UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _____________
 
Commission file number: 001-11460
 
graphic

Brooklyn ImmunoTherapeutics, Inc.
(Exact name of registrant as specified in its charter)
 
Delaware
  
31-1103425
(State of incorporation)
  
(I.R.S. Employer Identification No.)

10355 Science Center Drive, Suite 150
San Diego, California
  
92121
(Address of principal executive offices)
  
(Zip Code)

(212) 582-1199
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
  
Trading symbol
  
Name of each exchange on which registered
Common Stock, $0.005 par value
  
BTX
  
The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
 
Indicate by check mark whether the registrant has submitted electronically every interactive data file required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒  No ☐
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
 ☐
Accelerated filer
☐
Non-accelerated filer
 ☒
Smaller reporting company
 ☒
   
Emerging growth company
 ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No ☒
 
As of June 30, 2022, the registrant had outstanding 57,468,597 shares of common stock, $0.005 par value per share.

 

TABLE OF CONTENTS

   
Page
PART I – FINANCIAL INFORMATION
  
Item 1.
Financial Statements (unaudited)
  
 
1
 
2
 
3
 
4
  5
Item 2.
 23
Item 3.
 31
Item 4.
 31
     
PART II – OTHER INFORMATION
  
Item 1.
 32
Item 1A.
 33
Item 2.
33
Item 3.
Defaults Upon Senior Securities
33
Item 4.
Mine Safety Disclosures
33
Item 5.
Other Information
33
Item 6.
 34
35

i
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
This Quarterly Report on Form 10-Q contains “forward-looking statements” as that term is defined under the Private Securities Litigation Reform Act of 1995 (“PSLRA”), Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include statements related to future events, results, performance, prospects and opportunities, including statements related to our strategic plans and targets, revenue generation, product availability and offerings, capital needs, capital expenditures, industry trends and our financial position. Forward-looking statements are based on information currently available to us, on our current expectations, estimates, forecasts, and projections about the industries in which we operate and on the beliefs and assumptions of management. Forward looking statements often contain words such as “expects,” “anticipates,” “could,” “targets,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” “will,” “would,” and similar expressions. In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our business, and other characterizations of future events or circumstances, are forward-looking statements. Forward-looking statements by their nature address matters that are, to different degrees, subject to risks and uncertainties that could cause actual results to differ materially and adversely from those expressed in any forward-looking statements. For us, particular factors that might cause or contribute to such differences include those risks and uncertainties described in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2021 and described in other documents we file from time to time with the Securities and Exchange Commission, or SEC.
 
Readers are urged not to place undue reliance on the forward-looking statements in this Quarterly Report on Form 10-Q, which speak only as of the date of this Quarterly Report on Form 10-Q. We are including this cautionary note to make applicable, and take advantage of, the safe harbor provisions of the PSLRA. Except as required by law, we do not undertake, and expressly disclaim any obligation, to disseminate, after the date hereof, any updates or revisions to any such forward-looking statements to reflect any change in expectations or events, conditions or circumstances on which any such statements are based.
 
We believe that the expectations reflected in forward-looking statements in this Quarterly Report on Form 10-Q are based upon reasonable assumptions at the time made. However, given the risks and uncertainties, you should not rely on any forward- looking statements as a prediction of actual results, developments or other outcomes. You should read these forward-looking statements with the understanding that we may be unable to achieve projected results, developments or other outcomes and that actual results, developments or other outcomes may be materially different from what we expect.

Unless stated otherwise or the context otherwise requires, all references in this Quarterly Report on Form 10-Q to “Brooklyn” refer to Brooklyn ImmunoTherapeutics, Inc., “Brooklyn LLC” refer to Brooklyn ImmunoTherapeutics LLC, a wholly owned subsidiary of Brooklyn, and to “Company,” “we,” “us” or “our” refer to Brooklyn. and its subsidiaries, including Brooklyn LLC, Novellus, Inc. and Novellus Therapeutics Limited.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements

BROOKLYN IMMUNOTHERAPEUTICS, INC.
 CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value amount)
(Unaudited)


  
March 31,
2022
    
December 31,
2021
  
ASSETS
  
       
Current assets:
            
Cash
  
$
23,500
    
$
16,985
  
Other receivable
    
835
      
684
  
Prepaid expenses and other current assets
    
800
      
1,097
  
Total current assets
    
25,135
      
18,766
  
Property and equipment, net
    
308
      
670
  
Right-of-use assets - operating leases
    
1,093
      
2,567
  
Goodwill
    
2,044
      
2,044
  
In-process research and development
    
5,990
      
5,990
  
    Investment in non-controlling interest
     385       1,000  
Security deposits and other assets
    
421
      
488
  
Total assets
  
$
35,376
    
$
31,525
  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
                
Current liabilities:
                
Accounts payable
  
$
1,106
    
$
1,755
  
Accrued expenses
    
2,384
      
1,249
  
Operating lease liabilities, current
    
149
      
426
  
Other current liabilities     45
       247
  
Total current liabilities
    
3,684
      
3,677
  
Warrant liabilities
    
13,315
      
-
  
Operating lease liabilities, non-current
    
1,018
      
2,297
  
Other liabilities
    
48
      
48
  
Total liabilities
    
18,065
      
6,022
  
                 
Stockholders' equity:
                
    Preferred stock, $0.005 par value, 1,000 shares authorized, 156 designated and outstanding of Series A convertible preferred stock at March 31, 2022 and December 31, 2021, $156 liquidation preference
     1       1  
Common stock, $0.005 par value, 100,000 shares authorized at March 31, 2022 and December 31, 2021; 57,452 and 52,021 issued and outstanding at March 31, 2022 and December 31, 2021, respectively
    
287
      
260
  
Additional paid-in capital
    
167,100
      
165,944
  
Accumulated deficit
    
(150,077
)
    
(140,702
)
Total stockholders' equity
    
17,311
      
25,503
Total liabilities and stockholders' equity
  
$
35,376
    
$
31,525
  

The accompanying notes are an integral part of these condensed consolidated financial statements.

1

BROOKLYN IMMUNOTHERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)

 
Three months ended
March 31,
  
   
2022
    
2021
  
Operating expenses:
            
Research and development
  
$
1,782
    
$
1,533
  
General and administrative
    
4,514
      
1,623
  
Transaction costs
    
-
      
5,765
  
Total operating expenses
    
6,296
      
8,921
  
Loss from operations
    
(6,296
)
    
(8,921
)
Other expense, net:
                
Loss on sale of NTN assets
    
-
      
(9,598
)
Warrant liabilities expense
     (1,322 )     -  
Loss on non-controlling investment
     (615 )     -  
Other expense, net     (1,142 )     (3 )
Total other expense, net
    
(3,079
)
    
(9,601
)
Loss before income taxes
     (9,375 )     (18,522 )
Provision for income taxes
     -       -  
Net loss
  

(9,375
)
  

(18,522
)
Net loss per common share - basic and diluted
   $ (0.17 )   $ (0.67 )
Weighted average shares outstanding - basic and diluted
    
53,626
      
27,799
  

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

BROOKLYN IMMUNOTHERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ AND MEMBERS’ EQUITY
For the three months ended March 31, 2022 and 2021 (unaudited)
(In thousands)

 
  
Membership Equity
    
Common Stock
    
Series A Preferred
Stock
    
Additional
Paid-in
    Accumulated        
 
  
Class A
    
Class B
    
Class C
    
Common
    
Shares
    
Amount
    
Shares
    
Amount
    
Capital
    
Deficit
    
Total
  
Balances at January 1, 2022
  
$
-
    
$
-
    
$
-
    
$
-
      
52,021
    
$
260
      
156
    
$
1
    
$
165,944
    
$
(140,702
)
  
$
25,503
  
Issuance of common stock in connection with private offering
    
-
      
-
      
-
      
-
      
5,500
      
27
      
-
      
-
      
(27
)
    
-
      
-
  
Forfeiture of unvested restricted stock
    
-
      
-
      
-
      
-
      
(78
)
    
-
      
-
      
-
      
-
      
-
      
-
  
Issuance of common stock from vested restricted stock units
     -       -       -       -       9       -       -       -       -       -       -  
Stock-based compensation
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
1,183
      
-
      
1,183
  
Net loss
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
(9,375
)
    
(9,375
)
Balances at March 31, 2022
  
$
-
    
$
-
    
$
-
    
$
-
      
57,452
    
$
287
      
156
    
$
1
    
$
167,100
    
$
(150,077
)
  
$
17,311
  
 
                                                                                        
Balances at January 1, 2021
  
$
23,202
    
$
1,400
    
$
1,000
    
$
198
      
-
    
$
-
      
-
    
$
-
    
$
-
    
$
(18,141
)
  
$
7,659
  
Brooklyn rights offerings membership units
    
10,500
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
10,500
  
Elimination of Brooklyn’s historical members’ equity
    
(33,702
)
    
(1,400
)
    
(1,000
)
    
(198
)
    
-
      
-
      
-
      
-
      
36,300
      
-
      
-
  
Issuance of common stock for business combination
    
-
      
-
      
-
      
-
      
1,514
      
8
      
-
      
-
      
8,170
      
-
      
8,178
  
Series A preferred stock retained in business combination
    
-
      
-
      
-
      
-
      
-
      
-
      
156
      
1
      
(1
)
    
-
      
-
  
Issuance of common stock to Brooklyn members
    
-
      
-
      
-
      
-
      
38,924
      
195
      
-
      
-
      
(195
)
    
-
      
-
  
Issuance of common stock to Financial Advisor upon consummation of merger
    
-
      
-
      
-
      
-
      
1,068
      
5
      
-
      
-
      
5,760
      
-
      
5,765
  
Stock-based compensation
     -       -       -       -       -       -       -       -       419       -       419  
Net loss
    
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
      
-
       (18,522 )    
(18,522
)
Balances at March 31, 2021
  
$
-
    
$
-
    
$
-
    
$
-
      
41,506
    
$
208
      
156
    
$
1
    
$
50,453
    
$
(36,663
)
  
$
13,999
  

The accompanying notes are an integral part of these condensed consolidated financial statements.

3
BROOKLYN IMMUNOTHERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

 
  
For the three months ended
March 31,
  
 
  
2022
    
2021
  
Cash flows used in operating activities:
            
Net loss
  
$
(9,375
)
  
$
(18,522
)
Adjustments to reconcile net loss to net cash used in operating activities:
                
Depreciation and amortization
    
36
      
25
  
Stock-based compensation
    
1,183
      
419
  
Amortization of right-to-use asset
    
102
      
70
  
Transaction costs - shares to Financial Advisor
    
-
      
5,765
  
Loss on sale of NTN assets
    
-
      
9,598
  
Loss on disposal of fixed assets
     371       -  
Gain on lease termination
     (85 )     -  
Warrant liabilities expense
     1,322       -  
Loss on non-controlling investment
    
615
      
-
  
Changes in operating assets and liabilities:
                
Other receivable
    
(146
)
    
4
  
Prepaid expenses and other current assets
    
298
      
42
  
Security deposits and other non-current assets
    
66
      
(1
)
Accounts payable and accrued expenses
    
486
   
(766
)
Operating lease liability
    
(103
)
    
(64
)
Other liabilities
    
(202
)
    
-
  
Net cash used in operating activities
    
(5,432
)
    
(3,430
)
Cash flows used in investing activities:
                
Purchase of property and equipment
    
(46
)
    
-
  
Purchase of NTN, net of cash acquired
    
-
      
148
  
Proceeds from the sale of NTN assets, net of cash disposed
    
-
      
119
  
Net cash (used in) provided by investing activities
    
(46
)
    
267
  
Cash flows provided by financing activities:
                
Proceeds from issuance of common stock and  warrants in connection with private offering
     11,993       -  
Proceeds from sale of members’ equity
    
-
      
10,475
  
Repayment of NTN’s PPP loan
    
-
      
(532
)
Net cash provided by financing activities
    
11,993
      
9,943
  
Net increase in cash and cash equivalents
    
6,515
      
6,780
  
Cash and cash equivalents at beginning of period
    
16,985
      
1,630
  
Cash and cash equivalents at end of period
  
$
23,500
    
$
8,410
  
 
                
Supplemental disclosures of cash flow information:
                
Cash paid during the period for:
                
Interest
  
$
1
    
$
-
  
 
                
Supplemental disclosure of non-cash investing and financing activities:
                
Issuance of common stock for business combination
  
$
-
    
$
8,178
  
Series A preferred stock retained in business combination
   $ -     $ 1  

The accompanying notes are an integral part of these condensed consolidated financial statements.

4
BROOKLYN IMMUNOTHERAPEUTICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 
1)
DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
 

Description of Business

Brooklyn ImmunoTherapeutics Inc., a Delaware corporation (“Brooklyn” or the “Company”), together with its subsidiaries including Brooklyn ImmunoTherapeutics LLC (“Brooklyn LLC”), Novellus, Inc. (“Novellus”) and Novellus Therapeutics, Ltd. (“Novellus, Ltd.”), is a biopharmaceutical company utilizing its mRNA technology platform, including mRNA-based cell reprogramming and gene editing technologies, to create next generation mRNA, gene editing and cell therapies, including iPSC therapies for multiple therapeutic indications. As used herein, the “Company” refers collectively to Brooklyn and its subsidiaries.


On August 12, 2020, Brooklyn (then known as “NTN Buzztime, Inc.”), Brooklyn LLC and BIT Merger Sub, Inc., a wholly owned subsidiary of Brooklyn (the “Merger Sub”), entered into an agreement and plan of merger and reorganization (the “Merger Agreement”) pursuant to which, among other matters, Merger Sub merged with and into Brooklyn LLC, with Brooklyn LLC continuing as a wholly owned subsidiary of Brooklyn and as the surviving company of the merger (the “Merger”). The Merger closed on March 25, 2021. After the Merger, Brooklyn changed its name from “NTN Buzztime, Inc.” to “Brooklyn ImmunoTherapeutics, Inc.” The Merger was accounted for as a reverse acquisition, in which Brooklyn LLC was deemed the acquiring company for accounting purposes.



On March 26, 2021, Brooklyn sold (the “Disposition”) its rights, title and interest in and to the assets relating to the business operated under the name “NTN Buzztime, Inc.” prior to the Merger to eGames.com Holdings LLC (“eGames.com”) in accordance with the terms of an asset purchase agreement dated September 18, 2020, as amended, between Brooklyn and eGames.com (the “Asset Purchase Agreement”).



On July 16, 2021, Brooklyn and its newly formed, wholly owned subsidiary Brooklyn Acquisition Sub, Inc. entered into an agreement and plan of acquisition (the “Acquisition Agreement”) with (a) Novellus LLC, (b) Novellus (the sole equity holder of Novellus, Ltd. and, prior to the closing under the Acquisition Agreement, a wholly owned subsidiary of Novellus, LLC), and (c) a seller representative (the “Acquisition”), pursuant to which Brooklyn acquired Novellus and its subsidiary, Novellus, Ltd. As part of the Acquisition, Brooklyn also acquired 25.0% of the total outstanding equity interests of NoveCite, Inc. (“NoveCite”), a corporation focused on developing an allogeneic mesenchymal stem cell product for patients with acute respiratory distress syndrome, including from COVID-19.



Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial statements and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the unaudited financial statements include all the normal recurring adjustments that are necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented.



These condensed consolidated financial statements should be read together with the audited consolidated financial statements and notes thereto contained in Brooklyn’s Annual Report on Form 10-K/A for the year ended December 31, 2021 filed with the Securities and Exchange Commission (the “SEC”) on June 30, 2022 (the “10-K/A”). The accompanying condensed consolidated balance sheet as of December 31, 2021 has been derived from the audited financial statements contained in the 10-K/A, but does not include all of the information and footnotes required by GAAP for complete financial statements. The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be anticipated for the entire year ending December 31, 2022, or any other period.


5
Reclassifications


Certain reclassifications have been made to Brooklyn’s prior years’ financial statements to conform to the current year presentation. These reclassifications had no effect on Brooklyn’s previously reported results of operations or accumulated deficit.
    
2)
LIQUIDITY AND CAPITAL RESOURCES
 

The Company has incurred significant operating losses and has an accumulated deficit as a result of ongoing efforts to develop product candidates, including conducting clinical trials and providing general and administrative support for operations. As of March 31, 2022, the Company had a cash balance of approximately $23.5 million and an accumulated deficit of approximately $150.1 million. For the three months ended March 31, 2022, the Company incurred a net loss of $9.4 million, and the Company used cash in operating activities of $5.4 million.
 

On March 9, 2022, the Company consummated a private placement of common stock and warrants resulting in net proceeds of approximately $11 million (See Note 10).



In connection with preparing the accompanying condensed consolidated financial statements as of and for the three months ended March 31, 2022, the Company’s management concluded that there is substantial doubt regarding the Company’s ability to continue as a going concern because it does not expect to have sufficient cash or working capital resources to fund operations for the twelve-month period subsequent to the issuance date of these financial statements. The Company will need to raise additional capital, which could be through the remaining availability under our equity line purchase agreement with Lincoln Park Capital Fund, LLC (the “Second Purchase Agreement”) (to the extent the Company is permitted to use such agreement) (see Note 10), public or private equity offerings, debt financings, corporate collaborations or other means. The Company may also seek governmental grants to support its clinical trials and preclinical trials. The Company currently has no arrangements for such capital and no assurances can be given that it will be able to raise such capital when needed, on acceptable terms, or at all.



The accompanying condensed consolidated financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The accompanying condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to the Company’s ability to continue as a going concern.

3)
MERGER, DISPOSITION AND ACQUISITION TRANSACTIONS
 

Merger


On August 12, 2020, Brooklyn, Brooklyn LLC and the Merger Sub entered into the Merger Agreement, and the Merger closed on March 25, 2021. The Merger was accounted for as a reverse acquisition, in which Brooklyn LLC was deemed the acquiring company for accounting purposes. Brooklyn LLC, as the accounting acquirer, recorded the assets acquired and liabilities assumed of Brooklyn in the Merger at their fair values as of the acquisition date.


Brooklyn LLC was determined to be the accounting acquirer based upon the terms of the Merger and other factors including that (i) Brooklyn LLC members, received common stock in the Merger that represented 96.35% of Brooklyn’s outstanding common stock on a fully diluted basis, (ii) all of the directors of Brooklyn immediately after the Merger were designated by Brooklyn LLC under the terms of the Merger Agreement and (iii) existing members of Brooklyn LLC’s management became the management of Brooklyn immediately after the Merger.


At the closing of the Merger, all the outstanding membership interests of Brooklyn LLC converted into the right to receive an aggregate of approximately 39,992,000 shares of common stock, of which 1,068,000 shares were issued as compensation to Maxim Group LLC, Brooklyn LLC’s financial advisor (the “Financial Advisor”) for its services to Brooklyn LLC in connection with the Merger.

6

The purchase price of $8.2 million, which represents the consideration transferred in the Merger to stockholders of Brooklyn immediately before the Merger, was calculated based on the closing price of $5.40 per share for approximately 1,514,000 shares common stock that those stockholders owned on March 25, 2021 immediately prior to the Merger because that represented a more reliable measure of the fair value of consideration transferred in the Merger.


Under the acquisition method of accounting, the total purchase price has been allocated to the acquired tangible and intangible assets and assumed liabilities of Brooklyn based on their estimated fair values as of March 25, 2021, the Merger closing date. Because the consideration paid by Brooklyn LLC in the Merger is more than the estimated fair values of Brooklyn’s net assets deemed to be acquired, goodwill is equal to the difference of approximately $8.6 million, which has been calculated using the fair values of the net assets of Brooklyn as of March 25, 2021.


The allocation of the purchase price to the tangible and intangible assets acquired and liabilities deemed to be assumed from Brooklyn, based on their estimated fair values as of March 25, 2021, is as follows (in thousands):

 
  
Historical
Balance
Sheet of
Brooklyn at
March 25, 2021
    
Fair Value
Adjustment
to Brooklyn
Pre-Merger
Assets
    
Price
Purchase
Allocation
  
Cash and cash equivalents
  
$
148
    
$
-
    
$
148
  
Accounts receivable
    
103
      
-
      
103
  
Prepaid expense and other current assets
    
329
      
-
      
329
  
Property and equipment, net
    
1,015
      
-
      
1,015
  
Software development costs
    
1,296
      
(368
)
    
928
  
Customers
    
-
      
548
      
548
  
Trade name
    
-
      
299
      
299
  
Accounts payable, accrued liabilities and other current
                        
liabilities
    
(3,781
)
    
-
      
(3,781
)
Net assets acquired, excluding goodwill
  
$
(890
)
  
$
479
    
$
(411
)
                         
Total consideration
  
$
8,178
                  
Net assets acquired, excluding goodwill
    
(411
)
                
Goodwill
  
$
8,589
                  


Brooklyn LLC was obligated under the Merger Agreement to have $10.0 million in cash and cash equivalents on its balance sheet at the effective time of the Merger. To ensure Brooklyn LLC had the required funds, certain beneficial holders of Brooklyn LLC’s Class A membership interests entered into contractual commitments to invest $10.0 million into Brooklyn LLC immediately prior to the closing of the Merger. During March 2021, Brooklyn offered its Class A unit holders an additional 5% rights offering for an additional $0.5 million to be raised by a rights offering. Brooklyn received funds from the rights offering between February 17, 2021 and April 5, 2021.

7

Disposition


On March 26, 2021, Brooklyn sold its rights, title and interest in and to the assets relating to the business it operated (under the name NTN Buzztime, Inc.) prior to the Merger to eGames.com in exchange for a purchase price of $2.0 million and assumption of specified liabilities relating to that business. The sale was completed in accordance with the terms of the Asset Purchase Agreement. Details of the Disposition are as follows (in thousands):

Proceeds from sale:
      
Cash   $ 132  
Escrow
    
100
  
Assume advance/loans
    
1,700
  
Interest on advance/loans
    
68
  
         
Carrying value of assets sold:
        
Cash and cash equivalents
    
(14
)
Accounts receivable
    
(75
)
Prepaids and other current assets
    
(124
)
Property and equipment, net
    
(1,014
)
Software development costs
    
(927
)
Customers
    
(548
)
Trade name
    
(299
)
Goodwill
    
(8,589
)
Other assets
    
(103
)
         
Liabilities transferred upon sale:
        
Accounts payable and accrued expenses
    
113
  
Obligations under finance leases
    
17
  
Lease liability
    
26
  
Deferred revenue
    
55
  
Other current liabilities
    
149
  
         
Transaction costs
    
(265
)
         
Total loss on sale of assets
  
$
(9,598
)


Acquisition


On July 16, 2021, Brooklyn and Brooklyn Acquisition Sub, Inc. entered into the Acquisition Agreement. The Acquisition closed contemporaneously with the execution and delivery of the Acquisition Agreement. At the closing:

 
•
Brooklyn acquired all of the outstanding equity interests of Novellus, Inc. as the result of the merger of Brooklyn Acquisition Sub, Inc. with and into Novellus, Inc., following which, Novellus, Inc., as the surviving corporation, became Brooklyn’s wholly owned subsidiary and Novellus Ltd. became Brooklyn’s indirectly owned subsidiary; and

 
•
Brooklyn acquired 25.0% of the total outstanding equity interests of NoveCite.


As consideration for the Acquisition, Brooklyn paid $22.9 million in cash and delivered approximately 7,022,000 shares of common stock, which under the terms of the Acquisition Agreement, were valued at a total of $102.0 million based on an agreed upon price of $14.5253 per share. At the date of issuance, the fair value of the shares were approximately $58.6 million.


The Acquisition Agreement contained customary representations, warranties and certain indemnification provisions. Approximately 741,000 of the shares issued as consideration were placed in escrow for a period of up to 12 months in order to secure indemnification obligations to Brooklyn under the Acquisition Agreement. The Acquisition Agreement also contains certain non-competition and non-solicitation provisions pursuant to which Novellus LLC agreed not to engage in certain competitive activities for a period of five years following the closing, including customary restrictions relating to employees. No employees of Novellus Ltd. or Novellus, Inc. prior to the Acquisition continued their employment, or were otherwise engaged by Brooklyn, following the Acquisition.

8

In connection with the Acquisition, the co-founders of Novellus, Ltd. entered into lock-up agreements with respect to approximately 3,378,000 of the shares of common stock received in the Acquisition, and Brooklyn’s Chairman of the Board of Directors (the “Board”) and its Chief Executive Officer and President entered into identical lock-up agreements with respect to their current holdings of Brooklyn stock. Each lock-up agreement extends for a period of three years, provided that up to 75% of the shares of common stock subject to the lock-up agreement may be released from the lock-up restrictions earlier if the price of common stock on the Nasdaq exceeds specified thresholds. The lock-up agreements include customary exceptions for transfers during the applicable lock-up period.


The Company expects the Acquisition will advance its evolution into a platform company with a pipeline of next generation engineered cellular, gene editing and cytokine programs. In addition, the acquisition of Novellus, Ltd. builds on the License Agreement. (See Note 8). The completion of the acquisition of Novellus, Ltd. relieved Brooklyn LLC from potential obligations to pay Novellus, Ltd. certain upfront fees, clinical development milestone fees and post-registration royalties under the License Agreement. The agreement with Factor Bioscience Limited (“Factor”) under the License Agreement, which grants Brooklyn LLC exclusive rights to develop certain next-generation mRNA gene editing and cell therapy products, remained unchanged.


Although Brooklyn acquired all of the outstanding equity interests of Novellus, Inc., the Company accounted for the Acquisition as an asset acquisition (as the assets acquired did not constitute a business as defined in Accounting Standards Codification (“ASC”) Topic 805, Business Combinations), and was measured by the amount of cash paid and by the fair value of the shares of common stock issued. As a result, substantially all of the value acquired was attributed to IPR&D, with the exception of the cash paid for the investment in NoveCite, which is being accounted for as an investment in equity securities, as discussed further below.


Brooklyn paid $22.9 million in cash, net of cash acquired, as part of the consideration for the Acquisition, of which $1.0 million was paid in cash for the investment in NoveCite. Brooklyn also issued approximately 7,022,000 shares of the Company’s common stock, of which approximately 3,644,000 shares are unrestricted and 3,378,000 shares are subject to the three-year lockup. The unrestricted shares were valued at $10.05 per share, which was the closing price of Brooklyn’s common stock on July 16, 2021. The fair value of the restricted shares was discounted by approximately 35% to $6.53 per restricted share, which was derived from the average discount rate between the Black Scholes and Finnerty valuation models. The resulting fair value of the asset acquired is as follows (in thousands):

 
  
Fair Value of
Consideration
  
Cash paid
  
$
22,882
  
Cash acquired
    
(28
)
Unrestricted shares
    
36,628
  
Restricted shares
    
22,056
  
Total fair value of consideration paid
    
81,538
  
Less amount of cash paid for NoveCite investment
    
(1,000
)
Fair value of IPR&D acquired
  
$
80,538
  


IPR&D that is acquired through an asset purchase that has no alternative future uses and no separate economic values from its original intended purpose is expensed in the period the cost is incurred. Accordingly, the Company expensed the fair value of the IPR&D during the third quarter of 2021 in the amount of $80.5 million.

Investment in NoveCite


As  a  result  of  the  Acquisition,  Brooklyn  acquired  and  currently  owns  25%  of  NoveCite  and  Citius Pharmaceuticals, Inc. (“Citius”) owns the remaining 75%. A member of the Company’s management holds one of three board seats on NoveCite’s board of directors. Citius’ s officers and directors hold the other two board seats. The Company is accounting for its interest in NoveCite under ASC Topic 323, Investments – Equity Method and Joint Ventures. The investment was recorded at cost, which was $1.0 million and is adjusted for the Company’s share of NoveCite’s earnings or losses, which are reflected in the accompanying condensed consolidated statement of operations. The investment may also reflect an equity loss in the event that circumstances indicate an other-than-temporary impairment. For the three months ended March 31, 2022, the Company recorded $0.6 million in losses from its investment in NoveCite, of which $0.5 million relates to NoveCite’s year ended December 31, 2021.
 
9
4)
FAIR VALUE OF FINANCIAL INSTRUMENTS


Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants. A fair value hierarchy has been established for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:


 •
Level 1 Inputs – Valued based on quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.


•
Level 2 Inputs – Valued based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means.


•
Level 3 Inputs – Valued based on inputs for which there is little or no market value, which require the reporting entity to develop its own assumptions.


The following tables summarize the liabilities that are measured at fair value as of March 31, 2022 (in thousands).  There were no liabilities measured at fair value as of December 31, 2021:

 
  
As of March 31, 2022
  
Description
  
Level 1
    
Level 2
    
Level 3
  
Liabilities:
                  
Warrant liabilities - Pre-Funded Warrants
  
$
-
    
$
2,782
    
$
-
  
Warrant liabilities - Common Warrants
    
-
      
-
      
10,533
  
Total
  
$
-
    
$
2,782
    
$
10,533
  


On March 9, 2022, the Company issued pre-funded warrants exercisable for approximately 1,357,000 shares of common stock (the “Pre-Funded Warrants”) and warrants exercisable for approximately 6,857,000 shares of common stock (the “Common Warrants”) in connection with the PIPE Transaction (as defined below).  See Note 10 for more information related to the PIPE Transaction.


The Common Warrants and Pre-Funded Warrants were accounted for as liabilities under ASC 815-40, Derivatives and Hedging, Contracts in Entity’s Own Equity (“ASC 815-40”), as these warrants provide for a cashless settlement provision that does not meet the requirements of the indexation guidance under ASC 815-40.  These warrant liabilities were measured at fair value at inception and are then subsequently measured on a recurring basis, with changes in fair value presented within the Company’s statement of operations.


The Company uses a Black-Scholes option pricing model to estimate the fair value of the Common Warrants, which is considered a Level 3 fair value measurement.  Certain inputs used in this Black-Scholes pricing model may fluctuate in future periods based upon factors that are outside of the Company’s control.  A significant change in one or more of these inputs used in the calculation of the fair value may cause a significant change to the fair value of the Company’s warrant liabilities, which could also result in material non-cash gains or losses being reported in the Company’s consolidated statement of operations.


The estimated fair value of the Pre-Funded Warrants was deemed a Level 2 measurement as of March 31, 2022, as all significant inputs to the valuation model used to estimate the fair value of the Pre-Funded Warrants were directly observable from the Company’s publicly-traded common stock.

10

The fair values of the Common Warrants and the Pre-Funded Warrants at the issuance date totaled $12.6 million in the aggregate, which was $0.6 million more than the $12.0 million proceeds received in the PIPE Transaction.  The excess $0.6 million represents an inducement to the purchaser to enter into the PIPE Transaction and was recorded in warrant liabilities expense in the accompanying consolidated statement of operations.  Given the Company’s capital requirements and market conditions, the Company consummated this financing on market terms available at the time of the transaction.


The Company remeasured the fair value of the warrant liabilities as of March 31, 2022, and the following table presents the changes in the warrant liabilities from the issuance date (in thousands):
 
 
  
Pre-Funded
Warrants
(Level 2)
    
Common
Warrants
(Level 3)
    
Total Warrant
Liabilities
  
Fair value at January 1, 2022
  
$
-
    
$
-
    
$
-
  
Fair value at March 9, 2022 (issuance date)
    
2,646
      
9,943
      
12,589
  
Change in fair value of warrant liabilities
    
136
      
590
      
726
  
Fair value at March 31, 2022
  
$
2,782
    
$
10,533
    
$
13,315
  

5)
LEASES



The Company has operating leases for office and laboratory space in the borough of Manhattan in New York, New York and in Cambridge, Massachusetts, which expire in 2026 and 2028, respectively. On March 31, 2022, the Company entered into the Torrey Pines Science Center Lease in San Diego, California (the “San Diego Lease”) with Torrey Pines Science Center Limited Partnership for approximately 5,200 square feet of lab and office space. The term of the San Diego Lease is 62 months and the lease commencement date was April 19, 2022, which is the date the Company will record a right-of-use (“ROU) asset and corresponding operating lease liability. The San Diego Lease will expire in June 2027.


Base rent for the San Diego Lease is $6.35 per square foot in the first year of the San Diego Lease, with a rent abatement for the second and third full months of the first year. The base rent will increase by approximately 3% on each anniversary of the lease commencement date. The Company is also required to pay its share of operating expenses and property taxes. The San Diego Lease provides for a one-time option to extend the lease term for an additional five years at the then fair rental value.


On March 5, 2022, the Company entered into an Agreement to Assign Space Lease with Regen Lab USA LLC (“Regen”) pursuant to which the Company agreed to assign its Brooklyn, New York lease (the “Brooklyn Lease”) to Regen. The effective date of the assignment was contingent upon, among other things, a consent from BioBat, Inc. (the “Landlord”) to assign the Brooklyn Lease.  Additionally, Regen agreed to purchase certain equipment from the Company for $50,000, partly reimburse the Company $50,000 toward certain existing unamortized leasehold improvements, and to reimburse the Company for the existing security deposit the Company had under the Brooklyn Lease of approximately $63,000.


On March 25, 2022, the Company entered into an Assignment and Assumption of Lease Agreement (the “Assignment Agreement”) with Regen, the consent of which was provided by the Landlord in the Assignment Agreement. The effective date of the assignment was March 28, 2022. Under the Assignment Agreement, Regen (i) accepts the assignment of the Brooklyn Lease; (ii) assumes all of the obligations, liabilities, covenants and conditions of the Company’s as tenant under the Brooklyn Lease; (iii) assumes and agrees to perform and observe all of the obligations, terms, requirements, covenants and conditions to be performed or observed by the Company under the Brooklyn Lease; and (iv) makes all of the representations and warranties binding under the Brooklyn Lease with the same force and effect as if Regens had executed the Brooklyn Lease originally as the tenant.


Notwithstanding the above assumptions by Regen, the Company shall be and remain liable and responsible for the due keeping, and full performance and observance, of all the provisions of the Brooklyn Lease on the part of the tenant to be kept, performed and observed. As a result of the Assignment Agreement, the Company wrote off the remaining ROU asset balance and the corresponding lease liability.

11

The Company accounts for leases under ASC 842, Leases. Operating leases are included in “Right-of use assets - operating leases” within the Company’s balance sheets and represent the Company’s right to use an underlying asset for the lease term. The Company’s related obligation to make lease payments are included in “Operating lease liabilities, non-current” and “Operating lease liabilities, current” within the Company’s balance sheets. ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Because the rate implicit in the lease is not readily determinable, the Company uses its incremental borrowing rates based on the information available at the lease commencement date in determining the present value of lease payments. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recorded on the balance sheet and are recognized as lease expense on a straight-line basis over the lease term.


Some leasing arrangements require variable payments that are dependent on usage or may vary for other reasons, such as payments for insurance, tax payments and other miscellaneous costs. The variable portion of lease payments is not included in the ROU assets or lease liabilities. Rather, variable payments, other than those dependent upon an index or rate, are expensed when the obligation for those payments is incurred and are included in lease expenses. Accordingly, all expenses associated with a lease contract are accounted for as lease expenses.


During the three months ended March 31, 2022 and 2021, the net operating lease expenses were as follows (in thousands):

   
Three months ended March 31,
  

  2022
     2021
  
Operating lease expense
  
$
186
    
$
151
  
Sublease income
    
(21
)
    
(21
)
Variable lease expense
    
3
      
9
  
Total lease expense
  
$
168
    
$
139
  


The tables below show the beginning balances of the operating ROU assets and lease liabilities as of January 1, 2022 and the ending balances as of March 31, 2022, including the changes during the period (in thousands).

   
Operating Lease
ROU Assets
  
Operating lease ROU assets at January 1, 2022
  
$
2,567
  
Amortization of operating lease ROU assets
    
(102
)
Write off of ROU asset due to lease termination
    
(1,372
)
Operating lease ROU assets at March 31, 2022
  
$
1,093
  

   
Operating Lease
Liabilities
  
Operating lease liabilities at January 1, 2022
  
$
2,723
  
Principal payments on operating lease liabilities
    
(103
)
Write off of operating lease liability due to lease termination
    
(1,453
)
Operating lease liabilities at March 31, 2022
    
1,167
  
Less non-current portion
    
1,018
  
Current portion at March 31, 2022
  
$
149
  

12

As of March 31, 2022, the Company’s operating leases had a weighted-average remaining life of 5.8 years with a weighted-average discount rate of 10.23%. The maturities of the operating lease liabilities are as follows (in thousands):

   
As of
March 31,
  
2022
  
$
201
  
2023
    
270
  
2024
    
272
  
2025
    
274
  
2026
    
267
  
Thereafter
    
245
  
Total payments
    
1,529
  
Less imputed interest
    
(362
)
Total operating lease liabilities
  
$
1,167
  

6)
GOODWILL AND IN-PROCESS RESEARCH & DEVELOPMENT
 

In 2018, the Company acquired IRX, which was accounted for as a business combination. The Company recorded IPR&D in the amount of $6.0 million, which represents the fair value assigned to technologies that were acquired in connection with the IRX Acquisition and which have not reached technological feasibility and have no alternative future use. IPR&D assets acquired in a business combination are considered to be indefinite lived until the completion or abandonment of the associated research and development projects. If and when development is complete, which generally occurs upon regulatory approval, and the Company is able to commercialize products associated with the IPR&D assets, these assets are then deemed definite-lived and are amortized based on their estimated useful lives beginning at that point in time. If development is terminated or abandoned, the Company may have a full or partial impairment charge related to the IPR&D assets, calculated as the excess of carrying value of the IPR&D assets over fair value


The Company also recorded goodwill in the amount of $2.0 million related to the IRX Acquisition. Goodwill and indefinite-lived IPR&D assets are not amortized but are tested for impairment annually, or more frequently if the Company becomes aware of any events occurring or changes in circumstances that indicate that the fair value of the entity is less than its carrying values.


As of March 31, 2022, the Company performed a qualitative assessment to determine whether it is more likely than not that the fair value of the entity is less than its carrying value. Such qualitative factors include macroeconomic conditions, industry and market considerations, cost factors, overall financial performance and other relevant events. As a result of the qualitative assessment, the Company determined that due to the decline in the


Company’s stock price of $4.17 per share as of December 31, 2021 to $2.05 per share as of March 31, 2022, there were indications of impairment. Accordingly, the Company engaged a third-party valuation firm to perform a quantitative analysis to compare the entity’s carrying values to its fair value, the results of which showed that the entity’s fair value exceeded its carrying value and there was no impairment of the recorded goodwill or IPR&D.
 
7)
ACCRUED EXPENSES
 

Accrued expenses consisted of the following (in thousands):
 
   
March 31,
2022
    
December 31,
2021
  
Accrued compensation
  
$
637
    
$
656
  
Accrued research and development expenses
    
311
      
222
  
Accrued general and administrative expenses
    
1,436
      
371
  
Total accrued expenses
  
$
2,384
    
$
1,249
  


Accrued general and administrative expenses include $0.8 million for legal-related matters.
 
8)
COMMITMENTS AND CONTINGENCIES
 

Legal Matters

 

The Company is involved in litigation and arbitrations from time to time in the ordinary course of business. Legal fees and other costs associated with such actions are expensed as incurred. In addition, the Company assesses the need to record a liability for litigation and contingencies. The Company reserves for costs relating to these matters when a loss is probable, and the amount can be reasonably estimated.

13

Dhesh Govender v. Brooklyn Immunotherapeutics, LLC, et al., Index No. 650847/2021 (N.Y. Sup. Ct. N.Y. Cty. 2021)


On or about February 5, 2021, Dhesh Govender, a former short-term consultant of Brooklyn LLC, filed a complaint against Brooklyn LLC and certain individuals that plaintiff alleges were directors of Brooklyn LLC. The complaint is captioned, Dhesh Govender v. Brooklyn Immunotherapeutics, LLC, et al., Index No. 650847/2021 (N.Y. Sup. Ct. N.Y. Cty. 2021). Plaintiff alleges that Brooklyn LLC and certain of its officers and directors (“defendants”) engaged in unlawful and discriminatory conduct based on race, national origin and hostile work environment. Plaintiff also asserts various breach of contract, fraud and quantum meruit claims based on an alleged oral agreement pursuant to which he alleges Brooklyn LLC agreed to hire him as an executive once the Merger was completed. In particular, plaintiff alleges that, in exchange for transferring an opportunity to obtain an agreement to acquire a license from Novellus for its mRNA-based gene editing and cell reprogramming technology to Brooklyn LLC, he was promised a $0.5 million salary and 7% of the equity of Brooklyn LLC. Based on these and other allegations, plaintiff seeks damages of not less than $10 million, a permanent injunction enjoining Brooklyn LLC from exercising the option to acquire such license from Novellus or completing the proposed Merger. On or about February 19, 2021, an amended complaint was filed asserting the same causes of action but withdrawing the request for injunctive relief. On June 6, 2021, defendants filed a motion to compel arbitration or, in the alternative, for partial dismissal of the complaint for failure to state viable fraud, quantum meruit and employment discrimination claims. After obtaining extensions of time to respond, plaintiff opposed the defendants’ motion on August 9, 2021. The defendants filed their reply on September 3, 2021. The Court heard oral argument on the motion to compel arbitration and/or dismiss and the motion to seal on October 13, 2021. By Order dated November 10, 2021, the Court granted defendants’ motion to compel Govender to arbitrate all of his claims against them, based on the arbitration clause of his consulting agreement with Brooklyn LLC.  Govender thereafter filed his Statement of Claim (the “Demand”) with the American Arbitration Association (“AAA”), Case No. 01-21-0017-9417, on December 15, 2021 against the same defendants, and served it on defendants’ counsel on February 3, 2022. In his Demand, Govender continues to assert statutory discrimination claims against all defendants, claims against Brooklyn LLC premised on the breach of an alleged oral promise to issue Govender 7% of the equity of Brooklyn LLC and to employ Govender at a $0.5 million annual salary in exchange for allegedly arranging and negotiating the Novellus license, common law fraud claims against Brooklyn LLC and Cherington based on the breach of these same promises and a claim for quantum meruit against the Brooklyn LLC. In his Demand, Govender now claims that the fair and reasonable value of his services on the quantum meruit claim exceeded $100 million and is seeking damages in an amount to be determined at the hearing. Defendants filed an answering statement to the Demand on February 28, 2022 have selected a three-member arbitration panel. Defendants intend to vigorously defend themselves against these claims. At this stage in the litigation, the Company is not able to predict the probability of a favorable or unfavorable outcome.


Emerald Private Equity Fund, LLC Matter

By a letter dated July 7, 2021, Emerald Private Equity Fund, LLC (“Emerald”), a stockholder of Brooklyn, made a demand pursuant to 8 Del. C. 220 to inspect certain books and records of Brooklyn. The stated purpose of the demand is to investigate possible wrongdoing by persons responsible for the implementation of the Merger and the issuance of paper stock certificates, including investigating whether: (i) Brooklyn’s stock certificates were issued in accordance with the Merger Agreement; (ii) certain restrictions on the sale of Brooklyn common stock following the Merger were proper and applied without favor; (iii) anyone received priority in post-Merger issuances of Brooklyn’s stock certificates that allowed them to benefit from an increase in the trading price of Brooklyn’s common stock; and (iv) it should pursue remedial measures and/or report alleged misconduct to the SEC. Brooklyn has responded to the demand letter and has produced certain information to Emerald in connection with the demand, which is subject to the terms of a confidentiality agreement entered into among the parties, including certain additional stockholders who have subsequently joined as parties to such agreement (including Truell noted above). In October 2021, Emerald requested that Brooklyn produce additional information related to the authority, purpose and justification for the restriction imposed on the sale of Brooklyn common stock following the Merger and the timing of share delivery to Brooklyn stockholders, following which request Brooklyn agreed to produce certain additional information and emails relating to these topics.


14
On March 30, 2022, counsel to Emerald advised the Company that it was prepared to file suit against the Company, certain current and former directors of the Company, and the Company’s financial advisor in connection with the Merger, on behalf of Emerald and a class of similarly situated stockholders with respect to some or all of the foregoing matters, alleging claims for breach of fiduciary duty, conversion and aiding and abetting breach of fiduciary duty. Emerald’s counsel expressed a willingness to engage in private pre-suit early resolution discussions with the Company and its financial advisor on behalf of individual stockholders whom counsel represents in addition to Emerald; and the Company since engaged in such discussions. The Company can provide no assurance that such pre-suit early resolution discussions will be successful or that suit will not ultimately be filed against the Company, nor can the Company currently predict the outcome of any such suit, if filed. The Company intends to defend itself vigorously against any and all claims. Additionally, on April 7, 2022, the Company received a demand for indemnification from its financial advisor as it relates to the aforementioned potential lawsuit.


John Westman v. Novellus, Inc., Christopher Rohde, and Matthew Angel, Civil Action No. 2181CV01949 (Middlesex County (Massachusetts) Superior Court)


On or about September 7, 2021, John Westman, a former employee of Novellus, Inc. filed a Complaint in Middlesex County (Massachusetts) Superior Court against Novellus, Inc. and the company’s founders and former executives, Christopher Rohde and Matthew Angel (collectively, “Defendants”). The case includes allegations that Novellus, Inc. violated the Massachusetts Wage Act.. Brooklyn acquired Novellus, Inc. on July 16, 2021. Mr. Westman’s claims relate to alleged conduct that took place before Brooklyn acquired Novellus, Inc. Defense and liability in association with any Wage Act claims have been assumed by Mr. Rohde and Mr. Angel. On December 24, 2021, Westman dismissed the case without prejudice so the parties could mediate the matter. The parties’ February 2022 mediation was unsuccessful and the dispute is currently in arbitration.



The company accrued $0.8 million in legal-related expenses during the quarter ended March 31, 2022 for the matters discussed above.


Licensing Agreements

 

USF

 

Brooklyn LLC has license agreements with University of South Florida Research Association, Inc. (“USF”), granting Brooklyn LLC the right to sell, market, and distribute IRX-2, subject to a 7% royalty payable to USF based on a percentage of gross product sales. Under the license agreement with USF, Brooklyn LLC is obligated to repay patent prosecution expenses incurred by USF. To date, Brooklyn LLC has not recorded any product sales, or obligations related to USF patent prosecution expenses. The license agreement terminates upon the expiration of the IRX-2 patents.

 

Novellus, Ltd. and Factor

 

In December 2020, Brooklyn LLC entered into option agreements (the “Option Agreements”) with Novellus, Ltd. and Factor (together, the “Licensors”) to obtain the right to exclusively license the Licensors’ intellectual property and mRNA cell reprogramming and gene editing technology for use in the development of certain cell-based therapies to be evaluated and developed for treating human diseases, including certain types of cancer, sickle cell disease, and beta thalassemia (the “Licensed Technology”). The option was exercisable before February 28, 2021 (or April 30, 2021 if the Merger had not closed by that date) and required Brooklyn LLC to pay a non-refundable option fee of $0.5 million and then an initial license fee of $4.0 million (including the non-refundable fee of $0.5 million) in order to exercise the option.


In April 2021, Brooklyn LLC and the Licensors amended the Option Agreements to extend the exercise period to May 21, 2021 and to require Brooklyn, LLC to pay a total $1.0 million of the $4.0 million initial license fees to the Licensors by April 15, 2021.


In April 2021, Brooklyn LLC and the Licensors entered into an exclusive license agreement (the “License Agreement”) pursuant to which Brooklyn LLC acquired an exclusive worldwide license to the Licensed Technology. Under the terms of the License Agreement, Brooklyn LLC is obligated to pay the Licensors a total of $4.0 million in connection with the execution of the License Agreement, all of which was paid as of June 2021.

15

The completion of the acquisition of Novellus, Ltd. relieved Brooklyn LLC from potential obligations to pay Novellus, Ltd. certain upfront fees, clinical development milestone fees and post-registration royalties under the License Agreement. The agreement with Factor under the License Agreement, which grants Brooklyn LLC exclusive rights to develop certain next-generation mRNA gene editing and cell therapy products, remained unchanged. Accordingly, Brooklyn LLC is obligated to pay to Factor a fee of $3.5 million in October 2022, which will be in addition to a fee of $2.5 million paid to Factor in October 2021.



Brooklyn LLC is also required to use commercially reasonably efforts to achieve certain delineated milestones, including specified clinical development and regulatory milestones and specified commercialization milestones. In general, upon its achievement of these milestones, Brooklyn LLC will be obligated to pay, in the case of development and regulatory milestones, milestone payments to the Licensors in specified amounts and, in the case of commercialization milestones, specified royalties with respect to product sales, sublicense fees or sales of pediatric review vouchers. In the event Brooklyn LLC fails to timely achieve certain delineated milestones, the Licensors will have the right to terminate Brooklyn LLC’s rights under provisions of the License Agreement relating to those milestones.

 

Novellus, Ltd. also has a license agreement with Factor, which was entered into in February 2015, amended in June 2018 and March 2020, and then amended and restated in November 2020. This license agreement provides for Novellus, Ltd. to use over 70 granted patents owned by Factor throughout the world covering synthetic mRNA, RNA-based gene editing, and RNA-based cell reprogramming, in addition to specific patents covering methods for treating specific diseases. There are also more than 60 pending patent applications throughout the world focused on these and other aspects of the technology. The patent coverage includes granted patents and pending patent applications in the United States, Europe, and Japan, along with other major life sciences markets.

 

Novellus, Ltd. is required to use commercially reasonably efforts to achieve certain delineated milestones, including specified clinical development and regulatory milestones and specified commercialization milestones. In general, upon its achievement of these milestones, Novellus, Ltd. will be obligated, in the case of development and regulatory milestones, to make milestone payments of up to $51.0 million in aggregate to Factor and, in the case of commercialization milestones, specified royalties with respect to product sales, sublicense fees or sales of pediatric review vouchers. In the event Novellus, Ltd. fails to timely achieve certain delineated milestones, Factor may have the right to terminate Novellus, Ltd.’s rights under provisions of the License Agreement relating to those milestones.

 

NoveCite


In October 2020, Novellus, Ltd. (as sublicensor) and NoveCite (as sublicensee) entered into an exclusive license agreement (the “Sublicense”) to license novel cellular therapy for acute respiratory distress syndrome, which NoveCite is licensing from Factor. Under the sublicense agreement, NoveCite is required to use commercially reasonably efforts to achieve certain delineated milestones, including specified clinical development and regulatory milestones and specified commercialization milestones. In general, upon its achievement of these milestones, NoveCite will be obligated, in the case of development and regulatory milestones, to make milestone payments to the Novellus, Ltd. in specified amounts and, in the case of commercialization milestones, specified royalties with respect to product sales, sublicense fees or sales of pediatric review vouchers.


Under the terms of the Sublicense, in the event that Novellus, Ltd. receives any revenue involving the original cell line included in the licensed technology, then Novellus, Ltd. shall remit to NoveCite 50% of such revenue.


Royalty Agreements

 

Collaborator Royalty Agreement

 

Effective June 22, 2018, IRX terminated its Research, Development and Option Facilitation Agreement and its Options Agreement (the “RDO and Options Agreements”) with a collaborative partner (the “Collaborator”), pursuant to a termination agreement (the “Termination Agreement”). The Termination Agreement was assigned to Brooklyn, LLC in November 2018 when Brooklyn LLC acquired the assets of IRX. In connection with the Termination Agreement, all of the rights granted to the Collaborator under the RDO and Options Agreements were terminated, and Brooklyn LLC has no obligation to refund any payments received from the Collaborator. As consideration for entering into the Termination Agreement, the Collaborator will receive a royalty equal to 6% of revenues from the sale of IRX-2, for the period of time beginning with the first sale of IRX-2 through the later of (i) the twelfth anniversary of the first sale of IRX-2 or (ii) the expiration of the last IRX patent, or other exclusivity of IRX-2.

 
16

Royalty Agreement with certain former IRX Therapeutics Investors



On May 1, 2012, IRX Therapeutics entered into a royalty agreement (the “IRX Investor Royalty Agreement”) with certain investors who participated in a financing transaction. The IRX Investor Royalty Agreement was assigned to Brooklyn LLC in November 2018 when Brooklyn LLC acquired the assets of IRX. Pursuant to the IRX Investor Royalty Agreement, when Brooklyn LLC becomes obligated to pay royalties to USF under the agreement described above under “Licensing Agreements-USF,” it will pay an additional royalty of 1% of gross sales to an entity organized by the investors who participated in such financing transaction. There are no termination provisions in the IRX Investor Royalty Agreement. Brooklyn LLC has not recognized any revenues to date, and no royalties are due pursuant to any of the above-mentioned royalty agreements.


Investor Royalty Agreement

 

On March 22, 2021, Brooklyn LLC restated its royalty agreement with certain beneficial holders of Brooklyn ImmunoTherapeutics Investors GP LLC and Brooklyn ImmunoTherapeutics Investors LP, whereby such beneficial holders will continue to receive, on an annual basis, royalties in an aggregate amount equal to 4% of the net revenues of IRX-2, a cytokine-based therapy being developed by Brooklyn LLC to treat patients with cancer.

9)
STOCK-BASED COMPENSATION
 

Stock Options

 

There were no stock options outstanding or granted during the three months ended March 31, 2021. The following weighted-average assumptions were used for stock options granted during the three months ended March 31, 2022:

   
Three months ended
March 31, 2022
  
Weighted average risk-free rate
    
1.92
%
Weighted average volatility
    
93
%
Dividend yield
    
0
%
Expected term
    
5.78 years
  

17

The following table summarizes stock option activity for the three months ended March 31, 2022:

   
Outstanding Options
    
Weighted Average Exercise Price per Share
    
Weighted Average Remaining Contractual Life (in years)
    
Aggregate Intrinsic Value
  
Outstanding January 1, 2022
    
3,988,000
    
$
8.40
      
9.38
    
$
-
  
Granted
    
1,258,000
      
2.10
      
-
      
-
  
Cancelled
    
(67,000
)
    
5.94
      
-
          
Outstanding March 31, 2022
    
5,179,000
    
$
6.90
      
9.32
    
$
134,000
  
                                 
Options vested and exercisable at March 31, 2022
    
10,000
    
$
10.26
      
9.75
    
$
-
  


The per-share weighted average grant-date fair value of stock options granted during the three months ended March 31, 2022 was $1.58.


As of March 31, 2022, the unamortized stock-based compensation expense related to outstanding unvested options was approximately $18.5 million with a weighted average remaining requisite service period of 3.06 years. The Company expects to amortize this expense over the remaining requisite service period of these stock options.


Included in the 5,179,000 stock options outstanding as of March 31, 2022 are two stock option grants the Company awarded to Howard J. Federoff, M.D., Ph.D. upon his appointment as the Company’s Chief Executive Officer and President in April 2021.


Dr. Federoff was granted a nonqualified stock option covering approximately 2,628,000 shares of common stock (the “Time-Based Option”). The Time-Based Option was granted at a per share exercise price equal to the closing price of the common stock on the NYSE American stock exchange on the date of grant. Of the shares covered by the Time-Based Option, 25% will vest on the one-year anniversary of the grant date, and the remaining shares will vest in substantially 36 equal monthly installments thereafter, so long as Dr. Federoff provides continuous service to the Company throughout the relevant vesting date.


Dr. Federoff was also granted a performance-based nonqualified stock option covering approximately 597,000 shares of common stock (the “Milestone Option”). The Milestone Option was granted at a per share exercise price equal to the closing price of common stock on the NYSE American stock exchange on the date of grant, and its fair value is $4.3 million. The Milestone Option will fully vest upon the first concurrence by the U.S. Food and Drug Administration that a proposed investigation may proceed following review of a Company filed investigational new drug application in connection with that the License Agreement. This milestone is subject to Dr. Federoff’s continuous service with the Company through such vesting date. As of March 31, 2022, the Company has not recognized any stock-based compensation expense on the Milestone Option because the Company has determined that it is not yet probable that the performance milestone will be accomplished.


Both the Time-Based Option and the Milestone Option were granted outside the Company’s equity incentive plans discussed above. The unvested portion of the Time-Based Option and the Milestone Option will be cancelled upon the termination of Dr. Federoff’s employment with the Company for any reason, subject to certain vesting acceleration provisions upon a qualifying termination, as described in his employment agreement with the Company. Unless earlier terminated in accordance with their terms, each of the Time-Based Option and the Milestone Option will otherwise expire on the tenth anniversary of their respective grant date and be subject to the terms and conditions of the respective option agreement approved by the Company. Each of the Time-Based Option and the Milestone Option was intended to constitute an “employment inducement grant” in accordance with the employment inducement grant rules set forth in Section 711(a) of the NYSE American LLC Company Guide and was offered as an inducement material to Dr. Federoff in connection with his hiring.


There were no options exercised during the three months ended March 31, 2022 and 2021.


18

RSUs


Outstanding RSUs are settled in an equal number of shares of common stock on the vesting date of the award. An RSU award is settled only to the extent vested. Vesting generally requires the continued employment or service by the award recipient through the respective vesting date. Because RSUs are settled in an equal number of shares of common stock without any offsetting payment by the recipient, the measurement of cost is based on the quoted market price of the stock at the measurement date, which is the grant date.


There were no RSUs outstanding or granted during the three months ended March 31, 2021. The following table summarizes RSU activity for the three months ended March 31, 2022:

   
Outstanding Restricted Stock Units
    
Weighted Average Fair Value per Share
  
January 1, 2022
    
240,000
    
$
13.80
  
Granted
    
1,101,000
      
1.93
  
Released
    
(9,000
)
    
4.21
  
Cancelled
    
(9,000
)
    
4.21
  
March 31 2022
    
1,323,000
    
$
4.05
  
                 
Balance expected to vest at March 31, 2022
    
772,000
          


During the three months ended March 31, 2022, the Company issued approximately 1,101,000 performance based RSUs (the “2022 PSUs”) to its employees, of which approximately 414,000 were awarded to Dr. Federoff. The 2022 PSUs are subject to the achievement of four performance goals, which are weighted equally. Once a performance goal is achieved, the tranche of shares allocated to that performance goal will be earned and will begin to vest over a three-year annual basis beginning on the date the performance goal was achieved. If a performance goal is not achieved, the tranche of shares allocated to that performance goal will be unearned and forfeited.


The Company recognizes the fair value of RSUs granted as expense on a straight-line basis over the requisite service period. For performance based RSUs, the Company will begin recognizing the expense once the achievement of the related performance goal is probable. As of March 31, 2022, the unamortized stock-based compensation expense related to outstanding RSUs, including performance based RSUs that have been deemed probable, was approximately $3.6 million with a weighted average remaining requisite service period of 2.59 years. The Company expects to amortize this expense over the remaining requisite service period of the RSUs.



Restricted Stock


Pursuant to the Merger, Brooklyn LLC’s approximately 3,000 outstanding restricted common units were exchanged for approximately 630,000 shares of Brooklyn’s restricted common stock. There were no changes to any conditions and requirements of the restricted common stock. The shares vest quarterly beginning on March 31, 2021 and continuing through December 31, 2022, contingent on continued service. Due to the modification of the restricted common units, the fair value of the restricted common stock immediately after the Merger was compared to the fair value of the restricted common units immediately prior to the Merger, and the change in fair value of $0.3 million was recognized in the statement of operations during the three months ended March 31, 2021. The Company recognizes the fair value of restricted common stock as an expense on a straight-line basis over the requisite service period. During the quarter ended March 31, 2022, approximately 78,000 shares of unvested restricted common stock were forfeited due to the holders of such shares no longer providing services to the Company. As of March 31, 2022, there were no shares of unvested restricted stock outstanding.


19

Stock-Based Compensation Expense



Stock-based compensation is recorded in general and administrative expense and research and development expense in the statement of operations. For the three months ended March 31, 2022 and 2021, stock-based compensation expense recorded in general and administrative expense was $0.8 million and $17,000, respectively. For both of the three months ended March 31, 2022 and 2021, stock-based compensation expense recorded in research and development expense was $0.4 million.

10)
STOCKHOLDERS’ EQUITY



Private Placement of Equity


On March 6, 2022, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with an investor (the “PIPE Investor”) providing for the private placement (the “PIPE Transaction”) to the PIPE Investor of approximately 6,857,000 units (collectively, the “Units”), each Unit consisting of (i) one share of the Company’s common stock (or, in lieu thereof, one pre-funded warrant (the “Pre-Funded Warrants”) to purchase one share of common stock) and (ii) one warrant (the “Common Warrants”) to purchase one share of common stock, for an aggregate gross purchase price of approximately $12.0 million (the “Subscription Amount”). The PIPE Transaction closed on March 9, 2022.

   

Each Pre-Funded Warrant has an exercise price of $0.005 per share of common stock, was immediately exercisable, may be exercised at any time, has no expiration date and is subject to customary adjustments. The Pre-Funded Warrants may not be exercised if the aggregate number of shares of common stock beneficially owned by the holder thereof would exceed 9.99% immediately after exercise thereof. Upon the closing of the transaction, the Company issued 5,500,000 shares of common stock and issued Pre-Funded Warrants representing approximately 1,357,000 shares of common stock.

   

Each Common Warrant has an exercise price of $1.91 per share, becomes exercisable six months following the closing of the PIPE Transaction, expires five-and-one-half years from the date of issuance and is subject to customary adjustments. The Common Warrants may not be exercised if the aggregate number of shares of common stock beneficially owned by the holder thereof would exceed 4.99% immediately after exercise thereof, subject to increase to 9.99% at the option of the holder.
 

As of March 31, 2022, the Company had 6,857,000 Common Warrants outstanding with a weighted average exercise price of $1.91 per share and a weighted average contractual life of 5.45 years. As of March 31, 2022, the Company had 1,357,000 Pre-Funded Warrants outstanding with a weighted average exercise price of $0.005 per share. The Pre-Funded Warrants do not expire.

 

The Common Warrants and Pre-Funded Warrants were accounted for as liabilities under ASC 815-40, as these warrants provide for a cashless settlement provision that does not meet the requirements of the indexation guidance under ASC 815-40. These warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within the statement of operations.

 

The fair values of the Common Warrants and the Pre-Funded Warrants at the issuance date totaled $12.6 million in the aggregate, which was $0.6 million more than the Subscription Amount. The excess $0.6 million represents an inducement to the PIPE Investor to enter into the transaction and was recorded in warrant liabilities expense in the accompanying consolidated statement of operations. Given the Company’s capital requirements and market conditions, the Company consummated this financing on market terms available at the time of the transaction.


The Company incurred fees of $1.0 million through March 31, 2022 related to the PIPE Transaction, which were allocated to the fair value of the Common Warrants and the Pre-Funded Warrants and recorded in other expense, net on the accompanying condensed consolidated statement of operations.

In connection with the PIPE Transaction, the Company and the PIPE Investor also entered into a registration rights agreement, dated March 6, 2022, pursuant to which the Company agreed to prepare and file a registration statement with the SEC no later than 15 days following the filing date of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Annual Report”) to register the resale of the shares of common stock included in the Units and the shares of common stock issuable upon exercise of the Pre-Funded Warrants and the Common Warrants. The Company agreed to use its best efforts to have such registration statement declared effective as promptly as possible after the filing thereof, subject to certain specified penalties if timely effectiveness is not achieved. The Company filed the 2021 Annual Report on April 15, 2022 and the registration statement on April 29, 2022. The registration statement became effective on May 11, 2022.


Pursuant to the registration rights agreement, the Company is obligated to pay the PIPE Investor liquidated damages equal to 2% of the Subscription Amount per month, with a maximum aggregate payment of 12% of the Subscription Amount, in the event the PIPE Investor is not permitted to use the registration statement to resell the securities registered for resale thereunder for more than 10 consecutive calendar days or more than an aggregate of fifteen calendar days (which need not be consecutive calendar days) during any 12-month period.


On May 24, 2022, the Company provided the PIPE Investor with notice that it was not able to resell the securities registered for resale under the registration agreement because the Company had not timely filed this Quarterly Report on Form 10-Q (the “Q1 2022 10-Q”) with the SEC, and that the PIPE Investor could not use the registration statement to resell the related securities until the Company filed the Q1 2022 10-Q. Because the PIPE Investor was unable to use the registration statement for at least 10 consecutive calendar days, the Company accrued $0.2 million for the three months ended March 31, 2022 for the estimated contingent loss the Company expected to incur as a result of the late Q1 2022 10Q filing, which is recorded in other expense, net in the accompanying condensed consolidated statements of operations.


Reverse Stock-Split


On March 25, 2021, immediately prior to the Merger, Brooklyn filed an amendment to the Certificate of Incorporation with the Secretary of State of the State of Delaware to effect a reverse stock split. As a result of the reverse stock split, the number of issued and outstanding shares of common stock immediately prior to the reverse stock split was reduced into a smaller number of shares, such that every two shares of common stock held by a stockholder of Brooklyn immediately prior to the reverse stock split were combined and reclassified into one share of common stock after the reverse stock split.

 

Immediately following the reverse stock split there were approximately 1,514,000 shares of common stock outstanding prior to the Merger. No fractional shares were issued in connection with the reverse stock split.

 

Merger



Under the terms of the Merger Agreement (see Note 3), on March 25, 2021, Brooklyn issued shares of common stock to the equity holders of Brooklyn LLC. The 87,000 Class A units of Brooklyn LLC were converted into approximately 22,275,000 shares of common stock; the 15,000,000 Class B units were converted into approximately 2,515,000 shares of common stock; the 10,000,000 Class C units were converted into approximately 1,676,000 shares of common stock; approximately 630,000 shares of common units were converted into approximately 630,000 shares of common stock, and 10,500,000 rights options were converted into approximately 11,828,000 shares of common stock. Brooklyn also issued approximately 1,068,000 shares of common stock to the Financial Advisor pursuant to the Merger Agreement.
11)
EARNINGS PER SHARE


Basic net loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the period including the weighted average effect of the Pre-Funded Warrants the Company issued in connection with the PIPE Transaction, the exercise of which requires little or no consideration for the delivery of shares of common stock. The Company determined that the exercise of the Pre-Funded Warrants requires nominal consideration for the delivery of shares of common stock, and as such, has considered the 1,357,000 shares underlying the Pre-Funded Warrants to be outstanding effective on March 9, 2022 for the purposes of calculating basic EPS. Diluted net loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding (including the weighted average effect of the Pre-Funded Warrants) plus dilutive securities. Stock options, RSUs, warrants and other convertible securities are considered potential common shares and are included in the calculation of diluted net loss per share using the treasury method when their effect is dilutive. Diluted net loss per share is the same as basic net loss per share in periods where the effect of potentially dilutive shares of common stock are antidilutive. The following table presents the amount of stock options, RSUs, warrants and convertible preferred stock that were excluded from the computation of diluted net loss per common share for three months ended March 31, 2022 and 2021, as their effect was anti-dilutive:

   
Three months ended March 31,
  
   
2022
    
2021
  
Stock options
    
5,179,000
      
-
  
RSUs
    
1,323,000
      
-
  
Warrants
    
6,857,000
      
-
  
Preferred stock converted into common stock
    
48,000
      
42,000
  
Total potential common shares excluded from computation
    
13,407,000
      
42,000
  

12)
RECENT ACCOUNTING PRONOUNCEMENTS
 

There were no recent accounting pronouncements issued during the three months ended March 31, 2022 that would have impacted the Company’s financial statements or operations.

13)
SUBSEQUENT EVENT
 

On May 24, 2022, Dr. Federoff resigned as the Company’s Chief Executive Officer and President effective May 26, 2022, and the Board appointed Dr. Matthew Angel as the Company’s interim Chief Executive Officer.


In connection with Dr. Federoff’s resignation, the Company entered into a Separation Agreement and General Release with Dr. Federoff (the “Separation Agreement”), pursuant to which Dr. Federoff resigned from his positions as Chief Executive Officer and as an officer, director and employee of the Company and all subsidiaries. Dr. Federoff’s resignation from the Board was not due to any disagreement with the Company on any matter relating to the Company’s operations, policies or practices. In consideration for Dr. Federoff’s execution of the Separation Agreement and non-revocation of a waiver and release of claims relating thereto, Dr. Federoff is entitled to the following benefits under the Separation Agreement:


 •
a lump sum cash severance benefit in the amount of $0.2 million, representing Dr. Federoff’s target bonus for 2022;


•
payment of Dr. Federoff’s annual base salary for a period of twelve months after the expiration of the applicable revocation period (the “Separation Period”), for a total gross amount equal to $0.5 million;


•
payment of Dr. Federoff’s premiums for continued health benefits provided under COBRA for the Separation Period;


•
full acceleration of the vesting of all outstanding options (with the exception of the Milestone Options) that would have vested during the Separation Period, and such options, together with outstanding options that vested prior to the Separation Date, representing collectively 1,420,095 shares of common stock, may be exercised for a period of thirty-six months after the Separation Date;


•
acceleration and vesting of 25/36th of the Milestone Options, representing collectively 414,759 shares of common stock, may be exercised for a period of thirty-six months after the Separation Date; and


•
a lump sum cash severance benefit in the amount of $0.1 million, representing the value Dr. Federoff would have received if he was entitled to receive a settlement of a pro rata portion of his performance restricted stock units through the expiration of the Separation Period, assuming the performance metrics were waived and assuming a per share value of $0.81.


The Separation Agreement also includes certain other customary representations, warranties and covenants of Dr. Federoff, and provides for reimbursement of certain expenses incurred by Dr Federoff. The Separation Agreement supersedes all other agreements or arrangements between Dr. Federoff and the Company regarding the subject matter of the agreement, including those with respect to severance payments and benefits.
22
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read this discussion together with the unaudited interim condensed consolidated financial statements, related notes, and other financial information included elsewhere in this Quarterly Report on Form 10-Q together with our audited consolidated financial statements, related notes, and other information contained in the Form 10-K/A filed with the Securities and Exchange Commission (the “SEC”) on June 30, 2022 (the “10-K/A”), as well as the information contained in our Annual Report on Form 10-K for the year ended December 31, 2021 (the “Original 10-K”), filed with the SEC on April 15, 2022, to the extent the information contained in the Original 10-K was not superseded by the information contained in the 10-K/A. The following discussion contains assumptions, estimates and other forward-looking statements that involve a number of risks and uncertainties, including those discussed under “Risk Factors,” in Part I, Item 1A of the 10-K/A and as described from time to time in our other filings with the SEC. These risks could cause our actual results to differ materially from those anticipated in these forward-looking statements.

Overview

We are a biopharmaceutical company utilizing our mRNA technology platform, including mRNA-based cell reprogramming and gene editing technologies, to create next generation mRNA, gene-editing and cell therapies, including iPSC therapies for multiple therapeutic indications.  Our mRNA technology platform, which includes novel lipid nanoparticles (“LNPs”) for mRNA delivery and targeted transgene insertion, was acquired through a license with Factor Bioscience Limited, or Factor, and through our acquisition of Novellus, Inc. and Novellus, Ltd. in July 2021, which we refer to as the Acquisition.  We are also evaluating our strategy for IRX-2, a novel cytokine-based therapy, to treat patients with cancer.

Acquisition of Novellus

On July 16, 2021, we acquired Novellus, Inc. and Novellus, Inc.’s wholly owned subsidiary, Novellus, Ltd. Brooklyn also acquired 25.0% of the total outstanding equity interests of NoveCite, Inc.  As consideration for the Acquisition, we paid $22.9 million in cash and delivered 7,022,000 shares of common stock, which under the terms of the Acquisition Agreement, were valued at a total of $102.0 million based on an agreed upon price of $14.5253 per share.  At the date of issuance, the fair value of the shares were approximately $58.7 million.

Merger with NTN Buzztime, Inc.

On March 25, 2021, we completed the Merger with NTN Buzztime, Inc. In accordance with the Merger Agreement, on March 25, 2021, Brooklyn amended its restated certificate of incorporation in order to effect:

 
•
prior to the Merger, a reverse stock split of its common stock, par value $0.005 per share, at a ratio of one-for-two; and
 
•
following the Merger, a change in its corporate name from “NTN Buzztime, Inc.” to “Brooklyn ImmunoTherapeutics, Inc.”

On March 26, 2021, we sold the rights, title and interest in and to the assets relating to the business operated under the name “NTN Buzztime, Inc.” prior to the Merger to eGames.com Holdings LLC, or eGames.com, in exchange for eGames.com’s payment of a purchase price of $2.0 million and assumption of specified liabilities relating to such pre-Merger business. This transaction, which we refer to as the Disposition, was completed in accordance with the terms of an asset purchase agreement dated September 18, 2020, as amended, between us and eGames.com.

The Merger has been accounted for as a reverse acquisition in accordance with U.S. generally accepted accounting principles, or GAAP. Under this method of accounting, Brooklyn LLC was deemed the “acquiring” company and Brooklyn (then known as NTN Buzztime, Inc.) was treated as the “acquired” company for financial reporting purposes. Operations prior to the Merger are those of Brooklyn LLC, and the historical financial statements of Brooklyn LLC became the historical financial statements of Brooklyn with respect to periods prior to the completion of the Merger.

23
IRX-2

IRX-2 is a mixed, human-derived cytokine product with multiple active constituents including Interleukin-2, or IL2, and other key cytokines. Together, these cytokines are believed to signal, enhance and restore immune function suppressed by the tumor, thus enabling the immune system to attack cancer cells, unlike many existing cancer therapies, which rely on targeting the cancer directly. IRX-2 is prepared from the supernatant of pooled allogeneic peripheral blood mononuclear cells, known as PBMCs, that have been stimulated using a proprietary process employing a specific population of cells and a specific mitogen.

Unlike existing recombinant IL2 therapies, IRX-2 is derived from human blood cells. We believe this may promote better tolerance, broader targeting and a natural molecular conformation leading to greater activity, and may permit low physiologic dosing, rather than the high doses needed in other existing IL2 therapies.  Enrollment in the ongoing Phase 2b INSPIRE trial, or the INSPIRE trial, has been completed, with top-line data estimated to be available by the third quarter of 2022.  Once INSPIRE trial data are released, we plan to use those results in addition to data from the other clinical trials in the program to evaluation our strategy with IRX-2.

Impact of COVID-19 Pandemic

The development of our product candidates has been, and could continue to be, disrupted and materially adversely affected by past and continuing impacts of the COVID-19 pandemic. This is largely a result of measures imposed by the governments and hospitals in affected regions, businesses and schools were suspended due to quarantines intended to contain this outbreak. The spread of COVID-19 from China to other countries resulted in the Director General of the World Health Organization declaring COVID-19 a pandemic in March 2020. Despite progress in vaccination efforts, the longer-term impact of the COVID-19 pandemic on our development plans and on the ability to conduct our clinical trials remains uncertain and cannot be predicted with confidence. COVID-19 could continue to disrupt production and cause delays in the supply and delivery of products used in our operations, may affect our operations, including the conduct of clinical studies, or the ability of regulatory bodies to grant approvals or supervise our candidates and products, may further divert the attention and efforts of the medical community to coping with the COVID-19 and disrupt the marketplace in which we operate and may have a material adverse effects on our operations. COVID-19 may also affect our employees and employees and operations at suppliers that may result in delays or disruptions in supply. In addition, a recession or market correction resulting from the spread of COVID-19 could materially affect our business and the value of our common stock. Additionally, if the COVID-19 pandemic has a significant impact on our business and financial results for an extended period of time, our liquidity and cash resources could be negatively impacted. The extent to which the COVID-19 pandemic and ongoing global efforts to contain its spread will impact our operations will depend on future developments, which are highly uncertain, and include the duration, severity and scope of the pandemic and the actions taken to contain or treat the COVID-19 pandemic. Further, the specific clinical outcomes, or future pandemic related impacts of emerging COVID-19 variants cannot be reliably predicted.

Engineered Cellular and Genetic Medicines

We are advancing our gene-editing and cell therapy technology in oncology, blood disorders and monogenic disorders through a license with Factor and through the Acquisition of Novellus, Inc. and Novellus, Ltd. in July 2021. We expect that the first-generation product candidates resulting from the Acquisition will be derived from unedited (that is, not gene modified), induced pluripotent stem cells (“iPSC”)-derived allogeneic mesenchymal stem cells (“iMSC”). We expect to begin preclinical development of iMSC for clinical indications for which inhibiting inflammation and/or supporting recovery of bone marrow stromal cells is required. The prior work of Novellus and NoveCite with iMSC shows evidence for preclinical efficacy in inflammatory conditions (for example, acute respiratory distress syndrome, or ARDS). Interactions with the FDA provided guidance on Chemistry, Manufacturing and Controls (“CMC”), and manufacturing plans, which will be undertaken in a similar manner for additional iMSC applications. We expect that second generation iMSC products will involve gene editing, for which we anticipate using the stepwise addition of genes provided by the in-licensed Factor Bioscience gene editing machinery, NoveSlice, to efficiently place genes and regulatory sequences into safe harbor locations. Development of processes to advance CMC and manufacturing will follow the experience from first generation iMSC products. We expect clinical indications for gene-modified iMSC will include solid tumors and other conditions associated with episodic and/or chronic inflammation.  We are also exploring opportunities to advance in vivo gene therapies for monogenic and other diseases by combining the NoveSlice gene editing technology in combination with ToRNAdoTM, the in-licensed LNP technology.

24
Recent Developments

PIPE Transaction

On March 6, 2022, we entered into a Securities Purchase Agreement with an investor (the “PIPE Investor”) providing for the private placement (the “PIPE Transaction”) to the PIPE Investor of approximately 6,857,000 units (the “Units”), each of  which consisted of (i) one share of our common stock (or, in lieu thereof, one pre-funded warrant (the “Pre-Funded Warrants”) to purchase one share of common stock) and (ii) one warrant (the “Common Warrants”) to purchase one share of common stock, for an aggregate purchase price of approximately $12.0 million (the “Subscription Amount”). The PIPE Transaction closed on March 9, 2022. We incurred fees of $1.0 million through March 31, 2022 related to the PIPE Transaction.

Each Pre-Funded Warrant has an exercise price of $0.005 per share of common stock, was immediately exercisable and may be exercised at any time and has no expiration date and is subject to customary adjustments. The Pre-Funded Warrants may not be exercised if the aggregate number of shares of common stock beneficially owned by the holder thereof would exceed 9.99% immediately after exercise thereof.

Each Common Warrant has an exercise price of $1.91 per share, becomes exercisable six months following the closing of the PIPE Transaction, expires five-and-one-half years from the date of issuance, and is subject to customary adjustments. The Common Warrants may not be exercised if the aggregate number of shares of common stock beneficially owned by the holder thereof would exceed 4.99% immediately after exercise thereof, subject to increase to 9.99% at the option of the holder.

The Common Warrants and Pre-Funded Warrants were accounted for as liabilities under ASC 815-40, Derivatives and Hedging, Contracts in Entity’s Own Equity, as these warrants provide for a cashless settlement provision that fails the requirement of the indexation guidance under ASC 815-40.  The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within the statement of operations.

The fair values of the Common Warrants and the Pre-Funded Warrants at the issuance date totaled $12.6 million in the aggregate, which was $0.6 million more than the Subscription Amount.  The excess $0.6 million represents an inducement to the PIPE Investor to enter into the PIPE Transaction and was recorded in warrant liabilities expense in the accompanying consolidated statement of operations.

In connection with the PIPE Transaction, we and the PIPE Investor also entered into a registration rights agreement, dated March 6, 2022, pursuant to which we agreed to prepare and file a registration statement with the Securities and Exchange Commission (the “SEC”) to register the resale of the shares of common stock included in the Units and the shares of common stock issuable upon exercise of the Pre-Funded Warrants and the Common Warrants. We agreed to use our best efforts to have such registration statement declared effective as promptly as possible after the filing thereof, subject to certain specified penalties if timely effectiveness is not achieved.  We filed such registration statement on April 29, 2022, which became effective on May 11, 2022.

Pursuant to the registration rights agreement, we are obligated to pay the PIPE Investor liquidated damages equal to 2% of the Subscription Amount per month, with a maximum aggregate payment of 12% of the Subscription Amount, in the event the PIPE Investor is not permitted to use the registration statement to resell the related securities for more than 10 consecutive calendar days or more than an aggregate of fifteen calendar days (which need not be consecutive calendar days) during any 12-month period.

25
On May 24, 2022, we provided the PIPE Investor with notice that it was not able to resell the securities under the registration agreement because we did not timely file this Quarterly Report on Form 10-Q (the “Q1 2022 10-Q”) with the SEC, and that the PIPE Investor could not use the registration statement to resell the related securities until we filed the Q1 2022 10-Q.  Because the PIPE Investor was unable to use the registration statement for at least 10 consecutive calendar days, we accrued $0.2 million during the three months ended March 31, 2022 for the estimated contingent loss we expect to incur as a result of the late Q1 2022 10Q filing, which is recorded in other expense, net in the accompanying condensed consolidated statements of operations.

Basis of Presentation

Revenues

We are a development stage company and have had no revenues from product sales to date. We will not have revenues from product sales until such time as we receive regulatory approval of our product candidates, successfully commercialize our products or enter into a licensing agreement which may include up-front licensing fees, of which there can be no assurance.

Research and Development Expenses

We expense our research and development costs as incurred. Our research and development expenses consist of costs incurred for company-sponsored research and development activities, as well as support for selected investigator-sponsored research. Upfront payments and milestone payments for the licensing of technology are expensed as research and development in the period in which they are incurred if the technology is not expected to have any alternative future uses other than the specific research and development project for which it was intended. In-Process Research and Development (“IPR&D”) that is acquired through an asset acquisition and has no alternative future uses and, therefore, no separate economic values, is expensed to research and development costs at the time the costs are incurred.

The major components of research and development costs include preclinical study costs, clinical manufacturing costs, clinical study and trial expenses, insurance coverage for clinical trials, expensed licensed technology, consulting, scientific advisors and other third-party costs, salaries and employee benefits, stock-based compensation expense, supplies and materials and allocations of various overhead costs related to our product development efforts.

In the normal course of our business, we contract with third parties to perform various clinical study and trial activities in the on-going development and testing of potential products. The financial terms of these agreements are subject to negotiation and vary from contract to contract and may result in uneven payment flows. Payments under the contracts depend on factors such as the achievement of certain events or milestones, the successful enrollment of patients, the allocation of responsibilities among the parties to the agreement, and the completion of portions of the clinical study or trial or similar conditions. Preclinical and clinical study and trial associated activities such as production and testing of clinical material require significant up-front expenditures. We anticipate paying significant portions of a study’s or trial’s cost before such begins and incurring additional expenditures as the study or trial progresses and reaches certain milestones.

General and Administrative Expenses

Our general and administrative expenses consist primarily of salaries, benefits and other costs, including equity-based compensation, for our executive and administrative personnel, legal and other professional fees, travel, insurance, and other corporate costs.

26
Results of Operations

Comparison of Three Months Ended March 31, 2022 and 2021


  
Three months ended March 31,
        

 
2022
    
2021
    
Change
  
   
(in thousands)
  
Operating expenses:
                  
Research and development
  
$
1,782
    
$
1,533
      
249
  
General and administrative
    
4,514
      
1,623
      
2,891
  
Transaction costs
    
-
      
5,765
      
(5,765
)
Total operating expenses
    
6,296
      
8,921
      
(2,625
)
                         
Loss from operations
    
(6,296
)
    
(8,921
)
    
2,625
  
                         
Other expense, net:
                        
Loss on sale of NTN assets
    
-
      
(9,598
)
    
9,598
  
Warrant liabilities expense
    
(1,322
)
    
-
      
(1,322
)
Loss on non-controlling investment
    
(615
)
    
-
      
(615
)
Other expense, net
    
(1,142
)
    
(3
)
    
(1,139
)
Total other expense, net
    
(3,079
)
    
(9,601
)
    
6,522
  
                         
Loss before income taxes
    
(9,375
)
    
(18,522
)
    
9,147
  
Provision for income taxes
    
-
      
-
      
-
  
                         
Net loss
  
$
(9,375
)
  
$
(18,522
)
  
$
9,147
  

Revenues

We had no revenues for the three months ended March 31, 2022 or 2021.

Research and Development Expenses

 
  
Three months ended March 31,
  
 
  
2022
    
2021
    
Change
  
 
  
(in thousands)
  
Payroll-related
  
$
1,383
    
$
863
    
$
520
  
Clinical trials
    
230
      
435
      
(205
)
Other expenses, net
    
169
      
235
      
(66
)
Total research and development expenses
  
$
1,782
    
$
1,533
    
$
249
  

For the three months ended March 31, 2022, our research and development expenses increased primarily due to increased headcount, offset by a decrease in clinical trial expense and other miscellaneous research and development expenses when compared to the same period in 2021.

On January 3, 2022, we completed a reduction in our workforce (the “Reduction”), involving eight research and development employees (53% of our workforce at that time). We believe the Reduction will enable us to better align our workforce with the needs of our business and focus more of our capital resources on our cell therapy and gene editing platform.. In connection with the Reduction, we incurred approximately $0.5 million for severance and termination-related costs, which we recorded during the first quarter of 2022.

27
General and Administrative Expenses

   
Three months ended March 31,
  
   
2022
    
2021
    
Change
  
   
(in thousands)
  
Stock-based compensation
  
$
761
    
$
17
    
$
744
  
Payroll-related
    
749
      
33
      
716
  
Insurance
    
367
      
33
      
334
  
Professional fees
    
1,198
      
1,256
      
(58
)
Loss on disposal of fixed assets
    
271
      
-
      
271
  
Other expenses, net
    
1,168
      
284
      
884
  
Total general and administrative expenses
  
$
4,514
    
$
1,623
    
$
2,891
  

The increase in general and administrative expense for the three months ended March 31, 2022 was primarily related to non-cash stock-based compensation expense from increased equity awards, increased headcount, increased premiums for public company insurance policies, increased other expenses, net, primarily due to legal-related matters, and losses on the disposal of fixed assets when compared to the same period in 2021.

Transaction Costs

The $5.8 million in transaction costs during the three months ended March 31, 2021 related to the issuance of common stock to Brooklyn LLC’s financial advisor upon consummation of the Merger, and there were no comparable transaction costs for the three months ended March 31, 2022.

Loss on Sales of NTN Assets

The $9.6 million loss on the sale of NTN assets for the three months ended March 31, 2021 was incurred when we completed the Disposition, and there was no comparable loss on sale for the three months ended March 31, 2022.

Warrant Liabilities Expense

The $1.3 million of warrant liabilities expense is includes (1) $0.6 million related to the excess fair value of the Common Warrants and Pre-Funded Warrant issued in connection with the PIPE Transaction over the $12.0 million gross proceeds received and (2) the change in the aggregate fair value of the Common Warrants and Pre-Funded Warrants of approximately $0.7 million from the March 9, 2022 issuance date to March 31, 2022.  There was no comparable expense for the three months ended March 31, 2021.

Loss on Non-Controlling Investment

The $0.6 million of loss on non-controlling investment, of which $0.5 million relates to the prior year, is related to our 25% share of NoveCite’s earnings or losses.  We account for our investment in NoveCite under the equity method.  There was no comparable expense for the three months ended March 31, 2021.

Other Expense, Net

   
Three months ended March 31,
  
   
2022
    
2021
    
Change
  
   
(in thousands)
  
PIPE transaction fees
  
$
(992
)
  
$
-
    
$
(992
)
Liquidated damages
    
(240
)
     -
      
(240
)
Interest expense, net
    
(1
)
    
(14
)
    
13
  
Other (expense) income , net
    
91
      
11
      
80
  
Total other expense, net
  
$
(1,142
)
  
$
(3
)
  
$
(1,139
)

28
For the three months ended March 31, 2022, we recognized an increase in other expense, net of approximately $1.4 million compared to the same period in 2021, primarily as a result of $1.0 million of other expense related to fees allocated to the PIPE Transaction, which was allocated to the warrants issued in connection with the transaction. Additionally, we accrued for a loss for the estimated liquidated damages we expected to incur as a result of not timely filing the Q1 2022 10Q with the SEC.  These increases in expense were offset by a decrease in interest expense of $13,000 for the three months ended March 31, 2022 when compared to the same period in 2021 due to the payoff of certain long-term debt at December 31, 2021.

Liquidity and Capital Resources

At March 31, 2022, we had cash and cash equivalents of approximately $23.5 million. On March 9, 2022, we issued 5,500,000 shares of common stock and Pre-Funded Warrants representing approximately 1,357,000 shares of common stock for net proceeds of approximately $11.0 million in connection with the PIPE Transaction.  Pursuant to the purchase agreement entered into in respect of the PIPE Transaction, we are prohibited from issuing equity in variable rate transactions for a period of one-year following consummation of the PIPE Transaction, including issuing equity under the Second Purchase Agreement.

We have to date incurred operating losses, and we expect these losses to increase in the future as we expand our product development programs and operate as a publicly traded company.  Developing product candidates, conducting clinical trials and commercializing products are expensive, and we will need to raise substantial additional funds to achieve our strategic objectives. It will likely be some years before we obtain the necessary regulatory approvals to commercialize one or more of our product candidates. Based on our current financial condition and forecasts of available cash, including as mentioned above, we believe we do not have sufficient funds to fund our operations for the next twelve months from the filing of the financial statements contained in this Q1 2022 10-Q. There can be no assurance that we will ever be in a position to commercialize IRX-2 or any other product candidate we may acquire, or that we will obtain any additional financing that we require in the future or, even if such financing is available, that it will be obtainable on terms acceptable to us.

In that regard, our future funding requirements will depend on many factors, including:


 •
the terms and timing of any collaborative, licensing and other agreements that we may establish;


•
the cost and timing of regulatory approvals;


•
the cost and delays in product development as a result of any changes in regulatory oversight applicable to our products;


•
the cost and timing of establishing sales, marketing and distribution capabilities;


•
the effect of competition and market developments;


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


•
the scope, rate of progress and cost of our clinical trials and other product development activities; and


•
future clinical trial results.

We plan to raise additional funds to support our product development activities and working capital requirements through the remaining availability under the Second Purchase Agreement (to the extent we are permitted to use such agreement), public or private equity offerings, debt financings, corporate collaborations or other means. We may also seek governmental grants to support our clinical trials and preclinical trials. Further, we may seek to raise capital to fund additional product development efforts even if we have sufficient funds for our planned operations. Any sale by us of additional equity or convertible debt securities could result in dilution to our stockholders. There can be no assurance that any such required additional funding will be available to us at all or available on terms acceptable to us.

29
Further, to the extent that we raise additional funds through collaborative arrangements, it may be necessary to relinquish some rights to our technologies or grant sublicenses on terms that are not favorable to us. If we are not able to secure additional funding when needed, we may have to delay the commercialize of our products, reduce the scope of or eliminate one or more research and development programs, which could have an adverse effect on our business.

Sources of Funds

PIPE Transaction

On March 9, 2022, we issued 5,500,000 shares of common stock, Pre-Funded Warrants exercisable for approximately 1,357,000 shares of common stock and Common Warrants exercisable for approximately 6,857,000 shares of common stock for net proceeds of approximately $11.0 million in connection with the PIPE Transaction.  Pursuant to the purchase agreement entered into in respect of the PIPE Transaction, we are prohibited from issuing equity in variable rate transactions for a period of one-year following consummation of the PIPE Transaction, including issuing equity under the Second Purchase Agreement.

Equity Securities

As a condition to the closing of the Merger, we were required to have at least $10.0 million in cash and cash equivalents at the effective time of the Merger. In furtherance of, and prior to, the Merger, certain of our members entered into agreements pursuant to which those members purchased units of Brooklyn LLC for an aggregate purchase price of $10.5 million during the three months ended March 31, 2021.

Disposition.

On March 26, 2021, we completed the Disposition, in which we sold to eGames.com our rights, title and interest in and to the assets relating to the business we operated prior to the Merger under the name “NTN Buzztime, Inc.” in exchange for eGames.com’s payment of a purchase price of $2.0 million and assumption of specified liabilities relating to such pre-Merger business.

Uses of Funds

Net Cash Used in Operating Activities.

Our operations used $5.4 million during the three months ended March 31, 2022 compared to $3.4 million in the comparable period. Our results for the quarter ended March 31, 2022 include approximately $1.0 million of fees incurred through March 31, 2022 related to the PIPE Transaction.  These fees were allocated to the fair value of the Common Warrants and the Pre-Funded Warrants and recorded in other expense, net on the accompanying condensed consolidated statements of operations.

Our cash use for operating activities is influenced by the level of our net loss and the amount of cash we invest in personnel and technology development to support anticipated growth in our business.

License Obligations.

We are obligated to pay certain amounts to Factor pursuant to the license agreement we entered into in April 2021, including $3.5 million in October 2022.  The license agreement also provides for milestone payments and royalties on the net sale of product developed under the license agreement.

30
Lease Obligations.

We are obligated to pay approximately $0.7 million per year for our facilities leases, subject to annual increases and to a sharing of common area expenses with other tenants in the building. The leases expire at varying times between December 2026 and June 2028.


Critical Accounting Policies and Estimates

There were no significant changes in our critical accounting estimates during the three months ended March 31, 2022 from those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of the 10-K/A.

Recent Accounting Pronouncements

There were no recent accounting pronouncements issued during the three months ended March 31, 2022 that would have impacted our financial statements or operations.

Item 3.
Quantitative and Qualitative Disclosures About Market Risk.

Under the rules and regulations of the SEC, as a smaller reporting company we are not required to provide the information otherwise required by this item.

Item 4.
Controls and Procedures.

Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act, designed to ensure that information required to be disclosed in our reports filed pursuant to the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosures.

In designing and evaluating the disclosure controls and procedures, we recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and we were required to apply our judgment in evaluating the cost-benefit relationship of possible controls and procedures. We have carried out an evaluation as of the end of the period covered by this Q1 2022 10-Q under the supervision, and with the participation, of our management, including our interim Chief Executive Officer and President (who serves as our principal executive officer) and our Chief Financial Officer (who serves as our principal financial officer), of the effectiveness of the design and operation of our disclosure controls and procedures.
 
Based on that evaluation, our interim Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this Q1 2022 10-Q in providing reasonable assurance of achieving the desired control objectives due primarily to the material weaknesses discussed below.
 
Management’s Plan for Material Weaknesses in Internal Control over Financial Reporting
 
Upon completion of the Merger in March 2021 and the resulting change in our business model and strategy, we experienced a complete turnover of our employees, including all of the members of our executive management team, which resulted in, among other things, our having insufficient accounting staff available to enable and ensure adequate segregation of duties and our lacking appropriate and complete documentation of policies and procedures critical to the accomplishment of financial reporting objectives. The accounting personnel and documentation deficiencies each increase the risk that a material misstatement of our financial statements will not be prevented or detected on a timely basis.

31
Additionally, we were unable to timely file our Q1 2022 10Q with the SEC due to identifying errors in our financial statements reported in the Original 10-K for the years ended December 31, 2021 and 2020 during our preparation of the financial statements for the quarter ended March 31, 2022.  Management concluded that the errors were the result of accounting personnel’s’ lack of technical proficiency in complex matters.   We filed Form 10-K/A for the years ended December 31, 2021 and 2020 on June 30, 2022 to correct the errors in our financial statements for the years ended December 31, 2021 and 2020 and for the quarters ended June 30, 2020, September 30, 2020, March 31, 2021, June 30, 2021 and September 30, 2021.  See the Form 10-K/A for further detail on the restatement.
 

Management plans to implement measures designed to ensure that the deficiencies contributing to the ineffectiveness of our internal controls over financial reporting are promptly remediated, such that the internal controls are designed, implemented and operating effectively. The remediation actions planned include:

•
hiring additional accounting personnel in a number, and with experience, to allow for proper segregation of duties and the accurate application of GAAP, including a chief financial officer, whom we hired in May of 2022;

•
developing and implementing, and then monitoring the effectiveness of, written policies and procedures required to achieve our financial reporting objectives in a timely manner, including policies and procedures relating to internal control over financial reporting;

•
providing additional training to accounting personnel; and.

•
consulting with an accounting advisor for technical, complex and non-recurring matters.

We are committed to developing a strong internal control environment, and we believe the remediation efforts that we have implemented and will implement will result in significant improvements in our control environment. We hired our Vice President of Finance in the second quarter of 2021 to oversee all accounting and financial reporting matters, including implementing a framework for internal controls over financial reporting, and we hired a full-time controller at the beginning of 2022. Also, during the fourth quarter of 2021, we engaged a third-party consulting firm with expertise in implementing the framework for internal controls over financial reporting, and we are making progress on developing this framework, including identifying key controls, creating process narratives or flowcharts, developing test plans, and beginning the testing of the key controls to ensure the framework is complete and effective. Our management will continue to monitor and evaluate the relevance of our risk-based approach and the effectiveness of our internal controls and procedures over financial reporting on an ongoing basis and is committed to taking further action and implementing additional enhancements or improvements, as necessary.
 
Changes in Internal Control over Financial Reporting
 
Other than described above, there was no change in our internal control over financial reporting during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1.
Legal Proceedings.

This information is set forth under “Note 8—Commitments and Contingencies—Legal Matters” to the condensed consolidated financial statements included in this Q1 2022 10-Q and is incorporated in this Item 1 by reference.

From time to time we may become involved in legal proceedings arising in the ordinary course of business. Except as described above, we do not believe there is any litigation pending that could have, individually or in the aggregate, a material adverse effect on our results of operations, financial condition or cash flows.

32
Item 1A.
Risk Factors.

An investment in our common stock involves a high degree of risk. You should consider carefully the risks and uncertainties described under Item 1A of Part I of the 10-K/A, together with all other information contained or incorporated by reference in this Q1 2022 10-Q. If any of the risks described in this Q1 2022 10-Q or in the 10-K/A occur, our business, financial condition, results of operations and future growth prospects could be materially and adversely affected. Under these circumstances, the trading price of our common stock could decline, and you may lose all or part of your investment. As of the date of this Q1 2022 10-Q, we do not believe that there have been any material changes to the risk factors previously disclosed in the 10-K/A except as follows:.

We are currently operating in a period of economic uncertainty and capital markets disruption, which has been significantly impacted by geopolitical instability, an ongoing military conflict between Russia and Ukraine, and record inflation. Our business, financial condition and results of operations could be materially adversely affected by any negative impact on the global economy and capital markets resulting from the conflict in Ukraine, geopolitical tensions, or record inflation.

U.S. and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the start of the military conflict between Russia and Ukraine. In February 2022, a full-scale military invasion of Ukraine by Russian troops began. Although the length and impact of the ongoing military conflict is highly unpredictable, the conflict in Ukraine has led to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions, which has contributed to record inflation globally. We are continuing to monitor inflation, the situation in Ukraine and global capital markets and assessing its potential impact on our business.

Although, to date, our business has not been materially impacted by the ongoing military conflict between Russian and Ukraine, geopolitical tensions, or record inflation, it is impossible to predict the extent to which our operations will be impacted in the short and long term, or the ways in which such matters may impact our business. The extent and duration of the conflict in Ukraine, geopolitical tensions, record inflation and resulting market disruptions are impossible to predict but could be substantial. Any such disruptions may also magnify the impact of other risks described in the 10-K/A.

Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.

None

Item 3.
Defaults Upon Senior Securities.

None.

Item 4.
Mine Safety Disclosures.

Not Applicable.

Item 5.
Other Information.

None.

33
Item 6.
Exhibits.

Exhibit
  
Description
  
Incorporated By Reference
 
Securities Purchase Agreement, dated as of March 6, 2022, between Brooklyn ImmunoTherapeutics, Inc. and the purchaser party thereto.
  
Exhibit to Form 8-K filed on March 9, 2022
 
Registration Rights Agreement, dated as of March 6, 2022, between Brooklyn ImmunoTherapeutics, Inc. and the purchaser party thereto.
  
Exhibit to Form 8-K filed on March 9, 2022
 
Form of Pre-Funded Warrant
  
Exhibit to Form 8-K filed on March 9, 2022
 
Form of Common Stock Warrant.
  
Exhibit to Form 8-K filed on March 9, 2022
 
Agreement to Assign Space Lease dated March 5, 2022 between Brooklyn ImmunoTherapeutics, LLC and Regen Lab USA LLC.
  
Filed herewith
 
Assignment and Assumption of Lease dated March 25, 2022 between Brooklyn ImmunoTherapeutics, LLC and Regen Lab USA LLC
  
Filed herewith
 
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
  
Filed herewith
 
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
  
Filed herewith
 
Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
  
Furnished herewith
 
Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
  
Furnished herewith
101.INS
  
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).
  
Filed herewith
101.SCH
  
Inline XBRL Taxonomy Extension Schema Document
  
Filed herewith
101.CAL
  
Inline XBRL Taxonomy Extension Calculation Linkbase Document
  
Filed herewith
101.DEF
  
Inline XBRL Taxonomy Extension Definition Linkbase Document
  
Filed herewith
101.LAB
  
Inline XBRL Taxonomy Extension Label Linkbase Document
  
Filed herewith
101.PRE
  
Inline XBRL Taxonomy Extension Presentation Linkbase Document
  
Filed herewith
104
  
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).
    

34
SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
BROOKLYN IMMUNOTHERAPEUTICS, INC.
     
Date: June 30, 2022
By:
/s/ Andrew Jackson
   
Andrew Jackson
   
Chief Financial Officer


35
Exhibit 10.5

AGREEMENT TO ASSIGN SPACE LEASE
 
This AGREEMENT TO ASSIGN SPACE LEASE (the “Agreement”) is made and entered into as of March   5     , 2022 (the “Signature Date”), between these two Delaware limited liability companies: (a) BROOKLYN IMMUNOTHERAPEUTICS LLC (“BITX”); and (b) REGENLAB USA LLC (“Regen”). Terms used in this Agreement may be defined after first usage. An index of defined terms appears on the last page. Certain rights and obligations under this Agreement, as stated in this Agreement, shall become effective only when certain conditions are satisfied and the Assignment Date has occurred.
 
1.
THE LEASE
 
Only if and when an Assignment Date occurs, BITX desires to assign to Regen, and Regen desires to assume, the Lease, as defined in (and modified by) the Second Amendment to Lease Agreement dated July 24, 2019 (the “Lease”), between BIOBAT, Inc., a Not-for-Profit 501(c)(3) corporation organized under the Laws of the State of New York (“Landlord”) and BITX relating to premises in Building A of the Brooklyn Army Terminal (the “Premises”). Terms used in this Agreement without definition have the same meanings as in the Lease. BITX represents and warrants that it has given Regen a true and complete unredacted copy of the Lease. Regen acknowledges it has received, reviewed, and approved that copy.
 
2.
INDEMNITY BY REGEN
 
After the Assignment Date, Regen shall indemnify and hold harmless BITX and its affiliates from and against any costs and liabilities (including those arising from the loss of life, personal injury, and property damage), including reasonable attorneys’ fees, directly or indirectly arising from any failure by Regen to perform any obligations under the Lease arising on or after the Assignment Date.
 
3.
INDEMNITY BY BITX
 
After the Assignment Date, BITX shall indemnify and hold harmless Regen and its affiliates from and against any costs and liabilities (including those arising from the loss of life, personal injury, and property damage), including reasonable attorneys’ fees, directly or indirectly arising from any failure by BITX to perform any obligation arising under the Lease before the Assignment Date.
 
4.
REPRESENTATIONS AND WARRANTIES BY BITX
 
This Agreement is made without representation or warranty by BITX, and without recourse to BITX, and Regen accepts the Premises as of the Assignment Date in the condition this Agreement requires, except as follows. BITX represents and warrants that, as of the Signature Date and as of the Assignment Date: (i) BITX has made all payments the Lease requires; (ii) all obligations of BITX under the Lease are current (including payment of rent and any escalations, pass-throughs, sundry charges, parking charges, security fees, and other sums, if any, payable under the Lease to date); (iii) the Lease is in full force and effect; (iv) the Lease as defined in this Agreement has not been modified, amended, waived, surrendered, cancelled, or otherwise impaired, orally or in writing; (v) BITX has not assigned or encumbered its interest in the Lease (except as this Agreement contemplates) or entered into any subleases; and (vi) BITX has given Regen true and correct copies of BITX’s rent bills and payment records for approximately the last 90 days. As of the Signature Date, BITX represents and warrants that: (a) to BITX’s knowledge, BITX has not received notice of any uncured default under the Lease; and (b) BITX has not given Landlord notice of any default by Landlord. BITX shall notify Regen if any statement in the previous sentence becomes false between the Signature Date and the Assignment Date. BITX represents and warrants that, as of the Signature Date and as of the Assignment Date, BITX has not entered into any service, operational, refuse removal, security, monitoring, parking, utility, or other contract benefitting the Premises except these, for which BITX will be solely responsible: (a) broadband service contract that will expire April 30; and (b) hazardous waste removal agreement that will expire on or before the Assignment Date.

5.
REPRESENTATIONS AND WARRANTIES BY BOTH PARTIES
 
BITX and Regen each (a “Warrantor”) represents and warrants to the other, subject to obtaining the Consent: (i) Warrantor has duly authorized, executed, and delivered this Agreement; (ii) this Agreement is Warrantor’s binding and enforceable obligation; (iii) Warrantor’s entering into and performing under this Agreement does not violate any agreement, law, or regulation by which Warrantor is bound; (iv) Warrantor has obtained all necessary consents, and made all governmental filings (if any), necessary for Warrantor to enter into this Agreement; and (v) Warrantor is a person with whom United States citizens may legally do business.
 
6.
TRANSITIONAL MATTERS
 
On or about the Assignment Date and before transferring possession of the Premises to Regen, BITX shall at its expense professionally clean the Premises. As of the Assignment Date, Regen accepts the present (as of the Signature Date) condition of the Premises and of all furniture, furnishings, and equipment within the Premises (the “FF&E”), subject only to ordinary wear and tear from the Signature Date to the Assignment Date and the professional cleaning required by the previous sentence. As of the Assignment Date: (i) BITX disclaims any interest in the FF&E; and (ii) Regen may at its option dispose of any FF&E at its cost as it sees fit. As of the Assignment Date, BITX shall give Regen all keys, keycards, access codes, key fobs, and similar access mechanisms for the Premises in BITX’s possession, all suitably labelled and described (the “Access Mechanisms”). Regen shall simultaneously acknowledge receipt of the Access Mechanisms. At and after the Assignment Date, BITX shall coordinate and cooperate with Landlord and Regen to give Regen possession and access to the Premises. After the Assignment Date, Regen may arrange with Landlord to reset any access codes or security devices for the Premises, all at Regen’s expense. BITX shall cooperate as necessary. The parties shall promptly cooperate to take all other actions, and promptly deliver all other documents, necessary or appropriate to effectuate their intentions as expressed in this Agreement. On the Assignment Date, Regen shall deliver to Landlord, with copies to BITX, all insurance-related documents the Lease requires, and the parties acknowledge that BITX may terminate its insurance at this location.

2
7.
FINANCIAL MATTERS
 
As of the Assignment Date, the parties shall cooperate to prorate monetary obligations under the Lease on a daily basis. To the extent that Landlord bills either party for any additional charges due under the Lease for periods before the Assignment Date, BITX shall promptly pay those bills. On the Assignment Date, Regen shall pay BITX: (a) $50,000 to partly reimburse BITX’s unamortized cost of the FF&E; (b) $50,000 to partly reimburse BITX’s unamortized cost of its fixturization of the Premises, including clean room buildout; and (c) $63,220 to reimburse BITX for the existing security deposit under the Lease (the “Security Deposit”).
 
8.
ASSIGNMENT DATE
 
The assignment of the Lease and all rights and obligations of BITX and Regen under this Agreement arising upon or after the Assignment Date shall not take effect unless and until all these conditions have been met (the “Assignment Date”): (i) Landlord has consented to this Agreement in writing in form and substance satisfactory to Landlord, BITX, and Regen, which consent may include a form of Lease assignment; (ii) both BITX and Regen have countersigned that consent to confirm they agree to its terms (the “Consent”); (iii) BITX has cured any monetary and nonmonetary defaults under the Lease and made all payments then due under the Lease; (iv) BITX has delivered, and Regen has acknowledged receipt of, the Access Mechanisms; (v) the parties have made all payments this Agreement requires to be made on or before the Assignment Date; and (vi) BITX has professionally cleaned the Premises. On the Assignment Date, the parties shall execute and exchange an assignment of the Lease in the form the Consent or Landlord requires.
 
9.
LANDLORD CONSENT
 
The parties shall diligently and reasonably cooperate to achieve the Consent. If the Consent has not been fully signed by all parties and delivered by the date 21 days after the Signature Date, then either party may terminate this Agreement.
 
10.
MISCELLANEOUS
 
The parties waive jury trial in any dispute arising from this Agreement. BITX and Regen shall each pay any taxes on this Agreement (or the transactions it contemplates) for which it has primary liability by law. The parties shall promptly cooperate on all tax filings.
 
No Further Text on This Page.

3
SIGNATURE PAGE FOR AGREEMENT TO ASSIGN SPACE LEASE
 
IN WITNESS WHEREOF, BITX and Regen have executed this Agreement as of the Signature Date but effective only as of the Assignment Date.
 
REGENLAB USA LLC
BROOKLYN IMMUNOTHERAPEUTICS LLC

By: /s/ Antoine Turzi
   By: /s/ Howard Federoff
  
Its: Antoine Turzi, CEO
   Its: Howard Federoff, CEO  

INDEX OF DEFINED TERMS

Access Mechanisms
 2
  
Lease
 1
Agreement
 1
  
Premises
 1
Assignment Date
 3
  
Regen
 1
BITX
 1
  
Security Deposit
 3
Consent
 3
  
Signature Date
 1
FF&E
 2
  
Warrantor
 2
Landlord
 1
  

 
 
4
Exhibit 10.6

Execution Copy

ASSIGNMENT AND ASSUMPTION OF LEASE

THIS ASSIGNMENT AND ASSUMPTION OF LEASE (the “Assignment”) made as of the 25th day of March 2022 (the “Effective Date”), between BROOKLYN IMMUNOTHERAPEUTICS LLC (“Assignor”), a Delaware limited liability company, and REGEN LAB USA LLC, a New York limited liability company (“Assignee”).

WHEREAS, BioBAT, Inc. (“Landlord”), as landlord, and IRX Therapeutics, Inc. (“IRX”), as tenant, entered into an Agreement of Lease, dated as of September 28, 2015; as amended by a First Amendment to Lease, dated as of September 28, 2015 by and between IRX and Landlord; as assigned by IRX to Assignor by that certain Assignment and Assumption of Lease dated as of November 6, 2018; as such lease was further amended by that certain Second Amendment to Lease Agreement by and between Assignor and Landlord dated as of July 24, 2019, (as assigned and amended, the “Lease”), with respect to the Premises, located in the Brooklyn Army Terminal, Building A, at 140 58th Street, Brooklyn, New York, as further defined in the Lease (attached hereto as Exhibit A) and as shown on the drawing attached hereto as Exhibit B; and

WHEREAS, Assignor now desires to assign, and Assignee desires to accept all of Assignor’s right, title and interest in and to, and assume all of its obligations under, the Lease;

NOW THEREFORE, in consideration of the recitals above and the mutual promises and covenants herein contained, and for other good and valuable consideration, the receipt and legal sufficiency of which is hereby acknowledged, the parties covenant and agree as follows:


 1.
Assumption of Obligations under the Lease.

(a)           Assignment of Lease. Assignor assigns, transfers and sets over to Assignee all of Assignor’s right, title and interest in and to, and all of its obligations under, the Lease.

(b)           Assumption of the Assignor’s Obligations. Assignee hereby: (i) accepts the assignment of the Lease; (ii) assumes all of the obligations, liabilities, covenants and conditions of Assignor as tenant under the Lease; (iii) assumes and agrees to perform and observe all of the obligations, terms, requirements, covenants and conditions to be performed or observed by Assignor under the Lease; and (iv) makes all of the representations and warranties binding upon the Tenant under the Lease; with the same force and effect as if Assignee had executed the Lease originally as Tenant.


 (c)
Intentionally Deleted.

(d)         Construing Lease. Nothing herein contained shall be construed to: (i) modify, waive, impair or affect any of the provisions contained in the Lease (except as may be expressly provided herein), (ii) operate as a consent to or approval by LANDLORD of any of the provisions, covenants and conditions of the Private Agreement, as defined below; (iii) operate as a representation or warranty by LANDLORD; (iv) waive any present or future breach of, or default under, the Lease, or any rights of LANDLORD against any person, firm, association or corporation liable or responsible for the performance thereof; or (v) enlarge or increase LANDLORD’s obligations or the Assignee’s rights under the Lease.

1
Execution Copy

(e)           Full Force and Effect. All provisions of the Lease are hereby declared by the Assignor and Assignee, respectively, to be in full force and effect, including the change in definition set forth in Section 5(a) below.

(f)            Assignor Remains Liable. Notwithstanding this Assignment, Assignor shall be and remain liable and responsible for the due keeping, and full performance and observance, of all of the provisions of the Lease on the part of Tenant to be kept, performed and observed.

(g)           Default Applicability. In the event of any default by Assignor or Assignee in the full performance and observance of any of their respective obligations hereunder, or in the event any representation of Assignor or Assignee contained herein should prove to be untrue, such event may, at LANDLORD’s option, be deemed a default under the Lease, and LANDLORD shall have all of the rights, powers and remedies provided for in the Lease or in this Assignment, or at law or in equity or by statute or otherwise with respect to defaults.

(h)           Conflict Provisions. In case of any conflict between the provisions of the Lease and this Assignment, the provisions of this Assignment shall prevail.

(i)            Defined Terms. All capitalized terms not defined in this Assignment shall have the meaning set forth in the Lease.

2.          Consent. LANDLORD hereby consents to the aforesaid assignment of the Lease by Assignor to Assignee, such consent being subject to and upon the conditions contained herein, to each of which Assignor and Assignee expressly agree. Assignee shall comply with, perform and observe all of the obligations and conditions of tenant under the Lease. Landlord does NOT consent to the document entitled Agreement to Assign Space Lease dated as of March 5, 2022, and signed by Assignor and Assignee (the “Private Agreement”) or any of the terms thereof. Each of Assignor and Assignee agree, represent, and covenant that the Private Agreement and the terms thereof only bind Assignor and Assignee, do not modify the Lease or any provision thereof, and are not binding, in any way, on Landlord, its successors or assigns, the New York City Economic Development Corporation (“NYCEDC”), or the City of New York (“City”).

3.          No Further Assignments. This Assignment is not, and shall not be construed as a consent by LANDLORD to, or as permitting, any other or further assignment by Assignor or Assignee. Any further assignment by Assignor or Assignee shall require LANDLORD’s prior written consent pursuant to and in accordance with the Lease.


 4.
Representations of Assignor and Assignee.

(a)          Assignor’s Representations. Assignor represents that:(i) to Assignor’s knowledge, there is no existing default under the Lease by Assignor; (ii) Assignor is the sole tenant under the Lease; (iii) the Lease is in full force and effect; (iv) the Lease has not been assigned or modified or amended in any respect whatsoever, except as stated in Section 5(a) below with respect to the change to the definition of Landlord’s Premises in the Lease; (v) Assignor has not encumbered the Lease with any prior transfer, assignment, mortgage, lien or any other encumbrance; (vi) Assignor has full and lawful authority to assign the Lease and enter into this Assignment; and (vii) except for this Assignment, the Lease embodies the entire agreement and understanding between the parties thereto with respect to the Premises demised thereunder.

2
Execution Copy

(b)          Assignor’s and Assignee’s Representations. Assignor and Assignee jointly and severally represent to LANDLORD (and Assignor and Assignee each, as to itself, represents to the other) that: The execution and delivery by Assignor and Assignee of this Assignment and the performance of their respective obligations hereunder (i) have been duly authorized by all requisite entity action and (ii) will not violate any provision of any applicable legal requirements, any order, writ, decree, injunction or demand of any court or other governmental authority, any organizational document or any indenture or agreement or other instrument to which Assignor or Assignee is a party or by which Assignor or Assignee is bound. Assignor and Assignee are not required to obtain any consent, approval or authorization from or to file any declaration or statement with any governmental authority or other agency in connection with or as a condition to the execution, delivery or performance of this Assignment. This Assignment has been duly authorized, executed and delivered by Assignor and Assignee. Assignor has not received any consideration from or on behalf of Assignee in connection with this Assignment, except as stated in the Private Agreement. Except to the extent stated in the Private Agreement, Assignee has not paid any such consideration, and there is no agreement to provide any such consideration at any time in the future, as described in Article 11 of the Lease. The copy of the Lease annexed hereto as Exhibit A is a true and correct copy thereof.


 (c)
Assignee’s Representations. Assignee represents to LANDLORD that:

(i)           No Representations of Landlord/ Premises “As Is”. No representations, statements, or warranties, express or implied, have been made by, or on behalf of, Landlord, NYCEDC, or the City with respect to the Premises or the transaction contemplated by the Lease, the status of title thereto, the physical condition thereof, the zoning or other laws, regulations, rules and orders applicable thereto or the use that may be made of the Premises, and Assignee takes the Premises “as-is” and “where-is”. Assignee has relied on no such representations, statements or warranties, and Landlord shall not be liable in any event whatsoever for any latent or patent defects in the Premises.


 (ii)
Intentionally Deleted.


(iii)
Intentionally Deleted.

(iv)       No City Interest. No officer, agent, employee or representative of the City has received or will receive any payment or other consideration for the making of this Assignment and LANDLORD’s consent hereto and no officer, agent, employee or representative of the City has any interest or will have any direct interest in the Lease, this Assignment or any proceeds thereof.

3
Execution Copy

(v)          Good Standing. Assignee is a validly existing corporation, limited liability company or other form of entity in good standing under the laws of the State of New York, has the power and authority to own its assets and to transact the business in which it is now engaged or proposed to be engaged, and/or as applicable is duly qualified as a foreign corporation, limited liability company or other form of entity and in good standing under the laws of each other jurisdiction in which such qualification is required.

(vi)        Legal Actions. There are no actions, suits or proceedings pending or, to the knowledge of Assignee, threatened against, or affecting Assignee or any affiliate before any court, federal, state or local governmental authority or arbitrator, which may, in any one case or in the aggregate, materially adversely affect the financial condition, operations, properties or business of Assignee, or the ability of Assignee to perform its obligations under the Lease and this Assignment.

(vii)       Tax Returns. Assignee has filed all tax (federal, state and local) returns required to be filed and has paid all taxes, assessments and governmental charges and levies thereon to be due, including interest and penalties. Assignee has no knowledge of any claims for taxes due and unpaid which might become a lien upon any of its assets.

(viii)      Licenses/Permits. Assignee has obtained all necessary licenses and permits to operate the Premises for the uses stated in the Lease and will continue to maintain such licenses and permits throughout the Term.

(ix)       Safety Procedures. Assignee shall use all recognized safety procedures at the Premises and techniques to protect life and property throughout the Term.


 (x)
Intentionally Deleted.

(d)         Security Deposit. Assignee and Assignor acknowledge and agree that: (i) prior to the Effective Date, pursuant to Section 27.1 of the Lease, the Assignor deposited with LANDLORD Eighty Four Thousand Ninety One and 53/00 Dollars ($84,091.53) (“Assignor’s Security Funds”); and (ii) simultaneous with the Effective Date of this Assignment, and as part of the conditions of and consideration for LANDLORD granting its consent to this Assignment, LANDLORD shall be entitled to withdraw the entire amount of the Assignor’s Security Funds (i.e., $84,091.53) in order to hold such amount as additional security for the faithful performance and observance by Assignee, as Tenant, of the terms, provisions and conditions of the Lease.


 5.
Miscellaneous.

(a)           Definitions. The term “Landlord’s Premises” is amended and restated to read as follows, pursuant to the terms of that certain First Amendment to Agreement of Lease dated as of August 16, 2019 between Prime Landlord and Landlord:

(i) Dock Level: approximately 46,400 gross square feet and any loading area reflected on the site map shown in Exhibit B-1 to the Prime Lease consisting of the following components;

4
Execution Copy

(ii) First Floor: approximately 48,000 gross square feet plus the common loading area reflected on the site map in Exhibit B-1 to the Prime Lease;

(iii) Floors Two Through Three: approximately 56,000 gross square feet per floor totaling approximately 112,000 gross square feet; and

(iv) Garage as more particularly delineated on the design development diagrams attached in Exhibit B-1 to the Prime Lease as the same may be revised in accordance with the terms of the Prime Lease.

(b)       Written Amendment Only. This Assignment may not be altered, amended, modified or changed orally, but only by an agreement in writing signed by the party against whom enforcement of any such alteration, amendment, modification or change is being sought.

(c)        Captions. Captions are inserted for convenience only and will not affect the construction hereof.

(d)      Entire Agreement. This Assignment, together with the Lease, constitutes the entire agreement of the parties hereto with respect to the matters stated herein.

(e)       Governing Law. This Assignment will for all purposes be construed in accordance with and governed by the laws of the State of New York applicable to agreements made and to be performed wholly therein without giving effect to any principles of conflict of laws.

(f)        Signature in Counterparts/.PDF Format. This Assignment may be executed in several counterparts, each of which will constitute an original instrument and all of which will together constitute one and the same instrument This Assignment may be delivered electronically in .PDF format, and any such delivery shall be of the same legal effect, validity and enforceability for all purposes as if delivered in hardcopy. Each party hereby waives any defenses to the enforcement of the terms of this Amendment based on its delivery of this Amendment in .PDF format, and hereby agrees that any such delivery by such party shall be conclusive proof, admissible in judicial proceedings, of such party’s delivery of this Amendment.

(g)       Remedies Cumulative. Each right and remedy of LANDLORD provided for in this Assignment or in the Lease shall be cumulative and shall be in addition to every other right and remedy provided for herein or therein or now or hereafter existing at law or in equity or by statute or otherwise, and the exercise or beginning of the exercise by LANDLORD of any one or more of the rights or remedies so provided for or existing shall not preclude the simultaneous or later exercise by LANDLORD of any or all other rights or remedies so provided for or so existing.

(h)       Successors and Assigns. All representations, warranties, grants, covenants, terms and provisions of this Assignment shall apply to, bind and inure to the benefit of the respective successors and, to the extent permitted under the Lease, the respective assigns, of Assignor, Assignee and LANDLORD.

5
Execution Copy

(i)         Definitions. All capitalized terms used in this Assignment without definition shall have the meanings given to such terms in the Lease.

(j)         Notices. Assignee directs that for purposes of Article XXIV of the Lease, notices to Assignee shall be sent to: Building A, 140 58th Street, Brooklyn, New York, 11220.

(Remainder of page intentionally left blank; signature page follows)

6
Execution Copy

IN WITNESS WHEREOF, the parties hereto have signed and executed this Assignment and Assumption of Lease, effective as of the first date noted above.

BROOKLYN IMMUNOTHERAPIES LLC,
REGEN LAB USA LLC,
ASSIGNOR ASSIGNEE
 
By:
 /s/ Howard Federoff
  
By:
 /s/ Antoine Turzi
  
 
    
 
    
Name: Dr. Howard Federoff
  
Name:
Antoine Turzi  
Title:
 President and Chief Executive Officer  
Title:
Chief Executive Officer
  

THIS ASSIGNMENT HAS BEEN CONSENTED TO BY THE LANDLORD:

BIOBAT, INC.

By:
 /s/ Eva Cramer
 
     
Name: Dr. Eva Cramer
 
Title: President
 

7
Execution Copy

IN WITNESS WHEREOF, the parties hereto have signed and Assumption of Lease, effective as of the first date noted above.

BROOKLYN IMMUNOTHERAPIES LLC,
 REGEN LAB USA LLC,
ASSIGNOR
ASSIGNEE

By:
 /s/ Howard Federoff
  
By:
 /s/ Antoine Turzi
  
 
    
 
    
Name: Dr. Howard Federoff
  
Name:
Antoine Turzi  
Title:
 President and Chief Executive Officer  
Title:
Chief Executive Officer
  
 
THIS ASSIGNMENT HAS BEEN CONSENTED TO BY THE LANDLORD:

BIOBAT, INC.

By:
 /s/ Eva Cramer
 
     
Name: Dr. Eva Cramer
 
Title: President
 

8
Execution Copy

EXHIBIT A

The Lease

between

BIOBAT, INC.

as landlord

BROOKLYN IMMUNOTHERAPEUTICS LLC

as tenant,

Consisting of the following documents:

a)
Agreement of Lease dated as of September 28, 2015, between BioBAT, Inc. (“Landlord”), as landlord, and IRX Therapeutics, Inc. (“IRX”), as tenant;

b)
First Amendment to Lease, dated as of September 28, 2015, by and between IRX and Landlord;

c)
Assignment and Assumption of Lease dated as of November 6, 2018, by IRX to Brooklyn Immunotherapy LLC (“BITX”); and

d)
Second Amendment to Lease Agreement by and between and Landlord and BITX dated as of July 24, 2019.

For the leased premises in the Brooklyn Army Terminal, Building A, at 140 58th Street, Brooklyn, New York, Second Floor consisting of approximately 6,322 rentable square feet containing wet lab space and office space, plus approximately 1,910 rentable square feet of Clean Room space for a total of approximately 8,232 rentable square feet as more particularly shown on the Exhibit B hereto.

9
LEASE AGREEMENT

Table of Contents

  Page
   
ARTICLE I.
  
LEASED PREMISES
 1
Section 1.1
 1
Section 1.2
 1
Section 1.3
2
Section 1.4
2
   
ARTICLE II.
  
TERM
2
Section 2.1
2
Section 2.2
3
Section 2.3
3
   
ARTICLE III.
  
RENT
3
Section 3.1
3
Section 3.2
3
Section 3.3
4
Section 3.4
7
Section 3.5
7
   
ARTICLE IV.
  
USE
7
Section 4.1
7
Section 4.2
7
Section 4.3
8
Section 4.4
9
 
  
ARTICLE V.
  
REQUIREMENTS OF LAW
9
Section 5.1
10
Section 5.2
10
Section 5.3
10
Section 5.4
11
   
ARTICLE VI.
  
ACCESS TO PREMISES
11
Section 6.1
11

i
Table of Contents
(continued)

  Page
   
ARTICLE VII
  
MAINTENANCE, SERVICE AND REPAIR OBLIGATIONS
11
Section 7.1
11
Section 7.2
12
Section 7.3
12
Section 7.4
13
Section 7.5
13
Section 7.6
14
Section 7.7
14
   
ARTICLE VIII.
  
ALTERATIONS
14
Section 8.1
14
Section 8.2
15
Section 8.3
15
Section 8.4
16
 
  
ARTICLE IX.
  
UTILITIES
17
Section 9.1
17
Section 9.2
17
Section 9.3
17
Section 9.4
17
   
ARTICLE X.
  
DESTRUCTION BY FIRE OR OTHER CAUSES
18
Section 10.1
18
Section 10.2
18
Section 10.3
18
Section 10.4
19
Section 10.5
19
   
ARTICLE XI
  
CONDEMNATION
19
Section 11.1
19
Section 11.2
20

ii
Table of Contents
(continued)

  Page
   
ARTICLE XII.
INSURANCE
20
Section 12.1
20
Section 12.2
22
   
ARTICLE XIII.
  
SUBROGATION AND WAIVER
22
Section 13.1
23
   
ARTICLE XIV.
  
INDEMNIFICATION AND HOLD HARMLESS
23
Section 14.1
23
Section 14.2
23
Section 14.3
24
 
  
ARTICLE XV.
  
RULES AND REGULATIONS
24
Section 15.1
24
   
ARTICLE XVI.
  
DEFAULTS BY TENANT; REMEDIES
24
Section 16.1
24
Section 16.2
24
Section 16.3
25
Section 16.4
25
Section 16.5
25
Section 16.6
26
Section 16.7
26
Section 16.8
27
   
ARTICLE XVII.
  
CONDITION OF PREMISES
27
Section 17.1
27
   
ARTICLE XVIII.
  
ASSIGNMENT AND SUBLETTING
27
Section 18.1
27
Section 18.2
27
Section 18.3
28
Section 18.4
28

iii
Table of Contents
(continued)

  Page
   
Section 18.5
28
   
ARTICLE XIX.
  
HAZARDOUS MATERIALS
28
Section 19.1
28
Section 19.2
29
Section 19.3
29
Section 19.4
30
   
ARTICLE XX.
  
NON-WAIVER OF LANDLORD’S RIGHTS
30
Section 20.1
30
   
ARTICLE XXI.
  
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT
30
Section 21.1
30
Section 21.2
31
Section 21.3
31
Scction 21.4
31
   
ARTICLE XXII.
  
QUIET ENJOYMENT
32
Section 22.1
32
   
ARTICLE XXIII.
  
END OF TERM
32
Section 23.1
32
Section 23.2
32
Section 23.3
32
 
  
ARTICLE XXIV.
  
NOTICES
33
Section 24.1
33
   
ARTICLE XXV.
  
SUCCESSORS AND ASSIGNS
34
Section 25.1
34

iv
Table of Contents
(continued)

  Page
   
ARTICLE XXVI.
  
SIGNS
34
Section 26. l
34
   
ARTICLE XXVII.
  
SECURITY
35
Section 27.1
35
   
ARTICLE XXVIII.
  
LIMITATION OF LIABILITY
35
Section 28.1
35
   
ARTICLE XXIX.
  
LATE PAYMENTS
36
Section 29.1
36
   
ARTICLE XXX.
  
BROKER
36
Section 30.1
36
   
ARTICLE XXXI.
  
TENANT TO PROVIDE FINANCIAL STATEMENT
36
Section 31.1
36
   
ARTICLE XXXII.
  
TENANT’S REMEDIES
36
Section 32.1
36
 
  
ARTICLE XXXIII.
  
TENANT’S ESTOPPEL CERTIFICATE
36
Section 33.1
36
   
ARTICLE XXXIV.
  
WAIVERS BY TENANT
37
Section 34.1
37
Section 34.2
37
Section 34.3
37

v
Table of Content
(continued)

  Page
   
ARTICLE XXXV.
  
EXCULPATION
37
Section 35.1
37
   
ARTICLE XXXVI.
  
EFFECT OF CONVEYANCE BY LANDLORD
38
Section 36.1
38
   
ARTICLE XXXVII.
  
SUBSTITUTE SPACE
38
Section 37.1
38
   
ARTICLE XXXVIII.
  
VENDEX
38
Section 38.1
38
Section 38.2
38
 
  
ARTICLE XXXIX.
  
MISCELLANEOUS
39
Section 39.1
41
Section 39.2
41
Section 39.3
42
Section 39.4
42
Section 39.5
42
Section 39.6
42
Section 39.7
42
Section 39.8
42
Section 39.9
42

vi
LEASE AGREEMENT

THIS LEASE AGREEMENT made this   28  day of September, 2015 (the “Effective Date”) between BIOBAT, INC., a Not-for-Profit 50l(c)(3) corporation organized under the laws of the State of New York, having an address c/o SUNY Downstate Medical Center, 450 Clarkson Avenue, Box 129, Brooklyn, New York 11203 (“Landlord”) and IRX THERAPEUTICS, INC., a New York corporation having an address at 140 West 57th Street, Suite 3D, New York, New York (“Tenant”).

W I T N E S S E T H :

ARTICLE I.
LEASED PREMISES

Section 1.1      Landlord leases and demises to Tenant and Tenant rents and leases from Landlord the following described space (the “Premises”), which Premises are shown on Exhibit A attached hereto and made a part hereof and located in Building A of the Brooklyn Anny Terminal, Brooklyn, New York (the “Building”):
Floor{s):
Second Floor

 
Rentable Square Footage (“RSF”)
approximately 7,250 rentable square feet

Section 1.2      The Building is located upon the land more particularly described on Exhibit B attached hereto and made a part hereof (the “Land”), which Building and Land form a part of the Brooklyn Anny Terminal more particularly described in the Prime Lease (as hereinafter defined) (the “Terminal”). A portion of the Building consisting of the following components (the “Landlord’s Premises”) has been leased to Landlord by the New York City Economic Development Corporation (the “Prime Landlord”) pursuant to an Agreement of Lease, dated November 13, 2009 (as it has been and may hereafter be amended, the “Prime Lease”):

(a)       Dock Level:    approximately 46,400 gross square feet and any loading area reflected on the site map shown in Exhibit B-1, attached hereto and made a part hereof;

(b)       First Floor:    approximately 48,000 gross square feet plus the common loading area reflected on the site map in Exhibit B-1, attached hereto and made a part hereof;

(c)       Floors  Two Through Eight:    approximately 56,000 gross square feet per floor totaling approximately 392,000 gross square feet; and

(d)      Roof above the southern third of Building A as more particularly delineated  on the site map attached hereto as Exhibit B-1, attached hereto and made a part hereof.

The Landlord’s Premises, together with the Common Areas (as hereinafter defined), is hereinafter collectively referred to as the “Property”.

Section 1.3      For purposes of this Agreement, “Tenant’s Pro Rata Share” shall be a fraction, the numerator of which is the RSF of the Premises and the denominator of which is the RSF of the Landlord’s Premises, as the same may be re-determined any time RSF is added to the Landlord’s Premises as set forth herein. As of the date hereof, the RSF of the Landlord’s Premises for purposes of this calculation is 94,682 RSF. RSF shall be deemed added to the Landlord’s Premises for purposes of this calculation on the date Landlord determines that such RSF is ready to receive tenant improvements and is offered for rental to the public. Within thirty (30) days following written request from Tenant (but not more than once every twelve (12) months), Landlord shall certify to Tenant in writing as to the then RSF of the Landlord’s Premises. For purposes of determining the Tenant’s Pro Rata Share of the insurance and telephone charges for the Building, the numerator shall be the RSF of the Premises and the denominator shall be 486,000.

Section 1.4      The Premises shall include the appurtenant  right to use, in common with others, the public lobbies, lavatories, entrances, stairs, corridors, elevators, drive-up ground level loading docks, and other public portions of the Landlord’s Premises, and the Prime Lease Common Facilities (as hereinafter defined) available to Landlord (collectively, the “Common Areas”), subject in all instances and under all circumstances to (i) the terms and conditions of the Prime Lease and this Lease, (ii) any restrictions, limitations, obligations or covenants imposed on Landlord relating to any of the foregoing areas, and (iii) Landlord’s right to alter, improve, modify and, to the extent necessary, temporarily block off access to, portions of such Common Areas if Landlord deems it desirable or appropriate to do so. The Common Areas, and the use thereof and access thereto through the Premises for the purposes of operation, maintenance, inspection, display and repairs are hereby reserved to Landlord. No easement for light, air or view is granted or implied hereunder, and the reduction or elimination of Tenant’s light, air or view will not affect Tenant’s liability or obligations under this Lease. For purposes of this Lease, the term “Prime Lease Common Facilities” means all those areas and facilities which may now or hereafter be furnished by Prime Landlord for the non-exclusive use by, or benefit of, Landlord under the Prime Lease, including, without limitation, all entrances, exits, gates, fences and other security facilities, driveways, sidewalks, parking facilities (excluding parking facilities designated for the exclusive use of the tenants and occupants of particular buildings at the Terminal), loading docks, lobbies, mailbox room, hallways, stairways, utility mains, lines and meters serving all or portions of the Terminal (other than such branch or service lines or meters providing or measuring utility services to particular buildings (other than the Landlord’s Premises)) or the respective tenants and occupants of such other premises and areas exclusively controlled by a tenant of premises other than Landlord’s Premises.

ARTICLE II.
TERM

Section 2.1      The term of this Lease shall be for ten years and three months, commencing on the “Commencement Date” (as hereinafter defined), and terminating at midnight on the last day of the month which shall be ten years and three months following the Commencement Date, unless terminated earlier pursuant to Article XXIII (the “Expiration Date”). This Lease shall be effective and enforceable between Landlord and Tenant upon the Effective Date. The Parties acknowledge ,and agree that the Commencement Date has not been finally determined as of the Effective Date. The Commencement Date shall be defined as the later of(a) January 1, 2016, or (b) the first day of the month that includes the date that is three months before the Scheduled Completion Date for the Landlord’s Work. For purposes of illustration, if the Scheduled Completion Date for the Landlord’s Work is May 15, 2016, the Commencement Date would be February 1, 2016.

2
Section 2.2      “Lease Year” as used herein shall mean (i) each and every consecutive twelve (12) month period during the Term of this Lease, or (ii) in the event of Lease expiration or termination, the period between the last complete Lease Year and said expiration or termination. The first such twelve (12) month period shall commence on the Commencement Date.

Section 2.3      If delivery of possession of the Premises shall be delayed beyond the date specified above for the commencement of the term of this Lease for any reason whatsoever, Landlord shall not be liable to Tenant for any damages resulting from such delay and Tenant’s obligation to pay Rent and Additional Rent shall be abated until possession of the Premises is delivered to Tenant. In the event of such delay, it is understood and agreed that the Commencement Date shall also be postponed until delivery of possession of the Premises and that the Expiration Date shall be correspondingly extended. Promptly upon the determination by Landlord of the revised Commencement Date and the revised Expiration Date, Landlord shall send written notice to Tenant of such revised dates and the parties shall be bound by said dates.

ARTICLE III.
RENT

Section 3.1      During the term of this Lease, Tenant agrees to pay to Landlord, Two Hundred Ninety Thousand &00/100 ($290,000.00) Dollars per annum, payable in equal monthly installments of $24,166.66 on or before the first day of each month (the “Base Rent”), which Base Rent shall increase on each anniversary of the Commencement Date by an amount equal to the then-current Base Rent multiplied by three (3%) percent. Notwithstanding the preceding, Tenant shall not be obligated to pay Base Rent during the first ninety days following the Commencement Date.

Section 3.2      Any sums of money required to be paid under this Lease by Tenant in addition to the Base Rent herein provided, shall be deemed “Additional Rent” due and payable after demand therefor with the Base Rent next due or as may be otherwise provided herein. Such Additional Rent shall be deemed to be and shall constitute “Rent” hereunder and shall be collectible in the same manner and with the same remedies as if they had been Base Rent originally reserved herein. Tenant’s obligation to pay Additional Rent accruing during the term of the Lease shall survive the earlier termination and/or expiration of the term of this Lease. If Landlord receives from Tenant any payment less than the sum of the monthly Rent, including Additional Rent, and other charges then due and owing, Landlord, in its sole discretion, may allocate such payment in whole or in part to the Base Rent, any Additional Rent, and/or other charge then due or to any combination thereof.

3
Section 3.3      Payment of Operating Expenses and Taxes.

(a)        Upon the Commencement Date, and then at least thirty (30) days prior to each subsequent calendar year during the Term, Landlord shall advise Tenant in writing of its reasonable estimate of Tenant’s Pro Rata Share of the annual Operating Expenses for each calendar year and Taxes for each calendar year. Commencing on the Commencement Date and continuing on the first day of each calendar month thereafter during the Term, Tenant shall pay as Additional Rent, one-twelfth (1/12th) of the estimated (as determined by Landlord) Tenant’s Pro Rata Share of such Operating Expenses and Taxes, if any, concurrently with the Monthly Base Rent payment.

(b)        Within ninety (90) days after the close of each calendar year, Landlord shall deliver to Tenant an itemized statement prepared by Landlord’s property management company or chief operating officer, or by a certified public accountant (“Landlord’s Statement”) showing in reasonable detail the (A) actual Operating Expenses and Taxes for the previous year broken down by component expenses; (B) Tenant’s Pro Rata Share of such amounts; (C) the amount paid by Tenant during the year towards Operating Expenses and the amount paid by Tenant during the year towards the Taxes; and (D) the amount Tenant owes to Landlord, or the amount of the refund Landlord owes to Tenant on account of any underpayment or overpayment by Tenant. Any such amount due from Tenant to Landlord shall be paid within ten (10) days after receipt of the most recent Landlord’s Statement. Any such refund due from Landlord to Tenant shall he credited against the next due payment of the estimated Tenant’s Pro Rata Share of Operating Expenses and Taxes or, if at the end of the Term, refunded to Tenant.

(c)        Landlord’s failure to submit a Landlord’s Statement to Tenant within ninety (90) days after the expiration of any calendar year shall not affect Tenant’s obligations to pay Tenant’s Pro Rata Share of Operating Expenses and Taxes.

(d)        If the Landlord’s Premises is less than one hundred percent (100%) occupied during any calendar year or part thereof, Operating Expenses shall include all additional costs and expenses of operation, management, insuring, securing and maintenance of the Property which Landlord determines that it would have paid or incurred during such calendar year if the Landlord’s Premises had been one hundred percent (100%) occupied. Landlord shall be responsible for any portion of the Operating Expenses that exceed the Pro-Rata Shares paid by Tenant and other tenants of the Premises.

(e)        Tenant shall also pay (i) before any penalties or fines are assessed lo the appropriate governmental authority any use and occupancy tax in connection with the Premises. In the event Landlord is required by law to collect such tax, Tenant shall pay such use and occupancy tax to Landlord as Additional Rent within ten (IO) days of demand and Landlord shall remit any amounts so paid to Landlord to the appropriate governmental authority in a timely fashion, and (ii) Tenant shall also pay to Landlord the applicable state sales tax on all Rent simultaneously with the payment by Tenant of the Rent as otherwise required by applicable Legal Requirements (as hereinafter defined).

4
(f)        For the purposes hereof, the following definitions shall apply:


 (i)
“Operating Expenses” shall mean:

(a)        All costs and expenses incurred or made by Landlord or charged to Landlord in the operation and management of the Property, exclusive of Taxes. Operating Expenses include, without limitation, (i) costs of cleaning, security, janitorial service for the Common Areas, rubbish removal, heating, electricity, air conditioning, utilities, risers/shafts and cable maintenance, tempered water and water for customary lavatory use, window cleaning, and maintenance and repairs, maintenance of the grounds, sidewalks, access roads, sanitary sewer and related connections, equipment and fixtures, drainage, stormwater management and related fixtures and equipment, and parking lots; (ii) service contracts or other agreements with independent contractors for any of the foregoing (including, but not limited to, fire alarm, security system, electric system, elevator and heating, ventilation and air conditioning (“HVAC”) maintenance); (iii) management fees; (iv) wages, salaries, benefits, payroll taxes and unemployment compensation insurance for employees of Landlord or any contractor of Landlord engaged in the cleaning, operating, maintenance or security of the Property; (v) the cost of all Landlord’s insurance including, without limitation, casualty, liability and loss of rent insurance equal to eighteen (18) month’s rent for the gross rent roll (including Additional Rent), and the amount of any insurance deductibles; (vi) legal fees (excluding fees incurred in connection with enforcement action against an existing tenant or in negotiating a new lease); (vii) payments, other than Taxes, to the city and/or county in which the Landlord’s Premises is located and other agencies or governmental agencies including, but not limited to, water and sewer charges; (viii) fees and charges of any association, or special district affecting the Property; (ix) fees and charges, under any agreements affecting the Common Areas such as any reciprocal easement agreements, operation and maintenance agreements and park covenant and restriction agreements and the like; (x) all rent, additional rent, (including common area charges and capital reserve fund contributions) and all other charges payable under the Prime Lease or any other ground lease or other lease to which this Lease is subject; (xi) supplies; and (xii) all costs of maintaining, managing, reporting, commissioning, and recommissioning the Landlord’s Premises or any part thereof.

(b)        The term “Operating Expenses” shall not include: (i) repairs or other work (including rebuilding) occasioned by fire, windstorm or other casualty or condemnation to the extent covered by Landlord’s insurance, but excluding any deductibles; (ii) any cost (such as electricity or overtime services) to the extent such costs are separately charged to and payable by Tenant hereunder; (iii) leasing commissions and expenses associated with procuring tenants, including, lease concessions, lease take-over obligations; (iv) interest on and amortization of debt; (v) interest and penalties for late payment of taxes; (vi) wages or salaries of employees over the rank of property or building manager; (vii) expenses resulting from any violation by Landlord of the terms of any ground or underlying lease or mortgage to which this Lease is subordinate; (viii) fines and penalties (to the extent not attributable to any act or omission of Tenant or its agents, employees or contractors) which, under this Lease, are the responsibility of Landlord; (ix) fees and costs associated with any refinancing of mortgage debt on the Property; and (x) any item for which reimbursement is actually made to Landlord from another source (e.g., insurance proceeds or payment from another tenant).

5
(c)         In the event that Landlord fails to supply any services Landlord is obligated to perform under this Lease in a reasonable and timely manner, then, after thirty (30) days’ notice to Landlord of such non-compliance and a failure to cure same, Tenant shall have the right, but not the obligation, to supply such services for its own benefit, and Tenant may deduct the costs of providing such services from the Rent payable hereunder.

(ii)          Operating Expenses shall be determined in accordance with GAAP based upon reasonable projections.

(iii)       Notwithstanding anything to the contrary contained in this Lease, instead of using Tenant’s Pro Rata Share or sub-metering, Landlord may allocate electricity, water and sewer and gas used in the Common Areas to Tenant and other tenants of the Landlord’s Premises based upon Tenant’s and such other tenants’ consumption of electricity, water and sewer and gas as reasonably determined by Landlord.

(g)       “Taxes” shall mean:

(i)        All payments in lieu of taxes (including payments in connection with so-called tax investment financing transactions or similar transactions (collectively, “TIFs”), real estate taxes, personal property taxes, assessments (special or otherwise), sewer and water rents, rates and charges, and any other governmental levies, impositions and charges of a similar nature (“Impositions”), which may be levied, assessed or imposed on or in respect of all or any part of the Property and any improvements, fixtures and equipment of Landlord, real or personal, located in or around the Landlord’s Premises.

(ii)        Any reasonable and appropriate expenses incurred by Landlord in contesting any of the foregoing or the assessed valuation of all or any part of the Landlord’s Premises.

(iii)        If at any time during the Term the methods of taxation prevailing at the date hereof shall be altered so that in lieu of or as a substitute for the whole or any part of the Impositions now levied, assessed or imposed on all or any part of the Landlord’s Premises, there shall be levied, assessed or imposed (a) an Imposition based on the income or rents received therefrom whether or not wholly or partially as a capital levy or otherwise, or (b) an Imposition measured by or based in whole or in part upon all or any part of the Landlord’s Premises and imposed on Landlord, then all Impositions shall be deemed to be Taxes.

(iv)         If an appropriate governmental authority levies any use and occupancy tax, any payments for such use and occupancy tax.

(h)       “Taxes” shall not include any penalties or interest paid by Landlord on account of taxes.

6
Section 3.4      Installments of the Rent payable hereunder shall be made payable to and shall be paid at the office address of Landlord listed above or at such other place as Landlord and its managing agent may designate from time to time by written notice to Tenant hereunder, without demand, setoff or deduction whatsoever. Rent for any partial month during the term of the Lease shall be ratably apportioned based on the actual number of days.

Section 3.5      This is a “triple net” lease. Tenant’s payment of Rent shall be completely net to Landlord so that this Lease yields to Landlord the net annual Base Rent and Tenant shall pay any and all Base Rent, Additional Rent and costs, expenses and obligations of every kind and nature whatsoever relating to the Premises without setoff, deduction, counterclaim or abatement, except as specifically and expressly (and not impliedly) provided in this Lease.

ARTICLE IV.
USE

Section 4.1      Tenant shall occupy and use the Premises for the following purposes only: all uses consistent with the mission of BioBAT as reflected in the third certification in the BioBAT Certificate of Incorporation, an excerpt of which is attached hereto as Exhibit C (“Permitted Uses”). Such Permitted Uses must be in accordance with the New York City Zoning Resolution, as amended from time to time, relevant certificates of occupancy and applicable Legal Requirements, and applicable Rules and Regulations (as hereinafter defined). Tenant contemplates that it shall use the Premises for administrative office space and research & development purposes. Tenant agrees to conduct its business in the manner and according to the generally accepted business principles of the business or profession in which Tenant is engaged.

Section 4.2      Landlord and Tenant acknowledge that the Building and Building site are subject to the following:

(a)          The terms and conditions of the Economic Development Administration (“EDA”) Special Award Conditions, wherein the use of the leased space within the Building is restricted to technology, biomedical and biotechnology facilities and any other activities conducive to such businesses provided that any such use is not in conflict with any restrictions place upon the Landlord or the Property. Landlord agrees that this Lease is consistent with the authorized general and specific purposes of the Award, that this Lease is consistent with EDA’s policies concerning, but not limited to, non-relocation (as defined in EDA’s regulations found in 12 CFR 316.3), non-discrimination and adequate consideration as found in 12 CFR 314.3. Moreover, the Premises must be used for no other purposes other than the general and specific purposes of the Award.

(b)         The terms and conditions of the United States Economic Development Administration (EDA), United States Department of Commerce, EDA Project Number 01-01-08862 financial assistance award, including, but not limited to:

7
(i)           Real Property or tangible Personal Property acquired or improved with EDA Investment Assistance must be used in a manner that is consistent with the authorized general and specific purposes of the Award, in this case, biotechnology research purposes and EDA policies concerning adequate consideration and environmental compliance; and may not be used in violation of the nondiscrimination requirements set forth in 13 C.F.R. 302.20 or for inherently religious activities prohibited by applicable federal law.

(ii)          Lessee agrees to provide Lessor and/or EDA with any document, evidence or report required to assure compliance with federal and state law, including, but not limited to, applicable federal and state environmental laws.

Section 4.3      Notwithstanding anything to the contrary provided in this Article IV, Tenant shall not use or occupy the Premises or any portion thereof, permit or suffer the same to be used or occupied and/or do, or permit or suffer anything to be done, in or on the Premises or any part thereof:

(a)         for inpatient or outpatient clinical services (other than clinical trials relating to bioscience uses or the teaching of device/technology usage, which uses shall be permitted);

(b)         for any unlawful, illegal or hazardous business, use or purpose or in any way in violation of any applicable present and future laws, rules, regulations, orders, ordinances, statutes, codes, executive orders, and requirements of all Governmental Authorities having jurisdiction over the Premises, the Landlord’s Premises, the Building, the Common Areas or the Terminal (including without limitation, the New York City Building Code, Title 25, Chapter 3 of the New York City Administrative Code and the laws, rules, regulations and orders, ordinances, statutes, codes and requirements of any applicable Fire Rating Bureau or other body exercising similar functions) (collectively, “Rules and Regulations”), or the certificates of completion and/or occupancy issued for the Premises, the Landlord’s Premises and the Building as then in force, as applicable;

(c)         in such manner as may make void or voidable any insurance then in force with respect to the Premises, the Landlord’s Premises, the Building, the Common Areas or the Terminal;

(d)         that would, in any manner or respect, cause structural or other injury to the Premises, the Landlord’s Premises or the Building (or any portion thereof), or constitute a private or public nuisance or waste;

(e)          that would, in any manner or respect, render the Premises incapable of being used or occupied after the expiration or sooner termination of the Term of this Lease for the purposes for which the same were permitted to be used and occupied on the day upon which Tenant shall first open the Premises for business to the public, except for ordinary wear and tear and damage by fire or other casualty and repairs for which Tenant is not responsible under this Lease; and/or

8
(f)           that would, in any manner or respect, violate the Prime Lease or any other recorded document affecting the use and occupancy of the Landlord’s Premises.

Section 4.4     Tenant shall not use the Premises for animal testing or clinical trials without the approval of the Institutional Animal Care and Use Committee (“IACUC”) or the Institutional Review Board (“IRB”), respectively, and the Landlord, which consent may be granted or withheld in the sole discretion of each of the above parties.

Section 4.5     Tenant understands and agrees that the enant is responsible, at its own expense, to obtain or cause to be obtained all necessary governmental licenses, permits, and certificate(s) of occupancy or completion required in order to use and occupy the Premises for the Permitted Uses and, except for the Landlord’s Work as defined in Section 8.l, to perform or cause to be performed construction and or any other work on the Premises permitted under this Lease. If any governmental license or permit shall be required for the proper and lawful conduct of Tenant’s business and uses of the Premises permitted under this Lease, including, without limitation, any license required to operate a laboratory and/or product development center and dispose of Hazardous Materials (as hereinafter defined), Tenant shall be responsible for and shall procure and maintain or cause to be procured and maintained such license or permit. Tenant agrees that Tenant is responsible that any and all use of laboratories or the like on the Premises shall comply with the requirements of licenses and permits necessary to facilitate the Permitted Uses described above, including but not limited to licenses and permits required from the New York State Department of Health (or successor agency). Further, Tenant represents and warrants that at all times during the Term, all activities of Tenant shall be licensed, certified, or registered by the appropriate governmental agencies including, without limitation, to the extent required, New York State Department of Health and New York State Department of Education. Tenant further represents and warrants that it shall maintain or cause to be maintained at all times, at its sole cost and expense, all other permits, licenses, certifications, or registrations that are required in connection with any laboratory operations and activities on the Premises. Landlord shall cooperate and execute documents where reasonably required in order to assist Tenant in obtaining licenses/permits necessary to facilitate the Permitted Uses. All related expenses and administrative costs to Landlord shall be Tenant’s responsibility.

Section 4.6      Tenant must notify Landlord of the use of radioactivity and is responsible for obtaining its own license(s) relating to the use, handling, storage or disposal of any radioactive material in or about the Premises. Tenant and Tenant’s employees, agents, contractors or invitees shall only use, handle or store, or permit the use, handling or storage, of the radioactive material stipulated under the applicable New York City Department of Health license and any related licenses for use on, in or about the Premises, in accordance with the quantity, chemical and physical form, and intended purpose specified in such license(s). A copy of such license(s) shall be delivered to Landlord for Landlord’s records prior to the delivery of any radioactive material to the Premises and updated copies shall be delivered to Landlord when renewed.

9
ARTICLE V.
REQUIREMENTS OF LAW

Section 5.1      Tenant shall give prompt notice to Landlord of any notice it receives of the violation of any law or requirements of any governmental authority with respect to the Premises or the use or occupation thereof. Tenant shall promptly comply with all present and future laws, orders and regulations of all state, federal, town, municipal and local governments, departments, commissions and boards or any direction of any public officer pursuant to law, and all orders, rules and regulations of the New York Board of Fire Underwriters or any similar body which shall impose any violation, order or duty upon Landlord or Tenant with respect to the Premises (in which event Tenant shall effect such compliance at its sole cost and expense) or the Building (in which event, notwithstanding anything herein to the contrary, Tenant shall promptly pay Tenant’s pro rata share of the cost to Landlord of complying therewith). Tenant shall pay all costs, expenses, fines, penalties or damages, which may be imposed upon Landlord by reason of Tenant’s failure to comply with the provisions of this Article.

Section 5.2      Tenant shall not place a load upon any floor of the Premises exceeding the floor load per square foot area which said floor was designed to carry and which is allowed by law.

Section 5.3      Tenant, at its expense, shall comply with all present or future Legal Requirements and Rules and Regulations to the extent that the same shall affect or be applicable to (a) Tenant’s particular manner of use of the Premises (as opposed to its mere use thereof), (b) alterations and improvements made by Tenant, or (c) a breach by Tenant of its obligations under this Lease, it being understood that Landlord shall be responsible for complying with Legal Requirements and Rules and Regulations imposed on the Landlord’s Premises generally and which would have to be complied with whether or not Tenant was then in occupancy of the Premises. Nothing herein contained, however, shall be deemed to impose any obligation upon Tenant to make any structural changes or repairs unless necessitated by Tenant’s acts or omissions or by reason of a particular use by Tenant of the Premises. For purposes of this Lease, the term “Legal Requirement(s)” means: (i) any and all present and future laws, rules, regulations, orders, ordinances, statutes, codes, executive orders, and requirements of all Governmental Authorities applicable to the Premises, the Landlord Premises, the Building or any street, road, avenue, or sidewalk comprising a part of, or in front of, the Property, or any vault in, or under the Premises (including, without limitation, the Building Code of New York City and the laws, rules, regulations, orders, ordinances, statutes, codes, and requirements of any applicable Fire Rating Bureau or other body exercising similar functions); (ii) the certificate or certificates of occupancy (or their equivalent) issued for the Premises or the Property as then in force; (iii) New York State Unconsolidated Laws Title 18, Chapter 5, Section 7381 q. as it may be amended from time to time; (iv) the provisions of City Planning Commission Resolution of November 21, 2001, Col. No. 23 (C 010708 PPM) adopted pursuant to Section 197(c) of the New York City Charter; (v) with respect to improvement and use of public access and open space on the Land, if any, the provisions of City Planning Commission Resolution of November 21, 2001, Calendar No. 25 (C 010712 ZSM) and may be amended from time to time (the “Bioscience Special Permit”); (vi) the rules, regulations, orders, codes, and requirements of the State Historic Preservation Office, if applicable; and (vii) Chapter 8-A of the New York City Administrative Code as it may be amended from time to time. For purposes of this Lease, the term “Governmental Authority or Authorities” means the United States of America, the State, County and City of New York, and any agency, department, commission, board, bureau, instrumentality or political subdivision of any of the foregoing, now existing or hereafter created, having jurisdiction over the Property or any portion thereof or any street, road, avenue or sidewalk comprising a part of, or in front of, the Property, or any vault in or under the Property.

10
Section 5.4      The patties acknowledge that Title III of the Americans With Disabilities Act of 1990 and the regulations and rules promulgated thereunder, as all of the same may be amended and supplemented from time to time (collectively referred to herein as the “ADA”) establish requirements for accessibility and barrier removal, and that such requirements may or may not apply to the Premises and the Property depending on, among other things: (A) whether Tenant’s business is deemed a “public accommodation” or “commercial facility”, (B) whether such requirements are “readily achievable”, and (C) whether a given alteration affects a “primary function area” or triggers “path of travel” requirements. The parties hereby agree that: (a) Landlord shall be responsible for ADA Title III compliance in the Common Areas, (b) Tenant shall be responsible for ADA Title Ill compliance within the Premises following delivery of possession, and (c) Landlord may perform, or require that Tenant perform, and Tenant shall be responsible for the cost of, ADA Title Ill “path of travel” requirements triggered by alterations within the Premises made subsequent to the commencement of the Term at the request of Tenant.

ARTICLE VI.
ACCESS TO PREMISES

Section 6.1      Landlord shall have the right to enter and pass through the Premises at all reasonable times to examine the same, and to show them to lessees of the Building, and to make such repairs, improvements or additions as Landlord may deem necessary or desirable and Landlord shall be allowed to take all material into and through the Premises that may be required therefor. During the year prior to the expiration of the term of this Lease, or of any renewal term, Landlord may exhibit the Premises to prospective tenants or purchasers at all reasonable hours and without unreasonably interfering with Tenant’s business. If Tenant shall not be personally present to open and permit such entry, Landlord may enter the same by a master key.

ARTICLE VII.
MAINTENANCE, SERVICE AND REPAIR OBLIGATIONS

Section 7.1      Tenant shall take good care of the Premises, the fixtures and appurtenances located therein and the machinery, equipment and systems exclusively serving the Premises and, at Tenant’s sole cost and expense, make all non- structural repairs thereto as and when needed to preserve the Premises and fixtures, machinery, equipment and services in good  working order and condition, obsolescence and damage from the elements, fire or other casualty, excepted. Notwithstanding the foregoing, all damage or injury to the Premises or to any other part of the Building, or to its fixtures, equipment and appurtenances, whether requiring structural or non-structural repairs, caused by or resulting from carelessness, omission, neglect or improper conduct of Tenant, Tenant’s servants, employees, invitees or licensees, shall  be  repaired promptly by Landlord at Tenant’s sole cost and expense. Tenant shall repair all damage to the Property and the Premises caused by the moving of Tenant’s fixtures,  furniture or equipment.  All the aforesaid repairs shall be of the quality and class equal to the original work or construction. All such maintenance, repairs and replacements shall be done at Tenant’s sole cost and expense by Landlord’s employees or agents or, with Landlord’s express written consent, by persons requested by Tenant and consented to in writing by Landlord. All bulbs, tubes and lighting fixtures for the Premises installed or maintained by Tenant must comply with Landlord’s sustainability practices, including any third-party rating system concerning the environmental compliance of the Landlord’s Premises or the Premises, as the same may change from time to time. Tenant is responsible for reporting lighting purchases to Landlord in a format suitable to Landlord. All maintenance and repairs made by Tenant must comply with Landlord’s sustainability practices, including any third-patty rating system concerning the environmental compliance of the Landlord’s Premises or the Premises, as the same may change from time to time.

11
Section 7.2      Provided that no Event of Default, or an event which, upon the giving of notice or the passage of time, or both, could become an Event of Default, exists under this Lease, Landlord shall furnish, or cause to be furnished, the following services, subject to the provisions of Section 7.3 hereof:

(a)          An attractive lobby area, and elevator service for passenger and delivery needs.

(b)          Air conditioning during summer operations and heat during winter operations, subject to all Federal and local energy conservation regulations.

(c)          Hot and cold running water for all common area restrooms and lavatories in the Landlord’s Premises.

(d)          Janitorial service for the Common Areas in the Landlord’s Premises.

(e)         Electricity to operate the Common Areas during ordinary business hours, and to operate the Premises seven (7) days per week, by providing electric current in reasonable amounts necessary for normal office uses, lighting, and HVAC.

(f)          General management, including supervision, inspections and management functions.

(g)          Four (4) wall-mounted exterior lights immediately adjacent to the west-facing entrance to the Premises.

(h)          Security card reader for the west-facing entrance to the Premises, and two (2) security card readers for doors to the Premises.

Section 7.3      The services provided for in Section 7.2 herein are predicated on and are in anticipation of certain usage of the Premises by Tenant as follows:

(a)          Services shall be provided for the Landlord’s Premises during ordinary business hours, unless expressly provided otherwise.

12
(b)        Such usage of the Premises by Tenant will not require the HVAC system to function beyond design loads currently applicable to the Landlord’s Premises.

(c)          Electric power usage and consumption for the Premises shall be based on (i) lighting of the Premises on a level suitable for normal office use and power for small desk-top machines and devices using no more than 110 volt, 20 amp circuits, and, if applicable, laboratory use at an average of 20 watts per RSF, and (ii) operating the improvements and equipment contemplated by the Tenant Improvement Construction Documents during ordinary business hours. Heavier use items shall not be used or installed, unless expressly permitted elsewhere herein or by separate written consent of Landlord.

(d)        Should Tenant’s total rated electrical design load per square foot in the Premises exceed the building standard rated electrical design load, on a per rentable square foot basis, as determined by Landlord from time to time, for either low or high voltage electrical consumption, or if Tenant’s electrical design requires low voltage or high voltage circuits in excess of Tenant’s share of the building standard circuits, as such share is determined by Landlord, Landlord may (at Tenant’s expense), if reasonably possible, install within the Landlord’s Premises one (1) additional high voltage panel and/or one (1) additional low voltage panel with associated transformer (the “Additional Electrical Equipment”) as necessary to accommodate the aforesaid requirements. If the Additional Electrical Equipment is installed because Tenant’s low or high voltage rated electrical design load exceeds the applicable building standard rated electrical design load (on a per rentable square foot basis), then a meter may also be added by Landlord (at Tenant’s expense) to measure the electricity provided through the Additional Electrical Equipment. In addition to the foregoing, should Tenant desire to install or use equipment in the Premises not contemplated by the Tenant Improvement Construction Documents (as defined in the Work Letter) that will, or can be reasonably expected to, exceed the building standard rated electrical design load, on a per rentable square foot basis, for either low or high voltage electrical consumption, Tenant shall advise Landlord in writing in advance of the installation or use of such equipment and Landlord shall have the right, in its reasonable discretion, to approve or disapprove Tenant’s installation and use of such equipment in the Premises, and Landlord may condition its approval on installation of Additional Electrical Equipment and a meter therefore as set forth above.

Section 7.4      If Tenant uses any services in an amount or for a period in excess of that provided for herein, Landlord also reserves the right to charge Tenant as Additional Rent a reasonable sum as reimbursement for the direct cost of such added services plus five percent (5%) for Landlord’s overhead, general conditions and profit. Landlord further reserves the right to install separate metering devices for the purpose of determining such excessive periods and/or amounts at Tenant’s sole cost and expense. In the event of disagreement as to the reasonableness of such additional charge, the opinion of the appropriate local utility company or an independent professional engineering firm selected by Landlord shall prevail.

13
Section 7.5     Tenant shall give Landlord prompt notice of any defective condition in any plumbing, heating system or electrical lines located in, servicing or passing through the Premises and, following such notice, Landlord shall remedy the condition with due diligence but at the expense of Tenant if repairs are necessitated by damage or injury attributable to Tenant, or Tenant’s servants, agents, employees, invitees or licensees as aforesaid. Except as specifically provided in this Lease, there shall be no allowance to Tenant for a diminution of rental value and no liability on the part of Landlord by reason of inconvenience, annoyance or injury to business arising from Landlord, Tenant or others making or failing to make any repairs, alterations, additions or improvements in or to any portion of the Building or the Premises or in and to the fixtures, appurtenances or equipment thereof.

Section 7.6      Landlord shall be responsible for complying with the provisions of Section 16.0 of the Prime Lease as they refer to the Common Areas.

Section 7.7      Except as otherwise expressly provided in this Article VII, Landlord shall have no obligation during the term of this Lease to expend any money for the preservation or repair of the Premises.

Section 7.8      Tenant shall be responsible to contract directly with (a) a janitorial company for daily cleaning services within the Premises and removal of trash to designated trash bins, and (b) a properly licensed contractor to remove biohazardous and medical waste from the Building in compliance with all applicable statutes and regulations.

ARTICLE VIII.
INITIAL AND SUBSEQUENT
ALTERATIONS

Section 8.1      Landlord shall make the initial improvements to the Premises (collectively, the “Landlord’s Work”) in accordance with the terms and conditions contained in the work letter, plans and construction estimate set forth in Exhibit D (the “Work Letter”). The patties agree that Landlord is responsible to pay One Hundred Seventy Five Thousand & 00/100 ($175,000.00) Dollars toward the cost of Landlord’s Work, and that Tenant shall pay the cost of Landlord’s Work in excess of this sum to the contractor prior to Landlord’s payment of the above sum. Other than for the Landlord’s Work, Landlord shall have no obligation whatsoever to alter, remodel, improve, repair, decorate or paint the Premises or any part thereof except as otherwise expressly provided herein or agreed upon in writing by Landlord, and the patties hereto affirm that Landlord has made no representations to Tenant respecting the condition of the Premises, the Landlord’s Premises or the Property except as specifically herein set forth in writing and Tenant shall accept the Premises in their “AS-IS, WHERE IS” condition. Landlord shall “Substantially Complete” the Landlord’s Work, as evidenced by delivery to Tenant of a certificate executed by the Landlord certifying that the Landlord’s Work has been constructed in substantial accordance with Exhibit D and all Legal Requirements, by no later than the Scheduled Completion Date (as hereinafter defined). Notwithstanding the foregoing, in the event that Landlord’s Work would have been Substantially Completed by the Scheduled Completion Date but for any act or omission of Tenant or any of its employees, agents or contractors, including, without limitation, Tenant’s changes to the Work Letter or Tenant’s failure to complete any preparatory work which Tenant is responsible to perform (each, a “Tenant Delay”), the Commencement Date shall not be delayed by the term of the Tenant Delay. By taking possession of the Premises, Tenant shall be deemed to have accepted the Premises as being in good and satisfactory order, condition and repair for its intended use under this Lease except for that portion of the Premises that is within the area of the Landlord’s Work. “Substantial Completion” shall mean the stage when Landlord’s Work is reasonably complete to permit Tenant to install substantially all of its FF&E throughout the Premises, even though “punch list” items, or other items of construction which do not unreasonably interfere with Tenant’s ability to install its FF&E, are not yet completed. The “Scheduled Completion Date” shall be the date the contractor selected by the Landlord to perform the Landlord’s Work assures both Parties with reasonable certainty that he will complete the Landlord’s Work after accounting for all reasonably foreseeable factors affecting the construction.

14
Section 8.2      Tenant may make cosmetic, non-structural alterations not requiring the approval of the New York City Department of Buildings, such as painting, carpeting, wallpapering, and flooring, to be undertaken in a good and workmanlike manner using new materials and in the manner permitted by this Lease. Tenant shall notify Landlord of such changes prior to the commencement of any work.

Section 8.3      Tenant shall obtain Landlord’s consent, which consent shall not be unreasonably withheld, regarding any nonstructural alterations which do not affect the Common Areas or roof, facade, windows or structural elements of the Building and do not diminish the value of the Building. All plans prepared by Tenant in connection with such alterations shall be delivered to Landlord for Landlord’s consent, prior to the commencement of any work by Tenant. Tenant shall also obtain, when appropriate, final as built plans for all such work and provide copies thereof to Landlord. Prior to commencing any alterations, Tenant shall, at its expense, obtain all permits, approvals and certificates required by any governmental or quasi-governmental bodies and upon completion, certificates of final approval thereof and shall promptly deliver duplicates of all such permits, approvals and certificates to Landlord. All alterations which shall be permit by landlords shall be accomplished at Tenant’s expense by Landlord, which expense shall include a charge of five (5%) percent of the cost of paying contractors and/or subcontractors retained by Landlord as Landlord’s fee for overseeing the alterations. All installations which are not in the nature of movable personal property installed in the Premises at any time, either by Tenant or Landlord on behalf of Tenant, shall, upon installation, become the property of Landlord and shall remain upon and be surrendered with the Premises unless Landlord, by written notice to Tenant no later than twenty (20) days prior to the Expiration Date elects to have them removed by Tenant in which event the same shall be removed by Tenant at Tenant’s expense prior to the Expiration Date. All property permitted or required to be removed by Tenant at the end of the term hereof remaining in the Premises after Tenant’s removal therefrom shall be deemed abandoned and may at the election of Landlord be either retained as Landlord’s property or removed from the Premises by Landlord at Tenant’s expense.

Section 8.4      Any and all alterations, additions and improvements will be performed in accordance with Landlord’s sustainability practices, including any third-party rating system concerning the environmental compliance of the Landlord’s Premises or the Premises, as the same may change from time to time. Tenant further agrees to engage a qualified third-party LEED or Green Globe Accredited Professional or similarly qualified professional during the design phase through implementation of any alterations, additions and improvements to review all plans, material procurement, demolition, construction and waste management procedures to ensure they are in full conformance to Landlord’s sustainability practices, as aforesaid.

15
Section 8.5      Landlord and Tenant expressly agree and acknowledge that no interest of Landlord in the Premises or the Landlord’s Premises shall be subject to any lien for improvements made by Tenant in or for the Premises. Landlord shall not be liable for any lien for any improvements made by Tenant, such liability being expressly prohibited by the terms of this Lease, and Tenant agrees to inform all contractors and material suppliers performing work in or for or supplying materials to the Premises of the existence of said prohibition. If any mechanic’s lien shall be filed against the Building or Land of which the Premises forms a part, for work claimed to have been done for, or materials claimed to have been furnished to, Tenant (a) the same shall be discharged by Tenant, by either payment, by bond or otherwise, at the sole cost and expense of Tenant, within fifteen (15) days of the giving of notice thereof by Landlord, (b) either a release or a satisfaction of lien, as the case may be, shall be filed with the County Clerk of the county in which the Building is situate within such fifteen (15) day period, and (c) a copy of such release or satisfaction, as the case may be, certified to by such County Clerk shall be delivered to Landlord within three (3) days after such filing. In the event such mechanic’s lien is not discharged timely, as aforesaid, Landlord may discharge same for the account of and at the expense of Tenant by payment, bonding or otherwise, without investigation as to the validity thereof or of any offsets or defenses thereto, and Tenant shall promptly reimburse Landlord, as Additional Rent, for all costs, disbursements, fees and expenses, including, without limitation, legal fees, incurred in connection with so discharging said mechanic’s lien, together with interest thereon from the time or times of payment until reimbursement by Tenant.

16
ARTICLE IX.
UTILITIES

Section 9.1      Landlord shall supply electricity to the Premises in such quantities as Tenant shall reasonably require (provided said requirements shall not exceed the electrical capacity of the electrical distribution system in the Building). Tenant shall make no alterations or additions to the electrical distribution system in the Premises without the prior written consent of Landlord, which consent will not be unreasonably withheld or delayed. Tenant covenants and agrees that at all times its use of electric current shall not exceed the capacity of existing feeders to the Building and the risers or wiring installation therein. Tenant may not use any electrical equipment which, in Landlord’s reasonable judgment, will overload such installations or interfere with the use thereof by other tenants in the Building.

Section 9.2       Subject to the provisions herein, the parties agree that Landlord shall furnish electricity to Tenant on a “submetering” basis. Landlord has installed a meter or meters (collectively, the “Submeter”), at a location designated by Landlord, and connections from the risers and/or circuits servicing the Premises to the Submeter and has performed all other work necessary for the famishing of electric current by Landlord to the Premises to service Tenant’s lighting and equipment. Tenant will pay Landlord, as Additional Rent for such service, the amounts determined by multiplying the usage indicated by the Submeter by the “all in” rate charged to Landlord by Consolidated Edison plus an administrative fee of five (5%) percent of such amount. The amounts computed from the Submeter readings are herein called the “Electricity Additional Rent”, and such amounts computed from the Submeter shall be binding and conclusive on Tenant. If the Submeter should fail to properly register or operate at any time during the term of this Lease for any reason whatsoever, Landlord may estimate the Electricity Additional Rent, and when the Submeter is again properly operative, an appropriate reconciliation shall be made, by Tenant paying any deficiency to Landlord within twenty (20) days after demand therefor, or by Landlord crediting Tenant with the amount of any overpayment against the next payment(s) of Electricity Additional Rent. The periods to be used for the aforesaid computation shall be as Landlord, in its sole discretion, may from time to time elect. Bills for the Electricity Additional Rent shall be rendered to Tenant at such time as Landlord may elect.

Section 9.3      If any tax is imposed upon Landlord’s receipts from the sale or resale of electric current to Tenant by Federal, State or municipal authority, Tenant agrees that, unless prohibited by law, Tenant’s pro rata share of such taxes shall be passed on to, and included in the bill, and paid by Tenant to Landlord as Additional Rent.

Section 9.4      Landlord shall not be liable to Tenant for any loss, damage or expense of whatever nature which Tenant may sustain or incur by reason of any failure, inadequacy or defect in the character, quantity or supply of utilities furnished to the Premises, whether through the primary service or back-up generation except for any loss, damage or expense due to the negligence or omission of Landlord. Tenant shall pay for any special fixtures, connection charges and equipment required for its usage of said utilities. Further, Tenant shall install monitoring equipment for any freezers at the Premises, and shall promptly notify Landlord in the event that any freezer is not receiving an adequate supply of current.

17
Section 9.5      Tenant, at its sole cost and expense, and subject to Landlord’s reasonable regulations and approval in its sole discretion of Tenant’s load requirements, shall be permitted to (a) connect to the back-up generator located within the Building to provide limited emergency power for Tenant’s selected equipment, and (b) install its own back-up generator within the Premises or other location to be designated by Landlord, such location to be provided for such use at no charge to Tenant.

ARTICLE X.
DESTRUCTION BY FIRE OR OTHER CAUSES

Section 10.1     Tenant shall give prompt notice to Landlord in case of fire or other damage to the Premises or the Building.

Section 10.2    If the Premises or the Building shall be damaged by fire or other casualty, not the result of Tenant’s negligent or wrongful conduct, Landlord, at Landlord’s expense, shall repair such damage. Landlord shall have no obligation to repair any damage to, or to replace, Tenant’s personal property or any other property or effects of Tenant. If the Premises shall be rendered untenantable by reason of any such damage, the Rent shall abate for the period from the date of such damage to the date when such damage shall have been substantially repaired, and if only a part of the Premises shall be so rendered untenantable, the Rent shall abate for such period in the proportion which the rentable area of the Premises so rendered untenantable bears to the total rentable area of the Premises. However, if, prior to the date when all of such damage shall have been repaired, any part of the Premises so damaged shall be rendered tenantable and shall be used or occupied by Tenant or other persons claiming through or under Tenant, then the amount by which the Rent shall abate shall be equitably apportioned for the period from the date of any such use or occupancy to the date when all such damage shall have been repaired. Tenant hereby expressly waives the provisions of Paragraph 227 of the New York Real Property Law, and of any successor law of like import then in force, and Tenant agrees that the provisions of this Paragraph shall govern and control in lieu thereof.

Section 10.3     Notwithstanding the foregoing provisions of this Article 10, if the Premises or the Building shall be totally damaged or rendered wholly untenantable by fire or other casualty, or partially damaged or rendered untenantable to the extent of fifty (50%) percent or more of the floor space of the Premises, then, in any of such events, either party, at such party’s option, may give to the other party, within one hundred eighty (180) days after such fire or other casualty, a thirty (30) days’ notice of termination of this Lease and, in the event such notice is given, this Lease shall come to an end and expire upon the expiration of said thirty (30) days with the same effect as if the date of expiration of said thirty (30) days were the expiration date, the Rent shall be apportioned as of such date and any prepaid portion for any period after such date shall be refunded by Landlord to Tenant.

18
Section 10.4     If this Lease shall not be terminated as provided above, Landlord shall, at its expense, to the extent of the net insurance recovery, repair or restore the Premises with reasonable diligence and dispatch, to the condition immediately prior to the casualty. For purposes of this Article 10, Landlord shall not be obligated to commence any repair or restoration unless and until insurance proceeds are actually received by Landlord and Landlord’s repair obligations shall be limited to the extent of the insurance proceeds actually received by Landlord therefor. Landlord shall not be required to repair or restore any of Tenant’s leasehold improvements or betterments, furniture, furnishings, decorations or any other installations made at Tenant’s expense. All insurance proceeds payable to Tenant for such items shall be held in trust by Tenant and upon the completion by Landlord of repair or restoration, Tenant shall prepare the Premises for occupancy by Tenant in the manner immediately prior to the damage or destruction in accordance with plans and specifications approved by Landlord.

Section 10.5    Notwithstanding any other provision of this Lease, (a) to the extent insurance proceeds in the event of a casualty are in excess of $100,000, such proceeds shall be paid and disbursed in accordance with the Prime Lease and (b) if the Landlord’s Premises is rendered wholly unusable or (whether or not the Landlord’s Premises is damaged in whole or in part) if the Building and/or Landlord’s Premises shall be so damaged that Prime Landlord, pursuant to the Prime Lease, shall decide to demolish it or to rebuild it, in whole or in part, then, in any of such events, Prime Landlord may elect, pursuant to the Prime Lease, to terminate the Prime Lease by written notice to Landlord, given within one hundred twenty (120) days after such fire or casualty, specifying a date for the expiration of the Prime Lease, which date shall not be more than sixty (60) days after the giving of such notice, and upon the date specified in such notice the term of the Prime Lease shall expire as fully and completely as if such date were the date set forth above for the termination of the Prime Lease. In such event, this Lease also shall terminate on such date and Tenant and its respective Representatives and, licensees, invitees, and occupants shall forthwith quit, surrender and vacate the Premises.

ARTICLE XI.
CONDEMNATION

Section 11.1      If all of the Premises, or a part of such Premises such that the Premises in the judgment of an licensed architect retained by Landlord are untenantable, are taken by exercise of the power of eminent domain or other similar proceeding (or are conveyed by Landlord in lieu of such taking), this Lease will terminate on a date which is the earlier of the date upon which the condemning authority takes possession of the Premises or the date on which title to the Premises is vested in the condemning authority. In the event of a partial taking where this Lease is not terminated, the Rent will be abated in the proportion of the rentable area of the Premises so taken to the rentable area of the Premises immediately before such taking. In the event of any such taking, the entire award relating to the Landlord’s Premises or the Property will be paid to Landlord, and Tenant will have no right or claim to any part of such award; however, Tenant will have the right to assert a claim against the condemning authority for loss of its business at the Premises, the value of the leasehold lost in the condemnation and any leasehold improvements installed by Tenant which were subject to the condemnation, so long as Landlord’s award is not reduced or otherwise impacted as a consequence of such claim, for Tenant’s moving expenses and trade fixtures owned by Tenant and interruption to Tenant’s business.

19
Section 11.2      Notwithstanding anything hereinabove contained in this Article 11, if all or any portion of the Premises shall be lawfully condemned or taken for any temporary public or quasi-public use, this Lease shall not terminate and Tenant shall continue to perform or observe all of Tenant’s obligations hereunder as though such condemnation or taking had not occurred, except only as Tenant may be prevented from so doing by reason of the lawful use and occupancy of the Premises or portion thereof affected by such condemnation or taking during such temporary period. In the event of any such condemnation or taking, Tenant shall be entitled to receive the award with respect to the Premises or portion thereof covered by such condemnation or taking (whether paid as damages, rent or otherwise), unless the period of occupancy extends beyond the termination of this Lease, in which case Landlord shall be entitled to such part of such award as shall be properly allocable to the cost of restoration of the Premises and the balance of said award shall be apportioned between Landlord and Tenant as of the scheduled Expiration Date. If such condemnation or taking shall end before the Expiration Date, Tenant shall, at its sole cost and expense, restore the Premises as nearly as possible to the condition in which they were prior to such condemnation or taking.

ARTICLE XII.
INSURANCE

Section 12.1      Tenant shall carry (at its sole expense from and after the date hereof and during the Term) the following insurance:

(a)      Property Insurance with “Special Form” coverage, including earthquakes and flood insurance, insuring Tenant’s improvements to the Premises and any and all furniture, equipment, supplies, contents and other prope1ty owned, leased, held or possessed by it and contained therein (collectively, “Tenant’s Property”), such insurance coverage to be equal to the full replacement cost value of Tenant’s Property, with wind and flood deductibles not exceeding the lesser of five percent (5%) of the total insured value (“TIV”) or $10,000;

(b)      Either as part of the above referenced property insurance or as a separate prope1ty insurance policy, business interruption insurance coverage on an “All Risk” basis in an amount not less than the aggregate Rent payable for the eighteen (18) month period immediately following the loss. The insurance required in this subsection shall designate Landlord as loss payee and shall be in the broadest form available covering loss of income;

(c)       Workers’ compensation insurance as required by applicable law;

20
(d)       Commercial general liability insurance for the Premises in a combined coverage for bodily injury and property damage in an amount not less than Five Million Dollars ($5,000,000) per occurrence. Tenant shall name Landlord, Landlord’s mortgagee, the Prime Landlord, the City of New York, Research Foundation for the State University of New York, State University of New York Downstate Medical Center, any manager of the Building and/or the Landlord’s Premises, and any other person designated by Landlord as additional insureds under such policy. Such policy shall insure against any and all liability for injury to or death of a person or persons and for damage to property occasioned by or arising out of any construction work being done on the Premises by Tenant, or arising out of the use or occupancy of the Premises by Tenant, its employees, agents, representatives or contractors. The liability coverage shall (i) be primary insurance as to all claims thereunder and provide that any insurance carried by Landlord is excess and is non-contributing with any insurance requirement of Tenant; (ii) contain cross-liability endorsements or a severability of interest clause acceptable to Landlord; and (iii) specifically cover the liability assumed by Tenant under this Lease including, without limitation, Tenant’s indemnification obligations under this Lease; and

(e)      Pollution/Environmental Liability Insurance covering bodily injury, including death, and property damage, including loss of use of damaged property or use of property that has not been physically injured or destroyed, which in any event shall not be less than two million dollars ($2,000,000) per occurrence, unless otherwise approved in writing by Landlord, which amount Landlord reserves the right, based upon in its reasonable evaluation of the risk and exposures from Tenant’s use of the Premises, which limit(s) may be increased from time to time as reasonably required by Landlord based on the Tenant’s activities and decreased from time to time. Tenant shall name Landlord, Landlord’s mortgagee, the Prime Landlord, the City of New York, any manager of the Building and/or the Landlord’s Premises, and any other person designated by Landlord as additional insureds under such policy. Such insurance shall provide coverage for actual, alleged or threatened emission, discharge, dispersal, seepage, release or escape of pollutants (including, without limitation, any Hazardous Materials, including any loss, cost or expense incurred as a result of any cleanup of pollutants (including, without limitation, any Hazardous Materials) or in the investigation, settlement or defense of any claim, suit or proceeding against any of the Additional Insureds arising from the activities and operations under this Lease. The coverage for bodily injury and property damage and clean up shall apply to both on and off the Premises (including throughout the Terminal) exposures and the shall include, without limitation, coverage for improper or inadequate: (i) environmental management practices; (ii) biological, chemical and radioactive materials handling and waste disposal; (iii) written emergency plans in the event of a chemical spill or release; (iv) training or supervision of staff who handle biological materials, chemicals and hazardous wastes; (v) storage of chemicals and Hazardous Materials; and (vi) loading, unloading, transportation, and/or off-site disposal of Hazardous Materials. Coverage must not exclude transportation (owned and non-owned vehicles) of the Hazardous Materials to and from the Premises and all related events which may occur in the Premises and/or elsewhere in the Terminal. Coverage must not exclude operations of basic lab support rooms (ESL 1), vector labs (ESL 2) and separate labs used for vectors and immunology (ESL 3) and ESL 4, vaccination bioscience research laboratories, and/or related product development center).

(f)       All of Tenant’s insurance shall be with responsible companies qualified to do business in the State of New York, in good standing and holding a “general policy rating” of A- :VIII or better, as set forth in the most current issue of Best Key Rating Guide, and shall be written on an occurrence basis (and not claims made). Landlord, Landlord’s mortgagee and any other person designated by Landlord shall be named as additional insureds as their interests may appear with respect to commercial general liability insurance coverage.

21
(g)       Tenant must deposit with Landlord the following for such insurance at or before Tenant or its agents, employees or contractors enters the Premises for any purpose whatsoever, and thereafter within fifteen (15) days before the expiration of any such policies: (i) with respect to the insurance required under Section 12.l(a) and (b), an ACORD Form 28 with changes requested by Landlord or other form reasonably acceptable to Landlord; (ii) with respect to the insurance required under Section 12(c), a certificate of insurance in form reasonably acceptable to Landlord; and (iii) with respect to the insurance required under Section 12(d) and (e), Tenant’s policy of insurance or an endorsement to Tenant’s policy in a form reasonable satisfactory to Landlord. All insurance shall provide that Landlord shall receive at least thirty (30) days prior written notice of cancellation or amendment to the same. All such policies or certificates shall be delivered with satisfactory evidence of the payment of the premium therefor.

(h)      All chemicals, molecules, laboratory data, computers, merchandise, furniture, fixtures and property which may be on or about the Premises shall be at the sole risk and hazard of Tenant, and if the whole or any part of the Premises is destroyed or damaged by fire, water or by the leaking or bursting of water pipes, or in any other manner, no part of such loss or damage will be charged to Landlord.

Section 12.2 Landlord shall maintain during the Term, with solvent and responsible companies:

(a)        Building and Personal Property Coverage, with “Special Form” coverage for the Landlord’s Premises in an amount equal to one hundred percent (100%) of the full replacement value of the Landlord’s Premises along with, at Landlord’s option, loss of rents insurance for up to eighteen (18) months of Rent; and

(b)      commercial general liability insurance covering injuries occurring at the Property, which shall provide for a combined coverage for bodily injury and property damage in an amount not less than Five Million Dollars ($5,000,000) per occurrence.

(c)       The cost of all insurance coverage provided to Landlord shall be an Operating Expense and subject to reimbursement pursuant to Article III. All such insurance and all other insurance required by this Lease shall satisfy all requirements for insurance under the Prime Lease and any Mortgage (as hereinafter defined). With respect to the insurance to be carried by Tenant hereunder, to the extent that the Prime Lease or Mortgage requires higher limits, additional insurance, additional coverages or additional insureds or otherwise imposes requirements in addition to or more onerous than the requirements set forth herein, then Tenant, on behalf of and at the expense of Tenant, shall obtain insurance satisfying all such additional or more onerous requirements.

22
ARTICLE XIII.
SUBROGATION AND WAIVER
 
Section 13.1     Anything in this Lease to the contrary notwithstanding, to the full extent permitted by law, Landlord and Tenant each hereby waives any and all rights of recovery, claim, action or cause of action, against the other, its agents, servants, partners, shareholders, officers, or employees, for any loss or damage that may occur to the Premises or the Property, or any improvements thereto, or any personal property of such party therein, by reason of fire, the elements, or any other cause to the extent such loss or damage is covered by the terms of a valid and collectible commercial prope1ty insurance policy with special causes of loss coverage in effect at the time of such loss (or would have been covered by such a policy if such a policy were in effect) regardless of cause or origin, including negligence of the other party hereto, its agents, officers, partners, shareholders, servants, or employees, and covenants that no insurer shall hold any right of subrogation against such other patty. Landlord and Tenant will cause their respective insurers to issue appropriate waiver of subrogation rights endorsements to all policies of commercial property insurance policy with special causes of loss coverage carried in connection with the Property and the Premises; provided that the foregoing waiver by each party is conditioned upon the other party’s carrying insurance with the above described waiver of subrogation, and if such coverage is not obtained or maintained by either patty, then the other party’s waiver shall be deemed rescinded until such waiver is either obtained or reinstated.

ARTICLE XIV.
INDEMNIFICATION AND HOLD HARMLESS

Section 14.1     Tenant agrees to defend, indemnify and hold Landlord and its affiliates, subsidiaries, and parents (collectively, “Landlord Affiliates”), and each of their (including Landlord’s) respective officers, directors, shareholders, partners, members, representatives, agents and employees (“Landlord’s Affiliated Persons,” and Landlord, Landlord’s Affiliates and Landlord’s Affiliated Persons, the Prime Landlord, the City of New York, the State University of New York, Research Foundation for the State University of New York, State University of New York Downstate Medical Center being collectively known as the “Landlord Indemnified Parties”) harmless from and against any and all liability for any injury to or death of any person or persons or any damage to property in any way arising out of or in connection with the condition, use or occupancy of the Premises, or in any way arising out of any activities in or about the Premises, the Landlord’s Premises or other portions of the Prope1ty, of Tenant, its assignees or subtenants or of the respective agents, employees, licensees, contractors or invitees of Tenant or its assignees or subtenants (each, a “Tenant Party”), and from all costs, expenses and liabilities (including, but not limited to, court costs and reasonable attorneys’ fees) incurred by the Indemnified Parties or any of them in connection therewith.

Section 14.2     Tenant covenants and agrees that, on and after the date hereof, Landlord shall not be liable to Tenant for any injury to or death of any person or persons or for damage to any prope1ty of Tenant, or any person claiming through Tenant, arising out of any accident or occurrence in or about the Premises or other portions of the Landlord’s Premises or the Property, including, but not limited to, injury, death or damage caused by the Premises or other property of the Landlord’s Premises or the Property arising out of repair or caused by any defect in or failure of equipment, pipes or wiring, or caused by broken glass, or caused by the backing up of drains, or caused by gas, water, steam, electricity, or oil leaking, escaping or flowing into the Premises, or caused by fire or smoke, or caused by the acts or omissions of other tenants and occupants of the Landlord’s Premises.

23
Section 14.3     Tenant agrees to report in writing to Landlord any defective condition in or about the Premises known to Tenant, and further agrees to attempt to contact Landlord by telephone immediately in such instance.

ARTICLE XV.
RULES AND REGULATIONS

Section 15.1    Tenant shall observe strictly the rules and regulations set forth in Exhibit E, and all subsequent reasonable rules and regulations as Landlord or Landlord’s agents may from time to time adopt (such rules and regulations as have been or may hereafter be adopted or amended are hereinafter the “Rules and Regulations”).

ARTICLE XVI.
DEFAULTS BY TENANT; REMEDIES

Section 16.1     Tenant shall be deemed in default of the obligations to be performed by it pursuant to the provisions of this Lease if: (a) Tenant shall fail to make payment of Rent or of any other payment reserved herein within the time provided in this Lease for payment of same to be made; or (b) if Tenant shall fail to fulfill any of the covenants of this Lease other than the covenants for the payments reserved herein, and said failure shall continue for a period of ten (10) days after written notice thereof from Landlord specifying such failure (or, in the case of a default or omission the nature of which cannot be completely cured or remedied within ten (10) days, Tenant shall not have diligently commenced curing such default within said ten (10) day period and not thereafter with reasonable dispatch and diligence and in good faith proceeded to remedy or cure such default, all in Landlord’s reasonable judgment); or (c) if the Premises shall become vacant or deserted; or (d) if there is any execution or attachment issued  against Tenant; or (e) if Tenant shall become insolvent or transfer property to defraud creditors; if Tenant shall make an assignment for the benefit of creditors; or if a receiver is appointed for any of Tenant’s assets; or (f) if Tenant fails to bond off or otherwise remove any lien filed against the Premises or the Landlord’s Premises by reason of Tenant’s actions, within ten (10) days after Tenant has notice of the filing of such lien; or (g) if all or any part of this Lease shall be assigned, or if all or any part of the Premises shall he sublet, either voluntarily or by operation of law, except in strict accordance with the requirements of Article XXVIII hereof.

Section 16.2    In the event of such a default by Tenant under subparagraphs (a) through (g) above, Landlord may give five (5) days notice of its intention to end the term of this Lease and thereupon at the expiration of said five (5) days, the term of this Lease shall expire as though such date were the Expiration Date, but Tenant shall remain liable for damages as provided in this Lease and pursuant to law. Tenant shall then quit and surrender the Premises, but shall remain liable as hereinafter provided.

24
Section 16.3     If at any time during the term of this Lease, there shall be filed by or against Tenant in any court pursuant to any statute either of the United States or of any State a petition in bankruptcy or insolvency or for reorganization or for the appointment of a receiver or trustee of all or a portion of Tenant’s property, this Lease shall ipso facto be canceled and terminated.

Section 16.4     If the notice provided in Section 16.2 shall have been given and the term hereof shall expire as aforesaid, or if this Lease shall have been terminated in accordance with Section 16.3, Landlord may without additional notice re-enter the Premises, either by force or otherwise, and dispossess Tenant and the legal representative of Tenant or other occupant of the Premises by summary proceedings or otherwise remove their effects and hold the Premises as if this Lease had not been made, and Tenant and its legal representative or other occupant of the Premises hereby waive the service of notice of intention to re-enter or to institute legal proceedings to that end. If Tenant shall default hereunder prior to the date fixed as the commencement of any renewal or extension of this Lease, then Landlord may cancel and terminate such renewal or extension.

Section 16.5     In the case of any such default, re-entry, expiration and/or dispossess by summary proceedings or otherwise, as aforesaid, (a) the Rent due at the time of said default shall become due thereupon and be paid up to the time of such re-entry, dispossess and/or expiration, together with such expenses as Landlord may incur for legal expenses, attorneys’ fees, brokerage fees and/or putting the Premises in good order or for preparing the same for re-rental; (b) Landlord may re-let the Premises or any part or parts thereof, either in its own name or otherwise, for a term or terms which may, at its option, be shorter or longer than the period which  would otherwise have constituted the remainder of the term of this Lease and may grant concessions or free Rent, to such extent as Landlord in Landlord’s sole judgment considers advisable and necessary to re-let the same; and (c) Tenant or its successors shall also pay the Landlord as liquidated damages for the failure of Tenant to observe and perform its covenants contained herein any deficiency between the Rent hereby reserved and the net amount, if any, of the rents collected on account of the Lease or subleases of the Premises or parts thereof for each month of the period which would otherwise have constituted the remainder of the term of this Lease subject to Tenant’s right to terminate the Lease early as provided in Section 23.3. The failure of Landlord to re-let the Premises or any part of parts thereof shall not release or affect Tenant’s liability for damages. In computing such liquidated damages, there shall be added to said deficiency such expenses as Landlord shall incur in connection with such re-letting, such as legal expenses, attorneys’ fees, brokerage, advertising and for restoring the Premises to or keeping same in good working order. Any such liquidated damages shall be paid in monthly installments on the Rent day specified in this Lease and any suit brought to collect the amount of the deficiency for any month shall not prejudice in any way the rights of Landlord to collect the deficiency for any subsequent month by a similar proceeding. Upon Landlord’s permitted entry hereunder, Landlord, at its option, may make such alterations, repairs, replacements and decorations in the Premises as Landlord in its sole judgment considers advisable or necessary for the purpose of re-letting the Premises, and the making of such alterations and decorations shall not operate or be construed to release Tenant from liability hereunder. Landlord shall in no event be liable in any way whatsoever for failure to re-let the Premises, or, in the event that the Premises are re-let, for reasonable failure to collect the Rent thereof under such re-letting, and, in no event shall Tenant be entitled to receive any excess of such net rent collected above the sums payable by Tenant to Landlord hereunder. Mention in this Lease of any particular remedy shall not preclude Landlord from any other remedy in law or equity. Tenant hereby expressly waives any and all rights of redemption granted by or under any present or future laws in the event of Tenant being evicted or dispossessed, for any cause, or in the event of Landlord obtaining possession of the Premises by reason of the violation of Tenant of any of the covenants and conditions of this Lease, or otherwise. Pursuit by Landlord of any of the foregoing remedies set forth in this Lease shall not preclude the pursuit of any damages incurred, or of any of the other remedies provided herein or available, at law or in equity. No act or thing done by Landlord or Landlord’s employees or agents during the Term shall be deemed an acceptance of a surrender of the Premises. Neither the mention in this Lease of any particular remedy, nor the exercise by Landlord of any particular remedy hereunder, or at law or in equity, shall preclude Landlord from any other remedy Landlord might have under this Lease, or at law or in equity.

25
Section 16.6     It is stipulated and agreed that in the event of the termination of this Lease pursuant to the provisions of this Paragraph, Landlord shall forthwith, notwithstanding any other provisions of this Paragraph or of this Lease to the contrary, be entitled to recover from Tenant as and for liquidated damages an amount equal to the Rent for the unexpired  portion of the term of this Lease, subject to Tenant’s right to terminate the Lease early as provided in Section 23.3, discounted at the rate of four (4%) percent per annum to present worth. Nothing contained herein shall limit or prejudice the right of Landlord to prove for and obtain as liquidated damages by reason of such termination an amount equal to the maximum allowed by any statute or rule of law in effect at the time when, and governing the proceedings in which, such damages are to be proved.

Section 16.7     Tenant acknowledges and agrees that all disputes arising, directly or indirectly, out of or relating to this Lease should be dealt with by application of the laws of the State of New York and adjudicated in the state courts of the State of New York sitting in Kings County or the Federal courts sitting in the State of New York in Kings County; and hereby expressly and irrevocably submits Tenant to the jurisdiction of such courts in any suit, action or proceeding arising, directly or indirectly, out of or relating to this Lease. So far as is permitted under the applicable law, this consent to personal jurisdiction shall be self-operative and no further instrument or action, other than service of process in one of the manners permitted by law, shall be necessary in order to confer jurisdiction upon Tenant in any such court. Provided that service of process is effected upon Tenant in one of the manners permitted by law, Tenant irrevocably waives, to the fullest extent permitted by law, and agrees not to assert, by way of motion, as a defense or otherwise, (a) any objection which it may have, or may hereafter have to the laying of the venue of any such suit, action or proceeding brought in such a court as is mentioned in the previous paragraph, (b) any claim that any such suit, action or proceeding brought in such a court has been brought in an inconvenient forum, or (c) any claim that it is not personally subject to the jurisdiction of the above named courts. Tenant hereby further irrevocably consents to the service of process in any suit, action or proceeding by the mailing or delivery of the appropriate documents (e.g., process or summons) by Landlord to the Premises and delivered in one of the manners set forth in Article XXV hereof. Nothing herein shall in any way be deemed to limit the ability of Landlord to serve any such papers in any other manner permitted by applicable law.

26
Section 16.8    If Tenant shall default in the observance or performance of any obligation of Tenant under this Lease, then, unless otherwise provided elsewhere hereunder, Landlord may immediately or at any time thereafter without notice perform such obligation of Tenant without hereby waiving such default. If Landlord, in connection therewith incurs any costs including, but not limited to, attorneys’ fees in instituting, prosecuting or defending any action or proceeding, such costs with interest at the rate of five (5%) percent per annum, shall be deemed to be Additional Rent hereunder and shall be paid by Tenant to Landlord within five (5) days of rendition of any bill or statement to Tenant therefor.

ARTICLE XVII.
CONDITION OF PREMISES

Section 17.1    Tenant accepts the Premises in “as is” condition, and Tenant acknowledges that Landlord makes no representation as to the conditions thereof, except as herein set forth.

ARTICLE XVIII.
ASSIGNMENT AND SUBLETTING

Section 18.1     Tenant shall not assign, mortgage, pledge, encumber, or in any manner transfer the Lease, or any part thereof, or lease all or any part of the Premises, other than in compliance with the provisions of this Article XVIII. Tenant is further responsible for complying with the provisions of Article XI of the Prime Lease as it pertains to Tenant’s intention to enter into a sublease or assign its interest in this Lease.

Section 18.2     Each of the following events shall be deemed to constitute an assignment of the Lease:

(a)       Any assignment of transfer of the Lease by operation of law;

(b)       Any hypothecation, pledge or collateral assignment of the Lease;

(c)       Any involuntary assignment or transfer of the Lease in connection with the bankruptcy, insolvency, receivership or similar occurrence;

(d)     Any assignment, transfer, disposition, sale or acquiring of a controlling interest in Tenant to or by any person, entity or group related persons or affiliated entities, whether in a single transaction or in a series of related or unrelated transactions; and

(e)     Any issuance of an interest or interests in Tenant (whether stock, partnership interest or otherwise) to any person, entity or group of related persons or affiliated entities, whether in a single transaction or in a series of related or unrelated transactions, such that following such issuance, such person, entity or group shall hold a controlling interest in Tenant. For purposes of the immediately preceding sentence, a “controlling interest” of Tenant shall mean fifty (50%) percent or more of the aggregate issued and outstanding equitable interest (whether stock, partnership interest or otherwise) thereof

27
Section 18.3    Tenant shall not sublet any part of the Premises, nor assign, pledge or encumber this Lease or any interest herein, without the prior written consent of Landlord, which consent may be granted or withheld by Landlord in its sole discretion. Consent by Landlord to one assignment or sublease shall not destroy or waive this provision, and all later assignments and subleases shall likewise be made only upon prior written consent of Landlord. In the event a sublease or assignment is consented to by Landlord, any sublease or assignees shall become liable directly to Landlord for all obligations of Tenant hereunder without relieving or in any way modifying Tenant’s liability hereunder, but rather Tenant and its transferee shall be jointly and severally liable therefor. In the event Landlord gives its consent to any such assignment or sublease, any rent or other cost to the assignee or subtenant for all or any portion of the Premises over and above the Rent payable by Tenant for such space shall be due and payable, and shall be paid, to Landlord. In the event a sublease or assignment is made as herein provided, Tenant shall pay Landlord a charge equal to the actual costs incurred by Landlord, in Landlord’s reasonable judgment (including, but not limited to, the use and time of Landlord’s personnel), for all of the necessary legal and accounting services required to accomplish such assignment or subletting, as the case may be. Any transfer, assignment or sublease of all or any portion of the Premises or Tenant’s interest under this Lease made without Landlord’s consent shall be void ab initio and of no force or effect. For the purpose of determining whether Landlord acted reasonably in granting or withholding its consent or approval to any assignment, sublease or other transfer to the extent required hereunder, Tenant acknowledges and agrees that Landlord may refuse to give such consent or approval if, and to the extent that, the Prime Lessor or the Mortgagee (as defined herein) has refused to provide any required consent or approval with respect to such assignment, sublease or other transfer.

Section 18.4     Landlord may, within thirty (30) days after submission of Tenant’s written request for Landlord’s consent to subletting or an assignment of this Lease, cancel this Lease as to the portion of the Premises proposed to be sublet or assigned as of the date such proposed transfer is to be effective. If Landlord cancels this Lease as to any portion of the Premises, then this Lease shall cease for such portion of the Premises and Tenant shall pay to Landlord all Rent accrued through the cancellation date relating to the portion of the Premises covered by such proposed transfer. Thereafter, Landlord may lease such portion of the Premises to the prospective transferee (or to any other person) without liability to Tenant.

Section 18.5     Nothing in this Lease or any assignment, subletting, encumbrance or transfer of this lease or any part thereof shall be deemed to permit the use of the Building or the Lease Premises in any manner other than that authorized by Article IV of this Lease.

28
ARTICLE XIX.
HAZARDOUS MATERIALS

Section 19.1    Tenant shall not cause or permit any Hazardous Material (as hereinafter defined) to be brought upon, kept or used in or about the Premises by Tenant, its agents, employees, contractors or invitees except in quantities and in a maimer authorized by applicable Governmental Laws (defined below) and in the ordinary course of Tenant’s business. Tenant further covenants and agrees that it shall not discharge any Hazardous Material in the ground or sewer disposal system. If Tenant breaches the obligations stated in the preceding sentences, or if the presence of Hazardous Material on the Premises caused by Tenant, its employees, contractors, invitees, agents, servants, subtenants or assigns, results in contamination of the Premises or any other part of the Property or if there is such a discharge, then Tenant shall (a) immediately give Landlord written notice thereof, and (b) be responsible for its indemnification obligations under Section 14.1 hereof which arise during or after the term as a result of such breach, contamination, or discharge. The foregoing indemnification includes, without limitation, costs incurred in connection with any investigation of site conditions or any cleanup, remedial, removal or restoration work required by any federal, state or local governmental agency or political subdivision. Without limiting the foregoing, if the presence of any Hazardous Material within the Premises caused or permitted by Tenant results in any contamination of the Premises or any other part of the Building or Land, Tenant shall promptly take all actions at its sole expense as are necessary to return the Premises or any facility or property of Landlord to the condition existing prior to the introduction of any such Hazardous Material.

Section 19.2     As used herein, the term “Governmental Laws” means all federal, state (including SUNY), regional, and local statutes, ordinances, rules, regulations, guidelines, and the like, and any notices and orders issued pursuant to any of the foregoing, concerning Hazardous Materials or public health and the environment. As used herein, the term “Hazardous Materials” means any pollutants, hazardous or toxic materials, substances or wastes, including, but not limited to: petroleum and petroleum products and derivatives; asbestos; radon; polychlorinated bi-phenyls (PCBs); urea-formaldehyde foam insulation; explosives; radioactive materials; laboratory wastes, medical wastes and other regulated wastes (including, without limitation, contaminated clothing, body fluids, contaminated medical instruments and equipment, catheters, used bandages, gauzes, needles and other sharps); and any chemicals, materials or substances designated or regulated, as hazardous or as toxic substances, materials, or wastes under any Governmental Laws.

Section 19.3     Any handling, transportation, generation, management, disposal, processing, treatment, storage and use by Tenant of Hazardous Materials in or about the Premises shall be subject to the rules and regulations promulgated by Landlord from time to time regarding the same or any aspect thereof (which rules and regulations may be amended, modified, deleted or added from time to time by Landlord) (collectively, the “Hazmat Rules”). All of the Hazmat Rules shall be effective upon written notice thereof to Tenant. Tenant will cause all Tenant Patties, or any others permitted by Tenant to occupy or enter the Premises to at all times abide by the Hazmat Rules. In the event of any breach of any Hazmat Rules, Landlord shall have all remedies in this Lease provided for in the Event of Default by Tenant and shall, in addition, have any remedies available at law or in equity, including but not limited to, the right to enjoin any breach of such Hazmat Rules. Within thirty (30) days after the Commencement Date and thereafter within ten (10) days of request therefore, Tenant shall provide to Landlord a written list of all Hazardous Materials and/or Regulated Waste handled, transported,  generated, managed, disposed, processed, treated, stored and used in or about the Premises, together with such other information as Landlord may reasonably request (including, without limitation, information regarding the quantity of such materials in or about the Premises and Tenant’s procedures for the use, storage, transportation and/or disposal of such materials).
 
29
Section 19.4     In addition to the foregoing, Tenant agrees not to use or permit the use of biohazardous agents requiring a degree of containment in excess of that described as National Institutes of Health Biosafety Level 2, as defined in the U.S. Department of Health and Human Services, Public Health Service, Centers for Disease Control and Prevention and National Institutes of Health, Biosafety in Microbiological and Biomedical Laboratories, dated May 1993 and any updates or revisions thereto (the “DHH Specifications”), and to conduct all scientific research and development activities in conformity with at least the minimum practices, equipment and facilities recommended for such activities in the DHH Specifications.

Section 19.5    Landlord and its agents shall have the right, but not the duty, to inspect the Premises at any time upon reasonable notice to determine whether Tenant is complying with the terms of this Article XIX. If Tenant is not in compliance with the provisions of this Article XIX, Landlord shall have the right to immediately enter upon the Premises to remedy said noncompliance upon reasonable notice at Tenant’s expense and any expense incurred by Landlord shall be paid by Tenant upon demand and shall be deemed Additional Rent.

ARTICLE XX.
NON-WAIVER OF LANDLORD’S RIGHTS

Section 20.1    The failure of Landlord to insist upon strict performance of any of the covenants or conditions of this Lease or to exercise any option herein conferred in any one or more instances, shall not be construed as a waiver or relinquishment for the future of any such covenant, conditions or options, but the same shall be and remain in full force and effect.

ARTICLE XXI.
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT.

Section 21.1     This Lease is and shall be subject and subordinate to all mortgages and deeds of trust and to all renewals, modifications, consolidations, replacements, and extensions of such documents (collectively, “Mortgages”) which may now or hereafter affect the Premises; provided, however, that at Landlord’s election, this Lease shall be superior to any or all Mortgages. The subordination in this Section 21.1 is self-executing and no further instrument shall be required to establish the subordination set forth herein. Upon request of Tenant, and at Tenant’s sole cost and expense, Landlord shall endeavor to obtain and deliver to Tenant from any present or future mortgagee (collectively, the “Mortgagee”) such Mortgagee’s customary and reasonable form of written subordination, non-disturbance and attornment agreement in recordable form providing, among other things, that so long as Tenant performs all of the terms, covenants and conditions of this Lease and agrees to attorn to the Mortgagee, on such customary terms and conditions as such Mortgagee may reasonably require, Tenant’s rights under this Lease shall not be disturbed and shall remain in full force and effect for the Term, and Tenant shall not be joined by the Mortgagee in any action or proceeding to foreclose thereunder. In addition, this Lease is and shall be subject and subordinate to the existing Ground Lease and any other existing underlying leases affecting the Premises and to all renewals, modifications, consolidations, replacements, and extensions thereof. If any Mortgagee requests a Subordination Non-Disturbance and Attornment Agreement (a “SNDA from Tenant, then Tenant shall execute and deliver to Mortgagee such Mortgagee’s form of SNDA in recordable form within twenty (20) days of such request.

30
Section 21.2     After receiving notice and a notice address from any Mortgagee, no notice from Tenant to Landlord alleging any default by Landlord shall be effective unless and until a copy of the same is given to such Mortgagee. Any such Mortgagee shall have thirty (30) days for the cure of any such default and if such default cannot reasonably be cured within such thirty (30) days, then Mortgagee shall have thirty (30) days within which to commence a cure and provided such Mortgagee is proceeding diligently, such longer period as may be reasonably necessary to complete such cure. The curing of any of Landlord’s defaults by such Mortgagee shall be treated as performance by Landlord.

Section 21.3     With respect to any assignment by Landlord of Landlord’s interest in this Lease, or the rents payable hereunder, conditional in nature or otherwise, which assignment is made to any Mortgagee, Tenant agrees that the execution thereof by Landlord, and the acceptance thereof by the Mortgagee, shall never be deemed an assumption by such Mortgagee of any of the obligations of Landlord hereunder, unless such Mortgagee shall, by written notice sent to Tenant, specifically elect, or unless such Mortgagee shall foreclose the Mortgage and take possession of the Premises. Tenant, upon receipt of written notice from a Mortgagee that such Mortgagee is entitled to collect Rent hereunder may in good faith remit such Rent to Mortgagee without incurring liability to Landlord for the non-payment of such Rent.

Section 21.4     If the Mortgagee, or any party deriving its interest therefrom shall succeed to the rights of Landlord in the Premises or under this Lease, whether through possession or foreclosure action or delivery of a new lease or deed, then Tenant shall attorn to and recognize such party succeeding to Landlord’s rights (the party so succeeding to Landlord’s rights herein sometimes called the “Successor Landlord”) as Tenant’s landlord under this Lease, and shall promptly execute and deliver any instrument that such Successor Landlord may reasonably request to confirm such attornment. This Lease shall continue in full force and effect as, or as if it were, a direct lease between the Successor Landlord and Tenant, and all of the terms, conditions and covenants set forth in this Lease shall be applicable after such attornment, except that the Successor Landlord shall not:

(a)        be liable for any previous act or omission of Landlord under this Lease;

(b)        be subject to any offset that shall have theretofore accrued to Tenant against Landlord; or

(c)        be bound by:

31
(i)        any previous modification of this Lease, not expressly provided for in this Lease unless consented to by such Successor Landlord; or

(ii)       any security deposit not delivered to such Successor Landlord or previous prepayment of more than one (1) month’s Rent then due, unless such prepayment shall have been expressly approved in writing by the Mortgagee through or by reason of which the Successor Landlord shall have succeeded to the rights of Landlord under this Lease.

ARTICLE XXII.
QUIET ENJOYMENT

Section 22.1    Landlord covenants and agrees that upon Tenant paying the Rent and any other charges and fees payable hereunder and observing and performing all the terms, covenants and conditions of the Lease on Tenant’s part to be performed, Tenant may peaceably and quietly enjoy the Premises during the term of this Lease without hindrance or molestation by anyone claiming by or through Landlord subject, nevertheless, to the terms, covenants and conditions of this Lease.

ARTICLE XXIII.
END OF TERM

Section 23.1    Upon the expiration or earlier termination of this Lease, Tenant shall quit and surrender to Landlord the Premises broom-clean and in good condition, ordinary wear and tear excepted. Tenant shall remove all of its property and shall repair all damage to the Premises or the Building occasioned by such removal. Any prope1ty not removed from the Premises shall be deemed abandoned by Tenant and may be disposed of in any manner deemed appropriate by Landlord, the cost of the removal and repairs occasioned by such removal to be at Tenant’s expense. Tenant’s obligations to observe or perform the terms of this Paragraph shall survive the expiration or earlier termination of this Lease. Tenant expressly waives, for itself and for any person claiming through or under Tenant, any rights which Tenant or such person may have under the provisions of Section 2201 of the New York Civil Practice Law and Rules and any similar successor law of the same import then in force, in connection with any holdover proceedings which Landlord may institute to enforce the provisions of this Article XXIII.

Section 23.2    If Tenant remains in possession of the Premises after expiration of the Term, or after any permitted termination of the Lease by Landlord, with Landlord’s acquiescence and without any written agreement between the parties, Tenant shall be a tenant at sufferance and such tenancy shall be subject to all the provisions hereof, except that the monthly Base Rent for said holdover period shall be one hundred fifty percent (150%) the amount of Base Rent due in the last full month of the Term, and Tenant shall pay I/12th of the previous year’s charges for all Additional Rent for each hold-over month. There shall be no renewal of this Lease by operation of law. Nothing in this Section shall be construed as a consent by Landlord to the possession of the Premises by Tenant after the expiration or earlier termination of the Term. In the event of any unauthorized holder-over, Tenant shall indemnify and hold harmless Landlord against all claims for damages by any other tenant to whom Landlord may have leased all or any part of the Premises effective upon the termination of this Lease. Anything in this Article to the contrary notwithstanding, the acceptance of any rent paid by Tenant pursuant to this Article XXIII shall not preclude Landlord from commencing and prosecuting a holdover or summary eviction proceeding, and the preceding sentence shall be deemed to be an “agreement expressly providing otherwise” within the meaning of Section 232-C of the Real Prope1ty Law of the State of New York and any successor law of like import.

32
Section 23.3     On or before the first day of the thirtieth month following the Commencement Date, either patty hereto may, at any time, provide notice. of its intent to terminate this Lease early for any reason including for its convenience. Tenant’s ability to provide such notice is subject to it being in compliance with all of its obligations hereunder, and there being no then-current uncured default under Article XVI hereof. Such notice shall be in writing and may or may not specify a reason for the early termination. If notice is given, the early termination date shall be the first day of the thirty sixth month following the Commencement Date (the “Early Termination Date”). If Tenant chooses, in its discretion to specify a reason for its early termination, Landlord shall have thirty days in which to remedy or propose a remedy and to propose a schedule of implementation of the remedy which may or may not be accepted in the sole discretion of Tenant. In the event that Tenant elects to terminate this Lease early for reason unrelated to Landlord’s default hereunder, Tenant shall be responsible for the unamortized costs Landlord’s Work and leasing commissions.

ARTICLE XXIV.
NOTICES

Section 24.1     Any notice permitted or required to be given by the terms of this Lease, or by any law or governmental regulation, shall be in writing. Unless otherwise required by such law or regulation, such notice shall be given, and shall be deemed to have been served and given when (1) deposited by registered or certified mail enclosed in a securely closed postpaid wrapper, in a United States Government general or branch post office, addressed to Landlord at the following addresses:

BioBAT Executive Director
c/o Downstate Medical Center
450 Clarkson Avenue
Brooklyn, New York 11203

BioBAT President
c/o Downstate Medical Center
450 Clarkson Avenue
Brooklyn, New York 11203

Secretary of BioBAT Board
110 William Street
New York, New York 10038

and to Tenant at the Premises. Either party may, by notice as aforesaid designate a different address or addresses for notices, requests or demands to it. Any notice required to be given by Landlord under the provisions of this Article may be given by Landlord or Landlord’s managing agent or counsel.

33
ARTICLE XXV.
SUCCESSORS AND ASSIGNS

Section 25.1    The terms, agreements, covenants and conditions contained in this Lease are binding upon and shall inure to the benefit of the patties hereto and their respective successors and assigns, except that Tenant shall have no right to assign this Lease or to Lease the space described herein without the express consent of the Landlord in writing except as othe1wise provided in Article XVIII.

ARTICLE XXVI.
SIGNS

Section 26.1    Tenant shall not erect any sign in, on or about the Premises, the Building and/or the Property without the prior written consent of Landlord, which consent shall not be unreasonably withheld. Notwithstanding the foregoing, Tenant shall be permitted to place its name on the front entrance to the Premises and on all building directories. Tenant agrees and covenants that all such signs shall be in accordance with any applicable statutes, ordinances, codes, rules and/or regulations of any governmental authority and that Tenant shall maintain such signs and keep the same in a good state of repair.

34
ARTICLE XXVII.
SECURITY

Section 27.1     Tenant has deposited with Landlord a sum of equal to three months Base Rent as of the date of this Lease Agreement as security for the faithful performance and observance by Tenant of the terms, provisions and conditions of the Lease. Landlord shall place the security in a non-interest-bearing account. It is agreed that in the event Tenant defaults in respect to any of the terms, provisions and conditions of the Lease, including, but not limited to, the payment of Rent, Landlord may use, apply or retain the whole or any part of the security so deposited to the extent required for the payment of any Rent or any other sum as to which Tenant is in default or for any sum which Landlord may expend or may be required to expend by reason of Tenant’s default, including but not limited to, any damages or deficiency in the reletting of the Premises, whether such damages or deficiency accrued before or after summary proceedings or other re- entry by Landlord. If any portion of the security is so used, applied, or retained, Tenant shall, within five (5) days after written demand therefor by Landlord, deposit cash with Landlord in an amount sufficient to restore the security to its original amount. In the event that Tenant shall fully and faithfully comply with all of the terms, provisions, covenants and conditions of the Lease, the security shall be returned to Tenant within thirty days following termination of the Lease as provided in Article XXIII and after delivery of possession of the Premises to Landlord. In the event of an assignment by Landlord of its estate in this Lease, Landlord shall have the obligation to transfer the security to the assignee and Landlord shall thereupon be released by Tenant from all liabilities for the return of such security. In the event of such assignment, Tenant agrees to look solely to the new Landlord for the return of such security. It is further agreed that the provisions hereof shall apply to every transfer or assignment made of the security to a new Landlord. Tenant further covenants that it will not assign or encumber or attempt to assign or encumber the monies deposited herein as security and that neither Landlord nor its successors or assigns shall be bound by any such assignment, encumbrance, attempted assignment or attempted encumbrance.

ARTICLE XXVIII.
LIMITATION OF LIABILITY

Section 28.1    Landlord or its employees and agents shall not be liable for any damages or injury to property of Tenant or of any other person, including property entrusted to employees of Landlord, nor loss of or damage to any property of Tenant by theft or otherwise, nor for any injury or damage to persons or property resulting from any cause whatsoever, nor shall Landlord or its agents or employees be liable for any such damage caused by other tenants or persons in, upon or about the Building, or caused by operations in construction of any private, public or quasi-public work.

35
ARTICLE XXIX.
LATE PAYMENTS

Section 29.1     Any payment of Rent or any other charges or fees not made within fifteen (15) days of the due date thereof shall have interest added at the rate of twelve (12%) percent per annum from the due date thereof.

ARTICLE XXX.
BROKER

Section 30.1     Tenant represents that there was no broker responsible for bringing about or negotiating this Lease except for Colliers International NY LLC, concerning which Landlord will pay an applicable single commission pursuant to a separate agreement. Tenant agrees to defend, indemnify, and hold the Landlord Indemnified Parties harmless against any claims for brokerage commission or compensation with regard to the Premises by any broker claiming or alleging to have acted on behalf of or to have dealt with Tenant.

ARTICLE XXXI.
TENANT TO PROVIDE FINANCIAL STATEMENT

Section 31.1    Tenant agrees that upon request by Landlord it will furnish to the Landlord such latest available financial statement as Landlord may require.

ARTICLE XXXII.
TENANT’S REMEDIES

Section 32.1     With respect to any provision of this Lease which provides, in effect, that Landlord shall not unreasonably withhold or unreasonably delay any consent or any approval, Tenant in no event shall be entitled to make, nor shall Tenant make, any claim, and Tenant hereby waives any claim, for money damages; nor shall Tenant claim any money damages by way of setoff, counterclaim or defense, based upon any claim or assertion by Tenant that Landlord has unreasonably withheld or unreasonably delayed any consent or approval; but Tenant’s sole remedy shall be an action or proceeding to enforce any such provision, or for specific performance, injunction or declaratory judgment.

ARTICLE XXXIII.
TENANT’S ESTOPPEL CERTIFICATE

Section 33.1     At any time and from time to time, and within ten (10) days after request by Landlord, Tenant agrees to execute, acknowledge and deliver to Landlord, a written statement certifying (a) that this Lease is unmodified and in full force and effect (or if there have been modifications that the same is in full force and effect as modified and identifying the modifications), (b) the dates to which the Rent and other charges have been paid, (c) that there are no offsets to the payment of Rent, (d) that Landlord is not in default under any provisions of the Lease and (e) any other certification reasonably requested by Landlord. It is intended that any such statement may be relied upon by any person proposing to acquire Landlord’s interest in this Lease or any prospective mortgagee of, or assignee of any mortgage upon such interest.

36
ARTICLE XXXIV.
WAIVERS BY TENANT

Section 34.1     Tenant, for itself, and on behalf of any and all persons claiming through or under it, including creditors of all kinds, does hereby waive and surrender all right and privilege which they or any of them might have under or by reason of any present or future law, to redeem the Premises or to have a continuance of this Lease for the term hereby demised after having been dispossessed or ejected therefrom by process of law or after the termination of this Lease as provided herein.

Section 34.2     Tenant hereby waives the right to trial by jury in any action, summary proceeding, legal proceeding or counterclaim between or among the parties hereto or their successors or assigns on any matters whatsoever arising out of or in any way connected with this Lease, the relationship of Landlord and Tenant, Tenant’s use of or occupancy of the Premises and any emergency statutory or any other statutory remedy.

Section 34.3    Supplementing and in furtherance of the provisions of this Article XXXIV, hereof, Tenant hereby waives the right to interpose a counterclaim of whatever nature or description in any summary proceeding instituted by Landlord against Tenant for possession of the Premises or in any action or proceeding instituted by Landlord for unpaid Rent or other sums or charges payable by Tenant under this Lease. Such waiver is not intended to deny Tenant any right it may have to commence a separate proceeding against Landlord for any legal or equitable claims Tenant may have against Landlord.

ARTICLE XXXV.
EXCULPATION

Section 35.1     Notwithstanding anything to the contrary contained herein, Tenant shall look solely to the interest of Landlord in the Lease and the Premises for the satisfaction of any of Tenant’s remedies with regard to the payment of money or othe1wise, and no other prope1ty or assets of Landlord shall be subject to levy, execution or other enforcement procedures for the satisfaction of Tenant’s remedies or with respect to this Lease, the relationship of Landlord and Tenant hereunder or Tenant’s use or occupancy of the Premises, such exculpation of personal liability to be absolute.

37
ARTICLE XXXVI.
EFFECT OF CONVEYANCE BY LANDLORD

Section 36.1     If Landlord shall validly assign or transfer this Lease and deliver to Tenant an agreement, in recordable form or a counterpart thereof, executed by the assignee or transferee whereupon such assignee or transferee agrees to assume performance of all the covenants to be performed by Landlord from and after the date of such delivery to Tenant, then Landlord shall be relieved and discharged from any and all liabilities thereafter accruing under this Lease.

ARTICLE XXXVII.
SUBSTITUTE SPACE

Section 37.1     At any time during the term of this Lease, Landlord shall have the right to substitute for the Premises other space in Landlord’s Premises (such other space hereinafter called the “Substitute Premises”) by written notice given to Tenant not later than sixty (60) days prior to the date set forth in said notice as the effective date (hereinafter, the “Substitution Date”) for such substitution. Landlord’s notice shall include a floor plan identifying the Substitute Premises, which premises shall have a rentable area equal to or greater than the Premises. Tenant shall vacate the Premises and surrender the same to Landlord on or before the Substitution Date. Tenant’s Base Rent for the Substitute Premises shall be no greater than the Rent on the prior Premises regardless of the increased size of the Substitute Premises. Landlord shall, promptly, after Tenant enters into occupancy of the Substitute Premises and provided Tenant is not then in default of any of the terms or conditions of this Lease, reimburse Tenant for any basic equipment transfer costs and expenses incurred by Tenant in connection with the substitution made hereunder which exceed those costs and expenses which would have been incurred by Tenant had the substitution not been made upon presentation of invoices therefor. From and after the Substitution Date, the term “Premises” shall mean the Substitute Premises for all purposes hereunder.

ARTICLE XXXVIII.
VENDEX

Section 38.1    Tenant represents that it will and it will cause all subsequent assignees and transferees of this Lease to submit to the City’s Vendex background investigation (or any similar or successor system serving the same function) and/or Landlord’s due diligence including, but not limited to, the Internal Background Investigation Questionnaire (or any similar or successor system serving the same function) sixty (60) days prior to the transfer and shall require them to make the same representations contained in this Article.

Section 38.2     Tenant represents, warrants and covenants that neither Tenant nor any person or entity that directly or indirectly controls or is controlled by or is under common control with the Tenant or, to Tenant’s knowledge, any contractor, subcontractor, or any consultant that will be involved with Tenant’s operations at the Demised Premises:

38
(a)     is in default or in breach, beyond any applicable grace period, of its obligations under any written agreement with Prime Landlord or New York City, unless such default or breach has been waived in writing by the Prime Landlord or New York City, as the case may be;

(b)      has been convicted of a misdemeanor and/or found in violation of any administrative, statutory, or regulatory provision in the past five (5) years;

(c)      has been convicted of a felony, and/or crime related to truthfulness and/or business conduct in the past ten (10) years;

(d)      has any felony, misdemeanor and/or administrative charges currently pending;

(e)     has received written notice of default in the payment to New York City of any taxes, sewer rents or water charges, unless such default is then being contested with due diligence in proceedings in a court or other appropriate forum; or

(f)      has owned at any time in the preceding three (3) years any property which, while in the ownership of such person, was acquired by New York City by in rem tax foreclosure, other than a property in which New York City has released or is in the process of releasing its interest to such person pursuant to the Administrative Code of New York City.

ARTICLE XXXIX.
EXPANSION OPTION

Section 39.1     Provided that no Event of Default, or an event which, upon the giving of notice or the passage of time could become and Event of Default, has occurred and is continuing under this Lease at such time, Tenant shall have the right to lease the Additional Space shown on Exhibit A at any time prior to the first anniversary of the Commencement Date. If Tenant desires to lease the Additional Space, Tenant shall give notice (the “Tenant Election Notice”) to Landlord. If Tenant shall fail to deliver such Tenant Election Notice prior to the first anniversary of the Commencement Date, then Landlord shall have the right to lease all or any portion of such Additional Space to any third party on any terms Landlord shall elect and Tenant shall have no further right whatsoever to lease all or any portion of the Additional Space.

Section 39.2     If Tenant shall deliver a Tenant Election Notice within the period set forth in Section 39.1, the following shall apply:

(a)      the Additional Space shall be added to and deemed a part of the Premises thirty (30) days after delivery of Tenant’s Election Notice (the “Additional Space Commencement Date”) upon the same terms and conditions of this Lease, as the same may be modified in accordance with the following provisions of this Section 39.2;

(b)     the Base Rent shall be increased on the Additional Space Commencement Date by an amount equal to the Additional Space Base Rent, which shall be calculated by multiplying the rentable square footage of the Additional Space by the then-current annual Base Rent per square foot;

39
(c)     the term of this Lease with respect to the Additional Space shall be coterminous with the Term under this Lease and shall expire on the same date as the Expiration Date (as it may have been extended) hereunder;

(d)     the Additional Space shall be delivered in its “as is” condition (i) as a “warm lit shell” with electric service and HVAC stubbed to the Additional Space and (ii) sprinkler heads installed and turned up for Life Safety. Landlord shall have no obligation to perform any other work or make any installation in or to the Additional Space. Landlord shall allow Tenant a construction allowance of Ninety ($90.00) Dollars per rentable square foot of the Additional Space, to be paid against third-patty invoices for work completed in the Additional Space as certified by Tenant’s architect and accompanied by lien waivers and other reasonable documentation as required by Landlord for the completed work;

(e)     Tenant’s Pro Rata Share shall be increased ratably by the rentable square footage of the Additional Space; and

(f)      All other terms and conditions relating to the lease, use and occupancy of the Additional Space shall be as set forth in this Lease.

ARTICLE XL.
EXTENSION OPTION

Section 40.1    Provided that no Event of Default, or an event which, upon the giving of notice or the passage of time could become and Event of Default, has occurred and is continuing under this Lease at the time Tenant exercises the Renewal Option (defined below) or at the commencement of the Renewal Term (defined below), Tenant shall have the option (the “Renewal Option”) to renew this Lease for one additional term (the “Renewal Term”) of five (5) years by giving Landlord written notice (the “Option Notice”) no earlier than two years but no later than one year prior to the end of the initial Term. If Tenant fails to deliver to Landlord the Option Notice on or before the date that is one year prior to the end of the initial Term, time being of the essence hereunder, the option to renew this lease for the Renewal Term shall terminate and be of no further force and effect and Tenant shall have no further right to extend or renew this Lease. The Renewal Term shall be on the same terms and conditions as set forth in this Lease, except that Landlord may elect, in its sole discretion and at no cost to Tenant, to relocate the Premises to another location in the Landlord’s Premises selected by Landlord. Base Rental during the first year of the Renewal Term shall be the greater of (i) one hundred three (103%) percent of the Base Rental last in effect during the initial Term and (ii) Market Rent (as hereinafter defined) for renewals of tenant space in comparable quality buildings in the area in which the Premises is located.

40
(a)     “Market Rent” shall be determined as follows: No later than nine (9) months prior to the Expiration Date, Landlord will advise Tenant of its determination of the Market Rent. If Landlord and Tenant cannot agree on the Market Rent within thirty (30) days of the date that Landlord provides Tenant with Landlord’s determination of the Market Rent, then within thirty (30) days after such failure to reach agreement, Landlord shall furnish to Tenant a notice in writing (“Landlord’s Notice”) stating what Landlord perceives to be Market Rent based on a statement from a qualified real estate appraiser retained by Landlord at Tenant’s reasonable cost and expense stating the appraiser’s opinion of Market Rent effective as of the commencement date of the Renewal Term and that it has been determined in accordance with this Paragraph. If the Tenant disagrees with the estimate of Market Rent submitted by Landlord with Landlord’s Notice, then within thirty (30) days after receipt of Landlord’s Notice, Tenant shall have the right to submit to Landlord a statement by a qualified real estate appraiser retained by Tenant at Tenant’s cost and expense stating the appraiser’s opinion of Market Rent effective as of the commencement date of the Renewal Term and that it has been determined in accordance with this Paragraph. If the higher estimate is not more than 105% of the lower estimate, the Market Rent shall be established as the average of the two appraisals. If the higher estimate is greater than 105% of the lower estimate, the two appraisers acting on behalf of Landlord and Tenant, shall, within fifteen (15) days after Tenant’s statement has been submitted, jointly appoint a third qualified real estate appraiser (the “Referee”) at Tenant’s cost. If the two appraisers are unable to agree upon the selection of a Referee, then the Referee shall be selected within fifteen (15) days thereafter by an arbitrator pursuant to the rules of the American Arbitration Association. The Referee shall, within thirty (30) days after appointment, render his decision which decision shall be strictly limited to choosing one of the two determinations made by the two appraisers chosen by Landlord and Tenant with respect to Market Rent. The decision of the Referee shall be binding upon Landlord and Tenant and shall constitute Market Rent for the purposes of determining the Base Rental. The cost of the Referee shall be shared equally by Landlord and Tenant. In determining Market Rent, the appraisers shall each take into account the following: (A) the amount of space and length of term taken by the Tenant; (B) the credit worthiness and quality of Tenant; and (C) rent in comparable buildings in the relevant competitive market. In determining Market Rent, the appraisers shall exclude from consideration: (A) tenant improvements installed by Tenant; (B) alterations installed by Tenant at its expense, during the Term; and (C) concessions offered to new tenants such as free rent, tenant improvement allowances, moving allowances and other concessions.

ARTICLE XLI.
MISCELLANEOUS

Section 41.1    This Lease is transmitted for examination only and does not constitute an offer to Lease. This Lease shall become effective only upon execution hereof by the parties hereto and delivery by Landlord to Tenant of an executed Lease.

Section 41.2     This instrument contains the entire and only agreement between the parties. No oral statements or representations or prior written matter not contained herein shall have any force or effect.

41
Section 41.3    This Lease shall not be modified, changed, or amended in any way or canceled, terminated or abridged except by a writing subscribed by both parties.

Section 41.4    This Lease may be executed in one or more counterparts each one of which shall be deemed an original. E-mail and facsimile signatures shall also be sufficient to bind the parties hereto.

Section 41.5    If any term or provision of this Lease or the application thereof to any person or circumstances shall, to any extent, be invalid unenforceable, the remainder of this Lease, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and each term and provision of this Lease shall be valid and enforced to the fullest extent permitted by law.

Section 41.6    Landlord shall be excused for the period of any delay and shall not be deemed in default with respect to the performance of any of the term, covenants, and conditions of this Lease when prevented from so doing by causes beyond its reasonable control, which shall include, but not be limited to (a) strike, lockout or other labor troubles, (b) governmental restrictions or limitations, (c) failure or shortage of electrical power, gas, water, fuel oil, or other utility or service, (d) riot, war, insurrection or other national or local emergency, (e) accident, flood, fire or other casualty, (J) adverse weather condition, (g) other act of God, (h) delay in ability or inability to obtain a building permit or a certificate of occupancy or (i) other cause similar or dissimilar to any of the foregoing and beyond Landlord’s reasonable control (collectively, “Force Majeure”), provided, however, that none of the foregoing shall excuse delays in the payment of money.

Section 41.7     Except as otherwise set forth herein, any obligations of Tenant and Landlord, as set forth herein (including, without limitation, Tenant’s rental and other monetary obligations, repair obligations, and obligations to indemnify Landlord), shall survive the expiration or earlier termination of this Lease.

Section 41.8     This Lease shall be governed by and construed in accordance with the laws of the State of New York.

Section 41.9     Neither this Lease nor any memorandum hereof shall be recorded without Landlord’s prior written consent.

Section 41.10    Landlord shall provide approximately 250 square feet of space to Tenant to be utilized solely for storage purposes. Prior to placing its property in the storage space, Tenant shall provide Landlord with a written inventory of the items to be stored. Tenant shall pay an annual fee of $3,750.00, payable in monthly installments of $312.50 on the first day of each month during the first year of the term hereof, commencing on the Commencement Date. The annual fee increase by three (3%) percent on the first day of each subsequent lease year during the term hereof. Landlord reserves the right to withdraw or relocate such storage space at its sole discretion without any further responsibility to Tenant. Tenant shall provide Landlord with a written inventory of the items to be stored in such storages space, and shall secure such storage space at its sole cost and expense.

42
IN WITNESS WHEREOF, the parties have caused these presents to be duly executed as of the day and year first above written.

 
LANDLORD:
   
 
BIOBAT, INC., a New York Not-for-Profit corporation
   
  BY:
/s/ Eva Cramer
   
 President

 
 TENANT:
   
 
IRX THERAPEUTICS, INC., a New York corporation
   
  BY:
 /s/ Jeffrey Hwang
   
 President & COO

43

44

45
EXHIBIT B

LAND

[ATTACHED]

46


47
EXHIBIT B-1

LANDLORD’S PREMISES

[ATTACHED]

48

49

50

51

52
EXHIBIT C

PERMITTED USES

The Corporation is formed and shall be operated exclusively for scientific, educational, and charitable purposes within the intent and meaning of Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), or corresponding provision of any subsequent federal tax laws.

Specifically, the Corporation will

(i)         attract, encourage, develop, improve and assist industry and public and private institutions in New York State by providing facilities and related support for the application of biotechnology, life sciences research or other appropriate technology development at the Brooklyn Army Terminal to develop and improve such research and related manufacturing; and,

(ii)        attract, encourage, develop, improve and assist industry and public and private institutions in New York State by providing facilities and related support for the application of biotechnology, life sciences research or other appropriate technology development at the Brooklyn Army Terminal for appropriate technology transfer allowing for third party manufacture, sale and/or other distribution of products and/or services and (iii) facilitate research and economic development activities related to the City of New York and the research and educational mission of the State University of New York by managing, constructing, developing and operating facilities which support the economic development, research activities, and the mission of the State University of New York, Downstate Medical Center and the City of New York.

53
EXHIBIT D

WORK LETTER

BioBAT will make minor modifications to the existing model laboratory for IRX, a biotechnology company moving into this space. The model lab is located on the north-west portion of the second floor of Phase 2. It is composed of office space (rooms 2101, 2102, 2103, 2104, 2106, 2108, and 2111, laboratory space (room 2109), a storage room (room 2112) and a service corridor/freezer farm (room 2110). See CAD drawings. IRX Therapeutics, Inc. would like the following changes shown in Attachment A and described below:


 1.
Remove the existing wall between the laboratory (room 2109) and the storage room (room 2112).


2.
Construct a new wall 24 feet from the west wall of the storage room which will enlarge the storage room (room 2112) and decrease the size of the laboratory room (room 2109). This new wall will have a door connecting the two rooms. Both rooms will be used as laboratories. Make sure lighting and HVAC are fine in both rooms.


3.
Polish floor of storage room (2112)


4.
Install a new center island 15ft. long x 5 ft. wide in the storage room (room 2112). The center island should have a knee space in the center of each long side and a 50/50 combination of drawers and cabinets.


5.
Install a new bench (approximately 10 ft. long) against the new west wall in the storage room (2112) with a 5 ft x 2.5 ft. sink at the north end of the bench. The bench should have a knee space in the center of the long side and a 50/50 combination of drawers and cabinets.


6.
Install a new bench (approximately 12.5 ft. long on one side and 7.5 ft. long on the other side) in laboratory room (2109). The bench should have a sink (2.5 ft. x 5 ft.) at the north end of the bench. There should be a knee space in the center of each long side and a 50/50 combination of drawers and cabinets.


7.
Emergency power -All emergency power will need the standard 120 V NEMA 5-15 outlet except one in the service corridor/freezer farm (room 2110), which is indicated by a box on the drawing in Attachment A. It will need a 120 V NEMA 5-20 outlet (see Attachment B). The emergency power locations (see Attachment A) are as follows:

54

 a.
One instance of emergency power in storage room (room 2112) on east wall to supply one incubator.

b.
Two instances of emergency power on north wall of laboratory room (room 2109) to supply two incubators.

c.
Ten instances of emergency power along the north wall of the service corridor/freezer farm (2110) placed about 5 feet apart. Please note: Contractor needs to check existing power on the north wall of the service corridor/freezer farm (room 2110) for existing outlets and if additional instances are necessary.


8.
Specialized outlets (See Attachment B)

a.
As mentioned in number 7 above, one freezer in the service corridor/freezer farm will need a 120 V NEMA 5-20 outlet.

b.
Three instances of 240 V NEMA 6-20 outlets in the labs. Two will be in the southeast section of the center island in the storage room (room 2112) to supply two table centrifuges and one on a bench toward the west end of the laboratory (room 2109) to supply a table centrifuge.

55

56


57
EXHIBIT E

RULES AND REGULATIONS

The rules and regulations set forth in this Exhibit shall be and hereby are made a part of the Lease to which they are attached. Whenever the term “Tenant” is used in these rules and regulations, it shall be deemed to include Tenant, its employees or agents and any other persons permitted by Tenant to occupy or enter the Premises. The following rules and regulations may from time to time be modified by Landlord in its discretion.

1.      Obstruction: The sidewalks, any entries, passages, corridors, halls, lobbies, stairways located outside the Premises, elevators and other common facilities of the Landlord’s Premises shall be controlled by Landlord and shall not be obstructed by Tenant or used for any purposes other than ingress or egress to and from the Premises. Tenant shall not place any item in any of such locations, whether or not any such item constitutes an obstruction, without the prior written consent of Landlord. Landlord shall have the right to remove any obstruction or any such item without notice to Tenant and at the expense of Tenant. The floors, skylights and windows that reflect or admit light into any place in said Landlord’s Premises shall not be covered or obstructed by Tenant.

2.     Deliveries: Tenant shall insure that all deliveries to the Premises (including, without limitation, deliveries of mail, office supplies, beverages and soft drinks, catered meals and all other deliveries of bulk items) shall be made only upon the elevator designated by Landlord for deliveries and only during the ordinary business hours of the Landlord’s Premises. If any person making deliveries to Tenant damages the elevator or any other part of the Landlord’s Premises or Property, Tenant shall pay to Landlord upon demand the amount required to repair such damage and restore the area to its previous condition.

3.      Moving: Furniture and equipment shall be moved in or out of the Landlord’s Premises only upon the elevator designated by Landlord for furniture and equipment deliveries and then only during such hours and in such manner as may be prescribed by Landlord. Landlord shall have the right to approve or disapprove the movers or moving company employed by Tenant and Tenant shall cause such movers to use only the loading facilities and elevator designated by Landlord. If Tenant’s movers damage the elevator or any other part of the Landlord’s Premises, Tenant shall pay to Landlord upon demand the amount required to repair such damage and restore the area to its previous condition.

4.      Heavy Articles: No safe or article the weight of which may, in the reasonable opinion of Landlord, constitute a hazard or may cause damage to the Landlord’s Premises or its equipment, shall be moved into the Premises. Safes and other heavy equipment, the weight of which will not constitute a hazard or cause damage the Landlord’s Premises or its equipment shall be moved into, from or about the Landlord’s Premises only during such hours and in such manner as shall be prescribed by Landlord and Landlord shall have the right to designate the location of such articles in the Premises.  The floor load for the Premises is 100 pounds per square foot live load and shall not be exceeded by Tenant.

58
5.      Nuisance: Tenant shall not do or permit anything to be done in the Premises, or bring or keep anything therein which would in any way constitute a nuisance or waste, or obstruct or interfere with the rights of other tenants of the Landlord’s Premises, or in any way injure or annoy them, or conflict with the laws relating to fire, or with any regulations of the fire department or with any insurance policy upon the Landlord’s Premises or any part thereof, or conflict with any of the rules or ordinances of any governmental authority having jurisdiction over the Landlord’s Premises (including, by way of illustration and not limitation, using the Premises for sleeping, lodging or cooking).

6.     Building Security: Landlord may restrict access to and from the Premises and the Landlord’s Premises outside of the ordinary business hours of the Landlord’s Premises at any time for reasons of Building Security. Landlord may require identification of persons entering and leaving the Landlord’s Premises during this period and, for this purpose, may issue building passes to tenants of the Landlord’s Premises. Landlord shall not be liable to any person (including, without limitation, Tenant) for excluding any person from the Landlord’s Premises or for admission of any person to the Landlord’s Premises at any time, or for damage, loss or theft resulting therefrom.

7.       Locks and Keys for Premises: No additional lock or locks shall be placed by Tenant on any door in the Premises and no existing lock shall be changed unless the written consent of Landlord shall first have been obtained, which consent shall not be unreasonably withheld. A reasonable number of keys to the Premises and to the toilet rooms, if locked by Landlord, will be furnished by Landlord, and Tenant shall not have any duplicate keys made. Landlord also shall furnish to Tenant a reasonable number of card keys/fobs or building passes permitting access and egress to and from the Landlord’s Premises and elevators within the Landlord’s Premises at a fee of Twenty & 00/100 ($20.00) Dollars per fob or key. The distribution and use of such card keys and passes by Tenant and its employees shall be subject at all times to such additional rules as Landlord may promulgate from time to time. At the termination of this Lease, Tenant shall promptly return to Landlord all keys, fobs, card keys and building passes to the Landlord’s Premises, offices, toilet rooms, and parking facilities. Tenant shall promptly repot to Landlord the loss or theft of any key, card key or building pass.

8.     Signs: Signs on Tenant’s entrance door will be designed, furnished and installed by Tenant at Tenant’s expense, subject to Landlord’s approval.  No advertisement, sign or other notice shall be inscribed, painted or affixed on any part of the outside or inside of the Landlord’s Premises, except upon Tenant’s interior doors as permitted by Landlord, which advertisement, signs or other notices shall be of building standard order, size and style, and at such places as shall be designated by Landlord. In addition, Landlord shall provide in the lobby of the Landlord’s Premises, at Landlord’s expense, a building directory which shall include Tenant’s name.

9.      Use of Water Fixtures: Water closets and other water fixtures shall not be used for any purpose other than for which the same are intended and no obstructing or improper substance shall be thrown, deposited or disposed of therein. Any damage resulting to the same from misuse on the part of Tenant shall be paid for by Tenant. No person shall waste water by tying back or wedging the faucets or in any other manner.

59
10.    No Animals, Excessive Noise: No birds, fish, or other animals (other than seeing eye dogs) shall be allowed in the offices, halls, corridors and elevators in the Landlord’s Premises. No person shall disturb Tenants of this or adjoining buildings or space by the use of any radio, musical instrument or singing, or by the making of loud or improper noises.

11.     Bicycles: Bicycles or other vehicles shall not be permitted anywhere inside or on the sidewalks outside the Landlord’s Premises, except in those areas, if any, designated by Landlord as secure bicycle parking. No motorized vehicles of any kind shall be brought into or kept in or about the Premises. Tenant and only its employees may bring bicycles into the Building only if they comply with the New York City LL-52 Bicycle Access to Office Buildings Law and the Bicycle Access Rules and Regulations for the Building.

12.    Trash: Tenant shall not allow anything to be placed on the outside of the Landlord’s Premises, nor shall anything be thrown by Tenant out of the windows or doors, or down the corridors, elevator shafts, or ventilating ducts or shafts of the Landlord’s Premises. All trash shall be placed in receptacles provided by Tenant on the Premises or in any receptacles provided by Landlord for the Landlord’s Premises. Tenant will separate recyclable materials from other trash in accordance with Landlord’s instructions.

13.    HoursforRepairs,Maintenance and Alterations:  Any repairs, maintenance and alterations required or permitted to be done by Tenant under the Lease shall be done only during the ordinary business hours of the Landlord’s Premises, unless Landlord shall have first consented in writing to such work being done outside such times. If Tenant desires to have such work done by Landlord’s employees on Saturdays, Sundays, holidays or weekends outside of ordinary business hours, Tenant shall pay the extra cost of such labor.

14.     No Defacing of Premises: Except as permitted by Landlord and by this Lease, Tenant shall not mark up, cut, drill into, drive nails or screws into, or in any way deface  the doors, walls, ceilings or floors of the Premises or of the Landlord’s Premises, nor shall any connection be made to the electric wires or electric fixtures without the consent in  writing on each occasion of Landlord or its agents, and any defacement, damage or injury caused by Tenant shall be paid for Tenant.

15.     Limit on Equipment: Tenant shall not, without Landlord’s prior written consent, install or operate any computer, duplicating or other large business machines or equipment, using more than 110 volts, 16 continuous load amps upon the Premises, or carry on any mechanical business thereon. If Tenant requires any interior wiring such as for a business machine, intercom, printing equipment or copying equipment, such wiring shall be done only by Landlord’s electrician for the Landlord’s Premises and at Tenant’s expense. No electrical wiring shall be performed by any person unless previously approved in writing by Landlord or its representative. If telegraphic or telephonic service is desired, the wiring for same shall be done as directed by the electrician of the Landlord’s Premises, or by some other employee of Landlord who may be instructed by the superintendent of the Landlord’s Premises to supervise same, and no boring or cutting for wiring shall be done unless approved by Landlord or its representatives, as stated.

60
16.     Solicitation, Food and Beverages: Landlord reserves the right to restrict, control or prohibit canvassing, soliciting and peddling within the Landlord’s Premises. Tenant shall not grant any concessions, licenses or permission for the sale or taking of orders for food, alcoholic beverages, services or merchandise in the Premises, nor install or permit the installation or use of any machine or equipment for dispensing goods or foods or beverages in the Landlord’s Premises, nor permit machine or equipment for dispensing goods or food or beverages in the Landlord’s Premises, nor permit the preparation, serving, distribution or delivery of food or beverages in the Premises without the approval of Landlord and in compliance with arrangements prescribed by Landlord, except in connection with convenience lunch rooms or beverage service or catered functions for employees, clients and guests of Tenant (on a noncommercial basis). Only persons approved in writing by Landlord shall be permitted to serve, distribute, or deliver food and beverages within the Landlord’s Premises, or lo the use the elevators or public areas of the Landlord’s Premises for that purpose.

17.    Smoke Free Building: The Landlord’s Premises is a smoke free building and Tenant shall not permit any of its employees, agents, contractors, subcontractors, invites, guests or visitors to smoke in the Landlord’s Premises or Premises.

18.     Sustainability. The building is or may become in the future certified under the LEED rating system, or other standard or operated pursuant to Landlord’s sustainable building practices. Landlord’s sustainability practices address whole-building operations and maintenance issues including chemical use; indoor air quality; energy efficiency; water efficiency; recycling programs; exterior maintenance programs; and systems upgrades to meet green building energy, water, indoor air quality, and lighting performance standards. All construction and maintenance methods and procedures, material purchases, and disposal of waste must be in compliance with minimum standards and specifications, in addition to all Legal Requirements. Furthermore, Tenant acknowledges that it is Landlord’s intention that the Property be operated in a manner which is consistent with Landlord’s sustainability practices. Tenant is required to comply with these practices within its Premises.

BROOKLYN ARMY TERMINAL RULES AND REGULATIONS

l.        All waste must be properly sealed and stored within Tenant’s respective unit(s) until the day of trash collection or until the waste is deposited in one of the trash containers.

2.       All Building emergencies shall be reported immediately to Brooklyn Army Terminal’s management office or the security desk in person during regular work hours or by calling 718/492-2 I 91 or 718/630-2429 (security desk).

3.      All loading bays may be used only for loading and off-loading merchandise; no parking is allowed. Landlord reserves the right to tow vehicles and equipment that (a) are owned or leased by Tenant, (b) are present for the benefit of Tenant, (c) are present at the Brooklyn Army Terminal by Tenant’s authorization, or (d) are otherwise contracted by Tenant or its agents, including, but not limited to, officers, employees, customers, vendors, suppliers, delivery persons and/or invitees.

61
4.        Freight elevators are not to be held on any floor except while loading or off-loading merchandise; the only permitted method of holding a freight elevator is by the use of the hold button.

5.        No materials, including, but not limited to, supplies, inventory, pallets, waste, debris and/or related items, shall be stored or otherwise left in any Common Facilities or in any unoccupied unit of the Brooklyn Army Terminal without prior written permission from Landlord in each occurrence. If Landlord should find said materials .in any Common Facilities or unoccupied unit of the Brooklyn Army Terminal and notify Tenant’s on-site resident manager, shift supervisor, or equivalent of same, then Tenant shall have eight (8) hours within which to remove same; if said materials are not removed within said eight hours, then (i) Landlord shall have the right to remove any such items at Tenant’s sole expense, including, but not limited to, moving costs, equipment rental, labor charges and administrative costs, and (ii) Tenant shall be charged at least one hundred dollars ($100) per day for storage of same (based on square footage required to store said materials), which charge shall be deemed Additional Rent and shall be due  and payable with the following month’s rent. Further, if Landlord gives Tenant written notice as set forth in the Lease herein, then Landlord shall have the right of disposing, at Tenant’s sole expense, of any of said materials after forty-eight (48) hours of said notice. Tenant shall indemnify and hold Landlord harmless from any liabilities and/or damages, direct or consequential, that may arise in connection with Landlord’s removal, storage and/or disposal of any said materials.

6.        All employees must obtain and carry with them a Brooklyn Army Terminal picture identification card, subject to a nominal charge, while on Brooklyn Army Terminal premises; employees must present their identification to security personnel when requested to do so.

7.        Tenants shall keep access from Tenant’s Premises to all fire stairwells unobstructed, unimpeded and accessible at all times.

8.      All contractors must present to Building management a New York City Building Department Permit and a Certificate of Insurance, satisfactory to Building management, before any construction work commences.

9.        Vehicles that have been issued a parking permit must be parked in the area designated by the permit.

10.      Vehicles are prohibited from standing or parking in the fire lanes at the entrances on the north and south sides of the Building; these fire lanes must be kept unobstructed at all times for use only by emergency vehicles.

11.      Landlord shall have the right to prohibit any advertising by any tenant which, in Landlord’s opinion, tends to impair the reputation of the Brooklyn Army Terminal, the Building or its desirability as a Building, and upon written notice from Landlord, such tenant shall refrain from or discontinue such advertising.

62
12.     Tenant shall not bring or permit to be brought or kept in or on the Premises, any inflammable, combustible or explosive fluid, material, chemical or substance, without Landlord’s prior written permission (with the exception of small quantities of cleaning supplies and office supplies and with the exception of limited amounts necessary in the ordinary course of the operation of the Tenant’s Permitted Use (pursuant to Article 3) at the demised premises (provided that all such exceptions are used, handled, maintained, and stored in the demised premises, and disposed of, in accordance with this Lease including, without limitation, Article 27 requiring compliance with all present and future laws, orders and regulations of all state, federal, municipal and local governments, departments, commissions and boards and any direction of any public officer pursuant to law, and all orders, rules and regulations of the New York Board of Fire Underwriters, or the Insurance Services Office, or any similar body) or cause or permit any odors of cooking or other processes, or any unusual or other objectionable odors to permeate in or emanate from the Premises.

13.      Tenant shall not use the Premises in a manner which disturbs or interferes with other tenants in the beneficial use of their premises.

14.     No machinery or mechanical equipment of any kind shall be so placed or operated as to disturb other tenants; and such machinery and mechanical equipment used in a tenant’s premises shall be so equipped, installed and maintained by such tenant as to prevent any disturbing noise, vibration or electrical or other interference from being transmitted from such premises to any other area of the Building.

15.      No tenant shall install any window mounted air conditioners within the Premises or any other portion of the Building.

16.     No noise or other activity, including the playing of any musical instruments, radio, television or other sound reproduction system, which would, in Landlord’s judgment, disturb other tenants in the Building, shall be made or permitted by any tenant, and no cooking shall be done in any tenant’s premises, except as expressly approved in writing by Landlord.

17.     Any hazardous waste materials that may be located within any tenant’s premises shall be disposed of in accordance with all applicable laws, ordinances and regulations of any public authorities governing the same.

18.      All entrance doors in each tenant’s premises shall be left locked by such tenant when such tenant’s premises are not in use.

19.    The requirements of tenants will be attended to only upon application to the Building superintendent or Landlord’s managing agent (or other person designated in writing by either of them) at his office in the Building or other location in the Brooklyn Army Terminal. Building employees shall not be requested by any tenant, and will not be permitted, to perform any work or services specially for any tenant, unless expressly authorized to do so by the Building superintendent or Landlord’s managing agent.

63
20.      If attendance of Landlord’s or the managing agent’s personnel and/or service contractors shall be required, as shall be reasonably determined by Landlord or its managing agent in all instances, in connection with the use by any tenant of freight elevators outside of ordinary business hours or in connection with the moving into or out of the Building by or for any tenant of any machinery, equipment, safes, heavy objects, freight, furniture or other bulky matter, during or outside regular business hours, the tenant so requiring such services shall pay Landlord, on demand, as Additional Rent, such amount as Landlord shall determine to be appropriate as a charge for Landlord’s or its managing agent’s personnel and/or service contractors used pursuant to this Rule 20.

21.      Landlord may refuse admission to the Brooklyn Army Terminal, including the Building, to any person not known to the watchman in charge or not having a pass issued by Landlord or its agent or not properly identified, and may require all persons admitted to or leaving the Building to register. Any person whose presence in the Brooklyn Army Terminal including the Building, at any time shall, in the judgment of Landlord or its managing agent, be prejudicial to the safety, character, reputation and interests of the Brooklyn Army Terminal or of its tenants may be denied access to the Brooklyn Army Terminal, including the Building, or may be ejected therefrom. In case of invasion, riot, public excitement or other commotion, Landlord may prevent all access to the Brooklyn Army Terminal during the continuance of the same, by closing the doors or otherwise, for the safety of the tenants and protection of property in the Brooklyn Army Terminal. Landlord may require any person leaving the Building with any package or other object to exhibit a pass from the tenant from whose premises the package or object is being removed, but the establishment and enforcement of such requirement shall not impose any responsibility on Landlord for the protection of any tenant against the removal of tenant’s property from such tenant’s premises. Landlord shall in no way be responsible or liable to any tenant for damages or loss arising from the admission, exclusion or ejection of any person to or from the Tenant’s premises or the Building under the provisions of this Rule. Each tenant shall be responsible for all persons for whom he requests admission or a pass and shall be liable for all acts of such persons.

22.      Tenant shall not at any time store or keep any material, supplies, furniture, furnishings or equipment of any kind in any machine room or in any mechanical or electrical equipment room in the Building, whether such room be within or outside the premises demised to Tenant.

23.      Landlord may charge Tenant for directory board changes subsequent to initial listings. All requests for directory board listings shall be in writing on Tenant’s letterhead signed by an authorized representative of Tenant.

24.      No food shall be eaten in the main lobby of the Building and alcoholic beverages are not permitted in the Building.

25.      Landlord reserves the right to rescind, alter, waive, expand or add any rule or regulation at any time prescribed for the Brooklyn Army Terminal or the Building when, in Landlord’s judgment, it deems it necessary, desirable or proper for its best interest and for the best interests of the other tenants in the Building, and no change or waiver of any rule or regulation in favor of one tenant shall operate as a change or waiver in favor of any other tenant. Landlord shall not be responsible to any tenant for the nonobservance or violation by any other tenant of any of the rules and regulations at any time prescribed for the Building.

64
FIRST AMENDMENT TO LEASE AGREEMENT

THIS FIRST AMENDMENT TO LEASE (this “Amendment”) is executed as of the 28th day of September, 2015, by and between BIOBAT, INC., a New York Not-for-Profit corporation (“Landlord”), and IRX THERAPEUTICS, INC., a New York corporation (“Tenant”).

W I T N E S S E T H:

WHEREAS, Landlord and Tenant entered into that certain Lease Agreement dated as of the date hereof (the “Lease”), whereby Tenant leases from Landlord certain space in that certain building known as Building A of the Brooklyn Army Terminal, Brooklyn, New York (the “Building”); and

WHEREAS, Landlord and Tenant desire to amend certain provisions of the Lease;

NOW, THEREFORE, in consideration of the foregoing premises, the mutual covenants herein contained and each act performed hereunder by the parties, and for other good and valuable consideration, Landlord and Tenant hereby enter into this Amendment.

1.          Incorporation of Recitals. The above recitals are hereby incorporated into this Amendment as if fully set forth herein.

2.          Section 1.1. In Section 1.1 of the Lease, the number “7,250” is hereby deleted and replaced with the number “6,322”.

3.          Section 2.1. Section 2.1 of the Lease is hereby deleted in its entirety and replaced with the following:

“Section 2.1 The term of this Lease shall be for ten years and three months, commencing on January 1, 2016 (the “Commencement Date”), and terminating at 11:59 PM on March 31, 2026 (the “Expiration Date”), unless terminated earlier pursuant to the terms of this Lease. This Lease shall be effective and enforceable between Landlord and Tenant upon the Effective Date.”

4.         Section 3.1. The first sentence of Section 3.1 of the Lease is hereby deleted in its entirety and replaced with the following: “During the term of this Lease, Tenant agrees to pay to Landlord Two Hundred Fifty-Two Thousand Eight Hundred Eighty and 00/100 ($252,880.00) Dollars per annum, payable in equal monthly installments of $21,073.33 on or before the first day of each month (the “Base Rent”), which Base Rent shall increase on each anniversary of the Commencement Date by an amount equal to the then-current Base Rent multiplied by three (3%) percent.”.

5.          Section 27.1. The first sentence of Section 27.1 of the Lease is hereby deleted in its entirety and replaced with the following: “Tenant shall deposit with Landlord, on or before the Effective Date, a sum of Sixty-Three Thousand Two Hundred Twenty and 00/100 ($63,220) Dollars as security for the faithful performance and observance by Tenant of the terms, provisions and conditions of the Lease.”.

6.         Exhibit A. The two pages immediately following the signature page of the Lease and immediately preceding Exhibit B to the Lease are hereby deleted and replaced with Exhibit A attached hereto.

1
7.         Broker. Tenant hereby represents and warrants to Landlord that it has dealt with no broker in connection with this Amendment other than Cresa New York (the “Broker’’), and there are no other brokerage fees or commissions payable in connection herewith. Tenant hereby agrees to hold Landlord harmless from, and indemnified against, all loss or damage (including without limitation, the cost of defending the same) arising from any claim by any broker other than the Broker claiming to have dealt with Tenant.

8.        Examination of Amendment. Submission of this instrument for examination or signature to Tenant does not constitute a reservation or option, and it is not effective until execution by and delivery to both Landlord and Tenant.

9.         Definitions. Except as otherwise provided herein, the capitalized terms used in this Amendment shall have the definitions set forth in the Lease.

10.       Reservation of Rights; No Waiver. By executing this Amendment, Landlord does not waive its right to assert (a) any events or conditions that would constitute defaults under the Lease, or (b) any monetary or other obligations owed by Tenant to Landlord under the Lease. Landlord expressly reserves and does not waive all rights under the Lease, at law, and in equity. Acceptance by Landlord of any partial performance, including without limitation partial performance of any unpaid obligations under the Lease, by Tenant is and will be without prejudice to the rights and remedies of Landlord under the Lease, at law and in equity.

11.       Incorporation. This Amendment shall be incorporated into and made a part of the Lease, and all provisions of the Lease not expressly modified or amended hereby shall remain in full force and effect.

[SIGNATURES APPEAR ON FOLLOWING PAGE]

IN WITNESS WHEREOF, the parties have caused this Amendment to be executed on the day and year first above written.

 
LANDLORD:
   
 
BIOBAT, INC., a New York Not-for-Profit corporation

 
By:
 /s/ Eva Cramer
  
 
Name:
 Eva Cramer
  
 
 Title: President
  

 
TENANT:
   
 
IRX THERAPEUTICS, INC., a New York corporation

 
By:
 /s/ Jeffrey Hwang
  
  Name:
 Jeffrey Hwang
  
 
 Title: President & COO
  

Signature Page to First Amendment to Lease Agreement


ASSIGNMENT AND ASSUMPTION OF LEASE

THIS ASSIGNMENT AND ASSUMPTION OF LEASE (this “Agreement”) is made as of November 6, 2018, by and between IRX Therapeutics, Inc., a New York corporation (“Assignor”) and Brooklyn Immunotherapeutics LLC, a Delaware limited liability company (“Assignee”).

RECITALS:

A.       Pursuant to that certain Lease Agreement, dated September 28, 2015, between BIOBAT, INC., a Not-for-Profit 501(c)(3) corporation organized under the laws of the State of New York (“Landlord”) and Assignor (“Lease”), Landlord currently leases to Assignor, that certain “Premises” (as more particularly described in the Lease). All initial capitalized terms used herein but not herein defined and defined in the Lease shall have the meaning ascribed to such terms under the Lease.

B.        Assignor desires by this Agreement to assign all of its right, title and interest in and to the Lease to Assignee, and Assignee desires to accept such assignment and to agree to perform all of the obligations of the tenant under the Lease from and after the Effective Time (as hereinafter defined), all upon the terms and conditions hereinafter set forth.

TERMS:

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

1.         Assignor assigns to Assignee all of its right, title and interest in and to the Lease as of the Effective Time. Assignee hereby accepts the foregoing assignment and assumes and agrees to be bound by and perform all covenants, conditions, obligations and duties of Assignor under the Lease as of the Effective Time. Assignee agrees that it has inspected the Premises and hereby agrees to take the Premises in the condition existing upon the Effective Time.

2.          Assignor shall remain obligated to Landlord for the full performance of all covenants, conditions, obligations and duties required of tenant under the Lease and shall not be relieved of any such performance thereunder as a result of this Assignment. However, as of the Effective Time, Assignor shall have no continuing or future possessory rights in and to the Premises and thereafter waives any right it may possess to receive notice from Landlord relative to this Agreement or the Lease.

3.        Assignor agrees that any security deposit currently being held by Landlord in the amount of shall be retained by Landlord to satisfy the security deposit requirements of “Tenant” under the Lease. Any amount of such security deposit remaining at the expiration of the term of the Lease shall be paid to Assignee after full satisfaction of any amount owed to Landlord.

4.          Assignor represents and covenants as follows:

(a)        That the Lease is in full force and effect; that Assignor’s interest therein is free and clear of all encumbrances; and that Assignor has fully performed all covenants and obligations under the Lease and has not done or permitted any acts in violation of the covenants contained in the Lease.

(b)        That Assignor has not heretofore assigned, mortgaged or otherwise transferred, amended or encumbered, voluntarily or involuntarily, the Lease or its interest therein or subleased or allowed use or occupancy of the Premises by any other person or entity under a sublease or occupancy agreement remaining in effect.

(c)       That Landlord has fully performed all the covenants and obligations on its part to be performed and observed under the Lease; that Landlord has not done or permitted any act or acts in violation of any of the covenants, provisions or terms thereof; and that there is not now in existence any reason or claim to offset, deduct or decrease any payments due under the Lease.

5.         Within thirty (30) days following the Effective Time, Assignor shall pay the Landlord’s attorneys’ fees and costs incurred in connection with the assignment contemplated hereby. Landlord consents to the assignment of the Lease to Assignee only at such time as this Agreement has been executed by all of the parties hereto. Nothing in this Agreement shall be deemed to waive or modify any of the provisions of the Lease. Consent to this Agreement shall not be deemed a consent by Landlord to any further assignment, whether or not Assignee purports to permit the same.

6.         Subject to the provisions of Paragraph 5, the provisions of this Agreement shall bind and inure to the benefit of the heirs, representatives, successors and assigns of the parties hereto.

7.          Assignee’s address for notices under the Lease shall be the Premises, unless changed in accordance with the Lease.

8.         Each individual executing this Agreement on behalf of a partnership, corporation, limited liability company or other entity represents that he or she is duly authorized to execute and deliver this Agreement on behalf of the entity which is a party to this Agreement and agrees to deliver evidence of his or her authority to the other party(ies) upon request.

9.          This Agreement may be executed by the parties hereto in separate counterparts, including by facsimile or PDF file, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument. Each counterpart may consist of a number of copies hereof each signed by less than all, but together signed by all of, the parties hereto.

10.       This Agreement is being entered into in conjunction with the purchase of the Assignor’s business by the Assignee pursuant to a certain Asset Purchase Agreement, by and among Assignor and Assignee (the “Transaction”). The parties to this Agreement agree that this Agreement shall become effective, and shall only become effective, at such time as the closing date of the Transaction (the “Effective Time”). If the Transaction does not close, this Agreement shall automatically become null and void.

[Signature page follows]

2
Landlord represents that the Lease is in full force and effect and that, to its knowledge, Assignor is not in default of any of its obligations thereunder. Landlord consents to the subject Assignment and Assumption of Lease. Landlord makes no representation regarding Assignor’s compliance with Article XI of the Prime Lease in connection with the subject assignment and assumption.

LANDLORD:
 
BIOBAT, IN C.,
a New York Not-for-Profit corporation

By:
 /s/ EVA Cramer
 
EVA Cramer, President
 
(Print Name & Title)  
November 02, 2018
 

ASSIGNOR
 
 ASSIGNER:
  
       
IRX THERAPEUTICS, INC.,
   BROOKLYN IMMUNOTHERAPEUTICS LLC
  
a New York corporation
   a Delaware limited liability company
  
 
 
 
  
By:
 /s/ Mark Leuchtenberger
 
By:
 /s/ Charles R. Cherington  
       
Mark Leuchtenberger, Chairman, President and CEO
   Charles R. Cherington, Manager
  
(Print Name & Title)   (Print Name & Title)
  

3
EXECUTION COPY

SECOND AMENDMENT TO LEASE AGREEMENT

THIS SECOND AMENDMENT TO LEASE AGREEMENT (this “Second Lease Amendment”) is executed as of the twenty fourth day of July, 2019 (the “Second Amendment Date”), by and between BIOBAT, INC., a New York Not-for-Profit corporation, having an address c/o SUNY Downstate Medical Center, 450 Clarkson Avenue, Box 129, Brooklyn, New York 11203 (“Landlord”), and BROOKLYN IMMUNOTHERAPEUTICS LLC, a Delaware limited liability company, having an address at the Brooklyn Army Terminal, 140 East 58th Street, Brooklyn, NY 11220 (“Tenant”).

W I T N E S S E T H:

WHEREAS, Landlord and IRX Therapeutics, Inc., a New York corporation (“IRX”), entered into that certain Lease Agreement, dated as of September 28, 2015 (the “Lease”), as amended by that certain First Amendment to Lease Agreement, dated as of September 28, 2015 (the “First Lease Amendment”) (the Lease and First Amendment are collectively, the “Lease”), whereby IRX leased from Landlord certain space of approximately 6,322 rentable square feet  (the “Existing Space”) in that certain building known as Building A of the Brooklyn Army Terminal, Brooklyn, New York (the “Building”);

WHEREAS, IRX and Tenant entered into that certain Assignment and Assumption of Lease, dated as of November 6, 2018, whereby IRX assigned to Tenant all of its right, title and interest in and to the Lease, and Tenant accepted the assignment and agreed to assume and be bound by and perform all covenants, conditions, obligations and duties of IRX under the Lease; and

WHEREAS, Landlord and Tenant desire to amend certain provisions of the Lease and add additional space.

NOW, THEREFORE, in consideration of the foregoing premises, the mutual covenants herein contained and each act performed hereunder by the parties, and for other good and valuable consideration, Landlord and Tenant hereby enter into this Second Lease Amendment.

1.           Incorporation of Recitals. The above recitals are hereby incorporated into this Second Lease Amendment as if fully set forth herein.

(a)         Tenant hereby leases additional space of approximately 1,910 rentable square feet shown on Exhibit A (the “Additional Space”) to run coterminous with the Term under this Lease and shall expire on the same date as the Expiration Date (as it may have been extended) hereunder. Accordingly, the Section 1.1 of the Lease is deleted in its entirety and replaced with the following:

Section 1.1     Landlord leases and demises to Tenant and Tenant rents and leases from Landlord the following described space (the “Premises”), which Premises are shown on Exhibit A attached hereto and made a part hereof and located in Building A of the Brooklyn Army Terminal, Brooklyn, New York (the “Building”):

1
 
Floor(s):
Second Floor

 
Rentable Square Footage (“RSF”)
approximately 8,232 rentable square feet consisting of the existing approximately 6,322 rentable square feet containing wet lab space and office space, plus approximately 1,910 rentable square feet of Clean Room space.

For purposes of this Section 1.1, the “Clean Room” shall be used to process clinical grade active pharmaceutical ingredients (api) pursuant to 21 CFR part 210 (subset b) of FDA regulations, ISO classification standards and relevant cGMP guidelines.

(b)         Exhibit A in the Lease is hereby deleted in its entirety and replaced with Exhibit A attached hereto.

(c)         Section 1.3 is hereby deleted in its entirety.

(d)        The following shall be added after Section 2.3:

Section 2.4      Preparation of Premises. Tenant shall perform Tenant’s Work in  the Premises in accordance with Exhibit D-1 attached hereto. Landlord shall deliver the Premises to Tenant as of the date hereof in a broom-swept condition for the purposes of performing Tenant’s Work. All fixtures installed in  connection with Tenant’s Work shall become a part of the Premises once they are attached to the Premises, except for the modular components of the Clean Room which Tenant shall be entitled to dismantle and remove at the end of the Term provided the Premises shall be restored to the condition as of the date hereof or better.

By its execution hereof, Tenant shall accept the Premises in their condition as of the date hereof; (ii) Landlord shall have no obligation for any defects in the Premises except for latent defects; and (iii) Tenant’s taking possession of the Premises shall be conclusive evidence that Tenant accepts the Premises and that the Premises were in good condition at the time possession was taken.

(e)         Exhibit B hereto is added as Exhibit D-1 to the Lease.

(f)         Section 3.1 is hereby deleted in its entirety and replaced with the following:

Section 3.1

Base Rent. During the Term, Tenant agrees to pay to Landlord, the following base rent payable in equal monthly installments on or before the first day of each month (“Base Rent”), which Base Rent shall increase on January 1st of each Lease Year by an amount equal to the then-current Base Rent multiplied by three (3%) percent:


Lease Year

For Tenant from Second Amendment Commencement Date
Annual Base Rent
Monthly Base Rent
Lease Year 1
 
July 1, 2019 – June 30, 2020
$365,210.36
July 1, 2019-December 31, 2019: $29,984.43
 
January 1, 2020-June 30, 2020: $30,883.96
Lease Year 2
 
July 1, 2020 – June 30, 2021
$ 376,166.66
July 1, 2020-December 31, 2020: $ 30,883.96
 
January 1, 2021-June 30, 2021: $31,810.48
Lease Year 3
 
July 1, 2021 – June 30, 2022
$ 387,451.66
July 1, 2021-December 31, 2021: $ 31,810.48
 
January 1, 2022-June 30, 2022:$32,764.80
Lease Year 4
 
July 1, 2022 – June 30, 2023
$ 399,075.22
July 1, 2022-December 31, 2022: $ 32,764.8
 
January 1, 2023-June 30, 2023: $33,747.74
Lease Year 5
 
July 1, 2023 – June 30, 2024
$ 411,047.46
July 1, 2023-December 31, 2023: $ 33,747.74
 
January 1, 2024-June 30, 2024: $ 34,760.17
Lease Year 6
 
July 1, 2024 – June 30, 2025
$ 423,378.88
July 1, 2024-December 31, 2024: $ 34,760.17
 
January 1, 2025-June 30, 2025: $ 35,802.98
Lease Year 7
 
July 1, 2025 – Dec. 31, 2015
$214,817.86
July 1, 2025-December 31, 2025: $35,802.98

Section 3.3 is hereby deleted in its entirety and replaced with the following:

Section 3.3     Payment of Operating Expenses and Taxes.

(a)         Commencing on the Commencement Date and continuing on the first day of each calendar month thereafter during the Term, Tenant shall pay, as Additional Rent, Tenant’s Pro Rata Share to reimburse Landlord for its Operating Expenses and Taxes, if any, concurrently with the monthly Base Rent payment. As of the Effective Date, Tenant’s Pro Rata Share of the Operating Expenses is $10/RSF, which the amount shall increase on January 1st of each Lease Year by an amount equal to the then current amount multiplied by three (3%) percent as set forth in the table below.

Lease Year
Annual Pro Rata Share of
the Operating Expenses
Monthly Pro Rata Share of
the Operating Expenses
Lease Year 1
 
July 1, 2019 – June 30, 2020
$ 83,554.80
July 1, 2019-December 31, 2019: $6,860.00
 
January 1, 2020-June 30, 2020: $7,065.80
Lease Year 2
 
July 1, 2020 – June 30, 2021
$ 86,061.44
July 1, 2020-December 31, 2020: $7,065.80
 
January 1, 2021-June 30, 2021: $7,277.77
Lease Year 3
 
July 1, 2021 – June 30, 2022
$ 88,643.29
July 1, 2021-December 31, 2021: $7,277.77
 
January 1, 2022-June 30, 2022: $7,496.11
Lease Year 4
 
July 1, 2022 – June 30, 2023
$ 91,302.59
July 1, 2022-December 31, 2022: $7,496.11
 
January 1, 2023-June 30, 2023: $7,720.99
Lease Year 5
 
July 1, 2023 – June 30, 2024
$ 94,041.66
July 1, 2023-December 31, 2023: $7,720.99
 
January 1, 2024-June 30, 2024: $7,952.62
Lease Year 6
 
July 1, 2024 – June 30, 2025
$ 96,862.91
July 1, 2024-December 31, 2024: $7,952.62
 
January 1, 2025-June 30, 2025: $8,191.20
Lease Year 7
 
July 1, 2025 – Dec. 31, 2015
$49,147.19
July 1, 2025-December 31, 2025: $8,191.20

(b)         For purposes of this Lease,

“Tenant’s Pro Rata Share” shall be Tenant’s share of Landlord’s Operating Expenses for the Property. a fraction, the numerator of which is the RSF of the Premises and the denominator of which is the RSF of the Landlord’s Premises, as the same may be re-determined any time RSF is added to or subtracted from the Landlord’s Premises as set forth herein. As of the date hereof, the RSF of the Landlord’s Premises for purposes of this calculation is 184,427 RSF. RSF shall be deemed added to the Landlord’s Premises for purposes of this calculation on the date Landlord determines that such RSF is ready to receive tenant improvements and is offered for rental to the public. Within thirty (30) days following written request from Tenant (but not more than once every twelve (12) months), Landlord shall certify to Tenant in writing as to the then RSF of the Landlord’s Premises. For purposes of determining the Tenant’s Pro Rata Share of the insurance for the Building, the numerator shall be the RSF of the Premises and the denominator shall be 184,427 RSF.

“Operating Expenses” shall mean all costs and expenses incurred or made by Landlord or charged to Landlord in connection with the Property or the operation and management thereof, exclusive of Taxes. Operating Expenses may include, without limitation: (i) costs of cleaning, security, janitorial service for the Common Areas, rubbish removal, heating, electricity, air conditioning, utilities, risers/shafts and cable maintenance, tempered water and water for customary lavatory use, window cleaning, and maintenance and repairs, maintenance of the grounds, sidewalks, access roads, sanitary sewer and related connections, equipment and fixtures, drainage, storm water management and related fixtures and equipment, and parking lots; (ii) service contracts or other agreements with independent contractors for any of the foregoing (including, but not limited to, fire alarm, security system, electric system, elevator, and heating, ventilation and air conditioning (“HVAC”) maintenance); (iii) management fees; (iv) wages, salaries, benefits, payroll taxes and unemployment compensation insurance for employees of Landlord or any contractor of Landlord engaged in the cleaning, operating, maintenance or security of the Property; (v) the cost of all Landlord’s insurance including, without limitation, casualty, liability and loss of rent insurance equal to eighteen (18) month’s rent for the gross rent roll (including Additional Rent), and the amount of any insurance deductibles; (vi) legal fees (excluding fees incurred in connection with enforcement action against an existing tenant or in negotiating a new lease); (vii) payments, other than Taxes, to the city and/or county in which the Landlord’s Premises is located and other agencies or governmental agencies including, but not limited to, water and sewer charges; (viii) fees and charges of any association, or special district affecting the Property; (ix) fees and charges, under any agreements affecting the Common Areas such as any reciprocal easement agreements, operation and maintenance agreements and park covenant and restriction agreements and the like; (x) all rent, additional rent, (including, without limitation, common area charges and capital reserve fund contributions) and all other charges payable under the Prime Lease or any other ground lease or other lease to which this Lease is subject; (xi) supplies; and (xii) all costs of maintaining, managing, reporting, commissioning, and recommissioning the Landlord’s Premises or any part thereof.

The term “Operating Expenses” shall not include: (i) repairs or other work (including rebuilding) occasioned by fire, windstorm or other casualty or condemnation to the extent covered by Landlord’s insurance, but excluding any deductibles; (ii) any cost (such as electricity or overtime services) to the extent such costs are separately charged to and payable by Tenant hereunder; (iii) leasing commissions and expenses associated with procuring tenants, including, lease concessions, lease take-over obligations; (iv) interest on and amortization of debt; (v) interest and penalties for late payment of taxes; (vi) wages or salaries of employees of property or building manager; (vii) expenses resulting from any violation by Landlord of the terms of any ground or underlying lease or mortgage to which this Lease is subordinate; (viii) fines and penalties (to the extent not attributable to any act or omission of Tenant or its agents, employees or contractors) which, under this Lease, are the responsibility of Landlord; (ix) fees and costs associated with any refinancing of mortgage debt on the Property; and (x) any item for which reimbursement is actually made to Landlord from another source (e.g., insurance proceeds or payment from another tenant).

Notwithstanding anything to the contrary contained in this Lease, Landlord may, at its sole option, instead of using Tenant’s Pro Rata Share or sub-metering, allocate electricity, water and sewer, and gas used in the Common Areas to Tenant and other tenants of the Landlord’s Premises based upon Tenant’s and such other tenants’ consumption of electricity, water and sewer, and gas as reasonably determined by Landlord.

(c)        Tenant shall also pay (i) before any penalties or fines are assessed to the appropriate governmental authority any use and occupancy tax in connection with the Premises. In the event Landlord is required by law to collect such tax, Tenant shall pay such use and occupancy tax to Landlord as Additional Rent within ten (10) days of demand and Landlord shall remit any amounts so paid to Landlord to the appropriate governmental authority in a timely fashion, and (ii) Tenant shall also pay to Landlord the applicable state sales tax on all Rent simultaneously with the payment by Tenant of the Rent as otherwise required by applicable Legal Requirements (as hereinafter defined).

(g)        Sections 12.1 and 12.2 are hereby deleted and replaced with the following:

Section 12.1 Tenant shall carry and contractually cause and require that its contractors carry (at their sole expense from and after the date hereof and during the Term) the following insurance:

(a)           Property Insurance and Boiler & Machinery insurance (the latter is applicable if Tenant has any machinery or equipment on the Premises) with “Special Form” coverage, including earthquakes and flood insurance, insuring Tenant’s alterations and improvements to the Premises and any and all furniture, equipment, supplies, contents and other property owned, leased, held or possessed by it and contained therein (collectively, “Tenant’s Property”), such insurance coverage to be equal to the full replacement cost value (without deduction for depreciation) of Tenant’s Property, with wind and flood deductibles not exceeding the lesser of five percent (5%) of the total insured value (“TIV”) or $10,000;

(b)           Either as part of the above referenced property insurance or as a separate property insurance policy, business interruption insurance with “Special Form” coverage including the same perils in (a) above in an amount not less than the aggregate Base Rent and Additional Rent payable for the eighteen (18) month period immediately following the loss. The insurance required in this subsection shall designate Landlord as loss payee and shall be in the broadest form available covering loss of income;

(c)           Workers’ compensation, Employer’s Liability, and New York State Disability and Paid Family Leave insurance with coverage in statutory amounts covering all persons employed by Tenant, and other statutory forms of insurance for all persons who under applicable law shall be required to be covered;

(d)             Commercial general liability insurance written on the most recent edition of ISO form CG 00 01 or its equivalent for the Premises in a combined coverage for bodily injury and property damage in an amount not less than Two Million Dollars ($2,000,000) per occurrence and Four Million Dollars ($4,000,000) aggregate or Five Million Dollars ($5,000,000) per occurrence and aggregate during construction. Tenant shall name Landlord, Landlord’s mortgagee, the Prime Landlord, the City of New York, Research Foundation for the State University of New York, State University of New York Downstate Medical Center, any manager of the Building and/or the Landlord’s Premises, and any other person designated by Landlord, and their respective employees, directors, officers, officials, members, and agents (“Additional Insureds”) as additional insureds for both ongoing and products/completed operations with coverage as broad as the most recent edition of ISO CG 20 10 and CG 20 37 or their equivalents under such policy. Such policy shall insure against any and all liability for injury to or death of a person or persons and for damage to property occasioned by or arising out of any construction work being done on the Premises, or arising out of the use or occupancy of the Premises by Tenant, its employees, agents, representatives or contractors. The additional insured coverage that applies to the Prime Landlord (currently New York City Economic Development Corporation), the City of New York and Prime Landlord’s building manager (if any) must be provided via a Designated Organization additional insured endorsement that specifically identifies each additional insured and shall not require privity of contract between the aforementioned additional insureds and the Tenant. The use of blanket additional endorsements which requires privity of contract with the Additional Insureds is prohibited. Tenant acknowledges that Landlord, Prime Landlord and the City are materially relying upon the content of most recent edition of ISO Form CG 00 01 or its equivalent if applicable to implement Landlord’s commercial general liability insurance requirements under this Section 12.1(b). Accordingly, Tenant agrees that non-standard exclusions and other modifications to the most recent edition of ISO Form CG 00 01 01 or to its equivalent if applicable regarding coverage for contractual liability, employer’s liability, and New York Labor Law are prohibited under the terms and conditions of this Section 12.1(b). The liability coverage shall (i) be primary insurance as to all claims thereunder and provide that any insurance carried by Landlord is excess and is non-contributing with any insurance requirement of Tenant; (ii) contain cross liability endorsements or a severability of interest clause acceptable to Landlord; and (iii) specifically cover the liability assumed by Tenant under this Lease including, without limitation, Tenant’s indemnification obligations under this Lease; and

(e)           Pollution/Environmental Liability Insurance covering bodily injury, including death, and property damage, including loss of use of damaged property or use of property that has not been physically injured or destroyed, which in any event shall not be less than two million dollars ($2,000,000) per occurrence, unless otherwise approved in writing by Landlord, which limit(s) may be increased from time to time as reasonably required by Landlord based on the Tenant’s activities and decreased from time to time. Tenant shall name Landlord, Landlord’s mortgagee, the Prime Landlord, the City of New York, any manager of the Building and/or the Landlord’s Premises, and any other person designated by Landlord as additional insureds under such policy. Such insurance shall provide coverage for actual, alleged or threatened emission, discharge, dispersal, seepage, release or escape of pollutants (including, without limitation, any Hazardous Materials), including any loss, cost or expense incurred as a result of any cleanup of pollutants (including, without limitation, any Hazardous Materials) or in the investigation, settlement or defense of any claim, suit or proceeding against any of the Additional Insureds arising from the activities and operations under this Lease. The coverage for bodily injury and property damage and clean up shall apply to both on and off the Premises (including throughout the Terminal) exposures and shall include, without limitation, coverage for improper or inadequate: (i) environmental management practices; (ii) biological, chemical and radioactive materials handling and waste disposal; (iii) written emergency plans in the event of a chemical spill or release; (iv) training or supervision of staff who handle biological materials, chemicals and hazardous wastes; (v) storage of chemicals and Hazardous Materials; and (vi) loading, unloading, transportation, and/or off- site disposal of Hazardous Materials. Coverage must not exclude transportation (owned and non-owned vehicles) of the Hazardous Materials to and from the Premises and all related events which may occur in the Premises and/or elsewhere in the Terminal. Coverage must not exclude operations of basic lab support rooms (BSL 1), vector labs (BSL 2) and separate labs used for vectors and immunology (BSL 3) and BSL 4, vaccination bioscience research laboratories, and/or related product development center. If such coverage is written on a claims-made basis, such policy shall have a retroactive date preceding the effective date of this Lease, and continuous coverage shall be maintained, or an extended discovery period exercised, for a period of not less than three (3) years following the Expiration Date.

Notwithstanding the above Section 12.1(e), Tenant shall only be required to carry such Pollution/Environmental Liability Insurance upon the earlier of occupancy of or storage of chemicals and Hazardous Materials on the Premises.

(f)            Automobile Liability insurance, covering applicable owned, hired and non-owned vehicles, with limits as reasonably designated by Landlord from time to time, but in any event, with limits of not less than one million dollars ($1,000,000) combined single limit with respect to bodily injury, death and property damage per occurrence and adding the Additional Insureds as additional insureds on a primary and non-contributory basis.

(g)           All of Tenant’s insurance shall be with responsible companies qualified to do business in the State of New York, in good standing and holding a “general policy rating” of A- VIII or better, as set forth in the most current issue of Best Key Rating Guide, and shall be written on an occurrence basis (and not claims made). Landlord, Landlord’s mortgagee and any other person designated by Landlord shall be named as additional insureds with respect to all liability insurance policies.

(h)         Tenant must deposit with Landlord the following for such insurance at or before Tenant or its agents, employees or contractors enters the Premises for any purpose whatsoever, and thereafter within fifteen (15) days before the expiration of any such policies: (i) with respect to the insurance required under Section 12.1(a) and (b), an ACORD Form 28 with changes requested by Landlord or other form reasonably acceptable to Landlord; (ii) with respect to the insurance required under Section 12(c) and 12(f), a certificate of insurance in form reasonably acceptable to Landlord; and (iii) with respect to the insurance required under Section 12(d), (e), and (f), Tenant’s policy of insurance or certificates with endorsements evidencing additional insured coverage for the Additional Insureds has been added to Tenant’s policy in a form reasonably satisfactory to Landlord. All insurance shall provide that Landlord shall receive at least thirty (30) days prior written notice of cancellation or amendment to the same. All such policies or certificates shall be delivered with satisfactory evidence of the payment of the premium therefor.

(i)        All chemicals, molecules, laboratory data, computers, merchandise, furniture, fixtures and property which may be on or about the Premises shall be at the sole risk and hazard of Tenant, and if the whole or any part of the Premises is destroyed or damaged by fire, water or by the leaking or bursting of water pipes, or in any other manner, no part of such loss or damage will be charged to Landlord.

Section 12.2     Coverages. Landlord shall maintain during the Term, with solvent and responsible companies:

(a)       Building and Personal Property Coverage, with “Special Form” coverage for the Landlord’s Premises in an amount equal to the full replacement value of the Landlord’s Premises along with, at Landlord’s option, loss of rents insurance for up to eighteen (18) months of Rent; and

(b)       commercial general liability insurance covering injuries occurring at the Property, which shall provide for a combined coverage for bodily injury and property damage in an amount not less than Five Million Dollars ($5,000,000) per occurrence.

(c)       The cost of all insurance coverage provided to Landlord shall be an Operating Expense and subject to reimbursement in connection with Tenant’s Pro Rata Share. All such insurance and all other insurance required by this Lease shall satisfy all requirements for insurance under the Prime Lease and any Mortgage. With respect to the insurance to be carried by Tenant hereunder, to the extent that the Prime Lease, Mortgage or Landlord in its commercially reasonable discretion requires higher limits, additional insurance, additional coverages or additional insureds or otherwise imposes requirements in addition to or more onerous than the requirements set forth herein, then Tenant, on behalf of and at the expense of Tenant, shall obtain insurance satisfying all such additional or more onerous requirements.

(i)          The content of Article XIII is hereby deleted in its entirety and replaced with “INTENTIONALLY DELETED”.

(j)          Section 21.1 is hereby deleted and replaced with the following:

Subordination. This Lease is and shall be subject and subordinate to (i) the City Lease, (ii) the Prime Lease and (iii) all Mortgages held by Landlord and Prime Landlord. The subordination in this Section 21.1 is self-executing and no further instrument shall be required to establish the subordination set forth herein. In addition, this Lease is and shall be subject and subordinate to any other existing underlying leases affecting the Premises and to all renewals, modifications, consolidations, replacements, and extensions thereof. If any Mortgagee requests an SNDA from Tenant, then Tenant shall execute and deliver to Mortgagee such Mortgagee’s form of SNDA in recordable form within twenty (20) days of such request.


 (k)
 Section 23.1 is modified to add the following after the last sentence:

Notwithstanding the foregoing, upon the expiration or earlier termination of this Lease, Landlord may, in its sole discretion, require Tenant to remove the improvements installed in connection with Tenant’s Work. If Landlord elects to require some or all of Tenant’s Work to be removed, Tenant shall cause such removal and restoration to condition on the date hereof or better to occur at Tenant’s expense promptly upon the early termination or expiration of this Lease or Landlord shall remove or cause to be removed Tenant’s Work at Tenant’s expense.


(l)
 The first sentence of Section 27.1 is hereby deleted and replaced with the following:

“Tenant has deposited with Landlord a sum of Twenty Thousand Eight Hundred Seventy-One and 53/100 ($20,871.53) Dollars as additional security for the faithful performance and observance by Tenant of the terms, provisions and conditions of the Lease.”

(m)          The content of Article XXXIX is hereby deleted in its entirety and replaced with “INTENTIONALLY DELETED”.

2.           Landlord’s Work. Tenant acknowledges that Landlord’s Work has been completed.

3.          Ratification. Except as expressly set forth in this Second Lease Amendment, the terms and conditions of the Lease are hereby ratified and reaffirmed and shall continue in full force and effect without any change or modification and shall apply for the balance of the Lease Term.

4.           Broker. Tenant hereby represents and warrants to Landlord that it has not dealt with any broker in connection with this Second Lease Amendment, and there are no brokerage fees or commissions payable in connection herewith. Tenant hereby agrees to hold Landlord harmless from, and indemnified against, all loss or damage (including without limitation, the cost of defending the same) arising from any claim by any broker.

5.        Examination of Second Lease Amendment. Submission of this instrument for examination or signature to Tenant does not constitute a reservation or option, and it is not effective until execution by and delivery to both Landlord and Tenant.

6.         Definitions. Except as otherwise provided herein, the capitalized terms used in this Second Lease Amendment shall have the definitions set forth in the Lease.

7.          Reservation of Rights; No Waiver. By executing this Second Lease Amendment, Landlord does not waive its right to assert (a) any events or conditions that would constitute defaults under the Lease, or (b) any monetary or other obligations owed by Tenant to Landlord under the Lease. Landlord expressly reserves and does not waive any rights under the Lease, at law, and in equity. Acceptance by Landlord of any partial performance, including without limitation partial performance of any unpaid obligations under the Lease, by Tenant is and will be without prejudice to the rights and remedies of Landlord under the Lease, at law and in equity.

8.          Incorporation. This Second Lease Amendment shall be incorporated into and made a part of the Lease, and all provisions of the Lease not expressly modified or amended hereby shall remain in full force and effect.

9.          Conflict. In the event of any conflict between the provisions of the First Lease Amendment and the Second Lease Amendment, the provisions of this Second Lease Amendment shall control.

10.        Effective Upon Execution. This Lease is transmitted for examination only and does not constitute an offer to Lease. This Lease shall become effective only upon execution hereof by the Parties and delivery by Landlord to Tenant of an executed Lease.

11.       Entire Agreement. This instrument contains the entire and only agreement between the Parties. No oral statements or representations or prior written matter not contained herein shall have any force or effect.

12.         Amendments. This Lease shall not be modified, changed, or amended in any way or canceled, terminated or abridged except by a writing subscribed by both Parties.

13.        Counterparts. This Lease may be executed in one or more counterparts, each one of which shall be deemed an original. E-mail (PDF attachment) and facsimile signatures shall also be sufficient to bind the Parties.

14.         Invalidity of Certain Provisions. If any term or provision of this Lease or the application thereof to any person or circumstances shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and each term and provision of this Lease shall be valid and enforced to the fullest extent permitted by law.

[SIGNATURES APPEAR ON FOLLOWING PAGE]

IN WITNESS WHEREOF, the parties have caused this Second Lease Amendment to be executed on the day and year first above written.

 
LANDLORD:
   
 
BIOBAT, INC., a New York Not-for-Profit corporation

 
 By: /s/ Eva Cramer  
 
Name:
 Eva Cramer  
 
 Title:
 President  

 
TENANT:
   
 
BROOKLYN IMMUNOTHERAPEUTICS LLC, a Delaware limited liability company

 
 By: /s/ Mark Leuchtenberger  
 
 Name: Mark Leuchtenberger
  
 
 Title: Interim President and CEO
  

Signature Page to Second Amendment to Lease Agreement

EXHIBIT A
TO
SECOND AMENDMENT TO LEASE AGREEMENT

EXHIBIT A

A-1
EXHIBIT B

EXHIBIT D-1

WORK LETTER

[Tenant’s contractor or architect should review to make sure time periods and other requirements are workable.]

THIS  WORK LETTER dated _____________, 2019 (this “Work Letter”) is made and entered into by and between Landlord and Tenant, and is attached to and made a part of the Lease Agreement dated _____________, 2019 (the “Lease”), by and between Landlord and Tenant. Any initially capitalized terms used but not defined herein shall have the meanings set forth in the Lease.


 1.
General Requirements.

(a)      Landlord’s Authorized Representative. Landlord designates _____________ and _____________ (either such individual acting alone, “Landlord’s Representative”) as the only persons authorized to act for Landlord pursuant to this Work Letter. Tenant shall not be obligated to respond to or act upon any request, approval, inquiry or other communication (“Communication”) from or on behalf of Landlord in connection with this Work Letter unless such Communication is in writing from Landlord’s Representative. Landlord may change either Landlord’s Representative at any time upon not less than 5 business days advance written notice to Tenant. Neither Landlord nor Landlord’s Representative shall be authorized to direct Landlord’s contractors in the performance of Tenant’s Work (as hereinafter defined).

(b)     Tenant’s Authorized Representative. Tenant designates _____________ and _____________ (either such individual acting alone, “Tenant’s Representative”) as the only persons authorized to act for Tenant pursuant to this Work Letter. Landlord shall not be obligated to respond to or act upon any request, approval, inquiry or other Communication from or on behalf of Tenant in connection with this Work Letter unless such Communication is in writing from Tenant’s Representative. Tenant may change either Tenant’s Representative at any time upon not less than 5 business days advance written notice to Landlord. Tenant’s Representative shall be the sole persons authorized to direct Tenant’s contractors in the performance of Tenant’s Work.

(c)        Architects, Consultants and Contractors. Landlord and Tenant hereby acknowledge and agree that: (i) ________________ shall be the general contractor for Tenant’s Work, (ii) ________________ shall be the architect (the “TI Architect”) for Tenant’s Work, and (iii) any subcontractors for Tenant’s Work shall be selected by Tenant, but approved in writing by Landlord prior to being engaged to perform Tenant’s Work.

A-2

 2.
Tenant Improvements.

(a)       Tenant’s Work Defined. As used herein, “Tenant’s Work” shall mean all improvements to the Premises as shown on the Construction Drawings, as defined in Section 2(c) below. Tenant’s Work shall include the oversight of the installation of furniture, benches, equipment, clean rooms and all other improvements required by Tenant to use the Premises. Other than as expressly provided herein or in the Lease, Landlord shall not have any obligation whatsoever with respect to the finishing of the Premises for Tenant’s use and occupancy. Tenant shall be responsible for all costs associated with Tenant’s Work in accordance with Section 8 hereof.

(b)       Tenant’s Space Plans. Tenant shall deliver to Landlord and the TI Architect schematic drawings and outline specifications (the “Space Plans”) detailing Tenant’s plans for completing Tenant’s Work within 30 days of the date hereof. Not more than 15 days thereafter, Landlord shall deliver to Tenant the reasonable written objections, questions or comments of Landlord and the TI Architect with regard to the Space Plans. Tenant shall cause the Space Plans to be revised to address such reasonable written comments and shall resubmit said drawings to Landlord for approval within 15 days thereafter. Such process shall continue until Landlord has approved the Space Plans in its sole discretion.

(c)       Working Drawings. Not later than 14 business days following the approval of the Space Plans, Tenant shall cause the TI Architect to prepare and deliver to Landlord for review and comment construction plans, specifications and drawings for Tenant’s Work (“Construction Drawings”), which Tenant’s Work shall be prepared substantially in accordance with the Space Plans. Tenant shall be solely responsible for ensuring that the Construction Drawings reflect Tenant’s requirements for Tenant’s Work. Landlord shall deliver its written comments on the Construction Drawings to Tenant not later than 14 business days after Landlord’s receipt of the same. Tenant shall cause the Construction Drawings to be revised to address such reasonable written comments and shall resubmit said drawings to Landlord for approval within 14 business days thereafter. Such process shall continue until Landlord has approved the Construction Drawings in its sole discretion.. Any disputes in connection with such comments shall be resolved in accordance with Section 2(d) hereof. Once approved by Landlord, subject to the provisions of Section 4 below, Tenant shall not modify the Construction Drawings except as may be reasonably required.

(d)       Approval and Completion. It is hereby acknowledged by Landlord and Tenant that the Construction Drawings must be completed and approved not later than [__Outside Date  for Construction Start]. Upon any dispute regarding the design of Tenant’s Work, which is not settled within 10 business days after notice of such dispute is delivered by one party to the other, Landlord may make the final decision regarding the design of Tenant’s Work. Any changes to the Construction Drawings following Landlord’s and Tenant’s approval of same requested by Tenant shall be processed as provided in Section 4 hereof.

A-3

 3.
Performance of Tenant’s Work.

(a)       Mechanic’s Liens. Tenant shall comply with Section 8.4 of the Lease at all times during the construction of Tenant’s Work.

(b)      Commencement and Permitting. Tenant shall commence construction of Tenant’s Work upon obtaining a building permit (the “TI Permit”) authorizing the construction of Tenant’s Work consistent with the Construction Drawings approved by Landlord. The cost of obtaining the TI Permit shall be payable by Tenant. Landlord shall cooperate with Tenant as may be reasonably necessary for Tenant to obtain the TI Permit. If any Governmental Authority having jurisdiction over the construction of Tenant’s Work or any portion thereof shall impose terms or conditions upon the construction thereof that: (i) are inconsistent with Landlord’s or Tenant’s obligations hereunder, (ii) materially increase the cost of constructing Tenant’s Work, or (iii) will materially delay the construction of Tenant’s Work, Landlord and Tenant shall reasonably and in good faith seek means by which to mitigate or eliminate any such adverse terms and conditions.

(c)      Completion of Tenant’s Work. Tenant shall substantially complete or cause to be substantially completed Tenant’s Work in a good and workmanlike manner, in accordance with the TI Permit subject, in each case, to Minor Variations and normal “punch list” items of a non-material nature that do not interfere with the use of the Premises and with a certificate or temporary certificate of occupancy (or an equivalent approval having been issued) for the Premises permitting lawful occupancy of the Premises (but specifically excluding any permits, licenses or other governmental approvals required to be obtained in connection with Tenant’s operations in the Premises) (“Substantial Completion” or “Substantially Complete”). For purposes of this Work Letter, “Minor Variations” shall mean any modifications reasonably required: (i) to comply with all applicable Legal Requirements and/or to obtain or to comply  with any required permit (including the TI Permit); (ii) to comply with any request by Tenant for modifications to Tenant’s Work; (iii) to comport with good design, engineering, and construction practices that are not material; or (iv) to make reasonable adjustments for field deviations or conditions encountered during the construction of Tenant’s Work.

(d)      Selection of Materials. Where more than one type of material or structure is indicated on the Construction Drawings approved by Landlord, the option will be selected at Tenant’s reasonable discretion. As to all building materials and equipment that Tenant is obligated to supply under this Work Letter, Tenant shall select the manufacturer thereof in its reasonable discretion, unless a specific manufacturer has been identified during the design process.

(e)      Delivery of the Premises. When Tenant’s Work is Substantially Complete, subject to the remaining terms and provisions of this Section 3(e), Tenant shall accept the Premises. Tenant’s taking possession and acceptance of the Premises shall constitute a waiver  of: (i) any warranty with respect to workmanship (including installation of equipment) or material (exclusive of equipment provided directly by manufacturers), (ii) any non-compliance of Tenant’s Work with Applicable Laws, or (iii) any claim that Tenant’s Work was not completed substantially in accordance with the Construction Drawings (subject to Minor Variations and such other changes as are permitted hereunder) or (iv) any latent defect (collectively, a “Construction Defect”). Tenant shall immediately notify Landlord of any Construction Defect, and shall use reasonable efforts to remedy or cause the responsible contractor to remedy any such Construction Defect within 30 days after such notice. Tenant shall be responsible for remedying any Construction Defect at its sole cost and expense.

A-4
Tenant shall be entitled to receive the benefit of all construction warranties and manufacturer’s equipment warranties relating to equipment installed in the Premises. If requested by Landlord, Tenant shall attempt to obtain extended warranties from manufacturers and suppliers of such equipment. Tenant shall promptly undertake and complete, or cause to be completed, all punch list items within ninety (90) days of Substantial Completion.

4.       Changes. Any changes requested by Tenant to Tenant’s Work after the delivery and approval by Landlord of the Space Plan shall be requested and instituted in accordance with the provisions of this Section 4 and shall be subject to the written approval of Landlord, such approval not to be unreasonably withheld, conditioned or delayed.

(a)      Tenant’s Request For Changes. If Tenant shall request changes to Tenant’s Work (“Changes”), Tenant shall request such Changes by notifying Landlord in writing in substantially the same form as the AIA standard change order form (a “Change Request”), which Change Request shall detail the nature and extent of any such Change. Each Change Request shall also include an estimate of: (i) the time it will take, and (ii) the architectural and engineering fees and costs that will be incurred in connection with such Change Request. Such Change Request must be signed by Tenant’s Representative. Landlord shall respond to any Change Request within 10 business days following receipt thereof by either approving, denying or requesting more information relating to the Change Request, each in Landlord’s sole and absolute discretion.

(b)       Landlord’s Request For Changes. Once the Space Plans or Construction Drawings have been approved by Landlord, Landlord shall be permitted to make any Changes that, Landlord’s reasonable discretion, are necessary or required to maintain the structural integrity of the Building, compliance with any Applicable Laws or to remain in compliance with the City Lease.


 5.
Costs.

(a)       Budget For Tenant Improvements. Before the commencement of construction of Tenant’s Work, Tenant shall obtain a detailed breakdown by trade of the costs incurred or that will be incurred in connection with the design and construction of Tenant’s Work (the “Budget”). Landlord shall have the right to review and approve or make comments to the Budget. If the Landlord-approved Budget is greater than the TI Letter of Credit, Tenant shall deposit with Landlord the difference, in cash, prior to the commencement of construction of Tenant’s Work or Changes, for disbursement by Landlord as described in Section 5(d).

A-5
(b)      TI Letter of Credit. Tenant shall provide to Landlord a Letter of Credit (the “TI Letter of Credit”) in the amount of [________________]. The TI Letter of Credit shall be held by Landlord as additional security for Tenant’s performance hereunder and may be used by Landlord upon and after any default hereunder by Tenant or an Event of Default (as defined in the Lease) to either (i) cause Tenant’s Work to be completed or (ii) cause the removal of all improvements made in connection with Tenant’s Work to return the Premises to the condition it was in when it was delivered by Landlord to Tenant. The TI Letter of Credit shall be returned to Tenant upon the Substantial Completion of Tenant’s Work.


 6.
Tenant Access.

(a)       No Interference. Neither Tenant nor any Tenant Party (as defined in the Lease) shall interfere with the performance of Tenant’s Work, nor with any inspections or issuance of final approvals by applicable governmental authorities.

(b)       Acceptance of Premises. Tenant acknowledges and agrees that it has accepted the Premises as of the Commencement Date (as defined in the Lease) subject to Landlord’s right to inspect the Premises at reasonable times to inspect the progress of Tenant’s Work prior to substantial completion. Tenant shall defend with counsel reasonably acceptable by Landlord, indemnify and hold Landlord harmless from and against any loss of or damage to Tenant’s property, completed work, fixtures, equipment, materials or merchandise, and from liability for death of, or injury to, any person, caused by the act or omission of Tenant or any Tenant Party during such inspections.


 7.
Miscellaneous.

(a)      Consents. Whenever consent or approval of either party is required under this Work Letter, that party shall not unreasonably withhold, condition or delay such consent or approval, unless expressly set forth herein to the contrary.

(b)       Modification. No modification, waiver or amendment of this Work Letter or of any of its conditions or provisions shall be binding upon Landlord or Tenant unless in writing signed by Landlord and Tenant.

8.       Costs. Notwithstanding anything else set forth herein or in the Lease to the contrary, Tenant acknowledges and agrees to be solely responsible for all costs associated with obtaining the Space Plans and Construction Drawings and for all costs and expenses associated with the completion of Tenant’s Work, including, without limitation, all costs and expenses incurred by Landlord in connection with any of the foregoing.

A-6
Execution Copy

EXHIBIT B

The Premises, outlined below, is located on the 2d floor of the southwest portion of the Building.



9
Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Matthew Angel, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Brooklyn ImmunoTherapeutics, Inc.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls.

Date: June 30, 2022
/s/ Matthew Angel
 
Matthew Angel
 
Chief Executive Officer and President
 
(Principal Executive Officer)

 
Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Andrew Jackson, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Brooklyn ImmunoTherapeutics, Inc.

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls.

Date: June 30, 2022
/s/ Andrew Jackson
 
Andrew Jackson
 
Chief Financial Officer
 
(Principal Financial Officer)


Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Brooklyn ImmunoTherapeutics, Inc. for the quarterly period ended March 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge on the date hereof:

1. the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Brooklyn ImmunoTherapeutics, Inc. for the period presented therein.

Date: June 30, 2022
/s/ Matthew Angel
 
Matthew Angel
 
Chief Executive Officer and President
 
(Principal Executive Officer)

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Brooklyn ImmunoTherapeutics, Inc. for the quarterly period ended March 31, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge on the date hereof:

1. the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Brooklyn ImmunoTherapeutics, Inc. for the period presented therein.

Date: June 30, 2022
/s/ Andrew Jackson
 
Andrew Jackson
 
Chief Financial Officer
 
(Principal Financial Officer)

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.