Build-to-suit Lease

Exhibit 10.5


BUILD-TO-SUIT LEASE


Landlord: Britannia Poinic Grand Limited Partnership


Tenant: MetaXen, LLC


Date: May 27, 1997


TABLE OF CONTENTS


1. PREMISES ......................................... 1 1.1 Lease of Premises ........................... 1 1.2 Landlord's Reserved Rights .................. 2 1.3 First Refusal Right ......................... 2


2. TERM ............................................. 3 2.1 Term ........................................ 3 2.2 Early Possession ............................ 3 2.3 Delay In Possession ......................... 3 2.4 Acknowledgment Of Lease Commencement ........ 4 2.5 Holding Over ................................ 4 2.6 Option To Extend Term ....................... 4


3. RENTAL ........................................... 5 3.1 Minimum Rental .............................. 5 3.2 Late Charge ................................. 6


4. STOCK WARRANTS ................................... 7 4.1 Stock Warrants .............................. 7


5. CONSTRUCTION ..................................... 7 5.1 Condition of Improvements ................... 7 5.2 Condition of Property ....................... 8 5.3 Compliance with Law ......................... 8


6. TAXES ............................................ 8 6.1 Personal Property ........................... 8 6.2 Real Property ............................... 8 6.3 Challenges .................................. 9


7. OPERATING EXPENSES ............................... 9 7.1 Payment Of Operating Expenses ............... 9 7.2 Definition Of Operating Expenses ............ 10 7.3 Determination Of Operating Expenses ......... 12 7.4 Final Accounting For Lease Yew .............. 13 7.5 Proration ................................... 13


8. UTILITIES ........................................ 13 8.1 Payment ..................................... 13 8.2 Interruption ................................ 14


9. ALTERATIONS; SIGNS ............................... 14 9.1 Right To Make Alterations ................... 14 9.2 Title To Alterations ........................ 14 9.3 Tenanl Fixtures ............................. 15 9.4 No Liens .................................... 15 9.5 Signs ....................................... 15


10. MAINTENANCE AND REPAIRS......................... 15 10.1 Landlord's Work ....... ..................... 15 10.2 Tenant's Obligation For Maintenance.......... 16
(a) Good Order. Condition And Repair......... 16
(b) Landlord's Remedy........................ 16
(c) Condition Upon Surrender................. 16


11. USE OF PREMISES................................. 16 11.1 Permitted Use................................ 16 11.2 [Omitted].................................... 16 11.3 No Nuisance.................................. 16 11.4 Compliance With Laws ........................ 17 11.5 Liquidation Sales............................ 17 11.6 Environmental Matters........................ 17


12.INSURANCE AND INDEMNITY........................... 20 12.1 Insurance ................................. 20 12.2 Quality Of Policies And Certificates......... 21 12.3 Workers' Compensation........................ 21 11.4 Waiver Of Subrogation........................ 21 12.5 Increase In Premiums......................... 21 12.6 Indemnification.............................. 21 12.7 Blanket Policy............................... 22


13.SUBLEASE AND ASSIGNMENT .......................... 22 13.1 Assignment And Sublease Of Property.......... 22 13.2 Rights Of Landlord........................... 23


14.RIGHT OF ENTRY AND QUIET ENJOYMENT................ 23 14.1 Right Of Entry............................... 23 14.2 Quiet Enjoyment.............................. 23


15.CASUALTY AND TAKING............................... 23 15.1 Termination Or Reconstruction................ 23 15.2 Tenant's Rights.............................. 24 15.3 Lease To Remain In Effect.................... 24 15.4 Reservation Of Compensation.................. 24 15.5 Restoration Of Fixtures...................... 24


16.DEFAULT........................................... 25 16.1 Events Of Default ........................... 25
(a) [Omitted]................................ 25
(b) Nonpayment .............................. 25
(c) Other obligations........................ 25
(d) General assignment....................... 25
(e) Bankruptcy .............................. 25
(f) Receivership ............................ 25
(g) Attachment .............................. 25
(h) Insolvency ................. ............ 25 16.2 Remedies Upon Tenant's Default............... 26 16.3 Remedies Cumulative....................... 26


17.SUBORDINATION, ATTORNMENT AND SALE................ 26 17.1 Subordination To Mortgage.................... 26 17.2 Sale Of Landlord's Interest ................. 27 17.3 Estoppel Certificates........................ 27 17.4 Subordination To CC&R'S...................... 27 17.5 Mortgagee Protection......................... 28


18. SECURITY ........................................ 28 18.1 DEPOSIT...................................... 28


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19 MISCELLANEOUS..................................... 29 19.1 Notices ..................................... 29 19.2 Successors And Assigns....................... 30 19.3 No Waiver ................................. 30 19.4 Scvcrability................................. 30 19.5 Litigation Between Panics.................... 30 19.6 Surrender.................................... 30 19.7 Interpretation .............................. 30 19.8 Entire Agreement............................. 30 19.9 Governing Law................................ 31 19.10 No Partnership............................... 31 19.11 Financial Information ....................... 31 19.12 [Omitted].................................... 31 19.13 Time......................................... 31 19.14 Rules And Regulations........................ 31 19.15 Brokers...................................... 31 19.16 Memorandum Of Lease ......................... 31 19.17 Authority.................................... 32 19.18 Execution and Delivery....................... 32 19.19 Survival..................................... 32


EXHIBITS


EXHIBIT A Real Property Description (Center)


EXHIBIT B Location of Premises (Site Plan)


EXHIBIT C Construction


EXHIBIT D Estimated Construction Schedule


EXHIBIT E Acknowledgment of Lease Commencement


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BUILD-TO-SUIT LEASE


THIS BUILD-TO-SUIT LEASE ("Lease") is made and entered into is of the 27th day of May 1997 by and between BRITANNIA POINTS GRAND LIMITED PARTNERSHIP, a Delaware limited partnership ("Landlord"), and METAXEN, LLC, a Delaware limited liability company ("Tenant").


THE PARTIES AGREE AS FOLLOWS:


1. PREMISES


1.1 Lease of Premises.


(a) Landlord leases to Tenant and Tenant hires and leases from Landlord, on the terms, covenants and conditions hereinafter set forth, the premises (the "Premises") designated in Exhibit B attached hereto and incorporated herein by this reference, consisting of the entire second floor (approximately 23.680 square feet) and a portion of the first floor (preliminarily estimated, for working purposes to consist of at least 4,000 square feet, for an aggregate estimated area of approximately 27,680 square feet) of a two-story building designated as Building H(the "Building") to be constructed by Landlord pursuant to Article 5 hereof and Exhibit C attached hereto in the Britannia Pointe Grand Business Park (the "Center") in the City of South San Francisco, County of San Mateo, Slate of California, located on East Grand Avenue on the real property described in Exhibit A attached hereto and incorporated herein by this reference (the "Property"). The parties contemplate that the plans for the first floor portion of the Premises will include an exclusive entrance, a reception area, loading dock access, an and for vibration-sensitive facilities, and both stair and elevator access to the second floor, with the size of the first floor space and the details of such facilities to be developed pursuant to the design process described in Article 5 hereof and Exhibit C attached hereto. The Building and the other improvements to be constructed pursuant to Article 5 hereof and Exhibit C attached hereto are sometimes referred to collectively herein as the "Improvements. The parking areas, driveways, sidewalks, landscaped areas and other portions of the Center that lie outside the exterior walls of the buildings now existing or to be constructed in the Center, as depicted oil the site plan attached hereto as Exhibit B. are sometimes referred to herein as the "Common Areas."


(b) As an appurtenance to Tenant's leasing of the Premises pursuant to Section 1.1 (a). Landlord hereby grants to Tenant, for the benefit of Tenant and its employees, agents, contractors, suppliers, shippers, customers and invitees, during the term of this Lease, the non-exclusive right to use, in common with others entitled to such use, (i) those portions of the Common Areas improved from time to lime for use as parking areas, driveways, sidewalks, landscaped areas, or for other common purposes, and (ii) all access easements and similar rights and privileges relating to or appurtenant to the Property and created or existing from time to time under any access easement agreements, declarations of covenants, conditions and restrictions, or other written agreements now or hereafter of record with respect to the Property, subject however to any limitations applicable to such rights and privilege, under applicable law and/or under the written agreements creating such rights and privileges Landlord represents that the Property shall include parking spaces available for use (on a non-exclusive basis) by tenents of the Building and their employees, agents and invitees at. the rate of 3.5 spaces per 1,000 square feet, and that Tenant shall be entitled to have five (5) parking spaces marked as being reserved for exclusive use by Tenant, at a location to be reasonably designated by Tenant.


(c) Subject to all of the terms and conditions of this paragraph (c). Tenant may by written notice to Landlord, elect to expand the Premises to include all or any portion of the Building not included within the initial Premises as described in Section l.l(a) (the "Option Space"). This option may be exercised by Tenant at any time during the period from the date of this Lease to the date which is four (4) months prior to the Commencement Date (the "Option Period"): provided, however, that for purposes of this paragraph (c), me Option Period shall be conclusively deemed to expire on the date specified in a written notice from Landlord to Tenant, which notice shall (i) specify the anticipated Commencement Date under this Lease (based on Landlord's best reasonable, good faith estimate, (ii) specify the date on which the Option Period will expire (which date shall be no less than ten (10) business days after the date such notice is delivered to Tenant), and (iii) shall be given no earlier then four and one-half months prior to the


Commencement Date as estimated reasonably and in good faith by Landlord in such notice. If this option is duly and timely exercised by Tenant, then (I) Landlord and Tenant shall proceed diligently to develop and agree upon a space plan and detailed plans and specifications for the Option Space, (II) Landlord shall proceed diligently to construct improvements to the Option Space in accordance with such plans and specifications, at Landlord's sole cost and expense (subject to the provisions of Section 3.1(c) hereof), (III) the Option Space shall be added to the Premises and rent and other charges shall commence with respect thereto upon the later to occur of (A) substantial completion of such improvements or (B) the date on which rent and such other charges commence with respect to the Premises, (IV) rent payable hereunder and Tenant's Operating Cost Share shall be adjusted to reflect the addition of the Option Space to the Premises, using the same rates and formulas pet square foot as are applicable to the original Premises hereunder, and (V) Tenant shall occupy the Option Space for the remaining term of this Lease upon and subject to all of the terms and provisions of this Lease, to the same extent and in the same manner as such terms and provisions are applicable to the original Premises hereunder.


1.2 Landlord's Reserved Rights. To the extent reasonably necessary to permit Landlord to exercise any rights of Landlord and discharge any obligations of Landlord under this Lease, Landlord shall have, in addition to the right of entry set forth in Section 14.1 hereof, the following rights: (i) to install, use, maintain, repair and replace pipes, ducts, conduits, wires and appurtenant meters and equipment for service to other parts of the Building above the ceiling. surfaces, below the floor surfaces, within the walls or leading through the Premises in locations which will not materially interfere with Tenant's use thereof, (ii) to relocate any pipes, ducts, conduits, wires and appurtenant meters and equipment included in the Premises which are so located or located elsewhere outside the Premises, (iii) to make changes, alterations or additions to the portions of the Building not occupied by Tenant and/or to the Common Areas, including, without limitation, changes in the location, size or shape of any portion of the Common Areas, and to relocate parking spaces on the Property (but not materially decrease the number of such parking spaces in areas of the Property generally adjacent to the Building); (iv) to close temporarily any of the Common Areas for maintenance or other reasonable purposes, provided that reasonable parking and reasonable access to the Building remain available; (v) to construct, alter or add to other buildings or improvements on the Property (including, but not limited to, construction of buildings in the areas designated as "New Building A," "New Building B" and "New Building C" on the site plan attached hereto as Exhibit B, and construction of related site improvements and common area improvements on the Property); (vi) to build adjoining to the Property; (vii) to use the Common Areas while engaged in making additional improvements, repairs or alterations to the Property or any portion thereof; (viii) to lease any part of the Property for the construction of improvements or buildings; and (ix) to do and perform such other acts with respect to the Common Areas and the Property as may be necessary or appropriate; provided, however, that notwithstanding anything to-the contrary in this Section 1.2, Landlord's exercise of its rights hereunder shall not cause any material diminution or impairment of Tenant's rights, nor any material increase of Tenant's obligations, under this Lease or with respect to the Improvements.


1.3 First Refusal Right.


(a) Following expiration of Tenant's right to add part or all of the Option Space to the Premises pursuant to Section l.l(c) hereof, if Tenant has not elected to exercise such right in whole or in part. Landlord shall not thereafter lease all or any part of the Option Space that has not already been added to the Premises at any time during the term of this Lease, except in compliance with this Section 1.3; provided, however, that the foregoing restriction shall not apply during any period in which Tenant is in material default, beyond say applicable cure periods, under this Lease (without limitation, any "event of default," as that term is defined in Section 16.1, will be considered a material default).


(b) If Landlord during the term of this Lease (after expiration of Tenant's rights under Section l.l(c) hereof) receives a bona fide written offer from a prospective tenant to lease all or any portion of the Option Space, and if Tenant is not then in default (beyond any applicable cure periods) under this Lease, Landlord shall first give written notice of such offer to Tenant, attaching a copy of the written offer and specifying (to the extent not set forth in such offer) the material terms on which Landlord proposes to lease the Option Space or portion thereof (the "Offered Space"), and shall offer to Tenant the opportunity to lease the Offered Space on the terms specified in Landlord's notice and in the written third-party offer. Tenant shall have


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five (5) business days after the date of giving of such notice by Landlord in which to accept such offer by written notice to Landlord. Upon such acceptance by Tenant, the Offered Space shall be leased to Tenant oh the terms set forth in Landlord's notice and in the written third-party offer, and on the additional terms and provisions set forth herein (except to the extent inconsistent with the terms set forth in Landlord's said notice and in said written offer), and the parties shall promptly execute an amendment to (this Lease adding the Offered Space to the Premises and making any appropriate amendments to provisions of this Lease to reflect different rent and other obligations applicable to the Offered Space under the terms of Landlord's said notice and of said written offer. If Tenant does not accept Landlord's offer within the allotted time. Landlord shall thereafter have the right to lease the Offered Space to the third parry which submitted the bona fide written offer at any time within one hundred eighty (180) days after Tenant's failure to accept Landlord's offer, at a minimum rental and on other tarns and conditions not more favorable to the lessee than the minimum rental and other-terms offered to Tenant in Landlord's said notice. If Tenant does not accept Landlord's offer and Landlord does not lease the Offered Space to such third parry within one hundred eighty (180) days, this First Right of Refusal shall reattach to that space. For purposes of this Section 1.3(b), a "bona fide written offer" shall mean a terms sheet, letter of intent or other written statement of proposed lease terms that has been signed by the prospective lessee or by its authorized agent, even if such terms sheet letter or statement is non-binding or is subject to preparation of full documents, completion of due diligence or inspections, or other customary and commercially reasonable contingencies.


2. TERM


2.1 Term. The term of this Lease shall commence on the earlier to occur of (i) the date which is five (5) days after the date Landlord delivers to Tenant written notice that Landlord's work pursuant to Article 5 and Exhibit C on the Building and on the Premises is substantially complete, such work is in fact substantially complete and the City of South San' Francisco has issued a certificate of occupancy (or reasonable equivalent thereof) for the Premises, or (ii) the date Tenant takes occupancy of the Premises (except as otherwise provided in Section 2.2). the earlier of such dates being herein called the "Commencement Date" and shall end on the day immediately preceding the date fifteen (15) years thereafter, unless sooner terminated or extended as hereinafter provided.


2.2 Early Possession. If Landlord permits Tenant to occupy, use, take possession of or have access to the Premises or any portion thereof prior to the Commencement Date determined under Section 2.1, such occupancy, use possession or access shall be subject to and upon all of the terms and conditions of this Lease, including the obligation to pay rent and other charges unless Landlord and Tenant agree otherwise; provided however, that such early possession shall not advance or otherwise affect the Commencement Date or termination date determined under Section 2.1; provided further, that Tenant and the contractor selected pursuant to Exhibit C attached hereto for construction of the Tenant Improvements shall be entitled to have early access to the Premises, promptly after completion of the roof metal decking for the Building and thereafter at all appropriate times throughout the course of construction of Landlord's work pursuant to Section 5.1 and Exhibit C, subject to the approval of Landlord and the general contractor (which approval shall not be unreasonably withheld), for the purposes of hanging electrical, mechanical and plumbing services from the overhead structure and installing fixtures, furniture, laboratory equipment, computer equipment, telephone, low voltage data wiring and other personal property, and other similar work preparatory to the commencement of Tenant's business on the Premises, and Tenant shall not be required to pay minimum rental or Operating Expenses by reason of such early access until the Commencement Date otherwise occurs; and provided further, that Tenant shall not interfere with or delay Landlord's contractors by such early access or possession and shall indemnify, defend and hold harmless Landlord and its agents and employees from and against any and all claims, demands, liabilities, actions, tosses, costs and expenses, including (but not limited to) reasonable attorneys' fees, arising out of or in connection with Tenant's early entry upon the Premises hereunder.


2.3 Delay In Possession. Landlord agrees to use its best reasonable efforts to complete the work described in Section 5.1 and Exhibit C promptly, diligently and within the respective time periods set forth in the estimated construction schedule attached hereto as Exhibit D and incorporated herein by this reference, as such schedule may be modified from time to time by mutual agreement of Landlord and Tenant, and subject to the effects of any delays caused by or


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attributable to Tenant or any other circumstances beyond Landlord's reasonable control (excluding any financial inability); provided ,however, that except to the extent caused by a material default by Landlord of its obligations set forth in this Lease (including, but not limited to, its obligations set forth in this Section 2.3 and in Section 5.1 and Exhibit C). Landlord shall not be liable for any damages caused by any delay in the completion of such work nor shall any such delay affect the validity of this Lease or the obligations of Tenant hereunder. Notwithstanding any other provisions of this Lease, however, if Landlord's construction of the Building Shell pursuant to Article 5 and Exhibit C is not substantially complete by the later of (x) September 1, 1998 or (y) thirteen (13) months after Landlord and Tenant have mutually approved detailed plans and specifications for the interior tenant improvements within the Premises, then Tenant shall be entitled to terminate this Lease by written notice to Landlord at any time prior to substantial completion of Landlord's construction of the Building Shell under Article 5 and Exhibit C; provided, however, that the deadline described in this sentence for construction of the Building Shell shall be extended, day for day, for a period of time equal to the length of any actual delay in substantial completion of Landlord's construction of the Building Shell that is caused by or attributable to (I) acts or omissions of Tenant or its agents or employees or (II) any fire, earthquake or other casualty, strike, shortage of labor or materials, or other circumstances beyond Landlord's reasonable control (excluding any financial inability); and provided, further, that any extensions pursuant to the foregoing clause (II) shall not exceed nine (9) months in the aggregate.


2.4 Acknowledgment Of Lease Commencement. Upon commencement of the term of this Lease, Landlord and Tenant shall execute a written acknowledgment of the Commencement Date, date of termination and related matters, substantially in the form attached hereto as Exhibit E (with appropriate insertions), which acknowledgment shall be deemed to be incorporated herein by this reference. Notwithstanding the foregoing requirement, the failure of one or both parties to execute such a written acknowledgment shall not affect the determination of the Commencement Date, date of termination and related matters in accordance with the provisions of this Lease.


2.5 Holding Over. If Tenant holds possession of the Premises or any portion thereof after the term of this Lease with Landlord's written consent, then except as otherwise specified in such consent. Tenant shall become a tenant from month to month at one hundred fifty percent (150%) of the rental and otherwise upon the terms herein specified for the period immediately prior to such holding over and shall continue in such status until the tenancy is terminated by either party upon not less than thirty (30) days prior written notice. If Tenant holds possession of the Premises or any portion thereof after the term of this Lease without Landlord's written consent, then Landlord in its sole discretion may elect (by written notice to Tenant) to have Tenant become a tenant either from month to month or at will, at one hundred fifty percent (150%) of the rental (prorated on a daily basis for an at-will tenancy, if applicable) and otherwise upon the terms herein specified for the period immediately prior to such holding over, or may elect to pursue any and all legal remedies available to Landlord under applicable law with respect to such unconsented holding over by Tenant. Tenant shall indemnify and hold Landlord harmless from any loss, damage, claim, liability, cost or expense (including reasonable attorneys' fees) resulting from any delay by Tenant in surrendering the Premises (except with Landlord's prior written consent), including but not limited to any claims made by a succeeding tenant by reason of such delay. Acceptance of rent by Landlord following expiration or termination of this Lease shall not constitute a renewal of this Lease.


2.6 Option to Extend Term. Tenant shall have the option to extend the term of this Lease, at the minimum rental set forth in Section 3.1 (c) and (d) and otherwise upon all the terms and provisions set forth herein with respect to the initial term of this Lease, for up to two (2) additional periods of five (5) years each, commencing upon expiration of the initial term hereof. Exercise of such option with respect to the first such extended term shall be by written notice to Landlord at least twelve (12) months prior to the expiration of the initial term hereof; exercise of such option with respect to the second extended term, if the first extension option has been duly exercised, shall be by like written notice to Landlord at least twelve (12) months prior to the expiration of the first extended term hereof. If Tenant is in material default hereunder, beyond any applicable cure periods, on the date of such notice or on the date any extended term is to commence (without limitation, any "event of default," as that term is defined in Section 16.1 will be considered a material default), then the exercise of the option shall be of no force or effect, the extended term shall not commence and this Lease shall expire at the end of the then current term hereof (or at such earlier time as Landlord may elect pursuant to the


-4- default provisions of this Lease). If Tenant properly exercises one or more extension options under this Section, then all references in this Lease (other than in this Section 2.6) to the "term" of this Lease shall be construed to include the extension term(s) thus elected by Tenant. Except as expressly set forth in this Section 2.6, Tenant shall have no right to extend the term of this Lease beyond its prescribed term.


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