Exhibit 10.3

 

FIFTH AMENDMENT TO LEASE

 

THIS FIFTH AMENDMENT TO LEASE (“Amendment”), dated for reference purposes only
as of the 23rd day of May, 2014, is entered into by and between EMERYVILLE
OFFICE, L.L.C., a Delaware limited liability company (“Landlord”), and ADAMAS
PHARMACEUTICALS, INC., a Delaware corporation (formerly known as Neuromolecular
Pharmaceuticals, Inc.) (“Tenant”).

 

R E C I T A L S:

 

A.                                 Landlord (as successor to NOP Watergate, LLC,
a Delaware limited liability company) and Tenant are parties to that certain
Office Lease Agreement dated October 25, 2006 (the “Original Lease”), which
Original Lease has previously been amended by that certain: (i) First Amendment
to Lease dated April 29, 2009 (the “First Amendment”), (ii) Second Amendment to
Office Lease Agreement dated January 18, 2011 (the “Second Amendment”),
(iii) Third Amendment to Lease dated June 17, 2011 (the “Third Amendment”), and
(iii) Fourth Amendment to Lease dated January 31, 2013 (the “Fourth Amendment”)
(the Original Lease, as so amended, is referred to herein collectively as the
“Lease”).  Pursuant to the Lease, Tenant currently leases from Landlord those
certain premises on the second floor of the building at 2200 Powell Street,
Emeryville, California (the “2200 Building”) described as Suite 220 containing
approximately 7,652 rentable square feet (the “Current Premises”).

 

B.                                  Capitalized terms not defined herein have
the meanings given to such terms in the Lease.

 

C.                                  The Term of the Lease is currently scheduled
to expire on February 29, 2016.  Landlord and Tenant desire to enter into this
Amendment to extend the Term of the Lease.

 

D.                                 In addition, the parties desire to amend the
Lease in order to, among other things, relocate Tenant from the Current Premises
to that certain space currently known as Suite 750 located on the Seventh (7th)
floor of that certain building located at 1900 Powell Street, Emeryville,
California, commonly known as Towers Emeryville – Tower I (the “1900 Building”),
containing approximately 12,492 rentable square feet in the aggregate (the “New
Premises”), as depicted on Exhibit A attached hereto, and to further amend the
terms of the Lease upon the terms and conditions set forth below.

 

A G R E E M E N T:

 

NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and
agreements contained in this Amendment and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Landlord and Tenant hereby agree as follows:

 

1.                                    New Premises.  Tenant hereby agrees to
lease from Landlord, and Landlord hereby agrees to lease to Tenant, the New
Premises on the terms and conditions hereinafter set forth.  As of the New
Premises Commencement Date (as defined in Section 3 below): (a) Exhibit A
attached hereto showing the New Premises is hereby incorporated into and made a
part of the Lease; (b) all references in the Lease to the defined term
(i) “Premises” shall mean and refer to the New Premises, (ii) “Building” shall
mean and refer to the 1900 Building, (iii) “Rentable Square Footage of the
Building” shall be deemed to be 216,990 square feet, and (iv) rentable square
footage of the “Premises” (New Premises) shall be deemed to be 12,492 square
feet.  Tenant’s use and occupancy of the New Premises shall be in accordance
with all of the terms and conditions of the Lease, as amended by this Amendment
(the “Amended Lease”).

 

1

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

 

2.                                    Current Premises.  Tenant shall have the
right to continue to occupy the Current Premises in accordance with the terms
and conditions of the Lease until no later than 12:00 midnight on the date which
is five (5) days after the New Premises Commencement Date (as defined in
Section 3 below) (the “Surrender Date”); provided, however, if Tenant surrenders
the Current Premises by the Surrender Date, Tenant’s obligation to pay Rent for
the Current Premises accruing after the New Premises Commencement Date (as
defined in Section 3 below) shall cease, otherwise, if Tenant fails to surrender
the Current Premises by the Surrender Date, Tenant shall be obligated to pay
(a) the then current rent for the Current Premises for each day during the
initial two (2) weeks of such holdover after the Surrender Date that Tenant
continues to occupy the Current Premises (with any such rent prorated on the
basis of a 30-day month); and (b) thereafter Tenant shall pay holdover rent for
the Current Premises pursuant to Section 22 of the Lease for each day that
Tenant continues to occupy the Current Premises (with any such rent prorated on
the basis of a 30-day month), until Tenant actually surrenders the Current
Premises in accordance with the terms of the Amended Lease.  Tenant agrees to
surrender possession of the Current Premises to Landlord on or before the
Surrender Date, broom clean and in good order, condition and repair, ordinary
wear and tear excepted, and otherwise in compliance with the terms of Section 25
the Lease regarding surrender as if the Term had expired as to the Current
Premises.  Upon such surrender, all rights of Tenant to possession and occupancy
of the Current Premises and Tenant’s obligations with respect to the Current
Premises will terminate except as to Tenant’s surviving obligations under the
Lease, and all of Tenant’s rights and obligations under the Amended Lease shall
relate solely to the New Premises.  Tenant shall be responsible for all costs
and expenses related to its relocation from the Current Premises to the New
Premises, including, without limitation, all moving costs and costs to install
telephone and data cabling in the New Premises.  Tenant shall have no
restoration obligation(s) regarding the Current Premises.

 

3.                                    New Premises Commencement Date and New
Premises Term.  The Term as to the New Premises (“New Premises Term”) shall
commence on the earlier to occur of: (a) the date Tenant moves into the New
Premises to commence operation of its business in all or any portion of the New
Premises; or (b) the date Landlord delivers the New Premises to Tenant with the
“Tenant Improvements” (as defined in the Work Letter attached hereto Exhibit B)
“substantially completed” (as defined in the Work Letter) (the “New Premises
Commencement Date”).  The New Premises Term shall expire on the last day of the
sixty-fifth (65th) month after the New Premises Commencement Date (the “New
Premises Expiration Date”).  In no event shall the New Premises Term operate to
release Tenant from liability for any amounts owed or defaults that exist under
the Lease for the Current Premises prior to the New Premises Commencement Date;
provided, however, notwithstanding the foregoing, if Tenant surrenders the
Current Premises on or before the Surrender Date, Tenant shall have no
obligation to pay Rent for the Current Premises accruing from and after the New
Premises Commencement Date.  Landlord shall use commercially reasonable efforts
to allow Tenant to enter the New Premises five (5) days prior to the New
Premises Commencement Date for fit up without any obligation to pay Rent for the
New Premises during such five (5) day period.

 

4.                                    Monthly Base Rent.  Prior to the New
Premises Commencement Date, Tenant shall pay monthly installments of monthly
Base Rent for the Current Premises pursuant to the terms of the Lease. 
Notwithstanding anything in the Lease to the contrary, effective as of the New
Premises Commencement Date and continuing for the duration of the New Premises
Term, Tenant shall pay monthly installments of monthly Base Rent for the New
Premises to Landlord in accordance with the following schedule:

 

2

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

 

Months*

Monthly Base Rent
Per Rentable Square
Foot

Monthly Base Rent

 

 

 

1 – 12

$2.60

$32,479.20

13 – 24

$2.68

$33,453.58

25 – 36

$2.76

$34,457.18

37 – 48

$2.84

$35,490.90

49 – 60

$2.93

$36,555.63

61 - 65

$3.01

$37,652.29

 

*Months are measured from the New Premises Commencement Date.

 

**Notwithstanding the foregoing, provided Tenant is not in default under the
Amended Lease, Landlord hereby agrees to abate Tenant’s obligation to pay the
monthly Base Rent due during the first five (5) full months of the New Premises
Term (the “Abatement Period”) (such amount of abated monthly Base Rent, being
hereinafter collectively referred to as the “Abated Amount”); provided, however,
such abatement shall immediately cease upon the occurrence of any Tenant default
which continues beyond applicable notice and cure periods.  During such
Abatement Period, Tenant will still be responsible for the payment of any and
all other monetary obligations due under the Amended Lease.

 

5.                                    Condition of New Premises.  Tenant
acknowledges that Landlord shall not be obligated to refurbish or improve the
New Premises in any manner whatsoever or to otherwise provide funds for the
improvement of the New Premises, and Tenant hereby accepts the New Premises
“AS-IS”.  Tenant further acknowledges that except as expressly provided in this
Amendment, neither Landlord nor any agent of Landlord has made any
representation or warranty regarding the condition of any of the New Premises,
the improvements, refurbishments, or alterations therein, or the 1900 Building
or with respect to the functionality thereof or the suitability of any of the
foregoing for the conduct of Tenant’s business, and that all representations and
warranties of Landlord, if any, are as set forth in this Amendment. 
Notwithstanding the foregoing, Landlord shall install the Tenant Improvements in
the New Premises as described in, and pursuant to the terms and conditions of,
the Work Letter attached hereto as Exhibit B.

 

6.                                    Condition of the Current Premises.  Tenant
acknowledges that it is presently in possession of the Current Premises and is
fully aware of the condition of the Current Premises.  Tenant acknowledges that
Landlord shall not be obligated to refurbish or improve the Current Premises in
any manner whatsoever or to otherwise provide funds for the improvement of the
Current Premises in conjunction with this Amendment, and Tenant hereby accepts
the Current Premises “AS-IS”.  Tenant further acknowledges that except as
expressly provided in the Lease and this Amendment, neither Landlord nor any
agent of Landlord has made any representation or warranty regarding the
condition of the Current Premises, the improvements, refurbishments, or
alterations therein, or the 2200 Building or with respect to the functionality
thereof or the suitability of any of the foregoing for the conduct of Tenant’s
business and that all representations and warranties of Landlord, if any, are as
set forth in the Lease and this Amendment.

 

3

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

 

7.                                    Tenant’s Pro Rata Share.  Prior to the New
Premises Commencement Date, Tenant shall continue to pay for Tenant’s Pro Rata
Share of Expense Excess and Tax Excess in accordance with the terms of the
Lease.  As of the New Premises Commencement Date and continuing for the duration
of the New Premises Term, Tenant’s Pro Rata Share allocable to the New Premises
shall be 5.76%, based upon the New Premises containing 12,492 RSF and the 1900
Building containing 216,990 RSF.  During the New Premises Term, the Base Year
shall be adjusted to be the calendar year 2014 (the “Adjusted Base Year”), and
during the New Premises Term, Tenant shall continue to pay Tenant’s Pro Rata
Share of Expense Excess and Tax Excess calculated using the Adjusted Base Year,
in accordance with the Amended Lease.

 

8.                                    Additional Security Deposit.  Landlord and
Tenant acknowledge that the Security Deposit currently held by Landlord under
the Lease is in the amount of $9,270.27 (the “Existing Security Deposit”). 
Concurrently with Tenant’s execution of this Amendment, Tenant shall deposit
with Landlord an additional security deposit in the amount of $28,382.02, which
when added to the Existing Security Deposit shall equal $37,652.29 (the “New
Security Deposit”).  The New Security Deposit shall be held by Landlord as
security for the performance by Tenant of Tenant’s covenants and obligations
under the Lease

 

9.                                    Payment of First Month’s Base Rent. 
Tenant agrees that, concurrently with Tenant’s execution of this Amendment,
Tenant shall deposit with Landlord the first full month’s Monthly Base Rent with
respect to the New Premises Term in the amount of $32,479.20.

 

10.                            Conditional Must Take Space.  Subject to the
terms hereof and subject to availability (as such availability is determined by
Landlord in Landlord’s reasonable and good faith discretion), Tenant hereby
agrees to add to the New Premises 6,047 additional rentable square feet of space
located in Suite 700 on the seventh (7th) floor of the 1900 Building (“Must Take
Space”).  The effective date of Tenant’s lease of the Must Take Space shall be
the later of March 1, 2015 or the date that Tenant’s Must Take Space
Improvements are substantially completed (“Must Take Space Commencement Date”). 
Tenant’s lease of the Must Take Space shall be on the same terms and conditions
as affect the New Premises throughout the New Premises Term, including, without
limitation, the same Base Rent rate (per rentable square foot) as then applies
to the New Premises; provided, however, that (a) Tenant’s Pro Rata Share shall
be increased to take into account the additional number of rentable square feet
of the Must Take Space, and (b) Tenant shall be entitled to a one-time
refurbishment allowance for the Must Take Space in the amount of up to
Forty-Five Dollars ($45.00) per rentable square foot of the Must Take Space
(i.e., up to Two Hundred Seventy-Two Thousand One Hundred Fifteen Dollars
($272,115.00) based on 6,047 rentable square feet comprising the Must Take
Space) (the “Must Take Space Refurbishment Allowance”), the application of which
Must Take Space Refurbishment Allowance to Tenant’s Must Take Space Improvements
shall be subject to the terms and conditions of the Work Letter attached as
Exhibit B hereto (as reasonably adjusted to reflect the differences between the
initial New Premises and the Must Take Space).  Any such refurbishment work in
the Must Take Space is hereinafter referred to as “Tenant’s Must Take Space
Improvements”, and such work shall be performed by Landlord subject to the terms
and conditions of the Work Letter attached as Exhibit B hereto (as reasonably
adjusted to reflect the differences between the initial New Premises and the
Must Take Space).  The Lease Term for the Must Take Space and Tenant’s
obligation to pay rent with respect to the Must Take Space shall commence on the
Must Take Space Commencement Date and shall expire co-terminously with Tenant’s
lease of the New Premises.  Landlord shall not be liable to Tenant or otherwise
be in default hereunder in the event that Landlord is unable to deliver the Must
Take Space to Tenant due to the failure of any existing tenant to vacate and
surrender to Landlord such Must Take Space, or any portion thereof.  Prior to
Landlord’s delivery of the Must Take Space to Tenant, Landlord and Tenant shall
execute an amendment to the Lease, as amended herein, adding the Must Take Space
to the New Premises upon the terms and conditions set forth in this Section 10.

 

4

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

 

11.                            Accessibility.  Pursuant to Section 1938 of the
California Civil Code, Landlord hereby advises Tenant that as of the date of
this Amendment none of the Current Premises, the New Premises, the 2200
Building, the 1900 Building, nor the Project has undergone inspection by a
Certified Access Specialist.

 

12.                            Parking.  Prior to the New Premises Commencement
Date, Tenant shall continue to have the right to use twenty-one (21) unreserved
vehicle parking stalls in the parking lot or lots of the Property designated by
Landlord for the use of tenants of the 2200 Building, subject to the terms of
the Lease.  As of the New Premises Commencement Date, Tenant shall have the
right to use up to thirty-seven (37) unreserved parking spaces for the New
Premises designated by Landlord for the use of tenants of the 1900 Building at
the monthly rate of $85.00 per stall or at the prevailing market rate for the
Property as determined by Landlord in its commercially reasonable discretion
from time to time, all subject to the terms of the Amended Lease.  To the extent
additional parking spaces are available at the Property, subject to Landlord’s
parking space planning requirements for the Property, which Landlord shall
establish in its sole discretion, Landlord shall make available to Tenant
additional parking spaces at the Property on a month-to-month basis.

 

13.                            Deletion of Certain Provisions.  The following
provisions of the Lease are hereby deleted and are of no further force or
effect: (a) Section 13 (Conditional Option to Terminate) of the Fourth
Amendment; (b) Section 6 (Termination Option) of the Second Amendment; and
(c) Section 7 (Right of First Offer) of the Second Amendment.

 

14.                            Asbestos Notification.  As of the New Premises
Commencement Date, the Asbestos Disclosure Statement attached hereto as
Exhibit C attached hereto is hereby incorporated into and made a part of the
Lease

 

15.                            Broker.  Landlord and Tenant each represent and
warrant to the other that it is not aware of any brokers or finders who may
claim a fee or commission in connection with the consummation of the
transactions contemplated by this Amendment.  If any other claims for brokers’
or finders’ fees in connection with the transactions contemplated by this
Amendment arise, then Tenant agrees to indemnify, protect, hold harmless and
defend Landlord (with counsel reasonably satisfactory to Landlord) from and
against any such claims if they shall be based upon any statement,
representation or agreement made by Tenant, and Landlord agrees to indemnify,
protect, hold harmless and defend Tenant (with counsel reasonably satisfactory
to Tenant) if such claims are based upon any statement, representation or
agreement made by Landlord.

 

16.                            Representations and Warranties.  Tenant hereby
represents, warrants, and agrees that: (a) there exists no breach, default, or
event of default by Landlord under the Lease, or any event or condition which,
with notice or passage of time or both, would constitute a breach, default, or
event of default by Landlord under the Lease; (b) the Lease continues to be a
legal, valid, and binding agreement and obligation of Tenant; and (c) Tenant has
no current offset or defense to its performance or obligations under the Lease. 
Tenant hereby waives and releases all demands, charges, claims, accounts, or
causes of action of any nature whatsoever against Landlord or Landlord’s
managers, members, officers, directors, employees or agents, including without
limitation, both known and unknown demands, charges, claims, accounts, and
causes of action that have previously arisen out of or in connection with the
Lease, except for continuing obligations of Landlord under the Lease.

 

17.                            Authority.  Each signatory of this Amendment on
behalf of Landlord and Tenant represents hereby that he or she has the authority
to execute and deliver the same on behalf of the party hereto for which such
signatory is acting.

 

5

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

 

18.                            No Other Modification.  Landlord and Tenant agree
that except as otherwise specifically modified in this Amendment, the Lease has
not been modified, supplemented, amended, or otherwise changed in any way and
the Lease remains in full force and effect between the parties hereto as
modified by this Amendment.  To the extent of any inconsistency between the
terms and conditions of the Lease and the terms and conditions of this
Amendment, the terms and conditions of this Amendment shall apply and govern the
parties.  This Amendment may be executed in counterparts, each of which shall be
deemed an original, but all of which, together, shall constitute one and the
same instrument.

 

[NO FURTHER TEXT ON THIS PAGE; SIGNATURES ON FOLLOWING PAGE]

 

6

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

 

IN WITNESS WHEREOF, Landlord and Tenant have caused this Amendment to be
executed the date first above written.

 

Tenant:

 

 

 

ADAMAS PHARMACEUTICALS, INC.,

a Delaware corporation

 

 

By:

/s/ Anthony Rimac

 

Name:

Anthony Rimac

 

Its:

Chief Financial Officer

 

 

 

 

 

 

 

[SIGNATURES CONTINUED ON FOLLOWING PAGE]

 

7

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

 

Landlord:

 

EMERYVILLE OFFICE, L.L.C.,

a Delaware limited liability company

 

By:

EMERYVILLE OFFICE HOLDINGS, L.L.C.,

 

a Delaware limited liability company,

 

its Sole Member and Manager

 

 

 

By:

LBA RIV-Company III, LLC,

a Delaware limited liability company,

its Operating Member

 

 

 

 

 

By:

LBA REIT IV, LLC,

a Delaware limited liability company

its sole Member and Manager

 

 

 

 

 

 

 

By:

LBA Realty Fund IV, L.P.,

a Delaware limited partnership,

its Sole Manager

 

 

 

 

 

 

 

 

 

By:

LBA Management Company IV, LLC,

a Delaware limited liability company,

its General Partner

 

 

 

 

 

 

 

 

 

 

 

By:

LBA Realty LLC,

a Delaware limited liability company,

its Manager

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

LBA Inc.,

 

 

 

 

 

 

 

a California corporation,

 

 

 

 

 

 

 

its Managing Member

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ Brad Neglia

 

 

 

 

 

 

 

 

Name:

Brad Neglia

 

 

 

 

 

 

 

 

Title:

Authorized Sinatory

 

 

 

 

 

 

 

 

 

 

 

For LBA Office Use Only:  Prepared & Reviewed by: 
_______________________________

 

8

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

 

EXHIBIT A

 

DEPICTION OF NEW PREMISES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT A

 

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

 

EXHIBIT B

 

 

WORK LETTER

 

 

1.         TENANT IMPROVEMENTS.  As used in the Lease and this Work Letter, the
term “Tenant Improvements” or “Tenant Improvement Work” means those items of
general tenant improvement construction shown on the Final Plans (described in
Section 4 below), more particularly described in Section 5 below.  As used in
this Work Letter, the term “Building” means the 1900 Building.  This Work Letter
shall also govern and control the performance of Tenant’s Must Take Space
Improvements and disbursement of the Must Take Space Refurbishment Allowance,
and this Work Letter shall be reasonably adjusted to reflect the differences
between the initial New Premises and the Must Take Space.

 

2.         WORK SCHEDULE.  Within ten (10) days after the execution of this
Lease, Landlord will deliver to Tenant, for Tenant’s review and approval, a
schedule (“Work Schedule”) which will set forth the timetable for the planning
and completion of the installation of the Tenant Improvements and the New
Premises Commencement Date.  The Work Schedule will set forth each of the
various items of work to be done or approval to be given by Landlord and Tenant
in connection with the completion of the Tenant Improvements.  The Work Schedule
will be submitted to Tenant for its approval, which approval Tenant agrees not
to unreasonably withhold, and, once approved by both Landlord and Tenant, the
Work Schedule will become the basis for completing the Tenant Improvements.  All
plans and drawings required by this Work Letter and all work performed pursuant
thereto are to be prepared and performed in accordance with the Work Schedule. 
Landlord may, from time to time during construction of the Tenant Improvements,
modify the Work Schedule as Landlord reasonably deems appropriate.  If Tenant
fails to approve the Work Schedule, as it may be modified after discussions
between Landlord and Tenant within five (5) business days after the date the
Work Schedule is first received by Tenant, the Work Schedule shall be deemed to
be approved by Tenant as submitted.

 

3.         CONSTRUCTION REPRESENTATIVES.  Landlord hereby appoints the following
person(s) as Landlord’s representative (“Landlord’s Representative”) to act for
Landlord in all matters covered by this Work Letter:  Martin Bachoc.

 

Tenant hereby appoints the following person(s) as Tenant’s representative
(“Tenant’s Representative”) to act for Tenant in all matters covered by this
Work Letter:  Shannon Eastin.

 

All communications with respect to the matters covered by this Work Letter are
to be made to Landlord’s Representative or Tenant’s Representative, as the case
may be, in writing in compliance with the notice provisions of the Lease. 
Either party may change its representative under this Work Letter at any time by
written notice to the other party in compliance with the notice provisions of
the Lease.

 

4.         TENANT IMPROVEMENT PLANS.

 

(a)        Preparation of Space Plans.  In accordance with the Work Schedule,
Tenant agrees to meet with Landlord’s architect and/or space planner for the
purpose of promptly preparing preliminary space plans for the layout of the New
Premises (“Space Plans”).  The Space Plans are to be sufficient to convey the
architectural design of the New Premises and layout of the Tenant Improvements
therein and are to be submitted to Landlord in accordance with the Work Schedule
for Landlord’s approval.  If Landlord reasonably disapproves any aspect of the
Space Plans, Landlord will advise Tenant in writing of such disapproval and the
reasons therefor in accordance with the Work Schedule.  Tenant will then submit
to

 

Exhibit B - Page 1

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

 

Landlord for Landlord’s approval, in accordance with the Work Schedule, a
redesign of the Space Plans incorporating the revisions reasonably required by
Landlord.

 

(b)        Preparation of Final Plans.  Based on the approved Space Plans, and
in accordance with the Work Schedule, at Landlord’s election, Landlord’s
architect will prepare complete architectural plans, drawings and specifications
and complete engineered mechanical, structural and electrical working drawings
for all of the Tenant Improvements for the New Premises (collectively, the
“Final Plans”).  The Final Plans will be submitted to Tenant for signature to
confirm that they are consistent with the Space Plans.  If Tenant reasonably
disapproves any aspect of the Final Plans based on any inconsistency with the
Space Plans, Tenant agrees to advise Landlord in writing of such disapproval and
the reasons therefor within the time frame set forth in the Work Schedule.  In
accordance with the Work Schedule, Landlord will, subject to Section 4(c) below,
then cause Landlord’s architect to redesign the Final Plans incorporating the
revisions reasonably requested by Tenant so as to make the Final Plans
consistent with the Space Plans.

 

(c)        Requirements of Tenant’s Final Plans.  Landlord will not unreasonably
withhold its consent to changes in the Final Plans proposed by Tenant provided
the Final Plans, as revised, will:  (i) be compatible with the Building shell
and with the design, construction and equipment of the Building; (ii) be
comprised of the Building standards set forth in the written description thereof
(the “Standards”) or of at least equal quality as the Standards and approved by
Landlord; (iii) comply with all applicable laws, ordinances, rules and
regulations of all governmental authorities having jurisdiction, and all
applicable insurance regulations; (iv) not require Building service beyond the
level normally provided to other tenants in the Building and will not overload
the Building floors; and (v) be of a nature and quality consistent with the
overall objectives of Landlord for the Building, as determined by Landlord in
its reasonable but subjective discretion.

 

(d)        Submittal of Final Plans.  Once approved by Landlord and Tenant, at
Landlord’s election, Landlord’s architect will submit the Final Plans to the
appropriate governmental agencies for plan checking and the issuance of a
building permit.  Landlord’s architect, with Tenant’s cooperation, will make any
changes to the Final Plans which are requested by the applicable governmental
authorities to obtain the building permit.  After approval of the Final Plans no
further changes may be made without the prior written approval of both Landlord
and Tenant, and then only after agreement by Tenant to pay any costs resulting
from the design and/or construction of such changes in excess of the Allowance
and Additional Allowance.  Tenant hereby acknowledges that any such changes will
be subject to the terms of Sections 7 and 8 below.  Landlord’s approval of the
Final Plans shall create no liability or responsibility on the part of Landlord
for the completeness of such plans or their design sufficiency or compliance
with Laws.

 

(e)        Changes to Shell of Building.  If the Final Plans or any amendment
thereof or supplement thereto shall require changes in the Building shell, the
increased cost of the Building shell work caused by such changes will be paid
for by Tenant or charged against the Allowance and Additional Allowance
described in Section 5 below.

 

(f)        Work Cost Estimate and Statement.  Prior to the commencement of
construction of any of the Tenant Improvements shown on the Final Plans,
Landlord will submit to Tenant a written estimate of the cost (the “Work Cost”)
to complete the Tenant Improvement Work, which written estimate will be based on
the Final Plans taking into account any modifications which may be required to
reflect changes in the Final Plans required by the City or County in which the
New Premises are located (the “Work Cost Estimate”).  Tenant will either approve
the Work Cost Estimate or disapprove specific items and submit to Landlord
revisions to the Final Plans to reflect deletions of and/or substitutions for
such disapproved items.  Submission and approval of the Work Cost Estimate will
proceed in accordance with the Work

 

Exhibit B - Page 2

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

 

Schedule.  Upon Tenant’s approval of the Work Cost Estimate (such approved Work
Cost Estimate to be hereinafter known as the “Work Cost Statement”), Landlord
will have the right to purchase materials and to commence the construction of
the items included in the Work Cost Statement pursuant to Section 6 hereof.  If
the total costs reflected in the Work Cost Statement exceed the Allowance and
Additional Allowance described in Section 5 below, Tenant agrees to pay such
excess, as Additional Rent, within five (5) business days after Tenant’s
approval of the Work Cost Estimate.  Throughout the course of construction, any
differences between the estimated Work Cost in the Work Cost Statement and the
actual Work Cost will be determined by Landlord and appropriate adjustments and
payments by Landlord or Tenant, as the case may be, will be made within five (5)
business days thereafter.

 

5.         PAYMENT FOR THE TENANT IMPROVEMENTS.

 

(a)        Allowance.  Landlord hereby grants to Tenant a tenant improvement
allowance of up to $45.00 per rentable square foot of the New Premises (i.e., up
to $562,140.00) (the “Allowance”).  The Allowance is to be used only for:

 

(i)         Payment of the cost of preparing the Space Plans and the Final
Plans, including mechanical, electrical, plumbing and structural drawings and of
all other aspects necessary to complete the Final Plans.  The Allowance will not
be used for the payment of extraordinary design work not consistent with the
scope of the Standards (i.e., above-standard design work) or for payments to any
other consultants, designers or architects other than Landlord’s architect,
engineers and consultants.

 

(ii)        The payment of plan check, permit and license fees relating to
construction of the Tenant Improvements.

 

(iii)       Construction of the Tenant Improvements, including, without
limitation, the following:

 

(aa)      Installation within the New Premises of all partitioning, doors, floor
coverings, ceilings, wall coverings and painting, millwork and similar items;

 

(bb)      All electrical wiring, lighting fixtures, outlets and switches, and
other electrical work necessary for the New Premises;

 

(cc)      The furnishing and installation of all duct work, terminal boxes,
diffusers and accessories necessary for the heating, ventilation and air
conditioning systems within the New Premises, including the cost of meter and
key control for after-hour air conditioning;

 

(dd)      Any additional improvements to the New Premises required for Tenant’s
use of the New Premises including, but not limited to, odor control, special
heating, ventilation and air conditioning, noise or vibration control or other
special systems or improvements;

 

(ee)      All fire and life safety control systems such as fire walls,
sprinklers, halon, fire alarms, including piping, wiring and accessories,
necessary for the New Premises;

 

(ff)       All plumbing, fixtures, pipes and accessories necessary for the New
Premises;

 

(gg)      Testing and inspection costs;

 

(hh)      Fees for the general contractor including, but not limited to, fees
and costs attributable to general conditions associated with the construction of
the Tenant Improvements;

 

Exhibit B - Page 3

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

 

(ii)        Installation of cabling, cubicles and other fit up work to prepare
the Premises for occupancy (provided the portion of the total Allowance and
Additional Allowance applicable to such installations shall not exceed $8.00 per
square foot of the New Premises in the aggregate); and

 

(jj)        Landlord’s construction management fee of three percent (3%) of the
total costs of the Tenant Improvements; provided, however, Landlord’s
construction management fee shall not be charged with respect to actual Work
Costs in excess of the Allowance and the Additional Allowance, to the extent
such excess Work Costs are incurred installing Tenant’s furniture, fixtures, and
equipment in the New Premises.

 

(iv)       All other costs to be expended by Landlord in the construction of the
Tenant Improvements, including those costs incurred by Landlord for construction
of elements of the Tenant Improvements in the New Premises, which construction
was performed by Landlord prior to the execution of this Lease by Landlord and
Tenant and which construction is for the benefit of tenants and is customarily
performed by Landlord prior the execution of leases for space in the Building
for reasons of economics (examples of such construction would include, but not
be limited to, the extension of mechanical including heating, ventilating and
air conditioning systems and electrical distribution systems outside of the core
of the Building, wall construction, column enclosures and painting outside of
the core of the Building, ceiling hanger wires and window treatment).

 

(b)        Excess Costs.  The cost of each item referenced in Section 5(a) above
shall be charged against the Allowance and Additional Allowance.  If the Work
Cost exceeds the Allowance and Additional Allowance, Tenant agrees to pay to
Landlord such excess including the fee for Landlord’s contractor and Landlord’s
three percent (3%) fee for the construction manager associated with the
supervision of such excess work prior to the commencement of construction within
five (5) business days after invoice therefor (less any sums previously paid by
Tenant for such excess pursuant to the Work Cost Estimate).  Except as expressly
provided above, in no event will the Allowance or Additional Allowance be used
to pay for Tenant’s furniture, artifacts, equipment, telephone systems or any
other item of personal property which is not affixed to the New Premises.

 

(c)        Changes.  If, after the Final Plans have been prepared and the Work
Cost Statement has been established, Tenant requires any changes or
substitutions to the Final Plans, any additional costs related thereto including
the fee for Landlord’s contractor and Landlord’s three percent (3%) fee for the
construction manager associated with the supervision of such changes or
substitutions are to be paid by Tenant to Landlord within five (5) business days
after invoice therefor.  Any changes to the Final Plans will be approved by
Landlord and Tenant in the manner set forth in Section 4 above and will, if
necessary, require the Work Cost Statement to be revised and agreed upon between
Landlord and Tenant in the manner set forth in Section 4(f) above.  Landlord
will have the right to decline Tenant’s request for a change to the Final Plans
if such changes are inconsistent with the provisions of Section 4 above, or if
the change would unreasonably delay construction of the Tenant Improvements and
the New Premises Commencement Date.

 

(d)        Governmental Cost Increases.  If increases in the cost of the Tenant
Improvements as set forth in the Work Cost Statement are due to requirements of
any governmental agency, Tenant agrees to pay Landlord the amount of such
increase including the fee for Landlord’s contractor and Landlord’s three
percent (3%) fee for the construction manager associated with the supervision of
such additional work within five (5) business days of Landlord’s written notice;
provided, however, that Landlord will first apply toward any such increase any
remaining balance of the Allowance and Additional Allowance.

 

(e)        Additional Allowance.  Landlord hereby grants Tenant an additional
allowance up to an amount not to exceed $62,460.00 (the “Additional Allowance”)
to cover any excess costs as described in

 

Exhibit B - Page 4

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

 

Sections 5(b), 5(c) or 5(d), which Additional Allowance shall be amortized over
the months of the New Premises Term remaining as of the disbursement of the
Additional Allowance on a straight-line basis calculated with interest at eight
percent (8%) per annum and payable by Tenant to Landlord as Additional Rent
concurrently with each monthly payment of monthly Base Rent.

 

(f)        Unused Allowance Amounts.  Any unused portion of the Allowance and
Additional Allowance upon completion of the Tenant Improvements in the New
Premises will be added to the Must Take Space Refurbishment Allowance; provided,
however, any unused portion of the Must Take Space Refurbishment Allowance upon
completion of Tenant’s Must Take Space Improvements shall not be refunded to
Tenant or be available to Tenant as a credit against any obligations of Tenant
under the Lease.

 

6.         CONSTRUCTION OF TENANT IMPROVEMENTS.  Until Tenant approves the Final
Plans and Work Cost Statement, Landlord will be under no obligation to cause the
construction of any of the Tenant Improvements. Following Tenant’s approval of
the Work Cost Statement described in Section 4(f) above and upon Tenant’s
payment of the total amount by which such Work Cost Statement exceeds the
Allowance, if any, Landlord’s contractor will commence and diligently proceed
with the construction of the Tenant Improvements, subject to Tenant Delays (as
described in Section 8 below) and Force Majeure Delays (as described in Section
9 below).

 

7.         SUBSTANTIAL COMPLETION.

 

(a)        Substantial Completion; Punch-List.  The Tenant Improvements will be
deemed to be “substantially completed” when Landlord: (a) is able to provide
Tenant with reasonable access to the New Premises and (b) has substantially
performed all of the Tenant Improvement Work required to be performed by
Landlord under this Work Letter, other than minor “punch-list” type items and
adjustments which do not materially interfere with Tenant’s access to or use of
the New Premises.  Within ten (10) days after delivery of the New Premises to
Tenant, Tenant and Landlord will conduct a walk-through inspection of the New
Premises and prepare a written punch-list specifying those punch-list items
which require completion, which items Landlord will thereafter diligently
complete.

 

(b)        Delivery of Possession.  Landlord agrees to deliver possession of the
New Premises to Tenant when the Tenant Improvements have been substantially
completed in accordance with Section (b) above.  The parties estimate that
Landlord will deliver possession of the New Premises to Tenant and the Term will
commence on or before September 1, 2014 (the “Estimated New Premises
Commencement Date”).  Tenant agrees that if Landlord is unable to deliver
possession of the New Premises to Tenant on or prior to the Estimated New
Premises Commencement Date, the Amended Lease will not be void or voidable, nor
will Landlord be liable to Tenant for any loss or damage resulting therefrom.

 

8.         TENANT DELAYS.  For purposes of this Work Letter, “Tenant Delays”
means any delay in the completion of the Tenant Improvements resulting from any
or all of the following:  (a) Tenant’s failure to timely perform any of its
obligations pursuant to this Work Letter, including any failure to complete, on
or before the due date therefor, any action item which is Tenant’s
responsibility pursuant to the Work Schedule delivered by Landlord to Tenant
pursuant to this Work Letter; (b) Tenant’s changes to Space Plans or Final Plans
after Landlord’s approval thereof; (c) Tenant’s request for materials, finishes,
or installations which are not readily available or which are incompatible with
the Standards; (d) any delay of Tenant in making payment to Landlord for
Tenant’s share of the Work Cost; or (e) any other act or failure to act by
Tenant, Tenant’s employees, agents, architects, independent contractors,
consultants and/or any other person performing or required to perform services
on behalf of Tenant.

 

9.         FORCE MAJEURE DELAYS.  For purposes of this Work Letter, “Force
Majeure Delays” means any actual delay in the construction of the Tenant
Improvements, which is beyond the reasonable

 

Exhibit B - Page 5

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

 

control of Landlord or Tenant, as the case may be, as “Force Majeure” is
described in Section 26.03 of the Lease.

 

Exhibit B - Page 6

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

 

EXHIBIT C

 

ASBESTOS DISCLOSURE STATEMENT

 

In 1988, California enacted legislation (specifically, Chapter 10.4 of the
Health and Safety Code, Section 25915 et seq.) requiring landlords and tenants
of commercial buildings constructed prior to 1979 to notify certain people,
including each other and their respective employees working within such
building, of any knowledge they may have regarding any asbestos containing
materials or asbestos-containing construction materials (collectively, “ACM”) in
the building.

 

On July 13, 1995, Title 29, Code of Federal Regulations, Section 1910.1001 and
1926.1101 defined Presumed Asbestos Containing Material (“PACM”) as thermal
system insulation and surfacing material found in buildings constructed no later
than 1980.  Although not considered PACM, asphalt and vinyl flooring installed
in buildings constructed no later than 1980 must also be considered asbestos
containing.  Both PACM and asphalt and vinyl flooring can be shown not to
contain asbestos through comprehensive sampling.  The federal standard requires
the building and/or facility owner to notify contractors and tenants of the
presence of ACM/PACM.  On May 3, 1996, Cal/OSHA adopted the same notification
requirements for PACM in Title 8 CCR 5208 & 1529.

 

This notification is being given to provide the information required under this
Legislation in order to help you avoid any unintentional contact with the
ACM/PACM, to assure that appropriate precautionary measures are taken before
disturbing any ACM/PACM, and to assist you in making appropriate disclosures to
your employees and others.

 

We have engaged qualified asbestos consultants to survey the Property for
asbestos and to assist in implementing an asbestos operations and maintenance
program that includes, among other things, periodic reinspection and
surveillance, air monitoring as necessary, information and training programs for
project personnel/engineering and other measures to minimize potential fiber
releases.  We have developed an Operations and Maintenance Program for the
Building (the “O&M Program”) which is available for review at the office of the
Building manager and must be complied with by Tenant and Tenant’s contractor’s
performing any work in the Building.

 

We have no reason to believe, based upon our environmental consultant’s document
review and asbestos inspection, that the ACM/PACM in the Building is currently
in a condition to release asbestos fibers which would pose a significant health
hazard to the Building’s occupants.  This should remain so if such ACM/PACM is
properly handled and remains undisturbed.  You should take into consideration
that our knowledge as to the absence of health risks is based solely upon
general information and the information contained in the previous asbestos
surveys and the O&M Program, and that we have no special knowledge concerning
potential health risks resulting from exposure to asbestos in the Building.  We
are therefore required by the above-mentioned legislation to encourage you to
contact local or state public agencies if you wish to obtain a better
understanding of the potential impacts resulting from exposure to asbestos.  The
health risks generally associated with asbestos (as further described in the O&M
Program) result from the inhalation of asbestos fibers.  The inhalation of
asbestos fibers has been associated with serious lung diseases including
asbestosis, lung cancer, and mesothelioma.

 

Because any tenant alterations or other work at the Building could disturb
ACM/PACM and possibly release asbestos fibers into the air, we must require that
you obtain our written approval prior to beginning such projects.  This includes
major alterations, but might also include such activities as drilling or boring
holes, installing electrical, telecommunications or computer lines, sanding
floors, removing ceiling tiles or other work which disturbs ACM/PACM.  In many
cases, such activities will not affect ACM/PACM, but you must check with the
property manager in advance, just in case.  You should check with the property

 

EXHIBIT C

Page 1

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

 

manager at the address set forth in Schedule A attached hereto.  The property
manager will make available such instruction as may be required.  Any such work
should not be attempted by an individual or contractor who is not qualified to
handle ACM/PACM.  In the areas specified in Schedule A, you should avoid
touching, moving or disturbing the ACM/PACM in any way.  If you observe any
activity which has the potential to disturb the ACM/PACM, please report the same
to the property manager immediately.

 

In connection with the foregoing, we have adopted the following policies (which
shall be considered rules under tenant leases):  (1) the owner, and
representatives of the owner, including, without limitation, the owner’s
ACM/PACM consultant, are entitled to enter into the premises of any tenant to
inspect for ACM/PACM, perform air tests and abatement; and (2) any tenant,
contractor, or other party must obtain our prior written approval before
performing any alterations on any tenant space, or performing any other work at
the property that might disturb ACM/PACM or involve exposure to asbestos fibers
as described above and all such work must comply with the requirements of the
O&M Program.

 

California law also requires persons in the course of doing business whose
activities may result in exposures to asbestos and other substances regulated
under the Safe Drinking Water and Toxic Enforcement Act of 1986, commonly
referred to as Proposition 65, to provide a clear and reasonable warning. 
Accordingly, you are advised as follows:

 

WARNING:  The areas within the Building that are described in Schedule A below
contain a substance known to the State of California to cause cancer.

 

EXHIBIT C

Page 2

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

 

SCHEDULE A

TO

EXHIBIT H

 

ASBESTOS DISCLOSURE STATEMENT

 

BUILDING:

 

The Towers Emeryville, Tower 1,

 

 

1900 Powell Street, Emeryville, CA 94608

 

 

ADDRESS OF PROPERTY

 

 

 

MANAGER’S OFFICE:

 

2000 Powell Street, Suite 100

 

 

Emeryville, CA 94608

 

 

Telephone: (510) 594-3100

 

 

Facsimile: (510) 594-5609

 

I.                                      SPECIFIC LOCATIONS WHERE ACM IS PRESENT
OR PACM IS SUSPECTED IN ANY QUANTITY IN THAT PORTION OF THE BUILDING

 

Floors 1-12

Drywall and mud throughout
White, beige, gold, and grey floor tiles and mastic
All cove base
Ceiling tiles
All carpet mastic

 

 

 

An O&M Manual has been established for the property to set up procedures to
remediate asbestos when required as a result of planned improvements.  ASBESTOS
SURVEYS, REPORTS AND THE OPERATIONS AND MAINTENANCE PROGRAM ARE AVAILABLE FOR
REVIEW DURING NORMAL BUSINESS HOURS IN THE PROPERTY MANAGER’S OFFICE AT THE
ABOVE ADDRESS, MONDAY THROUGH FRIDAY EXCEPT LEGAL HOLIDAYS.  NO REPRESENTATIONS
OR WARRANTIES WHATSOEVER ARE MADE REGARDING THE REPORTS, CONCERNING THE SURVEYS,
OR THE OPERATIONS AND MAINTENANCE PROGRAM (INCLUDING WITHOUT LIMITATION, THE
CONTENTS OR ACCURACY THEREOF), OR THE PRESENCE OR ABSENCE OF TOXIC OR HAZARDOUS
MATERIALS IN, AT, OR UNDER ANY PREMISES, BUILDING, OR THE PROJECT

 

SCHEDULE A TO
EXHIBIT C

 

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