LEASE AMENDMENT AGREEMENT

This LEASE AMENDMENT AGREEMENT (this “Agreement”) is entered into as of July 23,
2015, by and between Peninsula Innovation Partners, LLC, a Delaware limited
liability company (“Landlord”) and Pacific Biosciences of California, Inc., a
Delaware corporation (“Tenant”).

RECITALS

A.WHEREAS, Landlord and Tenant are parties to the following leases (each, a
“Lease”, and collectively, the “Leases”):  

(i)Lease dated as of December 15, 2010 and modified by that certain Commencement
Date Certificate dated by Tenant as of February 14, 2011 and by Landlord as of
March 16, 2011, as amended by that certain First Amendment to Lease dated as of
March 30, 2015 and as further amended by that certain Second Amendment to Lease
dated as of March 30, 2015 (as amended, the “1350 Willow Lease”), pursuant to
which Landlord leases to Tenant certain premises (the “1350 Willow Premises”)
consisting of approximately 14,001 square feet located at 1350 Willow Road,
Suite 101, Menlo Park, California for a term that currently expires on December
31, 2015;

 (ii)Lease dated as of February 8, 2010 and modified by that certain
Commencement Date Certificate dated by Landlord as of September 8, 2010 and by
Tenant as of August 24, 2010, as amended by that certain First Amendment to
Industrial Lease dated as of December 29, 2010, as further amended by that
certain Second Amendment to Lease dated as of March 30, 2015 and as further
amended by that certain Third Amendment to Lease dated as of March 30, 2015 (the
“1380 Willow Lease”), pursuant to which Landlord leases to Tenant certain
premises (the “1380 Willow Premises”) consisting of approximately 33,792 square
feet located at 1380 Willow Road, Menlo Park, California for a term that
currently expires on December 31, 2015, subject to two (2) options to renew the
initial term thereof each for a period of five (5) years;

 (iii)Lease dated as of December 10, 2009 and modified by that certain
Commencement Date Certificate dated as of by Tenant as August 24, 2010 and by
Landlord as of September 8, 2010, as amended by that certain Second Amendment to
Industrial Lease [sic] dated as of August 13, 2010, as further amended by that
certain Third Amendment to Industrial Lease dated as of December 29, 2010, as
further amended by that certain Fourth Amendment to Lease dated as of March 30,
2015, and as further amended by that certain Fifth Amendment to Lease dated as
of March 30, 2015 (as amended, the “940 Hamilton Lease”), pursuant to which
Landlord leases to Tenant certain premises (the “940 Hamilton Premises”)
consisting of approximately 29,371 square feet located at 940 Hamilton Avenue
(formerly known as 1394 Willow Road), Menlo Park, California for a term that
currently expires on December 31, 2015, subject to two (2) options to renew the
initial term thereof each for a period of five (5) years;

 

 

 

 

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(iv)Lease dated as of September 24, 2009, as amended by that certain First
Amendment to Lease Agreement dated as of May 19, 2010, as further amended by
that certain Second Amendment to Industrial Lease dated as of August 13, 2010,
as further amended by that certain Third Amendment to Industrial Lease dated as
of December 29, 2010, as further amended by that certain Fourth Amendment to
Lease dated as of March 30, 2015 and as further amended by that certain Fifth
Amendment to Lease dated as of March 30, 2015 (the “960 Hamilton Lease”),
pursuant to which Landlord leases to Tenant certain premises (the “960 Hamilton
Premises”) consisting of approximately 22,267 square feet located at 960
Hamilton Avenue (formerly known as 1392 Willow Road), Menlo Park, California for
a term that currently expires on December 31, 2015, subject to two (2) options
to renew the initial term thereof each for a period of five (5) years;

(v)Lease dated as of December 15, 2010 and modified by that certain Commencement
Date Certificate dated by Tenant as of February 14, 2011 and by Landlord as of
March 16, 2011, as amended by that certain First Amendment to Lease dated as of
March 30, 2015 and as further amended by that certain Second Amendment to Lease
dated as of March 30, 2015 (the “1003-1005 Hamilton Lease”), pursuant to which
Landlord leases to Tenant certain premises (the “1003-1005 Hamilton Premises”)
consisting of approximately 54,586 square feet located at 1003-1005 Hamilton
Avenue, Menlo Park, California for a term that currently expires on December 31,
2015, subject to two (2) options to renew the initial term thereof each for a
period of five (5) years;

(vi)Lease dated as of December 15, 2010 and modified by that certain
Commencement Date Certificate dated by Tenant as of February 4, 2011 and by
Landlord as of March 16, 2011, as further amended by that certain First
Amendment to Lease dated as of March 30, 2015 and as further amended by that
certain Second Amendment to Lease dated as of March 30, 2015 (the “1010 Hamilton
Lease”), pursuant to which Landlord leases to Tenant certain premises (the “1010
Hamilton Premises”) consisting of approximately 21,240 square feet located at
1010 Hamilton Avenue, Menlo Park, California for a term that currently expires
on December 31, 2015, subject to two (2) options to renew the initial term
thereof each for a period of five (5) years; and

(vii)Lease dated as of May 27, 2011, as amended by that certain First Amendment
to Lease dated as of March 30, 2015 and as further amended by that certain
Second Amendment to Lease dated as of March 30, 2015 (as amended, the “1180
Hamilton Lease”), pursuant to which Landlord leases to Tenant certain premises
(the “1180 Hamilton Premises”, and collectively with the 1350 Willow Premises,
the 1380 Willow Premises, the 940 Hamilton Premises, the 960 Hamilton Premises,
the 1003-1005 Hamilton Premises, the 1010 Hamilton Premises, the “Premises”)
approximately 11,160 square feet located at 1180 Hamilton Court, Menlo Park,
California for a term that currently expires on December 31, 2015.

 

 

 

 

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B.WHEREAS, Landlord and Tenant wish to modify the Leases on the terms and
conditions set forth below.

AGREEMENT

NOW THEREFORE, in consideration of the promises and the mutual covenants
hereinafter contained, the parties hereto agree as follows:

1.Abatement. 

a.For the period beginning May 1, 2015 through the end of the Term (the “OpEx
Abatement Period”) for each of the Leases (as amended hereby), Operating
Expenses under the Leases (which shall include, for purposes hereof, any Real
Property Taxes payable under Section 10.3 of the Leases) shall be abated (the
“Additional Abated OpEx”). The Additional Abated OpEx shall be in lieu of the
Abated OpEx and, notwithstanding anything to the contrary in the Leases, during
the OpEx Abatement Period Tenant shall not be required to pay Reduced Operating
Expenses (or, for clarity, any other Operating Expenses under the Leases).  For
further clarity, Tenant’s obligation to pay Reduced Operating Expenses for the
month of April, 2015 shall remain unmodified and in full force and effect (it
being noted that Tenant has already paid Landlord such Reduced Operating
Expenses).

b.For the period beginning August 1, 2015 through the end of the Term for each
of the Leases (as amended hereby),  Monthly Base Rent shall be abated (the
“Additional Abated Rent”).

c.Notwithstanding the foregoing, the Additional Abated OpEx and the Additional
Abated Rent shall immediately terminate upon (i) the delivery of the CUP Failure
Notice (as defined below), or (ii) a Default by Tenant under any Lease;
provided, however that upon the cure of such Default by Tenant the Additional
Abated OpEx and the Additional Abated Rent shall recommence as of the date of
cure.  

2.Lease Term.  The Term for the Leases are hereby amended as follows:

a.The Term for the 1180 Hamilton Lease shall expire on December 31, 2016.

b.The Term for (i) the 940 Hamilton Lease, (ii) the 960 Hamilton Lease, (iii)
the 1003-1005 Hamilton Lease, (iv) the 1010 Hamilton Lease, and (v) the 1380
Willow Lease, shall expire on September 30, 2017.

c.All renewal, expansion and extension rights contained in any Lease, including
but not limited to the Options to Extend, are hereby terminated and of no
further force or effect.

3.Agreement Contingency. Tenant intends to relocate to the building located at
1315 O’Brien Drive, Menlo Park, California (the “O’Brien Building”). In order
for Tenant to

 

 

 

 

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relocate to the O’Brien Building, the owner of the O’Brien Building will be
required to obtain from the City of Menlo Park, California (the “City”) an
architectural approval and a change of use permit which would allow Tenant to
operate its business from within, and make certain improvements to, the O’Brien
Building (collectively, the “CUP”). Receipt of the CUP in final, non-appealable
form on or before September 30, 2015 (the “Contingency Date”) is referred to in
this Amendment as the “CUP Contingency”. The terms and conditions of this
Agreement are subject to the satisfaction or waiver (whether affirmative or
deemed) by Tenant of the CUP Contingency by the Contingency Date.

a.If (i) (1) the CUP is received by September 15, 2015 and (2) no appeal is made
to the issuance of the CUP within the fifteen (15) day appeal period provided
pursuant to the City’s Municipal Code (the “Appeal Period”) or (ii) (1) the CUP
is received by September 15, 2015, (2) an appeal is made to the issuance of the
CUP within the Appeal Period, and (3) the City subsequently affirms the CUP in
all material respects on or before the Contingency Date,  then, in either
case, the CUP Contingency will be automatically deemed satisfied.  Tenant shall
provide Landlord notice of (x) receipt of the CUP within two (2) business days
following the occurrence thereof and (y) the satisfaction of the CUP Contingency
within two (2) business days thereof (the “Contingency Notice”), although the
failure of Tenant to provide such notice shall not have any effect on the
satisfaction of the CUP Contingency.  In addition, at any time prior to the
Contingency Date, Tenant may deliver a notice to Landlord waiving the CUP
Contingency (which shall also be deemed a Contingency Notice).

b.If prior to the Contingency Date the City reaches a final, non-appealable
decision not to grant the CUP, then on or before October 2, 2015 Tenant may
deliver written notice to Landlord (the  “CUP Failure Notice”) that the CUP
Contingency has not been satisfied.  In addition, if  (i)  the CUP is not
received by September 15, 2015 or (ii)  (1) the CUP is received by September 15,
2015, (2) an appeal is made to the issuance of the CUP within the Appeal Period,
and (3) the City has not subsequently affirmed the CUP in all material respects
on or before the Contingency Date,  then, in either case, Tenant may deliver the
CUP Failure Notice to Landlord on or before October 2, 2015.  Tenant’s failure
to timely deliver the CUP Failure Notice or the Contingency Notice shall be
deemed to be an election by Tenant to waive the CUP Contingency.

c.If Tenant delivers the CUP Failure Notice:

(i)Within thirty  (30) days following the delivery of the CUP Failure Notice,
Tenant shall pay to Landlord for each Lease: (A) all Additional Abated Opex, and
(B)  all Additional Abated Rent.

(ii) The Options to Extend contained in the applicable Leases shall be
reinstated except that each Option to Extend may be exercised by Tenant at any
time through and including October 15, 2015.

(iii)Section 2 of this Agreement shall be of no further force or effect, such
that the Term for each Lease shall automatically revert to expire on the

 

 

 

 

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Expiration Date for such Lease as though it had not been amended pursuant to
Section 2 hereof.

(iv)Landlord shall have no obligation to pay any Landlord Payment (as defined
below).

(v)Section 5(b) of this Agreement shall be of no further force or effect, such
that Section 16.9 of each Lease shall be in full force and effect as though it
had not been amended hereby.

4.Early Termination Consideration. As consideration for Tenant’s agreements
hereunder to amend the Leases, and subject to the terms and conditions contained
herein, Landlord shall make the following payments to Tenant (each, a “Landlord
Payment”):

a.Within thirty (30) days following the date that Landlord receives the
Contingency Notice (or the Contingency Date, if Tenant delivers neither the
Contingency Notice nor the CUP Failure Notice), Landlord shall pay Tenant Five
Million and No/100 Dollars ($5,000,000.00).

b.Landlord shall pay Tenant Five Million and No/100 Dollars ($5,000,000.00) on
March 1, 2016.

c.Landlord shall pay Tenant Five Million and No/100 Dollars ($5,000,000.00) on
September 1, 2016.

d.Landlord shall pay Tenant Five Million and No/100 Dollars ($5,000,000.00) (the
“Final Payment”) within thirty (30) days following the date Tenant surrenders
the entirety of the Premises in compliance with Section 5 below;  provided,
however, that the following conditions shall be express conditions precedent to
Landlord’s obligation to make the Final Payment: (i) Tenant shall have
surrendered the entirety of the Premises in compliance with Section 5 below on
or before November  30, 2017, and (ii) Tenant shall not be in Default under any
Lease as of the date Tenant surrenders the entirety of the Premises
(collectively, the “Final Payment Conditions”).   Notwithstanding anything to
the contrary herein, if the Final Payment Conditions are not satisfied, Landlord
shall give Tenant written notice (the “Final Payment Failure Notice”)
identifying the reason(s) the Final Payment Conditions were not satisfied.
  Tenant shall have a period of twenty-five (25) days following receipt of the
Final Payment Failure Notice to cause the Final Payment Conditions to be
satisfied, and if Tenant causes the Final Payment Conditions to be satisfied
within such twenty-five (25) day period then Landlord shall be obligated to pay
Tenant the Final Payment.

5.Surrender.  Upon the expiration or other termination of each applicable Term
for the 1180 Hamilton Premises, the 1350 Willow Premises, the 1380 Willow
Premises, the 940 Hamilton Premises, the 960 Hamilton Premises, the 1003-1005
Hamilton Premises, the 1010 Hamilton Premises (each a “Portion of the
Premises”), Tenant shall surrender such Portion of the Premises in accordance
with the requirements of the applicable Lease, subject to the following
modifications:

 

 

 

 

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a.Section 7.4 and Exhibit D of each Lease are hereby deleted in their entirety. 
Tenant shall surrender the Premises clean and free of debris, but otherwise in
their then “as is” condition, subject to Tenant’s obligations with respect to
Hazardous Substances set forth below.  Tenant may remove any and all Tenant’s
Property installed in the Premises and any equipment installed in the Premises
by Tenant regardless of whether the Leases vest ownership of that equipment to
Landlord. For clarity, Tenant may remove equipment, furniture,  nitrogen tanks,
cold rooms, UPS systems, fume hoods, lab benches, security cameras, card
readers,  A/V equipment, cabinetry, lockers and signage. Notwithstanding the
preceding, Tenant may not remove any HVAC equipment or backup generators.

b.Section 16.9 of each Lease is hereby deleted in its entirety and replaced with
the following:

“Tenant has no right to retain possession of the Premises or any part thereof
beyond the expiration or earlier termination of this Lease. If Tenant holds over
following the expiration of the Term: (i) the Additional Abated OpEx and
Additional Abated Rent shall immediately terminate, (ii) Landlord waives all
other claims for damages as a result of such holdover, other than any right to
attorneys’ fees as a prevailing party with regard to any dispute with Tenant,
and (iii) all other terms and conditions of the Lease shall continue to apply.” 

c.Tenant shall comply with federal, state and local laws with respect to the
removal of any Hazardous Substances used by Tenant or any Tenant Entities in
such Portion of the Premises. For each Portion of the Premises in which
Hazardous Substances are used, Tenant shall provide written confirmation from
the City of Menlo Park and San Mateo County (in each case, to the extent the
City and County issue confirmations for similar properties), in a form
reasonably acceptable to Landlord, that Tenant has completed all actions under
applicable federal, state and local laws and regulations which are required in
order for Tenant to close out its permits to use such Hazardous Substances at
the Portion of the Premises being vacated and surrendered.

6.Miscellaneous.  

a.Except as otherwise expressly provided herein, all defined terms used in this
Agreement shall have the same respective meanings as are provided for such
defined terms in the Leases.

b. Insofar as the specific terms and provisions of this Agreement purport to
amend or modify or are in conflict with the specific terms, provisions and
exhibits of the Leases, the terms and provisions of this Agreement shall govern
and control; in all other respects, the terms, provisions and exhibits of the
Leases shall remain unmodified and in full force and effect. 

c.Landlord and Tenant hereby agree that (i) this Agreement is incorporated into
and made a part of each Lease, (ii) any and all references to the Leases
hereinafter shall include this Agreement, and (iii) the Leases and all terms,
conditions and provisions of the Leases are in full force and effect as of the
date hereof, except as expressly modified and amended hereinabove.

 

 

 

 

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d.If either Landlord or Tenant brings an action or proceeding to enforce the
terms hereof or declare rights hereunder, the Prevailing Party (as hereafter
defined) in any such proceeding shall be entitled to reasonable attorneys' fees.
The term “Prevailing Party” shall include, without limitation, a party who
substantially obtains or defeats the relief sought.

 e.Time is of the essence with respect to each and every time period described
in this Agreement.

[Signatures appear on following page]

 

 

 

 

 

 

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IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the day
and year first above written.

 

 

 

 

 

 

 

TENANT:

 

LANDLORD:

 

 

 

 

 

PACIFIC BIOSCIENCES OF

 

PENINSULA INNOVATION

CALIFORNIA, INC.

 

PARTNERS, LLC,

A Delaware corporation

 

A Delaware limited liability company

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ Ben Gong

 

By:

/s/ Fergus O’Shea

Name:

Ben Gong

 

Name:

Fergus O’Shea

Title:

VP, Finance

 

Title:

Facilities Director

 

 

 

 

Pacific Biosciences

Legal Department

Approved: 7/23/2015

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