Second amendment to Lease dated as of May 4, 2020, by and between NS Boston III PO Owner LLC and the Registrant

Second Amendment to lease

THIS SECOND AMENDMENT TO LEASE (this “Second Amendment”), dated as of May 4, 2020, is entered into by and between NS Boston III PO Owner LLC, a Delaware limited liability company (“Landlord”) and Albireo Pharma, Inc., a Delaware corporation (“Tenant”).

W I T N E S S E T H

WHEREAS, Landlord and Tenant are the current parties to that certain Office Lease Agreement dated as of February 7, 2017 by and between SHIGO 10 PO Owner LLC, a Delaware limited liability company, as landlord, and Tenant, as tenant (the “Original Lease”), as amended by that certain First Amendment to Lease dated as of March 28, 2019 by and between POSIG Investors, LLC, a Delaware limited liability company, as landlord, and Tenant, as tenant (the “First Amendment”);

WHEREAS, the Original Lease, as amended by the First Amendment, shall be known as the “Lease”;

WHEREAS, the Lease relates to the premises (hereafter, the “Existing Premises”) measuring approximately 14,734 rentable square feet located on the tenth (10th)  floor of the South Tower of the building known and numbered as 10 Post Office Square, Boston, Massachusetts (the “Building”); and  

WHEREAS, Landlord and Tenant wish to modify and amend the Lease subject to the terms and conditions set forth below.     

NOW, THEREFORE, in consideration of the covenants herein reserved and contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree as follows:

4.1Tenant’s Expansion Premises Alterations.  Tenant acknowledges and agrees that any alterations, additions, improvements or other changes required to prepare the Expansion Premises for Tenant’s occupancy thereof (“Tenant’s Expansion Premises Alterations” or “Alterations”) shall be controlled by Section 12 (Alterations, Additions and Improvements to the Premises) of the Original Lease and, subject to the provision of the Expansion Premises TI Allowance (as hereinafter defined), made at Tenant’s sole cost and expense.

4.2Amount of Expansion Premises TI Allowance.  In the event Tenant exercises the Expansion Premises Extension Option in accordance with Section 11 below,  Landlord shall provide tenant with a tenant improvement allowance of $52,350.00 (i.e., $15.00 per rentable square foot of the

Expansion Premises based on 3,490 rentable square feet) (the “Expansion Premises TI Allowance”) to be used by Tenant toward the hard and soft costs of performing Tenant’s Expansion Premises Alterations, subject to Section 4.5(1) below.  

4.3Requisitions.  The Expansion Premises TI Allowance shall be (1) available to Tenant as of the date of the Extension Notice (as defined in Section 11.1 below) for Tenant’s exercise of its Expansion Premises Extension Option and (2) payable by Landlord to Tenant in installments, as provided below, according to reasonable construction disbursement procedures and as Tenant’s Expansion Premises Alterations progress.  In any case, prior to payment of any such installment, Tenant shall deliver to Landlord a written requisition (“Requisition”), which Requisition shall be given no more frequently than once every thirty (30) days and which shall include, without limitation, (a) invoices from Tenant’s contractors, approved by Tenant, and such other documentation as Landlord may reasonably request, showing in reasonable detail the cost of the items in question or improvements installed in the Expansion Premises for which reimbursement is requested, accompanied by certifications from Tenant’s contractors that the amount of the Requisition in question is true and correct and does not exceed the cost of the items or improvements covered by such Requisition; (b) proof of payment by Tenant to Tenant’s contractors (in the form of a cancelled check or other evidence reasonably satisfactory to Landlord) showing that the amount of the Requisition in question has been paid for in full; (c) copies of partial lien waivers or final lien waivers (in the case of a final installment), or such other form(s) as Landlord may reasonably require so that no mechanic’s or materialman’s liens shall attach to the Expansion Premises or the Building as a result of Tenant’s Expansion Premises Alterations or, if attached, evidence reasonably satisfactory to Landlord that they have been satisfied of record or that they are being contested in good faith by Tenant with Tenant posting any bond or indemnity as required under applicable laws pending the resolution of such challenge; (d) certification from Tenant’s architect that Tenant’s Expansion Premises Alterations have been completed in accordance with Tenant’s plans (if applicable and in the case of a final installment), (e) “as built” plans for Tenant’s Expansion Premises Alterations (if applicable and in the case of a final installment), and (f) a “certificate of occupancy” and/or “occupancy permit” from the City of Boston (or the applicable governmental authority) for the Expansion Premises with Tenant’s Expansion Premises Alterations completed (if applicable and in the case of a final installment).

4.4Payments.  Provided that Tenant shall not be in an Event of Default at the time of any Requisition, Landlord shall pay each Requisition within thirty (30) days after receiving all the materials enumerated in Section 4.3 above.  All Requisitions shall incorporate a retainage equal to the greater of (1) the retainage set forth in the construction contract or (2) five percent (5%) of the amount due under the construction contract.  Any retainage amounts withheld from any Requisitions shall be paid by Landlord to Tenant at the same time Landlord disburses payment for the final Requisition.

4.5Restrictions on Expansion Premises TI Allowance.  Notwithstanding anything to the contrary contained herein:

(1)In no event shall Tenant be entitled to apply any amount of the Expansion Premises TI Allowance towards (a) Tenant’s furniture, fixtures and equipment, or (b) Tenant’s rental obligation hereunder. 

(2)Landlord shall have no obligation to pay the Expansion Premises TI Allowance after March 31, 2022 (the “Expansion Premises Outside Requisition Date”).

(3)Tenant acknowledges and agrees that, prior to payment of any Requisition hereunder, Landlord shall have the right to examine and inspect Tenant’s Expansion Premises Alterations to confirm that the improvements reflected on the Requisition have been performed in accordance with the terms, covenants and conditions of this Second Amendment; provided, however, that no such examination or inspection shall constitute an approval or warranty or give rise to any liability of Landlord with respect thereto.

4.6Construction Management Fee; Out-of-Pocket Expenses.    In consideration of Landlord’s costs associated with the general coordination and oversight of Tenant’s Expansion Premises Alterations,

Tenant shall pay to Landlord a construction management fee equal to two and one-half percent (2.5%) of the total project cost of Tenant’s Expansion Premises Alterations, which construction mmanagement fee shall be deducted from the Expansion Premises TI Allowance.  In addition, Tenant agrees to reimburse Landlord for any third-party out-of-pocket expenses reasonably incurred by Landlord in connection with the review of the plans, drawings and specifications for Tenant’s Expansion Premises Alterations within thirty (30) days after receipt of Landlord’s invoice therefor.

4.7Notices Relating to Tenant’s Expansion Premises Alterations.  Notwithstanding the notice provisions contained in the Lease, as amended hereby, Landlord and Tenant acknowledge and agree that any written notices relating to Tenant’s Expansion Premises Alterations may be sent via email as follows:

If to Landlord, then to Landlord’s construction representative:  Kevin Kiley, ***@***.

If to Tenant, then to Tenant’s construction representative:  Janice Conlon,   ***@***.

11.2Notwithstanding the foregoing, provided that (1) Tenant shall not be in an Event of Default beyond any applicable notice and cure period on any Reduction Date (as hereinafter defined), and (2) Tenant shall have a Tangible Net Worth (as hereinafter defined) on each Reduction Date at least equal to the Tangible Net Worth reflected on Tenant’s Q42018 financial statements (as evidenced by Tenant’s then current financial statements), then at the written request of Tenant, the Security Deposit shall be reduced to (a) $456,753.33 at the end of Month 40 of the Term (as extended by this First Amendment) (the “First Reduction Date”), (b) $380,627.66 at the end of Month 52 of the Term (the “Second Reduction Date”), and (c) $304,501.99 at the end of Month 64 of the Term (the “Third Reduction Date”), and Landlord shall return the applicable portion of the Security Deposit to Tenant within thirty (30) days after receipt of Tenant’s written request therefor.  As used herein, the First Reduction Date, Second Reduction Date, and Third Reduction Date shall each be known as a “Reduction Date.”  Tenant acknowledges and agrees that in the event (i) Tenant shall be in an Event of Default beyond any applicable notice and cure period on any Reduction Date, or (ii) Tenant shall not have a Tangible Net Worth on each Reduction Date at least equal to the Tangible Net Worth reflected on Tenant’s Q42018 financial statements, the Security Deposit then in effect shall remain in place (without reduction) for the balance of the Term of the Lease.  As used herein, “Tangible Net Worth” shall mean total assets minus intangible assets (including goodwill, patents, trademarks and copyrights) and total liabilities, all as calculated in accordance with generally accepted accounting principles consistently applied.

If Tenant shall fail to send the Expansion Premises Extension Notice within the time period herein provided, the Expansion Premises Extension Option shall cease to exist and terminate, and Tenant shall have no further opportunity to exercise the Expansion Premises Extension Option.

11.2No Transfer.  Except with respect to a Permitted Transfer in accordance with Section 18.7 of the Original Lease, Tenant may not assign or otherwise transfer its interest or rights under Section 11, and any such purported transfer or attempted transfer shall be null and void, without effect, and shall terminate Tenant’s rights under Section 11.

NS Boston III PO Owner LLC  

c/o Synergy Investments

10 Post Office Square, 14th Floor

Boston, MA 02109

Attention:  VP, Leasing

with a copy to:

Rubin and Rudman LLP

53 State Street

Boston, MA 02109

Attention:  Paul L. Baccari, Esq.

and a copy to:

***@*** 

NS Boston III PO Owner LLC    

c/o Synergy Investments

10 Post Office Square, 14th Floor

Boston, MA 02109

Attention:  Accounting Department   

17.Representations and Warranties.  Tenant represents, warrants and covenants to Landlord that (1) the Lease is in full force and effect, and (2) to the best of Tenant’s knowledge, Landlord is not in default under the Lease,

and no facts or circumstances exist which, with the passage of time or the giving of notice or both, would constitute a Landlord default under the Lease.

18.Authority.  Tenant represents, warrants and covenants to Landlord that (1) Tenant is duly formed, has legal existence, is in good standing, and is qualified to do business in the state in which the Building is located, (2) Tenant has full right, power and authority to enter into this Second Amendment and has taken all corporate or partnership action, as the case may be, necessary to carry out the transaction contemplated herein, so that when executed, this Second Amendment constitutes a valid and binding obligation enforceable in accordance with its terms, and (3) the person or persons executing this Second Amendment on behalf of Tenant are duly authorized to do so. 

Exhibit A – Plan of Expansion Premises

[SIGNATURES FOLLOW ON NEXT PAGE]

IN WITNESS WHEREOF, Landlord and Tenant have caused this Second Amendment to be executed as of the date set forth above.

LANDLORD:

NS Boston III PO Owner LLC,

a Delaware limited liability company

By:Synergy Financial LLC,

a Massachusetts limited liability company,

Property Manager and Authorized Agent

By:/s/ David Greaney

David Greaney, Manager

Hereunto duly authorized

TENANT:

Albireo Pharma, Inc.,  

a Delaware corporation

By:/s/ Simon Harford

Name: Simon Harford

Title:Chief Financial Officer

Hereunto duly authorized 

[COUNTERPART SIGNATURE PAGE TO SECOND AMENDMENT]

EXHIBIT A

PLAN OF Expansion Premises