Exhibit 10.1


 


	
  Purchase
  Agreement

  	
   

  	
  6138-6150 Nancy Ridge Drive

  



 


 


PURCHASE AND SALE AGREEMENT


 


AND JOINT ESCROW INSTRUCTIONS


 


December 22, 2003


 


BY AND BETWEEN


 


ARE – NANCY RIDGE NO. 3, LLC,

a Delaware limited liability company

“Buyer”


 


AND


 


ARENA
PHARMACEUTICALS, INC.,


a Delaware corporation

“Seller”


 


1

















 


	
  1

  	
  AGREEMENT TO PURCHASE AND SELL

  	
   

  
	
   

  	
   

  	
   

  
	
  2

  	
  PURCHASE PRICE

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Deposit

  	
   

  
	
   

  	
  2.2

  	
  Balance

  	
   

  
	
   

  	
  2.3

  	
  Allocation of Purchase Price

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3

  	
  DUE DILIGENCE

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  3.1

  	
  Property Documents

  	
   

  
	
   

  	
  3.2

  	
  Investigations

  	
   

  
	
   

  	
  3.3

  	
  Intentionally Deleted

  	
   

  
	
   

  	
  3.4

  	
  CC&Rs

  	
   

  
	
   

  	
  3.5

  	
  Property Questionnaire

  	
   

  
	
   

  	
  3.6

  	
  Termination Right

  	
   

  
	
   

  	
  3.7

  	
  Insurance

  	
   

  
	
   

  	
  3.8

  	
  Indemnity and Repair

  	
   

  
	
   

  	
  3.9

  	
  Title

  	
   

  	
   

  
	
   

  	
   

  	
  3.9.1

  	
  Deliveries by Seller

  	
   

  
	
   

  	
   

  	
  3.9.2

  	
  Buyer’s Review of Title

  	
   

  
	
   

  	
   

  	
  3.9.3

  	
  Seller’s Obligations Regarding Title

  	
   

  
	
   

  	
   

  	
  3.9.4

  	
  Condition of Title at Closing

  	
   

  
	
   

  	
   

  	
  3.9.5

  	
  Return of Documents

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4

  	
  SELLER’S REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  4.1

  	
  Authority

  	
   

  
	
   

  	
  4.2

  	
  No
  Conflicts

  	
   

  
	
   

  	
  4.3

  	
  Preferential Rights

  	
   

  
	
   

  	
  4.4

  	
  Property
  Documents

  	
   

  
	
   

  	
  4.5

  	
  Possession

  	
   

  
	
   

  	
  4.6

  	
  Construction

  	
   

  
	
   

  	
  4.7

  	
  Material Information

  	
   

  
	
   

  	
  4.8

  	
  Special Assessments or Condemnation

  	
   

  
	
   

  	
  4.9

  	
  Utilities

  	
   

  
	
   

  	
  4.10

  	
  Service Contracts

  	
   

  
	
   

  	
  4.11

  	
  Bankruptcy

  	
   

  
	
   

  	
  4.12

  	
  Insurance

  	
   

  
	
   

  	
  4.13

  	
  Litigation

  	
   

  
	
   

  	
  4.14

  	
  Compliance with Laws

  	
   

  
	
   

  	
  4.15

  	
  Environmental Materials

  	
   

  
	
   

  	
   

  	
  4.15.1

  	
  Definitions

  	
   

  
	
   

  	
   

  	
  4.15.2

  	
  Representations and Warranties

  	
   

  
	
   

  	
   

  	
  4.15.3

  	
  Indemnification

  	
   

  
	
   

  	
  4.16

  	
  Survival

  	
   

  
	
   

  	
  4.17

  	
  Seller’s Knowledge

  	
   

  



 


i

















 


	
   

  	
  4.19

  	
  As-Is

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5

  	
  BUYER’S REPRESENTATIONS AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  5.1

  	
  No
  Conflicts

  	
   

  
	
   

  	
  5.2

  	
  Consents

  	
   

  
	
   

  	
  5.3

  	
  Buyer’s Authority; Validity of Agreements

  	
   

  
	
   

  	
  5.4

  	
  Bankruptcy

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6

  	
  COVENANTS OF SELLER

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  6.1

  	
  Title

  	
   

  
	
   

  	
  6.2

  	
  Notice of Change in Circumstances

  	
   

  
	
   

  	
  6.3

  	
  No Defaults; Maintenance of Property

  	
   

  
	
   

  	
  6.4

  	
  Exclusive Negotiations

  	
   

  
	
   

  	
  6.5

  	
  Development Activities

  	
   

  
	
   

  	
  6.6

  	
  Service,
  Management and Employment Contracts

  	
   

  
	
   

  	
  6.7

  	
  Leases

  	
   

  
	
   

  	
  6.8

  	
  Insurance

  	
   

  
	
   

  	
  6.9

  	
  Litigation

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7

  	
  CONDITIONS PRECEDENT TO CLOSING

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  Buyer’s Conditions

  	
   

  
	
   

  	
   

  	
  7.1.1

  	
  Title

  	
   

  
	
   

  	
   

  	
  7.1.2

  	
  Seller’s Due Performance

  	
   

  
	
   

  	
   

  	
  7.1.3

  	
  Condition of Property

  	
   

  
	
   

  	
   

  	
  7.1.4

  	
  Bankruptcy

  	
   

  
	
   

  	
   

  	
  7.1.5

  	
  Estoppel Certificates

  	
   

  
	
   

  	
   

  	
  7.1.6

  	
  Property Questionnaire

  	
   

  
	
   

  	
   

  	
  7.1.7

  	
  No
  Moratoria

  	
   

  
	
   

  	
   

  	
  7.1.8

  	
  Repeat
  Representations, Warranties and Agreements

  	
   

  
	
   

  	
  7.2

  	
  Failure of Buyer’s Conditions

  	
   

  
	
   

  	
   

  	
  7.2.1

  	
  Waive
  and Close

  	
   

  
	
   

  	
   

  	
  7.2.2

  	
  Terminate

  	
   

  
	
   

  	
  7.3

  	
  Seller’s Conditions

  	
   

  
	
   

  	
   

  	
  7.3.1

  	
  Buyer’s Due Performance

  	
   

  
	
   

  	
   

  	
  7.3.2

  	
  Repeat Representations, Warranties and
  Agreements

  	
   

  
	
   

  	
   

  	
  7.3.3

  	
  Bankruptcy

  	
   

  
	
   

  	
  7.4

  	
  Failure of Seller’s Conditions

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8

  	
  CLOSING

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  8.1

  	
  Closing
  Date

  	
   

  
	
   

  	
  8.2

  	
  Closing
  Costs

  	
   

  



 


ii

















 


	
  9

  	
  CLOSING DELIVERIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.1

  	
  Deliveries by Seller to Escrow

  	
   

  
	
   

  	
   

  	
  9.1.1

  	
  Deed

  	
   

  
	
   

  	
   

  	
  9.1.2

  	
  Non-foreign Affidavit

  	
   

  
	
   

  	
   

  	
  9.1.3

  	
  California FTB Form 597-W

  	
   

  
	
   

  	
   

  	
  9.1.4

  	
  Lease

  	
   

  
	
   

  	
   

  	
  9.1.5

  	
  Bill of Sale and Assignment

  	
   

  
	
   

  	
   

  	
  9.1.6

  	
  Seller’s Certificate

  	
   

  
	
   

  	
   

  	
  9.1.7

  	
  Memorandum of Lease and Purchase Option

  	
   

  
	
   

  	
   

  	
  9.1.8

  	
  Proof of Authority

  	
   

  
	
   

  	
   

  	
  9.1.9

  	
  Other

  	
   

  
	
   

  	
  9.2

  	
  Deliveries by Buyer

  	
   

  
	
   

  	
   

  	
  9.2.1

  	
  Balance,
  Prorations & Closing Costs

  	
   

  
	
   

  	
   

  	
  9.2.2

  	
  Lease

  	
   

  
	
   

  	
   

  	
  9.2.3

  	
  Buyer’s Certificate

  	
   

  
	
   

  	
   

  	
  9.2.4

  	
  Proof
  of Authority

  	
   

  
	
   

  	
   

  	
  9.2.5

  	
  Memorandum
  of Lease and Purchase Option

  	
   

  
	
   

  	
   

  	
  9.2.6

  	
  Other

  	
   

  
	
   

  	
  9.3

  	
  Deliveries Outside of Escrow

  	
   

  
	
   

  	
   

  	
  9.3.1

  	
  Intangible Property

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10

  	
  PRORATIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  10.1.1

  	
  Expenses

  	
   

  
	
   

  	
   

  	
  10.1.2

  	
  Adjustments
  Closing Statement

  	
   

  
	
   

  	
   

  	
  10.1.3

  	
  Generally

  	
   

  
	
   

  	
  10.2

  	
  Preliminary Closing Statement

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11

  	
  ESCROW

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  11.1

  	
  Opening of Escrow

  	
   

  
	
   

  	
  11.2

  	
  Escrow Instructions

  	
   

  
	
   

  	
  11.3

  	
  Actions by Escrow Agent

  	
   

  
	
   

  	
   

  	
  11.3.1

  	
  Recording

  	
   

  
	
   

  	
   

  	
  11.3.2

  	
  Funds

  	
   

  
	
   

  	
   

  	
  11.3.3

  	
  Owner’s Title Policy

  	
   

  
	
   

  	
   

  	
  11.3.4

  	
  Delivery of Documents

  	
   

  
	
   

  	
  11.4

  	
  Conflicting Demands

  	
   

  
	
   

  	
  11.5

  	
  Real Estate Reporting Person

  	
   

  
	
   

  	
  11.6

  	
  Destruction of Documents; Survival

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  12

  	
  RISK
  OF LOSS

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  12.1

  	
  Condemnation

  	
   

  
	
   

  	
  12.2

  	
  Casualty

  	
   

  



 


iii

















 


	
  13

  	
  DEFAULT

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  13.1

  	
  Default by Buyer

  	
   

  
	
   

  	
  13.2

  	
  Default by Seller

  	
   

  
	
   

  	
   

  	
  13.2.1

  	
  Specific Performance

  	
   

  
	
   

  	
   

  	
  13.2.2

  	
  Actual
  Damages

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14

  	
  BROKERS

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  15

  	
  CONFIDENTIALITY

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  15.1

  	
  Buyer

  	
   

  
	
   

  	
  15.2

  	
  Seller

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  16

  	
  INDEMNIFICATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  17

  	
  MISCELLANEOUS PROVISIONS

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  17.1

  	
  Governing
  Law

  	
   

  
	
   

  	
  17.2

  	
  Entire Agreement

  	
   

  
	
   

  	
  17.3

  	
  Modifications; Waiver

  	
   

  
	
   

  	
  17.4

  	
  Notices

  	
   

  
	
   

  	
  17.5

  	
  Expenses

  	
   

  
	
   

  	
  17.6

  	
  Assignment

  	
   

  
	
   

  	
   

  	
  17.6.1

  	
  Seller’s Right to Assign

  	
   

  
	
   

  	
   

  	
  17.6.2

  	
  Buyer’s Right to Assign

  	
   

  
	
   

  	
  17.7

  	
  Severability

  	
   

  
	
   

  	
  17.8

  	
  Successors and Assigns; Third Parties

  	
   

  
	
   

  	
  17.9

  	
  Counterparts

  	
   

  
	
   

  	
  17.10

  	
  Headings

  	
   

  
	
   

  	
  17.11

  	
  Time of the Essence

  	
   

  
	
   

  	
  17.12

  	
  Further Assistance

  	
   

  
	
   

  	
  17.13

  	
  Number and Gender

  	
   

  
	
   

  	
  17.14

  	
  Construction

  	
   

  
	
   

  	
  17.15

  	
  Post-Closing
  Access to Records

  	
   

  
	
   

  	
  17.16

  	
  Exhibits

  	
   

  
	
   

  	
  17.17

  	
  Attorneys’
  Fees

  	
   

  
	
   

  	
  17.18

  	
  Business
  Days

  	
   

  
	
   

  	
  17.19

  	
  Tax-Free Exchange

  	
   

  



 


iv

















 


PURCHASE AND SALE AGREEMENT

AND JOINT ESCROW INSTRUCTIONS


 


THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW
INSTRUCTIONS (this “Agreement”)
is made and entered into as of December 22, 2003 (“Execution Date”), by and
between ARE
– NANCY RIDGE NO. 3, LLC,
a Delaware limited liability (“Buyer”),
and ARENA PHARMACEUTICALS, INC., a
Delaware corporation (“Seller”),
for the purposes of setting forth the agreement of the parties and of
instructing CHICAGO TITLE INSURANCE COMPANY
(“Escrow Agent”), with respect to
the transactions contemplated by this Agreement.


 


RECITALS


 


Upon and
subject to the terms and conditions set forth in this Agreement, Seller desires
to sell and Buyer desires to purchase the following (collectively, the “Property”):


 


(i)            the
fee interest in that certain real property commonly known as 6138-6150 Nancy
Ridge Drive, located in the City and County of San Diego, State of California,
as legally described on Exhibit A attached hereto, together with all of
Seller’s rights, privileges and easements appurtenant thereto or used in
connection therewith, including, without limitation, all minerals, oil, gas and
other hydrocarbon substances thereon, all development rights, air rights,
water, water rights and water stock relating thereto, all strips and gores, and
all of Seller’s right, title and interest in and to any streets, alleys,
easements, rights-of-way, public ways, or other rights appurtenant, adjacent or
connected thereto or used in connection with the land legally described on Exhibit
A attached hereto (collectively, the “Land”);


 


(ii)           all
buildings, improvements, structures and fixtures now or hereafter included or
located on or in the Land (collectively, the “Improvements”),
and all real property fixtures,
built-in machinery and equipment, built-in casework and cabinets and other
similar additions and improvements built into the Premises so as to become an
integral part of the Premises, including without limitation, the items
described on Exhibit B attached hereto, now or hereafter owned by
Seller and located on or about the Land or the Improvements or attached thereto
(collectively, the “Fixtures”), excluding the power generator, security
system, the waste storage building located west of the buildings on the Land
and Seller’s moveable personal property (provided that none of the items on Exhibit
B shall be deemed Seller’s personal property)and all heating, air
conditioning or mechanical systems and facilities used to provide any utility
services, refrigeration, ventilation, waste disposal or other utility services
now or hereafter located on or in the Land or the Improvements (the Land and
the Improvements are sometimes hereinafter collectively referred to as the “Real Property”); and


 


(iii)          architectural,
site, landscaping or other permits specifically relating to the Real Property,
applications, approvals, authorizations and other entitlements, transferable
guarantees and warranties covering the Land and/or Improvements, books,
records, reports, test results, environmental assessments, as-built plans, specifications
and other


 


2

















 


similar
documents and materials specifically relating to the Real Property or the
construction or fabrication thereof (collectively, the “Intangible Property”).


 


NOW, THEREFORE, in
consideration of the foregoing Recitals which are incorporated herein by this
reference, the mutual covenants contained in this Agreement and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Buyer and Seller hereby agree, and instruct Escrow Agent, as
follows:


 


1              AGREEMENT TO PURCHASE AND SELL.


 


Subject to all
of the terms and conditions of this Agreement, Seller agrees to sell, transfer
and convey to Buyer, and Buyer agrees to acquire and purchase from Seller, the
Property upon the terms and conditions set forth herein.


 


2              PURCHASE PRICE.


 


The purchase
price for the Property (the “Purchase Price”)
shall be the sum of $13,000,000.00, payable in cash as follows:


 


2.1          Deposit.  Not later than the
date which is 3 Business Days (as hereinafter defined) after the Execution
Date, Buyer shall deposit into Escrow the sum of $250,000.00 (which amount,
together with any and all interest and dividends accrued thereon, shall
hereinafter be referred to as the “Deposit”).


 


Escrow Agent shall deposit the Deposit in a non-commingled trust
account and shall invest the Deposit in insured money market accounts,
certificates of deposit, United States Treasury Bills or such other instruments
as Buyer may instruct from time to time. 
In the event of the consummation of the purchase and sale of the
Property as contemplated hereunder, the Deposit shall be paid to Seller at the
Closing (as defined in Section 8 below) and credited against the
Purchase Price.  In the event the sale
of the Property is not consummated because of the termination of this Agreement
by Buyer in accordance with any right to so terminate provided herein, or the
failure of any Buyer’s Conditions Precedent (hereinafter defined), Buyer shall
notify Escrow Agent in writing of the same, and the Deposit shall be
immediately returned to Buyer.  In the
event the sale of the Property is not consummated because of a default of Buyer
(as more particularly described in Section 13.1) the Deposit shall be
immediately paid to Seller.


 


2.2          Balance.  On the Closing Date
(as defined below), Buyer shall pay to Seller the balance of the Purchase Price
over and above the Deposit paid by Buyer under Section 2.1 above, by
wire transfer of federal funds to Escrow Agent, net of all prorations and
adjustments as provided herein.


 


2.3          Allocation
of Purchase Price.  Buyer and Seller hereby agree to allocate
the Purchase Price among the Property for all tax and non-tax purposes in
accordance with Exhibit C attached hereto (the “Allocation Schedule”).  Buyer and Seller hereby agree that the
Allocation Schedule shall be prepared in a manner consistent with the rules
prescribed under Section 1060 of the Internal Revenue Code of 1986, as amended
(the “Code”).  Buyer and Seller hereby each (a) agree to
utilize the amounts allocated pursuant to the Allocation Schedule in filing all
tax returns (including any amended tax returns) and (b)


 


3

















 


agree not to take any position on or in connection with any such tax
return or otherwise that is inconsistent with such allocation.


 


3              DUE DILIGENCE


 


3.1          Property
Documents.  Not later than the Execution Date, Seller
shall, at Seller’s sole cost and expense, deliver or make available to Buyer
(to the extent not already delivered or made available), to the extent such
items are in Seller’s possession or control or in the possession or control of
Seller’s agents, auditors, independent contractors or representatives, copies
of all agreements, contracts, documents, information, reports, books, records
and other materials pertinent to the ownership, operation, occupancy, use, or
management of the Property which would be considered material by a prudent
buyer of commercial real estate in a transaction similar to the one
contemplated by this Agreement, and all certifications, approvals, consents,
authorizations, licenses, permits, easements, rights of way, and all valid,
final and unconditional certificates of occupancy, or the equivalent permitting
required by the applicable licensing agency, or required by any governmental
authority in connection with the ownership, development, use and maintenance of
the Property, including the items described in Exhibit D attached hereto
(the “Property Documents”).


 


3.2          Investigations. 
At all reasonable times from the mutual execution of the Letter of
Intent dated as of October 10, 2003 between Buyer and Seller (“Letter of
Intent”)  until the Closing
or earlier termination of this Agreement and upon reasonable notice to Seller,
Buyer, its agents and representatives shall, during normal business hours, be
entitled at Buyer’s sole cost and expense to (i) enter onto the Property to
perform any inspections, investigations, studies and tests of the Property,
including, without limitation, physical, structural, mechanical, architectural,
engineering, soils, geotechnical and environmental/asbestos tests that Buyer
deems reasonable upon notice to Seller; (ii) cause an environmental assessment
of the Property to be performed; (iii) review all Property Documents and
examine and copy any and all other books and records in the possession or
control of Seller or its agents relating to the Property (including, without
limitation, all documents relating to utilities, zoning, and the access,
subdivision and appraisal of the Property); and (iv) interview Seller’s senior
management regarding the Property and Seller’s finances;  provided, however, that Buyer
shall have no right to examine any of the following documents and materials
which may be in Seller’s possession (collectively,
the “Excluded  Materials”): (i) financial analyses
generated by or made on behalf of Seller; (ii) offers to sell or purchase,
or (iii) any documents which are protected by the attorney-client and/or
attorney work product privileges. 
Notwithstanding the foregoing,
Buyer shall not be permitted to undertake any intrusive or destructive testing
of the Property, including without limitation a “Phase II” environmental
assessment, without in each instance first obtaining Seller’s written consent
thereto, which consent Seller shall not unreasonably withhold or delay.  In conducting any inspections, tests or
studies, Buyer and its authorized agents and representatives shall:
(a) not unreasonably interfere with the operation, use and maintenance of
the Property or unreasonably disturb any business of Seller, (b) provide Seller
with the opportunity to be present at all entries onto the Property,
(c) not damage any part of the Property without repairing such damage upon
completion, (d) not injure or otherwise cause bodily harm to Seller or any
of its


 


4

















 


respective agents, contractors and employees
or any other third party, (e) not permit any liens to attach to the
Property by reason of the exercise of their rights under this Section,
(f) fully restore the Property to substantially the same condition in
which the same was found before, and to the extent any change resulted from,
any such inspections, tests or studies were undertaken, and (g) not reveal
or disclose any information obtained prior to the Close of Escrow concerning
the Property to anyone outside Buyer’s organization, except as may otherwise be
required by law and other than Buyer’s outside counsel, accounting firm, other
professional advisors and consultants, and prospective lenders and investors,
and their attorneys and other professional advisors all of whom who, in Buyer’s
reasonable judgment, need to know such information for evaluating a possible
purchase of the Property and all of whom shall be advised and have agreed to
keep such information strictly confidential.  The provisions of the Section 3.2
shall survive the termination of this Agreement.


 


3.3          Intentionally
Deleted.


 


3.4          CC&Rs. 
Buyer may conduct such inquiries and investigations of any and all
declarants or associations created by any covenants, conditions or restrictions
encumbering the Property (“CC&Rs”)
as Buyer, in its sole discretion, deems advisable or necessary.  Not later than the Due Diligence Termination
Date, Seller shall deliver to Buyer an estoppel certificate, in the form
attached hereto as Exhibit E, executed by each declarant or association
under any CC&Rs (collectively, the “CC&Rs
Estoppels”).


 


3.5          Property
Questionnaire.  Seller shall deliver to Buyer a property
questionnaire in the form attached hereto as Exhibit F (the “Property Questionnaire”) completed by
Seller, no later than 6 Business Days prior to expiration of the Due Diligence
Termination Date.  Buyer shall have 5
Business Days after receipt to notify Seller whether the Property Questionnaire
has been completed to Buyer’s reasonable satisfaction.  The Property Questionnaire shall be deemed
to have been completed to the Buyer’s satisfaction if Buyer has not terminated
this Agreement under Section 3.6.


 


3.6          Termination
Right.  Buyer shall have the right at any time on or
before 5:00 p.m. (Los Angeles, California time) on December 19, 2003 (the “Due Diligence Termination Date”) to
terminate this Agreement if, during the course of Buyer’s due diligence investigations
of the Property, Buyer determines in its sole and absolute discretion that the
Property is not acceptable to Buyer. 
Buyer may exercise such termination right by delivering written notice
of termination to Seller and Escrow Agent (a “Due
Diligence Termination Notice”) on or before the Due Diligence
Termination Date.  Upon the timely
delivery of such Due Diligence Termination Notice, (i) Escrow Agent shall
immediately return the Deposit to Buyer, (ii) the parties shall equally share
the cancellation charges of Title Company (as hereinafter defined) and Escrow
Agent (“Cancellation Charges”),
and (iii) this Agreement shall automatically terminate and be of no further
force or effect and neither party shall have any further rights or obligations
hereunder, other than pursuant to any provision hereof which expressly survives
the termination of this Agreement.  If
Buyer has timely delivered to Escrow Agent a Due Diligence Termination Notice,
no notice to Escrow Agent from Seller shall be required for the return of the
Deposit to Buyer.  If Buyer does not
exercise such termination by


 


5

















 


delivery of the Due Diligence Termination Notice on or before the Due
Diligence Termination Date, then Buyer’s right to terminate this Agreement
pursuant to this Section shall automatically lapse.


 


3.7          Insurance. 
Buyer agrees that from the Execution Date through the Due Diligence
Termination Date, Buyer shall carry, or cause its agents and representatives
that will enter the Property in connection with the investigations pursuant to Section
3.2 to carry, workers’ compensation and general liability insurance in the
amount of $2,000,000 per occurrence, which insurance shall name Seller as an
additional insured.  Buyer shall provide
Seller with proof of such insurance prior to entry on or commencing Buyer’s
physical inspections of the Property.


 


3.8          Indemnity
and Repair.  Buyer agrees to indemnify and hold harmless
Seller from any losses or mechanic’s liens arising from entry onto the Property
or any injury to persons caused by such entry by Buyer or its agents or
representatives or as a result of the inspections, investigations or tests
performed pursuant to Section 3.2 above, which indemnity shall survive
the termination of this Agreement; provided, however, that
Buyer’s indemnity hereunder shall not include any losses, cost, damage or
expenses resulting from (x) the acts of Seller, its agents or representatives,
or (y) the discovery of any pre-existing condition of the Property.  In addition, if this Agreement is
terminated, Buyer shall repair any damage to the Property caused by its or its
agents or representatives’ entry thereon and shall restore the Property
substantially to the condition in which it existed prior to such entry; provided,
however, that Buyer shall have no obligation to repair any damage caused
by the acts or omissions of Seller or its agents or representatives or to
remediate, contain, abate or control any pre-existing condition of the Property
which existed prior to Buyer’s entry thereon.


 


3.9          Title.


 


3.9.1       Deliveries
by Seller.  Not later than ten (10) days after the
Execution Date, Seller shall have delivered to Buyer (a) Seller’s existing
title policy for the Property, together with legible copies of the underlying
documents referenced therein, and (b) the most recently updated ALTA as-built
survey for the Property, if any.


 


3.9.2       Buyer’s
Review of Title.  Not later than ten (10) days after the
Execution Date, Buyer shall order at its sole cost and expense (a) an ALTA
extended coverage preliminary title report (the “PTR”) issued by Chicago Title Insurance Company (in such
capacity, “Title Company”),
together with legible copies of all documents referenced as exceptions therein,
(b) a current As-Built American Land Title Association survey of the Property
(the “Survey”), in form reasonably
satisfactory to Buyer and the Title Company, prepared by a surveyor licensed in
the State where the Property is located and certified (using a surveyor’s
certificate in substantially the same form as the certificate attached hereto
as Exhibit G) to Buyer and the Title Company, and such other persons or
entities as Buyer may, in its discretion, request; and (c) a UCC search with
regard to Seller and the Property (the “UCC
Search”).  Buyer shall have
until five (5) days prior to the Due Diligence Termination Date to notify
Seller in writing of any objection which


 


6

















 


Buyer may have to any exception reported in the PTR or matter shown on
the Survey or the UCC Search or any updates thereof; provided, however,
that if any such updates are received by Buyer, Buyer shall have an additional
5 Business Days, regardless of the Due Diligence Termination Date or Closing
Date, following Buyer’s receipt of such update and legible copies of all
documents referenced therein to notify Seller of objections to items shown on
any such update.  Exceptions reported in
the PTR and matters shown on the Survey or the UCC Search (or any updates
thereof) not objected to by Buyer as provided above shall be deemed to be “Permitted Exceptions.”


 


3.9.3       Seller’s Obligations Regarding Title. 
As a condition to Closing, Seller shall take all reasonable action
necessary to remove from title to the Property (or in the alternative, Seller
shall obtain for Buyer title insurance insuring over such exceptions or
matters, such insurance to be in form and substance satisfactory to Buyer in
its sole discretion) the following matters: (a) all exceptions to title and
survey matters created by Seller on or after the Execution Date without the
prior written consent of Buyer (which consent may be withheld in Buyer’s sole
and absolute discretion); (b) any and all liens and encumbrances affecting the
Property which secure an obligation of Seller to pay money (other than
installments of real estate taxes or assessments not delinquent as of the
Closing); and (c) all taxes and assessments due and payable for any period
prior to the Closing (collectively, the “Obligatory
Removal Exceptions”).  If,
prior to the Closing, Seller is unable or unwilling to remove or satisfactorily
insure over any of the Obligatory Removal Exceptions, then Buyer may (a)
terminate this Agreement by delivering written notice to Seller and Escrow
Agent (in which case Escrow Agent shall return the Deposit to Buyer, and the
parties shall equally share the Cancellation Charges), and thereafter neither
party shall thereafter have any rights or obligations to the other hereunder,
other than pursuant to any provision hereof which expressly survives the
termination of this Agreement; (b) pursue an action for specific performance to
compel Seller to remove the Obligatory Removal Exceptions; or (c) waive Buyer’s
objections to such Obligatory Removal Exceptions and proceed to a timely
Closing whereupon such Obligatory Removal Exceptions shall be deemed “Permitted Exceptions.”  If, prior to the Closing, Seller is unable
or unwilling to remove or satisfactorily insure over any other exceptions or
matters objected to by Buyer (other than Obligatory Removal Exceptions), then
Buyer may (x) terminate this Agreement by delivering written notice to Seller
and Escrow Agent (in which case Escrow Agent shall return the Deposit to Buyer,
and the parties shall equally share the Cancellation Charges), and thereafter
neither party shall thereafter have any rights or obligations to the other
hereunder, other than pursuant to any provision hereof which expressly survives
the termination of this Agreement; or (y) waive Buyer’s objections to such
other exceptions and matters (other than Obligatory Removal Exceptions) and
proceed to a timely Closing whereupon such other exceptions and matters shall
be deemed “Permitted Exceptions.”


 


3.9.4       Condition
of Title at Closing.  Upon the Closing, Seller shall sell,
transfer and convey to Buyer indefeasible fee simple title, as evidenced by the
Title Company


 


7

















 


issuing the Owner’s Title Policy (as hereinafter defined), to the Land
and the Improvements thereon by a duly executed and acknowledged deed in the
form of Exhibit H attached hereto (the “Deed”), subject only to the Lease and Purchase Option (as
hereafter defined) and the Permitted Exceptions.


 


3.10        Return
of Documents.  In the event this Agreement is terminated by Buyer pursuant to Section
3.6 or is terminated due to Buyer’s failure to perform hereunder, Buyer
shall promptly return to Seller the Property Documents received from
Seller.  This Section shall survive any
termination of this Agreement.


 


4              SELLER’S REPRESENTATIONS AND
WARRANTIES.


 


Seller
represents and warrants to and agrees with Buyer that, as of the date hereof
and as of the Closing Date:


 


4.1          Authority. 
This Agreement and all other documents delivered prior to or at the
Closing (i) have been duly authorized, executed, and delivered by Seller; (ii)
are binding obligations of Seller; (iii) are collectively sufficient to
transfer all of Seller’s rights to the Property, subject to the Lease; and (iv)
do not violate the formation documents of Seller.  Seller has obtained all required consents, releases, and
approvals necessary to execute this Agreement and consummate the transaction
contemplated by this Agreement.  Seller
further represents that it is a corporation, duly organized and existing in
good standing under the laws of the State of Delaware, with its principal place
of business in San Diego, California, and that it is qualified to transact
business in the State of California.


 


4.2          No Conflicts. 
The execution and delivery of this Agreement, the consummation of the
transactions herein contemplated, and compliance with the terms of this
Agreement will not conflict with, or, with or without notice or the passage of
time or both, result in a breach of any of the terms or provisions of, or constitute
a default under, any indenture, deed of trust, mortgage, loan agreement, or
other document, or instrument or agreement, oral or written, to which Seller is
a party or by which Seller or the Property is bound, or any applicable
regulation of any governmental agency, or any judgment, order or decree of any
court having jurisdiction over Seller or all or any portion of the Property.


 


4.3          Preferential
Rights.  Seller has not granted any options or rights
of first refusal or rights of first offer to third parties to purchase or
otherwise acquire an interest in the Property.


 


4.4          Property Documents.  The Property
Documents delivered by Seller pursuant to the terms hereof constitute all of
the material documents relating to the Property, and to Seller’s Knowledge,
each such Property Document as delivered by Seller constitutes a true, correct
and complete copy of such Property Document. 
To Seller’s Knowledge, there are no material written commitments or
agreements relating to the Property and there are no other commitments or
agreements relating to the Property which would be binding on Buyer after
Closing which have not been disclosed by Seller to Buyer in writing.  To Seller’s Knowledge, Seller is not in
default of Seller’s obligations or liabilities pertaining to the Property or
the Property Documents; nor, to Seller’s Knowledge, are there facts,
circumstances, conditions, or events which, after notice or


 


8

















 


lapse of time, would constitute a default.  Seller has not received written notice or information that any
party to any of the Property Documents considers a breach or default to have
occurred.


 


4.5          Possession. 
On the Closing Date, Seller shall deliver exclusive possession of the
Property to Buyer, free and clear of any leases, tenancies or parties in
possession, except for the Lease.


 


4.6          Construction. 
To Seller’s Knowledge, there are no material physical defects in the
construction of the Improvements.


 


4.7          Material
Information.  To Seller’s Knowledge, this Agreement,
together with the Property Documents and any matters heretofore disclosed to
Buyer in writing by Seller, do not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements
contained herein not materially misleading.


 


4.8          Special Assessments or Condemnation.  To Seller’s
Knowledge, there are no existing, proposed or contemplated (i) special
assessments, except those shown as exceptions on the PTR, or (ii) condemnation
actions against the Property or any part, and Seller has not received written
notice of any contemplated special assessments or eminent domain proceedings
that would affect the Property.


 


4.9          Utilities. 
To Seller’s Knowledge, all water, sewer, electric, gas, telephone, and
drainage facilities, and all other utilities required by law or for the normal
operation of the Property are installed to the property lines of the Property,
have been connected to the Improvements and Seller has received no written
notices that service will be disconnected or reduced.


 


4.10        Service
Contracts.  To Seller’s Knowledge, there are no service,
maintenance, repair, management, leasing, or supply contracts or other
contracts (including, without limitation, janitorial, elevator and landscaping
agreements) affecting the Property, oral or written, which would be binding on
Buyer after Closing. .


 


4.11        Bankruptcy. 
No attachments, execution proceedings, assignments for the benefit of
creditors, insolvency, bankruptcy, reorganization or other proceedings are
pending, or, to Seller’s Knowledge, threatened, against Seller.


 


4.12        Insurance.  There are currently
in effect such insurance policies as are customarily maintained with respect to
similar properties.  Seller has not
received any written notice or request from any insurance company requesting
the performance of any work or alteration with respect to the Property.  Seller has received no written notice from
any insurance company concerning, nor, to Seller’s Knowledge, are there any
defects or inadequacies in the Property which, if not corrected, would result
in the termination of insurance coverage or increase its cost.


 


4.13        Litigation. 
To Seller’s Knowledge, except as set forth on the schedule attached
hereto as Exhibit R, there are no actions, suits or proceedings before
any judicial or quasi-judicial


 


9

















 


body, pending, or to Seller’s Knowledge, threatened, against or
affecting all or any portion of the Property.


 


4.14        Compliance
with Laws.  To Seller’s Knowledge, Seller has received
no written notice of, and has no Knowledge of, any condition currently on the
Property or any portion thereof which may give rise to any violation of any
existing laws, rules, regulations, ordinances and orders of all applicable
federal, state, city and other governmental authorities in effect as of the
date of this Agreement (collectively, “Laws”)
applicable to the Property if it were disclosed to the authorities having
jurisdiction over the Property, except as set forth on Exhibit I.


 


4.15        Environmental Materials.


 


4.15.1     Definitions.


 


(a)           “Environmental Claim” means any and all
actions (including, without limitation, investigatory, remedial or enforcement
actions of any kind, administrative or judicial proceedings, and orders or
judgments arising out of or resulting therefrom), costs, claims, damages
(including, without limitation, punitive damages), expenses (including, without
limitation, attorneys’, consultants’ and experts’ fees, court costs and amounts
paid in settlement of any claims or actions), fines, forfeitures or other
civil, administrative or criminal penalties, injunctive or other relief
(whether or not based upon personal injury, property damage, or contamination
of, or adverse effects upon, the environment, water tables or natural
resources), liabilities or losses arising from or relating to the presence or
suspected presence of any Environmental Materials in, on, under, or about the
Property or properties adjacent thereto.


 


(b)           “Environmental Materials” means chemicals,
pollutants, contaminants, wastes, toxic substances, petroleum and petroleum
products or any other chemical, material, or substance that, because of its
quantity, concentration, or physical or chemical characteristics, exposure to
which is limited or regulated for health and safety reasons by any governmental
authority, or which poses a significant present or potential hazard to human
health and safety or to the environment if released into the workplace or the
environment.


 


4.15.2     Representations
and Warranties.  Seller represents and warrants to and agrees
with Buyer that, as of the date hereof, to Seller’s Knowledge: (i) there is no
Environmental Claim pending or threatened with regard to the Property; and (ii)
without in any way limiting the generality of the foregoing, (a) there are no
underground storage tanks located on the Property, (b) there is no asbestos
contained in or forming part of any Improvement, including, without limitation,
any building, building component, structure or office space on the Property,
and (c) no polychlorinated biphenyls (PCBs) are used or stored at the Property.


 


4.15.3     Indemnification. 
Seller hereby indemnifies and agrees to reimburse, defend, and hold
Buyer harmless from, for and against all Environmental Claims arising from,


 


10

















 


asserted against, imposed on, or incurred by Buyer, directly or
indirectly, in connection with the breach of any representation or warranty set
forth in Section 4.15.2 of this Agreement.


 


4.16        Survival. 
All of the representations, warranties and agreements of Seller set
forth in this Agreement shall be true upon the execution of this Agreement, and
shall survive the delivery of the Deed and other Closing instruments and
documents for a period of 24 months following the Closing.


 


4.17        Seller’s
Knowledge.  As used in this Agreement, the phrase “to Seller’s Knowledge” and words of similar
import shall mean the best knowledge of the Chief Executive Officer, Chief
Financial Officer, the General Counsel, Adam Chinnock, and the Facilities
Manager of Seller, after reasonable inquiry and investigation of the files and
materials in the possession or control of such persons.  Seller represents and warrants that the
foregoing persons are those persons affiliated with Seller most knowledgeable
regarding the ownership and operation of the Property, possessing the greatest
experience and familiarity with the Property, that no other person presently
affiliated with Seller possesses any equal or greater familiarity and
experience with the Property and that the foregoing persons have been employed
by Seller since July 1, 1997, September 11, 2000, October 24, 2001, September
15, 2002 and August 25, 1997 respectively.


 


4.18        As-Is. 
Buyer acknowledges, represents and
warrants that prior to Close of Escrow, Buyer will have had the opportunity to
thoroughly inspect the Property and to investigate all aspects of the
Property.  Notwithstanding anything to
the contrary contained in this Agreement, Buyer further acknowledges and agrees
that Buyer is purchasing the Property subject to all governmental regulations
and the Lease.  Buyer further
acknowledges and agrees that except for any representations and warranties
expressly made by Seller in this Agreement, neither Seller nor any of Seller’s
employees, agents or representatives have made any representations or
warranties by or on behalf of Seller of any kind whatsoever, whether oral or
written, express or implied, statutory or otherwise, as to any matters
concerning the Property, the condition of the Property, the size of the Real
Property, the size of the Improvements (including without limitation, any
discrepancies in the actual rentable square footage of any leased premises
within the Improvements), the present use of the Property or the suitability of
Buyer’s intended use of the Property. 
Buyer hereby acknowledges, agrees and represents that the Property is to
be purchased, conveyed and accepted by Buyer in its present condition, “AS IS”,
“WHERE IS” AND WITH ALL FAULTS, and that no patent or latent defect or
deficiency in the condition of the Property whether or not known or discovered,
shall affect the rights of either Seller or Buyer hereunder nor shall the
Purchase Price be reduced as a consequence thereof.  Except for any representations and warranties expressly made by
Seller in this Agreement, any and all information and documents furnished to
Buyer by or on behalf of Seller relating to the Property, including, without
limitation, the Property Documents, shall be deemed furnished as a courtesy to
Buyer but without warranty of any kind from or on behalf of Seller regarding
the content thereof except as expressly provided herein.  Buyer hereby represents and warrants to
Seller that Buyer will have an opportunity to perform an independent inspection
and investigation of the Property and also will have an opportunity to
investigate and has knowledge of operative or proposed governmental


 


11

















 


regulations. 
Buyer further represents that, except for any representations and
warranties expressly made by Seller in this Agreement, it shall acquire the
Property solely upon the basis of its independent inspection and investigation
of the Property, including without limitation: (i) the quality, nature,
habitability, merchantability, use, operation, value, marketability, adequacy
or physical condition of the Property or any aspect or portion thereof,
including, without limitation, structural elements, foundation, roof,
appurtenances, access, landscaping, parking facilities, electrical, mechanical,
HVAC, plumbing, sewage, and utility systems, facilities and appliances, soils,
geology and groundwater, or whether the Real Property lies within a special
flood hazard area, an area of potential flooding, a very high fire hazard
severity zone, a wildland fire area, an earthquake fault zone or a seismic
hazard zone, (ii) the dimensions or lot size of the Real Property or the
square footage of the Improvements thereon or of any tenant space therein,
(iii) the development or income potential, or rights of or relating to,
the Real Property or its use, habitability, merchantability, or fitness, or the
suitability, value or adequacy of such Real Property for any particular
purpose, (iv) the zoning or other legal status of the Real Property or any
other public or private restrictions on the use of the Real Property,
(v) the compliance of the Real Property or its operation with any
governmental regulations, (vi) the ability of Buyer to obtain any necessary
governmental approvals, licenses or permits for Buyer’s intended use or
development of the Real Property, (vii) the presence or absence of
hazardous materials on, in, under, above or about the Real Property or any
adjoining or neighboring property, (viii) the quality of any labor and
materials used in any Improvements, (ix) the condition of title to the
Real Property, or (x) the economics of, or the income and expenses,
revenue or expense projections or other financial matters, relating to the
operation of the Real Property.  Without
limiting the generality of the foregoing, Buyer expressly acknowledges and
agrees that Buyer is not relying on any representation or warranty of Seller,
nor any member, officer, employee, attorney, property manager, agent or broker
of Seller, whether implied, presumed or expressly provided at law or otherwise,
arising by virtue of any statute, common law or other legally binding right or
remedy in favor of Buyer except as expressly provided in this Agreement.


 


5              BUYER’S REPRESENTATIONS AND
WARRANTIES.


 


Buyer
represents and warrants to and agrees with Seller that, as of the date hereof,
and as of the Closing Date:


 


5.1          No Conflicts.  The execution and
delivery of this Agreement, the consummation of the transactions herein contemplated,
and compliance with the terms of this Agreement will not conflict with, or,
with or without notice or the passage of time or both, result in a breach of
any of the terms or provisions of, or constitute a default under, any
indenture, deed of trust, mortgage, loan agreement, or other document or
instrument to which Buyer is a party or by which Buyer is bound, or any
applicable regulation of any governmental agency, or any judgment, order or
decree of any court having jurisdiction over Buyer or all or any portion of the
Property.


 


5.2          Consents. 
All requisite corporate action has been taken by Buyer in connection
with entering into this Agreement, and will be taken prior to the Closing in
connection with


 


12

















 


the execution and delivery of the instruments referenced herein and the
consummation of the transactions contemplated hereby.  No consent of any partner, shareholder, beneficiary, creditor,
investor, judicial or administrative body, governmental authority or other
party is required in connection herewith which has not been obtained.


 


5.3          Buyer’s Authority; Validity of Agreements. 
This Agreement and all other documents delivered prior to or at the
Closing (i) have been or will be before the Closing duly authorized, executed,
and delivered by Buyer; (ii) are binding obligations of Buyer; and (iii) do not
violate the formation documents of Buyer. 
Buyer has obtained all required consents, releases, and approvals necessary
to execute this Agreement and, as of the Closing, to consummate the transaction
contemplated by this Agreement.  Buyer
further represents that it is a limited liability company duly organized and
existing in good standing under the laws of the State of Delaware, with its
principal place of business in the State of California, and that it is
qualified to transact business in the State of California.


 


5.4          Bankruptcy.  No attachments,
execution proceedings, assignments for the benefit of creditors, insolvency,
bankruptcy, reorganization or other proceedings are pending, or, to Buyer’s
Knowledge, threatened, against Buyer.


 


6              COVENANTS OF SELLER.


 


In addition to
the covenants and agreements of Seller set forth elsewhere in this Agreement,
Seller covenants and agrees that between the date hereof and the earlier of (1)
the Closing or (2) termination of this Agreement:


 


6.1          Title. 
Seller shall not (a) directly or indirectly sell, assign or create any
right, title or interest whatsoever in or to the Property, (b) take any action,
create, commit, permit to exist or suffer any acts which would (i) give rise to
a variance from the current legal description of the Land, or (ii) cause the
creation of any lien, charge or encumbrance other than the Permitted
Exceptions, or (c) enter into any agreement to do any of the foregoing without
Buyer’s prior written consent (which consent may be withheld in Buyer’s sole
and absolute discretion).


 


6.2          Notice
of Change in Circumstances.  Seller shall
promptly notify Buyer of any change in any condition with respect to the
Property or any portion thereof or of any event or circumstance of which Seller
has Knowledge subsequent to the date of this Agreement which (a) materially,
adversely affects the Property or any portion thereof or the use or operation
of the Property or any portion thereof, (b) makes any representation or
warranty of Seller to Buyer under this Agreement untrue or misleading, or (c)
makes any covenant or agreement of Seller under this Agreement incapable or
less likely of being performed, it being expressly understood that Seller’s
obligation to provide information to Buyer under this Section shall in no way
relieve Seller of any liability for a breach by Seller of any of its
representations, warranties, covenants or agreements under this Agreement.  Notwithstanding the foregoing, Buyer agrees
that if, at any time prior to the Closing Date, it has knowledge of any
information which would require the qualification of any of the above
representations and warranties for such representation and warranty to be


 


13

















 


true, it shall immediately notify Seller in writing of such
information.  If Buyer has knowledge of
the incorrectness of any representation or warranty made by Seller in this
Agreement and fails to so notify Seller prior to the Closing Date, then such
representation or warranty shall be deemed to be modified to the extent of such
knowledge.  Seller shall have the right
to qualify such representations and warranties with any newly discovered
information it receives concerning such representations and warranties after
the date of this Agreement promptly upon discovering such new information
(provided that such new information is not a result of Seller’s actions).  If Seller has notified Buyer in writing that
it will be necessary to qualify any of the above representations and warranties
as provided above (i.e. as a result of new information which is not a result of
Seller’s actions) when they are restated as of the Closing Date, Buyer must
elect, by a writing received by Seller prior to the Closing Date (as same may
be extended on a day for day basis if Seller’s notice was delivered within the
three days preceding the Closing Date), to either (i) terminate this
Agreement and the Escrow, in which event the Deposit shall be returned to Buyer
and neither party shall have any further obligations or liabilities hereunder,
except for the indemnity obligations of Buyer contained herein which
indemnities shall survive any such termination or (ii) proceed with the transaction
contemplated by this Agreement, in which event the above representations and
warranties shall be qualified when remade on the Closing Date as provided
above.  In the event that Seller does
not receive such written notification from Buyer, then Buyer will be deemed to
have elected to proceed with the transaction contemplated by this Agreement,
with the above representations and warranties qualified when remade as of the
Closing Date.


 


6.3          No
Defaults; Maintenance of Property.  Seller shall not
default with respect to the performance of any obligation relating to the
Property which would be binding on Buyer following the Closing or subject Buyer
to liability as the owner of the Property following the Closing.  Subject to Section 12, Seller shall
operate and maintain the Property in its current condition, reasonable wear and
tear excepted, in accordance with all applicable Laws.


 


6.4          Exclusive
Negotiations.  Seller shall (i) remove the Property from
the market and (ii) cease and refrain from any and all negotiations with any
other prospective tenants, optionees or purchasers of the Property, until the
earlier of the termination of this Agreement or the Closing.


 


6.5          Development
Activities.  Seller shall not take any actions with
respect to the development of the Property, including, without limitation,
applying for, pursuing, accepting or obtaining any permits, approvals or other
development entitlements from any governmental or other regulatory entities or
finalizing or entering into any agreements relating thereto without Buyer’s
prior written consent (which consent may be withheld in Buyer’s sole and
absolute discretion).


 


6.6          Service, Management and Employment Contracts. 
Seller shall not enter into, extend, renew or replace any existing
service, property management or employment contracts in respect of the Property
without Buyer’s prior written consent (which consent may be withheld in Buyer’s
sole and absolute discretion), which would be binding on Buyer following the
Closing, unless the same shall be cancelable without penalty or premium,


 


14

















 


upon not more than 30 days’ notice from the owner of the Property and
Seller shall immediately notify Buyer of any such new, extended, renewed or
replaced contract.


 


6.7          Leases. 
Seller shall not enter into any new lease or occupancy agreement for the
Property without Buyer’s prior written consent (which consent may be withheld
in Buyer’s sole and absolute discretion).


 


6.8          Insurance.  Seller will maintain
its current insurance on the Property in place from the date hereof through the
Closing Date or earlier termination of this Agreement.


 


6.9          Litigation.  Following the Due
Diligence Termination Date, Seller shall not allow to be commenced on its
behalf any action, suit or proceeding with respect to all or any portion of the
Property without Buyer’s prior written consent (which consent may be withheld
in Buyer’s sole and absolute discretion). 
In the event Seller receives any notice of any proceeding of the
character described in Sections 4.11 or 4.13 which has not been
previously disclosed to Buyer prior to the Closing, Seller shall promptly
advise Buyer in writing.


 


7              CONDITIONS PRECEDENT TO CLOSING.


 


7.1          Buyer’s
Conditions.  The obligation of Buyer to render performance
under this Agreement is subject to the following conditions precedent (and
conditions concurrent, with respect to deliveries to be made by the parties at
Closing) (“Buyer’s Conditions”),
which conditions may be waived, or the time for satisfaction thereof extended,
by Buyer only in a writing executed by Buyer, it being expressly understood
that, subject to Section 6.1, the waiver of any of the following
conditions by Buyer shall prevent Buyer from pursuing any remedy Buyer may have
with respect to any breach hereunder by Seller:


 


7.1.1       Title.  Title Company shall
be prepared and irrevocably committed to issue (a) to Buyer an American Land
Title Association extended coverage owner’s policy of title insurance (Form
B)-1970 (expressly deleting any creditor’s rights exclusion) in favor of Buyer
in an amount equal to the Purchase Price showing indefeasible fee simple title
to the Real Property vested in Buyer, with those endorsements reasonably
requested by Buyer prior to the Due Diligence Termination Date, subject only to
the Lease and the Purchase Option and the Permitted Exceptions (collectively,
the “Owner’s Title Policy”).


 


7.1.2       Seller’s
Due Performance.  All of the representations and warranties of
Seller set forth in Section 4 shall be true and correct as of the
Closing Date, and Seller, on or prior to the Closing Date, shall have complied
with and/or performed all of the obligations, covenants and agreements required
on the part of Seller to be complied with or performed pursuant to the terms of
this Agreement, including, without limitation, the deliveries required to be
made by Seller pursuant to Sections 9.1 and 9.3 hereof.


 


7.1.3       Condition
of Property.  Subject to the provisions of Section 12
below, the condition of the Property shall be substantially the same on the
Closing Date as on


 


15

















 


the Execution Date, except for reasonable wear and tear and any damages
due to any act of Buyer or Buyer’s representatives.


 


7.1.4       Bankruptcy.  No action or proceeding
shall have been commenced by or against Seller under the federal bankruptcy
code or any state law for the relief of debtors or for the enforcement of the
rights of creditors and no attachment, execution, lien or levy shall have
attached to or been issued with respect to the Property or any portion thereof.


 


7.1.5       Estoppel
Certificates.  Prior to the Due Diligence Termination Date,
Buyer shall have received and approved a fully executed original of each
CC&Rs Estoppel.


 


7.1.6       Property
Questionnaire. 
Buyer shall have received the Property Questionnaire for the Property,
completed by Seller, within the time frame required by Section 3.5.


 


7.1.7       No Moratoria. 
No moratorium, statute, regulation, ordinance, or federal, state, county
or local legislation, or order, judgment, ruling or decree of any governmental
agency or of any court shall have been enacted, adopted, issued, entered or
pending which would materially and adversely affect Buyer’s intended use of the
Property.


 


7.1.8       Repeat Representations, Warranties and Agreements.  Seller
shall repeat all of its representations, warranties and agreements set forth in
this Agreement as of the Closing Date, by delivery of the Seller’s Certificate
(as defined below).


 


7.2          Failure of
Buyer’s Conditions. 
Subject and without limitation to Buyer’s rights hereunder, including,
without limitation, Section 13.2 hereof, if any of Buyer’s Conditions
have not been fulfilled within the applicable time periods, Buyer may:


 


7.2.1       Waive and Close. 
Waive the Buyer’s Condition and close Escrow in accordance with this
Agreement, with or without adjustment or abatement of the Purchase Price; or


 


7.2.2       Terminate. 
Terminate this Agreement by delivering written notice to Seller and to
Escrow Agent, in which event Escrow Agent shall return the Deposit to Buyer,
the parties shall equally share the Cancellation Charges and neither party
shall thereafter have any rights or obligations to the other hereunder other
than any provisions hereof which expressly survive the termination of this Agreement.


 


7.3          Seller’s
Conditions.  The obligation of Seller to render
performance under this Agreement is subject to the following conditions
precedent (and conditions concurrent with respect to deliveries to be made by
the parties at Closing) (“Seller’s Conditions”),
which conditions may be waived, or the time for satisfaction thereof extended,
by Seller only in a writing executed by Seller:


 


7.3.1       Buyer’s
Due Performance.  All of the representations and warranties of
Buyer set forth in Section 5 hereof shall be true and correct as of the
Closing Date, and


 


16

















 


Buyer, on or prior to the Closing Date, shall have complied with and/or
performed all of the obligations, covenants and agreements required on the part
of Buyer to be complied with or performed pursuant to the terms of this
Agreement.


 


7.3.2       Repeat
Representations,
Warranties and Agreements.  Buyer shall repeat all of its
representations, warranties and agreements set forth in this Agreement as of the
Closing Date, by delivery of the Buyer’s Certificate (as defined below).


 


7.3.3       Bankruptcy.  No action or
proceeding shall have been commenced by or against Buyer under the federal
bankruptcy code or any state law for the relief of debtors or for the enforcement
of the rights of creditors.


 


7.4          Failure
of Seller’s Conditions.  In the event of the failure of a Seller’s
Condition, Seller may terminate this Agreement by delivery of written notice to
Buyer and Escrow Agent, in which event Escrow Agent shall return the Deposit to
Buyer, the parties shall equally share the Cancellation Charges, and neither
party shall thereafter have any rights or obligations to the other hereunder,
other than pursuant to any provision hereof which expressly survives the termination
of this Agreement.


 


8              CLOSING.


 


8.1          Closing Date. 
Subject to the provisions of this Agreement, the Closing shall take
place on December 30, 2003, or on such other date as the parties hereto may
agree.  As used herein, the “Closing” shall mean the recordation of the
Deed in the Official Records of the County of San Diego, State of California
(the “Official Records”), and the
“Closing Date” shall mean the date
upon which the Closing actually occurs.


 


8.2          Closing Costs. 
Each party shall pay its own costs and expenses arising in connection
with the Closing (including, without limitation, its own attorneys’ and
advisors’ fees), except the following costs (the “Closing Costs”), which shall be allocated between the parties
as follows:


 


8.2.1       Seller
shall pay all documentary transfer, stamp, sales and other taxes related to the
transfer of the Property, 1⁄2 of Escrow Agent’s escrow fees and costs, and all
premiums, costs and fees related to the delivery of the CLTA portion of Owner’s
Title Policy and the endorsements listed on Exhibit J up to a maximum of
$2,000, and all recording fees related to the transfer of ownership of the
Property.


 


8.2.2       Buyer
shall pay 1⁄2 of Escrow Agent’s escrow fees and costs, the cost of the Survey,
the balance due for Owner’s Title Policy, and the cost of the UCC Search.


 


9              CLOSING DELIVERIES.


 


9.1          Deliveries
by Seller to Escrow. 
Not less than 1 Business Day prior to the Closing Date, Seller, at its
sole cost and expense, shall deliver or cause to be delivered into Escrow the
following documents and instruments, each effective as of the Closing Date and
executed by Seller, in addition to the other items and payments required by
this Agreement to be delivered by Seller:


 


17

















 


9.1.1       Deed. 
The original executed and acknowledged Deed conveying the Property to
Buyer or its nominee;


 


9.1.2       Non-foreign
Affidavit.  2 originals of the Non-Foreign Affidavit in
the form of Exhibit M attached hereto, each executed by Seller;


 


9.1.3       California
FTB Form 597-W.  2 originals of a California FTB Form 597-W,
each executed by Seller in the form attached as Exhibit L;


 


9.1.4       Lease. 
3 original executed counterparts of the Lease in the form attached
hereto as Exhibit N (the “Lease”);


 


9.1.5       Bill of
Sale and Assignment.  2 original counterparts of the Bill of Sale
and Assignment in the form of Exhibit P attached hereto, each executed
by Seller, pursuant to which Seller shall transfer to Buyer all the Fixtures
and the Intangible Property, in each case free of all liens and encumbrances;


 


9.1.6       Seller’s
Certificate.  2 originals of a certificate, in the form of
Exhibit K attached hereto (the “Seller’s
Certificate”), each executed by Seller;


 


9.1.7       Memorandum of Lease and Purchase Option.  3
original executed counterparts of the Memorandum of Lease and Purchase Option
in the form attached hereto as Exhibit O (“Memorandum of Lease and Purchase Option”);


 


9.1.8       Proof of
Authority.  Such proof of Seller’s authority and
authorization to enter into this Agreement and the transaction contemplated
hereby, and such proof of the power and authority of the individual(s)
executing or delivering any instruments, documents or certificates on behalf of
Seller to act for and bind Seller as may be reasonably required by Title Company  or Buyer; and


 


9.1.9       Other. 
Such other documents and instruments, signed and properly acknowledged
by Seller, if appropriate, as may be reasonably required by Buyer, Escrow Agent, or otherwise in
order to effectuate the provisions of this Agreement and the Closing of the
transactions contemplated herein, including, without limitation, reasonable or
customary title affidavits and indemnities.


 


9.2          Deliveries by
Buyer.  On or before the Closing, Buyer, at its sole
cost and expense, shall deliver or cause to be delivered into Escrow the
following:


 


9.2.1       Balance, Prorations & Closing Costs. 
The balance of the Purchase Price pursuant to Section 2 hereof
and Buyer’s share of prorations and Closing Costs (as hereinafter defined), as
provided in Sections 10 and 8.2, respectively;


 


9.2.2       Lease.  3 original executed
counterparts of the Lease; and


 


9.2.3       Buyer’s
Certificate.  2 originals of a certificate, in the form of
Exhibit Q attached hereto (the “Buyer’s
Certificate”), each executed by Buyer.


 


18

















 


9.2.4       Proof of Authority.  Such proof of
Buyer’s authority and authorization to enter into this Agreement and the
transaction contemplated hereby, and such proof of the power and authority of
the individual(s) executing or delivering any instruments, documents or
certificates on behalf of Buyer to act for and bind Buyer as may be reasonably
required by Title Companyor Seller;


 


9.2.5       Memorandum of Lease and Purchase Option.  3
original executed counterparts of the Memorandum of Lease and Purchase Option.


 


9.2.6       Other.  Such other documents
and instruments, signed and properly acknowledged by Buyer, if appropriate, as
may reasonably be required by Seller and Escrow Agent or otherwise in order to
effectuate the provisions of this Agreement and the closing of the transactions
contemplated herein.


 


9.3          Deliveries
Outside of Escrow. 
Seller shall deliver possession of the Property to Buyer upon the
Closing, subject to Seller’s rights as tenant under the Lease.  Further, Seller hereby covenants and agrees,
at its sole cost and expense, to deliver or cause to be delivered to deliver to
Buyer, on or prior to the Closing, the following items:


 


9.3.1       Intangible
Property.  The original of each document evidencing the
Intangible Property or rights to ownership and use thereof.


 


10           PRORATIONS.


 


10.1.1     Expenses. 
Assessments, improvement bonds and other expenses such as common area
maintenance costs affecting the Property shall be prorated between Buyer and
Seller as of the Closing Date to the extent due and payable for any period
prior to the Closing.


 


10.1.2     Adjustments. 
If any expenses attributable to the Property and allocable to the period
prior to the Closing are discovered or billed after the Closing, the parties
shall make any necessary adjustment after the Closing by cash payment to the
party entitled thereto so that Seller shall have borne all expenses allocable
to the period prior to the Closing and Buyer shall bear all expenses allocable
to the period from and after the Closing.


 


10.1.3     Generally. 
For purposes of calculating prorations, Buyer shall be deemed to be in
title to the Property after 12:01 a.m. (Los Angeles, California time) on the
Closing Date.  All such prorations shall
be made on the basis of the actual number of days of the month which shall have
elapsed as of the day of the Closing and based upon the actual number of days
in the month and a three hundred sixty-five (365) day year.  The provisions of this Section 10
shall survive the Closing for a period of 2 years.


 


10.2        Preliminary
Closing Statement.  10 days prior to the Closing, Escrow Agent
shall deliver to each of the parties for their review and approval a
preliminary closing statement (the “Preliminary
Closing Statement”) setting forth the Closing Costs allocable to
each of the parties pursuant to Section 8.2 hereof.  Based on each of the


 


19

















 


party’s comments, if any, regarding the Preliminary Closing Statement,
Escrow Agent shall revise the Preliminary Closing Statement and deliver a
final, signed version of a closing statement to each of the parties at the
Closing (the “Closing Statement”).


 


11           ESCROW.


 


11.1        Opening of
Escrow.  Promptly following the Execution Date, Buyer
and Seller shall each cause a purchase and sale escrow (“Escrow”) to be opened with Escrow Agent by
delivery to Escrow Agent of 2 duplicate partially executed originals of this
Agreement executed by Seller and Buyer. 
Upon receipt of such partially executed originals of this Agreement,
Escrow Agent shall form 2 duplicate original counterparts of this Agreement and
telephonically confirm to Buyer and Seller the date upon which Escrow is opened
(the “Opening of Escrow”).  On or immediately after the Opening of
Escrow, Escrow Agent shall (a) confirm the same by executing and dating the 3
duplicate original counterparts of this Agreement in the space provided for
Escrow Agent, and (b) deliver a fully executed original of this Agreement to
each of Seller and Buyer.


 


11.2        Escrow
Instructions.  This Agreement shall constitute escrow
instructions to Escrow Agent as well as the agreement of the parties.  Escrow Agent is hereby appointed and
designated to act as Escrow Agent and instructed to deliver, pursuant to the
terms of this Agreement, the documents and funds to be deposited into Escrow as
herein provided.  The parties hereto
shall execute such additional escrow instructions, not inconsistent with this
Agreement as determined by counsel for Buyer and Seller, as Escrow Agent shall
deem reasonably necessary for its protection, if any (as may be modified by and
mutually acceptable to Buyer, Seller and Escrow Agent).  In the event of any inconsistency between
this Agreement and such additional escrow instructions, the provisions of this
Agreement shall govern.


 


11.3        Actions by
Escrow Agent.  Provided that Escrow Agent shall not have
received written notice from Buyer or Seller of the failure of any condition to
the Closing or of the termination of the Escrow and this Agreement, when Buyer
and Seller have deposited into Escrow the documents and funds required by this
Agreement, and Title Company is unconditionally and irrevocably committed to
issue the Owner’s Title Policy concurrently with the Closing, Escrow Agent
shall, in the order and manner herein below indicated, take the following
actions:


 


11.3.1     Recording. 
Following Title Company’s acknowledgment that it is prepared and
irrevocably committed to issue the Owner’s Title Policy to Buyer, cause the
Deed, the Memorandum of Lease and Purchase Option and any other documents which
the parties hereto may mutually direct to be recorded in the Official Records
and obtain conformed copies thereof for distribution to Buyer and Seller.


 


11.3.2     Funds. 
Upon receipt of confirmation of the recordation of the Deed and the
Memorandum of Lease and Purchase Option and such other documents as were
recorded pursuant to Section 11.3.1 above, disburse all funds deposited
with it by Buyer as follows:


 


20

















 


(a)           Pursuant to the Closing Statement (as
hereinafter defined), retain for Escrow Agent’s own account all escrow fees and
costs, disburse to Title Company the fees and expenses incurred in connection
with the issuance of the Owner’s Title Policy, and disburse to any other persons
or entities entitled thereto the amount of any other Closing Costs;


 


(b)           Disburse to Seller an amount equal to the
Purchase Price, less or plus the net debit or credit to Seller by reason of the
prorations and allocation of Closing Costs provided for in Sections 10
and 8.2.  Seller’s portion (as
provided in Section 8.2) of the escrow fees, title fees and other
Closing Costs shall be paid pursuant to clause (a) above; and


 


(c)           Disburse to Buyer any remaining funds in the
possession of Escrow Agent after payments pursuant to clauses (a) and (b)
above have been completed.


 


11.3.3     Owner’s Title
Policy.  Cause Title Company to issue the Owner’s
Title Policy to Buyer.


 


11.3.4     Delivery of
Documents.  Deliver to Buyer and Seller one original of
each of all documents deposited into Escrow, other than the Deed and any other
recorded documents promptly after the Closing.


 


11.4        Conflicting
Demands.  Upon receipt of a written demand for the
Deposit (a “Deposit Demand”) by
Seller or Buyer (the “demanding party”),
Escrow Agent shall promptly send a copy of such Deposit Demand to the other
party (the “non-demanding party”).  Except in connection with the delivery of a
Due Diligence Termination Notice (in which event the Deposit shall be
immediately returned to Buyer), Escrow Agent shall hold the Deposit for 5
Business Days from the date of delivery by Escrow Agent of the Deposit Demand
to the non-demanding party (“Objection
Period”) or until Escrow Agent receives a confirming instruction
from the non-demanding party.  In the
event the non-demanding party delivers to Escrow Agent written objection to the
release of the Deposit to the demanding party (an “Objection Notice”) within the Objection Period (which
Objection Notice shall set forth the basis under this Agreement for objecting
to the release of the Deposit), Escrow Agent shall promptly send a copy of the
Objection Notice to the demanding party. 
In the event of any dispute between the parties regarding the release of
the Deposit, Escrow Agent, in its good faith business judgment, may disregard
all inconsistent instructions received from either party and may either (a)
hold the Deposit until the dispute is mutually resolved and Escrow Agent is
advised of such mutual resolution in writing by both Seller and Buyer, or Escrow
Agent is otherwise instructed by a final non-appealable judgment of a court of
competent jurisdiction, or (b) deposit the Deposit with a court of competent
jurisdiction by an action of interpleader (whereupon Escrow Agent shall be
released and relieved of any further liability or obligations hereunder from
and after the date of such deposit).  In
the event Escrow Agent shall in good faith be uncertain as to its duties or
obligations hereunder or shall receive conflicting instructions, claims or
demands from the parties hereto (expressly excluding however a conflicting
demand given by Seller after Buyer has delivered a Due


 


21

















 


Diligence Termination Notice and demand for the Deposit), Escrow Agent
shall promptly notify both parties in writing and thereafter Escrow Agent shall
be entitled (but not obligated) to refrain from taking any action other than to
keep safely the Deposit until Escrow Agent shall receive a joint instruction
from both parties clarifying Escrow Agent’s uncertainty or resolving such
conflicting instructions, claims or demands, or until a final non-appealable
judgment of a court of competent jurisdiction instructs Escrow Agent to act.


 


11.5        Real
Estate Reporting Person.  Escrow Agent is designated the “real estate
reporting person” for purposes of section 6045 of title 26 of the United States
Code and Treasury Regulation 1.6045-4 and any instructions or settlement
statement prepared by Escrow Agent shall so provide.  Upon the consummation of the transaction contemplated by this
Agreement, Escrow Agent shall file Form 1099 information return and send the
statement to Seller as required under the aforementioned statute and
regulation.


 


11.6        Destruction
of Documents; Survival.  Escrow Agent is hereby authorized to destroy
or otherwise dispose of any and all documents, papers, instructions and other
material concerning the Escrow at the expiration of 6 years from the later of
(a) the Closing, (b) the final disbursement of any funds maintained in Escrow
after the Closing, or (c) the final release of the Deposit following the
termination of this Agreement.  The
provisions of this Section 11 shall survive the Closing or earlier
termination of this Agreement until Escrow Agent’s duties and obligations hereunder
are fully and finally discharged.


 


12           RISK
OF LOSS.


 


12.1        Condemnation. 
If, prior to the Closing Date, all or any material portion of the
Property is taken by condemnation or eminent domain (or is the subject of a
pending or contemplated taking which has not been consummated), Seller shall
immediately notify Buyer of such fact. 
In such event, Buyer shall have the option to terminate this Agreement
by delivering written notice to Seller not later than the earlier of (i) the
Closing Date, and (ii) 10 days after delivery of such notice from Seller.  Upon such termination, Escrow Agent shall
immediately return the Deposit to Buyer, the parties shall equally share the
Cancellation Charges, and neither party shall have any further rights or
obligations hereunder, other than pursuant to any provision hereof which
expressly survives the termination of this Agreement.  If Buyer does not elect to terminate this Agreement,  the terms of the Lease shall govern
distribution of proceeds and restoration regardless of the commencement of the
term thereof.


 


12.2        Casualty. 
Prior to the Closing and notwithstanding the pendency of this Agreement,
the entire risk of loss or damage or destruction of the Property shall be borne
and assumed by Seller.  If, prior to
Closing any part of the Property is damaged or destroyed, Seller shall
immediately notify Buyer of such fact. 
In the event that the amount of the damage caused by such event exceeds
$500,000, Buyer shall have the option to terminate this Agreement by delivering
written notice to Seller not later than the earlier of (i) the Closing Date,
and (ii) 10 days after delivery of such notice from Seller.  If Buyer does not elect to terminate this
Agreement, the terms of the Lease shall govern distribution of proceeds and restoration
regardless of the commencement of the term thereof .


 


22

















 


13           DEFAULT.


 


13.1        Default
by Buyer.  IN THE EVENT THAT THE
ESCROW AND THIS TRANSACTION FAIL TO CLOSE AS A RESULT OF THE DEFAULT OF BUYER IN
THE PERFORMANCE OF ITS OBLIGATIONS UNDER THIS AGREEMENT, PROVIDED THAT SELLER
IS READY, WILLING AND ABLE TO CLOSE, BUYER AND SELLER AGREE THAT SELLER’S
ACTUAL DAMAGES WOULD BE IMPRACTICABLE OR EXTREMELY DIFFICULT TO FIX AND THAT
THE AMOUNT OF THE DEPOSIT REPRESENTS THE PARTIES’ REASONABLE ESTIMATE OF SUCH
DAMAGES.  THE PARTIES THEREFORE AGREE
THAT IN THE EVENT THAT ESCROW AND THIS TRANSACTION FAIL TO CLOSE AS A RESULT OF
THE DEFAULT OF BUYER IN THE PERFORMANCE OF ITS OBLIGATIONS HEREUNDER AND SELLER
IS READY, WILLING AND ABLE TO PERFORM ITS OBLIGATIONS HEREUNDER, SELLER, AS
SELLER’S SOLE AND EXCLUSIVE REMEDY, IS ENTITLED TO LIQUIDATED DAMAGES IN THE
AMOUNT OF THE DEPOSIT THEN HELD BY ESCROW AGENT.  IN THE EVENT ESCROW FAILS TO CLOSE AS A RESULT OF BUYER’S DEFAULT
AND SELLER IS READY, WILLING AND ABLE TO PERFORM ITS OBLIGATIONS HEREUNDER,
THEN (1) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF BUYER AND SELLER
HEREUNDER AND THE ESCROW CREATED HEREBY SHALL TERMINATE, (2) ESCROW AGENT
SHALL, AND IS HEREBY AUTHORIZED AND INSTRUCTED TO, RETURN PROMPTLY TO BUYER AND
SELLER ALL DOCUMENTS AND INSTRUMENTS TO THE PARTIES WHO DEPOSITED THE SAME, AND
(3) ESCROW AGENT SHALL DELIVER THE DEPOSIT THEN HELD BY ESCROW AGENT TO SELLER
PURSUANT TO SELLER’S INSTRUCTIONS, AND THE SAME SHALL BE THE FULL, AGREED AND
LIQUIDATED DAMAGES.  THE PAYMENT OF SUCH AMOUNT AS LIQUIDATED
DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING OF
CALIFORNIA CIVIL CODE SECTIONS 3275 OR 3369, BUT IS INTENDED TO CONSTITUTE
LIQUIDATED DAMAGES TO SELLER PURSUANT TO CALIFORNIA CIVIL CODE SECTIONS 1671,
1676 AND 1677.  SELLER HEREBY
WAIVES THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 3389.  SELLER AND BUYER ACKNOWLEDGE THAT THEY HAVE
READ AND UNDERSTAND THE PROVISIONS OF THIS SECTION 13.1, AND BY THEIR INITIALS
IMMEDIATELY BELOW AGREE TO BE BOUND BY ITS TERMS.


 


NOTHING
CONTAINED IN THIS SECTION IS INTENDED TO WAIVE OR OTHERWISE LIMIT SELLER’S
REMEDIES OR DAMAGES FOR CLAIMS OF SELLER AGAINST BUYER ARISING OUT OF SECTION
3.7 HEREOF OR WAIVE OR OTHERWISE LIMIT SELLER’S RIGHTS TO OBTAIN FROM BUYER
ALL COSTS AND EXPENSES OF ENFORCING ITS RIGHTS UNDER THIS AGREEMENT, INCLUDING
ATTORNEYS’ FEES AND COSTS.


 


	
   

  	
  /int./ JL

  	
   

  	
   

  	
  /int./ PN

  	
   

  
	
   

  	
  Seller’s Initials

  	
   

  	
  Buyer’s Initials

  



 


23

















 


13.2        Default by Seller.  IF SELLER SHALL FAIL TO CONVEY THE PROPERTY TO BUYER
IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT, AND SUCH FAILURE
CONSTITUTES A DEFAULT HEREUNDER, THEN BUYER SHALL HAVE THE RIGHT TO  PURSUE THE REMEDY SET FORTH IN EITHER SECTIONS
13.2.1 OR 13.2.2 BELOW, AS ITS SOLE AND EXCLUSIVE REMEDY:


 


13.2.1     SPECIFIC
PERFORMANCE.  THE RIGHT TO
PURSUE AN ACTION FOR THE SPECIFIC PERFORMANCE OF THIS AGREEMENT.  AS A CONDITION PRECEDENT TO BUYER’S RIGHT TO
PURSUE AN ACTION FOR SPECIFIC PERFORMANCE, BUYER MUST BE READY, WILLING AND
ABLE TO PERFORM ALL OF BUYER’S COVENANTS AND OBLIGATIONS THAT THIS AGREEMENT
CONTEMPLATES WILL BE PERFORMED OR DELIVERED ON OR BEFORE THE CLOSE OF ESCROW.


 


13.2.2     ACTUAL
DAMAGES.  THE RIGHT TO THE
RETURN OF THE DEPOSIT AND ALL INTEREST ACCRUED THEREON WHILE IN ESCROW AND TO
PURSUE AN ACTION OR ACTIONS FOR ACTUAL DAMAGES AGAINST SELLER RELATIVE TO SUCH
DEFAULT.  IN THE EVENT SPECIFIC
PERFORMANCE IS AVAILABLE AS A REMEDY TO BUYER AND BUYER CHOOSES INSTEAD THE
REMEDY SET FORTH IN THIS SECTION 13.2.2, THEN SUCH ACTION OR ACTIONS FOR
DAMAGES (INCLUDING ANY ACTION FOR ANY BREACH OF SELLER’S REPRESENTATIONS,
WARRANTIES OR COVENANTS) SHALL NOT SEEK NOR SHALL THE AGGREGATE OF ANY AWARDS
OBTAINED EXCEED THE AMOUNT OF $250,000.


 


BUYER FURTHER AGREES THAT UNLESS BUYER SHALL
BE ENTITLED TO SPECIFIC PERFORMANCE UNDER SECTION 13.2.1 ABOVE, IF BUYER
SEEKS OR FILES OR RECORDS A LIS PENDENS OR ANY OTHER MATTER, CLOUD OR NOTICE
AFFECTING TITLE OF THE PROPERTY, OR SEEKS OR CLAIMS A VENDEE’S LIEN UPON THE
PROPERTY, THEN, UPON PRESENTATION OF A COPY OF THIS AGREEMENT TO THE COURT,
SELLER SHALL BE ISSUED A DISMISSAL OF THE ACTION EX PARTE, THAT THE LIS PENDENS
OR OTHER NOTICES SHALL BE EXPUNGED UPON SELLER’S EX PARTE APPLICATION.


 


NOTHING
CONTAINED IN THIS SECTION IS INTENDED TO WAIVE OR OTHERWISE LIMIT BUYER’S
RIGHTS TO OBTAIN FROM SELLER ALL COSTS AND EXPENSES OF ENFORCING ITS RIGHTS
UNDER THIS AGREEMENT, INCLUDING ATTORNEYS’ FEES AND COSTS.


 


	
   

  	
  /int./ JL

  	
   

  	
  /int./ PN

  	
   

  
	
   

  	
  Seller’s Initials

  	
  Buyer’s Initials

  



 


24

















 


14           BROKERS.


 


Seller and
Buyer each hereby represent, warrant to and covenant to each other that it has
not dealt with any third party, other than Cushman & Wakefield (“Brokers”) as Seller’s representative, in a
manner which would obligate the other to pay any brokerage commission, finder’s
fee or other compensation due or payable with respect to the transaction
contemplated hereby other than a commission to be paid to Brokers pursuant to a
separate agreement, which shall be paid by Seller only upon the Closing of the
purchase and sale contemplated hereby. 
Buyer represents and warrants to Seller that Buyer has not paid Brokers
any commission or compensation to Brokers in connection with the transaction
contemplated by this Agreement or otherwise in connection with the Property and
that it has not agreed to do so.  Seller
hereby indemnifies and agrees to protect, defend and hold Buyer harmless from
and against any and all claims, losses, damages, costs and expenses (including
attorneys’ fees, charges and disbursements) incurred by Buyer by reason of any
breach or inaccuracy of the representation, warranty and agreement of Seller
contained in this Section 14. 
Buyer hereby indemnifies and agrees to protect, defend and hold Seller
harmless from and against any and all claims, losses, damages, costs and
expenses (including attorneys’ fees, charges and disbursements) incurred by
Seller by reason of any breach or inaccuracy of the representation, warranty
and agreement of Buyer contained in this Section 14.  The provisions of this Section 14
shall survive the Closing or earlier termination of this Agreement.


 


15           CONFIDENTIALITY.


 


15.1        Buyer. 
Buyer agrees that until 5 years after the Closing (or if this Agreement
is terminated before Closing, 5 years after the termination), except as
otherwise provided herein or required by law and except for the exercise by
Buyer of any remedy hereunder, Buyer shall (a) keep confidential the pendency
of this transaction with Seller, the terms and conditions contained in the
Agreement and the identity of Seller and the documents and information supplied
by Seller to Buyer, (b) disclose such information only to Buyer’s agents,
employees, contractors, consultants or attorneys, as well as lenders (if any),
investment bankers, venture capital groups, investors, title company personnel,
auditors,  and prospective tenants, with
a need to know such information , provided that Buyer shall inform all persons
receiving such information from Buyer of the confidentiality requirement and
(to the extent within Buyer’s control) cause such confidence to be maintained,
and (c) upon the termination of this Agreement prior to the Closing, return to
Seller promptly upon request all copies of documents and materials supplied by
Seller.  Disclosure of information by
Buyer shall not be prohibited if that disclosure is of information that is or
becomes a matter of public record or public knowledge as a result of the Closing
of this transaction or from sources other than Buyer or its agents, employees,
contractors, consultants or attorneys or if disclosure is required under law or regulation.  Notwithstanding anything to the contrary
contained herein, Seller acknowledges that Buyer is a public company and that
Buyer may disclose the pendency and/or Closing of the transaction contemplated
by this Agreement in its public company filings.  Notwithstanding the foregoing, after the
Closing, and in connection with Buyer’s operation of the Property, Buyer shall
have the right to use and disclose the


 


25

















 


Property Documents and information therein, except Property Documents
and information therein related to Seller’s financial position and
environmental conditions at the Property, which shall be subject to the
limitations set forth above.


 


15.2        Seller. 
Seller agrees that until 5 years after the Closing (or if this Agreement
is terminated before Closing, 5 years after the termination), except as
otherwise provided herein or required by law or regulation, and except for the
exercise by Seller of any remedy hereunder, Seller shall (a) keep confidential
the pendency of this transaction with Buyer, the terms and conditions contained
in the Agreement and the identity of Buyer and the relationship between Buyer
and the entity to which Buyer may assign this Agreement or which Buyer
designates as the party to whom Seller shall convey the Property at the
Closing, and (b) disclose such information only to Seller’s agents, employees,
contractors, consultants or attorneys, as well as Tenants and title company
personnel, with a need to know such information in connection with effecting
this transaction, provided that Seller shall inform all such persons receiving
such confidential information from Seller of the confidentiality requirement
and (to the extent within Seller’s control) cause such confidence to be
maintained.  Disclosure of information
by Seller shall not be prohibited if that disclosure is of information that is
or becomes a matter of public record or public knowledge as a result of the
Closing of this transaction or from sources other than Seller or its agents,
employees, contractors, consultants or attorneys, or if disclosure is required under law or regulation.  Notwithstanding anything to the contrary
contained herein, Buyer acknowledges that Seller is a public company and that
Seller may disclose the pendency and/or Closing of the transaction contemplated
by this Agreement in its public company filings.


 


16           INDEMNIFICATION.


 


Seller hereby
indemnifies and agrees to defend and hold Buyer harmless from and against any
claims, demands, obligations, losses, costs, damages, liabilities, judgments or
expenses (including reasonable attorneys’ fees, charges and disbursements)
arising out of or in connection with the ownership, operation or maintenance of
the Property prior to the Closing. 
Promptly after receipt by Buyer of notice of the commencement of any
action for which a claim for indemnification is to be made against Seller,
Buyer shall notify Seller in writing of such commencement, but the
omission to so notify Seller will not relieve Seller from any liability
that it may have to Buyer hereunder except to the extent that failure to
notify causes prejudice to Seller.  If any action is brought against
Buyer, and it notifies Seller of the commencement thereof, Seller will be
entitled to participate therein and, to the extent that it may elect by written
notice delivered to Buyer promptly after receiving the aforesaid notice of
commencement, to assume the defense thereof with counsel satisfactory to Buyer
in its discretion.  In the event Seller has so assumed the
defense of any action against Buyer, Buyer shall not settle such action without
Seller’s prior written consent, which consent shall not be unreasonably
withheld or delayed.  In the event
Seller, after notice from Buyer as set forth above, has not elected to assume
the defense in such action, Buyer may settle such action in its sole and absolute
discretion, provided that such settlement shall not waive any claims by Buyer
against Seller hereunder.  Seller
shall do, execute and deliver, or shall cause to be done, executed and
delivered, all such further acts and instruments which Buyer may reasonably
request in order to


 


26

















 


more fully effectuate the
indemnifications provided for in this Agreement.  The provisions of this Section 16 shall survive the
Closing for a period of 24 months.


 


17           MISCELLANEOUS PROVISIONS.


 


17.1        Governing Law. 
This Agreement and the legal relations between the parties hereto shall
be governed by and construed and enforced in accordance with the laws of the
State of California, without regard to its principles of conflicts of law.


 


17.2        Entire
Agreement.  This Agreement, including the exhibits and
schedules attached hereto, constitutes the entire agreement between Buyer and
Seller pertaining to the subject matter hereof and supersedes all prior
agreements, understandings, letters of intent, negotiations and discussions,
whether oral or written, of the parties, and there are no warranties,
representations or other agreements, express or implied, made to either party
by the other party in connection with the subject matter hereof except as
specifically set forth herein or in the documents delivered pursuant hereto or
in connection herewith.  Without
limiting the foregoing, upon the execution of this Agreement, the Letter of
Intent shall terminate and be of no further force or effect.


 


17.3        Modifications;
Waiver.  No supplement, modification, waiver or
termination of this Agreement shall be binding unless executed in writing by
the party to be bound thereby.  No
waiver of any provision of this Agreement shall be deemed or shall constitute a
waiver of any other provision hereof (whether or not similar), nor shall such
waiver constitute a continuing waiver unless otherwise expressly provided.


 


17.4        Notices. 
All notices, consents, requests, reports, demands or other
communications hereunder (collectively, “Notices”)
shall be in writing and may be given personally, by reputable overnight
delivery service or by facsimile transmission (with in the case of a facsimile
transmission, with a copy by reputable overnight delivery service) to each of
the parties at the following addresses:


 


27

















 


	
  To Buyer:

  	
  ARE - Nancy Ridge No. 3, LLC

  
	
   

  	
  Alexandria Real Estate Equities, Inc.

  
	
   

  	
  135 N. Los Robles Ave.

  
	
   

  	
  Suite 250

  
	
   

  	
  Pasadena, California 91101

  
	
   

  	
  Attention:

  	
  Corporate Secretary

  
	
   

  	
   

  	
  Re: 6138-6150
  Nancy Ridge Drive

  
	
   

  	
  Telephone:

  	
  (626) 578-0777

  
	
   

  	
  Facsimile:

  	
  (626) 578-0770

  
	
   

  	
   

  	
   

  
	
  With A Copy To:

  	
  Teel, Palmer & Roeper, LLP

  
	
   

  	
  11455 El Camino Real, Suite 300

  
	
   

  	
  San Diego, California  92130

  
	
   

  	
  Attention:

  	
  Elizabeth A. Willes, Esq.

  
	
   

  	
  Telephone:

  	
  (858) 794-2900

  
	
   

  	
  Facsimile:

  	
  (858) 794-2909

  
	
   

  	
   

  	
   

  
	
  To Seller:

  	
  Arena Pharmaceuticals, Inc.

  
	
   

  	
  6166 Nancy Ridge Drive

  
	
   

  	
  San Diego, California 92121

  
	
   

  	
  Attention:

  	
  Chief Financial Officer

  
	
   

  	
  Telephone:

  	
  (858) 453-7200

  
	
   

  	
  Facsimile:

  	
  (858) 677-0065

  
	
   

  	
   

  	
   

  
	
  With A Copy To:

  	
  Arena Pharmaceuticals, Inc.

  
	
   

  	
  6166 Nancy Ridge Drive

  
	
   

  	
  San Diego, California 92121

  
	
   

  	
  Attention:

  	
  General Counsel

  
	
   

  	
  Telephone:

  	
  (858) 453-7200

  
	
   

  	
  Facsimile:

  	
  (858) 677-0065

  
	
   

  	
   

  	
   

  
	
  To Escrow Agent:

  	
  Chicago Title Insurance Company

  
	
   

  	
  700 South Flower Street

  
	
   

  	
  Suite 900

  
	
   

  	
  Los Angeles, California  90017

  
	
   

  	
  Attention:  Maggie Watson

  
	
   

  	
  Telephone:

  	
  (213) 488-4337

  
	
   

  	
  Facsimile:

  	
  (213) 488-4388

  



 


or to such other address or such other person as the addressee party
shall have last designated by written notice to the other party.  Notices given by facsimile transmission
shall be deemed to be delivered as of the date and time of transmission; and
all other Notices shall have been deemed to have been delivered on the date of
delivery or refusal to accept delivery.


 


28

















 


17.5        Expenses.  Subject to the
allocation of Closing Costs provided in Section 8.2 hereof, whether or
not the transactions contemplated by this Agreement shall be consummated, all
fees and expenses incurred by any party hereto in connection with this
Agreement shall be borne by such party.


 


17.6        Assignment.


 


17.6.1     Seller’s
Right to Assign.  Seller shall not have the right, power, or
authority to assign, pledge or mortgage this Agreement or any portion of this
Agreement, or to delegate any duties or obligations arising under this
Agreement, voluntarily, involuntarily, or by operation of law.


 


17.6.2     Buyer’s
Right to Assign.  Buyer shall not have the right, power, and
authority to assign this Agreement or to delegate any duties or obligations
arising under this Agreement, voluntarily, involuntarily or by operation of
law, to any person or entity without Seller’s prior written consent (which
consent shall not be unreasonably withheld or delayed).  Upon such assignment, Buyer shall be
relieved of all obligations under this Agreement and the Escrow.


 


17.7        Severability. 
Any provision or part of this Agreement which is invalid or
unenforceable in any situation in any jurisdiction shall, as to such situation
and such jurisdiction, be ineffective only to the extent of such invalidity and
shall not affect the enforceability of the remaining provisions hereof or the
validity or enforceability of any such provision in any other situation or in
any other jurisdiction, unless the absence of the invalid or unenforceable
provision(s) or part(s) adversely affects the substantive rights of one or both
of the parties.


 


17.8        Successors and Assigns; Third Parties. 
Subject to and without waiver of the provisions of Section 17.6
hereof, all of the rights, duties, benefits, liabilities and obligations of the
parties shall inure to the benefit of, and be binding upon, their respective
successors and assigns.  Except as
specifically set forth or referred to herein, nothing herein expressed or
implied is intended or shall be construed to confer upon or give to any person
or entity, other than the parties hereto and their successors or assigns, any
rights or remedies under or by reason of this Agreement.


 


17.9        Counterparts. 
This Agreement may be executed in as many counterparts as may be deemed
necessary and convenient, and by the different parties hereto on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute one and the same instrument.


 


17.10      Headings. 
The section headings of this Agreement are for convenience of reference
only and shall not be deemed to modify, explain, restrict, alter or affect the
meaning or interpretation of any provision hereof.


 


17.11      Time of the
Essence.  Time shall be of the essence with respect to
all matters contemplated by this Agreement.


 


29

















 


17.12      Further
Assistance.  In addition to the actions recited herein
and contemplated to be performed, executed, and/or delivered by Seller and
Buyer, Seller and Buyer agree to perform, execute and/or deliver or cause to be
performed, executed and/or delivered at the Closing or after the Closing any
and all such further acts, instruments, deeds and assurances as may be
reasonably required to consummate the transactions contemplated hereby.


 


17.13      Number and
Gender.  Whenever the singular number is used, and
when required by the context, the same includes the plural, and the masculine
gender includes the feminine and neuter genders.


 


17.14      Construction.  This Agreement shall
not be construed more strictly against one party hereto than against any other
party hereto merely by virtue of the fact that it may have been prepared by
counsel for one of the parties.


 


17.15      Intentionally Deleted.


 


17.16      Exhibits. 
All exhibits attached hereto are hereby incorporated by reference as
though set out in full herein.


 


17.17      Attorneys’ Fees. 
If any action is brought by either party against the other party,
relating to or arising out of this Agreement, the transaction described herein
or the enforcement hereof, the prevailing party shall be entitled to recover
from the other party reasonable attorneys’ fees, costs and expenses incurred in
connection with the prosecution or defense of such action.  For purposes of this Agreement, the term “attorneys’ fees” or “attorneys’ fees and costs” shall mean the
fees and expenses of counsel to the parties hereto, which may include printing,
photostating, duplicating and other expenses, air freight charges, and fees
billed for law clerks, paralegals and other persons not admitted to the bar but
performing services under the supervision of an attorney, and the costs and
fees incurred in connection with the enforcement or collection of any judgment
obtained in any such proceeding.  The
provisions of this Section shall survive the entry of any judgment, and shall
not merge, or be deemed to have merged, into any judgment.


 


17.18      Business Days. 
As used herein, the term “Business
Day” shall mean a day that is not a Saturday, Sunday or legal
holiday under the laws of the State of California.  In the event that the date for the performance of any covenant or
obligation under this Agreement shall fall on a Saturday, Sunday or legal holiday
under the laws of the State of California, the date for performance thereof
shall be extended to the next Business Day.


 


17.19      Tax-Free Exchange.  In the event
that Seller or Buyer desires to effectuate the transaction contemplated by this
Agreement as a tax-free exchange, then upon request made by Seller or Buyer,
the other party shall cooperate fully in effectuating such tax-free exchange,
such cooperation to include, without limitation, executing and delivering all
documents and instruments necessary, for such purpose, provided that the
exchanging party shall reimburse the other party for any costs or expenses
incurred by the other party in connection with such cooperation.  Each party (the “Indemnifying Party”) shall indemnify, protect, defend and hold
harmless the other party and all of the other party’s


 


30

















 


Exculpated Parties (the “Indemnified
Party”) from and against any liability, loss, cost or expense
incurred by the Indemnified Party or any of its Exculpated Parties in
connection with the Indemnified Party’s cooperation with the Indemnifying Party
pursuant to this section or otherwise arising out of the Indemnifying Party’s
tax-deferred exchange.


 


[Remainder of page intentionally blank.]


 


31

















 


IN WITNESS WHEREOF,
the parties hereto have executed this Agreement as of the day and year first
above written.


 


	
  BUYER:

  	
  ARE – NANCY RIDGE NO. 3, LLC,

  
	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Alexandria Real Estate Equities, L.P.,

  
	
   

  	
   

  	
  a Delaware limited partnership,

  
	
   

  	
   

  	
  its managing member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  ARE-QRS Corp.,

  
	
   

  	
   

  	
   

  	
  a Maryland corporation,

  
	
   

  	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  
	
  Execution Date: December 19, 2003

  	
   

  	
  By:

  	
   /s/ Peter J. Nelson

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Peter J.
  Nelson

  	
   

  
	
   

  	
   

  	
   

  	
  Its: 

  	
  Senior VP
  & Chief Financial Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SELLER:

  	
  ARENA
  PHARMACEUTICALS, INC.,

  a Delaware corporation  

  
	
   

  	
   

  	
   

  
	
  Execution Date: December 18, 2003

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Jack Lief

  
	
   

  	
  Name:

  	
  Jack Lief

  
	
   

  	
  Its:

  	
  President and Chief Executive Officer

  
											



 


ESCROW AGENT:


 


The undersigned Escrow Agent accepts the foregoing Agreement of
Purchase and Sale and Joint Escrow Instructions and agrees to act as Escrow
Agent under this Agreement in strict accordance with its terms.


 


	
  CHICAGO
  TITLE INSURANCE COMPANY

  	
  Date:

  	
  December        , 2003

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
								



 


32

















 


EXHIBIT
A


 


LEGAL DESCRIPTION


 


PARCEL A:


 


PARCEL 9 OF PARCEL MAP NO. 17347, IN THE CITY
OF SAN DIEGO, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP
THEREOF FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY APRIL
13, 1994 AS DOCUMENT NO. 94-242762 OFFICIAL RECORDS.


 


PARCEL B:


 


A NONEXCLUSIVE EASEMENT FOR INGRESS AND
EGRESS BY VEHICULAR AND PEDESTRIAN TRAFFIC AND VEHICLE PARKING UPON, OVER AND
ACROSS THE “COMMON AREA” FOR THE BENEFIT OF THE OWNERS, PRESENT AND FUTURE, AND
THEIR RESPECTIVE SUCCESSORS AND ASSIGNS, TENANTS, CUSTOMERS AND INVITEES,
TOGETHER WITH A NONEXCLUSIVE EASEMENT UNDER AND THROUGH THE “COMMON AREA” FOR
THE INSTALLATION, MAINTENANCE, REMOVAL AND REPLACEMENT OF WATER DRAINAGE
SYSTEMS OR STRUCTURES, WATER MAINS, SEWERS, WATER SPRINKLER SYSTEM LINES,
TELEPHONE OR ELECTRICAL CONDUITS OR SYSTEMS, GAS MAINS AND ANY OTHER PUBLIC
UTILITIES AND/OR SERVICE EASEMENTS, AS CREATED, SET FORTH, DEFINED, DESCRIBED
AND GRANTED IN THAT CERTAIN “DECLARATION OF RECIPROCAL EASEMENTS OF THE
SORRENTO RIDGE BUSINESS PARK PLANNED INDUSTRIAL DEVELOPMENT” RECORDED APRIL 13,
1994 AS DOCUMENT NO. 94-242763 OFFICIAL RECORDS.


 


(APN:  
343-350-26)


 


A-1

















 


EXHIBIT
B


 


INCLUDED
FIXTURES


 


fume hoods, built-in cold rooms, built-in
warm rooms, walk-in cold rooms, walk-in warm rooms, deionized water systems,
glass washing equipment, cage washers, built-in autoclaves, chillers, built-in
plumbing and electrical systems, HVAC systems and equipment, vacuum pumps, air
compressors, and transfer switches.


 


B-1

















 


EXHIBIT
C


 


ALLOCATION SCHEDULE


 


	
  Item

  	
   

  	
  Allocation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Real
  Property

  	
   

  	
  100

  	
  %

  
	
  Personal
  Property

  	
   

  	
  0

  	
  %

  
	
  Intangible
  Property

  	
   

  	
  0

  	
  %

  



 


C-1

















 


EXHIBIT
D


 


PROPERTY DOCUMENTS


 


 


	
  No.

  	
   

  	
  Item

  	
   

  	
  Delivered

  	
   

  
	
  1.

  	
   

  	
  Other Property Information

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  a.          A
  list of Fixtures to be sold to Buyer (including any leased personal property)
  and all documentation evidencing the ownership thereof (specifically
  excluding all Fixtures not part of the sale to Buyer.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  b.          All
  documents evidencing the Intangible Property

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  c.          Copies
  of all outstanding labor, service, equipment, supply, management,
  maintenance, concession, utility, construction and operating contracts, and
  any amendments thereto to which Seller is a party (collectively, the “Service
  Contracts”)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  d.          Property
  Sales Contracts (prior purchase and sales agreements with surviving
  representations, warranties, indemnities or preferential rights to purchase
  or lease, first right of negotiation or refusal regarding the same or other
  option rights)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  e.          Copies
  of any Ground Leases and amendments thereto

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  f.          Copies
  of existing Loan Documents, if assumption contemplated

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  g.         Copies
  of all Approvals

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  h.         Property
  Association Documents: including Conditions, Covenants and Restrictions,
  Association Articles of Incorporation and Bylaws, Financial Statements,
  Budgets and Information on Reserves, Reciprocal Easement Agreements

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  i.          Capital
  Improvement and Preventative Maintenance Program

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Drawings and Specifications, Maps, Plans
  and Photographs

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  a.          All
  as-built plans and specifications, site plans, aerial photographs, floor
  plans, CAD drawing and other similar maps, plans and drawings.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  b.          American
  Land Title Association (ALTA) Survey sufficient to obtain extended coverage
  Owner’s Policy of Title Insurance

  	
   

  	
   

  	
   

  



 


D-1

















 


	
  No.

  	
   

  	
  Item

  	
   

  	
  Delivered

  	
   

  
	
  3.

  	
   

  	
  Financial Information

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  a.          Year
  end financial and monthly operating statements, and Income and expense
  statements for 2000 through 2002, and for the period from January 1, 2003
  through September 30, 2003

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  b.          Monthly
  general ledgers for 2002 and for the period from January 1, 2003 through September 30,
  2003

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  c.          A
  budget for calendar year 2003

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  d.          A
  copy of the tax bill issued for the prior 3 years for real estate taxes

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  e.          Expense
  Records: including invoice receipts and disbursements

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  f.          Accounts
  Receivable and Payable Records: including current and breakdown of over 30,
  60 and 90 days

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  g.         Bank
  Statements and check registers for all operating accounts: for 2002 and for
  the period from January 1, 2003 through September 30, 2003

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  h.         Most
  recent audited financial statements, if audited within last two years

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  i.          Appraisals

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Insurance Information

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  a.          Statement
  of insurance coverage and premiums by policy type, and evidence of insurance

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  b.          Copies
  of all pending insurance claims and insurance-related litigation documents

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Governmental Documents

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  a.          Development
  Agreements

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  b.          Building
  Permits

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  c.          Certificates
  of Occupancy/Completion

  	
   

  	
   

  	
   

  



 


D-2

















 


	
  No.

  	
   

  	
  Item

  	
   

  	
  Delivered

  	
   

  
	
   

  	
   

  	
  d.          Variances

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  e.          Special
  Conditional Use Permits for Building

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  f.          Special
  Agreements with Utilities and Districts

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  g.         Environmental
  Impact Reports (EIR)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  h.         Negative
  declarations

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  i.          Other
  zoning, entitlements and developments rights agreements and information

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  j.          Any
  notices of violation, citations, or compliance orders related to the
  foregoing

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Engineering Reports and Studies

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  a.          Geological,
  soils, geotechnical, flood zone studies

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  b.          Mechanical,
  structural, electrical, architectural, engineering and physical inspection
  reports which relate to the physical condition, development and operation of
  the Property or recommended improvements thereto, including any seismic
  retrofit and ADA compliance reports.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  c.          All
  reports, studies, audits, assessments and information concerning Material of
  Environmental Concern, if any including any investigation or remediation
  reports.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  d.          Any
  notices of violation, citations, or compliance orders related to the
  foregoing

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Seller Information

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  a.          Organizational
  Documents

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  b.          Authority
  Documents or Certificates

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  Title Information

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  a.          Existing
  Title Policy

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  b.          Current
  Preliminary Title Report or Commitment and legible copies of all underlying
  documents referenced therein, deed

  	
   

  	
   

  	
   

  



 


D-3

















 


	
  No.

  	
   

  	
  Item

  	
   

  	
  Delivered

  	
   

  
	
   

  	
   

  	
  vesting Seller
  with title, and any maps referenced in the legal description for the Property

  	
   

  	
   

  	
   

  



 


 


D-4

















 


EXHIBIT
E


 


FORM OF ESTOPPEL CERTIFICATE


 


RE:          [Declaration of
Reciprocal Easements
dated                                 ]


 


The undersigned [Association] hereby
certifies
to                                 (“Buyer”)
as follows:


 


1.             As
of the date of this Estoppel Certificate, there exists no breach or default,
nor any state of facts which, with notice, the passage of time, or both, would
result in a breach or default under the Declaration on the part of Arena
Pharmaceuticals, Inc. (“Arena”) or the property located at
6138-6150 Nancy Ridge Drive, San Diego, California (the “Property”).


 


2.             The
owner of the Property is currently obligated to pay common area maintenance
charges of
$                     in
monthly installments and monthly installments of such charges have been paid by
Arena through
                     ,
200    .  Tenant’s
pro rata share of common area maintenance charges under the Declaration
is       %.


 


This Estoppel Certificate is made to Buyer in
connection with the prospective purchase by Buyer, or Buyer’s assignee, of the
Property.  This Estoppel Certificate may
be relied on by Buyer or Buyer’s assignee and any other party who acquires an
interest in the Premises in connection with such purchase or any person or
entity which may finance such purchase.


 


Dated this
                            day
of                     ,          


 


	
   

  	
  “ASSOCIATION”

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  a

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Its:

  	
   

  
						



 


E-1

















 


EXHIBIT
F


 


PROPERTY QUESTIONNAIRE


 


Name of Property:                                                                                                    
(the “Property”)


 


 


THIS
QUESTIONNAIRE SHOULD BE COMPLETED BY THE PROPERTY MANAGER OR THE MOST SENIOR
MANAGEMENT PERSON OF THE COMPANY THAT IS FAMILIAR WITH THE DETAILS OF THE
PROPERTY AND ITS OPERATION.


 


 


1.             Which of the following best describes the
Property?  (Check more than one box if
applicable.)


 


o    Scientific research and
development laboratory facility


o    Assembly, distribution, pilot
plant, or full-scale manufacturing facility


o    Headquarters or administrative
offices


o    Build-to-suit or retrofit
project


o    Warehouse facility


o    Raw land


o    Other (please describe):


 


 


2.             How
many different tenants currently lease space at the Property?


 


o    0 - 5


o    6 - 10


o    11 - 15


o    More than 15


 


F-1

















 


3.             a              Does
any lease in connection with the Property provide for any rental payments based
upon the net income or profits of the tenant(1) or that are contingent in any
respect, other than rental payments that vary (i) as a percentage or
percentages of the tenant’s gross receipts or sales, or (ii) because of
“escalation clauses”?  If yes, please
explain.


 


	
  o  YES

  	
   

  	
  o  NO

  



 


Explain:


 


 


b.             Do
the terms of any lease contain “escalation clauses” other than standard
escalation provisions requiring adjustments in the amount of rent due based
upon changes in the consumer price index or in the costs of the Owner for
insurance, property taxes or maintenance expenses?  If yes, please list all such items that would potentially require
any adjustment under any escalation clause.


 


	
  o  YES

  	
   

  	
  o  NO

  



 


List:


 


c.             In
connection with the lease of the Property, is any tenant entitled to receive
any economic incentives (e.g., “free” or reduced rent, tenant
improvement allowances, etc.)?  If yes,
please explain.


 


	
  o  YES

  	
   

  	
  o  NO

  



 


Explain:


 


 


d.             Are
the terms of all lease payments and formulas typical and customary for
properties of a character and quality similar to the Property that are located
in the same geographic market, and do these provisions conform with normal
business practice?  If no, please
explain which provisions are not typical or customary, or do not conform with
normal business practice.


 


	
  o  YES

  	
   

  	
  o  NO

  



 


Explain:


 


 












(1)           Responses to any
questions about leases or tenants should take into account, where applicable,
any subleases and sub-tenants.


 


F-2

















 


e.             Which
of the following best describes the percentage of the leases that are “triple
net”?


 


	
  o  ALL

  	
   

  	
  o  MOST

  	
   

  	
  o  SOME

  	
   

  	
  o  NONE

  



 


4.             a              Is the percentage of the total rent
attributable to personal property more than 15 percent of the total rent from
any lease?


 


	
  o  YES

  	
   

  	
  o  NO

  



 


 


b.             Are
any temperature-controlled or other specialized rooms located at the Property (e.g., “cold rooms”, “warm rooms”, or
“clean rooms”)?  If yes, please list the
approximate number of such items located in each unit and/or floor.


 


	
  o  YES

  	
   

  	
  o  NO

  



 


List:


 


 


c.             Do
any of the units at the Property contain any individual air conditioning,
heating, refrigeration, or freezer units that are owned or leased by the Owner,
other than centralized HVAC or any specialized rooms described in question
4(b)?  If yes, please describe.


 


	
  o  YES

  	
   

  	
  o  NO

  



 


Explain:


 


 


d.             Do
any of the units at the Property contain any movable lab benches or tables,
furniture (e.g., desks, chairs or
lamps), laboratory equipment (e.g.,
microscopes, centrifuges or glassware), boilers, air compressors, deionizing
apparatus, reverse osmosis apparatus, vacuum pumps, glassware washers, oven
dryers, animal washers, animal caging, incinerators, or other significant items
of specialized equipment that is owned or leased by the Owner?  If yes, please attach a list of such
items (if available).


 


	
  o  YES

  	
   

  	
  o  NO

  



 


 


5.             a.             Does any entity other than the Owner
manage the Property or any portion of the Property (the “Manager”)?  If yes, please identify the Manager:


 


	
  o  YES

  	
   

  	
  o  NO

  



 


Name of
Manager:                                    


 


F-3

















 


b.             If
the answer to question 5(a) is yes, are there any arrangements pursuant to
which the Manager refunds, rebates or otherwise provides any credit with
respect to its fee relating to the Property? 
If yes, please explain.


 


	
  o  YES

  	
   

  	
  o  NO

  	
   

  	
  o  N/A

  



 


Explain:


 


 


c.             Does
the Owner employ any on-site personnel at the Property?  If yes, please name such person(s) and
describe their general duties.


 


	
  o  YES

  	
   

  	
  o  NO

  



 


Explain:


 


 


6.             a.             Are all services provided to tenants of
the Property by the Owner or the Manager (if applicable) typical and customary
for properties of a character and quality similar to the Property that are
located in the same geographic market? 
If no, please describe which services or arrangements are not typical
and customary.


 


	
  o  YES

  	
   

  	
  o  NO

  



 


Explain:


 


b.             Are
you aware of any other services provided to tenants by any person hired by the
Owner or the Manager that are not typical and customary for properties of a
character and quality similar to the Property that are located in the same
geographic market?  If yes, please
explain.


 


	
  o  YES

  	
   

  	
  o  NO

  



 


Explain:


 


 


7.             a.             Are there any arrangements for the Owner
or the Manager to provide architectural, construction or engineering services
to any tenant at the Property (e.g.,
“building-out” the Property as part of lease inducements)?


 


	
  o  YES

  	
   

  	
  o  NO

  



 


IF THE ANSWER TO
QUESTION 7(a) IS NO, PLEASE SKIP TO QUESTION 8; OTHERWISE, PLEASE ANSWER
QUESTIONS 7(b) THROUGH 7(d).


 


F-4

















 


b.             Are
such arrangements only provided as an inducement to the tenant to enter into or
extend a lease?


 


	
  o  YES

  	
   

  	
  o  NO

  



 


c.             Are
such arrangements typical and customary for properties of a character and
quality similar to the Property that are located in the same geographic market?
 If no, please explain which
arrangements are not typical and customary.


 


	
  o  YES

  	
   

  	
  o  NO

  



 


Explain:


 


 


d.             Does
the Owner or the Manager expect to derive any income (e.g., development fees) from such
arrangements?  If yes, please describe.


 


	
  o  YES

  	
   

  	
  o  NO

  



 


Explain:


 


 


e.             Do
any such arrangements provide for the purchase, funding, or installation by the
Owner of any significant items of property which could be deemed to constitute
“personal property”?  If yes, please
describe any such items of property.


 


	
  o  YES

  	
   

  	
  o  NO

  



 


Explain:


 


 


8.             a.             Please check any utility services that the
Owner or the Manager directly or indirectly plays any role in providing to
tenants at the Property:


 


	
  o  Electric

  	
   

  	
  o  Gas

  	
   

  	
  o  Water

  	
   

  	
  o  Telephone

  	
   

  	
   

  
	
  o  Heat/Air cond.

  	
   

  	
  o  Sewage

  	
   

  	
  o  Facsimile

  	
   

  	
  o  Cable TV

  
	
  o  Other: (Please
  list)                                                                                   

  



 


b.             Are
all such utility services typical and customary for properties of a character
and quality similar to the Property that are located in the same geographic
market?  If no, please list any utility
services that are not typical and customary.


 


	
  o  YES

  	
   

  	
  o  NO

  	
   

  	
  o  N/A

  



 


List:


 


F-5

















 


c.             Are
tenants charged, either as a separate recoverable amount or as part of common
area maintenance costs, for all such utility services?  If no, please explain which services are
provided at no charge and whether this is a typical and customary practice for
properties of a quality and character similar to the Property that are located
in the same geographic market.


 


	
  o  YES

  	
   

  	
  o  NO

  



 


Explain:


 


 


d.             Are
individual units separately metered to measure utility usage, with tenants
charged by the Owner or the Manager, as appropriate, in proportion to
usage?  If no, please briefly explain
how charges for utilities are determined and allocated among the various
tenants (e.g., pro-rata based on
square footage, etc.).


 


	
  o  YES

  	
   

  	
  o  NO

  	
   

  	
  o  N/A

  



 


Explain:


 


 


e.             If
any tenant is charged by the Owner or the Manager for any utility service, is
the tenant billed without any fee, income, profit or other markup over the
cost?  If no, please explain.


 


	
  o  YES

  	
   

  	
  o  NO

  	
   

  	
  o  N/A

  



 


Explain:


 


 


f.              Does
the Owner or the Manager derive any income from any utility provider at the
Property?  If yes, please explain.


 


	
  o  YES

  	
   

  	
  o  NO

  	
   

  	
  o  N/A

  



 


Explain:


 


 


9.             a.             Are pay telephones and vending (e.g., soda, cigarette, candy, etc.)
machines provided at the Property by the Owner, by the Manager, or by
third-party suppliers?  (Check more than
one response if appropriate.)


 


	
  o  OWNER

  	
   

  	
  o  MANAGER

  	
   

  	
  o  THIRD PARTY

  	
   

  	
  o  N/A

  



 


Explain:


 


F-6

















 


b.             If
pay telephones or vending machines are provided or operated by a third-party
supplier, does that person pay the Owner or the Manager any rent, fee, or any
other amount?


 


	
  o  YES

  	
   

  	
  o  NO

  	
   

  	
  o  N/A

  



 


 


c.             If
the answer to question 9(b) is yes, is such amount fixed or based upon a
percentage of gross receipts?  If it is
not fixed or based upon a percentage of gross receipts, please explain.


 


	
  o  YES

  	
   

  	
  o  NO

  	
   

  	
  o  N/A

  



 


Explain:


 


 


10.           a.             Please check any of the following that
describes the parking provided at or with respect to the Property.  (Check more than one box if applicable.)


 


o    Open lot / no gated entry


o    Open lot / gated entry


o    Single level parking garage


o    Multi-tier parking garage


o    Specific spaces (or group of
spaces) reserved or preferential parking for tenant(s) or their employees


o    Cashier/parking lot attendant
on duty


o    Valet parking available


o    Security guard on duty


 


b.             Is
all parking at or with respect to the Property available to tenants (or to
their or employees or guests) without separate charge and only on an unreserved
basis (i.e., no tenant is
assigned particular space(s)), other than valet parking services (as described
in response to question 11(c) below) or reserved parking for handicapped
persons?  If no, please explain the
parking arrangements between the Owner and the tenants.


 


	
  o  YES

  	
   

  	
  o  NO

  



 


Explain:


 


 


c.             Are
there any attendants or are any additional related services provided (e.g., valet parking, security, car
wash)?  If yes, please describe the
functions of such person(s) and the nature of such services (including any
services indicated in response to question 10(a)).  In addition, please indicate whether any such services are
typical and customary


 


F-7

















 


for properties of a similar character and quality as the Property that
are located in the same geographic market.


 


	
  o  YES

  	
   

  	
  o  NO

  



 


Explain:


 


 


d.             For
those persons who pay to park at the Property (including in connection with any
valet parking services), please indicate the period of time, if any, for which
their parking privileges are generally valid (e.g.,
hourly, daily, monthly, etc.).


 


Duration:                               


 


e.             Is
there a person or entity (an “Operator”) that either operates the parking
facilities or provides related services (e.g.,
valet services)?  If yes, please
identify the Operator and attach any separate agreement evidencing those arrangements.


 


	
  o  YES

  	
   

  	
  o  NO

  



 


Operator(s):                            


 


IF THE ANSWER TO
QUESTION 10(e) IS NO, PLEASE SKIP TO QUESTION 11; OTHERWISE, PLEASE ANSWER
QUESTIONS 10(f) THROUGH 10(h).


 


f.              Please
briefly explain the manner in which each Operator is compensated for its role
in providing parking (e.g., fixed
fee, percentage of gross parking revenues, etc.).


 


Explain:


 


 


g.             Does
either of the Owner or the Manager bear any portion of any Operator’s costs or
expenses?  If yes, please explain the
arrangement.


 


	
  o  YES

  	
   

  	
  o  NO

  	
   

  	
  o  N/A

  



 


Explain:


 


F-8

















 


h.             Does
either of the Owner or the Manager derive any income from the Operator or from
any parking charges?  If yes, please
explain.


 


	
  o  YES

  	
   

  	
  o  NO

  	
   

  	
  o  N/A

  



 


Explain:


 


 


11.           Does the Owner or the Manager directly or
indirectly play any role in providing security services to individual
tenants?  Answer no if the only
involvement of these entities in providing security services is with respect to
the Property as a whole or its common areas, and not for individual units or
tenants.


 


	
  o  YES

  	
   

  	
  o  NO

  



 


 


12.           a.             Does the Owner or the Manager directly or
indirectly play any role in providing janitorial services to individual
tenants?  Answer no if the only
involvement of these entities in providing janitorial services is with respect
to the Property as a whole or its common areas, and not for individual units or
tenants.


 


	
  o  YES

  	
   

  	
  o  NO

  



 


IF
THE ANSWER TO QUESTION 12(a) IS NO, PLEASE SKIP TO QUESTION 13; OTHERWISE,
PLEASE ANSWER QUESTIONS 12(b) THROUGH 12(d).


 


b.             Is
the provision of such service typical and customary for properties of a
character and quality similar to the Property that are located in the same
geographic market?  If no, please
explain.


 


	
  o  YES

  	
   

  	
  o  NO

  



 


Explain:


 


 


c.             Does
the Owner or the Manager bear any portion of the cost or expense of providing
janitorial services to tenants?  If yes,
please explain.


 


	
  o  YES

  	
   

  	
  o  NO

  



 


Explain:


 


F-9

















 


d.             Does
the Owner or the Manager derive any income in connection with the janitorial
services provided to tenants?  If yes,
please explain.


 


	
  o  YES

  	
   

  	
  o  NO

  



 


Explain:


 


 


e.             Are
tenants directly or indirectly charged for any janitorial services provided at
the Property?  If yes, please briefly
explain the manner in which these charges are determined (e.g., pro-rata based on relative square
footage).


 


	
  o  YES

  	
   

  	
  o  NO

  



 


Explain:


 


 


13.           a.             Is the actual maintenance of the
Property’s common areas performed by employees of the Owner, the Manager, or an
unrelated third-party?  (Check more than
one response if appropriate.)


 


	
  o  OWNER

  	
   

  	
  o  MANAGER

  	
   

  	
  o  THIRD-PARTY

  



 


b.             Does
the Owner or the Manager bear any portion of the cost of common area
maintenance?  If yes, please explain.


 


	
  o  YES

  	
   

  	
  o  NO

  



 


Explain:


 


 


c.             Are
tenants charged for common area maintenance? 
If yes, please explain the manner in which these charges are determined
(e.g., pro-rata based on relative
square footage).


 


	
  o  YES

  	
   

  	
  o  NO

  



 


 


d.             Are
the services and arrangements with respect to the Property’s common area
maintenance typical and customary for properties of a character and quality
similar to the Property that are located in the same geographic market?  If no, please explain.


 


	
  o  YES

  	
   

  	
  o  NO

  



 


Explain:


 


F-10

















 


14.           Are any tenants charged by the Owner or the
Manager any fee or other amount that is not typically and customarily charged
in connection with the rental of properties of a character and quality similar
to the Property in the same geographic market?(2) If yes, please explain.


 


	
  o  YES

  	
   

  	
  o  NO

  	
   

  	
  o  N/A

  



 


Explain:


 


 


15.           a.             Does the Owner or the Manager render any
services to any tenant (or to employees of any tenant) other than as disclosed
above in this questionnaire (e.g.,
glassware cleaning, electron microscopy, animal care or storage, information
services (e.g., Internet or LAN
connections), telecommunication services (e.g.,
voice mail), day care, babysitters, food services, etc.)?


 


	
  o  YES

  	
   

  	
  o  NO

  



 


Explain:


 


 


b.             Are
all of the services described in the response to question 15(a) above typical
and customary for properties of a character and quality similar to the Property
that are located in the same geographic market?  If no, please describe which services or amenities are not
typical and customary.


 


	
  o  YES

  	
   

  	
  o  NO

  	
   

  	
  o  N/A

  



 


Explain:


 


 


c.             Does
the Owner or the Manager directly or indirectly derive any income, bear any
costs or expenses, or employ any persons in connection with any atypical or
non-customary services indicated in the response to question 15(b) above?  If yes, please explain.


 


	
  o  YES

  	
   

  	
  o  NO

  	
   

  	
  o  N/A

  



 


Explain:


 












(2)           Typical
and customary fees might include, in some markets, late payment fees,
subleasing fees, application fees, credit check fees, release fees, etc.


 


F-11

















 


16.           Is any space at the Property leased to any
non-commercial tenants (i.e.,
residential tenants)?


 


	
  o  YES

  	
   

  	
  o  NO

  



 


 


17.           a.             Are any services rendered to any tenant by
third-party suppliers hired by the Owner or the Manager, other than as
previously disclosed in this questionnaire?


 


	
  o  YES

  	
   

  	
  o  NO

  



 


 


b.             If
the answer to question 17(a) above is yes, are all of those services typical
and customary for properties of a character and quality similar to the Property
that are located in the same geographic market?  If not, please describe which services are not typical and
customary.


 


	
  o  YES

  	
   

  	
  o  NO

  	
   

  	
  o  N/A

  



 


Explain:


 


 


18.           Does any of the Owner, an Affiliate or the
Manager share in any income or compensation received by any third-party service
provider with respect to the rendering of services to any tenant, other than as
previously disclosed in this questionnaire? 
If yes, please explain the arrangements.


 


	
  o  YES

  	
   

  	
  o  NO

  	
   

  	
  o  N/A

  



 


Explain:


 


 


19.           Does the Company or the Manager engage in
any revenue-generating activities in connection with the Property not mentioned
previously in this questionnaire (other than the rental of real property or the
investment of excess cash)?


 


	
  o  YES

  	
   

  	
  o  NO

  



 


Explain:


 


 


20.           a.             Does
the Owner separately lease any storage space at the Property?


 


	
  o  YES

  	
   

  	
  o  NO

  



 


F-12

















 


b.             If
the answer to question 19(a) is yes, is such storage space a
temperature-controlled or other specialized room described in question 4(b) (e.g., freezer warehouse)?


 


	
  o  YES

  	
   

  	
  o  NO

  



 


Explain:


 


 


	
   

  	
  Arena
  Pharmaceuticals, Inc., a Delaware 

  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
  Dated: December      , 2003

  	
   

  	
   

  
	
   

  	
  Signature

  
						



 


F-13

















 


EXHIBIT
G


 


SURVEYOR’S CERTIFICATE


 


To:          ARE – NANCY RIDGE NO. 3, LLC, a Delaware
limited liability company, its successors and assigns, and Chicago Title
Company.


 


This is to certify that this map or plat and the survey on which it is
based were made on the date shown below of the premises described in Chicago
Title Company’s title commitment dated as
of                   ,
2003, issued under Order No.                   ,
(i) in accordance with the “Minimum Standard Detail Requirements for ALTA/ACSM
Land Title Surveys,” jointly established and adopted by ALTA, ACSM and NSPS in
1999, as defined therein, and includes Items 1, 2, 3, 4, 6, 7(a), 7(b), 7(c),
8, 9, 10, 11, 13, 14, 15 and 16 of Table A thereof and (ii) pursuant to the
Accuracy Standards (as adopted by ALTA and ACSM and in effect on the date of
this certification) of an Urban Survey, as defined therein.  This survey was also made in accordance with
the State of                   Minimum
Standards of Practice for Land Surveyors.


 


The subject property contains                   square
feet or       acres, is located in a zoning
district classification
of          , and contains
          regular parking
spaces
and          handicapped
parking spaces,
totaling          regular and
handicapped parking spaces.


 


The survey correctly shows the zone designation of any area shown as
being within a Special Flood Hazard Area according to current Federal Emergency
Management Agency Maps which make up a part of the National Flood Insurance
Administration Report; Community No.          ,
Panel
No.          dated          
          , 2003.


 


The subject property has ingress and egress to and
from                                       which
is a paved, public right-of-way.


 


The street address of the subject property is
                                                            .


 


[Surveyor’s Name]


 


 


	
  By

  	
   

  	
   

  	
  Date:

  	
   

  
	
                               Registered
  Land Surveyor No.                             

  
	
   

  	
   

  	
   

  
	
  Date of Survey:

  	
   

  	
   

  	
   

  
	
  Date of Last Revision:

  	
   

  	
   

  	
   

  
							



 


G-1

















 


EXHIBIT
H


 


DEED


 


RECORDING REQUESTED
BY AND WHEN RECORDED MAIL TO:


 


Teel, Palmer & Roeper

11455 El Camino Real

Suite 300

San Diego, California 92130

Attention:              Elizabeth A. Willes,
Esq.


 


MAIL TAX STATEMENTS
TO:


 


ARE-                                                                     ,


 


 


 


GRANT DEED


 


The undersigned Grantor declares that Documentary Transfer Tax is not
part of the public records.


 


FOR A VALUABLE CONSIDERATION,
receipt of which is hereby acknowledged, Arena
Pharmaceuticals, Inc., a Delaware corporation (“Grantor”), hereby GRANTS to ARE-                                       ,
a                           (“Grantee”), that certain real property
located in the County
of                               ,
State of California and more particularly described in Exhibit A
attached hereto and incorporated herein by this reference (the “Property”), together with (i) all
improvements located thereon, (ii) all rights, privileges, easements and
appurtenances appertaining to the Property, and (iii) all right, title and
interest of Grantor (if any) in, to and under adjoining streets, rights of way
and easements


 


IN WITNESS WHEREOF,
Grantor has caused its duly authorized representatives to execute this
instrument as of
                   ,
2003.


 


	
  GRANTOR:

  	
  Arena
  Pharmaceuticals, Inc.,

  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  
	
  Assessor’s Parcel Number(s): 

  	
   

  	
   

  
							



 


H-1

















 


	
  STATE OF CALIFORNIA

  	
  )

  
	
   

  	
  )

  
	
  COUNTY OF SAN DIEGO

  	
  )

  



 


On             ,
2003, before
me,                                         ,
a Notary Public in and for said State, personally appeared
                                         and
                                         ,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are subscribed to the within instrument
and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.


 


	
   

  	
  WITNESS my hand and official seal.

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
  (Seal)

  



 


H-2

















 


EXHIBIT A


 


Legal Description of the Property


 


A-1

















 


STATEMENT OF TAX DUE AND REQUEST

THAT TAX DECLARATION NOT BE MADE A PART

OF THE PERMANENT RECORD

IN THE OFFICE OF THE

COUNTY RECORDER


 


(Pursuant to Cal. Rev. and Tax Code Section
11932)


 


To:          Registrar – Recorder

County of San Diego


 


Request is hereby made in accordance with the provision of the
Documentary Transfer Tax Act that the amount of tax due not be shown on the
original document which names:


 


Arena Pharmaceuticals, Inc.,

a Delaware corporation, as Grantor,


 


and


 


ARE-                                          ,
a                                              ,
as Grantee.


 


The property described in the accompanying document is located in San
Diego County, California.


 


The amount of tax due to the County of San Diego on the accompanying
document is $                      ,
computed on full value of property conveyed.


 


	
  GRANTOR:

  	
   

  	
  Arena
  Pharmaceuticals, Inc.,

  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Its:

  	
   

  	
   

  
						



 


NOTE:    After
the permanent record is made, this form will be affixed to the conveying
document and returned with it.


 


A-2

















 


EXHIBIT
I


 


NON-COMPLIANCE WITH LAWS


 


None.


 


I-1

















 


EXHIBIT
J


 


ENDORSEMENTS


 


CLTA 100 modified for owner


 


CLTA 103.3 (as to exceptions 12 and 16 of
PTR)


 


CLTA 103.7 (access from physically open
street)


 


CLTA 116 (address)


 


CLTA 116.1 (same as survey)


 


CLTA 116.7 (subdivision map act)


 


CLTA 123.2 (zoning)


 


separate tax lot


 


mechanics’’ liens


 


J-1

















 


EXHIBIT
K


 


SELLER’S CERTIFICATE


 


The
undersigned hereby certifies to ARE – NANCY RIDGE NO. 3, LLC (“Buyer”) that, as of the date hereof:


 


1.             all of the representations, covenants and
warranties of Arena Pharmaceuticals, Inc. (“Seller”) made in or pursuant to that certain Purchase and
Sale Agreement and Joint Escrow Instructions dated as of December
   , 2003 (the “Agreement”),
between Seller and ARE – NANCY RIDGE NO. 3, LLC (“ARE”) are true, accurate, correct and complete;


 


2.             all conditions to the Closing (as such
term is defined in the Agreement) that Seller was to satisfy or perform have
been satisfied and performed; and


 


3.             all conditions to the Closing that ARE or
Buyer was to perform have been satisfied and performed.


 


	
  Dated                        ,
  2003

  	
   

  	
  Arena
  Pharmaceuticals, Inc.,

  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
							



 


K-1

















 


EXHIBIT
L


 


FORM 597-W


 


L-1

















 


EXHIBIT
M


 


NON-FOREIGN AFFIDAVIT


 


1.             Section 1445 of the Internal Revenue Code
of 1986, as amended (the “Code”),
provides that a transferee of a United States real property interest must
withhold tax if the transferor is a foreign person.


 


2.             In order to inform ARE – NANCY RIDGE NO.
3, LLC, a Delaware limited liability company, and its nominees, designees and
assigns (collectively, “Transferee”),
that withholding of tax is not required upon the disposition by Arena
Pharmaceuticals, Inc. (“Transferor”),
of the United States real property more particularly described on Exhibit A
attached hereto and incorporated herein by reference (the “Property”), the undersigned Transferor
certifies and declares by means of this certification, the following:


 


a.             Transferor is not a foreign person,
foreign corporation, foreign partnership, foreign trust or foreign estate (as
such terms are defined in the Code and the Income Tax Regulations).


 


b.             Transferor’s federal taxpayer
identification number
is:                        .


 


c.             Transferor’s address is:


 


 


3.             Transferor understands that this
certification may be disclosed to the Internal Revenue Service by Transferee
and that any false statement contained in this certification may be punished by
fine, imprisonment or both.


 


Under
penalties of perjury, Transferor declares that it has carefully examined this
certification and it is true, correct and complete.


 


Executed
this                day
of                       ,
2003 at San Diego, California.


 


	
  TRANFEROR:

  	
   

  	
  Arena
  Pharmaceuticals, Inc.,

  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Its:

  	
   

  	
   

  
							



 


M-1

















 


EXHIBIT A


 


Legal Description


 


Parcel A:


 


Parcel 9 of Parcel Map No.
17347, in the city of san Diego, county of san Diego, state of California, according
to Map thereof filed in the office of the county recorder of san Diego county
April 13, 1994 as document no. 94-242762 official records.


 


Parcel B:


 


A nonexclusive easement for
ingress and egress by vehicular and pedestrian traffic and vehicle parking
upon, over and across the "common area" for the benefit of the
owners, present and future, and their respective successors and assigns,
tenants, customers and invitees, together with a nonexclusive easement under
and through the "common area" for the installation, maintenance,
removal and replacement of water drainage systems or structures, water mains,
sewers, water sprinkler system lines, telephone or electrical conduits or
systems, gas mains and any other public utilities and/or service easements, as
created, set forth, defined, described and granted in that certain
"declaration of reciprocal easements of the Sorrento ridge business park
planned industrial development" recorded April 13, 1994 as document no.
94-242763 official records.


 


(APN:   343-350-26)


 


A-1

















 


EXHIBIT
N


 


FORM OF LEASE


 


[Lease filed as Exhibit 10.2 to
this Form 8-K]


 


N-1

















 


EXHIBIT
O


 


MEMORANDUM OF LEASE AND PURCHASE OPTION


 


RECORDING REQUESTED
BY AND WHEN RECORDED RETURN TO:


 


Arena Pharmaceuticals, Inc.


6166 Nancy Ridge Drive

San Diego, California 92121


Attention:  Steven W. Spector,
Esq.


 


Space above line for recorder’s use only


 


 


MEMORANDUM
OF LEASE AND PURCHASE OPTION


 


THIS MEMORANDUM OF
LEASE AND PURCHASE OPTION (this “Memorandum”) is made
effective as of
                    ,
2003 by and among ARE – NANCY RIDGE NO. 3, LLC, a Delaware
limited liability company, (“Landlord”), and ARENA PHARMACEUTICALS, INC.,
a Delaware corporation (“Tenant”), who agree as follows:


 


1.             Lease.  Landlord hereby leases to Tenant, and Tenant
hereby hires from Landlord, upon and subject to the terms of that certain
unrecorded Lease Agreement
dated                         ,
2003 (the “Lease”), all of Landlord’s right, title and interest in and to
that certain real property known as 6138-6150 Nancy Ridge Drive, situated in
the City of San Diego, County of San Diego, State of California and more
particularly described in Exhibit A attached hereto and incorporated
herein by reference (the “Premises”).  The terms and provisions of the Lease are incorporated into this
Memorandum by this reference as though fully set forth herein.


 


2.             Term.  The term of the Lease will commence on
December                     ,
2003, and expires on
December                 ,
2018.


 


3.             Purchase
Option.  Landlord hereby grants to
Tenant an option to purchase the Premises, upon and subject to the terms of the
purchase option contained in the Lease (the “Purchase Option”).  The terms and provisions of the Purchase
Option (including a limitation on the amount of liens which may be secured by
deeds of trust or mortgages on the Premises) are incorporated into this
Memorandum by this reference as though fully set forth herein.


 


4.             No
Modification.  This Memorandum has
been executed for purposes of notice and recordation only and shall not modify
the terms and provisions of the Lease or Purchase Option in any manner.


 


O-1

















 


5.             Counterparts.  This Memorandum may be executed in multiple
counterparts, and by each party on separate counterparts, each of which shall
be deemed an original and all of which shall constitute one and the same
instrument.


 


O-2

















 


IN WITNESS WHEREOF,
the parties have executed this Memorandum of Lease and Purchase Option as of
the day and year first above written.


 


	
   

  	
  “Landlord”

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ARE – NANCY RIDGE NO. 3, LLC,
a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Alexandria Real Estate Equities, L.P.,

  a Delaware limited partnership, its managing member 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  ARE-QRS Corp.,

  a Maryland corporation,

  its general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Tenant” 

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ARENA
  PHARMACEUTICALS, INC.,

  a Delaware corporation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Title: 

  	
   

  	
   

  
														



 


O-3

















 


EXHIBIT
P


 


BILL OF SALE AND ASSIGNMENT


 


THIS BILL OF SALE AND ASSIGNMENT (“Bill of Sale”) is made as of
                         ,
2003, by Arena Pharmaceuticals, Inc.,
a Delaware corporation (“Seller”),
to ARE-Nancy Ridge No. 3, LLC, a
Delaware limited liability company (“Buyer”).


 


RECITALS


 


A.            Seller is the owner of
that certain real property located in the County of San Diego, State of
California (the “Real Property”),
as more particularly described on Exhibit A attached hereto and
incorporated herein by reference.


 


B.            Buyer and Seller have
entered into that certain Purchase and Sale Agreement and Joint Escrow
Instructions dated as of December      , 2003
(the “Purchase Agreement”),
with respect to, among other things, the acquisition of the “Fixtures” and the “Intangible Property” (each as defined
below), and certain other property.


 


C.            The Purchase Agreement
requires Seller to convey all of Seller’s right, title and interest in, to and
under the Fixtures and the Intangible Property to Buyer.


 


NOW, THEREFORE, for
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Seller hereby agrees as follows:


 


1.             Unless
the context otherwise requires, all capitalized terms used but not otherwise
defined herein shall have the respective meanings provided therefor in the
Purchase Agreement.


 


a.             Seller
does hereby unconditionally, absolutely, and irrevocably grant, bargain, sell,
transfer, assign convey, set over and deliver unto Buyer all of Seller’s right,
title and interest in and to the Fixtures and Intangible Property, as such
terms are defined in the Purchase Agreement (collectively, the “Property”).


 


2.             Seller
represents and warrants that its title to the Property is free and clear of all
liens, mortgages, pledges, security interests, prior assignments, encumbrances
and claims of any nature other than the Permitted Exceptions.


 


3.             Seller
hereby agrees to indemnify, protect, defend and hold Buyer harmless from and
against any and all claims, losses, damages, costs and expenses (including,
without limitation, reasonable attorney’s fees and disbursements) incurred or
suffered by Buyer in connection with the Property and arising prior to the
Closing.  Buyer hereby agrees to
indemnify, protect, defend and hold Seller harmless from and against any and
all claims, losses, damages, costs and expenses (including, without limitation,
reasonable attorney’s fees and disbursements) incurred or suffered by Seller in
connection with the Property and arising on or after the Closing.


 


P-1

















 


4.             This
Bill of Sale shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, legal representatives, successors and
assigns.


 


5.             This
Bill of Sale and the legal relations of the parties hereto shall be governed by
and construed and enforced in accordance with the laws of the State of
California, without regard to its principles of conflicts of law.


 


[Signatures on next page ]


 


P-2

















 


IN WITNESS WHEREOF,
this Bill of Sale was made and executed as of the date first above written.


 


	
  SELLER:

  	
   

  	
  Arena
  Pharmaceuticals, Inc.,

  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Its:

  	
   

  	
   

  
						



 


P-3

















 


EXHIBIT A


 


Legal Description


 


A-1

















 


EXHIBIT
Q


 


BUYER’S CERTIFICATE


 


The
undersigned hereby certifies to ARENA
PHARMACEUTICALS, INC., a Delaware corporation (“Seller”) that, as of the date hereof:


 


1.             all of the representations, covenants and
warranties of ARE – NANCY RIDGE NO. 3, LLC,
a Delaware limited liability (“Buyer”)
made in or pursuant to that certain Purchase and Sale Agreement and Joint
Escrow Instructions dated as of
December       , 2003 (the “Agreement”), between Seller and Buyer
are true, accurate, correct and complete;


 


2.             all conditions to the Closing (as such
term is defined in the Agreement) that Buyer was to satisfy or perform have
been satisfied and performed; and


 


3.             all
conditions to the Closing that Seller was to perform have been satisfied and
performed.


 


	
   

  	
  ARE – NANCY RIDGE NO. 3, LLC,
a Delaware limited liability company

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Alexandria Real Estate Equities, L.P.,

  a Delaware limited partnership, its managing member 

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  ARE-QRS Corp.,

  a Maryland corporation, its general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Its:

  	
   

  	
   

  
											



 


Q-1

















 


EXHIBIT
R


 


LITIGATION


 


None.


 


R-1

















 


LIST OF EXHIBITS


 


	
  EXHIBIT
  A

  	
   

  	
  Legal
  Description

  
	
  EXHIBIT
  B

  	
   

  	
  Included
  Fixtures

  
	
  EXHIBIT
  C

  	
   

  	
  Allocation
  Schedule

  
	
  EXHIBIT
  D

  	
   

  	
  Property
  Documents

  
	
  EXHIBIT
  E

  	
   

  	
  Form
  of Estoppel Certificate

  
	
  EXHIBIT
  F

  	
   

  	
  Property
  Questionnaire

  
	
  EXHIBIT
  G

  	
   

  	
  Surveyor’s
  Certificate

  
	
  EXHIBIT
  H

  	
   

  	
  Deed

  
	
  EXHIBIT
  I

  	
   

  	
  Non-Compliance
  with Laws

  
	
  EXHIBIT
  J

  	
   

  	
  Endorsements

  
	
  EXHIBIT
  K

  	
   

  	
  Seller’s
  Certificate

  
	
  EXHIBIT
  L

  	
   

  	
  Form
  597-W

  
	
  EXHIBIT
  M

  	
   

  	
  Non-Foreign
  Affidavit

  
	
  EXHIBIT
  N

  	
   

  	
  Form
  of Lease

  
	
  EXHIBIT
  O

  	
   

  	
  Memorandum
  of Lease and Purchase Option

  
	
  EXHIBIT
  P

  	
   

  	
  Bill
  of Sale and Assignment

  
	
  EXHIBIT
  Q

  	
   

  	
  Buyer’s
  Certificate

  
	
  EXHIBIT
  R

  	
   

  	
  Litigation

  



 


v