Exhibit 10.8

EXECUTION VERSION

 

 

 

LEASE

 

by and between

 

BMR-6114-6154 Nancy Ridge Drive LLC,

a Delaware limited liability company,

as Landlord

 

and

 

Arena Pharmaceuticals, Inc.,

a Delaware corporation,

as Tenant

 

Building E:  6154 Nancy Ridge Drive, San Diego, CA

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TABLE OF CONTENTS

 

 

 

Page

 

 

 

 

 

1.

 

Lease of Premises

 

1

2.

 

Basic Lease Provisions

 

1

3.

 

Term

 

2

4.

 

Term Commencement Date and Possession

 

2

5.

 

Rent

 

2

6.

 

Rent Adjustments

 

3

7.

 

Taxes

 

3

8.

 

Security Deposit

 

5

9.

 

Use

 

7

10.

 

Brokers

 

8

11.

 

Holding Over

 

8

12.

 

Property Management Fee

 

9

13.

 

Condition of Premises

 

9

14.

 

Regulations and Parking Facilities

 

10

15.

 

Utilities and Services

 

10

16.

 

Tenant Improvements

 

11

17.

 

Alterations

 

13

18.

 

Repairs and Maintenance

 

15

19.

 

Liens

 

16

20.

 

Indemnification and Exculpation

 

16

21.

 

Insurance; Waiver of Subrogation

 

17

22.

 

Damage or Destruction

 

19

23.

 

Eminent Domain

 

21

24.

 

Defaults and Remedies

 

22

25.

 

Assignment or Subletting

 

25

26.

 

Attorneys’ Fees

 

28

27.

 

Bankruptcy

 

29

28.

 

Definition of Landlord

 

29

29.

 

Estoppel Certificate

 

29

30.

 

Purchase Option

 

30

31.

 

Limitation of Landlord’s Liability

 

33

32.

 

Premises Control by Landlord

 

33

33.

 

Quiet Enjoyment

 

34

34.

 

Subordination and Attornment

 

34

35.

 

Surrender

 

35

36.

 

Waiver and Modification

 

35

37.

 

Waiver of Jury Trial and Counterclaims

 

35

38.

 

Hazardous Materials

 

36

39.

 

Miscellaneous

 

37

40.

 

Option to Extend Term

 

39

41.

 

Tenant’s Authority

 

40

41.

 

Landlord’s Authority

 

40

42.

 

Confidentiality

 

40

43.

 

Odors and Exhaust

 

40

44.

 

Excavation

 

40

 

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LEASE

THIS LEASE (this “Lease”) is entered into as of this 2nd day of May, 2007 (the
“Execution Date”), by and between BMR-6114-6154 Nancy Ridge Drive LLC, a
Delaware limited liability company (“Landlord”), and Arena Pharmaceuticals,
Inc., a Delaware corporation (“Tenant”).

RECITALS

A.                                   Landlord owns certain real property (the
“Property”) and the improvements thereon located at 6154 Nancy Ridge Drive, San
Diego, California, including the approximately 50,000 rentable square foot
building located thereon (the “Existing Building”) in which the Premises (as
defined below) are located;

B.                                     Tenant intends to construct an additional
building totaling approximately 75,000 rentable square feet on the Property and
related improvements which may include a parking structure (collectively, the
“Expansion Building” and, together with the Existing Building, the “Buildings”);

C.                                     Tenant may elect to construct additional
improvements totaling between approximately 18,000 and 36,000 rentable square
feet on the Property which may consist of expansion to the Existing Building or
the Expansion Building and an additional parking structure (collectively, the
“Optional Improvements”); and

D.                                    Landlord wishes to lease to Tenant, and
Tenant desires to lease from Landlord, the Premises (as defined below) pursuant
to the terms and conditions of this Lease, as detailed below.

AGREEMENT

NOW, THEREFORE, Landlord and Tenant, in consideration of the mutual promises
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
agree as follows:

1.                                       Lease of Premises.  Landlord hereby
leases to Tenant, and Tenant hereby leases from Landlord, the Premises, as more
particularly described on Exhibit A attached hereto.  The Property and all
landscaping, parking facilities and other improvements and appurtenances related
thereto, including, without limitation, the Buildings and the Optional
Improvements, if any, are hereinafter collectively referred to as the
“Premises.”

2.                                       Basic Lease Provisions.  For
convenience of the parties, certain basic provisions of this Lease are set forth
herein.  The provisions set forth herein are subject to the remaining terms and
conditions of this Lease and are to be interpreted in light of such remaining
terms and conditions.

2.1.                              This Lease shall take effect upon the date of
execution and delivery hereof by all parties hereto and, except as specifically
otherwise provided within this Lease, each of the provisions hereof shall be
binding upon and inure to the benefit of Landlord and Tenant from the date of
execution and delivery hereof by all parties hereto.  Notwithstanding anything
to the contrary contained in this Lease, the delivery of this Lease by each
party hereto to the other shall occur concurrently with, and as part of, the
consummation of the transactions contemplated by that certain Agreement of
Purchase and Sale dated as of March 21, 2007 (the “Purchase Agreement”).

2.2.                              Rentable Area of the Premises:  As of the Term
Commencement Date, the Rentable Area of the Premises is approximately 50,000
rentable square feet for the Existing Building.

2.3.                              Initial monthly installment of Basic Annual
Rent for the Premises (“Basic Annual Rent”) as of the Term Commencement Date
shall be $133,109.07, subject to the rental adjustments provided in Article 6
hereof.

2.4.                              Term Commencement Date: May 2, 2007.

2.5.                              Term Expiration Date:  May 31, 2027.

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2.6.                              Security Deposit: An amount equal to
$133,109.07, which amount shall be increased in accordance with Section 8.1.

2.7.                              Permitted Use:  General office and/or
laboratory use, together with all manufacturing, research and development in
connection with such laboratory use, in conformity with Applicable Laws (as
defined below) and consistent with applicable zoning for the Premises.

2.8.

 

Address for Rent Payment:

 

BMR-6114-6154 Nancy Ridge Drive LLC

 

 

 

 

17140 Bernardo Center Drive, Suite 222

 

 

 

 

San Diego, California 92128

 

 

 

 

Attn: Karen Sztraicher

 

 

 

 

 

 

2.9.

 

Address for Notices to Landlord:

 

BMR-6114-6154 Nancy Ridge Drive LLC

 

 

 

 

17140 Bernardo Center Drive, Suite 222

 

 

 

 

San Diego, California 92128

 

 

 

 

Attn: General Counsel/Real Estate

 

 

 

 

 

 

2.10.

 

Address for Notices to Tenant:

 

Arena Pharmaceuticals, Inc.

 

 

 

 

6166 Nancy Ridge Drive

 

 

 

 

San Diego, California 92121

 

 

 

 

Attn: Chief Financial Officer

 

 

 

 

 

 

 

With a copy to:

 

Arena Pharmaceuticals, Inc.

 

 

 

 

6166 Nancy Ridge Drive

 

 

 

 

San Diego, California 92121

 

 

 

 

Attn: General Counsel

 

2.11.                        The following Exhibits are attached hereto and
incorporated herein by reference:

Exhibit A

 

Premises

 

Exhibit B

 

Acknowledgement of Term Commencement Date and Term Expiration Date

 

Exhibit C

 

Rules and Regulations

 

Exhibit D

 

Form of Estoppel Certificate

 

Exhibit E

 

Form of Letter of Credit

 

Exhibit F

 

Form of Notice of Exercise of Purchase Option

 

3.                                       Term.

3.1.                              This Lease shall take effect upon the date of
execution and delivery hereof by all parties hereto and, except as specifically
otherwise provided within this Lease, each of the provisions hereof shall be
binding upon and inure to the benefit of Landlord and Tenant from the date of
execution and delivery hereof by all parties hereto.

3.2.                              The actual term of this Lease (the “Term”)
shall be that period from the Term Commencement Date through the Term Expiration
Date, subject to earlier termination of this Lease as provided herein.

4.                                       Term Commencement Date and Possession.

4.1.                              Tenant currently occupies and shall continue
to occupy the Premises on the Term Commencement Date.  Tenant and Landlord shall
execute and deliver to each other a written acknowledgement of the actual Term
Commencement Date and the Term Expiration Date within ten (10) days after the
Term Commencement Date, in the form attached as Exhibit B hereto.  Failure to
execute and deliver such acknowledgement, however, shall not affect the Term
Commencement Date or Landlord’s or Tenant’s liability hereunder.

5.                                       Rent.

5.1.                              Tenant shall pay to Landlord as Basic Annual
Rent for the Premises, commencing on the Term Commencement Date, the sum set
forth in Section 2.3, subject to the rental adjustments provided in Article 6
hereof.  Basic Annual Rent shall be paid in equal monthly

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installments (as set forth in Section 2.3), subject to the rental adjustments
provided in Article 6 hereof, each in advance on the first day of each and every
calendar month during the Term.

5.2.                              In addition to Basic Annual Rent, Tenant shall
pay to Landlord as additional rent (“Additional Rent”) at times hereinafter
specified in this Lease (a) amounts related to Insurance Costs and Taxes (each
as defined below) and (b) any other amounts that Tenant assumes or agrees to pay
under the provisions of this Lease that are owed to Landlord, including, without
limitation, any and all other sums that may become due by reason of any default
of Tenant or failure on Tenant’s part to comply with the agreements, terms,
covenants and conditions of this Lease to be performed by Tenant, after notice
and the lapse of any applicable cure periods.

5.3.                              Basic Annual Rent and Additional Rent shall
together be denominated “Rent.”  Rent shall be paid to Landlord, without
abatement, deduction or offset, in lawful money of the United States of America
at the office of Landlord as set forth in Section 2.9 or to such other person or
at such other place as Landlord may from time to time designate in writing.  In
the event the Term commences or ends on a day other than the first day of a
calendar month, then the Rent for such fraction of a month shall be prorated for
such period on the basis of a thirty (30) day month and shall be paid at the
then-current rate for such fractional month.

6.                                       Rent Adjustments.  The Basic Annual
Rent shall be subject to the following adjustments:

6.1.                              Annual Adjustment.  The Basic Annual Rent
shall be subject to an annual upward adjustment of two and one-half percent
(2.5%) of the then-current Basic Annual Rent.  The first such adjustment shall
become effective commencing with that monthly rental installment that is due on
or after the first (1st) anniversary of the Term Commencement Date, and
subsequent adjustments shall become effective on every successive anniversary
for so long as this Lease continues in effect.

6.2.                              Expansion Building: Basic Annual Rent
Increase.  In the event Tenant receives the Building E Additional Purchase Price
(as defined in Section 1.3.2 of the Purchase Agreement), the monthly rental
installment of Basic Annual Rent shall be increased (effective as of the date
Tenant receives the Building E Additional Purchase Price) by the applicable
amount set forth in Schedule 1 attached hereto (the “Basic Annual Rent
Increase”), and the Basic Annual Rent as so adjusted shall be subject to further
rental adjustments as provided in Section 6.1 hereof.

6.3.                              Building F Option: Basic Annual Rent
Reduction.  Pursuant to the Purchase Agreement, Tenant assigned to Landlord
Tenant’s existing option (the “Building F Option”) to acquire that certain real
property located at 6122, 6124 and 6126 Nancy Ridge Drive, San Diego,
California, including the approximately 68,000 rentable square foot building
located thereon (the “Building F Property”).  In the event: (a) Landlord elects
not to exercise the Building F Option as a result of any casualty loss or
proceeding in eminent domain in accordance with Section 1.2 of the Purchase
Agreement; and (b) Tenant pays Landlord the Building F Option Termination
Payment in accordance with Section 1.2 of the Purchase Agreement, the monthly
rental installment of Basic Annual Rent shall be reduced by the applicable
amount set forth in Schedule 2 attached hereto (the “Basic Annual Rent
Reduction”), and the Basic Annual Rent as so adjusted shall be subject to
further rental adjustments as provided in Section 6.1 hereof.

7.                                       Taxes.

7.1.                              Commencing with the Term Commencement Date and
continuing for each calendar year or, at Landlord’s option, tax year (each such
“tax year” being a period of twelve (12) consecutive calendar months for which
the applicable taxing authority levies or assesses Taxes), for the balance of
the Term, Tenant shall pay to Landlord the amount of all Taxes levied and
assessed for any such year upon the Premises.  “Taxes” shall mean all government
impositions including, without limitation, property tax costs consisting of real
and personal property taxes and assessments (including amounts due under any
improvement bond upon the Premises or any portion thereof, including the parcel
or parcels of real property upon which the Buildings are located or assessments
levied in lieu thereof) imposed by any federal, state, regional, local or
municipal governmental authority, agency or subdivision (each, a “Governmental
Authority”) on the Premises or improvements thereon, any tax on or measured by
gross rentals received from the rental of space in the Buildings (other than
gross receipt taxes assessed against Landlord based solely on Landlord’s
business entity structure), or tax based on

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the square footage of the Premises or the Buildings as well as any parking
charges, utilities surcharges, or any other costs levied, assessed or imposed
by, or at the direction of, or resulting from statutes or regulations, or
interpretations thereof, promulgated by any Governmental Authority in connection
with the use or occupancy of the Premises or the parking facilities serving the
Premises; any tax on this transaction or this Lease; provided, however, that
“Taxes” shall in no event include any franchise or income tax or any tax based
on net rentals received from the rental of space in the Buildings. Any amount
paid by Tenant for any partial year of the Term shall be prorated on the basis
of the number of days of such partial year.  Payment shall be made in the
following manner:  Tenant shall pay to Landlord the amounts owed under this
Article 7 within thirty (30) days after Landlord gives notice to Tenant of the
amount of such Taxes payable by Tenant (or not less than ten (10) days prior to
delinquency, whichever is later).  Landlord also shall provide Tenant with a
copy of the applicable tax bill or tax statement from the relevant taxing
authority.  Notwithstanding the foregoing, if Applicable Laws allow any such
Taxes to be paid in installments, then Tenant may make such payments to Landlord
in installments, provided that each such installment shall be payable to
Landlord not less than ten (10) days prior to the date upon which payment of the
applicable installment to the taxing authority becomes delinquent.  In addition
to any other amounts due from Tenant to Landlord, if Tenant fails to pay Taxes
to Landlord as herein required, Tenant shall pay to Landlord the amount of any
interest, penalties or late charges imposed for late payment.  “Applicable Laws”
means all federal, state, municipal and local laws, codes, ordinances, rules and
regulations of Governmental Authorities, committees, associations, or other
regulatory committees, agencies or governing bodies having jurisdiction over the
Premises, Landlord or Tenant, including both statutory and common law and hazard
waste rules and regulations.

(a)                          If the Premises are separately assessed, Tenant
shall have the right, by appropriate proceedings, to protest or contest in good
faith any assessment or reassessment of Taxes, any special assessment, or the
validity of any Taxes or of any change in assessment or tax rate; provided,
however, that prior to any such challenge Tenant must either (i) pay to the
appropriate Governmental Authority the Taxes alleged to be due in their entirety
and seek a refund from the appropriate authority (which payment may be under
protest if payment under protest will not materially adversely affect Landlord)
or (ii) post a bond (or provide to Landlord other security acceptable to
Landlord) in an amount sufficient to ensure full payment of the Taxes, including
any potential interest, late charges and penalties.  Upon a final determination
with respect to any such contest or protest, Tenant shall promptly pay to the
appropriate Governmental Authority all sums found to be due with respect
thereto.  In any such protest or contest, Tenant may act in its own name, and at
the request of Tenant, Landlord shall cooperate with Tenant in any way Tenant
may reasonably require in connection with such contest or protest, including
signing such documents as Tenant reasonably shall request, provided that such
cooperation shall be at no expense to Landlord and shall not require Landlord to
attend any appeal or other hearing unless (x) such attendance is mandatory or
reasonably determined by Tenant to be reasonably required in order to materially
increase the prospects of a successful contest or protest, and (y) Tenant pays
all costs and expenses of Landlord’s appearance and fairly compensates Landlord
for all time spent at such appeal or hearing.  Any such contest or protest shall
be at Tenant’s sole expense (subject to reimbursement of such expenses whenever
Tenant prevails in such contest or protest but only to the extent of available
proceeds therefor from any portion of the refund that would not have accrued to
the benefit of Landlord absent Tenant’s protest or contest), and if any
penalties, interest or late charges become payable with respect to the Taxes as
a result of such contest or protest, Tenant shall pay the same.

(b)                         If Tenant obtains a refund as the result of Tenant’s
protest or contest, and subject to Tenant’s obligation to pay Landlord’s costs
(if any) associated therewith, Tenant shall be entitled to such refund to the
extent it relates to the Premises during the Term.

7.2.                              Tenant shall be solely responsible for the
payment of any and all taxes levied upon personal property and trade fixtures
located upon the Premises, and shall pay the same at least ten (10) days prior
to delinquency.  Tenant shall have the right by appropriate proceedings to
protest or contest in good faith the assessment or validity of any such taxes. 
Any such contest or protest shall be at Tenant’s sole expense.

7.3.                              If, at any time during the Term under the laws
of any Governmental Authority, a tax or excise on rent or any other tax
howsoever described is levied or assessed by any such political body against
Landlord on account of rentals payable to Landlord hereunder, such tax or

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excise shall be considered “Taxes” for the purposes of this Article 7. 
Notwithstanding the foregoing, “Taxes” shall not include any amount assessed
against Landlord as any local, state or federal income tax, including any gross
receipt taxes assessed against Landlord based solely on Landlord’s business
entity structure.

7.4.                              Within ten (10) business days after the end of
each calendar month, Tenant shall submit to Landlord an invoice, or, in the
event an invoice is not available, an itemized list, of all costs and expenses
paid by Tenant that (a) Tenant has incurred (either internally or by employing
third parties) during the prior month and (b) for which Tenant reasonably
believes it is entitled to reimbursements from Landlord pursuant to the terms of
this Lease; provided, however, in no event should this Section 7.4 apply to the
Building E Additional Purchase Price.  Landlord shall pay to Tenant each
invoiced amount within twenty (20) days after Landlord’s receipt of the
applicable invoice unless Landlord, in good faith, disputes any obligation to
pay the invoice; provided, however, Landlord shall pay to Tenant any undisputed
portion of such invoice and shall notify Tenant in writing of those portions of
such invoice which Landlord disputes (the “Disputed Amounts”).  Upon resolution
of any Disputed Amount, in a manner in which Landlord is either determined to
owe, or has agreed to pay, any of the Disputed Amounts, then Landlord shall
promptly pay to Tenant the amount it is determined to owe or has agreed to pay,
as applicable.

8.                                       Security Deposit.

8.1.                              Prior to the Term Commencement Date, Tenant
shall deposit with Landlord the sum set forth in Section 2.6 (the “Security
Deposit”), which sum shall be held by Landlord as security for the faithful
performance by Tenant of all of the terms, covenants and conditions of this
Lease to be kept and performed by Tenant during the Term of this Lease.  In
addition, Tenant shall, within five (5) days after any upward adjustment in the
Basic Annual Rent pursuant to Section 6.2, deposit with Landlord, and the
Security Deposit shall be increased by, an amount equal to the increase in the
monthly rental installment of the Basic Annual Rent pursuant to Section 6.2.  If
Tenant defaults with respect to any provision of this Lease, including, but not
limited to, any provision relating to the payment of Rent, then Landlord may
(but shall not be required to) use, apply or retain all or any part of the
Security Deposit for the payment of any Rent or any other sum in default, or to
compensate Landlord for any other loss or damage that Landlord may suffer by
reason of Tenant’s default.  If any portion of the Security Deposit is so used
or applied, then Tenant shall, within ten (10) days following 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 this
Security Deposit separate from its general fund, and Tenant shall not be
entitled to interest on the Security Deposit.  The provisions of this Article 8
shall survive the expiration or earlier termination of this Lease.  TENANT
HEREBY WAIVES THE REQUIREMENTS OF SECTION 1950.7 OF THE CALIFORNIA CIVIL CODE,
AS THE SAME MAY BE AMENDED FROM TIME TO TIME, WHICH, AMONG OTHER THINGS, (a)
ESTABLISH THE TIME FRAME BY WHICH LANDLORD MUST REFUND A SECURITY DEPOSIT UNDER
A LEASE, AND/OR (b) PROVIDE THAT LANDLORD MAY CLAIM FROM THE SECURITY DEPOSIT
ONLY THOSE SUMS REASONABLY NECESSARY TO REMEDY DEFAULTS IN THE PAYMENT OF RENT,
TO REPAIR DAMAGE CAUSED BY TENANT OR TO CLEAN THE PREMISES.

8.2.                              In the event of bankruptcy or other
debtor-creditor proceedings against Tenant, the Security Deposit shall be deemed
to be applied first to the payment of Rent and other charges due Landlord for
all periods prior to the filing of such proceedings.

8.3.                              Landlord may deliver to any purchaser of
Landlord’s interest in the Premises the funds deposited hereunder by Tenant, and
thereupon Landlord shall be discharged from any further liability with respect
to such deposit.  This provision shall also apply to any subsequent transfers.

8.4.                              The Security Deposit, or any balance thereof
after Landlord applies the Security Deposit to the payment of Rent or the amount
reasonably necessary to repair damage to the Premises caused by Tenant or to
compensate Landlord for any breach by Tenant, shall be returned to Tenant (or,
at Landlord’s option, to the last assignee of Tenant’s interest hereunder)
within thirty (30) days after the later of: (a) the expiration or earlier
termination of this Lease so long as Tenant is not then in Default under this
Lease nor is any event then occurring which with

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the giving of notice or the passage of time, or both, would constitute a Default
hereunder; or (b) the date that Tenant has cured all such Defaults or
prospective Defaults under this Lease.

8.5.                              THE SECURITY DEPOSIT MAY BE IN THE FORM OF
CASH, A LETTER OF CREDIT OR ANY OTHER SECURITY INSTRUMENT ACCEPTABLE TO LANDLORD
IN ITS SOLE DISCRETION.  TENANT MAY AT ANY TIME, EXCEPT DURING DEFAULT, DELIVER
A LETTER OF CREDIT (THE “L/C SECURITY”) AS THE ENTIRE SECURITY DEPOSIT, AS
FOLLOWS.

(A)                          IF TENANT ELECTS TO DELIVER L/C SECURITY, THEN
TENANT SHALL PROVIDE LANDLORD, AND MAINTAIN IN FULL FORCE AND EFFECT THROUGHOUT
THE TERM, A LETTER OF CREDIT IN SUBSTANTIALLY THE FORM OF EXHIBIT E ISSUED BY
ANY NATIONAL BANK THAT HAS (X) A BRANCH OFFICE WITHIN SAN DIEGO COUNTY WHERE
LANDLORD MAY PRESENT DRAFTS UNDER THE L/C SECURITY AND (Y) AN ISSUER REASONABLY
SATISFACTORY TO LANDLORD, IN THE AMOUNT OF THE SECURITY DEPOSIT, WITH AN INITIAL
TERM OF AT LEAST ONE YEAR.  IF, AT THE TERM EXPIRATION DATE, ANY RENT REMAINS
UNCALCULATED OR UNPAID, THEN:  (I) LANDLORD SHALL WITH REASONABLE DILIGENCE
COMPLETE ANY NECESSARY CALCULATIONS; (II) TENANT SHALL EXTEND THE EXPIRY DATE OF
SUCH L/C SECURITY FROM TIME TO TIME AS LANDLORD REASONABLY REQUIRES; AND
(III) IN SUCH EXTENDED PERIOD, LANDLORD SHALL NOT UNREASONABLY REFUSE TO CONSENT
TO AN APPROPRIATE REDUCTION OF THE L/C SECURITY.  TENANT SHALL REIMBURSE
LANDLORD’S OUT-OF-POCKET LEGAL COSTS NOT TO EXCEED THE SUM OF TWO THOUSAND
DOLLARS ($2,000) IN HANDLING LANDLORD’S ACCEPTANCE OF L/C SECURITY OR ITS
REPLACEMENT OR EXTENSION, EXCEPT WITH RESPECT TO ANY REPLACEMENT IN ACCORDANCE
WITH SUBPARAGRAPH (D) OF THIS SECTION 8.5.

(B)                         IF TENANT DELIVERS TO LANDLORD SATISFACTORY L/C
SECURITY IN PLACE OF THE ENTIRE SECURITY DEPOSIT, LANDLORD SHALL PROMPTLY REMIT
TO TENANT ANY CASH SECURITY DEPOSIT LANDLORD PREVIOUSLY HELD.

(C)                          LANDLORD MAY DRAW UPON THE L/C SECURITY, AND HOLD
AND APPLY THE PROCEEDS IN THE SAME MANNER AND FOR THE SAME PURPOSES AS THE
SECURITY DEPOSIT, IF:  (I) AN UNCURED DEFAULT EXISTS; (II) AS OF THE DATE 45
DAYS BEFORE ANY L/C SECURITY EXPIRES (EVEN IF SUCH SCHEDULED EXPIRY DATE IS
AFTER THE TERM EXPIRATION DATE) TENANT HAS NOT DELIVERED TO LANDLORD AN
AMENDMENT OR REPLACEMENT FOR SUCH L/C SECURITY, REASONABLY SATISFACTORY TO
LANDLORD, EXTENDING THE EXPIRY DATE TO THE EARLIER OF (1) THE DATE TWO (2)
MONTHS AFTER THE THEN-CURRENT TERM EXPIRATION DATE OR (2) THE DATE ONE YEAR
AFTER THE THEN-CURRENT EXPIRY DATE OF THE L/C SECURITY; (III) THE L/C SECURITY
PROVIDES FOR AUTOMATIC RENEWALS, LANDLORD ASKS THE ISSUER TO CONFIRM THE CURRENT
L/C SECURITY EXPIRY DATE, AND THE ISSUER FAILS TO DO SO WITHIN TEN (10) BUSINESS
DAYS; (IV) TENANT FAILS TO PAY (WHEN AND AS LANDLORD REASONABLY REQUIRES) ANY
BANK CHARGES FOR LANDLORD’S TRANSFER OF THE L/C SECURITY; (V) THE ISSUER OF THE
L/C SECURITY CEASES, OR ANNOUNCES THAT IT WILL CEASE, TO MAINTAIN AN OFFICE
WITHIN SAN DIEGO COUNTY WHERE LANDLORD MAY PRESENT DRAFTS UNDER THE L/C
SECURITY; OR (VI) UPON THE EXPIRATION OR EARLIER TERMINATION OF THIS LEASE, THE
CONDITIONS SET FORTH IN SECTION 8.4 HAVE NOT BEEN SATISFIED, AND THE L/C
SECURITY EXPIRES IN LESS THAN THIRTY (30) DAYS.  THIS PARAGRAPH DOES NOT LIMIT
ANY OTHER PROVISIONS OF THIS LEASE ALLOWING LANDLORD TO DRAW THE L/C SECURITY
UNDER SPECIFIED CIRCUMSTANCES.

(D)                         TENANT SHALL NOT SEEK TO ENJOIN, PREVENT, OR
OTHERWISE INTERFERE WITH LANDLORD’S DRAW UNDER L/C SECURITY, EVEN IF IT VIOLATES
THIS LEASE.  TENANT ACKNOWLEDGES THAT THE ONLY EFFECT OF A WRONGFUL DRAW WOULD
BE TO SUBSTITUTE A CASH SECURITY DEPOSIT FOR L/C SECURITY, CAUSING TENANT NO
LEGALLY RECOGNIZABLE DAMAGE.  LANDLORD SHALL HOLD THE PROCEEDS OF ANY DRAW IN
THE SAME MANNER AND FOR THE SAME PURPOSES AS A CASH SECURITY DEPOSIT.  IN THE
EVENT OF A WRONGFUL DRAW, THE PARTIES SHALL COOPERATE TO ALLOW TENANT TO POST
REPLACEMENT L/C SECURITY SIMULTANEOUSLY WITH THE RETURN TO TENANT OF THE
WRONGFULLY DRAWN SUMS, AND LANDLORD SHALL UPON REQUEST CONFIRM IN WRITING TO THE
ISSUER OF THE L/C SECURITY THAT LANDLORD’S DRAW WAS ERRONEOUS.

(E)                          IF LANDLORD TRANSFERS ITS INTEREST IN THE PREMISES,
THEN TENANT SHALL AT TENANT’S EXPENSE, WITHIN FIFTEEN (15) BUSINESS DAYS AFTER
RECEIVING A WRITTEN REQUEST FROM LANDLORD, DELIVER (AND, IF THE ISSUER REQUIRES,
LANDLORD SHALL CONSENT TO) AN AMENDMENT TO THE L/C SECURITY NAMING LANDLORD’S
GRANTEE AS SUBSTITUTE BENEFICIARY.  IF THE REQUIRED SECURITY CHANGES WHILE L/C
SECURITY IS IN FORCE, THEN TENANT SHALL DELIVER (AND, IF THE ISSUER REQUIRES,
LANDLORD SHALL CONSENT TO) A CORRESPONDING AMENDMENT TO THE L/C SECURITY.

(F)                            NOTWITHSTANDING AN ELECTION BY TENANT DURING THE
TERM TO SUBSTITUTE A CASH SECURITY DEPOSIT FOR L/C SECURITY, TENANT SHALL
NEVERTHELESS HAVE THE RIGHT TO REPLACE THE

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L/C SECURITY WITH A CASH SECURITY DEPOSIT, AT TENANT’S SOLE COST AND EXPENSE. 
IF TENANT DELIVERS THE CASH SECURITY DEPOSIT TO LANDLORD IN PLACE OF THE L/C
SECURITY, LANDLORD SHALL PROMPTLY CANCEL OR SURRENDER THE L/C SECURITY.  TENANT
MAY EFFECT SUCH SUBSTITUTIONS ON MULTIPLE OCCASIONS DURING THE TERM, PROVIDED
TENANT SHALL NOT EFFECT SUCH SUBSTITUTIONS MORE THAN TWICE IN ANY CALENDAR YEAR.

9.                                       Use.

9.1.                              Tenant shall use the Premises for the purposes
set forth in Section 2.7 (or any one, or any combination of, such purposes), and
shall not use the Premises, or permit or suffer the Premises to be used, for any
other purpose without Landlord’s prior written consent, which consent Landlord
may withhold in its sole and absolute discretion.

9.2.                              Tenant shall not use or occupy the Premises in
violation of Applicable Laws; zoning ordinances; or the certificate of occupancy
issued for the Buildings, and shall, upon five (5) days’ written notice from
Landlord, discontinue any use of the Premises if such use is in violation of
Applicable Law or declared or claimed by any Governmental Authority having
jurisdiction to be a violation of any of the above.  Tenant shall, at its sole
cost and expense, promptly and properly observe and comply with (including in
the making by Tenant of the any Alterations to the Premises): (a) all present
and future orders, regulations, directions, rules, laws, ordinances, and
requirements of all Governmental Authorities arising from the use or occupancy
of, or applicable to, the Premises or any portion thereof (except for any
orders, regulations, directions, rules, laws, ordinances or requirement that it
is contesting in accordance with this Section 9.2); and (b) any direction of any
Governmental Authority having jurisdiction that shall, by reason of the nature
of Tenant’s use or occupancy of the Premises, impose any duty upon Tenant or
Landlord with respect to the Premises or with respect to the use or occupation
thereof.    Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by any Governmental Authority. 
Notwithstanding the foregoing, Tenant shall not be obligated to comply with any
declaration, direction or other governmental rule or governmental action (a)
whose application or validity is being contested by Tenant diligently and in
good faith by appropriate proceedings if Tenant’s failure to comply therewith
neither creates any material risk of any financial liability or criminal
sanction against Landlord or the Premises, nor creates any material risk of
damage to the Premises, nor creates any risk to Landlord’s title to or rights in
the Premises, or (b) compliance with which shall have been excused or exempted
by a nonconforming use permit, waiver, extension or forbearance exempting it
from such declaration, direction or other governmental rule or governmental
action.

9.3.                              Tenant shall not do or permit to be done
anything that will invalidate the cost of any fire, environmental, extended
coverage or any other insurance policy covering the Premises, and shall comply
with all rules, orders, regulations and requirements of the insurers of the
Premises, and Tenant shall promptly, upon demand, reimburse Landlord for any
additional premium charged for such policy by reason of Tenant’s failure to
comply with the provisions of this Article.

9.4.                              Tenant shall, upon termination of this Lease,
return to Landlord all keys to offices and restrooms either furnished to or
otherwise procured by Tenant.  In the event any key so furnished to Tenant is
lost, Tenant shall pay to Landlord the cost of replacing the same or of changing
the lock or locks opened by such lost key if Landlord shall deem it necessary to
make such change.

9.5.                              No awnings or other projections shall be
attached to any outside wall of the Buildings in violation of any Applicable
Laws.

9.6.                              Tenant shall, at Tenant’s sole cost and
expense, have the right to install legally permitted signage on the Premises
(including any building thereon) (“Signage”), which Signage shall be subject to
Landlord’s prior written consent, which consent shall not be unreasonably
withheld, conditioned or delayed.  Tenant shall keep the Signage in good
condition and repair.  The size, design, and other physical aspects of any sign
shall be subject to Landlord’s written approval prior to installation, which
approval will not unreasonably be withheld, and shall conform to all covenants,
conditions, and restrictions encumbering the Premises and all Applicable Laws.
The cost of the sign(s), including but not limited to the permitting,
installation, maintenance and removal thereof shall be at Tenant’s sole cost and
expense. If Tenant fails to maintain its sign(s), or if Tenant fails to remove
such sign(s) upon termination of this Lease, or

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fails to repair any damage caused by such removal (including without limitation,
painting the damaged portions of the Buildings and any other portions of the
Buildings that Landlord reasonably determines in good faith shall be painted so
that repainting the damaged portion of the Buildings does not adversely affect
the visual appearance of the Buildings, if required by Landlord), Landlord may
do so at Tenant’s expense. Tenant shall reimburse Landlord within twenty (20)
days after written demand for all reasonable costs incurred by Landlord to
effect such maintenance, removal or repair, which amounts shall be deemed
Additional Rent and shall include without limitation, all sums disbursed,
incurred or deposited by Landlord, including Landlord’s costs, expenses and
actual attorneys’ fees with interest thereon.  Notwithstanding the foregoing,
Landlord has observed, and hereby approves, all existing signage on the
Premises, and all future repairs and replacements to such existing signage, so
long as such repairs and replacements: (a) are consistent with the size, design,
quality and other physical aspects of the existing signage, (b) are in
compliance with Applicable Laws, (c) are paid for at Tenant’s sole cost and
expense, and (d) do not adversely affect the visual appearance of the
Buildings.  In addition, Tenant shall have the right to incorporate its company
logo and trademarks as part of the design of its Signage.

9.7.                              Tenant shall only place equipment within the
Premises with floor loading consistent with the structural design of the
Buildings without Landlord’s prior written approval, and such equipment shall be
placed in a location designed to carry the weight of such equipment.  If Tenant
desires to place equipment within the Premises that exceeds the floor loading
consistent with the structural design of the Buildings, Tenant shall make any
structural enhancements necessary to carry the weight of such equipment in
accordance with the terms and conditions of Article 17 hereof.

9.8.                              TENANT SHALL NOT (A) USE OR ALLOW THE PREMISES
TO BE USED FOR UNLAWFUL PURPOSES OR (B) CAUSE, MAINTAIN OR PERMIT ANY WASTE IN,
ON OR ABOUT THE PREMISES.

9.9.                              Notwithstanding any other provision herein to
the contrary but subject to Section 9.2 hereof, Tenant shall be responsible for
all liabilities, costs and expenses arising out of or in connection with the
compliance during the Term of the Premises with the Americans with Disabilities
Act, 42 U.S.C. § 12101, et seq. (together with regulations promulgated pursuant
thereto, the “ADA”).

10.                                 Brokers.

10.1.                        Tenant represents and warrants that it knows of no
other real estate broker or agent other than Antaeus Capital, Inc. (“Antaeus”) /
Coastline Capital Partners (“Coastline Capital” and, together with Antaeus, the
“Brokers”), that is or might be entitled to a commission in connection with this
Lease.  Tenant shall compensate Antaeus in relation to this Lease pursuant to a
separate agreement between Tenant and Antaeus, and it is Tenant’s understanding
that Antaeus will compensate Coastline Capital in relation to this Lease
pursuant to a separate agreement between Antaeus and Coastline Capital. 
Landlord represents and warrants that it knows of no other real estate broker or
agent other than Brokers that is or might be entitled to a commission in
connection with this Lease.

10.2.                        Tenant and Landlord represent and warrant to the
other that no broker or agent has made any representation or warranty relied
upon by it in its decision to enter into this Lease, other than as contained in
this Lease.

10.3.                        Tenant acknowledges and agrees that the employment
of brokers by Landlord is for the purpose of solicitation of offers of leases
from prospective tenants and that no authority is granted to any broker to
furnish any representation (written or oral) or warranty from Landlord unless
expressly contained within this Lease.  Landlord is executing this Lease in
reliance upon Tenant’s representations, warranties and agreements contained
within Sections 10.1 and 10.2, and Tenant is executing this Lease in reliance
upon Landlord’s representations, warranties and agreements contained within
Sections 10.1 and 10.2.

11.                                 Holding Over.

11.1.                        If, with Landlord’s prior written consent, Tenant
holds possession of all or any part of the Premises after the Term, Tenant shall
become a tenant from month to month after the expiration or earlier termination
of the Term, and in such case Tenant shall continue to pay (a)

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the Basic Annual Rent in accordance with Article 5, as adjusted in accordance
with Article 6, and (b) any amounts for which Tenant would otherwise be liable
under this Lease if the Lease were still in effect, including, without
limitation, payments for Taxes and insurance.  Any such month-to-month tenancy
shall be subject to every other term, covenant and agreement contained herein.

11.2.                        Notwithstanding the foregoing, if Tenant remains in
possession of the Premises after the expiration or earlier termination of the
Term without Landlord’s prior written consent, Tenant shall become a tenant at
sufferance subject to the terms and conditions of this Lease, except that the
per diem monthly rent shall be equal to: (a) for the first three (3) months that
Tenant remains in possession of the Premises after the expiration or earlier
termination of this Lease,  one hundred twenty-five percent (125%) of the Basic
Annual Rent in effect during the last thirty (30) days of the Term; and (b) for
any time thereafter that Tenant remains in possession of the Premises after the
expiration or earlier termination of this Lease, one hundred fifty percent
(150%) of the Basic Annual Rent in effect during the last thirty (30) days of
the Term.

11.3.                        Acceptance by Landlord of Rent after the expiration
or earlier termination of the Term shall not result in an extension, renewal or
reinstatement of this Lease.

11.4.                        The foregoing provisions of this Article 11 are in
addition to and do not affect Landlord’s right of reentry or any other rights of
Landlord hereunder or as otherwise provided by Applicable Laws.

12.                                 Property Management Fee.  Tenant shall pay
to Landlord on the first day of each calendar month of the Term, as Additional
Rent, the “Property Management Fee,” which shall equal one percent (1%) of the
monthly installment of Basic Annual Rent then due from Tenant.

13.                                 Condition of Premises.

13.1.                        Tenant acknowledges that immediately prior to the
Term Commencement Date, Tenant occupied the Premises, is familiar with the
condition of the Premises and accepts the entire Premises in its “as is”
condition with all faults, and Landlord makes no representation or warranty of
any kind with respect to the condition of the Premises or with respect to the
suitability of the Premises for the conduct of Tenant’s business, and Landlord
shall have no obligation to alter, repair or otherwise prepare the Premises for
Tenant’s occupancy or to pay for or construct any improvements to the Premises
other than, if required by Section 1.3.2 of the Purchase Agreement, the Building
E Additional Purchase Price.  It is understood and agreed that Landlord is not
obligated to install any equipment, or make any repairs, improvements or
Alterations to the Premises, including the Tenant Improvements.  Tenant’s
possession of the Premises as of the Term Commencement Date shall, except as
otherwise agreed to in writing by Landlord and Tenant, conclusively establish
that the Premises were at such time in good, sanitary and satisfactory condition
and repair.

13.2.                        NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, IT
IS EXPRESSLY UNDERSTOOD AND AGREED THAT LANDLORD IS LEASING THE PREMISES “AS IS”
AND “WHERE IS,” AND WITH ALL FAULTS AND THAT, LANDLORD IS MAKING NO
REPRESENTATIONS AND WARRANTIES WHETHER EXPRESS OR IMPLIED, BY OPERATION OF LAW
OR OTHERWISE, WITH RESPECT TO THE QUALITY OR PHYSICAL CONDITION OF THE PREMISES,
THE INCOME OR EXPENSES FROM OR OF THE PREMISES, OR THE COMPLIANCE OF THE
PREMISES WITH APPLICABLE BUILDING OR FIRE CODES, ENVIRONMENTAL LAWS OR OTHER
LAWS, RULES, ORDERS OR REGULATIONS.  WITHOUT LIMITING THE FOREGOING, IT IS
UNDERSTOOD AND AGREED THAT LANDLORD MAKES NO WARRANTY WITH RESPECT TO THE
HABITABILITY, SUITABILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. 
TENANT AGREES THAT IT ASSUMES FULL RESPONSIBILITY FOR, AND THAT IT HAS HAD AN
OPPORTUNITY TO PERFORM EXAMINATIONS AND INVESTIGATIONS OF THE PREMISES,
INCLUDING SPECIFICALLY, WITHOUT LIMITATION, EXAMINATIONS AND INVESTIGATIONS FOR
THE PRESENCE OF ASBESTOS, PCBS AND OTHER HAZARDOUS SUBSTANCES, MATERIALS AND
WASTES (AS THOSE TERMS MAY BE DEFINED HEREIN OR BY APPLICABLE FEDERAL OR STATE
LAWS, RULES OR REGULATIONS) ON OR IN THE PREMISES.  WITHOUT LIMITING THE
FOREGOING,

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TENANT IRREVOCABLY WAIVES ALL CLAIMS THAT EXIST AS OF THE EXECUTION DATE AGAINST
LANDLORD WITH RESPECT TO ANY ENVIRONMENTAL CONDITION, INCLUDING CONTRIBUTION AND
INDEMNITY CLAIMS, WHETHER STATUTORY OR OTHERWISE.  TENANT ASSUMES FULL
RESPONSIBILITY (AS BETWEEN LANDLORD AND TENANT) FOR ALL COSTS AND EXPENSES
REQUIRED TO CAUSE THE PREMISES TO COMPLY WITH ALL APPLICABLE BUILDING AND FIRE
CODES, MUNICIPAL ORDINANCES, ENVIRONMENTAL LAWS AND OTHER LAWS, RULES, ORDERS,
AND REGULATIONS.

14.                                 Regulations and Parking Facilities.

14.1.                        Tenant shall faithfully observe and comply with the
rules and regulations attached hereto as Exhibit C, together with such other
reasonable and nondiscriminatory rules and regulations as are hereafter
promulgated by Landlord in its reasonable discretion (the “Rules and
Regulations”).  During the Term, Landlord shall not promulgate any rules and
regulations that (a) have a material adverse effect on Tenant’s use or occupancy
of the Premises, or (b) materially increase Tenant’s costs under this Lease,
without Tenant’s prior written consent, which consent shall not be unreasonably
withheld, conditioned or delayed.

14.2.                        Tenant shall have a non-exclusive license to use
all parking facilities located on the Premises during the Term except to the
extent of any covenants, conditions and restrictions existing as of the
Execution Date providing for rights in favor of others to use the parking
facilities in common with Tenant.  Landlord shall not use or grant a license or
any other right to use the parking facilities located on the Premises to any
person or entity (other than Tenant pursuant to the terms and conditions of this
Lease and any Required Lease (as defined below)).

14.3.                        Landlord reserves the right to subdivide the real
property; provided, however, that such right shall be exercised in a way that
does not materially adversely affect Tenant’s beneficial use and occupancy of
the Premises in any way whatsoever, including Tenant’s Permitted Use and
Tenant’s access to the Premises and use of parking facilities serving the
Premises.

15.                                 Utilities and Services.

15.1.                        Tenant shall, at Tenant’s sole cost and expense,
hire contractors and procure and maintain contracts, in customary form and
substance for, and with contractors adequately qualified and experienced in the
maintenance of the following equipment and improvements, if and when installed
on the Premises (a) HVAC equipment, (b) boilers and pressure vessels, (c) fire
extinguishing systems, including fire alarm and smoke detection devices, (d)
landscaping and irrigation systems (to the extent not maintained by the owners’
association), (e) roof coverings and drains, (f) clarifiers, (g) basic utility
feeds to the perimeter of the Buildings (except to the extent the owner’s
association, City of San Diego or applicable utility provider is responsible for
such maintenance) and (h) any other equipment reasonably required by Landlord;
provided, however, Tenant may provide such maintenance using its own personnel
so long as it hires personnel with adequate experience and qualifications in
maintaining such equipment.  Tenant shall deliver to Landlord copies of any such
contracts that contemplate total expenditures for such services of One Hundred
Thousand Dollars ($100,000) or more.   Notwithstanding the foregoing, in the
event Tenant fails either to maintain the contracts required under this Section
15.1 or to employ experienced and qualified personnel, Landlord reserves the
right, upon three (3) days prior written notice to Tenant, to procure and
maintain any such contracts which Tenant has failed to maintain, and if Landlord
so elects, Tenant shall reimburse Landlord, upon demand, for the actual
documented costs thereof.

15.2.                        Within sixty (60) days after the Term Commencement
Date, and within sixty (60) days after the beginning of each calendar year
during the Term, Landlord shall give Tenant a good faith written estimate for
such calendar year of the cost of insurance provided by Landlord, in connection
with the Premises (“Insurance Costs”), and any repair and maintenance expenses
Landlord incurs pursuant to Section 18.4 (“Landlord’s Maintenance Costs”).  Such
written estimate shall be consistent with then prevailing expenses in the
applicable industries and reflect allowable expenditures by Landlord pursuant to
this Lease.  Tenant shall pay such estimated amount to Landlord in advance in
equal monthly installments. Within ninety (90) days after the end of each
calendar year, Landlord shall furnish to Tenant a statement showing in
reasonable detail the Insurance Costs and Landlord’s Maintenance Costs incurred
by Landlord during such

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year (the “Annual Statement”), and Tenant shall pay to Landlord the Insurance
Costs and Landlord’s Maintenance Costs incurred in excess of the payments
previously made by Tenant within ten (10) days of receipt of the Annual
Statement.  In the event that the payments previously made by Tenant for
Insurance Costs and Landlord’s Maintenance Costs exceed Tenant’s obligation,
such excess amount shall be credited by Landlord to the Rent or other charges
next due and owing, provided that, if the Term has expired, Landlord shall
promptly remit such excess amount to Tenant.

15.3.                        Tenant shall make all arrangements for and pay for
all water, electricity, air, sewer, refuse, gas, heat, light, power, telephone
service and any other service or utility Tenant requires at the Premises. 
Landlord shall cooperate with Tenant, at Tenant’s sole cost and expense, in its
arrangements for such services and utilities and shall use commercially
reasonable efforts to avoid impeding the continued provision of such services
and utilities to the Premises in any way.  Landlord shall not be liable for, nor
shall any eviction of Tenant result from, the unintentional failure (unless such
failure is caused by Landlord’s willful misconduct or gross negligence), or
Landlord’s inability, to furnish any utility or service, whether or not such
failure is caused by accident; breakage; repair; strike, lockout or other labor
disturbance or labor dispute of any character; act of terrorism; shortage of
materials, which shortage is not unique to Landlord or Tenant, as the case may
be; or governmental regulation, moratorium or other governmental action
(collectively, “Force Majeure”).  In the event of such failure, Tenant shall not
be entitled to termination of this Lease, any abatement or reduction of Rent, or
relief from the operation of any covenant or agreement of this Lease.  Tenant
shall pay for, prior to delinquency of payment therefor, any utilities and
services that may be furnished to the Premises during or, if Tenant occupies the
Premises after the expiration or earlier termination of the Term, after the
Term.

15.4.                        Tenant shall not, without Landlord’s prior written
consent, use any device in the Premises that will in any way increase the amount
of ventilation, air exchange, gas, steam, electricity or water beyond the then
existing capacity of the Buildings.

16.                                 Tenant Improvements.

16.1.                        Tenant Improvements. Tenant shall have the right at
any time, and from time to time during the Term, to construct the Expansion
Building and the Optional Improvements on the Premises (collectively, the
“Tenant Improvements”), as Tenant shall deem necessary or desirable, which
Tenant Improvements shall be made in compliance with the requirements described
in this Article 16; provided, however, any Optional Improvements to the Existing
Building shall be made in compliance with the requirements set forth in Article
17. Tenant shall be solely responsible for all costs and expenses in connection
with any Tenant Improvements constructed on the Premises at no cost to Landlord
other than, if required by Section 1.3.2 of the Purchase Agreement, the Building
E Additional Purchase Price. Tenant shall reimburse Landlord for any extra
expenses incurred by Landlord during the Term by reason of faulty work done by
Tenant or its architects or contractors in connection with any of the Tenant
Improvements.  Landlord will reasonably cooperate with Tenant’s obtaining of
approvals from Governmental Authorities including providing letters of
permission, consent letters, applications and similar authorizations.  Upon
payment of the Building E Additional Purchase Price, all Tenant Improvements
shall (a) become part of the Premises and the property of Landlord, (b) remain
upon and be surrendered with the Premises as a part thereof, and (c) remain on
the Premises and not be removed by Tenant at any time during the Term, other
than items that Tenant replaces with a comparable item of equal quality and
quantity as existed as of the time of such removal.

16.2.                        Plans.  Tenant’s architect, Smith Consulting
Architects, or such other architect who is reasonably acceptable to Landlord,
shall be responsible for the preparation of plans for such Tenant Improvements
(the “Plans”).  Tenant shall prepare and submit to Landlord for Landlord’s
approval the Plans.  Landlord shall notify Tenant in writing within seven (7)
days after receipt of the Plans whether Landlord approves or objects to the
Plans and (in a reasonably detailed description) of the manner, if any, in which
the Plans are objectionable.  If Landlord objects to the Plans, then Tenant
shall revise the Plans and cause Landlord’s permissible objections (based on the
allowable grounds for such objections described in this Section 16.2) to be
remedied in the revised Plans to Landlord. Landlord shall not withhold its
approval to the Plans unless the Tenant Improvements to be constructed in
accordance with such Plans: (a) create a foreseeable risk of violating any Law,
including zoning ordinances; (b) violate any recorded document affecting the
Premises; provided that during the Term, Landlord shall not record any document
affecting the Premises which has (or will have in the event Tenant

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exercises the Purchase Option and acquires the Premises) a material adverse
effect on Tenant’s use or occupancy of the Premises without Tenant’s prior
written consent, which consent shall not be unreasonably withheld, conditioned
or delayed; (c) are not reasonably consistent with the architecture and overall
design of comparable office buildings in the surrounding Sorrento Mesa/Sorrento
Valley area; (d) are not at least equivalent to the then existing quality of the
Existing Building and other office buildings in the vicinity of the Buildings;
(e) involves a use of the Premises that is inconsistent with the Permitted Use
of the Premises; or (f) are reasonably expected to reduce the value of the
Existing Building or the Premises (each, a “Tenant Improvement Design
Problem”).  Landlord’s approval of, or objection to, the revised Plans and
Tenant’s correction of the same shall be in accordance with this Section 16.2
until Landlord has approved the Plans in writing.  The iteration of the Plans
that is approved by Landlord without objection shall be referred to herein as
the “Approved Plans.”

16.3.                        Changes.  Any changes to the Approved Plans (each,
a “TI Change”) requested by Tenant which causes a Tenant Improvement Design
Problem shall be subject to the written approval of Landlord, which approval
shall not be unreasonably withheld or delayed.

16.4.                        Landlord’s Approval.  Landlord shall respond to all
requests for consents, approvals or directions made by Tenant pursuant to this
Section 16 within seven (7) days following Landlord’s receipt of such request. 
If Landlord fails to respond within such seven (7) days period, then Tenant
shall provide Landlord with a second written notice stating that “Landlord’s
failure to respond within three (3) days after Tenant’s second notice shall be
deemed approval by Landlord,” and if Landlord does not respond within such three
(3) day period, then Landlord shall be deemed to have approved such item.

16.5.                        CONSTRUCTION OF TENANT IMPROVEMENTS. TENANT
COVENANTS AND AGREES THAT ALL WORK DONE BY TENANT OR TENANT’S CONTRACTORS IN
CONNECTION WITH SUCH TENANT IMPROVEMENTS SHALL BE PERFORMED: (A) BY LICENSED
CONTRACTORS (UNLESS DONE BY QUALIFIED EMPLOYEES OF TENANT); (B) IN A GOOD AND
WORKMANLIKE MANNER; AND (C) IN FULL COMPLIANCE WITH APPLICABLE LAWS. TENANT
SHALL REQUIRE ITS CONTRACTORS AND SUBCONTRACTORS PERFORMING SUCH TENANT
IMPROVEMENTS TO NAME LANDLORD AND ITS AFFILIATES AND LENDERS AS ADDITIONAL
INSUREDS ON THEIR RESPECTIVE INSURANCE POLICIES.

16.6.                        Completion of Tenant Improvements.  Tenant shall
complete such Tenant Improvements in all respects in accordance with the
provisions of this Lease.  The applicable Tenant Improvements shall be deemed
completed at such time as Tenant shall furnish to Landlord:

(a)                                        A certificate of occupancy from the
City of San Diego for such Tenant Improvements;

(b)                                       Either (i) a final unconditional
waiver of liens from each contractor and any other individual or entity for whom
payment is requested in connection with such Tenant Improvements and their
respective subcontractors, if any (other than contractors and any other
individuals or entities and their respective subcontractors, if any, requesting
payment of less than One Thousand Five Hundred Dollars ($1,500)), in the form
prescribed by Section 3626 of the California Civil Code which provides that such
individual or entity, as applicable, unconditionally waives and releases all
mechanics’ liens and other similar encumbrances, stop notices and bond rights
with respect to all work performed by such individual or entity, as applicable
(the “Building E Unconditional Waiver”), except to the extent Tenant does not
receive any unconditional waivers of liens from any contractors and other
individuals or entities and their respective subcontractors, if any, for whom
payment is requested in connection with such work and the lien period has lapsed
without any such contractors or other individuals or entities and their
respective subcontractors, if any, recording mechanics liens; or (ii) Tenant
posts a bond in an amount sufficient to ensure full payment of any mechanic’s
liens and other similar encumbrances for which Landlord has not received a
Building E Unconditional Waiver, including any potential interest, late charge
or penalties;

(c)                                        All other certifications and
approvals with respect to such Tenant Improvements that may be required from any
Governmental Authority and any board of fire underwriters or similar body for
the use and occupancy of the Expansion Building;

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(d)                                         Complete “as-built” drawing print
sets and electronic CADD files on disc showing such Tenant Improvements to the
extent Tenant obtains such files (or files in such other format as Tenant
maintains for its records);

(e)                                        Upon Landlord’s request,
documentation showing the amounts expended by Tenant with respect to such Tenant
Improvements, together with supporting documentation reasonably acceptable to
Landlord; and

(f)                                          A Certificate of Substantial
Completion in the form of the American Institute of Architects document G704, or
such other form reasonably approved by Landlord, executed by the project
architect and the general contractor.

17.                                 Alterations.

17.1.                        Subject to Article 16, Tenant shall, at Tenant’s
sole cost and expense, have the right at any time, and from time to time during
the Term, to make such Alterations (as defined below) to the Buildings, and
improvements and fixtures hereafter erected on the Premises, including, without
limitation, solar panels on the roof of the Existing Building, as Tenant shall
deem necessary or desirable in connection with the requirements of its business,
which Alterations (other than Alterations of Tenant’s movable trade fixtures and
equipment) shall be made in compliance with the requirements described in this
Article 17; provided, however, the Tenant Improvements (other than any Optional
Improvements to the Existing Building) shall be made in compliance with the
requirements of Article 16.  Tenant shall make no alterations, additions or
improvements in or to the Premises or engage in any construction, demolition,
reconstruction, renovation, or other work of any kind in, at, or serving the
Premises (“Alterations”) without Landlord’s prior written approval, which
approval Landlord may withhold in its sole and absolute discretion in connection
with any Alteration that: (a) adversely affects the exterior appearance of the
Buildings or the Premises; (b) adversely affects the structural aspects of the
Buildings, including, without limitation, the roof, foundation, load bearing
walls and structural elements of the Premises; (c) adversely affects any
base-building system or equipment, including, without limitation, the base
building HVAC, mechanical, electrical, plumbing or life safety systems; (d)
violates any Applicable Law; (e) violates any recorded document affecting the
Premises; provided that during the Term, Landlord shall not record any document
affecting the Premises which has (or will have in the event Tenant exercises the
Purchase Option and acquires the Premises) a material adverse effect on Tenant’s
use or occupancy of the Premises without Tenant’s prior written consent, which
consent shall not be unreasonably withheld, conditioned or delayed; (f) causes
the Buildings to be inconsistent with the then existing quality of the Buildings
and other office buildings in the vicinity of the Buildings; (g) involves a use
of the Premises that is inconsistent with the Permitted Use of the Premises; or
(h) reduces the value of the Buildings or the Premises (each, a “Design
Problem”).

17.2.                        Notwithstanding the foregoing, Tenant may make
non-structural Alterations to the Premises (“Acceptable Changes”) upon at least
ten (10) business days prior written notice to Landlord but without Landlord’s
prior consent provided (a) the Acceptable Changes do not involve Design
Problems; and (b) the cost of such Acceptable Changes do not exceed Seventy-Five
Thousand Dollars ($75,000) per occurrence or an aggregate amount of One Hundred
Seventy-Five Thousand Dollars ($175,000) in any twelve (12) month period;
provided, however, Tenant shall not be required to provide Landlord any notice
in connection with any non-structural Alterations in any twelve (12) month
period where the total combined cost of such non-structural Alterations do not
exceed Twenty Thousand Dollars ($20,000).

17.3.                        If Landlord’s approval of proposed Alterations is
required, Tenant shall provide Landlord, at least ten (10) days in advance of
any proposed construction, with plans, specifications, bid proposals, work
contracts, requests for laydown areas and such other information concerning the
nature and cost of the Alterations as Landlord may reasonably request.  If
Landlord’s approval of the proposed Alterations is required, Landlord shall
notify Tenant in writing within ten (10) business days after receipt of the
applicable plans, whether Landlord has approved or disapproved the plans (and,
in the case of disapproval, shall provide a detailed explanation of the
reason(s) for disapproval).  If Landlord’s approval of proposed Alterations is
not required, Tenant shall (a) give Landlord at least ten (10) business days’
prior written notice of the proposed commencement of such proposed Alterations,
and (b) a copy of the applicable plans upon Landlord’s written request after
Tenant’s completion of the Alterations.

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17.4.                        Tenant shall not construct or permit to be
constructed partitions or other obstructions in a manner that will interfere
with free access to mechanical installation or service facilities of the
Buildings.

17.5.                        Tenant shall accomplish any work performed on the
Premises in such a manner as to permit any fire sprinkler system and fire water
supply lines to remain fully operable at all times, unless such interruption in
service is temporary and commercially reasonable arrangements are made for the
provision of temporary services, all in accordance with Applicable Laws and the
applicable insurance policies.

17.6.                        Tenant covenants and agrees that all work done by
Tenant or Tenant’s contractors shall be performed in full compliance with
Applicable Laws.  Within thirty (30) days after completion of any Alterations,
Tenant shall provide Landlord, to the extent available, with complete “as-built”
drawing print sets and electronic CADD files on disc (or files in such other
current format in common use as Landlord reasonably approves or requires)
showing any changes in the Premises.

17.7.                        All Alterations shall (a) unless, prior to such
construction or installation Landlord elects otherwise, become the property of
Landlord upon the expiration or earlier termination of the Term, (b) remain upon
and be surrendered with the Premises as a part thereof, and (c) remain on the
Premises and not be removed by Tenant at any time during the Term, other than
items that Tenant replaces with a comparable item of equal quality and quantity
as existed as of the time of such removal.  The Premises shall at all times
remain the property of Landlord and shall be surrendered to Landlord upon the
expiration or earlier termination of this Lease.  Subject to the first sentence
of this Section 17.7, the Tenant’s Personal Property, whether owned by Tenant or
leased by Tenant from a lessor/owner (the “Owner/Secured Party”), shall be and
remain the property of Tenant or any such Owner/Secured Party and may be removed
by Tenant or any such Owner/Secured Party at any time.  Tenant shall promptly
repair any damage to the Property caused by the removal of Tenant’s Personal
Property.  The Premises shall at all times remain the property of Landlord and
shall be surrendered to Landlord upon the expiration or earlier termination of
this Lease.

17.8.                        Tenant shall repair any damage to the Premises
caused by Tenant’s removal of any property from the Premises.  During any such
restoration period, Tenant shall pay Rent to Landlord as provided herein as if
said space were otherwise occupied by Tenant.  The provisions of this Section
shall survive the expiration or earlier termination of this Lease.

17.9.                        If Tenant shall fail to remove any of its effects
from the Premises prior to termination of this Lease, then Landlord may, at its
option, remove the same in any manner that Landlord shall choose and store said
effects without liability to Tenant for loss thereof or damage thereto, and
Tenant shall pay Landlord, upon demand, any costs and expenses incurred due to
such removal and storage or Landlord may, at its sole option and without notice
to Tenant, sell such property or any portion thereof at private sale and without
legal process for such price as Landlord may obtain and apply the proceeds of
such sale against any (a) amounts due by Tenant to Landlord under this Lease and
(b) any expenses incident to the removal, storage and sale of said personal
property.

17.10.                  Notwithstanding any other provision of this Article 17
to the contrary, in no event shall Tenant remove any improvement from the
Premises as to which Landlord directly contributed payment without Landlord’s
prior written consent, unless Tenant replaces such improvement with improvements
having equal or greater value than those removed, as reasonably determined by,
and subject to the prior written approval of, Landlord, which approval shall not
be unreasonably withheld, conditioned or delayed.

17.11.                  Upon Landlord’s written request, within sixty (60) days
after final completion of any Alterations performed by Tenant with respect to
the Premises, Tenant shall submit to Landlord documentation showing the amounts
expended by Tenant with respect to such Alterations, together with supporting
documentation reasonably acceptable to Landlord.

17.12.                  Tenant shall reimburse Landlord for any extra expenses
incurred by Landlord during the Term by reason of faulty work done by Tenant or
its contractors.

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17.13.                  TENANT SHALL REQUIRE ITS CONTRACTORS AND SUBCONTRACTORS
PERFORMING WORK ON THE PREMISES TO NAME LANDLORD AND ITS AFFILIATES AND LENDERS
AS ADDITIONAL INSUREDS ON THEIR RESPECTIVE INSURANCE POLICIES.

18.                                 Repairs and Maintenance.

18.1.                        Tenant, at its sole cost and expense, shall
maintain and keep the Premises, all improvements thereon, and all appurtenances
thereto, including but not limited to sidewalks, parking areas, curbs, roads,
driveways, lighting standards, landscaping, sewers, water, gas and electrical
distribution systems and facilities, drainage facilities, and all signs, both
illuminated and non-illuminated that are now or hereafter on the Premises, in
good condition (ordinary wear and tear excepted) and in a manner consistent with
the Permitted Use provided, however, Tenant shall not be required to maintain
any of the foregoing to the extent such maintenance is the responsibility of an
owners’ association, City of San Diego or any utility provider.  Tenant shall
make all repairs, replacements and improvements, including, without limitation,
all structural, roof, HVAC, plumbing and electrical repairs, replacements and
improvements required, and shall keep the same free and clear from all rubbish
and debris.  All repairs made by Tenant shall be at least equal in quality to
the original work, and shall be made only by a licensed, bonded contractor
approved in advance by Landlord (which shall not be unreasonably withheld,
conditioned or delayed); provided, however, Tenant may make such repairs using
its own personnel so long as it hires personnel with adequate experience and
qualifications in performing such work; provided, further, that such contractor
or qualified personnel need not be bonded or approved by Landlord if the
Alterations, repairs, additions or improvements to be performed do not exceed
Seventy-Five Thousand Dollars ($75,000) per occurrence or an aggregate amount of
One Hundred Seventy-Five Thousand Dollars ($175,000) in any twelve (12) month
period.  Tenant shall not take or omit to take any action, the taking or
omission of which shall cause waste, damage or injury to the Premises, ordinary
wear and tear excepted.

18.2.                        Tenant shall, and shall cause Tenant’s contractors
or agents to, maintain the lines designating the parking spaces in good
condition and paint the same as often as may be necessary, so that they are
discernable at all times; resurface the parking areas as necessary to maintain
them in good condition; paint any exterior portions of the Buildings as
necessary to maintain them in good condition; maintain the roof and landscaping
in good condition; maintain sight screens, barricades or enclosures around any
waste or storage areas; and take all reasonable precautions to insure that the
drainage facilities of the roof are not clogged and are in good and operable
condition at all times; provided, however, Tenant shall not be required to
maintain any of the foregoing that are the responsibility of any Governmental
Authority or an owners’ association to maintain.

18.3.                        There shall be no abatement of Rent and no
liability of Landlord by reason of any injury to or interference with Tenant’s
business arising from the making of any repairs, Alterations or improvements in
or to any portion of the Premises, or in or to improvements, fixtures, equipment
and personal property therein unless such damage is caused by Landlord or its
agents’ gross negligence or willful misconduct.

18.4.                        Landlord shall not be required to maintain or make
any repairs or replacements of any nature or description whatsoever to the
Premises.  Except for repairs arising as a result of damage caused by Landlord
or its agents’ gross negligence or willful misconduct, Tenant hereby expressly
waives the right to make repairs at the expense of Landlord as provided for in
any Applicable Laws in effect at the time of execution of this Lease, or in any
other Applicable Laws that may hereafter be enacted, and waives its rights under
Applicable Laws relating to a landlord’s duty to maintain its premises in a
tenantable condition.  Notwithstanding the foregoing, if Tenant shall fail
during the Term, after reasonable notice, to maintain or to commence and
thereafter to proceed with diligence to make any repair required of it pursuant
to the terms of this Lease, Landlord, without being under any obligation to do
so and without thereby waiving such default by Tenant, may so maintain or make
such repair and may charge Tenant for the costs thereof.  Any expense reasonably
incurred by Landlord in connection with the making of such repairs may be billed
by Landlord to Tenant monthly or, at Landlord’s option, immediately, and shall
be due and payable within twenty (20) days after such billing or, at Landlord’s
option, may be deducted from the Security Deposit.

18.5.                        During the Term, Landlord and Landlord’s agents
shall have the reasonable right to enter upon the Premises or any portion
thereof for the purposes of performing any repairs or

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maintenance Landlord is permitted to make pursuant to this Lease, and of
ascertaining the condition of the Premises or whether Tenant is observing and
performing Tenant’s obligations hereunder, all without unreasonable interference
from Tenant or Tenant’s Agents.  Except for emergency maintenance or repairs,
the right of entry contained in this paragraph shall be exercisable at
reasonable times, at reasonable hours and on reasonable notice in compliance
with Section 32.3 hereof, conducted in a manner that protects Tenant’s
intellectual property and does not unreasonably interfere with Tenant’s
business.

18.6.                        Tenant shall, upon the expiration or sooner
termination of the Term, surrender the Premises to Landlord in as good of a
condition as when received, ordinary wear and tear and casualty excepted. 
Landlord shall have no obligation to alter, remodel, improve, repair, decorate
or paint the Premises or any part thereof.

18.7.                        This Article 18 relates to repairs and maintenance
arising in the ordinary course of operation of the Premises and any related
facilities.  In the event of fire, earthquake, flood, vandalism, war, terrorism,
natural disaster or similar cause of damage or destruction, Article 22 shall
apply in lieu of this Article 18.

19.                                 Liens.

19.1.                        Subject to the immediately succeeding sentence
Tenant shall keep the Premises free from any liens arising out of work
performed, materials furnished or obligations incurred by Tenant.  Tenant
further covenants and agrees that any mechanic’s lien filed against the Premises
for work claimed to have been done for, or materials claimed to have been
furnished to, shall be discharged or bonded by Tenant within twenty (20) days
after the filing thereof, at Tenant’s sole cost and expense.

19.2.                        Should Tenant fail to discharge or bond against any
lien of the nature described in Section 19.1, Landlord may, at Landlord’s
election, pay such claim or post a bond or otherwise provide security to
eliminate the lien as a claim against title, and Tenant shall within twenty (20)
days, reimburse Landlord for the costs thereof as Additional Rent.

19.3.                        In the event that Tenant leases or finances the
acquisition of office equipment, furnishings or other personal property of a
removable nature utilized by Tenant in the operation of Tenant’s business,
Tenant warrants that any Uniform Commercial Code financing statement executed by
Tenant shall, upon its face or by exhibit thereto, indicate that such financing
statement is applicable only to removable personal property of Tenant located
within the Premises.  In no event shall the address of the Premises be furnished
on a financing statement without qualifying language as to applicability of the
lien only to removable personal property located within the Premises.  Should
any holder of a financing statement executed by Tenant record or place of record
a financing statement that appears to constitute a lien against any interest of
Landlord or against equipment that may be located other than within an
identified suite leased by Tenant, Tenant shall, within twenty (20) days after
filing such financing statement, (a) cause a copy of the lender security
agreement or other documents to which the financing statement pertains to be
furnished to Landlord to facilitate Landlord’s ability to demonstrate that the
lien of such financing statement is not applicable to Landlord’s interest and
(b) take commercially reasonable efforts to cause Tenant’s lender to amend such
financing statement and any other documents of record to clarify that any liens
imposed thereby are not applicable to any interest of Landlord in the Premises.

20.                                 Indemnification and Exculpation.

20.1.                        Tenant agrees to indemnify, defend and save
Landlord harmless from and against any and all demands, claims, liabilities,
losses, costs, expenses, actions, causes of action, damages or judgments, and
all reasonable expenses (including, without limitation, reasonable attorneys’
fees, charges and disbursements) incurred in investigating or resisting the same
(collectively, “Claims”) arising from (a) injury or death to any person or
injury to any property occurring within or about the Premises arising directly
or indirectly out of Tenant’s or any of Tenant’s officers, employees, agents,
contractors, invitees, customers and subcontractors (collectively, “Tenant’s
Agents”) use or occupancy of the Premises, (b) a breach or default by Tenant in
the performance of any of its obligations hereunder, including, without
limitation, tenant’s failure to perform any of its obligations in Sections 9.6
and 18.1, (c) any of the Tenant Improvements or any of the Tenant’s Alterations,
(d) any determination by a Governmental

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Authority that the Premises during the Term, the Tenant Improvements or any of
Tenant’s Alterations at any time, fails or failed to comply with the ADA, and
(e) any and all cost or liability for compensation claimed by any other broker
or agent, other than the Brokers, employed or engaged by Tenant or claiming to
have been employed or engaged by Tenant, except to the extent caused by
Landlord’s Parties’ willful misconduct or gross negligence.

20.2.                        Notwithstanding any provision of Section 20.1 to
the contrary, Landlord shall not be liable to Tenant for, and Tenant assumes all
risk of, damage to personal property or scientific research, including, without
limitation, loss of records kept by Tenant within the Premises and damage or
losses caused by fire, electrical malfunction, gas explosion or water damage of
any type (including, without limitation, broken water lines, malfunctioning fire
sprinkler systems, roof leaks or stoppages of lines), unless any such loss is
due to Landlord’s willful disregard of written notice by Tenant of need for a
repair that Landlord is responsible to make for an unreasonable period of time
or to Landlord Parties’ willful misconduct or gross negligence.  Tenant further
waives any claim for injury to Tenant’s business or loss of income relating to
any such damage or destruction of personal property as described in this Section
20.2 except to the extent caused by Landlord Parties’ willful misconduct or
gross negligence.

20.3.                        Landlord shall not be liable for any damages
arising from any act, omission or neglect of any third party other than the
gross negligence or willful misconduct of the Landlord Parties.

20.4.                        Tenant acknowledges that security devices and
services, if any, while intended to deter crime, may not in given instances
prevent theft or other criminal acts.  Landlord shall not be liable for injuries
or losses caused by criminal acts of third parties other than Landlord’s
affiliates and agents, and Tenant assumes the risk that any security device or
service may malfunction or otherwise be circumvented by a criminal.  Tenant may,
subject to Article 17, at its expense, install such security devices and
contract for such services as Tenant determines are appropriate to deter crime
or otherwise protect against criminal acts.  If Tenant desires protection
against such criminal acts, then Tenant shall, at Tenant’s sole cost and
expense, obtain appropriate insurance coverage.

20.5.                        Landlord agrees to indemnify, defend and save
Tenant harmless from and against any and all Claims arising from (a) injury or
death to any person or injury to any property occurring within or about the
Premises arising directly or indirectly out of Landlord Parties’ willful
misconduct or gross negligence, (b) a breach or default by Landlord in the
performance of its obligations hereunder, or (c) any and all cost or liability
for compensation claimed by any other broker or agent, other than the Brokers,
employed or engaged by Landlord or claiming to have been employed or engaged by
Landlord.

20.6.                        If a party (the “Indemnified Party”) becomes aware
of a Claim which would reasonably be expected to result in an obligation to
indemnify the Indemnified Party by the other party (the “Obligated Party”) under
this Lease, the Indemnified Party shall notify the Obligated Party thereof in
writing within thirty (30) days after it becomes so aware, giving a reasonably
detailed description of the Claim to the extent then known, and providing a copy
of any written demand, notice, summons or other paper received by the
Indemnified Party; provided, however, the Indemnified Party’s failure to provide
the Obligated Party notice under this Section 20.6 shall not relieve the
Obligated Party’s liability hereunder except to the extent such failure to
provide notice created or exacerbated the Obligated Party’s liability
hereunder.  In addition, the Indemnified Party shall not settle any Claims under
Sections 20.1 and 20.5 without the Obligated Party’s prior written consent,
which consent shall not be unreasonably withheld, conditioned or delayed.

20.7.                        The provisions of this Article 20 shall survive the
expiration or earlier termination of this Lease.

21.                                 Insurance; Waiver of Subrogation.

21.1.                        Landlord shall maintain insurance for the Premises
in amounts equal to full replacement cost (exclusive of the costs of excavation,
foundations and footings, and without reference to depreciation taken by
Landlord upon its books or tax returns) or such lesser coverage as Landlord may
elect, provided that such coverage shall not be less than ninety percent (90%)
of such full replacement cost or the amount of such insurance Landlord’s lender,

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mortgagee or beneficiary (each, a “Lender”), if any, requires Landlord to
maintain (but Tenant shall not be required to pay the incremental costs of
obtaining limits greater than the full replacement cost, as determined by
Landlord in its reasonable discretion), providing protection against any peril
generally included within the classification “Fire and Extended Coverage,”
together with insurance against sprinkler damage (if applicable), vandalism and
malicious mischief.  Landlord, subject to availability thereof, shall further
insure, if Landlord deems it appropriate, coverage against flood, environmental
hazard and earthquake, loss or failure of building equipment, rental loss during
the period of repairs or rebuilding, workmen’s compensation insurance and
fidelity bonds for employees employed to perform services.  Notwithstanding the
foregoing, Landlord may, but shall not be deemed required to, provide insurance
for any improvements or Alterations installed by Tenant hereunder, without
regard to whether or not such improvements or Alterations are made a part of or
are affixed to the Buildings; provided, however, upon payment of the Building E
Additional Purchase Price, the Premises hereunder shall include the Tenant
Improvements constructed in accordance with Section 16.

21.2.                        In addition, Landlord shall carry public liability
insurance with a single limit of not less than One Million Dollars ($1,000,000)
for death or bodily injury, or property damage with respect to the Premises.

21.3.                        Tenant shall, at its own cost and expense, procure
and maintain in effect, beginning on the Term Commencement Date, and continuing
throughout the Term (and occupancy by Tenant, if any, after termination of this
Lease) commercial general liability insurance with limits of not less than Two
Million Dollars ($2,000,000) per occurrence for death or bodily injury and not
less than Two Million Dollars ($2,000,000) for property damage with respect to
the Premises (including $100,000 fire legal liability (each loss)).

21.4.                        The insurance required to be purchased and
maintained by Tenant pursuant to this Lease shall name Landlord, BioMed Realty,
L.P., BioMed Realty Trust, Inc., and their respective officers, employees,
agents, general partners, members, subsidiaries, affiliates and Lenders
(“Landlord Parties”) as additional insureds.  Said insurance shall be with
companies having a rating of not less than policyholder rating of A and
financial category rating of at least Class XII in “Best’s Insurance Guide.” 
Tenant shall obtain for Landlord from the insurance companies or cause the
insurance companies to furnish certificates of coverage to Landlord.  The
insurer shall endeavor to provide Landlord at least thirty (30) days’ prior
written notice of any reduction of coverage, other modification or cancellation
of such policy (except in the event of non-payment of premium, in which case ten
(10) days written notice shall be given).  All such policies shall be written as
primary policies, not contributing with and not in excess of the coverage that
Landlord may carry.  Tenant’s policy may be a “blanket policy” that specifically
provides that the amount of insurance shall not be prejudiced by other losses
covered by the policy.  Tenant shall, on or before the expiration of such
policies, furnish Landlord with a copy of a certificate of insurance for Tenant
from a duly licensed insurance company showing all premiums due on the renewal
or successor policy have been paid at the time such premiums are due and payable
and showing the insurance provided by the renewal or successor policy to be in
full force and effect.  Tenant agrees that if Tenant does not take out or does
not maintain such insurance, Landlord may (but shall not be required to) procure
said insurance on Tenant’s behalf and at its cost to be paid by Tenant as
Additional Rent.

21.5.                        Subject to Section 20.5, Tenant assumes the risk of
damage to any fixtures, goods, inventory, merchandise, equipment and leasehold
improvements, and Landlord shall not be liable for injury to Tenant’s business
or any loss of income therefrom, relative to such damage, all as more
particularly set forth within this Lease.  Tenant shall, at Tenant’s sole cost
and expense, carry such insurance as Tenant desires for Tenant’s protection with
respect to personal property of Tenant or business interruption.

21.6.                        In each instance where insurance is to name
Landlord Parties as additional insureds, Tenant shall, upon Landlord’s written
request, also designate and furnish certificates evidencing such Landlord
Parties as additional insureds to (a) any Lender of Landlord holding a security
interest in the Premises or any portion thereof, (b) the landlord under any
lease whereunder Landlord is a tenant of the real property upon which the
Buildings are located if the interest of Landlord is or shall become that of a
tenant under a ground lease rather than that of a fee owner, and (c) any
management company retained by Landlord to manage the Premises.

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21.7.                        Landlord and Tenant each hereby waive any and all
rights of recovery against the other or against the officers, directors,
employees, agents and representatives of the other on account of loss or damage
occasioned by such waiving party or its property or the property of others under
such waiving party’s control, in each case to the extent that such loss or
damage is insured against under any fire and extended coverage insurance policy
that either Landlord or Tenant may have in force at the time of such loss or
damage.  Such waivers shall continue so long as their respective insurers so
permit.  Any termination of such a waiver shall be by written notice to the
other party, containing a description of the circumstances hereinafter set forth
in this Section 21.7.  Landlord and Tenant, upon obtaining the policies of
insurance required or permitted under this Lease, shall give notice to the
insurance carrier or carriers that the foregoing mutual waiver of subrogation is
contained in this Lease.  If such policies shall not be obtainable with such
waiver or shall be so obtainable only at a premium over that chargeable without
such waiver, then the party seeking such policy shall notify the other of such
conditions, and the party so notified shall have ten (10) days thereafter to
either (a) procure such insurance with companies reasonably satisfactory to the
other party or (b) agree to pay such additional premium.  If the parties do not
accomplish either (a) or (b), then this Section 21.7 shall have no effect during
such time as such policies shall not be obtainable or the party in whose favor a
waiver of subrogation is desired refuses to pay the additional premium.  If such
policies shall at any time be unobtainable, but shall be subsequently
obtainable, then neither party shall be subsequently liable for a failure to
obtain such insurance until a reasonable time after notification thereof by the
other party.  If the release of either Landlord or Tenant, as set forth in the
first sentence of this Section 21.7, shall contravene Applicable Laws, then the
liability of the party in question shall be deemed not released but shall be
secondary to the other party’s insurer.

21.8.                        LANDLORD MAY REQUIRE INSURANCE POLICY LIMITS
REQUIRED UNDER THIS LEASE TO BE RAISED TO CONFORM WITH REQUIREMENTS OF
LANDLORD’S LENDER, IF ANY, TO BRING COVERAGE LIMITS TO LEVELS THEN BEING
REQUIRED OF SIMILARLY SITUATED TENANTS UNDER LEASES OF PREMISES THAT ARE
COMPARABLE IN SIZE TO THE PREMISES, USED FOR SIMILAR PURPOSES AS THE PREMISES
ARE USED AND LOCATED IN BUILDINGS COMPARABLE IN QUALITY TO, AND IN THE GENERAL
VICINITY OF, THE BUILDINGS.  IN ADDITION, UPON EACH TENTH (10TH) ANNIVERSARY OF
THE TERM COMMENCEMENT DATE, LANDLORD MAY REQUIRE INSURANCE POLICY LIMITS
REQUIRED UNDER THIS LEASE TO BE ADJUSTED BY THE PERCENTAGE CHANGE IN THE
CONSUMER PRICE INDEX FOR ALL URBAN CONSUMERS FOR THE SAN DIEGO METROPOLITAN
AREA, AS PUBLISHED BY THE UNITED STATES DEPARTMENT OF LABOR’S BUREAU OF LABOR
STATISTICS FROM THE TERM COMMENCEMENT DATE THROUGH SUCH TENTH (10TH) ANNIVERSARY
OF THE TERM COMMENCEMENT DATE.

21.9.                        Any costs incurred by Landlord pursuant to this
Article 21 shall be included as Insurance Costs payable by Tenant pursuant to
this Lease; provided, however, with respect to insurance coverage for
environmental hazard and earthquake, if any, maintained by Landlord under
Section 21.8, the costs included as Insurance Costs payable by Tenant pursuant
to this Lease shall not exceed an amount equal to Tenant’s pro rata portion of
the cost to Landlord of maintaining portfolio-wide policies with limits of up to
$10,000,000 for environmental hazard and up to $20,000,000 for earthquake, in
each case as may be adjusted by Landlord in its sole and absolute discretion on
each anniversary of the Term Commencement Date of this Lease by the then most
recent available 12-month percentage change in the Consumer Price Index for All
Urban Consumers for the San Diego metropolitan area, as published by the United
States Department of Labor’s Bureau of Labor Statistics.

22.                                 Damage or Destruction.

22.1.                        In the event of a partial destruction of the
Premises by fire or other perils covered by extended coverage insurance not
exceeding thirty percent (30%) of the full insurable value thereof, and provided
that (a) the damage thereto is such that the Premises may be repaired,
reconstructed or restored to substantially the same condition as existed
immediately before such damage and destruction in accordance with Applicable
Laws within a period of twelve (12) months from the date of the happening of
such casualty and (b) Landlord shall receive insurance proceeds sufficient to
cover the cost of such repairs (except for any deductible amount provided by
Landlord’s policy, which deductible amount, if paid by Landlord, shall
constitute an Insurance Cost), Landlord shall commence and proceed diligently
with the work of repair, reconstruction and restoration of the Premises, and the
provisions of this Lease shall continue in full force and effect except as
otherwise provided in this Article 22.

22.2.                        In the event of any damage to or destruction of the
Premises other than as described in Section 22.1, Landlord may elect to repair,
reconstruct and restore the Premises in

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which case the provisions of this Lease shall continue in full force and effect
except as otherwise provided in this Article 22.  Landlord shall give written
notice to Tenant of its election to repair, reconstruct or restore the Premises
or to terminate this Lease within sixty (60) days following the date of damage
or destruction (the “Landlord’s Restoration Notice”).  Landlord shall include
with the Landlord’s Restoration Notice a good faith estimate (the “Restoration
Estimate”) prepared by Landlord’s architect or engineer of: (a) the time
required to substantially complete the repair, reconstruction or restoration of
the Premises to its original condition in compliance with Applicable Laws (the
“Restoration Period”), and (b) the costs and expenses incurred or to be incurred
in restoring such damage and destruction, including, without limitation, the
design costs, project management costs, insurance costs and all other costs in
connection with the repair, reconstruction or restoration of such damage or
destruction (the “Restoration Costs”).  If Landlord elects to repair,
reconstruct and restore the Premises but the estimated Restoration Period set
forth in the Landlord’s Restoration Notice is greater than twenty-four (24)
months, then Tenant shall have the right to terminate this Lease as of the date
of such damage or destruction within twenty (20) business days following the
date upon which Tenant receives the Landlord’s Restoration Notice.  If Landlord
elects to terminate this Lease, then this Lease shall terminate as of the date
of such damage or destruction; provided, however, if Landlord elects to
terminate this Lease, then Tenant may elect, within such twenty (20) business
days following the date upon which Tenant receives the Landlord’s Restoration
Notice, to exercise the Purchase Option in accordance with Section 30.1(c)(ii),
in which event Tenant shall receive any insurance proceeds resulting from such
damage; and provided further, if the Restoration Period set forth in the
Restoration Estimate is less than thirty-six (36) months, Tenant may elect,
within such twenty (20) business days following the date upon which Tenant
receives the Landlord’s Restoration Notice, to deposit with Landlord an amount
that is sufficient to cover any shortfall between the amount of insurance
proceeds Landlord expects to receive in connection with the damage or
destruction and the expected Restoration Costs set forth in the Restoration
Estimate (the “Restoration Deposit”), so long as Tenant: (1) reaffirms its
intention to pay all Rent as such Rent becomes due and owing under this Lease;
(2) waives any claim to offsets, defenses or abatement of such Rent as a
consequence of such damage or destruction without regard to the duration of the
Restoration Period; and (3) deposits with Landlord the Restoration Deposit, in
which event this Lease shall remain in full force and effect and Landlord shall
repair, reconstruct or restore such damage or destruction in accordance with the
terms and conditions of Section 22.6, and in the event Landlord thereafter
notifies Tenant at any time that the expected Restoration Costs exceed the
remaining Restoration Deposit and remaining insurance proceeds to be received by
Landlord, Tenant shall within ten (10) days after such notice pay the amount of
such deficiency to Landlord.  Landlord shall have the right to use the
Restoration Deposit to cover all costs and expenses in excess of the insurance
proceeds received by Landlord necessary to complete the repair, reconstruction
or restoration of such damage or destruction.  In addition, if the actual cost
of such repair, reconstruction or restoration exceeds the amount of the
Restoration Fund, Tenant shall promptly deposit with Landlord such excess to be
included in the Restoration Fund.  Any sum which remains in the Restoration Fund
upon completion of the repair, reconstruction or restoration of such damage or
destruction after the payment of all Restoration Costs shall be promptly
refunded to Tenant.

22.3.                        Upon any termination of this Lease under any of the
provisions of this Article 22 (and provided Tenant does not exercise the
Purchase Option), the parties shall be released thereby without further
obligation to the other from the date possession of the Premises is surrendered
to Landlord, except with regard to (a) items occurring prior to the damage or
destruction and (b) provisions of this Lease that, by their express terms,
survive the expiration or earlier termination hereof.

22.4.                        Except as set forth in Section 22.2, in the event
of repair, reconstruction and restoration as provided in this Article 22, all
Rent to be paid by Tenant under this Lease shall be abated proportionately based
on the extent to which Tenant’s use of the Premises is impaired during the
period of such repair, reconstruction or restoration; provided, however, that
the amount of such abatement shall be reduced by the proceeds of lost rental
income insurance actually received by Tenant with respect to the Premises.

22.5.                        Notwithstanding anything to the contrary contained
in this Article 22, should Landlord be delayed or prevented from completing the
repair, reconstruction or restoration of the damage or destruction to the
Premises after the occurrence of such damage or destruction by Force Majeure,
then the time for Landlord to commence or complete repairs shall be extended on
a day-for-day basis.

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22.6.                        If, and solely to the extent, Landlord is obligated
to or elects to repair, reconstruct or restore as herein provided, then Landlord
shall be obligated to make such repair, reconstruction or restoration only with
regard to: (a) those portions of the Premises that were originally provided at
Landlord’s expense, and (b) those portions of the Premises that are covered by
the insurance Landlord is required to, or has elected to, obtain in accordance
with Article 21.  Landlord shall not be obligated to repair, reconstruct or
restore improvements not originally provided by Landlord or at Landlord’s
expense to the extent not covered by the insurance Landlord is required to, or
has elected to, obtain in accordance with Article 21.

22.7.                        Notwithstanding anything to the contrary contained
in this Article 22, Landlord shall not have any obligation whatsoever to repair,
reconstruct or restore the Premises if the damage resulting from any casualty
covered under this Article 22 occurs during the last twenty-four (24) months of
the Term unless Tenant exercises the Extension Option to extend, in which event
Landlord shall not have any obligation to repair, reconstruct or restore the
Premises if the damages resulting from any casualty covered under this
Article 22 occurs during the last twenty-four (24) months of any extension
hereof, or to the extent that insurance proceeds are not available therefor.

22.8.                        Landlord’s obligation, should it elect or be
obligated to repair or rebuild, shall be limited to the Premises; provided that
Tenant shall have the right but not the obligation, at its expense, to replace
or fully repair all of Tenant’s personal property and any Tenant Improvements or
Alterations installed by Tenant existing at the time of such damage or
destruction.  If the Premises are to be repaired in accordance with the
foregoing, Landlord shall make available to Tenant any portion of insurance
proceeds it receives that are allocable to the Tenant Improvements and
Alterations constructed by Tenant pursuant to this Lease, provided Tenant is not
then in monetary Default under this Lease.

23.                                 Eminent Domain.

23.1.                        In the event the whole of the Premises shall be
taken for any public or quasi-public purpose by any lawful power or authority by
exercise of the right of appropriation, condemnation or eminent domain, or sold
to prevent such taking, Tenant or Landlord may terminate this Lease effective as
of the date possession is required to be surrendered to said authority.

23.2.                        In the event of a partial taking of the Premises,
or of drives, walkways or parking areas serving the Premises for any public or
quasi-public purpose by any lawful power or authority by exercise of right of
appropriation, condemnation, or eminent domain, or sold to prevent such taking,
then Tenant may elect to terminate this Lease as of such taking if such taking
is, in Tenant’s reasonable opinion, of a material nature such as to make it
impracticable or infeasible to continue use of the unappropriated portion for
purposes of renting office or laboratory space.

23.3.                        In the event a partial taking of the Premises is
threatened (in writing) or instituted by any lawful power or authority by
exercise of the right of appropriation, condemnation or eminent domain with
respect to: (a) twenty-five percent (25%) or more of the Premises, or (b) the
condemnation award is less than the cost to repair the unappropriated portion of
the Premises (“Condemnation Restoration Costs”), Landlord may, upon thirty (30)
days prior written notice to Tenant (the “Landlord’s Condemnation Notice”),
elect to either (i) terminate this Lease, or (ii) continue this Lease in
accordance with Section 23.5.  Landlord shall include with the Landlord’s
Condemnation Notice a good faith estimate (the “Condemnation Restoration
Estimate”) prepared by Landlord’s architect or engineer of the costs and
expenses incurred or to be incurred in restoring the unappropriated portion of
the Premises.  If Landlord elects to terminate this Lease because the
condemnation award is less than the cost to repair the unappropriated portion of
the Premises, then Tenant may elect, within fifteen (15) days following the date
upon which Tenant receives Landlord’s Condemnation Notice, to either (1)
exercise the Purchase Option in accordance with Section 30.1(c)(iii), in which
event Tenant shall receive any condemnation proceeds resulting from such
condemnation, or (2) deposit with Landlord an amount that is sufficient to cover
any shortfall between the amount of the condemnation award Landlord expects to
receive in connection with the partial taking of the Premises and the expected
Condemnation Restoration Costs set forth in the Condemnation Restoration
Estimate (the “Condemnation Restoration Deposit”), so long as Tenant: (x)
reaffirms its intention to pay all Rent as such Rent becomes due and owing under
this Lease; (y) waives any claim to offsets,

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defenses or abatement of such Rent as a consequence of such damage or
destruction without regard to the duration of the restoration period; and (z)
deposits with Landlord the Condemnation Restoration Deposit, in which event this
Lease shall remain in full force and effect and Landlord shall repair,
reconstruct or restore the unappropriated portion of the Premises, and in the
event Landlord thereafter notifies Tenant at any time that the expected
Condemnation Restoration Costs exceeds the remaining Condemnation Restoration
Deposit and remaining condemnation proceeds to be received by Landlord, Tenant
shall within ten (10) days after such notice pay the amount of such deficiency
to Landlord.

23.4.                        Tenant shall be entitled to any award that is
specifically awarded as compensation for (a) the taking of Tenant’s personal
property that was installed at Tenant’s expense, and (b) the costs of Tenant
moving to a new location.  Except as set forth in the previous sentence, any
award for such taking shall be the property of Landlord.

23.5.                        If, upon any taking of the nature described in this
Article 23, this Lease continues in effect, then Landlord shall promptly proceed
to restore the Premises to substantially the same condition prior to such
partial taking.  To the extent such restoration is feasible, as reasonably
determined by Landlord, the Rent shall be decreased proportionately to reflect
the loss of any portion of the Premises no longer available to Tenant.

24.                                 Defaults and Remedies.

24.1.                        Late payment by Tenant to Landlord of Rent and
other sums due shall cause Landlord to incur costs not contemplated by this
Lease, the exact amount of which shall be extremely difficult and impracticable
to ascertain.  Such costs include, but are not limited to, processing and
accounting charges and late charges that may be imposed on Landlord by the terms
of any mortgage or trust deed covering the Premises.  Therefore, if any
installment of Rent due from Tenant is not received by Landlord within five (5)
days after written notice that such payment is due, Tenant shall pay to Landlord
an additional sum of four percent (4%) of the overdue Rent as a late charge. 
The parties agree that this late charge represents a fair and reasonable
estimate of the costs that Landlord shall incur by reason of late payment by
Tenant.

24.2.                        No payment by Tenant or receipt by Landlord of a
lesser amount than the Rent payment herein stipulated shall be deemed to be
other than on account of the Rent, nor shall any endorsement or statement on any
check or any letter accompanying any check or payment as Rent be deemed an
accord and satisfaction, and Landlord may accept such check or payment without
prejudice to Landlord’s right to recover the balance of such Rent or pursue any
other remedy provided in this Lease or in equity or at law.  If a dispute shall
arise as to any amount or sum of money to be paid by Tenant to Landlord
hereunder, Tenant shall have the right to make payment “under protest,” such
payment shall not be regarded as a voluntary payment, and there shall survive
the right on the part of Tenant to institute suit for recovery of the payment
paid under protest.

24.3.                        If Tenant fails to pay any sum of money required to
be paid by it hereunder, or shall fail to perform any other act on its part to
be performed hereunder, Landlord may, without waiving or releasing Tenant from
any obligations of Tenant, but shall not be obligated to, make such payment or
perform such act; provided that Landlord may do so only if (a) such failure by
Tenant continues for five (5) days after Landlord delivers notice to Tenant
demanding performance by Tenant, or (b) such failure by Tenant unreasonably
interferes with the efficient operation of the Premises, or resulted or will
result in a violation of Applicable Laws or the cancellation of an insurance
policy maintained by Landlord.  Notwithstanding the foregoing, in the event of
an emergency, Landlord shall have the right to enter the Premises and act in
accordance with its rights as provided elsewhere in this Lease.  In addition to
the late charge described in Section 24.1, Tenant shall pay to Landlord as
Additional Rent all sums so paid or incurred by Landlord, together with interest
thereon, from the date such sums were paid or incurred, at the annual rate equal
to ten percent (10%) per annum or the highest rate permitted by Applicable Laws,
whichever is less.

24.4.                        The occurrence of any one or more of the following
events shall constitute a “Default” hereunder by Tenant:

(a)                          The abandonment of the Premises by Tenant;

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(b)                         The failure by Tenant to make any payment of Rent,
as and when due, where such failure shall continue for a period of five (5) days
after written notice thereof from Landlord to Tenant;

(c)                          The failure by Tenant to observe or perform any
material obligation or material covenant contained herein (other than described
in Sections 24.4(a) and 24.4(b)) to be performed by Tenant, where such failure
shall continue for a period of twenty (20) days after written notice thereof
from Landlord to Tenant (except where Tenant has contested in good faith the
existence of a breach of a material obligation or material covenant and the
parties have not yet resolved the dispute by mutual agreement or, if necessary,
final court judgment); provided that, if the nature of Tenant’s default is such
that it reasonably requires more than twenty (20) days to cure, Tenant shall not
be deemed to be in default if Tenant shall commence such cure within said twenty
(20) day period and thereafter diligently prosecute the same to completion;

(d)                         Tenant makes an assignment for the benefit of
creditors;

(e)                          A receiver, trustee or custodian is appointed to or
does take title, possession or control of all or substantially all of Tenant’s
assets and such circumstance is not reversed within sixty (60) days;

(f)                            Tenant files a voluntary petition under the
United States Bankruptcy Code or any successor statute (the “Bankruptcy Code”)
or an order for relief is entered against Tenant pursuant to a voluntary or
involuntary proceeding commenced under any chapter of the Bankruptcy Code;

(g)                         Any involuntary petition if filed against Tenant
under any chapter of the Bankruptcy Code and is not dismissed within one hundred
twenty (120) days;

(h)                         The occurrence of a monetary Default or a material
non-monetary Default under the Building D Lease, the Building F Lease or the
Building G Lease (each as defined in the Purchase Agreement);

(i)                             The occurrence of any Transfer that is not in
compliance with the provisions of Article 25, where such failure shall continue
for a period of three (3) business days after written notice thereof from
Landlord to Tenant; or

(j)                             Tenant’s interest in this Lease is attached,
executed upon or otherwise judicially seized and such action is not released
within one hundred twenty (120) days of the action.

Notices given under this Section 24.4 shall specify the alleged default and
shall demand that Tenant perform the provisions of this Lease or pay the Rent
that is in arrears, as the case may be, within the applicable period of time, or
quit the Premises.  No such notice shall be deemed a forfeiture or a termination
of this Lease unless Landlord elects otherwise in such notice.

24.5.                        In the event of a monetary default or a material
non-monetary default by Tenant after the lapse of any applicable cure periods,
and at any time thereafter, with notice or demand and without limiting Landlord
in the exercise of any right or remedy that Landlord may have, Landlord shall be
entitled to terminate Tenant’s right to possession of the Premises by any lawful
means, in which case this Lease shall terminate and Tenant shall immediately
surrender possession of the Premises to Landlord.  In such event, Landlord shall
have the immediate right to re-enter and remove all persons and property, and
such property may be removed and stored in a public warehouse or elsewhere at
the cost and for the account of Tenant, all without service of notice or resort
to legal process and without being deemed guilty of trespass or becoming liable
for any loss or damage that may be occasioned thereby.  In the event that
Landlord shall elect to so terminate this Lease, then Landlord shall be entitled
to recover from Tenant the following damages to the extent incurred by Landlord
by reason of Tenant’s default:

(a)                          The worth at the time of award of any unpaid Rent
that had accrued at the time of such termination; plus

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(b)                         The worth at the time of award of the amount by
which the unpaid Rent that would have accrued during the period commencing with
termination of this Lease and ending at the time of award exceeds that portion
of the loss of Landlord’s rental income from the Premises that Tenant proves
could have been reasonably avoided; plus

(c)                          The worth at the time of award of the amount by
which the unpaid Rent for the balance of the Term after the time of award
exceeds that portion of the loss of Landlord’s rental income from the Premises
that Tenant proves could have been reasonably avoided; plus

(d)                         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 that in the ordinary course of things would be
likely to result therefrom, including, without limitation, the cost of restoring
the Premises to the condition required under the terms of this Lease; plus

(e)                          At Landlord’s election, such other amounts in
addition to or in lieu of the foregoing as may be permitted from time to time by
Applicable Laws.

As used in Sections 24.5(a) and 24.5(b), “worth at the time of award” shall be
computed by allowing interest at the rate specified in Section 24.1.  As used in
Section 24.5(c) above, the “worth at the time of the award” shall be computed by
taking the present value of such amount, using the discount rate of the Federal
Reserve Bank of San Francisco at the time of the award plus one (1) percentage
point.

24.6.                        In addition to any other remedies available to
Landlord at law or in equity and under this Lease, Landlord shall have the
remedy described in California Civil Code Section 1951.4 (Landlord may continue
this Lease in effect after Tenant’s Default and abandonment and recover Rent as
it becomes due, provided Tenant has the right to sublet or assign, subject only
to reasonable limitations).  In addition, Landlord shall not be liable in any
way whatsoever for its failure or refusal to relet the Premises.  For purposes
of this Section 24.6, the following acts by Landlord will not constitute the
termination of Tenant’s right to possession of the Premises:

(A)                          ACTS OF MAINTENANCE OR PRESERVATION OR EFFORTS TO
RELET THE PREMISES, INCLUDING, BUT NOT LIMITED TO, ALTERATIONS, REMODELING,
REDECORATING, REPAIRS, REPLACEMENTS OR PAINTING AS LANDLORD SHALL CONSIDER
ADVISABLE FOR THE PURPOSE OF RELETTING THE PREMISES OR ANY PART THEREOF; OR

(B)                         THE APPOINTMENT OF A RECEIVER UPON THE INITIATIVE OF
LANDLORD TO PROTECT LANDLORD’S INTEREST UNDER THIS LEASE OR IN THE PREMISES.

Notwithstanding the foregoing, in the event of a Default by Tenant, Landlord may
elect at any time to terminate this Lease and to recover damages to which
Landlord is entitled.  If Landlord does not elect to terminate this Lease as
provided in Section 24.5, then Landlord may, from time to time, recover all Rent
as it becomes due under this Lease.

24.7.                        If Landlord does not elect to terminate this Lease
as provided in Section 24.5, then Landlord may, from time to time, recover all
Rent as it becomes due under this Lease.  At any time thereafter, Landlord may
elect to terminate this Lease and to recover damages to which Landlord is
entitled.

24.8.                        In the event Landlord elects to terminate this
Lease and relet the Premises, Landlord may execute any new lease in its own
name.  Tenant hereunder shall have no right or authority whatsoever to collect
any Rent from such tenant.  The proceeds of any such reletting shall be applied
as follows:

(a)                          First, to the payment of any indebtedness other
than Rent due hereunder from Tenant to Landlord, including, without limitation,
storage charges or brokerage commissions owing from Tenant to Landlord as the
result of such reletting;

(b)                         Second, to the payment of the costs and expenses of
reletting the Premises, including (i) repairs that Landlord deems reasonably
necessary and advisable and (ii) reasonable attorneys’ fees, charges and
disbursements incurred by Landlord in connection with the retaking of the
Premises and such reletting;

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(c)                          Third, to the payment of Rent and other charges due
and unpaid hereunder; and

(d)                         Fourth, to the payment of future Rent and other
damages payable by Tenant under this Lease.

24.9.                        All of Landlord’s rights, options and remedies
hereunder shall be construed and held to be nonexclusive and cumulative. 
Landlord shall have the right to pursue any one or all of such remedies, or any
other remedy or relief that may be provided by Applicable Laws, whether or not
stated in this Lease.  No waiver of any default of Tenant hereunder shall be
implied from any acceptance by Landlord of any Rent or other payments due
hereunder or any omission by Landlord to take any action on account of such
default if such default persists or is repeated, and no express waiver shall
affect defaults other than as specified in said waiver.

24.10.                  Landlord’s termination of (a) this Lease or (b) Tenant’s
right to possession of the Premises shall not relieve Tenant of any liability to
Landlord that has previously accrued or that shall arise based upon events that
occurred prior to the later to occur of (i) the date of Lease termination or
(ii) the date Tenant surrenders possession of the Premises.

24.11.                  To the extent permitted by Applicable Laws, Tenant
waives any and all rights of redemption granted by or under any present or
future Applicable Laws if Tenant is evicted or dispossessed for any cause, or if
Landlord obtains possession of the Premises due to Tenant’s default hereunder or
otherwise.

24.12.                  Landlord shall not be in default under this Lease unless
Landlord fails to perform obligations required of Landlord within a reasonable
time, but in no event shall such failure continue for more than thirty (30) days
after written notice from Tenant specifying the nature of Landlord’s failure;
provided, however, that if the nature of Landlord’s obligation is such that more
than thirty (30) days are required for its performance, then Landlord shall not
be in default if Landlord commences performance within such thirty (30) day
period and thereafter diligently prosecutes the same to completion.

24.13.                  In the event of any default by Landlord, Tenant shall
give notice by registered or certified mail to any (a) beneficiary of a deed of
trust or (b) mortgagee under a mortgage covering the Premises or any portion
thereof and to any landlord of any lease of land upon or within which the
Premises are located, and shall offer such beneficiary, mortgagee or landlord
the Lender’s Cure Period to cure the default, including time to obtain
possession of the Premises by power of sale or a judicial action if such should
prove necessary to effect a cure; provided that Landlord shall promptly furnish
to Tenant in writing, upon written request by Tenant, the names and addresses of
all such persons who are to receive such notices.  “Lender’s Cure Period” shall
mean sixty (60) days after written notice from Tenant within which to cure or
correct such default (of which the initial thirty (30) days may run concurrently
with the thirty (30) days after written notice from Tenant described in Section
24.12 above); provided, however, if such default cannot be cured or corrected
within that time, then Lender’s Cure Period shall include such additional time
as may be necessary to cure such default if such mortgagee, beneficiary or
landlord has commenced to cure such Default within such sixty (60) day period
and is diligently pursuing the remedies or steps necessary to cure or correct
such default; provided, further, if such mortgagee, beneficiary or landlord
requires possession of the Premises to prosecute such cure, and such mortgagee,
beneficiary or landlord commences foreclosure proceedings within such sixty (60)
day period (or is unable to commence foreclosure proceedings because of a
bankruptcy proceeding involving Landlord or Tenant, but commences such
foreclosure proceeding promptly after it is permitted to do so), then such sixty
(60) day period shall commence to run only on the conveyance of the Premises
pursuant to such proceeding.

25.                                 Assignment or Subletting.

25.1.                        Except as hereinafter expressly permitted, Tenant
shall not, either voluntarily or by operation of Applicable Laws, directly or
indirectly sell, hypothecate, assign, pledge, encumber or otherwise transfer
this Lease, or sublet the Premises (each, a “Transfer”), without Landlord’s
prior written consent, which consent Landlord may not unreasonably delay,
condition or withhold.  Notwithstanding the foregoing, Tenant shall have the
right to Transfer the Premises, upon twenty (20) days prior written notice to
Landlord but without obtaining Landlord’s prior written consent, to a
corporation or other entity which is a successor-in-interest

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to Tenant, by way of merger, consolidation or corporate reorganization, or by
the purchase of all or substantially all of the assets or the controlling
ownership interests of Tenant provided that (a) such merger or consolidation, or
such acquisition or assumption, as the case may be, is for a good business
purpose and not principally for the purpose of transferring this Lease, and
(b) the net worth (as determined in accordance with generally accepted
accounting principles (“GAAP”) of the assignee is not less than the net worth
(as determined in accordance with GAAP) of Tenant as of the date of Tenant’s
then most current quarterly or annual financial statements, and (c) such
assignee shall agree in writing to assume all of the terms, covenants and
conditions of this Lease arising after the effective date of the assignment
(collectively, the “Permitted Assignees”).  Notwithstanding the foregoing,
Tenant shall have the right to sublet any portion of the Premises, upon twenty
(20) days prior written notice to Landlord, but without obtaining Landlord’s
prior written consent,  to a Permitted Subtenant subject to the conditions
precedent in Section 25.9.

25.2.                        In the event Tenant desires to effect a Transfer,
then, at least twenty (20) days prior to the date when Tenant desires the
assignment or sublease to be effective (the “Transfer Date”), Tenant shall
provide written notice to Landlord (the “Transfer Notice”) containing
information concerning the character, relevant business experience and financial
responsibility and status of the proposed transferee, assignee or sublessee; the
Transfer Date; any ownership or commercial relationship between Tenant and the
proposed transferee, assignee or sublessee; and the consideration and all other
material terms and conditions of the proposed Transfer, all in such detail as
Landlord shall reasonably require (the “Transfer Information”).  Tenant shall
also reimburse Landlord for Landlord’s actual and reasonable costs and expenses,
including, without limitation, reasonable attorneys’ fees, charges and other
costs or overhead expenses incurred by Landlord in connection with the review,
processing and documentation of such request in an amount not to exceed Five
Thousand Dollars ($5,000);

25.3.                        Landlord, in determining whether consent should be
given to a proposed Transfer, may give consideration to (a) the financial
strength of such transferee or assignee (notwithstanding Tenant remaining liable
for Tenant’s performance), and (b) any change in use that such transferee,
assignee or sublessee proposes to make in the use of the Premises to the extent
any such change in use is not a Permitted Use.  In no event shall Landlord be
deemed to be unreasonable for declining to consent to a Transfer to a transferee
or assignee lacking financial qualifications (commensurate with the obligations
proposed to be undertaken in connection with such a Transfer) or seeking a
change in the Permitted Use, or jeopardizing directly or indirectly the status
of Landlord or any of Landlord’s affiliates as a Real Estate Investment Trust
under the Internal Revenue Code of 1986.  Notwithstanding anything contained in
this Lease to the contrary, (w) no Transfer shall be consummated on any basis
such that the rental or other amounts to be paid by the occupant, assignee,
manager or other transferee thereunder would be based, in whole or in part, on
the income or profits derived by the business activities of such occupant,
assignee, manager or other transferee; (x) Tenant shall not furnish or render
any services to an occupant, assignee, manager or other transferee with respect
to whom transfer consideration is required to be paid, or manage or operate the
Premises or any capital additions so transferred, with respect to which transfer
consideration is being paid; (y) Tenant shall not consummate a Transfer with any
person in which Landlord owns an interest, directly or indirectly (by applying
constructive ownership rules set forth in Section 856(d)(5) of the Internal
Revenue Code (the “Revenue Code”)); and (z) Tenant shall not consummate a
Transfer with any person or in any manner that could cause any portion of the
amounts received by Landlord pursuant to this Lease or any sublease, license or
other arrangement for the right to use, occupy or possess any portion of the
Premises to fail to qualify as “rents from real property” within the meaning of
Section 856(d) of the Revenue Code, or any similar or successor provision
thereto or which could cause any other income of Landlord to fail to qualify as
income described in Section 856(c)(2) of the Revenue Code.  The immediately
preceding sentence shall not apply if ownership of the Property is transferred
or conveyed to a person or entity other than a real estate investment trust or
affiliate thereof.

25.4.                        As conditions precedent to Tenant subleasing the
Premises or to Landlord considering a request by Tenant to Tenant’s transfer of
rights or sharing of the Premises, Landlord may require any or all of the
following:

(a)                          Tenant shall remain fully liable under this Lease
during the unexpired Term;

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(b)                         Tenant shall provide Landlord with the Transfer
Information;

(c)                          Tenant shall reimburse Landlord for Landlord’s
actual and reasonable costs and expenses, including, without limitation,
reasonable attorneys’ fees, charges and other costs or overhead expenses
incurred by Landlord in connection with the review, processing and documentation
of such request in an amount not to exceed Five Thousand Dollars ($5,000);

(d)                         Subject to Section 25.8, if Tenant’s transfer of
rights or sharing of the Premises provides for the receipt by, on behalf of or
on account of Tenant of any consideration of any kind whatsoever (including,
without limitation, a premium rental for a sublease or lump sum payment for an
assignment, but excluding Tenant’s reasonable costs in marketing and subleasing
the Premises) in excess of the rental and other charges due to Landlord under
this Lease, Tenant shall pay fifty percent (50%) of all of such excess to
Landlord, after deductions for any transaction costs incurred by Tenant,
including marketing expenses, tenant improvement allowances actually provided by
Tenant, alterations, cash concessions, brokerage commissions, attorneys’ fees
and free rent.  If said consideration consists of cash paid to Tenant, payment
to Landlord shall be made upon receipt by Tenant of such cash payment;

(e)                          With respect to any Transfer of all or any portion
of the Premises, the proposed transferee, assignee or sublessee shall agree
that, in the event Landlord gives such proposed transferee, assignee or
sublessee notice that Tenant is in default under this Lease, such proposed
transferee, assignee or sublessee shall thereafter make all payments otherwise
due Tenant directly to Landlord, which payments shall be received by Landlord
without any liability being incurred by Landlord, except to credit such payment
against those due by Tenant under this Lease, and any such proposed transferee,
assignee or sublessee shall agree to attorn to Landlord or its successors and
assigns should this Lease be terminated for any reason; provided, however, that
in no event shall Landlord or its Lenders, successors or assigns be obligated to
accept such attornment;

(f)                            Any such consent to Transfer (if such consent is
required hereunder) shall be effected on Landlord’s forms, subject to changes by
Tenant that are satisfactory to Landlord in its reasonable discretion;

(g)                         Tenant shall not then be in Default hereunder in any
respect;

(h)                         Such proposed transferee, assignee or sublessee’s
use of the Premises shall not violate Section 2.7;

(i)                             Landlord shall not be bound by any provision of
any agreement pertaining to the Transfer, except for Landlord’s written consent
to the same;

(J)                             TENANT SHALL PAY ALL TRANSFER AND OTHER TAXES
(INCLUDING INTEREST AND PENALTIES) ASSESSED OR PAYABLE FOR ANY TRANSFER;

(K)                          LANDLORD’S CONSENT (IF SUCH CONSENT IS REQUIRED
HEREUNDER) (OR WAIVER OF ITS RIGHTS) FOR ANY TRANSFER SHALL NOT WAIVE LANDLORD’S
RIGHT TO CONSENT TO ANY LATER TRANSFER;

(l)                             Tenant shall deliver to Landlord one executed
copy of any and all written instruments evidencing or relating to the Transfer;
and

(m)                       A list of Hazardous Materials (as defined in Section
38.6 below), certified by the proposed transferee, assignee or sublessee to be
true and correct, which the proposed transferee, assignee or sublessee intends
to use, store, handle, treat, generate in or release or dispose of from the
Premises, together with copies of all documents relating to such use, storage,
handling, treatment, generation, release or disposal of Hazardous Materials by
the proposed assignee or subtenant in the Premises, including, without
limitation: permits; approvals; reports and correspondence; storage and
management plans; plans relating to the installation of any storage tanks to be
installed in or under the Premises (provided, such installation of tanks shall
only be permitted after Landlord has given its written consent to do so, which
consent may not be unreasonably withheld); and all closure plans or any other
documents required by any and all federal, state and local Governmental
Authorities for any storage tanks installed in, on or under the Premises for the
closure of any such tanks.  Neither Tenant nor any such proposed transferee,
assignee or sublessee is required, however, to

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provide Landlord with any portion(s) of such documents containing information of
a proprietary nature which, in and of themselves, do not contain a reference to
any Hazardous Materials or hazardous activities.

25.5.                        Any Transfer that is not in compliance with the
provisions of this Article 25 shall be void and constitute a “Default” hereunder
after the lapse of any applicable notice and cure period set forth in Section
24.4(i).

25.6.                        The consent by Landlord to a Transfer shall not
relieve Tenant or proposed transferee or assignee from obtaining Landlord’s
consent to any further Transfer, nor shall it release Tenant or any proposed
transferee or assignee of Tenant from liability under this Lease.

25.7.                        Notwithstanding any Transfer, Tenant shall remain
liable for the payment of all Rent and other sums due or to become due
hereunder, and for the full performance of all other terms, conditions and
covenants to be kept and performed by Tenant.  The acceptance of Rent or any
other sum due hereunder, or the acceptance of performance of any other term,
covenant or condition thereof, from any person or entity other than Tenant shall
not be deemed a waiver of any of the provisions of this Lease or a consent to
any Transfer.

25.8.                        Notwithstanding any contrary provision of this
Article 25, the original Tenant named hereunder (but not any assignee or
subtenant other than Permitted Assignees) shall have the right, without the
receipt of Landlord’s consent, but on prior written notice to Landlord, to
license (but not sublease) up to an aggregate of up to ten percent (10%) of the
rentable square feet of the Premises to individuals or entities (each, a
“Business Affiliate”), which license to a Business Affiliate shall be on and
subject to all of the following conditions:  (a) Tenant shall have a direct
contractual business relationship (relating to a primary business of Tenant
conducted in the Premises and other than Business Affiliate’s use of the
Premises) with each such Business Affiliate and any such Business Affiliate’s
use of the Premises shall be directly and primarily related to such business
relationships; (b) each such Business Affiliate shall be of a character and
reputation consistent with the quality of the Buildings; (c) each such license
shall clearly specify that it is only a contract right and that the Business
Affiliate is not a subtenant and has no interest in real property; (d) each such
Business Affiliate’s use of the Premises is in a manner consistent with the
Permitted Use; (e) no demising walls or separate entrances shall be constructed
in the Premises to accommodate any such license; (f) the term of such license
shall not exceed six (6) months unless otherwise agreed to in writing by
Landlord; (g) the primary motivation for Tenant’s grant of such license is not
to provide space to such Business Affiliate; and (h) such Business Affiliate
shall pay no rent to Tenant in respect of such license.  No such license shall
relieve Tenant from any liability under this Lease.

25.9.                        Notwithstanding any contrary provision of this
Article 25, the original Tenant named hereunder (but not any assignee or
subtenant other than Permitted Assignees) shall have the right, without the
receipt of Landlord’s consent, but on prior written notice to Landlord, to
sublet up to an aggregate of up to thirty-five percent (35%) of the rentable
square feet of the Premises to individuals or entities (each, a “Permitted
Subtenant”) on and subject to all of the following conditions:  (a) the net
worth (as determined in accordance with generally accepted accounting principles
(“GAAP”) of such Permitted Subtenant is not less than Five Million Dollars
($5,000,000); (b) each such Permitted Subtenant shall be of a character and
reputation consistent with the quality of the Buildings; (c) each such Permitted
Subtenant’s use of the Premises is in a manner consistent with the Permitted
Use; (d) the term of such sublease shall not exceed four (4) years unless
otherwise agreed to in writing by Landlord; and (e) all rent and other
compensation paid to Tenant by such Permitted Subtenant shall be subject to
Section 25.4(d).  No such sublease shall relieve Tenant from any liability under
this Lease.

25.10.                  If Tenant sublets the Premises or any portion thereof,
Tenant hereby immediately and irrevocably assigns to Landlord, as security for
Tenant’s obligations under this Lease, all rent from any such subletting, and
Landlord (or a receiver for Tenant appointed on Landlord’s application) may
collect such rent and apply it toward Tenant’s obligations under this Lease;
provided that, until the occurrence of a Default by Tenant, or if a Default
occurs and is cured to the satisfaction of Landlord, Tenant shall have the right
to collect such rent.

26.                                 Attorneys’ Fees.  If either party commences
an action against the other party arising out of or in connection with this
Lease, then the substantially prevailing party shall be entitled to

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have and recover from the other party reasonable attorneys’ fees, charges and
disbursements and costs of suit.

27.                                 Bankruptcy.  In the event a debtor, trustee
or debtor in possession under the Bankruptcy Code, or another person with
similar rights, duties and powers under any other Applicable Laws, proposes to
cure any default under this Lease or to assume or assign this Lease and is
obliged to provide adequate assurance to Landlord that (a) a default shall be
cured, (b) Landlord shall be compensated for its damages arising from any breach
of this Lease and (c) future performance of Tenant’s obligations under this
Lease shall occur, then such adequate assurances shall include any or all of the
following, as designated by Landlord in its sole and absolute discretion:

27.1.                        Those acts specified in the Bankruptcy Code or
other Applicable Laws as included within the meaning of “adequate assurance,”
even if this Lease does not concern a shopping center or other facility
described in such Applicable Laws;

27.2.                        A prompt cash payment to compensate Landlord for
any monetary defaults or actual damages arising directly from a breach of this
Lease;

27.3.                        A cash deposit in an amount at least equal to the
then-current amount of the Security Deposit; or

27.4.                        The assumption or assignment of all of Tenant’s
interest and obligations under this Lease.

28.                                 Definition of Landlord.  With regard to
obligations imposed upon Landlord pursuant to this Lease, the term “Landlord,”
as used in this Lease, shall refer only to Landlord or Landlord’s then-current
successor-in-interest.  In the event of any transfer, assignment or conveyance
of Landlord’s interest in this Lease or in Landlord’s fee title to or leasehold
interest in the Property, as applicable, Landlord herein named (and in case of
any subsequent transfers or conveyances, the subsequent Landlord) shall be
automatically freed and relieved, from and after the date of such transfer,
assignment or conveyance, from all liability for the performance of any
covenants or obligations contained in this Lease thereafter to be performed by
Landlord and, without further agreement, the transferee, assignee or conveyee of
Landlord’s in this Lease or in Landlord’s fee title to or leasehold interest in
the Property, as applicable, shall be deemed to have assumed and agreed to
observe and perform any and all covenants and obligations of Landlord hereunder
during the tenure of its interest in this Lease or the Property.  Landlord or
any subsequent Landlord may transfer its interest in the Premises or this Lease
without Tenant’s consent.

29.                                 Estoppel Certificate.  Tenant shall, within
fifteen (15) days after receipt of written notice from Landlord, execute,
acknowledge and deliver a statement in writing substantially in the form
attached hereto as Exhibit D, or on any other form reasonably requested by a
proposed Lender or purchaser, (a) certifying that this Lease is unmodified and
in full force and effect (or, if modified, stating the nature of such
modification and certifying that this Lease as so modified is in full force and
effect) and the dates to which rental and other charges are paid in advance, if
any, (b) acknowledging (if accurate) that there are not, to Tenant’s knowledge,
any uncured defaults on the part of Landlord hereunder, or specifying such
defaults if any are claimed, and (c) setting forth such further information with
respect to this Lease or the Premises as may be reasonably requested thereon. 
Any such statement may be relied upon by any prospective purchaser or
encumbrancer of all or any portion of the real property of which the Premises
are a part.  Tenant’s failure to deliver such statement within the prescribed
time shall be binding upon Tenant that there are no uncured defaults on the part
of Landlord hereunder and that this Lease is in full force and effect and
without modification except as may be represented by Landlord in any certificate
prepared by Landlord and delivered to Tenant for execution and that all other
statements set forth in such certificate are true and correct.  Likewise,
Landlord shall, within fifteen (15) days after receipt of written notice from
Tenant, execute, acknowledge and deliver an estoppel certificate containing
substantially the same content shown on Exhibit D (as appropriately modified to
reflect that the certificate is being executed by Landlord in favor of Tenant). 
Landlord’s failure to deliver such estoppel certificate within the prescribed
time shall be binding upon Landlord that there are no uncured defaults on the
part of Tenant hereunder and that this Lease is in full force and effect and
without modification except as may be represented by Tenant in any certificate
prepared by Tenant and delivered to Landlord for execution and that all other
statements set forth in such certificate are true and correct.

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30.                                 Purchase Option.

30.1.                        Grant of Option.  Landlord hereby grants to Tenant
the exclusive option (the “Purchase Option”) to purchase the Property,
including, without limitation, the Premises, for an amount equal to (a) the
annualized aggregate Basic Annual Rent for the month in which the Closing Date
(as defined below) occurs (i.e., the Basic Annual Rent for the entire month in
which the Closing Date occurs (without giving effect to any free rent or rent
abatement), multiplied by twelve) under this Lease, divided by (b) seven and
nine-tenths percent (7.9%) (the “Building E Purchase Option Exercise Price”),
subject to the following provisions:

(a)                  The Purchase Option is conditioned upon Tenant: (i)
concurrently exercising its purchase option under the Building D Lease, the
Building G Lease and, solely in the event Landlord acquires the Building F
Property (as defined in the Purchase Agreement), then from and after the closing
of such acquisition (the “Building F Acquisition”), the Building F Lease (unless
the purchase option under such Lease shall have been (1) previously exercised in
accordance with Section 30.1(c)(i) through (iv) under such Lease, or (2)
terminated in accordance with the penultimate sentence of Section 30.1(a) of
such Lease) in strict accordance with the requirements of each such lease
(collectively, the “Required Leases”), and (ii) paying the purchase option
exercise price under, and in accordance with the terms and conditions of, each
Required Lease upon the closing of each such transaction.  For purposes of
clarity, Tenant shall only have the right to exercise the Purchase Option in
connection with its purchase options under each of the Building D Lease, the
Building G Lease and from and after the Building F Acquisition, the Building F
Lease and shall not have the right to exercise the Purchase Option with respect
to individual buildings.  Notwithstanding the foregoing, solely upon the
occurrence of any of the events set forth in Sections 30.1(c)(i) through (iv)
below, (1) Tenant shall have the right to exercise the Purchase Option solely
with respect to the Property, (2) Tenant shall not have the right to exercise
the respective purchase options under any of the Required Leases at any time
other than the times specified therein, and (3) in the event Tenant elects not
to acquire the Property in accordance with Section 30.1(c)(ii) or (iii),
Tenant’s right to exercise its Purchase Option under this Lease shall
terminate.  Tenant shall have no right to exercise its option to purchase the
Building F Property until the Building F Acquisition.

(b)                 Tenant shall have no right to exercise the Purchase Option:
(i) while a monetary Default or a material non-monetary Default exists under
this Lease or any Required Lease; provided that, if the nature of Tenant’s
non-monetary Default is such that it could not reasonably be cured before the
deadline for Tenant’s exercise of the Purchase Option, then the deadline for
Tenant’s exercise of the Purchase Option shall be extended so long as Tenant
promptly commences such cure and thereafter diligently prosecutes the same to
completion; (ii) during the period of time any monthly installment of Basic
Annual Rent under this Lease or any Required Lease is due and unpaid; or (iii)
in the event this Lease or any of the Required Leases are terminated (other than
any termination as a consequence of a casualty or condemnation or pursuant to
Section 30.1(c)(v)) or rejected as a result of a Tenant bankruptcy.

(c)                  The closing of the sale under such Purchase Option must
occur on the tenth, fifteenth, or twentieth anniversary of the Execution Date
or, in the event Tenant exercises its Purchase Option in accordance with
Sections 30.1(c)(i) through (iv) below, thirty (30) days after Tenant exercises
its Purchase Option (the applicable date, the “Closing Date”).  Tenant may only
exercise the Purchase Option by Tenant delivering to Landlord written notice
exercising the Purchase Option substantially in the form attached hereto as
Exhibit F (the “Purchase Option Exercise Notice”) at least twelve (12) months
before the corresponding anniversary; provided, however,

(i)                                     in the event Landlord directly or
indirectly transfers its interest in the Property or this Lease to a party other
than Landlord’s Affiliate (as defined in the Purchase Agreement) or a special
purpose entity formed solely to own the Property, Landlord shall give Tenant
written notice of such transfer (“Landlord’s Assignment Notice”) and Tenant
shall have a period of fifteen (15) days after receipt of Landlord’s Assignment
Notice to exercise its Purchase Option at the Building E Purchase Option
Exercise Price in accordance with the terms and conditions of this Article 30,
subject to Tenant’s satisfaction of each of the conditions contained in Sections
30.1(e) and (f).  “Affiliate” of Landlord means (x) an entity that directly or
indirectly controls, is controlled by or is under common

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control with such landlord, (y) a partnership or other entity in which such
landlord described in (x) is a partner or other owner, or (z) an entity that
acquires substantially all of the assets or stock of such landlord; and the term
“control” means the power to direct the management of such landlord through
voting rights, ownership or contractual obligations.

(ii)                                  in the event Landlord elects to terminate
this Lease pursuant to Landlord’s Restoration Notice delivered to Tenant in
accordance with Section 22.2, Tenant shall have a period of twenty (20) business
days after receipt of Landlord’s Restoration Notice to exercise its Purchase
Option at the Building E Purchase Option Exercise Price in accordance with the
terms and conditions of this Article 30, subject to Tenant’s satisfaction of
each of the conditions contained in Sections 30.1(e) and (f).  Notwithstanding
the foregoing, in no event shall Tenant’s exercise of the Purchase Option in
accordance with this Section 30.1(c)(ii) affect or reduce the Building E
Purchase Option Exercise Price.  Landlord will assign to Tenant the right to
receive and retain any casualty insurance proceeds resulting from such damage.

(iii)                               in the event Landlord elects to terminate
this Lease pursuant to Landlord’s Condemnation Notice delivered to Tenant in
accordance with Section 23.3, Tenant shall have a period of twenty (20) business
days after receipt of Landlord’s Condemnation Notice to exercise its Purchase
Option at the Building E Purchase Option Exercise Price in accordance with the
terms and conditions of this Article 30, subject to Tenant’s satisfaction of
each of the conditions contained in Sections 30.1(e) and (f).  Notwithstanding
the foregoing, in no event shall Tenant’s exercise of the Purchase Option in
accordance with this Section 30.1(c)(iii) affect or reduce the Building E
Purchase Option Exercise Price.  Landlord will assign to Tenant the right to
receive and retain any condemnation proceeds resulting from such condemnation.

(iv)                              in the event Landlord transfers its interest
in the Property or this Lease to an entity other than Landlord’s Affiliate and
such entity files a voluntary petition under the Bankruptcy Code or an order for
relief is entered against such entity pursuant to a voluntary proceeding
commenced under any chapter of the Bankruptcy Code, Landlord shall give Tenant
written notice of such proceeding (“Landlord’s Bankruptcy Notice”) and Tenant
shall have a period of twenty (20) days after receipt of Landlord’s Bankruptcy
Notice to exercise its Purchase Option at the Building E Purchase Option
Exercise Price in accordance with the terms and conditions of this Article 30 to
the extent permitted by the Bankruptcy Code and other Applicable Laws, subject
to Tenant’s satisfaction of each of the conditions contained in Sections 30.1(e)
and (f).

(v)                                 in the event Landlord elects to terminate
this Lease in accordance with Section 24.5, Tenant shall have a period of twenty
(20) business days after receipt of Landlord’s notice of termination to exercise
its Purchase Option at the Building E Purchase Option Exercise Price in
accordance with the terms and conditions of this Article 30, subject to (i)
Tenant’s compliance with each of the terms contained in Sections 30.1(e) and
(f), (ii) Tenant’s exercise of its purchase option under each of the Required
Leases (Tenant shall not have the right to exercise the Purchase Option under
this Section 30.1(c)(v) without exercising its purchase option under each of the
Required Leases), and (iii) Tenant’s prepayment of all Rent due from Tenant
under this Lease from the termination date through the closing of the sale under
the Purchase Option; provided, however, Tenant shall not have the right to
exercise its Purchase Option under this Section 30.1(c)(v) in the event
Landlord’s termination of this Lease was due to Tenant’s failure to pay either
(x) any monthly installment of Basic Annual Rent or (y) any insurance costs,
Taxes or Property Management Fee.  Notwithstanding the foregoing, nothing in
this Section 30.1(c)(v) shall limit the liability of Tenant under this Lease or
Landlord’s ability to exercise any of its rights and remedies available at law
or in equity or under this Lease, including Article 24 of this Lease.

(vi)                              in the event (a) Tenant exercises its purchase
option under any of the Required Leases, and (b) such Required Lease imposes a
condition that Tenant exercise its Purchase Option under this Lease, Tenant
shall concurrently exercise its Purchase Option under this Lease at the Building
E Purchase Option Exercise Price in accordance with the terms and conditions of
this Article 30, subject to Tenant’s satisfaction of each of the conditions
contained in Sections 30.1(a) and (b), and each of the provisions contained in
Sections (e) and (f).

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Notwithstanding the foregoing, in the event Tenant exercises its Purchase Option
on or before the fourth (4th) anniversary of the Execution Date, (a) the closing
of the sale under such Purchase Option shall occur on the first (1st) business
day after the fourth (4th) anniversary of the Execution Date, (b) Tenant shall
continue to pay Rent in accordance with this Lease until such closing date, and
(c) Tenant shall pay Landlord the Building E Purchase Option Exercise Price on,
and calculated as of, such closing date.

(d)                 If Tenant does not timely deliver the Purchase Option
Exercise Notice on or before the nineteenth anniversary of the Execution Date,
the Purchase Option shall terminate except as provided in Section 30.1(b); time
being of the essence with respect to the delivering thereof.  If Tenant timely
delivers the Purchase Option Exercise Notice to Landlord, then Landlord shall
sell to Tenant, and Tenant shall purchase from Landlord, the Property for the
Building E Purchase Option Exercise Price. Notwithstanding the foregoing, (i)
any amounts due from Tenant to Landlord pursuant to this Lease and any
prorations in favor of Landlord shall be paid by Tenant on the Closing Date, and
(ii) any prorations in favor of Tenant shall be offset against the Building E
Purchase Option Exercise Price.

(e)                  The Property shall be sold in its then-current, as-is, with
all faults conditions and without any representation and warranty, expressed or
implied, whatsoever; provided, however, Landlord shall satisfy all monetary
obligations on the Property (including, without limitation, mechanics and
materialmens liens or claims thereof, any liens or encumbrances that secure
obligations for borrowed money and any encumbrances to title which are created
by Seller after the Effective Date), and all nonmonetary encumbrances on the
Property which were entered into after the Term Commencement Date and which have
not been consented to by Tenant.  Notwithstanding the foregoing, in the event
Landlord enters into any nonmonetary encumbrance in accordance with Section 32.1
or otherwise required by Applicable Laws and Landlord elects to request Tenant’s
consent in connection with any such encumbrance, Tenant’s consent shall not be
unreasonably withheld, conditioned or delayed.

(f)                    Any condemnation or damage to the Property (other than
damage caused by the willful misconduct or gross negligence of Landlord or its
affiliates) shall not affect Tenant’s obligations to purchase the Property after
Tenant delivers the Purchase Option Exercise Notice and shall not affect the
Building E Purchase Option Exercise Price.  Landlord will assign to Tenant the
right to receive and retain any casualty insurance proceeds or condemnation
proceeds resulting from such damage or condemnation.

(g)                 Upon the termination of the Purchase Option herein granted,
(i) Tenant shall execute and deliver such documents as Landlord may reasonably
request to evidence the termination thereof, and (ii) Landlord may execute, file
and record an instrument evidencing the termination of the Purchase Option
herein granted.  If Tenant fails to execute and deliver such documents, then
Landlord may do so.  Tenant hereby appoints Landlord its attorney in fact for
such purpose, which appointment is coupled with an interest and is irrevocable. 
Tenant shall pay all transaction costs (including title insurance premiums and
transfer taxes in connection with the conveyance of the Property to Tenant).

30.2.                        No Representations and Warranties.  Tenant
acknowledges that neither Landlord nor any of its agents or representatives has
made any oral or written representations or warranties concerning the Property
of any nature whatsoever and that Tenant will be relying on its own independent
investigation thereof.

30.3.                        Assignment of Purchase Option.  The Purchase Option
and Tenant’ rights and obligations under this Article 30 are personal to Tenant,
may not be exercised by any assignee or transferee of Tenant and shall
irrevocably terminate upon any Transfer of this Lease.  Notwithstanding the
foregoing, Tenant shall have the right to assign this Lease without Landlord’s
prior written consent to a Permitted Assignee in accordance with Section 25.1,
and in such event the Purchase Option shall not terminate and may be exercised
by such Permitted Assignee, but only if  (a) Tenant notifies Landlord in writing
prior to the effectiveness of such assignment to such Permitted Assignee, and
(b) prior to or concurrently with such assignment, such Permitted Assignee
assumes all of Tenant’s obligations under this Article 30.  Notwithstanding the
foregoing, in no event shall Landlord’s consent to a Transfer under Article 25
(to the extent such consent is required) be deemed to include the Purchase
Option or the provisions of this Article 30 unless explicitly agreed to in
writing by Landlord.

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30.4.                        Tenant’s Remedies.  In the event the closing of the
sales transaction pursuant to the Purchase Option shall fail to occur by reason
of a default in Landlord’s obligations under this Article 30, Tenant may elect
one of the following two remedies: (a) reimbursement from Landlord for Tenant’s
reasonable actual documented out of pocket costs incurred in connection with
this Article 30 (provided that said sum recoverable as reimbursement shall not
exceed One Hundred Thousand Dollars ($100,000)); or (b) enforce specific
performance of this Article 30 against Landlord, including the right to recover
reasonable attorneys’ fees and court costs, but shall have no right to receive
any other equitable relief.  Tenant hereby waives any right to record a lis
pendens on the property other than in connection with the filing of an action
for specific performance.  In no event shall Tenant be entitled to seek or
obtain any other damages of any kind, including, without limitation, actual,
consequential, indirect or punitive damages.  Notwithstanding the foregoing, any
liability of Landlord under this Article 30 shall be limited strictly to the
assets of Landlord only, and not to any of its general partners or their
respective partners.

31.                                 Limitation of Landlord’s Liability.

31.1.                        If Landlord is in default under this Lease and, as
a consequence, Tenant recovers a monetary judgment against Landlord, the
judgment shall be satisfied only out of (a) the proceeds of sale received on
execution of the judgment and levy against the right, title and interest of
Landlord in the Premises, (b) rent or other income from such real property
receivable by Landlord and/or (c) the consideration received by Landlord from
the sale, financing, refinancing or other disposition of all or any part of
Landlord’s right, title or interest in the Premises.  Notwithstanding the
foregoing, the foregoing limitation shall not apply to any default by Landlord
of its obligation to convey the Property to Tenant following Tenant’s exercise
of its Purchase Option.

31.2.                        Except as described in Section 31.1, Landlord shall
not be personally liable for any deficiency under this Lease.  If Landlord is a
partnership or joint venture, then the partners of such partnership shall not be
personally liable for Landlord’s obligations under this Lease, and no partner of
Landlord shall be sued or named as a party in any suit or action relating to the
obligations of Landlord under this Lease, and service of process shall not be
made against any partner of Landlord relating to the obligations of Landlord
under this Lease except as may be necessary to secure jurisdiction of the
partnership or joint venture.  If Landlord is a corporation, then the
shareholders, directors, officers, employees and agents of such corporation
shall not be personally liable for Landlord’s obligations under this Lease, and
no shareholder, director, officer, employee or agent of Landlord shall be sued
or named as a party in any suit or action, and service of process shall not be
made against any shareholder, director, officer, employee or agent of Landlord. 
If Landlord is a limited liability company, then the members of such limited
liability company shall not be personally liable for Landlord’s obligations
under this Lease, and no member of Landlord shall be sued or named as a party in
any suit or action, and service of process shall not be made against any member
of Landlord except as may be necessary to secure jurisdiction of the limited
liability company.  No partner, shareholder, director, employee, member or agent
of Landlord shall be required to answer or otherwise plead to any service of
process, and no judgment shall be taken or writ of execution levied against any
partner, shareholder, director, employee or agent of Landlord, relating to the
obligations of Landlord under this Lease.

31.3.                        Each of the covenants and agreements of this
Article 31 shall be applicable to any covenant or agreement either expressly
contained in this Lease or imposed by Applicable Laws and shall survive the
expiration or earlier termination of this Lease.

32.                                 Premises Control by Landlord.

32.1.                        Landlord reserves full control over the Premises to
the extent not inconsistent with Tenant’s rights under this Lease, including,
without limitation, Landlord’s right to subdivide the Property, convert the
Buildings to condominium units, grant easements and licenses to third parties,
and maintain or establish ownership of the Buildings separate from fee title to
the Property.

32.2.                        Tenant shall, at Landlord’s request, promptly
execute such further documents as may be reasonably appropriate to assist
Landlord in the performance of its obligations hereunder;

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provided that Tenant need not execute any document that creates additional
liability for Tenant or that deprives Tenant of the quiet enjoyment and use of
the Premises as provided by this Lease.

32.3.                        During the Term, Landlord may, at any and all
reasonable times during non-business hours (or during business hours if Tenant
so requests), and upon two (2) business days’ prior notice (provided that no
time restrictions shall apply or advance notice be required if an emergency
necessitates immediate entry), enter the Premises to (a) inspect the same and to
determine whether Tenant is in compliance with its obligations hereunder, (b)
supply any service Landlord is required to provide hereunder, (c) show the
Premises to prospective purchasers or tenants during the final year of the Term
(as extended if Tenant exercises the Extension Option), and (d) post notices of
nonresponsibility.  In no event shall Tenant’s Rent abate as a result of
Landlord’s activities pursuant to this Section 32.3; provided, however, that all
such activities shall be conducted in such a manner so as to cause as little
interference to Tenant as is reasonably possible, and Landlord shall safeguard
all of Tenant’s property, including intellectual property, within the Premises. 
Landlord shall comply with Tenant’s customary restrictions, policies and
procedures for security and access, particularly with respect to any areas of
the Premises containing fragile or expensive equipment or confidential or
proprietary information or materials.  If an emergency necessitates immediate
access to the Premises, Landlord may use such reasonable force as Landlord
believes is appropriate under the circumstances to enter the Premises, and any
such entry to the Premises shall not constitute a forcible or unlawful entry to
the Premises, a detainer of the Premises, or an eviction of Tenant from the
Premises or any portion thereof.

33.                                 Quiet Enjoyment.  So long as Tenant is not
in default under this Lease, Landlord or anyone acting through or under Landlord
shall not disturb Tenant’s occupancy of the Premises, except as permitted by
this Lease.

34.                                 Subordination and Attornment.

34.1.                        Subject to the delivery of the non-disturbance
agreements described in this Article 34 as a condition precedent to any such
subordination, this Lease shall be subject and subordinate to the lien of any
mortgage, deed of trust, or lease in which Landlord is tenant now or hereafter
in force against the Premises or any portion thereof and to all advances made or
hereafter to be made upon the security thereof without the necessity of the
execution and delivery of any further instruments on the part of Tenant to
effectuate such subordination.  In consideration of, and as a condition
precedent to, Tenant’s agreement to permit its interest pursuant  to this Lease
to be subordinated to any particular future ground or underlying lease of the
Buildings or the Premises or to the lien of any mortgage or trust deed,
hereafter enforced against the Buildings or the Premises and to any renewals,
extensions, modifications, consolidations and replacements thereof, Landlord
shall deliver to Tenant a non-disturbance agreement on (a) the form of
non-disturbance agreement customarily used by the lessor under such ground lease
or underlying lease or the holder of such mortgage or trust deed or (b) another
commercially reasonable form, provided in either instance that such form (i) is
reasonably acceptable to Tenant, and (ii) recognizes Tenant’s Purchase Option. 
Landlord’s delivery to Tenant of non-disturbance agreement(s) in favor of Tenant
from any ground lessors, mortgage holders or lien holders of Landlord who later
came into existence at any time prior to the expiration of the Term shall be in
consideration of, and a condition precedent to, Tenant’s agreement to be bound
by the terms of this Article 34.  Tenant shall be entitled, at Tenant’s sole
cost and expense, to record any such non-disturbance agreement promptly after
full execution and delivery of such agreement.

34.2.                        Notwithstanding the foregoing, subject to
Landlord’s compliance with the terms of Section 34.1, Tenant shall execute and
deliver upon demand such further instrument or instruments evidencing such
subordination of this Lease to the lien of any such mortgage or mortgages or
deeds of trust or lease in which Landlord is tenant as may be required by
Landlord; provided, however, if any such mortgagee, beneficiary or Landlord
under lease wherein Landlord is tenant so elects, this Lease shall be deemed
prior in lien to any such lease, mortgage, or deed of trust upon or including
the Premises regardless of date and Tenant shall execute a statement in writing
to such effect at Landlord’s request.  If Tenant fails to execute any document
required from Tenant under this Section within ten (10) days after written
request therefor, Tenant hereby constitutes and appoints Landlord or its special
attorney-in-fact to execute and deliver any such document or documents in the
name of Tenant.  Such power is coupled with an interest and is irrevocable. 
Within five (5) business days after Landlord

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executes any document in accordance with this Section 34.2 as Tenant’s
attorney-in-fact, Landlord shall provide Tenant a copy of such document.

34.3.                        Upon written request of Landlord and opportunity
for Tenant to review, Tenant agrees to execute any Lease amendments not
materially altering the terms of this Lease, if required by a mortgagee or
beneficiary of a deed of trust encumbering real property of which the Premises
constitute a part incident to the financing of the real property of which the
Premises constitute a part.  Any change affecting the amount or timing of the
consideration to be paid by Tenant or modifying the Term of this Lease shall be
deemed as materially altering the terms hereof.

34.4.                        In the event any proceedings are brought for
foreclosure, or in the event of the exercise of the power of sale under any
mortgage or deed of trust made by Landlord covering the Premises, Tenant shall
at the election of the purchaser at such foreclosure or sale attorn to the
purchaser upon any such foreclosure or sale and recognize such purchaser as
Landlord under this Lease.

35.                                 Surrender.

35.1.                        At least ten (10) days prior to Tenant’s surrender
of possession of any part of the Premises, Tenant shall provide Landlord with
(a) a facility decommissioning and Hazardous Materials closure plan for the
Premises (“Exit Survey”), and (b) written evidence of all appropriate
governmental releases obtained by Tenant in accordance with Applicable Laws,
including, without limitation, laws pertaining to the surrender of the
Premises.  In addition, Tenant agrees to remain responsible after the surrender
of the Premises for the remediation of any recognized environmental conditions
set forth in the Exit Survey and compliance with any recommendations set forth
in the Exit Survey.  Tenant’s obligations under this Section 35.1 shall survive
the expiration or earlier termination of the Lease.

35.2.                        No surrender of possession of any part of the
Premises shall release Tenant from any of its obligations hereunder, unless such
surrender is accepted in writing by Landlord.

35.3.                        The voluntary or other surrender of this Lease by
Tenant shall not effect a merger with Landlord’s fee title or leasehold interest
in the Premises or any portion thereof, unless Landlord consents in writing, and
shall, at Landlord’s option, operate as an assignment to Landlord of any or all
subleases.

35.4.                        The voluntary or other surrender of any ground or
other underlying lease that now exists or may hereafter be executed affecting
the Premises or any portion thereof, or a mutual cancellation thereof or of
Landlord’s interest therein by Landlord and its lessor shall not effect a merger
with Landlord’s fee title or leasehold interest in the Premises and shall, at
the option of the successor to Landlord’s interest in the Premises or any
portion thereof, operate as an assignment of this Lease.

35.5.                        All permanently attached equipment, permanently
attached fixtures, additions and improvements attached to or built into the
Premises, including, without limitation, all floor and wall coverings, built-in
cabinet work and paneling, sinks and related plumbing fixtures, laboratory
benches, exterior venting fume hoods, ductwork, conduits, electrical panels and
circuits, together with all additions and accessories thereto is the property of
Landlord and shall remain upon and be surrendered with the Premises as a part
thereof.

35.6.                        In the event Tenant has performed any Alterations
in accordance with this Lease, upon surrender of the Premises, Tenant shall
reimburse Landlord for any extra costs and expenses incurred by Landlord by
reason of any delays in re-leasing the Premises caused by Tenant’s removal of
such Alterations.

36.                                 Waiver and Modification.  No provision of
this Lease may be modified, amended or supplemented except by an agreement in
writing signed by Landlord and Tenant.  The waiver by either party of any breach
by the other party of any term, covenant or condition herein contained shall not
be deemed to be a waiver of any subsequent breach of the same or any other term,
covenant or condition herein contained.

37.                                 Waiver of Jury Trial and Counterclaims.  The
parties waive trial by jury in any action, proceeding or counterclaim brought by
the other party hereto related to matters arising out of or

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in any way connected with this Lease; the relationship between Landlord and
Tenant; Tenant’s use or occupancy of the Premises; or any claim of injury or
damage related to this Lease or the Premises.

38.                                 Hazardous Materials.

38.1.                        Tenant shall not cause or permit any Hazardous
Materials (as hereinafter defined) to be brought upon, kept or used in or about
the Premises in violation of Applicable Laws by Tenant, its agents, employees,
contractors or invitees.  If Tenant breaches such obligation, or if the presence
of Hazardous Materials as a result of such a breach results in contamination of
the Premises or any adjacent property, or if contamination of the Premises or
any adjacent property by Hazardous Materials otherwise occurs during the Term of
this Lease or any extension or renewal hereof or holding over hereunder (other
than in connection with substances that migrated to the Premises from any
adjoining property, except in the event Tenant is aware of such contamination
and neither remedies such contamination nor promptly notifies Landlord of the
existence of such contamination), then Tenant shall indemnify, save, defend and
hold Landlord, its agents and contractors harmless from and against any and all
claims, judgments, damages, penalties, fines, costs, liabilities and losses
(including, without limitation, diminution in value of the Premises or any
portion thereof; damages for the loss or restriction on use of rentable or
usable space or of any amenity of the Premises; damages arising from any adverse
impact on marketing of space in the Premises; and sums paid in settlement of
claims, attorneys’ fees, consultants’ fees and experts’ fees) that arise during
or after the Term as a result of such breach or contamination.  This
indemnification of Landlord by Tenant includes, without limitation, costs
incurred in connection with any investigation of site conditions or any cleanup,
remedial, removal or restoration work required by any Governmental Authority
because of Hazardous Materials present in the air, soil or groundwater above, on
or under the Premises.  Without limiting the foregoing, if the presence of any
Hazardous Materials in, on, under or about the Premises or any adjacent property
caused or permitted by Tenant results in any contamination of the Premises or
any adjacent property, then Tenant shall promptly take all actions at its sole
cost and expense as are necessary to return the Premises and any adjacent
property to their respective condition existing prior to the time of such
contamination; provided that Landlord’s written approval of such action shall
first be obtained, which approval Landlord shall not unreasonably withhold
(provided that no time restrictions shall apply or advance approval be required
if an emergency necessitates the remediation of such contamination so long as
Tenant promptly provides Landlord written notice of any action taken by Tenant
pursuant to this Section 38.1); and provided, further, that it shall be
reasonable for Landlord to withhold its consent if such actions could have a
material adverse long-term or short-term effect on the Premises. 
Notwithstanding the foregoing, Landlord shall neither (a) settle any Claims
under this Section 38.1 without Tenant’s prior written consent, which consent
shall not be unreasonably withheld, conditioned or delayed, nor (b) except in
the case of an emergency (where there is imminent threat of injury to persons or
damage to property), enter into any agreement with a third party for any
cleanup, remedial, removal or restoration work in connection with such breach or
contamination other than in the event an emergency necessitates immediate entry,
without first providing Tenant prior written notice.

38.2.                        Landlord acknowledges that it is not the intent of
this Article 38 to prohibit Tenant from operating its business as described in
Section 2.7 above.  Tenant may operate its business according to the custom of
Tenant’s industry so long as the use or presence of Hazardous Materials is
strictly and properly monitored according to Applicable Laws.  As a material
inducement to Landlord to allow Tenant to use Hazardous Materials in connection
with its business, Tenant agrees to deliver to Landlord prior to the Term
Commencement Date a list identifying each type of Hazardous Material expected to
be present on the Premises and setting forth any and all governmental approvals
or permits required in connection with the presence of such Hazardous Material
on the Premises (the “Hazardous Materials List”).  Within twenty (20) days after
Landlord gives to Tenant a written request (which request shall not be made more
frequently than annually), Tenant shall deliver to Landlord an updated Hazardous
Materials List.  Tenant shall deliver to Landlord true and correct copies of the
following documents received from or submitted to any Government Authority
(hereinafter referred to as the “Documents”) relating to the handling, storage,
disposal and emission of Hazardous Materials prior to the Term Commencement Date
or, if unavailable at that time, concurrent with the receipt from or submission
to any Governmental Authority:  permits; approvals; reports and correspondence;
storage and management plans; notices of violations of Applicable Laws; plans
relating to the installation of any storage tanks to be installed in or under
the Premises (provided that

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installation of storage tanks shall only be permitted after Landlord has given
Tenant its written consent to do so, which consent Landlord may withhold in its
sole and absolute discretion); and all closure plans or any other documents
required by any and all Governmental Authorities for any storage tanks installed
in, on or under the Premises for the closure of any such storage tanks.  Tenant
shall not be required, however, to provide Landlord with any portion of the
Documents containing information of a proprietary nature that, in and of
themselves, do not contain a reference to any Hazardous Materials or activities
related to Hazardous Materials.

38.3.                        At any time, and from time to time,  prior to the
expiration of the Term, Landlord shall have the right to conduct appropriate
tests of the Premises to demonstrate that Hazardous Materials are present or
that contamination has occurred due to Tenant or Tenant’s agents, employees or
invitees.  Tenant shall pay all reasonable costs of any test of the Property
demonstrating that Tenant has breached any provision of this Lease regarding
Hazardous Materials or has any clean-up obligations under this Article 38.  Such
tests shall be conducted in a manner that minimizes any interference with
Tenant’s normal operations on the Premises.

38.4.                        If underground or other storage tanks storing
Hazardous Materials are located on the Premises or are hereafter placed on the
Premises by any party, Tenant shall monitor the storage tanks, maintain
appropriate records, implement reporting procedures, properly close any
underground storage tanks, and take or cause to be taken all other steps
necessary or required under the Applicable Laws.

38.5.                        Tenant’s obligations under this Article 38 shall
survive the expiration or earlier termination of this Lease.  During any period
of time needed by Tenant or Landlord after the termination of this Lease to
complete the removal from the Premises of any such Hazardous Materials, Tenant
shall continue to pay Rent in accordance with this Lease, which Rent shall be
prorated daily.

38.6.                        As used herein, the term “Hazardous Material” means
any hazardous or toxic substance, material or waste that is or becomes regulated
by any Governmental Authority.

39.                                 Miscellaneous.

39.1.                        This Lease shall be deemed and construed to be an
“absolute net lease” and, except as herein expressly provided, Landlord shall
receive all payments required to be made by Tenant free from all charges,
assessments, impositions, expenses and deductions of any and every kind or
nature whatsoever.  Landlord shall not be required to furnish any services or
facilities or to make any repairs, replacements or Alterations of any kind in or
on the Premises except as specifically provided herein. Tenant shall receive all
invoices and bills relative to the Premises and, except as otherwise provided
herein, shall pay for all expenses directly to the person or company submitting
a bill without first having to forward payment for the expenses to Landlord. 
Tenant shall at Tenant’s sole cost and expense be responsible for the management
of the Premises, shall maintain the landscaping and parking lot (to the extent
the landscaping and parking lot are not maintained by the owner’s association),
and shall make those additional repairs and Alterations required of Tenant
hereunder to maintain the Premises in a condition consistent with the quality of
the condition as of the Execution Date, ordinary wear and tear excepted.

39.2.                        Where applicable in this Lease, the singular
includes the plural and the masculine or neuter includes the masculine, feminine
and neuter.  The section headings of this Lease are not a part of this Lease and
shall have no effect upon the construction or interpretation of any part hereof.

39.3.                        Submission of this instrument for examination or
signature by Tenant does not constitute a reservation of or option for a lease,
and shall not be effective as a lease or otherwise until execution by and
delivery to both Landlord and Tenant.

39.4.                        Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor.

39.5.                        Each provision of this Lease performable by Tenant
shall be deemed both a covenant and a condition.

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39.6.                        Whenever consent or approval of either party is
required, that party shall not unreasonably withhold, condition or delay such
consent or approval, except as may be expressly set forth to the contrary.

39.7.                        The terms of this Lease are intended by the parties
as a final expression of their agreement with respect to the terms as are
included herein, and may not be contradicted by evidence of any prior or
contemporaneous agreement.

39.8.                        If any provision of this Lease is held invalid or
inoperative, then so far as is reasonable and possible the remainder of this
Agreement shall be deemed valid and operative and, to the greatest extent
legally possible, effect shall be given to the intent manifested by the portion
held invalid or inoperative.

39.9.                        Either party may, but shall not be obligated to,
record a short form memorandum of this Lease, including a description of the
Purchase Option granted under Article 30 above.  Each party agrees to execute
and deliver such memorandum upon the other party’s request.  Neither party shall
record this Lease.  Tenant shall be responsible for the cost of recording any
memorandum of this Lease, including any transfer or other taxes incurred in
connection with said recordation.

39.10.                  The language in all parts of this Lease shall be in all
cases construed as a whole according to its fair meaning and not strictly for or
against either Landlord or Tenant.

39.11.                  Each of the covenants, conditions and agreements herein
contained shall inure to the benefit of and shall apply to and be binding upon
the parties hereto and their respective heirs; legatees; devisees; executors;
administrators; and permitted successors, assigns, sublessees.  Nothing in this
Section 39.11 shall in any way alter the provisions of this Lease restricting
assignment or subletting.

39.12.                  Any notice, consent, demand, bill, statement or other
communication required or permitted to be given hereunder shall be in writing
and shall be given by personal delivery, overnight delivery with a reputable
nationwide overnight delivery service, or certified mail (return receipt
requested), and if given by personal delivery, shall be deemed delivered upon
receipt; if given by overnight delivery, shall be deemed delivered one (1) day
after deposit with a reputable nationwide overnight delivery service; and, if
given by certified mail (return receipt requested), shall be deemed delivered
three (3) business days after the time the notifying party deposits the notice
with the United States Postal Service.  Any notices given pursuant to this Lease
shall be addressed to Tenant at the Premises, or to Landlord or Tenant at the
addresses shown in Sections 2.9 and 2.10, respectively.  Either party may, by
notice to the other given pursuant to this Section, specify additional or
different addresses for notice purposes.

39.13.                  This Lease shall be governed by, construed and enforced
in accordance with the laws of the State in which the Premises are located,
without regard to such State’s conflict of law principles.

39.14.                  That individual or those individuals signing this Lease
guarantee, warrant and represent that said individual or individuals have the
power, authority and legal capacity to sign this Lease on behalf of and to bind
all entities, corporations, partnerships, limited liability companies, joint
venturers or other organizations and entities on whose behalf said individual or
individuals have signed.

39.15.                  Tenant agrees that it shall promptly furnish to
Landlord, from time to time, upon Landlord’s written request, the most recent
audited year-end financial statements reflecting Tenant’s current financial
condition.  Tenant shall, within ninety (90) days after the end of Tenant’s
financial year or as soon thereafter as available, furnish Landlord with a
certified copy of Tenant’s audited year-end financial statements for the
previous year (unless Tenant is a public company that is listed on a United
States stock exchange).  Tenant represents and warrants that all financial
statements, records and information furnished by Tenant to Landlord in
connection with this Lease are true, correct and complete in all respects. 
Notwithstanding the foregoing, the provisions of this Section 39.15 shall not
apply to Tenant so long as Tenant is a publicly traded company that is listed on
a United States stock exchange.

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39.16.                  This Lease may be executed in one or more counterparts,
each of which, when taken together, shall constitute one and the same document.

39.17.                  This Lease is subject to any recorded covenants,
conditions or restrictions on the Premises or Property (the “CC&Rs”).  Tenant
shall comply with the CC&Rs.

39.18.                  Any notice of default or breach under this Lease shall
be given only if the party giving the notice has a reasonable, good faith belief
that a default or breach has occurred.

40.                                 Option to Extend Term.  Tenant shall have
the option (“Extension Option”) to extend the Term of this Lease as to the
entire Premises (and no less than the entire Premises) upon the following terms
and conditions.  Any extension of the Term pursuant to any Extension Option
shall be on all the same terms and conditions as this Lease, except as follows:

40.1.                        Tenant shall have two (2) consecutive options to
extend the Term of this Lease for five (5) years each on the same terms and
conditions as this Lease.  Basic Annual Rent shall be adjusted on the first
(1st) day of the extension term and each annual anniversary date thereof in
accordance with Article 6.

40.2.                        The Extension Option is not assignable separate and
apart from this Lease.

40.3.                        The Extension Option is conditional upon Tenant
giving Landlord written notice of its election to exercise the Extension Option
at least twelve (12) months prior to the end of the expiration of the
then-current Term.  Time shall be of the essence as to Tenant’s exercise of any
Extension Option.  Tenant assumes full responsibility for maintaining a record
of the deadlines to exercise any Extension Option.  Tenant acknowledges that it
would be inequitable to require Landlord to accept any exercise of any Extension
Option after the date provided for in this paragraph.

40.4.                        Notwithstanding anything contained in this Article
40, Tenant shall not have the right to exercise the Extension Option: (a) during
any time that Tenant is in Default under any provision of this Lease or the
Required Leases (provided, however, that, for purposes of this Section 40.4(b),
Landlord shall not be required to provide Tenant with notice of such Default but
upon Tenant’s notification to Landlord of Tenant’s intent to exercise the
Extension Option, Landlord shall promptly provide Tenant with written notice of
such Defaults to which Landlord is aware) and continuing until Tenant cures any
such Default, if such Default is susceptible to being cured; or (b) in the event
that Tenant has defaulted in the performance of its obligations under this Lease
three (3) or more times and a service or late charge has become payable under
Section 24.1 for each of such defaults during the twelve (12)-month period
immediately prior to the date that Tenant intends to exercise an Extension
Option, whether or not Tenant has cured such defaults.  Notwithstanding the
foregoing, if the nature of such default is such that it could reasonably be
cured before the deadline for Tenant’s exercise of the Extension Option, then
the deadline for Tenant’s exercise of the Extension Option shall be extended for
five (5) days to provide Tenant the opportunity to cure such default.

40.5.                        Except as provided in Section 40.4, the period of
time within which Tenant may exercise an Extension Option shall not be extended
or enlarged by reason of Tenant’s inability to exercise such Extension Option
because of the provisions of Section 40.4.

40.6.                        All of Tenant’s rights under the provisions of the
Extension Option shall terminate and be of no further force or effect even after
Tenant’s due and timely exercise of the Extension Option if, after such
exercise, but prior to the commencement date of the new term, (a) Tenant fails
to pay to Landlord a monetary obligation of Tenant for a period of twenty (20)
days after written notice from Landlord to Tenant, (b) Tenant fails to commence
to cure a default (other than a monetary default) within thirty (30) days after
the date Landlord gives notice to Tenant of such default, (c) Tenant commences
to cure a default (other than a monetary default) but does not prosecute to
completion prior to the commencement date of the extended Term (unless Tenant is
diligently prosecuting to completion and merely needs additional time), or (d)
Tenant has defaulted under this Lease three (3) or more times and a service or
late charge under Section 24.1 has become payable for any such default, whether
or not Tenant has cured such defaults.

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41.                                 Tenant’s Authority.  Tenant hereby covenants
and warrants that (a) Tenant is duly incorporated or otherwise established or
formed and validly existing under the laws of its state of incorporation,
establishment or formation, (b) Tenant has and is duly qualified to do business
in the state in which the Property is located, (c) Tenant has full corporate,
partnership, trust, association or other appropriate power and authority to
enter into this Lease and to perform all Tenant’s obligations hereunder and
(d) each person (and all of the persons if more than one signs) signing this
Lease on behalf of Tenant is duly and validly authorized to do so.

42.                                 Landlord’s Authority.  Landlord hereby
covenants and warrants that (a) Landlord is duly incorporated or otherwise
established or formed and validly existing under the laws of its state of
incorporation, establishment or formation, (b) Landlord has and is duly
qualified to do business in the state in which the Property is located,
(c) Landlord has full corporate, partnership, trust, association or other
appropriate power and authority to enter into this Lease and to perform all
Landlord’s obligations hereunder and (d) each person (and all of the persons if
more than one signs) signing this Lease on behalf of Landlord is duly and
validly authorized to do so.

43.                                 Confidentiality.  Neither party shall
disclose any terms or conditions of this Lease (including Rent) or give a copy
of this Lease to any third party, and Landlord shall not release to any third
party any nonpublic financial information or nonpublic information about
Tenant’s ownership structure that Tenant gives Landlord, except (a) if required
by Applicable Laws or in any judicial proceeding, provided that the releasing
party has given the other party reasonable notice of such requirement, if
feasible, (b) to a party’s attorneys, accountants, lenders, brokers and other
bona fide consultants or advisers, provided such third parties agree to be bound
by this Section, or (c) to bona fide prospective assignees or subtenants of this
Lease, provided they agree in writing to be bound by this Section. 
Notwithstanding the foregoing, either Landlord or Tenant may file a copy of this
Lease in connection with any NASDAQ or SEC filing.  The parties shall reasonably
cooperate with each other in connection with such filing.

44.                                 Odors and Exhaust.  If the Buildings have an
adequate ventilation system, Tenant shall vent the Premises through such
system.  Tenant shall comply with Applicable Laws in connection with the venting
of fumes and odors from the Premises.

45.                                 Excavation.  If any excavation shall be made
upon land adjacent to or under the Buildings, or shall be authorized to be made,
Tenant shall afford to the person causing or authorized to cause such excavation
license to enter the Premises for the purpose of performing such work as said
person shall deem reasonably necessary to preserve and protect the Buildings
from injury or damage and to support the same by proper foundations, without any
claim for damages or liability against Landlord (except in the case of Landlord
Parties’ willful misconduct or gross negligence) and without reducing or
otherwise affecting Tenant’s obligations under this Lease.  Any such work must
be conducted in a manner that minimizes disruption and inconvenience to Tenant.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

40

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

BMR-6114-6154 NANCY RIDGE DRIVE LLC:
a Delaware limited liability company

By:

BioMed Realty, L.P.,

 

 

a Maryland limited partnership,

 

 

its sole member

 

 

 

 

 

By:

/s/ Gary A. Kreitzer

 

 

Name:

Gary A. Kreitzer

 

Title:

Executive Vice President

 

ARENA PHARMACEUTICALS, INC.:
a Delaware corporation

By:

 

/s/ Robert E. Hoffman

 

Name:

 

Robert E. Hoffman

 

Title:

 

VP, Finance and CFO

 

 

--------------------------------------------------------------------------------

EXHIBIT A

PREMISES

ALL THAT CERTAIN REAL PROPERTY SITUATED IN THE COUNTY OF SAN DIEGO, STATE OF
CALIFORNIA, DESCRIBED AS FOLLOWS:

PARCEL A:

PARCEL 12 OF PARCEL MAP NO. 17347, IN THE CITY OF SAN DIEGO, COUNTY OF SAN
DIEGO, STATE OF CALIFORNIA, AS PER THE MAP THEREOF FILED IN THE OFFICE OF THE
SAN DIEGO COUNTY RECORDER ON APRIL 13, 1994 AS FILE NO. 1994-0242762 OF OFFICIAL
RECORDS.

PARCEL B:

A NONEXCLUSIVE EASEMENT FOR INGRESS AND EGRESS BY VEHICULAR AND PEDESTRIAN
TRAFFIC AND VEHICLE PARKING UPON, OVER AND ACROSS THE “COMMON AREA” FOR THE
BENEFIT OF THE OWNER, PRESENT AND FUTURE, AND THEIR RESPECTIVE SUCCESSORS AND
ASSIGNS, TENANTS, CUSTOMERS AND INVITEES, TOGETHER WITH A NONEXCLUSIVE EASEMENT
UNDER AND THROUGH THE “COMMON AREA” FOR THE INSTALLATION, MAINTENANCE, REMOVAL,
AND REPLACEMENT OF WATER DRAINAGE SYSTEMS OR STRUCTURES, WATER MAINS, SEWERS,
WATER SPRINKLER SYSTEM LIENS, TELEPHONE OR ELECTRICAL CONDUITS OR SYSTEMS, GAS
MAINS AND ANY OTHER PUBLIC UTILITIES AND/OR SERVICE EASEMENTS, AS CREATED SET
FORTH, DEFINED, DESCRIBED AND GRANTED IN THAT CERTAIN “DECLARATION OF RECIPROCAL
EASEMENTS OF THE SORRENTO RIDGE BUSINESS PARK PLANNED INDUSTRIAL DEVELOPMENT”
RECORDED APRIL 13, 1994 AS FILE NO. 1994-0242763 OF OFFICIAL RECORDS.

Exhibit A-1

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EXHIBIT B

ACKNOWLEDGEMENT OF TERM COMMENCEMENT DATE
AND TERM EXPIRATION DATE

THIS ACKNOWLEDGEMENT OF TERM COMMENCEMENT DATE AND TERM EXPIRATION DATE is
entered into as of [                ], 20[    ], with reference to that certain
Lease (the “Lease”) dated as of May 2, 2007, by Arena Pharmaceuticals, Inc., a
Delaware corporation (“Tenant”), in favor of BMR-6114-6154 Nancy Ridge Drive
LLC, a Delaware limited liability company (“Landlord”).  All capitalized terms
used herein without definition shall have the meanings ascribed to them in the
Lease.

Tenant hereby confirms the following:

1.             The Premises are located at 6154 Nancy Ridge Drive, San Diego,
California.

2.             Tenant accepted possession of the Premises under the Lease on May
2, 2007.

3.             The Premises are accepted in AS IS condition

4.             All conditions of the Lease to be performed by Landlord as a
condition to the full effectiveness of the Lease have been satisfied, and
Landlord has fulfilled all of its duties in the nature of inducements offered to
Tenant to lease the Premises.

5.             In accordance with the provisions of Section 3.3 of the Lease,
the Term Commencement Date is May 2, 2007, and, unless the Lease is terminated
or extended prior to the Term Expiration Date pursuant to its terms, the Term
Expiration Date shall be May 31, 2027.

6.             The Lease is in full force and effect, and the same represents
the entire agreement between Landlord and Tenant concerning the Premises [,
except [               ]].

7.             Tenant has no existing defenses against the enforcement of the
Lease by Landlord, and there exist no offsets or credits against Rent owed or to
be owed by Tenant.

8.             The obligation to pay Rent is presently in effect and all Rent
obligations on the part of Tenant under the Lease commenced to accrue on
[             ], 20[    ].

9.             The undersigned Tenant has not made any prior assignment,
transfer, hypothecation or pledge of the Lease or of the rents thereunder or
sublease of the Premises or any portion thereof.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

Exhibit B-1

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IN WITNESS WHEREOF, the parties hereto have executed this Acknowledgment of Term
Commencement Date and Term Expiration Date as of [              ], 20[    ].

ARENA PHARMACEUTICALS, INC.,
a Delaware corporation

By:

 

 

Name:

 

 

Title:

 

 

 

Exhibit B-2

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EXHIBIT C

RULES AND REGULATIONS

NOTHING IN THESE RULES AND REGULATIONS (“RULES AND REGULATIONS”) SHALL SUPPLANT
ANY PROVISION OF THE LEASE.  IN THE EVENT OF A CONFLICT OR INCONSISTENCY BETWEEN
THESE RULES AND REGULATIONS AND THE LEASE, THE LEASE SHALL PREVAIL.

1.             Tenant shall not obstruct any sidewalks or entrances to the
Buildings, or any halls, passages, exits, entrances or stairways within the
Premises, in any case that are required to be kept clear for health and safety
reasons.

2.             Tenant shall not place a load upon any floor of the Premises that
exceeds the load per square foot that (a) such floor was designed to carry or
(b) is allowed by Applicable Laws.

3.             Tenant shall store all of its trash, garbage and Hazardous
Materials within its Premises or in designated receptacles outside of the
Premises.  Tenant shall not place in any such receptacle any material that
cannot be disposed of in the ordinary and customary manner of trash, garbage and
Hazardous Materials disposal.

4.             Tenant assumes any and all responsibility for protecting the
Premises from theft, robbery and pilferage, which responsibility includes
keeping doors locked and other means of entry to the Premises closed.

5.             Landlord may waive any one or more of these Rules and Regulations
for the benefit of Tenant, but no such waiver by Landlord shall be construed as
a waiver of such Rules and Regulations in favor of Tenant, nor prevent Landlord
from thereafter enforcing any such Rules and Regulations against Tenant.

6.             These Rules and Regulations are in addition to, and shall not be
construed to in any way modify or amend, in whole or in part, the terms
covenants, agreements and conditions of the Lease.

7.             Tenant shall be responsible for the observance of these Rules and
Regulations by Tenant’s employees, agents, clients, customers, invitees and
guests.

Exhibit C-1

--------------------------------------------------------------------------------

EXHIBIT D

FORM OF ESTOPPEL CERTIFICATE

To:          BMR-6114-6154 Nancy Ridge Drive LLC

17140 Bernardo Center Drive, Suite 222

San Diego, CA 92128

Attention: General Counsel/Real Estate

BioMed Realty, L.P.

c/o BioMed Realty Trust, Inc.

17140 Bernardo Center Drive, Suite 222

San Diego, CA 92128

Re:                               6154 Nancy Ridge Drive (the “Premises”) in San
Diego, California (the “Property”)

The undersigned tenant (“Tenant”) hereby certifies to you as follows:

1.             Tenant is a tenant at the Property under a lease (the “Lease”)
for the Premises dated as of May 2, 2007.  The Lease has not been cancelled,
modified, assigned, extended or amended [except as follows: 
[                ]], and there are no other agreements, written or oral,
affecting or relating to Tenant’s lease of the Premises or any other space at
the Property.  The lease term expires on [                ], 20[     ].

2.             Tenant took possession of the Premises, currently consisting of
[                ] square feet, on [                ], 20[     ], and commenced
to pay rent on [                ], 20[     ].  Tenant has full possession of the
Premises, has not assigned the Lease or sublet any part of the Premises, and
does not hold the Premises under an assignment or sublease[, except as follows: 
[                ]].

3.             All base rent, rent escalations and additional rent under the
Lease have been paid through [                ], 20[    ].  There is no prepaid
rent[, except $[                ]][, and the amount of security deposit is
$[                ] [in cash][in the form of a letter of credit]].  Tenant
currently has no right to any future rent abatement under the Lease.

4.             Base rent is currently payable in the amount of
$[                ] per month.

5.             Tenant is currently paying estimated payments of additional rent
of $[                ] per month on account of real estate taxes, insurance,
management fees and common area maintenance expenses.

6.             Landlord was not required to perform any work or tenant
improvements for Tenant under the Lease.

7.             The Lease is in full force and effect, free from default and free
from any event that could become a default under the Lease, and Tenant has no
claims against Landlord or offsets or defenses against rent, and there are no
disputes with Landlord. Tenant has received no notice of prior sale, transfer,
assignment, hypothecation or pledge of the Lease or of the rents payable
thereunder[, except [                ]].

8.             Tenant has the following expansion rights for the Property: 
[                ].  Tenant has the following options to purchase the Property:
[                                                     ].

9.             To Tenant’s knowledge, no hazardous wastes have been generated,
treated, stored or disposed of by or on behalf of Tenant in, on or around the
Premises in violation of any environmental laws that have not been corrected.

10.           The undersigned has executed this Estoppel Certificate with the
knowledge and understanding that [INSERT NAME OF LANDLORD, PURCHASER OR LENDER,
AS APPROPRIATE] or its assignee is acquiring the Property in reliance on this
certificate and that the undersigned shall be bound by this certificate.  The
statements contained herein may be relied upon by [INSERT NAME OF PURCHASER OR
LENDER, AS APPROPRIATE], [LANDLORD], BioMed Realty, L.P., BioMed Realty Trust,
Inc., and any mortgagee of the Property and their respective successors and
assigns.

Exhibit D-1

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Any capitalized terms not defined herein shall have the respective meanings
given in the Lease.

Dated this [                              ] day of
[                ], 20[     ].

[                ],
a [                ]

By:

 

 

Name:

 

 

Title:

 

 

 

Exhibit D-2

--------------------------------------------------------------------------------

EXHIBIT E

FORM OF LETTER OF CREDIT

[On letterhead or L/C letterhead of Issuer.]

LETTER OF CREDIT

Date:                 , 200  

_________________________ (the “Beneficiary”)

_________________________

_________________________

Attention:_________________

L/C. No.: _________________

Loan No. _________________

 

Ladies and Gentlemen:

We establish in favor of Beneficiary our irrevocable and unconditional Letter of
Credit numbered as identified above (the “L/C”) for an aggregate amount of
$                , expiring at     :00 p.m. on                or, if such day is
not a Banking Day, then the next succeeding Banking Day (such date, as extended
from time to time, the “Expiry Date”). “Banking Day” means a weekday except a
weekday when commercial banks in                        are authorized or
required to close.

We authorize Beneficiary to draw on us (the “Issuer”) for the account of
               (the “Account Party”), under the terms and conditions of this
L/C.

Funds under this L/C are available by presenting the following documentation
(the “Drawing Documentation”): (a) the original L/C and (b) a sight draft
substantially in the form of Exhibit A, with blanks filled in and bracketed
items provided as appropriate. No other evidence of authority, certificate, or
documentation is required.

Drawing Documentation must be presented at Issuer’s office at
                     on or before the Expiry Date by personal presentation,
courier or messenger service, or fax. Presentation by fax shall be effective
upon electronic confirmation of transmission as evidenced by a printed report
from the sender’s fax machine. After any fax presentation, but not as a
condition to its effectiveness, Beneficiary shall with reasonable promptness
deliver the original Drawing Documentation by any other means.  Issuer will on
request issue a receipt for Drawing Documentation.

We agree, irrevocably, and irrespective of any claim by any other person, to
honor drafts drawn under and in conformity with this L/C, within the maximum
amount of this L/C, presented to us on or before the Expiry Date, provided we
also receive (on or before the Expiry Date) any other Drawing Documentation this
L/C requires.

We shall pay this L/C only from our own funds by check or wire transfer, in
compliance with the Drawing Documentation.

If Beneficiary presents proper Drawing Documentation to us on or before the
Expiry Date, then we shall pay under this L/C at or before the following time
(the “Payment Deadline”): (a) if presentment is made at or before noon of any
Banking Day, then the close of the next Banking Day; and (b) otherwise, the
close of the second Banking Day following presentment.  We waive any right to
delay payment beyond the Payment Deadline. If we determine that Drawing
Documentation is not proper, then we shall so advise Beneficiary in writing,
specifying all grounds for our determination, within one Banking Day after the
Payment Deadline.

Partial drawings are permitted. This L/C shall, except to the extent reduced
thereby, survive any partial drawings.

Exhibit E-1

--------------------------------------------------------------------------------

We shall have no duty or right to inquire into the validity of or basis for any
draw under this L/C or any Drawing Documentation.  We waive any defense based on
fraud or any claim of fraud.

The Expiry Date shall automatically be extended by one year (but never beyond
              the “Outside Date”) unless, on or before the date 60 days before
any Expiry Date, we have given Beneficiary notice that the Expiry Date shall not
be so extended (a “Nonrenewal Notice”). We shall promptly upon request confirm
any extension of the Expiry Date under the preceding sentence by issuing an
amendment to this L/C, but such an amendment is not required for the extension
to be effective. We need not give any notice of the Outside Date.

Beneficiary may from time to time without charge transfer this L/C, in whole but
not in part, to any transferee (the “Transferee”).  Issuer shall look solely to
Account Party for payment of any fee for any transfer of this L/C.  Such payment
is not a condition to any such transfer. Beneficiary or Transferee shall
consummate such transfer by delivering to Issuer the original of this L/C and a
Transfer Notice substantially in the form of Exhibit B, purportedly signed by
Beneficiary, and designating Transferee.  Issuer shall promptly reissue or amend
this L/C in favor of Transferee as Beneficiary.  Upon any transfer, all
references to Beneficiary shall automatically refer to Transferee, who may then
exercise all rights of Beneficiary.  Issuer expressly consents to any transfers
made from time to time in compliance with this paragraph.

Any notice to Beneficiary shall be in writing and delivered by hand with receipt
acknowledged or by overnight delivery service such as FedEx (with proof of
delivery) at the above address, or such other address as Beneficiary may specify
by written notice to Issuer. A copy of any such notice shall also be delivered,
as a condition to the effectiveness of such notice, to:                        
(or such replacement as Beneficiary designates from time to time by written
notice).

No amendment that adversely affects Beneficiary shall be effective without
Beneficiary’s written consent.

This L/C is subject to and incorporates by reference: (a) the Uniform Customs
and Practice for Documentary Credits, International Chamber of Commerce
Publication No. 500 (the “UCP”); and (b) to the extent not inconsistent with the
UCP, Article 5 of the Uniform Commercial Code of the State of New York.

Very truly yours,

 

 

 

[Issuer Signature]

 

Exhibit E-2

--------------------------------------------------------------------------------

EXHIBIT A

FORM OF SIGHT DRAFT

[BENEFICIARY LETTERHEAD]

TO:

[Name and Address of Issuer]

SIGHT DRAFT

AT SIGHT, pay to the Order of                            , the sum of
                            United States Dollars
($                           ). Drawn under [Issuer] Letter of Credit No.
                            dated                            .

[Issuer is hereby directed to pay the proceeds of this Sight Draft solely to the
following account:                                         .]

[Name and signature block, with signature or purported signature of Beneficiary]

Date:                            

Exhibit E-3

--------------------------------------------------------------------------------

EXHIBIT B

FORM OF TRANSFER NOTICE

[BENEFICIARY LETTERHEAD]

TO:

[Name and Address of Issuer] (the “Issuer”)

TRANSFER NOTICE

By signing below, the undersigned, Beneficiary (the “Beneficiary”) under
Issuer’s Letter of Credit No.                             dated
                            (the “L/C”), transfers the L/C to the following
transferee (the “Transferee”):

[Transferee Name and Address]

The original L/C is enclosed. Beneficiary directs Issuer to reissue or amend the
L/C in favor of Transferee as Beneficiary. Beneficiary represents and warrants
that Beneficiary has not transferred, assigned, or encumbered the L/C or any
interest in the L/C, which transfer, assignment, or encumbrance remains in
effect.

[Name and signature block, with signature or purported signature of Beneficiary]

Date:                            

Exhibit E-4

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EXHIBIT F

FORM OF NOTICE OF EXERCISE OF PURCHASE OPTION

[On Tenant’s letterhead]

To:          BMR-6114-6154 Nancy Ridge Drive LLC

17140 Bernardo Center Drive, Suite 222

San Diego, CA 92128

Attention: General Counsel/Real Estate

BioMed Realty, L.P.

c/o BioMed Realty Trust, Inc.

17140 Bernardo Center Drive, Suite 222

San Diego, CA 92128

Re:          Notice of Exercise of Purchase Option

The undersigned Tenant hereby exercises its option to purchase the real property
located at [                         ] Nancy Ridge Drive, San Diego, California
in accordance with Section 30 of those certain Leases dated May 2, 2007 by and
between BMR-6114-6154 Nancy Ridge Drive LLC and Arena Pharmaceuticals, Inc.

Please call the undersigned immediately at                               if you
have any questions.

Sincerely,

TENANT:

[name of Tenant],

By:

 

 

Name:

 

 

Title:

 

 

 

Exhibit F-1

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SCHEDULE 1

BASIC ANNUAL RENT INCREASE

Calendar Year

 

Additional
Monthly Rental
Installment of
Basic Annual Rent

 

2007

 

$

112,500.00

 

2008

 

$

115,312.50

 

2009

 

$

118,195.31

 

2010

 

$

121,150.20

 

2011

 

$

124,178.95

 

2012

 

$

127,283.42

 

 

Schedule 1

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SCHEDULE 2

BASIC ANNUAL RENT REDUCTION

Calendar Year

 

Monthly Rental
Installment of Basic
Annual Rent
Reduction(1)

 

2007

 

$

58,109.07

 

2008

 

$

59,561.80

 

2009

 

$

61,050.84

 

2010

 

$

62,577.11

 

2011

 

$

64,141.54

 

2012

 

$

65,745.08

 

 

 

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(1) Amount shown is amount by which the monthly installment of the Basic Annual
Rent shall be reduced.

Schedule 2

--------------------------------------------------------------------------------