Exhibit 10.4

 

THIRD AMENDMENT TO LEASE

This THIRD AMENDMENT TO OFFICE LEASE ("Third Amendment") is made and entered
into as of the 26th day of June, 2020 (the "Effective Date"), by and between
HAYWARD POINT EDEN I LIMITED PARTNERSHIP, a Delaware limited partnership
("Landlord"), and ARCUS BIOSCIENCES, INC., a Delaware corporation ("Tenant").

r e c i t a l s :

A.

Landlord and Tenant entered into that certain Lease dated September 30, 2015
(the "Original Lease"), as supplemented by that certain Notice of Lease Term
Dates dated April 8, 2016 and that certain Notice of First Amendment Lease Term
Dates dated July 27, 2016 and that certain Notice of Second Amendment Lease Term
Dates dated October 27, 2017 (collectively, the "Notices of Lease Term Dates"),
whereby Landlord leased to Tenant and Tenant leased from Landlord those certain
premises consisting of approximately 26,467 rentable square feet ("Original
Premises") with a street address of 3928 Point Eden Way, Hayward, California
(together with 3920 Point Eden Way, Hayward, California, ("Building E").  

B.

The Original Lease was amended by that certain First Amendment to Lease dated
July 22, 2016 (the "First Amendment"), whereby Landlord and Tenant agreed to
expand the Original Premises to include that certain space consisting of
approximately 13,644 rentable square feet of space with a street address of 3920
Point Eden Way, Hayward, California (the "Expansion Premises").  

C.

The Original Lease and First Amendment were amended by that certain Second
Amendment to Lease dated October 12, 2017 (the "Second Amendment"), whereby
Landlord and Tenant agreed to expand the Original Premises and the Expansion
Premises to that certain space consisting of approximately 30,000 rentable
square feet of space (the "Second Expansion Premises") with a street address of
26118 Research Road, Hayward, California ("Building J").  The Original Premises,
Expansion Premises and Second Expansion Premises are, collectively, the
"Existing Premises."  The Original Lease, the Notices of Lease Term Dates, the
First Amendment and the Second Amendment are, collectively, the "Lease."

D.

Tenant desires to (i) expand the Existing Premises to include that certain space
consisting of approximately 36,303 rentable square feet of space (the "Third
Expansion Premises") with a street address of 3967 Trust Way, Hayward,
California ("Building F"), as delineated on Exhibit A attached hereto and made a
part hereof, and (ii) make other modifications to the Lease, and in connection
therewith, Landlord and Tenant desire to amend the Lease as hereinafter
provided.

a g r e e m e n t :

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

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1.Capitalized Terms.  All capitalized terms when used herein shall have the same
meaning as is given such terms in the Lease unless expressly superseded by the
terms of this Third Amendment.

2.Modification of Premises.  Effective as of the date which is six (6) months
following the later of (a) July 1, 2020 and (b) the date upon which Landlord
delivers all of the Third Expansion Premises to Tenant in the condition required
by this Third Amendment (the "Third Expansion Commencement Date"), Tenant shall
lease from Landlord and Landlord shall lease to Tenant the Third Expansion
Premises.  Landlord anticipates delivering and shall use commercially reasonable
efforts to deliver possession of the Third Expansion Premises to Tenant on or
about July 1, 2020.  Consequently, effective upon the Third Expansion
Commencement Date, the Existing Premises shall be increased to include the Third
Expansion Premises.  Landlord and Tenant hereby acknowledge that notwithstanding
any provision to the contrary contained in the Lease, such addition of the Third
Expansion Premises to the Existing Premises shall, effective as of the Third
Expansion Commencement Date, increase the size of the Premises to approximately
106,414 rentable square feet.  The Existing Premises and the Third Expansion
Premises may hereinafter collectively be referred to as the
"Premises".  Effective as of the Third Expansion Commencement Date, all
references in the Lease, as amended, to the Building shall mean (i) Building E
when the context applies to Building E or any portion of the Premises located in
Building E, (ii) Building J when the context applies to Building J or any
portion of the Premises located in Building J, (iii) Building F when the context
applies to Building F or any portion of the Premises located in Building F, and
(iv) each of Building E, Building J and Building F when the context applies to
all of such buildings; provided; however, if casualty damage affects only one
Building, the termination rights of the parties under Article 11 of the Original
Lease shall apply only to the portion of the Premises in such Building (in which
event the rent, security deposit and other amounts herein related to square
footage and the definition of "Building" shall be correspondingly revised) and
after the expiration of the Lease Term as to the Existing Premises, the Building
shall mean only Building F and the Premises shall mean only the Third Expansion
Premises.  Notwithstanding the foregoing, if Landlord has not delivered
possession of the Third Expansion Premises in the “Delivery Condition” (as that
term is defined in Section 1 of Exhibit B), on or before (a) October 1, 2020,
then, as Tenant's sole remedy for such delay, other than the right to specific
performance, the date Tenant is otherwise obligated to commence payment of rent
as to the Third Expansion Space shall be delayed by one (1) day for each two (2)
days that the delivery date is delayed beyond such date, or (b) January 1, 2021,
then Tenant shall also have the right to terminate this Third Amendment by
written notice thereof to Landlord, whereupon any monies previously paid or
deliveries previously made by Tenant to Landlord under this Third Amendment
shall be promptly returned to Tenant, which dates shall be extended to the
extent of any delays in delivery of possession caused by (a) Tenant delays, or
(b) events of Force Majeure (which Force Majeure delays shall not exceed ninety
(90) days in the aggregate).

3.Lease Term.  

3.1.Third Expansion Term.  Landlord and Tenant acknowledge that Tenant's lease
of the Existing Premises is scheduled to expire on October 31, 2025, pursuant to
the terms of the Lease, and such term shall continue as currently set forth in
the Lease and be unmodified by the terms of this Third Amendment.  The term of
Tenant's lease of the Third Expansion Premises shall commence on the Third
Expansion Commencement Date, and shall expire on the last day of the

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ninety-sixth (96th) full calendar month following the Third Expansion
Commencement Date (the "Third Expansion Expiration Date"), unless sooner
terminated as provided in the Lease, as hereby amended.  The period of time
commencing on the Third Expansion Commencement Date and terminating on the Third
Expansion Expiration Date, shall be referred to herein as the "Third Expansion
Term."  At any time during the Third Expansion Term, Landlord may deliver to
Tenant a notice substantially in the form as set forth in Exhibit C attached to
the Original Lease, as a confirmation only of the information set forth therein,
which Tenant shall execute and return to Landlord within ten (10) days of
receipt thereof.   For purposes of this Third Amendment, the term “Third
Expansion Year” shall mean each consecutive twelve (12) month period during the
Third Expansion Term; provided, however, that the first (1st) Third Expansion
Year shall commence on the Third Expansion Commencement Date and end on the last
day of the month in which the first anniversary of the Third Expansion
Commencement Date occurs (unless the Third Expansion Commencement Date is the
first (1st) day of a calendar month, in which event the first Third Expansion
Year shall end on the day immediately preceding the first anniversary of the
Third Expansion Commencement Date), and the second and each succeeding Third
Expansion Year shall commence on the first day of the next calendar month; and
further provided that the last Third Expansion Year shall end on the Third
Expansion Expiration Date.

3.2.Option Term for Third Expansion Premises.  Notwithstanding any provision to
the contrary contained in the Lease, Landlord and Tenant hereby acknowledge and
agree that the option to extend the Lease Term currently set forth in the Lease
(i.e., Section 2.2 of the Original Lease, as modified by Section 3.2 of the
Second Amendment) shall continue to apply to the Existing Premises, and shall
only apply to the Existing Premises.  Tenant shall have an option to extend the
Third Expansion Term for the Third Expansion Premises pursuant to the terms of
this Section 3.2 only.  

3.2.1Option Right for Third Expansion Premises.  Landlord hereby grants to the
Original Tenant, and its Permitted Assignees, as defined in the Lease, one (1)
option to extend the Third Expansion Term with respect to the Third Expansion
Premises only for a period of eight (8) years (the "Option Term"), which option
shall be irrevocably exercised only by written notice delivered by Tenant to
Landlord not more than twelve (12) months nor less than nine (9) months prior to
the expiration of the then Third Expansion Term, provided that the following
conditions (the "Option Conditions") are satisfied:  (i) as of the date of
delivery of such notice, Tenant is not in default under the Lease, after the
expiration of any applicable notice and cure period; (ii) Tenant has not
previously been in default under the Lease, after the expiration of any
applicable notice and cure period, more than twice in the twelve (12) month
period prior to the date of Tenant's attempted exercise; and (iii) the Lease
then remains in full force and effect.  Landlord may, at Landlord's option,
exercised in Landlord's sole and absolute discretion, waive any of the Option
Conditions in which case the option, if otherwise properly exercised by Tenant,
shall remain in full force and effect.  Upon the proper exercise of such option
to extend, and provided that Tenant satisfies all of the Option Conditions
(except those, if any, which are waived by Landlord), the Third Expansion Term,
as it applies to the Third Expansion Premises, shall be extended for a period of
eight (8) years.  The rights contained in this Section 3.2 shall be personal to
Original Tenant and any Permitted Assignees, and may be exercised by Original
Tenant or such Permitted Assignees (and not by any assignee, sublessee or other
Transferee, of Tenant's interest in the Lease).  

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3.2.2Option Rent.  The annual Rent payable by Tenant during the Option Term (the
"Option Rent") shall be equal to the "Fair Rental Value," as that term is
defined below, for the Third Expansion Premises as of the commencement date of
the Option Term.  The "Fair Rental Value," as used in this Third Amendment,
shall be equal to the annual rent per rentable square foot (including additional
rent and considering any "base year" or "expense stop" applicable thereto),
including all escalations, at which tenants (pursuant to leases consummated
within the twelve (12) month period preceding the first day of the Option Term),
are leasing non-sublease, non-encumbered, non-equity space which is not
significantly greater or smaller in size than the subject space, with a
comparable level of improvements (excluding any property that Tenant would be
allowed to remove from the Third Expansion Premises at the termination of the
Lease), for a comparable lease term, in an arm's length transaction, which
comparable space is located in the "Comparable Buildings," as that term is
defined in this Section 3.2.2, below (transactions satisfying the foregoing
criteria shall be known as the "Comparable Transactions"), taking into
consideration the following concessions (the "Concessions"):  (a) rental
abatement concessions, if any, being granted such tenants in connection with
such comparable space; (b) tenant improvements or allowances provided or to be
provided for such comparable space, and taking into account the value, if any,
of the existing improvements in the subject space, such value to be based upon
the age, condition, design, quality of finishes and layout of the improvements
and the extent to which the same can be utilized by a general office/lab user
other than Tenant; and (c) other reasonable monetary concessions being granted
such tenants in connection with such comparable space; provided, however, that
in calculating the Fair Rental Value, no consideration shall be given to the
fact that Landlord is or is not required to pay a real estate brokerage
commission in connection with Tenant's exercise of its right to extend the Third
Expansion Term, or the fact that landlords are or are not paying real estate
brokerage commissions in connection with such comparable space.  The Concessions
shall be reflected in the effective rental rate (which effective rental rate
shall take into consideration the total dollar value of such Concessions as
amortized on a straight-line basis over the applicable term of the Comparable
Transaction (in which case such Concessions evidenced in the effective rental
rate shall not be granted to Tenant)) payable by Tenant.  The term “Comparable
Buildings” shall mean the Building and those other life sciences buildings which
are comparable to the Building in terms of age (based upon the date of
completion of construction or major renovation of to the building), quality of
construction, level of services and amenities, size and appearance, and are
located in Hayward, California and the surrounding commercial area.

3.2.3Determination of Option Rent.  In the event Tenant timely and appropriately
exercises an option to extend the Third Expansion Term, Landlord shall notify
Tenant of Landlord's determination of the Option Rent within thirty (30) days
thereafter.  If Tenant, on or before the date which is ten (10) days following
the date upon which Tenant receives Landlord's determination of the Option Rent,
in good faith objects to Landlord's determination of the Option Rent, then
Landlord and Tenant shall attempt to agree upon the Option Rent using their best
good-faith efforts.  If Landlord and Tenant fail to reach agreement within ten
(10) days following Tenant's objection to the Option Rent (the "Outside
Agreement Date"), then Tenant shall have the right to withdraw its exercise of
the option by delivering written notice thereof to Landlord within five (5) days
thereafter, in which event Tenant's right to extend the Lease pursuant to this
Section 3.2 shall be of no further force or effect.  If Tenant does not withdraw
its exercise of the extension option, each party shall make a separate
determination of the Option Rent, as the case may be, within ten (10) days after
the Outside Agreement Date, and such determinations shall

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be submitted to arbitration in accordance with Sections 3.2.3.1 through 3.2.3.7,
below.  If Tenant fails to object to Landlord's determination of the Option Rent
within the time period set forth herein, then Tenant shall be deemed to have
accepted Landlord's determination of Option Rent.  

3.2.3.1Landlord and Tenant shall each appoint one arbitrator who shall be a real
estate appraiser who shall have been active over the five (5) year period ending
on the date of such appointment in the appraisal of other class A life sciences
buildings located in the Hayward market area.  The determination of the
arbitrators shall be limited solely to the issue of whether Landlord's or
Tenant's submitted Option Rent is the closest to the actual Option Rent, taking
into account the requirements of Section 3.2.2 of this Third Amendment, as
determined by the arbitrators.  Each such arbitrator shall be appointed within
fifteen (15) days after the Outside Agreement Date.  Landlord and Tenant may
consult with their selected arbitrators prior to appointment and may select an
arbitrator who is favorable to their respective positions.  The arbitrators so
selected by Landlord and Tenant shall be deemed "Advocate Arbitrators."

3.2.3.2The two (2) Advocate Arbitrators so appointed shall be specifically
required pursuant to an engagement letter within ten (10) days of the date of
the appointment of the last appointed Advocate Arbitrator to agree upon and
appoint a third arbitrator ("Neutral Arbitrator") who shall be qualified under
the same criteria set forth hereinabove for qualification of the two Advocate
Arbitrators, except that neither the Landlord or Tenant or either parties'
Advocate Arbitrator may, directly or indirectly, consult with the Neutral
Arbitrator prior or subsequent to his or her appearance.  The Neutral Arbitrator
shall be retained via an engagement letter jointly prepared by Landlord's
counsel and Tenant’s counsel.

3.2.3.3The three arbitrators shall, within thirty (30) days of the appointment
of the Neutral Arbitrator, reach a decision as to whether the parties shall use
Landlord's or Tenant's submitted Option Rent, and shall notify Landlord and
Tenant thereof.

3.2.3.4The decision of the majority of the three arbitrators shall be binding
upon Landlord and Tenant.  

3.2.3.5If either Landlord or Tenant fails to appoint an Advocate Arbitrator
within fifteen (15) days after the Outside Agreement Date, then either party may
petition the presiding judge of the Superior Court of Alameda County to appoint
such Advocate Arbitrator subject to the criteria in Section 3.2.3.1 of this
Third Amendment, or if he or she refuses to act, either party may petition any
judge having jurisdiction over the parties to appoint such Advocate Arbitrator.

3.2.3.6If the two (2) Advocate Arbitrators fail to agree upon and appoint the
Neutral Arbitrator, then either party may petition the presiding judge of the
Superior Court of Alameda County to appoint the Neutral Arbitrator, subject to
criteria in Section 3.2.3.1 of this Third Amendment, or if he or she refuses to
act, either party may petition any judge having jurisdiction over the parties to
appoint such arbitrator.

3.2.3.7The cost of the arbitration shall be paid by Landlord and Tenant equally.

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3.2.3.8In the event that the Option Rent shall not have been determined pursuant
to the terms hereof prior to the commencement of the Option Term, Tenant shall
be required to pay the Option Rent initially provided by Landlord to Tenant, and
upon the final determination of the Option Rent, the payments made by Tenant
shall be reconciled with the actual amounts of Option Rent due, and the
appropriate party shall make any corresponding payment to the other party.

4.Base Rent.

4.1.Existing Premises.  Notwithstanding anything to the contrary in the Lease as
hereby amended, Tenant shall continue to pay Base Rent for the Existing Premises
in accordance with the terms of the Lease.  

4.2.Third Expansion Premises.  Commencing on the Third Expansion Commencement
Date and continuing throughout the Third Expansion Term, Tenant shall pay to
Landlord monthly installments of Base Rent for the Third Expansion Premises as
follows:

Third
Expansion Year

Annualized
Base Rent

Monthly Installment
of Base Rent

Approximate Monthly Rental Rate per Rentable Square Foot

1

$1,110,871.80

$92,572.65

$2.55

2

$1,149,752.31

$95,812.69

$2.64

3

$1,189,993.64

$99,166.14

$2.73

4

$1,231,643.42

$102,636.95

$2.83

5

$1,274,750.94

$106,229.25

$2.93

6

$1,319,367.22

$109,947.27

$3.03

7

$1,365,545.08

$113,795.42

$3.13

8

$1,413,339.15

$117,778.26

$3.24

5.Tenant's Share of Direct Expenses.  

5.1.Existing Premises.  Tenant shall continue to pay Tenant's Share of Direct
Expenses in connection with the Existing Premises in accordance with the terms
of the Lease.  

5.2.Third Expansion Premises.  Commencing on the Third Expansion Commencement
Date, Tenant shall also pay Tenant's Share of Direct Expenses in connection with
the Third Expansion Premises in accordance with the terms of the Lease, provided
that with respect to the calculation of Tenant's Share of Direct Expenses in
connection with the Third Expansion Premises, Tenant's Share shall equal 86.40%
of Building F.

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6.Condition of Third Expansion Premises.  Except as specifically set forth in
the Tenant Work Letter attached to this Third Amendment as Exhibit B, Landlord
shall not be obligated to provide or pay for any improvement work or services
related to the improvement of the Third Expansion Premises, and Tenant shall
accept the Third Expansion Premises in its presently existing, "as-is"
condition. Tenant shall accept all laboratory services, process utilities and
emergency generator in their presently existing, as-is condition and Tenant
shall be solely responsible for all costs related to their conditional
use.  Tenant shall construct the initial improvements in the Third Expansion
Premises only pursuant to the terms of the Tenant Work Letter.

7.Brokers.  Landlord and Tenant hereby warrant to each other that they have had
no dealings with any real estate broker or agent in connection with the
negotiation of this Third Amendment other than CBRE, Inc. and Newmark Cornish &
Carey (the "Brokers"), and that they know of no other real estate broker or
agent who is entitled to a commission in connection with this Third
Amendment.  Each party agrees to indemnify and defend the other party against
and hold the other party harmless from and against any and all claims, demands,
losses, liabilities, lawsuits, judgments, and costs and expenses (including,
without limitation, reasonable attorneys' fees) with respect to any leasing
commission or equivalent compensation alleged to be owing on account of the
indemnifying party's dealings with any real estate broker or agent, other than
the Broker, occurring by, through, or under the indemnifying party.  The terms
of this Section 7 shall survive the expiration or earlier termination of the
term of the Lease, as hereby amended.

8.Letter of Credit; Security Deposit.  Landlord and Tenant acknowledge that, in
accordance with Section 8 of the First Amendment and Section 8 of the Second
Amendment, Tenant has previously delivered an L-C in the amount of $201,816.64
and a cash Security Deposit in the amount of $200,219.66 to
Landlord.  Notwithstanding anything in the Lease to the contrary, on the Third
Expansion Commencement Date, the Security Deposit held by Landlord pursuant to
the Lease, as amended hereby, or, at Tenant’s election, the amount of the L-C
shall be increased by $235,556.52 (via delivery of a new L-C in such amount or
an amendment to the existing L-C, which shall in either event be in a form
reasonably acceptable to Landlord and in conformance with the terms of this
Lease).  Accordingly, on or before the Third Expansion Commencement Date, Tenant
shall deposit with Landlord an amount equal to $235,556.52 in connection with
the Third Expansion Premises to be held by Landlord as a part of the Security
Deposit, or, at Tenant’s election, provide an additional L-C (or an amendment to
the existing L-C) that complies with the requirements in the Lease in the amount
of $235,556.52 or an amendment to increase the current L-C by such amount.  To
the extent that the total amount held by Landlord at any time after the Third
Expansion Commencement Date as security for the Lease, as hereby amended, is
less than the amount required, Tenant shall provide the difference to Landlord
pursuant to the terms of the Lease.  If the Lease terminates as to the (a) Third
Expansion Premises before it terminates as to the Existing Premises, the terms
of this Section 8 shall be of no further force and Landlord shall promptly
return any amounts held by Landlord in excess thereof pursuant to the terms of
the Lease (as if the Lease had expired), and (b) Existing Premises before it
terminates as to the Third Expansion Premises, the amount of the Security
Deposit and L-C required under the Lease shall be limited to the increased
amount required under this Section 8 and Landlord shall promptly return any
amounts held by Landlord in excess thereof pursuant to the terms of the Lease
(as if the Lease had expired).  

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9.Intentionally Deleted.  

10.California Accessibility Disclosure.  For purposes of Section 1938 of the
California Civil Code, Landlord hereby discloses to Tenant, and Tenant hereby
acknowledges, that the Project, Building and Premises (including the Third
Expansion Premises) have not undergone inspection by a Certified Access
Specialist (CASp).  

11.Existing Lease. Landlord represents that it has terminated the existing
lease(s) of the Third Expansion Premises (and the existing sublease of the Third
Expansion Premises has been terminated), which terminations are effective as of
the date of this Third Amendment, provided the outside date by which the
existing tenant is required to surrender the Third Expansion Premises to
Landlord is July 15, 2020.  

12.Signage.  The provisions of Section 23 of the Original Lease shall apply to
signage at the Third Expansion Premises and Tenant shall have such signage
rights with respect to the Third Expansion Premises.

13.Surrender.  Tenant shall not be required to restore any of the existing
alterations in the Existing Premises as of the date of this Third Amendment.

14.Lender Consent.  Landlord represents that there is no mortgage or deed of
trust encumbering Buildings E, J or F.

15.Emergency Generator.  There is an existing generator exclusively serving the
Third Expansion Premises (the “Third Expansion Generator”).  Tenant shall have
the right to connect to such Third Expansion Generator for all of the back-up
power provided by such generator.  During the Third Expansion Term, Landlord
shall maintain the Third Expansion Generator in good condition and repair, and
Tenant shall be responsible for a share of the costs of such maintenance and
repair based on the proportion of the Third Expansion Generator capacity
allocated to the Third Expansion Premises.  Notwithstanding the foregoing,
Landlord shall not be liable for any damages whatsoever resulting from any
failure in operation of the Third Expansion Generator, or the failure of the
Third Expansion Generator to provide suitable or adequate back-up power to the
Third Expansion Premises, including but not limited to, loss of profits, loss of
rents or other revenues, loss of business opportunity, loss of goodwill or loss
of use, in each case, however occurring, or loss to inventory, scientific
research, scientific experiments, laboratory animals, products, specimens,
samples, and/or scientific, business, accounting and other records of every kind
and description kept at the Third Expansion Premises and any and all income
derived or derivable therefrom.  

16.Right of First Refusal.  The right of first refusal set forth in Section 9 of
the Second Amendment shall continue to apply during the Lease Term as to the
Existing Premises and the Third Expansion Term, provided that the First Refusal
Space is hereby modified such that it also includes all or any portion of the
building located at 3955 Trust Way which is commonly known as Building H.

17.Restoration.  Tenant shall not be required to restore any of the alterations
or improvements in the Premises as of the date of this Third Amendment, and the
percentages in the

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penultimate sentence of Section 2.4 of Exhibit B to the Second Amendment are
hereby changed to sixty percent (60%) in subpart (i) and thirty-five percent
(35%) in subpart (iii).

18.Force Majeure.  Landlord and Tenant hereby acknowledge and agree that the
definition of Force Majeure set forth in Section 29.16 of the Original Lease
shall be expanded to include actual or threatened public health emergency
(including, without limitation, epidemic, pandemic, famine, disease, plague,
quarantine, and other significant public health risk), governmental edicts,
actions, declarations or quarantines by a governmental entity or health
organization (including, without limitation, any shelter-in-place orders, stay
at home orders or any restrictions on travel related thereto that preclude
Tenant, its agents, contractors or its employees from accessing the Premises,
national or regional emergency).

19.Equipment Pad.  Subject to Landlord’s obligations to maintain the Emergency
Generator thereon and perform the Removal Work, Tenant shall have the exclusive
right to use the equipment pad adjacent to the Third Expansion Premises (the
“Pad”), including the air compressor, storage bunker and any other equipment
located thereon (other than the Emergency Generator) (collectively, the “Pad
Equipment”), during the Third Expansion Term, at no additional cost, for the
storage of chemicals and the placement and operation of Pad Equipment. Tenant
shall maintain such Pad and the Pad Equipment at Tenant's sole cost and
expense.  Landlord shall not be liable for any damages whatsoever resulting from
any failure in operation of the Pad or any of the Pad Equipment, or the failure
of such Pad Equipment to provide suitable or adequate services to Tenant or to
the Premises, including but not limited to, loss of profits, loss of rents or
other revenues, loss of business opportunity, loss of goodwill or loss of use,
in each case, however occurring, or loss to inventory, scientific research,
scientific experiments, laboratory animals, products, specimens, samples, and/or
scientific, business, accounting and other records of every kind and description
kept at the Premises and any and all income derived or derivable
therefrom.  Tenant's obligations with respect to the Premises, including the
insurance and indemnification obligations contained in the Lease, and
obligations to comply with applicable law shall apply to Tenant's use of the Pad
and Pad Equipment.  Tenant shall maintain all required permits in connection
with the Pad and Pad Equipment throughout the Lease Term.  Tenant shall
surrender the Pad, storage bunker and air compressor (and shall transfer to
Landlord all permits maintained by Tenant in connection with the Pad and Pad
Equipment during the Lease Term) concurrent with the surrender of the Premises
to Landlord as required hereunder in good operating and working order, with all
permits current.  

20.No Further Modification.  Except as set forth in this Third Amendment, all of
the terms and provisions of the Lease shall apply with respect to the Third
Expansion Premises and shall remain unmodified and in full force and effect.  

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IN WITNESS WHEREOF, this Third Amendment has been executed as of the day and
year first above written.  

LANDLORD:

 

HAYWARD POINT EDEN I LIMITED PARTNERSHIP,
a Delaware limited partnership

 

By:HCP Estates USA Inc.,
a Delaware corporation,
its General Partner

By: /s/ Scott Bohn
Name: Scott Bohn
Its: Senior Vice President

 

TENANT:

 

ARCUS BIOSCIENCES, INC.,
a Delaware corporation

By: /s/ Juan Jaen

Name: Juan Jaen

Its: President

 

 

 

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EXHIBIT A

OUTLINE OF THIRD EXPANSION PREMISES

 

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EXHIBIT B

TENANT WORK LETTER

This Tenant Work Letter shall set forth the terms and conditions relating to the
initial improvement of the Third Expansion Premises by Tenant following the date
of this Third Amendment.  This Tenant Work Letter is essentially organized
chronologically and addresses the issues of construction, in sequence, as such
issues will arise during construction in the Third Expansion Premises.    

SECTION 1

CONDITION OF THIRD EXPANSION PREMISES

Landlord shall deliver the Third Expansion Premises to Tenant in good, vacant,
broom clean condition, in compliance with applicable laws (to the extent
required to allow the legal occupancy of the Third Expansion Premises for the
permitted use), fully decommissioned (including decontaminating the storage
bunker, scrubber and related ductwork and equipment) and otherwise in
substantially the same condition as of the date of this Third Amendment, with
the roof water-tight and shall cause the plumbing, electrical systems, fire
sprinkler system, lighting, and all other building systems serving the Third
Expansion Premises to be in good operating condition and repair (other than the
HVAC system which will be delivered as-is and repaired by Tenant pursuant to the
terms of Section 2.1 below) (the “Delivery Condition”).  In addition following
delivery of the Third Expansion Premises and during Tenant’s performance of the
Tenant Improvements and the HVAC work (i.e., the following shall not be a part
of the Delivery Condition or Landlord’s delivery obligation with respect to the
Third Expansion Premises), Landlord will (i) remove the scrubber and the related
ductwork and equipment (provided that Landlord will not remove the storage
bunker on the Pad, but will remove the ductwork attached to the storage bunker),
(ii) remove any rust and corrosion on the exterior of the storage bunker and
(iii) remove all equipment and debris from the Pad, including from within the
storage bunker, other than the Emergency Generator, storage bunker and air
compressor (the “Removal Work”).  Landlord shall (a) perform the Removal Work in
a good and workmanlike manner, in compliance with laws and in a manner  so as to
not unreasonably interfere with or delay Tenant’s completion of the Tenant
Improvements, (b) coordinate with Removal Work with Tenant so as to not
unreasonably interfere with or delay Tenant’s completion of the Tenant
Improvements and (c) use commercially reasonable efforts to complete the Removal
Work within sixty (60) days following its delivery of the Third Expansion
Premises, but in any event shall complete such Removal Work on or before the
Third Expansion Commencement Date. Tenant shall accept all laboratory services,
process utilities and emergency generator in their presently existing, as-is
condition and Tenant shall be solely responsible for all costs related to their
conditional use.  Further, Landlord at its sole cost shall be responsible to
cause the exterior of Building F, the base Building, the existing Building
entrances, and all exterior Common Areas (including required striping and
handicapped spaces in the parking areas) to be in compliance with Applicable
Laws, ADA and parking requirements, to the extent required to allow the legal
occupancy of the Premises for the permitted use or completion of the Tenant
Improvements (subject to Tenant's interior design and utilization of existing
entrances for required egress from Building F), and the structural portions of
Building F to be in compliance with applicable laws and ADA requirements to the
extent

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required to allow the legal occupancy of the Third Expansion Premises for the
permitted use (subject to Tenant's interior design and utilization of existing
entrances for required egress from Building F).  Tenant acknowledges that Tenant
has had the opportunity to thoroughly examine the Third Expansion
Premises.  Subject to the express terms hereof, Tenant shall accept the Third
Expansion Premises in their existing, "as-is" condition on the date of delivery
thereof to Tenant.  Except as specifically set forth in the Lease or this Third
Amendment, Landlord shall have no obligation to make or pay for any improvements
to the Third Expansion Premises.

SECTION 2

TENANT IMPROVEMENTS

2.1

Tenant Improvement Allowance; HVAC Allowance.  Commencing as of the date of this
Third Amendment, Tenant shall be entitled to a one-time improvement allowance
(the "Tenant Improvement Allowance") in the amount of $544,545.00 (i.e., $15.00
per rentable square foot of the Third Expansion Premises) for the costs relating
to the initial design and construction of Tenant's improvements, refurbishment
work and other renovations to the Third Expansion Premises or which are "Tenant
Improvement Allowance Items," as that term is defined in Section 2.2.1, below
(collectively, the "Tenant Improvements").  In addition to the Tenant
Improvement Allowance Landlord will reimburse Tenant in an amount not to exceed
$434,664.00 (the "HVAC Allowance"), for actual costs incurred by Tenant in
connection with certain HVAC repairs, replacements, and other work to be
performed by Tenant with respect to the HVAC system, including ductwork, serving
the Third Expansion Premises (the "HVAC Costs"), provided that Tenant separately
accounts for such HVAC Costs.  The HVAC Allowance will be disbursed in the same
manner as Landlord disburses the Tenant Improvement Allowance pursuant to this
Tenant Work Letter, Such HVAC work shall (i) be constructed pursuant to the
Tenant Work Letter, (ii) be deemed to be a part of the Tenant Improvements, and
(iii) be deemed to be a component of the Tenant Improvement Allowance Items, but
shall be accounted for and disbursed separately from the Tenant Improvement
Allowance.  Subject to the terms of this Exhibit B, in no event shall Landlord
be obligated to make disbursements pursuant to this Tenant Work Letter or
otherwise in connection with Tenant's construction of the Tenant Improvements or
any Tenant Improvement Allowance Items, as defined below, in a total amount
which exceeds the sum of the Tenant Improvement Allowance and the HVAC
Allowance.  All Tenant Improvements that have been paid for with or reimbursed
from the Tenant Improvement Allowance shall be deemed Landlord's property under
the terms of the Lease.  Any portion of the Tenant Improvement Allowance as to
which Tenant has not properly requested disbursement by December 31, 2021, as
such date may be extended by one (1) day for each day (a) Landlord is delayed in
delivering the Third Expansion Premises in the required condition beyond July 1,
2020 and (b) of any delay by Tenant in completing the Tenant Improvements due to
Coronavirus Delay or due to Landlord Caused Delay, shall revert to Landlord and
Tenant shall have no further rights with respect thereto.

2.2

Disbursement of the Tenant Improvement Allowance.

2.2.1Tenant Improvement Allowance Items.  Except as otherwise set forth in this
Tenant Work Letter, the Tenant Improvement Allowance shall be disbursed by
Landlord only for the following items and costs (collectively the "Tenant
Improvement Allowance Items"):

2.2.1.1Payment of all reasonable fees of the "Architect" and the "Engineers," as
those terms are defined in Section 3.1 of this Tenant Work Letter, project

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management fees, and payment of the fees incurred by, and the cost of documents
and materials supplied by, Landlord for specialists (such as a structural
engineer) if needed for the review of the "Approved Working Drawings," as that
term is defined in Section 3.4 of this Tenant Work Letter;

2.2.1.2The payment of plan check, permit and license fees relating to
construction of the Tenant Improvements;

2.2.1.3The payment for all demolition and removal of existing improvements in
the Third Expansion Premises;

2.2.1.4The cost of construction of the Tenant Improvements, including, without
limitation, testing and inspection costs, costs incurred for removal of existing
furniture, fixtures or equipment in the Third Expansion Premises, hoisting and
trash removal costs, costs to purchase and install in the Third Expansion
Premises equipment customarily incorporated into laboratory improvements or
laboratory utility systems, including, without limitation, UPS, DI Systems,
boilers, air compressors, glass/cage washers and autoclaves, painting, and
contractors' fees and general conditions;

2.2.1.5The cost of any changes in the Base Building when such changes are
required by the Approved Working Drawings (including if such changes are due to
the fact that such work is prepared on an unoccupied basis), such cost to
include all direct architectural and/or engineering fees and expenses incurred
in connection therewith;

2.2.1.6The cost of any changes to the Approved Working Drawings or Tenant
Improvements required by all applicable building codes (the "Code");

2.2.1.7Sales and use taxes;

2.2.1.8Costs expended by Landlord pursuant to Section 4.1.1 of this Tenant Work
Letter, below.

2.2.2Disbursement of Tenant Improvement Allowance.  During the construction of
the Tenant Improvements, Landlord shall make monthly disbursements of the Tenant
Improvement Allowance for Tenant Improvement Allowance Items for the benefit of
Tenant and shall authorize the release of monies for the benefit of Tenant as
follows.

2.2.2.1Monthly Disbursements.  On or before the fifth (5th) day of each calendar
month, during the design and construction of the Tenant Improvements (or such
other date as Landlord may designate), Tenant shall deliver to Landlord:  (i) a
request for reimbursement of amounts paid to the "Contractor," as that term is
defined in Section 4.1.1 of this Tenant Work Letter, approved by Tenant, in a
form to be provided by Landlord, showing the schedule, by trade, of percentage
of completion of the Tenant Improvements in the Third Expansion Premises,
detailing the portion of the work completed and the portion not completed;
(ii) invoices from all of "Tenant's Agents," as that term is defined in
Section 4.1.2 of this Tenant Work Letter, for labor rendered and materials for
the Third Expansion Premises; (iii) executed conditional and/or unconditional
mechanic's lien releases, as applicable, from all of Tenant's Agents which shall
comply with the appropriate provisions, as reasonably determined by Landlord, of
California Civil Code Sections 8132, 8134, 8136 and 8138; and (iv) all other
information reasonably requested by Landlord.  As between Landlord and Tenant,
Tenant's request for payment shall be deemed Tenant's acceptance and approval of
the work furnished and/or the materials supplied as set forth in Tenant's
payment request.  Within forty-five (45) days thereafter, Landlord shall deliver
a check to Tenant made payable to Tenant in payment of the lesser of:  (A) the
amounts so requested by

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Tenant as set forth in this Section 2.2.2.1, above, and (B) the balance of any
remaining available portion of the Tenant Improvement Allowance, provided that
Landlord does not dispute any request for payment based on non-compliance of any
work with the "Approved Working Drawings," as that term is defined in Section
3.4 below, or due to any substandard work.  Landlord's payment of such amounts
shall not be deemed Landlord's approval or acceptance of the work furnished or
materials supplied as set forth in Tenant's payment request.

2.2.2.2Final Deliveries.  Following the completion of construction of the Tenant
Improvements, Tenant shall deliver to Landlord properly executed final
mechanic's lien releases in compliance with both California Civil Code Section
8134 and either Section 8136 or Section 8138 from all of Tenant's Agents, and a
certificate certifying that the construction of the Tenant Improvements in the
Third Expansion Premises has been substantially completed.  Tenant shall record
a valid Notice of Completion in accordance with the requirements of Section 4.3
of this Tenant Work Letter.

2.2.2.3Other Terms.  Landlord shall only be obligated to make disbursements from
the Tenant Improvement Allowance to the extent costs are incurred by Tenant for
Tenant Improvements.  All Tenant Improvement Allowance Items that have been paid
for with or reimbursed from the Tenant Improvement Allowance shall be deemed
Landlord's property under the terms of the Lease.

2.3

Building Standards.  The quality of Tenant Improvements shall be in keeping with
the existing improvements in the Premises.

2.4

Removal of Tenant Improvements.  Landlord may, by written notice to Tenant given
concurrently with Landlord's approval of the "Final Working Drawings", as that
term is defined in Section 3.3, below, require Tenant, prior to the end of the
Lease Term, at Tenant's expense, to remove any Tenant Improvements which are
deemed to be "Above Standard Tenant Improvements" (defined below) and to repair
any damage to the Third Expansion Premises and Building caused by such removal
and return the affected portion of the Third Expansion Premises to its
previously existing condition.  Other than with respect to Above Standard Tenant
Improvements as set forth in this Section 2.4, Landlord shall not require Tenant
to remove from the Third Expansion Premises any other Tenant Improvements (to
the extent the same are constructed in the Third Expansion Premises in
accordance with the terms of this Tenant Work Letter) upon the expiration or any
earlier termination of the Lease Term.  “Above Standard Tenant Improvements”
shall mean any part of the Tenant Improvements which do not constitute normal
and customary general laboratory or office improvements as reasonably determined
by Landlord (Above Standard Tenant Improvements shall include, without
limitation, improvements such as voice, data and other cabling, raised floors,
floor penetrations, any installations outside the Premises or any areas
requiring floor reinforcement, personal baths and showers, vaults, rolling file
systems, internal stairwells, supplemental air conditioning units and structural
alterations of any type).  In addition to the foregoing, the following shall
also be considered Above Standard Improvements: (i) laboratory improvements
exceeding fifty percent (50%) of the rentable square footage of the Third
Expansion Premises, (ii) a vivarium exceeding ten percent (10%) of the rentable
square footage of the Third Expansion Premises, or (iii) a chemistry lab
exceeding twenty-five percent (25%) of the rentable square footage of the Third
Expansion Premises. In addition, Landlord shall not require Tenant to remove any
of the Tenant Improvements to the extent they resemble the improvements in the
Existing Premises or are predominantly office.

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2.5

Failure to Disburse the Tenant Improvement Allowance.  To the extent that
Landlord fails to make payments from the Tenant Improvement Allowance or HVAC
Allowance in accordance with the terms of this Tenant Work Letter, and such
amounts remain unpaid for thirty (30) days after notice from Tenant, then
without limiting Tenant's other remedies under the Lease, Tenant may, after
Landlord's failure to pay such amounts within five (5) business days after
Tenant's delivery of a second notice from Tenant delivered after the expiration
of such 30-day period, pay the same and deduct the amount thereof from the Rent
next due and owning under the Lease.  Notwithstanding the foregoing, if during
either the 30-day or 5-day period set forth above, Landlord (i) delivers notice
to Tenant that it disputes any portion of the amounts claimed to be due, and
(ii) pays any amounts not in dispute, Tenant shall have no right to offset any
amounts against rent, but may institute proceedings to recover such amounts from
Landlord.

SECTION 3

CONSTRUCTION DRAWINGS

3.1

Selection of Architect.  Tenant shall retain an architect/space planner (the
"Architect") approved in advance by Landlord (which approval shall not be
unreasonably withheld) to prepare the Final Space Plan and Final Working
Drawings as provided in Sections 3.2 and 3.3, below.  Landlord hereby approves
Ware Malcomb or CAS as the Architect.  Tenant shall retain the engineering
consultants or design/build subcontractors designated by Tenant and reasonably
approved in advance by Landlord, which approval shall not be unreasonably
withheld, conditioned or delayed (the "Engineers") to prepare all plans and
engineering working drawings relating to the structural, mechanical, electrical,
plumbing, HVAC, lifesafety, and sprinkler work in the Third Expansion Premises,
which work is not part of the Base Building.  All such plans and drawings shall
comply with the drawing format and specifications reasonably determined by
Landlord, and shall be subject to Landlord's reasonable approval, which approval
shall not be unreasonably withheld, conditioned or delayed.  Tenant and
Architect shall verify, in the field, the dimensions and conditions as shown on
the relevant portions of the Base Building plans, and Tenant and Architect shall
be solely responsible for the same, and Landlord shall have no responsibility in
connection therewith.  Landlord's review of any plans or drawings as set forth
in this Section 3, shall be for its sole purpose and shall not imply Landlord's
review of the same, or obligate Landlord to review the same, for quality,
design, Code compliance or other like matters.  

3.2

Final Space Plan.  Tenant shall supply Landlord with four (4) copies signed by
Tenant of its final space plan for the Tenant Improvements before any
architectural working drawings or engineering drawings have been commenced.  The
final space plan (the "Final Space Plan") shall include a layout and designation
of all offices, labs, rooms and other partitioning, their intended use, and
equipment to be contained therein.  Landlord may request clarification or more
specific drawings for special use items not included in the Final Space
Plan.  Landlord shall advise Tenant within five (5) business days after
Landlord's receipt of the Final Space Plan for the Third Expansion Premises if
the same is unsatisfactory or incomplete in any respect.  If Tenant is so
advised, Tenant shall promptly cause the Final Space Plan to be revised to
correct any deficiencies or other matters Landlord may reasonably
require.  Landlord shall not unreasonably withhold its consent to the Final
Space Plan.

3.3

Final Working Drawings.  After the Final Space Plan has been approved by
Landlord, Tenant shall supply the Engineers with a complete listing of standard
and non-standard

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equipment and specifications, including, without limitation, Title 24
calculations, electrical requirements and special electrical receptacle
requirements for the Third Expansion Premises, to enable the Engineers and the
Architect to complete the "Final Working Drawings" (as that term is defined
below) in the manner as set forth below.  Upon the approval of the Final Space
Plan by Landlord and Tenant, Tenant shall promptly cause the Architect and the
Engineers to complete the architectural and engineering drawings for the Third
Expansion Premises, and Architect shall compile a fully coordinated set of
architectural, structural, mechanical, electrical and plumbing working drawings
in a form which is sufficiently complete to allow all of Tenant's Agents to bid
on the work and to obtain all applicable permits (collectively, the "Final
Working Drawings") and shall submit the same to Landlord for Landlord's
approval, which shall not be unreasonably withheld, conditioned, or
delayed.  Tenant shall supply Landlord with four (4) copies signed by Tenant of
such Final Working Drawings.  Landlord shall advise Tenant within seven (7)
business days after Landlord's receipt of the Final Working Drawings for the
Third Expansion Premises (five (5) business days for re-submissions) if the same
is unsatisfactory or incomplete in any respect (provided that, except in the
case of re-submissions, if the scope of such Final Working Drawings are such
that Landlord cannot reasonably complete its review in such period, Landlord
will inform Tenant, and such period will be extended five (5) additional
business days).  If Tenant is so advised, Tenant shall promptly cause the Final
Working Drawings to be revised in accordance with such review and any
disapproval of Landlord in connection therewith.  If Landlord fails to respond
to or approve of the Final Working Drawings or any re-submission thereof within
the foregoing period after Landlord’s receipt of the Final Working Drawings or
any re-submission, Tenant may submit a notice (the “Final Working Drawings
Notice”) with the following words in bold font, all capitalized: “FINAL NOTICE:
FAILURE TO RESPOND IN TWO (2) BUSINESS DAYS CONSTITUTES APPROVAL BY LANDLORD OF
THE FINAL WORKING DRAWINGS.”   Failure of Landlord to respond to or approve of
the Final Working Drawings or any re-submission thereof within two (2) business
days after Landlord’s receipt of the Final Working Drawings Notice will
constitute approval by Landlord of the Final Working Drawings.

3.5

Approved Working Drawings.  The Final Working Drawings shall be approved by
Landlord (the "Approved Working Drawings") prior to the commencement of
construction of the Third Expansion Premises by Tenant.  Concurrently with
Tenant's delivery of the Final Working Drawings to Landlord for Landlord's
approval, Tenant may submit the same to the appropriate municipal authorities
for all applicable building permits.  Tenant hereby agrees that neither Landlord
nor Landlord's consultants shall be responsible for obtaining any building
permit or certificate of occupancy for the Third Expansion Premises and that
obtaining the same shall be Tenant's responsibility; provided, however, that
Landlord shall cooperate with Tenant in executing permit applications and
performing other ministerial acts reasonably necessary to enable Tenant to
obtain any such permit or certificate of occupancy.  No changes, modifications
or alterations in the Approved Working Drawings may be made without the prior
written consent of Landlord, which shall not be unreasonably withheld,
conditioned, or delayed.  

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SECTION 4

CONSTRUCTION OF THE TENANT IMPROVEMENTS

4.1

Tenant's Selection of Contractors.

4.1.1The Contractor; Landlord's Project Manager.  Tenant shall retain a licensed
general contractor, approved in advance by Landlord, to construct the Tenant
Improvements ("Contractor").  Landlord hereby approves MAI Construction, Inc. or
Landmark Builders as the Contractor.  Landlord's approval of the Contractor
shall not be unreasonably withheld.  Landlord shall retain Project Management
Advisors, Inc. ("PMA") as a third party project manager for construction
oversight of the Tenant Improvements on behalf of Landlord, and Tenant shall pay
a fee to Landlord with respect to the PMA services equal to three percent (3%)
of the total cost of the Tenant Improvements (excluding the cost of the HVAC
Work), which amount shall be paid by Landlord deducting such amount from the
Tenant Improvement Allowance each month while funds therein remain.

4.1.2Tenant's Agents.  All subcontractors, laborers, materialmen, and suppliers
used by Tenant and the Contractor shall be known collectively as "Tenant's
Agents".  The subcontractors used by Tenant, but not any laborers, materialmen,
and suppliers, must be approved in writing by Landlord, which approval shall not
be unreasonably withheld, conditioned, or delayed.  Landlord hereby approves of
the subcontractors set forth in Schedule 1.  If Landlord does not approve any of
Tenant's proposed subcontractors, Tenant shall submit other proposed
subcontractors for Landlord's written approval, which approval shall not be
unreasonably withheld, conditioned or delayed.

4.2

Construction of Tenant Improvements by Tenant's Agents.

4.2.1Construction Contract; Cost Budget.  Tenant shall engage the Contractor
under a commercially reasonable and customary construction contract, reasonably
approved by Landlord (collectively, the "Contract").  Prior to the commencement
of the construction of the Tenant Improvements, and after Tenant has accepted
all bids for the Tenant Improvements, Tenant shall provide Landlord with a
detailed breakdown, by trade, of the final costs to be incurred or which have
been incurred, as set forth more particularly in Sections 2.2.1.1 through
2.2.1.8, above, in connection with the design and construction of the Tenant
Improvements to be performed by or at the direction of Tenant or the Contractor,
which costs form a basis for the estimated total costs of the work of the Tenant
Improvement project (the "Final Costs").  The difference between the amount of
the Final Costs and the amount of the Tenant Improvement Allowance (less any
portion thereof already disbursed by Landlord, or in the process of being
disbursed by Landlord, on or before the commencement of construction of the
Tenant Improvements) is referred to herein as the "Over-Allowance Amount".  The
Over-Allowance Amount shall be paid by Tenant out of its own funds following the
disbursement of any of the then remaining portion of the Tenant Improvement
Allowance.  In the event that, after the Final Costs have been delivered by
Tenant to Landlord, the costs relating to the design and construction of the
Tenant Improvements shall change, any additional costs necessary to such design
and construction in excess of the Final Costs, shall be paid by Tenant as an
addition to the Over-Allowance Amount out of its own funds, but Tenant shall
continue to provide Landlord with the documents described in Sections 2.2.2.1
(i), (ii), (iii) and (iv) of this Tenant Work Letter, above, for Landlord's
approval, prior to Tenant paying such

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costs.  All Tenant Improvements (other than personal property and fixtures) paid
for by the Over-Allowance Amount shall be deemed Landlord's property under the
terms of the Lease.

4.2.2Tenant's Agents.

4.2.2.1Compliance with Drawings and Schedule.  Tenant's and Tenant's Agent's
construction of the Tenant Improvements shall comply with the
following:  (i) the Tenant Improvements shall be constructed in strict
accordance with the Approved Working Drawings; and (ii) Tenant's Agents shall
submit schedules of all work relating to the Tenant's Improvements to Contractor
and Contractor shall, within five (5) business days of receipt thereof, inform
Tenant's Agents of any changes which are necessary thereto, and Tenant's Agents
shall use commercially reasonable efforts to adhere to such corrected
schedule.  

4.2.2.2Indemnity.  Tenant's indemnity of Landlord as set forth in Article 10 of
the Lease shall also apply with respect to any and all costs, losses, damages,
injuries and liabilities related in any way to any act or omission of Tenant or
Tenant's Agents, or anyone directly or indirectly employed by any of them, or in
connection with Tenant's non-payment of any amount arising out of the Tenant
Improvements and/or Tenant's disapproval of all or any portion of any request
for payment.  Such indemnity by Tenant, as set forth in the Lease, shall also
apply with respect to any and all costs, losses, damages, injuries and
liabilities related in any way to Landlord's performance of any ministerial acts
reasonably necessary (i) to permit Tenant to complete the Tenant Improvements,
and (ii) to enable Tenant to obtain any building permit or certificate of
occupancy for the Third Expansion Premises, subject to the terms of the
penultimate sentence of Section 10.1 of the Lease.  The foregoing indemnity
shall not apply to claims caused by the gross negligence or willful misconduct
of Landlord, its member partners, shareholders, officers, directors, agents,
employees, and/or contractors or Landlord’s violation of the Lease.

4.2.2.3Requirements of Tenant's Agents.  Each of Tenant's Agents shall guarantee
to Tenant and for the benefit of Landlord that the portion of the Tenant
Improvements for which it is responsible shall be free from any defects in
workmanship and materials for a period of not less than one (1) year from the
date of substantial completion of the work under the Contract ("Substantial
Completion").  Each of Tenant's Agents shall be responsible for the replacement
or repair, without additional charge, of all work done or furnished in
accordance with its contract that shall become defective within one (1) year
after Substantial Completion.  The correction of such work shall include,
without additional charge, all additional expenses and damages incurred in
connection with such removal or replacement of all or any part of the Tenant
Improvements, and/or the Building and/or common areas that may be damaged or
disturbed thereby.  All such warranties or guarantees as to materials or
workmanship of or with respect to the Tenant Improvements shall be contained in
the Contract or subcontract and shall be written such that such guarantees or
warranties shall inure to the benefit of both Landlord and Tenant, as their
respective interests may appear, and can be directly enforced by either.  Tenant
covenants to give to Landlord any assignment or other assurances which may be
necessary to effect such right of direct enforcement.

4.2.2.4Insurance Requirements.

4.2.2.4.1

General Coverages.  All of Tenant's Agents shall carry the following insurance
with insurers having a  minimum A.M. best rating of A- VIII or better (i)
worker's compensation insurance covering all of Tenant's Agents' respective
employees with a waiver of subrogation in favor of Landlord and the property
manager, (ii) commercial

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general liability insurance with a limit of not less than $1,000,000 per
occurrence and $2,000,000 general aggregate, including products/completed
operations and contractual coverage, and including Landlord and its property
manager as additional insureds, and (ii) if the cost of such Tenant Improvements
exceeds $100,000 in the aggregate, then Builders Risk insurance covering the
construction of the Tenant Improvements, and such policy shall include Landlord
as an additional insured, it being understood and agreed that the Tenant
Improvements shall be insured by Landlord pursuant to the Lease, immediately
upon completion thereof.

4.2.2.4.2

Intentionally Omitted.  

4.2.2.4.3

General Terms.  Certificates for all insurance carried pursuant to this
Section 4.2.2.4 shall be delivered to Landlord before the commencement of
construction of the Tenant Improvements and before the Contractor's equipment is
moved onto the site.  All such policies of insurance must contain a provision
that the company writing said policy will endeavor to give Landlord thirty (30)
days prior written notice of any cancellation or lapse of the effective date or
any reduction in the amounts of such insurance.  In the event that the Tenant
Improvements paid for by Landlord are damaged by any cause during the course of
the construction thereof, Tenant shall immediately repair the same at Tenant's
sole cost and expense.  Tenant's Agents shall maintain all of the foregoing
insurance coverage in force until the Tenant Improvements are fully completed,
except for any Products and Completed Operation Coverage insurance required by
Landlord, which is to be maintained for three (3) years following completion of
the work.  Such insurance shall provide that it is primary insurance as respects
the owner and that any other insurance maintained by owner is excess and
noncontributing with the insurance required hereunder.  The requirements for the
foregoing insurance shall not derogate from the provisions for indemnification
of Landlord by Tenant under Section 4.2.2.2 of this Tenant Work Letter.

4.2.3Governmental Compliance.  The Tenant Improvements shall comply in all
respects with the following:  (i) all state, federal, city or quasi-governmental
laws, codes, ordinances and regulations, as each may apply according to the
rulings of the controlling public official, agent or other person;
(ii) applicable standards of the American Insurance Association (formerly, the
National Board of Fire Underwriters) and the National Electrical Code; and
(iii) building material manufacturer's specifications.

4.2.4Inspection by Landlord.  Landlord shall have the right to inspect the
Tenant Improvements at all times, provided however, that Landlord's failure to
inspect the Tenant Improvements shall in no event constitute a waiver of any of
Landlord's rights hereunder nor shall Landlord's inspection of the Tenant
Improvements constitute Landlord's approval of the same.  Should Landlord
reasonably disapprove any portion of the Tenant Improvements, on the grounds
that the construction is defective or fails to comply with the Approved Working
Drawings, Landlord shall notify Tenant in writing of such disapproval and shall
specify the items disapproved.  Any such defects or deviations shall be
rectified by Tenant at no expense to Landlord, provided however, that in the
event a defect or deviation exists that materially adversely affects the
mechanical, electrical, plumbing, heating, ventilating and air conditioning or
life-safety systems of the Building, the structure or exterior appearance of the
Building or any other tenant's use of such other tenant's leased premises,
Landlord may, take such action as Landlord reasonably deems necessary, at
Tenant's expense and without incurring any liability on Landlord's part, to
correct any such defect, deviation and/or matter, including, without limitation,
causing the

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cessation of performance of the construction of the Tenant Improvements until
such time as the defect, deviation and/or matter is corrected to Landlord's
reasonable satisfaction.

4.2.5Meetings.  Commencing upon the date Tenant begins to plan the Tenant
Improvements, Tenant shall hold weekly meetings at a reasonable time, with the
Architect and the Contractor (once retained) regarding the progress of the
preparation of Approved Working Drawings and the construction of the Tenant
Improvements, and Landlord and/or its agents shall receive prior notice of, and
shall have the right to attend, all such meetings, and, upon Landlord's request,
certain of Tenant's Agents shall attend such meetings.  In addition, minutes
shall be taken at all such meetings, a copy of which minutes shall be promptly
delivered to Landlord.  One such meeting each month shall include the review of
Contractor's current request for payment, if any.

4.3

Notice of Completion; Copy of Record Set of Plans.  Within ten (10) days after
completion of construction of the Tenant Improvements, Tenant shall cause a
valid Notice of Completion to be recorded in the office of the Recorder of the
county in which the Building is located in accordance with Section 8182 of the
Civil Code of the State of California or any successor statute, and shall
furnish a copy thereof to Landlord upon such recordation.  If Tenant fails to do
so, Landlord may execute and file the same on behalf of Tenant as Tenant's agent
for such purpose, at Tenant's sole cost and expense.  At the conclusion of
construction, (i) Tenant shall cause the Architect and Contractor (x) to update
the Approved Working Drawings as necessary to reflect all changes made to the
Approved Working Drawings during the course of construction, (y) to certify to
the best of their knowledge that the "record-set" of as-built drawings are true
and correct, which certification shall survive the expiration or termination of
the Lease, and (z) to deliver to Landlord two (2) sets of copies of such record
set of drawings (hard copy and CAD files) within ninety (90) days following
Substantial Completion, and (ii) Tenant shall deliver to Landlord a copy of all
warranties, guaranties, and operating manuals and information relating to the
improvements, equipment, and systems in the Third Expansion Premises.  Within
fifteen (15) days after request by Tenant following the Substantial Completion
of the Tenant Improvements, Landlord will acknowledge its approval of the Tenant
Improvements (provided that such approval has been granted) by placing its
signature on a Contractor’s Certificate of Substantial Completion fully executed
by the Architect, Contractor and Tenant.  Landlord’s approval shall not create
any contingent liabilities for Landlord with respect to any latent quality,
design, Code compliance or other like matters that may arise subsequent to
Landlord’s approval.

SECTION 5

MISCELLANEOUS

5.1

Tenant's Representative.  Tenant has designated Carlos Mena, as its sole
representatives with respect to the matters set forth in this Tenant Work
Letter, who, until further notice to Landlord from Tenant, shall each have full
authority and responsibility to act on behalf of the Tenant as required in this
Tenant Work Letter.

5.2

Landlord's Representatives.  Landlord has designated Tara Korlipara & Luann
Rosmando with PMA, as its sole representatives with respect to the matters set
forth in this Tenant Work Letter, who, until further notice to Tenant, shall
each have full authority and responsibility to act on behalf of the Landlord as
required in this Tenant Work Letter.

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5.3

Time is of the Essence in This Tenant Work Letter.  Unless otherwise indicated,
all references herein to a "number of days" shall mean and refer to calendar
days.  If any item requiring approval is timely disapproved by Landlord, the
procedure for preparation of the document and approval thereof shall be repeated
until the document is approved by Landlord.

5.4

Tenant's Lease Default.  Notwithstanding any provision to the contrary contained
in the Lease or this Tenant Work Letter, if any default by Tenant under the
Lease or this Tenant Work Letter occurs at any time on or before the substantial
completion of the Tenant Improvements and such default remains uncured ten (10)
days following Landlord's notice of such default to Tenant, then in addition to
all other rights and remedies granted to Landlord pursuant to the Lease,
Landlord shall have the right to withhold payment of all or any portion of the
Tenant Improvement Allowance.

5.5

Landlord Caused Delays.  Base Rent as to the Third Expansion Premises shall be
abated for the number of days of actual delay of the substantial completion of
the Tenant Improvements in the Third Expansion Premises to the extent caused by
(a) a "Landlord Caused Delay," as that term is defined, below, or (b)
“Coronavirus Delay,” as that term is defined in Section 5.6 below, but only to
the extent such Landlord Caused Delay or Coronavirus Delay causes the
substantial completion of the Tenant Improvements to occur after the date which
is six (6) months days following the delivery date.  As used herein, "Landlord
Caused Delay" shall mean actual delays in the substantial completion of the
Premises to the extent resulting from interference (when judged in accordance
with industry custom and practice) with Tenant's construction of the Tenant
Improvements to the extent caused by (i) Landlord's failure to timely approve or
disapprove any matter requiring Landlord's approval pertaining to the Tenant
Improvements within the time periods set forth above or if not specified, within
a reasonable period of time; (ii) Landlord's failure to timely disburse the
Tenant Improvement Allowance or HVAC Allowance; (iii) material and unreasonable
interference by Landlord with substantial completion of the Third Expansion
Premises if such interference (A) objectively precludes or delays the
construction of Tenant Improvements therein or any portion thereof, and (B)
relates to access by Tenant to the Third Expansion Premises or any of the
Building's facilities (including loading docks and freight elevators) or
services and utilities (including temporary power and parking areas as provided
herein) during normal construction hours, or the use thereof during normal
construction hours; or (iv) Landlord’s failure to complete the Removal Work on
or before the Third Expansion Commencement Date.  If Tenant contends that a
Landlord Caused Delay has occurred, Tenant shall notify Landlord in writing of
the event which constitutes such Landlord Caused Delay.  Tenant will
additionally use reasonable efforts to mitigate the effects of any Landlord
Caused Delay through the re-sequencing or re-scheduling of work, if feasible,
but this sentence will not be deemed to require Tenant to incur overtime or
after-hours costs unless Landlord agrees in writing to bear such costs.  In
addition, Tenant shall endeavor to provide notice to Landlord when Tenant
becomes aware of any expected or potential Landlord Caused Delays prior to any
such delay actually occurring, in order to allow Landlord to attempt to mitigate
such potential delay.  If such actions, inaction or circumstance described in
the notice (the "Landlord Delay Notice") are not cured by Landlord within one
(1) business day of Landlord’s receipt of the Landlord Delay Notice and if such
action, inaction or circumstance otherwise qualify as a Landlord Caused Delay,
then a Landlord Caused Delay shall be deemed to have occurred commencing as of
the date of Landlord’s receipt of the Landlord Delay Notice and ending as of the
date such delay ends.

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5.6

Coronavirus Delay.  The term "Coronavirus Delay" shall mean only an actual delay
in the completion of the Tenant Improvements which is caused by (x) suspension
of construction of the Tenant Improvements affecting all similar construction in
the vicinity of the Building due to any law, regulation, ordinance, rule,
requirement or order of any governmental authority which may hereafter be
adopted or imposed to address the COVID-19 outbreak, (y) delay in the response
of any governmental authority to Tenant’s initial submittal of construction
drawings for the Improvements, or any subsequent submittals thereof, beyond
thirty (30) days after such submittal, if such response delays arise as a result
of the COVID-19 pandemic and the effects thereof; or (z) delay in the issuance
of a building permit beyond thirty (30) days after Tenant's initial request for
issuance or delay in the issuance of a temporary certificate of occupancy or
certificate of occupancy permitting Tenant to occupy the Third Expansion
Premises beyond thirty (30) days after final inspection of the Third Expansion
Premises, or delay in performing any required inspections beyond thirty (30)
days after Tenant's request for such inspection , to the extent such issuance
delay arises as a result of the COVID-19 pandemic and the effects thereof.  In
order for Tenant to claim any Coronavirus Delay, Tenant must notify Landlord in
writing (each, a "Coronavirus Delay Notice") specifying the nature of the
Coronavirus Delay and the anticipated number of days of Coronavirus Delay.

5.7

Tenant Access.  Tenant may access the Third Expansion Premises in the period
from Landlord’s delivery thereof and the Third Expansion Commencement Date for
the purpose of planning and installing furniture and equipment or fixtures
(including Tenant's data and telephone cabling and equipment) in the Third
Expansion Premises, performing Tenant Improvements and conducting business
therein; provided, however, if Tenant occupies the Third Expansion Premises for
the conduct of business prior to the Third Expansion Commencement Date, Tenant
shall pay a pro rata portion of the Base Rent for the Third Expansion Premises
at the rate applicable to the first Third Expansion Year with respect to the
portion of the Third Expansion Premises occupied by Tenant for the conduct of
business and Tenant shall pay Direct Expenses and other Additional Rent with
respect to the portion of the Third Expansion Premises occupied by Tenant for
the conduct of business.  In connection with the foregoing, Tenant shall provide
written notice to Landlord prior to any such occupancy for the conduct of
Tenant’s business, which notice will include the portion of the Premises which
Tenant shall occupy for the conduct of its business.  

 

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SCHEDULE 1

APPROVED SUBCONTRACTORS

 

Ceiling & Drywall:

Tisys Construction

Magnum Drywalls

Bayside Drywall

 

Laboratory Casework:

ISEC

 

 

Mechanic & Plumbing:

ACCO Engineered Systems

Therma Mechanical

Thermal Mechanical

 

Electrical:

RK Electric

Rodda Electric

Howell Electric

 

 

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