Exhibit 10.1

LEASE AGREEMENT

THIS LEASE AGREEMENT (this “Lease”) is made this 5th day of September, 2011,
between ARE-SD REGION NO. 24, LLC, a Delaware limited liability company
(“Landlord”), and LIGAND PHARMACEUTICALS, INCORPORATED, a Delaware corporation
(“Tenant”).

 

Building:

   11119 North Torrey Pines, San Diego CA 92037

Premises:

   That portion of the east side of the second floor of the Building, containing
approximately 15,964 rentable square feet, and that portion of the basement of
the Building, containing approximately 465 rentable square feet, all as
determined by Landlord, as shown on Exhibit A.

Project:

   The real property on which the Building in which the Premises are located,
together with all improvements thereon and appurtenances thereto as described on
Exhibit B.

Base Rent:

   $2.75 per rentable square foot of the Premises per month

Rentable Area of Premises: 16,429 sq. ft.

Usable Area of Premises: 14,123 sq. ft.

Rentable Area of Project: 72,245 sq. ft.; provided, however, that for purposes
of calculating Tenant’s Share of Operating Expenses the parties agree that
Rentable Area of Project shall be for all purposes be 65,314 sq. ft.

Tenant’s Share of Operating Expenses: 26.15%

Security Deposit:

   $43,290.50

Rent Adjustment Percentage: 3%

Base Term:

   Beginning on the Commencement Date and ending 84 months from the first day of
the first full month following the Rent Commencement Date.

Permitted Use:

   Research and development laboratory, related office and other related uses
consistent with the character of the Project and otherwise in compliance with
the provisions of Section 7 hereof.

 

Address for Rent Payment:

   Landlord’s Notice Address:

P.O. Box 79840

   385 E. Colorado Boulevard, Suite 299

Baltimore, MD 21279-0840

   Pasadena, CA 91101    Attention: Corporate Secretary

Tenant’s Notice Address:

11119 North Torrey Pines, Suite 200

San Diego CA 92037

Attention: General Counsel

The following Exhibits and Addenda are attached hereto and incorporated herein
by this reference:

 

[X] EXHIBIT A - PREMISES DESCRIPTION

   [X] EXHIBIT B - DESCRIPTION OF PROJECT

[X] EXHIBIT C – WORK LETTER

   [X] EXHIBIT D - COMMENCEMENT DATE

[X] EXHIBIT E - RULES AND REGULATIONS

   [X] EXHIBIT F – TENANT’S PERSONAL PROPERTY

[X] EXHIBIT G – SIGNAGE

   [X] EXHIBIT H – EXPANSION SPACE

[X] EXHIBIT I - LANDLORD’S PROPERTY

   [X] EXHIBIT J - APPROVED PLAN

 

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1. Lease of Premises. Upon and subject to all of the terms and conditions
hereof, Landlord hereby leases the Premises to Tenant and Tenant hereby leases
the Premises from Landlord. The portions of the Project which are for the
non-exclusive use of tenants of the Project are collectively referred to herein
as the “Common Areas.” Landlord reserves the right to modify Common Areas,
provided that such modifications do not materially adversely affect Tenant’s use
of the Premises for the Permitted Use or increase the Rentable Area of the
Premises above 16,429 square feet unless Tenant leases additional space at the
Project; provided, however, if, following the completion of Landlord’s Work,
Landlord thereafter reduces the size of the portion of the enclosed Common Areas
(excluding the fitness center and bistro at the Project) which is included in
Landlord’s calculation of the square footage of the Premises, the Rentable Area
of the Premises will be reduced proportionately. For the avoidance of doubt, in
no event shall a reduction in the size of the fitness center or bistro result in
a change of the Rentable Area of the Premises. From and after the Rent
Commencement Date (as defined below) through the expiration of the Term, Tenant
shall have access to the Premises for the Permitted Use and to the parking
facilities serving the Project 24 hours per day, 7 days a week, except in the
case of emergencies, as the result of Legal Requirements, the performance by
Landlord of any necessary maintenance or repairs, or any other reasonable
temporary interruptions, and otherwise subject to the terms of this Lease.

2. Delivery; Acceptance of Premises; Commencement Date. Landlord shall, subject
to the other provisions of this Lease, make the Premises available to Tenant for
Tenant’s Work under the Work Letter within 5 business days after the full
execution and delivery of this Lease (“Delivery” or “Deliver”). Tenant shall
deliver evidence of the insurance required to be maintained by Tenant under this
Lease and the Work Letter along with Tenant’s delivery of an executed copy of
this Lease to Landlord. Landlord shall use its reasonable efforts to Deliver the
Premises by April 1, 2012. If Landlord fails to timely Deliver the Premises,
Landlord shall not be liable to Tenant for any loss or damage resulting
therefrom, and this Lease shall not be void or voidable except as provided
herein. If Landlord does not Deliver the Premises by June 1, 2012, Tenant may
terminate this Lease on 10 days prior written notice to Landlord unless Delivery
of the Premises occurs during the 10 day period following Landlord’s receipt of
such notice; provided, however, that if Tenant fails to provide such notice to
Landlord on or before June 5, 2012, Tenant shall have no further right to
terminate this Lease pursuant to the provisions of this sentence. As used
herein, the term “Tenant’s Work” shall have the meaning set forth for such term
in the Work Letter.

Tenant acknowledges and agrees that construction of the Tenant Improvements will
be undertaken at the same time as Landlord is undertaking the construction of
the Landlord’s Work (as defined in the Work Letter) and that the parties and
their contractors will be required to coordinate their work with one another
(including, without limitation, work within the Premises) but in no event may
Tenant or any Tenant Party (as defined below) delay or interfere with the
performance of Landlord’s Work, nor with any inspections or issuance of final
approvals by applicable Governmental Authorities (as defined below) nor cause an
increase the cost of the performance of Landlord’s Work. Tenant further
acknowledges and agrees that Landlord’s Work includes, without limitation, the
construction of a pass through lobby and common area restrooms and Landlord will
also be accessing the Premises in connection with the construction of the same.

The “Commencement Date” shall be the date Landlord Delivers the Premises to
Tenant for construction of the Tenant Improvements. The “Rent Commencement Date”
shall be July 1, 2012; provided that if Tenant has not Substantially Completed
the Tenant Improvements on or before July 1, 2012, to the extent delays are
attributable solely to Landlord Delays (as defined in the Work Letter), such
date shall be extended 1 day for each day after July 1, 2012, that Tenant is
unable to Substantially Complete the Tenant Improvements because of such
Landlord Delays. Upon request of Landlord, Tenant shall execute and deliver a
written acknowledgment of the Commencement Date, the Rent Commencement Date and
the expiration date of the Term when such are established in the form of the
“Acknowledgement of Commencement Date” attached to this Lease as Exhibit D;
provided, however, Tenant’s failure to execute and deliver such acknowledgment
shall not affect Landlord’s rights hereunder. The “Term” of this Lease shall be
the Base Term, as defined above on the first page of this Lease and the
Extension Term which Tenant may elect pursuant to Section 40 hereof.

 

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Tenant shall, subject to the provisions of this paragraph, have the right during
the Term, at no additional cost to Tenant, to use the furniture, fixtures,
equipment, lab equipment and infrastructure listed on Exhibit I attached hereto
(“Landlord’s Property”). The Landlord’s Property was located in the Building and
Tenant acknowledges that all of Landlord’s Property was removed by Tenant prior
to the date of this Lease for reuse as part of the Tenant Improvements. Tenant
accepted Landlord’s Property in its current “as is” condition as of the date the
same was removed from the Building and shall return Landlord’s Property to
Landlord upon the expiration or earlier termination of this Lease in the same
condition as received, ordinary wear and tear excepted. The reasonable costs
associated with removing Landlord’s Property from the Building and storing the
same and reusing it as part of the Tenant Improvements may be paid for out of
the TI Allowance (as defined in the Work Letter).

Except as set forth in this Lease (including the Work Letter): (i) Tenant shall
accept the Premises and Landlord’s Property in their condition as of the
Commencement Date, subject to all applicable Legal Requirements (as defined in
Section 7 hereof); (ii) Landlord shall have no obligation for any defects in the
Premises or Landlord’s Property; and (iii) Tenant’s taking possession of the
Premises and Landlord’s Property shall be conclusive evidence that Tenant
accepts the Premises and Landlord’s Property and that the Premises and
Landlord’s Property were in good condition at the time possession was taken. Any
access to and/or occupancy of the Premises by Tenant before the Rent
Commencement Date shall be subject to all of the terms and conditions of this
Lease, excluding the obligation to pay Base Rent and Operating Expenses.

Subject to the provisions of this paragraph, Landlord shall, at its sole cost
and expense (which shall not constitute an Operating Expense), be responsible
for any repairs that are required to be made to the Building structure, roof or
Building Systems (as defined in Section 13) provided that Tenant notifies
Landlord in writing of the need for any such repairs within 120 days after the
Commencement Date. The cost of any repairs not identified in such notice during
such 120 day period shall thereafter be included as part of Operating Expenses.
Notwithstanding anything to the contrary contained in this paragraph, if Tenant
or any Tenant Party was responsible for the cause of any of the repairs provided
for in this paragraph, Tenant shall pay the full cost of such repairs.

Tenant agrees and acknowledges that except as expressly set forth in this Lease,
neither Landlord nor any agent of Landlord has made any representation or
warranty with respect to the condition of all or any portion of the Premises or
the Project, and/or the suitability of the Premises or the Project for the
conduct of Tenant’s business, and Tenant waives any implied warranty that the
Premises or the Project are suitable for the Permitted Use. This Lease
constitutes the complete agreement of Landlord and Tenant with respect to the
subject matter hereof and supersedes any and all prior representations,
inducements, promises, agreements, understandings and negotiations which are not
contained herein. Landlord in executing this Lease does so in reliance upon
Tenant’s representations, warranties, acknowledgments and agreements contained
herein.

3. Rent.

(a) Base Rent. The first month’s Base Rent and the Security Deposit shall be due
and payable on delivery of an executed copy of this Lease to Landlord. Tenant
shall pay to Landlord in advance, without demand, abatement, deduction or
set-off, monthly installments of Base Rent on or before the first day of each
calendar month during the Term hereof after the Rent Commencement Date, in
lawful money of the United States of America, at the office of Landlord for
payment of Rent set forth above, or to such other person or at such other place
as Landlord may from time to time designate in writing. Payments of Base Rent
for any fractional calendar month shall be prorated. The obligation of Tenant to
pay Base Rent and other sums to Landlord and the obligations of Landlord under
this Lease are independent obligations. Tenant shall have no right at any time
to abate, reduce, or set-off any Rent (as defined in Section 5) due hereunder
except for any abatement as may be expressly provided in this Lease.

Notwithstanding anything to the contrary contained herein, Tenant shall not be
required to pay Base Rent for months 2 through 6 after the Rent Commencement
Date.

 

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(b) Additional Rent. In addition to Base Rent, Tenant agrees to pay to Landlord
as additional rent (“Additional Rent”): (i) Tenant’s Share of “Operating
Expenses” (as defined in Section 5), and (ii) any and all other amounts Tenant
assumes or agrees to pay under the provisions of this Lease, including, without
limitation, any and all other sums that may become due by reason of any default
of Tenant or failure to comply with the agreements, terms, covenants and
conditions of this Lease to be performed by Tenant, after any applicable notice
and cure period.

4. Base Rent Adjustments. Base Rent shall be increased on each annual
anniversary of the Rent Commencement Date (each an “Adjustment Date”) by
multiplying the Base Rent payable immediately before such Adjustment Date by the
Rent Adjustment Percentage and adding the resulting amount to the Base Rent
payable immediately before such Adjustment Date. Base Rent, as so adjusted,
shall thereafter be due as provided herein. Base Rent adjustments for any
fractional calendar month shall be prorated.

5. Operating Expense Payments. Landlord shall deliver to Tenant a written
estimate of Operating Expenses for each calendar year during the Term (the
“Annual Estimate”), which may be revised by Landlord from time to time during
such calendar year. Commencing on the Rent Commencement Date and continuing on
the first day of each month during the Term, Tenant shall pay Landlord an amount
equal to 1/12th of Tenant’s Share of the Annual Estimate. Payments for any
fractional calendar month shall be prorated.

The term “Operating Expenses” means all costs and expenses of any kind or
description whatsoever incurred or accrued each calendar year by Landlord with
respect to the Project (including, without duplication, Taxes (as defined in
Section 9), capital repairs and improvements amortized over the useful life of
such capital items (as reasonably determined by Landlord and taking into account
relevant factors including, without limitation, the hours of operation of the
building (or any portions thereof, as applicable) and its use for
laboratory/office purposes), and the costs of Landlord’s third party property
manager or, if there is no third party property manager, administration rent in
the amount of 3.0% of Base Rent), excluding only:

(a) the original construction costs of the Project and renovation prior to the
date of the Lease and costs of correcting defects in such original construction
or renovation;

(b) capital expenditures for expansion of the Project;

(c) interest, principal payments of Mortgage (as defined in Section 27) debts of
Landlord, financing costs and amortization of funds borrowed by Landlord,
whether secured or unsecured;

(d) depreciation of the Project (except for capital improvements, the cost of
which are includable in Operating Expenses);

(e) advertising, legal and space planning expenses and leasing commissions and
other costs and expenses incurred in procuring and leasing space to tenants for
the Project, including any leasing office maintained in the Project, free rent
and construction allowances for tenants;

(f) legal and other expenses incurred in the negotiation or enforcement of
leases;

(g) completing, fixturing, improving, renovating, painting, redecorating or
other work, which Landlord pays for or performs for other tenants within their
premises, and costs of correcting defects in such work;

(h) costs to be reimbursed by other tenants of the Project or Taxes to be paid
directly by Tenant or other tenants of the Project, whether or not actually
paid;

 

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(i) salaries, wages, benefits and other compensation paid to officers and
employees of Landlord who are not assigned in whole or in part to the operation,
management, maintenance or repair of the Project;

(j) general organizational, administrative and overhead costs relating to
maintaining Landlord’s existence, either as a corporation, partnership, or other
entity, including general corporate, legal and accounting expenses;

(k) costs (including attorneys’ fees and costs of settlement, judgments and
payments in lieu thereof) incurred in connection with disputes with tenants,
other occupants, or prospective tenants, and costs and expenses, including legal
fees, incurred in connection with negotiations or disputes with employees,
consultants, management agents, leasing agents, purchasers or mortgagees of the
Building;

(l) costs incurred by Landlord due to the violation by Landlord, its employees,
agents or contractors or any tenant of the terms and conditions of any lease of
space in the Project or any Legal Requirement (as defined in Section 7);

(m) penalties, fines or interest incurred as a result of Landlord’s inability or
failure to make payment of Taxes and/or to file any tax or informational returns
when due, or from Landlord«‘s failure to make any payment of Taxes required to
be made by Landlord hereunder before delinquency;

(n) overhead and profit increment paid to Landlord or to subsidiaries or
affiliates of Landlord for goods and/or services in or to the Project to the
extent the same exceeds the costs of such goods and/or services rendered by
unaffiliated third parties on a competitive basis;

(o) costs of Landlord’s charitable or political contributions, or of fine art
maintained at the Project;

(p) costs in connection with services (including electricity), items or other
benefits of a type which are not standard for the Project and which are not
available to Tenant without specific charges therefor, but which are provided to
another tenant or occupant of the Project, whether or not such other tenant or
occupant is specifically charged therefor by Landlord;

(q) costs incurred in the sale or refinancing of the Project;

(r) net income taxes of Landlord or the owner of any interest in the Project,
franchise, capital stock, gift, estate or inheritance taxes or any federal,
state or local documentary taxes imposed against the Project or any portion
thereof or interest therein;

(s) any expenses otherwise includable within Operating Expenses to the extent
directly paid by Tenant to third parties or which are actually reimbursed to
Landlord by any third party, other tenants of the Project, or from insurance
proceeds (which reimbursements shall be credited against Operating Expenses for
the year the applicable casualty occurred); and

(t) the initial cost of the renovation to the Project described on Annex 1 of
the Work Letter (“Renovation”) and the costs of correcting defects in such
Renovation.

Following the first year of the Base Term of this Lease, that part of Operating
Expenses which is comprised of Controllable Operating Expenses (as defined
below) may be increased by no more than 4% over the amount of the Controllable
Operating Expenses for the previous year during the Base Term. “Controllable
Operating Expenses” shall mean those Project Operating Expenses for which
increases are reasonably within the control of Landlord, and shall specifically
not include, without limitation, Taxes, assessments, refuse and or trash
removal, insurance, electricity and other utilities, and any payments required
under any applicable CC&Rs or to any owners’ association of which the Project is
a part. There shall be no limitation on the amount of increase from year to year
on Project Operating Expenses which are not Controllable Operating Expenses.

 

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Notwithstanding anything to the contrary contained herein (including, without
limitation, Section 9 of this Lease, if, at any time after the date of this
Lease, Landlord is successful in any of its appeals to obtain a lower tax basis
for the Project which results in lower Taxes and Operating Expenses, Tenant’s
monthly payment of Operating Expense will not be reduced to reflect such lower
Taxes and Tenant shall pay Taxes and Operating Expenses to Landlord as though no
such reduction had been obtained. Furthermore, Tenant shall pay the full amount
of the annual statutory increases that would have been applicable if the
reduction had not been obtained such that Tenant will pay Taxes during the Term
as if no reduction in the property tax basis had occurred. For the avoidance of
doubt, if Tenant’s Share of Operating Expenses equated to $1 per square foot per
month and the corresponding component for Taxes was reduced by $.10 per square
foot per month as a result of a successful appeal, Tenant would still pay $1 per
square foot per month in Operating Expenses plus any increases.

Within 90 days after the end of each calendar year (or such longer period as may
be reasonably required), Landlord shall furnish to Tenant a statement (an
“Annual Statement”) showing in reasonable detail: (a) the total and Tenant’s
Share of actual Operating Expenses for the previous calendar year, and (b) the
total of Tenant’s payments in respect of Operating Expenses for such year. If
Tenant’s Share of actual Operating Expenses for such year exceeds Tenant’s
payments of Operating Expenses for such year, the excess shall be due and
payable by Tenant as Rent within 30 days after delivery of such Annual Statement
to Tenant. If Tenant’s payments of Operating Expenses for such year exceed
Tenant’s Share of actual Operating Expenses for such year Landlord shall pay the
excess to Tenant within 30 days after delivery of such Annual Statement, except
that after the expiration, or earlier termination of the Term or if Tenant is
delinquent in its obligation to pay Rent, Landlord shall pay the excess to
Tenant after deducting all other amounts due Landlord.

The Annual Statement shall be final and binding upon Tenant unless Tenant,
within 90 days after Tenant’s receipt thereof, shall contest any item therein by
giving written notice to Landlord, specifying each item contested and the reason
therefor. If, during such 90 day period, Tenant reasonably and in good faith
questions or contests the accuracy of Landlord’s statement of Tenant’s Share of
Operating Expenses, Landlord will provide Tenant with access to Landlord’s books
and records relating to the operation of the Project and such information as
Landlord reasonably determines to be responsive to Tenant’s questions (the
“Expense Information”). If after Tenant’s review of such Expense Information,
Landlord and Tenant cannot agree upon the amount of Tenant’s Share of Operating
Expenses, then Tenant shall have the right to have an independent public
accounting firm selected by Tenant from among the 4 largest in the United
States, working pursuant to a fee arrangement other than a contingent fee (at
Tenant’s sole cost and expense) and approved by Landlord (which approval shall
not be unreasonably withheld or delayed), audit and/or review the Expense
Information for the year in question (the “Independent Review”). The results of
any such Independent Review shall be binding on Landlord and Tenant. If the
Independent Review shows that the payments actually made by Tenant with respect
to Operating Expenses for the calendar year in question exceeded Tenant’s Share
of Operating Expenses for such calendar year, Landlord shall at Landlord’s
option either (i) credit the excess amount to the next succeeding installments
of estimated Operating Expenses or (ii) pay the excess to Tenant within 30 days
after delivery of such statement, except that after the expiration or earlier
termination of this Lease or if Tenant is delinquent in its obligation to pay
Rent, Landlord shall pay the excess to Tenant after deducting all other amounts
due Landlord. If the Independent Review shows that Tenant’s payments with
respect to Operating Expenses for such calendar year were less than Tenant’s
Share of Operating Expenses for the calendar year, Tenant shall pay the
deficiency to Landlord within 30 days after delivery of such statement. If the
Independent Review shows that Tenant has overpaid with respect to Operating
Expenses by more than 5% then Landlord shall reimburse Tenant for all costs
incurred by Tenant for the Independent Review. Operating Expenses for the
calendar years in which Tenant’s obligation to share therein begins and ends
shall be prorated. Notwithstanding anything set forth herein to the contrary, if
the Project is not at least 95% occupied on average during any year of the Term,
Tenant’s Share of Operating Expenses for such year shall be computed as though
the Project had been 95% occupied on average during such year.

 

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Notwithstanding anything to the contrary contained herein, Landlord shall have
the right, from time to time during the Term, to re-measure the rentable square
footage of the Premises and the square footage of Common Areas of the Project.
Any such re-measurements shall be performed in accordance with the Building
Owners and Managers Association (BOMA) International, Gross Areas of a Building:
Standard Methods of Measurement (2009). Tenant acknowledges and agrees that any
measurement of the rentable square footage of the Premises shall include
Tenant’s pro rata share of the Common Areas of the Project. If any such
re-measurements determine that the actual rentable square footage of the
Premises and/or the square footage of the Common Areas of the Project deviate
from the rentable square footage specified in the definition of “Premises” on
page 1 of this Lease and/or the actual square footage of the Common Areas of the
Project applicable as of the Commencement Date, then, upon Landlord’s request,
Landlord and Tenant shall cause this Lease shall be amended so as to reflect the
actual square footage thereof in the definitions, as applicable, of “Premises,”
“Project,” “Rentable Area of Premises,” “Rentable Area of Project” and “Tenant’s
Share of Operating Expenses of Project”; provided, however, that such
re-measurement shall not affect the Base Rent payable under this Lease or the TI
Allowance granted to Tenant but Tenant’s Share of Operating Expenses shall be
adjusted. In the event that Landlord does not re-measure the Premises and the
Common Areas of the Project, then the square footages listed on page 1 of this
Lease shall conclusively be deemed to be the rentable square footage of the
Premises and the Project and shall not be subject to further re-measurement
except as provided for in the next sentence. “Tenant’s Share” shall be the
percentage set forth on the first page of this Lease as Tenant’s Share as
reasonably adjusted by Landlord for increases or decreases in the physical size
of the Premises or the Project occurring thereafter. Landlord may equitably
increase Tenant’s Share for any item of expense or cost reimbursable by Tenant
that relates to a repair, replacement, or service that benefits only the
Premises or only a portion of the Project that includes the Premises or that
varies with occupancy or use. Base Rent, Tenant’s Share of Operating Expenses
and all other amounts payable by Tenant to Landlord hereunder are collectively
referred to herein as “Rent.” Notwithstanding the foregoing, (i) the Rentable
Area of Premises will not exceed 16,429 square feet during the Base Term or any
extension of this Lease unless Tenant leases additional space at the Project,
and (ii) for purposes of calculating Tenant’s Share of Operating Expenses,
Landlord may treat the Rentable Area of Project as being 65,314 sq. ft.

6. Security Deposit. Tenant shall deposit with Landlord, upon delivery of an
executed copy of this Lease to Landlord, a security deposit (the “Security
Deposit”) for the performance of all of Tenant’s obligations hereunder in the
amount set forth on page 1 of this Lease, which Security Deposit shall be in the
form of an unconditional and irrevocable letter of credit (the “Letter of
Credit”): (i) in form and substance satisfactory to Landlord, (ii) naming
Landlord as beneficiary, (iii) expressly allowing Landlord to draw upon it at
any time from time to time by delivering to the issuer notice that Landlord is
entitled to draw thereunder, (iv) issued by an FDIC-insured financial
institution satisfactory to Landlord, and (v) redeemable by presentation of a
sight draft in the state of Landlord’s choice. If Tenant does not provide
Landlord with a substitute Letter of Credit complying with all of the
requirements hereof at least 10 days before the stated expiration date of any
then current Letter of Credit, Landlord shall have the right to draw the full
amount of the current Letter of Credit and hold the funds drawn in cash without
obligation for interest thereon as the Security Deposit. The Security Deposit
shall be held by Landlord as security for the performance of Tenant’s
obligations under this Lease. The Security Deposit is not an advance rental
deposit or a measure of Landlord’s damages in case of Tenant’s default. Upon
each occurrence of a Default (as defined in Section 20), Landlord may use all or
any part of the Security Deposit to pay delinquent payments due under this
Lease, future rent damages under California Civil Code Section 1951.2, and the
cost of any damage, injury, expense or liability caused by such Default, without
prejudice to any other remedy provided herein or provided by law. Landlord’s
right to use the Security Deposit under this Section 6 includes the right to use
the Security Deposit to pay future rent damages following the termination of
this Lease pursuant to Section 21(c) below. Upon any use of all or any portion
of the Security Deposit, Tenant shall pay Landlord on demand the amount that
will restore the Security Deposit to the amount set forth on Page 1 of this
Lease. Tenant hereby waives the provisions of any law, now or hereafter in
force, including, without limitation, California Civil Code Section 1950.7,
which provide that Landlord may claim from a security deposit only those sums
reasonably necessary to remedy defaults in the payment of Rent, to repair damage
caused by Tenant or to clean the Premises, it being agreed that Landlord may, in
addition, claim those sums reasonably necessary to compensate Landlord for any
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loss or damage, foreseeable or unforeseeable, caused by the act or omission of
Tenant or any officer, employee, agent or invitee of Tenant. Upon bankruptcy or
other debtor-creditor proceedings against Tenant, the Security Deposit shall be
deemed to be applied first to the payment of Rent and other charges due Landlord
for periods prior to the filing of such proceedings. Upon any such use of all or
any portion of the Security Deposit, Tenant shall, within 5 days after demand
from Landlord, restore the Security Deposit to its original amount. If Tenant
shall fully perform every provision of this Lease to be performed by Tenant, the
Security Deposit, or any balance thereof (i.e., after deducting therefrom all
amounts to which Landlord is entitled under the provisions of this Lease), shall
be returned to Tenant (or, at Landlord’s option, to the last assignee of
Tenant’s interest hereunder) within 90 days after the expiration or earlier
termination of this Lease.

Notwithstanding anything to the contrary contained herein, the parties hereto
agree that Tenant shall deposit the sum of $43,290.50 in cash (“Initial
Deposit”) with Landlord as the Security Deposit under this Lease concurrent with
Tenant’s delivery to Landlord of an original of this Lease executed by Tenant;
provided, however, that Tenant shall replace the cash Security Deposit with a
Letter of Credit in the amount of $43,290.50 on or before September 15, 2011.
Promptly after the delivery to Landlord of the approved and effective Letter of
Credit in the amount of $43,290.50, Landlord shall return the Initial Deposit to
Tenant.

If Landlord transfers its interest in the Project or this Lease, Landlord shall
either (a) transfer any Security Deposit then held by Landlord to a person or
entity assuming Landlord’s obligations under this Section 6 with written notice
to Tenant of such transfer, or (b) return to Tenant any Security Deposit then
held by Landlord and remaining after the deductions permitted herein. Upon such
transfer to such transferee or the return of the Security Deposit to Tenant,
Landlord shall have no further obligation with respect to the Security Deposit,
and Tenant’s right to the return of the Security Deposit shall apply solely
against Landlord’s transferee. The Security Deposit is not an advance rental
deposit or a measure of Landlord’s damages in case of Tenant’s default.
Landlord’s obligation respecting the Security Deposit is that of a debtor, not a
trustee, and no interest shall accrue thereon.

7. Use. The Premises shall be used solely for the Permitted Use set forth in the
basic lease provisions on page 1 of this Lease, and in compliance with all
applicable laws, orders, judgments, ordinances, regulations, codes, directives,
permits, licenses, covenants and restrictions now or hereafter applicable to the
Premises, and to the use and occupancy thereof, including, without limitation,
the Americans With Disabilities Act, 42 U.S.C. § 12101, et seq. (together with
the regulations promulgated pursuant thereto, “ADA”) (collectively, “Legal
Requirements” and each, a “Legal Requirement”). Tenant shall, upon 5 days’
written notice from Landlord, discontinue any use of the Premises which is
declared by any Governmental Authority (as defined in Section 9) having
jurisdiction over Tenant’s operations to be a violation of a Legal Requirement.
Tenant will not use or permit the Premises to be used for any purpose or in any
manner that would void Tenant’s or Landlord’s insurance, increase the insurance
risk to an unreasonable level, or cause the disallowance of any sprinkler or
other credits. Tenant shall not permit any part of the Premises to be used as a
“place of public accommodation”, as defined in the ADA or any similar legal
requirement. Tenant shall reimburse Landlord promptly upon demand for any
additional premium charged for any such insurance policy by reason of Tenant’s
failure to comply with the provisions of this Section or otherwise caused by
Tenant’s use and/or occupancy of the Premises. Tenant will use the Premises in a
careful, safe and proper manner and will not commit or permit waste, overload
the floor or structure of the Premises, subject the Premises to use that would
damage the Premises or obstruct or interfere with the rights of Landlord or
other tenants or occupants of the Project, including conducting or giving notice
of any auction, liquidation, or going out of business sale on the Premises, or
using or allowing the Premises to be used for any unlawful purpose. Tenant shall
cause any equipment or machinery to be installed in the Premises so as to
reasonably prevent sounds or vibrations from the Premises from extending into
Common Areas, or other space in the Project. Tenant shall not place equipment
exceeding the floor load capacity in or upon the Premises or transport or move
such items through the Common Areas of the Project or in the Project elevators
without the prior written consent of Landlord. Except as may be provided under
the Work Letter, Tenant shall not, without the prior written consent of
Landlord, use the Premises in any manner which will require ventilation, air
exchange, heating, gas, steam, electricity or water beyond the existing capacity
of the Project as proportionately allocated to the Premises based upon Tenant’s
Share as usually furnished for the Permitted Use.

 

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Landlord shall, at Landlord’s cost and expense, be responsible for the
compliance of the Building (excluding the Premises and any compliance resulting
from the Tenant Improvements all of which costs and expenses shall be the
responsibility of Tenant) with Legal Requirements as of the Commencement Date.
Tenant, at its sole expense, shall make any improvements, alterations or
modifications to the interior or the exterior of the Premises or the Project
that are required by Legal Requirements (including, without limitation,
compliance of the Premises with the ADA) related to Tenant’s Tenant
Improvements, Tenant’s Alterations, and/or Tenant particular use or occupancy of
the Premises. Notwithstanding any other provision herein to the contrary, Tenant
shall be responsible for any and all demands, claims, liabilities, losses,
costs, expenses, actions, causes of action, damages or judgments, and all
reasonable expenses incurred in investigating or resisting the same (including,
without limitation, reasonable attorneys’ fees, charges and disbursements and
costs of suit) (collectively, “Claims”) arising out of or caused by Tenant’s
failure to comply with any Legal Requirements as required herein, and Tenant
shall indemnify, defend, hold and save Landlord harmless from and against any
and all Claims arising out of or caused by Tenant’s failure of the Premises to
comply with any Legal Requirement as required herein.

8. Holding Over. If, with Landlord’s express written consent, Tenant retains
possession of the Premises after the termination of the Term, (i) unless
otherwise agreed in such written consent, such possession shall be subject to
immediate termination by Landlord at any time, (ii) all of the other terms and
provisions of this Lease (including, without limitation, the adjustment of Base
Rent pursuant to Section 4 hereof) shall remain in full force and effect
(excluding any expansion or renewal option or other similar right or option)
during such holdover period, (iii) Tenant shall continue to pay Base Rent in the
amount payable upon the date of the expiration or earlier termination of this
Lease or such other amount as Landlord may indicate, in Landlord’s sole and
absolute discretion, in such written consent, and (iv) all other payments shall
continue under the terms of this Lease. If Tenant remains in possession of the
Premises after the expiration or earlier termination of the Term without the
express written consent of Landlord, (A) Tenant shall become a tenant at
sufferance upon the terms of this Lease except that the monthly rental shall be
equal to 150% of Rent in effect during the last 30 days of the Term, and
(B) Tenant shall be responsible for all damages suffered by Landlord resulting
from or occasioned by Tenant’s holding over, including for consequential
damages; provided, however, that if Tenant delivers written inquiries to
Landlord whether the potential exists for consequential damages if Tenant holds
over, Landlord shall, promptly after each such inquiry, notify Tenant in writing
whether at the time of such inquiry the potential exists for consequential
damages. No holding over by Tenant, whether with or without consent of Landlord,
shall operate to extend this Lease except as otherwise expressly provided, and
this Section 8 shall not be construed as consent for Tenant to retain possession
of the Premises. Acceptance by Landlord of Rent after the expiration of the Term
or earlier termination of this Lease shall not result in a renewal or
reinstatement of this Lease.

9. Taxes. Landlord shall pay, as part of Operating Expenses (with Tenant not
receiving any benefits from any successful tax appeals), all taxes, levies,
fees, assessments and governmental charges of any kind, existing as of the
Commencement Date or thereafter enacted (collectively referred to as “Taxes”),
imposed by any federal, state, regional, municipal, local or other governmental
authority or agency, including, without limitation, quasi-public agencies
(collectively, “Governmental Authority”) during the Term, including, without
limitation, all Taxes: (i) imposed on or measured by or based, in whole or in
part, on rent payable to (or gross receipts received by) Landlord under this
Lease and/or from the rental by Landlord of the Project or any portion thereof,
or (ii) based on the square footage, assessed value or other measure or
evaluation of any kind of the Premises or the Project, or (iii) assessed or
imposed by or on the operation or maintenance of any portion of the Premises or
the Project, including parking, or (iv) assessed or imposed by, or at the
direction of, or resulting from Legal Requirements, or interpretations thereof,
promulgated by any Governmental Authority, or (v) imposed as a license or other
fee, charge, tax, or assessment on Landlord’s business or occupation of leasing
space in the Project. Landlord may contest by appropriate legal proceedings the
amount, validity, or application of any Taxes or liens securing Taxes. Taxes
shall not include any net income taxes imposed on Landlord except to the extent
such net income taxes are in substitution for any Taxes payable hereunder. If
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levied or assessed directly against Tenant, then Tenant shall be responsible for
and shall pay the same at such times and in such manner as the taxing authority
shall require. Tenant shall pay, prior to delinquency, any and all Taxes levied
or assessed against any personal property or trade fixtures placed by Tenant in
the Premises, whether levied or assessed against Landlord or Tenant. If any
Taxes on Tenant’s personal property or trade fixtures are levied against
Landlord or Landlord’s property, or if the assessed valuation of the Project is
increased by a value attributable to improvements in or alterations to the
Premises, whether owned by Landlord or Tenant and whether or not affixed to the
real property so as to become a part thereof, higher than the base valuation on
which Landlord from time-to-time allocates Taxes to all tenants in the Project,
Landlord shall have the right, but not the obligation, to pay such Taxes.
Landlord’s determination of any excess assessed valuation shall be binding and
conclusive, absent manifest error. The amount of any such payment by Landlord
shall constitute Additional Rent due from Tenant to Landlord immediately upon
demand. Landlord shall not include in the Operating Expenses payable by Tenant
any assessed valuation attributable solely to (i) the personal property or trade
fixtures of other tenants at the Project, and (ii) improvements in the premises
of other tenants at the Project which are materially higher than the base
valuation on which Landlord from time-to-time allocates Taxes to all tenants in
the Project.

10. Parking. Subject to all matters of record, Force Majeure, a Taking (as
defined in Section 19 below) and the exercise by Landlord of its rights
hereunder, Tenant shall be allocated 3 parking spaces per 1,000 usable square
feet of the Premises, in common with other tenants of the Project in those areas
designated for non-reserved parking, subject in each case to Landlord’s rules
and regulations, at no cost to Tenant. Landlord may allocate parking spaces
among Tenant and other tenants in the Project pro rata as described above if
Landlord determines that such parking facilities are becoming crowded. Included
in the number of spaces allocated to Tenant pursuant to the first sentence of
this Section 10 will be 2 spaces identified by Landlord located in front of the
Building which shall be marked as Tenant visitor spaces. Landlord shall not be
responsible for enforcing Tenant’s parking rights against any third parties,
including other tenants of the Project or for enforcing any reservation of
parking spaces.

11. Utilities, Services. Landlord shall provide, subject to the terms of this
Section 11, water, electricity, heat, light, power, sewer, and other utilities
(including gas and fire sprinklers to the extent the Project is plumbed for such
services), refuse and trash collection and janitorial services (collectively,
“Utilities”). Landlord shall pay, as Operating Expenses or subject to Tenant’s
reimbursement obligation, for all Utilities used on the Premises, all
maintenance charges for Utilities, and any storm sewer charges or other similar
charges for Utilities imposed by any Governmental Authority or Utility provider,
and any taxes, penalties, surcharges or similar charges thereon. Landlord may
cause, at Tenant’s expense, any Utilities to be separately metered or charged
directly to Tenant by the provider. Tenant shall pay directly to the Utility
provider, prior to delinquency, any separately metered Utilities and services
which may be furnished to Tenant or the Premises during the Term. Tenant shall
pay, as part of Operating Expenses, its share of all charges for jointly metered
Utilities based upon consumption, as reasonably determined by Landlord. No
interruption or failure of Utilities, from any cause whatsoever other than
Landlord’s willful misconduct, shall result in eviction or constructive eviction
of Tenant, termination of this Lease or the abatement of Rent. Landlord shall
use reasonable efforts to correct interruptions or failures of Utilities which
are within the reasonable control of Landlord to correct within a reasonable
period of time after Tenant provides Landlord with notice or such interruption
or failure. Tenant agrees to limit use of water and sewer with respect to Common
Areas to normal restroom use.

Notwithstanding anything to the contrary set forth herein, if (i) a stoppage of
an Essential Service (as defined below) to the Premises shall occur and such
stoppage is due solely to the gross negligence or willful misconduct of Landlord
and not due in any part to any act or omission on the part of Tenant or any
Tenant Party or any matter beyond Landlord’s reasonable control (any such
stoppage of an Essential Service being hereinafter referred to as a “Service
Interruption”), and (ii) such Service Interruption continues for more than 5
consecutive business days after Landlord shall have received written notice
thereof from Tenant, and (iii) as a result of such Service Interruption, the
conduct of Tenant’s normal operations in the Premises are materially and
adversely affected, then, there shall be an abatement of one day’s Base Rent for
each day during which such Service Interruption continues after such 5 business
day period; provided, however, that if any part of the Premises is reasonably
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business operations or if Tenant conducts all or any part of its operations in
any portion of the Premises notwithstanding such Service Interruption, then the
amount of each daily abatement of Base Rent shall only be proportionate to the
nature and extent of the interruption of Tenant’s normal operations or ability
to use the Premises. The rights granted to Tenant under this paragraph shall be
Tenant’s sole and exclusive remedy resulting from a failure of Landlord to
provide services, and Landlord shall not otherwise be liable for any loss or
damage suffered or sustained by Tenant resulting from any failure or cessation
of services. For purposes hereof, the term “Essential Services” shall mean the
following services: access to the Premises, HVAC service, water, sewer and
electricity, but in each case only to the extent that Landlord has an obligation
to provide same to Tenant under this Lease.

At least once per month as part of the maintenance of the Building, Landlord
shall run the emergency generator for a period reasonably determined by Landlord
for the purpose of determining whether it operates when started.

Landlord’s sole obligation for either providing emergency generators or
providing emergency back-up power to Tenant shall be: (i) to provide emergency
generators with not less than the capacity of the emergency generators located
in the Building as of the Commencement Date, (ii) to contract with a third party
to maintain the emergency generators as per the manufacturer’s standard
maintenance guidelines, and (iii) maintain current any and all licenses and
permits required for the use of the emergency generator. Landlord shall make the
service contract and maintenance records (including Landlord’s monthly
maintenance records) and permits for the generators reasonably available to
Tenant for Tenant’s review upon Tenant’s prior written request. Landlord shall
reasonably cooperate with Tenant’s requests so that Tenant can assess whether
the emergency generator is being maintained as per the manufacturer’s standard
guidelines and whether the applicable service contract needs to be amended to
address any guidelines that are not included in the applicable service contract.
Landlord shall have no obligation to provide Tenant with operational emergency
generators or back-up power or to supervise, oversee or confirm that the third
party maintaining the emergency generators is maintaining the generators as per
the manufacturer’s standard guidelines or otherwise. During any period of
replacement, repair or maintenance of the emergency generators when the
emergency generators are not operational, including any delays thereto due to
the inability to obtain parts or replacement equipment, Landlord shall have no
obligation to provide Tenant with an alternative back-up generator or generators
or alternative sources of back-up power. Tenant expressly acknowledges and
agrees that Landlord does not guaranty that such emergency generators will be
operational at all times or that emergency power will be available to the
Premises when needed.

12. Alterations and Tenant’s Property. Any alterations, additions, or
improvements made to the Premises by or on behalf of Tenant, including
additional locks or bolts of any kind or nature upon any doors or windows in the
Premises, but excluding installation, removal or realignment of furniture
systems (other than removal of furniture systems owned or paid for by Landlord)
not involving any modifications to the structure or connections (other then by
ordinary plugs or jacks) to Building Systems (as defined in Section 13)
(“Alterations”) shall be subject to Landlord’s prior written consent, which may
be given or withheld in Landlord’s sole discretion if any such Alteration
affects the structure or Building Systems and shall not be otherwise
unreasonably withheld. If Landlord approves any Alterations, Landlord may impose
such reasonable conditions on Tenant in connection with the commencement,
performance and completion of such Alterations as Landlord may deem appropriate
in Landlord’s reasonable discretion. Any request for approval shall be in
writing, delivered not less than 15 business days in advance of any proposed
construction, and accompanied by plans, specifications, bid proposals, work
contracts and such other information concerning the nature and cost of the
alterations as may be reasonably requested by Landlord, including the identities
and mailing addresses of all persons performing work or supplying materials.
Landlord’s right to review plans and specifications and to monitor construction
shall be solely for its own benefit, and Landlord shall have no duty to ensure
that such plans and specifications or construction comply with applicable Legal
Requirements. Tenant shall cause, at its sole cost and expense, all Alterations
to comply with insurance requirements and with Legal Requirements and shall
implement at its sole cost and expense any alteration or modification required
by Legal Requirements as a result of any Alterations. Tenant shall pay to
Landlord, as Additional Rent, on demand an amount equal to 3% of all charges
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connection with any Alteration to cover Landlord’s overhead and expenses for
plan review, coordination, scheduling and supervision. Before Tenant begins any
Alteration, Landlord may post on and about the Premises notices of
non-responsibility pursuant to applicable law. Tenant shall reimburse Landlord
for, and indemnify and hold Landlord harmless from, any expense incurred by
Landlord by reason of faulty work done by Tenant or its contractors, delays
caused by such work, or inadequate cleanup.

Tenant shall furnish security or make other arrangements satisfactory to
Landlord to assure payment for the completion of all Alterations work free and
clear of liens, and shall provide (and cause each contractor or subcontractor to
provide) certificates of insurance for workers’ compensation and other coverage
in reasonable amounts and from an insurance company reasonably satisfactory to
Landlord protecting Landlord against liability for personal injury or property
damage during construction. Upon completion of any Alterations, Tenant shall
deliver to Landlord: (i) sworn statements setting forth the names of all
contractors and subcontractors who did the work and copies of final lien waivers
from all such contractors and subcontractors; and (ii) “as built” plans for any
such Alteration.

Except for Removable Installations (as hereinafter defined), all Installations
(as hereinafter defined) shall be and shall remain the property of Landlord
during the Term and following the expiration or earlier termination of the Term,
shall not be removed by Tenant at any time during the Term, and shall remain
upon and be surrendered with the Premises as a part thereof. Notwithstanding the
foregoing, Landlord may, at the time its approval of any such Installation is
requested, notify Tenant that Landlord requires that Tenant remove such
Installation upon the expiration or earlier termination of the Term, in which
event Tenant shall remove such Installation in accordance with the immediately
succeeding sentence. Upon the expiration or earlier termination of the Term,
Tenant shall remove (i) all wires, cables or similar equipment which Tenant has
installed in the Premises or in the risers or plenums of the Building, (ii) any
Installations for which Landlord has given Tenant notice of removal in
accordance with the immediately preceding sentence, and (iii) all of Tenant’s
Property (as hereinafter defined), and Tenant shall restore and repair any
damage caused by or occasioned as a result of such removal, including, without
limitation, capping off all such connections behind the walls of the Premises
and repairing any holes. During any restoration period beyond the expiration or
earlier termination of the Term, Tenant shall pay Rent to Landlord as provided
herein as if said space were otherwise occupied by Tenant. If Landlord is
requested by Tenant or any lender, lessor or other person or entity claiming an
interest in any of Tenant’s Property to waive any lien Landlord may have against
any of Tenant’s Property, and Landlord consents to such waiver, then Landlord
shall be entitled to be paid as administrative rent a fee of $1,000 per
occurrence for its time and effort in preparing and negotiating such a waiver of
lien.

For purposes of this Lease, (x) “Removable Installations” means any items listed
on Exhibit F attached hereto and any items agreed by Landlord in writing to be
included on Exhibit F in the future, (y) “Tenant’s Property” means Removable
Installations and, other than Installations, any personal property or equipment
of Tenant that may be removed without material damage to the Premises, and
(z) “Installations” means all property of any kind paid for with the TI Fund,
all Alterations, all fixtures, and all partitions, hardware, built-in machinery,
built-in casework and cabinets and other similar additions, equipment, property
and improvements built into the Premises so as to become an integral part of the
Premises, including, without limitation, fume hoods which penetrate the roof or
plenum area, built-in cold rooms, built-in warm rooms, walk-in cold rooms,
walk-in warm rooms, deionized water systems, glass washing equipment,
autoclaves, chillers, built-in plumbing, electrical and mechanical equipment and
systems, and any power generator and transfer switch.

13. Landlord’s Repairs. Landlord, as an Operating Expense, shall maintain all of
the structural, exterior, parking and other Common Areas of the Project,
including HVAC, plumbing, fire sprinklers, elevators and all other building
systems serving the Premises and other portions of the Project (“Building
Systems”), in good repair, reasonable wear and tear and uninsured losses and
damages caused by Tenant, or by any of Tenant’s agents, servants, employees,
invitees and contractors (collectively, “Tenant Parties”) excluded. Losses and
damages caused by Tenant or any Tenant Party shall be repaired by Landlord, to
the extent not covered by insurance, at Tenant’s sole cost and expense. Landlord
reserves the right to stop Building Systems services when necessary (i) by
reason of accident or emergency, or (ii) for planned repairs, alterations or
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Landlord, desirable or necessary to be made, until said repairs, alterations or
improvements shall have been completed. Landlord shall have no responsibility or
liability for failure to supply Building Systems services during any such period
of interruption; provided, however, that Landlord shall, except in case of
emergency, make a commercially reasonable effort to give Tenant a minimum of 48
hours advance notice of any planned stoppage of Building Systems services for
routine maintenance, repairs, alterations or improvements. Landlord shall
endeavor to minimize interference with Tenant’s business operations during
planned stoppages of the Building Systems. Tenant shall promptly give Landlord
written notice of any repair required by Landlord pursuant to this Section,
after which Landlord shall make a commercially reasonable effort to effect such
repair. Landlord shall not be liable for any failure to make any repairs or to
perform any maintenance unless such failure shall persist for an unreasonable
time after Tenant’s written notice of the need for such repairs or maintenance.
Tenant waives its rights under any state or local law to terminate this Lease or
to make such repairs at Landlord’s expense and agrees that the parties’
respective rights with respect to such matters shall be solely as set forth
herein. Repairs required as the result of fire, earthquake, flood, vandalism,
war, or similar cause of damage or destruction shall be controlled by
Section 18.

14. Tenant’s Repairs. Subject to Section 13 hereof, Tenant, at its expense,
shall repair, replace and maintain in good condition all portions of the
Premises, including, without limitation, entries, doors, ceilings, interior
windows, interior walls, and the interior side of demising walls. Such repair
and replacement may include capital expenditures and repairs whose benefit may
extend beyond the Term. Should Tenant fail to make any such repair or
replacement or fail to maintain the Premises, Landlord shall give Tenant notice
of such failure. If Tenant fails to commence cure of such failure within 10 days
of Landlord’s notice, and thereafter diligently prosecute such cure to
completion, Landlord may perform such work and shall be reimbursed by Tenant
within 30 days after demand therefor; provided, however, that if such failure by
Tenant creates or could create an emergency, Landlord may immediately commence
cure of such failure and shall thereafter be entitled to recover the costs of
such cure from Tenant. Subject to Sections 17 and 18, Tenant shall bear the full
uninsured cost of any repair or replacement to any part of the Project that
results from damage caused by Tenant or any Tenant Party and any repair that
benefits only the Premises.

15. Mechanic’s Liens. Tenant shall discharge, by bond or otherwise, any
mechanic’s lien filed against the Premises or against the Project for work
claimed to have been done for, or materials claimed to have been furnished to,
Tenant within 15 days after the filing thereof, at Tenant’s sole cost and shall
otherwise keep the Premises and the Project free from any liens arising out of
work performed, materials furnished or obligations incurred by Tenant. Should
Tenant fail to discharge any lien described herein, Landlord shall have the
right, but not the obligation, to pay such claim or post a bond or otherwise
provide security to eliminate the lien as a claim against title to the Project
and the cost thereof shall be immediately due from Tenant as Additional Rent. If
Tenant shall lease or finance 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 filed as a matter of public record by any lessor or creditor
of Tenant will 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 Project be furnished
on the statement without qualifying language as to applicability of the lien
only to removable personal property, located in an identified suite held by
Tenant.

16. Indemnification. Tenant hereby indemnifies and agrees to defend, save and
hold Landlord harmless from and against any and all Claims for injury or death
to persons or damage to property occurring within or about the Premises, arising
directly or indirectly out of use or occupancy of the Premises or a breach or
default by Tenant in the performance of any of its obligations hereunder, unless
caused solely by the willful misconduct or gross negligence of Landlord.
Landlord shall not be liable to Tenant for, and Tenant assumes all risk of
damage to, personal property (including, without limitation, loss of records
kept within the Premises). Tenant further waives any and all Claims for injury
to Tenant’s business or loss of income relating to any such damage or
destruction of personal property (including, without limitation, any loss of
records). Landlord shall not be liable for any damages arising from any act,
omission or neglect of any tenant in the Project or of any other third party.

 

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17. Insurance. Landlord shall maintain all risk property and, if applicable,
sprinkler damage insurance covering the full replacement cost of the Project or
such lesser coverage amount as Landlord may elect provided such coverage amount
is not less than 90% of such full replacement cost. Landlord shall further
procure and maintain commercial general liability insurance with a single loss
limit of not less than $2,000,000 for bodily injury and property damage with
respect to the Project. Landlord may, but is not obligated to, maintain such
other insurance and additional coverages as it may deem necessary, including,
but not limited to, flood, environmental hazard and earthquake, loss or failure
of building equipment, errors and omissions, rental loss during the period of
repair or rebuilding, workers’ compensation insurance and fidelity bonds for
employees employed to perform services and insurance for any improvements
installed by Tenant or which are in addition to the standard improvements
customarily furnished by Landlord without regard to whether or not such are made
a part of the Project. All such insurance shall be included as part of the
Operating Expenses. The Project may be included in a blanket policy (in which
case the cost of such insurance allocable to the Project will be determined by
Landlord based upon the insurer’s cost calculations). Tenant shall also
reimburse Landlord for any increased premiums or additional insurance which
Landlord reasonably deems necessary as a result of Tenant’s use of the Premises.

Tenant, at its sole cost and expense, shall maintain during the Term: all risk
property insurance with business interruption and extra expense coverage,
covering the full replacement cost of all property and improvements installed or
placed in the Premises by Tenant at Tenant’s expense; workers’ compensation
insurance with no less than the minimum limits required by law; employer’s
liability insurance with such limits as required by law; and commercial general
liability insurance, with a minimum limit of not less than $2,000,000 per
occurrence for bodily injury and property damage with respect to the Premises.
The commercial general liability insurance policy shall name Alexandria Real
Estate Equities, Inc., and Landlord, its officers, directors, employees,
managers, agents, invitees and contractors (collectively, “Landlord Parties”),
as additional insureds; insure on an occurrence and not a claims-made basis; be
issued by insurance companies which have a rating of not less than policyholder
rating of A and financial category rating of at least Class X in “Best’s
Insurance Guide”; shall not be cancelable for nonpayment of premium unless 30
days prior written notice shall have been given to Landlord from the insurer;
contain a hostile fire endorsement and a contractual liability endorsement; and
provide primary coverage to Landlord (any policy issued to Landlord providing
duplicate or similar coverage shall be deemed excess over Tenant’s policies).
Copies of such policies (if requested by Landlord), or certificates of insurance
showing the limits of coverage required hereunder and showing Landlord as an
additional insured, along with reasonable evidence of the payment of premiums
for the applicable period, shall be delivered to Landlord by Tenant upon
commencement of the Term and upon each renewal of said insurance. Tenant’s
policy may be a “blanket policy” with an aggregate per location endorsement
which specifically provides that the amount of insurance shall not be prejudiced
by other losses covered by the policy. Tenant shall, at least 5 days prior to
the expiration of such policies, furnish Landlord with renewal certificates.

In each instance where insurance is to name Landlord as an additional insured,
Tenant shall upon written request of Landlord also designate and furnish
certificates so evidencing Landlord as additional insured to: (i) any lender of
Landlord holding a security interest in the Project or any portion thereof,
(ii) the landlord under any lease wherein Landlord is tenant of the real
property on which the Project is located, if the interest of Landlord is or
shall become that of a tenant under a ground or other underlying lease rather
than that of a fee owner, and/or (iii) any management company retained by
Landlord to manage the Project.

The property insurance obtained by Landlord and Tenant shall include a waiver of
subrogation by the insurers and all rights based upon an assignment from its
insured, against Landlord or Tenant, and their respective officers, directors,
employees, managers, agents, invitees and contractors (“Related Parties”), in
connection with any loss or damage thereby insured against. Neither party nor
its respective Related Parties shall be liable to the other for loss or damage
caused by any risk insured against under property insurance required to be
maintained hereunder, and each party waives any claims against the other party,
and its respective Related Parties, for such loss or damage. The failure of a
party to insure its property shall not void this waiver. Landlord and its
respective Related Parties shall not be liable for,

 

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and Tenant hereby waives all claims against such parties for, business
interruption and losses occasioned thereby sustained by Tenant or any person
claiming through Tenant resulting from any accident or occurrence in or upon the
Premises or the Project from any cause whatsoever. If the foregoing waivers
shall contravene any law with respect to exculpatory agreements, the liability
of Landlord or Tenant shall be deemed not released but shall be secondary to the
other’s insurer.

Landlord may require insurance policy limits to be reasonably raised to conform
with requirements of Landlord’s lender and/or to bring coverage limits to levels
then being generally required of new tenants within the Project.

18. Restoration. If, at any time during the Term, the Project or the Premises
are damaged or destroyed by a fire or other casualty, Landlord shall notify
Tenant within 60 days after discovery of such damage as to the amount of time
Landlord reasonably estimates it will take to restore the Project or the
Premises, as applicable (the “Restoration Period”). If the Restoration Period is
estimated to exceed 12 months (the “Maximum Restoration Period”), Landlord may,
in such notice, elect to terminate this Lease as of the date that is 75 days
after the date of discovery of such damage or destruction; provided, however,
that notwithstanding Landlord’s election to restore, Tenant may elect to
terminate this Lease by written notice to Landlord delivered within 5 business
days of receipt of a notice from Landlord estimating a Restoration Period for
the Premises longer than the Maximum Restoration Period. Unless either Landlord
or Tenant so elects to terminate this Lease, Landlord shall, subject to receipt
of sufficient insurance proceeds (with any deductible to be treated as a current
Operating Expense), promptly restore the Premises (excluding the improvements
installed by Tenant or by Landlord and paid for by Tenant), subject to delays
arising from the collection of insurance proceeds, from Force Majeure events or
as needed to obtain any license, clearance or other authorization of any kind
required to enter into and restore the Premises issued by any Governmental
Authority having jurisdiction over the use, storage, handling, treatment,
generation, release, disposal, removal or remediation of Hazardous Materials (as
defined in Section 30) in, on or about the Premises (collectively referred to
herein as “Hazardous Materials Clearances”); provided, however, that if repair
or restoration of the Premises is not substantially complete as of the end of
the Maximum Restoration Period or, if longer, the Restoration Period, Landlord
may, in its sole and absolute discretion, elect not to proceed with such repair
and restoration, or Tenant may by written notice to Landlord delivered within 10
business days of the expiration of the Maximum Restoration Period or, if longer,
the Restoration Period, elect to terminate this Lease, in which event Landlord
shall be relieved of its obligation to make such repairs or restoration and this
Lease shall terminate as of the date that is 75 days after the later of:
(i) discovery of such damage or destruction, or (ii) the date all required
Hazardous Materials Clearances are obtained, but Landlord shall retain any Rent
paid and the right to any Rent payable by Tenant prior to such election by
Landlord or Tenant.

Tenant, at its expense, shall promptly perform, subject to delays arising from
the collection of insurance proceeds, from Force Majeure (as defined in
Section 34) events or to obtain Hazardous Material Clearances, all repairs or
restoration not required to be done by Landlord and shall promptly re-enter the
Premises and commence doing business in accordance with this Lease.
Notwithstanding the foregoing, either Landlord or Tenant may terminate this
Lease upon written notice to the other if the Premises are damaged during the
last year of the Term and Landlord reasonably estimates that it will take more
than 2 months to repair such damage; provided, however, that such notice is
delivered within 10 business days after the date that Landlord provides Tenant
with written notice of the estimated Restoration Period. Landlord shall also
have the right to terminate this Lease if insurance proceeds are not available
for such restoration. Rent shall be abated from the date all required Hazardous
Material Clearances, if applicable, are obtained or, if not applicable, the date
of discovery of such damage or destruction, until the Premises are repaired and
restored, in the proportion which the area of the Premises, if any, which is not
usable by Tenant bears to the total area of the Premises, unless Landlord
provides Tenant with other space during the period of repair that is suitable to
Tenant, in Tenant’s sole but reasonable discretion, for the temporary conduct of
Tenant’s business. Such abatement shall be the sole remedy of Tenant, and except
as provided in this Section 18, Tenant waives any right to terminate the Lease
by reason of damage or casualty loss.

 

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The provisions of this Lease, including this Section 18, constitute an express
agreement between Landlord and Tenant with respect to any and all damage to, or
destruction of, all or any part of the Premises, or any other portion of the
Project, and any statute or regulation which is now or may hereafter be in
effect shall have no application to this Lease or any damage or destruction to
all or any part of the Premises or any other portion of the Project, the parties
hereto expressly agreeing that this Section 18 sets forth their entire
understanding and agreement with respect to such matters.

19. Condemnation. If the whole or any material part of the Premises or the
Project is taken for any public or quasi-public use under governmental law,
ordinance, or regulation, or by right of eminent domain, or by private purchase
in lieu thereof (a “Taking” or “Taken”), and the Taking would in Landlord’s
reasonable judgment, materially interfere with or impair Landlord’s ownership or
operation of the Project or would in the reasonable judgment of Landlord and
Tenant either prevent or materially interfere with Tenant’s use of the Premises
(as resolved, if the parties are unable to agree, by arbitration by a single
arbitrator with the qualifications and experience appropriate to resolve the
matter and appointed pursuant to and acting in accordance with the rules of the
American Arbitration Association), then upon written notice by Landlord this
Lease shall terminate and Rent shall be apportioned as of said date. If part of
the Premises shall be Taken, and this Lease is not terminated as provided above,
Landlord shall promptly restore the Premises and the Project as nearly as is
commercially reasonable under the circumstances to their condition prior to such
partial Taking and the rentable square footage of the Building, the rentable
square footage of the Premises, Tenant’s Share of Operating Expenses and the
Rent payable hereunder during the unexpired Term shall be reduced to such extent
as may be fair and reasonable under the circumstances. Upon any such Taking,
Landlord shall be entitled to receive the entire price or award from any such
Taking without any payment to Tenant, and Tenant hereby assigns to Landlord
Tenant’s interest, if any, in such award. Tenant shall have the right, to the
extent that same shall not diminish Landlord’s award, to make a separate claim
against the condemning authority (but not Landlord) for such compensation as may
be separately awarded or recoverable by Tenant for moving expenses and damage to
Tenant’s trade fixtures, if a separate award for such items is made to Tenant.
Tenant hereby waives any and all rights it might otherwise have pursuant to any
provision of state law to terminate this Lease upon a partial Taking of the
Premises or the Project.

20. Events of Default. Each of the following events shall be a default
(“Default”) by Tenant under this Lease:

(a) Payment Defaults. Tenant shall fail to pay any installment of Rent or any
other payment hereunder when due; provided, however, that Landlord will give
Tenant notice and an opportunity to cure any failure to pay Rent within 3 days
after Tenant’s receipt of any such notice not more than twice in any 12 month
period without such failure to pay being a Default provided that the full
payment is received within such 3 day period after Tenant’s receipt of notice
and Tenant agrees that such notice shall be in lieu of and not in addition to,
or shall be deemed to be, any notice required by law.

(b) Insurance. Any insurance required to be maintained by Tenant pursuant to
this Lease shall be canceled or terminated or shall expire or shall be reduced
or materially changed, or Landlord shall receive a notice of nonrenewal of any
such insurance and Tenant shall fail to obtain replacement insurance at least 20
days before the expiration of the current coverage.

(c) Abandonment. Tenant shall abandon the Premises.

(d) Improper Transfer. Tenant shall assign, sublease or otherwise transfer or
attempt to transfer all or any portion of Tenant’s interest in this Lease or the
Premises except as expressly permitted herein, or Tenant’s interest in this
Lease shall be attached, executed upon, or otherwise judicially seized and such
action is not released within 90 days of the action.

(e) Liens. Tenant shall fail to discharge or otherwise obtain the release of any
lien placed upon the Premises in violation of this Lease within 10 days after
Tenant receives notice that any such lien is filed against the Premises.

 

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(f) Insolvency Events. Tenant or any guarantor or surety of Tenant’s obligations
hereunder shall: (A) make a general assignment for the benefit of creditors;
(B) commence any case, proceeding or other action seeking to have an order for
relief entered on its behalf as a debtor or to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, liquidation,
dissolution or composition of it or its debts or seeking appointment of a
receiver, trustee, custodian or other similar official for it or for all or of
any substantial part of its property (collectively a “Proceeding for Relief”);
(C) become the subject of any Proceeding for Relief which is not dismissed
within 90 days of its filing or entry; or (D) die or suffer a legal disability
(if Tenant, guarantor, or surety is an individual) or be dissolved or otherwise
fail to maintain its legal existence (if Tenant, guarantor or surety is a
corporation, partnership or other entity).

(g) Estoppel Certificate or Subordination Agreement. Tenant fails to execute any
document required from Tenant under Sections 23 or 27 within 5 days after a
second notice requesting such document.

(h) Other Defaults. Tenant shall fail to comply with any provision of this Lease
other than those specifically referred to in this Section 20, and, except as
otherwise expressly provided herein, such failure shall continue for a period of
10 days after written notice thereof from Landlord to Tenant.

Any notice given under Section 20(h) hereof shall: (i) specify the alleged
default, (ii) demand that Tenant cure such default, (iii) be in lieu of, and not
in addition to, or shall be deemed to be, any notice required under any
provision of applicable law, and (iv) not be deemed a forfeiture or a
termination of this Lease unless Landlord elects otherwise in such notice;
provided that if the nature of Tenant’s default pursuant to Section 20(h) is
such that it cannot be cured by the payment of money and reasonably requires
more than 10 days to cure, then Tenant shall not be deemed to be in default if
Tenant commences such cure within said 10 day period and thereafter diligently
prosecutes the same to completion; provided, however, that such cure shall be
completed no later than 90 days from the date of Landlord’s notice.

21. Landlord’s Remedies.

(a) Payment By Landlord; Interest. Upon a Default by Tenant hereunder, Landlord
may, without waiving or releasing any obligation of Tenant hereunder, make such
payment or perform such act. 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 12% per annum or the highest rate permitted by law (the
“Default Rate”), whichever is less, shall be payable to Landlord on demand as
Additional Rent. Nothing herein shall be construed to create or impose a duty on
Landlord to mitigate any damages resulting from Tenant’s Default hereunder.

(b) Late Payment Rent. Late payment by Tenant to Landlord of Rent and other sums
due will cause Landlord to incur costs not contemplated by this Lease, the exact
amount of which will be extremely difficult and impracticable to ascertain. Such
costs include, but are not limited to, processing and accounting charges and
late charges which may be imposed on Landlord under any Mortgage covering the
Premises. Therefore, if any installment of Rent due from Tenant is not received
by Landlord within 5 days after the date such payment is due, Tenant shall pay
to Landlord an additional sum equal to 6% of the overdue Rent as a late charge.
The parties agree that this late charge represents a fair and reasonable
estimate of the costs Landlord will incur by reason of late payment by Tenant.
In addition to the late charge, Rent not paid when due shall bear interest at
the Default Rate from the 5th day after the date due until paid.

(c) Remedies. Upon the occurrence of a Default, Landlord, at its option, without
further notice or demand to Tenant, shall have in addition to all other rights
and remedies provided in this Lease, at law or in equity, the option to pursue
any one or more of the following remedies, each and all of which shall be
cumulative and nonexclusive, without any notice or demand whatsoever.

(i) Terminate this Lease, or at Landlord’s option, Tenant’s right to possession
only, in which event Tenant shall immediately surrender the Premises to
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do so, Landlord may, without prejudice to any other remedy which it may have for
possession or arrearages in rent, enter upon and take possession of the Premises
and expel or remove Tenant and any other person who may be occupying the
Premises or any part thereof, without being liable for prosecution or any claim
or damages therefor;

(ii) Upon any termination of this Lease, whether pursuant to the foregoing
Section 21(c)(i) or otherwise, Landlord may recover from Tenant the following:

(A) The worth at the time of award of any unpaid rent which has been earned at
the time of such termination; plus

(B) The worth at the time of award of the amount by which the unpaid rent which
would have been earned after termination until the time of award exceeds the
amount of such rental loss that Tenant proves could have been reasonably
avoided; 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 the amount of such
rental loss 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 which in the ordinary course of things would be likely to result
therefrom, specifically including, but not limited to, brokerage commissions and
advertising expenses incurred, expenses of remodeling the Premises or any
portion thereof for a new tenant, whether for the same or a different use, and
any special concessions reasonably made to obtain a new tenant; and

(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 law.

The term “rent” as used in this Section 21 shall be deemed to be and to mean all
sums of every nature required to be paid by Tenant pursuant to the terms of this
Lease, whether to Landlord or to others. As used in Sections 21(c)(ii)(A) and
(B), above, the “worth at the time of award” shall be computed by allowing
interest at the Default Rate. As used in Section 21(c)(ii)(C) above, the “worth
at the time of award” shall be computed by discounting such amount at the
discount rate of the Federal Reserve Bank of San Francisco at the time of award
plus 1%.

(iii) Landlord may continue this Lease in effect after Tenant’s Default and
recover rent as it becomes due (Landlord and Tenant hereby agreeing that Tenant
has the right to sublet or assign hereunder, subject only to reasonable
limitations). Accordingly, if Landlord does not elect to terminate this Lease
following a Default by Tenant, Landlord may, from time to time, without
terminating this Lease, enforce all of its rights and remedies hereunder,
including the right to recover all Rent as it becomes due.

(iv) Whether or not Landlord elects to terminate this Lease following a Default
by Tenant, Landlord shall have the right to terminate any and all subleases,
licenses, concessions or other consensual arrangements for possession entered
into by Tenant and affecting the Premises or may, in Landlord’s sole discretion,
succeed to Tenant’s interest in such subleases, licenses, concessions or
arrangements. Upon Landlord’s election to succeed to Tenant’s interest in any
such subleases, licenses, concessions or arrangements, Tenant shall, as of the
date of notice by Landlord of such election, have no further right to or
interest in the rent or other consideration receivable thereunder.

 

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(v) Independent of the exercise of any other remedy of Landlord hereunder or
under applicable law, Landlord may conduct an environmental test of the Premises
as generally described in Section 30(d) hereof, at Tenant’s expense.

(d) Effect of Exercise. Exercise by Landlord of any remedies hereunder or
otherwise available shall not be deemed to be an acceptance of surrender of the
Premises and/or a termination of this Lease by Landlord, it being understood
that such surrender and/or termination can be effected only by the express
written agreement of Landlord and Tenant. Any law, usage, or custom to the
contrary notwithstanding, Landlord shall have the right at all times to enforce
the provisions of this Lease in strict accordance with the terms hereof; and the
failure of Landlord at any time to enforce its rights under this Lease strictly
in accordance with same shall not be construed as having created a custom in any
way or manner contrary to the specific terms, provisions, and covenants of this
Lease or as having modified the same and shall not be deemed a waiver of
Landlord’s right to enforce one or more of its rights in connection with any
subsequent default. A receipt by Landlord of Rent or other payment with
knowledge of the breach of any covenant hereof shall not be deemed a waiver of
such breach, and no waiver by Landlord of any provision of this Lease shall be
deemed to have been made unless expressed in writing and signed by Landlord. To
the greatest extent permitted by law, Tenant waives the service of notice of
Landlord’s intention to re-enter, re-take or otherwise obtain possession of the
Premises as provided in any statute, or to institute legal proceedings to that
end, and also waives all right of redemption in case Tenant shall be
dispossessed by a judgment or by warrant of any court or judge. Any reletting of
the Premises or any portion thereof shall be on such terms and conditions as
Landlord in its sole discretion may determine. Landlord shall not be liable for,
nor shall Tenant’s obligations hereunder be diminished because of, Landlord’s
failure to relet the Premises or collect rent due in respect of such reletting
or otherwise to mitigate any damages arising by reason of Tenant’s Default.

22. Assignment and Subletting.

(a) General Prohibition. Without Landlord’s prior written consent subject to and
on the conditions described in this Section 22, other than pursuant to a
Permitted Assignment (as defined below), Tenant shall not, directly or
indirectly, voluntarily or by operation of law, assign this Lease or sublease
the Premises or any part thereof or mortgage, pledge, or hypothecate its
leasehold interest or grant any concession or license within the Premises, and
any attempt to do any of the foregoing shall be void and of no effect. If Tenant
is a corporation, partnership or limited liability company, the shares or other
ownership interests thereof which are not actively traded upon a stock exchange
or in the over-the-counter market, a transfer or series of transfers whereby 25%
or more of the issued and outstanding shares or other ownership interests of
such corporation are, or voting control is, transferred (but excepting transfers
upon deaths of individual owners) from a person or persons or entity or entities
which were owners thereof at time of execution of this Lease to persons or
entities who were not owners of shares or other ownership interests of the
corporation, partnership or limited liability company at time of execution of
this Lease, shall be deemed an assignment of this Lease requiring the consent of
Landlord as provided in this Section 22.

(b) Permitted Transfers. If Tenant desires to assign, sublease, hypothecate or
otherwise transfer this Lease or sublet the Premises, then at least 15 business
days, but not more than 45 business days, before the date Tenant desires the
assignment or sublease to be effective (the “Assignment Date”), Tenant shall
give Landlord a notice (the “Assignment Notice”) containing such information
about the proposed assignee or sublessee, including the proposed use of the
Premises and any Hazardous Materials proposed to be used, stored handled,
treated, generated in or released or disposed of from the Premises, the
Assignment Date, any relationship between Tenant and the proposed assignee or
sublessee, and all material terms and conditions of the proposed assignment or
sublease, including a copy of any proposed assignment or sublease in its final
form, and such other information that may be reasonably necessary or appropriate
to Landlord in its consideration whether to grant its consent. Landlord may, by
giving written notice to Tenant within 15 business days after receipt of the
Assignment Notice and without unreasonably withholding, delaying or conditioning
its consent: (i) grant such consent, (ii) refuse such consent in its reasonable
discretion; or (iii) terminate this Lease with respect to the space described in
the Assignment Notice as of the Assignment Date (an “Assignment Termination”).

 

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Landlord shall not unreasonably delay its response to an Assignment Notice
delivered to Landlord by Tenant. Among other reasons, it shall be reasonable for
Landlord to withhold its consent in any of these instances: (1) the proposed
assignee or subtenant is a governmental agency; (2) in Landlord’s reasonable
judgment, the use of the Premises by the proposed assignee or subtenant would
entail any alterations that would lessen the value of the leasehold improvements
in the Premises, or would require increased services by Landlord; (3) in
Landlord’s reasonable judgment, the proposed assignee or subtenant is engaged in
areas of scientific research or other business concerns that are controversial
such that they may (i) attract or cause negative publicity for or about the
Building or the Project, (ii) negatively affect the reputation of the Building,
the Project or Landlord, (iii) attract protestors to the Building or the
Project, or (iv) lessen the attractiveness of the Building or the Project to any
tenants or prospective tenants, purchasers or lenders; (4) in Landlord’s
reasonable judgment, the proposed assignee or subtenant lacks the
creditworthiness to support the financial obligations it will incur under the
proposed assignment or sublease; (5) in Landlord’s reasonable judgment, the
character, reputation, or business of the proposed assignee or subtenant is
inconsistent with the desired tenant-mix or the quality of other tenancies in
the Project or is inconsistent with the type and quality of the nature of the
Building; (6) Landlord has received from any prior landlord to the proposed
assignee or subtenant a negative report concerning such prior landlord’s
experience with the proposed assignee or subtenant; (7) Landlord has experienced
previous defaults by or is in litigation with the proposed assignee or
subtenant; (8) the use of the Premises by the proposed assignee or subtenant
will violate any applicable Legal Requirement; (9) the proposed assignee or
subtenant, or any entity that, directly or indirectly, controls, is controlled
by, or is under common control with the proposed assignee or subtenant, is then
an occupant of the Project; (10) the proposed assignee or subtenant is an entity
with whom Landlord is actively or has been negotiating to lease space in the
Project within 90 days of the Assignment Notice; or (11) the assignment or
sublease is prohibited by Landlord’s lender. If Landlord delivers notice of its
election to exercise an Assignment Termination, Tenant shall have the right to
withdraw such Assignment Notice by written notice to Landlord of such election
within 5 business days after Landlord’s notice electing to exercise the
Assignment Termination. If Tenant withdraws such Assignment Notice, this Lease
shall continue in full force and effect. If Tenant does not withdraw such
Assignment Notice, this Lease, and the term and estate herein granted, shall
terminate as of the Assignment Date with respect to the space described in such
Assignment Notice. No failure of Landlord to exercise any such option to
terminate this Lease, or to deliver a timely notice in response to the
Assignment Notice, shall be deemed to be Landlord’s consent to the proposed
assignment, sublease or other transfer. Tenant shall pay to Landlord a fee equal
to One Thousand Five Hundred Dollars ($1,500) in connection with its
consideration of each Assignment Notice and/or its preparation or review of any
consent documents. Notwithstanding the foregoing, Landlord’s consent to an
assignment of this Lease or a subletting of any portion of the Premises to any
entity controlling, controlled by or under common control with Tenant (a
“Control Permitted Assignment”) shall not be required, provided that Landlord
shall have the right to approve the form of any such sublease or assignment. In
addition, Tenant shall have the right to assign this Lease, upon 30 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 to
Tenant, by way of merger, consolidation or corporate reorganization, or by the
purchase of all or substantially all of the assets or the ownership interests of
Tenant provided that (i) 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 the Lease, and (ii) the net worth
(as determined in accordance with generally accepted accounting principles
(“GAAP”)) of the assignee is not less than the greater of the net worth (as
determined in accordance with GAAP) of Tenant as of (A) the Commencement Date,
or (B) as of the date of Tenant’s most current quarterly or annual financial
statements, and (iii) 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 (a “Corporate Permitted Assignment”). Control Permitted
Assignments and Corporate Permitted Assignments are hereinafter referred to as
“Permitted Assignments.”

(c) Additional Conditions. As a condition to any such assignment or subletting,
whether or not Landlord’s consent is required, Landlord may require:

(i) that any assignee or subtenant agree, in writing at the time of such
assignment or subletting, that if Landlord gives such party notice that Tenant
is in default under this Lease,

 

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such party shall thereafter make all payments otherwise due Tenant directly to
Landlord, which payments will be received by Landlord without any liability
except to credit such payment against those due under the Lease, and any such
third party shall agree to attorn to Landlord or its successors and assigns
should this Lease be terminated for any reason; provided, however, in no event
shall Landlord or its successors or assigns be obligated to accept such
attornment; and

(ii) A list of Hazardous Materials, certified by the proposed assignee or
sublessee to be true and correct, which the proposed 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 or on the
Project, prior to the proposed assignment or subletting, 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 Project (provided, said installation of tanks shall
only be permitted after Landlord has given its written consent to do so, which
consent may be withheld in Landlord’s sole and absolute discretion); 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 Project for the closure of any such tanks. Neither Tenant nor any such
proposed assignee or subtenant is required, however, to provide Landlord with
any portion(s) of the 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.

(d) No Release of Tenant, Sharing of Excess Rents. Notwithstanding any
assignment or subletting, Tenant and any guarantor or surety of Tenant’s
obligations under this Lease shall at all times remain fully and primarily
responsible and liable for the payment of Rent and for compliance with all of
Tenant’s other obligations under this Lease. Except in the case of a Permitted
Assignment, if the Rent due and payable by a sublessee or assignee (or a
combination of the rental payable under such sublease or assignment plus any
bonus or other consideration therefor or incident thereto in any form) exceeds
the sum of the rental payable under this Lease, (excluding however, any Rent
payable under this Section) and actual and reasonable brokerage fees, legal
costs and any design or construction fees directly related to and required
pursuant to the terms of any such sublease) (“Excess Rent”), then Tenant shall
be bound and obligated to pay Landlord as Additional Rent hereunder 50% of such
Excess Rent within 10 days following receipt thereof by Tenant. If Tenant shall
sublet the Premises or any part 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 as assignee and as
attorney-in-fact for Tenant, or a receiver for Tenant appointed on Landlord’s
application, may collect such rent and apply it toward Tenant’s obligations
under this Lease; except that, until the occurrence of a Default, Tenant shall
have the right to collect such rent.

(e) No Waiver. The consent by Landlord to an assignment or subletting shall not
relieve Tenant or any assignees of this Lease or any sublessees of the Premises
from obtaining the consent of Landlord to any further assignment or subletting
nor shall it release Tenant or any assignee or sublessee of Tenant from full and
primary liability under the Lease. The acceptance of Rent hereunder, or the
acceptance of performance of any other term, covenant, or condition thereof,
from any other person or entity shall not be deemed to be a waiver of any of the
provisions of this Lease or a consent to any subletting, assignment or other
transfer of the Premises.

(f) Prior Conduct of Proposed Transferee. Notwithstanding any other provision of
this Section 22, if (i) the proposed assignee or sublessee of Tenant has been
required by any prior landlord, lender or Governmental Authority to take
remedial action in connection with Hazardous Materials contaminating a property,
where the contamination resulted from such party’s action or use of the property
in question, (ii) the proposed assignee or sublessee is subject to an
enforcement order issued by any Governmental Authority in connection with the
use, storage, handling, treatment, generation, release or disposal of Hazardous
Materials (including, without limitation, any order related to the failure to
make a required reporting to any Governmental Authority), or (iii) because of
the existence of a pre-existing environmental condition in the vicinity of or
underlying the Project, the risk that Landlord would be

 

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targeted as a responsible party in connection with the remediation of such
pre-existing environmental condition would be materially increased or
exacerbated by the proposed use of Hazardous Materials by such proposed assignee
or sublessee, Landlord shall have the absolute right to refuse to consent to any
assignment or subletting to any such party.

23. Estoppel Certificate. Tenant shall, within 10 business days of written
notice from Landlord, execute, acknowledge and deliver a statement in writing in
any form reasonably requested by a proposed lender or purchaser, (i) 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 the rental and
other charges are paid in advance, if any, (ii) acknowledging that there are not
any uncured defaults on the part of Landlord hereunder, or specifying such
defaults if any are claimed, and (iii) setting forth such further information
with respect to the status of this Lease or the Premises as may be 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 such time shall,
at the option of Landlord, constitute a Default under this Lease, and, in any
event, shall be conclusive upon Tenant that the 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.

Upon request by Tenant no more than once in any 12 month period during the Term,
Landlord will similarly execute an estoppel certificate: (i) 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 the rental and other charges
are paid in advanced, if any, and (ii) acknowledging that there are not, to
Landlord’s knowledge, any Defaults on the part of Tenant hereunder, or
specifying such Defaults if any are claimed.

24. Quiet Enjoyment. So long as Tenant is not in Default under this Lease,
Tenant shall, subject to the terms of this Lease, at all times during the Term,
have peaceful and quiet enjoyment of the Premises against any person claiming
by, through or under Landlord.

25. Prorations. All prorations required or permitted to be made hereunder shall
be made on the basis of a 360 day year and 30 day months.

26. Rules and Regulations. Tenant shall, at all times during the Term and any
extension thereof, comply with all reasonable rules and regulations at any time
or from time to time established by Landlord covering use of the Premises and
the Project. The current rules and regulations are attached hereto as Exhibit E.
If there is any conflict between said rules and regulations and other provisions
of this Lease, the terms and provisions of this Lease shall control. Landlord
shall not have any liability or obligation for the breach of any rules or
regulations by other tenants in the Project and shall not enforce such rules and
regulations in a discriminatory manner.

27. Subordination. This Lease and Tenant’s interest and rights hereunder are
hereby made and shall be subject and subordinate at all times to the lien of any
Mortgage now existing or hereafter created on or against the Project or the
Premises, and all amendments, restatements, renewals, modifications,
consolidations, refinancing, assignments and extensions thereof, without the
necessity of any further instrument or act on the part of Tenant; provided,
however that so long as there is no Default hereunder, Tenant’s right to
possession of the Premises shall not be disturbed by the Holder of any such
Mortgage. Tenant agrees, at the election of the Holder of any such Mortgage, to
attorn to any such Holder. Tenant agrees upon demand to execute, acknowledge and
deliver such instruments, confirming such subordination, and such instruments of
attornment as shall be requested by any such Holder, provided any such
instruments contain appropriate non-disturbance provisions assuring Tenant’s
quiet enjoyment of the Premises as set forth in Section 24 hereof. Tenant hereby
appoints Landlord attorney-in-fact for Tenant irrevocably (such power of
attorney being coupled with an interest) to execute, acknowledge and deliver any
such instrument and instruments for and in the name of Tenant and to cause any
such instrument to be recorded. Notwithstanding the foregoing, any such Holder
may at any time subordinate its Mortgage to this Lease, without Tenant’s
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thereupon this Lease shall be deemed prior to such Mortgage without regard to
their respective dates of execution, delivery or recording and in that event
such Holder shall have the same rights with respect to this Lease as though this
Lease had been executed prior to the execution, delivery and recording of such
Mortgage and had been assigned to such Holder. The term “Mortgage” whenever used
in this Lease shall be deemed to include deeds of trust, security assignments
and any other encumbrances, and any reference to the “Holder” of a Mortgage
shall be deemed to include the beneficiary under a deed of trust. Landlord
represents and warrants that as of the date of this Lease, there is no existing
Mortgage encumbering the Project. Upon written request from Tenant, Landlord
shall use reasonable efforts to obtain for execution by Tenant a commercially
reasonable form of non-disturbance and attornment agreement executed by the
Holder of any future Mortgage with a lien on the Project which provides, among
other things, that so long as Tenant is not in Default of its obligations under
this Lease, foreclosure or other enforcement of such Mortgage shall not
terminate this Lease and the successor to Landlord’s interest in the Project
shall recognize this Lease and Tenant’s right to possession of the Premises.

28. Surrender. Upon the expiration of the Term or earlier termination of
Tenant’s right of possession, Tenant shall surrender the Premises to Landlord in
the same condition as received, subject to any Alterations or Installations
permitted by Landlord to remain in the Premises, free of Hazardous Materials
brought upon, kept, used, stored, handled, treated, generated in, or released or
disposed of from, the Premises by any person other than a Landlord Party
(collectively, “Tenant HazMat Operations”) and released of all Hazardous
Materials Clearances, broom clean, ordinary wear and tear and casualty loss and
condemnation covered by Sections 18 and 19 excepted. At least 3 months prior to
the surrender of the Premises, Tenant shall deliver to Landlord a narrative
description of the actions proposed (or required by any Governmental Authority)
to be taken by Tenant in order to surrender the Premises (including any
Installations permitted by Landlord to remain in the Premises) at the expiration
or earlier termination of the Term, free from any residual impact from the
Tenant HazMat Operations and otherwise released for unrestricted use and
occupancy (the “Surrender Plan”). Such Surrender Plan shall be accompanied by a
current listing of (i) all Hazardous Materials licenses and permits held by or
on behalf of any Tenant Party with respect to the Premises, and (ii) all
Hazardous Materials used, stored, handled, treated, generated, released or
disposed of from the Premises, and shall be subject to the review and approval
of Landlord’s environmental consultant. In connection with the review and
approval of the Surrender Plan, upon the request of Landlord, Tenant shall
deliver to Landlord or its consultant such additional non-proprietary
information concerning Tenant HazMat Operations as Landlord shall request. On or
before such surrender, Tenant shall deliver to Landlord evidence that the
approved Surrender Plan shall have been satisfactorily completed and Landlord
shall have the right, subject to reimbursement at Tenant’s expense as set forth
below, to cause Landlord’s environmental consultant to inspect the Premises and
perform such additional procedures as may be deemed reasonably necessary to
confirm that the Premises are, as of the effective date of such surrender or
early termination of the Lease, free from any residual impact from Tenant HazMat
Operations. Tenant shall reimburse Landlord, as Additional Rent, for the actual
out-of pocket expense incurred by Landlord for Landlord’s environmental
consultant to review and approve the Surrender Plan and to visit the Premises
and verify satisfactory completion of the same, which cost shall not exceed
$5,000. Landlord shall have the unrestricted right to deliver such Surrender
Plan and any report by Landlord’s environmental consultant with respect to the
surrender of the Premises to third parties.

If Tenant shall fail to prepare or submit a Surrender Plan approved by Landlord,
or if Tenant shall fail to complete the approved Surrender Plan, or if such
Surrender Plan, whether or not approved by Landlord, shall fail to adequately
address any residual effect of Tenant HazMat Operations in, on or about the
Premises, Landlord shall have the right to take such actions as Landlord may
deem reasonable or appropriate to assure that the Premises and the Project are
surrendered free from any residual impact from Tenant HazMat Operations, the
cost of which actions shall be reimbursed by Tenant as Additional Rent, without
regard to the limitation set forth in the first paragraph of this Section 28.

Tenant shall immediately return to Landlord all keys and/or access cards to
parking, the Project, restrooms or all or any portion of the Premises furnished
to or otherwise procured by Tenant. If any such access card or key is lost,
Tenant shall pay to Landlord, at Landlord’s election, either the cost of
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such lost access card or key or the cost of reprogramming the access security
system in which such access card was used or changing the lock or locks opened
by such lost key. Any Tenant’s Property, Alterations and property not so removed
by Tenant as permitted or required herein shall be deemed abandoned and may be
stored, removed, and disposed of by Landlord at Tenant’s expense, and Tenant
waives all claims against Landlord for any damages resulting from Landlord’s
retention and/or disposition of such property. All obligations of Tenant
hereunder not fully performed as of the termination of the Term, including the
obligations of Tenant under Section 30 hereof, shall survive the expiration or
earlier termination of the Term, including, without limitation, indemnity
obligations, payment obligations with respect to Rent and obligations concerning
the condition and repair of the Premises.

29. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY LAW, TENANT AND LANDLORD
WAIVE ANY RIGHT TO TRIAL BY JURY OR TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, BETWEEN LANDLORD AND
TENANT ARISING OUT OF THIS LEASE OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED HERETO.

30. Environmental Requirements.

(a) Prohibition/Compliance/Indemnity. Tenant shall not cause or permit any
Hazardous Materials (as hereinafter defined) to be brought upon, kept, used,
stored, handled, treated, generated in or about, or released or disposed of
from, the Premises or the Project in violation of applicable Environmental
Requirements (as hereinafter defined) by Tenant or any Tenant Party. If Tenant
breaches the obligation stated in the preceding sentence, or if the presence of
Hazardous Materials in the Premises during the Term or any holding over results
in contamination of the Premises, the Project or any adjacent property or if
contamination of the Premises, the Project or any adjacent property by Hazardous
Materials brought into, kept, used, stored, handled, treated, generated in or
about, or released or disposed of from, the Premises by anyone other than
Landlord and Landlord’s employees, agents and contractors otherwise occurs
during the Term or any holding over, Tenant hereby indemnifies and shall defend
and hold Landlord, its officers, directors, employees, agents and contractors
harmless from any and all actions (including, without limitation, remedial or
enforcement actions of any kind, administrative or judicial proceedings, and
orders or judgments arising out of or resulting therefrom), costs, claims,
damages (including, without limitation, punitive damages and damages based upon
diminution in value of the Premises or the Project, or the loss of, or
restriction on, use of the Premises or any portion of the Project), expenses
(including, without limitation, attorneys’, consultants’ and experts’ fees,
court costs and amounts paid in settlement of any claims or actions), fines,
forfeitures or other civil, administrative or criminal penalties, injunctive or
other relief (whether or not based upon personal injury, property damage, or
contamination of, or adverse effects upon, the environment, water tables or
natural resources), liabilities or losses (collectively, “Environmental Claims”)
which arise during or after the Term as a result of such contamination. This
indemnification of Landlord by Tenant includes, without limitation, costs
incurred in connection with any investigation of site conditions or any cleanup,
treatment, remedial, removal, or restoration work required by any federal, state
or local Governmental Authority because of Hazardous Materials present in the
air, soil or ground water above, on, or under the Premises. Without limiting the
foregoing, if the presence of any Hazardous Materials on the Premises, the
Project or any adjacent property caused or permitted by Tenant or any Tenant
Party results in any contamination of the Premises, the Project or any adjacent
property, Tenant shall promptly take all actions at its sole expense and in
accordance with applicable Environmental Requirements as are necessary to return
the Premises, the Project or any adjacent property to the condition existing
prior to the time of such contamination, provided that Landlord’s approval of
such action shall first be obtained, which approval shall not unreasonably be
withheld so long as such actions would not potentially have any material adverse
long-term or short-term effect on the Premises or the Project. Notwithstanding
anything to the contrary contained in this Section 30, Tenant shall not be
responsible for, and the indemnification and hold harmless obligation set forth
in this paragraph shall not apply to (i) contamination in the Premises which
Tenant can prove to Landlord’s reasonable satisfaction existed in the Premises
immediately prior to the Commencement Date, or (ii) the presence of any
Hazardous Materials in the Premises which Tenant can prove to Landlord’s
reasonable satisfaction migrated from outside of the Premises into the Premises,

 

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unless in either case, the presence of such Hazardous Materials (x) is the
result of a breach by Tenant of any of its obligations under this Lease, or
(y) was caused by Tenant or any Tenant Party or (z) was exacerbated by Tenant or
any Tenant Party.

(b) Business. Landlord acknowledges that it is not the intent of this Section 30
to prohibit Tenant from using the Premises for the Permitted Use. Tenant may
operate its business according to prudent industry practices so long as the use
or presence of Hazardous Materials is strictly and properly monitored according
to all then applicable Environmental Requirements. 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 Commencement Date a
list identifying each type of Hazardous Materials to be brought upon, kept,
used, stored, handled, treated, generated on, or released or disposed of from,
the Premises as of the Commencement Date and setting forth any and all
governmental approvals or permits required in connection with the presence, use,
storage, handling, treatment, generation, release or disposal of such Hazardous
Materials on or from the Premises (“Hazardous Materials List”). Tenant shall
deliver to Landlord an updated Hazardous Materials List at least once a year
and, upon request from Landlord, Tenant shall also deliver to Landlord any
update to Tenant’s Hazardous Materials Business Plan inventory on record with
the City and/or County of San Diego. Tenant shall deliver to Landlord true and
correct copies of the following documents (the “Haz Mat Documents”) relating to
the use, storage, handling, treatment, generation, release or disposal of
Hazardous Materials prior to the Commencement Date, or if unavailable at that
time, concurrent with the receipt from or submission to a Governmental
Authority: permits; approvals; reports and correspondence; storage and
management plans, notice of any pending violations of applicable Legal
Requirements; plans relating to the installation of any storage tanks to be
installed in or under the Project (provided, said installation of tanks shall
only be permitted after Landlord has given Tenant its written consent to do so,
which consent may be withheld in Landlord’s sole and absolute discretion); all
closure plans or any other documents required by all federal, state and local
Governmental Authorities as applicable for any storage tanks installed in, on or
under the Project for the closure of any such tanks; and a Surrender Plan (to
the extent surrender in accordance with Section 28 cannot be accomplished in 3
months). Notwithstanding anything to the contrary contained herein, Tenant is
not required, however, to provide Landlord with any portion(s) of the Haz Mat
Documents containing information of a proprietary nature which, in and of
themselves, do not contain a reference to any Hazardous Materials or hazardous
activities. It is not the intent of this Section to provide Landlord with
information which could be detrimental to Tenant’s business should such
information become possessed by Tenant’s competitors.

(c) Tenant Representation and Warranty. Tenant hereby represents and warrants to
Landlord that (i) neither Tenant nor any of its legal predecessors has been
required by any prior landlord, lender or Governmental Authority at any time to
take remedial action in connection with Hazardous Materials contaminating a
property which contamination was permitted by Tenant of such predecessor or
resulted from Tenant’s or such predecessor’s action or use of the property in
question and which were not adequately addressed or corrected by Tenant, and
(ii) Tenant is not subject to any enforcement order issued by any Governmental
Authority in connection with the use, storage, handling, treatment, generation,
release or disposal of Hazardous Materials (including, without limitation, any
order related to the failure to make a required reporting to any Governmental
Authority) that has not been adequately addressed and corrected by Tenant. If
Landlord determines that this representation and warranty was not true as of the
date of this lease, Landlord shall have the right to terminate this Lease in
Landlord’s sole and absolute discretion.

(d) Testing. Upon 30 days prior written notice to Tenant, Landlord shall have
the right to conduct annual environmental tests of the Premises to determine
whether any contamination of the Premises or the Project has occurred as a
result of Tenant’s use. Tenant shall only be required to pay the cost of such
annual environmental test of the Premises if it is revealed that Tenant has not
complied with any Environmental Requirement or if contamination for which Tenant
is responsible under this Lease is identified. Landlord and Tenant shall
cooperate with one another to schedule such testing at a mutually acceptable
time for both parties. Tenant shall have the right to have a representative
present during such testing and shall be permitted to conduct its own testing
concurrent with Landlord’s testing activities. All sample collection, testing,
analysis and reporting will be performed by a duly accredited laboratory for any

 

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testing performed by Landlord and/or Tenant, following well established and
validated regulatory environmental protocols. Notwithstanding the foregoing, if
Tenant, at Tenant’s expense, conducts its own tests of the Premises using third
party contractors and test procedures acceptable to Landlord which tests are
certified to Landlord, Landlord shall accept such tests in lieu of the annual
tests to be paid for by Tenant. In addition, at any time, and from time to time,
prior to the expiration or earlier termination of the Term, Landlord shall have
the right to conduct appropriate tests of the Premises and the Project to
determine if contamination has occurred as a result of Tenant’s use of the
Premises. In connection with such testing, upon the request of Landlord, Tenant
shall deliver to Landlord or its consultant such non-proprietary information
concerning the use of Hazardous Materials in or about the Premises by Tenant or
any Tenant Party. If contamination has occurred for which Tenant is liable under
this Section 30, Tenant shall pay all costs to conduct such tests. If no such
contamination is found, Landlord shall pay the costs of such tests (which shall
not constitute an Operating Expense). Landlord shall provide Tenant with a copy
of all third party, non-confidential reports and tests of the Premises made by
or on behalf of Landlord during the Term without representation or warranty and
subject to a confidentiality agreement. Tenant shall, at its sole cost and
expense, promptly and satisfactorily remediate any environmental conditions
identified by such testing for which Tenant is responsible for under this Lease
and in accordance with all Environmental Requirements. Landlord’s receipt of or
satisfaction with any environmental assessment in no way waives any rights which
Landlord may have against Tenant.

(e) Control Areas. In addition to Tenant’s HazMat Safety Storage Area (as
defined below), Tenant shall be allowed to utilize (i) one and one-half
(1.5) control areas or zones for Hazardous Materials inventory on the second
floor, and (ii) one (1) control area or zone for Hazardous Materials inventory
in the basement, all as designated by the applicable building code for chemical
use or storage. If Tenant leases the entire Expansion Space, Tenant shall also
be allowed to utilize two (2) control areas or zones for Hazardous Materials
inventory on the first floor.

(f) Underground Tanks. If underground or other storage tanks storing Hazardous
Materials located on the Premises or the Project are exclusively used by Tenant
or are hereafter placed on the Premises or the Project by Tenant for the
exclusive use of Tenant, Tenant shall install, use, monitor, operate, maintain,
upgrade and manage such storage tanks, maintain appropriate records, obtain and
maintain appropriate insurance, implement reporting procedures, properly close
any underground storage tanks, and take or cause to be taken all reasonable
actions necessary or required under applicable state and federal Legal
Requirements, as such now exists or may hereafter be adopted or amended in
connection with the installation, use, maintenance, management, operation,
upgrading and closure of such storage tanks.

(g) Tenant’s Obligations. Tenant’s obligations under this Section 30 shall
survive the expiration or earlier termination of the Lease. During any period of
time after the expiration or earlier termination of this Lease required by
Tenant or Landlord to complete the removal from the Premises of any Hazardous
Materials (including, without limitation, the release and termination of any
licenses or permits restricting the use of the Premises and the completion of
the approved Surrender Plan), Tenant shall continue to pay the full Rent in
accordance with this Lease for any portion of the Premises not relet by Landlord
in Landlord’s sole discretion, which Rent shall be prorated daily.

(h) Definitions. As used herein, the term “Environmental Requirements” means all
applicable present and future statutes, regulations, ordinances, rules, codes,
judgments, orders or other similar enactments of any Governmental Authority
regulating or relating to health, safety, or environmental conditions on, under,
or about the Premises or the Project, or the environment, including without
limitation, the following: the Comprehensive Environmental Response,
Compensation and Liability Act; the Resource Conservation and Recovery Act; and
all state and local counterparts thereto, and any regulations or policies
promulgated or issued thereunder. As used herein, the term “Hazardous Materials”
means and includes any substance, material, waste, pollutant, or contaminant
listed or defined as hazardous or toxic, or regulated by reason of its impact or
potential impact on humans, animals and/or the environment under any
Environmental Requirements, asbestos and petroleum, including crude oil or any
fraction thereof, natural gas liquids, liquefied natural gas, or synthetic gas
usable for fuel (or mixtures of natural gas and such synthetic gas). As defined
in Environmental Requirements, Tenant is and shall

 

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be deemed to be the “operator” of Tenant’s “facility” and the “owner” of all
Hazardous Materials brought on the Premises by Tenant or any Tenant Party, and
the wastes, by-products, or residues generated, resulting, or produced
therefrom. Tenant’s facility is also referred to as the Premises and any other
areas of the Project which are in direct control or exclusively support Tenant’s
operations.

31. Tenant’s Remedies/Limitation of Liability. Landlord shall not be in default
hereunder unless Landlord fails to perform any of its obligations hereunder
within 30 days after written notice from Tenant specifying such failure (unless
such performance will, due to the nature of the obligation, require a period of
time in excess of 30 days, then after such period of time as is reasonably
necessary). Upon any default by Landlord, Tenant shall give notice by registered
or certified mail to any Holder of a Mortgage covering the Premises and to any
landlord of any lease of property in or on which the Premises are located and
Tenant shall offer such Holder and/or landlord a reasonable opportunity to cure
the default, including time to obtain possession of the Project by power of sale
or a judicial action if such should prove necessary to effect a cure; provided
Landlord shall have furnished to Tenant in writing the names and addresses of
all such persons who are to receive such notices. All obligations of Landlord
hereunder shall be construed as covenants, not conditions; and, except as may be
otherwise expressly provided in this Lease, Tenant may not terminate this Lease
for breach of Landlord’s obligations hereunder.

All obligations of Landlord under this Lease will be binding upon Landlord only
during the period of its ownership of the Premises and not thereafter. The term
“Landlord” in this Lease shall mean only the owner for the time being of the
Premises. Upon the transfer by such owner of its interest in the Premises, such
owner shall thereupon be released and discharged from all obligations of
Landlord thereafter accruing, but such obligations shall be binding during the
Term upon each new owner for the duration of such owner’s ownership.

32. Inspection and Access. Landlord and its agents, representatives, and
contractors may enter the Premises at any reasonable time to inspect the
Premises and to make such repairs as may be required or permitted pursuant to
this Lease and for any other business purpose. Landlord and Landlord’s
representatives may enter the Premises during business hours on not less than 48
hours advance written notice (except in the case of emergencies in which case no
such notice shall be required and such entry may be at any time) for the purpose
of effecting any such repairs, inspecting the Premises, showing the Premises to
prospective purchasers and, during the last year of the Term, to prospective
tenants or for any other business purpose. Landlord may erect a suitable sign on
the Premises stating the Premises are available to let or that the Project is
available for sale. Landlord may grant easements, make public dedications,
designate Common Areas and create restrictions on or about the Premises,
provided that no such easement, dedication, designation or restriction
materially, adversely affects Tenant’s use or occupancy of the Premises for the
Permitted Use. At Landlord’s request, Tenant shall execute such instruments as
may be necessary for such easements, dedications or restrictions. Tenant shall
at all times, except in the case of emergencies, have the right to escort
Landlord or its agents, representatives, contractors or guests while the same
are in the Premises, provided such escort does not materially and adversely
affect Landlord’s access rights hereunder.

33. Security. Tenant acknowledges and agrees that security devices and services,
if any, while intended to deter crime may not in given instances prevent theft
or other criminal acts and that Landlord is not providing any security services
with respect to the Premises. Tenant agrees that Landlord shall not be liable to
Tenant for, and Tenant waives any claim against Landlord with respect to, any
loss by theft or any other damage suffered or incurred by Tenant in connection
with any unauthorized entry into the Premises or any other breach of security
with respect to the Premises. Tenant shall be solely responsible for the
personal safety of Tenant’s officers, employees, agents, contractors, guests and
invitees while any such person is in, on or about the Premises and/or the
Project. Tenant shall at Tenant’s cost obtain insurance coverage to the extent
Tenant desires protection against such criminal acts.

34. Force Majeure. Landlord shall not be responsible or liable for delays in the
performance of its obligations hereunder when caused by, related to, or arising
out of acts of God, sinkholes or subsidence, strikes, lockouts, or other labor
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regional, or local disasters, calamities, or catastrophes, inability to obtain
labor or materials (or reasonable substitutes therefor) at reasonable costs or
failure of, or inability to obtain, utilities necessary for performance,
governmental restrictions, orders, limitations, regulations, or controls,
national emergencies, delay in issuance or revocation of permits, enemy or
hostile governmental action, terrorism, insurrection, riots, civil disturbance
or commotion, fire or other casualty, and other causes or events beyond the
reasonable control of Landlord (“Force Majeure”).

35. Brokers. Landlord and Tenant each represents and warrants that it has not
dealt with any broker, agent or other person (collectively, “Broker”) in
connection with this transaction and that no Broker brought about this
transaction, other than Studley. Landlord agrees to pay Studley a leasing
commission in connection with this Lease pursuant to the terms of a separate
written agreement between Landlord and Studley. Landlord and Tenant each hereby
agree to indemnify and hold the other harmless from and against any claims by
any Broker, other than the broker, if any named in this Section 35, claiming a
commission or other form of compensation by virtue of having dealt with Tenant
or Landlord, as applicable, with regard to this leasing transaction.

36. Limitation on Landlord’s Liability. NOTWITHSTANDING ANYTHING SET FORTH
HEREIN OR IN ANY OTHER AGREEMENT BETWEEN LANDLORD AND TENANT TO THE CONTRARY:
(A) LANDLORD SHALL NOT BE LIABLE TO TENANT OR ANY OTHER PERSON FOR (AND TENANT
AND EACH SUCH OTHER PERSON ASSUME ALL RISK OF) LOSS, DAMAGE OR INJURY, WHETHER
ACTUAL OR CONSEQUENTIAL TO: TENANT’S PERSONAL PROPERTY OF EVERY KIND AND
DESCRIPTION, INCLUDING, WITHOUT LIMITATION TRADE FIXTURES, EQUIPMENT, INVENTORY,
SCIENTIFIC RESEARCH, SCIENTIFIC EXPERIMENTS, LABORATORY ANIMALS, PRODUCT,
SPECIMENS, SAMPLES, AND/OR SCIENTIFIC, BUSINESS, ACCOUNTING AND OTHER RECORDS OF
EVERY KIND AND DESCRIPTION KEPT AT THE PREMISES AND ANY AND ALL INCOME DERIVED
OR DERIVABLE THEREFROM; (B) THERE SHALL BE NO PERSONAL RECOURSE TO LANDLORD FOR
ANY ACT OR OCCURRENCE IN, ON OR ABOUT THE PREMISES OR ARISING IN ANY WAY UNDER
THIS LEASE OR ANY OTHER AGREEMENT BETWEEN LANDLORD AND TENANT WITH RESPECT TO
THE SUBJECT MATTER HEREOF AND ANY LIABILITY OF LANDLORD HEREUNDER SHALL BE
STRICTLY LIMITED SOLELY TO LANDLORD’S INTEREST IN THE PROJECT OR ANY PROCEEDS
FROM SALE OR CONDEMNATION THEREOF AND ANY INSURANCE PROCEEDS PAYABLE IN RESPECT
OF LANDLORD’S INTEREST IN THE PROJECT OR IN CONNECTION WITH ANY SUCH LOSS; AND
(C) IN NO EVENT SHALL ANY PERSONAL LIABILITY BE ASSERTED AGAINST LANDLORD IN
CONNECTION WITH THIS LEASE NOR SHALL ANY RECOURSE BE HAD TO ANY OTHER PROPERTY
OR ASSETS OF LANDLORD OR ANY OF LANDLORD’S OFFICERS, DIRECTORS, EMPLOYEES,
AGENTS OR CONTRACTORS. UNDER NO CIRCUMSTANCES SHALL LANDLORD OR ANY OF
LANDLORD’S OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR CONTRACTORS BE LIABLE FOR
INJURY TO TENANT’S BUSINESS OR FOR ANY LOSS OF INCOME OR PROFIT THEREFROM.

37. Severability. If any clause or provision of this Lease is illegal, invalid
or unenforceable under present or future laws, then and in that event, it is the
intention of the parties hereto that the remainder of this Lease shall not be
affected thereby. It is also the intention of the parties to this Lease that in
lieu of each clause or provision of this Lease that is illegal, invalid or
unenforceable, there be added, as a part of this Lease, a clause or provision as
similar in effect to such illegal, invalid or unenforceable clause or provision
as shall be legal, valid and enforceable.

38. Signs; Exterior Appearance. Tenant shall not, without the prior written
consent of Landlord, which may be granted or withheld in Landlord’s sole
discretion: (i) attach any awnings, exterior lights, decorations, balloons,
flags, pennants, banners, painting or other projection to any outside wall of
the Project, (ii) use any curtains, blinds, shades or screens other than
Landlord’s standard window coverings, (iii) coat or otherwise sunscreen the
interior or exterior of any windows, (iv) place any bottles, parcels, or other
articles on the window sills, (v) place any equipment, furniture or other items
of personal property on any exterior balcony, or (vi) paint, affix or exhibit on
any part of the Premises or the Project any signs, notices, window or door
lettering, placards, decorations, or advertising media of any type which can be
viewed from the exterior of the Premises. Interior signs on doors and the
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inscribed, painted or affixed for Tenant by Landlord at the sole cost and
expense of Tenant, and shall be of a size, color and type acceptable to
Landlord. Nothing may be placed on the exterior of corridor walls or corridor
doors other than Landlord’s standard lettering. The directory tablet shall be
provided exclusively for the display of the name and location of tenants.

Tenant shall have the non-exclusive right to display, at Tenant’s sole cost and
expense, signage bearing Tenant’s name on the building top facing the north
parking lot, directly above the Premises, in the location shown on Exhibit G
(“Building Sign”). In addition, subject to obtaining all necessary and required
approvals including, without limitation, as may be required by Legal
Requirements and from the adjacent property owner, Landlord intends to erect a
new monument sign at the Project upon which the names of tenants of the Project
shall be displayed (“Monument Sign”), which Monument Sign shall replace the
monument sign located at the Project as of the date of this Lease. If Landlord
does not erect the intended new monument sign then references in this Lease to
Monument Sign shall mean the existing monument sign. Tenant shall, at Tenant’s
sole cost and expense, have the non-exclusive right to install a sign bearing
Tenant’s name in one slot designated by Landlord on the Monument Sign. Tenant
acknowledges that Landlord is only entitled to use 50% of the signage on the
Monument Sign and Tenant acknowledges and agrees that Tenant shall only be
entitled to Tenant’s Share of Landlord’s 50% share of the Monument Sign. Tenant
further acknowledges and agrees that Tenant’s signage on the Monument Sign and
the Building Sign including, without limitation, the size, color and type, shall
be subject to Landlord’s prior written approval, which shall not be unreasonably
withheld and shall be consistent with Landlord’s signage program at the Project
and applicable Legal Requirements and in no event shall Tenant be entitled more
than Tenant’s pro rata share of any such signage. Tenant shall be responsible,
at Tenant’s sole cost and expense, for the maintenance of Tenant’s signage on
the Monument Sign and the Building Sign, for the removal of Tenant’s signage
from the Monument Sign and the Building Sign at the expiration or earlier
termination of this Lease and for the repair all damage resulting from such
removal.

39. Rights to Expand.

(a) Right of First Refusal. The first time after the date of this Lease that
Landlord intends to accept a written proposal (the “Pending Deal”) to lease all
or any portion the Expansion Space (as hereinafter defined) to a third party,
Landlord shall deliver to Tenant written notice (the “Pending Deal Notice”) of
the existence of such Pending Deal; provided, however, Tenant shall have no
right to receive a Pending Deal Notice and the provisions of this Section 39(a)
shall not apply during any period following the Rent Commencement Date if Tenant
is not then leasing and occupying 100% of the Premises. For purposes of this
Section 39(a), “Expansion Space” shall mean that certain approximately 15,136
rentable square feet on the first floor of the Building as more particularly
shown on Exhibit H, which is not occupied by a tenant or which is occupied by a
then existing tenant whose lease is expiring within 9 months or less and such
tenant does not wish to renew (whether or not such tenant has a right to renew)
its occupancy of such space, plus any basement space in the Building which may
be described in the Pending Deal Notice. For the avoidance of doubt, Tenant
shall be entitled to exercise its right under this Section 39(a) only with
respect to the entire Expansion Space described in such Pending Deal Notice
which shall include an obligation on the part of Tenant to lease along with the
Expansion Space any basement space in the Building described in the Pending Deal
Notice. Within 5 business days after Tenant’s receipt of the Pending Deal
Notice, Tenant shall deliver to Landlord written notice (the “Space Acceptance
Notice”) if Tenant elects to lease the Expansion Space. Tenant’s right to
receive the Pending Deal Notice and election to lease or not lease the Expansion
Space pursuant to this Section 39(a) is hereinafter referred to as the “Right of
First Refusal.” If Tenant elects to lease the Expansion Space described in the
Pending Deal Notice by delivering the Space Acceptance Notice within the
required 5 business day period, Tenant shall be deemed to agree to lease the
Expansion Space on the same general terms and conditions as this Lease except
that the terms of this Lease shall be modified to reflect the terms of the
Pending Deal Notice for the rental of the Expansion Space; provided, however
that if Landlord delivers a Pending Deal Notice within the first 12 months after
the Rent Commencement Date, Tenant may elect in its Space Acceptance Notice to
lease the Expansion Space pursuant to the Expansion Right Terms (as defined
below) rather than the terms of the Pending Deal Notice, in which case the terms
of this Lease shall be modified to reflect the terms of the Expansion Right
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rental of the Expansion Space. Tenant acknowledges that the term of the Lease
with respect to the Expansion Space and the Term of the Lease with respect to
the original Premises may not be co-terminous if Tenant elects to lease the
Expansion Space pursuant to the terms set forth in the Pending Deal Notice.
Notwithstanding anything to the contrary contained herein, in no event shall the
Work Letter or the TI Allowance apply to the Expansion Space. If Tenant fails to
deliver a Space Acceptance Notice to Landlord within the required 5 business day
period, Tenant shall be deemed to have waived its rights under this
Section 39(a) to lease the Expansion Space, and Landlord shall have the right to
lease the Expansion Space to any third party on any terms and conditions
acceptable to Landlord.

(b) Expansion Right. Commencing on the Rent Commencement Date and continuing
through the date that is 12 months after the Rent Commencement Date (“Expansion
Right Expiration Date”), if and for so long as the Expansion Space is available
for lease, Tenant shall have the right, but not the obligation, to elect to
expand (“Direct Expansion Right”) the Premises to include all and not less than
all of the Expansion Space by delivery of written notice to Landlord of its
election to exercise the Direct Expansion Right (“Expansion Exercise Notice” ).
If Tenant elects to lease the Expansion Space by timely delivering a Expansion
Exercise Notice to Landlord, Tenant shall be deemed to agree to lease the
Expansion Space on the same terms and conditions as this Lease, except that
(i) the amount of the Security Deposit shall be proportionately increased,
(ii) the definition of Premises shall be amended to include the Expansion Space,
(iii) the Base Rent payable for the Expansion Space shall be equal to the per
square foot amount of Base Rent then payable for the Premises, which shall be
subject to adjustment pursuant to Section 4, (iv) Tenant’s Share of Operating
Expenses shall be proportionately increased based upon the addition of the
Expansion Space to the Premises, (v) Tenant shall accept the Expansion Space in
its “as is” condition as of the expiration or earlier termination of any then
existing lease affecting the Expansion Space, (vi) Landlord shall provide the
same per square foot TI Allowance as was provided for the Premises as a tenant
improvement allowance for the Expansion Space but ratably reduced based on the
length of the remaining Base Term after the Expansion Space is delivered to
Tenant for the construction of tenant improvements within the Expansion Space of
a fixed and permanent nature desired by Tenant and approved by Landlord, which
tenant improvements shall be constructed by Tenant pursuant to the terms of a
work letter reasonably acceptable to Landlord and Tenant, (vii) the Base Term of
the Lease shall commence with respect to the Expansion Space and Tenant shall
commence paying Base Rent and Operating Expenses on the date that is 6 months
after the Expansion Exercise Notice, and (viii) the Early Termination Payment
(as defined in Section 41 below) shall be increased by $750,000 to $1,500,000
(collectively, the Expansion Right Terms”). Tenant’s failure to timely deliver
an Expansion Exercise Notice to Landlord shall be deemed to be an election by
Tenant not to exercise Tenant’s Direct Expansion Right pursuant to this
Section 39(b) with respect to the Expansion Space, in which case Tenant shall be
deemed to have forever waived its rights under this Section 39(b) and this
Section 39(b) shall be of no further force or effect. Notwithstanding anything
to the contrary contained in this Section 39(b), Tenant acknowledges and agrees
that (x) Landlord is under no obligation to keep the Expansion Space vacant from
the date hereof until the Expansion Right Expiration Date and, prior to Tenant’s
election to exercise its Direct Expansion Right, Landlord is free to lease the
Expansion Space at any time to any party and on any terms and conditions
acceptable to Landlord in its sole and absolute discretion, and (y) if Landlord
leases the Expansion Space to any other party, Tenant’s Direct Expansion Right
shall immediately terminate and Tenant shall have no further to exercise its
Direct Expansion Right.

(c) Amended Lease. If: (i) Tenant fails to timely deliver a Space Acceptance
Notice or Expansion Exercise Notice, or (ii) after the expiration of a period of
10 days after Landlord’s delivery to Tenant of a lease amendment or lease
agreement for Tenant’s lease of the Expansion Space, no lease amendment or lease
agreement (including the work letter) for the Expansion Space, acceptable to
both parties each in their sole and absolute discretion, has been executed,
Tenant shall, notwithstanding anything to the contrary contained herein, be
deemed to have forever waived its right to lease such Expansion Space.

 

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(d) Exceptions. Notwithstanding the above, the Direct Expansion Right and the
Right of First Refusal shall, at Landlord’s option, not be in effect and may not
be exercised by Tenant:

(i) during any period of time that Tenant is in Default under any provision of
the Lease; or

(ii) if Tenant has been in Default under any provision of the Lease 3 or more
times, whether or not the Defaults are cured, during the 12 month period prior
to the date on which Tenant seeks to exercise the Direct Expansion Right or
Right of First Refusal.

(e) Termination. The Direct Expansion Right and Right of First Refusal shall, at
Landlord’s option, terminate and be of no further force or effect even after
Tenant’s due and timely exercise of the Direct Expansion Right or Right of First
Refusal, as applicable,, if, after such exercise, but prior to the commencement
date of the lease of such Expansion Space, (i) Tenant fails to timely cure any
default by Tenant under the Lease; or (ii) Tenant has Defaulted 3 or more times
during the period from the date of the exercise of the Direct Expansion Right or
Right of First Refusal, as applicable, to the date of the commencement of the
lease of the Expansion Space, whether or not such Defaults are cured.

(f) Rights Personal. The Direct Expansion Right and Right of First Refusal are
personal to Tenant and are not assignable without Landlord’s consent, which may
be granted or withheld in Landlord’s sole discretion separate and apart from any
consent by Landlord to an assignment of Tenant’s interest in the Lease, except
that they may be assigned in connection with any Permitted Assignment of this
Lease.

(g) No Extensions. The period of time within which the Direct Expansion Right or
the Right of First Refusal may be exercised shall not be extended or enlarged by
reason of Tenant’s inability to exercise the Direct Expansion Right or Right of
First Refusal.

40. Right to Extend Term. Tenant shall have the right to extend the Term of the
Lease upon the following terms and conditions:

(a) Extension Rights. Tenant shall have 1 right (an “Extension Right”) to extend
the term of this Lease for 5 years (an “Extension Term”) on the same terms and
conditions as this Lease (other than with respect to Base Rent and the Work
Letter) by giving Landlord written notice of its election to exercise each
Extension Right at least 9 months prior, and no earlier than 15 months prior, to
the expiration of the Base Term of the Lease or the expiration of any prior
Extension Term.

Upon the commencement of the Extension Term, Base Rent shall be payable at the
Market Rate (as defined below). Base Rent shall thereafter be adjusted on each
annual anniversary of the commencement of such Extension Term by the Rent
Adjustment Percentage. As used herein, “Market Rate” shall mean the then market
rental rate as determined by Landlord and agreed to by Tenant, for space of
comparable size and quality (including all Alterations and other improvements)
in Class A laboratory buildings in the Torrey Pines area for a comparable term,
taking into account all relevant factors, including, but not limited to, tenant
inducements, leasing commissions, allowances or concessions, if any.

If, on or before the date which is 180 days prior to the expiration of the Base
Term of this Lease, Tenant has not agreed with Landlord’s determination of the
Market Rate and the rent escalations during the Extension Term after negotiating
in good faith, Tenant shall be deemed to have elected arbitration as described
in Section 40(b). Tenant acknowledges and agrees that, if Tenant has elected to
exercise the Extension Right by delivering notice to Landlord as required in
this Section 40(a), Tenant shall have no right thereafter to rescind or elect
not to extend the term of the Lease for the Extension Term.

(b) Arbitration.

(i) Within 10 days of Tenant’s notice to Landlord of its election (or deemed
election) to arbitrate Market Rate and escalations, each party shall deliver to
the other a proposal containing the Market Rate and escalations that the
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(“Extension Proposal”). If either party fails to timely submit an Extension
Proposal, the other party’s submitted proposal shall determine the Base Rent and
escalations for the Extension Term. If both parties submit Extension Proposals,
then Landlord and Tenant shall meet within 7 days after delivery of the last
Extension Proposal and make a good faith attempt to mutually appoint a single
Arbitrator (and defined below) to determine the Market Rate and escalations. If
Landlord and Tenant are unable to agree upon a single Arbitrator, then each
shall, by written notice delivered to the other within 10 days after the
meeting, select an Arbitrator. If either party fails to timely give notice of
its selection for an Arbitrator, the other party’s submitted proposal shall
determine the Base Rent for the Extension Term. The 2 Arbitrators so appointed
shall, within 5 business days after their appointment, appoint a third
Arbitrator. If the 2 Arbitrators so selected cannot agree on the selection of
the third Arbitrator within the time above specified, then either party, on
behalf of both parties, may request such appointment of such third Arbitrator by
application to any state court of general jurisdiction in the jurisdiction in
which the Premises are located, upon 10 days prior written notice to the other
party of such intent.

(ii) The decision of the Arbitrator(s) shall be made within 30 days after the
appointment of a single Arbitrator or the third Arbitrator, as applicable. The
decision of the single Arbitrator shall be final and binding upon the parties.
The average of the two closest Arbitrators in a three Arbitrator panel shall be
final and binding upon the parties. Each party shall pay the fees and expenses
of the Arbitrator appointed by or on behalf of such party and the fees and
expenses of the third Arbitrator shall be borne equally by both parties. If the
Market Rate and escalations are not determined by the first day of the Extension
Term, then Tenant shall pay Landlord Base Rent in an amount equal to the Base
Rent in effect immediately prior to the Extension Term and increased by the Rent
Adjustment Percentage until such determination is made. After the determination
of the Market Rate and escalations, the parties shall make any necessary
adjustments to such payments made by Tenant. Landlord and Tenant shall then
execute an amendment recognizing the Market Rate and escalations for the
Extension Term.

(iii) An “Arbitrator” shall be any person appointed by or on behalf of either
party or appointed pursuant to the provisions hereof and: (i) shall be (A) a
member of the American Institute of Real Estate Appraisers with not less than 10
years of experience in the appraisal of improved office and high tech industrial
real estate in the greater San Diego metropolitan area, or (B) a licensed
commercial real estate broker with not less than 15 years experience
representing landlords and/or tenants in the leasing of high tech or life
sciences space in the greater San Diego metropolitan area, (ii) devoting
substantially all of their time to professional appraisal or brokerage work, as
applicable, at the time of appointment and (iii) be in all respects impartial
and disinterested.

(c) Rights Personal. Extension Rights are personal to Tenant and are not
assignable without Landlord’s consent, which may be granted or withheld in
Landlord’s sole discretion separate and apart from any consent by Landlord to an
assignment of Tenant’s interest in the Lease, except that they may be assigned
in connection with any Permitted Assignment of this Lease.

(d) Exceptions. Notwithstanding anything set forth above to the contrary,
Extension Rights shall, at Landlord’s option, not be in effect and Tenant may
not exercise any of the Extension Rights:

(i) during any period of time that Tenant is in Default under any provision of
this Lease; or

(ii) if Tenant has been in Default under any provision of this Lease 3 or more
times, whether or not the Defaults are cured, during the 12 month period
immediately prior to the date that Tenant intends to exercise an Extension
Right, whether or not the Defaults are cured.

(e) No Extensions. The period of time within which any Extension Rights may be
exercised shall not be extended or enlarged by reason of Tenant’s inability to
exercise the Extension Rights.

 

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(f) Termination. The Extension Rights shall, at Landlord’s option, terminate and
be of no further force or effect even after Tenant’s due and timely exercise of
an Extension Right, if, after such exercise, but prior to the commencement date
of an Extension Term, (i) Tenant fails to timely cure any default by Tenant
under this Lease; or (ii) Tenant has Defaulted 3 or more times during the period
from the date of the exercise of an Extension Right to the date of the
commencement of the Extension Term, whether or not such Defaults are cured.

41. Early Termination Right. Tenant shall have the right, subject to the
provisions of this Section 41, to terminate this Lease (“Termination Right”)
with respect to the entire Premises only as of expiration of the 60th month
after the Rent Commencement Date (“Early Termination Date”), so long as Tenant
delivers to Landlord (i) a written notice (“Termination Notice”), of its
election to exercise its Termination Right no less than 9 months in advance of
the Early Termination Date, and (ii) concurrent with Tenant’s delivery to
Landlord of the Termination Notice delivers, an early termination payment in the
amount of $750,000 (which amount shall be increased by an additional $750,000 if
Tenant leases the Expansion Space pursuant to its Direct Expansion Right under
Section 39(b), the “Early Termination Payment”). If Tenant timely and properly
exercises the Termination Right, Tenant shall vacate the Premises and deliver
possession thereof to Landlord in the condition required by the terms of this
Lease on or before the Early Termination Date and Tenant shall have no further
obligations under this Lease except for those accruing prior to the Early
Termination Date and those which, pursuant to the terms of this Lease, survive
the expiration or early termination of this Lease. In the event that Tenant does
not deliver to Landlord the Termination Notice and the Early Termination Payment
within the time period provided in this paragraph, Tenant shall be deemed to
have waived its Termination Right and the provisions of this Section 41 shall
have no further force or effect. Notwithstanding anything to the contrary
contained herein, if Tenant elects to exercise its Right of First Refusal
pursuant to Section 39(a) by delivering a Space Acceptance Notice, then Tenant
shall be deemed to have waived its Termination Right and the provisions of this
Section 41 shall have no further force or effect except that Tenant may exercise
its Termination Right with respect to the original Premises as provided for in
this Section 41 if the following conditions have been satisfied: (x) Tenant
makes no materially detrimental changes, as reasonably determined by Landlord,
to the Tenant Improvements contemplated pursuant to the plan attached hereto as
Exhibit J, and (y) Tenant unconditionally agrees to extend the Base Term of the
lease with respect to the Expansion Space, if necessary, so that it is not less
than a full 60 months from the date that Tenant commenced paying Base Rent for
the Expansion Space.

42. LEED Certification. Tenant agrees to cooperate with Landlord and to comply
with reasonable measures implemented by Landlord with respect to the Building
and/or the Project in connection with Landlord’s efforts to obtain a Leadership
in Energy and Environmental Design (LEED) certificate for the base, shell and
core of the Building. Any reasonable measure implemented in accordance with the
foregoing will be at minimal or no cost to Tenant, will be performed so as to
minimize any interference with Tenant’s use and enjoyment of the Premises, and
will not require Tenant to make any substantial changes to its business
operations for the Permitted Use in the Premises nor materially increase the
cost of such business operations. Notwithstanding anything to the contrary
contained in this paragraph, Landlord shall not be precluded from undertaking
any retrofits, repairs or replacements (including, without limitation, capital
repairs and replacements) to the Premises or the Building as part of Operating
Expenses in the ordinary course of maintenance or repairs (including, without
limitation, capital repairs and replacements) to the Premises or the Building,
which retrofits, repairs or replacements include LEED components or satisfy LEED
rating systems or any similar standard in connection with the performance by
Landlord of its obligations under this Lease so long as the cost of such LEED
items is reasonably comparable to the cost of non-LEED components, taking into
account any reasonably anticipated savings resulting from LEED components over
the remaining Term of this Lease. Tenant shall have the right, at Tenant’s sole
cost and expense or utilizing the TI Allowance, to pursue a LEED certification
of the Tenant Improvements, and Landlord will cooperate, at minimal or no cost
to Landlord, with Tenant’s efforts to pursue such certification.

 

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43. Miscellaneous.

(a) Notices. All notices or other communications between the parties shall be in
writing and shall be deemed duly given upon delivery or refusal to accept
delivery by the addressee thereof if delivered in person, or upon actual receipt
if delivered by reputable overnight guaranty courier, addressed and sent to the
parties at their addresses set forth above. Landlord and Tenant may from time to
time by written notice to the other designate another address for receipt of
future notices.

(b) Joint and Several Liability. If and when included within the term “Tenant,”
as used in this instrument, there is more than one person or entity, each shall
be jointly and severally liable for the obligations of Tenant.

(c) Financial Information. Upon Landlord’s written request, Tenant shall furnish
Landlord with true and complete copies of (i) Tenant’s most recent audited
annual financial statements within 90 days of the end of each of Tenant’s fiscal
years during the Term, (ii) Tenant’s most recent unaudited quarterly financial
statements within 45 days of the end of each of Tenant’s first three fiscal
quarters of each of Tenant’s fiscal years during the Term, (iii) at Landlord’s
request from time to time, updated business plans, including cash flow
projections and/or pro forma balance sheets and income statements, all of which
shall be treated by Landlord as confidential information belonging to Tenant,
(iv) corporate brochures and/or profiles prepared by Tenant for prospective
investors, and (v) any other financial information or summaries that Tenant
typically provides to its lenders or shareholders. If and for so long as Tenant
is a “public company” and its financial information is publicly available, then
the foregoing delivery requirements of this Section 43(c) shall not apply.

(d) Recordation. Neither this Lease nor a memorandum of lease shall be filed by
or on behalf of Tenant in any public record. Landlord may prepare and file, and
upon request by Landlord Tenant will execute, a memorandum of lease.

(e) Interpretation. The normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of this Lease or any exhibits or amendments hereto. Words
of any gender used in this Lease shall be held and construed to include any
other gender, and words in the singular number shall be held to include the
plural, unless the context otherwise requires. The captions inserted in this
Lease are for convenience only and in no way define, limit or otherwise describe
the scope or intent of this Lease, or any provision hereof, or in any way affect
the interpretation of this Lease.

(f) Not Binding Until Executed. The submission by Landlord to Tenant of this
Lease shall have no binding force or effect, shall not constitute an option for
the leasing of the Premises, nor confer any right or impose any obligations upon
either party until execution of this Lease by both parties.

(g) Limitations on Interest. It is expressly the intent of Landlord and Tenant
at all times to comply with applicable law governing the maximum rate or amount
of any interest payable on or in connection with this Lease. If applicable law
is ever judicially interpreted so as to render usurious any interest called for
under this Lease, or contracted for, charged, taken, reserved, or received with
respect to this Lease, then it is Landlord’s and Tenant’s express intent that
all excess amounts theretofore collected by Landlord be credited on the
applicable obligation (or, if the obligation has been or would thereby be paid
in full, refunded to Tenant), and the provisions of this Lease immediately shall
be deemed reformed and the amounts thereafter collectible hereunder reduced,
without the necessity of the execution of any new document, so as to comply with
the applicable law, but so as to permit the recovery of the fullest amount
otherwise called for hereunder.

(h) Choice of Law. Construction and interpretation of this Lease shall be
governed by the internal laws of the state in which the Premises are located,
excluding any principles of conflicts of laws.

 

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(i) Time. Time is of the essence as to the performance of Tenant’s obligations
under this Lease.

(j) OFAC. Tenant, and all beneficial owners of Tenant, are currently (a) in
compliance with and shall at all times during the Term of this Lease remain in
compliance with the regulations of the Office of Foreign Assets Control (“OFAC”)
of the U.S. Department of Treasury and any statute, executive order, or
regulation relating thereto (collectively, the “OFAC Rules”), (b) not listed on,
and shall not during the term of this Lease be listed on, the Specially
Designated Nationals and Blocked Persons List maintained by OFAC and/or on any
other similar list maintained by OFAC or other governmental authority pursuant
to any authorizing statute, executive order, or regulation, and (c) not a person
or entity with whom a U.S. person is prohibited from conducting business under
the OFAC Rules.

(k) Incorporation by Reference. All exhibits and addenda attached hereto are
hereby incorporated into this Lease and made a part hereof. If there is any
conflict between such exhibits or addenda and the terms of this Lease, such
exhibits or addenda shall control.

(l) Entire Agreement. This Lease, including the exhibits attached hereto,
constitutes the entire agreement between Landlord and Tenant pertaining to the
subject matter hereof and supersedes all prior and contemporaneous agreements,
understandings, letters of intent, negotiations and discussions, whether oral or
written, of the parties, and there are no warranties, representations or other
agreements, express or implied, made to either party by the other party in
connection with the subject matter hereof except as specifically set forth
herein.

(m) No Accord and Satisfaction. No payment by Tenant or receipt by Landlord of a
lesser amount than the monthly installment of Base Rent or any Additional Rent
will be other than on account of the earliest stipulated Base Rent and
Additional Rent, nor will any endorsement or statement on any check or letter
accompanying a check for payment of any Base Rent or Additional Rent be an
accord and satisfaction. Landlord may accept such check or payment without
prejudice to Landlord’s right to recover the balance of such Rent or to pursue
any other remedy provided in this Lease.

(n) Hazardous Activities. Notwithstanding any other provision of this Lease,
Landlord, for itself and its employees, agents and contractors, reserves the
right to refuse to perform any repairs or services in any portion of the
Premises which, pursuant to Tenant’s routine safety guidelines, practices or
custom or prudent industry practices, require any form of protective clothing or
equipment other than safety glasses. In any such case, Tenant shall contract
with parties who are acceptable to Landlord, in Landlord’s reasonable
discretion, for all such repairs and services, and Landlord shall, to the extent
required, equitably adjust Tenant’s Share of Operating Expenses in respect of
such repairs or services to reflect that Landlord is not providing such repairs
or services to Tenant.

(o) Redevelopment of Project. Tenant acknowledges that Landlord is expanding,
renovating and/or reconfiguring the Project and, in connection therewith or in
addition thereto, as the case may be, Landlord may from time to time without
limitation: (a) change the shape, size, location, number and/or extent of any
improvements, buildings, structures, lobbies, hallways, entrances, exits,
parking and/or parking areas relative to any portion of the Project; (b) modify,
eliminate and/or add any buildings, improvements, and parking structure(s)
either above or below grade, to the Project, the Common Areas and/or any other
portion of the Project and/or make any other changes thereto affecting the same;
and (c) make any other changes, additions and/or deletions in any way affecting
the Project and/or any portion thereof as Landlord may elect from time to time,
including without limitation, additions to and/or deletions from the land
comprising the Project, the Common Areas and/or any other portion of the
Project. Notwithstanding anything to the contrary contained in this Lease,
Tenant shall have no right to seek damages (including abatement of Rent) or to
cancel or terminate this Lease because of any proposed changes, expansion,
renovation or reconfiguration of the Project nor shall Tenant have the right to
restrict, inhibit or prohibit any such changes, expansion, renovation or
reconfiguration; provided, however, Landlord shall not change the size,
dimensions, location or Tenant’s Permitted Use of the Premises.

 

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(p) Hazardous Materials Storage Area. In connection with its use of the
Premises, Tenant shall have the right, during the Term, to the use of one of the
3 units (“Tenant’s HazMat Safety Storage Area”) designated by Landlord in the
Hazardous Materials storage shed at the Project for the storage of Tenant’s
Hazardous Materials waste and other Hazardous Materials. Tenant shall maintain
appropriate records, obtain and maintain appropriate insurance, implement
reporting procedures, and take or cause to be taken all other actions necessary
or required under applicable state and federal Legal Requirements in connection
with the use of the Tenant’s HazMat Safety Storage Area. Tenant shall, at
Tenant’s sole cost and expense, surrender Tenant’s HazMat Safety Storage Area
free of any debris and trash and free of any Hazardous Materials in accordance
with the requirements of Section 28 hereof, normal wear and tear excluded.

(q) Discontinued Use. If, at any time following the Rent Commencement Date,
Tenant does not continuously operate its business in the Premises for a period
of 90 consecutive days, Landlord may, but is not obligated to, elect to
terminate this Lease upon 30 days’ written notice to Tenant, whereupon this
Lease shall terminate 30 days’ after Landlord’s delivery of such written notice
(“Termination Date”), and Tenant shall vacate the Premises and deliver
possession thereof to Landlord in the condition required by the terms of this
Lease on or before the Termination Date and Tenant shall have no further
obligations under this Lease except for those accruing prior to the Termination
Date and those which, pursuant to the terms of the Lease, survive the expiration
or early termination of the Lease.

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IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the day
and year first above written.

 

TENANT:

LIGAND PHARMACEUTICALS, INCORPORATED,

a Delaware corporation

By:  

/s/ John Sharp

Its:   Vice President, Finance and Chief Financial Officer

LANDLORD:

ARE-SD REGION NO. 24, LLC,

a Delaware limited liability company

By:   ALEXANDRIA REAL ESTATE EQUITIES, L.P.,  

a Delaware limited partnership,

managing member

  By:   ARE-QRS CORP.,    

a Maryland corporation,

general partner

  By:  

/s/ Eric S. Johnson

  Its:   Vice President Real Estate Legal Affairs

 

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EXHIBIT A TO LEASE

DESCRIPTION OF PREMISES

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EXHIBIT B TO LEASE

DESCRIPTION OF PROJECT

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* Please note the Building configuration above includes Landlord’s proposed
renovation of the west side of the structure in addition to relocating a portion
of the existing central plant into the lower level of the Building. These
changes are conceptual and subject to modification at Landlord’s sole
discretion.

 

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EXHIBIT C TO LEASE

WORK LETTER

THIS WORK LETTER (this “Work Letter”) is incorporated into that certain Lease
Agreement (the “Lease”) dated as of September     , 2011, by and between ARE-SD
REGION NO. 24, LLC, a Delaware limited liability company (“Landlord”), and
LIGAND PHARMACEUTICALS, INCORPORATED, a Delaware corporation (“Tenant”). Any
initially capitalized terms used but not defined herein shall have the meanings
given them in the Lease.

1. General Requirements.

(a) Tenant’s Authorized Representative. Tenant designates John Sharp and
Vilmarie Rodriguez (either such individual acting alone, “Tenant’s
Representative”) as the only persons authorized to act for Tenant pursuant to
this Work Letter. Landlord shall not be obligated to respond to or act upon any
request, approval, inquiry or other communication (“Communication”) from or on
behalf of Tenant in connection with this Work Letter unless such Communication
is in writing from Tenant’s Representative. Tenant may change either of Tenant’s
Representative at any time upon not less than 5 business days advance written
notice to Landlord.

(b) Landlord’s Authorized Representative. Landlord designates Dan Ryan and Jay
Ingram (either such individual acting alone, “Landlord’s Representative”) as the
only persons authorized to act for Landlord pursuant to this Work Letter. Tenant
shall not be obligated to respond to or act upon any request, approval, inquiry
or other Communication from or on behalf of Landlord in connection with this
Work Letter unless such Communication is in writing from Landlord’s
Representative. Landlord may change either Landlord’s Representative at any time
upon not less than 5 business days advance written notice to Tenant.

(c) Architects, Consultants and Contractors. Landlord and Tenant hereby
acknowledge and agree that the architect (the “TI Architect”) for the Tenant
Improvements (as defined in Section 2(a) below), the general contractor and any
subcontractors for the Tenant Improvements shall be selected by Tenant, subject
to Landlord’s approval, which approval shall not be unreasonably withheld,
conditioned or delayed. Landlord shall be named a third party beneficiary of any
contract entered into by Tenant with the TI Architect, any consultant, any
contractor or any subcontractor, and of any warranty made by any contractor or
any subcontractor.

2. Tenant Improvements.

(a) Tenant Improvements Defined. As used herein, “Tenant Improvements” shall
mean all improvements to the Premises desired by Tenant of a fixed and permanent
nature as shown on the TI Constructions Drawings (as defined in Section 2(c)
below) and which shall be required to satisfy the requirements set forth on
Annex 2 attached hereto. As used in the Lease, “Tenant’s Work” shall mean the
construction of the Tenant Improvements. As used herein, the term “Landlord’s
Work” shall mean completing the base Building described on Annex 1.

Tenant shall be solely responsible for ensuring that the Building and the design
and specifications for the Tenant Improvements are consistent with Tenant’s
requirements. Tenant shall be solely responsible for all costs incurred by
Landlord to alter the Building as a result of Tenant’s requested changes.
Landlord shall have no obligation to, and shall not, secure any permits,
approvals or entitlements related to Tenant’s specific use of the Premises or
Tenant’s business operations therein. Other than the obligation to perform
Landlord’s Work and funding the TI Allowance (as defined below) as provided
herein, Landlord shall not have any obligation whatsoever with respect to the
finishing of the Premises for Tenant’s use and occupancy.

 

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(b) Tenant’s Space Plans. Tenant shall deliver to Landlord schematic drawings
and outline specifications (the “TI Design Drawings”) detailing Tenant’s
requirements for the Tenant Improvements within 10 weeks after the date hereof.
Not more than 10 days thereafter, Landlord shall deliver to Tenant the written
objections, questions or comments of Landlord and the TI Architect with regard
to the TI Design Drawings. If Landlord disapproves any portion of Tenant’s TI
Design Drawings, then Landlord shall specifically (a) approve those portions
which are acceptable to Landlord and (b) disapprove those portions which are not
acceptable to Landlord, specifying the reasons for such disapproval and
describing in detail any change requested for each item disapproved. Tenant
shall cause the changes requested by Landlord to be made to Tenant’s TI Design
Drawings and shall resubmit said drawings to Landlord for approval within 5 days
thereafter; provided, however, if Tenant does not agree with a change requested
by Landlord, Landlord and Tenant shall meet and confer and shall attempt in good
faith to reach agreement on the TI Design Drawings. Such process shall continue
until Landlord has approved the TI Design Drawings.

(c) Working Drawings. Not later than 14 weeks following the approval of the TI
Design Drawings by Landlord, Tenant shall cause the TI Architect to prepare and
deliver to Landlord for review and comment construction plans, specifications
and drawings for the Tenant Improvements (“TI Construction Drawings”), which TI
Construction Drawings shall be prepared substantially in accordance with the TI
Design Drawings. Tenant shall be solely responsible for ensuring that the TI
Construction Drawings reflect Tenant’s requirements for the Tenant Improvements.
Landlord shall deliver its written comments on the TI Construction Drawings to
Tenant not later than 7 business days after Landlord’s receipt of the same;
provided, however, that Landlord may not disapprove any matter that is
consistent with the TI Design Drawings. If Landlord disapproves any portion of
Tenant’s TI Construction Drawings, then Landlord shall specifically (a) approve
those portions which are acceptable to Landlord and (b) disapprove those
portions which are not acceptable to Landlord, specifying the reasons for such
disapproval and describing in detail any change requested for each item
disapproved. Tenant shall cause the changes requested by Landlord to be made to
Tenant’s TI Construction Drawings; provided, however, if Tenant does not agree
with a change requested by Landlord, Landlord and Tenant shall meet and confer
and shall attempt in good faith to reach agreement on TI Construction Drawings.
Tenant and the TI Architect shall consider all such comments in good faith and
shall, within 7 business days after receipt, notify Landlord how Tenant proposes
to respond to such comments. Any disputes in connection with such comments shall
be resolved in accordance with Section 2(d) hereof. Provided that the design
reflected in the TI Construction Drawings is consistent with the TI Design
Drawings, Landlord shall approve the TI Construction Drawings submitted by
Tenant. Once approved by Landlord, subject to the provisions of Section 4 below,
Tenant shall not materially modify the TI Construction Drawings except as may be
reasonably required in connection with the issuance of the TI Permit (as defined
in Section 3(a) below).

(d) Approval and Completion. If any dispute regarding the design of the Tenant
Improvements is not settled within 10 business days after notice of such dispute
is delivered by one party to the other, Tenant may make the final decision
regarding the design of the Tenant Improvements, provided (i) Tenant acts
reasonably and such final decision is either consistent with or a compromise
between Landlord’s and Tenant’s positions with respect to such dispute,
(ii) that all costs and expenses resulting from any such decision by Tenant
shall be payable out of the TI Fund (as defined in Section 5(d) below), and
(iii) Tenant’s decision will not affect the base Building, structural components
of the Building or any Building systems (in which case Landlord shall make the
final decision). Any changes to the TI Construction Drawings following
Landlord’s and Tenant’s approval of same requested by Tenant shall be processed
as provided in Section 4 hereof.

3. Performance of the Tenant Improvements.

(a) Commencement and Permitting of the Tenant Improvements. Tenant shall,
subject to the other provisions of the Lease and this Work Letter, commence
construction of the Tenant Improvements upon obtaining and delivering to
Landlord a building permit (the “TI Permit”) authorizing the construction of the
Tenant Improvements consistent with the TI Construction Drawings approved by
Landlord. The cost of obtaining the TI Permit shall be payable from the TI Fund.
Landlord shall assist

 

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Tenant in obtaining the TI Permit. Prior to the commencement of the Tenant
Improvements, Tenant shall deliver to Landlord a copy of any contract with
Tenant’s contractors (including the TI Architect), and certificates of insurance
from any contractor performing any part of the Tenant Improvement evidencing
industry standard commercial general liability, automotive liability, “builder’s
risk”, and workers’ compensation insurance. Tenant shall cause the general
contractor to provide a certificate of insurance naming Landlord, Alexandria
Real Estate Equities, Inc., and Landlord’s lender (if any) as additional
insureds for the general contractor’s liability coverages required above.

Notwithstanding the foregoing, Tenant shall have no right to enter onto the
Premises or the Project unless and until Tenant shall deliver to Landlord
evidence reasonably satisfactory to Landlord demonstrating that any insurance
reasonably required by Landlord in connection with such pre-commencement access
(including, but not limited to, any insurance that Landlord may require pursuant
to the Lease) is in full force and effect. Any entry by Tenant and/or any Tenant
Party shall comply with all established safety practices of Landlord’s
contractor and Landlord until completion of Landlord’s Work.

(b) Selection of Materials, Etc. Where more than one type of material or
structure is indicated on the TI Construction Drawings approved by Tenant and
Landlord, the option will be within Tenant’s reasonable discretion if the matter
concerns the Tenant Improvements, and within Landlord’s sole and absolute
subjective discretion if the matter concerns the structural components of the
Building or any Building system.

(c) Tenant Liability. Tenant shall be responsible for correcting any
deficiencies or defects in the Tenant Improvements.

(d) Substantial Completion. Tenant shall substantially complete or cause to be
substantially completed the Tenant Improvements in a good and workmanlike
manner, in accordance with the TI Permit subject, in each case, to Minor
Variations and normal “punch list” items of a non-material nature which do not
interfere with the use of the Premises (“Substantial Completion” or
“Substantially Complete”). Upon Substantial Completion of the Tenant
Improvements, Tenant shall require the TI Architect and the general contractor
to execute and deliver, for the benefit of Tenant and Landlord, a Certificate of
Substantial Completion in the form of the American Institute of Architects
(“AIA”) document G704. For purposes of this Work Letter, “Minor Variations”
shall mean any modifications reasonably required: (i) to comply with all
applicable Legal Requirements and/or to obtain or to comply with any required
permit (including the TI Permit); (ii) to comport with good design, engineering,
and construction practices which are not material; or (iii) to make reasonable
adjustments for field deviations or conditions encountered during the
construction of the Tenant Improvements.

(e) Landlord Delay. Other than with respect to Landlord Delay as provided for in
this Work Letter, nothing contained in the Lease or this Work Letter shall delay
the Rent Commencement Date. As used herein, “Landlord Delay” shall mean any
delay or failure to act by Landlord after the date hereof (other than a matter
which qualifies as a Force Majeure or a delay by Tenant) within the time period
required for such action pursuant to this Work Letter solely to the extent such
delay or failure actually causes or results in a delay in Substantial Completion
of the Tenant Improvements. Tenant acknowledges and agrees that the performance
of Landlord’s Work and the cooperation and related coordination which Tenant is
required under this Lease to provide in connection therewith shall under no
circumstances constitute a Landlord Delay. The general contractor for Landlord’s
Work shall, after consultation with the general contractor for the Tenant
Improvements, make the determination regarding the date on which Substantial
Completion of the Tenant Improvements would have occurred but for any Landlord
Delay. In no event shall a Landlord Delay commence unless and until Landlord
receives written notice from Tenant notifying Landlord of the existence of such
Landlord Delay.

4. Changes. Any changes requested by Tenant to the Tenant Improvements after the
delivery and approval by Landlord of the TI Design Drawings, shall be requested
and instituted in accordance with the provisions of this Section 4 and shall be
subject to the written approval of Landlord, which approval shall not be
unreasonably withheld, conditioned or delayed.

 

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(a) Tenant’s Right to Request Changes. If Tenant shall request changes
(“Changes”), Tenant shall request such Changes by notifying Landlord in writing
in substantially the same form as the AIA standard change order form (a “Change
Request”), which Change Request shall detail the nature and extent of any such
Change. Such Change Request must be signed by Tenant’s Representative. Landlord
shall review and approve or disapprove such Change Request within 7 business
days thereafter, provided that Landlord’s approval shall not be unreasonably
withheld, conditioned or delayed.

(b) Implementation of Changes. If Landlord approves such Change and Tenant
deposits with Landlord any Excess TI Costs (as defined in Section 5(d) below)
required in connection with such Change, Tenant may cause the approved Change to
be instituted. If any TI Permit modification or change is required as a result
of such Change, Tenant shall promptly provide Landlord with a copy of such TI
Permit modification or change.

5. Costs.

(a) Budget For Tenant Improvements. Before the commencement of construction of
the Tenant Improvements, Tenant shall obtain a detailed breakdown, by trade, of
the costs incurred or that will be incurred, in connection with the design and
construction of the Tenant Improvements (the “Budget”), and deliver a copy of
the Budget to Landlord for Landlord’s approval, which shall not be unreasonably
withheld or delayed. The Budget shall be based upon the TI Construction Drawings
approved by Landlord and shall include a payment to Landlord of administrative
rent (“Administrative Rent”) equal to 3% of the TI Costs (as hereinafter
defined) for monitoring and inspecting the construction of the Tenant
Improvements, which sum shall be payable from the TI Fund. Such Administrative
Rent shall include, without limitation, all out-of-pocket costs, expenses and
fees incurred by or on behalf of Landlord arising from, out of, or in connection
with, such monitoring of the construction of the Tenant Improvements, and shall
be payable out of the TI Fund. If the Budget is greater than the TI Allowance,
Tenant shall deposit with Landlord the difference, in cash, prior to the
commencement of construction of the Tenant Improvements, for disbursement by
Landlord as described in Section 5(d).

(b) TI Allowance. Landlord shall provide to Tenant a tenant improvement
allowance (“TI Allowance”) of $175.00 per rentable square foot of the Premises,
or $2,676,100 in the aggregate. Within 5 business days after receipt of notice
of Landlord’s approval of the Budget, Tenant shall notify Landlord how much of
the TI Allowance Tenant has elected to receive from Landlord. Such election
shall be final and binding on Tenant, and may not thereafter be modified without
Landlord’s consent, which may not be unreasonably withheld or delayed. The TI
Allowance shall be disbursed in accordance with this Work Letter. In addition to
the TI Allowance, Landlord shall reimburse Tenant up to $0.15 per usable square
foot of the Premises for actual costs incurred by Tenant for the preparation by
Tenant’s interior design firm of a test fit of the Premises.

Tenant shall have no right to the use or benefit (including any reduction to
Base Rent) of any portion of the TI Allowance not required for the construction
of (i) the Tenant Improvements described in the TI Construction Drawings
approved pursuant to Section 2(d) or (ii) any Changes pursuant to Section 4;
provided, however that any portion of the TI Allowance not required for the
items listed in subsections (i) or (ii) above, may be used by Tenant for the
payment of architectural, engineering and other consultant fees incurred by
Tenant in connection with the Tenant Improvements and other expenses incurred by
Tenant for improvements which shall remain in the Premises and will be useable
by future tenants following the expiration or earlier termination of the Term of
the Lease. Tenant shall have no right to any portion of the TI Allowance that is
not disbursed before the last day of the month that is 12 months after the
Commencement Date.

(c) Costs Includable in TI Fund. The TI Fund shall be used solely for the
payment of design, permits and construction costs in connection with the
construction of the Tenant Improvements, including, without limitation, the cost
of electrical power and other utilities used in connection with the construction
of the Tenant Improvements, the cost of preparing the TI Design Drawings and the
TI Construction Drawings, all costs set forth in the Budget, including
Landlord’s Administrative Rent, and the

 

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cost of Changes (collectively, “TI Costs”). Notwithstanding anything to the
contrary contained herein, the TI Fund shall not be used to purchase any
furniture, personal property or other non-Building system materials or
equipment, including, but not limited to, Tenant’s voice or data cabling,
non-ducted biological safety cabinets and other scientific equipment not
incorporated into the Tenant Improvements; provided, however, that a portion of
the TI Allowance up to $15.00 per rentable square foot of the Premises may be
used for costs incurred by Tenant with respect to the Premises for equipment,
architectural, engineering and other consulting fees, voice or data cabling,
project management, furniture and equipment.

(d) Excess TI Costs. Landlord shall have no obligation to bear any portion of
the cost of any of the Tenant Improvements except to the extent of the TI
Allowance. If at any time and from time-to-time, the remaining TI Costs under
the Budget exceed the remaining unexpended TI Allowance, Tenant shall deposit
with Landlord, as a condition precedent to Landlord’s obligation to fund the
Tenant Improvements, 100% of the then current TI Cost in excess of the remaining
TI Allowance (“Excess TI Costs”). If Tenant fails to deposit, or is late in
depositing any Excess TI Costs with Landlord, Landlord shall have all of the
rights and remedies set forth in the Lease for nonpayment of Rent (including,
but not limited to, the right to interest at the Default Rate and the right to
assess a late charge). For purposes of any litigation instituted with regard to
such amounts, those amounts will be deemed Rent under the Lease. The TI
Allowance and Excess TI Costs is herein referred to as the “TI Fund.” Funds
deposited by Tenant shall be the first thereafter disbursed to pay TI Costs.
Notwithstanding anything to the contrary set forth in this Section 5(d), Tenant
shall be fully and solely liable for TI Costs and the cost of Minor Variations
in excess of the TI Allowance. If upon Substantial Completion of the Tenant
Improvements and the payment of all sums due in connection therewith there
remains any undisbursed portion of the TI Fund, Tenant shall be entitled to such
undisbursed TI Fund solely to the extent of any Excess TI Costs deposit Tenant
has actually made with Landlord.

(e) Payment for TI Costs. During the course of design and construction of the
Tenant Improvements, Landlord shall reimburse Tenant for TI Costs once a month
against a draw request in Landlord’s standard form, containing evidence of
payment of such TI Costs by Tenant and such certifications, lien waivers
(including a conditional lien release for each progress payment and
unconditional lien releases for the prior month’s progress payments), inspection
reports and other matters as Landlord customarily obtains, to the extent of
Landlord’s approval thereof for payment, no later than 30 days following receipt
of such draw request. Upon completion of the Tenant Improvements (and prior to
any final disbursement of the TI Fund), Tenant shall deliver to Landlord:
(i) sworn statements setting forth the names of all contractors and first tier
subcontractors who did the work and final, unconditional lien waivers from all
such contractors and first tier subcontractors; (ii) as-built plans (one copy in
print format and two copies in electronic CAD format) for such Tenant
Improvements; (iii) a certification of substantial completion in Form AIA G704,
(iv) a certificate of occupancy for the Premises; and (v) copies of all
operation and maintenance manuals and warranties affecting the Premises.

6. Miscellaneous.

(a) Consents. Whenever consent or approval of either party is required under
this Work Letter, that party shall not unreasonably withhold, condition or delay
such consent or approval, except as may be expressly set forth herein to the
contrary.

(b) Modification. No modification, waiver or amendment of this Work Letter or of
any of its conditions or provisions shall be binding upon Landlord or Tenant
unless in writing signed by Landlord and Tenant.

 

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Annex 1

Base Building Description

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11119 North Torrey Pines

SAN DIEGO

 

BASE BUILDING DESCRIPTION

MULTI TENANT

WARM SHELL LAB & OFFICE BUILDING

July 6, 2011

CONFIDENTIAL & PROPRIETARY

 

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LOGO [g230180g76r42.jpg] Alexandria 11119 North Torrey Pines

Base Building Description July 6, 2011 CONFIDENTIAL & PROPRIETARY

PROJECT DATA

PROJECT:

ADDRESS: 11119 North Torrey Pines San Diego, CA 92122

DATE: July6, 2011

General Base Building Information

1. Project: Redevelopment project of a single building

2. Construction Type Type III B, Fully Sprinklered

3. Number of Buildings in Campus One (1)

4. Number of Stories Two (2) with one lower level

5. Use B Occupancy

6. Estimated Project Site Area 4.404 acres

8, Parking provided Tenant will be provided with parking ratio of 3.0/ 1,000 USF
leased

9. Trash and Recycling New Trash enclosure East side of building

10. Drive Aisle Widths 26’-0” wide drive aisles provided at fire lanes and 24’
-0” wide drive aisles provided for parking aisles

11. Applicable Codes: 2010 California Building Code (CBC) based on the 2009 IBC
arid including numerous State of

California Amendments

2010 California Green Building Standards Code (GBC)

2010 California Electrical Code (CEC)

based on the 2009 NEC and including State of California Amendments

2010California Mechanics I Code (CMC)

based on the 2009 UMC with the State of California Amendments

2010 California Plumbing Code (CPC) based on the 2009 UPC with the State of
California

Amendments

 

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LOGO [g230180g96o20.jpg] Alexandria 11119 North Torrey Pines

Base Building Description July 6, 2011 CONFIDENTIAL & PROPRIETARY

2010 California Fire Code (CFC) based on the 2009 International Fire Code

2010 California Energy Efficiency Standards

Other Regulations:

NFPA (Current Edition)

2CAL-OSHA

CCR 2010 Title 24 California Code of Regulations Energy Commission

Handicap Standards—Federal Regulations and American Disabilities Act (ADA)

Note: Applicable codes may change as the applicable local and state governing
bodies adopt new codes.

12. Live Loads Flat Roof: All Floors: 20 PSF 100 PSF

13. Floor-to- Floor Height Basement First Floor: Second Floor: (+/-)11’-0” 14-0”
14-0”

SHELL COMPONENTS TO BE PROVIDED BY LANDLORD

Lobby: Landbrd to provide new feature stair at the main lobby entrance. Feature
stair to include a steel stringer with concrete pan structure, clad with stone
tile. Railing to be structural glass with integral stainless steel handrail.
Landlord to provide structural openings for a two story lobby including the
structural opening for the feature stair. Landbrd to provide all lobby finishes
includingflooring, walls, ceiling, HVAC, electrical, etc for a new pass
thru-bbby.

Elevators: Landbrd to provide one (1) existing passenger elevator (with new dual
sided cab and new architectural finishes and new ceiling and lighting), one
existing (1) combination passenger/freight elevator and one (1) new
passenger/freight. Elevator interiors to be provided with stainless steel and
panel finishes.

Secondary Exit Stairs: 11119 NTPR to be provided with a secondary exit stair at
the east and west end building.

HVAC: Landbrd to provide chilled and heating hot water infrastructure to support
a warm shell lab-office building including heating hot water and chilled water
supplied from the modified central plant in the basement and mechanical yard.

3

 

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LOGO [g230180g07r15.jpg] Alexandria CONFIDENTIAL &

11119 North Torrey Pines PROPRIETARY

Base Building Description July 6, 2011

Electrical

Landlord to provide a 4,000 AMP, 480V underground pull section in the main SDGE
room as well as a small panel and meter for house loads (elevators, site
lighting, etc).

SHELL OUTLINE SPECIFICATIONS SITE WORK:

Site Utilities

All sewer, gas, water, storm drain, electrical, services as required with the
following minimum sizes:

Fire Service -existing

Sanitary Sewer—existing

Domestic Water—existing

Reclaimed water as required for site irrigation -

Chilled Water-stubbed into lower level

Heating HotWater -stubbed into lower level

Site Area

All site scope including asphalt paving, curb and gutter, concrete walkways,
landscaping and enhanced paving areas.

Landscaping and Hardscape

Existing site irrigation system to be expanded to cover new improved landscaped
area. Modified landscaping throughout the site and new hardscape at main
building entrances and courtyard area

Parking Lot Lighting

Existing parking lot lighting to remain

Pedestrian Lighting

Tree up-lighting and low level fixtures, minimum lighting levels per City of San
Diego lighting Ordinance.

Signage

Landlord to ins tall one shared monument sign at the drive entrance to 11119
NTPR

Loading Zone

Building to be provided with a new loading area on the east and west side of the
building.

BUILDING SKIN:

Vision Areas

Floor to ceiling curtainwall glazing is comprised of a low E insulating glass
unit provided by viracon. Spandrel areas are to include a metal pan “shadow box”
behind the vision panels. Punched openings to include new low E glazing with
similar performance to the curtainwall and a slightly darker glazing color.
Entry glazing at

4

 

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LOGO [g230180g64y80.jpg] Alexandria CONFIDENTIAL &

11119 North Torrey Pines PROPRIETARY

Base Building Description July 6, 2011

both the north and south bbby to comprise of a clear laminated structural
glazing unit.

Aluminum Framing

Curtain wall framing is a -field installed “stick built” system, comprised of 2
1/2” x 7 1/4” offset captured verticals and 2 1/2” x 7 1/2” glazed in
horizontals utilizing “rain screen” principles. Existing punched openings to be
comprised of a new2 1/2” x 7 1/2 flashed in storefront system. Lobby entrances
to comprise of a structural glass wall system with structural glass fins at the
double height lobby.

Exterior Wall Finish

Areas not provided with curtain wall and punched openings to be a painted
concrete finish.

Entry Doors

6’-0”x8’-6” entry doors are to be set within a 1” thick laminated structural
glazing system. Doors are to be 1/2” thick herculite doors with satin stainless
steel top patch fittings, and bottom rail, and concealed floor closers.

MOISTURE AND THERMAL PROTECTION:

Roofing

Existing roof to remain

Building /Sound & Thermal Insulation

Landlord to provide where applicable fiber glass batts or blankets of types and
R-values specified below for the various applications as manufactured by
Marwille Building Products Corp., Owens-Corning Fiberglas Corp., or equal. Wall
insulation to be kraft faced batts, R-13 or the R-value required for the
specified wall cavity. Provide fiber glass batts or approved equal with vapor
barrier at spandrel glass. Provide full thick batts at toilet rooms and all
interior walls.

Fire Safing

Landlord to provide applicable fire safing as required by code at top of wall
conditions and slab deck conditions

EXIT STAIRWAYS:

Treads and Landings

Fabricate stairs with closed risers and pan treads to receive concrete fill, as
indicated. Form treads with minimum 12 gage bent plate with deformed bars full
length of tread welded to bent ends. Form stringers of structural steel channel
sections or rolled steel rectangular hoIlow sections

MISCELLANEOUS:

Sealants

Sealant Standard: Provide manufacturer’s standard sealant of type indicated,
complying with ASTM C 920 requirements. Use silicone based sealants at all
glazing

5

 

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LOGO [g230180g27j98.jpg]

Alexandria CONFIDENTIAL &

11119 North Torrey Pines PROPRIETARY

Base Building Description July 6, 2011

conditions. In general, for use on areas subject to foot or vehicle traffic use
multi-part, pourable, urethane sealant. At exterior or perimeters of openings in
exterior walls use non-sag, urethane sealant. All stone to be provided with an
appropriate sealer.

Sheet Metal

Provide minimum 24 GA galvanized sheet metal to comply with recommendations of
SMACNA “Architectural Sheet Metal Manual” for the basement and lobby space
complete; including regtets and counter flashings.

Steel Doors

Landlord to provide 18 gauge hollow metal steel doors, frames and stops for the
basement only. Prime and paint ( see Division 9, painting). Applicable
weatherstripping to be provided at allexterior doors.

Hardware

All building hardware shall be 626 finish (satin stainless steel finish). Lock
and latch sets shall be equal to Schlage Series L, Full mortise with lever
handle design. All fire rated doors and storefront entry doors shall be equipped
with closers. All hardware shall meet state Title 24 requirements for
handicapped accessibility.

Fireproof ing

Landlord to provide 2 hour protection at all primary and secondary structural
columns, beams and metal floor decks, supporting the first and second floor
level to allow for multiple control areas on each floor.

FINISHES:

Custom Interior Doors

Common area doors to be pre-finished woof doors.

Paint

Landlord to provide all interior gypsum walls (Lo-Glo satin sheen), exposed
steel surfaces, hollow metal doors and frames and interior columns to receive
paint: 3 coats over primer at exterior, 2 coats over primer at interior.

Metal Framing & Furring Channels

Steel studs shall be 16, 20, and 25 gauge as indicated on drawings or as
required. Drywall furring shall be 25 gauge ‘hat’ sections. Backing plates shall
be 1/8” steel of proper size to accommodate fastenings and shall be welded to 20
gauge steel studs.

Gypsum and Drvwall

Landbrd to provide gypsum wallboard at designated locations shown. Board
thickness to be 5/8” at vertical and horizontal surf ace applications. In areas
requiring fire ratings, wall board shall be 5/8” Type “X”. In areas subject to
moisture, use water resistant (WR) gypsum board. All gypsum board surfaces in
lobby shall be Levels finish and all others shall be Level 4. Tenant side of all
walls shall be Level 1 (Fire Taped).

 

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LOGO [g230180g99t62.jpg]

Alexandria CONFIDENTIAL &

11119 North Torrey Pines PROPRIETARY

Base Building Description July 6, 2011

SPECIALTIES:

Window Coverings

Building standard non-electrical mecho shades for the balance of the building to
be provided by Tenant.

Siqnaqe

Tenant to provide aII suite entrance, building and monument signage per Landlord
standards.

Fire Extinguishers

Landlord to provide as required by code,

CONVEYING SYSTEMS:

Hydraulic Elevators

Existing passenger elevator in the lobby with new dual sided cab and newfinishes

Existing service elevator at the east side of the building

New 4,500 Ibs service elevator to be provided on the west side of the building.

MECHANICAL AND PLUMBING:

Plumbing

Landlord to provide plumbing for roof drains and new restroom fixtures.

Heating. Ventilating & Air Conditioning

Landlord to provide a modified chiller plant with 430 tons of capacity. . 200
tons of cooling tower capacity is available for water cooled equipment within
the tenant space. Condenser water piping shall be stubbed out of the basement
chiller room for hookup by future tenant improvements.

Landbrd to provide an modified heating hot water plant capable of 4,000,000 BTU

Tenant to be allocated their pro-rata share of the chiller plant, cooling tower
capacity and heating hot water capacity.

Chilled water and heating hot water lines will be stubbed out from the basement
chiller room for hookup during future Tenant Improvements.

Landbrd will install HVAC equipment to serve the new tobby and restroomarea.

Controls: Landlord will provide a controls system to support the central plant
and lobby mechanical system . System to be expanded for future tenant
improvement HVAC systems.

NOTE: (The HVAC infrastructure is designed to accommodate future tenant
improvements to be provided by the Tenant) Any air handlers, exhaust fans, fan
coils, etc for the tenant space to be provided by Tenant.

7

 

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LOGO [g230180g87o01.jpg]

Alexandria CONFIDENTIAL &

11119 North Torrey Pines PROPRIETARY

Base Building Description July 6, 2011

ELECTRICAL:

Building Power and Lighting

Landlord to provide main SDG&E electrical room and main telephone MPOE room.
277/480 volt, 4,000 AMP underground pull section to be provided in the main
electrical room with a small house meter for house loads (ie: lobby, elevators,
etc). The tenant metering section and distribution section to be provided by
Tenant. Interior distribution for tenant use to be provided by Tenant.

Power for Equipme nt

Landlord to provide power wiring and connection to chilled water and heating hot
water equipment.

Building Power and Lighting

Typical lobby lighting and power to be provided. All other power and associated
devices to be provided by Tenant.

Telephone. Data Communications, and Access Control

Landbrd to provide base building MPOE room to be provided for future use by
tenant as necessary.

Landlord to provide first floor building perimeter doors, suite entrance door
and two basement perimeter doors with electrified hardware. Landlord to provide
a access control system for the common area doors that can be expanded for
future tenant areas. All necessary devices, control panels, wiring, additional
conduit, access doors, etc., for operation and monitoring of access control
system in the tenant space shall be provided by Tenant however the system shall
be the landlord standard system provided in the rest of the building.

UPS System and Emergency Generator

Any UPS systems are to be provided by tenant for their computer servers or to
provide standby-power to the building.

The existing 60QkVW750kVA campus diesel emergency generator located east of
11119 NT PR will be available for tenant to use on a pro-rata basis. Tenant is
required to provide individual standby povusr distribution, ATS and associated
switchgear and wring from existing generator and new circuit breaker in the
generator switchgear.

Fire Protection

Landlord to provide a typical sheII sprinkler system The fire sprinkler system
shall be per the CBC, CFCand NFPA requirements. Isolation valves to be installed
to allow/for isolation of the fire sprinkler system by floor. Tenant is
responsible for any second layer of fire sprinkler heads above the finished
ceiling required due to the nature of building.

Fire Alarm System

Landbrd to provide fully functional fire alarm systemfor the flow meters, lobby
and elevators. System to be expandable to cover future Tenant Improvements.

END OF BASE BUILDING DESCRIPTION

8

 

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Annex 2

Tenant Improvement Specifications

LOGO [g230180g33q09.jpg]

11119 North Torrey Pines Road -

July 6, 2011

TENANT IMPROVEMENTS SPECIFICATIONS

State and Local Code Compliance

Design and construction shall conform to all Federal, State and Local building
codes and ordinances to include but not limited to the most current version of
the following documents:

2010 California Building Code

2010California Plumbing Code

2010 California Mechanical Code

2010Califcfnia Energy Code

National Electric Code/ 2010 California Efedric Code 2008 Title 24, California
Energy Efficiency Standards

California Fire Code

2010 California Green Building Standards Code California Division of
Occupational Safety and Health San Diego Municipal Code

LEED Certification Guidelines for Tenant

Tenant agrees to design their suite improvements to comply, at a minimum with
LEED Silver Certification requirements with specific emphasis on the Energy and
Water Conservation categories noted below.

ARCHITECTURAL IMPROVEMENTS

Interior Partitions Metal stud and drywall partitions per tenant’s floor plan
requirements.

3W studs typical, gauge and spacing as required by code, and Type X, 5/8”
drywall

Standard Interior Partitions penetrate ceiling grid 6”

Full height partitions to underside of structure at demising locations or where
so un ^security

requirements occur

Fire rated assemblies as required by code, full height, tunnel or shaft wall
construction as approved

by local building officials

Backing required in any walls where casework, appliances, equipment a1 fixtures
will be mounted

Coordinate with structural engineer to determine any specialty requirements for
heavy loads.

Smooth drywall finish to Level 4

Insulation Batt insulation within wall cavity as required for sound control.

Doors, Frames &

Hardware Offices/General Use Areas

Suite entry door assemblies are 3’ x 9’ or 6’ x 9’ pair, glass, Herculite doors

Interior door assemblies are 3’ x 8’, solid core, wood veneer, flush face doors
with no added

urea-formaldehyde resins

Anodized aluminum frames, natural finish, 3’ x8’ or 6’ xS’pr. with integral 3ET
sidelights at offices

and conference rooms

Lever style, heavy duty, satin aluminum hardware

Suite enlry doors are require Blumcraft hardware; interior doors a re passage or
cylindrical

locksets

Include components and ratings as required by code

1

 

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LOGO [g230180g81l16.jpg] Keying to be compatible with Landlord’s master system

Lab/ Lab Support/ Equipment/ Storage Areas

Door Assemblies are 3’ x B’ or 3-61 x 8’ to match offices except where noted as
painted hollow

metal (fully welded)

Doors stained to match offices and 2’w x3’h vision lite

Lab offices and shall be 3’ x 8’, 3’-ff x 8’ or 6’ x 8’ custom stained to match
office areas with Alum

frames to match offices, except where noted to be welded hollow metal frames

Lever style, heavy duty, satin aluminum cylindrical passage lockset hardware

Include components and ratings as required by code

Keying to be compatible with Landlord’s master system

Windows Frames to match style of door frames in office areas

Ceiling System General

Ceiling height at 10-0” or max height as possible to obtain

T-Bar suspension installation per code, utilize BERC clips in lieu of 2 wall
angle Office Areas

Armstrong XL 2’x 2’, 15/1S1 exposed T-Grid, white

Armstrong 2’x 2’ acoustic tile. Dune 1775NF (no added/low formaldehyde) with
beveled tegular

edge, white Lab/ Lab support/ equipment/ storage areas

Armstrong XL 2’x 4’, 15/16” exposed T-grid, white

Armstrong 2’ x 4’ Climaplus (No added/ low formaldehyde) with beveled, tegular
edge, white Vivarium

Suspended 5/8” gyp. board 1-5/8’ hat channel and black iron runners, where shown

IV/ndoivCoi/ering WlechoShads Systems or Equal roller shades, manual controls,
EcoVeil 1350, color #1369 Silver, shade cloth mounted within blind pocket Lobby
shades to be electrified.

Cab/nefry Construction Designation APAC-D plugged with exterior glue, 3/4’thick
or 3/4” high-pressure particle

board with no added urea-formaldehyde containing resins for Break Rooms,
CopyM/ork Rooms and Conference Rooms Adhesive compliant with Indoor Air Quality
criteria per ASTM D-5116 Plastic laminate finish, countertops and splashes shall
be constructed in accordance with Wl Manual of Millwork, “Custom” grade

Self-closing hinges with vertical, horizontal and depth adjustment Adjustable
shelf standards, full extension, heavy-duty drawer glides

Lab casework shall be metal Hanson Lab Furniture Inc. Fisher Hamilton, or
equivalent or plastic laminate and constructed in accordance with Wl Manual of
MilIwork, ‘Custom1 grade Self-closing hinges with vertical, horizontal and depth
adjustment Adjustable shelf standards, full extension, heavy-duty drawer glides
Counter!ops at labs to be TRESPA or equivalent countertops Refer to drawings for
modular casework requirements

Floor Covering Office and Admin Areas

Monterey or Equal, Overview Multi-Level Loop Pattern, minimum allowance of
$30.OQ/syd

installed

Adhesives: GLP16003-latex resin based multi-purpose carpet floor adhesive, C16E
GLP91505—floor preparation primers, C36E, C46E GLP582G6—latex resin based
multi-purpose broadloom carpet adhesive, B-19 GLP60151—latex based carpet
broadloom seam sealer, B-71

 

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LOGO [g230180g77w97.jpg] 4” rubber base with adhesive com pliant with Indoor Air
Quality criteria per ASTM D-6116

Lab/ Lab Support/ Equipment/ Storage Areas

Vinyl Composition Tile, Armstrong or equivalent, 12” x 12” x 1/8”

Adhesive compliant with Indoor Air Quality criteria per ASTM D-5116

4* ° rubber coved base with adhesive compliant with Indoor Air Quality criteria
per ASTM D-5116

Vivarium & Glass Wash Epoxy flooring vtl 8” integral coved base

Server Room Static Dissipative tile 24” x 24” Mipolam orVPI, non-grounded

Tissue Culture Resilient sheet flooring with matching welded seams and 6”
integral coved base -Mediritech or equal

Paint Shall not exceed the VOC and chemical component limits of Green Seal’s
Standard GS-11

Epoxy paint—provide at Vivarium, Glass Wash and Tissue Culture

Restfooms Floors and wet walls to be finished with porcelain tile (60” AFF on
wet walls), vinyl wall covering above

tile and on non-wet walls, solid surface count ertops with full coverage
laminate aprons, stainless steel toilet partitions, stainless steel Boberick
accessories, drywall ceilings with recessed can lights and cove lighting above
toilets, urinals and mirrors.

Cold Rooms Wall Panels Withstand live lateral load of 100 Ibs point load, 5 psf
uniform load

Ceiling Panels Withstand their own weight, dead loads, and live loads of 25 Ibs
with maximum deflection of1:180

Cooler Rooms Maintain 4 degrees F; plus or minus 2 F degrees

Air Tiahlnessof Assembled Unit Limit air infiltration through assembly to 0.06
cuft/min/sq ft of wall area, measured at a reference differential pressure
across assembly of 1.57 psf as measured in accordance

with ASTME 283

Vapor Sea I Interior room atmospheric pressure of 1 inch sp, 72 degrees F, 40
percent RH: No failure Vapor Tig hi ness Sufficient to eliminate frost
accumulation Insulation Thickness 4 inches

Doors: Overlap type for 34 x 78 inch opening, construction as for walls but with
edges closed; 2-1/2 inch thick insulation; flexible gasket containing magnetic
strip on four edges: heated gasket thermos!atic control with two way air relief
valve. Configuration and quantity as shown on drawings

View Windows Sealed insulating glass units in doors

Hardware Cast brass, nylon bearing self closing hinges, roller catch latch and
keeper; cylinder lock and inside safety release mechanism

Shelving and Supports Stainless steel construction, open rod construction,
freestanding style, adjustable supports

Deli Boxes Rear load, deep shelving with front access at each door

Light Fixtures Vapor tight, incandescent with 150 watt lamp, operating toggle
switch on exterior wail of room with pilot light, wired in rigid conduit

 

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LOGO [g230180g25s64.jpg] Cooling System Direct expansion refrigerant, water
cooled; remote located condensing unit for all rooms, evaporator, unit cooler,
sell contained with valves, controls, switches, timers, refrigerant piping,
insulated suction lines, and wiring. Size and capacity to maintain environment
specified; hot gas defrost; electrically heated trace condensate drain

Cooling Unit Locate remote from cold storage rooms. Pipe coolant to cdd rooms

Specialties Pass Throughs stainless steel (#3160 with mechanical interlock, view
window in doors and exhausted

by rooftop fan. Unit shall be seamless and fully welded shall have installation
tlarge and supplied with support brackets as required

Lockers 4 High x 12” w. plastic laminate lockable units with matching sloped
top. Provide on built up 6” pedestal. Interiors shall be white melamine. Supply
with number plates

Corner guards Stainless Steel in all tab / lab support areas 3 %’ x 3 %’ x 5’
Goat Racks Provide unitized aluminum coat hooks at each locker location

ProiectorScreens Install motorized projections screens (Dayiite or equal) with
recessed housing above ceiling and controls to switch

STRUCTURAL

Btdg Structure Replaceme nt of a ny sp ray-appli ed f ir e protect io n t hat i
s r emov ed or dam aged d uri ng th e co urse of tenant improvements is required

Roof Structure Due to coastal height restrictions, no equipment is allowed on
the roof FIRE PROTECTION

Fire SprmHer Spacing and number of heads shall comply with recommendations of
NFPA 13 for type of occupancy. Ceiling mounted high temperature heads (pendant,
natural brass with chrome finish, semi-recessed with matching adjustable metal
escutcheon) shall be used in those areas required by code. Server rooms shall
have pre-action fire protection system with separate riser

Fife Extinguisher Semi-Recessed, stainless steel fire extinguisher cabinet

Dry chemical fire extinguisher bottle: Sentry 5 or equivalent Provide quantity
required by code

Fire Alarm Suite improvements to include all devices required by code and must
be connected to the building fire

atarm system. All work must be performed by an authorized Notifier
representative with a minim urn of 10 years experience

PLUMBING—TENANT IMPROVEMENT MINIMUM CRITERIA

All work shall be in strict conform a nee with the following codes & standards
Uniform Plumbing Code Uniform Building Code Uniform Fire Code Local Fire
Department Regulations National Fire Protection Association

4

 

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LOGO [g230180g88p11.jpg] All other Authorities Having Jurisdiction

All water fixtures used in general office space inducting restrooms but not
including Process Fixtures, shall exceed the minimum rating by 30% specified in
the Energy Policy Act of 1992, in accordance with LEED calculations

Adhesives shall comply: VOC content shall be less than the current VOC content
limits of SCAQMD Rule #1168, AND all sealants used as fillers must meet to
exceed the requirements of the South Coast Air Quality Management District
Regulation 8, Rule 51

Principal Systems to be Included in the Design

1. Sanitary sewer drain, waste & went—all spaces above ground level drain by
gravity to the

public sewer. 2 Compressed Gases ((CA, N2, C02)

HouseVacuumSystem

Water Systems (ICW. IHW, DCW, DHW, Dl). Water usage shall be submetered and
measured for bill back purposes to the tenant

Liquid Nitrogen System

Typically, localized instantaneous electric domestic hot water heaters serve
lavatories and sinksinthe tenant suites

Corde nsate cf a i n pipi n g i1 u n s fr oti t he H VA C u n its to the nearest
i nd irect wa st e re ceptor (max. 60’ AFF.Jortoa Janitor’s Sink

All drain piping from HVAC equipment and plumbing equipment runs to the nearest
indirect waste receptor or Janitor Sink

Materials Soil, Waste and Vent above Ground: Service-weight, no-hub cast-iron
pipe and fittings

Soil, Waste and Vent Below Ground and to 5’-0” Outside of Building:
Service-weight, cast-iron

hub& spigot pipe and fittings

Industrial Waste and Vent piping above ground to be plenum rated polypropylene
DWV

Industrial Waste and Vent piping below ground to be polypropylene DWV.

Industrial Waste piping to route to a sample port just prior to connection to
sanitary system

Water and Condensate Drain Piping Above Ground: Type’L” hard-drawn copper type.
ASTM

B88, and wrought copper fittings, ANSI B1 6.22. All hot water supply piping
shall be insulated

with 1-inch thick fiberglass insulation for sizes up to 2-1/2 inch size, 1-1/2
inch thick above 2-inch

size piping. Condensate drain piping above ceilings to be insulated

Water Piping Below Ground 4-inches and smaller: Type’K” hard-drawn copper
tubing, ASTM

B88, and wrought copper fittings ANSI B 16.22, silver brazed joints

Natural Gas Piping: Buried piping to be Polyethylene per ASTM D2513; above grade
to be

Schedule 40 black steelper ASTM D2513

Indirect Drains: Type ‘M1 copper fittings, ANSI B16.22, solder joint type.
Insulate with Manville

Micro-Lok65QAP

Specialty gas piping shall be type L copper, silver brazed

Deionized Water: Schedule 40 polypropylene with socket fused joints

Liquid Nitrogen: Vacuum insulated stainless steel tubing

Adhesives shall comply: VOC content shall be less than the current VOC content
limits of

SCAQMD Rule ealants used as fillers must meet or exceed the requirements of the
South Coast

Air Quality Management District Regulation 8, Rule 51

Plumbing Fixtures Water C losets, A D A C ornp lia nt: H a nd ica p-h ei ght:
vitreou s c h i n a, wal I m ou nted, floor out let, low-

flush toilet with flush valve

Water Closet: Vitreous china, wall mounted, floor outlet, low-flush toilet with
flush valve Urinal, ADA Compliant: Wall hung, vitreous china, ultra low-flush
urinal with flushometer. Mount at handicap height

5

 

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LOGO [g230180g46j26.jpg] Urinal: Wall hung, vitreous china, pint urinal with
flushometer

Lavatory: Vitreous china wall hung lavatory with a single temperature-metering
low flow faucet

Faucet: Infra-fed sensoi1 control faucet on 120 v power

Lab sink: 25 in. x 22 in. x 12 in. deep stainless steel sink.

Scullery sink: Double compartment stainless steel sink with 14 in. deep basin

Service Sink: Corner model, terrazzo mop service basin with vacuum breaker
faucet.

Emergency Shower/Eyewash: Water Saver Faucet Co. Model SSBF2150 or equivalent

Electric Water Cooler: Barrier-free, wall hung water cooler with push bar
control and equipped for

handicap usage

All water fixtures used in general office space including restrooms but not
including Process

Fixtures, shall exceed! he minimum rating by 30% specified in the Energy Policy
Act of 1992, in

ace or dance with LEED calculations

Drains Floor Drains: Cast iron body floor drains with nickel bronze top,
membrane clamp and adjustable

collar

Floor Sinks: Cast iron body receptor with acid-resistant coated interior, bottom
dome strainer, seepage flange and grate

Break rooms shall have either single or double compartment 16 gauge stainless
steel sinks. Minimum acceptable building standard sinks and accessories:

SingleCompartmentSmk: Just Mode1#SX-2133-A-GR

Double Compartment Sink: Just Model#DL-2133-A-GR

Drain: Just Model #J-35FS

Faucet: Just #J-900 single handle 8” center

Garbage Disposer: In-Sink-Erator #444 0.75HP @ 120/1^0

Provide air gap fitting for dishwasher, if installed.

HVAC -TEHAHT IMPROVEMENT MINIMUM CRITERIA

All work shall be in strict conformance with the following codes and standards
Uniform Mechanical Code Uniform Plumbing Code Uniform Building Code Uniform Fire
Code Local Fire Department Regulations National Fire Protection Association All
other Authorities Having Jurisdiction

Principal Systems to be Included in Design

Summer-Winter air conditioning for all occupied areas, including corridors and
restrootns

The current building has a common central plant that providesCHW for cooling.
CHW piping is delivered to the basement and capped

Tenant spaces shall be conditioned by either fan coils above the ceiling space
or air handlers bcated in basement

Toilet exhaust systems for all restrooms and janitor rooms per code

Building controls to be Johnson Metasys DDC System integrated with the existing
site-wide DDC system with electric controllers

Existing Cooling Plant The existing cooling plant consists of (1) 300T
centrifugal and (1) 250T Turbocor chiller allocated on a pro-rata basis between
3550 John Hopkins Court and 3530 John Hopkins Court and chilled

6

 

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Work Letter    11119 N. Torrey Pines/Ligand - Page 20

 

LOGO [g230180g88b88.jpg] water usage shall be monitored for billing pur poses

The tenant shall be responsible for providing and installing all necessary CHW
BTU monitoring

devices

Areas that require continuous 7/24 operation {computer rooms, network server
rooms, etc.) shall

be considered for stand-alone systems; be Liebert, Data-Aire or equivalent. The
system

configuration shall be dependent on room capacity requirements

Existing Heating The existing heating plant consists of boilers with 4,000,000
BTU. Tenant to install all required

distribution piping from the basement chiller room into the Tl space.

Office Areas Fan coils can be installed in office areas above the ceiling space
with ducted supply and return.

Minimum standardfor cabinet style fan coils shall Carrier 42BH type or equal.

Lab Areas These areas shall be serviced by basement or floor mounted 100% OSA
air handling units

equipped as described below

Basement Air Handling Units shall be based on Energy Lab Units or approved
equivalent with the following

minimum components and accessories: Double wall outdoor construction

Backward Inclined Supply fans with high efficiency motors a rtdVFD’s Airflow
monitoring stations Moisture eliminate)1 section

Filtration with 2 in. 30/30 prefliters and 85 % efficient final filters Cooling
and heating coils with corrosion resistant protection Stainless steel drain pan

Teteptione/tTRoom Dedicated 24/7 independent split system units with the fan
coil units mounted above the ceiling space and the condensing unit located in
the basement

Environmental Design The following criteria will be used for sizing the heating
and cooling systems: Conditions

Outdoor Ambient Design Conditions: Summer: 68»F dB, 72«F rnwB, 13«F dB outdoor

daily range Winter: 42«F dB

Indoor Conditions for Air Conditioned Area:

Offices, Labs 72°°F dB ± 3«F dB, Ho Humidity Control

Electrical, Telecom, Storage Typical of office space unless equipment

requires a more specifically control led environment

Ventilation Air
OutdoorairforventiiaiiononihisprojectexceedstherequirementsoftheAmericanSccietyof

Requirements Heating Ventilating and Air Conditioning Engineers {AS HFJAE)
Standard S2-1989, Ventilation for

Acceptable Indoor Air Quality. On average approximately 0.2 cfm per square foot
should be

provided for all office environments.

For laboratory areas provide 100% outside air with the following minimum
requirements:

 

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Work Letter    11119 N. Torrey Pines/Ligand - Page 21

 

LOGO [g230180g11y12.jpg]

1. Biology Areas 8AC/Hr

2 Chemistry Areas 12AC/Hr

Chemical Storage 15AC/Hr

WashAreas 15AC/Hr

BL-3Areas 15AC/Hr

Vivarium 15AC/Hr

Energy Use & The Energy Efficiency Standard, Title 24, to be used to set the
minimum performance

Conservation requirements of this installation, though Tenant agrees their
design will exceed the minimum

savings to comply with LEED Silver Certification.

Ceding Registers Ceil i ng di ffu sers with perforat ed face wit h frame sty I e
com patib le wit h t h e type of ceil i ng us ed.

& Diffusers Surface mounted diffusers require gaskets to prevent leakage.
Diffuser faceplate to have

concealed hinges and latches. Faceplates to be easily removable from the frame.

Supply diffusers, Titus-PMC perforated modular face-size 24” X 24’ for tay-in
ceiling tile.

Linear diffusersfor all hard lid areas.

These manufacturers are considered equal, providing corresponding models meet
specified

requirements. Equivalent substituted equipment to be submitted for the
Designer’s review during

lad of major equipment.

Air Filters AAF, Air Guard

Diffusers. Registers, Grilles Titus, EH Price, Krueger

Duet Work Supply duds, return ducts, and exhaust ducts plenum chambers, housing,
and panels fabricated

from zinc-coated (galvanized) steel sheets conforming to the latest AS TM Specs
A-525. Zinc-coatingtobeofthe”Commerical” class

Exhaust duct from fume hoods shall be 304 stainless steel back to main exhaust
duct Exhaust duct from Glasswash area shall be 304 stainless steel back to main
exhaust duct Ductwork shall be installed in strict accordance with the latest
SMAGMA guidelines and shall also adhere to the latest State and Federal seismic
requirements

Install flexible ducts in a fully extended condition free of sags and kinks,
using minimum length required for connection. Flexible duct suspended on 36”
centers with amin 3M1 wide flat banding material where horizontal support is
required. Joints and connections to be made in accordance with Underwriters
Laboratories, Inc. Connect to rigid sheet metal with min 1/2’ wide collar
positively clamped and secured with screws or other approved fastening

ToM Exhaust Exhausted all rest room sand janitor rooms shall with a m in of 12
air changes per hour

Ventilation

Miscellaneous Exhaust/ The following exhaust system have been installed as part
of the shell design, it is assumed that Ventilation Systems outside ambient air
shall provide makeup air to the exhausted area:

Elevator Machinery Rooms.

Electrical Room(s).

Controls Electronic 0DC building automation system controls the central pant,
located in the lower level of

the building. The system operates the HVAC system and controls occupied and
non-occupied temperature and ventilation schedules. System is expandable for
Tenant Improvements. The system includes monitoring, alarm and by-pass functions
for efficient energy management The DDC System is programmed to log utilities

Electronic digital control to be provided at the tenant zone level; controls
shall be coordinated with the shell building system. Purchase and installation
of all utility devices and controls within the tenant space are part of Tenant
Improvement scope of work

 

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Work Letter    11119 N. Torrey Pines/Ligand - Page 22

 

LOGO [g230180g15k52.jpg]

ELECTRICAL -TENANT IMPROVEMENT MINIMUM CRITERIA

All work shall be in strict conforms nee with the following codes and standards

NFPA 70 National Electrical Code

NFPA 101 Life Safety Code

BOCA Building Codes

IES—Illuminating Engineering Scciety of North America

Distribution The building distribution is located in basement with 277V4BQ volt,
4,000 AMP underground pull

section to be provided in the main electrical room with a small house meter for
house loads (ie: lobby, elevators, etc). The main distribution board, tenant
meter section and other electrical distribution work will be part of the Tenant
Improvement.

Electrical panels must grouped in dedicated electrical rooms not installed
randomly within tenant

spaces

All conductors for new switch gear to be installed as new

New HVAC equipment to be fed from the basement distribution switch gear. New
external starters

for HVAC equipment

Panel boards and distribution boards shall be located at the satellite
electrical rooms to feed the

office/lab and support areas

All new transformers to be energy efficient Energy Star type

Tenant to provide 208V branch circuit panelboards within the tenant space

Distribution Panelboards

Equipment All Panelboards to be new; all Tl panels to be surface mounted and
stacked if necessary, inside

the dedicated electrical rooms.

Panelboards for lighting to be 48QY/277V Sip 4Wtobe series rated for fault
current. All Electrical panels are to be located in electrical equipment rooms.

Panelboards for power and control power shall be 208Y/120V 3(jj 4W with minimum
fault current ratings of 10,000 AIC. located in electrical equipment rooms.
Panelboards served through transformers shall have integral main over current
protection, sized as indicated on the drawings.

All panelboards have bolt-on circuit breakers, 42-pole space, bus ratings (as
indicated on the panel schedules) and are either surface or flush mounted (as
indicated on the panel schedules). All panels located in electrical rooms to be
stacked or switch board mounted to minimize space used by the panels

Panelboards with an isolated ground bus are required as noted. All 206Y/120V 3<p
4W panelboards shall be provided with 100% rated neutral bus; panelboards for IT
room UPS equipment to be 200% rated neutral bus with an isolated ground bus.

Feeders

Feeders shall be copper conductors (Type THHN or THW) routed in electro metallic
tubing (EMT), polyvinylchloride (PVC) conduit, or rigid galvanized steel (RGS)
conduit. EMT shall be used in all indoor, concealed locations where the feeder
is protected from damage or weather. RGS conduit shall be used in exterior
applications or where the conduit may be exposed to physical damage. PVC shall
be used for all below-grade applications. Feeders shall be sized according to
the singleline diagram in the construction documents. Feeders shall be
rack-mounted in accessible ceiling spaces or routed below grade under the slab

 

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Work Letter    11119 N. Torrey Pines/Ligand - Page 23

 

LOGO [g230180g50a53.jpg]

Emergency Power Svsiem

Tenant will be allocated pro-rata share of existing generator at 11119 North
Torrey Pines. All

other emergency power system components to be provided by tenant

Branch C ire uitry

1. ConcluitandWire

a. Branch circuits (or all power circuits serving furniture partition systems,
offce power, convenience outlets, control power, etc. to be nominally sized as
12W 20A.

b. Branch circuits for lighting circuits to be either 277V 20A unless
specifically indicated otherwise( under cabinet lighting is connected to 120V
20A circuits).

c. All area branch circuit conductors to be copper and routed i n metal conduit.

d. Branch circuiting to individual offices shall be (3)#12AWG (two ‘hot’ and one
neutral) plus (1) #12 green ground wire forming a two dedicated 120V 20A 3- wire
circuits to feed a maximum of four offices.

e. Each office to include (2) duplex receptacles, and (1) ring and string
devices per 130 SF office. Quantity to be adjusted per square footage rcom size.

f. Systems furniture feeds to be provided as (4) circuit (8) wire systems with
three normal circuits and one isolated ground circuit.

g. Branch circuits may be increased in size for specific loads or as necessary
to prevent excessive voltage drop on longer circuits.

h. MC cable to be provided as for concealed office wall wiring and concealed
lighting only. All homerunsto be provided in EMT conduit.

2. Electrical Devices

a. Electrical devices including (receptacles and switches) shall be rated
according to the load served.

b. Electrical devices shall be Decora type, white in color with white
thermoplastic cover plates.

c. Cover plates for receptacles and junction boxes shall be labeled indicating
the circuit and panelboard from which the device is fed.

d. All floor furniture feeds shall be flush type, and flush type to be provided
at conference rooms. Floor devices must be 2 hr rated at second floor locations.

3. Lighting Systems

a. Fixtures shall be suitable for the application including the ability to
provide egress illumination where required. Egress light shall be wired and
remain on a night lights.

b. Fixtures shall meet U.L requirements and selection and placement of fixtures
shall comply with AD A requirements.

c. All lighting fixtures shall operate at 277V unless specifically noted
otherwise.

d. Lighting Power Densities (LPD) must exceed with the Title 24 energy savings
by 25%—35% to comply with LEED Silver Certification efforts.

e. Office area to consist of direct/indirect linear pendant style fixtures or
recessed direct/indirect light fixtures type: Focal Point Skylite 2’xZ, FBX-24-B
Perforated Shield, White, lamping and voltage to be confirmed. Landlord reserves
the right to determine use and location ol either style of fixture.

f. Exit Lights—Lithonia LRP, Green on clear, 120/277, EL N,

4 Lighting Control Systems

a. Lighting control must comply with Title 24 requirements (including over-ride
control

 

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Work Letter    11119 N. Torrey Pines/Ligand - Page 24

 

LOGO [g230180g50e24.jpg]

for automatically shutting the lights off at prescribed periods of time and the
ability to over-ride the lighting control for up to two hours of use).

b. Lighting control equipment shall include a programmable lighting control
panel, relay panels {quantity as necessary), over-ride switches (distributed
throughout the space), and interconnecting conductors.

c. Control zones to include perimeter areas for dayi spaces, skylit areas, and
interior areas under 5,OOOSF.

d. Lighting over-rids switches to be located in corridors and similar areas to
allow ease of access.

e. Each r ootn sha 11 b e con tro I led b y dua I -le vel switch i ng f or local
co ntro I.

f. Each private enclosed office to be provided with wall mounted dual-level
switching and a ceiling mounted override motion sensor. Manufacturer: Hubbell or
equal.

5. Mechanical Equipment

a. Power provided from the 480 V or 208 Y/120 V system for line voltage to
mechanical equipment.

b. Control power wiring (other than 120 V as indicated on Mechanical control
wiring diagrams) by the mechanical contractor.

c. Smoke detectors, time clocks, relays, contactors, etc. by the mechanical
contractor.

d. M otor start ers a nd di sc onn ect switch es by the el ect n cal contract or
ac cord i n g to the oontf ol wiring diagrams provided by mechanical contractor.

6. Telephone/Data Room and Low Voltage Wiring

a. The existing MPOErcom in the basement can be utilized

 

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   11119 N. Torrey Pines/Ligand - Page 1

 

EXHIBIT D TO LEASE

ACKNOWLEDGMENT OF COMMENCEMENT DATE

This ACKNOWLEDGMENT OF COMMENCEMENT DATE is made this      day of             ,
        , between ARE-SD REGION NO. 24, LLC, a Delaware limited liability
company (“Landlord”), and LIGAND PHARMACEUTICALS, INCORPORATED, a Delaware
corporation (“Tenant”), and is attached to and made a part of the Lease dated
            ,         (the “Lease”), by and between Landlord and Tenant. Any
initially capitalized terms used but not defined herein shall have the meanings
given them in the Lease.

Landlord and Tenant hereby acknowledge and agree, for all purposes of the Lease,
that the Commencement Date of the Base Term of the Lease is             ,
        , the Rent Commencement Date is             ,         and the
termination date of the Base Term of the Lease shall be midnight on
            ,         . In case of a conflict between the terms of the Lease and
the terms of this Acknowledgment of Commencement Date, this Acknowledgment of
Commencement Date shall control for all purposes.

IN WITNESS WHEREOF, Landlord and Tenant have executed this ACKNOWLEDGMENT OF
COMMENCEMENT DATE to be effective on the date first above written.

 

TENANT:

LIGAND PHARMACEUTICALS, INCORPORATED,

a Delaware corporation

By:  

 

Its:  

 

LANDLORD:

 

ARE-SD REGION NO. 24, LLC,

a Delaware limited liability company

By:  

ALEXANDRIA REAL ESTATE EQUITIES, L.P.,

a Delaware limited partnership,

managing member

  By:  

ARE-QRS CORP.,

a Maryland corporation,

general partner

   

By:

 

 

   

Its:

 

 

 

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Rules and Regulations

   11119 N. Torrey Pines/Ligand - Page 1

 

EXHIBIT E TO LEASE

Rules and Regulations

1. The sidewalk, entries, and driveways of the Project shall not be obstructed
by Tenant, or any Tenant Party, or used by them for any purpose other than
ingress and egress to and from the Premises.

2. Tenant shall not place any objects, including antennas, outdoor furniture,
etc., in the parking areas, landscaped areas or other areas outside of its
Premises, or on the roof of the Project.

3. Except for animals assisting the disabled, no animals shall be allowed in the
offices, halls, or corridors in the Project.

4. Tenant shall not disturb the occupants of the Project or adjoining buildings
by the use of any radio or musical instrument or by the making of loud or
improper noises.

5. If Tenant desires telegraphic, telephonic or other electric connections in
the Premises, Landlord or its agent will direct the electrician as to where and
how the wires may be introduced; and, without such direction, no boring or
cutting of wires will be permitted. Any such installation or connection shall be
made at Tenant’s expense.

6. Tenant shall not install or operate any steam or gas engine or boiler, or
other mechanical apparatus in the Premises, except as specifically approved in
the Lease or if authorized by Landlord in writing. The use of oil, gas or
inflammable liquids for heating, lighting or any other purpose is expressly
prohibited unless permitted. Unless permitted, explosives or other articles
deemed extra hazardous shall not be brought into the Project. Notwithstanding
the foregoing, Tenant may operate in the Premises a reasonable steam boiler for
the purpose of washing and sterilizing glass ware used by Tenant in its
operations.

7. Parking any type of recreational vehicles is specifically prohibited on or
about the Project. Except for the overnight parking of operative vehicles, no
vehicle of any type shall be stored in the parking areas at any time. In the
event that a vehicle is disabled, it shall be removed within 48 hours. There
shall be no “For Sale” or other advertising signs on or about any parked
vehicle. All vehicles shall be parked in the designated parking areas in
conformity with all signs and other markings. All parking will be open parking,
and no reserved parking, numbering or lettering of individual spaces will be
permitted except as specified by Landlord.

8. Tenant shall maintain the Premises free from rodents, insects and other
pests.

9. Landlord reserves the right to exclude or expel from the Project any person
who, in the judgment of Landlord, is intoxicated or under the influence of
liquor or drugs or who shall in any manner do any act in violation of the Rules
and Regulations of the Project.

10. Tenant shall not cause any unnecessary labor by reason of Tenant’s
carelessness or indifference in the preservation of good order and cleanliness.
Landlord shall not be responsible to Tenant for any loss of property on the
Premises, however occurring, or for any damage done to the effects of Tenant by
the janitors or any other employee or person.

11. Tenant shall give Landlord prompt notice of any defects in the water,
sewage, gas pipes, electrical lights and fixtures, heating apparatus, or any
other service equipment affecting the Premises.

12. Tenant shall not permit storage outside the Premises, including without
limitation, unless authorized by Landlord in writing, outside storage of trucks
and other vehicles, or dumping of waste or refuse or permit any harmful
materials to be placed in any drainage system or sanitary system in or about the
Premises.

 

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Rules and Regulations

   11119 N. Torrey Pines/Ligand - Page 2

 

13. All moveable trash and recycling receptacles provided by the trash disposal
or recycling firm for the Premises must be kept in the trash enclosure areas, if
any, provided for that purpose.

14. No auction, public or private, will be permitted on the Premises or the
Project.

15. No awnings shall be placed over the windows in the Premises except with the
prior written consent of Landlord.

16. The Premises shall not be used for lodging, sleeping or cooking or for any
immoral or illegal purposes or for any purpose other than that specified in the
Lease. No gaming devices shall be operated in the Premises.

17. Tenant shall ascertain from Landlord the maximum amount of electrical
current which can safely be used in the Premises, taking into account the
capacity of the electrical wiring in the Project and the Premises and the needs
of other tenants, and shall not use more than such safe capacity. Landlord’s
consent to the installation of electric equipment shall not relieve Tenant from
the obligation not to use more electricity than such safe capacity.

18. Tenant assumes full responsibility for protecting the Premises from theft,
robbery and pilferage.

19. Tenant shall not install or operate on the Premises any machinery or
mechanical devices of a nature not directly related to Tenant’s ordinary use of
the Premises and shall keep all such machinery free of vibration, noise and air
waves which may be transmitted beyond the Premises.

 

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EXHIBIT F TO LEASE

TENANT’S PERSONAL PROPERTY

None.

 

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EXHIBIT G TO LEASE

SIGNAGE

LOGO [g230180g23m09.jpg]

 

 

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EXHIBIT H TO LEASE

EXPANSION SPACE

First Floor

LOGO [g230180g99c81.jpg]

 

 

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EXHIBIT I TO LEASE

LANDLORD’S PROPERTY

LOGO [g230180g22w47.jpg]

Fume Hood System 8’ 7 Storage Cabinet (S1 steel) I iT

Fume Hood System 6’ 2 Bookshelf Wood 6’ | 2

Eyewash Shower com bo recesed 8 ^^^^^^^^_^^_^^^^^^^^_^^_

Vented chemical cabinets—HazMat 8 Bathroom Lockers {sets of 4) 2

La bora to iy Snorkle 11_ Mini Fridge 3

Stainless Steel Sink 1 AED 1

Range Hood Vent 2

Autoclave 1_ Cisco 2600 Servers server room I 4

Dish washer 2 Cisco Devices 1st floor | 3

Laboratory Cabinets and Shelving See Note

Laboratory Seismic Shelving See Note

Laboratory- Cabinets (Glass) 6 Mail Room Shelf I 1

Glass Drying Rack 13 Mail Room Case work | 1

Punching Bag small 1_

Elliptical treaclmill 1

Fire Extinguisher (case) 1_2 Standard Treadmill 1_

Halon Extinguisher 1_ Recumbant Bike 1_

Fire Extinguisher (class D) 1_ Balance Ball 1_

Higliback Black Leather Chair I ~35J | | |

Guest Chair (palm leaf design) 24

Lobby Chairs 4

Mesh Back Chair I 30

Projector (didn’t get model) 1_

Mitsubishi XD500U Projector 1_

NEC VT595 Projector 1_

Projector Screen (Tension and others) 6

Tension Projector Screen Control 6

Crestron Scheduling Monitor/Hardware ( 1_

Room Entry Monitor (Door) 1_

Video Conference Camera 1_

Fire Door 8

NFR Door 6

NFR Door Leaf | 1

Step Stool (VM) I 1

File Cabinet 2’(HZ) | ~

OvalTabie?’ I 1

Credenza (Glass) 2

Pictures (Frames) 4

Board Room Table 1_

Clock 7

Collapsible Table (G1 x 18”) | 10

 

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LOGO [g230180g52t09.jpg]

Notes:

1) All casework and upper shelf units to meet lab spaces. These include turrets,
sinks, sink eyewashes, etc.

2) All seismic shelving throughout for installation in laboratories, meeting the
need in lab spaces.

Lab Spaces To be Finalized and these Include: Chemistry, Biology, Captisol, Mass
Spec, Glasswash, Media Tissue Culture, NMR, Equip, EHS.

 

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LOGO [g230180g97o65.jpg]

Furniture Description Location

Light color desk with angle, 2 (2) file cabinets per unit, and return 2-020

Light color desk with angle, 2 (2) file cabinets per unit, and return 2-028

Light color desk with angle, 2 (2) file cabinets per unit, and return 2-022

Light color desk with angle. 2 (2) file cabinets per unit, and return 2-033

Light color desk with angle. 2 (2) file cabinets per unit, and return 2-042

Light color desk with angle, 2 (2) file cabinets per unit, and return 2-043

Light color desk with angle. 2 (2) file cabinets per unit, and return 2-052

Light color desk with angle, 2 (2) file cabinets per unit, and return 2-053

Light color desk with angle, 2 (2) file cabinets per unit, and return 2-057

Light color desk with angle, 2 (2) file cabinets per unit, and return 2-058

Light color desk with angle, 2 (2) file cabinets per unit, and return 2-066

Light color desk with angle, 2 (2) file cabinets per unit, and return 2-069

Light color desk with angle, 2 (2) file cabinets per unit, and return 2-070

Light color desk with angle, 2 (2) file cabinets per unit, and return 2-071

Light color desk with angle, 2 (2) file cabinets per unit and return 2-072

Light color desk with angle, 2 (2) file cabinets per unit, and return 2-073

Light color desk with angle, 2 (2) file cabinets per unit, and return 1-032

Light color desk with angle, 2 (2) file cabinets per unit, and return 1-091

Light color desk with angle, 2 (2) file cabinets per unit, and return 1-087

Light color desk with angle, 2 (2) file cabinets per unit, and return 1-08S

Light color desk with angle, 2 (2) file cabinets per unit, and return 1-079

Light color desk with angle. 2 (2) file cabinets per unit, and return 1-076

Light color desk with angle, 2 (2) file cabinets per unit, and return 1-075

Light color desk with angle, 2 (2) file cabinets per unit, and return 1-074

Light color desk with angle, 2 (2) file cabinets per unit, and return 1-071

Light color desk with angle, 2 (2) file cabinets per unit, and return 1-070

Light color desk with angle, 2 (2) file cabinets per unit, and return 1-069

Light color desk with angle. 2 (2) file cabinets per unit, and return 1-065

Light color desk with angle, 2 (2) file cabinets per unit, and return 1-064

Total Count = 28 Sets

 

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EXHIBIT J TO LEASE

APPROVED PLAN

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