Exhibit 10.34

LEASE

SAN RAFAEL CORPORATE CENTER

770 Lindaro Street

San Rafael, California

SR CORPORATE CENTER PHASE TWO, LLC,

a Delaware limited liability company

as Landlord,

and

BIOMARIN PHARMACEUTICAL INC,

a Delaware corporation

as Tenant.

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TABLE OF CONTENTS

 

     Page   ARTICLE 1 PREMISES, BUILDING, PROJECT, AND COMMON AREAS      5   
ARTICLE 2 LEASE TERM      7    ARTICLE 3 BASE RENT      11    ARTICLE 4
ADDITIONAL RENT      11    ARTICLE 5 USE OF PREMISES      18    ARTICLE 6
SERVICES AND UTILITIES      19    ARTICLE 7 REPAIRS AND MAINTENANCE      21   
ARTICLE 8 ADDITIONS AND ALTERATIONS      22    ARTICLE 9 COVENANT AGAINST LIENS
     25    ARTICLE 10 INSURANCE      25    ARTICLE 11 DAMAGE AND DESTRUCTION   
  28    ARTICLE 12 NONWAIVER      30    ARTICLE 13 CONDEMNATION      30   
ARTICLE 14 ASSIGNMENT AND SUBLETTING      31    ARTICLE 15 SURRENDER OF
PREMISES; OWNERSHIP AND REMOVAL OF TRADE FIXTURES      35    ARTICLE 16 HOLDING
OVER      36    ARTICLE 17 ESTOPPEL CERTIFICATES      37    ARTICLE 18
SUBORDINATION      37    ARTICLE 19 DEFAULTS; REMEDIES      38    ARTICLE 20
COVENANT OF QUIET ENJOYMENT      41    ARTICLE 21 LETTER OF CREDIT      41   
ARTICLE 22 INTENTIONALLY OMITTED      45    ARTICLE 23 SIGNS      45   
ARTICLE 24 COMPLIANCE WITH LAW      46    ARTICLE 25 LATE CHARGES      46   
ARTICLE 26 LANDLORD’S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT      47   
ARTICLE 27 ENTRY BY LANDLORD      47    ARTICLE 28 TENANT PARKING      48   
ARTICLE 29 MISCELLANEOUS PROVISIONS      49    ARTICLE 30 ROOFTOP ANTENNA     
59    ARTICLE 31 EMERGENCY GENERATOR      63   

EXHIBITS

 

A    OUTLINE OF PREMISES A-1    SITE PLAN B    TENANT WORK LETTER C    NOTICE OF
LEASE TERM DATES D    RULES AND REGULATIONS E    FORM OF TENANT’S ESTOPPEL
CERTIFICATE F    FORM OF LETTER OF CREDIT G    RIGHT TO LEASE ADJACENT BUILDING
AGREEMENT

 

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[SAN RAFAEL CORPORATE CENTER]

[BIOMARIN PHARMACEUTICAL INC.]

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H    VISITOR PARKING I    DIAGRAM OF ROOFTOP AREA FOR ANTENNA J    DIAGRAMS OF
EMERGENCY GENERATOR AREA AND GENERATOR FUEL PAD

 

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[SAN RAFAEL CORPORATE CENTER]

[BIOMARIN PHARMACEUTICAL INC.]

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INDEX

 

     Page(s)  

Additional Rent

     11   

Alterations

     23   

Approved Bank

     41   

Bank

     41    Bank Prime Loan      46   

Bankruptcy Code

     42   

Base Building

     23   

Base Rent

     11   

Brokers

     54   

Building Hours

     19   

Direct Expenses

     12   

Estimate

     16   

Estimate Statement

     16   

Expense Year

     12   

First Offer Notice

     6   

First Offer Rent

     6, 7   

Force Majeure

     52   

Holidays

     19   

HVAC

     19   

Identification Requirements

     56   

Landlord

     1   

Landlord Parties

     25   

Landlord Repair Notice

     28   

Landlord’s Communication Equipment

     58   

L-C

     41   

L-C Amount

     41   

L-C Expiration Date

     41   

Lease

     1   

Lease Commencement Date

     7   

Lease Expiration Date

     7   

Lease Term

     7   

Lease Year

     7   

Lines

     56   

Mail

     52   

Notices

     52   

Operating Expenses

     12   

Original Improvements

     26   

Premises

     5   

Proposition 13

     14   

Provider

     57   

Quoted Rent

     32   

Renovations

     55   

Rent

     11   

Security Deposit Laws

     44   

 

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[SAN RAFAEL CORPORATE CENTER]

[BIOMARIN PHARMACEUTICAL INC.]

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     Page(s)  

Statement

     15   

Subject Space

     31   

Summary

     1   

Tax Expenses

     14   

Tenant

     1   

Tenant Work Letter

     5   

Tenant’s Share

     15   

Termination Date

     7   

Termination Notice

     8   

Transfer Notice

     31   

Transfer Premium

     33   

Transferee

     31   

Transferee’s Rent

     32   

Transfers

     31   

Wireless Communication Equipment

     58   

 

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[SAN RAFAEL CORPORATE CENTER]

[BIOMARIN PHARMACEUTICAL INC.]

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SAN RAFAEL CORPORATE CENTER

LEASE

This Lease (the “Lease”), dated as of the date set forth in Section 1 of the
Summary of Basic Lease Information (the “Summary”), below, is made by and
between SR CORPORATE CENTER PHASE TWO, LLC, a Delaware limited liability company
(“Landlord”), and BIOMARIN PHARMACEUTICAL INC., a Delaware corporation
(“Tenant”).

SUMMARY OF BASIC LEASE INFORMATION

 

   

TERMS OF LEASE

  

DESCRIPTION

1.   Date:    December 31, 2011 2.   Premises      2.1   Building:    That
certain building located at 770 Lindaro Street, San Rafael, California, which is
known and designated as “770 Lindaro” of the San Rafael Corporate Center 94901.
There are approximately 83,360 square feet in the Building.   2.2   Premises:   
Approximately 83,360 square feet for 770 Lindaro. The Premises shall mean the
areas shown on pages 1 and 2 of Exhibit A to the Lease and the areas shown on
Exhibits I and J to the Lease. The Premises shall include the entire four story
Building.   2.3   Project:    The Building is part of an office project known as
“San Rafael Corporate Center”, as further set forth in Section 1.1.2 of this
Lease. 3.  

Lease Term

(Article 2).

     3.1   Length of Term:    Ten (10) years plus any partial calendar month(s)
at the beginning of the Term.   3.2   Lease and Rent Commencement Date:   

 

April 15, 2012.

 

    

[SAN RAFAEL CORPORATE CENTER]

[BIOMARIN PHARMACEUTICAL INC.]

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  3.3   Lease Expiration Date:    April 14, 2022.   3.4   Options to Extend   
Two (2) options to extend, each for a five (5) year period. 4.  

Base Rent, NNN (Article 3):

    

4.1

 

Amount Due:

  

 

Period

   Leased
Area sf      Monthly
Base Rent      Annualized
Base Rent (1)  

Beneficial Occupancy to Lease and Rent Commencement Date

       
 

 

Direct
Expenses

Only

  
  

  

  

April 15, 2012 through July 14, 2012

     40,386       $ 80,772.92       $ 242,318.76   

July 15, 2012 through November 14, 2012

     61,873       $ 123,746.44       $ 494,985.76   

November 15, 2012 through April 14, 2013

     83,360       $ 166,719.96       $ 833,599.80   

April 15, 2013 through April 14, 2014

     83,360       $ 175,889.56       $ 2,110,674.69   

April 15, 2014 through April 14, 2015

     83,360       $ 185,892.76       $ 2,230,713.06   

April 15, 2015 through April 14, 2016

     83,360       $ 195,062.35       $ 2,340,748.24   

April 15, 2016 through April 14, 2017

     83,360       $ 205,899.15       $ 2,470,789.81   

April 15, 2017 through April 14, 2018

     83,360       $ 215,902.35       $ 2,590,828.18   

April 15, 2018 through April 14, 2019

     83,360       $ 226,739.15       $ 2,720,869.75   

April 15, 2019 through April 14, 2020

     83,360       $ 238,409.54       $ 2,860,914.51   

April 15, 2020 through April 14, 2021

     83,360       $ 250,079.94       $ 3,000,959.28   

April 15, 2021 through April 14, 2022

     83,360       $ 262,583.94       $ 3,151,007.24   

 

(1) Annualized Base Rent for the one year period from April 15, 2012 through
April 14, 2013 reflects Base Rent due per period based on staged occupancy.

 

  4.2   Rent Payment Address:   

Payable to the order of SR Corporate Center Phase Two, LLC at either of the
following addresses:

 

Via U.S. Mail

 

SR Corporate Center Phase Two LLC

P.O. Box 748132

Los Angeles, CA 90074-8132

 

Or

 

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[SAN RAFAEL CORPORATE CENTER]

[BIOMARIN PHARMACEUTICAL INC.]

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Via Courier

 

Bank of America

P.O. Box 748132

Ground Level

1000 W. Temple Street

Los Angeles , CA 90012

5.   [Intentionally Omitted]    6.  

Tenant’s Share

(Article 4):

  

100% (83,360 sf/83,360 sf) of Building Expenses.

 

26.51% (83,360 sf/314,497 rsf) of Project Expenses.

 

Tenant’s Share of Project Direct Expenses is subject to adjustment if the
Project rentable square footage increases in accordance with Section 29.33.3 of
the Lease.

7.  

Permitted Use

 

(Article 5):

   General executive and administrative office space, research and development,
basic biology, and chemistry lab functions, research and development laboratory
use, and development. Additionally Tenant may construct on-site amenities within
the Premises including but not limited to a fitness center and cafeteria. All
use and interior improvements shall be subject to the current zoning and
development agreement, or as modified in the future, governing San Rafael
Corporate Center as issued by the City of San Rafael. 8.  

Letter of Credit

(Article 21):

   Four Million Seven Hundred Twenty-Six Thousand Dollars ($4,726,000), subject
to reduction as provided in Article 21. This single Letter of Credit is the same
Letter of Credit which Tenant is required to deliver to Landlord under the terms
of that certain Lease between Landlord and Tenant for premises at 790 Lindaro
Street, San Rafael, California.

 

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[SAN RAFAEL CORPORATE CENTER]

[BIOMARIN PHARMACEUTICAL INC.]

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9.  

Parking Pass Ratio

(Article 28):

   Three and Three Tenths (3.3) unreserved, non-exclusive and unlabeled parking
passes for every 1,000 rentable square feet of the Premises. 10.  

Address of Tenant

(Section 29.18):

  

Bio Marin Pharmaceutical Inc.

105 Digital Drive

Novato, CA 94949

Attention: General Counsel

(Prior to Lease Commencement Date)

 

With a required copy to the CFO at the same address.

  and   

BioMarin Pharmaceutical Inc.

770 Lindaro Street

San Rafael, CA 94901

Attention: General Counsel

(After Lease Commencement Date)

 

With a required copy to the CFO at the same address.

11.

 

Address of Landlord

(Section 29.18):

   See Section 29.18 of the Lease.

12.

 

Broker(s)

(Section 29.24):

  

Cassidy Turley/BT Commercial

(Landlord’s Broker)

 

Colliers International

(Tenant’s Broker)]

13.

 

Tenant Improvement Allowance

(Section 2 of Exhibit B):

   $5,007,600

 

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[SAN RAFAEL CORPORATE CENTER]

[BIOMARIN PHARMACEUTICAL INC.]

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ARTICLE 1

 

PREMISES, BUILDING, PROJECT, AND COMMON AREAS

 

1.1 Premises, Building, Project and Common Areas.

 

1.1.1 The Premises. Landlord hereby leases to Tenant and Tenant hereby leases
from Landlord the premises which are to be constructed by Tenant and are set
forth in Section 2.2 of the Summary (the “Premises”). The outline of the
Premises is set forth in Exhibit A attached hereto and the Premises have
approximately the number of rentable square feet as set forth in Section 2.2 of
the Summary, which shall not be re-measured except as a result of a change in
the physical size of the Premises. The parties hereto agree that the lease of
the Premises is upon and subject to the terms, covenants and conditions herein
set forth, and Tenant covenants as a material part of the consideration for this
Lease to keep and perform each and all of such terms, covenants and conditions
by it to be kept and performed and that this Lease is made upon the condition of
such performance. The parties hereto hereby acknowledge that the purpose of
Exhibit A is to show the approximate location of the Premises in the “Building,”
as that term is defined in Section 1.1.2, below, only, and such Exhibit is not
meant to constitute an agreement, representation or warranty as to the
construction of the Premises, the precise area thereof or the specific location
of the “Common Areas,” as that term is defined in Section 1.1.3, below, or the
elements thereof or of the accessways to the Premises or the “Project,” as that
term is defined in Section 1.1.2, below. Except as specifically set forth in
this Lease and in the Tenant Work Letter attached hereto as Exhibit B (the
“Tenant Work Letter”), Landlord shall not be obligated to provide or pay for any
improvement work or services related to the improvement of the Premises. Tenant
also acknowledges that neither Landlord nor any agent of Landlord has made any
representation or warranty regarding the condition of the Premises, the Building
or the Project or with respect to the suitability of any of the foregoing for
the conduct of Tenant’s business, except as specifically set forth in this Lease
and the Tenant Work Letter. The taking of possession of the Premises by Tenant
shall conclusively establish that the Premises and the Building were at such
time in good and sanitary order, condition and repair, except as specifically
set forth in this Lease and the Tenant Work Letter.

 

1.1.2 The Building and The Project. The Premises are the entire building set
forth in Section 2.1 of the Summary (the “Building”) located in San Rafael,
California. The Building is part of an office project known as “The San Rafael
Corporate Center” which contains other office buildings and a parking structure
(the “Adjacent Buildings”), as shown on the Site Plan attached hereto as Exhibit
A-1. The term “Project,” as used in this Lease, shall mean (i) the Building, the
Adjacent Buildings, and the “Common Areas,” as that term is defined in
Section 1.1.3, (ii) the land (which is improved with landscaping, surface
parking facilities and other improvements) upon which the Building, the Adjacent
Buildings, and the Common Areas are located, and (iii) at Landlord’s discretion,
any additional real property, areas, buildings or other improvements added
thereto pursuant to the terms of Section 29.33.

 

    

[SAN RAFAEL CORPORATE CENTER]

[BIOMARIN PHARMACEUTICAL INC.]

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1.1.3 Common Areas. Tenant shall have the non-exclusive right to use in common
with other tenants in the Project, and subject to the rules and regulations
referred to in Article 5, those portions of the Project which are provided, from
time to time, for use in common by Landlord, Tenant and any other tenants of the
Project, whether or not those areas are open to the general public (such areas,
together with such other portions of the Project designated by Landlord, in its
discretion, including certain areas designated for the exclusive use of certain
tenants, or to be shared by Landlord and certain tenants, such as balconies
abutting tenants’ premises, are collectively referred to herein as the “Common
Areas”). The manner in which the Common Areas are maintained and operated shall
be at the sole discretion of Landlord, provided that Landlord shall maintain and
operate the same in a manner consistent with that of other first-class, mid-rise
office buildings (including the office buildings constructed adjacent to the
Project as “Phase I” of The San Rafael Corporate Center, hereafter referred to
as “Phase I”) in the Marin County, California area, which are comparable in
terms of size, quality of construction, appearance, and services and amenities
(the “Comparable Buildings”).

 

1.2 Square Feet of Premises and Building. For purposes of this Lease, “square
feet” of the Premises shall be deemed as set forth in Section 2.2 of the Summary
and shall not be subject to remeasurement or modification following execution of
this Lease.

 

1.3 Exclusive Right to Lease. Tenant shall have the exclusive right to lease the
to-be-built building at 791 Lincoln Avenue (“Exclusive Right”) effective as of
the date of the Lease until December 20, 2012 (the “Exclusive Right Period”), in
accordance with the Right to Lease Adjacent Building Agreement, in the form
attached hereto as Exhibit G. Landlord shall remove the 791 Lincoln Avenue
building from the market during this period.

 

1.4 Right of First Offer. In the event Tenant does not exercise its Exclusive
Right prior to December 21, 2012, then throughout the Term, Tenant shall have a
right of first offer (the “791 Right of First Offer”) as set forth below, at the
then existing market rent rate, as determined by Landlord in its sole and
absolute discretion, to lease the 791 Lincoln Avenue building (the “First Offer
Space”) should Landlord elect to build it.

 

1.4.1 Procedure for Offer. Landlord shall notify Tenant (the “First Offer
Notice”) when and if the First Offer Space becomes available for lease to third
parties. Landlord shall give Tenant such First Offer Notice no more than
eighteen (18) months and no less than three (3) months before the anticipated
delivery date of the First Offer Space. Pursuant to such First Offer Notice,
Landlord shall offer to lease the First Offer Space to Tenant. The First Offer
Notice shall describe when the First Offer Space is available and shall set
forth the market rate rent “First Offer Rent,” as that term is defined in
Section 1.4.3 below, and the other economic terms upon which Landlord is willing
to lease the First Offer Space to Tenant.

 

1.4.2 Procedure for Acceptance. If Tenant wishes to exercise Tenant’s 791 Right
of First Offer, then within fifteen (15) business days following delivery of the
First Offer Notice to Tenant, Tenant shall deliver notice to Landlord of
Tenant’s election to exercise its 791 Right of First Offer on the terms
contained in such notice. If Tenant does not notify Landlord within the fifteen
(15) business day period set forth above, then Landlord shall be free to lease
the First Offer Space to anyone to whom Landlord desires on any terms Landlord
desires. Tenant must elect to exercise its 791 Right of First Offer, if at all,
with respect to the entire 791 Lincoln Avenue building.

 

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[SAN RAFAEL CORPORATE CENTER]

[BIOMARIN PHARMACEUTICAL INC.]

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1.4.3 First Offer Space Rent. The “Rent,” as that term is defined in Section 4.1
of this Lease, payable by Tenant for the First Offer Space (the “First Offer
Rent”) shall be the market rate rent as determined by Landlord in its sole and
absolute discretion.

1.4.4 Amendment to Lease. If Tenant timely exercises Tenant’s 791 Right of First
Offer, Landlord and Tenant shall as soon as reasonably practicable execute an
amendment to this Lease for such First Offer Space upon the terms and conditions
as set forth in the First Offer Notice and this Section 1.4.

ARTICLE 2

LEASE TERM

2.1 In General. The terms and provisions of this Lease shall be effective as of
the date of this Lease. The term of this Lease (the “Lease Term”) shall be as
set forth in Section 3.1 of the Summary, shall commence on the date set forth in
Section 3.2 of the Summary (the “Lease Commencement Date”), and shall terminate
on the date set forth in Section 3.3 of the Summary (the “Lease Expiration
Date”) unless this Lease is sooner terminated as hereinafter provided. For
purposes of this Lease, the term “Lease Year” shall mean each consecutive twelve
(12) month period during the Lease Term; provided that the last Lease Year shall
end on the Lease Expiration Date. At any time during the Lease Term, Landlord
may deliver to Tenant a notice in the form as set forth in Exhibit C, attached
hereto, as a confirmation only of the information set forth therein, which
Tenant shall execute and return to Landlord within ten (10) days of receipt
thereof.

2.2 Beneficial Occupancy. Tenant shall have the right to occupy the Premises (or
certain portions of the Premises) to conduct its business prior to the Lease
Commencement Date, but in no event prior to January 2, 2012, provided that
(A) Tenant shall give Landlord at least ten (10) days’ prior notice of any such
occupancy of the Premises (or portion thereof), (B) a temporary certificate of
occupancy or its equivalent shall have been issued by the appropriate
governmental authorities for each such portion to be occupied, and (C) all of
the terms and conditions of this Lease shall apply (including, without
limitation Tenant’s obligation to deliver a certificate of insurance to Landlord
in accordance with the terms of Section 10.4 below), other than Tenant’s
obligation to pay “Base Rent,” as that term is defined in Article 3 below. Base
Rent shall commence on the applicable Rent Commencement Date, provided that
during the period April 15, 2012 through the applicable Rent Commencement Date
Tenant shall pay directly or to Landlord Tenant’s Share of Building Direct
Expenses.

2.3 Early Termination Right.

2.3.1 In General. Provided that Tenant is not in Default under this Lease as of
the date of Tenant’s delivery of the “Termination Notice,” as that term is
defined below, the Original Tenant or an Affiliate Assignee shall have the
one-time right to terminate this Lease effective on the last day of the
eighty-fourth (84th) full month from the Lease Commencement Date (the
“Termination Date”), provided that (i) Landlord receives written notice (the

 

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[SAN RAFAEL CORPORATE CENTER]

[BIOMARIN PHARMACEUTICAL INC.]

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“Termination Notice”) from Tenant on or before the date that is twelve
(12) months prior to the Termination Date stating Tenant’s election to terminate
this Lease pursuant to the terms and conditions of this Section 2.3.1, and
(ii) concurrently with Landlord’s receipt of the Termination Notice, Landlord
receives from Tenant the “Termination Fee”, as specified in Section 2.3.2 below,
as consideration for and as a condition precedent to such early termination.
Subject to increase in accordance with Section 2.3.2 below, the “Termination
Fee” shall be an amount, representing (x) all unamortized leasing commissions
and Tenant Improvements (amortized on a straight-line basis over the 120 month
term of the Lease with an interest rate of eight percent (8%) per annum, and
(y) and an amount equal to the Base Rent which would have been due for the six
(6) month period commencing April 15, 2019 and ending October 14, 2019. Provided
that Tenant terminates this Lease pursuant to the terms of this Section 2.3.1,
this Lease shall automatically terminate and be of no further force or effect
and Landlord and Tenant shall be relieved of their respective obligations under
this Lease as of the Termination Date, except those obligations set forth in
this Lease which relate to the term of Tenant’s lease of the Premises and/or
that specifically survive the expiration or earlier termination of this Lease,
including, without limitation, the payment by Tenant of all amounts owed by
Tenant under the Lease, up to and including the Termination Date.

2.3.2 Termination Fee. For purposes of this Lease, the “Termination Fee” shall
mean the sum of Seven Million Four Hundred Thirty-Four Thousand Six Hundred
Sixty-Five and 27/100 Dollars ($7,434,665.27). The Termination Fee is the total
fee which Tenant would be required to pay to Landlord to terminate this Lease
and that certain Lease with Landlord for the premises at 790 Lindaro Street, San
Rafael, California which Tenant leases from Landlord.

2.3.3 Other Terms. The rights granted in this Section 2.3 shall be personal to
the Original Tenant or an Affiliate Assignee and may not be exercised by any
other Transferee. In the event the Tenant delivers the Termination Notice to
Landlord under this Lease, Tenant shall also be required to contemporaneously
deliver a termination notice in accordance with the provisions of Tenant’s lease
with Landlord for the premises Tenant leases from Landlord at 790 Lindaro
Street, San Rafael, California, and any additional expansion space which Tenant
may have leased from Landlord in 751 and 791 Lincoln Avenue and 750 Lindaro
Street, San Rafael, California.

2.4 Options to Extend.

2.4.1 Tenant shall have the right to extend the Lease Term (each an “Option to
Extend”) for two (2) five-year periods (each an “Extended Term”), provided
Tenant is not in Default at the time of exercise and at the time the Extended
Term commences of any of the terms, covenants and conditions of the Lease and
has provided Landlord with written notice of its intention to extend the Lease
not later than twelve (12) months nor earlier than fifteen (15) months prior to
the expiration of the Lease Term. The right to extend for the second Extended
Term shall be of no force or effect if the Option to Extend for the first
Extended Term has not been validly exercised. The Base Rent during each Extended
Term shall be the fair market rent (defined below) for the Premises. Within
thirty (30) days of Tenant’s exercise of the Option to Extend, Landlord shall
notify Tenant in writing of Landlord’s determination of fair market rent and the
Base Rent proposed during the applicable Extended Term. If Tenant does not agree
with

 

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[SAN RAFAEL CORPORATE CENTER]

[BIOMARIN PHARMACEUTICAL INC.]

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Landlord’s proposal, Tenant shall so notify Landlord in writing within thirty
(30) days after receipt of the proposal from Landlord. In the event that
Landlord and Tenant are unable to agree in writing upon fair market rent within
fifteen (15) days after Tenant shall have notified Landlord in writing that
Tenant disagrees with such determination, then within five (5) days after the
expiration of such 15-day period, the parties shall deliver to each other
concurrently at a mutually agreeable place and time their respective final
written estimates of fair market rent (including applicable annual increases).
If each party’s estimate of fair market rent is the same, then the fair market
rent shall equal such estimate. If both parties’ final estimates of fair market
rent are within a ten percent (10%) range of the higher final estimate, then
fair market rent shall equal the average of the two (2) final estimates. In
every other case, fair market rent, based on the two (2) final estimates, shall
be determined by arbitration as provided below in Section 2.4.2.

Should the determination of fair market rent not be completed or agreed upon
prior to the commencement of an Extended Term, Tenant shall, commencing on the
first (1st) day of the applicable Extended Term, and continuing until the fair
market rent is determined under Section 2.4.2, pay as Base Rent commencing on
the first (1st) day of the applicable Extended Term, an amount equal to
Landlord’s final determination of the fair market rent. If after the fair market
rent is determined under Section 2.4.2, the fair market rent is less than the
amount of Base Rent previously paid by Tenant for the Premises for the
applicable Extended Term, Landlord shall pay the difference to Tenant within
thirty (30) days after the date of such determination, with interest thereon
calculated from the date of each payment of such Base Rent by Tenant at the rate
of six percent (6%) per annum; and, if after determination of fair market rent,
the fair market rent is more than the amount of Base Rent previously paid Tenant
for the Premises for the applicable Extended Term, Tenant shall pay the
difference to Landlord within thirty (30) days after the date of such
determination, with interest thereon calculated from the date of each payment of
such Base Rent by Tenant at the rate of six percent (6%) per annum.

2.4.2 Whenever under this Section 2.4 the determination of fair market rent is
to be made by arbitration, such arbitration shall be conducted and determined in
the City of San Francisco, solely in accordance with the provisions of this
Section 2.4.2. Within fifteen (15) days after the parties have exchanged their
estimates of fair market rent under Section 2.4.1, the parties shall attempt to
agree upon a mutually-acceptable arbitrator meeting the criteria set forth below
to determine fair market rent hereunder. If the parties are unable to agree on
an arbitrator within such fifteen (15) day period, then either party, on behalf
of both, may request appointment of such arbitrator by the then head official of
the San Francisco office of the American Arbitration Association, and neither
party shall raise any objections as to the appointment made by such official or
as to such official’s full power and jurisdiction to entertain the application
for and make the appointment. The arbitrator shall be a member of the Appraisal
Institute (or its successor organization) with a then current senior designation
of MAI (or then comparable designation) currently certified under the continuing
education program, shall have at least ten (10) years’ experience in appraising
major Class A commercial office buildings in the area from the Central San
Rafael exit off Highway 101 and south or southern Marin County, California
(“Comparable Buildings”), and shall not then be engaged or have been engaged by
either Landlord or Tenant within the five (5) year period preceding their
appointment hereunder. The arbitrator shall determine which of the two estimates
submitted by the parties pursuant to Section 2.4.1 is closest to the correct
result in the arbitrator’s opinion. The arbitrator shall have no power to select
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party. The decision of the arbitrator shall be final and binding upon the
parties, absent fraud or gross error. Upon failure, refusal or inability of an
arbitrator to act, his or her successor shall be appointed in the same manner as
provided for the original appointment. The party whose position is not chosen by
the arbitrator shall bear the fees and expenses of the arbitrator. The
attorneys’ fees and expenses of counsel and consultants to the respective
parties shall be paid by the respective party engaging such counsel or
consultant. The arbitrator shall render his or her decision in writing, with
counterpart copies to each party, within thirty (30) days after his or her
appointment. The arbitrator shall have no power to modify the provisions of this
Lease. Landlord and Tenant agree to execute and deliver to each other a
supplement to this Lease confirming the new Base Rent as determined by the
method described in this Section 2.4.

2.4.3 For purposes of this Lease, “fair market rent” means the rent at which a
landlord, under no compulsion to lease, would rent the Premises for the
applicable Extended Term and a tenant, under no compulsion to lease, would rent
the Premises for the applicable Extended Term. Fair market rent shall mean and
refer to the rent being charged by Landlord and other landlords at the time of
exercise of the Option to Extend for non-renewal, non-expansion, then current,
comparable non-sublease, non-encumbered, non-equity space in the Building and
Comparable Buildings. Fair market rent shall not necessarily be a monthly rent
fixed during the applicable Extended Term, but may be subject to periodic
adjustment. For purposes of determining fair market rent under this Lease, the
following factors shall be taken into account: (i) that the Premises are then in
their “as is, where is” condition as improved with any alterations thereto made
by or on behalf of Tenant in their then condition, and (ii) that Tenant could
immediately occupy the Premises in such condition for the use as permitted by
the terms and conditions of this Lease. In addition, (A) the determination of
fair market rent shall exclude “down time” for releasing the Premises and during
the period Landlord and Tenant are negotiating the fair market rent only the
amount of an “in-house” brokerage commission on renewal shall be taken into
account; (B) the determination of fair market rent shall take into account the
then unamortized value of Building standard alterations to the Premises paid for
by Tenant but shall exclude any value attributable to above Building standard
alterations in the Premises paid for by Tenant; and (C) the fair market rent
shall include appropriate annual increases. In the event that the fair market
rent is to be determined by arbitration in accordance with this Section 2.4,
notwithstanding anything to the contrary contained in the preceding sentence,
the arbitrator shall take into account all factors which an experienced
arbitrator familiar with the Comparable Buildings would customarily take into
account in determining the amount of fair market rent.

2.4.4 Tenant’s right to extend the Lease Term for an Extended Term is personal
to the named Tenant and/or Affiliate Assignee under this Lease, and shall not
inure to the benefit of any other assignee or subtenant. The Option to Extend
shall be void and of no further effect if at any time the named Tenant or an
Affiliate Assignee under this Lease (i) assigns this Lease or (ii) subleases
more than fifty percent (50%) of the rentable square feet of the Premises for
substantially the remainder of the Term.

 

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ARTICLE 3

BASE RENT

Tenant shall pay, without prior notice or demand, to Landlord or Landlord’s
agent at the address set forth in Section 4.2 of the Summary, or, at Landlord’s
option, at such other place as Landlord may from time to time designate in
writing, by a check for currency which, at the time of payment, is legal tender
for private or public debts in the United States of America, base rent (“Base
Rent”) as set forth in Section 4 of the Summary, payable in equal monthly
installments as set forth in Section 4 of the Summary in advance on or before
the first day of each and every calendar month during the Lease Term, without
any setoff or deduction whatsoever. The Base Rent for the first full month of
the Lease Term shall be paid at the time of Tenant’s execution of this Lease. If
any Rent payment date (including the Lease Commencement Date) falls on a day of
the month other than the first day of such month or if any payment of Rent is
for a period which is shorter than one month, the Rent for any fractional month
shall accrue on a daily basis for the period from the date such payment is due
to the end of such calendar month or to the end of the Lease Term at a rate per
day which is equal to 1/365 of the applicable annual Rent. All other payments or
adjustments required to be made under the terms of this Lease that require
proration on a time basis shall be prorated on the same basis. If there is a
delay in Landlord’s delivery of possession of the Premises to Tenant which
causes the Lease Commencement Date to be delayed, as provided for in Section 2.1
of the Lease, then Rent Commencement Date shall be moved to the revised Lease
Commencement Date.

ARTICLE 4

ADDITIONAL RENT

4.1 General Terms. In addition to paying the Base Rent specified in Article 3 of
this Lease, Tenant shall pay “Tenant’s Share” of the annual “Direct Expenses,”
as those terms are defined in Sections 4.2.6 and 4.2.2 of this Lease,
respectively, commencing on April 15, 2012. Such payments by Tenant, together
with any and all other amounts payable by Tenant to Landlord pursuant to the
terms of this Lease, are hereinafter collectively referred to as the “Additional
Rent”, and the Base Rent and the Additional Rent are herein collectively
referred to as “Rent.” All amounts due under this Article 4 as Additional Rent
shall be payable for the same periods and in the same manner as the Base Rent,
provided that, to the extent practical, Tenant may elect to pay Direct Expenses
for the Building (as opposed to Direct Expenses for the Project) directly to the
party to whom payment is due, rather than through reimbursement of Landlord.
Without limitation on other obligations of Tenant which survive the expiration
of the Lease Term, the obligations of Tenant to pay the Additional Rent provided
for in this Article 4 shall survive the expiration of the Lease Term.

4.2 Definitions of Key Terms Relating to Additional Rent. As used in this
Article 4, the following terms shall have the meanings hereinafter set forth:

4.2.1 “Net Lease”. This Lease is designed as a “net lease,” and the provisions
in this Lease for payment by Tenant of Tenant’s Share of Direct Expenses are
intended to pass on to Tenant and reimburse Landlord for Tenant’s Share of all
Direct Expenses incurred by Landlord for the Building and the Project, except as
otherwise expressly herein provided.

 

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4.2.2 “Direct Expenses” shall mean “Operating Expenses” and “Tax Expenses.”

4.2.3 “Expense Year” shall mean each calendar year in which any portion of the
Lease Term falls, through and including the calendar year in which the Lease
Term expires, provided that Landlord, upon notice to Tenant, may change the
Expense Year from time to time to any other twelve (12) consecutive month
period, and, in the event of any such change, Tenant’s Share of Direct Expenses
shall be equitably adjusted for any Expense Year involved in any such change.

4.2.4 “Operating Expenses” shall mean all expenses, costs and amounts of every
kind and nature which are payable or accrued during any Expense Year because of
or in connection with the ownership, management, maintenance, security, repair,
replacement, restoration or operation of the Project, or any portion thereof,
whether paid directly by Tenant or by Landlord. Without limiting the generality
of the foregoing, Operating Expenses shall specifically include any and all of
the following: (i) the cost of supplying all utilities, the cost of operating,
repairing, maintaining, and renovating the utility, telephone, mechanical,
sanitary, storm drainage, and elevator systems, and the cost of maintenance and
service contracts in connection therewith; (ii) the cost of licenses,
certificates, permits and inspections and the cost of contesting any
governmental enactments which may affect Operating Expenses, and the costs
incurred in connection with a transportation system management program or
similar program; (iii) the cost of all insurance carried by Landlord pursuant to
the terms of this Lease in connection with the Project; (iv) the cost of
landscaping, relamping, and all supplies, tools, equipment and materials used in
the operation, repair and maintenance of the Project, or any portion thereof;
(v) costs incurred in connection with the parking areas servicing the Project;
(vi) fees and other costs, including management and/or incentive fees,
consulting fees, legal fees and accounting fees, of all contractors and
consultants in connection with the management, operation, maintenance and repair
of the Project; (vii) payments under any equipment rental agreements and the
fair rental value of any management office space; (viii) wages, salaries and
other compensation and benefits, including taxes levied thereon, of all persons
engaged in the operation, maintenance and security of the Project;
(ix) payments, fees or charges under any easement, license, operating agreement,
declaration, restrictive covenant, or any instrument pertaining to the sharing
of costs by the Project, or any portion thereof; (x) operation, repair,
maintenance and replacement of all systems and equipment and components thereof
of the Building; (xi) the cost of janitorial, alarm, security and other
services, replacement of wall and floor coverings, ceiling tiles and fixtures in
common areas, maintenance and replacement of curbs and walkways, repair to roofs
and re-roofing; (xii) amortization (including interest on the unamortized cost)
of the cost of acquiring or the rental expense of personal property used in the
maintenance, operation and repair of the Project, or any portion thereof;
(xiii) the cost of capital improvements or other costs incurred in connection
with the Project (A) which are intended to effect economies in the operation or
maintenance of the Project, or any portion thereof, (B) that are required to
comply with present or anticipated conservation programs, (C) which are
replacements or modifications of nonstructural items located in the Common Areas
required to keep the Common Areas in good order or condition, (D) that are
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governmental law or regulation; provided, however, that any capital expenditure
shall be amortized with interest over its useful life determined in accordance
with generally accepted accounting principles, or (E) that relate to the safety
or security of the Project, its occupant and visitors, and are deemed advisable
in the reasonable judgment of Landlord; (xiv) costs, fees, charges or
assessments imposed by, or resulting from any mandate imposed on Landlord by,
any federal, state or local government for fire and police protection, trash
removal, community services, or other services which do not constitute “Tax
Expenses” as that term is defined in Section 4.2.5, below; and (xv) payments
under any easement, license, operating agreement, declaration, restrictive
covenant, or instrument pertaining to the sharing of costs by the Building.

Operating Expenses shall not include: (a) the cost capital items (except as set
forth above); (b) depreciation; ( c) interest (except as provided above for the
amortization of capital improvements); (d) rental on any ground or underlying
lease or points, fees and principal payments of mortgage and other non-operating
debts of Landlord or other costs incurred in connection therewith, including
penalties and charges incurred as a result of Landlord’s late payment; (e) costs
in connection with leasing space in the Building, including tenant improvements,
brokerage commissions, legal fees and advertising or promotions; (f) market
concessions granted to specific tenants; (g) costs incurred in connection with
the sale, financing or refinancing of the Building; (h) Taxes (defined in
Section 4.2.5); any fines, interest and penalties incurred due to the late
payment thereof; (i) organizational expenses associated with the creation and
operation of the entity which constitutes Landlord; (j) any penalties or damages
that Landlord pays to Tenant under this Lease or to other tenants in the
Building under their respective leases; (k) costs incurred by Landlord for
structural repairs, or building construction defects, or costs which are covered
by and reimbursable under any contractor, manufacturer or supplier warranty;
(l) costs arising from the adjudicated negligence of Landlord or its agents;
(m) costs or expenses incurred due to adjudicated violations by Landlord of any
laws, rules, regulations, or ordinances applicable to the Property; (n) reserves
for future expenditures that would be incurred subsequent to the current
accounting year; (o) the initial cost of the installation or construction of any
parking areas; (p) costs of art and sculptures except as typical of comparable
buildings in Marin County; (q) legal fees, advertising, and marketing expenses
and other such costs incurred in connection with the development, marketing, or
leasing of the Project (r) costs or expenses for correcting defects in the
design or construction of the Project; (s) costs or expenses incurred that are
subject to reimbursement by tenants (including, without limitation, Tenant) or
third parties (including, without limitation, insurers); (t) expenses in
connection with services or other benefits of a type which Tenant is not
entitled to receive under the Lease; (u) costs incurred in negotiating,
amending, administering or terminating leases, any brokerage commissions, or
construction or planning expenses; (v) overhead and profit paid to subsidiaries
or affiliates of Landlord for services on or to the Building, the Project and/or
Premises, to the extent only that the costs of such services exceed competitive
costs for such services were they not so rendered by a subsidiary or affiliate;
provided, however, that the property management fee charged by Landlord or an
affiliate of Landlord shall not be in excess of the rates then customarily
charged for building management for buildings of like class and character; in
circumstances where tenants perform operation, management, repair and
maintenance in the same manner as Tenant is required to perform under this
Lease; (w) costs incurred to test, survey, cleanup, contain abate, remove, or
otherwise remedy Hazardous or Toxic Material (as defined in Section 5.3) at the
Property, other materials and in quantities commonly found in office
environments; or (x) costs or expenses of leasing any item if the purchase price
of such item is not properly chargeable as an Operating Expense.

 

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4.2.5 Taxes.

4.2.5.1 “Tax Expenses” shall mean all federal, state, county, or local
governmental or municipal taxes, fees, charges or other impositions of every
kind and nature, whether general, special, ordinary or extraordinary,
(including, without limitation, real estate taxes, general and special
assessments, transit taxes, leasehold taxes or taxes based upon the receipt of
rent, including gross receipts or sales taxes applicable to the receipt of rent,
unless required to be paid by Tenant, personal property taxes imposed upon the
fixtures, machinery, equipment, apparatus, systems and equipment, appurtenances,
furniture and other personal property used in connection with the Project, or
any portion thereof), which shall be paid or accrued during any Expense Year
(without regard to any different fiscal year used by such governmental or
municipal authority) because of or in connection with the ownership, leasing and
operation of the Project, or any portion thereof.

4.2.5.2 Tax Expenses shall include, without limitation: (i) Any tax on the rent,
right to rent or other income from the Project, or any portion thereof, or as
against the business of leasing the Project, or any portion thereof; (ii) Any
assessment, tax, fee, levy or charge in addition to, or in substitution,
partially or totally, of any assessment, tax, fee, levy or charge previously
included within the definition of real property tax, it being acknowledged by
Tenant and Landlord that Proposition 13 was adopted by the voters of the State
of California in the June 1978 election (“Proposition 13”) and that assessments,
taxes, fees, levies and charges may be imposed by governmental agencies for such
services as fire protection, street, sidewalk and road maintenance, refuse
removal and for other governmental services formerly provided without charge to
property owners or occupants, and, in further recognition of the decrease in the
level and quality of governmental services and amenities as a result of
Proposition 13, Tax Expenses shall also include any governmental or private
assessments or the Project’s contribution towards a governmental or private
cost-sharing agreement for the purpose of augmenting or improving the quality of
services and amenities normally provided by governmental agencies; (iii) Any
assessment, tax, fee, levy, or charge allocable to or measured by the area of
the Premises or the Rent payable hereunder, including, without limitation, any
business or gross income tax or excise tax with respect to the receipt of such
rent, or upon or with respect to the possession, leasing, operating, management,
maintenance, alteration, repair, use or occupancy by Tenant of the Premises, or
any portion thereof; and (iv) Any assessment, tax, fee, levy or charge, upon
this transaction or any document to which Tenant is a party, creating or
transferring an interest or an estate in the Premises.

4.2.5.3 Any costs and expenses (including, without limitation, reasonable
attorneys’ fees) incurred in attempting to protest, reduce or minimize Tax
Expenses shall be included in Tax Expenses in the Expense Year such expenses are
paid. Refunds of Tax Expenses shall be credited against Tax Expenses and
refunded to Tenant regardless of when received, based on the Expense Year to
which the refund is applicable, provided that in no event shall the amount to be
refunded to Tenant for any such Expense Year exceed the total amount paid by
Tenant as Additional Rent under this Article 4 for such Expense Year. If Tax
Expenses for any period during the Lease Term or any extension thereof are
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thereof for any reason, including, without limitation, error or reassessment by
applicable governmental or municipal authorities, Tenant shall pay Landlord
within thirty (30) days of demand Tenant’s Share of any such increased Tax
Expenses included by Landlord as Tax Expenses pursuant to the terms of this
Lease. Notwithstanding anything to the contrary contained in this Section 4.2.5
(except as set forth in Section 4.2.5.1, above), there shall be excluded from
Tax Expenses (i) all excess profits taxes, franchise taxes, gift taxes, capital
stock taxes, inheritance and succession taxes, estate taxes, federal and state
income taxes, and other taxes to the extent applicable to Landlord’s general or
net income (as opposed to rents, receipts or income attributable to operations
at the Project), (ii) any items included as Operating Expenses, and (iii) any
items paid by Tenant under Section 4.5 of this Lease.

4.2.5.4. Notwithstanding anything to the contrary set forth in this Lease, the
amount of Tax Expenses for any Expense Year shall be calculated taking into
account any decreases in real estate taxes obtained in connection with
Proposition 8, and, therefore, the Tax Expenses in an Expense Year may be
greater than those actually incurred by Landlord, but shall, nonetheless, be the
Tax Expenses due under this Lease; provided that (i) any costs and expenses
incurred by Landlord in securing any Proposition 8 reduction shall be included
in Direct Expenses for purposes of this Lease, and (ii) tax refunds under
Proposition 8 shall be deducted from Tax Expenses. Landlord and Tenant
acknowledge that this Section 4.2.5.4 is not intended to in any way affect
(A) the inclusion in Tax Expenses of the statutory two percent (2.0%) annual
increase in Tax Expenses (as such statutory increase may be modified by
subsequent legislation), or (B) the inclusion or exclusion of Tax Expenses
pursuant to the terms of Proposition 13, which shall be governed pursuant to the
terms of Sections 4.2.5.1 through 4.2.5.3, above.

4.2.6 “Tenant’s Share” shall mean the percentages set forth in Section 6 of the
Summary.

4.3 Allocation of Direct Expenses.

4.3.1 Method of Allocation. The parties acknowledge that the Building is a part
of a multi-building project. Building Direct Expenses shall, to the extent
practical, be paid directly by Tenant to the parties to whom payment is due, and
Project Direct Expenses shall be determined annually, paid by Landlord and
allocated to Tenant in proportion with Tenant’s Share and to the tenants of the
other buildings in the Project in accordance with their shares, calculated using
the same formula used to calculate Tenant’s Share with respect to Project Direct
Expenses. Building Direct Expenses which cannot be paid directly by Tenant shall
be paid by Landlord and allocated to Tenant in proportion to Tenant’s Share of
Building Direct Expenses.

4.4 Calculation and Payment of Additional Rent. For each Expense Year ending or
commencing within the Lease Term, Tenant shall pay to Landlord as Additional
Rent Tenant’s Share of Direct Expenses for such Expense Year in the manner set
forth in Section 4.4.1 below.

4.4.1 Statement of Actual Direct Expenses and Payment by Tenant. Landlord shall
give to Tenant following the end of each Expense Year (and no later than the
following May 1st), a statement (the “Statement”) which shall state the Project
Direct Expenses and Building Direct Expenses incurred or accrued by Landlord
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by Tenant) for such preceding Expense Year and shall also state the amount of
payments made by Tenant on account of the Estimate given to Tenant under
Section 4.4.2. Upon receipt of the Statement for each Expense Year commencing or
ending during the Lease Term, if Tenant has paid less in estimated payments than
the amount shown due on the Statement, Tenant shall pay, with its next
installment of Base Rent due, the full amount of the difference for such Expense
Year. If on the basis of the Statement Tenant owes an amount that is less than
the estimated payments for such calendar year previously made by Tenant,
Landlord shall credit such excess to Tenant against the rent owed by Tenant as
it becomes due, except that if such excess exists at the termination of this
Lease, Landlord shall refund any such excess payments to Tenant if Tenant is not
in default. The failure of Landlord to timely furnish the Statement for any
Expense Year shall not prejudice Landlord or Tenant from enforcing its rights
under this Article 4, provided that failure to furnish the Statement for more
than twenty-four (24) months following the date it should have been delivered
shall be deemed Landlord’s waiver if its right to demand any amount due on
account of Direct Expenses for the applicable Expense Year. Even though the
Lease Term has expired and Tenant has vacated the Premises, when the final
determination is made of Tenant’s Share of Direct Expenses for the Expense Year
in which this Lease terminates, if an amount is due from Tenant as shown on the
Statement, Tenant shall immediately pay to Landlord such amount, and if Tenant
has paid more in payments on account of the Estimate, Landlord shall promptly
refund such excess to Tenant. The provisions of this Section 4.4.1 shall survive
the expiration or earlier termination of the Lease Term.

4.4.2 Statement of Estimated Direct Expenses. In addition, Landlord shall give
Tenant on or before the Rent Commencement Date, and on or before the first day
of January of each year thereafter during the Term, or as soon thereafter as
practicable, a yearly expense estimate statement (the “Estimate Statement”)
which shall set forth Landlord’s reasonable estimate (the “Estimate”) of what
the total amount of Direct Expenses for the then-current Expense Year shall be.
The failure of Landlord to timely furnish the Estimate Statement for any Expense
Year shall not preclude Landlord from enforcing its rights to collect any
Estimate under this Article 4, nor shall Landlord be prohibited from revising
any Estimate Statement or Estimate theretofore delivered to the extent
necessary. Thereafter, Tenant shall pay, with its next installment of Base Rent
due, a fraction of the Estimate for the then-current Expense Year (reduced by
any amounts paid pursuant to the next to last sentence of this Section 4.4.2).
Such fraction shall have as its numerator the number of months which have
elapsed in such current Expense Year, including the month of such payment, and
twelve (12) as its denominator. Until a new Estimate Statement is furnished
(which Landlord shall have the right to deliver to Tenant at any time), Tenant
shall pay monthly, with the monthly Base Rent installments, an amount equal to
one-twelfth (1/12) of the total Estimate set forth in the previous Estimate
Statement delivered by Landlord to Tenant.

4.5 Taxes and Other Charges for Which Tenant Is Directly Responsible.

4.5.1 Tenant shall be liable for and shall pay ten (10) days before delinquency,
taxes levied against Tenant’s equipment, furniture, fixtures and any other
personal property located in or about the Premises. If any such taxes on
Tenant’s equipment, furniture, fixtures and any other personal property are
levied against Landlord or Landlord’s property or if the assessed value of
Landlord’s property is increased by the inclusion therein of a value placed upon
such equipment, furniture, fixtures or any other personal property and if
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taxes based upon such increased assessment, which Landlord shall have the right
to do regardless of the validity thereof but only under proper protest if
requested by Tenant, Tenant shall upon demand repay to Landlord the taxes so
levied against Landlord or the proportion of such taxes resulting from such
increase in the assessment, as the case may be.

4.5.2 All Tax Expenses assessed on tenant improvements in the Premises for real
property tax purposes, whether installed and/or paid for by Landlord or Tenant
and whether or not affixed to the real property so as to become a part thereof,
shall be deemed to be taxes levied against personal property of Tenant and shall
be governed by the provisions of Section 4.5.1, above.

4.5.3 Notwithstanding any contrary provision herein, Tenant shall pay prior to
delinquency any (i) rent tax or sales tax, service tax, transfer tax or value
added tax, or any other applicable tax on the rent or services herein or
otherwise respecting this Lease, (ii) taxes assessed upon or with respect to the
possession, leasing, operation, management, maintenance, alteration, repair, use
or occupancy by Tenant of the Premises or any portion of the Project, including
the Project parking facility; or (iii) taxes assessed upon this transaction or
any document to which Tenant is a party creating or transferring an interest or
an estate in the Premises.

4.6 Landlord’s Books and Records. Within one (1) year after receipt of a
Statement by Tenant, but not more frequently than one (1) time per year, if
Tenant disputes the amount of Additional Rent set forth in the Statement, either
an employee of Tenant, or an independent certified public accountant (which
accountant is a member of a nationally recognized accounting firm and is not
working on a contingency fee basis), designated and paid for by Tenant, may,
after ten (10) days’ notice to Landlord and at reasonable times, inspect
Landlord’s records with respect to the Statement at Landlord’s local offices,
provided that Tenant is not then in Default under this Lease and Tenant has paid
all amounts required to be paid under the applicable Estimate Statement and
Statement, as the case may be. In connection with such inspection, Tenant and
Tenant’s agents must agree in advance to follow Landlord’s reasonable rules and
procedures regarding inspections of Landlord’s records, and shall execute a
commercially reasonable confidentiality agreement regarding such inspection.
Tenant’s failure to dispute the amount of Additional Rent set forth in any
Statement within one (1) year of Tenant’s receipt of such Statement shall be
deemed to be Tenant’s approval of such Statement and Tenant, thereafter, waives
the right or ability to dispute the amounts set forth in such Statement. If
after such inspection, Tenant still disputes such Additional Rent, a
determination as to the proper amount shall be made, at Tenant’s expense, by an
independent certified public accountant (the “Accountant”) selected by Landlord
and subject to Tenant’s reasonable approval; provided that if such determination
by the Accountant proves that Direct Expenses were overstated by more than five
percent (5%), then the cost of the Accountant and the cost of such determination
shall be paid for by Landlord. Tenant hereby acknowledges that Tenant’s sole
right to inspect Landlord’s books and records and to contest the amount of
Direct Expenses payable by Tenant shall be as set forth in this Section 4.6, and
Tenant hereby waives any and all other rights pursuant to applicable law to
inspect such books and records and/or to contest the amount of Direct Expenses
payable by Tenant.

 

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ARTICLE 5

USE OF PREMISES

5.1 Permitted Use. Tenant shall use the Premises solely for the Permitted Use
set forth in Section 7 of the Summary and Tenant shall not use or permit the
Premises or the Project to be used for any other purpose or purposes whatsoever
without the prior written consent of Landlord, which may be withheld in
Landlord’s sole discretion. Landlord hereby covenants to take, at its sole cost
and expense, all actions necessary to ensure that the Permitted Use under this
Lease is permitted under the applicable laws of the City of San Rafael,
including, without limitation, an amendment of any development agreement or use
permit currently in place for the Project (collectively, the “San Rafael
Zoning”).

5.2 Prohibited Uses. The uses prohibited under this Lease shall include, without
limitation, (a) use of the Premises or a portion thereof for (i) offices of any
agency or bureau of the United States or any state or political subdivision
thereof; (ii) offices or agencies of any foreign governmental or political
subdivision thereof; (iii) schools or other training facilities which are not
ancillary to corporate, executive or professional office use; (iv) retail uses;
or (v) communications firms such as radio and/or television stations, and
(b) use of the Premises for retail banking operations, which shall include
depository operations, issuance and sales of certificates of deposit, or
establishing and maintaining money market and savings accounts and other
deposit-based accounts and investments. Tenant further covenants and agrees that
Tenant shall not use, or suffer or permit any person or persons to use, the
Premises or any part thereof for any use or purpose contrary to the provisions
of the Rules and Regulations set forth in Exhibit D, attached hereto, or in
violation of the laws of the United States of America, the State of California,
or the ordinances, regulations or requirements of the local municipal or county
governing body or other lawful authorities having jurisdiction over the Project)
including, without limitation, any such laws, ordinances, regulations or
requirements relating to hazardous materials or substances, as those terms are
defined by applicable laws now or hereafter in effect. Tenant shall not do or
permit anything to be done in or about the Premises which will in any way damage
the reputation of the Project or obstruct or interfere with the rights of other
tenants or occupants of the Building, or injure or annoy them or use or allow
the Premises to be used for any improper, unlawful or objectionable purpose, nor
shall Tenant cause, maintain or permit any nuisance in, on or about the
Premises. Tenant shall comply with all recorded covenants, conditions, and
restrictions now or hereafter affecting the Project.

5.3 Hazardous or Toxic Material. Except as otherwise provided in this Lease,
Tenant shall not cause or knowingly permit the receipt, storage, use, location
or handling on the Property (including the Building and Premises) of any
product, material or merchandise which is explosive, highly inflammable, or a
“hazardous or toxic material,” as that term is hereafter defined. “Hazardous or
toxic material” shall include all materials or substances which have been
determined to be hazardous to health or the environment, including, without
limitation hazardous waste (as defined in the Resource Conservation and Recovery
Act); hazardous substances (as defined in the Comprehensive Emergency Response,
Compensation and Liability Act, as amended by the Superfund Amendments and
Reauthorization Act); gasoline or any other petroleum product or by-product or
other hydrocarbon derivative; toxic substances, (as defined by the Toxic
Substances Control Act); insecticides, fungicides or rodenticide, (as defined in
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Federal Insecticide, Fungicide, and Rodenticide Act); asbestos and radon and
substances determined to be hazardous under the Occupational Safety and Health
Act or regulations promulgated thereunder. Notwithstanding the foregoing or
anything else in this Lease to the contrary, Tenant shall have the right to use
in the Premises and at the Property the following hazardous or toxic materials
(“Permitted Hazardous Materials”) so long as such materials are used in
compliance with all applicable laws, ordinances and regulations and in
reasonable amounts required for Tenant’s normal and customary business
operations as part of the Permitted Use: (i) hazardous or toxic materials that
are customarily present in a general office use (e.g., copying machine
chemicals, printer toner, cleaning supplies, standard batteries and other
similar items); (ii) nitrogen, compressed air and other hazardous materials
customarily used in a laboratory of the type Tenant intends to operate.
Notwithstanding anything in this Lease to the contrary, Tenant shall not be
liable for any cost or expense related to testing, removal, transportation,
storage, cleaning, abatement or remediation of hazardous or toxic materials
(including, without limitation, hazardous or toxic materials in the ground water
or soil): (X) located outside the Premises, except to the extent caused by any
act or negligent omission of Tenant or its agents, employees and contractors,
and (Y) existing in the Premises prior to the date Landlord tenders possession
of the Premises to Tenant, and (Z) that migrates on or under the Premises from
and after the date Landlord tenders possession of the Premises to Tenant except
to the extent such migration is due to any act of Tenant or Tenant’s agents,
employees or contractors. To Landlord’s actual knowledge, there are no hazardous
materials at the Building in violation of environmental laws. For purposes of
this Section, “Landlord’s actual knowledge” shall be deemed to mean and limited
to the current actual knowledge of Willis K. Polite Jr. and the property manager
for the Building at the time of execution of this Lease, whom Landlord
represents and warrants to Tenant are the persons most likely to have the
knowledge described, and not any implied, imputed, or constructive knowledge of
said individuals or of Landlord or any parties related to or comprising Landlord
and without any independent investigation or inquiry having been made or any
implied duty to investigate or make any inquiries; it being understood and
agreed that such individuals shall have no personal liability in any manner
whatsoever hereunder or otherwise related to the transactions contemplated
hereby.

ARTICLE 6

SERVICES AND UTILITIES

6.1 Standard Tenant Services. Except to the extent that Tenant elects to arrange
for the following directly from the utilities or providers, Landlord shall
provide the following services on all days (unless otherwise stated below)
during the Lease Term.

6.1.1 Tenant shall be responsible, subject to limitations imposed by all
governmental rules, regulations and guidelines applicable thereto, to obtain
heating and air conditioning (“HVAC”) for its own use in the Premises. While the
Project contains multi-tenant buildings in which Landlord is responsible for
providing HVAC when necessary for normal comfort for normal office use from 8:00
A.M. to 6:00 P.M. Monday through Friday (the “Building Hours”), except for the
date of observation of New Year’s Day, President’s Day, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day, Christmas Day and, at Landlord’s
discretion, other nationally recognized holidays (collectively, the “Holidays”),
Tenant, in its sole discretion, shall control the hours of operation of the HVAC
within the Premises.

 

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6.1.2 Landlord shall provide adequate electrical wiring and facilities for
connection to Tenant’s lighting fixtures and incidental use equipment, provided
that (i) the connected electrical load of the incidental use equipment does not
exceed an average of watts per usable square foot of the Premises during the
Building Hours on a monthly basis, and the electricity so furnished for
incidental use equipment will be at a nominal one hundred twenty (120) volts and
no electrical circuit for the supply of such incidental use equipment will
require a current capacity exceeding twenty (20) amperes, and (ii) the connected
electrical load of Tenant’s lighting fixtures does not exceed an average of
watts per usable square foot of the Premises during the Building Hours on a
monthly basis, and the electricity so furnished for Tenant’s lighting will be at
a nominal one hundred twenty (120) volts, which electrical usage shall be
subject to applicable laws and regulations, including Title 24. Tenant will
design Tenant’s electrical system serving any equipment producing nonlinear
electrical loads to accommodate such nonlinear electrical loads, including, but
not limited to, oversizing neutral conductors, derating transformers and/or
providing power-line filters. Engineering plans shall include a calculation of
Tenant’s fully connected electrical design load with and without demand factors
and shall indicate the number of watts of unmetered and submetered loads. Tenant
shall bear the cost of replacement of lamps, starters and ballasts for
non-Building standard lighting fixtures within the Premises.

6.1.3 Landlord shall provide city water from the regular Building outlets for
drinking, lavatory and toilet purposes in the Building Common Areas and in the
Premises, provided that it shall be Tenant’s responsibility at its expense and
as part of the Tenant Improvements described in Exhibit B attached to distribute
the city water within the Premises from the point to which the city water
service line is stubbed on the floor of the Building in which the Premises are
located.

6.1.4 Landlord shall provide window washing services in a manner consistent with
other comparable buildings in the vicinity of the Building.

6.1.5 Tenant shall manage its own exclusive, non-attended automatic passenger
elevator service.

Tenant shall cooperate fully with Landlord at all times and abide by all
regulations and requirements not inconsistent with the terms of this Lease that
Landlord may reasonably prescribe for the proper functioning and protection of
the HVAC, electrical, mechanical (control systems included), fire and life
safety systems, fire sprinkler systems, roof and plumbing systems.

6.2 Intentionally Omitted.

6.3 Interruption of Use. Except to the extent caused by the gross negligence or
willful misconduct of Landlord or its employees, agents or contractors, Tenant
agrees that Landlord shall not be liable for damages, by abatement of Rent or
otherwise, for failure to furnish or delay in furnishing any service (including
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or for any diminution in the quality or quantity thereof, when such failure or
delay or diminution is occasioned, in whole or in part, by breakage, repairs,
replacements, or improvements, by any strike, lockout or other labor trouble, by
inability to secure electricity, gas, water, or other fuel at the Building or
Project after reasonable effort to do so, by any riot or other dangerous
condition, emergency, accident or casualty whatsoever, by act or default of
Tenant or other parties, or by any other cause; and such failures or delays or
diminution shall never be deemed to constitute an eviction or disturbance of
Tenant’s use and possession of the Premises or relieve Tenant from paying Rent
or performing any of its obligations under this Lease. Notwithstanding anything
to the contrary in this Lease, if Tenant’s use or occupancy of the Premises is
substantially impaired thereby for a period of more than five (5) consecutive
days, Base Rent and Additional Rent payable by Tenant shall abate until such
substantial impairment ceases. Furthermore, Landlord shall not be liable under
any circumstances (other than the gross negligence or willful misconduct of
Landlord or its employees, agents or contractors) for a loss of, or injury to,
property or for injury to, or interference with, Tenant’s business, including,
without limitation, loss of profits, however occurring, through or in connection
with or incidental to a failure to furnish any of the services or utilities as
set forth in this Article 6. Landlord may comply with voluntary controls or
guidelines promulgated by any governmental entity relating to the use or
conservation of energy, water, gas, light or electricity or the reduction of
automobile or other emissions without creating any liability of Landlord to
Tenant under this Lease, provided that the Premises are not thereby rendered
untenantable.

ARTICLE 7

REPAIRS AND MAINTENANCE

7.1 Tenant shall maintain in good condition and operating order and keep in good
repair and condition the stairs, stairwells, elevator cabs, restrooms, Building
mechanical, electrical and telephone closets, and all common and public areas
(collectively, “Tenant’s Building Structure”), and the base building mechanical,
electrical, life safety, plumbing, vertical transportation system, sprinkler
systems and the heating, ventilating and air conditioning (“HVAC”) systems
(collectively, the “Building Systems”), in a first-class manner at least as good
as that maintained by Landlord in other buildings in the Project. Subject to
Landlord’s reasonable approval, at least once each Lease Year, Tenant, at
Tenant’s sole cost and expense, shall procure and maintain service contracts
with specific terms which are comparable to those maintained by Landlord for
other buildings in the Project, with copies of the contracts and the service
contract providers’ insurance certificates naming Landlord and Landlord’s
managing agent as additional insureds, to Landlord within thirty (30) days of
execution, with contractors reasonably approved by Landlord, which specialize in
and are experienced in the maintenance and repair of the Tenant’s Building
Structure, HVAC and Building Systems. Failure to provide the service contracts
and/or evidence of insurance as required herein prior to performance of any
services by such service contractors shall constitute an Event of Default under
this Lease. In lieu of complying with Tenant’s obligations under this
Section 7.1, Tenant may arrange with Landlord to perform Tenant’s obligations
under this Section 7.1 and to reimburse Landlord within twenty (20) days of
being billed therefor for all costs and expenses incurred by Landlord in
connection with providing such contracts and services. If Tenant fails to
perform its obligations under this Section 7.1, after five (5) days’ notice from
Landlord to Tenant of such failure and Tenant’s failure to cure such failure
within such five (5) day period, Landlord may on notice to Tenant take over
rendering such services and bill Tenant for the cost thereof.

 

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7.2 Landlord shall maintain in good condition and operating order and keep in
good repair and condition the Common Areas, and the structural portions of the
Building, including the foundation, floor/ceiling slabs, roof, curtain wall,
exterior glass and mullions, columns, and beams (collectively, “Landlord’s
Building Structure”), and shall perform any reasonably required capital repairs
and/or improvement to the Building, subject to being reimbursed for Tenant’s
Share of the costs and expenses thereof, in accordance with the provisions of
Sections 4.2.4 and 4.3.

7.3 Subject to Landlord’s obligations under Section 7.2, Tenant shall, at
Tenant’s own expense, pursuant to the terms of this Lease, including without
limitation Article 8 hereof, keep the Premises, including all improvements,
fixtures and furnishings therein, in good order, repair and condition at all
times during the Lease Term and Tenant shall, at Tenant’s own expense, but under
the supervision and subject to the prior approval of Landlord, and within any
reasonable period of time specified by Landlord, pursuant to the terms of this
Lease, including without limitation Article 8 hereof, promptly and adequately
repair all damage to the Premises and replace or repair all damaged, broken, or
worn fixtures and appurtenances, except for damage caused by ordinary wear and
tear or beyond the reasonable control of Tenant; provided however, that, at the
Landlord’s reasonable discretion if Tenant fails to make such repairs, Landlord
may, but need not, make such repairs and replacements, and Tenant shall pay
Landlord the cost thereof, including a percentage of the cost thereof (to be
uniformly established for the Building and/or the Project) sufficient to
reimburse Landlord for all overhead, general conditions, fees and other costs or
expenses arising from Landlord’s involvement with such repairs and replacements
forthwith upon being billed for same. Landlord may, but shall not be required
to, enter the Premises at all reasonable times upon reasonable prior notice to
make such repairs, alterations, improvements or additions to the Premises or to
the Project or to any equipment located in the Project as required or permitted
by this Lease or as Landlord may be required to do by governmental or
quasi-governmental authority or court order or decree. Tenant hereby waives any
and all rights under and benefits of subsection 1 of Section 1932 and Sections
1941 and 1942 of the California Civil Code or under any similar law, statute, or
ordinance now or hereafter in effect. Tenant shall at its own expense provide
daily janitorial service in the Premises under similar or higher specifications
than those maintained by Landlord in Adjacent Buildings and pay for trash and
garbage removal from the Premises to the designated Building trash and garbage
collection area. Tenant shall be required to keep the Premises in good and clean
condition and dispose of any hazardous or toxic materials, including biohazard
waste in accordance with applicable laws and not in the Building trash
receptacles.

ARTICLE 8

ADDITIONS AND ALTERATIONS

8.1 Landlord’s Consent to Alterations. Following completion of the Tenant
Improvements in accordance with the terms of the Tenant Work Letter attached to
this Lease as Exhibit B, Tenant may not make any improvements, alterations,
additions or changes to the Premises or any mechanical, plumbing or HVAC
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(collectively, the “Alterations”) without first procuring the prior written
consent of Landlord to such Alterations, which consent shall be requested by
Tenant not less than thirty (30) days prior to the commencement thereof, and
which consent shall not be unreasonably withheld by Landlord, provided it shall
be deemed reasonable for Landlord to withhold its consent to any Alteration
which adversely affects the structural portions or the systems or equipment of
the Building or is visible from the exterior of the Building. The construction
of the initial improvements to the Premises shall be governed by the terms of
the Tenant Work Letter and not the terms of this Article 8.

8.2 Manner of Construction. Landlord may impose, as a condition of its consent
to any and all Alterations or repairs of the Premises or about the Premises,
such requirements as Landlord in its reasonable discretion may deem desirable,
including, but not limited to, the requirement that Tenant utilize for such
purposes only contractors, subcontractors, materials, mechanics and materialmen
selected by Tenant from a list provided and approved by Landlord, the
requirement that upon Landlord’s request (given concurrently with Landlord’s
consent to installation of the subject Alterations), Tenant shall, at Tenant’s
expense, remove such Alterations upon the expiration or any early termination of
the Lease Term, and the requirement that all Alterations conform in terms of
quality to the building’s standards established by Landlord. If such Alterations
will involve the use of or disturb hazardous materials or substances existing in
the Premises, Tenant shall comply with Landlord’s rules and regulations
concerning such hazardous materials or substances. Tenant shall construct such
Alterations and perform such repairs in a good and workmanlike manner, in
conformance with any and all applicable federal, state, county or municipal
laws, rules and regulations and pursuant to a valid building permit, issued by
the City of San Rafael, all in conformance with Landlord’s reasonable
construction rules and regulations. In the event Tenant performs any Alterations
in the Premises which require or give rise to governmentally required changes to
the “Base Building,” as that term is defined below, then Landlord shall, at
Tenant’s expense, make such changes to the Base Building. The “Base Building”
shall include the structural portions of the Building, and the public restrooms
and the systems and equipment located in the internal core of the Building on
the floor or floors on which the Premises are located. In performing the work of
any such Alterations, Tenant shall have the work performed in such manner so as
not to obstruct access to the Project or any portion thereof, by any other
tenant of the Project, and so as not to obstruct the business of Landlord or
other tenants in the Project. Tenant shall not use (and upon notice from
Landlord shall cease using) contractors, services, workmen, labor, materials or
equipment that, in Landlord’s reasonable judgment, would disturb labor harmony
with the workforce or trades engaged in performing other work, labor or services
in or about the Building or the Common Areas. In addition to Tenant’s
obligations under Article 9 of this Lease, upon completion of any Alterations,
Tenant agrees to cause a Notice of Completion to be recorded in the office of
the Recorder of the County of Marin in accordance with Section 3093 of the Civil
Code of the State of California or any successor statute, and Tenant shall
deliver to the Project management office (A) a reproducible print copy, and
(B) an electronic CAD file, of the “as built” drawings of the Alterations as
well as all permits, approvals and other documents issued by any governmental
agency in connection with the Alterations. Based upon such “as built” drawings
and other documents provided by Tenant, Landlord shall, at Tenant’s expense,
update Landlord’s “As-Built Floor Master Plans,” including updated vellums and
electronic CAD files. As used in this Lease, the “As-Built Floor Master Plans”
means (i) the “Architectural Partition Plan,” and (ii) the following engineered
plans: (a) “Lighting Plan,” (b) “Power Plan,” (c) “Mechanical Plan,” (d)

 

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“Plumbing Plan,” (e) “Fire Sprinkler Plan, and (f) “Fire/Life Safety Plan.” The
current version of such As-Built Floor Master Plans, which may be modified by
Landlord from time-to-time, shall be made available to Tenant upon Tenant’s
request, at Landlord’s expense.

8.3 Payment for Improvements. If payment is made directly to contractors, Tenant
shall comply with Landlord’s requirements for final lien releases and waivers in
connection with Tenant’s payment for work to contractors. Whether or not Tenant
orders any work directly from Landlord, Tenant shall pay to Landlord two
(2) percent of the hard costs of such work, subject to a ceiling of $1.50 per
square foot, to compensate Landlord for all overhead, general conditions, fees
and other costs and expenses arising from Landlord’s involvement with such work.

8.4 Construction Insurance. In addition to the requirements of Article 10 of
this Lease, in the event that Tenant makes any Alterations, prior to the
commencement of such Alterations, Tenant shall provide Landlord with evidence
that Tenant carries “Builder’s All Risk” insurance, or comparable, in an amount
approved by Landlord covering the construction of such Alterations, and such
other insurance as Landlord may require, it being understood and agreed that all
of such Alterations shall be insured by Tenant pursuant to Article 10 of this
Lease immediately upon completion thereof. In addition, Landlord may, in its
discretion, require Tenant to obtain a lien and completion bond or some
alternate form of security satisfactory to Landlord in an amount sufficient to
ensure the lien-free completion of such Alterations and naming Landlord as a
co-obligee, in any instance where the projected cost of the proposed Alterations
is in excess of $50,000.

8.5 Landlord’s Property. All Alterations which may be installed or placed in or
about the Premises, from time to time, shall be at the sole cost of Tenant and
shall be and become the property of Landlord, except that Tenant may remove any
Alterations which Tenant can substantiate to Landlord have not been paid for
with any Tenant improvement allowance funds provided to Tenant by Landlord,
provided Tenant repairs any damage to the Premises and Building caused by such
removal and returns the affected portion of the Premises to a building standard
tenant improved condition as determined by Landlord. Furthermore, Landlord may,
by written notice to Tenant given concurrently with giving Landlord’s consent,
require Tenant, at Tenant’s expense, to remove at the end of the Term the
following Tenant Improvements and any Alterations which in Landlord’s reasonable
judgment are of a nature that would require removal and repair costs that are
materially in excess of the removal and repair costs associated with standard
office improvements: laboratory improvements, any exercise facility, and any
cafeteria (collectively referred to as “Required Removables”), and to repair any
damage to the Premises and Building caused by such removal. If Tenant fails to
complete such removal and/or to repair any damage caused by the removal of any
Alterations, then at Landlord’s option, either (A) Tenant shall be deemed to be
holding over in the Premises and Rent shall continue to accrue in accordance
with the terms of Article 16, below, until such work shall be completed, or
(B) Landlord may do so and may charge the cost thereof to Tenant. Tenant hereby
protects, defends, indemnifies and holds Landlord harmless from any liability,
cost, obligation, expense or claim of lien in any manner relating to the
installation, placement, and removal or financing of any such Alterations in, on
or about the Premises, which obligations of Tenant shall survive the expiration
or earlier termination of this Lease. Tenant’s removal obligations with respect
to the Tenant Improvements are set forth in the Tenant Work Letter.

 

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ARTICLE 9

COVENANT AGAINST LIENS

Tenant shall keep the Project and Premises free from any liens or encumbrances
arising out of the work performed, materials furnished or obligations incurred
by or on behalf of Tenant, and shall protect, defend, indemnify and hold
Landlord harmless from and against any claims, liabilities, judgments or costs
(including, without limitation, reasonable attorneys’ fees and costs) arising
out of same or in connection therewith. Tenant shall give Landlord notice at
least twenty (20) days prior to the commencement of any such work on the
Premises (or such additional time as may be necessary under applicable laws) to
afford Landlord the opportunity of posting and recording appropriate notices of
non-responsibility. Tenant shall remove any such lien or encumbrance by bond or
otherwise within five (5) days after notice by Landlord, and if Tenant shall
fail to do so, Landlord may pay the amount necessary to remove such lien or
encumbrance, without being responsible for investigating the validity thereof.
The amount so paid shall be deemed Additional Rent under this Lease payable upon
demand, without limitation as to other remedies available to Landlord under this
Lease. Nothing contained in this Lease shall authorize Tenant to do any act
which shall subject Landlord’s title to the Building or Premises to any liens or
encumbrances whether claimed by operation of law or express or implied contract.
Any claim to a lien or encumbrance upon the Building or Premises arising in
connection with any such work or respecting the Premises not performed by or at
the request of Landlord shall be null and void, or at Landlord’s option shall
attach only against Tenant’s interest in the Premises and shall in all respects
be subordinate to Landlord’s title to the Project, Building and Premises.

ARTICLE 10

INSURANCE

10.1 Indemnification and Waiver. Tenant hereby assumes all risk of damage to
property or injury to persons in, upon or about the Premises from any cause
whatsoever (including, but not limited to, any personal injuries resulting from
a slip and fall in, upon or about the Premises) and agrees that Landlord, its
partners, subpartners and their respective officers, agents, servants,
employees, and independent contractors (collectively, “Landlord Parties”) shall
not be liable for, and are hereby released from any responsibility for, any
damage either to person or property or resulting from the loss of use thereof,
which damage is sustained by Tenant or by other persons claiming through Tenant.
Tenant shall indemnify, defend, protect, and hold harmless the Landlord Parties
from any and all loss, cost, damage, expense and liability (including without
limitation court costs and reasonable attorneys’ fees) incurred in connection
with or arising from any cause in, on or about the Premises, any violation of
any of the requirements, ordinances, statutes, regulations or other laws,
including, without limitation, any environmental laws, any acts, omissions or
negligence of Tenant or of any person claiming by, through or under Tenant, or
of the contractors, agents, servants, employees, invitees, guests or licensees
of Tenant or any such person, in, on or about the Project or any breach of the
terms of this Lease, either prior to, during, or after the expiration of the
Lease Term, provided that the terms of the foregoing indemnity shall not apply
to the gross negligence or willful misconduct of Landlord or any of the Landlord
Parties. Should Landlord be named as a defendant in any suit brought against
Tenant in connection with or arising out of Tenant’s occupancy of the Premises,

 

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Tenant shall pay to Landlord its costs and expenses incurred in such suit,
including without limitation, its actual professional fees such as appraisers’,
accountants’ and attorneys’ fees. Further, Tenant’s agreement to indemnify
Landlord pursuant to this Section 10.1 is not intended and shall not relieve any
insurance carrier of its obligations under policies required to be carried by
Tenant pursuant to the provisions of this Lease, to the extent such policies
cover the matters subject to Tenant’s indemnification obligations; nor shall
they supersede any inconsistent agreement of the parties set forth in any other
provision of this Lease. The provisions of this Section 10.1 shall survive the
expiration or sooner termination of this Lease with respect to any claims or
liability arising in connection with any event occurring prior to such
expiration or termination.

10.2 Tenant’s Compliance With Landlord’s Fire and Casualty Insurance. Tenant
shall, at Tenant’s expense, comply with all insurance company requirements
pertaining to the use of the Premises. If Tenant’s conduct or use of the
Premises causes any increase in the premium for such insurance policies then
Tenant shall reimburse Landlord for any such increase. Tenant, at Tenant’s
expense, shall comply with all rules, orders, regulations or requirements of the
American Insurance Association (formerly the National Board of Fire
Underwriters) and with any similar body.

10.3 Tenant’s Insurance. Tenant shall maintain the following coverages in the
following amounts.

10.3.1 Commercial General Liability Insurance covering the insured against
claims of bodily injury, personal injury and property damage (including loss of
use thereof) arising out of Tenant’s operations, and contractual liabilities
(covering the performance by Tenant of its indemnity agreements) including a
Broad Form endorsement covering the insuring provisions of this Lease and the
performance by Tenant of the indemnity agreements set forth in Section 10.1 of
this Lease, for limits of liability not less than:

 

Bodily Injury and

Property Damage Liability

  

$5,000,000 each occurrence

$5,000,000 annual aggregate

Personal Injury Liability

  

$5,000,000 each occurrence

$5,000,000 annual aggregate

0% Insured’s participation

10.3.2 Physical Damage Insurance covering (i) all office furniture, business and
trade fixtures, office equipment, free-standing cabinet work, movable
partitions, merchandise and all other items of Tenant’s property on the Premises
installed by, for, or at the expense of Tenant, (ii) the “Tenant Improvements,”
as that term is defined in Section 2.1 of the Tenant Work Letter, and any other
improvements which exist in the Premises as of the Lease Commencement Date
(excluding the Base Building) (the “Original Improvements”), and (iii) all other
improvements, alterations and additions to the Premises. Such insurance shall be
written on an “all risks” of physical loss or damage basis, for the full
replacement cost value (subject to reasonable deductible amounts) new without
deduction for depreciation of the covered items and in amounts that meet any
co-insurance clauses of the policies of insurance and shall include coverage for
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limited to, vandalism and malicious mischief, theft, water damage of any type,
including sprinkler leakage, bursting or stoppage of pipes, and explosion, and
providing business interruption coverage for a period of one year.

10.3.3 Worker’s Compensation and Employer’s Liability or other similar insurance
pursuant to all applicable state and local statutes and regulations.

10.4 Form of Policies. The minimum limits of policies of insurance required of
Tenant under this Lease shall in no event limit the liability of Tenant under
this Lease. Such insurance shall (i) name Landlord, Landlord’s lender, and any
other party the Landlord so specifies, as an additional insured, including
Landlord’s managing agent, if any; (ii) specifically cover the liability assumed
by Tenant under this Lease, including, but not limited to, Tenant’s obligations
under Section 10.1 of this Lease; (iii) be issued by an insurance company having
a rating of not less than A-VIII in Best’s Insurance Guide or which is otherwise
acceptable to Landlord and licensed to do business in the State of California;
(iv) be primary insurance as to all claims thereunder and provide that any
insurance carried by Landlord is excess and is non-contributing with any
insurance requirement of Tenant; and (v) be in form and content reasonably
acceptable to Landlord. In the event that any insurance required of Tenant under
the Lease is cancelled or modified, then, within three (3) business days’ of
Tenant’s receipt of notice of cancellation or modification, Tenant shall give
Landlord notice of such cancellation or modification. Tenant shall deliver said
policy or policies or certificates thereof to Landlord on or before the Lease
Commencement Date and at least thirty (30) days before the expiration dates
thereof. In the event Tenant shall fail to procure such insurance, or to deliver
such policies or certificate, Landlord may, at its option, procure such policies
for the account of Tenant, and the cost thereof shall be paid to Landlord within
five (5) days after delivery to Tenant of bills therefor.

10.5 Subrogation. Landlord and Tenant intend that their respective property loss
risks shall be borne by reasonable insurance carriers to the extent above
provided, and Landlord and Tenant hereby agree to look solely to, and seek
recovery only from, their respective insurance carriers in the event of a
property loss to the extent that such coverage is agreed to be provided
hereunder. The parties each hereby waive all rights and claims against each
other for such losses, and waive all rights of subrogation of their respective
insurers, provided such waiver of subrogation shall not affect the right to the
insured to recover thereunder. The parties agree that their respective insurance
policies are now, or shall be, endorsed such that the waiver of subrogation
shall not affect the right of the insured to recover thereunder, so long as no
material additional premium is charged therefor.

10.6 Additional Insurance Obligations. Tenant shall carry and maintain during
the entire Lease Term, at Tenant’s sole cost and expense, increased amounts of
the insurance required to be carried by Tenant pursuant to this Article 10 and
such other reasonable types of insurance coverage and in such reasonable amounts
covering the Premises and Tenant’s operations therein, as may be reasonably
requested by Landlord or Landlord’s lenders, if any.

10.7 Landlord’s Insurance. So long as the same is available at commercially
reasonable rates, Landlord shall maintain so called “Special form Causes of Loss
property insurance on the Building at replacement cost value, as reasonably
estimated by Landlord.

 

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ARTICLE 11

DAMAGE AND DESTRUCTION

11.1 Repair of Damage to Premises by Landlord. Tenant shall promptly notify
Landlord of any damage to the Premises resulting from fire or any other
casualty. Within ninety (90) days of such casualty Landlord shall give to Tenant
a notice estimating the date upon which the Landlord’s repair shall be complete
(the “Landlord Repair Notice”). The ninety (90) day notice period in the
preceding sentence may be extended by Landlord for an additional thirty
(30) days if by the end of the ninety (90) day notice period Landlord has not
received the information required to issue the Landlord Repair Notice and so
notifies Tenant. If the Premises or any Common Areas serving or providing access
to the Premises shall be damaged by fire or other casualty, Landlord shall
promptly and diligently, subject to reasonable delays for insurance adjustment
or other matters beyond Landlord’s reasonable control, and subject to all other
terms of this Article 11, restore the Base Building and such Common Areas. Such
restoration shall be to substantially the same condition of the Base Building
and the Common Areas prior to the casualty, except for modifications required by
zoning and building codes and other laws or by the holder of a mortgage on the
Building or Project or any other modifications to the Common Areas deemed
desirable by Landlord, provided that access to the Premises and any common
restrooms serving the Premises shall not be materially impaired. Upon the
occurrence of any damage to the Premises, upon notice (the “Landlord Repair
Notice”) to Tenant from Landlord, Tenant shall assign to Landlord (or to any
party designated by Landlord) all insurance proceeds payable to Tenant under
Tenant’s insurance required under Section 10.3 of this Lease, and Landlord shall
repair any injury or damage to the Tenant Improvements and the Original
Improvements installed in the Premises and shall return such Tenant Improvements
and Original Improvements to their original condition; provided that if the cost
of such repair by Landlord exceeds the amount of insurance proceeds received by
Landlord from Tenant’s insurance carrier, as assigned by Tenant, the cost of
such repairs shall be paid by Tenant to Landlord prior to Landlord’s
commencement of repair of the damage, provided Tenant has been given
satisfactory evidence of their costs. In the event that Landlord does not
deliver the Landlord Repair Notice within one hundred twenty (120) days
following the date the casualty becomes known to Landlord, Tenant shall, at its
sole cost and expense, repair any injury or damage to the Tenant Improvements
and the Original Improvements installed in the Premises and shall return such
Tenant Improvements and Original Improvements to their original condition.
Whether or not Landlord delivers a Landlord Repair Notice, prior to the
commencement of construction, Tenant shall submit to Landlord, for Landlord’s
review and approval, all plans, specifications and working drawings relating
thereto, and Landlord shall select the contractors to perform such improvement
work. Landlord shall not be liable for any inconvenience or annoyance to Tenant
or its visitors, or injury to Tenant’s business resulting in any way from such
damage or the repair thereof; provided however, that if such fire or other
casualty shall have damaged the Premises or Common Areas necessary to Tenant’s
occupancy, Landlord shall allow Tenant a proportionate abatement of Rent to the
extent Landlord is reimbursed from the proceeds of rental interruption insurance
purchased by Landlord as part of Operating Expenses, during the time and to the
extent the Premises are unfit for occupancy for the purposes permitted under
this Lease, and not occupied by Tenant as a result thereof; provided, further,
however, that if the damage or destruction is due to the negligence or wilful
misconduct of Tenant or any of its agents, employees, contractors, invitees or
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applicable insurance deductible (which shall be payable to Landlord upon demand)
and there shall be no rent abatement. In the event that Landlord shall not
deliver the Landlord Repair Notice, Tenant’s right to rent abatement pursuant to
the preceding sentence shall terminate as of the date which is reasonably
determined by Landlord to be the date Tenant should have completed repairs to
the Premises assuming Tenant used reasonable due diligence in connection
therewith.

11.2 Termination Options. Notwithstanding the terms of Section 11.1 of this
Lease, Landlord may elect not to rebuild and/or restore the Premises, Building
and/or Project, and instead terminate this Lease, by notifying Tenant in writing
of such termination within thirty (30) days after the date of the Landlord
Repair Notice, such notice to include a termination date giving Tenant sixty
(60) days to vacate the Premises, but Landlord may so elect only if the Building
or Project shall be damaged by fire or other casualty or cause, whether or not
the Premises are affected, and one or more of the following conditions is
present: (i) in Landlord’s reasonable judgment, repairs cannot reasonably be
completed within one (1) year after the date of the Landlord Repair Notice (when
such repairs are made without the payment of overtime or other premiums);
(ii) the holder of any mortgage on the Building or Project or ground lessor with
respect to the Building or Project shall require that the insurance proceeds or
any portion thereof be used to retire the mortgage debt, or shall terminate the
ground lease, as the case may be; (iii) the damage is not fully covered by
Landlord’s insurance policies (unless Landlord has failed to maintain the
policies required by this Lease); or (iv) the damage occurs during the last
twelve (12) months of the Lease Term.

Notwithstanding the terms of Section 11.1 of this Lease, Tenant may terminate
this Lease, by notifying Landlord in writing of such termination within thirty
(30) days after the date of Landlord’s notice required in the preceding
paragraph, such notice to include a termination date giving Tenant sixty
(60) days to vacate the Premises, if the Building shall be damaged by fire or
other casualty or cause, and one or more of the following conditions is present:
(iv) in Landlord’s reasonable judgment, repairs cannot reasonably be completed
within one (1) year after the date of the Landlord Repair Notice (when such
repairs are made without the payment of overtime or other premiums); or (v) the
damage occurs during the last twelve (12) months of the Lease Term. In addition,
Tenant may terminate the Lease by giving written notice to Landlord if Landlord
shall have failed to complete the restoration as required above within ninety
(90) days following the estimated restoration date set forth in the Landlord
Repair Notice.

11.3 Waiver of Statutory Provisions. The provisions of this Lease, including
this Article 11, 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, the Building or the Project, and any statute or regulation of the
State of California, including, without limitation, Sections 1932(2) and 1933(4)
of the California Civil Code, with respect to any rights or obligations
concerning damage or destruction in the absence of an express agreement between
the parties, and any other statute or regulation, now or hereafter in effect,
shall have no application to this Lease or any damage or destruction to all or
any part of the Premises, the Building or the Project.

 

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ARTICLE 12

NONWAIVER

No provision of this Lease shall be deemed waived by either party hereto unless
expressly waived in a writing signed thereby. The waiver by either party hereto
of any breach of any term, covenant or condition herein contained shall not be
deemed to be a waiver of any subsequent breach of same or any other term,
covenant or condition herein contained. The subsequent acceptance of Rent
hereunder by Landlord shall not be deemed to be a waiver of any preceding breach
by Tenant of any term, covenant or condition of this Lease, other than the
failure of Tenant to pay the particular Rent so accepted, regardless of
Landlord’s knowledge of such preceding breach at the time of acceptance of such
Rent. No acceptance of a lesser amount than the Rent herein stipulated shall be
deemed a waiver of Landlord’s right to receive the full amount due, nor shall
any endorsement or statement on any check or payment or any letter accompanying
such check or payment be deemed an accord and satisfaction, and Landlord may
accept such check or payment without prejudice to Landlord’s right to recover
the full amount due. No receipt of monies by Landlord from Tenant after the
termination of this Lease shall in any way alter the length of the Lease Term or
of Tenant’s right of possession hereunder, or after the giving of any notice
shall reinstate, continue or extend the Lease Term or affect any notice given
Tenant prior to the receipt of such monies, it being agreed that after the
service of notice or the commencement of a suit, or after final judgment for
possession of the Premises, Landlord may receive and collect any Rent due, and
the payment of said Rent shall not waive or affect said notice, suit or
judgment.

ARTICLE 13

CONDEMNATION

If the whole or any part of the Premises, Building or Project shall be taken by
power of eminent domain or condemned by any competent authority for any public
or quasi-public use or purpose, or if any adjacent property or street shall be
so taken or condemned, or reconfigured or vacated by such authority in such
manner as to require the use, reconstruction or remodeling of any part of the
Premises, Building or Project, or if Landlord shall grant a deed or other
instrument in lieu of such taking by eminent domain or condemnation, Landlord
shall have the option to terminate this Lease effective as of the date
possession is required to be surrendered to the authority. If more than
twenty-five percent (25%) of the rentable square feet of the Premises is taken,
or if access to the Premises is substantially impaired, in each case for a
period in excess of one hundred eighty (180) days, Tenant shall have the option
to terminate this Lease effective as of the date possession is required to be
surrendered to the authority. Tenant shall not because of such taking assert any
claim against Landlord or the authority for any compensation because of such
taking and Landlord shall be entitled to the entire award or payment in
connection therewith, except that Tenant shall have the right to file any
separate claim available to Tenant for any taking of Tenant’s personal property
and fixtures belonging to Tenant and removable by Tenant upon expiration of the
Lease Term pursuant to the terms of this Lease, and for moving expenses, so long
as such claims do not diminish the award available to Landlord, its ground
lessor with respect to the Building or Project or its mortgagee, and such claim
is payable separately to Tenant. All Rent shall be apportioned as of the date of
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part of the Premises shall be taken, and this Lease shall not be so terminated,
the Rent shall be proportionately abated. Tenant hereby waives any and all
rights it might otherwise have pursuant to Section 1265.130 of The California
Code of Civil Procedure. Notwithstanding anything to the contrary contained in
this Article 13, in the event of a temporary taking of all or any portion of the
Premises for a period of one hundred and eighty (180) days or less, then this
Lease shall not terminate but the Base Rent and the Additional Rent shall be
abated for the period of such taking in proportion to the ratio that the amount
of rentable square feet of the Premises taken bears to the total rentable square
feet of the Premises. Landlord shall be entitled to receive the entire award
made in connection with any such temporary taking.

ARTICLE 14

ASSIGNMENT AND SUBLETTING

14.1 Transfers. Tenant shall not, without the prior written consent of Landlord,
assign, mortgage, pledge, hypothecate, encumber, or permit any lien to attach
to, or otherwise transfer, this Lease or any interest hereunder, permit any
assignment, or other transfer of this Lease or any interest hereunder by
operation of law, sublet the Premises or any part thereof, or enter into any
license or concession agreements or otherwise permit the occupancy or use of the
Premises or any part thereof by any persons other than Tenant and its employees
and contractors (all of the foregoing are hereinafter sometimes referred to
collectively as “Transfers” and any person to whom any Transfer is made or
sought to be made is hereinafter sometimes referred to as a “Transferee”). If
Tenant desires Landlord’s consent to any Transfer, Tenant shall notify Landlord
in writing, which notice (the “Transfer Notice”) shall include (i) the proposed
effective date of the Transfer, which shall not be less than thirty (30) days
nor more than one hundred eighty (180) days after the date of delivery of the
Transfer Notice, (ii) a description of the portion of the Premises to be
transferred (the “Subject Space”), (iii) all of the terms of the proposed
Transfer and the consideration therefor, including calculation of the “Transfer
Premium”, as that term is defined in Section 14.3 below, in connection with such
Transfer, the name and address of the proposed Transferee, and an executed copy
of all documentation effectuating the proposed Transfer, including all operative
documents to evidence such Transfer and all agreements incidental or related to
such Transfer, provided that Landlord shall have the right to require Tenant to
utilize Landlord’s standard form of consent document in connection with the
consent of Landlord to a Transfer, (iv) current financial statements of the
proposed Transferee certified by an officer, partner or owner thereof, business
credit and personal references and history of the proposed Transferee and any
other information required by Landlord which will enable Landlord to determine
the financial responsibility, character, and reputation of the proposed
Transferee, nature of such Transferee’s business and proposed use of the Subject
Space and (v) an executed estoppel certificate from Tenant in the form attached
hereto as Exhibit E. Any Transfer for which consent is required made without
Landlord’s prior written consent shall, at Landlord’s option, be null, void and
of no effect, and shall, at Landlord’s option, constitute a Default by Tenant
under this Lease. Whether or not Landlord consents to any proposed Transfer,
Tenant shall pay Landlord’s reasonable review and processing fees, as well as
any reasonable professional fees (including, without limitation, attorneys’,
accountants’, architects’, engineers’ and consultants’ fees) incurred by
Landlord, which shall not exceed $10,000.00, within thirty (30) days after
written request by Landlord.

 

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14.2 Landlord’s Consent. Landlord shall not unreasonably withhold its consent to
any proposed Transfer of the Subject Space to the Transferee on the terms
specified in the Transfer Notice. Without limitation as to other reasonable
grounds for withholding consent, the parties hereby agree that it shall be
reasonable under this Lease and under any applicable law for Landlord to
withhold consent to any proposed Transfer where one or more of the following
apply:

14.2.1 The Transferee is of a character or reputation or engaged in a business
which is not consistent with the quality of the Building or the Project, or
would be a significantly less prestigious occupant of the Building than Tenant;

14.2.2 The Transferee intends to use the Subject Space for purposes which are
not permitted under this Lease;

14.2.3 The Transferee is either a governmental agency or instrumentality
thereof;

14.2.4 The Transfer occurs during the period from the Lease Commencement Date
until the earlier of (i) one (1) year after Tenant’s occupancy of at least
130,000 rentable square feet in the Project or March 1, 2014, or (ii) the date
at least ninety-five percent (95%) of the rentable square feet of the Project is
leased, and the rent charged by Tenant to such Transferee during the term of
such Transfer (the “Transferee’s Rent”), is less than ninety-five percent
(95%) of the starting rent being obtained by landlords of comparable space in
Comparable Buildings within the twelve (12) months prior to the time of such
Transfer for a comparable term (the “Quoted Rent”). In the event there are
comparable space lease transactions within the six (6) months prior to such
Transfer, those transactions shall be considered first;

14.2.5 The Transferee is not a party of reasonable financial worth and/or
financial stability in light of the responsibilities to be undertaken in
connection with the Transfer on the date consent is requested;

14.2.6 The proposed Transfer would cause a violation of another lease for space
in the Project, or would give an occupant of the Project a right to cancel its
lease;

14.2.7 The terms of the proposed Transfer will allow the Transferee to exercise
a right of renewal, right of expansion, right of first offer, or other similar
right held by Tenant (or will allow the Transferee to occupy space leased by
Tenant pursuant to any such right); or

14.2.8 At the time of the proposed Transfer, Landlord has comparable space
available for lease in the Project and either the proposed Transferee, or any
person or entity which directly or indirectly, controls, is controlled by, or is
under common control with, the proposed Transferee, (i) occupies space in the
Project at the time of the request for consent, or (ii) is negotiating with
Landlord to lease space in the Project at such time, or (iii) has negotiated
with Landlord during the twelve (12)-month period immediately preceding the
Transfer Notice. For the purposed of this Section 14.2.8, the term “comparable
space” means space that is substantially the same size, which has or will have
the same quality of finish and which is or will be of the same type (office,
lab, etc.) as the Subject Space.

 

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If Landlord consents to any Transfer pursuant to the terms of this Section 14.2
(and does not exercise any recapture rights Landlord may have under Section 14.4
of this Lease), Tenant may within six (6) months after Landlord’s consent, but
not later than the expiration of said six-month period, enter into such Transfer
of the Premises or portion thereof, upon substantially the same terms and
conditions as are set forth in the Transfer Notice furnished by Tenant to
Landlord pursuant to Section 14.1 of this Lease, provided that if there are any
changes in the terms and conditions from those specified in the Transfer Notice
(i) such that Landlord would initially have been entitled to refuse its consent
to such Transfer under this Section 14.2, or (ii) which would cause the proposed
Transfer to be more favorable to the Transferee than the terms set forth in
Tenant’s original Transfer Notice, Tenant shall again submit the Transfer to
Landlord for its approval and other action under this Article 14 (including
Landlord’s right of recapture, if any, under Section 14.4 of this Lease).
Notwithstanding anything to the contrary in this Lease, if Tenant or any
proposed Transferee claims that Landlord has unreasonably withheld or delayed
its consent under Section 14.2 or otherwise has breached or acted unreasonably
under this Article 14, their sole remedies shall be a declaratory judgment and
an injunction for the relief sought without any monetary damages, and Tenant
hereby waives all other remedies, including, without limitation, any right at
law or equity to terminate this Lease, on its own behalf and, to the extent
permitted under all applicable laws, on behalf of the proposed Transferee.
Tenant shall indemnify, defend and hold harmless Landlord from any and all
liability, losses, claims, damages, costs, expenses, causes of action and
proceedings involving any third party or parties (including without limitation
Tenant’s proposed subtenant or assignee) who claim they were damaged by
Landlord’s wrongful withholding or conditioning of Landlord’s consent.

14.3 Transfer Premium. If Landlord consents to a Transfer, as a condition
thereto which the parties hereby agree is reasonable, Tenant shall pay to
Landlord fifty percent (50%) of any “Transfer Premium,” as that term is defined
in this Section 14.3, received by Tenant from such Transferee. “Transfer
Premium” shall mean all rent, additional rent or other consideration payable by
such Transferee in connection with the Transfer in excess of the Rent and
Additional Rent payable by Tenant under this Lease during the term of the
Transfer on a per rentable square foot basis if less than all of the Premises is
transferred, after deducting the reasonable expenses incurred by Tenant for
(i) any free base rent reasonably provided to the Transferee, (ii) any brokerage
commissions, (iii) legal fees, (iv) tenant improvement costs required by the
Transferee, and (v) any legal or other fees payable to Landlord in connection
with the Transfer, all of which shall be amortized on a straight-line basis over
the remaining term of the Lease, or sublease, as the case may be. “Transfer
Premium” shall also include, but not be limited to, key money, bonus money or
other cash consideration paid by Transferee to Tenant in connection with such
Transfer, any debt relief benefiting Tenant in connection with such Transfer,
and any payment in excess of fair market value for services rendered by Tenant
to Transferee or for assets, fixtures, inventory, equipment, or furniture
transferred by Tenant to Transferee in connection with such Transfer. In the
calculations of the Rent (as it relates to the Transfer Premium calculated under
this Section 14.3), and the Transferee’s Rent and Quoted Rent under Section 14.2
of this Lease, the Rent paid during each annual period for the Subject Space,
and the Transferee’s Rent and the Quoted Rent, shall be computed after adjusting
such rent to the actual effective rent to be paid, taking into consideration any
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granted in connection therewith, including, but not limited to, any rent credit
and tenant improvement allowance. For purposes of calculating any such effective
rent all such concessions shall be amortized on a straight-line basis over the
relevant term.

14.4 Landlord’s Option as to Subject Space. Notwithstanding anything to the
contrary contained in this Article 14, Landlord shall have the option, by giving
written notice to Tenant within thirty (30) days after receipt of any Transfer
Notice, to recapture the Subject Space. Such recapture notice shall cancel and
terminate this Lease with respect to the Subject Space as of the date stated in
the Transfer Notice as the effective date of the proposed Transfer until the
last day of the term of the Transfer as set forth in the Transfer Notice (or at
Landlord’s option, shall cause the Transfer to be made to Landlord or its agent,
in which case the parties shall execute the Transfer documentation promptly
thereafter). In the event of a recapture by Landlord, if this Lease shall be
canceled with respect to less than the entire Premises, the Rent reserved herein
shall be prorated on the basis of the number of rentable square feet retained by
Tenant in proportion to the number of rentable square feet contained in the
Premises, and this Lease as so amended shall continue thereafter in full force
and effect, and upon request of either party, the parties shall execute written
confirmation of the same. If Landlord declines, or fails to elect in a timely
manner to recapture the Subject Space under this Section 14.4, then, provided
Landlord has consented to the proposed Transfer, Tenant shall be entitled to
proceed to transfer the Subject Space to the proposed Transferee, subject to
provisions of this Article 14.

14.5 Effect of Transfer. If Landlord consents to a Transfer, (i) the terms and
conditions of this Lease shall in no way be deemed to have been waived or
modified, (ii) such consent shall not be deemed consent to any further Transfer
by either Tenant or a Transferee, (iii) Tenant shall deliver to Landlord,
promptly after execution, an original executed copy of all documentation
pertaining to the Transfer in form reasonably acceptable to Landlord,
(iv) Tenant shall furnish upon Landlord’s request a complete statement,
certified by an independent certified public accountant, or Tenant’s chief
financial officer, setting forth in detail the computation of any Transfer
Premium Tenant has derived and shall derive from such Transfer, and (v) no
Transfer relating to this Lease or agreement entered into with respect thereto,
whether with or without Landlord’s consent, shall relieve Tenant or any
guarantor of the Lease from any liability under this Lease, including, without
limitation, in connection with the Subject Space. Landlord or its authorized
representatives shall have the right at all reasonable times to audit the books,
records and papers of Tenant relating to any Transfer, and shall have the right
to make copies thereof. If the Transfer Premium respecting any Transfer shall be
found understated, Tenant shall, within thirty (30) days after demand, pay the
deficiency, and if understated by more than two percent (2%), Tenant shall pay
Landlord’s costs of such audit.

14.6 Additional Transfers. For purposes of this Lease, the term “Transfer” shall
also include, except as otherwise described in Section 14.8, (i) if Tenant is a
partnership, the withdrawal or change, voluntary, involuntary or by operation of
law, of twenty-five percent (25%) or more of the partners, or transfer of
twenty-five percent (25%) or more of partnership interests, within a twelve
(12)-month period, or the dissolution of the partnership without immediate
reconstitution thereof, and (ii) if Tenant is a closely held corporation (i.e.,
whose stock is not publicly held and not traded through an exchange or over the
counter), (A) the dissolution, merger, consolidation or other reorganization of
Tenant or (B) the sale or other transfer of an aggregate of twenty-five percent
(25%) or more of the voting shares of Tenant

 

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(other than to immediate family members by reason of gift or death), within a
twelve (12)-month period, or (C) the sale, mortgage, hypothecation or pledge of
an aggregate of twenty-five percent (25%) or more of the value of the
unencumbered assets of Tenant within a twelve (12)-month period.

14.7 Occurrence of Default. Any Transfer hereunder shall be subordinate and
subject to the provisions of this Lease, and if this Lease shall be terminated
during the term of any Transfer, Landlord shall have the right to: (i) treat
such Transfer as cancelled and repossess the Subject Space by any lawful means,
or (ii) require that such Transferee attorn to and recognize Landlord as its
landlord under any such Transfer. If Tenant shall be in Default under this
Lease, Landlord is hereby irrevocably authorized, as Tenant’s agent and
attorney-in-fact, to direct any Transferee to make all payments under or in
connection with the Transfer directly to Landlord (which Landlord shall apply
towards Tenant’s obligations under this Lease) until such Event of Default is
cured. Such Transferee shall rely on any representation by Landlord that Tenant
is in Default hereunder, without any need for confirmation thereof by Tenant.
Upon any assignment, the assignee shall assume in writing all obligations and
covenants of Tenant thereafter to be performed or observed under this Lease. No
collection or acceptance of rent by Landlord from any Transferee shall be deemed
a waiver of any provision of this Article 14 or the approval of any Transferee
or a release of Tenant from any obligation under this Lease, whether theretofore
or thereafter accruing. In no event shall Landlord’s enforcement of any
provision of this Lease against any Transferee be deemed a waiver of Landlord’s
right to enforce any term of this Lease against Tenant or any other person. If
Tenant’s obligations hereunder have been guaranteed, Landlord’s consent to any
Transfer shall not be effective unless the guarantor also consents to such
Transfer.

14.8 Non-Transfers. Notwithstanding anything to the contrary contained in this
Lease, neither (i) an assignment to a transferee of all or substantially all of
the assets and liabilities of Tenant, (ii) an assignment of the Premises to a
transferee which is the resulting entity of a merger or consolidation of Tenant
with another entity, nor (iii) an assignment or subletting of all or a portion
of the Premises to an affiliate (an “Affiliate”) of Tenant (an entity which is
controlled by, controls, or is under common control with, Tenant), shall be
deemed a Transfer under Article 14 of this Lease, provided that within fifteen
(15) days after the effective date of the Transfer, Tenant notifies Landlord of
any such assignment or sublease and supplies Landlord with any documents or
information reasonably requested by Landlord regarding such transfer or
transferee as set forth in items (i) through (iii) above, and provided that such
assignment or sublease is not a subterfuge by Tenant to avoid its obligations
under this Lease. “Control,” as used in this Section 14.7, shall mean the
ownership, directly or indirectly, of at least fifty-one percent (51%) of the
voting securities of, or possession of the right to vote, in the ordinary
direction of its affairs, of at least fifty-one percent (51%) of the voting
interest in, any person or entity.

ARTICLE 15

SURRENDER OF PREMISES; OWNERSHIP AND REMOVAL OF TRADE FIXTURES

15.1 Surrender of Premises. No act or thing done by Landlord or any agent or
employee of Landlord during the Lease Term shall be deemed to constitute an
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Landlord of a surrender of the Premises unless such intent is specifically
acknowledged in writing by Landlord. The delivery of keys to the Premises to
Landlord or any agent or employee of Landlord shall not constitute a surrender
of the Premises or effect a termination of this Lease, whether or not the keys
are thereafter retained by Landlord, and notwithstanding such delivery Tenant
shall be entitled to the return of such keys at any reasonable time upon request
until this Lease shall have been properly terminated. The voluntary or other
surrender of this Lease by Tenant, whether accepted by Landlord or not, or a
mutual termination hereof, shall not work a merger, and at the option of
Landlord shall operate as an assignment to Landlord of all subleases or
subtenancies affecting the Premises or terminate any or all such sublessees or
subtenancies.

15.2 Removal of Tenant Property by Tenant. Upon the expiration of the Lease
Term, or upon any earlier termination of this Lease, Tenant shall, subject to
the provisions of this Article 15, quit and surrender possession of the Premises
to Landlord in as good order and condition as when Tenant took possession and as
thereafter improved by Landlord and/or Tenant, reasonable wear and tear and
repairs which are specifically made the responsibility of Landlord hereunder
excepted. Upon such expiration or termination, Tenant shall, without expense to
Landlord, remove or cause to be removed from the Premises all debris and
rubbish, and such items of furniture, equipment, business and trade fixtures,
free-standing cabinet work, movable partitions and other articles of personal
property owned by Tenant or installed or placed by Tenant at its expense in the
Premises, and such similar articles of any other persons claiming under Tenant,
as Landlord may, in its sole discretion, require to be removed (the notification
of which may be provided to Tenant either prior to or following the expiration
or earlier termination of this Lease), and Tenant shall repair at its own
expense all damage to the Premises and Building resulting from such removal.

ARTICLE 16

HOLDING OVER

If Tenant holds over after the expiration of the Lease Term or earlier
termination thereof, with or without the express or implied consent of Landlord,
such tenancy shall be from month-to-month only, and shall not constitute a
renewal hereof or an extension for any further term, and in such case Base Rent
shall be payable for the first sixty (60) days at a monthly rate equal to 150%
of the Rent applicable during the last rental period of the Lease Term under
this Lease, and thereafter at a monthly rate equal to 200% of the Base Rent
applicable during the last rental period of the Lease Term under this Lease.
Such month-to-month tenancy shall be subject to every other applicable term,
covenant and agreement contained herein. For purposes of this Article 16, a
holding over shall include Tenant’s remaining in the Premises after the
expiration or earlier termination of the Lease Term, as required pursuant to the
terms of Section 8.5, above, to remove any Alterations or Above Building
Standard Tenant Improvements located within the Premises and replace the same
with Building Standard Tenant Improvements. Nothing contained in this Article 16
shall be construed as consent by Landlord to any holding over by Tenant, and
Landlord expressly reserves the right to require Tenant to surrender possession
of the Premises to Landlord as provided in this Lease upon the expiration or
other termination of this Lease. The provisions of this Article 16 shall not be
deemed to limit or constitute a waiver of any other rights or remedies of
Landlord provided herein or at law. If Tenant fails to surrender the Premises
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liabilities to Landlord accruing therefrom, Tenant shall protect, defend,
indemnify and hold Landlord harmless from all loss, costs (including reasonable
attorneys’ fees) and liability resulting from such failure, including, without
limiting the generality of the foregoing, any claims made by any succeeding
tenant founded upon such failure to surrender and any lost profits to Landlord
resulting therefrom.

ARTICLE 17

ESTOPPEL CERTIFICATES

Within ten (10) business days following a request in writing by Landlord, Tenant
shall execute, acknowledge and deliver to Landlord an estoppel certificate,
which, as submitted by Landlord, shall be substantially in the form of Exhibit
E, attached hereto (or such other reasonable form as may be required by any
prospective mortgagee or purchaser of the Project, or any portion thereof),
indicating therein any exceptions thereto that may exist at that time, and shall
also contain any other information reasonably requested by Landlord or
Landlord’s mortgagee or prospective mortgagee. Any such certificate may be
relied upon by any prospective mortgagee or purchaser of all or any portion of
the Project. Tenant shall execute and deliver whatever other instruments may be
reasonably required for such purposes. At any time during the Lease Term, upon
delivery of an executed confidentiality agreement reasonably satisfactory to
Tenant, which excludes any information which is generally available to the
public, Landlord may require Tenant to provide Landlord with a current financial
statement and financial statements of the two (2) years prior to the current
financial statement year. Such statements shall be prepared in accordance with
generally accepted accounting principles and, if such is the normal practice of
Tenant, shall be audited by an independent certified public accountant. Failure
of Tenant to timely execute, acknowledge and deliver such estoppel certificate
or other instruments shall constitute an acceptance of the Premises and an
acknowledgment by Tenant that statements included in the estoppel certificate
are true and correct, without exception.

ARTICLE 18

SUBORDINATION

This Lease shall be subject and subordinate to all future ground or underlying
leases of the Building or Project and to the lien of any mortgage, trust deed or
other encumbrances now or hereafter in force against the Building or Project or
any part thereof, if any, and to all renewals, extensions, modifications,
consolidations and replacements thereof, and to all advances made or hereafter
to be made upon the security of such mortgages or trust deeds, unless the
holders of such mortgages, trust deeds or other encumbrances, or the lessors
under such ground lease or underlying leases, require in writing that this Lease
be superior thereto, conditioned upon Landlord and Tenant each executing a
commercially reasonable form of subordination, non-disturbance and attornment
agreement. Tenant covenants and agrees in the event any proceedings are brought
for the foreclosure of any such mortgage or deed in lieu thereof (or if any
ground lease is terminated), to attorn, without any deductions or set-offs
whatsoever (including without limitation, any liability for the previous
Landlord’s acts or omissions, any rent prepaid to the previous Landlord more
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any modifications to the Lease made without the consent of the Building’s
mortgagee or ground lessor (as applicable), to the extent such consent was
required under the applicable mortgage or ground lease), to the lienholder or
purchaser or any successors thereto upon any such foreclosure sale or deed in
lieu thereof (or to the ground lessor), if so requested to do so by such
purchaser or lienholder or ground lessor, and to recognize such purchaser or
lienholder or ground lessor as the lessor under this Lease, provided such
lienholder or purchaser or ground lessor shall agree to accept this Lease and
not disturb Tenant’s occupancy, so long as Tenant timely pays the rent and
observes and performs the terms, covenants and conditions of this Lease to be
observed and performed by Tenant. Landlord’s interest herein may be assigned as
security at any time to any lienholder. Conditioned upon Landlord and Tenant
each executing, or having executed, a commercially reasonable form of
subordination, non-disturbance and attornment agreement. Tenant shall, within
five (5) days of request by Landlord, execute such further instruments or
assurances as Landlord may reasonably deem necessary to evidence or confirm the
subordination or superiority of this Lease to any such mortgages, trust deeds,
ground leases or underlying leases. Tenant waives the provisions of any current
or future statute, rule or law which may give or purport to give Tenant any
right or election to terminate or otherwise adversely affect this Lease and the
obligations of the Tenant hereunder in the event of any foreclosure proceeding
or sale.

ARTICLE 19

DEFAULTS; REMEDIES

19.1 Events of Default. The occurrence of any of the following shall constitute
an “Event of Default” of this Lease by Tenant (and in each instance Tenant shall
be “in Default”):

19.1.1 Any failure by Tenant to pay any Rent or any other charge required to be
paid under this Lease, or any part thereof, when due unless such failure is
cured within three (3) days after notice; or

19.1.2 Except where a specific time period is otherwise set forth for Tenant’s
performance in this Lease, in which event the failure to perform by Tenant
within such time period shall be a default by Tenant under this Section 19.1.2,
any failure by Tenant to observe or perform any other provision, covenant or
condition of this Lease to be observed or performed by Tenant where such failure
continues for ten (10) days after written notice thereof from Landlord to
Tenant; provided that if the nature of such default is such that the same cannot
reasonably be cured within a ten (10) day period, Tenant shall not be deemed to
be in default if it diligently commences such cure within such period and
thereafter diligently proceeds to rectify and cure such default, and notifies
Landlord in writing each month of the status of the cure and the estimated time
when the cure will be completed; or

19.1.3 To the extent permitted by law, a general assignment by Tenant or any
guarantor of this Lease for the benefit of creditors, or the taking of any
corporate action in furtherance of bankruptcy or dissolution whether or not
there exists any proceeding under an insolvency or bankruptcy law, or the filing
by or against Tenant or any guarantor of any proceeding under an insolvency or
bankruptcy law, unless in the case of a proceeding filed against Tenant or any
guarantor the same is dismissed within sixty (60) days, or the appointment

 

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of a trustee or receiver to take possession of all or substantially all of the
assets of Tenant or any guarantor, unless possession is restored to Tenant or
such guarantor within thirty (30) days, or any execution or other judicially
authorized seizure of all or substantially all of Tenant’s assets located upon
the Premises or of Tenant’s interest in this Lease, unless such seizure is
discharged within thirty (30) days; or

19.1.4 Abandonment of all or a substantial portion of the Premises by Tenant; or

19.1.5 The failure by Tenant to observe or perform according to the provisions
of Articles 5, 7, 14, 17, 18 or 21 of this Lease where such failure continues
for more than two (2) business days after notice from Landlord; or

19.1.6 An Event of Default under the terms of that certain Lease between
Landlord and Tenant for premises at 790 Lindaro Street, San Rafael, California.

The notice periods provided herein are in lieu of, and not in addition to, any
notice periods provided by law.

19.2 Remedies Upon Default. Upon the occurrence of any event of default by
Tenant, Landlord shall have, in addition to any other remedies available to
Landlord at law or in equity (all of which remedies shall be distinct, separate
and cumulative), 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.

19.2.1 Terminate this Lease, in which event Tenant shall immediately surrender
the Premises to Landlord, and if Tenant fails to 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 for damages therefor; and
Landlord may recover from Tenant the following:

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

(ii) 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

(iii) The worth at the time of award of the amount by which the unpaid rent for
the balance of the Lease Term after the time of award exceeds the amount of such
rental loss that Tenant proves could have been reasonably avoided; plus

(iv) Any other amount necessary to compensate Landlord for all the detriment
proximately caused by Tenant’s failure to perform its obligations under this
Lease or which in the ordinary course of things would be likely to result
therefrom, 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
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(v) 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 19.2 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 Paragraphs 19.2.1(i)
and (ii), above, the “worth at the time of award” shall be computed by allowing
interest at the rate set forth in Article 25 of this Lease, but in no case
greater than the maximum amount of such interest permitted by law. As used in
Paragraph 19.2.1(iii) 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 one percent (1%).

19.2.2 Landlord shall have the remedy described in California Civil Code
Section 1951.4 (lessor may continue lease in effect after lessee’s breach and
abandonment and recover rent as it becomes due, if lessee has the right to
sublet or assign, subject only to reasonable limitations). Accordingly, if
Landlord does not elect to terminate this Lease on account of any default by
Tenant, Landlord may, from time to time, without terminating this Lease, enforce
all of its rights and remedies under this Lease, including the right to recover
all rent as it becomes due.

19.2.3 Landlord shall at all times have the rights and remedies (which shall be
cumulative with each other and cumulative and in addition to those rights and
remedies available under Sections 19.2.1 and 19.2.2, above, or any law or other
provision of this Lease), without prior demand or notice except as required by
applicable law, to seek any declaratory, injunctive or other equitable relief,
and specifically enforce this Lease, or restrain or enjoin a violation or breach
of any provision hereof.

19.3 Subleases of Tenant. Whether or not Landlord elects to terminate this Lease
on account of any default by Tenant, as set forth in this Article 19, 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. In
the event of 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.

19.4 Form of Payment After Default. Following the occurrence of an event of
default by Tenant, Landlord shall have the right to require that any or all
subsequent amounts paid by Tenant to Landlord hereunder, whether to cure the
default in question or otherwise, be paid in the form of cash, money order,
cashier’s or certified check drawn on an institution acceptable to Landlord, or
by other means approved by Landlord, notwithstanding any prior practice of
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19.5 Efforts to Relet. No re-entry or repossession, repairs, maintenance,
changes, alterations and additions, reletting, appointment of a receiver to
protect Landlord’s interests hereunder, or any other action or omission by
Landlord shall be construed as an election by Landlord to terminate this Lease
or Tenant’s right to possession, or to accept a surrender of the Premises, nor
shall same operate to release Tenant in whole or in part from any of Tenant’s
obligations hereunder, unless express written notice of such intention is sent
by Landlord to Tenant. Tenant hereby irrevocably waives any right otherwise
available under any law to redeem or reinstate this Lease.

ARTICLE 20

COVENANT OF QUIET ENJOYMENT

Landlord covenants that Tenant, on paying the Rent, charges for services and
other payments herein reserved and on keeping, observing and performing all the
other terms, covenants, conditions, provisions and agreements herein contained
on the part of Tenant to be kept, observed and performed, shall, during the
Lease Term, peaceably and quietly have, hold and enjoy the Premises subject to
the terms, covenants, conditions, provisions and agreements hereof without
interference by any persons lawfully claiming by or through Landlord. The
foregoing covenant is in lieu of any other covenant express or implied.

ARTICLE 21

LETTER OF CREDIT

21.1 Letter of Credit. Concurrently with the full execution and delivery of this
Lease and that certain Lease to Tenant for premises at 790 Lindaro Street, San
Rafael, California (the “790 Lindaro Lease”), Tenant shall deliver to Landlord
an unconditional, clean, irrevocable letter of credit (the “L-C”) in the amount
set forth in Section 8 of the Summary (the “L-C Amount”), which L-C shall be in
the form required under this Article 21 and shall be issued by Wells Fargo Bank
or other money-center bank (a bank which accepts deposits, maintains accounts,
has a local San Francisco Bay Area office which will negotiate a letter of
credit, and whose deposits are insured by the FDIC) reasonably acceptable to
Landlord (the “Bank”), with a short term Fitch Rating currency rating which is
not less than “F2”, and a long term Fitch Rating currency rating which is not
less than “BBB+” (an “Approved Bank”). The L-C shall be held by Landlord as
security for the full and faithful performance by Tenant of all of the
provisions of this Lease and the 790 Lindaro Lease. This Lease and the 790
Lindaro Lease each provide that that an Event of Default under either lease is
an Event of Default under the other lease. In no event may an L-C be provided by
JPMorgan Chase Bank, Bank One, or any affiliate of either. The L-C shall be in a
form and content substantially similar to the L-C as set forth in Exhibit F,
attached hereto. Tenant shall pay all expenses, points and/or fees incurred by
Tenant in obtaining the L-C. The L-C shall (i) be “callable” at sight,
irrevocable and unconditional, (ii) be maintained in effect, whether through
renewal, substitution, replacement or extension, for the period from the Lease
Commencement Date and continuing until the date (the “L-C Expiration Date”) that
is one hundred twenty (120) days after the expiration of the Lease Term (as the
same may be extended, and subject to the terms of Section 21.6, below), and
Tenant shall deliver a new L-C or certificate of renewal, substitution,
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prior to the expiration of the L-C then held by Landlord, without any action
whatsoever on the part of Landlord, (iii) be fully assignable by Landlord at
Landlord’s expense to its successors and assigns, (iv) permit partial draws and
multiple presentations and drawings, and (v) be otherwise subject to the
“International Standby Practices” (ISP 98) International Chamber of Commerce
(Publication No. 590). Landlord, or its then managing agent, shall have the
right to draw down an amount up to the face amount of the L-C if any of the
following shall have occurred or be applicable: (1) such amount is then due and
owing to Landlord under the terms of this Lease or the 790 Lindaro Lease,
Landlord has provided any notice to Tenant required under the terms of this
Lease or the 790 Lindaro Lease, and any grace or cure period applicable to the
payment of such amount has expired under this Lease or the 790 Lindaro Lease, or
(2) Tenant has filed a voluntary petition under the U. S. Bankruptcy Code or any
state bankruptcy code (collectively, “Bankruptcy Code”), or (3) an involuntary
petition has been filed against Tenant under the Bankruptcy Code, or (4) the
Bank has notified Landlord that the L-C will not be renewed or extended through
the L-C Expiration Date. The L-C will be honored by the Bank regardless of
whether Tenant disputes Landlord’s right to draw upon the L-C.

21.2 Maintenance of L-C by Tenant. If, as a result of any drawing by Landlord on
the L-C, the amount of the L-C shall be less than the L-C Amount, Tenant shall,
within ten (10) days after receipt of Landlord’s notice that Landlord has drawn
upon the L-C, provide Landlord with additional letter(s) of credit in an amount
equal to the deficiency, and any such additional letter(s) of credit shall
comply with all of the provisions of this Article 21, and if Tenant fails to
comply with the foregoing, the same shall constitute an incurable Event of
Default by Tenant under Section 19.1.3, if not cured within the Section 19.1.3
two (2) business day period following a notice given pursuant to Section 19.1.3.
Tenant further covenants and warrants that it will neither assign nor encumber
the L-C or any part thereof and that neither Landlord nor its successors or
assigns will be bound by any such assignment, encumbrance, attempted assignment
or attempted encumbrance. Without limiting the generality of the foregoing, if
the L-C expires earlier than the L-C Expiration Date, Landlord will accept a
renewal, replacement or substitution thereof or therefor (such renewal,
replacement or substitution letter of credit to be in effect and delivered to
Landlord, as applicable, not later than thirty (30) days prior to the expiration
of the previously existing L-C), and shall be substantially in the form attached
hereto as Exhibit F and otherwise comply with the terms of this Article 21.
However, if the L-C is not timely renewed or replaced in accordance with the
terms hereof, or if Tenant fails to maintain the L-C in the amount and in
accordance with the terms set forth in this Article 21, Landlord shall have the
right to present the L-C to the Bank in accordance with the terms of this
Article 21, and the proceeds of the L-C may be applied by Landlord against any
unpaid Rent payable by Tenant under this Lease or the 790 Lindaro Lease and/or
to pay for all losses and damages that Landlord has suffered or is awarded at
law. Any unused proceeds shall be held as a security deposit and need not be
segregated from Landlord’s other assets. Landlord agrees to pay to Tenant within
thirty (30) days after the L-C Expiration Date the amount of any proceeds of the
L-C received by Landlord and not applied against any Rent payable by Tenant
under this Lease or the 790 Lindaro Lease that was not paid when due or used to
pay for any losses and/or damages suffered by Landlord (or awarded to Landlord
at law) as a result of any breach or default by Tenant under this Lease or the
790 Lindaro Lease; provided, however, that if prior to the L-C Expiration Date a
voluntary petition is filed by Tenant, or an involuntary petition is filed
against Tenant by any of Tenant’s creditors, under the Bankruptcy Code, then
Landlord shall not be obligated to make such payment in the amount of the unused
L-C proceeds until either all preference issues relating to payments under this
Lease or the 790 Lindaro Lease have been resolved in such bankruptcy or
reorganization case or such bankruptcy or reorganization case has been
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21.3 Landlord’s Right to Draw Upon L-C. If an Event of Default, after the
expiration of any applicable notice and cure period, shall have occurred and be
continuing under any provision of this Lease or the 790 Lindaro Lease, Landlord
may, but without obligation to do so, and without any additional notice to
Tenant, draw upon the L-C, in part or in whole, to cure any such breach or
default of Tenant and/or to compensate Landlord for any and all damages of any
kind or nature sustained or awarded at law. Landlord shall likewise have the
right to draw upon the entire amount of the L-C in the event Tenant fails to
renew the same as required by the terms of Section 21.1, above. The use,
application or retention of the L-C, or any portion thereof, by Landlord shall
not prevent Landlord from exercising any other right or remedy provided by this
Lease or the 790 Lindaro Lease or by any applicable law, it being intended that
Landlord shall not first be required to proceed against the L-C, and shall not
operate as a limitation on any recovery to which Landlord may otherwise be
entitled. Tenant agrees not to interfere in any way with payment to Landlord of
the proceeds of the L-C, either prior to or following a “draw” by Landlord of
any portion of the L-C, regardless of whether any dispute exists between Tenant
and Landlord as to Landlord’s right to draw upon the L-C. No condition or term
of this Lease or the 790 Lindaro Lease shall be deemed to render the L-C
conditional to justify the issuer of the L-C in failing to honor a drawing upon
such L-C in a timely manner. Tenant agrees and acknowledges that (a) the L-C
constitutes a separate and independent contract between Landlord and the Bank,
(b) Tenant is not a third party beneficiary of such contract, (c) Tenant has no
property interest whatsoever in the L-C or the proceeds thereof, and (d) in the
event Tenant becomes a debtor under any chapter of the Bankruptcy Code, none of
Tenant, any trustee, or Tenant’s bankruptcy estate shall have any right to
restrict or limit Landlord’s claim and/or rights to the L-C and/or the proceeds
thereof by application of Section 502(b)(6) of the U. S. Bankruptcy Code or
otherwise.

21.4 Transfer of L-C by Landlord. The L-C shall also provide that Landlord, its
successors and assigns, may, at any time and without notice to Tenant and
without first obtaining Tenant’s consent thereto, transfer (one or more times)
all or any portion of its interest in and to the L-C to another party, person or
entity, if and only if such transfer is a part of the assignment by Landlord of
its rights and interests in and to this Lease or the 770 Lindaro Lease, in each
case subject to the terms and conditions of this Lease or the 790 Lindaro Lease.
In the event of a transfer of Landlord’s interest in the Building or the
building at 790 Lindaro Street, San Rafael, California, Landlord shall transfer
the L-C, in whole or in part, to the transferee and thereupon Landlord shall,
upon the transferee accepting and assuming Landlord’s obligations under this
Lease or the 790 Lindaro Lease, including this Article 21, without any further
agreement between the parties, be released by Tenant from all liability
therefor, and it is agreed that the provisions of this Lease or the 790 Lindaro
Lease shall apply to every transfer or assignment of the whole or any portion of
said L-C to a new landlord who shall be deemed the Landlord for all purposes
under this Lease or the 790 Lindaro Lease. In connection with any such transfer
of the L-C by Landlord, Tenant shall, at Tenant’s sole cost and expense, execute
and submit to the Bank such applications, documents and instruments as may be
necessary to effectuate such transfer or change in the beneficiary, and Landlord
shall be responsible for paying the Bank’s transfer and processing fees in
connection therewith.

 

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21.5 L-C Not a Security Deposit. Landlord and Tenant acknowledge and agree that
in no event or circumstance shall the L-C or any renewal, substitution or
replacement thereof or therefore or any proceeds thereof be (i) deemed to be or
treated as a “security deposit” within the meaning of California Civil Code
Section 1950.7, (ii) subject to the terms of such Section 1950.7, or
(iii) intended to serve as a “security deposit” within the meaning of such
Section 1950.7. The parties hereto (A) recite that the L-C is not intended to
serve as a security deposit and such Section 1950.7 and any and all other laws,
rules and regulations applicable to security deposits in the commercial context
(“Security Deposit Laws”) shall have no applicability or relevancy thereto and
(B) waive any and all rights, duties and obligations either party may now or, in
the future, will have relating to or arising from the Security Deposit Laws.

21.6 Reduction of L-C Amount. The amount of the letter of credit, which the
parties acknowledge shall be in the initial amount of $4,726,000.00, shall be
reduced during the Lease Term as follows:

 

Reduction Date

   New L-C Amount  

January 30, 2013

   $ 3,545,0000   

January 30, 2014

   $ 2,365,000   

January 30, 2015

   $ 1,180,000   

January 30, 2016

   $ 650,000   

The amount of the letter of credit shall additionally be reduced on a
proportionate basis in the event of any permanent recapture of any portion of
the Premises by Landlord pursuant to the terms of Section 14.4, above.
Notwithstanding anything to the contrary in this Section 21.6, the amount of the
letter of credit shall only decrease as set forth above if, as of the applicable
Reduction Date, Tenant is not in default under this Lease and the 790 Lindaro
Lease (beyond any applicable notice and cure periods set forth in this Lease and
the 790 Lindaro Lease). In the event Tenant does not satisfy the foregoing
condition as of a particular Reduction Date, the L-C shall not be reduced as of
such Reduction Date but if Tenant satisfies the L-C Reduction Conditions as of
the succeeding Reduction Date, the L-C shall be decreased to the corresponding
“New L-C Amount” set forth above for such succeeding Reduction Date
notwithstanding that the prior L-C reduction did not occur (but no reduction
prior to such succeeding Reduction Date shall be permitted). Notwithstanding
anything contained herein to the contrary, in no event shall any decrease in the
L-C occur pursuant to the terms of this Section 21.6 in the event this Lease or
the 790 Lindaro Lease is terminated due to an Event of Default by Tenant. Not
more than thirty (30) days prior to each of the applicable reduction dates,
Tenant shall deliver Landlord a Notice (the “Reduction Request”) requesting that
Landlord provide the bank issuing the L-C notice confirming that the applicable
reduction is to occur on the reduction date (the “Reduction Certification”). The
Reduction Request shall be accompanied by evidence reasonably acceptable to
Landlord that Tenant meets the L-C Reduction Conditions. Within five
(5) business days after Landlord’s receipt of the Reduction Request, and
provided that Tenant meets the L-C Reduction Conditions, Landlord shall deliver
the Reduction Certification to the bank in the form required by the terms of the
L-C.

 

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ARTICLE 22

INTENTIONALLY OMITTED

ARTICLE 23

SIGNS

23.1 Full Floors. Subject to Landlord’s prior written approval, in its
reasonable discretion, and provided all signs are not visible from the exterior
of the Building and are in keeping with the quality of the Project, Tenant, at
Tenant’s sole cost and expense, may install identification signage anywhere in
the Premises including in the elevator lobby of the Premises.

23.2 Intentionally Omitted.

23.3 Prohibited Signage and Other Items. Any signs, notices, logos, pictures,
names or advertisements which are installed and that have not been separately
approved by Landlord may be removed without notice by Landlord at the sole
expense of Tenant. Except with Landlord’s prior written consent, which may be
withheld in Landlord’s sole discretion, Tenant may not install any signs on the
exterior or roof of the Project or the Common Areas. Any signs, window
coverings, or blinds (even if the same are located behind the Landlord-approved
window coverings for the Building), or other items visible from the exterior of
the Premises or Building, shall be subject to the prior approval of Landlord, in
its sole discretion.

23.4 Shared Monument Signage. So long as Tenant occupies at least 25,000
rentable square feet in a specific building, Tenant shall be entitled to shared
monument signage at Landlord’s expense. So long as Tenant occupies 25,000
rentable square feet in a specific building, Tenant shall have the right at
Tenant’s expense to install and maintain a single strip of identity signage with
non-illuminated individual letters on the exterior of the Building. The specific
location of the exterior identity signage shall be subject to Landlord’s
reasonable approval and such signage must be in conformance with the City of San
Rafael’s approved SRCC Corporate Center Sign Program and be approved by the City
of San Rafael.

23.5 Removal of Tenant’s Signage. Upon the expiration or earlier termination of
the Lease, or upon the termination of Tenant’s rights to maintain Tenant’s
signage on the shared monument sign and/ or the exterior of the building due to
Tenant’s failure to meet the minimum occupancy requirements specified in
Section 23.4, Tenant shall, at Tenant’s sole cost and expense, cause the
Tenant’s signage to be removed from the shared monument sign and/or the exterior
of the Building and shall repair any damage caused by such removal. If Tenant
fails to timely remove such signage or to repair the areas in which such signage
was located, as provided in the immediately preceding sentence, then Landlord
may perform such work, and all actual costs incurred by Landlord in so
performing shall be reimbursed by Tenant to Landlord within thirty (30) days
after Tenant’s receipt of an invoice therefor. The terms and conditions of this
Section 23.5 shall survive the expiration or earlier termination of the Lease.

 

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ARTICLE 24

COMPLIANCE WITH LAW

Tenant shall not do anything or suffer anything to be done in or about the
Premises or the Project which will in any way conflict with any law, statute,
ordinance or other governmental rule, regulation or requirement now in force or
which may hereafter be enacted or promulgated. At its sole cost and expense,
Tenant shall promptly comply with all such governmental measures applicable to
its particular use, as opposed to the uses of tenants generally. Landlord shall
be responsible for, and shall pay the cost of (which may be reimbursable as
Operating Expenses in accordance with Article 4), compliance with all other such
governmental measures. Should any standard or regulation now or hereafter be
imposed on Landlord or Tenant by a state, federal or local governmental body
charged with the establishment, regulation and enforcement of occupational,
health or safety standards for employers, employees, landlords or tenants, as a
result of Tenant’s particular use, as opposed to the uses of tenants generally,
then Tenant agrees, at its sole cost and expense, to comply promptly with such
standards or regulations. Tenant shall be responsible, at its sole cost and
expense, to make all alterations to the Premises as are required to comply with
the governmental rules, regulations, requirements or standards applicable to its
particular use, as opposed to the uses of tenants generally. The judgment of any
court of competent jurisdiction or the admission of Tenant in any judicial
action, regardless of whether Landlord is a party thereto, that Tenant has
violated any of said governmental measures, shall be conclusive of that fact as
between Landlord and Tenant.

ARTICLE 25

LATE CHARGES

If any installment of Rent or any other sum due from Tenant shall not be
received by Landlord or Landlord’s designee within five (5) days after said
amount is due, then Tenant shall pay to Landlord a late charge equal to five
percent (5%) of the overdue amount plus any attorneys’ fees incurred by Landlord
by reason of Tenant’s failure to pay Rent and/or other charges when due
hereunder. The late charge shall be deemed Additional Rent and the right to
require it shall be in addition to all of Landlord’s other rights and remedies
hereunder or at law and shall not be construed as liquidated damages or as
limiting Landlord’s remedies in any manner. In addition to the late charge
described above, any Rent or other amounts owing hereunder which are not paid
within ten (10) days after the date they are due shall bear interest from the
date when due until paid at a rate per annum equal to the lesser of (i) the
annual “Bank Prime Loan” rate cited in the Federal Reserve Statistical Release
Publication G.13(415), published on the first Tuesday of each calendar month (or
such other comparable index as Landlord and Tenant shall reasonably agree upon
if such rate ceases to be published) plus four (4) percentage points, and
(ii) the highest rate permitted by applicable law.

 

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ARTICLE 26

LANDLORD’S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT

26.1 Landlord’s Cure. All covenants and agreements to be kept or performed by
Tenant under this Lease shall be performed by Tenant at Tenant’s sole cost and
expense and without any reduction of Rent, except to the extent, if any,
otherwise expressly provided herein. If Tenant shall fail to perform any
obligation under this Lease, and such failure shall continue in excess of the
time allowed under Section 19.1.2, above, unless a specific time period is
otherwise stated in this Lease, Landlord may, but shall not be obligated to,
make any such payment or perform any such act on Tenant’s part without waiving
its rights based upon any default of Tenant and without releasing Tenant from
any obligations hereunder.

26.2 Tenant’s Reimbursement. Except as may be specifically provided to the
contrary in this Lease, Tenant shall pay to Landlord, upon delivery by Landlord
to Tenant of statements therefor: (i) sums equal to expenditures reasonably made
and obligations reasonably incurred by Landlord in connection with the remedying
by Landlord of Tenant’s Defaults pursuant to the provisions of Section 26.1;
(ii) sums equal to all losses, costs, liabilities, damages and expenses referred
to in Article 10 of this Lease; and (iii) sums equal to all expenditures made
and obligations incurred by Landlord in collecting or attempting to collect the
Rent or in enforcing or attempting to enforce any rights of Landlord under this
Lease or pursuant to law, including, without limitation, all legal fees and
other amounts so expended. Tenant’s obligations under this Section 26.2 shall
survive the expiration or sooner termination of the Lease Term.

ARTICLE 27

ENTRY BY LANDLORD

Provided Landlord use commercially reasonable efforts to minimize interference
with Tenant’s use and complies with Tenant’s reasonable requirements that
Landlord be accompanied by Tenant’s representative, Landlord reserves the right
at all reasonable times and upon 24 hours prior notice to Tenant (except in the
case of an emergency, when no prior notice shall be required) to enter the
Premises to (i) inspect them; (ii) show the Premises to prospective purchasers,
mortgagees or during the last 12 months of the Term to tenants, or to current or
prospective mortgagees, ground or underlying lessors or insurers; (iii) post
notices of nonresponsibility; or (iv) if permitted or required by the terms of
this Lease, alter, improve or repair the Premises or the Building, or for
structural alterations, repairs or improvements to the Building or the
Building’s systems and equipment. Notwithstanding anything to the contrary
contained in this Article 27, Landlord may enter the Premises at any time to
(A) perform services required of Landlord, including janitorial service if
requested by and agreed to be paid for by Tenant; (B) take possession due to any
breach of this Lease in the manner provided herein; and (C) perform any
covenants of Tenant which Tenant fails to perform. Landlord may make any such
entries without the abatement of Rent and may take such reasonable steps as
required to accomplish the stated purposes. Tenant hereby waives any claims for
damages or for any injuries or inconvenience to or interference with Tenant’s
business, lost profits, any loss of occupancy or quiet enjoyment of the
Premises, and any other loss occasioned thereby. For each of the above purposes,
Landlord shall at all times have a key with which to unlock all the doors

 

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in the Premises, excluding Tenant’s vaults, safes and special security areas
designated in advance by Tenant. In an emergency, Landlord shall have the right
to use any means that Landlord may deem proper to open the doors in and to the
Premises. Any entry into the Premises by Landlord in the manner hereinbefore
described shall not be deemed to be a forcible or unlawful entry into, or a
detainer of, the Premises, or an actual or constructive eviction of Tenant from
any portion of the Premises. No provision of this Lease shall be construed as
obligating Landlord to perform any repairs, alterations or decorations except as
otherwise expressly agreed to be performed by Landlord herein.

ARTICLE 28

TENANT PARKING

28.1 Tenant Parking Passes. Tenant shall, commencing on the Lease Commencement
Date or Beneficial Occupancy, be entitled to the number of parking passes set
forth in Section 9 of the Summary, which parking passes shall pertain to the
Project parking facility. As of the Lease Commencement Date, Landlord does not
impose a charge for the parking passes. If Tenant requests Landlord to provide
Tenant with parking passes in excess of the Parking Pass Ratio set forth in
Section 9 of the Summary, then, in consideration of Landlord’s granting such
request, Landlord reserves the right to require Tenant to pay to Landlord for
such additional automobile parking passes on a monthly basis the prevailing rate
charged from time to time at the location of such parking passes. In addition,
Tenant shall be responsible for the full amount of any taxes imposed by any
governmental authority in connection with the renting of such additional parking
passes by Tenant or the use of the parking facility by Tenant. Tenant’s
continued right to use the parking passes is conditioned upon Tenant abiding by
all rules and regulations which are prescribed from time to time for the orderly
operation and use of the parking facility where the parking passes are located,
including any sticker or other identification system established by Landlord,
Tenant’s cooperation in seeing that Tenant’s employees and visitors also comply
with such rules and regulations and Tenant not being in default under this Lease

28.2 Other Terms. Landlord shall take commercially reasonable steps to insure
that use of the parking areas of the Project are limited to tenants and their
employees and invitees. Provided there is no permanent reduction in the number
of parking passes allocated to Tenant by this Lease, Landlord specifically
reserves the right to change the size, configuration, design, layout and all
other aspects of the Project parking facility at any time and Tenant
acknowledges and agrees that Landlord may, without incurring any liability to
Tenant and without any abatement of Rent under this Lease, from time to time,
temporarily close-off or restrict access to the Project parking facility for
purposes of permitting or facilitating any such construction, alteration or
improvements. Landlord may delegate its responsibilities hereunder to a parking
operator in which case such parking operator shall have all the rights of
control attributed hereby to the Landlord. The parking passes given to and/or
rented by Tenant pursuant to this Article 28 are provided to Tenant solely for
use by Tenant’s own personnel and such passes may not be transferred, assigned,
subleased or otherwise alienated by Tenant without Landlord’s prior approval.

 

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28.3 Parking Procedures. The parking passes initially will not be separately
identified; however Landlord reserves the right in its sole and absolute
discretion to separately identify by signs or other markings the area to which
Tenant’s parking passes relate. Landlord shall have no obligation to monitor the
use of such parking facility, nor shall Landlord be responsible for any loss or
damage to any vehicle or other property or for any injury to any person.
Tenant’s parking passes shall be used only for parking of automobiles no larger
than full size passenger automobiles, sport utility vehicles or pick-up trucks.
Tenant shall comply with all rules and regulations which may be adopted by
Landlord from time to time with respect to parking and/or the parking facilities
servicing the Project. Tenant shall not at any time use more parking passes than
the number so allocated to Tenant or park its vehicles or the vehicles of others
in any portion of the Project parking facility not designated by Landlord as a
non-exclusive parking area. Tenant shall not have the exclusive right to use any
specific parking space unless otherwise permitted by Landlord in writing or in
this Lease. If Landlord grants to any other tenant the exclusive right to use
any particular parking space(s), Tenant shall not use such spaces, provided,
that Tenant shall not be treated less favorably than other tenants of the
Project with respect to parking location assignments, if any. With the exception
of Tenant’s visitor parking spaces, as provided in Section 28.4 below, there are
not “assigned parking” spaces in the Project. All trucks (other than pick-up
trucks) and delivery vehicles shall be (i) loaded and unloaded in a manner which
does not interfere with the businesses of other occupants of the Project, and
(ii) permitted to remain on the Project only so long as is reasonably necessary
to complete loading and unloading. In the event Landlord elects in its
reasonable discretion or is required by any law to limit or control parking,
whether by validation of parking tickets or any other method of assessment,
Tenant agrees to participate in such validation or assessment program under such
reasonable rules and regulations as are from time to time established by
Landlord.

28.4 Visitor Parking. During the Term Landlord shall provide Tenant at no
additional cost with five (5) designated visitor standard parking spaces of
which three (3) will be adjacent to the Building and two (2) will be directly to
south of the three (3) aforementioned spaces in the locations shown on the
diagram attached hereto as Exhibit H. Landlord reserves the right to adopt
reasonable rules and regulations not inconsistent with the terms of the Leaser,
and post appropriate signage limiting the use of such spaces to parking only for
Tenant’s visitors.

ARTICLE 29

MISCELLANEOUS PROVISIONS

29.1 Terms; Captions. The words “Landlord” and “Tenant” as used herein shall
include the plural as well as the singular. The necessary grammatical changes
required to make the provisions hereof apply either to corporations or
partnerships or individuals, men or women, as the case may require, shall in all
cases be assumed as though in each case fully expressed. The captions of
Articles and Sections are for convenience only and shall not be deemed to limit,
construe, affect or alter the meaning of such Articles and Sections.

29.2 Binding Effect. Subject to all other provisions of this Lease, each of the
covenants, conditions and provisions of this Lease shall extend to and shall, as
the case may require, bind or inure to the benefit not only of Landlord and of
Tenant, but also of their respective heirs, personal representatives, successors
or assigns, provided this clause shall not permit any assignment by Tenant
contrary to the provisions of Article 14 of this Lease.

 

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29.3 No Air Rights. No rights to any view or to light or air over any property,
whether belonging to Landlord or any other person, are granted to Tenant by this
Lease. If at any time any windows of the Premises are temporarily darkened or
the light or view therefrom is obstructed by reason of any repairs,
improvements, maintenance or cleaning in or about the Project, the same shall be
without liability to Landlord and without any reduction or diminution of
Tenant’s obligations under this Lease.

29.4 Modification of Lease. Should any current or prospective mortgagee or
ground lessor for the Building or Project require a modification of this Lease,
which modification will not cause an increased cost or expense to Tenant or in
any other way materially and adversely change the rights and obligations of
Tenant hereunder, then and in such event, Tenant agrees that this Lease may be
so modified and agrees to execute whatever documents are reasonably required
therefor and to deliver the same to Landlord within ten (10) days following a
request therefor. At the request of Landlord or any mortgagee or ground lessor,
Tenant agrees to execute a short form of Lease and deliver the same to Landlord
within ten (10) days following the request therefor.

29.5 Transfer of Landlord’s Interest. Tenant acknowledges that Landlord has the
right to transfer all or any portion of its interest in the Project or Building
and in this Lease, and Tenant agrees that in the event of any such transfer, and
the assumption by the transferee of all of Landlord’s obligations under this
Lease, Landlord shall automatically be released from all liability under this
Lease and Tenant agrees to look solely to such transferee for the performance of
Landlord’s obligations hereunder after the date of transfer and such transferee
shall be deemed to have fully assumed and be liable for all obligations of this
Lease to be performed by Landlord, including the return of any Security Deposit,
and Tenant shall attorn to such transferee. Tenant further acknowledges that
Landlord may assign its interest in this Lease to a mortgage lender as
additional security and agrees that such an assignment shall not release
Landlord from its obligations hereunder and that Tenant shall continue to look
to Landlord for the performance of its obligations hereunder.

29.6 Prohibition Against Recording. Except as provided in Section 29.4 of this
Lease, neither this Lease, nor any memorandum, affidavit or other writing with
respect thereto, shall be recorded by Tenant or by anyone acting through, under
or on behalf of Tenant.

29.7 Landlord’s Title. Landlord’s title is and always shall be paramount to the
title of Tenant. Nothing herein contained shall empower Tenant to do any act
which can, shall or may encumber the title of Landlord.

29.8 Relationship of Parties. Nothing contained in this Lease shall be deemed or
construed by the parties hereto or by any third party to create the relationship
of principal and agent, partnership, joint venturer or any association between
Landlord and Tenant.

29.9 Application of Payments. Landlord shall have the right to apply payments
received from Tenant pursuant to this Lease, regardless of Tenant’s designation
of such payments, to satisfy any obligations of Tenant hereunder, in such order
and amounts as Landlord, in its sole discretion, may elect.

 

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

29.11 Partial Invalidity. If any term, provision or condition contained in this
Lease shall, to any extent, be invalid or unenforceable, the remainder of this
Lease, or the application of such term, provision or condition to persons or
circumstances other than those with respect to which it is invalid or
unenforceable, shall not be affected thereby, and each and every other term,
provision and condition of this Lease shall be valid and enforceable to the
fullest extent possible permitted by law.

29.12 No Warranty. In executing and delivering this Lease, Tenant has not relied
on any representations, including, but not limited to, any representation as to
the amount of any item comprising Additional Rent or the amount of the
Additional Rent in the aggregate or that Landlord is furnishing the same
services to other tenants, at all, on the same level or on the same basis, or
any warranty or any statement of Landlord which is not set forth herein or in
one or more of the exhibits attached hereto.

29.13 Landlord Exculpation. The liability of Landlord or the Landlord Parties to
Tenant for any default by Landlord under this Lease or arising in connection
herewith or with Landlord’s operation, management, leasing, repair, renovation,
alteration or any other matter relating to the Project or the Premises shall be
limited solely and exclusively to an amount which is equal to the lesser of
(a) the interest of Landlord in the Building or (b) the equity interest Landlord
would have in the Building if the Building were encumbered by third-party debt
in an amount equal to eighty percent (80%) of the value of the Building (as such
value is determined by Landlord), provided that in no event shall such liability
extend to any sales or insurance proceeds received by Landlord or the Landlord
Parties in connection with the Project, Building or Premises. Neither Landlord,
nor any of the Landlord Parties shall have any personal liability therefor, and
Tenant hereby expressly waives and releases such personal liability on behalf of
itself and all persons claiming by, through or under Tenant. The limitations of
liability contained in this Section 29.13 shall inure to the benefit of
Landlord’s and the Landlord Parties’ present and future partners, beneficiaries,
officers, directors, trustees, shareholders, agents and employees, and their
respective partners, heirs, successors and assigns. Under no circumstances shall
any present or future partner of Landlord (if Landlord is a partnership), or
trustee or beneficiary (if Landlord or any partner of Landlord is a trust), have
any liability for the performance of Landlord’s obligations under this Lease.
Notwithstanding any contrary provision herein, neither Landlord nor the Landlord
Parties shall be liable under any circumstances for injury or damage to, or
interference with, Tenant’s business, including but not limited to, loss of
profits, loss of rents or other revenues, loss of business opportunity, loss of
goodwill or loss of use, in each case, however occurring.

29.14 Entire Agreement. It is understood and acknowledged that there are no oral
agreements between the parties hereto affecting this Lease and this Lease
constitutes the parties’ entire agreement with respect to the leasing of the
Premises and supersedes and cancels any and all previous negotiations,
arrangements, brochures, agreements and understandings, if any,

 

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between the parties hereto or displayed by Landlord to Tenant with respect to
the subject matter thereof, and none thereof shall be used to interpret or
construe this Lease. None of the terms, covenants, conditions or provisions of
this Lease can be modified, deleted or added to except in writing signed by the
parties hereto.

29.15 Right to Lease. Landlord reserves the absolute right to effect such other
tenancies in the Project as Landlord in the exercise of its sole business
judgment shall determine to best promote the interests of the Building or
Project. Tenant does not rely on the fact, nor does Landlord represent, that any
specific tenant or type or number of tenants shall, during the Lease Term,
occupy any space in the Building or Project. Notwithstanding the preceding
provisions of this Section, for so long as Tenant is occupying at least a total
of 42,974 square feet in the buildings at 770, 790 and 791 Lindaro Street, San
Rafael, California, Landlord shall only lease portions of the Project for
medical uses if those medical uses are located in one (1) building in the
Project which Tenant is not occupying. In addition, Landlord shall maintain and
operate all space in the Project in a manner consistent with other first-class,
mid-rise office buildings in the central San Rafael, California area which are
Comparable Buildings, and ensure that the tenants in the Project are not of a
character or reputation or engaged in a business which would be significantly
less prestigious occupants of the Project than Tenant. Landlord agrees that up
to 50,000 rentable square feet of space in the Project shall be authorized for R
& D lab space for Tenant.

29.16 Force Majeure. Any prevention, delay or stoppage due to strikes, lockouts,
labor disputes, acts of God, inability to obtain services, labor, or materials
or reasonable substitutes therefor, governmental actions, civil commotions, fire
or other casualty, and other causes beyond the reasonable control of the party
obligated to perform, except with respect to the obligations imposed with regard
to Rent and other charges to be paid by Tenant pursuant to this Lease and except
as to Tenant’s obligations under Articles 5 and 24 of this Lease (collectively,
a “Force Majeure”), notwithstanding anything to the contrary contained in this
Lease, shall excuse the performance of such party for a period equal to any such
prevention, delay or stoppage and, therefore, if this Lease specifies a time
period for performance of an obligation of either party, that time period shall
be extended by the period of any delay in such party’s performance caused by a
Force Majeure.

29.17 Waiver of Redemption by Tenant. Tenant hereby waives, for Tenant and for
all those claiming under Tenant, any and all rights now or hereafter existing to
redeem by order or judgment of any court or by any legal process or writ,
Tenant’s right of occupancy of the Premises after any termination of this Lease.

29.18 Notices. All notices, demands, statements, designations, approvals or
other communications (collectively, “Notices”) given or required to be given by
either party to the other hereunder or by law shall be in writing, shall be
(A) sent by United States certified or registered mail, postage prepaid, return
receipt requested (“Mail”), (B) transmitted by e-mail, if such e-mail is
promptly followed by a Notice sent by Mail, (C) delivered by a nationally
recognized overnight courier, or (D) delivered personally. Any Notice shall be
sent, transmitted, or delivered, as the case may be, to Tenant at the
appropriate address set forth in Section 10 of the Summary, or to such other
place as Tenant may from time to time designate in a Notice to Landlord, or to
Landlord at the addresses set forth below, or to such other places as Landlord

 

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may from time to time designate in a Notice to Tenant. Any Notice will be deemed
given (i) three (3) days after the date it is posted if sent by Mail, (ii) the
date the e-mail and mailed copy is transmitted, (iii) the date the overnight
courier delivery is made, or (iv) the date personal delivery is made or
attempted to be made. If Tenant is notified of the identity and address of
Landlord’s mortgagee or ground or underlying lessor, Tenant shall give to such
mortgagee or ground or underlying lessor written notice of any default by
Landlord under the terms of this Lease by registered or certified mail, and such
mortgagee or ground or underlying lessor shall be given a reasonable opportunity
to cure such default prior to Tenant’s exercising any remedy available to
Tenant. As of the date of this Lease, any Notices to Landlord must be sent,
transmitted, or delivered, as the case may be, to the following addresses:

SR Corporate Center Phase Two, LLC

c/o Seagate Properties, Inc.

980 Fifth Avenue

San Rafael, California 94901

Attention: Lease Administrator

With a copy to:

SR Corporate Center Phase Two, LLC

c/o J. P. Morgan Investment Management Inc.

2029 Century Park East

Suite 4150

Los Angeles, California 90067

Attention: Karen M. Wilbrecht

With a copy to (which shall not constitute notice):

Seagate Properties, Inc.

750 Lindaro Street, Suite 145

San Rafael, CA 94901

Attention: Lease Administrator

29.19 Joint and Several. If there is more than one Tenant, the obligations
imposed upon Tenant under this Lease shall be joint and several.

29.20 Authority. If Tenant is a corporation, trust or partnership, Tenant hereby
represents and warrants that Tenant is a duly formed and existing entity
qualified to do business in California and that Tenant has full right and
authority to execute and deliver this Lease and that each person signing on
behalf of Tenant is authorized to do so. In such event, Tenant shall, within ten
(10) days after execution of this Lease, deliver to Landlord satisfactory
evidence of such authority and, if a corporation, upon demand by Landlord, also
deliver to Landlord satisfactory evidence of (i) good standing in Tenant’s state
of incorporation and (ii) qualification to do business in California.

29.21 Attorneys’ Fees. In the event that either Landlord or Tenant should bring
suit for the possession of the Premises, for the recovery of any sum due under
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the breach of any provision of this Lease or for any other relief against the
other, then all costs and expenses, including reasonable attorneys’ fees,
incurred by the prevailing party therein shall be paid by the other party, which
obligation on the part of the other party shall be deemed to have accrued on the
date of the commencement of such action and shall be enforceable whether or not
the action is prosecuted to judgment.

29.22 Governing Law; WAIVER OF TRIAL BY JURY. This Lease shall be construed and
enforced in accordance with the laws of the State of California. IN ANY ACTION
OR PROCEEDING ARISING HEREFROM, LANDLORD AND TENANT HEREBY CONSENT TO (I) THE
JURISDICTION OF ANY COMPETENT COURT WITHIN THE STATE OF CALIFORNIA, (II) SERVICE
OF PROCESS BY ANY MEANS AUTHORIZED BY CALIFORNIA LAW, AND (III) IN THE INTEREST
OF SAVING TIME AND EXPENSE, TRIAL WITHOUT A JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER OR THEIR
SUCCESSORS IN RESPECT OF ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS
LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT’S USE OR OCCUPANCY OF THE
PREMISES, AND/OR ANY CLAIM FOR INJURY OR DAMAGE, OR ANY EMERGENCY OR STATUTORY
REMEDY. IN THE EVENT LANDLORD COMMENCES ANY SUMMARY PROCEEDINGS OR ACTION FOR
NONPAYMENT OF BASE RENT OR ADDITIONAL RENT, TENANT SHALL NOT INTERPOSE ANY
COUNTERCLAIM OF ANY NATURE OR DESCRIPTION (UNLESS SUCH COUNTERCLAIM SHALL BE
MANDATORY) IN ANY SUCH PROCEEDING OR ACTION, BUT SHALL BE RELEGATED TO AN
INDEPENDENT ACTION AT LAW.

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

29.24 Brokers. Landlord and Tenant hereby warrant to each other that they have
had no dealings with any real estate broker or agent in connection with the
negotiation of this Lease, excepting only the real estate brokers or agents
specified in Section 12 of the Summary (the “Brokers”), and that they know of no
other real estate broker or agent who is entitled to a commission in connection
with this Lease. Landlord shall pay the commissions due to Brokers pursuant to a
separate agreement between Landlord and Brokers. Each party agrees to indemnify
and defend the other party against and hold the other party harmless from any
and all claims, demands, losses, liabilities, lawsuits, judgments, costs and
expenses (including without limitation reasonable attorneys’ fees) with respect
to any leasing commission or equivalent compensation alleged to be owing on
account of any dealings with any real estate broker or agent, other than the
Brokers, occurring by, through, or under the indemnifying party.

29.25 Independent Covenants. This Lease shall be construed as though the
covenants herein between Landlord and Tenant are independent and not dependent
and Tenant hereby expressly waives the benefit of any statute to the contrary
and agrees that if Landlord fails to perform its obligations set forth herein,
Tenant shall not be entitled to make any repairs or perform any acts hereunder
at Landlord’s expense or to any setoff of the Rent or other amounts owing
hereunder against Landlord.

 

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29.26 Project or Building Name and Signage. Landlord shall have the right at any
time to change the name of the Project or Building and to install, affix and
maintain any and all signs on the exterior and on the interior of the Project or
Building as Landlord may, in Landlord’s sole discretion, desire. Tenant shall
not use the name of the Project or Building or use pictures or illustrations of
the Project or Building in advertising or other publicity or for any purpose
other than as the address of the business to be conducted by Tenant in the
Premises, without the prior written consent of Landlord.

29.27 Counterparts. This Lease may be executed in counterparts with the same
effect as if both parties hereto had executed the same document. Both
counterparts shall be construed together and shall constitute a single lease.

29.28 Confidentiality. Tenant acknowledges that the content of this Lease and
any related documents are confidential information. Tenant shall keep such
confidential information strictly confidential and shall not disclose such
confidential information to any person or entity other than Tenant’s financial,
legal, and space planning consultants.

29.29 Transportation Management. Tenant shall fully comply with all present or
future programs intended to manage parking, transportation or traffic in and
around the Building, and in connection therewith, Tenant shall take responsible
action for the transportation planning and management of all employees located
at the Premises by working directly with Landlord, any governmental
transportation management organization or any other transportation-related
committees or entities.

29.30 Building Renovations. It is specifically understood and agreed that
Landlord has made no representation or warranty to Tenant and has no obligation
and has made no promises to alter, remodel, improve, renovate, repair or
decorate the Premises, Building, or any part thereof and that no representations
respecting the condition of the Premises or the Building have been made by
Landlord to Tenant except as specifically set forth herein or in the Tenant Work
Letter. However, Tenant hereby acknowledges that Landlord may during the Lease
Term renovate, improve, alter, or modify (collectively, the “Renovations”) the
Project, the Building and/or the Premises including without limitation the
parking structure, common areas, systems and equipment, roof, and structural
portions of the same, which Renovations may include, without limitation,
(i) modifying the Common Areas and tenant spaces to comply with applicable laws
and regulations, including regulations relating to the physically disabled,
seismic conditions, and building safety and security, and (ii) installing new
floor covering, lighting, and wall coverings in the Building Common Areas, and
in connection with any Renovations, Landlord may, among other things, erect
scaffolding or other necessary structures in the Building, limit or eliminate
access to portions of the Project, including portions of the Common Areas, or
perform work in the Building, which work may create noise, dust or leave debris
in the Building. Tenant hereby agrees that such Renovations and Landlord’s
actions in connection with such Renovations shall in no way constitute a
constructive eviction of Tenant nor entitle Tenant to any abatement of Rent.
Landlord shall have no responsibility or for any reason be liable to Tenant for
any direct or indirect injury to or interference with Tenant’s business arising
from the Renovations, nor shall Tenant be entitled to any compensation or
damages from Landlord for loss of the use of the whole or any part of the
Premises or of Tenant’s personal property or improvements resulting from the
Renovations or Landlord’s actions in connection with such Renovations, or for
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inconvenience or annoyance occasioned by such Renovations or Landlord’s actions;
provided that Landlord shall use commercially reasonable efforts to minimize
interference with Tenant’s use, and shall give Tenant no less than three
(3) business days’ prior notice of any planned power interruption.

29.31 No Violation. Tenant hereby warrants and represents that neither its
execution of nor performance under this Lease shall cause Tenant to be in
violation of any agreement, instrument, contract, law, rule or regulation by
which Tenant is bound, and Tenant shall protect, defend, indemnify and hold
Landlord harmless against any claims, demands, losses, damages, liabilities,
costs and expenses, including, without limitation, reasonable attorneys’ fees
and costs, arising from Tenant’s breach of this warranty and representation.

29.32 Communications and Computer Lines. Tenant may install, maintain, replace,
remove or use any communications or computer wires and cables (collectively, the
“Lines”) at the Project in or serving the Premises, provided that (i) Tenant
shall obtain Landlord’s prior written consent, use an experienced and qualified
contractor approved in writing by Landlord, and comply with all of the other
provisions of Articles 7 and 8 of this Lease, (ii) an acceptable number of spare
Lines and space for additional Lines shall be maintained for existing and future
occupants of the Project, as determined in Landlord’s reasonable opinion,
(iii) the Lines therefor (including riser cables) shall be appropriately
insulated to prevent excessive electromagnetic fields or radiation, and shall be
surrounded by a protective conduit reasonably acceptable to Landlord, and shall
be identified in accordance with the “Identification Requirements,” as that term
is set forth hereinbelow, (iv) any new or existing Lines servicing the Premises
shall comply with all applicable governmental laws and regulations, (v) as a
condition to permitting the installation of new Lines, Landlord may require that
Tenant remove existing Lines located in or serving the Premises and repair any
damage in connection with such removal, and (vi) Tenant shall pay all costs in
connection therewith. All Lines shall be clearly marked with adhesive plastic
labels (or plastic tags attached to such Lines with wire) to show Tenant’s name,
suite number, telephone number and the name of the person to contact in the case
of an emergency (A) every four feet (4’) outside the Premises (specifically
including, but not limited to, the electrical room risers and other Common
Areas), and (B) at the Lines’ termination point(s) (collectively, the
“Identification Requirements”). Upon the expiration of the Lease Term, or
immediately following any earlier termination of this Lease, Tenant shall, at
Tenant’s sole cost and expense, remove all Lines installed by Tenant, and repair
any damage caused by such removal. In the event that Tenant fails to complete
such removal and/or fails to repair any damage caused by the removal of any
Lines, Landlord may do so and may charge the cost thereof to Tenant. In
addition, Landlord reserves the right at any time to require that Tenant remove
any Lines located in or serving the Premises which are installed in violation of
these provisions, or which are at any time in violation of any laws or represent
a dangerous or potentially dangerous condition.

29.33 Development of the Project.

29.33.1 Subdivision. Landlord reserves the right to further subdivide all or a
portion of the Project. Tenant agrees to execute and deliver, upon demand by
Landlord and in the form requested by Landlord, any additional documents needed
to conform this Lease to the circumstances resulting from such subdivision.

 

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29.33.2 The Other Improvements. If portions of the Project (the “Other
Improvements”) are owned by an entity other than Landlord, Landlord, at its
option, may enter into an agreement with the owner or owners of any or all of
the Other Improvements to provide (i) for reciprocal rights of access and/or use
of the Project and the Other Improvements, (ii) for the common management,
operation, maintenance, improvement and/or repair of all or any portion of the
Project and the Other Improvements, (iii) for the allocation of a portion of the
Direct Expenses to the Other Improvements and the operating expenses and taxes
for the Other Improvements to the Project, and (iv) for the use or improvement
of the Other Improvements and/or the Project in connection with the improvement,
construction, and/or excavation of the Other Improvements and/or the Project.
Nothing contained herein shall be deemed or construed to limit or otherwise
affect Landlord’s right to convey all or any portion of the Project or any other
of Landlord’s rights described in this Lease.

29.33.3 Construction of Project and Other Improvements. Tenant acknowledges that
portions of the Project and/or the Other Improvements may be under construction
following Tenant’s occupancy of the Premises, and that such construction may
result in levels of noise, dust, obstruction of access, etc. which are in excess
of that present in a fully constructed project. Tenant hereby waives any and all
rent offsets or claims of constructive eviction which may arise in connection
with such construction.

29.34 Office and Communications Services.

29.34.1 The Provider. Landlord has advised Tenant that certain office and
communications services may be offered to tenants of the Building by a
concessionaire under contract to Landlord (“Provider”). Tenant shall be
permitted to contract with Provider for the provision of any or all of such
services on such terms and conditions as Tenant and Provider may agree.

29.34.2 Other Terms. Tenant acknowledges and agrees that: (i) Landlord has made
no warranty or representation to Tenant with respect to the availability of any
such services, or the quality, reliability or suitability thereof; (ii) the
Provider is not acting as the agent or representative of Landlord in the
provision of such services, and Landlord shall have no liability or
responsibility for any failure or inadequacy of such services, or any equipment
or facilities used in the furnishing thereof, or any act or omission of
Provider, or its agents, employees, representatives, officers or contractors;
(iii) Landlord shall have no responsibility or liability for the installation,
alteration, repair, maintenance, furnishing, operation, adjustment or removal of
any such services, equipment or facilities; and (iv) any contract or other
agreement between Tenant and Provider shall be independent of this Lease, the
obligations of Tenant hereunder, and the rights of Landlord hereunder, and,
without limiting the foregoing, no default or failure of Provider with respect
to any such services, equipment or facilities, or under any contract or
agreement relating thereto, shall have any effect on this Lease or give to
Tenant any offset or defense to the full and timely performance of its
obligations hereunder, or entitle Tenant to any abatement of rent or additional
rent or any other payment required to be made by Tenant hereunder, or constitute
any accrual or constructive eviction of Tenant, or otherwise give rise to any
other claim of any nature against Landlord.

 

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29.35 No Discrimination. There shall be no discrimination against, or
segregation of, any person or persons on account of sex, marital status, race,
color, religion, creed, national origin or ancestry in the Transfer of the
Premises, or any portion thereof, nor shall the Tenant itself, or any person
claiming under or through it, establish or permit any such practice or practices
of discrimination or segregation with reference to the selection, location,
number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees
of the Premises, or any portion thereof.

29.36 Access Control Cards. Landlord shall have the right to institute access
control systems and/or procedures at the Building and/or Project that may
include the provision of personal access control cards to individual employees
of Tenant. In such event, any such cards shall be personal to each particular
employee, and Tenant shall cooperate with Landlord in order to ensure that such
cards are used by employees of Tenant only, and are not transferred to any other
persons. Tenant shall additionally comply with any other reasonable requirements
instituted by Landlord in connection with such systems or procedures.

29.37 Wireless Communications.

29.37.1 Landlord’s Wireless Communication Equipment. Tenant acknowledges that
Landlord may elect, in its sole and absolute discretion, to install and maintain
(either itself or through a third party service provider) certain office and
communications services (specifically including, without limitation, wireless
communication equipment) in the Building or Project, or any portion thereof
(“Landlord’s Communication Equipment”).

29.37.2 Tenant’s Wireless Communication Equipment. Subject to Landlord’s prior
written approval, which approval shall not be unreasonably withheld, conditioned
or delayed, and subject to, in accordance with, and the terms and conditions set
forth in Article 8, above, and this Section 29.36, Tenant may install and
maintain, at Tenant’s sole cost and expense, wireless communication equipment
within the Premises (the “Wireless Communication Equipment”). Such Wireless
Communication Equipment shall be used for wireless communications within the
Premises only, and shall be for the servicing of the operations conducted by
Tenant from within the Premises. Tenant shall not be entitled to license its
Wireless Communication Equipment to any third party, nor shall Tenant be
permitted to receive any revenues, fees or any other consideration for the use
of such Communication Equipment by any third party. Such Wireless Communication
Equipment shall, in all instances, comply with applicable governmental laws,
codes, rules and regulations.

29.37.3 Use of Wireless Equipment. Tenant hereby acknowledges and agrees that
its use of the Wireless Communication Equipment (i) shall not be permitted to
interfere with any wireless communication equipment or other equipment of any
other tenant or occupant of the Building or Project which was installed and
operating in the Project in compliance with laws prior to the time Tenant
installed Tenant’s Wireless Tenant’s Communications Equipment, (ii) shall not be
permitted to interfere with any wireless communication equipment or other
equipment of any other third-party with whom Landlord has any third-party
agreement where such communication equipment was installed and operating in the
Project in compliance with laws prior to the time Tenant installed Tenant’s
Wireless Tenant’s Communications Equipment, and (iii) shall not be permitted to
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Communication Equipment which was installed and operating in the Project in
compliance with laws prior to the time Tenant installed Tenant’s Wireless
Tenant’s Communications Equipment. Within three (3) days after receipt of notice
from Landlord that Tenant is in violation of one or more of the provisions of
the preceding sentence, Tenant shall commence steps necessary to eliminate any
such interference and diligently prosecute such efforts to completion, but in no
event later than five (5) business days after receipt of Landlord’s notice. If
after the date of installation of Tenant’s Wireless Communications Equipment
Landlord installs Landlord’s Communications Equipment in the Project, then upon
notice from Tenant to Landlord that Landlord’s Communications Equipment is
believed to be interfering with Tenant’s Wireless Communications Equipment,
Landlord shall within a reasonable period of time after receipt of such notice
from Tenant eliminate any interference which is caused by Landlord’s
Communications Equipment. Tenant hereby acknowledges and agrees that Landlord
has made no warranty or representation to Tenant with respect to the suitability
of the Premises for any wireless communications, specifically including, without
limitation, with respect to the quality and clarity of any receptions and
transmissions to or from the Wireless Communication Equipment and the presence
of any interference with such signals whether emanating from Landlord’s
Communication Equipment, the Building, the Project or otherwise. In no event
shall any such interfere with Tenant’s Wireless Communication Equipment have any
effect on this Lease or give to Tenant any offset or defense to the full and
timely performance of its obligations hereunder, or entitle Tenant to any
abatement of rent or additional rent or any other payment required to be made by
Tenant hereunder, or constitute any accrual or constructive eviction of Tenant,
or otherwise give rise to any other claim of any nature against Landlord. In no
event shall any of the following equipment or systems which are in place in the
Project as of the Lease Commencement Date be deemed to interfere with Tenant’s
Wireless Communication Equipment: standard maintenance equipment, mechanical
equipment (e.g. HVAC systems), office equipment, computer equipment,
telecommunications systems, and other similar equipment, devices, and systems
used in connection with the primary businesses operated at the Project from time
to time.

ARTICLE 30

ROOFTOP ANTENNA

30.1 Rooftop Antenna Area.

30.1.1 Designation. Landlord has designated an area on the roof of the Building
as shown on Exhibit “I” attached hereto (the “Rooftop Area”) that Tenant may use
for the purpose of constructing, installing, operating, repairing, replacing
(subject to Section 30.3), and maintaining satellite/telecommunications dishes
up to two (2) meter(s) in diameter (collectively, the “Antenna”).

30.1.2 Notice of Exercise. Tenant may exercise its right to use the Rooftop Area
upon five (5) business days’ prior written notice delivered to Landlord (the
“Notice of Exercise”). The terms of this Article 30 Agreement shall be effective
upon the date of this Lease and shall continue in effect until the expiration or
earlier termination of this Article 30 as set forth in Section 30.1.3.

 

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30.1.3 Use of the Rooftop Area; Term; Exclusive Use. Five (5) business days
following the delivery of the Notice of Exercise, Tenant’s right to use the
Rooftop Area to construct, install, operate, repair, replace (subject to
Section 30.3) and maintain the Antenna shall commence and shall continue until
the earlier of (i) the expiration or earlier termination of the initial term of
the Lease, or (ii) any termination of this Article 30 required by law,
governmental authority or quasi-governmental authority. Subject to the rights of
Landlord to maintain and repair the Building in accordance with the terms of
this Lease, Tenant shall have the exclusive right to use the Rooftop Area.

30.1.4 Access to Antenna. During the term of the rights granted to Tenant under
this Article 30 (the “Antenna Term”), Tenant, its agents, employees and
contractors, will have the right of access to the Antenna and the Rooftop Area.

30.1.5 Ownership and Removal of Antenna. The Antenna shall at all times remain
the property of Tenant. Tenant shall have the right to remove the Antenna, or
any part thereof, at any reasonable time. On or before the expiration or earlier
termination of the Antenna Term, Tenant will remove, at its own cost and
expense, the Antenna and all related facilities on the Rooftop Area
(specifically including, but not limited to, any fencing and barriers securing
the Antenna, and any connections installed by or on behalf of Tenant), and
return the Rooftop Area to its condition existing prior to Tenant’s installation
of the Antenna (except for normal wear and tear). If Tenant fails to complete
such removal or fails to repair any damage caused by such removal, Landlord may
complete such removal and repair such damage and charge the cost thereof to
Tenant, which amounts shall be immediately payable by Tenant.

30.1.6 Leaks. Without limiting any other provision of this Lease, Tenant hereby
agrees that it shall be solely responsible for, and in accordance with the
provisions of Section 30.5 agrees to indemnify, defend, protect, and hold
Landlord and the “Landlord Parties” (as that term is defined in Article 10 of
the Lease) harmless from, any leaks which occur in the roof or roof membrane at
or adjacent to the Rooftop Area during the term Antenna Term or, if later,
caused by the removal of the Antenna by Tenant.

30.2 Installation, Maintenance and Operation of Antenna.

30.2.1 Approvals and Permits. During the Antenna Term and subject to the terms
of Section 30.3.2, below, Tenant may install and operate the Antenna (and
install all equipment ancillary to and necessary for the operation of the
Antenna) in the Rooftop Area, provided that: (a) Tenant has obtained Landlord’s
prior written approval, which approval shall be in Landlord’s reasonable
discretion, of the plans and specifications for the Antenna and all working
drawings for the installation of the Antenna, (b) Tenant has obtained all
required permits and governmental or quasi-governmental approvals (including
satisfying any applicable Federal Communications Commission and Federal Aviation
Administration requirements) to install and operate the Antenna, and (c) Tenant
complies with all applicable governmental and quasi-governmental laws,
regulations and building codes in connection with the Rooftop Area and the
Antenna. Landlord shall have the right to condition its approval of the Antenna
proposed to be installed by Tenant on Tenant, among other things, erecting
fencing or other barriers to secure such device. With regard to Tenant obtaining
all required permits and approvals set forth in Section 30.3.1(b) above,
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Tenant; provided, however, that Landlord shall not be responsible for any such
approvals. Once Landlord has given its requisite approval, Tenant may not
materially alter or modify the working drawings, or the actual installation of
the Antenna without Landlord’s prior written consent, which consent shall not be
unreasonably withheld, conditioned or delayed.

30.2.2 Compatibility with Building Systems and Operations. The Antenna shall be
compatible with the Building systems and equipment and the antennae and other
telecommunications devices of Landlord and other tenants located in the Project,
and shall not impair window washing or the use of chiller units, the cooling
tower, the emergency generator, elevators, machine rooms, helipads, ventilation
shafts, if any, or any other parts of the Building. If the installation,
maintenance, repair, operation or removal of the Antenna requires any changes or
modifications to any structural systems or components of the Building or any of
the Building’s systems or equipment, Landlord shall have the right to either
(i) perform such changes or modifications and Tenant shall pay for the actual
costs thereof upon demand or (ii) require Tenant to perform such changes or
modifications at Tenant’s sole cost and expense. If required by Landlord, in its
reasonable discretion, or any governmental agency or authority, Tenant shall
fully secure the Rooftop Area with suitable fencing or other required enclosures
(including enclosures that shield the visibility of the Rooftop without
impairing their operation and maintenance), subject to the terms of
Section 30.3.1, above. Landlord shall have the right to post notices of
non-responsibility in connection with any work performed by Tenant or its agents
or contractors in connection with this Agreement. The terms and conditions of
Articles 8 and 9 of the Lease shall specifically be applicable in connection
with any work performed by Tenant or its agents or contractors in connection
with the Antenna or this Article 30.

30.3 Use of Rooftop Area. Tenant shall have the right to use the Building
electricity located on the roof of the Building for the operation of the Antenna
and ancillary equipment installed by Tenant. Tenant will not store any materials
in the Rooftop Area. Tenant will use the Rooftop Area solely for the Antenna and
ancillary equipment and to run all necessary cabling and wires to the Antenna
(through conduits or in areas designated by Landlord) and not for any other
purpose. Landlord and its agents may enter and inspect the Rooftop Area at any
time upon reasonable prior notice to Tenant if accompanied by Tenant’s
representative. Concurrently with Tenant’s installation of any locks for the
Rooftop Area, Tenant will deliver to Landlord a key for any such lock. Tenant
will not interfere with the mechanical, electrical, heating, ventilation and air
conditioning, or plumbing systems of the Building or the operation, reception,
or transmission of any other satellite, microwave, or other broadcasting or
receiving devices that are located on the roof of, or in, the Building.

30.4 Indemnification and Insurance. Tenant agrees and acknowledges that it shall
use the Rooftop Area at its sole risk, and Tenant absolves and fully releases
Landlord and Landlord Parties, from (i) any and all cost, loss, damage, expense,
liability, and cause of action, whether foreseeable or not, arising from any
cause, that Tenant may suffer to its personal property located in the Rooftop
Area, or (ii) that Tenant or Tenant’s officers, agents, employees, or
independent contractors Landlord or the Landlord Parties may suffer as a direct
or indirect consequence of Tenant’s use of the Rooftop Area, the Antenna or
access areas to the Rooftop Area, or (iii) any other cost, loss, damage,
expense, liability, or cause of action arising from or related to this Article
30, excluding that caused by the negligence or willful misconduct of Landlord or
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indemnify, defend, protect, and hold Landlord and the Landlord Parties harmless
from and against any loss, cost, damage, liability, expense, claim, action or
cause of action of any third party (including, but not limited to, reasonable
attorneys’ fees and costs, and, if Landlord requires the removal of the Antenna
at the end of the Antenna Term, any leaks in the roof or roof membrane caused by
the removal of the Antenna and any other rooftop equipment), whether foreseeable
or not, resulting as a direct or indirect consequence of Tenant’s use of the
Rooftop Area, the Antenna or access areas to the Rooftop Area, except when such
cost, loss, damage, expense, or liability is due to the negligence or willful
misconduct of Landlord or Landlord Parties or Landlord Event of Default. In
addition, Tenant shall cause the Rooftop Area, the Antenna and the obligations
assumed by Tenant under this Article 30 to be covered by the insurance coverage
required to be procured by Tenant under the Lease.

30.5 Defaults. If Tenant fails to cure the breach of any of the covenants set
forth in this Article 30 within ten (10) business days following written notice
from Landlord, Landlord shall have the right to terminate the rights granted to
Tenant under this Article 30 upon written notice to Tenant; provided that if a
period longer than ten (10) business days is required to cure, no Event of
Default shall be deemed to have occurred if Tenant commences the cure within
such period and diligently prosecutes such cure to completion. In addition, at
the option of Landlord, breach of any of the covenants under this Article 30 by
Tenant beyond the above-referenced notice and cure period will also constitute
an Event of Default by Tenant under the Lease.

30.6 Notices. Any notice required or permitted to be given under this Article 30
by Tenant or Landlord will be given under the terms of Section 29.18 of the
Lease.

30.7 Incorporation of Lease Provisions. All applicable provisions of the Lease
apply to Tenant’s payment of amounts pursuant to this Article 30, and the use of
the Rooftop Area in the same manner as those provisions apply to the Premises
and are incorporated into this Article 30 by this reference as though fully set
forth in this Article 30.

30.8 No Warranty. Landlord has made no warranty or representation that the
Antenna is permitted by law and Tenant assumes all liability and risk in
obtaining all permits and approvals necessary for the installation and use of
the Antenna. Landlord does not warrant or guaranty that Tenant will receive
unobstructed transmission or reception to or from the Antenna and Tenant assumes
the liability for the transmission and reception to and from the Antenna.

30.9 Assignment. Notwithstanding any contrary provision set forth in this
Article 30, Tenant’s rights contained herein, may not be transferred or assigned
to any other person or entity, and no person or entity other than Tenant and its
employees shall be entitled to use the Antenna or the Rooftop Area; provided
however, the rights hereunder may be transferred or assigned to an Affiliate of
Tenant under Article 14 of the Lease in conjunction with an assignment of the
Lease or a sublease of all of the Premises for all or substantially all of the
remainder of the term of the Lease.

 

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ARTICLE 31

EMERGENCY GENERATOR

31.1 Emergency Generator. Upon notice by Tenant to Landlord within sixty
(60) days following the Lease Commencement Date, Tenant shall have the right, at
Tenant’s sole cost and expense, subject to the terms hereof, to install one
(1) approximately          kw backup emergency power generator unit to provide
emergency power to the Premises (the “Generator”) in an area of approximately
         feet by          feet, as set forth on Exhibit J attached to the Lease
(the “Emergency Generator Area”). Tenant shall have the right to terminate its
right to use all or a portion the Emergency Area at any time upon not less than
thirty (30) days’ notice to Landlord, in which event following such termination,
Tenant shall promptly remove Tenant’s Emergency Generator Equipment pursuant to
the terms hereof. The physical appearance and all specifications of the
Generator shall be subject to Landlord’s reasonable approval and Landlord may
require Tenant to install screening around the Generator, at Tenant’s sole cost
and expense, as reasonably designated by Landlord. Tenant shall be responsible,
at Tenant’s sole cost and expense, for (x) obtaining all permits or other
governmental approvals required in connection with the Generator, and
(y) repairing and maintaining and causing the Generator to comply with all
applicable laws. In no event shall Tenant permit the Generator to interfere with
the Building Systems or any other communications equipment at the Building that
is located on or in the Building prior to the installation of the Generator (or
reasonable substitutes therefor). In the event Tenant elects to exercise its
right to install the Generator, then Tenant shall give Landlord prior notice
thereof and Landlord and Tenant shall execute an amendment to this Lease
covering the matters addressed in this Article 31, the installation and
maintenance of the Generator and the Generator Fuel Pad described in
Section 31.2, Tenant’s indemnification of Landlord with respect thereto,
Tenant’s obligation to remove the Generator (and restore the Emergency Generator
Area to its previously existing condition) upon the expiration or earlier
termination of this Lease, and other related matters. Subject to Landlord’s
reasonable rules and regulations (including, without limitation, Landlord’s
reasonable notice requirements), Tenant shall be permitted to access the
Emergency Generator Area in order to install, repair and maintain the Generator.

31.2 Generator Fuel Pad. If Tenant exercises its right to install the Generator
pursuant to Section 31.1, Tenant shall have the right, at Tenant’s sole cost and
expense, subject to the terms hereof, to install a fuel tank to service such
generator in the area set forth on Exhibit J attached to the Lease (the
“Generator Fuel Pad”). Tenant shall have the right to terminate its right to use
all or a portion the Generator Fuel Pad at any time upon not less than thirty
(30) days’ notice to Landlord, in which event following such termination,
Tenant, at Tenant’s sole cost, shall promptly remove all of the equipment
installed on the Generator Fuel Pad, and repair any damage to the Project
resulting from the installation or removal of such equipment. All specifications
of such equipment shall be subject to Landlord’s reasonable approval. Tenant
shall be responsible, at Tenant’s sole cost and expense, for (x) obtaining all
permits or other governmental approvals required in connection with such
equipment, and (y) repairing and maintaining and causing such equipment to
comply with all applicable laws. In the event Tenant elects to exercise its
right to install equipment on the Generator Fuel Pad, then Tenant shall give
Landlord prior notice thereof and Landlord and Tenant shall execute an amendment
to this Lease covering the matters addressed in this Section 31.2, the payment
for installation costs, the installation and maintenance of such equipment,
Tenant’s indemnification of Landlord with

 

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respect thereto, Tenant’s obligation to remove such equipment upon the
expiration or earlier termination of this Lease, and other related matters.
Subject to Landlord’s reasonable rules and regulations (including, without
limitation, Landlord’s reasonable notice requirements), Tenant shall be
permitted to access the Generator Fuel Pad in order to install, repair and
maintain Tenant’s equipment thereon.

[SIGNATURES APPEAR ON NEXT PAGE.]

 

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IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be executed
the day and date first above written.

 

LANDLORD:     TENANT: SR CORPORATE CENTER PHASE TWO, LLC,     BIOMARIN
PHARMACEUTICAL INC., a Delaware limited liability company     a Delaware
corporation By:  

Seagate SR Corporate Center, LLC,

a California limited liability company

        By:   Seagate Second Street, LLC,     By:  

/s/ G. Eric Davis

    a California limited liability company     Name:  

G. Eric Davis

          Its:  

Sr.VP, General Counsel

    By:  

Seagate Lindaro, LLC,

a California limited liability company

                          By:  

/s/ Willis K. Polite Jr.

              Willis K. Polite Jr.             Its:   Managing Member      

 

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EXHIBIT A

SAN RAFAEL CORPORATE CENTER

[DIAGRAMS OF PREMISES]

 

 

 

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EXHIBIT A-1

SAN RAFAEL CORPORATE CENTER

[SITE PLAN]

 

 

 

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EXHIBIT B

SAN RAFAEL CORPORATE CENTER

TENANT WORK LETTER

This Tenant Work Letter shall set forth the terms and conditions relating to the
construction of the tenant improvements in the Premises in the 770 Lindaro
Building which shall be referred to herein as the “Premises”. This Tenant Work
Letter is essentially organized chronologically and addresses the issues of the
construction of the Premises, in sequence, as such issues will arise during the
actual construction of the Premises. All references in this Tenant Work Letter
to Articles or Sections of “this Lease” shall mean the relevant portion of
Articles 1 through 29 of the Office Lease to which this Tenant Work Letter is
attached as Exhibit B and of which this Tenant Work Letter forms a part, and all
references in this Tenant Work Letter to Sections of “this Tenant Work Letter”
shall mean the relevant portion of Sections 1 through 5 of this Tenant Work
Letter.

SECTION 1

DELIVERY OF THE PREMISES

Tenant acknowledges that Tenant has thoroughly examined the Premises. Upon full
execution and delivery of this Lease by Landlord and Tenant, Landlord shall
deliver the Premises and Tenant shall accept the Premises as of January 2, 2012,
in the “as-is” condition existing on the date of this Lease.

SECTION 2

TENANT IMPROVEMENTS

2.1 Tenant Improvement Allowance. Tenant shall be entitled to a one-time tenant
improvement allowance (the “Tenant Improvement Allowance”) in the amount of
$5,007,600 (i.e., $60.00 for each of the square feet of the Premises (83,360 sq.
ft.) for the costs relating to the initial design and construction of Tenant’s
improvements, which are permanently affixed to the Premises. Such work, as
depicted in the Approved Construction Documents is referred to herein as the
“Tenant Improvements”. In no event shall Landlord be obligated to make
disbursements pursuant to this Tenant Work Letter in a total amount which
exceeds the Tenant Improvement Allowance and “Landlord’s Drawing Contribution,”
as that term is defined in Section 2.2.2.1 below, unless otherwise expressly set
forth in the Lease or this Tenant Work Letter.

2.2 Disbursement of the Tenant Improvement Allowance.

2.2.1 Tenant Improvement Allowance Items. Except as otherwise set forth in this
Tenant Work Letter, the Tenant Improvement Allowance shall be disbursed by
Landlord only for the following items and costs (collectively the “Tenant
Improvement Allowance Items”):

 

 

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2.2.1.1 Payment of the fees of the “Architect/Space Planner” and the
“Engineers,” as those terms are defined in Section 3.1 of this Tenant Work
Letter, which payment shall, notwithstanding anything to the contrary contained
in this Tenant Work Letter, not exceed an aggregate amount equal to $5.00 per
rentable square foot of the Premises (“Landlord’s Drawing Contribution”), which
shall be deducted from the Tenant Improvement Allowance, and payment of the fees
incurred by, and the cost of documents and materials supplied by, Landlord and
Landlord’s consultants in connection with the preparation and review of the
“Construction Documents,” as that term is defined in Section 3.1 of this Tenant
Work Letter;

2.2.1.2 The payment of plan check, permit and license fees relating to
construction of the Tenant Improvements;

2.2.1.3 The cost of construction of the Tenant Improvements, including, without
limitation, demolition, testing and inspection costs, trash removal costs,
parking fees, after-hours utilities usage and contractors’ fees and general
conditions;

2.2.1.4 The cost of any changes anywhere in the Base Building or the floor of
the Building on which the Premises is located, when such changes are required by
the Approved Construction Documents or to comply with applicable governmental
regulations or building codes (collectively, the “Code”), such cost to include
all direct architectural and/or engineering fees and expenses incurred in
connection therewith;

2.2.1.5 The cost of any changes to the Construction Documents or Tenant
Improvements required by Code;

2.2.1.6 Sales and use taxes and Title 24 fees;

2.2.1.7 The “Landlord Coordination Fee,” as that term is defined in
Section 4.2.6 of this Tenant Work Letter; and

2.2.1.8 All other costs approved by or expended by Landlord in connection with
the construction of the Tenant Improvements.

2.2.1.9 Notwithstanding anything to the contrary in this Section 2, all costs
for the Landlord Coordination Fee and fees for Tenant’s Agents (as defined in
Section 4.1.2 of this Tenant Work Letter) are to be paid from the Tenant
Improvement Allowance.

2.2.2 Disbursement of Tenant Improvement Allowance. During the construction of
the Tenant Improvements, Landlord shall make monthly disbursements of the Tenant
Improvement Allowance for Tenant Improvement Allowance Items for the benefit of
Tenant and shall authorize the release of monies for the benefit of Tenant as
follows.

2.2.2.1 Monthly Disbursements. On or before the twentieth (20th) day of each
calendar month during the construction of the Tenant Improvements (the
“Submittal Date”) (or such other date as Landlord may designate), Tenant shall
deliver to Landlord: (i) a request for payment of the “Contractor,” as that term
is defined in Section 4.1 of this Tenant Work Letter, approved by Tenant showing
the schedule, by trade, of percentage of completion of

 

 

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the Tenant Improvements in the Premises; (ii) invoices from all of “Tenant’s
Agents,” as that term is defined in Section 4.1.2 of this Tenant Work Letter,
for labor rendered and materials delivered to the Premises (if such invoice is
for the Contractor, the Contractor will need to provide an application and
certificate for payment [AIA form G702-1992 or equivalent] signed by the
Architect/Space Planner, and a breakdown sheet [AIA form G703-1992 or
equivalent]); (iii) an original letter from the Tenant approving such invoices
and requesting payment from the Tenant Improvement Allowance; (iv) executed
mechanic’s lien releases, which lien releases shall be conditional with respect
to the then-requested payment amounts and unconditional with respect to payment
amounts previously disbursed by Landlord or Tenant, from all of Tenant’s Agents
which shall comply with the appropriate provisions, as reasonably determined by
Landlord, of California Civil Code Section 3262(d); and (v) all other
information reasonably requested by Landlord. Tenant’s request for payment shall
be deemed Tenant’s acceptance and approval of the work furnished and/or the
materials supplied as set forth in Tenant’s payment request. On or before the
date occurring thirty (30) days after the Submittal Date, and assuming Landlord
receives all of the information described in items (i) through (v), above,
Landlord shall deliver a check to Tenant made payable to Tenant’s Agent (or to
Tenant if such invoices were previously paid by the Tenant) in payment of the
lesser of: (A) the amounts so requested by Tenant, as set forth in this
Section 2.2.2.1, above, up to an aggregate total of ninety percent (90%) of the
Tenant Improvement Allowance (the remaining ten percent (10%) of the Tenant
Improvement Allowance shall be the “Final Retention”), and (B) the balance of
any remaining available portion of the Tenant Improvement Allowance (not
including the Final Retention), provided that Landlord does not dispute any
request for payment based on non-compliance of any work with the “Approved
Construction Documents”, as that term is defined in Section 3.4 below, or due to
any substandard work, or for any other reason as provided in this Lease.
Landlord’s payment of such amounts shall not be deemed Landlord’s approval or
acceptance of the work furnished or materials supplied as set forth in Tenant’s
payment request. Notwithstanding anything to the contrary in this
Section 2.2.2.1, any payment by Landlord of the Tenant Improvement Allowance
requested by Tenant shall be reduced to account for Tenant’s obligation to pay
Tenant’s percentage share of the Over-Allowance Amount in accordance with the
procedure specified in Section 4.3.1 below.

2.2.2.2 Final Retention. Subject to the provisions of this Tenant Work Letter, a
check for the Final Retention payable to Tenant shall be delivered by Landlord
to Tenant following the completion of construction of the Premises, provided
that (i) Tenant delivers to Landlord all of the items outlined in the “Close-out
Requirement” document included in the Construction Rules, Requirements,
Specifications, Design Criteria and Building Standards (collectively, the “Final
Close-Out Package”), and (ii) Landlord has determined that no substandard work
exists which adversely affects the mechanical, electrical, plumbing, heating,
ventilating and air conditioning, life-safety or other systems of the Building,
the curtain wall of the Building, the structure or exterior appearance of the
Building, or any other tenant’s use of such other tenant’s leased premises in
the Building.

2.2.2.3 Other Terms. Landlord shall only be obligated to make disbursements from
the Tenant Improvement Allowance to the extent costs are incurred by Tenant for
Tenant Improvement Allowance Items. All Tenant Improvement Allowance Items for
which the Tenant Improvement Allowance has been made available shall be deemed
Landlord’s property under the terms of Section 8.5 of this Lease. Tenant shall
have no claim to any Tenant Improvement Allowance not expended by Tenant within
two (2) years after the Lease Commencement Date and any such sums shall be the
sole property of Landlord.

 

 

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2.3 Construction Rules. Landlord has established construction rules, regulation,
requirements and procedures, and specifications, design criteria and Building
standards with which Tenant, the “Architect/Space Planner,” as that term is
defined below, and all Tenant’s Agents must comply in designing and constructing
the Tenant Improvements in the Premises in the form attached hereto as Schedule
2 (the “Construction Rules”).

SECTION 3

CONSTRUCTION DOCUMENTS

3.1 Selection of Architect/Space Planner/Construction Documents. Tenant shall
retain a licensed, competent, reputable architect/space planner experienced in
office space design (the “Architect/Space Planner”) to prepare the Construction
Documents. Tenant shall retain one or more of Landlord’s approved engineering
consultants listed in the attached Schedule 1 (the “Engineers”) to prepare all
plans and engineering Construction Documents relating to the structural,
mechanical, electrical, plumbing, HVAC, lifesafety, and sprinkler work in the
Premises. The plans and drawings to be prepared by Architect/Space Planner and
the Engineers hereunder shall be known collectively as the “Construction
Documents.” All Construction Documents shall comply with Landlord’s reasonable
drawing format and specifications. Landlord’s review of the Construction
Documents as set forth in this Section 3, shall be for its sole purpose and
shall not imply Landlord’s review of the same, or obligate Landlord to review
the same, for quality, design, Code compliance or other like matters.
Accordingly, notwithstanding that any Construction Documents are reviewed by
Landlord or its space planner, architect, engineers and consultants, and
notwithstanding any advice or assistance which may be rendered to Tenant by
Landlord or Landlord’s space planner, architect, engineers, and consultants,
Landlord shall have no liability whatsoever in connection therewith and shall
not be responsible for any omissions or errors contained in the Construction
Documents, and Tenant’s waiver and indemnity set forth in Section 10.1 of this
Lease shall specifically apply to the Construction Documents. Furthermore,
Tenant and Architect/Space Planner shall verify, in the field, the dimensions
and conditions as shown on the relevant portions of the base building plans, and
Tenant and Architect/Space Planner shall be solely responsible for the same, and
Landlord shall have no responsibility in connection therewith.

3.2 Final Space Plan. Tenant shall supply Landlord with two (2) copies signed by
Tenant of its final space plan for the Premises before any architectural
Construction Documents or engineering drawings have been commenced. The final
space plan (the “Final Space Plan”) shall include a layout and designation of
all offices, rooms and other partitioning, their intended use, and equipment to
be contained therein. Landlord may request clarification or more specific
drawings for special use items not included in the Final Space Plan. Landlord
shall advise Tenant within five (5) business days after Landlord’s receipt of
the Final Space Plan for the Premises if the same is satisfactory, incomplete or
unsatisfactory because it would result in improvements which are of inferior
quality, or are not in compliance with applicable law or would not be compatible
with the Building’s systems. If Tenant is advised that it is unsatisfactory or
incomplete in any respect, Tenant shall promptly cause the final Space Plan to

 

 

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be revised to correct any deficiencies or other matters Landlord may reasonably
require. As part of Landlord’s approval of the Final Space Plan, Landlord will
attach to the Final Space Plan a list of “TI Required Removables”, as defined in
Section 4.4 of this Tenant Work Letter, with the express understanding that no
portion of the lobby shall be included within the definition of TI Required
Removables.

3.3 Final Construction Documents. After the approval of the Final Space Plan by
Landlord and Tenant, Tenant shall promptly cause the Architect/Space Planner and
the Engineers to complete the architectural and engineering drawings for the
Premises, and Architect/Space Planner shall compile a fully coordinated set of
architectural, structural, mechanical, electrical and plumbing Construction
Documents in a form which is complete to allow subcontractors to bid on the work
and to obtain all applicable permits (collectively, the “Final Construction
Documents”) and shall submit the same to Landlord for Landlord’s approval.
Tenant shall supply Landlord with two (2) copies signed by Tenant of such Final
Construction Documents. Landlord shall advise Tenant within ten (10) business
days after Landlord’s receipt of the Final Construction Documents for the
Premises if the same is satisfactory, unsatisfactory or incomplete in any
respect. If Tenant is advised that the Final Construction Documents are
unsatisfactory, incomplete, or unsatisfactory because they are not consistent
with the previously approved Final Space Plan, or would result in improvements
which are of inferior quality, or are not in compliance with applicable law or
would not be compatible with the Building’s systems, Tenant shall immediately
revise the Final Construction Documents in accordance with such review and any
reasonable disapproval of Landlord in connection therewith.

3.4 Approved Construction Documents. The Final Construction Documents shall be
approved by Landlord (the “Approved Construction Documents”) prior to the
commencement of construction of the Premises by Tenant. After approval by
Landlord of the Final Construction Documents Tenant shall cause the
Architect/Space Planner to submit the Approved Construction Documents to the
appropriate municipal authorities for all architectural and structural permits
(the “Permits”), provided that (a) the Architect/Space Planner shall provide
Landlord with a copy of the package that it intends to submit prior to such
submission, and (b) if there are Base Building modifications required to obtain
the Permits, then Tenant shall obtain Landlord’s prior written consent to any
such Base Building modifications. Tenant hereby agrees that neither Landlord nor
Landlord’s consultants shall be responsible for obtaining any certificate of
occupancy (or other documentation or approval allowing Tenant to legally occupy
the Premises) for the Premises and that obtaining the same shall be Tenant’s
responsibility; provided, however, that Landlord shall cooperate with Tenant in
performing ministerial acts reasonably necessary to enable Tenant to obtain any
such certificate of occupancy (or other documentation or approval allowing
Tenant to legally occupy the Premises). No changes, modifications or alterations
in the Approved Construction Documents may be made without the prior written
consent of Landlord, which consent may not be unreasonably withheld.

 

 

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SECTION 4

CONSTRUCTION OF THE TENANT IMPROVEMENTS

4.1 Tenant’s Selection of Contractors.

4.1.1 The Contractor. Tenant shall retain a licensed general contractor from one
of those listed on the attached Schedule 1 (the “Contractor”), as a contractor
for the construction of the Tenant Improvements.

4.1.2 Tenant’s Agents. The Architect/Space Planner, Engineers, consultants,
Contractor, other contractors, vendors, subcontractors, laborers, materialmen,
and suppliers retained and/or used by Tenant shall be known collectively as the
“Tenant’s Agents.” The list of Landlord’s Approved Contractors is attached
hereto as Schedule 1. No other contractors may be selected without the written
approval of Landlord, which may be withheld by Landlord in its reasonable
discretion.

4.2 Construction of Tenant Improvements by Tenant’s Agents.

4.2.1 Construction Contract; Cost Budget. Prior to commencement of construction,
Tenant shall submit a copy of the executed contract with the Contractor for the
construction of the Tenant Improvements, including the general conditions with
Contractor (the “Contract”), to Landlord for its records. Prior to the
commencement of the construction of the Tenant Improvements, and after Tenant
has accepted all bids and proposals for the Tenant Improvements, Tenant shall
provide Landlord with (i) a detailed breakdown, by trade, for all of Tenant’s
Agents, of the final estimated costs to be incurred or which have been incurred
in connection with the design and construction of the Tenant Improvements to be
performed by or at the direction of Tenant or the Contractor (the “Construction
Budget”), which costs shall include, but not be limited to, the costs of the
Architect’s and Engineers’ fees and the Landlord Coordination Fee. The amount,
if any, by which the total costs set forth in the Construction Budget exceed the
amount of the Tenant Improvement Allowance is referred to herein as the “Over
Allowance Amount”. Tenant shall be responsible to pay a percentage of each
disbursement under this Tenant Work Letter, which percentage (the
“Over-Allowance Percentage”) shall be equal to the amount of the Over-Allowance
Amount, divided by the amount of the Construction Budget, and such payment by
Tenant shall be a condition to Landlord’s obligation to pay any amounts of the
Tenant Improvement Allowance. In the event that after the Construction Budget
has been delivered by Tenant, the costs relating to the design and construction
of the Tenant Improvements shall be in excess of the estimated amounts as set
forth in the Construction Budget and the Over-Allowance Amount, the
Over-Allowance Amount shall be re-calculated by Tenant and approved by Landlord
and the respective payments made by Landlord and Tenant as of the date of such
re-calculation shall be reconciled and adjusted based on such re-calculation and
payment of any difference owed by one party to the to the other based on such
reconciliation shall be made within five (5) business days of the approval of
such reconciliation.

 

 

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4.2.2 Tenant’s Agents.

4.2.2.1 Landlord’s General Conditions for Tenant’s Agents and Tenant Improvement
Work. Tenant’s and Tenant’s Agent’s construction of the Tenant Improvements
shall comply with the following: (i) the Tenant Improvements shall be
constructed in strict accordance with the Approved Construction Documents;
(ii) Tenant and Tenant’s Agents shall not, in any way, interfere with, obstruct,
or delay, the work of Landlord’s base building contractor and subcontractors
with respect to the Base Building or any other work in the Building;
(iii) Tenant’s Agents shall submit schedules of all work relating to the
Tenant’s Improvements to Landlord and Landlord shall, within five (5) business
days of receipt thereof, inform Tenant’s Agents of any changes which are
reasonably necessary thereto, and Tenant’s Agents shall adhere to such corrected
schedule; and (iv) Tenant shall abide by all reasonable rules made by Landlord
with respect to the use of parking, freight, loading dock and service elevators,
storage of materials, coordination of work with the contractors of other
tenants, and any other matter in connection with this Tenant Work Letter,
including, without limitation, the construction of the Tenant Improvements and
Tenant shall promptly execute all documents including, but not limited to,
Landlord’s standard contractor’s rules and regulations, as Landlord may deem
reasonably necessary to evidence or confirm Tenant’s agreement to so abide.

4.2.2.2 Indemnity. Tenant’s indemnity of Landlord as set forth in Section 10.1
of this Lease shall also apply with respect to any and all costs, losses,
damages, injuries and liabilities related in any way to any act or omission of
Tenant or Tenant’s Agents, or anyone directly or indirectly employed by any of
them, or in connection with Tenant’s non-payment of any amount arising out of
the Tenant Improvements and/or Tenant’s disapproval of all or any portion of any
request for payment. Such indemnity by Tenant, as set forth in Section 10.1 of
this Lease, shall also apply with respect to any and all costs, losses, damages,
injuries and liabilities related in any way to Landlord’s performance of any
ministerial acts reasonably necessary (i) to permit Tenant to complete the
Tenant Improvements, and (ii) to enable Tenant to obtain any certificate of
occupancy (or other documentation or approval allowing Tenant to legally occupy
the Premises) for the Premises.

4.2.2.3 Requirements of Tenant’s Agents. Each of Tenant’s Agents shall guarantee
to Tenant and for the benefit of Landlord that the portion of the Tenant
Improvements for which it is responsible shall be free from any defects in
workmanship and materials for a period of not less than one (1) year from the
date of completion thereof. Each of Tenant’s Agents shall be responsible for the
replacement or repair, without additional charge, of all work done or furnished
in accordance with its contract that shall become defective within one (1) year
after the later to occur of (i) completion of the work performed by such
contractor or subcontractors and (ii) the Lease Commencement Date. The
correction of such work shall include, without additional charge, all additional
expenses and damages incurred in connection with such removal or replacement of
all or any part of the Tenant Improvements, and/or the Building and/or common
areas that may be damaged or disturbed thereby. All such warranties or
guarantees as to materials or workmanship of or with respect to the Tenant
Improvements shall be contained in the Contract or subcontract and shall be
written such that such guarantees or warranties shall inure to the benefit of
both Landlord and Tenant, as their respective interests may appear, and can be
directly enforced by either. Tenant covenants to give to Landlord any assignment
or other assurances which may be necessary to effect such right of direct
enforcement.

 

 

EXHIBIT B

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[SAN RAFAEL CORPORATE CENTER]

[BIOMARIN PHARMACEUTICAL INC.]

[Tenant-Controlled Build-Out]

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4.2.2.4 Insurance Requirements.

4.2.2.4.1 General Coverages. All of Tenant’s Agents shall carry worker’s
compensation insurance covering all of their respective employees, and shall
also carry commercial general liability insurance, including property damage,
all with limits, in form and with companies as are required to be carried by
Tenant as set forth in Article 10 of this Lease, and the policies therefor shall
insure Landlord and Tenant, as their interests may appear, as well as the
Contractor and subcontractors.

4.2.2.4.2 Special Coverages. Tenant or Contractor shall carry “Builder’s All
Risk” insurance in an amount approved by Landlord, which shall in no event be
less than the amount actually carried by Tenant or Contractor, covering the
construction of the Tenant Improvements, and such other insurance as Landlord
may require, it being understood and agreed that the Tenant Improvements shall
be insured by Tenant pursuant to Article 10 of this Lease immediately upon
completion thereof. Such insurance shall be in amounts and shall include such
extended coverage endorsements as may be reasonably required by Landlord.

4.2.2.4.3 General Terms. Certificates for all insurance carried pursuant to this
Section 4.2.2.4 shall be delivered to Landlord before the commencement of
construction of the Tenant Improvements and before the Contractor’s equipment is
moved onto the site. All such policies of insurance must contain a provision
that the company writing said policy will give Landlord thirty (30) days prior
written notice of any cancellation or lapse of the effective date or any
reduction in the amounts of such insurance. In the event that the Tenant
Improvements are damaged by any cause during the course of the construction
thereof, Tenant shall immediately repair the same at Tenant’s sole cost and
expense. Tenant’s Agents shall maintain all of the foregoing insurance coverage
in force until the Tenant Improvements are fully completed and accepted by
Landlord, except for any Products and Completed Operation Coverage insurance
required by Landlord, which is to be maintained for ten (10) years following
completion of the work and acceptance by Landlord and Tenant and which shall
name Landlord, and any other party that Landlord so specifies, as additional
insured as to the full limits required hereunder for such entire ten (10) year
period. All insurance, except Workers’ Compensation, maintained by Tenant’s
Agents shall preclude subrogation claims by the insurer against anyone insured
thereunder. Such insurance shall provide that it is primary insurance as
respects the owner and that any other insurance maintained by owner is excess
and noncontributing with the insurance required hereunder. The requirements for
the foregoing insurance shall not derogate from the provisions for
indemnification of Landlord by Tenant under Section 4.2.2.2 of this Tenant Work
Letter.

4.2.3 Governmental Compliance. The Tenant Improvements shall comply in all
respects with the following: (i) the Code and other state, federal, city or
quasi-governmental laws, codes, ordinances and regulations, as each may apply
according to the rulings of the controlling public official, agent or other
person; (ii) applicable standards of the American Insurance Association
(formerly, the National Board of Fire Underwriters) and the National Electrical
Code; and (iii) building material manufacturer’s specifications.

4.2.4 Inspection by Landlord. Landlord shall have the right to inspect the
Tenant Improvements at all times, provided however, that Landlord’s failure to
inspect the

 

 

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[Tenant-Controlled Build-Out]

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Tenant Improvements shall in no event constitute a waiver of any of Landlord’s
rights hereunder nor shall Landlord’s inspection of the Tenant Improvements
constitute Landlord’s approval of the same. Should Landlord reasonably
disapprove any portion of the Tenant Improvements, because of a defect in
materials or workmanship or failure to comply with the Approved Construction
Drawings or applicable local, state or federal building codes or law, Landlord
shall notify Tenant in writing of such disapproval and shall specify the items
disapproved. Any defects or deviations in, and/or disapproval by Landlord of,
the Tenant Improvements shall be rectified by Tenant at no expense to Landlord,
provided however, that in the event Landlord determines that a defect or
deviation exists or disapproves any portion of the Tenant Improvements for the
reasons set forth above, and Tenant shall have failed to commence correction
within ten (10) business days following Tenant’s receipt of notice of
disapproval, Landlord may, take such action as Landlord reasonably deems
necessary, at Tenant’s expense and without incurring any liability on Landlord’s
part, to correct any such defect, deviation and/or matter, including, without
limitation, causing the cessation of performance of the construction of the
Tenant Improvements until such time as the defect, deviation and/or matter is
corrected to Landlord’s satisfaction.

4.2.5 Meetings. Commencing upon the execution of this Lease, Tenant shall hold
regular meetings with the Architect/Space Planner and the Contractor regarding
the progress of the preparation of Construction Documents and the construction
of the Tenant Improvements, which meetings shall be held at the office of the
Project, at a time mutually agreed upon by Landlord and Tenant, and, upon
Landlord’s request, certain of Tenant’s Agents shall attend such meetings. In
addition, minutes shall be taken at all such meetings, a copy of which minutes
shall be promptly delivered to Landlord. One such meeting each month shall
include the review of Contractor’s current request for payment.

4.2.6 Landlord Coordination Fee. Tenant shall pay a construction supervision and
management fee (the “Landlord Coordination Fee”) to Landlord in an amount equal
to the product of (i) two percent (2%) and (ii) the Tenant Improvement
Allowance. The Landlord Coordination Fee shall be deducted from the Tenant
Improvement Allowance and shall not exceed $1.20 per foot.

4.3 Notice of Completion. Within five (5) days after the final completion of
construction of the Tenant Improvements, including, without limitation, the
completion of any punch list items, Tenant shall cause a Notice of Completion to
be recorded in the office of the Recorder of the County of Marin in accordance
with Section 3093 of the Civil Code of the State of California or any successor
statute, and shall furnish a copy thereof to Landlord upon such recordation. If
Tenant fails to do so, Landlord may execute and file the same on behalf of
Tenant as Tenant’s agent for such purpose, at Tenant’s sole cost and expense.

4.4 Removal Obligations. In the event that, in the course of developing the
Construction Documents, Tenant changes the configuration of the Premises from
that shown in the approved Final Space Plan, Landlord may, by written notice to
Tenant given concurrently with giving Landlord’s consent to the Construction
Documents, require Tenant, at Tenant’s expense, to remove at the end of the Term
any portion of the Tenant Improvements introduced in the reconfigured plan which
in Landlord’s reasonable judgment, are of a nature that would require removal
and repair costs that are materially in excess of the removal and repair costs
associated with standard office improvements such as laboratory improvements,
any exercise

 

 

EXHIBIT B

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[SAN RAFAEL CORPORATE CENTER]

[BIOMARIN PHARMACEUTICAL INC.]

[Tenant-Controlled Build-Out]

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facility, and any cafeteria (collectively referred to as “TI Required
Removables”), and to repair any damage to the Premises and Building caused by
such removal. If Tenant fails to complete such removal and/or to repair any
damage caused by the removal of any such TI Required Removables, then at
Landlord’s option, either (A) Tenant shall be deemed to be holding over in the
Premises and Rent shall continue to accrue in accordance with the terms of
Article 16 of the Lease, until such work shall be completed, or (B) Landlord may
do so and may charge the cost thereof to Tenant. Tenant hereby protects,
defends, indemnifies and holds Landlord harmless from any liability, cost,
obligation, expense or claim of lien in any manner relating to the installation,
placement, and removal or financing of any such Tenant Improvements in, on or
about the Premises, which obligations of Tenant shall survive the expiration or
earlier termination of this Lease. In no event shall any portion of the lobby be
included within the definition of TI Required Removables.

SECTION 5

MISCELLANEOUS

5.1 Tenant’s Representative. Tenant will designate in writing someone as its
sole representative with respect to the matters set forth in this Tenant Work
Letter, who shall have full authority and responsibility to act on behalf of the
Tenant as required in this Tenant Work Letter, prior to commencing construction
of the Tenant Improvements.

5.2 Landlord’s Representative. Landlord has designated Tom Holman or Willis K.
Polite Jr. as its sole representatives with respect to the matters set forth in
this Tenant Work Letter, either of whom, until further notice to Tenant, shall
have full authority and responsibility to act on behalf of the Landlord as
required in this Tenant Work Letter.

5.3 Time of the Essence in This Tenant Work Letter. Unless otherwise indicated,
all references in this Tenant Work Letter to a “number of days” shall mean and
refer to calendar days. If any item requiring approval is timely disapproved by
Landlord, the procedure for preparation of the document and approval thereof
shall be repeated until the document is approved by Landlord.

5.4 Tenant’s Lease Default. Notwithstanding any provision to the contrary
contained in this Lease, if an event of Default as described in Section 19.1 of
this Lease or a Default by Tenant under this Tenant Work Letter has occurred at
any time on or before the substantial completion of the Tenant Improvements in
the Premises, then (i) in addition to all other rights and remedies granted to
Landlord pursuant to the Lease, Landlord shall have the right to withhold
payment of all or any portion of the Tenant Improvement Allowance and/or
Landlord may cause Contractor to cease the construction of the Premises (in
which case, Tenant shall be responsible for any delay in the substantial
completion of the Tenant Improvements in the Premises caused by such work
stoppage), and (ii) all other obligations of Landlord under the terms of this
Tenant Work Letter shall be forgiven until such time as such Default is cured
pursuant to the terms of the Lease (in which case, Tenant shall be responsible
for any delay in the substantial completion of the Tenant Improvements in the
Premises caused by such inaction by Landlord).

 

 

EXHIBIT B

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[SAN RAFAEL CORPORATE CENTER]

[BIOMARIN PHARMACEUTICAL INC.]

[Tenant-Controlled Build-Out]

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EXHIBIT C

SAN RAFAEL CORPORATE CENTER

NOTICE OF LEASE TERM DATES

 

To:   

 

        

 

        

 

        

 

     

 

  Re: Lease dated                     , 20     between                     , a
                     (“Landlord”), and                         , a
                         (“Tenant”) concerning Suite          on floor(s)
             of the office building located at                         ,
                        , California.

Gentlemen:

In accordance with the Lease (the “Lease”), we wish to advise you and/or confirm
as follows:

 

  1. The Lease Term shall commence on or has commenced on                     
for a term of                          ending on                     .

 

  2. Rent commenced to accrue on                     , in the amount of
                    .

 

  3. If the Lease Commencement Date is other than the first day of the month,
the first billing will contain a pro rata adjustment. Each billing thereafter,
with the exception of the final billing, shall be for the full amount of the
monthly installment as provided for in the Lease.

 

  4. Your rent checks should be made payable to                          at
                        .

 

  5. The exact number of rentable square feet within the Premises is
                     square feet.

 

 

EXHIBIT C

 

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  6. Tenant’s Share of Building Expenses is             %. Tenant’s Share of
Project Expenses is             %.

 

“Landlord”:  

 

  , a  

 

 

By:  

 

    Its:  

 

 

 

Agreed to and Accepted as of                     , 20     . “Tenant”:  

 

  , a  

 

 

By:  

 

    Its:  

 

 

 

 

EXHIBIT C

 

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[SAN RAFAEL CORPORATE CENTER]

[BIOMARIN PHARMACEUTICAL INC.]

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EXHIBIT D

SAN RAFAEL CORPORATE CENTER

RULES AND REGULATIONS-770 LINDARO

Tenant shall faithfully observe and comply with the following Rules and
Regulations. Landlord shall not be responsible to Tenant for the nonperformance
of any of said Rules and Regulations by or otherwise with respect to the acts or
omissions of any other tenants or occupants of the Project. In the event of any
conflict between the Rules and Regulations and the other provisions of this
Lease, the latter shall control.

1. Upon the termination of this Lease, Tenant shall return to Landlord all keys
of stores, offices, and toilet rooms, either furnished to, or otherwise procured
by Tenant.

2. Intentionally omitted.

3. Intentionally omitted.

4. Intentionally omitted.

5. Tenant shall provide protection for all elevator finishes when using same to
move furniture, freight, etc.

6. The requirements of Tenant will be attended to only upon application at the
management office for the Project or at such office location designated by
Landlord. Employees of Landlord shall not perform any work or do anything
outside their regular duties unless under special instructions from Landlord.

7. No sign, advertisement, notice or handbill shall be exhibited, distributed,
painted or affixed by Tenant on any part of the exterior of the Building without
the prior written consent of the Landlord. Tenant shall not disturb, solicit,
peddle, or canvass any occupant of the Project and shall cooperate with Landlord
and its agents of Landlord to prevent same.

8. The toilet rooms, urinals, wash bowls and other apparatus shall not be used
for any purpose other than that for which they were constructed, and no foreign
substance of any kind whatsoever shall be thrown therein. The expense of any
breakage, stoppage or damage resulting from the violation of this rule shall be
borne by the tenant who, or whose servants, employees, agents, visitors or
licensees shall have caused same.

9. Tenant shall not overload the floor of the Premises, nor mark, drive nails or
screws, or drill into the partitions, woodwork or drywall or in any way deface
the Premises or any part thereof without Landlord’s prior written consent.

10. Except for vending machines intended for the sole use of Tenant’s employees
and invitees, no vending machine or machines other than fractional horsepower
office machines shall be installed, maintained or operated upon the Premises
without the written consent of Landlord.

 

 

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11. Except as permitted by this Lease, Tenant shall not use or keep in or on the
Premises, the Building, or the Project any kerosene, gasoline, explosive
material, corrosive material, material capable of emitting toxic fumes, or other
inflammable or combustible fluid chemical, substitute or material. Tenant shall
provide material safety data sheets for any Hazardous Material used or kept on
the Premises.

12. Intentionally omitted.

13. Except as permitted by this Lease, Tenant shall not use, keep or permit to
be used or kept, any foul or noxious gas or substance in or on the Premises, or
permit or allow the Premises to be occupied or used in a manner offensive or
objectionable to Landlord or other occupants of the Project by reason of noise,
odors, or vibrations, or interfere with other tenants or those having business
therein, whether by the use of any musical instrument, radio, phonograph, or in
any other way. Tenant shall not throw anything out of doors, windows or
skylights or down passageways.

14. Tenant shall not bring into or keep within the Project, the Building or the
Premises any animals (other than guide or service dogs), birds, aquariums, or,
except in areas designated by Landlord, bicycles or other vehicles.

15. No cooking shall be done or permitted on the Premises, nor shall the
Premises be used for the storage of merchandise, for lodging or for any
improper, objectionable or immoral purposes. Notwithstanding the foregoing,
Underwriters’ laboratory-approved equipment and microwave ovens may be used in
the Premises for heating food and brewing coffee, tea, hot chocolate and similar
beverages for employees and visitors, provided that such use is in accordance
with all applicable federal, state, county and city laws, codes, ordinances,
rules and regulations.

16. The Premises shall not be used for manufacturing or for the storage of
merchandise except as such storage may be incidental to the use of the Premises
provided for in the Summary. Tenant shall not occupy or permit any portion of
the Premises to be occupied as an office for a messenger-type operation or
dispatch office, public stenographer or typist, or for the manufacture or sale
of liquor, narcotics, or tobacco in any form, or as a medical office, or as a
barber or manicure shop, or as an employment bureau without the express prior
written consent of Landlord. Tenant shall not engage or pay any employees on the
Premises except those actually working for such tenant on the Premises nor
advertise for laborers giving an address at the Premises.

17. 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 any of
these Rules and Regulations.

18. Tenant, its employees and agents shall not loiter in or on the entrances,
corridors, sidewalks, lobbies, courts, halls, stairways, elevators, vestibules
or any Common Areas for the purpose of smoking tobacco products or for any other
purpose, nor in any way obstruct such areas, and shall use them only as a means
of ingress and egress for the Premises.

 

 

EXHIBIT D

 

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19. Tenant shall not waste electricity, water or air conditioning and agrees to
cooperate fully with Landlord to ensure the most effective operation of the
Building’s heating and air conditioning system, and shall refrain from
attempting to adjust any controls. Tenant shall participate in recycling
programs undertaken by Landlord.

20. Tenant shall store all its trash and garbage within the interior of the
Premises. No material shall be placed in the trash boxes or receptacles if such
material is of such nature that it may not be disposed of in the ordinary and
customary manner of removing and disposing of trash and garbage in San Rafael,
California without violation of any law or ordinance governing such disposal.
All trash, garbage and refuse disposal shall be made only through entry-ways and
elevators provided for such purposes at such times as Landlord shall designate.
If the Premises is or becomes infested with vermin as a result of the use or any
misuse or neglect of the Premises by Tenant, its agents, servants, employees,
contractors, visitors or licensees, Tenant shall forthwith, at Tenant’s expense,
cause the Premises to be exterminated from time to time to the satisfaction of
Landlord and shall employ such licensed exterminators as shall be approved in
writing in advance by Landlord.

21. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental agency.

22. Any persons employed by Tenant to do janitorial work shall be subject to the
prior written approval of Landlord and Tenant shall be responsible for all acts
of such persons.

23. No awnings or other projection shall be attached to the outside walls of the
Building without the prior written consent of Landlord, and no curtains, blinds,
shades or screens shall be attached to or hung in, or used in connection with,
any window or door of the Premises other than Landlord standard window
coverings. Neither the interior nor exterior of any windows shall be coated or
otherwise sunscreened without the prior written consent of Landlord.

24. Intentionally omitted.

25. Tenant must comply with requests by the Landlord concerning the informing of
their employees of items of importance to the Landlord.

26. Tenant must comply with all applicable “NO-SMOKING” or similar ordinances.
If Tenant is required under the ordinance to adopt a written smoking policy, a
copy of said policy shall be on file in the office of the Building.

27. Tenant hereby acknowledges that Landlord shall have no obligation to provide
guard service or other security measures for the benefit of the Premises, the
Building or the Project. Tenant hereby assumes all responsibility for the
protection of Tenant and its agents, employees, contractors, invitees and
guests, and the property thereof, from acts of third parties, including keeping
doors locked and other means of entry to the Premises closed, whether or not
Landlord, at its option, elects to provide security protection for the Project
or any portion thereof. Tenant further assumes the risk that any safety and
security devices, services and programs which Landlord elects, in its sole
discretion, to provide may not be effective, or may malfunction or be
circumvented by an unauthorized third party, and Tenant shall, in addition to
its other

 

 

EXHIBIT D

 

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[SAN RAFAEL CORPORATE CENTER]

[BIOMARIN PHARMACEUTICAL INC.]

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insurance obligations under this Lease, obtain its own insurance coverage to the
extent Tenant desires protection against losses related to such occurrences.
Tenant shall cooperate in any reasonable safety or security program developed by
Landlord or required by law.

28. Intentionally omitted.

29. Intentionally omitted.

30. No auction, liquidation, fire sale, going-out-of-business or bankruptcy sale
shall be conducted in the Premises without the prior written consent of
Landlord.

31. No tenant shall use or permit the use of any portion of the Premises for
living quarters, sleeping apartments or lodging rooms.

32. Intentionally omitted.

33. Tenant shall install and maintain, at Tenant’s sole cost and expense, an
adequate, visibly marked and properly operational fire extinguisher next to any
duplicating or photocopying machines or similar heat producing equipment, which
may or may not contain combustible material, in the Premises.

Landlord reserves the right at any time to change or rescind any one or more of
these Rules and Regulations, or to make such other and further reasonable Rules
and Regulations not inconsistent with the terms of the Lease as in Landlord’s
judgment may from time to time be necessary for the management, safety, care and
cleanliness of the Premises, Building, the Common Areas and the Project, and for
the preservation of good order therein, as well as for the convenience of other
occupants and tenants therein. Landlord may waive any one or more of these Rules
and Regulations for the benefit of any particular tenants, but no such waiver by
Landlord shall be construed as a waiver of such Rules and Regulations in favor
of any other tenant, nor prevent Landlord from thereafter enforcing any such
Rules or Regulations against any or all tenants of the Project. Tenant shall be
deemed to have read these Rules and Regulations and to have agreed to abide by
them as a condition of its occupancy of the Premises.

 

 

EXHIBIT D

 

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[SAN RAFAEL CORPORATE CENTER]

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EXHIBIT E

SAN RAFAEL CORPORATE CENTER

FORM OF TENANT ESTOPPEL CERTIFICATE

The undersigned as Tenant under that certain Lease (the “Lease”) made and
entered into as of                     , 20     by and between
                     as Landlord, and the undersigned as Tenant, for Premises on
the                      floor(s) of the office building located at
                    ,                         , California                     ,
certifies as follows:

1. Attached hereto as Exhibit A is a true and correct copy of the Lease and all
amendments and modifications thereto. The documents contained in Exhibit A
represent the entire agreement between the parties as to the Premises.

2. The undersigned currently occupies the Premises described in the Lease, the
Lease Term commenced on             , and the Lease Term expires on
            , and the undersigned has no option to terminate or cancel the Lease
or to purchase all or any part of the Premises, the Building and/or the Project.

3. Base Rent became payable on             .

4. The Lease is in full force and effect and has not been modified, supplemented
or amended in any way except as provided in Exhibit A.

5. Tenant has not transferred, assigned, or sublet any portion of the Premises
nor entered into any license or concession agreements with respect thereto
except as follows:

6. Tenant shall not modify the documents contained in Exhibit A without the
prior written consent of Landlord’s mortgagee.

7. All monthly installments of Base Rent, all Additional Rent and all monthly
installments of estimated Additional Rent have been paid when due through
            . The current monthly installment of Base Rent is
$                    .

8. All conditions of the Lease to be performed by Landlord necessary to the
enforceability of the Lease have been satisfied and Landlord is not in default
thereunder. In addition, the undersigned has not delivered any notice to
Landlord regarding a default by Landlord thereunder.

9. No rental has been paid more than thirty (30) days in advance and no security
has been deposited with Landlord except as provided in the Lease.

 

 

EXHIBIT E

 

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10. As of the date hereof, there are no existing defenses or offsets, or, to the
undersigned’s knowledge, claims or any basis for a claim, that the undersigned
has against Landlord.

11. If Tenant is a corporation or partnership, Tenant hereby represents and
warrants that Tenant is a duly formed and existing entity qualified to do
business in California and that Tenant has full right and authority to execute
and deliver this Estoppel Certificate and that each person signing on behalf of
Tenant is authorized to do so.

12. There are no actions pending against the undersigned under the bankruptcy or
similar laws of the United States or any state.

13. Other than in compliance with all applicable laws and the Lease, the
undersigned has not used or stored any hazardous substances in the Premises.

14. To the undersigned’s knowledge, all tenant improvement work to be performed
by Landlord under the Lease has been completed in accordance with the Lease and
has been accepted by the undersigned and all reimbursements and allowances due
to the undersigned under the Lease in connection with any tenant improvement
work have been paid in full.

The undersigned acknowledges that this Estoppel Certificate may be delivered to
Landlord or to a prospective mortgagee or prospective purchaser, and
acknowledges that said prospective mortgagee or prospective purchaser will be
relying upon the statements contained herein in making the loan or acquiring the
property of which the Premises are a part and that receipt by it of this
certificate is a condition of making such loan or acquiring such property.

Executed at                      on the      day of                     ,
20    .

 

“Tenant”:  

 

  , a  

 

  By:  

 

    Its:  

 

  By:  

 

    Its:  

 

 

 

 

EXHIBIT E

 

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[SAN RAFAEL CORPORATE CENTER]

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EXHIBIT F

SAN RAFAEL CORPORATE CENTER

FORM OF LETTER OF CREDIT

(Letterhead of a money center bank

acceptable to the Landlord)

 

FAX NO. [(    )         -        ]

SWIFT: [Insert No., if any]

   [Insert Bank Name And Address]    DATE OF ISSUE:                 

BENEFICIARY:

[Insert Beneficiary Name And Address]

  

APPLICANT:

[Insert Applicant Name And Address]

   LETTER OF CREDIT NO.

EXPIRATION DATE:

             AT OUR COUNTERS

  

AMOUNT AVAILABLE:

USD[Insert Dollar Amount]

(U.S. DOLLARS [Insert Dollar Amount])

LADIES AND GENTLEMEN:

WE HEREBY ESTABLISH OUR IRREVOCABLE STANDBY LETTER OF CREDIT NO.              IN
YOUR FAVOR FOR THE ACCOUNT OF BIOMARIN PHARMACEUTICAL INC., A DELAWARE
CORPORATION UP TO THE AGGREGATE AMOUNT OF USD FOUR MILLION SEVEN HUNDRED
TWENTY-SIX THOUSAND (4,726,000 U.S. DOLLARS) EFFECTIVE IMMEDIATELY AND EXPIRING
ON (Expiration Date) AVAILABLE BY PAYMENT UPON PRESENTATION OF YOUR DRAFT AT
SIGHT DRAWN ON [Insert Bank Name] WHEN ACCOMPANIED BY THE FOLLOWING DOCUMENT(S):

1. THE ORIGINAL OF THIS IRREVOCABLE STANDBY LETTER OF CREDIT AND AMENDMENT(S),
IF ANY.

2. BENEFICIARY’S SIGNED STATEMENT PURPORTEDLY SIGNED BY AN AUTHORIZED
REPRESENTATIVE OF [Insert Landlord’s Name], A [Insert Entity Type] (“LANDLORD”)
STATING THE FOLLOWING:

“THE UNDERSIGNED HEREBY CERTIFIES THAT THE LANDLORD, EITHER (A) UNDER THE LEASES
(DEFINED BELOW), OR (B) AS A RESULT OF THE TERMINATION OF SUCH LEASES, HAS THE
RIGHT TO DRAW DOWN THE AMOUNT OF USD              IN ACCORDANCE WITH THE TERMS
OF THOSE CERTAIN LEASES DATED [Insert Leases

 

 

EXHIBIT F

 

-1-

  

[SAN RAFAEL CORPORATE CENTER]

[BIOMARIN PHARMACEUTICAL INC.]

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

Dates], (COLLECTIVELY, THE “LEASES”), OR SUCH AMOUNT CONSTITUTES DAMAGES OWING
BY THE TENANT UNDER SUCH LEASES TO BENEFICIARY RESULTING FROM THE BREACH OF SUCH
LEASES BY THE TENANT THEREUNDER, AND SUCH AMOUNT REMAINS UNPAID AT THE TIME OF
THIS DRAWING.”

OR

“THE UNDERSIGNED HEREBY CERTIFIES THAT WE HAVE RECEIVED A WRITTEN NOTICE OF
[Insert Bank Name]’S ELECTION NOT TO EXTEND ITS STANDBY LETTER OF CREDIT NO.
                     AND HAVE NOT RECEIVED A REPLACEMENT LETTER OF CREDIT WITHIN
AT LEAST SIXTY (60) DAYS PRIOR TO THE PRESENT EXPIRATION DATE.”

OR

“THE UNDERSIGNED HEREBY CERTIFIES THAT BENEFICIARY IS ENTITLED TO DRAW DOWN THE
FULL AMOUNT OF LETTER OF CREDIT NO.              AS THE RESULT OF THE FILING OF
A VOLUNTARY PETITION UNDER THE U.S. BANKRUPTCY CODE OR A STATE BANKRUPTCY CODE
BY THE TENANT UNDER THOSE CERTAIN LEASES DATED DECEMBER     , 2011
(COLLECTIVELY, THE “LEASES”), WHICH FILING HAS NOT BEEN DISMISSED AT THE TIME OF
THIS DRAWING.”

OR

“THE UNDERSIGNED HEREBY CERTIFIES THAT BENEFICIARY IS ENTITLED TO DRAW DOWN THE
FULL AMOUNT OF LETTER OF CREDIT NO.              AS THE RESULT OF AN INVOLUNTARY
PETITION HAVING BEEN FILED UNDER THE U.S. BANKRUPTCY CODE OR A STATE BANKRUPTCY
CODE AGAINST THE TENANT UNDER THOSE CERTAIN LEASES DATED DECEMBER     , 2011
(COLLECTIVELY, THE “LEASES”), WHICH FILING HAS NOT BEEN DISMISSED AT THE TIME OF
THIS DRAWING.”

SPECIAL CONDITIONS:

PARTIAL DRAWINGS AND MULTIPLE PRESENTATIONS MAY BE MADE UNDER THIS STANDBY
LETTER OF CREDIT, PROVIDED, HOWEVER, THAT EACH SUCH DEMAND THAT IS PAID BY US
SHALL REDUCE THE AMOUNT AVAILABLE UNDER THIS STANDBY LETTER OF CREDIT.

ALL INFORMATION REQUIRED WHETHER INDICATED BY BLANKS, BRACKETS OR OTHERWISE,
MUST BE COMPLETED AT THE TIME OF DRAWING. [Please Provide The Required Forms For
Review, And Attach As Schedules To The Letter Of Credit.]

 

 

EXHIBIT F

 

-2-

  

[SAN RAFAEL CORPORATE CENTER]

[BIOMARIN PHARMACEUTICAL INC.]

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

ALL SIGNATURES MUST BE MANUALLY EXECUTED IN ORIGINALS.

ALL BANKING CHARGES ARE FOR THE APPLICANT’S ACCOUNT.

IT IS A CONDITION OF THIS STANDBY LETTER OF CREDIT THAT IT SHALL BE DEEMED
AUTOMATICALLY EXTENDED WITHOUT AMENDMENT FOR A PERIOD OF ONE YEAR FROM THE
PRESENT OR ANY FUTURE EXPIRATION DATE, UNLESS AT LEAST SIXTY (60) DAYS PRIOR TO
THE EXPIRATION DATE WE SEND YOU NOTICE BY NATIONALLY RECOGNIZED OVERNIGHT
COURIER SERVICE THAT WE ELECT NOT TO EXTEND THIS CREDIT FOR ANY SUCH ADDITIONAL
PERIOD. SAID NOTICE WILL BE SENT TO THE ADDRESS INDICATED ABOVE, UNLESS A CHANGE
OF ADDRESS IS OTHERWISE NOTIFIED BY YOU TO US IN WRITING BY RECEIPTED MAIL OR
COURIER. ANY NOTICE TO US WILL BE DEEMED EFFECTIVE ONLY UPON ACTUAL RECEIPT BY
US AT OUR DESIGNATED OFFICE. IN NO EVENT, AND WITHOUT FURTHER NOTICE FROM
OURSELVES, SHALL THE EXPIRATION DATE BE EXTENDED BEYOND A FINAL EXPIRATION DATE
OF JUNE 30, 2022 (Expiration Date).

THIS LETTER OF CREDIT MAY BE TRANSFERRED SUCCESSIVELY IN WHOLE OR IN PART ONLY
UP TO THE THEN AVAILABLE AMOUNT IN FAVOR OF A NOMINATED TRANSFEREE
(“TRANSFEREE”), ASSUMING SUCH TRANSFER TO SUCH TRANSFEREE IS IN COMPLIANCE WITH
ALL APPLICABLE U.S. LAWS AND REGULATIONS. AT THE TIME OF TRANSFER, THE ORIGINAL
LETTER OF CREDIT AND ORIGINAL AMENDMENT(S) IF ANY, MUST BE SURRENDERED TO US
TOGETHER WITH OUR TRANSFER FORM (AVAILABLE UPON REQUEST) AND PAYMENT OF OUR
CUSTOMARY TRANSFER FEES BY APPLICANT. IN CASE OF ANY TRANSFER UNDER THIS LETTER
OF CREDIT, THE DRAFT AND ANY REQUIRED STATEMENT MUST BE EXECUTED BY THE
TRANSFEREE AND WHERE THE BENEFICIARY’S NAME APPEARS WITHIN THIS STANDBY LETTER
OF CREDIT, THE TRANSFEREE’S NAME IS AUTOMATICALLY SUBSTITUTED THEREFOR.

ALL DRAFTS REQUIRED UNDER THIS STANDBY LETTER OF CREDIT MUST BE MARKED: “DRAWN
UNDER [Insert Bank Name] STANDBY LETTER OF CREDIT NO.             .”

WE HEREBY AGREE WITH YOU THAT IF DRAFTS ARE PRESENTED TO [Insert Bank Name]
UNDER THIS LETTER OF CREDIT AT OR PRIOR TO [Insert Time – (e.g., 11:00 AM)], ON
A BUSINESS DAY, AND PROVIDED THAT SUCH DRAFTS PRESENTED CONFORM TO THE TERMS AND
CONDITIONS OF THIS LETTER OF CREDIT, PAYMENT SHALL BE INITIATED BY US IN
IMMEDIATELY AVAILABLE FUNDS BY OUR CLOSE OF BUSINESS ON THE SUCCEEDING BUSINESS
DAY. IF DRAFTS ARE PRESENTED TO [Insert Bank Name] UNDER THIS LETTER OF CREDIT
AFTER [Insert Time – (e.g., 11:00 AM)], ON A BUSINESS DAY, AND PROVIDED THAT
SUCH DRAFTS CONFORM WITH THE TERMS AND CONDITIONS OF THIS LETTER OF CREDIT,
PAYMENT SHALL BE INITIATED BY US IN IMMEDIATELY AVAILABLE FUNDS BY OUR CLOSE OF
BUSINESS ON THE SECOND SUCCEEDING BUSINESS DAY. AS USED IN THIS LETTER OF
CREDIT, “BUSINESS DAY” SHALL MEAN ANY DAY

 

 

EXHIBIT F

 

-3-

  

[SAN RAFAEL CORPORATE CENTER]

[BIOMARIN PHARMACEUTICAL INC.]

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

OTHER THAN A SATURDAY, SUNDAY OR A DAY ON WHICH BANKING INSTITUTIONS IN THE
STATE OF CALIFORNIA ARE AUTHORIZED OR REQUIRED BY LAW TO CLOSE. IF THE
EXPIRATION DATE FOR THIS LETTER OF CREDIT SHALL EVER FALL ON A DAY WHICH IS NOT
A BUSINESS DAY THEN SUCH EXPIRATION DATE SHALL AUTOMATICALLY BE EXTENDED TO THE
DATE WHICH IS THE NEXT BUSINESS DAY.

PRESENTATION OF A DRAWING UNDER THIS LETTER OF CREDIT MAY BE MADE ON OR PRIOR TO
THE THEN CURRENT EXPIRATION DATE HEREOF BY HAND DELIVERY, COURIER SERVICE,
OVERNIGHT MAIL, OR FACSIMILE. PRESENTATION BY FACSIMILE TRANSMISSION SHALL BE BY
TRANSMISSION OF THE ABOVE REQUIRED SIGHT DRAFT DRAWN ON US TOGETHER WITH THIS
LETTER OF CREDIT TO OUR FACSIMILE NUMBER, [Insert Fax Number – (    )
    -        ], ATTENTION: [Insert Appropriate Recipient], WITH TELEPHONIC
CONFIRMATION OF OUR RECEIPT OF SUCH FACSIMILE TRANSMISSION AT OUR TELEPHONE
NUMBER [Insert Telephone Number – (    )         -        ] OR TO SUCH OTHER
FACSIMILE OR TELEPHONE NUMBERS, AS TO WHICH YOU HAVE RECEIVED WRITTEN NOTICE
FROM US AS BEING THE APPLICABLE SUCH NUMBER. WE AGREE TO NOTIFY YOU IN WRITING,
BY NATIONALLY RECOGNIZED OVERNIGHT COURIER SERVICE, OF ANY CHANGE IN SUCH
DIRECTION. ANY FACSIMILE PRESENTATION PURSUANT TO THIS PARAGRAPH SHALL ALSO
STATE THEREON THAT THE ORIGINAL OF SUCH SIGHT DRAFT AND LETTER OF CREDIT ARE
BEING REMITTED, FOR DELIVERY ON THE NEXT BUSINESS DAY, TO [Insert Bank Name] AT
THE APPLICABLE ADDRESS FOR PRESENTMENT PURSUANT TO THE PARAGRAPH FOLLOWING THIS
ONE.

WE HEREBY ENGAGE WITH YOU THAT ALL DOCUMENT(S) DRAWN UNDER AND IN COMPLIANCE
WITH THE TERMS OF THIS STANDBY LETTER OF CREDIT WILL BE DULY HONORED IF DRAWN
AND PRESENTED FOR PAYMENT AT OUR OFFICE LOCATED AT [Insert Bank Name], [Insert
Bank Address], ATTN: [Insert Appropriate Recipient], ON OR BEFORE THE EXPIRATION
DATE OF THIS CREDIT, (Expiration Date).

IN THE EVENT THAT THE ORIGINAL OF THIS STANDBY LETTER OF CREDIT IS LOST, STOLEN,
MUTILATED, OR OTHERWISE DESTROYED, WE HEREBY AGREE TO ISSUE A DUPLICATE ORIGINAL
HEREOF UPON RECEIPT OF A WRITTEN REQUEST FROM YOU AND A CERTIFICATION BY YOU
(PURPORTEDLY SIGNED BY YOUR AUTHORIZED REPRESENTATIVE) OF THE LOSS, THEFT,
MUTILATION, OR OTHER DESTRUCTION OF THE ORIGINAL HEREOF.

EXCEPT SO FAR AS OTHERWISE EXPRESSLY STATED HEREIN, THIS STANDBY LETTER OF
CREDIT IS SUBJECT TO THE “INTERNATIONAL STANDBY PRACTICES” (ISP 98)
INTERNATIONAL CHAMBER OF COMMERCE (PUBLICATION NO. 590).

 

Very truly yours, (Name of Issuing Bank) By:  

 

 

 

EXHIBIT F

 

-4-

  

[SAN RAFAEL CORPORATE CENTER]

[BIOMARIN PHARMACEUTICAL INC.]

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

EXHIBIT G

SAN RAFAEL CORPORATE CENTER

RIGHT TO LEASE ADJACENT BUILDING AGREEMENT

THIS RIGHT TO LEASE ADJACENT BUILDING AGREEMENT (this “Agreement”) is made and
entered into as of December 31, 2011, by and between SR CORPORATE CENTER PHASE
TWO, LLC, a Delaware limited liability company (“Landlord”), and BIOMARIN
PHARMACEUTICAL INC., a Delaware corporation (“Tenant”).

RECITALS

 

A. Concurrently herewith, Landlord and Tenant are entering into a Lease for the
entire building located at 770 Lindaro Street (the “770 Lease”) and a Lease of
space within the building at 790 Lindaro Street (the “790 Lease”, and
collectively with the 770 Lease, the “Leases”), in San Rafael, California
(collectively the “Premises”). The Premises are located in two of the buildings
in a project known as “San Rafael Corporate Center” (the “Project”).

 

B. Landlord is the owner of property in the Project at 791 Lincoln Avenue, San
Rafael, California, which is adjacent to the Premises (the “Development Site”).

 

C. The Development Site is currently entitled for the construction of one
(1) four (4) story building consisting of approximately 83,040 square feet (the
“New Building”). In conjunction with the construction of the New Building,
Landlord intends to construct a parking garage at 788 Lincoln Avenue, San
Rafael, California for use by tenants of the Project and not the public (the
“Parking Garage”).

 

D. Landlord has completed final working drawings for the New Building, which
have been approved by the City of San Rafael and are ready to submit for
building permits (the “Existing Plans”), as described on Schedule 1 attached
hereto.

 

E. In connection with the Lease, Landlord has agreed to grant to Tenant a right
to lease the New Building to be exercise on or before December 20, 2012, as
provided in this Agreement, for a fixed period of time pursuant to the 770 Lease
and on the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the above recitals which by this reference
are incorporated herein, the mutual covenants and conditions contained herein
and other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Landlord and Tenant agree as follows:

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

1. Defined Terms.

As used in this Agreement, the following capitalized terms have the following
meanings:

Allowance: See definition in Section 9.2.10.

Approved Plans: The Final Working Drawing as approved by both Landlord and
Tenant in accordance with this Agreement.

Architect: The architect selected by Landlord and approved by Tenant (which
approval shall not be unreasonably withheld or delayed), with respect to the
Landlord’s Work.

Bidding Contractor(s): See definition in Section 7.

Building Shell: The shell of the New Building, as shown on the Existing Plans
(as the same may be modified pursuant to the process of development and approval
of the Approved Plans).

Change Order: Any changes, alterations or additions to the Approved Plans with
respect to any of Landlord’s Work (“Change Order”).

Commencement of Construction: See definition in Section 8.

Commissions: See definition in Section 9.2.9.

Construction Financing: See definition in Section 9.2.3.

Contractor: See definition in Section 7.

Customary Fees: See definition in Section 9.2.2.

Development Costs: See definition in Section 9.2.

Development Documents: means that certain Planned Development (PD-1754) Zoning
District, Master Use Permit and Development Agreement for the San Rafael
Corporate Center, dated February 17, 1998, recorded April 9, 1998, as Instrument
Number 89-023245 (as amended to date).

Development Site: See definition in Recital B.

Governmental Fees: See definition in Section 9.2.5.

Estimated Construction Schedule: See definition in Section 3.1.2.

Exclusive Right to Lease: See definition in Section 2.

Final Completion Certificate: See definition in Section 10.1.

Final Working Drawings: See definition in Section 5.2.

Force Majeure: Any prevention, delay or stoppage due to strikes, lockouts, labor
disputes, acts of God, inability to obtain services, labor, or materials or
reasonable substitutes therefor, governmental actions, civil commotions, fire or
other casualty, and other causes beyond the reasonable control of the party
obligated to perform, except with respect to the obligations imposed with regard
to charges to be paid by Tenant pursuant to this Agreement.

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

General Contract: See definition in Section 7.3.

General Contractor: The general contractor selected by Landlord and approved by
Tenant (not to be unreasonably withheld or delayed), with respect to Landlord’s
Work, the Site Improvements and the Tenant Improvements.

Governmental Review Process: See definition in Section 6.

Landlord Delay: Any of the following types of delay in the completion of
construction of the Tenant Improvements:

Any delay resulting from Landlord’s failure to furnish, in a timely manner,
information requested by Tenant or by the Architect or General Contractor in
connection with Tenant’s preparation of the Tenant’s Initial Plans, or from
Landlord’s failure to approve in a timely manner any matters requiring approval
by Landlord; or

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

No Landlord Delay shall be deemed to have occurred unless the applicable delay
continues for more than two (2) business days following written notice of the
delay from Tenant to Landlord.

Landlord Parties: See definition in Section 12.10.

Landlord’s Work: The New Building and Site Improvements as shown on the Existing
Plans, or on the Approved Plans, or which Landlord otherwise agrees to construct
or install pursuant to this Agreement by mutual agreement of Landlord and Tenant
from time to time.

New Building Commencement Date: The date that five (5) days after Landlord
delivers the Final Completion Certificate and the New Building to Tenant in the
New Building Substantial Completion Condition.

New Building Approvals means the governmental approvals Landlord covenants to
obtain pursuant to Section 6 below.

New Building Carry: See definition in Section 9.2.6.

New Building Exercise Notice: See definition in Section 4.

New Building Information: See definition in Section 3.1.

New Building Interest Notice: See definition in Section 2.1.

New Building Land: means the land contained within Tax Parcel 013-012-51.

New Building Land Value: See definition in Section 7.1.

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

New Building Lease: See definition in Section 11.1.

New Building Permit: means a permit issued by the City of San Rafael to permit
construction of the Landlord’s Work.

New Building Rent: See definition in Section 7.

New Building Return on Costs: See definition in Section 9.

New Building Substantial Completion Condition: See definition in Section 10.1.

New Building Substantial Completion Date: See definition in Section 68

New Building Term: See definition in Section 11.2.

Notice: See definition in Section 12.5.

Offsite/Impact Costs: See definition in Section 9.2.5.

Permitted Use: General executive and administrative office space, research and
development, basic biology and chemistry lab functions, laboratory use, and
ancillary fitness center and cafeteria for employees and invitees of Tenant.

Proforma Estimate: See definition in Section 3.1.1.

Project Costs: See definition in Section 9.

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

Rescission Notice: See definition in Section 6.

Restricted Changes: Any changes (i) to the location of the elevator shafts in
the New Building, (ii) that would require the removal of the piles that have
already been installed at the Development Site, and (iii) any changes of the
nature of the New Building from a first class general officer, research and
development, and laboratory space building.

Security Agreement: See definition in Section 12.10.

Security Holder: See definition in Section 12.10.

Site Improvements: The parking areas, driveways, landscaping and other
improvements to the Common Areas of the Property that are depicted on the
Existing Plans (as the same may be modified pursuant to the process of
development and approval of the Approved Plans).

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

Tenant Delay: Any of the following types of delay in the completion of
construction of the any Improvements Landlord is required to construct in
accordance with this Agreement:

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

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

Any delay of any other kind or nature caused by Tenant (or Tenant’s contractors,
agents or employees).

No Tenant Delay shall be deemed to have occurred unless the applicable delay
continues for more than two (2) business days following written notice of the
delay from Landlord to Tenant.

Tenant Improvements: The improvements to or within the New Building, other than
improvements constituting part of Landlord’s Work, to be constructed by Tenant
in the New Buiilding at Tenant’s sole cost and expense (subject to Landlord’s
contribution of the Tenant Improvement Allowance) in accordance with the terms
of the New Lease.

Tenant’s Initial Plans: Plans and specifications based on the Existing Plans to
be prepared by Tenant’s architect at Tenant’s cost depicting Tenant’s conception
of the Landlord’s Work and Tenant’s proposed modifications to the Existing
Plans, provided that the Conceptual Plans shall be stylistically consistent with
the exterior architecture of the remainder of the Project and otherwise
consistent with the Development Documents, and which shall not include and
“Restricted Changes” as defined above. Ata minimum, the Tenant’s Initial Plans
shall be complete and detailed enough, with elevations and specifications
completed to the extent required to allow for (1) design review and planning
commission review (the “Initial City Approvals”), and (2) receipt of a detailed
pricing bid for the construction of all of the Landlord’s Work shown on the
Tenant’s Initial Plans. At Tenant’s option, the Tenant’s Initial Plans may be
complete to the extent required to be Final Working Drawings.

Winning Bid: The bid of the Contractor as described in Section 7.

Work Deadlines: The target dates for performance by the applicable party of the
steps listed in the Estimated Construction Schedule.

Capitalized terms not otherwise defined in this Agreement shall have the
definitions set forth in the Lease to which this Agreement is attached as an
Exhibit (the 770 Lindaro Lease).

2. Exclusive Right to Lease. Landlord hereby grants Tenant an exclusive right to
lease the entire New Building on the terms and conditions set forth in this
Agreement (the “Exclusive Right to Lease”), during the period commencing on the
date hereof, and continuing through the final date upon which Tenant may deliver
the New Building Exercise Notice (which, subject to the terms of Section 4,
below, is scheduled to be December 20, 2012). Tenant may only lease the New
Building in its entirety.

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

2.1 Notice of Interest; Delivery Date of New Building Information. If Tenant is
interested in leasing the New Building, Tenant shall deliver written notice of
interest to Landlord, which shall include Tenant’s Initial Plans (collectively
the “New Building Interest Notice”) on or before November 15, 2012. Without in
any way limiting Tenant’s rights hereunder, Tenant shall endeavor to provide
Landlord with one or more drafts of the Tenant’s Initial Plans prior to
submitting the New Building Interest Notice, and if any such drafts are
produced, Landlord and Tenant agree to meet and discuss such drafts. The New
Building Interest Notice shall state conspicuously that it is a “NEW BUILDING
INTEREST NOTICE.” If Tenant timely delivers the New Building Interest Notice,
then, no later than December 15, 2012, Landlord shall deliver to Tenant the New
Building Information in response to the New Building Interest Notice.

3. New Building Information.

3.1 The “New Building Information” shall consist of the following.

3.1.1 Proforma Estimate. The New Building Information shall include Landlord’s
reasonable estimate of all relevant “Project Costs,” as that term is defined in
Section 9, below (the “Proforma Estimate”), for the Landlord’s Work, based on
the Tenant’s Initial Plans, which Proforma Estimate shall, at a minimum, include
the categories and be presented in the manner set forth on the form attached
hereto as Exhibit A.

3.1.2 Estimated Construction Schedule. The New Building Information shall
include Landlord’s estimated schedule for (i) the preparation of Final Working
Drawings which shall be sufficiently complete to allow subcontractors and
providers of materials to bid on the work and to obtain all applicable permits,
and to produce the construction schedule (which may be amended by Landlord from
time-to-time) (the “Estimated Construction Schedule”) (ii) completing the design
review and planning commission (and city council, if applicable) approval
process, including any approvals required pursuant to Applicable Law and the
Development Documents for the construction of the New Building and the allowance
of the Permitted Use (the “Initial Approvals”), (iii) bidding the New Building
Final Working Drawings to general contractors and subcontractors for
construction, bid validation and selection, and negotiation and execution of the
General Contract (as defined in Section 4.5), (iv) receiving all necessary
building permits and other ministerial governmental and third party approvals
required in order to commence and fully complete the Landlord’s Work, and
(v) demolishing the existing improvements, and constructing the Landlord’s Work.
The Estimated Construction Schedule shall contain the anticipated dates, as
reasonably projected by Landlord, by which the various plan preparation,
bidding, contractor selection and construction Work Deadlines for the Landlord’s
Work are expected to be achieved, as well as any time periods contemplated by
this Agreement for obtaining any required material approvals or consents by
Landlord, Tenant or other third parties, as the case may be.

4. Notice of Exercise. If Tenant desires to lease the New Building based on its
review of the New Building Information, Tenant shall deliver written notice to
Landlord approving the New Building Information and evidencing Tenant’s exercise
of its Exclusive Right to Lease (the “New Building Exercise Notice”) no later
than December 20, 2012, which date shall be extended on a day-for-day basis for
each day past December 15, 2012, Landlord

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

delivers the New Building Information to Tenant. The New Building Exercise
Notice shall state conspicuously that it is a “NEW BUILDING EXERCISE NOTICE.”
After delivery of the New Building Exercise Notice, subject to Landlord’s
compliance with its obligations and completion of the Landlord’s Work as
required hereunder and subject to all other terms and conditions of this
Agreement, Tenant shall be obligated to lease the New Building commencing on the
New Building Commencement Date, subject only to Tenant’s rescission right set
forth in Section 6 below.

5. “Pre-Construction Actions. If Tenant timely delivers the New Building
Exercise Notice, Landlord and Tenant shall work together in good faith in
connection with the following:

5.1 Architectural Agreement. Landlord shall have no obligation to prepare the
Tenant’s Initial Plans. Tenant shall, at Tenant’s option, engage Architect
pursuant to a commercially reasonable and customary architectural agreement,
reasonably approved by Landlord, to prepare the Tenant’s Initial Plans at
Tenant’s sole cost and expense. If Tenant delivers the New Building Exercise
Notice, then promptly following Tenant’s delivery of the New Building Exercise
Notice, Tenant shall assign to Landlord (without relasing Architect from its
obligations to Tenant, or waiving any rights of Tenant under such contract) all
of Tenant’s rights and obligations under its contract with the Architect
(provided that Tenant shall remain obligation to pay all amounts incurred or
applicable to work performed by Architect prior to the date of such assignment,
which amounts shall not be included within the definition of Project Costs for
the purposes of determining the new Building Rent).

5.2 New Building Final Working Drawings. Following the assignment of the
contract with the Architect from Tenant to Landlord, Landlord shall promptly and
diligently cause the Architect to modify the Tenant’s Initial Plans as required
to cause such Tenant’s Initial Plans to be final working drawings and
specification for the Landlord’s Work, including structural, fire protection,
life safety, mechanical and electrical working drawings and final architectural
drawings (collectively, “Final Working Drawings”). During the course of the
preparation of the Final Working Drawings, Architect shall receive Tenant’s
approval to any material modifications of the Tenant’s Initial Plans, and to any
and all material decisions regarding materials, finishes and specifications
required for the Final Working Drawings that were not including in the Tenant’s
Initial Plans. Landlord shall use commercially reasonable, diligent efforts to
deliver Final Working Drawings to Tenant within the time period set forth in the
Estimated Construction Schedule. No later than the applicable Work Deadline set
forth in the Estimated Construction Schedule (assuming timely delivery of plans
and drawings by Landlord), Tenant shall either approve the Final Working
Drawings or set forth in writing with particularity any changes required by
Tenant to bring the Final Working Drawings into a form which will be acceptable
to Tenant. In no event, however, shall Tenant have the right to object to any
aspect of the proposed plans and specifications or proposed Final Working
Drawings for Landlord’s Work that is necessitated by applicable laws. Failure of
Tenant to deliver to Landlord written notice of disapproval and specification of
required changes on or before the applicable Work Deadline set forth in the
Estimated Construction schedule shall contritute and be deemed to be approval of
the Final Working Drawings. Upon approval, actual or deemed, of the Final
Working Drawings by Landlord and Tenant, the Final Working Drawings shall be
deemed to be the Approved Plans.

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

5.3 Mutual Cooperation. At each stage during the process of preparing the
Tenant’s Initial Drawings and the Final Working Drawings, Landlord and Tenant
shall regularly communicate regarding the status of the design and construction
documents related thereto, and provide each other the opportunity to comment on
such documents. Without limiting any provisions of this Agreement, Tenant shall
be entitled to attend all substantial meetings between Landlord and its
Architect and General Contractor, and through such communications and meetings
Landlord shall make reasonable efforts to accommodate Tenant’s comments on the
draft design and construction documents in order to make Tenant’s approval
process set forth in Section 5.2 as efficient as possible.

6. Initial City Approvals. Following Tenant’s delivery of the New Building
Exercise Notice, the parties shall work together in good faith to submit the
Tenant’s Initial Plans for review and approval of the applicable governmental
entities for receipt of the Initial City Approvals (“Governmental Review
Process”). In the event that during the Governmental Review Process, either at
the design review stage or the planning department stage, material changes to
the Tenant’s Initial Plans or Permitted Use are required as a condition of the
Initial City Approvals, Tenant shall have the right to rescind its New Building
Exercise Notice by giving written notice of rescission (“Rescission Notice”) to
Landlord within five (5) business days following Landlord’s written notice of
such conditions to Tenant, and following such rescission the parties shall have
no further rights or obligations under this Agreement. If the Initial City
Approvals have not been obtained by September 30, 2013, then either party may
terminate this Agreement by giving written notice to the other party and
following such termination the parties shall have no further rights or
obligations under this Agreement. Tenant shall be responsible for all filing
fees and other payments to the City of San Rafael incurred in connection with
the Governmental Review Process. If this Agreement is terminated as provided in
this Section 6, Tenant shall reimburse Landlord any reasonable costs incurred by
Landlord in connection with the Governmental Review Process (provided that
Landlord shall obtain Tenant’s approval prior to incurring any such costs). For
the purposed of this Section 6, the term “material change” shall mean any change
to the submitted Tenant’s Initial Plans imposed as a condition of approval
during the Governmental Review Process which would impair Tenant’s ability to
use the New Building for the purposes for which it is intended, would increase
Tenant’s costs or expenses by more than five percent (5%), or which would
substantially impair the aesthetics or functionality of the interior portions of
the New Building as described by the submitted Tenant’s Initial Plans, each as
reasonably and in good faith determined by Tenant.

7. Selection of General Contractor; Winning Bid. Following the completion of the
Final Working Drawings, Landlord shall select three (3) qualified general
contractors, subject to Tenant’s approval, which shall not be unreasonably
withheld, or delayed (each a “Bidding Contractor,” and, collectively, the
“Bidding Contractors”), that shall bid on the construction of the Landlord’s
Work. Each of the Bidding Contractors shall submit a bid that includes (i) fees
for general conditions, profit and overhead, (ii) such Bidding Contractor’s
agreement to abide by the relevant portions of the Estimated Construction
Schedule which relate to the Bidding Contractor’s scope of work in connection
with the construction of the Landlord’s Work, and (iii) such Bidding
Contractor’s agreement to construct the Landlord’s Work in accordance with the
approved Final Working Drawings and to comply with the terms of the “General
Contract,” as that term is defined in Section 5.6, below. Landlord shall select

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the winning general contractor (the “Contractor”) from among the Bidding
Contractors that Landlord reasonably determines have submitted qualified
proposals which were consistent with the bid assumptions and directions. The bid
of the selected Contractor shall be referred to herein as the “Winning Bid”. If
the Winning Bid is more than five (5%) greater than the amount set forth in the
Proforma Estimate, Landlord and Tenant shall work cooperatively with the
Architect and Contractor to make such Change Orders as approved by Tenant in
order to reduce the cost of such work.

7.1 Selection of Major Subcontractors. Landlord shall cause the Contractor to
bid (such bidding shall take into consideration any Landlord caused Change
Orders and any Tenant caused Change Orders) each of the major trades (as
reasonably determined by Landlord) with at least three (3) qualified
subcontractors (to the extent that three (3) such qualified subcontractors are
available to perform the work in accordance with the Estimated Construction
Schedule and, if three (3) such subcontractors are not available, by at least
two (2) of such subcontractors). Landlord shall, within ten (10) business days
following the date upon which Landlord delivers such subcontractors bids to
Tenant, select the winning subcontractor for each major trade from among the
subcontractors that Landlord reasonably determines have (a) submitted qualified
bids which were consistent with the bid assumptions and directions, (b) have
committed to the Estimated Construction Schedule, and (c) will comply with
applicable terms of the General Contract.

7.2 Pre-Ordering of Long Lead-Time Items. To the extent that some items of
construction must be pre-ordered in order to allow the construction of the
Landlord’s Work or the Landlord’s Work to comply with the Estimated Construction
Schedule, Landlord may cause such items to be competitively bid, in a manner
consistent with that used for the competitive bidding of the remainder of the
Landlord’s Work, in advance of the execution of the General Contract.

7.3 Construction Contract. Landlord shall then enter into an AIA A111 or A133
(as reasonably modified by Landlord) and AIA A201 (as reasonably modified by
Landlord) construction contract (more commonly known as a “Cost of the Work Plus
a Fee with Guaranteed Maximum Price” construction contract) with the Contractor
based upon Winning Bid (the “General Contract”). Landlord shall enforce the
terms of the General Contract, in a commercially reasonable manner, with respect
to the Contractor’s obligations including, without limitation, obligations with
respect to pricing and the construction schedule. The General Contract shall
provide that any Changes Orders shall be set forth in writing.

8. Construction of Landlord’s Work. Landlord shall use commercially reasonable
and diligent efforts to meet the Work Deadlines set forth in the Estimated
Construction Schedule for completion of the Landlord’s Work. In the event Tenant
delivers a New Building Exercise Notice, then Landlord shall use commercially
reasonable and diligent efforts to commence construction of the Landlord’s Work
(i.e., demolition of the existing improvements) within thirty (30) days after
Landlord’s receipt of the applicable permits (except as otherwise set forth on
the Estimated Construction Schedule) (the “Commencement of Construction”).
Landlord shall use commercially reasonable and diligent efforts to complete
construction of the Landlord’s Work and deliver the New Building to Tenant in
the “New Building Substantial Completion Condition,” as that term is defined in
Section 10,

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below, on or before the date shown on the Estimated Construction Schedule for
substantial completion (the “New Building Substantial Completion Date”) (subject
to delays caused by Force Majeure, or other matters that were not reasonably
foreseeable to Landlord at the time that Landlord delivered the Preliminary New
Building Information Notice to Tenant or except as otherwise set forth on the
Estimated Construction Schedule). Notwithstanding any contrary provision set
forth in this Agreement, the New Building Substantial Completion Date shall be
delayed by one day for every day of delay caused by (i) Tenant Delays and
(ii) delays due to “Force Majeure,” as that term is defined in the Lease. During
construction of the Landlord’s Work, Tenant shall have the right to attend
construction meetings and inspect the progress of the work, so long as such
action does not delay the construction schedule.

9. New Building Rent. The rent payable by Tenant for the New Building (the “New
Building Rent”) shall equal, on an annual basis, (1) the “Base Rent”, which
shall initially be equal to the product of (i) the “Project Costs,” as that term
is defined below, and (ii) nine percent (9%) (the “New Building Return on
Costs”) and (2) one hundred percent (100%) of the Direct Expenses for the New
Building for the calendar year in which the New Building Commencement Date
occurs, and thereafter for each calendar year during the Lease Term, and (3) a
pro rata share of common Direct Expenses associated with the Project. The Base
Rent shall be increased on an annual basis during the Lease Term equal to 103.5%
of the Base Rent attributable to the prior year. As used herein, the term
“Project Costs” shall mean an amount equal to the sum of the amounts set forth
in Sections 9.1, 9.2 and 9.3 below. Irrespective of whether Tenant exercises the
Exclusive Right to Lease, any costs incurred by Landlord in connection with the
construction of the Landlord’s Work shall be paid by Landlord (without
reimbursement from Tenant, except for Tenant caused Change Orders which actually
increase Project Costs over the amount set forth in the approved Winning Bid),
and Tenant’s sole obligation with respect to such costs shall be to pay the New
Building Rent if Tenant delivers the New Building Exercise Notice. Any costs
reimbursed to Landlord by Tenant for Tenant caused Change Orders, or any other
costs or charges that are reimbursed by Tenant (or paid directly by Tenant)
shall be excluded from Project Costs.

9.1 New Building Land Value. A land value (“New Building Land Value”) equal to
$$4,982,400.00.

9.2 Development, Design and Construction Costs. Expressly excluding fees and
costs payable by Tenant under Sections 5.1 and/or Section 6 above, all costs,
fees and expenses reasonably incurred in connection with the design, development
and construction of the Landlord’s Work (including associated common areas,
walkways, parking, landscaping, and related improvements required to complete
Landlord’s Work), and in obtaining all permits, approvals, authorizations and
licenses required to construct the Landlord’s Work (the “Development Costs”),
including, without limitation, the following.

9.2.1 Design Fees. All architectural (including landscape architecture),
engineering, and other design consulting fees attributable solely the Landlord’s
Work.

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9.2.2 Governmental Fees. All permit fees and costs charged by the City or other
applicable governmental authorities with jurisdiction that are required to be
paid to construct a building which can be used for the Permitted Uses set forth
in the Lease to which this Agreement is attached, including such costs related
to the [amendment of the Development Agreement and related use permits], plan
check, permitting, inspecting, bonding, constructing, and utilities and services
for the Landlord’s Work (collectively, the “Customary Fees”).

9.2.3 Financing. The sum of (i) all interest and loan fees and actual costs
payable by Landlord on any construction loan or loans obtained by Landlord for
the construction of the Landlord’s Work, the terms of which have been approved
in writing by Tenant, such approval not to be unreasonably withheld or delayed
(the “Construction Financing”) to the extent incurred from the closing of the
Construction Financing until the New Building Commencement Date, and (ii) all
interest on debt financing obtained by Landlord in its acquisition of the New
Building Land and the Development Site to the extent reasonably allocable to the
New Building Land and secured by the Project and the Development Site from the
date Tenant delivers the New Building Exercise Notice until the time such
Construction Financing is obtained. Notwithstanding the foregoing, any costs
incurred by Landlord on account of late charges, penalties, default interest,
and prepayment or defeasance penalties, payments, costs or fees associated with
such financing shall be excluded from Development Costs. Landlord shall use
commercially reasonable efforts to obtain Construction Financing on terms not
less favorable than the generally prevailing terms for comparable loans, taking
into account all customary and reasonable factors, including without limitation
the appraised value of the Development Site and the Project.

9.2.4 Contractor’s Fees. All fees and charges of the Contractor as set forth in
the General Contract and approved in writing by Tenant, such approval not to be
unreasonably withheld or delayed.

9.2.5 Entitlement Fees and Offsite/Impact Costs. All fees (including zoning
fees), exactions and other expenses and costs incurred in obtaining the New
Building Entitlements (the “Entitlement Fees”), and costs of complying with
conditions of approval or mitigation requirements relating to offsite
infrastructure costs, traffic improvements, and other off-site impacts other
than any amounts attributable to the presence of hazardous materials (the
“Offsite/Impact Costs”).

9.2.6 New Building Cost Carry. The “New Building Cost Carry” shall be an amount
equal to the sum of (i) “Tax Expenses,” as that term is defined in Section 4.1.5
of the Lease to which this Agreement is attached, to the extent reasonably
allocable to the New Building Land and incurred by Landlord from the time from
the date Tenant delivers the New Building Exercise Notice until the New Building
Commencement Date, (ii) the cost of obtaining reasonable liability insurance
attributable to the New Building and incurred by Landlord from the time from the
date Tenant delivers the New Building Exercise Notice until the New Building
Commencement Date, and (iii) reasonable site maintenance and security costs, and
similar site specific expenditures incurred by Landlord from the time from the
date Tenant delivers the New Building Exercise Notice until the New Building
Commencement Date, and (iv) a nine percent (9%) per annum return to Landlord on
all Development Costs paid by Landlord (not including Development Costs paid
from the proceeds of any Construction Loan) during the period from the date
Tenant delivers the new Building Exercise Notice to the New Building
Commencement Date.

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9.2.7 Development Fee. A development fee in an amount equal to four percent
(4%) of the total Development Costs, excluding the financing costs referred to
in Section 7.2.3.

9.2.8 Consultant Costs. All reasonable costs arising from consultants reasonably
retained by Landlord in connection with the development, design, permitting and
construction of the Landlord’s Work, including, without limitation, legal,
accounting, construction and other professional and consultant fees, costs and
expenses.

9.2.9 Commissions. All real estate brokerage commissions paid by Landlord to any
broker retained by Tenant in connection with Tenant’s lease of the New Building
(the “Commissions”).

9.2.10 Tenant Improvement Allowance. An improvement allowance to be provided by
Landlord to Tenant to be used for the construction of Tenant’s improvements in
the New Building in an amount equal to $60.00 per rentable square foot of the
New Building (the “Allowance”), which Allowance shall be prorated based on the
term of the Lease for the New Building.

9.2.11 Demolition and Remediation Costs. All costs incurred to demolish and
remove the existing structures on the Development Site in compliance with all
applicable laws, as required for the construction of the Landlord’s Work and
receipt of all governmental approvals to allow for the use of the New Building
for the Permitted Use.

9.3 Parking Garage; Project Common Areas. The Project Costs shall include a
percentage of all of the applicable costs incurred for construction of the
Parking Garage, which percentage shall have a numerator equal to the rentable
square footage of the New Building, a denominator equal to the rentable area of
the entire Project. Based on the currently estimated square footage of the new
Building, such percentage is 20.901% (83,040 / 397,294).

9.4 Tenant’s Audit of Project Costs. Tenant shall have the right to review all
documentation relating to the Project Costs incurred by Landlord on an “open
book” basis. In that regard, Landlord shall make reasonably available for
Tenant’s review and copying all material invoices, applications for payment, and
other material books, records and other documentation evidencing the Project
Costs incurred by Landlord. Once Landlord has made a final determination of New
Building Rent, Landlord shall deliver such final determination to Tenant. Tenant
shall pay the New Building Rent as determined by Landlord commencing on the New
Building Commencement Date. Thereafter, if Tenant disputes the calculation of
the New Building Rent, Landlord and Tenant shall meet and attempt to reconcile
any differences regarding the determination of the New Building Rent. If
Landlord and Tenant are still unable to agree on the calculation of Project
Costs, within sixty (60) days after Tenant receives such determination by
Landlord, if so requested by Tenant, a determination as to the actual amount of
Project Costs shall be made, at Tenant’s expense (except as otherwise provided
below), by an independent construction management firm (as applicable, the
“Project Costs Accountant”) selected by the parties. If Landlord and Tenant are
unable to agree on the Project Costs Accountant, then the parties shall apply to
JAMS, Inc., for appointment of the

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Project Costs Accountant. If the Project Costs Accountant determines that the
Project Costs were equal to an amount which is different than the Project Costs
amount determined by Landlord, then Landlord and Tenant shall, within thirty
(30) days following such determination by the Project Costs Accountant,
reconcile the amount of New Building Rent that has already been paid by Tenant,
if any, with the amount of New Building Rent which should have been paid by
Tenant, if any, and the Project Costs determined by the Project Costs Accountant
shall be used, thereafter, to calculate New Building Rent. If the New Building
Rent as calculated by the Project Costs Accountant is less than the New Building
Rent calculated by Landlord, Landlord shall reimburse Tenant for the costs of
the Project Costs Accountant.

10. Completion.

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

10.2 At any time within forty-five (45) days after delivery of the Final
Completion Certificate, Tenant shall be entitled to submit one or more lists to
Landlord specifying Punch List Work to be performed on the applicable
Improvements constituting Landlord’s Work, and upon receipt of such list(s),
Landlord shall diligently complete such Punch List Work at Landlord’s sole
expense (which costs shall be included in Project Costs). Promptly after
Landlord provides Tenant with the Final Completion Certificate, Landlord shall
cause the recordation of a Notice of Completion (as defined in Section 3093 of
the California Civil Code) with respect to Landlord’s Work.

11. New Lease.

11.1 In General. If Tenant timely exercises Tenant’s Exclusive Right to Lease
the New Building as set forth herein, Landlord and Tenant shall promptly
thereafter negotiate in good faith and execute a new lease in connection with
Tenant’s lease of the New Building (the “New Building Lease”). The New Building
Lease shall be in substantially the same form as the 770 Lease, provided that
(a) such form shall be modified to incorporate the terms and conditions
contained in this Section 11, (b) both the New Building Lease and the 770 Lease
shall contain cross-default provisions providing that a default under either of
the leases shall constitute a default under the other lease, and (c) such New
Building Lease shall not include any provisions in the 770 Lease which by their
terms are clearly not applicable to the New Building Lease. The New Building
Lease shall (1) require Tenant to deliver to Landlord a Letter of Credit,
concurrently with the execution of the New Building Lease, in the initial amount
of Three Million Two Hundred Fifty Thousand Dollars ($3,250,000.00) to be held
by

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Landlord on terms comparable to those in Article 21 of the Lease (provided that
the reductions in the amount of the Letter of Credit shall be proportional to
the reductions in the letter of credit held under the Lease, and shall commence
after the first (1st) year of the New Building Lease), and (2) shall provide
rights to renew the lease term similar to the rights provided in the 770 Lease.
In the event that despite their good faith efforts Landlord and Tenant fail to
fully agree upon and execute and deliver the New Building Lease within sixty
(60) days after Tenant’s delivery of the New Building Exercise Notice, then
Landlord and Tenant shall submit any remaining unresolved points to binding
arbitration using JAMS, with the instruction that the arbitrator determine a
customary market compromise provision with respect to each unresolved point.
Landlord shall have no obligation to commence construction of the Landlord’s
Work until the New Building Lease is fully executed and delivered, subject only
to the rescission right provided in Section 4, above.

11.2 Term. Tenant shall commence payment of Rent for the New Building, and the
term of the New Building Lease (the “New Building Term”) shall commence, on the
New Building Commencement Date and shall continue for a period of ten
(10) years, subject to the terms of the New Building Lease.

11.3 Termination of Exclusive Right to Lease. The Exclusive Right to Lease
contained in this Agreement shall be personal to the named Tenant or an
Affiliate Assignee, as defined in the 770 Lease. Tenant shall not have the
option to lease the New Building, as provided in this Agreement, if, as of the
date of the attempted exercise of such right, Tenant is in default under the 770
Lease (beyond any applicable notice and cure periods).

12. Miscellaneous.

12.1 Entire Agreement. This Agreement and the attached exhibits, which are
hereby incorporated into and made a part of this Agreement, set forth the entire
agreement between the parties with respect to the matters set forth herein.
There have been no additional oral or written representations or agreements.

12.2 Not An Offer. Submission of this Agreement by Landlord is not an offer to
enter into this Agreement but rather is a solicitation for such an offer by
Tenant. Neither Landlord nor Tenant shall be bound by this Agreement until both
Landlord and Tenant have executed and delivered this Agreement and the 770 Lease
to the other. This Agreement may be executed in counterparts, each of which
shall be deemed a part of an original and all of which together shall constitute
one (1) agreement. Signature pages may be detached from the counterparts and
attached to a single copy of this Agreement to form one (1) document.

12.3 Brokers. Tenant shall indemnify and hold Landlord, its trustees, members,
principals, beneficiaries, partners, officers, directors, employees,
mortgagee(s) and agents, and the respective principals and members of any such
agents harmless from all claims of any brokers claiming to have represented
Tenant in connection with this Agreement other than the Brokers. Landlord will
pay the Brokers commission due in connection with the Lease of the New Building,
if any, pursuant to a separate agreement. Landlord shall indemnify and hold
Tenant, its trustees, members, principals, beneficiaries, partners, officers,
directors, employees, and agents, and the respective principals and members of
any such agents harmless

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from all claims of any brokers claiming to have represented Landlord in
connection with this Agreement. Tenant acknowledges that any assistance rendered
by any agent or employee of any affiliate of Landlord in connection with this
Agreement has been made as an accommodation to Tenant solely in furtherance of
consummating the transaction on behalf of Landlord, and not as agent for Tenant.

12.4 Authority. Each party hereby represents hereby that the signatory signing
on its behalf has the authority to execute and deliver the same on its behalf.

12.5 Notices. No notice, demand, statement, designation, request, consent,
approval, election or other communication given hereunder (“Notice”) shall be
binding upon either party unless (a) it is in writing; (b) it is (i) sent by
certified or registered mail, postage prepaid, return receipt requested,
(ii) delivered by a nationally recognized courier service, or (iii) delivered
personally; and (c) it is sent or delivered to the address set forth below, as
applicable, or to such other place (other than a P.O. box) as the recipient may
from time to time designate in a Notice to the other party. Any Notice shall be
deemed received on the earlier of the date of actual delivery or the date on
which delivery is refused, or, if Tenant is the recipient and has vacated its
notice address without providing a new notice address, three (3) days after the
date the Notice is deposited in the U.S. mail or with a courier service as
described above. Landlord’s and Tenant’s initial notice addresses are as set
forth in the Lease.

12.6 Representations and Warranties. Tenant and Landlord each hereby represents,
warrants and covenants that (a) such party is duly organized, validly existing
and in good standing under the laws of the state of its formation and qualified
to do business in the state of California; and (b) neither such party’s
execution of nor its performance under this Agreement will cause it to be in
violation of any agreement or law.

Each party shall take any actions that may be required to comply with the terms
of the USA Patriot Act of 2001, as amended, any regulations promulgated under
the foregoing law, Executive Order No. 13224 on Terrorist Financing, any
sanctions program administrated by the U.S. Department of Treasury’s Office of
Foreign Asset Control or Financial Crimes Enforcement Network, or any other
laws, regulations or executive orders designed to combat terrorism or money
laundering, if applicable, to this Agreement. Each party represents and warrants
to the other party that it is not an entity named on the List of Specially
Designated Nationals and Blocked Persons maintained by the U.S. Department of
Treasury, as last updated prior to the date of this Agreement.

12.7 Attorney’s Fees. In any action or proceeding between the parties, including
any appellate or alternative dispute resolution proceeding, the prevailing party
may recover from the other party all of its costs and expenses in connection
therewith, including reasonable attorneys’ fees and costs.

12.8 Waiver of Jury Trial. This Agreement shall be construed and enforced in
accordance with the laws of the State of California. THE PARTIES WAIVE, TO THE
FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY LITIGATION
ARISING OUT OF OR RELATING TO THIS AGREEMENT.

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12.9 Severability; Time is of the Essence. If any provision hereof is void or
unenforceable, no other provision shall be affected. If Tenant is comprised of
two or more parties, their obligations shall be joint and several. Time is of
the essence with respect to the performance of every provision hereof in which
time of performance is a factor.

12.10 Security Holders. Notwithstanding any contrary provision hereof, (a) the
liability of the Landlord, its Security Holders (defined below), Landlord’s
managing agent(s), their (direct or indirect) owners, and the beneficiaries,
trustees, officers, directors, employees and agents of each of the foregoing
(including Landlord, the “Landlord Parties”) to Tenant shall be limited to an
amount equal to Landlord’s interest in the Project; (b) no Landlord Party shall
have any personal liability for any judgment or deficiency, and Tenant waives
and releases such personal liability on behalf of itself and all parties
claiming by, through or under Tenant; and (c) no Landlord Party shall be liable
for any injury or damage to, or interference with, Tenant’s business, including
loss of profits, loss of rents or other revenues, loss of business opportunity,
loss of goodwill or loss of use, or for any form of special or consequential
damage. Conditioned upon Tenant’s receipt of a reasonable and customary
non-disturbance agreement, this Agreement shall be subject and subordinate to
all existing and future ground or underlying leases, mortgages, trust deeds and
other encumbrances against the Project, all renewals, extensions, modifications,
consolidations and replacements thereof (each, a “Security Agreement”), and all
advances made upon the security of such mortgages or trust deeds, unless in each
case the holder of such Security Agreement (each, a “Security Holder”) requires
in writing that this Agreement be superior thereto. Upon any termination or
foreclosure (or any delivery of a deed in lieu of foreclosure) of any Security
Agreement, Tenant, upon request, shall attorn, without deduction or set-off, to
the Security Holder or purchaser or any successor thereto and shall recognize
such party as the “Landlord” hereunder. Within 10 business days after written
request by Landlord, Tenant shall execute such further instruments as Landlord
may reasonably deem necessary to evidence the subordination or superiority of
this Agreement to any Security Agreement. Within 10 business days after
Landlord’s written request, Tenant shall execute and deliver to Landlord a
commercially reasonable estoppel certificate in favor of such parties as
Landlord may reasonably designate, including current and prospective Security
Holders and prospective purchasers.

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

 

LANDLORD:     TENANT:           SR CORPORATE CENTER PHASE TWO, LLC,
a Delaware limited liability company     BIOMARIN PHARMACEUTICAL INC.,
a Delaware corporation By:   Seagate SR Corporate Center, LLC,
a California limited liability company                 By:   Seagate Second
Street, LLC,     By:         a California limited liability company     Name:  
        Its:  

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  By:   Seagate Lindaro, LLC,
a California limited liability company                     By:         By:      
    Willis K. Polite Jr.     Name:     Its:     Managing Member     Its:        
     

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EXHIBIT H

SAN RAFAEL CORPORATE CENTER

[VISITOR PARKING DIAGRAM]

 

 

 

-1-

  

[SAN RAFAEL CORPORATE CENTER]

[BIOMARIN PHARMACEUTICAL INC.]

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EXHIBIT I

SAN RAFAEL CORPORATE CENTER

[DIAGRAM OF ROOFTOP AREA FOR ANTENNA]

 

 

 

-1-

  

[SAN RAFAEL CORPORATE CENTER]

[BIOMARIN PHARMACEUTICAL INC.]

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EXHIBIT J

SAN RAFAEL CORPORATE CENTER

[DIAGRAMS OF EMERGENCY GENERATOR AREA AND GENERATOR FUEL PAD]

 

 

 

-1-

  

[SAN RAFAEL CORPORATE CENTER]

[BIOMARIN PHARMACEUTICAL INC.]