Exhibit 10.2

FIRST AMENDMENT TO LEASE

THIS FIRST AMENDMENT TO LEASE (this “First Amendment”) is made as of June 1,
2010 (“Effective Date”), by and between ARE-901/951 GATEWAY BOULEVARD, LLC, a
Delaware limited liability company (“Landlord”), and THERAVANCE, INC., a
Delaware corporation (“Tenant”).

RECITALS

A.           Landlord and Tenant are now parties to that certain Lease Agreement
dated January 1, 2001 (the “Lease”).  Pursuant to the Lease, Tenant leases
certain premises consisting of approximately 110,428 rentable square feet
(“Premises”) in a building located at 901 Gateway Boulevard, South San
Francisco, California.  The Premises are more particularly described in the
Lease.  Capitalized terms used herein without definition shall have the meanings
defined for such terms in the Lease.

B.           Landlord and Tenant desire, subject to the terms and conditions set
forth below, to amend the Lease to, among other things, (i) extend the Term of
the Lease, and (ii) provide Tenant with an additional tenant improvement
allowance.

NOW, THEREFORE, in consideration of the foregoing Recitals, which are
incorporated herein by this reference, the mutual promises and conditions
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree
as follows:

1.          Term. The “Expiration Date” of the Term of the Lease is hereby
extended from March 31, 2012, until May 31, 2020.  From and after the Effective
Date, references in the Lease to “Term” shall mean the one hundred twenty (120)
months commencing on June 1, 2010 and expiring on May 31, 2020.

2.          Monthly Base Rent. Notwithstanding anything to the contrary
contained in the Lease, commencing on the Effective Date of this First
Amendment, Monthly Base Rent shall be payable pursuant to the following table:

Time Period

    

Monthly Base Rent

6/1/10 — 5/31/11

 

$287,112.80 per month

6/1/11 — 3/31/12

 

$309,198.40 per month

4/1/12 — 3/31/13

 

$325,762.60 per month

4/1/13 — 3/31/14

 

$335,535.48 per month

4/1/14 — 3/31/15

 

$345,601.54 per month

4/1/15 — 3/31/16

 

$355,969.59 per month

4/1/16 — 3/31/17

 

$366,648.68 per month

4/1/17 — 3/31/18

 

$377,648.14 per month

4/1/18 — 3/31/19

 

$388,977.58 per month

4/1/19 — 3/31/20

 

$400,646.91 per month

4/1/20 — 5/31/20

 

$412,666.32 per month

 

Notwithstanding the foregoing, the above-referenced Monthly Base Rent payable by
Tenant (i) shall be reduced by $55,556.00 per month for the period commencing
June 1, 2010, through November 30, 2011, and (ii) shall be increased by
$62,223.00 for the period commencing December 1, 2011, through May 31, 2013.

3.          Additional Tenant Improvement Allowance.  From and after the
Effective Date, Landlord shall make available to Tenant a tenant improvement
allowance of up to $2,606,840.00 (the “Additional TI Allowance”) for the design
and construction of fixed and permanent

 

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improvements in the Premises and in Tenant’s premises located on the third floor
of the adjacent Building located at 951 Gateway Boulevard (“951 Premises”)
desired by and performed by Tenant (provided that Tenant may not spend more than
$782,052.00 of the Additional TI Allowance in the 951 Premises), and which
improvements shall be of a fixed and permanent nature (the “Additional Tenant
Improvements”).  Tenant acknowledges that (i) the Additional Tenant Improvements
shall be constructed pursuant to space plans mutually agreed upon by Landlord
and Tenant pursuant to this paragraph, and (ii) upon the expiration of the Term
of the Lease, the Additional Tenant Improvements shall become the property of
Landlord and Tenant shall not be obligated to remove, and may not remove, the
Additional Tenant Improvements at any time during the Term, including upon the
expiration or earlier termination of the Lease.  Tenant shall deliver to
Landlord space plans detailing Tenant’s requirements for the Additional Tenant
Improvements following the preparation of the same by Tenant’s architect.  Not
more than ten (10) days thereafter, Landlord shall deliver to Tenant either
written consent to the space plans, which consent of the space plans shall not
be unreasonably withheld, conditioned or delayed, or the written objections,
questions or comments of Landlord with regard to the space plans. 
Representatives of both parties shall promptly make themselves available to
discuss and resolve any such objections, questions or comments.  In the event
the parties cannot reach agreement and resolve all disputed matters relating to
any such documents, the parties shall promptly meet and confer and negotiate in
good faith to reach agreement on any disputed matters.  Tenant shall cause the
space plans to be revised to address any agreed-upon changes and shall resubmit
said space plans to Landlord for approval within five (5) business days
thereafter.  Such process shall continue until Landlord has reasonably approved
the space plans.  The foregoing process also shall apply to Tenant’s preparation
of final plans and specifications which describe the Additional Tenant
Improvements and are based on the approved space plans, and Landlord’s approval
of the final plans and specifications shall not be unreasonably withheld,
conditioned or delayed.  Notwithstanding anything to the contrary contained
herein, Tenant shall have the right to use up to $250,000 of the Additional TI
Allowance to purchase and install within the Premises furniture, cubicles and
other personal property and non-Building system materials and equipment,
including, but not limited to, Tenant’s voice or data cabling, non-ducted
biological safety cabinets and other scientific equipment.  Except for the
Additional TI Allowance, Tenant shall be solely responsible for all of the costs
of the Additional Tenant Improvements.  The Additional Tenant Improvements shall
be treated as Alterations and shall be undertaken pursuant to Paragraph 12 of
the Lease, except to the extent the provisions of Paragraph 12 conflict with the
provisions of this Section 3, in which case the provisions of this Section 3
shall control.  The contractor for the Additional Tenant Improvements shall be
selected by Tenant, subject to Landlord’s approval, which approval shall not be
unreasonably withheld, conditioned or delayed.  Prior to the commencement of
construction of the Additional Tenant Improvements, Tenant shall deliver to
Landlord a copy of any contract with Tenant’s contractors (including the
architect), and certificates of insurance from any contractor performing any
part of the Additional Tenant Improvements evidencing industry standard
commercial general liability, automotive liability, “builder’s risk”, and
workers’ compensation insurance.  Tenant shall cause the general contractor to
provide a certificate of insurance naming Tenant, Landlord, Alexandria Real
Estate Equities, Inc., and Landlord’s lender (if any) as additional insureds for
the general contractor’s liability coverages required above.

During the course of design and construction of the Additional Tenant
Improvements, Landlord shall reimburse Tenant for the cost of the Additional
Tenant Improvements once a month against a draw request in Landlord’s
commercially reasonable standard form, containing evidence of payment of the
applicable costs and such certifications, lien waivers (including a conditional
lien release for each progress payment and unconditional lien releases for the
prior month’s progress payments), inspection reports and other matters as
Landlord reasonably and customarily obtains, to the extent of Landlord’s
approval thereof for payment, no later than thirty (30) days following receipt
of such draw request.  Upon completion of the Additional Tenant Improvements
(and prior to any final disbursement of the Additional TI Allowance), Tenant
shall provide to Landlord the following items: (i) sworn statements setting
forth the names of all contractors and subcontractors

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who did work on the Additional Tenant Improvements and final lien waivers from
all such contractors and subcontractors; and (ii) “as built” plans for the
Additional Tenant Improvements.  Notwithstanding the foregoing, if the cost of
the Additional Tenant Improvements exceeds the Additional TI Allowance, Tenant
shall be required to pay such excess.  Except as specifically provided in the
immediately following paragraph, the Additional TI Allowance shall only be
available for use by Tenant for the construction of the Additional Tenant
Improvements for a period of twenty-four (24) months following the Effective
Date of this First Amendment and any portion of the Additional TI Allowance
which has not been requested by Tenant for disbursement by Landlord on or before
June 30, 2012 shall be forfeited and shall not be available for use by Tenant.

Notwithstanding anything to the contrary contained herein, Tenant may elect to
apply a portion of the Additional TI Allowance, up to $1,042,736.00, to the
payment of Monthly Base Rent due under the Lease.  Tenant shall notify Landlord
in writing not later than thirty (30) days prior to the first day of the month
in which Tenant desires that the credit against Monthly Base Rent commence
(provided; however, that in no event shall Tenant deliver such notice after
June 30, 2012), and Tenant’s notice shall state the amount of the Additional TI
Allowance that Tenant will take as a credit against Monthly Base Rent (“Rent
Credit”).  The Rent Credit shall be applied to Monthly Base Rent next coming due
after the date of Tenant’s notice until credited in full.

4.          Letter of Credit.  The definition of “Letter of Credit” in the Basic
Lease Information is hereby deleted and replaced with the following:

“Letter of Credit:                $833,333.33”

5.          Security Deposit.  Effective as of the Effective Date of this First
Amendment, Paragraph 7 of the Lease is hereby deleted in its entirety and
replaced with the following:

“7.          Security Deposit.  Tenant has deposited with Landlord a security
deposit (the “Security Deposit”) for the performance of all of Tenant’s
obligations hereunder in the amount set forth in the Letter of Credit section in
the Basic Lease Information, which Security Deposit shall be in the form of an
unconditional and irrevocable stand-by letter of credit (the “Letter of
Credit”):  (i) in form and substance reasonably satisfactory to Landlord,
(ii) naming Landlord as beneficiary, (iii) expressly allowing Landlord to draw
upon it at any time from time to time by delivering to the issuer notice that
Landlord is entitled to draw thereunder pursuant to the terms of this Lease,
(iv) issued by an FDIC-insured financial institution reasonably satisfactory to
Landlord (“LC Issuing Bank”), (v) redeemable by presentation of LC Issuing
Bank’s sight draft in person, by nationally recognized overnight courier or by
facsimile; and (vi) having an expiration date not earlier than ninety (90) days
after the Expiration Date or, in the alternative, have a term of not less than
one (1) year and be automatically renewable for an additional one (1) year
periods (provided, however, that the final Letter of Credit shall not expire
earlier than ninety (90) days after the Expiration Date) unless, on or before
the date forty-five (45) days prior to the expiration of the term of such Letter
of Credit, the LC Issuer gives notice to Landlord of its election not to renew
such Letter of Credit for any additional period pursuant thereto.  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 Paragraph 24) by Tenant under this
Lease, Landlord may use all or any part of the Security Deposit to pay
delinquent payments due under this Lease, future rent damages under California
Civil Code Section 1951.2, and the cost of any damage, injury, expense or
liability caused by such Default, without prejudice

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to any other remedy provided herein or provided by law.  Landlord’s right to use
the Security Deposit under this Paragraph 7 includes the right to use the
Security Deposit to pay future rent damages following the termination of this
Lease pursuant to Paragraph 25.5 below.  Upon any use of all or any portion of
the Security Deposit, Tenant shall pay Landlord within twenty (20) days after
receipt of written demand the amount that will restore (by delivery of a
replacement or amended Letter of Credit) the Security Deposit to the amount set
forth in the definition of “Letter of Credit” set forth in the Basic Lease
Information of this Lease.  Tenant hereby waives the provisions of any law, now
or hereafter in force, including, without limitation, California Civil Code
Section 1950.7, which provide that Landlord may claim from a security deposit
only those sums reasonably necessary to remedy defaults in the payment of rent,
to repair damage caused by Tenant or to clean the Premises, it being agreed that
Landlord may, in addition, claim those sums reasonably necessary to compensate
Landlord for any other loss or damage, foreseeable or unforeseeable, caused by
the Default of Tenant  or any of Tenant’s Agents under this Lease.  Upon
bankruptcy or other debtor-creditor proceedings against Tenant, the Security
Deposit shall be deemed to be applied first to the payment of Rent and other
charges due Landlord for periods prior to the filing of such proceedings,
subject to applicable bankruptcy law.  If Tenant shall fully perform every
provision of this Lease to be performed by Tenant and Landlord is holding cash
in the amount of the Letter of Credit or cash proceeds therefrom, 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 within ninety (90) days after the expiration or earlier
termination of this Lease.  If, in lieu of a cash Security Deposit, Landlord is
holding the Letter of Credit upon the expiration or earlier termination of this
Lease, Landlord shall comply with the LC Issuer’s requirements necessary to
cancel the Letter of Credit by the date that is ninety (90) days after the
expiration or earlier termination of this Lease.

Notwithstanding anything contained in this Paragraph 7 to the contrary, if
Landlord draws on the Letter of Credit for any reason, then Tenant shall have
the right, upon ten (10) days’ prior written notice to Landlord, to obtain a
refund from Landlord of any unapplied proceeds of the Letter of Credit which
Landlord has drawn upon, any such refund being conditioned upon Tenant
simultaneously delivering to Landlord a replacement Letter of Credit in the
amount required by, and otherwise meeting the requirements contained in, this
Paragraph 7.

Notwithstanding anything to the contrary contained herein or in the 951 Gateway
Lease, if requested by Landlord at any time following the date of this Lease,
Tenant shall cause the LC Issuing Bank to bifurcate the Letter of Credit into
two separate letters of credit, one securing Tenant’s obligations under the 951
Gateway Lease and the other securing Tenant’s obligations under this Lease. 
Such bifurcated letters of credit shall each be in an amount specified by
Landlord, provided that the aggregate amount of such letters of credit shall
equal the amount of the Letter of Credit immediately prior to such bifurcation. 
Concurrently with the bifurcation of the Letter of Credit, Landlord and Tenant
shall enter into a modification of the 951 Gateway Lease and a modification of
this Lease, which modifications shall amend Paragraph 7 of the 951 Gateway Lease
and this Paragraph 7 to provide for separate, stand-alone security deposit
provisions in the 951 Gateway Lease and this Lease.

If Landlord transfers its interest in the Project or this Lease, Landlord shall
either (a) transfer any Security Deposit then held by Landlord to a person or
entity assuming Landlord’s obligations under this Paragraph 7, 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.  Landlord’s obligation respecting the Security Deposit is that of a
debtor, not a trustee, and no interest shall accrue thereon.

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Notwithstanding anything to the contrary contained in this Lease, Landlord shall
have the right to apply all or any portion of the Security Deposit in connection
with any Defaults (as such term is defined in the 951 Gateway Lease) under the
951 Gateway Lease.

For avoidance of doubt, “Security Deposit” shall mean both the Letter of Credit
any cash proceeds therefrom.”

Tenant shall have up to sixty (60) days from the date of Tenant’s execution of
this First Amendment to provide Landlord with an amendment to the Letter of
Credit which complies with the requirements set forth in the first paragraph of
Section 7, as set forth above.

6.          Surrender Plan.  Effective as of the Effective Date of this First
Amendment, Paragraph 32.9 of the Lease hereby is deleted in its entirety and
replaced with the following:

“32.9     Condition of Premises upon Expiration or Termination.  Upon the
expiration of the Term or earlier termination of Tenant’s right of possession,
Tenant shall surrender the Premises to Landlord (y) free of Hazardous Materials
brought upon, kept, used, stored, handled, treated, generated in, or released or
disposed of from, the Premises by Tenant or Tenant’s Agents (“Tenant HazMat
Operations”) in a manner consistent with prudent commercial practices and such
that no Hazardous Materials resulting from Tenant HazMat Operations remain at
the Premises in violation of Environmental Requirements and the continued
presence of such Hazardous Materials are not in excess of industry standards for
the occupancy and re-use of the Premises for research and scientific purposes by
a subsequent tenant of the Premises, and (z) released of any license, clearance
or other authorization of any kind issued by any governmental authority having
jurisdiction over the use, storage, handling, treatment, generation, release,
disposal, removal or remediation of Hazardous Materials in, on or about the
Premises (collectively referred to herein as “Hazardous Materials Clearances”). 
At least 3 months prior to the surrender of the Premises, Tenant shall deliver
to Landlord a narrative description of the actions proposed (or required by any
governmental authority) to be taken by Tenant in order to surrender the Premises
(including any installations permitted by Landlord to remain in the Premises) at
the expiration or earlier termination of the Term, free from any residual impact
from the Tenant HazMat Operations and in a manner consistent with prudent
commercial practices and such that no Hazardous Materials resulting from Tenant
HazMat operations remain at the Premises in violation of Environmental
Requirements and the continued presence of such Hazardous Materials are not in
excess of industry standards for the occupancy and re-use of the Premises for
research and scientific purposes by a subsequent tenant of the Premises (the
“Surrender Plan”).  Such Surrender Plan shall be accompanied by a current
listing of (i) all Hazardous Materials licenses and permits held by or on behalf
of any of Tenant or Tenant’s Agents with respect to the Premises, and (ii) all
Hazardous Materials used, stored, handled, treated, generated, released or
disposed of or from the Premises by Tenant or Tenant’s Agents, and shall be
subject to the review and approval of Landlord’s environmental consultant, which
approval shall not be unreasonably withheld, conditioned or delayed.  In
connection with the review and approval of the Surrender Plan, upon the request
of Landlord, Tenant shall deliver to Landlord or its consultant such additional
non-proprietary information concerning Tenant HazMat Operations as Landlord
reasonably shall request.  On or before such surrender, Tenant shall deliver to
Landlord commercially reasonable evidence that the approved Surrender Plan has
been satisfactorily completed and Landlord shall have the right, subject to
reimbursement at Tenant’s expense as set forth below, to cause Landlord’s
environmental consultant to inspect the Premises and perform such additional
procedures as may be deemed reasonably necessary to confirm that the Premises
are, as of the effective date of such surrender or early termination of the
Lease, free from any residual impact from Tenant HazMat Operations as required
pursuant to this Paragraph 7.  Tenant shall reimburse Landlord, as Additional
Rent, for the actual out-of pocket expense incurred by Landlord for Landlord’s
environmental consultant to review and approve the Surrender Plan and to visit
the Premises and verify satisfactory completion of the same, which cost shall
not exceed $5,000.  Landlord shall have the unrestricted right to deliver

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such Surrender Plan (subject to any standard non-reliance letter, if any,
prepared by Tenant and delivered by Tenant to Landlord concurrently with
Tenant’s delivery of the Surrender Plan to Landlord, which non-reliance letter
shall be applicable only to third parties other than Landlord) and any report by
Landlord’s environmental consultant with respect to the surrender of the
Premises to Landlord’s potential tenants, purchasers, lenders and other third
parties with a need to know in connection with Landlord’s business; provided,
however, that Landlord instructs such parties to treat the same as confidential.

If Tenant shall fail to prepare or submit a Surrender Plan reasonably approved
by Landlord, or if Tenant shall fail to complete the approved Surrender Plan, or
if such Surrender Plan, whether or not approved by Landlord, shall fail to
adequately address any residual effect of Tenant HazMat Operations in, on or
about the Premises, shall fail to adequately address any Hazardous Materials
resulting from Tenant’s HazMat Operations remaining at the Premises in violation
of Environmental Requirements or in a manner not consistent with prudent
commercial practices or such that the continued presence of such Hazardous
Materials are in excess of industry standards for the occupancy and re-use of
the Premises for research and scientific purposes by a subsequent tenant of the
Premises,  Landlord shall have the right to take such actions as Landlord
reasonably may deem reasonable or appropriate to assure that the Premises and
the Project are surrendered free from any such residual impact from Tenant
HazMat Operations, the cost of which actions shall be reimbursed by Tenant as
Additional Rent, without regard to the limitation set forth in the first
paragraph of this Paragraph 32.9.

All obligations of Tenant hereunder not fully performed as of the expiration or
earlier termination of this Lease, including the obligations of Tenant under
Paragraph 32 of this Lease, shall survive the expiration or earlier termination
of the Term, including, without limitation, indemnity obligations, payment
obligations with respect to rent and obligations concerning the condition and
repair of the Premises.”

7.          Option to Renew.  Tenant shall have two (2) options (each a “Renewal
Option”) to extend the term of this Lease with respect to the entire Premises
for successive periods of five (5) years each (each a “Renewal Term”) pursuant
to the provisions of Paragraph 49 of the Lease.

8.          Right of First Offer.  Notwithstanding anything to the contrary
contained herein or in the Lease, Paragraph 51 of the Lease is hereby deleted in
its entirety and of no further force or effect and Tenant shall have no further
right of first offer or other right to purchase the Building.

9.          Additional Modifications to Lease.  From and after the Effective
Date of this First Amendment, the Lease shall be modified as follows:

a.          Modification to Basic Lease Information.  The Tenant’s Contact
Person shall be “General Counsel” rather than “Marty Glick”.

b.          Modification to Paragraph 2.2(a), “Changes to Common Area”.  The
following shall be added at the end of Paragraph 2.2(a):  “Notwithstanding the
foregoing, Landlord’s exercise of the foregoing rights shall not materially
interfere with Tenant’s access to or use of the Premises to the extent that
Tenant’s business operations are materially interrupted thereby.”

c.          Modification to Paragraph 2.2(b), “Changes to Common Area”.  The
second sentence of Paragraph 2.2(b) hereby is deleted and revised to state in
its entirety as follows:  “During periods of construction only, Landlord shall
have the right to provide parking to Tenant on properties reasonably proximate
to the Project (the “Adjacent Properties”) or through the use of valets or
parking attendants on the Parking Areas or the Adjacent Properties,

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provided that Tenant shall at all times have parking for the number of
automobiles contemplated under the Lease.”

d.          Modification to Paragraph 4.2, “Additional Rent”. There shall be
added to Paragraph 4.2 a new Paragraph 4.2.10, “Exclusions from Expenses”, which
reads as follows:

“4.2.11   Exclusions from Expenses.  Notwithstanding anything to the contrary
contained in this Paragraph 4.2, and in addition to the exclusions set forth in
the preceding paragraph, there shall be excluded from Expenses and Additional
Rent the following: (i) leasing commissions, advertising expenses, promotional
expenses, attorneys’ fees, disbursements, and other costs and expenses incurred
in procuring prospective tenants, negotiating and executing leases, and
constructing improvements required to prepare for a new tenant’s occupancy for
the Building or the Project, if any; (ii) finance and debt service fees,
principal and/or interest on debt or amortization payments on any mortgages
executed by Landlord covering Landlord’s property, any other indebtedness of
Landlord, and rental under any ground lease or leases for the Building or the
Project; (iii) any depreciation allowance or expense, amortization (except for
expenditures permitted under this Lease) or expense reserve; (iv) the costs of
Landlord’s third party property manager or, if there is no third party property
manager, administration rent in excess of the amount of 3.0% of Base Rent);
(v) except for management fees, Landlord’s general overhead and any overhead or
profit increment to any subsidiary or affiliate of Landlord for services on or
to the Project to the extent that the cost of such service exceeds competitive
costs for such services rendered by persons or entities of similar skill,
competence and experience other than a subsidiary or affiliate of Landlord;
(vi) any costs or expenses representing any amount paid for services and
materials to a (personal or business) related person, firm, or entity to the
extent such amount exceeds the amount that would have been paid for such service
or materials at the then existing market rates in the absence of such
relationship; (vii) compensation paid to any employee of Landlord above the
grade of Property Manager/Building Superintendent, including officers and
executives of Landlord (provided that Landlord may pass through as Expenses
compensation paid to employees at or below the grade of Property
Manager/Building Superintendant or affiliates of Landlord providing services to
the Project); (viii) costs of electrical energy furnished and metered directly
to tenants of the Project or for which Landlord is entitled to be reimbursed by
tenants as additional rental over and above tenant’s Monthly Base Rent or
pass-through of Expenses; (ix) the cost of any work or service furnished to any
tenant or occupant of the Project to a materially greater extent or in a
materially more favorable manner than that furnished generally to the tenants
and other occupants of the Project, or the costs of work or service furnished
exclusively for the benefit of any tenant or occupant of the Project or at such
tenant’s cost; (x) the costs and expenses incurred in resolving disputes with
other tenants, other occupants, or prospective tenants or occupants of the
Project, collecting rents or otherwise enforcing leases of the tenants of the
Project; (xi)  the costs of any work or service performed for any facility other
than a facility located within the Project; (xii) the costs of repairs,
alterations, and general maintenance necessitated by the gross negligence or
willful misconduct of Landlord or its agents, employees, or contractors or
repairs; (xiii) interest or penalties due to the late payment by Landlord of
taxes, utility bills or other such costs (except to the extent caused by
Tenant’s action or inaction); (xiv) any of the following tax or assessment
expenses: (a) estate, inheritance, transfer, gift, federal, state or franchise
taxes of Landlord, or (b) penalties and interest, other than those attributable
to Tenant’s failure to comply timely with its obligations pursuant to this
Lease; and (xv) bad debt expenses and charitable contributions and donations. 
Landlord agrees that (a) Landlord will not collect or be entitled to collect
more than one hundred percent (100%) of the Expenses actually paid by Landlord
in connection with the operation of the Project in any calendar year, and
(b) Landlord shall make no profit from Landlord’s collection of Expenses.”

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e.          Modifications to Paragraph 15, “Tenant’s Insurance”.  The third
sentence of Paragraph 15.2 hereby is revised in its entirety to state:  “No such
policy shall contain a deductible greater than Twenty-Five Thousand Dollars
($25,000.00).  Paragraph 15.5 hereby is deleted and revised to state in its
entirety as follows:  “All insurance required to be carried by Tenant hereunder
shall be maintained with insurance companies authorized to do business in the
State of California for the issuance of the applicable type of insurance
coverage and rated A-VII or better in Best’s Key Rating Guide.  Tenant shall
deliver to Landlord certificates of insurance and true and complete copies of
any and all endorsements required herein for all insurance required to be
maintained by Tenant hereunder at the execution of this Lease by Tenant.  Tenant
shall, at least thirty (30) days prior to expiration of each policy, furnish
Landlord and the other parties named as additional insureds with certificates of
renewal thereof.  Tenant shall (i) provide Landlord with 30 days advance written
notice of cancellation of each policy, and (ii) require Tenant’s insurer to
endeavor to provide 30 days advance written notice of cancellation of each
policy.”

f.           Modification to Paragraph 23.2, “Assignment and Subletting —
Requirements of Request for Consent”.  Paragraph 23.2 shall be amended to
provide that if Tenant requests consent to a proposed assignment or subletting
(except in connection with a Permitted Transfer), whether or not the term of the
proposed transfer is for the balance of the Term, Landlord shall have the right
to recapture that portion of the Premises that is the subject of the proposed
assignment or subletting and terminate the Lease with respect thereto; provided,
however, that subsection (3) of Paragraph 23.2 shall be of no further force or
effect and Landlord shall not have the right to sublease or take an assignment,
as the case may be, of the interest in the Lease that is at issue.

g.          Modification to Paragraph 24, “Tenant’s Default”.  The following is
hereby added at the end of Paragraph 24.(a):  “provided, however, that if Tenant
vacates the Premises at any time during the last nine (9) months of the Term but
continues to perform all of its obligations hereunder, including, without
limitation, maintaining all insurance policies required by this Lease and
complying with all of the surrender requirements of Paragraph 32.9, Tenant shall
not be deemed to be in default under this Paragraph 24.(a);”.

h.          Modification to Paragraph 32.2, “Tenant’s Obligation to Update
Disclosure Certificates”.  The first sentence of Paragraph 32.2 hereby is
deleted and revised to state in its entirety as follows:  “Within ten
(10) business days after receipt of Landlord’s written request, Tenant shall
complete, execute and deliver to Landlord an updated Disclosure Certificate
(each, an “Updated Disclosure Certificate”) describing Tenant’s then current and
proposed future uses of Hazardous Materials on or about the Premises, which
Update Disclosure Certificates shall be in the same format as that which is set
forth in Exhibit D or in such other form as is reasonably acceptable to
Landlord”.

i.           Modification to Paragraph 34, “Waiver”.  The last two sentences of
Paragraph 34 hereby are deleted and revised to state in their entirety as
follows:  “No delay or omission in the exercise of any right or remedy of
Landlord or Tenant in regard to any default by the other shall impair such right
or remedy or be construed as a waiver.  Any waiver by Landlord or Tenant of any
default must be in writing and shall not be a waiver of any other default
concerning the same or any other provisions of this Lease.”

j.           Modification to Paragraph 40, “Financial Statements”.  Paragraph 40
hereby is deleted and revised to state in its entirety as follows:  “Within ten
(10) days after Landlord’s request, Tenant shall deliver to Landlord the then
current, or if Tenant is a publicly traded company, the most recent publicly
available financial statements of Tenant prepared, compiled or reviewed by a
certified public accountant, including a balance sheet and

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profit and loss statement for the most recent prior year, all prepared in
accordance with GAAP.”.

k.          New Paragraphs.  The following new paragraphs are hereby added to
the Lease:

“54.       Commercially Reasonable.  Where Landlord or Tenant are required to
use “best efforts” in the performance of any obligation under this Lease, “best
efforts” shall mean “commercially reasonable good faith efforts.”

“55.       Force Majeure.  Whenever a period of time is herein prescribed for
action (other than the payment of money) to be taken by Landlord or Tenant, such
party shall not be liable or responsible for, and there shall be excluded from
the computation for any such period of time, any delays due to strikes, riots,
acts of God, shortages of labor or materials, war, terrorist activity,
governmental laws, regulations or restrictions”.

10.        Brokers.  Landlord and Tenant each represents and warrants that it
has not dealt with any broker, agent or other person (collectively, “Broker”) in
connection with this First Amendment and that no Broker brought about this
transaction, other than BT Cassidy/Turley.  Landlord and Tenant each hereby
agree to indemnify and hold the other harmless from and against any claims by
any Broker, other than the broker, if any named in this Section 11, claiming a
commission or other form of compensation by virtue of having dealt with Tenant
or Landlord, as applicable, with regard to this First Amendment.  Landlord shall
pay any commission due to BT Cassidy/Turley in connection with this First
Amendment pursuant to a separate written agreement between Landlord and BT
Cassidy/Turley.

11.        OFAC.  To Tenant’s knowledge, without any duty of inquiry, as of the
date of Tenant’s execution of this First Amendment, Tenant is currently (a) in
compliance with and shall at all times during the Term of the Lease remain in
compliance with the regulations of the Office of Foreign Assets Control (“OFAC”)
of the U.S. Department of Treasury and any statute, executive order, or
regulation relating thereto (collectively, the “OFAC Rules”), (b) not listed on,
and shall not during the term of the Lease be listed on, the Specially
Designated Nationals and Blocked Persons List maintained by OFAC and/or on any
other similar list maintained by OFAC or other governmental authority pursuant
to any authorizing statute, executive order, or regulation, and (c) not a person
or entity with whom a U.S. person is prohibited from conducting business under
the OFAC Rules.

12.        Miscellaneous.

a.            This First Amendment is the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior and
contemporaneous oral and written agreements and discussions.  This First
Amendment may be amended only by an agreement in writing, signed by the parties
hereto.

b.            This First Amendment is binding upon and shall inure to the
benefit of the parties hereto, their respective agents, employees,
representatives, officers, directors, divisions, subsidiaries, affiliates,
assigns, heirs, successors in interest and shareholders.

c.            Landlord and Tenant each acknowledge that it has read the
provisions of this First Amendment, understands them, and is bound by them. Time
is of the essence in this First Amendment.

d.            This First Amendment may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which when
taken together shall constitute one and the same instrument.  The signature
page of any counterpart may be detached therefrom without impairing the legal
effect of the signature(s) thereon provided such signature page is attached to

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any other counterpart identical thereto except having additional signature
pages executed by other parties to this First Amendment attached thereto.

e.            Except as amended and/or modified by this First Amendment, the
Lease is hereby ratified and confirmed and all other terms of the Lease shall
remain in full force and effect, unaltered and unchanged by this First
Amendment.  In the event of any conflict between the provisions of this First
Amendment and the provisions of the Lease, the provisions of this First
Amendment shall prevail.  Whether or not specifically amended by this First
Amendment, all of the terms and provisions of the Lease are hereby amended to
the extent necessary to give effect to the purpose and intent of this First
Amendment.

[Signatures are on the next page.]

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IN WITNESS WHEREOF, the parties hereto have executed this First Amendment as of
the day and year first above written.

 

TENANT:

 

 

 

THERAVANCE, INC.,

 

a Delaware corporation

 

 

 

/s/ Rick E Winningham

 

 

 

By: Rick E Winningham

 

Its: Chief Executive Officer

 

 

 

 

 

LANDLORD:

 

 

 

ARE-901/951 GATEWAY BOULEVARD, LLC,

 

a Delaware limited liability company

 

 

 

By:

ALEXANDRIA REAL ESTATE EQUITIES, L.P.,

 

 

a Delaware limited partnership,

 

 

managing member

 

 

 

 

 

By:

ARE-QRS CORP.,

 

 

 

a Maryland corporation,

 

 

 

general partner

 

 

 

 

 

 

 

/s/ Eric S. Johnson

 

 

 

 

 

 

 

By: Eric S. Johnson

 

 

 

Its: Vice President, Real Estate Legal Affairs

 

 

 

 

 

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SECOND AMENDMENT TO LEASE

THIS SECOND AMENDMENT TO LEASE (this “Second Amendment”) is made as of
November 13, 2017 (“Effective Date”), by and between ARE-901/951 GATEWAY
BOULEVARD, LLC, a Delaware limited liability company (“Landlord”), and
THERAVANCE BIOPHARMA US, INC., a Delaware corporation (“Tenant”).

RECITALS

A.Landlord and Tenant are now parties to that certain Lease Agreement dated
January 1, 2001, as amended by that certain First Amendment to Lease dated as of
June 1, 2010 (as amended, the “Lease”).  Pursuant to the Lease, Tenant leases
certain premises consisting of approximately 110,428 rentable square feet
(“Premises”) comprising the building located at 901 Gateway Boulevard,  South
San Francisco, California 94080 (the “Building”).  The Premises are more
particularly described in the Lease.  Capitalized terms used herein without
definition shall have the meanings defined for such terms in the Lease.

B.Landlord and Tenant are also parties to that certain Lease Agreement dated
January 1, 2001, as amended by that certain First Amendment to Lease dated as of
June 1, 2010, as further amended by that certain Second Amendment to Lease dated
as of October 1, 2010, as further amended by that certain Third Amendment to
Lease dated as of September 27, 2013, and as further amended by that certain
Fourth Amendment to Lease dated as of the Effective Date (the “Fourth Amendment
to 951 Lease”) (as amended, the “951 Lease”).  Pursuant to the 951 Lease, Tenant
leases from Landlord certain premises consisting of approximately 59,816
rentable square feet (the “951 Premises”) comprising the building located at 951
Gateway Boulevard, South San Francisco, California 94080.

C. Landlord and Tenant desire, subject to the terms and conditions set forth
below, to amend the Lease to, among other things, (i) extend the Term of the
Lease, and (ii) provide for the construction of certain improvements in the
Premises by Tenant.

NOW, THEREFORE, in consideration of the foregoing Recitals, which are
incorporated herein by this reference, the mutual promises and conditions
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree
as follows:

1.

Term.  The “Expiration Date” of the Term of the Lease is hereby extended from
June 1, 2020 (the “Extension Term Commencement Date”), until May 31, 2030 (the
“Extension Term Expiration Date”).  From and after the Effective Date,
references in the Lease to “Term” shall mean the two hundred forty (240) months
commencing on June 1, 2010, and expiring on the Extension Term Expiration Date.

2.

Monthly Base Rent.  Tenant shall continue paying Monthly Base Rent as provided
under the Lease through May 31, 2020.  Commencing on the Extension Term
Commencement Date, Monthly Base Rent shall be payable pursuant to the following
table:

 

 

 

 

 

Time Period

    

Monthly Rent PSF

    

Monthly Base Rent

6/1/20 – 8/30/20

 

$ 0.00

 

$ 0 per month*

9/1/20 – 5/31/21

 

$ 4.35

 

$ 480,361.80 per month

6/1/21 – 5/31/22

 

$ 4.48

 

$ 494,717.44 per month

6/1/22 – 5/31/23

 

$ 4.61

 

$ 509,073.08 per month

6/1/23 – 5/31/24

 

$ 4.75

 

$ 524,533.00 per month

6/1/24 – 5/31/25

 

$ 4.89

 

$ 539,992.92 per month

6/1/25 – 5/31/26

 

$ 5.04

 

$ 556,557.12 per month

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6/1/26 – 5/31/27

 

$ 5.19

 

$ 573,121.32 per month

6/1/27 – 5/31/28

 

$ 5.35

 

$ 590,789.80 per month

6/1/28 – 5/31/29

 

$ 5.51

 

$ 608,458.28 per month

6/1/29 – 5/31/30

 

$ 5.68

 

$ 627,231.04 per month

 

*For the avoidance of doubt, Tenant shall be required to pay the management fee
payable by Tenant pursuant Section 4.2 of the original Lease during this period
based on the amount of Monthly Base Rent that would have been payable during
this period had the Monthly Base Rent not been abated (i.e., Monthly Base Rent
in the amount of $480,361.00 per month).

3.

Second Amendment Tenant Improvements; TI Allowance.  Tenant shall have the right
to construct certain tenant improvements in the Premises (the “Second Amendment
Tenant Improvements”) subject to the terms of the Second Amendment Work Letter
attached hereto as Exhibit A.  Commencing on the Effective Date, Landlord shall
make the TI Allowance (as defined in the Second Amendment Work Letter) available
to Tenant for the design and construction of the Second Amendment Tenant
Improvements. Notwithstanding anything to the contrary contained in the Lease,
Tenant shall not be required to remove the Second Amendment Tenant Improvements
from the Premises at the expiration or earlier termination of the Term, nor
shall Tenant have any right to remove the Second Amendment Tenant Improvements
at any time during the Term.

4.

Additional Tenant Improvement Allowance.  In addition to the Tenant Improvement
Allowance (as defined in the Second Amendment Work Letter), commencing on the
Effective Date, Landlord shall, subject to the terms of the Second Amendment
Work Letter, also make available to Tenant the Additional Tenant Improvement
Allowance (as defined in the Second Amendment Work Letter).  Commencing on the
first day of the month following the date that Landlord first disburses all or a
portion of the Additional Tenant Improvement Allowance, and continuing
thereafter on the first day of each month of the Term through the Extension Term
Expiration Date, Tenant, as Additional Rent, shall pay the amount necessary to
fully amortize the portion of the Additional Tenant Improvement Allowance
actually funded by Landlord, if any, in equal monthly payments with interest at
a rate of 8% per annum through the Extension Term Expiration Date, which
interest shall begin to accrue on the date that Landlord first disburses the
applicable portion of such Additional Tenant Improvement Allowance.  Any of the
Additional Tenant Improvement Allowance and applicable interest remaining unpaid
as of the expiration or earlier termination of the Lease shall be paid to
Landlord in a lump sum at the expiration or earlier termination of this Lease.
For the avoidance of doubt, the Additional Tenant Improvement Allowance does not
constitute Monthly Base Rent under the Lease shall not be included in
determining the annual three percent (3%) increases in Monthly Base Rent.

5.

Option to Renew.  Tenant shall continue to have two (2) options (each a “Renewal
Option”) to extend the term of the Lease with respect to the entire Premises for
successive periods of five (5) years each (each a “Renewal Term”) pursuant to
the provisions of Paragraph 49 of the Lease. 

6.

Additional Rent.  The final paragraph of Section 4.2 of the Lease is hereby
deleted in its entirety and replaced with the following:

“Notwithstanding anything in this Paragraph 4.2 to the contrary, (i) Tenant
shall not be responsible for the payment of any Expenses which relate to or
benefit solely another building within the Project occupied or intended to be
occupied by other tenants or for which Landlord receives full reimbursement from
other tenants, and (ii) with respect to all sums payable by Tenant as Additional
Rent under this Paragraph 4.2 for the replacement of any item or the
construction of any new item in connection with the physical operation of the
Premises, the Building or the Project (i.e., HVAC, roof membrane or coverings
and parking area) or as required by applicable Laws (including , without
limitation, ADA) which is a capital item the replacement of which would be
capitalized under generally accepted accounting principles consistently applied,
Tenant shall be

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required to pay its pro rata share of the cost of the item falling due within
the Term (including any Renewal Term) based upon the amortization of the same
over the useful life of such item, as reasonably determined by Landlord.  Such
pro rata share shall be paid by Tenant on a monthly basis throughout the Term
(rather than in a lump sum when incurred by Landlord).”

7.

Compliance with Laws.  To the extent that alterations or modifications to the
Building exterior, path of travel outside the Building or Building access
existing as of the date of the Second Amendment (collectively, “Triggered
Improvements”) are triggered by Tenant’s performance of the Second Amendment
Tenant Improvements, the cost of the Triggered Improvements shall be paid for by
Landlord as part of Expenses under the Lease, and Tenant shall be required to
pay its pro rata share of the cost of the Triggered Improvements on a monthly
basis (on the same day that Monthly Base Rent is due) over the remaining balance
of the Term.

8.

Encumbrances.  As of the Effective Date, there are no existing Encumbrances
encumbering the Project.

9.

Brokers.  Landlord and Tenant each represents and warrants that it has not dealt
with any broker, agent or other person (collectively, “Broker”) in connection
with this Second Amendment and that no Broker brought about this transaction,
other than CBRE.  Landlord and Tenant each hereby agree to indemnify and hold
the other harmless from and against any claims by any Broker, other than the
broker, if any named in this Section 6, claiming a commission or other form of
compensation by virtue of having dealt with Tenant or Landlord, as applicable,
with regard to this Second Amendment.  Landlord shall pay any commission due to
CBRE in connection with this Second Amendment pursuant to a separate written
agreement between Landlord and CBRE.

10.

OFAC.  To Tenant’s knowledge, without any duty of inquiry, as of the date of
Tenant’s execution of this Second Amendment, Tenant is currently (a) in
compliance with and shall at all times during the Term of the Lease remain in
compliance with the regulations of the Office of Foreign Assets Control (“OFAC”)
of the U.S. Department of Treasury and any statute, executive order, or
regulation relating thereto (collectively, the “OFAC Rules”), (b) not listed on,
and shall not during the term of the Lease be listed on, the Specially
Designated Nationals and Blocked Persons List, Foreign Sanctions Evaders List or
the Sectoral Sanctions Identifications List, which are all maintained by OFAC
and/or on any other similar list maintained by OFAC or other governmental
authority pursuant to any authorizing statute, executive order, or regulation,
and (c) not a person or entity with whom a U.S. person is prohibited from
conducting business under the OFAC Rules.

11.

California Accessibility Disclosure.  For purposes of Section 1938(a) of the
California Civil Code, Landlord hereby discloses to Tenant, and Tenant hereby
acknowledges, that the Project has not undergone inspection by a Certified
Access Specialist (CASp).  In addition, the following notice is hereby provided
pursuant to Section 1938(e) of the California Civil Code:  “A Certified Access
Specialist (CASp) can inspect the subject premises and determine whether the
subject premises comply with all of the applicable construction-related
accessibility standards under state law.  Although state law does not require a
CASp inspection of the subject premises, the commercial property owner or lessor
may not prohibit the lessee or tenant from obtaining a CASp inspection of the
subject premises for the occupancy or potential occupancy of the lessee or
tenant, if requested by the lessee or tenant.  The parties shall mutually agree
on the arrangements for the time and manner of the CASp inspection, the payment
of the fee for the CASp inspection, and the cost of making any repairs necessary
to correct violations of construction-related accessibility standards within the
premises.”  In furtherance of and in connection with such notice:  (i) Tenant,
having read such notice and understanding Tenant’s right to request and obtain a
CASp inspection, hereby elects not to obtain such CASp inspection and forever
waives its rights to obtain a CASp inspection with respect to the Premises,
Building and/or Project to the extent permitted by Legal Requirements; and (ii)
if the waiver set forth in clause (i) hereinabove is not enforceable pursuant to
Legal Requirements, then Landlord and Tenant hereby agree as follows (which
constitute the mutual agreement of the parties as to the matters described in
the last sentence of the foregoing

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notice):  (A) Tenant shall have the one-time right to request for and obtain a
CASp inspection, which request must be made, if at all, in a written notice
delivered by Tenant to Landlord; (B) any CASp inspection timely requested by
Tenant shall be conducted (1) at a time mutually agreed to by Landlord and
Tenant, (2) in a professional manner by a CASp designated by Landlord and
without any testing that would damage the Premises, Building or Project in any
way, and (3) at Tenant’s sole cost and expense, including, without limitation,
Tenant’s payment of the fee for such CASp inspection, the fee for any reports
prepared by the CASp in connection with such CASp inspection (collectively, the
“CASp Reports”) and all other costs and expenses in connection therewith; (C)
the CASp Reports shall be delivered by the CASp simultaneously to Landlord and
Tenant; (D) Tenant, at its sole cost and expense, shall be responsible for
making any improvements, alterations, modifications and/or repairs to or within
the Premises to correct violations of construction-related accessibility
standards including, without limitation, any violations disclosed by such CASp
inspection; and (E) if such CASp inspection identifies any improvements,
alterations, modifications and/or repairs necessary to correct violations of
construction-related accessibility standards relating to those items of the
Building and Project located outside the Premises that are Landlord’s obligation
to repair as set forth in the Lease, then Landlord shall perform such
improvements, alterations, modifications and/or repairs as and to the extent
required by Legal Requirements to correct such violations, and Tenant shall
reimburse Landlord for the cost of such improvements, alterations, modifications
and/or repairs within 30 days after Tenant’s receipt of an invoice therefor from
Landlord.

12.

Miscellaneous.

a. This Second Amendment is the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior and
contemporaneous oral and written agreements and discussions.  This Second
Amendment may be amended only by an agreement in writing, signed by the parties
hereto.

b. This Second Amendment is binding upon and shall inure to the benefit of the
parties hereto, their respective agents, employees, representatives, officers,
directors, divisions, subsidiaries, affiliates, assigns, heirs, successors in
interest and shareholders.

c. Landlord and Tenant each acknowledge that it has read the provisions of this
Second Amendment, understands them, and is bound by them. Time is of the essence
in this Second Amendment.

d. This Second Amendment may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which when taken together shall
constitute one and the same instrument.  The signature page of any counterpart
may be detached therefrom without impairing the legal effect of the signature(s)
thereon provided such signature page is attached to any other counterpart
identical thereto except having additional signature pages executed by other
parties to this Second Amendment attached thereto. 

e. Except as amended and/or modified by this Second Amendment, the Lease is
hereby ratified and confirmed and all other terms of the Lease shall remain in
full force and effect, unaltered and unchanged by this Second Amendment.  In the
event of any conflict between the provisions of this Second Amendment and the
provisions of the Lease, the provisions of this Second Amendment shall
prevail.  Whether or not specifically amended by this Second Amendment, all of
the terms and provisions of the Lease are hereby amended to the extent necessary
to give effect to the purpose and intent of this Second Amendment.

f. Commencing on June 1, 2020, Innoviva, Inc., a Delaware corporation formerly
known as Theravance, Inc., the original tenant under the Lease, is excused from
any obligations under the Lease first arising after May 31, 2020, excepting only
the payment of Monthly Base Rent, Additional Rent and other amounts under the
Lease coming due prior to June 1, 2020, and such other

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obligations arising under the Lease which would survive a termination of the
Lease if the Lease were to terminate on May 31, 2020.

[Signatures are on the next page.]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment as of
the day and year first above written.

 

 

 

 

 

TENANT:

 

THERAVANCE BIOPHARMA US, INC.,
a Delaware corporation

 

By:

/s/ Renee Gala

 

Its:

SVP & Chief Financial Officer

 

 

 

 

 

 

 

LANDLORD:

 

ARE-901/951 GATEWAY BOULEVARD, LLC,  

 

a Delaware limited liability company

 

By:

ALEXANDRIA REAL ESTATE EQUITIES, L.P.,

 

 

a Delaware limited partnership,
managing member

 

 

By:

ARE-QRS CORP.,

 

 

 

a  Maryland corporation,

 

 

 

general partner

 

 

 

 

 

 

By:

/s/ Eric S. Johnson

 

 

 

Its:

Senior Vice President, RE Leal Affairs

 

 

 

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Exhibit A

 

Second Amendment Work Letter

THIS SECOND AMENDMENT WORK LETTER (this “Second Amendment Work Letter”) is
incorporated into that certain Lease Agreement dated January 1, 2001, as amended
by that certain First Amendment to Lease dated as of June 1, 2010, and as
further amended by that certain Second Amendment to Lease dated of even date
herewith (the “Second Amendment”) (as amended, the “Lease”) by and between
ARE-901/951 GATEWAY BOULEVARD, LLC, a Delaware limited liability company
(“Landlord”), and THERAVANCE BIOPHARMA US, INC., a Delaware corporation
(“Tenant”).  Any initially capitalized terms used but not defined herein shall
have the meanings given them in the Lease.

1. General Requirements.

(a) Tenant’s Authorized Representative.  Tenant designates Jeffrey Lang
(“Tenant’s Representative”) as the only person authorized to act for Tenant
pursuant to this Second Amendment Work Letter.  Landlord shall not be obligated
to respond to or act upon any request, approval, inquiry or other communication
(“Communication”) from or on behalf of Tenant in connection with this Second
Amendment Work Letter unless such Communication is in writing from Tenant’s
Representative.  Tenant may change Tenant’s Representative at any time upon not
less than 5 business days advance written notice to Landlord. 

(b) Landlord’s Authorized Representative.  Landlord designates Hong Leahey and
Greg Gehlen (either such individual acting alone, “Landlord’s Representative”)
as the only persons authorized to act for Landlord pursuant to this Second
Amendment Work Letter.  Tenant shall not be obligated to respond to or act upon
any request, approval, inquiry or other Communication from or on behalf of
Landlord in connection with this Second Amendment 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. 

(c) Architects, Consultants and Contractors.  Landlord and Tenant hereby
acknowledge and agree that the architect (the “TI Architect”) for the Second
Amendment Tenant Improvements (as defined in Section 2(a) below), the general
contractor and any subcontractors for the Second Amendment Tenant Improvements
shall be selected by Tenant, subject to Landlord’s approval, which approval
shall not be unreasonably withheld, conditioned or delayed.  Landlord shall be
named a third party beneficiary of any contract entered into by Tenant with the
TI Architect, any consultant, any contractor or any subcontractor, and of any
warranty made by any contractor or any subcontractor. 

2. Second Amendment Tenant Improvements.

(a) Second Amendment Tenant Improvements Defined.  As used herein, “Second
Amendment Tenant Improvements” shall mean all improvements to the Premises
desired by Tenant of a fixed and permanent nature.  Notwithstanding anything to
the contrary contained in this Second Amendment Work Letter, the Second
Amendment Tenant Improvements may include LED lighting required to comply with
California Title 24 requirements imposed on the Project and associated
wiring.  The Second Amendment Tenant Improvements shall include the replacement
of the roof of the Building and the replacement of the rooftop Building HVAC
systems and controls.  The Second Amendment Tenant Improvements may, but are not
required to, also include the components set forth on Schedule 1 attached
hereto.  Notwithstanding anything to the contrary contained in the Lease
including, without limitation, the Second Amendment, other than funding the TI
Allowance (as defined below) as provided herein, Landlord shall not have any
obligation whatsoever with respect to paying for the Second Amendment Tenant
Improvements or otherwise finishing of the Premises for Tenant’s use and
occupancy.  Landlord and Tenant acknowledge that the Second Amendment Tenant
Improvements may be constructed in multiple phases, and that the TI Design
Drawings and TI Construction Drawings may be submitted to Landlord for approval
pursuant to Sections 2(b) and 2(c) below, respectively, on a phase-by-phase
basis.

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(b) Tenant’s Space Plans.  Tenant shall deliver to Landlord schematic drawings
and outline specifications (the “TI Design Drawings”) detailing Tenant’s
requirements for the Second Amendment Tenant Improvements.  Not more than 10
days thereafter, Landlord shall deliver to Tenant the written objections,
questions or comments of Landlord with regard to the TI Design Drawings.  Tenant
shall cause the TI Design Drawings to be revised to address such written
comments and shall resubmit said drawings to Landlord for approval within 10
days thereafter.  Such process shall continue until Landlord has approved the TI
Design Drawings.  Landlord’s approval of the TI Design Drawings shall not be
unreasonably withheld, conditioned or delayed.

(c) Working Drawings.  Within a reasonable period following the approval of the
TI Design Drawings by Landlord, Tenant shall cause the TI Architect to prepare
and deliver to Landlord for review and comment construction plans,
specifications and drawings for the Second Amendment Tenant Improvements (“TI
Construction Drawings”), which TI Construction Drawings shall be prepared
substantially in accordance with the TI Design Drawings.  Tenant shall be solely
responsible for ensuring that the TI Construction Drawings reflect Tenant’s
requirements for the Second Amendment Tenant Improvements.  Landlord shall
deliver its written comments on the TI Construction Drawings to Tenant not later
than 10 business days after Landlord’s receipt of the same; provided, however,
that Landlord may not disapprove any matter that is consistent with the TI
Design Drawings.  Tenant and the TI Architect shall consider all such comments
in good faith and shall, within 10 business days after receipt, notify Landlord
how Tenant proposes to respond to such comments.  Any disputes in connection
with such comments shall be resolved in accordance with Section 2(d)
hereof.  Provided that the design reflected in the TI Construction Drawings is
consistent with the TI Design Drawings, Landlord shall approve the TI
Construction Drawings submitted by Tenant.  Once approved by Landlord, subject
to the provisions of Section 4 below, Tenant shall not materially modify the TI
Construction Drawings except as may be reasonably required in connection with
the issuance of the TI Permit (as defined in Section 3(a) below).  Landlord’s
approval of the TI Construction Drawings shall not be unreasonably, withheld,
conditioned or delayed.

(d) Approval and Completion.  If any dispute regarding the design of the Second
Amendment Tenant Improvements is not settled within 10 business days after
notice of such dispute is delivered by one party to the other, Tenant may make
the final decision regarding the design of the Second Amendment Tenant
Improvements, provided (i) Tenant acts reasonably and such final decision is
either consistent with or a compromise between Landlord’s and Tenant’s positions
with respect to such dispute, and (ii) that all costs and expenses resulting
from any such decision by Tenant shall be payable out of the TI Fund (as defined
in Section 5(d) below).  Any changes to the TI Construction Drawings following
Landlord’s and Tenant’s approval of same requested by Tenant shall be processed
as provided in Section 4 hereof.

3. Performance of the Second Amendment Tenant Improvements.

(a) Commencement and Permitting of the Second Amendment Tenant
Improvements.  Tenant shall commence construction of the Second Amendment Tenant
Improvements upon obtaining and delivering to Landlord a building permit (the
“TI Permit”) authorizing the construction of the Second Amendment Tenant
Improvements consistent with the TI Construction Drawings approved by
Landlord.  The cost of obtaining the TI Permit shall be payable from the TI
Fund.  Landlord shall assist Tenant in obtaining the TI Permit.  Prior to the
commencement of the Second Amendment Tenant Improvements, Tenant shall deliver
to Landlord a copy of any contract with Tenant’s contractors (including the TI
Architect), and certificates of insurance from any contractor performing any
part of the Tenant Improvement evidencing industry standard commercial general
liability, automotive liability, “builder’s risk”, and workers’ compensation
insurance.  Tenant shall cause the general contractor to provide a certificate
of insurance naming Landlord, Alexandria Real Estate Equities, Inc., and
Landlord’s lender (if any) as additional insureds for the general contractor’s
liability coverages required above.

 

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(b) Selection of Materials, Etc.  Where more than one type of material or
structure is indicated on the TI Construction Drawings approved by Tenant and
Landlord, the option will be within Tenant’s reasonable discretion if the matter
concerns the Second Amendment Tenant Improvements, and within Landlord’s
reasonable discretion if the matter concerns the structural components of the
Building or any Building system.

(c) Tenant Liability.  Tenant shall be responsible for correcting any
deficiencies or defects in the Second Amendment Tenant Improvements.

(d) Substantial Completion.  Tenant shall substantially complete or cause to be
substantially completed the Second Amendment Tenant Improvements 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 which do
not interfere with the use of the Premises (“Substantial Completion” or
“Substantially Complete”).  Upon Substantial Completion of the Second Amendment
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 Second Amendment 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 which are not
material; or (iii) to make reasonable adjustments for field deviations or
conditions encountered during the construction of the Second Amendment Tenant
Improvements.

4. Changes.  Any changes requested by Tenant to the Second Amendment Tenant
Improvements after the delivery and approval by Landlord of the TI Design
Drawings, shall be requested and instituted in accordance with the provisions of
this Section 4 and shall be subject to the written approval of Landlord, which
approval shall not be unreasonably withheld, conditioned or delayed.

(a) Tenant’s Right to Request Changes.  If Tenant shall request changes
(“Changes”), Tenant shall request such Changes by notifying Landlord in writing
in substantially the same form as the AIA standard change order form (a “Change
Request”), which Change Request shall detail the nature and extent of any such
Change.  Such Change Request must be signed by Tenant’s
Representative.  Landlord shall review and approve or disapprove such Change
Request within 7 business days thereafter, provided that Landlord’s approval
shall not be unreasonably withheld, conditioned or delayed.

(b) Implementation of Changes.  If Landlord approves such Change and Tenant
deposits with Landlord any Excess TI Costs (as defined in Section 5(d) below)
required in connection with such Change, Tenant may cause the approved Change to
be instituted.  If any TI Permit modification or change is required as a result
of such Change, Tenant shall promptly provide Landlord with a copy of such TI
Permit modification or change.

5. Costs.

(a) Budget For Second Amendment Tenant Improvements.  Before the commencement of
construction of the Second Amendment Tenant Improvements, 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 the Second Amendment Tenant
Improvements (the “Budget”), and deliver a copy of the Budget to Landlord for
Landlord’s approval, which shall not be unreasonably withheld or delayed.  The
Budget shall be based upon the TI Construction Drawings approved by
Landlord.  The Budget shall include a payment to Landlord of administrative rent
(“Administrative Rent”) equal to the out-of-pocket costs incurred by Landlord in
connection with Landlord’s review of the TI Design Drawings, the TI Construction
Drawings and any Changes, which sum shall be payable from the TI Fund.  If the
Budget is greater than the TI Allowance, Tenant shall deposit with Landlord the
difference, in cash, prior to the commencement of construction of the Second
Amendment Tenant Improvements, for disbursement by Landlord as described in
Section 5(d).

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(b) TI Allowance.  Landlord shall provide to Tenant a tenant improvement
allowance (collectively, the “TI Allowance”) as follows:

1.a “Tenant Improvement Allowance” in the maximum amount of $115.00 per rentable
square foot in the Premises, or $12,699,220 in the aggregate for the Premises,
which is included in the Base Rent set forth in the Lease; and

2.an “Additional Tenant Improvement Allowance” in the maximum amount of $30.00
per rentable square foot in the Premises, or $3,312,840.00 in the aggregate for
the Premises, which shall, to the extent used, result in additional Rent as set
forth in the Second Amendment. 

The TI Allowance shall be disbursed in accordance with this Second Amendment
Work Letter. 

Tenant shall have no right to the use or benefit (including any reduction to
Base Rent) of any portion of the TI Allowance not required for the construction
of (i) the Second Amendment Tenant Improvements described in the TI Construction
Drawings approved pursuant to Section 2(d) or (ii) any Changes pursuant to
Section 4.  Tenant shall have no right to any portion of the TI Allowance that
is not disbursed before May 31, 2022.  Notwithstanding anything to the contrary
contained in the Second Amendment or this Second Amendment Work Letter, Tenant
may elect by written notice to Landlord to apply a portion of the TI Allowance
to the cost of the Fourth Amendment Tenant Improvements (as defined in the
Fourth Amendment to the 951 Lease) in which event the amount of the TI Allowance
available to Tenant for the TI Costs incurred by Tenant with respect to the
Second Amendment Tenant Improvements shall be ratably reduced.

(c) Costs Includable in TI Fund.  The TI Fund shall be used solely for the
payment of design, permits and construction costs in connection with the design
and construction of the Second Amendment Tenant Improvements, including, without
limitation, the cost of electrical power and other utilities used in connection
with the construction of the Second Amendment Tenant Improvements, the cost of
preparing the TI Design Drawings and the TI Construction Drawings, all costs set
forth in the Budget, including Landlord’s Administrative Rent, and the cost of
Changes (collectively, “TI Costs”).  Notwithstanding anything to the contrary
contained herein, other than as provided in the immediately following sentence,
the TI Fund shall not be used to purchase any furniture, personal property or
other non-Building system materials or equipment, including, but not be limited
to, Tenant’s voice or data cabling, non-ducted biological safety cabinets and
other scientific equipment not incorporated into the Second Amendment Tenant
Improvements.  Notwithstanding anything to the contrary contained in this Second
Amendment Work Letter, Tenant may use a portion of the TI Allowance for the cost
of Tenant’s work stations and cubicles in the Premises and related cabling and
wiring.

(d) Excess TI Costs.  Landlord shall have no obligation to bear any portion of
the cost of any of the Second Amendment Tenant Improvements except to the extent
of the TI Allowance.  If at any time and from time-to-time, the remaining TI
Costs under the Budget exceed the remaining unexpended TI Allowance (“Excess TI
Costs”), monthly disbursements of the TI Allowance shall be made in the
proportion that the remaining TI Allowance bears to the outstanding TI Costs
under the Budget, and Tenant shall fund the balance of each such monthly
draw.  The TI Allowance and Excess TI Costs is herein referred to as the “TI
Fund.”  Notwithstanding anything to the contrary set forth in this Section 5(d),
Tenant shall be fully and solely liable for TI Costs and the cost of Minor
Variations in excess of the TI Allowance. 

 

 

 

 

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(e) Payment for TI Costs.  During the course of design and construction of the
Second Amendment Tenant Improvements, subject to the terms of Section 5(d),
Landlord shall reimburse Tenant for TI Costs once a month against a draw request
in Landlord’s standard form, containing evidence of payment of such TI Costs by
Tenant and such certifications, lien waivers (including a conditional lien
release for each progress payment and unconditional lien releases for the prior
month’s progress payments), inspection reports and other matters as Landlord
customarily obtains, to the extent of Landlord’s reasonable good faith approval
thereof for payment, no later than 30 days following receipt of such draw
request.  Upon completion of the Second Amendment Tenant Improvements (and prior
to any final disbursement of the TI Fund), Tenant shall deliver to
Landlord:  (i) sworn statements setting forth the names of all contractors and
first tier subcontractors who did the work and final, unconditional lien waivers
from all such contractors and first tier subcontractors; (ii) as-built plans
(one copy in print format and two copies in electronic CAD format) for such
Second Amendment Tenant Improvements; (iii) a certification of substantial
completion in Form AIA G704, (iv) a certificate of occupancy for the Premises;
and (v) copies of all operation and maintenance manuals and warranties affecting
the Premises. 

6. Miscellaneous.

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

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

(c) No Default Funding.  In no event shall Landlord have any obligation to fund
any portion of the TI Allowance during any period that Tenant is in Default
under the Lease.

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Schedule 1 to Second Amendment Work Letter

 

Optional Second Amendment Tenant Improvements

1.  Replacement of the fire panel/alarm system

2.  Replacement of the existing HVAC system duct work

3.  New Building management systems

4.  Restroom upgrades

5.  New LED lighting throughout the Building

6.  Repainting the exterior and interior of the Building

7.  Window repair/caulking, as necessary

8.  Renovation of the office areas to a more “pen” floor plan

9.  Renovation of the lab [] areas

10.  Additional Building entrances adjacent to parking areas

11.  New furnishing/work stations, as necessary

 

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