Exhibit 10.40

SUBLEASE

THIS SUBLEASE (“Sublease”), dated June 1, 2002 (the “Commencement Date”), is
entered into by and between DIADEXUS, INC., a Delaware corporation
(“Sublandlord”), and VIROLOGIC, INC. a Delaware corporation (“Subtenant”).

RECITALS

A.    Sublandlord, as successor-in-interest to Subtenant pursuant to an
Assignment and Assumption of Lease of even date herewith, leases certain
premises (the “Premises”) consisting of approximately 53,980 square feet in a
building, located at 343 Oyster Point Boulevard, South San Francisco,
California, pursuant to that certain Lease dated November 23, 1999, between
ARE-Technology Center SSF, LLC, a Delaware limited liability company,
successor-in-interest to Trammell Crow Northern California Development, Inc., as
landlord (the “Master Landlord”), and Sublandlord, as tenant, as amended by
(i) that certain First Amendment to Lease Agreement dated February     , 2000
and (ii) that certain Consent to Assignment and Modification of Lease of even
date herewith (collectively, the “Master Lease”). The Premises is more
particularly described in the Master Lease, a copy of which is attached hereto
as Exhibit A. Capitalized terms used but not defined herein have the same
meanings as they have in the Master Lease.

B.    Sublandlord desires to sublease to Subtenant a portion of the Premises
comprising approximately 13,630 square feet and depicted on Exhibit B attached
hereto (the “Sublease Premises”), and Subtenant desires to sublease the Sublease
Premises from Sublandlord on the terms and provisions hereof.

Now, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, Sublandlord and Subtenant covenant and agree as follows:

AGREEMENT

1.    Sublease Premises. On and subject to the terms and conditions below,
Sublandlord hereby leases to Subtenant, and Subtenant hereby leases from
Sublandlord, the Sublease Premises.

2.    Term.

(a)    This Sublease shall commence upon the Commencement Date, provided
Sublandlord and Subtenant have theretofore obtained the Consent to Assignment
and Modification of Lease (the “Consent”) signed by the Master Landlord in the
form of Exhibit C attached hereto, and shall expire on September 30, 2003,
unless sooner terminated pursuant to any provision hereof.

(b)    Subtenant shall have an option to extend the term hereof to December 31,
2003 (i.e., for a period of three (3) months); provided that Subtenant delivers
notice of such exercise to Sublandlord on or before January 1, 2003 and
provided, further, that Subtenant is not in default under this Sublease at the
time of exercise or at the commencement of the extension period.

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3.    Possession. Subtenant acknowledges that it is in possession of the
Sublease Premises on the Commencement Date.

4.    Rent.

(a)    Commencing on the Commencement Date and continuing throughout the term of
this Sublease, Subtenant shall pay monthly rent (“Rent”) to Sublandlord in the
following amounts:

(i)    Base Rent. Subtenant shall pay to Sublandlord monthly base rent (“Base
Rent”) in an amount equal to a pro-rata portion of the base rent payable by
Sublandlord under the Master Lease based on the square footage of the Sublease
Premises in proportion to the square footage of the entire Premises, as follows:

 

June 2002:

   $ 28,350.00       ($2.08/square foot)

July 2002-June 2003:

   $ 29,168.00       ($2.14/square foot)

July 2003-October 2003

   $ 30,122.00       ($2.21/square foot)

If, pursuant to Section 2(b) above, the term of this Sublease is extended to
December 31, 2003, Base Rent during such extended term shall be the same as set
forth above for the months July, 2003 through October, 2003.

(ii)    Additional Rent. In addition to Base Rent, Subtenant also shall pay to
Sublandlord, (a) Subtenant’s proportionate share of Tenant’s Proportionate Share
of Basic Operating Costs (as such terms are defined in the Basic Lease
Information and in Section 7 of the Master Lease), (b) all other costs payable
by Sublandlord with respect to the Sublease Premises under the Master Lease,
except penalties, interest and other costs and fees arising from a default by
Sublandlord under the Master Lease, and (c) any costs and expenses applicable to
the Sublease Premises which are paid directly by Sublandlord, if any, including,
but not limited to, utilities, personal property taxes and real property taxes
(collectively, “Additional Rent”). Subtenant shall pay Subtenant’s share of
Basic Operating Costs and any Rent Increase as and when such payments are due
from Sublandlord pursuant to the Master Lease, but at least five (5) business
days prior to the date Sublandlord must pay such amounts to Master Landlord.
Within ten (10) days of receipt by Sublandlord from Master Landlord, Sublandlord
shall provide to Subtenant copies of all notices relating to Estimated Basic
Operating Costs and Basic Operating Cost Adjustments applicable to the Sublease
Premises. Subtenant shall pay items of Additional Rent other than Basic
Operating costs within ten (10) days after receipt of written demand from
Sublandlord, which demand shall be accompanied by any invoice or statement that
Sublandlord received from Master Landlord relating thereto. Promptly upon
receipt from Master Landlord, Sublandlord shall provide Subtenant with an
estimate of Additional Rent for the year 2003, together with any notices
received by Sublandlord from Master Landlord with respect thereto.

(iii)    Payment of Rent. If the termination or expiration date of this Sublease
does not fall on the last day of a calendar month, Rent for such month shall be
prorated on a daily basis based upon a calendar month. Rent shall be payable to
Sublandlord in lawful money of the United States, in advance, without prior
notice, demand, or offset, at least five (5) business days prior to the first
day of each calendar month during the term hereof. All Rent shall be paid to
Sublandlord at the address specified for notices to Sublandlord in Section 13
below.

 

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(b)    In the event of any casualty or condemnation affecting the Sublease
Premises, Rent payable by Subtenant shall be abated hereunder, but only to the
extent that Rent under the Master Lease is abated, and Subtenant waives any
right to terminate this Sublease in connection with such casualty or
condemnation except to the extent the Master Lease is also terminated as to the
Sublease Premises or any portion thereof.

(c)    Base Rent and Additional Rent may be referred to herein collectively as
“Rent.”

5.    Security Deposit. On or prior to the Commencement Date, Subtenant shall
deliver to Sublandlord the sum of Fifty Six Thousand Seven Hundred Dollars and
No/100 Dollars ($56, 700.00) as security for the performance of Subtenant’s
obligations under this Sublease (“Security Deposit”). If Subtenant fails to pay
Rent or other charges when due under this Sublease, or fails to perform any of
its other obligations hereunder, Sublandlord may use or apply the portion of the
Security Deposit required for the payment of any Rent or other amount then due
hereunder and unpaid, for the payment of any other sum for which Sublandlord may
become obligated by reason of Subtenant’s default or breach, or for any loss or
damage sustained by Sublandlord as a result of Subtenant’s default or breach. If
Sublandlord so uses any portion of the Security Deposit, Subtenant shall restore
the Security Deposit to the full amount originally deposited within ten
(10) days after receipt of Sublandlord’s written demand therefor. Sublandlord
shall not be required to keep the Security Deposit separate from its general
accounts, and shall have no obligation or liability for payment of interest on
the Security Deposit. The Security Deposit, or so much thereof as had not
theretofore been applied by Sublandlord, shall be returned to Subtenant within
thirty (30) days of the expiration or earlier termination of this Sublease,
provided Subtenant has vacated the Sublease Premises in accordance with the
terms of this Sublease.

In lieu of a cash Security Deposit, Subtenant may provide to Sublandlord an
unconditional, irrevocable letter of credit (“Letter of Credit”) in the amount
set forth in this Section 5 in favor of Sublandlord and issued by a bank located
in the Bay Area and reasonably acceptable to Sublandlord (“Issuer”). The Letter
of Credit shall be in form reasonably acceptable to Sublandlord. The Letter of
Credit shall provide that draws, including partial draws, at Sublandlord’s
election, will be honored upon the delivery to the Issuer of notice signed by
Sublandlord, or its authorized agent, that an event of default has occurred
under the Sublease. Any draw or partial draw of the Letter of Credit shall not
constitute a waiver by Sublandlord of its right to enforce its other remedies
hereunder, at law or in equity. If any portion of the Letter of Credit is drawn
upon, Subtenant shall, within ten (10) days after delivery of written demand
from Sublandlord, restore said Letter of Credit to its original amount. The
Letter of Credit shall be for the term of one year and automatically shall be
renewed each year for the term of sixty (60) days beyond the termination or
earlier expiration of the Sublease. The Letter of Credit will automatically
renew each year during the Sublease term unless the beneficiary under the Letter
of Credit is given at least thirty (30) days prior notice of a non-renewal by
the issuing bank, and Sublandlord shall be able to draw on the Letter of Credit
in the event of such notice.

6.     Assignment and Subletting. Subtenant may not assign, sublet, transfer,
pledge, hypothecate or otherwise encumber the Sublease Premises, in whole or in
part, or permit the use or occupancy of the Sublease Premises by anyone other
than Subtenant, unless Subtenant has obtained Sublandlord’s consent thereto,
which consent shall not be unreasonably withheld, and the consent of Master
Landlord in accordance with the terms of the Master Lease; provided, however,
that no such consent shall be required upon Subtenant’s assignment or subletting
of the Sublease Premises to a Permitted Assignee (as such term is defined in
Section 21 of the Master Lease). Regardless of Sublandlord’s consent, no
subletting or assignment shall release Subtenant of its obligations hereunder.
Any rent or other consideration payable to Subtenant pursuant to any sublease or
assignment permitted by this paragraph which is in excess of the Rent payable by
Subtenant to Sublandlord pursuant hereto (“Bonus Rent”) shall be paid to
Sublandlord. In calculating Bonus Rent, Subtenant may first deduct from the rent
or other consideration received (a) the amortization of a reasonable brokerage
commission, and (b) the amortization of the cost of tenant improvements, if any,
paid for by Subtenant in connection with the assignment or subletting.

 

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7.    Condition of Sublease Premises. Subtenant has used due diligence in
inspecting the Sublease Premises and is satisfied with the condition of the
Sublease Premises and the property, including the environmental condition
thereof. Subtenant agrees to accept the Sublease Premises in “as-is” condition
and with all faults without any representation or warranty of any kind or nature
whatsoever, and without any obligation on the part of Sublandlord to modify,
improve or otherwise prepare the Sublease Premises for Subtenant’s occupancy.

8.    Use. Subtenant may use the Sublease Premises only for the purposes allowed
in the Master Lease and for no other purpose. Subtenant shall promptly comply
with all applicable statutes, ordinances, rules, regulations, orders, and
restrictions of record in effect during the term of this Sublease governing,
affecting and regulating the Sublease Premises, including but not limited to the
use thereof. Subtenant shall not use or permit the use of the Sublease Premises
in a manner that will create waste or a nuisance, interfere with or disturb
other tenants in the Building or violate the provisions of the Master Lease.

9.    Parking. Subtenant shall have a proportional interest in such parking
rights as Sublandlord has in connection with the Sublease Premises pursuant to
the Master Lease.

10.    Incorporation of Sublease.

(a)    All of the terms and provisions of the Master Lease, except as provided
in subsection (b) below, are incorporated into and made a part of this Sublease
and the rights and obligations of the parties under the Master Lease are hereby
imposed upon the parties hereto with respect to the Sublease Premises,
Sublandlord being substituted for the “Landlord” in the Master Lease, and
Subtenant being substituted for the “Tenant” in the Master Lease. It is further
understood that where reference is made in the Master Lease to the “Premises,”
the same shall mean the Sublease Premises as defined herein; where reference is
made to the “Term Commencement Date,” the same shall mean the Commencement Date
as defined herein; and where reference is made to the “Lease,” the same shall
mean this Sublease. Notwithstanding the foregoing, the term “Landlord” in the
following sections of the Master Lease (i) shall mean Master Landlord, not
Sublandlord: 8.A., 10, 24, 28, 36.J, 37.F and (ii) shall mean both Master
Landlord and Sublandlord: 18.

(b)    The following paragraphs of the Master Lease are not incorporated herein:
Basic Lease Information (except definitions that are applicable to and
appropriate in the context of this Sublease), 1, 2, 3, 6,19, 20, 21.B., 31, 35,
37.C, D, E, G and H, Exhibit A-2, Exhibit B-l, Exhibit B-3, Exhibit C, Exhibit
F, and Exhibit Q.

 

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(c)    Subtenant hereby assumes and agrees to perform for Sublandlord’s benefit,
during the term of this Sublease, all of Sublandlord’s obligations with respect
to the Sublease Premises under the Master Lease, except as otherwise provided
herein. Subtenant shall not commit or permit to be committed any act or omission
which violates any term or condition of the Master Lease. Except as otherwise
provided herein, this Sublease shall be subject and subordinate to all of the
terms of the Master Lease.

(d)    Except as expressly set forth herein, Sublandlord hereby grants to
Subtenant all of the rights, privileges and benefits granted to or conferred
upon Sublandlord as tenant under the Master Lease, provided that Subtenant’s
exercise of such rights, privileges and benefits do not result in or cause
Sublandlord to default under the Master Lease.

11.    Insurance. Subtenant shall be responsible for compliance with the
insurance provisions of the Master Lease. Such insurance shall insure the
performance by Subtenant of its indemnification obligations hereunder and shall
name Master Landlord and Sublandlord as additional insureds. All insurance
required under this Sublease shall contain an endorsement requiring thirty
(30) days written notice from the insurance company to Subtenant and Sublandlord
before cancellation or change in the coverage, insureds or amount of any policy.
Subtenant shall provide Sublandlord with certificates of insurance evidencing
such coverage prior to the commencement of this Sublease.

12.    Default. In addition to defaults contained in the Master Lease, failure
of Subtenant to make any payment of Rent when due hereunder shall constitute an
event of default hereunder. If Subtenant’s default causes Sublandlord to default
under the Master Lease, Subtenant shall defend, indemnify and hold Sublandlord
harmless from all damages, costs (including reasonable attorneys’ fees),
liability, expenses or claims relating to such default.

13.    Notices. The addresses specified in the Master Lease for receipt of
notices to each of the parties are deleted and replaced with the following:

 

To Sublandlord at:     

diaDexus, Inc.

343 Oyster Point Boulevard

South San Francisco, CA 94080

Attn: Sharon Tetlow

To Subtenant at:     

Virologic, Inc.

345 Oyster Point Boulevard

South San Francisco, CA 94080

Attn: Karen Wilson/Kathy Hibbs

All notices hereunder shall be in writing and shall be sent by (a) messenger or
hand delivery; (b) reputable overnight air courier service; or (c) certified or
registered U.S. Mail, postage prepaid, return receipt requested. Notice shall be
deemed given on the earlier of the date delivered or refusal of a party to
accept delivery thereof. Each party immediately shall provide the other with a
copy of any notice of default given to or received from Master Landlord with
respect to this Sublease or the Sublease Premises.

 

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14.    Sublandlord’s Obligations.

(a)    To the extent that the provision of any services or the performance of
any maintenance or any other act respecting the Sublease Premises or the
building in which the Sublease Premises is located (the “Building”), including,
without limitation, the performance and completion of Landlord’s Work (as
defined in the Master Lease), is the responsibility of Master Landlord
(collectively “Master Landlord Obligations”), upon Subtenant’s written request,
Sublandlord shall make reasonable efforts to cause Master Landlord to perform
such Master Landlord Obligations, including the commencement of appropriate
legal proceedings; provided, however, that, except to the extent resulting from
Sublandlord’s breach of or default under the Master Lease which is not the
result of Subtenant’s breach or default hereunder, in no event shall Sublandlord
be liable to Subtenant for any liability, loss or damage whatsoever in the event
that Master Landlord should fail to perform the same, nor shall Subtenant be
entitled to withhold the payment of Rent or to terminate this Sublease, except
to the extent Sublandlord has such a termination right under the Master Lease.
If Sublandlord is unsuccessful in obtaining the performance by Master Landlord
of the Master Landlord Obligations in accordance with the immediately preceding
sentence, then Subtenant shall have the right, upon prior written notice to
Sublandlord, to exercise in its own name all of the rights available to
Sublandlord under the Master Lease to enforce performance on the part of Master
Landlord. It is expressly understood that the services and repairs which are
incorporated herein by reference, including but not limited to the maintenance
of exterior walls, structural portions of the roof, foundations, walls and
floors, will in fact be furnished by Master Landlord and not by Sublandlord,
except to the extent otherwise provided in the Master Lease. In addition,
Sublandlord shall not be liable for any maintenance, restoration (following
casualty or destruction) or repairs in or to the Building or Sublease Premises,
other than its obligation hereunder to use reasonable efforts to cause Master
Landlord to perform its obligations under the Master Lease. With respect to any
maintenance or repair to be performed by Master Landlord respecting the Sublease
Premises, the parties expressly agree that Subtenant shall have the right to
contact Master Landlord directly to cause it to so perform.

(b)    So long as Subtenant complies with its obligations under this Sublease:
(i) Sublandlord shall not agree to any amendment of the Master Lease which
materially affects Subtenant’s rights under this Sublease; (ii) Sublandlord
shall not, without Subtenant’s written consent, exercise any right to terminate
the Master Lease with respect to any period during the Sublease term, other than
on account of a default by Master Landlord under the Master Lease, casualty or
condemnation; and (iii) Sublandlord shall perform all of its obligations under
the Master Lease not assumed by Subtenant hereunder, including, without
limitation, the prompt payment to Master Landlord of all sums paid by Subtenant
to Sublandlord hereunder.

(c)    Sublandlord represents to Subtenant that (i) the Master Lease is in full
force and effect, (ii) Sublandlord is not in default under the Master Lease with
respect to any obligation arising after the Commencement Date and, to
Sublandlord’s knowledge, Master Landlord is not in default thereunder, (iii) the
Master Lease attached hereto is a full and complete copy of the Master Lease,
and (iv) as of the Commencement Date, Sublandlord’s leasehold estate is not
encumbered by any deed of trust or mortgage financing.

 

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(d)    Subtenant represents to Sublandlord that, immediately prior to the
Commencement Date, (i) the Master Lease was in full force and effect,
(ii) Subtenant was not in default under the Master Lease with respect to any
obligation arising before the Commencement Date and, to Subtenant’s knowledge,
Master Landlord was not in default thereunder, (iii) the Master Lease attached
hereto is a full and complete copy of the Master Lease, and (iv) Subtenant’s
leasehold estate under the Master Lease was not encumbered by any deed of trust
or mortgage financing.

(e)    Except as otherwise provided herein, Sublandlord shall have no other
obligations to Subtenant with respect to the Sublease Premises or the
performance of the Master Landlord Obligations.

15.    Early Termination of Sublease. If, without the fault of Sublandlord, the
Master Lease should terminate prior to the expiration of this Sublease,
Sublandlord shall have no liability to Subtenant on account of such termination.
Subject to Section 14(b) above, to the extent that the Master Lease grants
Sublandlord any discretionary right to terminate the Master Lease, whether due
to casualty, condemnation, or otherwise, Sublandlord shall be entitled to
exercise or not exercise such right in its complete and absolute discretion.

16.    Consent of Master Landlord and Sublandlord. If Subtenant desires to take
any action which requires the consent or approval of Sublandlord pursuant to the
terms of this Sublease, prior to taking such action, including, without
limitation, making any alterations, then, notwithstanding anything to the
contrary herein, (a) Sublandlord shall have the same rights of approval or
disapproval as Master Landlord has under the Master Lease, and (b) Subtenant
shall not take any such action until it obtains the consent of Sublandlord and
Master Landlord, as may be required under this Sublease or the Master Lease.
This Sublease shall not be effective unless and until the Consent shall have
been obtained. Each of Sublandlord and Subtenant represents and warrants to the
other that it has obtained all necessary corporate approvals for the execution
and delivery of this Sublease.

17.    Indemnity. Subtenant shall indemnify, defend, protect, and hold
Sublandlord and Master Landlord harmless from and against all actions, claims,
demands, costs, liabilities, losses, reasonable attorneys’ fees, damages,
penalties, and expenses (collectively “Claims”) which may be brought or made
against Sublandlord or which Sublandlord may pay or incur to the extent caused
by (i) a breach of this Sublease by Subtenant, (ii) any violation of law by
Subtenant or its employees, agents, contractors or invitees (collectively,
“Agents”) relating to the use or occupancy of the Sublease Premises, (iii) any
act or omission by Subtenant or its Agents resulting in contamination of any
part or all of the Sublease Premises or the Building by Hazardous Materials or
(iv) the negligence or willful misconduct of Subtenant or its Agents.
Sublandlord shall indemnify and hold Subtenant harmless from and against any and
all loss, liability or expense, including reasonable attorneys’ fees, incurred
or suffered by Subtenant on account of (i) the Sublandlord’s material breach of
this Sublease, (ii) a default by Sublandlord under the Master Lease to the
extent not caused by Subtenant or (iii) Sublandlord’s gross negligence of
willful misconduct with respect to the Sublease Premises or this Sublease.

18.    Brokers. Each party hereto represents and warrants that it has dealt with
no brokers in connection with this Sublease and the transactions contemplated
herein, except Mark Pearson of CRESA Partners (“Broker”). All Broker fees and
commissions shall be paid by Subtenant in accordance with the terms of a
separate agreement between Subtenant and Broker. Each party shall indemnify,
protect, defend and hold the other party harmless from all costs and expenses
(including reasonable attorneys’ fees) arising from or relating to a breach of
the foregoing representation and warranty.

 

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19.    Right of First Offer.

(a)    So long as Virologic, Inc. (or a Permitted Assignee) is the Subtenant
hereunder and occupies the entirety of the Sublease Premises, and subject to the
conditions set forth in this Section 19, prior to entering into a sublease
proposal with a third party for all or any portion of the Premises (the “Offered
Space”) pursuant to which the third party would occupy such portion of the
Premises during the term of this Sublease, Sublandlord shall deliver to
Subtenant a written notice (the “ROF Notice”) informing Subtenant of
Sublandlord’s intent to sublease the Offered Space to a third party during the
term of this Sublease.

(b)    Within ten (10) days of receipt of the ROF Notice, Subtenant shall notify
Sublandlord in writing of Subtenant’s election to sublease the Offered Space
(the “Acceptance Notice”). Failure of Subtenant to timely deliver the Acceptance
Notice shall be deemed an election by Subtenant not to sublease the Offered
Space, and Subtenant shall have no further rights to sublease any portion of the
Offered Space thereafter. Subtenant’s right of first offer set forth in this
Section 19 is a one-time right.

(c)    Immediately following receipt of the Acceptance Notice, Sublandlord and
Subtenant shall negotiate in good faith the terms of an amendment to this
Sublease to incorporate the Offered Space. The parties shall use best efforts to
finalize and execute such sublease within ten (10) days of Sublandlord’s receipt
of the Acceptance Notice. The amendment shall (i) add the Offered Space to the
Sublease Space, (ii) set forth the economic terms applicable to the Offered
Space, and (iii) provide that the term of the Offered Space is coterminous with
the Sublease Premises. Base Rent for the Offered Space shall be the “Fair Market
Rent” for the Offered Space as agreed to by the parties. “Fair Market Rent”
shall mean the then current market rent for comparable facilities in the
proximate South San Francisco market area. The definition of comparable
facilities shall incorporate the parking amenities of the Premises and its use
as an office/laboratory space, and the Building’s location, age, quality,
amenities, identity, exterior appearance, interior improvements, and type of
construction. If the parties are unable to agree on Fair Market Rent within
thirty (30) days of Sublandlord’s receipt of the Acceptance Notice, then Fair
Market Rent shall be determined in accordance with subsection (e) below. In no
event, however, shall Base Rent for the Offered Space be less than the then
current Base Rent for the Sublease Premises.

(d)    Anything herein to the contrary notwithstanding, if Subtenant is in
default under any of the terms, covenants or conditions of this Sublease, either
at the time Subtenant exercises the right of first offer or on the commencement
date of sublease applicable to the Offered Space, Sublandlord shall have, in
addition to all of Sublandlord’s other rights and remedies provided in this
Sublease, the right to terminate such right of first offer upon notice to
Subtenant.

 

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(e)    If Sublandlord and Subtenant are unable to agree on Fair Market Rent
pursuant to subsection 19(c) above, then the parties shall submit the matter to
arbitration. The arbitration shall be concluded within ninety (90) days after
the date of Subtenant’s Acceptance Notice. To the extent that arbitration has
not been completed prior to the expiration of the original Sublease term,
Subtenant shall pay Base Rent at the rate applicable during the last month of
the original Sublease term, with an adjustment to be made once Fair Market Rent
is ultimately determined by arbitration. Within ten (10) days of the expiration
of the 30-day period described in subsection 19(c) above, each party shall
choose an Appraiser and shall send written notice to the other party specifying
therein the identity of the Appraiser. For purposes hereof, “Appraiser” means a
real estate broker or MAI designated appraiser, in either case with not less
than five (5) years of full time commercial appraisal or brokerage experience in
the sub-market area in which the Offered Space is located and with no prior
business dealings with the party appointing such Appraiser. If either party
fails to timely appoint an Appraiser, the sole Appraiser appointed shall
determine the Base Rent to be charged during the new sublease term, based on the
criteria described above. If two Appraisers are appointed, they shall
immediately meet and attempt to agree upon such Base Rent. If they are unable to
do so within fifteen (15) days after their first meeting, they shall jointly
appoint a third Appraiser and the third Appraiser shall determine Fair Market
Rent for the applicable extension period within ten (10) days of his/her
appointment. If the two Appraisers are unable to agree upon such third
Appraiser, either party may petition the Presiding Judge of the Superior Court
of the City and County where the Sublease Premises are located to appoint such
third Appraiser. The determination of Base Rent as provided herein shall be
binding upon the parties hereto. Promptly upon such determination, the parties
shall execute a sublease specifying the Base Rent payable during the sublease
term.

20.    Surrender of Sublease Premises. Upon the expiration or earlier
termination of this Sublease, Subtenant shall surrender the Sublease Premises in
the same condition as they were in on the “Term Commencement Date” of the Master
Lease, ordinary wear and tear excepted.

21.    No Third Party Rights. The benefit of the provisions of this Sublease is
expressly limited to Sublandlord and Subtenant and their respective permitted
successors and assigns. Under no circumstances will any third party be construed
to have any rights as a third party beneficiary with respect to any of said
provisions.

22.    Quiet Enjoyment. Subject to Section 14(b)(ii) above, so long as Subtenant
timely pays Rent and performs its obligations under this Sublease, Sublandlord
shall take no action, or fail to take any action, which would interfere with the
right of Subtenant to peaceably have, hold and enjoy the Sublease Premises
during the Sublease term.

23.    Counterparts. This Sublease may be signed in two or more counterparts,
each of which shall be deemed an original and all of which shall constitute one
agreement

 

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

 

SUBLANDLORD: DIADEXUS, INC.,

 

SUBTENANT: VIROLOGIC, INC.,

a Delaware corporation

 

a Delaware corporation

By:

 

/s/ Sharon Tetlow

 

By:    

 

/s/ William D. Young

Print Name:

 

Sharon Tetlow

 

Print Name:

 

William D. Young

Its:

 

CEO

 

Its:

 

WOY

 

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Exhibit A

Master Lease

[to be attached]

 

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Exhibits B

Depiction of Sublease Premises

[to be attached]

 

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Exhibit C

Consent to Sublease

[to be attached]

 

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CONSENT TO SUBLEASE

This CONSENT TO SUBLEASE (this “Sublease Consent”), effective as of June 1, 2002
(the “Effective Date”), is entered into by (i) ARE-TECHNOLOGY CENTER SSF, LLC, a
Delaware limited liability company (“Landlord”), (ii) VIROLOGIC, INC., a
Delaware corporation (“Current Tenant”), and (iii) DIADEXUS, INC., a Delaware
corporation (“New Tenant”), as follows:

RECITALS

A.    Current Tenant currently leases the entire building located at 343 Oyster
Point Boulevard in South San Francisco, California (the “Premises”) from
Landlord pursuant to a certain Lease made as of November 23, 1999, between
Landlord’s predecessor-in-interest, Trammell Crow Northern California
Development, Inc., and Current Tenant, as amended by a certain First Amendment
To Lease Agreement dated as of February     , 2000, between Landlord and Current
Tenant (collectively, the “Lease”). All initially capitalized terms not
expressly defined in this Sublease Consent shall have the meanings given to such
terms in the Lease unless the context clearly indicates otherwise.

B.    Concurrently with this Sublease Consent, (i) Current Tenant is assigning
to New Tenant of all of Current Tenant’s right, title, and interest in and to
the Lease, and (ii) Current Tenant is selling and transferring to New Tenant all
of Current Tenant’s ownership interest in and to all of the Movable Equipment
and Trade Fixtures described in Exhibit B-3 of the Lease, excluding items 1
through 6 described in such Exhibit B-3. The agreements of Landlord, Current
Tenant, and New Tenant (each, a “Party” and collectively, the “Parties”)
regarding the transactions described in this Recital (the “Assignment
Transactions”) are contained in a certain Consent To Assignment and Modification
of Lease of even date herewith (the “Assignment Consent”).

C.    New Tenant currently occupies 40,350 square feet of the Premises pursuant
to a certain Sublease dated May 17, 2001, between Current Tenant (as
sublandlord) and New Tenant (as subtenant) (the “Current Sublease”). Among other
things, Landlord consented to the Current Sublease pursuant to a certain Consent
To Sublease made as of May 17, 2001, among Landlord, Current Tenant, and New
Tenant (“Consent To Current Sublease”). Current Tenant and New Tenant have
entered into various agreements pursuant to which, among other things, (i) New
Tenant is subleasing to Current Tenant 13,630 square feet of space in the
Premises until September 30, 2003, with an option to extend the term thereof
until December 31, 2003, and (ii) Current Tenant and New Tenant are terminating
the Current Sublease.

D.    New Tenant and Current Tenant expressly acknowledge and agree that the
transactions described in Recital C above (the “Sublease Transactions”) require
Landlord’s consent.

NOW, THEREFORE, in consideration of the foregoing Recitals, which are
incorporated herein by this reference, the covenants in this Sublease Consent,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Parties hereby agree as follows:

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1.    Consent To New Sublease and Termination of Current Sublease.

(a)    Current Tenant and New Tenant each hereby represents and warrants to
Landlord that: (i) attached to this Sublease Consent as Attachment 1 is a
correct and complete copy of the Sublease (the “New Sublease”) pursuant to which
New Tenant is subleasing to Current Tenant, and Current Tenant is subleasing
from New Tenant, the 13,630 square feet of space in the Premises occupied by
Current Tenant as of the day immediately prior to the Effective Date (the “New
Sublease Premises”); (ii) the effectiveness of the New Sublease is not subject
to any oral or written agreement between Current Tenant and New Tenant that
provides for a revocation, rescission, cancellation, termination, or other
nullification of the New Sublease upon the occurrence or failure to occur of any
other event (other than a breach or default under such New Sublease);
(iii) attached to this Sublease Consent as Attachment 2 is a correct and
complete copy of the Sublease Termination Agreement (the “Current Sublease
Termination”) pursuant to which Current Tenant and New Tenant have terminated
the Current Sublease as of the Effective Date, and (iv) the effectiveness of the
Current Sublease Termination is not subject to any oral or written agreement
between Current Tenant and New Tenant that provides for a revocation,
rescission, cancellation, or other nullification of the Current Sublease
Termination upon the occurrence or failure to occur of any other event. Subject
to paragraphs (b) through (j) below, Landlord hereby consents to New Tenant’s
sublease of the New Sublease Premises to Current Tenant, in accordance with the
terms, covenants, and conditions in the New Sublease. Subject to paragraph
(k) below, Landlord hereby consents to the termination of the Current Sublease,
in accordance with the terms, covenants, and conditions in the Current Sublease
Termination. Landlord neither approves nor disapproves any of the terms or
conditions in the New Sublease or in the Current Sublease Termination, which are
and will remain matters solely between Current Tenant and New Tenant.

(b)    The New Sublease shall be a sublease only and not an assignment of the
Lease with respect to the New Sublease Premises, and there shall be no further
subletting or assignment of any part of the Premises (including, without
limitation, the New Sublease Premises) except in strict accordance with the
terms, covenants, and conditions in the Lease. Further, any modification or
extension of the New Sublease without Landlord’s prior written consent (which
consent may not be unreasonably withheld, conditioned, or delayed) shall be void
and of no force or effect.

(c)    All of the terms, covenants, and conditions in the New Sublease shall be
subordinate and subject to (i) all of the terms, covenants, and conditions in
the Lease, (ii) all superior ground leases, mortgages, deeds of trust, and other
liens now or hereafter placed against the real property of which the Premises
are a part and to all advances secured thereby and to all renewals,
modifications, consolidations, replacements, and extensions thereof, and
(iii) all matters of record and all laws, ordinances, and regulations now or
hereafter affecting the real property of which the Premises are a part.

(d)    Nothing contained in the New Sublease shall be construed to modify,
waive, impair, or affect in any way any of the terms, covenants, and conditions
in the Lease (including, without limitation, the obligation of the Tenant under
the Lease to obtain any required consents for any other or future sublettings or
assignments), to waive any current or future breach of the Lease, to compromise
any rights or remedies of Landlord under the Lease against any person or entity
liable for the performance thereof, or to enlarge or increase Landlord’s
obligations or liabilities under the Lease (including, without limitation, any
liability to the sublessee under the New Sublease (the “New Sublessee”) for any
portion of the security deposit held by the sublessor under the New Sublease
(the “New Sublessor”)), it being expressly acknowledged and agreed by the
Parties that all of the terms, covenants, and conditions in the Lease shall
remain in full force and effect, notwithstanding the New Sublease. Further, the
Tenant under the Lease shall remain liable and responsible for performing and
complying with all of the terms, covenants, and conditions in the Lease that are
to be performed or complied with by such Tenant for all of the Premises,
including, without limitation, the New Sublease Premises.

 

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(e)    Current Tenant (in its capacity as the New Sublessee), for the benefit of
Landlord, hereby expressly assumes and agrees to be bound by, and to perform and
comply with, all of the obligations of the Tenant under the Lease that are
applicable to the New Sublease Premises.

(f)    Landlord and Current Tenant (in its capacity as the New Sublessee) each
hereby releases the other, and each hereby waives its rights of recovery against
the other, for direct or consequential losses or damages arising out of or
incident to any perils covered by property insurance carried by such party to
the extent of such insurance, and each hereby waives any right of subrogation
that otherwise might exist in or accrue to any person on account thereof.

(g)    Any act or omission of the New Sublessee or of anyone claiming under or
through the New Sublessee that violates any of the terms, covenants, or
conditions of the Lease shall be deemed a violation of the Lease by the Tenant
under the Lease.

(h)    Current Tenant (in its capacity as the New Sublessee) hereby agrees that,
upon a default by the Tenant under the Lease, Landlord may proceed, but shall
not be required to proceed, directly against such Tenant without first
exhausting any other rights or remedies Landlord may have against any other
person or entity liable to Landlord for the same or against any other security
for the same. If Landlord gives the New Sublessee notice that the Tenant under
the Lease is in default under the Lease, the New Sublessee thereafter shall make
directly to Landlord all payments otherwise due the New Sublessor under the New
Sublease, which payments shall be received by Landlord without any liability to
the Tenant under the Lease except to credit such payments against amounts due
under the Lease.

(i)    New Tenant (in its capacity as the Tenant under the Lease and its
capacity as the New Sublessor) and Current Tenant (in its capacity as the New
Sublessee) each hereby acknowledges and agrees that if the Lease is terminated,
for any reason, Landlord shall have no liability, responsibility, or obligation
to the New Sublessee, and the New Sublease shall automatically terminate, except
as expressly provided below. If the Lease is terminated, for any reason, then,
so long as the New Sublessee is not in default under the New Sublease, the New
Sublease shall become a direct lease between Landlord and the New Sublessee,
Landlord shall not interfere with or disturb the New Sublessee’s use,
possession, and enjoyment of the New Sublease Premises, and the New Sublessee
shall attorn to Landlord and recognize Landlord as the New Sublessor. If the New
Sublease becomes a direct lease between Landlord and the New Sublessee, Landlord
shall undertake the obligations of the New Sublessor from the date of the
termination of the Lease (the “Lease Termination Date”) through the expiration
or earlier termination of the New Sublease, but Landlord, in undertaking such
obligations, shall not (i) be liable for any rent or any security deposit paid
by the New Sublessee under the New Sublease, except to the extent actually
delivered to Landlord, (ii) be liable for any act, omission, or default of the
Tenant under the Lease or of the New Sublessor under the Sublease that arose
prior to the Lease Termination Date, (iii) be subject to any defenses or offsets
that the New Sublessee may have against the New Sublessor that arose prior to
the Lease Termination Date, (iv) be bound by any changes or modifications made
to the New Sublease prior to the Lease Termination Date without Landlord’s
written consent, or (v) be liable for any matters provided in Sections 17 or 18
of the New Sublease. Notwithstanding the termination of the Lease, if the New
Sublease becomes a direct lease between Landlord and the New Sublessee, Landlord
shall continue to perform, from the Lease Termination Date through the
expiration or earlier termination of the New Sublease, the obligations of
Landlord set forth in Paragraphs 8, 10, 24, and 28 of the Lease.

 

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(j) Under no circumstances shall the term of the New Sublease be extended beyond
December 31, 2003.

(k) As consideration for Landlord’s consent to the Current Sublease Termination
and agreement to forego the periodic bonus rent payments now payable by Current
Tenant to Landlord under the Consent To Current Sublease (“Current Sublease
Bonus Rent”), Current Tenant shall pay Landlord a total of $937,546.00 (the
“Consideration”), of which $237,546.00 shall be consideration for the Current
Sublease Bonus Rent already owed to Landlord by Current Tenant and $700,000.00
shall be consideration for Landlord’s agreement to forego any other Current
Sublease Bonus Rent that would have come due under the Consent To Current
Sublease, in accordance with the following schedule:

 

Date

  

Amount

 

06/01/02

   $ 562,527.60   

09/27/02

   $ 187,509.20   

12/28/02

   $ 187,509.20   

The effectiveness of this Sublease Consent (and of the Assignment Consent) shall
not be subject to Current Tenant’s payment of the Consideration to Landlord, and
Landlord shall have no right to revoke, rescind, cancel, terminate, or otherwise
nullify this Sublease Consent (or the Assignment Consent) if Current Tenant
fails to pay to Landlord any part of the Consideration. Landlord’s remedy in
such an event shall be to pursue its rights and/or remedies against Current
Tenant at law or in equity and/or to seek to recover from Current Tenant any
unpaid portion of the Consideration plus any actual or consequential damages
suffered by Landlord (including, without limitation, reasonable attorneys’ fees
and disbursements) as a result of Current Tenant’s breach.

2.    Miscellaneous Provisions.

(a)    Condition of New Sublease Premises: Prior to the Effective Date, Current
Tenant has been in possession of, and conducting business in, the New Sublease
Premises. Accordingly, (i) Current Tenant hereby expressly acknowledges, for the
benefit of Landlord, that Current Tenant has accepted the New Sublease Premises
in their “as-is” condition, without any qualifications, restrictions, or
limitations, and (ii) all currently installed utility systems and related
infrastructure within the Sublease Premises (collectively, “Infrastructure”)
shall remain in their current location after the Effective Date. Landlord’s
execution of this Sublease Consent, in and by itself, shall not constitute or
give rise to, and under no circumstances shall such execution, in and by itself,
be deemed, construed, or interpreted as constituting or giving rise to, any
representation or warranty by Landlord regarding the condition of any portion or
component of the New Sublease Premises (including, without limitation, all
currently installed Infrastructure).

 

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(b)    Commissions: Current Tenant shall be solely responsible and liable for,
and under no circumstances shall Landlord or New Tenant have any responsibility
or liability for, any commission, fee, or other payment (a “Commission”) due to
CRESA Partners in connection with the Sublease Transactions. Current Tenant
hereby indemnifies and agrees to protect, defend, and hold Landlord and New
Tenant harmless from and against any and all claims, losses, damages, costs, and
expenses (including reasonable attorneys’ fees and disbursements) that may be
incurred by Landlord or New Tenant, respectively, with respect to any
Commissions payable in connection with the Sublease Transactions that result
from the actions of Current Tenant. New Tenant hereby indemnifies and agrees to
protect, defend, and hold Landlord and Current Tenant harmless from and against
any and all claims, losses, damages, costs, and expenses (including reasonable
attorneys’ fees and disbursements) that may be incurred by Landlord or Current
Tenant, respectively, with respect to any Commissions payable in connection with
the Sublease Transactions that result from the actions of New Tenant.

(c)    Counterparts: This Sublease Consent may be executed in any number of
counterparts, each of which shall be deemed an original and all of which, taken
together, shall constitute a single agreement with the same effect as if all
Parties had signed the same signature page. Any signature page from any
counterpart of this Sublease Consent, signed only by one Party, may be detached
from such counterpart and re-attached to any other counterpart of this Sublease
Consent that has a signature page signed only by one or both of the other
Parties.

(d)    Notices: All notices or other communications hereunder shall be in
writing and may be given personally, by reputable overnight delivery service
(including overnight U.S. mail), or by facsimile transmission (with in the case
of a facsimile transmission, confirmation by reputable overnight delivery
service) to the Parties at the following addresses:

 

If to Landlord:    With a copy to:

c/o Alexandria Real Estate Equities, Inc.

135 N. Los Robles Ave., Suite 250

Pasadena, California 91101

   McKay, Meyer and Herbert

1801 Century Park East, 25th Floor

Los Angeles, California 90067-2327

Attention:    Corporate Secretary    Attention:    David S. Meyer, Esq. Re:   
343 Oyster Point    Re:    343 Oyster Point Facsimile:    626-578-0770   
Facsimile:    310-772-0239 If to New Tenant:    With a copy to:

diaDexus, Inc.

343 Oyster Point Boulevard

South San Francisco, CA 94080

   Latham & Watkins

505 Montgomery Street, Suite 1900

San Francisco, California 94111

Attention:    Ms. Sharon Tetlow    Attention:    Kenneth Whiting, Esq. Re:   
Virologic, Inc.    Re:    diaDexus, Inc. Facsimile:    650-246-6503   
Facsimile:    415-395-8095

 

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If to Current Tenant:

  

With a copy to:

Virologic, Inc.

  

Virologic, Inc.

345 Oyster Point Boulevard

  

345 Oyster Point Boulevard

South San Francisco, CA 94080

  

South San Francisco, CA 94080

Attention:

  

Ms. Karen Wilson

  

Attention:

  

Kathy Hibbs, Esq.

Re:

  

343 Oyster Point

  

Re:

  

Virologic, Inc.

Facsimile:

  

650-635-1111

  

Facsimile:

  

650-635-1111

(e)    Amendments; Waivers: No amendment, modification, supplement, or waiver of
this Sublease Consent shall be binding unless executed in writing by the Party
to be bound thereby. No waiver of any provision of this Sublease Consent shall
be deemed a waiver of any other provision of this Sublease Consent (whether or
not similar), nor shall such waiver be deemed a continuing waiver unless
otherwise expressly provided.

(f)    Construction: This Sublease Consent shall not be construed more strictly
against one Party than against any other Party merely by virtue of the fact that
this Sublease Consent may have been prepared by counsel for one of the Parties.
Further, no inferences are to be drawn, and no conclusions are to be made, based
on the fact that a particular provision contained in a draft of this Sublease
Consent is not included in the executed version of this Sublease Consent, and no
differences between drafts of this Sublease Consent and the executed version of
this Sublease Consent may be used as evidence of the Parties’ intended
interpretation of any of the terms of this Sublease Consent.

(g)    Integration: This Sublease Consent and the Assignment Consent constitute
the entire agreement among the Parties with respect to Landlord’s consent to the
Sublease Transactions and the Assignment Transactions and is intended by the
Parties to be the final expression and the complete and exclusive statement of
the terms of such agreement, and supersedes all prior agreements,
understandings, negotiations, and discussions of the Parties, whether oral or
written, and there are no other agreements, express or implied, made by the
Parties in connection with Landlord’s consent to the Sublease Transactions and
the Assignment Transactions, except as may be specifically set forth in any
documents delivered pursuant hereto or in connection herewith.

(h)    Further Assistance: Each Party agrees to perform, execute, and/or deliver
or cause to be performed, executed, and/or delivered any further acts,
instruments, and assurances as may be reasonably required to accomplish the
purposes of this Sublease Consent.

 

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(i)    Successors and Assigns; Third Parties: All of the rights, duties,
benefits, liabilities, and obligations of the Parties under this Sublease
Consent shall inure to the benefit of, and be binding upon, their respective
successors and assigns. Nothing expressed or implied in this Sublease Consent is
intended or shall be construed to confer upon or give to any person or entity,
other than the Parties and their successors or assigns, any rights or remedies
under or by reason of this Sublease Consent.

IN WITNESS WHEREOF, the Parties have executed this Sublease Consent effective as
of the Effective Date.

 

LANDLORD:

ARE-TECHNOLOGY CENTER SSF, LLC,

a Delaware limited liability company

By:        

 

ALEXANDRIA REAL ESTATE EQUITIES, L.P.,

a Delaware limited partnership, managing member

 

By:        

 

ARE-QRS CORP.,
a Maryland corporation, general partner

   

By:

 

/s/ Jim Ricardson

   

Print Name:

 

Jim Ricardson

   

Print Title:

 

President

CURRENT TENANT:

VIROLOGIC, INC., a Delaware corporation

By:

 

/s/ William D. Young

Print Name:  

William D. Young

Print Title:  

Chairman & CEO

NEW TENANT: DIADEXUS, INC., a Delaware corporation By:  

/s/ Sharon Tetlow

Print Name:  

Sharon Tetlow

Print Title:  

CFO

 

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ATTACHMENT 1

Copy of New Sublease

[ See Following Page(s) ]

 

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