CONFIDENTIAL TREATMENT REQUESTED

CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND HAVE BEEN

SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION

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FIRST AMENDMENT TO LEASE

THIS FIRST AMENDMENT TO LEASE (this “Amendment”) is made as of December 23, 2016
(the “Effective Date”), by and between MENLO PARK PORTFOLIO II, LLC, a Delaware
limited liability company (“Lessor”) and PACIFIC BIOSCIENCES OF CALIFORNIA,
INC., a Delaware corporation (“Lessee”).

RECITALS

A.       Lessor and Lessee entered into that certain Lease, dated as of July 22,
2015 (the “Lease”), pertaining to the premises located at 1315 O’Brien Drive,
Menlo Park, California (the “Premises”).

B.       Lessor and Lessee desire to amend the Lease as set forth
herein.  Unless otherwise defined herein, all capitalized terms in this
Amendment shall have the same meaning ascribed to them in the Lease.

TERMS AND CONDITIONS

In consideration of the mutual covenants herein contained, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Lessor and Lessee agree as follows:

1.       Premises; Building.  The Lease defined the Premises as a portion of the
Building consisting of approximately One Hundred Eighty Thousand (180,000)
rentable square feet, as shown on the floor plan of the Building attached to the
Lease as Exhibit “C.”  As contemplated in the Lease, Lessor has re-measured the
Building and the Building is equal to approximately One Hundred Ninety Thousand
Three Hundred Eighty Nine (190,389) rentable square feet.  Paragraph 1 of the
Lease is hereby amended to define the Premises as the portion of the Building
consisting of approximately 180,231 rentable square feet, as shown on the floor
plan attached hereto as Exhibit “A”.  The floor plan attached to the Lease as
Exhibit “C” is hereby deleted and replaced with the floor plan attached hereto
as Exhibit “A”. 

2.       Commencement Date; Substantial Completion Date.  Subject to the
provisions of this Amendment, the initial Term of the Lease commenced on October
25, 2016 (the “Commencement Date”), and shall expire on October 31,
2027.  Notwithstanding the foregoing, Lessor and Lessee acknowledge that, as of
the date of this Amendment, (i) a portion of the Premises (the “Construction
Area”) has not been delivered to Lessee, (ii) Lessor has not obtained a TCO as
to the Construction Area and (iii) the Work is not yet Substantially
Completed.  Accordingly, Lessor remains obligated to cause the Work to be
Substantially Completed, to deliver the Construction Area to Lessee in the
required condition and to obtain a final TCO as to the Construction Area (the
date Lessor causes all of the foregoing to be satisfied is referred to herein
and in the Lease as the “Substantial Completion Date”).  Pursuant to Paragraph
14(b) of the Lease, as modified herein, Lessor agrees to (i) use reasonable
efforts to assign any assignable warranties or guaranties provided by the
contractors or manufacturers of equipment to be maintained by Lessee pursuant to
Paragraph 15 (if any) provided as part of the Work to Lessee or, at Lessee’s
option, to enforce same with respect to any defect discovered in such equipment
within one (1) year after the Substantial Completion Date and (ii) to enforce
all other warranties or guaranties with respect to any defect discovered in the
Work

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within one (1) year after the Substantial Completion Date.  The parties hereby
agree and acknowledge that subject to the waiver of subrogation set forth in
Paragraph 12(c) of the Lease and to Section 14 of the Work letter, the
indemnification obligations of Lessee and Lessor shall be as set forth in
Paragraph 13 of the Lease.  Notwithstanding anything to the contrary in the
Lease or this Amendment, Lessee shall not be liable or responsible for any
injury or damages (including attorneys' and consultants' fees) of any type or
nature, arising from any occurrence or cause within the Construction Area prior
to the Substantial Completion Date, except to the extent such injury or damage
is caused by Lessee or Lessee’s employees, agents or contractors.

3.       Additional Rent.  The term “Commencement Date” appearing in the first
sentence of Paragraph 6(a) of the Lease and the second sentence of Paragraph
6(e) is hereby deleted and replaced with “December 15, 2016” so that Lessee’s
obligation to commence paying Additional Rent to Lessor commenced as of December
15, 2016.

4.       Monthly Base Rent.  The chart in Paragraph 5(a) of the Lease is hereby
deleted in its entirety and replaced with the following chart:

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﻿

Months

Square Feet

$/SF/Mo./NNN

Monthly Base Rent

 

﻿

Rent Commencement Date -12

180,231

$2.996

$540,000.00*

 

﻿

13-24

180,231

$3.145

$567,000.00

 

﻿

25-36

180,231

$3.196

$576,000.00

 

﻿

37-48

180,231

$3.246

$585,000.00

 

﻿

49-60

180,231

$3.346

$603,000.00

 

﻿

61-72

180,231

$3.45

$621,000.00

 

﻿

73-84

180,231

$3.55

$639,000.00

 

﻿

85-96

180,231

$3.645

$657,000.00

 

﻿

97-108

180,231

$3.745

$675,000.00

 

﻿

109-120

180,231

$3.845

$693,000.00

 

﻿

121-132

180,231

$3.945

$711,000.00

 

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5.       Monthly Base Rent Credit; Additional Credit.  Pursuant to Paragraph
2(c)(i) of the Lease, Lessee is entitled to receive a credit towards Monthly
Base Rent next coming due under the Lease in an amount equal to One Hundred
Seventy Seven Thousand Five Hundred Thirty Four and 25/100 Dollars
($177,534.25), which amount is equal to ten (10) days of Monthly Base
Rent.  Notwithstanding anything to the contrary in the Lease, if the Substantial
Completion Date has not occurred by January 31, 2017 (the “Second Abatement
Trigger Date”), then Lessee shall be entitled to receive a credit towards
Monthly Base

 

 

 

 

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Rent next coming due under the Lease in the amount of $ 17,753.42 per day for
each day beyond the Second Abatement Trigger Date until the Substantial
Completion Date occurs. 

6.       Insurance.  Paragraph 12(a) of the Lease is hereby amended to provide
that Lessee shall, at Lessee’s sole cost and expense, provide and keep in force
the insurance policies described in Paragraph 12 commencing as of December 31,
2016.  In addition, the requirement of Lessee to provide property insurance in
clause (ii) of Paragraph 12(a) is hereby amended to require Lessee to provide
such property insurance as to alterations by Lessee in the Premises and as to
alterations made by Lessor in the Premises after the Substantial Completion
Date.

7.       Warranties and Guaranties.  The last sentence of Paragraph 14(b) of the
Lease is deleted in its entirety and replaced with the following language,

“Lessor agrees to (i) use reasonable efforts to assign any assignable warranties
or guaranties provided by the contractors or manufacturers of equipment to be
maintained by Lessee pursuant to Paragraph 15 (if any) provided as part of the
Work to Lessee or, at Lessee’s option, to enforce same with respect to any
defect discovered in such equipment within one (1) year after the Substantial
Completion Date and (ii) to enforce all other warranties or guaranties with
respect to any defect discovered in the Work within one (1) year after the
Substantial Completion Date.

8.       Maintenance and Repairs.  The second full paragraph of Paragraph 15(c)
of the Lease is hereby deleted in its entirety and replaced with the following
language,

“If at any time after the first (1st) anniversary of the Substantial Completion
Date, Pacific Biosciences of California, Inc. (the named tenant hereunder) (i)
assigns this Lease by operation of law or otherwise other than to a Permitted
Transferee, (ii) fails to provide copies of all service contracts and all
service, maintenance, repair and replacement records (whether performed by
Lessee’s trained and certified personnel or by outside vendors) with respect to
Systems Repairs required to be performed by Lessee in the Premises to Lessor on
a timely basis, without necessity of request therefor, (iii) fails to require
that all vendors maintain insurance reasonably satisfactory to Lessor naming
Lessor and the Additional Insureds named in Paragraph 12 as “Additional
Insured”, (iv) fails to perform the Systems Repairs in accordance with the
provisions of this Paragraph 15, (v) fails to provide such service, maintenance,
repair or replacement at quality and frequency levels at least equal to the
quality and frequency levels Lessor would maintain if it were providing such
services (as evidenced by Lessor’s maintenance of the balance of the Menlo
Business Park), or (vi) fails to satisfy any of the Maintenance Requirements,
and following such breach Lessee fails to commence a cure of any breach of the
obligations set forth in (ii), (iii), (iv), (v) or (vi) within five (5) business
days after receipt of written notice from Lessor and, thereafter, to diligently
prosecute the cure to completion three (3) or more times in a twelve (12) month
period then, the Parties agree that Lessor may, in its discretion, elect to
assume or resume responsibility for maintenance, repair and replacement of the
systems described in Paragraph 15(b)(i) and (ii), above, and include the cost in
Operating Expenses as provided in Paragraph 6, subject to the provisions of
Paragraph 6.  Notwithstanding the cure period set forth in the immediately
preceding sentence, the parties hereby agree and acknowledge that if Lessee
fails more than once in a twelve (12) month period to cure a breach of any of
the obligations set forth in (ii), (iii), (iv), (v) or (vi) within a reasonable
time after receipt of written notice from Lessor, then Lessor may elect to
assume or resume responsibility for maintenance, repair and replacement of the
systems as set forth herein.  Any such election by Lessor shall be effective
immediately upon written notice to the Lessee of Lessor’s intent to assume or
resume such service, maintenance, repair and replacement.  Any Lessor notice
referred to above must set forth in reasonable detail the nature and extent of
the failure referencing pertinent Lease provisions.”

 

 

 

 

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9.       Maintenance Programs and Procedures.  The second sentence of the third
paragraph of Paragraph 15(c) is hereby deleted in its entirety and replaced with
the following language,

“Lessee agrees to provide Lessor with a copy of Lessee’s internal maintenance
programs and procedures within one hundred eighty (180) days of the Commencement
Date hereof, and again at any time upon receipt of Lessor’s request therefor.”  

10.       Surrender/Restoration.  Paragraph 15(h) of the Lease is hereby amended
to provide that the state of repair for purposes of determining Lessee’s
obligation to surrender the Premises shall not be as of the Commencement Date,
but rather the state of repair existing as of Substantial Completion Date.

11.       Additional Modifications to the Lease.  The Lease is further modified
as follows:

(a)       The term “Commencement Date” in Paragraph 6(d)(10) of the Lease is
hereby replaced with the term “Substantial Completion Date”, as defined in this
Amendment.

(b)       The term “Commencement Date” in first sentence of Paragraph 23 of the
Lease is hereby replaced with the term “Substantial Completion Date”, as defined
in this Amendment.

12.       Continuing Effect.  All of the terms and conditions of the Lease shall
remain in full force and effect, as the Lease is amended by this Amendment.

13.       Conflicts.  If any provision of this Amendment conflicts with the
Lease, the provisions of this Amendment shall control.

14.       Warranty of Authority.  Each party represents and warrants to the
other that the person signing this Amendment is duly and validly authorized to
do so on behalf of the entity it purports to so bind, and if such party is a
limited liability company or a corporation, that such limited liability company
or corporation has full right and authority to enter into this Amendment and to
perform all of its obligations hereunder and that it has obtained all necessary
consents and approvals to enter into this Amendment.

15.       Effectiveness.  No binding agreement between the parties pursuant
hereto shall arise or become effective until this Amendment has been duly
executed by both Lessor and Lessee and a fully executed copy of this Amendment
has been delivered to both Lessor and Lessee.  This Amendment may be executed in
one or more counterparts, each of which shall be an original, but all of which,
taken together, shall constitute one and the same Amendment.

16.       Governing Law.  This Amendment is governed by the Electronic
Signatures in Global and National Commerce Act (15 U.S.C. §§ 7001 et seq.) and
the laws of the State of California without regard to its conflicts of law
rules.

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[Signatures continue on the next page]

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IN WITNESS WHEREOF, Lessor and Lessee have duly executed this Amendment as of
the date first set forth above.

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“Lessor”

 

 

 

 

 

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MENLO PARK PORTFOLIO II, LLC,

a Delaware limited liability company

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By:  

PREHC MENLO PARK PORTFOLIO II MEMBER, LLC,

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a Delaware limited liability company

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Its:  Co-Managing Member

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By:  

PRINCIPAL REAL ESTATE INVESTORS, LLC,

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a Delaware limited liability company, authorized signatory

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By:  

/s/ Kevin Anderegg

 

 

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Name:  

Kevin Anderegg

 

 

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Title:  

Assistant Managing Director

 

 

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By:  

/s/ Sara Hoffman

 

 

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Name:  

Sara Hoffman

 

 

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Title:  

Assistant Financial Controller

 

 

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By:  

TPI INVESTORS 11, LLC, a California limited liability company

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By:  

TARLTON PROPERTIES, INC., a California corporation

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Its:  

Managing Member

 

 

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By:  

/s/ John C. Tarlton

 

 

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Name:  

John C. Tarlton

 

 

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Title:  

CEO

 

 

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“Lessee”

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PACIFIC BIOSCIENCES OF CALIFORNIA, INC.,

a Delaware corporation

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By:  

 

/s/ Ben Gong

 

 

Printed Name:  

Ben Gong

 

 

Its:  

 

VP Finance

 

 

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By:  

 

 

 

 

 

 

Printed Name:  

 

 

 

 

 

Its:  

 

 

 

 

 

 

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EXHIBIT “A”

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Floor Plan

[See Attached]

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*** Certain information on this page has been omitted and filed separately with
the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.

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