Exhibit 10.5

 

 

SUBLEASE

 

THIS SUBLEASE (this “Sublease”) is dated for reference purposes as of January
16, 2019, and

is made by and between ONCOMED PHARMACEUTICALS, INC., a Delaware corporation

(“Sublandlord”), and REVOLUTION MEDICINES, INC., a Delaware corporation
(“Subtenant”).

Sublandlord and Subtenant hereby agree as follows:

 

1. Recitals: This Sublease is made with reference to the fact that HCP LS
Redwood City, LLC,

as “Landlord,” (“Master Landlord”) and Sublandlord, as “Tenant,” are parties to
that certain Lease dated

May 30, 2006, as amended by that certain First Amendment to Lease dated
November, 2006, that certain

Acknowledgement of Rent Commencement Date dated as of March 9, 2007, that
certain Second

Amendment to Office Lease dated December 22, 2010, and that certain Third
Amendment to Lease dated

November 11, 2016 (as amended, the “Master Lease”), with respect to those
certain premises consisting

of approximately 45,690 rentable square feet described therein (the “Master
Premises”) located at 800

Chesapeake Drive, in the Britannia Seaport Centre in Redwood City, California. A
copy of the Master

Lease is attached hereto as Exhibit A. Capitalized terms used and not defined
herein shall have the

meaning ascribed to them in the Master Lease.

 

2. Subleased Premises: Subject to the terms and conditions of this Sublease,
Sublandlord

hereby subleases to Subtenant, and Subtenant hereby subleases from Sublandlord,
a portion of the Master

Premises shown on Exhibit B attached hereto (the “Subleased Premises”). In
connection with its use of

the Subleased Premises, and subject to Sublandlord’s reasonable rules and
regulations, Subtenant shall

have the non-exclusive right to use the shared areas outlined on Exhibit B,
including the

shipping/receiving area for ingress and egress purposes only, the common lobby,
shared break room,

common restrooms and locker rooms outlined thereon (collectively, the “Shared
Areas”), in each case to

the extent permitted by and on the terms set forth in the Master Lease and
subject to Sublandlord’s

reasonable rules and regulations. Subtenant shall have no right to enter, and
shall prevent its employees,

agents, contractors and invitees from entering any portions of the Master
Premises other than the

Subleased Premises and the Shared Areas.

 

3. Term:

 

A. Term. The term (the “Term”) of this Sublease shall be for the period
commencing

on the date by which this Sublease is executed by Sublandlord and Subtenant,
Master Landlord’s written

consent to this Sublease is obtained and Sublandlord delivers the Subleased
Premises to Subtenant (the

“Commencement Date”) and ending one (1) year thereafter unless this Sublease is
sooner terminated

pursuant to its terms or the Master Lease is sooner terminated pursuant to its
terms (the “Expiration

Date”). In the event of (i) an event of default under the Master Lease of which
Sublandlord becomes

aware, or (ii) notification of an event of default with a cure period, pursuant
to Article 14 of the Master

Lease, Sublandlord shall promptly, and in no event less than two business days,
notify Subtenant of such

event of default. To the extent practicable, but not including the payment of
monies, the incurring of any

liabilities, or the institution of legal proceedings, Sublandlord will
facilitate Subtenant’s discussion with

Master Landlord regarding the maintenance of this Sublease despite Sublandlord’s
default or alleged

default. Sublandlord will use commercially reasonable efforts to obtain Master
Landlord’s consent (not

including the payment of monies, the incurring of any liabilities, or the
institution of legal proceedings).

Notwithstanding the foregoing, if neither party delivers to the other a written
notice of termination at least

thirty (30) days prior to the scheduled Expiration Date, then the Term shall
automatically be extended on

a month-to-month basis (the “Extension Term”). During the Extension Term, either
party shall have the

right to terminate the Sublease upon thirty (30) days’ prior written notice to
the other.

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B. No Options to Extend or Expand. Notwithstanding anything to the contrary in
the

Sublease or the Master Lease but subject to the foregoing month-to-month
Extension Term, Subtenant

shall not have any options to extend or renew the term of the Sublease or any
options to expand the

Subleased Premises (except as expressly set forth in Paragraph 3.C below).

 

C. Right of First Offer. So long as Subtenant is not and has not been in default
of any

term or provision of this Sublease, if Sublandlord determines to sublease a
portion of or the entire

remaining balance of the vivarium space in the Master Premises, then Sublandlord
shall notify Subtenant

in writing (such written notice, the “Offer Notice”) of the terms on which
Sublandlord would be willing to

sublease the same, which terms may include, without limitation, the subleasing
of other portions of the

Master Premises at Sublandlord’s sole discretion (such vivarium space together
with such other portions

of the Master Premises included in the Offer Notice, the “Offer Space”). If
Subtenant, within five (5)

business days after receipt of Sublandlord’s Offer Notice, accepts Sublandlord’s
offer in the Offer Notice

and indicates in writing its agreement to sublease the Offer Space on the terms
stated in Offer Notice,

then, subject to Master Landlord’s consent, Sublandlord shall sublease to
Subtenant and Subtenant shall

sublease from Sublandlord the Offer Space on the terms stated in the Offer
Notice (and all other terms set

forth in this Sublease that are not inconsistent with the terms set forth in the
Offer Notice). Upon such

acceptance by Subtenant, (i) Sublandlord shall prepare an amendment to the
Sublease reflecting all such

terms, (ii) Subtenant shall promptly (and in all events within ten (10) business
days after receipt of the

same) execute the same, and (iii) the rights of Subtenant under this Paragraph
3.C shall terminate in their

entirety and shall no longer be in effect. If Subtenant does not indicate in
writing its agreement to

sublease the Offer Space on the terms contained in the Offer Notice within said
five (5) business day

period, or if Master Landlord shall withhold its consent to the sublease of the
Offer Space to Subtenant,

then the rights of Subtenant under this Paragraph 3.C shall terminate in their
entirety and shall no longer

be in effect, and Sublandlord shall thereafter be free to sublease the Offer
Space (or any other portion of

the Master Premises, including without limitation any vivarium space) to any
third party upon any terms

and conditions in Sublandlord’s sole discretion. The rights of Subtenant
contained herein shall be subject

and subordinate to any rights of renewal, extension or expansion under any other
subleases in the Master

Premises.

 

4. Rent:

 

A. Base Rent. Commencing on the Commencement Date and continuing each month

throughout the Term (and any Extension Term) of this Sublease, Subtenant shall
pay to Sublandlord as

base rent (“Base Rent”) for the Subleased Premises Sixty-Five Thousand Dollars
($65,000.00) per month.

Base Rent shall increase by five percent (5%) on each annual anniversary of the
Commencement Date.

Base Rent shall be paid in advance on or before the first (1st) day of each
month. Base Rent for any

period during the Term hereof which is for less than one (1) month of the Term
shall be a pro rata portion

of the monthly installment based on a thirty (30) day month. Base Rent and
Additional Rent (if any), as

defined in Paragraph 4.B below (collectively, “Rent”) shall be payable without
notice or demand and

without any deduction, offset, or abatement, in lawful money of the United
States of America. Rent shall

be paid directly to Sublandlord at 800 Chesapeake Drive, Redwood City, CA 94063,
Attention:

Accounting, or such other address as may be designated in writing by
Sublandlord.

 

B. Additional Rent. All monies other than Base Rent required to be paid by
Subtenant

under this Sublease shall be deemed additional rent (“Additional Rent”). Along
with any invoice for

Additional Rent due, Sublandlord will provide supporting documentation detailing
the Additional Rent

charges. Base Rent shall include the cost to perform Sublandlord’s maintenance
obligations under

Paragraph 8, electricity, water and heating, hazardous waste management (to the
extent set forth in the

Animal Care Agreement, as defined below), and ventilation and air conditioning
(“HVAC”) (collectively,

“Included Services”). Subtenant shall pay for all environmental health and
safety services, hazardous

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waste management (except as set forth in the Animal Care Agreement, defined
below) , internet, phone

and information technology services and support, administrative support, and
other similar items and

services with respect to the Subleased Premises (if applicable).

 

C. Animal Care Agreement. Subtenant shall pay all charges and amounts due and

payable under the Animal Care Agreement attached hereto as Exhibit C (the
“Animal Care Agreement”).

 

D. Prepayment of Rent. Upon execution hereof by Subtenant, Subtenant shall pay
to

Sublandlord the sum of Sixty-Five Thousand Dollars ($65,000.00), which shall
constitute Base Rent for

the first (1st) month of the Term (with any remainder to be applied towards the
second month of the

Term).

 

5. Security Deposit:

 

A. Within five (5) business days after execution of this Sublease, Subtenant
shall deposit

with Sublandlord Sixty-Five Thousand Dollars ($65,000.00) in cash as security
for the performance by

Subtenant of its obligations under this Sublease, and not as a prepayment of
rent (collectively, the

“Security Deposit”). If Subtenant defaults under this Sublease, Sublandlord may
apply all or any part of

the Security Deposit for the payment of any rent or other sum in default, the
repair of any damage to the

Subleased Premises caused by Subtenant or the payment of any other amount which
Sublandlord may

spend or become obligated to spend by reason of Subtenant’s default or to
compensate Sublandlord for

any other loss or damage which Sublandlord may suffer by reason of Subtenant’s
default to the full extent

permitted by law. Subtenant hereby waives any restriction on the use or
application of the Security

Deposit by Sublandlord as set forth in California Civil Code Section 1950.7. To
the extent any portion of

the Security Deposit is used, Subtenant shall within five (5) days after demand
from Sublandlord restore

the Security Deposit to its full amount. Sublandlord may keep the Security
Deposit in its general funds

and shall not be required to pay interest to Subtenant on the deposit amount. If
Subtenant shall perform

all of its obligations under this Sublease and return the Subleased Premises to
Sublandlord at the end of

the Term (as the same may be extended), Sublandlord shall return all of the
remaining Security Deposit to

Subtenant within thirty (30) days after the end of the Term (as the same may be
extended). The Security

Deposit shall not serve as an advance payment of rent or a measure of
Sublandlord’s damages for any

default under this Sublease. Subtenant covenants and agrees that it shall not
assign or encumber or

attempt to assign or encumber the Security Deposit and neither Sublandlord nor
its successors or assigns

shall be bound by any such agreement, encumbrance, attempted assignment or
attempted encumbrance.

 

6. Holdover: Subtenant acknowledges that it is critical that Subtenant surrender
the Subleased

Premises on or before the expiration or earlier termination of the Sublease in
accordance with the terms of

this Sublease. Accordingly, Subtenant shall indemnify, defend and hold harmless
Sublandlord from and

against all losses, costs, claims, liabilities and damages resulting from
Subtenant’s failure to surrender the

Subleased Premises on or before the expiration or earlier termination of the
Sublease in the condition

required under the terms of this Sublease (including, without limitation, any
liability or damages

sustained by Sublandlord as a result of a holdover of the Master Premises by
Sublandlord occasioned by

the holdover of the Subleased Premises by Subtenant). In addition, Subtenant
shall pay Sublandlord

holdover rent equal to one hundred fifty percent (150%) of Base Rent plus any
Additional Rent payable

hereunder for any period from the Expiration Date through the date Subtenant
surrenders the Subleased

Premises in the condition required hereunder. The provisions of this Paragraph 6
shall survive the

expiration or earlier termination of this Sublease.

 

7. “AS IS”Condition: The parties acknowledge and agree that Subtenant is
subleasing the

Subleased Premises on an “AS IS” basis (except that Sublandlord shall deliver
the same in vacant, broom

clean condition and, to the extent such compliance is Sublandlord’s obligation
under the Master Lease, in

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compliance with applicable laws as currently interpreted and enforced), and that
Sublandlord has made no

representations or warranties, express or implied, whatsoever, with respect to
the Subleased Premises,

including, without limitation, any representation or warranty as to the
suitability of the Subleased

Premises for Subtenant’s intended use or any representation or warranty made by
Master Landlord under

the Master Lease. Sublandlord shall have no obligation whatsoever to make or pay
the cost of any

alterations, improvements or repairs to the Subleased Premises, including,
without limitation, any

improvement or repair required to comply with any law, regulation, building code
or ordinance (including

the Americans with Disabilities Act of 1990, as may be amended). Subtenant
expressly waives all rights

under law to make repairs at the expense of Sublandlord. Subtenant hereby
expressly waives the

provisions of subsection 1 of Section 1932 and Sections 1941 and 1942 of the
Civil Code of California

and all rights to make repairs at the expense of Sublandlord as provided in
Section 1942 of said Civil

Code.

 

8. Repair and Maintenance. Subtenant shall repair and maintain the Subleased
Premises in

good and sanitary order, condition and repair as set forth in Section 8.2(a) of
the Master Lease

incorporated herein. Notwithstanding the foregoing, Sublandlord shall continue
to repair and maintain

the Building electrical, plumbing and HVAC systems required to be maintained by
“Tenant” pursuant to

Section 8.2(a) of the Master Lease. In the event Sublandlord’s cost to maintain
and repair such Building

systems increases as a result of Subtenant’s use of the Subleased Premises,
Subtenant shall pay to

Sublandlord such increase in cost. In addition, Subtenant shall pay the entire
cost of any repair,

maintenance or replacement required as a result of the misuse or excess use of
such systems, or the

negligence, willful misconduct or violation of this Sublease, by Subtenant or
its agents, employees,

contractors or invitees.

 

9. Master Landlord Obligations. Sublandlord shall have no obligation to perform
any repairs

or any other obligation of Master Landlord required to be performed by Master
Landlord under the terms

of the Master Lease (including, without limitation, Master Landlord’s
obligations under Sections 6, 8, 9,

10, 13, 15, and 17.20 of the Master Lease and Master Landlord’s obligation to
comply with laws and

carry building insurance). Sublandlord shall, however, request performance of
the same in writing from

Master Landlord promptly after being requested to do so by Subtenant, and shall
use Sublandlord’s

reasonable efforts (not including the payment of monies, the incurring of any
liabilities, or the institution

of legal proceedings) to obtain Master Landlord’s performance.

 

10. Right to Cure Defaults: If Subtenant fails to pay any sum of money to
Sublandlord, or fails

to perform any other act on its part to be performed hereunder, then Sublandlord
may, but shall not be

obligated to, make such payment or perform such act. All such sums paid, and all
reasonable costs and

expenses of performing any such act, shall be deemed Additional Rent payable by
Subtenant to

Sublandlord upon demand, together with interest thereon at the lesser of (i) ten
percent (10%) per annum

or (ii) the maximum rate allowable under law (the “Interest Rate”) from the date
of the expenditure until

repaid.

 

11. Assignment and Subletting: Notwithstanding anything to the contrary in the
Sublease or

the terms of the Master Lease incorporated herein, Subtenant may not assign any
interest in this Sublease

(by operation of law or otherwise), sublet any of the Subleased Premises,
transfer any interest of

Subtenant therein or permit any use of the Subleased Premises by another party
(collectively, “Transfer”).

Any Transfer by Subtenant shall be void and, at the option of Sublandlord, shall
be a material default

under this Sublease. Notwithstanding the foregoing, Subtenant may enter into a
“Permitted Transfer” of

Subtenant as described in Section 11.1 of the Master Lease, as incorporated
herein, so long as Master

Landlord’s consent is received (to the extent Master Landlord’s consent is
required under the Master

Lease) and the conditions therein are satisfied; provided, however, in the event
of any such Permitted

Transfer of Subtenant (other than a venture equity financing, initial public
offering, or other issuance of

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capital stock for bona fide financing purposes), Sublandlord shall have the
right to terminate this Sublease

upon written notice to Subtenant, in which event this Sublease shall terminate
thirty (30) days after such

notice of termination.

 

12. Use:

 

A. Subject to the terms of the Master Lease, Subtenant may use the Subleased
Premises

for research and development and/or laboratory purposes, and for administrative
and other lawful

purposes reasonably related to or incidental to such specified uses (subject in
each case to receipt of all

necessary approvals from the City of Redwood City and all other governmental
agencies having

jurisdiction over the Subleased Premises), and for no other purpose whatsoever.

 

B. Subtenant shall not use, store, transport or dispose of any Hazardous
Substances (as

defined in the Master Lease) in or about the Subleased Premises or the Master
Premises, except that

Subtenant may keep, store and use in the Subleased Premises those Hazardous
Substances, and their

respective quantities, specifically listed on the Environmental Questionnaire
attached to this Sublease as

Exhibit D to the extent permitted pursuant to the terms and conditions of
Section 9.6 of the Master Lease

incorporated herein. Subtenant shall at all times comply with Sublandlord’s
environmental, health and

safety (“EH&S”) standards, rules and regulations, and Sublandlord shall have the
right at any time to

audit Subtenant’s compliance with the same.

 

C. Subtenant shall have access to the Subleased Premises twenty-four (24) hours
per

day, seven (7) days per week, subject to access procedures reasonably required
by Sublandlord and/or

Master Landlord, the Building rules and regulations and other limitations set
forth in this Sublease or the

Master Lease.

 

D. Subtenant shall comply with all reasonable rules and regulations promulgated
from

time to time by Master Landlord or Sublandlord. Without limiting the generality
of the foregoing,

Subtenant shall comply with Sublandlord’s emergency policies and procedures.

 

13. Effect of Conveyance: As used in this Sublease, the term “Sublandlord” means
the holder of

the Tenant’s interest under the Master Lease. In the event of any assignment or
transfer of the Tenant’s

interest under the Master Lease, which assignment or transfer may occur at any
time during the Term

hereof in Sublandlord’s sole discretion, Sublandlord shall be and hereby is
entirely relieved of all

covenants and obligations of Sublandlord hereunder, and it shall be deemed and
construed, without

further agreement between the parties hereto, that any transferee has assumed
and shall carry out all

covenants and obligations thereafter to be performed by Sublandlord hereunder.
Sublandlord shall

transfer and deliver any security of Subtenant to the transferee of the Tenant’s
interest under the Master

Lease, and thereupon Sublandlord shall be discharged from any further liability
with respect thereto.

 

14. Delivery and Acceptance: This Sublease shall not be void or voidable, nor
shall

Sublandlord be liable to Subtenant for any loss or damage, by reason of delays
in the Commencement

Date or delays in Sublandlord delivering the Subleased Premises to Subtenant for
any reason whatsoever;

provided, however, that Base Rent shall abate with respect to the applicable
portion of the Subleased

Premises until Sublandlord delivers possession of the such portion of the
Subleased Premises to

Subtenant.

 

15. Improvements: Subtenant shall not make any alterations or improvements to
the Subleased

Premises (i) without the prior written consent of both Master Landlord and
Sublandlord and (ii) except in

accordance with the Master Lease. Sublandlord’s consent may be withheld by
Sublandlord in its sole and

absolute discretion. Notwithstanding anything to the contrary, by written notice
delivered not later than

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sixty (60) days prior to the Expiration Date (or, during the Extension Term, by
written notice delivered on

or around the same date as Sublandlord’s delivery or receipt of a notice of
termination), Sublandlord may

require Subtenant, at Subtenant’s expense, to remove any alterations or
improvements constructed by or

for Subtenant and restore the affected areas to their condition prior to such
alteration or improvement.

 

16. Release and Waiver of Subrogation: Notwithstanding anything to the contrary
in this

Sublease, the parties hereto release each other and their respective agents,
employees, successors and

assigns from all liability for damage to any property that is actually covered
by property insurance in

force or which would normally be covered by full replacement value “Special
Form” property insurance,

without regard to the negligence or willful misconduct of the entity so
released. Each party shall cause

each insurance policy it obtains to include a waiver of subrogation regarding
the liabilities released

hereby. Sublandlord shall not be liable to Subtenant, nor shall Subtenant be
entitled to terminate this

Sublease or to abate Base Rent for any (i) failure or interruption of any
utility system or service or (ii)

failure of Master Landlord to maintain the Subleased Premises or the Building as
may be required under

the Master Lease. Notwithstanding anything to the contrary in the Sublease or in
the Animal Care

Agreement, in no event shall Sublandlord be liable to Subtenant for any lost
profit, damage to or loss of

business or any form of special, indirect or consequential damages.

 

17. Insurance: Subtenant shall obtain and keep in full force and effect, at
Subtenant’s sole cost

and expense, during the Term (including any Extension Term) the insurance
required to be carried by the

“Tenant” under the Master Lease and business interruption insurance covering at
least one (1) year of

Base Rent. Subtenant shall include Sublandlord and Master Landlord as an
additional insured in any

policy of insurance carried by Subtenant in connection with this Sublease (other
than business

interruption insurance) and shall provide Sublandlord with certificates of
insurance upon Sublandlord’s

request.

 

18. Default: Subtenant shall be in material default of its obligations under
this Sublease if any of

the following events occur:

 

A. Subtenant fails to pay any Rent within three (3) business days after written
notice of

nonpayment; or

 

B. Subtenant fails to perform any term, covenant or condition of this Sublease
(except

those requiring payment of Rent) or the Animal Care Agreement and fails to cure
such breach within

twenty (20) days after delivery of a written notice specifying the nature of the
breach; or

 

C. the bankruptcy or insolvency of Subtenant, transfer by Subtenant in fraud of

creditors, an assignment by Subtenant for the benefit of creditors, or the
commencement of any

proceedings of any kind by or against Subtenant under any provision of the
Federal Bankruptcy Act or

under any other insolvency, bankruptcy or reorganization act unless, in the
event any such proceedings

are involuntary, Subtenant is discharged from the same within thirty (30) days
thereafter;

 

D. the appointment of a receiver for a substantial part of the assets of
Subtenant, which

receiver is not discharged within thirty (30) days;

 

E. the levy upon this Sublease or any estate of Subtenant hereunder by any
attachment

or execution and the failure within thirty (30) days thereafter to have such
attachment or execution

vacated or such other action taken with respect thereto so as to put Sublandlord
at no risk of having an

unconsented transfer of this Sublease;

 

F. Subtenant abandons the Subleased Premises; or

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G. Subtenant commits any other act or omission which could constitute a default
under

the Master Lease.

 

19. Remedies: In the event of any default by Subtenant, Sublandlord shall have
all remedies

provided to the “Landlord” under Section 14.2 of the Master Lease as if an
“event of default” had

occurred thereunder and all other rights and remedies otherwise available at law
and in equity.

Sublandlord may resort to its remedies cumulatively or in the alternative.

 

20. Surrender:

 

A. On or before the Expiration Date or any sooner termination of this Sublease,

Subtenant shall remove all of its trade fixtures, personal property and all
alterations constructed by

Subtenant in the Subleased Premises which are required to be removed under the
terms of this Sublease or

the Master Lease and shall surrender the Subleased Premises to Sublandlord in
good condition, order and

repair (reasonable wear and tear and damage by casualty or condemnation
excepted), and fully

decommissioned and free of any Hazardous Substances used, stored, released,
emitted or disposed of by

Subtenant or its agents, employees, contractors or invitees. Subtenant shall
repair any damage to the

Subleased Premises caused by Subtenant’s removal of its personal property,
furnishings and equipment.

If the Subleased Premises are not so surrendered, then Subtenant shall be liable
to Sublandlord for all

costs incurred by Sublandlord in returning the Subleased Premises to the
required condition, plus interest

thereon at the Interest Rate.

 

B. In connection with its surrender of the Subleased Premises, Subtenant shall
submit to

Sublandlord, at least fifteen (15) days prior to the expiration date of this
Sublease (or in the event of an

earlier termination of this Sublease, as soon as reasonably possible following
such termination), an

environmental assessment of the Subleased Premises by a competent and
experienced environmental

engineer or engineering firm reasonably satisfactory to Sublandlord (pursuant to
a contract approved by

Sublandlord and providing that Sublandlord can rely on the environmental
assessment). If such

environmental assessment reveals that removal, remediation or other clean-up is
required under any

applicable laws, rules, regulations, orders, permits or licenses, Subtenant
shall submit a remediation plan

prepared by a recognized environmental consultant and shall be responsible for
all costs of such removal,

remediation and clean-up.

 

21. Broker: Sublandlord and Subtenant each represent to the other that they have
dealt with no

real estate brokers, finders, agents or salesmen in connection with this
transaction other than CBRE

representing Sublandlord ( “Sublandlord Broker”). Sublandlord and Subtenant each
agrees to indemnify

and hold the other harmless from and against all claims for brokerage
commissions, finder’s fees or other

compensation made by any other agent, broker, salesman or finder as a
consequence of the indemnifying

party’s actions or dealings with such other agent, broker, salesman, or finder.

 

22. Notices: Unless at least five (5) days’ prior written notice is given in the
manner set forth in

this paragraph, the address of each party for all purposes connected with this
Sublease shall be that

address set forth below their signatures at the end of this Sublease. All
notices, demands and

communications in connection with this Sublease shall be properly addressed and
delivered as follows:

(a) personally delivered; or (b) submitted to an overnight courier service,
charges prepaid; or (c) deposited

in the mail (certified, return-receipt requested, and postage prepaid). Notices
shall be deemed delivered

upon receipt, if personally delivered, one (1) business day after being so
submitted to an overnight courier

service and two (2) business days after deposit in the United States mail, if
mailed as set forth above. All

notices given to Master Landlord under the Master Lease shall be considered
received only when

delivered in accordance with the Master Lease.

 

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23. Other Sublease Terms:

 

A. Incorporation By Reference. Except as set forth below and except as otherwise

provided in this Sublease, the terms and conditions of this Sublease shall
include all of the terms of the

Master Lease and such terms are incorporated into this Sublease as if fully set
forth herein, except that: (i)

each reference in such incorporated sections to “Lease” shall be deemed a
reference to this “Sublease”;

(ii) each reference to the “Premises” shall be deemed a reference to the
“Subleased Premises”; (iii) each

reference to “Landlord” shall be deemed a reference to “Sublandlord” and each
reference to “Tenant”

shall be deemed a reference to “Subtenant”, except as otherwise expressly set
forth herein; (iv) each

reference to “Rent Commencement Date” shall be deemed a reference to the
“Commencement Date”; (v)

with respect to work, services, utilities, electricity, repairs (or damage
caused by Master Landlord),

restoration, insurance, indemnities, reimbursements, representations, warranties
or the performance of any

other obligation of “Landlord” under the Master Lease, whether or not
incorporated herein, the sole

obligation of Sublandlord shall be to request the same in writing from Master
Landlord as and when

requested to do so by Subtenant, and to use Sublandlord’s reasonable efforts
(not including the payment

of money, the incurring of any liabilities, or the institution of legal
proceedings) to obtain Master

Landlord’s performance; (vi) with respect to any obligation of Subtenant to be
performed under this

Sublease, wherever the Master Lease grants to “Tenant” a specified number of
days to perform its

obligations under the Master Lease (including, without limitation, curing any
defaults), except as

otherwise provided herein, Subtenant shall have three (3) fewer days to perform
the obligation or one-half

the time period permitted under the Master Lease, which ever allows Subtenant
the greater amount of

time; (vii) with respect to any approval required to be obtained from the
“Landlord” under the Master

Lease, such approval must be obtained from both Master Landlord and Sublandlord,
and Sublandlord’s

withholding of approval shall in all events be deemed reasonable if for any
reason Master Landlord’s

approval is not obtained; (viii) in any case where the “Landlord” reserves or is
granted the right to

manage, supervise, control, repair, alter, regulate the use of, enter or use the
Premises or any areas

beneath, above or adjacent thereto, such reservation or grant of right of entry
shall be deemed to be for the

benefit of both Master Landlord and Sublandlord; (ix) in any case where “Tenant”
is to indemnify, release

or waive claims against “Landlord”, such indemnity, release or waiver shall be
deemed to run from

Subtenant to both Master Landlord and Sublandlord; (x) in any case where
“Tenant” is to execute and

deliver certain documents or notices to “Landlord”, such obligation shall be
deemed to run from

Subtenant to both Master Landlord and Sublandlord; and (xi) the following
modifications shall be made

to the Master Lease as incorporated herein:

 

(a) the following provisions of the Master Lease are not incorporated herein:

Sections 1.1(a)(except last sentence), 2, 3.1, 4.2, 5, 6.1, 7.1(first sentence),
7.2(a)(except clause (i)),

7.2(b), 7.3, 7.5, 8.1(b), 9.6(b)(xi) 9.6(c), 10.6(b), 11.1 (first three (3)
sentences), 11.2, 14.1, 15.2, 16, 17.1,

17.15, 17.16, 17.21, Exhibit B, Exhibit C, Exhibit D, First Amendment to Lease,
Acknowledgment of

Rent Commencement Date, Second Amendment to Lease, and Third Amendment to Lease;
and

 

(b) any right to abate rent provided to Subtenant through incorporation of the

provisions of the Master Lease shall not exceed the rent actually abated under
the Master Lease with

respect to the Subleased Premises.

 

B. Assumption of Obligations. This Sublease is and at all times shall be subject
and

subordinate to the Master Lease and the rights of Master Landlord thereunder.
Subtenant hereby

expressly assumes and agrees: (i) to comply with all provisions of the Master
Lease which are

incorporated hereunder; and (ii) to perform all the obligations on the part of
the “Tenant” to be performed

under the terms of the Master Lease which are incorporated hereunder with
respect to the Subleased

Premises during the term of this Sublease except as set forth in Paragraph 8
above. In the event the

Master Lease is terminated for any reason whatsoever, this Sublease shall
terminate simultaneously with

- 8 -

--------------------------------------------------------------------------------

such termination without any liability of Sublandlord to Subtenant. In the event
of a conflict between the

provisions of this Sublease and the Master Lease, as between Sublandlord and
Subtenant, the provisions

of this Sublease shall control.

 

24. Right to Contest: If Sublandlord does not have the right to contest any
matter in the Master

Lease due to expiration of any time limit that may be set forth therein or for
any other reason, then

notwithstanding any incorporation of any such provision from the Master Lease in
this Sublease,

Subtenant shall also not have the right to contest any such matter.

 

25. Signage: Subtenant shall not have any signage rights under this Sublease.

 

26. Review Costs: Subtenant shall reimburse Master Landlord promptly for any and
all

reasonable costs and expenses, including without limitation reasonable
attorneys’ fees, incurred by Master

Landlord in connection with any consent requested from the Master Landlord in
connection with the

Sublease, including without limitation, Master Landlord consent to this
Sublease.

 

27. Inspection by a CASp in Accordance with Civil Code Section 1938: To
Sublandlord’s

actual knowledge, the property being leased or rented pursuant to this Sublease
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.” Sublandlord and Subtenant agree
that if Subtenant requests a

CASp inspection of the Subleased Premises, then Subtenant shall pay (a) the fee
for such inspection, and (b) the cost of making any repairs necessary to correct
violations of construction-related accessibility standards within the Subleased
Premises or the Master Premises.

 

28. Conditions Precedent: Notwithstanding anything to the contrary in this
Sublease or the

Animal Care Agreement, this Sublease and the Animal Care Agreement and
Sublandlord’s obligations

hereunder and thereunder are conditioned upon Sublandlord’s receipt of the
written consent of Master

Landlord to this Sublease. Unless waived in writing by Sublandlord, such consent
shall provide that

Master Landlord waives its rights under Sections 11.2(b)-(c) of the Master Lease
with respect to the Rent

payable under this Sublease or other charges under the Animal Care Agreement. If
Sublandlord does not

receive such consent within thirty (30) days after execution of this Sublease by
Sublandlord, then either

party may terminate this Sublease by giving the other party written notice of
termination prior to

receiving Master Landlord’s consent to this Sublease, and upon such termination,
Sublandlord shall return

to Subtenant all prepaid rent and the Security Deposit. This Sublease is further
conditioned upon

Sublandlord and Subtenant entering into the Animal Care Agreement.

 

29. Termination; Recapture: Notwithstanding anything to the contrary herein,
Subtenant

acknowledges that, under the Master Lease, both Master Landlord and Sublandlord
have certain

termination and recapture rights, including, without limitation, in Sections 11
and 13 of the Master Lease.

Nothing herein shall prohibit Master Landlord or Sublandlord from exercising any
such rights and neither

Master Landlord nor Sublandlord shall have any liability to Subtenant as a
result thereof. In the event

Master Landlord or Sublandlord exercise any such termination or recapture
rights, this Sublease shall

terminate without any liability to Master Landlord or Sublandlord.

- 9 -

--------------------------------------------------------------------------------

 

 

 

30. No Recording: Subtenant agrees that it will not record this Sublease, or a
short

memorandum hereof.

 

31. No Drafting Presumption: The parties acknowledge that this Sublease has been
agreed to

by both the parties, that both Sublandlord and Subtenant have consulted with
attorneys with respect to the

terms of this Sublease and that no presumption shall be created against
Sublandlord because Sublandlord

drafted this Sublease.

 

32. Entire Agreement; Amendment: This Sublease constitutes the entire agreement
between

the parties with respect to the subject matter herein, and there are no binding
agreements or

representations between the parties except as expressed herein. No subsequent
amendment, change or

addition to this Sublease shall be binding unless in writing and signed by all
parties hereto.

 

33. Counterparts: This Sublease may be executed in one (1) or more counterparts
each of

which shall be deemed an original but all of which together shall constitute one
(1) and the same

instrument. Signature copies may be detached from the counterparts and attached
to a single copy of this

Sublease physically to form one (1) document.

 

[Remainder of page left intentionally blank]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- 10 -

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties have executed this Sublease as of the day and
year first

above written.

 

SUBLANDLORD:SUBTENANT:

 

ONCOMED PHARMACEUTICALS, INC.,REVOLUTION MEDICINES, INC.,

a Delaware corporationa Delaware corporation

 

 

By: /s/ John A. LewickiBy: /s/ Mark A. Goldsmith

Print Name: John A. Lewicki, PhDPrint Name: Mark A. Goldsmith

Title: President & CEOTitle: Chief Executive Officer

 

Address:Address:

 

800 Chesapeake Drive700 Saginaw Drive

Redwood City, CA 94063Redwood City, CA 94063

Attn:Attn:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

- 11 –

EXHIBIT A

MASTER LEASE

(attached)

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

LEASE

 

 

 

 

Landlord:

  

Slough Redwood City, LLC

 

 

Tenant:

  

OncoMed Pharmaceuticals, Inc.

 

 

Date:

  

May 30, 2006

TABLE OF CONTENTS

 

 

 

 

 

 

 

 

 

 

 

 

1.

  

PROPERTY

  

 

1

  

 

  

1.1

  

Lease of Premises

  

 

1

  

 

  

1.2

  

Landlord’s Reserved Rights

  

 

2

  

2.

  

TERM

  

 

2

  

 

  

2.1

  

Term

  

 

2

  

 

  

2.2

  

Early Possession

  

 

4

  

 

  

2.3

  

Condition of Premises

  

 

5

  

 

  

2.4

  

Acknowledgment of Rent Commencement Date

  

 

8

  

 

  

2.5

  

Holding Over

  

 

9

  

 

  

2.6

  

Options to Extend Term

  

 

9

  

3.

  

RENTAL

  

 

10

  

 

  

3.1

  

Minimum Rental

  

 

10

  

 

  

 

  

(a)

  

Rental Amounts

  

 

10

  

 

  

 

  

(b)

  

Rental Amounts During Extended Term(s)

  

 

10

  

 

  

 

  

(c)

  

Square Footage of Premises

  

 

10

  

 

  

3.2

  

Late Charge

  

 

11

  

4.

  

TAXES

  

 

12

  

 

  

4.1

  

Personal Property

  

 

12

  

 

  

4.2

  

Real Property

  

 

12

  

5.

  

OPERATING EXPENSES

  

 

13

  

 

  

5.1

  

Payment of Operating Expenses

  

 

13

  

 

  

5.2

  

Definition of Operating Expenses

  

 

13

  

 

  

5.3

  

Determination of Operating Expenses

  

 

15

  

 

  

5.4

  

Final Accounting for Expense Year

  

 

16

  

 

  

5.5

  

Proration

  

 

16

  

6.

  

UTILITIES

  

 

17

  

 

  

6.1

  

Payment

  

 

17

  

 

  

6.2

  

Interruption

  

 

17

  

7.

  

ALTERATIONS; SIGNS

  

 

18

  

 

  

7.1

  

Right to Make Alterations

  

 

18

  

 

  

7.2

  

Title to Alterations

  

 

18

  

 

  

7.3

  

Tenant Trade Fixtures

  

 

20

  

 

  

7.4

  

No Liens

  

 

20

  

 

  

7.5

  

Signs

  

 

20

  

8.

  

MAINTENANCE AND REPAIRS

  

 

20

  

 

  

8.1

  

Landlord’s Obligation for Maintenance

  

 

20

  

 

--------------------------------------------------------------------------------

 

 

 

 

 

 

 

 

 

 

 

 

  

 

  

(a)

  

Repairs and Maintenance

  

 

20

  

 

  

 

  

(b)

  

Tenant’s Remedy

  

 

21

  

 

  

8.2

  

Tenant’s Obligation for Maintenance

  

 

21

  

 

  

 

  

(a)

  

Good Order, Condition and Repair

  

 

21

  

 

  

 

  

(b)

  

Landlord’s Remedy

  

 

22

  

 

  

 

  

(c)

  

Condition Upon Surrender

  

 

22

  

9.

  

USE OF PROPERTY

  

 

22

  

 

  

9.1

  

Permitted Use

  

 

22

  

 

  

9.2

  

[Intentionally Deleted.]

  

 

23

  

 

  

9.3

  

No Nuisance

  

 

23

  

 

  

9.4

  

Compliance with Laws

  

 

23

  

 

  

9.5

  

Liquidation Sales

  

 

24

  

 

  

9.6

  

Environmental Matters

  

 

24

  

10.

  

INSURANCE AND INDEMNITY

  

 

30

  

 

  

10.1

  

Insurance

  

 

30

  

 

  

10.2

  

Quality of Policies and Certificates

  

 

32

  

 

  

10.3

  

Workers’ Compensation; Employees

  

 

33

  

 

  

10.4

  

Waiver of Subrogation

  

 

33

  

 

  

10.5

  

Increase in Premiums

  

 

33

  

 

  

10.6

  

Indemnification

  

 

33

  

 

  

10.7

  

Blanket Policy

  

 

34

  

11.

  

SUBLEASE AND ASSIGNMENT

  

 

34

  

 

  

11.1

  

Assignment and Sublease of Building

  

 

34

  

 

  

11.2

  

Rights of Landlord

  

 

35

  

12.

  

RIGHT OF ENTRY AND QUIET ENJOYMENT

  

 

36

  

 

  

12.1

  

Right of Entry

  

 

36

  

 

  

12.2

  

Quiet Enjoyment

  

 

37

  

13.

  

CASUALTY AND TAKING

  

 

37

  

 

  

13.1

  

Damage or Destruction

  

 

37

  

 

  

13.2

  

Condemnation

  

 

39

  

 

  

13.3

  

Reservation of Compensation

  

 

40

  

 

  

13.4

  

Restoration of Improvements

  

 

41

  

14.

  

DEFAULT

  

 

41

  

 

  

14.1

  

Events of Default

  

 

41

  

 

  

 

  

(a)

  

Abandonment

  

 

41

  

 

  

 

  

(b)

  

Nonpayment

  

 

41

  

 

  

 

  

(c)

  

Other Obligations

  

 

41

  

 

  

 

  

(d)

  

General Assignment

  

 

41

  

 

  

 

  

(e)

  

Bankruptcy

  

 

42

  

 

  

 

  

(f)

  

Receivership

  

 

42

  

 

  

 

  

(g)

  

Attachment

  

 

42

  

 

  

 

  

(h)

  

Insolvency

  

 

42

  

 

  

14.2

  

Remedies Upon Tenant’s Default

  

 

42

  

 

  

14.3

  

Remedies Cumulative

  

 

43

  

15.

  

SUBORDINATION, ATTORNMENT AND SALE

  

 

43

  

 

  

15.1

  

Subordination to Mortgage    

  

 

43

  

 

-ii-

--------------------------------------------------------------------------------

 

 

 

 

 

 

 

 

 

 

 

 

 

  

15.2

  

Sale of Landlord’s Interest

  

 

44

  

 

  

15.3

  

Estoppel Certificates

  

 

44

  

 

  

15.4

  

Subordination to CC&R’s

  

 

45

  

 

  

15.5

  

Mortgagee Protection

  

 

45

  

16.

  

SECURITY

  

 

46

  

 

  

16.1

  

Deposit

  

 

46

  

17.

  

MISCELLANEOUS

  

 

46

  

 

  

17.1

  

Notices

  

 

46

  

 

  

17.2

  

Successors and Assigns

  

 

48

  

 

  

17.3

  

No Waiver

  

 

48

  

 

  

17.4

  

Severability

  

 

48

  

 

  

17.5

  

Litigation Between Parties

  

 

48

  

 

  

17.6

  

Surrender

  

 

48

  

 

  

17.7

  

Interpretation

  

 

48

  

 

  

17.8

  

Entire Agreement

  

 

48

  

 

  

17.9

  

Governing Law

  

 

49

  

 

  

17.10

  

No Partnership

  

 

49

  

 

  

17.11

  

Financial Information

  

 

49

  

 

  

17.12

  

Costs

  

 

50

  

 

  

17.13

  

Time

  

 

50

  

 

  

17.14

  

Rules and Regulations

  

 

50

  

 

  

17.15

  

Brokers

  

 

50

  

 

  

17.16

  

Memorandum of Lease

  

 

50

  

 

  

17.17

  

Organizational Authority

  

 

50

  

 

  

17.18

  

Execution and Delivery

  

 

50

  

 

  

17.19

  

Survival

  

 

51

  

 

  

17.20

  

Parking

  

 

51

  

 

  

17.21

  

Warrant

  

 

51

  

 

  

17.22

  

Approvals

  

 

51

  

 

EXHIBITS

  

 

  

EXHIBIT A-1

  

Site Plan (The Center)

  

 

 

 

 

  

EXHIBIT A-2

  

Building Plan/Service Annex

  

 

 

 

 

  

EXHIBIT B

  

Workletter

  

 

 

 

 

  

EXHIBIT C

  

Form of Acknowledgment of Rent Commencement Date

  

 

 

 

 

  

EXHIBIT D

  

Form of Warrant

  

 

 

 

 

-iii-

 

--------------------------------------------------------------------------------

LEASE

THIS LEASE (“Lease”) is made and entered into as of May 30, 2006 (the “Lease
Commencement Date”), by and between SLOUGH REDWOOD CITY, LLC, a Delaware limited
liability company (“Landlord”), and ONCOMED PHARMACEUTICALS, INC., a Delaware
corporation (“Tenant”).

THE PARTIES AGREE AS FOLLOWS:

1. PROPERTY

1.1 Lease of Premises.

(a) Landlord leases to Tenant and Tenant hires and leases from Landlord, on the
terms, covenants and conditions hereinafter set forth, the premises (the
“Premises”) of approximately 45,678 square feet of space (subject to the
measurement provisions in Section 3.1(c) below) consisting of (i) the building
commonly known as 800 Chesapeake Drive (the “Building”) located in the Britannia
Seaport Centre (referred to interchangeably herein as the “Center” or the
“Property”) in the City of Redwood City, County of San Mateo, State of
California; and (ii) those portions of the Service Annex (as defined in
Section 2.3 below) designated as being either for the exclusive use of the
occupant of the Building, or for shared, nonexclusive use by the occupant of the
Building and the occupant of the Adjacent Building (as defined in Section 2.3
below), including (but not limited to) the Chemical Storage Area and Emergency
Generator Area (as described in Section 2.3 below) immediately adjacent to the
Building, which Chemical Storage Area and Emergency Generator Area,
respectively, are for the exclusive use of the occupant of the Building but are
not fully enclosed and therefore are not included in the square footage
calculation for the Premises. The location of the Building within the Center is
depicted on the site plan attached hereto as Exhibit A-1 and incorporated herein
by this reference (the “Site Plan”); the footprint of the Building is depicted
on the drawing attached hereto as Exhibit A-2 and incorporated herein by this
reference (the “Building Plan”). The parking areas, driveways, sidewalks,
landscaped areas and other portions of the Center that lie outside the exterior
walls of the buildings now or hereafter existing from time to time in the
Center, as depicted in the Site Plan and as hereafter modified by Landlord from
time to time in accordance with the provisions of this Lease, are sometimes
referred to herein as the “Common Areas.”

(b) As an appurtenance to Tenant’s leasing of the Premises pursuant to
Section 1.1(a), Landlord hereby grants to Tenant, for the benefit of Tenant and
its employees, suppliers, shippers, customers and invitees, during the term of
this Lease, the non-exclusive right to use, in common with others entitled to
such use, (i) those portions of the Common Areas improved from time to time for
use as parking areas, driveways, sidewalks, landscaped areas, or for other
common purposes, and (ii) all access easements and similar rights and privileges
relating to or appurtenant to the Center and created or existing from time to
time under any access easement agreements, declarations of covenants, conditions
and restrictions, or other written agreements now or hereafter of record with
respect to the Center, subject however to any

 

- 1 -

 

--------------------------------------------------------------------------------

limitations applicable to such rights and privileges under applicable law, under
this Lease and/or under the written agreements creating such rights and
privileges.

1.2 Landlord’s Reserved Rights. To the extent reasonably necessary to permit
Landlord to exercise any rights of Landlord and discharge any obligations of
Landlord under this Lease, Landlord shall have, in addition to the right of
entry set forth in Section 12.1 hereof; the following rights: (i) to make
changes to the Common Areas, including, without limitation, changes in the
location, size or shape of any portion of the Common Areas, and to construct
and/or relocate parking structures and/or parking spaces in the Center; (ii) to
close temporarily any of the Common Areas for maintenance or other reasonable
purposes; (iii) to construct, alter or add to other buildings and Common Area
improvements in the Center; (iv) to use the Common Areas while engaged in making
additional improvements, repairs or alterations to the Center or any portion
thereof; and (v) to do and perform such other acts with respect to the Common
Areas and the Center as may be necessary or appropriate. Landlord shall not
exercise rights reserved to it pursuant to this Section 1.2 in such a manner as
to cause any material diminution of Tenant’s rights, or any material increase of
Tenant’s obligations, under this Lease, or in such a manner as to leave Tenant
without reasonable parking or reasonable access to the Premises or otherwise to
materially impair Tenant’s ability to conduct its activities in the normal
manner; provided, however, that the foregoing shall not limit or restrict
Landlord’s right to undertake reasonable construction activity and Tenant’s use
of the Premises shall be subject to reasonable temporary disruption incidental
to such activity diligently prosecuted.

2. TERM

2.1 Term.

(a) The term of this Lease shall commence on the Lease Commencement Date as
defined above. Subject to any applicable adjustments pursuant to Paragraph 3(d)
of the Workletter attached hereto as Exhibit B and incorporated herein by this
reference (the “Workletter”), Tenant’s obligation to pay minimum rental and
Operating Expenses under this Lease shall commence on the date (the “Rent
Commencement Date”) that is the earlier to occur of (i) the date on which Tenant
commences actual business operations in at least a material portion of the
Premises or (ii) the first date by which all of the following conditions are
satisfied: (A) Landlord has delivered to Tenant both a TI Substantial Completion
Certificate with respect to Landlord’s TI Work (as those terms are defined in
the Workletter) and a Section 2.3 Substantial Completion Certificate with
respect to Landlord’s Section 2.3 Work (as those terms are defined below);
(B) Landlord has delivered possession of the Premises to Tenant with Landlord’s
Work substantially completed, for which purpose “substantially completed” shall
mean completed subject only to the performance of Punch List Work (as defined in
the Workletter); and (C) Landlord has obtained from the appropriate governmental
authorities all approvals and permits required for the legal occupancy and use
of the Premises; provided that (I) for purposes of the foregoing clause (C),
Landlord shall not be responsible for (and the occurrence of the Rent
Commencement Date shall not be delayed by any delay in the receipt of) any such
approvals or permits that are required by reason of improvements (if any)
installed by Tenant pursuant to Article 7 hereof or the Workletter, or by reason
of the particular nature of

 

- 2 -

 

--------------------------------------------------------------------------------

Tenant’s business operations to be conducted in the Premises (as distinguished
from approvals or permits required for the general use and occupancy of the
Premises and of the improvements constructed therein by Landlord); and (II) for
purposes of the foregoing clauses (A), (B) and (C), (x) the issuability of the
TI Substantial Completion Certificate and the Section 2.3 Substantial Completion
Certificate shall be determined without reference to completion of any elements
of Landlord’s Work that relate to the construction of the Larc facility and
related systems and improvements (the “Larc”) to be constructed as part of
Landlord’s TI Work under the Workletter (collectively, “Landlord’s Larc Work”);
(y) the substantial completion of Landlord’s Work (subject only to Punch List
Work) shall be determined without reference to completion of any elements of
Landlord’s Larc Work; and (z) the concept of receipt of all governmental
approvals and permits shall not be construed to include operational readiness
of, or receipt of governmental approvals and permits for the operation of, the
Larc, since the parties recognize that the time frame for permitting,
construction and commissioning of the Larc may be materially longer than the
time frame for the rest of Landlord’s TI Work. As used in this Lease, the term
“Landlord’s Work” shall mean, collectively, Landlord’s Section 2.3 Work (as
defined below) and Landlord’s TI Work (as defined in the Workletter). Subject to
development and/or modification of construction schedules for Landlord’s Work as
contemplated in the Workletter, the parties presently contemplate that the Rent
Commencement Date will occur on or about February 7, 2007.

(b) If the Rent Commencement Date has not occurred for any reason whatsoever on
or before August 7, 2007, then, in addition to any other rights or remedies
available to Tenant under this Lease or under applicable law, Tenant shall have
the right to terminate this Lease by written notice to Landlord at any time
prior to the satisfaction of all conditions for the occurrence of the Rent
Commencement Date; provided, however, that the foregoing deadline of August 7,
2007 shall be extended, day for day, by a period equal to the length of any
actual delay in the completion of Landlord’s Work that is caused by Tenant Delay
or Unavoidable Delay (as such terms are defined in the Workletter).
Notwithstanding the foregoing proviso, however, to the extent there are any
periods of such actual delay that are attributable solely to Unavoidable Delay
and not to Tenant Delay, the maximum amount of such actual delay attributable
solely to Unavoidable Delay that may be taken into account for purposes of
extending such deadline of August 7, 2007 shall be sixty (60) days in the
aggregate. Upon any valid exercise of Tenant’s termination right under this
paragraph (b), (i) if the periods of actual delay that gave rise to Tenant’s
termination right consisted primarily of periods attributable solely to Landlord
Delay and not to any concurrent Tenant Delay or Unavoidable Delay, then Landlord
shall refund to Tenant, within ten (10) business days after Tenant’s exercise of
its termination right, any monies previously paid by Tenant to Landlord pursuant
to this Lease and the Workletter (including, without limitation, any such
amounts paid by Tenant to Landlord for Tenant’s pro rata share, if any, of the
cost of Landlord’s TI Work), and (ii) if the periods of actual delay that gave
rise to Tenant’s termination right consisted primarily of periods attributable
solely to Tenant Delay and/or Unavoidable Delay and not to any concurrent
Landlord Delay, then Tenant shall not be entitled to any such refund and
Landlord shall instead be entitled to retain any such monies previously paid by
Tenant pursuant to this Lease and the Workletter.

 

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(c) If Landlord has not completed construction of Landlord’s Larc Work (subject
only to performance of Punch List Work) and delivered a Larc Substantial
Completion Certificate (as defined in the Workletter) to Tenant within ninety
(90) days after the Rent Commencement Date, then, in addition to any other
rights or remedies available to Tenant under this Lease or under applicable law,
beginning on the ninety-first (91st) day after the Rent Commencement Date and
continuing until completion of construction of Landlord’s Larc Work (subject
only to performance of Punch List Work) and delivery of such Larc Substantial
Completion Certificate, the square footage on which Tenant’s minimum rental
obligation under Section 3.1(a) and Tenant’s Operating Cost Share under Article
5 are calculated shall be reduced by an amount equal to the square footage of
the Larc, measured in a manner consistent with the manner in which other
measurements of square footage are made under this Lease, and Tenant’s payment
obligations with respect to minimum rental and Operating Expenses shall be
reduced proportionately. If Landlord has not completed construction of
Landlord’s Larc Work (subject only to performance of Punch List Work) and
delivered a Larc Substantial Completion Certificate to Tenant within nine
(9) months after the Rent Commencement Date, then, in addition to any other
rights or remedies available to Tenant under this Lease or under applicable law,
Tenant shall have the right to terminate this Lease by written notice to
Landlord at any time prior to the completion of construction of Landlord’s Larc
Work (subject only to performance of Punch List Work) and delivery of such Larc
Substantial Completion Certificate; provided, however, that each of the
foregoing deadlines shall be extended, day for day, by a period equal to the
length of any actual delay in the completion of Landlord’s Larc Work that is
caused by Tenant Delay (as defined in the Workletter). Upon any valid exercise
of Tenant’s termination right under this paragraph (c), (i) if the periods of
actual delay that gave rise to Tenant’s termination right consisted primarily of
periods attributable solely to Landlord Delay and not to any concurrent Tenant
Delay or Unavoidable Delay, then Landlord shall refund to Tenant, within ten
(10) business days after Tenant’s exercise of its termination right, any monies
previously paid by Tenant to Landlord pursuant to this Lease and the Workletter
(including, without limitation, any such amounts paid by Tenant to Landlord for
Tenant’s pro rata share, if any, of the cost of Landlord’s TI Work), and (ii) if
the periods of actual delay that gave rise to Tenant’s termination right
consisted primarily of periods attributable solely to Tenant Delay and/or
Unavoidable Delay and not to any concurrent Landlord Delay, then Tenant shall
not be entitled to any such refund and Landlord shall instead be entitled to
retain any such monies previously paid by Tenant pursuant to this Lease and the
Workletter.

(d) The term of this Lease shall end on the seventh (7th) anniversary of the
Rent Commencement Date (the “Termination Date”), estimated to be February 7,
2014 (if the Rent Commencement Date occurs on the target date indicated in
Section 2.1(a) above), unless sooner terminated or extended as hereinafter
provided.

2.2 Early Possession. Tenant shall have the nonexclusive right to enter and use
the Premises for the purpose of constructing improvements in the Premises
(subject to all the terms and conditions of Article 7 below and of the
Workletter as defined below), installing fixtures and furniture, laboratory
equipment, computer equipment, telephone equipment, low-voltage data wiring and
personal property and performing other similar work preparatory to the
commencement of Tenant’s business in the Premises, beginning on the Lease
Commencement

 

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Date (which date is also sometimes interchangeably referred to herein, for
purposes of such early access, as the “Early Access Date”). Such occupancy and
possession shall be subject to and upon all of the terms and conditions of this
Lease (including, but not limited to, conditions relating to maintenance of
required insurance by Tenant), except that (i) Tenant shall have no obligation
to pay minimum rental or Operating Expenses for any period prior to the Rent
Commencement Date, (ii) subject to any applicable provisions to the contrary in
Section 6.1 hereof and/or in the Workletter, Tenant shall have no obligation to
pay the cost of utilities supplied to the Premises for any period prior to the
Rent Commencement Date, and (iii) such early possession shall not advance or
otherwise affect the Rent Commencement Date or Termination Date determined under
Section 2.1. To the extent Landlord and/or its contractors or consultants are
also performing work in the Premises prior to the Rent Commencement Date, Tenant
shall not unreasonably interfere with or delay Landlord’s contractors or
consultants by any early access, occupancy or possession under this Section 2.2,
shall coordinate and cooperate with Landlord and its contractors and consultants
(who shall similarly coordinate and cooperate with Tenant and its contractors)
to minimize any interference or delay by either party with respect to the other
party’s work following the Early Access Date, and shall indemnify Landlord and
its agents and employees to the extent provided in Section 10.6(a) below and in
Paragraph 5(c) of the Workletter in connection with Tenant’s early entry upon
the Premises hereunder.

2.3 Condition of Premises. Tenant has had an opportunity to inspect the
condition of the Premises and agrees to accept the Premises “as is” in their
condition existing as of the date of this Lease, without any obligation on the
part of Landlord to improve, alter, repair or clean the Premises in any way for
Tenant’s occupancy hereunder, except as otherwise expressly provided herein.
Notwithstanding the foregoing:

(a) Landlord shall, at Landlord’s sole expense, perform all work necessary to
cause the following conditions to be satisfied (“Landlord’s Section 2.3 Work”):
(i) all existing Building systems and improvements (including, but not limited
to, the existing HVAC, electrical and plumbing systems and all utilities serving
the Premises) shall be in good working order and repair, including selective
retrofit and upgrade work to certain of such Building systems as reasonably
determined by Landlord to be appropriate to accommodate a standard level of
laboratory improvements; (ii) the Premises and Service Annex, as defined below
(excluding any improvements constructed in either of them by Tenant) and the
Common Areas of the Center shall comply with all laws, rules, regulations,
codes, ordinances, requirements, covenants, conditions and restrictions
applicable thereto at the Rent Commencement Date, and shall comply with the
terms of Landlord’s warranty set forth in Section 2.3(c) below; (iii) the roof
membrane of the Building shall be replaced; (iv) any additional shell or
structural work which Landlord in its sole discretion deems necessary or
appropriate to prepare the Building for occupancy by Tenant (which additional
work may include, but will not necessarily include or be limited to, structural
reinforcement and/or voluntary seismic upgrades) shall be substantially
completed; and (v) Landlord shall have substantially completed construction of
those portions of the Service Annex designated for exclusive or shared use by
the occupant of the Building, including all systems and improvements reasonably
required for the contemplated use thereof, in accordance with Section 2.3(d)
below. As described in the Workletter, a detailed (but not necessarily

 

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exhaustive) description of the elements of the “Base Building” which it is
Landlord’s responsibility to deliver to Tenant in accordance with this
Section 2.3 and the Workletter (including, but not necessarily limited to, the
elements of Landlord’s Section 2.3 Work as described above) is set forth
in Schedule B-1 attached to the Workletter and incorporated by reference
therein. Landlord shall use reasonable efforts to coordinate the design and
construction of Landlord’s Section 2.3 Work with Tenant’s final interior layout
and with the final plans and specifications for the Tenant Improvements.
Landlord shall use reasonable efforts to endeavor to complete Landlord’s
Section 2.3 Work and cause the conditions set forth in the first sentence of
this paragraph to be satisfied by February 7, 2007, but to the extent it is not
reasonably practicable to do so by February 7, 2007, Landlord shall thereafter
continue to proceed diligently and with reasonable efforts to complete the
required work and achieve the required conditions as promptly as practicable
thereafter, and Landlord and Tenant shall continue to cooperate reasonably and
in good faith with one another (and cause their respective consultants and
contractors to cooperate reasonably and in good faith with one another) in the
manner described in Section 2.2 above in connection with the concurrent
performance of their respective work in the Building. When Landlord receives
written certification from Landlord’s Architect that construction of Landlord’s
Section 2.3 Work has been substantially completed (subject only to performance
of Punch List Work), Landlord shall prepare and deliver to Tenant a certificate
signed by both Landlord and Landlord’s Architect (the “Section 2.3 Substantial
Completion Certificate”) certifying that the construction of Landlord’s
Section 2.3 Work has been substantially completed in accordance with this
Section 2.3 and specifying the date of that completion. Thereafter, beginning on
the Rent Commencement Date and continuing during the rest of the term of this
Lease, Tenant shall be responsible (subject, however, to any corrective
obligations of Landlord as expressly set forth in this Lease) for maintenance,
repair and/or replacement of all such systems and improvements to the extent
required under the provisions of Article 8 hereof. If Landlord’s obligations
under this paragraph are violated in any respect, then it shall be the
obligation of Landlord, after receipt of written notice from Tenant setting
forth with specificity the nature of the violation, to correct promptly and
diligently, at Landlord’s sole cost, the condition(s) constituting such
violation. However, in the case of the requirements set forth in clause (i) of
the first sentence of this paragraph, Tenant’s failure to give such written
notice to Landlord within six (6) months after the Rent Commencement Date shall
give rise to a conclusive and irrebuttable presumption that Landlord has
complied with all Landlord’s obligations under such clause (i), and in the case
of the requirements set forth in clauses (ii) through (v) of the first sentence
of this paragraph (except with respect to latent defects in the case of the
requirements set forth in clauses (iii) and (v) of the first sentence of this
paragraph), Tenant’ failure to give such written notice to Landlord regarding
any alleged violation within one (1) year after the Rent Commencement Date shall
give rise to a conclusive and irrebuttable presumption that Landlord has
complied with all Landlord’s obligations under such clauses (ii) through (v).
TENANT ACKNOWLEDGES THAT THE WARRANTIES AND/OR OBLIGATIONS CONTAINED IN THIS
SECTION 2.3 AND IN THE WORKLETTER (IF APPLICABLE) ARE IN LIEU OF ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE PHYSICAL CONDITION OF THE
PREMISES, BUILDING SYSTEMS AND EXISTING IMPROVEMENTS (OTHER THAN TENANT
IMPROVEMENTS) IN THE PREMISES, AND THAT LANDLORD MAKES NO OTHER WARRANTIES
EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION 2.3 AND, IN

 

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THE CASE OF TENANT IMPROVEMENTS CONSTRUCTED BY LANDLORD UNDER THE WORKLETTER, AS
EXPRESSLY SET FORTH IN THE WORKLETTER.

(b) As set forth in the Workletter, Landlord shall provide Tenant with a tenant
improvement allowance in the maximum amount of One Hundred Twenty-Five Dollars
($125) per square foot, or approximately Five Million Seven Hundred Nine
Thousand Seven Hundred Fifty Dollars ($5,709,750) in total (the “Tenant
Improvement Allowance”), towards the construction of Tenant Improvements (as
defined in the Workletter) in the Premises. Construction of such Tenant
Improvements shall be governed by the provisions of Article 7 hereof (in the
case of any such Tenant Improvements constructed by Tenant) and by the
Workletter, and such Tenant Improvements shall be constructed in compliance with
all of the provisions thereof (including, without limitation, all conditions
relating to approval of plans and specifications), as well as the provisions of
this Section 2.3. The Tenant Improvement Allowance shall not be used or useable
by Tenant for any moving or relocation expenses of Tenant, or for any cost or
expense associated with any moveable furniture, trade fixtures, personal
property or any other item or element which, under the applicable provisions of
this Lease, will not become Landlord’s property and remain with the Building
upon expiration or termination of this Lease. Any portion of the Tenant
Improvement Allowance which has not been claimed or drawn by Tenant within
eighteen (18) months after the Rent Commencement Date shall expire and shall no
longer be available to Tenant thereafter. Additional conditions and procedures
relating to the disbursement of the Tenant Improvement Allowance shall be as set
forth in the Workletter or as otherwise reasonably prescribed in writing by
Landlord.

(c) Landlord warrants to Tenant that the Premises as they exist on the Rent
Commencement Date (but without regard to the particular use for which Tenant
will occupy the Premises, and excluding any improvements constructed by Tenant)
and the Tenant Improvements constructed by Landlord under the Workletter shall
not violate any covenants or restrictions of record or any applicable law,
building code, regulation or ordinance in effect on the Rent Commencement Date.
Tenant warrants to Landlord that any Tenant Improvements constructed by Tenant
and any other improvements constructed by Tenant from time to time shall not
violate any applicable law, building code, regulation or ordinance in effect on
the Rent Commencement Date or at such later time as such improvements are placed
in service. Without limiting the generality of the foregoing, the parties
acknowledge that Landlord shall be responsible for Americans with Disabilities
Act (“ADA”) and building code compliance for all improvements in the Building
and Common Areas as they exist on the Rent Commencement Date (excluding any
improvements constructed by Tenant), for all Landlord’s Section 2.3 Work and for
all Tenant Improvements constructed by Landlord hereunder and under the
Workletter (except to the extent, if any, that the application of ADA or
building code requirements to any such improvements is triggered or materially
affected by Tenant’s construction of any improvements) and that Tenant shall be
responsible for ADA and building code compliance required in connection with or
as a result of improvements constructed by Tenant. If it is determined that any
of these warranties has been violated, then it shall be the obligation of the
warranting party, after written notice from the other party, to correct the
condition(s) constituting such violation promptly, at the warranting party’s
sole cost and expense. Tenant acknowledges that except as expressly set forth in
this Lease, neither Landlord nor any agent of Landlord has

 

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made any representation or warranty as to the present or future suitability of
the Center or the Premises for the conduct of Tenant’s business or proposed
business therein.

(d) As part of Landlord’s Section 2.3 Work, Landlord shall construct in a good
and workmanlike manner and in compliance with all applicable laws, ordinances,
rules and regulations a combined service yard and loading area and related
systems and improvements (collectively, the “Service Annex”) located in the area
between the Building and the adjacent building located at 900 Chesapeake Drive
(the “Adjacent Building”) and serving both the Building and the Adjacent
Building. The parties intend that the Service Annex will include (but not
necessarily be limited to) appropriate areas for vehicle deliveries, trash and
hazardous materials storage, future emergency generator areas, and an elevator
suitable for freight/passenger use to serve second floor spaces in the Building
and the Adjacent Building, and that the Service Annex will also include areas in
which systems and equipment can be installed by or at the request of the
respective tenants of the Building and the Adjacent Building to support their
occupancy of and operations in the Building and the Adjacent Building,
respectively. The approximate location and preliminary layout of the Service
Annex are shown on the Building Plan. Also shown on the Building Plan are two
areas immediately adjacent to the Building, designated respectively as “Chemical
Storage Enclosure” (the “Chemical Storage Area”) and “Emergency Generator
Enclosure” (the “Emergency Generator Area”), which areas are for the exclusive
use of the occupant of the Building and shall be deemed to be part of the
Service Annex for purposes of Landlord’s construction obligations under this
Section 2.3, but are not enclosed and are therefore not included in the
calculation of the square footage of the Premises and/or of the Service Annex
for purposes of any formulas or other calculations under this Lease that are
based on the square footage of the Premises and/or of the Service Annex.
Landlord shall have the final authority with respect to the design and layout of
the Service Annex and with respect to all plans, drawings and specifications for
the Service Annex, but Landlord shall consult reasonably and in good faith with
Tenant regarding all such matters. As part of the design and development of the
Service Annex, Landlord shall have the right, in its reasonable discretion (but
after reasonable consultation with Tenant), to designate various portions of the
Service Annex for exclusive use by the occupant of the Building, for exclusive
use by the occupant of the Adjacent Building, or for shared, nonexclusive use by
the occupant of the Building and the occupant of the Adjacent Building. For
purposes of measuring the square footage of the Premises under this Lease
(including, but not limited to, measurements contemplated in Section 3.1(c)
below), Landlord shall make a reasonable allocation of the square footage of the
Service Annex (measured from exterior faces of exterior walls, and from interior
faces of common walls shared with the Building or the Adjacent Building) between
the Building and the Adjacent Building; so long as the areas (if any) designated
for exclusive use of the Building and for exclusive use of the Adjacent Building
are generally comparable in size and the balance of the Service Annex is
designated for shared, nonexclusive use, Landlord’s present intention is to
allocate the square footage of the Service Annex fifty percent (50%) to the
Building and fifty percent (50%) to the Adjacent Building, and Tenant agrees
that such an allocation would be reasonable under those circumstances.

2.4 Acknowledgment of Rent Commencement Date. Promptly following the Rent
Commencement Date, Landlord and Tenant shall execute a written acknowledgment of
the Rent

 

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Commencement Date, Termination Date and related matters, substantially in the
form attached hereto as Exhibit C (with appropriate insertions), which
acknowledgment shall be deemed to be incorporated herein by this reference.
Notwithstanding the foregoing requirement, the failure of either party to
execute such a written acknowledgment shall not affect the determination of the
Rent Commencement Date, Termination Date and related matters in accordance with
the provisions of this Lease.

2.5 Holding Over. If Tenant holds possession of the Premises or any portion
thereof after the term of this Lease with Landlord’s written consent, then
except as otherwise specified in such consent, Tenant shall become a tenant from
month to month at one hundred twenty-five percent (125%) of the minimum rental
and otherwise upon the terms herein specified for the period immediately prior
to such holding over and shall continue in such status until the tenancy is
terminated by either party upon not less than thirty (30) days prior written
notice. If Tenant holds possession of the Premises or any portion thereof after
the term of this Lease without Landlord’s written consent, then Landlord in its
sole discretion may elect (by written notice to Tenant) to have Tenant become a
tenant either from month to month or at will, at one hundred fifty percent
(150%) of the minimum rental (prorated on a daily basis for an at-will tenancy,
if applicable) and otherwise upon the terms herein specified for the period
immediately prior to such holding over, or may elect to pursue any and all legal
remedies available to Landlord under applicable law with respect to such
unconsented holding over by Tenant. Tenant shall indemnify and hold Landlord
harmless from any loss, damage, claim, liability, cost or expense (including
reasonable attorneys’ fees) resulting from any delay by Tenant in surrendering
the Premises or any portion thereof, including but not limited to any claims
made by a succeeding tenant by reason of such delay. Acceptance of rent by
Landlord following expiration or termination of this Lease shall not constitute
a renewal of this Lease.

2.6 Options to Extend Term. Tenant shall have the option to extend the term of
this Lease, at the minimum rental set forth in Section 3.1(b) and otherwise upon
all the terms and provisions set forth herein with respect to the initial term
of this Lease, for up to two (2) additional periods of five (5) years each, the
first such period commencing upon the expiration of the initial term hereof and,
if such first extension period is duly elected by Tenant, the second such period
commencing upon the expiration of the first extended term. Exercise of such
option shall be by written notice to Landlord at least nine (9) months and not
more than twelve (12) months prior to the expiration of the initial term hereof,
in the case of the first extended term, and at least nine (9) months and not
more than twelve (12) months prior to the expiration of the first extended term
hereof, in the case of the second extended term (if applicable). If Tenant is in
default hereunder, beyond any applicable notice and cure periods, on the date of
such notice or on the date the applicable extended term is to commence, then the
exercise of the option shall be of no force or effect, the applicable extended
term shall not commence and this Lease shall expire at the end of the then
current term hereof (or at such earlier time as Landlord may elect pursuant to
the default provisions of this Lease). If Tenant properly exercises one or both
extension options under this Section, then all references in this Lease (other
than in this Section 2.6) to the “term” of this Lease shall be construed to
include the extension term(s) thus elected by Tenant. Except as expressly set
forth in this Section 2.6, Tenant shall have no right to extend the term of this
Lease beyond its prescribed term.

 

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3. RENTAL

3.1 Minimum Rental.

(a) Rental Amounts. Tenant shall pay to Landlord as minimum rental for the
Premises, in advance, without deduction, offset, notice or demand, on or before
the Rent Commencement Date and on or before the first day of each subsequent
calendar month of the initial term of this Lease, the following amounts per
month (subject to adjustment under Section 3.1(c) below, if applicable):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Months

  

Sq Ft

 

  

PSF/PM

 

  

Monthly 
Minimum Rental

 

01 - 12

  

 

30,000

  

  

$

3.250

  

  

$

97,500.00

  

13 - 18

  

 

36,000

  

  

$

3.400

  

  

$

122,499.00

  

19 - 24

  

 

45,678

  

  

$

3.400

  

  

$

155,305.00

  

25 - 36

  

 

45,678

  

  

$

3.600

  

  

$

164,441.00

  

37 - 48

  

 

45,678

  

  

$

3.744

  

  

$

171,018.00

  

49 - 60

  

 

45,678

  

  

$

3.894

  

  

$

177,859.00

  

61 - 72

  

 

45,678

  

  

$

4.050

  

  

$

184,974.00

  

73 - 84

  

 

45,678

  

  

$

4.211

  

  

$

192,372.00

  

If the obligation to pay minimum rental hereunder commences on other than the
first day of a calendar month or if the term of this Lease terminates on other
than the last day of a calendar month, the minimum rental for such first rental
payment month or last month of the term of this Lease, as the case may be, shall
be prorated based on the number of days the term of this Lease (from and after
the Rent Commencement Date, if applicable) is in effect during such month. If an
increase in minimum rental becomes effective on a day other than the first day
of a calendar month, the minimum rental for that month shall be the sum of the
two applicable rates, each prorated for the portion of the month during which
such rate is in effect.

(b) Rental Amounts During Extended Term(s). If Tenant properly exercises its
right to extend the term of this Lease pursuant to Section 2.6 hereof, then
(i) the monthly minimum rental during the first year of each extended term shall
be equal to one hundred four percent (104%) of the monthly minimum rental
payable for the last full calendar month preceding the commencement of such
extended term, and (ii) the monthly minimum rental during each subsequent year
of the applicable extended term shall be equal to one hundred four percent
(104%) of the monthly minimum rental payable during the immediately preceding
year of the extended term.

(c) Square Footage of Premises. The Building was fully constructed prior to the
date of this Lease, has been measured by Landlord’s Architect and, applying the
measurement formula customarily used by Landlord to measure square footage of
buildings in the Center, has been determined to contain 41,821 square feet,
which measurement is final and binding on the parties, is hereby accepted by the
parties for all purposes under this Lease and is not subject to remeasurement or
adjustment. The square footage of the Premises, for all

 

 

 

 

 

 

 

 

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purposes under this Lease (including, without limitation, calculation of minimum
rental payments under Section 3.1(a), calculation of the Tenant Improvement
Allowance, and calculation of Tenant’s Operating Cost Share under Article 5),
shall consist of the sum of such Building square footage and the portion of the
Service Annex square footage allocated to the Building pursuant to
Section 2.3(d) above. An estimated square footage of 45,678 square feet (the
Building square footage plus an estimate of 3,857 square feet for the Service
Annex, excluding the Chemical Storage Area and the Emergency Generator Area as
provided in Section 2.3(d) above) has been used in this Lease in order to
provide estimates of the calculations described in the preceding sentence, but
upon completion of construction of the Service Annex and notification by
Landlord to Tenant of Landlord’s final determination of the allocation of the
square footage of the Service Annex as contemplated in Section 2.3(d) above,
(i) the final square footage for the Premises shall be determined by adding such
allocable portion of the Service Annex square footage to the Building square
footage of 41,821 square feet, (ii) such final square footage shall be inserted
in the Acknowledgment of Rent Commencement Date form to be executed by the
parties pursuant to Section 2.4 above, and (iii) the minimum rental payments
under Section 3.1(a), the Tenant Improvement Allowance, Tenant’s Operating Cost
Share, and any other calculations or amounts determined with reference to the
square footage of the Premises shall be deemed to be amended automatically to
reflect such final square footage of the Premises. Notwithstanding the foregoing
provisions, the square footages used in Section 3.1(a) for calculation of
minimum rental for Months 1 through 18 are not subject to adjustment or
recalculation based on the allocable portion of the Service Annex square
footage, nor are such square footages, in being less than the estimated entire
square footage of the Premises, meant to imply any limitation on Tenant’s right
or ability to use the entire Premises during such months; such reduced square
footages merely represent a method of implementing an economic agreement between
the parties with respect to the calculation of Tenant’s minimum rental
obligation during Months 1 through 18.

3.2 Late Charge. If Tenant fails to pay when due rental or other amounts due
Landlord hereunder, such unpaid amounts shall bear interest for the benefit of
Landlord at a rate equal to the lesser of ten percent (10%) per annum or the
maximum rate permitted by law, from the date due to the date of actual payment.
In addition to such interest, Tenant shall pay to Landlord a late charge in an
amount equal to five percent (5%) of any installment of minimum rental and any
other amounts due Landlord if not paid in full on or before the fifth (5th) day
after such rental or other amount is due; provided, however, that for the first
two (2) instances of late payment during the term of this Lease, Tenant shall
not be required to pay such late charge unless Tenant has failed to pay the
past-due amount within three (3) days after Landlord has given Tenant written
notice that such amount is past due. Tenant acknowledges that late payment by
Tenant to Landlord of rental or other amounts due hereunder will cause Landlord
to incur costs not contemplated by this Lease, including, without limitation,
processing and accounting charges and late charges which may be imposed on
Landlord by the terms of any loan relating to the Center. Tenant further
acknowledges that it is extremely difficult and impractical to fix the exact
amount of such costs and that the late charge set forth in this Section 3.2
represents a fair and reasonable estimate thereof. Acceptance of any late charge
by Landlord shall not constitute a waiver of Tenant’s default with respect to
overdue rental or other amounts, nor shall such acceptance prevent Landlord from
exercising any other rights and remedies

 

 

 

 

 

 

 

 

 

 

 

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available to it. Acceptance of rent or other payments by Landlord shall not
constitute a waiver of late charges or interest accrued with respect to such
rent or other payments or any prior installments thereof, nor of any other
defaults by Tenant, whether monetary or non-monetary in nature, remaining
uncured at the time of such acceptance of rent or other payments.

4. TAXES

4.1 Personal Property. Tenant shall be responsible for and shall pay prior to
delinquency all taxes and assessments levied against or by reason of any and all
alterations, additions and items existing on or in the Premises from time to
time during the term of this Lease and taxed as personal property rather than as
real property, including (but not limited to) all personal property, trade
fixtures and other property placed by Tenant on or about the Premises. Upon
request by Landlord, Tenant shall furnish Landlord with satisfactory evidence of
Tenant’s payment thereof. If at any time during the term of this Lease any of
said alterations, additions or personal property, whether or not belonging to
Tenant, shall be taxed or assessed as part of the Center, then such tax or
assessment shall be paid by Tenant to Landlord within thirty (30) days after
presentation by Landlord of copies of the tax bills in which such taxes and
assessments are included and shall, for the purposes of this Lease, be deemed to
be personal property taxes or assessments under this Section 4.1.

4.2 Real Property. To the extent any real property taxes and assessments on the
Premises are assessed directly to Tenant, Tenant shall be responsible for and
shall pay prior to delinquency all such taxes and assessments levied against the
Premises. Upon request by Landlord, Tenant shall furnish Landlord with
satisfactory evidence of Tenant’s payment thereof. To the extent the Premises
are taxed or assessed to Landlord following the Rent Commencement Date, such
real property taxes and assessments shall constitute Operating Expenses (as that
term is defined in Section 5.2 of this Lease) and shall be paid in accordance
with the provisions of Article 5 of this Lease. Notwithstanding the foregoing
provisions, if real property taxes and assessments on the Service Annex are
assessed directly to Tenant (which the parties do not expect to be the case),
Tenant shall only be required to bear a share of such Service Annex taxes and
assessments proportional to the percentage of square footage of the Service
Annex that is allocated to the Building, and Landlord shall reimburse Tenant or
cause Tenant to be reimbursed for the portion of such Service Annex taxes and
assessments allocable to the Adjacent Building. Notwithstanding the foregoing,
Tenant shall not be required to pay, and there shall not be included in
Operating Expenses, any tax or assessment or increase therein (a) in the nature
of a tax on Landlord’s net income, or in the nature of an inheritance, gift,
transfer, estate or death tax; or (b) in excess of the amount which would be
payable on a current basis if such tax or assessment were paid in installments
over the full period for which such installments would customarily be paid; or
(c) imposed on land or improvements other than those constituting part of the
Center (except to the extent, if any, that an allocable share of real property
taxes or assessments on land or improvements not constituting part of the Center
may be chargeable to Landlord or the Center pursuant to the Master Declaration
as defined in Section 15.4 below, in which event such real property taxes or
assessments may be included in Operating Expenses to the extent permitted under
Article 5 below).

 

 

 

 

 

 

 

 

 

 

 

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5. OPERATING EXPENSES

5.1 Payment of Operating Expenses.

(a) Tenant shall pay to Landlord, at the time and in the manner hereinafter set
forth, as additional rental, Tenant’s Operating Cost Share of the Operating
Expenses defined in Section 5.2, subject to adjustment pursuant to
Section 5.1(b) when applicable. For purposes of this Section 5.1, “Tenant’s
Operating Cost Share” shall be: (i) in the case of Operating Expenses that are
reasonably allocable solely to the Building, one hundred percent (100%); (ii) in
the case of Operating Expenses that are reasonably attributable to the Service
Annex, a percentage amount equal to the percentage of the total square footage
of the Service Annex that is included in the Premises pursuant to Section 2.3(d)
and Section 3.1(c) above; and (iii) in the case of Operating Expenses that are
determined and allocated on a Center-wide basis, seven and twenty-seven
hundredths percent (7.27%).

(b) Tenant’s Operating Cost Share as specified in Section 5.1(a) with respect to
matters allocable to the entire Center is based upon an estimated area of 45,678
square feet for the Premises (subject to determination of the allocable square
footage from the Service Annex) and upon an aggregate area of 628,593 square
feet for all of the buildings presently located in the Center. If the actual
area of the Premises or of any of the buildings existing from time to time in
the Center changes for any reason (including, but not limited to, modification
of existing buildings, final determination of the allocable square footage from
the Service Annex, construction of new buildings in the Center, or construction
of new buildings on any adjacent property owned by Landlord and operated, for
common area purposes, on an integrated basis with the Center), then Tenant’s
Operating Cost Share shall be adjusted proportionately to reflect the new actual
areas of the Premises and/or such other buildings, as applicable, as determined
reasonably and in good faith by Landlord’s architect on the same basis of
measurement as applied in determining the existing square footage of the
Building.

5.2 Definition of Operating Expenses.

(a) Subject to the exclusions and provisions hereinafter contained and the
allocation principles set forth in Section 5.1, the term “Operating Expenses”
shall mean, without duplication, the total costs and expenses actually incurred
by Landlord for management, operation and maintenance of the Building and the
Center, including, without limitation, costs and expenses of (i) insurance
(which may include, at Landlord’s option, environmental and seismic insurance as
part of or in addition to any casualty or property insurance policy), property
management, landscaping, and the operation, repair and maintenance of buildings
and Common Areas; (ii) all utilities and services; (iii) real and personal
property taxes and assessments or substitutes therefor levied or assessed
against the Center or any part thereof, including (but not limited to) any
possessory interest, use, business, license or other taxes or fees, any taxes
imposed directly on gross rents or services, any assessments or charges for
police or fire protection, housing, transit, open space, street or sidewalk
construction or maintenance or other similar services from time to time by any
governmental or quasi-governmental entity, and any other new taxes on landlords
in addition to taxes now in effect; (iv) supplies, equipment, utilities

 

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and tools used in management, operation and maintenance of the Center;
(v) capital improvements to the Center or the improvements therein, amortized
over the useful life of such capital improvements as determined reasonably and
in good faith by Landlord on the basis of generally accepted accounting
principles or tax accounting principles, consistently applied, (aa) which reduce
or will cause future reduction of other items of Operating Expenses for which
Tenant is otherwise required to contribute or (bb) which are required by law,
ordinance, regulation or order of any governmental authority (excluding,
however, any such expenses incurred by Landlord in complying with Landlord’s
obligations under Section 2.3) or (cc) of which Tenant has use or which benefit
Tenant, and which in either case under this clause (cc) are reasonably
consistent with the nature and quality of the Center as a first-class office and
research and development campus; and (vi) any other costs (including, but not
limited to, any parking or utilities fees or surcharges not otherwise
specifically addressed elsewhere in this Lease) paid by Landlord, as owner of
the Center, pursuant to any applicable laws, ordinances, regulations or orders
of any governmental or quasi-governmental authority or pursuant to the terms of
the Master Declaration (as hereinafter defined) or of any other declarations of
covenants, conditions and restrictions now or hereafter affecting the Center or
any other property over which Tenant has non-exclusive usage rights as
contemplated in Section 1.1(b) hereof. Operating Expenses shall not include any
costs attributable to the initial construction of buildings or Common Area
improvements in the Center, nor any costs attributable to buildings the square
footage of which is not taken into account in determining Tenant’s Operating
Cost Share under Section 5.1 for the applicable period. The distinction between
items of ordinary operating maintenance and repair and items of a capital nature
shall be made in accordance with generally accepted accounting principles
applied on a consistent basis or in accordance with tax accounting principles,
as determined reasonably and in good faith by Landlord’s accountants.

(b) Notwithstanding any other provisions of this Section 5.2, the following
shall not be included within Operating Expenses: (i) rent paid to any ground
lessor; (ii) the cost of constructing tenant improvements for any other tenant
of the Center; (iii) the costs of special services, goods or materials provided
to any other tenant of the Center and not offered or made available to Tenant;
(iv) repairs covered by proceeds of insurance or from funds provided by Tenant
or any other tenant of the Center, or as to which any other tenant of the Center
is obligated to make such repairs or to pay the cost thereof; (v) legal fees,
advertising costs or other related expenses incurred by Landlord in connection
with the leasing of space to individual tenants of the Center; (vi) repairs,
alterations, additions, improvements or replacements needed to rectify or
correct any defects in the design, materials or workmanship of the Building, the
Center or the Common Areas; (vii) damage and repairs necessitated by the
negligence or willful misconduct of Landlord or of Landlord’s employees,
contractors or agents; (viii) executive salaries or salaries of service
personnel to the extent that such personnel perform services other than in
connection with the management, operation, repair or maintenance of the Building
or the Center; (ix) Landlord’s general overhead expenses not related to the
Building or the Center; (x) legal fees, accountants’ fees and other expenses
incurred in connection with disputes with tenants or other occupants of the
Center, or in connection with the enforcement of the terms of any leases with
tenants or the defense of Landlord’s title to or interest in the Center or any
part thereof; (xi) costs incurred due to a violation by Landlord or any other
tenant of the Center of the terms and conditions of any lease; (xii) costs of
any service provided to Tenant or to other

 

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occupants of the Center for which Landlord is reimbursed other than through
recovery of Operating Expenses; (xiii) personal property taxes due and payable
by any other tenant of the Center; (xiv) costs incurred in connection with an
event of casualty or condemnation governed by Article 13 of this Lease
(including, but not limited to, any applicable deductible and/or coinsurance
amounts under applicable insurance policies); (xv) costs to comply with
Landlord’s obligations under Section 2.3 of this Lease; (xvi) costs incurred in
connection with the presence of any hazardous substance or hazardous waste (as
such terms are defined in Section 9.6) on, under or about the Property or the
Center (but in the event of any use or release of such a hazardous substance or
hazardous waste by Tenant or related parties as described in Section 9.6,
Tenant’s responsibility therefor shall be determined pursuant to Section 9.6);
(xvii) interest, charges and fees incurred on debt; (xviii) costs in the nature
of depreciation, amortization or other expense reserves, except in connection
with any amortization of capital expenditures that is expressly authorized under
any provision of this Lease; (xix) costs or expenditures for capital repairs,
replacements and improvements (as determined pursuant to Section 5.2(a) above)
in excess of the amortized amounts which are expressly authorized to be included
as Operating Expenses under the provisions of clause (v) of Section 5.2(a) above
or under any other applicable provision of this Lease; (xx) costs incurred in
connection with any construction of additional buildings in the Center;
(xxi) wages, compensation and labor burden for any employee not stationed at the
Center on a substantially full-time basis; (xxii) taxes and assessments excluded
pursuant to the last sentence of Section 4.2 above; and (xxiii) any fee, profit
or compensation paid to or retained by Landlord or any person or entity
controlling, controlled by or under common control with Landlord for the
management or administration of the Center, to the extent the portion of such
aggregate fees, profits or compensation chargeable to Tenant as an Operating
Expense under this Article 5 exceeds three percent (3%) of the minimum monthly
rental and Operating Expenses (provided, however, that solely for purposes of
applying the foregoing limitation during the first eighteen (18) months
following the Rent Commencement Date, such limitation shall be calculated using
a deemed minimum monthly rental amount calculated on the entire square footage
of the Premises and not on the reduced square footage otherwise applicable under
Section 3.1(a) during such initial 18-month period).

5.3 Determination of Operating Expenses. On or before the Rent Commencement Date
and during the last month of each subsequent calendar year of the term of this
Lease (“Expense Year”), or as soon thereafter as practical, Landlord shall
provide Tenant notice of Landlord’s estimate of the Operating Expenses for the
ensuing Expense Year or applicable portion thereof. On or before the first day
of each month during the term of this Lease, beginning on the Rent Commencement
Date, Tenant shall pay to Landlord Tenant’s Operating Cost Share of the portion
of such estimated Operating Expenses allocable (on a prorata basis) to such
month; provided, however, that if such notice is not given in the last month of
an Expense Year, Tenant shall continue to pay on the basis of the prior year’s
estimate, if any, until the month after such notice is given. If at any time or
times it appears to Landlord that the actual Operating Expenses will vary from
Landlord’s estimate by more than five percent (5%), Landlord may, by notice to
Tenant, revise its estimate for the applicable Expense Year and subsequent
payments by Tenant for such Expense Year shall be based upon such revised
estimate.

 

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5.4 Final Accounting for Expense Year.

(a) Within ninety (90) days after the close of each Expense Year, or as soon
after such 90-day period as practicable, Landlord shall deliver to Tenant a
statement of Tenant’s Operating Cost Share of the Operating Expenses for such
Expense Year prepared by Landlord from Landlord’s books and records, which
statement shall be final and binding on Landlord and Tenant (except as provided
in Section 5.4(b)). If on the basis of such statement Tenant owes an amount that
is more or less than the estimated payments for such Expense Year previously
made by Tenant, Tenant or Landlord, as the case may be, shall pay the deficiency
to the other party within thirty (30) days after delivery of the statement.
Failure or inability of Landlord to deliver the annual statement within such
ninety (90) day period shall not impair or constitute a waiver of Tenant’s
obligation to pay Operating Expenses, or cause Landlord to incur any liability
for damages.

(b) At any time within three (3) months after receipt of Landlord’s annual
statement of Operating Expenses as contemplated in Section 5.4(a), Tenant shall
be entitled, upon reasonable written notice to Landlord and during normal
business hours at Landlord’s office or such other places as Landlord shall
reasonably designate, to inspect and examine those books and records of Landlord
relating to the determination of Operating Expenses for the immediately
preceding Expense Year covered by such annual statement or, if Tenant so elects
by written notice to Landlord, to request an independent audit of such books and
records. Any such independent audit of the books and records shall be conducted
by a certified public accountant reasonably acceptable to both Landlord and
Tenant or, if the parties are unable to agree, by a certified public accountant
appointed by the Presiding Judge of the San Mateo County Superior Court upon the
application of either Landlord or Tenant (with notice to the other party). In
either event, such certified public accountant shall be one who is not then
employed in any capacity by Landlord or Tenant or by any of their respective
affiliates. The audit shall be limited to the determination of the amount of
Operating Expenses for the subject Expense Year, and shall be based on generally
accepted accounting principles and tax accounting principles, consistently
applied. If it is determined, by mutual agreement of Landlord and Tenant or by
independent audit, that the amount of Operating Expenses billed to or paid by
Tenant for the applicable Expense Year was incorrect, then the appropriate party
shall pay to the other party the deficiency or overpayment, as applicable,
within thirty (30) days after the final determination of such deficiency or
overpayment. All costs and expenses of the audit shall be paid by Tenant unless
the audit shows that Landlord overstated Operating Expenses for the subject
Expense Year by more than five percent (5%), in which case Landlord shall pay
all costs and expenses of the audit. Each party agrees to maintain the
confidentiality of the findings of any audit in accordance with the provisions
of this Section 5.4.

5.5 Proration. If the Rent Commencement Date falls on a day other than the first
day of an Expense Year or if this Lease terminates on a day other than the last
day of an Expense Year, then the amount of Operating Expenses payable by Tenant
with respect to such first or last partial Expense Year shall be prorated on the
basis which the number of days during such Expense Year in which this Lease is
in effect bears to 365. The termination of this Lease shall

 

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not affect the obligations of Landlord and Tenant pursuant to Section 5.4 to be
performed after such termination.

6. UTILITIES

6.1 Payment. Commencing with the Rent Commencement Date and thereafter
throughout the term of this Lease, Tenant shall pay, before delinquency, all
charges for water, gas, heat, light, electricity, power, sewer, telephone, alarm
system, janitorial and other services or utilities supplied to or consumed in or
with respect to the Premises (other than any costs for water, electricity or
other services or utilities furnished with respect to the Common Areas, which
costs shall be paid by Landlord and shall constitute Operating Expenses under
Section 5.2 hereof), including any taxes on such services and utilities. It is
the intention of the parties that all such services shall be separately metered
to the Premises. In the event that any utilities or services supplied to the
Premises are not separately metered, then the amount thereof shall be allocated
in a reasonable, good faith and appropriate manner by Landlord between the
Premises and the other buildings, premises or areas sharing such utilities or
services, and the portion thereof allocable to the Building may, in Landlord’s
discretion, either be included in Operating Expenses allocable to the Building
under Section 5.1 hereof or be billed directly to Tenant and paid or reimbursed
by Tenant within thirty (30) days after receipt of Landlord’s statement and
request for payment, accompanied by reasonable supporting documentation
evidencing the calculation or determination of the amount for which payment or
reimbursement is requested. Notwithstanding the foregoing provisions, during the
period from the Lease Commencement Date to the Rent Commencement Date, (a) if
Tenant is neither operating its business in the Premises nor performing any
material construction of improvements in the Premises, Landlord shall bear all
utilities charges for the Premises, but to the extent Landlord is then
performing construction of improvements in the Premises pursuant to this Lease
and/or the Workletter, Landlord may, in its discretion, make a reasonable, good
faith allocation of such utilities charges between (i) Landlord’s Work and
(ii) the Cost of Improvements (as defined in the Workletter) for the Tenant
Improvements being constructed by Landlord; and (b) if Tenant is operating its
business in the Premises and/or performing any material construction of
improvements in the Premises, utilities charges for the Premises shall be
allocated between Landlord and Tenant on the basis of a reasonable, good faith
estimate of their respective usage of such utilities.

6.2 Interruption. There shall be no abatement of rent or other charges required
to be paid hereunder and Landlord shall not be liable in damages or otherwise
for interruption or failure of any service or utility furnished to or used with
respect to the Premises, the Building or the Center because of accident, making
of repairs, alterations or improvements, severe weather, difficulty or inability
in obtaining services or supplies, labor difficulties or any other cause.
Notwithstanding the foregoing provisions of this Section 6.2, however, in the
event of any interruption or failure of any service or utility to the Premises
that (i) is caused in whole or in material part by the active negligence or
willful misconduct of Landlord or its agents, employees or
contractors and (ii) continues for more than three (3) business
days and (iii) materially impairs Tenant’s ability to use the Premises for the
intended purpose hereunder, then following such three (3) business day period,
Tenant’s obligations for payment of rent and other charges under this Lease
shall be abated in proportion to the degree of impairment of Tenant’s use of the

 

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Premises, and such abatement shall continue until Tenant’s use of the Premises
is no longer materially impaired thereby. Tenant expressly waives any benefits
of any applicable existing or future law (including, but not limited to, the
provisions of California Civil Code Section 1932(1)) to the extent the same
would permit the termination of the Lease due to any such interruption or
failure of any service or utility, it being the intention of the parties that
their respective rights in such circumstances shall be governed solely by the
provisions of this Section 6.2.

7. ALTERATIONS; SIGNS

7.1 Right to Make Alterations. Tenant shall make no alterations, additions or
improvements to the Premises, other than interior non-structural alterations in
the Premises costing less than Twenty-Five Thousand Dollars ($25,000) in each
instance and less than Fifty Thousand Dollars ($50,000) in the aggregate during
any twelve (12) month period, without the prior written consent of Landlord,
which consent shall not be unreasonably withheld, conditioned or delayed. All
such alterations, additions and improvements shall be completed with due
diligence in a good and workmanlike manner, in compliance with plans and
specifications approved in writing by Landlord and in compliance with all
applicable laws, ordinances, rules and regulations, and to the extent Landlord’s
consent is not otherwise required hereunder for such alterations, additions or
improvements, Tenant shall give prompt written notice thereof to Landlord.
Tenant shall cause any contractors engaged by Tenant for work in the Building or
in the Center to maintain public liability and property damage insurance, and
other customary insurance, with such terms and in such amounts as Landlord may
reasonably require, naming as additional insureds Landlord and any of its
partners, shareholders, property managers, project managers and lenders
designated by Landlord for this purpose, and shall furnish Landlord with
certificates of insurance or other evidence that such coverage is in effect.
Notwithstanding any other provisions of this Section 7.1, under no circumstances
shall Tenant make any structural alterations or improvements, or any changes to
the roof or equipment installations on the roof, or any alterations materially
affecting any building systems, without Landlord’s prior written consent (which
consent shall not be unreasonably withheld, conditioned or delayed).

7.2 Title to Alterations. All alterations, additions and improvements installed
by Tenant in, on or about the Premises, the Building or the Center (including,
but not limited to, lab benches, fume hoods, clean rooms, cold rooms and other
similar improvements and equipment) shall become part of the Property and shall
become the property of Landlord, unless Landlord elects to require Tenant to
remove the same upon the termination of this Lease; provided, however, that the
foregoing shall not apply to Tenant’s movable furniture, equipment and trade
fixtures, except to the extent any such items are specifically described in the
parenthetical in the initial portion of this sentence. Tenant shall promptly
repair any damage caused by its removal of any such furniture, equipment or
trade fixtures.

(a) Notwithstanding any other provisions of this Article 7, (i) under no
circumstances shall Tenant have any right to remove from the Premises or the
Building, at the expiration or termination of this Lease, any lab benches, fume
hoods, clean rooms, cold rooms or other similar improvements and equipment
installed in the Building, even if such equipment and improvements were
installed by Tenant; (ii) under no circumstances shall Tenant have any right

 

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to remove from the Premises or the Building, at the expiration or termination of
this Lease, any alterations, additions, improvements or equipment acquired,
constructed or installed with the use, in whole or in part, of any funds from
the Tenant Improvement Allowance; (iii) if Tenant requests Landlord’s written
consent to any alterations, additions or improvements under Section 7.1 hereof
and, in requesting such consent, asks that Landlord specify whether Landlord
will require removal of such alterations, additions or improvements upon
termination or expiration of this Lease, then Landlord shall not be entitled to
require such removal unless Landlord specified its intention to do so at the
time of granting of Landlord’s consent to the requested alterations, additions
or improvements; and (iv) Tenant shall not be required to remove any Tenant
Improvements constructed or installed pursuant to the Workletter unless Landlord
specifies its intention to do so at the time of granting of Landlord’s approval
of the plans and specifications for the applicable elements of such Tenant
Improvements, for which purpose Landlord agrees that (A) it will not withhold
its approval of specific elements of the Tenant Improvements, or condition its
approval upon Tenant’s agreement to remove such elements upon termination or
expiration of this Lease, unless Landlord believes reasonably and in good faith
that the functionality and marketability of the Premises for purposes of
re-leasing to a successor tenant would be materially and adversely affected by
the presence of such specific elements, and (B) it will not require Tenant to
remove upon termination or expiration of this Lease, or condition its approval
upon Tenant’s agreement to remove upon termination or expiration of this Lease,
any Tenant Improvements (including, but not limited to, Larc improvements) which
constitute standard, non-extraordinary improvements for ordinary office,
laboratory and/or Larc uses in biotech facilities.

(b) Notwithstanding any other provisions of this Article 7, (i) it is the
intention of the parties that Landlord shall be entitled to claim all tax
attributes associated with alterations, additions, improvements and equipment
constructed or installed by Tenant or Landlord with funds provided by Landlord
pursuant to the Tenant Improvement Allowance; and (ii) it is the intention of
the parties that Tenant shall be entitled to claim, during the term of this
Lease, all tax attributes associated with alterations, additions, improvements
and equipment constructed or installed by Tenant with Tenant’s own funds (and
without any payment or reimbursement by Landlord pursuant to the Tenant
Improvement Allowance), despite the fact that the items described in this clause
(ii) are characterized in this Section 7.2 as becoming Landlord’s property upon
installation, in recognition of the fact that Tenant will have installed and
paid for such items, will have the right of possession of such items during the
term of this Lease (from and after the Rent Commencement Date) and will have the
obligation to pay (directly or indirectly) property taxes on such items, carry
insurance on such items to the extent provided in Article 10 hereof and bear the
risk of loss with respect to such items to the extent provided in Article 13
hereof. If and to the extent it becomes necessary, in implementation of the
foregoing intentions, to identify (either specifically or on a percentage basis,
as may be required under applicable tax laws) which alterations, additions,
improvements and equipment constructed as part of the Tenant Improvements have
been funded through the Tenant Improvement Allowance and which (if any) have
been constructed or installed with Tenant’s own funds, Landlord and Tenant agree
to cooperate reasonably and in good faith to make such an identification by
mutual agreement.

 

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7.3 Tenant Trade Fixtures. Subject to the third sentence of Section 7.2 and to
Section 7.5, Tenant may install, remove and reinstall trade fixtures without
Landlord’s prior written consent, except that installation and removal of any
trade fixtures which are affixed to the Building or which affect the exterior or
structural portions of the Building or which materially affect the Building
systems shall require Landlord’s written approval, which approval shall not be
unreasonably withheld, conditioned or delayed. Subject to the provisions of
Section 7.5, the foregoing shall apply to Tenant’s signs, which Tenant shall
have the right to place and remove and replace (a) only with Landlord’s prior
written consent as to location, size and composition, which consent shall not be
unreasonably withheld, conditioned or delayed, and (b) only in compliance with
all restrictions and requirements of applicable law and of any covenants,
conditions and restrictions or other written agreements now or hereafter
applicable to the Center. Tenant shall immediately repair any damage caused by
installation and removal of trade fixtures under this Section 7.3.

7.4 No Liens. Tenant shall at all times keep the Building and the Center free
from all liens and claims of any contractors, subcontractors, materialmen,
suppliers or any other parties employed either directly or indirectly by Tenant
in construction work on the Building or the Center. Tenant may contest any claim
of lien, but only if, prior to such contest, Tenant either (i) posts security in
the amount of the claim, plus estimated costs and interest, or (ii) records a
bond of a responsible corporate surety in such amount as may be required to
release the lien from the Building and the Center. Tenant shall indemnify,
defend and hold Landlord harmless against any and all liability, loss, damage,
cost and other expenses, including, without limitation, reasonable attorneys’
fees, arising out of claims of any lien for work performed or materials or
supplies furnished at the request of Tenant or persons claiming under
Tenant; provided, however, that the foregoing indemnity shall not apply with
respect to (x) any Landlord’s Work, or (y) any work (or related materials and
supplies) performed by Tenant but for which Landlord is obligated to make direct
payment to the contractor or supplier out of the Tenant Improvement Allowance.

7.5 Signs. Without limiting the generality of the provisions of Section 7.3
hereof, Tenant shall have the right to install building and monument signage
comparable to that maintained by the preceding tenant of the Premises, subject
to Landlord’s prior approval as to location, size, design and composition (which
approval shall not be unreasonably withheld or delayed), subject to the
established sign criteria for the Center and subject to all restrictions and
requirements of applicable law and of any covenants, conditions and restrictions
or other written agreements now or hereafter applicable to the Center. All costs
for installation, maintenance and removal or restoration of such signage shall
be at Tenant’s sole expense.

8. MAINTENANCE AND REPAIRS

8.1 Landlord’s Obligation for Maintenance.

(a) Repairs and Maintenance. Landlord shall repair and maintain or cause to be
repaired and maintained the Common Areas of the Center; the roof, exterior walls
and other structural portions of the Building and Service Annex; and the
shared-use areas of the Service

 

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Annex, except to the extent Landlord enters into an alternative arrangement with
Tenant and the tenant of the Adjacent Building regarding janitorial and/or other
repair and maintenance services relating to such shared-use areas. The cost of
all work performed by Landlord under this Section 8.1 shall be an Operating
Expense hereunder, except to the extent such work (i) is required due to the
negligence of Landlord; (ii) involves the repair or correction of a condition or
defect that Landlord is required to correct pursuant to Section 2.3 hereof;
(iii) is a capital expense not includible (or in excess of the amount includible
on an amortized basis) as an Operating Expense under Section 5.2 hereof, or is
otherwise expressly excluded from treatment as an Operating Expense under any
other applicable provision of Section 5.2 hereof; (iv) results from an event of
casualty or condemnation covered by Article 13 hereof (in which event the
provisions of such Article 13 shall govern the parties’ respective rights and
obligations); or (v) is required due to the negligence or willful misconduct of
Tenant or its agents, employees or invitees (in which event Tenant shall bear
the full cost of such work pursuant to the indemnification provided in
Section 10.6 hereof, subject to the release set forth in Section 10.4 hereof).
Tenant knowingly and voluntarily waives the right to make repairs at Landlord’s
expense (except as specifically provided in Section 8.1(b) hereof), or to offset
the cost thereof against rent, under any law, statute, regulation or ordinance
now or hereafter in effect.

(b) Tenant’s Remedy. If (i) Landlord fails to perform promptly any repair,
maintenance or replacement required to be performed by Landlord on the Building
or Premises (including the portions of the Service Annex designated for
exclusive use by the occupant of the Building, but excluding the shared use
areas of the Service Annex) under Section 8.1(a) and (ii) such failure creates a
material risk to health and safety or a material risk of damage to property or a
material impairment of Tenant’s ability to conduct its business in the Premises
and (iii) such failure continues for more than thirty (30) days after Tenant
gives Landlord written notice of such failure (or, if such repairs or
maintenance cannot reasonably be performed within such 30-day period, then if
Landlord fails to commence performance within such 30-day period and thereafter
to pursue such performance diligently to completion), then Tenant shall have the
right, but not the obligation, to perform such repairs or maintenance and
Landlord shall reimburse Tenant for the reasonable cost thereof within fifteen
(15) days after written notice from Tenant of the completion and cost of such
work, accompanied by copies of invoices or other documentation reasonably
supporting the costs for which Tenant is requesting reimbursement. Under no
circumstances, however, shall Tenant have any right to offset or deduct the cost
of any such work against rent or other charges falling due from time to time
under this Lease.

8.2 Tenant’s Obligation for Maintenance.

(a) Good Order, Condition and Repair. Except as provided in Section 8.1 hereof,
and subject to the provisions of Article 13 hereof (which shall be controlling
in the event of any casualty or condemnation covered by such Article 13), Tenant
at its sole cost and expense shall keep and maintain in good and sanitary order,
condition and repair the Premises and every part thereof, wherever located
(excluding the shared-use areas of the Service Annex, subject to Section 8.1
above, but including any and all portions of the Service Annex designated for
exclusive use by the occupant of the Building), including but not limited to the
signs, interior,

 

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ceiling, electrical system, plumbing system, telephone and communications
systems serving the Premises, the HVAC equipment and related mechanical systems
serving the Premises (for which equipment and systems Tenant shall enter into a
service contract with a person or entity reasonably approved by Landlord), all
doors, door checks, windows, plate glass, door fronts, exposed plumbing and
sewage and other utility facilities, fixtures, lighting, wall surfaces, floor
surfaces and ceiling surfaces of the Premises and all other interior repairs,
foreseen and unforeseen, with respect to the Premises, as required.

(b) Landlord’s Remedy. If Tenant, after notice from Landlord, fails to make or
perform promptly (and in all events within any applicable notice and cure
periods) any repairs or maintenance which are the obligation of Tenant
hereunder, Landlord shall have the right, but shall not be required, to enter
the Premises and make the repairs or perform the maintenance necessary to
restore the Premises to good and sanitary order, condition and repair.
Immediately on demand from Landlord, the cost of such repairs shall be due and
payable by Tenant to Landlord.

(c) Condition Upon Surrender. At the expiration or sooner termination of this
Lease, Tenant shall surrender the Premises and Building and the improvements
located therein, including any additions, alterations and improvements thereto
(except for items which Tenant is permitted and elects to remove, or is required
to remove, pursuant to the provisions of this Lease), broom clean, in good and
sanitary order, condition and repair (excluding the effects of ordinary wear and
tear, casualty damage or condemnation governed by the provisions of Article 13
hereof, and hazardous substances and/or hazardous wastes, except to the extent
Tenant is responsible for the same pursuant to the provisions of Section 9.6 or
any other applicable provisions of this Lease), first, however, removing all
goods and effects of Tenant and all and fixtures and items required to be
removed or specified to be removed at Landlord’s election pursuant to this Lease
(including, but not limited to, any such removal required as a result of an
election duly made by Landlord to require such removal as contemplated in
Section 7.2), and repairing any damage caused by such removal. Tenant expressly
waives any and all interest in any personal property and trade fixtures not
removed from the Center by Tenant at the expiration or termination of this
Lease, agrees that any such personal property and trade fixtures may, at
Landlord’s election, be deemed to have been abandoned by Tenant, and authorizes
Landlord (at its election and without prejudice to any other remedies under this
Lease or under applicable law) to remove and either retain, store or dispose of
such property at Tenant’s cost and expense, and Tenant waives all claims against
Landlord for any damages resulting from any such removal, storage, retention or
disposal.

9. USE OF PROPERTY

9.1 Permitted Use. Subject to Sections 9.3, 9.4 and 9.6 hereof, Tenant shall use
the Premises solely for an office, research and development, engineering,
laboratory, and/or warehousing facility, and for administrative and other lawful
purposes reasonably related to or incidental to such specified uses (subject in
each case to receipt of all necessary approvals from the City of Redwood City
and all other governmental agencies having jurisdiction over the

 

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Premises), and for no other purpose, unless Landlord in its sole discretion
otherwise consents in writing.

9.2 [Intentionally Deleted.]

9.3 No Nuisance. Tenant shall not use the Premises for or carry on or permit
within the Center or any part thereof any offensive, noisy or dangerous trade,
business, manufacture, occupation, odor or fumes, or any nuisance or anything
against public policy, nor interfere with the rights or business of Landlord in
the Building or the Center, nor commit or allow to be committed any waste in, on
or about the Center. Tenant shall not do or permit anything to be done in or
about the Center, nor bring nor keep anything therein, which will in any way
cause the Center or any portion thereof to be uninsurable with respect to the
insurance required by this Lease or with respect to standard fire and extended
coverage insurance with vandalism, malicious mischief and riot endorsements.

9.4 Compliance with Laws. Tenant shall not use the Premises, the Building or the
Center or permit the Premises, the Building or the Center to be used in whole or
in part for any purpose or use that is in violation of any applicable laws,
ordinances, regulations or rules of any governmental agency or public authority.
Tenant shall keep the Premises equipped with all safety appliances required by
law, ordinance or insurance on the Center, or any order or regulation of any
public authority, because of Tenant’s particular use of the Premises. Tenant
shall procure all licenses and permits required for Tenant’s particular use of
the Premises. Tenant shall use the Premises in strict accordance with all
applicable ordinances, rules, laws and regulations and shall comply with all
requirements of all governmental authorities now in force or which may hereafter
be in force pertaining to the particular use of the Premises and the Center by
Tenant, including, without limitation, regulations applicable to noise, water,
soil and air pollution, and making such nonstructural alterations and additions
thereto as may be required from time to time by such laws, ordinances, rules,
regulations and requirements of governmental authorities or insurers of the
Center (collectively, “Requirements”) because of Tenant’s construction of
improvements in or other particular use of the Premises or the Center. Any
structural alterations or additions required from time to time by applicable
Requirements because of Tenant’s construction of improvements in the Premises or
other particular use of the Center shall, at Landlord’s election, either (i) be
made by Tenant, at Tenant’s sole cost and expense, in accordance with the
procedures and standards set forth in Section 7.1 for alterations by Tenant, or
(ii) be made by Landlord at Tenant’s sole cost and expense, in which event
Tenant shall pay to Landlord as additional rent, within thirty (30) days after
demand by Landlord, an amount equal to all reasonable costs incurred by Landlord
in connection with such alterations or additions. The judgment of any court, or
the admission by Tenant in any proceeding against Tenant, that Tenant has
violated any law, statute, ordinance or governmental rule, regulation or
requirement shall be conclusive of such violation as between Landlord and
Tenant. Notwithstanding the foregoing, Tenant shall not be required to comply
with or cause the Premises or the Center to comply with any Requirements except
to the extent such compliance is necessitated due to Tenant’s construction of
improvements in, or Tenant’s particular use of, the Premises.

 

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9.5 Liquidation Sales. Tenant shall not conduct or permit to be conducted any
auction, bankruptcy sale, liquidation sale, or going out of business sale, in,
upon or about the Center, whether said auction or sale be voluntary, involuntary
or pursuant to any assignment for the benefit of creditors, or pursuant to any
bankruptcy or other insolvency proceeding.

9.6 Environmental Matters.

(a) For purposes of this Section, “hazardous substance” shall mean (i) the
substances included within the definitions of the term “hazardous substance”
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended, 42 U.S.C. §§ 9601 et seq., and the regulations promulgated
thereunder, as amended, (ii) the substances included within the definition of
“hazardous substance” under the California Carpenter-Presley-Tanner Hazardous
Substance Account Act, California Health & Safety Code §§ 25300 et seq., and
regulations promulgated thereunder, as amended, (iii) the substances included
within the definition of “hazardous materials” under the Hazardous Materials
Release Response Plans and Inventory Act, California Heath & Safety Code
§§ 25500 et seq., and regulations promulgated thereunder, as amended, (iv) the
substances included within the definition of “hazardous substance” under the
Underground Storage of Hazardous Substances provisions set forth in California
Health & Safety Code §§ 25280 et seq., and (v) petroleum or any fraction
thereof; “hazardous waste” shall mean (i) any waste listed as or meeting the
identified characteristics of a “hazardous waste” under the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. §§ 6901 et seq., and
regulations promulgated pursuant thereto, as amended (collectively, “RCRA”),
(ii) any waste meeting the identified characteristics of “hazardous waste,”
“extremely hazardous waste” or “restricted hazardous waste” under the California
Hazardous Waste Control Law, California Health & Safety Code §§ 25100 et seq.,
and regulations promulgated pursuant thereto, as amended (collectively, the
“CHWCL”), and/or (iii) any waste meeting the identified characteristics of
“medical waste” under California Health & Safety Code §§ 25015-25027.8, and
regulations promulgated thereunder, as amended; “hazardous waste facility” shall
mean a hazardous waste facility as defined under the CHWCL; and “pollutant”
shall mean all substances defined as a “pollutant,” “pollution,” “waste,”
“contamination” or “hazardous substance” under the Porter-Cologne Water Quality
Control Act, California Water Code §§ 13000 et seq.

(b) Without limiting the generality of the obligations set forth in Section 9.4
of this Lease:

(i) Tenant shall not cause or permit any hazardous substance or hazardous waste
to be brought upon, kept, stored or used in or about the Center without the
prior written consent of Landlord, which consent shall not be unreasonably
withheld, except that Tenant, in connection with its permitted use of the
Premises and the Center as provided in Section 9.1, may keep, store and use
materials that constitute hazardous substances which are customary for such
permitted use, provided such hazardous substances are kept, stored and used in
quantities which are customary for such permitted use and are kept, stored and
used in full compliance with clauses (ii) and (iii) immediately below.

 

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(ii) Tenant shall comply with all applicable laws, rules, regulations, orders,
permits, licenses and operating plans of any governmental authority with respect
to the receipt, use, handling, generation, transportation, storage, treatment
and/or disposal of hazardous substances or wastes by Tenant or its agents or
employees, and Tenant will provide Landlord with copies of all permits,
licenses, registrations and other similar documents that authorize Tenant to
conduct any such activities in connection with its authorized use of the
Premises and the Center from time to time.

(iii) Tenant shall not (A) operate on or about the Center any facility required
to be permitted or licensed as a hazardous waste facility or for which interim
status as such is required, nor (B) store any hazardous wastes on or about the
Center for ninety (90) days or more, nor (C) conduct any other activities on or
about the Center that could result in the Center or any portion thereof being
deemed to be a “hazardous waste facility” (including, but not limited to, any
storage or treatment of hazardous substances or hazardous wastes which could
have such a result), nor (D) store any hazardous wastes on or about the Center
in violation of any federal or California laws or in violation of the terms of
any federal or state licenses or permits held by Tenant.

(iv) Tenant shall not install any underground storage tanks on the Property
without the prior written consent of Landlord and prior approval by all
applicable governmental authorities. If and to the extent that Tenant obtains
all such required consents and approvals and installs any underground storage
tanks on the Property, Tenant shall comply with all applicable laws, rules,
regulations, orders and permits relating to such underground storage tanks
(including any installation, monitoring, maintenance, closure and/or removal of
such tanks) as such tanks are defined in California Health & Safety Code
§ 25281(x), including, without limitation, complying with California Health &
Safety Code §§ 25280-25299.7 and the regulations promulgated thereunder, as
amended. Tenant shall furnish to Landlord copies of all registrations and
permits issued to or held by Tenant from time to time for any and all
underground storage tanks located on or under the Property.

(v) If applicable, Tenant shall provide Landlord in writing the following
information and/or documentation within fifteen (15) days after the Rent
Commencement Date, and shall update such information at least annually, on or
before each anniversary of the Rent Commencement Date, to reflect any change in
or addition to the required information and/or documentation (provided, however,
that in the case of the materials described in subparagraphs (B), (C) and
(E) below, Tenant shall not be required to deliver copies of such materials to
Landlord but shall maintain copies of such materials to such extent and for such
periods as may be required by applicable law and shall permit Landlord or its
representatives to inspect and copy such materials during normal business hours
at any time and from time to time upon reasonable notice to Tenant;
and provided further, however, that Landlord shall keep all such materials
reviewed by Landlord confidential, except to the extent disclosure of such
materials or of the contents thereof (x) to Landlord’s employees, counsel,
managers and/or consultants is necessary or appropriate in the course of their
employment or their representation of or advice to

 

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Landlord or in the enforcement of Landlord’s rights and Tenant’s obligations
under this Lease, or (y) to any prospective lender or purchaser of the Center is
necessary or appropriate in connection with any proposed sale or financing of
the Center, or (z) is compelled by any governmental or quasi-governmental
authority or by applicable law):

(A) A list of all hazardous substances, hazardous wastes and/or pollutants that
Tenant receives, uses, handles, generates, transports, stores, treats or
disposes of from time to time in connection with its operations in the Center.

(B) All Material Safety Data Sheets (“MSDS’s”), if any, required to be completed
with respect to operations of Tenant at the Center from time to time in
accordance with Title 26, California Code of Regulations § 8-5194 or 42 U.S.C.
§ 11021, or any amendments thereto, and any Hazardous Materials Inventory Sheets
that detail the MSDS’s.

(C) All Hazardous Waste Manifests, if any, that Tenant is required to complete
from time to time under California Health & Safety Code § 25160, any regulations
promulgated thereunder, any similar successor provisions and/or any amendments
to any of the foregoing, in connection with its operations in the Center.

(D) Any Hazardous Materials Management Plan required from time to time with
respect to Tenant’s operations in the Center, pursuant to California Health &
Safety Code §§ 25500 et seq., any regulations promulgated thereunder, any
similar successor provisions and/or any amendments to any of the foregoing.

(E) Any Air Toxics Emissions Inventory Plan required from time to time with
respect to Tenant’s operations in the Center, pursuant to California Health &
Safety Code §§ 44340 et seq., any regulations promulgated thereunder, any
similar successor provisions and/or any amendments to any of the foregoing.

(F) Any biennial Hazardous Waste Generator reports or notifications furnished by
Tenant to the California Department of Toxic Substances Control or other
applicable governmental authorities from time to time pursuant to California
Code of Regulations Title 22, § 66262.41, any similar successor provisions
and/or any amendments to any of the foregoing, in connection with Tenant’s
operations in the Center.

(G) Any Hazardous Waste Generator Reports regarding source reductions, as
required from time to time pursuant to California Health & Safety Code
§§ 25244.20 et seq., any regulations promulgated thereunder, any similar
successor provisions and/or any amendments to any of the foregoing, in
connection with Tenant’s operations in the Center.

 

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(H) Any Hazardous Waste Generator Reports or notifications not otherwise
described in the preceding subparagraphs and required from time to time pursuant
to California Health & Safety Code § 25153.6, California Code of Regulations
Title 22, Division 4.5, Chapter 12, §§ 66262.10 et seq.(“Standards Applicable to
Generators of Hazardous Waste”), any other regulations promulgated thereunder,
any similar successor provisions and/or any amendments to any of the foregoing,
in connection with Tenant’s operations in the Center.

(I) All industrial wastewater discharge permits issued to or held by Tenant from
time to time in connection with its operations in the Center, and all air
quality management district permits issued to or held by Tenant from time to
time in connection with its operations in the Center.

(J) Copies of any other lists or inventories of hazardous substances, hazardous
wastes and/or pollutants on or about the Center that Tenant is otherwise
required to prepare and file from time to time with any governmental or
regulatory authority.

(vi) Tenant shall secure Landlord’s prior written approval for any proposed
receipt, storage, possession, use, transfer or disposal of “radioactive
materials” or “radiation,” as such materials are defined in Title 26, California
Code of Regulations § 17-30100, and/or any other materials possessing the
characteristics of the materials so defined, which approval Landlord may
withhold in its sole and absolute discretion; provided, that such approval shall
not be required for any radioactive materials (x) for which Tenant has secured
prior written approval of the Nuclear Regulatory Commission and delivered to
Landlord a copy of such approval (if applicable), or (y) which Tenant is
authorized to use pursuant to the terms of any radioactive materials license
issued by the State of California. Tenant, in connection with any such
authorized receipt, storage, possession, use, transfer or disposal of
radioactive materials or radiation, shall:

(A) Comply with all federal, state and local laws, rules, regulations, orders,
licenses and permits issued to or applicable to Tenant with respect to its
operations in the Center;

(B) Maintain, to such extent and for such periods as may be required by
applicable law, and permit Landlord and its representatives to inspect during
normal business hours at any time and from time to time upon reasonable notice
to Tenant, a list of all radioactive materials or radiation received, stored,
possessed, used, transferred or disposed of by Tenant or in connection with
Tenant’s operations in the Center from time to time, to the extent not already
disclosed through delivery of a copy of a Nuclear Regulatory Commission approval
with respect thereto as contemplated above; and

(C) Maintain, to such extent and for such periods as may be required by
applicable law, and permit Landlord or its representatives to inspect during
normal business hours at any time and from time to time upon reasonable

 

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notice to Tenant, all licenses, registration materials, inspection reports,
governmental orders and permits in connection with the receipt, storage,
possession, use, transfer or disposal of radioactive materials or radiation by
Tenant or in connection with Tenant’s operations in the Center from time to
time.

(vii) Tenant shall comply with any and all applicable laws, rules, regulations
and orders of any governmental authority with respect to the release into the
environment of any hazardous wastes, hazardous substances, pollutants, radiation
or radioactive materials by Tenant or its agents or employees. If and to the
extent Tenant becomes aware of any unauthorized release of any such hazardous
wastes, hazardous substances, pollutants, radiation or radioactive materials
into the environment and such release (x) creates a significant risk to human
health or safety, (y) creates a significant risk of contamination of any of the
improvements, soil or groundwater on or under the Property, or (z) is required
to be reported to any governmental authority (including, but not limited to, any
release of a Reportable Quantity, under the Emergency Planning and Community
Right to Know Act, of any hazardous substance, hazardous waste, pollutant,
radiation or radioactive material), then in each such event, Tenant shall give
Landlord verbal notice of such release as immediately as practicable, shall
follow such verbal notice with written notice to Landlord of such release within
one (1) business day after Tenant became aware of such release, and shall
provide Landlord with a copy of any written report or disclosure filed by Tenant
with any governmental authority with respect to such release, substantially
concurrently with Tenant’s filing of such written report or disclosure with the
applicable governmental authority.

(viii) Tenant shall indemnify, defend and hold Landlord harmless from and
against any and all claims, losses (including, but not limited to, loss of
rental income), damages, liabilities, costs, legal fees and expenses of any sort
arising out of or relating to (A) any failure by Tenant to comply with any
provisions of this Section 9.6(b), or (B) any receipt, use handling, generation,
transportation, storage, treatment, release and/or disposal of any hazardous
substance, hazardous waste, pollutant, radioactive material or radiation on or
about the Center as a proximate result of Tenant’s use of the Center or as a
result of any intentional or negligent acts or omissions of Tenant or of any
agent, employee or invitee of Tenant. Notwithstanding the foregoing provisions,
Landlord acknowledges and agrees that losses of rental or other income
compensable under the preceding sentence do not include any actual or alleged
loss of rental or other income arising from another tenant’s or prospective
tenant’s or prospective purchaser’s objection to the mere fact of Tenant’s use
of hazardous substances or materials on or about the Premises, absent any
material violation by Tenant or its agents or employees of the provisions of
this Lease or of applicable law in the course of such use.

(ix) Tenant shall cooperate with Landlord in furnishing Landlord with complete
information regarding Tenant’s receipt, handling, use, storage, transportation,
generation, treatment and/or disposal of any hazardous substances, hazardous
wastes, pollutants, radiation or radioactive materials in or about the Center.
Upon request, but subject to Tenant’s reasonable operating and security
procedures, Tenant shall grant

 

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Landlord reasonable access at reasonable times to the Premises to inspect
Tenant’s receipt, handling, use, storage, transportation, generation, treatment
and/or disposal of hazardous substances, hazardous wastes, pollutants, radiation
and radioactive materials, without Landlord thereby being deemed guilty of any
disturbance of Tenant’s use or possession or being liable to Tenant in any
manner.

(x) Notwithstanding Landlord’s rights of inspection and review under this
Section 9.6(b), Landlord shall have no obligation or duty to so inspect or
review, and no third party shall be entitled to rely on Landlord to conduct any
sort of inspection or review by reason of the provisions of this Section 9.6(b).

(xi) Prior to, or as soon as practicable after, mutual execution of this Lease,
Landlord shall obtain, at Landlord’s expense, a Phase I environmental study
evaluating the presence or absence of hazardous substances, hazardous wastes,
pollutants, radiation and radioactive materials in and under the Building, and
shall provide a copy of that study to Tenant. The purpose of this study is to
provide evidence of the “baseline” condition of the Building prior to Tenant’s
occupancy and use thereof, but such evidence is not intended to be conclusive or
irrebuttable. Tenant shall also have the right (but not the obligation), if it
so elects and at its own expense, to conduct its own environmental study of the
Premises prior to or at the time of Tenant’s occupancy, in which event Tenant
shall provide a copy of such study to Landlord. If Tenant or its employees,
agents, contractors, vendors, customers or guests receive, handle, use, store,
transport, generate, treat and/or dispose of any hazardous substances or wastes
or radiation or radioactive materials on or about the Center at any time during
the term of this Lease, then within thirty (30) days after Tenant vacates the
Premises upon termination or expiration of this Lease, Landlord shall obtain a
further environmental study (which study shall be at least a Phase I study, and
shall be a Phase II study to the extent the results of the Phase I study
reasonably suggest the necessity or desirability of a Phase II level
investigation in any areas), performed by GeoSyntec or Geomatrix or another
reputable environmental consultant selected by Landlord, evaluating the presence
or absence of hazardous substances, hazardous wastes, pollutants, radiation and
radioactive materials on and about those portions of the Center affected by
Tenant’s operations in the Center and attributable or potentially attributable
to such operations (the “Exit Study”). Liability for any remedial actions
required or recommended on the basis of the Exit Study shall be allocated in
accordance with Sections 9.4, 9.6, 10.6 and other applicable provisions of this
Lease. The cost of the Exit Study shall be borne by Landlord, except that if the
Exit Study identifies any required or recommended remedial work that is Tenant’s
responsibility under the applicable provisions of this Lease, then Tenant shall
also reimburse Landlord for the cost of the Exit Study, which reimbursement
shall be paid within thirty (30) days after written demand by Landlord,
accompanied by a copy of the invoice(s) reflecting the cost of the Exit Study.
The Exit Study is not intended to be conclusive or irrebuttable. Tenant shall
also have the right (but not the obligation), if it so elects and at its own
expense, to conduct its own environmental study of the Premises to verify the
results of the Exit Study.

 

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(c) Landlord shall indemnify, defend and hold Tenant harmless from and against
any and all claims, losses, damages, liabilities, costs, legal fees and expenses
of any sort arising out of or relating to (i) the presence on the Center of any
hazardous substances, hazardous wastes, pollutants, radiation or radioactive
materials present on the Center as of the Rent Commencement Date (other than as
a result of any intentional or negligent acts or omissions of Tenant or of any
agent, employee or invitee of Tenant), and/or (ii) any unauthorized release into
the environment (including, but not limited to, the Center) of any hazardous
substances, hazardous wastes, pollutants, radiation or radioactive materials to
the extent such release results from the negligence of or willful misconduct or
omission by Landlord or its agents or employees.

(d) The provisions of this Section 9.6 shall survive the termination of this
Lease.

10. INSURANCE AND INDEMNITY

10.1 Insurance.

(a) Tenant shall procure and maintain in full force and effect at all times
during the term of this Lease, from and after the Early Access Date, at Tenant’s
cost and expense, commercial general liability insurance to protect against
liability arising out of or related to the use of or resulting from any accident
occurring in, upon or about the Premises, with limits of liability of not less
than (i) Three Million Dollars ($3,000,000.00) per occurrence for bodily injury,
personal injury and death, and Five Hundred Thousand Dollars ($500,000.00) per
occurrence for property damage, or (ii) a combined single limit of liability of
not less than Five Million Dollars ($5,000,000.00) per occurrence for bodily
injury (including personal injury and death) and property damage, which
insurance may be provided in a combination of primary and excess limits (i.e.,
umbrella coverage). Such insurance shall name Landlord, its general partners,
its property manager and any lender holding a deed of trust on the Center from
time to time (as designated in writing by Landlord to Tenant from time to time)
as additional insureds thereunder. The amount of such insurance shall not be
construed to limit any liability or obligation of Tenant under this Lease.
Tenant shall also procure and maintain in full force and effect at all times
during the term of this Lease, at Tenant’s cost and expense, products/completed
operations coverage on terms and in amounts (A) customary in Tenant’s industry
for companies engaged in the marketing of products on a scale comparable to that
in which Tenant is engaged from time to time and (B) mutually satisfactory to
Landlord and Tenant in their respective reasonable discretion, provided that
such coverage is reasonably available to Tenant on commercially reasonable
terms.

(b) Landlord shall procure and maintain in full force and effect at all times
during the term of this Lease, at Landlord’s cost and expense (but reimbursable
as an Operating Expense under Section 5.2 hereof), commercial general liability
insurance to protect against liability arising out of or related to the use of
or resulting from any accident occurring in, upon or about the Center, with a
combined single limit of liability of not less than Five Million Dollars
($5,000,000.00) per occurrence for bodily injury (including personal injury and
death) and property damage.

 

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(c) Landlord shall procure and maintain in full force and effect at all times
during the term of this Lease, at Landlord’s cost and expense (but reimbursable
as an Operating Expense under Section 5.2 hereof), policies of property
insurance providing protection against “all risk of direct physical loss” (as
defined by and detailed in the Insurance Service Office’s Commercial Property
Program “Cause of Loss—Special Form [CP 1030]” or its equivalent) for the shell
of the Building and for the improvements in the Common Areas of the Center, on a
full replacement cost basis (with no co-insurance or, if coverage without
co-insurance is not reasonably available, then on an “agreed amount” basis or
with a commercially reasonable margin clause). Such insurance may include
earthquake and/or environmental coverage, as part of the same policy or as a
separate policy or policies, to the extent Landlord in its sole discretion
elects to carry such coverage, and shall have such commercially reasonable
deductibles and other terms as Landlord in its discretion determines to be
appropriate. Landlord shall have no obligation to carry property damage
insurance for any alterations, additions or improvements installed by Tenant in
the Building or on or about the Center.

(d) Landlord shall procure and maintain in full force and effect at all times
during the term of this Lease, at Tenant’s cost and expense (chargeable,
pursuant to and subject to Article 5, as an Operating Expense), policies of
property insurance providing protection against “all risk of direct physical
loss” (as defined by and detailed in the Insurance Service Office’s Commercial
Property Program “Cause of Loss—Special Form [CP 1030]” or its equivalent) for
the tenant improvements existing in the Premises on the Early Access Date and
for all Tenant Improvements constructed by Landlord pursuant to this Lease and
the Workletter (other than Tenant’s Property, which it shall be Tenant’s
responsibility to insure pursuant to paragraph (e) below), on a full replacement
cost basis (with no co-insurance or, if coverage without co-insurance is not
reasonably available, then on an “agreed amount” basis or with a commercially
reasonable margin clause). Such insurance may have such commercially reasonable
deductibles and other terms as Landlord in its reasonable discretion determines
to be appropriate. The coverage required to be maintained under this paragraph
(d) may, in Landlord’s discretion, be added to or combined with Landlord’s
master policy carried under paragraph (c) above. Tenant shall cooperate with
Landlord in the preparation of a mutually approved initial list or schedule of
such existing improvements and Tenant Improvements, for purposes of identifying
the items Landlord is responsible for insuring under this paragraph (d), and
Tenant shall thereafter provide to Landlord from time to time, upon request by
Landlord annually or at other reasonable intervals, an updated version of such
list or schedule (the intended purpose of such updating being to reflect any
modification or removal of any such items that would have the effect of
eliminating them from the scope of Landlord’s insurance obligation under this
paragraph (d)). Landlord, in its discretion, may elect from time to time to
obtain appraisals of any or all alterations, additions, improvements and Tenant
Improvements which Landlord is required to insure hereunder.

(e) Tenant shall procure and maintain in full force and effect at all times
during the term of this Lease, from and after the Early Access Date, at Tenant’s
cost and expense, policies of property insurance providing protection against
“all risk of direct physical loss” (as defined by and detailed in the Insurance
Service Office’s Commercial Property Program “Cause of Loss-Special Form [CP
1030]” or its equivalent) for Tenant’s movable

 

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personal property, office furniture, movable equipment and trade fixtures, and
all other alterations, additions and improvements placed or installed by Tenant
from time to time in or about the Premises (collectively, “Tenant’s Property,”
which term is not intended to imply any conclusion regarding ultimate ownership
of alterations, additions and improvements that are otherwise covered by Article
7 above, but is used solely as a defined term for purposes of the specific
contexts in which it is used as such in this Lease), on a full replacement cost
basis (with no co-insurance or, if coverage without co-insurance is not
reasonably available, then on an “agreed amount” basis or with a commercially
reasonable margin clause). Such insurance may have such commercially reasonable
deductibles and other terms as Tenant in its discretion determines to be
appropriate, and shall name both Tenant and Landlord as insureds as their
interests may appear. Without limiting the generality of the foregoing
provisions, Tenant’s property insurance on Tenant’s Property shall in all events
include earthquake insurance in an amount at least equal to the amount (if any)
of the Tenant Improvement Allowance paid by Landlord pursuant to this Lease in
connection with the construction of any Tenant Improvements constructed by
Tenant pursuant to the Workletter.

(f) During the construction of the Tenant Improvements, each party constructing
such Tenant Improvements or any portion thereof shall also procure and maintain
in full force and effect, at Tenant’s sole cost and expense (but chargeable
against the Tenant Improvement Allowance to the extent any portion of the Tenant
Improvement Allowance is available for that purpose), a policy of builder’s risk
insurance on the Tenant Improvements being constructed by such party, in such
amounts and with such commercially reasonable deductibles as Landlord and Tenant
may mutually and reasonably determine to be appropriate with respect to such
insurance. Without limiting the generality of the foregoing provisions, any
party’s builder’s risk insurance with respect to the Tenant Improvements shall
in all events include earthquake insurance in an amount at least equal to the
cumulative amount of the Tenant Improvement Allowance paid by Landlord from time
to time in connection with the construction of such Tenant Improvements by the
applicable party.

10.2 Quality of Policies and Certificates. All policies of insurance required
hereunder shall be issued by responsible insurers and, in the case of policies
carried or required to be carried by Tenant, shall be written as primary
policies not contributing with and not in excess of any coverage that Landlord
may carry. Tenant shall deliver to Landlord copies of policies or certificates
of insurance showing that said policies are in effect. The coverage provided by
such policies shall include the clause or endorsement referred to in
Section 10.4. If Tenant fails to acquire, maintain or renew any insurance
required to be maintained by it under this Article 10 or to pay the premium
therefor, then Landlord, at its option and in addition to its other remedies,
but without obligation so to do, may procure such insurance, and any sums
expended by it to procure any such insurance on behalf of or in place of Tenant
shall be repaid upon demand, with interest as provided in Section 3.2 hereof.
Tenant shall give Landlord at least thirty (30) days prior written notice of any
cancellation or nonrenewal of insurance required to be maintained under this
Article 10, and shall obtain written undertakings from each insurer under
policies required to be maintained by it to endeavor to notify all insureds
thereunder at least thirty (30) days prior to cancellation of coverage (or ten
(10) days prior to cancellation of coverage due to nonpayment of premiums).

 

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10.3 Workers’ Compensation; Employees. Tenant shall maintain in full force and
effect during the term of this Lease workers’ compensation insurance in at least
the minimum amounts required by law, covering all of Tenant’s employees working
at or about the Premises. In addition, Tenant shall maintain in full force and
effect during the term of this Lease employer’s liability coverage with limits
of liability of not less than One Hundred Thousand Dollars ($100,000) per
accident, One Hundred Thousand Dollars ($100,000) per employee for disease, and
Five Hundred Thousand Dollars ($500,000) policy limit for disease.

10.4 Waiver of Subrogation. Notwithstanding anything to the contrary elsewhere
in this Lease, to the extent permitted by law, Landlord and Tenant each waive
any right to recover against the other with respect to (i) damage to property,
(ii) damage to the Center or any part thereof, or (iii) claims arising by reason
of any of the foregoing, but only to the extent that any of the foregoing
damages and claims under clauses (i)-(iii) hereof are covered or would have been
covered, and only to the extent of such actual or deemed coverage, by property
insurance actually carried or required to be carried hereunder by either
Landlord or Tenant, regardless of any negligence of the party receiving the
benefit of such waiver. This provision is intended to waive fully, and for the
benefit of each party, any rights and claims which might give rise to a right of
subrogation in any insurance carrier. Each party shall procure a clause or
endorsement on any property insurance policy denying to the insurer rights of
subrogation against the other party to the extent rights have been waived by the
insured prior to the occurrence of injury or loss. Coverage provided by
insurance maintained by Landlord or Tenant shall not be limited, reduced or
diminished by virtue of the subrogation waiver herein contained.

10.5 Increase in Premiums. Tenant shall do all acts and pay all expenses
reasonably necessary to ensure that the Premises are not used for purposes
prohibited by any applicable fire insurance, and that Tenant’s use of the
Premises, Building and Center complies with all requirements necessary to obtain
any such insurance. If Tenant uses or permits the Premises, Building or Center
to be used in a manner which increases the existing rate of any insurance
carried by Landlord on the Center and such use continues for longer than a
reasonable period specified in any written notice from Landlord to Tenant
identifying the rate increase and the factors causing the same, then Tenant
shall pay the amount of the increase in premium caused thereby, and Landlord’s
costs of obtaining other replacement insurance policies, including any increase
in premium, within thirty (30) days after demand therefor by Landlord.

10.6 Indemnification.

(a) Except as otherwise expressly provided for in this Lease, Tenant shall
indemnify, defend and hold Landlord and its members, partners, shareholders,
officers, directors, agents, employees and contractors harmless from any and all
liability for injury to or death of any person, or loss of or damage to the
property of any person, and all actions, claims, demands, costs (including,
without limitation, reasonable attorneys’ fees), damages or expenses of any kind
arising therefrom which may be brought or made against Landlord or which
Landlord may pay or incur by reason of the use, occupancy and enjoyment of the
Center by Tenant or any invitees, sublessees, licensees, assignees, employees,
agents or contractors of Tenant or holding under Tenant (including, but not
limited to, any such matters arising out of or in connection with

 

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any early entry upon the Center by Tenant pursuant to Section 2.2 hereof) from
any cause whatsoever other than (i) negligence or willful misconduct or omission
by Landlord or its agents, employees or contractors or (ii) Landlord’s material
breach of its obligations under this Lease. Except as otherwise expressly
provided for in this Lease, Landlord and its members, partners, shareholders,
officers, directors, agents, employees and contractors shall not be liable for,
and Tenant hereby waives all claims against such persons for, damages to goods,
wares and merchandise in or upon the Center, or for injuries to Tenant, its
agents or third persons in or upon the Center, from any cause whatsoever other
than (x) negligence or willful misconduct or omission by Landlord or its agents,
employees or contractors or (y) Landlord’s material breach of its obligations
under this Lease. Tenant shall give prompt notice to Landlord of any casualty or
accident in, on or about the Center.

(b) Except as otherwise expressly provided for in this Lease, Landlord shall
indemnify, defend and hold Tenant and its partners, shareholders, officers,
directors, agents, employees and contractors harmless from any and all liability
for injury to or death of any person, or loss of or damage to the property of
any person, and all actions, claims, demands, costs (including, without
limitation, reasonable attorneys’ fees), damages or expenses of any kind arising
therefrom which may be brought or made against Tenant or which Tenant may pay or
incur, to the extent such liabilities or other matters arise in, on or about the
Center by reason of any negligence or willful misconduct or omission by Landlord
or its agents, employees or contractors.

10.7 Blanket Policy. Any policy required to be maintained hereunder may be
maintained under a so-called “blanket policy” insuring other parties and other
locations so long as the amount of insurance required to be provided hereunder
is not thereby diminished. Without limiting the generality of the requirement
set forth at the end of the preceding sentence, property insurance provided
under a blanket policy shall provide full replacement cost coverage and
liability insurance provided under a blanket policy shall include per location
aggregate limits meeting or exceeding the limits required under this Article 10.

11. SUBLEASE AND ASSIGNMENT

11.1 Assignment and Sublease of Building. Except in the case of a Permitted
Transfer, Tenant shall not have the right or power to assign its interest in
this Lease, or make any sublease of the Premises or any portion thereof, nor
shall any interest of Tenant under this Lease be assignable involuntarily or by
operation of law, without on each occasion obtaining the prior written consent
of Landlord, which consent shall not be unreasonably withheld, conditioned or
delayed. Any purported sublease or assignment of Tenant’s interest in this Lease
requiring but not having received Landlord’s consent thereto (to the extent such
consent is required hereunder) shall be void. Without limiting the generality of
the foregoing provisions, Landlord may withhold consent to any proposed
subletting or assignment solely on the ground, if applicable, that the use by
the proposed subtenant or assignee is not a permitted use hereunder and is
reasonably likely to be incompatible with Landlord’s use of the balance of the
Center. Except in the case of a Permitted Transfer, any dissolution,
consolidation, merger or other reorganization of Tenant, or any sale or transfer
of substantially all of the stock or assets of Tenant in a single

 

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transaction or series of related transactions, shall be deemed to be an
assignment hereunder and shall be void without the prior written consent of
Landlord as required above. Notwithstanding the foregoing, (i) neither an
initial public offering of the common stock of Tenant nor any other sale of
Tenant’s capital stock through any public securities exchange or market nor any
other issuance of Tenant’s capital stock for bona fide financing purposes nor
any sale or transfer of Tenant’s capital stock in connection with any merger or
consolidation with, or acquisition of, Tenant, nor any consolidation, merger or
reorganization in which Tenant is the surviving entity, shall be deemed to be an
assignment, subletting or transfer hereunder; and (ii) Tenant shall have the
right to assign this Lease or sublet the Premises, or any portion thereof,
without Landlord’s consent (but with prior or concurrent written notice by
Tenant to Landlord), to any Affiliate of Tenant, or to any entity which results
from a merger or consolidation involving Tenant, or to any entity which acquires
substantially all of the stock or assets of Tenant as a going concern
(hereinafter each a “Permitted Transfer”). For purposes of the preceding
sentence, an “Affiliate” of Tenant shall mean any entity in which Tenant owns at
least a fifty percent (50%) equity interest, any entity which owns at least a
fifty percent (50%) equity interest in Tenant, and/or any entity which is
related to Tenant by a chain of ownership interests involving at least a fifty
percent (50%) equity interest at each level in the chain. Landlord shall have no
right to terminate this Lease in connection with, and shall have no right to any
sums or other economic consideration resulting from, any Permitted Transfer.
Except as expressly set forth in this Section 11.1, however, the provisions of
Section 11.2 shall remain applicable to any Permitted Transfer and the
transferee under such Permitted Transfer shall be and remain subject to all of
the terms and provisions of this Lease.

11.2 Rights of Landlord.

(a) Consent by Landlord to one or more assignments of this Lease, or to one or
more sublettings of the Premises or any portion thereof, or collection of rent
by Landlord from any assignee or sublessee, shall not operate to exhaust
Landlord’s rights under this Article 11, nor constitute consent to any
subsequent assignment or subletting. No assignment of Tenant’s interest in this
Lease and no sublease shall relieve Tenant of its obligations hereunder,
notwithstanding any waiver or extension of time granted by Landlord to any
assignee or sublessee, or the failure of Landlord to assert its rights against
any assignee or sublessee, and regardless of whether Landlord’s consent thereto
is given or required to be given hereunder. In the event of a default by any
assignee, sublessee or other successor of Tenant in the performance of any of
the terms or obligations of Tenant under this Lease, Landlord may proceed
directly against Tenant without the necessity of exhausting remedies against any
such assignee, sublessee or other successor. In addition, Tenant immediately and
irrevocably assigns to Landlord, as security for Tenant’s obligations under this
Lease, all rent from any subletting of all or a part of the Premises as
permitted under this Lease, and Landlord, as Tenant’s assignee, or any receiver
for Tenant appointed on Landlord’s application, may collect such rent and apply
it toward Tenant’s obligations under this Lease; except that, until the
occurrence and during the continuance of an event of default by Tenant, Tenant
shall have the right to collect such rent and to retain all sublease profits
(subject to the provisions of Section 11.2(c), below),

 

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(b) Upon any assignment of Tenant’s interest in this Lease for which Landlord’s
consent is required under Section 11.1 hereof, Tenant shall pay to Landlord,
within ten (10) days after receipt thereof by Tenant from time to time, one-half
( 1/2) of all cash sums and other economic considerations received by Tenant in
connection with or as a result of such assignment, after first deducting
therefrom (i) any costs incurred by Tenant for leasehold improvements
(including, but not limited to, third-party architectural and space planning
costs) in the Premises in connection with such assignment, amortized over the
remaining term of this Lease, (ii) any real estate commissions and/or reasonable
attorneys’ fees actually incurred by Tenant in connection with such assignment,
and (iii) the unamortized cost (assuming straight-line amortization over the
entire period from the Rent Commencement Date through the remainder of the
initial term of this Lease) of any alterations, additions and improvements made
to the Premises at Tenant’s expense and remaining in the Premises at the time of
such assignment.

(c) Upon any sublease of all or any portion of the Premises for which Landlord’s
consent is required under Section 11.1 hereof, Tenant shall pay to Landlord,
within ten (10) days after receipt thereof by Tenant from time to time, one-half
( 1/2) of all cash sums and other economic considerations received by Tenant in
connection with or as a result of such sublease, after first deducting therefrom
(i) the minimum rental due hereunder for the corresponding period, prorated (on
the basis of the average per-square-foot cost paid by Tenant for the Premises
for the applicable period under this Lease) to reflect the size of the subleased
portion of the Premises, (ii) any costs incurred by Tenant for leasehold
improvements in the subleased portion of the Premises (including, but not
limited to, third-party architectural and space planning costs) for the specific
benefit of the sublessee in connection with such sublease, amortized over the
remaining term of this Lease, (iii) any real estate commissions and/or
reasonable attorneys’ fees actually incurred by Tenant in connection with such
sublease, amortized over the term of such sublease, and (iv) amortized over the
term of such sublease, the portion allocable to the sublease term of the
unamortized cost (assuming straight-line amortization over the entire period
from the Rent Commencement Date through the remainder of the initial term of
this Lease) of any alterations, additions and improvements made to the Premises
at Tenant’s expense and reasonably allocable to the subleased portion of the
Premises at the time of the sublease. Notwithstanding anything to the contrary
contained in this paragraph (c), in no event shall the economic considerations
required to be shared by Tenant with Landlord hereunder include the reasonable,
good faith value of any goods or services provided by Tenant to any sublessee in
connection with any subletting, including, but not limited to, any shipping,
receiving, security, reception, facilities management, laboratory, repair,
maintenance, utilities and other similar goods and services provided to the
sublessee in excess of the goods and services provided by Landlord to Tenant
under this Lease.

12. RIGHT OF ENTRY AND QUIET ENJOYMENT

12.1 Right of Entry. Landlord and its authorized representatives shall have the
right, subject to Tenant’s reasonable operating and security procedures, to
enter the Premises at any time during the term of this Lease, provided that
after the Rent Commencement Date, such entry shall be made only during normal
business hours and upon not less than one (1) business day’s

 

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prior notice, except in the case of emergency (in which event no notice shall be
required and entry may be made at any time), for the purpose of inspecting and
determining the condition of the Premises and Building or for any other proper
purpose including, without limitation, to make repairs, replacements or
improvements which Landlord may deem necessary, to show the Premises and
Building to prospective purchasers, to show the Premises and Building to
prospective tenants (but only during the final year of the term of this Lease,
except that in the case of the initial term or first extended term [if
applicable] of this Lease, such period shall instead begin only on the earlier
of the date nine (9) months prior to expiration of such initial term or first
extended term of this Lease or the date [if any] on which Tenant informs
Landlord in writing that Tenant does not intend to exercise its renewal right
under Section 2.6 hereof as of the end of such initial term or first extended
term of this Lease, but in no event earlier than one (1) year prior to the
scheduled expiration date of such initial term or first extended term of this
Lease), and to post notices of nonresponsibility. Landlord shall not be liable
for inconvenience, annoyance, disturbance, loss of business, quiet enjoyment or
other damage or loss to Tenant by reason of making any repairs or performing any
work upon the Building or the Center or by reason of erecting or maintaining any
protective barricades in connection with any such work, and the obligations of
Tenant under this Lease shall not thereby be affected in any manner
whatsoever, provided, however, Landlord shall use reasonable efforts to minimize
the inconvenience to Tenant’s normal business operations caused thereby.

12.2 Quiet Enjoyment. Landlord covenants that Tenant, upon paying the rent and
performing its obligations hereunder within any applicable notice and cure
periods and subject to all the terms and conditions of this Lease, shall
peacefully and quietly have, hold and enjoy the Premises and the Center
throughout the term of this Lease, or until this Lease is terminated as provided
by this Lease.

13. CASUALTY AND TAKING

13.1 Damage or Destruction.

(a) If the Premises or any portion of the Common Areas of the Center necessary
for Tenant’s use and occupancy of the Premises is damaged or destroyed in whole
or in any substantial part during the period from the Rent Commencement Date
through the remaining term of this Lease, Landlord shall obtain from Landlord’s
architect, as soon as practicable (and in all events within forty-five (45) days
following the damage or destruction, (i) the architect’s reasonable, good faith
estimate of the time within which repair and restoration of the Premises and
Common Areas (if applicable) can reasonably be expected to be completed to the
extent necessary to enable Tenant to resume its full business operations in the
Premises without material impairment and (ii) the architect’s reasonable, good
faith opinion as to whether repair and restoration to that extent will be
permitted under applicable governmental laws, regulations and building codes
then in effect (collectively, the “Architect’s Estimate”). If the damage or
destruction materially impairs Tenant’s ability to conduct its business
operations in the Premises, and if either (A) the estimated repair time
specified in the Architect’s Estimate exceeds six (6) months (or, in the case of
an occurrence during the final year of the term of this Lease, sixty (60) days),
or (B) the Architect’s Estimate states that repair and restoration of the

 

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affected areas to the extent necessary to enable Tenant to resume its full
business operations in the Premises without material impairment will not be
permitted under applicable governmental laws, regulations and building codes
then in effect, then in either such event either Landlord or Tenant may
terminate this Lease as of the date of the occurrence by giving written notice
to the other party within thirty (30) days after the damage has occurred or
fifteen (15) days after delivery of the Architect’s Estimate, whichever is
later; provided, however, that if Landlord elects to terminate this Lease under
clause (A) of this sentence on the basis of an Architect’s Estimate showing an
estimated repair time of more than sixty (60) days but not more than six
(6) months with respect to a casualty occurring during the final year of the
initial term or first extended term (if applicable) of this Lease but occurring
prior to a valid exercise by Tenant of its option to extend the then-current
term of this Lease, and if Tenant, within ten (10) days after receipt of written
notice of Landlord’s election to terminate, validly exercises in writing any
then-exercisable option of Tenant to extend the term of this Lease under
Section 2.6 above, then Landlord’s election to terminate shall be void and of no
force or effect and the rights and obligations of the parties shall be
determined under this Article 13 without regard to such purported termination by
Landlord. In addition, Landlord shall have a similar termination right if the
damage or destruction arises from a risk that is not required to be insured
against (and is not actually insured against) by Landlord under this Lease and
if Landlord’s architect reasonably estimates that the uninsured cost to restore
the portions of the Premises for which Landlord is responsible to the condition
required above would exceed five percent (5%) of the then applicable replacement
cost of the entire Premises, unless Tenant agrees in writing, within ten
(10) days after being notified of Landlord’s exercise of its termination right,
to bear the restoration costs in excess of such five percent (5%) limit and, if
reasonably requested by Landlord, agrees to provide security in an amount and on
terms reasonably satisfactory to Landlord for Tenant’s performance of such
payment obligation. If the circumstances creating a termination right under the
preceding two sentences do not exist, or if such circumstances exist but neither
party timely exercises any applicable termination right, then this Lease shall
remain in full force and effect and (1) Landlord, as to the Common Areas of the
Center, as to the Premises as they existed prior to any construction or
installation of Tenant Improvements or other fixtures or personal property by
Tenant, and as to all Tenant Improvements constructed by Landlord pursuant to
this Lease and the Workletter, and (2) Tenant, as to all Tenant Improvements (if
any) constructed by Tenant pursuant to this Lease and the Workletter and as to
all other alterations, additions, improvements, fixtures and personal property
constructed or installed by Tenant, shall commence and complete, with all due
diligence and as promptly as is reasonably practicable under the conditions then
existing, all such repair and restoration as may be required to return the
affected portions of the Premises and Center to a condition comparable to that
existing immediately prior to the occurrence; provided, however, that Tenant in
its discretion may elect not to repair, restore or replace any or all of the
items which would otherwise be Tenant’s responsibility under clause (2) of this
sentence to the extent such items were constructed or installed at Tenant’s sole
expense and without any use of funds from the Tenant Improvement Allowance.

(b) If this Lease is terminated pursuant to the foregoing provisions of this
Section 13.1 following an occurrence which is a peril actually insured or
required to be insured against pursuant to Section 10.1(c), (d) and/or (e),
Landlord and Tenant agree (and any Lender

 

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shall be asked to agree) that such insurance proceeds shall be allocated between
Landlord and Tenant in a manner which fairly and reasonably reflects their
respective ownership rights under this Lease, as of the termination or
expiration of the term of this Lease, with respect to the improvements,
fixtures, equipment and other items to which such insurance proceeds are
attributable.

(c) From and after the date of an occurrence resulting in damage to or
destruction of the Premises or of Common Areas necessary for Tenant’s use and
occupancy of the Premises, and continuing until repair and restoration thereof
are completed to the extent necessary to enable Tenant to resume operation of
its business in the Premises without substantial impairment, there shall be an
equitable abatement of minimum rental and of Tenant’s Operating Cost Share of
Operating Expenses based upon the degree to which Tenant’s ability to conduct
its business in the Premises is impaired.

(d) Each party expressly waives the provisions of California Civil Code Sections
1932(2), 1933(4) and any other applicable existing or future law to the extent
the same would permit the termination of this Lease in the event of damage to or
destruction of the leased property, it being the intention of the parties that
their respective rights in such circumstances shall be governed solely by the
provisions of this Article 13.

13.2 Condemnation.

(a) If during the term of this Lease the Building or any Common Areas of the
Center that are necessary for Tenant’s use and occupancy of the Premises, or any
substantial part of either of them, is taken by eminent domain or by reason of
any public improvement or condemnation proceeding, or in any manner by exercise
of the right of eminent domain (including any transfer in lieu of or in
avoidance of an exercise of the power of eminent domain), or receives
irreparable damage by reason of anything lawfully done under color of public or
other authority, then (i) this Lease shall terminate as to the entire Premises
at Landlord’s election by written notice given to Tenant within thirty (30) days
after the taking has occurred, and (ii) this Lease shall terminate as to the
entire Premises at Tenant’s election, by written notice given to Landlord within
thirty (30) days after the nature and extent of the taking have been finally
determined, if the portion of the Building or Center taken is of such extent and
nature as substantially to handicap, impede or permanently impair Tenant’s use
of the Premises. If Tenant elects to terminate this Lease, Tenant shall also
notify Landlord of the date of termination, which date shall not be earlier than
thirty (30) days nor later than ninety (90) days after Tenant has notified
Landlord of Tenant’s election to terminate, except that this Lease shall
terminate on the date of taking if such date falls on any date before the date
of termination designated by Tenant. If neither party elects to terminate this
Lease as hereinabove provided, this Lease shall continue in full force and
effect (except that there shall be an equitable abatement of minimum rental and
of Tenant’s Operating Cost Share of Operating Expenses based upon the degree to
which Tenant’s ability to conduct its business in the Premises is impaired),
Landlord shall restore the improvements for which Landlord is responsible (as
provided above) to a complete architectural whole and a functional condition and
as nearly as reasonably possible to the condition existing before the taking,
and Tenant shall restore the improvements for which Tenant is responsible

 

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under clause (2) of Section 13.1(a) above to a complete architectural whole and
a functional condition and as nearly as reasonably possible to the condition
existing before the taking; provided, however, that Tenant in its discretion may
elect not to repair, restore or replace any or all of the items which would
otherwise be Tenant’s responsibility under such clause (2) to the extent such
items were constructed or installed at Tenant’s sole expense and without any use
of funds from the Tenant Improvement Allowance. In connection with any such
restoration, each party shall use its respective reasonable efforts (including,
without limitation, any necessary negotiation or intercession with its
respective lender, if any) to ensure that any severance damages or other
condemnation awards intended to provide compensation for rebuilding or
restoration costs are promptly collected and made available to Landlord and
Tenant in portions reasonably corresponding to the cost and scope of their
respective restoration obligations, subject only to such payment controls as
either party or its lender may reasonably require in order to ensure the proper
application of such proceeds toward the restoration of the Building and the
Center. Each party expressly waives the provisions of California Code of Civil
Procedure Section 1265.130 and of any other existing or future law to the extent
the same would allow either party to terminate (or to petition the Superior
Court to terminate) this Lease in the event of a partial condemnation or taking
of the leased property, it being the intention of the parties that their
respective rights in such circumstances shall be governed solely by the
provisions of this Article 13.

(b) If this Lease is terminated pursuant to the foregoing provisions of this
Section 13.2, or if this Lease remains in effect but any condemnation awards or
other proceeds become available as compensation for the loss or destruction of
all or any portion of the Building or the Center, then Landlord and Tenant agree
(and any Lender shall be asked to agree) that such proceeds shall be allocated
between Landlord and Tenant, respectively, in the respective proportions in
which Landlord and Tenant would have shared, under Section 13.1(b), the proceeds
of any insurance proceeds following loss or destruction of the applicable
improvements due to an insured casualty.

13.3 Reservation of Compensation. Landlord reserves, and Tenant waives and
assigns to Landlord, all rights to any award or compensation for damage to the
Center, the improvements located therein and the leasehold estate created
hereby, accruing by reason of any taking in any public improvement, condemnation
or eminent domain proceeding or in any other manner by exercise of the right of
eminent domain or of anything lawfully done by public authority, except that
(a) Tenant shall be entitled to pursue recovery from the applicable public
authority for Tenant’s moving expenses, trade fixtures and equipment and any
leasehold improvements installed by Tenant in the Premises or Building at its
own sole expense, but only to the extent Tenant would have been entitled to
remove such items at the expiration of the term of this Lease and then only to
the extent of the then remaining unamortized value of such improvements computed
on a straight-line basis over the period from the Rent Commencement Date through
the remainder of the then current term of this Lease, and (b) any condemnation
awards or proceeds described in Section 13.2(b) shall be allocated and disbursed
in accordance with the provisions of Section 13.2(b), notwithstanding any
contrary provisions of this Section 13.3.

 

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13.4 Restoration of Improvements. In connection with any repair or restoration
of improvements by either party following a casualty or taking as hereinabove
set forth, the party responsible for such repair or restoration shall, to the
extent possible, return such improvements to a condition substantially equal to
that which existed immediately prior to the casualty or taking. To the extent
such party wishes to make material modifications to such improvements, such
modifications shall be subject to the prior written approval of the other party
(not to be unreasonably withheld or delayed), except that no such approval shall
be required for modifications that are required by applicable governmental
authorities as a condition of the repair or restoration, unless such required
modifications would impair or impede Tenant’s conduct of its business in the
Premises (in which case any such modifications in Landlord’s work shall require
Tenant’s consent, not unreasonably withheld or delayed) or would materially and
adversely affect the exterior appearance, the structural integrity or the
mechanical or other operating systems of the Premises or Building (in which case
any such modifications in Tenant’s work shall require Landlord’s consent, not
unreasonably withheld or delayed).

14. DEFAULT

14.1 Events of Default. The occurrence of any of the following shall constitute
an event of default on the part of Tenant:

(a) Abandonment. Abandonment of the Premises. “Abandonment” is hereby defined to
include, but is not limited to, any absence by Tenant from the Premises for
fifteen (15) consecutive days or more while Tenant is in default, beyond any
applicable notice and cure periods, under any other provision of this Lease;

(b) Nonpayment. Failure to pay, when due, any amount payable to Landlord
hereunder, such failure continuing for a period of five (5) business days after
written notice of such failure; provided, however, that any such notice shall be
in lieu of, and not in addition to, any notice required under California Code of
Civil Procedure Section 1161 et seq., as amended from time to time, so long as
such notice is given in the manner required by California Code of Civil
Procedure Section 1162;

(c) Other Obligations. Failure to perform any obligation, agreement or covenant
under this Lease other than those matters specified in subsection (b) hereof
(including, but not limited to, any breach by Tenant of the Master Declaration
or Association Documents (if any) as provided in Section 15.4 below), such
failure continuing for thirty (30) days after written notice of such
failure; provided, however, that if such failure is curable in nature but cannot
reasonably be cured within such 30-day period, then Tenant shall not be in
default if and so long as, Tenant promptly (and in all events within such 30-day
period) commences such cure and thereafter diligently pursues such cure to
completion; and provided further, however, that any such notice shall be in lieu
of and not in addition to, any notice required under California Code of Civil
Procedure Section 1161 et seq., as amended from time to time, so long as such
notice is given in the manner required by California Code of Civil Procedure
Section 1162;

(d) General Assignment. A general assignment by Tenant for the benefit of
creditors;

 

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(e) Bankruptcy. The filing of any voluntary petition in bankruptcy by Tenant, or
the filing of an involuntary petition by Tenant’s creditors, which involuntary
petition remains undischarged for a period of sixty (60) days. In the event that
under applicable law the trustee in bankruptcy or Tenant has the right to affirm
this Lease and continue to perform the obligations of Tenant hereunder, such
trustee or Tenant shall, in such time period as may be permitted by the
bankruptcy court having jurisdiction, cure all defaults of Tenant hereunder
outstanding as of the date of the affirmance of this Lease and provide to
Landlord such adequate assurances as may be necessary to ensure Landlord of the
continued performance of Tenant’s obligations under this Lease. Specifically,
but without limiting the generality of the foregoing, such adequate assurances
must include assurances that the Premises continue to be operated only for the
use permitted hereunder. The provisions hereof are to assure that the basic
understandings between Landlord and Tenant with respect to Tenant’s use of the
Center and the benefits to Landlord therefrom are preserved, consistent with the
purpose and intent of applicable bankruptcy laws;

(f) Receivership. The employment of a receiver appointed by court order to take
possession of substantially all of Tenant’s assets or the Premises, if such
receivership remains undissolved for a period of sixty (60) days;

(g) Attachment. The attachment, execution or other judicial seizure of all or
substantially all of Tenant’s assets or the Premises, if such attachment or
other seizure remains undismissed or undischarged for a period of sixty
(60) days after the levy thereof; or

(h) Insolvency. The admission by Tenant in writing of its inability to pay its
debts as they become due, the filing by Tenant of a petition seeking any
reorganization or arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future statute, law or
regulation, the filing by Tenant of an answer admitting or failing timely to
contest a material allegation of a petition filed against Tenant in any such
proceeding or, if within sixty (60) days after the commencement of any
proceeding against Tenant seeking any reorganization or arrangement,
composition, readjustment, liquidation, dissolution or similar relief under any
present or future statute, law or regulation, such proceeding shall not have
been dismissed.

14.2 Remedies Upon Tenant’s Default.

(a) Upon the occurrence of any event of default described in Section 14.1
hereof, Landlord, in addition to and without prejudice to any other rights or
remedies it may have, shall have the right either (i) to terminate this Lease
and recover from Tenant all damages incurred by Landlord as a result of Tenant’s
default, as hereinafter provided, or (ii) to continue this Lease in effect and
recover rent and other charges and amounts as they become due.

(b) Even if Tenant has breached this Lease and abandoned the Premises, this
Lease shall continue in effect for so long as Landlord does not terminate
Tenant’s right to possession under subsection (a) hereof and Landlord may
enforce all of its rights and remedies under this Lease, including the right to
recover rent as it becomes due, and Landlord, without terminating this Lease,
may exercise all of the rights and remedies of a lessor under California Civil
Code Section 1951.4 (lessor may continue lease in effect after lessee’s breach
and

 

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abandonment and recover rent as it becomes due, if lessee has right to sublet or
assign, subject only to reasonable limitations), or any successor Code section.
Acts of maintenance, preservation or efforts to relet the Premises or the
appointment of a receiver upon application of Landlord to protect Landlord’s
interests under this Lease shall not constitute a termination of Tenant’s right
to possession.

(c) If Landlord terminates this Lease pursuant to this Section 14.2, Landlord
shall have all of the rights and remedies of a landlord provided by
Section 1951.2 of the Civil Code of the State of California, or any successor
Code section, which remedies include Landlord’s right to recover from Tenant
(i) the worth at the time of award of the unpaid rent and additional rent which
had been earned at the time of termination, (ii) the worth at the time of award
of the amount by which the unpaid rent and additional rent which would have been
earned after termination until the time of award exceeds the amount of such
rental loss that Tenant proves could have been reasonably avoided, (iii) the
worth at the time of award of the amount by which the unpaid rent and additional
rent for the balance of the term after the time of award exceeds the amount of
such rental loss that Tenant proves could be reasonably avoided, and (iv) any
other amount necessary to compensate Landlord for all the detriment proximately
caused by Tenant’s failure to perform its obligations under this Lease or which
in the ordinary course of things would be likely to result therefrom, including,
but not limited to, the cost of recovering possession of the Premises, expenses
of reletting, including necessary repair, renovation and alteration of the
Premises, reasonable attorneys’ fees, and other reasonable costs. The “worth at
the time of award” of the amounts referred to in clauses (i) and (ii) above
shall be computed by allowing interest at ten percent (10%) per annum from the
date such amounts accrued to Landlord. The “worth at the time of award” of the
amounts referred to in clause (iii) above shall be computed by discounting such
amount at one percentage point above the discount rate of the Federal Reserve
Bank of San Francisco at the time of award.

14.3 Remedies Cumulative. All rights, privileges and elections or remedies of
Landlord contained in this Article 14 are cumulative and not alternative to the
extent permitted by law and except as otherwise provided herein.

15. SUBORDINATION, ATTORNMENT AND SALE

15.1 Subordination to Mortgage. This Lease, and any sublease entered into by
Tenant under the provisions of this Lease, shall be subject and subordinate to
any ground lease, mortgage, deed of trust, sale/leaseback transaction or any
other hypothecation for security now or hereafter placed upon the Premises, the
Building, the Center, or any of them, and the rights of any assignee of Landlord
or of any ground lessor, mortgagee, trustee, beneficiary or leaseback lessor
under any of the foregoing, and to any and all advances made on the security
thereof and to all renewals, modifications, consolidations, replacements and
extensions thereof; provided, however, that such subordination in the case of
any future ground lease, mortgage, deed of trust, sale/leaseback transaction or
any other hypothecation for security placed upon the Premises, the Building, the
Center, or any of them shall be conditioned on Tenant’s receipt from the ground
lessor, mortgagee, trustee, beneficiary or leaseback lessor of a Non-Disturbance
Agreement in a form reasonably acceptable to Tenant (i) confirming that so long
as Tenant is not in material

 

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default hereunder beyond any applicable cure period (for which purpose the
occurrence and continuance of any event of default under Section 14.1 hereof
shall be deemed to be “material”), Tenant’s rights hereunder shall not be
disturbed by such person or entity and (ii) agreeing that the benefit of such
Non-Disturbance Agreement shall be transferable to any transferee under a
Permitted Transfer and to any other assignee or subtenant that is acceptable to
the ground lessor, mortgagee, trustee, beneficiary or leaseback lessor at the
time of transfer. If any mortgagee, trustee, beneficiary, ground lessor,
sale/leaseback lessor or assignee elects to have this Lease be an encumbrance
upon the Center prior to the lien of its mortgage, deed of trust, ground lease
or leaseback lease or other security arrangement and gives notice thereof to
Tenant, this Lease shall be deemed prior thereto, whether this Lease is dated
prior or subsequent to the date thereof or the date of recording thereof.
Tenant, and any sublessee, shall execute such documents as may reasonably be
requested by any mortgagee, trustee, beneficiary, ground lessor, sate/leaseback
lessor or assignee to evidence the subordination herein set forth, subject to
the conditions set forth above, or to make this Lease prior to the lien of any
mortgage, deed of trust, ground lease, leaseback lease or other security
arrangement, as the case may be. Upon any default by Landlord in the performance
of its obligations under any mortgage, deed of trust, ground lease, leaseback
lease or assignment, provided that Tenant has received such a Non-Disturbance
Agreement from the applicable party, Tenant (and any sublessee) shall,
notwithstanding any subordination hereunder, attorn to the mortgagee, trustee,
beneficiary, ground lessor, leaseback lessor or assignee thereunder upon demand
and become the tenant of the successor in interest to Landlord, at the option of
such successor in interest, and shall execute and deliver any instrument or
instruments confirming the attornment herein provided for. Landlord represents
and warrants to Tenant that as of the date of this Lease, neither the Premises,
the Building nor the Center is subject to any existing ground lease, mortgage,
deed of trust, sale/leaseback transaction or any other hypothecation for
security.

15.2 Sale of Landlord’s Interest. Upon sale, transfer or assignment of
Landlord’s entire interest in the Building and the Center, Landlord shall be
relieved of its obligations hereunder with respect to liabilities accruing from
and after the date of such sale, transfer or assignment.

15.3 Estoppel Certificates. Tenant or Landlord (the “responding party”), as
applicable, shall at any time and from time to time, within ten (10) business
days after written request by the other party (the “requesting party”), execute,
acknowledge and deliver to the requesting party a certificate in writing
stating: (i) that this Lease is unmodified and in full force and effect, or if
there have been any modifications, that this Lease is in full force and effect
as modified and stating the date and the nature of each modification; (ii) the
date to which rental and all other sums payable hereunder have been paid;
(iii) that the requesting party is not in default in the performance of any of
its obligations under this Lease, that the certifying party has given no notice
of default to the requesting party and that no event has occurred which, but for
the expiration of the applicable time period, would constitute an event of
default hereunder, or if the responding party alleges that any such default,
notice or event has occurred, specifying the same in reasonable detail; and
(iv) such other matters as may reasonably be requested by the requesting party
or by any institutional lender, mortgagee, trustee, beneficiary, ground lessor,
sale/leaseback lessor or prospective purchaser of the Center, or prospective
sublessee or assignee

 

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of this Lease. Any such certificate provided under this Section 15.3 may be
relied upon by any lender, mortgagee, trustee, beneficiary, assignee or
successor in interest to the requesting party, by any prospective purchaser, by
any purchaser on foreclosure or sale, by any grantee under a deed in lieu of
foreclosure of any mortgage or deed of trust on the Property, by any subtenant
or assignee, or by any other third party. Failure to execute and return within
the required time any estoppel certificate requested hereunder, if such failure
continues for five (5) days after a second written request by the requesting
party for such estoppel certificate, shall be deemed to be an admission of the
truth of the matters set forth in the form of certificate submitted to the
responding party for execution.

15.4 Subordination to CC&R’s. This Lease, and any permitted sublease entered
into by Tenant under the provisions of this Lease, and the interests in real
property conveyed hereby and thereby shall be subject and subordinate (a) to any
declarations of covenants, conditions and restrictions or other recorded
restrictions affecting the Center or any portion thereof from time to
time, provided that the terms of such declarations or restrictions are
reasonable (or, to the extent they are not reasonable, are mandated by
applicable law), do not materially impair Tenant’s ability to conduct the uses
permitted hereunder on the Premises and in the Center, and do not discriminate
against Tenant relative to other similarly situated tenants occupying the
portion(s) of the Center covered by such declarations or restrictions, (b) to
the Master Declaration of Covenants, Conditions and Restrictions for Seaport
Centre, San Mateo County, California, dated October 5, 1987 and recorded on
October 6, 1987 as Instrument No. 87153374, Official Records of San Mateo
County, as amended from time to time (the “Master Declaration”), the provisions
of which Master Declaration are an integral part of this Lease, and (c) to the
Articles, Bylaws and Association Rules (if any), as amended from time to time,
of the Seaport Centre Owners’ Association created under the Master Declaration
(the “Association Documents”). Any failure by Tenant to comply with the
applicable terms of the Master Declaration and the Association Documents (if
any) shall be a default under this Lease. Tenant agrees to execute, upon request
by Landlord, any documents reasonably required from time to time to evidence the
foregoing subordination.

15.5 Mortgagee Protection. If, following a default by Landlord under any
mortgage, deed of trust, ground lease, leaseback lease or other security
arrangement covering the Building, the Center, or any portion of them, the
Building and/or the Center, as applicable, is acquired by the mortgagee,
beneficiary, master lessor or other secured party, or by any other successor
owner, pursuant to a foreclosure, trustee’s sale, sheriff’s sale, lease
termination or other similar procedure (or deed in lieu thereof), then any such
person or entity so acquiring the Building and/or the Center shall not be:

(a) liable for any act or omission of a prior landlord or owner of the Center
(including, but not limited to, Landlord), except that such person or entity
shall be liable for the cure or correction of any continuing defaults, such as a
continuing failure to repair or maintain;

(b) subject to any offsets or defenses that Tenant may have against any prior
landlord or owner of the Center (including, but not limited to, Landlord);

 

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(c) bound by any rent or additional rent that Tenant may have paid in advance to
any prior landlord or owner of the Center (including, but not limited to,
Landlord) for a period in excess of one month, or by any security deposit,
cleaning deposit or other prepaid charge that Tenant may have paid in advance to
any prior landlord or owner (including, but not limited to, Landlord), except to
the extent such deposit or prepaid amount has been expressly turned over to or
credited to the successor owner thus acquiring the Center;

(d) liable for any warranties or representations of any nature whatsoever,
whether pursuant to this Lease or otherwise, by any prior landlord or owner of
the Center (including, but not limited to, Landlord) with respect to the use,
construction, zoning, compliance with laws, title, habitability, fitness for
purpose or possession, or physical condition (including, without limitation,
environmental matters) of the Building or the Center, except for any then
remaining obligations of Landlord arising under Section 2.3 of the Lease or
under the Workletter; or

(e) liable to Tenant in any amount beyond the interest of such mortgagee,
beneficiary, master lessor or other secured party or successor owner in the
Center as it exists from time to time, and in the proceeds from any disposition
of such interest, it being the intent of this provision that Tenant shall look
solely to the interest of any such mortgagee, beneficiary, master lessor or
other secured party or successor owner in the Center for the payment and
discharge of the landlord’s obligations under this Lease and that such
mortgagee, beneficiary, master lessor or other secured party or successor owner
shall have no separate personal liability for any such obligations.

16. SECURITY

16.1 Deposit. Tenant shall have no obligation to provide a security deposit in
connection with this Lease.

17. MISCELLANEOUS

17.1 Notices. All notices, consents, waivers and other communications which this
Lease requires or permits either party to give to the other shall be in writing
and shall be deemed given when delivered personally (including delivery by
private same-day or overnight courier or express delivery service) or by
telecopier with mechanical confirmation of transmission, effective upon personal
delivery to or refusal of delivery by the recipient (in the case of personal
delivery by any of the means described above) or, except with respect to notices
of a party’s failure to perform its obligations under this Lease, upon
telecopier transmission during normal business hours at the recipient’s office
(in the case of telecopier transmission, with any transmission outside of normal
business hours being effective as of the beginning of the first business day
commencing after the time of actual transmission) to the parties at their
respective addresses as follows:

 

 

 

 

To Tenant:

  

(until the Rent Commencement Date)

 

  

OncoMed Pharmaceuticals, Inc.

 

  

265 N. Whisman Road

 

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Mountain View, CA 94043

Attn: Chief Executive Officer

Telecopier: (650) 938-4570

 

 

 

  

(after the Rent Commencement Date)

 

  

OncoMed Pharmaceuticals, Inc.

 

  

800 Chesapeake Drive

 

  

Redwood City, CA 94063

 

  

Attn: Chief Executive Officer

 

  

Telecopier: (650) 938-4570

 

 

with a copy to:

  

Holme, Roberts & Owen LLP

 

  

560 Mission Street, 25th Floor

 

  

San Francisco, CA 94105-2994

 

  

Attn: Kenneth R. Whiting, Jr.

 

  

Telecopier: (415) 268-1999

 

 

To Landlord:

  

Slough Redwood City, LLC

 

  

c/o Slough Estates USA Inc.

 

  

444 North Michigan Avenue, Suite 3230

 

  

Chicago, IL 60611

 

  

Attn: Randy Rohner

 

  

Telecopier: (312) 755-0717

 

 

with a copy to:

  

Britannia Management Services, Inc.

 

  

555 Twelfth Street, Suite 1650

 

  

Oakland, CA 94607

 

  

Attn: Magdalena Shushan

 

  

Telecopier: (510) 763-6262

 

 

and a copy to:

  

Folger Levin & Kahn LLP

 

  

Embarcadero Center West

 

  

275 Battery Street, 23rd Floor

 

  

San Francisco, CA 94111

 

  

Attn: Donald E. Kelley, Jr.

 

  

Telecopier: (415) 986-2827

or to such other address(es) as may be contained in a notice of address change
given by either party to the other pursuant to this Section, effective no
earlier than fifteen (15) days after delivery of such notice to the receiving
party. Rental payments and other sums required by this Lease to be paid by
Tenant shall be delivered to Landlord in care of Britannia Management Services,
Inc., 555 Twelfth Street, Suite 1650, Oakland, CA 94607, or at such other
address as Landlord may from time to time specify in writing to Tenant, and
shall be deemed to be paid only upon actual receipt.

 

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17.2 Successors and Assigns. The obligations of this Lease shall run with the
land, and this Lease shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that the
original Landlord named herein and each successive Landlord under this Lease
shall be liable only for obligations accruing during the period of its ownership
of the Center, and any liability for obligations accruing after termination of
such ownership shall terminate as of the date of such termination of ownership
and shall pass to the successor lessor.

17.3 No Waiver. The failure of Landlord or Tenant to seek redress for violation,
or to insist upon the strict performance, of any covenant or condition of this
Lease shall not be deemed a waiver of such violation, or prevent a subsequent
act which would originally have constituted a violation from having all the
force and effect of an original violation.

17.4 Severability. If any provision of this Lease or the application thereof is
held to be invalid or unenforceable, the remainder of this Lease or the
application of such provision to persons or circumstances other than those as to
which it is invalid or unenforceable shall not be affected thereby, and each of
the provisions of this Lease shall be valid and enforceable, unless enforcement
of this Lease as so invalidated would be unreasonable or grossly inequitable
under all the circumstances or would materially frustrate the purposes of this
Lease.

17.5 Litigation Between Parties. In the event of any litigation or other dispute
resolution proceedings between the parties hereto arising out of or in
connection with this Lease, the prevailing party shall be reimbursed for all
reasonable costs, including, but not limited to, reasonable accountants’ fees
and attorneys’ fees, incurred in connection with such proceedings (including,
but not limited to, any appellate proceedings relating thereto) or in connection
with the enforcement of any judgment or award rendered in such proceedings.
“Prevailing party” within the meaning of this Section shall include, without
limitation, a party who dismisses an action for recovery hereunder in exchange
for payment of the sums allegedly due, performance of covenants allegedly
breached or consideration substantially equal to the relief sought in the
action.

17.6 Surrender. A voluntary or other surrender of this Lease by Tenant, or a
mutual termination thereof between Landlord and Tenant, shall not result in a
merger but shall, at the option of Landlord, operate either as an assignment to
Landlord of any and all existing subleases and subtenancies, or a termination of
all or any existing subleases and subtenancies. This provision shall be
contained in any and all assignments or subleases made pursuant to this Lease.

17.7 Interpretation. The provisions of this Lease shall be construed as a whole,
according to their common meaning, and not strictly for or against Landlord or
Tenant. The captions preceding the text of each Section and subsection hereof
are included only for convenience of reference and shall be disregarded in the
construction or interpretation of this Lease.

17.8 Entire Agreement. This written Lease, together with the exhibits hereto,
contains all the representations and the entire understanding between the
parties hereto with respect to the subject matter hereof. Any prior
correspondence, memoranda or agreements are replaced in total

 

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by this Lease and the exhibits hereto. This Lease may be modified only by an
agreement in writing signed by each of the parties.

17.9 Governing Law. This Lease and all exhibits hereto shall be construed and
interpreted in accordance with and be governed by all the provisions of the laws
of the State of California.

17.10 No Partnership. The relationship between Landlord and Tenant is solely
that of a lessor and lessee. Nothing contained in this Lease shall be construed
as creating any type or manner of partnership, joint venture or joint enterprise
with or between Landlord and Tenant.

17.11 Financial Information. From time to time Tenant shall promptly provide
directly to prospective lenders and purchasers of the Center designated by
Landlord such financial information pertaining to the financial status of Tenant
as Landlord may reasonably request; provided, Tenant shall be permitted to
provide such financial information in a manner which Tenant deems reasonably
necessary to protect the confidentiality of such information. In addition, from
time to time, Tenant shall provide Landlord with such financial information
pertaining to the financial status of Tenant as Landlord may reasonably request.
Landlord agrees that all financial information supplied to Landlord by Tenant
shall be treated as confidential material, and shall not be disseminated to any
party or entity (including any entity affiliated with Landlord) without Tenant’s
prior written consent, except that Landlord shall be entitled to provide such
information, subject to reasonable precautions to protect the confidential
nature thereof, (i) to Landlord’s partners and professional advisors, solely to
use in connection with Landlord’s execution and enforcement of this Lease, and
(ii) to prospective lenders and/or purchasers of the Center, solely for use in
connection with their bona fide consideration of a proposed financing or
purchase of the Center, provided that such prospective lenders and/or purchasers
are not then engaged in businesses directly competitive with the business then
being conducted by Tenant. For purposes of this Section, without limiting the
generality of the obligations provided herein, it shall be deemed reasonable for
Landlord to request copies of Tenant’s most recent audited annual financial
statements, or, if audited statements have not been prepared, unaudited
financial statements for Tenant’s most recent fiscal year, accompanied by a
certificate of Tenant’s chief financial officer that such financial statements
fairly present Tenant’s financial condition as of the date(s) indicated.
Notwithstanding any other provisions of this Section 17.11, during any period in
which Tenant has outstanding a class of publicly traded securities and is filing
with the Securities and Exchange Commission, on a regular basis, Forms 10Q and
10K and any other periodic filings required under the Securities Exchange Act of
1934, as amended, it shall constitute sufficient compliance under this
Section 17.11 for Tenant to furnish Landlord with copies of such periodic
filings substantially concurrently with the filing thereof with the Securities
and Exchange Commission.

Landlord and Tenant recognize the need of Tenant to maintain the confidentiality
of information regarding its financial status and the need of Landlord to be
informed of, and to provide to prospective lenders and purchasers of the Center
financial information pertaining to, Tenant’s financial status. Landlord and
Tenant agree to cooperate with each other in achieving these needs within the
context of the obligations set forth in this Section.

 

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17.12 Costs. If Tenant requests the consent of Landlord under any provision of
this Lease for any act that Tenant proposes to do hereunder, including, without
limitation, assignment or subletting of the Premises, Tenant shall, as a
condition to doing any such act and the receipt of such consent, reimburse
Landlord promptly for any and all reasonable costs and expenses incurred by
Landlord in connection therewith, including, without limitation, reasonable
attorneys’ fees.

17.13 Time. Time is of the essence of this Lease, and of every term and
condition hereof.

17.14 Rules and Regulations. Tenant shall observe, comply with and obey, and
shall cause its employees, agents and, to the best of Tenant’s ability, invitees
to observe, comply with and obey such reasonable rules and regulations for the
safety, care, cleanliness, order and use of the Building and the Center as
Landlord may promulgate and deliver to Tenant from time to time, provided that
such rules and regulations are reasonable (or, to the extent they are not
reasonable, are mandated by applicable law), do not materially impair Tenant’s
ability to conduct the uses permitted hereunder on the Premises and in the
Center, and do not discriminate against Tenant relative to other similarly
situated tenants occupying portions of the Center.

17.15 Brokers. Landlord agrees to pay a brokerage commission in connection with
the consummation of this Lease to CB Richard Ellis, Inc., which has acted as
dual representative for both Landlord and Tenant, in accordance with a separate
written agreement. Each party represents and warrants that no other broker
participated in the consummation of this Lease and agrees to indemnify, defend
and hold the other party harmless against any liability, cost or expense,
including, without limitation, reasonable attorneys’ fees, arising out of any
claims for brokerage commissions or other similar compensation in connection
with any conversations, prior negotiations or other dealings by the indemnifying
party with any other broker.

17.16 Memorandum of Lease. At any time during the term of this Lease, either
party, at its sole expense, shall be entitled to record a memorandum of this
Lease and, if either party so requests, both parties agree to cooperate in the
preparation, execution, acknowledgment and recordation of such document in
reasonable form. If such a memorandum of lease is recorded, then upon expiration
or termination of this Lease, Tenant agrees promptly to execute, acknowledge and
deliver to Landlord, upon written request by Landlord, a Termination of
Memorandum of Lease in such form as Landlord may reasonably request, for the
purpose of terminating any continuing effect of the previously recorded
memorandum of lease as a cloud upon title to the Center.

17.17 Organizational Authority. Each party to this Lease represents and warrants
that the person signing this Lease on behalf of such party is fully authorized
to do so and, by so doing, to bind such party.

17.18 Execution and Delivery. Submission of this Lease for examination or
signature by Tenant does not constitute an agreement or reservation of or option
for lease of the Premises. This instrument shall not be effective or binding
upon either party, as a lease or otherwise, until executed and delivered by both
Landlord and Tenant. This Lease may be executed in one or

 

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more counterparts and by separate parties on separate counterparts, but each
such counterpart shall constitute an original and all such counterparts together
shall constitute one and the same instrument.

17.19 Survival. Without limiting survival provisions which would otherwise be
implied or construed under applicable law, the provisions of Sections 2.5, 5.4,
7.2, 7.3, 7.4, 8.2(b) and (c), 9.6, 10.6, 17.5, 17.11 and 17.16 hereof shall
survive the termination of this Lease with respect to matters occurring prior to
the expiration of this Lease.

17.20 Parking. Landlord agrees that the Common Areas, taken as a whole, shall
include parking in amounts sufficient to satisfy the minimum parking
requirements of the City of Redwood City applicable to the Center from time to
time; that Tenant shall have the non-exclusive and non-reserved use of
approximately three (3) automobile parking stalls per 1,000 rentable square feet
of space in the Premises; and that there shall be no additional cost or charge
to Tenant for the nonexclusive, non-reserved use of such parking by Tenant and
its employees and invitees. Landlord represents to Tenant that the existing
parking in the Center consists of approximately 3.0 spaces per 1,000 square
feet. Landlord shall not agree with any other tenant of the Center that such
tenant may have the use of parking spaces in excess of such tenant’s
proportional share of the available parking spaces in the Center as it exists
from time to time.

17.21 Warrant. Concurrently with the mutual execution of this Lease, Tenant
shall issue and deliver to Landlord or Landlord’s designees (which may be any
members, partners, shareholders or affiliates of Landlord or any affiliates of
any such members, partners, shareholders or affiliates of Landlord) a warrant or
warrants registered in the name of Landlord or Landlord’s designee(s) for the
acquisition of an aggregate of Fifty-Five Thousand (55,000) shares of Tenant’s
Series B preferred stock, which warrant(s) shall be in the form of Exhibit
D attached hereto and incorporated herein by this reference. The warrant(s)
shall have an exercise price per share equal to one hundred twenty-five percent
(125%) of the price per share at which Tenant’s Series B preferred stock is
issued in its first issuance to one or more institutional investors, and shall
be exercisable for a period beginning on the date of issuance and ending on the
seventh (7th) anniversary of the date of issuance, subject to earlier
termination upon certain events as specified in the form of warrant. If no
Series B preferred stock has been issued by Tenant to one or more institutional
investors within eighteen (18) months after the mutual execution of this Lease,
then as set forth in the form of warrant attached hereto as Exhibit D, without
further action by Tenant or by the holder of the warrant issued hereunder, such
warrant shall automatically be deemed to entitle the holder to acquire, in lieu
of such Series B preferred stock, an aggregate of Fifty-Five Thousand
(55,000) shares of Tenant’s Series A preferred stock, with an exercise price per
share equal to one hundred twenty-five percent (125%) of the price per share at
which Tenant’s Series A preferred stock was previously issued to institutional
investors. Landlord hereby designates its affiliate Kwacker Limited, a
corporation organized and existing under the laws of England, as the entity to
which Landlord’s warrant(s) hereunder should be issued in satisfaction of the
foregoing provisions.

17.22 Approvals. Whenever this Lease requires an approval, consent, designation,
determination, selection or judgment either by Landlord or Tenant, then except
to the extent a

 

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different standard is expressly provided in the applicable provision where such
requirement is set forth, such approval, consent, designation, determination,
selection or judgment shall not be unreasonably withheld, conditioned or
delayed.

[rest of page intentionally left blank]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the day
and year first set forth above.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

“Landlord”

 

 

 

“Tenant”

 

 

 

SLOUGH REDWOOD CITY, LLC, a Delaware limited liability company

 

 

 

ONCOMED PHARMACEUTICALS, INC., a Delaware corporation

 

 

 

 

 

By:

 

Slough Estates USA Inc., a Delaware corporation, Its Manager

 

 

 

By:

 

/s/ Paul J. Hastings

 

 

 

 

 

Its:

 

 

President & CEO

 

 

 

 

 

 

 

 

By:

 

/s/ Jonathan M. Bergschneider

 

 

 

By:

 

 

 

 

 

 

Jonathan M. Bergschneider

Vice President

 

 

 

 

Its:

 

 

 

 

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EXHIBITS

 

 

 

 

EXHIBIT A-1

  

Site Plan (The Center)

 

 

EXHIBIT A-2

  

Building Plan/Service Annex

 

 

EXHIBIT B

  

Workletter

 

 

EXHIBIT C

  

Form of Acknowledgment of Rent Commencement Date

 

 

EXHIBIT D

  

Form of Warrant

 

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EXHIBIT A-1

SITE PLAN (THE CENTER)

[See attached two (2) pages.]

 

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[gljm3zdhtfb0000001.jpg]

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[gljm3zdhtfb0000002.jpg]

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[gljm3zdhtfb0000003.jpg]

 

EXHIBIT A-2 TO LEASE

 

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[gljm3zdhtfb0000004.jpg]

 

EXHIBIT A-2 TO LEASE

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EXHIBIT B

WORKLETTER

[See attached.]

EXHIBIT B

WORKLETTER

This Workletter (“Workletter”) constitutes part of the Lease dated as of May 30,
2006 (the “Lease”) between SLOUGH REDWOOD CITY, LLC, a Delaware limited
liability company (“Landlord”), and ONCOMED PHARMACEUTICALS, INC., a Delaware
corporation (“Tenant”). The terms of this Workletter are incorporated in the
Lease for all purposes.

1. Defined Terms. As used in this Workletter, the following capitalized terms
have the following meanings:

(a) Approved TI Plans: As defined in Paragraph 2(a) hereof, plans and
specifications prepared by the TI Architect for the Tenant Improvements and
approved by the applicable parties in accordance with Paragraph 2 of this
Workletter, subject to further modification from time to time to the extent
provided in and in accordance with such Paragraph 2.

(b) Base Building: The existing Building shell and existing interior
improvements which are to be modified and upgraded pursuant to Landlord’s
Section 2.3 Work and delivered to Tenant, at Landlord’s expense, subject to such
demolition (if any) of existing improvements and such construction of additional
improvements as are required to be performed in connection with the construction
of the Tenant Improvements. A detailed but not necessarily exhaustive
description of the Base Building (including both existing elements and
modifications or improvements to be constructed as part of Landlord’s
Section 2.3 Work) is set forth in Schedule B-1 attached hereto and incorporated
herein by this reference.

(c) Cost of Improvement: See definition in Paragraph 2(c) hereof.

(d) Final TI Working Drawings: See definition in Paragraph 2(a) hereof.

(e) Improvements: Collectively, Landlord’s Section 2.3 Work and the Tenant
Improvements to be constructed pursuant to this Workletter.

(f) Landlord Delay: Any of the following types of delay in the completion of
construction of Tenant’s Work (if any), but in each instance only to the extent
that any of the following has actually and proximately caused substantial
completion of Tenant’s Work to be delayed beyond the later of February 7, 2007
or the date by which the applicable Tenant’s Work would have been completed but
for such delay:

(i) Any delay resulting from Landlord’s failure to furnish, in a timely manner,
information reasonably requested by Tenant or by the TI Architect or TI General
Contractor in connection with the design or construction of Tenant’s Work, or
from Landlord’s failure to approve in a timely manner any matters requiring
approval by Landlord; or

(ii) Any delay caused by Landlord (or Landlord’s contractors, agents or
employees) materially interfering with the performance of Tenant’s Work.

 

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(g) Landlord’s Architect: DES Architects/Engineers, or any other architect
selected by Landlord in its sole discretion, with respect to Landlord’s
Section 2.3 Work.

(h) Landlord’s General Contractor: Hathaway Dinwiddie Construction Company, or
any other general contractor selected by Landlord in its sole discretion, with
respect to Landlord’s Section 2.3 Work.

(i) Landlord’s Section 2.3 Work: See definition in Section 2.3(a) of the Lease.

(j) Landlord’s TI Work: The Tenant Improvements to be constructed by Landlord
pursuant to this Workletter.

(k) Landlord’s Work: Collectively, Landlord’s Section 2.3 Work and Landlord’s TI
Work.

(l) Project Manager: Project Management Advisors, Inc., or any other project
manager designated by Landlord in its sole discretion from time to time to act
in an oversight, project management or other similar capacity on behalf of
Landlord in connection with the design and/or construction of Landlord’s
Section 2.3 Work and the Tenant Improvements.

(m) Punch List Work: Minor corrections of construction or decoration details,
and minor mechanical adjustments, that are required in order to cause any
applicable portion of the Tenant Improvements as constructed to conform to the
Approved TI Plans in all material respects and that do not materially interfere
with Tenant’s use or occupancy of the Building and the Property.

(n) Substantial Completion Certificate: See definition in Paragraph 3(a) hereof.

(o) Tenant Change Request: See definition in Paragraph 2(e)(ii) hereof.

(p) Tenant Delay: Any of the following types of delay in the completion of
construction of Landlord’s Work, but in each instance, only to the extent that
any of the following has actually and proximately caused substantial completion
of Landlord’s Work to be delayed beyond the later of February 7, 2007 or the
date by which Landlord’s Work would have been completed but for such delay:

(i) Any delay resulting from Tenant’s failure to furnish, in a timely manner,
information reasonably requested by Landlord or by Project Manager in connection
with the design or construction of Landlord’s Work, or from Tenant’s failure to
approve in a timely manner any matters requiring approval by Tenant;

(ii) Any delay resulting from Tenant Change Requests initiated by Tenant,
including any delay resulting from the need to revise any drawings or obtain
further governmental approvals as a result of any such Tenant Change Request; or

(iii) Any delay of any other kind or nature caused by Tenant (or Tenant’s
contractors, agents or employees) materially interfering with the performance of
Landlord’s Work.

 

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(q) Tenant Improvements: The improvements to or within the Building (excluding
the Base Building and Landlord’s Section 2.3 Work) shown on the Approved TI
Plans from time to time and to be constructed by Tenant and/or Landlord, as
applicable, pursuant to the Lease and this Workletter. A detailed but not
necessarily exhaustive description of certain elements that the parties
contemplate as being included within the Tenant Improvements is set forth in
Schedule B-2 attached hereto and incorporated herein by this reference.

(r) Tenant’s Work: All of the Tenant Improvements (if any) which Landlord and
Tenant mutually agree in writing shall be constructed by Tenant pursuant to this
Workletter, and such other materials and improvements (if any) as Tenant deems
necessary or appropriate for Tenant’s initial use and occupancy of the Building.
The parties presently contemplate that substantially all of the Tenant
Improvements will be constructed by Landlord and will constitute Landlord’s TI
Work under this Workletter. However, in anticipation of the possibility that
Tenant may perform some equipment installations or other minor improvements in
the Premises during the initial construction phase, the definition of “Tenant’s
Work” is retained and the provisions of this Workletter pertaining to such
Tenant’s Work, as well as the provisions of Article 7 of the Lease, shall govern
the performance of such work by Tenant. The parties acknowledge, nevertheless,
that the foregoing allocation of responsibilities with respect to Tenant
Improvements is subject to further discussion and modification by mutual
agreement of the parties.

(s) TI Architect: The architect for the Landlord’s TI Work and for Tenant’s Work
(if any), which architect shall be mutually selected and approved by Landlord
and Tenant, such approval not to be unreasonably withheld, conditioned or
delayed by either party. Upon such mutual approval, the TI Architect shall be
engaged by Landlord to design the Tenant Improvements. Landlord and Tenant
hereby mutually select and approve DES Architects + Engineers as the TI
Architect.

(t) TI General Contractor: The general contractor for the Landlord’s TI Work and
for Tenant’s Work (if any), which general contractor shall be mutually selected
and approved by Landlord and Tenant, such approval not to be unreasonably
withheld, conditioned or delayed by either party. Upon such mutual approval, the
TI General Contractor shall be engaged by Landlord to construct the Tenant
Improvements constituting Landlord’s TI Work and shall be engaged by Tenant to
construct the Tenant Improvements constituting Tenant’s Work (if any).
Notwithstanding Tenant’s right to approve and mutually select the TI General
Contractor, the TI General Contractor with respect to Landlord’s TI Work shall
be the contractor of Landlord only, and Tenant shall have no liability to such
TI General Contractor. Landlord and Tenant hereby mutually select and approve
Hathaway Dinwiddie Construction Company as the TI General Contractor with
respect to Landlord’s TI Work. Landlord shall cause the TI General Contractor to
construct Landlord’s TI Work on a cost of work plus fee basis, with a guaranteed
maximum price reasonably approved by Tenant and with such fee (for overhead and
profit) being limited to 2.1% of the total direct cost of construction, general
conditions and insurance relating to Landlord’s TI Work.

(u) Unavoidable Delays: Delays due to acts of God, acts of public agencies,
labor disputes, strikes, fires, freight embargoes, rainy or stormy weather,
inability (despite the exercise of reasonable diligence) to obtain supplies,
materials, fuels or permits, delays of contractors or

 

B-3

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subcontractors, or other causes or contingencies (excluding financial inability)
beyond the reasonable control of Landlord or Tenant, as applicable.

(v) Capitalized terms not otherwise defined in this Workletter shall have the
definitions set forth in the Lease.

2. Plans, Cost of Improvements and Construction. Landlord and Tenant shall
comply with the procedures set forth in this Paragraph 2 in preparing,
delivering and approving matters relating to the Tenant Improvements.

(a) Plans, Drawings and Specifications for Landlord’s Section 2.3 Work. Landlord
shall promptly and diligently (subject to Tenant Delays and Unavoidable Delays)
prepare or cause to be prepared all necessary plans, drawings and specifications
for Landlord’s Section 2.3 Work. In the course thereof, Landlord shall use
reasonable efforts to coordinate the design and construction of Landlord’s
Section 2.3 Work with Tenant’s final interior layout and with the final plans
and specifications for the Tenant Improvements, shall provide copies of the
proposed plans, drawings and specifications for Landlord’s Section 2.3 Work to
Tenant and shall consult reasonably and in good faith with Tenant regarding such
plans, drawings and specifications, and regarding any changes therein proposed
to be made by Landlord from time to time. Nevertheless, Landlord shall have the
final authority with respect to the design of Landlord’s Section 2.3 Work and
with respect to all plans, drawings and specifications relating thereto, and
shall not be required to obtain Tenant’s consent to or approval of such plans,
drawings or specifications or of any changes therein made by Landlord from time
to time.

(b) Approved Plans and Working Drawings for Tenant Improvements. Tenant shall
promptly and diligently (subject to Landlord Delays and Unavoidable Delays)
develop with TI Architect a space plan for the Tenant Improvements and cause TI
Architect to prepare proposed schematic plans for the Tenant Improvements.
Tenant shall deliver copies of such proposed schematic plans to Landlord for
Landlord’s approval, which shall not be unreasonably withheld, conditioned or
delayed. Following mutual approval of such proposed schematic plans by Landlord
and by Tenant (as so approved, the “Approved TI Plans”), Tenant shall then cause
to be prepared, promptly and diligently (assuming timely delivery by Landlord of
any information and decisions required to be furnished or made by Landlord in
order to permit preparation of final working drawings), final detailed working
drawings and specifications for the Tenant Improvements, including (without
limitation) any applicable life safety, mechanical, electrical and plumbing
working drawings and final architectural drawings (collectively, “Final TI
Working Drawings”), which Final TI Working Drawings shall substantially conform
to the Approved TI Plans. Tenant shall deliver copies of the Final TI Working
Drawings to Landlord for Landlord’s approval, which shall not be unreasonably
withheld, conditioned or delayed. Landlord shall promptly and diligently either
approve Tenant’s proposed schematic plans or proposed Final TI Working Drawings,
as applicable, or set forth in writing with particularity any changes necessary
to bring the aspects of such proposed schematic plans or proposed Final TI
Working Drawings into a form which will be reasonably acceptable to Landlord or,
in the case of - the Final TI Working Drawings, into substantial conformity with
the Approved TI Plans. Notwithstanding any other provisions of this paragraph,
Landlord reserves the right to condition its approval of the proposed schematic
plans and/or Final TI Working Drawings upon reasonable specific modifications to
reasonably facilitate future uses of the Building. Upon approval of the

 

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Final TI Working Drawings by Landlord and Tenant, the Final TI Working Drawings
shall be deemed to be incorporated in and considered part of the Approved TI
Plans, superseding (to the extent of any inconsistencies) any inconsistent
features of the previously existing Approved TI Plans.

(c) Approved Plans and Working Drawings for Any Other Tenant’s Work. To the
extent Tenant wishes to perform, in the course of the initial build-out of the
Premises, any alterations, additions or improvements which are not part of the
Tenant Improvements, Tenant shall proceed in the same manner set forth in
Paragraph 2(b) above to cause plans, specifications and working drawings for
such alterations, additions and improvements to be prepared and delivered to
Landlord for approval (which approval shall not be unreasonably withheld,
conditioned or delayed by Landlord).

(d) Cost of Improvements. “Cost of Improvement” shall mean, with respect to any
item or component for which a cost must be determined in order to allocate such
cost, or an increase in such cost, to Landlord and/or Tenant pursuant to this
Workletter, the sum of the following (unless otherwise agreed in writing by
Landlord and Tenant with respect to any specific item or component or any
category of items or components): (i) all sums paid to contractors or
subcontractors for labor and materials furnished in connection with construction
of such item or component; (ii) all costs, expenses, payments, fees and charges
(other than penalties) paid or incurred to or at the direction of any city,
county or other governmental or quasi-governmental authority or agency which are
required to be paid in order to obtain all necessary governmental permits,
licenses, inspections and approvals relating to construction of such item or
component; (iii) engineering and architectural fees for services rendered in
connection with the design and construction of such item or component
(including, but not limited to, the applicable Architect for such item or
component and an electrical engineer, mechanical engineer and civil engineer);
(iv) sales and use taxes; (v) testing and inspection costs; (vi) the cost of
power, water and other utility facilities and the cost of collection and removal
of debris required in connection with construction of such item or component;
(vii) all other “hard” and “soft” costs incurred in the construction of such
item or component in accordance with the applicable Approved TI Plans (if
applicable) and this Workletter; and (viii) a reasonable allocation of a portion
of the project management fee payable to Project Manager in connection with
Project Manager’s activities on behalf of Landlord as set forth in Paragraph
2(h) below.

(i) Notwithstanding anything to the contrary in this Workletter, Cost of
Improvement allocable to Tenant shall not include, Landlord shall be solely
responsible for, and the Tenant Improvement Allowance shall not be used for any
of the following: (A) costs incurred to remove from the Premises, the Building
and/or the Center any hazardous substances, hazardous wastes and pollutants
existing therein prior to the Rent Commencement Date, except to the extent (if
any) that such hazardous substances, hazardous wastes or pollutants were brought
onto or released onto the Premises, the Building or the Center through the acts
or omissions of Tenant or its employees, agents or contractors; (B) costs
incurred to perform Landlord’s Section 2.3 Work (including, without limitation,
any ADA or other legal compliance costs associated with or triggered by
Landlord’s Section 2.3 Work, except to the extent [if any] otherwise expressly
provided in Section 2.3(c) of the Lease); (C) costs for improvements which are
not shown on or described in the Approved TI Plans, unless otherwise approved by
Tenant; (D) attorneys’ fees incurred by Landlord in connection with the
negotiation of construction

 

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contracts, and attorneys’ fees, experts’ fees and other costs incurred by
Landlord in connection with disputes with third parties; (E) interest and other
financing costs incurred by Landlord in connection with any financing of
construction costs or Tenant Improvements; (F) costs of Landlord’s TI Work
incurred as a consequence of any delay (other than Unavoidable Delay or Tenant
Delay), construction defects, or default by any contractor or subcontractor
performing any part of Landlord’s TI Work; (G) costs actually recovered by
Landlord on account of warranties and insurance (for which purpose Landlord
agrees to pursue, with reasonable diligence, recovery of any amounts which
appear to be reasonably recoverable on account of warranties and insurance);
(H) restoration costs in excess of insurance proceeds recovered with respect to
any casualty occurring in the course of construction of Landlord’s TI Work;
(I) penalties and late charges attributable to Landlord’s failure to pay, when
due, construction costs for which Landlord is responsible under this Workletter,
including (but not limited to) any failure to make timely disbursements of the
Tenant Improvement Allowance following satisfaction of all applicable conditions
to the making of such disbursements; (J) off-site management or other general
overhead costs incurred by Landlord; (K) construction management fees and
charges paid to Landlord, to any affiliate of Landlord, or to any Project
Manager for Landlord, except for the Project Manager’s fee described in
Paragraph 2(h) of this Workletter; and (L) wages, labor and/or overhead for
overtime or premium time, except to the extent such charges can be accommodated
within the approved budget and guaranteed maximum price construction contract or
are expressly provided for under or included in the cost provisions of an
approved Tenant Change Request as defined below.

(ii) For purposes of this Paragraph 2(d) and of Section 2.3 of the Lease, the
parties wish to clarify their intention with respect to the allocation of costs
of compliance with ADA or other code requirements or other legal compliance
requirements (collectively, “Legal Compliance Costs”) as follows: If Legal
Compliance Costs arise from legal requirements which have not previously been
applicable to or enforced against the Building but which become applicable to or
enforceable against the Building in connection with the permitting and
construction of the Tenant Improvements solely because of the extent, cost or
value of the Tenant Improvements and/or because of the mere fact that permits
are being obtained for the Tenant Improvements, and not because of the
particular nature or design of the Tenant Improvements, then Landlord shall bear
such Legal Compliance Costs without any charge against the Tenant Improvement
Allowance and without any inclusion of such Legal Compliance Costs in the Cost
of Improvements for the Tenant Improvements. Landlord specifically agrees that
ADA-related compliance costs for the existing toilet cores in the Premises will
be part of the Legal Compliance Costs borne by Landlord pursuant to the
preceding sentence. If Legal Compliance Costs arise from legal requirements
which become applicable to or enforceable against the Building as a result of
the particular nature or design of the Tenant Improvements (such as, but not
limited to, installation of improvements or equipment which trigger seismic,
vibration, firewall, sprinkler, life safety, ventilation or other requirements
that would not apply in the absence of the installation and use of such specific
improvements or equipment), then Tenant shall be responsible for such Legal
Compliance Costs and such Legal Compliance Costs shall be part of the Cost of
Improvements for the Tenant Improvements, chargeable against the Tenant
Improvement Allowance to the extent they are not excluded from eligibility for
payment or reimbursement from the Tenant Improvement Allowance and to the extent
the Tenant Improvement Allowance has not otherwise been spent or fully committed
at the time.

 

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(e) Budgeting. Following approval by Landlord and Tenant of the Final TI Working
Drawings and the selection of subcontractors as provided in this Workletter,
Landlord shall prepare an estimated budget for the Tenant Improvements. Tenant
shall have five (5) business days after the receipt of such budget to approve or
disapprove such estimated budget. Further, if Tenant disapproves the estimated
budget and if the Approved TI Plans must be modified to change the scope of the
work or to modify finishes or materials shown on the Approved TI Plans in order
to reduce the cost of the Tenant Improvements as shown on the estimated budget
to a level satisfactory to Tenant, then Tenant shall cause the TI Architect to
modify the Approved TI Plans, at Tenant’s expense (but chargeable against the
Tenant Improvement Allowance to the extent funds are available under the TI
Allowance for that purpose), in order to achieve such cost reduction. Any and
all revisions to the Approved TI Plans shall be subject to Landlord’s approval
(which approval shall not be unreasonably withheld, conditioned or delayed) in
the same manner provided in Paragraph 2(b) above. Notwithstanding anything to
the contrary in this Workletter, the parties agree that if Tenant disapproves
the initial estimated budget and if modifications of the Approved TI Plans are
then considered or implemented on a “value engineering” basis in order to
attempt to address Tenant’s objections, then on a one-time basis, any period of
not more than ten (10) business days (in the aggregate) of actual delay in the
completion of Landlord’s TI Work proximately caused by such consideration of or
request for revisions of the Approved TI Plans shall not be considered a Tenant
Delay under this Workletter.

(f) Construction of Tenant Improvements. Promptly following approval of the
Final TI Working Drawings, Landlord shall apply for and use reasonable efforts
to obtain the necessary permits and approvals to allow construction of
Landlord’s TI Work. Upon receipt of such permits and approvals, Landlord shall,
at Tenant’s expense (subject to the application of the Tenant Improvement
Allowance provided in this Workletter, and subject to any other applicable
provisions of the Lease or of this Workletter expressly making any specific item
of expense or cost the responsibility of Landlord), diligently construct and
complete Landlord’s TI Work substantially in accordance with the Approved TI
Plans, subject to Unavoidable Delays and Tenant Delays (if any). Such
construction shall be performed in a good and workmanlike manner and shall
conform to all applicable governmental codes, laws and regulations in force at
the time such work is completed. Without limiting the generality of the
foregoing, Landlord shall be responsible for compliance of Landlord’s TI Work
with the requirements of the Americans with Disabilities Act and all similar or
related requirements pertaining to access by persons with disabilities, but
nothing in this sentence shall be construed to make Landlord responsible for
bearing the cost of any such compliance, to the extent the compliance work is
reasonably attributable to or related to the particular nature or design of the
Tenant Improvements or is for any other reason expressly made Tenant’s cost or
responsibility under any applicable provision of the Lease or of this
Workletter. Landlord shall have the right, in its sole discretion, to decide
whether and to what extent to use union labor on or in connection with
Landlord’s Work, and shall use the TI General Contractor to construct all of
Landlord’s TI Work. Landlord and Tenant shall each have a right to approve all
subcontractors engaged in connection with the construction of the Tenant
Improvements and to review and approve all competitive bids for any elements of
the Tenant Improvements, such approval in each instance not to be unreasonably
withheld, conditioned or delayed by either party.

 

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(g) Changes.

(i) If Landlord determines at any time that changes in the Final TI Working
Drawings or in any other aspect of the Approved TI Plans relating to any
Landlord’s TI Work arc required as a result of applicable law or governmental
requirements, or are required at the insistence of any other third party whose
approval may be required with respect to the Tenant Improvements, or are
required as a result of unanticipated conditions encountered in the course of
construction, then Landlord shall promptly (A) advise Tenant of such
circumstances and (B) cause revised Approved TI Plans and/or Final TI Working
Drawings, as applicable, reflecting such changes to be prepared by the TI
Architect and submitted to Tenant for Tenant’s information, review and approval,
which approval shall not be unreasonably withheld, conditioned or delayed.
Landlord shall concurrently notify Tenant of any estimated additional cost or
delay associated with such proposed changes. Notwithstanding the foregoing
provisions, Tenant shall not have the right to disapprove any such changes
necessitated by applicable law or as a condition of any required governmental or
other third-party approvals or consents or as a result of unanticipated
conditions, but to the extent Tenant identifies to Landlord any concerns arising
out of any such requirements, conditions or changes described in this sentence,
Landlord and Tenant shall cooperate reasonably, diligently and in good faith to
discuss possible changes in the nature or scope of the Tenant Improvements that
might minimize or avoid the effects of such requirements, conditions or changes.
Upon completion of any changes in the Approved TI Plans approved or deemed
approved by Landlord and Tenant as a result of the circumstances and processes
described in the preceding sentences, the Approved TI Plans shall be deemed to
be modified accordingly. Landlord shall have no liability or responsibility for
any costs or cost increases incurred by Tenant as a result of such required
changes.

(ii) If Tenant at any time desires any changes, alterations or additions to the
Approved TI Plans with respect to any of the Tenant Improvements, Tenant shall
submit a detailed written request to Landlord specifying such changes,
alterations or additions (a “Tenant Chance Request”). Upon receipt of any such
request, Landlord shall promptly notify Tenant of (A) whether the matters
proposed in the Tenant Change Request are approved by Landlord (which approval
shall not be unreasonably withheld, conditioned or delayed by Landlord),
(B) Landlord’s estimate of the number of days of delay, if any, which shall be
caused by such Tenant Change Request if implemented (including, without
limitation, delays due to the need to obtain any revised plans or drawings and
any governmental approvals), and (C) Landlord’s estimate of the increase, if
any, which shall occur in the Cost of Improvement for the items or components
affected by such Tenant Change Request if such Tenant Change Request is
implemented (including, but not limited to, any costs of compliance with laws or
governmental regulations that become applicable because of the implementation of
the Tenant Change Request). If Landlord approves the Tenant Change Request and
Tenant notifies Landlord in writing, within five (5) business days after receipt
of such notice of approval from Landlord, of Tenant’s approval of the Tenant
Change Request (including the estimated delays and cost increases, if any,
described in Landlord’s notice), then Landlord shall cause such Tenant Change
Request to be implemented and Tenant shall be responsible for all actual costs
or cost increases and all actual schedule delays (if any) resulting from or
attributable to the implementation of the Tenant Change Request, subject to the
application of the Tenant Improvement Allowance. If Tenant fails to notify
Landlord in writing of Tenant’s approval of such Tenant Change Request

 

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within said five (5) business day period, then such Tenant Change Request shall
be deemed to be withdrawn and shall be of no further effect.

(iii) If Tenant at any time desires to make any changes, alterations or
additions to the approved plans for any other Tenant’s Work as described in
Paragraph 2(c) above, such changes, alterations or additions shall be presented
to Landlord and shall be subject to approval by Landlord in the same manner as
the original plans submitted to and approved by Landlord pursuant to such
Paragraph 2(c).

(h) Project Management. Unless and until revoked by Landlord by written notice
delivered to Tenant, Landlord hereby (i) delegates to Project Manager the
authority to oversee the design and manage the construction of the Tenant
Improvements on behalf of Landlord and to exercise all approval rights,
supervisory rights and other rights and powers of Landlord under this Workletter
with respect to the design and construction of the Tenant Improvements, and
(ii) requests that Tenant work with Project Manager with respect to any and all
logistical or other coordination matters arising in the course of design and
construction of the Tenant Improvements, in which regard Project Manager’s role
on behalf of Landlord may include (but need not be limited to) facilitating and
assisting in coordination between teams performing the Base Building portion of
Landlord’s Work and teams constructing the Tenant Improvements, managing the TI
General Contractor, reviewing and processing requests for disbursement of the
Tenant Improvement Allowance, and monitoring Landlord’s and Tenant’s performance
of their respective obligations under this Workletter and under the Lease in
connection with the design and construction of the Tenant Improvements. Tenant
acknowledges the foregoing delegation and request, and agrees to cooperate
reasonably with Project Manager as Landlord’s representative pursuant to such
delegation and request. Landlord shall be fully liable and responsible for all
acts and omissions of Project Manager and for the payment and performance of all
of Landlord’s obligations under the Lease and under this Workletter,
notwithstanding such delegation of authority to Project Manager; however,
Landlord’s engagement of Project Manager and delegation of authority to Project
Manager for the management services described in this paragraph shall not cause
Landlord to incur or be subject to any additional or broader obligations or
responsibilities for construction and delivery of the Tenant Improvements than
those obligations and responsibilities that are expressly documented or assigned
to Landlord elsewhere in the Lease or in this Workletter. Project Manager’s fees
for its services on behalf of Landlord in connection with the Tenant
Improvements shall be charged at the rate of Three Dollars ($3.00) per square
foot of space in the Premises (determined in accordance with Section 3.1(c) of
the Lease) and shall be charged against the Tenant Improvement Allowance, and
Landlord shall not charge Tenant or the Tenant Improvement Allowance for any
other supervisory or review costs with respect to the design or construction of
the Tenant Improvements, except to the extent [if any] that any increase in
Project Manager’s fees is expressly provided for under or included in the cost
provisions of an approved Tenant Change Request.

3. Completion.

(a) When Landlord receives written certification from the TI Architect that
construction of Landlord’s TI Work has been substantially completed in
accordance with the Approved TI Plans (except for Punch List Work), Landlord
shall prepare and deliver to Tenant a certificate signed by both Landlord and
the TI Architect (the “TI Substantial Completion

 

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Certificate”) certifying that the construction of Landlord’s TI Work has been
substantially completed in accordance with the Approved TI Plans and this
Workletter in all material respects, subject only to completion of Punch List
Work, and specifying the date of that completion. To the extent the construction
of Landlord’s Larc Work (as defined in the Lease) takes longer than construction
of the balance of Landlord’s TI Work, the TI Substantial Completion Certificate
may be submitted upon substantial completion of all of Landlord’s TI Work other
than Landlord’s Larc Work, and a separate substantial completion certificate
with respect to Landlord’s Larc Work (the “Larc Substantial Completion
Certificate”) may be submitted at such later time as Landlord’s Larc Work is
substantially completed in accordance with the Approved TI Plans and this
Workletter in all material respects, subject to completion of Punch List Work.

(b) Promptly following delivery of the TI Substantial Completion Certificate
and/or Larc Substantial Completion Certificate for the respective portions of
Landlord’s TI Work, Project Manager or other representatives of Landlord shall
conduct one or more “walkthroughs” of the Premises with Tenant and Tenant’s
representatives, to identify any items of Punch List Work that may require
correction and to prepare a joint punch list reflecting any such items,
following which Landlord shall diligently complete the Punch List Work reflected
in such joint punch list. At any time within forty-five (45) days after delivery
of the applicable Substantial Completion Certificate, Tenant shall be entitled
to submit one or more lists to Landlord supplementing such joint punch list by
specifying any additional items of Punch List Work to be performed on the
applicable Landlord’s TI Work, and upon receipt of such list(s), Landlord shall
diligently complete such additional Punch List Work. All completion of Punch
List Work by Landlord shall be part of the Cost of Improvement for the
applicable Tenant Improvements and shall be at Tenant’s expense, subject to
application of the Tenant Improvement Allowance and subject to any other
applicable provisions of this Workletter making any specific item of expense or
cost the responsibility of Landlord. Promptly after Landlord provides Tenant
with the applicable Substantial Completion Certificates and completes all
applicable Punch List Work for the Premises, Landlord shall cause the
recordation of a Notice of Completion (as defined in Section 3093 of the
California Civil Code) with respect to Landlord’s Work in the Premises.

(c) Effective upon delivery of the applicable Substantial Completion
Certificates and delivery of the Premises by Landlord to Tenant, and subject to
completion of any Punch List Work as described above, Landlord warrants to
Tenant as follows: (i) Landlord’s TI Work has been constructed in a good and
workmanlike manner, using new materials of good quality (except to the extent,
if any, that reuse of existing materials is expressly provided for in the
Approved TI Plans), and in accordance with the Approved TI Plans in all material
respects (provided that except with respect to Punch List Items, which shall be
governed by Paragraph 3(b) above, and except with respect to latent defects,
Tenant’s failure to notify Landlord in writing regarding any alleged defects in
the Landlord’s TI Work (x) in the case of elements of Landlord’s TI Work which
constitute new construction with new materials, within one (1) year after
delivery of the applicable Substantial Completion Certificate for such
Landlord’s TI Work, and (y) in the case of elements of Landlord’s TI Work which
constitute re-use of existing materials from the Premises as they existed prior
to commencement of Landlord’s TI Work, within one hundred eighty (180) days
after delivery of the applicable Substantial Completion Certificate for such
Landlord’s TI Work, shall in each such respective case give rise to a conclusive
and irrebuttable presumption that the applicable portion of Landlord’s TI Work

 

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complies with the warranty set forth in this clause (i) in all respects); and
(ii) Landlord’s TI Work complies with all laws, rules, regulations, codes,
ordinances, requirements, covenants, conditions and restrictions applicable
thereto at the time of such delivery. Landlord shall cooperate with Tenant in a
commercially reasonable manner to assist in enforcing, for the benefit of
Tenant, all construction, product and equipment warranties and guaranties
obtained by Landlord with respect to any element of Landlord’s TI Work. TENANT
ACKNOWLEDGES THAT THE WARRANTIES AND OBLIGATIONS CONTAINED IN THIS PARAGRAPH 3
AND IN SECTION 2.3 OF THE LEASE (TO THE EXTENT APPLICABLE TO LANDLORD’S TI WORK)
ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO
LANDLORD’S TI WORK, AND THAT LANDLORD MAKES NO OTHER WARRANTIES WITH RESPECT TO
LANDLORD’S TI WORK EXCEPT AS EXPRESSLY SET FORTH IN THIS PARAGRAPH 3 OR IN
SECTION 2.3 OF THE LEASE (TO THE EXTENT APPLICABLE TO LANDLORD’S TI WORK).
Notwithstanding anything to the contrary in the Lease, in the Acknowledgment of
Rent Commencement Date attached to the Lease, or in this Workletter, Tenant’s
acceptance of the Premises shall not be deemed a waiver of the Landlord
warranties and obligations set forth in this Paragraph 3 or in Section 2.3 of
the Lease, and subject to the provisions of Paragraph 3(b) above with respect to
Punch List Work, Landlord shall promptly repair or cause to be repaired all
violations of the warranties and obligations set forth in this Paragraph 3(c) at
Landlord’s sole cost and expense.

(d) Notwithstanding any other provisions of this Workletter or of the Lease, if
Landlord is actually delayed in substantially completing any of Landlord’s Work
as a proximate result of any Tenant Delay, and if such delay results in any
actual delay in the Rent Commencement Date as determined under Section 2.1(a) of
the Lease, then notwithstanding any other provisions of Section 2.1(a) of the
Lease to the contrary, the amount of any actual delay in substantial completion
of Landlord’s TI Work directly and proximately attributable to such Tenant Delay
shall be ignored in calculating the Rent Commencement Date, and the Rent
Commencement Date shall instead be deemed to occur on the date it would have
otherwise occurred without the period of actual delay directly and proximately
attributable to such Tenant Delay.

4. Payment of Costs.

(a) Landlord’s Work. Except as otherwise expressly provided in this Workletter,
in the Lease or by mutual written agreement of Landlord and Tenant, (i) the cost
of design and construction of Landlord’s TI Work shall be at Tenant’s sole cost
and expense, including any costs or cost increases incurred as a result of
Unavoidable Delays, governmental requirements or unanticipated conditions,
subject to application of the Tenant Improvement Allowance in accordance with
this Workletter; and (ii) the cost of design and construction of Landlord’s
Section 2.3 Work shall be at Landlord’s sole cost and expense, including any
costs or cost increases incurred as a result of Unavoidable Delays, governmental
requirements or unanticipated conditions. To the extent the estimated entire
amount that Landlord is committed to pay (under contracts and obligations in
effect from time to time) with respect to Landlord’s TI Work exceeds the net
Tenant Improvement Allowance available pursuant to this Workletter, the excess
Cost of Improvements for Landlord’s TI Work, over and above the Tenant
Improvement Allowance, shall be payable by Tenant on a pro rata basis as
illustrated in the diagram attached

 

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hereto as Schedule B-4 and incorporated herein by this reference (the “TI
Allowance Disbursement Diagram”). To the extent the final net Cost of
Improvement with respect to Landlord’s TI Work is not covered by the Tenant
Improvement Allowance plus any payments made by Tenant from time to time during
the course of construction, the remaining balance of the final net Cost of
Improvement of Landlord’s TI Work shall be reimbursed by Tenant to Landlord in
cash within thirty (30) days after final completion of Landlord’s TI Work
(including any applicable Punch List Work), subject to the provisions of
subparagraph (c) below.

(b) Tenant’s Work. Subject to any restrictions, conditions or limitations
expressly set forth in this Workletter or in the Lease or as otherwise expressly
provided by mutual written agreement of Landlord and Tenant, the cost of
construction of the Tenant Improvements shall be paid or reimbursed by Landlord
up to a maximum contribution by Landlord equal to One Hundred Twenty-Five
Dollars ($125.00) per square foot times the square footage of the Premises as
determined pursuant to Section 3.1(c) of the Lease, or approximately Five
Million Seven Hundred Nine Thousand Seven Hundred Fifty Dollars ($5,709,750) in
total (such maximum amount, the “Tenant Improvement Allowance”), less any
reduction in or charge against such sums pursuant to any applicable provisions
of the Lease or of this Workletter. Except as otherwise expressly provided in
this Workletter, in the Lease or by mutual written agreement of Landlord and
Tenant, Tenant shall be responsible, at its sole cost and expense, for payment
of the entire Cost of Improvements of the Tenant Improvements in excess of the
Tenant Improvement Allowance, including (but not limited to) any costs or cost
increases incurred as a result of Unavoidable Delays, governmental requirements
or unanticipated conditions, but Tenant shall be entitled to use or apply the
entire Tenant Improvement Allowance for the Tenant Improvements (subject to any
applicable restrictions, conditions, limitations, reductions or charges as
described above) prior to being required to expend any of Tenant’s own funds on
an unreimbursed basis for the Tenant Improvements. The funding of the Tenant
Improvement Allowance shall be made on a monthly basis or at other convenient
intervals mutually approved by Landlord and Tenant and in all other respects
shall be based on such commercially reasonable disbursement conditions and
procedures as Landlord, Project Manager and Landlord’s lender (if any) may
reasonably prescribe (which conditions may include, without limitation, delivery
of invoices and/or other evidence reasonably satisfactory to Landlord or Project
Manager that Landlord or Tenant, as applicable, has expended or incurred
expenses for the design and construction of Tenant Improvements for which the
Tenant Improvement Allowance is eligible to be expended or applied, and delivery
of conditional or unconditional lien releases from all parties performing the
applicable work), which procedures shall (without limitation) be generally
consistent with the TI Allowance Disbursement Diagram. Since the parties intend
that Landlord will perform most (if not all) of the Tenant Improvements and will
hold the contracts for the same, Landlord will generally make direct payment of
amounts due to the TI General Contractor, the TI Architect and others under
applicable contracts and will charge such payments against the Tenant
Improvement Allowance, but prior to making any such payments, Landlord will
first present Tenant with a copy of the full “draw request package” (including
invoices, certifications, lien releases and similar items substantially
comparable to the documentation that would be required from Tenant with respect
to any funding of portions of the Tenant Improvement Allowance to be applied to
Tenant’s Work, if any) and will request Tenant’s approval (not to be
unreasonably withheld, conditioned or delayed) of the proposed disbursements. To
the extent Tenant objects to any such proposed disbursements, Landlord shall
still be entitled to make payments to the extent Landlord in its sole discretion
determines that such payment is required or

 

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appropriate, but amounts not approved by Tenant (so long as such approval is not
unreasonably withheld or conditioned) shall not be chargeable against the Tenant
Improvement Allowance. Notwithstanding the foregoing provisions, (i) under no
circumstances shall the Tenant Improvement Allowance or any portion thereof be
used or useable for any moving or relocation expenses of Tenant, or for any Cost
of Improvement (or any other cost or expense) associated with any moveable
furniture, trade fixtures, personal property or any other item or element which,
under the applicable provisions of the Lease, will not become Landlord’s
property and remain with the Building upon expiration or termination of the
Lease, and (ii) any portion of the Tenant Improvement Allowance which has not
been claimed or drawn by Tenant within eighteen (18) months after the Rent
Commencement Date shall expire and shall no longer be available to Tenant
thereafter.

(c) Upon completion of Landlord’s TI Work, Landlord shall submit promptly to
Tenant a final and detailed accounting of the Cost of Improvements for
Landlord’s TI Work, and of the disbursement of the Tenant Improvement Allowance.
At any time within three (3) months after receipt of such accounting, Tenant
shall be entitled, upon reasonable written notice to Landlord and during normal
business hours at Landlord’s office, at Project Manager’s office or at such
other place or places in the Bay Area as Landlord may reasonably designate, to
inspect and examine the books, records and supporting documents of Landlord and
Project Manager relating to the construction of Landlord’s TI Work and the
disbursement of the Tenant Improvement Allowance, to the extent reasonably
necessary to determine the accuracy of such accounting. During the same period
Tenant may also elect, by written notice to Landlord, to request an independent
audit of such books and records. Any such independent audit shall be conducted
by a certified public accountant reasonably acceptable to both Landlord and
Tenant or, if the parties are unable to agree, by a certified public accountant
appointed by the Presiding Judge of the San Mateo County Superior Court upon the
application of either Landlord or Tenant (with notice to the other party). In
either case, such certified public accountant shall be one who is not then
employed in any capacity by Landlord or Tenant or any of their respective
affiliates. If it is determined, by mutual agreement of Landlord and Tenant or
by independent audit, that the Cost of Improvement for Landlord’s TI Work or the
amount disbursed by Landlord from the Tenant Improvement Allowance was
incorrect, then the appropriate party shall make an appropriate corrective
payment within thirty (30) days after the final determination thereof. All costs
and expenses of the audit shall be paid by Tenant unless the audit shows that
Landlord overstated the Cost of Improvements for Landlord’s TI Work by more than
five percent (5%), in which event Landlord shall pay all costs and expenses of
the audit. Each party agrees to maintain the confidentiality of the findings of
any audit in accordance with the provisions of this paragraph (c).

5. Tenant’s Work. Tenant shall construct and install Tenant’s Work (if any)
substantially in accordance with the plans and specifications approved by
Landlord for such work. Tenant’s Work shall be performed in accordance with, and
shall in all respects be subject to, the terms and conditions of the Lease (to
the extent not inconsistent with this Workletter), and shall also be subject to
the following conditions:

(a) Contractor Requirements. The contractor engaged by Tenant for Tenant’s Work,
and any subcontractors, shall be duly licensed in California and shall be
subject to Landlord’s prior written approval (in accordance with, and to the
extent provided in, Paragraph 1(t) above).

 

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Tenant shall engage only union contractors for the construction of Tenant’s Work
and for the installation of Tenant’s fixtures and equipment in the Building, and
shall require all such contractors engaged by Tenant, and all of their
subcontractors, to use only union labor on or in connection with such work,
except to the extent Landlord determines, in its reasonable discretion, that the
use of non-union labor would not create a material risk of labor disputes,
picketing or work interruptions at the Center, in which event Landlord shall, to
that extent, waive such union labor requirement at Tenant’s request.

(b) Costs and Expenses of Tenant’s Work. Subject to Landlord’s payment or
reimbursement obligations under this Workletter and the Lease, Tenant shall
promptly pay all costs and expenses arising out of the performance of Tenant’s
Work (including the costs of permits) and shall furnish Landlord with evidence
of payment on request. Tenant shall provide Landlord with ten (10) days prior
written notice before commencing any Tenant’s Work. On completion of Tenant’s
Work, Tenant shall deliver to Landlord a release and unconditional lien waiver
executed by each contractor, subcontractor and materialman involved in the
design or construction of Tenant’s Work.

(c) Tenant’s Indemnification. Tenant shall indemnify, defend (with counsel
reasonably satisfactory to Landlord) and hold Landlord harmless from all suits,
claims, actions, losses, costs and expenses (including, but not limited to,
claims for workers’ compensation, attorneys’ fees and costs) based on personal
injury or property damage or contract claims (including, but not limited to,
claims for breach of warranty) arising from the performance of Tenant’s Work,
except to the extent (i) any such claims or matters arise from (A) negligence or
willful misconduct or omission by Landlord or its agents, employees or
contractors or (B) Landlord’s material breach of its obligations under this
Workletter or the Lease, or (ii) any such specific items of costs or expenses
are expressly made the responsibility of Landlord under any other applicable
provisions of this Workletter (provided that the exception set forth in this
clause (ii) shall not apply to the extent the applicable items of costs or
expenses would not have arisen or been incurred except for the negligence or
willful misconduct or omission of Tenant or its agents, employees or
contractors). Subject to Section 10.4 of the Lease, Tenant shall repair or
replace (or, at Landlord’s election, reimburse Landlord for the cost of
repairing or replacing) any portion of Landlord’s Work and/or any of Landlord’s
real or personal property or equipment that is damaged, lost or destroyed in the
course of or in connection with the performance of Tenant’s Work.

(d) Insurance. Tenant’s contractors shall obtain and provide to Landlord
certificates evidencing workers’ compensation, public liability and property
damage insurance in amounts and forms and with companies reasonably satisfactory
to Landlord, and Tenant shall provide to Landlord certificates evidencing
Tenant’s compliance with the insurance requirements of Article 10 of the Lease
(except to the extent any such requirements by their terms are clearly relevant
only after Tenant’s commencement of business operations on the Premises),
including, without limitation, the requirements of Section 10.1(f) of the Lease
with respect to builder’s risk insurance on any Tenant Improvements being
constructed by Tenant as part of Tenant’s Work. In addition, to the extent
Landlord or Project Manager advises Tenant of any specific insurance
requirements with respect to Tenant’s Work that are commercially reasonable and
customary during a “course of construction” period (such as, but not limited to,
designation of specified “additional insureds” who would not ordinarily be
required to be named in that capacity during

 

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the Lease term under Article 10 of the Lease), Tenant shall comply and/or cause
its contractors to comply, as applicable, with such additional requirements.

(e) Rules and Regulations. Tenant and Tenant’s contractors shall comply with any
other rules, regulations and requirements that Landlord or Project Manager or
Landlord’s General Contractor or the TI General Contractor may reasonably impose
with respect to the performance of Tenant’s Work. Tenant’s agreement with
Tenant’s contractors shall require each contractor to provide daily cleanup of
the construction area to the extent that such cleanup is necessitated by the
performance of Tenant’s Work.

(f) Risk of Loss. All materials, work, installations and decorations of any
nature brought onto or installed in the Premises, by or at the direction of
Tenant or in connection with the performance of Tenant’s Work, prior to the Rent
Commencement Date shall be at Tenant’s risk, and neither Landlord nor any party
acting on Landlord’s behalf shall be responsible for any damage, loss or
destruction thereof from any cause whatsoever other than negligence or willful
misconduct or omission by Landlord or its agents, employees or contractors.

(g) Condition of Tenant’s Work. All work performed by Tenant shall be performed
in a good and workmanlike manner, and shall be completed in compliance with the
plans approved by Landlord for such Tenant’s Work in all material respects and
in compliance with all applicable governmental laws, ordinances, codes and
regulations in force at the time such work is completed. Without limiting the
generality of the foregoing, Tenant shall be responsible for compliance of all
Improvements designed and constructed by Tenant with the requirements of the
Americans with Disabilities Act and all similar or related requirements
pertaining to access by persons with disabilities.

6. No Agency. Nothing contained in this Workletter shall make or constitute
Tenant as the agent of Landlord.

7. Survival. Without limiting any survival provisions which would otherwise be
implied or construed under applicable law, the provisions of Paragraph 5(c) of
this Workletter shall survive the termination of the Lease with respect to
matters occurring prior to expiration of the Lease.

8. Miscellaneous. All references in this Workletter to a number of days shall be
construed to refer to calendar days, unless otherwise specified herein. In all
instances where Landlord’s or Tenant’s approval is required, if no written
notice of disapproval is given within the applicable time period, at the end of
that period Landlord or Tenant, as applicable, shall be deemed to have given
approval (unless the provision requiring Landlord’s or Tenant’s approval
expressly states that non-response is deemed to be a disapproval or withdrawal
of the pending action or request, in which event such express statement shall be
controlling over the general statement set forth in this sentence) and the next
succeeding time period shall commence. If any item requiring approval is
disapproved by Landlord or Tenant (as applicable) in a timely manner, the
procedure for preparation of that item and approval shall be repeated.

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IN WITNESS WHEREOF, the parties have executed this Workletter concurrently with
and as of the date of the Lease.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

“Landlord”

 

 

 

 

 

“Tenant”

 

 

 

 

SLOUGH REDWOOD CITY, LLC, a Delaware limited liability company

 

 

 

 

 

ONCOMED PHARMACEUTICALS, INC., a Delaware corporation

 

 

 

 

 

 

By:

 

Slough Estates USA Inc., a Delaware corporation, Its Manager

 

 

 

 

 

By:

 

/s/ Paul J. Hastings

 

 

 

 

 

 

 

Its:

 

 

/s/ President & CEO

 

 

 

 

 

 

 

 

 

By:

 

/s/ Jonathan M. Bergschneider

 

 

 

 

 

 

 

 

 

 

 

 

Jonathan M. Bergschneider

 

 

 

 

 

 

 

 

 

 

 

 

Vice President

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Its:

 

 

Attachments:

Schedule B-1        800 Chesapeake Base Building

Schedule B-2        800 Chesapeake Tenant Improvements

Schedule B-3        Construction Schedule (preliminary)

Schedule B-4        TI Allowance Disbursement Diagram

 

B-16

--------------------------------------------------------------------------------

Schedule B-1 to Workletter

800 CHESAPEAKE BASE BUILDING

The “Base Building” as defined in the Workletter to which this Schedule B-1 is
attached shall consist of the following:

Existing building envelope and waterproofing (the Building “shell”), except as
specifically indicated as being included in Tenant Improvements under Schedule
B-2, including: reinforced grade beam foundation on precast concrete piles;
ground floor is a reinforced structural concrete slab supported by precast
concrete piles; elevated floors consist of metal decking with concrete topping
slab; roof structure consists of glulam beams and girders with plywood
sheathing; visual mechanical roof screen; roof membrane to be new built-up
system, flashing and sealants; building structural framing consists of open web
steel joists, girders, columns with a non-bearing exterior EIFS and curtain
wall; seismic system utilizing steel braced frames; roof live load is 20 PSF;
floor to floor heights of 14 feet, all floors

New Service Annex including foundations, structure, enclosure and waterproofing.
This includes base building life safety systems (electrical, mechanical, fire
protection, and plumbing systems) required by code. The Service Annex floor is
designed for 100 PSF uniform live load capacity (reducible as allowed by code)
plus the weight of “normal” lab mechanical equipment. The Service Annex roof is
designed for 20 PSF uniform live load capacity (reducible as allowed by code)
plus the weight of “normal” lab mechanical equipment

New structural foundation and visual screen walls for emergency
generator/chemical storage enclosure

Existing ground floor designed for 150 PSF uniform live load capacity (reducible
as allowed by code)

Existing second floor designed for 100 PSF uniform live load capacity (reducible
as allowed by code)

Existing building entrances (including modifications for ADA compliance, if any)

Existing stairs, including ADA required modifications

Existing exterior paving, hardscape and landscape, including modifications for
ADA compliance, if any

Existing site underground water, fire, storm, and sanitary service

Existing building storm and overflow drainage systems

Existing site underground conduits for electrical and communication, including
the existing electrical utility pad, existing PG&E pad mounted transformer (300
kva), and the existing five 5” primary service conduits terminated at the
existing building switchgear (1600 amp rated)

Existing gas service up to exterior meter location at Building (including
existing meter)

 

Schedule B-1 to Workletter

--------------------------------------------------------------------------------

Existing wet fire protection (risers, loops, branches and heads), evenly
distributed for “ordinary hazard” occupancy

Shell modification (including Service Annex) design and permitting fees, except
as specifically included in Tenant Improvements under Schedule B-2

Existing underslab sanitary waste main trunk line and branch distribution

Existing toilet room cores

 

Schedule B-1 to Workletter

--------------------------------------------------------------------------------

Schedule B-2 to Workletter

800 CHESAPEAKE TENANT IMPROVEMENTS

The “Tenant Improvements” as defined in the Workletter to which this Schedule
B-2 is attached will include, but not necessarily be limited to, the following:

All tenant construction, design fees, fixtures, furnishings, etc. to support
tenant operations, including use space, offices, lobbies, circulation, restrooms
and all other features not specifically indicated as part of the Building Shell
in Schedule B-1. Although included in the definition of Tenant Improvements, use
of TI Allowance for furniture, fixtures or personal property is not permitted.

Additions and modifications to the new Service Annex, including emergency
generator and associated conduits, chemical storage cabinets, eyewash facilities
and associated utilities, cage wash equipment and utilities

Interior demolition required for TI construction

ADA modifications triggered by TI construction (subject to any specific
provisions of the Workletter or the Lease providing for a different allocation
of ADA compliance costs)

Exterior Building skin modifications to support TI systems (e.g., louvers for
HVAC equipment)

Topical emission barriers on slabs, if required

Slab depressions for special finishes or special uses (including cage wash area)

Enhancement of structure for live loading above designed maximums or vibration
control criteria

Modification of structure for openings at floors and roof

Modification or repair of structure required by TI construction

All minor support structures for ducts, conduits, pipes, etc. required by TI

Additional stairs, stair enclosures, handrails and guardrails (if required by TI
design)

New exterior wall insulation, if required by TI modifications

New firesafing at floor decks, exterior walls and interior openings, if required
by TI modifications

Custom doors

Security or other upgrades to existing exterior doors

Supporting structures/platforms/sleepers, etc. for rooftop equipment, ducts,
plumbing, electrical, etc., related to Tenant Improvements

 

Schedule B-2 to Workletter

--------------------------------------------------------------------------------

Roof patching for all penetrations relating to Tenant Improvements

Skylights, if installed, including curbs, roof patching, etc.

Additional elevators, if required by Tenant

Shaft walls or other fire separations required for vertical openings (stairs,
elevators) or control zones

New distribution/laterals from sanitary waste main trunk line required by TI

New lab waste main trunk line and distribution/laterals required by TI

Upsized gas meter and piping from gas meter to Building areas, if required by TI

Modifications/enhancements to wet fire protection systems required by TI design

Modifications to fire alarm systems

Signal and security systems

Modifications or upsizing of primary electrical service (from existing 1600 amp
service)

Modifications and additions to all secondary electrical service for Tenant
demand loads, including main service disconnect, Tenant meter section and
distribution panels

Standby electrical generator, transfer switch and conduits, if required

All communications wire and service not specifically included in Building Shell

All TI design fees and reimbursables

All other “soft” costs, including Ti permit fees, project management fees,
utility company charges, temporary utilities during TI construction, etc.

All testing and inspection of TI construction

Builders risk insurance for TI construction

 

Schedule B-2 to Workletter

--------------------------------------------------------------------------------

Schedule B-3 to Workletter

Construction Schedule (Preliminary)

[See attached page.]

--------------------------------------------------------------------------------

 

[gljm3zdhtfb0000005.jpg]

 Schedule B-3 to Workletter

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 

SCHEDULE B-4

[gljm3zdhtfb0000006.jpg]

 

*

Note: To the extent Slough commitments are later increased (due to Tenant Change
Requests, for example), these numbers will need to be recalibrated and the
project may even move from the “LESS” to the “MORE” category.

Example 1

 

 

 

 

 

 

 

 

 

 

HDCC:

  

$

5,100,000

  

  

 

  

 

DES:

  

$

340,000

  

  

 

  

 

PMA:

  

$

130,000

  

  

 

  

 

 

  

 

 

 

  

 

  

 

 

  

$

5,570,000

  

  

=

  

Commitments

 

  

$

5,709,750

  

  

=

  

TI Allowance

Slough funds 100% of its commitments plus $139,750 of approved invoices
submitted by OncoMed.

Example 2

 

 

 

 

 

 

 

 

 

 

HDCC:

  

$

5,500,000

  

  

 

  

 

DES:

  

$

340,000

  

  

 

  

 

PMA:

  

$

130,000

  

  

 

  

 

 

  

 

 

 

  

 

  

 

 

  

$

5,970,000

  

  

=

  

Commitments

 

  

$

5,709,750

  

  

=

  

TI Allowance

 

 

 

 

 

 

OncoMed pro-rata share of commitments =

 

$5,970,000 - $5,709,750

 

= 4.36%

 

 

$5,970,000

 

 

Therefore, OncoMed would contribute 4.36% of each payment application for the
commitments and would fund 100% of all expenditures incurred directly by
OncoMed.

 

Schedule B-4 to Workletter

--------------------------------------------------------------------------------

EXHIBIT C

ACKNOWLEDGMENT OF RENT COMMENCEMENT DATE

This Acknowledgment is executed as of                     , 200    , by SLOUGH
REDWOOD CITY, LLC, a Delaware limited liability company (“Landlord”), and
ONCOMED PHARMACEUTICALS, INC., a Delaware corporation (“Tenant”), pursuant to
Section 2.4 of the Lease dated May 30, 2006 between Landlord and Tenant (the
“Lease”) covering premises located at 800 Chesapeake Drive, Redwood City, CA
94063 (the “Premises”).

Landlord and Tenant hereby acknowledge and agree as follows:

1. The Rent Commencement Date under the Lease is                     , 20    .

2. The termination date under the Lease shall be                    , 20    ,
subject to any applicable provisions of the Lease for extension or early
termination thereof.

3. The square footage of the Premises (including allocable portions of the
Service Annex, as defined in the Lease) is              square feet.

4. Tenant accepts the Premises, subject only to Landlord’s warranties,
representations and obligations expressly set forth in Section 2.3 of the Lease
and in the Workletter (as defined in the Lease).

EXECUTED as of the date first set forth above.

 

 

 

 

 

 

 

 

 

 

 

 

“Landlord”

 

 

 

“Tenant”

 

 

 

SLOUGH REDWOOD CITY, LLC, a Delaware limited liability company

 

 

 

ONCOMED PHARMACEUTICALS, INC., a Delaware corporation

 

 

 

 

 

By:

 

Slough Estates USA Inc., a Delaware corporation, Its Manager

 

 

 

By:

 

 

 

 

 

 

 

Its:

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

 

 

 

 

Jonathan M. Bergschneider

 

 

 

 

 

 

 

 

 

 

Vice President

 

 

 

By:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Its:

 

 

EXHIBIT C TO LEASE

--------------------------------------------------------------------------------

EXHIBIT D

FORM OF WARRANT

[See attached.]

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “ACT”) OR QUALIFIED UNDER THE SECURITIES LAWS OF
ANY STATE. SUCH SECURITIES AND ANY SECURITIES OR SHARES ISSUED HEREUNDER MAY NOT
BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR QUALIFICATION OR
AN EXEMPTION THEREFROM UNDER SAID ACT OR LAWS.

 

 

 

 

Warrant No.                     

  

Warrant to Purchase 55,000 Shares

Date of Issuance:                     

  

of Series B Preferred Stock

WARRANT TO PURCHASE PREFERRED STOCK

OF

ONCOMED PHARMACEUTICALS, INC.

This certifies that, for value received, Kwacker Limited, a corporation
organized and existing under the laws of England (“Holder”) is entitled, subject
to the terms and conditions set forth below, to purchase from OncoMed
Pharmaceuticals, Inc., a Delaware corporation (the “Company”), in whole or in
part fifty-five thousand (55,000) fully paid and nonassessable shares (the
“Warrant Shares”) of Series B Preferred Stock, par value $0.001 per share, (the
“Preferred Stock”) of the Company at a purchase price per share equal to the
product obtained by multiplying (x) 125% by (y) the price per share at which the
Company’s Series B Preferred Stock is issued in its first issuance to one or
more institutional investors (the “Exercise Price”). Notwithstanding the
foregoing, in the event that no Series B Preferred Stock has been issued by the
Company to one or more institutional investors within eighteen (18) months after
the mutual execution of the Agreement (as defined below), this Warrant shall
automatically be deemed to entitle Holder, in lieu of the right to purchase
shares of Series B Preferred Stock set forth in the foregoing sentence and
subject to the terms and conditions set forth below, to purchase from the
Company in whole or in part fifty-five thousand (55,000) fully paid and
nonassessable shares of Series A Preferred Stock, par value $0.001 per share, of
the Company at a purchase price per share equal to the product obtained by
multiplying (x) 125% by (y) the price per share at which the Company’s Series A
Preferred Stock was previously issued to institutional investors, and all
references to “Warrant Shares,” “Preferred Stock” and “Exercise Price” contained
in this Warrant shall be deemed to be updated accordingly. The number, character
and Exercise Price of such Warrant Shares are subject to adjustment as provided
below and all references to “Warrant Shares” and “Exercise Price” herein shall
be deemed to include any such adjustment or series of adjustments. The term
“Warrant” as used herein shall mean this Warrant, and any warrants delivered in
substitution or exchange therefor as provided herein.

This Warrant is being issued in connection with services or other consideration
to be provided to the Company pursuant to that certain Lease between the Company
and Slough Redwood City, LLC, an affiliate of the Holder, dated as of May 30,
2006 (the “Agreement”).

1. Term of Warrant. Subject to the terms and conditions set forth herein, this
Warrant shall be exercisable, in whole or in part, during the term commencing on
the date hereof and ending at 5:00 p.m., Pacific time, on the earliest of the
following: (i) the closing of a merger, consolidation or other reorganization of
the Company pursuant to which the stockholders of the Company hold less than 50%
of the voting securities of the surviving entity, or a sale of all or
substantially all of

 

-1-

--------------------------------------------------------------------------------

the assets of the Company; (ii) the consummation of the initial public offering
of the Company’s securities pursuant to a registration statement filed under the
Act or (iii) the seventh (7th) anniversary of the date hereof, and shall be void
thereafter (the “Exercise Period”).

2. Exercise of Warrant.

(a) Cash Exercise. This Warrant may be exercised by the Holder by (i) the
surrender of this Warrant to the Company, with the Notice of Exercise annexed
hereto duly completed and executed on behalf of the Holder, at the office of the
Company (or such other office or agency of the Company as it may designate by
notice in writing to the Holder at the address of the Holder appearing on the
books of the Company) during the Exercise Period and (ii) the delivery of
payment to the Company, for the account of the Company, by cash, wire transfer
of immediately available funds to a bank account specified by the Company, or by
certified or bank cashier’s check, of the Exercise Price for the number of
Warrant Shares specified in the Exercise Form in lawful money of the United
States of America. The Company agrees that such Warrant Shares shall be deemed
to be issued to the Holder as the record holder of such Warrant Shares as of the
close of business on the date on which this Warrant shall have been surrendered
and payment made for the Warrant Shares as aforesaid. A stock certificate or
certificates for the Warrant Shares specified in the Exercise Form shall be
delivered to the Holder as promptly as practicable, and in any event within 10
days, thereafter. If this Warrant shall have been exercised only in part, the
Company shall, at the time of delivery of the stock certificate or certificates,
deliver to the Holder a new Warrant evidencing the rights to purchase the
remaining Warrant Shares, which new Warrant shall in all other respects be
identical with this Warrant. No adjustments shall be made on Warrant Shares
issuable on the exercise of this Warrant for any cash dividends paid or payable
to holders of record of Common Stock prior to the date as of which the Holder
shall be deemed to be the record holder of such Warrant Shares.

(b) Net Issue Exercise. In lieu of exercising this Warrant pursuant to
Section 2(a), this Warrant may be exercised by the Holder by the surrender of
this Warrant to the Company, with a duly executed Exercise Form marked to
reflect Net Issue Exercise and specifying the number of shares of Preferred
Stock to be purchased, during normal business hours on any Business Day during
the Exercise Period. The Company agrees that such shares of Preferred Stock
shall be deemed to be issued to the Holder as the record holder of such shares
of Preferred Stock as of the close of business on the date on which this Warrant
shall have been surrendered as aforesaid. Upon such exercise, the Holder shall
be entitled to receive shares equal to the value of this Warrant (or the portion
thereof being canceled) by surrender of this Warrant to the Company together
with notice of such election in which event the Company shall issue to Holder a
number of shares of Preferred Stock computed as of the date of surrender of this
Warrant to the Company using the following formula:

 

 

 

 

 

 

 

 

X

 

= Y(A-B)

 

 

 

 

   A

 

 

 

 

 

 

Where

  

X =

  

the number of shares of Preferred Stock to be issued to Holder under this
Section 2(b);

 

-2-

 

--------------------------------------------------------------------------------

 

 

 

 

 

 

  

Y =

  

the number of shares of Preferred Stock covered by this Warrant (as adjusted to
the date of such calculation) in respect of which the net issue exercise
election is made under this Section 2(b);

 

 

 

 

  

A =

  

the fair market value of one share of the Preferred Stock at the date of such
calculation;

 

 

 

 

  

B =

  

the Exercise Price (as adjusted to the date of such calculation).

(c) Fair Market Value. For purposes of Section 2(b) and Section 3, the fair
market value of one share of the Company’s Preferred Stock shall be the price
per share which the Company could obtain from a willing buyer for the shares
sold by the Company from authorized but unissued shares, as such price shall be
determined in good faith by the Board of Directors of the Company.

(d) Effective Time of Exercise. This Warrant shall be deemed to have been
exercised immediately prior to the close of business on the date of its
surrender for exercise as provided above, and the person entitled to receive the
shares of Preferred Stock issuable upon such exercise shall be treated for all
purposes as the holder of record of such shares as of the close of business on
such date. As promptly as practicable on or after such date and in any event
within ten days thereafter, the Company at its expense shall issue and deliver
to the person or persons entitled to receive the same a certificate or
certificates for the number of shares issuable upon such exercise. In the event
that this Warrant is exercised in part, the Company at its expense will execute
and deliver a new Warrant of like tenor exercisable for the number of shares for
which this Warrant may then be exercised.

3. No Fractional Shares or Scrip. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. In lieu of
any fractional share to which the Holder would otherwise be entitled, the
Company shall make a cash payment equal to the product of the fair market value
of a share of the Company’s Preferred Stock multiplied by such fraction.

4. Replacement of Warrant. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant and, in
the case of loss, theft or destruction, on delivery of an indemnity agreement,
with surety if reasonably required, in an amount reasonably satisfactory to the
Company, or in the case of mutilation, on surrender and cancellation of this
Warrant, the Company at its expense shall execute and deliver, in lieu of this
Warrant, a new warrant of like tenor and amount.

5. No Rights as Stockholder. Subject to Sections 9 and 12 of this Warrant, the
Holder shall not be entitled to vote or receive dividends or be deemed the
holder of Preferred Stock or any other securities of the Company that may at any
time be issuable on the exercise hereof for any purpose, nor shall anything
contained herein be construed to confer upon the Holder, as such, any of the
rights of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of stock, change of par
value, or change of stock to no par value, consolidation,

 

-3-

--------------------------------------------------------------------------------

merger, conveyance, or otherwise) or to receive notice of meetings, or to
receive dividends or subscription rights or otherwise until the Warrant shall
have been exercised as provided herein.

6. Transfer of Warrant.

(a) Restrictions on Transferability. This Warrant and the Warrant Shares shall
not be sold, assigned, transferred or pledged except upon satisfaction of the
conditions herein. Holder will cause any proposed transferee of the Warrant or
the Warrant Shares, as the case may be, to agree in writing to be bound by the
terms of this Warrant, including, but not limited to the restrictions on
transfer and “market stand-off.” The Holder will not make any disposition of any
Warrant, Warrant Shares or other Company security to any of the Company’s
competitors as such is determined in good faith by the Company. The restrictions
set forth in this Section 6 (other than restrictions relating to compliance with
applicable securities laws) shall not apply to any disposition of Warrant Shares
or other Company securities in a transaction pursuant to Rule 144 or any other
transaction effected on a securities exchange or in a public securities market.

(b) Notice of Proposed Transfer. Except as otherwise provided herein, prior to
any proposed transfer of this Warrant and the Warrant Shares, the Holder shall
give written notice to the Company of its intention to effect such transfer.
Each such notice shall identify the proposed transferee, shall describe the
manner of the proposed transfer and, if requested by the Company, shall be
accompanied by a written opinion of counsel, satisfactory in form and substance
to the Company, to the effect that the proposed transfer may be effected without
registration under the Act and any applicable state securities laws, whereupon
the holder of such security shall be entitled to transfer such security in
accordance with the terms of its notice, subject to compliance with all other
applicable requirements of this Section 6. Each certificate for this Warrant and
the Warrant Shares transferred as provided for above shall bear the legend set
forth herein, except that such certificate shall not bear such legend if
(i) such transfer is in accordance with the provisions of Rule 144 (or any other
rule permitting public sale without registration under the Act) or (ii) the
opinion of counsel referred to above is to the further effect that the
transferee and any subsequent transferee (other than an affiliate of the
Company) would be entitled to transfer such securities in a public sale without
registration under the Act. The Company may issue stop transfer instructions to
its transfer agent in connection with restrictions on transferability of this
Warrant or the Warrant Shares. Notwithstanding the restrictions set forth above,
no registration statement or opinion of counsel or prior notice to the Company
shall be necessary, and such transfer shall be automatically effected on the
stock records of the Company effective as of the date of such transfer, for a
transfer (x) by a Holder to an affiliate of the Holder or (y) by a Holder which
is (A) a partnership to its partners or retired partners in accordance with
partnership interests, (B) a limited liability company to its members or former
members in accordance with their interest in the limited liability company,
(C) a corporation to its subsidiary or parent, or (D) to the Holder’s family
member or trust for the benefit of an individual Holder, provided that in the
case of any transfer pursuant to the foregoing clause (x) or clauses (y)(A) –
(D), (i) the restrictions in the second and third sentences of Section 6(a)
above shall apply to the transfer and to the transferee, (ii) the transfer shall
be conducted in compliance with all applicable securities laws, and (iii) the
transferring Holder shall provide the Company with a completed written notice of
the transfer pursuant to this sentence no later than 30 days following the
transfer to an affiliate or other permitted transferee pursuant to this sentence
and, upon request by the Company, with

 

-4-

--------------------------------------------------------------------------------

evidence reasonably satisfactory to the Company that the conditions and
requirements applicable to such transfer pursuant to this sentence have been
satisfied.

7. Reservation of Stock. The Company covenants that during the term this Warrant
is exercisable, the Company will reserve from its authorized and unissued
Preferred Stock a sufficient number of shares to provide for the issuance of
Preferred Stock upon the exercise of this Warrant and, from time to time, will
take all steps necessary to amend its Amended and Restated Certificate of
Incorporation, as it may be amended from time to time (“Restated Certificate”)
to provide sufficient reserves of shares of Preferred Stock issuable upon
exercise of the Warrant. The Company further covenants that all shares that may
be issued upon the exercise of rights represented by this Warrant, upon exercise
of the rights represented by this Warrant and payment of the Exercise Price, all
as set forth herein, will be free from all taxes, liens and charges in respect
of the issue thereof (other than taxes in respect of any transfer occurring
contemporaneously or otherwise specified herein).

8. Representations and Covenants of the Holder. Holder hereby represents and
warrants as follows:

(a) Experience. Holder is experienced in evaluating and investing in private
placement transactions of securities of start up companies such as the Company,
and has either individually or through its current officers such knowledge and
experience in financial and business matters that Holder is capable of
evaluating the merits and risks of Holder’s prospective investment in the
Company, and has the ability to bear the economic risks of the investment.
Holder has, if an entity, its principal place of business or, if an individual,
its primary residence at the address provided to the Company in writing.

(b) Accredited Investor. Holder is an “accredited investor” within the meaning
of Securities and Exchange Commission Rule 501 of Regulation D, as presently in
effect, under the Act.

(c) Acquire Entirely for Own Account. Holder is acquiring the Warrant and
Warrant Shares for investment for Holder’s own account, not as a nominee or
agent, and not with the view to, or for resale in connection with, any
distribution thereof. Holder further represents that it does not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participation to any third person with respect to the Warrant
or any of the Warrant Shares.

(d) Restricted Securities. Holder acknowledges that the Warrant Shares must be
held indefinitely unless subsequently registered under the Act or an exemption
from such registration is available. Holder is aware of the provisions of Rule
144 promulgated under the Act which permit limited resale of shares acquired in
a private placement subject to the satisfaction of certain conditions; among the
conditions for use of Rule 144 may be the availability of current information to
the public about the Company; such information is not now available and the
Company has no present plans to make such information available.

 

-5-

--------------------------------------------------------------------------------

(e) No Public Market. Holder understands that no public market now exists for
any of the securities issued by the Company, and that there is no assurance that
a public market will ever exist for this Warrant and the Warrant Shares.

(f) Regulation S. If Holder is not a U.S. person as defined in Rule 902 under
the Act, Holder understands that this agreement is made in reliance upon
Holder’s representation to the Company, and by execution of this Agreement,
Holder hereby confirms, that:

(i) Holder is not a U.S. person as such term is defined in Rule 902 under the
Act;

(ii) Holder is not acquiring the securities for the account or benefit of any
U.S. person; and

(iii) Holder agrees to resell the Warrant and the Warrant Shares only in
accordance with the provisions of Regulation S, pursuant to registration under
the Act, or pursuant to an available exemption from registration, and agrees not
to engage in hedging transactions with regard to the Warrant and the Warrant
Shares unless in compliance with the Act.

(g) Legends. Holder acknowledges that, to the extent applicable, each
certificate evidencing the Warrant Shares shall be endorsed with the legends
substantially in the form set forth below, as well as any additional legend
imposed or required by the Company’s Bylaws or applicable state securities laws:

“THE SECURITIES ISSUABLE HEREUNDER OR REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED (A) UNLESS AND UNTIL REGISTERED
UNDER SUCH ACT, (B) UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR
OTHER EVIDENCE, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH
REGISTRATION IS NOT REQUIRED OR (C) IN COMPLIANCE WITH THE PROVISIONS OF
REGULATION S PROMULGATED PURSUANT TO THE ACT AND, IF REQUIRED BY THE COMPANY,
SUCH COMPLIANCE IS CONFIRMED BY AN OPINION OF COUNSEL. HEDGING TRANSACTIONS
INVOLVING THE SECURITIES REPRESENTED HEREBY MAY NOT BE CONDUCTED EXCEPT IN
COMPLIANCE WITH THE ACT.”

(h) Access to Data. Holder has received and reviewed information about the
Company and has had an opportunity to discuss the Company’s business, management
and financial affairs with its management and to review the Company’s
facilities. Holder believes it has received all the information it considers
necessary or appropriate for deciding whether to acquire the Warrant to acquire
the Warrant Shares. Holder understands and acknowledges that any such
discussions, as well as any written information issued by the Company, (i) were
intended to describe the aspects of the Company’s business and prospects which
the Company believes to be material, but were not necessarily an exhaustive
description, and (ii) may have

 

-6-

--------------------------------------------------------------------------------

contained forward-looking statements involving known and unknown risks and
uncertainties which may cause the Company’s actual results in future periods or
plans for future periods to differ materially from what was anticipated and that
no representations or warranties were or are being made with respect to any such
forward-looking statements or the probability of achieving any of the results
projected in any of such forward-looking statements.

(i) Authorization. Holder has full power and authority to enter into this
Warrant. This Warrant when executed and delivered by Holder will constitute
valid and legally binding obligations of Holder, enforceable in accordance with
its terms, subject to (i) judicial principles limiting the availability of
specific performance, injunctive relief, and other equitable remedies; and
(ii) bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect generally relating to or affecting creditors’ rights
generally.

(j) Reliance Upon Holders’ Representations. Holder understands that the Warrant
and the Warrant Shares have not been registered under the Act by reason of a
specific exemption from the registration provisions of the Act which depends
upon, among other things, the bona fide nature of the investment intent as
expressed herein. Holder understands and acknowledges that the offering of the
Warrant and the Warrant Shares pursuant to this Warrant will not be registered
under the Act on the ground that the sale provided for in this Warrant and the
issuance of securities hereunder is exempt from the registration requirements of
the Act.

9. Notices.

(a) Whenever the Exercise Price or number of shares purchasable hereunder shall
be adjusted pursuant to Section 12 hereof, the Company shall issue a certificate
signed by its Chief Financial Officer setting forth, in reasonable detail, the
event requiring the adjustment, the amount of the adjustment, the method by
which such adjustment was calculated, and the Exercise Price and number of
shares purchasable hereunder after giving effect to such adjustment, and shall
cause a copy of such certificate to be transmitted by facsimile, or mailed (by
first class mail, postage prepaid) to the Holder of this Warrant.

(b) In case:

(i) the Company shall take a record of the holders of its Preferred Stock (or
other stock or securities at the time receivable upon the exercise of this
Warrant) for the purpose of entitling them to receive any dividend or other
distribution;

(ii) of any capital reorganization of the Company, any reclassification of the
capital stock of the Company, any consolidation or merger of the Company with or
into another corporation, or any conveyance of all or substantially all of the
assets of the Company to another corporation; or

(iii) of any voluntary dissolution, liquidation or winding-up of the Company;

then, and in each such case, the Company will transmit by facsimile, or mail or
cause to be mailed to the Holder or Holders a notice specifying, as the case may
be, (A) the date on which a record is to be taken for the purpose of such
dividend or other distribution, and stating the amount and character of such
dividend or other distribution or (B) the date on which such

 

-7-

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reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up is to take place, and the time, if any is
to be fixed, as of which the holders of record of Preferred Stock shall be
entitled to exchange their shares of Preferred Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation or winding-up. Such notice shall be
delivered at least seven business days prior to the date therein specified.

(c) All such notices, advices and communications shall be deemed effectively
delivered upon deposit with a nationally recognized overnight courier or upon
transmission by facsimile (upon receipt of appropriate electronic confirmation
of successful transmission).

10. Market Standoff Agreement.

(a) The Holder agrees in connection with any registration of the Company’s
securities (other than a registration of securities in a Rule 145 transaction or
with respect to an employee benefit plan), upon request of the underwriters
managing any underwritten offering of the Company’s securities, not to sell,
make any short sale of, loan, pledge or otherwise hypothecate or encumber, grant
any option for the purchase of, or otherwise dispose of any securities of the
Company (other than those included in the registration, securities acquired in
the Company’s initial public offering of its Common Stock (the “IPO”) or
securities acquired in market transactions following the IPO) without the prior
written consent of such underwriters, as the case may be, for such period of
time (not to exceed one hundred eighty (180) days from the effective date of
such registration in the case of a registration for the Company’s IPO) as may be
requested by such managing underwriter(s); provided that all officers and
directors of the Company and holders of at least five percent (5%) of the
Company’s capital stock enter into similar agreements.

(b) The Company may impose stack-transfer instructions with respect to any of
its securities subject to the foregoing restriction until the end of such
period.

(c) The underwriters are intended third-party beneficiaries of this Section 10
and shall have the right, power and authority to enforce the provisions hereof
as though they were a party hereto. To the extent that a party executes and
delivers a market standoff agreement in the form requested by the Company’s
underwriters in connection with the IPO, then the agreement with the
underwriters will supersede the provisions of this Section 10.

11. Amendments. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing executed by the
Company and the Holder. Any amendment or waiver effected in accordance with such
terms shall be binding upon the Company, the Holder and any transferee or
assignee of this Warrant.

12. Adjustments. The Exercise Price and the number of shares purchasable
hereunder are subject to adjustment from time to time as follows:

(a) Stock Conversion of Preferred Stock. Should all of the Company’s Series B
Preferred Stock, at any time prior to the expiration of this Warrant, be
converted into shares of the Company’s Common Stock in accordance with the
Company’s Restated Certificate, then this Warrant shall immediately become
exercisable for that number of shares of the Company’s

 

-8-

--------------------------------------------------------------------------------

Common Stock equal to the number of shares of the Common Stock that would have
been received if this Warrant had been exercised in full and the Preferred Stock
received thereupon had been simultaneously converted immediately prior to such
event, and the Exercise Price shall be immediately adjusted to equal the
quotient obtained by dividing (x) the aggregate Exercise Price of the maximum
number of shares of Preferred Stock for which this Warrant was exercisable
immediately prior to such conversion, by (y) the number of shares of Common
Stock for which this Warrant is exercisable immediately after such conversion.
For purposes of the foregoing, the “Restated Certificate” shall mean the
Certificate of Incorporation of the Company as amended and/or restated and
effective immediately prior to the conversion of all of the Company’s Series B
Preferred Stock.

(b) Reclassification, etc. If the Company, at any time while this Warrant, or
any portion thereof, remains outstanding and unexpired by reclassification of
securities or otherwise, shall change any of the securities as to which purchase
rights under this Warrant exist into the same or a different number of
securities of any other class or classes, this Warrant shall thereafter
represent the right to acquire such number and kind of securities as would have
been issuable as the result of such change with respect to the securities that
were subject to the purchase rights under this Warrant immediately prior to such
reclassification or other change and the Exercise Price therefor shall be
appropriately adjusted, all subject to further adjustment as provided in this
Section 12. No adjustment shall be made pursuant to this Section 12 (b), upon
any conversion of the Preferred Stock which is the subject of Section 12 (a).

(c) Split, Subdivision or Combination of Shares. If the Company at any time
while this Warrant, or any portion thereof, remains outstanding and unexpired
shall split, subdivide or combine the securities as to which purchase rights
under this Warrant exist, into a different number of securities of the same
class, then (i) in the case of a split or subdivision, the Exercise Price for
such securities shall be proportionately decreased and the securities issuable
upon exercise of this Warrant shall be proportionately increased, and (ii) in
the case of a combination, the Exercise Price for such securities shall be
proportionately increased and the securities issuable upon exercise of this
Warrant shall be proportionately decreased.

(d) Adjustments for Dividends in Stock or Other Securities or Property. If while
this Warrant, or any portion hereof, remains outstanding and unexpired the
holders of the securities as to which purchase rights under this Warrant exist
at the time shall have received, or, on or after the record date fixed for the
determination of eligible stockholders, shall have become entitled to receive,
without payment therefor, other or additional stock or other securities or
property (other than cash) of the Company by way of dividend, then and in each
case, this Warrant shall represent the right to acquire, in addition to the
number of shares of the security receivable upon exercise of this Warrant, and
without payment of any additional consideration therefor, the amount of such
other or additional stock or other securities or property (other than cash) of
the Company that such holder would hold on the date of such exercise had it been
the holder of record of the security receivable upon exercise of this Warrant on
the date hereof and had thereafter, during the period from the date hereof to
and including the date of such exercise, retained such shares and/or all other
additional stock available by it as aforesaid during such period, giving effect
to all adjustments called for during such period by the provisions of this
Section 12.

 

-9-

--------------------------------------------------------------------------------

(e) Certificate as to Adjustments. Upon the occurrence of each adjustment or
readjustment pursuant to this Section 12, the Company at its expense shall
promptly compute such adjustment or readjustment in accordance with the terms
hereof and furnish to each Holder of this Warrant a certificate setting forth
such adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Company shall, upon the written
request, at any time, of any such Holder, furnish or cause to be furnished to
such Holder a like certificate setting forth: (i) all such adjustments and
readjustments cumulatively made up to the date of the certificate; (ii) the
Exercise Price at the time in effect; and (iii) the number of shares and the
amount, if any, of other property that at the time would be received upon the
exercise of the Warrant.

(f) No Impairment. The Company will not, by any voluntary action, avoid or seek
to avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Company, but will at all times in good faith assist
in the carrying out of all the provisions of this Section 12 and in the taking
of all such action as may be necessary or appropriate in order to protect the
rights of the Holders of this Warrant against impairment.

13. Miscellaneous.

(a) This Warrant shall constitute a contract under the laws of the State of
Delaware and for all purposes shall be construed in accordance with and governed
by the laws of said state, without regard to the conflicts of law provisions
thereof.

(b) In the event of a dispute with regard to the interpretation of this Warrant,
the prevailing party may collect the cost of attorney’s fees, litigation
expenses or such other expenses as may be incurred in the enforcement of the
prevailing party’s rights hereunder.

(c) This Warrant shall be exercisable as provided for herein, except that in the
event that the expiration date of this Warrant shall fall on a Saturday, Sunday
and or United States federally recognized Holiday, this expiration date for this
Warrant shall be extended to 5:00 p.m. Pacific time on the business day
following such Saturday, Sunday or recognized Holiday.

(d) Acceptance. Receipt of this Warrant by the holder shall constitute
acceptance of and agreement to all of the terms and conditions contained herein.

(e) Counterparts. This Warrant may be executed in two counterparts, each of
which shall be deemed an original, but both of which together shall constitute
one and the same instrument.

IN WITNESS WHEREOF, ONCOMED PHARMACEUTICALS, INC. has caused this Warrant to be
executed by its officers thereunto duly authorized.

Date:                     

 

 

 

 

ONCOMED PHARMACEUTICALS, INC.

 

 

By

 

 

 

 

 

Name:

 

 

Title:

 

 

 

-10-

--------------------------------------------------------------------------------

The undersigned hereby accepts the Warrant in accordance with Section 13(d)
above.

 

 

 

 

 

 

HOLDER:

 

Kwacker Limited

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

-11-

--------------------------------------------------------------------------------

NOTICE OF EXERCISE

To: ONCOMED PHARMACEUTICALS, INC.:

(1) The undersigned hereby elects to purchase                     shares of
Series B Preferred Stock of OncoMed Pharmaceuticals, Inc., pursuant to the terms
of the attached Warrant, and                     tenders herewith payment of the
purchase price for such shares in full or             elects to exercise such
Warrant pursuant to the net issue exercise provisions provided for in
Section 2(b) thereof (PLEASE CHECK THE APPROPRIATE FORM OF PAYMENT).

(2) In exercising this Warrant, the undersigned hereby confirms and acknowledges
that (A) the shares of Series B Preferred Stock and/or other securities to be
issued upon exercise thereof are being acquired solely for the account of the
undersigned and not as a nominee for any other party, or for investment, and
(B) the undersigned will not offer, sell or otherwise dispose of any such shares
of Preferred Stock except under circumstances that will not result in a
violation of the Securities Act of 1933, as amended, or any applicable state
securities laws.

(3) Please issue a certificate or certificates representing said shares of
Series B Preferred Stock in the name of the undersigned or in such other name as
is specified below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Name)

 

 

 

 

 

 

 

 

 

 

 

 

(Name)

(4) Please issue a new Warrant for the unexercised portion of the attached
Warrant in the name of the undersigned:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Name)

 

 

 

 

 

 

 

 

(Date)

 

 

 

(Signature)

 

--------------------------------------------------------------------------------

EXHIBIT B

FORM OF TRANSFER

(To be signed only upon transfer of Warrant)

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
                    the right represented by the attached Warrant to purchase
                    shares of                     of ONCOMED PHARMACEUTICALS,
Inc. to which the attached Warrant relates, and appoints
                    Attorney to transfer such right on the books of
                    , with full power of substitution in the premises.

Dated:                     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Signature must conform in all respects to name of Holder as specified on the
face of the Warrant)

 

 

 

 

 

 

 

 

Address:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Signed in the presence of

 

 

 

 

*

Insert here the number of shares without making any adjustment for additional
shares of Common Stock or any other stock or other securities or property or
cash which, pursuant to the adjustment provisions of the Warrant, may be
deliverable upon exercise.

 

 

--------------------------------------------------------------------------------

FIRST AMENDMENT TO LEASE

THIS FIRST AMENDMENT TO LEASE (“First Amendment”) is dated as of November     ,
2006 and is entered into between SLOUGH REDWOOD CITY, LLC, a Delaware limited
liability company (“Landlord”) and ONCOMED PHARMACEUTICALS, INC., a Delaware
corporation (“Tenant”), with reference to the following facts:

Recitals

A. Landlord and Tenant are parties to a Lease dated as of May 30, 2006 (the
“Lease”), covering the building commonly known as 800 Chesapeake Drive (the
“Building”) in the Britannia Seaport Centre in Redwood City, California.

B. Landlord and Tenant wish to modify certain provisions of the Lease and
certain of their respective rights and obligations thereunder, all as more
particularly set forth in this First Amendment. This First Amendment modifies
and amends the Lease and supersedes any inconsistent provisions of the Lease
with respect to the matters covered by this First Amendment.

C. Capitalized terms used in this First Amendment as defined terms but not
specifically defined in this First Amendment shall have the meanings assigned to
such terms in the Lease.

Agreement

NOW, THEREFORE, in consideration of the mutual agreements contained in this
First Amendment and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Landlord and Tenant agree as
follows, effective upon their mutual execution of this First Amendment:

1. Rent Adjustment. Nothing in this First Amendment shall modify or affect
Tenant’s obligation for payment of Tenant’s Operating Cost Share of Operating
Expenses with respect to the Building pursuant to the terms of the Lease. The
minimum rental provisions set forth in Section 3.1(a) of the Lease are amended
to provide that for the period commencing on the Rent Commencement Date and
ending two (2) months later (the “Abatement Period”), Tenant’s minimum monthly
rental obligation under Section 3.1(a) of the Lease shall be zero ($0.00) [i.e.,
no minimum monthly rental due for those two months]. The remaining minimum
monthly rental schedule in Section 3.1(a) of the Lease remains in full force and
effect, and nothing in this First Amendment shall modify or affect in any way
(a) Tenant’s obligation for payment of any other amounts (such as, but not
limited to, utilities, personal property taxes, and Tenant’s Operating Cost
Share of Operating Expenses with respect to the Building) for any period under
the Lease, with the sole exception of the minimum monthly rent adjustment for
the Abatement Period as set forth above, or (b) the calculation of the duration,
term or expiration date of the Lease.

2. Brokers. Each party respectively (i) represents and warrants that no broker
participated in the consummation of this First Amendment and (ii) agrees to
indemnify, defend and hold the other party harmless against any liability, cost
or expense, including (but not limited

to) reasonable attorneys’ fees, arising out of any claims for brokerage
commissions or other similar compensation in connection with any conversations,
prior negotiations, agreements or other dealings by the indemnifying party with
any broker in connection with this First Amendment.

3. Entire Agreement. This First Amendment constitutes the entire agreement
between Landlord and Tenant regarding the subject matter hereof and supersedes
all prior negotiations, discussions, terms sheets, understandings and
agreements, whether oral or written, between the parties with respect to such
subject matter (other than the Lease itself, as expressly amended hereby).

4. Execution and Delivery. This First Amendment may be executed in one or more
counterparts and by separate parties on separate counterparts, effective when
each party has executed at least one such counterpart or separate counterpart,
but each such counterpart shall constitute an original and all such counterparts
together shall constitute one and the same instrument.

--------------------------------------------------------------------------------

5. Full Force and Effect. Except as expressly set forth herein, the Lease has
not been modified or amended and remains in full force and effect.

IN WITNESS WHEREOF, Landlord and Tenant have executed this First Amendment as of
the date first set forth above.

 

 

 

 

 

 

 

 

 

 

 

 

“Landlord”

 

 

 

“Tenant”

 

 

 

SLOUGH REDWOOD CITY, LLC,

a Delaware limited liability company

 

 

 

ONCOMED PHARMACEUTICALS, INC.,

a Delaware corporation

 

 

 

 

 

By:

 

Slough Estate USA Inc., a Delaware

 

 

 

 

 

 

 

 

corporation, Its Manager

 

 

 

By:

 

/s/ Paul Hastings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Name:

 

 

 

 

By:

 

/s/ Jonathan M. Bergschneider

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Title:

 

 

 

 

Name:

 

Jonathan M. Bergschneider

 

 

 

 

 

 

 

 

Title:

 

Senior Vice President

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Name:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

--------------------------------------------------------------------------------

EXHIBIT C

 

ACKNOWLEDGMENT OF RENT COMMENCEMENT DATE

 

This Acknowledgment is executed as of March 9th ,2007, by SLOUGH REDWOOD CITY,
LLC, a Delaware limited partnership ("Landlord"), and ONCOMED PHARMACEUTICALS,
INC., a Delaware corporation ("Tenant"), pursuant to Section 2.4 of the Lease
dated May 30, 2006 between Landlord and Tenant, and as amended on November 30,
2006 in a First Amendment to the Lease (collectively, the "Lease") covering
premises located at 800 Chesapeake Drive, Redwood City, CA 94063   (the
"Premises").

 

Landlord and Tenant hereby acknowledge and agree as follows:

 

 

1.

The Rent Commencement Date under the Lease is February 7, 2007.

 

 

 

2.

The termination date under the Lease shall be February 6, 2014, subject to any
applicable provisions of the Lease for extension or early termination thereof.

 

 

 

3.

The square footage of the Premises is 45,690 square feet.

 

 

4.

Tenant accepts the Premises, subject only to Landlord's warranties,
representations and obligations expressly set forth in Section 2.3 of the Lease
and in the Workletter (as defined in the Lease).

 

 

EXECUTED as of the date first set forth above.

 

 

"Landlord"                                                             "Tenant"

SLOUGH REDWOOD CITY, LLC, aONCOMED PHARMACEUTICALS

Delaware limited partnershipINC., a Delaware corporation

 

By:       SLOUGH REDWOOD CITY,By:   /s/ Martin H. Goldstein

LLC, a Delaware corporation,

Its General PartnerIts: SVP Corporate Development

 

By:   /s/ Jonathon M. BergschneiderBy:  /s/ John Lewicki

Jonathon M. Bergschneider

Senior Vice PresidentIts: SVP, R&D

 

                     

 

 

--------------------------------------------------------------------------------

SECOND AMENDMENT TO OFFICE LEASE

This SECOND AMENDMENT TO OFFICE LEASE (“Amendment”) is made and entered into as
of December 22, 2010, by and between HCP LS REDWOOD CITY, LLC, a Delaware
limited liability company (“Landlord”), and ONCOMED PHARMACEUTICALS, INC., a
Delaware corporation (“Tenant”).

R E C I T A L S:

A. Landlord (as successor in interest to Slough Redwood City, LLC) and Tenant
are parties to that certain Lease dated May 30, 2006 (the “Lease”), as amended
by that certain First Amendment to Lease dated November, 2006 (the “First
Amendment”), and that certain Acknowledgement of Rent Commencement Date dated as
of March 9, 2007, pursuant to which Lease Tenant leases from Landlord
approximately 45,690 rentable square feet of space (the “Premises”) consisting
of the entire building (the “Building”) located at 800 Chesapeake Drive, in the
Britannia Seaport Centre in Redwood City, California.

B. The parties desire to amend the Lease on the terms and conditions set forth
in this Amendment.

A G R E E M E N T:

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

1. Terms. All capitalized terms when used herein shall have the same respective
meanings as are given such terms in the Lease unless expressly provided
otherwise in this Amendment.

2. Condition of the Premises. Commencing on January 1, 2011, Landlord shall
provide Tenant with an improvement allowance equal to One Million Six Hundred
Thousand Dollars ($1,600,000) (the “Tenant Improvement Allowance”) to be applied
toward the construction of tenant improvements and other renovations to the
Premises in accordance with the terms of the Tenant Work Letter attached hereto
as Exhibit A. Except as expressly provided above, Tenant shall continue to
accept the Premises in their currently existing “as-is” condition, and Landlord
shall not be obligated to provide or pay for any work or services related to the
improvement of the Premises.

3. Extended Lease Term. Pursuant to the Lease, the Lease Term is scheduled to
expire on February 6, 2014. Landlord and Tenant hereby agree to extend the Lease
Term for a period of five (5) years, to February 6, 2019 (the “Extended Lease
Term”), on the terms and conditions set forth in this Amendment.

4. Rent.

4.1 Base Rent. Prior to February 6, 2012. Tenant shall continue to pay monthly
installments of Base Rent for the Premises in accordance with the terms of

 

1

--------------------------------------------------------------------------------

Section 3.1(a) the Lease. Commencing on February 7, 2012, and continuing through
the Extended Lease Term, Tenant shall pay monthly installments of Base Rent for
the Premises as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period During Extended Term

  

Annual
Base Rent

 

  

Monthly
Installment
of Base Rent

 

  

Monthly
Rental Rate
per Square  Foot

 

 

 

 

 

February 7, 2012 - February 6, 2013

  

$

1,781,910.00

  

  

$

148,492.50

  

  

$

3.25

  

 

 

 

 

February 7, 2013 - February 6, 2014

  

$

1,836,738.00

  

  

$

153,061.50

  

  

$

3.35

  

 

 

 

 

February 7, 2014 - February 6, 2015

  

$

1,891,566.00

  

  

$

157,630.50

  

  

$

3.45

  

 

 

 

 

February 7, 2015 - February 6, 2016

  

$

1,946,394.00

  

  

$

162,199.50

  

  

$

3.55

  

 

 

 

 

February 7, 2016 - February 6, 2017

  

$

2,006,704.80

  

  

$

167,225.40

  

  

$

3.66

  

 

 

 

 

February 7, 2017 - February 6, 2018

  

$

2,067,015.60

  

  

$

172,251.30

  

  

$

3.77

  

 

 

 

 

February 7, 2018 - February 6, 2019

  

$

2,127,326.40

  

  

$

177,277.20

  

  

$

3.88

  

4.2 Additional Rent. Prior to and during the Extended Term, Tenant shall
continue to pay Tenant’s Operating Cost Share of the Operating Expenses and all
other monetary obligations of Tenant in accordance with the terms of the Lease.

5. Option to Extend Term. Tenant shall continue to have two (2) options to
extend the term of the Lease as of the end of the Extended Term as provided
in Section 2.6 of the Original Lease, provided that the Original Lease as it
relates to such options is hereby amended as follows.

5.1 Term of Extension. The length of each such option term shall be three
(3) years, and not five (5) years as provided in the Original Lease.

5.2 Rental During Option Term. The rental increases of “one hundred four percent
(104%)” as provided in subsections (i) and (ii) of Section 3.1(b) of the
Original Lease, are hereby amended to be rental increases of “one hundred three
percent (103%)”.

 

2

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6. Notices. Landlord’s address for Notices under Section 17.1 of the Lease shall
be changed to the following:

 

 

 

 

if to Landlord:

  

HCP LS Redwood City, LLC

 

  

c/o HCP, Inc.

 

  

3760 Kilroy Airport Way, Suite 300

 

  

Long Beach, CA 90806

 

  

Attention: Legal Department

 

 

 

  

and

 

 

 

  

HCP Life Science Estates

 

  

400 Oyster Point Boulevard, Suite 409

 

  

South San Francisco, CA 94080

 

  

Attention: Jon Bergschneider

 

 

 

  

and

 

 

 

  

Allen Matkins Leck Gamble Mallory & Natsis LLP

 

  

1901 Avenue of the Stars

 

  

Suite 1800

 

  

Los Angeles, California 90067

 

  

Attention: Anton N. Natsis, Esq.

7. Broker. Landlord and Tenant hereby warrant to each other that they have had
no dealings with any real estate broker or agent in connection with the
negotiation of this Amendment other than CB Richard Ellis, Inc. (the “Broker”),
representing both Landlord and Tenant, and that they know of no other real
estate broker or agent who is entitled to a commission in connection with this
Amendment. Each party agrees to indemnify and defend the other party against and
hold the other party harmless from any and all claims, demands, losses,
liabilities, lawsuits, judgments, costs and expenses (including without
limitation reasonable attorneys’ fees) with respect to any leasing commission or
equivalent compensation alleged to be owing on account of any dealings with any
real estate broker or agent, other than the Broker, occurring by, through, or
under the indemnifying party. Landlord shall be responsible for all leasing
commissions and/or equivalent compensation payable to the Broker in connection
with this Amendment. The terms of this Section 7 shall survive the expiration or
earlier termination of the term of the Lease, as hereby amended.

8. No Further Modification. Except as specifically set forth in this Amendment,
all of the terms and provisions of the Lease shall remain unmodified and in full
force and effect.

 

3

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IN WITNESS WHEREOF, this Amendment has been executed as of the day and year
first above written.

 

 

 

 

 

 

 

 

“LANDLORD”

 

HCP LS REDWOOD CITY, LLC,

 

 

a Delaware limited liability company

 

 

 

 

 

By:

 

/s/ Jonathan M. Bergschneider

 

 

 

 

 

 

 

 

Name:

 

Jonathan M. Bergschneider

 

 

 

 

 

 

 

 

Its:

 

SVP

 

 

“TENANT”

 

ONCOMED PHARMACEUTICALS, INC.,

 

 

a Delaware corporation

 

 

 

 

 

By:

 

/s/ Paul J. Hastings

 

 

 

 

 

 

 

 

Its:

 

CEO & President

 

 

 

 

Date:

 

12/22/10

 

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EXHIBIT A

TENANT WORK LETTER

This Tenant Work Letter shall set forth the terms and conditions relating to the
initial improvement of the Premises for Tenant following the date of this
Amendment. This Tenant Work Letter is essentially organized chronologically and
addresses the issues of construction, in sequence, as such issues will arise
during construction in the Premises.

SECTION 1

CONDITION OF PREMISES

Tenant acknowledges that Tenant has been occupying the Premises in accordance
with the Lease, and shall continue to accept the Premises in their existing,
“as-is” condition on the date of delivery thereof to Tenant. Except for the
payment of the Tenant Improvement Allowance as provided in Section 2, below,
Landlord shall have no obligation to make or pay for any improvements to the
Premises.

SECTION 2

TENANT IMPROVEMENTS

2.1 Tenant Improvement Allowance. Commencing as of January 1, 2011, Tenant shall
be entitled to use the “Tenant Improvement Allowance”, as defined
in Section 2 of this Amendment, for the costs relating to the design and
construction of Tenant’s improvements or which are otherwise “Tenant Improvement
Allowance items,” as that term is defined in Section 2.2.1, below (collectively,
the “Tenant Improvements”). In no event shall Landlord be obligated to make
disbursements pursuant to this Tenant Work Letter or otherwise in connection
with Tenant’s construction of the Tenant Improvements or any Tenant Improvement
Allowance Items, as defined below, in a total amount which exceeds the sum of
the Tenant Improvement Allowance. All Tenant Improvements for which the Tenant
Improvement Allowance has been made available shall be deemed Landlord’s
property under the terms of the Lease; provided, however, Landlord may, by
written notice to Tenant given concurrently with Landlord’s approval of the
“Final Working Drawings”, as that term is defined in Section 3.3, below, require
Tenant, prior to the end of the Lease Term or promptly following any earlier
termination of this Lease, at Tenant’s expense, to remove any Tenant
Improvements and to repair any damage to the Premises and Building caused by
such removal and return the affected portion of the Premises to a Building
standard general office condition; provided, however, that Landlord shall not
require Tenant to remove upon termination or expiration of this Lease, or
condition its approval upon Tenant’s agreement to remove upon termination or
expiration of this Lease, any Tenant Improvements constructed pursuant to this
Tenant Work Letter (including, without limitation, Larc improvements) which
constitute standard, non-extraordinary improvements for ordinary office,
laboratory and/or Larc uses in biotech facilities. Any portion of the Tenant
Improvement Allowance that is not disbursed or allocated for disbursement by
December 31, 2013, shall revert to Landlord and Tenant shall have no further
rights with respect thereto.

 

EXHIBIT A

1

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2.2 Disbursement of the Tenant Improvement Allowance.

2.2.1 Tenant Improvement Allowance Items. Except as otherwise set forth in this
Tenant Work Letter, the Tenant Improvement Allowance shall be disbursed by
Landlord only for the following items and costs (collectively the “Tenant
Improvement Allowance Items”):

2.2.1.1 Payment of all reasonable fees of the “Architect” and the “Engineers,”
as those terms are defined in Section 3.1 of this Tenant Work Letter, project
management fees, and payment of the fees incurred by, and the cost of documents
and materials supplied by, Tenant and Tenant’s consultants in connection with
the preparation and review of the “Construction Drawings,” as that term is
defined in Section 3.2 of this Tenant Work Letter;

2.2.1.2 The payment of plan check, permit and license fees relating to
construction of the Tenant Improvements;

2.2.1.3 The payment for all demolition and removal of existing improvements in
the Premises;

2.2.1.4 The cost of the design and construction of the Tenant Improvements,
including, without limitation, testing and inspection costs, costs incurred for
removal of existing furniture, fixtures or equipment in the Premises, hoisting
and trash removal costs, costs to remove wiring and cabling, costs to install
wiring and cabling other than related to telecom or data uses, costs to purchase
and install in the Premises equipment customarily incorporated into laboratory
improvements or laboratory utility systems, including, without limitation, UPS,
DI Systems, boilers, air compressors, glass/cage washers and autoclaves,
painting, and contractors’ fees and general conditions;

2.2.1.5 The cost of any changes in the Base Building when such changes are
required by the Construction Drawings (including if such changes are due to the
fact that such work is prepared on an unoccupied basis), such cost to include
all direct architectural and/or engineering fees and expenses incurred in
connection therewith;

2.2.1.6 The cost of any changes to the Construction Drawings or Tenant
Improvements required by all applicable building codes (the “Code”);

2.2.1.7 Sales and use taxes; and

2.2.1.8 Up to Three Hundred Twenty Thousand Dollars ($320,000) of the Tenant
Improvement Allowance not otherwise used for items set forth in Section 2.2.1.4,
above, may be used toward the purchase of furniture, fixtures and equipment
(“FF&E”) (any FF&E purchased through the use of the Tenant Improvement Allowance
in accordance with this Tenant Work Letter shall become property of the Landlord
and remain in the Premises upon the expiration or earlier termination of the
Lease), and for telecom and/or data wiring and cabling (provided that no more
than $15,000 of such amount may be used for Such cabling purposes).

 

EXHIBIT A

2

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2.2.3 Disbursement of Tenant Improvement Allowance. During the construction of
the Tenant Improvements, Landlord shall make monthly disbursements of the Tenant
Improvement Allowance for Tenant Improvement Allowance Items for the benefit of
Tenant and shall authorize the release of monies for the benefit of Tenant as
follows.

2.2.3.1 Monthly Disbursements. On or before the fifth (5th) day of each calendar
month, during the design and construction of the Tenant Improvements (or such
other date as Landlord may designate), Tenant shall deliver to Landlord: (i) a
request for reimbursement of amounts paid to the “Contractor,” as that term is
defined in Section 4.1.1 of this Tenant Work Letter, approved by Tenant, in a
commercially reasonable form to be provided by Landlord, showing the schedule,
by trade, of percentage of completion of the Tenant Improvements in the
Premises, detailing the portion of the work completed and the portion not
completed; (ii) invoices from all of “Tenant’s Agents,” as that term is defined
in Section 4.1.2 of this Tenant Work Letter, for labor rendered and materials
for the Premises; (iii) executed mechanic’s lien releases, as applicable, from
all of Tenant’s Agents which shall comply with the appropriate provisions, as
reasonably determined by Landlord, of California Civil Code Section 3262(d); and
(iv) all other information reasonably requested by Landlord. Tenant’s request
for payment shall be deemed Tenant’s acceptance and approval of the work
furnished and/or the materials supplied as set forth in Tenant’s payment
request. Within forty-five (45) days thereafter, Landlord shall deliver a check
to Tenant made payable to Tenant in payment of the lesser of: (A) the amounts so
requested by “tenant as set forth in this Section 2.2.3.1, above (or, subject to
the terms of Section 4.2.1, below, a percentage thereof), and (B) the balance of
any remaining available portion of the Tenant Improvement Allowance, provided
that Landlord does not dispute any request for payment based on non-compliance
of any work with the “Approved Working Drawings,” as that term is defined
in Section 3.5 below, or due to any substandard work. Landlord’s payment of such
amounts shall not be deemed Landlord’s approval or acceptance of the work
furnished or materials supplied as set forth in Tenant’s payment request.

2.2.3.2 Final Deliveries. Following the completion of construction of the Tenant
Improvements, Tenant shall deliver to Landlord properly executed final
mechanic’s lien releases in compliance with both California Civil Code
Section 3262(d)(2) and either Section 3262(d)(3) or Section 3262(d)(4) from all
of Tenant’s Agents, and a certificate certifying that the construction of the
Tenant Improvements in the Premises has been substantially completed. Tenant
shall record a valid Notice of Completion in accordance with the requirements
of Section 4.3 of this Tenant Work Letter.

2.2.3.3 Other Terms. Landlord shall only be obligated to make disbursements from
the Tenant Improvement Allowance to the extent costs are incurred by Tenant for
Tenant Improvement Allowance Items. All Tenant Improvement Allowance Items for
which the Tenant Improvement Allowance has been made available shall be deemed
Landlord’s property under the terms of this Lease.

2.3 Building Standards. The quality of Tenant Improvements shall be in keeping
with the existing improvements in the Premises.

 

EXHIBIT A

3

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SECTION 3

CONSTRUCTION DRAWINGS

3.1 Selection of Architect. Tenant shall retain an architect/space planner (the
“Architect”) approved in advance by Landlord (which approval shall not be
unreasonably withheld) to prepare the Final Space Plan and Final Working
Drawings as provided in Section 3.2 and 3.3, below. Landlord hereby approves of
WHL Architects*Planners, Inc., as a permitted Architect hereunder. Tenant shall
retain the engineering consultants or design/build subcontractors designated by
Tenant and reasonably approved in advance by Landlord (the “Engineers”) to
prepare all plans and engineering working drawings relating to the structural,
mechanical, electrical, plumbing, HVAC, lifesafety, and sprinkler work in the
Premises, which work is not part of the Base Building. All such plans and
drawings shall comply with the drawing format and specifications reasonably
determined by Landlord, and shall be subject to Landlord’s reasonable approval.
Tenant and Architect shall verify, in the field, the dimensions and conditions
as shown on the relevant portions of the Base Building plans, and Tenant and
Architect shall be solely responsible for the same, and Landlord shall have no
responsibility in connection therewith. Landlord’s review of any plans or
drawings as set forth in this Section 3, shall be for its sole purpose and shall
not imply Landlord’s review of the same, or obligate Landlord to review the
same, for quality, design, Code compliance or other like matters.

3.2 Final Space Plan. Tenant shall supply Landlord with four (4) copies signed
by Tenant of its final space plan for the Premises before any architectural
working drawings or engineering drawings have been commenced. The final space
plan (the “Final Space Plan”) shall include a layout and designation of all
offices, labs, rooms and other partitioning, their intended use, and equipment
to be contained therein. Landlord may request clarification or more specific
drawings for special use items not included in the Final Space Plan. Landlord
shall not unreasonably withhold, condition, or delay its approval of the Final
Space Plan. Landlord shall approve or reasonably disapprove of the Final Space
Plan within five (5) business days after Landlord’s receipt thereof. If Landlord
reasonably withholds its approval, Landlord shall provide Tenant with the
specific reasons therefor.

3.3 Final Working Drawings. After the Final Space Plan has been approved by
Landlord, Tenant shall supply the Engineers with a complete listing of standard
and non-standard equipment and specifications, including, without limitation,
Title 24 calculations, electrical requirements and special electrical receptacle
requirements for the Premises, to enable the Engineers and the Architect to
complete the “Final Working Drawings” (as that term is defined below) in the
manner as set forth below. Upon the approval of the Final Space Plan by Landlord
and Tenant, Tenant shall promptly cause the Architect and the Engineers to
complete the architectural and engineering drawings for the Premises, and
Architect shall compile a fully coordinated set of architectural, structural,
mechanical, electrical and plumbing working drawings in a form which is
sufficiently complete to allow all of Tenant’s Agents to bid on the work and to
obtain all applicable permits (collectively, the ‘‘Final Working Drawings”) and
shall submit the same to Landlord for Landlord’s approval, which shall not be
unreasonably withheld, conditioned, or delayed. Tenant shall supply Landlord
with four (4) copies signed by Tenant of such Final Working Drawings, Landlord
shall not unreasonably withhold, condition, or delay its approval of the Final
Working Drawings. Landlord shall approve or reasonably

 

EXHIBIT A

4

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disapprove of the Final Working Drawings within ten (10) business days after
Landlord’s receipt thereof. If Landlord reasonably withholds its approval,
Landlord shall provide Tenant with the specific reasons therefor.

3.4 Approved Working Drawings. The Final Working Drawings shall be approved by
Landlord (the “Approved Working Drawings”) prior to the commencement of
construction of the Premises by Tenant. Concurrently with Tenant’s delivery of
the Final Working Drawings to Landlord for Landlord’s approval, Tenant may
submit the same to the appropriate municipal authorities for all applicable
building permits. Tenant hereby agrees that neither Landlord nor Landlord’s
consultants shall be responsible for obtaining any building permit or
certificate of occupancy for the Premises and that obtaining the same shall be
Tenant’s responsibility; provided, however, that Landlord shall cooperate with
Tenant in executing permit applications and performing other ministerial acts
reasonably necessary to enable Tenant to obtain any such permit or certificate
of occupancy. No changes, modifications or alterations in the Approved Working
Drawings may be made without the prior written consent of Landlord, which shall
not be unreasonably withheld, conditioned, or delayed, except that Tenant shall
be entitled to make minor changes customarily made in the field without
Landlords consent, provided that Tenant shall provide notice to Landlord thereof
and any documentation received in connection with any such changes.

SECTION 4

CONSTRUCTION OF THE TENANT IMPROVEMENTS

4.1 Tenant’s Selection of Contractors.

4.1.1 The Contractor; Landlord’s Project Manager. Tenant shall retain a licensed
general contractor, approved in advance by Landlord, to construct the Tenant
Improvements (“Contractor”). Landlord’s approval of the Contractor shall not be
unreasonably withheld. Landlord hereby approves of Landmark Builders
Incorporated as a permitted Contractor hereunder. Landlord shall retain Project
Management Advisors, Inc. (“PMA”) as a third party project manager for
construction oversight of the Tenant Improvements on behalf of Landlord.
Landlord shall be solely responsible for any fee associated with such services.

4.1.2 Tenant’s Agents. All subcontractors, laborers, materialmen, and suppliers
used by Tenant (such subcontractors, laborers, materialmen, and suppliers, and
the Contractor to be known collectively as “Tenant’s Agents”). The
subcontractors used by Tenant, but not any laborers, materialmen, and suppliers,
must be approved in writing by Landlord, which approval shall not be
unreasonably withheld, conditioned, or delayed; provided, however, Landlord may
nevertheless reasonably designate and reasonably require the use of particular
mechanical, engineering, plumbing, fire life-safety and other Base Building
subcontractors. If Landlord does not approve any of Tenant’s proposed
subcontractors, Tenant shall submit other proposed subcontractors for Landlord’s
written approval.

 

EXHIBIT A

5

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4.2 Construction of Tenant Improvements by Tenant’s Agents.

4.2.1 Construction Contract; Cost Budget. Tenant shall engage the Contractor
under a commercially reasonable and customary construction contract, reasonably
approved by Landlord (collectively, the “Contract”). Prior to the commencement
of the construction of the Tenant Improvements, and after Tenant has accepted
all bids for the Tenant Improvements, Tenant shall provide Landlord with a
detailed breakdown, by trade, of the final costs to be incurred or which have
been incurred, as set forth more particularly
in Sections 2.2.1.1 through 2.2.1.9, above, in connection with the design and
construction of the Tenant Improvements to be performed by or at the direction
of Tenant or the Contractor, which costs form a basis for the estimated total
costs of the work of the Tenant Improvement project (the “Final Budget”). Prior
to the commencement of construction of the Tenant Improvements, Tenant shall
inform Landlord of the amount (the “Over-Allowance Amount”), if any, by which
the amount of the Final Budget exceeds the amount of the Tenant Improvement
Allowance (less any portion thereof already disbursed by Landlord, or in the
process of being disbursed by Landlord, on or before the commencement of
construction of the Tenant Improvements). Tenant shall be responsible to pay any
Over-Allowance Amount in progress payments on a pro rata basis based on the
total Over-Allowance Amount as compared to the Tenant Improvement Allowance.

4.2.2 Tenant’s Agents.

4.2.2.1 Compliance with Drawings and Schedule. Tenant’s and Tenant’s Agent’s
construction of the Tenant Improvements shall comply with the following: (i) the
Tenant Improvements shall be constructed in substantial accordance with the
Approved Working Drawings; and (ii) Tenant’s Agents shall endeavor to submit
schedules of all work relating to the Tenant’s Improvements to Contractor and
Contractor shall endeavor, within five (5) business days of receipt thereof, to
inform Tenant’s Agents of any changes which are necessary thereto, and Tenant’s
Agents shall endeavor to adhere to such corrected schedule.

4.2.2.2 Indemnity. Tenant’s indemnity of Landlord as set forth in this Lease
shall also apply with respect to any and all costs, losses, damages, injuries
and liabilities related in any way to any act or omission of Tenant or Tenant’s
Agents, or anyone directly or indirectly employed by any of them, or in
connection with Tenant’s non-payment of any amount arising out of the Tenant
improvements and/or Tenant’s disapproval of all or any portion of any request
for payment. Such indemnity by Tenant, as set forth in this Lease, shall also
apply with respect to any and all costs, losses, damages, injuries and
liabilities related in any way to Landlord’s performance of any ministerial acts
reasonably necessary (i) to permit Tenant to complete the Tenant Improvements,
and (ii) to enable Tenant to obtain any building permit or certificate of
occupancy for the Premises. The foregoing indemnities shall not apply to claims
caused by the negligence or willful misconduct of Landlord, its member partners,
shareholders, officers, directors, agents, employees, and/or contractors.

4.2.2.3 Requirements of Tenant’s Agents. Each of Tenant’s Agents shall provide
to Tenant and for the benefit of Landlord a commercially reasonable and
customary warranty covering the portion of the Tenant Improvements for which it
is responsible, which warranty shall be for a period of not less than one
(1) year from the date of substantial

 

EXHIBIT A

6

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completion of the work under the Contract (“Substantial Completion”). All such
warranties as to materials or workmanship of or with respect to the Tenant
Improvements shall be contained in the Contract or subcontract and shall be
written such that such warranties shall inure to the benefit of both Landlord
and Tenant, as their respective interests may appear, and can be directly
enforced by either.

4.2.2.4 Insurance Requirements.

4.2.2.4.1 General Coverages. All of Tenant’s Agents shall carry worker’s
compensation insurance covering all of their respective employees, and shall
also carry public liability insurance, including property damage, all with
limits, in form and with companies as are required to be carried by Tenant’s
contractors as set forth in Section 7.1 of the Lease.

4.2.2.4.2 Special Coverages. Tenant shall carry “Builder’s All Risk” insurance
in an amount approved by Landlord covering the construction of the Tenant
Improvements, and such other insurance as Landlord may require, but Landlord
shall insure the Tenant Improvements pursuant to the Lease immediately upon
completion thereof in the same manner as Landlord is required to insure the
“Tenant Improvements constructed by Landlord” pursuant to Section 10.1(d) of the
Lease. Such insurance shall be in amounts and shall include such extended
coverage endorsements as may be reasonably required by Landlord including, but
not limited to, the requirement that all of Tenant’s Agents, including all
contractors, shall carry general liability, including Products and Completed
Operation Coverage insurance, each in amounts not less than (i) for the
Contractor, $5,000,000 per incident, $5,000,000 in aggregate, and (ii) for
subcontractors, $2,000,000 per incident, $2,000,000 in aggregate (or such lesser
amounts as are reasonably approved in advance by Landlord), as well as workers
compensation insurance and in form and with companies as are required to be
carried by Tenant’s contractors as set forth in the Lease.

4.2.2.4.3 General Terms. Certificates for all insurance carried pursuant to
this Section 4.2.2.4 Shall be delivered to Landlord before the commencement of
construction of the Tenant Improvements and before any equipment of Tenant’s
Agents is moved onto the site. All such policies of insurance must contain a
provision that the company writing said policy will endeavor to give Landlord
thirty (30) days prior written notice of any cancellation or lapse of the
effective date or any reduction in the amounts of such insurance. Tenant shall
provide Landlord notice of any cancellation or lapse of the effective date or
reduction in the amounts of such insurance promptly following Tenant’s receipt
of such notice from its insurer. In the event that the Tenant Improvements are
damaged by any cause during the course of the construction thereof, Tenant shall
immediately repair the same at Tenant’s sole cost and expense. Tenant’s Agents
shall maintain all of the foregoing insurance coverage in force until the Tenant
Improvements are fully completed and accepted by Landlord, except for Products
and Completed Operations Coverage insurance required by Landlord, which is to be
maintained for a commercially reasonable period following completion of the
Tenant Improvements and acceptance by Landlord and Tenant. The builders risk
policy carried under thisSection 4.2.2.4 shall name Tenant’s agents and Landlord
as Additional Insureds. All insurance maintained by Tenant’s Agents shall
preclude subrogation claims by the insurer against anyone insured thereunder,
and the public liability insurance shall name Landlord, HCP, Inc., Project
Management Advisors, Inc., CB Richard Ellis, or other manager of the Project, as

 

EXHIBIT A

7

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an additional insured or loss payee, as applicable. Such insurance shall provide
that it is primary insurance and that any other insurance maintained by Landlord
is excess and noncontributing with the insurance required hereunder, The
requirements for the foregoing insurance shall not serve to limit the
indemnification of Landlord by Tenant under Section 4.2.2.2 of this Tenant Work
Letter. If the Over-Allowance Amount is more than fifty percent of the total
amount of the Tenant Improvement Allowance, then Landlord may, in its reasonable
discretion, require Tenant to obtain a lien and completion bond or some
alternate form of security satisfactory to Landlord in an amount sufficient to
ensure the lien-free completion of the Tenant Improvements and naming Landlord
as a co-obligee.

4.2.3 Governmental Compliance. The Tenant Improvements shall comply in all
respects with the following: (i) all state, federal, city or quasi-governmental
laws, codes, ordinances and regulations, as each may apply according to the
rulings of the controlling public official, agent or other person;
(ii) applicable standards of the American Insurance Association (formerly, the
National Board of Fire Underwriters) and the National Electrical Code; and
(iii) building material manufacturer’s specifications.

4.2.4 Inspection by Landlord. Landlord shall have the right to reasonably
inspect the Tenant Improvements at all times, provided however, that Landlord’s
failure to inspect the Tenant Improvements shall in no event constitute a waiver
of any of Landlord’s rights hereunder nor shall Landlord’s inspection of the
Tenant Improvements constitute Landlord’s approval of the same. Should Landlord
reasonably disapprove any portion of the Tenant Improvements, on the grounds
that the construction is defective or fails to comply with the Approved Working
Drawings, Landlord shall notify Tenant in writing of such disapproval and shall
specify the items disapproved. Any such defects or deviations shall be rectified
by Tenant at no expense to Landlord, provided however, that in the event
Landlord determines that a defect or deviation exists that might adversely
affect the mechanical, electrical, plumbing, heating, ventilating and air
conditioning or life-safety systems of the Building, the structure or exterior
appearance of the Building or any other tenant’s use of such other tenant’s
leased premises, Landlord may, take such action as Landlord reasonably deems
necessary, at Tenant’s expense and without incurring any liability on Landlord’s
part, to correct any such defect and/or deviation, including, without
limitation, causing the cessation of performance of the construction of the
Tenant Improvements until such time as the defect and/or deviation is corrected
to Landlord’s reasonable satisfaction.

4.2.5 Meetings. Commencing upon the execution of this Lease, Tenant shall hold
weekly meetings at a reasonable time, as reasonably required, with the Architect
and the Contractor regarding the progress of the preparation of Construction
Drawings and the construction of the Tenant Improvements, and Landlord and/or
its agents shall receive prior notice of, and shall have the right to attend,
all such meetings, and, upon Landlord’s request, certain of Tenant’s Agents
shall attend such meetings. In addition, minutes shall be taken at all such
meetings, a copy of which minutes shall be promptly delivered to Landlord. One
such meeting each month shall include the review of Contractor’s current request
for payment.

4.3 Notice of Completion; Copy of Record Set of Plans. Within ten (10) days
after completion of construction of The Tenant Improvements, Tenant shall cause
a valid Notice of Completion to be recorded in the office of the Recorder of the
county in which the Building is

 

EXHIBIT A

8

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located in accordance with Section 3093 of the Civil Code of the State of
California or any successor statute, and shall furnish a copy thereof to
Landlord upon such recordation. If Tenant fails to do so, Landlord may execute
and file the same on behalf of Tenant as Tenant’s agent for such purpose, at
Tenant’s sole cost and expense. At the conclusion of construction, (i) Tenant
shall cause the Architect and Contractor (x) to update the Approved Working
Drawings as necessary to reflect all changes made to the Approved Working
Drawings during the course of construction, (y) to certify to the best of their
knowledge that the “record-set” of as-built drawings are true and correct, which
certification shall survive the expiration or termination of this Lease, and
(z) to deliver to Landlord two (2) sets of copies of such record set of drawings
(hard copy and CAD files) within ninety (90) days following issuance of a
certificate of occupancy for the Premises, and (ii) Tenant shall deliver to
Landlord a copy of all warranties and operating manuals and information relating
to the Tenant Improvements. Within fifteen (15) days after request by Tenant
following the Substantial Completion of the Tenant Improvements, Landlord will
acknowledge its approval of the Tenant Improvements (provided that such approval
has been granted) by placing its signature on a Contractor’s Certificate of
Substantial Completion fully executed by the Architect, Contractor and Tenant.
Landlord’s approval shall not create any contingent liabilities for Landlord
with respect to any latent quality, design, Code compliance or other like
matters that may arise subsequent to Landlord’s approval.

SECTION 5

MISCELLANEOUS

5.1 Tenant’s Representative. Tenant has designated Chuck Alaimo as its sole
representatives with respect to the matters set forth in this Tenant Work
Letter, who shall each have full authority and responsibility to act on behalf
of the Tenant as required in this Tenant Work Letter.

5.2 Landlord’s Representative. Landlord has designated Bernie Baker and/or Jeff
Marcowitz with PMA, as its sole representatives with respect to the matters set
forth in this Tenant Work Letter, who, until further notice to Tenant, shall
have full authority and responsibility to act on behalf of the Landlord as
required in this Tenant Work Letter.

5.3 Time is of the Essence in This Tenant Work Letter. Unless otherwise
indicated, all references herein to a “number of days” shall mean and refer to
calendar days. If any item requiring approval is timely disapproved by Landlord,
the procedure for preparation of the document and approval thereof shall be
repeated until the document is approved by Landlord.

5.4 Tenant’s Lease Default. Notwithstanding any provision to the contrary
contained in the Lease or this Tenant Work Letter, if any default by Tenant
under the Lease or this Tenant Work Letter (including, without limitation, any
failure by Tenant to fund any portion of the Over-Allowance Amount) occurs at
any time on or before the substantial completion of the Tenant Improvements and
such default remains uncured ten (10) days following Landlord’s notice of such
default to Tenant, then in addition to all other rights and remedies granted to
Landlord pursuant to the Lease, Landlord shall have the right, during the
continuation of such default, to withhold payment of all or any portion of the
Tenant Improvement Allowance and/or, without any liability whatsoever, to cause
the cessation of construction of the Tenant

 

EXHIBIT A

9

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Improvements (in which case, Tenant shall be responsible for any delay in the
substantial completion of the Tenant Improvements and any costs occasioned
thereby).

 

EXHIBIT A

10

 

 

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THIRD AMENDMENT TO LEASE

This THIRD AMENDMENT TO LEASE (this "Third Amendment") is made and entered into
as of the 11 day of November, 2016, by and between HCP LS REDWOOD CITY, LLC, a
Delaware limited liability company ("Landlord"), and ONCOMED PHARMACEUTICALS,
INC., a Delaware corporation ("Tenant").

R E C I T A L S :

A.Landlord (as successor in interest to Slough Redwood City, LLC) and Tenant are
parties to that certain Lease dated May 30, 2006 (the "Original Lease"), as
amended by that certain First Amendment to Lease dated November, 2006 (the
"First Amendment"), that certain Acknowledgement of Rent Commencement Date dated
as of March 9, 2007 ("Commencement Letter"), and that certain Second Amendment
to Office Lease dated December 22, 2010 (the "Second Amendment") pursuant to
which Lease Tenant leases from Landlord approximately 45,690 rentable square
feet of space (the "Existing Premises") consisting of the entire building (the
" 800 Building") located at 800 Chesapeake Drive, in the Britannia Seaport
Centre in Redwood City, California.  The Original Lease, the First Amendment,
the Commencement Letter and the Second Amendment are, collectively, the "Lease."

B.Landlord and Tenant desire (i) to extend the Lease Term of the Lease, (ii) to
expand the Existing Premises to include that certain space consisting of
approximately 22,750 rentable square feet of space consisting of space on the
first (1st) floor of the building (the "900 Building") located at 900 Chesapeake
Drive, in the Britannia Seaport Centre in Redwood City, California (the
"Expansion Premises"), as delineated on Exhibit A attached hereto and made a
part hereof, and (iii) to make other modifications to the Lease, and in
connection therewith, Landlord and Tenant desire to amend the Lease as
hereinafter provided.

A G R E E M E N T :

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

1.Capitalized Terms.  All capitalized terms when used herein shall have the same
meaning as is given such terms in the Lease unless expressly superseded by the
terms of this Third Amendment.

2.Modification of Premises.  Effective as of the date (the "Expansion
Commencement Date") which is the earlier to occur of (i) the date upon which
Tenant first commences to conduct business in the Expansion Premises and (ii)
the Target Commencement Date (as defined below), Tenant shall lease from
Landlord and Landlord shall lease to Tenant the Expansion Premises.  The “Target
Commencement Date” shall mean June 1, 2018; provided, however, if Landlord fails
to deliver possession of the Expansion Premises to Tenant on or before the
Target Delivery Date (as defined below), then the Target Commencement Date shall
be extended beyond June 1, 2018, by one (1) day for each day delivery of
possession of the

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HCP LS Redwood City, LLC

[Third Amendment]

[Oncomed Pharmaceuticals, Inc.]

 

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Expansion Premises to Tenant is delayed beyond the Target Delivery
Date.  Landlord and Tenant hereby acknowledge that the Expansion Premises shall
be occupied by a third-party tenant (the "Third Party") pursuant to a lease to
be entered into between Landlord and such Third Party (the "Third-Party
Lease").  Such Third-Party Lease shall contain an unconditional right of
Landlord to terminate the Third-Party Lease.  In the event Tenant shall lease
the Expansion Premises (either via delivery of the "Expansion Confirmation
Notice" (as that term is defined in Section 7 below) or if Tenant fails to
deliver the "Expansion Termination Notice" (as that term is defined in Section 7
below)) Landlord shall cause the Third-Party Lease to terminate on or prior to
the Target Delivery Date (by exercise of the right to terminate or otherwise),
but Landlord's ability to deliver the Expansion Premises to Tenant is expressly
conditioned upon the full vacation and surrender of the Expansion Premises by
the Third Party to Landlord.  Provided that Landlord has caused the Third-Party
Lease to terminate on or before the Target Delivery Date (by exercise of the
right to terminate or otherwise), if Landlord is unable for any reason to
deliver possession of the Expansion Premises to Tenant on or before the Target
Delivery Date, then Landlord shall not be subject to any liability for its
failure to do so, and such failure shall not affect the validity of this Third
Amendment or the obligations of Tenant hereunder.  In connection with the
foregoing, Landlord agrees to utilize commercially reasonable efforts to deliver
the Expansion Premises on or before the Target Delivery Date.  The “Target
Delivery Date” shall mean the later of (a) six (6) months following the earlier
to occur of (i) Landlord's receipt of the Expansion Confirmation Notice, and
(ii) the last day upon which Tenant may deliver the "Expansion Termination
Notice" (as that term is defined in Section 7 below) (i.e., September 15, 2017),
or (b) January 1, 2018.  Effective upon the Expansion Commencement Date, the
Existing Premises shall be increased to include the Expansion
Premises.  Landlord and Tenant hereby acknowledge that such addition of the
Expansion Premises to the Existing Premises shall, effective as of the Expansion
Commencement Date, increase the size of the Premises to approximately 68,440
rentable square feet.  The Existing Premises and the Expansion Premises may
hereinafter collectively be referred to as the "Premises".  Notwithstanding the
foregoing, in the event Landlord is not able to deliver the Expansion Premises
to Tenant on or before June 1, 2018 (subject to extension by virtue of delays
resulting from events of "Force Majeure" (as that term is defined below), then
commencing on the Expansion Commencement Date, Tenant shall receive one (1) day
of abatement of Base Rent with respect to the Expansion Premises for each day
delivery of the Expansion Premises is delayed beyond June 1, 2018.  For purposes
of this Third Amendment, Force Majeure shall mean any prevention, delay or
stoppage due to strikes, lockouts, labor disputes, acts of God, inability to
obtain services, labor, or materials or reasonable substitutes therefor,
governmental actions, civil commotions, fire or other casualty, and other causes
beyond the reasonable control of the party obligated to perform (collectively,
a "Force Majeure").  Force Majeure shall not include a holdover of the Expansion
Premises by the Third Party.

3.Lease Term.  

3.1.Expansion Term.  Landlord and Tenant acknowledge that Tenant's lease of the
Existing Premises is scheduled to expire on February 6, 2019, pursuant to the
terms of the Lease.  Notwithstanding anything to the contrary in the Lease, the
term of Tenant's lease of the Existing Premises is hereby extended and shall
expire coterminously with the term of Tenant's lease of the Expansion Premises
on May 31, 2028 (the "Expansion Expiration Date"), unless sooner terminated as
provided in the Lease, as hereby amended, provided that in the event

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HCP LS Redwood City, LLC

[Third Amendment]

[Oncomed Pharmaceuticals, Inc.]

 

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Tenant timely exercises the Expansion Termination Right, then the Lease Term
with respect to the Existing Premises shall still be extended to and shall
expire on May 31, 2028.  The period of time commencing on the Expansion
Commencement Date and terminating on the Expansion Expiration Date, shall be
referred to herein as the "Expansion Term."  

3.2.Option Term.  Landlord and Tenant acknowledge and agree that notwithstanding
the extension of the Lease Term set forth in Section 3.1 above, Tenant shall
retain one (1) option to extend the Expansion Term (with respect to the
Expansion Premises) and to further extend the Lease Term (with respect to the
Existing Premises) as set forth in Section 2.6 of the Original Lease (as amended
pursuant to Section 5 of the Second Amendment), provided that all references to
the "Premises" therein shall be deemed to be references to both the Existing
Premises and the Expansion Premises.

4.Base Rent.  

4.1.Existing Premises.  Prior to September 1, 2016, Tenant continued to pay Base
Rent (also referred to as “minimum rental” under the Lease) for the Existing
Premises in accordance with the terms of the Lease.  Commencing retroactively on
September 1, 2016, and continuing throughout the remainder of the Lease Term,
Tenant shall pay to Landlord monthly installments of Base Rent for the Existing
Premises as follows:

 

 

 

 

Period During
Expansion Term

Annualized
Base Rent

Monthly
Installment
of Base Rent

Approximate
Monthly
Rental Rate
per Rentable
Square Foot

September 1, 2016 – 
May 31, 2018

$2,275,362.00

$189,613.50

$4.15

June 1, 2018 – 
May 31, 2019

$2,357,604.00

$196,467.00

$4.30

June 1, 2019 – 
May 31, 2020

$2,440,120.14

$203,343.35

$4.45

June 1, 2020 – 
May 31, 2021

$2,525,524.34

$210,460.36

$4.61

June 1, 2021 – 
May 31, 2022

$2,613,917.70

$217,826.47

$4.77

June 1, 2022 – 
May 31, 2023

$2,705,404.82

$225,450.40

$4.93

June 1, 2023 – 
May 31, 2024

$2,800,093.98

$233,341.17

$5.11

June 1, 2024 – 
May 31, 2025

$2,898,097.27

$241,508.11

$5.29

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HCP LS Redwood City, LLC

[Third Amendment]

[Oncomed Pharmaceuticals, Inc.]

 

 

 

 

 

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June 1, 2025 – 
May 31, 2026

$2,999,530.68

$249,960.89

$5.47

June 1, 2026 – 
May 31, 2027

$3,104,514.25

$258,709.52

$5.66

June 1, 2027 – 
May 31, 2028

$3,213,172.25

$267,764.35

$5.86

4.2.Existing Premises Abated Base Rent.  Provided that Tenant is not then in
default of the Lease (as hereby amended) beyond the applicable notice and cure
periods set forth in the Lease, as amended, then during the period commencing on
September 1, 2016 and ending on March 31, 2017 (the "Existing Premises Rent
Abatement Period"), Tenant shall not be obligated to pay any Base Rent otherwise
attributable to the Existing Premises during such Existing Premises Rent
Abatement Period (the "Existing Premises Rent Abatement").  Landlord and Tenant
acknowledge that the aggregate amount of the Existing Premises Rent Abatement
equals $1,327,294.50 (i.e., $189,613.50 per month).  Tenant acknowledges and
agrees that the foregoing Existing Premises Rent Abatement has been granted to
Tenant as additional consideration for entering into this Third Amendment, and
for agreeing to pay the rent and performing the terms and conditions otherwise
required under the Lease (as hereby amended).  

4.3.Expansion Premises.  Commencing on the Expansion Commencement Date and
continuing throughout the Expansion Term, Tenant shall pay to Landlord monthly
installments of Base Rent (also referred to as “minimum rental” under the Lease)
for the Expansion Premises as follows:

 

 

 

 

Period During
Expansion Term

Annual
Base Rent

Monthly
Installment
of Base Rent

Approximate
Monthly
Rental Rate
per Rentable
Square Foot

Expansion Commencement Date – 
May 31, 2019

$1,173,900.00

$97,825.00

$4.30

June 1, 2019 – 
May 31, 2020

$1,214,986.50

$101,248.88

$4.45

June 1, 2020 – 
May 31, 2021

$1,257,511.03

$104,792.59

$4.61

June 1, 2021 – 
May 31, 2022

$1,301,523.91

$108,460.33

$4.77

June 1, 2022 – 
May 31, 2023

$1,347,077.25

$112,256.44

$4.93

June 1, 2023 – 
May 31, 2024

$1,394,224.95

$116,185.41

$5.11

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HCP LS Redwood City, LLC

[Third Amendment]

[Oncomed Pharmaceuticals, Inc.]

 

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June 1, 2024 – 
May 31, 2025

$1,443,022.83

$120,251.90

$5.29

June 1, 2025 – 
May 31, 2026

$1,493,528.63

$124,460.72

$5.47

June 1, 2026 – 
May 31, 2027

$1,545,802.13

$128,816.84

$5.66

June 1, 2027 – 
May 31, 2028

$1,599,905.20

$133,325.43

$5.86

On or before the Expansion Commencement Date, Tenant shall pay to Landlord the
Base Rent payable for the Expansion Premises for the first full month of the
Expansion Term.

5.Tenant's Operating Cost Share of Operating Expenses.  

5.1.Existing Premises.  Notwithstanding the extension of the Lease Term as
provided herein, Tenant shall continue to be obligated to pay Tenant's Operating
Cost Share of the Operating Expenses in connection with the Existing Premises in
accordance with the terms of the Lease; provided that Landlord and Tenant hereby
acknowledge and agree that Tenant shall not be obligated to pay Tenant's
Operating Cost Share of the Operating Expenses during the period commencing
retroactively on September 1, 2016 through December 31, 2016.  In connection
with the foregoing, Landlord and Tenant acknowledge and agree that Tenant has
paid minimum rental and Tenant's Operating Cost Share of the Operating Expenses
for September 2016, October 2016 and November 2016, and accordingly, within
forty-five (45) days following the full execution and delivery of this Third
Amendment by Landlord and Tenant, Landlord shall deliver a check to Tenant
reimbursing Tenant for such payments previously received by Landlord.

5.2.Expansion Premises.  Except as specifically set forth in this Section 5.2,
commencing on the Expansion Commencement Date, Tenant shall pay Tenant's Share
of Direct Expenses in connection with the Expansion Premises in accordance with
the terms of the Lease, provided that with respect to the calculation of
Tenant's Operating Cost Share of the Operating Expenses in connection with the
Expansion Premises, Tenant's Operating Cost Share shall equal 50% of the 900
Building.

6.Improvements.  Except as specifically set forth in the Tenant Work Letter
attached to this Third Amendment as Exhibit B (the "Tenant Work Letter"),
Landlord shall not be obligated to provide or pay for any improvement work or
services related to the improvement of the Expansion Premises.  Landlord shall
deliver the Expansion Premises to Tenant in good, vacant, broom clean condition,
in compliance with all laws (to the extent required to obtain or maintain a
certificate of occupancy for the Expansion Premises), with the roof water-tight
and shall cause the plumbing, electrical systems, fire sprinkler system,
lighting, and all other building systems serving the Expansion Premises to be in
good operating condition and repair on or before the Expansion Commencement
Date.  Tenant shall otherwise accept the Expansion Premises and continue to
accept the Existing Premises in their presently existing, "as-is"
condition.  For purposes of Section 1938 of the California Civil Code, Landlord
hereby discloses

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HCP LS Redwood City, LLC

[Third Amendment]

[Oncomed Pharmaceuticals, Inc.]

 

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to Tenant, and Tenant hereby acknowledges that the Common Areas and the Premises
have not undergone inspection by a Certified Access Specialist (CASp).

7.Expansion Premises Termination Right.  Notwithstanding any provision to the
contrary contained in the Lease (as amended), Tenant shall have the right (the
"Expansion Termination Right"), upon written notice to Landlord (the "Expansion
Termination Notice") delivered no later than September 15, 2017, to terminate
Tenant's lease of the Expansion Premises only.  Provided that Tenant timely
delivers the Expansion Termination Notice as set forth above, then (i) the Lease
with respect to the Expansion Premises only shall automatically terminate and be
of no further force or effect, (ii) Landlord and Tenant shall be relieved of
their respective obligations under the Lease, as amended, solely with respect to
the Expansion Premises, (iii) the Premises shall be decreased to exclude the
Expansion Premises and thereafter, all references in the Lease and this Third
Amendment to the term "Premises" shall be deemed to refer to only the Existing
Premises, (iv) the applicable portions of this Third Amendment which relate
solely to the Expansion Premises (specifically including, without
limitation, Sections 2, 4.3, 5.2 and 9) shall be deemed null and void and of no
further force or effect, and the portions of this Amendment which relate solely
to the Existing Premises shall remain unmodified and of full force and effect,
and (v) Tenant shall only be entitled to receive the "Existing Premises
Improvement Allowance" (as defined in the Tenant Work Letter) and Tenant would
forfeit any and all right to the "Expansion Premises Improvement Allowance" (as
defined in the Tenant Work Letter). In connection with the foregoing, Tenant
hereby agrees that if prior to September 15, 2017, Tenant determines that Tenant
shall lease the Expansion Premises pursuant to the terms of this Third
Amendment, Tenant shall provide written notice of the same to Landlord (the
"Expansion Confirmation Notice"), in which event Landlord and Tenant shall
promptly thereafter execute an amendment (substantially in the form
of Exhibit C attached hereto) to the Lease deleting the Expansion Premises
Termination Right and confirming Tenant's lease of the Expansion Premises
pursuant to the terms of this Third Amendment.  Notwithstanding the foregoing
documentation obligation, Landlord and Tenant hereby acknowledge and agree that
Tenant's delivery of the Expansion Confirmation Notice (or Tenant's failure to
timely deliver the Expansion Termination Notice) shall, in and of itself,
conclusively establish Tenant's obligation to lease the Expansion Premises and
Landlord’s obligation to lease to Tenant the Expansion Premises) on the express
terms, covenants and conditions set forth in this Third Amendment.  

8.Broker.  Landlord and Tenant hereby warrant to each other that they have had
no dealings with any real estate broker or agent in connection with the
negotiation of this Third Amendment other than CBRE, Inc. (the "Broker"), and
that they know of no other real estate broker or agent who is entitled to a
commission in connection with this Third Amendment.  Landlord shall pay the
Brokers the commissions payable in connection with this Third Amendment pursuant
to a separate agreement.  Each party agrees to indemnify and defend the other
party against and hold the other party harmless from any and all claims,
demands, losses, liabilities, lawsuits, judgments, and costs and expenses
(including, without limitation, reasonable attorneys' fees) with respect to any
leasing commission or equivalent compensation alleged to be owing on account of
the indemnifying party's dealings with any real estate broker or agent, other
than the Broker.  The terms of this Section 8 shall survive the expiration or
earlier termination of the term of the Lease, as hereby amended.

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HCP LS Redwood City, LLC

[Third Amendment]

[Oncomed Pharmaceuticals, Inc.]

 

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9.Insurance / Restoration.  Landlord and Tenant agree that the Tenant
Improvements under the Tenant Work Letter (and the Tenant Improvements under the
Second Amendment) shall be deemed to be “Tenant Improvements constructed by
Landlord” for purposes of Sections 10.1(c), 10.1(d) and 13.1(a) of the Lease.  

10.No Mortgage.  Landlord represents and warrants to Tenant that as of the date
of this Third Amendment, neither the Premises, the 800 Building, the 900
Building nor the Center is subject to any existing ground lease, mortgage, deed
of trust, sale/leaseback transaction or any other hypothecation for security.

11.No Further Modification.  Except as set forth in this Third Amendment, all of
the terms and provisions of the Lease shall remain unmodified and in full force
and effect.  The terms of that certain letter of intent dated September 19, 2016
executed by the parties hereto shall be deemed null and void and of no force or
effect.

[signatures contained on following page]

 

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HCP LS Redwood City, LLC

[Third Amendment]

[Oncomed Pharmaceuticals, Inc.]

 

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IN WITNESS WHEREOF, this Third Amendment has been executed as of the day and
year first above written.  

 

LANDLORD:

 

TENANT:

 

 

 

HCP LS REDWOOD CITY, LLC,
a Delaware limited liability company

 

ONCOMED PHARMACEUTICALS, INC.,
a Delaware corporation

 

 

 

By:

/s/ Jonathan Bergschneider

 

 

 

 

Jonathan Bergschneider

 

By:

/s/ Paul J. Hastings

 

Executive Vice President

 

  

 

 

 

 

Paul J. Hastings

 

 

 

Print Name

 

 

 

 

 

 

 

 

Its:  

Chairman & CEO

 

 

 

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HCP LS Redwood City, LLC

[Third Amendment]

[Oncomed Pharmaceuticals, Inc.]

 

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EXHIBIT A

OUTLINE OF EXPANSION PREMISES

[gljm3zdhtfb0000007.jpg]

 

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EXHIBIT A

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HCP LS Redwood City, LLC

[Third Amendment]

[Oncomed Pharmaceuticals, Inc.]

 

 

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EXHIBIT B

TENANT WORK LETTER

This Tenant Work Letter shall set forth the terms and conditions relating to the
initial improvement of the Premises for Tenant following the date of this Third
Amendment.  This Tenant Work Letter is essentially organized chronologically and
addresses the issues of construction, in sequence, as such issues will arise
during construction in the Premises.    

SECTION 1

CONDITION OF PREMISES

Landlord shall deliver the Expansion Premises to Tenant in good, vacant, broom
clean condition, in compliance with all laws (to the extent required to obtain
or maintain a certificate of occupancy for the Expansion Premises), with the
roof water-tight and shall cause the plumbing, electrical systems, fire
sprinkler system, lighting, and all other building systems serving the Expansion
Premises to be in good operating condition and repair on or before the Expansion
Commencement Date.  Further, Landlord at its sole cost (and at no cost to Tenant
through Operating Expenses or otherwise) shall be responsible to cause the
exterior of the 900 Building and the structural portions of the 900  Building to
be in compliance with applicable ADA requirements to the extent required to
allow the legal occupancy of the Expansion Premises for the permitted use
(subject to Tenant's interior design and utilization of existing entrances for
required egress from the 900 Building).  Tenant acknowledges that except as
provided in this Section, Tenant shall accept the Premises in their existing,
"as-is" condition on the date of delivery thereof to Tenant.  Except for the
payment of the Tenant Improvement Allowance as provided in Section 2, below,
Landlord shall have no obligation to make or pay for any improvements to the
Premises.  Further, any hazardous materials (as defined by applicable laws)
existing in the Expansion Premises as of the date of delivery of the Expansion
Premises to Tenant, if any, shall be removed or remediated by Landlord as
required by applicable laws, at Landlord's sole cost and expense (i.e., the cost
of the Tenant Improvements shall not include such costs, and the Tenant
Improvement Allowance shall not be used for such costs), except to the extent
(if any) that such hazardous materials were brought onto or released onto the
Expansion Premises, the Building or the Center through the acts or omissions of
Tenant or its employees, agents or contractors.    

SECTION 2

TENANT IMPROVEMENTS

2.1Tenant Improvement Allowance.  Commencing as of the Lease Commencement Date,
Tenant shall be entitled to use a one-time improvement allowance in the
aggregate amount of $2,400,000.00 which is comprised of (i) $1,600,000 (the
"Existing Premises Improvement Allowance"), for the costs relating to the design
and construction of Tenant's improvements, which are permanently affixed to the
Existing Premises only (the "Existing Premises Improvements") or which are
"Tenant Improvement Allowance Items," as that term is defined in Section 2.2.1,
below, and (ii) $800,000.00 (the "Expansion Premises Improvement Allowance") for
the costs relating to the design and construction of Tenant's improvements

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EXHIBIT B

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HCP LS Redwood City, LLC

[Third Amendment]

[Oncomed Pharmaceuticals, Inc.]

 

 

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which are permanently affixed to the Expansion Premises only (the "Expansion
Premises Improvements") or which are Tenant Improvement Allowance
Items.   Collectively, the Expansion Premises Improvements and the Existing
Premises Improvements are the "Tenant Improvements" and collectively the
Existing Premises Improvement Allowance and the Expansion Premises Improvement
Allowance are the "Tenant Improvement Allowance".  Tenant hereby acknowledges
and agrees that (A) Tenant shall not be entitled to receive more
than $500,000.00 of the Existing Improvement Allowance during the calendar year
2016, and (B) Tenant shall not be entitled to receive any portion of the
Expansion Premises Improvement Allowance until the earlier to occur of (a) the
date upon which the Expansion Confirmation Notice is delivered to Landlord or
(b) September 16, 2017 (assuming the Expansion Termination Notice has not
been timely delivered by Tenant, as Tenant shall forfeit any and all rights to
the Expansion Premises Improvement Allowance in the event the Expansion
Termination Notice is timely delivered to Landlord).  In no event shall Landlord
be obligated to make disbursements pursuant to this Tenant Work Letter or
otherwise in connection with Tenant's construction of the Tenant Improvements or
any Tenant Improvement Allowance Items, as defined below, in a total amount
which exceeds the sum of the Tenant Improvement Allowance.  All Tenant
Improvements for which the Tenant Improvement Allowance has been made available
shall be deemed Landlord's property under the terms of the Lease; provided,
however, Landlord may, by written notice to Tenant given concurrently with
Landlord's approval of the "Final Working Drawings", as that term is defined
in Section 3.3, below, require Tenant, prior to the end of the Lease Term,
or promptly following any earlier termination of the Lease, at Tenant's expense,
to remove any Tenant Improvements and to repair any damage to the Premises and
Building caused by such removal and return the affected portion of the Premises
to a Building standard general office condition; provided, however, that
Landlord shall not require Tenant to remove upon termination or expiration of
the Lease, or condition its approval upon Tenant’s agreement to remove upon
termination or expiration of the Lease, any Tenant Improvements constructed
pursuant to this Tenant Work Letter which constitute standard, non-extraordinary
improvements for ordinary office use.  Any portion of the Existing
Premises Improvement Allowance that is not disbursed or requested for
disbursement by the end of the first twelve (12) months following the Expansion
Commencement Date (or, in the event that Tenant timely exercises the Expansion
Termination Notice, by September 15, 2018), shall revert to Landlord and Tenant
shall have no further rights with respect thereto, and any portion of
the Expansion Premises Improvement Allowance that is not disbursed or allocated
for disbursement by the end of the first twelve (12) months following the
Expansion Commencement Date, shall revert to Landlord and Tenant shall have no
further rights with respect thereto.

2.2Disbursement of the Tenant Improvement Allowance.

2.2.1Tenant Improvement Allowance Items.  Except as otherwise set forth in this
Tenant Work Letter, the Tenant Improvement Allowance shall be disbursed by
Landlord only for the following items and costs (collectively the "Tenant
Improvement Allowance Items"):

2.2.1.1Payment of all reasonable fees of the "Architect" and the "Engineers," as
those terms are defined in Section 3.1 of this Tenant Work Letter, project
management fees payable to Project Management Advisors, Inc. ("PMA"), as
provided below, and payment of the reasonable fees incurred by, and the
reasonable cost of documents and

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EXHIBIT B

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HCP LS Redwood City, LLC

[Third Amendment]

[Oncomed Pharmaceuticals, Inc.]

 

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materials supplied by, Landlord and Landlord's consultants in connection
with third-party review of the "Construction Drawings," as that term is defined
in Section 3.2 of this Tenant Work Letter, which consultants are
reasonably deemed necessary by Landlord to review and oversee the Tenant
Improvements and whose services are not the same as the services provided by PMA
(e.g., structural engineers);

2.2.1.2The payment of plan check, permit and license fees relating to
construction of the Tenant Improvements;

2.2.1.3The payment for all demolition and removal of existing improvements in
the Premises;

2.2.1.4The cost of construction of the Tenant Improvements, including, without
limitation, testing and inspection costs, costs incurred for removal of existing
furniture, fixtures or equipment in the Premises, hoisting and trash removal
costs, costs to purchase and install in the Premises equipment customarily
incorporated into laboratory improvements or laboratory utility systems,
including, without limitation, UPS, DI Systems, boilers, air compressors,
glass/cage washers and autoclaves, painting, and contractors' fees and general
conditions;

2.2.1.5The cost of any changes in the Base Building when such changes are
required by the Construction Drawings (including if such changes are due to the
fact that such work is prepared on an unoccupied basis), such cost to include
all direct architectural and/or engineering fees and expenses incurred in
connection therewith;

2.2.1.6The cost of any changes to the Construction Drawings or Tenant
Improvements required by all applicable building codes (the "Code");

2.2.1.7Sales and use taxes;

2.2.1.8Costs expended by Landlord pursuant to Section 4.1.1 of this Tenant Work
Letter, below.

2.2.2Disbursement of Tenant Improvement Allowance.  During the construction of
the Tenant Improvements, Landlord shall make monthly disbursements of the Tenant
Improvement Allowance for Tenant Improvement Allowance Items for the benefit of
Tenant and shall authorize the release of monies for the benefit of Tenant as
follows.

2.2.2.1Monthly Disbursements.  On or before the fifth (5th) day of each calendar
month, during the design and construction of the Tenant Improvements (or such
other date as Landlord may designate), Tenant shall deliver to Landlord:  (i) a
request for reimbursement of amounts paid to the "Contractor," as that term is
defined in Section 4.1.1 of this Tenant Work Letter, approved by Tenant, in a
form to be provided by Landlord, showing the schedule, by trade, of percentage
of completion of the Tenant Improvements in the Premises, detailing the portion
of the work completed and the portion not completed; (ii) invoices from all of
"Tenant's Agents," as that term is defined in Section 4.1.2 of this Tenant Work
Letter, for labor rendered and materials for the Premises; (iii) executed
mechanic's lien releases, as applicable, from all of Tenant's Agents which shall
comply with the appropriate provisions, as

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HCP LS Redwood City, LLC

[Third Amendment]

[Oncomed Pharmaceuticals, Inc.]

 

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reasonably determined by Landlord, of California Civil Code Sections 8132, 8134,
8136 and 8138; and (iv) all other information reasonably requested by
Landlord.  As between Landlord and Tenant only, Tenant's request for payment
shall be deemed Tenant's acceptance and approval of the work furnished and/or
the materials supplied as set forth in Tenant's payment request.  Within
forty-five (45) days thereafter, Landlord shall deliver a check to Tenant made
payable to Tenant in payment of the lesser of:  (A) the amounts so requested by
Tenant as set forth in this Section 2.2.3.1, above (or, subject to the terms
of Section 4.2.1, below, the applicable percentage thereof), and (B) the balance
of any remaining available portion of the Tenant Improvement Allowance provided
that Landlord does not dispute any request for payment based on non-compliance
of any work with the "Approved Working Drawings," as that term is defined
in Section 3.5 below, or due to any substandard work.  Landlord's payment of
such amounts shall not be deemed Landlord's approval or acceptance of the work
furnished or materials supplied as set forth in Tenant's payment request.

2.2.2.2Final Deliveries.  Following the completion of construction of the Tenant
Improvements, Tenant shall deliver to Landlord properly executed final
mechanic's lien releases in compliance with both California Civil Code Section
8134 and either Section 8136 or Section 8138 from all of Tenant's Agents, and a
certificate certifying that the construction of the Tenant Improvements in the
Premises has been substantially completed.  Tenant shall record a valid Notice
of Completion in accordance with the requirements of Section 4.3 of this Tenant
Work Letter.

2.2.2.3Other Terms.  Landlord shall only be obligated to make disbursements from
the Tenant Improvement Allowance to the extent costs are incurred by Tenant for
Tenant Improvement Allowance Items.  All Tenant Improvement Allowance Items for
which the Tenant Improvement Allowance have been made available shall be deemed
Landlord's property under the terms of the Lease.

2.4Building Standards.  The quality of Tenant Improvements shall be in keeping
with the existing improvements in the Existing Premises.

SECTION 3

CONSTRUCTION DRAWINGS

3.1Selection of Architect.  Tenant shall retain an architect/space planner (the
"Architect") approved in advance by Landlord (which approval shall not be
unreasonably withheld) to prepare the Final Space Plan and Final Working
Drawings as provided in Section 3.2 and 3.3, below.  Tenant shall retain the
engineering consultants or design/build subcontractors designated by Tenant and
reasonably approved in advance by Landlord (the "Engineers") to prepare all
plans and engineering working drawings relating to the structural, mechanical,
electrical, plumbing, HVAC, lifesafety, and sprinkler work in the Premises,
which work is not part of the Base Building.  All such plans and drawings shall
comply with industry standard drawing format and specifications, and shall be
subject to Landlord's reasonable approval.  Tenant and Architect shall verify,
in the field, the dimensions and conditions as shown on the relevant portions of
the Base Building plans, and Tenant and Architect shall be solely responsible
for the same, and Landlord shall have no responsibility in connection
therewith.  

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HCP LS Redwood City, LLC

[Third Amendment]

[Oncomed Pharmaceuticals, Inc.]

 

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Landlord's review of any plans or drawings as set forth in this Section 3, shall
be for its sole purpose and shall not imply Landlord's review of the same, or
obligate Landlord to review the same, for quality, design, Code compliance or
other like matters.  

3.2Final Space Plan.  Tenant shall supply Landlord with four (4) copies signed
by Tenant of its final space plan for the Premises before any architectural
working drawings or engineering drawings have been commenced.  The final space
plan (the "Final Space Plan") shall include a layout and designation of all
offices, labs, rooms and other partitioning, their intended use, and equipment
to be contained therein.  Landlord may request clarification or more specific
drawings for special use items not included in the Final Space Plan.  Landlord
shall advise Tenant within five (5) business days after Landlord's receipt of
the Final Space Plan for the Premises if the same is unsatisfactory or
incomplete in any respect.  If Tenant is so advised, Tenant shall promptly cause
the Final Space Plan to be revised to correct any deficiencies or other matters
Landlord may reasonably require.  Notwithstanding the foregoing, Landlord's
approval of the Final Space Plan shall not be unreasonably withheld, provided
that Landlord and Tenant hereby agree it shall be deemed reasonably for Landlord
to withhold its approval of the Final Space Plan if a "Design Problem"
exists.  A "Design Problem" shall mean and refer to any design criteria which
would (a) adversely affect the Building structure or Building systems; (b) be in
non-compliance with codes or other applicable laws; (c) be seen from the
exterior of the Premises; (d) cause material interference with Landlord or other
tenants of the Building (other than as typical for construction of
improvements), or (e) affect the certificate of occupancy or its legal
equivalent for the Building or any portion thereof.

3.3Final Working Drawings.  After the Final Space Plan has been approved by
Landlord, Tenant shall supply the Engineers with a complete listing of standard
and non-standard equipment and specifications, including, without limitation,
Title 24 calculations, electrical requirements and special electrical receptacle
requirements for the Premises, to enable the Engineers and the Architect to
complete the "Final Working Drawings" (as that term is defined below) in the
manner as set forth below.  Upon the approval of the Final Space Plan by
Landlord and Tenant, Tenant shall promptly cause the Architect and the Engineers
to complete the architectural and engineering drawings for the Premises, and
Architect shall compile a fully coordinated set of architectural, structural,
mechanical, electrical and plumbing working drawings, to the extent applicable
to the Tenant Improvements, in a form which is sufficiently complete to allow
all of Tenant's Agents to bid on the work and to obtain all applicable permits
(collectively, the "Final Working Drawings") and shall submit the same to
Landlord for Landlord's approval, which shall not be unreasonably withheld,
conditioned, or delayed.  Tenant shall supply Landlord with four (4) copies
signed by Tenant of such Final Working Drawings.  Landlord shall advise Tenant
within ten (10) business days after Landlord's receipt of the Final Working
Drawings for the Premises if the same is unsatisfactory or incomplete in any
respect.  If Tenant is so advised, Tenant shall promptly cause the Final Working
Drawings to be revised in accordance with such review and any disapproval of
Landlord in connection therewith.  Notwithstanding the foregoing, Landlord's
approval of the Final Working Drawings shall not be unreasonably withheld;
provided that Landlord and Tenant hereby agree that it shall be deemed
reasonable for Landlord to withhold its approval of the Final Working Drawings
if a Design Problem exists or if the Final Working Drawings are inconsistent
with the Final Space Plan.  

 

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HCP LS Redwood City, LLC

[Third Amendment]

[Oncomed Pharmaceuticals, Inc.]

 

 

 

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3.5Approved Working Drawings.  The Final Working Drawings shall be approved by
Landlord (the "Approved Working Drawings," and collectively with the Final Space
Plan and the Final Working Drawings, the “Construction Drawings”) prior to the
commencement of construction of the Premises by Tenant.  Concurrently with
Tenant's delivery of the Final Working Drawings to Landlord for Landlord's
approval, Tenant may submit the same to the appropriate municipal authorities
for all applicable building permits.  Tenant hereby agrees that neither Landlord
nor Landlord's consultants shall be responsible for obtaining any building
permit or certificate of occupancy for the Premises and that obtaining the same
shall be Tenant's responsibility; provided, however, that Landlord shall
cooperate with Tenant in executing permit applications and performing other
ministerial acts reasonably necessary to enable Tenant to obtain any such permit
or certificate of occupancy.  No changes, modifications or alterations in the
Approved Working Drawings may be made without the prior written consent of
Landlord, which shall not be unreasonably withheld, conditioned, or delayed;
provided, however, Tenant shall be permitted, without Landlord’s prior written
consent, to make minor changes in the Tenant Improvements that are customarily
made in the field.  

SECTION 4

CONSTRUCTION OF THE TENANT IMPROVEMENTS

4.1Tenant's Selection of Contractors.

4.1.1The Contractor; Landlord's Project Manager.  Tenant shall retain a licensed
general contractor, approved in advance by Landlord, to construct the Tenant
Improvements ("Contractor").  Landlord's approval of the Contractor shall not be
unreasonably withheld.  Landlord shall retain Project Management Advisors, Inc.
("PMA") as a third party project manager for construction oversight of the
Tenant Improvements on behalf of Landlord, and Tenant shall pay a fee to
Landlord with respect to the PMA services in the amount of $1.53/sf of the
Expansion Premises ($34,808), but not less than $4,068 per month in which design
and construction activity is occurring in the Existing Premises and/or Expansion
Premises.  Said fee is to be deducted from the Tenant Improvement Allowance.

4.1.2Tenant's Agents.  All subcontractors, laborers, materialmen, and suppliers
used by Tenant shall be known collectively as "Tenant's Agents".  The
subcontractors used by Tenant, but not any laborers, materialmen, and suppliers,
must be approved in writing by Landlord, which approval shall not be
unreasonably withheld, conditioned, or delayed; provided, however, Landlord may
nevertheless designate and require the use of particular mechanical,
engineering, plumbing, fire life-safety and other Base Building
subcontractors.  If Landlord does not approve any of Tenant's proposed
subcontractors, Tenant shall submit other proposed subcontractors for Landlord's
written approval.

4.2Construction of Tenant Improvements by Tenant's Agents.

4.2.1Construction Contract; Cost Budget.  Tenant shall engage the Contractor
under a commercially reasonable and customary construction contract, reasonably
approved by Landlord (collectively, the "Contract").  Prior to the commencement
of the construction of the Tenant Improvements (or a phase thereof, as the case
may be), and after

 

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HCP LS Redwood City, LLC

[Third Amendment]

[Oncomed Pharmaceuticals, Inc.]

 

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Tenant has accepted all bids for the Tenant Improvements (or a phase thereof, as
the case may be), Tenant shall provide Landlord with a detailed breakdown, by
trade, of the good faith estimated costs to be incurred or which have been
incurred, as set forth more particularly in Sections 2.2.1.1 through 2.2.1.10,
above, in connection with the design and construction of the applicable phase of
the Tenant Improvements to be performed by or at the direction of Tenant or the
Contractor, which costs form a basis for the estimated total costs of the work
of the applicable phase of the Tenant Improvement project (the
"Estimated Budget").  The difference between the amount of the Estimated
Budget and the amount of the Tenant Improvement Allowance (less any portion
thereof already disbursed by Landlord, or in the process of being disbursed by
Landlord, on or before the commencement of construction of the Tenant
Improvements) is referred to herein as the "Over-Allowance Amount".  In the
event that an Over-Allowance Amount exists in connection with any particular
construction project involving the construction of the Improvements, then Tenant
shall pay a percentage of each amount requested by Contractor or otherwise
disbursed under this Work Letter, which percentage shall be equal to the
Over-Allowance Amount divided by the amount of the Estimated Budget (after
deducting from the Estimated Budget any amounts expended in connection with the
preparation of the Construction Drawings, and the cost of
other Tenant Improvement Allowance Items incurred prior to the commencement of
construction of the Tenant Improvements) and such payments by Tenant (the
“Over-Allowance Payments”) shall be a condition to Landlord’s obligation to pay
any amounts from the Tenant Improvement Allowance.  In the event that, after
the Estimated Budget has been delivered by Tenant to Landlord, the costs
relating to the design and construction of the Tenant Improvements shall change,
any additional costs necessary to such design and construction in excess of
the Estimated Budget, shall be in accordance with the terms of the immediately
preceding sentence and the amounts to be disbursed by Landlord pursuant to the
terms of this Work Letter thereafter shall be accordingly adjusted so that
Landlord’s disbursements in the aggregate pursuant to the terms of this Work
Letter and Tenant’s Over-Allowance Payments are each proportionate to the
adjusted Estimated Budget.  All Tenant Improvements paid for by the
Over-Allowance Amount shall be deemed Landlord's property under the terms of the
Lease.

4.2.2Tenant's Agents.

4.2.2.1Compliance with Drawings and Schedule.  Tenant's and Tenant's Agent's
construction of the Tenant Improvements shall comply with the
following:  (i) the Tenant Improvements shall be constructed in substantial
accordance with the Approved Working Drawings; and (ii) Tenant's Agents shall
submit schedules of all work relating to the Tenant's Improvements to Contractor
and Contractor shall, within five (5) business days of receipt thereof, inform
Tenant's Agents of any changes which are necessary thereto, and Tenant's Agents
shall adhere to such corrected schedule.  

4.2.2.2Indemnity.  Tenant's indemnity of Landlord as set forth in the Lease
shall also apply with respect to any and all costs, losses, damages, injuries
and liabilities related in any way to any act or omission of Tenant or Tenant's
Agents, or anyone directly or indirectly employed by any of them, or in
connection with Tenant's non-payment of any amount arising out of the Tenant
Improvements and/or Tenant's disapproval of all or any portion of any request
for payment.  Such indemnity by Tenant, as set forth in the Lease, shall also
apply with respect to any and all costs, losses, damages, injuries and
liabilities related in any way to

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HCP LS Redwood City, LLC

[Third Amendment]

[Oncomed Pharmaceuticals, Inc.]

 

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Landlord's performance of any ministerial acts reasonably necessary (i) to
permit Tenant to complete the Tenant Improvements, and (ii) to enable Tenant to
obtain any building permit or certificate of occupancy for the Premises.  The
foregoing indemnity shall not apply to claims caused by the negligence or
willful misconduct of Landlord, its member partners, shareholders, officers,
directors, agents, employees, and/or contractors, or
Landlord’s breach of the Lease.

4.2.2.2Requirements of Tenant's Agents.  Each of Tenant's Agents shall guarantee
to Tenant and for the benefit of Landlord that the portion of the Tenant
Improvements for which it is responsible shall be free from any defects in
workmanship and materials for a period of not less than one (1) year from the
date of substantial completion of the work under the Contract ("Substantial
Completion").  Each of Tenant's Agents shall be responsible for the replacement
or repair, without additional charge, of all work done or furnished in
accordance with its contract that shall become defective within one (1) year
after Substantial Completion.  The correction of such work shall include,
without additional charge, all additional expenses and damages incurred in
connection with such removal or replacement of all or any part of the Tenant
Improvements, and/or the Building and/or common areas that may be damaged or
disturbed thereby.  All such warranties or guarantees as to materials or
workmanship of or with respect to the Tenant Improvements shall be contained in
the Contract or subcontract and shall be written such that such guarantees or
warranties shall inure to the benefit of both Landlord and Tenant, as their
respective interests may appear, and can be directly enforced by either.  Tenant
covenants to give to Landlord any assignment or other assurances which may be
necessary to effect such right of direct enforcement.

4.2.2.4Insurance Requirements.

4.2.2.4.1General Coverages.  All of Tenant's Agents shall carry the following
insurance with insurers having a  minimum A.M. best rating of A- VII or better
(i) worker's compensation insurance covering all of Tenant's Agents' respective
employees with a waiver of subrogation in favor of Landlord and the property
manager, (ii) general liability insurance with a limit of not less than
$1,000,000 per occurrence and $2,000,000 general aggregate, including
products/completed operations and contractual coverage, and including Landlord
and its property manager as additional insureds, and (ii) if the cost of such
Tenant Improvements exceeds $100,000 in the aggregate, then Builders Risk
insurance covering the construction of the Tenant Improvements (it being
understood and agreed that the Tenant Improvements shall be insured by Landlord
pursuant to the Lease immediately upon completion thereof in the same manner as
Landlord is required to insure the “Tenant Improvements constructed by Landlord”
pursuant to Section 10.1(d) of the Lease), and such policy shall include
Landlord as an additional insured.

4.2.2.4.2Intentionally Omitted.  

4.2.2.4.3General Terms.  Certificates for all insurance carried pursuant to
this Section 4.2.2.4 shall be delivered to Landlord before the commencement of
construction of the Expansion Tenant Improvements and before the Contractor's
equipment is moved onto the site.  All such policies of insurance must contain a
provision that the company writing said policy will endeavor to give Landlord
thirty (30) days prior written notice of any cancellation or lapse of the
effective date or any reduction in the amounts of such insurance.  In

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HCP LS Redwood City, LLC

[Third Amendment]

[Oncomed Pharmaceuticals, Inc.]

 

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the event that the Expansion Tenant Improvements are damaged by any cause during
the course of the construction thereof, Tenant shall immediately repair the same
at Tenant's sole cost and expense.  Tenant's Agents shall maintain all of the
foregoing insurance coverage in force until the Expansion Tenant Improvements
are fully completed, except for any Products and Completed Operation Coverage
insurance required by Landlord, which is to be maintained for a commercially
reasonable period following completion of the work.  Such insurance shall
provide that it is primary insurance as respects the owner and that any other
insurance maintained by owner is excess and noncontributing with the insurance
required hereunder.  The requirements for the foregoing insurance shall not
derogate from the provisions for indemnification of Landlord by Tenant
under Section 4.2.2.2 of this Tenant Work Letter.

4.2.3Governmental Compliance.  The Tenant Improvements shall comply in all
respects with the following:  (i) all state, federal, city or quasi-governmental
laws, codes, ordinances and regulations, as each may apply according to the
rulings of the controlling public official, agent or other person;
(ii) applicable standards of the American Insurance Association (formerly, the
National Board of Fire Underwriters) and the National Electrical Code; and
(iii) building material manufacturer's specifications.

4.2.4Inspection by Landlord.  Landlord shall have the right to inspect the
Tenant Improvements at all times, provided however, that Landlord's failure to
inspect the Tenant Improvements shall in no event constitute a waiver of any of
Landlord's rights hereunder nor shall Landlord's inspection of the Tenant
Improvements constitute Landlord's approval of the same.  Should Landlord
reasonably disapprove any portion of the Tenant Improvements, on the grounds
that the construction is defective or fails to comply with the Approved Working
Drawings, Landlord shall notify Tenant in writing of such disapproval and shall
specify the items disapproved.  Any such defects or deviations shall be
rectified by Tenant at no expense to Landlord, provided however, that in the
event Landlord determines that a defect or deviation exists that might adversely
affect the mechanical, electrical, plumbing, heating, ventilating and air
conditioning or life-safety systems of the Building, the structure or exterior
appearance of the Building or any other tenant's use of such other tenant's
leased premises, Landlord may, take such action as Landlord reasonably deems
necessary, at Tenant's expense and without incurring any liability on Landlord's
part, to correct any such defect, deviation and/or matter, including, without
limitation, causing the cessation of performance of the construction of the
Tenant Improvements until such time as the defect, deviation and/or matter is
corrected to Landlord's reasonable satisfaction.

4.2.5Meetings.  Commencing upon the date Tenant begins to plan the Existing
Improvements or the Expansion Improvements, Tenant shall hold weekly meetings at
a reasonable time, with the Architect and the Contractor regarding the progress
of the preparation of Construction Drawings and the construction of the Existing
Improvements or the Expansion Improvements as the case may be, and Landlord
and/or its agents shall receive prior notice of, and shall have the right to
attend, all such meetings, and, upon Landlord's request, certain of Tenant's
Agents shall attend such meetings.  In addition, minutes shall be taken at all
such meetings, a copy of which minutes shall be promptly delivered to
Landlord.  One such meeting each month shall include the review of Contractor's
current request for payment.

 

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HCP LS Redwood City, LLC

[Third Amendment]

[Oncomed Pharmaceuticals, Inc.]

 

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4.3Notice of Completion; Copy of Record Set of Plans.  Within ten (10) days
after completion of construction of the Tenant Improvements, Tenant shall cause
a valid Notice of Completion to be recorded in the office of the Recorder of the
county in which the Building is located in accordance with Section 3093 of the
Civil Code of the State of California or any successor statute, and shall
furnish a copy thereof to Landlord upon such recordation.  If Tenant fails to do
so, Landlord may execute and file the same on behalf of Tenant as Tenant's agent
for such purpose, at Tenant's sole cost and expense.  At the conclusion of
construction, (i) Tenant shall cause the Architect and Contractor (x) to update
the Approved Working Drawings as necessary to reflect all changes made to the
Approved Working Drawings during the course of construction, (y) to certify to
the best of their knowledge that the "record-set" of as-built drawings are true
and correct, which certification shall survive the expiration or termination
of the Lease, and (z) to deliver to Landlord two (2) sets of copies of such
record set of drawings (hard copy and CAD files) within ninety (90) days
following issuance of a certificate of occupancy for the Premises, and
(ii) Tenant shall deliver to Landlord a copy of all warranties, guaranties, and
operating manuals and information relating to the improvements, equipment, and
systems in the Premises.  Within fifteen (15) days after request by Tenant
following the Substantial Completion of the Tenant Improvements, Landlord will
acknowledge its approval of the Tenant Improvements (provided that such approval
has been granted) by placing its signature on a Contractor’s Certificate of
Substantial Completion fully executed by the Architect, Contractor and Tenant.
 Landlord’s approval shall not create any contingent liabilities for Landlord
with respect to any latent quality, design, Code compliance or other like
matters that may arise subsequent to Landlord’s approval.

SECTION 5

MISCELLANEOUS

5.1Tenant's Representative.  Tenant has designated Chuck Alaimo as its sole
representative with respect to the matters set forth in this Tenant Work Letter,
who, until further notice to Landlord, shall have full authority and
responsibility to act on behalf of the Tenant as required in this Tenant Work
Letter.

5.2Landlord's Representative.  Landlord has designated Jeff Marcowitz with PMA,
as its sole representative with respect to the matters set forth in this Tenant
Work Letter, who, until further notice to Tenant, shall have full authority and
responsibility to act on behalf of the Landlord as required in this Tenant Work
Letter.

5.3Time is of the Essence in This Tenant Work Letter.  Unless otherwise
indicated, all references herein to a "number of days" shall mean and refer to
calendar days.  If any item requiring approval is timely disapproved by
Landlord, the procedure for preparation of the document and approval thereof
shall be repeated until the document is approved by Landlord.

5.5Tenant's Lease Default.  Notwithstanding any provision to the contrary
contained in the Lease or this Tenant Work Letter, if any default by Tenant
under the Lease or this Tenant Work Letter (including, without limitation, any
failure by Tenant to fund any portion of the Over-Allowance Amount) occurs at
any time on or before the substantial completion of the Tenant Improvements and
such default remains uncured ten (10) days following Landlord's

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HCP LS Redwood City, LLC

[Third Amendment]

[Oncomed Pharmaceuticals, Inc.]

 

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notice of such default to Tenant, then in addition to all other rights and
remedies granted to Landlord pursuant to the Lease, Landlord shall have the
right, during the continuation of such default, to withhold payment of all or
any portion of the Tenant Improvement Allowance and/or Landlord may, without any
liability whatsoever, cause the cessation of construction of the Tenant
Improvements (in which case, Tenant shall be responsible for any delay in the
substantial completion of the Tenant Improvements and any costs occasioned
thereby).

5.6Phased Construction.  Tenant may construct the Tenant Improvements (and
submit the Final Space Plan and Working Drawings therefor) in phases at Tenant’s
discretion.  

5.7Landlord Caused Delays.  The Expansion Commencement Date shall occur as
provided in this Third Amendment, provided that the same shall be extended by
the number of days of actual delay of the substantial completion of the
Expansion Premises Improvements to the extent caused by a "Landlord Caused
Delay," as that term is defined, below, but only to the extent such Landlord
Caused Delay causes the substantial completion of the Expansion Premises
Improvements to occur after the date which is five (5) months following the date
upon which the Expansion Premises is delivered to Tenant.  As used herein,
"Landlord Caused Delay" shall mean actual delays in the substantial completion
of the Expansion Premises Improvements to the extent resulting from interference
(when judged in accordance with industry custom and practice) with Tenant's
construction of the Expansion Premises Improvements to the extent caused by (i)
Landlord's failure to timely approve or disapprove any matter requiring
Landlord's pertaining to the Expansion Premises Improvements within the time
periods set forth above or if not specified, within a reasonable period of time;
(iii) Landlord's failure to timely disburse the Expansion Premises Improvement
Allowance; (ii) material and unreasonable interference by Landlord with
substantial completion of the Expansion Premises if such interference (A)
objectively precludes or delays the construction of tenant improvements in the
Building or any portion thereof, and (B) relates to access by Tenant to the
Expansion Premises or any of the Building's facilities (including loading docks
and freight elevators) or services and utilities (including temporary power and
parking areas as provided herein) during normal construction hours, or the use
thereof during normal construction hours; or (iii) the negligence or willful
misconduct of Landlord or the Landlord Parties pertaining to the Premises.  If
Tenant contends that a Landlord Caused Delay has occurred, Tenant shall notify
Landlord in writing of the event which constitutes such Landlord Caused
Delay.  Tenant will additionally use reasonable efforts to mitigate the effects
of any Landlord Caused Delay through the re-sequencing or re-scheduling of work,
if feasible, but this sentence will not be deemed to require Tenant to incur
overtime or after-hours costs unless Landlord agrees in writing to bear such
costs.  In addition, Tenant shall endeavor to provide notice to Landlord when
Tenant becomes aware of any expected or potential Landlord Caused Delays prior
to any such delay actually occurring, in order to allow Landlord to attempt to
mitigate such potential delay.  If such actions, inaction or circumstance
described in the notice (the "Landlord Delay Notice") are not cured by Landlord
within one (1) business day of Landlord’s receipt of the Landlord Delay Notice
and if such action, inaction or circumstance otherwise qualify as a Landlord
Caused Delay, then a Landlord Caused Delay shall be deemed to have occurred
commencing as of the date of Landlord’s receipt of the Landlord Delay Notice and
ending as of the date such delay ends.

 

 

 

 

761257.05/WLA

183305-00010/3-9-17/gjn/gjn

EXHIBIT B

-11-

 

HCP LS Redwood City, LLC

[Third Amendment]

[Oncomed Pharmaceuticals, Inc.]

 

--------------------------------------------------------------------------------

EXHIBIT C

This FOURTH AMENDMENT TO LEASE (this "Third Amendment") is made and entered into
as of the _____ day of ________, 20__, by and between HCP LS REDWOOD CITY, LLC,
a Delaware limited liability company ("Landlord"), and ONCOMED PHARMACEUTICALS,
INC., a Delaware corporation ("Tenant").

R E C I T A L S :

A.Landlord (as successor in interest to Slough Redwood City, LLC) and Tenant are
parties to that certain Lease dated May 30, 2006 (the "Original Lease"), as
amended by that certain First Amendment to Lease dated November, 2006 (the
"First Amendment"), that certain Acknowledgement of Rent Commencement Date dated
as of March 9, 2007 ("Commencement Letter"), that certain Second Amendment to
Office Lease dated December 22, 2010 (the "Second Amendment") and that certain
Third Amendment to Lease dated ________, 2016 (the "Third Amendment") pursuant
to which Lease Tenant leases from Landlord approximately 68,440 rentable square
feet of space (the "Premises") consisting of the entire building (the
" 800 Building") located at 800 Chesapeake Drive, in the Britannia Seaport
Centre in Redwood City, California, and a portion of the building located at 900
Chesapeake Drive, in the Britannia Seaport Centre in Redwood City,
California.  The Original Lease, the First Amendment, the Commencement Letter,
the Second Amendment and the Third Amendment are, collectively, the "Lease."

 

B.Landlord and Tenant to amend the Lease as hereinafter provided.

A G R E E M E N T :

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

 

1.Capitalized Terms.  All capitalized terms when used herein shall have the same
meaning as is given such terms in the Lease unless expressly superseded by the
terms of this Third Amendment.

 

2.Deletion of Expansion Termination Right.  Effective as of the date of this
Fourth Amendment, Section 7 of the Third Amendment is hereby deleted in its
entirety and of no further force or effect, and Tenant shall lease the Expansion
Premises from Landlord pursuant to the terms set forth in the Third Amendment.

 

3.California Accessibility Disclosure. For purposes of Section 1938 of the
California Civil Code, Landlord hereby discloses to Tenant, and Tenant hereby
acknowledges that the Common Areas and the Premises have not undergone
inspection by a Certified Access Specialist (CASp).

 

 

 

 

761257.05/WLA

183305-00010/3-9-17/gjn/gjn

EXHIBIT C

-1-

 

HCP LS Redwood City, LLC

[Third Amendment]

[Oncomed Pharmaceuticals, Inc.]

 

--------------------------------------------------------------------------------

4.No Further Modification.  Except as set forth in this Third Amendment, all of
the terms and provisions of the Lease shall apply with respect to the Expansion
Premises and shall remain unmodified and in full force and effect.

IN WITNESS WHEREOF, this Fourth Amendment has been executed as of the day and
year first above written.  

 

LANDLORD:

 

 

TENANT:

 

 

 

 

 

HCP LS REDWOOD CITY, LLC,
a Delaware limited liability company

 

 

ONCOMED PHARMACEUTICALS, INC.,
a Delaware corporation

 

 

 

 

 

By:

 

 

 

 

 

Jonathan Bergschneider

 

By:

 

 

Executive Vice President

 

 

 

 

 

 

 

 

 

 

Print Name

 

 

 

 

 

 

 

 

Its:

 

 

761257.05/WLA

183305-00010/3-9-17/gjn/gjn

EXHIBIT C

-2-

 

HCP LS Redwood City, LLC

[Third Amendment]

[Oncomed Pharmaceuticals, Inc.]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

EXHIBIT B

SUBLEASED PREMISES AND SHARED AREAS

(attached)

 

[gljm3zdhtfb0000008.jpg]

 

--------------------------------------------------------------------------------

EXHIBIT C

ANIMAL CARE AGREEMENT

(attached)

--------------------------------------------------------------------------------

ANIMAL CARE AGREEMENT

 

This ANIMAL CARE AGREEMENT (this “Agreement”) is dated as of January 16, 2019
(the

“Effective Date”) and is made by and between ONCOMED PHARMACEUTICALS, INC., with
offices at

800 Chesapeake Drive, Redwood City, CA 94063 (“OncoMed”), and REVOLUTION
MEDICINES

INC., with offices at 700 Saginaw Dr., Redwood City, CA 94063 (“Company”).
OncoMed and

Company are sometimes referred to herein individually as a “Party” and
collectively as the “Parties.”

 

WHEREAS, the Parties have entered into that certain Sublease Agreement, dated as
of January 16,

2019 (the “Sublease Agreement”) pursuant to which Company is subletting certain
facilities on

OncoMed’s premises (the “Facilities”); and

 

WHEREAS, the Parties wish to allocate responsibilities between themselves for
the care of animals in the

Facilities, including certain services and supplies to be provided by OncoMed to
the Company.

 

NOW, THEREFORE, in reliance upon and in consideration of the following
undertaking, and for other

good and valuable consideration, the Parties agree as follows:

 

 

1.

Responsibilities of Each Party.

 

1.1. Each of the Parties shall be responsible for and perform the duties
assigned to such

Party in Exhibit A (the “Duties”). Each Party shall perform its assigned Duties
in a professional manner

in accordance with the terms of this Agreement and all applicable law and
regulations. Company may not

conduct any studies or procedures involving any animals in the Facilities unless
and until the applicable

protocols for such studies or procedures have been approved by OncoMed’s
Institutional Animal Care

and Use Committee (the “IACUC”). Company shall conduct all studies and
procedures involving animals

in accordance with such IACUC-approved protocols and shall otherwise comply with
all requirements

and instructions of the IACUC.

 

1.2. No Company employee, consultant, contractor, agent, or other representative

(“Company Personnel”) shall access the Facilities prior to completing OncoMed’s
orientation process

relating to the Facilities, provided such orientation shall be made available to
Company Personnel within

five (5) business days of the Sublease Agreement date. If Company adds Company
Personnel at any time

during the Term, OncoMed shall promptly provide such orientation or train
Company to conduct same.

 

1.3. Company shall not introduce any animals into the Facilities other than new
animals

arriving directly from vendors. Without limiting the foregoing, no animals that
are already involved in

studies as of the Effective Date may be introduced into the Facilities.

 

1.4. Company will develop and conduct a “sentinel” animal health surveillance
program

(the “Company Sentinel Program”) in accordance with applicable law and
regulations and the

requirements of the IACUC. Company will pay for the animals for the Company
Sentinel Program and

OncoMed shall perform the Company Sentinel Program pursuant to its standard
protocols and cover all

other costs associated therewith, including RADIL testing.

 

 

2.

Supplies and Equipment. OncoMed will provide Company with the supplies
reasonably

necessary to operate the Subleased Premises, including but not limited to those
supplies listed on

Exhibit B (the “Supplies”), but excluding disposable cages and associated setup
supplies (e.g., water

bottles), animals for use by the Company, surgical tools, computers, scales, and
calipers. Company may

also make reasonable use of the OncoMed equipment listed in Exhibit B (the
“Equipment”). Without

OncoMed’s prior consent, Company may not use any OncoMed equipment other than
the Equipment,

 

1

--------------------------------------------------------------------------------

including without limitation OncoMed’s autoclave and cage washers. If any of the
Equipment reasonably

requires maintenance or repairs as a result of Company’s use thereof, such
maintenance or repairs shall be

at Company’s cost.

 

 

3.

[Intentionally omitted]

 

 

4.

IACUC Fees. Company shall reimburse OncoMed for all amounts invoiced by the
IACUC

(and/or its members) relating to any activities of Company, including without
limitation in connection

with the review and approval of the Company Sentinel Program, Company protocols,
and the Company’s

standard operating procedures for humane endpoints (the “Company IACUC Fees”).
OncoMed shall

invoice Company for all Company IACUC Fees upon OncoMed’s receipt of the
applicable invoice(s)

from the IACUC. Company shall pay all such invoices within thirty (30) days
after its receipt thereof.

Company shall have the right to have one Company Personnel designated as a
member of the IACUC.

 

 

5.

Service Fee. In consideration for OncoMed’s performance of its Duties, the
provision of the

Supplies, access to the Equipment, Company’s use of the IACUC, and other
services provided by

OncoMed hereunder, Company shall pay to OncoMed, within fifteen (15) days after
the Effective Date, a

one-time fee in an amount equal to fifteen thousand US dollars ($15,000).

 

 

6.

Audits.

 

6.1. OncoMed and/or its representatives may, at mutually convenient times, audit

Company’s conduct of its Duties and other activities in the Facilities,
including Company’s

documentation thereof and relevant standard operating procedures (including
without limitation those

relating to humane endpoints), to ensure Company is in compliance with IACUC
requirements, applicable

law and regulations, and all OncoMed policies and procedures reasonably imposed
on Company’s use of

the Subleased Premises.

 

6.2. If Company receives notice that any governmental or regulatory authority,
including

without limitation the U.S. Department of Agriculture, will conduct an
investigation or audit relating to

any Company activities conducted in the Facilities, Company shall notify OncoMed
in writing

immediately, but no later than twenty-four (24) hours after receiving such
notice. If Company does not

receive prior notice of such investigation or audit, Company shall notify
OncoMed as soon as practicable

after receiving knowledge of such investigation or audit. Company shall
promptly, but in any event within

one (1) business day of issuance, provide OncoMed with copies of all materials,
statements, forms,

records, reports, analyses and correspondences, including warning letters,
relating to any such inspection

or audit.

 

 

7.

Confidential Information.

 

7.1. The term “Confidential Information” shall refer to all information provided
by

either Party (the “Disclosing Party”) to the other Party (the “Receiving Party”)
or otherwise learned by

or exposed to the Receiving Party as a result of the Parties’ conducting their
respective Duties and/or

sharing space, either directly or indirectly, intentionally or inadvertently, in
writing, orally, electronically,

or by inspection of tangible objects, and regardless of whether any such
information is marked as

“confidential” or “proprietary.” Any such disclosure of, learning of, or
exposure to a Disclosing Party’s

Confidential Information may be referred to herein as an “Exposure” to such
Confidential Information.

Confidential Information may include, without limitation, information relating
to: testing/analysis

methods or processes; products (whether investigational or not), samples,
specimens, and other materials

or compounds; analyses conducted on such products, samples, specimens, or other
materials or

compounds; information on research and development antibodies, products, and
processes; technical

2

--------------------------------------------------------------------------------

know-how; formulas; studies; regulatory submissions and records; research data
and information;

financial information, business forecasts, business plans, and employee and/or
personnel matters; sales

and marketing information; inventions; patent applications and other trade
secrets.

 

7.2. The Receiving Party shall (a) hold the Confidential Information in
confidence and

take all reasonable measures to protect the secrecy of and avoid disclosure and
unauthorized use of

Confidential Information (including, without limitation, all measures the
Receiving Party takes to protect

its own confidential information), (b) not divulge any such Confidential
Information or any information

derived therefrom to any third person, (c) not make any use whatsoever at any
time of such Confidential

Information except as necessary to carry out its obligations under this
Agreement, (d) not derive any

commercial benefit (whether direct or indirect) from such Confidential
Information, and (e) not copy

(except as may be necessary to carry out its obligations under this Agreement)
or reverse engineer any

such Confidential Information.

 

7.3. The Receiving Party’s obligation of confidentiality and restrictions on use
shall not

apply to Confidential Information that the Receiving Party can demonstrate by
reasonable documentary

evidence: (a) was in its possession prior to the Receiving Party’s Exposure
thereto; (b) was in the public

domain at the time of the Receiving Party’s Exposure thereto; (c) becomes part
of the public domain

without breach of the Receiving Party’s obligations of confidentiality under
this Agreement; (d) is

received by the Receiving Party from a third party not under confidentiality
obligations and without a

breach of any obligations of confidentiality, (e) is developed independently by
employees of the

Receiving Party without access to or knowledge of such Confidential Information,
or (f) was permitted to

be disclosed by written authorization of the Disclosing Party. The foregoing
exceptions shall not apply to

Confidential Information merely because such Confidential Information is
embraced by more general

information in the public domain or in the possession of the Receiving Party.

 

7.4. The Receiving Party may disclose Confidential Information to the extent
required

pursuant to an order of a court or administrative agency or other governmental
body with valid

jurisdiction; provided that the Receiving Party shall, to the extent permitted,
provide the Disclosing Party

with reasonable advance written notice thereof and provide reasonable
cooperation to the Disclosing

Party in its efforts to limit such disclosure, whether by protective order or
otherwise. Disclosure of any

Confidential Information in accordance with the foregoing shall not cause any
such information to cease

to be Confidential Information except to the extent that such disclosure results
in a public disclosure of

such information.

 

7.5. The Receiving Party shall limit the disclosure of Confidential Information
to its

directors, employees, or agents with a legitimate “need to know” in order to
carry out the Receiving

Party’s obligations under this Agreement and who, prior to disclosure, are bound
by obligations of

confidentiality and non-use no less restrictive than the obligations set forth
in this Agreement. The

Receiving Party shall remain responsible for any failure by any such person or
entity who receives

Confidential Information pursuant to this Section 6.5 to protect such
Confidential Information as required

under this Agreement.

 

7.6. Except as otherwise specified in this Agreement, the Receiving Party shall,
upon the

request of the Disclosing Party, return to the Disclosing Party all Confidential
Information in the

Receiving Party’s possession or control (including any copies or extracts
thereof) or destroy such tangible

Confidential Information and certify the destruction thereof, except for any
copy legally required to be

retained for archive purposes.

 

7.7. The Receiving Party acknowledges and agrees that due to the unique nature
of the

Confidential Information there may be no adequate remedy at law for any breach
of its obligations

3

--------------------------------------------------------------------------------

hereunder, and that upon any such breach or any threat thereof, the Disclosing
Party shall be entitled to

seek appropriate equitable relief in addition to whatever remedies it might have
at law. The Receiving

Party shall notify the Disclosing Party in writing immediately upon the
occurrence of any unauthorized

release of Confidential Information or other breach of which the Receiving Party
becomes aware.

 

7.8. Each Party’s obligations with respect to Confidential Information shall
remain in

effect during the Term and shall survive any expiration or termination of this
Agreement for a period of

five (5) years thereafter.

 

 

8.

Intellectual Property. All intellectual property of each Party (a) in existence
as of the

Effective Date, or (b) developed, conceived, or made after the Effective Date
and independently of this

Agreement, is and shall remain the exclusive property of such Party. Nothing in
this Agreement is

intended to grant any option, license, or other rights to either Party under any
intellectual property rights

of the other Party.

 

 

9.

Limitations of Warranties and Remedies.

 

9.1. Except as expressly set forth in Section 1.1, NEITHER PARTY PROVIDES ANY

WARRANTIES HEREUNDER, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION

WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.

 

9.2. With the exception of breaches of Section 7, in no event shall either Party
be

responsible or liable to the other Party under this Agreement for any special,
incidental, indirect,

exemplary or consequential damages (including, without limitation, lost business
or lost profits).

 

9.3. OncoMed shall not be required to provide any service, Supplies or Equipment
to the

extent the performance of the same becomes impracticable as a result of a cause
or causes outside the

reasonable control of OncoMed or to the extent the performance would require
OncoMed to violate any

applicable laws, rules or regulations or would result in the breach of any
contract. In providing any

services, OncoMed shall not be obligated to hire any additional employees or
maintain the employment of

any specific employee; provided that, if OncoMed does not provide sufficient
staffing to perform its

Duties hereunder and Company is required to incur costs to hire additional staff
or contractors to perform

such Duties, Company may reduce the Base Rent owed under the Sublease Agreement
by an amount

equal to the amount actually paid by Company to such additional staff or
contractors to perform such

Duties, up to a maximum of eight thousand dollars ($8,000) per month.

 

 

10.

Indemnification.

 

10.1. Company shall indemnify, defend and hold harmless OncoMed and its
officers,

directors, employees, consultants, representatives, and agents (collectively,
the “OncoMed

Indemnitees”), from any and all losses, injuries, harms, costs or expenses,
including without limitation,

reasonable attorney’s fees (collectively, “Losses”), incurred by any OncoMed
Indemnitee in connection

with any claim, suit or action brought by a third party arising from (a) the
performance or nonperformance of Company’s Duties hereunder, (b) Company’s use
of the Supplies and/or the Equipment, (c) Company’s material breach of this
Agreement, and (d) the gross negligence or intentional misconduct of any Company
Indemnitee (as defined in Section 10.2).

 

10.2. OncoMed shall indemnify, defend and hold harmless Company and its
officers,

directors, employees, consultants, representatives, and agents (collectively,
the “Company

Indemnitees”), from any and all Losses incurred by any Company Indemnitee in
connection with any

claim, suit or action brought by a third party arising from (a) the performance
or non-performance of

OncoMed’s Duties hereunder, (b) OncoMed’s material breach of this Agreement, and
(c) the gross

negligence or intentional misconduct of any OncoMed Indemnitee.

4

--------------------------------------------------------------------------------

10.3. Any Party seeking indemnity hereunder shall (a) give prompt written notice
to the

indemnifying Party of any Claim for which indemnification is sought, (b) permit
the indemnifying Party

to assume full responsibility to investigate, prepare for and defend against
such claim, (c) reasonably

assist the indemnifying Party, at the indemnifying Party’s reasonable expense,
in the investigation of,

preparation for and defense of such claim, and (d) not compromise or settle such
claim without the

indemnifying Party’s prior written consent. Notwithstanding the foregoing, an
indemnifying Party will

not settle a claim in such a way as to require an admission of wrongdoing or
negligence on the part of any

other Party, or incur a financial obligation on behalf of any other Party,
without such other Party’s written

approval, which approval will not be unreasonably withheld, delayed, or
conditioned.

 

 

11.

Term and Termination.

 

11.1. This Agreement shall be effective from the Effective Date and shall remain
in effect

until the expiration or earlier termination of the Sublease Agreement (the
“Term”). This Agreement may

only be terminated prior to such date in a written agreement signed by both
Parties.

 

11.2. The termination of this Agreement for any reason shall not relieve the
Parties of any

obligation accruing prior to such termination, including without limitation any
payment obligation. In no

way limiting the generality of the foregoing, Sections 4 (to the extent any
Company IACUC Fees remain

unpaid), 7, 8, 9, 10, 11.2, and 12 shall survive the termination of this
Agreement.

 

 

12.

Miscellaneous.

 

12.1. Independent Contractors. It is expressly agreed that the relationship
between

OncoMed and Company shall not constitute a partnership, joint venture or agency.
Neither OncoMed nor

Company shall have the authority to make any statements, representations or
commitments of any kind,

or to take any action, which shall be binding on the other Party, without the
prior written consent of the

other Party to do so.

 

12.2. Governing Law. This Agreement and all claims or causes of action (whether
in

contract, tort, or otherwise) that may be based upon, arise out of, or relate to
this Agreement, or the

negotiation, execution, or performance of this Agreement, shall be governed by
the laws of the State of

California without giving effect to any conflict of laws principle that would
result in the application of the

laws of any other jurisdiction.

 

12.3. Use of Names. Except as required by law or the rules of any stock exchange
or

market on which securities of a Party are listed, neither Party shall use the
name of the other Party or the

names of the employees of the other Party in any advertising or sales
promotional material or in any

publication without prior written permission of such Party.

 

12.4. Assignment. Neither Party may assign, or transfer any rights or
obligations under,

this Agreement without the other Party's prior written consent, except that no
such consent shall be

required for either Party to assign its rights or transfer its obligations to
its affiliate or in connection with

the sale or transfer of all or substantially all of its equity, assets or
business to which this Agreement

relates, whether as part of a merger, acquisition, asset sale or otherwise. Any
assignment in violation of

this Agreement will be null and void from the beginning. This Agreement benefits
and binds the Parties

and their respective successors and permitted assigns.

 

 

5

 

 

 

--------------------------------------------------------------------------------

12.5. Severability. If any provision of this Agreement is held to be illegal,
invalid, or

unenforceable under present or future state or federal laws or rules and
regulations promulgated

thereunder, such provision shall be fully severable, and this Agreement shall be
construed and enforced as

if such illegal, invalid or unenforceable provision had never comprised a part
hereof, and the remaining

provisions hereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or

unenforceable provision or by its severance herefrom.

 

12.6. Notices. Other than payments and routine communications, any notice to be
given to

a party under or in connection with this Agreement shall be in writing and shall
be delivered

(a) personally, (b) by a nationally recognized overnight courier or by certified
mail, postage prepaid,

return receipt requested, (c) via facsimile, with receipt confirmed, or (d) if
actually received, by U.S. mail,

addressed to such party at its address indicated below, or to such other address
as the addressee shall have

last furnished in writing to the addressor and shall be effective upon receipt
by the addressee:

 

If to Company:If to OncoMed:

Revolution Medicines, Inc.OncoMed Pharmaceuticals, Inc.

700 Saginaw Dr.800 Chesapeake Avenue

Redwood City, CA 94063Redwood City, CA 94063

Attn: LegalAttn: Legal

legal@revolutionmedicines.comlegal@oncomed.com

 

12.7. Waiver. No waiver of any provision of this Agreement, whether by conduct
or

otherwise, in any one or more instances shall be deemed to be or be construed as
a further or continuing

waiver of any such provision in any other instance, or of any other provision or
condition of this

Agreement. No waiver of this Agreement shall be binding upon either Party unless
made in writing and

signed by a duly authorized representative of such Party and no failure or delay
in enforcing any right

shall be deemed a waiver.

 

12.8. Entire Agreement; Amendment. This Agreement (including all Exhibits
hereto)

supersedes all prior discussions and writings and constitutes the entire
agreement between the Parties with

respect to the subject matter hereof. This Agreement may only be amended by a
written document signed

by duly authorized representatives of both Parties.

 

12.9. Counterparts. This Agreement may be executed in multiple counterparts,
each of

which shall be deemed an original but all of which together shall constitute one
and the same instrument.

A facsimile or other digital transmission of this signed Agreement bearing a
signature on behalf of a Party

shall be legal and binding on such Party. Each Party agrees that electronic
signatures may be used in lieu

of hand signatures in the execution of this Agreement.

 

[Signature Page Follows]

 

 

 

 

 

 

 

 

 

 

 

6

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Parties have caused their duly authorized officers to
execute and deliver this Animal Care Agreement as of the Effective Date.

 

ONCOMED PHARMACEUTICALS, INC.REVOLUTION MEDICINES INC.

 

By: /s/ John A. LewickiBy: /s/ Mark A. Goldsmith

Name: John A. Lewicki, PhDName: Mark A. Goldsmith

Title: President & CEOTitle: Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

[Signature Page to Animal Care Agreement]

Exhibit A

Duties

 

Duties of OncoMed

 

•

Conduct basic animal health-related tasks, consisting of daily health checks,
record-keeping related to animal health, cage changing, and house cleaning.

 

•

Receive new Company animals from vendors, including printing out cage cards and
moving the

animals to the animal holding rooms. Excludes shaving, ear tagging, and weighing
animals.

 

•

Receive and put away Company lab supplies, cages, water bottles, bedding, and
rodent diets.

 

•

Box dirty cages.

 

•

Report ill animals through OncoMed’s Animal Treatment Requirement (ATR) system.

 

•

Review, approve, and conduct the Company Sentinel Program pursuant to OncoMed’s
standard

protocols.

 

•

Permit Company to use the IACUC as necessary for activities conducted in the
Facilities.

 

•

Provide bio-waste (including carcass) disposal.

 

Duties of Company

 

•

Notify OncoMed promptly of new orders of animals and supplies.

 

•

Shave, ear tag, and weigh new animals as necessary.

 

•

Provide all necessary supplies other than the Supplies (as described in Section
2)

 

•

Respond to all ATR reports received from OncoMed in a timely manner and in
accordance with

OncoMed’s ATR process and applicable law and regulations.

 

•

Draft, maintain, and receive IACUC approval of standard operating procedures for
humane endpoints.

 

•

Develop the Company Sentinel Program under the oversight of OncoMed and the
IACUC.

 

•

Clean and maintain all supplies and equipment used by Company.

 

•

Keep all portions of the Facilities clean and organized.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit B

--------------------------------------------------------------------------------

Supplies; Equipment

 

Supplies

 

•

Shoe covers

 

•

Disposable lab coats

 

•

Spor-Klenz

 

•

Alcohol (70%)

 

•

Ice

 

•

Dry ice

 

•

Food and bedding

 

•

Liquid nitrogen

 

•

Disposables required for surgical procedures (i.e., diapers, kimwipes and
biohazard bags)

 

•

Reasonable amounts of controlled substances for infrequent use, provided that
Company shall access and log any use through the OncoMed controlled substances
protocols, but OncoMed shall retain control over such controlled substances and
shall be accountable for reconciling stocks and usage records.

 

Equipment Useable by Company

 

•

Isoflurane vaporizers (2)

 

•

Biosafety cabinets (3)

 

•

Cage changing stations (4)

 

•

Personnel lockers

 

•

Sharps disposal containers

 

•

Refrigerators

 

•

Freezers

--------------------------------------------------------------------------------

EXHIBIT D

ENVIRONMENTAL QUESTIONNAIRE

(attached)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

EXHIBIT E

 

BRITANNIA POINTE GRAND BUSINESS PARK

ENVIRONMENTAL QUESTIONNAIRE

FOR COMMERCIAL AND INDUSTRIAL PROPERTIES

 

Revolution Medicines

 

Tenant Name:  

800 Chesapeake Dr, Redwood City, CA 94063

 

Lease Address:

Oncomed Pharmaceuticals

 

Lease Type (check correct box – right click to properties):  ☐ Primary
Lease/Lessee    

☒ Sublease from:

 

Instructions: The following questionnaire is to be completed by the Lessee
representative with knowledge of the planned operations for the specified
building/location. Please print clearly and attach additional sheets as
necessary.

 

1.0

PROCESS INFORMATION

 

Animal research including tumor injection, treatment, necropsies, take‐downs.

 

 

 

Describe planned site use, including a brief description of manufacturing
processes and/or pilot plants planned for this site, if any.

 

2.0

HAZARDOUS MATERIALS – OTHER THAN WASTE

 

Will (or are) non-waste hazardous materials be/being used or stored at this
site? If so, continue with the next question. If not, go to Section 3.0.

 

2.1

Are any of the following materials handled on the Property?       ☒ Yes   ☐ No

[A material is handled if it is used, generated, processed, produced, packaged,
treated, stored, emitted, discharged, or disposed.] If YES, check (right click
to properties) the applicable correct Fire Code hazard categories below.

☐

Combustible dusts/fibers

☐

Explosives

[gljm3zdhtfb0000009.jpg]

Flammable liquids

☐

Combustible liquids (e.g., oils)

☐

Compressed gas - inert

☐

Flammable solids/pyrophorics

[gljm3zdhtfb0000010.jpg]

Cryogenic liquids - inert

☐

Compressed gas - flammable/pyrophoric

☐

Organic peroxides

☐

Cryogenic liquids - flammable

[gljm3zdhtfb0000011.jpg]

Compressed gas - oxidizing

☐

Oxidizers - solid or liquid

☐

Cryogenic liquids - oxidizing

☐

Compressed gas - toxic

☐

Reactives - unstable or water reactive

☐

Corrosives - solid or liquid

☐

Compressed gas - corrosive

[gljm3zdhtfb0000012.jpg]

Toxics - solid or liquid

 

 

2-2.

For all materials checked in Section 2.1 above, please list the specific
material(s), use(s), and quantities of each used or stored on the site in the
table below; or attach a separate inventory. NOTE: If proprietary, the
constituents need not be named but the hazard information and volumes are
required.

 

Material/

Chemical

Physical State (Solid, Liquid, or Gas)

Container Size

Number of Containers Used & Stored

Total Quantity

Units (pounds for solids, gallons or liters for liquids, & cubic feet for gases)

Nitrogen

Liquid

N/A

Provided as part

of OncoMed’s

infrastructure

 

 

Oxygen

Gas

660 Liters

2

1320

Liters

--------------------------------------------------------------------------------

Material/

Chemical

Physical State (Solid, Liquid, or Gas)

Container Size

Number of Containers Used & Stored

Total Quantity

Units (pounds for solids, gallons or liters for liquids, & cubic feet for gases)

Ethanol

Liquid

1 Pint

Unknown

< 1

Gallon

Isoflurane

Liquid

200 ml

Unknown

< 1

Gallon

Carbon dioxide

  Gas

  N/A

Provided as part

of OncoMed’s

infrastructure

 

 

 

2-3.

Describe the planned storage area location(s) for the materials in Section 2-2
above. Include site maps and drawings as appropriate.

Storage of hazardous materials will be in OncoMed’s designated storage areas.
Inert gases Aare delivered through building plumbing, while the other materials
are stored in

Aappropriate storage cabinets in the Vivarium.

 

 

 

 

 

 

 

2-4.

Other hazardous materials. Check below (right click to properties) if
applicable. NOTE: If either of the latter two are checked (BSL-3 and/or
radioisotope/radiation), be advised that not all lease locations/cities or lease
agreements allow these hazards; and if either of these hazards are planned,
additional information will be required with copies of oversight agency
authorizations/licenses as they become available.

☒

Risk Group 2/Biosafety Level-2 Biohazards

☐

Risk Group 3/Biosafety Level-3 Biohazards

☐

Radioisotopes/Radiation

3.0

HAZARDOUS WASTE (i.e., REGULATED CHEMICAL WASTE)

Are (or will) hazardous wastes (be) generated?       ☒ Yes   ☐ No

If YES, continue with the next question. If not, skip this section and go to
section 4.0.

 

 

3.1

Are or will any of the following hazardous (CHEMICAL) wastes generated, handled,
or disposed of (where applicable and allowed) on the property?

 

☐

Liquids

☐

Process sludges

☐

PCBs

☒

Solids

☐

Metals

☐

wastewater

 

 

3-2.

List and estimate the quantities of hazardous waste identified in Question 3-1
above.

HAZRDOUS (CHEMICAL) WASTE GENERATED

SOURCE

WASTE TYPE

APPROX. MONTHLY QUANTITY with units

 

DISPOSITION [e.g., off-site landfill, incineration, fuel blending scrap metal;
wastewater neutralization (onsite or off-site)]

RCRA listed (federal)

Non-RCRA (Calif-ornia ONLY or recycle)

Charcoal filters

Anesthesia

Machine

☐

☒

3 canisters

Hazardous waste landfill

 

3-3.

Waste characterization by:        Process knowledge ☒       EPA lab analysis
☐      Both ☐

 

3-4.  

Please include name, location, and permit number (e.g. EPA ID No.) for
transporter and disposal facility if applicable. Attach separate pages as
necessary. If not yet known, write “TBD.”

 

Hazardous Waste Transporter/Disposal Facility Name

Facility Location

Transporter (T) or Disposal (D) Facility

Permit Number

Advanced Chemical

Transport

967 Marbury Rd.

San Jose, CA 95133

T

CAR000070540

--------------------------------------------------------------------------------

Clean Harbors

11600 Aptus Rd.

Aragonite, UT 84029

D

UTD981552177

 

 

 

 

 

3-5.

Are pollution controls or monitoring employed in the process to prevent or
minimize the release of wastes into the environment? NOTE: This does NOT mean
fume hoods; examples include air scrubbers, cyclones, carbon or HEPA filters at
building exhaust fans, sedimentation tanks, pH neutralization systems for
wastewater, etc.

 

☐ Yes   ☒ No

 

 

If YES, please list/describe:

 

 

 

 

 

 

 

4.0

OTHER REGULATED WASTE (i.e., REGULATED BIOLOGICAL WASTE, referred to as “Medical
Waste” in California)

 

4-1.

Will (or do) you generate medical waste?   ☒ Yes   ☐ No   If NO, skip to Section
5.0.

 

4-2.

Check the types of waste that will be generated, all of which fall under the
California Medical Waste Act:

☒

Contaminated sharps (i.e., if contaminated with  ≥ Risk Group 2 materials)

☒

Animal carcasses

☐

Pathology waste known or suspected to be contaminated with ≥ Risk Group 2
pathogens)

☒

Red bag  biohazardous waste (i.e., with  ≥ Risk Group 2 materials) for
autoclaving

☒

Human or non-human primate blood, tissues, etc.

(e.g., clinical specimens)

☒

Trace Chemotherapeutic Waste and/or Pharmaceutical waste NOT otherwise regulated
as RCRA chemical waste

 

4-3.

What vendor will be used for off-site autoclaving and/or incineration?

Advanced Chemical Transport

 

 

 

4-5.

Do you have a Medical Waste Permit for this site?    ☐ Yes   ☒ No, not
required.  

☐ No, but an application will be submitted.

5.0

UNDERGROUND STORAGE TANKS (USTS) & ABOVEGROUND STORAGE TANKS (ASTS)

 

5-1.

Are underground storage tanks (USTs), aboveground storage tanks (ASTs), or
associated pipelines used for

 

 

the storage of petroleum products, chemicals, or liquid wastes present on site
(lease renewals) or required for planned operations (new tenants)?     ☐ Yes   ☒
No  

NOTE: If you will have your own diesel emergency power generator, then you will
have at least one AST! [NOTE: If a backup generator services multiple tenants,
then the landlord usually handles the permits.]

If  NO, skip to section 6.0. If YES, please describe capacity, contents, age,
type of the USTs or ASTs, as well any associated leak detection/spill prevention
measures. Please attach additional pages if necessary.

 

UST or AST

Capacity (gallons)

 

Contents

Year Installed

Type (Steel, Fiberglass, etc.)

Associated Leak Detection / Spill Prevention Measures*

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

 

 

 

 

 

*NOTE: The following are examples of leak detection / spill prevention measures:
integrity testing, inventory reconciliation, leak detection system, overfill
spill protection, secondary containment, cathodic protection.

 

5-2.

Please provide copies of written tank integrity test results and/or monitoring
documentation, if available.

 

5-3.

Is the UST/AST registered and permitted with the appropriate regulatory
agencies?     ☐ Yes   ☐ No, not yet  

If YES, please attach a copy of the required permit(s). See Section 7-1 for the
oversight agencies that issue permits, with the exception of those for diesel
emergency power generators which are permitted by the local Air Quality District
(Bay Area Air Quality Management District = BAAQMD; or San Diego Air Pollution
Control District = San Diego APCD).

 

5-4.

If this Questionnaire is being completed for a lease renewal, and if any of the
USTs/ASTs have leaked, please state the substance released, the media(s)
impacted (e.g., soil, water, asphalt, etc.), the actions taken, and all remedial
responses to the incident.

 

 

 

 

 

 

 

 

 

 

 

5-5.

If this Questionnaire is being completed for a lease renewal, have USTs/ASTs
been removed from the Property?

☐ Yes   ☐ No

If YES, please provide any official closure letters or reports and supporting
documentation (e.g., analytical test results, remediation report results, etc.).

 

5-6.

For Lease renewals, are there any above or below ground pipelines on site used
to transfer chemicals or wastes?

☐ Yes   ☐ No

For new tenants, are installations of this type required for the planned
operations?   ☐ Yes   ☐ No

If YES to either question in this section 5-6, please describe.

 

 

 

 

 

 

 

 

 

 

 

 

6.0

ASBESTOS CONTAINING BUILDING MATERIALS

Please be advised that an asbestos survey may have been performed at the
Property. If provided, please review the information that identifies the
locations of known asbestos containing material or presumed asbestos containing
material. All personnel and appropriate subcontractors should be notified of the
presence of these materials, and informed not to disturb these materials. Any
activity that involves the disturbance or removal of these materials must be
done by an appropriately trained individual/contractor.

 

7.0

OTHER REGULATORY PERMITS/REQUIREMENTS

 

 

7-1.

Does the operation have or require an industrial wastewater permit to discharge
into the local National Pollutant Discharge Elimination System (NPDES)?
[Example: This applies when wastewater from equipment cleaning is routed through
a pH neutralization system prior to discharge into the sanitary or lab sewer for
certain pharmaceutical manufacturing wastewater; etc.] Permits are obtained from
the regional sanitation district that is treating wastewater.

☐ Yes   ☒ No   ☐ No, but one will be prepared and submitted to the Landlord
property management company.

If so, please attach a copy of this permit or provide it later when it has been
prepared.

--------------------------------------------------------------------------------

 

7-2.

Has a Hazardous Materials Business Plan (HMBP) been developed for the site and
submitted via the State of California Electronic Reporting System (CERS)? [NOTE:
The trigger limits for having to do this are ≥ 200 cubic feet if any one type of
compressed gas(except for carbon dioxide and inert simple asphyxiant gases,
which have a higher trigger limit of  ≥ 1,000 cubic feet); ≥ 55 gallons if any
one type of hazardous chemical liquid; and ≥500 pounds of any one type of
hazardous chemical solid. So a full-sixe gas cylinder and a 260-liter of liquid
nitrogen are triggers! Don’t forget the diesel fuel in a backup emergency
generator if  the diesel tank size is ≥ 55 gallons and it is permitted under the
tenant (rather than  under the landlord).] NOTE: Each local Certified Unified
Program Agency (CUPA) in California governs the HMBP process so start there.
Examples: the CUPA for cities in San Mateo County is the County Environmental
Health Department; the CUPA for the City of Hayward, CA is the Hayward Fire
Department; the CUPA for Mountain View is the Mountain View Fire Department;
and, the CUPA for San Diego is the County of San Diego Hazardous Materials
Division (HMD),

☒ Yes   ☐ No, not required.  ☐ No, but one will be prepared and submitted, and a
copy will be provided to the landlord property management company.

If one has been completed, please attach a copy.  Continue to provide updated
versions as they are completed. This is a legal requirement in that State law
requires that the owner/operator of a business located on leased or rented real
property shall notify, in writing, the owner of the property that the business
is subject to and is in compliance with the Hazardous Materials Business Plan
requirements (Health and Safety Code Chapter 6.95 Section 25505.1).

 

7-3.

NOTE: Please be advised that if you are involved in any tenant improvements that
require a construction permit, you will be asked to provide the local city with
a Hazardous Materials Inventory Statement (HMIS) to ensure that your hazardous
chemicals fall within the applicable Fire Code fire control area limits for the
applicable construction occupancy of the particular building.  The HMIS will
include much of the information listed in Section 2-2.  Neither the landlord nor
the landlord’s property management company expressly warrants that the inventory
provided in Section 2-2 will necessarily meet the applicable California Fire
Code fire control area limits for building occupancy, especially in shared
tenant occupancy situations. It is the responsibility of the tenant to ensure
that a facility and site can legally handle the intended operations and
hazardous materials desired/ needed for its operations, but the landlord is
happy to assist in this determination when possible.

CERTIFICATION

 

I am familiar with the real property described in this questionnaire. By signing
below, I represent and warrant that the answers to the above questions are
complete and accurate to the best of my knowledge. I also understand that Lessor
will rely on the completeness and accuracy of my answers in assessing any
environmental liability risks associated with the property.

 

/s/ Randy Cook

 

 

Signature:    

 

Randy Cook

 

Name:

 

EH&S Consultant

 

Title:

 

November 30, 2018

 

Date:

[telephone number]

 

 

Telephone: