric duct heater to raise the OA temperature in Winter to 55°F.

 

4.                     A system of isolation dampers so that during a power outage the Core & Shell AHU supply air duct will close; the backup supply duct will open and the backup system will start.

 

D.                                     Humidificatlon:

 

1.                     The main supply duct will have an electric humidifier (Basis of Design: Dri-Steem Ultra-Sorb) to raise the supply air humidity level to a minimum of+70% relative humidity in the duct (or an equivalent of 30% RH in the space). This unit will need a wall mounted steam generator.

 

2.                     Individual room supply duct will be provided with a duct mounted hot water reheat coll (for individual control) and an electric humidifier (Basis of Design: Dri-Steem Ultra-Sorb) providing individual room control. The room humidifier will raise the supply air humidity level to maintain a maximum of ±50% RH in the space. Each unit will need a wall mounted steam generator.

 

45



 

 

 

 

 

 

 

3.                     RODI water will be used since these are Animal Labs. With City Water make-up, the humidifiers would enter a timed drain cycle where the unit will lose its humidity level for a period of 5-8 minutes.

 

4.                     Electric humidifiers will not be on generator backup power.

 

ELECTRICAL

 

A.                                     Normal Power: The space shall be served by buildings 480/277 Volt electric service originating in the Basement bus duct riser or switchboard. New panelboards shall feed various panels and transformers in Tenant space. Provide utility meter from bus riser or check meter if using switchboard as needed to support Tenant space.

 

B.                                     Standby Power: The space shall be served by new electrical service originating at the 480/277 Volt optional standby panel located on 4th floor Penthouse. New panelboards via ATS and check meter shall feed various panels and transformers in Tenant space.

 

C.                                     Lighting:

 

1.                     Lighting controls shall meet IECC 2015.

 

2.                     Common Areas:

 

40 - 50 footcandles at 3 feet above floor utilizing recessed direct/indirect LED or fluorescent light fixtures.

 

3.                     Procedure/Holding/Quarantine Rooms:

 

Each Procedure Room and associated Animal Holding Rooms shall be equipped with an independently controlled lighting system. An additional system (red lensed) shall be provided in the rooms to accommodate evening procedures. These systems are as follows:

 

·               Animal White light (full spectrum fluorescent/LED). Animal lighting system shall provide a programmable, automatic day/night cycle on an adjustable time and duration schedule.

 

·               Animal lighting system shall provide 35-55 FC (adjustable) at 3’ AFF. System override shall be manually controlled by a rotary timer switch mounted outside animal room near door and clearly marked for override.

 

·               Override ability shall be for a maximum of 60-minute time period.

 

4.                     Emergency egress lighting and exit signs shall be utilize via battery ballast pack and or battery unit from normal panel.

 

a.                                 Standby Power:

 

Procedure Rooms:

 

·                   Wall outlets, one (1) general purpose GFI receptacle in each Procedure Room

 

46



 

 

 

 

 

 

 

·                   Bio-Safety Cabinet

·                   Lighting

 

Holding Rooms and Quarantine :

 

·                   Wall outlets, two (2) general purpose GFI receptacles in each holding room

·                   Ventilated cage racks

·                   Bio-Safety Cabinet

·                   Lighting

 

HVAC Systems :

 

·                   Holding room supply and exhaust fans

·                   Holding room heat pump

·                   HVAC Controls

 

Equipment :

 

·                   Refrigerator

·                   Freezer

 

b.                                 Normal Power:

 

General and support Spaces :

 

·                   General receptacles

·                   Lighting

·                   Computers

 

c.                                  HVAC Systems :

 

·                   Electric Steam Humidifiers, refer to HVAC.

 

d.                                 Plumbing Systems :

 

·                   Electric Water Heater.

 

FIRE ALARM

 

A.                                     The Fire Alarm system will be an extension of the existing Fire Alarm system within the building.

 

B.                                     Devices in Holding Rooms shall be designed for low frequency levels acceptable to laboratory animals.

 

47


 

 

Scope of Work

 

 

 

Rubius Therapeutics

Project # TBD

399 Binney St, Cambridge, MA

November4, 2017

 

1.               Architectural

 

·                   Casework

·                   New mobile casework in the labs, Metal w/ Epoxy Tops and Integral Utilities

·                   New fixed casework at sink and Fume Hood locations - Metal w/ Epoxy Top

·                   (36) Thirty-Six Ceiling Utility Panels

·                   Floor finishes

·                   Resilient Tile - Ballroom Lab, Support Labs, Lab Corridor

·                   Luxury Vinyl Tile - Cafe/Lounge, Main circulation and Lobbies

·                   Epoxy paint - Mechanical, Electrical

·                   Epoxy Flooring- Waste Storage

·                   Static Dissipative Tile - Server Room

·                   Sheet Vinyl- Tissue Culture Labs, Bio-Processing Suite

·                   Carpet Tile - Coat/Storage, Open Office, Conference

·                   Ceiling Finishes

·                   2x4 Standard Lab Tiles- Ballroom Lab, Support Labs

·                   Vinyl Faced Tile- Tissue Culture Labs, Bio-processing Suite

·                   2x2 Standard Office Tile in Fine Line Grid - Conference, Huddle, Phone

·                   2x2 Standard Office Tile in 15/16 Grid - Office Support

·                   Open Ceiling - Open Office, Reception

·                   Glazing

·                   8’-0” Butt glazing at offices and labs.

·                   8’-0° Glass Doors - Conference, Huddle Rooms

·                   Doors

·                   Flush wood doors at Coat/Storage, Server Room, Wellness

·                   Full View Wood doors at Phone Rooms.

·                   Hollow metal doors with vision kits at Ballroom Lab, Support Labs, Tissue Culture Labs, Bio-Processing Suite (gasketed)

·                   Millwork

·                   Kitchen - Plastic laminate base/wall cabinets with solid surface counter. Assume solid surface waterfall edge at island.

·                   Print Station - Plastic laminate base cabinet with plastic laminate counter and wall cabinets.

·                   Coat/Storage - Shelf & Rod

·                   Furniture is excluded

 

2.               Equipment

 

·                   (1)6’ Chemical Fume Hoods Included.

·                   Autoclave & glasswash units are not included

·                   BSCs are not included.

·                   Kitchen Appliances are not included.

·                   Lab equipment is not included.

 

48



 

3.               Fire Protection

·                   Existing sprinkler mains to remain

·                   Re-work branch lines and provide new sprinkler heads per new layout with proper density requirements for office and lab

 

4.               Plumbing

·                   Tepid water distribution to emergency shower / eye wash units, from existing house Tepid Skid. Each lab will have at least one emergency shower/eyewash per 50 feet of walking distance from experiment to unit Emergency shower / eyewash units will be located near the exit of each lab

·                   RODI distribution from existing house system to loop the floor to serve each lab sink and glass wash room.

·                   Compressed air distribution to ceiling panels (1 per panel) in labs, and along walls in main labs. Provide one drop within glass wash room. Connect new distribution to existing base building valve/cap. Additional drops needed at wall per matrix.

·                   Vacuum distribution to ceiling panels (1 per panel) in the labs and along the main lab walls. Provide a vacuum drop at each BSC. Connect new distribution to existing base building valve/cap. Additional drops needed at wall per matrix.

·                   N2 Manifold and distribution per matrix

·                   CO2 Manifold and distribution per matrix

·                   O2 Manifold and distribution per matrix

·                   Labs will have (36) thirty-six ceiling utility panels.

·                   Fume hoods to receive Compressed Air, VAC.

·                   Connect to existing house pH neutralization system with horizontal lab waste and vent to existing base building risers. Horizontal lab waste and lab vent distribution on the tenant or below tenant floors from tenant sinks and equipment to base building riser connections.

·                   Pipe office sinks to cold water, domestic waste and vent, install local electric hot water heater

·                   Install non-potable hot water heaters, and distribution piping to lab sinks, glass wash room

 

5.               HVAC

·                   Base building will provide 100% outside supply air, exhaust air, chilled water, hot water, and condenser water.

·                   Office portion shall have supply air VAV air valves, with common plenum return.

·                   All lab areas shall have matching VAV exhaust air valves

·                   All supply air valves shall hot water heating coils

·                   Exhaust air valves shall track supply air valves and shall have liner, so insulation is not exposed

·                   Fume hood shall be constant volume type with bypass on sash operation

·                   Tissue culture lab shall (2) fan coils units for supplemental equipment cooling, connected to the base building chilled water system.

·                   In addition to the tissue culture labs, general labs shall have fan coil units for supplemental cooling,

·                   All office and lab supply and exhaust air VAV’s shall be standard type Envirotech or equal.

·                   Provide a 2 ton high temperature heat pump for each tel/data room, connect condenser water piping to base building riser

·                   All conference room walls shall be considered full height and will require sound lined Z-duct returns

 

49



 

·                   Office portion general exhaust shall have an open end duct with modulating damper control to maintain pressure. A sound attenuator elbow and straight run of duct sound lines needs to be installed for noise reduction

·                   Building Management System (BMS) shall be extended for tenant use.

·                   02 Sensor near N2 lanks and C02 manifolds, alarms shall be local and to BMS

 

6.               Electrical

·                   Distribution of fire alarm and life safety as required.

·                   Electrical distribution from main bus duct, wilh utility meter, 4S0 volt panels, transformers and 208 volt panels to support lighting, outlets power, HVAC equipment, plumbing equipment and lab equipment power

·                   (36) Thirty-Six Ceiling Utility Panels Total with (4) dedicated 120 volt, 20 AMP circuits each, (1) dedicated 120V, 20AMP on OS power and (2) T/D knock outs

·                   Power & Data to be fed from Ceiling.

·                   New lighting throughout with controls, including emergency and exit lighting

·                   8-wire power whips for furniture system. Floor boxes to be provided as layout requires.

·                   Floor boxes for all conference rooms for power, TD and AV

·                   Standby power from base building generator, wired to tenant area for tenant use, based on 4 W/SF per 60% of total rentable area

·                   Card access

·                   Security

·                   Tel/data . AV

·                   Equipment alarms on a separate system from BMS

 

50



 

 

51


 

 

52



 

 

53



 

 

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55



 

 

56



 

 

57



 

 

58



 

 

59



 

 

60



 

 

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62


 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

Schedule 2(d)

 

LEED Standards

 

EAc4: Enhanced Refrigerant Management

The base building heating, ventilating, air conditioning and refrigeration systems have been selected to reduce ozone depletion and support early compliance with the Montreal Protocol while minimizing direct contributions to climate change. All tenant provided HVAC&R equipment must also comply with the following formula, which sets a maximum threshold for the combined contributions to ozone depletion and global warming potential:

 

 

IEQc5: Indoor Chemical and Pollutant Source Control

The base building has been designed to minimize building occupant exposure to potentially hazardous particulates and chemical pollutants. All tenant work affecting the entry of pollutants into the building and potential cross contamination of regularly occupied areas must be mitigated through the following strategies, as applicable to the tenant improvements:

 

·                   Sufficiently exhaust each space where hazardous gases or chemicals may be present or used (e.g. garages, housekeeping and laundry areas and copying and printing rooms) to create negative pressure with respect to adjacent spaces when the doors to the room are closed. For each of these spaces, provide self-closing doors and deck-to-deck partitions or a hard-lid ceiling. The exhaust rate must be at least 0.50 cubic feet per minute (cfm) per square foot (0.15 cubic meters per minute per square meter), with no air recirculation. The pressure differential with the surrounding spaces must be at least 5 Pascals (Pa) (0.02 inches of water gauge) on average and IPa (0.004 inches of water) at a minimum when the doors to the rooms are closed.

 

·                   In mechanically ventilated buildings, each ventilation system that supplies outdoor air shall comply with the following:

 

A.                   Particle filters or air cleaning devices shall be provided to clean the outdoor air at location prior to its introduction to occupied spaces.

 

B.                   These filters or devices shall meet one of the following criteria:

 

·                         Filtration media is rated a minimum efficiency reporting value (MERV) of 13 or higher in accordance with ASHRAE Standard 52.2.

 

·                         Filtration media is Class F7 or higher, as defined by CEN Standard EN 779: 2002, Particulate air filters for general ventilation, Determination of . the filtration performance.

 

·                         Filtration media has a minimum dust spot efficiency of 80% or higher and greater than 98% arrestance on a particle size of 3-10 fig.

 

C.                   Clean air filtration media shall be installed in all air systems after completion of construction and prior to occupancy.

 

***Confidential Treatment Requested***

 

63



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

 

Tenant LEED Design & Construction Guidelines

For

399 Binney Street

 

399 Binney Street

Cambridge, MA 02420

 

***Confidential Treatment Requested***

 

64



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

TABLE OF CONTENTS

 

PART A; GENERAL PROJECT INFORMATION

 

PART B: LEED-CS AND LEED-CI CERTIFICATION

 

 

1. Sustainable Sites (SS)

 

 

 

2. Water Efficiency (WE)

 

 

 

3. Energy and Atmosphere (EA)

 

 

 

4. Materials and Resources (MR)

 

 

 

5. Indoor Environmental Quality (IEQ)

 

 

 

6. Innovation in Design (ID)

 

 

 

7. Resources for Tenants

 

 

PART C:

TENANT SPECIFICATION AND PRODUCT SUGGESTIONS

 

 

APPENDIX:

SUPPLEMENTAL INFORMATION

 

 

 

A. LEED-CS Scorecard (completed)

 

 

 

B. LEED-CI for Commercial Interiors Scorecard (Sample)

 

 

 

C. IAQ Management Plan (Sample)

 

***Confidential Treatment Requested***

 

65



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

PART A: GENERAL INFORMATION

 

Introduction

 

This document is provided to inform tenants of the sustainable design aspects for the design and construction of the 399 Binney Street, and to outline the sustainability goals and objectives for the tenant spaces. This document also provides information on how the base building sustainable features will interface with the tenant fit-up sustainable features (LEED CI).

 

Using the information provided here the tenants are encouraged to make their fit-up projects comply with the standards of the US Green Building Council LEED for Green Building Design and Construction. Some key features of LEED are prerequisites, and where these are a requirement for Tenant spaces they have been noted here.

 

Being a tenant in a LEED certified construction project can benefit a company’s bottom line. It can be more cost effective and save money on utility bills and operating costs. It can increase productivity by making employees and residents more comfortable and it can create a positive reputation for the company in the community. LEED certified projects help the larger environment by reducing energy and natural resource consumption and by cutting down on waste and pollution created.

 

The U.S. Green Building Council and LEED

 

The U.S. Green Building Council (www.usgbc.org) is a nonprofit organization committed to expanding sustainability in the built environment. Its mission is to transform the way buildings and communities are designed, built and operated, enabling an environmentally and socially responsible, healthy, and prosperous environment that improves the quality of life. LEED is a voluntary, consensus-based national rating system for developing high-performance, sustainable buildings.

 

Developed by USGBC, LEED addresses all building types and emphasizes state-of-the-art strategies for sustainable site development, water savings, energy efficiency, materials and resources selection, and indoor environmental quality. LEED is a voluntary rating system for green building design and construction that provides immediate and measurable results for building owners and occupants.

 

399 Binney Street

 

Tenants at the 399 Binney Street have a remarkable opportunity to help lead the shift to sustainability in buildings, and in the process define a new kind of workplace. By locating in a LEED certified building, tenants will benefit from excellent indoor air quality, as well as other advantages. These and other elements combine to create a healthier workplace and improve the indoor environment for all employees. In addition, the 399 Binney Street has seta higher standard with high-performance technologies that use less energy, consume less water, and leave a smaller footprint on the city’s resources. Some of the building’s innovative features will be noticed upon entering the building while others, such as energy-saving light fixtures and efficient systems will exist behind the scenes, quietly but significantly setting the building apart from its neighbors.

 

The Tenant Guidelines that follow summarize the measures the 399 Binney Street has undertaken to achieve LEED certification. These guidelines are intended to help tenants understand and take full  advantage of the high-performance features of the building, and to provide guidance in ways that tenants can reinforce these features in their own workplaces.

 

The 399 Binney Street project has seta goal of achieving certification for the base building using LEED for Core and Shell (LEED-CS). We can only design and build the building, however. It is up to our tenants to fit it out and operate it in an environmentally friendly way. To do this, we recommend you use the LEED for Commercial Interiors rating system (LEED-CI). The intent of LEED-CI is to assist in the creation of high-performance, healthy, durable, affordable and environmentally sound commercial interiors. Together

 

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LEED-CS and LEED-CI address the commercial office real estate market for both developers and tenants enabling significant benefits through improved indoor air quality, maximized daylighting and lower energy costs. A copy of the LEED-CI 2009 Scorecard and Rating System are included as an appendix for reference by tenants who wish to explore more information on timing and detailed strategies.

 

PART B: LEED-CS AND LEED-CI CERTIFICATION

 

Tenant’s Interior Fit-Out: LEED-CI

 

As noted above, the property offers many sustainable features. Tenants have the option of building upon these features in the fit-out of their space.

 

To achieve LEED-CI certification, a minimum of 40 points are needed, out of an available 110 points. For Silver, 50 points are needed, Gold requires 60 points and Platinum requires 80 points. The LEED-CI program credits can be broken into three different categories for this project, specifically:

 

·

Achieved credits [already achieved as part of the base building LEED-CS design and construction]

29 points

 

 

 

·

LEED Certified or Silver credits (credits easily attainable in the interior fit-out]

25-38 points

 

 

 

·

LEED Gold, or Platinum credits [additional “maybe” credits that could be pursued to achieve a higher level of LEED certification]

18-24 points

 

Refer to the potential Tenant Fit-Up LEED-CI scorecard in the Appendix.

 

Achieved Credits

29 Points

 

These credits/points are noted as YES on the attached potential tenant fit-out LEED-CI scorecard.

 

SSc1, Site Selection

[5 points]

 

The tenant has selected a building that will be achieving LEED certification. The base building has been designed and built with environmentally sustainable measures. The required documentation to support this claim, a copy of the core/shell building LEED certification document, will be provided for the tenant.

 

SSc2, Development Density and Community Connectivity

[6 points]

 

The tenant has selected a building that is within Y% mile of a residential neighborhood with an average density of 10 units per acre net, and is within 1/z mile of at least 10 basic services; and has pedestrian access between the building and the services.

 

SSc3.1, Alternative Transportation: Public Transportation Access

[6 points]

 

The tenant has selected a building that is located within Vz mile walking distance, measured from a main building entrance, of two MBTA stations. Green and Orange line, which give them the opportunity to travel through Cambridge and Boston via different subway services.

 

SSc3.2, Alternative Transportation: Bicycle Storage & Changing Rooms

[2 points]

 

The tenant has selected a building that was designed and built with bicycle storage. The Tenant can choose to achieve this credit by installing showers and providing changing rooms.

 

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WEpl and WEc1.1, Water Use Reduction Prerequisite and 35% Savings

[8 points]

 

The tenant has selected a building that was designed and built with low-flow and low-flush plumbing fixtures for the bathroom in the core of the building. These low-flow and low-flush fixtures include a toilet, urinal and lavatory faucet; Tenants shall utilize similar low-flow faucets and fixtures that exceed the 1992 EPACT requirements in their own spaces, including low -flow (0.5 GPM) lavatory faucet, low-flow (1.5 GPM) kitchenette faucet, 1/8 GPF urinals, and 1.28 GPF water closet. In addition, the faucets have been equipped with auto-sensors that further reduce water usage. Tenant fixtures in tenant spaces shall utilize low-flow technologies as well.

 

EAp2, Minimum Energy Performance Prerequisite, Part 1 of 2

[required]

 

The tenant has selected a building that was designed and built according to the ASHRAE 90.1-2007 energy standard, which is the Massachusetts Energy Code at the time of construction. Energy efficiency was considered when designing the envelope of the building, which includes the selection of roof insulation, wall insulation, floor insulation and windows. The mechanical and domestic hot water systems use energy efficient technology and equipment. If the mechanical systems or envelope are adjusted or supplemented by the tenant fit-out, care should be taken to ensure the current LEED program referenced energy standard is still being met. Not addressed here is the lighting density requirements that fall within the scope of the tenant fit-out; however, it is expected and required that tenants will use high-efficiency light fixtures with occupancy sensor and daylight dimming controls. See Interior Fit-Out section for more information.

 

EAp3, CFC Reduction in HVAC&R Equipment Prerequisite

[required]

 

The tenant has selected a building that was designed and built with equipment that does not use any CFC refrigerants for cooling. CFCs adversely affect the ozone causing environmental harm. If the mechanical systems are adjusted or supplemented by new equipment or systems in the tenant fit-out, care must be taken to ensure no CFCs are used in new equipment.

 

MRpl, Storage & Collection of Recyclables

[required]

 

The site and building was designed and built to provide a central area for storing the collection of tenants’ recyclables before removal from the site. During the design and construction of the tenant

 

spaces, areas for tenant specific recycling bins shall be provided within the tenant space. These areas shall include, but are not limited to, kitchenettes, copy rooms, printer areas and other spaces near trash bins. Recycling bins for paper, cardboard, plastic, metal and glass shall be provided.

 

lEQp1, Minimum Indoor Air Quality Performance Prerequisite

[required]

 

The tenant has selected a building that was designed and built according to the ventilation standard, ASHRAE 62.1-2007. If the mechanical systems are adjusted or supplemented, or if the tenant needs any high density space, care should be taken to ensure the current LEED referenced ventilation standard is still being met.

 

IEQp2, Environmental Tobacco Smoke (ETS) Control

[required]

 

The tenant has selected a building that was designed and built to meet the requirements of this prerequisite. There is no smoking allowed in this building in accordance with Commonwealth of Massachusetts Law. Smoking is prohibited outside within 25 feet of any entries, outdoor air intakes and operable windows.

 

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EQc3.1, Construction IAQ Management Plan, During Construction

[1 point]

 

The interior fit-out of the space will implement best practices for air quality. Measures taken by the contractors will include protection of duct and mechanical systems, absorptive materials and good housekeeping in accordance with SMACNA Indoor Air Quality guidelines for building under construction.

 

IEQc7.1, Thermal Comfort, Design

[1 point]

 

The core and shell indoor conditions comply with the ASHRAE 55-2004, the indoor temperature and humidity conditions standard. The base building HVAC system is designed and installed to support achieving this credit. If the mechanical systems are adjusted or supplemented as part of the tenant fit-out, care should be taken to ensure the standard referenced is still being met. Thermal comfort ranges are as follows:

 

·                   Temperature Range: 75°F± 2° in summer, 70°F ± 2° in winter.

 

·                   Humidity Range: 50% ± 10% summer, 20% + 10% in winter.

 

·                   Zone Control: All thermostats and humidity sensors are located in the zone served.

 

·                   Outdoor Conditions: Per ASHRAE 90.1-2007, outdoor design conditions are 87’F DB/73°F WB in summer and 7”F DB in winter.

 

LEED Certified or Silver Minimum Requirements

25-38 Points

 

To obtain LEED certification, the tenant can choose from items with point values from the list below to incorporate into the design and fit-out of tenant space. The “required” items must be incorporated into the fit-out to achieve certification. These credits/points are generally noted as YES on the attached tenant fit-out LEED-CI scorecard.

 

EAp1, Fundamental Building Systems Commissioning Prerequisite

[required]

 

To increase energy performance of the tenant’s space, a Commissioning Agent will verify that the project’s energy-related systems are installed, calibrated and perform as intended.

 

EAp2, Minimum Energy Performance Prerequisite, part 2 of 2

[required]

 

The lighting designed under the scope of the tenant fit-out must meet the LEED requirements of the ASHRAE 90.1-2007 energy standard, and at least 50% (by rated-power) of installed Energy Star eligible appliances and equipment shall be Energy Star qualified.

 

EAc1.1, Optimize Energy Performance, Lighting Power

[2-5 points]

 

The design for the lighting will need to meet and exceed the ASHRAE Standard 90.1-2007 by reducing the lighting power used by 20%. Tenants that reduce their lighting power by more than 20% can earn additional points, up to 5 points for 35% savings. The tenant’s choice of lamps and fixtures will need to take into consideration the tenant’s program needs and be high efficiency fixtures. (There is the potential of receiving rebates from the local utility depending on the specific fixtures selected. See www.nstar.com for more information.)

 

EAc1.2, Optimize Energy Performance, Lighting Controls

[1-3 points]

 

The installation of daylighting controls for all perimeter spaces (within 15 LF at exterior walls) and occupancy sensor controls can reduce unnecessary energy consumption. Daylighting controls work in conjunction with the lighting fixtures to allow natural daylight to provide the necessary illumination. This building requires the tenants to utilize daylight dimming controls, in addition to the other occupancy

 

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sensor and motion detection lighting controls. (There is the potential of receiving rebates from the local utility depending on the daylighting dimming system selected. See www.nstar.com for more information.)

 

EAc1.3, Optimize Energy Performance, HVAC Equipment

[5-10 points]

 

The tenant design shall meet the requirements in sections 1.4, 2.9 and 3.10 of the New Building Institute’s Advanced Buildings Core Performance Guide, which is used as the prescriptive criteria for the mechanical system which deal with the ducts, equipment, system operations, VAV pumps and fans (5 points). Premium efficient motors should be used on all equipment (>1 HP) and ECM motors (< 1 HP) shall be used in all tenant fan coil units and perimeter fan-powered VAV boxes. The base building HVAC system is designed and installed to support achieving this credit. (There is the potential of receiving rebates from the local utility depending on the variable speed drives on HVAC fans ECM motors, and Energy Management Systems selected. See www.nstar.com for more information.) The tenant has the potential of achieving a credit based on the layout of the space (5 points). To achieve this credit, every solar exposure must have a separate control zone. Interior spaces must be zoned separately from exterior spaces, and private office and conference rooms, kitchens, etc, must have active sensors that sense space occupancy and modulate the HVAC systems accordingly. The base building HVAC system is designed and installed to support achieving this credit.

 

EAc2, Enhanced Commissioning

[5 points]

 

As a LEED prerequisite (EApl), a Commissioning Agent will verify that the project’s energy-related systems are installed, calibrated and perform as designed. In addition, the Commissioning Agent can assist In the transition of the new systems from the installers to those who will operate and use them. They can provide a single manual for the tenant to assist in future re-commissioning calibration. The Commissioning Agent can oversee the training of operating personnel and tenant space occupants as well as return within ten months to review the system operations and assist in resolving any outstanding issues.

 

MRc2, Construction Waste Management

[2 points]

 

The tenant will be provided with sustainable practice options for construction waste removal. A large percentage of our landfills are composed of building construction waste. To earn this credit, the interior fit-out of the tenant’s space will ensure that a minimum of 75% construction and demolition waste will be diverted from landfills to be recycled. Given the quantity of recycling facilities and waste haulers in Massachusetts, this is very straightforward to accomplish.

 

MRc4, Recycled Material Content, 10%

[1 point]

 

The tenant fit-up can be designed to utilize materials that have recycled content. These materials include, but are not limited to, gypsum wallboard, steel studs, carpet, ceiling tiles and flooring. The achievement of this credit is dependent on the tenant’s selection of materials and furniture.

 

MRc5, Local/Regional Materials, 20% Manufactured Locally

[1 point]

 

The tenant fit-up can be designed to utilize materials that have been manufactured locally. These materials include, but are not limited to, gypsum wallboard, steel studs and flooring. The achievement of this credit is dependent on the tenant’s selection of materials and furniture.

 

IEc1, Outside Air Delivery Monitoring

[1 point]

 

The tenant design should include carbon dioxide monitoring in all densely occupied spaces. These spaces are most often conference rooms, training rooms and other gather spaces. The benefit of the monitoring system is that it allows the ventilation system to be set back when the spaces are not in use,

 

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thereby reducing unnecessary energy consumption. The base building HVAC system has the necessary infrastructure and outside air C02 sensors to support this operation.

 

IEQc4.1, Low-Emitting Materials, Adhesives and Sealants

[1 point]

 

Only low VOC (Volatile Organic Compound) adhesives (carpet, tile, wall base, etc.) and sealants shall be used throughout the tenant fit-out. The base building construction uses similar material to ensure a healthy environment.

 

IEQc4.2, Low-Emitting Materials, Paints

[1 point]

 

Only low-VOC (Volatile Organic Compound) paints shall be used in the interior fit-out The base building used similar materials and methods to ensure a healthy environment. Low-toxic paints and coatings shall be used throughout the interior fit-out.

 

IEQc4.3, Low Emitting Materials, Flooring

[1 point]

 

Only low-toxic carpet and pad systems that meet the Carpet and Rug Institute’s Green Label Plus shall be used throughout the interior fit-out.

 

IEQc6.1, Controllability of System, Lighting

[1 point]

 

The tenant has the choice of achieving a credit based on the lighting design instituted. The most straightforward method of achievement is to provide individual task lighting with occupancy sensors and automatic shut-off for all desks and workstations.

 

IEQc7.2, Thermal Comfort, Verification

[1 point]

 

The tenant can achieve a credit by installing a permanent thermal monitoring system that measures temperature, humidity and air speed that is integrated into the HVAC system. This will optimize the thermal comfort of the tenant space. The base building HVAC has the necessary software and infrastructure to support this credit. An alternative option for achievement of this credit is to put in place an occupant survey that collects input from all staff periodically and performs corrective action based on any issues that arise.

 

IDc2, LEED Accredited Professional

[1 point]

 

The tenant has selected a building that can provide a consultant for the interior fit-out that is a LEED Accredited Professional. The consultant is knowledgeable about the environmental options and the LEED process to help ensure the best product is achieved for the tenant’s needs.

 

RPc1.1-1.4, Regional Priority Credits

[1-4 points]

 

The LEED CI v.2009 program has identified six credits within the standard CI program that have extra importance for projects, based on the project’s location, and particular needs of the region. If a project achieves one of the Regional Priority Credits, one point can be awarded in addition to the points already awarded for the credit itself. For Boston, the Regional Priority Credits are SSc3.2, WEcl (to 40%), EAc1.1 (to 25%), EAcl.3, MRc3.1 (5%), and MRc5. EAc1.1, EAcl.3 and MRc5 should all be achievable with little additional effort and/or cost. This would enable the tenant fit-up project to achieve an additional 3 points. WEcl and MRc3 do not appear to be easily achievable to the levels required.

 

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LEED Gold or Platinum Additional

18-24 Points

 

At the tenant’s option, the following additional credits (points) can be pursued to obtain a higher level of LEED certification. These credits/points are generally noted as MAYBE on the attached tenant fit-out LEED-CI scorecard.

 

EAc1.4, Optimize Energy Performance, Equipment & Appliances

[1-4 points]

 

The selection of Energy Star rated office equipment and appliances provide energy reduction. A survey of all new and existing office equipment will be needed to assess whether any credits will be achieved and require the involvement of the tenant. Items that can be considered are computers, monitors, laptops, printers, copiers, fax machines, scanners and televisions, along with refrigerators and dishwashers. (For more information and a catalog of Energy Star equipment and appliances, see www.energvstar.eov.>

 

EAc4, Green Power

[5 points]

 

The tenant can choose receiving a credit for supporting alternative energy by purchasing 50% of their electricity or a minimum of 8 kWh/SF from a Green Power source for two years. Renewable sources must be defined by the Center for Resource Solutions (CRS) as a Green-e product. Most often, the purchase of Green-e Tradable Renewable Certificates, also known as RECs, are the method chosen for achieving this credit. This credit generally has been found to be cost-effective.

 

MRc1.1, Tenant Space, Long Term Commitment

[1 point]

 

The tenant has the choice of receiving a credit by engaging in a minimum 10-year lease. By committing to remain in the same place for a long period of time, building construction waste and material are reduced.

 

MRc3.1, Resource Reuse, 5%

[1 point]

 

The tenant has the choice of receiving a credit by using salvaged, refurbished or re-used construction materials for a minimum of 5% of the total materials budget

 

MRc3.2, Resource Reuse, Furniture and Furnishings

[1 point]

 

The tenant has the choice of receiving a credit by using salvaged, refurbished or re-used furniture and furnishings for a minimum of 30% of the total furniture and furnishings budget.

 

MRc4.2, Recycled Material Content, 20%

[1 point]

 

To achieve the higher threshold for recycled content, the tenant may need to consider the recycled content of their furniture. Many of the large office furniture companies such as Hayworth, Steelcase and Knoll provide lines with sustainable features.

 

MRc5.2, Local/Regional Materials, 10% Harvested or Extracted Locally

[1 point]

 

The tenant fit-up can be designed to utilize materials that are included in the locally manufactured credit and have been further extracted or harvested locally. These materials include, but are not limited to, gypsum wallboard and flooring. The achievement of this credit is dependent on the selection of materials by the tenant, and may include the furniture.

 

MRc6, Rapidly Renewable Materials

[1 point]

 

The tenant fit-up can be designed to utilize materials that have a growth cycle less than ten years. These materials include, but are not limited to, wheatgrass wood products, bamboo, and linoleum flooring. The

 

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achievement of this credit is dependent on the selection of materials by the tenant, and may include the furniture.

 

MRc7, Certified Wood

[1 point]

 

The tenant has the choice of receiving a credit by using certified wood in their tenant fit-out. Since there is usually a limited amount of wood being used in the finishes, the achievement of this credit is dependent on materials selected by the tenant including the furniture and millwork/cabinetry. To achieve this credit, half of all the wood used for the tenant fit-out, including furniture, must be FSC certified. This percentage is based on the cost of the materials.

 

IEQc3.2, Construction IAQ Management Plan, After Construction

[1 point]

 

There are two possible ways to achieve this credit. First is performing a flush-out of the tenant space after the completion of construction but prior to moving in. The time of the flush-out is dependent on the area of space but is (on average) two weeks. The other option is to perform indoor air quality testing, which is an additional cost but provides the tenant a record of the air quality prior to moving in. Items tested include particulates, formaldehyde, TVOC, 4-PCH and carbon monoxide.

 

IEQc4.4, Low Emitting Materials, Composite Wood

[1 point]

 

Any composite wood, such as plywood, particleboard or door cores shall be urea-formaldehyde free throughout the interior fit-out. The base building used these materials and methods to ensure a healthy environment.

 

IEQc4.5, Low-Emitting Materials, Systems Furniture & Seating

[1 point]

 

Tenants can receive this credit by purchasing Greenguard Indoor Air Quality Certified furniture for their new space, including work stations and seating. Salvaged and re-used furniture is exempt from this requirement.

 

IEQc8.2, Daylight and Views, Views

[1 point]

 

The base building has been designed to give the occupants views of outdoors from the majority of the occupied spaces. Future tenants also have the potential of achieving a credit for views of outdoors based on the layout of the tenant space. Placement of open work areas along the perimeter wall, with less used spaces, storage and closed office spaces with glass sidelights in the core areas will optimize views of outside the building for the employees. For more information, review the LEED-CI Reference Guide for credit requirements and additional strategies.

 

IDc1, Innovation in Design

[1-4 points]

 

The tenant has the potential of achieving up to four additional credits dependent on other environmental features they might institute. Some examples include purchasing 100% green power; providing an Educational program that provides signage, a case study, web-based information, and/or tours to share the green features of the tenant’s interior fit-out; to exceed MRc2 to more than 95% recycled construction waste; or to utilize ergonomic workstation furniture. A final Innovation credit for the tenant LEED CI program will be to engage in a building-wide green housekeeping program in which the cleaning materials, paper goods, equipment and procedures used are in accordance with Green Seal and will provide optimum indoor air quality so that all tenants will enjoy working in a clean and healthy building.

 

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Summary and conclusion:

 

Tenants are encouraged to pursue project certification under the LEED for Commercial Interiors program sponsored by the US Green Building Council. The program has specific prerequisites and credits that are intended to help tenant fit-up projects achieve greater sustainability. LEED-CI is the companion program to LEED-CS, and focuses on those aspects of design and construction that are under the control of the tenant.

 

Refer to the attached LEED-CS score sheet for those credits that the Core and Shell project is pursing. The score sheet has notations that key individual prerequisites and credits to the corresponding LEED-CI prerequisites and credits. See also the potential tenant LEED-CI scorecard for credits that should be achievable by the tenant fit-up project team.

 

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SUSTAINABLE DESIGN RESOURCES

 

The following is a partial listing of major resources for sustainable design and LEED:

 

1.               U.S. Green Building Council (USGBC) - www.usgbc.org

 

USGBC is the standard-writing body for the LEED Rating Systems. USGBC also provides education and other advocacy related to green building.

 

2.               Green Building Certification Institute (GBCI) -http://www.gbcl.org/

 

The GBCI is a third-party certification entity that provides reviews of LEED projects.

 

3.               GreenSpec Directory-www.greenspec.com

 

The GreenSpec directory provides green product information and resources.

 

4.               LEEDuser-www.LEEDuser.com

 

LEEDuser provides practical credit-by-credit advice for project teams working within the LEED rating system.

 

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PART C:                                              TENANT SPECIFICATION AND PRODUCT SUGGESTIONS

 

Tenant Interior Architect and Design Team to research and utilize products which are sustainable and aid in minimizing waste, lessening environmental impacts and health impact of occupants, utilize recycled materials, are obtained from within 500 mile radius of the 399 Binney Street in order to reduce the impact of embodied energy in getting products to the job site, reduce the energy & water required for operation of the facility. This guideline serves to lead project teams in selecting the most sustainable products for this building during the building’s lifecycle, and therefore it is recommended that research on current product availability is accomplished at the time of design. Please refer to the applicable LEED CI guideline at the time of design and construction for USGBC recommended guidelines for product selection assisting project teams in achieving compliance with the LEED CI program. At a minimum, sustainable features of the following products should be researched and evaluated for use in the facility:

 

·                   ACOUSTICALCEILING AND SUSPENSION SYSTEM

 

·                   CARPET AND FLOORING SYSTEMS

 

·                   PAINT, COATINGS, ADHESIVES, AND SEALANTS

 

·                   WALL TREATMENTS

 

·                   GYPSUM BOARD

 

·                   COUNTER TOPS

 

·                   WOOD PRODUCTS

 

·                   PLUMBING SYSTEMS AND FIXTURES

 

·                   MECHANICAL AND HVAC

 

·                   ELECTRICAL AND LIGHTING

 

·                   ENTRYWAY SYSTEMS

 

·                   BUILDING ENVELOPE

 

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APPENDIX:                          SUPPLEMENTAL INFORMATION

 

A.                                     LEED-CS Scorecard (completed)

 

B.                                     LEED-CI for Commercial Interiors Scorecard (sample)

 

C.                                     IAQ Management Plan for base building

 

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Appendix—A

 

LEED-CS Scorecard for the 399 Binney Street

 

 

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Appendix—B

 

LEED-CL Sample Scorecard

 

 

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Appendix -C

 

Sample Indoor Air Quality Management Plan - During Construction

 

1.                                                     Construction IAQ Plan

 

The intent of this plan is to describe the measures to be taken in order to provide good indoor air quality (IAQ.) not only during construction but also after construction is complete and the occupants have moved into the building. This plan is based on the SMACNA standard “IAQ Guidelines for Occupied Buildings under Construction” and the requirements of the LEED-NC v2009 Construction Program.

 

This document is to provide the framework for the General Contractor to create the project specific plan to minimize contamination in the building during construction and to flush the building prior to construction.

 

It is not the intent of this document to replace or supercede OSHA regulations as to safe construction workplace practices. It remains the responsibility of the Construction Manager and the individual sub-contractors to maintain safe building and site operations.

 

The plan will address construction IAQ by recommending procedures in six areas of concern, which in turn will allow the building to achieve two LEED program points:

 

·                   HVAC system protection

 

·                   Contaminant source control

 

·                   Pathway interruption

 

·                   Housekeeping

 

·                   Scheduling

 

·                   Building flush-out

 

The following describes the specific measures to be performed in each area of concern:

 

2.                                                     HVAC Protection

 

·                   During construction, provide temporary MERV 8 filters at the return air system openings. Perform frequent periodic maintenance if the HVAC system is being utilized and replace filters as they become loaded. When activities that produce high dust, such as drywall sanding, concrete cutting, masonry work, wood sawing and insulating or pollution levels occur, seal off the return air system openings completely for the duration of the task.

 

·                   Shut down or seal off the return air during any demolition operations.

 

·                   If the HVAC system is not used during construction, seal off the supply and return air system openings to prevent the accumulation of dust and debris in the duct system. Seal the diffusers in plastic also.

 

·                   Do not use the mechanical rooms to store construction or waste materials. Keep rooms clean and neat.

 

·                   After construction, provide AHU filter media to meet the ASHRAE MERV Level 13 (80-90% efficient). Provide cut sheets on the filter media utilized with the MERV values highlighted.

 

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·                   Provide periodic duct inspections during construction; if the ducts become contaminated due to inadequate protection, clean the ducts professionally in accordance with NADCA (National Air Duct Cleaning Association) standards.

 

·                   The General Contractor shall take photographs showing measures in place.

 

3.                                                     Source Control

 

·                   Odor and dust sources can be classified in one of three categories:

 

Class 1 . These are air pollutants expected to have only a nuisance impact on exposed occupants. Health effects should only occur in the case of very sensitive individuals.

 

Class 2 . These are air pollutants that could cause a moderate but temporary health impact in some occupants.

 

Class 3 . These are more hazardous air pollutants that could cause severe, acute, or chronic illness.

 

·                   Use low VOC products as indicated by the specifications to reduce potential problems.

 

·                   Restrict traffic volume and prohibit idling of motor vehicles where emissions could be drawn into the building.

 

·                   Utilize electric or natural gas alternatives for gasoline and diesel equipment where possible and practical.

 

·                   Cycle equipment off when not being used or needed.

 

·                   Exhaust pollution sources to the outside with portable fan systems. Prevent exhaust from recirculating back into the building.

 

·                   Keep containers of wet products closed as much as possible. Cover or seal containers of waste materials that can release odor or dust.

 

·                   Protect stored on-site or installed absorptive building materials from weather and moisture; wrap with plastic and seal tight to prevent moisture absorption.

 

·                   The General Contractor shall take photographs showing measures in place.

 

4.                                                     Pathway Interruption

 

·                   Provide dust curtains or temporary enclosures to prevent dust from migrating to other areas when applicable.

 

·                   Locate pollutant sources as far away as possible from supply ducts and areas occupied by workers when feasible. Supply and exhaust systems may have to be shutdown or isolated during such activity.

 

·                   During construction, isolate areas of work to prevent contamination of clean or occupied areas. Pressure differentials may be utilized to prevent contaminated air from entering clean areas.

 

·                   Depending on weather, ventilation using 100% outside air will be used to exhaust contaminated air directly to the outside during installation of VOC emitting materials.

 

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17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

5.                                                     Housekeeping

 

·                   Provide regular cleaning concentrating on HVAC equipment and building spaces to remove contaminants from the building prior to occupancy.

 

·                   All coils, air filters, fans and ductwork shall remain clean during installation and, if required, will be cleaned prior to performing the testing, adjusting and balancing of the systems.

 

·                   Suppress and minimize dust with wetting agents or sweeping compounds. Utilize efficient and effective dust collecting methods such as a damp cloth, wet mop, vacuum with particulate filters, or wet scrubber.

 

·                   Remove accumulations of water inside the building. Protect porous materials such as insulation and ceiling tile from exposure to moisture.

 

·                   Provide photographs of the above activities during construction to document compliance.

 

6.                                                     Scheduling and Construction Activity Sequence

 

·                   Schedule high pollution activities that utilize high VOC level products (including paints, sealers, insulation, adhesives, caulking and cleaners) to take place prior to installing highly absorbent materials (such as ceiling tiles, gypsum wall board, fabric furnishings, carpet and insulation, for example). These materials will act as ‘sinks’ for VOCs, odors and other contaminants, and release them later after occupancy.

 

7.                                                     Building Flush-out

 

·                   Clean the coils and fans, replace all filter media with MERV 13 (80-90% efficient) media when construction is complete and prior to operating HVAC system for flush-out.

 

·                   Operate the HVAC systems utilizing 100% outside air in all systems (where possible) for continuously for a two-week period prior to occupancy, providing 14,000 cubic feet of air per square foot of building served over the flush-out period.

 

·                   Check HVAC filters and systems daily. Replace filter media as loading occurs, or if media is dislodged from the holding rack.

 

·                   If filter media does get dislodged from the holding rack, shut down the unit and inspect the downstream ductwork for dust, dirt and debris carryover. If needed, professionally clean the ductwork per NADCA standards.

 

·                   When flush-out is complete and building is ready for occupancy, replace all filter media one final time with MERV 13 filters.

 

Refer to attached Planning Checklist and Inspection Checklist for use in planning activities and confirming that measures selected are utilized.

 

PLANNING AND INSPECTION CHECKLISTS

 

The planning and inspection checklists included in this document cover a range of building systems and projects. These lists may be useful in documenting problem areas, identifying responsibility, communicating the problem to the responsible party, and serving as follow-up reminders.

 

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17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

The checklists are generic and include a list of items, not all of which are applicable for every project. Therefore, the lists should be used as generic masters, to be revised to suit the needs of specific equipment and systems in specific projects. Some items will not be relevant and should be deleted from the project checklists. Other items may need to be added.

 

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17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

Planning Checklist

 

Project: Project Phase/Area    

 

 

1.0 Potential Emissions

 

Source

 

Class

 

 

 

 

 

1.1 Materials disturbed

 

 

 

 

 

 

 

 

 

1.2 New products

 

 

 

 

 

 

 

 

 

1.3 Equipment operation

 

 

 

 

 

 

 

 

 

1.4 System disruption

 

 

 

 

 

 

 

 

 

1.5 Waste materials

 

 

 

 

 

 

 

 

 

2.0 Pathway

 

Affected Areas

 

Worst-Case

 

 

 

 

 

2.1 HVAC recirculation

 

 

 

 

 

 

 

 

 

2.2 Direct exposure

 

 

 

 

 

 

 

 

 

2.3 Negative pressure

 

 

 

 

 

 

 

 

 

2.4 Tracking

 

 

 

 

 

 

 

 

 

3.0 Controls

 

Options

 

Comments

 

 

 

 

 

3.1 HVAC protection

 

 

 

 

 

 

 

 

 

3.2 Product substitution

 

 

 

 

 

 

 

 

 

3.3 Equipment modification

 

 

 

 

 

 

 

 

 

3.4 Local exhaust

 

 

 

 

 

 

 

 

 

3.5 Air cleaning

 

 

 

 

 

 

 

 

 

3.6 Covering/sealing

 

 

 

 

 

 

 

 

 

3.7 Negative Pressure

 

 

 

 

 

 

 

 

 

3.8 Barriers

 

 

 

 

 

 

 

 

 

3.9 Source relocation

 

 

 

 

 

 

 

 

 

3.10 Dust suppression

 

 

 

 

 

 

 

 

 

3.11 Upgraded cleaning

 

 

 

 

 

 

 

 

 

3.12 Buffer zones

 

 

 

 

 

3.                                       Instructions

 

For larger projects, review by phase or area (do separate checklist for each).

 

Section 1.0: Select Class 1, 2, or 3. Refer to Page 3 for Classes.

 

Section 2.0: Describe area and/or attach floor plan. Note approximate occupancy during impact. Discuss worst-case scenarios (emissions/occupancy/pathway).

 

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Section 3.0: Note pros and cons of each option.

 

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General Inspection Checklist

 

Project: Project

 

Status

 

Date

 

Inspector

 

Contractor(s)

 

1.0 Active Work Areas

 

Location

 

Odor?

 

Dust?

 

 

 

 

 

 

 

1.1 Materials disturbed

 

 

 

 

 

 

 

 

 

 

 

 

 

1.2 New products

 

 

 

 

 

 

 

 

 

 

 

 

 

1.3 Equipment operation

 

 

 

 

 

 

 

 

 

 

 

 

 

1.4 System disruption

 

 

 

 

 

 

 

 

 

 

 

 

 

1.5 Waste materials

 

 

 

 

 

 

 

 

 

 

 

 

 

2.0 Potentially Affected Areas

 

Location

 

Odor?

 

Dust?

 

 

 

 

 

 

 

2.1 HVAC recirculation

 

 

 

 

 

 

 

 

 

 

 

 

 

2.2 Direct exposure

 

 

 

 

 

 

 

 

 

 

 

 

 

2.3 Negative pressure

 

 

 

 

 

 

 

 

 

 

 

 

 

2.4 Tracking

 

 

 

 

 

 

 

 

 

 

 

 

 

3.0 Controls

 

Description

 

Status

 

 

 

 

 

 

 

 

 

3.1 HVAC protection

 

 

 

 

 

 

 

 

 

 

 

 

 

3.2 Source control

 

 

 

 

 

 

 

 

 

 

 

 

 

3.3 Pathway interruption

 

 

 

 

 

 

 

 

 

 

 

 

 

3.4 Housekeeping

 

 

 

 

 

 

 

 

 

 

 

 

 

3.5 Scheduling

 

 

 

 

 

 

 

 

 

 

 

 

 

4.0 Occupant complaints/observations

 

 

 

 

 

 

 

 

 

 

 

 

 

5.0 Occupant complaints/observations

 

 

 

 

 

 

 

***Confidential Treatment Requested***

 

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Weekly Checklist- IAQ Management Tasks

 

 

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Schedule 2(e)

 

Well Building Guidelines
https://www.wellcertified.com/en

 

WELL BUILDING STANDARDS

 

Landlord and Tenant shall each abide by the following WELL Building Standards and any rules and regulations of general application to all similarly situated Building tenants that may reasonably be implemented by Landlord to ensure compliance with the WELL Building Standards, including, without limitation, the International WELL Building Institute’s WELL Building Standard for Core and Shell Construction: Details on the requirements for each certification can be found at www.wellceiiified.com.

 

The WELL Building Standard marries best practices in design and construction with evidence-based health and wellness interventions. It harnesses the built environment as a vehicle to support human health, well-being and comfort. WELL Certified spaces and developments can lead to a built environment that helps to improve the nutrition, fitness, mood, sleep, comfort and performance of its occupants. This is achieved in part by implementing strategies, programs and technologies designed to encourage healthy, more active lifestyles and reducing occupancy exposure to harmful chemicals and pollutants.

 

The following Wellness practices and strategies establish a process through with the Tenant can elevate human health and comfort to the forefront of building practices and reinvent buildings that are not only better for the planet, but also for people.

 

WELLNESS STRATEGIES

 

Tenant shall use reasonable efforts to adhere to the following standards so that Landlord and Tenant may achieve the WELL Building Standards.

 

A.             Smoking Ban (Precondition 02) : Smoking and the use of e-cigarettes is prohibited inside the building. A smoking ban is in effect within 25 feet of all entrances, operable windows and building air intakes. A smoking ban is in effect on all decks, patios, balconies, rooftops and all other regularly occupied exterior building spaces. Signage shall be provided by the Landlord stating the restriction.

 

B.             VOC Reduction (Precondition 04) : Tenant must select materials that meet WELL Air Quality Standards, including the compliance with the following items listed below. Tenant may choose to comply with furniture standards, but is not mandated by the Landlord.

 

a.     PART 1: INTERIOR PAINTS AND COATINGS
The VOC limits of newly applied paints and coatings meet one of the following requirements:

 

i.                   100% of installed products meet California Air Resources Board (CARB) 2007, Suggested Control Measure (SCM) for Architectural Coatings, or South Coast Air Quality Management District (SCAQMD) Rule 1113, effective June 3, 2011 for VOC content.

 

ii.                At minimum 90%, by volume, meet the California Department of Public Health (CDPH) Standard Method v1.1-2010 for VOC emissions.

 

iii.             Applicable national VOC control regulations or conduct testing of VOC content in accordance with ASTM D2369-10; ISO 11890, part 1; ASTM D6886-03; or ISO 11890-2.

 

b.     PART 2: INTERIOR ADHESIVES AND SEALANTS
The VOC limits of newly applied adhesives and sealants meet one of the following requirements:

 

i.                   100% of installed products meet South Coast Air Quality Management District (SCAQMD) Rule 1168, July 1 2005 for VOC content.

 

ii.                At minimum 90%, by volume, meet the California Department of Public Health (CDPH) Standard Method v1.1-2010 for VOC emissions.

 

iii.             Applicable national VOC control regulations or conduct testing of VOC content in accordance with ASTM D2369-10; ISO 11890, part 1; ASTM D6886-03; or ISO 11890-2.

 

***Confidential Treatment Requested***

 

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17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

c.      PART 3: FLOORING
The VOC content of all newly installed flooring must meet all limits set by the following, as applicable:

 

i.                   California Department of Public Health (CDPH) Standard Method v1.1-2010.

 

d.      PART 4: INSULATION
The VOC content of all newly installed thermal and acoustic insulation in ceilings and walls must meet all limits set by the following, as applicable:

 

i.                   California Department of Public Health (CDPH) Standard Method v1.1-2010.

 

C.             Construction Pollution Management (Precondition 07) : Tenant construction must minimize the introduction of air pollutants during construction and remove pollutant build up before occupancy. This feature has a direct overlap with LEED v4 EQ Credit: Construction Indoor Air Quality Management Plan. Specific requirements include:

 

a.      PART 1: DUCT PROTECTION
To prevent pollutants from entering the ventilation system, all ducts are either:

 

i.                   Sealed and protected from possible contamination during construction.

 

ii.                Vacuumed out prior to installing registers, grills and diffusers.

 

b.      PART 2: FILTER REPLACEMENT
To prevent pollutants from entering the air supply post-occupancy, if the ventilation system is operating during

 

i.                   All filters are replaced prior to occupancy.

 

c.      VOC ABSORPTION MANAGEMENT
To prevent building materials from absorbing and later releasing VOCs emitted by other (source) materials during construction, the following requirements are met:

 

i.                   A secure area is designated to store and protect absorptive materials, including but not limited to carpets, acoustical ceiling panels, fabric wall coverings, insulation, upholstery and furnishings.

 

ii.                Wet materials, including but not limited to adhesives, wood preservatives and finishes, sealants, glazing compounds, paints and joint fillers are installed and allowed to fully cure, prior to installation of absorptive materials.

 

iii.             Hard finishes requiring adhesive installation are installed and allowed to dry for a minimum of 24 hours, prior to installation of absorptive materials.

 

d.      DUST CONTAINMENT AND REMOVAL
The following procedures are followed during building construction:

 

i.                   AH active areas of work are isolated from other spaces by sealed doorways or windows or through the use of temporary barriers.

 

ii.                Walk-off mats are used at entryways to reduce the transfer of dirt and pollutants.

 

iii.             Saws and other tools use dust guards or collectors to capture generated dust

 

D.                   Pesticide Management (Precondition 10) : Tenant must create a pest management system that reduces pesticides and herbicide use and eliminates highly toxic chemicals. Most pest management systems do not prohibit the application of harmful chemicals, so this feature further requires that only approve products are used. This scope is applicable if the tenant has indoor plants, green walls and all other biophillic elements. Specific requirements include:

 

a.      PART 1: PESTICIDE USE
The following conditions are met for all pesticides and herbicides used on plants:

 

i.                   Pesticide and herbicide use is minimized by creating a use plan based on Chapter 3 of the San Francisco Environment Code Integrated Pest Management (IPM) program.

 

ii.                Only pesticides with a hazard tier ranking of 3 (least hazardous) as per The City of San Francisco Department of the Environment’s (SFE) Reduced-Risk

 

***Confidential Treatment Requested***

 

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17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

Pesticide List are used. Refer to Table A2 in Appendix C of the WELL Building Standard for more details.

 

E.              Fundamental Material Safety (Precondition 11) : Tenant is restricted in use of Mercury Containing equipment. The other components of Precondition 11 are not applicable to Tenant Scope.

 

a.      PART 5: MERCURY LIMITATION
Mercury-containing equipment and devices are restricted in accordance with the below guidelines:

 

i.                   Project does not specify or install new mercury containing thermometers, switches and electrical relays.

 

ii.                Project develops a plan to upgrade current mercury-containing lamps to low-mercury or mercury-free lamp technology per limits specified in Appendix C, Table A5 of the WELL Building Standard.

 

iii.             Illuminated exit signs only use Light-Emitting Diode (LED) or Light-Emitting Capacitor (LEC) lamps.

 

iv.            No mercury vapor or probe-start metal halide high intensity discharge lamps are in use.

 

F.               Solar Glare Control (Optimization 56) : Tenant is required to comply with Landlord Interior Window Shade Design standards, as well as the City of Cambridge Special Permit Application Requirements. In addition, the Tenant must comply with WELL Building Requirements pertinent to Solar Glare Control.

 

a.      PART 1: VIEW WINDOW SHADING
Applicable to Glazing less than 7’-0” above the floor.

 

i.                   Interior Window shading or blinds are controllable by the occupants or set on a timer.

 

b.      PART 2: DAYLIGHT MANAGEMENT
Applicable to Glazing greater than 7-0” above the floor.

 

i.                   Interior Window shading or blinds are controllable by the occupants or set on a timer.

 

G.             ADA Accessible Design Standards (Precondition 72) : All Tenant construction must comply with current ADA Standards for Accessible Design.

 

H.            Thermal Comfort (Precondition 76) : The property is a mechanically ventilated project. The Tenant must meet the design, operating and performance criteria of ASHRAE Standard 55-2013 Section 5.3, Standard Comfort Zone Compliance

 

***Confidential Treatment Requested***

 

93



 

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17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

Schedule 8

 

Reported Project Costs

 

Landlord:  ARE-MA Region No. 58, LLC
Tenant:      Rubius Therapeutics, Inc.
Date:          December 31, 2017

 

(Amounts in tables are in thousands)

 

Certain costs of development of 399 Binney Street, Cambridge, provided by ARE-MA Region No. 58, LLC.

 

The following table excludes, among others, the following:

·       Cost of land

·       Capitalized interest

·       Costs attributable to space not leased by tenant (xx%)

 

 

(a) Represents Tenant’s Share (xx%) of reported amounts by Landlord’s General Contractor for costs paid through the date of this report.

 

(b) Represents Tenant’s Share (xx%) of architecture and design costs.

 

(c) Represents Tenant’s Share (xx%) of other project costs.

 

(d) Represents Tenant’s Share (xx%) of estimated accrued (invoiced but not paid or incurred but not invoiced) construction costs for Reported Project Costs incurred, but not paid as of the date of this report.

 

Note: Tenant’s Share is the estimated portion related to the Tenant space, based on relative rentable square feet or other acceptable method in accordance with GAAP.

 

Neither ARE-MA Region No. 58, LLC, nor any of its affiliates has made any representations, statements or warranties of any kind as to the accuracy or validity of the information contained in this schedule. Without limitation of the foregoing, this report and any updates of this report are expressly subject to the terms of the lease, dated         .

 

***Confidential Treatment Requested***

 

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17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

EXHIBIT D TO LEASE

 

ACKNOWLEDGMENT OF COMMENCEMENT DATE

 

This ACKNOWLEDGMENT OF COMMENCEMENT DATE is made as of this        day of               ,             between ARE-MA REGION NO. 58, LLC , a Delaware limited liability company (“ Landlord ”), and RUBIUS THERAPEUTICS, INC. , a Delaware corporation (“ Tenant ”), and is attached to and made a part of the Lease dated as of            ,             (the “ Lease ”), by and between Landlord and Tenant. Any initially capitalized terms used but not defined herein shall have the meanings given them in the Lease.

 

Landlord and Tenant hereby acknowledge and agree, for all purposes of the Lease, that the Commencement Date of the Base Term of the Lease is           ,       , and the termination date of the Base Term of the Lease shall be midnight on            ,       . In case of a conflict between this Acknowledgment of Commencement Date and the Lease, this Acknowledgment of Commencement Date shall control for all purposes.

 

IN WITNESS WHEREOF, Landlord and Tenant have executed this ACKNOWLEDGMENT OF COMMENCEMENT DATE to be effective on the date first above written.

 

 

TENANT:

 

 

 

RUBIUS THERAPEUTICS, INC. ,

 

a Delaware corporation

 

 

 

By:

 

 

Print Name:

 

 

Title:

 

 

 

 

LANDLORD:

 

 

 

ARE-MA REGION NO. 58, LLC,

 

a Delaware limited liability company

 

 

 

By:

ALEXANDRIA REAL ESTATE EQUITIES, L.P.,
a Delaware limited partnership, managing member

 

 

 

 

By:

ARE-QRS CORP.,

 

 

a Maryland corporation,

 

 

general partner

 

 

 

 

By:

 

 

 

Print Name:

 

 

 

Title:

 

 

***Confidential Treatment Requested***

 

1



 

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Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

EXHIBIT E TO LEASE

 

RULES AND REGULATIONS

 

1.             The sidewalk, entries, and driveways of the Project shall not be obstructed by Tenant, or any Tenant Party, or used by them for any purpose other than ingress and egress to and from the Premises.

 

2.             Tenant shall not place any objects, including antennas, outdoor furniture, etc., in the parking areas, landscaped areas or other areas outside of its Premises, or on the roof of the Project.

 

3.             Except for animals assisting the disabled, no animals shall be allowed in the offices, halls, or corridors in the Project.

 

4.             Tenant shall not disturb the occupants of the Project or adjoining buildings by the use of any radio or musical instrument or by the making of loud or improper noises.

 

5.             If Tenant desires telegraphic, telephonic or other electric connections in the Premises, Landlord or its agent will direct the electrician as to where and how the wires may be introduced; and, without such direction, no boring or cutting of wires will be permitted. Any such installation or connection shall be made at Tenant’s expense.

 

6.             Tenant shall not install or operate any steam or gas engine or boiler, or other mechanical apparatus in the Premises, except as specifically approved in the Lease. The use of oil, gas or inflammable liquids for heating, lighting or any other purpose is expressly prohibited. Explosives or other articles deemed extra hazardous shall not be brought into the Project.

 

7.             Parking any type of recreational vehicles is specifically prohibited on or about the Project. Except for the overnight parking of operative vehicles, no vehicle of any type shall be stored in the parking areas at any time. In the event that a vehicle is disabled, it shall be removed within 48 hours. There shall be no “For Sale” or other advertising signs on or about any parked vehicle. All vehicles shall be parked in the designated parking areas in conformity with all signs and other markings. Ail parking will be open parking, and no reserved parking, numbering or lettering of individual spaces will be permitted except as specified by Landlord.

 

8.             Tenant shall maintain the Premises free from rodents, insects and other pests.

 

9.             Landlord reserves the right to exclude or expel from the Project any person who, in the judgment of Landlord, is intoxicated or under the influence of liquor or drugs or who shall in any manner do any act in violation of the Rules and Regulations of the Project.

 

10.          Tenant shall not cause any unnecessary labor by reason of Tenant’s carelessness or indifference in the preservation of good order and cleanliness. Landlord shall not be responsible to Tenant for any loss of property on the Premises, however occurring, or for any damage done to the effects of Tenant by the janitors or any other employee or person.

 

11.          Tenant shall give Landlord prompt notice of any defects in the water, lawn sprinkler, sewage, gas pipes, electrical lights and fixtures, heating apparatus, or any other service equipment affecting the Premises.

 

12.          Tenant shall not permit storage outside the Premises, including without limitation, outside storage of trucks and other vehicles, or dumping of waste or refuse or permit any harmful materials to be placed in any drainage system or sanitary system in or about the Premises.

 

***Confidential Treatment Requested***

 

1



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

13.          All moveable trash receptacles provided by the trash disposal firm for the Premises must be kept in the trash enclosure areas, if any, provided for that purpose.

 

14.          No auction, public or private, will be permitted on the Premises or the Project.

 

15.          No awnings shall be placed over the windows in the Premises except with the prior written consent of Landlord.

 

16.          The Premises shall not be used for lodging, sleeping or cooking or for any immoral or illegal purposes or for any purpose other than that specified in the Lease. No gaming devices shall be operated in the Premises.

 

17.          Tenant shall ascertain from Landlord the maximum amount of electrical current which can safely be used in the Premises, taking into account the capacity of the electrical wiring in the Project and the Premises and the needs of other tenants, and shall not use more than such safe capacity. Landlord’s consent to the installation of electric equipment shall not relieve Tenant from the obligation not to use more electricity than such safe capacity.

 

18.          Tenant assumes full responsibility for protecting the Premises from theft, robbery and pilferage.

 

19.          Tenant shall not install or operate on the Premises any machinery or mechanical devices of a nature not directly related to Tenant’s ordinary use of the Premises and shall keep all such machinery free of vibration, noise and air waves which may be transmitted beyond the Premises.

 

***Confidential Treatment Requested***

 

2


 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

EXHIBIT F TO LEASE

 

TENANT’S PERSONAL PROPERTY

 

None.

 

***Confidential Treatment Requested***

 

1



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

EXHIBIT G TO LEASE

 

FORM OF ESTOPPEL CERTIFICATE

 

THIS TENANT ESTOPPEL CERTIFICATE (“Certificate”), dated as of                , 20     , is executed by RUBIUS THERAPEUTICS, INC., a Delaware corporation (“Tenant’”) in favor of ARE-MA REGION NO. 58, LLC, LLC, a Delaware limited liability company, together with its nominees, designees and assigns (collectively, “Landlord”).

 

RECITALS

 

A.            Tenant and Landlord have entered into that certain Lease Agreement dated as of           , 2018 (together with all amendments, modifications, and supplements, thereof, the “ Lease ”), for a portion of the Project.

 

B.            Pursuant to the Lease, Tenant has agreed that upon the request of Landlord, Tenant would execute and deliver an estoppel certificate certifying the status of the Lease.

 

C.            Landlord has requested that Tenant execute this Certificate with an understanding that Landlord and parties designated by Landlord will rely on the representations and agreements below.

 

NOW, THEREFORE, Tenant certifies, warrants, and represents to Landlord as follows:

 

1.             Lease . Attached hereto as Exhibit 1 is a true, correct and complete copy of the Lease, including the following amendments, modifications, supplements, guarantees and restatements thereof, which together represent all of the amendments, modifications, supplements, guarantees and restatements thereof:                    . (If none, please state “None.”)

 

2.             Premises . Pursuant to the Lease, Tenant leases those certain premises (the “ Premises ”) consisting of approximately          rentable square feet within the Project, as more particularly described in the Lease, in addition, pursuant to the terms of the Lease, Tenant has a license for the use of [        ] parking spaces in the OKS Garage during the Term of the Lease.

 

3.             Full Force of Lease . The Lease has been duly authorized, executed and delivered by Tenant, is in full force and effect has not been terminated and constitutes a legally valid instrument, binding and enforceable against Tenant in accordance with its terms, subject only to applicable limitations imposed by laws relating to bankruptcy and creditor’s rights.

 

4.             Complete Agreement . The Lease constitutes the complete agreement between Landlord and Tenant for the Premises and the Project, except as modified by the Lease amendments noted above (if any).

 

5.             Acceptance of Premises . The Premises have been Delivered to Tenant. [NOTE: N/A if prior to Commencement Date.] Tenant has accepted possession and is currently occupying the Premises [NOTE: N/A if prior to Commencement Date].

 

6.             Lease Term; Extension; Expansion . The term of the Lease commenced on             , 20   and ends on              , 20  . Tenant has one option to extend the Base Term as set forth in the Lease. Tenant has no option to lease, right of first refusal to lease, right of first offer to lease, or other right to expand the Premises or lease any other portion of the Project, except the following:               . (If none, please state “None.”)

 

7.             No Purchase Rights . Tenant has no option, right of first refusal, right of first offer on sale, or other right to purchase all or any portion of the Premises or the Project.

 

***Confidential Treatment Requested***

 

1



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

8.             Rent . The obligation to pay rent under the Lease commenced on             , 20  . The rent under the Lease is current, and Tenant is not in Default in the performance of any of its obligations under the Lease.

 

Tenant is currently paying base rent under the Lease in the amount of $         per month, and is currently paying for parking under the Lease in the amount of $        per month. Tenant has not received and is not, presently, entitled to any abatement, refunds, rebates, concessions or forgiveness of rent or other charges, free rent, partial rent, or credits, offsets or reductions in rent, except as follows:           . (If none, please state “None.”)

 

Tenant’s estimated share of operating expenses, common area charges, insurance, real estate taxes and administrative and overhead expenses is   % and is currently being paid at the rate of $        per month, payable to:               .

 

To the best of Tenant’s knowledge, as of the date hereof, there are no existing defenses or offsets against rent due or to become due under the terms of the Lease, and there presently is no default or other wrongful act or omission by Landlord under the Lease or otherwise in connection with Tenant’s occupancy of the Premises, except as follows:                     . (If none, please state “None.”)

 

9.             Security Deposit . A Security Deposit in the form of a letter of credit in the amount of $          is held by Landlord under the Lease.

 

10.          Prepaid Rent . The amount of prepaid rent is $          , covering the period from                 , 20   to               , 20  .

 

11.          Tenant Improvements . As of the date of this Certificate, to the best of Tenant’s knowledge, Landlord has performed all obligations required of Landlord pursuant to the Lease; no offsets, counterclaims, or defenses of Tenant under the Lease exist against Landlord; except as follows:                       . (If none, please state “None.”)

 

12.          Assignments by Landlord . Tenant has received no notice of any assignment, hypothecation or pledge of the Lease or rentals under the Lease by Landlord, except as follows:                      . (If none, please state “None”.)

 

13.          Assignments by Tenant . Tenant has not sublet or assigned the Leased Premises or the Lease or any portion thereof to any sublessee or assignee, except as follows:                . (If none, please state “None”.) The address for notices to be sent to Tenant is as set forth in the Lease.

 

Tenant makes this Certificate with the knowledge that it will be relied upon by Landlord and its designees.

 

Tenant has executed this Certificate as of the date first written above by the person named below, who is duly authorized to do so.

 

TENANT:

 

RUBIUS THERAPEUTICS, INC. ,
a Delaware corporation

 

By:

 

 

Name:

 

 

Its:

 

 

 

***Confidential Treatment Requested***

 

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***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

EXHIBIT H

 

FIRST FLOOR EXPANSION SPACE

 

[ *** ]

 

***Confidential Treatment Requested***

 




Exhibit 10.1 2

 

RUBIUS THERAPEUTICS, INC.

 

LOAN AND SECURITY AGREEMENT

 



 

This LOAN AND SECURITY AGREEMENT (the “Agreement”) is entered into as of November 20, 2015, by and between PACIFIC WESTERN BANK, a California state chartered bank (“Bank”) and RUBIUS THERAPEUTICS, INC. (“Borrower”).

 

RECITALS

 

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

 

AGREEMENT

 

The parties agree as follows:

 

1.                                       DEFINITIONS AND CONSTRUCTION.

 

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

 

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

 

2.                                       LOAN AND TERMS OF PAYMENT.

 

2.1                                Credit Extensions .

 

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

 

(b)                                  Term Loans.

 

(i)                                     Subject to and upon the terms and conditions of this Agreement, (I) Borrower may request and Bank agrees to make one or more term loans to Borrower in an aggregate original principal amount not to exceed $2,000,000 (each a “Tranche A Term Loan” and collectively the “Tranche A Term Loans”) at any time from the Closing Date through the Availability End Date and (II) Borrower may request and Bank agrees to make one or more additional term loans to Borrower in an aggregate original principal amount not to exceed $2,000,000 (each a “Tranche B Term Loan” and collectively, the “Tranche B Term Loans” and together with the Tranche A Term Loans, each a “Term Loan” and collectively, the “Term Loans”) at any time from the date Borrower achieves the Tranche B Milestones through the Availability End Date.  The proceeds of the Term Loans shall be used for general working capital purposes and for capital expenditures.

 

(ii)                                 Interest shall accrue from the date of each Term Loan at the rate specified in Section 2.3(a), and prior to the Availability End Date shall be payable monthly in arrears beginning on the 20th day of the month next following the such Term Loan, and continuing on the same day of each month thereafter.  Any Term Loans that are outstanding on the Availability End Date shall be payable in equal monthly installments of principal, plus all accrued interest, beginning on the Amortization Start Date and continuing on the same day of each month thereafter through the Term Loan Maturity Date, at which time all amounts due in connection with the Term Loans and any other amounts due under this Agreement shall be immediately due and payable.  Term Loans, once repaid, may not be reborrowed.  Borrower may prepay any Term Loan in whole or in part without penalty or premium.

 

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(iii)                             When Borrower desires to obtain a Term Loan (other than the initial Term Loan), Borrower shall notify Bank (which notice shall be irrevocable) by facsimile transmission to be received no later than 3:30 p.m. Eastern time on the Business Day prior to the date on which the Term Loan is to be made.  Such notice shall be substantially in the form of Exhibit C.  The notice shall be signed by an Authorized Officer.

 

2.2                                Intentionally Omitted .

 

2.3                                Interest Rates, Payments, and Calculations.

 

(a)                                  Interest Rate for Term Loans .  Except as set forth in Section 2.3(b), the Term Loans shall bear interest, on the outstanding daily balance thereof, at a variable annual rate equal to the greater of (A) 1.25% above the Prime Rate then in effect, or (B) 4.50%.

 

(b)                                  Late Fee; Default Rate .  If any payment is not made within 15 days after the date such payment is due, Borrower shall pay Bank a late fee equal to the lesser of (i) 5% of the amount of such unpaid amount or (ii) the maximum amount permitted to be charged under applicable law.  All Obligations shall bear interest, from and after the occurrence and during the continuance of an Event of Default, at a rate equal to 5 percentage points above the interest rate applicable immediately prior to the occurrence of the Event of Default.

 

(c)                                   Payments .  Interest under the Term Loans shall be due and payable on the 20 th  calendar day of each month during the term hereof.  Bank shall, at its option, charge such interest, all Bank Expenses, and all Periodic Payments against any of Borrower’s deposit accounts.  Any interest not paid when due shall be compounded by becoming a part of the Obligations, and such interest shall thereafter accrue interest at the rate then applicable hereunder.

 

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

 

2.4                                Crediting Payments .  Prior to the occurrence of an Event of Default, Bank shall credit a wire transfer of funds, check or other item of payment to such deposit account or Obligation as Borrower specifies.  After the occurrence and during the continuance of an Event of Default, Bank shall have the right, in its sole discretion, to immediately apply any wire transfer of funds, check, or other item of payment Bank may receive to conditionally reduce Obligations, but such applications of funds shall not be considered a payment on account unless such payment is of immediately available federal funds or unless and until such check or other item of payment is honored when presented for payment.  Notwithstanding anything to the contrary contained herein, any wire transfer or payment received by Bank after 5:30 p.m. Eastern time shall be deemed to have been received by Bank as of the opening of business on the immediately following Business Day.  Whenever any payment to Bank under the Loan Documents would otherwise be due (except by reason of acceleration) on a date that is not a Business Day, such payment shall instead be due on the next Business Day, and additional fees or interest, as the case may be, shall accrue and be payable for the period of such extension.

 

2.5                                Fees .  Borrower shall pay to Bank the following:

 

(a)                                  Facility Fee .  On or before the Closing Date, a fee equal to $5,000, which shall be nonrefundable;

 

(b)                                  Bank Expenses .  On the Closing Date, all Bank Expenses incurred through the Closing Date, and, after the Closing Date, all Bank Expenses, as and when they become due.

 

2.6                                Term .  This Agreement shall become effective on the Closing Date and, subject to Section 12.7, shall continue in full force and effect for so long as any Obligations remain outstanding or Bank has any obligation to make Credit Extensions under this Agreement.  Notwithstanding the foregoing, Bank shall have the right to

 

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terminate its obligation to make Credit Extensions under this Agreement immediately and without notice upon the occurrence and during the continuance of an Event of Default.

 

3.                                       CONDITIONS OF LOANS .

 

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

 

(a)                                  this Agreement;

 

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

 

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

 

(d)                                  payment of the fees and Bank Expenses then due specified in Section 2.5, which may be debited from any of Borrower’s accounts with Bank;

 

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

 

(f)                                    unaudited annual financial statements for fiscal year 2014 and a company prepared consolidated balance sheets, income statements and statements of cash flows for the month most recently ended more than 20 days prior to the Closing Date in accordance with Section 6.2, and such other updated financial information as Bank may reasonably request;

 

(g)                                  current Compliance Certificate in accordance with Section 6.2;

 

(h)                                  a warrant in form and substance satisfactory to Bank;

 

(i)                                     a Borrower Information Certificate;

 

(j)                                     such other documents or certificates, and completion of such other matters, as Bank may reasonably request; and

 

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

 

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

 

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

 

(b)                                  Borrower shall have transferred substantially all of its Cash assets into operating accounts held with Bank;

 

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

 

(d)                                  the representations and warranties contained in Section 5 shall be true and correct in all material respects on and as of the date of such Loan Advance/Paydown Request Form and on the effective date of each Credit Extension as though made at and as of each such date, and no Event of Default shall have occurred and

 

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be continuing, or would exist after giving effect to such Credit Extension (provided, however, that those representations and warranties expressly referring to another date shall be true, correct and complete in all material respects as of such date).  The making of each Credit Extension shall be deemed to be a representation and warranty by Borrower on the date of such Credit Extension as to the accuracy of the facts referred to in this Section 3.2.

 

4.                                       CREATION OF SECURITY INTEREST.

 

4.1                                Grant of Security Interest .  Borrower grants and pledges to Bank a continuing security interest in the Collateral to secure prompt repayment of any and all Obligations and to secure prompt performance by Borrower of each of its covenants and duties under the Loan Documents (other than any warrants or equity related agreements).  Except for Permitted Liens or as disclosed in the Schedule, such security interest constitutes a valid, first priority security interest in the presently existing Collateral, and will constitute a valid, first priority security interest in later-acquired Collateral.  Borrower also hereby agrees not to sell, transfer, assign, mortgage, pledge, lease, grant a security interest in, or encumber any of its Intellectual Property, except for Permitted Transfers and Permitted Liens.  Notwithstanding any termination of this Agreement or of any filings undertaken related to Bank’s rights under the Code, Bank’s Lien on the Collateral shall remain in effect for so long as any Obligations are outstanding.

 

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

 

5.                                       REPRESENTATIONS AND WARRANTIES.

 

Borrower represents and warrants as follows:

 

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

 

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

 

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5.3                                Collateral .  Borrower has rights in or the power to transfer the Collateral, and its title to the Collateral is free and clear of Liens, adverse claims, and restrictions on transfer or pledge except for Permitted Liens.  Other than movable items of personal property such as laptop computers, all Collateral having an aggregate book value in excess of $250,000 is located solely in the Collateral States, at the locations set forth on Schedule 7.11 and such other locations permitted under Section 7.11.  All finished goods Inventory is in all material respects of good and merchantable quality, free from all material defects, except for Inventory for which adequate reserves have been made.  Except as set forth in the Schedule, none of the Borrower’s Cash is maintained or invested with a Person other than Bank or Bank’s affiliates or as permitted under Section 6.6.

 

5.4                                Intellectual Property . Borrower’s Intellectual Property as of the Closing Date is set forth on Schedule 5.4 hereto.  Borrower is the sole owner of the intellectual property created or purchased or licensed by Borrower, except for any rights of a licensor  of intellectual property purchased or licensed by Borrower, licenses granted by Borrower in the ordinary course of business and other Permitted Transfers.  To the best of Borrower’s knowledge, each of the material copyrights, trademarks and patents created or purchased by Borrower is valid and enforceable, and no part of the intellectual property created or purchased by Borrower has been judged invalid or unenforceable, in whole or in part, and no claim has been made to Borrower that any part of the intellectual property created or purchased by Borrower violates the rights of any third party except to the extent such judgment or claim would not reasonably be expected to cause a Material Adverse Effect.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5.12                         Inbound Licenses .  Except as disclosed on the Schedule, disclosed in accordance with Section 6.9 or permitted pursuant to Section 7.5, Borrower is not a party to, nor is bound by, any material license or other similar agreement important for the conduct of Borrower’s business that prohibits or otherwise restricts Borrower from granting a security interest in Borrower’s interest in such license or agreement or any other property important for the conduct of Borrower’s business, other than this Agreement or the other Loan Documents.

 

6.                                       AFFIRMATIVE COVENANTS.

 

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

 

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

 

6.2                                Financial Statements, Reports, Certificates .  Borrower shall deliver to Bank:  (i) as soon as available, but in any event within 30 days after the end of each calendar month, a company prepared consolidated and consolidating (if any) balance sheet, income statement, and statement of cash flows covering Borrower’s operations during such period, in a form reasonably acceptable to Bank and certified by a Responsible Officer; (ii) as soon as available, but in any event within 180 days after the end of Borrower’s fiscal year, audited (or such other level as is required by the Investment Agreement) consolidated and consolidating (if any) financial statements of Borrower prepared in accordance with GAAP, consistently applied, together with (if required by the Investment Agreement) an opinion which is either unqualified, qualified only for going concern so long as Borrower’s investors provide additional equity as needed or otherwise consented to in writing by Bank on such financial statements of an independent certified public accounting firm reasonably acceptable to Bank; (iii) annual budget approved by Borrower’s Board of Directors as soon as available but in any event within 30 days after each fiscal year end during the term of this Agreement; (iv) if applicable, copies of all statements, reports and notices sent or made available generally by Borrower to its security holders or to any holders of Subordinated Debt and all reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission; (v) promptly upon receipt of notice thereof, a report of any legal actions pending or threatened in writing against Borrower or any Subsidiary that could reasonably be expected to result in damages or costs to Borrower or any Subsidiary of $250,000 or more; (vi) promptly upon receipt, each management letter prepared by Borrower’s independent certified public accounting firm regarding Borrower’s management control systems; and (vii) such budgets, sales projections, operating plans, information relating to clinical updates or other information as Bank may reasonably request from time to time.

 

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

 

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

 

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

 

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

 

6.3                                Inventory and Equipment; Returns .  Borrower shall keep all finished goods Inventory and Equipment in good and merchantable condition, free from all material defects except for Inventory and Equipment (i) sold in the ordinary course of business, and (ii) for which adequate reserves have been made, in all cases in the United States and such other locations permitted under Section 7.11 or as to which Borrower gives prior written notice.  Returns and allowances, if any, as between Borrower and its account debtors shall be on the same basis and in accordance with the usual customary practices of Borrower.  Borrower shall promptly notify Bank of all returns and recoveries and of all written disputes and claims involving inventory having a book value of more than $100,000.

 

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

 

6.5                                Insurance .  Borrower, at its expense, shall (i) keep the Collateral insured against loss or damage, and (ii) maintain liability and other insurance, in each case in as ordinarily insured against by other owners in businesses similar to Borrower’s.  All such policies of insurance shall be in such form, with such companies, and in such amounts as reasonably satisfactory to Bank.  All policies of property insurance shall contain a lender’s loss payable endorsement, in a form reasonably satisfactory to Bank, showing Bank as an additional loss payee, and all liability insurance policies shall show Bank as an additional insured and specify that the insurer must give at least 10 days notice to Bank before canceling or refusing to renew its policy for any reason.  Within 30 days of the Closing Date, Borrower shall cause to be furnished to Bank a copy of its policies or certificate of insurance including any endorsements covering Bank or showing Bank as an additional insured.  Upon Bank’s request, Borrower shall deliver to Bank certified copies of the policies of insurance and evidence of all premium payments.  Proceeds payable under any casualty policy will, at Borrower’s option, be payable to Borrower to repair or replace the property subject to the claim, provided that any such repaired or replacement property shall be deemed Collateral in which Bank has been granted a first priority security interest, provided that if an Event of Default has occurred and is continuing, all proceeds payable under any such policy shall, at Bank’s option, be payable to Bank to be applied on account of the Obligations.

 

6.6                                Primary Depository .  Except as set forth below, within 30 days of the Closing Date Borrower shall maintain all its depository and operating accounts with Bank and all its investment accounts with Bank or Bank’s affiliates; provided that prior to maintaining any investment accounts with Bank’s affiliates, Borrower, Bank, and any such affiliate shall have entered into a securities account control agreement with respect to any such investment accounts, in form and substance satisfactory to Bank.  Notwithstanding the above, Borrower shall be permitted to maintain (i) payroll and employee benefits accounts at Bank or outside of Bank provided that if the same are outside of Bank, Borrower must deliver a control agreement in favor of Bank for such accounts, in form and substance satisfactory to Bank in its sole discretion, (ii) a deposit account held at Silicon Valley Bank securing the SVB Letter of Credit without the requirement for a control agreement, (iii) for a period of 90 days after the Closing Date, a deposit account at Silicon Valley Bank securing credit card reimbursement obligations without the requirement for a control agreement provided that at no time shall such deposit account contain funds in excess of

 

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$10,000, and (iv) Cash in one or more accounts outside of Bank, without the requirement for control agreements, provided that the total aggregate amount of Cash maintained in all accounts outside of Bank pursuant to this section (iv) does not exceed (x) $100,000 from the date that is 31 days after the Closing Date through the date that is 90 days after the Closing Date, (y) $50,000 from the date 91 days after the Closing Date through the date 180 days after the Closing Date, and (z) $20,000 at all times thereafter.  The foregoing notwithstanding, at no time from the date that is 31 days after the Closing Date and thereafter shall Borrower maintain cash outside of Bank in an aggregate amount in excess of Two Hundred Fifty Thousand Dollars ($250,000).

 

6.7                                Intentionally Omitted.

 

6.8                                Intentionally Omitted .

 

6.9                                Consent of Inbound Licensors .  Not more than 10 days after entering into or becoming bound by any material inbound license or similar agreement for the use of intellectual property (for the avoidance of doubt, excluding licenses of open source, over the counter software, prepackaged software and other software that is commercially available to the public), Borrower shall:  (i) provide written notice to Bank of the material terms of such license or agreement with a description of its likely impact on Borrower’s business or financial condition; and (ii) upon Bank’s request, in good faith use commercially reasonable efforts to obtain the consent of, or waiver by, any person whose consent or waiver is necessary for Borrower’s interest in such licenses or contract rights to be deemed Collateral and for Bank to have a security interest in it that could reasonably be expected to otherwise be restricted by the terms of the applicable license or agreement, whether now existing or entered into in the future, provided, however, that the failure to obtain any such consent or waiver shall not constitute a default under this Agreement.

 

6.10                         Creation/Acquisition of Subsidiaries.   In the event any Borrower or any Subsidiary of any Borrower creates or acquires any Subsidiary, Borrower or such Subsidiary shall promptly notify Bank of such creation or acquisition, and Borrower or such Subsidiary shall take all actions reasonably requested by Bank to achieve any of the following with respect to such “ New Subsidiary ” (defined as a Subsidiary formed after the date hereof during the term of this Agreement):  (i) if such New Subsidiary is organized under the laws of the United States, to cause New Subsidiary to become either a co-Borrower hereunder, or a secured guarantor with respect to the Obligations; and (ii) to grant and pledge to Bank a perfected security interest in 100% of the stock, units or other evidence of ownership held by Borrower or its Subsidiaries of any such New Subsidiary which is organized under the laws of the United States, and 65% of the stock, units or other evidence of ownership held by Borrower or its Subsidiaries of any such New Subsidiary which is not organized under the laws of the United States.

 

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

 

7.                                       NEGATIVE COVENANTS .

 

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

 

7.1                                Dispositions .  Convey, sell, lease, license, transfer or otherwise dispose of (collectively, to “Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of its business or property, or move cash balances on deposit with Bank to accounts opened at another financial institution, other than as permitted under Section 6.6, Permitted Transfers or Permitted Investments.

 

7.2                                Change in Name, Location, Executive Office, or Executive Management; Change in Business; Change in Fiscal Year; Change in Control .  Change its name or the state of Borrower’s formation or relocate its chief executive office without 30 days prior written notification to Bank; replace or suffer the departure of its chief executive officer or chief financial officer, if any, without delivering written notification to Bank within

 

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10 Business Days; suffer a change on its board of directors which results in the failure of at least one representative of Flagship Ventures Management, Inc. or its Affiliates to serve as a voting member, or suffer the resignation of one or more directors from its board of directors in anticipation of the Borrower’s insolvency, in either case without the prior written consent of Bank which may be withheld in Bank’s sole discretion; take action to liquidate, wind up, or otherwise cease to conduct business in the ordinary course; engage in any business, or permit any of its Subsidiaries to engage in any business, other than or reasonably related or incidental to the businesses currently engaged in by Borrower; change its fiscal year end; have a Change in Control.

 

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

 

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

 

7.5                                Encumbrances .  Create, incur, assume or allow any Lien with respect to its property, or assign or otherwise convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries so to do, except for Permitted Liens, or covenant to any other Person (other than (i) the licensors of in-licensed property with respect to such property, (ii) the lessors of specific equipment or lenders financing specific equipment with respect to such leased or financed equipment or (iii) as disclosed on the Schedule) that Borrower in the future will refrain from creating, incurring, assuming or allowing any Lien with respect to any of Borrower’s property, except for licenses and agreements containing customary anti-assignment provisions so long as such provisions are, or would be, rendered unenforceable or ineffective under applicable law (including, without limitation Sections 9-406, 9-407 and 9-408 of the Code).

 

7.6                                Distributions .  Pay any dividends or make any other distribution or payment on account of or in redemption, retirement or purchase of any of its capital stock, except that Borrower may (i) repurchase the stock of former employees or directors pursuant to stock repurchase agreements in an aggregate amount not to exceed $150,000 in any fiscal year, so long as an Event of Default does not exist prior to such repurchase or would not exist after giving effect to such repurchase, and (ii) repurchase the stock of former employees or directors pursuant to stock repurchase agreements in any amount where the consideration for the repurchase is the cancellation of indebtedness owed by such former employees or directors to Borrower regardless of whether an Event of Default exists.

 

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

 

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7.8                                Capitalized Expenditures .  Make Capitalized Expenditures in excess of $150,000 in the aggregate in any fiscal year of Borrower.

 

7.9                                Transactions with Affiliates .  Directly or indirectly enter into or permit to exist any material transaction with any Affiliate of Borrower except for transactions that are in the ordinary course of Borrower’s business, upon fair and reasonable terms that are no less favorable to Borrower than would be obtained in an arm’s length transaction with a non-affiliated Person and except for transactions permitted under Sections 7.2, 7.3, 7.4, 7.7 or 7.9.

 

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

 

7.11                         Inventory and Equipment .  Store the Inventory or the Equipment of a book value in excess of $250,000 with a bailee, warehouseman, collocation facility or similar third party unless the third party has been notified of Bank’s security interest and Bank (a) has received an acknowledgment from the third party that it is holding or will hold the Inventory or Equipment for Bank’s benefit or (b) is in possession of the warehouse receipt, where negotiable, covering such Inventory or Equipment.  Except for Inventory sold in the ordinary course of business and for movable items of personal property having an aggregate book value not in excess of $250,000, and except for such other locations as Bank may approve in writing, Borrower shall keep the Inventory and Equipment only at the location set forth in Section 10 of the Schedule, and such other locations of which Borrower gives Bank prior written notice and as to which Bank is able to take such actions as may be reasonably necessary to perfect its security interest or to obtain a bailee’s acknowledgment of Bank’s rights in the Collateral.

 

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

 

8.                                       EVENTS OF DEFAULT .

 

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

 

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

 

8.2                                Covenant Default .

 

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

 

(b)                                  If Borrower fails or neglects to perform or observe any other material term, provision, condition or covenant contained in this Agreement, in any of the Loan Documents, or in any other present or future agreement between Borrower and Bank and as to any default under such other term, provision, condition or covenant that can be cured, has failed to cure such default within 10 days after Borrower receives notice thereof or any officer of Borrower becomes aware thereof; provided, however, that if the default cannot by its nature be cured within the 10 day period or cannot after diligent attempts by Borrower be cured within such 10 day period, and such default is likely to be cured within a reasonable time, then Borrower shall have an additional reasonable period (which shall not in any case exceed 30 days) to attempt to cure such default, and within such reasonable time period the failure to have cured such default shall not be deemed an Event of Default but no Credit Extensions will be made;

 

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8.3                                Material Adverse Change .  If there occurs any circumstance or any circumstances which would reasonably be expected to have a Material Adverse Effect;

 

8.4                                Attachment .  If any material portion of Borrower’s assets is attached, seized, subjected to a writ or distress warrant, or is levied upon, or comes into the possession of any trustee, receiver or person acting in a similar capacity and such attachment, seizure, writ or distress warrant or levy has not been removed, discharged or rescinded within 10 days, or if Borrower is enjoined, restrained, or in any way prevented by court order from continuing to conduct all or any material part of its business affairs, or if a judgment or other claim becomes a lien or encumbrance upon any material portion of Borrower’s assets, or if a notice of lien, levy, or assessment is filed of record with respect to any material portion of Borrower’s assets by the United States Government, or any department, agency, or instrumentality thereof, or by any state, county, municipal, or governmental agency, and the same is not paid within ten days after Borrower receives notice thereof, provided that none of the foregoing shall constitute an Event of Default where such action or event is stayed or an adequate bond has been posted pending a good faith contest by Borrower (provided that no Credit Extensions will be made during such cure period);

 

8.5                                Insolvency .  If Borrower becomes insolvent, or if an Insolvency Proceeding is commenced by Borrower, or if an Insolvency Proceeding is commenced against Borrower and is not dismissed or stayed within 30 days (provided that no Credit Extensions will be made prior to the dismissal of such Insolvency Proceeding);

 

8.6                                Other Agreements .  If there is a default or other failure to perform in any agreement to which Borrower is a party with a third party or parties (a) resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Indebtedness in an amount in excess of $250,000, (b) in connection with any lease of real property that has not been cured or waived by the landlord under such lease (but only if the landlord thereof has given Borrower notice of such default), or (c) that would reasonably be expected to have a Material Adverse Effect;

 

8.7                                Judgments .  If a final, non-appealable, uninsured judgment or judgments for the payment of money in an amount, individually or in the aggregate, of at least $250,000 shall be rendered against Borrower and shall remain unsatisfied and unstayed for a period of 10 days (provided that no Credit Extensions will be made prior to the satisfaction or stay of the judgment); or

 

8.8                                Misrepresentations .  If any material misrepresentation or material misstatement exists now or hereafter in any warranty or representation set forth herein or in any certificate delivered to Bank by any Responsible Officer pursuant to this Agreement or to induce Bank to enter into this Agreement or any other Loan Document.

 

8.9                                Guaranty .  If any guaranty of all or a portion of the Obligations (a “Guaranty) ceases for any reason to be in full force and effect, or any guarantor fails to perform any obligation under any Guaranty or a security agreement securing any Guaranty (collectively, the “Guaranty Documents”), or any event of default occurs under any Guaranty Document or any guarantor revokes or purports to revoke a Guaranty, or any material misrepresentation or material misstatement exists now or hereafter in any warranty or representation set forth in any Guaranty Document or in any certificate delivered to Bank in connection with any Guaranty Document, or if any of the circumstances described in Sections 8.3 through 8.9 occur with respect to any guarantor.

 

9.                                       BANK’S RIGHTS AND REMEDIES.

 

9.1                                Rights and Remedies .  Upon the occurrence and during the continuance of an Event of Default, Bank may, at its election, without notice of its election and without demand, do any one or more of the following, all of which are authorized by Borrower:

 

(a)                                  Declare all Obligations, whether evidenced by this Agreement, by any of the other Loan Documents, or otherwise, immediately due and payable (provided that upon the occurrence of an Event of Default described in Section 8.5 (insolvency), all Obligations shall become immediately due and payable without any action by Bank);

 

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(b)                                  Demand that Borrower  (i) deposit cash with Bank in an amount equal to the amount of any Letters of Credit remaining undrawn, as collateral security for the repayment of any future drawings under such Letters of Credit, and (ii) pay in advance all Letter of Credit fees scheduled to be paid or payable over the remaining term of the Letters of Credit, and Borrower shall promptly deposit and pay such amounts;

 

(c)                                   Cease advancing money or extending credit to or for the benefit of Borrower under this Agreement or under any other agreement between Borrower and Bank;

 

(d)                                  Settle or adjust disputes and claims directly with account debtors for amounts, upon terms and in whatever order that Bank reasonably considers advisable;

 

(e)                                   Make such payments and do such acts as Bank considers necessary or reasonable to protect its security interest in the Collateral.  Borrower agrees to assemble the Collateral if Bank so requires, and to make the Collateral available to Bank as Bank may designate.  Borrower authorizes Bank to enter the premises where the Collateral is located, to take and maintain possession of the Collateral, or any part of it, and to pay, purchase, contest, or compromise any encumbrance, charge, or lien which in Bank’s determination appears to be prior or superior to its security interest and to pay all expenses incurred in connection therewith.  With respect to any of Borrower’s owned premises, Borrower hereby grants Bank a license to enter into possession of such premises and to occupy the same, without charge, in order to exercise any of Bank’s rights or remedies provided herein, at law, in equity, or otherwise;

 

(f)                                    Set off and apply to the Obligations any and all (i) balances and deposits of Borrower held by Bank, and (ii) indebtedness at any time owing to or for the credit or the account of Borrower held by Bank;

 

(g)                                  Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell (in the manner provided for herein) the Collateral.  Bank is hereby granted a license or other right, solely pursuant to the provisions of this Section 9.1, to use, without charge, Borrower’s labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks, service marks, and advertising matter, or any property of a similar nature, as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Bank’s exercise of its rights under this Section 9.1, Borrower’s rights under all licenses and all franchise agreements shall inure to Bank’s benefit;

 

(h)                                  Sell the Collateral at either a public or private sale, or both, by way of one or more contracts or transactions, for cash or on terms, in such manner and at such places (including Borrower’s premises) as Bank determines is commercially reasonable, and apply any proceeds to the Obligations in whatever manner or order Bank deems appropriate.  Bank may sell the Collateral without giving any warranties as to the Collateral.  Bank may specifically disclaim any warranties of title or the like.  This procedure will not be considered adversely to affect the commercial reasonableness of any sale of the Collateral.  If Bank sells any of the Collateral upon credit, Borrower will be credited only with payments actually made by the purchaser, received by Bank, and applied to the indebtedness of the purchaser.  If the purchaser fails to pay for the Collateral, Bank may resell the Collateral and Borrower shall be credited with the proceeds of the sale;

 

(i)                                     Bank may credit bid and purchase at any public sale;

 

(j)                                     Apply for the appointment of a receiver, trustee, liquidator or conservator of the Collateral, without notice and without regard to the adequacy of the security for the Obligations and without regard to the solvency of Borrower, any guarantor or any other Person liable for any of the Obligations; and

 

(k)                                  Any deficiency that exists after disposition of the Collateral as provided above will be paid immediately by Borrower.

 

Bank may comply with any applicable state or federal law requirements in connection with a disposition of the Collateral and compliance will not be considered adversely to affect the commercial reasonableness of any sale of the Collateral.

 

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9.2                                Power of Attorney .  Effective only upon the occurrence and during the continuance of an Event of Default, Borrower hereby irrevocably appoints Bank (and any of Bank’s designated officers, or employees) as Borrower’s true and lawful attorney to:  (a) send requests for verification of Accounts or notify account debtors of Bank’s security interest in the Accounts; (b) endorse Borrower’s name on any checks or other forms of payment or security that may come into Bank’s possession; (c) sign Borrower’s name on any invoice or bill of lading relating to any Account, drafts against account debtors, schedules and assignments of Accounts, verifications of Accounts, and notices to account debtors; (d) dispose of any Collateral; (e) make, settle, and adjust all claims under and decisions with respect to Borrower’s policies of insurance; (f) settle and adjust disputes and claims respecting the accounts directly with account debtors, for amounts and upon terms which Bank determines to be reasonable and (g) file, in its sole discretion, one or more financing or continuation statements and amendments thereto, relative to any of the Collateral; provided Bank may exercise such power of attorney to sign the name of Borrower on any of the documents described in clause (g) above, regardless of whether an Event of Default has occurred.  The appointment of Bank as Borrower’s attorney in fact, and each and every one of Bank’s rights and powers, being coupled with an interest, is irrevocable until all of the Obligations have been fully repaid and performed and Bank’s obligation to provide advances hereunder is terminated.

 

9.3                                Accounts Collection .  At any time after the occurrence and during the continuation of an Event of Default, Bank may notify any Person owing funds to Borrower of Bank’s security interest in such funds and verify the amount of such Account.  Borrower shall collect all amounts owing to Borrower for Bank, receive in trust all payments as Bank’s trustee, and immediately deliver such payments to Bank in their original form as received from the account debtor, with proper endorsements for deposit.

 

9.4                                Bank Expenses .  If Borrower fails to pay any amounts or furnish any required proof of payment due to third persons or entities, as required under the terms of this Agreement, then Bank may do any or all of the following after reasonable notice to Borrower:  (a) make payment of the same or any part thereof; or (b) obtain and maintain insurance policies of the type discussed in Section 6.5 of this Agreement, and take any action with respect to such policies as Bank deems prudent.  Any amounts so paid or deposited by Bank shall constitute Bank Expenses, shall be immediately due and payable, and shall bear interest at the then applicable rate hereinabove provided, and shall be secured by the Collateral.  Any payments made by Bank shall not constitute an agreement by Bank to make similar payments in the future or a waiver by Bank of any Event of Default under this Agreement.

 

9.5                                Bank’s Liability for Collateral .  Bank has no obligation to clean up or otherwise prepare the Collateral for sale.  All risk of loss, damage or destruction of the Collateral shall be borne by Borrower.

 

9.6                                No Obligation to Pursue Others .  Bank has no obligation to attempt to satisfy the Obligations by collecting them from any other person liable for them and Bank may release, modify or waive any collateral provided by any other Person to secure any of the Obligations, all without affecting Bank’s rights against Borrower.  Borrower waives any right it may have to require Bank to pursue any other Person for any of the Obligations.

 

9.7                                Remedies Cumulative .  Bank’s rights and remedies under this Agreement, the Loan Documents, and all other agreements shall be cumulative.  Bank shall have all other rights and remedies not inconsistent herewith as provided under the Code, by law, or in equity.  No exercise by Bank of one right or remedy shall be deemed an election, and no waiver by Bank of any Event of Default on Borrower’s part shall be deemed a continuing waiver.  No delay by Bank shall constitute a waiver, election, or acquiescence by it.  No waiver by Bank shall be effective unless made in a written document signed on behalf of Bank and then shall be effective only in the specific instance and for the specific purpose for which it was given.  Borrower expressly agrees that this Section 9.7 may not be waived or modified by Bank by course of performance, conduct, estoppel or otherwise.

 

9.8                                Demand; Protest .  Except as otherwise provided in this Agreement, Borrower waives demand, protest, notice of protest, notice of default or dishonor, notice of payment and nonpayment and any other notices relating to the Obligations.

 

10.                                NOTICES .

 

Unless otherwise provided in this Agreement, all notices or demands by any party relating to this Agreement or any other agreement entered into in connection herewith shall be in writing and (except for financial

 

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statements and other informational documents which may be sent by first-class mail, postage prepaid) shall be personally delivered or sent by a recognized overnight delivery service, certified mail, postage prepaid, return receipt requested, or by telefacsimile to Borrower or to Bank, as the case may be, at its addresses set forth below:

 

If to Borrower:

 

RUBIUS THERAPEUTICS, INC.

 

 

Attn: Chief Executive Officer

 

 

620 Memorial Drive Suite 100 West

 

 

Cambridge, MA 02139

 

 

 

With a copy (which will

 

 

not constitute notice) to:

 

Wilmer Cutler Pickering Hale and Dorr LLP

 

 

Attn: Jamie N. Class, Esq.

 

 

60 State Street

 

 

Boston, MA 02446

 

 

FAX: (617) 526-5000

 

 

 

If to Bank:

 

PACIFIC WESTERN BANK

 

 

406 Blackwell Street, Suite 240

 

 

Durham, North Carolina 27701

 

 

Attn: Loan Operations Manager

 

 

FAX: (919) 314-3080

 

 

 

with a copy to:

 

PACIFIC WESTERN BANK

 

 

50 Milk Street, 14th Floor

 

 

Boston, MA 02109

 

 

Attn: Scott Hansen

 

 

FAX: (781) 547-0848

 

The parties hereto may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other.

 

11.                                CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

 

This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of North Carolina, without regard to principles of conflicts of law.  Jurisdiction shall lie in the State of North Carolina.  All disputes, controversies, claims, actions and similar proceedings arising with respect to Borrower’s account or any related agreement or transaction shall be brought in the General Court of Justice of North Carolina sitting in Durham County, North Carolina or the United States District Court for the Middle District of North Carolina, except as provided below with respect to arbitration of such matters.  BANK AND BORROWER EACH ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED.  EACH OF THEM, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT, WITH COUNSEL OF THEIR CHOICE, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY RELATED INSTRUMENT OR LOAN DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR ACTION OF ANY OF THEM.  THESE PROVISIONS SHALL NOT BE DEEMED TO HAVE BEEN MODIFIED IN ANY RESPECT OR RELINQUISHED BY BANK OR BORROWER, EXCEPT BY A WRITTEN INSTRUMENT EXECUTED BY EACH OF THEM.  If the jury waiver set forth in this Section 11 is not enforceable, then any dispute, controversy, claim, action or similar proceeding arising out of or relating to this Agreement, the Loan Documents or any of the transactions contemplated therein shall be settled by final and binding arbitration held in Durham County, North Carolina in accordance with the then current Commercial Arbitration Rules of the American Arbitration Association by one arbitrator appointed in accordance with those rules.  The arbitrator shall apply North Carolina law to the resolution of any dispute, without reference to rules of conflicts of law or rules of statutory arbitration. Judgment upon any award resulting from arbitration may be entered into and enforced by any state or federal court having

 

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jurisdiction thereof.  Notwithstanding the foregoing, the parties may apply to any court of competent jurisdiction for preliminary or interim equitable relief, or to compel arbitration in accordance with this Section.  The costs and expenses of the arbitration, including without limitation, the arbitrator’s fees and expert witness fees, and reasonable attorneys’ fees, incurred by the parties to the arbitration may be awarded to the prevailing party, in the discretion of the arbitrator, or may be apportioned between the parties in any manner deemed appropriate by the arbitrator.  Unless and until the arbitrator decides that one party is to pay for all (or a share) of such costs and expenses, both parties shall share equally in the payment of the arbitrator’s fees as and when billed by the arbitrator.

 

12.                                GENERAL PROVISIONS .

 

12.1                         Successors and Assigns .  This Agreement shall bind and inure to the benefit of the respective successors and permitted assigns of each of the parties and shall bind all persons who become bound as a debtor to this Agreement; provided, however, that neither this Agreement nor any rights hereunder may be assigned by Borrower without Bank’s prior written consent, which consent may be granted or withheld in Bank’s sole discretion.  Bank shall have the right without the consent of or notice to Borrower to sell, assign, transfer, negotiate, or grant participation in all or any part of, or any interest in, Bank’s obligations, rights and benefits hereunder.

 

12.2                         Indemnification .  Borrower shall defend, indemnify and hold harmless Bank and its officers, employees, and agents against:  (a) all obligations, demands, claims, and liabilities claimed or asserted by any other party in connection with the transactions contemplated by this Agreement; and (b) all losses or Bank Expenses in any way suffered, incurred, or paid by Bank, its officers, employees and agents as a result of or in any way arising out of, following, or consequential to transactions between Bank and Borrower whether under this Agreement, or otherwise (including without limitation reasonable attorneys fees and expenses), except for losses caused by Bank’s gross negligence or willful misconduct.

 

12.3                         Time of Essence .  Time is of the essence for the performance of all obligations set forth in this Agreement.

 

12.4                         Severability of Provisions .  Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.

 

12.5                         Amendments in Writing, Integration.  All amendments to or terminations of this Agreement or the other Loan Documents must be in writing.  All prior agreements, understandings, representations, warranties, and negotiations between the parties hereto with respect to the subject matter of this Agreement and the other Loan Documents, if any, are merged into this Agreement and the Loan Documents.

 

12.6                         Counterparts .  This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same Agreement. Executed copies of the signature pages of this Agreement sent by facsimile or transmitted electronically in Portable Document Format (“PDF”), or any similar format, shall be treated as originals, fully binding and with full legal force and effect, and the parties waive any rights they may have to object to such treatment.

 

12.7                         Survival .  All covenants, representations and warranties made in this Agreement shall continue in full force and effect so long as any Obligations remain outstanding or Bank has any obligation to make any Credit Extension to Borrower.  The obligations of Borrower to indemnify Bank with respect to the expenses, damages, losses, costs and liabilities described in Section 12.2 shall survive until all applicable statute of limitations periods with respect to actions that may be brought against Bank have run.

 

12.8                         Confidentiality .  In handling any confidential information, Bank and Borrower and all employees and agents of each such party shall exercise the same degree of care that such party 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 Agreement and the Loan Documents or upon request of Bank or its Affiliates, except that disclosure of such information may be made (i) in the case of Bank, to the subsidiaries or Affiliates of Bank or Borrower in connection with their present or prospective business relations with Borrower (provided that

 

15



 

such subsidiaries or Affiliates are bound by confidentiality obligations substantially the same as those of this Section 12.8), (ii) in the case of Bank, to prospective transferees or purchasers of any interest in the Credit Extensions, 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, (iv) in the case of Bank, as may be required in connection with the examination, audit or similar investigation of Bank and (v) as Bank may determine in connection with the enforcement of any remedies hereunder.  Confidential information hereunder shall not include information that either:  (a) is in the public domain or in the knowledge or possession of the receiving party when disclosed to such party, or becomes part of the public domain after disclosure to such receiving party through no fault of such receiving party; or (b) is disclosed to such receiving party by a third party, provided the receiving party does not have actual knowledge that such third party is prohibited from disclosing such information.

 

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

 

 

RUBIUS THERAPEUTICS, INC.

 

 

 

By:

/s/ Avak Kahejian

 

Name:

Avak Kahejian

 

Title:

President

 

 

 

 

PACIFIC WESTERN BANK

 

 

 

By:

/s/ Scott Hansen

 

Name:

Scott Hansen

 

Title:

Vice President

 



 

EXHIBIT A

 

DEFINITIONS

 

“Accounts” means all presently existing and hereafter arising accounts, contract rights, payment intangibles and all other forms of obligations owing to Borrower arising out of the sale or lease of goods (including, without limitation, the licensing of software and other technology) or the rendering of services by Borrower and any and all credit insurance, guaranties, and other security therefor, as well as all merchandise returned to or reclaimed by Borrower and Borrower’s Books relating to any of the foregoing.

 

“Affiliate” means, with respect to any Person, any Person that owns or controls directly or indirectly such Person, any Person that controls or is controlled by or is under common control with such Person, and each of such Person’s senior executive officers, directors, and general partners.

 

“Amortization Start Date” means December 20, 2016 ; provided however if Borrower has achieved the Tranche B Milestones and no Event of Default has occurred and is continuing at such time, the Amortization Start Date shall be extended to June 20, 2017.

 

“Authorized Officer” means someone designated as such in the corporate resolution provided by Borrower to Bank including any such resolutions in which this Agreement and the transactions contemplated hereunder are authorized by Borrower’s board of directors. If Borrower provides subsequent corporate resolutions to Bank after the Closing Date, the individual(s) designated as “Authorized Officer(s)” in the most-recently provided resolution shall be the only “Authorized Officers” for purposes of this Agreement.

 

“Availability End Date” means November 20, 2016; provided however, upon achievement of the Tranche B Milestones and no Event of Default has occurred and is continuing, the Availability End Date shall be automatically extending until May 20, 2017.

 

“Bank Expenses” means all reasonable costs or expenses (including reasonable attorneys’ fees and expenses, whether generated in-house or by outside counsel) incurred in connection with the preparation, negotiation, administration, and enforcement of the Loan Documents;  reasonable Collateral audit fees; and Bank’s reasonable attorneys’ fees and expenses (whether generated in-house or by outside counsel) incurred in amending, enforcing or defending the Loan Documents (including fees and expenses of appeal), incurred before, during and after an Insolvency Proceeding, whether or not suit is brought.

 

“Borrower’s Books” means all of Borrower’s books and records including:  ledgers; records concerning Borrower’s assets or liabilities, the Collateral, business operations or financial condition; and all computer programs, or tape files, and the equipment, containing such information.

 

“Business Day” means any day that is not a Saturday, Sunday, or other day on which banks in the State of North Carolina are authorized or required to close.

 

“Capitalized Expenditures” means current period unfinanced cash expenditures that are capitalized and amortized over a period of time in accordance with GAAP, including but not limited to capitalized cash expenditures for capital equipment, capitalized manufacturing and labor costs as they relate to inventory, and software development.

 

“Cash” means unrestricted cash and cash equivalents.

 

“Change in Control” shall mean a transaction other than a bona fide equity financing or series of financings on terms and from investors reasonably acceptable to Flagship Ventures Management Inc. or its affiliates in which any “person” or “group” (within the meaning of Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) becomes the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of a sufficient number of shares of all classes of stock then outstanding of Borrower ordinarily entitled to vote in the election of directors, empowering such “person” or “group” to elect a majority of the Board of Directors of Borrower, who did not have such power before such transaction.

 

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“Closing Date” means the date of this Agreement.

 

“Code” means the North Carolina Uniform Commercial Code as amended or supplemented from time to time.

 

“Collateral” means the property described on Exhibit B attached hereto and all Negotiable Collateral to the extent not described on Exhibit B, except to the extent (i) any such property is nonassignable by its terms without the consent of the licensor thereof or another party (but only to the extent such prohibition on transfer is enforceable under applicable law, including, without limitation, §25-9-406 and §25-9-408 of the Code), (ii) the granting of a security interest therein is contrary to applicable law, provided that upon the cessation of any such restriction or prohibition, such property shall automatically become part of the Collateral, (iii) any such property constitutes the capital stock of a controlled foreign corporation (as defined in the IRC), in excess of 65% of the voting power of all classes of capital stock of such controlled foreign corporations entitled to vote, (iv) any such property (including any attachments, accessions or replacements) is subject to a Lien that is permitted pursuant to clauses (c) or (e) of the definition of Permitted Liens, if the grant of a security interest with respect to such property pursuant to this Agreement would be prohibited by the agreement creating such Permitted Lien or would otherwise constitute a default thereunder, provided, that such property will be deemed “Collateral” hereunder upon the termination and release of such Permitted Lien or (v) any such property is Intellectual Property, in any medium, of any kind or nature whatsoever, now or hereafter owned or acquired or received by Borrower, or in which Borrower now holds or hereafter acquires or receives any right or interest; provided, however, that the Collateral shall include all accounts and general intangibles that consist of rights to payment and proceeds from the sale, licensing or disposition of all or any part, or rights in, the foregoing (the “Rights to Payment”). Notwithstanding the foregoing, if a judicial authority (including a U.S. Bankruptcy Court) holds that a security interest in the underlying Intellectual Property is necessary to have a security interest in the Rights to Payment, then the Collateral shall automatically, and effective as of November 20, 2015, include the Intellectual Property to the extent and only to the extent necessary to permit perfection of Bank’s security interest in the Rights to Payment, and further provided, however, that Bank’s enforcement rights with respect to any security interest in the Intellectual Property shall be absolutely limited to the Rights to Payment only, and Bank shall have no recourse whatsoever with respect to the underlying Intellectual Property.

 

“Collateral State” means the state or states where the Collateral is located, which is Massachusetts.

 

“Compliance Certificate” means a compliance certificate, in substantially the form of Exhibit D attached hereto, executed by a Responsible Officer of the Borrower.

 

“Contingent Obligation” means, as applied to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to (i) any indebtedness, lease, dividend, letter of credit or other obligation of another, including, without limitation, any such obligation directly or indirectly guaranteed, endorsed, co-made or discounted or sold with recourse by that Person, or in respect of which that Person is otherwise directly or indirectly liable; (ii) any obligations with respect to undrawn letters of credit, corporate credit cards or merchant services issued for the account of that Person; and (iii) all obligations arising under any interest rate, currency or commodity swap agreement, interest rate cap agreement, interest rate collar agreement, or other agreement or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; provided, however, that the term “Contingent Obligation” shall not include endorsements for collection or deposit in the ordinary course of business.  The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determined amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith; provided, however, that such amount shall not in any event exceed the maximum amount of the obligations under the guarantee or other support arrangement.

 

“Copyrights” means any and all copyright rights, copyright applications, copyright registrations and like protections in each work or authorship and derivative work thereof, whether published or unpublished and whether or not the same also constitutes a trade secret, now or hereafter existing, created, acquired or held.

 

“Credit Extension” means each Term Loan, or any other extension of credit by Bank, to or for the benefit of Borrower hereunder.

 

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“Equipment” means all present and future machinery, equipment, tenant improvements, furniture, fixtures, vehicles, tools, parts and attachments in which Borrower has any interest.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations thereunder.

 

“Event of Default” has the meaning assigned in Article 8.

 

“GAAP” means generally accepted accounting principles, consistently applied, as in effect from time to time in the United States.

 

“Indebtedness” means (a) all indebtedness for borrowed money or the deferred purchase price of property or services, including without limitation reimbursement and other obligations with respect to surety bonds and letters of credit, (b) all obligations evidenced by notes, bonds, debentures or similar instruments, (c) all capital lease obligations, and (d) all Contingent Obligations, including but not limited to any sublimit contained herein.

 

“Insolvency Proceeding” means any proceeding commenced by or against any Person or entity under any provision of the United States Bankruptcy Code, as amended, or under any other bankruptcy or insolvency law, including assignments for the benefit of creditors, formal or informal moratoria, compositions, extension generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief.

 

“Intellectual Property” means all of Borrower’s right, title, and interest in and to the following:

 

(a)                                  Copyrights, Trademarks and Patents;

 

(b)                                  Any and all trade secrets, and any and all intellectual property rights in computer software and computer software products now or hereafter existing, created, acquired or held;

 

(c)                                   Any and all design rights which may be available to Borrower now or hereafter existing, created, acquired or held;

 

(d)                                  Any and all claims for damages by way of past, present and future infringement of any of the rights included above, with the right, but not the obligation, to sue for and collect such damages for said use or infringement of the intellectual property rights identified above;

 

(e)                                   All licenses or other rights to use any of the Copyrights, Patents or Trademarks, and all license fees and royalties arising from such use to the extent permitted by such license or rights;

 

(f)                                    All amendments, renewals and extensions of any of the Copyrights, Trademarks or Patents; and

 

(g)                                  All proceeds and products of the foregoing, including without limitation all payments under insurance or any indemnity or warranty payable in respect of any of the foregoing.

 

“Inventory” means all present and future inventory in which Borrower has any interest.

 

“Investment” means any beneficial ownership of (including stock, partnership or limited liability company interest or other securities) any Person, or any loan, advance or capital contribution to any Person.

 

“Investment Agreement” means, collectively, Borrower’s stock purchase and other agreement(s) pursuant to which Borrower most recently issued its preferred stock.

 

“IRC” means the Internal Revenue Code of 1986, as amended, and the regulations thereunder.

 

“Lien” means any mortgage, lien, deed of trust, charge, pledge, security interest or other encumbrance.

 

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“Loan Documents” means, collectively, this Agreement, any note or notes executed by Borrower, and any other document, instrument or agreement entered into in connection with this Agreement, all as amended or extended from time to time.

 

“Material Adverse Effect” means a material adverse effect on (i) the operations, business or financial condition of Borrower and its Subsidiaries taken as a whole, (ii) the ability of Borrower to repay the Obligations or otherwise perform its obligations under the Loan Documents, or (iii) Borrower’s interest in, or the value, perfection or priority of Bank’s security interest in the Collateral.

 

“Negotiable Collateral” means all of Borrower’s present and future letters of credit of which it is a beneficiary, drafts, instruments (including promissory notes), securities, documents of title, and chattel paper, and Borrower’s Books relating to any of the foregoing.

 

“Obligations” means all debt, principal, interest, Bank Expenses and other amounts owed to Bank by Borrower pursuant to this Agreement or any other agreement (other than any warrant or equity related agreement), whether absolute or contingent, due or to become due, now existing or hereafter arising, including any interest that accrues after the commencement of an Insolvency Proceeding and including any debt, liability, or obligation owing from Borrower to others that Bank may have obtained by assignment or otherwise.

 

“Patents” means all patents, patent applications and like protections including without limitation improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same.

 

“Periodic Payments” means all installments or similar recurring payments that Borrower may now or hereafter become obligated to pay to Bank pursuant to the terms and provisions of any instrument, or agreement now or hereafter in existence between Borrower and Bank.

 

“Permitted Indebtedness” means:

 

(a)                                  Indebtedness of Borrower in favor of Bank arising under this Agreement or any other Loan Document;

 

(b)                                  Indebtedness existing on the Closing Date and disclosed in the Schedule;

 

(c)                                   Indebtedness not to exceed $250,000 in the aggregate at any time secured by a lien described in clause (c) of the defined term “Permitted Liens,” provided such Indebtedness does not exceed at the time it is incurred the lesser of the cost or fair market value of the property financed with such Indebtedness;

 

(d)                                  the SVB Letter of Credit;

 

(e)                                   the SVB Credit Card for a period of time not to exceed 90 days after the Closing Date;

 

(f)                                    Subordinated Debt;

 

(g)                                  Indebtedness to trade creditors incurred in the ordinary course of business;

 

(h)                                  Indebtedness incurred as a result of endorsing negotiable instruments received in the ordinary course of business;

 

(i)                                     Indebtedness permitted under clause (d) of Permitted Investments; and

 

(j)                                     Extensions, refinancings and renewals of any items of Permitted Indebtedness, provided that the principal amount is not increased or the terms modified to impose more burdensome terms upon Borrower or its Subsidiary, as the case may be.

 

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“Permitted Investment” means:

 

(a)                                  Investments existing on the Closing Date disclosed in the Schedule;

 

(b)                                  (i) Marketable direct obligations issued or unconditionally guaranteed by the United States of America or any agency or any State thereof maturing within one year from the date of acquisition thereof, (ii) commercial paper maturing no more than one year from the date of creation thereof and currently having rating of at least A-2 or P-2 from either Standard & Poor’s Corporation or Moody’s Investors Service, (iii) Bank’s certificates of deposit maturing no more than one year from the date of investment therein, and (iv) Bank’s money market accounts; (v) Investments in regular deposit or checking accounts held with Bank or as otherwise permitted by, and subject to the terms and conditions of, Section 6.6 of this Agreement; and (vi) Investments consistent with any investment policy adopted by the Borrower’s board of directors;

 

(c)                                   Investments accepted in connection with Permitted Transfers;

 

(d)                                  Investments (i) of Subsidiaries in or to other Subsidiaries (which are co-Borrowers or secured guarantors and, for Subsidiaries created or acquired after the date hereof, with respect to which Borrower and its Subsidiaries have fully complied with Section 6.8 hereof) or Borrower and Investments by Borrower in Subsidiaries (which are co-Borrowers or secured guarantors and, for Subsidiaries created or acquired after the date hereof, with respect to which Borrower and its Subsidiaries have fully complied with Section 6.8 hereof) and (ii) of Subsidiaries in or to other Subsidiaries (which are not co-Borrowers or secured guarantors) and Investments by Borrower in Subsidiaries (which are not co-Borrowers or secured guarantors) not to exceed $250,000 in the aggregate in any fiscal year;

 

(e)                                   Investments not to exceed $250,000 outstanding in the aggregate at any time consisting of (i) travel advances and employee relocation loans and other employee loans and advances in the ordinary course of business, and (ii) loans to employees, officers or directors relating to the purchase of equity securities of Borrower or its Subsidiaries pursuant to employee stock purchase plan agreements approved by Borrower’s Board of Directors;

 

(f)                                    Investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the ordinary course of Borrower’s business;

 

(g)                                  Investments consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers who are not Affiliates, in the ordinary course of business, provided that this subparagraph (g) shall not apply to Investments of Borrower in any Subsidiary;

 

(h)                                  Joint ventures or strategic alliances in the ordinary course of Borrower’s business consisting of the non-exclusive licensing of technology, the development of technology or the providing of technical support, provided that any cash Investments by Borrower in another Person under this clause (h) do not exceed $250,000 in the aggregate in any fiscal year;

 

(i)                                     Investments consisting of the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and

 

(j)                                     Investments permitted under Section 7.3.

 

“Permitted Licenses” means the following:

 

(a)                                  non-exclusive licenses or sublicenses and similar arrangements, partnerships and joint ventures on commercially reasonable terms for the use of the property of Borrower or its Subsidiaries in the ordinary course of business;

 

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(b)                                  licenses of open source, over-the-counter software, prepackaged software and other software that is commercially available to the public, and

 

(c)                                   non-exclusive and exclusive licenses for the use of the Intellectual Property of Borrower or any of its Subsidiaries entered into in the ordinary course of business, provided, that, with respect to each such license described in clause (c), (i) no Event of Default has occurred or is continuing at the time of such license; (ii) the license constitutes an arms-length transaction, the terms of which, on their face, do not provide for a sale or legal transfer of title of any Intellectual Property and do not contain an enforceable restriction on the ability of Borrower or any of its Subsidiaries, as applicable, to pledge, grant a security interest in or lien on, or assign or otherwise Transfer any Intellectual Property; (iii) in the case of any exclusive license, (x) Borrower delivers to the Bank ten (10) days’ prior written notice and a brief summary of the terms of the proposed license and copies of the final executed licensing documents in connection with the exclusive license promptly upon consummation thereof, and (y) any such license could not result in a legal transfer of title of the licensed property but may be exclusive in respects other than territory and may be exclusive as to territory only as to discrete geographical areas outside of the United States; and (iv) all upfront payments, royalties, milestone payments or other proceeds arising from the licensing agreement that are payable to Borrower or any of its Subsidiaries are deposited into a Deposit Account that is governed by a Control Agreement.

 

“Permitted Liens” means the following:

 

(a)                                  Any Liens existing on the Closing Date and disclosed in the Schedule (excluding Liens to be satisfied with the proceeds of the Credit Extensions) or arising under this Agreement, the other Loan Documents, or any other agreement in favor of Bank;

 

(b)                                  Liens for taxes, fees, assessments or other governmental charges or levies, either not delinquent or being contested in good faith by appropriate proceedings and for which Borrower maintains adequate reserves;

 

(c)                                   Liens not to exceed $250,000 in the aggregate at any time (i) upon or in any Equipment (other than Equipment financed by a Credit Extension) acquired or held by Borrower or any of its Subsidiaries to secure the purchase price of such Equipment or indebtedness incurred solely for the purpose of financing the acquisition or lease of such Equipment, or (ii) existing on such Equipment at the time of its acquisition, in each case provided that the Lien is confined solely to the property so acquired and improvements thereon, and the proceeds of such Equipment;

 

(d)                                  Liens incurred in connection with the extension, renewal or refinancing of the indebtedness secured by Liens of the type described in clauses (a) through (c) above, provided that any extension, renewal or replacement Lien shall be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness being extended, renewed or refinanced does not increase;

 

(e)                                   Liens on cash collateral in favor of Silicon Valley Bank securing (i) the SVB Letter of Credit and (ii) for a period of time not to exceed 90 days after the Closing Date, the SVB Credit Card in an amount not to exceed $10,000;

 

(f)                                    Liens securing Subordinated Debt;

 

(g)                                  Permitted Licenses;

 

(h)                                  Liens of carriers, warehousemen, suppliers, or other Persons that are possessory in nature arising in the ordinary course of business so long as such Liens attach only to Inventory, securing liabilities in the aggregate amount not to exceed $25,000 and which are not delinquent or remain payable without penalty or which are being contested in good faith and by appropriate proceedings which proceedings have the effect of preventing the forfeiture or sale of the property subject thereto;

 

6



 

(i)                                     Liens to secure payment of workers’ compensation, employment insurance, old-age pensions, social security and other like obligations incurred in the ordinary course of business (other than Liens imposed by ERISA); and

 

(j)                                     Liens arising from judgments, decrees or attachments in circumstances not constituting an Event of Default under Sections 8.4 (attachment) or 8.7 (judgments).

 

“Permitted Transfer” means the conveyance, sale, lease, transfer or disposition by Borrower or any Subsidiary of:

 

(a)                                  Inventory in the ordinary course of business;

 

(b)                                  licenses and similar arrangements for the use of the property of Borrower or its Subsidiaries in the ordinary course of business;

 

(c)                                   Transfers that constitute Permitted Licenses;

 

(d)                                  worn-out, surplus or obsolete Equipment;

 

(e)                                   grants of security interests and other Liens that constitute Permitted Liens; and

 

(f)                                    other assets of Borrower or its Subsidiaries that do not in the aggregate exceed $250,000 during any fiscal year.

 

“Person” means any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or governmental agency.

 

“Prime Rate” means the variable rate of interest, per annum, most recently announced by Bank, as its “prime rate,” whether or not such announced rate is the lowest rate available from Bank.

 

“Responsible Officer” means each of the Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer, Vice President of Finance, the Secretary and the Controller of Borrower, as well as any other officer or employee identified as an Authorized Officer in the corporate resolution delivered by Borrower to Bank in connection with this Agreement.

 

“Schedule” means the schedule of exceptions attached hereto and approved by Bank, if any.

 

“SOS Reports” means the official reports from the Secretaries of State of each Collateral State, the state where Borrower’s chief executive office is located, the state of Borrower’s formation and other applicable federal, state or local government offices identifying all current security interests filed in the Collateral and Liens of record as of the date of such report.

 

“Subordinated Debt” means any debt incurred by Borrower that is subordinated in writing to the debt owing by Borrower to Bank on terms reasonably acceptable to Bank (and identified as being such by Borrower and Bank).

 

“Subsidiary” means any corporation, partnership or limited liability company or joint venture in which (i) any general partnership interest or (ii) more than 50% of the stock, limited liability company interest or joint venture of which by the terms thereof ordinary voting power to elect the Board of Directors, managers or trustees of the entity, at the time as of which any determination is being made, is owned by Borrower, either directly or through an Affiliate.

 

“SVB Credit Card” means Borrower’s existing credit card issued by Silicon Valley Bank with an aggregate limit not to exceed $10,000.

 

7



 

“SVB Letter of Credit” means letter of credit number SVBSF009786 issued by Silicon Valley Bank on behalf of Borrower in the face amount of $100,000 and naming 620 Memorial Leasehold LLC as beneficiary.

 

“Term Loan Maturity Date” means November 20, 2019.

 

“Trademarks” means any trademark and servicemark rights, whether registered or not, applications to register and registrations of the same and like protections, and the entire goodwill of the business of Borrower connected with and symbolized by such trademarks.

 

“Tranche” means any of Tranche A or Tranche B.

 

“Tranche A” has the meaning assigned in Section 2.1(b)(i).

 

“Tranche B” has the meaning assigned in Section 2.1(b)(i).

 

“Tranche B Milestones” means (i) the receipt by Borrower of at least $5,200,000 of gross cash proceeds from the sale of the second tranche of its Series A equity securities, and (ii) Flagship Ventures Management Inc. or an affiliate thereof confirms to Bank that Flagship Ventures Management Inc. or an affiliate thereof is satisfied with Borrower’s performance relating to (I) hiring of a senior management team, (II) selection of lead indication and lead product, (III) establishment of a manufacturing process at a scale to perform large animal pharm/tox studies and (IV) broadening of Borrower’s intellectual property portfolio.

 

8



 

DEBTOR

 

RUBIUS THERAPEUTICS, INC.

 

 

 

SECURED PARTY:

 

PACIFIC WESTERN BANK

 

EXHIBIT B

 

COLLATERAL DESCRIPTION ATTACHMENT TO LOAN AND SECURITY AGREEMENT

 

All personal property of Borrower (herein referred to as “Borrower” or “Debtor”) whether presently existing or hereafter created or acquired, and wherever located, including, but not limited to:

 

(a)                                  all accounts (including health-care-insurance receivables), chattel paper (including tangible and electronic chattel paper), deposit accounts, documents (including negotiable documents), equipment (including all accessions and additions thereto), financial assets, general intangibles (including patents, trademarks, copyrights, goodwill, payment intangibles, domain names and software), goods (including fixtures), instruments (including promissory notes), inventory (including all goods held for sale or lease or to be furnished under a contract of service, and including returns and repossessions), investment property (including securities and securities entitlements), letter of credit rights, money, and all of Debtor’s books and records with respect to any of the foregoing, and the computers and equipment containing said books and records;

 

(b)                                  any and all cash proceeds and/or noncash proceeds of any of the foregoing, including, without limitation, insurance proceeds, and all supporting obligations and the security therefor or for any right to payment.  All terms above have the meanings given to them in the North Carolina Uniform Commercial Code, as amended or supplemented from time to time, including revised Division 9 of the Uniform Commercial Code-Secured Transactions.

 

Notwithstanding the foregoing, the Collateral shall not include (i) any property that is nonassignable by its terms without the consent of the licensor thereof or another party (but only to the extent such prohibition on transfer is enforceable under applicable law, including, without limitation, §25-9-406 and §25-9-408 of the Code), (ii) any property where the granting of a security interest therein is contrary to applicable law, provided that upon the cessation of any such restriction or prohibition, such property shall automatically become part of the Collateral, (iii) any property that constitutes the capital stock of a controlled foreign corporation (as defined in the IRC), in excess of 65% of the voting power of all classes of capital stock of such controlled foreign corporations entitled to vote, (iv) any property (including any attachments, accessions or replacements) that is subject to a Lien that is permitted pursuant to clauses (c) or (e) of the definition of Permitted Liens, if the grant of a security interest with respect to such property pursuant to this Agreement would be prohibited by the agreement creating such Permitted Lien or would otherwise constitute a default thereunder, provided, that such property will be deemed “Collateral” hereunder upon the termination and release of such Permitted Liens or (v) any property that is Intellectual Property, in any medium, of any kind or nature whatsoever, now or hereafter owned or acquired or received by Borrower, or in which Borrower now holds or hereafter acquires or receives any right or interest; provided, however, that the Collateral shall include all accounts and general intangibles that consist of rights to payment and proceeds from the sale, licensing or disposition of all or any part, or rights in, the foregoing (the “Rights to Payment”).

 

Notwithstanding the foregoing, if a judicial authority (including a U.S. Bankruptcy Court) holds that a security interest in the underlying Intellectual Property is necessary to have a security interest in the Rights to Payment, then the Collateral shall automatically, and effective as of November 20, 2015, include the Intellectual Property to the extent and only to the extent necessary to permit perfection of Bank’s security interest in the Rights to Payment, and further provided, however, that Bank’s enforcement rights with respect to any security interest in the Intellectual Property shall be absolutely limited to the Rights to Payment only, and Bank shall have no recourse whatsoever with respect to the underlying Intellectual Property.

 

1



 

EXHIBIT C

 

LOAN ADVANCE / PAYDOWN REQUEST FORM

 

[Please refer to New Borrower Kit]

 



 

EXHIBIT D

 

COMPLIANCE CERTIFICATE

 

[Please refer to New Borrower Kit]

 



 

SCHEDULE OF EXCEPTIONS

 

Permitted Indebtedness   (Exhibit A) – None.

 

Permitted Investments   (Exhibit A) – None.

 

Permitted Liens   (Exhibit A) – None.

 

Intellectual Property (Section 5.4) –

 

Patents

 

Application #

 

Publication #

 

Title

 

Filing date

 

Status

PCT/US2015/020614

 

WO2015/153102

 

METHODS AND COMPOSITIONS FOR IMMUNOMODULATION

 

13-Mar-2015

 

Published PCT

PCT/US2014/065304

 

WO2015/073587

 

SYNTHETIC MEMBRANE-RECEIVER COMPLEXES

 

12-Nov-2014

 

Published PCT

14/581486

 

US-2015-0182588

 

SYNTHETIC MEMBRANE-RECEIVER COMPLEXES

 

23-Dec-2014

 

Published, US non-provisional

14/738414

 

US-2015-030621

 

SYNTHETIC MEMBRANE-RECEIVER COMPLEXES

 

12-Jun-2015

 

Published, US non-provisional, Track 1

62/161196

 

n/a

 

MEMBRANE-RECEIVER COMPLEX THERAPEUTICS

 

13-May-2015

 

Pending, US provisional

 

Trademarks

 

Word Mark

 

Serial Number

 

Filing Date

RUBIUS

 

86511778

 

1/22/2015

Red Platform

 

86511779

 

1/22/2015

ECELL

 

86718863

 

8/7/2015

 

Prior Names   (Section 5.5) – VL 26, Inc.

 

Litigation   (Section 5.6) – None.

 

Inbound Licenses   (Section 5.12) – None.

 



 

USA PATRIOT ACT
NOTICE
OF
CUSTOMER IDENTIFICATION

 

IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT

 

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account.

 

WHAT THIS MEANS FOR YOU:  when you open an account, we will ask your name, address, date of birth, and other information that will allow us to identify you.  We may also ask to see your driver’s license or other identifying documents.

 


 

FIRST AMENDMENT
TO
LOAN AND SECURITY AGREEMENT

 

This First Amendment to Loan and Security Agreement (the “ Amendment ”) is made and entered into as of July 13, 2016 by and between PACIFIC WESTERN BANK, a California state chartered bank (“ Bank ”), and RUBIUS THERAPEUTICS, INC. (“ Borrower ”).

 

RECITALS

 

Borrower and Bank are parties to that certain Loan and Security Agreement dated as of November 20, 2015 (as amended from time to time, the “ Agreement ”).  The parties desire to amend the Agreement in accordance with the terms of this Amendment.

 

NOW, THEREFORE, the parties agree as follows:

 

1)              A new Section 2.1(c) is hereby added to the Agreement, as follows:

 

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

 

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

 

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

 

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

 

1



 

2)              The following defined terms are hereby added to Exhibit A to the Agreement, as follows:

 

“Credit Card Line” means a Credit Extension of up to $10,000, to be used exclusively for the provision of Credit Card Services.

 

“Credit Card Maturity Date” means July 12, 2017.

 

“First Amendment Effective Date” means July 13, 2016.

 

3)              The following defined term in Exhibit A to the Agreement is hereby amended and restated, as follows:

 

“Credit Extension” means each Term Loan, the Credit Card Services provided under the Credit Card Line, or any other extension of credit by Bank to or for the benefit of Borrower hereunder.

 

4)              Unless otherwise defined, all initially capitalized terms in this Amendment shall be as defined in the Agreement.  The Agreement, as amended hereby, shall be and remain in full force and effect in accordance with its respective terms and hereby is ratified and confirmed in all respects.  Except as expressly set forth herein, the execution, delivery, and performance of this Amendment shall not operate as a waiver of, or as an amendment of, any right, power, or remedy of Bank under the Agreement, as in effect prior to the date hereof.  Borrower ratifies and reaffirms the continuing effectiveness of all agreements entered into in connection with the Agreement.

 

5)              Borrower represents and warrants that the representations and warranties contained in the Agreement are true and correct as of the date of this Amendment.

 

6)              This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument.

 

7)              As a condition to the effectiveness of this Amendment, Bank shall have received, in form and substance satisfactory to Bank, the following:

 

a)                                      this Amendment, duly executed by Borrower;

 

b)                                      payment for all Bank Expenses incurred through the date of this Amendment, including Bank’s expenses for the documentation of this Amendment and any UCC, good standing or intellectual property search or filing fees, which may be debited from any of Borrower’s accounts; and

 

c)                                       such other documents and completion of such other matters, as Bank may reasonably deem necessary or appropriate.

 

2



 

IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the first date above written.

 

RUBIUS THERAPEUTICS, INC.

 

PACIFIC WESTERN BANK

 

 

 

 

 

 

 

 

By:

/s/ Avak Kahvejian

 

By:

/s/ Patrick Cahill

Name:

Avak Kahvejian

 

Name:

Patrick Cahill

Title:

President

 

Title:

VP

 

 

[Signature Page to First Amendment to Loan and Security Agreement]

 

3


 

SECOND AMENDMENT
TO
LOAN AND SECURITY AGREEMENT

 

This Second Amendment to Loan and Security Agreement (the “ Amendment ”) is made and entered into as of May 19, 2017 by and between PACIFIC WESTERN BANK, a California state chartered bank (“ Bank ”), and RUBIUS THERAPEUTICS, INC. (“ Borrower ”).

 

RECITALS

 

Borrower and Bank are parties to that certain Loan and Security Agreement dated as of November 20, 2015 (as amended from time to time, the “ Agreement ”).  The parties desire to amend the Agreement in accordance with the terms of this Amendment.

 

NOW, THEREFORE, the parties agree as follows:

 

1)              Bank and Borrower hereby agree that Borrower’s 2016 fiscal year financial statements, which are currently required by Section 6.2(ii) of the Agreement to be delivered to Bank within 180 days after fiscal year end, shall instead be delivered to Bank on or before September 30, 2017.

 

2)              Section 2.1(b) of the Agreement is hereby amended and restated, as follows:

 

(b)                                  Term Loan.

 

(i)                                     Subject to and upon the terms and conditions of this Agreement, Borrower may request and Bank agrees to make one or more term loans to Borrower in an aggregate original principal amount not to exceed Seven Million Dollars ($7,000,000) (each a “Term Loan” and collectively the “Term Loans”) at any time on or before June 30, 2017.  The proceeds of the Term Loans shall be used (A) first, to refinance the aggregate principal amount of all term loans then outstanding under this Agreement, and (B) second, for general working capital purposes and for capital expenditures.  Any Term Loans other than the initial Term Loan shall be in at least $500,000 increments.

 

(ii)                                 Interest shall accrue from the date of each Term Loan at the rate specified in Section 2.3(a), and prior to the Interest-Only End Date shall be payable monthly in arrears beginning on the 20th day of the month next following the making of such Term Loan, and continuing on the same day of each month thereafter.  Any principal amount of the Term Loans that is outstanding on the Interest-Only End Date shall be payable in equal monthly installments of principal, plus all accrued interest, beginning on the date that is one month immediately following the Interest-Only End Date and continuing on the same day of each month thereafter through the Term Loan Maturity Date, at which time all amounts due in connection with the Term Loans and any other amounts due under this Agreement shall be immediately due and payable.  Term Loans, once repaid, may not be reborrowed.  Borrower may prepay any Term Loan in whole or in part without penalty or premium.

 

(iii)                             When Borrower desires to obtain a Term Loan, Borrower shall notify Bank (which notice shall be irrevocable) by facsimile transmission to be received no

 

1



 

later than 3:30 p.m. Eastern time on the Business Day prior to the date on which the Term Loan is to be made.  Such notice shall be substantially in the form of Exhibit C.  The notice shall be signed by an Authorized Officer.

 

3)              Section 6.6 of the Loan Agreement is hereby amended and restated as follows:

 

6.6                                Primary Depository. Borrower shall maintain its primary depository and operating accounts with Bank and its primary investment accounts with Bank or Bank’s affiliates.  Notwithstanding the above, Borrower shall be permitted to maintain (i) payroll and employee benefits accounts at Bank or outside of Bank provided that if the same are outside of Bank, Borrower must deliver a control agreement in favor of Bank for such accounts, in form and substance satisfactory to Bank in its sole discretion, (ii) Cash and/or Investments owned by a Subsidiary that is a “Security Corporation” as defined in 830 Code of Mass. Regulations 63.38B.1 (as the same may be amended, modified or supplemented from time to time) in one or more accounts outside of Bank or Bank’s affiliates, without the requirement for control agreements, so long as the total aggregate amount of Cash maintained in all accounts with Bank or Bank’s affiliates equals or exceeds 120% of the aggregate principal amount of Credit Extensions then outstanding, and (iii) Cash and/or Investments in one or more accounts outside of Bank or Bank’s affiliates, subject to control agreements in favor of Bank, so long as the total aggregate amount of Cash maintained in all accounts with Bank or Bank’s affiliates equals or exceeds 200% of the sum of (x) the aggregate initial principal amount of the Term Loans plus (y) the maximum amount of the Credit Card Line.  Prior to maintaining any investment accounts with Bank’s affiliates, Borrower, Bank, and any such affiliate shall have entered into a securities account control agreement with respect to any such investment accounts, in form and substance satisfactory to Bank.

 

4)              Section 7.8 of the Loan Agreement is hereby amended and restated, as follows:

 

7.8                                Capitalized Expenditures. Make Capitalized Expenditures, in the aggregate in any fiscal year of Borrower, in excess of 175% of the amount approved by Borrower’s Board of Directors and set forth in the most recently approved operating plan delivered to Bank in accordance with Section 6.2(iii) of this Agreement.

 

5)              The following defined term is hereby added to Exhibit A to the Agreement, as follows:

 

“Interest-Only End Date” means May 20, 2018.

 

6)              The following defined term in Exhibit A to the Agreement is hereby amended and restated, as follows:

 

“Credit Card Line” means a Credit Extension of up to $30,000, to be used exclusively for the provision of Credit Card Services.

 

7)              The defined terms “Amortization Start Date”, “Tranche”, “Tranche A”, “Tranche B”, and “Tranche B Milestones” and their corresponding definitions in Exhibit A to the Agreement are hereby deleted.

 

2



 

8)              Unless otherwise defined, all initially capitalized terms in this Amendment shall be as defined in the Agreement.  The Agreement, as amended hereby, shall be and remain in full force and effect in accordance with its respective terms and hereby is ratified and confirmed in all respects.  Except as expressly set forth herein, the execution, delivery, and performance of this Amendment shall not operate as a waiver of, or as an amendment of, any right, power, or remedy of Bank under the Agreement, as in effect prior to the date hereof.  Borrower ratifies and reaffirms the continuing effectiveness of all agreements entered into in connection with the Agreement.

 

9)              Borrower represents and warrants that the representations and warranties contained in the Agreement are true and correct in all material respects as of the date of this Amendment; provided, however, that any representation or warranty that contains a materiality qualification therein shall be true and correct in all respects.

 

10)       This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument.

 

11)       As a condition to the effectiveness of this Amendment, Bank shall have received, in form and substance satisfactory to Bank, the following:

 

a)              this Amendment, duly executed by Borrower;

 

b)              a Loan Advance Request Form, delivered in accordance with Section 2.1(b)(iii) of the Agreement, requesting that Bank make a Term Loan in a principal amount of at least Five Million Five Hundred Thousand Dollars ($5,500,000);

 

c)               an officer’s certificate of Borrower with respect to incumbency and resolutions authorizing the execution and delivery of this Amendment;

 

d)              an Amended and Restated Warrant to Purchase Stock, duly executed by Borrower;

 

e)               a Second Warrant to Purchase Stock, duly executed by Borrower;

 

f)                payment for all Bank Expenses incurred through the date of this Amendment, including Bank’s expenses for the documentation of this Amendment and any UCC, good standing or intellectual property search or filing fees, which may be debited from any of Borrower’s accounts; and

 

g)               such other documents and completion of such other matters, as Bank may have reasonably requested.

 

[Signature Page Follows]

 

3



 

IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the first date above written.

 

RUBIUS THERAPEUTICS, INC.

 

PACIFIC WESTERN BANK

 

 

 

 

 

 

 

 

By:

/s/ Torben Straight Nissen

 

By:

/s/ Scott Hansen

Name:

Torben Straight Nissen

 

Name:

Scott Hansen

Title:

President

 

Title:

SVP

 

 

[Signature Page to Second Amendment to Loan and Security Agreement]

 

4


 

THIRD AMENDMENT
TO
LOAN AND SECURITY AGREEMENT

 

This Third Amendment to Loan and Security Agreement (this “ Amendment ”) is made and entered into as of September 12, 2017 by and between PACIFIC WESTERN BANK, a California state chartered bank (“ Bank ”), and RUBIUS THERAPEUTICS, INC. (“ Borrower ”).

 

RECITALS

 

Borrower and Bank are parties to that certain Loan and Security Agreement dated as of November 20, 2015 (as amended from time to time, the “ Agreement ”).  The parties desire to amend the Agreement in accordance with the terms of this Amendment.

 

NOW, THEREFORE, the parties agree as follows:

 

1)              The following defined term in Exhibit A to the Agreement is hereby amended and restated, as follows:

 

“Credit Card Maturity Date” means July 11, 2018.

 

2)              Unless otherwise defined, all initially capitalized terms in this Amendment shall be as defined in the Agreement.  The Agreement, as amended hereby, shall be and remain in full force and effect in accordance with its respective terms and hereby is ratified and confirmed in all respects.  Except as expressly set forth herein, the execution, delivery, and performance of this Amendment shall not operate as a waiver of, or as an amendment of, any right, power, or remedy of Bank under the Agreement, as in effect prior to the date hereof.  Borrower ratifies and reaffirms the continuing effectiveness of all agreements entered into in connection with the Agreement.

 

3)              Borrower represents and warrants that the representations and warranties contained in the Agreement are true and correct in all material respects as of the date of this Amendment; provided, however, that any representation or warranty that contains a materiality qualification therein shall be true and correct in all respects.

 

4)              This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument.

 

5)              As a condition to the effectiveness of this Amendment, Bank shall have received, in form and substance satisfactory to Bank, the following:

 

a)              this Amendment, duly executed by Borrower;

 

b)              payment for all Bank Expenses incurred through the date of this Amendment, including Bank’s expenses for the documentation of this Amendment and any UCC, good standing or intellectual property search or filing fees, which may be debited from any of Borrower’s accounts; and

 

1



 

c)               such other documents and completion of such other matters, as Bank may have reasonably requested.

 

[Signature Page Follows]

 

2



 

IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the first date above written.

 

RUBIUS THERAPEUTICS, INC.

 

PACIFIC WESTERN BANK

 

 

 

 

 

 

 

 

 

By:

/s/ Joanne M. Protano

 

By:

/s/ Scott Hansen

Name:

Joanne M. Protano

 

Name:

Scott Hansen

Title:

VP Finance, Secretary & Treasurer

 

Title:

Senior Vice President

 

 

[Signature Page to Third Amendment to Loan and Security Agreement]

 

3


 

FOURTH AMENDMENT
TO
LOAN AND SECURITY AGREEMENT

 

This Fourth Amendment to Loan and Security Agreement (this “ Amendment ”) is made and entered into as of October 26, 2017 by and between PACIFIC WESTERN BANK, a California state chartered bank (“ Bank ”), and RUBIUS THERAPEUTICS, INC. (“ Borrower ”).

 

RECITALS

 

Borrower and Bank are parties to that certain Loan and Security Agreement dated as of November 20, 2015 (as amended from time to time, the “ Agreement ”).  The parties desire to amend the Agreement in accordance with the terms of this Amendment.

 

NOW, THEREFORE, the parties agree as follows:

 

1)              Bank and Borrower hereby agree that, notwithstanding the prohibitions on Investments in Section 7.7 of the Agreement, if the MSC Investment Conditions are then being met and no Event of Default then exists or an event that with the passage of time could reasonably result in an Event of Default then exists, then Borrower may make Investments in an MSC Subsidiary.  If, at any time after Borrower makes Investments in an MSC Subsidiary, the MSC Investment Conditions are not met, and such failure to meet the MSC Investment Conditions continues for a period of 10 consecutive days thereafter, then (i) Borrower shall promptly cause any MSC Subsidiaries then existing to distribute to Borrower all assets held by any MSC Subsidiaries for deposit into a deposit account at Bank, and (ii) Borrower shall not permit any MSC Subsidiary to hold any assets.  Borrower shall not permit any MSC Subsidiary to make any Investments or hold any assets that would cause such MSC Subsidiary to fail to qualify as a Massachusetts security corporation under 830 CMR 63.38B.1 of the Massachusetts tax code and applicable regulations (as the same may be amended, modified or replaced from time to time).

 

2)              Section 6.10 of the Agreement is hereby amended and restated, as follows:

 

6.10                         Creation/Acquisition of Subsidiaries.  In the event any Borrower or any Subsidiary of any Borrower creates or acquires any Subsidiary (other than the MSC Subsidiary), Borrower or such Subsidiary shall promptly notify Bank of such creation or acquisition, and Borrower or such Subsidiary shall take all actions reasonably requested by Bank to achieve any of the following with respect to such “ New Subsidiary ” (defined as a Subsidiary formed after the date hereof during the term of this Agreement):  (i) if such New Subsidiary is organized under the laws of any state or territory of the United States, to cause New Subsidiary to become either a co-Borrower hereunder, or a secured guarantor with respect to the Obligations; and (ii) to grant and pledge to Bank a perfected security interest in 100% of the stock, units or other evidence of ownership held by Borrower or its Subsidiaries of any such New Subsidiary which is organized under the laws of any state or territory of the United States, and 65% of the stock, units or other evidence of ownership held by Borrower or its Subsidiaries of any such New Subsidiary which is not organized under the laws of any state or territory of the United States.

 

1



 

3)              The following defined term in Exhibit A to the Agreement is hereby amended and restated, as follows:

 

“Credit Card Line” means a Credit Extension of up to $100,000, to be used exclusively for the provision of Credit Card Services.

 

4)              The following defined terms are hereby added in Exhibit A to the Agreement, as follows:

 

“MSC Investment Conditions” means that Borrower has on deposit with Bank unrestricted cash or cash equivalents in an aggregate amount greater than or equal to 120% of the then outstanding principal and accrued interest on all Credit Extensions.

 

“MSC Subsidiary” means a wholly owned Subsidiary incorporated in the Commonwealth of Massachusetts or the State of Delaware for the purpose of holding Investments as a Massachusetts security corporation under 830 CMR 63.38B.1 of the Massachusetts tax code and applicable regulations (as the same may be amended, modified or replaced from time to time).

 

5)              Unless otherwise defined, all initially capitalized terms in this Amendment shall be as defined in the Agreement.  The Agreement, as amended hereby, shall be and remain in full force and effect in accordance with its respective terms and hereby is ratified and confirmed in all respects.  Except as expressly set forth herein, the execution, delivery, and performance of this Amendment shall not operate as a waiver of, or as an amendment of, any right, power, or remedy of Bank under the Agreement, as in effect prior to the date hereof.  Borrower ratifies and reaffirms the continuing effectiveness of all agreements entered into in connection with the Agreement.

 

6)              Borrower represents and warrants that the representations and warranties contained in the Agreement are true and correct in all material respects as of the date of this Amendment; provided, however, that any representation or warranty that contains a materiality qualification therein shall be true and correct in all respects.

 

7)              This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument.

 

8)              As a condition to the effectiveness of this Amendment, Bank shall have received, in form and substance satisfactory to Bank, the following:

 

a)              this Amendment, duly executed by Borrower;

 

b)              payment for all Bank Expenses incurred through the date of this Amendment, including Bank’s expenses for the documentation of this Amendment and any UCC, good standing or intellectual property search or filing fees, which may be debited from any of Borrower’s accounts; and

 

c)               such other documents and completion of such other matters, as Bank may have reasonably requested.

 

2



 

IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the first date above written.

 

RUBIUS THERAPEUTICS, INC.

 

PACIFIC WESTERN BANK

 

 

 

 

 

 

 

 

 

By:

/s/ Joanne M. Protano

 

By:

/s/ John Orlando

Name:

Joanne M. Protano

 

Name:

John Orlando

Title:

VP Finance, Secretary & Treasurer

 

Title:

Vice President

 

 

[Signature Page to Fourth Amendment to Loan and Security Agreement]

 

3


 

FIFTH AMENDMENT

TO

LOAN AND SECURITY AGREEMENT

 

This Fifth Amendment to Loan and Security Agreement (this Amendment ”) is made and entered into as of May 11, 2018 by and between PACIFIC WESTERN BANK, a California state chartered bank (“ Bank ”), and RUBIUS THERAPEUTICS, INC. (“ Borrower ”).

 

RECITALS

 

Borrower and Bank are parties to that certain Loan and Security Agreement dated as of November 20, 2015 (as amended from time to time, the Agreement ”). The parties desire to amend the Agreement in accordance with the terms of this Amendment.

 

NOW, THEREFORE, the parties agree as follows:

 

1)              Section 2.3(a) of the Agreement is hereby amended and restated, as follows:

 

(a)                                                        Interest Rate for Term Loans. Except as set forth in Section 2.3(b), the Term Loans shall bear interest, on the outstanding daily balance thereof, at a variable annual rate equal to the greater of (A) 0.75% above the Prime Rate then in effect, or (B) 5.50%.

 

2)              The following defined terms in Exhibit A to the Agreement are hereby amended and restated, as follows:

 

“Credit Card Line” means a  Credit Extension of up to $500,000, to be used exclusively for the provision of Credit Card Services.

 

“Credit Card Maturity Date” means May 10, 2019.

 

“Interest-Only End Date” means May 20, 2019.

 

“Term Loan Maturity Date” means November 20, 2020.

 

3)              Unless otherwise defined, all initially capitalized terms in this Amendment shall be as defined in the Agreement. The Agreement, as amended hereby, shall be and remain in full force and effect in accordance with its respective terms and hereby is ratified and confirmed in all respects. Except as expressly set forth herein, the execution, delivery, and performance of this Amendment shall not operate as a waiver of, or as an amendment of, any right, power, or remedy of Bank under the Agreement, as in effect prior to the date hereof. Borrower ratifies and reaffirms the continuing effectiveness of all agreements entered into in connection with the Agreement.

 

4)              Borrower represents and warrants that the representations and warranties contained in the Agreement are true and correct in all material respects as of the date of this Amendment; provided, however, that any representation or warranty that contains a materiality qualification therein shall be true and correct in all respects.

 



 

5)              This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one instrument.

 

6)              As a condition to the effectiveness of this Amendment, Bank shall have received, in form and substance satisfactory to Bank, the following:

 

a)              this Amendment, duly executed by Borrower;

 

b)              payment of a $5,000 facility fee, which may be debited from any of Borrower’s accounts;

 

c)               payment for all Bank Expenses incurred through the date of this Amendment, including Bank’s expenses for the documentation of this Amendment and any UCC, good standing or intellectual property search or filing fees, which may be debited from any of Borrower’s accounts; and

 

d)              such other documents and completion of such other matters, as Bank may have reasonably requested.

 

[Signature Page Follows]

 

2



 

IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the first date above written.

 

RUBIUS THERAPEUTICS, INC.

 

PACIFIC WESTERN BANK

 

 

 

 

 

 

 

 

 

By:

/s/ Joanne M. Protano

 

By:

/s/ Scott Hansen

Name:

Joanne M. Protano

 

Name:

Scott Hansen

Title:

VP Finance, Secretary & Treasurer

 

Title:

SVP

 

 

[Signature Page to Fifth Amendment to Loan and Security Agreement]

 

3




Exhibit 10.1 3

 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

WHITEHEAD INSTITUTE FOR BIOMEDICAL RESEARCH

 

and

 

RUBIUS THERAPEUTICS, INC.

 

EXCLUSIVE PATENT LICENSE AGREEMENT

 


***Confidential Treatment Requested***

 



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

TABLE OF CONTENTS

 

R E C I T A L S

1

1 .

DEFINITIONS

2

2 .

GRANT OF RIGHTS

7

3 .

COMPANY DILIGENCE OBLIGATIONS

11

4 .

ROYALTIES AND PAYMENT TERMS

13

5 .

REPORTS AND RECORD KEEPING

18

6 .

PATENT PROSECUTION

20

7 .

INFRINGEMENT

21

8 .

PATENT CHALLENGE

23

9 .

INDEMNIFICATION AND INSURANCE

25

10 .

REPRESENTATIONS AND WARRANTIES

26

11 .

ASSIGNMENT

27

12 .

GENERAL COMPLIANCE WITH LAWS

27

13 .

TERMINATION

29

14 .

DISPUTE RESOLUTION

31

15 .

CONFIDENTIALITY

32

16 .

MISCELLANEOUS

33

APPENDIX A

34

APPENDIX B

38

APPENDIX C

39

APPENDIX D

40

 

i

 


***Confidential Treatment Requested***

 



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

WHITEHEAD INSTITUTE FOR BIOMEDICAL RESEARCH
EXCLUSIVE PATENT LICENSE AGREEMENT

 

This Agreement, effective as of January 28, 2016, (the “EFFECTIVE DATE”), is by and between the Whitehead Institute for Biomedical Research (“WHITEHEAD”), a Delaware corporation, with a principal office at Nine Cambridge Center, Cambridge, MA 02142, and Rubius Therapeutics, Inc. (“COMPANY”), formerly known as VL26, Inc., a Delaware corporation, with a principal place of business at 620 Memorial Drive, Suite 100 West, Cambridge, MA 02139.

 

R E C I T A L S

 

WHEREAS , WHITEHEAD is the owner of certain PATENT RIGHTS (as later defined herein), including [***] entitled “[***]” by [***]; and [***] entitled “[***]” by [***];

 

WHEREAS , WHITEHEAD received a subcontract from Celgene Corporation (“CELGENE”) under the Defense Advanced Research Projects Agency Agreement No. [***] (the “DARPA Award”), which funded research resulting in [***];

 

WHEREAS , WHITEHEAD has the right to grant licenses under the PATENT RIGHTS, subject to a royalty-free, nonexclusive, nontransferable license to practice the PATENT RIGHTS reserved by the United States Government, and subject to a worldwide, irrevocable, nonexclusive, royalty-free right to use [***] of the PATENT RIGHTS reserved by CELGENE for research and development purposes;

 

WHEREAS , WHITEHEAD desires to have the PATENT RIGHTS developed and commercialized to benefit the public and is willing to grant a license thereunder; and

 

WHEREAS , COMPANY has represented to WHITEHEAD, to induce WHITEHEAD to enter into this Agreement, that COMPANY shall commit itself to a program of exploiting the PATENT RIGHTS so that public utilization will result therefrom; and

 

WHEREAS , COMPANY desires to obtain a license under the PATENT RIGHTS upon the terms and conditions hereinafter set forth.

 

NOW, THEREFORE , WHITEHEAD and COMPANY hereby agree as follows:

 


***Confidential Treatment Requested***

 



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

1 .                                       DEFINITIONS

 

1.1                                AFFILIATE ” means any legal entity (such as a corporation, partnership, or limited liability company) that is controlled by COMPANY, and which Company has designated in a written communication to WHITEHEAD as an AFFILIATE under this Agreement.  For the purposes of this definition, the term “control” means (i) beneficial ownership of at least fifty percent (50%) of the voting securities of a corporation or other business organization with voting securities or (ii) a fifty percent (50%) or greater interest in the net assets or profits of a partnership or other business organization without voting securities.

 

1.2                                FIELD ” means all fields.

 

1.3                                FIRST COMMERCIAL SALE ” in a country means the first sale of a LICENSED PRODUCT in such country that results in a NET SALE subject to royalties hereunder.

 

1.4                                IMPROVEMENTS ” means any new inventions created after the EFFECTIVE DATE and until [***] months ([***]) from the EFFECTIVE DATE and no longer:  (i) which WHITEHEAD owns or has rights to license; and (ii) that are from the activities at WHITEHEAD of [***], and/or others working under his/their supervision; and (iii) not included in the PATENT RIGHTS; and (iv) are fully or partially dominated by one or more VALID CLAIMS and whose practice infringes or is required to practice one or more VALID CLAIMS.  For the purpose of illustration and not limitation, IMPROVEMENTS may include immortalization, improved expansion, novel fusion partners, novel proteins and/or applications, etc., pertaining to red blood cells and the expression of proteins in and on red blood cells.

 

1.5                                IND ” means, with respect to a particular LICENSED PRODUCT, an Investigational New Drug application submitted to the FDA, or a corresponding application filed with any other regulatory agency, seeking approval to begin tests of a new drug in human subjects.

 

1.6                                LICENSED PROCESS ” means any process that, absent the license granted hereunder, would infringe one or more VALID CLAIMS or which uses a LICENSED PRODUCT as defined in Section 1.7(i), below.

 

2

 


***Confidential Treatment Requested***

 



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

1.7                                LICENSED PRODUCT ” means any product that, in whole or in part, (i) absent the license granted hereunder, would infringe one or more VALID CLAIMS; or (ii) is manufactured by using a LICENSED PROCESS or that, when used, practices a LICENSED PROCESS.

 

1.8                                MARKETING APPROVAL ” means receipt of all approvals, licenses, registrations, or authorizations of any federal, state, or local regulatory agency, department, bureau, or other governmental entity, including but not limited to pricing approvals, necessary for the marketing and sale of LICENSED PRODUCTS, as applicable, in a country or regulatory jurisdiction in the TERRITORY.

 

1.9                                NDA ” means a New Drug Application submitted to the FDA seeking approval to market and sell a LICENSED PRODUCT in the United States of America, or a corresponding application filed with any other regulatory agency seeking approval to market and sell a LICENSED PRODUCT in a country in the TERRITORY.

 

1.10                         NET SALES ” means the gross amount billed by COMPANY and its AFFILIATES and SUBLICENSEES for LICENSED PRODUCTS to a third party who is neither COMPANY, an AFFILIATE nor SUBLICENSEE, less the following:

 

(i)                                      customary trade, quantity, cash or other discounts to the extent actually allowed and taken;

 

(ii)                                   amounts repaid or credited by reason of rejection or return, charge-backs or rebates;

 

(iii)                                to the extent separately stated on purchase orders, invoices, or other documents of sale, any taxes or other governmental charges levied on the production, sale, transportation, delivery, or use of a LICENSED PRODUCT which is paid by or on behalf of COMPANY or any AFFILIATE or SUBLICENSEE;

 

(iv)                               outbound transportation costs prepaid or allowed and costs of insurance in transit;

 

(v)                                  discounts, rebates or other payments required by law to be made under Medicaid, Medicare or other governmental special medical assistance programs, to the extent actually allowed and taken.

 

3

 


***Confidential Treatment Requested***

 



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

No deductions will be made for commissions paid to individuals whether they are with independent sales agencies or regularly employed by COMPANY and on its payroll, or for cost of collections.  NET SALES will occur on the date of billing for a LICENSED PRODUCT.  If a LICENSED PRODUCT is distributed for non-cash consideration, NET SALES will be calculated based on the fair market value of such non-cash consideration received by COMPANY, an AFFILIATE or SUBLICENSEE.  For clarity, transfer of a LICENSED PRODUCT within COMPANY or between or among COMPANY and any of its AFFILIATES or SUBLICENSEES shall not be considered a NET SALE hereunder, except where the transferee is an end user of such LICENSED PRODUCT.  Transfers of LICENSED PRODUCT to third parties in connection with clinical trials, early access programs (such as to provide patients with LICENSED PRODUCT prior to regulatory approval pursuant to treatment INDs or protocols, named patient programs, compassionate use programs or any similar uses), humanitarian and charitable donations or indigent programs, shall be excluded from NET SALES.

 

Non-monetary consideration may be accepted by COMPANY, any AFFILIATE, or any SUBLICENSEE for any LICENSED PRODUCT subsequent to or concurrently with written notification to WHITEHEAD describing such non-monetary consideration.  NET SALES includes the fair-market value of any non-cash consideration from sale of LICENSED PRODUCT received by COMPANY or AFFILIATES, calculated in accordance with this Section 1.10.

 

1.11                         PATENT CHALLENGE ” means a challenge to the validity, patentability or enforceability of any of the PATENT RIGHTS (as defined below) or otherwise opposing the validity, patentability or enforceability of any of the PATENT RIGHTS, including without limitation a declaratory judgment of invalidity or unenforceability, an inter partes review (IPR) application or an inter partes reexamination application.

 

1.12                         PATENT RIGHTS ” means:

 

(i)                                      the United States and international patents listed on Appendix A :

 

(ii)                                   the United States and international patent applications and/or provisional applications listed on Appendix A and the resulting patents;

 

4

 


***Confidential Treatment Requested***

 



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

(iii)                                any patent applications resulting from the provisional applications listed on Appendix A , and any divisional, continuations, continuation-in-part applications, and continued prosecution applications (and their relevant international equivalents) of the patent applications listed on Appendix A and of such patent applications that claim priority from or result from the provisional applications listed on Appendix A (including any related provisional patent applications filed during the one-year pendency of such provisional applications listed on Appendix A , provided it names [***] at WHITEHEAD as an inventor(s) and WHITEHEAD has an ownership interest therein), to the extent the claims are directed to subject matter specifically described in the patent applications listed on Appendix A , and the resulting patents;

 

(iv)                               any patents resulting from reissues, reexaminations, or extensions (and their relevant international equivalents) of the patents described in (i), (ii), and (iii) above; and

 

(v)                                  international (non-United States) patent applications filed after the EFFECTIVE DATE and the relevant international equivalents to divisional, continuations, continuation-in-part applications and continued prosecution applications of the patent applications to the extent the claims are directed to subject matter specifically described in the patents or patent applications referred to in (i), (ii), (iii), and (iv) above, and the resulting patents, and the relevant international equivalents of reissues, reexaminations, or extensions of such patents.

 

1.13                         PHASE I TRIAL ” means a clinical study of the first introduction of a LICENSED PRODUCT into a human subject under an IND.

 

1.14                         PHASE III TRIAL ” means a clinical study of a LICENSED PRODUCT in human subjects that is “adequate and well controlled”, as defined in 21 CFR § 314.126, for the purpose of gathering the definitive information about efficacy, dosage, and safety in the proposed therapeutic indication that is needed for the FDA or other appropriate regulatory agency to evaluate the overall benefit-risk relationship of the LICENSED PRODUCT in order to grant (or deny) approval to market the drug, or a clinical study of a LICENSED PRODUCT that otherwise is described in 21 CFR § 312.21(c).

 

1.15                         REPORTING PERIOD ” will begin on the first day of each calendar quarter and end on the last day of such calendar quarter.

 

5

 


***Confidential Treatment Requested***

 



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

1.16                         SUBLICENSE ” means any sublicense granted by COMPANY or an AFFILIATE or SUBLICENSEE of any of the rights granted to COMPANY and AFFILIATES under Section 2.1.

 

1.17                         SUBLICENSE INCOME ” means any payments that COMPANY or AFFILIATE receives from a SUBLICENSEE (whether received by COMPANY or an AFFILIATE from a direct SUBLICENSEE of COMPANY or an AFFILIATE or from a SUBLICENSEE down multiple tiers) specifically in consideration of the SUBLICENSE, including without limitation upfront fees, license fees, milestone payments, annual license maintenance fees, distribution or joint marketing fees, and premiums above the fair-market value on bona fide equity investments, debt, or other types of investments in the COMPANY or any AFFILIATE.  Notwithstanding the foregoing, SUBLICENSE INCOME shall not include:  (i) royalties on NET SALES; (ii) payments received from a SUBLICENSEE or any of its affiliates for bona fide security investments, debt or other types of investments in the COMPANY or any AFFILIATE, including the right to acquire COMPANY ’S or AFFILIATE ’S securities in the future, such as warrants, convertible debt and the like (other than premiums above the fair-market value of such investments, debt or other types of investments as of the date of receipt of such payments), or (iii) reimbursement by a SUBLICENSEE of future bona fide research, development, manufacturing, and commercialization costs actually incurred (including, without limitation, payments for FTEs).  COMPANY and AFFILIATES will be entitled to reduce any fees payable to WHITEHEAD for SUBLICENSE INCOME by the amount of any payments paid or due to WHITEHEAD for the same milestone(s) achieved by COMPANY, AFFILIATES or SUBLICENSEES for sublicensed LICENSED PRODUCTS and for patent costs paid to COMPANY or AFFILIATES as reimbursement of amounts owed to WHITEHEAD.  For the avoidance of doubt, the limitation of Milestone Payments due to WHITEHEAD under Section 4.1(c) does not limit the amount payable as SUBLICENSE INCOME.

 

1.18                         SUBLICENSEE ” means any non-AFFILIATE entity granted a SUBLICENSE of the rights granted to COMPANY under Section 2.1.

 

1.19                         TERM ” means the term of this Agreement, which will commence on the EFFECTIVE DATE and will remain in effect until the expiration or abandonment of all issued

 

6

 


***Confidential Treatment Requested***

 



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

patents and filed patent applications within the PATENT RIGHTS, unless earlier terminated in accordance with the provisions of this Agreement.

 

1.20                         TERRITORY ” means worldwide.

 

1.21                         VALID CLAIM ” means a claim in (i) an issued and unexpired patent within the PATENT RIGHTS, which claim has not been revoked or held unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise; or (ii) a pending patent application under the PATENT RIGHTS which (A) has not been abandoned or finally disallowed without possibility of appeal or re-filing of such application and (B) solely for purposes of payments under this Agreement, has not been pending for more than the shorter of (1) [***] years from the date such application was first examined or (2) [***] years from its earliest priority date.  The invalidity of a particular claim in one or more countries shall not invalidate such claim in the remaining countries of the TERRITORY if it otherwise meets the definition of VALID CLAIM.

 

2 .                                       GRANT OF RIGHTS

 

2.1                                License Grants .  Subject to the terms of this Agreement, WHITEHEAD hereby grants to COMPANY and its AFFILIATES for the TERM an exclusive, royalty-bearing license under the PATENT RIGHTS to research, develop, make, have made, use, sell, have sold, offer to sell, lease, and import LICENSED PRODUCTS in the FIELD in the TERRITORY and to develop and perform LICENSED PROCESSES in the FIELD in the TERRITORY.

 

2.2                                Sublicenses .  Provided that COMPANY maintains an exclusive license to the PATENT RIGHTS in the FIELD in the TERRITORY, COMPANY (and its AFFILIATES) will have the right to grant, through multiple tiers, SUBLICENSES; provided however that such multiple-tier SUBLICENSES shall be consistent with the provisions herein with respect to SUBLICENSES.  COMPANY shall, or shall require its AFFILIATES and SUBLICENSEES to, incorporate terms and conditions into its SUBLICENSE agreements sufficient to enable COMPANY to comply with this Agreement.  COMPANY shall also, or shall require its AFFILIATES and SUBLICENSEES to, include provisions in all SUBLICENSES to provide that in the event that SUBLICENSEE brings a PATENT CHALLENGE against WHITEHEAD or

 

7

 


***Confidential Treatment Requested***

 



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

assists another party in bringing a PATENT CHALLENGE against WHITEHEAD (except as required under a court order or subpoena) then COMPANY may terminate the SUBLICENSE, to the extent such termination is enforceable in accordance with applicable laws.

 

COMPANY shall furnish WHITEHEAD with a fully signed photocopy of any SUBLICENSE agreement between COMPANY or an AFFILIATE, on the one hand, and a SUBLICENSEE, on the other hand, within [***] days of its effective date, which copies may be reasonably redacted except for matters relevant to COMPANY ’S obligations or WHITEHEAD ’S rights under this Agreement.  WHITEHEAD shall treat any such copies of SUBLICENSE agreements as Information in accordance with Article 15 of this Agreement.

 

COMPANY shall provide written notification to WHITEHEAD within [***] days of the effective date of multiple-tier SUBLICENSE (i.e., a SUBLICENSEE sublicensing PATENT RIGHTS to a third party).  COMPANY shall provide information to WHITEHEAD related to the parties of such agreement, grant of rights, and payments due to COMPANY or an AFFILIATE from such SUBLICENSEE as it relates to SUBLICENSE INCOME.

 

Upon termination of this Agreement for any reason, any SUBLICENSEE not then in default will have the right to seek a direct license from WHITEHEAD under rights and terms substantially identical to the SUBLICENSE rights and terms which COMPANY previously granted to such SUBLICENSEE, where such SUBLICENSEE will pay WHITEHEAD as if it were COMPANY under the terms of this Agreement.  WHITEHEAD agrees to execute such direct license and any non-identical terms in good faith under reasonable terms and conditions.

 

2.3                                Mandatory Sublicensing .  Beginning [***] years from the EFFECTIVE DATE, if WHITEHEAD receives a bona fide request from a third party for a sublicense to the PATENT RIGHTS to develop, make, have made, use, sell, offer to sell, lease, and import a LICENSED PRODUCT or LICENSED PROCESS, which proposed product or process (“ PROPOSED PRODUCT ”) is not directly competitive with any LICENSED PRODUCT or LICENSED PROCESS that is being, or is planned to be, researched, developed or commercialized by, or with the then current business interests of, COMPANY or an AFFILIATE or SUBLICENSEE, then COMPANY shall enter into good-faith negotiations toward granting at least a non-exclusive sublicense, limited to the proposed field only, to such third party for such third party’s

 

8

 


***Confidential Treatment Requested***

 


 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

PROPOSED PRODUCT.  COMPANY obligation to negotiate will extend for up to [***] but not thereafter.

 

2.4                                U.S. Manufacturing .  To the extent required by applicable law, COMPANY agrees that any LICENSED PRODUCTS used or sold in the United States will be manufactured substantially in the United States.  If requested, WHITEHEAD agrees to provide reasonable assistance to COMPANY, its AFFILIATES or SUBLICENSEES, as applicable, to seek a waiver from this requirement from the applicable federal agency.

 

2.5                                Retained Rights .

 

(a)                                  WHITEHEAD .  WHITEHEAD retains the right to practice under the PATENT RIGHTS for research, teaching, and educational purposes including sponsored research and collaborations.

 

(b)                                  Academic and Not-For-Profit Research Institutes .  WHITEHEAD retains the right to grant non-exclusive licenses to academic and not-for-profit research institutes to practice under the PATENT RIGHTS for research, teaching, and educational purposes only; excluding use in sponsored research.

 

(c)                                   Federal Government .  COMPANY acknowledges that the U.S. federal government retains a royalty-free, non-exclusive, non-transferable license to practice any government-funded invention claimed in any PATENT RIGHTS as set forth in 35 U.S.C. §§ 201-211 and Executive Order 12591 and the regulations promulgated thereunder, as amended, or any successor statutes or regulations.

 

(d)                                  Celgene License .  COMPANY acknowledges that CELGENE, under the DARPA Award, retains a worldwide, irrevocable, non-exclusive, royalty-free right to use [***] of the PATENT RIGHTS for research and development purposes.

 

(e)                                   License to COMPANY Exclusive .  Neither the rights described in Sections 2.5(a)-(d), nor the granting of any SUBLICENSE, shall be deemed to make COMPANY ’S rights in the PATENT RIGHTS in the FIELD in the TERRITORY non-exclusive

 

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or otherwise less than exclusive for purposes of those provisions that pertain only while COMPANY has an exclusive license.

 

2.6                                IMPROVEMENTS .  Provided that COMPANY is not then in default or breach of this Agreement, and subject to (a) WHITEHEAD’S obligations under conflict of interest regulations or guidelines from the federal government, (b) policies of WHITEHEAD or (c) WHITEHEAD ’S obligations under the [***] or to the U.S. Government, WHITEHEAD hereby grants to COMPANY a first exclusive option to negotiate an exclusive or non-exclusive license to WHITEHEAD ’S ownership rights, and any other rights that WHITEHEAD has the right to license, to all IMPROVEMENTS (“OPTION”), whether or not such IMPROVEMENTS arise from work performed under any third-party corporate sponsorship (other than the [***]).  For the purpose of this Section 2.6, “[***]” is the scientific research collaboration agreement between WHITEHEAD and [***], as in effect on the EFFECTIVE DATE, limited to those research projects in the laboratory of [***] performed with funds from [***], to WHITEHEAD pursuant to such agreement, as delineated by WHITEHEAD ’S internal records.

 

The OPTION must be exercised within [***] days from the date of disclosure of any such IMPROVEMENT to COMPANY and the resulting license will be incorporated into this Agreement as an amendment to the PATENT RIGHTS definition.  COMPANY shall agree with WHITEHEAD on the field(s) for such IMPROVEMENT and terms which are reasonable and appropriate in licenses between industry and academic institutions, to-be negotiated in good faith within [***] days of exercising the OPTION (the “Negotiation Period”), which will be added to the COMPANY ’S diligence obligations under Article 3 with respect to such IMPROVEMENTS, and COMPANY and WHITEHEAD shall timely amend Appendix A to include all relevant information for such IMPROVEMENT.  Should no license result from this process, WHITEHEAD will be free to license IMPROVEMENTS to any third party, provided however, during [***] after the end of the Negotiation Period for such IMPROVEMENT, WHITEHEAD shall not license such IMPROVEMENT to any third party on terms that are more favorable to the third party, alone or in the aggregate, than the terms last offered to COMPANY.

 

2.7                                No Additional Rights .  Nothing in this Agreement will be construed to confer any rights upon COMPANY by implication, estoppel, or otherwise as to any technology or patent

 

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rights of WHITEHEAD or any other entity other than the PATENT RIGHTS, and IMPROVEMENTS as provided in Section 2.6, regardless of whether such technology or patent rights shall be dominant or subordinate to any PATENT RIGHTS.

 

3 .                                       COMPANY DILIGENCE OBLIGATIONS

 

3.1                                COMPANY shall use commercially reasonable efforts, or shall cause its AFFILIATES and SUBLICENSEES to use commercially reasonable efforts, to develop at least one (1) LICENSED PRODUCT or LICENSED PROCESS and to introduce at least one (1) LICENSED PRODUCT or LICENSED PROCESS into the commercial market; thereafter, COMPANY or its AFFILIATES or SUBLICENSEES shall use commercially reasonable efforts to make LICENSED PRODUCTS or LICENSED PROCESSES reasonably available to the public.  Specifically, COMPANY or AFFILIATE or SUBLICENSEE shall fulfill the following obligations:

 

(i)                                      Within [***] months after the EFFECTIVE DATE, COMPANY shall furnish WHITEHEAD with a written research and development plan describing the major tasks to be achieved in order to bring to market a LICENSED PRODUCT or LICENSED PROCESS, specifying the resources to be devoted to such commercialization effort.

 

(ii)                                   Within [***] days after [***], COMPANY shall furnish WHITEHEAD with a written report (consistent with Section 5.1(a)) on the progress of its efforts during [***] to develop and commercialize a LICENSED PRODUCT or LICENSED PROCESS.  The report shall also contain a discussion of intended efforts and sales projections for the year in which the report is submitted.  At WHITEHEAD ’S request, COMPANY will provide its commercially diligent assessment on embodiments of PATENT RIGHTS.

 

(iii)                                Within [***] years after the EFFECTIVE DATE, COMPANY, AFFILIATE, or SUBLICENSEE shall file an IND for a LICENSED PRODUCT.

 

In the event that COMPANY, AFFILIATE, or SUBLICENSEE, alone or together, has not performed Section 3.1(iii), and such failure is because of a bona fide and documented scientific, technical, or regulatory issue, then WHITEHEAD and COMPANY shall negotiate in good faith a reasonable extension of time for COMPANY, AFFILIATE, or SUBLICENSEE to

 

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achieve the specific obligation, and WHITEHEAD will not unreasonably deny or condition such extension.  If the parties are unable to agree on the length of such extension of time, then the matter will be resolved in accordance with Article 14.

 

Subject to the immediately preceding paragraph, in the event that COMPANY, AFFILIATE, or SUBLICENSEE, alone or together, has not performed Sections 3.1(i) through (iii), then WHITEHEAD may treat such failure as a material breach in accordance with Section 13.3(b).

 

3.2                                Diligence Requirements .  If, in any calendar year, COMPANY, AFFILIATE, or SUBLICENSEE, alone or together, has performed any one of the following with respect to a LICENSED PRODUCT, then COMPANY shall be deemed to have complied with COMPANY ’S obligations under this Section 3.2 with respect to a LICENSED PRODUCT:

 

(i)                                      has expended a minimum of [***] for research, development, manufacture or commercialization of a LICENSED PRODUCT annually;

 

(ii)                                   is actively conducting a PHASE I TRIAL, Phase II trial, and/or PHASE III TRIAL with respect to a LICENSED PRODUCT;

 

(iii)                                is preparing or has prepared documents for filing an NDA with respect to a LICENSED PRODUCT within [***] years of completion of a PHASE III TRIAL;

 

(iv)                               has filed or is pursuing an NDA for MARKETING APPROVAL for a LICENSED PRODUCT;

 

(v)                                  has received MARKETING APPROVAL for a LICENSED PRODUCT; or

 

(vi)                               a LICENSED PRODUCT is launched or is being sold.

 

In the event that COMPANY, AFFILIATE, or SUBLICENSEE, alone or together, has not performed at least one of Sections 3.2(i) through (vi) during such calendar year with respect to a LICENSED PRODUCT, then, subject to COMPANY ’S rights in the second paragraph of Section 3.1, WHITEHEAD may treat such failure as a material breach in accordance with Section 13.3(b).

 

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4 .                                       ROYALTIES AND PAYMENT TERMS

 

4.1                                Consideration for Grant of Rights .

 

(a)                                  License Issue Fee and Patent Cost Reimbursement .  COMPANY shall pay to WHITEHEAD within [***] days of the EFFECTIVE DATE a license issue fee of [***], and such amounts required as reimbursement in accordance with Section 6.3, relating to actual expenses incurred as of the EFFECTIVE DATE in connection with obtaining the PATENT RIGHTS.  These payments are nonrefundable.

 

(b)                                  License Maintenance Fees .  COMPANY shall pay to WHITEHEAD the following license maintenance fees on January 1 of each year set forth below:

 

Year

 

Maintenance Fee

[***]

 

[***]

[***]

 

[***]

[***]

 

[***]

 

This license maintenance fee is nonrefundable; however, the license maintenance fee may be credited to running royalties subsequently due on NET SALES earned during the same calendar year and any milestone payments in the same calendar year, if any.  License maintenance fees paid in excess of running royalties and milestone payments due in such calendar year will not be creditable to amounts due for future years.

 

(c)                                   Milestone Payments .  COMPANY shall pay to WHITEHEAD the following milestone payments upon first achievement of the following milestones for a LICENSED PRODUCT whether by COMPANY, AFFILIATE, or SUBLICENSEE.  These milestone payments are nonrefundable, and each milestone is payable once only, not to exceed One Million Six Hundred Twenty Five Thousand Dollars $1,625,000 in any event:

 

(i)                                      [***] upon initiation of pre-IND enabling toxicology study.

 

(ii)                                   [***] upon the first dosing in a PHASE I TRIAL.

 

(iii)                                [***] upon the first dosing in a PHASE III TRIAL.

 

(iv)                               [***] upon MARKETING APPROVAL in USA or European Union.

 

(v)                                  [***] upon MARKETING APPROVAL in USA or European Union for second LICENSED PRODUCT or second indication for first LICENSED PRODUCT.

 

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(vi)                               [***] upon MARKETING APPROVAL in Japan.

 

For the avoidance of doubt, the limitation of milestone payments in this Section 4.1(c) will not limit the amount of SUBLICENSE INCOME due to WHITEHEAD from the achievement of milestones.

 

(d)                                  Running Royalties :  COMPANY shall pay to WHITEHEAD a running royalty of [***] on NET SALES of LICENSED PRODUCTS by COMPANY, AFFILIATES, and SUBLICENSEES.

 

On a LICENSED PRODUCT-by-LICENSED PRODUCT and country-by-country basis, running royalties will commence on the date of FIRST COMMERCIAL SALE of such LICENSED PRODUCT in such country and will continue until the expiration of the last VALID CLAIM that would be infringed by the sale of such LICENSED PRODUCT in such country.  Thereafter, the license for such LICENSED PRODUCT in such country will be fully paid up, royalty-free, perpetual and irrevocable.  Running royalties will be payable for each REPORTING PERIOD and will be due to WHITEHEAD within [***] days of the end of each REPORTING PERIOD.

 

(e)                                   Royalty Offset .  If COMPANY, or an AFFILIATE is obligated to pay royalties to one or more third parties in order to obtain a license or similar right necessary to make, have made, use, sell, have sold, offer to sell, lease, or import a LICENSED PRODUCT, and COMPANY or an AFFILIATE actually pays said third-party royalties, COMPANY will be entitled to credit up to [***] of the amounts actually paid to such third parties against the royalties due to WHITEHEAD under this Agreement in the same REPORTING PERIOD, provided, however, that in no event shall the royalty payments under Section 4.1 (d) be reduced to less than [***] of NET SALES of such LICENSED PRODUCT in such REPORTING PERIOD; provided, further, that such offset shall only be available in connection with such payments to third party(ies) pursuant to agreements that permit a similar right of offset against royalties payable thereunder as a result of royalties payable to WHITEHEAD for the PATENT RIGHTS under this Section.

 

For clarification, COMPANY may only offset royalties paid to third parties from the sales in the same country as the royalties due to WHITEHEAD.  For example, if COMPANY

 

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owes royalties to third parties for NET SALES in country Y and country Z, and COMPANY owes royalties to WHITEHEAD for NET SALES in country Y, COMPANY may only offset third-party royalties on NET SALES from country Y against royalties due to WHITEHEAD for NET SALES in country Y.

 

(f)                                    Sharing of SUBLICENSE INCOME .  COMPANY shall pay WHITEHEAD the following percentage of all SUBLICENSE INCOME received by COMPANY or AFFILIATES.  Such amount will be payable for each REPORTING PERIOD and will be due to WHITEHEAD within [***] days of the end of each REPORTING PERIOD.

 

·                   [***], for SUBLICENSES effective before [***].

 

·                   [***], for SUBLICENSES effective after [***], but prior to [***].

 

·                   [***], for SUBLICENSES effective thereafter.

 

To the extent that other patent rights, other intellectual property rights or other rights or obligations are granted to a SUBLICENSEE, other than PATENT RIGHTS which are sublicensed hereunder, by COMPANY or AFFILIATES, the consideration received by COMPANY will, subject to this Section 4.1(f), be equitably apportioned between the PATENT RIGHTS and those other rights and obligations, and such apportionment will be reasonable and in accordance with customary standards in the industry, such that only the portion of consideration received from the third party that is reasonably attributable to the SUBLICENSE of rights under the PATENT RIGHTS shall be considered SUBLICENSE INCOME.  Deductions taken under SUBLICENSE INCOME (e.g., future bona fide research, development and commercialization costs) also will be apportioned, as applicable.

 

COMPANY shall deliver to WHITEHEAD promptly a written report setting forth such apportionment.  In the event WHITEHEAD disagrees with the determination made by COMPANY, WHITEHEAD will so notify COMPANY within [***] days of receipt of COMPANY ’S report and the parties shall meet to discuss and resolve such disagreement in good faith.  If the parties are unable to agree in good faith as to such fair-market values within [***] days, then the matter will be submitted in accordance with the dispute resolution process set forth in Article 14.  If COMPANY owes additional monies to WHITEHEAD after the conclusion of

 

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such process, COMPANY will have [***] days after the completion of such process to make such payment to WHITEHEAD.

 

(g)                                   No Multiple Royalties .  If the manufacture, use, lease, or sale of any LICENSED PRODUCT or the performance of any LICENSED PROCESS is covered by more than one of the PATENT RIGHTS, multiple royalties will not be due.

 

(h)                                  Equity .

 

(1)                                  Initial Grant .  COMPANY shall issue to WHITEHEAD a total of [***] shares of Common Stock of COMPANY, $0.001 par value per share, (the “Shares”) in the name of WHITEHEAD, which shares represent the equivalent to [***] of the capitalization of COMPANY on a Fully-Diluted Basis (as defined below), after giving effect to the sale of [***] in COMPANY equity, subject to WHITEHEAD and, to the extent WHITEHEAD has transferred such Shares, any of its transferees (the “Whitehead Holders”) entering into a representation letter in substantially the form attached hereto as Appendix C with respect to such issuance of shares to WHITEHEAD and the Whitehead Holders.

 

(2)                                  Participation in Future Private Equity Offerings .  After the EFFECTIVE DATE, WHITEHEAD will have the right to purchase additional shares of the COMPANY’S Capital Stock in any private offering by the COMPANY of such Capital Stock in exchange for cash, to maintain its pro rata ownership as calculated immediately prior to such offering on a Fully Diluted Basis, pursuant to the terms and conditions at least as favorable as those granted to the other offerees; provided, that the right set forth in this Section 4.1(h)(2) shall not apply with respect to the offer or issuance by COMPANY of (i) Exempted Securities (as such term is defined in the Certificate of Incorporation of COMPANY), (ii) shares of Capital Stock or Convertible Instruments issued to banks, equipment lessors or other financial institutions, or to real property lessors, pursuant to a debt financing, equipment leasing or real property leasing transaction; (iii) shares of Capital Stock or Convertible Instruments issued pursuant to the acquisition of another corporation by the COMPANY by merger, purchase of substantially all of the assets or other reorganization or to a joint venture agreement or (iv) shares of Capital Stock or Convertible Instruments issued in connection with sponsored research, collaboration, technology license, development, OEM, marketing or other similar agreements or strategic

 

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partnerships.  All rights granted pursuant to this Section 4.1(h)(2) will terminate immediately prior to the earliest of (i) a firm commitment underwritten public offering of the COMPANY ’S Capital Stock resulting in gross proceeds to the COMPANY of at least [***], (ii) a Deemed Liquidation Event, as such term is defined in the Company’s Certificate of Incorporation or (iii) the date on which COMPANY has raised [***] in cash from its sale of its Capital Stock.  The right under this Section 4.1(h)(2) may only be assigned (and only with all related obligations) by WHITEHEAD to a transferee of the Shares that (i) is an AFFILIATE of WHITEHEAD, provided COMPANY is provided notice of such transfer; or (ii) is not an AFFILIATE of WHITEHEAD, provided COMPANY has provided its prior written consent to such transfer.

 

The following definitions will apply to this Section 4.1(h):

 

“Capital Stock” will mean any form of COMPANY ’S capital stock.

 

“Convertible Instrument” will mean any instrument issued by COMPANY that is convertible into, or may be exercised in exchange for, any Capital Stock.

 

“Fully Diluted Basis” will mean the total number of issued and outstanding shares of the COMPANY ’S Common Stock calculated to include conversion of all issued and outstanding securities convertible into Common Stock, the exercise of all then outstanding options and warrants to purchase shares of Common Stock, whether or not then exercisable, the conversion or exercise of all rights to purchase or acquire Common Stock, whether or not then convertible or exercisable, and will assume the issuance or grant of all securities reserved for issuance pursuant to any COMPANY stock or stock option plan in effect on the date of the calculation.

 

4.2                                Payments .

 

(a)                                  Method of Payment .  All payments under this Agreement should be made payable to “Whitehead Institute for Biomedical Research” and sent to WHITEHEAD ’S address identified in Section 16.1.  Each payment should reference this Agreement (Reference:  “[***]”) and identify the obligation under this Agreement that the payment satisfies.

 

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(b)                                  Payments in U.S. Dollars .  All payments due under this Agreement will be drawn on a United States bank and will be payable in United States dollars.  Conversion of foreign currency to U.S. dollars will 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 calendar quarter of the applicable REPORTING PERIOD.  Such payments will 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 definition of NET SALES.  To the extent it has the legal right to do so and at the request of COMPANY, WHITEHEAD will assist COMPANY in reclaiming or seeking reimbursement of any amounts withheld under this Section 4.2(b) from the appropriate government, agency, or taxing authority.

 

(c)                                   Late Payments .  Any payments by COMPANY that are not paid on or before the date such payments are due under this Agreement will bear interest, to the extent permitted by law, at two percentage points above the Prime Rate of interest as reported in the Wall Street Journal on the date payment is due.

 

5 .                                       REPORTS AND RECORD KEEPING

 

5.1                                Frequency of Reports .

 

(a)                                  Before FIRST COMMERCIAL SALE .  Prior to the FIRST COMMERCIAL SALE of any LICENSED PRODUCT or first commercial performance of any LICENSED PROCESS, COMPANY shall deliver reports to WHITEHEAD [***], within [***] days of the end of [***], containing information concerning the immediately preceding [***], as further described in Section 5.2.

 

(b)                                  Upon FIRST COMMERCIAL SALE or Commercial Performance of a LICENSED PROCESS .  COMPANY shall report to WHITEHEAD the date of FIRST COMMERCIAL SALE and the date of first commercial performance of a LICENSED PROCESS within [***] days of occurrence in each country.

 

(c)                                   After FIRST COMMERCIAL SALE .  After the FIRST COMMERCIAL SALE or first commercial performance of a LICENSED PROCESS, COMPANY shall

 

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deliver reports to WHITEHEAD within [***] days of the end of each REPORTING PERIOD, containing information concerning the immediately preceding REPORTING PERIOD, as further described in Section 5.2.

 

5.2                                Content of Reports and Payments .  Each report delivered by COMPANY to WHITEHEAD pursuant to Section 5.1 will contain at least the following information for the immediately preceding REPORTING PERIOD, as applicable; provided that, for any information required with respect to a SUBLICENSEE, COMPANY shall be deemed to fulfill its obligation under this Section 5.2 if it exercises commercially reasonable efforts to obtain such information:

 

(i)                                      the number of LICENSED PRODUCTS sold, leased or distributed by COMPANY, AFFILIATES, and SUBLICENSEES to independent third parties in each country;

 

(ii)                                   a description of LICENSED PROCESSES performed by COMPANY, its AFFILIATES and SUBLICENSEES in each country as may be pertinent to a royalty accounting hereunder;

 

(iii)                                the gross price charged by COMPANY, AFFILIATES, and SUBLICENSEES for each LICENSED PRODUCT; and the gross price charged for each LICENSED PROCESS performed by COMPANY, AFFILIATES, and SUBLICENSEES in each country;

 

(iv)                               calculation of NET SALES for the applicable REPORTING PERIOD in each country, including a listing of applicable deductions;

 

(v)                                  total royalty payable on NET SALES in U.S. dollars, together with the exchange rates used for conversion;

 

(vi)                               the amount of SUBLICENSE INCOME received by COMPANY from each SUBLICENSEE and the amount deliverable to WHITEHEAD from such SUBLICENSE INCOME, including an itemized breakdown of the sources of income comprising the SUBLICENSE INCOME;

 

(vii)                            the number of SUBLICENSE agreements entered into for the PATENT RIGHTS, LICENSED PRODUCTS, and/or LICENSED PROCESSES and (viii) achievement of any Milestones under Section 4.1(c) (and COMPANY shall pay the related milestone payments concurrently with the delivery of such report).

 

If no amounts are due for any REPORTING PERIOD, die report will so state.

 

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5.3                                Financial Statements .  On or before the [***] day following the COMPANY ’S fiscal year end, COMPANY shall provide WHITEHEAD with COMPANY’S financial statements for the preceding fiscal year including, at a minimum, a balance sheet and an income statement, certified by COMPANY’S treasurer or chief financial officer or by an independent auditor.  During any time period in which COMPANY is required to make filings of its annual financial information with the SEC (as defined below), and such reports are available via a publicly accessible website, COMPANY shall not be required to actually deliver copies of the foregoing reports to WHITEHEAD.

 

5.4                                Record keeping .  COMPANY shall maintain, and shall cause its AFFILIATES and SUBLICENSEES to maintain, complete and accurate records relating to the rights and obligations under this Agreement and any amounts payable to WHITEHEAD in relation to this Agreement, which records shall contain sufficient information to permit WHITEHEAD to confirm the accuracy of any reports delivered to WHITEHEAD and compliance in other respects with this Agreement.  The relevant party shall retain such records for at least [***] years following the end of the calendar year to which they pertain, during which time WHITEHEAD or WHITEHEAD ’S appointed agents, will have the right, at WHITEHEAD ’S expense, to inspect such records during normal business hours to verify any reports and payments made or compliance in other respects under this Agreement.  In the event that any audit performed under this Section 5.4 reveals an underpayment in excess of [***], COMPANY shall bear the full out-of-pocket cost of such audit and shall remit any amounts due to WHITEHEAD within [***] days of receiving notice thereof from WHITEHEAD.  In the event that any audit performed under this Section 5.4 reveals an overpayment, COMPANY may take the amount of any overpayment as a credit under this Agreement.

 

6 .                                       PATENT PROSECUTION

 

6.1                                Responsibility for PATENT RIGHTS .  WHITEHEAD shall prepare, file, prosecute, and maintain all of the PATENT RIGHTS.  WHITEHEAD shall instruct counsel to copy COMPANY on all draft material correspondence and draft submissions relating to the PATENT RIGHTS so that COMPANY may review and comment on same.  COMPANY will have reasonable opportunities to advise WHITEHEAD regarding prosecution of the PATENT RIGHTS, and which, if any, of the PATENT RIGHTS shall be subject to patent term extension,

 

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supplementary protection certificate or similar extensions, and WHITEHEAD shall reasonably consider all comments from COMPANY.  WHITEHEAD shall not abandon, or otherwise elect to forego its rights in, any PATENT RIGHTS without COMPANY ’S prior written consent, which consent shall not be unreasonably withheld.  COMPANY shall cooperate with WHITEHEAD in such filing, prosecution and maintenance.

 

6.2                                International (non-United States’! Filings Appendix B is a list of countries in which patent applications corresponding to the United States patent applications listed in Appendix A will be filed, prosecuted, and maintained.  Appendix B may be amended by mutual agreement of COMPANY and WHITEHEAD.

 

6.3                                Payment of Expenses .  Payment of all fees and costs, including attorneys* fees, relating to the filing, prosecution and maintenance of the PATENT RIGHTS will be the responsibility of COMPANY, whether such amounts were incurred before or after the EFFECTIVE DATE.  WHITEHEAD has incurred the following amounts for such patent-related fees and costs:

 

Patent Case

 

As of service date

 

Patent Expenses

 

[***]

 

December 31, 2015

 

[***]

 

[***]

 

December 30, 2015

 

[***]

 

 

COMPANY shall reimburse all amounts due pursuant to this Section 6.3 within [***] days of invoicing; late payments will accrue interest pursuant to Section 4.2(c).  In all instances, WHITEHEAD shall pay the fees prescribed for large entities to the United States Patent and Trademark Office.

 

7 .                                       INFRINGEMENT

 

7.1                                Notification of Infringement .  Each party agrees to provide written notice to the other parties promptly after becoming aware of any infringement of the PATENT RIGHTS.

 

7.2                                Right to Prosecute Infringements .

 

(a)                                  COMPANY Right to Prosecute .  So long as COMPANY remains the exclusive licensee of the PATENT RIGHTS in the FIELD in the TERRITORY, COMPANY, to the extent permitted by law, will have the right (but not the obligation),

 

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under its own control and at its own expense, to prosecute any third-party infringement of the PATENT RIGHTS in the FIELD in the TERRITORY, subject to Sections 7.4 and 7.5.  If required by law, WHITEHEAD shall permit any action under this Section to be brought in its name, including being joined as a party-plaintiff, provided that, as set forth in Section 7.6, COMPANY shall hold WHITEHEAD harmless from, and indemnify WHITEHEAD against, any reasonable out-of-pocket costs or expenses that WHITEHEAD incurs in connection with such action.

 

Prior to commencing any such action, COMPANY shall consult with WHITEHEAD and shall consider the views of WHITEHEAD regarding the advisability of the proposed action and its effect on the public interest.  COMPANY shall not enter into any settlement, consent judgment, or other voluntary final disposition of any infringement action under this Section 7.2 without the prior written consent of WHITEHEAD, which consent shall not be unreasonably withheld, conditioned or delayed.

 

(b)                                  WHITEHEAD Right to Prosecute .  In the event that COMPANY is unsuccessful in persuading the alleged infringer to desist or fails to have initiated an infringement action within a reasonable time (no sooner than [***] months) after COMPANY first becomes aware of the basis for such action in writing from WHITEHEAD, WHITEHEAD will have the right, at its sole discretion, to prosecute such infringement under its sole control and at its sole expense, and any recovery obtained shall belong to WHITEHEAD.

 

7.3                                Declaratory Judgment Actions .  In the event that a PATENT CHALLENGE or any suit or action alleging that the PATENT RIGHTS are not infringed is brought against WHITEHEAD or COMPANY or any AFFILIATES or SUBLICENSEES by a third party, the subject party shall promptly notify the other parties in writing and COMPANY, at its option, and upon written notice to WHITEHEAD, shall have the right, but shall not be obligated, within [***] days after commencement of such action to take over the sole defense of the action at its own expense, subject to Sections 7.4 and 7.5.  If COMPANY does not exercise this right, WHITEHEAD may take over the sole defense of the action at WHITEHEAD ’S sole expense, but shall not be obligated to do so.

 

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Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

7.4                                Offsets .  COMPANY may offset a total of [***] of any expenses it incurs under Sections 7.2 and 7.3 against any payments due to WHITEHEAD under Article 4, provided that in no event will such payments under Article 4, when aggregated with any other offsets and credits allowed under this Agreement, be reduced by more than [***] in any REPORTING PERIOD.

 

7.5                                Recovery .  Any recovery obtained in an action brought by COMPANY under Sections 7.2 or 7.3 will be distributed as follows:

 

(i)                                      each party will be reimbursed for any expenses incurred in the action (including the amount of any royalty or other payments withheld from WHITEHEAD as described in Section 7.4);

 

(ii)                                   as to ordinary damages, such amounts shall be paid to COMPANY and deemed NET SALES hereunder, subject to payment of applicable royalties by COMPANY, and payment of applicable unpaid Milestone Payments (as though such milestones were achieved by COMPANY); and

 

(iii)                                as to special or punitive damages, the parties shall share equally in any award.

 

7.6                                Cooperation .  Each party agrees to cooperate in any action under this Article 7 which is controlled by any other party, provided that the controlling party reimburses the cooperating party promptly for any reasonable out-of-pocket costs and expenses incurred by the cooperating party in connection with providing such assistance.

 

7.7                                Right to Sublicense .  So long as COMPANY remains the exclusive licensee of the PATENT RIGHTS in the FIELD in the TERRITORY, COMPANY will have the sole right to sublicense any alleged infringer in the FIELD in the TERRITORY for future use of the PATENT RIGHTS in accordance with the terms and conditions of this Agreement relating to sublicenses.  Any SUBLICENSE INCOME arising from such SUBLICENSE will be treated as set forth in Article 4.

 

8 .                                       PATENT CHALLENGE

 

8.1                                In the event that COMPANY or AFFILIATES brings a PATENT CHALLENGE against WHITEHEAD, or COMPANY or AFFILIATES assists another party in bringing a

 

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Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

PATENT CHALLENGE against WHITEHEAD (except as required under a court order or subpoena), WHITEHEAD, in its sole discretion, may terminate this Agreement immediately upon written notice to COMPANY without any liability and without any opportunity to cure by COMPANY.  COMPANY will have no right to recoup any royalties paid or other payments made during the period of challenge.

 

8.2                                In the event that SUBLICENSEE brings a PATENT CHALLENGE or assists another party in bringing a PATENT CHALLENGE against WHITEHEAD (except as required under a court order or subpoena), then WHITEHEAD may send a written demand to COMPANY to terminate such SUBLICENSE.  COMPANY agrees that it will, to the extent enforceable in accordance with applicable laws, terminate such SUBLICENSE within [***] days of its receipt of written notice by WHITEHEAD requesting such termination.  COMPANY will have no right to recoup any royalties paid or other payments made during the period of challenge.

 

8.3                                In the event that (a) COMPANY or AFFILIATES brings a PATENT CHALLENGE or assists another party in bringing a PATENT CHALLENGE against WHITEHEAD (except as required under a court order or subpoena) and WHITEHEAD does not terminate this Agreement; or (b) a SUBLICENSEE brings a PATENT CHALLENGE or assists another party in bringing a PATENT CHALLENGE against WHITEHEAD (except as required under a court order or subpoena) and COMPANY fails to terminate a SUBLICENSE to a SUBLICENSEE as required under Section 8.2 (except to the extent termination is unenforceable in accordance with applicable laws), then the following:

 

(i)                                      (A) solely with respect to Section 8.3(a), the license to PATENT RIGHTS granted under Section 2.1 will convert to a non-exclusive license upon notice from WHITEHEAD to COMPANY and the royalty rate payable to WHITEHEAD under Section 4.1(d) on NET SALES shall thereafter double, and (B) solely with respect to Section 8.3(b), (1) if the SUBLICENSE to PATENT RIGHTS had been granted to the applicable SUBLICENSEE under Section 2.1 on an exclusive basis, such SUBLICENSE will convert to a non-exclusive SUBLICENSE upon notice from WHITEHEAD to COMPANY, and (2) the royalty rate payable to WHITEHEAD under Section 4.1(d) on NET SALES by such SUBLICENSEE shall thereafter double;

 

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Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

(ii)                                   COMPANY will have no right to recoup any royalties paid or other payments made during the period of the PATENT CHALLENGE; and

 

(iii)                                COMPANY shall reimburse WHITEHEAD for all reasonable out-of-pocket legal fees and expenses incurred in its defense against the PATENT CHALLENGE.

 

9 .                                       INDEMNIFICATION AND INSURANCE

 

9.1                                Indemnification .

 

(a)                                  Indemnity .  COMPANY shall indemnify, defend, and hold harmless WHITEHEAD and its trustees, officers, faculty, students, employees, and agents and their respective successors, heirs and assigns (the “Indemnitees”), against any liability, damage, loss, or expense (including reasonable attorneys’ fees and expenses) incurred by or imposed upon any of the Indemnitees in connection with any claims, suits, investigations, actions, demands, or judgments brought by third parties arising out of or related to the exercise of any rights granted to COMPANY under this Agreement or any breach of this Agreement by COMPANY, except if arising out of or related to WHITEHEAD ’S breach of this Agreement or any gross negligence or willful misconduct of any indemnitee.

 

(b)                                  Procedures .  The Indemnitees agree to provide COMPANY with prompt written notice of any claim, suit, action, demand, or judgment for which indemnification is sought under Section 9.1(a) of this Agreement.  COMPANY agrees, at its own expense, to provide attorneys reasonably acceptable to the Indemnitees to defend against any such claim.  The Indemnitees shall cooperate fully with COMPANY in such defense and will permit COMPANY to conduct and control such defense and the disposition of such claim, suit, or action (including all decisions relative to litigation, appeal, and settlement); provided however, that any Indemnitee will have the right to retain its own counsel, at the expense of COMPANY, if representation of such Indemnitee by the counsel retained by COMPANY would be inappropriate because of actual or potential differences in the interests of such Indemnitee and any other party represented by such counsel.  COMPANY agrees to keep WHITEHEAD informed of the progress in the

 

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Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

defense and disposition of such claim and to consult with WHITEHEAD with regard to any proposed settlement.

 

9.2                                Insurance .  At such time as any product, process, or service relating to, or developed pursuant to, this Agreement is being used in a human clinical trial, commercially distributed or sold by COMPANY or one of its AFFILIATES or SUBLICENSEES, COMPANY shall obtain and carry in full force and effect commercial general liability insurance, product liability, and errors and omissions insurance which will protect COMPANY and Indemnitees with respect to events covered by Section 9.1(a) above.  Such insurance will:

 

(i)                                      be issued by a reputable insurer licensed to practice in the Commonwealth of Massachusetts;

 

(ii)                                   list WHITEHEAD as an additional insured thereunder;

 

(iii)                                require no less than [***] days written notice to be given to WHITEHEAD prior to any non-renewal or cancellation thereof.

 

The limits of such insurance will not be less than [***] per occurrence with an aggregate of [***] for bodily injury, death or property damage; and [***] per occurrence with an aggregate of [***] for errors and omissions.  COMPANY shall, upon WHITEHEAD ’S reasonable request, provide WHITEHEAD with Certificates of Insurance evidencing compliance with this Section 9.2.  COMPANY shall continue to maintain such insurance after the expiration or termination of this Agreement during any period in which COMPANY or any AFFILIATE or SUBLICENSEE continues (i) to make, use in human clinical trials, or sell a product that was a LICENSED PRODUCT under this Agreement or (ii) to perform a service that was a LICENSED PROCESS under this Agreement, and thereafter for a period of [***] years.

 

10 .                                REPRESENTATIONS AND WARRANTIES

 

10.1                         WHITEHEAD represents that as of the EFFECTIVE DATE, it is the owner of all right, title, and interest in and to the PATENT RIGHTS (excluding future PATENT RIGHTS claiming inventions in the disclosures in Appendix D), and that it has the lawful right to grant the rights as set forth in this Agreement.

 

10.2                         Limitations .  EXCEPT AS MAY OTHERWISE BE EXPRESSLY SET FORTH IN THIS AGREEMENT, WHITEHEAD MAKES NO REPRESENTATIONS OR

 

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Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

WARRANTIES OF ANY KIND CONCERNING THE PATENT RIGHTS, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT, VALIDITY OF PATENT RIGHTS CLAIMS, WHETHER ISSUED OR PENDING, AND THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE.  Specifically, and not to limit the foregoing, WHITEHEAD makes no warranty or representation (i) regarding the validity or scope of the PATENT RIGHTS, and (ii) that the exploitation of the PATENT RIGHTS or any LICENSED PRODUCT or LICENSED PROCESS will not infringe any patents or other intellectual property rights of WHITEHEAD or of a third party.

 

IN NO EVENT SHALL COMPANY, WHITEHEAD, OR ANY OF THEIR RESPECTIVE TRUSTEES, DIRECTORS, OFFICERS, EMPLOYEES, AFFILIATES OR AFFILIATED ENTITIES BE LIABLE FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING ECONOMIC DAMAGES OR INJURY TO PROPERTY AND LOST PROFITS, ARISING OUT OF THIS AGREEMENT, REGARDLESS OF WHETHER SUCH PERSON OR ENTITY SHALL BE ADVISED, SHALL HAVE OTHER REASON TO KNOW, OR IN FACT SHALL KNOW OF THE POSSIBILITY OF THE FOREGOING.

 

11 .                                ASSIGNMENT

 

COMPANY may assign its rights and obligations under this Agreement to an AFFILIATE or to a successor in connection with the merger, consolidation, or sale of all or substantially all of its assets or equity or that portion of its business to which this Agreement relates; provided however , that if the Agreement is assigned upon such merger, consolidation, or sale, the Agreement will immediately terminate if the proposed assignee has not agreed in writing to be bound by the terms and conditions of this Agreement within [***] days after the effective date of the assignment.

 

12 .                                GENERAL COMPLIANCE WITH LAWS

 

12.1                         Compliance with Laws .  COMPANY shall comply with all local, state, federal, and international laws and regulations relating to the development, manufacture, use, and sale of LICENSED PRODUCTS and LICENSED PROCESSES.

 

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Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

12.2                         Export Control .  COMPANY, AFFILIATES, and SUBLICENSEES shall comply with all United States laws and regulations controlling the export of certain commodities and technical data, including without limitation all Export Administration Regulations of the United States Department of Commerce.  Among other things, these laws and regulations prohibit or require a license for the export of certain types of commodities and technical data to specified countries.  COMPANY hereby gives written assurance that it will comply with, and will cause its AFFILIATES and SUBLICENSEES to comply with, all United States export control laws and regulations, that it bears sole responsibility for any violation of such laws and regulations by itself or its AFFILIATES or SUBLICENSEES, and that it will indemnify, defend, and hold WHITEHEAD harmless (in accordance with Section 9.1) for the consequences of any such violation.

 

12.3                         Non-Use of Name .  COMPANY, AFFILIATES and SUBLICENSEES shall not use the name of “Whitehead Institute for Biomedical Research” or any variation, adaptation, or abbreviation thereof, or any of its trustees, officers, faculty, students, employees (including [***], except as permitted under their separate consulting agreements between [***] and COMPANY effective on [***] and [***], and between [***] and COMPANY effective on [***] and [***]), or agents, or any trademark owned by WHITEHEAD or any terms of this Agreement in any promotional material or other public announcement or disclosure without the prior written consent of WHITEHEAD.  WHITEHEAD shall not use the name of “Rubius Therapeutics, Inc.”, “VL26, Inc.”, or any variation, adaptation, or abbreviation of either of the foregoing, or any of its directors, officers, employees or agents, or any trademark owned by COMPANY or any terms of this Agreement in any promotional material or other public announcement or disclosure without the prior written consent of COMPANY.  The foregoing notwithstanding, without the consent of WHITEHEAD, COMPANY may make (a) disclosures required by law, (b) factual statements during the TERM that COMPANY has a license from WHITEHEAD under one or more of the patents and/or patent applications comprising the PATENT RIGHTS, (c) disclosures of the terms of the Agreement to its or its AFFILIATE ’S or affiliated entity’s directors, officers, employees, consultants, advisors and agents, or actual or potential licensors, licensees, sublicensees, acquirers, investors and financing sources; provided that, COMPANY shall bind them to reasonable confidentiality obligations.  In addition, COMPANY shall have the right to issue a press release upon execution of this Agreement and the achievement of any

 

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Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

milestone, which will be reviewed and approved in advance by WHITEHEAD if WHITEHEAD is named in such press release and such naming is not required by law.

 

12.4                         Marking of LICENSED PRODUCTS .  To the extent commercially feasible and required by applicable patent laws, COMPANY shall mark, shall cause its AFFILIATES to mark and shall use commercially reasonable efforts to cause its SUBLICENSEES to mark, all LICENSED PRODUCTS that are manufactured or sold under this Agreement with the number of each issued patent under the PATENT RIGHTS that applies to such LICENSED PRODUCT.

 

13 .                                TERMINATION

 

13.1                         Voluntary Termination by COMPANY .  COMPANY will have the right to terminate this Agreement in its entirety or in part, including on a patent-by-patent and country-by-country basis, for any reason, (i) upon at least [***] months prior written notice to WHITEHEAD, such notice to state the date at least [***] months in the future upon which termination is to be effective, and (ii) upon payment of all undisputed amounts due to WHITEHEAD through such termination effective date.

 

13.2                         Cessation of Business .  If COMPANY and all AFFILIATES and SUBLICENSEES cease to carry on its business related to this Agreement for a period in excess of six (6) months, WHITEHEAD will have the right to terminate this Agreement immediately upon written notice to COMPANY.

 

13.3                         Termination for Default .

 

(a)                                  Nonpayment .  In the event COMPANY fails to pay any amounts due and payable to WHITEHEAD hereunder, and fails to make such payments within [***] days after receiving written notice of such failure, WHITEHEAD may terminate this Agreement immediately upon written notice to COMPANY.

 

(b)                                  Material Breach .  In the event COMPANY commits a material breach of its obligations under this Agreement, except for breach as described in Section 13.3(a), and fails to cure that breach within [***] days after receiving written notice thereof,

 

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17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

WHITEHEAD may terminate this Agreement immediately upon written notice to COMPANY.

 

(c)                                   Dispute Resolution .  For termination pursuant to Section 13.3(a) or 13.3(b), if COMPANY disputes in good faith that such breach entitles WHITEHEAD to terminate this Agreement, and COMPANY provides notice to WHITEHEAD of such dispute within the applicable cure period, such cure period shall be tolled while the process pursuant to Section 14 is conducted as described below, WHITEHEAD shall not have the right to terminate this Agreement unless and until a determination is reached in accordance with Section 14.3 that WHITEHEAD is entitled to terminate this Agreement and COMPANY fails to cure such breach prior to the later of (i) the remainder of the applicable cure period and (ii) the [***] day following such determination.  It is understood and acknowledged that during the pendency of such a dispute, all of the terms and conditions of this Agreement shall remain in effect and the Parties shall continue to perform all of their respective obligations hereunder.

 

13.4                         Effect of Termination .

 

(a)                                  Survival .  The following provisions shall survive the expiration or termination of this Agreement in its entirety:  Articles 1 (“Definitions”), 9 (“Indemnification and Insurance”), 10 (“Representations and Warranties”), 11 (“Assignment”), 14 (“Dispute Resolution”), 15 (“Confidentiality”), and 16 (“Miscellaneous”), and Sections 2.2 (last two sentences only), 4.1(d) (second sentence of second paragraph only, to the extent applicable as of the date of expiration or termination of this Agreement), 5.2 (obligation to provide a final report and related payment), 5.4 (“Record Keeping”), 12.2 indemnification for violation of export control laws), 12.3 (“Non-Use of Name”) and 13.4 (“Effect of Termination”).

 

(b)                                  Inventory .  Upon the early termination of this Agreement related to PATENT RIGHTS or parts thereof that cover LICENSED PRODUCTS, COMPANY, AFFILIATES, and SUBLICENSEES may complete and sell any work-in-progress and inventory of such LICENSED PRODUCTS that exist as of the effective date of termination, provided that:

 

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(i)                                      COMPANY pays WHITEHEAD the applicable running royalty or other amounts due on such sales of LICENSED PRODUCTS in accordance with the terms and conditions of this Agreement; and

 

(ii)                                   COMPANY, AFFILIATES, and SUBLICENSEES shall complete and sell all work-in-progress and inventory of such LICENSED PRODUCTS within [***] months after the effective date of termination.

 

(c)                                   Pre-termination Obligations .  In no event will termination of this Agreement release COMPANY, AFFILIATES, or SUBLICENSEES from the obligation to pay any amounts that became due on or before the effective date of termination.

 

14 .                                DISPUTE RESOLUTION

 

14.1                         Mandatory Procedures .  The parties agree that any dispute arising out of or relating to this Agreement shall be resolved solely by means of the procedures set forth in this Article, and that such procedures constitute legally binding obligations that are an essential provision of this Agreement.  If any party fails to observe the procedures of this Article, as may be modified by their written agreement, the other parties may bring an action for specific performance of these procedures in any court of competent jurisdiction.

 

14.2                         Equitable Remedies .  Although the procedures specified in this Article are the sole and exclusive procedures for the resolution of disputes arising out of or relating to this Agreement, any party may seek a preliminary injunction or other provisional equitable relief if, in its reasonable judgment, such action is necessary to avoid irreparable harm to itself or to preserve its rights under this Agreement.

 

14.3                         Dispute Resolution Procedures .

 

(a)                                  Mediation .  In the event any dispute arising out of or relating to this Agreement remains unresolved within [***] days from the date the affected party informed the other parties of such dispute, any party may initiate mediation upon written notice to the other party (“Notice Date”), whereupon all parties shall be obligated to engage in a mediation proceeding under the then current Center for Public Resources (“CPR”) Model Procedure for Mediation of Business Disputes (http://www.cpradr.org), except that specific provisions of this Article will override inconsistent provisions of the

 

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Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

CPR Model Procedure.  The mediator will be selected from the CPR Panels of Neutrals.  If the parties cannot agree upon the selection of a mediator within [***] business days after the Notice Date, then upon the request of any party, the CPR shall appoint the mediator.  The parties shall attempt to resolve the dispute through mediation until the first of the following occurs:

 

(i)                                      the parties reach a written settlement;

 

(ii)                                   the mediator notifies the parties in writing that they have reached an impasse;

 

(iii)                                the parties agree in writing that they have reached an impasse; or

 

(iv)                               the parties have not reached a settlement within [***] days after the Notice Date.

 

(b)                                  Trial Without Jury .  If the parties fail to resolve the dispute through mediation, or if no party elects to initiate mediation, each party will have the right to pursue any other remedies legally available to resolve the dispute, provided, however, that the parties expressly waive any right to a jury trial in any legal proceeding under this Article 14.

 

14.4                         Performance to Continue .  Each party shall continue to perform its undisputed obligations under this Agreement pending final resolution of any dispute arising out of or relating to this Agreement; provided, however, that a party may suspend performance of its undisputed obligations during any period in which any other party fails or refuses to perform its undisputed obligations.  Nothing in this Article is intended to relieve COMPANY from its obligation to make undisputed payments pursuant to Articles 4 and 6 of this Agreement.

 

14.5                         Statute of Limitations .  The parties agree that all applicable statutes of limitation and time-based defenses (such as estoppel and laches) will be tolled while the procedures set forth in Section 14.3(a) are pending.  The parties shall cooperate in taking any actions necessary to achieve this result.

 

 

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Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

15 .                                CONFIDENTIALITY

 

15.1                         Non-disclosure and Non-use .

 

(a)                                  All information disclosed by one party to the other party hereunder (“Information”) shall be maintained in confidence by the receiving party and shall not be disclosed to any third party or used for any purpose except as set forth herein without the prior written consent of the disclosing party, for a period of [***] years from disclosure of such information, except to the extent that such information:

 

(i)                                      is known by receiving party at the time of its receipt, and not through a prior disclosure by the disclosing party, as documented by the receiving party’s business records;

 

(ii)                                   is or becomes part of the public domain or generally known to the public through no fault of the receiving party;

 

(iii)                                is subsequently disclosed to the receiving party by a third party who may lawfully do so and is not under an obligation of confidentiality to the disclosing party;

 

(iv)                               is developed by the receiving party independently of Information received from the disclosing party, as documented by the receiving party’s business records;

 

(b)                                  Notwithstanding the foregoing, a party may disclose Information:

 

(i)                                      to governmental or other regulatory agencies in order to obtain patents or to gain or maintain approval to conduct clinical trials or to market LICENSED PRODUCTS or LICENSED PROCESSES, provided however that such disclosure may be only to the extent reasonably necessary to obtain patents or authorizations.

 

(ii)                                   deemed necessary by COMPANY to be disclosed to AFFILIATES, affiliated entities, SUBLICENSEES, agents, consultants, and/or other third parties for the research, development, manufacture and/or commercialization of a LICENSED PRODUCT or LICENSED PROCESS, and/or in connection with a licensing/sublicensing transaction and/or a permitted assignment under this Agreement, and/or loan, financing or investment and/or acquisition, merger, consolidation or similar transaction (or for such entities to determine their interest in performing such activities) in each case on the condition that any third party to whom such disclosures are made agree to be bound by a confidentiality agreement.

 

Information that is disclosed under 15.1(b)(i) or 15.1(b)(ii) shall remain otherwise subject to the confidentiality and non-use provisions hereof.

 

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17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

15.2                         Judicial or Administrative Process .  If a party is required by judicial or administrative process to disclose Information that is subject to the non-disclosure provisions of this Section 15, such party, to the extent permitted by law, shall promptly inform the other party of the disclosure that is being sought in order to provide the other party an opportunity to challenge or limit the disclosure obligations.

 

Information that is disclosed by judicial or administrative process shall remain otherwise subject to the confidentiality and non-use provisions hereof, and the disclosing party, pursuant to law or court order, shall take all steps reasonably necessary, including without limitation obtaining an order of confidentiality, to ensure the continued confidential treatment of such Information.

 

15.3                         SEC Filings .  Either party may publicly disclose the terms of this Agreement to the extent required, in the reasonable opinion of such party’s legal counsel, to comply with applicable laws, including without limitation the rules and regulations promulgated by the United States Securities and Exchange Commission (the “SEC”).  Notwithstanding the foregoing, before disclosing this Agreement or any of the terms hereof pursuant to this Section 15.3, the parties will consult with one another on the terms of this Agreement to be redacted in making any such disclosure, but such consultation shall not prevent a party from fulfilling its obligations under law.  If a party discloses this Agreement or any of the terms hereof in accordance with this Section 15.3, such party agrees, at its own expense, to seek confidential treatment of portions of this Agreement or such terms, as may be reasonably requested by the other party.

 

16 .                                MISCELLANEOUS

 

16.1                         Notice .  Any notices required or permitted under this Agreement will be in writing, will specifically refer to this Agreement, and will be sent by hand, recognized national overnight courier, confirmed facsimile transmission, confirmed electronic mail, or registered or certified mail, postage prepaid, return receipt requested, to the following addresses or facsimile numbers of the parties:

 

If to WHITEHEAD:
Whitehead Institute for Biomedical Research
9 Cambridge Center
Cambridge, MA 02142

 

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17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

Attention:  Intellectual Property Office
Tel:  617-258-5000

 

If to COMPANY:
Rubius Therapeutics, Inc.
620 Memorial Drive, Suite 100 West
Cambridge, MA 02139
Attention:
Tel:

 

All notices under this Agreement will be deemed effective upon receipt.  A party may change its contact information immediately upon written notice to the other parties in the manner provided in this Section 16.1.

 

16.2                         Governing Law .  This Agreement and all disputes arising out of or related to this Agreement, or the performance, enforcement, breach or termination hereof, and any remedies relating thereto, will be construed, governed, interpreted and applied in accordance with the laws of the Commonwealth of Massachusetts, U.S.A., without regard to conflict of laws principles, except that questions affecting the construction and effect of any patent will be determined by the law of the country in which the patent will have been granted.  The state and federal courts having jurisdiction over Cambridge, MA, U.S.A., provide the exclusive forum for any court action between the parties relating to this Agreement COMPANY submits to the jurisdiction of such courts and waives any claim that such court lacks jurisdiction over COMPANY or its AFFILIATES or constitutes an inconvenient or improper forum.

 

16.3                         Force Majeure .  No 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.

 

16.4                         Amendment and Waiver .  This Agreement may be amended, supplemented, or otherwise modified only by means of a written instrument signed by all parties.  Any waiver of any rights or failure to act in a specific instance will relate only to such instance and will not be construed as an agreement to waive any rights or fail to act in any other instance, whether or not similar.

 

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Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

16.5                         Severability .  In the event that any provision of this Agreement will be held invalid or unenforceable for any reason, such invalidity or unenforceability will not affect any other provision of this Agreement, and the parties shall negotiate in good faith to modify the Agreement to preserve (to the extent possible) their original intent.  If the parties fail to reach a modified agreement within [***] days after the relevant provision is held invalid or unenforceable, then the dispute will be resolved in accordance with the procedures set forth in Article 14.  While the dispute is pending resolution, this Agreement will be construed as if such provision were deleted by agreement of the parties.

 

16.6                         Binding Effect .  This Agreement will be binding upon and inure to the benefit of the parties and their respective permitted successors and assigns.

 

16.7                         Headings; Interpretation .  All headings are for convenience only and will not affect the meaning of any provision of this Agreement.  Except as otherwise explicitly specified to the contrary, (a) words in the singular or plural form include the plural and singular form, respectively; (b) unless the context requires a different interpretation, the word “or” has the inclusive meaning that is typically associated with the phrase “and/or”; (c) the terms “including,” “include(s),” “such as,” “e.g.” and “for example” will be deemed to be followed by “without limitation”; and (d) “$” or “dollars” means U.S. Dollars.

 

16.8                         Entire Agreement .  This Agreement constitutes the entire agreement between the parties with respect to its subject matter and supersedes all prior agreements or understandings between the parties relating to its subject matter.  Notwithstanding the foregoing, WHITEHEAD and COMPANY entered into a Bilateral Nondisclosure Agreement, dated March 10, 2014, as amended on March 12,2014 (as amended, the “BNDA”), and such BNDA shall continue to apply with respect to information which was considered Confidential Information (as defined therein) as of the Effective Date.

 

36

 


***Confidential Treatment Requested***

 



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

IN WITNESS WHEREOF , the parties have caused this Agreement to be executed by their duly authorized representatives.

 

 

For WHITEHEAD

 

For COMPANY:

 

 

 

By:

/s/ Carla DeMaria

 

By:

/s/ Avak Kahvejian

 

 

 

Name: Carla DeMaria

 

Name: Avak Kahvejian

 

 

 

Title: Director of Intellectual Property

 

Title: President & CEO

& Sponsored Programs

 

 

 

 

 

Date:

January 29, 2016

 

Date:

January 29, 2016

 

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***Confidential Treatment Requested***

 



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

APPENDIX A

 

List of Patent Applications and Patents

 

[***]

 

38

 


***Confidential Treatment Requested***

 



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

APPENDIX B

 

List of Countries (excluding United States) for which
PATENT RIGHTS Applications Will Be Filed. Prosecuted and Maintained

 

[***]

 

39

 


***Confidential Treatment Requested***

 



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

APPENDIX C

 

RUBIUS THERAPEUTICS, INC.
620 Memorial Drive
Suite 100 West
Cambridge, MA 02139

 

Dear Sirs:

 

Pursuant to Section 4.1(h) of that certain EXCLUSIVE PATENT LICENSE AGREEMENT dated as of January 28, 2016 by and between WHITEHEAD INSTITUTE FOR BIOMEDICAL RESEARCH (“Whitehead”) and RUBIUS THERAPEUTICS, INC. (the “Company”), in connection with the issuance of the Shares (as defined in such Exclusive Patent License Agreement), Whitehead represents, warrants and covenants as follows:

 

1.                                       It is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Shares.

 

2.                                       It is acquiring the Shares for its own account for investment only, and not with a view to, or for sale in connection with, any “distribution” of the Shares in violation of the Securities Act of 1933 (the “Securities Act”), or any rule or regulation under the Securities Act.

 

3.                                       It can afford a complete loss of the value of the Shares and is able to bear the economic risk of holding such Shares for an indefinite period.

 

4.                                       It understands that (i) the Shares have not been registered under the Securities Act by reason of a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of the investment intent as expressed herein, and are “restricted securities” within the meaning of Rule 144 under the Securities Act; (ii) the Shares cannot be sold, transferred or otherwise disposed of unless they are subsequently registered under the Securities Act or an exemption from registration is then available; (iii) in any event, the exemption from registration under Rule 144 or otherwise may not be available for at least one year and even then will not be available unless a public market then exists for the Common Stock, adequate information concerning the Company is then available to the public, and other terms and conditions of Rule 144 are complied with; and (iv) there is now no registration statement on file with the Securities and Exchange Commission with respect to any stock of the Company and the Company has no obligation or current intention to register the Shares under the Securities Act.

 

5.                                       It further acknowledges and understands that the Company is under no obligation to register the Shares.  It understands that the certificate evidencing the Shares will be endorsed with the following legend, in addition to any legends that may be required by applicable law:

 

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF.  NO SUCH TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE

 

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***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

 

6.                                       It is an accredited investor as defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

 

Very truly yours,

 

 

 

Whitehead Institute

 

for Biomedical Research

 

 

 

 

 

By:

 

 

 

 

 

Name:

 

 

 

 

 

Title:

 

 

 

 

 

Date:

 

 

 

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***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

APPENDIX D

 

List of disclosures

 

1.                                       [***]

 

2.                                       [***]

 


***Confidential Treatment Requested***

 


 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

This FIRST AMENDMENT, effective as of December 12, 2017 (the “AMENDMENT EFFECTIVE DATE”), amends the Exclusive Patent License Agreement dated January 28, 2016 (the “LICENSE”), between the Whitehead Institute for Biomedical Research (“WHITEHEAD”) and Rubius Therapeutics, Inc . (“COMPANY”).

 

WHEREAS , WHITEHEAD and COMPANY wish to modify Appendix A of the LICENSE;

 

WHEREAS , WHITEHEAD and Tufts University having offices at 136 Harrison Avenue, Boston, Massachusetts 02111 (“TUFTS”) are co-owners of certain FIRST AMENDMENT PATENT RIGHTS, as later defined herein, relating to [***];

 

WHEREAS , WHITEHEAD and TUFTS entered into the Joint Invention Administration Agreement dated November 9, 2017 (WHITEHEAD Reference:  J7269), giving WHITEHEAD the right to grant licenses under said FIRST AMENDMENT PATENT RIGHTS;

 

WHEREAS , WHITEHEAD and TUFTS desire to have the PATENT RIGHTS developed and commercialized to benefit the public, and WHITEHEAD is willing to grant a license thereunder;

 

WHEREAS , COMPANY desires to add such FIRST AMENDMENT PATENT RIGHTS to the LICENSE.

 

NOW, THEREFORE , WHITEHEAD and COMPANY hereby agree as follows:

 

Capitalized terms used herein and not defined herein shall have the respective meanings ascribed to such terms in the LICENSE.

 


***Confidential Treatment Requested***

 



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

1.              The following (hereinafter the “FIRST AMENDMENT PATENT RIGHTS”) is included under the definition of PATENT RIGHTS and is added to Appendix A of the LICENSE:

 

[***].

 

Appendix A of the LICENSE is deleted in its entirety and replaced with the Appendix A of this FIRST AMENDMENT, attached hereto.

 

2.              For the avoidance of doubt, per Section 6.3 of the LICENSE, payment of all fees and costs, including attorneys’ fees relating to the filing, prosecution, and maintenance of the FIRST AMENDMENT PATENT RIGHTS shall be the responsibility of COMPANY, whether such amounts were incurred before or after the AMENDMENT EFFECTIVE DATE.

 

3.              Section 2.5 (a) of the LICENSE is deleted in its entirety and replaced with the following:

 

(a)           WHITEHEAD .  WHITEHEAD retains the right to practice under the PATENT RIGHTS for research, teaching, and educational purposes including sponsored research and collaborations.  TUFTS retains the right to practice under the FIRST AMENDMENT PATENT RIGHTS for research, teaching, and educational purposes including sponsored research and collaborations.

 

4.              Section 2.5 (b) of the LICENSE is deleted in its entirety and replaced with the following:

 

(b)           Academic and Not-For-Profit Research Institutes .  WHITEHEAD retains the right to grant non-exclusive licenses to academic and not-for-profit research institutes to practice under the PATENT RIGHTS for research, teaching, and educational purposes only; excluding use in sponsored research.  TUFTS retains the right to grant non-exclusive licenses to academic and not-for-profit research institutes to practice under the FIRST AMENDMENT PATENT RIGHTS for research, teaching, and educational purposes only; excluding use in sponsored research.

 

2

 


***Confidential Treatment Requested***

 



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

5.              Article 9 (INDEMNIFICATION AND INSURANCE) and Article 10 (REPRESENTATIONS AND WARRANTIES) of the LICENSE are deleted in their entirety and replaced with the following:

 

9.              INDEMNIFICATION AND INSURANCE

 

9.1          Indemnification .

 

(a)           Indemnity .  COMPANY shall indemnify, defend, and hold harmless WHITEHEAD, TUFTS, and their trustees, officers, faculty, students, employees, and agents and their respective successors, heirs and assigns (the “Indemnitees”), against any liability, damage, loss, or expense (including reasonable attorneys’ fees and expenses) incurred by or imposed upon any of the Indemnitees in connection with any claims, suits, investigations, actions, demands, or judgments brought by third parties arising out of or related to the exercise of any rights granted to COMPANY under this Agreement or any breach of this Agreement by COMPANY, except if arising out of or related to WHITEHEAD ’S and/or TUFTS’s breach of this Agreement or any gross negligence or willful misconduct of any Indemnitee.

 

(b)           Procedures .  The Indemnitees agree to provide COMPANY with prompt written notice of any claim, suit, action, demand, or judgment for which indemnification is sought under Section 9.1(a) of this Agreement.  COMPANY agrees, at its own expense, to provide attorneys reasonably acceptable to the Indemnitees to defend against any such claim.  The Indemnitees shall cooperate fully with COMPANY in such defense and will permit COMPANY to conduct and control such defense and the disposition of such claim, suit, or action (including all decisions relative to litigation, appeal, and settlement); provided however, that any Indemnitee will have the right to retain its own counsel, at the expense of COMPANY, if representation of such Indemnitee by the counsel retained by COMPANY would be inappropriate because of actual or potential differences in the interests of such Indemnitee and any other party represented by such counsel.  COMPANY agrees to keep WHITEHEAD and TUFTS informed of the progress in the defense and disposition of such claim and to consult with WHITEHEAD and TUFTS with regard to any proposed settlement.

 

3

 


***Confidential Treatment Requested***

 



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

9.2          Insurance .  At such time as any product, process, or service relating to, or developed pursuant to, this Agreement is being used in a human clinical trial, commercially distributed or sold by COMPANY or one of its AFFILIATES or SUBLICENSEES, COMPANY shall obtain and carry in full force and effect commercial general liability insurance, product liability, and errors and omissions insurance which will protect COMPANY and Indemnitees with respect to events covered by Section 9.1(a) above.  Such insurance will:

 

(i)                                      be issued by a reputable insurer licensed to practice in the Commonwealth of Massachusetts;

 

(ii)                                   list WHITEHEAD and TUFTS as an additional insured thereunder;

 

(iii)                                require no less than [***] days written notice to be given to WHITEHEAD and TUFTS prior to any non-renewal or cancellation thereof.

 

The limits of such insurance will not be less than [***] per occurrence with an aggregate of [***] for bodily injury, death or property damage; and [***] per occurrence with an aggregate of [***] for errors and omissions.  COMPANY shall, upon WHITEHEAD’S or TUFTS’s reasonable request, provide WHITEHEAD or TUFTS with Certificates of Insurance evidencing compliance with this Section 9.2.  COMPANY shall continue to maintain such insurance after the expiration or termination of this Agreement during any period in which COMPANY or any AFFILIATE or SUBLICENSEE continues (i) to make, use in human clinical trials, or sell a product that was a LICENSED PRODUCT under this Agreement or (ii) to perform a service that was a LICENSED PROCESS under this Agreement, and thereafter for a period of [***] years.

 

10.           REPRESENTATIONS AND WARRANTIES

 

10.1        WHITEHEAD represents that as of the AMENDMENT EFFECTIVE DATE, it is the owner of all right, title, and interest in and to [***] and [***] of the PATENT RIGHTS, and it as the lawful right to grant the rights as set forth in this Agreement.  WHITEHEAD and TUFTS represent that as of the AMENDMENT EFFECTIVE DATE, they are the owners of all right, title, and interest in and to [***], and they have the lawful right to grant the rights as set forth in this Agreement.

 

4

 


***Confidential Treatment Requested***

 



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

10.2        Limitations .  EXCEPT AS MAY OTHERWISE BE EXPRESSLY SET FORTH IN THIS AGREEMENT, WHITEHEAD AND TUFTS MAKE NO REPRESENTATIONS OR WARRANTIES OF ANY KIND CONCERNING THE PATENT RIGHTS, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT, VALIDITY OF PATENT RIGHTS CLAIMS, WHETHER ISSUED OR PENDING, AND THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE.  Specifically, and not to limit the foregoing, WHITEHEAD and TUFTS make no warranty or representation (i) regarding the validity or scope of the PATENT RIGHTS, and (ii) that the exploitation of the PATENT RIGHTS or any LICENSED PRODUCT or LICENSED PROCESS will not infringe any patents or other intellectual property rights of WHITEHEAD, TUFTS, or of a third party.

 

IN NO EVENT SHALL COMPANY, WHITEHEAD, TUFTS, OR ANY OF THEIR RESPECTIVE TRUSTEES, DIRECTORS, OFFICERS, EMPLOYEES, AFFILIATES OR AFFILIATED ENTITIES BE LIABLE FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING ECONOMIC DAMAGES OR INJURY TO PROPERTY AND LOST PROFITS, ARISING OUT OF THIS AGREEMENT, REGARDLESS OF WHETHER SUCH PERSON OR ENTITY SHALL BE ADVISED, SHALL HAVE OTHER REASON TO KNOW, OR IN FACT SHALL KNOW OF THE POSSIBILITY OF THE FOREGOING.

 

6.              Section 12.3 (Non-Use of Name) of the LICENSE is deleted in its entirety and replaced with the following:

 

12.3        Non-Use of Name .  COMPANY, AFFILIATES, and SUBLICENSEES shall not use the name of “Whitehead Institute for Biomedical Research”, “Tufts University”, or any variation, adaptation, or abbreviation thereof, or any of its trustees, officers, faculty, students, employees (including [***], except as permitted under their separate consulting agreements between [***] and COMPANY effective on [***] and [***], and between [***] and COMPANY effective on [***] and [***]), or agents, or

 

5

 


***Confidential Treatment Requested***

 



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

any trademark owned by WHITEHEAD, TUFTS, or any terms of this Agreement in any promotional material or other public announcement or disclosure without the prior written consent of WHITEHEAD or TUFTS, as applicable.  WHITEHEAD and TUFTS shall not use the name of “Rubius Therapeutics, Inc.”, “VL26, Inc.”, or any variation, adaptation, or abbreviation of either of the foregoing, or any of its directors, officers, employees or agents, or any trademark owned by COMPANY or any terms of this Agreement in any promotional material or other public announcement or disclosure without the prior written consent of COMPANY.  The foregoing notwithstanding, without the consent of WHITEHEAD or TUFTS, COMPANY may make (a) disclosures required by law, (b) factual statements during the TERM that COMPANY has a license from WHITEHEAD under one or more of the patents and/or patent applications comprising the PATENT RIGHTS, (c) disclosures of the terms of the Agreement to its or its AFFILIATE ’S or affiliated entity’s directors, officers, employees, consultants, advisors and agents, or actual or potential licensors, licensees, sublicensees, acquirers, investors and financing sources; provided that, COMPANY shall bind them to reasonable confidentiality obligations.  In addition, COMPANY shall have the right to issue a press release upon execution of this Agreement and the achievement of any milestone, which will be reviewed and approved in advance by WHITEHEAD or TUFTS, if WHITEHEAD or TUFTS is named in such press release and such naming is not required by law.

 

7.              Section 16.1 (Notice) of the LICENSE is deleted in its entirety and replaced with the following:

 

16.1        Notice .  Any notices required or permitted under this Agreement will be in writing, will specifically refer to this Agreement, and will be sent by hand, recognized national overnight courier, confirmed facsimile transmission, confirmed electronic mail, or registered or certified mail, postage prepaid, return receipt requested, to the following addresses or facsimile numbers of the parties:

 

If to WHITEHEAD:
Whitehead Institute for Biomedical Research
455 Main Street

 

6

 


***Confidential Treatment Requested***

 



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

Cambridge, MA 02142
Attention:  Intellectual Property Office
Tel:  617-258-5000

 

If to TUFTS:
Tufts University
136 Harrison Avenue, 75K-950
Boston, MA 02111
Attention:  Office for Technology Licensing & Industry Collaboration

 

If to COMPANY:
Rubius Therapeutics, Inc.
325 Vassar St Suite 1A
Cambridge, MA 02139
Attention:  Legal Affairs

 

All notices under this Agreement will be deemed effective upon receipt.  A party may change its contact information immediately upon written notice to the other parties in the manner provided in this Section 16.1.

 

8.              Appendix D (List of disclosures) of the LICENSE is deleted in its entirety.

 

9.              As consideration for this Amendment, COMPANY shall pay WHITEHEAD a case addition fee of [***] within [***] days of the AMENDMENT EFFECTIVE DATE.  This payment is nonrefundable.

 

10.           The LICENSE, as amended hereby, is hereby ratified and confirmed in all respects and shall continue in full force and effect.  The LICENSE will, together with this FIRST AMENDMENT, be read and construed as a single instrument.  All other terms and conditions of the LICENSE are confirmed and remain in full force and effect.  This FIRST AMENDMENT shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective successors and assigns.

 

7

 


***Confidential Treatment Requested***

 



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

IN WITNESS WHEREOF , the parties have caused this Agreement to be executed by their duly authorized representatives.

 

 

For WHITEHEAD

 

For COMPANY:

 

 

 

By:

/s/ Carla DeMaria

 

By:

/s/ Torben Straight Nissen

 

 

 

Name: Carla DeMaria

 

Name: Torben Straight Nissen

 

 

 

Title: Director of Intellectual Property

 

Title: President

& Sponsored Programs

 

 

 

 

 

Date:

December 12, 2017

 

Date:

December 12, 2017

 

8

 


***Confidential Treatment Requested***

 



 

***Text Omitted and Filed Separately with the Securities and Exchange Commission

Confidential Treatment Requested Under

17 C.F.R. Sections 200.80(b)(4) and 240.24b-2

 

APPENDIX A

 

List of Patent Applications and Patents

 

[***]

 


***Confidential Treatment Requested***

 




Exhibit 10.14

RUBIUS THERAPEUTICS, INC.

 

[FORM OF] DIRECTOR INDEMNIFICATION AGREEMENT

 

This Indemnification Agreement (“ Agreement ”) is made as of [        ] by and between Rubius Therapeutics, Inc., a Delaware corporation (the “ Company ”), and [Director] (“ Indemnitee ”).

 

RECITALS

 

WHEREAS, the Company desires to attract and retain the services of highly qualified individuals, such as Indemnitee, to serve the Company;

 

WHEREAS, in order to induce Indemnitee to provide or continue to provide services to the Company, the Company wishes to provide for the indemnification of, and advancement of expenses to, Indemnitee to the maximum extent permitted by law;

 

WHEREAS, the Amended and Restated Certificate of Incorporation (as amended and in effect from time to time, the “ Charter ”) and the Amended and Restated Bylaws (as amended and in effect from time to time, the “ Bylaws ”) of the Company require indemnification of the officers and directors of the Company, and Indemnitee may also be entitled to indemnification pursuant to the General Corporation Law of the State of Delaware (the “ DGCL ”);

 

WHEREAS, the Charter, the Bylaws 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 Board of Directors of the Company (the “ Board ”) has determined that the increased difficulty in attracting and retaining highly qualified persons such as Indemnitee is detrimental to the best interests of the Company’s stockholders;

 

WHEREAS, it is reasonable and prudent 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, regardless of any amendment or revocation of the Charter or the Bylaws, 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 indemnification provided in the Charter, the Bylaws 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 has certain rights to indemnification and/or insurance provided by [Affiliated Entity] (“[Affiliated Entity]”) which Indemnitee and [Affiliated Entity ] intend to be secondary to the primary obligation of the Company to indemnify Indemnitee as provided in

 

1



 

this Agreement, with the Company’s acknowledgment and agreement to the foregoing being a material condition to Indemnitee’s willingness to serve or continue to serve on the Board.]

 

NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:

 

Section 1.                                            Services to the Company .  Indemnitee agrees to [continue to] serve as a director of the Company.  Indemnitee may at any time and for any reason resign from such position (subject to any other contractual obligation or any obligation imposed by law), in which event the Company shall have no obligation under this Agreement to continue Indemnitee in such position.  This Agreement shall not be deemed an employment contract between the Company (or any of its subsidiaries or any Enterprise) and Indemnitee.

 

Section 2.                                            Definitions .

 

As used in this Agreement:

 

(a)                                  Change in Control ” shall mean (i) the sale of all or substantially all of the assets of the Company on a consolidated basis to an unrelated person or entity, (ii) a merger, reorganization or consolidation pursuant to which the holders of the Company’s outstanding voting power and outstanding stock immediately prior to such transaction do not own a majority of the outstanding voting power and outstanding stock or other equity interests of the resulting or successor entity (or its ultimate parent, if applicable) immediately upon completion of such transaction, (iii) the sale of all of the Stock of the Company to an unrelated person, entity or group thereof acting in concert, or (iv) any other transaction in which the owners of the Company’s outstanding voting power immediately prior to such transaction do not own at least a majority of the outstanding voting power of the Company or any successor entity immediately upon completion of the transaction other than as a result of the acquisition of securities directly from the Company.

 

(b)                                  Corporate Status ” describes the status of a person as a current or former director of the Company or current or former director, manager, partner, officer, employee, agent or trustee of any other Enterprise which such person is or was serving at the request of the Company.

 

(c)                                   Enforcement Expenses ” shall include all reasonable attorneys’ fees, court costs, transcript costs, fees of experts, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other out-of-pocket disbursements or expenses of the types customarily incurred in connection with an action to enforce indemnification or advancement rights, or an appeal from such action.  Expenses, however, shall not include fees, salaries, wages or benefits owed to Indemnitee.

 

(d)                                  Enterprise ” shall mean any corporation (other than the Company), partnership, joint venture, trust, employee benefit plan, limited liability company, or other legal entity of which Indemnitee is or was serving at the request of the Company as a director, manager, partner, officer, employee, agent or trustee.

 

2



 

(e)                                   Expenses ” shall include all reasonable attorneys’ fees, court costs, transcript costs, fees of experts, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other out-of-pocket disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding or an appeal resulting from a Proceeding.  Expenses, however, shall not include amounts paid in settlement by Indemnitee, the amount of judgments or fines against Indemnitee or fees, salaries, wages or benefits owed to Indemnitee.

 

(f)                                    Independent Counsel ” means a law firm, or a partner (or, if applicable, member or shareholder) of such a law firm, that is experienced in matters of Delaware corporation law and neither presently is, nor in the past five (5) years has been, retained to represent: (i) the Company, any subsidiary of the Company, any Enterprise or Indemnitee in any matter material to any such party; or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder.  Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.  The Company agrees to pay the reasonable fees and expenses of the Independent Counsel referred to above and to fully indemnify such counsel against any and all expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

 

(g)                                   The term “ Proceeding ” shall include 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 in the right of the Company or otherwise and whether of a civil, criminal, administrative, regulatory or investigative nature, and whether formal or informal, in which Indemnitee was, is or will be involved as a party or otherwise by reason of the fact that Indemnitee is or was a director of the Company or is or was serving at the request of the Company as a director, manager, partner, officer, employee, agent or trustee of any Enterprise or by reason of any action taken by Indemnitee or of any action taken on his or her part while acting as a director of the Company or while serving at the request of the Company as a director, manager, partner, officer, employee, agent or trustee of any Enterprise, in each case whether or not serving in such capacity at the time any liability or expense is incurred for which indemnification, reimbursement or advancement of expenses can be provided under this Agreement; provided , however , that the term “Proceeding” shall not include any action, suit or arbitration, or part thereof, initiated by Indemnitee to enforce Indemnitee’s rights under this Agreement as provided for in Section 12(a) of this Agreement.

 

Section 3.                                            Indemnity in Third-Party Proceedings .  The Company shall indemnify Indemnitee to the extent set forth in this Section 3 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding, other than a Proceeding by or in the right of the Company to procure a judgment in its favor.  Pursuant to this Section 3, Indemnitee shall be indemnified against all Expenses, judgments, fines, penalties, excise taxes, and amounts paid in settlement actually and reasonably incurred by Indemnitee or on his or her behalf in connection

 

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with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company and, in the case of a criminal proceeding, had no reasonable cause to believe that his or her conduct was unlawful.

 

Section 4.                                            Indemnity in Proceedings by or in the Right of the Company .  The Company shall indemnify Indemnitee to the extent set forth in this Section 4 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding by or in the right of the Company to procure a judgment in its favor.  Pursuant to this Section 4, Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by Indemnitee or on his or her behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company.  No indemnification for Expenses shall be made under this Section 4 in respect of any claim, issue or matter as to which Indemnitee shall have been finally adjudged by a court to be liable to the Company, unless and only to the extent that the Delaware Court of Chancery (the “ Delaware Court ”) shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification for such expenses as the Delaware Court shall deem proper.

 

Section 5.                                            Indemnification for Expenses of a Party Who is Wholly or Partly Successful .  Notwithstanding any other provisions of this Agreement and except as provided in Section 7, to the extent that Indemnitee is a party to or a participant in any Proceeding and is successful in such Proceeding or in defense of any claim, issue or matter therein, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or her in connection therewith.  If Indemnitee is not wholly successful in such Proceeding but is successful 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 Indemnitee or on his or her 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.

 

Section 6.                                            Reimbursement for Expenses of a Witness or in Response to a Subpoena .  Notwithstanding any other provision of this Agreement, to the extent that Indemnitee, by reason of his or her Corporate Status, (i) is a witness in any Proceeding to which Indemnitee is not a party and is not threatened to be made a party or (ii) receives a subpoena with respect to any Proceeding to which Indemnitee is not a party and is not threatened to be made a party, the Company shall reimburse Indemnitee for all Expenses actually and reasonably incurred by him or her or on his or her behalf in connection therewith.

 

Section 7.                                            Exclusions .  Notwithstanding any provision in this Agreement to the contrary, the Company shall not be obligated under this Agreement:

 

(a)                                  to indemnify for amounts otherwise indemnifiable hereunder (or for which advancement is provided hereunder) if and to the extent that Indemnitee has otherwise actually received such amounts under any insurance policy, contract, agreement or otherwise; provided

 

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that the foregoing shall not affect the rights of Indemnitee or the Secondary Indemnitors as set forth in Section 13(c);

 

(b)                                  to indemnify 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, or from the purchase or sale by Indemnitee of such securities in violation of Section 306 of the Sarbanes Oxley Act of 2002, as amended (“ SOX ”);

 

(c)                                   to indemnify with respect to any Proceeding, or part thereof, brought by Indemnitee against the Company, any legal entity which it controls, any director or officer thereof or any third party, unless (i) the Board has consented to the initiation of such Proceeding or part thereof and (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law; provided , however , that this Section 7(c) shall not apply to (A) counterclaims or affirmative defenses asserted by Indemnitee in an action brought against Indemnitee or (B) any action brought by Indemnitee for indemnification or advancement from the Company under this Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company in the suit for which indemnification or advancement is being sought as described in Section 12; or

 

(d)                                  to provide any indemnification or advancement of expenses that is prohibited by applicable law (as such law exists at the time payment would otherwise be required pursuant to this Agreement).

 

Section 8.                                            Advancement of Expenses .  Subject to Section 9(b), the Company shall advance, to the extent not prohibited by law, the Expenses incurred by Indemnitee in connection with any Proceeding, and such advancement shall be made as incurred, and such advancement shall be made within thirty (30) days after the receipt by the Company of a statement or statements requesting such advances (including any invoices received by Indemnitee, which such invoices may be redacted as necessary to avoid the waiver of any privilege accorded by applicable law) from time to time, whether prior to or after final disposition of any Proceeding.  Advances shall be unsecured and interest free.  Advances shall be made without regard to Indemnitee’s (i) ability to repay the expenses, (ii) ultimate entitlement to indemnification under the other provisions of this Agreement, and (iii) entitlement to and availability of insurance coverage, including advancement, payment or reimbursement of defense costs, expenses of covered loss under the provisions of any applicable insurance policy (including, without limitation, whether such advancement, payment or reimbursement is withheld, conditioned or delayed by the insurer(s)).  Indemnitee shall qualify for advances upon the execution and delivery to the Company of this Agreement which shall constitute an undertaking providing that Indemnitee undertakes to the fullest extent required by law to repay the advance if and to the extent that it is ultimately determined by a court of competent jurisdiction in a final judgment, not subject to appeal, that Indemnitee is not entitled to be indemnified by the Company.  The right to advances under this paragraph shall in all events continue until final disposition of any Proceeding, including any appeal therein.  Nothing in this Section 8 shall limit Indemnitee’s right to advancement pursuant to Section 12(e) of this Agreement.

 

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Section 9.                                          Procedure for Notification and Defense of Claim .

 

(a)                                  To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request therefor specifying the basis for the claim, the amounts for which Indemnitee is seeking payment under this Agreement, and all documentation related thereto as reasonably requested by the Company.

 

(b)                                  In the event that the Company shall be obligated hereunder to provide indemnification for or make any advancement of Expenses with respect to any Proceeding, the Company shall be entitled to assume the defense of such Proceeding, or any claim, issue or matter therein, with counsel approved by Indemnitee (which approval shall not be unreasonably withheld or delayed) upon the delivery to Indemnitee of written notice of the Company’s election to do so.  After delivery of such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees or expenses of separate counsel subsequently employed by or on behalf of Indemnitee with respect to the same Proceeding; provided that (i) Indemnitee shall have the right to employ separate counsel in any such Proceeding at Indemnitee’s expense and (ii) if (A) the employment of separate counsel by Indemnitee has been previously authorized by the Company, (B) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in the conduct of such defense, or (C) the Company shall not continue to retain such counsel to defend such Proceeding, then the fees and expenses actually and reasonably incurred by Indemnitee with respect to his or her separate counsel shall be Expenses hereunder.

 

(c)                                   In the event that the Company does not assume the defense in a Proceeding pursuant to paragraph (b) above, then the Company will be entitled to participate in the Proceeding at its own expense.

 

(d)                                  The Company shall not be liable to indemnify Indemnitee under this Agreement for any amounts paid in settlement of any Proceeding effected without its prior written consent (which consent shall not be unreasonably withheld or delayed).  The Company shall not, without the prior written consent of Indemnitee (which consent shall not be unreasonably withheld or delayed), enter into any settlement which (i) includes an admission of fault of Indemnitee, any non-monetary remedy imposed on Indemnitee or any monetary damages for which Indemnitee is not wholly and actually indemnified hereunder or (ii) with respect to any Proceeding with respect to which Indemnitee may be or is made a party or may be otherwise entitled to seek indemnification hereunder, does not include the full release of Indemnitee from all liability in respect of such Proceeding.

 

Section 10.                                     Procedure Upon Application for Indemnification .

 

(a)                                  Upon written request by Indemnitee for indemnification pursuant to Section 9(a), a determination, if such determination is required by applicable law, with respect to Indemnitee’s entitlement to indemnification hereunder shall be made in the specific case by one of the following methods:  (x) if a Change in Control shall have occurred, by Independent Counsel in a written opinion to the Board; or (y) if a Change in Control shall not have occurred: (i) by a majority vote of the disinterested directors, even though less than a quorum; (ii) by a

 

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committee of disinterested directors designated by a majority vote of the disinterested directors, even though less than a quorum; or (iii) if there are no disinterested directors or if the disinterested directors so direct, by Independent Counsel in a written opinion to the Board.  For purposes hereof, disinterested directors are those members of the Board who are not parties to the action, suit or proceeding in respect of which indemnification is sought.  In the case that such determination is made by Independent Counsel, a copy of Independent Counsel’s written opinion shall be delivered to Indemnitee and, if it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within thirty (30) days after such determination.  Indemnitee shall cooperate with the Independent Counsel or the Company, as applicable, in making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such counsel or the Company, 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 out-of-pocket costs or expenses (including reasonable attorneys’ fees and disbursements) actually and reasonably incurred by Indemnitee in so cooperating with the Independent Counsel or the Company 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.

 

(b)                                  If the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 10(a), the Independent Counsel shall be selected by the Board if a Change in Control shall not have occurred or, if a Change in Control shall have occurred, by Indemnitee.  Indemnitee or the Company, as the case may be, may, within ten (10) days after written notice of such selection, deliver to the Company or Indemnitee, as the case may be, a written objection to such selection; provided , however , that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 2 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion.  Absent a proper and timely objection, the person so selected shall act as Independent Counsel.  If such written objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or the Delaware Court has determined that such objection is without merit.  If, within twenty (20) days after the later of (i) submission by Indemnitee of a written request for indemnification pursuant to Section 9(a), and (ii) the final disposition of the Proceeding, including any appeal therein, no Independent Counsel shall have been selected without objection, either Indemnitee or the Company may petition the Delaware Court for resolution of any objection which shall have been made by Indemnitee or the Company to the 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.   The person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 10(a) hereof.  Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 12(a) of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).

 

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Section 11.                                   Presumptions and Effect of Certain Proceedings .

 

(a)                                  To the extent permitted by applicable law, in making a determination with respect to entitlement to indemnification hereunder, it shall be presumed that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 9(a) of this Agreement, and the Company shall have the burden of proof to overcome that presumption in connection with the making of any determination contrary to that presumption.  Neither (i) the failure of the Company or of Independent Counsel to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor (ii) an actual determination by the Company or by Independent Counsel that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.

 

(b)                                  The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of guilty, 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 or she 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 or her conduct was unlawful.

 

(c)                                   The knowledge and/or actions, or failure to act, of any director, manager, partner, officer, employee, agent or trustee of the Company, any subsidiary of the Company, or any Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.

 

Section 12.                                     Remedies of Indemnitee .

 

(a)                                  Subject to Section 12(f), in the event that (i) a determination is made pursuant to Section 10 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 8 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 10(a) of this Agreement within sixty (60) days after receipt by the Company of the request for indemnification for which a determination is to be made other than by Independent Counsel, (iv) payment of indemnification or reimbursement of expenses is not made pursuant to Section 5 or 6 or the last sentence of Section 10(a) of this Agreement within thirty (30) days after receipt by the Company of a written request therefor (including any invoices received by Indemnitee, which such invoices may be redacted as necessary to avoid the waiver of any privilege accorded by applicable law) or (v) payment of indemnification pursuant to Section 3 or 4 of this Agreement is not made within thirty (30) days after a determination has been made that Indemnitee is entitled to indemnification, Indemnitee shall be entitled to an adjudication by the Delaware Court of his or her entitlement to such indemnification or advancement.  Alternatively, Indemnitee, at his or her option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the

 

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American Arbitration Association.  Indemnitee shall commence such proceeding seeking an adjudication or an award in arbitration within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 12(a); provided , however , that the foregoing time limitation shall not apply in respect of a proceeding brought by Indemnitee to enforce his or her rights under Section 5 of this Agreement.  The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.

 

(b)                                  In the event that a determination shall have been made pursuant to Section 10(a) of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 12 shall be conducted in all respects as a de novo trial, or arbitration, on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination.  In any judicial proceeding or arbitration commenced pursuant to this Section 12, the Company shall have the burden of proving Indemnitee is not entitled to indemnification or advancement, as the case may be.

 

(c)                                   If a determination shall have been made pursuant to Section 10(a) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 12, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.

 

(d)                                  The Company shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 12 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement.

 

(e)                                   The Company shall indemnify Indemnitee to the fullest extent permitted by law against any and all Enforcement Expenses and, if requested by Indemnitee, shall (within thirty (30) days after receipt by the Company of a written request therefor) advance, to the extent not prohibited by law, such Enforcement Expenses to Indemnitee, which are incurred by Indemnitee in connection with any action brought by Indemnitee for indemnification or advancement from the Company under this Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company in the suit for which indemnification or advancement is being sought.  Such written request for advancement shall include invoices received by Indemnitee in connection with such Enforcement Expenses but, in the case of invoices in connection with legal services, any references to legal work performed or to expenditures made that would cause Indemnitee to waive any privilege accorded by applicable law need not be included with the invoice.

 

(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, including any appeal therein.

 

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Section 13.                                   Non-exclusivity; Survival of Rights; Insurance; Primacy of Indemnification; Subrogation .

 

(a)                                  The rights of indemnification and to receive advancement 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 Charter, the Bylaws, any agreement, a vote of stockholders or a resolution of directors, or otherwise.  No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his or her Corporate Status prior to such amendment, alteration or repeal.  To the extent that a change in Delaware law, whether by statute or judicial decision, permits greater indemnification or advancement than would be afforded currently under the Charter, Bylaws 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, managers, partners, officers, employees, agents or trustees of the Company or of any other Enterprise, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, manager, partner, officer, employee, agent or trustee 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 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 certain rights to indemnification, advancement of expenses and/or insurance provided by [Affiliated Entity] and certain of its affiliates (collectively, the “ Secondary 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 Secondary 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 Charter and/or Bylaws (or any other agreement between the Company and Indemnitee), without regard to any rights Indemnitee may have against the Secondary Indemnitors, and (iii) that it irrevocably waives, relinquishes and releases the Secondary Indemnitors from any and all claims against the Secondary 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 Secondary 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 Secondary Indemnitors

 

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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 Secondary Indemnitors are express third party beneficiaries of the terms of this Section 13(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 Secondary 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’s obligation to provide indemnification or advancement hereunder to Indemnitee who is or was serving at the request of the Company as a director, manager, partner, officer, employee, agent or trustee of any other Enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement from such other Enterprise.

 

Section 14.                                     Duration of Agreement .  This Agreement shall continue until and terminate upon the later of: (a) ten (10) years after the date that Indemnitee shall have ceased to serve as a director of the Company or (b) one (1) year after the final termination of any Proceeding, including any appeal, then pending in respect of which Indemnitee is granted rights of indemnification or advancement hereunder and of any proceeding commenced by Indemnitee pursuant to Section 12 of this Agreement relating thereto.  This Agreement shall be binding upon the Company and its successors and assigns and shall inure to the benefit of Indemnitee and his or her heirs, executors and administrators.  The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

 

Section 15.                                     Severability .  If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

 

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Section 16.                                     Enforcement .

 

(a)                                  The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve or continue to serve as a director of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as a 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; provided , however , that this Agreement is a supplement to and in furtherance of the Charter, the Bylaws and applicable law, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder.

 

Section 17.                                     Modification and Waiver .  No supplement, modification or amendment, or waiver of any provision, of this Agreement shall be binding unless executed in writing by the parties thereto.  No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement nor shall any waiver constitute a continuing waiver.  No supplement, modification or amendment 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 prior to such supplement, modification or amendment.

 

Section 18.                                     Notice by Indemnitee .  Indemnitee agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification, reimbursement or advancement as provided hereunder.  The failure of Indemnitee to so notify the Company shall not relieve the Company of any obligation which it may have to Indemnitee under this Agreement or otherwise.

 

Section 19.                                     Notices .  All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, (ii) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed, (iii) mailed by reputable overnight courier and receipted for by the party to whom said notice or other communication shall have been directed or (iv) sent by facsimile transmission, with receipt of oral confirmation that such transmission has been received:

 

(a)                                  If to Indemnitee, at such address as Indemnitee shall provide to the Company.

 

(b)                                  If to the Company to:

 

Rubius Therapeutics, Inc.

325 Vassar Street, Suite 1A

 

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Cambridge, MA 02139

Attention: Chief Executive Officer

 

or to any other address as may have been furnished to Indemnitee by the Company.

 

Section 20.                                     Contribution .  To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any Proceeding in such proportion as is deemed fair and reasonable in light of all of the circumstances in order to reflect (i) the relative benefits received by the Company and Indemnitee in connection with the event(s) and/or transaction(s) giving rise 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 transactions.

 

Section 21.                                     Internal Revenue Code Section 409A .  The Company intends for this Agreement to comply with the Indemnification exception under Section 1.409A-1(b)(10) of the regulations promulgated under the Internal Revenue Code of 1986, as amended (the “ Code ”), which provides that indemnification of, or the purchase of an insurance policy providing for payments of, all or part of the expenses incurred or damages paid or payable by Indemnitee with respect to a bona fide claim against Indemnitee or the Company do not provide for a deferral of compensation, subject to Section 409A of the Code, where such claim is based on actions or failures to act by Indemnitee in his or her capacity as a service provider of the Company.  The parties intend that this Agreement be interpreted and construed with such intent.

 

Section 22.                                     Applicable Law and Consent to Jurisdiction .  This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules.  Except with respect to any arbitration commenced by Indemnitee pursuant to Section 12(a) of this Agreement, the Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Delaware Court, and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) consent to service of process at the address set forth in Section 19 of this Agreement with the same legal force and validity as if served upon such party personally within the State of Delaware, (iv) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court, and (v) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum.

 

Section 23.                                     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.

 

Section 24.                                     Identical Counterparts .  This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which

 

13



 

together shall constitute one and the same Agreement.  Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

 

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the day and year first above written.

 

 

RUBIUS THERAPEUTICS, INC.

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

[Indemnitee]

 




Exhibit 10.15

 

RUBIUS THERAPEUTICS, INC.

 

[FORM OF] OFFICER INDEMNIFICATION AGREEMENT

 

This Indemnification Agreement (“ Agreement ”) is made as of [                ] by and between Rubius Therapeutics, Inc., a Delaware corporation (the “ Company ”), and [Officer] (“ Indemnitee ”).(1)

 

RECITALS

 

WHEREAS, the Company desires to attract and retain the services of highly qualified individuals, such as Indemnitee, to serve the Company;

 

WHEREAS, in order to induce Indemnitee to provide or continue to provide services to the Company, the Company wishes to provide for the indemnification of, and advancement of expenses to, Indemnitee to the maximum extent permitted by law;

 

WHEREAS, the Amended and Restated Certificate of Incorporation (as amended and in effect from time to time, the “ Charter ”) and the Amended and Restated Bylaws (as amended and in effect from time to time, the “ Bylaws ”) of the Company require indemnification of the officers and directors of the Company, and Indemnitee may also be entitled to indemnification pursuant to the General Corporation Law of the State of Delaware (the “ DGCL ”);

 

WHEREAS, the Charter, the Bylaws 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 Board of Directors of the Company (the “ Board ”) has determined that the increased difficulty in attracting and retaining highly qualified persons such as Indemnitee is detrimental to the best interests of the Company’s stockholders;

 

WHEREAS, it is reasonable and prudent 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, regardless of any amendment or revocation of the Charter or the Bylaws, so that they will serve or continue to serve the Company free from undue concern that they will not be so indemnified; and

 

WHEREAS, this Agreement is a supplement to and in furtherance of the indemnification provided in the Charter, the Bylaws and any resolutions adopted pursuant thereto, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder.

 

NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:

 


(1)  To be entered into with all C-level officers and Section 16 officers.

 



 

Section 1.                                            Services to the Company .  Indemnitee agrees to [continue to] serve as [a director and] an officer of the Company.  Indemnitee may at any time and for any reason resign from [any] such position (subject to any other contractual obligation or any obligation imposed by law), in which event the Company shall have no obligation under this Agreement to continue Indemnitee in such position.  This Agreement shall not be deemed an employment contract between the Company (or any of its subsidiaries or any Enterprise) and Indemnitee.

 

Section 2.                                            Definitions .

 

As used in this Agreement:

 

(a)                                  “Change in Control” shall mean (i) the sale of all or substantially all of the assets of the Company on a consolidated basis to an unrelated person or entity, (ii) a merger, reorganization or consolidation pursuant to which the holders of the Company’s outstanding voting power and outstanding stock immediately prior to such transaction do not own a majority of the outstanding voting power and outstanding stock or other equity interests of the resulting or successor entity (or its ultimate parent, if applicable) immediately upon completion of such transaction, (iii) the sale of all of the Stock of the Company to an unrelated person, entity or group thereof acting in concert, or (iv) any other transaction in which the owners of the Company’s outstanding voting power immediately prior to such transaction do not own at least a majority of the outstanding voting power of the Company or any successor entity immediately upon completion of the transaction other than as a result of the acquisition of securities directly from the Company.

 

(b)                                  Corporate Status ” describes the status of a person as a current or former [director or] officer of the Company or current or former director, manager, partner, officer, employee, agent or trustee of any other Enterprise which such person is or was serving at the request of the Company.

 

(c)                                   Enforcement Expenses ” shall include all reasonable attorneys’ fees, court costs, transcript costs, fees of experts, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other out-of-pocket disbursements or expenses of the types customarily incurred in connection with an action to enforce indemnification or advancement rights, or an appeal from such action.  Expenses, however, shall not include fees, salaries, wages or benefits owed to Indemnitee.

 

(d)                                  Enterprise ” shall mean any corporation (other than the Company), partnership, joint venture, trust, employee benefit plan, limited liability company, or other legal entity of which Indemnitee is or was serving at the request of the Company as a director, manager, partner, officer, employee, agent or trustee.

 

(e)                                   Expenses ” shall include all reasonable attorneys’ fees, court costs, transcript costs, fees of experts, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other out-of-pocket disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise

 

2



 

participating in, a Proceeding or an appeal resulting from a Proceeding.  Expenses, however, shall not include amounts paid in settlement by Indemnitee, the amount of judgments or fines against Indemnitee or fees, salaries, wages or benefits owed to Indemnitee.

 

(f)                                    Independent Counsel ” means a law firm, or a partner (or, if applicable, member or shareholder) of such a law firm, that is experienced in matters of Delaware corporation law and neither presently is, nor in the past five (5) years has been, retained to represent: (i) the Company, any subsidiary of the Company, any Enterprise or Indemnitee in any matter material to any such party; or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder.  Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.  The Company agrees to pay the reasonable fees and expenses of the Independent Counsel referred to above and to fully indemnify such counsel against any and all expenses, claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto.

 

(g)                                   The term “ Proceeding ” shall include 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 in the right of the Company or otherwise and whether of a civil, criminal, administrative, regulatory or investigative nature, and whether formal or informal, in which Indemnitee was, is or will be involved as a party or otherwise by reason of the fact that Indemnitee is or was [a director or] an officer of the Company or is or was serving at the request of the Company as a director, manager, partner, officer, employee, agent or trustee of any Enterprise or by reason of any action taken by Indemnitee or of any action taken on his or her part while acting as [a director or] an officer of the Company or while serving at the request of the Company as a director, manager, partner, officer, employee, agent or trustee of any Enterprise, in each case whether or not serving in such capacity at the time any liability or expense is incurred for which indemnification, reimbursement or advancement of expenses can be provided under this Agreement; provided , however , that the term “Proceeding” shall not include any action, suit or arbitration, or part thereof, initiated by Indemnitee to enforce Indemnitee’s rights under this Agreement as provided for in Section 12(a) of this Agreement.

 

Section 3.                                            Indemnity in Third-Party Proceedings .  The Company shall indemnify Indemnitee to the extent set forth in this Section 3 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding, other than a Proceeding by or in the right of the Company to procure a judgment in its favor.  Pursuant to this Section 3, Indemnitee shall be indemnified against all Expenses, judgments, fines, penalties, excise taxes, and amounts paid in settlement actually and reasonably incurred by Indemnitee or on his or her behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company and, in the case of a criminal proceeding, had no reasonable cause to believe that his or her conduct was unlawful.

 

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Section 4.                                            Indemnity in Proceedings by or in the Right of the Company .  The Company shall indemnify Indemnitee to the extent set forth in this Section 4 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding by or in the right of the Company to procure a judgment in its favor.  Pursuant to this Section 4, Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by Indemnitee or on his or her behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company.  No indemnification for Expenses shall be made under this Section 4 in respect of any claim, issue or matter as to which Indemnitee shall have been finally adjudged by a court to be liable to the Company, unless and only to the extent that the Delaware Court of Chancery (the “ Delaware Court ”) shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification for such expenses as the Delaware Court shall deem proper.

 

Section 5.                                            Indemnification for Expenses of a Party Who is Wholly or Partly Successful .  Notwithstanding any other provisions of this Agreement and except as provided in Section 7, to the extent that Indemnitee is a party to or a participant in any Proceeding and is successful in such Proceeding or in defense of any claim, issue or matter therein, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by him or her in connection therewith.  If Indemnitee is not wholly successful in such Proceeding but is successful 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 Indemnitee or on his or her 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.

 

Section 6.                                            Reimbursement for Expenses of a Witness or in Response to a Subpoena .  Notwithstanding any other provision of this Agreement, to the extent that Indemnitee, by reason of his or her Corporate Status, (i) is a witness in any Proceeding to which Indemnitee is not a party and is not threatened to be made a party or (ii) receives a subpoena with respect to any Proceeding to which Indemnitee is not a party and is not threatened to be made a party, the Company shall reimburse Indemnitee for all Expenses actually and reasonably incurred by him or her or on his or her behalf in connection therewith.

 

Section 7.                                            Exclusions .  Notwithstanding any provision in this Agreement to the contrary, the Company shall not be obligated under this Agreement:

 

(a)                                  to indemnify for amounts otherwise indemnifiable hereunder (or for which advancement is provided hereunder) if and to the extent that Indemnitee has otherwise actually received such amounts under any insurance policy, contract, agreement or otherwise;

 

(b)                                  to indemnify 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

 

4



 

statutory law or common law, or from the purchase or sale by Indemnitee of such securities in violation of Section 306 of the Sarbanes-Oxley Act of 2002, as amended (“ SOX ”);

 

(c)                                   to indemnify for any reimbursement of, or payment to, the Company by Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by Indemnitee from the sale of securities of the Company pursuant to Section 304 of SOX or any formal policy of the Company adopted by the Board (or a committee thereof), or any other remuneration paid to Indemnitee if it shall be determined by a final judgment or other final adjudication that such remuneration was in violation of law;

 

(d)                                  to indemnify with respect to any Proceeding, or part thereof, brought by Indemnitee against the Company, any legal entity which it controls, any director or officer thereof or any third party, unless (i) the Board has consented to the initiation of such Proceeding or part thereof and (ii) the Company provides the indemnification, in its sole discretion, pursuant to the powers vested in the Company under applicable law; provided , however , that this Section 7(d) shall not apply to (A) counterclaims or affirmative defenses asserted by Indemnitee in an action brought against Indemnitee or (B) any action brought by Indemnitee for indemnification or advancement from the Company under this Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company in the suit for which indemnification or advancement is being sought as described in Section 12; or

 

(e)                                   to provide any indemnification or advancement of expenses that is prohibited by applicable law (as such law exists at the time payment would otherwise be required pursuant to this Agreement).

 

Section 8.                                            Advancement of Expenses .  Subject to Section 9(b), the Company shall advance, to the extent not prohibited by law, the Expenses incurred by Indemnitee in connection with any Proceeding, and such advancement shall be made as incurred, and such advancement shall be made within thirty (30) days after the receipt by the Company of a statement or statements requesting such advances (including any invoices received by Indemnitee, which such invoices may be redacted as necessary to avoid the waiver of any privilege accorded by applicable law) from time to time, whether prior to or after final disposition of any Proceeding.  Advances shall be unsecured and interest free.  Advances shall be made without regard to Indemnitee’s (i) ability to repay the expenses, (ii) ultimate entitlement to indemnification under the other provisions of this Agreement, and (iii) entitlement to and availability of insurance coverage, including advancement, payment or reimbursement of defense costs, expenses of covered loss under the provisions of any applicable insurance policy (including, without limitation, whether such advancement, payment or reimbursement is withheld, conditioned or delayed by the insurer(s)).  Indemnitee shall qualify for advances upon the execution and delivery to the Company of this Agreement which shall constitute an undertaking providing that Indemnitee undertakes to the fullest extent required by law to repay the advance if and to the extent that it is ultimately determined by a court of competent jurisdiction in a final judgment, not subject to appeal, that Indemnitee is not entitled to be indemnified by the Company.  The right to advances under this paragraph shall in all events continue until final disposition of any Proceeding, including any appeal therein.  Nothing in this Section 8 shall limit Indemnitee’s right to advancement pursuant to Section 12(e) of this Agreement.

 

5



 

Section 9.                                          Procedure for Notification and Defense of Claim .

 

(a)                                  To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request therefor specifying the basis for the claim, the amounts for which Indemnitee is seeking payment under this Agreement, and all documentation related thereto as reasonably requested by the Company.

 

(b)                                  In the event that the Company shall be obligated hereunder to provide indemnification for or make any advancement of Expenses with respect to any Proceeding, the Company shall be entitled to assume the defense of such Proceeding, or any claim, issue or matter therein, with counsel approved by Indemnitee (which approval shall not be unreasonably withheld or delayed) upon the delivery to Indemnitee of written notice of the Company’s election to do so.  After delivery of such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees or expenses of separate counsel subsequently employed by or on behalf of Indemnitee with respect to the same Proceeding; provided that (i) Indemnitee shall have the right to employ separate counsel in any such Proceeding at Indemnitee’s expense and (ii) if (A) the employment of separate counsel by Indemnitee has been previously authorized by the Company, (B) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in the conduct of such defense, or (C) the Company shall not continue to retain such counsel to defend such Proceeding, then the fees and expenses actually and reasonably incurred by Indemnitee with respect to his or her separate counsel shall be Expenses hereunder.

 

(c)                                   In the event that the Company does not assume the defense in a Proceeding pursuant to paragraph (b) above, then the Company will be entitled to participate in the Proceeding at its own expense.

 

(d)                                  The Company shall not be liable to indemnify Indemnitee under this Agreement for any amounts paid in settlement of any Proceeding effected without its prior written consent (which consent shall not be unreasonably withheld or delayed).  The Company shall not, without the prior written consent of Indemnitee (which consent shall not be unreasonably withheld or delayed), enter into any settlement which (i) includes an admission of fault of Indemnitee, any non-monetary remedy imposed on Indemnitee or any monetary damages for which Indemnitee is not wholly and actually indemnified hereunder or (ii) with respect to any Proceeding with respect to which Indemnitee may be or is made a party or may be otherwise entitled to seek indemnification hereunder, does not include the full release of Indemnitee from all liability in respect of such Proceeding.

 

Section 10.                                     Procedure Upon Application for Indemnification .(2)

 

(a)                                  Upon written request by Indemnitee for indemnification pursuant to Section 9(a), a determination, if such determination is required by applicable law, with respect to Indemnitee’s entitlement to indemnification hereunder shall be made in the specific case by one of the following methods: [(x) if a Change in Control shall have occurred and indemnification is

 


(2)  Bracketed portions for CEO Director version only

 

6



 

being requested by Indemnitee hereunder in his or her capacity as a director of the Company, by Independent Counsel in a written opinion to the Board; or (y) in any other case,] (i) by a majority vote of the disinterested directors, even though less than a quorum; (ii) by a committee of disinterested directors designated by a majority vote of the disinterested directors, even though less than a quorum; or (iii) if there are no disinterested directors or if the disinterested directors so direct, by Independent Counsel in a written opinion to the Board.  For purposes hereof, disinterested directors are those members of the Board who are not parties to the action, suit or proceeding in respect of which indemnification is sought.  In the case that such determination is made by Independent Counsel, a copy of Independent Counsel’s written opinion shall be delivered to Indemnitee and, if it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within thirty (30) days after such determination.  Indemnitee shall cooperate with the Independent Counsel or the Company, as applicable, in making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such counsel or the Company, 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 out-of-pocket costs or expenses (including reasonable attorneys’ fees and disbursements) actually and reasonably incurred by Indemnitee in so cooperating with the Independent Counsel or the Company 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.

 

(b)                                  If the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 10(a), the Independent Counsel shall be selected by the Board[; provided that, if a Change in Control shall have occurred and indemnification is being requested by Indemnitee hereunder in his or her capacity as a director of the Company, the Independent Counsel shall be selected by Indemnitee].  Indemnitee [or the Company, as the case may be,] may, within ten (10) days after written notice of such selection, deliver to the Company [or Indemnitee, as the case may be,] a written objection to such selection; provided , however , that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in Section 2 of this Agreement, and the objection shall set forth with particularity the factual basis of such assertion.  Absent a proper and timely objection, the person so selected shall act as Independent Counsel.  If such written objection is so made and substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or the Delaware Court has determined that such objection is without merit.  If, within twenty (20) days after the later of (i) submission by Indemnitee of a written request for indemnification pursuant to Section 9(a), and (ii) the final disposition of the Proceeding, including any appeal therein, no Independent Counsel shall have been selected without objection, either Indemnitee or the Company may petition the Delaware Court for resolution of any objection which shall have been made by Indemnitee or the Company to the 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.   The person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 10(a) hereof.  Upon the due commencement of any judicial proceeding or arbitration pursuant to Section 12(a) of this Agreement, Independent Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to the applicable standards of professional conduct then prevailing).

 

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Section 11.                                   Presumptions and Effect of Certain Proceedings .

 

(a)                                  To the extent permitted by applicable law, in making a determination with respect to entitlement to indemnification hereunder, it shall be presumed that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 9(a) of this Agreement, and the Company shall have the burden of proof to overcome that presumption in connection with the making of any determination contrary to that presumption.  Neither (i) the failure of the Company or of Independent Counsel to have made a determination prior to the commencement of any action pursuant to this Agreement that indemnification is proper in the circumstances because Indemnitee has met the applicable standard of conduct, nor (ii) an actual determination by the Company or by Independent Counsel that Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct.

 

(b)                                  The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of guilty, 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 or she 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 or her conduct was unlawful.

 

(c)                                   The knowledge and/or actions, or failure to act, of any director, manager, partner, officer, employee, agent or trustee of the Company, any subsidiary of the Company, or any Enterprise shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.

 

Section 12.                                     Remedies of Indemnitee .

 

(a)                                  Subject to Section 12(f), in the event that (i) a determination is made pursuant to Section 10 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 8 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 10(a) of this Agreement within sixty (60) days after receipt by the Company of the request for indemnification for which a determination is to be made other than by Independent Counsel, (iv) payment of indemnification or reimbursement of expenses is not made pursuant to Section 5 or 6 or the last sentence of Section 10(a) of this Agreement within thirty (30) days after receipt by the Company of a written request therefor (including any invoices received by Indemnitee, which such invoices may be redacted as necessary to avoid the waiver of any privilege accorded by applicable law) or (v) payment of indemnification pursuant to Section 3 or 4 of this Agreement is not made within thirty (30) days after a determination has been made that Indemnitee is entitled to indemnification, Indemnitee shall be entitled to an adjudication by the Delaware Court of his or her entitlement to such indemnification or advancement.  Alternatively, Indemnitee, at his or her option, may seek an award in arbitration to

 

8



 

be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association.  Indemnitee shall commence such proceeding seeking an adjudication or an award in arbitration within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 12(a); provided , however , that the foregoing time limitation shall not apply in respect of a proceeding brought by Indemnitee to enforce his or her rights under Section 5 of this Agreement.  The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.

 

(b)                                  In the event that a determination shall have been made pursuant to Section 10(a) of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration commenced pursuant to this Section 12 shall be conducted in all respects as a de novo trial, or arbitration, on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination.  In any judicial proceeding or arbitration commenced pursuant to this Section 12, the Company shall have the burden of proving Indemnitee is not entitled to indemnification or advancement, as the case may be.

 

(c)                                   If a determination shall have been made pursuant to Section 10(a) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 12, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law.

 

(d)                                  The Company shall be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 12 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement.

 

(e)                                   The Company shall indemnify Indemnitee to the fullest extent permitted by law against any and all Enforcement Expenses and, if requested by Indemnitee, shall (within thirty (30) days after receipt by the Company of a written request therefor) advance, to the extent not prohibited by law, such Enforcement Expenses to Indemnitee, which are incurred by Indemnitee in connection with any action brought by Indemnitee for indemnification or advancement from the Company under this Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company in the suit for which indemnification or advancement is being sought.  Such written request for advancement shall include invoices received by Indemnitee in connection with such Enforcement Expenses but, in the case of invoices in connection with legal services, any references to legal work performed or to expenditures made that would cause Indemnitee to waive any privilege accorded by applicable law need not be included with the invoice.

 

(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, including any appeal therein.

 

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Section 13.                                   Non-exclusivity; Survival of Rights; Insurance; Subrogation .

 

(a)                                  The rights of indemnification and to receive advancement 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 Charter, the Bylaws, any agreement, a vote of stockholders or a resolution of directors, or otherwise.  No amendment, alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his or her Corporate Status prior to such amendment, alteration or repeal.  To the extent that a change in Delaware law, whether by statute or judicial decision, permits greater indemnification or advancement than would be afforded currently under the Charter, Bylaws 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, managers, partners, officers, employees, agents or trustees of the Company or of any other Enterprise, Indemnitee shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage available for any such director, manager, partner, officer, employee, agent or trustee 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 Indemnitee, all amounts payable as a result of such proceeding in accordance with the terms of such policies.

 

(c)                                   In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

 

(d)                                  The Company’s obligation to provide indemnification or advancement hereunder to Indemnitee who is or was serving at the request of the Company as a director, manager, partner, officer, employee, agent or trustee of any other Enterprise shall be reduced by any amount Indemnitee has actually received as indemnification or advancement from such other Enterprise.

 

Section 14.                                     Duration of Agreement .  This Agreement shall continue until and terminate upon the later of: (a) ten (10) years after the date that Indemnitee shall have ceased to serve as [both a director and] an officer of the Company or (b) one (1) year after the final termination of any Proceeding, including any appeal, then pending in respect of which Indemnitee is granted rights of indemnification or advancement hereunder and of any proceeding

 

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commenced by Indemnitee pursuant to Section 12 of this Agreement relating thereto.  This Agreement shall be binding upon the Company and its successors and assigns and shall inure to the benefit of Indemnitee and his or her heirs, executors and administrators.  The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

 

Section 15.                                     Severability .  If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

 

Section 16.                                     Enforcement .

 

(a)                                  The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to serve or continue to serve as [a director and] an officer of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as [a director and] an officer 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; provided , however , that this Agreement is a supplement to and in furtherance of the Charter, the Bylaws and applicable law, and shall not be deemed a substitute therefor, nor to diminish or abrogate any rights of Indemnitee thereunder.

 

Section 17.                                     Modification and Waiver .  No supplement, modification or amendment, or waiver of any provision, of this Agreement shall be binding unless executed in writing by the parties thereto.  No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement nor shall any waiver constitute a continuing waiver.  No supplement, modification or amendment 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 prior to such supplement, modification or amendment.

 

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Section 18.                                     Notice by Indemnitee .  Indemnitee agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter which may be subject to indemnification, reimbursement or advancement as provided hereunder.  The failure of Indemnitee to so notify the Company shall not relieve the Company of any obligation which it may have to Indemnitee under this Agreement or otherwise.

 

Section 19.                                     Notices .  All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, (ii) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed, (iii) mailed by reputable overnight courier and receipted for by the party to whom said notice or other communication shall have been directed or (iv) sent by facsimile transmission, with receipt of oral confirmation that such transmission has been received:

 

(a)                                  If to Indemnitee, at such address as Indemnitee shall provide to the Company.

 

(b)                                  If to the Company to:

 

Rubius Therapeutics,  Inc.

325 Vassar Street, Suite 1A

Cambridge, Massachusetts 02139

Attention:  Chief Executive Officer

 

or to any other address as may have been furnished to Indemnitee by the Company.

 

Section 20.                                     Contribution .  To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any Proceeding in such proportion as is deemed fair and reasonable in light of all of the circumstances in order to reflect (i) the relative benefits received by the Company and Indemnitee in connection with the event(s) and/or transaction(s) giving rise 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 transactions.

 

Section 21.                                     Internal Revenue Code Section 409A .  The Company intends for this Agreement to comply with the Indemnification exception under Section 1.409A-1(b)(10) of the regulations promulgated under the Internal Revenue Code of 1986, as amended (the “ Code ”), which provides that indemnification of, or the purchase of an insurance policy providing for payments of, all or part of the expenses incurred or damages paid or payable by Indemnitee with respect to a bona fide claim against Indemnitee or the Company do not provide for a deferral of compensation, subject to Section 409A of the Code, where such claim is based on actions or failures to act by Indemnitee in his or her capacity as a service provider of the Company.  The parties intend that this Agreement be interpreted and construed with such intent.

 

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Section 22.                                     Applicable Law and Consent to Jurisdiction .  This Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules.  Except with respect to any arbitration commenced by Indemnitee pursuant to Section 12(a) of this Agreement, the Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Delaware Court, and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) consent to service of process at the address set forth in Section 19 of this Agreement with the same legal force and validity as if served upon such party personally within the State of Delaware, (iv) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court, and (v) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court has been brought in an improper or inconvenient forum.

 

Section 23.                                     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.

 

Section 24.                                     Identical Counterparts .  This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement.  Only one such counterpart signed by the party against whom enforceability is sought needs to be produced to evidence the existence of this Agreement.

 

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as of the day and year first above written.

 

 

RUBIUS THERAPEUTICS, INC.

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

 

 

 

 

[Name of Indemnitee]

 




Exhibit 21

 

SUBSIDIARIES

 

Subsidiary

 

Jurisdiction of Incorporation

Rubius Therapeutics Securities Corporation

 

Massachusetts

 




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Exhibit 23.1

Consent of independent registered public accounting firm

We hereby consent to the use in this Registration Statement on Form S-1 of Rubius Therapeutics, Inc. of our report dated April 13, 2018 relating to the financial statements of Rubius Therapeutics, Inc., which appears in this Registration Statement. We also consent to the reference to us under the heading "Experts" in such Registration Statement.

/s/ PricewaterhouseCoopers LLP

Boston, Massachusetts
June 22, 2018




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