DIFFUSION PHARMACEUTICALS INC.
REGISTRATION RIGHTS AGREEMENT
DATED [●], 2017
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SECTION 2.
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REGISTRATION; RESTRICTIONS ON TRANSFER. 3
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2.2.
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Registration Procedures. 4
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2.3.
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Expenses of Registration 6
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2.4.
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Delay of Registration; Agreement to Furnish Information; Suspension of Sales. 6
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2.6.
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Assignment of Registration Rights 9
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2.7.
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Market Stand-Off Agreement 9
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2.8.
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Termination of Registration Provisions 9
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SECTION 3.
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MISCELLANEOUS. 9
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3.2.
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Successors and Assigns 10
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3.5.
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Amendment and Waiver 10
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3.6.
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Delays or Omissions 10
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3.8.
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Titles and Subtitles 11
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REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this “
Agreement
”) is made as of the last date set forth on the signature page hereof by and between Diffusion Pharmaceuticals Inc., a Delaware corporation (the “
Company
”), and the undersigned investor in the Offering (the “
Investor
”).
W I T N E S S E T H:
WHEREAS, the Company is conducting an Offering of up to $15,000,000 of its Series A Convertible Preferred Stock, which amount may be increased to $25,000,000 at the discretion of the Placement Agent and the Company;
WHEREAS, the Investor has purchased or intends to purchase shares of Preferred Stock in accordance with the terms of that certain subscription agreement related to the Offering by and between the Company and the Investor (the “
Subscription Agreement
”);
WHEREAS, as additional, supplemental consideration for Investor’s purchase of Securities, the Company has agreed to provide the Investor with certain registration rights with respect to Investor’s Registrable Shares (as defined herein) on the terms set forth herein; and
WHEREAS, capitalized terms used and not otherwise defined herein have the respective meanings given to them in the Subscription Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual representations and covenants hereinafter set forth, the parties hereto do hereby agree as follows:
Section 1.
GENERAL.
1.1.
Definitions.
As used in this Agreement the following terms shall have the following respective meanings:
(a)
“
Common Stock
”
means the Common Stock of the Company.
(b)
“
Effectiveness Deadline
”
means, with respect to the Registration Statement, the ninetieth (90
th
) calendar day following the Final Closing (or, in the event the Commission reviews and has written comments to the Registration Statement, the one hundred twentieth (120
th
) calendar day following the Final Closing);
provided, however
, that if the Company is notified by the Commission that the Registration Statement will not be reviewed or is no longer subject to further review and comments, the Effectiveness Deadline as to such Registration Statement shall be the fifth (5
th
) Trading Day following the date on which the Company is so notified if such date precedes the dates otherwise required above;
provided, further
, that if the Effectiveness Deadline falls on a Saturday, Sunday or other day that the Commission is closed for business, the Effectiveness Deadline shall be extended to the next Trading Day on which the Commission is open for business
(c)
“
Exchange Act
”
means the Securities Exchange Act of 1934, as amended.
(d)
“Filing Deadline
”
means, with respect to the Registration Statement required to be filed pursuant to
Section 2(a)
, May 17, 2017.
(e)
“
Form S-3
”
means such form under the Securities Act as in effect on the date hereof or any successor or similar registration form under the Securities Act subsequently adopted by the SEC which permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC.
(f)
“
Holder
”
means any person owning of record Securities issued in the Offering that has executed and delivered to the Company a registration rights agreement with the Company in the form hereof prior to April 26, 2017.
(g)
“Preferred Stock”
means the Series A Convertible Preferred Stock, par value $0.001 per share, issued in the Offering.
(h)
“
Prospectus
”
means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Shares covered by a Registration Statement, and all other amendments and supplements to the Prospectus, including post‑effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.
(i)
“Registrable Shares”
means the shares of Common Stock of any Holder that are (a) issued and outstanding, or issuable, pursuant to any conversion of the Preferred Stock, (b) issued and outstanding, or issuable, pursuant to any exercise of the Warrants and (c) issued and outstanding pursuant to the cumulative preferred dividend on each share of the Preferred Stock;
provided
, that any such shares of Common Stock shall cease to be Registrable Shares on the date which such shares of Common Stock may be sold or otherwise transferred, without volume or manner-of-sale restrictions, pursuant SEC Rule 144. The Registrable Shares described in clause (b) are sometimes referred to herein as the “
Registrable Warrant Shares
” and the Registrable Shares described in clauses (a) and (c) are sometimes referred to herein, collectively, as the “
Registrable Preferred Shares
”
(j)
“Registration Expenses”
means all expenses incurred by the Company in complying with Section 2.1 hereof, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel for the Company, blue sky fees and expenses and the expense of any special audits incident to or required by any such registration (but excluding any transfer taxes, and Selling Expenses applicable to the sale).
(k)
“SEC”
or
“Commission”
means the Securities and Exchange
Commission.
(l)
“SEC Rule 144”
means Rule 144 promulgated by the SEC under the Securities Act.
(m)
“Securities Act”
means the Securities Act of 1933, as amended.
(n)
“Selling Expenses”
means all underwriting discounts and selling commissions applicable to the sale.
(o)
“
Trading Day
”
means a day on which the principal Trading Market is open for trading.
(p)
“
Trading Market
”
means the NASDAQ Capital Market; provided, that if the Common Stock ceases to be listed thereon, “Trading Market” shall mean (i) any other securities market or exchange on which the Common Stock is principally listed or quoted for trading on the date in question, including the NYSE MKT, the Nasdaq Global Market or the Nasdaq Global Select Market (or any successors to any of the foregoing) or (ii) if the Common Stock is not then listed or quoted for trading on any such securities market or exchange and if prices for the Common Stock are then reported in the “Pink Sheets,” OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices).
(q)
“Warrants”
means the 5-year warrants received by each Holder to purchase one share of Common Stock for each share of Preferred Stock purchased by such Holder in the Offering.
SECTION 2.
REGISTRATION; RESTRICTIONS ON TRANSFER.
2.1.
Registration.
(a)
On or prior to the Filing Deadline, the Company shall prepare and file with the SEC a registration statement (including any related prospectus, amendments and supplements to such registration statement, and including pre- and post-effective amendments, and all exhibits and all material incorporated by reference in such registration statement, the “
Registration Statement
”) to register, in accordance with the Securities Act, a number of shares of Common Stock equal to the number of Registrable Shares (a “
Registration
”). The Registration Statement shall be on Form S-3 (except if the Company is then ineligible to register for resale the Registrable Shares on Form S-3, in which case such registration shall be on such other form available to register for resale the Registrable Shares as a secondary offering) subject to the provisions of Section 2.1(c). Notwithstanding the registration obligations set forth in this Section 2.1, in the event the SEC informs the Company that all of the Registrable Shares cannot, as a result of the application of Rule 415 promulgated under the Securities Act, as such Rule may be amended from time to time, be registered for resale as a secondary offering on a single registration statement, the Company agrees to promptly (i) inform each of the Holders thereof and use its commercially reasonable efforts to file amendments to the Registration Statement as required by the SEC and/or (ii) withdraw the Registration Statement and file an alternative registration statement (the “
Alternative Registration Statement
”), in either case, covering the maximum number of Registrable Shares permitted to be registered by the SEC on Form S-3 or such other form available to register for resale the Registrable Shares as a secondary offering;
provided, however
, that prior to filing such amendment or Alternative Registration Statement, the Company shall be obligated to use its commercially reasonable efforts to advocate with the SEC for the registration of all of the Registrable Shares in accordance with the SEC Guidance, including without limitation, Compliance and Disclosure Interpretation 612.09. Notwithstanding any other provision of this Agreement, if any SEC Guidance sets forth a limitation of the number of Registrable Shares permitted to be registered on the Registration Statement as a secondary offering (and notwithstanding that the Company used diligent efforts to advocate with the
SEC for the registration of all or a greater number of Registrable Shares), unless otherwise directed in writing by a Holder as to its Registrable Shares, the number of Registrable Shares to be registered on such Registration Statement will be allocated to the Holders of such Registrable Shares in the following order of priority: first, on a pro rata basis based on the number of Registrable Warrant Shares held by all such Holders; and second, on a pro rata basis based on the number of Registrable Preferred Shares held by all such Holders. Any Registrable Shares excluded or withdrawn from such Registration Statement shall be withdrawn from the Registration and the Company shall have no obligation to register such securities with the SEC. For the avoidance of doubt, the Holders are not entitled to participate in any registration of the Company’s capital stock other than a registration resulting from this Section 2.1. In the event the Company amends the Registration Statement or files an Alternative Registration Statement, as the case may be, under clauses (i) or (ii) above, the Company will use its commercially reasonable efforts to file with the Commission, as promptly as allowed by Commission or SEC Guidance provided to the Company or to registrants of securities in general, one or more registration statements on Form S-3 or such other form available to register for resale those Registrable Shares that were not registered for resale on the Registration Statement, as amended, or the Alternative Registration Statement, as amended (the “
Remainder Registration Statements
”)
(b)
The Company shall use its commercially reasonable efforts to cause the Registration Statement to be declared effective by the Commission as soon as practicable and, with respect to the Registration Statement or the Alternative Registration Statement, as applicable, no later than the Effectiveness Deadline (including filing with the SEC a request for acceleration of effectiveness in accordance with Rule 461 promulgated under the Securities Act), and shall use its commercially reasonable efforts to and keep such Registration Statement effective for as long as such shares of Common Stock are Registrable Shares (the “
Effectiveness Period
”). The Company, in its sole discretion, may deregister all shares that are no longer Registrable Shares. The Company shall telephonically request effectiveness of the Registration Statement as of 4:00 P.M. New York City time on a Trading Day. The Company shall promptly notify the Holders via facsimile or electronic mail file of the effectiveness of the Registration Statement within three (3) Trading Days that the Company telephonically confirms effectiveness with the SEC. The Company shall, by 5:30 P.M. New York City time on the second Trading Day after the Effective Date, file a final Prospectus with the SEC, as required by Rule 424(b) promulgated under the Securities Act.
(c)
In the event that Form S-3 is not available for the registration of the resale of Registrable Shares hereunder, the Company shall use commercially reasonable efforts to (i) register the resale of the Registrable Shares on another appropriate form and (ii) undertake to register the Registrable Shares on Form S-3 after such form is available, provided that the Company shall maintain the effectiveness of the Registration Statement then in effect until such time as a Registration Statement on Form S-3 covering the Registrable Shares has been declared effective by the SEC.
(d)
Each Holder agrees to furnish to the Company the information set forth in the Acknowledge, Notice and Questionnaire at the end of this Agreement. The Company will notify each Holder of any information the Company requires from that Holder other than the information contained herein, if any, which shall be completed and delivered to the Company promptly upon request and, in any event, within two (2) Trading Days after such notification. Each Holder further agrees that it shall not be entitled to be named as a selling security holder in the Registration Statement or use the Prospectus for offers and resales
of Registrable Shares at any time, unless such Holder has returned to the Company a completed and signed this Agreement (including the Acknowledgement, Notice and Questionnaire at the end of this Agreement) and a response to any requests for further information as described in the previous sentence. The Company has no obligation to include any such Holder as a selling security holder in the Registration Statement or any pre-effective or post-effective amendment or supplement thereto or to include (to the extent not theretofore included) in the Registration Statement the Registrable Shares identified in such request for further information. Each Holder acknowledges and agrees that the information provided by such Holder herein or in any request for further information as described in this
Section 2(d)
will be used by the Company in the preparation of the Registration Statement and hereby consents to the inclusion of such information in the Registration Statement.
(e)
If the Company intends to distribute the Registrable Shares by means of an underwriting, it shall have sole discretion to select such underwriters. In such event, the right of any Holder to include its Registrable Shares in such Registration shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Shares in the underwriting to the extent provided herein. Any Registrable Shares excluded or withdrawn from such underwriting shall be withdrawn from the Registration.
2.2.
Registration Procedures.
In connection with the Company’s registration obligations hereunder, the Company shall use its commercially reasonable efforts to:
(a)
Cause its officers and directors, counsel and independent registered public accountants to respond to such inquiries as shall be necessary, in the reasonable opinion of the Company, to conduct a reasonable investigation within the meaning of the Securities Act.
(b)
(i) Prepare and file with the SEC such amendments (including post‑effective amendments) and supplements, to the Registration Statement and the Prospectus used in connection therewith as may be necessary to keep such Registration Statement continuously effective as to the applicable Registrable Shares for its Effectiveness Period; (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement (subject to the terms of this Agreement), and, as so supplemented or amended, to be filed pursuant to Rule 424 promulgated under the Securities Act; (iii) respond as promptly as reasonably practicable to any comments received from the SEC with respect to the Registration Statement or any amendment thereto and, as promptly as reasonably possible, provide the Holders true and complete copies of all correspondence from and to the Commission relating to such Registration Statement that pertains to the Holders as “Selling Stockholders” but not any comments that would result in the disclosure to the Holders of material and non-public information concerning the Company; and (iv) comply with the provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Shares covered by the Registration Statement until such time as all of such Registrable Shares shall have been disposed of (subject to the terms of this Agreement) in accordance with the intended methods of disposition by the Holders thereof as set forth in such Registration Statement as so amended or in such Prospectus as so supplemented;
provided, however
, that each Holder shall be responsible for the delivery of the Prospectus to the Persons to whom such Holder sells any Registrable Shares (including in accordance with Rule 172 promulgated under the Securities Act), and each Holder agrees to dispose of Registrable Shares in compliance with the “Plan of Distribution” described in the Registration Statement and otherwise in compliance with
applicable federal and state securities laws. In the case of amendments and supplements to a Registration Statement which are required to be filed pursuant to this Agreement (including pursuant to this Section 2.2(b)) by reason of the Company filing Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K or any analogous report under the Exchange Act, the Company shall have incorporated such report by reference into such Registration Statement, if applicable, or shall file such amendments or supplements with the SEC as promptly as reasonably possible.
(c)
Notify, as promptly as reasonably practicable, each Holder of Registrable Shares covered by such Registration Statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing. The Company will use commercially reasonable efforts to amend or supplement such prospectus in order to cause such prospectus not to include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing.
(d)
Avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order suspending the effectiveness of a Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Shares for sale in any jurisdiction, as soon as practicable.
(e)
If requested by a Holder, furnish to such Holder, without charge, at least one conformed copy of each Registration Statement and each amendment thereto and all exhibits to the extent requested by such person (including those previously furnished or incorporated by reference) promptly after the filing of such documents with the SEC; provided, that the Company shall have no obligation to provide any document pursuant to this clause that is available on the SEC’s EDGAR system.
(f)
Prior to any resale of Registrable Shares by a Holder, register or qualify or cooperate with the selling Holders in connection with the registration or qualification (or exemption from the registration or qualification) of such Registrable Shares for the resale by the Holder under the securities or Blue Sky laws of such jurisdictions within the United States as any Holder reasonably requests in writing, to keep each registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or things reasonably necessary to enable the disposition in such jurisdictions of the Registrable Shares covered by each Registration Statement;
provided, however
that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified, subject the Company to any material tax in any such jurisdiction where it is not then so subject or file a general consent to service of process in any such jurisdiction.
(g)
If requested by a Holder, cooperate with such Holder to facilitate the timely preparation and delivery of certificates or book-entry statements representing Registrable Shares to be delivered to a transferee pursuant to the Registration Statement.
(h)
Cooperate with any registered broker through which a Holder proposes to resell its Registrable Shares in effecting a filing with Financial Industry Regulatory Authority (“
FINRA
”) pursuant
to FINRA Rule 2710 as requested by any such Holder;
provided, however
, that the Holder shall pay the filing fee required.
2.3.
Expenses of Registration.
Except as specifically provided herein, all Registration Expenses incurred in connection with any Registration, qualification or compliance pursuant to Section 2.1 herein shall be borne by the Company. All Selling Expenses incurred in connection with any Registration hereunder, shall be borne by the Holders.
2.4.
Delay of Registration; Agreement to Furnish Information; Suspension of Sales.
(a)
No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any such Registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 2.
(b)
It shall be a condition precedent to the obligations of the Company to take any action pursuant to Section 2.1 that the selling Holders shall furnish to the Company such information regarding themselves and the Registrable Shares held by them as shall be required to effect the Registration of their Registrable Shares, including but not limited to the information required pursuant to Section 2.1(d). Each Holder acknowledges and agrees that the information provided to the Company will be used by the Company in the preparation of the Registration Statement and hereby consents to the inclusion of such information in the Registration Statement.
(c)
Each Holder agrees to execute and deliver such other agreements as may be reasonably requested by the Company or the underwriter that are consistent with the Holder’s obligations under Section 2.7 below or that are necessary to give further effect thereto, including but not limited to powers of attorney and the Acknowledgement, Notice and Questionnaire at the end of this Agreement. The Company may impose stop-transfer instructions with respect to the shares of Common Stock subject to the foregoing restriction until the end of said one hundred eighty (180) calendar day period set forth in Section 2.7.
(d)
Each Holder agrees that any transferee who has become such other than pursuant to the Registration Statement of any shares of Registrable Shares shall be bound by this Section 2.4 and Section 2.7. The underwriters of the Company’s stock are intended third party beneficiaries of this Section 2.4 and Section 2.7 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto.
(e)
The Company may require each selling Holder to furnish to the Company a certified statement as to (i) the number of shares of Common Stock beneficially owned by such Holder and any affiliate thereof, (ii) any FINRA affiliations, (iii) any natural persons who have the power to vote or dispose of the Common Stock and (iv) any other information as may be requested by the Commission, FINRA or any state securities commission.
(f)
Upon notification by the Company pursuant to Section 2.2(c), the Holders shall suspend all transactions under the Registration Statement until such time as the Company has amended or supplemented such Registration Statement in accordance with its obligations under Section 2.2(c).
2.5.
Indemnification.
In the event any Registrable Shares are included in a Registration Statement under Section 2.1:
(a)
To the extent permitted by law, the Company will indemnify and hold harmless each Holder, the partners, members, officers and directors of each Holder, any underwriter (as defined in the Securities Act) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a “
Violation
”) by the Company: (i) any untrue statement or alleged untrue statement of a material fact contained in such Registration Statement or incorporated by reference therein, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company 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 in connection with the offering covered by such Registration Statement; and the Company will reimburse each such Holder, partner, member, officer, director, underwriter or controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action;
provided however
, that the indemnity agreement contained in this Section 2.5(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company, which consent shall not be unreasonably withheld, nor shall the Company be liable in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such Registration by such Holder, partner, member, officer, director, underwriter or controlling person of such Holder.
(b)
To the extent permitted by law, each Holder will, if Registrable Shares held by such Holder are included in the securities as to which such Registration qualifications or compliance is being effected, indemnify and hold harmless the Company, each of its directors, its officers and each person, if any, who controls the Company within the meaning of the Securities Act, any underwriter and any other Holder selling securities under such Registration Statement or any of such other Holder’s partners, directors or officers or any person who controls such Holder, against any losses, claims, damages or liabilities (joint or several) to which the Company or any such director, officer, controlling person, underwriter or other such Holder, or partner, director, officer or controlling person of such other Holder may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any of the following statements: (i) any untrue statement or alleged untrue statement of a material fact contained in such Registration Statement or incorporated by reference therein, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company of the Securities Act (collectively, a “
Holder Violation
”), in each case to the extent (and only to the extent) that such Holder Violation occurs in reliance
upon and in conformity with written information furnished by such Holder under an instrument duly executed by such Holder and stated to be specifically for use in connection with such Registration; and each such Holder will reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, controlling person, underwriter or other Holder, or partner, officer, director or controlling person of such other Holder in connection with investigating or defending any such loss, claim, damage, liability or action if it is judicially determined that there was such a Holder Violation;
provided however
, that the indemnity agreement contained in this Section 2.5(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; provided further, that in no event shall any indemnity under this Section 2.5 exceed the net proceeds from the offering received by such Holder.
(c)
Promptly after receipt by an indemnified party under this Section 2.5 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 2.5, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties;
provided, however,
that an indemnified party shall have the right to retain its own 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 proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if materially prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 2.5, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 2.5.
(d)
If the indemnification provided for in this Section 2.5 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any losses, claims, damages or liabilities referred to herein, the indemnifying party, in lieu of indemnifying such indemnified party thereunder, shall to the extent permitted by applicable law contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the Violation(s) or Holder Violation(s) that resulted in such loss, claim, damage or liability, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by a court of law by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state 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, that
(i) in no event shall any contribution by a Holder hereunder exceed the net proceeds from the offering received by such Holder and (ii) no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation; and provided further that in no event shall a Holder’s liability pursuant to this Section
2.5(d), when combined with the amounts paid or payable by such Holder pursuant to Section 2.5(b), exceed the proceeds from the offering received by such Holder, except in the case of willful misconduct or fraud by such Holder.
(e)
The obligations of the Company and Holders under this Section 2.5 shall survive completion of any offering of Registrable Shares in a Registration Statement and the termination of this Agreement. No indemnifying party, in the defense of any such claim or litigation, shall, except with the consent of each indemnified party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation.
2.6.
Assignment of Registration Rights.
The rights to cause the Company to register
Registrable Shares pursuant to Section 2.1 may be assigned by a Holder to a transferee or assignee of Registrable Shares (for so long as such shares remain Registrable Shares) that (a) is a subsidiary, parent, general partner, limited partner, retired partner, member or retired member, or stockholder of a Holder that is a corporation, partnership or limited liability company or (b) is a Holder’s family member or trust for the benefit of an individual Holder;
provided, however,
(i) the transferor shall, prior to consummating such transfer, furnish to the Company written notice of the name and address of such transferee or assignee and the Securities with respect to which such registration rights are being assigned, (ii) such transferee shall agree to be subject to all restrictions and obligations set forth in this Agreement and (iii) such transferee shall agree not to sell such Registrable Shares under the Registration Statement until such time as the Company has concluded that the transferee is eligible to sell such Registrable Shares under the Registration Statement.
2.7.
Market Stand-Off Agreement.
If requested by an underwriter, each Holder hereby agrees that such Holder shall not sell, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale, any Common Stock of the Company held by such Holder for a period specified by the representative of the underwriters of Common Stock of the Company not to exceed one hundred twenty (120) calendar days following the effective date of a Registration Statement of the Company filed under the Securities Act.
2.8.
Termination of Registration Provisions.
With respect to any Holder, all provisions in Section 2 of this Agreement (other than Section 2.5 and 2.7) shall expire and terminate upon the earlier of (i) sixty-six (66) months after the issue date of the Preferred Stock or (ii) when all Registrable Shares of such Holders are eligible to be sold without restriction under SEC Rule 144 or another similar exemption under the Securities Act of the Securities Act.
SECTION 3.
MISCELLANEOUS.
3.1.
Governing Law.
Any action, arbitration, claim, hearing, litigation or suit (whether civil, criminal, administrative, judicial or investigative, whether formal or informal, whether public or private) commenced, brought, conducted or heard by or before any federal, state, local or foreign government or any court of competent jurisdiction, administrative or regulatory body, agency, bureau, or commission in any domestic or foreign jurisdiction, any appropriate division of any of the foregoing or any arbitrator, or other legal action (each, a “
Proceeding
”) relating to this Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all Proceedings concerning the interpretations, enforcement and defense of the actions contemplated by this Agreement (whether brought against a party hereto or its affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the Southern District of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the Southern District of New York for the adjudication of any Proceeding related to this Agreement or the actions contemplated hereby, and hereby irrevocably waives, and agrees not to assert in any Proceeding that it is not personally subject to the jurisdiction of any such court, that Proceeding is improper or is an inconvenient venue for such Proceeding.
3.2.
Successors and Assigns.
Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the parties hereto and their respective successors, assigns, heirs, executors, and administrators and shall inure to the benefit of and be enforceable by each person who shall be a holder of Registrable Shares from time to time;
provided, however,
that prior to the receipt by the Company of adequate written notice of the transfer of any Registrable Shares specifying the full name and address of the transferee, the Company may deem and treat the person listed as the holder of such shares in its records as the absolute owner and holder of such shares for all purposes, including the payment of dividends or any redemption price. Before the Company records a stock transfer on its corporate record books or issues shares of its capital stock to any person following such transfer or issuance and such person is not a party to this Agreement, such person shall be required to first execute and deliver to the Company a counterpart signature page to this Agreement pursuant to which such person agrees to be bound by all of the terms and conditions of this Agreement (as it may have been amended), and the failure of any such person to do so shall preclude the Company from recording such a transfer or issuance on its corporate record books. The addition of any such person as a party to this Agreement shall not be deemed an amendment to this Agreement pursuant to Section 3.5 of this Agreement and shall not require the consent of any of the other parties to this Agreement.
3.3.
Entire Agreement.
This Agreement, the Subscription Agreement and the other documents delivered pursuant thereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and no party shall be liable or bound to any other in any manner by any oral or written representations, warranties, covenants and agreements except as specifically set forth herein and therein. Each party expressly represents and warrants that it is not relying on any oral or written representations, warranties, covenants or agreements outside of this Agreement.
3.4.
Severability.
If any provision of this Agreement, or the application of such provision to any person or circumstance, shall be held invalid by a court of competent jurisdiction, the remainder of this Agreement, or the application of such provision to persons or circumstances other than those to which it is held invalid by such court, shall not be affected thereby.
3.5.
Amendment and Waiver
.
(a)
Except as otherwise expressly provided, this Agreement may be amended or modified only upon the written consent of the Company and the Holders of at least a majority of the Registrable Shares.
(b)
Except as otherwise expressly provided, the obligations of the Company and the rights of the Holders under this Agreement may be waived only with the written consent of the Holders of at least a majority of the Registrable Shares.
(c)
For the purposes of determining the number of Holders entitled to exercise any rights hereunder, the Company shall be entitled to rely solely on the list of record holders of its stock as maintained by or on behalf of the Company.
3.6.
Delays or Omissions.
It
is agreed that no delay or omission to exercise any right, power, or remedy accruing to any party, upon any breach, default or noncompliance by another party under this Agreement shall impair any such right, power, or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of any similar breach, default or noncompliance thereafter occurring. It is further agreed that any waiver, permit, consent, or approval of any kind or character on any party’s part of any breach, default or noncompliance under the Agreement or any waiver on such party’s part of any provisions or conditions of this Agreement must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, by law, or otherwise afforded to any party, shall be cumulative and not alternative.
3.7.
Notices.
Any notice or other communication given hereunder shall be deemed sufficient if in writing and sent by registered or certified mail, return receipt requested, delivered by hand against written receipt therefor, or sent in portable document format (“
pdf
”) via electronic mail, addressed as follows:
if to the Company, to it at:
Diffusion Pharmaceuticals Inc.
2020 Avon Court, Suite 4
Charlottesville, Virginia 22902
Attn: David Kalergis, Chief Executive Officer
Email: dkalergis@diffusionpharma.com
With a copy to (which shall not constitute notice):
Dechert LLP
1095 Avenue of the Americas
New York, New York 10036
Attn: David Rosenthal, Esq.
Email: david.rosenthal@dechert.com
if to the Investor, to the Investor’s address indicated on the signature page of this such Investor’s Subscription Agreement.
Notices shall be deemed to have been given or delivered (i) on the third (3rd) business day following the date of postmark in the case of delivery by registered or certified mail, (ii) on the date of delivery in the case of delivery by hand or (iii) on the date of delivery if delivered by electronic mail; provided that if such e-mail is received after 4:00 p.m. Eastern Time on a business day or at any time on a non-business day, such notice shall be deemed delivered on the following business day.
3.8.
Titles and Subtitles.
The titles of the sections and subsections of this Agreement
are for convenience of reference only and are not to be considered in construing this Agreement.
3.9.
Counterparts.
This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but such counterparts together shall constitute one and the same instrument. Delivery of executed signature pages hereof by facsimile transmission or pdf shall constitute effective and binding execution and delivery of this Agreement.
3.10.
Pronouns.
All pronouns contained herein, and any variations thereof, shall be deemed to refer to the masculine, feminine or neutral, singular or plural, as to the identity of the parties hereto may require.
[THIS SPACE INTENTIONALLY LEFT BLANK]
The undersigned hereby acknowledges and is advised of the following Interpretation A.65 of the July 1997 SEC Manual of Publicly Available Telephone Interpretations regarding short selling:
“An Issuer filed a Form S-3 registration statement for a secondary offering of common stock which is not yet effective. One of the selling stockholders wanted to do a short sale of common stock “against the box” and cover the short sale with registered shares after the effective date. The issuer was advised that the short sale could not be made before the registration statement become effective, because the shares underlying the short sale are deemed to be sold at the time such sale is made. There would, therefore, be a violation of Section 5 if the shares were effectively sold prior to the effective date.”
By returning an executed copy of this Agreement, the undersigned will be deemed to be aware of the foregoing interpretation and to have confirmed that, to the best of the undersigned’s knowledge and belief, the foregoing statements (including without limitation the answers to this Acknowledgment, Notice and Questionnaire) are true, correct and complete.
PLEASE FAX OR E-MAIL A COPY OF THE COMPLETED AND EXECUTED ACKNOWLEDGEMENT, NOTICE AND QUESTIONNAIRE, AS WELL AS THE SIGNATURE PAGE THAT FOLLOWS, AND RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:
Kevin Silk
Dechert LLP
2929 Arch Street
Philadelphia, Pennsylvania 19104
Fax: 215-655-2506
Email: kevin.silk@dechert.com
*******************************************
IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Agreement to be executed and delivered either in person or by its duly authorized agent.
Signature Signature (if shares are held jointly)
Name Typed or Printed Name Typed or Printed
Title (if Investor is an Entity) Title (if Investor is an Entity)
AGREED AND ACCEPTED:
DIFFUSION PHARMACEUTICALS INC.
By:____________________________________
Name:
Title:
Dated: _________________, 2017
Tenant: Diffusion Pharmaceuticals Inc.
Su
i
te:
1317
Carlton Ave., Suite 400
DEED OF LEASE
THIS DEED OF; LEASE (this “Lease”) is
entered
into as of the 31
st
day of
March 2017, between
ONE CARLTON, LLC, Aa
Virginia Limited liability
company ("Landlord"),
and DIFFUSION PHARMACEUTICALS INC., a Delaware corporation (“Tenant”).
In consideration of the mutual covenants stated below, and intending to be legally bound, the parties covenant and agree as follows:
1.
PREMISES
. Landlord leases to Tenant, and
Tenant
leases from Landlord, for the Tenant and upon the terms and subject to the conditions of this Lease, the entire second floor of the Building
(as
shown on
Exhibit A
attached hereto) but exclusive of the mezzanine space, known-as Su
i
te
400
which
the part
i
es
stipulate
and agree cons
i
st of approxima
t
ely 8,221 rentable square feet of space
(the "
Premises'')
in the Building. The “Building” is the building known as
1317 Carlton
Avenue, Charlottesville, Virginia 22902
.
The
'
'Pro
j
ect'
'
is the land on
which
the
Building
is
located,
-together with
the Building and all other improvements thereon. The Premises are delivered
"As
ls".
2.
TERM
.
(a)
The term of this Lease
(the "
T
erm
") shall
commence
on
April
15,2017
(the "
Commencement
Date
'
'
)
.
The
terms and provisions of this Lease are binding on the parties upon Tenant's and Landlord's execution of this Lease
notwithstanding
a
later
Commencement Date for the Term.
The Commencement
Date and Rent Commencement Date
(as
hereinafter defined) shall be confirmed by Landlord and Tenant by the execution of a
Confirmation
of Lease Term
(
the “
COLT
") in the form attached
hereto
as
Exhibit B
.
1f
Tenan
t
fails
to
execute or
object to
the COLT within
ten (I
0) business days of its delivery, Landlord's determination of such dates
shall
be deemed accepted.
(b)
The Term shall end on
April 30,
2022, unless
extended
or sooner terminate pursuant to the term of this Lease.
(c)
Provided Tenant is Diffusion Pharmaceuticals, Inc., or any
Affiliate
(as
defined in Section 9(b)
below
)
or
Surviving
Entity (as defined in Section 9(d) below), Tenant is neither in default at the time of
exercise
nor has
Tenant
ever been in default beyond notice and cure (irrespective of the fact
that
Tenant
later
cured such default
after the
applicable cure period expired) of any monetary obligations under the Lease more
than twice
during the Term, Tenant
is
fully occupying
the
Premises and the Lease is in full force and effect,
Tenant
shall have
the
right to
extend
the
Term (the "
First
Extension
Option
")
for sixty
(60)
months beyond the end of
the
Term as extended by
this
option
(i.e.
,
from
May I
,
2022 to April 30, 2027)
the
"
First
Extension Term
"). Tenant shal
l
furnish
written notice to Landlord of intent to extend
t
he Term
("Tenant
'
s First
Extension Notice")
no later than May 1, 2021
,
failing
which
the First Extension Option shall be deemed
waived;
time being of the essence. The terms and
conditions
of the
Lease
during the
First
Extension Term shall remain unchanged except that the annual Fixed Rent for each
twelve (12)-month
period of the First Extension
Term
shall be
the
amount as set forth in Section 3
(a)
below.
(d)
Provided
Tenant is
Diffusion Pharmaceuticals
Inc.
,
or any Affiliate or Surviving Entity, Tenant is
neither
in default at the time of exercise nor has
Tenant
ever been in default beyond notice and cure
(irrespective
of the fact that
Tenant
late
r
cured
such default after the applicab
l
e cure period expired) of any monetary obligations under
the
Lease more
than
twice during the
Term, Tenant is fully occupying the Premises and the Lease is
in full force
and
effect,
Tenant shall have
the right
to
extend
the
Term (the
''
Second Extension
Option
") for
sixty (60)
months beyond the end of the
Term
as
extended
by this second option
(i.e.,
from
May
1,
2027
to April 30
,
2032)
the
"
Second
Extension Term
''). Tenant shall furnish
written
notice
to
Landlord of intent
to extend
the Term
("
Tenant's Second Extension
Notice
") no later than May l,
2026
,
failing which
the Second Extension Option shall be deemed waived; time being of the
essence.
The terms and conditions of
the Lease
during the Second Extension
Term shall
remain unchanged except that the annual
Fixed
Rent for each
twelve
(12)-month period of
the Second
Extension Term
shall
be the amount as set
forth
in Section 3(a) below.
Notwithstanding
anything to the contrary
herein, Tenant shall have no right to extend the Term other than or beyond the two (2), sixty (60)-month extension terms described in this and the preceding paragraph.
(e)
Upon Tenant’s timely and proper exercise of the First Extension Option (and, if timely and properly exercised, the Second Extension Option) pursuant to the terms above and satisfaction of the above conditions, the “
Term
” shall include the First Extension Term (and the Second Extension Term), and Landlord and Tenant shall execute prior to the expiration of the then-expiring Term an appropriate amendment to this Lease, in form and content reasonably satisfactory to both Landlord and Tenant, memorializing the extension of the Term for the ensuing First or Second Extension Term. Notwithstanding the foregoing, failure of either of the parties to timely execute the said amendment shall not affect the validity of an Extension Term provided Tenant has met the requirements of
Section 2(c)
or
2(d)
above.
3.
FIXED RENT; SECURITY DEPOSIT; GUARANTY
.
(a)
Tenant covenants and agrees to pay to Landlord, commencing on May 1, 2017 (the “Rent Commencement Date”) and continuing during the Term, without notice, demand, set-off, deduction or counterclaim, fixed rent (“
Fixed Rent
”) in the amounts set forth below, payable in accordance with
Section 3(b)
:
|
|
|
|
|
TIME PERIOD
|
RENT PER R.S.F.
|
MONTHLY
INSTALLMENTS
|
ANNUAL FIXED RENT
|
5/1/17 – 4/30/18
|
$13.50
|
$9,248.63
|
$110,983.50
|
5/1/18 – 4/30/19
|
$13.75
|
$9,419.90
|
$113,038.75
|
5/1/19 – 4/30/20
|
$14.00
|
$9,591.17
|
$115,094.00
|
5/1/20 – 4/30/21
|
$14.25
|
$9,762.44
|
$117,149.25
|
5/1/21 – 4/30/22
|
$14.50
|
$9,933.71
|
$119,204.50
|
(1st x ext) 5/1/22 – 4/30/23
|
$14.75
|
$10,104.98
|
$121,259.75
|
(1st x ext) 5/1/23 – 4/30/24
|
$15.00
|
$10,276.25
|
$123,315.00
|
(1st x ext) 5/1/24 – 4/30/25
|
$15.25
|
$10,447.52
|
$125,370.25
|
(1st x ext) 5/1/25 – 4/30/26
|
$15.50
|
$10,618.79
|
$127,425.50
|
(1st x ext) 5/1/26 – 4/30/27
|
$15.75
|
$10,790.06
|
$129,480.75
|
(2nd x ext) 5/1/27 – 4/30/32
|
Market, but not lower than
$16.00 sf for 1st year with annual increases of $.25 sf
|
--
|
--
|
(b)
Monthly installments of Fixed Rent shall be payable in advance on or before the first day of each month of the Term by wire transfer or ACH of immediately available funds to the account at Bank of America account of Henry Liscio Company Escrow Account no.435019970194, ABA wire routing number 026009593 (ACH ABA routing number 05100017), or as otherwise directed in writing by Landlord to Tenant.
(c)
Together with Tenant’s execution of this Lease, Tenant shall pay to Landlord the installment of Fixed Rent due for May,2017, and the Security Deposit (as defined below) by two separate checks. If any installment of Fixed Rent is not paid by the fifth of the month, or any other amount due from Tenant is not paid to Landlord when due, Tenant shall also pay as Additional Rent (as defined in
Article 4
) a late fee of ten percent (10%) of the total payment then due. Tenant shall be required to pay a security deposit of $9,248.63 (the “
Security Deposit
”), as security for the prompt and complete performance by Tenant of every provision of this Lease. No interest shall be paid to Tenant on the Security Deposit. If Tenant fails to perform any of its obligations hereunder, Landlord may use, apply or retain the whole or any part of the Security Deposit for the payment of: (i) any rent or other sums of money that Tenant may not have paid
when due; (ii) any sum expended by Landlord in accordance with the provisions of this Lease; and/or (iii) any sum that Landlord may expend or be required to expend by reason of Tenant’s default. The use of the Security Deposit by Landlord shall not prevent Landlord from exercising any other remedy provided by this Lease or by law and shall not operate as either liquidated damages or as a limitation
on any recovery to which Landlord may otherwise be
en
ti
tled.
If any portion of the Security Deposit is used, applied or retained
b
y
Landlord, Tenant agrees, within ten
(10)
days after the written demand therefor
is
made by Landlord, to deposit
cash
with
Landlord in
an amount sufficient to restore the Security
Deposit
to
its
original amount.
In
addition
to the foregoing, if Tenant defaults
(irres
pective
of the fact that Tenant cured
such default
)
more than
once
in its performance of a monetary
obligation
and such monetary defaults aggregate in excess of $15,000.00 under this Lease, Landlord may require Tenant to increase
the
Security
Deposit to
the greater of twice
the:
(i)
Fixed Rent
paid
monthly; or (ii) the initial
amount
of the Security
Deposit.
If Tenant shall fully
comply
with all of the provisions of this
Lease, the
Security
Deposit,
or
a
ny
balance
thereof shal
l be returned to
Tenant within a reasonable time after
the
later of
the
end
of the
Term
or Tenant's delivery
of
the Premises to
Landlord a
s
required hereunder
.
Upon the return
of
the Security
Deposit to
the original
Tenant
hereunder, or the remaining balance
thereof,
Landlord
shall be
completely
relieved
of liability with respect to
the
Security
Deposit
In the
event
of a transfer of the
Building,
Landlord shall have the right
to
transfer
the
Security
Deposit and Landlord
shall thereupon be
released
by Tenant from all liability for the
return
of
such
Security Deposit. Upon the assumption of
such
Security
Deposit
by the transferee,
Tenant
agrees to
look
solely to
the new
landlord
for
the return of such Security Deposit.
4
,
ADDITIONAL
RENT
.
(a)
Commencing on the
Commencement Date:
and in each calendar year thereafter during the Term,
Tenan
t
covenants and
agrees
to
pay
in advance on a monthly basis to Landlord Tenant's Share of Operating Expenses, without
deduction,
counterclaim or set off. "
Tenant's Share
"
equals the
number of rentable square
feet
of the Premises
divided
by
the
number of rentable square feet office
Building
(which
the parties confirm contains approximately
78,454 rentable
square feet). Tenant's Share on
the
date of this Lease is stipulated to be 10.48%.
"
O
perating
Expenses
" are:
(i)
all
reasonable operating
costs and expenses related to the maintenance, operation and repair of
the
Project incurred
by Landlord,
including
but not limited to a
management fee
not
to
exceed
five percent
(5%)
of gross rents
and
revenues
from
the
Project;
utilities; and
capital
expenditures and
capital
repairs and replacements, which capital items shall
be
included as operating expenses solely
to
the extent of
the
amortized costs of same
over
the useful life of the improvement in accordance with generally accepted accounting
principles;
(ii)
all
insurance
premiums
payable by Landlord for
insurance with respect to
the Project;
and (iii)
taxes
payable on the Project. Each
of
the Operating Expenses
shall for all
purposes be treated
and considered
as Additional Rent. Tenant shall
pay,
in monthly installments
in advance
,
on
account
of
Tenant's
Share of Operating Expenses, the estimated amount of
the Operating
Expenses for such year as
determined
by Land
l
ord in
its reasonable
discretion.
Prior
to the end
of
the calendar year in which the
Lease
commences and thereafter for each successive
calendar
year during the Term (each, a
''
Lease
Yea
r'), or part thereof: or as soon as administratively available thereafter
,
Landlord shall send
to
Tenant a statement of projected Operating Expenses
and
shall
indicate
what
Tenant's
Share of Operating
Expenses shall be. As soon as administratively available, Landlord shall send to Tenant a
statement
of actual Operating Expenses for the prior
Lease
Year showing
the
actual
amount
due
from
Tenant.
In
the event
the
amount prepaid by Tenant exceeds the amount
that
was actually due then Landlord shall
issue
a
credit
to Tenant in an amount equal to the overcharge, which
credit
Tenant may
apply to future payments on
account of
Operating Expenses
until Tenant
has been fully credited with the overcharge. If the credit due
to
Tenant is more than the aggregate total
of
future
renta
l
payments, Landlord shall
pay
to Tenant
the
difference
between
the credit and such aggregate total. In the event Landlord has undercharged Tenant, then
Landlord
shall send Tenant an invoice with the additional amount due, which amount shall be paid in
full
by Tenant within twenty (20) days of
receipt.
Tenant's obligations under this
Article 4
shall survive the expiration or sooner
termination
of this Lease.
(b)
ln calculating the Operating Expenses, if for thirty
(30)
or more days during
the
preceding Lease Year less than ninety-five percent (95%) of
the rentable
area
of
the Building was occupied by tenants,
then
the Operating Expenses
attributable
to the
Project
shall be
deemed
for such Lease Year to be amounts equal to the Operating Expenses
that
would
normally be
expected
to
be incurred bad such occupancy of the
Building
beep at least ninety-five percent
(95%)
throughout such year, as reasonably determined
by
Landlord
(i.e.,
taking into account that certain expenses depend on occupancy
(e.g.,
janitorial
)
and certain expenses do not
(e.g.,
landscaping))
.
Furthermore, if Landlord shall
not
furnish any item or items of Operating Expenses to any portions
of
the
Building because
such portions are not occupied or because such item is not
required by
the tenant of such portion
of
the Building, for the purposes
of
computing Operating Expenses, an equitable adjustment shall be made so
that
the item of Operating Expense
in
question
shall
be
shared only
b
y
tenants actually
receiving
the benefits thereof
.
(c)
All costs and
expenses
other
than
Fixed Rene
that Tenant
assumes
or
agrees to pay and
any
other sum payable by Tenant pursuant to this Lease, including, without limitation, pursuant to this
Article 4
, shall be deemed "
Additional
Rent
",
and all remedies applicable to
the nonpayment of
Fixed Rent shall be applicable thereto. Fixed Rent and Additional Rent
are herein referred to collectively
as "
Rent
". Land
lo
rd may apply payments
received
from Tenant
to any obligations
of Tenant then
accrued
,
without regard to such obligations
as
may
be designated b
y
Tenant. Additional Rent shall be
paid by Tenant
in the same manner as
Fixed Rent,
without
any
prior
notice or
demand
therefor
and without
deduction, set-off
or counterclaim and without relief from any valuation or appraisement
l
aws
.
(d)
Notwithstanding the foregoing definition of Operating Expenses, for purposes of this lease, “Operating Expenses” shall not include the following:
(i)
the cost
of
any special work or service performed for
any
tenant (including Tenant) at such tenant's cost;
(ii)
any real estate brokerage commissions or other costs incurred m procuring tenants or any fee lieu of such commission;
(iii)
the cost of correcting
defects
in construction of the Project or the
Building;
(iv) compensation paid to officers and executives of Landlord;
(v) the cost of any items
for which Landlord is reimbursed by insurance, condemnation or otherwise;
(vi) the cost of any additions, changes, replacements and other items which are solely made in order to prepare for a new tenant’s occupancy;
(vii) interest on debt or amortization payments on any mortgage or deed to secure debt and rental under any ground lease or other underlying lease;
(viii) capital expenditures to the common areas of the Project, unless such capita
l
expenditures are
aimed at
reducing Operating Expenses, maintenance
of
existing equipment, improving safety, or compliance
with
governmental rules and
regulations
(such
as the installation
of low
energy lights in the parking area on the Project);
(ix) capital expenditures made as part of the acquisition or redevelopment of the Project;
(x) any expenses for repairs or maintenance which are covered by warranties and service contracts, to the extent such maintenance and repairs are made at no cost to Landlord;
(xi) legal expenses arising solely out of the construction of the improvements on the Project the entering into or enforcement of the provisions of any lease of space within the Building, including without limitation this Lease;
(xii) any advertising expe3nses incurred in connection with the marketing of any rentable space; and
(xiii) rental payments for base building equipment such as HVAC equipment and elevators.
5.
UTILITIES.
(a)
Landlord shall use commercially reasonable efforts to sub meter utilities to the Premises, in
which case Tenant shall make arrangements with the applicable service provider to provide such serv
i
ces to the Premises in
Tenant's
name, and Tenant shall pay directly to such service providers the cost of all service connection fees and utilities consumed at the Premises throughout the Term. If any utility service is not
separately
metered, Landlord shall pay such bills and Tenant shall pay
to
Landlord within fifteen (15) days after actual receipt of the amount due from Landlord an amount based
on the
actual usage by Tenant
(as
determined by submeter read by Landlord) and
the
actual rate charged to Landlord by
the
utility provider without additional fee from Landlord.
If
Tenant
fails
to pay in a timely manner any sum required under this. Article
5.
Landlord shall have the right, but not me obligation, to pay any such sum
.
Any sum so paid
by
Landlord shall be deemed
to
be owing by Tenant to
Landlord
and due and pc1yable as Additional Rent within ten
(l
0) days after demand therefor.
Notwithstanding
anything
herein
to the contrary,
any supplemental
heating and/or cooling systems and equipment serving the Premises shall be separately metered to the Premises at Tenant's cost, and Tenant
shall
be solely responsible for all electricity registered by such meters
.
Landlord shall not be liable for any interruption or delay in
electric
or any other utility service for any reason unless caused by the gross negligence or
willful
misconduct of Landlord.
(b)
Use of the-Premises-, or any part thereof, in a manner exceeding the design
conditions (including
occupancy and connected electrical load) for the heating, ventilation and air conditioning
("HV
AC")
units serving the Premises, or rearrangement of partitioning which interferes with normal operation of the
HV
AC system
serving
the Premises, may require
changes
in the HVAC system serving the Premises. Landlord has no obligation to keep cool any of Tenant's
information
technology equipment that is placed
together
in one room
,
on
a rack, or in any simi
l
ar manner ("
IT Equipmen
t"), and Tenant
waives
any claim agains
t
Landlord in connection
with
Tenant's IT Equipmen
t
.
If Tenant exceeds
the
design conditions for the heating or cooling unts in the
Premises
or introduces into the Premise’s equipment that overloads the system. and/or in any oilier
way
causes the system not
adequately
to perform their proper functions,
supplementary systems
may at Landlord
'
s option be provided by Landlord at
Tenant's
expense. Tenant shall
not
change or adjust any closed or sealed thermostat o
r
other
element of the HV AC system without Landlord's express prior written consent. Landlord may install and
operate
meters
or
any
other reasonable system for monitoring or estimating any services or utilities used by Tenant in excess of those
required
to be provided by Landlord
(including
a
system
for Landlord's engineer reasonab
l
y
to estimate any such
excess
usage). If such
system
indicates such
excess
services or
utilities,
Tenant shall pay Landlord
1
s reasonable
charges
for
installing
and operating such
system
and any supplementary air conditioning, ventilation., beat, electrical,
or
other
systems or
equipment {or adjustments or modifications
to the
existing Building
systems
and equ
i
pment), and Landlord's reasonable charges for such
amount
of excess services or
utilities
used by Tenant
6.
SIGNS: USE OF PREMISES AND COMMON AREAS
.
At Tenant's
cost, Land
l
ord shal
l provide
Tenant
with
Building-standard identification signage on all Building directories and at the entrance to the Premises. No other signs shall be placed, erected
or
maintained by Tenant at any place upon the Premises, Building or Project. Tenant's
use
of the Premises shall be limited to general office and laboratory, including,
without
limitation,
medical
testing, use
(the
“
Permitted
Use
"). The
Permitted Use shall be subject to all applicable Laws
(as
defined in
Article 21
)
and
to all
reasonable requirements of the insurers of the Building. Without Landlord's prior written consent, Tenant shall not install in or for the Premises any equipment that requires more
electric
current
than
is standard in
the
Building. Tenant shall have the right,
non-exclusive
and in common
with others,
to use: (i) the exterior paved driveways and wa
l
kways of the Building for
vehicular
and pedestrian access to the Building;
(ii)
the internal
common
area, if any; and
(
i
i
i
)
the designated parking areas of the Project for the parking of automobiles
of
Tenant
and its employees
and business visitors and vendors; provided Landlord shall have the right in its sole discretion and from time to time, to construct
,
maintain,
operate, repair
,
close
,
limit,
take out
of
service
,
alter, change, and modify all or any part of the commo
n
areas of the
Project, including
without limitation,
restricting
or limiting Tenant's utilization
of
the parking areas in the event the same become overburdened and in such
case to equitably allocate on proportiona
t
e basis or assign parking spaces among Tenant and the other tenants of the Building. Tenant
shall
be
solely
responsible for installation of
its
data/te1ecommurucation systems
and wiring
at the
Premises, which
shall be done
in
compliance
with
all applicable Laws. Subject
to
Landlord
'
s
reasonable
approval, Tenant may
use
the
vendor
of its choice for such installation
,
Landlord
shall
mark the spaces outside the front door of the Building as reserved for
visitors. In
no event
will Landlord
reduce
the
ratio of parking spaces
to
rentable square feet
of the
Project below the ratio that exists as
of
the date of this Lease. Tenant
shall
be given four
(
4)
reserved
parking spaces in the
parking
lot
closest
to the entrance to the Premises.
7.
ENVIRONMENT
AL
MATTERS
. Tenant shall not use
,
generate, manufacture, refine, transport, treat
,
store,
handle,
dispose,
bring
or otherwise cause to
be
brought or permit any
of
its agents,
employees,
subtenants, contractors or invitees to bring,
in,
on or
about
any part of
the
Project, any hazardous. waste,
hazardous
substances
,
toxic
substances, oil, asbestos or other hazardous material, pollutant or contaminant as defined by 42 U.S.C. Sections 960
1
et
seq.,
as
the
same may from time to
time
be amended, and the regulations promulgated pursuant thereto (CERCLA), or now or hereafter regulated by any Law.
N
otwithstanding
the foregoing
,
Tenant shall be permitted to
bring
onto the
Premises
Hazardous
Materials
(as defined below) used in connection with its business provided Tenant shall at all times comp
l
y \with all
La
ws
(including
,
without limitation laws gove1ning the use of laboratory space) pertaining
to
the storage handling, use and application of such Hazardous Materials. This
Article
7
shall
survive
the expiration or
sooner
termination of this Lease. In no event shall Landlord
be
required to consent to
the
installation or use of any
Hazar
dous
Material storage tanks at
the
Project.
Tenant
,
at
its sole cost
and expense
,
shall remediate in a manner satisfactory to the applicable governmental agencies
any
Hazardous Materials released on or from the Project by Tenant, its agents, employees, contractors,
assignees,
subtenants or
invitees.
Tenant shall complete and certify disclosure statements as
requested
by Landlord
from time
to
time relating
to Tenant's
transportation, storage,
use
,
generation,
manufacture
o
r
release
of
Hazardous
Materials at the Premises. As defined in any applicable Laws, Tenant
is
and
shall
be deemed to be the
"op
erator” of Tenant's
''facility” and the
"
owner"
of
a1J
Hazardous
Materials brought on the
Premises
by Tenant, its
agents,
employees, contractors,
assignees
, su
btenants
,
or invitees, and the wastes,
byproducts
,
or residues
generated,
resulting, or
produced therefrom
.
''
Hazardous Materials
" means
any
flammable
items,
explosives, radioactive materials, hazardous or toxic
substances,
material or waste or
related
materials,
including any
substances defined as or included in
the
definition of "hazardous
substance", "
hazardous
wastes/'
"hazardous material", or "toxic substances" now or subsequently regulated under any applicable federal, state or
local La
ws
or
regulations
,
including without limitation petroleum based products,
paints,
solvents, lead, cyanide
,
DDT,
printing inks,
acids,
pesticides, ammonia compounds and other chemical
products, asbestos,
PCBs and similar compounds. and including any diffe
r
ent
products
and materials that are subsequently found to have adverse effects
on
the environment or the health and safety of persons.
In the
event that Hazardous Materia1s are discovered that (i) are located in the Premises and pre-date Tenant's occupancy of the Premises; or,
(ii)
are located
in
the
Premises
and were introduced
by
Land
l
ord., its
agents
,
employees, or
contracto
rs,
such Hazardous Materials shall be remediated by Landlord in a manner satisfactory to the applicable governmental agencies
at Lan
dl
o
rd
1
s sole
cost
and expense. Landlord
r
epresents and warrants to Tenant
that
it
ha
s re
cei
ved
no notice and has no knowledge of
any
violations of any federal state or local
laws
,
ordinances, orders, regulations and requirements affecting the Premises,
the Building
,
or the Project.
8.
TENANT'S ALTERATIONS
.
Tenan
t
shall not cut,
drill
into
or
secure any fixture, apparatus or equipment or make alterations, improvements or physical additions
(
collectively,
"
Alterations
")
of any kind to any
part
of the Premises without first obtaining
the
written consent of Landlord, such consent not to be unreasonably
w
ithheld,
Alterations shall
be in
compliance with all Laws. With
respect to
all Alterations made after the date hereof, other than those expressly
made by Landlord pursuant
to this
Lease,
Tenant acknowledges and agrees
that
(i) Tenant is no
t,
under any circumstance, acting as the agent of Landlord;
(
ii
)
Lru1d!ord
did
not cause or
request
s
uch
Alterations to
be
made;
(iii)
Landlord has not ratified such work;
and
(iv)
Landlord
did
not
authorize such Alterations within the
meaning
of Section
43
3
of
the
Code of Virginia
or any
amendment
thereof
All Alterations (whether temporary or permanent in character) made in or
upon
the
Premises
,
either by Landlo
r
d
or Tenant,
shall be Landlo1'd's property
upon
installation and sha
l
l remain on the Premises without
compensation
to Tenant unless
Landlor
d
provides written
notice to Tenant
to remove same at the expiration or sooner termination of
this
Lease,
in
w
hich event Tenant shall promptly remove such Alterations and restore
the
Premises to good
order
and condition. Notwithstanding the foregoing, Landlord
has consented to
Tenant's initial
up-fit
of the Premises
pursuant to the
plans
attached hereto as
Exhibit "D
"
("Tenant's Initial Work"). Further, the following items of Tenant's Initial Work shall at all times remain Tenant's property and may be removed on or before the expiration of the Temby Tenant, at Tenant's sole cost and e:XJ>ense, and so long as Tenant repairs any
damage
occasioned
by the
removal of such item
,
s and restore
s_
the Premises to at least as good of a condition
as
existed
as
the date of
this
Lease, ordinary
wear
and tear excepted:
All parts of Tenant's laboratory space
.
9.
ASSIGNMENT Mm SUBLETTING
.
(a)
Except as o
otherwise
expressly provided in this
Article
9,
neither Tenant
nor
Tenant
'
s
legal
representatives or successors-in-interest
by
operation of law or otherwise, shall
sell,
assign, transfer
,
hypotheca
te,
mortgage
,
encumber, grant concessions or
licenses
,
sublet, or otherwise dispose of all or any interest in
this
Lease
or
the
Premises,
or
permit
any
person
or entity
other
than Tenant
to
occupy any portion of the Premises, without Landlord's prior written consent, which consent shall not be unreasonably withheld,
conditioned
or
delayed.
Any
of
the
foregoing
acts (a
"
Transfer
"
to a "
Transferee
") without such consent shall constitute an Event of Default and shall, at Landlord's option, be void
and/or terminate
this Lease. Landlord and Tenant acknowledge that
Tenant
is a publicly traded entity and so
long
as
Tenant remains a publicly traded entity
an
assignment shall not include any
assignment
by operation of law, any merger, consolidation, or asset sale involving Tenant,
any direc
t
or indirect transfer
o
f
control of Tenant and any transfer of a majority of the
ownership
interests in Tenant. Consent
by
Landl
ord
to any Transfer shall be held to apply only to the
spe
cific Transfer
authorized. Such consent shall not be construed as
a
waiver of the
duty
of Tenant, or Tenant's
legal
representatives or assigns, to obtain from Landlord consent
to
any other or subsequent
Transfers
,
or as modifying or
limiting
the rights of
La
ndlo
rd
under the foregoing covenant by Tenant not
to
Transfer without Landlord's consent. The acceptance of rental by Landlord from any other person shall not
be deemed to
be a waiver by Landlord of
any provision
hereof.
(b)
If at any
time
during the
Term
Tenant desires to consummate a
Transfer
which requires Landlord consent, Tenant shall give notice to Landlord of
such
desire, including the name,
addre
ss
and contact party for the proposed Transferee, the effective
date of
the proposed Transfer (including the proposed occupancy date by the proposed
Transferee
),
and in the instance
of
a proposed sublease, the square footage
to be
subleased, a floor plan professonally drawn to scale depicting the
proposed
sublease area and a statement of the duration of the proposed sublease
(which
shall in any and all events expire by its terms prior to the scheduled expiration of this Lease
,
and immediately upon the sooner
terminatio
n
hereof). Landlord may,
a
t
its option, exercisable by notice given
to
Tenant within forty
-
five (45) days following Landlord's receipt of Tenant's notice, elect to
r
ecapture
the
Premises if Tenant is proposing to sublet, or
termina
te
this Lease in the event of an assignment.
(c)
Regardless of
Landlord
's
consent, no Transfer shall release Tenant of Tenant's obligation or alter the primary
liability
of Tenant to pay the Rent and to perform all other obligations to be performed by Tenant hereunder, and DIFFUSlON
PHARMACEUTICALS
INC. and
all
assignees shall be jointly
and
severally liable for all Tenant obligations under this Lease, In connection with each proposed Transfer requiring
Landlord
approval and regardless of whether consent
is
given, Tenant shal
l
pay
to
Landlord: (i) an administrative fee of $1,000 per request in order to defer Landlord's administrative expenses arising from such request;
plus
(ii)
Landlord's
reasonab
le
attorneys' fees. Any sums or other economic consideration received by Tenant as a result of any
Transfer
(except payments that are unrelated to Tenant's
leasehold
interest in the Premises (such as
cash
consideration for Tenant's
sto
ck
),
and rental or other payments
received
that
are
attributable
to
the amortization of the cost of leasehold improvements made
to the
transferred
portion
of the Premises by
Tenant to
the Transferee, and other reasonable
expenses
incident to the
Transfer,
including standard
leasing
commissions
)
whether
denominated
rentals under the sublease or
otherwise
,
that exceed, in the aggregate, the total sums which Tenant is obligated
to
pay Land
l
ord under this Lease (prorated to reflect obligations
allocable
to that portion of the Premises subject to such
Transfer)
shall be divided evenly between Landlord
and
Tenant, with Landlord's
portion
being payable to
Landlord
as
Additiona
l
Rent without affecting
or
reducing any other obligation of
Tenant
.hereunder
.
(d)
Notwithstanding
the
foregoing, Tenant shall have the right without the prior
con
sen
t
of Landlord, but after
at
least fifteen
(15)
days' prior written notice to Landlord,
to
ass
i
gn this Lease or sublet any portion of the Premises to any Affiliate (as
defined
below), or an entity
(the
''Sur
viving
Entity")
into which Tenant merges or that acquires substantially all of the assets or stock of1'enant; provided:
(i)
such assignee shall, in writing, assume and agree to perform all of the obligations of Tenant under this Lease, and it shall deliver a copy of such assignment and
assumption agreement
to Landlord within ten (
10
)
days thereafter, together with a certificate of insurance evidencing the assignee's compliance with the insurance requirements of Tenant under this
Lease; (ii)
the Surviving Entity shall
have
a tangible
net
worth at
least
equal to the greater of the net worth of Tenant on the date of this Lease or on the date of such
Transfer;
(iii)
DIFFUSION
PHARMACEUTICALS INC. and any subsequent Tenant/assignor shall not be released or discharged from any liability under this Lease by reason of such Transfer;
(iv)
the use of the Premises shall
be
for the Permitted Use; and (v)
if
the
assignmen
t
or subletting is to an Affiliate, such assignee or subtenant shall
remain
an Affiliate
1hro
ughout the Term
and if such
assignee
or subtenant shall cease being an Affiliate,
Tenant
shall notify Landlord
in
writing of such change and such transfer shall be deemed an Event of Default if Landlord's consent thereto is not given in writing within ten (l 0) business
da
ys
of
such notification. An "
Affiliate
" shall mean: (i) an entity which is
50% or more owned
by those owning 50% or more of
Tenan
t;
(ii) a subsidiary of
Tenant,
(ill) a parent entity of Tenant;
or,
(iv) a subsidiary of the parent entity of Tenant.
10.
LANDLORD
'S
RIGHT OF ENTRY.
Landlord
and
persons autb01ized
by Landlord may enter the
Premises
at all reasonable times upon reasonable advance
notice
with the accompaniment by a Tenant representative or specific written consent of the Tenant to the areas
where
Landlord
and persons authorized by Landlord will be allowed to
ent
er (
or any time without
notice
in the case of an
emerge
ncy
).
Landlord shall not
be
liable for inconvenience to
or disturbance of
Tenant
by
reason of any such entity; provided
,
however, in the case of repairs or work, such
shall
be
done, so far
as
practicable, so as to
not unreasonably interfere with Tenant's use of the Premises. Notwithstanding the foregoing,
Landlord
and
Tenant
acknowledge that, as
a re
sult
of
the
nature of Tenant's business operations in the
Premises,
Tenant is
required by
applicable laws and
regulations
to restrict access to
the
Premises and
to
comply with other extraordinary security procedures. Accordingly, Landlord expressly acknowledges
that
as a material condition of the Lease, it shall comply with Tenant's security provisions when
accessing
the Premises for any reason, however
,
in the
event
of an emergency, Landlord
may use
any means necessary to access the
Premises.
Landlord agrees that if it accesses the Premises
in t
he
event of an emergency, Landlord shall immediately or as soon as reasonably practical, notify Tenant of
such
access. Tenant
deals
with sensitive non-public information in the
conduc
t
of
the Permitted
Use and Landlord shall, and shall
require
its contractors’ agents, and employees to, keep confidential any items observed, seen, l1eard, or
learned
while inside
the
Premises.
11.
REPAJRS AND MAINTENANCE
.
(a) Tenant
,
at its sole cost
an
d
exp.en.se and
throughout
the
Term,
shall keep and maintain the interior of the Premises and mechanical,
plumbing
and electrical systems
exclusivel
y
serving the Premises
(incl
uding
;
without limitation, HVAC systems and equipment serving
th
e
Premises) in good order and condition, free of rubbish, and shall
promptly
make all non-structural
re
pairs
necessary to keep and maintain such
good
order and
condition.
When used
.
in this
Article
-
II
, the term “repairs"
shall
include replacements and
renewals
when necessary. All repairs made by Tenant
stall
utilize
materials
and
equipment
that area
l
east
equal in quality and usefulness to
those
originally used in constructing the Building and the Premises. Landlord shall not be liable to Tenant for any damage caused to
Tenant
and its property
due
to the Building or any part or appurtenance thereof being improperly constructed or being or becoming out of repair, or arising from the
leaking
of gas
,
water, sewer or steam
·
pipe
·
s, or from problems with e
l
ectrical service, so long
as
Landlord
diligently
remedies such defect to the extent under Landlord's control.
(b)
Tenant shall, at its expense, enter into contracts
(
or,
at. Landlord’s option
, accept
the assignment and
responsibili
ty
for existing contracts) for: (i) preventive maintenance and service for regularly scheduled maintenance of all HVAC systems and equipment serving the Premises; and
(ii)
termite and pest prevention and extermination
services to
the Premises.
The
contractors and the terms and conditions of the
contracts
,
including the scope of services and the maintenance
or
service schedule, shall
be
subject to the prior written approval
of
Landlord, which
approva
l
shall not be unreasonably withheld. The contracts
must
be in effect and a fully executed copy thereof must
be provided
to
Landlord within thirty (30) days after the Commencement
Date
.
Tenant shall provide or
cause
the contractors to provide
Landlord
with copies of all work
orders and
other
main
tenance
or
service
records for all work performed w
i
thin the
Pr
emises
promptly
following
each maintenance
or
service activity.
If
Tenant shall fai
l
to
perform
any of its obligations hereunder, Landlord may cure such default on behalf of
Tenant
,
and Tenant shall reimburse
Landlord upon
demand for any sums paid
or
costs incurred
b
y
Landlord in cure such default, including attorneys' fees and other
legal
expenses, together
with
interest at
the Default
Rate
(as
defined
in
Section 19(b)
below).
(c)
Landlord shall make all
necessary
repairs to thefooti(c) Landlord shall make all necessary repairs to the footings and foundations and the steel columns and girders forming a part of the Premises, and to the Building outside of the Premises and repairs made necessary by a negligent or willful act or omission of Tenant or any employee, agent, contractor, or invitee of Tenant shall be made at sole cost and expense of Tenant, except to the extent of insurance proceeds received by Landlord. Landlord represents and warrants to the best of Landlord’s knowledge that, as of the date of this Lease, for buildings, of like age and class, all structural parts of the Premises, including but not limited to the foundation, roof, exterior walls, plumbing and electrical systems meet and comply with all federal, state, and local laws, ordinances and regulations, all handicapped accessibility standards, including but not limited to the Americans with Disabilities Act (“ADA”) accessibility requirements, and are in good, sanitary order, condition, and repair.
(d)
Landlord
shall deliver the Premises with the
HVAC systems
and
equipment serving the
Premises
in good working order. If me cost of any one (l) repair
to
the HVAC systems and equipment serving the
Premises
incurred by Tenant during
the
first twelve
(12)
months after the Commencement
Date
exceeds Five
Hundred and
Nol
l00
Dollars ($500.00), then
Land1ord
shall reimburse Tenant for such costs
incurred
in excess of Five Hundred and Noll00 Dollars ($500.00) within thirty
(30)
days after receipt of an
invoice
therefor
together
with reasonable
supporting documentation. If
the costs of any series of repairs or
replacemen
ts
to the
HV
AC
systems
exceeds $1,500 in any twelve (12) month period
during
the
Term
,
Landlord shall
reimburse
Te
nant
for such costs incurred in excess of $1,500 within thirty (30) days after receipt
of an
invoice
therefor
together with reasonable supporting
documentation.
Notwithstanding
the
foregoing,
Land
lord's
obligation to reimburse Tenant
is
expressly conditioned on; (i) Tenant
maintaining
a preventative maintenance contract
on
the HVAC units;
(ii)
the cause
for
the repairs or replacements
not being
the negligence
or
willful
misconduct of Tenant
or
its
agents, employees or contractors; and
(iii)
Landlord
being
given the opportunity to inspect the applicable and equipment and proposals prior to
either
party incurring costs.
12.
INSURANCE: SUBROGATION RIGHT’S
. Tenant shall obtain and keep in force at
all
times during the Term, at its own expense, commercial general liability insurance
including
contractual liability and personal injury
1iability
and
all
similar coverage, with combined single limits of $2,000,0Qp.oo
.
on account of bodily injury to or death of one or more persons as the result of any one
accident
or
disaster
and on account
of
damage to property
,
toge
ther
with
an umbrella policy of$4,000,000.00, or in such other amounts as
Landlord
may
from
time
to time
require. Tenant shall also require
its
movers to procure
and
deliver to
Landlord
a certificate of insurance covering.
Landlord as an additional insured. Tenant shall, at
its
sole cost and expense, maintain in full force and effect
on
al} Tenant's trade fixtures, equipment and personal
property
in the Premises, a policy of
''speci
al form
” property
insurance covering the full
replacement
value of such property. All liability insurance required
hereunder
shall IlQ1 be subject to cancellation without
a
t
least
thirty (30) days' prior notice to all insureds, and shall name
Tenant
as insured,
and
Landlord and Landlord's property manager as additional insureds, and, if
requested
by Landlord, shall also name as an additional insured any
mortgagee
or holder of any mortgage that may be or
become
a lien
upon
any part of the
Premises.
Prior to the commencement of the Term,
Tenant
shall provide Landlord with certificates
that
evidence that the coverages required have
been
obtained for the policy
periods.
Tenant shall also furnish.to Landlord or Landlord's designated agent throughout the
Term
replacement certificates at least thirty (30)
days
prior to the expiration dates
of
the
then
-
current policy or policies
.
All the insurance required under this
Lease
shall be issued by insurance companies authorized to
do
business in the Commonwealth of Virginia with a financial
rating
of at least an A
-
X
as rated in
the
most recent edition of Best's Insurance Reports and in
business for
the
past
five (5) years. The limit of any
such
insurance shall not
limit
the liability of Tenant hereunder. If Tenant fails
to
maintain such insurance, Landlord may but is not
required
to, procure and maintain the same, at Tenant's expense to be
reimbursed by
Tenant as Additional Rent within
ten
(I 0) days of written demand. Any deductible under such insurance policy in excess of Twenty-Five Thousand Dollars ($25,000) must be approved
by Landlord
in writing prior to
issuance
of such policy. Tenant
s
hall
not self-insure-without Landlord's prior written consent Landlord and Tenant shall each procure an appropriate clause in or endorsement to any property
insurance
covering the Project or any
portion
thereof and personal property, fu.1Ures and equipment located therein, wherein the
insurer
waives subrogation or consents
to
a
waiver of right
of recovery.
Both Landlord
and
Tenant agree
t
o
immediately give each insurance company which has issued to it policies of fire and
exte
nded
coverage
insurance
written
notice of
the
terms
of such mutu.al waivers and to cause such insurance
policies
to be properly endorsed, if
necessary
,
to prevent the invalidation thereof by reason of such waivers and shall furnish to the other party written evidence of such foregoing endorsements or that such endorsement is not required. Landlord and Tenant hereby waive and agree not to make any claim against, or seek to recover from, the other for any loss or damage to its property or the property of others resulting from tire or other hazards to the e>..1:ent covered
(
or would have been covered if the party
had
obtained and maintained
the
insurance it was required
to carry under
this Lease or
if
Tenant did not elect to
self-
insure for any such matter or
risk)
by the property insurance that was required co
be
carried by that party under the terms of this
Lease.
The foregoing waivers shall
not
apply to
Joss or damage
in
excess
of actual or required policy limits (whichever is greater)
or to
the first $25,000.00 of any deductible, co-insurance or self-ins
ur
ed
retentions
applicable
under
any policy
maintained
by
Landlord.
Landlord. will maintain a policy of
“special
form:
'
' property insurance covering the full replacement value of Landlord's interest in the
Project
with
a deductible
in an amount not
to
exceed $25,000
.
Landlord will maintain
a
commercial general
liability
insurance policy for
the
Project in a
reasonable
amount.
13.
INDEMNIFICATION
.
(a)
Tenant shall defend, indemnify and bold
harmless Landlord,
Landlord's property manager and each of Landlord's
directors,
officers,
members, partners
,
trustees,
employees and agents (collectively, the "
Landlord Indemnitees
") from and against any
and
all third-party claims, actions
,
damages
,
liabilities and expenses (including
all
reasonable costs and expenses (including reasonable attorneys
'
fees)) arising from: (i)
Tenant's
breach of this Lease; (ii) any negligence
or
willful
act of
Tenant,
any
Tenant
Indemnitees
(as
defined
in Section 13(b) below), or any of
Tenant
'
s invitees, subtenants, or contractors; provided, however
,
Tenant
'
s
indemnity
obligations shall not
extend to loss of business
,
loss of profits, or other consequential damages that may be suffered by Landlord and (iii) any
acts or
omissions occurring
at
,
or the
condition,
use
or operation of, the Premises,
except
to
the extent arising from Landlord's negligence or willful misconduct. If Tenant fai
l
s to promptly defend a Landlord Indemnitee following written demand by the
Landlord
Indemnitee, the Landlord
Indemnitee
shall
defend
the same at Tenant's expense, by retaining or employing counsel reasonably satisfactory to such Landlord Indemnitee.
(b)
Landlord shall defend, indemnify
and
ho
l
d
harmless
Tenant and each of
Tenant's directors,
officers, members, partners, trus
t
ees,employees
and agents
(collectively, t
he
'
'
Tenant
Indemnitees")
from
and against any and all third
-
party claims, actions, damages,
liabilities
and
expenses
(including all reasonable costs
and
expenses (including reasonable attorneys' fees)) arising from: (i) Landlord's
breach
of
this
Lease; and (ii) any negligence or w
i
llful
misconduct
of Landlord or any Landlord indemnitees; provided, however Landlord's
indemnity obligations shall not extend to
loss
of business, loss of profits, or other consequential
damages that
may be suffered by
Tenant.
If Landlord fails to
promptly defend
a Tenant Indemnitee following written
demand
by the Tenant indemnitee, the
Tenant Indemnitee
shall
defend the
same at Landlord's expense
,
by retaining or
employing
counsel reasonably satisfactory to such Tenant
Indemnitee.
(c)
The provisions
of this Article 13 shall survive the expiration or earlier termination of this Lease
14.
FIRE
DAMAGE
.
If there occurs any casualty to the
Premises
and: {i) the casualty damage
is
of a
nature or extent that, in Landlord's
reasonable
judgment, the
repair
and restoration work would require more than two
hundred
ten (210) consecutive days
to complete
after the casualty (assuming normal work crews not engaged in overtime); or (ii) more than
th
irty (30%) percent of the total area of the Building
is
extensively
damaged;
or (iii) the casualty occurs in the
l
ast Lease Year of the Term and Tenant
bas
not exercised a renewal right; or (iv) insurance proceeds are unavailable or insufficient, either party shall have the right to
terminate
this Lease and all the
unaccrued
obligations of the
parties
hereto,
by
sending written notice of such
termination
to the other within thirty
(30
)
days of the date of
casualty.
Such notice is to
specify
a
termination
date no
less
1han fifteen (15)
days
after its
transmission. Notwithstanding the foregoing, if the casualty was
caused
by the act or omission of Tenant or any of Tenant's agents, employees,
invitees,
assignees
,
subtenants
,
licensees
or contractors, Tenant shall have no right to terminate th.is Lease due to the casualty. In
the event of
damage or
destruction
to
the Premises
or any
part
thereof and neither
party
has
terminated this
Lease,
Tenant's obligation
to
pay Fixed Rent and Additional Rent shall be equitably adjusted or abated.
15.
SUBORDINATION AND NON-DISTURBANCE: RIGHTS OF MORTGAGEE
. Provided the holder of a mortgage or Deed of Trust (as hereinafter
defined)
agrees to recognize ibis Lease
in
the event of a foreclosure or deed in l
ieu
of
foreclosure,
this Lease shall
be
subordinate at
all
times to the
lien of
any mortgages
now
or
hereafter
placed upon the Premises, Building and/or
Project
and land of which they are a
part
withou
t
the necessity of any further instrument or
act
on the part of Tenant to effectuate
such
subordination. Tenant further agrees to execute and
deliver
within ten (10) days of demand such further instrument evidencing such subordination, non-disturbance and
attornment as sha
ll
be reasonably required by any mortgagee.
If
Landlo
r
d shall be or is alleged to be in defaul
t
of any of its obligations owing to Tenant under this Lease, Tenant shall give to the holder (the "
Mortgagee
'') of any mortgage or deed of
trust
now or
h
ere after placed upon the Premises, Building and/or
P
roject (provided Tenant has received written notice of the name and address of such Mortgagee), notice by overnight mail of
any
such default that Tenant shall have served upon Landlord
.
Tenant shall not be entitled to terminate this Lease because of any default by Landlord without having given such notice to the Mortgagee. If Landlord shall
fail
to cure such default, prior
t0
Tenant terminating the Lease, the Mortgagee shall have forty-five (45)
a
dditional days within which to cute such default.
In
addition
,
the Mortgagee (or a trustee on behalf of the Mortgagee), may, at its option
,
execute and record among the land records of the jurisdiction where the Premises are located a subordination s
t
atement or statements w
i
th respect
to
this Lease whereby this Lease
will
be made superior to the lien of the deed of trust or the mortgage held by the Mortgagee and encumbe1ing the: Project (the "
Deed of Trus
t''). Tenant acknow
l
edges the
right
of the Mortgagee to file such a subo
r
dination statement
,
and agrees that from and after the recordation of such a subordination statement, this Lease shall be superior in lien and in
dignity
t
o the lien of the Deed of Trust, and shall not be affected by any foreclosure of the De
e
d of Trust.
16.
CONDEMNATION.
If
a taking rende
r
s the Building reasonably unsuitable for the Permitted Use, this Lease s
h
all, at e
i
ther party's option, terminate as of the date ti
t
le to condemned real estate vests
in
the condemner, the Rent herein reserved shall
b
e apportioned and paid
in
full by Tenant to Landlord to such date, a
ll
Rent prepaid for pe
r
iod beyond that date shall
forthwith
be repaid by Landlord
t
o Tenant, and neither party sha
ll
th
e
reafter have any liability for any unaccrued obligations here
un
der. If this Lease is not terminated after a condemnation, the Fixed
Rent and the Additional Rent shall be equitab
l
y reduced in proportion to the area of the Premises that has been taken for the balance of the Term. Tenant shall have the
right
t
o make a claim against
t
he condemner for moving expenses and business dislocation damages to the extent that such claim does not reduce the sums otherwise payab
l
e by the condemner to Land
l
ord.
17.
ESTESTOP£'.E.L CERTIFICATE.
Each party agrees at any time and from time to time
,
within ten
(1
0) days after the other party's written request, to execute and deliver
of
the other party a written instrument: in
recordable form certifying all information reasonably requested.
.
18.
DEFAULT
.
(a)
An
"Ev
ent
of Default
"
shall be deemed to exist and Tenant shall be
in
default hereunder
if:
CO
Tenant fails to pay any Rent when due and such failure continues for more than three (3) business days after Landlord bas given Tenant writte
n
notice of such failure; provided, however,
in
no event shall Landlor
d
have any obligation
t
o give Tenant more than two (2) such notices in any twelve
(12)-month
period, after which there shall be an Event of
D
efault
if
Tenant fails to pay
any
'Rent when due, regardless of Tenant's receipt of notice of such non- payment;
(ii)
Tenant ceases to use the Premises for its Permitted Use or removes substantially all of
its
furniture, equipment and personal property from the Premises (other than in the case of a permitted subletting or assignment
)
t or permits the same to be unoccupied;
(iii)
Tenant fails to bond over
-a
construction or mechanics lien within ten
(10)
days of demand; (iv) any assignment or subletting (regardless of whe
t
her the same m
i
ght be void under this Lease)
in
violation
of the terms of this Lease; (v) the occurrence of any default beyond any applicable
notice
and/or cure period under any guaranty executed in connection with this Lease;
(
vi)Tenant fails to delive
r
any Landlord requested estoppel certificate or subordination agreement within ten (10) business days afte
r
receipt of notice that such document was not received w
i
thin the time period required under this Lease; or (vii) Tenant fails to observe or perform any of Tenant's other non-monetary agreements or obligations herein contained
within
ten
(l0)
days after written notice specifying the defau
l
t
,
or the expiration of such add
i
tional time period as is reasonab
l
y necessary to cure such default (not to exceed ninety (90) days
)
, provided Tenant immediately commences and thereafter proceeds with all due diligence and in good faith to cure such default
,
h
(b)
If an Event of Defau
l
t shall occur
,
the following provisions shall apply and Landlord shall have, in addition to all other rights and remedies available at law or in equity, including the right to terminate this Lease
.
the rights and remedies set forth herein
,
which may be exercised upon or at
any
rime following the occurrence of an Event of Default.
1.
Acceleration of Rent
. Landlord sha
ll
have the right to accelerate all Rent and all expenses due hereunder and o
t
herwise payable in insta
l
lments over the remainder of t
h
e Term. The amount of accelerated rent to the termination
da te
,
without further notice or demand for payment
,
shall be due and payable by
Tenant
within
five
(
5) days after Landlord has so notified Tenant. If Tenant has paid to Landlord all accelerated rent for the balance of the Term and if Landlord shall subseq
u
ently lease the Premises or a portion thereof for the balanc
e
of the
Term or portion thereof: Landlord shall pay Tenant 50% of
any
such rent actually collected
.
Additiona
l
Rent that has not been included
,
in
whol
e
or in part,
in
accelerated rent, shall be due and payable by Tenant during the remainder of the Term, in the
amount
s and
at the times otherwise provided for in this Lease. 2.
Termination of
Lease
;
Termination of Possession.
L
andlord
shall
have the
right
to terminate this Lease and recover all damages
c
aused
by
Tenant
'
s breach
,
including consequential damages for lost future rent, and/or repossess the Premises
,
with or without terminating, and
relet
the Premise
s
at such amount as Landlord deems
reasonable,
and/or seize and bold any personal property of
T
enant located in the Premises and assert against the same a lien for monies due Landlord
,
and/or lock the
Premises
and deny Tenant access
thereto
without obtaining any court authorization, and/or obtain an order for unlawful detainer from any court of competent jurisdiction without prejudice to Landlord
'
s rights to otherwise collect Rent or breach of contract damages from
Tenant,
an
d/
or pursue any
other
remedy available
in
law or equity. 3.
Landlord's Damages
. The damages tha
t
Landlord shall be entitled to recover from Tenant shall be the sum of:
(i)
all Fixed Ren
t
and Additional Rent accrued and unpaid as of the termination date
;
(ii)
all costs and expenses incurred by Landlord
in
recovering
possession of the Premises, including legal fees, and removal and storage of Tenant's property; (iii) the cost
s
and expenses o
f
restoring
the Premises to the condition in which the same were
to
have been surrendered by Tenant as of the expiration of the Term
; (
i
v
) the costs of reletting commissions; (v)
all
Fixed Rent
and
Additional
Rent
otherwise payable
by
Tenan
t
over the remainder of the Term as reduced to present value and
all
consequential damages relating to Tenant's breach of this Lease; (vi) all legal
fees
and court costs incurred by Landlord
in
connection
with
the Event of
Default;
plus
(vii
)
the unamortized portion (as
reasonably
determined by Landlord) of brokerage commissions
and
consulting fees incurred by Landlord, and tenant concessions including free rent given by Landlord,
in
connection
with
th.is Lease. Less deducting from the total determined under subsections (i) through (vii) above
,
all
Rent that Landlord rece
i
ves from other tenant(s) by reason of the
leasing
of the Premises during
any
period falling
within
the otherwise remainder of
the
Term. 4.
Landlord's Right to Cure
. Without
limiting
the generality of
the
foregoing, if
Tenant
shall
fail
to perform any of its obligations
hereunder
,
Landlord may,
in
addition
t
o any other
rights it
may
have
in
law
or
in
equity
,
cure such default on behalf of Tenant, and Tenan
t
shall reimburse Landlord upon demand for any sums paid or cost
s
incurred by Landlord in curing such default, including attorne
y
s' fees and other legal expenses,
together
with inte
r
est a
t
twe
l
ve percent (12%)
(
the "
Default Rate
"
)
from1he
dates
of Landlord
'
s incurring of costs or expenses. 5. Int
eres
t
on Damage Amounts
.
Any sums pa
y
able by
Tenant
hereunder that are not paid after the same shall be due shall
bear
interest at the Default
Rate.
6.
No Waiver by Landlord
.
No delay or forbearance by
Landlord
in exercising. any
right
or remedy hereunder, or
Landlord's
undertaking or performing
any
act or matter that is not expressly required to be undertaken
b
y
Landlord shall be construed
1
respectively, to be a wai
v
er of Landlord's rights or to represent any agreement by Landlord to undertake or perform such act or matter thereafter. Waiver by
L
andlord of
any
breach by Tenant of any covenant or condition herein contained (which waiver shall be effective onl
y
if
so expressed
in
writing by Landlord
)
or failure
by
Landlord to exercise any right or
remedy
in
respect
of any such breach shall not constitute a waiver or relinquishment for the future of Landlord
'
s right to have any such covenant or condition
duly
performed or observed
by
Tenant
,
or of Landlord's rights arising because o
f
any
subsequent breach of
any
such. covenant or condition nor bar any right or remedy of Landlord
in
respect of such breach o
r
any subsequent
breach.
All tights and remedi
e
s of
Landlord
are cumulative, and the exercise of any one shall
n
ot be an election excluding Landlord at any other time from exercise of a different or inconsistent remedy.
(c)
I
f Landlord is compelled to engage the services of attorneys
(
either outside counsel or in house counsel) to enforce the provisions of
this
Lease, to the extent that Landlord incurs any cost or expense in connection with such enforcemen
t,
including without limitation instituting, prosecuting or defending its rights in an
y
action, proceeding or dispute
by
reason
of any default
by Tenant,
the sum or
s
ums so paid or billed to Landlord
,
t
o
gether
with
all
interes
t,
costs and disbursements, shall be due from
Tenant
immediately upon receipt of an invoice therefor following the occurrence of such expenses.
If, in
the context of a bankruptcy ca
se Landlord is compelled a
t
any time to incur any expense, including attorneys
'
fees,
in
enforcing or attempting
t
o enforce the terms of this Lease or to enforce or attempt to enforce any actions required under the Bankruptcy Code to be taken by the trustee or by Tenant
,
as
debtor-in
-
possession then the sum so, paid
by Landlord
shall
be
awarded to Landlord b
y
the
Bankruptcy
Court and shall be immediately due and payable by the trustee or b
y
Tenant's bankruptcy estate to Land
l
ord in accordance with
t
he terms of the order of the Bankruptc
y
Court.
(d)
If Landlord fails to
pay
when due any sum due Tenant hereunder, which failure continues for a
period
of
fifteen
(
15) days after
receip
t
of written notice of such failure from Tenant
to
Landlord, or
if
Landlord fail
to
keep, perform or observe any of
the
other covenants to be kept, observed or
performed by
Landlord
hereunder,
which failure continues for a period of
thirty
(30)
days
after written notice of such failure from Tenant to
Landlo
rd
(unless
such failure is
of such a
nature
that
it
will
require more
than
thirty
(30)
days to cure,
in
which case such cure period shall be extended for so long as
Landlord
shall promptly
commence
and diligently prosecute the cure of such failure, and
while
doing so shall continue to perform
all
of
its
monetary obligations hereunder, but in no event to exceed one hundred twenty
(
120
)
days), then,
in
either of such events, an ''Event of Default by Landlord" shall exist hereunder.
(e)
If an Event of Default by Landlord exists
,
then Tenant may
exercise any
and all remedies available
at
law
or
in
equity,
including
,
without
limitation,
any
one or
more
of
the following remedies,
while such
default
is
continuing
or
remains uncured:
(i)
to
commence an
action
for specific performance against Landlord; and/or
(ii)
to commence
an action for damages suffered or incurred
by
Tenant as a result
of
Landlord's default; and/or
(iii)
to
itself perform, or cause to be performed, the covenant, performance or condition required to be kept, observed or
p
erformed
by Landlord
and
which
is
in
default and
to thereafter
pursue a court action against Landlord for amounts expended
on
Landlord's
account.
19.
SURRENDER.
No later than upon
the
expiration or
earlier
termination of the
Term
or Tenant
'
s right to
possess
ion
of the
Premises,
Tenant shall vacate and surrender the
Premises to
Landlord in good order and condition and
in
conformity with the applicable provisions of
this
Lease, including without
limitation
Article
11. Tenant shall have no right to hold over beyond
the
expiration
of
the
Term, and if Tenant does not vacate
as
required
such
failure shall be
deemed
an Event of Default and Tenant's occupancy shall
not
be construed
to
effect
or constitute anything other than a
tenancy
at sufferance.
During
any period of occupancy beyond the expiration or
earlier
termination of the Term the amount
of Rent
owed by
Tenant. a
Landlord shall
be one hundred
fifty
percent
(150%)
of the
Rent that would otherwise be due under this Lease,
wi
thout
prorating for
any
partial month of holdover. The acceptance of
Rent
by
Landlord or the failure or delay of Landlord
in
notifying or
evicting Tenant following the expiration or earlier
termination
of the
Term
shall not create
any
tenancy
rights
in
Tenant and any such payments by Tenant may be
applied
by
Landlord
against its costs and expenses, including reasonable attorneys' fees,
incurred
by
Landlord
as a result of such holdover
. The provisions
of
this
section shall not constitute a waiver by Landlord
of
any
right
of
re-entry as set forth
in
this Lease; nor
shall
receipt
of
any
Rent or any
other
act
in
apparent
affirmance
of the tenancy operate as a waiver of Landlord's right to terminate
this
Lease for
a breach
of any of the terms,
covenants,
or obligations herein on Tenant's part to be performed.
In
addition, if Tenant fails to vacate and surrender the Premises as herein
required,
Tenant shall indemnify, defend and hold harmless
Landlord
from all costs, losses, expenses or liabilities incurred as a result
of
such failure, including without limitation
,
claims made by any succeeding tenant and real estate brokers'
claims
and reasonable attorneys' fees. At the end of the Term or sooner
termination
of
Tenant's
right to
possession
of the
Premises,
Tenant shall, at Landlord's option, remove all furniture, movable trade
fixtures
and equipment
(including
telephon
e
security and
communication
equipment system wiring and cabling)
in
a
good and workmanlike manner so as not to damage
the
Premises or Building and in
such
manner so as not
to
disturb
other
tenants
in
the
Building.
Tenant's obligation to pay Rent and to perform all other Lease obligations for
the period
up to and including the
expiration
or earlier termination of
this
Lease
,
and the provisions of this
Article
19
.
sha11survive
the
expiration or
earlier
termination of this Lease.
20.
RULES AND
REGULATIONS.
At
all
times during the Term,
Tenant,
its
employees, agents,
subtenan
ts,
invitees and licensees shall
compl
y
with
all
rules
and regulations specified on
Exhibit
G
attached hereto and such other written rules and regulations established
by
Landlord
for the Project from time
to
time (provided, no later
adopted
rules shall interfere
with
Tenant
'
s use of
the
Premises for the Permitted Use). In.the event of an
inconsi
stency
between the rules and
regulations
and this Lease, the provisions of this Lease shall
contro
l.
21.
GOVERNMENTAL REGULATIONS.
Tenant shall. in the use and
occupancy
of the Premises and the
conduct of Tenant's business or profession therein, at all times
comply
with
all applicable laws, ordinances, orders
,
notices,
rules
and regulations
of
the federal, state and municipal governments
(
collectively
,
"
Laws
").
Landlord shall be responsible for compliance
with
Title III
of
the Americans with Disabilities Act of 1990, 42 U.S.C.
§
12181
et
seq.
and
its
regulations
(collectively,
the
"
ADA
"): (a)
as to the design and
construc
tion
of exterior and interior
common
areas
(e.g.
sidewalks, parking areas and common area bathrooms); and
(b)
with
respect
to
the
design and
construction
of the Premises
as
of the date of this Lease.
Except as
set
forth
above in the preceding sentence, Tenant shall be responsible for compliance with the ADA
in
all other respects concerning the use
and
occupancy of the Premises, which. Compliance shall
include,
without limitation:
(i)
provision for full and equal enjoyment of the goods, services,
facilit
ies
,
privileges, advantages or accommodations of
the
Premises as contemplated by and to the
extent
required by the ADA;
(ii)
compliance relating to requirements under the ADA or amendments
thereto
arising
after
the date of
this Lease;
and
(
ii
i) compliance
re1ating
to the
design, layout, renovation redecorating, refurbishment,
alteration,
or improvement
to
the
Premises
made or requested by Tenant.
22.
NOTIC
ES
.
Wherever in this Lease
it
shall
be required
or
permitted that notice or demand
be
given
or
served
by
either party
to
this Lease
to
or on the other party, such
notice
or demand
shall
be duly given or served
if in
writing
and either: (i) personally served;
(ii)
delivered by pre-paid
nationall
y
recognized overnight courier service
(e.g.,
Federal
Express) with evidence of receipt required for delivery;
(ill)
forwarded
by
registered
or
certified
mail,
return receipt
r
equested,
postage prepaid
;
(iv) sen
t by
facsimile
with
a
copy
mailed by first class
United
States
mail;
or
(v)
if
an e-mail
address
is
provided, e-mailed
with
evidence of
receipt
and delivery
of
a
copy of
the
notice
by
first
class mail in all such cases
addressed to
the
parties
at the addresses
set
forth
below_
Each
such
notice shall
be
deemed to
h
ave
been given to or served upon the party to
which
addressed on the date the same is delivered or delivery is refused. Each
party
shall have the
right
to
chang
e its
address for
no
tices
(provided such new address
is
in
the
continental
United
States) by
a writing
sent to the
other
party
in
acco
rdanc
e
with
this
Article
22,
and
each
party
shall,
if
reque
sted,
within ten
(10)
days
confirm
to the other its notice address.
Notices
from Landlord may be given by
either an
agent or
attorney
acting on
beha
lf
of Landlord.
|
|
|
|
Tenant:
|
|
DIFFUSION PHARMACEUTICALS INC
,
Attn:
David Kalergis
1317
Carlton
Avenue
,
Sµite400
Charlottesville, VA
22902
Pax
No:
(434)
220
-
0722
E-mail: dkalergis@diffusionpharma.com
|
Landlord:
|
|
ONE
CARL
TO
N, LLC
Attn:
Frayse
r
White
1100 Harris
Street
Char
lottesville
,
VA 22903
E-mail:
frayser.white@!!lilaiLcom
|
With a copy to:
|
|
Henry
Lisico
Henry Lisico
Company
12704
Crimson Ct.
,
Suite 101
Richmond, VA.23233-7657
E-mail: h
enrviisjco@verizon.net
|
23.
BROKERS
.
Landlord
and
Tenant each represents
and
warrants to
the
other that such
party
has had
no
dealings, negotiations or consultations
with
respect
to
the Premises
or
this transaction wi.th
any broker
or finder
other
than
Cushman
&
Wakefield/Thalhimer.
Each
party
shall
indemnify and hold the other harmless from
and
against
all
liability,
cost
and expense
,
including attorneys' fees and
court
costs
,
arising out of
any
misrepresentation
or
breach of
warranty
under this
Article.
24.
LANDLORD
'
S LIABILITY.
Landlor
d’s
obligations hereunder
shall
be
binding
upon
Landlord
only
for
the period of time that Landlord
is in
ownership of
the
Building,
and
upon
t
ermination
of that
ownership
,
Tenant
except as
to any
obligations
that are then due
and owing, shall
l
ook
solely to
Landlord's successor-in-interest in
ownership
of the
Building
for the satisfaction of
each
and every obl
i
gation of
Landlord
hereunder. Upon
request
and without
charge,
Tenant
shall
attorn to
any successor to Landlord's interest
in
this Lease
and,
at the option of
any Mort gees
,
t
o such Mortgagees. Landlord shall have no personal liability under any
of
the
term
s,
conditions
or covenants
of
this
Lease and Tenant shall look
solely to
the
equity of
Landlord in
the Building and/or the proceeds the
r
efrom for the
satisfaction
of
any
claim, remedy
or cause
of action of any kind whatsoever
arising
from
the
relationship between
the
part
i
es or
any
rights
and
obligations
they
may
have
rela
t
ing
to
the
Proj
ect, this Lease, or anything related to
either, including
without limitation as a result of the
breach
of any section of this Lease
by Landlord. In addition, no
recourse shall be had
for an
ob
li
gation of Landlord
hereunder
,
o
r
for
any claim based
thereon or otherwise in respect thereof or the relationship between
the
parties, against any past, present or future
Landlord
Indemnitee (other than
Landlord),
whe
th
er
by
virtue of any statute or rule of law, or by the enforcement of any assessment or
penalty
or otherwise, all such other
li
ability being
expressly
waived and released
by
Tenant with respect to the Landlord
Indemnitees
(oth
er
than Landlord)
.
25.
MISCELLANEOUS
PROVISIONS
.
(a)
Successors
.
The respective rights and obligations provided
in
this
Lease
shall
bind
and inure to the
benefit of the parties hereto, their
successors
and assigns; provided
;
however,
no
rights
shall inure to the
benefit
of
any
successo
rs
or assigns
of Tenant unless Landlord's written consent for the transfer to such successor and/or assignee has first
been
obtained
as
provided
in
Art
i
cle
9
hereof. (b)
Governing
La
w
.
This Lease shall be construed,
governed
and enforced
in
accordance with the laws of the Commonwealth of Virginia, without
regard
to
principles relating
to
conflicts of l a
w
.
(c)
Entire Agreement
.
The
exhibits attached to
this
Lease are expressly incorporated
into this
Lease. This
Lease
supersedes any
prior
discussions,
proposals,
negotiations and discussions between the parties,
and
this Lease contains all the agreements, conditions, understandings, representations and warranties
made betw
een
the parties hereto with
respect
to
the
subject matter hereof, and may not
be
modified orally or
in
any manner other than by an agreement
in
writing signed by both parties
hereto
or their respective successors
in
interest.
Without
in
any
way
limiting the
generality of the foregoing, this Lease
can
only
be
extended pursuant
to
the
terms hereof,
with the due
exercise
of.
a
n
option
(if
any)
contained
herein or pursuan
t
to a written agreement signed by
both
La
n
dlord
and
Tenant specifically extending the
term. No
negotiations, correspondence
by
Landlord
or offers
to
extend the term shal
l
be deemed an extension of
the
termination
date
for any
period
whatsoever. (d)
Time of the Essence
.
TXME IS OF THE ESSENCE
IN
ALL PROVISIONS
OF
THI
S
LEASE,
INCLUDING
ALL
N
OTIC
E
PROVISIONS.
(e)
Accord and Satisfaction
. No
payment by
Tenant
or receipt
by Landlord
of a
l
esser-amount
than any
payment of Fixed
Rent
or
Additional
Rent herein stipulated shall
be deemed
to be other than on ac
-
count of
the earliest
stip
ulated
Fixed
Rent
or Additional Rent due and
payable
hereunder, nor shall any endorsement or
s
tatement or
any
check or
any
letter accompanying any check or payment as
Rent
be deemed an
accord
and satisfaction. Landlord may
accept
such check or payment without prejudice
to Landlord
’s right
to recover the
balance
of such
Rent
or
pursue any other
right or remedy provided for
in
this Lease
,
at
law
o
r
in
equity.
(f)
Guaranty.
Intentionally deleted.
(g)
Force Majeure
. Whenever
a
party hereto
is
require
d by
the
provisions
of
this
Lease to
perform
an obligation and such party is prevented beyond its reasonable control from doing so
by
reason of
a Force
Majeure Event (as defined below), such
party
shall be temporarily
relieved
of its obligation
to
perform the obligation provided such
party
promptly notifies
the other
party of the specific
delay
and exercises due
diligence
to remove or overcome
it.
In
no event, however, shall Tenant be
excu
s
ed
from paying
Rent because
of a Force Majeure Event
.
A
"
Force Majeure
Event
"
shall
mean
any and all delays beyond a
party’s
reasonable control, including without limitatio
n
,
delays caused
by
the other
party
,
governmental
restrictions,
governmental regulations and controls, order of civil,
military
or naval authority, governmental preemption, strikes, labor
disputes,
lock-outs, acts of God, fire, earthquake, floods, e:xplosions, extreme
weathe
r
conditions, enemy
action,
and
civil
commotion, riot or insurrection, but expressly
excluding
insufficiency of
funds
,
inability
to obtain
financing.
casualty and condemnation.
(h)
Financial Statements
. Tenant shall furnish to Landlord,
the
Mortgagee, prospective
mortgagee
or purchaser reasonably requested financial information; provided, so long as
Tenant
is publicly traded, Tenant's financial statements which are publicly available on the SEC website shall be
all
that
Tenant is
required to
provide.
(i)
Authority
. Each of Tenant and Landlord represents and warrants
to the
other that: (i) i
t
is duly organized, va
l
idly
existing
in
its
state of incorporation/organization
and
legally authorized to do business in the Commonwealth
of
Virginia; and
(ii)
the persons executing
this Lease are duly
authorized to execute
and deli
ver
this
Lease
on behalf of such party.
(j)
Attorneys' Fees
.
In
connection with any litigation arising out of
this
Lease,
the
prevailing
pa1iy, Tenant or Landlo
,
rd shall be entitled
t
o
recover
all costs incurred, including reasonabl1;1 attorneys' fees.
(
k)
Waiver: of
Jury
Trial
.
To
the extent permitted
b
y
applicab
l
e
l
aw, Landlord
and
Tenant hereby waive trial by
jury
in any action, proceeding or
counterclaim brought by either against the other on any matter arising out of or in any way connected
with
this Lease, the
relationship
of Landlord
and
Tenant, or Tenant's use or occupancy of
the Building,
any claim or
injury
or damage, or any emergency or other statutory remedy
w
ith respect
thereto. (1)
Press Releases
.
Landlord
shall
have the
right,
without further
notice
to
Tenant
,
to
include general information relating to
this
Lease including without
limitation
Tenant's name
,
the
Building
and
the
square
footage of the Premises, in press releases
relating
to Landlord's and
its
affiliates'
leasing
activity. Information relating to rates
will
not
be
released without Tenant's prior written consent, such consent not
to
b
e
unreasonably
withheld,
conditioned or delayed.
(m)
Calculation of
T
im
e.
Io
computing any period of time prescribed or allowed by any
provision
of
this
Lease, the day
of
the act,
event
or default from which the designated period of
time
begins
to
run shall
not be included.
The
last
day of
the
period so computed shall be included, unless
it is
a Saturday, Sunday or a
lega
l
holiday, in which event
the
period runs until the end
of
the
next
day which
is
not a Saturday
,
Sunday; or
legal holiday.
Unless otherwise provided herein,
all
notices
and other periods expire as of
5
:00
p.ro..
(local
time
in
Charlottesville, Virginia) on the last day of
the
notice
or
other period.
(
n)
Landlord's Consent
. Under no
circumstances
shall Landlord be liable to Tenant for
any
failure or refusal to grant
its
consent when consent is
required
hereunder. Tenant shall
not
claim any money damages by
way
of setoff, counterclaim or
defense,
based on any claim that Landlord unreasonably withbe1d its consent, in
which
case Tenant
'
s sole and exclusive
remedy
shall
be
an
action
for
specific performance, injunction or declaratory judgment.
(
o
)
Landlord
's
Fees
.
Whenever Tenant requests Landlord to take any action not required of it
hereunder
or give any consent required or
permitted
under this Lease, Tenant shall reimburse Landlord for
Landlo
rd
's
reasonable, out of-pocket costs incurred by Landlord
in
reviewing
the
proposed action or consent. including reasonable attorneys', engineers' or architects' fees;
within
thirty
(30)
days after Landlord's delivery to Tenant of a statement
of
such costs. Tenant shall make such reimbursement without regard to
wh
ether
Landlord consents to any such proposed action. Tenant shall not owe any fees
to
Landlord for review and approval of
Tenant's
Initial Work.
(p)
Confidentiality
. Tenant acknowledges and agrees that the terms of this
Lease
(and any preliminary drafts hereof) are confidential
and
constitute
proprietary
information
of Landlord, and may not be disclosed
b
y
Tenant to anyone
except
to
Tenant's
employees
,
brokers, accountants,
attorneys
,
and
permitted
assignees and subtenants, who have
each
been informed
of
the
confidentiality
clause
in
this
Lease,
by
any manner
or
means, directly
or
indirectly, without Landlord
'
s prior written consent except
as
and
to the
extent required by court order.
The
consent by Landlord to
any
disclosures
shall
not be deemed to be a
waiver
on
the
part of Landlord of
any
prohibition
against
any
future
disclosure
.
Disclosure of thee
ter.ms
of 'this Lease could adversely affect the ability of
Landlord to
negotiate other
leases
and may impair Landlord's
relat
ionship
with other
tenants.
It
is
understood
and
agreed that damages alone would be an inadequate
remedy
for the breach of this provision by Tenant, and
Landlord
shall also
have
the right to seek specific
performance
of this
provis
ion
and injunctive
relief
to prevent
its
breach or continued
breach.
26.
CONSENT TO 1URISD1CTION
. Landlord and Tenant hereby consent to
the
exclusive
jurisdiction
of the
state
courts located
in
the jurisdiction in
which
the Project is located. For purposes of Section 55
-
2 of the
C
ode of
Virginia
(1950),
as amended from time to time, this Lease
is and shall
be deemed
to
be a
deed
of lease.
27.
OFAC/PATRIOT ACT COMPLIANCE
. Tenant
represents
,
warrants and covenants that neither Tenant nor any of
its
partners, officers, or directors:
(i)
is
listed on
the
Specially
Designated
Nationals and Blocked Persons List maintained by
the
Office of Foreign Asset Control, Department of
the
Treasury
("OF
AC")
pursuant to
Executive
Order No. 13224, 66 Fed. Reg. 49079 (Sept
25,
2001)
t'
O
rder
"
)
and all applicable
provision
s
of Title III of
the
USA
Patriot Act (Public
Law
No.
107
-
56
(O
ctober
26,
2001));
(ii)
is
listed on
the
Denied :Persons
List and
Ent
ity
List
maintained
by
the United States Department of Commerce;
(iii)
is listed on the List of Terrorists
and List
of Disbarred Part
i
es maintained
by
the United States
Department
of State; (iv)
is
listed on
any
list
or qualification of
"Des
ignat
ed
Nationa1s"
as
defined
in
the
Cuban
Assets Control Regulations
31
C,F.R..
Part
515;
(v)
is listed on
any
other publicly available
List
of
terrorists, terrorist
organizations or narcotics traffickers maintained by the United States Department of State, the
United
States D
epartment
of Commerce or
any
other governmental authority or pursuant to the Order,
th
e
rules and regulations of OFAC (including without limitation the Trading with
the
Economy
Act,
50
U.S.C. App.
1-44;
the
International
Emergency
Economic Powers Act, 50 U.S.C.
§§
1701
-
06;
the
unrepealed provision of the Iraq Sanctions Act,
Pub .L.
,
No.
101-513
;
the United
Nations
Participation Act,
22
U.S.C.
§
2349
as-9;
The
Cuban Democracy
Act, 22
V.S.C
.
§§
6001-10; The Cuban Liberty and Democratic
Solidarity
Act, 18
U.S.C.
§§
2332d and
233;
and
The
Foreign
Narcotic Kingpin Designation Act,
Pub.
L.
No
.
106-
120 and 107-108
,
all as
may be
amended from time
to
time); or any other applicable requirements contained in any enabling legislation or other Executive Orders in
respect
of the Order (the Order and such other rules, regulations
;
legislation
or
orders are collectively
called
the
"
Orders
"); (vi)
is
engaged
in
activities
prohibited
in
the Orders; or
(
vii)
has
been convicted, pleaded
nolo contendere,
indicted
,
arraigned or custodially detained on charges involving money laundering or predicate crimes
to
money
laundering,
drug
trafficking,
terrorist
-r
elate
d
activities
or
other money laundering predicate crimes
or
in
connection
with
the Bank Secrecy
Act (31
U.S.C.
§§
5311
et
seq.). Tenant shall defend, indemnify
,
and hold harmless Landlord from and against any and all claims
,
damages, losses, risks
,
liabilities, and
expenses (inc
l
uding attorneys' fees and costs) arising from or related to any breach of the foregoing representation,
warranty
and covenant. The breach of this representation,
warranty
and
covenant
by
Tenant shall be
an
immediate Event of Default under this Lease without cure.
28.
QUIET ENJOYMENT.
Provided Tenant has performed all of the
te
rms
and conditions of this Lease10 be performed by Tenant,
including
the payment of Rent, Tenant shall peaceably and quietly hold and
enjoy
the Prem1ses
for
the
Term,
wi
thout
hindrance from
Land
lord
or anyone claiming by through or under Landlord, under and subject
to
the terms and conditions of this Lease and of any deeds of
trust
now or
hereafte
r
affecting all or any
portion
of the Premises.
29.
RIGHT
OFFIRST OFFER
.
a.
If
at any time or times during the Term
or any
renewal
term:
(i)
any area
becom
es
available
for
lease on
Floo
r
1 in the Building, and
(1i)
no
event
of default by
Tenant
shall have occurred
with.in
the preceding
thirty
(30)
months and no event of default by
Tenant
shall have occurred and be continuing hereunder, all applicable cure periods having expired,, and
(iii)
such space
is
not
s
ubject to
an expansion opt
i
on or renewal option or agreement for expansion or relocation
in
favor of another tenant existing as the date of this Lease,
or
a
lease term is extended for a
then
existing tenant, Landlord shall not enter into a lease of
any
such
space except upon compliance
wi
th
the following procedures.
b.
Each such time
any
such space becomes available for direct
lease (whether
or not Tenant has previously declined
to
lease such space)
,
Landlord shall give
written
notice to Tenant
of
such fact at least sixty
(60)
da
ys
before marketing the space, such notice to set out the amount and location of the space, the date that the present tenant
1
s lease expires, -and the proposed Rent for the space. Tenant shall have a period of ten (10) days from the receipt of such
not
ice
from Landlord, within
which
to
elect
to
include all of
suc
h
space under this
Le
as
e (the “Right
of First Offering").
If
Tenant does not timely exercise
its
option under
this
paragraph, then Landlord shall
be
free
to lease
the space to a
third
party
upon terms acceptable to Landlord provided the Rent shall not be more than 10% less
than
the
Rent
offered to Tenant without re-offering the space to Tenant.
c.
In
the event
Tenant
elects to lease
s
uch
space
,
an amendment of
this
Lease shal1 be
executed
by Landlord and Tenant no later than
fift
een (15)
days after Landlord shall have
su
bmitted
to Tenant copies of a
draft
of such amendment for
execu
tio
n
purposes.
1f
Tenant
exercises
its option
to
lease
such
additional
s
p
ace:
(i) the
lease term for such space and Rent shall commence upon Landlord's ability to deliver such space to Tenant ready
for
alteration and finish-out, and (ii) all such
space shall be
tendered by Landlord and
accepted
by
Tenant in an
"as
-is
''
condition
.
[S
I
GNATURES
ON FOLLOWING-
PAGE]
1N WITNESS WHEREOF, the parties hereto have executed
this
Lease, under Seal, the
day
and year
first
above
written.
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WITNESS:
|
LANDLORD:
ONB CARLTON, LLC,
a
Virginia limited liability company
|
|
|
|
|
WITNESS:
|
TENANT:
DIFFUSION PHARMACEUTICALS INC.,
a
Delaware
corporation
|
|
By:.
_ __
Name: David Kalergis
Title: Chief Executive Officer
Date:.
_
|
IN WITNESS WHEREOF, the
parties
hereto have executed this
Lease,
under Seal, the day and year
first above, written.
|
|
|
WITNESS:
|
LANDLORD:
ONB CARLTON, LLC,
a
Virginia limited liability company
|
|
By: _ _ _ _ _ _ _ _ _ _ _ _ _
Name: _ _ _ _ _ _ _ _ _ _ _ _ _
Title: _ _ _ _ _ _ _ _ _ _ _ _ _
Date: _ _ _ _ _ _ _ _ _ _ _ _ _
|
|
|
WITNESS:
|
TENANT:
DIFFUSION PHARMACEUTICALS INC.,
a
Delaware
corporation
|
|
By: f )
Name:
David Kalergis
Title: Chief Executive Officer
Date:
03
/
81
/
c,
ti
I
|
EXHIBITA
LOCATION
PLAN
(NOT TO SCALE)
[Attached]
EXHIBIT B
CONFIR.t\1ATION OF
LE
ASE TERM
THIS MEMORANDUM
is
made as of the
2,1
!a y
of
March
20I7, between ONE CARLTON, LLC, a Virginia limited liability company ("
Landlord
"), and DIFFUS
I
ONPHARMA.CEUTICALS
INC.,
a Delaware corporation ("
Tenant
''), who entered into a Deed of Lease (the "
Lease
") dated as of
"' "
1,
\
,
201 covering premises located at 1317 Carlton Avenue, Suite 400, Charlottesville, Virginia 22902. All capitalized terms, if not defined herein, shall be defined as they are defined
in
the Lease
.
1.
The parties to this Memorandum hrre agree that the date of
April 15
,
2017 is the Commencement Date of the Term,
and
the date
Apfl
I
3
0
,
2 0
2-2.
is
the expiration date of the Lease.
2.
Tenant hereby confirms the following:
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|
a.
|
That it has accepted possession of the Premises pursuant to the terms of the Lease;
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b.
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That the improvements, if any, required to be furnished according to the Lease by Landlord have been Substantially Completed;
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c.
|
That Landlord has fulfilled all of its duties of an inducement nature or as otherwise set forth
in
the Lease;
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d.
|
That there are no offsets or credits against rentals, and the $9,248
.
63Sccurity Deposit has been paid
as
provided
in
the Lease;
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e.
|
That there is no default by Landlord or Tenant under the Lease and the Lease is in full force and effect.
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3.
Landlord hereby confirms to Tenant that its Lease number is _____ . This information must accompany each Rent check or wire payment.
4.
This memorandum, each and all of the provisions here of shall inure to the benefit, or bind, as the case may require, the parties hereto, and their respective successors and assigns, subject to the restirctions upon assinment and subletting contained in the Lease.
IN WITNESS \\'HEREOF, the parties hereto have executed this Memorandum, under Seal, the day and year first above written.
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WITNESS:
|
LANDLORD:
ONB CARLTON, LLC,
a
Virginia limited liability company
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By: _ _ _ _ _ _ _ _ _ _ _ _ _
Name: _ _ _ _ _ _ _ _ _ _ _ _ _
Title: _ _ _ _ _ _ _ _ _ _ _ _ _
Date: _ _ _ _ _ _ _ _ _ _ _ _ _
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WITNESS:
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TENANT:
DIFFUSION PHARMACEUTICALS INC.,
a
Delaware
corporation
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EXHIBIT B
CONFIRMATION
Of
LEASE
TERM
THIS MEMORANDUM
is
made as of the
day
of
2017, between ONE CARLTON, LLC,
a
Virginia
limited
liability company ("
Landlord)
1 ,
and DIFFUSION PHARMACEUTICALS INC"II a Delaware
corporation ·).who entered into a Deed of Lease(the" dated as
of
_,...,
2012.
covering premises located at 131? Carlton Avenue, Suite 400, Charlottesville, Virginia 22902. All
capitalized
terms,
if
not defined herein, shall be defined as
they
are
defined
in
the
Lease.
)
1. The parties to this Memorandum hereby agree that the date of
2017 is the Commencement Date of the Term, and the date
20_is the expiration date of the Lease.
2. Tenant hereby confirms the following:
a.
That it has accepted possession of the Premises pursuant to the terms of the Lease;
b.
That the improvements. if any, required to be: furnished a according to the Lease
by
Landlord have been Substantially Completed;
c.
That Lanlord has fulfilled all of its duties of an inducement nature or as otherwise set forth in the Lease;
d.
That there are no offsets or credits against rentals, and the S9,248.63 Secwity Deposit has been paid as provided the Lease;
e.
That there is no default by the Landlord or Tenant under the Lease and the Lease is in full force and effect.
3.
Landlord hereby confirms to Tenant that its Lease number is _____ . This information must accompany each Rent check or wire payment.
4.
This Memorandum, each and all of the provisions hereof: shall inure to the benefit, or bind, as the caes may require, the parties herto, and their respective successors and assigns, subject to the restrictions upon assignment and subletting contained in the Lease.
IN WITNESS WHEROF, the parties hereto have executed this Memorandum, under Seal, the day and year first above wrtieen.
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WITNESS:
|
LANDLORD:
ONB CARLTON, LLC,
a
Virginia limited liability company
|
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WITNESS:
|
TENANT:
DIFFUSION PHARMACEUTICALS INC.,
a
Delaware
corporation
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By: _ _ _ _ _ _ _ _ _ _ _ _ _
Name: _ _ _ _ _ _ _ _ _ _ _ _ _
Title: _ _ _ _ _ _ _ _ _ _ _ _ _
Date: _ _ _ _ _ _ _ _ _ _ _ _ _
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EXHIBITC
BUILDING
RULES AND REGULATIONS
LAST
REVISIO
N:
DECEMBER 17.
2003
Landlord reserves
the right
to
rescind
any
o
f
these rules and
make
such other and further rules and regulations as in
the
judgment
of
Landlord shall from time
to
time be needed for the safety, protection, care and cleanliness of the Project, the operations
thereof, the
preservation
of
good order therein and the
protection
and comfort of its tenants, their agents, employees and invitees, which rules
when
made and
notice
thereof given to Tenant
shall
be binding upon Tenant
in
a
like manner
as if originally prescribed.
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l.
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Sidewalks, entrances, passages, elevators, vestibules, stairways, corridors, halls,
lobby
and -any other part of the Building shall
not
be obstructed or
encumbered
by any
tenant
or used for any purpose other than ingress or egress to
and
from each
tenant's
premises. Landlord
shall
have the right to control and operate the common portions of the Building and exterior facilities furnished for common use of the
tenants
{such as the eating, smoking,
and
parking areas)
in
such a manner as Landlord
deems
appropriate.
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2.
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No
awnings or o her projections shall be
attached
to
the
outside walls of the
B1.1ilding
without the prior written consent of Landlord. All
drapes,
or window blinds, must be of a quality, type and design color and attached
in
a manner approved
by
Landlord.
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3.
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No showcases
or
other articles shall be put
in
front of or affixed
to
any part of the exterior
of
the
Building,
or placed in
hallways or
vestibules without prior written consent of
Landlord
.
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4.
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Rest rooms and other
plumbing
fixtures shall
not be
used for
any
purposes other than those for
w
hich
they were constructed and no debris, robbi.sh, rags or other substances shall be thrown therein. Only standard toilet tissue may
be flushed
in
commodes. All
damage
resulting from
any
misuse of these fixtures shall be the responsibility of the tenant who, or whose emp
l
oyees, agents, visitors, clients, or licensees shall have caused same.
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5.
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No
tenant,
without the prior
consent
of
Landlord,
shall mark, paint,
drill
into, bore, cut or string wires or in any way deface
any
part of the
Premises
or the Building
of
which they form a
part
except for
the
reasonable hanging of decorative or instructional materials on
th
e
walls
of the Premises.
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6.
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Tenants shall not construct or
maintain,
use
or
operate
many
part
of
the Project
any electrical
device, wiring or other
apparatus
in
connection
with
a loud speaker system or other sound/communication system
whi
ch
may
be
heard outside the
Premises.
Any such communication system to be installed within the
Premises
shall require prior written
approval
of Landlord.
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7.
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No mopeds, skateboards, scooters, roller blades
or
other vehicles and
no
animals,
birds
or other pets of any kind
shall
be
brought
into, used
or
kept
in
o
r
about the Building other
than
a service animal performing
a
specified task.
Notwithstanding
the foregoing, Diffusion Pharmaceuticals’ Inc
(and
its
permitted successors and ass
i
gns) shall be permitted to use animals for medical testing
purposes
in
the ordinary course of
its
business,
provided
such animals are handled
in
such a manner as to
(i)
keep them confined in vivariums,
(ii)
prevent any sound or smell originating from the animals from intruding into the
common
areas of the Building,
(iii)
ensure any dead animals are properly disposed of by a professional disposal company and not as part of
th
e
Building
trash collection, and (v) otherwise comply
with
generally accepted practices
in
handling
animals as part
of
medical testing.
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S.
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No
tenant shall cause or permit
any
unusual or objectionable odors
to
be produced upon or permeate from its premises.
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9.
No
space in the Building shall be used for
the
sale at auction of merchand
i
se, goods
or
property of any
kind
.
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11.
|
No tenant, or
employ
ee
,
s
of tenant, shall make any unseemly or disturbing
noises
or disturb or interfere
with
the occupants of this or
neighboring
buildings or residences
b
y voice,
musical instrument, radio,
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talking machines,
whistling,
singing
,
or in any way.
All
passage through the Building
'
s hallways
,
e
l
evators, and
main
lobby
shall
be conducted
in
a quiet, business
-
like
manner.
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12.
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No tenant shall throw
anything out
of the
doors,
windows,
or down
corridors
or
stairs
of
the
Building.
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13.
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Except in connection
with
the
Permitted Use and
in
compl
i
ance
with
an applicable Laws,
Tenant
shall not p)ace
,
install
or operate on the Premises o
r
in any
part of
the
Project
,
any engine
,
stove
or machinery or
conduct
mechanical operations or cook thereon o
r
therein
(
except for coffee machine, microwave oven, and/or vending machine)
,
or place or use in or about the Premises
any
explosives
,
gasoline
,
kerosene oil,
acids, caustics
or any other
flammable.,
explosive or hazardous materia
l,
without prior written consent of
Landlord.
Landlord consents to the use
of
(i)
Hazardous
Materials
in accordance with Section
7
of the
Lease;
(ii)
the
kitchen in
the
Premises
,
and (iii) lab equipment
m
the
ordinary course of
Tenant's
busine
ss.
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l
3.
|
Tenants
are no
t
to install any additional locks
or bolts
of any kind upon any door or window of the Building
without
prior written consent of Landlord. Each tenan
t
must
,
upon the termination of tenancy
,
return to
the
Landlord all keys for the Premises, either furnished
to
or otherwise procured
by
such
tenant, and all
security
access cards to the
B
uilding. Land
l
ord hereby consents to
Tenant
installing
a
ke
y
card s
e
curity
system
as
part
of Tenant's Initial Work.
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14.
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All doors
to
hallways and corridors shall be
kept closed
during busin
e
ss hours
except
as they
may
be used for ingress or egress.
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15.
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Tenant
shall
not
use the name of the Building
1
Project, Landlord or Land
l
ord's Agent
in
any
way
in
connection
with
its
business except as the address
thereof.
Landlord shall also have
the
right to prohibit an
y
advertising
by tenant, which, in. its
sole
opinion, tends
to impair
the reputation of the Building or its desirab
i
lity
as a
building
for offices
,
and upon written notice. from Landlord, tenan
t
shall refrain from
or
discontinue such
advertising.
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16.
|
All
deliveries by vendors, couriers, clients,
employees
or visitors to the B
u
ilding which involve the use
of
a hand
cart,
hand truck, or other heavy equipment or device must be made
via
the freight elevator,
if
such freight
elevator
exists in the Building. Tenan
t
shall be responsib
l
e to Landlord for
any
loss or damage
resu1ting
from
any
delive
ri
es made
by
or
for tenant to the Building.
Tenant s
hall
procure and deliver a certificate
of
insurance from
tenant's
movers
which
certificate
shall name Landlord as an
additional insured.
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1
7
,
|
Landlord reserves the right to exclude from
t
he Building at all times any person who is not known or does not properly
identify
himself to Landlord
'
s
management or security personnel.
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18
.
|
No
space
within the Building,
or
in
the common areas such as the parking
lot,
may be used at
any
time
for
the purpose of lodging, sleeping, or for any immoral
or
illegal purposes.
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1
9.
|
N
o canvassing
,
soliciting or
peddling is permitted
in
the
Building
or
i
ts common areas
by
tenants,
their employees, or
other
persons.
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20.
|
N
o
mats,
trash,
or
other
objects shall
be
placed in the public corridors, hallways,
stairs, or other common
areas
of
the Building
.
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21.
|
if
Landlord elects
to have in effect a recycling
program, Tenant
mu
s
t place all
re
cyclable
i
tems
of
cans
,
bottles,
plastic
and
office
recyclable
paper
in
appropriate containers provided
by
Landlord
in each
tenant
'
s
space.
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22.
|
Landlord does not maintain su
ite
finishes which
are
non-standard
,
such
as kitchens
,
bathrooms
,
wallpaper; special
lights
,
etc. Ho
w
ever, should
the need
arise for repair of i
t
ems no
t
maintained by Landlo
r
d,
Landlord
,
-at
its sole option, may arrange for the work
to
be done at tenan
t
s’
expense.
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23.
|
No pictures, signage
,
advertising, decals
,
banners
, e
tc. are permitted
to
be placed in or on
windows
in
such
a
manner
as
they are
visible from
the
exterior, without
the
prior
written
consent of
Landlord
.
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24.
|
Tenant shall
be
responsible to
Landlord for
any acts
of
vandalism performed
in
the Building
by its
Employees,
agents,
invitees
or
visitors
.
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25.
|
Landlord's
emp
loyees
shall not
perform
any
work
or do
anything
outside of their regular duties unless
under
special
instructions
from Landlord. Requests
for
such requirements must be submitted
in
writing
to Landlord.
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26.
|
Landlor
d will
not
be responsible
foi:
1ost or stolen persona! property, equipment, money or jewelry from tenant's area or common areas of the P
r
oject regardless
of
whether
such
loss occurs
when
area is
locked against entry or not.
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27.
|
Landlord
will
not
permit
entrance to tenant's
premis
es
by
use
of
pass
key
controlled
by
Landlord
,
to
any person at any time without written permission of tenant
1
except employees
,
contractors or service
personnel
supervised or employed
by
Landlord.
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28.
|
Te11ant
and
its agents, employees and invitees shall observe and
comply
with
the driving and parking
signs
and markers on the
Building
grounds and surrounding areas.
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29.
|
Tenan
t
and
its
employees, invitees,
agents, etc. shall no
t en
te
r
other
s
eparat
e
tenants' hallways, restroom
s or
premises unless they have received prior
approval
from Landlord's
managemen
.
t
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30.
|
Tenant
shall not
use
or
permit
the
u
se
of any portion of
the
Premises for outdoor storage.
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31
.
|
Tenant shall not overload any floor in the Premises
or
the Building
,
including any public
corridors
or
elevat
ors
therein, by
bringing
in,
placing,
storing;
installing or
removing
any large or
heavy
articles
,
and
La11dlord
may prohibit, or may direct and control the
location
and size
of
,
safes
and all other
heavy
articles, and may require
,
at
tenant's sole cost
and expense
,
supplementary
supports
of
such
materia
l
and dimensions
as
Landlord may
deem
necessary to properly
distribu
t
e
the
weight.
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32.
|
Tenant
shall
not commit or suffer any waste upon the
Premise
s,
Building
or Project or a:ny nuisance, or do
any
other act
or
thing that ma
y
disturb
the
quiet enjoyment of an
y
other
tenant
in
the Building or Project
.
|
Exhibit D
Tenant's
Initial
Work
Tenant shal
l
do
all
construction
and
alterations
that
are
part of Tenant's
Initial
Work
in
compliance
with
all
building
rules and regulations, co
n
sistent w
i
th existing building systems and
in
a manner aimed at
limiting
disruption
to
existing
tenants of the
Building.
Landlord
understands
the
attached plans are schematic
and
minor modifications
are
acceptable. Tenant will provide
Landlord
with revised
plans
as
they
become avai
l
able.
[Approved
Plans
to be Attached]