SUBLEASE

EX-10.13 14 d575431dex1013.htm EX-10.13 EX-10.13

Exhibit 10.13

SUBLEASE

THIS SUBLEASE (“Sublease”), dated November 21, 2006, is entered into by and between AMGEN SF, LLC, a Delaware limited liability company, as successor by merger to Tularik, Inc., a Delaware corporation (“Sublandlord”), and RAVEN BIOTECHNOLOGIES, INC., a Delaware corporation (“Subtenant”).

RECITALS

A. Sublandlord leases certain premises (the “Premises”) consisting of approximately 66,127 rentable square feet of space located in that certain building located at One Corporate Drive, South San Francisco, California (the “Building”), as more particularly shown on Exhibit B attached hereto and incorporated herein. Sublandlord is the tenant under that certain Build-To-Suit Lease dated the 20th day of April, 1995, with Britannia Biotech Gateway Limited Partnership, a Delaware limited partnership (“Master Landlord”) as amended by that certain First Amendment to Lease, dated February 10, 1998, and as further amended by that certain Second Amendment to Build-To-Suit Lease, dated August 12, 2004 (collectively, the “Master Lease”). A copy of the Master Lease is attached hereto as Exhibit A. Except as otherwise expressly provided herein, any capitalized terms herein without definition shall have the same meaning as they have in the Master Lease.

B. Sublandlord desires to sublease to Subtenant, and Subtenant desires to Sublease from Sublandlord, the Premises during the Term, pursuant to the terms and provisions hereof.

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

AGREEMENT

1. Premises. Sublandlord hereby subleases to Subtenant and Subtenant hereby subleases from Sublandlord the Premises.

2. Term.

(a) The term of this Sublease (the “Term”) shall commence on the later of (i) November 21, 2006, (ii) the date Sublandlord has delivered possession of the Premises to Subtenant in the condition required by the terms of this Sublease, or (iii) the date Master Landlord consents to this Sublease (the “Commencement Date”) and shall expire, unless sooner terminated pursuant to the further provisions hereof, at 11:59 p.m. (Pacific time) on December 31, 2013, or such earlier date as the Master Lease may be terminated pursuant to the terms thereof. If the Commencement Date does not occur on or before the date that is ten (10) days after the execution of this Sublease, then Subtenant shall have the right to terminate this Sublease within ten (10) days thereafter upon ten (10) days’ prior written notice to Sublandlord, and in such event Sublandlord shall immediately return to Subtenant all monies previously paid by Subtenant to Sublandlord pursuant to this Sublease.

(b) Upon the Commencement Date, Subtenant shall have the right to enter the Premises to commence the Tenant Improvements (as defined in Exhibit C attached hereto)

and for installation of furniture, fixtures and equipment and otherwise to prepare the Premises for Subtenant’s occupancy. During such period of occupancy, Subtenant shall comply with all of the terms of this Sublease, including, without limitation, Section 11 hereof, other than the payment of Rent pursuant to Section 3(a). Prior to Subtenant’s entry into the Premises, Subtenant shall provide Sublandlord with evidence that Subtenant has obtained the insurance required by Section 11 hereof.

3. Rent.

(a) Commencing on April 1, 2007 (the “Rent Commencement Date”), and continuing throughout the term of this Sublease, Subtenant shall pay monthly rent consisting of Base Rent and Additional Rent (as defined below) (collectively, “Rent”) to Sublandlord in the amounts set forth below. To the extent substantial completion of the Tenant Improvements (as defined in Exhibit C) is delayed beyond April 1, 2007, the Rent Commencement Date shall be extended beyond April 1, 2007, on a day for day basis: (i) for each day after December 7, 2007, that a building permit for the Tenant Improvements is not issued, provided Subtenant, no later than November 22, 2006, submits all necessary information and materials for the issuance of the building permit and such delay is not caused by Subtenant or its affiliates, contractors or consultants; or (ii) for each day substantial completion of the Tenant Improvements is delayed beyond April 1, 2007 as a result of Sublandlord’s failure to complete its Decommissioning work, as defined in Section 5 below.

(i) Base Rent. Subtenant shall pay to Sublandlord monthly base rent (“Base Rent”) in the following amount:


Period	Monthly Base Rent Amount
Rent Commencement-12/31/07	$	104,850.00
01/01/08-12/31/08	$	108,000.00
01/01/09-12/31/09	$	111,150.00
01/01/10-12/31/10	$	114,300.00
01/01/11-12/31/11	$	117,900.00
01/01/12-12/31/12	$	121,500.00
01/01/13-12/31/13	$	125,150.00

(ii) Additional Rent. In addition to Base Rent, commencing on the Rent Commencement Date, Subtenant shall also pay to Sublandlord the Operating Expenses (as that term is defined in Section 9.2 of the Master Lease) and all other costs payable by Sublandlord under the Master Lease that may accrue after the Rent Commencement Date (“Additional Rent”). Additional Rent shall also include all amounts paid directly by Sublandlord to parties other than Sublandlord to the extent related to the Premises (e.g. real property taxes assessed against the tenant improvements in the Premises, landscape maintenance, and parking lot maintenance). Sublandlord shall use its commercially reasonable efforts to induce Master Landlord to agree to bill Subtenant directly for Additional Rent. If Master Landlord does not agree to bill Subtenant directly for Additional Rent, then prior to the Rent Commencement Date,

and then on or before December 1 of each year, Sublandlord shall give Tenant a yearly expense estimate statement which shall set forth Sublandlord’s reasonable estimate of the total amount of Additional Rent for the succeeding calendar year, Subtenant shall pay Additional Rent in equal monthly installments based upon such estimate; provided, that the estimate statement may be reasonably revised and reissued by Sublandlord from time to time. Within 120 days after the end of each calendar year (subject to corresponding delivery to Sublandlord from Master Landlord), Sublandlord shall give to Tenant a statement, which shall indicate the Additional Rent incurred or accrued for such preceding calendar year, and which shall indicate the amount, if any, of any amounts due from Subtenant in excess of the amounts previously paid, or the amount of any refund due. Upon receipt of the statement for each expense year ending during the Term, Tenant shall pay, with its next installment of Base Rent due, but in no event later than thirty (30) days after receipt of such statement the full amount of any excess for such expense year. If a refund is due, Sublandlord shall provide such refund at the time it provides the statement. The failure of Sublandlord to timely furnish the statement for any expense year shall not prejudice Sublandlord from enforcing its rights under this Section 3. Even though the Term has expired and Tenant has vacated the Premises, when the final determination is made of the Additional Rent due from Subtenant for the Term, Tenant shall immediately pay to Sublandlord any amounts due. Upon request, Sublandlord shall furnish to Subtenant copies of any invoices for items constituting Additional Rent hereunder (to the extent obtainable from Master Landlord).

(iii) Direct Costs. Commencing on the Commencement Date, Subtenant shall pay directly to the provider thereof all costs and expenses for, utilities, janitorial services, HVAC maintenance and security for the Premises, and shall pay its own personal property taxes. The level of utilities, janitorial service, HVAC maintenance and security for the Premises to be obtained shall be at the reasonable discretion of the Subtenant, provided Subtenant shall exercise its discretion in such manner as will avoid a default under the Master Lease.

(b) Subtenant shall also be liable for any amounts payable by Sublandlord to Master Landlord which are (A) due to Subtenant’s breach of any provision of the Master Lease, (B) due to Subtenant’s negligence or willful misconduct, or (C) for the sole benefit of Subtenant, and any such amounts shall be the sole responsibility of Subtenant.

(c) Upon the written request of Subtenant to Sublandlord, Sublandlord shall exercise its audit rights under Section 9.3 of the Master Lease at the sole cost and expense of Subtenant and shall promptly provide the results thereof to Subtenant without warranty of any kind or nature. Sublandlord shall use its commercially reasonable efforts to induce Master Landlord to agree in its consent to this Sublease that Subtenant may exercise Sublandlord’s audit rights under Section 9.3 of the Master Lease directly.

4. Security Deposit. Upon execution of this Sublease, Subtenant shall deposit with Sublandlord the sum of $104,850.00 as a security deposit (“Security Deposit”). Subtenant hereby grants to Sublandlord a security interest in the Security Deposit, including but not limited to replenishments thereof. If Subtenant fails to pay Rent or other charges when due under this Sublease, or fails to perform any of its other obligations hereunder, and such failure is not cured within the relevant cure period, Sublandlord may use or apply all or any portion of the Security Deposit for the payment of any Rent or other amount then due hereunder and unpaid, for the payment of any other sum for which Sublandlord may become obligated by reason of

Subtenant’s default or breach, or for any loss or damage sustained by Sublandlord as a result of Subtenant’s default or breach. If Sublandlord so uses any portion of the Security Deposit, Subtenant shall restore the Security Deposit to the full amount originally deposited within ten (10) days after Sublandlord’s written demand. Sublandlord shall not be required to keep the Security Deposit separate from its general accounts, and shall have no obligation or liability for payment of interest on the Security Deposit. The Security Deposit, or so much thereof as had not theretofore been applied by Sublandlord, shall be returned to Subtenant within thirty (30) days of the expiration or earlier termination of this Sublease, provided Subtenant has vacated the Premises.

In lieu of making the cash deposit described above, Subtenant shall have the option to instead deliver to Sublandlord a letter of credit in the amount of the Security Deposit in the form attached hereto as Exhibit D from an institution reasonably satisfactory to Sublandlord (the “Initial LOC”; the Initial LOC and all letters of credit issued in renewal or replacement thereof being individually referred to hereinafter as an “LOC”). Sublandlord may, in its sole discretion but with no obligation to do so, draw upon each LOC at any time following an event of default, which is not cured within the applicable cure period, in accordance with this Section 4. Each LOC delivered hereunder shall (a) be in a form and from Greater Bay Bank or another institution acceptable to Sublandlord, in its reasonable discretion, (b) allow for multiple draws, and (c) be transferable, irrevocable and payable on sight draft made by Sublandlord or its successors and assigns. In the event Sublandlord draws upon any LOC in accordance with this Section 4, Subtenant shall replenish the LOC within ten (10) days of notice of such draw so that the amount of the LOC shall equal the sum of $104,850.00. Sublandlord may, in its sole discretion but with no obligation to do so, draw upon each LOC for the failure of any LOC to be renewed or replaced in compliance with the terms of this Section 4 on or before the date that is thirty (30) days prior to the expiration of any LOC, such draw to be in the full amount of any such expiring LOC, with such drawn amount thereafter to be held by Sublandlord as the Security Deposit under this Sublease. Sublandlord will not be required to declare any default or event of default as a condition to any such draw. In the event Sublandlord fails to draw upon any expiring LOC and such LOC actually expires, Subtenant shall cause a replacement LOC to be issued in favor of Sublandlord in the amount of any such expired LOC, with any failure to provide such a replacement LOC to constitute a default hereunder within ten (10) days of notice from Sublandlord to Subtenant of any such expired LOC, and without any further cure period being allowed to Subtenant.

5. Condition of the Premises.

(a) Subtenant agrees that (i) except as specifically set forth in this Sublease, Sublandlord has made no other representations or warranties of any kind or nature whatsoever respecting the Premises or the alterations, additions and improvements, title to which is held by Sublandlord under Section 11.2 of the Master Lease (the “Sublandlord Owned Property”) located in or serving the Premises, or their condition or suitability for Subtenant’s use; and (ii) Subtenant agrees to accept the Premises and Sublandlord Owned Property located in or serving the Premises “as is, where is,” with all faults, without any obligation on the part of Sublandlord to modify, improve or otherwise prepare the Premises for Subtenant’s occupancy, except as provided in Exhibit C attached hereto.

(b) No later than sixty (60) days after the Commencement Date, Sublandlord shall at its sole cost and expense obtain and deliver to Master Landlord and to Subtenant an environmental study, performed by an expert reasonably satisfactory to Master Landlord and Subtenant, evaluating the presence or absence of hazardous substances and wastes, radiation and radioactive materials on and about the Property (as defined in the Master Lease) (the “Environmental Study”). Such study shall be based on a reasonable and prudent level of tests and investigations of the Property and shall be intended to satisfy, on an interim basis, Sublandlord’s obligations under Section 13(b)(xi) of the Master Lease. Liability for any remedial actions required or recommended on the basis of such study shall be allocated between Master Landlord and Sublandlord in accordance with the Master Lease. Within thirty (30) days of the date of the aforementioned report, Sublandlord shall commence, and thereafter shall diligently pursue to completion, all actions required under the Master Lease with respect to hazardous substances and wastes, radiation and radioactive materials on and about the Property, and Subtenant shall have no liability whatsoever in connection therewith; provided Subtenant shall reasonably cooperate with Sublandlord in the performance of Sublandlord’s obligations in this regard. Sublandlord hereby certifies that Sublandlord has taken all commercially reasonable steps necessary to decommission the areas of the Premises that contain levels of radiation higher than permitted pursuant to applicable environmental laws, and has complied with the Master Lease and all applicable laws with respect to any portion of the Building used in connection with hazardous substances and/or hazardous waste, as such terms are used in the Master Lease (the “Decommissioning” work). At the termination or expiration of this Sublease, Subtenant shall be responsible, at its sole cost and expense, for the obligations arising under the Section 13 of the Master Lease, including Section 13.6(b)(xi) thereof only with respect to hazardous substances caused to be present in the Premises by Subtenant or its agents, and Subtenant does hereby agree to indemnify and hold harmless Sublandlord from any and all costs, claims, and liabilities arising from or attributable to such obligations, and such obligation to indemnify and hold harmless shall survive the expiration or earlier termination of this Sublease. Throughout the term of this Sublease and at the termination or expiration of this Sublease, Sublandlord shall remain responsible, at its sole cost and expense, for the obligations arising under the Section 13 of the Master Lease, including Section 13.6(b)(xi) thereof arising out of or in connection with any Sublandlord Hazardous Substances, and Sublandlord does hereby agree to indemnify and hold harmless Subtenant from any and all costs, claims, and liabilities arising from or attributable to such obligations, and such obligation to indemnify and hold harmless shall survive the expiration or earlier termination of this Sublease. As used herein, the term “Sublandlord Hazardous Substances” shall mean any and all hazardous substances located within the Premises to the extent (I) such hazardous substances are identified as being present within the Premises by the Environmental Study as of the date thereof or (II) Subtenant can reasonably demonstrate that the presence of such hazardous substances was caused by Sublandlord.

(c) Except as addressed in Section 5(b) above, Sublandlord has not made an independent investigation of the Premises or determination with respect to the physical condition of the Premises including without limitation compliance with The Americans With Disabilities Act. Except as otherwise provided in this Section 5(c), Subtenant shall rely solely

on its own investigations and/or that of a licensed professional specializing in the areas referenced in this Section 5(c). Notwithstanding the foregoing, Sublandlord hereby represents and warrants that as of the Commencement Date all mechanical, plumbing and electrical systems within the Premises shall be in good working order and condition, and to the best of its knowledge, Sublandlord has complied in all material respects with the terms and conditions of the Master Lease with respect to Sublandlord’s repair and maintenance obligations. Subtenant shall notify Sublandlord of its discovery of any non-compliance with the foregoing warranty within six (6) months of the Rent Commencement Date, and Sublandlord shall promptly repair or correct the defect. Sublandlord’s obligation to repair in accordance with the foregoing warranty shall expire unless Subtenant notifies Sublandlord of a specific breach of the warranty within six (6) months of the Rent Commencement Date, in which event such warranty shall continue as to only such specific breach.

(d) Subtenant’s alterations and modifications of the Premises shall be governed by Article 11 of the Master Lease (as incorporated by Section 8 of this Sublease); provided, however, that Subtenant shall not be obligated to remove any Sublandlord Owned Property present in the Premises on the Commencement Date, or any of the Tenant Improvements described in Exhibit C, at the end of the Term. In addition, Subtenant agrees that if any of Subtenant’s alterations or modifications require a building permit, Subtenant shall engage only licensed contractors to perform such alterations or modifications.

6. Use. Subtenant may use the Premises twenty four hours a day, seven days a week, as administrative offices, for research and development purposes and/or for laboratory purposes to the extent permitted under the Master Lease and for no other purpose without the approval of the Master Landlord and Sublandlord. Sublandlord shall have the right to inspect the Premises at any time after giving Subtenant twenty-four (24) hours notice; provided that Subtenant may require that Sublandlord be escorted by an employee of Subtenant. Notwithstanding the foregoing, Sublandlord shall have the unrestricted right to access the Premises at any time, without notice and without escort, in the event of an emergency. Subtenant acknowledges and agrees that the operation and use of the Premises may require that Subtenant apply for and receive licenses and/or permits from various federal, state and local governments, and Subtenant covenants and agrees to apply for and receive such licenses and/or permits as are required. Upon receipt of Sublandlord’s written request therefore, Subtenant shall provide to Sublandlord copies of any such licenses and/or permits.

7. Master Lease. This Sublease shall be subject and subordinate to all of the terms and provisions of the Master Lease. Except for payments of Rent (which payments shall be made by Sublandlord) and except for those provisions of the Master Lease excluded by Section 8 below, Subtenant hereby assumes and agrees to perform, during the Term, all of Sublandlord’s obligations under the Master Lease to the extent such obligations are applicable to the Premises and accrue after the date hereof pursuant to this Sublease.

8. Incorporation of Master Lease.

Except as otherwise provided herein, all of the terms and provisions of the Master Lease are incorporated into and made a part of this Sublease and the rights and obligations of the parties under the Master Lease are hereby imposed upon the parties hereto with respect to the Premises, the Sublandlord being substituted for the “Landlord” in the Master Lease, the Subtenant being

substituted for the “Tenant” in the Master Lease, and this Sublease being substituted for the “Lease” and the “Premises” being substituted for the “Property” in the Master Lease (except in Section 13.6(b)(viii), and Section 14.6, where the “Property” shall mean the Property); provided, however, that the term “Landlord” in Sections 1.2 and 12.1 (a), Article 19, and Section 21.14 shall mean Master Landlord, not Sublandlord. The parties specifically agree that any provisions relating to any construction obligations of “Landlord” under the Master Lease with respect to construction that occurred or was to have occurred prior to the Commencement Date hereof, are hereby deleted. Sublandlord shall not be liable to Subtenant for any failure by Master Landlord to perform its obligations under the Master Lease, nor shall such failure by Master Landlord excuse performance by Subtenant of its obligations hereunder; provided, however, that Sublandlord shall use its commercially reasonable efforts to cause Master Landlord to perform its obligations under the Master Lease. Anything in the Master Lease to the contrary notwithstanding, no personal liability shall at any time be asserted or enforceable against Sublandlord’s stockholders, directors, officers or partners on account of Sublandlord’s obligations or actions under this Sublease. The following Sections of the Master Lease are not incorporated herein: Section 1.1, Section 2.1, Section 2.2, Section 2.3, Section 2.4, Section 2.6, Section 3.1, Article 4, Article 5, Article 6, Article 7, Section 9.1, Section 9.3, Section 10.1, Section 12.1(b), Section 12.2(c), Section 13.6(d), Section 16.1, Section 16.2, Article 17, Section 20.1, Section 21.11, Section 21.12, Section 21.15, Section 21.16, Section 21.17, Exhibits C, D and E, the First Amendment and the Second Amendment.

Notwithstanding the foregoing, for purposes of the incorporation set forth in this Section 8, Section 13.6(b)(vi) of the Master Lease is amended to delete “Nuclear Regulatory Commission” and insert “California Department of Health Services (“DHS”).”

9. Sublandlord’s Obligations.

(a) Provided that Subtenant is not in default under the terms of this Sublease, Sublandlord agrees (i) to make timely payments of the Rent due under the Master Lease and to perform all of its other obligations under the Master Lease (except to the extent assumed by Subtenant hereunder), (ii) subject to Sublandlord’s right to exercise a discretionary right to terminate the Master Lease as set forth in the second sentence of Section 15 hereof, to maintain the Master Lease in full force and effect and (iii) not to amend the Master Lease in any way which could have a material adverse impact on Subtenant.

(b) To the extent that the provision of any services or the performance of any maintenance or any other act is the responsibility of Master Landlord (collectively “Master Landlord Obligations”), Sublandlord, upon Subtenant’s request, shall make commercially reasonable efforts to cause Master Landlord under the Master Lease to perform such Master Landlord Obligations; provided, however, that Sublandlord shall not be liable to Subtenant for any liability, loss or damage whatsoever in the event that Master Landlord should fail to perform the same, nor shall Subtenant be entitled to withhold the payment of Rent or Terminate this Sublease, unless such failure is the result of an event of default on the part of Sublandlord under this Sublease (including Sublandlord’s obligation to use commercially reasonable efforts to cause Master Landlord to perform the Master Landlord Obligations), the Master Lease, or both. It is expressly understood that Sublandlord does not assume the Master Landlord Obligations and that the services and repairs that are incorporated herein by reference, including

but not limited to the furnishing of elevators or other services or maintenance, restoration (following casualty or destruction), or repairs to the Building or the Premises which are Master Landlord Obligations will in fact be furnished by Master Landlord and not Sublandlord, except to the extent otherwise provided herein.

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

10. Intentionally Omitted.

11. Insurance.

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

(b) The waiver of subrogation provision contained in Section 14.4 of the Master Lease shall be deemed to be a three party agreement binding among and inuring to the benefit of Sublandlord, Subtenant and Master Landlord (by reason of its consent hereto).

12. Default. In addition to the events of default described in the Master Lease which have been incorporated by reference in Section 8(a) of this Sublease, failure of Subtenant to make any payment of Rent as and when due shall constitute an event of default hereunder. If Subtenant’s event of default causes an event of default by Sublandlord under the Master Lease, Subtenant shall defend, indemnify and hold Sublandlord harmless from all damages, costs (including reasonable attorneys’ fees), liability, expenses or claims relating to such default.

13. Assignment and Subletting. Subtenant may not assign, sublet, transfer, pledge, hypothecate or otherwise encumber the Premises, in whole or in part, or permit the use or occupancy of the Premises by anyone other than Subtenant, unless Subtenant has obtained Sublandlord’s consent thereto (which shall not be unreasonably withheld) and the consent of Master Landlord; provided, however, that Subtenant shall have the right to engage in a Permitted Transfer (as defined in Section 15.1 of the Master Lease) without such consent (but with prior written notice by Subtenant to Sublandlord unless such prior notice is prohibited by applicable law, in which case notice shall be given as soon as reasonably practical and permitted by applicable law). Regardless of Sublandlord’s consent, no subletting or assignment shall release Subtenant of its obligations hereunder. Any rent or other consideration payable to Subtenant pursuant to any sublease or assignment permitted by this paragraph shall be the sole property of Subtenant. Neither the Master Lease nor any other agreement between Master Landlord and Sublandlord requires Sublandlord to remit to Master Landlord any rent or other consideration payable pursuant to any sublease or assignment, provided the foregoing will not negate Subtenant’s obligation to pay Rent or any other amount due hereunder.

14. Parking. Subtenant shall have such parking rights as Sublandlord may have in connection with the Premises pursuant to the Master Lease.

15. Early Termination of Master Lease. If, without the fault of Sublandlord or Subtenant, the Master Lease should terminate prior to the expiration of this Sublease, neither party shall have any liability to the other party. To the extent that the Master Lease grants Sublandlord any discretionary right to terminate the Master Lease, whether due to casualty, condemnation or otherwise, Sublandlord shall not be entitled to exercise such right without Subtenant’s consent, which may be granted or withheld in Subtenant’s sole discretion.

16. Consent of Master Landlord. If Subtenant desires to take any action that requires the consent of Master Landlord pursuant to the terms of the Master Lease, including, without limitation, making any modification, alteration or improvement of the Premises or entering into a further sublease or assignment of this Sublease, and in any event if Subtenant desires to make any alternation to the Premises, then, notwithstanding anything to the contrary herein, (a) if Master Landlord consents, then Sublandlord shall not unreasonably withhold or delay its consent to any such action (and Sublandlord shall be deemed to have consented to such action if Sublandlord does not expressly withhold its consent on or before the date that is ten (10) business days after Master Landlord consents to such action), (b) Subtenant shall not take any such action until it obtains the consent of both Sublandlord and Master Landlord and (c) Subtenant shall request that Sublandlord obtain Master Landlord’s consent on Subtenant’s behalf, unless Sublandlord agrees that Subtenant may contact Master Landlord directly with respect to the specific action for which Master Landlord’s consent is required. If Subtenant requests that Sublandlord obtain Master Landlord’s consent on any matter, Sublandlord shall use its commercially reasonable efforts, at no out-of-pocket expense to Sublandlord, to obtain such consent from Master Landlord, unless Master Landlord and Sublandlord agree that Subtenant may contact Master Landlord directly with respect to the specific action for which Master Landlord’s consent is required.

17. Surrender of Premises. In lieu of any obligation or liability set forth in the Master Lease, upon the termination of this Sublease, Subtenant shall surrender the Premises to Sublandlord broom-clean and in as good a condition as on the Commencement Date, ordinary wear and tear excepted. In addition, except as further set forth below, Subtenant shall remove any alterations, additions and improvements made by or at the request of Subtenant (whether or not made with Sublandlord’s consent) prior to the termination of this Sublease and restore the Premises to its prior condition, ordinary wear and tear excepted, repairing all damage caused by or related to any such removal, all at Subtenant’s expense; provided, however, that Subtenant shall not be obligated to remove any of the Tenant Improvements, or any subsequent alteration, addition or improvement which Sublandlord or Master Landlord did not elect to require Subtenant to remove pursuant to Section 11.2 of the Master Lease (as incorporated by reference herein) or to the extent that Sublandlord had previously waived in writing the right to require Subtenant to remove certain alterations at the time of construction or installation of such alterations. Notwithstanding anything to the contrary contained in this Sublease, to the extent that Subtenant continues to occupy the Premises pursuant to a direct lease with Master Landlord and Master Landlord does not require any such action on the part of Sublandlord under the Master Lease, the provisions of the preceding sentence shall not apply upon the expiration of the Sublease.

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

19. Time of Essence. It is expressly understood and agreed that time is of the essence of this Sublease.

20. Attorneys’ Fees. If any action or proceeding at law or in equity shall be brought to enforce or interpret any of the provisions of this Sublease, the prevailing party shall be entitled to recover from the other party its reasonable attorneys’ fees and costs incurred in connection with the prosecution or defense of such action or proceeding.

21. Approval of Master Landlord. This Sublease shall be conditioned upon, and shall not take effect until, receipt of the written consent of Master Landlord hereto. Upon receipt of such consent, this Sublease shall be effective as of the Commencement Date. Sublandlord and Subtenant acknowledge and agree that in granting such consent, notwithstanding any other provisions contained in or implied in this Sublease, Master Landlord shall not be deemed or construed (a) to have released Sublandlord from any responsibility for the full and timely performance of all obligations of Sublandlord as Tenant under the Master Lease as it pertains to the Premises, nor (b) to have authorized Sublandlord to act on Master Landlord’s behalf in exercising or waiving any rights, remedies or privileges of Master Landlord as Landlord under the Master Lease as it pertains to the Premises, nor (c) to have assumed, incurred or undertaken any obligations or liabilities running directly to Subtenant with respect to the Premises, it being the explicit intention and understanding of the parties that, notwithstanding the incorporation by reference of a portion of the Master Lease into this Sublease, Master Landlord and Sublandlord shall look solely to one another for the performance of their respective obligations with respect to the Premises as Landlord and Tenant under the Master Lease, and that Sublandlord and Subtenant shall look solely to one another for the performance of their respective obligations with respect to the Premises under this Sublease.

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


To Sublandlord at:		Amgen SF, LLC
		One Amgen Center Drive - 28-3-D
		Thousand Oaks, CA 91320
		Attn: Jerry Bernie

To Subtenant at:		Raven biotechnologies, inc.
		1140 Veterans Drive
		South San Francisco, CA 94080
		Attn: CFO

23. Brokers. Each party hereto represents and warrants that it has dealt with no broker in connection with this Sublease and the transactions contemplated herein other than Gerald A. Porter of CRESA Partners on behalf of Sublandlord and Chris Jacobs of CB Richard Ellis, on behalf of Subtenant (collectively “Brokers”). Sublandlord shall be responsible for

payment of any commissions due to Brokers as a result of this Sublease. Each party shall indemnify, protect, defend and hold the other party harmless from all costs and expenses (including reasonable attorneys’ fees) arising from or relating to a breach of the foregoing representation and warranty.

24. No Existing Defaults. Sublandlord represents and warrants to Subtenant that as of the date hereof the Master Lease is in full force and effect, that Sublandlord has neither given nor received written notice of default under the Master Lease, and that Sublandlord is not aware of any event which with the giving of notice or the passage of time could give rise to a default under the Master Lease.

25. Quiet Enjoyment. Sublandlord covenants that Subtenant shall peacefully have, hold and enjoy the Premises, subject to the terms and conditions of this Sublease and subject to the Master Lease, provided that Subtenant pays all rent and performs all of Subtenant’s covenants and agreements contained herein.

26. Damage and Destruction.

(a) Termination of Master Lease. If the Premises is damaged or destroyed and the Master Landlord, or Sublandlord with Subtenant’s consent, exercises any option either may have to terminate the Master Lease, if any, this Sublease shall terminate as of the date of the casualty. In the event that after a damage or destruction of the Premises, where the time estimated to restore the Premises exceeds 180 days, Subtenant shall have the right to terminate this Sublease on written notice to Sublandlord given within thirty (30) days after determination of the amount of time to restore the Premises, which termination shall be effective as of the date of the casualty.

(b) Continuation of Sublease. If the Master Lease or this Sublease is not terminated following any damage or destruction as provided in subsection (a) above, this Sublease shall remain in full force and effect, and Rent shall be abated proportionately to the extent rent payable under the Master Lease is abated.

27. Eminent Domain. If all or any material portion of the Premises is condemned by eminent domain, inversely condemned or sold in lieu of condemnation, for any public or a quasi-public use or purpose, this Sublease may be terminated as of the date of title vesting in such proceeding by either party, and Rent shall be adjusted to the date of termination.

28. Tenant Improvements and Subtenant Allowance.

Construction of the Tenant Improvements (as defined in Exhibit C) shall be governed by the Tenant Improvement Agreement attached hereto as Exhibit C. Sublandlord and Subtenant agree to comply with all of the terms and provisions of the Tenant Improvement Agreement, which is hereby incorporated by reference as though fully set forth herein.

[THIS SPACE INTENTIONALLY LEFT BLANK]

EXECUTED as of the date first written above.


		SUBLANDLORD

		AMGEN SF, LLC, a Delaware limited liability company
		By:		illegible
		Title:
		SUBTENANT

		RAVEN BIOTECHNOLOGIES, INC.,
		a Delaware corporation

		By:
		Title:

[SIGNATURE PAGE TO SUBLEASE]

EXECUTED as of the date first written above.


SUBLANDLORD

AMGEN SF, LLC, a Delaware limited liability company
By:
Title:

SUBTENANT

RAVEN BIOTECHNOLOGIES, INC.,
a Delaware corporation

By:		illegible
Title:		illegible

[SIGNATURE PAGE TO SUBLEASE]

EXHIBIT A

MASTER LEASE

See attached.

BUILD-TO-SUIT LEASE


LANDLORD:		BRITANNIA DEVELOPMENTS, INC.

TENANT:		TULARIK, INC.

DATE:		APRIL 20, 1995

BUILD-TO-SUIT-LEASE

TABLE OF CONTENTS


		Page

1.	PROPERTY		1
	1.1 Lease of Property.		1
	1.2 Landlord’s Reserved Rights.		1

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

3.	RENTAL		4
	3.1 Minimum Rental.		4
	3.2 Late Charge.		5

4.	STOCK WARRANTS		5
	4.1 Stock Warrants.		5

5.	CONSTRUCTION		6
	5.1 Construction of Improvements.		6
	5.2 Condition of Property.		6
	5.3 Compliance with Law.		6

6.	EXPANSION BUILDING		6
	6.1 Lock-Up Option.		6
	6.2 Exercise.		7
	6.3 Carrying Costs.		7
	6.4 First Negotiation Right and First Refusal Right to Lease.		7

7.	FIRST REFUSAL RIGHT TO PURCHASE		8
	7.1 Sale Restriction.		8
	7.2 First Refusal Right.		8
	7.3 Discount on Purchase Price.		9

8.	TAXES		9
	8.1 Personal Property.		9
	8.2 Real Property.		9

9.	OPERATING EXPENSES		9
	9.1 Liability For Operating Expenses.		9
	9.2 Definition Of Operating Expenses.		10
	9.3 Determination and Payment Of Operating Expenses.		11
	9.4 Proration.		11

10.	UTILITIES		12
	10.1 Payment.		12
	10.2 Interruption.		12


11.	ALTERATION; SIGNS	12
	11.1 Right To Make Alterations.	12
	11.2 Title To Alterations.	12
	11.3 Tenant Fixtures.	12
	11.4 No Liens.	13
	11.5 Signs.	13

12.	MAINTENANCE AND REPAIRS	13
	12.1 Landlord’s Work.	13
	12.2 Tenant’s Obligation For Maintenance.	13

13.	USE OF PROPERTY	14
	13.1 Permitted Use	14
	13.2 [Omitted.]	14
	13.3 No Nuisance.	14
	13.4 Compliance With Laws.	15
	13.5 Liquidation Sales.	15
	13.6 Environmental Matters.	15

14.	INSURANCE AND INDEMNITY	18
	14.1 Liability and Property Insurance.	18
	14.2 Quality Of Policies And Certificates.	20
	14.3 Workers’ Compensation.	20
	14.4 Waiver Of Subrogation.	20
	14.5 Increase In Premiums.	20
	14.6 Indemnification.	20
	14.7 Blanket Policy.	21

15.	SUBLEASE AND ASSIGNMENT	21
	15.1 Assignment And Sublease Of Property.	21
	15.2 Rights Of Landlord.	21

16.	RIGHT OF ENTRY AND QUIET ENJOYMENT	22
	16.1 Right Of Entry.	22
	16.2 Quiet Enjoyment.	22

17.	CASUALTY AND TAKING	22
	17.1 Damage or Destruction.	22
	17.2 Condemnation.	24
	17.3 Reservation Of Compensation.	25
	17.4 Restoration Of Improvements.	25

18.	DEFAULT	25
	18.1 Events Of Default.	25
	18.2 Remedies Upon Tenant’s Default.	26
	18.3 Remedies Cumulative.	27

19.	SUBORDINATION, ATTORNMENT AND SALE	27
	19.1 Subordination To Mortgage.	27
	19.2 Sale Of Landlord’s Interest.	27
	19.3 Estoppel Certificates.	27
	19.4 Subordination to CC&R’s.	28
	19.5 Mortgagee Protection.	28

20.	SECURITY	29
	20.1 Deposit.	29

21.	MISCELLANEOUS	29
	21.1 Notices.	29
	21.2 Successors And Assigns.	30
	21.3 No Waiver.	30
	21.4 Severability.	30

- ii -


		21.5 Litigation Between Parties.		30
		21.6 Surrender.		31
		21.7 Interpretation.		31
		21.8 Entire Agreement.		31
		21.9 Governing Law.		31
		21.10 No Partnership.		31
		21.11 Financial Information.		31
		21.12 Costs.		31
		21.13 Time.		31
		21.14 Rules And Regulations.		31
		21.15 Brokers.		32
		21.16 Memorandum Of Lease.		32
		21.17 Corporate Authority.		32
		21.18 Execution and Delivery.		32
		21.19 Survival.		32

EXHIBITS


EXHIBIT A		Real Property Description (Site)

EXHIBIT B		Site Plan

EXHIBIT C		Workletter

EXHIBIT D		Estimated Construction Schedule

EXHIBIT E		Acknowledgement of Lease Commencement

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BUILD-TO-SUIT LEASE

THIS BUILD-TO-SUIT LEASE (“Lease”) is made and entered into as of the 20th day of April, 1995, by and between BRITANNIA DEVELOPMENTS, INC., a California corporation (“Landlord”), and TULARIK INC., a California corporation (“Tenant”).

THE PARTIES AGREE AS FOLLOWS:

1. PROPERTY

1.1 Lease of Property.

(a) Landlord leases to Tenant and Tenant hires and leases from Landlord, on the terms, covenants and conditions hereinafter set forth, the building (the “Initial Building”) to be constructed pursuant to Article 5 hereof and Exhibit C attached hereto on the real property described in Exhibit A attached hereto (the “Site”), to consist of a two-story office and laboratory building containing approximately 66,127 square feet (measured in accordance with the BOMA standard most closely applicable to a two-story, single-tenant building of this nature). The location of the Initial Building on the Site is intended to be substantially as shown for “Building B” on the site plan attached hereto as Exhibit B. The Initial Building and the other improvements to be constructed, pursuant to Article 5 hereof and Exhibit C attached hereto, on the portion of the Site designated as “Phase I” on Exhibit B attached hereto (the “Phase I Site”) are sometimes referred to collectively herein as the “Improvements,” and the Improvements and the Phase I Site are sometimes referred to collectively herein as the “Property.” The parking areas, driveways, sidewalks, landscaped areas and other portions of the Phase I Site that lie outside the exterior walls of the Initial Building, as depicted on the site plan attached hereto as Exhibit B, are sometimes referred to herein as the “Common Areas.” The Site is part of The Britannia Biotechnology Center in South San Francisco, California.

(b) As an appurtenance to Tenant’s leasing of the Initial Building pursuant to Section l.l(a), Landlord hereby grants to Tenant, for the benefit of Tenant and its employees, 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 time for use as parking areas, driveways, sidewalks, landscaped areas, or for other common purposes, and (ii) all easements, access rights and similar rights and privileges relating to or appurtenant to the Property and created or existing from time to time under any easement agreements, declarations of covenants, conditions and restrictions, or other written agreements now of record with respect to the Site, including (but not limited to) the portion of the Site designated as “Phase II” on Exhibit B attached hereto (the “Phase II Site”), subject however to any limitations applicable to such rights and privileges under applicable law and/or under the written agreements creating such rights and privileges.

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 16.1 hereof, the following rights: (i) to make changes to the Common Areas, including, without limitation, changes in the location, size or shape of any portion of the Common Areas and to relocate (but not materially decrease the number of) parking spaces on the Phase I Site; (ii) to close temporarily any of the Common Areas for maintenance or other reasonable purposes, provided that reasonable parking and reasonable access to the Initial Building remain available; (iii) to construct, alter or add to other buildings or improvements on the Site (including, but not limited to, construction of a building in the area designated as “Building A” on the site plan attached hereto as Exhibit B, and construction of site improvements and common area improvements in the Phase II Site; (iv) to build adjoining to the Property and/or the Site; (v) to use the Common Areas while engaged in making additional improvements, repairs or alterations to the Property, or any portion thereof; and (vi) 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 (x) shall not cause any material diminution of Tenant’s rights, nor any material increase of Tenant’s obligations, under this Lease or with respect to the Improvements, (y) shall not authorize Landlord to make any material, permanent alterations in the Improvements without

the prior written consent of Tenant, which consent shall not be unreasonably withheld or delayed, and (z) shall be conducted in such a manner as to minimize, to the extent reasonably possible, any adverse effect on Tenant’s business operations on the Phase I Site (including, but not limited to, reasonable prior notice to Tenant of any pile-driving or other activities that will cause significant noise or vibration on the Phase I Site).

2. TERM

2.1 Term. The term of this Lease shall commence on the later to occur of (i) the date which is six (6) months after the date Landlord delivers to Tenant a Structural Completion Certificate pursuant to the Workletter attached hereto as Exhibit C, subject to any adjustments authorized or required under the provisions of such Exhibit C, or (ii) February 1, 1996, the later 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 (if applicable) as hereinafter provided.

2.2 Early Possession. Tenant shall have the nonexclusive right to occupy and take possession of the Phase I Site from and after the date of Landlord’s delivery of the Structural Completion Certificate described in clause (i) of Section 2.1, even though such date is prior to the Commencement Date determined under Section 2.1 and even though Landlord will be continuing to construct the balance of Landlord’s Work as contemplated in Exhibit C, for the purpose of constructing Tenant’s Work as contemplated in Exhibit C. Such occupancy and possession, and any early access under the next sentence of this Section 2.2, shall be subject to and upon all of the terms and conditions of this Lease and of the Workletter attached hereto as Exhibit C (including, but not limited to, conditions relating to the maintenance of required insurance), except that Tenant shall have no obligation to pay minimum rental or Operating Expenses for any period prior to the Commencement Date as determined under Section 2.1; such early possession shall not advance or otherwise affect the Commencement Date or termination date determined under Section 2.1. Tenant shall also be entitled to have early access to the Phase I Site at all appropriate times prior to Landlord’s delivery of the Structural Completion Certificate, subject to the approval of Landlord and its contractor (which approval shall not be unreasonably withheld or delayed), solely for the purpose of installing fixtures and equipment and other similar work preparatory to the construction of Tenant’s Work and the commencement of Tenant’s business on the Property, 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. Tenant shall not interfere with or delay Landlord’s contractors by any such early access, occupancy or possession under this Section 2.2 prior to Landlord’s delivery of the Structural Completion Certificate, shall coordinate and cooperate with Landlord and its contractors (who shall similarly coordinate and cooperate with Tenant and its contractors) to minimize any interference or delay by either party with respect to the other party’s work following Landlord’s delivery of the Structural Completion Certificate, and shall indemnify, defend and hold harmless Landlord and its agents and employees from and against any and all claims, demands, liabilities, actions, losses, costs and expenses, including (but not limited to) reasonable attorneys’ fees, arising out of or in connection with Tenant’s early entry upon the Phase I Site hereunder.

2.3 Delay In Possession. Landlord agrees to use its best reasonable efforts to complete promptly its portion of the work described in Section 5.1 and Exhibit C; provided, however, 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 provision of this Section 2.3, however, if Landlord fails to deliver the Structural Completion Certificate and tender possession of the completed structural portions of the Building Shell (i.e., those portions required to be completed as a condition of delivery of the Structural Completion Certificate) to Tenant by April 30, 1996, then Tenant shall have the right to terminate this Lease without further liability hereunder by written notice delivered to Landlord at any time prior to Landlord’s delivery of the Structural Completion Certificate and tender of possession of the completed structural portions of the Building Shell to Tenant; provided, however, that the deadline of April 30, 1996 set forth in this sentence shall be extended, day for day, for a period equal to the length of any delay beyond May 31, 1995 in Tenant’s delivery to Landlord of all information reasonably necessary for Landlord to complete the preparation of all drawings, designs and specifications for the Building Shell.

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2.4 Acknowledgement Of Lease Commencement. Upon commencement of the term of this Lease, Landlord and Tenant shall execute a written acknowledgement of the Commencement Date, date of termination and related matters, substantially in the form attached hereto as Exhibit E (with appropriate insertions), which acknowledgement shall be deemed to be incorporated herein by this reference. Notwithstanding the foregoing requirement, the failure of Tenant to execute such a written acknowledgement 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 Property 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 twenty-five percent (125%) 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 Property 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 Property (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(b) and (c) 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, the first commencing upon the expiration of the initial term hereof and the second commencing upon the expiration of the first extended term, if any. Exercise of such option with respect to the first such extended term shall be by written notice to Landlord at least nine (9) 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 nine (9) months prior to the expiration of the first extended term hereof. If Tenant is in default hereunder on the date of such notice or on the date any extended term is to commence, then 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 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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3. RENTAL

3.1 Minimum Rental.

(a) Tenant shall pay to Landlord as minimum rental for the Property, in advance, without deduction, offset, notice or demand, on or before the Commencement Date and on or before the first day of each subsequent calendar month of the term of this Lease, the following amounts per month:


Months	Minimum Rental

1 - 6	$	119,240
7 - 12		132,840
13 - 24		150,770
25 - 36		160,689
37 - 48		164,656
49 - 60		171,930
61 - 72		173,253
73 - 84		149,447
85 - 96		154,076
97 -108		158,705
109 - 120		163,334
121 - 132		148,786
133 - 144		154,076
145 - 156		159,366
157 - 168		165,318
169 - 180		170,608

If the obligation to pay minimum rental hereunder commences on other than the first day of a calendar month or if the term of this Lease terminates on other than the last day of a calendar month, the minimum rental for such first or last month of the term of this Lease, as the case may be, shall be prorated based on the number of days the term of this Lease is in effect during such month. If an increase in minimum rental becomes effective on a day other than the first day of a calendar month, the minimum rental for that month shall be the sum of the two applicable rates, each prorated for the portion of the month during which such rate is in effect.

(b) If Tenant properly exercises its right to extend the term of this Lease pursuant to Section 2.6 hereof, the minimum rental during the first extended term shall be equal to the greater of (i) $144,157 per month or (ii) ninety-five percent (95%) of the fair market rental value of the Property (as defined below), including any rental increase provisions then customary in the relevant market for comparable commercial leases, determined as of the commencement of such extended term in accordance with this paragraph. Upon Landlord’s receipt of a proper notice of Tenant’s exercise of its option to extend the term of this Lease, the parties shall have sixty (60) days in which to agree on the fair market rental (including any applicable rental increase provisions) for the Property at the commencement of the first extended term for the uses permitted hereunder. If the parties agree on such fair market rental and rental increase provisions (if any), they shall execute an amendment to this Lease stating the amount of the applicable minimum monthly rental and any applicable rental increase provisions. If the parties are unable to agree on such rental (including any applicable rental increase provisions) within such sixty (60) day period, then within fifteen (15) days after the expiration of such period each party, at its cost and by giving notice to the other party, shall appoint a real estate appraiser with at least five (5) years experience appraising similar commercial properties in northeastern San Mateo County to appraise and set the fair market rental and any applicable rental increase provisions for the Property at the commencement of the first extended term. If either party fails to appoint an appraiser within the allotted time, the single appraiser appointed by the other party shall be the sole appraiser. If an appraiser is appointed by each party and the two appraisers so appointed are unable to agree upon a fair market rental (and any appropriate rental increase provisions) within thirty (30) days after the appointment of the second, they shall appoint a third qualified appraiser within ten (10) days after expiration of such 30-day period; if they are unable to agree upon a third appraiser, either party may, upon not less than five (5) days notice to the other party, apply to the Presiding Judge of the San Mateo County Superior Court for the appointment of a third qualified appraiser. Each party shall bear its own legal fees in connection with appointment of the third appraiser and shall bear one-half of any other costs of appointment of the third appraiser and of such third appraiser’s fee. The third appraiser, however selected, shall be a person who has not previously acted for either party in any capacity. Within thirty (30) days after the appointment of the third appraiser, a majority of the three appraisers shall set the fair market rental and any applicable rental increase provisions for the first extended term and shall so notify the parties. If a majority are unable to agree within the allotted time, (i) the three appraised fair market rentals shall be added together and divided by three and the resulting quotient shall be the fair market rental for the first extended term, and (ii) the applicable rental increase provision shall be equal to the mathematical average (or the nearest reasonable approximation thereto) of the two

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rental increase provisions that are most closely comparable, which determinations shall be binding on the parties and shall be enforceable in any further proceedings relating to this Lease. For purposes of this Section 3.1(b), the “fair market rental” of the Property shall be determined with reference to the then prevailing market rental rates for properties in northeastern San Mateo County with shell and standard office, research and development improvements and site (common area) improvements comparable to those then existing in the Initial Building and on the Property; no equipment or laboratory improvements shall be taken into account in determining such fair market rental.

(c) If Tenant properly exercises its right to a second extended term of this Lease pursuant to Section 2.6 hereof, the minimum rental during such second extended term shall be determined in the same manner provided in the preceding paragraph for the first extended term, except that the determination shall be made as of the commencement of the second extended term.

(d) The minimum rental amounts specified in this Section 3.1 are based upon an estimated area of 66,127 square feet for the Initial Building. If the actual area of the Initial Building, when completed, is greater or less than such estimated area, then the minimum rentals, specified in this Section 3.1 shall be adjusted proportionately to the change in the area of the Initial Building, measured in accordance with the BOMA standard most closely applicable to a two-story, single-tenant building of this nature; provided, however, that the foregoing provision shall not apply to the minimum rental for months 1 through 12 of the initial term, which rental is based on a negotiated square footage of less than the full area of the Initial Building and is not intended to be subject to adjustment under this paragraph (d).

3.2 Late Charge. If Tenant fails to pay when due rental or other amounts due Landlord hereunder, such unpaid amounts shall bear interest for the benefit of Landlord at a rate equal to the lesser of fifteen percent (15%) per annum or the maximum rate permitted by law, from the date due to the date of payment. In addition to such interest, Tenant shall pay to Landlord a late charge in an amount equal to ten percent (10%) of any installment of minimum rental and any other amounts due Landlord if not paid in full on or before the fifth (5th) day after such rental or other amount is due. Tenant acknowledges that late payment by Tenant to Landlord of rental or other amounts due hereunder will cause Landlord to incur costs not contemplated by this Lease, including, without limitation, processing and accounting charges and late charges which may be imposed on Landlord by the terms of any loan relating to the Property. Tenant further acknowledges that it is extremely difficult and impractical to fix the exact amount of such costs and that the late charge set forth in this Section 3.2 represents a fair and reasonable estimate thereof. Acceptance of any late charge by Landlord shall not constitute a waiver of Tenant’s default with respect to overdue rental or other amounts, nor shall such acceptance prevent Landlord from exercising any other rights and remedies available to it. Acceptance of rent or other payments by Landlord shall not constitute a waiver of late charges or interest accrued with respect to such rent or other payments or any prior installments thereof, nor of any other defaults by Tenant, whether monetary or non-monetary in nature, remaining uncured at the time of such ‘acceptance of rent or other payments.

4. STOCK WARRANTS

4.1 Stock Warrants. Within fifteen (15) days after written request by Landlord at any time after execution hereof (but in all events no later than four (4) months after execution hereof), as a condition to Landlord’s obligations hereunder. Tenant shall deliver to Landlord, subject to compliance by Tenant and Landlord with all applicable securities laws, a warrant registered in Landlord’s name to purchase two hundred thousand (200,000) shares of Tenant’s common stock. The warrant shall have an exercise price of seven dollars and fifty cents ($7.50) per share and shall be exercisable only after the closing of the initial public offering of Tenant’s common stock and for a period of five (5) years thereafter, and shall be on the terms and conditions as set forth therein.

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5. CONSTRUCTION

5.1 Construction of Improvements. Landlord shall, at Landlord’s cost and expense (except as otherwise provided herein and in Exhibit C), construct Landlord’s Work as defined in and in accordance with the terms and conditions of the Workletter attached hereto as Exhibit C (the “Workletter”). Landlord shall use its best efforts to complete such construction in accordance with the estimated construction schedule attached hereto as Exhibit D as the same may be modified or revised from time to time in accordance with the Workletter. Tenant shall, at Tenant’s cost and expense (except as otherwise provided herein and in Exhibit C), construct Tenant’s Work as defined in and in accordance with the terms and conditions of the Workletter.

5.2 Condition of Property. Landlord shall deliver the Building Shell and other Improvements constructed by Landlord to Tenant clean and free of debris, promptly upon completion of construction thereof, and Landlord warrants to Tenant that the Building Shell and other Improvements constructed by Landlord (i) shall be free from material structural defects and (ii) shall be constructed in compliance in all material respects with any and all applicable specifications mutually approved by Landlord and Tenant, subject to any changes implemented in such specifications in accordance with the procedures set forth in the Workletter. If it is determined that this warranty has been violated in any respect, then it shall be the obligation of Landlord, after receipt of written notice from Tenant setting forth with specificity the nature of the violation, to promptly, at Landlord’s sole cost, correct the condition(s) constituting such violation. Tenant’s failure to give such written notice to Landlord within one hundred eighty (180) days after the Commencement Date shall give rise to a conclusive presumption that Landlord has complied with all Landlord’s obligations hereunder, except with respect to latent defects. Landlord shall also assign to Tenant Landlord’s rights under all contractor’s and other warranties relating to the Building Shell and other Improvements constructed by Landlord (provided, however, that Landlord may reserve joint enforcement rights under such warranties to the extent of Landlord’s continuing obligations or warranties hereunder), and shall cooperate with Tenant in all reasonable respects in any enforcement of such assigned warranties. TENANT ACKNOWLEDGES THAT THE WARRANTY CONTAINED IN THIS SECTION IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE PHYSICAL CONDITION OF THE IMPROVEMENTS TO BE CONSTRUCTED BY LANDLORD AND THAT LANDLORD MAKES NO OTHER WARRANTIES EXCEPT AS EXPRESSLY SET FORTH IN THIS LEASE.

5.3 Compliance with Law. Landlord warrants to Tenant that the Building Shell and other Improvements constructed by Landlord (when constructed), as they exist on the Commencement Date, but without regard to the use for which Tenant will occupy the Property, shall not violate any covenants or restrictions of record or any applicable building code, regulation or ordinance in effect on the Commencement Date. Tenant warrants to Landlord that the Interior Improvements and any other improvements constructed by Tenant from time to time shall not violate any applicable building code, regulation or ordinance in effect on the Commencement Date or at the time such improvements are placed in service. If it is determined that this warranty has been violated, then it shall be the obligation of the warranting party, after written notice from the other party, to correct the condition(s) constituting such violation promptly, at the warranting party’s sole cost and expense. Tenant acknowledges that neither Landlord nor any agent of Landlord has made any representation or warranty as to the present or future suitability of the Property for the conduct of Tenant’s business or proposed business thereon.

6. EXPANSION BUILDING

6.1 Lock-Up Option. The parties acknowledge that Landlord may, subject to the terms hereof, construct a building on the Phase II Site, including (but not limited to) a building in the area designated as “Building A” in Exhibit B attached hereto. Tenant shall have four consecutive options (each, a “Lock-Up Option”) to prohibit Landlord from entering into an agreement with any party other than Tenant for the sale or leasing of any such other building then existing on or planned for the Phase II Site (in either case, the “Expansion Building”). Upon Tenant’s timely and proper exercise of a Lock-Up Option, Landlord shall refrain from entering into such an agreement for a period of six (6) months (a “Lock-Up Period”). Failure to exercise a Lock-Up Option on or before the deadline determined under Section 6.2 shall result in the forfeiture of that Lock-Up Option and all future Lock-Up Options, if any.

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6.2 Exercise. To exercise a Lock-Up Option, Tenant shall provide written notice to Landlord of such exercise. In the case of the first Lock-Up Option, Tenant must provide such notice not later than fifteen (15) days after a certificate of occupancy or equivalent verbal or written permission to occupy the Initial Building has been given by the City of South San Francisco to Tenant (or, if the certificate of occupancy or equivalent permission is given to Landlord, then within fifteen (15) days after Landlord’s written notice to Tenant that such certificate of occupancy or equivalent permission has been given); the first six-month Lock-Up Period shall begin, retroactively, as of the date such certificate of occupancy or equivalent verbal or written permission is given by the City of South San Francisco. In the case of the subsequent Lock-Up Options, Tenant must provide such notice not later than fifteen (15) days prior to the final day of the Lock-Up Period then in effect. Within ten (10) days after such notice, Landlord shall provide Tenant with written notice of Landlord’s estimate of the Carrying Costs (as defined in Section 6.3) for the upcoming Lock-Up Period. Tenant shall then pay such amount to Landlord within five (5) days after receipt of such estimate. A Lock-Up Option shall be deemed validly exercised when and only when Tenant has timely paid such estimated amount pertaining to the applicable Lock-Up Period to Landlord. If Tenant is in default hereunder on the date of its exercise notice or on the date any Lock-Up Period is to commence, then the Lock-Up Option (and any future Lock-Up Options) shall be of no force or effect.

6.3 Carrying Costs. As compensation for each Lock-Up Option, Tenant shall pay or reimburse to Landlord all Carrying Costs incurred by Landlord during or with respect to the applicable Lock-Up Period, including (i) interest expense on Landlord’s construction financing for any site work, off-site improvements or other construction (including, but not limited to, construction of the Expansion Building, if any) on the Phase II Site, (ii) interest expense on Landlord’s acquisition financing or refinancing for the Phase II Site, and (iii) real property taxes, assessments and insurance on or allocable to the Expansion Building and/or the Phase II Site; provided, however, that Tenant shall not be obligated to pay Landlord an amount greater than one hundred fifty thousand dollars ($150,000) for Carrying Costs incurred during or with respect to any single Lock-Up Period. Tenant shall pay Landlord’s estimated Carrying Costs for each applicable Lock-Up Period in advance as contemplated in Section 6.2 hereof. Within ten (10) days after the end of each Lock-Up Period, Landlord shall notify Tenant in writing of Landlord’s actual Carrying Costs for such Lock-Up Period and within ten (10) days after such notice either (i) Tenant shall pay Landlord the amount by which such actual Carrying Costs exceeded the estimated Carrying Costs paid by Tenant for such period, up to the $150,000 maximum set forth in this Section 6.3, or (ii) Landlord shall pay Tenant the amount by which the estimated Carrying Costs paid by Tenant exceeded the actual Carrying Costs for such period. If taxes or other Carrying Costs allocable to any Lock-Up Period are increased or decreased (for example, by a tax reduction or additional tax assessment) following completion of the reconciliation process described in the preceding sentence, Landlord shall promptly notify Tenant in writing of such further increase or decrease and the parties shall make any further adjustment payments in cash in the same manner contemplated in the preceding sentence.

6.4 First Negotiation Right and First Refusal Right to Lease.

(a) Landlord shall not lease all or any portion of the Expansion Building at any time during the term of this Lease, except in compliance with this Section 6.4; provided, however, that the foregoing restriction shall not apply during any period in which Tenant is in default under this Lease.

(b) As specified in Section 6.1 hereof, during any Lock-Up Period duly and timely elected by Tenant, Landlord shall have no right to agree to sell or lease the Expansion Building to anyone other than Tenant, and therefore shall have no right to invoke the first refusal right provisions in Section 6.4(c). If, however, during any such Lock-Up Period, Tenant notifies Landlord in writing of Tenant’s desire to lease and occupy the Expansion Building, then Landlord and Tenant shall negotiate diligently and in good faith concerning such terms, subject to the following (unless otherwise mutually agreed by Landlord and Tenant at the time): Tenant shall have the option to have Landlord construct the building shell for the Expansion Building on substantially the same economic terms as the Initial Building, adjusted to reflect changes in costs of construction and in cost of money (determined by reference to changes in the Bank of America prime rate). At the time the option is exercised, Landlord and Tenant shall negotiate over tenant improvements and over any additional stock warrants, but Landlord is not required to agree to construct or fund tenant improvements and Tenant is not required to agree to have Landlord

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construct or fund them. The new lease shall have a primary term of 15 years. Upon the commencement of the lease term for the Expansion Building, the term of this Lease for the Initial Building shall be extended, by amendment, to be coterminous with the primary term of the new lease. The initial rent on the Expansion Building as of Tenant’s occupancy shall take into account, in addition to the cost factors mentioned above, any required construction or funding of tenant improvements by Landlord, and shall also reflect any changes in Tenant’s financial condition at that time. In any event, however, the initial rent on the Expansion Building shall be no less than the prevailing rent at that time on the Initial Building, having regard for the fact that the Initial Building included a tenant improvement allowance of $105 per square foot.

(c) If, at any time during the term of this Lease after the expiration of any and all available Lock-Up Periods, Landlord receives and wishes to accept a bona fide written offer from a person or entity other than Tenant (the “Offeror”) to lease all or any portion of the Expansion Building and if Tenant is not then in default under this Lease, Landlord shall give written notice of such offer to Tenant, specifying the material terms on which the Offeror proposes to lease the Expansion Building 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. For purposes of this Section 6.4(c), an offer shall be considered bona fide if it is contained in a letter of intent or other writing signed by the Offeror and specifies the material terms of such proposed lease. Tenant shall have fifteen (15) 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 on the terms set forth in Landlord’s notice and on the additional terms and provisions set forth in this Lease (except to the extent inconsistent with the terms set forth in Landlord’s said notice) and the parties shall promptly execute an agreement containing the terms of Landlord’s said notice and all other terms and provisions of this Lease not inconsistent with the terms of said notice, except as the parties may otherwise mutually agree. 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 Offeror, 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 terms and conditions not more favorable to the Offeror 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 the Offeror within one hundred eighty (180) days, this First Refusal Right shall reattach to that space. This First Refusal Right shall be applicable in the case of either an offer to lease all or a portion of an already-built Expansion Building or an offer to enter into a build-to-suit lease for the Expansion Building. Tenant’s failure, if any, to exercise any or all Lock-Up Options shall not affect Tenant’s First Refusal Right under this Section 6.4.

7. FIRST REFUSAL RIGHT TO PURCHASE

7.1 Sale Restriction. Landlord shall not sell the Site, or any portion thereof containing the Initial Building, the Expansion Building or both, at any time during the term of this Lease, except in compliance with this Article 7; provided, however, that the foregoing restriction shall not apply during any period in which Tenant is in default under this Lease. The parties acknowledge that the sale of any portion of the Site independent of the remainder of the Site as a separate legal parcel would require a subdivision of the Site. For purposes of this Article 7, the terms “purchase,” “sell” and “sale” shall be construed to include, without limitation, any exchange transaction in which Landlord transfers or conveys its interest in the Site (or any applicable portion thereof) in exchange for other real property or other non-cash consideration. Notwithstanding any other provisions of this Article 7, the provisions of this Article 7 shall not apply to any sale, transfer or other conveyance of the Site or any portion thereof by Landlord to any person or entity which controls, is controlled by or is under common control with Landlord, but the provisions of this Article 7 shall continue to apply to the Site in the hands of such affiliated transferee.

7.2 First Refusal Right. If, at any time during the term of this Lease after the expiration of any and all available Lock-Up Periods, Landlord receives and wishes to accept a bona fide written offer from a person or entity other than Tenant (the “Offeror”) to purchase the Site, or any portion thereof containing the Initial Building, the Expansion Building or both, and if Tenant is not then in default under this Lease, Landlord shall give written notice of such offer to Tenant, specifying the material terms on which the Offeror proposes to purchase the Site or specified

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portion thereof (the “Offered Property”), and shall offer to Tenant the opportunity to purchase the Offered Property on the terms specified in Landlord’s notice, as modified by Section 7.3 (if applicable). For purposes of this Section 7.2, an offer shall be considered bona fide if it is contained in a letter of intent or other writing signed by the Offeror and specifies the material terms of such proposed purchase. Tenant shall have twenty (20) 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 Property shall be sold to Tenant on the terms set forth in Landlord’s notice, as modified by Section 7.3 hereof (if applicable), and the parties shall promptly execute an agreement containing the terms of Landlord’s said notice and such other reasonable and customary terms as the parties shall agree. If Tenant does not accept Landlord’s offer within the allotted time, Landlord shall thereafter have the right to sell the Offered Property to the Offeror, at any time within one hundred eighty (180) days after Tenant’s failure to accept Landlord’s offer, at a price and on other terms and conditions not more favorable to the Offeror than the price and other terms of the original offer specified in Landlord’s said notice. If Tenant does not accept Landlord’s offer and Landlord does not sell the Offered Property to the Offeror within one hundred eighty (180) days, this First Refusal Right shall reattach to the Offered Property. Tenant’s failure, if any, to exercise any or all Lock-Up Options shall not affect Tenant’s First Refusal Right under this Section 7.2.

7.3 Discount on Purchase Price. If, at the time Landlord is required to give Tenant a notice specified in Section 7.2, Tenant has at least one class of equity securities listed on any national stock exchange, the NASDAQ National Market System or the NASDAQ Small Cap Market, or registered for public trading pursuant to the Securities Exchange Act of 1934, as amended, and Tenant has received gross revenues of at least one hundred fifty million dollars ($150,000,000) during Tenant’s most recently completed fiscal year, then the price at which Tenant is entitled to purchase the Offered Property pursuant to the notice specified in Section 7.2 shall be four percent (4%) lower than the price specified in the bona fide offer. For purposes of this Section 7.3, “gross revenues” shall include equity investments, research and development funding, milestone payments and royalty revenue.

8. TAXES

8.1 Personal Property. Tenant shall be responsible for and shall pay prior to delinquency all taxes and assessments levied against or by reason of (a) any and all alterations, additions and items installed or placed on the Property and taxed as personal property rather than as real property, and/or (b) all personal property, trade fixtures and other property placed by Tenant on or about the Property. Upon request by Landlord, Tenant shall furnish Landlord with satisfactory evidence of Tenant’s payment thereof. If at any time during the term of this Lease any of said alterations, additions or personal property, whether or not belonging to Tenant, shall be taxed or assessed as part of the Property, then such tax or assessment shall be paid by Tenant to Landlord immediately upon presentation by Landlord of copies of the tax bills in which such taxes and assessments are included and shall, for the purposes of this Lease, be deemed to be personal property taxes or assessments under this Section 8.1.

8.2 Real Property. To the extent any real property taxes and assessments on the Property (including, but not limited to, the Improvements) are assessed directly to Tenant, Tenant shall be responsible for and shall pay prior to delinquency all such taxes and assessments levied against the Property. Upon request by Landlord, Tenant shall furnish Landlord with satisfactory evidence of Tenant’s payment thereof. To the extent the Property and/or Improvements are taxed or assessed to Landlord following the Commencement Date, such real property taxes and assessments shall constitute Operating Expenses (as that term is defined in Section 9.2 of this Lease) and shall be paid in accordance with the provisions of Article 9 of this Lease.

9. OPERATING EXPENSES

9.1 Liability For Operating Expenses.

(a) Tenant shall pay to Landlord, at the time and in the manner hereinafter set forth, as additional rental, an amount equal to one hundred percent (100%) (“Tenant’s Operating Cost Share”) of the Operating Expenses defined in Section 9.2.

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(b) If Landlord constructs additional buildings on the Phase II Site or on any other adjacent property owned by Landlord and operated, for common area purposes, on an integrated basis with the Phase I Site, Landlord and Tenant shall negotiate in good faith concerning the reasonable and appropriate treatment of any taxes, insurance or other operating expense items that are allocable both to the Phase I Site and to any such additional buildings or properties. To the extent appropriate, except as otherwise agreed in any such negotiations by Landlord and Tenant, the definition of Operating Expenses in Section 9.2 shall be expanded to include items attributable to such additional buildings or properties and Tenant’s Operating Cost Share shall be adjusted from time to time to be equal to the percentage determined by dividing the square footage of the Initial Building as it then exists by the square footage of all buildings located on portions of the Site owned by Landlord or on any applicable adjacent property owned by Landlord as described above. In determining such percentage, a building shall be taken into account from and after the date on which a tenant first enters into possession of the building or a portion thereof, and the square footage of any such building shall be measured or determined in accordance with the same BOMA standard applicable to the measurement of the Initial Building under Section 1.1(a) hereof.

9.2 Definition Of Operating Expenses. Subject to the exclusions and provisions hereinafter contained, the term “Operating Expenses” shall mean the total costs and expenses incurred by or allocable to Landlord for operation and maintenance of the Improvements and the Property, including, without limitation, costs and expenses of (i) operation, repair and maintenance of the roof (structural portions only), exterior walls and other structural portions of the Initial Building; (ii) liability, casualty or other insurance (including, but not limited to, earthquake insurance if Landlord in its discretion elects to carry such insurance, which it is Landlord’s present intention to do, so long as such insurance is reasonably available in the commercial insurance markets) carried by Landlord with respect to the Property, the Improvements or any portion thereof; (iii) real and personal property taxes and assessments or substitutes therefor levied or assessed against the Property or any part thereof, including (but not limited to) any possessory interest, use, business, license or other taxes or fees, any taxes imposed directly on rents or services, any assessments or charges for police or fire protection, housing, transit, open space, street or sidewalk construction or maintenance or other similar services from time to time by any governmental or quasi-governmental entity, and any other new taxes on landlords in addition to taxes now in effect; (iv) supplies, equipment, utilities and tools used in operation, repair and maintenance of the roof (structural portions only), exterior walls and other structural portions of the Initial Building; (v) capital improvements to the Property or the Improvements, amortized over their respective useful lives, (aa) which reduce or will cause future reduction of other items of Operating Expenses for which Tenant is otherwise required to contribute (but not in excess of the cost savings realized) or (bb) which are required by law, ordinance, regulation or order of any governmental authority enacted after the date of this Lease; and (vi) any other costs (including, but not limited to, any parking or utilities fees or surcharges) allocable to or paid by Landlord, as owner of the Property or Improvements, pursuant to any applicable laws, ordinances, regulations or orders of any governmental or quasi-governmental authority or pursuant to the terms of any declarations of covenants, conditions and restrictions now or hereafter affecting either the Property or any other property described in Section 9.1(b) or over which Tenant has non-exclusive usage rights as contemplated in Section l.l(b) hereof. The distinction between items of ordinary operating maintenance and repair and items of a capital nature shall be made in accordance with generally accepted accounting principles applied on a consistent basis. Notwithstanding any other provisions of this Section 9.2, Operating Expenses shall not include any costs attributable to work for which Landlord is required to pay under Section 5.1 or Exhibit C; any management fees; depreciation on buildings (other than depreciation on personal property); costs of tenants’ improvements; interest; capital items (other than as expressly provided above); payments on debt (principal or interest); leasing commissions; costs of goods and services (including utilities) for which Landlord is reimbursed by tenants or occupants other than Tenant; costs incurred to perform or correct Landlord’s Work described in Section 5.1 and Exhibit C; costs of correcting defects in or inadequacy of the initial design of the structure of the Initial Building; legal fees; amounts paid to affiliates of Landlord (i.e., persons or companies controlled by, under common control with, or which control, Landlord) for services on or to the Initial Building, except to the extent that the costs of such services do not exceed competitive costs of such services were they rendered by a non-affiliate of Landlord; expenses in connection with services or other benefits provided to one or more other tenants but not generally available to Tenant; space planning fees, architectural fees, engineering fees (other than those relating to the general operation of buildings or common areas), marketing, advertising or

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any other expenses incurred in connection with the development or leasing of any buildings or improvements; costs associated with the operation of the business of the legal entity which constitutes Landlord as the same is separate and apart from the costs and operation of the Initial Building, including legal entity formation and internal entity accounting; any late fees or penalties or similar fees incurred by Landlord, except to the extent attributable to Tenant’s late payment or nonpayment of minimum rental or additional rent; any debt losses, rent losses or reserves for bad debt; the cost of any repairs in accordance with the provisions of this Lease relating to fire, casualty and/or condemnation; Landlord’s incremental costs incurred by reason of Landlord’s breach of any leases with other tenants, and any costs incurred by reason of the breach by other tenants of such tenants’ leases (to the extent recoverable from such tenants); or any unrecovered expenses incurred as a consequence of the grossly negligent operation and maintenance, by Landlord or its employees, of those portions of the Initial Building required to be maintained by Landlord.

9.3 Determination and Payment Of Operating Expenses.

(a) Beginning on the Commencement Date and thereafter from time to time during the term of this Lease, Landlord shall give Tenant written notice of amounts paid or to be paid, by Landlord for insurance premiums, taxes, structural repair or maintenance costs or any other amount constituting an Operating Expense under Section 9.2 hereof, accompanied by copies of premium notices, tax statements, contractor’s invoices or other documentation reasonably evidencing the amount of the applicable Operating Expense payment, and Tenant shall pay to Landlord Tenant’s Operating Cost Share of each such item of Operating Expenses. Such payment by Tenant shall be due on or before the later to occur of (i) ten (10) days after delivery of Landlord’s written notice to Tenant or (ii) fourteen (14) days before the date on which the applicable Operating Expense payment by Landlord is due (in the case of insurance premiums or other payments to private parties) or would become delinquent (in the case of taxes or assessments). In the event of any subsequent rebate, refund, adjustment or surcharge with respect to any item of Operating Expenses allocable to any portion of the term of this Lease, the amount of such rebate, refund, adjustment or surcharge shall be for Tenant’s benefit or account, as the case may be, and shall be adjusted promptly by a cash payment from Landlord to Tenant or from Tenant to Landlord, as the case may be.

(b) Tenant shall be entitled at any time and from time to time, upon reasonable written notice to Landlord and during normal business hours at Landlord’s office or such other places as Landlord shall designate, to inspect and examine those books and records of Landlord relating to the determination and payment of Operating Expenses relating to this Lease, the Property and/or any other properties described in Section 9.1(b). If, after inspection and examination of such books and records, Tenant disputes the amount of any such Operating Expenses charged by Landlord and the parties are not able to resolve such dispute by good faith negotiations within (30) days after Tenant notifies Landlord in writing of the disputed items, then Tenant may, by written notice to Landlord, request an independent audit of such books and records. The independent audit of the books and records shall be conducted by a certified public accountant acceptable to both Landlord and Tenant or, if the parties are unable to agree, by a “Big Six” accounting firm designated by Landlord and not then employed by Landlord or Tenant. The audit shall be limited to the determination of the amount of Operating Expenses specified by Tenant in its notice of objection. If the audit discloses that the amount of Operating Expenses billed to Tenant was incorrect, the appropriate party shall promptly pay to the other party the deficiency or overpayment, as applicable. All costs and expenses of the audit shall be paid by Tenant unless the audit shows that Landlord overstated Operating Expenses covered by the audit by more than five percent (5%), in which case Landlord shall pay all costs and expenses of the audit.

9.4 Proration. If the Commencement Date falls on a day other than the first day of an insurance coverage period, tax fiscal year or other period to which an Operating Expense is allocable or attributable, or if this Lease terminates on a day other than the last day of an insurance coverage period, tax fiscal year or other period to which an Operating Expense is allocable or attributable, then the amount of Operating Expenses payable by Tenant with respect to such first or last partial insurance coverage period, tax fiscal year or other period shall be prorated on the basis which the number of days during such insurance coverage period, tax fiscal year or other period in which this Lease is in effect bears to the total number of days in such insurance coverage period, tax fiscal year or other period.

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10. UTILITIES

10.1 Payment. Commencing with the Commencement Date and thereafter throughout the term of this Lease, Tenant shall pay, before delinquency, all charges for water, gas, heat, light, electricity, power, sewer, telephone, alarm system, janitorial and other services or utilities supplied to or consumed in or upon the Property (including any separately metered costs for water, electricity or other services or utilities furnished with respect to the Common Areas), including any taxes on such services and utilities.

10.2 Interruption. There shall be no abatement of rent or other charges required to be paid hereunder and Landlord shall not be liable in damages or otherwise for interruption or failure of any service or utility furnished to or used in the Property because of accident, making of repairs, alterations or improvements, severe weather, difficulty or inability in obtaining services or supplies, labor difficulties or any other cause, except to the extent such interruption or failure of a service or utility is caused by the negligence or willful misconduct of Landlord or its agents or employees.

11. ALTERATIONS: SIGNS

11.1 Right To Make Alterations. Tenant shall make no alterations, additions or improvements to the Property without the prior written consent of Landlord, which consent shall not be unreasonably withheld or delayed, except that Tenant shall not be required to obtain such consent for interior non-structural alterations costing less than Seventy-Five Thousand Dollars ($75,000.00) in the aggregate during any twelve (12) month period. All such alterations, additions and improvements shall be completed with due diligence in a first-class workmanlike manner and in compliance with plans and specifications approved in writing by Landlord and all applicable laws, ordinances, rules and regulations, and to the extent Landlord’s consent is not otherwise required hereunder for such alterations, additions or improvements, Tenant shall give prompt written notice thereof to Landlord for purposes of Section 11.2 hereof. Tenant shall cause any contractors engaged by Tenant for work on the Property to maintain public liability and property damage insurance, and other customary insurance, with such terms and in such amounts as Landlord may reasonably require, naming Landlord and its partners, shareholders, agents and employees as additional insureds, and shall furnish Landlord with certificates of insurance or other evidence that such coverage is in effect. Notwithstanding any other provisions of this Section 11.1, under no circumstances shall Tenant make any structural alterations or improvements, or any substantial changes to the roof or substantial equipment installations on the roof, or any substantial changes or alterations to building systems, without Landlord’s prior written consent.

11.2 Title To Alterations. All alterations, additions and improvements installed in, on or about the Property shall be part of the Improvements and the property of Landlord, unless Landlord elects to require Tenant to remove the same upon the termination of this Lease, which election shall be made by Landlord concurrently with its consent to such alterations, additions or improvements or, if no such consent is required, then within fifteen (15) days after Landlord is advised in writing of such alterations, additions or improvements as contemplated in Section 11.1 hereof; provided, however, that the foregoing shall not apply (i) to Tenant’s movable furniture and trade fixtures not affixed to the Property, or (ii) to any of the Interior Improvements (as defined in Exhibit C hereto), or any subsequent improvements installed by Tenant at its own expense, which are readily movable, are not an integral part of the Initial Building’s structure or interior architectural improvements, and are not an integral part of the Initial Building’s HVAC, plumbing or electrical systems or other standard operating systems. All of such items described in clause (i) or (ii) of the preceding sentence (in all events including, but not limited to, lab benches, fume hoods and cold rooms) may (and, if duly elected by Landlord hereunder, shall) be removed by Tenant upon the termination of this Lease. Tenant shall promptly repair any damage caused by its removal of any such improvements.

11.3 Tenant Fixtures. Notwithstanding the provisions of Sections 11.1 and 11.2, Tenant may install, remove and reinstall trade fixtures without Landlord’s prior written consent, except that any fixtures which are affixed to the Property or which affect the exterior or structural portions of the Initial Building or the building systems shall require Landlord’s written approval.

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The foregoing shall apply to Tenant’s signs, logos and insignia, all of which Tenant shall have the right to place and remove and replace (a) only with Landlord’s prior written consent as to location, size and composition, which consent shall not be unreasonably withheld or delayed, and (b) only in compliance with all restrictions and requirements of applicable law and of any covenants, conditions and restrictions or other written agreements now or hereafter applicable to the Property. Tenant shall immediately repair any damage caused by installation and removal of fixtures under this Section 11.3.

11.4 No Liens. Tenant shall at all times keep the Property free from all liens and claims of any contractors, subcontractors, materialmen, suppliers or any other parties employed either directly or indirectly by Tenant in construction work on the Property. Tenant may contest any claim of lien, but only if, prior to such contest, Tenant either (i) posts security in the amount of the claim, plus estimated costs and interest, or (ii) records a bond of a responsible corporate surety in such amount as may be required to release the lien from the Property. Tenant shall indemnify, defend and hold Landlord harmless against any and all liability, loss, damage, cost and other expenses, including, without limitation, reasonable attorneys’ fees, arising out of claims of any lien for work performed or materials or supplies furnished at the request of Tenant or persons claiming under Tenant.

11.5 Signs. Without limiting the generality of the provisions of Section 11.3 hereof, Tenant shall have the right to display its corporate name and logo on the Initial Building and in front of the entrance to the Initial Building, subject to Landlord’s prior approval as to location, size and composition (which approval shall not be unreasonably withheld or delayed) and subject to all restrictions and requirements of applicable law and of any covenants, conditions and restrictions or other written agreements now or hereafter applicable to the Property. Landlord is hereby deemed to have approved, as to location, any signage the location of which is expressly designated on the site plan attached hereto as Exhibit B or on any Approved Plan developed pursuant to the Workletter executed concurrently herewith.

12. MAINTENANCE AND REPAIRS

12.1 Landlord’s Work.

(a) Landlord shall repair and maintain or cause to be repaired and maintained the roof (structural portions only), exterior walls and other structural portions of the Initial Building. The cost of all work performed by Landlord under this Section 12.1 shall be an Operating Expense hereunder, except to the extent such work (i) is required due to the negligence of Landlord, (ii) is a capital expense not includible as an Operating Expense under Section 9.2 hereof, or (iii) is required due to the negligence or willful misconduct of Tenant or its agents, employees or invitees (in which event Tenant shall bear the full cost of such work pursuant to the indemnification provided in Section 14.6 hereof). Tenant knowingly and voluntarily waives the right to make repairs at Landlord’s expense, except to the extent expressly set forth in Section ‘12.1(b), or to offset the cost thereof against rent, under any law, statute, regulation or ordinance now or hereafter in effect.

(b) If Landlord fails to perform any repairs or maintenance required to be performed by Landlord under Section 12.1(a) and such failure continues for thirty (30) days or more after Tenant gives Landlord written notice of such failure (or, if such repairs or maintenance cannot reasonably be performed within such 30-day period, then if Landlord fails to commence performance within such 30-day period and thereafter to pursue such performance diligently to completion), then Tenant shall have the right to perform such repairs or maintenance and Landlord shall reimburse Tenant for the reasonable cost thereof within fifteen (15) days after written notice from Tenant of the completion and cost of such work, accompanied by copies of invoices or other reasonable supporting documentation. Under no circumstances, however, shall Tenant have any right to offset the cost of any such work against rent or other charges falling due from time to time under this Lease.

12.2 Tenant’s Obligation For Maintenance.

(a) Good Order, Condition And Repair. Except as provided in Section 12.1 hereof, Tenant at its sole cost and expense shall keep and maintain in good and sanitary order,

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condition and repair the Property and every part thereof, wherever located, including but not limited to the Common Areas of the Phase I Site, the roof (non-structural portions only), signs, interior, ceiling, electrical system, plumbing system, telephone and communications systems of the Initial Building, the HVAC equipment and related mechanical systems serving the Initial Building (for which equipment and systems Tenant shall enter into a service contract with a person or entity designated or approved by Landlord), all doors, door checks, windows, plate glass, door fronts, exposed plumbing and sewage and other utility facilities, fixtures, lighting, wall surfaces, floor surfaces and ceiling surfaces of the Initial Building and all other interior repairs, foreseen and unforeseen, with respect to the Initial Building, as required. If the Expansion Building is constructed by Landlord and is not occupied by Tenant, then Landlord and Tenant shall negotiate diligently and in good faith to reach a reasonable arrangement for the maintenance and repair of the Common Areas of the entire Site and a reasonable allocation of the cost of such maintenance and repair between the Initial Building and the Expansion Building.

(b) Landlord’s Remedy. If Tenant, after notice from Landlord, fails to make or perform promptly any repairs or maintenance which are the obligation of Tenant hereunder, Landlord shall have the right, but shall not be required, to enter the Property and make the repairs or perform the maintenance necessary to restore the Property to good and sanitary order, condition and repair. Immediately on demand from Landlord, the cost of such repairs shall be due and payable by Tenant to Landlord.

(c) Condition Upon Surrender. At the expiration or sooner termination of this Lease, Tenant shall surrender the Property, including any additions, alterations and improvements thereto, broom clean, in good and sanitary order, condition and repair, ordinary wear and tear excepted, first, however, removing all goods and effects of Tenant and all and fixtures and items required to be removed pursuant to this Lease (including, but not limited to, any such removal required as a result of an election duly made by Landlord to require such removal as contemplated in Section 11.2), and repairing any damage caused by such removal. Tenant shall not have the right to remove fixtures or equipment if Tenant is in default hereunder unless Landlord specifically waives this provision in writing. Tenant expressly waives any and all interest in any personal property and trade fixtures not removed from the Property by Tenant at the expiration or termination of this Lease, agrees’ that any such personal property and trade fixtures may, at Landlord’s election, be deemed to have been abandoned by Tenant, and authorizes Landlord (at its election and without prejudice to any other remedies under this Lease or under applicable law) to remove and either retain, store or dispose of such property at Tenant’s cost and expense, and Tenant waives all claims against Landlord for any damages resulting from any such removal, storage, retention or disposal.

13. USE OF PROPERTY

13.1 Permitted Use. Subject to Sections 13.3 and 13.4 hereof, Tenant shall use the Property solely as a laboratory research and development facility, including (but not limited to) wet chemistry and biology labs, clean rooms, pilot scale, clinical scale and GMP scale manufacturing, storage and use of toxic and radioactive materials incidental to such research and development activities (subject to the provisions of Section 13.6 hereof), storage and use of laboratory animals, and other lawful purposes related to or incidental to such research and development use, and for no other purpose without Landlord’s written consent (not to be unreasonably withheld or delayed).

13.2 [Omitted.]

13.3 No Nuisance. Tenant shall not use the Property for or carry on or permit upon the Property or any part thereof any offensive, noisy or dangerous trade, business, manufacture, occupation, odor or fumes, or any nuisance or anything against public policy, nor interfere with the rights or business of Landlord in the Initial Building or the Property, nor commit or allow to be committed any waste in, on or about the Property. Tenant shall not do or permit anything to be done in or about the Property, nor bring nor keep anything therein, which will in any way cause the Property to be uninsurable with respect to the insurance required by this Lease or with respect to standard fire and extended coverage insurance with vandalism, malicious mischief and riot endorsements.

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13.4 Compliance With Laws. Tenant shall not use the Property or permit the Property to be used in whole or in part for any purpose or use that is in violation of any applicable laws, ordinances, regulations or rules of any governmental agency or public authority. Tenant shall keep the Property equipped with all safety appliances required by law, ordinance or insurance on the Property, or any order or regulation of any public authority, because of Tenant’s particular use of the Property. Tenant shall procure all licenses and permits required for use of the Property. Tenant shall use the Property in strict accordance with all applicable ordinances, rules, laws and regulations and shall comply with all requirements of all governmental authorities now in force or which may hereafter be in force pertaining to the use of the Property by Tenant, including, without limitation, regulations applicable to noise, water, soil and air pollution, and making such nonstructural alterations and additions thereto as may be required from time to time by such laws, ordinances, rules, regulations and requirements of governmental authorities or insurers of the Property (collectively, “Requirements”) because of Tenant’s construction of improvements in or other particular use of the Property. Any structural alterations or additions required from time to time by applicable Requirements because of Tenant’s construction of improvements in or other particular use of the Property shall, at Landlord’s election, either (i) be made by Tenant, at Tenant’s sole cost and expense, in accordance with the procedures and standards set forth in Section 11.1 for alterations by Tenant, or (ii) be made by Landlord at Tenant’s sole cost and expense, in which event Tenant shall pay to Landlord as additional rent, within ten (10) days after demand by Landlord, an amount equal to all reasonable costs incurred by Landlord in connection with such alterations or additions. The judgment of any court, or the admission by Tenant in any proceeding against Tenant, that Tenant has violated any law, statute, ordinance or governmental rule, regulation or requirement shall be conclusive of such violation as between Landlord and Tenant.

13.5 Liquidation Sales. Tenant shall not conduct or permit to be conducted any auction, bankruptcy sale, liquidation sale, or going out of business sale, in, upon or about the Property, whether said auction or sale be voluntary, involuntary or pursuant to any assignment for the benefit of creditors, or pursuant to any bankruptcy or other insolvency proceeding.

13.6 Environmental Matters.

(a) For purposes of this Section, “hazardous substance” shall mean the substances included within the definitions of the term “hazardous substance” under (i) the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. §§ 9601 et seq., and the regulations promulgated thereunder, as amended, (ii) the California Carpenter-Presley-Tanner Hazardous Substance Account Act, California Health & Safety Code §§ 25300 et seq., and regulations promulgated thereunder, as amended, (iii) the Hazardous Materials Release Response Plans and Inventory Act, California Health & Safety Code §§ 25500 et seq., and regulations promulgated thereunder, as amended, and (iv) petroleum; “hazardous waste” shall mean (i) any waste listed as or meeting the identified characteristics of a “hazardous waste” under the Resource Conservation and Recovery Act of 1976, 42 U.S.C. §§ 6901 et seq., and regulations promulgated pursuant thereto, as amended (collectively, “RCRA”), (ii) any waste meeting the identified characteristics of “hazardous waste,” “extremely hazardous waste” or “restricted hazardous waste” under the California Hazardous Waste Control Law, California Health & Safety Code §§ 25100 et seq., and regulations promulgated pursuant thereto, as amended (collectively, the “CHWCL”), and/or (iii) any waste meeting the identified characteristics of “medical waste” under California Health & Safety Code §§ 25015-25027.8, and regulations promulgated thereunder, as amended; and “hazardous waste facility” shall mean a hazardous waste facility as defined under the CHWCL.

(b) Without limiting the generality of the obligations set forth in Section 13.4 of this Lease:

(i) Tenant covenants not to cause or permit any hazardous substance or hazardous waste to be brought upon, kept, stored or used in or about the Property without the prior written consent of Landlord, which consent shall not be unreasonably withheld or delayed, except that Tenant, in connection with its permitted use of the Property as provided in Section 13.1, may keep, store and use materials that constitute hazardous substances which are customary for such permitted use, provided such hazardous substances are kept, stored and used in quantities which are customary for such permitted use and are kept, stored and used in full compliance with clauses (ii) and (iii) immediately below.

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(ii) Tenant covenants that it will comply with all applicable laws, rules, regulations, orders, permits, licenses and operating plans of any governmental authority with respect to the receipt, use, handling, generation, transportation, storage, treatment and/or disposal of hazardous substances or wastes by Tenant or its agents or employees, and Tenant will provide Landlord with copies of all permits, licenses, registrations and other similar documents that authorize Tenant to conduct any such activities in connection with its authorized use of the Property from time to time.

(iii) Tenant agrees that it shall not (A) operate on or about the Property any facility required to be permitted or licensed as a hazardous waste facility or for which interim status as such is required, nor (B) store any hazardous wastes on or about the Property for ninety (90) days or more, nor (C) conduct any other activities on or about the Property that could result in the Property being deemed to be a “hazardous waste facility” (including, but not limited to, any storage or treatment of hazardous substances or hazardous wastes which could have such a result).

(iv) Tenant agrees to comply with all applicable laws, rules, regulations, orders and permits relating to underground storage tanks installed by Tenant or its agents or employees (including any installation, monitoring, maintenance, closure and/or removal of such tanks) as such tanks are defined in California Health & Safety Code § 25281(x), including, without limitation, complying with California Health & Safety Code § 25280-25299.7 and the regulations promulgated thereunder, as amended. Tenant shall furnish to Landlord copies of all registrations and permits issued to or held by Tenant from time to time for any and all underground storage tanks.

(v) If applicable, Tenant shall provide Landlord in writing the following information and/or documentation at the commencement of this Lease and within sixty (60) days of any change in or addition to the required information and/or documentation (provided, however, that in the case of the materials described in subparagraphs (B), (C) and (E) below, Tenant shall not be required to deliver copies of such materials to Landlord but shall maintain copies of such materials to such extent and for such periods as may be required by applicable law and shall permit Landlord or its representatives to inspect such materials during normal business hours at any time and from time to time upon reasonable notice to Tenant):

(A) A list of all hazardous substances and/or wastes that Tenant receives, uses, handles, generates, transports, stores, treats or disposes of from time to time in connection with its operations on the Property.

(B) All Material Safety Data Sheets (“MSDS’s”), if any, required to be completed with respect to operations of Tenant at the Property from time to time in accordance with Title 26, California Code of Regulations § 8-5194 or 42 U.S.C. § 11021, or any amendments thereto, and any Hazardous Materials Inventory Sheets that detail the MSDS’s.

(C) All hazardous waste manifests (as defined in Title 26, California Code of Regulations § 22-66481), if any, that Tenant is required to complete from time to time in connection with its operations at the Property.

(D) A copy of any Hazardous Materials Management Plan required from time to time with respect to Tenant’s operations at the Property, pursuant to California Health & Safety Code §§ 25500 et seq., and any regulations promulgated thereunder, as amended.

(E) Copies of any Contingency Plans and Emergency Procedures required of Tenant from time to time due to its operations in accordance with Title 26, California Code of Regulations §§ 22-67140 et seq., and any amendments thereto, and copies of any Training Programs and Records required under Title 26, California Code of Regulations, § 22-67105, and any amendments thereto.

(F) Copies of any biennial reports required to be furnished to the California Department of Health Services from time to time relating to hazardous substances or wastes, pursuant to Title 26, California Code of Regulations, § 22-66493, and any amendments thereto.

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(G) Copies of all industrial wastewater discharge permits issued to or held by Tenant from time to time in connection with its operations on the Property.

(H) Copies of any other lists or inventories of hazardous substances and/or wastes on or about the Property that Tenant is otherwise required to prepare and file from time to time with any governmental or regulatory authority.

(vi) Tenant shall secure Landlord’s prior written approval for any proposed receipt, storage, possession, use, transfer or disposal of “radioactive materials” or “radiation,” as such materials are defined in Title 26, California Code of Regulations §17-30100, and/or any other materials possessing the characteristics of the materials so defined, which approval Landlord may withhold in its sole and absolute discretion; provided, that such approval shall not be required for any radioactive materials for which Tenant has secured prior written approval of the Nuclear Regulatory Commission and delivered to Landlord a copy of such approval. Tenant, in connection with any such authorized receipt, storage, possession, use, transfer or disposal of radioactive materials or radiation, shall:

(A) Comply with all federal, state and local laws, rules, regulations, orders, licenses and permits;

(B) Maintain, to such extent and for such periods as may be required by applicable law, and permit Landlord or its representatives to inspect during normal business hours at any time and from time to time upon reasonable notice to Tenant, a list of all radioactive materials or radiation received, stored, possessed, used, transferred or disposed of from time to time, to the extent not already disclosed through delivery of a copy of a Nuclear Regulatory Commission approval with respect thereto as contemplated above; and

(C) Maintain, to such extent and for such periods as may be required by applicable law, and permit Landlord or its representatives to inspect during normal business hours at any time and from time to time upon reasonable notice to Tenant, all licenses, registration materials, inspection reports, governmental orders and permits in connection with the receipt, storage, possession, use, transfer or disposal of radioactive materials or radiation from time to time.

(vii) Tenant agrees to comply with any and all applicable laws, rules, regulations and orders of any governmental authority with respect to the release into the environment of any hazardous wastes or substances or radiation or radioactive materials by Tenant or its agents or employees. Tenant agrees to give Landlord immediate verbal notice of any unauthorized release of any such hazardous wastes or substances or radiation or radioactive materials into the environment, and to follow such verbal notice with written notice to Landlord of such release within twenty-four (24) hours of the time at which Tenant became aware of such release.

(viii) Tenant shall indemnify, defend and hold Landlord harmless from and against any and all claims, losses (including, but not limited to, loss of rental income and loss due to business interruption), damages, liabilities, costs, legal fees and expenses of any sort arising out of or relating to (A) any failure by Tenant to comply with any provisions of this paragraph (b), or (B) any receipt, use handling, generation, transportation, storage, treatment, release and/or disposal of any hazardous substance or waste or any radioactive material or radiation on or about the Property in connection with Tenant’s use or occupancy of the Property or as a result of any intentional or negligent acts or omissions of Tenant or of any agent or employee of Tenant.

(ix) Tenant agrees to cooperate with Landlord in furnishing Landlord with complete information regarding Tenant’s receipt, handling, use, storage, transportation, generation, treatment and/or disposal of any hazardous substances or wastes or radiation or radioactive materials. Upon request, Tenant agrees to grant Landlord reasonable access at reasonable times to the Property to inspect Tenant’s receipt, handling, use, storage, transportation, generation, treatment and/or disposal of hazardous substances or wastes or radiation or radioactive materials, without being deemed guilty of any disturbance of Tenant’s use or possession and without being liable to Tenant in any manner.

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(x) Notwithstanding Landlord’s rights of inspection and review under this paragraph (b), Landlord shall have no obligation or duty to so inspect or review, and no third party shall be entitled to rely on Landlord to conduct any sort of inspection or review by reason of the provisions of this paragraph (b).

(xi) If Tenant receives, handles, uses, stores, transports, generates, treats and/or disposes of any hazardous substances or wastes or radiation or radioactive materials on or about the Property at any time during the term of this Lease, then within thirty (30) days after termination or expiration of this Lease, Tenant at its sole cost and expense shall obtain and deliver to Landlord an environmental study, performed by an expert reasonably satisfactory to Landlord, evaluating the presence or absence of hazardous substances and wastes, radiation and radioactive materials on and about the Property. Such study shall be based on a reasonable and prudent level of tests and investigations of the Property which tests shall be conducted no earlier than the date of termination or expiration of this Lease. Liability for any remedial actions required or recommended on the basis of such study shall be allocated in accordance with Sections 13.4, 13.6, 14.6 and other applicable provisions of this Lease.

(c) Landlord shall indemnify, defend and hold Tenant harmless from and against any and all claims, losses, damages, liabilities, costs, legal fees and expenses of any sort arising out of or relating to (i) the presence on the Property of any hazardous substances or wastes or radiation or radioactive materials present on the Property as of the Commencement Date (other than as a result of any intentional or negligent acts or omissions of Tenant or of any agent or employee of Tenant), and/or (ii) any unauthorized release into the environment (including, but not limited to, the Site) of any hazardous substances or wastes or radiation or radioactive materials to the extent such release results from the negligence of or willful misconduct or omission by Landlord or its agents or employees.

(d) In the event of any third-party claims, losses, damages, liabilities, costs, legal fees and expenses of any sort (including, but not limited to, costs incurred with respect to any government-mandated remediation), against either Landlord or Tenant or both, arising out of or relating to (i) the presence on the Property of any hazardous substances or wastes or radiation or radioactive materials not present on the Property as of the Commencement Date (except to the extent the presence thereof is already covered by an express indemnification obligation under Section 13.6(b)(viii) or Section 13.6(c), as applicable), and/or (ii) any unauthorized release into the environment (including, but not limited to, the Site) of any hazardous substances or wastes or radiation or radioactive materials (except to the extent such release is already covered by an express indemnification obligation under Section 13.6(b)(viii) or Section 13.6(c), as applicable), then (x) Landlord and Tenant shall cooperate reasonably and in good faith in the defense of such third-party claims, liabilities and related matters and (y) Landlord and Tenant shall each bear fifty percent (50%) of the total claims, losses, damages, liabilities, costs, legal fees and expenses incurred by Landlord and/or Tenant in connection with matters covered by this Section I3.6(d). For purposes of the sharing of expenses contemplated in clause (y) of the preceding sentence, the party directly paying or incurring such costs or expenses shall be entitled to invoice the other party from time to time (on a monthly basis or at other appropriate intervals) for such other party’s respective share thereof, which invoice shall be accompanied by copies of third-party invoices or other reasonable documentation supporting the invoiced amounts, and the party receiving such invoice shall pay its share as reflected in the applicable invoice within fifteen (15) days after receipt thereof, unless the parties agree otherwise. Within three (3) months after receipt of any such invoice, the party receiving the invoice shall be entitled, upon reasonable written notice and during normal business hours, to inspect and examine the books and records of the party submitting the invoice with respect to the invoiced amounts. Any dispute with respect thereto that the parties are unable to resolve by good faith negotiations shall be resolved by an independent audit using the same procedure set forth in Section 9.3(b).

14. INSURANCE AND INDEMNITY

14.1 Liability and Property Insurance.

(a) Tenant shall procure and maintain in full force and effect at all times during the term of this Lease, at Tenant’s cost and expense, commercial general liability insurance to protect against liability arising out of or related to the use of or resulting from any accident

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occurring in, upon or about the Property, with combined single limit of liability of not less than Five Million Dollars ($5,000,000) per occurrence for bodily injury and property damage. Such insurance shall name Landlord and its partners, shareholders, agents and employees as additional insureds thereunder. The amount of such insurance shall not be construed to limit any liability or obligation of Tenant under this Lease. Tenant shall also procure and maintain in full force and effect at all times during the term of this Lease, at Tenant’s cost and expense, product liability insurance on terms and in amounts satisfactory to Landlord in its reasonable discretion.

(b) Landlord shall procure and maintain in full force and effect at all times during the term of this Lease, at Landlord’s cost and expense (but reimbursable as an Operating Expense under Section 9.2 hereof), commercial general liability insurance to protect against liability arising out of or related to the use of or resulting from any accident occurring in, upon or about the Property, with combined single limit of liability of not less than Five Million Dollars ($5,000,000) per occurrence for bodily injury and property damage.

(c) Landlord shall procure and maintain in full force and effect at all times during the term of this Lease, at Landlord’s cost and expense (but reimbursable as an Operating Expense under Section 9.2 hereof), fire and extended coverage insurance for the Building Shell (as defined in Exhibit C) and for the improvements in the Common Areas of the Property on a full replacement cost basis, and for the Interior Improvements in an amount not less than the total amount contributed by Landlord toward the payment for the Interior Improvements pursuant to Exhibit C. Such insurance may include earthquake coverage to the extent Landlord in its discretion elects to carry such coverage, and shall have such deductibles and other terms as Landlord in its discretion determines to be appropriate. Except as expressly set forth in this paragraph (c), Landlord shall have no obligation to insure the Interior Improvements and shall, in all events, have no obligation to insure any other alterations, additions or improvements installed by Tenant on or about the Property.

(d) Tenant shall procure and maintain in full force and effect at all times during the term of this Lease, at Tenant’s cost and expense, fire and extended coverage insurance for the Interior Improvements in an amount not less than the full replacement cost thereof, less the amount of coverage required to be carried on the Interior Improvements by Landlord pursuant to Section 14.l(c), and shall have sole responsibility for insurance coverage of any other alterations, additions or improvements installed by Tenant on the Property to the extent Tenant deems such coverage appropriate. Tenant’s insurance under this paragraph (d) may include earthquake coverage to the extent Tenant in its discretion elects to carry such coverage, and shall have such deductibles and other terms as Tenant in its discretion determines to be appropriate.

(e) All policies of property insurance carried under paragraphs (c) and (d) of this Section 14.1 shall provide protection against “all perils of direct physical damage” (as defined by the Insurance Services Office) on all insured property. Each insuring party shall cause the other party to be named as an additional insured on such policy to the extent of the coverage for the Interior Improvements. Replacement cost for purposes hereof shall be determined periodically on such reasonable basis as Landlord and Tenant may determine. Such insurance policies (i) shall be written by companies rated B+ or better, with a financial rating of not less than Class VII, in “Best’s Insurance Guide,” and authorized to do business in California; (ii) shall be written to apply to covered property damage and other covered loss occurring during the policy term, or the onset of which occurred or arose during such policy term; (iii) shall be endorsed, in the case of Tenant’s property insurance, to name Landlord’s lender (“Lender”), if any, holding the lien of a mortgage or deed of trust on the Building and Interior Improvements from time to time as a loss payee, provided that a condition of such endorsement shall be that at all times during the effectiveness of the endorsement there shall be in full force and effect an agreement among Landlord, Tenant and Lender pursuant to which Lender agrees that, in the event of an insured occurrence, Lender will make available to Tenant such part or all of the proceeds of insurance on the Interior Improvements which are received by Lender as are required for the repair or replacement of the Interior Improvements, except as otherwise provided in Section 17.1 hereof in the event of a termination of this Lease; (iv) shall provide that the respective coverages shall be primary and not contributing with or in excess of any coverage that the other party may carry; (v) shall be endorsed to provide the other party with not less than thirty (30) days’ notice of cancellation; and (vi) shall provide for a deductible of not to exceed $10,000 (except in the case of earthquake coverage). Each party shall deliver to the other party, on or before the Commencement Date, and thereafter at least ten (10) days before the expiration dates of expiring

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policies, certificates of insurance or other satisfactory evidence of the continuation of such property insurance coverage for the period indicated therein. If either party fails to procure property insurance or to deliver certificates or other evidence thereof as required hereunder, the other party may, at its option and in addition to the other party’s other remedies in the event of a default hereunder, procure the same for the benefit of such party. If, pursuant to the foregoing sentence, Tenant secures such insurance on Landlord’s behalf, Tenant shall not be entitled to reimbursement of the cost thereof; if Landlord secures such insurance on Tenant’s behalf, Tenant shall reimburse Landlord for the cost thereof within ten (10) business days after receipt of Landlord’s invoice therefor.

14.2 Quality Of Policies And Certificates. All policies of insurance required hereunder shall be issued by responsible insurers and, in the case of policies carried or required to be carried by Tenant, shall be written as primary policies not contributing with and not in excess of any coverage that Landlord may carry. Each party shall deliver to the other party certificates of insurance showing that the insuring party’s required policies are in effect. If either party fails to acquire, maintain or renew any insurance required to be maintained by it under this Article 14 or to pay the premium therefor, then the other party, at its option and in addition to its other remedies, but without obligation so to do, may procure such insurance, and any sums expended by Landlord to procure any such insurance on behalf of or in place of Tenant shall be repaid upon demand, with interest as provided in Section 3.2 hereof. Tenant shall obtain written undertakings from each insurer under policies required to be maintained by it to notify all insureds thereunder at least thirty (30) days prior to cancellation.

14.3 Workers’ Compensation. Tenant shall maintain in full force and effect during the term of this Lease workers’ compensation insurance covering all of Tenant’s employees working on the Property, with a minimum limit of liability of not less man Five Hundred Thousand Dollars ($500,000) per accident/disease.

14.4 Waiver Of Subrogation. To the extent permitted by law and without affecting the coverage provided by insurance required to be maintained hereunder, Landlord and Tenant each waive any right to recover against the other (i) damage to property, (ii) damage to the Property or any part thereof, or (iii) claims arising by reason of any of the foregoing, but only to the extent that any of the foregoing damages and claims under subparts (i)-(iii) hereof are covered, and only to the extent of such coverage, by insurance actually carried or required to be carried hereunder by either Landlord or Tenant. This provision is intended to waive fully, and for the benefit of each party, any rights and claims which might give rise to a right of subrogation in any insurance carrier. Each party shall procure a clause or endorsement on any property insurance policy denying to the insurer rights of subrogation against the other party to the extent rights have been waived by the insured prior to the occurrence of injury or loss. Coverage provided by insurance maintained by Tenant shall not be limited, reduced or diminished by virtue of the subrogation waiver herein contained.

14.5 Increase In Premiums. Tenant shall do all acts and pay all expenses necessary to ‘insure that the Property is not used for purposes prohibited by any applicable fire insurance, and that Tenant’s use of the Property complies with all requirements necessary to obtain any such insurance. If Tenant uses or permits the Property to be used in a manner which increases the existing rate of any insurance on the Property carried by Landlord, Tenant shall pay the amount of the increase in premium caused thereby, and Landlord’s costs of obtaining other replacement insurance policies, including any increase in premium, within ten (10) days after demand therefor by Landlord.

14.6 Indemnification.

(a) Tenant shall indemnify, defend and hold Landlord, its partners, shareholders, officers, directors, agents and employees harmless from any and all liability for bodily injury to or death of any person, or loss of or damage to the property of persons, and all actions, claims, demands, costs (including, but not limited to, reasonable attorneys’ fees), damages or expenses arising therefrom which may be brought or made against Landlord or which Landlord may pay or incur by reason of the use, occupancy and enjoyment of the Property by Tenant or any invitees, sublessees, agents or employees of Tenant or holding under Tenant from any cause whatsoever other than negligence or willful misconduct or omission by Landlord, its agents or employees. Landlord, its partners, shareholders, officers, directors, agents and employees shall

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not be liable for, and Tenant hereby waives all claims against such persons for, damages to goods, wares and merchandise in or upon the Property, or for injuries to Tenant, its agents or third persons in or upon the Property, from any cause whatsoever other than negligence or willful misconduct or omission by Landlord, its agents or employees. Tenant shall give prompt notice to Landlord of any casualty or accident in, on or about the Property.

(b) Landlord shall indemnify, defend and hold Tenant, its shareholders, officers, directors, agents and employees harmless from liability for bodily injury to or death of any person, or loss of or damage to the property of persons, and all actions, claims, demands, costs (including, but not limited to, reasonable attorneys’ fees), damages or expenses arising therefrom which may be brought or made against Tenant or which Tenant may pay or incur, to the extent such liabilities or other matters arise by reason of any negligence or willful misconduct or omission by Landlord, its agents or employees.

14.7 Blanket Policy. Any policy required to be maintained hereunder may be maintained under a so-called “blanket policy” insuring other parties and other locations so long as the amount of insurance required to be provided hereunder is not thereby diminished.

15. SUBLEASE AND ASSIGNMENT

15.1 Assignment And Sublease Of Property. Tenant shall not have the right or power to assign its interest in this Lease, or make any sublease of the Property or any portion thereof, nor shall any interest of Tenant under this Lease be assignable involuntarily or by operation of law, without on each occasion obtaining the prior written consent of Landlord, which consent shall not be unreasonably withheld or delayed. Any purported sublease or assignment of Tenant’s interest in this Lease requiring but not having received Landlord’s consent thereto shall be void. Without limiting the generality of the foregoing, Landlord may withhold consent to any proposed subletting or assignment solely on the ground, if applicable, that the use by the proposed subtenant or assignee is reasonably likely to be incompatible with Landlord’s use of any adjacent property owned or operated by Landlord, unless the proposed use is within the permitted uses specified in Section 13.1, in which event it shall not be reasonable for Landlord to object to the proposed use. Any dissolution, consolidation, merger or other reorganization of Tenant, or any sale or transfer of the stock of or other interest in Tenant, or any series of one or more of such events, involving in the aggregate a change of fifty percent (50%) or more in the beneficial ownership of Tenant or its assets shall be deemed to be an assignment hereunder and shall be void without the prior written consent of Landlord as required above. Notwithstanding the foregoing, (i) an initial public offering of the common stock of Tenant shall not be deemed to be an assignment hereunder; and (ii) Tenant shall have the right to assign this Lease or sublet the Premises, or any portion thereof, without Landlord’s consent (but with prior or concurrent written notice by Tenant to Landlord), to any entity which controls, is controlled by, or is under common control with Tenant, or to any entity which results from a merger or consolidation with Tenant, or to any entity engaged in a joint venture with Tenant, or to any entity which acquires substantially all of the stock or assets of Tenant, as a going concern, with respect to the business that is being conducted on the Property (hereinafter each a “Permitted Transfer”). In addition, a sale or transfer of the capital stock of Tenant shall be deemed a Permitted Transfer if (x) such sale or transfer occurs in connection with any bona fide financing or capitalization for the benefit of Tenant, or (y) Tenant becomes a publicly traded corporation. Landlord shall have no right to terminate this Lease in connection with, and shall have no right to any sums or other economic consideration resulting from, any Permitted Transfer. Except as expressly set forth in this Section 15.1, however, the provisions of Section 15.2 shall remain applicable to any Permitted Transfer and the transferee under such Permitted Transfer shall be and remain subject to all of the terms and provisions of this Lease.

15.2 Rights Of Landlord. Consent by Landlord to one or more assignments of this Lease, or to one or more sublettings of the Property or any portion thereof, or collection of rent by Landlord from any assignee or sublessee, shall not operate to exhaust Landlord’s rights under this Article 15, nor constitute consent to any subsequent assignment or subletting. No assignment of Tenant’s interest in this Lease and no sublease shall relieve Tenant of its obligations hereunder, notwithstanding any waiver or extension of time granted by Landlord to any assignee or sublessee, or the failure of Landlord to assert its rights against any assignee or sublessee, and regardless of whether Landlord’s consent thereto is given or required to be given hereunder. In

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the event of a default by any assignee, sublessee or other successor of Tenant in the performance of any of the terms or obligations of Tenant under this Lease, Landlord may proceed directly against Tenant without the necessity of exhausting remedies against any such assignee, sublessee or other successor. In addition, Tenant immediately and irrevocably assigns to Landlord, as security for Tenant’s obligations under this Lease, all rent from any subletting of all or a part of the Property as permitted under this Lease, and Landlord, as Tenant’s assignee and as attorney-in-fact for Tenant, or any receiver for Tenant appointed on Landlord’s application, may collect such rent and apply it toward Tenant’s obligations under this Lease; except that, until the occurrence of an act of default by Tenant, Tenant shall have the right to collect such rent and to retain all sublease profits.

16. RIGHT OF ENTRY AND QUIET ENJOYMENT

16.1 Right Of Entry. Landlord and its authorized representatives shall have the right to enter the Property at any time during the term of this Lease during normal business hours and upon not less than twenty-four (24) hours prior notice, except in the case of emergency (in which event no notice shall be required and entry may be made at any time), for the purpose of inspecting and determining the condition of the Property or for any other proper purpose including, without limitation, to make repairs, replacements or improvements which Landlord may deem necessary, to show the Property to prospective purchasers, to show the Property to prospective tenants (but only during the final year of the term of this Lease), and to post notices of nonresponsibility. Landlord shall not be liable for inconvenience, annoyance, disturbance, loss of business, quiet enjoyment or other damage or loss to Tenant by reason of making any repairs or performing any work upon the Initial Building or the Property or by reason of erecting or maintaining any protective barricades in connection with any such work, and the obligations of Tenant under this Lease shall not thereby be affected in any manner whatsoever, provided, however, Landlord shall use reasonable efforts to minimize the inconvenience to Tenant’s normal business operations caused thereby.

16.2. Quiet Enjoyment. Landlord covenants that Tenant, upon paying the rent and performing its obligations hereunder and subject to all the terms and conditions of this Lease, shall peacefully and quietly have, hold and enjoy the Property throughout the term of this Lease, or until this Lease is terminated as provided by this Lease.

17. CASUALTY AND TAKING

17.1 Damage or Destruction.

(a) If the Initial Building, or the Common Areas of the Property necessary for Tenant’s use and occupancy of the Initial Building, are damaged or destroyed in whole or in part under circumstances in which (i) repair and restoration is permitted under applicable governmental laws, regulations and building codes then in effect and (ii) repair and restoration reasonably can be completed within a period of one (1) year following the date of the occurrence, then Landlord, as to the Common Areas of the Property and the Building Shell, and Tenant, as to the Interior Improvements, shall commence and complete, with all due diligence and as promptly as is reasonably practicable under the conditions then existing, all such repair and restoration as may be required to return the affected portions of the Property to the condition existing immediately prior to the occurrence. In connection with any such reconstruction of the Interior Improvements, Landlord shall use its best efforts (including, without limitation, any necessary negotiation or intercession with Landlord’s Lender, if any) to promptly make any proceeds of Landlord’s property insurance with respect to the Interior Improvements (up to a maximum amount equal to the amounts originally contributed by Landlord toward the construction of the Interior Improvements) available to Tenant for such reconstruction, subject only to such payment controls as Landlord and its Lender and insurer, or any of them, may reasonably require in order to ensure the proper application of such proceeds toward the reconstruction of the Interior Improvements pursuant to this Section 17.1. In the event of damage or destruction the repair of which is not permitted under applicable governmental laws, regulations and building codes then in effect, if such damage or destruction (despite being corrected to the extent then permitted under applicable governmental laws, regulations and building codes) would still materially impair Tenant’s ability to conduct its business in the Initial

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Building, then either party may terminate this Lease as of the date of the occurrence by giving written notice to the other within thirty (30) days after the date of the occurrence; if neither party timely elects such termination, or if such damage or destruction does not materially impair Tenant’s ability to conduct its business in the Initial Building, then this Lease shall continue in full force and effect, except that there shall be an equitable adjustment in monthly minimum rental and of Tenant’s Operating Cost Share of Operating Expenses, based upon the extent to which Tenant’s ability to conduct its business in the Initial Building is impaired, and Landlord and Tenant respectively shall restore the Building Shell and the Interior Improvements to a complete architectural whole and to a functional condition. In the event of damage or destruction which cannot reasonably be repaired within one (1) year following the date of the occurrence, then either Landlord or Tenant, at this election, may terminate this Lease as of the date of the occurrence by giving written notice to the other within thirty (30) days after the date of the occurrence; if neither party timely elects such termination, then this Lease shall continue in full force and effect and Landlord and Tenant shall each repair and restore applicable portions of the Property in accordance with the first sentence of this Section 17.1.

(b) The respective obligations of Landlord and Tenant pursuant to Section 17.1(a) are subject to the following limitations:

(i) If the occurrence results from a peril which is required to be insured pursuant to Section 14.1(c) and (d) above, the obligations of either party shall not exceed the amount of insurance proceeds received from insurers by reason of such occurrence, plus the amount of the party’s permitted deductible (provided that each party shall be obligated to use its best efforts to recover any available proceeds from the insurance which it is required to maintain pursuant to the provisions of Section 14.1(c) or (d), as applicable), and, if such proceeds are insufficient, either party may terminate the Lease unless the other party promptly elects and agrees, in writing, to contribute the amount of the shortfall; and

(ii) If the occurrence results from a peril which is not required to be insured pursuant to Section 14.l(c) and (d) above, Landlord shall be required to repair and restore the Building Shell and Common Areas to the extent necessary for Tenant’s continued use and occupancy of the Initial Building, and Tenant shall be required to repair and restore the Interior Improvements to the extent necessary for Tenant’s continued use and occupancy of the Initial Building, provided that each party’s obligation to repair and restore shall not exceed an amount equal to five percent (5%) of the replacement cost of the Building Shell and Common Area improvements, as to Landlord, or five percent (5%) of the replacement cost of the Interior Improvements, as to Tenant; if the replacement cost as to either party exceeds such amount, then the party whose limit has been exceeded may terminate this Lease unless the other party promptly elects and agrees, in writing, to contribute the amount of the shortfall.

(c) If this Lease is terminated pursuant to the foregoing provisions of this Section 17.1 following an occurrence which is a peril required to be insured against pursuant to Section 14.1(c) and (d), Landlord and Tenant agree (and any Lender shall be asked to agree) that there shall be paid from such insurance proceeds (i) to Landlord, the proceeds of Landlord’s property insurance on the Building Shell, (ii) to Landlord, a portion of the aggregate proceeds of Landlord’s and Tenant’s property insurance on the Interior Improvements equal to a fraction, the numerator of which is the insurable value, immediately prior to the occurrence, of the Interior Improvements that would have belonged to Landlord upon termination of this Lease in accordance with the provisions of Section 11.2 and the denominator of which is the total insurable value, immediately prior to the occurrence, of all of the Interior Improvements, and (iii) to Tenant, a portion of the aggregate proceeds of Landlord’s and Tenant’s property insurance on the Interior Improvements equal to a fraction, the numerator of which is the insurable value, immediately prior to the occurrence, of the Interior Improvements that would have belonged to Tenant upon termination of this Lease in accordance with the provisions of Section 11.2 and the denominator of which is the total insurable value, immediately prior to the occurrence, of all of the Interior Improvements.

(d) From and after the date of an occurrence resulting in damage to or destruction of the Initial Building or of the Common Areas necessary for Tenant’s use and occupancy of the Initial Building, and continuing until repair and restoration thereof are completed, there shall be an equitable abatement of minimum rental and of Tenant’s Operating Cost Share of Operating Expenses based upon the degree to which Tenant’s ability to conduct its business in the Initial Building is impaired.

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17.2 Condemnation.

(a) If during the term of this Lease the Property or Improvements, or any substantial part of either, is taken by eminent domain or by reason of any public improvement or condemnation proceeding, or in any manner by exercise of the right of eminent domain (including any transfer in avoidance of an exercise of the power of eminent domain), or receives irreparable damage by reason of anything lawfully done under color of public or other authority, then (i) this Lease shall terminate as to the entire Property at Landlord’s election by written notice given to Tenant within sixty (60) days after the taking has occurred, and (ii) this Lease shall terminate as to the entire Property at Tenant’s election, by written notice given to Landlord within thirty (30) days after the nature and extent of the taking have been finally determined, if the portion of the Property taken is of such extent and nature as substantially to handicap, impede or permanently impair Tenant’s use of the balance of the Property. If Tenant elects to terminate this Lease, Tenant shall also notify Landlord of the date of termination, which date shall not be earlier than thirty (30) days nor later than ninety (90) days after Tenant has notified Landlord of Tenant’s election to terminate, except that this Lease shall terminate on the date of taking if such date falls on any date before the date of termination designated by Tenant. If neither party elects to terminate this Lease as hereinabove provided, this Lease shall continue in full force and effect (except that there shall be an equitable abatement of minimum rental and of Tenant’s Operating Cost Share of Operating Expenses based upon the degree to which Tenant’s ability to conduct its business in the Initial Building is impaired), Landlord shall restore the Building Shell and Common Area improvements to a complete architectural whole and a functional condition and as nearly as reasonably possible to the condition existing before the taking, and Tenant shall restore the Interior Improvements and Tenant’s other alterations, additions and improvements to a complete architectural whole and a functional condition and as nearly as reasonably possible to the condition existing before the taking. In connection with any such restoration, each party shall use its respective best efforts (including, without limitation, any necessary negotiation or intercession with its respective lender, if any) to ensure that any severance damages or other condemnation awards intended to provide compensation for rebuilding or restoration costs are promptly collected and made available to Landlord and Tenant in portions reasonably corresponding to the cost and scope of their respective restoration obligations, subject only to such payment controls as either party or its lender may reasonably require in order to ensure the proper application of such proceeds toward the restoration of the Improvements. Each party waives the provisions of Code of Civil Procedure Section 1265.130, allowing either party to petition the Superior Court to terminate this Lease in the event of a partial condemnation of the Property.

(b) The respective obligations of Landlord and Tenant pursuant to Section 17.2(a) are subject to the following limitations:

(i) Each party’s obligation to repair and restore shall not exceed, net of any condemnation awards or other proceeds available for and allocable to such restoration as contemplated in Section 17.2(a), an amount equal to five percent (5%) of the replacement cost of the Building Shell and Common Area improvements, as to Landlord, or five percent (5%) of the replacement cost of the Interior Improvements, as to Tenant; if the replacement cost as to either party exceeds such amount, then the party whose limit has been exceeded may terminate this Lease unless the other party promptly elects and agrees, in writing, to contribute the amount of the shortfall; and

(ii) If this Lease is terminated pursuant to the foregoing provisions of this Section 17.2, or if this Lease remains in effect but any condemnation awards or other proceeds become available as compensation for the loss or destruction of any of the Improvements, then Landlord and Tenant agree (and any Lender shall be asked to agree) that there shall be paid from such award or proceeds (i) to Landlord, the award or proceeds attributable or allocable to the Building Shell and/or Common Area improvements, and (ii) to Landlord and Tenant, respectively, portions of the award or proceeds attributable or allocable to the Interior Improvements, in the respective proportions in which Landlord and Tenant would have shared, under Section 17.l(c), the proceeds of any insurance proceeds following loss or destruction of such Interior Improvements by an insured casualty.

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17.3 Reservation Of Compensation. Landlord reserves, and Tenant waives and assigns to Landlord, all rights to any award or compensation for damage to the Improvements, the Property and the leasehold estate created hereby, accruing by reason of any taking in any public improvement, condemnation or eminent domain proceeding or in any other manner by exercise of the right of eminent domain or of anything lawfully done by public authority, except that (a) Tenant shall be entitled to any and all compensation or damages paid for or on account of Tenant’s moving expenses, trade fixtures and equipment, and (b) any condemnation awards or proceeds described in Section 17.2(b)(ii) shall be allocated and disbursed in accordance with the provisions of Section 17.2(b)(ii), notwithstanding any contrary provisions of this Section 17.3.

17.4 Restoration Of Improvements. In connection with any repair or restoration of Improvements by either party following a casualty or taking as hereinabove set forth, the party responsible for such repair or restoration shall, to the extent possible, return such Improvements to a condition substantially equal to that which existed immediately prior to the casualty or taking. To the extent such party wishes to make material modifications to such Improvements, such modifications shall be subject to the prior written approval of the other party (not to be unreasonably withheld or delayed), except that no such approval shall be required for modifications that are required by applicable governmental authorities as a condition of the repair or restoration, unless such required modifications would impair or impede Tenant’s conduct of its business in the Initial Building (in which case any such modifications in Landlord’s work shall require Tenant’s consent, not unreasonably withheld or delayed) or would materially and adversely affect the exterior appearance, the structural integrity or the mechanical or other operating systems of the Initial Building (in which case any such modifications in Tenant’s work shall require Landlord’s consent, not unreasonably withheld or delayed).

18. DEFAULT

18.1 Events Of Default. The occurrence of any of the following shall constitute an event of default on the part of Tenant:

(a) Abandonment. Abandonment of the Property. “Abandonment” is hereby defined to include, but is not limited to, any absence by Tenant from the Property for fifteen (15) consecutive days or more while Tenant is in default under any other provision of this Lease. Tenant waives any right Tenant may have to notice under Section 1951.3 of the California Civil Code, the terms of this subsection (a) being deemed such notice to Tenant as required by said Section 1951.3;

(b) Nonpayment. Failure to pay, when due, any amount payable to Landlord hereunder, such failure continuing for a period of five (5) days after written notice of such failure;

(c) Other Obligations. Failure to perform any obligation, agreement or covenant under this Lease other than those matters specified in subsection (b) hereof, such failure continuing for fifteen (15) days after written notice of such failure; provided, however, that if such failure is curable in nature but cannot reasonably be cured within such 15-day period, then Tenant shall not be in default if, and so long as, Tenant promptly (and in all events within such 15-day period) commences such cure and thereafter diligently pursues such cure to completion;

(d) General Assignment. A general assignment by Tenant for the benefit of creditors;

(e) Bankruptcy. The filing of any voluntary petition in bankruptcy by Tenant, or the filing of an involuntary petition by Tenant’s creditors, which involuntary petition remains undischarged for a period of thirty (30) days. In the event that under applicable law the trustee in bankruptcy or Tenant has the right to affirm this Lease and continue to perform the obligations of Tenant hereunder, such trustee or Tenant shall, in such time period as may be permitted by the bankruptcy court having jurisdiction, cure all defaults of Tenant hereunder outstanding as of the date of the affirmance of this Lease and provide to Landlord such adequate assurances as may be necessary to ensure Landlord of the continued performance of Tenant’s obligations under this Lease. Specifically, but without limiting the generality of the foregoing, such adequate assurances must include assurances that the Property continues to be operated only for the use

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permitted hereunder. The provisions hereof are to assure that the basic understandings between Landlord and Tenant with respect to Tenant’s use of the Property and the benefits to Landlord therefrom are preserved, consistent with the purpose and intent of applicable bankruptcy laws;

(f) Receivership. The employment of a receiver appointed by court order to take possession of substantially all of Tenant’s assets or the Property, if such receivership remains undissolved for a period of thirty (30) days;

(g) Attachment. The attachment, execution or other judicial seizure of all or substantially all of Tenant’s assets or the Property, if such attachment or other seizure remains undismissed or undischarged for a period of thirty (30) days after the levy thereof; or

(h) Insolvency. The admission by Tenant in writing of its inability to pay its debts as they become due, the filing by Tenant of a petition seeking any reorganization or arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation, the filing by Tenant of an answer admitting or failing timely to contest a material allegation of a petition filed against Tenant in any such proceeding or, if within thirty (30) days after the commencement of any proceeding against Tenant seeking any reorganization or arrangement, composition, readjustment, liquidation, dissolution or similar relief under any present or future statute, law or regulation, such proceeding shall not have been dismissed.

18.2 Remedies Upon Tenant’s Default.

(a) Upon the occurrence of any event of default described in Section 18.1 hereof, Landlord, in addition to and without prejudice to any other rights or remedies it may have, shall have the immediate right to re-enter the Property or any part thereof and repossess the same, expelling and removing therefrom all persons and property (which property may be stored in a public warehouse or elsewhere at the cost and risk of and for the account of Tenant), using such force as may be necessary to do so (as to which Tenant hereby waives any claim for loss or damage that may thereby occur). In addition to or in lieu of such re-entry, and without prejudice to any other rights or remedies it may have, Landlord shall have the right either (i) to terminate this Lease and recover from Tenant all damages incurred by Landlord as a result of Tenant’s default, as hereinafter provided, or (ii) to continue this Lease in effect and recover rent and other charges and amounts as they become due.

(b) Even if Tenant has breached this Lease or abandoned the Property, this Lease shall continue in effect for so long as Landlord does not terminate Tenant’s right to possession under subsection (a) hereof and Landlord may enforce all of its rights and remedies under this Lease, including the right to recover rent as it becomes due, and Landlord, without terminating this Lease, may exercise all of the rights and remedies of a lessor under California Civil Code Section 1951.4 (lessor may continue lease in effect after lessee’s breach and abandonment and recover rent as it becomes due, if lessee has right to sublet or assign, subject only to reasonable limitations), or any successor Code section. Acts of maintenance, preservation or efforts to relet the Property or the appointment of a receiver upon application of Landlord to protect Landlord’s interests under this Lease shall not constitute a termination of Tenant’s right to possession.

(c) If Landlord terminates this Lease pursuant to this Section 18.2, Landlord shall have all of the rights and remedies of a landlord provided by Section 1951.2 of the Civil Code of the State of California, or any successor Code section, which remedies include Landlord’s right to recover from Tenant (i) the worth at the time of award of the unpaid rent and additional rent which had been earned at the time of termination, (ii) the worth at the time of award of the amount by which the unpaid rent and additional rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided, (iii) the worth at the time of award of the amount by which the unpaid rent and additional rent for the balance of the term after the time of award exceeds the amount of such rental loss that Tenant proves could be reasonably avoided, and (iv) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant’s failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom, including, but not limited to, the cost of recovering possession of the Property, expenses of reletting, including necessary repair, renovation and alteration of the Property, reasonable attorneys’ fees, and other reasonable costs. The “worth at the time of

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award” of the amounts referred to in clauses (i) and (ii) above shall be computed by allowing interest at ten percent (10%) per annum from the date such amounts accrued to Landlord. The “worth at the time of award” of the amounts referred to in clause (iii) above shall be computed by discounting such amount at one percentage point above the discount rate of the Federal Reserve Bank of San Francisco at the time of award.

18.3 Remedies Cumulative. All rights, privileges and elections or remedies of Landlord contained in this Article 18 are cumulative and not alternative to the extent permitted by law and except as otherwise provided herein.

19. SUBORDINATION, ATTORNMENT AND SALE

19.1 Subordination To Mortgage. This Lease, and any sublease entered into by Tenant under the provisions of this Lease, shall be subject and subordinate to any ground lease, mortgage, deed of trust, sale/leaseback transaction or any other hypothecation for security now or hereafter placed upon the Initial Building, the Property, or both, and the rights of any assignee of Landlord or of any ground lessor, mortgagee, trustee, beneficiary or leaseback lessor under any of the foregoing, and to any and all advances made on the security thereof and to all renewals, modifications, consolidations, replacements and extensions thereof; provided, however, that such subordination in the case of any future ground lease, mortgage, deed of trust, sale/leaseback transaction or any other hypothecation for security placed upon the Initial Building, the Property, or both shall be conditioned on Tenant’s receipt from the ground lessor, mortgagee, trustee, beneficiary or leaseback lessor of a Non-Disturbance Agreement in a form reasonably acceptable to Tenant confirming that so long as Tenant is not in default hereunder, Tenant’s rights hereunder shall not be disturbed by such person or entity. Moreover, Tenant’s obligations under this Lease shall be conditioned on Tenant’s receipt within thirty (30) days after mutual execution of this Lease, from any ground lessor, mortgagee, trustee, beneficiary or leaseback lessor currently owning or holding a security interest in the Property, of a Non-Disturbance Agreement in a form reasonably acceptable to Tenant confirming that so long as Tenant is not in default hereunder, Tenant’s rights hereunder shall not be disturbed by such person or entity. If any mortgagee, trustee, beneficiary, ground lessor, sale/leaseback lessor or assignee elects to have this Lease be an encumbrance upon the Property prior to the lien of its mortgage, deed of trust, ground lease or leaseback lease or other security arrangement and gives notice thereof to Tenant, this Lease shall be deemed prior thereto, whether this Lease is dated prior or subsequent to the date thereof or the date of recording thereof. Tenant, and any sublessee, shall execute such documents as may reasonably be requested by any mortgagee, trustee, beneficiary, ground lessor, sale/leaseback lessor or assignee to evidence the subordination herein set forth, subject to the conditions set forth above, or to make this Lease prior to the lien of any mortgage, deed of trust, ground lease, leaseback lease or other security arrangement, as the case may be, and if Tenant fails to do so within ten (10) days after demand from Landlord, Tenant constitutes and appoints Landlord as Tenant’s attorney-in-fact and in Tenant’s name, place and stead to do so. Upon any default by Landlord in the performance of its obligations under any mortgage, deed of trust, ground lease, leaseback lease or assignment, Tenant (and any sublessee) shall, notwithstanding any subordination hereunder, attorn to the mortgagee, trustee, beneficiary, ground lessor, leaseback lessor or assignee thereunder upon demand and become the tenant of the successor in interest to Landlord, at the option of such successor in interest, and shall execute and deliver any instrument or instruments confirming the attornment herein provided for.

19.2 Sale Of Landlord’s Interest. Upon sale, transfer or assignment of Landlord’s entire interest in the Improvements and Property, Landlord shall be relieved of its obligations hereunder with respect to liabilities accruing from and after the date of such sale, transfer or assignment, except as otherwise expressly provided in Section 21.2 hereof.

19.3 Estoppel Certificates. Either Tenant or Landlord (the “certifying party”) shall at any time and from time to time, within ten (10) days after written request by the other party (the “requesting party”), execute, acknowledge and deliver to the requesting party a certificate in writing stating: (i) that this Lease is unmodified and in full force and effect, or if there have been any modifications, that this Lease is in full force and effect as modified and stating the date and the nature of each modification; (ii) the date to which rental and all other sums payable hereunder have been paid; (iii) that the requesting party is not in default in the performance of any of its obligations under this Lease, that the certifying party has given no notice of default to the

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requesting party and that no event has occurred which, but for the expiration of the applicable time period, would constitute an event of default hereunder, or if the certifying party alleges that any such default, notice or event has occurred, specifying the same in reasonable detail; and (iv) such other matters as may reasonably be requested by the requesting party or by any institutional lender, mortgagee, trustee, beneficiary, ground lessor, sale/leaseback lessor or prospective purchaser of the Property or of Tenant’s leasehold interest therein. Any such certificate provided under this Section 19.3 may be relied upon by any lender, mortgagee, trustee, beneficiary, assignee or successor in interest to the requesting party, by any prospective purchaser, by any purchaser on foreclosure or sale, by any grantee under a deed in lieu of foreclosure of any mortgage or deed of trust on the Property, or by any other third party. Failure to execute and return within the required time any estoppel certificate requested hereunder shall be deemed to be an admission of the truth of the matters set forth in the form of certificate submitted to the certifying party for execution.

19.4 Subordination to CC&R’s. This Lease, and any permitted sublease entered into by Tenant under the provisions of this Lease, shall be subject and subordinate to any declarations of covenants, conditions and restrictions affecting the Property from time to time, which may include easements, access rights and similar non-exclusive use rights and privileges in favor of appropriate third parties; provided, however, that following the execution of this Lease, Landlord shall not record or agree to any such declarations affecting the Property without the prior written consent of Tenant, which consent shall not be unreasonably withheld or delayed. It shall be deemed reasonable for Tenant to withhold consent to any declaration or provision thereof which impairs Tenant’s rights under this Lease in any material respect. Tenant agrees to execute, upon request by Landlord, any documents reasonably required from time to time to evidence such subordination.

19.5 Mortgagee Protection.

(a) If, in connection with any future ground lease, mortgage, deed of trust, sale/leaseback transaction or any other hypothecation for security placed upon the Initial Building, the Property, or both, the ground lessor, mortgagee, trustee, beneficiary or leaseback lessor requests any changes in this Lease as a condition to its willingness to enter into or accept the ground lease, mortgage, deed of trust, sale/leaseback transaction or other hypothecation for security, then Tenant shall not unreasonably withhold or delay its consent to any such requested changes and shall execute, at the request of Landlord, an amendment to this Lease incorporating the changes thus reasonably consented to by Tenant It shall be deemed reasonable for Tenant to withhold consent to any requested change which imposes a substantial new monetary obligation on Tenant or which otherwise substantially impairs Tenant’s rights under this Lease. Tenant’s obligations under this Section 19.5(a) shall be conditioned on Tenant’s concurrent receipt, from the ground lessor, mortgagee, trustee, beneficiary or leaseback lessor, of a Non-Disturbance Agreement in a form reasonably acceptable to Tenant confirming that so long as Tenant is not in default hereunder, Tenant’s rights hereunder shall not be disturbed by such person or entity.

(b) If, following a default by Landlord under any mortgage, deed of trust, ground lease, leaseback lease or other security arrangement covering the Property, the Property is acquired by the mortgagee, beneficiary, master lessor or other secured party, or by any other successor owner, pursuant to a foreclosure, trustee’s sale, sheriffs sale, lease termination or other similar procedure (or deed in lieu thereof), then any such person or entity so acquiring the Property shall not be:

(i) liable for any act or omission of a prior landlord or owner of the Property (including, but not limited to, Landlord);

(ii) subject to any offsets or defenses that Tenant may have against any prior landlord or owner of the Property (including, but not limited to, Landlord);

(iii) bound by any rent or additional rent that Tenant may have paid in advance to any prior landlord or owner of the Property (including, but not limited to, Landlord) for a period in excess of one month, or by any security deposit, cleaning deposit or other prepaid charge that Tenant may have paid in advance to any prior landlord or owner (including, but not limited to, Landlord);

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(iv) liable for any warranties or representations of any nature whatsoever, whether pursuant to this Lease or otherwise, by any prior landlord or owner of the Property (including, but not limited to, Landlord) with respect to the use, construction, zoning, compliance with laws, title, habitability, fitness for purpose or possession, or physical condition (including, without limitation, environmental matters) of the Property or Improvements; or

(v) liable to Tenant in any amount beyond the interest of such mortgagee, beneficiary, master lessor or other secured party or successor owner in the Property as it exists from time to time, it being the intent of this provision that Tenant shall look solely to the interest of any such mortgagee, beneficiary, master lessor or other secured party or successor owner in the Property for the payment and discharge of the landlord’s obligations under this Lease and that such mortgagee, beneficiary, master lessor or other secured party or successor owner shall have no separate personal liability for any such obligations.

20. SECURITY

20.1 Deposit. Concurrently with Tenant’s execution of this Lease, Tenant shall deposit with Landlord the sum of One Hundred Nineteen Thousand Two Hundred Forty and No/100 Dollars ($119,240.00), which sum (the “Security Deposit”) shall be held by Landlord as security for the faithful performance of all of the terms, covenants, and conditions of this Lease to be kept and performed by Tenant during the term hereof. If Tenant defaults with respect to any provision of this Lease, including, without limitation, the provisions relating to the payment of rental and other sums due hereunder, Landlord shall have the right, but shall not be required, to use, apply or retain all or any part of the Security Deposit for the payment of rental or any other amount which Landlord may spend or become obligated to spend by reason of Tenant’s default or to compensate Landlord for any other loss or damage which Landlord may suffer by reason of Tenant’s default. If any portion of the Security Deposit is so used or applied, Tenant shall, within ten (10) days after written demand therefor, deposit cash with Landlord in an amount sufficient to restore the Security Deposit to its original amount and Tenant’s failure to do so shall be a material breach of this Lease. Landlord shall not be required to keep any deposit under this Section separate from Landlord’s general funds, and Tenant shall not be entitled to interest thereon. If Tenant fully and faithfully performs every provision of this Lease to be performed by it, the Security Deposit, or any balance thereof, shall be returned to Tenant or, at Landlord’s option, to the last assignee of Tenant’s interest hereunder, at the expiration of the term of this Lease and after Tenant has vacated the Property. In the event of termination of Landlord’s interest in this Lease, Landlord shall transfer all deposits then held by Landlord under this Section to Landlord’s successor in interest, whereupon Tenant agrees to release Landlord from all liability for the return of such deposit or the accounting thereof.

21. MISCELLANEOUS

21.1 Notices. All notices, consents, waivers and other communications which this Lease requires or permits either party to give to the other shall be in writing and shall be deemed given when delivered personally (including delivery by private courier or express delivery service) or four (4) days after deposit in the United States mail, registered or certified mail, postage prepaid, addressed to the parties at their respective addresses as follows:


To Tenant:		(until Commencement Date)
		Tularik Inc.
		270 E. Grand Avenue
		South San Francisco, CA 94080
		Attn: James M. Gower, Chairman

		(after Commencement Date)
		[At the Initial Building — address to be supplied]
		Attn: James M. Gower, Chairman

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with copy to:		Cooley Godward Castro Huddleson & Tatum
		Five Palo Alto Square, 4th Floor
		Palo Alto, CA ###-###-####
		Attn: Brian Cunningham

To Landlord:		Britannia Developments, Inc.
		1939 Harrison Street, Suite 610
		Park Plaza Building
		Oakland, CA 94612
		Attn: T. J. Bristow

with copy to:		Folger & Levin
		Embarcadero Center West
		275 Battery Street, 23rd Floor
		San Francisco, CA 94111
		Attn: Donald E. Kelley, Jr.

and copy to:		SDK Incorporated
		33 West Monroe Street
		Chicago, IL 60603
		Attn: Marshall Lees

or to such other address as may be contained in a notice at least fifteen (15) days prior to the address change from either party to the other given pursuant to this Section. Rental payments and other sums required by this Lease to be paid by Tenant shall be delivered to Landlord at Landlord’s address provided in this Section, or to such other address as Landlord may from time to time specify in writing to Tenant, and shall be deemed to be paid only upon actual receipt.

21.2 Successors And Assigns. The obligations of this Lease shall run with the land, and this Lease shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that the original Landlord named herein and each successive Landlord under this Lease shall be liable only for obligations accruing during the period of its ownership of the Property, said liability terminating upon termination of such ownership and passing to the successor lessor, except as otherwise expressly provided in the following sentence. Tenant acknowledges that it has been advised by Landlord that following execution of this Lease, Landlord intends to assign its rights and obligations hereunder (a) to a limited liability company or other entity having substantially the same ownership and management as Landlord, and/or (b) to an entity of which Landlord or an affiliate of Landlord is a general partner or has management responsibilities and equity participation comparable to those of a general partner; provided, that any such assignment shall not relieve Landlord of any of its obligations under this Lease.

21.3 No Waiver. The failure of Landlord to seek redress for violation, or to insist upon the strict performance, of any covenant or condition of this Lease shall not be deemed a waiver of such violation, or prevent a subsequent act which would originally have constituted a violation from having all the force and effect of an original violation.

21.4 Severability. If any provision of this Lease or the application thereof is held to be invalid or unenforceable, the remainder of this Lease or the application of such provision to persons or circumstances other than those as to which it is invalid or unenforceable shall not be affected thereby, and each of the provisions of this Lease shall be valid and enforceable, unless enforcement of this Lease as so invalidated would be unreasonable or grossly inequitable under all the circumstances or would materially frustrate the purposes of this Lease.

21.5 Litigation Between Parties. In the event of any litigation or other dispute resolution proceedings between the parties hereto arising out of or in connection with this Lease, the prevailing party shall be reimbursed for all reasonable costs, including, but not limited to, reasonable accountants’ fees and attorneys’ fees, incurred in connection with such proceedings (including, but not limited to, any appellate proceedings relating thereto) or in connection with the enforcement of any judgment or award rendered in such proceedings. “Prevailing party” within the meaning of this Section shall include, without limitation, a party who dismisses an action for recovery hereunder in exchange for payment of the sums allegedly due, performance of covenants allegedly breached or consideration substantially equal to the relief sought in the action.

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21.6 Surrender. A voluntary or other surrender of this Lease by Tenant, or a mutual termination thereof between Landlord and Tenant, shall not result in a merger but shall, at the option of Landlord, operate either as an assignment to Landlord of any and all existing subleases and subtenancies, or a termination of all or any existing subleases and subtenancies. This provision shall be contained in any and all assignments or subleases made pursuant to this Lease.

21.7 Interpretation. The provisions of this Lease shall be construed as a whole, according to their common meaning, and not strictly for or against Landlord or Tenant. The captions preceding the text of each Section and subsection hereof are included only for convenience of reference and shall be disregarded in the construction or interpretation of this Lease.

21.8 Entire Agreement. This written Lease, together with the exhibits hereto, contains all the representations and the entire understanding between the parties hereto with respect to the subject matter hereof. Any prior correspondence, memoranda or agreements are replaced in total by this Lease and the exhibits hereto. This Lease may be modified only by an agreement in writing signed by each of the parties.

21.9 Governing Law. This Lease and all exhibits hereto shall be construed and interpreted in accordance with and be governed by all the provisions of the laws of the State of California.

21.10 No Partnership. The relationship between Landlord and Tenant is solely that of a lessor and lessee. Nothing contained in this Lease shall be construed as creating any type or manner of partnership, joint venture or joint enterprise with or between Landlord and Tenant.

21.11 Financial Information. From time to time Tenant shall promptly provide directly to prospective lenders and purchasers of the Property designated by Landlord such financial information pertaining to the financial status of Tenant as Landlord may reasonably request; provided, Tenant shall be permitted to provide such financial information in a manner which Tenant deems reasonably necessary to protect the confidentiality of such information. In addition, from time to time, Tenant shall provide Landlord with such financial information pertaining to the financial status of Tenant as Landlord may reasonably request. Landlord agrees that all financial information supplied to Landlord by Tenant shall be treated as confidential material, and shall not be disseminated to any party or entity (including any entity affiliated with Landlord) without Tenant’s prior written consent. For purposes of this Section, without limiting the generality of the obligations provided herein, it shall be deemed reasonable for Landlord to request copies of Tenant’s most recent audited annual financial statements, or, if audited statements have not been prepared, unaudited financial statements for Tenant’s most recent fiscal year, accompanied by a certificate of Tenant’s chief financial officer that such financial statements fairly present Tenant’s financial condition as of the date(s) indicated.

Landlord and Tenant recognize the need of Tenant to maintain the confidentiality of information regarding its financial status and the need of Landlord to be informed of, and to provide to prospective lenders and purchasers of the Property financial information pertaining to, Tenant’s financial status. Landlord and Tenant agree to cooperate with each other in achieving these needs within the context of the obligations set forth in this Section. Landlord also acknowledges and agrees that Tenant’s obligations to furnish information to Landlord under this Section are in all events subject to Tenant’s compliance with, and may therefore be limited by, applicable securities laws.

21.12 Costs. If Tenant requests the consent of Landlord under any provision of this Lease for any act that Tenant proposes to do hereunder, including, without limitation, assignment or subletting of the Property, Tenant shall, as a condition to doing any such act and the receipt of such consent, reimburse Landlord promptly for any and all reasonable costs and expenses incurred by Landlord in connection therewith, including, without limitation, reasonable attorneys’ fees.

21.13 Time. Time is of the essence of this Lease, and of every term and condition hereof.

21.14 Rules And Regulations. Tenant shall observe, comply with and obey, and shall cause its employees, agents and, to the best of Tenant’s ability, invitees to observe, comply with and obey such rules and regulations as Landlord may promulgate from time to time for the safety, care, cleanliness, order and use of the Improvements and the Property.

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21.15 Brokers. Landlord agrees to pay a brokerage commission to Catalyst Real Estate Group, Tenant’s broker, in connection with the consummation of this Lease in accordance with a separate agreement. Each party represents and warrants that no other broker participated in the consummation of this Lease and agrees to indemnify, defend and hold the other party harmless against any liability, cost or expense, including, without limitation, reasonable attorneys’ fees, arising out of any claims for brokerage commissions or other similar compensation in connection with any conversations, prior negotiations or other dealings by the indemnifying party with any other broker.

21.16 Memorandum Of Lease. At any time during the term of this Lease, either party, at its sole expense, shall be entitled to record a memorandum of this Lease and, if either party so elects, both parties agree to cooperate in the preparation, execution, acknowledgement and recordation of such document in reasonable form.

21.17 Corporate Authority. The person signing this Lease on behalf of Tenant warrants that he or she is fully authorized to do so and, by so doing, to bind Tenant As evidence of such authority, Tenant shall deliver to Landlord, upon or prior to execution of this Lease, a certified copy of a resolution of Tenant’s board of directors authorizing the execution of this Lease and naming the officer that is authorized to execute this Lease on behalf of Tenant.

21.18 Execution and Delivery. This Lease may be executed in one or more counterparts and by separate parties on separate counterparts, but each such counterpart shall constitute an original and all such counterparts together shall constitute one and the same instrument.

21.19 Survival. Without limiting survival provisions which would otherwise be implied or construed under applicable law, the provisions of Sections 2.6, 9.4, 11.2, 11.3, 11.4, 13.6, 14.6 and 21.5 hereof shall survive the termination of this Lease with respect to matters occurring prior to the expiration of this Lease.

IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the day and year first set forth above.


“Landlord”		Tenant”

BRITANNIA DEVELOPMENTS, INC., a California corporation		TULARIK INC., a California corporation

By:	/s/ T. J. Bristow	By:	illegible
	T. J. Bristow
	President	Its:	President & CEO

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EXHIBITS


EXHIBIT A		Real Property Description (Site)

EXHIBIT B		Site Plan

EXHIBIT C		Workletter

EXHIBIT D		Estimated Construction Schedule

EXHIBIT E		Acknowledgement of Lease Commencement

EXHIBIT A

REAL PROPERTY DESCRIPTION (SITE)

All that certain real property in the City of South San Francisco, County of San Mateo, State of California, more particularly described as follows:

Parcel One:

Parcel C as designated on the Map entitled “PARCEL MAP NO. 89-268”, being a resubdivision of Lots 4, 5, 6 and 7 of that certain Map entitled “FINAL MAP GATEWAY CENTER” (SA-81-74) filed in the office of the Recorder of the County of San Mateo in Book 107 of Maps at Pages 27, 28, 29 and 30, which Map was filed in the Office of the Recorder of the County of San Mateo, State of California on December 12, 1989 in Book 63 of Parcel Maps at Pages 32 and 33.

Parcel Two:

A portion of that certain 0.572 acre parcel of land described in Resolution No. 900 by the City of South San Francisco, recorded August 6, 1943, in Book 1079 of Official Records of San Mateo County at Page 77, further described as follows:

A portion of Industrial Way, as shown on that certain Map entitled “Final Map Gateway Center” filed October 1, 1982, in Book 107 of Maps at Pages 27-30, San Mateo County Records, further described as follows:

Beginning at a point on the southeasterly line of said 0.572 acre parcel, also being the northwesterly line of Lot 4 as shown on said Map (104 Maps 27-30), distant thereon North 38° 42’ 41” East, 29.29 feet from the southwest corner of said Lot 4; thence along the aforementioned southeasterly line, North 38° 42’ 41” East, 356.97 feet; then northeasterly along the arc of a tangent, 980.56 foot radius curve to the left, through a central angle of 7° 19’ 26”, an arc distance of 125.34 feet to a point of reverse curvature; thence northeasterly along the arc of a tangent, 980.56 foot radius curve to the right, through a central angle of 7° 19’ 26”, an arc distance of 125.34 feet to a point of cusp, being the most northerly point of the aforementioned 0.572 acre parcel; thence along the northwesterly line of said 0.572 acre parcel, South 38° 42’ 41” West, 606.97 feet to a line which bears North 51° 17’ 19” West from the point of beginning; thence South 51° 17’ 19” East, 16.00 feet to the point of beginning.

EXHIBIT B

SITE PLAN

EXHIBIT C

WORKLETTER

This Workletter (“Workletter”) constitutes part of the Build-to-Suit Lease dated as of April 20, 1995 (the “Lease”) between BRITANNIA DEVELOPMENTS, INC., a California corporation (“Landlord”), and TULARIK INC., a California corporation (“Tenant”). The terms of this Workletter are incorporated in the Lease for all purposes.

1. Defined Terms. As used in this Workletter, the following capitalized terms have the following meanings:

(a) Approved Plans: Plans and specifications prepared by the applicable Architect for the respective Improvements and approved by both Landlord and Tenant in accordance with Paragraph 2 of this Workletter (subject to further modification in accordance with such Paragraph 2).

(b) Architect: Hallenbeck, Chamorro & Associates with respect to the Building Shell, the Site Improvements and any other Improvements which Landlord is to design pursuant to the Coordination Schedule; WHL Architects & Planners with respect to all Improvements which Tenant is to design pursuant to the Coordination Schedule, and with respect to all other Interior Improvements except those for which Hallenbeck, Chamorro & Associates is the Architect pursuant to the first portion of this definition.

(d) Change Order: See definition in Paragraph 2(e)(ii) hereof.

(e) Coordination Schedule: The schedule entitled Tularik/Britannia Shell/Interiors Coordination and attached as Schedule 2 to this Workletter.

(f) Cost of Improvement: See definition in Paragraph 2(c) hereof.

(g) Final Completion Certificate: See definition in Paragraph 3(b) hereof.

(h) Final Working Drawings: See definition in Paragraph 2(a) hereof.

(i) General Contractor: Concrete Shell Structures, Inc. with respect to Landlord’s Work. The General Contractor with respect to Tenant’s Work shall be selected by Tenant, subject to Landlord’s approval (not to be unreasonably withheld or delayed), as contemplated in Paragraph 5(a) hereof.

(j) Improvements: The Building Shell, Site Improvements, Interior Improvements and other improvements shown on the Approved Plans from time to time and to be constructed on the Phase I Site pursuant to the Lease and this Workletter.

(k) Interior Improvements: The improvements to or within the Initial Building, other than improvements constituting part of the Building Shell, shown on the Approved Plans from time to time and to be constructed by Tenant (except as otherwise provided herein) pursuant to the Lease and this Workletter.

(l) Landlord’s Work: The Building Shell and Site Improvements, and any other Improvements which Landlord is to install pursuant to the Coordination Schedule.

(m) Punch List Work: Minor corrections of construction or decoration details, and minor mechanical adjustments, that are required in order to cause any applicable portion of the Improvements as constructed to conform to the Approved Plans in all material respects and that do not materially interfere with Tenant’s use or occupancy of the Property.

(n) Site Improvements: The parking areas, driveways, landscaping and other improvements to the Common Areas of the Site that are designated on Exhibit B to the Lease as being part of the Phase I Site.

(o) Structural Completion Certificate: See definition in Paragraph 3(a) hereof.

(p) Tenant Delay: Any of the following types of delay in the completion of construction of the Building Shell:

(i) Any delay resulting from Tenant’s failure to furnish, in a timely manner, information requested by Landlord, Architect or Contractor in connection with the design or construction of the Building Shell, or from Tenant’s failure to approve in a timely manner any matters requiring approval by Tenant;

(ii) Any delay attributable to any need to construct the Building Shell in an “above standard” manner, as more fully described in Schedule I attached to this Workletter;

(iii) Any delay resulting from Change Orders, including any delay resulting from the need to revise any drawings or obtain further governmental approvals as a result of any Change Order; or

(iv) Any delay of any other kind or nature caused by Tenant (or Tenant’s contractors, agents or employees) or resulting from the performance of Tenant’s Work.

(q) Tenant’s Work: All of the Improvements other than those constituting Landlord’s Work, and such other materials and improvements as Tenant deems necessary or appropriate for Tenant’s use and occupancy of the Initial Building.

(r) Unavoidable Delays: Delays due to acts of God, acts of public agencies, labor disputes, strikes, fires, freight embargoes, rainy or stormy weather, inability to obtain supplies, materials, fuels or permits, delays of contractors or subcontractors, or other causes or contingencies beyond the reasonable control of Landlord.

(s) Work Deadlines: The target dates for performance by the applicable party of the steps listed in the Estimated Construction Schedule attached as Exhibit D to the Lease.

(t) Capitalized terms not otherwise defined in this Workletter shall have the definitions set forth in the Lease.

2. Plans, Cost of Improvements and Construction. Landlord and Tenant shall comply with the procedures set forth in this Paragraph in preparing, delivering and approving matters relating to the Improvements.

(a) Approved Plans and Working Drawings for Landlord’s Work. Plans and specifications for the Building Shell and other aspects of Landlord’s Work have been and continue to be under development and review by Landlord, Tenant and the respective Architects, but no such plans and specifications have yet been finally approved. Landlord shall continue to promptly and diligently (and in all events prior to any applicable Work Deadlines) cause to be prepared and delivered to Tenant, for approval, plans and specifications for the Improvements constituting Landlord’s Work (except to the extent Tenant is responsible for the design of such Improvements pursuant to the Coordination Schedule, in which event Tenant shall promptly and diligently, and in all events prior to any applicable Work Deadlines, cause such plans and specifications to be prepared and delivered to Landlord for approval). Following such mutual approval, Landlord shall then cause to be prepared and delivered to Tenant, on or before the applicable Work Deadline (assuming timely delivery by Tenant of all information, decisions and drawings required to be furnished or made by Tenant in order to permit complete preparation of plans and drawings), final working drawings and specifications for the Improvements constituting Landlord’s Work, including structural, fire protection, life safety, mechanical and electrical working drawings and final architectural drawings (collectively, “Final Working Drawings”). The

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Final Working Drawings shall substantially conform to the Approved Plans. Landlord’s obligation to deliver the Final Working Drawings to Tenant within the time period set forth above shall be extended for any delay encountered by Landlord as a result of a request by Tenant for changes in accordance with the procedure set forth below, any other Tenant Delays, or any Unavoidable Delays. No later than the applicable Work Deadline (assuming timely delivery of plans and drawings by Landlord), Tenant shall either approve the Final Working Drawings or set forth in writing with particularity any changes necessary to bring, the Final Working Drawings into substantial conformity with the Approved Plans or into a form which will be acceptable to Tenant. In no event, however, shall Tenant have the right to object to any aspect of the proposed plans and specifications or proposed Final Working Drawings for Landlord’s Work (including, but not limited to, any change from the Approved Plans) that is necessitated by applicable law, or to any aspect of such proposed plans and specifications or proposed Final Working Drawings that relates to the Building Shell or Site Improvements, although Landlord agrees to consult with Tenant and to give reasonable consideration to Tenant’s views regarding functional characteristics of the Building Shell and Site Improvements. Failure of Tenant to deliver to Landlord written notice of disapproval and specification of required changes on or before the applicable Work Deadline shall constitute and be deemed to be approval of the Final Working Drawings. Upon approval, actual or deemed, of the Final Working Drawings by Landlord and Tenant, the Final Working Drawings shall be deemed to be incorporated in and considered part of the Approved Plans, superseding (to the extent of any inconsistencies) any inconsistent features of the previously existing Approved Plans.

(b) Approved Plans and Working Drawings for Tenant’s Work. Tenant shall promptly and diligently cause to be prepared and delivered to Landlord, for approval, plans and specifications for the Improvements constituting Tenant’s Work (except to the extent Landlord is responsible for the design of such Improvements pursuant to the Coordination Schedule, in which event Landlord shall promptly and diligently cause such plans and specifications to be prepared and delivered to Tenant for approval). Following such approval, Tenant shall then cause to be prepared and delivered to Landlord final working drawings and specifications for the Improvements constituting Tenant’s Work, including any applicable life safety, mechanical and electrical working drawings and final architectural drawings (collectively, “Final Working Drawings”). The Final Working Drawings shall substantially conform to the Approved Plans. Landlord shall either approve the Final Working Drawings or set forth in writing with particularity any changes necessary to bring the Final Working Drawings into substantial conformity with the Approved Plans or into a form which will be acceptable to Landlord. Upon approval of the Final Working Drawings by Landlord and Tenant, the Final Working Drawings shall be deemed to be incorporated in and considered part of the Approved Plans, superseding (to the extent of any inconsistencies) any inconsistent features of the previously existing Approved Plans.

(c) Cost of Improvements. “Cost of Improvement” shall mean, with respect to any item or component for which a cost must be determined in order to allocate such cost, or an increase in such cost, to Landlord and/or Tenant pursuant to this Workletter, the sum of the following (unless otherwise agreed in writing by Landlord and Tenant with respect to any specific item or component or any category of items or components): (i) all sums paid to contractors or subcontractors for labor and materials furnished in connection with construction of such item or component; (ii) all costs, expenses, payments, fees and charges (other than penalties) paid or incurred to or at the direction of any city, county or other governmental or quasi-governmental authority or agency which are required to be paid in order to obtain all necessary governmental permits, licenses, inspections and approvals relating to construction of such item or component; (iii) engineering and architectural fees for services rendered in connection with the design and construction of such item or component (including, but not limited to, the applicable Architect for such item or component and an electrical engineer, mechanical engineer and civil engineer); (iv) sales and use taxes; (v) testing and inspection costs; (vi) the cost of power, water and other utility facilities and the cost of collection and removal of debris required in connection with construction of such item or component; and (vii) all other “hard” costs incurred in the construction of such item or component in accordance with the Approved Plans and this Workletter. Cost of Improvement shall not include any project management fee relating to the construction of such item or component.

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(d) Construction of Landlord’s Work. Promptly following approval of the Final Working Drawings, Landlord shall apply for and use reasonable efforts to obtain the necessary permits and approvals to allow construction of all Improvements constituting Landlord’s Work. Upon receipt of such permits and approvals, Landlord shall, at Landlord’s sole expense (except as otherwise provided in the Lease or in this Workletter), diligently construct and complete the Improvements constituting Landlord’s Work substantially in accordance with the Approved Plans, subject to Unavoidable Delays and Tenant Delays (if any). Such construction shall be performed in a neat and workmanlike manner and shall conform to all applicable governmental codes, laws and regulations in force at the time such work is completed. Landlord shall use only union labor on or in connection with Landlord’s Work and shall use the General Contractor specified in Paragraph l(i) to construct all Improvements constituting Landlord’s Work, but shall use any subcontractors specified in the Coordination Schedule or otherwise designated by Tenant to construct or install any Improvements constituting Landlord’s Work that are listed on the Coordination Schedule.

(e) Changes.

(i) If Landlord determines at any time that changes in the Final Working Drawings or in any other aspect of the Approved Plans relating to any item of Landlord’s Work are required as a result of applicable law or governmental requirements, or at the insistence of any other third party whose approval may be required with respcct to the Improvements, or as a result of unanticipated conditions encountered in the course of construction, then Landlord shall promptly (A) advise Tenant of such circumstances and (B) cause revised Approved Plans and/or Final Working Drawings, as applicable, reflecting such changes to be prepared by Architect and, to the extent such changes relate to items other than the Building Shell or Site Improvements, submitted to Tenant for approval in accordance with the procedure contemplated in Paragraph 2(a) hereof. Upon final approval of revised drawings by Landlord and Tenant (if applicable), the Final Working Drawings and/or Approved Plans shall be deemed to be modified accordingly.

(ii) If Tenant at any time desires any changes, alterations or additions to the Approved Plans or the Final Working Drawings with respect to any of Landlord’s Work, Tenant shall submit a detailed written request to Landlord specifying such changes, alterations or additions (a “Change Order”). Upon receipt of any such request, Landlord shall promptly notify Tenant of (A) whether the matters proposed in the Change Order are approved by Landlord (which approval shall not be unreasonably withheld), (B) Landlord’s estimate of the number of days of delay, if any, which shall be caused by such Change Order if implemented (including, without limitation, delays due to the need to obtain any revised plans or drawings and any governmental approvals), and (C) Landlord’s estimate of the increase, if any, which shall occur in the Cost of Improvement for the items or components affected by such Change Order if such Change Order is implemented (including, but not limited to, any costs of compliance with laws or governmental regulations that become applicable because of the requested Change Order). If Tenant notifies Landlord in writing, within five (5) business days after receipt of such notice from Landlord, of Tenant’s approval of the Change Order (including the estimated delays and cost increases, if any, described in Landlord’s notice), then Landlord shall cause such Change Order to be implemented, and Tenant shall be responsible for all costs or cost increases resulting from or attributable to the Change Order, subject to the provisions of Paragraph 4 hereof. If Tenant fails to notify Landlord in writing of Tenant’s approval of such Change Order within said five (5) business day period, then such Change Order shall be deemed to be withdrawn and shall be of no further effect.

3. Completion.

(a) When Landlord receives written certification from Architect that construction of the foundation, structural slab on grade, underslab plumbing work, structural steel framework, decking and concrete on second floor, and roof deck of the Initial Building, and installation of fire sprinklers therein, have been completed in accordance with the Approved Plans, Landlord shall prepare and deliver to Tenant a certificate signed by both Landlord and Architect (the “Structural Completion Certificate”) certifying that the construction of such portions of the Initial Building has been substantially completed in accordance with the Approved Plans in all material respects and specifying the date of that completion. The delivery of such Structural Completion Certificate shall commence the running of the six-month time period until the Commencement Date under Section 2.1 of the Lease.

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(b) When Landlord receives written certification from Architect that construction of the remaining Improvements constituting Landlord’s Work has been completed in accordance with the Approved Plans (except for Punch List Work), Landlord shall prepare and deliver to Tenant a certificate signed by both Landlord and Architect (the “Final Completion Certificate”) certifying that the construction of the remaining Improvements constituting Landlord’s Work has been substantially completed in accordance with the Approved Plans in all material respects, subject only to completion of Punch List Work, and specifying the date of that completion. Upon receipt by Tenant of the Final Completion Certificate, the Improvements constituting Landlord’s Work will be deemed delivered to Tenant for all purposes of the Lease (subject to Landlord’s continuing obligations with respect to the Punch List Work).

(c) Notwithstanding any other provisions of this Workletter or of the Lease, if Landlord is delayed in substantially completing any of Landlord’s Work necessary for issuance of the Structural Completion Certificate as a result of any Tenant Delay, then the six-month period between the delivery of the Structural Completion Certificate and the Commencement Date pursuant to Section 2.1 of the Lease shall be reduced, day for day, by the number of days by which such Tenant Delay delayed completion of the portions of Landlord’s Work necessary for issuance of the Structural Completion Certificate, and Tenant shall reimburse Landlord in cash, within fifteen (15) days after written demand by Landlord (accompanied by reasonable documentation of the items claimed), for any increased construction-related costs and expenses incurred by Landlord as a result of the Tenant Delay.

(d) At any time within thirty (30) days after delivery of the Structural Completion Certificate or the Final Completion Certificate, as applicable, Tenant shall be entitled to submit one or more lists to Landlord specifying Punch List Work to be performed on the applicable Improvements, and upon receipt of such list(s), Landlord shall diligently complete such Punch List Work at Landlord’s sole expense. In the event of any dispute as to completion of any item or component of Landlord’s Work, the certificate of, the applicable Architect shall be conclusive. Promptly after Landlord provides Tenant with the Final Completion Certificate, Landlord shall cause the recordation of a Notice of Completion (as defined in Section 3093 of the California Civil Code) with respect to Landlord’s Work.

4. Payment of Costs.

(a) Landlord’s Work. Except as otherwise specified in the Coordination Schedule with respect to any matters listed therein, the cost of construction of Landlord’s Work shall be borne by Landlord at its sole cost and expense, including any costs or cost increases incurred as a result of Unavoidable Delays, governmental requirements or unanticipated conditions; provided, however, that notwithstanding any other provisions of this Paragraph 4(a), to the extent the Cost of Improvement relating to the construction of any item or component of Landlord’s Work is increased as a result of any permitted Change Order or any Tenant Delay, or as a result of any “above standard” Building Shell components identified in Schedule 1 attached hereto or otherwise necessitated by Tenant’s particular use requirements or by the contemplated Tenant’s Work, or as a result of any other plan changes or compliance costs attributable to Tenant’s particular use requirements or to the contemplated Tenant’s Work, the amount of the increase in the Cost of Improvement with respect to such item or component, as well as the Cost of Improvement with respect to any matters listed on the Coordination Schedule as being installed by Landlord but as having the cost thereof borne by Tenant, shall be reimbursed by Tenant to Landlord by deducting such increase from the Allowance described in Paragraph 4(b).

(b) Tenant’s Work. Except as otherwise specified in the Coordination Schedule with respect to any matters listed therein or as otherwise expressly provided in this Workletter, the cost of construction of Tenant’s Work shall be borne by Tenant at its sole cost and expense, including any costs or cost increases incurred as a result of Unavoidable Delays, governmental requirements or unanticipated conditions. Notwithstanding the foregoing sentence, the Cost of Improvements

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with respect to the construction of the Interior Improvements shall be borne by Landlord up to a maximum cost equal to One Hundred Five and No/100 Dollars ($105.00) per square foot times the square footage of the Initial Building, as and when constructed (measured in accordance with Section 1.1(a) of the Lease), less any reduction in such sum pursuant to Paragraph 4(a) or any other applicable provision of this Workletter (the “Allowance”). The timing, conditions and other procedures for Landlord’s disbursement of the Allowance shall be subject to mutual agreement of Landlord, Tenant and Landlord’s lender (if any). To the extent the Cost of Improvement with respect to the Interior Improvements exceeds the Allowance (as reduced, if applicable), whether as a result of Change Orders, Tenant Delays and/or Unavoidable Delays or otherwise, the amount of such excess shall in all events be Tenant’s sole responsibility and expense.

5. Tenant’s Work. On or before the applicable Work Deadline, Tenant shall construct and install in the Initial Building the Tenant’s Work, substantially in accordance with the Approved Plans or, with respect to Tenant’s Work not shown on the Approved Plans, substantially in accordance with plans and specifications prepared by Tenant and approved in writing by Landlord (which approval shall not be unreasonably withheld or delayed). Tenant’s Work shall be performed in accordance with, and shall in all respects be subject to, the terms and conditions of the Lease (to the extent not inconsistent with this Workletter), and shall also be subject to the following conditions:

(a) Contractor Requirements. The contractor engaged by Tenant for Tenant’s Work, and any subcontractors, shall be duly licensed in California, shall use only union labor on or in connection with Tenant’s Work and shall be subject to Landlord’s prior written approval, which approval shall not be unreasonably withheld or delayed.

(b) Costs and Expenses of Tenant’s Work. Subject to Landlord’s payment or reimbursement obligations under Paragraph 4(b) hereof with respect to the Allowance, Tenant shall promptly pay all costs and expenses arising out of the performance of Tenant’s Work (including the costs of permits) and shall furnish Landlord with evidence of payment on request. Tenant shall provide Landlord with ten (10) days’ prior written notice before commencing any Tenant’s Work. On completion of Tenant’s Work, Tenant shall deliver to Landlord a release and waiver of lien executed by each contractor, subcontractor and materialman involved in the performance of Tenant’s Work. If any lien is filed against the Property or against Tenant’s leasehold interest, Tenant shall obtain, within ten (10) days after the filing, the release or discharge of that lien. If Tenant fails to do so, Landlord shall have the right (but not the obligation) to obtain the release or discharge of the lien and Tenant shall, within fifteen (15) days after written demand by Landlord (accompanied by reasonable documentation of the items claimed), reimburse Landlord for all costs, including (but not limited to) reasonable attorneys’ fees, incurred by Landlord in obtaining the release or discharge of such lien, together with interest from the date of demand at the interest rate set forth in Section 3.2 of the Lease.

(c) Indemnification. Tenant shall indemnify, defend (with counsel satisfactory to Landlord) and hold Landlord harmless from all suits, claims, actions, losses, costs and expenses (including, but not limited to, claims for workers’ compensation, attorneys’ fees and costs) based on personal injury or property damage or contract claims (including, but not limited to, claims for breach of warranty) arising from the performance of Tenant’s Work. Tenant shall repair or replace (or, at Landlord’s election, reimburse Landlord for the cost of repairing or replacing) any portion of the Improvements and/or any of Landlord’s real or personal property or equipment that is damaged, lost or destroyed in the performance of Tenant’s Work.

(d) Insurance. Tenant’s contractors shall obtain and provide to Landlord certificates evidencing workers’ compensation, public liability, and property damage insurance in amounts and forms and with companies satisfactory to Landlord.

(e) Rules and Regulations. Tenant and Tenant’s contractors shall comply with any other rules, regulations and requirements that Landlord or General Contractor may reasonably impose with respect to the performance of Tenant’s Work. Tenant’s agreement with Tenant’s contractors shall require each contractor to provide daily cleanup of the construction area to the extent that such cleanup is necessitated by the performance of Tenant’s Work.

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(f) Early Entry. Landlord shall permit entry of contractors into the Initial Building for the purposes of performing Tenant’s Work, prior to the Commencement Date, subject to satisfaction of the conditions set forth in the Lease. This license to enter before commencement of the Term is expressly conditioned on the contractor(s) retained by Tenant working in harmony with, and not interfering with, the workers, mechanics and contractors of Landlord.

(g) Risk of Loss. All materials, work, installations and decorations of any nature brought onto or installed in the Initial Building before the commencement of the Term shall be at Tenant’s risk, and neither Landlord nor any party acting on Landlord’s behalf shall be responsible for any damage, loss or destruction thereof.

(h) Condition of Tenant’s Work. All work performed by Tenant shall be performed in a good and workmanlike manner, shall be free from defects in design, materials and workmanship, and shall be completed in compliance with the plans approved by Landlord for such Tenant’s Work in all material respects and in compliance with all applicable governmental laws, ordinances, codes and regulations in force at the time such work is completed.

6. Effect of Delays. Any delay in any of the Work Deadlines (including any item that must be redone due to Tenant’s disapproval) shall automatically delay all subsequent deadlines by the same amount of time. To the extent that any delay constitutes a Tenant Delay, the Commencement Date for all purposes under the Lease shall be the date the Commencement Date would have occurred absent the Tenant Delay.

7. No Agency. Nothing contained in this Workletter shall make or constitute Tenant as the agent of Landlord.

8. Survival. Without limiting survival provisions which would otherwise be implied or construed under applicable law, the provisions of Paragraph 5(c) of this Workletter shall survive the termination of the Lease with respect to matters occurring prior to expiration of the Lease.

9. Miscellaneous. All references in this Workletter to a “number of days” shall be construed to refer to calendar days, unless otherwise specified herein. In all instances where Tenant’s approval is required, if no written notice of disapproval is given within the applicable time period, at the end of that period Tenant shall be deemed to have given approval and the next succeeding time period shall commence. If any item requiring approval is disapproved by Tenant in a timely manner, the procedure for preparation of that item and approval shall be repeated. Landlord may, in connection with any assignment of its interest under the Lease, assign to the same person or entity all of Landlord’s rights and obligations hereunder, in which event Landlord shall have no continuing obligations or liabilities hereunder (except to the extent otherwise expressly provided in Section 21.2 of the Lease) and all such continuing obligations and liabilities shall be assumed by and be binding upon Landlord’s assignee.

IN WITNESS WHEREOF, the parties have executed this Workletter concurrently with and as of the date of the Lease.


“Landlord”		“Tenant”

BRITANNIA DEVELOPMENTS, INC., a California corporation		TULARIK INC., a California corporation

By:	/s/ T.J. Bristow	By:	illegible
	T.J. Bristow
	President	Its:	illegible

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Schedule 1 to Workletter