exv10w35



 





Exhibit 10.35




SECOND AMENDMENT TO LEASE




     THIS
SECOND AMENDMENT TO LEASE (“Amendment”) is dated as of August 28, 2007 (the
“Effective Date”) and is entered into between BRITANNIA HACIENDA VIII LLC, a Delaware limited
liability company (“Landlord”) and ALEXZA
PHARMACEUTICALS, INC. a Delaware corporation
(“Tenant”), with reference to the following facts:



Recitals




     A. Landlord and Tenant are parties to a Lease dated as of August 25, 2006 (the
“Initial Lease”), covering premises consisting of the building commonly known as 2091
Stierlin Court (the “Initial Premises”) in the Britannia Shoreline Technology Park in Mountain
View, California, containing approximately 65,604 square feet of space. The term of the Initial
Lease is scheduled to expire on March 31, 2018, subject to two 5-year renewal options as set forth
in the Initial Lease.



     B. Landlord and Tenant are parties to a First Amendment to Lease dated as of
May 4, 2007 (the “First Amendment”) covering premises consisting of the building
commonly known as 2023 Stierlin Court (the “Expansion Premises”) in the Britannia Shoreline
Technology Park in Mountain View, California, containing approximately 41,290 square feet of space.
Tenant’s occupancy of the Expansion Premises will occur on a phased basis as more particularly
set forth in the First Amendment, and the term of that occupancy is the remainder of the term
of the Initial Lease (subject to the renewal described above).



     C. Landlord and Tenant wish to amend the Lease to provide an increase in the
Tenant Improvement Allowance to be provided by Landlord with respect to the Initial Premises,
subject to and as more particularly set forth in this Amendment.



     D. For purposes of this Amendment and of the Initial Lease as modified by this
Amendment, the term “Lease” means the Initial Lease as modified by the First Amendment
and this Amendment; the term “Initial TI Allowance” means the Tenant Improvement Allowance
of up to $8,331,708 as provided in the Initial Lease; the term “Lease Year” means a
twelve (12) month period commencing on the Rent Commencement Date or on an anniversary of the Rent
Commencement Date, as applicable; and the term “Rent” means the monthly minimum rent
payable with respect to the Initial Premises under Section 3.1 (a) of the Initial Lease.
Capitalized terms used in this Amendment as defined terms but not specifically defined in this Amendment
have the meanings assigned to such terms in the Initial Lease.



Agreement




     NOW, THEREFORE, in consideration of the recitals above, the mutual agreements contained in
this Amendment and for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Landlord and Tenant agree as follows:



     1. Increase in Tenant Improvement Allowance. Subject to Section 3 of this
Amendment, from and after the Effective Date, the Tenant Improvement Allowance, as defined in
Section 3 of the Workletter attached to the Initial Lease as Exhibit B, is hereby increased
by



 









 




an amount of up to $100.60 per square foot of the Initial Premises for construction of tenant
improvements in the Initial Premises, and the aggregate available amount of such increase
($6,600,000) is referred to in this Amendment as the
“Additional TI Allowance.” Except as
specifically set forth in this Amendment, the Additional TI Allowance and Tenant’s use thereof
toward the Cost of Improvements of Tenant Improvements are subject to all the terms and conditions
applicable to the Tenant Improvement Allowance and the use thereof under the Initial Lease,
including (without limitation) those terms and conditions contained in the Workletter. For example,
(i) in no event shall the Additional TI Allowance be used or useable by Tenant for any cost or
expense associated with any moveable furniture, trade fixtures or personal property, and (ii) the
cost of any refurbishments, alterations or improvements made by Tenant that are not eligible for
expenditure of Additional TI Allowance funds, and any amount by which the cost of permissible
refurbishments, alterations and improvements made by Tenant exceeds the available Additional TI
Allowance, shall be Tenant’s sole cost and expense. For the avoidance of doubt, in no event shall
the Additional TI Allowance be used or useable by Tenant for any cost or expense associated with
the Expansion Premises.




     2. No Effect on Other Tenant Improvement Allowances. The terms and conditions
applicable to the Initial TI Allowance shall remain unchanged and are not modified by this
Amendment. For example, the date on which the Initial TI Allowance expires shall be the date
that is one year after the Rent Commencement Date, as provided in the Initial Lease. Likewise,
the terms and conditions applicable to the Expansion Premises TI Allowance, as defined in the
First Amendment, shall remain unchanged and are not modified by this Amendment.



     3. Expiration of Additional TI Allowance. The Tenant is entitled to the Additional
TI Allowance as set forth in this Amendment but is not required to use any portion or all of
the Additional TI Allowance. Any portion of the Additional TI Allowance that has not been claimed
or drawn by Tenant as of March 31, 2008 shall expire and shall no longer be available to
Tenant thereafter.



     4. Availability of Additional TI Allowance. The Additional TI Allowance shall be
available to Tenant in three tranches. The “First Tranche” means any portion of the first
$2,600,000 of the Additional TI Allowance actually used by Tenant.
The “Second Tranche”
means any portion of the next $2,000,000 of the Additional TI Allowance actually used by
Tenant. The “Third Tranche” means any portion of the final $2,000,000 of the Additional TI
Allowance actually used by Tenant



     5. Repayment of Additional TI Allowance. The Additional TI Allowance shall be
subject to the following methods of cost recovery, all of which are based on the entire square
feet of space in the Initial Premises. The Additional TI Allowance is provided as part of the basic
consideration to Tenant under this Amendment and will not result in any rental adjustment or
additional rent beyond the minimum monthly rental expressly provided in the Lease except as
set forth in this Section 5. Schedule 1 attached hereto provides a sample calculation for
the following methods of cost recovery.



          (a) First Tranche. If Tenant draws down any portion of the First Tranche, then
from and after the date of each disbursement of First Tranche funds by Landlord, (i) Rent for the
remainder of the Lease Year in which such disbursement occurs shall be increased,




- 2 -









 







commencing on the first day of the calendar month following the month in which such disbursement of
First Tranche funds by Landlord occurs, by a monthly amount equal to eight hundred thirty-three
one-thousandths of a percent (0.833%) of the amount of such disbursement (the amount of such
increase is referred to herein as the “First Tranche Additional Monthly Rent”), and (ii) at
the beginning of each subsequent Lease Year during the initial term of the Lease, the First Tranche
Additional Monthly Rent shall be increased by three percent (3.0%) over the First Tranche
Additional Monthly Rent payable during the immediately preceding Lease Year. Such increases shall
be in addition to any increases in Rent pursuant to Section 3.1(a) of the Initial Lease. The First
Tranche Additional Monthly Rent will become part of monthly minimum rent payable with respect to
the Initial Premises for all purposes under the Initial Lease, and as such, will affect the monthly
minimum rental due pursuant to Section 3.1(b) of the Initial Lease during any extended term of the
Lease.




          (b) Second Tranche. If Tenant draws down any portion of the Second
Tranche, then from and after the date of the first disbursement of Second Tranche funds by
Landlord and continuing until the amortization of such amounts has been paid in full in the
manner described below, commencing on the first day of the calendar month following the
month in which such first disbursement of Second Tranche funds by Landlord occurs, Tenant
shall pay to Landlord, in addition to the Rent and any amounts due under Section 5(a) of this
Amendment, additional monthly rent (the “Second Tranche Additional Monthly Rent”) in
an
amount equal to the amount necessary to amortize the entire cumulative amount of the Second
Tranche funds drawn down by Tenant, over a seven (7) year period on a level-payment basis
with an implied interest rate of eleven percent (11%) per annum on the unamortized balance of
such Second Tranche funds outstanding from time to time. The parties acknowledge that to the
extent the Second Tranche funds are drawn down in two or more phases by Tenant, it will be
necessary for the Second Tranche Additional Monthly Rent to be recalculated following each
successive draw-down in order to reflect the additional amortization amounts attributable to
such
successive draw-down.




          (c) Third Tranche. If Tenant draws down any portion of the Third Tranche,
then from and after the date of the first disbursement of Third Tranche funds by Landlord and
continuing until the amortization of such amounts has been paid in full in the manner
described below, commencing on the first day of the calendar month following the month in which such
first disbursement of Third Tranche funds by Landlord occurs, Tenant shall pay to Landlord, in
addition to the Rent and any amounts due under Sections 5(a) and 5(b) of this Amendment,
additional monthly rent (the “Third Tranche Additional Monthly Rent”) in an amount
equal to the amount necessary to amortize the entire cumulative amount of the Third Tranche funds
drawn down by Tenant, over a five (5) year period on a level-payment basis with an implied
interest rate of twelve percent (12%) per annum on the unamortized balance of such Third
Tranche funds outstanding from time to time. The parties acknowledge that to the extent the
Third Tranche funds are drawn down in two or more phases by Tenant, it will be necessary for
the Third Tranche Additional Monthly Rent to be recalculated
following each successive draw-down in order to reflect the additional amortization amounts attributable to such successive
draw-down.




          (d) Acknowledgement of Revised Rent Schedule. Promptly following the
earlier to occur of (i) the entire Additional TI Allowance being claimed or drawn by Tenant
and




- 3 -









 







(ii) the expiration of the availability of the Additional TI Allowance pursuant to Section 3 of
this Amendment, Landlord and Tenant shall execute a written acknowledgement of the monthly minimum
rental due under the Lease (i.e., the Rent, First Tranche Additional Monthly Rent, Second Tranche
Additional Monthly Rent and Third Tranche Additional Monthly Rent) and related matters as affected
by this Amendment, which acknowledgement shall be deemed to be incorporated herein by this
reference. Notwithstanding the foregoing requirement, the failure of either party to execute such a
written acknowledgement shall not affect the determination of the monthly minimum rental due under
the Lease and related matters in accordance with the provisions of this Amendment.




          (e) Repayment Not a Loan. The parties acknowledge that Tenant’s repayment of the
Additional TI Allowance through the additional monthly rental amounts set forth in this Section 5
are a method of cost recovery and do not constitute a loan from Landlord. Any terminology similar
to that as might be used in connection with a loan (e.g., amortizations and interest rates), are
used solely for convenience in calculating the rates of such cost recovery and should not, and may
not, be used to imply any lending relationship between the parties.




     6. Brokers. Each party respectively (i) represents and warrants that no broker
participated in the consummation of this Amendment and (ii) agrees to indemnify, defend and hold
the other party harmless against any liability, cost or expense, including (but not limited to)
reasonable attorneys’ fees, arising out of any claims for brokerage commissions or other similar
compensation in connection with any conversations, prior negotiations, agreements or other dealings
by the indemnifying party with any broker in connection with this Amendment.



     7. Entire Agreement. This Amendment constitutes the entire agreement between
Landlord and Tenant regarding the subject matter hereof and supersedes all prior
negotiations, discussions, terms sheets, understandings and agreements, whether oral or written, between
the parties with respect to such subject matter (other than the Lease itself, as expressly
amended hereby).



     8. Execution
and Delivery. This Amendment may be executed in one or more counterparts and by separate parties on separate counterparts, effective when each party has
executed at least one such counterpart or separate counterpart, but each such counterpart
shall constitute an original and all such counterparts together shall constitute one and the same instrument.



     9. Full Force and Effect. Except as expressly set forth herein, the Lease has not
been modified or amended and remains in full force and effect.



[signature page follows]




- 4 -









 





     IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment as of the Effective Date.



	 	 	 	 	 	 	 
	“Landlord”	 	“Tenant”
	 
	 	 	 	 	 	 
	BRITANNIA HACIENDA VIII LLC,	 	ALEXZA PHARMACEUTICALS, INC.,
	a Delaware limited liability company	 	a Delaware corporation
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Thomas King	 	 
	 

	 	 	 	 	 	 
	By:
[ILLEGIBLE]

	 	Name:
	 	 Thomas King	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:
	 	President + CEO	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ August J. Moretti	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	August J. Moretti	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:
	 	SVP - CFO	 	 
	 

	 	 	 	 	 	 






- 5 -












 






Schedule 1




Sample Calculations Pursuant to Section 5 of Second Amendment to Lease




Alexza Pharmaceuticals

2001 Stlerlin Court

Square Feet     65,604     SF




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Additional TI Allowance Repayment
	Lease Periods	 	Existing Minimum Rent Schedule	 	First ATIA Tranche	 	Second ATIA Tranche	 	Third ATIA Tranche	 	Total	 	 	Adjusted
	Lease	 	Start	 	 	 	 	 	End	 	Square	 	Net Rent	 	Monthly	 	Net Rent	 	Monthly	 	Net Rent	 	Monthly	 	Net Rent	 	Monthly	 	Monthly	 	 	Total
	Months	 	Date	 	-	 	Date	 	Feet	 	PSF/MO	 	Min Rent	 	PSF/MO	 	FATIA Rent	 	PSF/MO	 	SATIA Rent	 	PSF/MO	 	TATIA Rent	 	ATIA Rent	 	 	Monthly Rent
	1-9
	 	Apr-07	 	 	—	 	 	Dec-07	 	 	[ILLEGIBLE]	 	 	$	3,000	 	 	$	105,000	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	 	$	105,000	 
	10-12
	 	Jan-08	 	 	—	 	 	Mar-08	 	 	[ILLEGIBLE]	 	 	$	3,000	 	 	$	105,000	 	 	$	0.33	 	 	$	21,667	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	21,667	 	 	 	$	126,667	 
	13-24
	 	Apr-08	 	 	—	 	 	Mar-09	 	 	[ILLEGIBLE]	 	 	$	3,000	 	 	$	150,000	 	 	$	0.34	 	 	$	22,317	 	 	$	0.52	 	 	$	34,245	 	 	$	0.34	 	 	$	22,244	 	 	$	78,806	 	 	 	$	228,506	 
	25-36
	 	Apr-09	 	 	—	 	 	Mar-10	 	 	[ILLEGIBLE]	 	 	$	3,070	 	 	$	201,404	 	 	$	0.35	 	 	$	22,986	 	 	$	0.52	 	 	$	34,245	 	 	$	0.34	 	 	$	22,244	 	 	$	79,475	 	 	 	$	280,880	 
	37-48
	 	Apr-10	 	 	—	 	 	Mar-11	 	 	[ILLEGIBLE]	 	 	$	3,162	 	 	$	207,440	 	 	$	0.36	 	 	$	23,676	 	 	$	0.52	 	 	$	34,245	 	 	$	0.34	 	 	$	22,244	 	 	$	80,165	 	 	 	$	287,505	 
	49-60
	 	Apr-11	 	 	—	 	 	Mar-12	 	 	[ILLEGIBLE]	 	 	$	3,257	 	 	$	213,672	 	 	$	0.37	 	 	$	24,386	 	 	$	0.52	 	 	$	34,245	 	 	$	0.34	 	 	$	22,244	 	 	$	80,875	 	 	 	$	294,548	 
	61-72
	 	Apr-12	 	 	—	 	 	Mar-13	 	 	[ILLEGIBLE]	 	 	$	3,355	 	 	$	220,101	 	 	$	0.38	 	 	$	25,118	 	 	$	0.52	 	 	$	34,245	 	 	$	0.34	 	 	$	22,244	 	 	$	81,607	 	 	 	$	301,708	 
	73-84
	 	Apr-13	 	 	—	 	 	Mar-14	 	 	[ILLEGIBLE]	 	 	$	3,455	 	 	$	226,662	 	 	$	0.39	 	 	$	25,871	 	 	$	0.52	 	 	$	34,245	 	 	$	—	 	 	$	—	 	 	$	60,116	 	 	 	$	266,778	 
	85-96
	 	Apr-14	 	 	—	 	 	Mar-15	 	 	[ILLEGIBLE]	 	 	$	3,559	 	 	$	233,455	 	 	$	0.41	 	 	$	26,647	 	 	$	0.52	 	 	$	34,245	 	 	$	—	 	 	$	—	 	 	$	60,892	 	 	 	$	294,377	 
	97-108
	 	Apr-15	 	 	—	 	 	Mar-16	 	 	[ILLEGIBLE]	 	 	$	3,666	 	 	$	240,504	 	 	$	0.42	 	 	$	27,447	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	27,447	 	 	 	$	267,951	 
	109-120
	 	Apr-16	 	 	—	 	 	Mar-17	 	 	[ILLEGIBLE]	 	 	$	3,776	 	 	$	247,721	 	 	$	0.43	 	 	$	28,270	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	28,270	 	 	 	$	275,991	 
	121-132
	 	Apr-17	 	 	—	 	 	Mar-18	 	 	[ILLEGIBLE]	 	 	$	3,889	 	 	$	255,134	 	 	$	0.44	 	 	$	29,118	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	29,118	 	 	 	$	284,252	 






	 	 	 	 	 	 	 	 	 
	 	 	ASSUMPTIONS:	 	First ATIA Tranche
	 	 	 	 
	 	 	 	 	(100% drawn on 12-31-2007)
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	[ILLEGIBLE]	 	 	 	Amount Utilized:
	 	$	2,600,000	 
	 	 	 	 	Rentalization Rate:
	 	 	10	%
	 	 	 	 	Rentalized Value:
	 	$21,687 per month
	 	 	 	 	psf
	 	$	0.33	 
	 	 	 	 	Annual Increases:
	 	 	3.0	%
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	Second ATIA Tranche
	 	 	 	 
	 	 	 	 	(100% drawn on 03-31-2008)
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	Amount Utilized:
	 	$	2,000,000	 
	 	 	 	 	Amortization Rate:
	 	 	11	%
	 	 	 	 	Term:
	 	7 Years
	 	 	 	 	Monthly Amortization:
	 	$34,245 per month
	 	 	 	 	psf
	 	$	0.52	 
	 	 	 	 	Annual Increases:
	 	Constant
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	Third ATIA Tranche
	 	 	 	 
	 	 	 	 	(50% drawn on 03-31-2008)
	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	Amount Utilized:
	 	$	1,000,000	 
	 	 	 	 	Amortization Rate:
	 	 	12	%
	 	 	 	 	Term:
	 	5 Years
	 	 	 	 	Monthly Amortization:
	 	$22,244 per month
	 	 	 	 	psf
	 	$	0.34	 
	 	 	 	 	Annual Increases:
	 	Constant