Document:

QuickLinks
 -- Click here to rapidly navigate through this document

EXHIBIT 10.40  

 
 

BUILD-TO-SUIT LEASE    
  

	 
	 	 
	 	 

	Landlord:	 	Slough BTC, LLC	 	 
	

Tenant:	
 	

Tularik Inc.	
 	

 
	

Date:	
 	

December    , 2001	
 	

 

  

 
 

TABLE OF CONTENTS    
  

	 
	 	 
	 	 
	 	 

	1.	 	PROPERTY	 	1
	 	 	1.1	 	Lease of Buildings	 	1
	 	 	1.2	 	Landlord's Reserved Rights	 	3
	

2.	
 	

TERM	
 	

3
	 	 	2.1	 	Term; Rent Commencement Dates	 	6
	 	 	2.2	 	Early Possession	 	7
	 	 	2.3	 	Delay In Possession	 	7
	 	 	2.4	 	Acknowledgment Of Rent Commencement Dates	 	7
	 	 	2.5	 	Holding Over	 	7
	 	 	2.6	 	Option To Extend Term	 	8
	

3.	
 	

RENTAL	
 	

8
	 	 	3.1	 	Minimum Rental	 	8
	 	 	3.2	 	Late Charge	 	13
	

4.	
 	

[Omitted]	
 	

14
	

5.	
 	

CONSTRUCTION	
 	

14
	 	 	5.1	 	Construction of Improvements	 	14
	 	 	5.2	 	Condition of Property	 	14
	 	 	5.3	 	Compliance with Law	 	15
	

6.	
 	

EXPANSION RIGHTS	
 	

15
	 	 	6.1	 	First Refusal Right to Lease	 	15
	 	 	6.2	 	Right of First Offer to Lease	 	15
	 	 	6.3	 	Expansion Option	 	17
	

7.	
 	

[OMITTED]	
 	

18
	

8.	
 	

TAXES	
 	

18
	 	 	8.1	 	Personal Property	 	18
	 	 	8.2	 	Real Property	 	19
	

9.	
 	

OPERATING EXPENSES	
 	

19
	 	 	9.1	 	Liability For Operating Expenses	 	19
	 	 	9.2	 	Definition Of Operating Expenses	 	21
	 	 	9.3	 	Determination and Payment of Operating Expenses	 	22
	 	 	9.4	 	Final Accounting For Lease Year	 	23
	 	 	9.5	 	Proration	 	23
	

10.	
 	

UTILITIES	
 	

24
	 	 	10.1	 	Payment	 	24
	 	 	10.2	 	Interruption	 	24
	

11.	
 	

ALTERATIONS; SIGNS	
 	

24
	 	 	11.1	 	Right To Make Alterations	 	24
	 	 	11.2	 	Title To Alterations	 	25
	 	 	11.3	 	Tenant Trade Fixtures	 	26
	 	 	11.4	 	No Liens	 	26
	 	 	11.5	 	Signs	 	26
	

12.	
 	

MAINTENANCE AND REPAIRS	
 	

26
	 	 	12.1	 	Landlord's Work	 	26

i

 

	 	 	12.2	 	Tenant's Obligation For Maintenance	 	27
	

13.	
 	

USE OF PROPERTY	
 	

28
	 	 	13.1	 	Permitted Use	 	28
	 	 	13.2	 	[Omitted.]	 	28
	 	 	13.3	 	No Nuisance	 	28
	 	 	13.4	 	Compliance With Laws	 	28
	 	 	13.5	 	Liquidation Sales	 	29
	 	 	13.6	 	Environmental Matters	 	29
	

14.	
 	

INSURANCE AND INDEMNITY	
 	

33
	 	 	14.1	 	Liability and Property Insurance	 	33
	 	 	14.2	 	Quality Of Policies And Certificates	 	35
	 	 	14.3	 	Workers' Compensation	 	35
	 	 	14.4	 	Waiver Of Subrogation	 	35
	 	 	14.5	 	Increase In Premiums	 	35
	 	 	14.6	 	Indemnification	 	36
	 	 	14.7	 	Blanket Policy	 	36
	

15.	
 	

SUBLEASE AND ASSIGNMENT	
 	

36
	 	 	15.1	 	Assignment And Sublease Of Building(s)	 	36
	 	 	15.2	 	Rights Of Landlord	 	37
	

16.	
 	

RIGHT OF ENTRY AND QUIET ENJOYMENT	
 	

37
	 	 	16.1	 	Right Of Entry	 	37
	 	 	16.2	 	Quiet Enjoyment	 	38
	

17.	
 	

CASUALTY AND TAKING	
 	

38
	 	 	17.1	 	Damage or Destruction	 	38
	 	 	17.2	 	Condemnation	 	39
	 	 	17.3	 	Reservation Of Compensation	 	40
	 	 	17.4	 	Restoration Of Improvements	 	41
	

18.	
 	

DEFAULT	
 	

41
	 	 	18.1	 	Events Of Default	 	41
	 	 	18.2	 	Remedies Upon Tenant's Default	 	42
	 	 	18.3	 	Remedies Cumulative	 	43
	

19.	
 	

SUBORDINATION, ATTORNMENT AND SALE	
 	

43
	 	 	19.1	 	Subordination To Mortgage	 	43
	 	 	19.2	 	Sale Of Landlord's Interest	 	44
	 	 	19.3	 	Estoppel Certificates	 	44
	 	 	19.4	 	Subordination to CC&R's	 	44
	 	 	19.5	 	Mortgagee Protection	 	45
	

20.	
 	

SECURITY	
 	

46
	 	 	20.1	 	Deposit	 	46
	

21.	
 	

MISCELLANEOUS	
 	

47
	 	 	21.1	 	Notices	 	47
	 	 	21.2	 	Successors And Assigns	 	48
	 	 	21.3	 	No Waiver	 	48
	 	 	21.4	 	Severability	 	48
	 	 	21.5	 	Litigation Between Parties	 	49
	 	 	21.6	 	Surrender	 	49

ii

 

	 	 	21.7	 	Interpretation	 	49
	 	 	21.8	 	Entire Agreement	 	49
	 	 	21.9	 	Governing Law	 	49
	 	 	21.10	 	No Partnership	 	49
	 	 	21.11	 	Financial Information	 	49
	 	 	21.12	 	Costs	 	50
	 	 	21.13	 	Time	 	50
	 	 	21.14	 	Rules And Regulations	 	50
	 	 	21.15	 	Brokers	 	50
	 	 	21.16	 	Memorandum Of Lease	 	50
	 	 	21.17	 	Corporate Authority	 	51
	 	 	21.18	 	Execution and Delivery	 	51
	 	 	21.19	 	Survival	 	51
	 	 	21.20	 	Parking and Traffic	 	51

iii

 
 

BUILD-TO-SUIT LEASE    
  

        THIS BUILD-TO-SUIT LEASE ("Lease") is made and entered into as of December 20,
2001, by and between SLOUGH BTC, LLC, a Delaware limited liability company ("Landlord"), and TULARIK INC., a Delaware corporation
("Tenant"). 

THE
PARTIES AGREE AS FOLLOWS: 

 
 

1.    PROPERTY    
  

        1.1    Lease of Buildings.    

        (a)  Landlord
leases to Tenant and Tenant hires and leases from Landlord, on the terms, covenants and conditions hereinafter set forth, the buildings (individually, a  "Building" and collectively, the "Buildings") to be constructed pursuant to Article 5 hereof and
Exhibit C attached hereto on a portion of the real property described in Exhibit A
attached hereto (the "Property"), as follows: (i) a three-story office and laboratory building containing approximately 103,000 square feet (the  "Phase IA
Building"), to be located on the Property substantially as shown for the building designated "Building
A" on the site plan attached hereto as Exhibit B (the "Site Plan");
(ii) a three-story office and laboratory building containing approximately 84,000 square feet (the "Phase IB Building"), to be located on the
Property substantially as shown for the building designated "Building B" on the Site Plan; (iii) a four-story building containing
approximately 93,200 square feet (and in no event less than 90,000 square feet) of office and laboratory space and approximately 5,000 square feet of ground-floor retail space (the  "Phase II Building"),
to be located on the Property substantially as shown for the building designated "Building
E" on the Site Plan; and (iv) subject to final design and to receipt of all required governmental approvals, an enclosed connector bridge connecting the Phase IA
Building to the Phase IB Building at the second-story level (the "Connector Bridge"). With respect to the governmental approvals described in
clause (iv) of the preceding sentence, Landlord has advised Tenant that the additional square footage created by construction of the Connector Bridge will cause the Project to exceed the
maximum square footage amount for which the Project is presently entitled and that, without limiting any other governmental approvals that may be required, a modification of the maximum square footage
amount under the existing Project entitlements will therefore be necessary in order to permit construction of the Connector Bridge. Landlord shall pursue diligently and reasonably
the design of the Connector Bridge and the securing of all governmental approvals and permits necessary for the construction of the Connector Bridge (other than the interior improvements therein,
which shall be Tenant's responsibility as part of the Tenant Improvements), and Tenant shall cooperate diligently and reasonably with Landlord, in any respects reasonably requested by Landlord, in
connection with the design and authorization of the Connector Bridge. For purposes of this Lease, the Connector Bridge shall generally be considered to be a part of the Phase IB Building, and the
square footage of the Connector Bridge (which is not presently included in the estimated square footage figure used in this Lease for the Phase IB Building), determined in accordance with
Section 1.1(d) of this Lease, shall be included in the square footage of the Phase IB Building for purposes of calculating Tenant's Minimum Rent, additional rent and Operating Expense
obligations with respect to the Phase IB Building and the Tenant Improvement Allowance with respect to the Phase IB Building; provided, however, that
the square footage of the Connector Bridge shall not be taken into account in determining the number of parking spaces allocated to Tenant or required to be paid for by Tenant pursuant to
Section 21.20(b) of this Lease. All references in this Lease to the Phase II Building as being leased to Tenant hereunder shall be construed to refer solely to the office and laboratory portion
of the Phase II Building and not to the ground-floor retail portion of such building. The Phase IA Building and the Phase IB Building (including the Connector Bridge) are sometimes hereinafter
collectively referred to as the "Phase I Buildings." The Property is commonly known as Britannia Oyster Point (the  "Center") and is located at Oyster Point
Boulevard and Veterans Boulevard in the City of South San Francisco, County of San Mateo, State of California.
The Buildings and the other improvements to be constructed on the Property pursuant to Article 5 hereof and Exhibit C attached hereto are
sometimes referred to collectively herein as the "Improvements." The parking areas, 

 

driveways, sidewalks, landscaped areas and other portions of the Center that lie outside the exterior walls of the Buildings and of the other buildings to be constructed in the Center, as depicted on
the Site Plan and as hereafter modified by Landlord from time to time in accordance with the provisions of this Lease, are sometimes referred to herein as the "Common
Areas."

        (b)  As
an appurtenance to Tenant's leasing of the Buildings pursuant to Section 1.1(a), Landlord hereby grants to Tenant, for the benefit of Tenant and its employees,
suppliers, shippers, customers and invitees, during the term of this Lease, the non-exclusive right to use, in common with others entitled to such use, (i) those portions of the
Common Areas improved from time to time for use as parking areas, driveways, sidewalks, landscaped areas, or for other common purposes, and (ii) all easements, access rights and similar rights
and privileges relating to or appurtenant to the Center and created or existing from time to time under any easement agreements, declarations of covenants, conditions and restrictions, or other
written agreements now or hereafter of record with respect to the Center, subject however to any limitations applicable to such rights and privileges under applicable law, under this Lease and/or
under the written agreements creating such rights and privileges. 

        (c)  Tenant
shall be entitled to install, in areas of the Property adjacent to one or more of the Buildings, in what would otherwise constitute Common Areas, at Tenant's sole
expense and for the exclusive use of Tenant and its employees and invitees, subject to all of the conditions set forth in this paragraph (c),
(1) a half-court basketball court and (2) an equipment yard. In no event shall Tenant be obligated to pay rent for the use of such areas, nor shall such areas be considered
part of the Buildings or premises leased by Tenant for purposes of any calculations of rent or of Tenant's Operating Cost Share under this Lease, but for all other purposes (including, but not limited
to, the purposes specifically identified in this paragraph (c)), such areas shall be considered part of the Buildings leased by Tenant under this Lease. Without limiting the generality of the
foregoing, Tenant's construction and use of such basketball court and equipment yard shall be subject to the following requirements and restrictions: (i) the locations in which such basketball
court and equipment yard are to be constructed shall be subject to Landlord's prior written consent, in Landlord's sole discretion; (ii) the plans and specifications for construction of all
improvements constituting such basketball court and equipment yard shall be subject to Landlord's prior written consent, in Landlord's sole discretion, and such improvements shall otherwise be
constructed in full compliance with the requirements applicable to Tenant's Work under Exhibit C attached hereto; (iii) the liability
insurance to be carried by Tenant pursuant to Section 14.1(a) of this Lease shall cover, to Landlord's satisfaction, any claims and liabilities arising out of the use of such basketball court
and equipment yard; (iv) Tenant shall ensure that the construction and use of such basketball court and equipment yard do not interfere with the use of any parking or driveway areas on the
Property and do not create any visual or noise interference with the use and enjoyment of the Property by the other tenants thereof; (v) Tenant shall be solely responsible for the maintenance
and repair of such basketball court and equipment yard, at Tenant's sole expense, as part of Tenant's maintenance obligations under Section 12.2 of this Lease; and (vi) Tenant shall take
all such steps as Landlord in its reasonable discretion may require in order to restrict access to and use of such basketball court and equipment yard to Tenant's employees and invitees. 

        (d)  All
measurements of building areas under this Lease shall be made by Landlord's architect in accordance with the same formula applied by Landlord to the building areas
for the other leased buildings in the Center, which formula consists of measurement from the exterior faces of exterior walls, from the dripline of any overhangs and, where applicable, from the
centerline of any demising walls. In measuring interior space (relevant only to the determination of space actually being used or occupied by Tenant in the Phase II Building during the
phase-in of Tenant's occupancy thereof), measurements involving any demising walls separating space actually used or occupied by Tenant from space not used or occupied by Tenant shall be
made to the centerline of the demising wall. 

-2-

 

        1.2    Landlord's Reserved Rights.    To the extent reasonably necessary to permit Landlord to exercise any rights of
Landlord and discharge any obligations of Landlord under this Lease, Landlord shall have, in addition to the right of entry set forth in Section 16.1 hereof, the following rights: (i) to
make changes to the Common Areas, including, without limitation, changes in the location, size or shape of any portion of the Common Areas, and to construct and/or relocate parking structures and/or
parking spaces in the Center, but not materially decrease the number of parking spaces in the Center; (ii) to close temporarily any of the Common Areas for maintenance or other reasonable
purposes, provided that reasonable parking and reasonable access to the Buildings remain available; (iii) to construct, alter or add to other
buildings or improvements in the Center; (iv) to build in areas adjacent to the Center and to add such areas to the Center; (v) to use the Common Areas while engaged in making additional
improvements, repairs or alterations to the Center or any portion thereof; and (vi) to do and perform such other acts with respect to the Common Areas and the Center as may be necessary or
appropriate; provided, however, that notwithstanding anything to the contrary in this Section 1.2, Landlord's exercise of its rights hereunder
(x) shall not cause any material diminution of Tenant's rights, nor any material increase
of Tenant's obligations, under this Lease, and (y) shall be conducted in such a manner as to minimize, to the extent reasonably possible, any adverse effect on Tenant's business operations in
the Buildings (including, but not limited to, reasonable prior notice to Tenant of any pile-driving or other activities of Landlord that will cause significant noise or vibration in the
Buildings). 

 
 

2.    TERM    
  

        2.1    Term; Rent Commencement Dates.    The term of this Lease shall commence upon mutual execution of this Lease by
Landlord and Tenant. 

        (a)  Tenant's
Minimum Rental, additional rent and Operating Expense obligations with respect to the Phase I Buildings shall commence on the earlier to occur of (i) the
date which is one hundred eighty (180) days after the date Landlord delivers to Tenant a Structural Completion Certificate for each of the Phase I Buildings (or, if the Structural Completion
Certificates for the two Phase I Buildings are delivered on different dates, the date Landlord delivers to Tenant the Structural Completion Certificate for the second of the two Phase I Buildings)
pursuant to the Workletter attached hereto as Exhibit C (the "Workletter"), subject to any
adjustments in such time period to the extent authorized or required under the provisions of such Workletter, or (ii) the date Tenant takes occupancy of and commences operation of its business
in either of the Phase I Buildings, the earlier of such dates being herein called the "Phase I Rent Commencement Date";  provided, however, that in no event
shall the Phase I Rent Commencement Date occur earlier than May 1, 2003, unless determined pursuant to
clause (ii) of this sentence or unless an earlier date is hereafter mutually agreed upon in writing by Landlord and Tenant; and provided further,
however, that if the Phase I Rent Commencement Date is determined pursuant to clause (ii) of this sentence as a result of Tenant's occupancy of and commencement of business operations in one of
the two Phase I Buildings, then notwithstanding any other provisions of this Lease to the contrary, Tenant's Minimum Rental, additional rent and Operating Expense obligations with respect to the
second of the Phase I Buildings and with respect to the Connector Bridge (regardless of whether the Phase IB Building is the first Phase I Building to be occupied by Tenant) shall not commence until
the earlier to occur of the date described in clause (i) of this sentence or the date Tenant takes occupancy of and commences operation of its business in the second Phase I Building. Based on
the estimated construction schedules attached hereto as Exhibit D, the parties presently estimate that the Phase I Rent Commencement Date shall
occur on May 1, 2003. 

        (b)  Tenant
shall be entitled to occupy the Phase II Building in up to four (4) successive phases. The first such phase ("Phase
IIA") shall consist of a minimum of 23,300 square feet of the Phase II Building. The second such phase ("Phase IIB") shall
consist of at least that amount of space which, when added to the Phase IIA space, shall equal a minimum of 46,600 square feet of the Phase II 

-3-

 

Building. The third such phase ("Phase IIC") shall consist of at least that amount of space which, when added to the Phase IIA and Phase IIB spaces,
shall equal a minimum of 69,900 square feet of the Phase II Building. The fourth such phase ("Phase IID") shall consist of the remainder, if any, of the
non-retail portion of the Phase II Building. As to any of such phases, Tenant shall have the right to take and occupy a larger portion of the Phase II Building than the minimum space
required for the applicable phase, in which event the space for the applicable phase shall be deemed to consist of the greater of the minimum required amount of space for such phase or the amount of
space actually occupied by Tenant. Tenant shall not be deemed to be occupying any portion of the Phase II Building solely by reason of constructing interior improvements in such portion in connection
with Tenant's intended future use and occupancy of such portion or by reason of maintaining insurance on or performing maintenance or repair work in such portion, but use of any portion of the Phase
II Building for any other purpose by Tenant (including, but not limited to, any storage uses other than storage or staging of materials on a temporary basis in the course of construction) shall be
deemed to constitute occupancy of such portion by Tenant. At least thirty (30) days prior to the applicable Rent Commencement Date for each phase of Tenant's occupancy of the Phase II Building
as set forth in subparagraphs (i) through (iv) below, Tenant shall notify Landlord in writing of the portion of the Phase II Building that Tenant intends to actually use and occupy
during such phase. Tenant acknowledges, however, that if Tenant in fact uses a greater portion of the Phase II Building than specified in Tenant's notice to Landlord with respect to the applicable
phase, then Tenant's Minimum Rental, additional rent and Operating Expense obligations with respect to Tenant's occupancy of the Phase II Building during such phase shall be controlled by the amount
of space actually used or occupied by Tenant. Landlord shall have the right to inspect the Phase II Building from time to time prior to the Phase IID Rent Commencement Date, on not less than one
(1) business day's prior notice to Tenant, to confirm and measure the amount of space actually being occupied by Tenant in the Phase II Building, and the measurement and calculation of such
space actually being occupied by Tenant shall be made by Landlord's architect as contemplated in Section 1.1(d) of this Lease. On the Phase IIA Rent Commencement Date as hereinafter defined,
all of Tenant's obligations under this Lease shall become applicable and effective in full with respect to all of the Phase II Building, except that the following obligations with respect to each
phase of Tenant's occupancy of the Phase II Building shall become effective only on the respective Rent Commencement Date for such phase: (A) Tenant's Minimum Rental, additional rent and
Operating Expense obligations with respect to such phase; (B) Tenant's obligations under Section 8.2 of this Lease with respect to real property taxes and assessments upon Improvements
constructed by Landlord and located within such phase; (C) Tenant's obligation under Section 10.1 of this Lease to pay for utilities or services supplied to or consumed in or with
respect to such phase, but only to the extent such utilities or services are consumed by or supplied at the request of Landlord or its agents, employees or contractors and the cost thereof can
reasonably be segregated from the cost of utilities or services furnished to the portions of the Phase II Building occupied by Tenant; (D) Tenant's maintenance and repair obligations under
Section 12.2 of this Lease with respect to any Improvements constructed or installed in such phase by Landlord as part of Landlord's Work under the Workletter, except that Tenant shall be
responsible for any such maintenance or repairs required as a result of the negligent or willful acts or omissions of Tenant or its agents, employees, contractors or invitees; and (E) Tenant's
obligation to cause the applicable phase to comply with any applicable Requirements under Section 13.4(a) of this Lease, except to the extent the applicability of such Requirements is triggered
by Tenant's actual use of any portion of the Building or by Tenant's construction of Improvements in any portion of the Building. The Rent Commencement Dates for the respective phases of the Phase II
Building shall be as follows: 

        (i)    Tenant's
Minimum Rental, additional rent and Operating Expense obligations with respect to Phase IIA shall commence on the earlier to occur of (A) the date which
is one hundred eighty (180) days after the date Landlord delivers to Tenant a Structural Completion Certificate for the Phase II Building pursuant to the Workletter, subject to any adjustments
in such time period to 

-4-

 

the extent authorized or required under the provisions of such Workletter, or (B) the date Tenant takes occupancy of and commences operation of its business in any portion of the Phase II
Building, the earlier of such dates being herein called the "Phase IIA Rent Commencement Date"; provided, however, that in no event shall the Phase IIA
Rent Commencement Date occur earlier than May 1, 2004, unless determined pursuant to clause (B) of this sentence or unless an earlier date is hereafter mutually agreed upon in writing by
Landlord and Tenant. Based on the foregoing provisions and on the estimated construction schedules attached hereto as Exhibit D, the parties
presently estimate that the Phase IIA Rent Commencement Date shall occur on May 1, 2004. 

        (ii)  Tenant's
Minimum Rental, additional rent and Operating Expense obligations with respect to Phase IIB shall commence on the earlier to occur of (A) the date which
is six (6) months after the Phase IIA Rent Commencement Date (as extended for any Landlord Delays occurring after the Phase IIA Rent Commencement Date in connection with Tenant's construction
of Tenant Improvements in Phase IIB) or (B) the date Tenant takes occupancy of and commences operation of its business in any portion of Phase IIB of the Phase II Building, the earlier of such
dates being herein called the "Phase IIB Rent Commencement Date"; provided, however, that in no event
shall the Phase IIB Rent Commencement Date occur earlier than November 1, 2004, unless determined pursuant to clause (B) of this sentence or unless an earlier date is hereafter mutually
agreed upon in writing by Landlord and Tenant. 

        (iii)  Tenant's
Minimum Rental, additional rent and Operating Expense obligations with respect to Phase IIC shall commence on the earlier to occur of (A) the date
which is six (6) months after the Phase IIB Rent Commencement Date (as extended for any Landlord Delays occurring after the Phase IIB Rent Commencement Date in connection with Tenant's
construction of Tenant Improvements in Phase IIC) or (B) the date Tenant takes occupancy of and commences operation of its business in any portion of Phase IIC of the Phase II Building, the
earlier of such dates being herein called the "Phase IIC Rent Commencement Date"; provided, however,
that in no event shall the Phase IIC Rent Commencement Date occur earlier than May 1, 2005, unless determined pursuant to clause (B) of this sentence or unless an earlier date is
hereafter mutually agreed upon in writing by Landlord and Tenant. 

        (iv)  Tenant's
Minimum Rental, additional rent and Operating Expense obligations with respect to Phase IID shall commence on the earlier to occur of (A) the date which
is six (6) months after the Phase IIC Rent Commencement Date (as extended for any Landlord Delays occurring after the Phase IIC Rent Commencement Date in connection with Tenant's construction
of Tenant Improvements in Phase IID) or (B) the date Tenant takes occupancy of and commences operation of its business in any portion of Phase IID of the Phase II Building, the earlier of such
dates being herein called the "Phase IID Rent Commencement Date"; provided, however, that in no event
shall the Phase IID Rent Commencement Date occur earlier than November 1, 2005, unless determined pursuant to clause (B) of this sentence or unless an earlier date is hereafter mutually
agreed upon in writing by Landlord and Tenant. 

        (c)  Notwithstanding
any other provisions of this Section 2.1 or of Section 2.3 below, if Landlord has not delivered a Final Completion Certificate under the
Workletter with respect to the Building Shell of a Building or phase of a Building, as applicable, and completed all Building Shell work that must be completed as a condition of delivery of such Final
Completion Certificate for the applicable Building or phase, by the date the Rent Commencement Date for such Building or phase would otherwise occur under this Section 2.1, and if the
incomplete elements of such Building Shell work materially impair Tenant's ability to occupy and commence operation of its business in the applicable Building or phase,
then the Rent Commencement Date for the applicable Building or phase, to the extent it is determined by the passage of time since delivery of the Structural Completion Certificate and not by actual
occupancy, shall be extended, day for day, for a period equal to the lesser of (i) the number of days from the date the Rent Commencement Date for such Building or phase would 

-5-

 

otherwise have occurred under this Section 2.1 until the date Landlord has completed all Building Shell work that must be completed as a condition of delivery of the Final Completion
Certificate for the applicable Building or phase to such an extent that Tenant's ability to occupy and commence operation of its business in the applicable Building or phase is no longer materially
impaired by any remaining incomplete elements of Landlord's Building Shell work in the applicable Building or phase, or (ii) the number of days by which Landlord's delay (beyond the date the
applicable Rent Commencement Date would otherwise have occurred pursuant to this Section 2.1) in completing all Building Shell work that must be completed as a condition of delivery of the
Final Completion Certificate for the applicable Building or phase has actually delayed Tenant's ability to occupy and commence operation of its business in the applicable Building or phase;  provided,
however, that the period (if any) for which any Rent Commencement Date is extended pursuant to this paragraph (c) shall be reduced, day
for day, for a period equal to the length of any delays in Landlord's completion of the Building Shell work that must be completed as a condition of delivery of the Final Completion Certificate for
the applicable Building or phase to the extent such delays are caused by any Tenant Delays (as defined in the Workletter). Nothing in this paragraph (c) is intended to imply or require that
Landlord's Site Improvements relating to a Building or phase shall be completed by the Rent Commencement Date for such Building or phase; in fact, the parties expressly contemplate that completion of
various elements of the Site Improvements may be deferred by Landlord, in its discretion, until after completion of Tenant's Work under the Workletter in order to avoid the risk of damage to such Site
Improvements in the course of Tenant's Work, and Landlord agrees to complete such Site Improvements with reasonable diligence following completion of Tenant's Work under the Workletter, subject to the
effects of any Tenant Delays and/or Unavoidable Delays (as defined in the Workletter). 

        (d)  The
term of this Lease shall end on the day (the "Termination Date") immediately preceding the fifteenth
(15th) anniversary of the last of the Phase II Rent Commencement Dates to occur, unless sooner terminated or extended as hereinafter provided. 

        2.2    Early Possession.    Tenant shall have the nonexclusive right to occupy and take possession of the respective
Buildings from and after the date of Landlord's delivery of the Structural Completion Certificate described in the applicable portion of Section 2.1 for the applicable Building, even though
Landlord will be continuing to construct the balance of Landlord's Work as contemplated in the Workletter, for the purpose of constructing Tenant's Work as contemplated in the Workletter and for the
purpose of installing fixtures and furniture, laboratory equipment, computer equipment, telephone equipment, low voltage data wiring and personal property and other similar work related to the
construction of Tenant's Work and/or preparatory to the commencement of Tenant's business in the applicable Building. Such occupancy and possession, and any early access under the next sentence of
this Section 2.2, shall be subject to and upon all of the terms and conditions of this Lease and of the Workletter (including, but not limited to, conditions relating to the maintenance of
required insurance), except that Tenant shall have no obligation to pay Minimum Rental or Operating Expenses for any period prior to the applicable Rent Commencement Date as determined under
Section 2.1; such early possession shall not advance or otherwise affect the respective Rent Commencement Dates or the Termination Date determined under Section 2.1. Tenant shall also be
entitled to have early access to the respective Buildings and the Property at all appropriate times prior to Landlord's delivery of the
Structural Completion Certificate for the applicable Building, subject to the approval of Landlord and its general contractor (which approval shall not be unreasonably withheld or delayed) and to all
other provisions of this Section 2.2 and of the Workletter (including, but not limited to, conditions relating to the maintenance of required insurance), solely for the purpose of installing
fixtures and equipment and other similar work preparatory to the construction of Tenant's Work and the commencement of Tenant's business on the Property, and Tenant shall not be required to pay
Minimum Rental or Operating Expenses by reason of such early access until the applicable Rent Commencement Date otherwise occurs; without limiting the generality of the preceding portion of this
sentence, Tenant shall be entitled to have early access to the Property and the respective Buildings as soon as the roof metal 

-6-

 

decking of the applicable Building is in place, to begin hanging electrical, mechanical and plumbing services from the overhead structure, subject to all of the provisions of this Section 2.2. 

        2.3    Delay In Possession.    Landlord agrees to use its best reasonable efforts to complete Landlord's Work (as
defined in the Workletter) promptly, diligently and within the respective time periods set forth in the respective estimated construction schedules attached hereto as  Exhibit D and incorporated
herein by this reference, as such schedules may be modified from time to time by mutual written agreement of Landlord
and Tenant, and subject to any Tenant Delays and Unavoidable Delays (as respectively defined in the Workletter); provided, however, that Landlord shall
not be liable for any damages caused by any delay in the completion of such work, nor shall any such delay affect the validity of this Lease or the obligations of Tenant hereunder. Notwithstanding any
other provision of this Section 2.3, however, unless Landlord delivers a Structural Completion Certificate for at least one of the two Phase I Buildings and tenders possession of those
completed structural portions of the Building Shell for such Building that must be completed as a condition of delivery of the Structural Completion Certificate by the date which is one hundred twenty
(120) days after the date specified for structural completion as to such Phase I Building in the applicable Estimated Construction Schedule attached hereto as  Exhibit D, Tenant shall
have the right to terminate this Lease without further liability hereunder by written notice delivered to Landlord at any
time prior to Landlord's delivery of a Structural Completion Certificate for at least one Phase I Building and tender of possession of the completed structural portions of the Building Shell for such
Phase I Building to Tenant; provided, however, that the applicable date on which Tenant's termination right becomes exercisable pursuant to this
sentence shall be extended, day for day, for a period equal to the length of any delays in Landlord's design and construction of the respective Phase I Building Shells that are caused by any
Unavoidable Delays or Tenant Delays (as respectively defined in the Workletter). If such a termination right arises in favor of Tenant and is properly exercised by Tenant, then Landlord shall
reimburse Tenant for all of Tenant's out-of-pocket fees and costs incurred prior to the date of such termination for design, space planning, architectural, engineering and
construction management services in connection with this Lease and the Workletter, which reimbursement shall be paid by Landlord to Tenant within thirty (30) days after Landlord's receipt of
Tenant's written request for such reimbursement, accompanied by copies of such invoices and other supporting documentation as Landlord may reasonably request to evidence the nature and amount of the
fees and costs for which such reimbursement is requested. 

        2.4    Acknowledgment Of Rent Commencement Dates.    Promptly following the respective Rent Commencement Date for each
Building or portion thereof, Landlord and Tenant shall execute a written acknowledgment of such Rent Commencement Date, the square footage of the Building or portion thereof (in the case of the Phase
II Rent Commencement Dates) as to which the Rent Commencement Date applies, the Termination Date (if then determined) and related matters, substantially in the form attached hereto as  Exhibit E
(with appropriate insertions), which
acknowledgment shall be deemed to be incorporated herein by this reference. Notwithstanding the foregoing requirement, the failure of either party to execute such a written acknowledgment shall not
affect the determination of the applicable Rent Commencement Date, the applicable minimum rental and Operating Expense obligations, the Termination Date and related matters in accordance with the
provisions of this Lease. 

        2.5    Holding Over.    If Tenant holds possession of the Property or any portion thereof after the term of this Lease  with
Landlord's written consent, then except as otherwise specified in such consent, Tenant shall become a tenant from month to month at one hundred
twenty-five percent (125%) of the rental and otherwise upon the terms herein specified for the period immediately prior to such holding over and shall continue in such status until the
tenancy is terminated by either party upon not less than thirty (30) days prior written notice. If Tenant holds possession of the Property or any portion thereof after the term of this Lease  without Landlord's written consent, then Landlord in its sole discretion may 

-7-

 

elect (by written notice to Tenant) to have Tenant become a tenant either from month to month or at will, at one hundred fifty percent (150%) of the rental (prorated on a daily basis for an
at-will tenancy, if applicable) and otherwise upon the terms herein specified for the period immediately prior to such holding over, or may elect to pursue any and all legal remedies
available to Landlord under applicable law with respect to such unconsented holding over by Tenant. Tenant shall indemnify and hold Landlord harmless from any loss, damage, claim, liability, cost or
expense (including reasonable attorneys' fees) resulting from any delay by Tenant in surrendering the Property (except with Landlord's prior written consent), including but not limited to any claims
made by a succeeding tenant by reason of such delay. Acceptance of rent by Landlord following expiration or termination of this Lease shall not constitute a renewal of this Lease. 

        2.6    Option To Extend Term.    Tenant shall have the option to extend the term of this Lease with respect to any one
or more of the Buildings, on a Building by Building basis (provided, however, that notwithstanding any other provisions of this Section 2.6, if
the Connector Bridge is constructed as contemplated in Section 1.1(a) of this Lease and if Tenant elects to exercise this extension option with respect to one but not both of the Phase I
Buildings, then Landlord's election regarding removal of the Connector Bridge by Landlord at Tenant's expense, as provided in Section 12.2(c) of this Lease, shall be exercisable in Landlord's
discretion either at the expiration of this Lease with respect to the Phase I Building for which the extension option was not exercised or at the expiration of this Lease with respect to the Phase I
Building for which the extension option was exercised), at the Minimum Rental set forth in Section 3.1(b) and (c) (as applicable) and otherwise upon all the terms and provisions set
forth herein with respect to the initial term of this Lease, for up to two (2) additional periods of five (5) years each, the first commencing upon the expiration of the initial term
hereof and the second (applicable only to the Building or Buildings as to which a first extended term has been duly elected) commencing upon the expiration of such first extended term, if any.
Exercise of such option with respect to the first such extended term shall be by written notice to Landlord at least nine (9) months and not more than twelve (12) months prior to the
expiration of the initial term hereof; exercise of such option with respect to the second extended term, if the first extension option has been duly exercised, shall be by like written notice to
Landlord at least nine (9) months and not more than twelve (12) months prior to the expiration of the first extended term hereof. If Tenant is in default hereunder on the date of such
notice or on the date any extended term is to commence, then the exercise of the option shall be of no force or effect, the extended term shall not commence and this Lease shall expire at the end of
the then current term hereof (or at such earlier time as Landlord may elect pursuant to the default provisions of this Lease). If Tenant properly exercises one or more extension options under
this Section, then all references in this Lease (other than in this Section 2.6) to the "term" of this Lease shall be construed to include the
extension term(s) thus elected by Tenant. Except as expressly set forth in this Section 2.6, Tenant shall have no right to extend the term of this Lease beyond its prescribed term. 

 
 

3.    RENTAL    
  

        3.1    Minimum Rental.    

        (a)    Rental Amounts.    Tenant shall pay to Landlord as minimum rental for the respective Buildings or applicable
portions thereof, in advance, without deduction, offset (except as specifically authorized under Paragraph 4(c) of the Workletter, if applicable), notice or demand, on or before the applicable
Rent Commencement Date for the respective Building and on or before the first day of each subsequent calendar month of the initial term of this Lease, the following 

-8-

 

amounts per month (the "Minimum Rental"), subject to adjustment in accordance with the terms of this Section 3.1: 

        (i)    For
the Phase IA Building, beginning on the Phase I Rent Commencement Date, an amount equal to the applicable amount per square foot from the following table multiplied
by the square footage of the Phase IA Building as determined pursuant to Section 3.1(d): 

	Months
 
	 	Monthly Minimum Rental

	001 - 012	 	$4.0500/sq ft
	013 - 024	 	$4.1715/sq ft
	025 - 036	 	$4.2966/sq ft
	037 - 048	 	$4.4255/sq ft
	049 - 060	 	$4.5583/sq ft
	061 - 072	 	$4.6951/sq ft
	073 - 084	 	$4.8359/sq ft
	085 - 096	 	$4.9810/sq ft
	097 - 108	 	$5.1304/sq ft
	109 - 120	 	$5.2843/sq ft
	121 - 132	 	$5.4429/sq ft
	133 - 144	 	$5.6061/sq ft
	145 - 156	 	$5.7743/sq ft
	157 - 168	 	$5.9476/sq ft
	169 - 180	 	$6.1260/sq ft
	181 - 192	 	$6.3098/sq ft
	193 - 204	 	$6.4991/sq ft
	205 - 216 (if applicable)	 	$6.6940/sq ft
	217 and after (if applicable), continued 3.0% annual escalations

-9-

 

        (ii)  For
the Phase IB Building, beginning on the Phase I Rent Commencement Date, an amount equal to the applicable amount per square foot from the following table multiplied
by the square footage of the Phase IB Building as determined pursuant to Section 3.1(d): 

	Months
 
	 	Monthly Minimum Rental

	001 - 012	 	$4.0500/sq ft
	013 - 024	 	$4.1715/sq ft
	025 - 036	 	$4.2966/sq ft
	037 - 048	 	$4.4255/sq ft
	049 - 060	 	$4.5583/sq ft
	061 - 072	 	$4.6951/sq ft
	073 - 084	 	$4.8359/sq ft
	085 - 096	 	$4.9810/sq ft
	097 - 108	 	$5.1304/sq ft
	109 - 120	 	$5.2843/sq ft
	121 - 132	 	$5.4429/sq ft
	133 - 144	 	$5.6061/sq ft
	145 - 156	 	$5.7743/sq ft
	157 - 168	 	$5.9476/sq ft
	169 - 180	 	$6.1260/sq ft
	181 - 192	 	$6.3098/sq ft
	193 - 204	 	$6.4991/sq ft
	205 - 216 (if applicable)	 	$6.6940/sq ft
	217 and after (if applicable), continued 3.0% annual escalations

        (iii)  For
the Phase II Building, beginning on the Phase IIA Rent Commencement Date (with each successive phase of Tenant's occupancy of the Phase II Building being brought
under the following table as of the applicable Rent Commencement Date for such phase at the rental rate determined under the following table by counting from the Phase IIA Rent Commencement Date), an
amount equal to the applicable amount per square foot from the following table multiplied by 

-10-

 

the aggregate square footage of all then applicable phases of the Phase II Building as determined pursuant to Section 3.1(d): 

	Months
 
	 	Monthly Minimum Rental

	001 - 012	 	$4.1715/sq ft
	013 - 024	 	$4.2966/sq ft
	025 - 036	 	$4.4255/sq ft
	037 - 048	 	$4.5583/sq ft
	049 - 060	 	$4.6951/sq ft
	061 - 072	 	$4.8359/sq ft
	073 - 084	 	$4.9810/sq ft
	085 - 096	 	$5.1304/sq ft
	097 - 108	 	$5.2843/sq ft
	109 - 120	 	$5.4429/sq ft
	121 - 132	 	$5.6061/sq ft
	133 - 144	 	$5.7743/sq ft
	145 - 156	 	$5.9476/sq ft
	157 - 168	 	$6.1260/sq ft
	169 - 180	 	$6.3098/sq ft

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

        (b)    Rental Amounts During First Extended Term.    If Tenant properly exercises its right to extend the term of this
Lease pursuant to Section 2.6 hereof, the Minimum Rental for each Building as to which Tenant has elected to extend during the first year of the first extended term shall be equal to the
initial fair market rental (as defined below) for the applicable Building, determined as of the commencement of such extended term in accordance with this Section 3.1(b), and as of the
beginning of each subsequent year of the first extended term such Minimum Rental shall be increased by an amount equal to the greater of (i) three percent (3%) of the Minimum Rental in effect
during the immediately preceding lease year or (ii) the fair market rental escalation percentage (as defined below) for the applicable Building, determined as of the commencement of such
extended term in accordance with this Section 3.1(b). Upon Landlord's receipt of a timely notice of Tenant's exercise of its option to extend the term of this Lease, the parties shall have
sixty (60) days in which to agree on the initial fair market rental and the applicable rental escalation percentage for the Buildings as of the commencement of the first extended term for the
uses permitted hereunder. If the parties agree on such initial fair market rental and rental escalation percentage, they shall execute an amendment to this Lease stating the amount of the Minimum
Rental during the first year of the extended term (determined in accordance with this Section 3.1(b)) and the annually increased Minimum Rental for the balance of the first extended term. If
the parties are unable to agree on such initial fair market rental and/or applicable rental escalation percentage within such sixty (60) day period, then within fifteen (15) days after
the expiration of such period each party, at its cost and by giving notice to the other party, shall appoint a real estate appraiser who is a member of the American Institute of 

-11-

 

Real Estate Appraisers, or any other similar organization, and has at least five (5) years experience appraising similar commercial properties in northeastern San Mateo County, to determine
the initial fair market rental and applicable rental escalation percentage for the Buildings as of the commencement of the first extended term in accordance with the provisions of this
Section 3.1(b). If either party fails to appoint an appraiser within the allotted time, the single appraiser appointed by the other party shall be the sole appraiser. If an appraiser is
appointed by each party and the two appraisers so appointed are unable to agree upon the initial fair market rental and/or the applicable rental escalation percentage within thirty (30) days
after the appointment of the second, the two appraisers shall appoint a third similarly qualified appraiser within ten (10) days after expiration of such 30-day period; if they are
unable to agree upon a third appraiser, then either party may, upon not less than five (5) days notice to the other party, apply to the Presiding Judge of the San Mateo County Superior Court
for the appointment of a third similarly qualified appraiser. Each party shall bear its own legal fees in connection with appointment of the third appraiser and shall bear one-half of any
other costs of appointment of the third appraiser and of such third appraiser's fee. The third appraiser, however selected, shall be a person who has not previously acted for either party in any
capacity. Within thirty (30) days after the appointment of the third appraiser, a majority of the three appraisers
shall set the initial fair market rental and the applicable rental escalation percentage for the first extended term and shall so notify the parties. If a majority are unable to agree within the
allotted time, (i) the three appraised initial fair market rentals shall be added together and divided by three and the resulting quotient shall be the initial fair market rental for the first
extended term, and (ii) the three appraised fair market rental escalation percentages shall be added together and divided by three and the resulting quotient shall be the fair market rental
escalation percentage used in determining the applicable rental escalation percentage for purposes of clause (ii) of the first sentence of this Section 3.1(b), which determinations shall
be binding on the parties and shall be enforceable in any further proceedings relating to this Lease. For purposes of this Section 3.1(b), the "fair market
rental" and "fair market rental escalation percentage" for the respective Buildings shall be determined as follows:
(x) in the case of a renewal term for any of the Buildings, with reference to the then prevailing market rental rates for properties in northeastern San Mateo County with shell and standard
office, research and development improvements and site (common area) improvements comparable to those then existing in the applicable Building and on the Property,  provided that no equipment or
laboratory improvements shall be taken into account in determining such fair market rental; and (y) in the case of
a lease or renewal term for any other building leased by Tenant under terms based on the terms of this Lease (for example, any building leased by Tenant pursuant to any of the provisions of
Article 6 hereof, except to the extent any different basis of determination is specified in Landlord's First Refusal Notice or First Offer Notice, if applicable, under such Article 6),
with reference to the then prevailing market rental rates and then prevailing market rental escalation provisions for leases of comparable length of properties in the South San Francisco market with
shell and office, research and development improvements and site (common area) improvements comparable to those then existing in the applicable building and on the Property, taking into account for
such determination all tenant improvements then existing in the applicable building (including, but not limited to, equipment and laboratory improvements installed as part of the initial construction
of tenant improvements in such building). 

        (c)    Rental Amounts During Second Extended Term.    If Tenant properly exercises its right to a second extended term
of this Lease pursuant to Section 2.6 hereof, the Minimum Rental during such second extended term shall be determined in the same manner provided in the preceding paragraph for the first
extended term (initial fair market rental followed by subsequent annual escalations equal to the greater of 3% or fair market rental escalation percentage during the balance of the term), except that
the determination shall be made as of the commencement of the second extended term. 

-12-

 

        (d)    Determination of Square Footage for Rent Calculation Purposes.    After completion of the Building Shell of
each respective Building, Landlord shall cause the square footage of the respective Building (including, in the case of the Phase IB Building, the Connector Bridge if constructed as contemplated in
Section 1.1(a) hereof) to be measured by Landlord's architect, and at the commencement of each phase of Tenant's occupancy of the Phase II Building, Landlord shall cause the square footage of
the space actually used or occupied by Tenant in the Phase II Building to be measured by Landlord's architect, in each case in accordance with the measurement formula specified in
Section 1.1(d) of this Lease, which measurements by Landlord's architect shall be subject to approval (not unreasonably withheld or delayed) by Tenant's architect. Upon mutual approval of such
measurement by Landlord's and Tenant's respective architects, the applicable square footages shall be set forth in the applicable Acknowledgment of Rent Commencement Date under Section 2.4
hereof and shall be used for
calculation of Minimum Rental under Section 3.1(a), additional rent under Section 3.1(e) and Tenant's Operating Cost Share under Section 9.1 for all applicable periods. 

        (e)    Additional Rent for Tenant Improvement Costs.    In consideration of Landlord's willingness to provide the
Tenant Improvement Allowance to Tenant in accordance with the provisions of the Workletter, Tenant agrees to pay to Landlord as additional rent hereunder, which additional rent shall be due with
respect to each Building or phase thereof on the same dates and in the same manner as Minimum Rental for such Building or phase thereof, beginning on the applicable Rent Commencement Date for the
applicable Building or phase thereof, an amount calculated separately for each such Building or phase thereof as follows: (i) for each of the Phase I Buildings, for the first one hundred twenty
(120) months after the applicable Rent Commencement Date for the applicable Building, an amount equal to $0.72 per square foot per month multiplied by the applicable square footage for such
Building as determined for purposes of Section 3.1(d) above, (ii) for each of the Phase I Buildings, for months one hundred twenty-one (121) through one hundred eighty
(180) after the applicable Rent Commencement Date for the applicable Building, an amount equal to $0.33 per square foot per month multiplied by the applicable square footage for such Building
as determined for purposes of Section 3.1(d) above, and (iii) for each phase of the Phase II Building, for the first one hundred eighty (180) months after the applicable Rent
Commencement Date for such phase, an amount equal to $0.13 per square foot per month multiplied by the applicable square footage for such phase as determined for purposes of Section 3.1(d)
above. 

        3.2    Late Charge.    If Tenant fails to pay when due rental or other amounts due Landlord hereunder, such unpaid
amounts shall bear interest for the benefit of Landlord at a rate equal to the lesser of fifteen percent (15%) per annum or the maximum rate permitted by law, from the date due to the date of payment.
In addition to such interest, Tenant shall pay to Landlord a late charge in an amount equal to six percent (6%) of any installment of minimum rental and any other amounts due Landlord if not paid in
full on or before the fifth (5th) day after such rental or other amount is due. Tenant acknowledges that late payment by Tenant to Landlord of rental or other amounts due hereunder will cause Landlord
to incur costs not contemplated by this Lease, including, without limitation, processing and accounting charges and late charges which may be imposed on Landlord by the terms of any loan relating to
the Property. Tenant further acknowledges that it is extremely difficult and impractical to fix the exact amount of such costs and that the late charge set forth in this Section 3.2 represents
a fair and reasonable estimate thereof. Acceptance of any late charge by Landlord shall not constitute a waiver of Tenant's default with respect to overdue rental or other amounts, nor shall such
acceptance prevent Landlord from exercising any other rights and remedies available to it. Acceptance of rent or other payments by Landlord shall not constitute a waiver of late charges or interest
accrued with respect to such rent or other payments or any prior installments thereof, nor of any other defaults by Tenant, whether monetary or non-monetary in nature, remaining uncured at
the time of such acceptance of rent or other payments. 

-13-

 
 
 

4.    [OMITTED]    
  

 
 

5.    CONSTRUCTION    
  

        5.1    Construction of Improvements.    

        (a)  Landlord
shall, at Landlord's cost and expense (except as otherwise provided herein and in the Workletter), construct Landlord's Work as defined in and in accordance
with the terms and conditions of the Workletter. Landlord shall use its best efforts to complete such construction promptly, diligently and within the applicable time periods set forth in the
estimated construction schedules attached hereto as Exhibit D and incorporated herein by this reference, as such schedules may be modified or
revised from time to time in accordance with the Workletter, subject to Tenant Delays and Unavoidable Delays as defined in the Workletter. 

        (b)  Tenant
shall, at Tenant's cost and expense (except as otherwise provided herein and in the Workletter), construct Tenant's Work as defined in and in accordance with the
terms and conditions of the Workletter. 

        5.2    Condition of Property.    Landlord shall deliver the Building Shell for each Building and the other
Improvements constructed by Landlord to Tenant clean and free of debris, promptly upon completion of construction thereof, and Landlord warrants to Tenant that each Building Shell and the other
Improvements constructed by Landlord (i) shall be free from material structural defects and (ii) shall be constructed in compliance in all material respects with the plans and
specifications developed pursuant to the Workletter and mutually approved (to the extent required thereunder) by Landlord and Tenant, subject to any changes implemented in such plans and
specifications in accordance with the procedures set forth in the Workletter. If it is determined that this warranty has been violated in any respect, then it shall be the obligation of Landlord,
after receipt of written notice from Tenant setting forth with specificity the nature of the violation, to correct promptly, at Landlord's sole cost, the condition(s) constituting such violation.
Tenant's failure to give such written notice to Landlord within ninety (90) days after the Rent Commencement Date for the applicable Building shall give rise to a conclusive presumption that
Landlord has complied with all Landlord's obligations under this Section 5.2 with respect to the applicable Building, except with respect to latent defects (as to which such 90-day
limit shall not apply). Without limiting the scope of Landlord's obligations under the foregoing provisions of this Section 5.2, Landlord also agrees to either (x) use its best
reasonable efforts to enforce when and as necessary, for the benefit of Tenant and the Improvements, any and all contractor's and/or manufacturer's warranties with respect to any of Landlord's Work
or, at Tenant's request, (y) assign any or all of such warranties to Tenant for enforcement purposes (provided, however, that Landlord may
reserve joint enforcement rights under such warranties to the extent of Landlord's continuing obligations or warranties hereunder), and shall cooperate with Tenant in all reasonable respects in any
enforcement of such assigned warranties. TENANT ACKNOWLEDGES THAT THE WARRANTIES CONTAINED IN THIS SECTION ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE PHYSICAL
CONDITION OF THE IMPROVEMENTS TO BE CONSTRUCTED BY LANDLORD AND THAT LANDLORD MAKES NO OTHER WARRANTIES EXCEPT AS EXPRESSLY SET FORTH IN THIS LEASE. 

-14-

  

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

 
 

6.    EXPANSION RIGHTS    
  

        6.1    First Refusal Right to Lease.    

        (a)  The
building commonly known as Building C in the Center, also commonly known as 1140 Veterans Boulevard and designated as "First Refusal
Building" on the Site Plan (the "First Refusal Building"), is presently leased to Raven Biotechnologies, Inc. pursuant to
a Build-to-Suit Lease dated as of May 1, 2001 (the "Existing Raven Lease"). Landlord shall not lease all or any portion
of the First Refusal Building at any time during the term of this Lease (as extended, if applicable), except in compliance with this Section 6.1;  provided, however, that the foregoing restriction
shall not apply during any period in which Tenant is in default under this Lease, beyond any
applicable notice and cure periods, and provided further, however, that Tenant's rights pursuant to this Section 6.1 are subordinate to the
rights of Raven Biotechnologies, Inc. and its successors in interest (collectively, "Raven") pursuant to the Existing Raven Lease, as the same
may be amended from time to time. 

        (b)  If,
at any time during the term of this Lease (as extended, if applicable), Landlord receives and wishes to accept a bona
fide written offer from a person or entity (an "Offeror," provided, however, that the term  "Offeror" shall not include Tenant
itself, nor shall it include Raven with respect to any rights or negotiations under the Existing Raven Lease, as the
same may be amended from time to time) to
lease all or any portion of the First Refusal Building and if Tenant is not then in default under this Lease (beyond any applicable notice and cure periods), then Landlord shall give written notice of
such bona fide written offer to Tenant (the "First Refusal Notice"), specifying the material terms on
which the Offeror proposes to lease the First Refusal Building or applicable portion thereof (the "First Refusal Space"), and shall offer to Tenant the
opportunity to lease the First Refusal Space on the terms specified in the First Refusal Notice. For purposes of this Section 6.1(b), an offer shall be considered bona
fide if it is contained in a letter of intent or other writing signed by the Offeror and specifies the material terms of the proposed lease. Tenant shall have ten
(10) business days after the date of giving of the First Refusal Notice in which to accept such offer by written notice to Landlord. Upon such acceptance by Tenant, the First Refusal Space
shall be leased to Tenant on the terms set forth in the First Refusal Notice and on the additional terms and provisions set forth in this Lease (except to the extent inconsistent with the terms set
forth in the First Refusal Notice), excluding Article 6 hereof, and the parties shall promptly (and in all events within ten (10) business days after delivery of Tenant's acceptance)
execute a lease amendment or other written agreement containing the terms of the First Refusal Notice and all other terms and provisions of this Lease not inconsistent with the terms of said First
Refusal Notice, except Article 6 hereof and except as the parties may otherwise mutually agree. If Tenant does not accept Landlord's offer within the allotted time or if the parties fail to
enter into such a lease amendment or other written agreement in a timely manner, Landlord shall thereafter have the right to lease the First Refusal Space to the Offeror, at any time within one
hundred eighty (180) days 

-15-

 

thereafter, at a minimum rental and on other terms and conditions not more favorable to the Offeror than the minimum rental and other terms offered to Tenant in the First Refusal Notice. If Landlord
does not lease the First Refusal Space to the Offeror pursuant to the preceding sentence within such one hundred eighty (180) days, or if Landlord desires to lease the First Refusal Space to
another third party within such one hundred eighty (180) days, this First Refusal Right shall reattach to the First Refusal Space on all of the same terms set forth above. 

        6.2    Right of First Offer to Lease.    

        (a)  Landlord
has advised Tenant that Buildings F and G in the Center, designated as "First Offer Buildings" on the Site Plan
(collectively, the "First Offer Buildings"), are presently leased to Rigel Pharmaceuticals, Inc. pursuant to a
Build-to-Suit Lease dated as of May 16, 2001 (the "Existing Rigel Lease"). Landlord shall not lease all or any portion of
the First Offer Buildings at any time during the term of this lease (as extended, if applicable), except in compliance with this Section 6.2;  provided, however, that the foregoing restriction shall
not apply during any period in which Tenant is in default under this Lease, beyond any
applicable notice and cure periods, and provided further, however, that Tenant's rights pursuant to this Section 6.2 are subordinate to the
rights of Rigel Pharmaceuticals, Inc. and its successors in interest (collectively, "Rigel") pursuant to the Existing Rigel Lease, as the same
may be amended from time to time. 

        (b)  If,
at any time during the term of this Lease (as extended, if applicable), any of the First Offer Buildings or any portion thereof becomes available for leasing by
Landlord and Landlord intends to pursue the leasing of such First Offer Building(s) or portion thereof (the "First Offer Space," provided, however, that
the provisions of this paragraph shall not apply to any negotiations or discussions Landlord may have with Tenant itself, nor to any negotiations or discussions Landlord may have with Rigel, or any
exercise of rights by Rigel, under or in connection with the Rigel Lease as the same may
be amended from time to time), and if Tenant is not then in default under this Lease (beyond any applicable notice and cure periods), then Landlord shall first give written notice of such intention to
Tenant (a "First Offer Notice") identifying the First Offer Space and the rent, improvement allowance and other material terms upon which Landlord
proposes to offer such First Offer Space to prospective tenants. Tenant and Landlord shall have ten (10) business days after Tenant's receipt of such First Offer Notice in which to reach
agreement on all terms and achieve execution of a written lease amendment or other written agreement regarding Tenant's leasing and occupancy of the First Offer Space. It is generally the intention of
the parties that except with respect to the economic and other terms specified in the First Offer Notice, the form of lease for any such leasing of First Offer Space would be similar to this Lease,
excluding Article 6 hereof and subject to such other modifications as may be reasonably necessary to reflect differences in the First Offer Space and/or in the economic and other terms
applicable to Tenant's leasing of such First Offer Space pursuant to the First Offer Notice. If Landlord and Tenant fail to reach agreement on all terms and achieve execution of a written lease within
ten (10) business days after Tenant's receipt of such First Offer Notice, then Landlord shall thereafter have the right to lease the First Offer Space, at any time within two hundred seventy
(270) days thereafter, to such persons or entities and on such terms as Landlord in its sole discretion may deem appropriate, without any further limitation or restriction hereunder. If
Landlord does not lease the First Offer Space to any such person or entity within such two hundred seventy (270) days, this First Offer Right shall reattach to the First Offer Space on all of
the same terms set forth above, except that in connection with any subsequent First Offer Notice delivered by Landlord to Tenant with respect to any First Offer Space that has previously been the
subject of a First Offer Notice which did not result in the leasing of such First Offer Space by Tenant, Tenant's time to reach a written agreement with Landlord in response to such subsequent First
Offer Notice shall be reduced from ten (10) business days to five (5) business days. 

-16-

 

        6.3    Expansion Option.    

        (a)  Landlord
presently owns the property lying easterly of the Property and commonly known as 333 Oyster Point Boulevard, South San Francisco (the  "Expansion Property"). The Expansion Property is presently operated
as a commercial warehouse facility, but it is also Landlord's present intention to
redevelop the Expansion Property as a biotechnology facility during calendar year 2005, and Landlord agrees to undertake such redevelopment, subject to the conditions set forth in this
Section 6.3, in order to accommodate any proper exercise of Tenant's rights under this Section 6.3. Tenant shall have a one-time option (the  "Expansion Option"), exercisable only in accordance
with this Section 6.3, to lease a minimum amount of at least 100,000 square feet of
redeveloped biotechnology space on the Expansion Property; provided, however, that the Expansion Option shall not apply if Tenant is in default under
this Lease (beyond any applicable notice and cure periods) on the date the Expansion Option is exercisable. The exact size and location of the space subject to the Expansion Option within the
Expansion Property (the "Expansion Space") shall be mutually agreed upon in writing by Landlord and Tenant, subject to the minimum size of 100,000
square feet as specified above, after Landlord has approved a final design and site plan for the redevelopment of the Expansion Property. If Tenant notifies Landlord in writing, at least
seventy-five (75) days prior to the date the Expansion Option must be exercised, that Tenant is considering exercise of the Expansion Option (which notice may be given by Tenant in
its sole and absolute discretion), then (i) Landlord agrees to adopt and approve a final design and site plan for the redevelopment of the Expansion Property at least forty-five
(45) days prior to the date the Expansion Option must be exercised, in order to allow a reasonable time for the parties to reach mutual
agreement regarding the size and location of the Expansion Space in a timely manner and (ii) Landlord and Tenant agree to negotiate diligently, reasonably and in good faith to reach such an
agreement regarding the size and location of the Expansion Space at least fifteen (15) days prior to the date the Expansion Option must be exercised. 

        (b)  The
Expansion Option shall be exercisable only by written notice from Tenant to Landlord no later than March 1, 2005, and only if Tenant is not then in default
under this Lease (beyond any applicable notice and cure periods). Such written notice (the "Exercise Notice") shall state that Tenant is exercising the
Expansion Option hereunder and shall state specifically the phasing (if any) pursuant to which Tenant proposes to occupy the Expansion Space, subject to the limitations hereinafter set forth. Upon
timely giving of a timely Exercise Notice by Tenant, (i) Landlord shall proceed with reasonable diligence and with commercially reasonable efforts to obtain all governmental approvals required
for the construction of the Expansion Space, including, but not limited to, any governmental approvals required for the redevelopment of the Expansion Property to accommodate the construction of the
Expansion Space (provided that if Landlord is unable, despite the exercise of reasonable diligence and commercially reasonable efforts, to obtain all
such required governmental approvals within six (6) months after delivery of Tenant's Exercise Notice, then upon written notice thereof by either party to the other, Tenant's Exercise Notice
shall be deemed to be rescinded and the Expansion Option shall be of no further force or effect) and (ii) subject to the receipt of such required governmental approvals, the Expansion Space
shall be leased to Tenant on the following terms (and on the additional terms and provisions set forth in this Lease, except for Article 6 hereof and except to the extent inconsistent with the
terms specified in this Section 6.3): The Expansion Space shall, at Tenant's election as set forth in the Exercise Notice, be leased and occupied either all at once, with a single Rent
Commencement Date, or in two separate phases, with the first phase having a minimum size of at least fifty percent (50%) of the total Expansion Space and the second phase constituting the balance of
the Expansion Space. The Rent Commencement Date for the Expansion Space (or for the first phase thereof, if applicable) shall be determined in the same manner as provided in Section 2.1 hereof
(180 days after Landlord's delivery of a Structural Completion Certificate, subject to any adjustments applicable under the Workletter, or on the date Tenant takes occupancy of and commences
operation of its business in the applicable space, whichever occurs first), provided that such Rent Commencement Date shall not occur prior to
December 1, 2006 unless triggered at an earlier date by Tenant's 

-17-

 

occupancy of and commencement of operation of its business in the applicable space or unless an earlier date is mutually agreed upon by Landlord and Tenant. If Tenant elects to take down the
Expansion Space in two phases as provided above, then the Rent Commencement Date for the second phase of the Expansion Space shall occur on the earlier of December 1, 2007 or the date Tenant
actually occupies and commences operation of its business in the second phase of the Expansion Space, unless an earlier date is mutually agreed upon by Landlord and Tenant. Landlord shall perform the
equivalent of Landlord's Work (as defined in the Workletter) at its sole cost and expense, for the Expansion Space, subject to such modifications of the scope and definition of Landlord's Work as are
consistent with Landlord's design, plans and specifications for the other buildings and facilities to be constructed on the Expansion Property, and Tenant shall be entitled to a Tenant Improvement
Allowance of One Hundred Thirty-Five and No/100 Dollars ($135.00) per square foot for the Expansion Space. The minimum monthly rental commencing as of the Rent Commencement Date for the
Expansion Space (or for the first phase thereof, if applicable) shall be $4.43 per square foot per month, with annual escalations thereafter on each anniversary of such Rent Commencement Date in an
amount equal to three percent (3.0%) of the rental rate in effect immediately prior to the applicable escalation date. If Tenant elects to take down the Expansion Space in two phases as provided
above, then the minimum monthly rental applicable to the second phase as of the Rent Commencement Date for such second phase shall be equal to the minimum monthly rental rate then in effect for the
first
phase, and the minimum monthly rental rate for the second phase shall thereafter at all times be equal to the minimum monthly rental rate in effect for the first phase from time to time, as escalated
in accordance with the foregoing provisions. Tenant's Operating Expense obligations with respect to the Expansion Space shall be determined in a manner both similar to and proportional to the
Operating Expense obligations of other tenants of the Expansion Property, depending on whether, in Landlord's discretion, the Expansion Property is combined with the Center for Operating Expense
purposes or is operated on a stand-alone basis for such purposes, and if operated on a stand-alone basis, whether the Expansion Property is operated on a project-wide basis for Operating
Expense purposes or the respective buildings within the Expansion Property are operated in whole or in part on a stand-alone basis for such purposes. Following a timely exercise of the Expansion
Option by Tenant, the parties shall promptly (and in all events within ten (10) business days after delivery of Tenant's Exercise Notice) execute a lease amendment or other written agreement
reflecting the terms applicable to the Expansion Space as set forth above and reflecting all other terms and provisions of this Lease not inconsistent with the terms set forth above, except for
Article 6 hereof and except as the parties may otherwise mutually agree. If Tenant does not validly and timely exercise the Expansion Option in accordance with this Section 6.3 or if the
parties do not timely enter into such a lease amendment or other written agreement with respect to the Expansion Space, then the Expansion Option shall be of no further force or effect and Landlord
shall thereafter have the right to lease the Expansion Space and the Expansion Property at any time and from time to time to such persons or entities and on such terms as Landlord in its sole
discretion may deem appropriate, without any further limitation or restriction hereunder. 

 
 

7.    [OMITTED]    
  

 
 

8.    TAXES    
  

        8.1    Personal Property.    Tenant shall be responsible for and shall pay prior to delinquency all taxes and
assessments levied against or by reason of (a) any and all alterations, additions and items installed or placed on, in or about any of the Buildings by Tenant or for Tenant's use and taxed as
personal property rather than as real property, and/or (b) all personal property, trade fixtures and other property placed by Tenant on or about the Property. Upon request by Landlord, Tenant
shall furnish Landlord with satisfactory evidence of Tenant's payment thereof. If at any time during the term of this Lease any of said alterations, additions or personal property, whether or not
belonging to Tenant, shall be taxed 

-18-

 

or assessed as part of the Property, then such tax or assessment shall be paid by Tenant to Landlord immediately upon presentation by Landlord of copies of the tax bills in which such taxes and
assessments are included and shall, for the purposes of this Lease, be deemed to be personal property taxes or assessments under this Section 8.1. 

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

 
 

9.    OPERATING EXPENSES    
  

        9.1    Liability For Operating Expenses.    

        (a)  Tenant
shall pay to Landlord, at the time and in the manner hereinafter set forth, as additional rental, Tenant's Operating Cost Share (as hereinafter defined) of the
Operating Expenses defined in Section 9.2, subject to adjustment pursuant to Sections 9.1(b) and (c) when applicable. The parties presently anticipate that the percentage amount
constituting Tenant's applicable share of Operating Expenses ("Tenant's Operating Cost Share"), except as otherwise provided herein, will be
thirty-eight and eighty hundredths percent (38.80%) as of the Phase I Rent Commencement Date, forty-one and twenty-one hundredths percent (41.21%) as of the Phase IIA Rent
Commencement Date, forty-three and seventy-eight hundredths percent (43.78%) as of the Phase IIB Rent Commencement Date, forty-six and thirteen hundredths percent (46.13%) as of the Phase
IIC Rent Commencement Date and forty-eight and twenty-nine hundredths percent (48.29%) as of the Phase IID Rent Commencement Date. Notwithstanding the foregoing and the provisions of
Section 9.1(c), with respect to liability insurance premiums (except to the extent separately and specifically allocable to a Building, in which event Tenant's Operating Cost Share with respect
thereto shall be 100% for the Phase IA Building and the Phase IB Building and 94.91% for the Phase II Building), the land component of real property taxes and assessments, common area lighting and
maintenance expenses, and other similar expenses that are incurred or measured on a Center-wide basis (rather than being clearly and reasonably allocable or attributable to a specific
Building alone, in which event Tenant's Operating Cost Share with respect thereto shall be 100% for the Phase IA Building and the Phase IB Building and 94.91% for the Phase II Building) or that are
incurred with respect to common area facilities, notwithstanding any other provisions of this Article 9, Tenant's Operating Cost Share with respect to such Center-wide and/or common
area expenses from and after each respective Rent Commencement Date, regardless of the status of construction and occupancy of the other contemplated buildings in the Center, shall be equal to the
percentage amount which is equivalent to a fraction, the numerator of which is the actual square footage of the Building(s) as to which a Rent Commencement Date has then occurred, as determined on the
basis of measurement set forth in Section 1.1(c) hereof, and the denominator of which is the sum of the actual square footage of all then completed buildings in the Center plus the proposed
square footage (as reflected in Landlord's entitlements for the Property) of all not yet completed buildings that Landlord proposes to construct in the Center (excluding the proposed child care
facility and proposed stand-alone restaurant as hereinafter set forth), in each case as determined on the basis of measurement set forth in Section 1.1(c) hereof, consistently applied;
provided, however, that the
adjusted Tenant's Operating Cost Share determined pursuant to this sentence shall be further adjusted from time to time to reflect (x) any difference between the actual square footage of any
additional buildings completed in the Center from time to time and the proposed square footage at which such additional buildings were previously included in the application of the 

-19-

 

foregoing formula, and (y) any increase or decrease in the aggregate square footage of the buildings that Landlord proposes to construct in the Center as part of the initial phased development
of the Center (such as, but not limited to, any decision by Landlord to defer indefinitely, beyond the normal and reasonable phasing of the Center, the construction of any of the planned buildings in
the Center and/or any action by governmental authorities to reduce the aggregate square footage of the buildings that Landlord is entitled to construct in the Center pursuant to Landlord's
entitlements as amended from time to time), provided that in no event shall Tenant's Operating Share be calculated with a denominator of less than
550,000 square feet (except that such minimum denominator shall be reduced to the extent any square footage of existing or proposed buildings in the Center from time to time is removed from commercial
use entirely, other than on a temporary or interim basis, as a result of casualty or condemnation, or to the extent any buildings in the Center from time to time cease to be operated and accounted for
on an integrated basis with the rest of the Center for Operating Expense purposes as a result of the sale of a portion of the Property or otherwise). 

        (b)  Tenant's
Operating Cost Share as specified in Section 9.1(a) as of the Phase I Rent Commencement Date is based upon an estimated area of 103,000 square feet for
the Phase IA Building, an estimated area of 87,000 square feet for the Phase IB Building (not including the Connector Bridge contemplated in Section 1.1(a), but if such Connector Bridge is in
fact constructed, the square footage thereof shall be included in the square footage of the Phase IB Building for purposes of all calculations of Tenant's Operating Cost Share under this
Article 9) and an aggregate estimated area of 482,000 square feet for all of the buildings that Landlord presently expects to have in fully constructed and occupied condition on the Property at
the Phase I Rent Commencement Date; Tenant's Operating Cost Share as specified in Section 9.1(a) as of the Phase IIA Rent Commencement Date is based upon an estimated area of 23,300 square feet
for Phase IIA and upon an aggregate estimated area of 510,200 square feet for all of the buildings that Landlord presently expects to have in fully constructed and occupied condition on the Property
at the Phase IIA Rent Commencement Date; Tenant's Operating Cost Share as specified in Section 9.1(a) as of the Phase IIB Rent Commencement Date is based upon an estimated area of 23,300 square
feet for Phase IIB and upon an aggregate estimated area of 533,600 square feet for all of the buildings that Landlord presently expects to have in fully constructed and occupied condition on the
Property at the Phase IIB Rent Commencement Date; Tenant's Operating Cost Share as specified in Section 9.1(a) as of the Phase IIC Rent Commencement Date is based upon an estimated area of
23,300 square feet for Phase IIC and upon an aggregate estimated area of 556,900 square feet for all of the buildings that Landlord presently expects to have in fully constructed and occupied
condition on the Property at the Phase IIC Rent Commencement Date; and Tenant's Operating Cost Share as specified in Section 9.1(a) as of the Phase IID Rent Commencement Date is based upon an
estimated area of 23,300 square feet for Phase IID and upon an aggregate estimated area of 580,200 square feet for all of the buildings that Landlord presently expects to have in fully constructed and
occupied condition on the Property at the Phase IID Rent Commencement Date. If the actual area of the respective Buildings (when completed) or phases thereof (in the case of the Phase II Building) or
of the other buildings existing from time to time in the Center, as determined on the basis of measurement set forth in Section 1.1(c) hereof (which basis of measurement shall be applied
consistently for all buildings in the Center), differs from the assumed numbers set forth above (including, but not limited to, any such difference arising from the completion and occupancy of
buildings in the Center before or after the respective Rent Commencement Dates hereunder, as contemplated in Section 9.1(c) below, and/or from the construction of the Connector Bridge
contemplated in Section 1.1(a), if applicable), then Tenant's Operating Cost Share shall be adjusted to reflect the actual areas so determined as they exist from time to time. In no event,
however, shall the square footage of any child care facility or stand-alone restaurant on the Property be included as part of the square footage of buildings on the Property in calculating Tenant's
Operating Cost Share, nor shall any costs or expenses relating to the proposed child care facility and proposed stand-alone restaurant on the Property be included in Operating Expenses as hereinafter
defined. In 

-20-

 

the case of expenses that are incurred or measured on a Center-wide basis or that are incurred with respect to Common Area facilities, Landlord shall allocate a reasonable share of such
expenses to the proposed child care facility and proposed stand-alone restaurant on the Property and shall exclude such share from Operating Expenses pursuant to the preceding sentence. 

        (c)  As
Landlord constructs additional buildings in the Center (other than those described in the first sentence of Section 9.1(b) as already being taken into account
in the estimated figures set forth above), Tenant's Operating Cost Share shall be adjusted from time to time to be equal to the percentage determined by dividing the gross square footage of the
Building(s) as to which a Rent Commencement Date has occurred hereunder, as they then exist, by the gross square footage of all buildings located in the Center (subject to the exclusion set forth in
Section 9.1(b) with respect to the proposed child care facility and proposed restaurant). In determining such percentage, a building shall be taken into account from and after the date on which
a tenant first enters into possession of the building or a portion thereof; the determination of the gross square footage of any such building by Landlord's architect in a manner consistent with the
manner in which other buildings in the Center are measured shall be final and binding upon the parties; and costs and expenses relating to a new building shall be taken into account as Operating
Expenses under this Article 9 only from and after the date on which the square footage of the building is taken into account in determining Tenant's Operating Cost Share under the criteria set
forth in this paragraph. 

        9.2    Definition Of Operating Expenses.    

        (a)  Subject
to the exclusions and provisions set forth in this Article 9, the term "Operating Expenses" shall mean the
total costs and expenses incurred by or allocable to Landlord for management, operation and maintenance of the Improvements, the Property and the Center, including, without limitation, costs and
expenses of (i) insurance (including, but not limited to, earthquake insurance and environmental insurance), property management (provided that
Tenant's allocable share of property management fees for any applicable period during the term of this Lease shall not exceed a maximum amount equal to one and one half percent (1.5%) of the Minimum
Rental payable hereunder with respect to such period), landscaping, and the operation, repair and maintenance of buildings and Common Areas; (ii) all utilities and services; (iii) real
and personal property taxes and assessments or substitutes therefor levied or assessed against the Center or any part thereof, including (but not limited to) any possessory interest, use, business,
license or other taxes or fees, any taxes imposed directly on rents or services, any assessments or charges for police or fire protection, housing, transit, open space, street or sidewalk construction
or maintenance or other similar services from time to time by any governmental or quasi-governmental entity, and any other new taxes on landlords in addition to taxes now in effect;
(iv) supplies, equipment, utilities and tools used in management, operation and maintenance of the Center; (v) capital improvements to the Property, the Improvements or the Center,
amortized over their useful lives as determined by Landlord's accountants consistent with generally
accepted accounting principles and/or tax accounting principles, (aa) which reduce or will cause future reduction of other items of Operating Expenses for which Tenant is otherwise required to
contribute or (bb) which are required by law, ordinance, regulation or order of any governmental authority; and (vi) any other costs (including, but not limited to, any parking or utilities
fees or surcharges not otherwise specifically addressed elsewhere in this Lease) allocable to or paid by Landlord, as owner of the Center or Improvements, pursuant to any applicable laws, ordinances,
regulations or orders of any governmental or quasi-governmental authority or pursuant to the terms of any declarations of covenants, conditions and restrictions now or hereafter affecting the Center
or any other property over which Tenant has non-exclusive usage rights as contemplated in Section 1.1(b) hereof. Operating Expenses shall not include any costs attributable to the
work for which Landlord is required to pay under Article 5 or the Workletter, nor any costs attributable to the initial construction of buildings or Common Area improvements in the Center, nor
any costs attributable to buildings the square footage of which is not taken into account in determining Tenant's Operating Cost Share under 

-21-

 

Section 9.1 for the applicable period. The distinction between items of ordinary operating maintenance and repair and items of a capital nature shall be made in accordance with generally
accepted accounting principles applied on a consistent basis or in accordance with tax accounting principles, as determined in good faith by Landlord's accountants. 

        (b)  Notwithstanding
any other provisions of this Section 9.2, the following shall not be included within Operating Expenses: (i) rent paid to any ground
lessor; (ii) the cost of constructing tenant improvements for any other tenant of a Building or the Center; (iii) the costs of special services, goods or materials provided to any other
tenant of a Building or the Center and not offered or made available to Tenant; (iv) repairs covered by proceeds of insurance or from funds provided by Tenant or any other tenant of the Center,
or as to which any other tenant of the Center is obligated to make such repairs or to pay the cost thereof; (v) legal fees, advertising costs, commissions or other related expenses incurred by
Landlord in connection with the leasing of space to individual tenants of the Center; (vi) repairs, alterations, additions, improvements or replacements needed to rectify or correct any defects
in the original design, materials or workmanship of a Building, the Center or the Common Areas; (vii) damage and repairs necessitated by the negligence or willful misconduct of Landlord or of
Landlord's employees, contractors or agents; (viii) Landlord's general overhead expenses not related to the Buildings or the Center; (ix) legal fees, accountants' fees and other expenses
incurred in connection with disputes with tenants or other occupants of the Center, or in connection with the enforcement of the terms of any leases with tenants or the defense of Landlord's title to
or interest in the Center or any part thereof; (x) costs incurred due to a violation by Landlord or any other tenant of the Center of the terms and conditions of any lease; (xi) costs of
any service provided to Tenant or to other occupants of a Building or the Center for which Landlord is reimbursed other than through recovery of Operating Expenses; (xii) personal property
taxes due and payable by any other tenant of the Center; (xiii) costs incurred by Landlord pursuant to Article 17 of this Lease in connection with an event of casualty or condemnation;
(xiv) depreciation on buildings; (xv) interest; (xvi) capital items (other than as expressly provided above); (xvii) payments on debt (principal or interest);
(xviii) legal fees; (xix) amounts paid to any affiliates of Landlord (i.e., persons or companies controlling, controlled by or under
common control with Landlord) for provision of services, except to the extent that the costs of such services do not exceed a reasonable and competitive rate for such services in the market for
provision of comparable commercial services in the San Francisco Bay Area; (xx) any bad debt losses, rent losses or reserves for bad debt; (xxi) any costs relating to the creation,
maintenance and operation of and the internal accounting for the legal entity which constitutes the landlord hereunder; and (xxii) any late fees or penalties or similar fees resulting from
delinquent payment by Landlord of any taxes, fees or contract amounts. Moreover, Operating Expenses shall not include any expenses of operation and maintenance of the parking structure and parking
areas on the Property or of measures undertaken by
Landlord pursuant to the TDMP (as defined in Section 21.20(a)), except to the extent such expenses in the aggregate exceed, for the applicable period, aggregate parking revenues received by
Landlord with respect to that period from tenants under provisions comparable to Section 21.20(b) hereof and from any other users paying hourly, daily, monthly or other fees for the use of such
parking structure and/or parking areas from time to time. Landlord presently estimates that parking-related revenues will generally exceed expenses of operation and maintenance of the parking
structure and parking areas on the Property, leaving a portion of such revenues available to support TDMP measures undertaken by Landlord as contemplated in the preceding sentence. 

        9.3    Determination and Payment of Operating Expenses.    On or before the Phase I Rent Commencement Date and during
the last month of each calendar year of the term of this Lease ("Lease Year"), or as soon thereafter as practical, Landlord shall provide Tenant notice
of Landlord's estimate of the Operating Expenses for the ensuing Lease Year or applicable portion thereof. On or before the first day of each month during the ensuing Lease Year or applicable portion
thereof, beginning on the Phase I Rent Commencement Date, Tenant shall pay to Landlord Tenant's Operating Cost Share of the portion of such estimated Operating Expenses allocable (on a prorata basis)
to such 

-22-

 

month; provided, however, that if such notice is not given in the last month of a Lease Year, Tenant shall continue to pay on the basis of the prior
year's estimate, if any, until the month after such notice is given. If at any time or times it appears to Landlord that the actual Operating Expenses will vary from Landlord's estimate by more than
five percent (5%), Landlord may, by notice to Tenant, revise its estimate for such year and subsequent payments by Tenant for such year shall be based upon such revised estimate. In the event of any
subsequent rebate, refund, adjustment or surcharge with respect to any item of Operating Expenses allocable to any portion of the term of this Lease, the amount of such rebate, refund, adjustment or
surcharge shall be for Tenant's benefit or account. 

        9.4    Final Accounting For Lease Year.    

        (a)  Within
ninety (90) days after the close of each Lease Year, or as soon after such 90-day period as practicable, Landlord shall deliver to Tenant a
statement of Tenant's Operating Cost Share of the Operating Expenses for such Lease Year prepared by Landlord from Landlord's books and records, which statement shall be final and binding on Landlord
and Tenant (except as provided in Section 9.4(b)). If on the basis of such statement Tenant owes an amount that is more or less than the estimated payments for such Lease Year previously made
by Tenant, Tenant or Landlord, as the case may be, shall pay the deficiency to the other party within thirty (30) days after delivery of the statement. Failure or inability of Landlord to
deliver the annual statement within such ninety (90) day period shall not impair or constitute a waiver of Tenant's obligation to pay Operating Expenses, or cause Landlord to incur any
liability for damages. 

        (b)  At
any time within four (4) months after receipt of Landlord's annual statement of Operating Expenses as contemplated in Section 9.4(a), Tenant shall be
entitled, upon reasonable written notice to Landlord and during normal business hours at Landlord's office or such other places as Landlord shall designate, to inspect and examine those books and
records of Landlord relating to the determination and payment of Operating Expenses relating to the immediately preceding Lease Year covered by such
annual statement or, if Tenant so elects by written notice to Landlord, to request an independent audit of such books and records. The independent audit of the books and records shall be conducted by
a certified public accountant reasonably acceptable to both Landlord and Tenant or, if the parties are unable to agree, by a certified public accountant appointed by the Presiding Judge of the San
Mateo County Superior Court upon the application of either Landlord or Tenant (with notice to the other party). In either event, such certified public accountant shall be one who is not then employed
in any capacity by Landlord or Tenant or by any of their respective affiliates. The audit shall be limited to the determination of the amount of Operating Expenses for the subject Lease Year, and
shall be based on generally accepted accounting principles and tax accounting principles, consistently applied. If it is determined, by mutual agreement of Landlord and Tenant or by independent audit,
that the amount of Operating Expenses billed to or paid by Tenant for the applicable Lease Year was incorrect, then the appropriate party shall pay to the other party the deficiency or overpayment, as
applicable, within thirty (30) days after the final determination of such deficiency or overpayment. All costs and expenses of the audit shall be paid by Tenant unless the audit shows that
Landlord overstated Operating Expenses for the subject Lease Year by more than five percent (5%), in which case Landlord shall pay all costs and expenses of the audit. Each party agrees to maintain
the confidentiality of the findings of any audit in accordance with the provisions of this Section 9.4. 

        9.5    Proration.    If a Rent Commencement Date falls on a day other than the first day of a Lease Year or if this
Lease terminates on a day other than the last day of a Lease Year, then the amount of Operating Expenses payable by Tenant with respect to such first or last partial Lease Year shall be prorated on
the basis which the number of days during such Lease Year in which this Lease is in effect bears to 365. The termination of this Lease shall not affect the obligations of Landlord and Tenant pursuant
to Section 9.4 to be performed after such termination. 

-23-

 
 
 

10.    UTILITIES    
  

        10.1    Payment.    Commencing with the applicable Rent Commencement Date for each Building and thereafter throughout
the term of this Lease, Tenant shall pay, before delinquency, all charges for water, gas, heat, light, electricity, power, sewer, telephone, alarm system, janitorial and other services or utilities
supplied to or consumed in or with respect to such Building (other than any separately metered costs for water, electricity or other services or utilities furnished with respect to the Common Areas,
which costs shall be paid by Landlord and shall constitute Operating Expenses under Section 9.2 hereof), including any taxes on such services and utilities. It is the intention of the parties
that all such services and utilities shall be separately metered to each Building and, in the case of the Phase II Building, to Tenant's premises in such Building. In the event that any of such
services or utilities supplied to any Building are not separately metered (or, in the case of the Phase II Building, are not separately metered to Tenant's premises in that Building), then the amount
thereof shall be an item of Operating Expenses allocable to the specific Building and shall be allocated to and paid by the tenants of that specific Building as provided in Article 9. 

        10.2    Interruption.    There shall be no abatement of rent or other charges required to be paid hereunder and
Landlord shall not be liable in damages or otherwise for interruption or failure of any service or utility furnished to or used with respect to any Building or the Property because of accident, making
of repairs, alterations or improvements, severe weather, difficulty or inability in obtaining services or supplies, labor difficulties or any other cause unless the interruption or failure of a
service or utility is caused by the negligence or willful misconduct of Landlord, its agents, employees or contractors, in which case all rent hereunder shall be abated for each Building for each day
that such service or utility is not available at such Building as a result of such negligence or willful misconduct, beginning on the first business day following the day on which the unavailability
of such service or utility at the applicable Building commences, and Landlord shall be liable for Tenant's actual damages (but not lost profits or other consequential damages) as a result of the
unavailability of such service or utility caused by such negligence or willful misconduct. Notwithstanding the foregoing, Landlord agrees that except in case of emergency, it will not voluntarily
interrupt, shut down, or otherwise interfere with utilities or services to any Building between the hours of 8:00 a.m. and 5:00 p.m. (excluding weekends and holidays) for any reason,
including without limitation, development of other buildings and improvements on the Property (but excluding any necessary interruption or shutdown of utilities or services in connection with the
construction of any of the Buildings themselves). In the event Landlord violates the foregoing prohibition, all rent hereunder for each Building shall be abated for each day any service or utility is
not available at such Building as a result of Landlord's voluntary interruption, shutdown or interference therewith and Tenant shall have the right to exercise all rights and remedies available at law
or in equity for such violation, including the right to enjoin Landlord's actions which are the cause of such interruption, shut down or interference. In the event of any interruption or shutdown of
utilities or services by Landlord under emergency circumstances, Landlord shall use reasonable efforts to provide Tenant with oral notice of such interruption or shutdown as promptly as the
circumstances reasonably permit. 

 
 

11.    ALTERATIONS; SIGNS    
  

        11.1    Right To Make Alterations.    Tenant shall make no alterations, additions or improvements to the Property
without the prior written consent of Landlord, which consent shall not be unreasonably withheld or delayed, except that Tenant shall not be required to obtain such consent for interior
non-structural alterations costing less than Fifty Thousand Dollars ($50,000.00) for any single project (i.e., any single item of
alterations or set of related alterations in a Building) and less than One Hundred Thousand Dollars ($100,000.00) in the aggregate with respect to the applicable Building, on a Building by Building
basis, during any twelve (12) month period. All such alterations, additions and improvements shall be completed with due diligence in a first-class workmanlike manner, in compliance with plans
and specifications approved in writing by Landlord and in compliance with all applicable 

-24-

 

laws, ordinances, rules and regulations, and to the extent Landlord's consent is not otherwise required hereunder for such alterations, additions or improvements, Tenant shall give prompt written
notice thereof to Landlord. Tenant shall cause any contractors engaged by Tenant for work on the Property to maintain public liability and property damage insurance, and other customary insurance,
with such terms and in such amounts as Landlord may reasonably require, naming as additional insureds
Landlord and any of its members, partners, shareholders, property managers, lenders, agents and employees designated by Landlord for this purpose, and shall furnish Landlord with certificates of
insurance or other evidence that such coverage is in effect. Notwithstanding any other provisions of this Section 11.1, under no circumstances shall Tenant make any structural alterations or
improvements, or any substantial changes to the roof or substantial equipment installations on the roof, or any substantial changes or alterations to building systems, without Landlord's prior written
consent. 

        11.2    Title To Alterations.    All alterations, additions and improvements installed in, on or about the Buildings
or the Property shall become part of the Improvements and the property of Landlord, unless Landlord elects to require Tenant to remove the same upon the termination of this Lease;  provided, however,
that the foregoing shall not apply to (i) any Tenant Improvements, (ii) any other alterations, additions or
improvements or (iii) Tenant's movable furniture, equipment and trade fixtures, to the extent Tenant can demonstrate that any such items described in the preceding clauses (i) through
(iii) were acquired and installed by Tenant at Tenant's sole expense, without any use of funds from the Tenant Improvement Allowance under the Workletter, and are not an integral part of the
applicable Building's structure, interior architectural improvements, HVAC, plumbing or electrical systems or other standard operating systems. All of such items described in clauses
(i) through (iii) of the preceding sentence and meeting the requirements set forth following clause (iii) in the preceding sentence (in all events including, but not limited to,
lab benches, fume hoods and portable cold rooms, to the extent they meet the requirements set forth following clause (iii) in the preceding sentence) may (and, if duly elected by Landlord
hereunder, shall) be removed by Tenant upon termination of this Lease. Tenant shall promptly repair any damage caused by its removal of any such improvements from time to time. Notwithstanding any
other provisions of this Article 11, however, under no circumstances shall Tenant have any right to remove from the Buildings or the Property, at the expiration or termination of this Lease,
any lab benches, fume hoods, cold rooms or other similar improvements and equipment installed in the Buildings with use of funds from the Tenant Improvement Allowance. Tenant shall also be
responsible, to the extent provided in Section 12.2(c) hereof, for the cost of removal of the Connector Bridge at the expiration or termination of this Lease if such Connector Bridge is
constructed as contemplated in Section 1.1(a) hereof. Notwithstanding any other provisions of this Article 11, (x) it is the intention of the parties that Landlord shall be
entitled to claim all tax attributes associated with alterations, additions, improvements and equipment constructed or installed by Tenant or Landlord with funds provided by Landlord pursuant to the
Tenant Improvement Allowance; and (y) it is the intention of the parties that Tenant shall be entitled to claim, during the term of this Lease, all tax attributes associated with alterations,
additions, improvements and equipment constructed or installed by Tenant with Tenant's own funds (and without any payment or reimbursement by Landlord pursuant to the Tenant Improvement Allowance),
despite the fact that many items described in this clause (y) may be characterized in this Section 11.2 as becoming Landlord's property upon installation, in recognition of the fact that
Tenant will have installed and paid for such items, will have the right of possession and use of such items during the term of this Lease and will have the obligation to pay (directly or indirectly)
property taxes on such items, carry insurance on such items and bear the risk of loss with respect to such items under Article 17 hereof. If and to the extent it becomes necessary, in
implementation of the foregoing intentions, to identify (either specifically or on a percentage basis, as may be required under applicable tax laws) which alterations, additions, improvements and
equipment constructed as part of Tenant's Work under the Workletter have been funded through the Tenant Improvement Allowance and which have been constructed or installed with Tenant's own funds,
Landlord and Tenant agree to cooperate reasonably and in good faith to make such an identification by mutual agreement. 

-25-

 

        11.3    Tenant Trade Fixtures.    Notwithstanding the provisions of Sections 11.1 and 11.2, but subject to the third
sentence of Section 11.2 and to Section 11.5 (which shall be controlling in the case of signs, logos and insignia), Tenant may install, remove and reinstall trade fixtures without
Landlord's prior written consent, except that installation and removal of any trade fixtures which are affixed to the Buildings or the Property or which affect the exterior or structural portions of
the Buildings or the building systems shall require Landlord's written approval. Tenant shall immediately repair any damage caused by installation and removal of trade fixtures under this
Section 11.3. 

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

        11.5    Signs.    Tenant shall have the right to display its corporate name, logo and/or insignia with lighted signage
on the exterior of the Buildings and in front of the entrance to each Building, subject to (a) Landlord's prior approval as to location, size, design and composition (which approval shall not
be unreasonably withheld or delayed), (b) the sign criteria established for the Center from time to time and (c) all restrictions and requirements of applicable law and of any covenants,
conditions and restrictions or other written agreements now or hereafter applicable to the Property. Tenant shall immediately repair any damage caused by installation and removal of signs under this
Section 11.5 from time to time. In the event Landlord installs at the Project any monument sign(s) on which identification signage for any individual tenants is included, Tenant shall be
entitled to have identification signage on such monument sign(s) on a basis comparable to that made available to any other tenants. 

 
 

12.    MAINTENANCE AND REPAIRS    
  

        12.1    Landlord's Work.    

        (a)  Landlord
shall repair and maintain or cause to be repaired and maintained the Common Areas of the Center, the roofs (structural portions only), exterior walls and other
structural portions of the Buildings, any demising walls between Tenant's portion of the Phase II Building and the retail portion of the Phase II Building (other than painting, minor surface damage
and other cosmetic matters affecting only Tenant's side of any such demising walls), and any building systems that serve, in
common, both Tenant's portion of the Phase II Building and the retail portion of the Phase II Building. The cost of all work performed by Landlord under this Section 12.1 shall be an Operating
Expense hereunder, except to the extent such work (i) is required due to the negligence of Landlord, (ii) is a capital expense not includible as an Operating Expense under
Section 9.2 hereof, or (iii) is required due to the negligence or willful misconduct of Tenant or its agents, employees or invitees (in which event Tenant shall bear the full cost of
such work pursuant to the indemnification provided in Section 14.6 hereof, subject to the release set forth in Section 14.4 hereof). Tenant knowingly and voluntarily waives the right to
make repairs at Landlord's expense, except to the extent expressly set forth in Section 12.1(b), or to offset the cost thereof against rent, under any law, statute, regulation or ordinance now
or hereafter in effect. 

        (b)  If
Landlord fails to perform any repairs or maintenance required to be performed by Landlord on any of the Buildings under Section 12.1(a) and such failure
continues for thirty (30) days or more after Tenant gives Landlord written notice of such failure (or, if such repairs or maintenance cannot reasonably be performed within such
30-day period, then if Landlord fails to commence 

-26-

 

performance within such 30-day period and thereafter to pursue such performance diligently to completion), then except as otherwise expressly excluded herein, Tenant shall have the right
to perform such repairs or maintenance and Landlord shall reimburse Tenant for the reasonable cost thereof within fifteen (15) days after written notice from Tenant of the completion and cost
of such work, accompanied by copies of invoices or other reasonable supporting documentation. Under no circumstances, however, shall Tenant have any right to offset the cost of any such work against
rent or other charges falling due from time to time under this Lease. Moreover, under no circumstances shall this Section 12.1(b) authorize Tenant to perform any of Landlord's repairs or
maintenance obligations (x) in the Phase II Building, except to the extent the conditions requiring repair or maintenance affect only Tenant's portion of the Phase II Building and not the
retail portion of the Phase II Building, or (y) in the Common Areas of the Property. 

        12.2    Tenant's Obligation For Maintenance.    

        (a)    Good Order, Condition And Repair.    Except as provided in Section 12.1 hereof, Tenant at its sole cost
and expense shall keep and maintain in good and sanitary order, condition and repair the Buildings (from and after the applicable Rent Commencement Date for each Phase I Building and for each phase of
the Phase II Building) and every part thereof, wherever located, including but not limited to the roofs (non-structural portions only), signs, interiors, ceilings, electrical systems,
plumbing systems, telephone and communications systems of the Buildings, the HVAC equipment and related mechanical systems serving the Buildings (for which equipment and systems Tenant shall enter
into a service contract with a person or entity designated or approved by Landlord), all doors, door checks, windows, plate glass, door fronts, exposed plumbing and sewage and other utility
facilities, fixtures, lighting, wall surfaces, floor surfaces and ceiling surfaces of the Buildings and all other interior repairs, foreseen and unforeseen, with respect to the Buildings, as required;  provided, however, that (x) Tenant's ordinary repair obligation with respect to any demising walls between Tenant's portion of the Phase II
Building and the retail portion of the Phase II Building shall be limited to painting, minor surface damage and other cosmetic matters affecting only Tenant's side of any such demising walls, and
(y) Tenant's ordinary repair obligation with respect to building systems in the Phase II Building shall be limited to building systems or portions thereof that serve only Tenant's portion of
the Phase II Building and shall not
include building systems or portions thereof which serve, in common, both Tenant's portion of the Phase II Building and the retail portion of the Phase II Building. 

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

        (c)    Condition Upon Surrender; Removal of Connector Bridge.    At the expiration or sooner termination of this
Lease, Tenant shall surrender the Buildings and the Improvements, including any additions, alterations and improvements thereto, broom clean, in good and sanitary order, condition and repair, ordinary
wear and tear and casualty damages (the latter of which shall be governed by the provisions of Article 17 hereof) excepted, first, however, removing all goods and effects of Tenant and all and
fixtures and items required or permitted to be removed pursuant to this Lease (including, but not limited to, any such removal required as a result of an election duly made by Landlord to require such
removal as contemplated in Section 11.2), and repairing any damage caused by such removal. In addition, notwithstanding any other provisions of this Lease, if the Connector Bridge is
constructed as contemplated in Section 1.1(a) hereof and if Landlord notifies Tenant in writing, prior to or within six (6) months after the expiration or sooner termination of this
Lease, that Landlord wishes, in its sole discretion, to remove the Connector 

-27-

 

Bridge following the expiration or sooner termination of this Lease in order to facilitate the re-leasing of the Phase I Buildings, then Tenant shall be responsible for all costs
reasonably incurred by Landlord in connection with the removal of the Connector Bridge and the restoration and repair of the areas where the Connector Bridge was attached to the respective Phase I
Buildings, and Tenant shall reimburse the amount of such costs to Landlord from time to time within twenty (20) days after receipt of Landlord's written request(s) for reimbursement,
accompanied by supporting documentation evidencing, in reasonable detail, the costs for which such reimbursement is requested. Tenant expressly waives any and all interest in any personal property and
trade fixtures not removed from the Property by Tenant at the expiration or termination of this Lease, agrees that any such personal property and trade fixtures may, at Landlord's election, be deemed
to have been abandoned by Tenant, and authorizes Landlord (at its election and without prejudice to any other remedies under this Lease or under applicable law) to remove and either retain, store or
dispose of such property at Tenant's cost and expense, and Tenant waives all claims against Landlord for any damages resulting from any such removal, storage, retention or disposal. 

 
 

13.    USE OF PROPERTY    
  

        13.1    Permitted Use.    Subject to Sections 13.3 and 13.4 hereof, Tenant shall use the Buildings solely as
laboratory and research and development facilities, including (but not limited to) wet chemistry and biology labs, clean rooms, storage and use of toxic and radioactive materials incidental to such
laboratory, research and development activities (subject to the provisions of Section 13.6 hereof), storage and use of laboratory animals, administrative offices, and other lawful purposes
related to or incidental to such research and development use (subject in each case to receipt of all necessary approvals from the City of South San Francisco and other governmental agencies having
jurisdiction over the Buildings), and for no other purpose without Landlord's written consent (not to be unreasonably withheld or delayed). 

        13.2    [Omitted.]    

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

        13.4    Compliance With Laws.    

        (a)  Tenant
shall not use the Buildings or the Property, or permit the Buildings or the Property to be used, in whole or in part for any purpose or use that is in violation
of any applicable laws, ordinances, regulations or rules of any governmental agency or public authority. Tenant shall keep the Buildings and the Improvements equipped with all safety appliances
required by law, ordinance or insurance on the Property, or any order or regulation of any public authority, because of Tenant's particular use of the Property. Tenant shall procure all licenses and
permits required for Tenant's use of the Property. Tenant shall use the Property in strict accordance with all applicable ordinances, rules, laws and regulations and shall comply with all requirements
of all governmental authorities now in force or which may hereafter be in force pertaining to the use of the Property by Tenant, including, without limitation, regulations applicable to noise, water,
soil and air pollution, and making such nonstructural alterations and additions thereto as may be required from time to time by such laws, ordinances, rules, regulations and requirements of
governmental authorities or insurers of the Property (collectively, "Requirements") because of Tenant's construction of improvements or other particular
use 

-28-

 

of the Property. Any structural alterations or additions required from time to time by applicable Requirements because of Tenant's construction of improvements in the Buildings or other particular
use of the Property shall, at Landlord's election, either (i) be made by Tenant, at Tenant's sole cost and expense, in accordance with the procedures and standards set forth in
Section 11.1 for alterations by Tenant, or (ii) be made by Landlord at Tenant's sole cost and expense, in which event Tenant shall pay to Landlord as additional rent, within ten
(10) days after demand by Landlord, an amount equal to all reasonable costs incurred by Landlord in connection with such alterations or additions. The judgment
of any court, or the admission by Tenant in any proceeding against Tenant, that Tenant has violated any law, statute, ordinance or governmental rule, regulation or requirement shall be conclusive of
such violation as between Landlord and Tenant. 

        (b)  In
compliance with requirements imposed upon Landlord by an Owner Participation Agreement between Landlord and The Redevelopment Agency of the City of South San
Francisco, Tenant hereby agrees to and accepts the following provision: 

        "Tenant
herein covenants by and for itself and its successors and assigns, and all persons claiming under or through it, and this Lease is made and accepted upon and subject to the
conditions that there shall be no discrimination against or segregation of any person or group of persons on account of race, color, religion, creed, sex, marital status, ancestry or national origin
in the leasing, subleasing, transferring, use, occupancy, tenure or enjoyment of the property herein leased, nor shall Tenant or any person claiming under or through it establish or permit any such
practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the property herein
leased." 

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

        13.6    Environmental Matters.    

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

-29-

  

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

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

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

        (iii)  Tenant
shall not (A) operate on or about the Property any facility required to be permitted or licensed as a hazardous waste facility or for which interim
status as such is required, nor (B) store any hazardous wastes on or about the Property for ninety (90) days or more, nor (C) conduct any other activities on or about the Property
that could result in the Property being deemed to be a "hazardous waste facility" (including, but not limited to, any storage or treatment of hazardous
substances or hazardous wastes which could have such a result), nor (D) store any hazardous wastes on or about the Property in violation of any federal or California laws or in violation of the
terms of any federal or California licenses or permits held by Tenant. 

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

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

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

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

-30-

 

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

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

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

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

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

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

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

        (A)  Comply
with all federal, state and local laws, rules, regulations, orders, licenses and permits issued to or applicable to Tenant with respect to its business operations
on the Property; 

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

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

-31-

 

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

        (viii)Tenant
shall indemnify, defend and hold Landlord harmless from and against any and all claims, losses (including, but not limited to, loss of rental income and loss
due to business interruption), damages, liabilities, costs, legal fees and expenses of any sort arising out of or relating to (A) any failure by Tenant to comply with any of its obligations
under this Section 13.6(b), or (B) any receipt, use handling, generation, transportation, storage, treatment, release and/or disposal of any hazardous substance or waste or any
radioactive material or radiation on or about the Property in connection with Tenant's use or occupancy of the Property or as a result of any intentional or negligent acts or omissions of Tenant or of
any agent, employee or invitee of Tenant. 

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

        (x)  Notwithstanding
Landlord's rights of inspection and review under this Section 13.6(b), Landlord shall have no obligation or duty to so inspect or review, and no
third party shall be entitled to rely on Landlord to conduct any sort of inspection or review by reason of the provisions of this Section 13.6(b). 

        (xi)  If
Tenant or its employees, agents, contractors, vendors, customers or guests receive, handle, use, store, transport, generate, treat and/or dispose of any hazardous
substances or wastes or radiation or radioactive materials on or about the Property at any time during the term of this Lease, then within thirty (30) days after termination or expiration of
this Lease, Tenant at its sole cost and expense shall obtain and deliver to Landlord an environmental study, performed by an expert reasonably satisfactory to Landlord, evaluating the presence or
absence of hazardous substances and wastes, radiation and radioactive materials on and about the Property. Such study shall be based on a reasonable and prudent level of tests and investigations of
the Buildings and other appropriate portions of the Property (if any), which tests shall be conducted no earlier than the date of termination or expiration of this Lease. Liability for any remedial
actions required or recommended on the basis of such study shall be allocated in accordance with Sections 13.4, 13.6, 14.6 and other applicable provisions of this Lease. 

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

-32-

 

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

        (e)  The
provisions of this Section 13.6 shall survive the termination of this Lease. 

 
 

14.    INSURANCE AND INDEMNITY    
  

        14.1    Liability and Property Insurance.    

        (a)  Tenant
shall procure and maintain in full force and effect at all times during the term of this Lease, at Tenant's cost and expense, commercial general liability
insurance to protect against liability arising out of or related to the use of or resulting from any accident occurring in, upon or about the Property, with combined single limit of liability of not
less than Five Million Dollars ($5,000,000) per occurrence for bodily injury and property damage. Such insurance shall name Landlord, its Manager, its property manager and any lender holding a deed of
trust on the Property from time to time (as designated in writing by Landlord to Tenant from time to time) as additional insureds thereunder. The amount of such insurance shall not be construed to
limit any liability or obligation of Tenant under this Lease. Tenant shall also procure and maintain in full force and effect at all times during the term of this Lease, at Tenant's cost and expense,
products/completed operations coverage on terms and in amounts satisfactory to Landlord in its reasonable discretion. 

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

        (c)  Landlord
shall procure and maintain in full force and effect at all times during the term of this Lease, at Landlord's cost and expense (but reimbursable as an Operating
Expense under 

-33-

 

Section 9.2 hereof), policies of property insurance providing protection against "all risk of direct physical loss" (as defined by and detailed in the Insurance Service Office's Commercial
Property Program "Cause of Loss—Special Form [CP 1030]" or its equivalent) for the Building Shell (as defined in the Workletter) of each Building and for the
improvements in the Common Areas of the Property, on a full replacement cost basis (with no co-insurance or, if coverage without co-insurance is not reasonably available, then
on an "agreed amount" basis). Such insurance shall include earthquake and environmental coverage and shall have such commercially reasonable deductibles and other terms as Landlord in its reasonable
discretion determines to be appropriate. Landlord shall, in all events, have no obligation to insure the Tenant Improvements or any other alterations, additions or improvements installed by Tenant in
the Buildings or on or about the Property; provided, however, that if Tenant so requests in writing, Landlord agrees to include the Tenant Improvements
under Landlord's earthquake coverage, in which event (i) such earthquake coverage with respect to the Tenant Improvements shall be in such amounts and with such commercially reasonable
deductibles and other terms as Landlord and Tenant may mutually and reasonably determine to be appropriate, (ii) such earthquake coverage shall, in Landlord's discretion, either name both
Landlord and Tenant as insureds as their interests may appear or name Tenant as an additional insured with respect to the portion of the policy that provides earthquake coverage for the Tenant
Improvements, (iii) the cost of such earthquake coverage for the Tenant Improvements shall be charged back to Tenant as additional rent under this Lease and shall be reimbursed by Tenant to
Landlord within ten (10) business days after Tenant's receipt of a written invoice from Landlord with respect to the premium costs attributable to such coverage, (iv) Tenant shall
provide to Landlord from time to time, at or about the Rent Commencement Date for the applicable Building and thereafter annually or at such intervals as Landlord may reasonably request, an updated
schedule of values or other appropriate information with respect to the insurable value of the Tenant Improvements, and (v) Landlord shall have no obligation or liability with respect to any
underinsurance of the Tenant Improvements that results from Tenant's failure to keep Landlord informed on a current basis of the insurable value of such Tenant Improvements from time to time. 

        (d)  Tenant
shall procure and maintain in full force and effect at all times during the term of this Lease, at Tenant's cost and expense, policies of property insurance
providing protection against "all risk of direct physical loss" (as defined by and detailed in the Insurance Service Office's Commercial Property Program "Cause of Loss—Special Form
[CP1030]" or its equivalent) for the Tenant Improvements constructed by Tenant pursuant to the Workletter and on all other alterations, additions and improvements installed by
Tenant from time to time in or about the Building, on a full replacement cost basis (with no co-insurance or, if coverage without co-insurance is not reasonably available, then
on an "agreed amount" basis). Such insurance may have such commercially reasonable deductibles and other terms as Tenant in its reasonable discretion
determines to be appropriate, and shall name both Tenant and Landlord as insureds as their interests may appear. Without limiting the generality of the foregoing provisions, Tenant's property
insurance on the Tenant Improvements in each Building shall in all events include (i) earthquake insurance (except as otherwise provided in paragraph (c) above, if applicable) in an
amount at least equal to the amount of the Tenant Improvement Allowance paid by Landlord pursuant to the Workletter in connection with the construction of the Tenant Improvements in such Building, and
(ii) business interruption (income) coverage, including extra expense coverage and off-premises utility interruption coverage, in such amounts and on such terms as Tenant in its
reasonable discretion determines to be appropriate. 

        (e)  During
the course of construction of the improvements being constructed by Landlord and Tenant under Section 5.1 and the Workletter, Landlord shall procure and
maintain in full force and effect, at its sole cost and expense, a policy or policies of builder's risk insurance on both the improvements being constructed by it and the improvements being
constructed by Tenant, (i) in such amounts and with such commercially reasonable deductibles and other terms as Landlord in its reasonable discretion determines to be appropriate with respect
to the insurance on the improvements being constructed by Landlord, and (ii) in such amounts and with such commercially reasonable 

-34-

 

deductibles and other terms as Landlord and Tenant may mutually and reasonably determine to be appropriate with respect to the insurance on the improvements being constructed by Tenant. Such
insurance shall, in Landlord's discretion, either name both Landlord and Tenant as insureds as their interests may appear or name Tenant as an additional insured with respect to the portion of the
policy that covers the improvements being constructed by Tenant. Tenant shall provide to Landlord from time to time during the course of construction of improvements by Tenant, at such intervals as
Landlord may reasonably request, an updated schedule of values or other appropriate information with respect to the insurable value of the improvements, work in progress and materials located on the
Property in connection with Tenant's construction of improvements, and Landlord shall have no obligation or liability with respect to any underinsurance of Tenant's improvements, work in progress and
materials that results from Tenant's failure to keep Landlord informed on a current basis, during the course of construction, of the insurable value of such improvements, work in progress and
materials on the Property from time to time. 

        14.2    Quality Of Policies And Certificates.    All policies of insurance required hereunder shall be issued by
responsible insurers and, in the case of policies carried or required to be carried by Tenant, shall be written as primary policies not contributing with and not in excess of any coverage that
Landlord may carry. The coverage provided by such policies shall include, where applicable, the clause or endorsement referred to in Section 14.4. Each party shall deliver to the other party
certificates of insurance showing that the insuring party's required policies are in effect. If either party fails to
acquire, maintain or renew any insurance required to be maintained by it under this Article 14 or to pay the premium therefor, then the other party, at its option and in addition to its other
remedies, but without obligation so to do, may procure such insurance, and any sums expended by Landlord to procure any such insurance on behalf of or in place of Tenant shall be repaid upon demand,
with interest as provided in Section 3.2 hereof. Tenant shall give Landlord at least thirty (30) days prior written notice of any cancellation or nonrenewal of insurance required to be
maintained by Tenant under this Article 14, and shall obtain written undertakings from each insurer under policies required to be maintained by Tenant to notify all insureds thereunder at least
thirty (30) days prior to cancellation of coverage. 

        14.3    Workers' Compensation.    Tenant shall maintain in full force and effect during the term of this Lease
workers' compensation insurance, in at least the minimum amounts required by law, covering all of Tenant's employees working on the Property. 

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

        14.5    Increase In Premiums.    Tenant shall do all acts and pay all expenses necessary to insure that the Buildings
are not used for purposes prohibited by any applicable fire insurance, and that Tenant's use of the Buildings and the Property complies with all requirements necessary to obtain any such insurance. If
Tenant uses or permits the Buildings or the Property to be used in a manner which increases the existing rate of any insurance carried by Landlord on the Center, then Tenant shall pay the amount of
the increase in premium caused thereby, and Landlord's costs of obtaining other 

-35-

 

replacement insurance policies, including any increase in premium, within ten (10) days after demand therefor by Landlord. 

        14.6    Indemnification.    

        (a)  Except
as otherwise expressly provided in this Lease, Tenant shall indemnify, defend and hold Landlord and its members, partners, shareholders, officers, directors,
agents, employees and contractors harmless from any and all liability for bodily injury to or death of any person, or loss of or damage to
the property of any person, and all actions, claims, demands, costs (including, but not limited to, reasonable attorneys' fees), damages or expenses of any kind arising therefrom which may be brought
or made against Landlord or which Landlord may pay or incur by reason of the use, occupancy and enjoyment of the Property by Tenant or any invitees, sublessees, licensees, assignees, agents, employees
or contractors of Tenant or holding under Tenant (including, but not limited to, any such matters arising out of or in connection with any early entry upon the Property by Tenant pursuant to
Section 2.2 hereof) from any cause whatsoever other than negligence or willful misconduct or omission by Landlord or its agents, employees or contractors. Landlord and its members, partners,
shareholders, officers, directors, agents, employees and contractors shall not be liable for, and Tenant hereby waives all claims against such persons for, damages to goods, wares and merchandise in
or upon the Property, or for injuries to Tenant, its agents or third persons in or upon the Property, from any cause whatsoever other than negligence or willful misconduct or omission by Landlord or
its agents, employees or contractors. Tenant shall give prompt notice to Landlord of any casualty or accident in, on or about the Property. 

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

        14.7    Blanket Policy.    Any policy required to be maintained hereunder may be maintained under a
so-called "blanket policy" insuring other parties and other locations so long as the amount of insurance required to be provided hereunder is not thereby diminished. Without limiting the
generality of the requirement set forth at the end of the preceding sentence, property insurance provided under a blanket policy shall provide full replacement cost coverage and liability insurance
provided under a blanket policy shall include per location aggregate limits meeting or exceeding the limits required under this Article 14. 

 
 

15.    SUBLEASE AND ASSIGNMENT    
  

        15.1    Assignment And Sublease Of Building(s).    Except in the case of a Permitted Transfer (as hereinafter
defined), Tenant shall not have the right or power to assign its interest in this Lease, or make any sublease of any Building or any portion thereof, nor shall any interest of Tenant under this Lease
be assignable involuntarily or by operation of law, without on each occasion obtaining the prior written consent of Landlord, which consent shall not be unreasonably withheld or delayed. Any purported
sublease or assignment of Tenant's interest in this Lease requiring but not having received Landlord's consent thereto (to the extent such consent is required hereunder) shall be void. Without
limiting the generality of the foregoing provisions, Landlord may withhold consent to any proposed subletting or assignment solely on the ground, if applicable, that the use by the proposed subtenant
or assignee is
reasonably likely to be incompatible with Landlord's use of the balance of the Property or of any adjacent property owned or operated by Landlord, unless the proposed use is within the 

-36-

 

permitted uses specified in Section 13.1, in which event it shall not be reasonable for Landlord to object to the proposed use. Except in the case of a Permitted Transfer, any dissolution,
consolidation, merger or other reorganization of Tenant, or any sale or transfer of the stock or assets of or other interest in Tenant, in a single transaction or series of related transactions,
involving in the aggregate a change of fifty percent (50%) or more in the beneficial ownership of Tenant or its assets shall be deemed to be an assignment hereunder and shall be void without the prior
written consent of Landlord as required above. Notwithstanding the foregoing, (i) an initial public offering of the common stock of Tenant shall not be deemed to be an assignment hereunder; and
(ii) Tenant shall have the right to assign this Lease or sublet the Buildings, or any portion thereof, without Landlord's consent (but with prior or concurrent written notice by Tenant to
Landlord), to any entity which controls, is controlled by, or is under common control with Tenant, or to any entity which results from a merger or consolidation with Tenant, or to any entity engaged
in a bona fide joint venture with Tenant, or to any entity which acquires substantially all of the stock or assets of Tenant, as a going concern, with
respect to the business that is being conducted on the Property (hereinafter each a "Permitted Transfer"). In addition, a sale or transfer of the
capital stock of Tenant shall be deemed a Permitted Transfer (x) if such sale or transfer occurs in connection with any bona fide financing or
capitalization for the benefit of Tenant, or (y) if Tenant becomes, and while Tenant is, a publicly traded corporation. Landlord shall have no right to terminate this Lease in connection with,
and shall have no right to any sums or other economic consideration resulting from, any Permitted Transfer. Except as expressly set forth in this Section 15.1, however, the provisions of
Section 15.2 shall remain applicable to any Permitted Transfer and the transferee under such Permitted Transfer shall be and remain subject to all of the terms and provisions of this Lease. 

        15.2    Rights Of Landlord.    Consent by Landlord to one or more assignments of this Lease, or to one or more
sublettings of any Building or any portion thereof, or collection of rent by Landlord from any assignee or sublessee, shall not operate to exhaust Landlord's rights under this Article 15, nor
constitute consent to any subsequent assignment or subletting. No assignment of Tenant's interest in this Lease and no sublease shall relieve Tenant of its obligations hereunder, notwithstanding any
waiver or extension of time granted by Landlord to any assignee or sublessee, or the failure of Landlord to assert its rights against any assignee or sublessee, and regardless of whether Landlord's
consent thereto is given or required to be given hereunder. In the event of a default by any assignee, sublessee or other successor of Tenant in the performance of any of the terms or obligations of
Tenant under this Lease, Landlord may proceed directly against Tenant without the necessity of exhausting remedies against any such assignee, sublessee or other successor. In addition, Tenant
immediately and irrevocably assigns to Landlord, as security for Tenant's obligations under this Lease, all rent from any subletting of all or a part of any Building as permitted under this Lease, and
Landlord, as Tenant's assignee and as attorney-in-fact for Tenant, or any receiver for Tenant appointed on Landlord's application, may collect such rent and apply it toward
Tenant's obligations under this Lease; except that, until the occurrence of an act of default by Tenant, Tenant shall have the right to collect such rent and to retain all sublease profits. 

 
 

16.    RIGHT OF ENTRY AND QUIET ENJOYMENT    
  

        16.1    Right Of Entry.    Landlord and its authorized representatives shall have the right to enter the Buildings at
any time during the term of this Lease during normal business hours and upon not less than twenty-four (24) hours prior notice, except in the case of emergency (in which event no
notice shall be required and entry may be made at any time), for the purpose of inspecting and determining the condition of the Buildings or for any other proper purpose including, without limitation,
to make repairs, replacements or improvements which Landlord may deem necessary, to show the Buildings to prospective purchasers, to show the Buildings to prospective tenants (but only during the
final year of the term of this Lease), and to post notices of nonresponsibility. Landlord shall not be liable for inconvenience, annoyance, disturbance, loss of business, quiet enjoyment or other
damage or loss to 

-37-

 

Tenant by reason of making any repairs or performing any work upon the Buildings or the Property or by reason of erecting or maintaining any protective barricades in connection with any such work,
and the obligations of Tenant under this Lease shall not thereby be affected in any manner whatsoever, provided, however, Landlord shall use reasonable efforts to minimize the inconvenience to
Tenant's normal business operations caused thereby. 

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

 
 

17.    CASUALTY AND TAKING    
  

        17.1    Damage or Destruction.    

        (a)  If
any or all Buildings, or the Common Areas of the Property necessary for Tenant's use and occupancy of any or all Buildings, are damaged or destroyed in whole or in
part under circumstances in which (i) repair and restoration is permitted under applicable governmental laws, regulations and building codes then in effect and (ii) repair and
restoration reasonably can be completed within a period of one (1) year (or, in the case of an occurrence during the last two (2) years of the term of this Lease, within a period of
sixty (60) days) following the date of the occurrence, then Landlord, as to the Common Areas of the Property and the Building Shell of the applicable Building(s), and Tenant, as to the Tenant
Improvements constructed by Tenant, shall commence and complete, with all due diligence and as promptly as is reasonably practicable under the conditions then existing, all such repair and restoration
as may be required to return the affected portions of the Property to a condition comparable to that existing immediately prior to the occurrence. In the event of damage or destruction the repair of
which is not permitted under applicable governmental laws, regulations and building codes
then in effect, if such damage or destruction (despite being corrected to the extent then permitted under applicable governmental laws, regulations and building codes) would still materially impair
Tenant's ability to conduct its business in the applicable Building(s), then either party may terminate this Lease with respect to the applicable Building(s) as of the date of the occurrence by giving
written notice to the other within thirty (30) days after the date of the occurrence; if neither party timely elects such termination, or if such damage or destruction does not materially
impair Tenant's ability to conduct its business in the applicable Building(s), then this Lease shall continue in full force and effect, except that there shall be an equitable adjustment in monthly
minimum rental and of Tenant's Operating Cost Share of Operating Expenses, based upon the extent to which Tenant's ability to conduct its business in the applicable Building(s) is impaired, and
Landlord and Tenant respectively shall restore the Common Areas and Building Shell and the Tenant Improvements in the applicable Building(s) to a complete architectural whole and to a functional
condition. In the event of damage or destruction which cannot reasonably be repaired within one (1) year (or, in the case of an occurrence during the last two (2) years of the term of
this Lease, within a period of sixty (60) days) following the date of the occurrence, then either Landlord or Tenant, at its election, may terminate this Lease with respect to the applicable
Building(s) as of the date of the occurrence by giving written notice to the other within thirty (30) days after the date of the occurrence; if neither party timely elects such termination,
then this Lease shall continue in full force and effect and Landlord and Tenant shall each repair and restore applicable portions of the Property in accordance with the first sentence of this
Section 17.1(a). 

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

        (i)    If
the occurrence results from a peril which is required to be insured pursuant to Section 14.1(c) and (d) above, the obligations of each party shall not
exceed the amount of 

-38-

 

insurance proceeds received from insurers (or, in the case of any failure to maintain required insurance, proceeds that reasonably would have been available if the required insurance had been
maintained) by reason of such occurrence, plus the amount of the party's permitted deductible (provided that each party shall be obligated to use its
best efforts to recover any available proceeds from the insurance which it is required to maintain pursuant to the provisions of Section 14.1(c) or (d), as applicable), and, if such proceeds
(including, in the case of a failure to maintain required insurance, any proceeds that reasonably would have been available) are insufficient, either party may terminate this Lease with respect to the
applicable Building(s) unless the other party promptly elects and agrees, in writing, to contribute the amount of the shortfall; and 

        (ii)  If
the occurrence results from a peril which is not required to be insured pursuant to Section 14.1(c) and (d) above and is not actually insured, Landlord
shall be required to repair and restore the Common Areas and the Building Shell of the applicable Building(s) to the extent necessary for Tenant's continued use and occupancy of the applicable
Building(s), and Tenant shall be required to repair and restore the Tenant Improvements to the extent necessary for Tenant's continued use and occupancy of the applicable Building(s),  provided that each
party's out of pocket cost (after application of any insurance proceeds) to repair and restore shall not exceed an amount equal to
fifteen percent (15%) of the replacement cost of the Building Shell of the applicable Building(s) and the Common Area improvements, as to Landlord, or fifteen percent (15%) of the replacement cost of
the Tenant
Improvements in the applicable Building(s), as to Tenant; if the out of pocket replacement cost as to either party exceeds such amount, then the party whose limit has been exceeded may terminate this
Lease with respect to the applicable Building(s) unless the other party promptly elects and agrees, in writing, to contribute the amount of the shortfall. 

        (c)  If
this Lease is terminated with respect to the applicable Building(s) pursuant to the foregoing provisions of this Section 17.1 following an occurrence which is
a peril actually insured or required to be insured against pursuant to Section 14.1(c) and (d), Landlord and Tenant agree (and any Lender shall be asked to agree) that such insurance proceeds
shall be allocated between Landlord and Tenant in a manner which fairly and reasonably reflects their respective ownership rights under this Lease, as of the termination or expiration of the term of
this Lease, with respect to the improvements, fixtures, equipment and other items to which such insurance proceeds are attributable. 

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

        17.2    Condemnation.    

        (a)  If
during the term of this Lease one or more Buildings, the Property or Improvements, or any substantial part of any of them, is taken by eminent domain or by reason of
any public improvement or condemnation proceeding, or in any manner by exercise of the right of eminent domain (including any transfer in avoidance of an exercise of the power of eminent domain), or
receives irreparable damage by reason of anything lawfully done under color of public or other authority, then (i) this Lease shall terminate as to the entire applicable Building(s) at
Landlord's election by written notice given to Tenant within sixty (60) days after the taking has occurred, and (ii) this Lease shall terminate as to the entire applicable Building(s) at
Tenant's election, by written notice given to Landlord within thirty (30) days after the nature and extent of the taking have been finally determined, if the portion of the Property taken is of
such extent and nature as substantially to handicap, impede or permanently impair Tenant's use of the balance of the applicable Building(s). If Tenant elects to terminate this Lease, Tenant shall also
notify Landlord of the date of termination, which date shall not be earlier than thirty (30) days nor later than ninety (90) days after Tenant has notified Landlord of Tenant's election
to 

-39-

 

terminate, except that this Lease shall terminate on the date of taking if such date falls on any date before the date of termination designated by Tenant. If neither party elects to terminate this
Lease as to the applicable Building(s) as hereinabove provided, this Lease shall continue in full force and effect (except that there shall be an equitable abatement of Minimum Rental and additional
rent and of Tenant's Operating Cost Share of Operating Expenses based upon the degree to which Tenant's ability to conduct its business in the applicable Building(s) is impaired), Landlord shall
restore the Building Shell of the applicable Building(s) and the Common Area improvements to a complete architectural whole and a functional condition and as nearly as reasonably possible to the
condition existing before the taking, and Tenant shall restore the Tenant Improvements and Tenant's other alterations, additions
and improvements to a complete architectural whole and a functional condition and as nearly as reasonably possible to the condition existing before the taking. In connection with any such restoration,
each party shall use its respective best efforts (including, without limitation, any necessary negotiation or intercession with its respective lender, if any) to ensure that any severance damages or
other condemnation awards intended to provide compensation for rebuilding or restoration costs are promptly collected and made available to Landlord and Tenant in portions reasonably corresponding to
the cost and scope of their respective restoration obligations, subject only to such payment controls as either party or its lender may reasonably require in order to ensure the proper application of
such proceeds toward the restoration of the Improvements. Each party waives the provisions of Code of Civil Procedure Section 1265.130, allowing either party to petition the Superior Court to
terminate this Lease in the event of a partial condemnation of one or more Buildings or the Property. 

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

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

        (ii)  If
this Lease is terminated with respect to the applicable Building(s) pursuant to the foregoing provisions of this Section 17.2, or if this Lease remains in
effect but any condemnation awards or other proceeds become available as compensation for the loss or destruction of any of the Improvements, then Landlord and Tenant agree (and any Lender shall be
asked to agree) that there shall be paid from such award or proceeds (i) to Landlord, the award or proceeds attributable or allocable to the Building Shell of the applicable Building(s) and/or
the Common Area improvements, and (ii) to Landlord and Tenant, respectively, portions of the award or proceeds attributable or allocable to the Tenant Improvements in the applicable
Building(s), in the respective proportions in which Landlord and Tenant would have shared, under Section 17.1(c), the proceeds of any insurance proceeds following loss or destruction of such
Tenant Improvements by an insured casualty. 

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

-40-

 

Section 17.2(b)(ii) shall be allocated and disbursed in accordance with the provisions of Section 17.2(b)(ii), notwithstanding any contrary provisions of this
Section 17.3. 

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

 
 

18.    DEFAULT    
  

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

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

        (b)    Nonpayment.    Failure to pay, when due, any amount payable to Landlord hereunder, such failure continuing for
a period of five (5) days after written notice of such failure; provided, however, that any such notice shall be in lieu of, and not in addition
to, any notice required under California Code of Civil Procedure Section 1161 et seq., as amended from time to time; 

        (c)    Other Obligations.    Failure to perform any obligation, agreement or covenant under this Lease other than
those matters specified in subsection (b) hereof, such failure continuing for fifteen (15) days after written notice of such failure;  provided, however, that if such failure is curable in
nature but cannot reasonably be cured within such 15-day period, then Tenant shall not
be in default if, and so long as, Tenant promptly (and in all events within such 15-day period) commences such cure and thereafter diligently pursues such cure to completion; and  provided further,
however, that any such notice shall be
in lieu of, and not in addition to, any notice required under California Code of Civil Procedure Section 1161 et seq., as amended from time to time; 

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

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

-41-

 

must include assurances that the Buildings continue to be operated only for the use permitted hereunder. The provisions hereof are to assure that the basic understandings between Landlord and Tenant
with respect to Tenant's use of the Property and the benefits to Landlord therefrom are preserved, consistent with the purpose and intent of applicable bankruptcy laws; 

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

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

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

        18.2    Remedies Upon Tenant's Default.    

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

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

        (c)  If
Landlord terminates this Lease pursuant to this Section 18.2, Landlord shall have all of the rights and remedies of a landlord provided by
Section 1951.2 of the Civil Code of the State of California, or any successor Code section, which remedies include Landlord's right to recover from Tenant (i) the worth at the time of
award of the unpaid rent and additional rent which had been earned at the time of termination, (ii) the worth at the time of award of the amount by which the unpaid rent and additional rent
which would have been earned after termination until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided, 

-42-

 

(iii) the worth at the time of award of the amount by which the unpaid rent and additional rent for the balance of the term after the time of award exceeds the amount of such rental loss that
Tenant proves could be reasonably avoided, and (iv) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant's failure to perform its obligations
under this Lease or which in the ordinary course of things would be likely to result therefrom, including, but not limited to, the cost of recovering possession of the Buildings, expenses of
reletting, including necessary repair, renovation and alteration of the Buildings, reasonable attorneys' fees, and other reasonable costs. The "worth at the time of
award" of the amounts referred to in clauses (i) and (ii) above shall be computed by allowing interest at ten percent (10%) per annum from the date such amounts
accrued to Landlord. The "worth at the time of award" of the amounts referred to in clause (iii) above shall be computed by discounting such
amounts at one percentage point above the discount rate of the Federal Reserve Bank of San Francisco at the time of award. 

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

 
 

19.    SUBORDINATION, ATTORNMENT AND SALE    
  

        19.1    Subordination To Mortgage.    This Lease, and any sublease entered into by Tenant under the provisions of this
Lease, shall be subject and subordinate to any ground lease, mortgage, deed of trust, sale/leaseback transaction or any other hypothecation for security now or hereafter placed upon the Buildings, the
Property, the Center, or any of them, and the rights of any assignee of Landlord or of any ground lessor, mortgagee, trustee, beneficiary or leaseback lessor under any of the foregoing, and to any and
all advances made on the security thereof and to all renewals, modifications, consolidations, replacements and extensions thereof; provided, however,
that such subordination in the case of any future ground lease, mortgage, deed of trust, sale/leaseback transaction or any other hypothecation for security placed upon the Buildings, the Property, the
Center or any of them shall be conditioned on Tenant's receipt from the ground lessor, mortgagee, trustee, beneficiary or leaseback lessor of a Non-Disturbance Agreement in a form
reasonably acceptable to Tenant confirming that so long as Tenant is not in default hereunder, Tenant's rights hereunder shall not be disturbed by such person or entity. Moreover, Tenant's obligations
under this Lease shall be conditioned on Tenant's receipt within thirty (30) days after mutual execution of this Lease, from any ground lessor, mortgagee, trustee, beneficiary or leaseback
lessor currently owning or holding a security interest in the Property, of a Non-Disturbance Agreement in a form reasonably acceptable to Tenant confirming that so long as Tenant is not in
default hereunder, Tenant's rights hereunder shall not be disturbed by such person or entity. (Landlord hereby advises Tenant, however, that in fact there is no mortgagee, trustee, beneficiary, ground
lessor or leaseback lessor holding an interest in the Property on the date of this Lease.) If any mortgagee, trustee, beneficiary, ground lessor, sale/leaseback lessor or assignee elects to have this
Lease be an encumbrance upon the Property prior to the lien of its mortgage, deed of trust, ground lease or leaseback lease or other security arrangement and gives notice thereof to Tenant, this Lease
shall be deemed prior thereto, whether this Lease is dated prior or subsequent to the date thereof or the date of recording thereof. Tenant, and any sublessee, shall execute such documents as may
reasonably be requested by any mortgagee, trustee, beneficiary, ground lessor, sale/leaseback lessor or assignee to evidence the subordination herein set forth, subject to the conditions set forth
above, or to make this Lease prior to the lien of any mortgage, deed of trust, ground lease, leaseback lease or other security arrangement, as the case may be, and if Tenant fails to do so within ten
(10) days after demand from Landlord, Tenant constitutes and appoints Landlord as Tenant's attorney-in-fact and in Tenant's name, place and stead to do so. Upon any
default by Landlord in the performance of its obligations under any mortgage, deed of trust, ground lease, leaseback lease or assignment, Tenant (and any sublessee) shall, notwithstanding any
subordination hereunder, attorn to the mortgagee, trustee, beneficiary, ground lessor, leaseback lessor or assignee thereunder upon demand and become the 

-43-

 

tenant of the successor in interest to Landlord, at the option of such successor in interest, and shall execute and deliver any instrument or instruments confirming the attornment herein provided
for. 

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

        19.3    Estoppel Certificates.    Either Tenant or Landlord (the "certifying
party") shall at any time and from time to time, within ten (10) days after written request by the other party (the "requesting
party"), execute, acknowledge and deliver to the requesting party a certificate in writing stating: (i) that this Lease is unmodified and in full force and effect, or if
there have been any modifications, that this Lease is in full force and effect as modified and stating the date and the nature of each modification; (ii) the date to which rental and all other
sums payable hereunder have been paid; (iii) that the requesting party is not in default in the performance of any of its obligations under this Lease, that the certifying party has given no
notice of default to the requesting party and that no event has occurred which, but for the expiration of the applicable time period, would constitute an event of default hereunder, or if the
certifying party alleges that any such default, notice or event has occurred, specifying the same in reasonable detail; and (iv) such other matters as may reasonably be requested by the
requesting party or by any institutional lender, mortgagee, trustee, beneficiary, ground lessor, sale/leaseback lessor or prospective purchaser of the Property or of Tenant's leasehold interest
therein. Any such certificate provided under this Section 19.3 may be relied upon by any lender, mortgagee, trustee, beneficiary, assignee or successor in interest to the requesting party, by
any prospective purchaser, by any purchaser on foreclosure or sale, by any grantee under a deed in lieu of foreclosure of any mortgage or deed of trust on the Property, or by any other third party.
Failure to execute and return within the required time any estoppel certificate requested hereunder shall be deemed to be an admission of the truth of the matters set forth in the form of certificate
submitted to the certifying party for execution. 

        19.4    Subordination to CC&R's.    This Lease, and any permitted sublease entered into by Tenant under the provisions
of this Lease, and the interests in real property conveyed hereby and thereby, shall be subject and subordinate (a) to any declarations of covenants, conditions and restrictions or other
recorded restrictions affecting the Property or the Center from time to time, which may include easements, access rights and similar non-exclusive use rights and privileges in favor of
appropriate third parties; provided that the terms of such declarations or restrictions are reasonable (or, to the extent they are not reasonable, are
mandated by applicable law), do not materially impair Tenant's ability to conduct the uses permitted hereunder on the Property, and do not discriminate against Tenant relative to other similarly
situated tenants occupying portions of the Center, and provided further that except with Tenant's prior written consent, Landlord shall not enter into
any such future declarations of covenants, conditions and restrictions or other recorded restrictions that are applicable, by their terms, solely to one or more of the buildings occupied by or leased
to Tenant under this Lease (including any buildings occupied by or leased to Tenant pursuant to Tenant's exercise of any of the rights contained in Article 6 of this Lease) and not to any
buildings occupied by or leased to other tenants in the Center or, if Tenant exercises its rights under Section 6.3 of this Lease, on the Expansion Property; (b) to the Declaration of
Covenants, Conditions and Restrictions and Reciprocal Easements for Shearwater Project dated January 21, 1998 and recorded on January 22, 1998 as Instrument
No. 98-008277, Official Records of San Mateo County, as amended from time to time (the "Shearwater Declaration"), the provisions of
which Shearwater Declaration are an integral part of this Lease; and (c) to the Covenant and Environmental Restriction dated as of January 26, 1998 and recorded on February 3,
1998 as Instrument No. 98-013813, Official Records of San Mateo County, as amended from time to time (the "Environmental
Restriction"), the provisions of which Environmental Restriction 

-44-

 

are incorporated herein by this reference. Tenant agrees to execute, upon request by Landlord, any documents reasonably required from time to time to evidence the foregoing subordination. 

        19.5    Mortgagee Protection.    

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

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

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

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

        (iii)  bound
by any rent or additional rent that Tenant may have paid in advance to any prior landlord or owner of the Property and/or the Center (including, but not limited
to, Landlord) for a period in excess of one month, or by any security deposit, cleaning deposit or other prepaid charge that Tenant may have paid in advance to any prior landlord or owner (including,
but not limited to, Landlord) except to the extent such deposit or prepaid amount has been expressly turned over to or credited to the successor owner thus acquiring the Property and/or the Center, as
applicable; 

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

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

-45-

  

 
 

20.    SECURITY    
  

        20.1    Deposit.    

        (a)  Concurrently
with Tenant's execution of this Lease, Tenant shall deposit with Landlord the sum of Two Million Two Hundred Seventy Thousand Four Hundred Thirty and No/100
Dollars ($2,270,430.00), which sum (the "Security Deposit") shall be held by Landlord as security for the faithful performance of all of the terms,
covenants, and conditions of this Lease to be kept and performed by Tenant during the term hereof. If Tenant defaults with respect to any provision of this Lease, including, without limitation, the
provisions relating to the payment of rental and other sums due hereunder, Landlord shall have the right, but shall not be required, to use, apply or retain all or any part of the Security Deposit for
the payment of rental or any other amount which Landlord may spend or become obligated to spend by reason of Tenant's default or to compensate Landlord for any other loss or damage which Landlord may
suffer by reason of Tenant's default. If any portion of the Security Deposit is so used or applied, Tenant shall, within ten (10) days after written demand therefor, deposit cash with Landlord
in an amount sufficient to restore the Security Deposit to its original amount and Tenant's failure to do so shall be a material breach of this Lease. Landlord shall not be required to keep any
deposit under this Section separate from Landlord's general funds, and Tenant shall not be entitled to interest thereon. If Tenant fully and faithfully performs every provision of this Lease to be
performed by it, the Security Deposit, or any balance thereof, shall be returned to Tenant or, at Landlord's option, to the last assignee of Tenant's interest hereunder, at the expiration of the term
of this Lease and after Tenant has vacated the Property. In the event of termination of Landlord's interest in this Lease, Landlord shall transfer all deposits then held by Landlord under this Section
to Landlord's successor in interest, whereupon Tenant agrees to release Landlord from all liability for the return of such deposit or the accounting thereof. 

        (b)  As
an alternative to the cash Security Deposit described in Section 20.1(a), Tenant may instead deliver to Landlord, within ten (10) days after mutual
execution of this Lease, an irrevocable standby letter of credit (the "Letter of Credit") issued in favor of Landlord by a federally insured commercial
bank or trust company approved in writing by Landlord (which approval shall not be unreasonably withheld), in form and substance reasonably satisfactory to Landlord, to be held by Landlord as security
for the faithful performance of all the obligations of Tenant under this Lease, subject to the following terms and conditions: 

        (i)    The
amount of the Letter of Credit shall be at least Two Million Two Hundred Seventy Thousand Four Hundred Thirty and No/100 Dollars ($2,270,430.00), and Tenant shall
maintain the Letter of Credit in that amount in full force and effect throughout the term of this Lease (including any extensions thereof) and until thirty (30) days after the expiration of the
term of this Lease, unless Tenant elects at any time to replace the Letter of Credit with a full cash Security Deposit in compliance with Section 20.1(a). The Letter of Credit may be for an
initial one-year term, with automatic renewal provisions, provided that Landlord shall be given at least thirty (30) days prior written notice if the Letter of Credit will not be
renewed as of any otherwise applicable renewal date and shall be entitled to draw against the expiring Letter of Credit if a replacement Letter of Credit is not furnished to Landlord at least twenty
(20) days prior to the scheduled expiration date, as provided in Section 20.1(b)(iii)(A) below. 

        (ii)  Landlord
shall be entitled (but shall not be required) to draw against the Letter of Credit and receive and retain the proceeds thereof upon any default by Tenant in
the payment of any rent or other amounts required to be paid by Tenant under this Lease, or upon the occurrence of any other Event of Default under this Lease. The amount of the draw shall not exceed
the amount of the payments (if any) as to which Tenant is then in default and/or the amount reasonably necessary to cure any non-monetary Events of Default by Tenant, and shall be applied
by Landlord to the cure of the applicable default(s). Following any partial draw under this paragraph (ii), if Tenant 

-46-

 

fully cures all outstanding defaults and provides Landlord with a new Letter of Credit in the full required amount under this Section 20.1(b), Landlord shall surrender and return to Tenant,
within ten (10) days after Tenant's satisfaction of the foregoing conditions, the Letter of Credit under which the partial draw was made, and any unapplied cash drawn under such Letter of
Credit. 

        (iii)  Landlord
shall also be entitled (but shall not be required) to draw against the Letter of Credit in full and to receive the entire proceeds thereof under either of the
following circumstances: 

        (A)  If
the Letter of Credit will expire as of a date prior to the date thirty (30) days after the expiration of the term of this Lease and Tenant fails to provide to
Landlord an extension or replacement of such Letter of Credit, in at least the minimum amount required under this Section 20.1(b), at least twenty (20) days prior to the scheduled
expiration date of the Letter of Credit; or 

        (B)  If,
as a result of a draw against the Letter of Credit by Landlord or for any other reason, the amount of the Letter of Credit falls below the minimum amount required to
be maintained from time to time pursuant to this Section 20.1(b) and Tenant has failed to cause the Letter of Credit to be restored to at least the minimum required amount within ten
(10) days after written demand by Landlord. Landlord shall return any unapplied cash to Tenant upon receipt a new Letter of Credit in the full amount required by the terms of the Lease. 

        (iv)  If
Landlord draws against the Letter of Credit in any of the circumstances described in subparagraph (iii) above, Landlord shall use, apply and/or retain all or
any part of the amount drawn for the cure of any then existing defaults under this Lease. Any amount drawn that is not immediately so used or applied by Landlord shall be retained by Landlord as a
cash security deposit, subject to and in accordance with the provisions of Section 20.1(a). 

        (v)  Any
actual or purported withdrawal, rescission, termination or revocation of the Letter of Credit by the issuer thereof prior to the expiration of the term of this Lease
(except when replaced prior to the effectiveness of such withdrawal, rescission, termination or revocation by a replacement Letter of Credit as contemplated in Section 20.1(b)(iii)(A) hereof)
shall be a material breach of this Lease. 

 
 

21.    MISCELLANEOUS    
  

        21.1    Notices.    All notices, consents, waivers and other communications which this Lease requires or permits
either party to give to the other shall be in writing and shall be deemed given when delivered personally (including delivery by private same-day or overnight courier or express delivery
service) or by telecopier with mechanical confirmation of transmission, effective upon personal delivery to or refusal of delivery by the recipient (in the case of personal delivery by any of the
means described above) or upon telecopier transmission during normal business hours at the recipient's office (in the case of telecopier transmission, with any transmission outside of normal business
hours being effective as of the beginning of the first business day commencing after the time of actual transmission) to the parties at their respective addresses as follows: 

	 
	 	 
	 	 

	 	 	To Tenant:	 	(until Phase I Rent Commencement Date)

Tularik Inc.

Two Corporate Drive

South San Francisco, CA 94080

Attn: Luis Bayol

Telecopier: (650) 825-7554

-47-

 

	

 	
 	

 	
 	

(after Phase I Rent Commencement Date)

Tularik Inc.

            Veterans Boulevard

South San Francisco, CA 94080

Attn:

Telecopier: (650)
 [as specified by Tenant in written notice at or about the Phase I Rent Commencement Date]
	

 	
 	

with a copy to:	
 	

Cooley Godward LLP

4401 Eastgate Mall

San Diego, CA 92121-1909

Attn: Elizabeth A. Willes, Esq.

Telecopier: (858) 550-6420
	

 	
 	

To Landlord:	
 	

Slough BTC, LLC

33 West Monroe Street, Suite 2000

Chicago, IL 60603

Attn: William Rogalla

Telecopier: (312) 558-9041
	

 	
 	

with a copy to:	
 	

Folger Levin & Kahn LLP

Embarcadero Center West

275 Battery Street, 23rd Floor

San Francisco, CA 94111

Attn: Donald E. Kelley, Jr., Esq.

Telecopier: (415) 986-2827
	

 	
 	

and a copy to:	
 	

Britannia Management Services, Inc.

1939 Harrison Street, Suite 715

Oakland, CA 94612

Telecopier: (510) 763-6262

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

        21.2    Successors And Assigns.    The obligations of this Lease shall run with the land, and this Lease shall be
binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that the original Landlord named herein and each successive Landlord under this Lease
shall be liable only for obligations accruing during the period of its ownership of the Property, said liability terminating upon termination of such ownership and passing to the successor lessor. 

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

        21.4    Severability.    If any provision of this Lease or the application thereof is held to be invalid or
unenforceable, the remainder of this Lease or the application of such provision to persons or circumstances other than those as to which it is invalid or unenforceable shall not be affected thereby, 

-48-

 

and each of the provisions of this Lease shall be valid and enforceable, unless enforcement of this Lease as so invalidated would be unreasonable or grossly inequitable under all the circumstances or
would materially frustrate the purposes of this Lease. 

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

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

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

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

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

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

        21.11    Financial Information.    From time to time Tenant shall promptly provide directly to prospective lenders and
purchasers of the Property and/or Center designated by Landlord such financial information pertaining to the financial status of Tenant as Landlord may reasonably request;  provided, Tenant shall be
permitted to provide such financial information in a manner which Tenant deems reasonably necessary to protect the
confidentiality of such information. In addition, from time to time, Tenant shall provide Landlord with such financial information pertaining to the financial status of Tenant as Landlord may
reasonably request. Landlord agrees that all financial information supplied to Landlord by Tenant shall be treated as confidential material, and shall not be disseminated to any party or entity
(including any entity affiliated with Landlord) without Tenant's prior written consent, except that Landlord shall be entitled to provide such information, subject to reasonable precautions to protect
the confidential nature thereof, (i) to Landlord's partners and professional advisors, solely to use in connection with Landlord's execution and enforcement of this Lease, and (ii) to
prospective lenders and/or purchasers of the Property and/or Center, solely for use in connection with their bona fide consideration of a proposed financing or purchase of the Property and/or Center.
For purposes of this Section, without limiting the generality of the obligations provided herein, it shall be deemed reasonable for Landlord to request copies of Tenant's most recent audited annual
financial statements, 

-49-

 

or, if audited statements have not been prepared, unaudited financial statements for Tenant's most recent fiscal year, accompanied by a certificate of Tenant's chief financial officer that such
financial statements fairly present Tenant's financial condition as of the date(s) indicated. Notwithstanding any other provisions of this Section 21.11, during any period in which Tenant has
outstanding a class of publicly traded securities and is filing with the Securities and Exchange Commission, on a regular basis, Forms 10Q and 10K and any other periodic filings required under the
Securities Exchange Act of 1934, as amended, it shall constitute sufficient compliance under this Section 21.11 for Tenant to furnish Landlord with copies of such periodic filings substantially
concurrently with the filing thereof with the Securities and Exchange Commission. 

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

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

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

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

        21.15    Brokers.    Landlord agrees to pay a brokerage commission to CRESA Partners
("Tenant's Broker"), in connection with the consummation of this Lease in the amount of $6.50 per rentable square foot, payable 50% upon mutual
execution of this Lease and 50%, as to each Building, upon the Rent Commencement Date for such Building or, in the case of the Phase II Building, upon the Rent Commencement Date for each phase of the
Phase II Building (in proportion to the ratio between the square footage covered by such phase and the total square footage of the Phase II Building). In addition, in the event Tenant exercises the
Expansion Option, Landlord shall pay to Tenant's Broker a commission on the same terms as set forth in the first sentence of this Section 21.15. Tenant shall be solely responsible for any
claims for brokerage commissions or similar compensation by Tenant's Broker and/or Mark Pearson in excess of the amount described in the preceding two sentences. Each party represents and warrants
that no other broker participated in the consummation of this Lease and agrees to indemnify, defend and hold the other party harmless against any liability, cost or expense,
including, without limitation, reasonable attorneys' fees, arising out of any claims for brokerage commissions or other similar compensation in connection with any conversations, prior negotiations or
other dealings by the indemnifying party with any other broker. 

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

-50-

 

        21.17    Corporate Authority.    The person signing this Lease on behalf of Tenant warrants that he or she is fully
authorized to do so and, by so doing, to bind Tenant. 

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

        21.19    Survival.    Without limiting survival provisions which would otherwise be implied or construed under
applicable law, the provisions of Sections 2.5, 9.4, 11.2, 11.3, 11.4, 13.6, 14.6, 21.5 and 21.20 hereof shall survive the termination of this Lease with respect to matters occurring prior to the
expiration of this Lease. 

        21.20    Parking and Traffic.    

        (a)  Landlord
has advised Tenant that the approval of the Britannia Oyster Point project by the City of South San Francisco was conditioned upon, among other things,
Landlord's development and implementation of a Transportation Demand Management Plan (the "TDMP") pursuant to which Landlord is required to undertake
various measures to try to reduce the volume of traffic generated by the Center. Landlord covenants with Tenant that Landlord will use reasonable efforts to try to reduce the volume of traffic
generated by the Center, as contemplated by the TDMP, including (but not limited to) substantially complying with any specific measures required by the City of South San Francisco or its Redevelopment
Agency. Tenant hereby agrees (i) to designate one of its employees to act as a liaison with Landlord's designated transportation coordinator in facilitating and coordinating such programs as
may be required from time to time by governmental agencies and/or by the terms of the TDMP to reduce the traffic generated by the Center (as required by the City of South San Francisco as part of the
conditions of approval of this project) and to facilitate and encourage the use of public transportation, (ii) to make reasonable efforts to encourage cooperation and participation by Tenant's
employees in the programs implemented from time to time pursuant to the TDMP, including (but not limited to) programs described in this Section 21.20, and (iii) to cooperate with
Landlord's
designated transportation coordinator in identifying an appropriate area within each Building where an information kiosk can be maintained for the dissemination of transportation-related information,
to be updated from time to time by Landlord's designated transportation coordinator. 

        (b)  The
Center is presently intended to contain a maximum of approximately 2.9 parking spaces per 1,000 square feet of rentable area in the buildings to be constructed on
the Property, subject to approval by appropriate agencies of the City of South San Francisco. Consistent with the TDMP, a specified percentage (presently anticipated to be ten percent (10%)) of these
spaces will be designated for carpool, vanpool and clean fuel vehicles. Among other things, the City of South San Francisco requires that Landlord charge a monthly parking fee for each parking space
allocated to tenants and their employees. The monthly fee per parking space shall be $20 per parking space for each Building for the first five (5) years after the Rent Commencement Date for
such Building, and shall increase to $30 per parking space for each Building immediately after the fifth (5th) anniversary of the Rent Commencement Date for such Building. In accordance
with the policies and requirements of the City of South San Francisco, Landlord recommends that Tenant pass through these parking charges to Tenant's employees using the spaces. (Thus, for example, in
years one (1) through five (5) of the Lease term, assuming an aggregate of 280,200 square feet in the Buildings and 2.9 spaces of parking per 1,000 square feet in the Center, Tenant
would have 813 allocable parking spaces at $20 per space per month, for a total monthly parking fee of $16,260.) 

        (c)  On
or about the date Tenant commences business in the respective Buildings, Landlord intends to provide Tenant, through Landlord's designated transportation coordinator,
with an appropriate number of packets of employee transportation information, presently expected to include (but not be limited to) information about carpool parking; schedules and maps for SamTrans,
Caltrain, BART and shuttle services operating to and from the Property; and a bicycle map. Landlord shall 

-51-

 

thereafter cause its designated transportation coordinator to provide updated copies of the employee transportation information packet to Tenant from time to time, as appropriate, and to make
additional copies of the packet available to Tenant from time to time, upon request by Tenant, for new employees. Tenant shall distribute copies of the employee transportation information packet to
all employees commuting to the Property at the time Tenant commences business in the respective Buildings, shall thereafter distribute copies of the packet to new employees from time to time and shall
distribute updated packets to all employees from time to time when and as such updated packets are furnished to Tenant by Landlord's designated transportation coordinator. 

        (d)  Landlord
is required to conduct, pursuant to the TDMP, annual surveys of its tenants and their employees regarding both quantitative and qualitative aspects of commuting
and transportation patterns at the Center. Landlord anticipates that these surveys will be prepared, administered and analyzed by an independent transportation consultant retained by the City of South
San Francisco, and will be summarized by that consultant in an annual report to be submitted by that consultant to the City of South San Francisco and its Redevelopment Agency with respect to the
Center. Tenant shall cooperate with Landlord, with Landlord's designated transportation coordinator and with any independent transportation consultant retained by the City, and shall use reasonable
efforts to cause Tenant's employees to so cooperate, in the completion and return of such surveys from time to time, when and as requested by Landlord or its designated transportation coordinator or
the independent consultant.
Tenant acknowledges and understands that employees who fail to respond to such surveys will be counted as drive-alone commuters. 

        (e)  Landlord
has advised Tenant that pursuant to conditions imposed by the City of South San Francisco and its Redevelopment Agency, Landlord may incur financial penalties
if implementation of the TDMP at the Center fails to achieve a target rate of at least thirty-five percent (35%) alternative mode transportation usage (the  "Alternative Mode Standard") by employees
working at the Center, as reflected in the surveys conducted pursuant to Section 21.20(d) above. Any
such financial penalties shall be imposed by the City of South San Francisco Redevelopment Agency (the "Redevelopment Agency"), in its sole discretion,
based on its review of the annual reports submitted from time to time pursuant to Section 21.20(d) above. The amount of such financial penalties is presently set at $15,000 per year for each
percentage point (if any) by which, after a phase-in period (two (2) years after the granting of a certificate of occupancy) for each building, the aggregate rate of alternative
mode transportation usage by employees throughout the Center falls short of the Alternative Mode Standard. If any such financial penalties are imposed on Landlord for failure to meet the Alternative
Mode Standard on a Center-wide basis for any applicable survey period, then Landlord shall be entitled to pass such financial penalties through to all tenants of the Center whose employees
have failed to demonstrate (pursuant to the applicable surveys) compliance with the Alternative Mode Standard for the applicable period (each such tenant being hereinafter referred to as a  "Noncomplying Tenant" for that period), in which event the actual penalty amount shall be allocated among the Noncomplying Tenants for the applicable
period in the following manner: Each Noncomplying Tenant shall bear a portion of the applicable penalty amount equal to a fraction, the numerator of which is the number of employees by which such
Noncomplying Tenant fell short of meeting the Alternative Mode Standard for the applicable period and the denominator of which is the sum of the respective numbers of employees by which all
Noncomplying Tenants, in the aggregate, fell short of meeting the Alternative Mode Standard for the applicable period. Each such Noncomplying Tenant shall pay its share of the applicable penalty
amount to Landlord within thirty (30) days after receipt of written demand from Landlord, accompanied by supporting documentation evidencing the applicable penalty amount, as provided by the
Redevelopment Agency or its consultant, and demonstrating in reasonable detail the calculation of such Noncomplying Tenant's share of that penalty amount. Under no circumstances shall Tenant be
required to bear any portion of any penalties contemplated in this paragraph with respect to any period as to which Tenant can demonstrate that its employees, as evidenced by the applicable survey(s)
for that period, met the Alternative Mode Standard. If Tenant subleases any portion(s) of any 

-52-

 

of the Buildings from time to time, then for purposes of this Section 21.20, as between Tenant and Landlord, Tenant shall be fully and solely responsible for compliance by its subtenant(s) and
their employees with the requirements of this Section 21.20, and all surveys and reports submitted by Tenant to Landlord or its designated transportation coordinator or to the independent
consultant pursuant to this Section 21.20 shall cover the entire Buildings (other than the retail space in the Phase III Building) and shall report figures for Tenant and its subtenant(s) on an
aggregate basis. Nothing in the preceding sentence, however, shall preclude Tenant, as between itself and its subtenant(s), from allocating to such subtenant(s) in the applicable sublease agreement
any compliance obligations and/or penalty reimbursement obligations under this Section 21.20(e), but no such allocation shall be binding on Landlord or require Landlord, its designated
transportation 

[rest of page intentionally left blank; signature page follows]

-53-

coordinator
or the independent consultant to deal directly with any such subtenant(s) regarding the matters addressed in this Section 21.20. If Tenant believes, reasonably and in good faith,
that there are circumstances particular to the nature of Tenant's business operations that would justify a mitigation of penalties and/or a modification of the implementation of the TDMP as applied to
Tenant's business, and requests in writing (with supporting information describing, in reasonable detail, the circumstances on which Tenant is relying) that Landlord present such mitigation or
modification arguments to the Redevelopment Agency, then Landlord shall use reasonable and good faith efforts to present or cause its designated transportation coordinator to present such mitigation
and/or modification arguments, but Tenant acknowledges and understands that any decision with respect to such mitigation and/or modification arguments will be in the sole discretion of the
Redevelopment Agency and agrees that Landlord shall have no liability to Tenant if such mitigation and/or modification arguments are not accepted by the Redevelopment Agency. 

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

	"Landlord"	 	"Tenant"
	

SLOUGH BTC, LLC, a Delaware

limited liability company	
 	

TULARIK INC., a Delaware corporation
	

By:	
 	

Slough Estates USA Inc.,

a Delaware corporation, Its Manager	
 	

By: /s/  DAVID V. GOEDDEL      
Its: CEO

	

 	
 	

By: /s/  WILLIAM ROGALLA      
Its: VP
	
 	

By: /s/  WILLIAM J. RIEFLIN      
Its: EVP

--

 
 

EXHIBITS    
  

	 
	 	 

	EXHIBIT A	 	Real Property Description (Center)
	

EXHIBIT B	
 	

Site Plan
	

EXHIBIT C	
 	

Workletter
	

EXHIBIT D	
 	

Estimated Construction Schedules
	

EXHIBIT E	
 	

Acknowledgment of Rent Commencement Date

--

 
 

EXHIBIT A
  
    REAL PROPERTY DESCRIPTION (CENTER)

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

Parcels
2, 3, 5 and 6 as shown on the Bay West Cove Final Subdivision Map, Parcel Map No. 97-027, recorded January 22, 1998 in Book 70, at pages 33-40, File
No. 98-008274, Official Records of San Mateo County, California. 

 
 

EXHIBIT B
  
    BRITANNIA OYSTER POINT
  SITE PLAN    
  

[SITE MAP]  

 
 

EXHIBIT C
  
    WORKLETTER

        This
Workletter ("Workletter") constitutes part of the Build-to-Suit Lease dated as of December 20, 2001
(the "Lease") between SLOUGH BTC, LLC, a Delaware limited liability company ("Landlord"), and
TULARIK INC., a Delaware corporation ("Tenant"). The terms of this Workletter are incorporated in the Lease for all purposes. 

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

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

        (b)  Architect: Chamorro Design Group, or any other architect selected by Landlord in its sole discretion, with respect to the
respective Building Shells, the Site Improvements and any other Improvements which Landlord is to design pursuant to this Workletter; any architect selected by Tenant with the written approval of
Landlord (which shall not be unreasonably withheld or delayed) with respect to the Tenant Improvements and any other Improvements which Tenant is to design pursuant to the this Workletter. 

        (c)  Building Shells: The shells of the respective Buildings, as more fully described in  Schedule C-1 attached to this Workletter, including the shell of the Connector
Bridge (as described in Section 1.1(a) of the
Lease). 

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

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

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

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

        (h)  General Contractor: Hathaway Dinwiddie Construction Company, or any other general contractor selected by Landlord in its
sole discretion, with respect to Landlord's Work. The General Contractor with respect to Tenant's Work shall be selected by Tenant, subject to Landlord's approval (not to be unreasonably withheld or
delayed), as contemplated in Paragraph 5(a) hereof. 

        (i)    Improvements: The Building Shells, Site Improvements, Tenant Improvements and other improvements shown on the Approved
Plans from time to time and to be constructed on the Property pursuant to the Lease and this Workletter. 

        (j)    Landlord Delay: See definition in Paragraph 10 hereof. 

        (k)  Landlord's Work: The Building Shells and Site Improvements, and any other Improvements which Landlord is to construct or
install pursuant to this Workletter (including, but not limited to, any Tenant Improvements identified in Schedule C-2 to this
Workletter as being Landlord's responsibility to construct) or by mutual agreement of Landlord and Tenant from time to time. 

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

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

 

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

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

        (i)    Any
delay resulting from Tenant's failure to furnish, within the time frames required in the Estimated Construction Schedules attached as  Exhibit D to the Lease (or, in the case of any requests for
which no specific time frame is specified in such Estimated Construction Schedules,
within the time frame reasonably specified in writing by Landlord or its project manager in making such request), information reasonably requested by Landlord or by Landlord's project manager (Project
Management Advisors, Inc. or such other person or entity as Landlord may designate from time to time) in connection with the design or construction of the respective Building Shells, or from
Tenant's failure to approve within the time frames required in the Estimated Construction Schedules attached as Exhibit D to the Lease (or, in
the case of any requests for which no specific time frame is specified in such Estimated Construction Schedules, within the time frame reasonably specified in writing by Landlord or its project
manager in requesting such approval) any matters requiring approval by Tenant; 

        (ii)  Any
delay resulting from changes in Landlord's Final Working Drawings and/or Landlord's Approved Plans with respect to the Phase IA Building and/or the Phase IB
Building in order to accommodate the construction of the Connector Bridge, under the circumstances and to the extent provided in Paragraph 2(e)(iii) of this Workletter; 

        (iii)  Any
delay resulting from Change Order Requests initiated by Tenant, including any delay resulting from the need to revise any drawings or obtain further governmental
approvals as a result of any such Change Order Request; or 

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

        (p)  Tenant Improvements: The improvements to or within the respective Buildings, other than improvements constituting part of
the respective Building Shells, shown on the Approved Plans from time to time and to be constructed by Tenant (except as otherwise provided herein) pursuant to the Lease and this Workletter, including
(but not limited to) the improvements described in Schedule C-2 attached to this Workletter. 

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

        (r)  Unavoidable Delays: Delays due to acts of God, action or inaction of public agencies, labor disputes, strikes, fires,
freight embargoes, rainy or stormy weather (but only to the extent such weather prevents the affected party from conducting any substantial element of its construction work for a period of at least
one full work day), inability to obtain supplies, materials, fuels or permits, delays of contractors or subcontractors, or other causes or contingencies beyond the reasonable control of Landlord or
Tenant, as applicable. 

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

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

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

C-2

 

        (a)  Approved Plans and Working Drawings for Landlord's Work. Landlord shall promptly and diligently (and in all events prior
to any applicable Work Deadlines, subject to Tenant Delays and Unavoidable Delays) prepare or cause to be prepared plans and specifications for the Improvements constituting Landlord's Work and for
all other Improvements (if any) for which Landlord is expressly assigned design responsibility under Schedule C-2 to this Workletter.
Such plans and specifications shall not be subject to Tenant's approval, except to the extent (and only to the extent) that Landlord's Work includes, pursuant to this Workletter or by other mutual
agreement of Landlord and Tenant, any portion of the Tenant Improvements. Landlord shall deliver copies of such plans and specifications to Tenant for Tenant's approval (but only to the extent
provided in the preceding sentence) and information, to assist Tenant in providing any information and making any decisions necessary to be provided or made by Tenant in order to permit preparation of
Landlord's Final Working Drawings as hereinafter defined, and to assist Tenant in preparing plans, specifications and drawings for Tenant's Work as hereinafter set forth. Following approval of such
plans and specifications by Landlord and, if applicable, by Tenant (as so approved, the "Landlord's Approved Plans"), Landlord shall then prepare or
cause to be prepared, on or before the applicable Work Deadline (assuming timely delivery by Tenant of all information and decisions required to be furnished or made by Tenant in order to permit
complete preparation of Landlord's Final Working Drawings), final detailed working drawings and specifications for the Improvements constituting Landlord's Work, including structural, fire protection,
life safety, mechanical and electrical working drawings and final architectural drawings (collectively, "Landlord's Final Working Drawings"). Landlord's
Final Working Drawings shall substantially conform to the Landlord's Approved Plans. Landlord's Final Working Drawings shall not be subject to Tenant's approval, except to the extent (and only to the
extent), as noted above, that Landlord's Work includes, pursuant to this Workletter or by other mutual agreement of Landlord and Tenant, any portion of the Tenant Improvements. Landlord shall deliver
copies of Landlord's Final Working Drawings to Tenant
for Tenant's approval (but only to the extent provided in the preceding sentence) and information, and to assist Tenant in preparing plans, specifications and drawings for Tenant's Work as hereinafter
set forth. Landlord's obligation to deliver Landlord's Final Working Drawings to Tenant within the time period set forth above shall be extended for any delay encountered by Landlord as a result of a
request by Tenant for changes in accordance with the procedure set forth below, any other Tenant Delays, or any Unavoidable Delays. To the extent Tenant has any right of approval over Landlord's
proposed plans and specifications or Landlord's proposed Final Working Drawings pursuant to the foregoing provisions, no later than the applicable Work Deadline (assuming timely delivery of plans and
drawings by Landlord), Tenant shall either approve (to the extent of Tenant's approval right) Landlord's proposed plans and specifications or Landlord's proposed Final Working Drawings, as applicable,
or set forth in writing with particularity any changes necessary to bring the aspects of such proposed plans and specifications or proposed Landlord's Final Working Drawings over which Tenant has a
right of approval into a form which will be acceptable to Tenant or, in the case of Landlord's Final Working Drawings, into substantial conformity with the Landlord's Approved Plans. Notwithstanding
any other provisions of this paragraph (other than the final sentence thereof), in no event shall Tenant have the right to object to any aspect of the Landlord's proposed plans and specifications or
proposed Landlord's Final Working Drawings (including, but not limited to, any subsequently proposed changes therein from time to time) that is necessitated by applicable law or as a condition of any
governmental or other third-party approvals that are required to be obtained in connection with Landlord's Work, or that is required as a result of unanticipated conditions encountered in the course
of construction of Landlord's Work. Failure of Tenant to deliver to Landlord written notice of disapproval and specification of required changes (to the extent Tenant has a right of approval or
objection under this paragraph) on or before the applicable Work Deadline shall constitute and be deemed to be approval of Landlord's proposed plans and specifications or proposed Landlord's Final
Working Drawings, as applicable. Upon approval, actual or deemed, of Landlord's Final Working Drawings by Landlord and Tenant (to the extent Tenant has such a right of approval under this paragraph),
Landlord's Final Working Drawings shall be deemed to be incorporated in and considered part of the Landlord's 

C-3

 

Approved Plans, superseding (to the extent of any inconsistencies) any inconsistent features of the previously existing Landlord's Approved Plans. Notwithstanding the foregoing provisions of this
paragraph, the parties acknowledge and agree as follows: (i) as to the Building Shells for the Phase IA and Phase IB Buildings (excluding the Connector Bridge, which has not yet been designed),
the plans and specifications for which building permits have already been issued by the City of South San Francisco constitute Landlord's Approved Plans for such Building Shells, subject to any
changes that may be required in connection with the design and construction of the Connector Bridge; (ii) as to the Building Shell for the Phase II Building, the plans and specifications filed
with Landlord's pending permit application with the City of South San Francisco constitute Landlord's Approved Plans for such Building Shell, subject to any changes that may be required by the City of
South San Francisco in connection with the issuance of a building permit for such Building Shell; and (iii) Tenant shall have a right of approval over the plans and specifications to be
prepared by Landlord for the shell of the Connector Bridge, which approval shall not be unreasonably withheld and which right of approval shall be exercised within any applicable Work Deadlines or, to
the extent there is no specifically applicable Work Deadline, within five (5) business days after delivery of plans and specifications for review by Tenant. 

        (b)  Approved Plans and Working Drawings for Tenant's Work. Tenant shall promptly and diligently cause to be prepared and
delivered to Landlord, for approval, a space plan and detailed plans and specifications for the Improvements constituting Tenant's Work (as so approved, the "Tenant's Approved
Plans"). Landlord shall approve or disapprove of Tenant's Plans, following receipt thereof from Tenant, within the applicable number of days specified on the applicable
Estimated Construction Schedule(s)
attached as Exhibit D to the Lease. Following mutual approval of the Tenant's Approved Plans, Tenant shall then cause to be prepared and
delivered to Landlord, for approval, final working drawings and specifications for the Improvements constituting Tenant's Work, including any applicable life safety, mechanical and electrical working
drawings and final architectural drawings (collectively, "Tenant's Final Working Drawings"). Tenant's Final Working Drawings shall substantially conform
to the Tenant's Approved Plans. Landlord shall, within the applicable number of days specified on the applicable Estimated Construction Schedule(s) attached as  Exhibit D to the Lease, either
approve Tenant's Final Working Drawings or set forth in writing with particularity any changes necessary to bring
Tenant's Final Working Drawings into substantial conformity with Tenant's Approved Plans or into a form which will be acceptable to Landlord. Upon approval of Tenant's Final Working Drawings by
Landlord and Tenant, Tenant's Final Working Drawings shall be deemed to be incorporated in and considered part of the Tenant's Approved Plans, superseding (to the extent of any inconsistencies) any
inconsistent features of the previously existing Tenant's Approved Plans. 

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

C-4

 

(viii) as to the Tenant Improvements, all costs and items specifically described as being at Tenant's cost in Schedules C-1 and  C-2 attached hereto.
Notwithstanding the foregoing provisions, however, Cost of Improvement shall not include any project management fee
relating to the construction of the applicable item or component, except to the extent of any project management fees expressly set forth in Schedules
C-1 and C-2 attached hereto. 

        (d)  Construction of Landlord's Work. Promptly following approval of Landlord's Final Working Drawings, Landlord shall apply
for and use reasonable efforts to obtain the necessary permits and approvals to allow construction of all Improvements constituting Landlord's Work. Upon receipt of such permits and approvals,
Landlord shall, at Landlord's sole expense (except as otherwise provided in the Lease or in this Workletter), diligently construct and complete the Improvements constituting Landlord's Work
substantially in accordance with the Landlord's Approved Plans, subject to Unavoidable Delays and Tenant Delays (if any). Such construction shall be performed in a neat and workmanlike manner and
shall conform to all applicable governmental codes, laws and regulations in force at the time such work is completed. Without limiting the generality of the foregoing, Landlord shall be responsible
for compliance of all Improvements designed and constructed by Landlord with the requirements of the Americans with Disabilities Act and all similar or related requirements pertaining to access by
persons
with disabilities. Landlord shall have the right, in its sole discretion, to decide whether and to what extent to use union labor on or in connection with Landlord's Work and shall use the General
Contractor designated or selected pursuant to Paragraph 1(h) to construct all Improvements constituting Landlord's Work. 

        (e)  Changes. 

        (i)    If
Landlord determines at any time that changes in Landlord's Final Working Drawings or in any other aspect of the Landlord's Approved Plans relating to any item of
Landlord's Work are required as a result of applicable law or governmental requirements, or at the insistence of any other third party whose approval may be required with respect to the Improvements,
or are required as a result of unanticipated conditions encountered in the course of construction, then Landlord shall promptly (A) advise Tenant of such circumstances and (B) cause
revised Landlord's Approved Plans and/or Landlord's Final Working Drawings, as applicable, reflecting such changes to be prepared by Architect and submitted to Tenant, for Tenant's information (and to
assist Tenant in determining the need for any related changes in Tenant's Approved Plans) and, to the extent such changes relate to any Tenant Improvements being constructed by Landlord pursuant to
mutual agreement of Landlord and Tenant or are subject to Tenant's approval pursuant to the final sentence of this paragraph, for approval by Tenant in accordance with the procedure contemplated in
Paragraph 2(a) hereof. Upon final approval of such revised drawings by Landlord and Tenant (if applicable), Landlord's Final Working Drawings and/or the Landlord's Approved Plans shall be
deemed to be modified accordingly. In the case of any such changes in Landlord's Final Working Drawings and/or Landlord's Approved Plans that are required as a result of applicable law or governmental
requirements, or are required at the insistence of any other third party whose approval is required with respect to the Improvements, or are required as a result of unanticipated conditions
encountered in the course of construction, Tenant shall have no approval right and Landlord shall have no liability or responsibility for any costs or cost increases incurred by Tenant as a result of
any such required changes. However, in the case of any changes in Landlord's Final Working Drawings and/or Landlord's Approved Plans that are merely deemed desirable by Landlord without being required
by any of the circumstances described in the preceding sentence, (A) Landlord shall not make any such change without Tenant's written approval, which approval shall not be unreasonably withheld
and which right of approval shall be exercised within five (5) business days after Tenant's receipt of Landlord's request for approval of the proposed change, and (B) Landlord shall be
responsible for all actual costs or cost increases reasonably incurred by Tenant as a result of such changes and shall reimburse Tenant for any such actual costs or cost 

C-5

 

increases promptly following receipt of Tenant's written request for such reimbursement, accompanied by documentation reasonably supporting Tenant's claimed costs or cost increases and their
relationship to the changes made by Landlord. 

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

        (iii)  If
Landlord determines at any time in the course of design and construction of the Connector Bridge that changes in Landlord's Final Working Drawings or in any other
aspect of the Landlord's Approved Plans for the Phase IA Building and/or the Phase IB Building are required in order to accommodate the construction of the Connector Bridge, then Landlord shall
promptly (A) advise Tenant of such circumstances and (B) notify Tenant of Landlord's estimate of the number of days of delay, if any, which shall be caused in Landlord's achievement of
structural completion for the Phase IA Building and/or the Phase IB Building as a result of such changes if implemented (including, without limitation, delays due to the need to obtain any revised
plans or drawings and any governmental approvals) (the "Estimated Delay"). If Tenant notifies Landlord in writing, within five (5) business days
after receipt of such notice from Landlord, of Tenant's approval of the Connector Bridge design which requires such changes and of Tenant's desire to have Landlord proceed with the construction of the
Connector Bridge notwithstanding the Estimated Delay (if any), then Landlord shall cause such changes to be implemented and the amount of the Estimated Delay (if any) as specified in Landlord's notice
shall constitute a Tenant Delay; provided, however, that notwithstanding the characterization of such changes as a Tenant Delay and notwithstanding any
contrary provisions of the Lease or of this Workletter, under no circumstances shall Tenant be responsible for any costs or cost increases resulting from or attributable to the implementation of the
changes described in this subparagraph (iii). If Tenant fails to notify Landlord in writing, within said five (5) business day period, of Tenant's approval of the Connector Bridge design which
requires such changes and of Tenant's desire to have Landlord proceed with the construction of the Connector Bridge notwithstanding the estimated delays (if any), then such design changes shall be
deemed to be disapproved and Landlord shall be under no further obligation to construct the Connector Bridge. 

C-6

 

        (iv)  If
Tenant at any time desires to make any changes, alterations or additions to the Tenant's Approved Plans, such changes, alterations or additions shall be subject to
approval by Landlord in the same manner as the original Tenant's Approved Plans as provided above. 

        3.    Completion.    

        (a)  When
Landlord receives written certification from Architect that construction of the foundation, structural slab on grade (except to the extent delayed at Tenant's
request to accommodate Tenant's design requirements and/or any underslab aspects of Tenant's Work), Landlord's underslab plumbing work, structural steel framework, decking and concrete on second,
third and fourth (if applicable) floors, roof structure, roof membrane and installation of main fire sprinkler risers in a Building have been substantially completed in accordance with the Landlord's
Approved Plans, Landlord shall prepare and deliver to Tenant a certificate signed by both Landlord and Architect (the "Structural Completion
Certificate") certifying that the construction of such portions of the applicable Building has been substantially completed in accordance with the Landlord's Approved Plans in
all material respects and specifying the date of that completion. The delivery of such Structural Completion Certificate shall commence the running of the 180-day time period (which period
shall be extended day for day by any Landlord Delay, as hereinafter defined, occurring after the date of delivery of such Structural Completion Certificate) until the Rent Commencement Date for the
applicable Building (or in the case of the Phase II Building, until the Phase IIA Rent Commencement Date) under Section 2.1 of the Lease. Notwithstanding any other provisions of this Workletter
or of the Lease, Landlord's right to issue a Structural Completion Certificate with respect to the respective Phase I Buildings shall be determined without reference to the degree of completion of the
Connector Bridge, and any delay in the construction or structural completion of the shell for the Connector Bridge shall not delay the determination of structural completion or the Rent Commencement
Date for either of the Phase I Buildings, treating each of such Buildings (without the Connector Bridge) as a stand-alone building and ignoring, for this purpose, any lack of completion of Landlord's
Work at and in the immediate vicinity of the point of attachment of the Connector Bridge to the applicable Building. 

        (b)  When
Landlord receives written certification from Architect that construction of the remaining Improvements constituting Landlord's Work with respect to a Building has
been substantially completed in accordance with the Landlord's Approved Plans (except for Punch List Work), Landlord shall prepare and deliver to Tenant a certificate signed by both Landlord and
Architect (the "Final Completion Certificate") certifying that the construction of the remaining Improvements constituting Landlord's Work with respect
to such Building has been substantially completed in accordance with the Landlord's Approved Plans in all material respects, subject only to completion of Punch List Work, and specifying the date of
that completion. Upon receipt by Tenant of the Final Completion Certificate, the Improvements constituting Landlord's Work will be deemed delivered to Tenant for all purposes of the Lease (subject to
Landlord's continuing obligations with respect to the Punch List Work). Notwithstanding any other provisions of this Workletter or of the Lease, Landlord's right to issue a Final Completion
Certificate with respect to the respective Phase I Buildings shall be determined without reference to the degree of completion of the Connector Bridge, and any delay in the construction or final
completion of the shell for the Connector Bridge shall not delay the determination of final completion or the Rent Commencement Date for either of the Phase I Buildings, treating each of such
Buildings (without the Connector Bridge) as a stand-alone building and ignoring, for this purpose, any lack of completion of Landlord's Work at and in the immediate vicinity of the point of attachment
of the Connector Bridge to the applicable Building. 

        (c)  Notwithstanding
any other provisions of this Workletter or of the Lease, Rent Commencement Dates for the applicable Buildings shall be subject to adjustment under the
following circumstances: 

        (i)    If
Landlord is delayed in substantially completing any of Landlord's Work necessary for issuance of the Structural Completion Certificate with respect to a Building as a
result of any 

C-7

 

Tenant Delay, then the 180-day period between the delivery of the Structural Completion Certificate and the Rent Commencement Date for such Building pursuant to Section 2.1 of the
Lease shall be reduced, day for day, by the number of days by which such Tenant Delay delayed completion of the portions of Landlord's Work necessary for issuance of the Structural Completion
Certificate for such Building, and Tenant shall reimburse Landlord in cash, within fifteen (15) days after written demand by Landlord (accompanied by reasonable documentation of the items
claimed), for any increased construction-related costs and expenses incurred by Landlord as a result of the Tenant Delay (except to the extent otherwise expressly provided in
Paragraph 2(e)(iii) of this Workletter). 

        (ii)  If
Tenant is delayed in substantially completing any of Tenant's Work necessary for Tenant's occupancy of and commencement of business in a Building as a result of any
Landlord Delay, then the 180-day period between the delivery of the Structural Completion Certificate and the Rent Commencement Date for such Building pursuant to Section 2.1 of the
Lease shall be extended, day for day, by the number of days by which such Landlord Delay delayed completion of the portions of Tenant's Work necessary for Tenant's occupancy of and commencement of
business in such Building. 

        (iii)  Rent
Commencement Dates shall also be subject to adjustment under the circumstances and to the extent provided in Section 2.1(c) of the Lease, if applicable. 

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

        4.    Payment of Costs.    

        (a)  Landlord's Work. Except as otherwise expressly provided in this Workletter (including, but not limited to, the cost
allocations set forth in Schedules C-1 and C-2 attached hereto) or by mutual
written agreement of Landlord and Tenant, the cost of construction of Landlord's Work shall be borne by Landlord at its sole cost and expense, including any costs or cost increases incurred as a
result of Unavoidable Delays, governmental requirements or unanticipated conditions; provided, however, that notwithstanding any other provisions of
this Paragraph 4(a), to the extent the Cost of Improvement relating to the construction of any item or component of Landlord's Work is increased as a result of any implemented Change Order
Request or any Tenant Delay, or as a result of any other plan changes or compliance costs attributable to Tenant's particular use requirements or to the contemplated
Tenant's Work, the amount of the increase in the Cost of Improvement with respect to such item or component, as well as the Cost of Improvement with respect to any matters listed on  Schedule C-1 or
C-2 as being installed by Landlord but as having the cost
thereof borne by Tenant, shall be reimbursed by Tenant to Landlord in cash or, by mutual agreement of Landlord and Tenant, may be deducted from Landlord's maximum obligation under
Paragraph 4(b) with respect to the cost of Tenant's Work. 

        (b)  Tenant's Work. Except as otherwise expressly provided in this Workletter (including, but not limited to, the cost
allocations set forth in Schedules C-1 and C-2 attached hereto) or by mutual
written agreement of Landlord and Tenant, the cost of construction of Tenant's Work shall be borne by Tenant at its sole cost and expense, including any costs or cost increases incurred as a result of
Unavoidable Delays, governmental requirements or unanticipated conditions. Notwithstanding the foregoing sentence, the Cost of Improvements with respect to the construction of the Tenant Improvements
in each Building shall be borne by Landlord up to a maximum contribution by Landlord equal to One 

C-8

 

Hundred Ninety and No/100 Dollars ($190.00) per square foot, in the case of each of the Phase I Buildings (including the Connector Bridge), and One Hundred Forty-Five and No/100 Dollars
($145.00) per square foot, in the case of each phase of the Phase II Building, times the square footage of the applicable Building, as and when constructed (measured in accordance with Sections 1.1(c)
and 3.1(d) of the Lease), toward the Cost of Improvements for the Tenant Improvements in the respective Buildings (the "Tenant Improvement Allowance"),
less any reduction in such sum pursuant to Paragraph 4(a) or any other applicable provision of this Workletter. Tenant shall be entitled to utilize the entire Tenant Improvement Allowance for
each respective Building or phase prior to being required to expend any of Tenant's own funds on an unreimbursed basis for Tenant Improvements in such Building or phase. In all other respects, the
timing, conditions and other procedures for Landlord's disbursement of the Tenant Improvement Allowance for each Building or phase shall be as reasonably prescribed by Landlord, subject to approval by
Tenant (which approval shall not be unreasonably withheld or delayed by Tenant); provided, however, that progress payments of the Tenant Improvement
Allowance shall be made not less often than monthly, subject to Tenant's timely compliance with all applicable conditions and procedures established pursuant to this sentence. To the extent the Cost
of Improvement with respect to the Tenant Improvements for any Building or Phase exceeds the Tenant Improvement Allowance (as reduced, if applicable), whether as a result of implemented Change Order
Requests, Tenant Delays and/or Unavoidable Delays or otherwise, the amount of such excess shall in all events be Tenant's sole responsibility and expense. The rental amounts set forth in
Section 3.1 of the Lease are not subject to adjustment based on the Cost of Improvements of the Tenant Improvements, regardless of whether the final Cost of Improvements for the Tenant
Improvements in any Building or Phase uses the entire Tenant Improvement Allowance or not. The foregoing Tenant Improvement Allowance assumes that each Phase I Building will be composed of a minimum
of 65% laboratory space and a maximum of 35% office space, and that the Phase II Building will be composed of a minimum of 50% laboratory space and a maximum of 50% office space, and such Tenant
Improvement Allowance shall be subject to reduction (and/or to disapproval by Landlord of Tenant's proposed plans and specifications for the Tenant Improvements in the applicable Building) if the
proposed laboratory space in a Building is less than the minimum percentage specified in this sentence. The square footage attributable to the Connector Bridge shall be disregarded for purposes of
applying the ratios set forth in the preceding sentence to the Phase I Buildings. 

        (c)  Tenant Funding of Tenant Improvement Allowance. If Landlord fails to timely fulfill its obligation to fund any portion of
the Tenant Improvement Allowance pursuant to Paragraph 4(b) above, Tenant shall be entitled to deliver written notice thereof (a "Payment
Notice") to Landlord. If Landlord still fails to
fulfill any such payment obligation within seventy-five (75) days after Landlord's receipt of the Payment Notice from Tenant and fails to deliver written notice to Tenant within
such 75-day period explaining the reasons for which Landlord believes that the amounts described in Tenant's Payment Notice are not in fact due and payable by Landlord, then Tenant shall
be entitled to fund the portion of the Tenant Improvement Allowance described in the Payment Notice and to offset the amount so funded, together with interest at the prime rate plus two percentage
points (2%) from the date of funding until the date of offset, against Tenant's next obligations to pay Rent under the Lease. 

        5.    Tenant's Work.    Tenant shall construct and install in each Building or Phase the Tenant's Work, substantially
in accordance with the Tenant's Approved Plans or, with respect to Tenant's Work not otherwise shown on the Tenant's Approved Plans, substantially in accordance with plans and specifications prepared
by Tenant and approved in writing by Landlord (which approval shall not be unreasonably withheld or delayed). Tenant's Work shall be performed in accordance with, and shall in 

C-9

 

all respects be subject to, the terms and conditions of the Lease (to the extent not inconsistent with this Workletter), and shall also be subject to the following conditions: 

        (a)  Contractor Requirements. The contractor engaged by Tenant for Tenant's Work, and any subcontractors, shall be duly
licensed in California and shall be subject to Landlord's prior written approval, which approval shall not be unreasonably withheld or delayed. Tenant shall engage only union contractors for the
construction of Tenant's Work and for the installation of Tenant's fixtures and equipment in the Buildings, and shall require all such contractors engaged by Tenant, and all of their subcontractors,
to use only union labor on or in connection with such work, except to the extent Landlord determines, in its reasonable discretion, that the use of non-union labor would not create a
material risk of labor disputes, picketing or work interruptions at the Property, in which event Landlord shall, to that extent, waive such union labor requirement. 

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

        (c)  Indemnification. Tenant shall indemnify, defend (with counsel satisfactory to Landlord) and hold Landlord and its agents
and employees harmless from all suits, claims, actions, losses, costs and expenses (including, but not limited to, claims for workers' compensation, attorneys' fees and costs) based on personal injury
or property damage or contract claims (including, but not limited to, claims for breach of warranty) arising from the performance of Tenant's Work, including (but not limited to) from any early access
to the Property by Tenant and its contractors in preparation for Tenant's Work as contemplated in Section 2.2 of the Lease and in this Workletter. Tenant shall repair or replace (or, at
Landlord's election, reimburse Landlord for the cost of repairing or replacing) any portion of the Improvements and/or any of Landlord's real or personal property or equipment that is damaged, lost or
destroyed in the course of or in connection with the performance of Tenant's Work. 

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

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

        (f)    Early Entry. Landlord shall permit entry of contractors into the Buildings for the purposes of performing Tenant's Work,
upon delivery of the Structural Completion Certificate and, to the extent provided in Section 2.2 of the Lease, prior to such delivery, subject to satisfaction of the conditions set 

C-10

 

forth in the Lease and in this Workletter. This license to enter is expressly conditioned on the contractor(s) retained by Tenant working in harmony with, and not interfering with, the workers,
mechanics and contractors of Landlord. If at any time the entry or work by Tenant's contractor(s) causes any material interference with the workers, mechanics or contractors of Landlord, permission to
enter may be withdrawn by Landlord immediately on written notice to Tenant. Landlord agrees to use reasonable efforts to cause its workers, mechanics and contractors to work in harmony with Tenant's
contractors. Any unreasonable exclusion of Tenant's contractors from the Buildings shall be a Landlord Delay to the extent provided in the definition of that term. 

        (g)  Risk of Loss. All materials, work, installations and decorations of any nature brought onto or installed in the
Buildings, by or at the direction of Tenant or in connection with the performance of Tenant's Work, before the applicable Rent Commencement Date shall be at Tenant's risk, and neither Landlord nor any
party acting on Landlord's behalf shall be responsible for any damage, loss or destruction thereof. 

        (h)  Condition of Tenant's Work. All work performed by Tenant shall be performed in a good and workmanlike manner, shall be
free from defects in design, materials and workmanship, and shall be
completed in compliance with the plans approved by Landlord for such Tenant's Work in all material respects and in compliance with all applicable governmental laws, ordinances, codes and regulations
in force at the time such work is completed. Without limiting the generality of the foregoing, Tenant shall be responsible for compliance of all Improvements designed and constructed by Tenant with
the requirements of the Americans with Disabilities Act and all similar or related requirements pertaining to access by persons with disabilities. 

        6.    [Omitted.]    

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

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

        9.    Miscellaneous.    All references in this Workletter to a number of days shall be construed to refer to calendar
days, unless otherwise specified herein. In all instances where Tenant's approval is required, if no written notice of disapproval is given within the applicable time period, at the end of that period
Tenant shall be deemed to have given approval (unless the provision requiring Tenant's approval expressly states that non-response is deemed to be a disapproval or withdrawal of the
pending action or request, in which event such express statement shall be controlling over the general statement set forth in this sentence) and the next succeeding time period shall commence. If any
item requiring approval is disapproved by Tenant in a timely manner, the procedure for preparation of that item and approval shall be repeated. 

        10.    Landlord Delay.    As used in this Workletter and the Lease, "Landlord
Delay" shall mean any of the following types of delay in the completion of construction of the Tenant Improvements necessary for Tenant's occupancy of and commencement of
business in the respective Buildings or phases, but only to the extent of the actual delay reasonably attributable to the causes or circumstances described herein and directly or proximately caused by
such causes or circumstances after the delivery of Landlord's Structural Completion Certificate for the applicable Building or phase: 

        (a)  Any
delay resulting from Landlord's failure to approve within the time frames required in the Estimated Construction Schedules attached as  Exhibit D to the Lease (or, in the case of any requests for
which no specific time frame is specified in such Estimated Construction Schedules,
within the time frame reasonably specified in writing by Tenant or its construction manager in requesting such approval) any matters requiring approval by Landlord; 

C-11

 

        (b)  Any
delay resulting from any unreasonable or wrongful denial by Landlord or its agents or contractors to Tenant or its agents or contractors of access to the applicable
Building or phase, or from any negligent or willful acts or omissions of Landlord or its agents or contractors that interfere materially and unreasonably (beyond reasonable and customary
accommodations and coordination issues necessarily involved in the conduct of concurrent work in the applicable premises by Landlord and Tenant) with the actual construction of Tenant's Work; or 

        (c)  Any
delay resulting from changes by Landlord in Landlord's approved Final Working Drawings and/or Landlord's Approved Plans that are merely deemed desirable by Landlord
without being required by any of the circumstances described in the next to last sentence of Paragraph 2(e)(i) of this Workletter. 

        11.    Financial Information.    In August 2002, upon written request by Tenant, Landlord agrees to provide to
Tenant, for Tenant's review, copies of the most recently available financial statements for Landlord and for Landlord's manager and sole member, Slough Estates USA Inc. Tenant agrees that such
financial statements shall be treated as confidential material, and shall not be disseminated to any person or entity (including, but not limited to, any prospective subtenants of Tenant's existing
premises in South San Francisco) without Landlord's prior written consent, except that Tenant shall be entitled to provide such information, subject to reasonable precautions to protect the
confidential nature thereof, to Tenant's officers, directors and professional advisors, solely to use in connection with Tenant's analysis and enforcement of its rights under the Lease and this
Workletter. 

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

	 	 	 	 	 	 
	

 	

 	

 	
 	

 	

 
	"Landlord"	 	"Tenant"
	

 	

 	

 	
 	

 	

 
	SLOUGH BTC, LLC, a Delaware limited liability company	 	TULARIK INC., a Delaware corporation
	

 	

 	

 	
 	

 	

 
	By:	Slough Estates USA Inc., a

Delaware corporation, Its Manager	 	By:	/s/ David V. Goeddel

	 	 	 	 	Its:	CEO

	

 	

 	

 	
 	

 	

 
	 	By:	/s/ William Rogalla
	 	By:	/s/ William J. Rieflin

	 	Its:	VP
	 	Its:	EVP

C-12

 
 

Schedule C-1 to Workletter
  
    BUILDING SHELL DESCRIPTION AND COST ALLOCATIONS

[attached] 

 
 

Schedule C-1 to Workletter
  
    BUILDING SHELL

The
"Building Shell" as defined in the Workletter to which this  Schedule C-1 is
attached shall consist of the following: 

Building
envelope and waterproofing (the Building "shell"), except as specifically indicated as being included in Tenant Improvements under  Schedule C-2, including:
reinforced grade beam foundation on prestressed concrete piles; ground floor to be
reinforced concrete slab supported by concrete piles; second, third and fourth (where applicable) floors to have metal decking with concrete topping slab; roof structure to be metal deck with concrete
for mass dampening in areas to receive mechanical equipment and to include a mechanical penthouse; roof membrane to be built-up system, four-ply including mineral fiber cap
sheet, with flashing and sealants; building structural framing to consist of steel beams, girders, columns with a non-bearing exterior curtain wall; seismic system utilizing steel braced
frames; floor system designed with live load capacity of 100 psf; roof live load to be 20 psf with minimum of 50 psf (more if required) in all areas within the roofscreen and mechanical penthouse;
floor to floor heights of 17 feet, all three (or four) floors. 

All
other structural work except that driven specifically by Tenant Improvements programming (e.g., interior masonry walls) 

Main
Building entrances plus 14' 6" rollup door 

Building
code required primary structure fireproofing, 1 hour deck at elevated floors 

Building
code required stairs 

Pit
and jack for elevator; framed openings at 2nd and 3rd floors (and 4th floors where applicable); pits/openings sized for 5' 8" × 8' 5" deep
inside clear dimension if Tenant provides elevator selection information prior to design completion by Landlord. 

Exterior
hardscape and landscape, except as specifically included in Tenant Improvements under Schedule C-2

Polyethylene
vapor barrier under slab on grade 

Site
underground water, fire, storm and sanitary service to 5' outside Building line; sanitary to include monitoring manhole if required by City (but not including any connection, capacity or service
fees associated with or imposed in connection with the construction of such manhole) 

Building
storm and overflow drainage systems 

Site
underground conduits for "normal" electrical and communications, terminated within the Building, including at least two 4" Pac Bell conduits into Building. 

Electrical
utility pad and transformer, and primary and secondary service conduits terminated at building switchgear location for TI-provided electrical service. Sizing for Building shall
be a 3000A service, unless not approved by PG&E based on Tenant loads and demands. 

Gas
service to exterior meter at Building. 

Wet
fire protection (risers, loops, branches and heads), evenly distributed for "ordinary hazard-group 2" occupancy, including plug T's to accommodate three branch lines per bay, .20/3000 sf. 

Shell
design and permitting fees, except as specifically included in Tenant Improvements under Schedule C-2

Vented
deck at 2nd and 3rd floors 

Temporary
project fencing 

Construction
lift for contractor access and stocking of materials (split with TI—50%) 

Underslab
plumbing and main trunk line for sanitary waste and lab waste (lab waste cost split 50/50 between shell and TI) 

Rigid
roof insulation 

Site
directional signage program: a) "Tularik Main Lobby ->"; b) "Tularik shipping/receiving ->"; c) "Tularik Building A->"" d) "Tularik Building
B->"; e) "Tularik Building E ->". $5,000 allowance by Landlord; balance chargeable to Tenant under TI 

 
 

Schedule C-2 to Workletter
  
    TENANT IMPROVEMENTS DESCRIPTION AND COST ALLOCATIONS    
  

[attached] 

  

 
 

Schedule C-2 to Workletter
  
    TENANT IMPROVEMENTS

The  "Tenant Improvements" as defined in the Workletter to which this  Schedule C-2 is attached may include, but shall not necessarily be limited to, the following: 

All
tenant construction, design fees, fixtures, furnishings, etc. to support tenant operations, including use space, offices, lobbies, circulation, restrooms and all other features not indicated as
part of the Building Shell in Schedule C-1

Service
Yard foundations, structure, enclosure and waterproofing 

Shipping/receiving/dock
equipment and bollards 

Exterior
Building skin modifications to support TI systems (e.g., louvers for HVAC accommodation) 

Outdoor
lounge and eating area 

Topical
emission barriers at slab on grade, if moisture test exceeds 3 lbs. Vapor barrier to be @ VCT, sheet vinyl and epoxy floor areas only. (cost split 50/50 with Shell) 

Slab
depressions for special finishes or special uses 

Enhancement
of structure for live loading above 100 PSF or vibration control criteria 

Modification
of structure for openings at floors and roof 

Modification
or repair of structure fireproofing required by TI construction 

All
minor support structures for ducts, conduits, pipes, etc. 

Stair
enclosures 

Stair
penthouse, if required 

Exterior
wall insulation 

Firesafing
at floor decks, exterior wall and interior openings 

Custom
doors 

Security
or other upgrades to exterior doors 

Wallboard
capture trim at exterior window wall 

Visual
screens for rooftop equipment 

Supports,
sleepers, etc. for all rooftop equipment, ducts, plumbing. electrical, etc. 

Roof
patching for all penetrations relating to Tenant Improvements 

Skylights,
if used, including curbs, roof patching, etc. 

Elevator
cab and equipment, except for pit and jack 

Shaft
walls or other fire separations required for vertical openings (stairs, elevators) or control zones 

Distribution/laterals
from Building main trunk line for sanitary waste 

All
underground plumbing (distribution/laterals) and related systems and fixtures for lab waste. Cost of main trunk line for lab waste split 50-50 with shell. 

Modifications/enhancements
to wet fire protection systems required by TI design 

Schedule C-2, Page 1 of 2

 

Fire
alarm and signal systems 

All
secondary electrical service for Tenant demand loads, including 3000A main service disconnect, Tenant meter section and distribution panels 

Standby
electrical generator, if required 

All
electrical communications wire and service not included in Building Shell 

All
TI design fees and reimbursables 

All
other "soft" costs, including TI permit fees, utility capacity or connection charges 

All
testing and inspection of TI construction 

Construction
lift for contractor access and stocking of materials (split with shell—50%) 

Schedule C-2, Page 2 of 2

 
 

EXHIBIT D
  
    ESTIMATED CONSTRUCTION SCHEDULES    
  

[CHART] 

[CHART] 

[CHART] 

 
 

EXHIBIT E
  
    ACKNOWLEDGMENT OF RENT COMMENCEMENT DATE

        This
Acknowledgment is executed as of                            , 200    , by SLOUGH BTC, LLC,
a Delaware limited liability company
("Landlord"), and TULARIK INC., a Delaware corporation ("Tenant"), pursuant to Section 2.4
of the Build-to-Suit Lease dated December    , 2001 between Landlord and Tenant (the "Lease") covering premises
located at                Veterans Boulevard, South San Francisco, CA 94080 (the Phase        Building, hereinafter referred to as
the
"Building"). [In the case of the Phase II Building: This Acknowledgment covers Phase II        of Tenant's occupancy of the
Building.] 

        Landlord
and Tenant hereby acknowledge and agree as follows: 

        1.    The
Rent Commencement Date for [Phase II    of] the Building under the Lease
is                            , 200    . 

        2.    The
termination date under the Lease (if determinable at this time) shall be                            ,
201    , subject to any applicable provisions of the Lease for
extension or early termination thereof. 

        3.    The
square footage of the Building, as finally designed and built, measured in accordance with Sections 1.1(c) and 3.1(d) of the Lease,
is                        square feet.
[The square footage of Phase II        of the Phase II Building
is                        square feet.] 

        4.    Tenant
accepts [Phase II    of] the Building and acknowledges the satisfactory completion of all Improvements thereon required to be
made by Landlord, subject only to any applicable "punch list" or similar procedures specifically provided under the Lease or under the Workletter governing such work. 

        EXECUTED
as of the date first set forth above. 

	 	 	 	 	 	 
	

 	

 	

 	
 	

 	

 
	"Landlord"	 	"Tenant"
	

 	

 	

 	
 	

 	

 
	SLOUGH BTC, LLC, a Delaware limited liability company	 	TULARIK INC., a Delaware corporation
	

 	

 	

 	
 	

 	

 
	By:	Slough Estates USA Inc., a

Delaware corporation, Its Manager	 	By:	

	 	 	 	 	Its:	

	

 	

 	

 	
 	

 	

 
	 	By:	
	 	By:	

	 	Its:	
	 	Its:	

QuickLinks

BUILD-TO-SUIT LEASE

TABLE OF CONTENTS

BUILD-TO-SUIT LEASE

1. PROPERTY

2. TERM

3. RENTAL

4. [OMITTED]

5. CONSTRUCTION

6. EXPANSION RIGHTS

7. [OMITTED]

8. TAXES

9. OPERATING EXPENSES

10. UTILITIES

11. ALTERATIONS; SIGNS

12. MAINTENANCE AND REPAIRS

13. USE OF PROPERTY

14. INSURANCE AND INDEMNITY

15. SUBLEASE AND ASSIGNMENT

16. RIGHT OF ENTRY AND QUIET ENJOYMENT

17. CASUALTY AND TAKING

18. DEFAULT

19. SUBORDINATION, ATTORNMENT AND SALE

20. SECURITY

21. MISCELLANEOUS

EXHIBITS

EXHIBIT A REAL PROPERTY DESCRIPTION (CENTER)

EXHIBIT B BRITANNIA OYSTER POINT SITE PLAN

EXHIBIT C WORKLETTER

Schedule C-1 to Workletter BUILDING SHELL DESCRIPTION AND COST ALLOCATIONS

Schedule C-1 to Workletter BUILDING SHELL

Schedule C-2 to Workletter TENANT IMPROVEMENTS DESCRIPTION AND COST ALLOCATIONS

Schedule C-2 to Workletter TENANT IMPROVEMENTS

EXHIBIT D ESTIMATED CONSTRUCTION SCHEDULES

EXHIBIT E ACKNOWLEDGMENT OF RENT COMMENCEMENT DATE<Page>

                                                                   EXHIBIT 4.5.1

     WAIVER AND CONSENT, dated as of March ______, 2000 (this "WAIVER"), by THE
CHASE MANHATTAN BANK, in its capacity as Collateral Agent under the Collateral
Agency Agreement referred to below (together with its successors and assigns,
the "COLLATERAL AGENT").

     Reference is made to: (i) that certain Equity Contribution Agreement, dated
as of November 1, 1999, made by and among Tenaska Georgia Partners, L.P. (the
"PARTNERSHIP"), Tenaska Georgia, Inc. ("TGI"), Tenaska Georgia Partners I, L.P.
("TGILP"), each other partner of the Partnership listed as a Contributing
Partner in Schedule 1 to the Equity Contribution Agreement, as such schedule may
be amended from time to time pursuant to the terms thereof (TGI, TGILP and each
such other partner of the Partnership, being referred to herein individually as
a "CONTRIBUTING PARTNER" and collectively as the "CONTRIBUTING PARTNERS") and
the Collateral Agent (the "EQUITY CONTRIBUTION AGREEMENT") (each of the
Partnership, each of the Contributing Partners and the Collateral Agent, a
"PARTY" and collectively, the "PARTIES"), (ii) that certain General Partner
Pledge and Security Agreement, dated as of November 1, 1999, by TGI to
Collateral Agent (the "GENERAL PARTNER PLEDGE AGREEMENT"), (iii) that certain
Limited Partner Pledge and Security Agreement, dated as of November 1, 1999, by
TGILP to Collateral Agent (the "LIMITED PARTNER PLEDGE AGREEMENT") and (iv) that
certain Collateral Agency and Intercreditor Agreement, dated as of November 1,
1999, among others, the Partnership and the Collateral Agent (the "COLLATERAL
AGENCY AGREEMENT").

1.   DEFINITIONS

     All capitalized terms used herein and not otherwise defined herein shall
have the meanings ascribed to them in the Equity Contribution Agreement. The
following term shall have the following meaning for the purposes of this Waiver:

     "WAIVER EFFECTIVE DATE" means the date on which all the conditions
precedent set forth in Section 5 of this Waiver have been satisfied.

2.   ADDITIONAL GENERAL PARTNERSHIP INTEREST

     In reliance on the executed certificate of the Partnership in the form
attached hereto as Exhibit A and the provisions of Section 6.1(c) of the
Collateral Agency Agreement, the Collateral Agent hereby waives the restrictions
of Section 7(b) of the General Partner Pledge Agreement and Section 7(b) of the
Limited Partner Pledge Agreement to the extent that such restrictions may be
interpreted to prohibit the issuance of a 0.30% general partnership interest to
Diamond Georgia, LLC. ("Diamond Georgia"), and the reduction of the general
partnership interest held by TGI from a 1.00% general partner interest to a
0.70% general partner interest.

3.   ISSUANCE OF SUBSTITUTE SPONSOR SUPPORT INSTRUMENT BY MITSUBISHI CORPORATION

     In connection with issuance of the .30% general partnership interest in the
Partnership to Diamond Gateway, Mitsubishi Corporation ("MC"), the ultimate
parent company of Diamond Gateway, will be issuing a Substitute Support
Instrument in the form of a corporate guaranty (the "MC Guaranty") on behalf of
TGI. In reliance on the executed certificate of the Partnership in

<Page>

the form attached hereto as Exhibit A and the provisions of Section 6.1(c) of
the Collateral Agency Agreement, the Collateral Agent hereby waives the
requirement under Section 7 of the Equity Contribution Agreement that Mitsubishi
Corporation be an "Affiliate" of TGI in order for Mitsubishi Corporation's
guaranty to constitute an acceptable Substitute Support Instrument.

4.   WAIVER EFFECTIVE DATE

     The parties intend and agree that the provisions of this Waiver shall have
no force or effect until the Waiver Effective Date.

5.   CONDITIONS PRECEDENT

     The waivers hereunder are subject to the fulfillment to the satisfaction of
the Collateral Agent of the following conditions precedent:

     5.1 CERTIFICATE. The Collateral Agent shall have received an executed
certificate of the Partnership dated the Waiver Effective Date in the form
attached hereto as Exhibit A.

     5.2 LEGAL OPINIONS. The Collateral Agent shall have received a signed
opinion of counsel addressed to the Collateral Agent, dated the Waiver Effective
Date, from Winthrop, Stimson, Putnam & Roberts, special New York counsel to the
Partnership, in the form of the Exhibit B hereto.

6.   MISCELLANEOUS

     6.1 GOVERNING LAW. This Waiver shall for all purposes be governed by and
construed in accordance with the laws of the State of New York without regard to
the conflict of law rules thereof (other than Section 5-1401 of the New York
General Obligations Law).

     6.2 HEADINGS. Headings herein are for convenience only and shall not be
relied upon in interpreting or enforcing this Waiver.

         [The remainder of the page has intentionally been left blank.]

<Page>

     IN WITNESS WHEREOF, the Collateral Agent has caused this Waiver to be
executed by its duly appointed representative as of the date first written
above.

                                   THE CHASE MANHATTAN BANK, as Collateral Agent

                                   By: /s/ Annette M. Marsula
                                       ---------------------------
                                   Title: Vice President

<Page>

                                                                       EXHIBIT A

                                 CERTIFICATE OF
                             AUTHORIZED OFFICER OF
                         TENASKA GEORGIA PARTNERS, L.P.

     The undersigned, as an Authorized Officer of Tenaska Georgia, Inc., a
Delaware corporation and the managing general partner of Tenaska Georgia
Partners, L.P., a Delaware limited partnership, DOES HEREBY CERTIFY, on behalf
of the Collateral Agent, that:

     1. The Collateral Agent's waiver of the restrictions of Section 7(b) of the
General Partner Pledge Agreement and Section 7(b) of the Limited Partner Pledge
Agreement to the extent that such restrictions may be interpreted to prohibit
the issuance of a 0.30% general partnership interest to Diamond Georgia, LLC and
the reduction of the general partnership interest held by Tenaska Georgia, Inc.
from a 1.00% general partner interest to a 0.70% general partner interest will
not result in a Material Adverse Effect.

     2. The Collateral Agent's waiver of the requirement under Section 7 of the
Equity Contribution Agreement that Mitsubishi Corporation be an "Affiliate" of
Tenaska Georgia, Inc. in order for Mitsubishi Corporation's guaranty to
constitute an acceptable Substitute Support instrument will not result in a
Material Adverse Effect.

     Capitalized terms used herein and not otherwise defined herein are used
herein with the meanings ascribed thereto in the Equity Contribution Agreement,
dated as of November 1, 1999 (as amended, restated, supplemented or otherwise
modified from time to time), among Tenaska Georgia Partners, L.P., Tenaska
Georgia, Inc., Tenaska Georgia Partners I, L.P. and The Chase Manhattan Bank, in
its capacity as collateral agent.

     In WITNESS WHEREOF, the undersigned has signed this certificate this 19(th)
day of March, 2000.

                              TENASKA GEORGIA PARTNERS, L.P. a Delaware
                              limited partnership

                              By: Tenaska Georgia, Inc. a Delaware corporation,
                                  Managing general partner

                              By:  /s/ Ronald N. Quinn
                                  --------------------------------------
                                   Title:  Vice President

<Page>

                                                                       EXHIBIT B

                             [Letterhead of WSP&R]

                                                  ________________________, 2000

To the Collateral Agent

Ladies and Gentlemen:

     We have acted as special New York (the "STATE") counsel to Tenaska Georgia
Partners, L.P. (the "PARTNERSHIP") in connection with the execution and delivery
of the Waiver and Consent, dated as of March, 2000, by the Chase Manhattan Bank,
as collateral agent (the "WAIVER").

     This opinion is delivered to you pursuant to Section 5 of the Waiver at the
request of the Partnership. Capitalized terms used herein and not otherwise
defined herein are used with the meanings ascribed to such terms in the Waiver.

     On the basis of the assumptions and subject to the qualifications and
limitations set forth below, we are of the opinion that the Waiver was granted
in accordance with the provisions of Section 6.1(c) of the Collateral Agency
Agreement.

     Our opinion is subject to the following qualifications and limitations:

     (a) Our opinion is limited to the law of the State and the federal law
("federal law") of the United States of America, in each case as in effect on
the date hereof.

     (b) Our opinion is intended for the sole benefit of the Collateral Agent,
and no other Person is entitled to rely on it for any purpose without our prior
written consent.

     In rendering our opinion:

     (i)   We have, without independent verification, relied, with respect to
factual matters, statements and conclusions, on certificates and statements of
government officials and officials of the Partnership and on the representations
made by the Partnership.

     (ii)  We have examined originals, or copies of originals certified,
conformed or otherwise identified to our satisfaction, of such agreements,
documents and records as we have considered relevant and necessary as a basis
for this opinion.

     (iii) We have assumed the accuracy and completeness of all, and the
authenticity of all original, certificates, agreements, documents, records and
other materials submitted to us, the conformity with the originals of any copies
submitted to us, the genuineness of all signatures and the legal capacity of all
natural persons.

                                Very truly yours,

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00034-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00034-of-00352.parquet"}]]