UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q/A

(Amendment No. 1)

 

ý             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2016

 

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: 001-34949

 

ARBUTUS BIOPHARMA CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

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 [x] No [ ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [x] No [ ]

 

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

 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [x]

 

As of October 31, 2016, the registrant had 54,841,494 common shares, no par value, outstanding. 

 

EXPLANATORY NOTE

 

Arbutus Biopharma Corporation (“Arbutus”) is filing this Amendment No. 1 (this "Amendment") to its quarterly report on Form 10-Q for the quarterly period ended September 30, 2016 (the "Original Form 10-Q"), which was filed with the Securities and Exchange Commission (the "SEC") on November 3, 2016, in response to comments from the SEC regarding a confidential treatment request made by Arbutus with respect to Exhibit 10.1 to the Original Form 10-Q, in order to re-file the agreement contained in Exhibit 10.1 and re-instate certain information previously redacted from such Exhibit.

Except as described above, no other changes have been made to the Original Form 10-Q.  This Amendment does not reflect events occurring after the date of the Original Form 10-Q or modifies or updates any of the other information contained in the Original Form 10-Q in any way other than as required to reflect the amendments discussed above. Accordingly, this Amendment should be read in conjunction with the Original Form 10-Q and Arbutus’ other filings with the SEC.

 

 

 

 

 

 

  

 

PART II. OTHER INFORMATION

 

See Exhibit Index

 

 

 

SIGNATURES

 

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, thereunto duly authorized on December 21, 2016.

 

 

 

    

 

 

 

EXHIBIT INDEX

______________________

 * Previously Filed.

 ** Filed herewith.

 †† Confidential treatment has been requested as to portions of this exhibit.

± Indicates a management contract or compensatory plan arrangement

 

LEASE AGREEMENT

THIS LEASE AGREEMENT (“this Lease”) is made as of this 9^th day of August, 2016, between ARE-PA REGION NO. 7, LLC, a Delaware limited liability company (“Landlord”), and ARBUTUS BIOPHARMA, INC., a Delaware corporation (“Tenant”).

BASIC LEASE PROVISIONS

Address:

701 Veterans Circle, Warminster, Pennsylvania  18974-3531.

Premises:

The entirety of the building containing approximately 35,155 rentable square feet, (“Building”) located at the address above and the real property on which the Building is located, as shown on Exhibit A together with all improvements thereon and appurtenances thereto as described on Exhibit B.

Base Rent:  $49,803, per month

Rentable Area of Premises:  35,155 sq. ft.

Security Deposit:  $99,606

Tenant’s Share of Operating Expenses:  [***]

Rent Adjustment Percentage:  [***]

Target Commencement Date:  November 1, 2016

Base Term:

Beginning on November 1, 2016 and ending on April 30, 2027, i.e., 126 months after November 1, 2016.

Permitted Use:

for the operation of a research and development laboratory, in addition to general office and other related uses, and for and all other incidental uses arising out of the operation of Tenant's business in the Premises, but in all events in compliance with the provisions of Section 7 hereof.

The following Exhibits and Addenda are attached hereto and incorporated herein by this reference:

Subject to Force Majeure (as defined in Section 34), a Taking (as defined in Section 19), the provisions of the preceding sentence, and Section 2 below, Tenant shall have access to and egress from the Building and the Premises, 24 hours a day, 7 days a week.

The “Commencement Date” shall mean November 1, 2016; provided, however, that Tenant shall have the right to deliver an irrevocable written notice to Landlord (“Early Commencement Date Notice”) at any time before the date that is 45 days before November 1, 2016 (i.e., Friday, September 16, 2016 since the 45^th day falls on Saturday, September 17, 2016) requesting that the Commencement Date occur on the date that is 45 days after the date of the Early Commencement Date Notice.  On Landlord’s receipt of the Early Commencement Date Notice, Landlord shall notify the Existing Tenant of such earlier Commencement Date and cause the Existing Lease to terminate before such earlier Commencement Date.  If Tenant timely delivers the Early Commencement Date Notice to Landlord, for all purposes of this Lease the Commencement Date shall be the date that is 45 days after the date of the Early Commencement Date Notice.  Upon request of Landlord, Tenant shall execute and deliver a written acknowledgment of the Commencement Date and the expiration date of the Term when such are established in the form of the “Acknowledgement of Commencement Date” attached to this Lease as Exhibit D; provided, however, Tenant’s failure to execute and deliver such acknowledgment shall not affect Landlord’s rights hereunder.  The “Term” of this Lease shall be the Base Term, as defined above in the Basic Lease Provisions and any Extension Terms that Tenant may elect pursuant to Section 39 hereof.

Except as set forth in the Work Letter and Section 30, if applicable, and Latent Defects (as defined below):  (i) Tenant shall accept the Premises in their condition as of the Commencement Date, subject to all applicable Legal Requirements (as defined in Section 7 hereof); (ii) Landlord shall have no obligation for any defects in the Premises; and (iii) Tenant’s taking possession of the Premises shall be conclusive evidence that Tenant accepts the Premises and that the Premises were in good condition at the time possession was taken.  Any occupancy of the Premises by Tenant before the Commencement Date shall be subject to all of the terms and conditions of this Lease, except that the Base Rent shall nevertheless not commence to accrue until the Commencement Date.  Notwithstanding the foregoing provisions of this paragraph, Tenant shall have a period of 180 days after the Commencement Date to reasonably identify in writing any Latent Defects.  During such 180 day period, Tenant shall promptly notify Landlord of any Latent Defects as soon as Tenant has knowledge of any such Latent Defect.  For purposes of this paragraph, “Latent Defects” means those material defects in the Premises that could not have been identified or discovered through a reasonable inspection of the Premises conducted by a

Except as set forth in this Lease, Tenant agrees and acknowledges that neither Landlord nor any agent of Landlord has made any representation or warranty with respect to the condition of all or any portion of the Premises, and/or the suitability of the Premises for the conduct of Tenant’s business, and Tenant waives any implied warranty that the Premises is suitable for the Permitted Use.  This Lease constitutes the complete agreement of Landlord and Tenant with respect to the subject matter hereof and supersedes any and all prior representations, inducements, promises, agreements, understandings and negotiations that are not contained herein.  Landlord in executing this Lease does so in reliance upon Tenant’s representations, warranties, acknowledgments and agreements contained herein.  Notwithstanding the provisions of this paragraph, Landlord represents and warrants to Tenant that, to Landlord’s Knowledge (as defined below) and as of the date hereof, (a) the Premises is in compliance with applicable Legal Requirements, including, but not limited to, those relating to fire/life safety systems, (b) the Premises is in material compliance with the ADA (as defined in Section 7 hereof), and (c) the Premises does not contain asbestos-containing materials or underground storage tanks.  For purposes of this paragraph, “Landlord’s Knowledge” means the current, actual knowledge of Lawrence J. Diamond, Senior Vice President of Alexandria Real Estate Equities, Inc., with no duty to inquire or investigate.  Mr. Diamond, who shall have no personal liability whatsoever under this Lease or otherwise, is the individual within Landlord’s organization who possesses the most knowledge about the condition of the Premises.

Concurrently with the execution and delivery of this Lease, Tenant shall cause Arbutus Biopharma Corporation (“Guarantor”) to execute and deliver to Landlord the Guaranty of Lease (“Guaranty”) in the form attached hereto as a part hereof as Exhibit G.

 

† subject to the Base Rent Abatement set forth in Section 4(a) below.

If the Commencement Date does not occur on November 1, 2016 because Tenant delivers the Early Commencement Date Notice to Landlord as provided in Section 2, the dates in the table above shall be revised to reflect the actual Commencement Date that occurs before November 1, 2016.  Such revisions shall be reflected in an amendment to this Lease promptly executed and delivered by Landlord and Tenant after request therefor by Landlord (which amendment shall be in form and substance reasonably acceptable to Landlord and Tenant) (“Commencement Date Amendment”).

If the Commencement Date does not occur on November 1, 2016 because Tenant delivers the Early Commencement Date Notice to Landlord as provided in Section 2, the dates in the table above shall be revised to reflect the actual Commencement Date that occurs before November 1, 2016.  Such revisions shall be reflected in the Commencement Date Amendment.

If Tenant is in Default during a month in which the Base Rent Abatement applies, then the monthly abatement then in effect shall temporarily cease for the period of time that Tenant remains in Default. Once the Default no longer exists, the Base Rent Abatement will thereupon resume, but the total period of abatement shall not be lengthened to accommodate any period of time that the Base Rent Abatement temporarily ceased due to a Default by Tenant.

 

Tenant shall pay the full amount of Base Rent due in accordance with the provisions of this Lease.  The administration rent set forth in Section 5 below shall not be abated and shall be based on the amount of Base Rent that would have been payable but for the Base Rent Abatement.

The term “Operating Expenses” means the following costs and expenses of any kind or description whatsoever incurred or accrued each calendar year during the Term by Landlord with respect to the Premises (without duplication):  (i) Taxes (as defined in Section 9), (ii) insurance premiums for insurance that Landlord is required to maintain under Section 17, and (iii) costs incurred in connection with, or arising out of or related to, Landlord’s obligations under Section 13; provided, however, that the cost of any capital repairs and improvements Landlord may elect to make shall be amortized over the lesser of 7 years and the useful life of such capital items with only the amortized portion included in Operating Expenses each year, and the costs of Landlord’s third party property manager in an amount not to exceed [***]% of Base Rent or, if there is no third party property manager, administration rent in the amount of [***]% of Base Rent).  Operating Expenses shall not include the following:

Within 90 days after the end of each calendar year (or such longer period as may be reasonably required), Landlord shall furnish to Tenant a statement (an “Annual Statement”) showing in reasonable detail:  (a) the total and Tenant’s Share of actual Operating Expenses for the previous calendar year, and (b) the total of Tenant’s payments in respect of Operating Expenses for such year.  If Tenant’s Share of actual Operating Expenses for such year exceeds Tenant’s payments of Operating Expenses for such year, the excess shall be due and payable by Tenant as Rent within 30 days after delivery of such Annual Statement to Tenant.  If Tenant’s payments of Operating Expenses for such year exceed Tenant’s Share of actual Operating Expenses for such year Landlord shall pay the excess to Tenant within 30 days after delivery of such Annual Statement, except that after the expiration, or earlier termination of the Term or if Tenant is delinquent in its obligation to pay Rent, Landlord shall pay the excess to Tenant after deducting all other amounts due Landlord.

The Annual Statement shall be final and binding upon Tenant unless Tenant, within 100 days after Tenant’s receipt thereof, shall contest any item therein by giving written notice to Landlord, specifying each item contested and the reason therefor.  If, during such 100 day period, Tenant reasonably and in good faith questions or contests the accuracy of Landlord’s statement of Tenant’s Share of Operating Expenses, Landlord will provide Tenant with access to Landlord’s books and records relating to the operation of the Premises and such information as Landlord reasonably determines to be responsive to Tenant’s questions (“Expense Information”).  If after Tenant’s review of such Expense Information, Landlord and Tenant cannot agree upon the amount of Tenant’s Share of Operating Expenses, then Tenant shall have the right to have an independent public accounting firm selected by Tenant from among the 5 largest in the United States, working pursuant to a fee arrangement other than a contingent fee (at Tenant’s sole cost and expense) and approved by Landlord (which approval shall not be unreasonably withheld or delayed), audit and/or review the Expense Information for the year in

question (“Independent Review”).  The results of any such Independent Review shall be binding on Landlord and Tenant.  If the Independent Review shows that the payments actually made by Tenant with respect to Operating Expenses for the calendar year in question exceeded Tenant’s Share of Operating Expenses for such calendar year, Landlord shall at Landlord’s option either (i) credit the excess amount to the next succeeding installments of estimated Operating Expenses or (ii) pay the excess to Tenant within 30 days after delivery of such statement, except that after the expiration or earlier termination of this Lease or if Tenant is delinquent in its obligation to pay Rent, Landlord shall pay the excess to Tenant after deducting all other amounts due Landlord.  If the Independent Review shows that Tenant’s payments with respect to Operating Expenses for such calendar year were less than Tenant’s Share of Operating Expenses for the calendar year, Tenant shall pay the deficiency to Landlord within 30 days after delivery of such statement.  If the Independent Review shows that Tenant has overpaid with respect to Operating Expenses by more than [***] then Landlord shall reimburse Tenant for all costs incurred by Tenant for the Independent Review.  Operating Expenses for the calendar years in which Tenant’s obligation to share therein begins and ends shall be prorated.

“Tenant’s Share” shall be the percentage set forth in the Basic Lease Provisions as Tenant’s Share.  Base Rent, Tenant’s Share of Operating Expenses and all other amounts payable by Tenant to Landlord hereunder are collectively referred to herein as “Rent.”

(a)     “The beneficiary hereby certifies that [insert Tenant] or its successors or assigns under the Lease has defaulted in its obligations under the lease agreement, dated [insert lease date] by and between [insert Tenant] and [insert Landlord] (as the same may be amended and assigned from time to time, the “Lease”) and that beneficiary is due the amount requested in this draw request.”  OR

(b)     “The beneficiary hereby certifies that [insert Tenant] or its successors or assigns under the Lease has defaulted in its obligations under the Lease, that beneficiary is barred by applicable law from sending a notice of default and that beneficiary is due the amount requested in this draw request.”  OR

 

(c)     “The beneficiary is in receipt of [insert bank’s name] notice of non-extension of letter of credit no. [insert letter of credit number] (“Letter of Credit”) and certifies that it is entitled to draw the entire amount of the Letter of Credit.”  OR

 

(d)     “The beneficiary hereby certifies that beneficiary is due the amount requested in this draw request pursuant to the terms and conditions of the Lease.”

If Tenant does not provide Landlord with a substitute Letter of Credit complying with all of the requirements hereof at least 10 days before the stated expiration date of any then current Letter of Credit, Landlord shall have the right to draw the full amount of the current Letter of Credit and hold the funds drawn in cash without obligation for interest thereon as the Security Deposit.  The Security Deposit shall be held by Landlord as security for the performance of Tenant’s obligations under this Lease.  The Security Deposit is not an advance rental deposit or a measure of Landlord’s damages in case of Tenant’s default.  Upon each occurrence of a Default (as defined in Section 20), Landlord may use all or

 

any part of the Security Deposit to pay delinquent payments due under this Lease, and the cost of any damage, injury, expense or liability caused by such Default, without prejudice to any other remedy provided herein or provided by law.  Upon any such use of all or any portion of the Security Deposit, Tenant shall pay Landlord, within 5 days after demand from Landlord, the amount that will restore the Security Deposit to the amount set forth in the Basic Lease Provisions.  Tenant hereby waives the provisions of any law, now or hereafter in force, which provide that Landlord may claim from a security deposit only those sums reasonably necessary to remedy defaults in the payment of Rent, to repair damage caused by Tenant or to clean the Premises, it being agreed that Landlord may, in addition, claim those sums reasonably necessary to compensate Landlord for any other loss or damage, foreseeable or unforeseeable, arising out of a Default by Tenant.  Upon bankruptcy or other debtor-creditor proceedings involving Tenant, the Security Deposit shall be deemed to be applied first to the payment of Rent and other charges due Landlord for periods prior to the filing of such proceedings.  If Tenant shall fully perform every provision of this Lease to be performed by Tenant, the Security Deposit, or any balance thereof (i.e., after deducting therefrom all amounts to which Landlord is entitled under the provisions of this Lease), shall be returned to Tenant (or, at Landlord’s option, to the last assignee of Tenant’s interest hereunder) within 75 days after the expiration or earlier termination of this Lease.

If Landlord transfers its interest in the Premises or this Lease, Landlord shall either (a) transfer any Security Deposit then held by Landlord to a person or entity assuming Landlord’s obligations under this Section 6, or (b) return to Tenant any Security Deposit then held by Landlord and remaining after the deductions permitted herein.  Upon such transfer to such transferee or the return of the Security Deposit to Tenant, Landlord shall have no further obligation with respect to the Security Deposit, and Tenant’s right to the return of the Security Deposit shall apply solely against Landlord’s transferee.  The Security Deposit is not an advance rental deposit or a measure of Landlord’s damages in case of Tenant’s default.  Landlord’s obligation respecting the Security Deposit is that of a debtor, not a trustee, and no interest shall accrue thereon.

Within 5 days after the date on which Tenant first uses any portion of the Additional Tenant Improvement Allowance (as defined in the Work Letter), the Security Deposit shall be increased so that it equals $[***].  Tenant shall deliver the increased Security Deposit to Landlord by means of an amendment to the Letter of Credit previously issued or a replacement Letter of Credit in the amount of the increased Security Deposit, all of which shall comply with the terms of this Lease.

notice of any auction, liquidation, or going out of business sale on the Premises, or using or allowing the Premises to be used for any unlawful purpose.  Tenant shall not place any machinery or equipment weighing 500 pounds or more in or upon the Premises without the prior written consent of Landlord, which consent shall not be unreasonably withheld.  Except as may be provided under the Work Letter, Tenant shall not, without the prior written consent of Landlord, use the Premises in any manner that will require ventilation, air exchange, heating, gas, steam, electricity or water beyond the existing capacity of the Premises as usually furnished for the Permitted Use.

 

 

this Lease, be deemed to have elected the longest period of payment permissible for the purpose of inclusion thereof in Taxes each year.  Landlord may contest by appropriate legal proceedings the amount, validity, or application of any Taxes or liens securing Taxes, and Tenant shall pay to Landlord within 30 days after request therefor, as Additional Rent, any costs or expenses (including, but not limited to, reasonable attorneys’ fees) incurred in connection with any such contest.  Taxes shall not include any net income taxes imposed on Landlord except to the extent such net income taxes are in substitution for any Taxes payable hereunder.  If any such Tax is levied or assessed directly against Tenant, then Tenant shall be responsible for and shall pay the same at such times and in such manner as the taxing authority shall require.  Tenant shall pay, prior to delinquency, any and all Taxes levied or assessed against any personal property or trade fixtures placed by Tenant in the Premises, whether levied or assessed against Landlord or Tenant.  If any Taxes on Tenant’s personal property or trade fixtures are levied against Landlord or Landlord’s property, or if the assessed valuation of the Premises is increased by a value attributable to improvements in or alterations to the Premises, whether owned by Landlord or Tenant and whether or not affixed to the real property so as to become a part thereof, higher than the base valuation on which Landlord from time-to-time allocates Taxes to the Premises, Landlord shall have the right, but not the obligation, to pay such Taxes.  Landlord’s determination of any excess assessed valuation shall be binding and conclusive, absent manifest error.  The amount of any such payment by Landlord shall constitute Additional Rent due from Tenant to Landlord within 30 days after written demand.  Landlord represents to Tenant, as of the date hereof, that (y) Landlord has not applied for any programs that could alter the amount of any future Taxes assessed against the Premises, and (z) Landlord is not currently contesting any Taxes.

separately metered Utilities and services that may be furnished to Tenant or the Premises during the Term.  No interruption or failure of Utilities, from any cause whatsoever other than Landlord’s willful misconduct, shall result in eviction or constructive eviction of Tenant, termination of this Lease or the abatement of Rent.

necessary approvals and permits from any Governmental Authorities for the Generator and Fuel Tank, Tenant shall have no remedy, claim, cause of action, or recourse against Landlord, nor shall such failure or inability to obtain any necessary permits or approvals provide Tenant the right to terminate this Lease.  Landlord shall cooperate with Tenant in securing all necessary permits and approvals for the Generator and Fuel Tank; provided, however, that Landlord shall not be obligated to spend any monies in connection with obtaining such permits and approvals and shall not be required to perform any act or otherwise take any action that would impose or create any liabilities on Landlord.  Without limiting any other obligations of Tenant set forth in this Lease, Tenant shall, at its sole cost and expense, install, maintain, and repair the Generator and Fuel Tank and keep such equipment in good order and operating condition.  The Fuel Tank shall serve as the fuel source for the Generator to be installed by Tenant.  Any installation work described in this Section shall comply with the terms and conditions of this Lease.

Landlord shall have no duty to ensure that such plans and specifications or construction comply with applicable Legal Requirements.  Tenant shall cause, at its sole cost and expense, all Alterations to comply with insurance requirements and with Legal Requirements and shall implement at its sole cost and expense any alteration or modification required by Legal Requirements as a result of any Alterations.  Tenant shall pay to Landlord, as Additional Rent, on demand an amount equal to the out-of-pocket costs incurred by Landlord in connection with plan review, coordination, scheduling and supervision.  Before Tenant begins any Alteration, Landlord may post on and about the Premises notices of non-responsibility pursuant to applicable law.  Tenant shall reimburse Landlord for, and indemnify and hold Landlord harmless from, any expense incurred by Landlord by reason of faulty work done by Tenant or its contractors or inadequate cleanup.

For Alterations costing in excess of $[***], Tenant shall furnish security or make other arrangements satisfactory to Landlord to assure payment for the completion of all Alterations work free and clear of liens, and shall provide (and cause each contractor or subcontractor to provide) certificates of insurance (in form and substance satisfactory to Landlord; form ACORD 28 [2006/07] is not satisfactory to Landlord) for workers’ compensation and other coverage in amounts and from an insurance company reasonably satisfactory to Landlord and selected by Tenant protecting Landlord against liability for personal injury or property damage during construction.  Upon completion of any Alterations, Tenant shall deliver to Landlord:  (i) sworn statements setting forth the names of all contractors and subcontractors who did the work and final lien waivers from all such contractors and subcontractors; and (ii) “as built” plans for any such Alteration.

Other than (i) the items, if any, listed on Exhibit F attached hereto, (ii) any items agreed by Landlord in writing to be included on Exhibit F in the future, and (iii) any trade fixtures, machinery, equipment and other personal property not paid for by Landlord that may be removed without material damage to the Premises, which damage shall be repaired (including capping or terminating utility hook-ups behind walls) by Tenant during the Term (collectively, “Tenant’s Property”), all property of any kind paid for by Landlord, all Alterations, real property fixtures, built-in machinery and equipment, built-in casework and cabinets and other similar additions and improvements built into the Premises so as to become an integral part of the Premises such as fume hoods that penetrate the roof or plenum area, built-in cold rooms, built-in warm rooms, walk-in cold rooms, walk-in warm rooms, deionized water systems, glass washing equipment, autoclaves, chillers, built-in plumbing, electrical and mechanical equipment and systems, and any power generator and transfer switch (collectively, “Installations”) shall be and shall remain the property of Landlord during the Term and following the expiration or earlier termination of the Term, shall not be removed by Tenant at any time during the Term and shall remain upon and be surrendered with the Premises as a part thereof in accordance with Section 28 following the expiration or earlier termination of this Lease; provided, however, that Landlord shall, at the time its approval of such Installation is requested, notify Tenant if it has elected to cause Tenant to remove such Installation upon the expiration or earlier termination of this Lease.  If Landlord so elects, Tenant shall remove such Installation upon the expiration or earlier termination of this Lease and restore any damage caused by or occasioned as a result of such removal, including, when removing any of Tenant’s Property that was plumbed, wired or otherwise connected to any of the Landlord Elements, capping off all such connections behind the walls of the Premises and repairing any holes.  During any such restoration period, Tenant shall pay Rent to Landlord as provided herein as if said space were otherwise occupied by Tenant.  All provisions of this Lease to the contrary notwithstanding, Tenant shall surrender the Tenant Improvements (as defined in the Work Letter) with the Premises in accordance with Section 28 and shall have no obligation whatsoever to remove or pay for the removal of the same at the expiration or earlier termination of this Lease.

 

 

under this paragraph shall be Tenant’s sole and exclusive remedy resulting from a failure of Landlord to provide an Essential Service, and Landlord shall not otherwise be liable for any loss or damage suffered or sustained by Tenant resulting from any failure or cessation of an Essential Service.  For purposes hereof, the term “Essential Services” shall mean the following services:  water, sewer, and electricity, but in each case only to the extent that Landlord has an obligation to provide same to Tenant under this Lease.  The provisions of this paragraph shall only apply as long as Arbutus Biopharma, Inc. is the tenant occupying the Premises under this Lease and shall not apply to any assignee or sublessee.

limitation, loss of records kept within the Premises).  Tenant further waives any and all Claims for injury to Tenant’s business or loss of income relating to any such damage or destruction of personal property (including, without limitation, any loss of records).  Landlord shall not be liable for any damages arising from any act, omission or neglect of Tenant or any Tenant Party.

Tenant, at its sole cost and expense, shall maintain during the Term:  “special form” property insurance with business interruption and extra expense coverage, covering the full replacement cost of all property and improvements installed or placed in the Premises by Tenant at Tenant’s expense; workers’ compensation insurance with no less than the minimum limits required by law; employer’s liability insurance with such limits as required by law; and commercial general liability insurance, with a minimum limit of not less than $[***] per occurrence for bodily injury and property damage with respect to the Premises (such minimum limit may be achieved through any combination of general liability insurance and umbrella liability policies obtained by Tenant).  The commercial general liability insurance policy shall name Landlord and Alexandria Real Estate Equities, Inc., and its and their respective members, officers, directors, employees, managers, and agents (collectively, “Landlord Parties”), as additional insureds; insure on an occurrence and not a claims-made basis; be issued by insurance companies that have a rating of not less than policyholder rating of A and financial category rating of at least Class X in “Best’s Insurance Guide”; shall not be cancelable for nonpayment of premium unless 30 days prior written notice shall have been given to Landlord from the insurer; contain a hostile fire endorsement and a contractual liability endorsement; and provide primary coverage to Landlord (any policy issued to Landlord providing duplicate or similar coverage shall be deemed excess over Tenant’s policies).  Copies of such policies (if requested by Landlord), or certificates of insurance (in form and substance satisfactory to Landlord; form ACORD 28 [2006/07] is not satisfactory to Landlord) showing the limits of coverage required hereunder and showing Landlord as an additional insured, along with reasonable evidence of the payment of premiums for the applicable period, shall be delivered to Landlord by Tenant upon Tenant’s execution and delivery of this Lease and upon each renewal of said insurance.  Any insurance maintained by Tenant may have deductibles in the amounts generally maintained by Tenant for a majority of its locations.  Tenant shall have the right, at its election and on written notice to Landlord, to self-insure for loss of Tenant’s personal property as long as Tenant maintains a commercially reasonable net worth to support such self-insurance.  Tenant’s policy may be a “blanket policy” with an aggregate per location endorsement that specifically provides that the amount of insurance shall not be prejudiced by other losses covered by the policy.  Tenant shall, at least 5 days prior to the expiration of such policies, furnish Landlord with renewal certificates.

In each instance where insurance is to name Landlord as an additional insured, Tenant shall upon written request of Landlord also designate and furnish certificates so evidencing Landlord as additional insured to:  (i) any lender of Landlord holding a security interest in the Premises or any portion thereof, (ii) the landlord under any lease wherein Landlord is tenant of the real property on which the Premises is located, if the interest of Landlord is or shall become that of a tenant under a ground or other underlying lease rather than that of a fee owner, and/or (iii) any management company retained by Landlord to manage the Premises.

The property insurance obtained by Landlord and Tenant shall include a waiver of subrogation by the insurers and all rights based upon an assignment from its insured, against Landlord or Tenant, and their respective officers, directors, employees, managers, agents, invitees and contractors (“Related Parties”), in connection with any loss or damage thereby insured against.  Neither party nor its respective Related Parties shall be liable to the other for loss or damage caused by any risk insured against under property insurance required to be maintained hereunder, and each party waives any claims against the other party, and its respective Related Parties, for such loss or damage.  The failure of a party to insure its property shall not void this waiver.  Landlord and its respective Related Parties shall not be liable for, and Tenant hereby waives all claims against such parties for, business interruption and losses occasioned thereby sustained by Tenant or any person claiming through Tenant resulting from any accident or occurrence in or upon the Premises from any cause whatsoever.  If the foregoing waivers shall contravene any law with respect to exculpatory agreements, the liability of Landlord or Tenant shall be deemed not released but shall be secondary to the other’s insurer.

Not more frequently than once every 5 years during the Term, Landlord may require insurance policy limits to be raised to bring coverage limits to levels then being generally required of tenants by prudent commercial landlords of comparable single-tenant buildings within a 15 mile radius of the Premises.

Tenant, at its expense, shall promptly perform, subject to delays arising from the collection of insurance proceeds, from Force Majeure (as defined in Section 34) events or to obtain Hazardous Material Clearances, all repairs or restoration not required to be done by Landlord and shall promptly re-enter the Premises and commence doing business in accordance with this Lease.  Notwithstanding the foregoing, either Landlord or Tenant may terminate this Lease if the Premises is damaged during the last year of the Term and Landlord reasonably estimates that it will take more than 4 months to repair such damage, or if insurance proceeds are not available for such restoration.  Rent shall be abated from the date all required Hazardous Material Clearances are obtained until the Premises is repaired and restored, in the proportion that the area of the Premises, if any, that is not usable by Tenant bears to the total area of the Premises.  Such abatement shall be the sole remedy of Tenant, and except as provided in this Section 18, Tenant waives any right to terminate this Lease by reason of damage or casualty loss.

The provisions of this Lease, including this Section 18, constitute an express agreement between Landlord and Tenant with respect to any and all damage to, or destruction of, all or any part of the Premises, and any statute or regulation that is now or may hereafter be in effect shall have no application to this Lease or any damage or destruction to all or any part of the Premises, the parties hereto expressly agreeing that this Section 18 sets forth their entire understanding and agreement with respect to such matters.

Any notice given under Section 20(h) hereof shall:  (i) specify the alleged default, (ii) demand that Tenant cure such default, (iii) be in lieu of, and not in addition to, or shall be deemed to be, any notice required under any provision of applicable law, and (iv) not be deemed a forfeiture or a termination of this Lease unless Landlord elects otherwise in such notice; provided that if the nature of Tenant’s default pursuant to Section 20(h) is such that it cannot be cured by the payment of money and reasonably requires more than 15 days to cure, then Tenant shall not be deemed to be in default if Tenant commences such cure within said 15 day period and thereafter diligently prosecutes the same to completion; provided, however, that such cure shall be completed no later than 60 days from the date of Landlord’s notice unless (i) Tenant notifies Landlord before the end of such 60 day period that Tenant needs additional time to complete such cure (which notice shall describe in reasonable detail the curative action that Tenant plans to continue or undertake and the estimate timeline for doing so) and such additional time does not, and will not, subject Landlord or the Premises or any interest therein to damage, injury, liability, or loss, and (b) Tenant is then the sole tenant in the Building.  If Tenant satisfies the conditions set forth in clauses (i) and (ii), then Tenant shall have such additional time (not to exceed an aggregate of [***] days after the date of Landlord’s notice) to cure the default as long as Tenant continues diligently to prosecute the cure to completion.  For purposes of this paragraph, “commences such cure” shall mean that Tenant has undertaken some identifiable form of affirmative action to implement or effectuate the cure.

Tenant.  Landlord shall in no event be liable in any way whatsoever for failure to re-rent the Premises or, if the Premises is re-rented, for failure to collect the rent thereof under such re-renting and Tenant expressly waives any duty of the Landlord to mitigate damages.  No act or thing done by Landlord shall be deemed to be an acceptance of a surrender of the Premises, unless Landlord shall execute a written agreement of surrender with Tenant.  Tenant’s liability hereunder shall not be terminated by the execution of a new lease of the Premises by Landlord, unless that new lease expressly so states.  If Landlord does not exercise its option to accelerate the payment of amounts owed as provided hereinabove, then Tenant agrees to pay to Landlord, upon demand, the amount of damages herein provided after the amount of such damages for any month shall have been ascertained; provided, however, that any expenses incurred by Landlord shall be deemed to be a part of the damages for the month in which they were incurred.  Separate actions may be maintained each month or at other times by Landlord against Tenant to recover the damages then due, without waiting until the end of the Term of this Lease to determine the aggregate amount of such damages.  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 being dispossessed for any cause, or in the event of Landlord obtaining possession of the Premises by reason of the violation by Tenant of any of the covenants and conditions of this Lease.  Tenant agrees and acknowledges that Landlord shall have no obligation whatsoever to mitigate any damages resulting from a Default by Tenant under this Lease, regardless of any contrary Legal Requirement in effect on the Commencement Date or at the time of Tenant’s Default.

necessary to authorize the entry of judgment of which facts such affidavit shall be conclusive evidence; and if a true copy of this Lease is filed in such action, it shall not be necessary to file the original as a warrant of attorney, any rule of court, custom, or practice to the contrary notwithstanding.

Materials proposed to be used, stored handled, treated, generated in or released or disposed of from the Premises, the Assignment Date, any relationship between Tenant and the proposed assignee or sublessee, and all material terms and conditions of the proposed assignment or sublease, including a copy of any proposed assignment or sublease in its final form, and such other information as Landlord may deem reasonably necessary or appropriate to its consideration whether to grant its consent.  Landlord may, by giving written notice to Tenant within 15 business days after receipt of the Assignment Notice:  (i) grant such consent, (ii) refuse such consent, in its reasonable discretion (provided that Landlord shall further have the right to review and approve or disapprove the proposed form of sublease prior to the effective date of any such subletting), or (iii) terminate this Lease with respect to the space described in the Assignment Notice as of the Assignment Date (an “Assignment Termination”).  If Landlord delivers notice of its election to exercise an Assignment Termination, Tenant shall have the right to withdraw such Assignment Notice by written notice to Landlord of such election within 15 business days after Landlord’s notice electing to exercise the Assignment Termination.  If Tenant withdraws such Assignment Notice, this Lease shall continue in full force and effect.  If Tenant does not withdraw such Assignment Notice, this Lease, and the term and estate herein granted, shall terminate as of the Assignment Date with respect to the space described in such Assignment Notice.  No failure of Landlord to exercise any such option to terminate this Lease, or to deliver a timely notice in response to the Assignment Notice, shall be deemed to be Landlord’s consent to the proposed assignment, sublease or other transfer.  Tenant shall pay to Landlord a fee equal to $[***] in connection with its consideration of any Assignment Notice and/or its preparation or review of any consent documents.  Notwithstanding the foregoing, (1) Landlord’s consent to an assignment of this Lease or a subletting of any portion of the Premises to any entity controlling, controlled by or under common control with Tenant shall not be required, provided that Landlord shall have the right to approve the form of any such sublease or assignment, and (2) Tenant shall have the right to assign this Lease, upon 30 days prior written notice to Landlord but without obtaining Landlord’s prior written consent, to a corporation or other entity that is a successor-in-interest to Tenant, by way of merger, consolidation, or corporate reorganization, or by the purchase of all or substantially all of the assets or the ownership interests of Tenant provided that (A) such merger or consolidation, or such acquisition or assumption, as the case may be, is for a good business purpose and not principally for the purpose of transferring this Lease, and (B) the net worth (as determined in accordance with generally accepted accounting principles (“GAAP”)) of the assignee is not less than the net worth (as determined in accordance with GAAP) of Guarantor as of the Commencement Date, and (iii) such assignee shall agree in writing to assume all of the terms, covenants and conditions of this Lease arising after the effective date of the assignment (the transfers described in clauses (1) and (2) each constitute a “Permitted Assignment”).  The Assignment Termination shall not apply to a Permitted Assignment.

(i)     that any assignee or subtenant agree, in writing at the time of such assignment or subletting, that if Landlord gives such party notice that Tenant is in Default under this Lease, such party shall thereafter make all payments otherwise due Tenant directly to Landlord, which payments will be received by Landlord without any liability except to credit such payment against those due under this Lease, and any such third party shall agree to attorn to Landlord or its successors and assigns should this Lease be terminated for any reason; provided, however, in no event shall Landlord or its successors or assigns be obligated to accept such attornment; and

(ii)    A list of Hazardous Materials, certified by the proposed assignee or sublessee to be true and correct, which the proposed assignee or sublessee intends to use, store, handle, treat, generate in or release or dispose of from the Premises, together with copies of all documents relating to such use, storage, handling, treatment, generation, release or disposal of Hazardous Materials by the proposed assignee or subtenant in the Premises, prior to the proposed assignment or subletting, including, without limitation:  permits; approvals; reports

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material nature that do not interfere with the use of the Premises (“Substantial Completion” or “Substantially Complete”).  Upon Substantial Completion of the Tenant Improvements, Tenant shall require the TI Architect and the general contractor to execute and deliver, for the benefit of Tenant and Landlord, a Certificate of Substantial Completion in the form of the American Institute of Architects (“AIA”) document G704.  For purposes of this Work Letter, “Minor Variations” shall mean any modifications reasonably required:  (i) to comply with all applicable Legal Requirements and/or to obtain or to comply with any required permit (including the TI Permit); (ii) to comport with good design, engineering, and construction practices that are not material; or (iii) to make reasonable adjustments for field deviations or conditions encountered during the construction of the Tenant Improvements.

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I, Mark Murray, certify that:

 

(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 (the registrant’s fourth fiscal quarter in the case of an the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(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 control over financial reporting.

Date: December 21, 2016

Exhibit 31.2

 

I, Bruce Cousins, certify that:

 

(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 (the registrant’s fourth fiscal quarter in the case of an the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

(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 control over financial reporting.

Date: December 21, 2016

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 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 Arbutus Biopharma Corporation (the “Company”) for the quarter ended September 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I Mark Murray, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

Date: December 21, 2016

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 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 Arbutus Biopharma Corporation (the “Company”) for the quarter ended September 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I Bruce Cousins, Executive Vice President, Finance and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

Date: December 21, 2016

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