Document:

Exhibit 10.49

 

CONSULTING AGREEMENT

 

Effective
April 27, 2010 (the “Effective Date”) P. Roy Vagelos, M.D., 82 Mosle Road,
Far Hills, NJ 07931 (“Consultant”) and Theravance, Inc., 901 Gateway
Boulevard, South San Francisco CA 94080 (“Theravance” or the “Company”) agree
as follows:

 

1.             Services
and Payment. Upon his retiring from the Theravance Board on April 27,
2010, Consultant agrees to continue to consult with and advise Theravance from
time to time, at Theravance’s request (“Services”) at mutually convenient
times, but in any event not more than once every three (3) months, for the
primary purpose of assisting the Chief Executive Officer and the Senior Vice
President—Research and Early Clinical Development with questions relating to
the business of Theravance. As full payment for the Services provided during
term of this Agreement:

 

(i) Consultant will receive a total consulting
fee of $80,000.00 for his Services during the term of this Agreement, payable
in equal monthly installments on the last day of each month beginning May 31,
2010;

 

(ii) Consultant will continue to vest in all of
his currently outstanding (a) options to purchase the Company’s common
stock and (b) restricted stock unit awards (RSUs) through the expiration
or earlier termination of this Agreement in accordance with the terms of such
options and RSUs (as the same may be amended from time to time, including as
contemplated by clauses (iii)( and (iv) below);

 

(iii) Consultant’s outstanding options to
purchase the Company’s common stock shall be amended to provide that such
options will remain exercisable with respect to any option shares that are
vested as of the termination of Consultant’s service for the length of the
option term, notwithstanding Consultant’s earlier cessation of service to the
Company, subject to earlier termination of such options in the event of certain
corporate transactions as described in Sections 11.2 and 11.3 of the Company’s
2004 Equity Incentive Plan; and

 

(iv) provided Consultant remains in continuous
Service through December 31, 2011, the last 2,408 shares subject to
Consultant’s RSU granted on April 22, 2008 scheduled to vest during
calendar 2012 shall instead vest on December 31, 2011.  Consultant understands that issuance of the
shares underlying any of his RSUs (settlement) will occur in accordance with
the terms of his RSUs.

 

Consultant shall also be entitled to reimbursement
for expenses for which Consultant has received prior approval from Theravance
within thirty (30) days of Consultant’s submission of receipts thereof.  Theravance will pay all o fConsultant’s
travel, lodging and related expenses where he is actively consulting.  Payment of the consulting fee will be made
within 30 days of the Company’s receipt of a reasonably detailed invoice from
Consultant.

 

 

2.             Ownership
of Inventions.  Theravance shall own
all right, title and interest (including patent rights, copyrights, trade
secret rights, trademark rights and all other rights of any sort throughout the
world) relating to any and all inventions (whether or not patentable),
including without limitation, discoveries, compositions of matter,
pharmaceutical formulations, methods of use, methods of making, techniques,
processes, formulas, improvements, works of authorship, designations, designs,
know-how, ideas and information made or conceived or reduced to practice, in
whole or in part, by Consultant (solely or jointly with others) during the term
of this Agreement that arise out of or relate to the Services or any
Proprietary Information (as defined below) (collectively, “Inventions”).  Consultant will promptly disclose, provide
and assign all Inventions to Theravance. 
Consultant shall further assist Theravance, at Theravance’s expense, to
further evidence, record and perfect such assignments, and to perfect, obtain,
maintain, enforce, and defend any rights assigned throughout the world. Such
assistance may include, but is not limited to, execution of documents and
assistance or cooperation in legal proceedings. 
Consultant hereby irrevocably designates and appoints Theravance as his
agent and attorney-in-fact to act for and on Consultant’s behalf to execute and
file any document and to do all other lawfully permitted acts to further the
foregoing with the same legal force and effect as if executed by Consultant.  When requested by Theravance, Consultant will
make available to Theravance all notes, data and other information relating to
any Invention.

 

3.             Proprietary
Information.  Consultant agrees that
all Inventions and other business, technical and financial information
concerning Theravance (including, without limitation, the identity of and
information relating to Theravance’s employees, vendors and service providers)
that Consultant develops, learns or obtains during the term of this Agreement
or while he is providing Services constitute “Proprietary Information.”  Consultant will hold in confidence and not
disclose or make available to third parties or make use of any Proprietary
Information except with the prior written consent of Theravance or to the
extent necessary in performing Services for Theravance.  However, Consultant shall not be obligated
under this paragraph with respect to information Consultant can document
(i) is or becomes readily publicly available without restriction through
no fault of Consultant, or (ii) that Consultant knew without restriction
prior to its disclosure by Theravance. 
Upon termination of this Agreement or as otherwise requested by
Theravance, Consultant will promptly return to Theravance all documents,
materials and copies containing or embodying Proprietary Information, except
that Consultant may keep a personal copy of (i) compensation records
relating to the Services and (ii) this Agreement.

 

4.             Solicitation.  As additional protection for Proprietary
Information, Consultant agrees that during the term of this Agreement and for
one year thereafter, Consultant will not encourage or solicit any employee of
or consultant to Theravance to leave Theravance for any reason.

 

5.             Term
and Termination.  This Agreement
shall become effective on the Effective Date and remain in force until the
earlier of December 31, 2011 or
when  terminated by either
party. Consultant may terminate this Agreement at any time, for any reason, by
giving Theravance thirty days advance written notice and Theravance will be
liable for the consulting

 

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fees
accrued through the end of the month in which the Agreement terminates.  Theravance may terminate this Agreement prior
to December 31, 2011 only for cause, which for purposes hereof shall
mean:  (i) the unauthorized use or
disclosure of the confidential information or trade secrets of the Company; (ii) conviction
of a felony under the laws of the United States or any state thereof; (iii) gross
negligence; (iv) a material breach of this Agreement which has not been
cured within ten days after receiving written notification from the Company; (v) failure
to perform lawful assigned Services as contemplated hereby for ten days after
receiving written notification from the Company. Theravance will be liable for
the consulting fees accrued through the end of the month in which the Agreement
terminates.  The Consultant is entitled
to the total consulting fee described in Section 1(i) above, unless,
prior to December 31, 2011, the Consultant terminates the Agreement or
Theravance terminates the Agreement for cause. 
All provisions of this Agreement and any remedies for breach of this
Agreement shall survive any termination or expiration.

 

6.             Relationship
of the Parties.  Notwithstanding any
provision hereof, for all purposes of this Agreement each party shall be and
act as an independent contractor and not as a partner, joint venturer, or agent
of the other and shall not bind nor attempt to bind the other to any
contract.  Consultant is an independent
contractor and is solely responsible for all taxes, withholdings, and other
statutory or contractual obligations of any sort, including, but not limited
to, Workers’ Compensation Insurance. Consultant recognizes and agrees that
Consultant has no expectation of privacy with respect to Theravance’s
telecommunications, networking or information processing systems (including,
without limitation, computer files, email messages and attachments, and voice
messages) and that Consultant’s activity, and any files or messages, on or
using any of those systems may be monitored at any time without notice.

 

7.             Assignment.  This Agreement and the Services performed
hereunder are personal to Consultant and Consultant shall not have the right or
ability to assign, transfer, or subcontract any obligations under this
Agreement without the written consent of Theravance.  Any attempt to do so shall be void.  Theravance shall not have the right to assign
or transfer this Agreement to a third party without the written consent of
Consultant.

 

8.             No
Conflict.  Consultant represents and
warrants that (i) his performance hereunder will not breach any agreement
or obligation to keep in confidence proprietary information acquired by
Consultant in confidence or trust prior to or during Consultant’s engagement
with Theravance, and (ii) all work under this Agreement will be Consultant’s
original work and none of the Services or Inventions or any development, use,
production, distribution or exploitation thereof will infringe, misappropriate
or violate any intellectual property or other right of any person or
entity.  Consultant represents and
warrants that he has not entered into, and agrees that he will not enter into,
any agreement whether written or oral in conflict with this Agreement or with
his obligations as a consultant to Theravance.

 

9.             Company
Policies.  Consultant represents that
he has read the Theravance Insider Trading Policy provided herewith and the
Theravance Code of Business Conduct located at
http://files.shareholder.com/downloads/THERA/558292177x0x249170/2b36461a-d8f6-44bf-901d-07448c4f42db/THERAconduct.pdf,

 

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and
agrees to abide by each such policy during the term of this Agreement.

 

10.           Remedies.  Any breach of Section 2, 3, 4 or 8 will
cause irreparable harm to Theravance for which damages would not be an adequate
remedy, and, therefore, Theravance will be entitled to injunctive relief with
respect thereto in addition to any other remedies.  The failure of either party to enforce its
rights under this Agreement at any time for any period shall not be construed
as a waiver of such rights.

 

11.           Entire
Agreement.  This Agreement supersedes
all prior agreements between the parties and constitutes the entire agreement
between the parties as to the subject matter hereof.

 

12.           Notices.  All notices, requests and other
communications called for by this Agreement shall be deemed to have been given
if made in writing and mailed, postage prepaid, to the address of each party
set forth above, or to such other addresses as either party shall specify to
the other.

 

13.           Amendments.  No changes or modifications or waivers to
this Agreement will be effective unless in writing and signed by both parties.

 

14.           Severability.  In the event that any provision of this
Agreement shall be determined to be illegal or unenforceable, that provision
will be limited or eliminated to the minimum extent necessary so that this
Agreement shall otherwise remain in full force and effect and enforceable.

 

15.           Arbitration.  Subject to the exceptions set forth below,
Consultant understands and agrees that any disagreement regarding this
Agreement will be determined by submission to arbitration as provided by Section 1280
et seq. of the California Code of Civil Procedure, and not by a lawsuit or
resort to court process proceedings.  The
only claims or disputes not covered by this paragraph are claims or disputes
related to issues affecting the validity, infringement or enforceability of any
trade secret or patent rights held or sought by Theravance or which Theravance
could otherwise seek; in which case such claims or disputes shall not be
subject to arbitration and will be resolved pursuant to applicable law.

 

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16.           Governing
Law.  This Agreement shall be
governed by and construed in accordance with the laws of the State of
California without regard to conflicts of law provisions thereof.  In any action or proceeding to enforce rights
under this Agreement, the prevailing party shall be entitled to recover costs
and attorneys fees.

 

 

	
  Consultant

  	
   

  	
  Theravance, Inc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/
  Roy Vagelos

  	
   

  	
  By:
  

  	
  /s/
  William H. Waltrip

  
	
      (signature)

  	
   

  	
   

  	
  (signature)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  William
  H. Waltrip

  
	
   

  	
   

  	
  Title:

  	
  Lead
  Independent Director

  
							

 

5Exhibit 10.50

 

FIRST AMENDMENT TO LEASE

 

THIS FIRST AMENDMENT TO LEASE (this “First
Amendment”) is made as of June 1, 2010 (“Effective
Date”), by and between ARE-901/951 GATEWAY BOULEVARD, LLC, a Delaware limited liability company
(“Landlord”), and THERAVANCE, INC., a Delaware corporation (“Tenant”).

 

RECITALS

 

A.            Landlord and Tenant are now parties
to that certain Lease Agreement dated January 1, 2001 (the “Lease”). 
Pursuant to the Lease, Tenant leases certain premises consisting of
approximately 110,428 rentable square feet (“Premises”)
in a building located at 901 Gateway Boulevard, South San Francisco,
California.  The Premises are more
particularly described in the Lease. 
Capitalized terms used herein without definition shall have the meanings
defined for such terms in the Lease.

 

B.            Landlord and Tenant desire, subject
to the terms and conditions set forth below, to amend the Lease to, among other
things, (i) extend the Term of the Lease, and (ii) provide Tenant
with an additional tenant improvement allowance.

 

NOW, THEREFORE, in
consideration of the foregoing Recitals, which are incorporated herein by this
reference, the mutual promises and conditions contained herein, and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Landlord and Tenant hereby agree as follows:

 

1.                                      Term.  The “Expiration Date”
of the Term of the Lease is hereby extended from March 31, 2012, until May 31,
2020.  From and after the Effective Date,
references in the Lease to “Term” shall mean the one hundred twenty (120)
months commencing on June 1, 2010 and expiring on May 31, 2020.

 

2.                                      Monthly Base Rent.  Notwithstanding anything to the contrary
contained in the Lease, commencing on the Effective Date of this First
Amendment, Monthly Base Rent shall be payable pursuant to the following table:

 

	
  Time
  Period

  	
   

  	
  Monthly Base Rent

  
	
  6/1/10 — 5/31/11

  	
   

  	
  $287,112.80 per month

  
	
  6/1/11 — 3/31/12

  	
   

  	
  $309,198.40 per month

  
	
  4/1/12 — 3/31/13

  	
   

  	
  $325,762.60 per month

  
	
  4/1/13 — 3/31/14

  	
   

  	
  $335,535.48 per month

  
	
  4/1/14 — 3/31/15

  	
   

  	
  $345,601.54 per month

  
	
  4/1/15 — 3/31/16

  	
   

  	
  $355,969.59 per month

  
	
  4/1/16 — 3/31/17

  	
   

  	
  $366,648.68 per month

  
	
  4/1/17 — 3/31/18

  	
   

  	
  $377,648.14 per month

  
	
  4/1/18 — 3/31/19

  	
   

  	
  $388,977.58 per month

  
	
  4/1/19 — 3/31/20

  	
   

  	
  $400,646.91 per month

  
	
  4/1/20 — 5/31/20

  	
   

  	
  $412,666.32 per month

  

 

Notwithstanding the foregoing, the above-referenced Monthly Base Rent
payable by Tenant (i) shall be reduced by $55,556.00 per month for the
period commencing June 1, 2010, through November 30, 2011, and (ii) shall
be increased by $62,223.00 for the period commencing December 1, 2011,
through May 31, 2013.

 

3.                                      Additional
Tenant Improvement Allowance. 
From and after the Effective Date, Landlord shall make available to
Tenant a tenant improvement allowance of up to $2,606,840.00 (the “Additional TI Allowance”) for the design and construction of
fixed and permanent 

 

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improvements in the Premises and in Tenant’s
premises located on the third floor of the adjacent Building located at 951
Gateway Boulevard (“951 Premises”)
desired by and performed by Tenant (provided that Tenant may not spend more
than $782,052.00 of the Additional TI Allowance in the 951 Premises), and which
improvements shall be of a fixed and permanent nature (the “Additional Tenant Improvements”).  Tenant acknowledges that (i) the
Additional Tenant Improvements shall be constructed pursuant to space plans
mutually agreed upon by Landlord and Tenant pursuant to this paragraph, and (ii) upon
the expiration of the Term of the Lease, the Additional Tenant Improvements
shall become the property of Landlord and Tenant shall not be obligated to
remove, and may not remove, the Additional Tenant Improvements at any time
during the Term, including upon the expiration or earlier termination of the
Lease.  Tenant shall deliver to Landlord
space plans detailing Tenant’s requirements for the Additional Tenant
Improvements following the preparation of the same by Tenant’s architect.  Not more than ten (10) days thereafter,
Landlord shall deliver to Tenant either written consent to the space plans,
which consent of the space plans shall not be unreasonably withheld,
conditioned or delayed, or the written objections, questions or comments of
Landlord with regard to the space plans. 
Representatives of both parties shall promptly make themselves available
to discuss and resolve any such objections, questions or comments.  In the event the parties cannot reach
agreement and resolve all disputed matters relating to any such documents, the
parties shall promptly meet and confer and negotiate in good faith to reach
agreement on any disputed matters. 
Tenant shall cause the space plans to be revised to address any
agreed-upon changes and shall resubmit said space plans to Landlord for
approval within five (5) business days thereafter.  Such process shall continue until Landlord
has reasonably approved the space plans. 
The foregoing process also shall apply to Tenant’s preparation of final
plans and specifications which describe the Additional Tenant Improvements and
are based on the approved space plans, and Landlord’s approval of the final
plans and specifications shall not be unreasonably withheld, conditioned or
delayed.  Notwithstanding anything to the
contrary contained herein, Tenant shall have the right to use up to $250,000 of
the Additional TI Allowance to purchase and install within the Premises
furniture, cubicles and other personal property and non-Building system
materials and equipment, including, but not limited to, Tenant’s voice or data
cabling, non-ducted biological safety cabinets and other scientific
equipment.  Except for the Additional TI
Allowance, Tenant shall be solely responsible for all of the costs of the
Additional Tenant Improvements.  The
Additional Tenant Improvements shall be treated as Alterations and shall be
undertaken pursuant to Paragraph 12 of the Lease, except to the extent the
provisions of Paragraph 12 conflict with the provisions of this Section 3,
in which case the provisions of this Section 3 shall control.  The contractor for the Additional Tenant
Improvements shall be selected by Tenant, subject to Landlord’s approval, which
approval shall not be unreasonably withheld, conditioned or delayed.  Prior to the commencement of construction of the
Additional Tenant Improvements, Tenant shall deliver to Landlord a copy of any
contract with Tenant’s contractors (including the architect), and certificates
of insurance from any contractor performing any part of the Additional Tenant
Improvements evidencing industry standard commercial general liability,
automotive liability, “builder’s risk”, and workers’ compensation
insurance.  Tenant shall cause the
general contractor to provide a certificate of insurance naming Tenant,
Landlord, Alexandria Real Estate Equities, Inc., and Landlord’s lender (if
any) as additional insureds for the general contractor’s liability coverages
required above.

 

During the course of design and construction
of the Additional Tenant Improvements, Landlord shall reimburse Tenant for the
cost of the Additional Tenant Improvements once a month against a draw request
in Landlord’s commercially reasonable standard form, containing evidence of
payment of the applicable costs and such certifications, lien waivers
(including a conditional lien release for each progress payment and
unconditional lien releases for the prior month’s progress payments),
inspection reports and other matters as Landlord reasonably and customarily
obtains, to the extent of Landlord’s approval thereof for payment, no later
than thirty (30) days following receipt of such draw request.  Upon completion of the Additional Tenant
Improvements (and prior to any final disbursement of the Additional TI
Allowance), Tenant shall provide to Landlord the following items: (i) sworn
statements setting forth the names of all contractors and subcontractors

 

2

 

who did work on the Additional Tenant
Improvements and final lien waivers from all such contractors and
subcontractors; and (ii) “as built” plans for the Additional Tenant
Improvements.  Notwithstanding the
foregoing, if the cost of the Additional Tenant Improvements exceeds the
Additional TI Allowance, Tenant shall be required to pay such excess.  Except as specifically provided in the
immediately following paragraph, the Additional TI Allowance shall only be
available for use by Tenant for the construction of the Additional Tenant
Improvements for a period of twenty-four (24) months following the Effective
Date of this First Amendment and any portion of the Additional TI Allowance
which has not been requested by Tenant for disbursement by Landlord on or
before June 30, 2012 shall be forfeited and shall not be available for use
by Tenant.

 

Notwithstanding anything to the contrary contained herein, Tenant may
elect to apply a portion of the Additional TI Allowance, up to $1,042,736.00,
to the payment of Monthly Base Rent due under the Lease.  Tenant shall notify Landlord in writing not
later than thirty (30) days prior to the first day of the month in which Tenant
desires that the credit against Monthly Base Rent commence (provided; however,
that in no event shall Tenant deliver such notice after June 30, 2012),
and Tenant’s notice shall state the amount of the Additional TI Allowance that
Tenant will take as a credit against Monthly Base Rent (“Rent Credit”).  The Rent Credit shall be applied to Monthly
Base Rent next coming due after the date of Tenant’s notice until credited in
full.

 

4.                                      Letter
of Credit.  The definition of “Letter of Credit” in the Basic Lease Information is hereby
deleted and replaced with the following:

 

“Letter of Credit:                 $833,333.33”

 

5.                                      Security
Deposit.  Effective as of the
Effective Date of this First Amendment, Paragraph 7 of the Lease is hereby
deleted in its entirety and replaced with the following:

 

“7.           Security
Deposit.  Tenant has deposited
with Landlord a security deposit (the “Security Deposit”)
for the performance of all of Tenant’s obligations hereunder in the amount set
forth in the Letter of Credit section in the Basic Lease Information, which
Security Deposit shall be in the form of an unconditional and irrevocable
stand-by letter of credit (the “Letter of Credit”):  (i) in form and substance reasonably
satisfactory to Landlord, (ii) naming Landlord as beneficiary, (iii) expressly
allowing Landlord to draw upon it at any time from time to time by delivering
to the issuer notice that Landlord is entitled to draw thereunder pursuant to
the terms of this Lease, (iv) issued by an FDIC-insured financial
institution reasonably satisfactory to Landlord (“LC Issuing
Bank”), (v) redeemable by presentation of LC Issuing Bank’s
sight draft in person, by nationally recognized overnight courier or by
facsimile; and (vi) having an expiration date not earlier than ninety (90)
days after the Expiration Date or, in the alternative, have a term of not less
than one (1) year and be automatically renewable for an additional one (1) year
periods (provided, however, that the final Letter of Credit shall not expire
earlier than ninety (90) days after the Expiration Date) unless, on or before
the date forty-five (45) days prior to the expiration of the term of such
Letter of Credit, the LC Issuer gives notice to Landlord of its election not to
renew such Letter of Credit for any additional period pursuant thereto.  If Tenant does not provide Landlord with a
substitute Letter of Credit complying with all of the requirements hereof at
least 10 days before the stated expiration date of any then current Letter of
Credit, Landlord shall have the right to draw the full amount of the current
Letter of Credit and hold the funds drawn in cash without obligation for
interest thereon as the Security Deposit. 
The Security Deposit shall be held by Landlord as security for the
performance of Tenant’s obligations under this Lease.  The Security Deposit is not an advance rental
deposit or a measure of Landlord’s damages in case of Tenant’s default.  Upon each occurrence of a Default (as defined
in Paragraph 24) by Tenant under this Lease, Landlord may use all or any part
of the Security Deposit to pay delinquent payments due under this Lease, future
rent damages under California Civil Code Section 1951.2, and the cost of
any damage, injury, expense or liability caused by such Default, without
prejudice

 

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to any other
remedy provided herein or provided by law. 
Landlord’s right to use the Security Deposit under this Paragraph 7
includes the right to use the Security Deposit to pay future rent damages
following the termination of this Lease pursuant to Paragraph 25.5 below.  Upon any use of all or any portion of the
Security Deposit, Tenant shall pay Landlord within twenty (20) days after
receipt of written demand the amount that will restore (by delivery of a
replacement or amended Letter of Credit) the Security Deposit to the amount set
forth in the definition of “Letter of Credit” set forth in the Basic Lease
Information of this Lease.  Tenant hereby
waives the provisions of any law, now or hereafter in force, including, without
limitation, California Civil Code Section 1950.7, which provide that
Landlord may claim from a security deposit only those sums reasonably necessary
to remedy defaults in the payment of rent, to repair damage caused by Tenant or
to clean the Premises, it being agreed that Landlord may, in addition, claim
those sums reasonably necessary to compensate Landlord for any other loss or
damage, foreseeable or unforeseeable, caused by the Default of Tenant  or any of Tenant’s Agents under this
Lease.  Upon bankruptcy or other
debtor-creditor proceedings against Tenant, the Security Deposit shall be
deemed to be applied first to the payment of Rent and other charges due
Landlord for periods prior to the filing of such proceedings, subject to
applicable bankruptcy law.  If Tenant
shall fully perform every provision of this Lease to be performed by Tenant and
Landlord is holding cash in the amount of the Letter of Credit or cash proceeds
therefrom, the Security Deposit, or any balance thereof (i.e., after deducting
therefrom all amounts to which Landlord is entitled under the provisions of
this Lease), shall be returned to Tenant within ninety (90) days after the
expiration or earlier termination of this Lease.  If, in lieu of a cash Security Deposit,
Landlord is holding the Letter of Credit upon the expiration or earlier
termination of this Lease, Landlord shall comply with the LC Issuer’s
requirements necessary to cancel the Letter of Credit by the date that is
ninety (90) days after the expiration or earlier termination of this Lease.

 

Notwithstanding anything contained in this Paragraph 7 to the contrary,
if Landlord draws on the Letter of Credit for any reason, then Tenant shall
have the right, upon ten (10) days’ prior written notice to Landlord, to
obtain a refund from Landlord of any unapplied proceeds of the Letter of Credit
which Landlord has drawn upon, any such refund being conditioned upon Tenant
simultaneously delivering to Landlord a replacement Letter of Credit in the amount
required by, and otherwise meeting the requirements contained in, this
Paragraph 7.

 

Notwithstanding anything to the contrary contained herein or in the 951
Gateway Lease, if requested by Landlord at any time following the date of this
Lease, Tenant shall cause the LC Issuing Bank to bifurcate the Letter of Credit
into two separate letters of credit, one securing Tenant’s obligations under
the 951 Gateway Lease and the other securing Tenant’s obligations under this
Lease.  Such bifurcated letters of credit
shall each be in an amount specified by Landlord, provided that the aggregate
amount of such letters of credit shall equal the amount of the Letter of Credit
immediately prior to such bifurcation. 
Concurrently with the bifurcation of the Letter of Credit, Landlord and
Tenant shall enter into a modification of the 951 Gateway Lease and a
modification of this Lease, which modifications shall amend Paragraph 7 of the
951 Gateway Lease and this Paragraph 7 to provide for separate, stand-alone
security deposit provisions in the 951 Gateway Lease and this Lease.

 

If Landlord transfers its interest in the
Project or this Lease, Landlord shall either (a) transfer any Security
Deposit then held by Landlord to a person or entity assuming Landlord’s
obligations under this Paragraph 7, or (b) return to Tenant any Security
Deposit then held by Landlord and remaining after the deductions permitted
herein.  Upon such transfer to such
transferee or the return of the Security Deposit to Tenant, Landlord shall have
no further obligation with respect to the Security Deposit, and Tenant’s right
to the return of the Security Deposit shall apply solely against Landlord’s
transferee.  Landlord’s obligation
respecting the Security Deposit is that of a debtor, not a trustee, and no
interest shall accrue thereon.

 

4

 

Notwithstanding anything to the contrary contained in this Lease,
Landlord shall have the right to apply all or any portion of the Security
Deposit in connection with any Defaults (as such term is defined in the 951
Gateway Lease) under the 951 Gateway Lease.

 

For avoidance of doubt, “Security Deposit” shall mean both the Letter
of Credit any cash proceeds therefrom.”

 

Tenant shall have up to sixty (60) days from the date of Tenant’s
execution of this First Amendment to provide Landlord with an amendment to the
Letter of Credit which complies with the requirements set forth in the first
paragraph of Section 7, as set forth above.

 

6.                                      Surrender
Plan.  Effective as of the Effective
Date of this First Amendment, Paragraph 32.9 of the Lease hereby is deleted in
its entirety and replaced with the following:

 

“32.9      Condition of Premises
upon Expiration or Termination. 
Upon the expiration of the Term or earlier termination of Tenant’s right
of possession, Tenant shall surrender the Premises to Landlord (y) free of
Hazardous Materials brought upon, kept, used, stored, handled, treated,
generated in, or released or disposed of from, the Premises by Tenant or Tenant’s
Agents (“Tenant HazMat Operations”) in a manner
consistent with prudent commercial practices and such that no Hazardous
Materials resulting from Tenant HazMat Operations remain at the Premises in
violation of Environmental Requirements and the continued presence of such Hazardous
Materials are not in excess of industry standards for the occupancy and re-use
of the Premises for research and scientific purposes by a subsequent tenant of
the Premises, and (z) released of any license, clearance or other
authorization of any kind issued by any governmental authority having
jurisdiction over the use, storage, handling, treatment, generation, release,
disposal, removal or remediation of Hazardous Materials in, on or about the
Premises (collectively referred to herein as “Hazardous
Materials Clearances”).  At
least 3 months prior to the surrender of the Premises, Tenant shall deliver to
Landlord a narrative description of the actions proposed (or required by any
governmental authority) to be taken by Tenant in order to surrender the
Premises (including any installations permitted by Landlord to remain in the
Premises) at the expiration or earlier termination of the Term, free from any
residual impact from the Tenant HazMat Operations and in a manner consistent
with prudent commercial practices and such that no Hazardous Materials
resulting from Tenant HazMat operations remain at the Premises in violation of
Environmental Requirements and the continued presence of such Hazardous
Materials are not in excess of industry standards for the occupancy and re-use
of the Premises for research and scientific purposes by a subsequent tenant of
the Premises (the “Surrender Plan”).  Such Surrender Plan shall be accompanied by a
current listing of (i) all Hazardous Materials licenses and permits held
by or on behalf of any of Tenant or Tenant’s Agents with respect to the
Premises, and (ii) all Hazardous Materials used, stored, handled, treated,
generated, released or disposed of or from the Premises by Tenant or Tenant’s
Agents, and shall be subject to the review and approval of Landlord’s
environmental consultant, which approval shall not be unreasonably withheld,
conditioned or delayed.  In connection
with the review and approval of the Surrender Plan, upon the request of
Landlord, Tenant shall deliver to Landlord or its consultant such additional
non-proprietary information concerning Tenant HazMat Operations as Landlord
reasonably shall request.  On or before
such surrender, Tenant shall deliver to Landlord commercially reasonable
evidence that the approved Surrender Plan has been satisfactorily completed and
Landlord shall have the right, subject to reimbursement at Tenant’s expense as
set forth below, to cause Landlord’s environmental consultant to inspect the
Premises and perform such additional procedures as may be deemed reasonably
necessary to confirm that the Premises are, as of the effective date of such
surrender or early termination of the Lease, free from any residual impact from
Tenant HazMat Operations as required pursuant to this Paragraph 7.  Tenant shall reimburse Landlord, as
Additional Rent, for the actual out-of pocket expense incurred by Landlord for
Landlord’s environmental consultant to review and approve the Surrender Plan
and to visit the Premises and verify satisfactory completion of the same, which
cost shall not exceed $5,000.  Landlord
shall have the unrestricted right to deliver

 

5

 

such Surrender Plan (subject to any standard
non-reliance letter, if any, prepared by Tenant and delivered by Tenant to
Landlord concurrently with Tenant’s delivery of the Surrender Plan to Landlord,
which non-reliance letter shall be applicable only to third parties other than
Landlord) and any report by Landlord’s environmental consultant with respect to
the surrender of the Premises to Landlord’s potential tenants, purchasers,
lenders and other third parties with a need to know in connection with Landlord’s
business; provided, however, that Landlord instructs such parties to treat the
same as confidential.

 

If Tenant shall fail to prepare or submit a Surrender Plan reasonably
approved by Landlord, or if Tenant shall fail to complete the approved
Surrender Plan, or if such Surrender Plan, whether or not approved by Landlord,
shall fail to adequately address any residual effect of Tenant HazMat
Operations in, on or about the Premises, shall fail to adequately address any
Hazardous Materials resulting from Tenant’s HazMat Operations remaining at the
Premises in violation of Environmental Requirements or in a manner not
consistent with prudent commercial practices or such that the continued
presence of such Hazardous Materials are in excess of industry standards for
the occupancy and re-use of the Premises for research and scientific purposes
by a subsequent tenant of the Premises, 
Landlord shall have the right to take such actions as Landlord
reasonably may deem reasonable or appropriate to assure that the Premises and
the Project are surrendered free from any such residual impact from Tenant
HazMat Operations, the cost of which actions shall be reimbursed by Tenant as
Additional Rent, without regard to the limitation set forth in the first
paragraph of this Paragraph 32.9.

 

All obligations of Tenant hereunder not fully performed as of the
expiration or earlier termination of this Lease, including the obligations of
Tenant under Paragraph 32 of this Lease, shall survive the expiration or
earlier termination of the Term, including, without limitation, indemnity
obligations, payment obligations with respect to rent and obligations
concerning the condition and repair of the Premises.”

 

7.                                      Option
to Renew.  Tenant shall have two (2) options
(each a “Renewal Option”) to extend the term of
this Lease with respect to the entire Premises for successive periods of five (5) years
each (each a “Renewal Term”) pursuant to the
provisions of Paragraph 49 of the Lease.

 

8.                                      Right
of First Offer.  Notwithstanding
anything to the contrary contained herein or in the Lease, Paragraph 51 of the
Lease is hereby deleted in its entirety and of no further force or effect and
Tenant shall have no further right of first offer or other right to purchase
the Building.

 

9.                                       Additional Modifications to Lease.  From and after the Effective Date of this
First Amendment, the Lease shall be modified as follows:

 

a.                                       Modification
to Basic Lease Information.  The
Tenant’s Contact Person shall be “General Counsel” rather than “Marty Glick”.

 

b.                                      Modification
to Paragraph 2.2(a), “Changes to Common Area”.  The following shall be added at the end of Paragraph
2.2(a):  “Notwithstanding the foregoing,
Landlord’s exercise of the foregoing rights shall not materially interfere with
Tenant’s access to or use of the Premises to the extent that Tenant’s business
operations are materially interrupted thereby.”

 

c.                                       Modification
to Paragraph 2.2(b), “Changes to Common Area”.  The second sentence of Paragraph 2.2(b) hereby
is deleted and revised to state in its entirety as follows:  “During periods of construction only,
Landlord shall have the right to provide parking to Tenant on properties
reasonably proximate to the Project (the “Adjacent Properties”)
or through the use of valets or parking attendants on the Parking Areas or the
Adjacent Properties,

 

6

 

provided that Tenant shall at all times have parking for the number of
automobiles contemplated under the Lease.”

 

d.                                      Modification
to Paragraph 4.2, “Additional Rent”. There shall be added to Paragraph 4.2
a new Paragraph 4.2.10, “Exclusions from Expenses”, which reads as follows:

 

“4.2.11    Exclusions
from Expenses.  Notwithstanding
anything to the contrary contained in this Paragraph 4.2, and in addition to
the exclusions set forth in the preceding paragraph, there shall be excluded
from Expenses and Additional Rent the following: (i) leasing commissions,
advertising expenses, promotional expenses, attorneys’ fees, disbursements, and
other costs and expenses incurred in procuring prospective tenants, negotiating
and executing leases, and constructing improvements required to prepare for a
new tenant’s occupancy for the Building or the Project, if any; (ii) finance
and debt service fees, principal and/or interest on debt or amortization
payments on any mortgages executed by Landlord covering Landlord’s property,
any other indebtedness of Landlord, and rental under any ground lease or leases
for the Building or the Project; (iii) any depreciation allowance or
expense, amortization (except for expenditures permitted under this Lease) or
expense reserve; (iv) the costs of Landlord’s third party property manager
or, if there is no third party property manager, administration rent in excess
of the amount of 3.0% of Base Rent); (v) except for management fees,
Landlord’s general overhead and any overhead or profit increment to any
subsidiary or affiliate of Landlord for services on or to the Project to the
extent that the cost of such service exceeds competitive costs for such
services rendered by persons or entities of similar skill, competence and
experience other than a subsidiary or affiliate of Landlord; (vi) any
costs or expenses representing any amount paid for services and materials to a
(personal or business) related person, firm, or entity to the extent such
amount exceeds the amount that would have been paid for such service or
materials at the then existing market rates in the absence of such
relationship; (vii) compensation paid to any employee of Landlord above
the grade of Property Manager/Building Superintendent, including officers and
executives of Landlord (provided that Landlord may pass through as Expenses
compensation paid to employees at or below the grade of Property
Manager/Building Superintendant or affiliates of Landlord providing services to
the Project); (viii) costs of electrical energy furnished and metered
directly to tenants of the Project or for which Landlord is entitled to be
reimbursed by tenants as additional rental over and above tenant’s Monthly Base
Rent or pass-through of Expenses; (ix) the cost of any work or service
furnished to any tenant or occupant of the Project to a materially greater
extent or in a materially more favorable manner than that furnished generally
to the tenants and other occupants of the Project, or the costs of work or
service furnished exclusively for the benefit of any tenant or occupant of the
Project or at such tenant’s cost; (x) the costs and expenses incurred in
resolving disputes with other tenants, other occupants, or prospective tenants
or occupants of the Project, collecting rents or otherwise enforcing leases of
the tenants of the Project; (xi)  the costs of any work or service
performed for any facility other than a facility located within the Project; (xii) the
costs of repairs, alterations, and general maintenance necessitated by the
gross negligence or willful misconduct of Landlord or its agents, employees, or
contractors or repairs; (xiii) interest or penalties due to the late
payment by Landlord of taxes, utility bills or other such costs (except to the
extent caused by Tenant’s action or inaction); (xiv) any of the following
tax or assessment expenses: (a) estate, inheritance, transfer, gift,
federal, state or franchise taxes of Landlord, or (b) penalties and
interest, other than those attributable to Tenant’s failure to comply timely
with its obligations pursuant to this Lease; and (xv) bad debt expenses
and charitable contributions and donations. 
Landlord agrees that (a) Landlord will not collect or be entitled
to collect more than one hundred percent (100%) of the Expenses actually paid
by Landlord in connection with the operation of the Project in any calendar
year, and (b) Landlord shall make no profit from Landlord’s collection of
Expenses.”

 

7

 

e.                                       Modifications
to Paragraph 15, “Tenant’s Insurance”. 
The third sentence of Paragraph 15.2 hereby is revised in its entirety
to state:  “No such policy shall contain
a deductible greater than Twenty-Five Thousand Dollars ($25,000.00).  Paragraph 15.5 hereby is deleted and revised
to state in its entirety as follows:  “All
insurance required to be carried by Tenant hereunder shall be maintained with
insurance companies authorized to do business in the State of California for
the issuance of the applicable type of insurance coverage and rated A-VII or
better in Best’s Key Rating Guide. 
Tenant shall deliver to Landlord certificates of insurance and true and
complete copies of any and all endorsements required herein for all insurance
required to be maintained by Tenant hereunder at the execution of this Lease by
Tenant.  Tenant shall, at least thirty
(30) days prior to expiration of each policy, furnish Landlord and the other
parties named as additional insureds with certificates of renewal thereof.  Tenant shall (i) provide Landlord with
30 days advance written notice of cancellation of each policy, and (ii) require
Tenant’s insurer to endeavor to provide 30 days advance written notice of
cancellation of each policy.”

 

f.                                         Modification
to Paragraph 23.2, “Assignment and Subletting — Requirements of Request for
Consent”.  Paragraph 23.2 shall be
amended to provide that if Tenant requests consent to a proposed assignment or
subletting (except in connection with a Permitted Transfer), whether or not the
term of the proposed transfer is for the balance of the Term, Landlord shall
have the right to recapture that portion of the Premises that is the subject of
the proposed assignment or subletting and terminate the Lease with respect
thereto; provided, however, that subsection (3) of Paragraph 23.2 shall be
of no further force or effect and Landlord shall not have the right to sublease
or take an assignment, as the case may be, of the interest in the Lease that is
at issue.

 

g.                                      Modification
to Paragraph 24, “Tenant’s Default”. 
The following is hereby added at the end of Paragraph 24.(a):  “provided, however, that if Tenant vacates
the Premises at any time during the last nine (9) months of the Term but
continues to perform all of its obligations hereunder, including, without
limitation, maintaining all insurance policies required by this Lease and
complying with all of the surrender requirements of Paragraph 32.9, Tenant
shall not be deemed to be in default under this Paragraph 24.(a);”.

 

h.                                      Modification
to Paragraph 32.2, “Tenant’s Obligation to Update Disclosure Certificates”.  The first sentence of Paragraph 32.2 hereby
is deleted and revised to state in its entirety as follows:  “Within ten (10) business days after
receipt of Landlord’s written request, Tenant shall complete, execute and
deliver to Landlord an updated Disclosure Certificate (each, an “Updated
Disclosure Certificate”) describing Tenant’s then current and proposed future
uses of Hazardous Materials on or about the Premises, which Update Disclosure
Certificates shall be in the same format as that which is set forth in Exhibit D
or in such other form as is reasonably acceptable to Landlord”.

 

i.                                          Modification
to Paragraph 34, “Waiver”.  The last
two sentences of Paragraph 34 hereby are deleted and revised to state in their
entirety as follows:  “No delay or
omission in the exercise of any right or remedy of Landlord or Tenant in regard
to any default by the other shall impair such right or remedy or be construed
as a waiver.  Any waiver by Landlord or
Tenant of any default must be in writing and shall not be a waiver of any other
default concerning the same or any other provisions of this Lease.”

 

j.                                          Modification
to Paragraph 40, “Financial Statements”. 
Paragraph 40 hereby is deleted and revised to state in its entirety as
follows:  “Within ten (10) days
after Landlord’s request, Tenant shall deliver to Landlord the then current, or
if Tenant is a publicly traded company, the most recent publicly available
financial statements of Tenant prepared, compiled or reviewed by a certified
public accountant, including a balance sheet and 

 

8

 

profit and loss statement for the most recent prior year, all prepared
in accordance with GAAP.”.

 

k.                                       New
Paragraphs.  The following new
paragraphs are hereby added to the Lease:

 

“54.        Commercially
Reasonable.  Where
Landlord or Tenant are required to use “best efforts” in the performance of any
obligation under this Lease, “best efforts” shall mean “commercially reasonable
good faith efforts.”

 

“55.        Force
Majeure.  Whenever a
period of time is herein prescribed for action (other than the payment of
money) to be taken by Landlord or Tenant, such party shall not be liable or
responsible for, and there shall be excluded from the computation for any such
period of time, any delays due to strikes, riots, acts of God, shortages of
labor or materials, war, terrorist activity, governmental laws, regulations or
restrictions”.

 

10.                                 Brokers.  Landlord and Tenant each represents and
warrants that it has not dealt with any broker, agent or other person (collectively,
“Broker”) in connection with this First
Amendment and that no Broker brought about this transaction, other than BT
Cassidy/Turley.  Landlord and Tenant each
hereby agree to indemnify and hold the other harmless from and against any
claims by any Broker, other than the broker, if any named in this Section 11,
claiming a commission or other form of compensation by virtue of having dealt
with Tenant or Landlord, as applicable, with regard to this First
Amendment.  Landlord shall pay any
commission due to BT Cassidy/Turley in connection with this First Amendment
pursuant to a separate written agreement between Landlord and BT
Cassidy/Turley.

 

11.                                 OFAC.  To Tenant’s knowledge, without any duty of
inquiry, as of the date of Tenant’s execution of this First Amendment, Tenant
is currently (a) in compliance with and shall at all times during the Term
of the Lease remain in compliance with the regulations of the Office of Foreign
Assets Control (“OFAC”) of the U.S. Department of
Treasury and any statute, executive order, or regulation relating thereto
(collectively, the “OFAC Rules”), (b) not
listed on, and shall not during the term of the Lease be listed on, the
Specially Designated Nationals and Blocked Persons List maintained by OFAC
and/or on any other similar list maintained by OFAC or other governmental
authority pursuant to any authorizing statute, executive order, or regulation,
and (c) not a person or entity with whom a U.S. person is prohibited from
conducting business under the OFAC Rules.

 

12.           Miscellaneous.

 

a.             This
First Amendment is the entire agreement between the parties with respect to the
subject matter hereof and supersedes all prior and contemporaneous oral and
written agreements and discussions.  This
First Amendment may be amended only by an agreement in writing, signed by the
parties hereto.

 

b.             This
First Amendment is binding upon and shall inure to the benefit of the parties
hereto, their respective agents, employees, representatives, officers,
directors, divisions, subsidiaries, affiliates, assigns, heirs, successors in
interest and shareholders.

 

c.             Landlord
and Tenant each acknowledge that it has read the provisions of this First
Amendment, understands them, and is bound by them. Time is of the essence in
this First Amendment.

 

d.             This
First Amendment may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which when taken together shall
constitute one and the same instrument. 
The signature page of any counterpart may be detached therefrom
without impairing the legal effect of the signature(s) thereon provided
such signature page is attached to 

 

9

 

any other counterpart identical thereto
except having additional signature pages executed by other parties to this
First Amendment attached thereto.

 

e.             Except
as amended and/or modified by this First Amendment, the Lease is hereby
ratified and confirmed and all other terms of the Lease shall remain in full
force and effect, unaltered and unchanged by this First Amendment.  In the event of any conflict between the
provisions of this First Amendment and the provisions of the Lease, the
provisions of this First Amendment shall prevail.  Whether or not specifically amended by this
First Amendment, all of the terms and provisions of the Lease are hereby
amended to the extent necessary to give effect to the purpose and intent of
this First Amendment.

 

[Signatures are on the next page.]

 

10

 

IN WITNESS WHEREOF,
the parties hereto have executed this First Amendment as of the day and year
first above written.

 

	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  THERAVANCE, INC.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
  /s/ Rick E Winningham

  
	
   

  	
   

  
	
   

  	
  By: Rick E Winningham

  
	
   

  	
  Its: Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  ARE-901/951 GATEWAY BOULEVARD, 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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  /s/ Eric S. Johnson

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By: Eric S. Johnson

  
	
   

  	
   

  	
   

  	
  Its: Vice President, Real Estate Legal Affairs

  
	
   

  	
   

  	
   

  	
   

  

11

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