Exhibit 10.14

Third Amendment to Industrial Lease

This Third Amendment to Industrial Lease (the “Amendment”) is made and entered
into as of December     , 2010 (the “Amendment Date”), by and between AMB
Property, L.P., a Delaware limited partnership (“Landlord”), and Pacific
Biosciences of California, Inc., a Delaware corporation dba Pac Bio, Inc.
(“Tenant”), with reference to the following facts.

Recitals

A. Landlord and Tenant have entered into that certain Industrial Lease dated as
of December 10, 2009 and modified by that certain Commencement Date Certificate
dated                     , as amended by that certain Second Amendment to Lease
Agreement dated as of August 13, 2010 (collectively, the “Lease”), for the
leasing of certain premises consisting of approximately 29,371 square feet
located at 940 Hamilton Avenue (formerly known as 1394 Willow Road), Menlo Park,
California (the “ Premises”) as such Premises are more fully described in the
Lease.

B. Landlord and Tenant now wish to amend the Lease to provide for, among other
things, the extension of the Term of the Lease upon and subject to each of the
terms, conditions, and provisions set forth herein.

NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Landlord and Tenant agree as follows:

1. Recitals: Landlord and Tenant agree that the above recitals are true and
correct and are hereby incorporated herein as though set forth in full.

2. Term: The Term of the Lease, which is currently scheduled to expire on
April 30, 2015 (the “Lease Expiration Date”), is hereby extended until
December 31, 2015 (the “Revised Expiration Date”), unless sooner terminated in
accordance with the terms of the Lease. The 8-month period from and after the
Lease Expiration Date through the Revised Expiration Date shall hereinafter be
referred to as the “Extended Term”.

3. Base Rent: Paragraphs 1.4 and 4 of the Lease are hereby modified to provide
that as of the commencement of the Extended Term, the monthly Base Rent payable
by Tenant to Landlord, in accordance with the provisions of Paragraphs 1.4 and 4
of the Lease shall be as follows:

 

Period

   Monthly Base Rent  

5/1/15 – 12/31/15

   $ 56,180.91   

4. Additional Lease Modifications: Landlord and Tenant agree that the Lease
shall also be modified as follows:

a. In Paragraph 4.2(a)(vi), the following shall be added after the phrase
“paragraph 8 below:” “(excluding the premiums and deductibles paid by Tenant to
maintain the insurance coverage Tenant is required to maintain pursuant to
Paragraph 8.2(a) below).”

b. In Subparagraph 4.2(e), the following shall be added as additional items not
included within the term “Operating Expenses:” “(x) costs incurred because
Landlord or another tenant actually violated the terms and conditions of any
lease for premises within the Industrial Center or due to Landlord’s gross
negligence or willful misconduct; (xi) any items for which Landlord is actually
reimbursed by insurance or by direct reimbursement by any other tenant of the
Industrial Center; (xii) costs associated with the investigation and/or
remediation of Hazardous Substances (hereafter defined) present in, on or about
any portion of the Industrial Center, unless such costs and expenses are the
responsibility of Tenant as provided in Paragraph 6.2 hereof; (xiii) Landlord’s
cost for the repairs and maintenance items set forth in the first (1st) sentence
(and subject to the terms) of Paragraph 7.2; (xiv) overhead and profit increment
paid to Landlord or to subsidiaries or affiliates of Landlord for goods and/or
services in the Industrial Center to the extent the same exceeds the costs of
such by unaffiliated third parties on a competitive basis; or any costs included
in Operating Expenses representing an amount paid to a person, firm, corporation
or other entity related to Landlord which is in excess of the amount which would
have been paid in the absence of such relationship; (xv) the cost of correcting
any building code or other code violations which were violations prior to the
Commencement Date of this Lease; and (xvi) wages, salaries, or other
compensation paid to any executive employees of Landlord above the grade of
building manager.”

c. The following shall be inserted as Subparagraph 4.2(f):

“(f) After delivery to Landlord of at least thirty (30) days’ prior written
notice, Tenant, at its sole cost and expense through any accountant designated
by it, shall have the right to examine and/or audit the books and records
evidencing such expenses for the previous one (1) calendar year, during
Landlord’s reasonable business hours but not more frequently than once during
any calendar year. Tenant may not compensate any such accountant on a
contingency fee basis. The results of any such audit (and any negotiations
between the parties related thereto) shall be maintained strictly confidential
by Tenant, its lawyers and its

 

1

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

accounting firm and shall not be disclosed, published or otherwise disseminated
to any other party other than to Landlord and its authorized agents, except as
otherwise required by Applicable Requirements or court order. Landlord and
Tenant each shall use its commercially reasonable efforts to cooperate in such
negotiations and to promptly resolve any discrepancies between Landlord and
Tenant in the accounting of such expenses.”

d. In Paragraph 5, the term “reasonable” shall be added in the fifth (5th) line
of such paragraph, between the term “including” and “attorneys’.”

e. In Subparagraph 6.2(c), the term “reasonable” shall be added (i) in the
fourth (4th) line of such subparagraph between the term “and” and “attorneys’”
and (ii) in the ninth (9th) line of such subparagraph between the term
“including” and “consultants.”

f. The following Paragraphs 6.7 and 6.8 shall be added to the Lease:

“6.7 Disclosure. The land described herein contains residual hazardous
substances. Such condition renders the land and the Landlord, Tenant or other
possessor of the land subject to requirements, restrictions, provisions, and
liabilities contained in Chapter 6.5 and Chapter 6.8 of Division 20 of the
Health and Safety Code, as same may be amended from time, and any successor
statutes thereof. This statement is not a declaration that a hazard to public
health, safety and welfare exists.

6.8 Landlord Indemnification. With respect to only those Hazardous Substances
present on, in or under the Industrial Center as of the date of this Lease (the
“Existing Hazardous Substances”), Landlord agrees to indemnify, defend (with
counsel reasonably acceptable to Tenant) and hold Tenant harmless from and
against any and all claims, judgments, damages, penalties, fines, liabilities,
losses, suits, administrative proceedings and costs (including, but not limited
to, reasonable attorneys’ and consultant fees and court costs), arising at any
time during or after the Term of this Lease, to the extent arising from (1) any
of the Existing Hazardous Substances and/or (2) the removal, investigation,
monitoring or remediation of any of the Existing Hazardous Substances; provided,
however, Landlord shall not indemnify, defend or hold Tenant harmless to the
extent (x) Tenant or any of the Tenant Entities contributes to or has
contributed to the presence of such Existing Hazardous Substances or Tenant
and/or any of the Tenant Entities exacerbates the conditions caused by such
Existing Hazardous Substances, or (y) Tenant and/or any of the Tenant Entities
allows or permits persons over which Tenant or any of the Tenant Entities has
control and/or for which Tenant or any of the Tenant Entities are legally
responsible for, to cause such Existing Hazardous Substances to be present in,
on, under, through or about any portion of the Premises, the Building or the
Industrial Center, or does not take all reasonably appropriate actions to
prevent such persons over which Tenant or any of the Tenant Entities has control
and/or for which Tenant or any of the Tenant Entities are legally responsible
from causing the presence of Existing Hazardous Substances in, on, under,
through or about any portion of the Premises, the Building or the Industrial
Center. Landlord’s obligations under this Paragraph 6.8 shall survive the
Expiration Date or earlier termination of this Lease.”

g. In Paragraph 6.4, the following shall be added in the fifth (5th) line after
the term “Applicable Requirements”: “; provided, however, Tenant shall have the
right to have a representative present during such inspections and such
inspections shall occur upon not less than 48 hours notice during normal
business hours. It is further agreed that Landlord shall have the right to use
any and all means Landlord deems necessary to enter the Premises in an emergency
and in the case of emergency advance notice shall not be required, provided that
Landlord agrees to use its commercially reasonable efforts to contact Tenant’s
24/7 security number (650-269-8434) to notify Tenant of the emergency. Landlord
shall use commercially reasonable efforts to minimize any interference with
Tenant’s business operations during any entry into the Premises.”

h. In Paragraph 6.6, the term “reasonable” shall be added in the tenth
(10th) line between the term “limitation,” and “attorneys’.”

i. In Paragraph 7.2, (i) the phrase “floors and of the” shall be added in the
fourth (4th) line thereof between the phrase “structure of the” and “exterior
walls,” and (ii) the following shall be inserted after the phrase “outside of
the Premises” in the sixth (6th) line thereof: “(including, without limitation,
fire protection services and plumbing, mechanical (including HVAC) and
electrical systems serving the Building but excluding the plumbing, mechanical
and electrical systems exclusively serving the Premises), and the parking areas,
pavement, landscaping, sprinkler systems, sidewalks, driveways, curbs and
lighting systems in the Common Areas.”

j. In Subparagraph 8.2(d), the phrase “or material change” shall be deleted.

 

2

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

k. In Paragraph 8.5, the following shall be inserted at the beginning of such
paragraph: “Except to the extent caused by the gross active or gross passive
negligence or willful misconduct of Landlord or any Landlord Entity,”. Also the
term “reasonable” shall be added in the second (2nd) line of such Paragraph 8.5,
between the term “and” and “attorneys’.”

l. In Paragraph 8.6, the phrase “or any Landlord Entity” shall be added in the
second (2nd) line of such Paragraph 8.6, between the term “Landlord,” and
“neither.”

m. Paragraph 9.1 of the Lease is hereby deleted and the following substituted
therefor:

“9.1 Termination Right. Tenant shall give Landlord immediate written notice of
any damage to the Premises. Subject to the provisions of Paragraph 9.2, if the
Premises or the Building shall be damaged to such an extent that there is
substantial interference for a period exceeding one hundred eighty
(180) consecutive days with the conduct by Tenant of its business at the
Premises (provided, up to an additional sixty (60) days shall be added to such
one hundred eighty (180) consecutive day period to account for time Landlord may
require to obtain permits for such repairs), then either party, at any time
prior to commencement of repair of the Premises and following ten (10) days
written notice to the other party, may terminate this Lease effective thirty
(30) days after delivery of such notice to the other party. Within forty five
(45) days following the occurrence of such damage, Landlord shall inform Tenant
in writing of Landlord’s estimate of the time required to complete repairs to
the Premises. Further, if any portion of the Premises is damaged and is not
fully covered by the aggregate of insurance proceeds received by Landlord and
any applicable deductible or if the holder of any indebtedness secured by the
Premises requires that the insurance proceeds be applied to such indebtedness,
and Tenant does not voluntarily contribute any shortfall thereof to Landlord,
then Landlord shall have the right to terminate this Lease by delivering written
notice of termination to Tenant within sixty (60) days after the date of notice
to Tenant of any such event. Such termination shall not excuse the performance
by Tenant of those covenants which under the terms hereof survive termination.
Rent shall be abated in proportion to the degree of interference during the
period that there is such substantial interference with the conduct of Tenant’s
business at the Premises. Abatement of rent and Tenant’s right of termination
pursuant to this provision shall be Tenant’s sole remedy with respect to any
such damage regardless of the cause thereof.”

n. In Paragraph 10.2, the term “reasonable” shall be added in the seventh
(7th) line thereof after the term “including” and before the term “attorneys’.”

o. In Paragraph 12.2, in the second (2nd) and fourth (4th) sentences thereof,
the phrase “thirty (30) days” shall be deleted and the phrase “fifteen
(15) business days” substituted therefor.

p. In Paragraph 12.3, subparagraphs (h) and (k) shall be deleted and
subparagraph “(i)” shall be relabeled “(h)”; subparagraph “(j)” shall be
relabeled “(i)” and subparagraph “(l)” shall be relabeled “(j).”

q. In Paragraph 13.3, (i) the number “4” shall be deleted and the number “5”
substituted therefor and (ii) the following phrase shall be added at the end of
the third (3rd) sentence thereof: “; provided, however, the foregoing late
charge shall not be applicable to the first (1st) instance of late payment of
Rent by Tenant until three (3) business days after written notice to Tenant of
such late payment”.

r. In Paragraph 14, the following shall be added at the end of the third
(3rd) sentence thereof: “and Landlord shall, if necessary, promptly proceed to
restore the Premises or the Building, as applicable, to substantially its same
condition prior to such partial condemnation, allowing for the reasonable
effects of such partial condemnation, and a proportionate allowance shall be
made to Tenant for the rent corresponding to the time during which, and to the
part of the Premises of which, Tenant is deprived on account of such partial
condemnation and restoration. Landlord shall not be required to spend funds for
restoration in excess of the amount received by Landlord as compensation
awarded.”

s. In Paragraph 15.2, the following shall be added as a new sentence at the end
of such Paragraph 15.2: “Tenant shall not be required to deliver such financial
statements to Landlord so long as Tenant is a publicly-held company whose stock
is listed on a national exchange.”

t. In Paragraph 16.9, the term “reasonable” shall be added in the last sentence
of such Paragraph 16.9 before the term “attorneys’.”

u. In Paragraph 16.13, the term “reasonable” shall be added in the third
(3rd) sentence thereof before the term “attorneys’.”

 

3

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

v. In Paragraph 16.14, the following phrase shall be added at the beginning of
such Paragraph 16.14: “Subject to the terms of Paragraph 6.4 above.”

w. In Subparagraph 16.18(a) the following shall be inserted at the beginning
thereof: “Subject to the nondisturbance provisions of subparagraph 16.18(c),”.

x. In Subparagraph 16.18(c), the following phrase shall be inserted following
the phrase “With respect to a Mortgage entered into by Landlord after the
execution of this Lease,”: “and to any and all advances made on the security
thereof, and to all renewals, modifications, consolidations, replacements and
extensions thereof,”.

y. In Paragraph 16.29, the following shall be inserted at the end of the second
(2nd) sentence of such Paragraph 16.29: “; provided, such Renovations shall not
unreasonably interfere with Tenant’s access to the Premises or access to the
parking areas.”

z. In Exhibit E, the following shall be added at the end of number 10: “, which
permission shall not be unreasonably withheld, conditioned or delayed.”

aa. Addendum 1 of the Lease is hereby deleted in its entirety and Addendum 1
attached hereto and incorporated herein by this reference shall be substituted
therefor.

5. Right of First Offer: Landlord and Tenant acknowledge and agree that Tenant
is, concurrently with the execution and delivery of this Amendment, executing
and delivering leases to Landlord for all of the Expansion Spaces (as defined in
Addendum 2 to the Lease) and therefore, Addendum 2 to the Lease shall be of no
further force or effect upon the execution and delivery of such leases for the
Expansion Spaces.

6. Condition of the Premises: Tenant acknowledges and agrees that its possession
of the Premises after the Amendment Date, is a continuation of Tenant’s
possession of the Premises under the Lease. Tenant is familiar with the
condition of the Premises, and agrees to accept the Premises in their existing
condition “AS IS”, without any obligation of Landlord to remodel, improve or
alter the Premises, to perform any other construction or work of improvement
upon the Premises, or to provide Tenant with any construction or refurbishing
allowance.

7. Brokers: Tenant warrants that it has had no dealings with any real estate
broker or agent in connection with the negotiation of this Amendment whose
commission shall be payable by Landlord, except Cornish & Carey Commercial and
Cassidy Turley BT Commercial (collectively, “Brokers”). If Tenant has dealt with
any person, real estate broker or agent with respect to this Amendment other
than Brokers, Tenant shall be solely responsible for the payment of any fee due
to said person or firm, and Tenant shall indemnify, defend and hold Landlord
free and harmless against any claims, judgments, damages, costs, expenses, and
liabilities with respect thereto, including attorneys’ fees and costs.

8. Effect of Amendment: Except as modified herein, the terms and conditions of
the Lease shall remain unmodified and continue in full force and effect. In the
event of any conflict between the terms and conditions of the Lease and this
Amendment, the terms and conditions of this Amendment shall prevail.

9. Definitions: Unless otherwise defined in this Amendment, all terms not
defined in this Amendment shall have the meanings assigned to such terms in the
Lease.

10. Authority: Subject to the provisions of the Lease, this Amendment shall be
binding upon and inure to the benefit of the parties hereto, their respective
heirs, legal representatives, successors and assigns. Each party hereto and the
persons signing below warrant that the person signing below on such party’s
behalf is authorized to do so and to bind such party to the terms of this
Amendment.

11. Incorporation: The terms and provisions of the Lease are hereby incorporated
in this Amendment.

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

LANDLORD

 

AMB PROPERTY, L.P., a Delaware limited partnership By:   AMB PROPERTY
CORPORATION,   a Maryland corporation, its general partner

        By:  

/s/ Mark Hansen

        Name:  

Mark Hansen

        Its:  

Sr. Vice President

        Date:  

12/29/10

///signatures continued on next page///

 

4

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

///signatures continued from previous page///

TENANT

PACIFIC BIOSCIENCES OF CALIFORNIA, INC.,

a Delaware corporation, dba Pac Bio, Inc.

 

By:  

/s/ Susan Barnes

Name: Susan Barnes Its:   Executive Vice President and Chief Financial Officer

Date:  

12/29/10

If Tenant is a CORPORATION, the authorized officers must sign on behalf of the
corporation and indicate the capacity in which they are signing. The document
must be executed by the chairman of the board, president or vice-president, and
the secretary, assistant secretary, chief financial officer or any assistant
treasurer, unless the bylaws or a resolution of the board of directors shall
otherwise provide, in which event, the bylaws or a certified copy of the
resolution, as the case may be, must be attached to this document.

 

5

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

Addendum 1

Options to Extend

This Addendum 1 (the “Addendum”) is incorporated as a part of that certain Third
Amendment to Industrial Lease dated

December __, 2010 (the “Amendment”), by and between AMB Property, L.P., a
Delaware limited partnership (“Landlord”), and Pacific Biosciences of
California, Inc., a Delaware corporation dba Pac Bio, Inc. (“Tenant”), for the
leasing of those certain premises commonly known as 940 Hamilton Avenue
(formerly known as 1394 Willow Road), Menlo Park, California. Any capitalized
terms used herein and not otherwise defined herein shall have the meaning
ascribed to such terms as set forth in the Amendment.

1. Grant of Extension Options. Subject to the provisions, limitations and
conditions set forth in Paragraph 5 below, Tenant shall have an Option
(individually, an “Option” and collectively, the “Options”) to extend the
Extended Term of the Lease for two (2) consecutive five (5) year periods
(individually, an “Option Extended Term” and collectively, “Option Extended
Terms”).

2. Tenant’s Option Notice. Tenant shall have the right to deliver written notice
to Landlord of its intent to exercise an Option (the “Option Notice”). If
Landlord does not receive an Option Notice from Tenant on a date which is
neither more than three hundred sixty five (365) days nor less than two hundred
twenty five (225) days prior to the end of the Extended Term or first Option
Extended Term, as applicable, all rights under the applicable Option shall
automatically terminate and shall be of no further force or effect. Upon the
proper exercise of the first Option, subject to the provisions, limitations and
conditions set forth in this Addendum, the Extended Term of the Lease shall be
extended for the first Option Extended Term and upon the proper exercise of the
second Option, subject to the provisions, limitations and conditions set forth
in Paragraph 5 below, the first Option Extended Term shall be extended for the
second Option Extended Term; provided, Tenant shall have no right to exercise
the Option for the second Option Extended Term if Tenant failed to properly
exercise the Option for the first Option Extended Term.

3. Determination of the Option Rent.

A. The Base Rent payable for each month during each Option Extended Term shall
be set at ninety-five percent (95%) of the then-prevailing fair market rental
rate (the “Prevailing Rental Rate”) for renewals of space of equivalent quality,
type, size and location in comparable R&D buildings in Menlo Park, with the
length of the applicable Option Extended Term, the then credit standing of
Tenant, tenant improvement allowances then being granted in the marketplace and
other market rent concessions then being offered in the marketplace to be taken
into account. The Prevailing Rental Rate shall include the periodic rental
increases, if any, that would be included for space leased for the period the
Premises will be covered by the Lease. As used herein, “then-prevailing” shall
mean the time period which is six (6) months prior to the commencement of the
applicable Option Extended Term and not the commencement date of the applicable
Option Extended Term. Within thirty (30) days after receipt of Tenant’s notice
to renew, Landlord shall deliver to Tenant written notice of Landlord’s
determination of the Prevailing Rental Rate and shall advise Tenant of the
required adjustment to Base Rent, if any, and the other terms and conditions
offered. Tenant shall, within ten (10) days after receipt of Landlord’s notice,
time being of the essence with respect thereto, notify Landlord in writing
whether Tenant accepts or rejects Landlord’s determination of the Prevailing
Rental Rate.

B. If Tenant rejects Landlord’s determination of the Prevailing Rental Rate,
Tenant’s written notice shall include Tenant’s own determination of the
Prevailing Rental Rate. If Tenant does not deliver any written notice to
Landlord within ten (10) days after receipt of Landlord’s notice of the
Prevailing Rental Rate, Tenant shall be deemed to have withdrawn its exercise of
its rights under this Addendum, whereupon Tenant’s rights under this Addendum
shall be null and void and of no further force or effect. If Tenant and Landlord
disagree on the Prevailing Rental Rate, then Landlord and Tenant shall attempt
in good faith to agree upon the Prevailing Rental Rate. If by that date which is
four (4) months prior to the commencement of the applicable Option Extended Term
(the “Option Trigger Date”), Landlord and Tenant have not agreed in writing as
to the Prevailing Rental Rate, the parties shall determine the Prevailing Rental
Rate in accordance with the procedure set forth in Paragraph C below.

C. If Landlord and Tenant are unable to reach agreement on the Prevailing Rental
Rate by the Option Trigger Date, then within ten (10) days of the applicable
Option Trigger Date, Landlord and Tenant shall each simultaneously submit to the
other in a sealed envelope its good faith estimate of the Prevailing Rental
Rate. If either Landlord or Tenant fails to propose a Prevailing Rental Rate,
then the Prevailing Rental Rate proposed by the other party shall prevail. If
the higher of such estimates is not more than one hundred five percent (105%) of
the lower, then the Prevailing Rental Rate shall be the average of the two.
Otherwise, the dispute shall be resolved by arbitration in accordance with the
remainder of this Paragraph C. Within seven (7) days after the exchange of
estimates, the parties shall select as an arbitrator a licensed real estate
broker with at least ten (10) years of experience leasing premises in Class A
office buildings in Central San Mateo County (a “Qualified Arbitrator”). If the
parties cannot agree on a Qualified Arbitrator, then within a second period of
seven (7) days, each shall select a Qualified Arbitrator and within ten
(10) days thereafter the two appointed Qualified Arbitrators shall select a
third Qualified Arbitrator (which third Qualified Arbitrator shall not
previously have represented either party hereto) and the third Qualified
Arbitrator shall be the sole arbitrator (the “Sole Arbitrator”). If one party
shall fail to select a Qualified Arbitrator within the second seven (7)-day
period, then the Qualified Arbitrator chosen by the other party shall be the
Sole Arbitrator. Within thirty (30) days after submission of the matter to the
Sole Arbitrator, the Sole Arbitrator shall determine the Prevailing Rental Rate
by choosing whichever of the estimates submitted by

Addendum 1, Page 1

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

Landlord and Tenant the Sole Arbitrator judges to be more accurate. The Sole
Arbitrator shall notify Landlord and Tenant of his or her decision, which shall
be final and binding. If the Sole Arbitrator believes that expert advice would
materially assist him or her, the Sole Arbitrator may retain one or more
qualified persons to provide expert advice. The fees of the arbitrator selected
by each party shall be borne by that party. The fees of the Sole Arbitrator and
the expenses of the arbitration proceeding, including the fees of any expert
witnesses retained by the Sole Arbitrator, shall be shared equally by Landlord
and Tenant.

D. If Tenant timely notifies Landlord that Tenant accepts Landlord’s
determination of the Prevailing Rental Rate, or following resolution of the
Prevailing Rental Rate via mutual agreement or via arbitration, whichever shall
be applicable, then, on or before the commencement date of the applicable Option
Extended Term, Landlord and Tenant shall execute an amendment to this Lease
prepared by Landlord extending the Term on the same terms provided in this
Lease, except as follows:

(i) Base Rent shall be adjusted to ninety-five percent (95%) of the Prevailing
Rental Rate (which shall be the rental rate set forth in Landlord’s
determination of the Prevailing Rental Rate, the rental rate determined by
mutual agreement or the Prevailing Rental Rate determined by arbitration, as the
case may be, but in no event less than the Base Rent payable by Tenant
immediately prior to the expiration of the Extended Term of this Lease with
respect to the first Option Extended Term and in no event less than the Base
Rent payable by Tenant immediately prior to the expiration of the first Option
Extended Term with respect to the second Option Extended Term);

(ii) Tenant shall have no further renewal Option (except as expressly set forth
in this Addendum 1) unless expressly granted by Landlord in writing; and

(iii) Landlord shall lease the Premises to Tenant in their then-current
condition, and Landlord shall not provide to Tenant any allowances (e.g.,
improvement allowance) or other tenant inducements, or pay any leasing
commissions.

E. Tenant’s rights under this Addendum shall terminate if (1) this Lease or
Tenant’s right to possession of the Premises is terminated, (2) Tenant assigns
any of its interest in this Lease or sublets any portion of the Premises, or
(3) Tenant fails to timely exercise its Option under this Addendum, time being
of the essence with respect to Tenant’s exercise thereof. Tenant shall have no
other rights to extend the Term of the Lease under this Addendum unless Landlord
and Tenant otherwise agree in writing.

4. Condition of Premises for the Option Extended Terms. If Tenant timely and
properly exercises this Option, in strict accordance with the terms contained
herein, Tenant shall accept the Premises in its then “As-Is” condition and,
accordingly, Landlord shall not be required to perform any additional
improvements to the Premises. Tenant shall not be responsible for brokerage
commissions payable to a broker procured or hired by Tenant in connection with
the Option if Landlord has agreed in writing to pay such commission.

5. Limitations On, and Conditions To, Extension Option. This Option is personal
to Tenant and may not be assigned, voluntarily or involuntarily, separate from
or as part of the Lease. At Landlord’s option, all rights of Tenant under this
Option shall terminate and be of no force or effect if any of the following
individual events occur or any combination thereof occur: (1) Tenant has been in
default at any time during the Extended Term or first Option Extended Term, as
applicable, of the Lease, or is in default of any provision of the Lease on the
date Landlord receives the Option Notice; and/or (2) Tenant has assigned its
rights and obligations under all or part of the Lease or Tenant has subleased
all or part of the Premises; and/or (3) Tenant’s financial condition is
unacceptable to Landlord at the time the Option Notice is delivered to Landlord;
and/or (4) Tenant has failed to exercise properly this Option in a timely manner
in strict accordance with the provisions of this Addendum; and/or (5) Tenant no
longer has possession of all or any part of the Premises under the Lease, or if
the Lease has been terminated earlier, pursuant to the terms and provisions of
the Lease.

6. Time is of the Essence. Time is of the essence with respect to each and every
time period described in this Addendum.

Addendum 1, Page 2