Document:

exv4wxbyx1y

 

Exhibit 4(b)(1)

STANDARD SINGLE-TENANT NET LEASE

CHAMBERLIN ASSOCIATES 180 OYSTER POINT BLVD., LLC,

A California limited liability company,

As Landlord

AND

ELAN PHARMACEUTICALS, INC.,

A Delaware corporation,

As Tenant

 

 

SUMMARY OF EXHIBITS AND AMENDMENTS TO LEASE FORM

EXHIBIT A — LEGAL DESCRIPTION

EXHIBIT B — WORK LETTER

EXHIBIT C — RULES AND REGULATIONS

EXHIBIT D — CALCULATION OF BUILDING MINIMUM

MONTHLY RENT DURING FIRST YEAR OF TERM

EXHIBIT E — TRANSPORTATION DEMAND MANAGEMENT PROGRAM REQUIREMENTS

EXHIBIT F — FINAL BUILDING / PARKING / SERVICE AREA PLAN

EXHIBIT G — GUARANTY

EXHIBIT H — TERMS UNDER WHICH THE LETTER OF CREDIT CAN BE REDUCED

EXHIBIT I — LIST OF BASELINE REPORTS

EXHIBIT J — DEPICTION OF SERVICE AREA

EXHIBIT K — RULES AND REGULATIONS GOVERNING ALTERATIONS

1

 

1.1. DATE. This lease is dated for reference purposes only June 1, 2007.

1.2. PARTIES AND NOTICE ADDRESSES

1.2.1 LANDLORD: Chamberlin Associates 180 Oyster Point Blvd., LLC

1.2.1.1 ADDRESS FOR NOTICES TO LANDLORD

                         c/o Chamberlin Associates

                         5880 West Las Positas Boulevard, Suite 34

                         Pleasanton, CA 94588-8552

                         Attention: Anne Hoffman AND Rahn Verhaeghe

                         E-Mail: Legal@Chamb.com

                                        Rahn@Chamb.com

          With a copy to:

                         Law Offices of Glenn M. Feeley

                         1660 Olympic Blvd., Suite 350

                         Walnut Creek, CA 94596

                         Attention: Glenn M. Feeley

                         E-Mail:
glenn@gfeeley.com

1.2.2 TENANT: Elan Pharmaceuticals, Inc.

1.2.2.1 ADDRESS FOR NOTICES TO TENANT

                         Elan Pharmaceuticals, Inc.

                         7475 Lusk Boulevard

                         San Diego, California 92121

                         Attn: Rick Smith

                         E-Mail: charles.smith@elan.com

          With a copy to:

                         Elan Pharmaceuticals, Inc.

                         800 Gateway Boulevard

                         South San Francisco, CA 94080

                         Attn: Vice President, Corporate Legal

                         E-Mail: legal_corporate@elan.com

1.3. PREMISES.

     (Section 2.1) The entire parcel of land legally described in Exhibit A and all
improvements thereto.

1.4 BUILDING

     (Section 2.1) 180 Oyster Point Boulevard, So. San Francisco, CA 94080.

1.5 COMMENCEMENT /EXPIRATION DATES.

     1.5(a). COMMENCEMENT DATE. Notwithstanding anything to the contrary contained herein or in
the Work Letter, Landlord and Tenant acknowledge and agree that the construction of the Initial
Tenant Improvements may be completed by Tenant on a floor by floor basis, with the Commencement
Date occurring on the earlier of (a) four (4) months after the Substantial Completion of the
Building Shell, as adjusted for any Tenant Delays such that the date of Substantial Completion of
the Building Shell, for purposes of this Section 1.5, shall occur on the date that the Building
Shell would have been Substantially Complete but for any Tenant Delays (the terms Initial Tenant
Improvements, Landlord’s Work, Substantial Completion, Tenant Delays, and Building Shell are
defined in the Work Letter attached to the Lease as Exhibit B, the “Work Letter”)), or (b) the
date that Tenant occupies the first, second and third floors of the Premises and commences
business operations thereon, following the date that Tenant obtains a temporary or final
certificate of occupancy for the Building. If Tenant occupies one or more floors (but not all
floors) of the Premises prior to the Commencement Date for the Premises (the “Early Occupancy
Period”), Tenant shall be obligated to pay Minimum Monthly Rent for only the floor(s) of the
Premises occupied during such Early Occupancy Period from the date that any portion of such floor
is occupied by Tenant for the purposes of operating Tenant’s business therein (and not solely for
the limited purpose of installing its furniture, fixtures and equipment therein); provided that
such early occupancy shall also be subject to the other terms of the Lease and the Work Letter,
including but not limited to Tenant’s obligation to provide Landlord with proof of Tenant’s
insurance as set forth in Section 6..3.3. The Minimum Monthly Rent payable for a floor during the
Early Occupancy Period shall be equal to one-third (1/3) of the Minimum Monthly Rent payable for
the Premises during the first full month after the Commencement Date.

     Following the Commencement Date, Landlord shall deliver written notice to Tenant of the
Commencement Date (as may be adjusted herein) after finally determining the same, and unless
Tenant delivers written notice of objection to Landlord within five (5) business days after
receiving Landlord’s written notice of the Commencement

2

 

Date, Tenant shall be deemed to have approved of, and shall be bound by, Landlord’s
determination of the Commencement Date.

     1.5(b) EXPIRATION DATE. The last day of the calendar month in which the fifteenth (15th)
anniversary of the Commencement Date occurs.

1.6 TERM (Section 3.1) Approximately 180 months, expiring on the Expiration Date.

1.7 RENT. The Minimum Monthly Rent for the Initial Year shall be determined in accordance with
the terms and provisions of Exhibit D (the Calculation of the Building Minimum Monthly Rent During
the First Year of Term).

1.8 OPERATING EXPENSE/MONTHLY PAYMENT (See Section 6.1): Initially an estimated amount to be
provided by Landlord after the date of this Lease.

1.9 LETTER OF CREDIT. (See Section 22.0) Six Million Dollars ($6,000,000.00)

1.10 USE. Except as provided in the last sentence of this Section 1.10, the Premises shall be used
solely for pharmaceutical/biotechnology research and for pharmaceutical/biotechnology
manufacturing, marketing and distribution and any other use generally associated with diagnostic
and pharmaceutical development and production, and for those other uses associated therewith,
including but not limited to general office space, vivarium space, cold room and glass washing
facilities, and radioactive material and chemical storage space, and employee amenities such as a
gymnasium and a cafeteria. Notwithstanding the foregoing, any use of the Premises which is
permitted by law and consistent with other activities conducted on the Premises is permissible.

1.11 CONTENTS Included as part of this Lease are Exhibits A through K, which are attached hereto
and incorporated herein by this reference.

2.0 PREMISES

     2.1 Description. Landlord hereby leases to Tenant and Tenant hereby leases from Landlord,
the real property described in Exhibit A (the “Real Property”), together with the entirety of the
building to be constructed by Landlord along with the other improvements to be located thereon
(collectively, the “Premises”) to be constructed by Landlord and Tenant, respectively, in
accordance with the Work Letter, including, but not limited to, a “basement” parking structure
(the “Basement Parking Structure”), a service loading dock, ramp and adjacent loading area,
surface parking, the Service Area (as defined in Section 5.2), and an outdoor patio area (“Patio
Area”), all substantially in the size and location as set forth in the Design Documents, all of
which are reserved for the exclusive use of Tenant and its employees, contractors, agents,
invitees and guests throughout the Term of this Lease as part of Tenant’s leasehold interest in
the Premises, subject to (i) any other rights of Landlord set forth herein, (ii) any matters of
public record existing as of the date of this Agreement, and (iii) any other rights or matters
that are reasonably necessary for Landlord’s development of the Property as contemplated herein
(such as a reciprocal driveway easement or the Reciprocal Parking Easement defined in Section 25
below) (collectively, the items in clauses (i) through (iii) above are referred to herein as
“Landlord’s Reserved Rights”). Landlord shall not, subject to the Landlord’s Reserved Rights,
operate or make available any portion of the Premises for use by any person other than Tenant
during the Term as long as Tenant is not in default under this Lease. Tenant shall have the
exclusive right, subject to Landlord’s Reserved Rights, to use the Patio Area for employee dining,
and for Tenant’s social and/or business functions, with no additional rent for such use payable by
Tenant.

     The “Rentable Square Footage of the Building” is estimated to be approximately 108,500 square
feet. Prior to the Commencement Date, the Building will be measured by Landlord’s Architect (as
defined in the Work Letter) in accordance with BOMA measurement standards pursuant to BOMA ANSI
Z65.1-1996, revised and readopted June 7, 1996; provided, however, that except as otherwise
expressly set forth herein, no floor area of the Building (nor of the Basement Parking Structure,
Patio Area or Service Area) other than (a) the first, second and third floors of the Building and
(b) those portions of the upper level garage within the Building constituting a lobby area and/or
used for circulation to the elevators, shall be included in the determination of the Rentable
Square Footage of the Building (i.e. regardless of whether any portion of the Basement Parking
Structure, Service Area or the Building roof includes any storage areas, machinery or electrical
rooms or HVAC chiller facilities, such areas shall not be included in the calculation of the
rentable square feet of the Building for purposes of determining Tenant’s Minimum Monthly Rent
payments and Landlord’s contribution of Tenant Improvement Allowance. If such measurement results
in a change in the Rentable Square Footage of the Building from the number stated above, the
Minimum Monthly Rent and the other provisions of this Lease based on square footage shall be
recalculated accordingly. Rentable square footage of the Service Area shall be measured in
accordance with Section 5.2 below. Before commencement of the Initial Tenant Improvements,
Landlord and Tenant will attempt to reach an agreement on the rentable square feet of the
Building. If Landlord and Tenant are unable to mutually agree upon the rentable square footage of
the Building, either Landlord or Tenant shall have the right to demand that the parties submit the
dispute as to the rentable square feet of the Building to a third party space management
professional jointly for resolution. Should such a demand be made, then within ten (10) days
after either party delivers written notice to the other of such demand, the parties shall select
an independent third party space management professional to resolve the dispute (the “Space
Management Professional”). Landlord shall initially retain the Space Management Professional, but
the costs and expenses of the Space Management Professional shall be split between the parties
(with Tenant paying Landlord its share of such costs and expenses within thirty (30)days after
receiving an invoice from Landlord requesting payment thereof). Thereafter, within
ten (10) days after the parties select the Space Management Professional, each party shall
deliver to such Space Management Professional, in a sealed envelope, their determination of the
rentable square footage of the Building. If a party fails to deliver its determination of the
rentable square footage of the Building to the Space Management Professional within said ten (10)
day period, and thereafter, if such party

3

 

fails to deliver its determination of the rentable
square footage of the Building to the Space Management Professional within five (5) days after
receiving written notice from the other party demanding that its determination be delivered to the
Space Management Professional, then the determination of the party providing its determination of
the rentable square footage of the Building to the Space Management Professional shall be binding
on the parties. Should both parties timely deliver their determination of the rentable square
footage of the Building to the Space Management Professional, then within forty-eight (48) hours
after receiving both determinations, the Space Management Professional shall call a meeting of the
parties, and during such meeting, the Space Management Professional shall open the envelopes
containing the parties determinations of the rentable square footage of the Building. If such
determinations differ by less than one percent (1%) of the lower number, then the rentable square
footage of the Building shall be the average of those two determinations, which number shall be
binding on the parties. Moreover, upon such determination, Landlord and Tenant shall set forth
such rentable square footage of the Building based on such process in a writing signed by Landlord
and Tenant. If such determinations are equal to or more than one percent (1%) of the lower
number, then the Space Management Professional shall field measure the rentable square feet of the
Building in accordance with this Section 2.1. Thereafter, the determination of the parties as to
the rentable square footage of the Building (as set forth in their submittal to the Space
Management Professional) that is closest to the measurement determined by the Space Management
Professional shall be the Rentable Square Footage of the Building for purposes of this Lease, and
shall be binding on the parties, and shall be set forth, in a writing, signed by both Landlord and
Tenant. Once the Rentable Square Footage of the Building is determined as provided in this Section
2.1, the Rentable Square Footage of the Building shall not be subject to re-measurement.

     2.2 Initial Tenant Improvements. Initial Tenant Improvements to the Premises shall be
completed in accordance with the terms and provisions of the Work Letter attached hereto as
Exhibit B (the “Work Letter”).

     2.3 Delivery. Tenant shall accept possession of the Building Shell as of the date of
Substantial Completion of the Building Shell, subject to the terms and conditions of the Work
Letter and Landlord’s rights set forth therein to complete any Punch List Items, and Tenant’s
taking possession of the Building Shell on that date shall be conclusive evidence that Tenant
accepts the Building Shell in its then existing condition, and that the Building Shell was in good
condition at the time possession was taken, subject to the Punch List items associated therewith.

     Tenant shall accept possession of the Premises as of the date of Substantial Completion of
Landlord’s Work, subject to the terms and conditions of this Lease, the Work Letter and Landlord’s
rights set forth therein to complete any Punch List Items, and Tenant’s taking possession of the
Premises on that date shall be conclusive evidence that Tenant accepts the Premises in its then
existing condition, and that the Premises were in good condition at the time possession was taken,
subject to the Punch List items associated therewith.

     Tenant agrees and acknowledges that, except as expressly set forth elsewhere in this Lease
and the Work Letter, neither Landlord nor any agent of Landlord has made any representation or
warranty with respect to the condition of all or any portion of the Premises or the Real Property,
and/or the suitability of the Premises or the Real Property for the conduct of Tenant’s business.

     2.4 Construction Defects. Notwithstanding anything to the contrary in Section 2.3 above,
Landlord shall, at Landlord’s sole cost and expense, repair or replace any “Construction Defects”
(defined below) that Tenant notifies Landlord of, in writing, during the Landlord’s Warranty
Period (as defined in the Work Letter). Such repair obligation is referred to herein as
“Landlord’s Warranty.” Such costs and expenses shall not be included as an Operating Expense.
Moreover, if Landlord is obligated hereunder to correct a violation of Landlord’s Warranty, such
corrective work shall be completed within thirty (30) days after Landlord receives notice of such
Construction Defect from Tenant; provided however, if by the nature of such correction more than
thirty (30) days is required to effect such correction, Landlord shall not be in default hereunder
if such correction is commenced within such thirty (30) day period and is diligently pursued to
completion.

     For purposes of this Lease, and the attached Work Letter, the term “Construction Defects”
shall mean (a) any defect in design, workmanship or materials with respect to Landlord’s Work, (b)
the failure of Landlord’s Work to be constructed in accordance with the Plans (as defined in
Section 1.7.3 below), (c) the failure of Landlord’s Work to comply with all applicable laws and
regulations, including but not limited to the California Uniform Building Code, and (c) any
introduction or generation of any Hazardous Materials in, on or about the Premises by Landlord or
anyone under Landlord’s control as part of Landlord’s Work in violation of applicable law.

     Tenant’s taking possession of the Premises and acceptance of the Premises shall not
constitute a waiver of any claims based upon warranty or defect in regard to the design,
materials, or construction of the Building Shell or any other Landlord’s Work against the
Landlord’s Architect, contractor, materialmen, manufacturers and other responsible party. The
expense of repairs and replacements attributable to defects in design, materials or construction
are payable by Tenant to the extent not covered by Landlord’s warranty obligations in this Section
2.3 and the Work Letter. Pursuant thereto, Tenant shall be entitled to receive any recovery from
the Landlord’s Architect, contractor, materialmen, manufacturers and other responsible party, and
from applicable insurance policies, to the extent Tenant pays such expense; otherwise, Landlord
shall be entitled to any such recovery. Landlord hereby assigns to Tenant, effective as of the
expiration of the Landlord’s Warranty Period (the
“Warranty Assignment Date”), and Tenant shall have the benefit of, on a non-exclusive basis
as of the Warranty Assignment Date, any and all warranties with respect to the design, materials
and construction of the Landlord’s Work, although such warranties shall revert to Landlord
exclusively upon the expiration or earlier termination of this Lease.

4

 

3.0 TERM

     3.1 Period; Commencement. The Term of this Lease shall commence in accordance with Section
1.5(a) (the “Commencement Date”), and shall be for the Term specified in Section 1.6, expiring on
the date specified in Section 1.5(b) (the “Expiration Date”).

4.0 USE

     4.1 Authorized. The Premises may be used and occupied only for the purposes specified in
Section 1.10 hereof, and for no other purpose or purposes.

     4.2 Compliance. Subject to Landlord’s construction and repair obligations set forth herein
and/or in the Work Letter, Tenant accepts the Premises by its occupancy of the Premises, and
subject to all applicable laws, ordinances, rules, regulations, orders, restrictions of record,
and requirements in effect during the Term regulating the Premises, with which Tenant shall comply
at its sole cost as they relate to Tenant’s use of the Premises or to any improvements,
alterations or installations made to the Premises by or for Tenant, or to the operation of
Tenant’s business. Landlord makes no warranty that Tenant’s particular use of the Premises
complies with the zoning applicable to the Premises

     4.3 Restricted Activities. Tenant shall not cause or permit the escape, disposal or release
of any biologically or chemically active or other hazardous substances or materials at or from the
Premises in violation of any Environmental Laws. Tenant shall not allow the storage or use of such
substances or materials in any manner which does not comply with all applicable Environmental Laws
in all material respects. For purposes of this Lease, the phrases “hazardous substance,”
“hazardous materials,” “hazardous substances or materials” and “hazardous substances and materials”
shall mean any chemical, compound, material, mixture, living organism or substance that is now or
hereafter becomes defined or listed in, or otherwise classified pursuant to and Environmental Law
as a hazardous substance, hazardous material, hazardous waste, extremely hazardous waste,
infectious waste, toxic substance, toxic pollutant or any other formulation intended to define,
list or classify substances by reason of deleterious properties such as ignitability, corrosivity,
reactivity, carcinogenicity or toxicity, and shall include, without limitation, any polychlorinated
biphenyls (PCBs), asbestos, lead-based paint or building materials, radon, petroleum, natural gas,
natural gas liquids, liquified natural gas or synthetic gas usable for fuel (or mixtures of natural
gas and such synthetic gas). “Environmental Law” shall mean any and all present and future federal,
state and local laws, statutes, rules or regulations, or any requirements under permits issued
pursuant to these laws, and other requirements of governmental authorities relating to the
environment, to any hazardous substance or to any activity involving hazardous substances, and
shall include, without limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. Section 9601 et seq.), the Federal Resource Conservation
and Recovery Act (42 U.S.C. Section 6901 et seq.), the Occupational Safety and
Health Act (29 U.S.C. Section 651 et seq.) (“OSHA”) and all other applicable
provisions of federal, state and local laws related to the environment.

     If any lender or governmental agency shall ever require testing to ascertain whether or not
there has been any release of hazardous substances or materials, then the reasonable costs thereof
shall be reimbursed by Tenant to Landlord upon demand as additional Rent (as defined in Section 5.1
below) if such release occurred and was caused or permitted by Tenant, or arose as a result of the
business activities of Tenant. In addition, Tenant shall execute affidavits, certificates and the
like from time to time at Landlord’s request concerning Tenant’s actual knowledge regarding the
presence of hazardous substances or materials on the Premises. In all events, Tenant shall
protect, defend, indemnify and hold harmless Landlord and its officers, members, partners,
employees, agents and representatives (collectively, the “Landlord Parties”) in the manner provided
in Section 11.1 of this Lease from any release of hazardous substances and/or materials on the
Premises occurring while Tenant is in possession thereof. If at any time during or after the Term
of this Lease, as it may be extended, Tenant becomes aware of any inquiry, investigation, or
proceeding by any governmental agency related to hazardous materials on or under the Premises,
Tenant shall within five (5) business days after first learning of such inquiry, investigation or
proceeding give Landlord written notice of same. This section shall survive the expiration or
earlier termination of the Lease.

     Tenant acknowledges receipt of those documents and reports relating to the soil and
environmental conditions at the Premises (including but not limited to that certain Phase I
Environmental Assessment Report for 180 Oyster Point Boulevard dated as of December 2005, prepared
for a prior owner by PIERS Environmental Services, Inc.) that are set forth in Exhibit I, which is
attached hereto and is expressly incorporated herein (collectively, the “Baseline Environmental
Reports”). Landlord makes no representations or warranties as to the truth or accuracy of the
Baseline Environmental Reports, or as to the contents thereof, except that Landlord hereby
represents that Landlord’s Work (as described in the Work Letter) shall be constructed in
accordance with the recommendations set forth in the latest soils report for the Real Property with
respect to corrosivity (as set forth in that certain letter regarding soil corrosivity of the Real
Property dated January 29, 2000 from J. Darby Howard, Jr., of Cerco Analytical, Inc. to Jeff
Saunders of Treadwell & Rollo). Tenant shall not be obligated to remediate any pre-existing
hazardous materials disclosed in the Baseline Environmental Reports unless such pre-existing
contamination is exacerbated by the gross negligence or willful misconduct of Tenant or any of its
subtenants or assigns. Landlord agrees to provide Tenant with copies of any and all of the
environmental reports performed by or for, or received by, Landlord (at no expense to Tenant except
as expressly provided in this Section 4.3) within
thirty (30) days of Landlord’s receipt thereof, including, but not limited to, all monitoring
and closure reports relating to the former Blue Line Transfer Station previously located on or near
the Premises.

     Tenant shall, prior to Tenant’s vacation and surrender of the Premises on or prior to the
Expiration Date, comply with all Environmental Laws, to surrender the Premises at the expiration
of the Term, free from any residual impact from the Tenant’s hazardous materials storage and use
at the Premises, including, without limitation, complying with the facility closure process
required by the San Mateo County Department of Health

5

 

and/or Health Services Agency (“County”),
and those other facility closure environmental laws, ordinances, rules, regulations, orders,
restrictions of record and requirements promulgated or issued by a federal, state or local
governmental department or agency required for the issuance of a facility closure permit, or its
equivalent (the “Closure Permit”), from all applicable governmental authorities with jurisdiction
over the subject matter (collectively, the “Closure Authority”). Tenant shall, within two (2)
business days of Tenant’s filing or receipt of the same, provide Landlord with copies of: (a) the
closure plan submitted by Tenant to the Closure Authority; and (b) the closure report or any other
closure approval(s) issued by the Closure Authority. Notwithstanding anything to the contrary
contained herein, Tenant shall remove from the Premises at the end of the Term all hazardous waste
containers that are brought onto the Premises by or for Tenant or anyone under Tenant’s control
during the Term.

     At least three (3) months prior to the surrender of the Premises, Tenant shall deliver to
Landlord a narrative description of the actions proposed (or required by the Closure Authority) to
be taken by Tenant in order to surrender the Premises at the expiration of the Term, free from any
residual impact from the Tenant’s hazardous materials storage and use at the Premises (the
“Surrender Plan”), prepared by a third party environmental consultant hired by Tenant, at Tenant’s
sole cost and expense (the “Environmental Consultant”), which Surrender Plan shall incorporate the
proposed closure plan to be submitted to the Closure Authority as required for the Closure Permit.
Landlord shall review such Surrender Plan and determine whether such Surrender Plan is acceptable
for the purpose of satisfying the Tenant’s surrender obligations relating to hazardous substances
and/or materials on the Premises. At a minimum, the Surrender Plan shall contain a listing of (i)
all hazardous materials licenses and permits held by or on behalf of Tenant with respect to the
Premises, and (ii) all hazardous materials used, stored, handled, treated, generated, released or
disposed of from the Premises for which a hazardous materials business plan is required under
applicable laws (e.g., excluding incidental hazardous materials in office and cleaning supplies).
Landlord shall either accept or propose reasonable modifications to the Surrender Plan within
thirty (30) days following Tenant’s delivery thereof to Landlord; and if Landlord does not respond
to the Surrender Plan with proposed modifications within such 30-day period, then the Surrender
Plan shall be deemed to be acceptable to Landlord. In connection with Landlord’s review of the
Surrender Plan, Tenant shall provide to Landlord such additional non-proprietary information
concerning Tenant’s hazardous materials use as Landlord may reasonably request. After Landlord’s
approval of the Surrender Plan, Tenant shall submit to, and obtain the Closure Authority’s
approval of the closure plan contained in the Surrender Plan, and after obtaining such approval,
Tenant shall comply with all governmental requirements indicated by the Closure Authority as
conditions to issuance of the Closure Permit. Upon Tenant’s vacating the Premises, and as a
condition to Tenant’s surrender of the Premises to Landlord at the expiration of the Term (subject
to Tenant’s right to holdover pursuant to Section 16.2), Tenant shall deliver to Landlord, in
addition to the Closure Permit, reasonable written evidence that all other actions required by the
Surrender Plan have been satisfactorily completed. Under no circumstances shall Landlord’s review
of the Surrender Plan, or any proposed modifications to the Surrender Plan, subject Landlord to
any liability or responsibility for the contents of such Surrender Plan or for the Surrender
Plan’s compliance with all applicable laws and regulations, nor shall Landlord’s review or
proposed modifications to the Surrender Plan satisfy Tenant’s obligation to comply with all
applicable legal requirements with respect to Tenant’s hazardous materials storage and use at the
Premises.

5.0 RENTS

     5.1 Minimum Monthly Rent. Tenant shall pay to Landlord at the place designated in Section
1.2, or at such place as Landlord may otherwise designate, without deduction, offset,
counterclaim, prior notice or demand, as Minimum Monthly Rent, the sum of the “Building Minimum
Monthly Rent” and the “Service Area Minimum Monthly Rent.” All such Minimum Monthly Rent
Payments shall be payable in advance on the first day of each month during the Lease Term. All
other costs and expenses that Tenant assumes or agrees to pay to Landlord under the Lease shall be
deemed additional rent (which, together with the Minimum Monthly Rent, is sometimes referred to as
the “Rent”). If the Term shall commence or end on a day other than the first day of a calendar
month, then Tenant shall pay, as rent for such partial calendar month, a pro rata portion of the
Minimum Monthly Rent, prorated on a per diem basis, with respect to the portions of the fractional
calendar month included in the Term.

     5.2 Rents; Adjustments. The Building Minimum Monthly Rent is the minimum monthly rent
associated with the Building, which during the first one year period after the Commencement Date
(as defined in Section 1.5) shall be equal to the amount determined in accordance with the formula
set forth in Exhibit D, which is attached hereto and is incorporated herein (the
“Calculation of the Building Minimum Monthly Rent During First Year of Term”). On each annual
anniversary of the Commencement Date, the Building Minimum Monthly Rent shall increase by three
percent (3%) from the prior year’s Building Minimum Monthly Rent.

     The Premises will include a service area (the “Service Area”), which shall be a secured area
to be used for loading, storage and distribution of Tenant’s process equipment, gas and chemicals,
as well as bio-waste containers, electrical transformers generators and other service equipment.
The location of the Service Area is generally depicted in Exhibit J (the “Depiction of the
Service Area”). After the Substantial Completion of the Building Shell, Landlord shall cause
Landlord’s Architect to determine the rentable square footage of the Service
Area, which shall mean the surface area of the Service Area measured to the internal boundary of
all surrounding walls and fences, less the area of any easement or right of way in which no
improvements are permitted to be constructed by Tenant and any areas occupied by equipment or
structures installed by Landlord that are not a part of the Initial Tenant Improvements (except
for the area upon which the PG&E transformer is located, which shall be included in the
determination of the rentable square footage of the Service Area); and Landlord shall notify
Tenant, in writing, of such determination prior to the Commencement Date. If Tenant does not
agree with such determination, Tenant shall notify Landlord of such objection within ten (10) days
after receiving such written notice from Landlord. Tenant’s written notice of objection to the
rentable square footage of the Service Area should include Tenant’s determination of the rentable
square footage of the same. Tenant shall be deemed to have

6

 

approved of Landlord’s determination of
the rentable square footage of the Service Area unless Tenant notifies Landlord, in writing, of
such objection (along with Tenant’s determination of the rentable square footage of the Service
Area) within such ten (10) day period. If Landlord and Tenant are unable to agree upon the
rentable square footage of the Service Area, after Landlord receives Tenant’s determination of the
same, then Landlord and Tenant shall mutually select an independent third party space measurement
professional to field measure the rentable square feet of the Service Area. Such third party
independent measurement professional’s determination shall be conclusive and binding on Landlord
and Tenant. Landlord and Tenant shall each pay one-half (1/2) of the fees and expenses of the
independent third party space measurement professional. If such determination is made, it will be
confirmed in a writing signed by Landlord to Tenant.

     The Service Area Minimum Monthly Rent is the minimum monthly rent associated with the Service
Area, which during the first one year period after the Commencement Date shall be equal to the
rentable square footage of the Service Area times 70/100ths Dollars ($.70) per rentable square
foot. On each annual anniversary of the Commencement Date, the Service Area Minimum Monthly Rent
shall increase by three percent (3%) from the prior year’s Service Area Minimum Monthly Rent.

6.0 OPERATING EXPENSES

     6.1 Payment. Tenant shall pay as additional rent, the Operating Expenses (Sections 6.2 —
6.5) for the Premises from the date of Substantial Completion of the Building Shell. Except as
otherwise specified herein, Tenant shall pay Landlord, on a monthly basis after the date of
Substantial Completion of the Building Shell, the estimated amount of the Operating Expenses
specified in Section 1.8 above; provided, however, that Landlord shall have the right to adjust the
estimated amount of Operating Expenses to be paid by Tenant by delivering written notice to Tenant
of the new estimated amount, in which case, the estimated amount to be paid by Tenant thereafter
shall be the new estimated monthly amount set forth in such written notice from Landlord. Landlord
shall provide Tenant with a statement of the actual amount of such expenses within 120 calendar
days following the end of each calendar year. Tenant shall pay to Landlord the amount by which
such actual expenses exceeds Tenant’s Operating Expense payments for such year and any excess
amounts paid by Tenant shall be credited to reduce Tenant’s payments for the next ensuing period,
or paid to Tenant if the Lease Term has expired. If Tenant disputes any amount set forth in the
statement of expenses to be delivered by Landlord pursuant to this Section 6.1, Tenant shall have
the right by written notice delivered to Landlord within thirty (30) days following receipt of such
statement to cause Landlord’s books and records with respect to the preceding calendar year to be
audited, which audit shall be completed within forty-five (45) days following Tenant’s receipt or
access to the materials required for such audit, which shall be performed by an accountant mutually
acceptable to Landlord and Tenant; provided that Tenant’s right to perform such audit shall be
conditioned on Tenant first paying to Landlord all such disputed amounts. The amounts payable by
Landlord to Tenant or Tenant to Landlord, as the case may be, shall be appropriately adjusted on
the basis of such audit. Access to such materials will be made available at the office of Landlord
or its property manager. If such audit discloses a liability for a refund by Landlord to Tenant in
excess of ten percent (10%) of the payments previously made by Tenant for such calendar year, the
cost of such audit shall be borne by Landlord; otherwise the cost of such audit shall be borne by
Tenant. If Tenant does not exercise its audit right for any year during the term (or any renewal
term) of this Lease in accordance with the provisions of this Section, then such statement shall be
conclusively binding for such year; provided, however, that a waiver by Tenant of its audit rights
in any one year shall not be deemed a waiver of audit rights under this Section for any subsequent
year.

     Moreover, the parties acknowledge that management of the Premises may, at Landlord’s sole and
absolute discretion, be included with other properties in the vicinity of the Premises owned by
Landlord or its affiliates to be commonly managed by Landlord, in which case, Landlord shall have
the right to commonly manage the entire project as long as such common management does not result
in increased Operating Expenses in excess of those amounts that would have been otherwise payable
under this Lease had Landlord not commonly managed the Premises and such adjacent Premises. If the
Premises are commonly managed with other properties, “Tenant’s Proportionate Share” shall mean the
rentable square footage of the Premises divided by the rentable square footage of all buildings
located on the properties commonly managed by Landlord. If the Premises are not commonly managed
with other properties, “Tenant’s Proportionate Share”, for purposes of this Lease, shall be equal
to 100%. For example, based on the fact that the Premises will be newly constructed as of the
Commencement Date, Tenant shall have no liability for the cost of restoring or replacing worn or
obsolete improvements that do not benefit the Premises (and that are located on adjacent
properties) as part of such Operating Expenses.

     6.2 Taxes. Tenant shall pay all real property and other taxes on the Premises, which shall
include any form of assessment, license, fee, commercial rental tax, levy or tax (other than net
income, franchise, inheritance or estate taxes) imposed by any authority having the power to tax
or levy assessments on the Premises and the reasonable cost of contesting any tax assessment,
whether such tax is (i) upon any legal or equitable interest of Landlord in the Premises; (ii)
upon this Lease, the Rent payable hereunder or the value thereof; (iii) with respect to any right
to occupancy, use, leasing, operation, management, maintenance, alteration, or repair of
the Premises or any part thereof; or (iv) imposed in substitution for, or in addition to,
existing or additional taxes against any part of the Premises whether or not now customary or
within the contemplation of the parties. If any governmental authority should pass any law or
regulation after the effective date of this Lease, which shall make it unlawful for Tenant to
reimburse Landlord for any of the taxes covered by this Section 6, the Minimum Monthly Rent
payable to Landlord under the terms of this Lease shall be increased so as to net to Landlord the
amount that would have been received by Landlord if such tax had not been imposed. Tenant shall
pay prior to delinquency all taxes assessed against and levied upon its trade fixtures,
furnishings, equipment, and other personal property, and any increase in real property taxes
resulting from any alterations, Initial Tenant Improvements, or any other improvements placed in
or on the Premises.

7

 

     6.3 Insurance

          6.3.1 Property. Landlord shall obtain and maintain on Landlord’s Work, prior to the
Commencement Date, and on the Landlord’s Work and the Initial Tenant Improvements, as of the
Commencement Date and throughout the Term, and Tenant shall pay to Landlord, as an Operating
Expense, the cost of, an “all risk” policy of property casualty insurance (including, at
Landlord’s option, earthquake and flood coverage, inflation endorsement, and sprinkler leakage
endorsement) covering the full replacement cost of the improvements located on the Real Property,
excluding coverage of all Tenant’s personal property on the Premises and excluding any Tenant
alterations or improvements to the Premises other than the Initial Tenant Improvements. Landlord
shall have the right to provide such insurance in the form of a blanket policy covering the
Premises and all buildings owned or managed by Landlord and its affiliates in the vicinity of the
Premises, with Tenant’s liability for the costs thereof limited to an equitable share based on the
replacement cost of the Building as compared to the replacement cost of all buildings covered by
such blanket policy. In addition, such insurance shall include a lender’s loss payable
endorsement in favor of Landlord’s lender. Notwithstanding anything to the contrary contained
herein, in the event of earthquake damage, Tenant shall pay Landlord Tenant’s Equitable Share of
the deductible associated with such earthquake policy up to a maximum amount of $100,000,
amortized over a period of four (4) years, which amounts shall be payable in monthly installments
for the portion of the amortization period remaining in the Term (i.e. with payments thereon in
any 12 month period not exceeding $25,000). “Tenant’s Equitable Share” of the earthquake policy
deductible shall mean the deductible amount multiplied by a fraction, the numerator of which is
the cost of restoration associated with items included in Landlord’s Operating Expense Repair
Obligations (as defined below), and the denominator of which is the sum of all restoration costs,
including Landlord’s Non-Compensated Repair Obligations and Landlord’s Operating Expense Repair
Obligations. Tenant agrees not to engage in any activities (i) that will increase the cost of
such insurance, unless such actions by Tenant are consistent with its normal business operations
as set forth in Section 1.10 of the Lease, or (ii) that will prevent Landlord from procuring
policies reasonably satisfactory to Landlord. Tenant shall pay any increases in insurance
premiums resulting from the nature of Tenant’s occupancy or any act or omission of Tenant within
ten (10) business days after receiving an invoice from Landlord for the same.

          6.3.2 Tenant’s Obligation. Tenant shall maintain in full force and effect at all times
during the term of the Lease, at its own expense, for the protection of Tenant and Landlord, as
their interests may appear, (a) “all risk” property insurance on any alterations (but excluding
the Initial Tenant Improvements) to the Premises in the amount of the replacement cost thereof,
(b) commercial general liability insurance with limits of liability for bodily injury and property
damage of not less than $2,000,000 per occurrence and $3,000,000 in the aggregate, insuring
Landlord and Tenant against any liability arising out of the use, occupancy or maintenance of the
Premises (provided that such insurance coverage for more than $2,000,000 in the aggregate and in
excess of the per occurrence limit may be covered by an umbrella policy meeting the requirements
of Section 6.3.3 below), and (c) worker’s compensation insurance as required by any applicable law
or regulation. The proceeds of this insurance will be payable to Tenant. The limits of said
insurance shall not, however, limit the liability of Tenant hereunder. Notwithstanding anything
to the contrary in Section 6.3.3 below, neither Landlord nor Landlord’s lender shall be named as
an additional insured with respect to Tenant’s personal property or worker’s compensation
insurance.

          6.3.3 Terms. All insurance policies required to be carried by Tenant hereunder shall conform
to the following requirements: (a) at Landlord’s request, shall carry a lender’s loss payee
endorsement in favor of Landlord’s lender; (b) an executed copy of each insurance policy,
including renewals (or a certificate thereof), as well as any required endorsements associated
therewith, shall be delivered to Landlord; (c) each certificate of insurance shall require that
the applicable insurer or insurance broker shall endeavor to notify Landlord in writing at least
thirty (30) days prior to any cancellation or expiration of such policy, or any reduction in the
amounts of insurance carried, provided, however, that Tenant shall provide written notice to
Landlord of any such cancellation or expiration or reduction in amounts at least fifteen (15) days
prior to the effective date of such cancellation, expiration or reduction; (d) each policy shall
be primary, not contributing with any insurance that Landlord may carry; (e) the commercial
general liability policy shall state that Landlord is entitled to recovery for the negligence of
Tenant even though Landlord is an additional insured; (f) the commercial general liability policy
shall name Landlord as an additional insured, by endorsement; and (g) shall be issued by companies
having a Best’s financial category minimum rating of Class “A-/VIII” or better in the most recent
edition of Best’s Insurance Report or as otherwise reasonably approved by Landlord in the event
such rating system shall be modified or discontinued.

          6.3.4 Waiver. Each of the parties hereto hereby releases the other, to the extent of the
releasing party’s insurance coverage required to be maintained hereunder (with Landlord’s
liability coverage deemed to be at least equivalent to the minimum limits on Tenant’s commercial
general liability policy required to be maintained under Section 6.3.2 above), and regardless of
any vitiation of the releasing party’s insurance coverage caused by the releasing party, each
party releases the other party from any and all liability for any loss or
damage covered by such insurance which may be inflicted upon the property of such releasing
party even if such loss or damage shall be brought about by the fault or negligence of the other
party, its agents or employees; provided, however, that this release shall be effective only with
respect to loss or damage occurring during such time as the appropriate policy of insurance shall
contain a clause to the effect that this release shall not affect said policy or the right of the
insured to recover thereunder. If any policy does not permit such a waiver, and if the party to
benefit therefrom requests that such a waiver be obtained, the other party agrees to obtain an
endorsement to its insurance policies permitting such waiver of subrogation if it is available.
If an additional premium is charged for such waiver, the named insured under such policy agrees to
pay the amount of such additional premium.

8

 

6.4 Repairs and Maintenance; Building Management

          6.4.1 Landlord’s Maintenance and Repair Obligations.

               6.4.1.1 Landlord’s Maintenance and Repair Obligations / Non-Operating Expenses. Landlord, at
its sole cost and expense and without reimbursement from Tenant, shall maintain, repair, and if
necessary, replace all footings, foundations, load bearing walls, roofs (exclusive of the roof
membrane), structural steel columns and girders forming a part of the Building located on the
Premises (“Landlord’s Non-Compensated Repair Obligations”).

               6.4.1.2 Landlord’s Maintenance and Repair Obligations / Operating Expenses. Subject to
Landlord’s obligations with respect to Construction Defects and Punch List Items (which Landlord
shall perform without reimbursement from Tenant), Landlord shall, with reimbursement from Tenant
for the costs associated therewith as an Operating Expense, perform all necessary maintenance and
repairs to (a) all exterior glass and other exterior surfaces of the Building, and all exterior
walls (other than load bearing walls included in Landlord’s obligations under Section 6.4.1.1
above), (b) the basement parking structure (including but not limited to all striping, exhaust
systems, and lighting systems contained within the basement parking structure), (c) all outdoor
parking facilities and driveways and all exterior sidewalks, (d) all exterior landscaping,
exterior irrigation systems, exterior drainage systems, and exterior lighting of the Premises, (e)
all drainage systems on the exterior portions of the Building, (f) the roof membrane, (g) all
utility lines (outside the Building) servicing the Premises up to their point of connection to the
Building (including but not limited to all backflow devices), and (h) the elevators within the
Building, as necessary to maintain the same in good condition and repair, subject to reasonable
wear and tear, throughout the Term (“Landlord’s Operating Expense Repair Obligations”). As part
of Landlord’s Operating Expense Repair Obligations for which Tenant shall reimburse Landlord for
the costs thereof as an Operating Expense, Landlord shall also be responsible for cleaning the
exterior side of all exterior windows of the Building, as necessary to maintain the same in good
condition and repair, subject to reasonable wear and tear, throughout the Term.

               6.4.1.3 Landlord’s Repair Obligations — Generally. Notwithstanding the foregoing, Landlord’s
repair obligations specified herein are limited to those repairs that would be commercially
reasonable to repair under common property management standards applicable to buildings that are
similar in type and quality to the Building. In addition, Landlord agrees to promptly perform its
repair obligations set forth herein after receiving written notice from Tenant to perform the
same.

               6.4.1.4 Landlord’s Failure to Commence Repairs. If Landlord fails to commence any repairs
required by this Section 6.4 within fifteen (15) days of notice thereof (as such time period may
be extended for Force Majeure Delays), and thereafter fails to diligently prosecute such repair to
completion, then Tenant may perform such work on Landlord’s behalf; provided, however, that Tenant
first notifies Landlord, in writing, at least three (3) days prior to commencing such repairs on
Landlord’s behalf, that Tenant will be commencing such repairs within three (3) days unless
Landlord commences such repairs and diligently prosecutes the same to completion. If Landlord
commences and diligently works towards completing such repairs within three (3) days after
receiving written notice from Tenant, then Tenant shall have no right to perform such repairs on
Landlord’s behalf. Landlord shall deliver written notice to Tenant of any Force Majeure delays
that are delaying Landlord’s commencement or the completion of the repairs. Notwithstanding the
foregoing, in the event of an emergency situation that threatens damage to Tenant’s personnel or
property, Tenant shall have the right to make repairs that are required by Landlord herein, on
Landlord’s behalf, provided, however, that Tenant first provides notice to Landlord of the
emergency situation, and provided Landlord fails to commence and diligently prosecute the repair
within 24 hours after receiving such notice of repair or such shorter period as is reasonable
under the circumstances.

               6.4.1.5 Reimbursement to Tenant for Work Performed On Landlord’s Behalf. If Tenant, on
Landlord’s behalf, repairs or replaces any item specified herein as being repaired or replaced by
Landlord, either at Landlord’s sole cost and expense or as an Operating Expense, then Landlord
shall reimburse Tenant for any such repair work performed by Tenant on Landlord’s behalf within
thirty (30) days after Landlord receives Tenant’s written request for payment of the same,
provided, however, that Tenant has first allowed Landlord to complete such repairs in accordance
with Section 6.4.1.5; and further provided that Landlord shall be permitted to include as an
Operating Expense for which Tenant shall be required to pay Tenant’s Proportionate Share of those
amounts paid by Landlord to Tenant as reimbursement under this Section 6.4.1.5 to the extent that
such repairs or replacements could have been included as an Operating Expense had Landlord (and
not Tenant) performed the same.

               6.1.4.1.6 Casualties. To the extent covered under Article 10, repairs required as the result
of fire, earthquake, flood, vandalism, war, or similar cause of damage or destruction shall, to
the extent covered under Article 10, be subject to Article 10.

          6.4.2 Tenant’s Performance Obligations. Subject to any maintenance or repair obligations
under this Lease that are specifically required to be performed by Landlord, Tenant shall, at its
sole cost and expense, be responsible for maintaining the Premises, including all improvements
constructed thereon, in good order, condition and repair, and Tenant shall promptly make all
repairs necessary to maintain such condition. Except as otherwise expressly set forth herein,
Tenant shall be solely responsible for all costs of maintaining and repairing the Premises,
including, without limitation, (1) maintenance and repair of all interior glass and interior and
exterior doors of the Building, and the interior of the Building, including, without limitation,
maintenance and repair of the interior walls and interior surfaces of exterior walls and all
interior electrical systems and lighting, (2) maintenance and repair of the HVAC system(s) serving
the Building (in accordance with the manufacturer’s

9

 

recommendations); and (3) maintenance and
repair of the Building fire, safety, and security systems, and all other equipment, plumbing,
wiring, conduits and cables within the Building, and (4) any and all generators on the Premises
(including but not limited to all emergency generators). Notwithstanding anything to the contrary
in this Lease, Tenant shall, reimburse Landlord for all reasonable costs incurred by Landlord to
repair any damage to the Building or the Premises, beyond reasonable wear and tear, caused by
Tenant or its Agents (as defined in Section 10.3). Tenant hereby waives the benefit of any
applicable statutory provision that requires a landlord to maintain leased property. All repairs
made by Tenant shall utilize materials and equipment that are comparable to those originally used
in constructing the Premises. Tenant shall notify Landlord, in writing, prior to making any
repairs to any portion of the Premises that are reasonably expected to cost in excess of $25,000;
provided, however, that Tenant shall have no obligation to so notify Landlord of any repairs to be
made pursuant to a preventive maintenance program established under a contractual arrangement with
Tenant and a third party maintenance provider. Tenant’s repair and replacement obligations set
forth in this Section 6.4.2 shall not include any repairs or replacements arising as a result of
any Construction Defects to the extent covered by Landlord’s Warranty. Furthermore, Tenant shall
be reimbursed by Landlord for Tenant’s costs incurred in complying with Tenant’s maintenance
obligations set forth herein, (a) to the extent such maintenance and repair arises from the
negligence or willful misconduct of Landlord or Landlord’s agents, employees, invitees or
licensees; or (b) to the extent such repairs or replacements are covered by Landlord’s insurance
(unless due to the gross negligence or willful misconduct of Tenant).

          6.4.3 Operating Expenses. Operating Expenses shall include (i) all sums expended by Landlord
for the supervision, maintenance, repair, replacement and operation of the Premises, and a
reasonable management and administrative fee (not to exceed three and one-quarter percent (3.25%)
of the net rent (i.e. the Minimum Monthly Rent payable over the year in question) plus the
Operating Expenses for the year), exclusive of those sums expended by Landlord for the supervision,
maintenance, or repair of Landlord’s Non-Compensated Repair Obligations, and (ii) any costs of
capital improvements made by Landlord to the Building or the Premises (x) to maintain the Building
and the Premises in a good, working condition and state of repair, or (y) that are required by any
governmental authority after the original construction of the Building. The portion of such
capital costs to be included each year as an Operating Expense shall be that amount allocable to
the year in question calculated by amortizing the costs thereof over the useful life of such
improvement, as reasonably determined by Landlord, with interest on the unamortized balance at the
rate of the Federal Reserve Bank of San Francisco, plus one percent (1%). However, if the capital
expense is less than Ten Thousand Dollars ($10,000), it shall be expensed in the year in which it
was incurred, and it shall not be amortized, provided that the aggregate amount of such capital
expenses that are less than $10,000 that are so expensed in any 12-month period of the Term shall
not exceed Thirty Thousand Dollars ($30,000), and if such aggregate amount is exceeded, then Thirty
Thousand Dollars ($30,000) of such capital expenses shall be proportionately allocated among such
capital expenses and expensed for the year in question, and the remainder shall be allocated
proportionately among the corresponding capital items, and amortized over the respective useful
lives. Notwithstanding the foregoing, operating expenses shall not include: (a) depreciation,
interest and principal payments on the Premises or Building; (b) the cost to complete the
Landlord’s Work or the Initial Tenant Improvements (but may include repair and maintenance costs
for the same in accordance with the requirements of this Article 6); (c) real estate broker
commissions; (d) repairs and maintenance costs paid to Landlord by proceeds of insurance or by
third parties; (e) legal fees incurred in connection with the development of the Project or leasing
of the Premises or any legal disputes arising from such leasing activities; (f) reserves for
Operating Expenses, taxes, insurance or any other costs for which Tenant is responsible under this
Lease; (g) costs of selling, syndicating, financing, mortgaging or hypothecating any of Landlord’s
interest in the Premises; (h) any fines, penalties or interest due to Landlord’s late payments; (i)
any amounts paid as ground rental by Landlord; (j) any recalculation of or additional Operating
Expenses incurred more than two (2) years prior to the year in which Landlord proposes that such
costs be included; (k) payments to Landlord or to subsidiaries or affiliates of Landlord for
services in the Building to the extent the same exceeds the costs of such services rendered by
unaffiliated comparable third parties on a competitive basis, except for the management and
administrative fee set forth above; (l) costs arising from Construction Defects in Landlord’s Work
for which Landlord is responsible under Landlord’s Warranty; (m) costs (such as property manager
salary and property management office expenses), for which Landlord is compensated by the
management and administrative fee; (n) capital expenses not included in clauses (ii)(x) or (ii)(y)
above; and (o) any costs related to any governmental, quasi-governmental, utility company or
similar program or plan for water, traffic, hazardous waste, environmental or handicapped access
management, mitigation, enhancement or remediation in which participation is voluntary, except to
the extent such participation results in a net reduction in Operating Expenses.

     Landlord and Tenant acknowledge that two other properties (200 Oyster Point and 230 Oyster
Point) share common driveway access rights (with the Premises) over a portion of the Premises (and
over such other properties) by way of easement agreements setting forth such access rights and the
maintenance costs and
responsibilities associated with such common driveway. Tenant agrees to pay Landlord, as part of
the Operating Expenses, the Premises’ allocable share of maintenance costs associated with such
common driveway (based on the terms of such easement agreements).

          6.4.4 Landlord’s Right to Repair On Tenant’s Behalf. If Tenant fails to maintain the
Premises in good order, condition and repair, Landlord may give Tenant notice to do such acts as
are reasonably required to so maintain the Premises. If Tenant fails to commence such work within
ten (10) days following receipt of such notice and thereafter diligently prosecute it to
completion, then Landlord shall have the right to do such acts and expend such funds at the
expense of Tenant as are reasonably required to perform such work, in which case, Tenant shall pay
such amounts to Landlord within thirty (30) days after receiving an invoice for the same from
Landlord. Landlord shall have no liability to Tenant for any damage, inconvenience or
interference with the use of the Premises as a result of Landlord’s performance of any such work.

10

 

          6.4.5 Landlord’s Right to Make Repairs. Landlord shall have the right, in its reasonable
discretion, to close temporarily (for a reasonable duration and following reasonable notice) any
portion of the Premises to the extent required for Landlord to perform its maintenance rights and
obligations specified herein; provided that Landlord shall reasonably cooperate with Tenant to
schedule any such closure and work at times and in a manner which mitigates the impact thereof on
Tenant’s business operations in the Premises. Tenant’s obligation to pay the Minimum Monthly Rent
shall not abate as a result of such temporary closure, nor shall Landlord be responsible or liable
to Tenant for any interference with Tenant’s use of the Premises as a result of any such temporary
closure.

     6.5 Utilities, Telecommunications; Backup Generator. Tenant shall pay for water, gas, heat,
sewer, power, telephone services and any other utility supplied to or consumed in or on the
Premises, and shall insure that each utility provider transfers the applicable accounts into
Tenant’s name on or before the Commencement Date. Landlord shall not be responsible or liable for
any interruption in utility service, nor shall such interruption affect the continuation or
validity of this Lease; provided, however, that Landlord shall use reasonable efforts to remedy
any interruption in the supply of such utilities or services if such interruption is caused by
Landlord or Landlord’s employees, agents or contractors. If such interruption arises from the act
of a third party, Tenant and Landlord shall cooperate with each other to seek to remedy the
interruption. Tenant shall maintain and regularly test, at its sole cost and expense, the
emergency power generators (if any) installed on the Premises in accordance with the
manufacturer’s recommendations. Tenant shall be responsible at its sole cost for the installation,
maintenance and repair of any phone, data or other communications cable from the demarcation point
supplied by the local regulated public utility to and within the Premises. Any alterations,
installations or modifications of such cable shall be subject to the provisions of this Lease,
including Articles 7 and 8.

     Tenant shall have the exclusive right during the Term, subject to Landlord’s Reserved Rights,
to install, maintain and operate on the roof of the Building, for the purpose of Tenant’s
business, telecommunications antennae, satellite dishes and other devices that make use of the
electromagnetic spectrum (“Telecommunications Devices”) and related wires, cables, conduits
between such equipment and the Premises, subject to the following requirements, (a) compliance
with all covenants or restrictions of record (as of the date hereof), applicable laws, building
codes, regulations and ordinances, (b) compliance with the terms and provisions of the Work
Letter, but only to the extent that such devices are installed prior to the Substantial Completion
of Landlord’s Work (as such terms are defined in the Work Letter), and (c) compliance with the
terms and provisions of Sections 7 and 8 hereof, but only to the extent that such devices are
installed after the Substantial Completion of Landlord’s Work.

     Notwithstanding anything to the contrary contained herein or in the Work Letter, prior to
installing any Telecommunications Devices outside of the Building or on the exterior of the
Building, including but not limited to on any roof of any building within the Premises, Tenant
shall provide Landlord with written notice of Tenant’s desire to install such Telecommunications
Devices, together with plans and specifications for the installation of such Telecommunications
Devices. Landlord shall review such plans and specifications within ten (10) business days after
receiving the same, and within such period notify Tenant if Landlord approves the installation of
such Telecommunications Devices or disapproves the installation of such Telecommunication Devices,
and if Landlord disapproves the installation of such Telecommunication Devices, the reasons
therefore. Landlord’s failure to provide notice of its disapproval and the reasons therefore
within such ten (10) business day period shall be deemed Landlord’s approval of such installation
request. Landlord shall not unreasonably withhold approval of the installation of such
Telecommunications Devices; provided, however, that Landlord shall have the right to withhold such
approval, in its sole and absolute discretion, if (a) Tenant fails to provide Landlord with
sufficient documentation with respect to the installation of the Telecommunication Devices so as
to allow Landlord to fully review and evaluate the same, (b) the installation of such
Telecommunication Devices is reasonably likely to cause damage to the physical integrity of the
Building, or (c) the installation of such Telecommunication Devices will adversely affect the
appearance of the Building from surrounding areas, as reasonably determined by Landlord. Tenant
shall install screening materials in conformance with all applicable laws and restrictions of
record, and the appearance, size and location of any screening materials shall be subject to
Landlord’s approval, which approval shall not be unreasonably withheld. Tenant shall be
responsible for any installation and maintenance costs of any such Telecommunication Devices, as
well as any damage to the Building, including without limitation the roof, arising out of or
related to the installation or use by Tenant of any such Telecommunications Device. Tenant shall
not be obligated to pay any license fee for the use of the roof of the Building pursuant to this
Section during the Term of this Lease or any extension thereof.

     Notwithstanding anything to the contrary contained herein, should the installation of the
Telecommunications Devices affect the engineered elements of Landlord’s Work or the roof of the
Building (including but not limited to the roof membrane), or should such installation potentially
affect any warranty
provided to Landlord by Landlord’s Contractor or its material suppliers (including but not
limited to any roof warranty), then Tenant shall either (a) have Landlord perform any work
affecting Landlord’s Work, on Tenant’s behalf, pursuant to a Change Request in accordance with
Section 1.11 of the Work Letter (provided such request is made prior to the Substantial Completion
of Landlord’s Work, as such terms are defined in the Work Letter), in which case, Landlord’s
performance of such work on Tenant’s behalf shall comply with all terms and requirements of the
Work Letter, or (b) utilize Landlord’s Architect and/or Landlord’s Contractor and/or any
subcontractor or material supplier who originally installed such portion of Landlord’s Work, at
Tenant’s sole cost and expense, as necessary, for the design and construction of that portion of
Landlord’s Work affected thereby in order to maintain all contractual warranties provided to
Landlord by Landlord’s Contractor or its material suppliers with respect to such Landlord’s Work,
and to maintain all of Landlord’s contractual rights and remedies against Landlord’s Architect with
respect to the design of Landlord’s Work.

     Tenant may, through the Change Request process specified in the Work Letter, have a trench
(with cables and conduit installed therein) constructed within the boundaries of the Real Property
for purposes of “hard wiring”

11

 

for voice, data and power transmissions between and among the
buildings occupied by Tenant in the vicinity of the Premises. Landlord shall not unreasonably
withhold its approval of such Change Request, unless such trenching poses a material risk to the
physical integrity of the Building. Tenant is hereby advised that such trenching work must be
performed through the Change Request process prior to the Substantial Completion of Landlord’s
Work, since any subsequent installation of the same may be all but impossible due to site
configuration. If such trenching and cabling work is installed within the Premises, Tenant shall
not be obligated to remove the installed conduit upon the expiration or earlier termination of the
Lease, but Tenant shall strip all cabling from such conduit at its sole cost and expense upon
expiration or earlier termination of this Lease. Tenant shall not be obligated to pay any license
fee for the use of the conduits installed in the Real Property pursuant to this Section during the
Term of this Lease or any extension thereof.

     Landlord grants Tenant the license and right to use a portion of the Service Area for the
installation, operation and maintenance of a backup power generator and associated fuel tank,
which includes the passage of related wires, cables and conduit between Tenant’s electrical room
and the backup power generator. However, any such improvements to be installed in the Service Area
shall be subject to the terms and provisions of Section 7 and 8 of this Lease, unless Tenant is
installing the same as part of the Initial Tenant Improvements, in which case, such improvements
shall be installed subject to the terms and provisions of the Work Letter. Subject to Landlord’s
rights herein, Tenant shall have access to the Service Area on a 24 hour per day/7 day per week
basis. Tenant shall be solely responsible for the repair and maintenance of Tenant’s improvements
and equipment within the Service Area, and Tenant agrees to maintain the same in a good state of
condition and repair. Tenant has advised Landlord that if and when it installs a backup generator
in the Service Area, it intends to run that backup generator on a regular basis in order to comply
with maintenance specifications and requirements of law and that such operation may be as often as
one (1) thirty (30) minute period per week. Except in cases of emergency, when no prior approval
shall be required, Tenant shall propose for Landlord’s reasonable approval the schedule for
operation of the backup generator to reasonably mitigate any interference with the use of adjacent
properties by other tenants.

7.0 ALTERATIONS, ADDITIONS AND FIXTURES

     7.1 Installation and Removal. Subject to the terms of this Section 7 and Section 8 below,
Tenant shall have the right to install its trade fixtures in the Building (and subject to Section
6.5 above, Tenant shall have the right to install any Telecommunication Devices on the exterior of
the building or within any other portions of the Premises outside the Building, or any backup
generator or associated fuel tank) during the term of this Lease; provided, however, that no such
installation or removal thereof shall affect the structural portion of the Building or the
engineered elements of Landlord’s Work, and that Tenant shall repair any damage to the Building or
the Premises caused by the installation, use or removal of any of Tenant’s furniture, fixtures,
equipment or other property; and provided however, that Tenant shall only be obligated to make
such repairs necessary to restore the Premises to its condition prior to such installation or
removal, ordinary wear and tear excepted. Notwithstanding the foregoing, Tenant shall not place a
load upon the floor or roof of the Premises that exceeds the load per square foot which such floor
or roof was designed (or is modified) to carry, as set forth in the Work Letter or the Plans for
Landlord’s Work. Tenant shall not install business machines or mechanical equipment which causes
noise or vibration to such a degree as to be reasonably objectionable to Landlord or other
neighboring owners or tenants. Further, except as otherwise provided in Section 6.5 above, and
except for those items of equipment (but not fixtures) that may be installed in the Service Area
from time to time by Tenant, Tenant shall not install, nor allow to be installed any equipment on
or outside the exterior of the Building without Landlord’s prior written consent, which consent
shall not be unreasonably withheld. For purposes of Section 6.1 and this Section 7.1, the term
“structural” shall refer to the footings, foundations, structural steel columns, girders, bearing
walls, exterior walls, and roof.

     7.2 Tenant’s Rights. Tenant shall not make or permit to be made any alterations or
improvements to the Premises without Landlord’s prior written consent. Notwithstanding the
foregoing, Landlord’s prior written consent shall not be needed for any alterations or
improvements to the premises that do not: (a) cost more than $25,000, (b) affect the exterior
appearance of the Premises or the Building, or (c) affect the structural portions of the Premises
or the engineered elements of Landlord’s Work. For purposes of determining the costs of the
alterations or improvements for purposes of clause (a) above, such costs normally associated with
such alterations and/or improvements must be included, and Tenant shall not be allowed to
segregate alterations or improvements in parts in order to allow Tenant to perform such work
without Landlord’s prior written consent. Any proposed alterations/improvements that do not
require Landlord’s consent pursuant to clauses (a), (b) or (c) above shall be referred to herein
as a “Minor Changes.” On a quarterly basis, Tenant shall deliver to Landlord a copy of the
“as-built” plans for any Minor Changes performed during the prior quarter that are of a type
for which “as-built” plans would customarily be prepared for such alteration, additions or
improvements or such other reasonable information to show such alterations, additions or
improvements if as-built plans are not customarily prepared for such work given the type, nature
and scope of the alteration, addition or improvement. Additionally, as a condition to Tenant’s
right to make Minor Changes, Tenant shall act reasonably to keep Landlord aware of the status of
Tenant’s alterations and improvement work in the Premises by means of quarterly meetings with
Landlord to review the status of work performed during the previous calendar quarter and work
planned for the current calendar quarter.

     Notwithstanding the foregoing, in making any alterations or improvements of any magnitude or
cost whatsoever, whether or not a Minor Change, Tenant shall comply with Section 8.

     7.3 Obtaining Landlord’s Consent. When seeking the Landlord’s consent to any alterations for
which such consent is required under this Article 7, Tenant shall provide to Landlord, for
Landlord’s review and approval, City approved plans and specifications for such changes, to the
extent City approval of the plans and specifications is required for such alterations.
Notwithstanding anything to the contrary contained herein, should

12

 

any proposed alterations
affect
the engineered elements of Landlord’s Work or the roof of the Building (including but not limited
to the roof membrane), or should such installation potentially affect any warranty provided to
Landlord by Landlord’s Contractor or its material suppliers (including but not limited to any roof
warranty), and if Landlord consents to such alterations, then, as required to prevent invalidation
of such warranty, Tenant shall utilize Landlord’s Architect and/or Landlord’s Contractor and/or any
subcontractor or material supplier who originally installed such portion of Landlord’s Work, at
Tenant’s sole cost and expense, for the design and construction of that portion of Landlord’s Work
covered by the affected warranty or warranties, or as required to maintain all of Landlord’s
contractual rights and remedies against Landlord’s Architect with respect to the design of
Landlord’s Work. If for some reasons Landlord’s Architect, Landlord’s Contractor, or Landlord’s
subcontractors and material suppliers are unavailable to design and/or construct such alterations,
then Landlord shall not unreasonably withhold its consent to Tenant’s architect and contractors
performing the design and/or construction of such alterations.

     7.4 Tenant’s Construction Obligations.

          7.4.1 Performance of Tenant’s Work. Should any proposed alterations to be performed by Tenant
hereunder conflict with Landlord’s exercise of its rights, or its performance of its obligations,
set forth herein, then Tenant agrees to reasonably cooperate with Landlord in Landlord’s exercise
of such rights and its performance of such obligations. Should any alterations require Landlord’s
consent, and if such alterations involve the sprinkler, plumbing, mechanical, electrical power,
lighting or fire safety systems within the Premises, such alterations shall be performed by
subcontractors approved by Landlord in its reasonable judgment. For any work subject to Landlord’s
consent or approval, Tenant shall provide Landlord with written notice, not less than fifteen (15)
calendar days prior to the date Tenant desires to commence such Work, setting forth or accompanied
by all of the following:

               7.4.1.1 A description and schedule for the work to be performed;

               7.4.1.2 The names and addresses of all contractors and subcontractors who, as of the date of
such notice, will perform such alterations;

               7.4.1.3 A complete set of all plans, specifications, and calculations developed by or for
Tenant, including all plans which are required by the applicable governmental authorities for the
issuance of any permits or approvals or for the commencement of any of Tenant’s Work;

               7.4.1.4 Certificates of insurance evidencing that Tenant’s contractors and subcontractors (a)
carry workers compensation insurance covering all of their respective workers as required by law,
and (b) carry commercial general liability insurance with limits, in form and with companies as are
required to be carried pursuant to the following paragraph, and the certificate of insurance shall
contain a provision that the insurance carrier or broker shall endeavor to notify Landlord at least
30 days’ prior written notice of any cancellation, modification or lapse or reduction in the
amounts of such insurance, provided, however, that Tenant shall provide written notice to Landlord
of any such cancellation or expiration or reduction in amounts at least fifteen (15) days prior to
the effective date of such cancellation, expiration or reduction.

     Tenant’s contractor shall carry commercial general liability insurance covering Premises
damage, personal injury, death, and products and completed operations coverage, in an amount not
less than $3,000,000 per occurrence, and $5,000,000 in the aggregate with deductibles of no more
than $10,000, naming Landlord and its affiliates, employees and agents as additional insureds, by
endorsement (on an ISO form 2010 11 85), with an insurance company with a minimum of an A-VIII
rating. All subcontractors shall carry such insurance as well, except that subcontractors shall
only be required to carry such insurance in an amount of not less than $1,000,000 per occurrence
and $2,000,000 in the aggregate; provided that the insurance coverage of any of the applicable
subcontractors required under this Section may be provided, in whole or in part, through a blanket
policy of such insurance coverage maintained by Tenant’s contractor which expressly provides that
the insured’s subcontractors are covered thereunder. Such insurance shall be maintained at all
times during the construction of the alterations or improvements, except for the products and
completed operation coverage, which coverage is to be maintained during construction of the work
and thereafter in accordance with standard industry practice in the Bay Area of San Francisco,
California. Furthermore, such insurance shall preclude or waive subrogation claims by the insurer
against Landlord, its affiliates, or their agents, employees, or representatives. Such insurance
shall also provide
that it is primary insurance with respect to the Landlord and that any other insurance maintained
by Landlord is excess and noncontributing with the insurance required hereunder.

     Notwithstanding the foregoing, for any Minor Change, the limits of the commercial general
liability policy referenced above shall be $1,000,000 per occurrence and $1,000,000 annual
aggregate.

               7.4.1.5 Notwithstanding anything to the contrary contained herein, at least three (3) days
prior to the commencement of any such Tenant alterations, Tenant shall deliver to Landlord copies
of all licenses and permits that are required in connection with the performance of such
alterations.

     For any work not subject to Landlord’s consent or approval, Tenant shall provide Landlord with
the documents set forth in Sections 7.4.1.1 through 7.4.1.5 above prior to the commencement of any
such work.

     With respect to the design and construction of any such Tenant alterations, Tenant at its
sole cost and expense, shall comply with all laws, codes and regulations (including the Americans
with Disabilities Act and all other accessibility laws and regulations) relating to any
alterations or improvements, including obtaining any necessary permits with respect thereto, and,
upon completion, shall provide Landlord with as-built plans (in “CAD” (computer assisted design)
form) detailing such alterations and improvements, together with a certificate of

13

 

occupancy or the
comparable municipal approval (such as a signed-off building permit) issued upon completion and
approval of alterations and improvements in the municipality. Tenant shall be responsible for the
accuracy of the as-built plans, and shall have Tenant’s contractor certify the accuracy of the
same, in writing, which certification shall be delivered to Landlord at the same time the as-built
CAD plans are delivered to Landlord.

     Additional rules and regulations regarding the design and construction of alterations (other
than Minor Changes), to which Tenant is bound, are attached hereto as Exhibit K (the “Rules and
Regulations Governing Alterations”), and is expressly incorporated herein.

          7.4.2 Damages due to Tenant’s Work. If any contractor or worker performing Tenant’s Work
performs any work which does impair, or demonstratively threatens to impair the quality, integrity
or performance of any portion of the Premises, Landlord shall give notice to Tenant and immediately
thereafter, Tenant shall cause such contractor or worker immediately to remove all of its tools,
equipment and materials and to cease working in the Premises. As additional rent under the Lease,
Tenant shall reimburse Landlord for any reasonable repairs or corrections to any portion of the
Premises made necessary as a result of the actions or omissions of anyone performing Tenant’s Work.

          7.4.3 Tenant’s Indemnity Obligations. Tenant shall defend, protect, indemnify and hold
Landlord harmless against all liens, claims, actions, damages, liability, costs, attorneys’ fees
and other expenses incurred as a result of any additions, alterations or improvements performed by
Tenant or any person claiming under Tenant, or incurred on account of claims by any person
performing work or furnishing materials or supplies for Tenant or any person claiming under Tenant.

     7.5 Removal of Alterations. All alterations and improvements to the Premises that are made
by Tenant shall be the property of Tenant until the expiration or earlier termination of this
Lease; at that time all such alterations and improvements shall remain on the Premises and become
the property of Landlord without payment therefor, unless Landlord gives written notice to Tenant
to remove the same at the time Landlord consents to such alterations (unless no Landlord consent
is required prior to the installation of such alterations, in which case, Tenant shall seek
Landlord’s determination, in writing, prior to the expiration of the Term, as to whether any such
alterations are to be removed prior to the expiration or earlier termination of the Term, which
determination shall be made by Landlord, in Landlord’s sole and absolute discretion, within ten
(10) days after Landlord receives written notice from Tenant requesting that Landlord make such
determination). Notwithstanding anything to the contrary herein, (a) Tenant shall not be required
to remove any Initial Tenant Improvements performed pursuant to the Work Letter, unless otherwise
required in accordance with the terms and conditions thereof, (b) Tenant’s removable trade
fixtures and personal property, as well as Tenant’s Telecommunication Devices and Tenant’s back-up
generator, shall be and remain Tenant’s property, and shall be removed by Tenant from the
Premises, at Tenant’s sole cost, on or before the expiration or earlier termination of this Lease.
If Tenant is required per the terms of this Lease to remove any alterations and improvements,
Tenant shall remove the same and repair any damage resulting therefrom, normal wear and tear
excepted.

     7.6 Inapplicability this Section 7 to the Initial Tenant Improvements. Notwithstanding
anything to the contrary contained herein, the terms and provisions of this Section 7 shall not
apply to those Initial Tenant Improvements to be performed by Tenant pursuant to the terms of any
Work Letter attached hereto (which improvements are subject to the terms and provisions of such
Work Letter).

     7.7 Tenant’s Construction Obligations. Landlord and Tenant agree that the obligations of
Tenant under this Section 7 shall not apply to any maintenance or repair work performed by Tenant
pursuant to its maintenance and repair obligations under this Lease.

     7.8 Security Interests in Tenant’s Personal Property and Trade Fixtures. Tenant shall have
the right, from time to time, to lease and to grant and assign security interests in that portion
of Tenant’s removable trade fixtures and personal property located in or at the Premises, which
may be subject to vendor financing, equipment leases and other means of personal property
financing (the “Tenant’s Lien Property”). Landlord agrees to execute, at Tenant’s cost and
expense, commercially-reasonable waiver forms releasing Landlord’s interest in those items of
Tenant’s Lien Property for which such a waiver is requested in favor of any purchase
money seller, lessor or lender who has an ownership or security interest in any of the Tenant’s
Lien Property, as long as such requested waiver specifically describes the equipment subject to
such waiver, and is not a general waiver. Without limiting the effectiveness of the foregoing,
provided that no default shall have occurred and be continuing, Landlord shall, upon the request
of Tenant, and at the Tenant’s sole cost and expense, execute and deliver any instruments
reasonably necessary or appropriate to confirm any such grant, release, dedication, transfer,
annexation or amendment to any person or entity permitted under this paragraph including Landlord
waivers with respect to any of the foregoing, and such acknowledgment shall include, if requested
by the person holding such ownership or security interest, the right to enter upon the Premises
following a Tenant default for a period not to exceed thirty (30) days, for the limited purpose of
removing that portion of the Tenant’s Lien Property subject to such person’s ownership or security
interest, provided that the lessor or secured party agrees to repair any damages resulting from
the exercise of such right. Tenant shall indemnify and hold Landlord harmless from and against
any and all losses due to damages to the Premises caused by the removal of any of Tenant’s Lien
Property.

8.0 MECHANIC’S LIENS

     8.1 Tenant’s Obligations. Landlord shall have the right to post or keep posted on the
Premises, or in the immediate vicinity thereof, any notices of non-responsibility for any
construction, alteration or repair of the Premises by Tenant. Tenant shall promptly pay and
discharge all claims for work or labor done, supplies furnished or services rendered by Tenant’s
its agents, employees, contractors, licensees, or invitees (collectively, “Agents”),

14

 

and Tenant
shall keep the Premises free and clear of any liens arising out of work done by or for Tenant or
Tenant’s Agents. Should any such lien or notice of lien be filed, Tenant shall bond against or
discharge the same within twenty (20) days after such filing. If Tenant fails to bond or discharge
such lien within said twenty (20) day period, then Landlord shall have the right, but not the
obligation, to take any action or pay such amount as may be necessary to remove such lien, and
Tenant shall pay to Landlord as Additional Rent any such amounts expended by Landlord within five
(5) business days after notice is received from Landlord of the amount expended by Landlord as a
result thereof.

9.0 ENTRY BY LANDLORD

     9.1 Entry by Landlord. Tenant shall permit Landlord, its lenders, and their Agents to enter
the Premises at all reasonable times, subject to Tenant’s reasonable safety and security
requirements, for the purpose of inspection, maintenance, making repairs, alterations or additions
to any portion of the Building or the Premises, conducting environmental tests, inspections and
audits (including review of Tenant’s records relating to hazardous materials), serving or posting
notices as well as to exhibit the Premises for sale, mortgage or lease, and, during the last one
hundred eighty (180) calendar days prior to the expiration of this Lease, placing “For Lease”
signs, without any rebate of Rent and without any liability to Tenant for any loss of occupation or
quiet enjoyment thereby occasioned.

     Landlord understands that all utilities are critical to Tenant’s business operations and will
use its best efforts to make sure that these sources are not interrupted at any time without
providing advance notice to Tenant. Landlord shall exercise its rights of entry hereunder for (i)
purposes reasonably relating to the management of the Premises or the performance of its
obligations under the Lease, (ii) assuring, Tenant’s compliance with its obligations under the
Lease to the extent that Landlord reasonably believes that Tenant is not complying with its
obligations under the Lease, (iii) for purposes associated with any environmental testing or
compliance required by any governmental authority, or (iv) purposes related to the sale or
financing of the Premises, including but not limited to appraisals, property inspections, etc. In
entering the Premises for such purposes, Landlord shall conduct its activities with due and proper
concern for Tenant’s interests in safety and security, in being free from unreasonable
interference with its business operations, and in guarding the confidentiality of its business
operations.

     Any proprietary or confidential information relating to Tenant’s operation of its business
shall not be disclosed to third parties by Landlord or anyone under Landlord’s control, unless (a)
such information is or becomes publicly available through means other than disclosure by Landlord,
or anyone under Landlord’s control, (b) the disclosure of such information is reasonably necessary
for Landlord or anyone under Landlord’s control to carry out Landlord’s obligations under this
Lease, (c) the disclosure of such information is reasonably necessary for Landlord to assert a
claim against Tenant for a breach of this Lease, or (d) the disclosure of such information is
required to be disclosed by law or by court order; provided, however, that if Landlord receives a
request, pursuant to the terms of a subpoena, order, civil investigative demand or similar process
issued by a court of competent jurisdiction or by governmental body, to disclose such confidential
information, Landlord agrees to promptly notify Tenant of such request so that Tenant may seek
such a protective order prohibiting or limiting such disclosure as Tenant shall deem appropriate.
Notwithstanding the foregoing, Landlord shall have the right to disclose such confidential
information to (x) prospective buyers of the Real Property, (y) prospective lenders of the
Premises, and to (z) its employees, agents, attorneys, accountants, and representatives for
purposes associated with this Lease, provided, however, that (i) Landlord assures Tenant that
such parties maintain the confidentiality of such information to the same extent that Landlord is
required to maintain the confidentiality of such information as set forth herein, or (ii) in no
case shall Landlord disclose (nor shall Landlord allow any party receiving any such confidential
information from Landlord to disclose) any such confidential information to a business competitor
of Tenant (or an affiliate of such competitor), and (iii) such information is reasonably required
or necessary for the legitimate business purposes of the person requesting such information as it
relates to this Lease. The parties agree that damages would be an inadequate remedy for the
breach of this provision, and Tenant shall have the right to seek specific performance of the
confidentiality covenant of Landlord and to seek injunctive relief to prevent its breach.

10.0 DAMAGE BY FIRE OR OTHER CASUALTY

     10.1 Damage by Fire or Other Casualty. If the Premises shall be damaged or destroyed by fire
or other casualty, Tenant shall promptly notify Landlord, and Landlord, subject to the conditions
set forth in this Section 10, shall repair such damage and restore the Premises to substantially
the same condition in which it was immediately prior to such damage or destruction; provided funds
are reasonably available to Landlord (from insurance proceeds) for Landlord to restore the same.
Landlord’s restoration shall not include the repair, restoration or replacement of Tenant’s
fixtures, improvements, alterations, furniture or any other of its property; provided, however,
that Tenant’s Initial Tenant Improvements constructed pursuant to the Work Letter shall be
included in Landlord’s property insurance carried as an Operating Expense pursuant to Section
6.3.1. If a substantial casualty occurs during the last 12 months of the Term or any extension
thereof, Landlord or Tenant may cancel this Lease unless Tenant has at least one Renewal Term
remaining under this Lease, and has exercised the Renewal Option relating to such term, prior to
such casualty in accordance with Section 30.1 below, or does so within thirty (30) calendar days
after the date of the casualty. If in Landlord’s reasonable opinion (and through no failure of
Landlord to maintain the insurance described in this Section 6.3.1 in the full replacement cost of
the building), the cost of completing such restoration exceeds the proceeds of such insurance
(without reduction for any amounts to be paid to Landlord’s lender) by more than Two Hundred Fifty
Thousand Dollars ($250,000), then Landlord may terminate this Lease by giving Tenant written
notice that specifies a termination date no less than thirty (30) calendar days after its
transmission; provided, however, that Tenant may elect to preserve this Lease by committing in
writing to Landlord to pay for any shortfall of insurance proceeds in excess of the Landlord’s
$250,000 limit set forth above

15

 

no later than fifteen (15) days following Tenant’s receipt of
Landlord’s termination notice, which amount shall be deposited with Landlord within ten (10)
business days following Landlord’s written notice to Tenant setting forth the amount required to
cover such shortfall, which funds shall be used by Landlord solely for the cost of repairing and
restoring Landlord’s Work and the Initial Tenant Improvements.

     The proceeds of Landlord’s casualty insurance shall be used for restoration of the Building
and the tenant improvements covered by such insurance as provided above unless (i) this Lease is
terminated as provided above due to a casualty occurring during the last 12 months of the Term, or
any extension thereof, or a shortfall of insurance proceeds, or (ii) due to the casualty and
resulting damage to the Premises, where there is an impairment of the security under any loan
obtained by Landlord that is secured by a Security Instrument (as defined in Section 15.1), other
than an impairment of the security due solely to a default by Landlord under such Security
Instrument, that permits such lender to apply such insurance proceeds towards the repayment of
such loan and not to the restoration of the damage to the Premises (herein referred to as a
“Landlord’s Loan Default”). If the proceeds of Landlord’s casualty insurance are not used for
restoration of the Premises and the tenant improvements covered by Landlord’s insurance due solely
to a Landlord’s Loan Default permitting such lender to apply such insurance proceeds towards the
repayment of such loan and not to the restoration of the damage to the Premises, then Landlord
shall indemnify and hold Tenant harmless from the cost of replacing the damaged tenant
improvements covered by Landlord’s casualty insurance to the extent any insurance proceeds
attributable to the replacement cost thereof is not available for the restoration of such tenant
improvements and provided that (a) Tenant is not in default under this Lease (after notice and the
expiration of the applicable cure period), and (b) Tenant is occupying and conducting business in
a majority of the Lab Space (as defined in Exhibit B) at the Premises prior to the date of the
casualty. Tenant agrees to cooperate with Landlord and its lender if Landlord’s lender requires
the insurance proceeds be deposited in a construction escrow account and disbursed during the
construction of the restoration work.

          In the event any judgment, order, decree or similar directive from any applicable
governmental authority (the “Order”) is issued in connection with any toxic material clean up,
monitoring program or other similar problem in or about the Building, and such problem was not
caused by Tenant, or its agents, contractors, invitees or employees, and the Order unreasonably
interferes with Tenant’s use of the Premises, then Rent shall be abated, proportionately while the
Order is in effect on the basis of that percentage of Tenant’s overall use of the Premises which
is unreasonably interfered with by the terms and conditions of the Order as jointly determined by
Landlord and Tenant. Landlord and Tenant shall meet within the ten (10) business day period
commencing on the date the Order is issued, and negotiate in good faith to attempt to agree upon
the percentage of the Premises which Tenant is unable to use. In the event that Landlord and
Tenant are unable to agree on the percentage of the Premises which Tenant is unable to use within
that ten (10) business day period, then the dispute shall be resolved by Judicial Reference in
accordance with Section 19.1 below.

     10.2 Tenant’s Right to Terminate. Landlord within thirty (30) days after the date of
destruction shall notify Tenant if the Building cannot be fully repaired within one hundred fifty
(150) days after the date of destruction. In such event Tenant may terminate this Lease as of the
40th day after the date of destruction by giving Landlord written notice within ten (10) days
after Tenant’s receipt of Landlord’s notice.

     10.3 Rent Abatement. The Minimum Monthly Rent, Operating Expenses and any other amounts
payable by Tenant to Landlord hereunder (other than amounts which are accrued and unpaid) shall
abate to the extent that the Premises are rendered unusable by such damage or the repair thereof,
and are not used due to such damage or repair, in the proportion that the area of the Premises that
Tenant is prevented from using (and does not use) bears to the total area of the Premises, as
reasonably determined by Landlord and Tenant, taking into consideration such factors as the use of,
and the location of, the damaged portion and the effect of the damage to Tenant’s operations;
provided, however, that such Rent shall not abate to the extent that such interference with
Tenant’s use of the Premises arises from the acts or omissions of Tenant or its agents, employees,
contractors, licensees, or invitees (collectively, “Agents”). Such abatement shall commence with
the damage or destruction and end upon restoration of the Premises. Tenant shall not be entitled
to any compensation or damages from
Landlord for loss of use of the Building or Premises, damage to Tenant’s personal property or
any inconvenience occasioned by such damage, repair or restoration. Notwithstanding the foregoing,
in the event Landlord’s rent abatement insurance provides coverage to Landlord for any abatement of
Tenant’s rent as a result of any acts or omissions of Tenant or its Agents, then Tenant’s rent
shall abate to the extent that Landlord is actually reimbursed by such insurance as a result of
Tenant’s inability to use the Premises.

     Notwithstanding the provisions of this Section 10.3, subject to Sections 6.3.4 and 11.1,
Landlord shall be liable for loss of use of the Premises or damage to Tenant’s personal property
occasioned by Landlord’s repair or restoration to the extent such loss or damage is caused by the
negligence or willful misconduct of Landlord, its employees or agents.

11.0 INDEMNIFICATION

     11.1 Indemnity Obligations. Subject to Section 6.3.4 above and except as otherwise expressly
provided herein, Tenant shall hold harmless, indemnify, and defend Landlord against all claims,
actions, damages, liability and expense (including, without limitation, fees of attorneys,
investigators and experts) (collectively, “Claims”) in connection with loss of life, personal
injury or damage to property in or about the Premises or arising out of the occupancy or use by
Tenant of the Premises or occasioned wholly or in part by any act or omission of Tenant or its
Agents, except to the extent such Claims arise from the negligence or willful misconduct of
Landlord and/or its Agents. Subject to Section 6.3.4 above, and except as otherwise expressly
provided herein, Landlord shall indemnify and hold Tenant harmless from and against all claims,
actions, damages, liability and expense (including, without limitation, fees of attorneys,
investigators and experts) in connection with loss of life, personal

16

 

injury or damage to property
in or about the Premises resulting from the negligence or willful misconduct of Landlord, or its
employees, agents or contractors. Without limiting the foregoing, Tenant will forever release and
hold Landlord and its Agents harmless from all Claims arising out of damage to Tenant’s property,
except to the extent such Claims arise as a result of Landlord’s failure to make repairs that
Landlord is required to make under this Lease after the expiration of any cure period specified in
the Lease to repair the same after having received written notice of the need for such repair. In
no event shall either party be liable to the other for indirect or consequential damages,
including without limitation, any claims for lost profits or business opportunities, arising from
any cause whatsoever, including without limitation any negligence of either party, excepting only
that Tenant shall be fully liable for (a) all damages arising out of a breach of Tenant’s
obligations under Section 15 of the Lease caused by Tenant’s willful failure to comply with any
Landlord request, and (b) any damages, including without limitation, any claims for lost profits
or business opportunities, arising out of the continued occupancy by Tenant of the Premises after
the expiration or earlier termination of this Lease or any renewal thereof (as the expiration date
of the Lease may be extended subject to Section 16 of this Lease), without Landlord’s written
consent, except to the extent such holding over after the expiration or earlier termination is due
to a cause beyond the reasonable control of Tenant when such cause would affect any person
similarly situated (such as a casualty or governmental preemption of priorities or other controls
in connection with a national or other public emergency) but an event or occurrence shall not be
beyond the reasonable control of Tenant when peculiar to Tenant (such as financial inability or
delay in ordering materials requiring a long lead time, or a delay making requests for
governmental approvals or permits).

12.0 CONDEMNATION

     12.1 Permanent Taking. If (i) all of the Premises is covered by a condemnation, (ii) any
part of the Premises is covered by a condemnation and the remainder thereof is insufficient for
the reasonable operation therein of Tenant’s business, or (iii) any of the Premises is covered by
a condemnation and, in Landlord’s opinion, it would be impractical to restore the remainder
thereof, then this Lease shall terminate and all obligations hereunder shall cease as of the date
upon which possession is taken by the condemnor. If there is a condemnation and this Lease has
not been terminated pursuant to this Section, the obligations of Landlord and Tenant shall be
unaffected by such condemnation except that Rent shall abate in proportion to the area, if any, of
the Building covered by such condemnation. Statutory provisions with respect to termination upon
a partial taking of leased property shall not be applicable to this Lease.

     12.2 Condemnation Award. In the event of a condemnation affecting Tenant, Tenant shall have
the right to make a separate claim against the condemnor for loss of Tenant’s property and for
relocation expenses. Except as aforesaid, Tenant hereby assigns to Landlord all other claims
against the condemnor.

     12.3 Temporary Taking. No temporary taking of the Premises or any part thereof shall
terminate this Lease or give Tenant any right to any abatement of Rent. Any award made to Tenant
by reason of such temporary taking shall belong entirely to Tenant and the Landlord shall not be
entitled to share therein. For the purpose of this Section 12.3, a taking shall be considered
temporary only if it is one hundred twenty (120) calendar days or less in duration.

13.0 QUIET ENJOYMENT

     13.1 Tenant’s Rights. Landlord covenants that Tenant, upon performing the terms, conditions
and covenants of this Lease shall have quiet and peaceful possession of the Premises as against
any person claiming the same by, through or under Landlord, subject, however, to the exceptions,
reservations and conditions of this Lease.

14.0 ASSIGNMENT AND SUBLETTING

     14.1 Limitation. Tenant shall not transfer this Lease, voluntarily or by operation of law,
without the prior written consent of Landlord, which consent shall not be unreasonably withheld,
conditioned or delayed. For purposes of this Section 14, “transfer” shall include any sublease,
assignment, license or concession agreement, mortgage or hypothecation of this Lease or Tenant’s
interest therein or in all or a portion of the Premises, but shall not include any Permitted
Transfer or Permitted Concession (as such terms are defined below). For purposes of this Lease,
the term “transfer” shall also include (i) if Tenant is a closely held corporation (i.e., whose
stock is not publicly held and not traded through an exchange or over the counter), (A) the
dissolution, merger, consolidation or other reorganization of Tenant resulting in a change of
control of Tenant or (B) the sale, transfer, pledge or hypothecation by Tenant of all or
substantially all of its assets or all or substantially all of its stock; or (ii) if Tenant is a
publicly traded corporation, a merger of Tenant with another corporation or a sale or other
disposition of ten percent (10%) or more of its stock within a twelve (12)-month period or a sale
of substantially all its assets. “Control,” as used in this Article 14, shall mean the possession
of the power to direct or cause the direction of the management or policies of an entity, whether
through ownership or voting securities, or by contract or otherwise. Landlord shall not consent
to any transfer which provides for a rental or other payment based in whole or in part on the net
income or profits derived by a user or occupant of the Premises from its use or occupancy of the
Premises (other than an amount based on a fixed percentage or percentages of receipts or sales).
A consent to one transfer shall not be deemed to be a consent to any subsequent transfer.
Notwithstanding the foregoing, Tenant may assign this Lease or sublet the Premises, or any portion
thereof, with at least fifteen (15) calendar days prior written notice to Landlord, but without
Landlord’s consent, to any corporation which controls, is controlled by or is under common control
with Tenant, or to any corporation resulting from a merger or consolidation with Tenant, or to any
person or entity which acquires all or substantially all of the assets of Tenant’s business (or
all or substantially all of the equity interests in Tenant) as a going concern (each, a “Permitted
Transferee”). Any transfer without Landlord’s consent (excluding any transfer that does not
require Landlord’s consent pursuant to this Section 14.1), shall be void at the option of
Landlord, giving Landlord the right to exercise any or all of its rights under Section

17

 

17 hereof.
None of the foregoing shall be interpreted to preclude Tenant permitting the use or occupancy of
the Premises by representatives or employees of any entity which is then performing services
related to Tenant’s business operations in the Premises (as long as the use or occupancy of the
Premises by such representatives or employees is not otherwise a subterfuge to avoid Tenant’s
assignment and subletting obligations under this Article 14), including, but not limited to
vendors providing outsourced services, such as employee travel services or food and beverage
services at the Premises (a “Permitted Concession”).

     Notwithstanding the foregoing, as a condition to Tenant’s right to transfer to a Permitted
Transferee, (i) if the transfer is an assignment of Tenant’s entire interest in this Lease, the
Permitted Transferee shall assume, in full and in writing, the obligations of Tenant under this
Lease, and Tenant shall provide to Landlord written documentation, signed by such Permitted
Transferee, evidencing the same, (ii) if the transfer is a sublease of a portion of Tenant’s
interest in the Lease, the Permitted Transferee shall assume, to the extent applicable to the
portion of the Premises subleased, and in writing, the obligations of Tenant under this Lease, and
Tenant shall provide to Landlord written documentation, signed by Permitted Transferee, evidencing
the same, (iii) Tenant shall remain fully liable under the Lease, and (iv) the use of the Premises
shall be permitted under this Lease. Furthermore, within ten (10) days after any transfer to a
Permitted Transferee, Tenant shall provide Landlord with reasonable documentation and information,
as reasonably requested by Landlord, evidencing that the transferee is sufficiently financially
responsible to perform its obligations in connection with the proposed transfer of this Lease

     14.2 Offer to Landlord. Tenant acknowledges that the terms of this Lease, including Rent,
have been based on the understanding that Tenant shall physically occupy the Premises for the
entire Term. Therefore, upon Tenant’s request for Landlord’s consent to a transfer (if required
pursuant to Section 14.1) of all or a portion of the Premises, Landlord shall be entitled to
sublease from Tenant for Landlord’s own account the portion of the Premises proposed to be
transferred by Tenant by written notice given to Tenant within twenty (20) days of Landlord’s
receipt of such request, upon the same terms as those proposed but otherwise upon the form of this
Lease; provided that Tenant may elect to avoid such sublease by rescinding the transfer request
within twenty (20) days following receipt of Landlord’s election; provided, however, that Tenant’s
right to rescind shall be limited to once every five (5) years (i.e. should Tenant rescind a
transfer request, Tenant shall have no right to rescind again for a period of five years after the
date that Tenant rescinds the transfer request). If Landlord so subleases for its own account,
Landlord shall have the further right to transfer such portion of the Premises to any person or
entity who is not a business competitor of Tenant, and Tenant shall be relieved of any liability
with respect to such portion of the Premises so subleased by Landlord until the term of such
sublease expires or is terminated.

     14.3 Conditions. Notwithstanding the above, the following shall apply to any proposed
transfer:

          (a) No transfer shall relieve Tenant of its obligation to pay Rent and to perform all other
obligations to be performed by Tenant hereunder. The acceptance of rent by Landlord from any
person shall not be deemed to be a waiver by Landlord of any provision of this Lease or to be a
consent to any transfer.

          (b) Any consideration received by Tenant as a result of a sublease or assignment (other than
from a Permitted Transferee or pursuant to a Permitted Concession) which exceeds the total sums
which Tenant is obligated to pay Landlord under this Lease, or the prorated portion thereof if only
a portion of the Premises is transferred, shall be payable to Landlord as additional rent under
this Lease without affecting or reducing any other obligation of the Tenant hereunder.
Notwithstanding the above, Tenant shall be entitled to deduct from such excess consideration its
reasonable expenses associated with such sublease or assignment (e.g., leasing commissions and cost
of alterations, attorneys’ fees, architectural fees, engineering fees and all other similar costs
normally associated with subletting or assigning), along with a reasonable return on all amounts
contributed by Tenant to the purchase and/or installation of the Initial Tenant Improvements (in
accordance with the Work Letter) and any alterations made by Tenant to the Premises associated with
the portion of the Premises being subleased or
assigned, exclusive of any Tenant Improvement Allowance paid by Landlord (and equitably
allocated to the portion of the Premises being subleased or assigned), at the initial book value of
such Initial Tenant Improvements and alterations less depreciation and any asset write-off, as
reasonably agreed upon by Landlord and Tenant. Furniture and equipment paid for and installed in
the Premises by Tenant (based on the initial book value less depreciation) shall be subject to such
reasonable return to the extent such furniture and equipment remains with the Premises as part of
such sublease or assignment. Items of repair, replacement, or maintenance which Tenant is required
to perform by law or under the terms of this Lease and items for which Tenant is in some other
manner reimbursed or compensated, shall not be subject to such return. Tenant’s return shall be an
annualized rate of return of seven percent (7%) of all amounts so contributed by Tenant (“Tenant’s
Return”). Tenant’s Return may be retained by Tenant at any time amounts in excess of applicable
Minimum Monthly Rent, Operating Expenses and any and all other amounts payable to Landlord by
Tenant hereunder (“Excess Consideration”) are paid by a subtenant or assignee. Tenant’s deductions
shall be supported by documentation provided to Landlord upon Landlord’s request, such as invoices,
purchase orders, receipts and construction contracts, detailing the amounts actually paid by Tenant
for those improvements as to which Tenant seeks to deduct such rate of return. Notwithstanding
anything to the contrary set forth above, (i) Tenant’s Return shall accrue continuously from the
date of commencement of any permitted sublease or assignment, (ii) Tenant shall be entitled to
receive 100% of all Excess Consideration until it is reimbursed the full amount of its subleasing
or assignment expenses as described above and has received 100% of Tenant’s Return. Thereafter,
Landlord shall be entitled to 92% of all Excess Consideration.

          (c) Each transfer to which Landlord has consented shall be by an instrument in writing in a
form satisfactory to Landlord, and shall be executed by Tenant and the transferee. Tenant shall
reimburse Landlord for Landlord’s reasonable costs and attorneys’ fees incurred in conjunction
with the processing and documentation of any such request.

15.0 SUBORDINATION; ESTOPPEL CERTIFICATES

18

 

     15.1 Subordination. Landlord represents that as of the date of this Lease, the Property is
not encumbered by a ground lease or a mortgage or deed of trust to which Landlord or any
affiliates of Landlord is a party. Nevertheless, this Lease shall, unless otherwise elected by
Landlord’s first mortgagee, lender, or ground lessor, be subordinate to any ground lease,
mortgage, deed of trust, or any other hypothecation for security (collectively, a “Security
Instrument”) now or hereafter placed upon the Premises and to any and all advances made on the
security thereof and to all modifications, replacements and extensions thereof. Notwithstanding
such subordination, this Lease shall not be terminated, nor shall the rights and possession of
Tenant hereunder be disturbed if Tenant shall not be in default under the terms of this Lease, and
upon such new landlord’s request, Tenant shall attorn to the new landlord or shall enter into a
new lease for the balance of the original or extended term hereof upon the same terms and
provisions contained in this Lease. In the event of a foreclosure of any such mortgage or deed of
trust or any other action or proceeding for the enforcement thereof, or any sale thereunder, this
Lease likewise will not be terminated, nor will the rights and possession of Tenant hereunder be
disturbed if Tenant shall not then be in default under the terms of this Lease, provided that
Tenant shall, at the new owner’s request, attorn to the new owner of the Premises. Tenant agrees
to execute and deliver upon demand such further instruments or documents as may reasonably be
required by Landlord evidencing the subordination of this Lease as set forth above; provided,
however, that Tenant’s covenant to subordinate the Lease is conditioned upon each senior mortgagee
under any senior mortgage executed after the date hereof providing a commercially reasonable
subordination and nondisturbance agreement to Tenant containing the nondisturbance commitment
specified above. This Lease shall, at the election of Landlord’s first mortgagee, lender or ground
lessor, be superior to any such Security Instrument. In any event, Tenant shall execute any
documents required to effectuate the subordination of this Lease or any Security Instrument within
ten (10) business days after Tenant’s receipt of the written request. Tenant shall attorn to any
purchaser at any foreclosure sale, or to any grantee or transferee designated in any deed given in
lieu of foreclosure.

     15.2 Condition of Lease. Within ten 10 business days after Tenant receives Landlord’s
written request, Tenant shall provide a written statement acknowledging the commencement and
termination dates of this Lease, that it is in full force and effect, has not been modified (or if
it has, stating such modifications), and providing any other pertinent factual information as
Landlord reasonably requests.

     15.3 Tenant’s Failure. If Tenant fails to execute and deliver to Landlord any document
requested by Landlord pursuant to Section 15.1 and 15.2 above within the time required therein,
and thereafter, if Landlord delivers a second written notice to Tenant requesting that Tenant
execute and deliver the same to Landlord, then if Tenant fails to execute and deliver such
documents to Landlord within five (5) business days after receiving such written notice from
Tenant, then Tenant hereby irrevocably appoints Landlord as Tenant’s attorney in fact to execute
such documents on Tenant’s behalf, and all statements made in such documents shall be deemed true
and binding upon Tenant, and Landlord’s mortgagee(s) and/or purchaser(s) may rely on said
statements. If Landlord requests more than two such certificate in any one calendar year,
Landlord shall pay Tenant’s actual attorney’s fees associated with reviewing all documents
relating to such additional requests, to the extent such attorney’s fees are reasonable, not to
exceed Five Hundred Dollars ($500.00) per request.

     15.4 Financial Statements. Tenant shall deliver to Landlord such financial statements of
Tenant and its guarantor as may be reasonably requested by Landlord for any purpose, including,
but not limited to Landlord’s efforts to finance, refinance or sell the Premises or any part
thereof (provided that Tenant shall not be required to provide audited financial statements if
unaudited financial statements are prepared in the ordinary course of Tenant or its guarantor’s
business). Landlord acknowledges that such financial information is to be kept confidential and
Landlord agrees to limit the distribution of any financial statements of Tenant or Tenant’s
guarantor to its lender(s), joint venturers, partners, and prospective purchasers, unless Tenant’s
prior consent has been obtained for further distribution. Any distribution shall be limited to the
purposes agreed to by Tenant in granting its consent to such distribution. Landlord shall require
its lender and any other distributees to maintain the confidentiality of such financial
information as a condition of its release of the information. Tenant represents and warrants that
all financial information provided by Tenant or its guarantor to Landlord on behalf of Tenant or
its guarantor prior to execution by Landlord of this Lease is true and complete and fairly
represents the actual financial condition of Tenant and its guarantor, as applicable, as of the
date of such financial information (as indicated in the financial statement), and that there has
been no material adverse change in the financial condition, statements or information provided on
behalf of Tenant or its guarantor, from the date of such financial information to and including
the date of execution of this Lease. Upon Landlord’s request, Tenant shall furnish Landlord with
Tenant and its guarantor’s most recent periodic or annual reports. As long as the common stock
(or American Depository Receipts or any other equity security) of Tenant or its guarantor (or any
affiliate consolidated with Tenant or its guarantor for financial reporting purposes) is
publicly-traded on a United States national stock exchange, and such information is available as
part of Tenant’s or its guarantor’s (as applicable) periodic filings on the SEC’s Edgar website,
and such materials are current per SEC filing requirements, then Tenant may satisfy such submittal
requirement by notifying Landlord that such information is available at the SEC website, and
indicating the company filer of the pertinent information; provided, however, that at Landlord’s
written request, Tenant must satisfy such submittal requirement by delivering a PDF copy of such
filing, via e-mail, to President: e-mail address Legal@Chamb.com. Landlord shall have the right
to change the name and e-mail address of the person identified in the preceding sentence by
delivering written notice of such name and e-mail address change to Tenant, in writing, which name
and e-mail address changes shall be effective upon delivery. Tenant agrees that any material
misrepresentation to Landlord as to Tenant’s or its guarantor’s financial condition, or any
failure to provide financial information required to be provided by Tenant or its guarantor on
behalf of Tenant hereunder, shall constitute a default under this Lease.

16.0 SURRENDER AND HOLDOVER

19

 

     16.1 Condition at End of Term. Subject to the terms of Articles 7 and 10, at the expiration
or earlier termination of the Term, Tenant shall promptly yield up, in the same condition, order
and repair in which they are required to be kept during the Term, the Premises and all alterations
thereto, and all fixtures and equipment servicing the Building and/or the Premises, ordinary wear
and tear excepted.

     16.2 Holdover Terms. If Tenant, or any person rightfully claiming through Tenant, shall
continue to occupy the Premises after the expiration or earlier termination of the Term or any
renewal thereof, with Landlord’s written consent, such occupancy shall be deemed to be under a
month-to-month tenancy under the same terms set forth in this Lease; except that the Minimum
Monthly Rent during such continued occupancy shall be any amount which Landlord may specify in a
written notice to Tenant. Any holding over by Tenant without Landlord’s prior written consent
shall constitute a default hereunder and shall be subject to all the remedies set forth in Section
17. Notwithstanding the above, the minimum monthly rent during any holdover period, with
Landlord’s consent, shall not exceed one hundred fifty percent (150%) of the Minimum Monthly Rent
in effect during the last month of the Lease term, as it may be extended. Notwithstanding the
foregoing, if Tenant, at the time the term of this Lease expires, as well as at the time the
Holdover Notice (as defined below) is delivered to Landlord, is not in default under this Lease,
then provided that Tenant provides Landlord with written notice at least sixty (60) days (and no
more than 120 days) in advance of the expiration date of this Lease stating that Tenant will be
unable to vacate the entire Premises in the condition required by the Surrender Plan on or before
such expiration date due to reasons outside of Tenant’s reasonable control or because of Tenant’s
reasonable business requirements (the “Holdover Notice”), then Landlord shall be deemed to have
consented in writing to a twenty-one (21) day holdover by Tenant after the expiration of the term
of this Lease (the “Permitted Holdover Period”), and Tenant’s holdover occupancy during such
twenty-one day period shall be subject to all terms and provisions of this Lease, provided,
however, that the Minimum Monthly Rent during such Permitted Holdover Period shall be based on an
accrual of the same on a weekly basis in an amount equal to One Hundred Ten percent (110%) of the
Minimum Monthly Rent payable during the last full month of the Lease prior to the Permitted
Holdover Period.

17.0 DEFAULT AND REMEDIES UPON DEFAULT

     17.1 Events. The occurrence of any of the following shall constitute a material default and
breach of this lease by Tenant:

          (a) Any failure by Tenant to pay Rent or to make any other payment required to be made by
Tenant hereunder when due (each occurrence thereof being referred to herein as a “Rent Default”);
provided, however, that Landlord shall exercise no remedies provided in Sections 17.2 and 17.3
unless Tenant fails to cure such Rent Default within ten (10) calendar days after Landlord gives
Tenant written notice of such Rent Default. Notwithstanding the foregoing, should Landlord
deliver to Tenant written notice of a Rent Default, then with respect to any subsequent Rent
Default occurring within one (1) year after the previously noticed Rent Default, Tenant will only
have five (5) calendar days after Landlord gives Tenant written notice of such subsequent Rent
Default to cure the same, provided, however, that the subsequent notice of a Rent Default within
specifies that Tenant only has five (5) calendar days to cure such Rent Default (should such
notice fail to specify that Tenant only has five (5) calendar days to cure such Rent Default, then
Tenant shall have ten (10) calendar days to cure such Rent Default);

          (b) A failure by Tenant to observe and perform any other provision of this Lease (each
occurrence thereof being referred to herein as a “Non-Rent Default”), where such failure continues
for thirty (30) calendar days after written notice thereof by Landlord to Tenant; provided,
however, that if the default cannot reasonably be cured within thirty (30) calendar days, Tenant
shall not be deemed to be in default if Tenant shall, within such thirty (30) calendar day period,
commence to cure and thereafter diligently prosecute the same to completion;

          (c) With respect to Tenant (or if Tenant is a limited liability company or partnership, any
member of or partner in Tenant) or any guarantor of Tenant’s obligations under this Lease
(collectively, with Tenant, a “Tenant Party”), either (1) the appointment of a receiver (except a
receiver appointed at Landlord’s request) to take possession of all or substantially all of the
assets of any Tenant Party, or (2) a general assignment by any Tenant Party for the benefit of
creditors, or (3) any action taken by any Tenant Party or by any other person against any Tenant
Party under any insolvency or bankruptcy act. In the event any of these actions has not been
withdrawn or dismissed within sixty (60) calendar days of the date of filing, Landlord may, at its
option, declare this Lease terminated and forfeited by Tenant in a written notice to Tenant, and
Landlord shall be entitled to immediate possession of the Premises; provided, that Tenant shall not
have such cure right with respect to any of such actions instituted, consented to or taken
voluntarily by Tenant.

     Tenant agrees that any notice given by Landlord pursuant to this Section 17.1(c) which is
served in compliance with Section 21 of this Lease shall be adequate notice for the purpose of
Landlord’s exercise of the remedies specified in Section 17.2 or any other remedies provided by
law. Therefore, any statutory provision relating to the manner of giving notice shall not be
applicable to this Lease.

     17.2 Landlord’s Rights. In the event of any material default by Tenant (as outlined above),
Landlord, in addition to all other remedies provided by law or in equity, shall have the immediate
option to terminate this Lease and all rights of Tenant hereunder by giving written notice of such
intention to terminate. If Landlord shall elect to so terminate this Lease, Landlord may recover from Tenant all damages
suffered by Landlord as a result of Tenant’s material default, including, but not limited to, the
worth at the time of award (computed in accordance with paragraph (3) of Subdivision (a) of
Section 1951.2 of the California Civil Code) of the amount by which the unpaid Rent for the
balance of the Term after the time of award exceeds the amount of such Rent loss that Tenant
proves could be reasonably avoided. If Landlord does not elect to terminate this Lease, Landlord
shall have the

20

 

remedy described in Section 1951.4 of the California Civil Code (Landlord may
continue the Lease in effect after Tenant’s breach and abandonment and recover Rent as it becomes
due, if Tenant has the right to sublet or assign, subject only to reasonable limitations). In
addition, if Landlord elects to continue the Lease in effect, Landlord may relet the Premises or
any part thereof for such term and at such rent and upon such other terms and conditions as
Landlord in its reasonable discretion may deem advisable with the right to make alterations and
repairs to the Premises. Any Rent received by Landlord from a reletting shall be applied to the
payment of (a) any indebtedness other than Rent due hereunder; (b) the cost of such reletting; (c)
the cost of any alterations and repairs to the Premises; (d) Rent due and unpaid hereunder; and
(e) the residue, if any, shall be held by Landlord and applied in payment of future Rent as the
same may become due and payable hereunder. If the Rent received from such reletting is less than
the Rent payable by Tenant, then Tenant shall pay such deficiency to Landlord immediately upon
demand therefore by Landlord. Such deficiency shall be calculated and paid monthly. Tenant shall
also pay to Landlord as soon as ascertained, any expenses incurred by Landlord that are not
covered by the Rent received from such reletting.

     17.3 Late Charge & Interest. Tenant shall pay a one time administrative fee (“Late Fee”) for
any Rent that is not paid within five (5) days after the date when due in an amount equal to the
greater of $100 or three percent (3%) of the amount due. Such late fee shall be due and payable
when incurred. In addition, all Rent (including all Late Fees) that are not paid when due shall
bear interest at the rate of ten percent (10%) per annum, or the maximum legal rate, whichever is
less. Landlord and Tenant agree that the Late Fee and interest set forth in this Section 17.3
represents a reasonable estimate of Landlord’s loss of the use of the money owed, and the costs
and expenses incurred by Landlord as a result of the non payment and is fair compensation to
Landlord for the loss suffered from Tenant’s nonpayment. Acceptance of any interest and/or late
payment penalty shall not constitute a waiver of Tenant’s default with respect to such nonpayment
by Tenant nor prevent Landlord from exercising any other rights or remedies available to Landlord
under this Lease. Notwithstanding the foregoing, after the second late payment by Tenant, Landlord
may require Tenant make advance payments of Rent on a quarterly basis or by wire transfer.

     17.4 Termination. No re-entry or taking possession of the Building or the Premises or any
other action under this Section shall be construed as an election to terminate this Lease unless a
written notice of such intention is given to Tenant or unless the termination thereof is decreed
by a Court of competent jurisdiction. Notwithstanding any reletting without termination by
Landlord because of any material default by Tenant, Landlord may at any time after such reletting
elect to terminate this Lease for any such material default.

     17.5 No Waiver. No waiver by either party of any breach by the other party shall be a waiver
of any subsequent breach, nor shall any forbearance by one party to seek a remedy for any breach
by the other party constitute a waiver by the non-breaching party of any rights and remedies with
respect to such or any subsequent breach. Efforts by either party to mitigate the damages caused
by the other party’s default shall not constitute a waiver by the non-breaching party to recover
damages hereunder.

     17.6 Cure of Tenant’s Default. Except as otherwise provided in Section 6.4.4, should Tenant
fail to perform any obligation imposed by this Lease, Landlord may perform or contract for the
performance of Tenant’s obligation after having given Tenant reasonable notice of the failure(s)
and a reasonable opportunity, which in no case shall exceed ten (10) calendar days, to remedy the
failure, and Tenant shall pay Landlord for all costs incurred by Landlord in connection therewith.
The exercise of one right or remedy by Landlord shall not in any way impair its right to any
other right or remedy. Should Tenant consist of more than one person or entity, they shall be
jointly and severally liable on this Lease.

     17.7 Waiver. Tenant waives (for itself and all persons claiming under Tenant) any right of
redemption or reinstatement of Tenant under Civil Code Sections 1179 and 3275 in the event that
Tenant is dispossessed from the Premises for any reason.

     17.8 Accord and Satisfaction. No payment by Tenant or receipt by Landlord of a lesser amount
than the amounts owed to Landlord in this Lease shall be deemed to be other than on account of the
earliest due amounts owed, nor shall any endorsement or statement on any check or letter
accompanying any check or payment be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord’s right to recover the balance of the Rent or
pursue any other remedy provided for in this Lease. In connection with the foregoing, Landlord
shall have the absolute right in its sole discretion to apply any payment received from Tenant to
any account or other payment of Tenant then not current and due or delinquent under the terms of
this Lease.

18.0 LIABILITY OF LANDLORD

     18.1 Landlord’s Right to Cure; Limitations on Liability. In the event of any actual or
alleged failure, breach or default by Landlord hereunder pertaining to the Building or the
Premises, Tenant shall give Landlord written notice thereof and Landlord shall not be deemed in
default unless it fails to diligently commence to cure such default within thirty (30) calendar
days after its receipt of such notice. Landlord’s (which term includes Landlord’s partners,
co-venturers, co-tenants, officers, directors, employees, agents (including any
property manager for the Premises), or representatives, all of whom have the authority to act
on Landlord’s behalf) liability to Tenant for any such default shall be limited to its ownership
interest in the Premises or the proceeds of a public sale of such interest pursuant to foreclosure
of a judgment against Landlord, plus any insurance proceeds actually received by Landlord with
reference to the Premises and not expended on the Premises or to pay claims covered by such
proceeds. Landlord shall not be liable for any deficiency beyond its interest in the Premises and
the amount of such insurance proceeds.

21

 

     18.2 Release or Transfer; Successor Liability. If Landlord shall transfer its interest in
the Building or the Premises, then from and after the effective date of the transfer, Landlord
shall be released from all obligations under this Lease, except for those already accrued. If
Landlord transfers the Security Deposit to the transferee, then upon the written acceptance of
Landlord’s obligations under said lease regarding the return thereof to Tenant by said transferee,
Landlord shall be discharged from any further liability in reference to such Security Deposit.

19.0 JUDICIAL REFERENCE/ ATTORNEY FEES

     19.1 JUDICIAL REFERENCE. EXCEPT FOR THOSE CLAIMS AND/OR ACTIONS THAT ARE SUBJECT TO
RESOLUTION PURSUANT TO STATUTORY UNLAWFUL DETAINER PROVISIONS SET FORTH IN THE CALIFORNIA CIVIL
CODE AND CODE OF CIVIL PROCEDURE, WHICH CLAIMS AND/OR ACTIONS LANDLORD SHALL HAVE THE RIGHT TO
PURSUE IN ANY MANNER PERMITTED BY LAW, ANY CONTROVERSY, BREACH OR DISPUTE ARISING OUT OF THIS
LEASE, OR RELATING TO THE INTERPRETATION OF ANY TERM OR PROVISION OF THIS LEASE SHALL BE HEARD BY
A REFEREE PURSUANT TO THE PROVISION OF THE CALIFORNIA CODE OF CIVIL PROCEDURE, SECTIONS 638-645.1
INCLUSIVE. THE PARTIES SHALL PROMPTLY AND DILIGENTLY COOPERATE WITH ONE ANOTHER AND THE REFEREE,
AND SHALL PERFORM SUCH ACTS AS MAY BE NECESSARY TO OBTAIN PROMPT AND EXPEDITIOUS RESOLUTION OF THE
DISPUTE OR CONTROVERSY IN ACCORDANCE WITH THE TERMS HEREOF. THE PARTIES AGREE THAT THE REFEREE
SHALL HAVE THE POWER TO DECIDE ALL ISSUES OF FACT AND LAW AND REPORT HIS/HER DECISION THEREON, AND
TO ISSUE ALL LEGAL AND EQUITABLE RELIEF APPROPRIATE UNDER THE CIRCUMSTANCES BEFORE HIM/HER. THE
PARTIES SHALL AGREE UPON A SINGLE REFEREE WHO SHALL BE A RETIRED JUDGE OF A CALIFORNIA SUPERIOR
COURT WHO SHALL THEN TRY ALL ISSUES, WHETHER OF FACT OR LAW, AND REPORT A FINDING AND JUDGMENT
THEREON. IF THE PARTIES ARE UNABLE TO AGREE UPON A REFEREE WITHIN TEN (10) DAYS OF A WRITTEN
REQUEST TO DO SO BY ANY PARTY, THEN ANY PARTY MAY THEREAFTER SEEK TO HAVE A REFEREE APPOINTED
PURSUANT TO THE CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 638 AND 640.

BY PLACING THEIR INITIALS BELOW, THE PARTIES AGREE TO RESOLVE ALL DISPUTES OF LAW AND FACT THAT
ARE SUBJECT TO THE JUDICIAL REFERENCE AS SET FORTH HEREIN BY A GENERAL REFERENCE TO A RETIRED
CALIFORNIA SUPERIOR COURT JUDGE.

	 	 	 
	 
	 	 
	LANDLORD
	 	TENANT

     19.2 Venue. Except for those disputes between Landlord and Tenant that are subject to
judicial reference, which judicial reference proceedings shall take place in the County where the
Premises are located, The parties to this Lease consent and agree that jurisdiction, venue and
forum shall be had only in a state or federal court located in the County of San Mateo,
California, with respect to any action which, in whole or in part, arises under or relates to this
Lease.

     19.3 Attorney Fees. The prevailing party in any dispute between Landlord and Tenant that is
subject to the statutory unlawful detainer provisions specified in the California Code of Civil
Procedure and/or California Civil Code shall be entitled to recover from the losing party, costs
of suit and reasonable attorneys’ fees.

20.0 INTERPRETATION

     20.1 Captions. The captions in this Lease are for convenience only and are not a part of
this Lease and do not in any way define, limit, describe or amplify the terms and provisions of
this Lease or the scope or intent thereof.

     20.2 Entire Agreement. This Lease represents the entire agreement between the parties hereto
and there are no collateral or oral agreements or understandings between Landlord and Tenant with
respect to the Premises. No right, easements or licenses are acquired in the Premises or any land
adjacent to the Premises by Tenant by implication or otherwise except as expressly set forth in
the provisions of this Lease. Tenant agrees to make such changes to this Lease as are required by
any mortgagee, provided such changes do not substantially affect Tenant’s rights or obligations
hereunder. This Lease shall not be modified in any manner except by an instrument in writing
executed by the parties. The masculine (or neuter) pronoun and the singular number shall include
the masculine, feminine and neuter genders and the singular and plural number.

     20.3 Exhibits. Each writing or plan referred to herein as being attached hereto as an
Exhibit or otherwise designated herein as an Exhibit hereto is hereby made a part hereof.

     20.4 Severability; Governing Law. If any provision of this Lease shall be declared
unenforceable in any respect, such unenforceability shall not affect any other provision of this
Lease, and each such provision shall be deemed to be modified, if possible, in such a manner as to
render it enforceable and to preserve to the extent possible the intent of the parties as set
forth herein. This Lease shall be construed and enforced in accordance with the laws of the State
of California.

     20.5 Authority. If Tenant is a corporation, partnership or any other form of business
association or entity, each individual executing this Lease on behalf of Tenant represents and
warrants that he is duly authorized to execute and deliver this Lease on behalf of said entity in
accordance with its corporate bylaws, statement of

22

 

partnership, certificate of limited partnership
or other appropriate organizational documents, as the case may be, and that this Lease is binding
upon said entity in accordance with its terms. At the time of execution of this Lease, Tenant
shall provide Landlord with corporate resolutions or other appropriate written authorization, in a
form acceptable to Landlord, authorizing the execution, delivery and performance of this Lease.
The failure of Tenant to deliver the same to Landlord within five (5) business days of Landlord’s
request therefor shall be deemed a default under this Lease. (If more than one party comprises
Tenant, then the obligations of such parties hereunder shall be joint and several.)

     20.6 Rules and Regulations. Landlord shall have the right to establish, modify and enforce
reasonable rules and regulations (“Rules and Regulations”) with respect to the care and orderly
management of the Premises and Tenant shall abide by the same. Tenant acknowledges the Rules and
Regulations expressly set forth in Exhibit C hereto do not deprive Tenant of any material
rights under this Lease. Whenever the Rules and Regulations conflict with this Lease, this Lease
shall control and be deemed the prevailing document for purposes of resolving the conflict.

21.0 NOTICES

     21.1 Notices of Default. All notices of default hereunder shall be in writing and shall only
by made by either (a) personal delivery, in which case, such notice shall be deemed to have been
received on the date of delivery, (b) by certified mail, postage prepaid, return receipt
requested, in which such notice is effective on receipt if delivery is confirmed by a return
receipt, or (c) by a professional courier company with charges prepaid or charged to the sender’s
account, in which case notice is effective on delivery if delivery is confirmed by the delivery
service. Notices of default may not be given by facsimile or by electronic mail. If a
representative is not generally available during normal business hours to accept delivery or
receipt of a notice, then a notice of default or other notice may be sent by first class mail to
the last address of the recipient known to the party giving the notice, in which case notice is
effective on delivery or leaving such notice at such last known address.

     21.2 Notices for Other Purposes. Except as otherwise expressly set forth in this Lease, all
notices or other communications under this Lease by either party to the other may be served and
delivered (a) in the manner set forth in Section 21.1 above, or (b) by facsimile, with a copy via
e-mail, provided receipt of confirmation of transmission thereof is obtained (in which case, such
notice shall be deemed to have been received on receipt of confirmation of both transmissions).

     21.3 General Provisions Regarding Notices. The Landlord’s and Tenant’s addresses for written
notices required to be given hereunder shall be the addresses set forth on page 3 of this Lease,
or at such other place designated by advance written notice delivered in accordance with the
foregoing. Any correctly addressed notice that is refused, unclaimed, or undeliverable because of
an act or omission of the party to be notified shall be considered to be effective as of the first
date that the notice was refused, unclaimed or considered undeliverable by the courier service,
messenger or postal authority. If a notice is received on a Saturday, Sunday or legal holiday, or
after 5:00 p.m. (and before 12:00 a.m.), it shall be deemed received on the next business day.

22.0 LETTER OF CREDIT

     22.1 Requirements. Within fifteen (15) days following Tenant’s receipt of written
notice from Landlord that Landlord has received all permits required for construction of the
Landlord’s Work, Tenant shall deliver to Landlord, as protection for the full and faithful
performance by Tenant of all of its obligations under this Lease and for all losses and damages
Landlord may suffer (or that Landlord reasonably estimates it may suffer) as a result of any
breach or default by Tenant under this Lease, an irrevocable and unconditional negotiable standby
Letter of Credit (“Letter of Credit”), in a form reasonably acceptable to Landlord, payable at an
office in the San Francisco Bay Area, California, running in favor of Landlord and issued by a
solvent, nationally recognized bank with a long term rating of BBB or higher, under the
supervision of the Superintendent of Banks of the State of California, or a national banking
association, in the amount of Six Million Dollars (the “Letter of Credit Amount”). The Letter of
Credit Amount is subject to reduction from time to time pursuant to the terms of Exhibit H
to this Lease. Tenant shall pay all expenses, points, or fees incurred by Tenant in obtaining the
Letter of Credit. The Letter of Credit shall (1) be “callable” at sight, irrevocable, and
unconditional; (2) be maintained in effect, whether through renewal or extension, for the period
from the Lease Commencement Date and continuing until the date (the “Letter of Credit Expiration
Date”) that is one hundred twenty (120) after the expiration of the Term, and will either be
automatically extended upon any extension of the initial Term or Tenant shall deliver a new Letter
of Credit or certificate of renewal or extension to Landlord at least forty-five (45) days before
the expiration of the Letter of Credit then held by Landlord, without any action whatsoever on the
part of Landlord; (3) be fully assignable by Landlord, its successors, and assignees of its
interest in the Premises; (4) permit partial draws and multiple presentations and drawings; and
(5) be otherwise subject to the Uniform Customs and Practices for Documentary Credits (1993-Rev),
International Chamber of Commerce Publication #500, or the
International Standby Practices-ISP 98, International Chamber of Commerce Publication #590.
In addition, the form and terms of the Letter of Credit and the bank issuing the same (the “Bank”)
shall be acceptable to Landlord, in Landlord’s reasonable discretion. Landlord, or its then
managing agent, shall have the right to draw down an amount up to the face amount of the Letter of
Credit if any of the following shall have occurred or be applicable: (a) Landlord certifies that
such amount is due to Landlord under the terms and conditions of this Lease, and that Tenant is in
default beyond all cure periods applicable thereto, provided that if Landlord is prevented from
delivering a notice of default to Tenant for any reason, including, without limitation, because
Tenant has filed a voluntary petition, or an involuntary petition has been filed against Tenant,
under the Bankruptcy Code (hereinafter defined), then no such notice and cure period shall be
required; (b) Tenant or any guarantor of Tenant’s obligations under this Lease has filed a
voluntary petition under any chapter of the U.S. Bankruptcy Code or any similar state law
(collectively, the “Bankruptcy Code”); (c) Tenant or any guarantor of Tenant’s obligations under
this Lease has assigned any or

23

 

all of its assets to creditors in accordance with any federal or
state laws; (d) an involuntary petition has been filed against Tenant or any guarantor of Tenant’s
obligations under this Lease under any chapter of the Bankruptcy Code, which petition is not
dismissed within sixty (60) days after the date it is filed; provided, however, that if Tenant is
still operating its business in the Premises and this Lease has not been terminated, Landlord may
draw upon the Letter of Credit only to the extent such amount is due Landlord under the terms of
this Lease or the guaranty of this Lease; or (e) the Bank has notified Landlord that the Letter of
Credit will not be renewed or extended through the Letter of Credit Expiration Date. The Bank will
honor the Letter of Credit regardless of whether Tenant disputes Landlord’s right to draw on the
Letter of Credit.

     22.2 Transfers. The Letter of Credit shall also provide that Landlord, its successors,
and assigns, may, at any time and without notice to Tenant and without first obtaining Tenant’s
consent, transfer (one or more times) all or any portion of its interest in and to the Letter of
Credit to another party, person, or entity, provided such transferee is the assignee of the
Landlord’s rights and interests in and to this Lease, or to any lender providing financing to
Landlord. In the event of a transfer of Landlord’s interest in the Building, Landlord shall
transfer the Letter of Credit, in whole or in part, to the transferee and Landlord shall then
(provided such transferee assumes all of Landlord’s obligations under this Lease), be released by
Tenant from all liability therefor, and it is agreed that the provisions of this Section shall
apply to every transfer or assignment of the whole or any portion of the Letter of Credit to a new
landlord. In connection with any such transfer of the Letter of Credit by Landlord, Tenant shall
execute and submit to the Bank such applications, documents, and instruments as may be necessary to
effectuate such transfer, and Landlord shall be responsible for paying the Bank’s transfer and
processing fees in connection with any such transfer.

     22.3 Restoration. If, as a result of any drawing by Landlord on the Letter of Credit,
the amount of the Letter of Credit shall be less than the Letter of Credit Amount, Tenant shall,
within ten (10) business days after the drawdown by Landlord, take such actions as are required to
restore the Letter of Credit Amount as security for Tenant’s obligations under this Lease, which
may include, but is not limited to, providing Landlord with additional letter(s) of credit in an
amount equal to the deficiency, provided such additional letter(s) of credit comply with the
applicable requirements of the this Section 22. If Tenant fails to comply with this requirement,
such failure shall be deemed a Rent Default under Section 17.1(a) of this Lease, provided that if
Landlord is prevented from delivering a notice of default to Tenant for any reason, including,
without limitation, because Tenant has filed a voluntary petition, or an involuntary petition has
been filed against Tenant, under the Bankruptcy Code, then no such notice of default and cure
period shall be required for a Rent Default under Section 17.1(a) of this Lease.

     22.4 Renewals. Tenant covenants and warrants that it will neither assign nor encumber
the Letter of Credit or any part of it and that neither Landlord nor its successors or assigns will
be bound by any such assignment, encumbrance, attempted assignment, or attempted encumbrance.
Without limiting the generality of the foregoing, if the Letter of Credit expires earlier than the
Letter of Credit Expiration Date, Landlord will accept a renewal of the letter of credit (such
renewal letter of credit to be in effect and delivered to Landlord, as applicable, not later than
forty-five (45) days before the expiration of the Letter of Credit), which shall be irrevocable and
automatically renewable as required in section 22.1 through the Letter of Credit Expiration Date on
the same terms as the expiring Letter of Credit or such other terms as may be acceptable to
Landlord in its sole discretion. However, if the Letter of Credit is not timely renewed, or if
Tenant fails to maintain the Letter of Credit in the amount and in accordance with the terms set
forth in section 22.1, Landlord shall have the right to present the Letter of Credit to the Bank in
accordance with the terms of section 22.1, and the proceeds of the Letter of Credit may be applied
by Landlord against any Rent payable by Tenant under this Lease that is not paid when due and to
pay for all losses and damages that Landlord has suffered or that Landlord reasonably estimates
that it will suffer as a result of any breach or default by Tenant under this Lease. Any unused
proceeds shall be deemed held by Landlord as security in accordance with applicable laws, but need
not be segregated from Landlord’s other assets. Landlord agrees to pay to Tenant within thirty
(30) days after the Letter of Credit Expiration Date the amount of any proceeds of the Letter of
Credit received by Landlord and not applied against any Rent payable by Tenant under this Lease
that was not paid when due or used to pay for any losses and damages suffered by Landlord (or
reasonably estimated by Landlord that it will suffer) as a result of any breach or default by
Tenant under this Lease; provided, however, that if before the Letter of Credit Expiration Date a
voluntary petition is filed by Tenant, or an involuntary petition is filed against Tenant by any of
Tenant’s creditors, under the Bankruptcy Code, then Landlord shall not be obligated to make such
payment in the amount of the unused Letter of Credit proceeds until either all preference issues
relating to payments under this Lease have been resolved in such bankruptcy or reorganization case
or such bankruptcy or reorganization case has been dismissed.

     22.5 Draws. Tenant acknowledges and agrees that Landlord is entering into this Lease
in material reliance on the ability of Landlord to draw on the Letter of Credit on the occurrence
of any breach or default on the
part of Tenant under this Lease. If Tenant shall breach any provision of this Lease or
otherwise be in default under this Lease, Landlord may, but without obligation to do so, and
without notice to Tenant, draw on the Letter of Credit, in part or in whole, to cure any breach or
default of Tenant and to compensate Landlord for any and all damages of any kind or nature
sustained or which Landlord reasonably estimates that it will sustain resulting from Tenant’s
breach or default, including any damages that accrue upon termination of the Lease under the Lease
and/or Section 1951.2 of the California Civil Code or any similar provision. The use, application,
or retention of any proceeds of the Letter of Credit, or any portion of it, by Landlord shall not
prevent Landlord from exercising any other right or remedy provided by this Lease or by any
applicable law, it being intended that Landlord shall not first be required to proceed against the
Letter of Credit, and shall not operate as a limitation on any recovery to which Landlord may
otherwise be entitled. Tenant agrees not to interfere in any way with payment to Landlord of the
proceeds of the Letter of Credit, following a draw properly made by Landlord of any portion of the
Letter of Credit. No condition or term of this Lease shall be deemed to render the Letter of
Credit conditional to justify the issuer of the Letter of Credit in failing to honor a drawing on
such Letter of Credit in a timely manner. Tenant agrees and acknowledges that (1) the Letter of
Credit constitutes a separate and independent contract between Landlord and the

24

 

Bank; and (2)
Tenant is not a third party beneficiary of such contract (3) Tenant has no property interest
whatsoever in the Letter of Credit; and (4) if Tenant becomes a debtor under any chapter of the
Bankruptcy Code, neither Tenant, any trustee, nor Tenant’s bankruptcy estate shall have any right
to restrict or limit Landlord’s claim or rights to the Letter of Credit by application of Section
502(b)(6) of the U.S. Bankruptcy Code or otherwise.

     22.6 Replacement. Tenant may, from time to time, replace any existing Letter of Credit
with a new Letter of Credit if the new Letter of Credit:

          (a) Becomes effective at least 30 days before expiration of the Letter of Credit that it
replaces;

          (b) Is in the required Letter of Credit amount;

          (c) Is issued by a Letter of Credit bank acceptable to Landlord; and

          (d) Otherwise complies with the requirements of Section 22 and all subsections thereof.

     22.7 Reduction Schedule. The Letter of Credit Amount is subject to reduction as
provided in Exhibit H to the Lease. Provided that, as of each date of reduction of the
Letter of Credit Amount set forth in Exhibit H, Tenant (or the guarantor of its Lease
obligations, as applicable) complies with the requirements for reduction as provided in Exhibit
H, and provided further that, on or before the applicable date of such reduction, Tenant
tenders to Landlord a replacement Letter of Credit or a certificate of amendment to the existing
Letter of Credit, conforming in all respects to the requirements of this Section 22 and all
subsections hereof as modified by Exhibit H, in the applicable Letter of Credit Amount as of such
date of reduction, Landlord shall exchange the Letter of Credit then held by Landlord for the
replacement or amended Letter of Credit tendered by Tenant.

     22.8 Not a Security Deposit. Landlord and Tenant acknowledge and agree that in no
event or circumstance shall the Letter of Credit or any renewal of it or any proceeds applied by
Landlord as provided in this Lease be (1) deemed to be or treated as a “security deposit” within
the meaning of California Civil Code Section 1950.7, (2) subject to the terms of Section 1950.7, or
(3) intended to serve as a “security deposit” within the meaning of Section 1950.7. Landlord and
Tenant (1) agree that Section 1950.7 and any and all other laws, rules, and regulations applicable
to security deposits in the commercial context (“Security Deposit Laws”) shall have no
applicability or relevancy to the Letter of Credit, and (2) waive any and all rights, duties, and
obligations either party may now or in the future have relating to or arising from the Security
Deposit Laws.

23.0 BROKERS

     23.1 Indemnity. Landlord and Tenant hereby warrant to each other that they have had no
dealings with any real estate broker or agent in connection with the negotiation of this Lease,
and that they know of no other real estate broker or agent who is entitled to a commission in
connection with this Lease. Each party agrees to indemnify and defend the other party against and
hold the other party harmless from any and all claims, demands, losses, liabilities, lawsuits,
judgments, costs and expenses (including without limitation reasonable attorneys’ fees) with
respect to any leasing commission or equivalent compensation alleged to be owing on account of any
dealings with any real estate broker or agent occurring by, through, or under the indemnifying
party.

24.0 SIGNAGE

     24.1 Identification Sign. Tenant shall, subject to Landlord’s written approval, which
approval shall not be unreasonably withheld, conditioned or delayed, be entitled to (a) all
Building signage permitted by applicable law, including but not limited to one or more
building-top parapet identification signs (in locations reasonably agreed to by Landlord), and (b)
other exterior signs in and about the Premises permitted by applicable law; provided, however,
that with respect to all such signage referenced in clauses (a) and (b) above, (i) Landlord
approves the design and location of such signage, which approval shall not be unreasonably
withheld, conditioned or delayed, (ii) the City of South San Francisco approves the same, if
required by law, (iii) such signage is in keeping with the master signage program for the Gateway
Business Park, and (iv) such signage does not affect the parking at the Premises. Moreover,
Tenant shall have the use of the monument sign being installed on the Premises by Landlord as part
of Landlord’s Work, provided, however that the requirements of clauses (i) through (iv) above are
satisfied. The cost of all of Tenant’s signage, its installation, maintenance and ultimate
removal
expense shall be at Tenant’s sole expense. At the expiration or earlier termination of this
Lease, Tenant shall, at its sole cost, cause its signage to be removed and shall restore the area
upon which such signage was affixed to the condition existing prior to installation, normal wear
and tear excepted. Except as otherwise expressly set forth to the contrary in this Section 24,
the design, installation, and construction of all signs shall be subject to the terms and
provisions of this Lease (and in the Work Letter, if applicable) governing alterations and/or the
Initial Tenant Improvements, as applicable.

25.0 PARKING

     25.1 Parking. Tenant shall be provided with the exclusive right to use the parking spaces of
the Premises, which shall be not less than 291 automobile parking spaces on the Premises except for
the parking spaces on the Adjacent Parking Area as hereinafter described; provided, however, that
if the number of parking spaces on the Premises are reduced below such minimum requirement as a
result of changes beyond Landlord’s reasonable control, Landlord may satisfy the parking
requirements through non-exclusive parking spaces on properties in the vicinity of the Premises as
hereinafter provided. The parking stalls and the location of the same at the Premises as of the
date hereof are shown on the Final Building/Parking/Service Area Plan attached hereto as Exhibit F.
Notwithstanding the foregoing, Landlord may provide up to thirty-eight (38) non-exclusive use
parking stalls on

25

 

adjacent parcels commonly known as 1000 Gateway Boulevard, 200 Oyster Point
Boulevard and/or 900 Gateway Boulevard (collectively, the “Adjacent Parking Area”) to satisfy (in
equivalent numbers) the number of exclusive use parking stalls required on the Premises, provided
that (a) Tenant is granted the right to utilize such parking stalls under a reciprocal parking
easement or license agreement that is binding on the Premises and the adjacent property (the
"Reciprocal Parking Easement Agreement”), (b) such parking spaces shall be without cost to Tenant
(except for the maintenance costs associated with such parking areas that are allocated to the
Premises under the Reciprocal Parking Easement Agreement, and (c) any restrictions on Tenant’s use
of such parking stalls shall be no less favorable than those imposed on other persons using such
parking spaces. Notwithstanding anything to the contrary contained herein, Landlord and Tenant
acknowledge that Landlord and the Adjacent Parking Area owner may not have executed the Reciprocal
Parking Easement Agreement as of the date of execution of this Lease. Provided the Reciprocal
Parking Easement complies with clauses (b) and (c) of this Section 25, Landlord shall have the
right to execute and record such Reciprocal Parking Easement Agreement, and to bind the Premises to
the terms of the Reciprocal Parking Easement Agreement. All parking spaces shall be available for
Tenant’s use seven (7) days per week, and twenty-four (24) hours per day, subject to (a) Landlord’s
exercise of its rights and obligations specified herein, (b) the terms of this Lease, including but
not limited to the Rules and Regulations attached as Exhibit C, (c) all matters of record as of the
date of this Lease, and (d) all the terms and provisions of the Reciprocal Easement Agreement (with
respect to Tenant’s rights in the Adjacent Parking Area only). Tenant shall be entitled, at its
sole cost and expense, to cause an access control system (card key activated or otherwise) to be
installed at the point of entry into the garage parking areas (the “Access Control System”).

26.0 MEMORANDUM OF LEASE

     26.1 Memorandum of Lease. Upon the request of either party, the other party shall execute and
acknowledge and deliver to the requesting party a Memorandum of Lease in form and substance
reasonably satisfactory to the requesting party. The requesting party shall have the right to
record the Memorandum of Lease in the Official Records of San Mateo County. If such Memorandum of
Lease is recorded, Tenant agrees to execute and acknowledge a quitclaim deed in favor of Landlord
at the expiration or earlier termination of this Lease.

27.0 CROSS-DEFAULT

     27.1 Cross-Default. So long as the Landlord under this Lease and the landlord under the
following leases including the 700 Gateway Boulevard Lease dated April 14, 1997 (the “700 Lease”),
the 750/800/1000 Gateway Boulevard Lease dated April 14, 1997 (the “750/800/1000 Lease”), the 750G
Gateway Boulevard Lease dated September 21, 2004 (the “750G Lease”), or the 750R Gateway Boulevard
Lease dated September 29, 2006 (the “750R Lease”) are affiliated, any default by Tenant under
Section 17.1(a) or 17.1(d), or any material default by Tenant under Section 17.1(c) that is not
being diligently contested in good faith by Tenant, of the 700 Lease, the 750/800/1000 Lease, the
750G Lease, or the 750R Lease (subject to all applicable cure periods) shall, at Landlord’s
election, constitute a default under this Lease, and any default by Tenant under Section 17.1(a) or
17.1(c), or any material default by Tenant under Section 17.1(b) that is not being diligently
contested in good faith by Tenant, of this Lease (in each case, subject to all applicable cure
periods) shall, at the election of the landlord under the 700 Lease, the 750/800/1000 Lease, the
750G Lease, or the 750R Lease, constitute a default by Tenant under the 700 Lease, the 750/800/1000
Lease, the 750G Lease, or the 750R Lease. For purposes hereof, Landlord and the landlord of the 700
Lease, the 750/800/1000 Lease, the 750G Lease, or the 750R Lease shall be deemed affiliated so long
as both entities are controlled by, or under common control with, Stephen W. Chamberlin and/or
Stephen Chamberlin Associates, Inc. and/or affiliated entities.

28.0 LANDLORD’S INDEMNITY

     28.1 Landlord’s Indemnity. Landlord shall indemnify and hold Tenant harmless against all
claims, actions, damages and liability (i) caused by any release of hazardous substances requiring
remediation caused by Landlord on the Premises or any real property in the vicinity of the Premises
owned or managed by Landlord or any person or entity affiliated with Landlord; or (ii) which arise
as a result of hazardous substances existing upon the Premises or any real property in the vicinity
of the Premises owned or managed by Landlord or any person or entity affiliated with Landlord prior
to the execution of this Lease. The foregoing indemnity shall not apply to any
contamination or release or any claims, actions, damages or liability relating to hazardous
substances arising from acts or occurrences caused, wholly or in part, permitted or subject to the
control of Tenant, its agents, employees, contractors, sublessees, assignees, licensees or
invitees. This paragraph shall survive the expiration or earlier termination of this Lease.

29.0 TRANSPORTATION DEMAND MANAGEMENT PROGRAM REQUIREMENTS

     29.1 Transportation Demand Management Program Requirements. Tenant shall comply with the
Transportation Demand Management Program Requirements that are attached hereto as Exhibit E, and
are expressly incorporated herein. Any penalties incurred by Tenant’s non-compliance shall be paid
by Tenant.

30.0 OPTION TO RENEW

     30.1 Grant of Option. Landlord hereby grants to Tenant an option (the “Renewal Option”) to
extend this Lease for an additional term of five (5) years (the “Renewal Term”) commencing upon the
expiration of the original Term. However, such Renewal Option shall be null and void, at
Landlord’s sole and absolute discretion, if Tenant is in material default beyond all applicable
notice and cure periods under this Lease at the time the Renewal Option is exercised and at any
time from Tenant’s exercise of the Renewal Option to the commencement date of the Renewal Term.
The Renewal Option must be exercised by written notice to Landlord not later than two hundred
seventy (270) calendar days prior to the expiration of the original Term. The Minimum Monthly Rent
for the

26

 

Renewal Term shall be equal to the Fair Market Rent for the Premises (determined as
provided below), but in no event shall the Minimum Monthly Rent during any year of the Renewal Term
be less than the Minimum Monthly Rent payable during the last full month of the original Term. The
Renewal Option shall be terminated and of no further force and effect if, at any time provided
herein for exercise of the Renewal Option by Tenant, any federal, state, or local law or regulation
invalidates the Renewal Option. Landlord shall have no responsibility for payment of any brokerage
commission with respect to this Renewal Option, and Tenant shall indemnify, defend and hold
Landlord harmless from and against any claims (and any expenses, including attorney’s fees,
incurred by Landlord in connection therewith) made by any broker, agent or finder claiming the
right to a fee or compensation on account of dealings with Tenant in connection therewith. The
Renewal Option described in this Section 30.1 shall be personal to Tenant (or its Permitted
Transferee) and may not be exercised or be assigned voluntarily or involuntarily by or to any
person or entity other than the original Tenant under this Lease (or its Permitted Transferee) and
shall be exercisable by the original Tenant (or its Permitted Transferee) only if the original
Tenant under this Lease (or its Permitted Transferee) is then in occupancy of the Premises and the
Lease is then in full force and effect.

     30.2 Determination of Fair Market Rent. After Landlord receives written notice from Tenant of
the exercise of the Renewal Option, Landlord and Tenant shall have thirty (30) days in which to
agree on the initial Fair Market Rent for such Renewal Term. In the event that Landlord and Tenant
cannot mutually agree upon such Fair Market Rent within such thirty (30) day period, then Landlord
and Tenant shall, within fifteen (15) days after the expiration of such thirty (30) day period or
the date they acknowledge that they cannot agree on an applicable Fair Market Rent, whichever is
earlier, each provide to the other (by simultaneous exchange) their determination of the
appropriate Fair Market Rent in writing (hereinafter, “Landlord’s Determination” and “Tenant’s
Determination”), and thereafter, the issue of the Fair Market Rent shall be submitted to
arbitration. Within fifteen (15) days after Landlord and Tenant exchange their determination of
the appropriate Fair Market Rent, Landlord and Tenant shall mutually agree on an arbitrator (the
"Arbitrator”), who shall be a California licensed real estate broker who has been active over the
five (5) year period ending on the date of such appointment in the leasing of office/laboratory
properties in San Mateo County, California; provided, however that if Landlord and Tenant are
unable to agree upon any such arbitrator within such fifteen (15) day period, then Landlord and
Tenant shall have another ten (10) days to mutually agree upon a licensed professional MAI
appraiser (with experience in the appraisal of office/laboratory properties in San Mateo County,
California) to serve as the Arbitrator. The determination of the Arbitrator shall be limited solely
to the issue of whether Landlord’s Determination or Tenant’s Determination is the closest to the
actual Fair Market Rent as determined by the Arbitrator. Neither Landlord nor Tenant may directly
or indirectly consult with the Arbitrator prior to, or subsequent to, his or her appointment.

          30.2.1 The Arbitrator shall within thirty (30) days of appointment reach a decision as to
Fair Market Rent and determine whether the Landlord’s Determination or Tenant’s Determination is
closest to Fair Market Rent as determined by the Arbitrator and simultaneously publish a ruling
(“Award”) indicating whether Landlord’s Determination or Tenant’s Determination is closest to the
Fair Market Rent as determined by the Arbitrator, which shall become the then applicable Fair
Market Rent. The Award issued by the Arbitrator shall be binding upon Landlord and Tenant.

          30.2.2. If Landlord and Tenant fail to appoint an Arbitrator within fifteen (15) days after
Landlord and Tenant exchange their determination of the appropriate Fair Market Rent, either party
may petition the presiding judge of the Superior Court of San Mateo County to appoint such
Arbitrator, subject to the criteria of this Section 30.2, or if he or she refuses to act, either
party may petition any judge having jurisdiction over the parties to appoint the Arbitrator.

          30.2.3 The Fair Market Rent shall not include the value of the improvements and equipment
which Tenant is entitled to remove under this Lease.

          30.2.4 The cost of arbitration shall be paid (i) by Landlord if Tenant’s Determination is
determined by the Arbitrator to be closest to the Fair Market Rent, or (ii) by Tenant if Landlord’s
Determination is determined by the Arbitrator to be closest to the Fair Market Rent.

     30.3 Terms of Lease. During the Renewal Term, Tenant shall occupy the Premises upon all of
the terms and conditions set forth in this Lease except (a) the Minimum Monthly Rent for the
Renewal Term shall be as determined above, and (b) Tenant shall have no right to extend the term of
this Lease beyond the Renewal Term.

31.0 TERMINATION RIGHT

     31.1 Termination Right. Tenant shall have one (1) option (the “Termination Option”) to
terminate this Lease on the last day of the One Hundred Twentieth (120th) month after the
Commencement Date. The Termination Option must be exercised, if at all, by written notice
(“Termination Election Notice”) from Tenant to Landlord given not less than three hundred and sixty
five (365) calendar days prior to the intended effective date of such termination (“Early
Termination Date”). As a condition to the effectiveness of Tenant’s Termination Notice, Tenant
must pay Landlord the “Termination Fee” (as defined below) in accordance with the terms of this
Section 31. As used herein, the term “Termination Fee” shall mean and refer to an amount equal to
(x) the unamortized portion of any tenant improvement costs incurred by Landlord in connection with
the original build-out and delivery of the Premises, plus (y) the unamortized portion of all
leasing commissions applicable to Tenant’s Lease of the Premises, plus (z) nine (9) month’s of Rent
at the monthly rental rate in effect for the month in which the Early Termination Date occurs.
Such unamortized balances shall be determined by using a fifteen (15) year amortization period
commencing on the day following the first anniversary of the Commencement Date, utilizing an eight
and one-half percent (8.5%) per annum interest rate. One third (1/3) of the Termination Fee shall
be paid by Tenant to Landlord within thirty (30) calendar days after Tenant delivers the
Termination Election Notice to Landlord, another one third (1/3) of the Termination Fee shall be
paid by Tenant to Landlord at least One Hundred Eighty (180)

27

 

calendar days prior to the Early
Termination Date, and the remaining one-third (1/3) shall be paid by Tenant to Landlord at least
thirty (30) calendar days prior to the Early Termination Date.

32. GUARANTY

     32.1 Guaranty. This Lease shall not become effective unless and until the duly executed
Guaranty of Lease attached hereto as Exhibit G is delivered to Landlord.

33.0 RULES AND REGULATIONS

     33.1 Rules and Regulations. The Rules and Regulations attached hereto as Exhibit C are
expressly incorporated herein.

34.0 BUSINESS DAYS

     34.1 Business Day. A “business day” is a day other than a Saturday, a Sunday or a legal
holiday as recognized by the Superior Court in the County in which the Premises are located.
Unless expressly defined as a “business day”, all references to the term “day” shall mean a
“calendar day.”

[the balance of this page has been intentionally left blank; signature page follows]

28

 

     IN WITNESS WHEROF, Landlord and Tenant have executed this Lease as of the date first above
written.

	 	 	 	 	 
	 	LANDLORD:

CHAMBERLIN ASSOCIATES 180 OYSTER POINT BLVD., LLC,

a California limited liability company

 	 
	 	By:  	Chamberlin
Properties I Limited Partnership, 
a California limited
partnership, 
Its Member
 	 

	 	 	 	 	 
	 	By:  	Stephen
Chamberlin Associates, Inc., 
a California corporation, 
Its General Partner
 	 

	 	 	 	 	 
	 	By:  	                                     /s/ Anne L. Hoffman
 	 
	 	 	Name:  	Anne L. Hoffman 	 
	 	 	Title:  	President 	 

	 	 	 	 	 
	 	TENANT:

ELAN PHARMACEUTICALS, INC., a Delaware

Corporation

 	 
	 	By:  	/s/ G. Kelly Martin
 	 
	 	 	Name:  	G. Kelly Martin 	 
	 	 	Title:  	President and Chief Executive Officer 	 

29

 

	 	 	 	 	 

EXHIBIT A

LEGAL DESCRIPTION

(LEASE SECTIONS 1.3 AND 2.1)

The Real Property described below is subject to a lot line adjustment to include certain
additional property in the vicinity of the north and western boundary of the Real Property
described in paragraph No. 1 below. After the lot line adjustment is completed, the legal
description of the Real Property will be as described in Section 1 below.

LEGAL DESCRIPTION BEFORE THE LOT LINE ADJUSTMENT:

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

Parcel 2, as shown on the Parcel Map of the Resubdivision of Lands of E. H. Edwards Company, filed
in the office of the Recorder of San Mateo County, California on April 30, 1971, in Book 12 of
Parcel Maps, at page 29.

JPN: 014-002-022-04A

APN: 015-023-090

 

 

LEGAL DESCRIPTION AFTER THE LOT LINE ADJUSTMENT:

 

 

EXHIBIT B

WORK LETTER FOR SHELL CONSTRUCTION

AND TENANT IMPROVEMENTS

THIS WORK LETTER (this “Work Letter”) sets forth the agreement of Landlord and Tenant with respect
to the improvements to be constructed in the Premises, as defined in the Lease to which this Work
Letter is attached as an exhibit. In the event of any inconsistency between the terms of this Work
Letter and the terms of the Lease, the terms of this Work Letter shall control. All defined terms
used herein shall have the meanings set forth in the Lease, unless otherwise defined in this Work
Letter.

ARTICLE 1. LANDLORD’S WORK

     1.1. General Provisions. Landlord shall, at its sole cost and expense, plan, design
and construct those certain improvements described in Schedule B-1 in accordance with the building
specifications set forth therein, and with the other provisions of this Article 1, and the other
terms and conditions of the Lease. The planning, design and construction of such improvements by
Landlord are referred to collectively herein as “Landlord’s Work.” Except as otherwise specified
herein, Landlord’s Work shall materially comply with those certain Design Documents attached hereto
as Schedule B-3, and shall include the underground and surface parking facilities of the Premises
as required to provide the parking spaces required under the Lease.

     1.2. Costs of Landlord’s Work. “Costs of Landlord’s Work” shall mean and include all
of the following costs incurred by Landlord with respect to Landlord’s Work: (a) architect’s,
engineer’s and consultants’ fees and costs for those architects, engineers and consultants retained
by Landlord; (b) deposits, fees and costs for building and other permits, licenses and approvals;
(c) tests and inspections; (d) security; (e) insurance and bond premiums; (f) utilities; (g) all
amounts payable to any contractors, subcontractors, suppliers and vendors retained by Landlord for
Landlord’s Work; and (h) all other charges, fees, expenses and other costs incurred or arising in
connection with Landlord’s Work. As of the date of the Lease, all of the Costs of Landlord’s Work
have not been bid by Landlord’s Contractor (as defined in Section 1.7.1.2 of this Exhibit) or any
subcontractor. In recognition that Tenant’s base rent payment obligations are directly tied to the
Costs of Landlord Work, as provided in Exhibit D to the Lease, Tenant shall have the right to
participate in the negotiations over the Costs of Landlord’s Work with Landlord’s Contractor as
provided in Section 1.7.1.2 of this Exhibit and will provide updated cost information to Tenant
throughout the period that Landlord is to perform Landlord’s Work as provided in Section 4 of
Exhibit D to the Lease. Landlord agrees not to unilaterally materially increase the Cost of
Landlord’s Work without Tenant’s prior approval, except as otherwise provided in Exhibit D to the
Lease or this Work Letter (e.g., increase costs due to any Tenant Delay, change requests, or
changes or work required by any governmental authority). Tenant’s approval shall not be
unreasonably withheld and its review is to confirm that the changes are permissible Costs of
Landlord’s Work.

     1.3. Building Shell. The “Building Shell” shall mean that portion of Landlord’s Work
identified in Exhibit B-1 as being part of the Building Shell (and not specified in Exhibit B-1 as
lagging behind the Substantial Completion of the Building Shell), provided, however, that the
Building Shell expressly excludes any exterior improvements to the Building podium, exterior
parking areas, exterior landscaping and other improvements outside the Building and the Building
podium, except for the underground utilities to the Building included as part of Exhibit B-1, which
shall be stubbed to the Building. Notwithstanding the foregoing, as part of the Building Shell,
Landlord shall provide for at least two pass-through window locations on each of the second and
third floors of the Building in order for Tenant to install its furnishings and equipment on the
upper floors of the building; provided that Tenant may after reasonable prior notice to Landlord
elect to have the work of the pass-through windows excluded from Landlord’s Work as Change Request
Work (as defined in Section 1.11.1 below), with the costs savings, if any, of such exclusion to
reduce the cost of the Landlord’s Work in accordance with Exhibit D of this Lease.

B-1
Page 1

 

 

     1.4.  Substantial Completion.

          1.4.1 Definition of Substantial Completion.

               1.4.1.1 Substantial Completion of the Building Shell. For purposes of this Work
Letter, the term “Substantial Completion” or “Substantially Complete” shall mean, with respect to
the Building Shell, that Landlord’s Work on the Building Shell is complete to the point where: (i)
Landlord’s work associated with the Building Shell is complete in accordance with the Design
Documents for the Building Shell, but for minor Building Shell Punch List work that is capable of
completion within 30 days following the Walk-Through Date, (ii) Tenant can safely, effectively, and
completely install all of its furnishings and equipment therein with minimal risk of loss or damage
due to exposure of the interior of the Building Shell to the elements, and (iii) Tenant can have
uninterrupted access to the roof and all interior areas of the Building Shell for purposes of
installing its furnishings and equipment within the Building Shell, with sufficient parking
available on-site or on adjacent properties for Tenant’s contractors and subcontractors performing
the work of the Initial Tenant Improvements. Notwithstanding the foregoing, for purposes of
determining the date of Substantial Completion of the Building Shell, as long as Landlord has
completed all material construction work associated with any elevators included as part of the
Building Shell, then the fact that all applicable governmental authorities have not approved or
permitted such elevators for use or occupancy shall not delay the date that the Building Shell is
determined to be Substantially Complete. If, as a result of any such governmental authorities
having not approved such elevators, it is not legally permissible for Tenant to utilize the
elevators for Tenant’s construction of the Initial Tenant Improvements, then Landlord shall provide
an alternative exterior service elevator for purposes of allowing Tenant reasonable access to the
upper floors of the Building Shell for purposes of installing furnishings and equipment and for
performing the Initial Tenant Improvements, the cost of which shall be included in the Cost of the
Landlord’s Work and considered in the calculation of base rent under Exhibit D to the Lease, and
which shall not require a separate agreement with Landlord’s contractor or any subcontractor,
notwithstanding the requirements of Section 2.4.3 hereof.

               1.4.1.2 Substantial Completion of Landlord’s Work. For purposes of this Work Letter,
the term “Substantial Completion” or “Substantially Complete” shall mean, with respect to
Landlord’s Work, that Landlord’s Work has been completed in accordance with the design and
specifications of the Construction Documents, except for any minor Landlord’s Work Punch List items
which are reasonably capable of completion within a 30-day period following the date of Substantial
Completion of Landlord’s Work, as such 30-day period may be extended as provided in Section 1.4.6.1
hereof.

          1.4.2 Walk Through at Substantial Completion. At least five (5) business days prior to
the Substantial Completion of the Building Shell and Landlord’s Work, respectively, Landlord shall
notify Landlord’s Contractor (defined in Section 1.7.1.2), Landlord’s Architect, Tenant and
Tenant’s Architect of the date and time of the inspection of the Building Shell or Landlord’s Work,
as applicable, for purposes of determining whether the Building Shell or Landlord’s Work, as
applicable, is Substantially Complete. Such scheduled date and time for the walk-through is
referred to herein as the “Walk-Through Date.” Landlord, Tenant, Landlord’s Contractor, as well as
Landlord’s Architect and (if desired by Tenant) Tenant’s Architect, shall meet at the Project site
on the Walk-Through Date to determine whether the Building Shell or Landlord’s Work, as applicable,
is Substantially Complete. If Tenant’s desired representative(s) is/are not available on the
Walk-Through Date, Tenant shall notify Landlord of the same, in writing, at least two (2) days
prior to the Walk-Through Date, in which case, the parties shall coordinate another date and time
for the walk-through, which shall be no later than five (5) days after the originally scheduled
Walk-Through Date. Both Landlord and Tenant shall have the right to attend the walk-through
inspections.

          1.4.3 Determination of Date of Substantial Completion.

               1.4.3.1 Building Shell. If during the walk-through inspection of the Building Shell,
Landlord and Tenant agree that the corresponding work is Substantially Complete, then (a) Tenant
and Landlord shall document such fact in writing (the “Substantial Completion Notice”) (but any
delay or failure to document such notice shall not delay the date of Substantial Completion), which
writing shall specify the date of Substantial Completion of the Building Shell, shall be signed by
Landlord and Tenant, and (b) Landlord’s Architect shall identify, in writing, those items of
Landlord’s Work that are in need of repair, or that have yet to

B-1
Page 2

 

 

be completed, and that Landlord agrees to repair (the “Building Shell Punch List”); provided,
however, that any Building Shell Punch List work shall be minor in nature, and shall not
unreasonably interfere with or delay the work of the Initial Tenant Improvements, and shall, in any
case, be reasonably capable of completion within thirty (30) days after the Walk-Through Date, as
provided in Section 1.4.6.1. Should Tenant disagree with the items on the Building Shell Punch
List, Tenant shall notify Landlord, in writing, within two (2) business days following receipt of
the proposed Building Shell Punch List from Landlord, of such disagreement and Tenant’s proposed
changes to the Building Shell Punch List. If the parties are unable to agree upon the Building
Shell Punch List scope of work, then any such disagreement shall be resolved in accordance with
Section 1.4.6.2. The date for the Substantial Completion of the Building Shell accurately set
forth in the Substantial Completion Notice shall be binding on Landlord and Tenant (but is subject
to adjustment for Tenant Delays and Force Majeure Delays as set forth herein).

               1.4.3.2 Landlord’s Work. If during the walk-through inspection of Landlord’s Work,
Landlord and Tenant agree that the corresponding work is Substantially Complete, then within two
(2) days following the Walk-Through Date associated with such walk-through inspection: (a)
Landlord’s Architect shall identify, in writing, those items of Landlord’s Work that are in need of
repair, or that have yet to be completed, and that Landlord agrees to repair (the “Landlord’s Work
Punch List”), and (b) Landlord, Landlord’s Architect, and Landlord’s Contractor shall complete and
execute a Certificate of Substantial Completion substantially in the form of the American Institute
of Architects document G704, as modified to reflect the definition of Substantial Completion
provided in this Work Letter, with the Landlord’s Work Punch List attached; provided, however, that
any Landlord’s Work Punch List items shall be minor in nature and shall not adversely affect the
exterior appearance of the Building or the exterior improvements of the Premises, and shall, in any
case, be reasonably capable of completion within thirty (30) days after the applicable Walk-Through
Date as provided in Section 1.4.6.1. Should Tenant disagree with the items on the Landlord’s Work
Punch List, Tenant shall notify Landlord, in writing, within two (2) business days following
receipt of the proposed Landlord’s Work Punch List from Landlord, of such disagreement and Tenant’s
proposed changes to the Landlord’s Work Punch List. If the parties are unable to agree upon the
Landlord’s Work Punch List scope of work, then any such disagreement shall be resolved in
accordance with Section 1.4.6.2. The date for the Substantial Completion of the Landlord’s Work
accurately set forth in the Certificate of Substantial Completion shall be binding on Landlord and
Tenant (but is subject to adjustment for Tenant Delays and Force Majeure Delays as set forth
herein).

          1.4.4 Disagreement As To Whether The Work Is Substantially Complete. If Landlord
considers the work Substantially Complete, but Tenant does not agree that the corresponding work is
Substantially Complete, then Tenant shall notify Landlord’s Architect, and Landlord, in writing, on
the Walk-Through Date of the reasons for withholding such confirmation. Thereafter, Keith
Lundquist, of Lundquist Construction, or if Keith Lundquist is unavailable, then Dan Hipple of
Theravance, (the applicable person being referred to herein as the “Third Party Inspector”) shall
be notified of the dispute, and shall be instructed to immediately visit the site to determine
whether such work is Substantially Complete. The determination of the date of Substantial
Completion by the Third Party Inspector shall be binding on the parties (but shall be subject to
adjustment for Tenant Delays and Force Majeure Delays as set forth herein). Moreover, the costs of
such Third Party Inspector shall be split equally by the parties. In the event that no Third Party
Inspector is reasonably available, Landlord and Tenant shall use commercially reasonable efforts to
immediately agree upon another Third Party Inspector, and if Landlord and Tenant cannot immediately
agree upon such a Third Party Inspector, then either Landlord or Tenant may apply to the American
Arbitration Association in San Mateo, California, for an appointment of an arbitrator to select the
neutral Third Party Inspector.

          1.4.5 Delay in Determining Date of Substantial Completion. If for some reason there
is a delay in determining the date of Substantial Completion, then date of Substantial Completion
shall be the date when the corresponding work would have been Substantially Complete, but for the
delays. For instance, if there is a delay in the selection of the Third Party Inspector, the
Third Party Inspector will not only determine whether the work is Substantially Complete, but also,
the date the work would have been Substantially Complete but for the delays

B-1
Page 3

 

 

in determining the same (which date may precede the date that such Third Party Inspector is
selected).

          1.4.6 Punch List Items. 

               1.4.6.1 Completion of Punch List Items. Landlord shall complete any Building Shell
Punch List or Landlord’s Work Punch List work within thirty (30) calendar days of the applicable
Walk-Through Date, unless such Punch List work cannot reasonably be completed within such thirty
(30) day period, in which case, Landlord shall have whatever time is reasonably necessary to
complete such Punch List work, provided Landlord is diligently prosecuting the same to completion.

               1.4.6.2 Disagreement Re Punch List Items. If the parties disagree on the applicable
Punch List scope of work (for instance, if Landlord alleges it is not responsible for an item
requested to be included in the applicable Punch List), then any such dispute shall be resolved by
binding arbitration with the San Mateo, California office of the American Arbitration Association,
pursuant to the commercial rules of the American Arbitration Association; provided, however, that
such proceedings shall not delay the performance of the Landlord’s Work or the Initial Tenant
Improvements and if the failure to perform the Punch List work is reasonably likely to cause a
delay in the performance of the Landlord’s Work or the Initial Tenant Improvements, then Landlord
shall perform the work subject to resolution of any such dispute, and arbitration shall be used to
determine the parties’ respective liability for the cost thereof, either as a Cost of the
Landlord’s Work or as a cost of the Initial Tenant Improvements.

     1.5. Possession of the Premises. Upon the Substantial Completion of the Building
Shell, Tenant shall have possession and control of the Building Shell, subject to the rights of
Landlord and Tenant set forth in this Exhibit and the Lease. Upon the Substantial Completion of
all Landlord’s Work, Tenant shall have full possession and control of the Premises, including the
exterior parking facilities, loading areas and equipment yards of the Building, subject to the
terms and provisions of the Lease, and the rights of the Parties under the Lease.

     1.6. Anticipated Schedule, Delays and Adjustment of Commencement Date. Landlord’s
Work shall be constructed by Landlord in accordance with this Work Letter diligently following the
execution of the Lease.

          1.6.1 Anticipated Development Schedule. The preliminary development and delivery
schedule for the Building Shell and for the entirety of Landlord’s Work, is attached hereto as
Schedule B-2, and is expressly incorporated herein (the “Landlord’s Preliminary Development and
Delivery Schedule”). Tenant and Landlord shall use their respective commercially reasonable, good
faith, efforts and all due diligence to cooperate with the architects, engineers, and each other to
complete all phases of the Construction Documents, general contractor selection and the permitting
process, the Landlord’s Work and the Initial Tenant Improvements in accordance with the Landlord’s
Preliminary Development and Delivery Schedule, and, in that regard, Landlord and Tenant shall meet
on a scheduled basis to discuss progress in connection with the same.

          1.6.2 Building Permit for Landlord’s Work. Landlord shall use commercially reasonable
and diligent efforts to obtain a building permit for Landlord’s Work in accordance with the time
deadlines set forth in Landlord’s Preliminary Development and Delivery Schedule. If despite such
efforts, Landlord is unable to obtain a building permit on or before August 1, 2007, then either
party may terminate this Agreement by delivering thirty (30) days written notice of termination to
the other party (anytime after August 1, 2007), provided, however, that the building permit is not
issued within said thirty (30) day period. If the building permit is issued prior to the
expiration of that thirty (30) day period, then this Agreement shall remain in full force and
effect and such termination notice shall be of no force or effect. Conversely, if the building
permit is not issued within said thirty (30) day period, this Agreement shall terminate on the
expiration of said thirty (30) day period, whereupon, this Agreement shall be of no further force
and effect, Landlord shall return all sums deposited by Tenant with Landlord, including but not
limited to any letters of credit, and neither party shall have any obligation to the other under
this Agreement. The date that the building permit has been issued and pulled for Landlord’s
Work is defined herein as the “Building Permit Date.”

B-1
Page 4

 

 

          1.6.3 Early Access.

               1.6.3.1 Commencement of Early Access Period. Landlord shall provide Tenant with
reasonable access to the Building Shell (to allow Tenant to commence the construction of the
Initial Tenant Improvements (as defined in Section 2.1 below)) for a period of not less than sixty
(60) days within a period that is seventy-five (75) days prior to the Substantial Completion of the
Building Shell (the “Early Access Period”). The start of the Early Access period shall be referred
to as the “Early Access Commencement Date.” Notwithstanding the foregoing, interruption of
Tenant’s access to the Building Shell as required for performance of the Landlord’s Work shall be
permitted without affecting the Early Access Commencement Date (“Permitted Interruptions”),
provided that Landlord gives reasonable advance notice of any such Permitted Interruption to Tenant
and the total days of Permitted Interruptions does not exceed fifteen (15) days during the Early
Access Period so that Tenant will have not less than sixty (60) days of access to the Building
within the Early Access Period. Landlord shall provide Tenant with at least twenty (20) days notice
prior to the date that Landlord will provide Tenant with such early access, and Landlord and Tenant
shall document the Early Access Commencement Date in writing promptly following such date.
Tenant’s entering the Premises for such purposes shall be at Tenant’s own risk, and under no
circumstances shall Tenant enter the Premises until all insurance required pursuant to the terms of
this Lease are in place. Landlord shall have control of those portions of the Premises where the
Landlord’s Work is being performed during the Early Access Period, but shall endeavor to cooperate
with Tenant to make those portions of the Premises and the other portions of the Premises available
to Tenant’s Contractor (hereinafter defined) and subcontractors throughout the Early Access Period
subject to Landlord’s right to interrupt Tenant’s access for Permitted Interruptions. In
performing any work resulting in a Permitted Interruption, Landlord shall also act to mitigate the
duration and extent of such Permitted Interruption as is reasonable under the circumstances, and
shall coordinate such mitigation efforts with Tenant.

               1.6.3.2 Landlord’s Failure to Provide Tenant with Reasonable Access. If Tenant does
not have reasonable access to the Building Shell for purposes of constructing the Initial Tenant
Improvements for a period of at least sixty (60) days during the Early Access Period, then the date
of Substantial Completion of the Building Shell (as accelerated for any Tenant Delays), for
purposes of determining the commencement date of Tenant’s obligation to pay CAM Charges (defined in
Section 1.6.3.5), shall be extended by the difference (as long as such difference is a positive
number) between (a) 60 days, and (b) the number of days that Tenant has reasonable access to the
Building Shell within the 75-day period prior to Substantial Completion of the Building Shell for
purposes of constructing the Initial Tenant Improvements (defined as “Tenant’s Access Delay”), in
accordance with Section 1.6.3.5 below.

               1.6.3.3 Scheduling of the Initial Tenant Improvements During the Early Access Period.
Tenant acknowledges that the exterior glass of the Building Shell may not be installed upon the
Early Access Commencement Date, and that Landlord anticipates that the exterior glass of the
Building Shell will be installed on a floor by floor basis. As such, Tenant agrees to schedule its
work so that it can continue to construct the Initial Tenant Improvements without the exterior
glass being installed on a particular floor and/or to allow the Initial Tenant Improvements within
a certain floor to be constructed before proceeding with the Initial Tenant Improvements on another
floor that does not have exterior glass installed (if such work would be impacted by not having the
exterior windows on that floor installed); provided, however, that all exterior building glass
(exclusive of any pass-through windows) must be installed by the date of Substantial Completion of
the Building Shell. Moreover, if the internal elevators within the Building Shell are not
available for use during the Early Access Period, then Landlord shall provide an alternative
exterior service elevator for purposes of giving Tenant reasonable access throughout the Early
Access Period to the second and third floors of the building for purposes of staging Tenant’s
construction materials and equipment, commencing construction of the Initial Tenant Improvements,
installing furnishings and equipment, and the costs for such alternative
service elevator shall be included as part of Landlord’s Costs of Work and considered in the
calculation of Tenant’s base rent under Exhibit D to the Lease.

               1.6.3.4 Interference with Landlord’s Work. During the Early Access Period, Tenant
shall schedule its entry, installation and other work with Landlord so as not to interfere with
Landlord’s Work. Tenant shall comply with all reasonable instructions from Landlord and Landlord’s
Contractor during such Early Access Period, subject to the limitations

B-1
Page 5

 

 

on Permitted Interruptions
set forth in Section 1.6.3.1 above. Moreover, during the Early Access Period, Landlord shall
provide a reasonable location within or adjacent to the Premises so Tenant and its construction
personnel can stage construction operations, store materials and equipment, and park vehicles.

               1.6.3.5 Tenant’s Lease Obligations During Early Access Period. During the Early
Access Period, all terms and conditions of the Lease (including all insurance and indemnity
provisions) shall apply, except for payment of Minimum Monthly Rent, and utility costs, Operating
Expenses, real estate taxes, and/or other standard triple net expenses (collectively, “CAM
Charges”). Tenant’s obligations to pay CAM Charges shall commence on the date of Substantial
Completion of the Building Shell (as such date may be accelerated for any Tenant Delays (in
accordance with Section 1.6.11.2) and extended for Tenant’s Access Delay (in accordance with
Section 1.6.3.2)). Under no circumstances shall the date of Substantial Completion of the Building
Shell (as adjusted pursuant to this Section 1.6.3.5) occur any earlier than September 1st, 2008.

               1.6.3.6 Responsibility During Early Access Period. During the Early Access Period,
except to the extent attributable to the gross negligence or willful misconduct of Landlord or any
of its agents, employees, contractors or invitees, Landlord shall have no responsibility for, and
Tenant shall be fully responsible for, the security for Tenant’s property, activities and
operations thereon. Each of Landlord’s Contractor and Tenant’s Contractor shall look to its
respective Builder’s Risk policy of liability insurance for any loss or damage to work being
performed by such contractor or its subcontractors, unless such loss or damage is attributable to
the gross negligence or willful misconduct of the other contractor or any of the other contractor’s
subcontractors.

               1.6.3.7 No Waiver of Condition. The fact that Tenant may, with Landlord’s consent,
enter into the Building prior to the date of Substantial Completion of Landlord’s Work for the
purpose of performing any Initial Tenant Improvements shall not be deemed an acceptance by Tenant
of possession of the Premises for the purposes of establishing the condition thereof upon Tenant’s
acceptance.

          1.6.4 Landlord’s Responsibility for Delay in the Substantial Completion of Building
Shell. If Landlord fails to Substantially Complete the Building Shell in accordance with the
time deadlines set forth in Landlord’s Preliminary Development and Delivery Schedule, as the same
shall be adjusted due to Tenant Delays and Force Majeure Delays, this Lease shall not be void or
voidable by Tenant, and Landlord shall not be liable for any loss or damage resulting therefrom,
except as provided in Section 1.6.6.1 below, and except for the Landlord’s obligation of repairing,
correcting or replacing any design or construction defects in Landlord’s Work in accordance with
the requirements set forth elsewhere in the Lease and this Work Letter.

          1.6.5 Responsibility After Substantial Completion of the Building Shell.

               1.6.5.1 Tenant’s Responsibility. After the Substantial Completion of the Building
Shell, and until the Substantial Completion of Landlord’s Work, (a) Tenant shall schedule its work
in the areas of the Premises outside the Building Shell with Landlord, (b) Tenant shall cooperate
with all reasonable instructions from Landlord and Landlord’s Contractor with respect to any such
construction work outside the Building Shell, and (c) Tenant shall cooperate with Landlord in
making those areas of the Premises within the Building Shell reasonably available to Landlord so
Landlord can complete Landlord’s Work.

               1.6.5.2 Landlord’s Responsibility. After the Substantial Completion of the Building
Shell, and until the Substantial Completion of Landlord’s Work, (a) Landlord shall schedule its
work within the Building Shell with Tenant, (b) Landlord shall cooperate with all reasonable
instructions from Tenant and Tenant’s Contractor with respect to any such construction work within
the Building Shell, (c) Landlord shall cooperate with Tenant in making
those areas of the Premises outside the Building Shell in the designated Service Area (as
defined in Section 2.1 of the Lease) reasonably available to Tenant so Tenant can complete the
Initial Tenant Improvements outside the Building Shell, and (d) Landlord shall provide a reasonable
location within or adjacent to the Premises (and outside the Building Shell) so Tenant and its
construction personnel can stage construction operations, store materials and equipment, and park
vehicles; provided, however, that Landlord’s providing such location to Tenant shall be at

B-1
Page 6

 

 

Tenant’s
sole risk, and Tenant shall be responsible for the security of all equipment and materials so
stored.

          1.6.6 Substantial Completion of Landlord’s Work.

               1.6.6.1 Substantial Completion of Building Shell. Landlord shall Substantially
Complete the Building Shell on or before November 30, 2008, as adjusted for Tenant Delays and Force
Majeure Delays (the “Adjusted Outside Shell Completion Date”). To the extent that the Building
Shell is not Substantially Complete, and the Premises are not delivered to Tenant, on or before the
Adjusted Outside Shell Completion Date, this Lease shall not be void or voidable by Tenant, and
Landlord shall not be liable for any loss or damage resulting therefrom, except Tenant shall, as
Tenant’s sole remedy, be entitled to (a) defer payment of CAM Charges until Substantial Completion
of the Building Shell; and (b) a credit towards Tenant’s Minimum Monthly Rent obligation equal to
two (2) days for each day that Landlord’s Work is Substantially Complete after the Adjusted Outside
Completion Date, provided, however, that the Landlord Delays during such period adversely impact
Tenant’s ability to complete the Initial Tenant Improvements or to conduct its business operations
on the Premises.

               1.6.6.2 Substantial Completion of Landlord’s Work. Landlord shall Substantially
Complete all of Landlord’s Work on or before December 31, 2008, as adjusted for Tenant Delays and
Force Majeure Delays and as extended by the length of any delay in the Adjusted Outside Shell
Completion Date under Section 1.6.6.1 above (the “Adjusted Outside Final Completion Date”). To the
extent that Landlord’s Work is not Substantially Complete, and the Premises are not delivered to
Tenant, on or before the Adjusted Outside Final Completion Date, this Lease shall not be void or
voidable by Tenant, and Landlord shall not be liable for any loss or damage resulting therefrom,
except Tenant shall, as Tenant’s sole remedy, be entitled to a credit towards Tenant’s Minimum
Monthly Rent obligation equal to two (2) days for each day that Landlord’s Work is Substantially
Complete after the Adjusted Outside Final Completion Date, provided, however, that the Landlord
Delays during such period adversely impact Tenant’s ability to complete the Initial Tenant
Improvements or to conduct its business operations on the Premises. A delay or extension of the
Adjusted Outside Shell Completion Date shall cause the Adjusted Outside Final Completion Date to be
extended for the same number of days as the Adjusted Outside Shell Completion Date is delayed or
extended

          1.6.7 Tenant Delays. For purposes of this Exhibit and the Lease, “Tenant Delays”
shall mean any delay of Landlord’s Work caused by Tenant which actually causes the Substantial
Completion of the Building Shell or Substantial Completion of Landlord’s Work to be delayed (unless
such delay can reasonably be avoided by Landlord without an increase in the costs of Landlord’s
Work) and is attributable to: (a) Tenant’s unreasonable rejection of all or any portion of the
Landlord’s Work Construction Documents (as defined in Section 1.7.2 below) or the modified
Construction Documents; (b) Tenant’s failure to provide Landlord with a reasonably detailed
statement of the reasons for rejecting all or any portion of the Construction Documents or the
modified Construction Documents or other approval required under this Exhibit within the time
period provided in this Exhibit; (c) Change Requests (as defined in Section 1.11 below); or (d) any
other delay caused by Tenant of which Tenant has received notice as hereinafter provided (and has
failed to timely cure if permitted under this Section 1.6.7). Landlord shall notify Tenant of any
Tenant Delay within twenty-four (24) hours after Landlord’s receipt of notice from Landlord’s
Contractor of the Tenant Delay or when Landlord otherwise has received actual knowledge of the
Tenant Delay; provided, however, that if Landlord does not notify Tenant of the Tenant Delay within
such twenty-four (24) hour period of the Tenant Delay, then the Tenant Delay shall not be deemed to
have commenced until Landlord notifies Tenant of the Tenant Delay (and if Tenant cures the cause of
any Tenant Delay attributable to clause (d) of the preceding sentence within twenty-four (24) hours
after receipt of such notice, no Tenant Delay shall accrue, but Tenant’s right to cure Tenant
Delays shall not exceed five (5) days over the course of Landlord’s Work). Such written notice
shall be delivered
in accordance with Section 1.6.10 below and shall state in reasonable detail the nature of
such event and the reasons that such event constitutes a Tenant Delay.

          1.6.8 Landlord Delays. For purposes of this Lease, “Landlord Delays” shall mean any
delay of the work of the Initial Tenant Improvements caused by Landlord which actually causes the
work of the Initial Tenant Improvements to fall behind the schedule for their completion in
violation of Section 2.4.4.1 below (unless such delay can reasonably be avoided

B-1
Page 7

 

 

by Tenant without
an increase in the cost of the Initial Tenant Improvements), and is attributable to: (a)
Landlord’s unreasonable rejection of Tenant’s plans or the modified plans; (b) Landlord’s failure
to provide Tenant with a reasonably detailed statement of the reasons for rejecting all or any
portion of the plans for the Initial Tenant Improvements or the modified plans for the Initial
Tenant Improvements; or (c) any other delay caused by Landlord of which Landlord has received
notice as hereinafter provided (and has failed to timely cure as permitted in this Section 1.6.8).
Tenant shall notify Landlord of any Landlord Delay within twenty-four (24) hours after Tenant’s
receipt of notice from the Tenant’s Contractor of the Landlord Delay or when Tenant otherwise has
received actual knowledge of the Tenant Delay; provided, however, that if Tenant does not notify
Landlord of the Landlord Delay within such twenty-four (24) hour period, then the Landlord Delay
shall not be deemed to have commenced until Tenant notifies Landlord of the Landlord Delay (and if
Landlord cures the cause of such Landlord Delay attributable to clause (c) of the preceding
sentence within twenty-four (24) hours after receipt of such notice, no Landlord Delay shall
accrue, but Landlord’s right to cure Landlord Delays shall not exceed more than five (5) days over
the course of the work of the Initial Tenant Improvements). Such written notice shall be delivered
in accordance with Section 1.6.10 below and shall state in reasonable detail the nature of such
event and the reasons such event constitutes a Landlord Delay.

          1.6.9 Force Majeure Delay.

               1.6.9.1 Definition of Force Majeure Delay. “Force Majeure Delay” means any delay in
Landlord’s Work or the work of the Initial Tenant Improvements due to fire or other casualty,
strikes or labor disputes (except as otherwise set forth in Section 1.6.9.2 below), embargo,
unavailability of power or supplies, war or violence, acts of terrorism, any moratorium pursuant to
any legal requirement of any governmental agency (subject to Section 1.6.9.3 below), or any other
occurrence or similar event beyond the reasonable control of the party claiming such Force Majeure
Delay, except for those occurrences caused by the actions of such party, which such party knows or
should reasonably know will result in any occurrence otherwise characterized as a force majeure
event. Each party shall use its commercially reasonable and diligent efforts to notify the other
party, in writing, of any event claimed by such party as a Force Majeure Delay, which notice shall
state in reasonable detail the nature of such event and the reason(s) that such event constitutes a
Force Majeure Delay.

               1.6.9.2 Strikes & Labor Disputes. Notwithstanding anything to the contrary contained
herein, Force Majeure Delays shall not include strikes or labor disputes that arise solely due to
Landlord’s or Tenant’s, as the case may be, negligent decisions, made directly by such party
claiming a Force Majeure Delay, in the hiring of non-union contractors.

               1.6.9.3 Work Stoppage By Government Order. Notwithstanding anything to the contrary
contained herein, any moratorium or stoppage of either party’s work under this Work Letter due to
its intentional acts or omissions of known (or which would be known to an owner, tenant or
developer of real property, having similar resources and experience as the personnel employed by
such party) regulations or requirements may not be claimed by such party as a Force Majeure Delay.

          1.6.10 Notice of Delays.

               1.6.10.1 Landlord’s Notice. Landlord shall notify Tenant, in writing, of any Tenant
Delay or any Force Majeure Delays within the applicable time period provided in Section 1.6.7 or
Section 1.6.9.1. Such written notice shall state the cause of the delay.

               1.6.10.2 Tenant’s Notice. Tenant shall notify Landlord, in writing, of any Landlord
Delay or any Force Majeure Delay in the work of the Initial Tenant Improvements within the
applicable time period provided in Section 1.6.8 or Section 1.6.9.1. Such written notice shall
state the cause of the delay; provided, however, that no Force Majeure Delay shall
delay the commencement of the term of the Lease or the date by which Tenant must commence
paying rent or other sums under the Lease.

               1.6.10.3 Delivery of Notice Of Delay. Notwithstanding anything to the contrary
contained herein, such notice of delay may be personally delivered, sent by overnight mail (FedEx
or another carrier that provides receipts for all deliveries), sent by certified mail, postage
prepaid, return receipt requested, or sent by e-mail transmission (provided that a successful
electronic confirmation is provided) to the persons set forth below. Each of the

B-1
Page 8

 

 

parties shall,
using commercially reasonable and good faith efforts, provide telephonic notice to the other party
that a notice of delay has been sent and the cause thereof.

	 	 	 
	If to Landlord:

	 	c/o Chamberlin Associates

5880 West Las Positas Blvd., Suite 34

Pleasanton, CA 94588-8552

Attention: Anne Hoffman

Office Phone: 925-227-0707

Fax: 925-227-0277

Email: Anne@chamb.com
	 
	 	 
	With a copy to:

	 	c/o Chamberlin Associates

5880 West Las Positas Blvd., Suite 34

Pleasanton, CA 94588-8552

Attention: Rahn Verhaeghe AND

                    Jennifer Von der Ahe

Office Phone: 925-227-0707

Fax: 925-227-0277

Email: Rahn@Chamb.com

Email: Jennifer@Chamb.com
	 
	 	 
	If to Tenant:

	 	Elan Pharmaceuticals, Inc.

800 Gateway Blvd.

South San Francisco, CA 94080

Attention: Brian Oppendike

Office Phone: 650-794-4238

Cell Phone: 650-267-0695

Email: brian.oppendike@elan.com
	 
	 	 
	With a copy to:

	 	Elan Pharmaceuticals, Inc.

7475 Lusk Blvd.

San Diego, CA 92121

Attention: Rick Smith

Office Phone: 858-784-6701

Cell Phone: 858-864-3128

Email: charles.smith@elan.com

Such notices shall be effective upon delivery. Notice of change of address shall be given by
written notice in the manner set forth in this Section. Rejection or other refusal to accept or
the inability to deliver any notice due to changed address or e-mail address of which no notice in
accordance with this Section was given shall not effect the delivery date. Any operational failure
of a notice recipient’s e-mail system shall not effect the delivery date of such notice, unless
electronic notice thereof is received in response to any attempt to deliver such notice.

          1.6.11 Damages for Delays.

               1.6.11.1 Landlord Delay Damages. To the extent that any Landlord Delays cause a delay
to Tenant in the substantial completion of the Initial Tenant Improvements, then Landlord shall be
responsible for the actual additional out-of-pocket costs incurred by Tenant in constructing the
Initial Tenant Improvements as a result thereof, it being acknowledged that Landlord shall not be
responsible to Tenant for any consequential damages as a result of such delays.

               1.6.11.2 Tenant Delay Damages. To the extent that Tenant Delays cause a delay to
Landlord in the Substantial Completion of the Building Shell or Landlord’s Work,
then (a) Tenant shall be responsible for the actual damages incurred by Landlord as a result
thereof, it being acknowledged that Tenant shall not be responsible to Landlord for any
consequential damages as a result of such delays, (b) the date of Substantial Completion of the
Building Shell shall be adjusted to the date that the Building Shell would have been substantially
completed but for such Tenant Delays, and (c) the date of Substantial Completion of Landlord’s Work
shall be adjusted to the date the Landlord’s Work would have been Substantially Complete but for
such Tenant Delays.

B-1
Page 9

 

 

     1.7. Plans & Permits

          1.7.1 Architects, Consultants and Contractors.

               1.7.1.1 Landlord and Tenant hereby acknowledge and agree that: (a) Randall Dowler and Karen
Lin of Dowler-Gruman Architects shall be the architect (“Landlord’s Architect”) for the Building
Shell, and (b) Dowler-Gruman Architects shall be the architect (“Tenant’s Architect”) for the
Initial Tenant Improvements. Notwithstanding the foregoing, Landlord and Tenant shall have the
right at any time, but subject to the approval of the other party (which shall not be unreasonably
withheld, conditioned or delayed) to designate a different architect.

               1.7.1.2 The general contractor for Landlord’s Work shall be J.M. O’Neil, Inc. (“Landlord’s
Contractor”), who shall perform Landlord’s Work pursuant to a guaranteed maximum price contract
(the “Construction Contract”) approved by Tenant (which approval shall not be unreasonably withheld
as long as it is consistent with the scope of work set forth in Exhibit B-1 of the Lease and this
Exhibit B). The Construction Contract shall contain, at a minimum, terms and provisions requiring
that Landlord’s Contractor name Tenant as an additional insured on Landlord’s Contractor’s
commercial general liability insurance policy and naming Tenant as an additional indemnitee with
the same rights of the owner set forth in any indemnity contained therein, and as a third-party
beneficiary with respect to any warranties contained therein; provided, however that Tenant will
not interfere with Landlord’s enforcement of any such warranties during Landlord’s warranty period
as provided in Section 1.7.2 below, as long as Landlord is diligently pursuing enforcement of a
warranty. Landlord shall allow Tenant to participate in Landlord’s negotiations with the
Landlord’s Contractor relating to the cost of the Landlord’s Work. The Construction Contract shall
also require, to the extent negotiable, that Tenant and Landlord be named as third-party
beneficiaries under all construction and equipment warranties (including without limitation, the
roof and any mechanical, electrical and plumbing equipment installed as part of the Landlord’s
Work, which Landlord’s Contractor shall endeavor to obtain for a minimum warranty term of ten (10)
years from the date of Substantial Completion of the Building Shell, with the right to enforce such
warranties directly against the obligor named therein; provided, however, that there are no
assurances that Landlord’s Contractor will be able to obtain such extended warranties. The cost of
causing the construction and equipment warranties to have terms in excess of one (1) year shall be
at Tenant’s sole cost and expense; provided, however, that Tenant shall have sole discretion with
respect to the decision to obtain any warranty exceeding a term of one (1) year if Tenant is to be
liable for the cost thereof.

          Landlord shall have the right to replace Landlord’s Contractor from time to time, provided
that such change shall not result in any increase in the cost of constructing Landlord’s Work or
the Initial Tenant Improvements, or the rights of Tenant under the construction agreement
(including, without limitation, the extended warranty periods negotiated with the Landlord’s
Contractor), unless such change is required as a result of a default by Landlord’s Contractor under
the construction agreement approved by Tenant, in which case, Landlord and Tenant shall cooperate
in the selection of the replacement general contractor for Landlord’s Work in order to mitigate the
increased cost of Landlord’s Work that is incorporated into Tenant’s base rent obligations under
the Lease. Tenant shall have the right to pre-approve all subcontractors retained by the
Landlord’s Contractor for the major trades, which approval shall not be unreasonably withheld,
conditioned or delayed. Attached hereto as Schedule B-4 is a list of those major trade
subcontractors that are pre-approved by Tenant (the “Pre-Approved Major Trade Subcontractors”).
Notwithstanding anything to the contrary contained herein, Tenant shall have the right to retain
any of the Pre-Approved Major Trade Subcontractors for the Initial Tenant Improvements, provided,
however, that Tenant or Tenant’s Contractor enters into a written contract with such Pre-Approved
Major Trade Subcontractor(s), that Tenant and/or Tenant’s Contractor pay all amounts owed to such
Pre-Approved Major Trade Subcontractors
under such contracts, and that under no circumstances shall Tenant or its contractor have any
right to direct the Pre-Approved Major Trade Subcontractors with respect to Landlord’s Work.

          1.7.2 Construction Documents for Landlord’s Work. Landlord shall cause to be prepared
the plans and specifications for the construction of Landlord’s Work (the “Landlord’s Work
Construction Documents”) based on the design documents attached hereto as Schedule B-3, as the same
may be modified from time to time as provided in this Work Letter (the “Design Documents”), and
upon its completion, Landlord shall deliver copies of the Landlord’s Work Construction Documents to
Tenant. Landlord warrants to Tenant, for a period of one year

B-1
Page 10

 

 

after Substantial Completion of the
Building Shell, except for Landlord’s Work Punch List and the portion of the Building Shell that
may lag Substantial Completion of the Building Shell as provided in Exhibit B-1 where the warranty
period shall be one year from completion of such portions of the work (the “Landlord’s Warranty
Period”), (A) the Landlord’s Work shall be constructed in accordance with the Plans (as defined in
Section 1.7.3 below); (B) the Landlord’s Work shall comply with all applicable laws and
regulations, including but not limited to the California Uniform Building Code; and (C) there shall
be no Hazardous Materials introduced or generated in, on, or about the Premises as part of
Landlord’s Work in violation of applicable law. For such warranty to be effective, Tenant must
notify Landlord of the violation within one (1) year after Substantial Completion of the Building
Shell.

          1.7.3 Tenant’s Acceptance of Landlord’s Construction Documents. Subject to Section
1.7.2 above, Tenant shall either accept or reasonably reject the Landlord’s Work Construction
Documents, in writing, within ten (10) business days after Tenant’s receipt of the Landlord’s Work
Construction Documents. Tenant shall not have the right to reject any improvements or details
specified in the Landlord’s Work Construction Documents if such improvements or details are
specified or contemplated in the Design Documents. If Tenant rejects the Landlord’s Work
Construction Documents, Tenant’s written notice of rejection shall reasonably detail the reasons
for such rejection. If Tenant does not accept or reasonably reject, in writing, all or any portion
of the Landlord’s Work Construction Documents within said ten (10) business day period, it shall
have no further right to review such Landlord’s Work Construction Documents and Landlord may use
the Landlord’s Work Construction Documents as if they had been accepted. If Tenant timely and
reasonably rejects the Landlord’s Work Construction Documents, Landlord shall modify the Landlord’s
Work Construction Documents and provide modified Landlord’s Work Construction Documents to Tenant.
Thereafter, for each set of modified Landlord’s Work Construction Documents, Tenant shall either
accept or reasonably reject, in writing, the modified Landlord’s Work Construction Documents by
providing Landlord with a notice of acceptance, or a reasonably detailed statement of the reasons
for the rejection, within five (5) business days after Tenant’s receipt of the modified Landlord’s
Work Construction Documents. If Tenant does not accept or reasonably reject the modified Landlord’s
Work Construction Documents, in writing, within said five (5) business day period, it shall have no
further right to review such modified Landlord’s Work Construction Documents, it shall be deemed to
have accepted the modified Landlord’s Work Construction Documents, and Landlord may use the
modified Landlord’s Work Construction Documents as if they had been accepted. Conversely, if
Landlord decides, in its sole discretion, to revise the Landlord’s Work Construction Documents or
modified Landlord’s Work Construction Documents pursuant to an untimely request from Tenant, Tenant
shall be responsible for all actual delays to the Substantial Completion of Landlord’s Work
associated with such revision, and the Commencement Date shall be subject to adjustment as a result
thereof in accordance with the provisions of Section 1.6.7 above. The final Landlord’s Work
Construction Documents are referred to herein as the “Plans.”

     1.8. Landlord’s Permits. Landlord shall, at Landlord’s sole cost and expense, procure
all permits, licenses, consents, notices and other approvals necessary to commence and complete
Landlord’s Work from all public and quasi-public authorities with jurisdiction (collectively, the
“Permits”). Landlord agrees to use reasonable diligent efforts to obtain such Permits. If prior
to obtaining the Permits for Landlord’s Work, any governmental authority having jurisdiction over
the construction of Landlord’s Work or any portion thereof shall impose terms or conditions upon
the construction thereof which: (i) are materially inconsistent with the project envisioned in the
February 1st, 2007 Planning Department Approval, (ii) materially increase the cost of
constructing Landlord’s Work over what was reasonably envisioned in the February 1st
2007 Planning Department Approval, or (iii) substantially delay the construction of Landlord’s Work
beyond the Outside Completion Date (each of the foregoing, a “Material Project Change”),
Landlord and Tenant shall reasonably, diligently, and in good faith seek means by which to
mitigate or eliminate any such adverse terms and conditions. If the parties are unable to agree
upon such mitigation prior to August 1, 2007, then this Agreement shall be subject to termination
pursuant to Section 1.6.2 above. Any terms and provisions required by a governmental authority
that do not result in a Material Project Change shall not give either party the right to terminate
this Agreement.

B-1
Page 11

 

 

     1.9. Construction Requirements for Landlord’s Work.

          1.9.1 Selection of Contractor. Landlord has selected the general contractor
identified in Section 1.7.1.2 above to be Landlord’s Contractor to construct Landlord’s Work.

          1.9.2 Landlord’s Design Changes.

               1.9.2.1 Changes Requested by Government. Landlord shall have the authority, without
the consent of Tenant, but with notice to Tenant and Tenant’s Architect, which notice may take the
form of a copy of a Landlord Change Directive, as defined in Section 1.10.1.2 below, to order any
changes to Landlord’s Work required by, or in order to comply with, applicable Laws, Governmental
Regulations, or any building officials; provided that such changes do not materially affect
Tenant’s Permitted Use or occupancy of the Premises. Landlord agrees to cooperate with Tenant in
connection with such changes to attempt to mitigate any additional Costs of Landlord’s Work in
connection therewith, but Landlord makes no assurances that such mitigation may be achieved, nor
shall Tenant be entitled to terminate the Lease or have any abatement in rent.

               1.9.2.2 Minor Changes. Landlord shall have the authority, without Tenant’s consent,
but with notice to Tenant and Tenant’s Architect, which notice may take the form of a copy of a
Landlord Change Directive, as defined in Section 1.10.1.2 below, to order any work that is
necessary in order to complete Landlord’s Work as contemplated herein, or to order minor changes in
Landlord’s work that do not adversely and materially affect the cost of Landlord’s Work, the
quality of Landlord’s Work, or the schedule for the completion of the same; provided that such
changes do not materially affect Tenant’s Permitted Use or occupancy of the Premises, nor
materially increase (x) Tenant’s Costs of the Work (as defined in Section 2.6.5 hereof), (y) the
cost of installing Tenant’s furnishings and equipment, or (z) the costs associated with Tenant’s
use or occupancy of the Premises.

               1.9.2.3 Other Design Changes. Subject to the limitations on any material increases in
the Costs of Landlord’s Work in this Work Letter and in Exhibit D to the Lease, Landlord shall also
have the right, with Tenant’s prior written consent in accordance with Section 1.10.1.2 below,
which consent shall not be unreasonably withheld, conditioned or delayed, to order Landlord Change
Directives for any other reasons not covered under Section 1.9.2.1 or 1.9.2.2 above; provided,
however, that if the Landlord Change Directive proposed by Landlord will increase Tenant’s Costs of
the Work, Tenant shall notify Landlord of the same, in writing, at the time Tenant consents to such
Landlord Change Directive. Such written notice from Tenant shall also specify the estimated
increase in Tenant’s Costs of the Work resulting from such Landlord Change Directive. Should
Landlord decide to proceed with such Landlord Change Directive, notwithstanding such notice from
Tenant, then Landlord shall be responsible for all additional Tenant’s Costs of the Work incurred
by Tenant as a result of such Landlord Change Directive.

     1.10. Coordination of Changes

          1.10.1  Landlord’s Obligation to Coordinate Changes to Landlord’s Work.

               1.10.1.1 Landlord’s Coordination Obligations. Landlord shall cause Landlord’s
Architect to coordinate the development of any material change in the design of Landlord’s Work
with Tenant’s Architect, and Tenant shall cause Tenant’s Architect to coordinate with Landlord’s
Architect so Landlord’s Architect can coordinate such design change with the design of the Initial
Tenant Improvements, and so Tenant’s Architect can provide information to Landlord’s Architect in
order to allow Landlord’s Architect to mitigate Tenant’s damages as a result of such changes. No
approval of Tenant’s Architect to any design change shall be binding on Tenant unless Tenant has
also provided such approval in writing to Landlord
to the extent the approval of Tenant is required under Sections 1.9.2.1 through 1.9.2.3 of
this Exhibit.

               1.10.1.2 Landlord’s Change Directives. Landlord shall have Landlord’s Contractor copy
Tenant on any requests for information (“RFI’s”) submitted by Landlord’s Contractor. In addition,
Landlord shall copy Tenant on any (a) responses to RFI’s, (b) change orders, and (c) any plan
clarifications sent to Landlord’s Contractor (collectively, “Landlord Change Directives”). It
shall be Tenant’s responsibility to review that information, and to

B-1
Page
12

 

 

object to the same within three
(3) business days after receiving Landlord’s Change Directives, if the same will impact the design
or construction of the Initial Tenant Improvements. Should Tenant fail to deliver written notice
to Landlord, within three (3) business days after receiving a Landlord Change Directive, then all
directions to Landlord’s Contractor set forth in any such Landlord Change Directive shall be deemed
to have no impact on the design or construction of the Initial Tenant Improvements.

               1.10.1.3 Landlord’s Obligation to Maintain As-Built Drawings. Landlord agrees to
reasonably cooperate with Tenant in order to allow Tenant (and Tenant’s Architect) to obtain the
most recent information regarding the Premises and the status and condition of Landlord’s Work,
which cooperation shall include requiring Landlord’s Contractor to keep an updated set of
“As-Built” drawings on site, and to make its “As-Built” drawings available for review by Landlord,
Landlord’s Architect, Tenant, and Tenant’s Architect.

          1.10.2 Tenant’s Obligation to Coordinate Changes to Tenant’s Work.

               1.10.2.1 Incorporation of Design Information. Tenant shall require that Tenant’s
Architect incorporate into the design of the Initial Tenant Improvements any information that it
receives from Landlord or Landlord’s Contractor regarding Landlord’s Work, including but not
limited to any Landlord Change Directive, and that it coordinate the design of the Initial Tenant
Improvements with Landlord’s Work.

               1.10.2.2 Tenant’s Obligation to Incorporate Changes Into its Design. At Landlord’s
request, Tenant shall attend (or shall cause Tenant’s Architect to attend) job site meetings for
purposes of discussing the progress of Landlord’s Work, the coordination of Landlord’s Work with
the Initial Tenant Improvements, and for purposes of reviewing the “As-Built” drawings prepared by
Landlord’s Contractor. If Tenant or Tenant’s Architect believes that the incorporation of any such
information into the plans for the Initial Tenant Improvements will increase the Tenant’s Costs of
the Work (as defined in Section 2.6.5 hereof), Tenant and/or Tenant’s Architect must notify
Landlord of the same, in writing, within three (3) business days after such meeting. Should Tenant
or Tenant’s Architect fail to notify Landlord of the same within said three (3) business day
period, then such information shall be deemed to have no effect on the Tenant’s Costs of the Work.
Should Tenant or Tenant’s Architect notify Landlord, in writing, that such information will
increase the Tenant’s Costs of the Work if such information is incorporated into the plans for the
Initial Tenant Improvements, then Landlord and Tenant shall meet informally in an attempt to
resolve the matter. Should the parties fail to resolve the matter during the meeting, any dispute
regarding the same shall be resolved by binding arbitration with the San Francisco, California
office of the American Arbitration Association, pursuant to the Commercial Rules of the American
Arbitration Association.

               1.10.2.3 Tenant’s Obligation to Have Subcontractors Take Measurements. Tenant shall
require that (a) Tenant’s Contractor take field measurements of Landlord’s Work before installing
any work affected by Landlord’s Work, and that (b) Tenant’s Contractor immediately notify Landlord
and Tenant, in writing, of any material discrepancies between such field measurements and the plans
for the Initial Tenant Improvements. Should it be determined that the material discrepancies
resulted from the negligence of Landlord’s Architect or Landlord’s Contractor, then Landlord shall
be responsible for all additional Tenant’s Costs of the Work and any delays incurred by Tenant as a
result of such material discrepancies, but only to the extent of such additional costs could not
have been reasonably avoided (i) by Tenant’s contractor immediately notifying Landlord, in writing,
of any such material discrepancies after it was discovered, or would have been discovered by Tenant
or Tenant’s Contractor if it took field measurements as required above, or (ii) by Tenant
incorporating any information contained within a Landlord Change Directive into its Tenant’s Final
Plans (defined in Section 2.3.1) or any addendum or plan clarification to Tenant’s Final Plans.

     1.11. Change Requests. Tenant shall have the right to request changes to the
Landlord’s Work Construction Documents as set forth herein (each a “Change Request”), and Landlord
agrees not to unreasonably withhold approval of any such Change Request; provided, however, that
(a) Tenant first complies with all other terms and provisions of this Exhibit regarding such Change
Requests; (b) the Change Request is of a similar character to the other elements of Landlord’s Work
being constructed by Landlord’s Contractor; (c) such Change Request does not negatively affect the
market value of the completed Premises; (d) such Change Request does not negatively affect the
structural integrity of the building or the quality or the

B-1
Page
13

 

 

integrity of the other engineered
elements of Landlord’s Work; (e) such Change Request will not have an adverse effect on the
exterior appearance of either (1) the Building or (2) that portion of the Premises outside the
boundaries of the Building (as reasonably determined by Landlord); and (f) Tenant provides Landlord
with all reasonable and necessary information to implement the Change Request.

          1.11.1 Change Request Procedure. Tenant shall submit all proposed Change Requests to
Landlord in writing, along with all necessary plans and specifications that may be necessary for
Landlord to review and approve the Change Request. Landlord will either approve or disapprove of
the Change Request, in writing, within ten (10) business days after receiving Tenant’s proposed
Change Request. If Landlord disapproves of a Change Request, such notice of disapproval shall
specify in reasonable detail the basis for Landlord’s disapproval. Landlord shall be deemed to
have approved of Tenant’s proposed Change Request unless Landlord delivers written notice
disapproving of the Change Request within said ten (10) business day period. If Landlord approves
or is deemed to have approved of the Change Request, then Landlord shall have Landlord’s Architect
prepare plans and/or specifications with respect to such Change Request (the “Change Request
Plans”) based upon the information provided to Landlord in Tenant’s proposed written Change
Request. Notwithstanding the foregoing, if Landlord determines, in its reasonable discretion, that
Change Request Plans are not necessary to implement the Change Request, then Landlord shall not be
required to cause Change Request Plans to be prepared for such Change Request. All reasonable
costs associated with the design, permitting, implementation and construction of the Change Request
(the “Change Request Work") that increase the Cost of Landlord’s Work shall be Tenant’s
responsibility, and any cost savings resulting from Change Request Work shall be factored into
Minimum Monthly Rent calculations made pursuant to Exhibit D to the Lease.

          1.11.2 Approval of Change Request Plans. Subject to Section 1.11.1, upon completion
of any Change Request Plans, Landlord shall submit such plans to Tenant for Tenant’s review and
approval. Tenant shall approve or reasonably reject such Change Request Plans, in writing, within
five (5) business days after Tenant’s receipt of the same. If Tenant timely rejects such Change
Request Plans, Tenant shall notify Landlord of the requested revisions to such Plans at the time
Tenant’s notice of rejection is given to Landlord. Thereafter, Landlord shall proceed with the
modifications to the Change Request Plans and shall submit the modified Change Request Plans to
Tenant for Tenant’s approval or reasonable rejection. If Tenant fails to deliver written notice of
approval or rejection within said five (5) business day period, Tenant will be deemed to have
abandoned the Change Request. Landlord shall continue to make revisions and submit such Change
Request Plans to Tenant for Tenant’s approval until (a) Tenant provides written notice of
acceptance, or (b) Tenant fails to provide timely written notice of its rejection of the revised
Change Request Plans. Landlord will have no obligation to modify the Change Request Plans after an
untimely response by Tenant.

          1.11.3 Cost of Change Request. If Tenant gives Landlord timely written notice of its
acceptance of any Change Request Plans (or if Landlord notifies Tenant, in writing, that Change
Request plans are not necessary to implement the Change Request), then within ten (10) business
days after Landlord receives such written notice of acceptance of any Change Request Plans from
Tenant (or at the time that Landlord notifies Tenant that Change Request plans are not necessary to
implement the Change Request), Landlord shall notify Tenant, in writing (the “Change Request Cost
Notice”), of the cost of the Change Request (the “Change Request Cost”) and of the impact the
Change Request will have on the date of Substantial Completion of the Building Shell and/or
Landlord’s Work (the “Change Request Delay”). The Change Request Cost and the Change Request Delay
shall be reasonably determined by Landlord. If after receiving such Change Request Cost Notice,
Tenant elects to proceed with the Change Request, Tenant shall notify Landlord of the same, in
writing, within five (5) business days after receiving the Change Request Cost Notice, and shall
concurrently deliver to Landlord the
Change Request Cost specified in Landlord’s Change Request Cost Notice. Conversely, Tenant
may utilize any remaining amounts of the Tenant Improvement Allowance to pay such Change Request
Cost, provided Tenant notifies Landlord of such election at the time Tenant notifies Landlord that
it is electing to proceed with the Change Request. Landlord shall not be obligated to commence any
Change Request work until Tenant pays Landlord the Change Request Cost, or notifies Landlord, in
writing, that it is utilizing the Tenant Improvement Allowance to pay for such Change Request Cost.
Furthermore, if Tenant elects to proceed with the Change Request, Tenant and Landlord shall be
bound by Landlord’s determination as to the Change Request Cost

B-1
Page
14

 

 

and the Change Request Delay. In
the event that Tenant does not elect to proceed with the Change Request work, Tenant shall
nonetheless be obligated to pay all of the Costs of Landlord’s Work reasonably incurred by Landlord
in processing the Change Request and preparing the Change Request Plans, including all
out-of-pocket design fees incurred by Landlord, within thirty (30) calendar days after receiving
Landlord’s written request for payment of the same. Conversely, Tenant may, by delivering written
notice to Landlord within said thirty (30) day period, utilize any remaining amounts of the Tenant
Improvement Allowance to pay for such Change Request Cost.

ARTICLE 2. TENANT’S WORK

     2.1. Initial Tenant Improvements. Tenant shall plan, design and construct certain
improvements (the “Initial Tenant Improvements”) in accordance with (a) the terms and provisions of
this Article 2, (b) the other terms and conditions of the Lease, and (c) all applicable laws,
statutes, ordinances, building codes and regulations (collectively, “Applicable Laws”). Landlord
and Tenant acknowledge and agree that the Building will be improved by Tenant with “Office Space”
and “Lab Space.” “Lab Space” is defined as areas within the Building that are to be primarily
equipped for scientific experimentation, research, observation, or testing that may include
equipment and fixtures, such as hoods and casework, used to support work conducted within the lab,
but which may include incidental offices for research personnel, which may comprise up to 40% of
the Lab Space. “Office Space” is defined as all other areas within the Building (including but
not limited to the cafeteria and gymnasium) that are not Lab Space, exclusive of any subterranean
garage parking or subterranean storage areas. Notwithstanding the foregoing, however, a portion of
the Service Area (as defined in the Lease and outlined in Exhibit J to the Lease) may be designated
by Tenant, from time to time, and in Tenant’s sole discretion, as storage space, which space shall
not be added to the Rentable Square Footage of the Building, and Tenant shall not receive any
additional Tenant Improvement Allowance for such space, but such space shall be subject to the
Service Area Minimum Monthly Rent as further described in the Lease.

     2.2. Definitions. For purposes of this Article 2, each of the following terms shall
have the following meaning:

          2.2.1 Tenant’s Contractor: The general contractor selected by Tenant and approved by
Landlord, in writing, which approval shall not be unreasonably withheld, to construct the Initial
Tenant Improvements (herein referred to as “Tenant’s Contractor”). The Tenant’s Contractor must be
licensed and bondable in the State of California. Landlord shall provide written notice of such
approval or disapproval within ten (10) business days after Tenant’s request for such approval.

          2.2.2 Construction Contract. The construction contract entered into between Tenant
and the Tenant’s Contractor for the Initial Tenant Improvements, which shall be approved by
Landlord, in writing, prior to execution, which approval shall not be unreasonably withheld,
conditioned or delayed, and if Landlord’s written approval or disapproval, accompanied by a written
detailed description of changes required by Landlord to satisfy its concerns relating to the
proposed contract, is not received within ten (10) business days after such contract is submitted
to Landlord for Landlord’s approval, then Landlord’s approval of the proposed construction contract
shall be deemed to have been received (provided it contains the required provisions of
subparagraphs 2.2.2.1 — 2.2.2.6 below). Such Construction Contract shall require, in addition to
any other provisions reasonably requested by Landlord, that:

               2.2.2.1 Tenant’s Contractor carry workers compensation insurance as required by law, and
employers liability insurance in an amount equal to $1,000,000, and shall require that all
subcontractors carry such insurance as well.

               2.2.2.2 Tenant’s Contractor carry comprehensive general liability or commercial general
liability insurance, covering Premises damage, personal injury, death, and products and completed
operations coverage, in an amount not less than $3,000,000 per occurrence, and $5,000,000 in the
aggregate with deductibles of no more than $10,000, naming Landlord and its affiliates, employees
and agents as additional insureds, by endorsement (on an ISO form 2010 11 85), with an insurance
company with a minimum of an A-VIII rating. The Construction Contract shall also require that all
of Tenant’s Contractor’s subcontractors carry such insurance as well, except that subcontractors
under subcontracts for less than ten percent

B-1
Page
15

 

 

(10%) of the cost of the Initial Tenant Improvements
shall only be required to carry such insurance in an amount of not less than $1,000,000 per
occurrence and $2,000,000 in the aggregate; provided that the insurance coverage of any of Tenant’s
subcontractors required under this Section may be provided, in whole or in part, through a blanket
policy of such insurance coverage maintained by Tenant’s Contractor which expressly provides that
the insured’s subcontractors are covered thereunder. Such insurance shall be maintained at all
times during the construction of the Initial Tenant Improvements, except for the products and
completed operation coverage, which coverage is to be maintained for ten (10) years following
completion of the work. Furthermore, such insurance shall preclude or waive subrogation claims by
the insurer against Landlord, its affiliates, or their agents, employees, or representatives.
Such insurance shall also provide that it is primary insurance with respect to the Landlord and
that any other insurance maintained by Landlord is excess and noncontributing with the insurance
required hereunder.

               2.2.2.3 Tenant’s Contractor deliver to Tenant and Landlord certificates of insurance, with
endorsements, evidencing the insurance requirements set forth in the Construction Contract prior to
Tenant’s Contractor’s entering the Premises.

               2.2.2.4 Tenant’s Contractor (to the greatest extent allowed by law) shall protect, defend,
indemnify, and hold harmless Landlord and its agents, employees, and representatives, for all
costs, losses, damages, injuries and liabilities related in any way to any act or omission of
Contractor or any of its subcontractors, suppliers, subcontractors, consultants, agents, or
representatives, or anyone directly or indirectly employed by any of them, with respect to the
Initial Tenant Improvements.

               2.2.2.5 Landlord be named as a third party beneficiary with respect to the Tenant’s
Contractor’s insurance and indemnity provisions of the Construction Contract.

          2.2.3 Construction Costs: Except as otherwise expressly set forth herein, any and all
costs, expenses, fees, taxes and charges relating to or associated with the Initial Tenant
Improvements and the design and/or construction of the same, shall be borne solely by Tenant.

     2.3. Plans for Initial Tenant Improvements.

          2.3.1 Preliminary Plans. Except as otherwise set forth herein, Tenant shall submit to
Landlord, and obtain Landlord’s approval of, any architectural floor plan of the initial Tenant
Improvements to the Premises (“Proposed Preliminary Plans”). Landlord shall not unreasonably
withhold its approval of such Proposed Preliminary Plans, provided, however, that (a) Tenant first
complies with all other terms and provisions of this Lease regarding the submittal of such Proposed
Preliminary Plans, (b) the design set forth in the Proposed Preliminary Plans does not negatively
affect the structural integrity of the Building Shell or the quality or the integrity of the other
engineered elements of Landlord’s Work; (c) the design set forth in the Proposed Preliminary Plans
will not have an adverse effect on the exterior appearance of the Building (as reasonably
determined by Landlord) or the portion of the Premises outside the Building, and (d) Tenant
provides Landlord will all reasonable and necessary information necessary to evaluate the Proposed
Preliminary Plans. After receiving such Proposed Preliminary Plans, Landlord shall notify Tenant
in writing whether (i) Landlord approves of such Proposed Preliminary Plans, or whether (ii)
Landlord disapproves of such Proposed Preliminary Plans. If Landlord disapproves of such Proposed
Preliminary Plans, Landlord’s disapproval notice shall specify the basis for such disapproval. If
Landlord fails to notify Tenant, in writing, of its disapproval of such Proposed Preliminary Plans,
along with the written description of the reasons for such disapproval, within ten (10) business
days after receiving the same, Landlord shall be deemed to have approved of such Proposed
Preliminary Plans. If Landlord disapproves of such Proposed Preliminary Plans, Tenant shall cause
the Proposed Preliminary Plans to be revised as required to address Landlord’s specified concerns,
and shall submit the revised
preliminary plans to Landlord for its review and approval as provided in this Section, and
such procedure shall continue until Landlord has approved of (or is deemed to have approved of) the
revised preliminary plans submitted by Tenant. After Landlord’s approval of the Proposed
Preliminary Plans as provided above, such preliminary plans shall be referred to in this Article 2
as “Tenant’s Preliminary Plans.”

          2.3.2 Final Plans. After Landlord’s approval or deemed approval of Tenant’s
Preliminary Plans, Tenant shall submit to Landlord, for Landlord’s review and approval, the

B-1
Page
16

 

 

plans
and specifications for the Initial Tenant Improvements, which shall be consistent with Tenant’s
Preliminary Plans(“Tenant’s Construction Documents”), and which shall be compatible with the
Landlord’s Construction Documents previously provided to Tenant by Landlord. After receiving the
Tenant’s Construction Documents, Landlord shall notify Tenant in writing whether (i) Landlord
approves of Tenant’s Construction Documents, which approval shall not be unreasonably withheld,
conditioned or delayed by Landlord, or (ii) Landlord reasonably disapproves of Tenant’s
Construction Documents. If Landlord reasonably disapproves of Tenant’s Construction Documents,
Landlord’s disapproval notice shall specify the basis for such disapproval. If Landlord fails to
notify Tenant, in writing, of its disapproval of Tenant’s Construction Documents, along with the
written description of the reasons for such disapproval, within ten (10) business days after
receiving the same, Landlord shall be deemed to have approved of Tenant’s Construction Documents.
If Landlord reasonably disapproves of Tenant’s Construction Documents and provides the written
description of the reasons for such disapproval as required, Tenant shall cause Tenant’s
Construction Documents to be revised as required to address Landlord’s specified concerns, and
shall submit the revised Tenant’s Construction Documents to Landlord for its review and approval as
provided in this Section, and such procedure shall continue until Landlord has approved Tenant’s
Construction Documents submitted by Tenant. After approval of Tenant’s Construction Documents as
provided above, such Tenant’s Construction Documents shall be referred to as “Tenant’s Final
Plans.” Tenant shall submit a copy of Tenant’s Final Plans to Landlord for its records prior to
commencing the construction of the Initial Tenant Improvements. Notwithstanding the foregoing,
where more than one type of material or structure is indicated on Tenant’s Final Plans approved by
Landlord and Tenant, the determination shall be made by Tenant in Tenant’s reasonable discretion.

          2.3.3 Landlord Information. Except for the Plans and other Construction Documents
provided by Landlord with respect to Landlord’s Work, all other information provided to Tenant by
Landlord is being made without any representation or warranty by Landlord, it being acknowledged by
Tenant that such information was furnished to Landlord by third parties, and Landlord shall not
have any liability or responsibility for the same; provided, however, that Landlord shall promptly
notify Tenant if Landlord discovers that any of the information furnished to Tenant by Landlord is
not materially true and correct. Tenant may look to the source of any reports for representations
or liabilities associated with any inaccuracies contained therein.

          2.3.4 Coordination With Landlord’s Work. Tenant shall require its Architect to
coordinate its design of the Initial Tenant Improvements, and any changes to the Initial Tenant
Improvements, with Landlord’s Architect. Such coordination includes, but is not limited to,
reviewing Landlord Change Directives as more fully described in Section 1.10.2 above. In addition,
Tenant shall require that Tenant’s Contractor (a) take field measurements of Landlord’s Work before
installing any work affected by Landlord’s Work, and (b) immediately notify Landlord and Tenant, in
writing, of any material discrepancies between such field measurements and the plans for the
Initial Tenant Improvements, as further set forth in Section 1.10.2 above.

          2.3.5 General. It is the responsibility of Tenant to assure that Tenant’s Final Plans
and the Initial Tenant Improvements constructed thereunder conform to all of the Applicable Laws.
Landlord’s acceptance or approval of any plan, drawing or specification, including, without
limitation, Tenant’s Preliminary Plans, Tenant’s Final Plans, or any changes thereto, shall not
constitute the assumption of any responsibility by Landlord for the accuracy or sufficiency of such
plans and material, and Tenant shall be solely responsible therefor. Tenant agrees and understands
that the review by Landlord of all plans pursuant to the Lease or this Exhibit B is to
protect the interests of Landlord in the Building and the Premises, and Landlord shall not be the
guarantor of, nor responsible for, the correctness, completeness or accuracy of any such plans or
compliance of such plans with Applicable Laws. Notwithstanding the foregoing, when requesting
Landlord’s approval of any change to Tenant’s Final Plans, then to
the extent such change effects the engineered elements of the Initial Tenant Improvements,
Tenant shall provide certification from Tenant’s Architect and the applicable engineers that the
requested change has been reviewed and approved by such party.

          2.3.6 Changes.

               2.3.6.1 Non-Material Changes. After Landlord’s approval of Tenant’s Final Plans, any
changes to Tenant’s Final Plans that are not “material” (as defined in Section 2.3.6.3 below) shall
not require Landlord’s prior written consent. However, Tenant shall cause

B-1
Page
17

 

 

Tenant’s Contractor,
promptly after the implementation of such change, to update the as-built drawings to reflect such
changes to Tenant’s Final Plans.

               2.3.6.2 Material Changes. After Landlord’s Approval of Tenant’s Final Plans, any
changes to Tenants Final Plans that are “material” (as defined in Section 2.3.6.3 below) shall
require Landlord’s prior written consent, which consent shall not be unreasonably withheld,
conditioned or delayed.

               2.3.6.3 Definition of a Material Change. For purposes of Section 2.3.6.1 and 2.3.6.2
above, a “material” change is one that (a) will substantially change the character of the design of
the Initial Tenant Improvements contemplated in the Preliminary Plans, (b) will materially and
adversely affect the market value of the Premises (exclusive of the Initial Tenant Improvements),
(c) will have a material adverse effect on the exterior appearance of the Building or the
appearance of the portion of the Premises outside the Building, or (d) will adversely and
materially affect the design or construction of the Landlord’s Work. For example, but without
limitation, a change in the number of offices on a floor of the Building Shell is not considered a
material change.

          2.3.7 Requirements when the Initial Tenant Improvements Affect Landlord’s Work.
Notwithstanding anything to the contrary contained herein, should any design for the Initial Tenant
Improvements (or any changes to the Initial Tenant Improvements) result in any change to the design
or specifications of the engineered elements of Landlord’s Work, or is reasonably likely to have an
adverse effect on any warranty provided to Landlord by Landlord’s Contractor or its material
suppliers with respect to Landlord’s Work, then Tenant shall either (a) have Landlord perform such
work, on Tenant’s behalf, pursuant to a Change Request in accordance with Section 1.11 above, or
(b) utilize Landlord’s Architect and/or Landlord’s Contractor and/or any subcontractor of
Landlord’s Contractor as necessary, for the design and construction of that portion of Landlord’s
Work affected thereby in order to maintain all contractual warranties provided to Landlord by
Landlord’s Contractor or its material suppliers with respect to such Landlord’s Work, and to
maintain all of Landlord’s contractual rights and remedies against Landlord’s Architect with
respect to the design of Landlord’s Work. The decision as to whether Tenant shall comply with
clauses (a) or (b) above shall be made by Landlord in Landlord’s sole and absolute discretion.
Notwithstanding anything to the contrary contained herein, should Tenant fail to retain such
parties for such work, Tenant shall be responsible for the cost of any repairs that would have been
covered by any warranty that is invalidated as a result of such failure.

          2.3.8 Change Order Review Costs. Tenant shall reimburse Landlord for its reasonable
out of pocket costs incurred in third-party engineering review of any “material” changes (as
defined in Section 2.3.6.3) to Tenant’s Final Plans. Landlord agrees not to request any such third
party review unnecessarily. Tenant shall pay Landlord such amounts within thirty (30) days after
receiving a written invoice from Landlord requesting payment for the same.

          2.3.9 Tenant’s Obligation to Remove Initial Tenant Improvements. All Initial Tenant
Improvements shall be the property of Tenant until the expiration or earlier termination of this
Lease; at that time all such Initial Tenant Improvements shall remain on the Premises and become
the property of Landlord without payment therefor, unless Landlord gives written notice to Tenant
to remove the same at the time Landlord approves Tenant’s Final Plans, in which event Tenant shall
remove such Initial Tenant Improvements at the expiration or earlier termination of the Lease and
repair any damage resulting therefrom, normal wear and tear excepted; provided that Tenant’s
removable trade fixtures and personal property (such as case work, laboratory fixtures and other
personal properties) shall be and remain Tenant’s property, and shall be removed by Tenant from the
Premises, at Tenant’s sole cost, on or before the expiration or earlier termination of this Lease,
and Tenant shall repair all damage to the Premises resulting
from such removal, normal wear and tear excepted. Landlord’s right to require removal shall
be limited to only those Initial Tenant Improvements that are not normally found in a combined
administrative office and wet and dry laboratory facility (for example, fitness areas) or that are
not of a scale appropriate to the size of the building (for instance, if a cafeteria seating
capacity is designed to accommodate a population greater than that which can be housed in the
building then Landlord shall have the right to require that Tenant remove (or, at Tenant’s
election, downsize) those improvements designed for a population greater than that housed in the
building).

B-1
Page
18

 

 

     2.4. Construction of Initial Tenant Improvements.

          2.4.1 Pre-Construction Submittals to Landlord. At least ten (10) business days prior
to the commencement of construction of the Initial Tenant Improvements, Tenant shall submit the
following items to Landlord:

               2.4.1.1 A written statement setting forth the proposed commencement date and the estimated
completion date for the Initial Tenant Improvements;

               2.4.1.2 Certificates of insurance (and endorsements) from Tenant, Tenant’s Contractor, and
all other Tenant parties (exclusive of Tenant’s Contractor’s subcontractors) intending to enter the
Premises for purposes of constructing the Initial Tenant Improvements, evidencing the insurance
required to be maintained by such parties pursuant to the terms of this Lease;

               2.4.1.3 Copies of all building permits, and all other permits and approvals required by
governmental agencies to construct the Initial Tenant Improvements; and

               2.4.1.4 A copy of the fully executed Construction Contract with Tenant’s Contractor.

Notwithstanding the foregoing, at least ten (10) business days prior to the commencement of work by
any subcontractor hired by Tenant’s Contractor to perform (in whole or in part) the Initial Tenant
Improvements, Tenant shall provide Landlord with written notice of the name and address of such
subcontractor, the scope of work of such subcontractor, and certificates of insurance from such
subcontractor, evidencing the insurance required to be maintained by such subcontractor (or by
Tenant’s Contractor on behalf of such subcontractor) under Section 2.2.2.2 of this Work Letter.

          2.4.2 Conduct of Work. Tenant shall cause Tenant’s Contractor to perform the work of
the Initial Tenant Improvements in an orderly manner, removing trash and debris generated by
Tenant’s Contractor and its subcontractors from the Premises as required to maintain a safe and
orderly worksite, and Tenant shall not permit any pipes, wires, boards or other construction
materials brought into the Premises by Tenant’s Contractor or any of its subcontractors to cross
public areas in a manner constituting a nuisance. All construction work of the Initial Tenant
Improvements shall be undertaken in material compliance with all Applicable Laws and Landlord’s
reasonable rules and regulations. If Tenant fails to comply with these requirements, Landlord
shall have the right, but not the obligation, in addition to all other remedies available to
Landlord due to Tenant’s default, to cause remedial action (at Tenant’s cost) as reasonably deemed
necessary by Landlord to protect the public. Tenant shall complete construction of the Initial
Tenant Improvements free and clear of all liens, security interests and encumbrances of any kind,
and (subject to Tenant’s right under Section 2.4.4.2 below) Tenant shall remove from title (by
bonding or otherwise) any mechanic’s liens filed against the Building and/or the Premises within
fifteen (15) business days following Tenant’s notice thereof. If Tenant fails to post such bond or
otherwise remove such lien of record within said time period, Landlord shall have the right, but
not the obligation, in addition to all other rights and remedies available under the Lease and the
applicable requirements of Section 2.4.4.2 below, to pay the claim for such lien or obtain a bond
to remove the lien as a lien against property, in which event Tenant shall reimburse Landlord in
full, including attorneys’ fees, for any such expense, within fifteen (15) days after notice from
Landlord.

          2.4.3 Use of Equipment. Landlord and Tenant acknowledge that during the sixty (60)
day Early Access Period, and thereafter while Landlord is completing the Landlord’s Work and any
Punch List work associated with Landlord’s Work, it is anticipated that Landlord
and Tenant will both be performing work within the Premises concurrently, and that Landlord’s
Contractor or any subcontractor of Landlord’s Contractor may have equipment on the Premises for the
performance of Landlord’s Work that Tenant (or Tenant’s Contractor or any subcontractor of Tenant’s
Contractor) is desirous of using for the construction of the Initial Tenant Improvements. Should
Tenant be desirous of using any such equipment for the performance of the Initial Tenant
Improvements, Tenant must obtain the prior written consent of Landlord (which will not be
unreasonably withheld provided the use of such equipment will not delay the completion of
Landlord’s Work or increase the costs of Landlord’s Work) and Landlord’s Contractor or any
subcontractor that owns, rents or has control over such equipment

B-1
Page
19

 

 

to use such equipment, provided,
however, that Tenant’s Contractor and any subcontractor of Tenant’s Contractor shall be able to use
the elevator or other alternative exterior service elevator for access to the upper floors of the
Building and the temporary electrical power source to the Building. Landlord will cooperate with
Tenant at no additional cost or liability to Landlord in Tenant’s efforts to obtain the consent of
Landlord’s Contractor or any subcontractor, as the case may be, for the use by Tenant or Tenant’s
Contactor of such equipment. Tenant shall be solely responsible for payment of any additional
costs, fees and charges required by Landlord’s Contractor or the subcontractor for such use of the
equipment. If such additional costs, fees or charges are assessed to Landlord, then Tenant shall
pay Landlord for such costs, fees or charges within thirty (30) days after written request from
Landlord. Tenant shall be responsible for any damage to person or property, including any damage
to any equipment of Landlord or Landlord’s Contractor or subcontractor as a result of use of such
equipment by Tenant or Tenant’s Contractor or any subcontractor of Tenant’s Contractor. Tenant
shall protect defend, indemnify, and hold Landlord, and its agents, representatives, consultants,
contractors, and affiliated entities harmless from and against any and all claims, actions,
damages, liability and expense (including, without limitation, fees of attorneys, investigators and
experts) in connection with loss of life, personal injury or damage to property in or about the
Premises as a result of the use of any such equipment by Tenant or anyone under Tenant’s control.

          2.4.4 Establishment of Escrow Account / Posting of Bonds.

               2.4.4.1 Schedule for Tenant’s Initial Tenant Improvements. With respect to the
schedule for the construction of the Initial Tenant Improvements, based on Tenant’s current
business projections, Tenant currently intends to (a) substantially complete the offices and
related amenities (the “Office Work”) within four (4) months after Substantial Completion of the
Building Shell and to (b) substantially complete the Labs (the “Lab Work”) within six (6) months
after the Substantial Completion of the Building Shell. If, at any time after that date which is
sixty (60) days following Substantial Completion of the Building Shell, Tenant is more than thirty
(30) days behind schedule with respect to the construction of the Office Work and the Lab Work,
subject to Force Majeure Delays and Landlord Delays, Landlord shall have the right, by delivering
written notice of the same to Tenant, and if Tenant does not remedy such failure within thirty (30)
days following receipt of such written notice, then Tenant shall be obligated to comply with the
terms and provisions of Section 2.4.4.3 below. At the time the Tenant’s Final Plans are submitted,
Tenant shall provide Landlord with a schedule for construction of the Initial Tenant Improvements
(with separate schedules for the Office Work and the Lab Work) which shall be reflected in the
Tenant’s Construction Documents and be the basis for Landlord’s rights under Section 2.4.4.3 below.
Landlord acknowledges that Tenant’s business requirements for the Building are subject to change
during the one-year period following the date of the Lease, and agrees that if any changes to
Tenant’s intended use of the Premises result in Initial Tenant Improvements which will reasonably
require more time for construction than those periods set forth in this Section 2.4.4.1 above, then
Landlord will not unreasonably withhold its approval of a construction schedule that reasonably
requires longer periods for completion of the Office Work and/or the Lab Work; provided, however,
that any additional time provided for construction of such work shall not postpone or delay the
date for the commencement of the Term of the Lease or the date by which Tenant must commence paying
rent or any other sums under the Lease.

               2.4.4.2 Failure to Obtain Mechanic’s Lien Releases. As a condition to paying any
contractor, subcontractor, material supplier, or design professional (that has served or filed
pre-lien notices with Landlord) providing labor, material, equipment or services with respect to
the Initial Tenant Improvements, Tenant agrees to obtain conditional and unconditional lien
releases from such contractors, subcontractors, material suppliers, or design professionals in
accordance with California law, and agrees to promptly deliver the latest copies
of the same to Landlord on a monthly basis; provided, however, that the foregoing shall not
prohibit Tenant from engaging in good faith disputes, from time to time, with such persons relating
to the cost and/or performance of their goods and services; in which case, Tenant shall not be
required to provide conditional or unconditional lien releases from persons who are engaged with
Tenant in such disputes as long as (i) Tenant removes, whether by posting a bond or otherwise
paying a claim, any mechanic’s lien filed against the property even if Tenant is in good faith
disputing such claim or lien, and (ii) the aggregate amount of all disputed claims outstanding at
any time is not more than $100,000. If the aggregate amount of the disputed claims are more than
$100,000.00, then Tenant shall be required to deposit in escrow that

B-1
Page
20

 

 

amount in excess of
$100,000.00, which amount shall be held in escrow until either (a) the amount in dispute is equal
to or less than $100,000.00, or (b) Tenant provides a surety bond resulting in the unbonded amount
of disputed claims being equal to or less than $100,000.00. Such escrow account shall be
established in accordance with the requirements set forth in Section 2.4.4.3.1 below. If a
mechanic’s lien for a disputed claim for which funds have been deposited in escrow by Tenant is
bonded off by Tenant, then funds deposited in escrow for such disputed claim may be withdrawn from
escrow. If as a result of such bonding, the amount of the bonded claims are less than or equal to
$100,000.00, then the entire escrowed amount shall be refunded to Tenant. Should Tenant fail to
provide Landlord with evidence that Tenant has made timely payment to such contractors,
subcontractors, material suppliers or design professionals of undisputed funds in accordance with
the procedures set forth in Section 2.6.3 below and removed (or bonded off) any lien against the
property, then provided that Tenant does not remedy such failure within fifteen (15) business days
after Landlord notifies Tenant, in writing, to do the same, then Landlord shall have the right, by
delivering written notice of the same to Tenant, to require that Tenant comply with the terms and
provisions of Section 2.4.4.3 below.

               2.4.4.3 Adequate Assurance of Completion. Should Tenant fail to timely cure any
failure to comply with its obligations under Section 2.4.4.1 or 2.4.4.2 above, then Tenant shall
immediately thereafter, do one of the following:

                    2.4.4.3.1 Escrow Account. Tenant shall place that portion of Tenant’s Over Allowance
Amount that is reasonably necessary for Tenant to fund the remaining Tenant’s Costs of the Work (as
defined in Section 2.6 below), as reasonably determined by Landlord and Tenant, into an escrow
account established by Landlord for the benefit of both Landlord and Tenant. Said escrow account
shall be used to fund all amounts remaining payable to the contractors, subcontractors, engineers,
designers, material suppliers and all other parties entitled to payment for the design or
construction of the Initial Tenant Improvements at the time such escrow is to be funded. Money may
only be withdrawn from such escrow account for purposes of paying the contractors, subcontractors,
engineers, designers, material suppliers and all other parties entitled to payment for the design
and/or construction of the Initial Tenant Improvements. In addition, the withdrawal of funds from
such escrow account shall only be made with either (a) a certification for payment from Tenant’s
Architect that the parties entitled to payment have performed the work associated with such
withdrawal request, or (b) written authorization from both Landlord and Tenant; and under no
circumstances shall money be withdrawn from such account unless all corresponding conditional and
unconditional lien releases are provided by the parties to be paid from such escrow account.
Landlord and Tenant agree to timely execute any escrow instructions that are reasonably necessary
in order to carry out the intent of this Section 2.4.4.3.1.

                    2.4.4.3.2 Bonds. Tenant shall provide Landlord, at Tenant’s sole cost and expense,
with a completion bond, a performance bond, and/or other bond requested by Landlord as may be
necessary to complete the Initial Tenant Improvements and to protect Landlord’s interest in the
Building, the Premises, and/or the Project. The amount of such bond(s) shall be reasonably
determined by Landlord and Tenant, but shall be based on that portion of Tenant’s Over Allowance
Amount that is reasonably necessary for Tenant to fund the remaining Tenant’s Costs of the Work.

          2.4.5 Notice of Completion; Copy of Record-Set of Plans. Within ten (10) calendar
days after completion of construction of the Initial Tenant Improvements, Tenant shall cause a
notice of completion (or the equivalent notice required under applicable local law to provide
notice to all contractors, subcontractors and materialmen that the work is completed and the time
for filing any mechanic’s lien is running) to be recorded in the Official Records of the County in
which the Building is located, and shall furnish a copy thereof to Landlord upon such
recordation. If Tenant fails to do so, Landlord may execute and file the same on behalf of
Tenant as Tenant’s agent for such purpose, at Tenant’s sole cost and expense. At the conclusion of
construction: (a) Tenant shall cause Tenant’s Contractor and Tenant’s Architect, as applicable (i)
to update Tenant’s Final Plans as necessary to reflect all changes made to Tenant’s Final Plans
during the course of construction, (ii) to certify to the best of their knowledge that the
“record-set” of as-built drawings are true and correct, which certification shall survive the
expiration or termination of the Lease, and (iii) to deliver to Landlord two (2) sets of printed
copies of “as-built” drawings (in computer assisted design format (“CAD”)), as well as an
electronic formatted copy, within ninety (90) calendar days following issuance of a certificate of
occupancy for the

B-1
Page
21

 

 

Premises; and (b) Tenant shall deliver to Landlord a copy of all signed building
permits and certificates of occupancy, and all warranties, guaranties, and operating manuals and
information relating to the Initial Tenant Improvements. Further, after the expiration of the Term
or the earlier termination of the Lease, Tenant shall, at Landlord’s written request, promptly
assign to Landlord all of Tenant’s remaining rights, title and interest in and to any and all
Plans, contracts, warranties, guarantees and other documents associated with those Initial Tenant
Improvements remaining on the Premises after Tenant’s surrender thereof.

          2.4.6 Correction of Work. As a condition to the payment of each progress payment of
the Tenant Improvement Allowance, Landlord may notify Landlord’s Architect, Tenant and Tenant’s
Architect of Landlord’s decision to perform a walk-through inspection of the Initial Tenant
Improvements on a day that is not later than five (5) business days following Landlord’s receipt of
the Draw Request for each progress payment and the date and time (during normal business hours) for
such walk-through inspection of the Initial Tenant Improvements for purposes of determining whether
there are any patent defects in the construction of the Initial Tenant Improvements (the “Progress
Payment Walk-Through Inspection”). Such scheduled date and time for a Progress Payment
Walk-Through Inspection is referred to herein as a “Progress Payment Walk-Through Date.” Landlord,
Tenant and Tenant’s Contractor, as well as Tenant’s Architect (if desired by Tenant), shall meet at
the Premises at the designated time on the inspection date. If Tenant’s desired representative(s)
is/are not available on the applicable Progress Payment Walk-Through Date, Tenant shall notify
Landlord of the same, in writing, at least two (2) days prior to the applicable Progress Payment
Walk-Through Date, in which case, the parties shall coordinate another date and time for the
walk-through, which shall be no later than five (5) days after the originally scheduled Progress
Payment Walk-Through Date. If during the Progress Payment Walk-Through Inspection, Landlord and
Tenant agree that the corresponding work is free of material defects and in substantial conformance
with the Tenant’s Final Plans, then (a) Landlord and Tenant shall document such fact in writing
(the “TI Completion Notice”), and (b) Landlord shall identify, in writing, those items of the
Initial Tenant Improvements that are in need of repair, or that have yet to be completed, and that
Tenant agrees to repair (the “TI Punch List”); provided, however, that any TI Punch List work shall
be minor in nature, and shall not interfere with the continued construction of the Initial Tenant
Improvements or occupancy of the Premises for the Permitted Uses set forth in the Lease in
connection with the Final Scheduled Payment, and shall, in any case, be reasonably capable of
completion within thirty (30) days after the applicable Progress Payment Walk-Through Date. Should
Tenant disagree with the items on the TI Punch List, Tenant shall notify Landlord, in writing
within two (2) business days following receipt of the proposed TI Punch List from Landlord, of such
disagreement and Tenant’s proposed changes to the TI Punch List. If the parties are unable to agree
upon the TI Punch List scope of work, then any such disagreement shall be resolved in accordance
with Section 1.4.6.2; provided that the applicable Progress Payment shall be made by Landlord net
of the reasonably estimated cost of correcting the TI Punch List items disputed by Tenant. The TI
Completion Notice shall be binding on Landlord and Tenant, subject to resolution of any
disagreement relating to the scope of work of the TI Punch List. TI Punch List items that are
determined to be defective or not in substantial conformity with Tenant’s Final Plans (as may be
amended in accordance with the requirements set forth herein) shall be promptly corrected by
Tenant. Landlord’s failure to require a Progress Payment Walk-Through Inspection by timely
delivery of the written notice required above shall be deemed Landlord’s waiver of such inspection
rights for such Progress Payment.

     2.5. Indemnity/Insurance.

          2.5.1 Indemnity. Tenant’s obligation to defend, indemnify, and hold Landlord harmless
as set forth in the Lease shall also apply with respect to any and all costs, losses, damages,
injuries and liabilities (collectively, “Claims”) related in any way to the Initial Tenant
Improvements, or any act or omission of Tenant or any contractor, subcontractor, material
supplier, architect, engineer, consultant or any other party employed, directly or indirectly, by
Tenant with respect to the Initial Tenant Improvements, or in connection with Tenant’s non-payment
of any amount arising out of the Initial Tenant Improvements that Tenant is required to pay
pursuant to the terms of this Lease; provided, however, that Tenant shall not be obligated to
defend, indemnify, and hold Landlord harmless from and against any such Claims to the extent the
same arise directly due to Landlord’s intentional failure to timely pay Tenant any portion of the
Tenant Improvement Allowance that is then due, payable, and undisputed under this Work Letter.

B-1
Page
22

 

 

          2.5.2 Insurance Requirements. In addition to the insurance requirements set forth in
the Lease, until the Final Scheduled Payment is received by Tenant in accordance with Section
2.6.3.2 below, Tenant shall carry, or shall cause its Contractor to carry, “Builder’s All-Risk”
insurance for the full replacement cost of the Initial Tenant Improvements, and otherwise in the
form required in Section 2.2.2.2 of this Work Letter. Such “Builder’s All-Risk” insurance coverage
shall preclude or waive subrogation claims by the insurer against Landlord, or its agents,
employees, or representatives, and contain a provision that the company writing said policy will
give Landlord thirty (30) calendar days’ prior written notice of any cancellation or lapse of the
policy or any reduction in the amounts of such insurance. In the event that the Initial Tenant
Improvements are damaged by any cause during the course of the construction thereof, Tenant shall
immediately repair the same at Tenant’s sole cost and expense, subject to Landlord’s obligation to
repair any damages to the Landlord’s Work covered by Landlord’s insurance. Prior to Substantial
Completion of Landlord’s Work, Landlord shall carry, or cause Landlord’s Contractor to carry,
“Builder’s All Risk” insurance for the full replacement cost of Landlord’s Work, excluding costs
for footings and excavation and any off-site work, as an expense included in the cost of Landlord’s
Work prior to Substantial Completion of the Building Shell, and in CAM Charges thereafter.
Landlord shall cause such “Builder’s All-Risk” insurance coverage on the Landlord’s Work to
preclude or waive subrogation claims by the insurer against Tenant, or its agents, employees or
representatives, and contain a provision that the company writing such policy will give Tenant
thirty (30) calendar days prior written notice of any cancellation or lapse of the policy or any
reduction in the amounts of such insurance prior to the Substantial Completion of Landlord’s Work.
Upon Substantial Completion of the Landlord’s Work, the “Builder’s All-Risk” insurance coverage
shall be replaced by an “all risk” policy of property insurance covering the replacement cost of
Landlord’s Work (exclusive of the Initial Tenant Improvements) in accordance with the requirements
of Section 6.3.1 of the Lease. Following Landlord’s receipt of a Draw Request satisfying the
conditions for the Final Scheduled Payment, Landlord shall cause the Landlord’s “all risk” policy
of insurance on the Premises to include the full replacement cost of the Initial Tenant
Improvements, and delivery of the Final Scheduled Payment shall be deemed Landlord’s assumption of
property insurance coverage for the Initial Tenant Improvements. In the event that the Landlord’s
Work is damaged by any cause during the course of construction thereof, Landlord shall immediately
repair the same at Landlord’s sole cost and expense, subject to Tenant’s obligation to repair any
damages to the Initial Tenant Improvements covered by Tenant’s insurance. The requirements for the
foregoing insurance shall not derogate from the provisions for indemnification of Landlord by
Tenant under the Lease or this Work Letter.

     2.6. Tenant’s Costs of the Work and Tenant Improvement Allowance.

          2.6.1 Tenant Improvement Allowance. Landlord agrees to reimburse Tenant One Hundred
Dollars ($100) per square foot of Lab Space (of which 40% can be office/support space without
reducing the Lab Space allowance), up to a maximum equal to the total rentable square footage of
one entire floor of the Building, and Fifty Dollars ($50) per square foot of the remainder of the
Rentable Square Footage of the Building (as defined in Section 2.1 of the Lease) (collectively, the
“Tenant Improvement Allowance”) for Tenant’s Costs of the Work (defined in Section 2.6.5 below)
incurred by Tenant for the construction of the Initial Tenant Improvements. Before the Initial
Payment toward the cost of the Initial Tenant Improvements, Landlord and Tenant shall agree on (a)
the total square footage of the Lab Space within the Building, based on Landlord’s and Tenant’s
Architects’ confirmation of the as-built construction of the Building and Tenant’s Final Plans, and
(b) on the total amount of the Tenant Improvement Allowance. Such square footage determination, as
well as such Tenant Improvement Allowance determination, shall be binding on Landlord and Tenant
throughout the Lease Term.

          2.6.2 Tenant’s Responsibility for Costs; Distribution of Allowance. Tenant shall bear
the cost of Initial Tenant Improvements, including, without limitation, costs in connection with
design, engineering, plan checking, special inspections and testing, Tenant’s consultants, and
permits and fees for the Initial Tenant Improvements Work. After Landlord’s approval of Tenant’s
Final Plans, Tenant shall deliver to Landlord (for Landlord’s review and approval, which approval
shall not be unreasonably withheld, conditioned, or delayed) a detailed breakdown of the estimated
costs to be incurred for the design and construction of the Initial Tenant Improvements (the “Total
Estimated Costs of Tenant’s Initial Improvements”). Tenant shall incorporate any reasonable
requested changes from Landlord with respect to such estimated costs. Tenant shall update such
estimate from time to time to reflect any increases in

B-1

Page 23

 

 

the costs of constructing the Initial Tenant Improvements. After Landlord’s approval of the
Total Estimated Costs of Tenant’s Initial Improvements, Tenant shall provide Landlord with a
detailed breakdown of the estimated final costs to be incurred, and that have been incurred, in
connection with the Initial Tenant Improvements, setting forth the estimated cost of the
construction of the Initial Tenant Improvements in excess of the Tenant Improvement Allowance (the
“Over Allowance Amount”).

          2.6.3 Distribution of Tenant Improvement Allowance. During the construction of the
Initial Tenant Improvements, the Tenant Improvement Allowance (to the extent payable to Tenant)
shall be disbursed by Landlord in three payments to Tenant as follows:

               2.6.3.1 Provided that Tenant complies with the Draw Request procedures set forth in Section
2.4.6 above and Section 2.6.4 below, after 33% of the Total Estimated Costs of Tenant’s Initial
Improvements (as modified by any changes thereto as permitted under Section 2.3.6 above) have been
paid by Tenant and after Tenant’s Architect certifies, in writing, that the Initial Tenant
Improvements are at least 33% complete, Tenant shall have the right to request a draw on the Tenant
Improvement Allowance in an amount equal to the product of the Tenant Improvement Allowance times
33%, minus any portion of the Tenant Improvement Allowance previously paid by Landlord for any
Change Request Costs as provided in Section 1.11.3 above, which amount requested by Tenant shall be
paid by Landlord in accordance with Section 2.6.4 below (“Initial Payment”).

               2.6.3.2 Provided that Tenant complies with the Draw Request procedures set forth in Section
2.4.6 above and Section 2.6.4 below, after 66% of the Total Estimated Costs of Tenant’s Initial
Improvements (as modified by any changes thereto as permitted under Section 2.3.6 above) have been
paid by Tenant and after Tenant’s Architect certifies, in writing, that the Initial Tenant
Improvements are at least 66% complete, Tenant shall have the right to request an additional draw
down on the Tenant Improvement Allowance in an amount equal to the product of the Tenant
Improvement Allowance times 66%, minus any portion of the Tenant Improvement Allowance previously
paid by Landlord at Tenant’s request, which amount requested by Tenant shall be paid by Landlord in
accordance with Section 2.6.4 below.

               2.6.3.3 Provided that Tenant complies with the Draw Request procedures set forth in Section
2.4.6 above and Section 2.6.4 below, after 100% of the Total Estimated Costs of the Work for
Tenant’s Initial Improvements (as modified by any changes thereto as permitted under Section 2.3.6
above) have been paid by Tenant and after Tenant’s Architect certifies, in writing, that the
Initial Tenant Improvements are 100% complete (except for any TI Punch List items), Tenant shall
have the right to request an additional draw down on the remaining balance of the Tenant
Improvement Allowance, which amount requested by Tenant shall be paid by Landlord in accordance
with Section 2.6.4 below (the “Final Scheduled Payment”) provided, however, that under no
circumstances shall such draw down amount cause the total amount withdrawn from the Tenant
Improvement Allowance to exceed the Tenant’s Costs of the Work (as defined in Section 2.6.5 below).

               2.6.3.4 Notwithstanding anything to the contrary contained herein, as of the Commencement
Date, if any portion of the Tenant Improvement Allowance has yet to be paid to Tenant, Tenant shall
be allowed to draw down the entire remaining unpaid balance of the Tenant Improvement Allowance to
reimburse Tenant for a portion of the Over Allowance Amount previously paid by Tenant.

          2.6.4 Draw Request for Payment of Allowance.

               2.6.4.1 Any request to draw on the Tenant Improvement Allowance (each, a “Draw Request”) shall
include the following items, the delivery of which are a condition to Landlord’s obligation to pay
Tenant the Tenant Improvement Allowance hereunder: (a) a copy of all design, consultant,
construction, and material supplier contracts for the Initial Tenant Improvements (the “Tenant
Construction Contracts”), that have been entered into by
Tenant prior to the date of the Draw Request (which shall cover all work for which Tenant
seeks payment under the Draw Request) and any change orders associated therewith (each contract and
change order need be submitted only once and may be in the form of Tenant’s corporate form of
purchase orders for change orders and supplier contracts); (b) a copy of the latest request for
payment from Tenant’s Contractor, approved by Tenant, in a form reasonably acceptable to

B-1

Page 24

 

 

Landlord,showing the percentage of completion of the Tenant Improvements in the Premises, and detailing the
portion of the work completed, and the portion not completed, as well as a copy of the
corresponding executed conditional and unconditional mechanic’s lien release associated with such
invoice from Tenant’s Contractor meeting the requirements of California law; (c) copies of the
latest up to date executed conditional and unconditional mechanic’s lien releases, in accordance
with California law, from all engineers, subcontractors, and material suppliers that have served or
filed pre-lien notices with Landlord, in the statutory form; (f) a certificate from Tenant’s
Architect certifying the requisite percentage of completion of the work associated with the Initial
Tenant Improvements has been completed so as to entitle Tenant to draw on the Tenant Improvement
Allowance, and (g) evidence showing that the Tenant’s Costs of the Work paid for by Tenant as of
the date that such Draw Request is submitted to Landlord equal or exceed the requisite percentage
of Tenant’s Estimated Costs of Tenant’s Improvements. Notwithstanding the foregoing, if Tenant has
paid any portion of the Tenant’s Costs of the Work to Tenant’s Contractor or any subcontractors,
engineers, design professionals or material suppliers, but pursuant to any unresolved dispute, such
persons shall fail to deliver an unconditional lien waiver, then as long as Tenant provides
reasonably satisfactory security against the enforcement of any mechanics’ lien not waived
unconditionally pursuant to the requirements in Sections 2.4.4 (and all subsections thereof),
Tenant shall receive reimbursement of the amount paid by Tenant from the Tenant Improvement
Allowance.

               2.6.4.2 Thereafter, Landlord shall deliver a check made payable to Tenant for the amount
requested by Tenant from the Tenant Improvement Allowance within twenty (20) days following receipt
of a Draw Request including the information required pursuant to Section 2.6.4.1. Landlord’s
payment of such amounts shall not be deemed Landlord’s approval or acceptance of the work furnished
or materials supplied as set forth in Tenant’s Draw Request.

               2.6.4.3 Tenant shall cooperate in a commercially reasonable manner (and as long as such
disbursement schedule does not result in any increased costs to Tenant due to late fees or interest
payable to its contractors or suppliers) with the disbursement schedule of Landlord’s construction
lender and Landlord shall use reasonable efforts to insure that such amounts are paid promptly in
accordance with Section 2.6.4.2 above.

     Notwithstanding anything to the contrary contained herein, Landlord shall have no obligation
to pay Tenant, and Tenant shall waive its right to collect from Landlord, any portion of the Tenant
Improvement Allowance that is not invoiced to Landlord, in accordance with the requirements set
forth herein within eighteen (18) months after the Commencement Date.

          2.6.5 Tenant’s Costs of the Work. For purposes of this Article 2.6, the “Tenant’s
Costs of the Work” shall mean and include all of the following costs incurred by Tenant with
respect to the design and construction of the Initial Tenant Improvements: (a) all design fees,
engineering fees and plan check fees, (b) all deposits, fees and costs for building and other
permits, licenses and approvals; (c) tests and inspections; (d) insurance and bond premiums; and
(e) all amounts payable to architects, engineers, designers, contractors, and subcontractors
retained by Tenant or Tenant’s Contractor for the Initial Tenant Improvements, and all suppliers
and vendors providing materials and services as part of the work of the Initial Tenant
Improvements. Tenant’s Costs of the Work expressly excludes the costs of (i) Tenant’s furniture,
and (ii) any Tenant equipment that Tenant may remove from the Premises in its sole discretion at
the expiration of the Term or the earlier termination of the Lease, pursuant to the terms and
provisions of the Lease.

     2.7. Transfer/Assignment of Lease. Notwithstanding anything to the contrary contained
herein, to the extent that the Landlord originally named in the Lease (the “Original
Landlord”) assigns or otherwise transfers its interest in the Premises prior to (a) the
substantial completion of Landlord’s Work, or (b) Landlord’s distribution of the entire Tenant
Improvement Allowance which Tenant is entitled to receive under this Work Letter (collectively, the
“Original Landlord Requirements”), then the Original Landlord shall remain responsible for, and
shall warrant the completion of such Original Landlord Requirements, notwithstanding such
conveyance, unless the new owner has expressly agreed to assume the obligation to perform the
Original Landlord Requirements.

     2.8. Temporary Facilities During Construction. Until the Substantial Completion of the
Building Shell, storage of Tenant’s Contractor’s and subcontractors’ construction material,

B-1

Page 25

 

 

tools, equipment and debris shall be confined to those areas that are reasonably designated for such
purposes by Landlord; provided, however that the location of such storage areas will not interfere
with Tenant’s completion of the Initial Tenant Improvements. Tenant shall not be responsible for
any loss or damage to Landlord, Landlord’s Contractor, or their agents, representatives,
subcontractors, consultant’s or employees’ equipment (each a “Landlord Party”), unless such loss or
damage arising from the gross negligence or willful misconduct of Tenant or Tenant’s Contractor or
any of their respective agents, representatives, subcontractors or employees so long as such loss
or damage is covered by insurance carried by the applicable Landlord Party; provided, however, that
this Section shall be subject to any agreement that Tenant may have with such Landlord Party as
required under Section 2.4.3. After the Substantial Completion of the Building Shell, and until
the Substantial Completion of Landlord’s Work, storage of Landlord’s Contractor’s and Tenant’s
Contractor’s construction material, tools, equipment and debris outside the Building Shell shall be
confined to those areas outside the Building Shell that may be designated for such purposes by
Landlord, and storage of same within the Building Shell shall be confined to those areas within the
Building Shell reasonably designated by Tenant, provided, however that the location of such storage
areas will not interfere with Landlord’s completion of Landlord’s Work. Landlord shall not be
responsible for any loss or damage to Tenant, Tenant’s Contractor, or their agents,
representatives, subcontractors, consultant’s or employees’ equipment (each, a “Tenant Party”),
unless such loss or damage arising from the gross negligence or willful misconduct of Landlord or
Landlord’s Contractor or any of their respective agents, representatives, subcontractors or
employees so long as such loss or damage is covered by insurance carried by the applicable Tenant
Party.

ARTICLE 3. MISCELLANEOUS

     3.1. Business Day. A “business day” is a day other than a Saturday, a Sunday or a
legal holiday as recognized by the Superior Court in the County in which the Premises are located.
Unless expressly defined as a “business day”, all references to the term “day” shall mean a
“calendar day.”

     3.2. Time of the Essence. Time is of the essence in this Work Letter, and unless
otherwise indicated, all references herein to a “number of days” shall mean and refer to calendar
days.

B-1

Page 26

 

 

SCHEDULE B-1

THE BUILDING SHELL

(LANDLORD’S WORK)

Building Specifications

“*” indicates Landlord’s Work that may lag

behind the Substantial Completion of the Building Shell.

     The developed building shell and site will reflect a high image Life Science/R&D environment
per a schedule of design drawings attached. The building shell shall include the following:

Building Structure, Foundation and Floors

	 	•	 	One three (3) story steel braced frame building over grade level and
sub-grade parking.
	 
	 	•	 	Structural components for a shell building, including foundations,
footings, columns, beams, joints, purlins, girders, headers and other
structural members as required to support the building structure.
	 
	 	*	 	Podium and surface parking on south side of Building
	 
	 	•	 	Fireproofing of structure as required by code.
	 
	 	•	 	Seismic importance factor of structure to be 1.0 per code.
	 
	 	•	 	PSE stated that the vibration were 6000-8000 MIPs at the 2nd and 3rd
floors and 5000 MPS at the 1st floor over garage level.
	 
	 	•	 	Exterior façade will be a curtain wall system consisting of double
insulated glass and GFRC, or precast concrete, or metal panels. Interior
walls will be unfinished and will not include insulation, drywall, studs,
etc.
	 
	 	•	 	Typical floor to floor heights to be sixteen (16) feet.
	 
	 	•	 	Typical elevated floors to have vented metal deck with concrete topping
slab. The floor ratings are as follows:
	 
	 	 	 	Garage to 1st floor: 3 hour
	 
	 	 	 	1st to 2nd floor:      2 hour
	 
	 	 	 	2nd to 3rd floor:     2 hour
	 
	 	 	 	Roof:                       1 hour
	 
	 	•	 	Waterproof membrane on podium floor under landscape panel and surface
parking.
	 
	 	•	 	Parking levels 1 & 2 to have reinforced concrete slab-on-grade with
capillary moisture break or waterproofing.
	 
	 	•	 	Main building entrances to include double (narrow style aluminum) doors
and canopy; design and installation of vestibule, custom doors, door
security, specialty hardware or modifications to be a part of tenant
improvement.
	 
	 	•	 	Two stairs assemblies with enclosures as required by code.

Schedule B-1

Page 1

 

 

	 	•	 	Exterior and/or basement level service area with location and size to be
determined.
	 
	 	•	 	One loading area with loading door.

Roof

	 	•	 	Roof floor: Vented metal deck with insulated roof deck and structural
support for mechanical area.
	 
	 	•	 	Roof system: Four ply built-up roof or single ply EPDM or PVC systems
with insulation to meet Title 24 requirements.
	 
	 	•	 	Roof screen design: Landlord to design roof screen with support system
to support future penthouse; supports for major rooftop equipment and davit
pedestals of window washing will be stubbed through roof membrane; roof
screen installation to be part of tenant improvement.
	 
	 	•	 	Ladder and roof hatch for roof access.

Elevators

	 	•	 	Installation of one hydraulic freight elevator, 5,000 lbs. rated, 150
fpm capacity in lieu of 4,000 lbs. rated (per CA RFI #1)
	 
	 	•	 	Installation of two traction passenger elevators, 3,500 lbs. Rate, 350
fpm capacity, in lieu of one hydraulic elevator rated 2,500 lbs (per CA RFI
#1)
	 
	 	•	 	*May be pending State of California inspection/licensing of elevators

Sewer, Drainage and Plumbing

	 	•	 	Sanitary sewer system to consist of one domestic line and one industrial
waste line. Any monitoring requirements to be part of the tenant
improvement.
	 
	 	•	 	The sanitary sewer laterals (domestic) will be piped up through each
floor. All distribution to be part of the tenant improvement. Industrial
waste line to terminate at garage.
	 
	 	•	 	Domestic and irrigation water mains connected to the city water main in
the street. Domestic line to be brought to the building with all
distribution to be part of the tenant improvement.
	 
	 	•	 	Roof drain leaders and roof overflows piped and draining onto paved
areas or connected to the site storm drainage system.
	 
	 	•	 	Underground site storm drainage systems shall be connected to the city
storm system main.
	 
	 	•	 	Service hook-up and meter fees at cost of Tenant.

Utilities and Electrical

	 	•	 	The electrical service is anticipated to be 3,000 to 4,000 amps of
277/480 volt, three phase, four wire power. The electrical service will
include underground conduit, wire feeders, transformers, transformer pads,
as well as secondary conduits and secondary feeders from transformer pads
into the building’s electrical room.
	 
	 	•	 	Underground pull section and house panel for exterior lighting,
landscaping, and garage ventilation system. *Meter may be part of the

Schedule B-1

Page 2

 

 

	 		 	Landlord’s Work to be done after Building Shell completion if the City does
not permit a temporary meter and electricity is being provided from a
neighboring property (provided that the Building Shell work shall not be
substantially complete if Tenant is required to provide electricity for the
work of the Initial Tenant Improvements by means of an on-site generator).
However, Tenant must request and apply to PG&E for the installation of the
meter and the establishment of the account in Tenant’s name before the
meter can be installed.

	 	•	 	* An electrically operated landscape irrigation system, with controller,
such that it is a complete and functioning system.
	 
	 	•	 	Underground conduit from the building to the main fire protection system
shut-off valve (PIV) for installation of supervisory alarm wiring.
	 
	 	•	 	Telephone service conduits from the street to a designated location in
the building.
	 
	 	•	 	* Gas line connected to the public utility main and run to gas meter
location.

Mechanical

	 	•	 	Mechanical exhaust fans as needed for parking garage.

Fire Protection (Sprinklers)

	 	•	 	A complete and fully functional overhead shell building system of
ordinary hazard density distributed throughout the building.
	 
	 	•	 	System shall include all upright pendant sprinkler heads (“uppers”) with
future sprinkler head drops to be part of the tenant improvement.

Sitework and Landscaping

	 	•	 	*Landlord’s Work will include site work outside the building and shall
include grading, asphalt concrete, paving, landscaping, landscape
irrigation, curbs, gutters, sidewalks, specialty paving (if any), retaining
walls, and trash enclosures.
	 
	 	•	 	*Paving sections for automobile and truck access shall be according to
the Geologic Soils Report.
	 
	 	•	 	*All parking lot striping, including handicap signage wheel stops and
spaces.
	 
	 	•	 	*Basic exterior directional signage
	 
	 	•	 	*Site lighting

Structural Design Criteria: Gravity

The Building will be designed for the gravity loads listed below. The designation of
“Mechanical penthouse” is intended to apply to a specific area above the third floor
roof; the area designated “Roof screened area” is that area outside of the Mechanical
penthouse, bounded by the roof screen; and the area designated as “roof” is the area
outside the roof screen.

	 	 	 	 	 
	Area	 	Live Load	 	Dead Load
	Mechanical penthouse
roof

	 	20 psf1
	 	10 psf suspended5
	Roof

	 	20 psf2
	 	10 psf suspended5
	Roof screened area

	 	50 psf2
	 	10 psf suspended5

Schedule B-1

Page 3

 

 

	 	 	 	 	 
	Penthouse floor

	 	100 psf3
	 	20 psf suspended6
	Third floor

	 	100 psf4
	 	20 psf suspended6
	Second floor

	 	100 psf4
	 	20 psf suspended6
	First floor

	 	100 psf4
	 	20 psf suspended6
	Podium level

	 	250 psf4
	 	5 psf suspended5
	Parking level 1

	 	50 psf4
	 	5 psf suspended5
	Parking level 2

	 	50 ps4
	 	NA

 

			
	***	 	Additional weight load requirements to 250 psi (per CA RFI #1):

Floor One: Grid 3-4 / B-C            Grid 7-8 / B-C

Floor Three: Grid 3-4 / B-C            Grid 7-8 / B-C

	 	 	 
	 

	 	Footnotes:
	1

	 	With no allowable area reduction
	2

	 	With provision for 5k point load anywhere on joist
	3

	 	With provision for 10k point load anywhere on joist
	4

	 	With no allowable area reduction in vertical loading on horizontal framing members
	5

	 	With provision for 2k point load
	 

	 	1 With provision for 5k point load

Schedule B-1

Page 4

 

 

SCHEDULE B-2

PRELIMINARY DEVELOPMENT AND DELIVERY SCHEDULE

FOR THE BUILDING SHELL AND LANDLORD’S WORK

	 	 	 
	Phase	 	Lease Benchmark Date
	 	 	 
	Outside Date to Secure Building Permit (Section 1.6.2)

	 	August 1, 2007
	 
	 	 
	Earliest Date of Early Access for Commencement of Initial Tenant
Improvements (Section 16.3.1)

	 	July 1, 2008
	 
	 	 
	Earliest Date of Substantial Completion of
Building Shell (Section 1.6.3.1)

	 	September 1, 2008
	 
	 	 
	Probable Date of Substantial Completion of
Building Shell (informational only)

	 	October 15, 2008
	 
	 	 
	Substantial Completion of Building Shell or
Penalties Accrue, subject to Tenant Delays
and/or Force Majeure (Section 1.6.6.1)

	 	November 30, 2008
	 
	 	 
	Substantial Completion of Landlord’s Work or
Or Penalties Accrue, Subject to Tenant Delays

and/or Force Majeure (Section 1.6.6.2)

	 	December 31, 2008

Schedule B-2

 

 

SCHEDULE B-3

DESIGN DOCUMENTS

FOR LANDLORD’S WORK

The following list of Design Documents attached to this cover sheet is based on plans and
specifications submitted to the local governmental authority for plan checking. The Design
Documents show work that is beyond the scope of Landlord’s Work as described in Exhibit B-1 to
Exhibit B. However, the scope of Landlord’s Work is limited to the work described in Exhibit B-1.

Schedule B-3

 

 

SCHEDULE B-4

PRE-APPROVED MAJOR TRADE SUBCONTRACTOR

(see list attached to this cover sheet)

Schedule B-4

 

 

EXHIBIT C

RULES AND REGULATIONS

1. No awning, shade, sign, placard, picture, advertisement, name, or notice shall be inscribed,
painted, installed or displayed on or outside the Building without written consent of Landlord.
Landlord shall have the right to remove any such unapproved item without notice and at Lessee’s
expense. All approved signs or lettering on doors and facia shall be printed, painted, affixed or
inscribed at the expense of Tenant by a person chosen by Landlord in accordance with Landlord’s
standard signage policy. All requests for listing on the Building directory shall be submitted to
the office of Landlord in writing and shall be subject to Landlord’s approval, not to be
unreasonably refused. Any change requested by Tenant of Landlord of the name or names posted on
directory, after initial posting, will be charged to Tenant.

2. Tenant, its employees, agents, contractors and invitees shall comply with all parking
regulations promulgated by Landlord from time to time for the orderly use of the vehicle parking
areas, including without limitation the following: Parking shall be limited to automobiles,
passenger or equivalent vans, motorcycles, light four wheeled pickup trucks, and (in designated
areas) bicycles. No vehicles shall be left in the parking lot overnight; provided however that
(i) occasional overnight parking by Tenant’s employees shall be permitted, and (ii) the full-time
parking of Tenant-owned maintenance and other vehicles in the basement of the parking structure
shall be permitted. Parked vehicles shall not be used for vending or any other business or other
activity while parked in the parking areas. Vehicles shall be parked only in striped parking
spaces, except for loading and unloading, which shall occur solely in zones marked for such
purpose, and be so conducted as to not unreasonably interfere with traffic flow within the Project
or with loading and unloading areas of other tenants. Employee and tenant vehicles shall not be
parked in spaces marked for visitor parking or other specific use. All vehicles entering or
parking in the parking areas shall do so at owner’s sole risk, and Landlord assumes no
responsibility for any damage, destruction, vandalism or theft. Tenant shall cooperate with
Landlord in any measures implemented by Landlord to control abuse of the parking areas, including
without limitation access control programs, tenant and guest vehicle identification programs, and
validated parking programs, provided that no such validated parking program shall result in Tenant
being charged for spaces to which it has a right to free use under its Lease. Each vehicle owner
shall promptly respond to any sounding vehicle alarm or horn, and failure to do so may result in
temporary or permanent exclusion of such vehicle from the parking areas. Any vehicle which
violates the parking regulations may be cited, towed at the expense of the owner, temporarily or
permanently excluded from the parking areas, or subject to other lawful consequence.

3. Tenant will not install or use any window coverings except those provided by Landlord. Tenant
shall not place anything against or near glass partitions or doors or windows which may appear
unsightly from outside the Building.

4. Tenant shall not use or keep in the Building or on the Premises any kerosene, gasoline or
flammable or combustible fluid or material (collectively, “Combustible Materials”) other than (i)
those limited quantities necessary for the maintenance of office equipment, and (ii) those
Combustible Materials that are necessary to and used in the ordinary course of Tenant’s business,
including those associated with Tenant’s back-up generator, provided the same are used in full
compliance with all applicable laws, rules and regulations pertaining to such use, and provided
that Tenant shall be solely responsible for the same. Tenant shall not use or permit to be used
in the Building or on the Premises any foul or noxious gas or substance, or permit or allow the
Building or the Premises to be occupied or used in a manner offensive or objectionable to Landlord
by reason of noise, odors or vibrations.

5. Tenant shall not alter any lock or install any new locks or bolts on any door on the Premises
without the prior consent of Landlord, which consent shall not be unreasonably withheld,
conditioned or delayed. All re-keying of office doors, after occupancy, shall be at the expense
of Tenant. Tenant, upon termination of its tenancy, shall deliver to Landlord the keys of all
locks for doors on the Premises, and in the event of loss of any keys furnished by Landlord, shall
pay Landlord therefor.

6. Canvassing, soliciting and distribution of handbills or any other written material, and
peddling in the Project are prohibited, and Tenant shall cooperate to prevent same.

7. Landlord reserves the right to exclude or expel from the Premises any person who, in Landlord’s
judgment, is intoxicated or under the influence of liquor or drugs or who is in violation of the
Rules and Regulations of the Premises.

8. Tenant shall comply with all safety, fire protection and evacuation procedures and regulations
established by Landlord or any governmental agency. No person shall go on the roof without
Landlord’s permission, except that Tenant may go upon the roof in order to fulfill Tenant’s
maintenance obligations.

9. Tenant assumes any and all responsibility for protecting the Premises from theft, robbery and
pilferage, which includes keeping doors locked and other means of entry to the Building closed.
Landlord shall have no obligation to secure the Building or the Premises, and Tenant hereby
releases Landlord, to the greatest extent allowed by law, from any responsibility for protecting
the Building or the Premises from theft, robbery and pilferage. If Tenant requires telegraphic,
telephonic, burglar alarm or similar services, it shall first obtain, and comply with Landlord’s
instructions in their installation. Tenant shall make provision for prompt termination of any
sounding alarm and failure to do so shall constitute grounds for Landlord to require that Tenant’s
alarm be modified as reasonably directed by Landlord or removed. Unless specifically permitted
under its Lease, Tenant

 

 

shall not install any radio or television antenna, loudspeaker or other
devices on the roof or exterior walls of the Building. Tenant shall not interfere with radio or
television broadcasting or reception from or in the Building or elsewhere.

10. Business machines and mechanical equipment belonging to Tenant which cause noise or vibration
that may be transmitted to the structure of the Building, to such a degree as to be objectionable
to Landlord, shall be placed and maintained by Tenant at Tenant’s expense, on vibration
eliminators or other devices sufficient to eliminate noise or vibration.

11. All goods, including material used to store goods, delivered to Tenant at the Premises shall
be immediately moved into the Building and shall not be left in parking or receiving areas
overnight. Tenant shall not use or permit the use of any portion of the Premises for outdoor
storage without the prior written consent of Landlord.

12. Tenant shall store all its trash and garbage within the Building or in the designated areas of
the Premises established or consented to by Landlord. Tenant shall not allow refuse, garbage or
trash to accumulate outside of the Building except on the day of scheduled scavenger pick-up
services, and then only in areas designated for that purpose by the Landlord. Tenant shall not
place in any trash box or receptacle any material which cannot be disposed of in the ordinary and
customary manner of trash and garbage disposal within the Premises. Tenant shall notify Landlord
in advance of any unusually large amount of trash to be disposed of in the designated trash areas,
including without limitation, trash associated with any permitted construction by Tenant on the
Premises, Tenant’s moving in or out of the Building or delivery to Tenant at the Premises of
furniture, fixtures and equipment, and Tenant shall bear the expense of any special trash pick up
necessary to remove such trash.

13. Tenant shall not mark, drive nails, screw or drill into the partitions, woodwork or plaster or
in any way deface the Building or any part thereof except that pictures, certificates, licenses
and similar items normally used in Tenant’s business may be carefully attached to the walls by
Tenant. The cost of any special electrical circuits for items such as copying machines,
computers, microwave, etc., shall be borne by Tenant unless the same are part of the Building
standard improvements. Tenant shall not cut or bore holes for wires. Tenant shall not affix any
floor covering to the floor of the Building, in any manner except as approved by Landlord. Tenant
shall repair or be responsible for the cost of repair of any damage resulting from noncompliance
with this rule.

14. Tractor trailers which must be unhooked or parked with dolly wheels beyond the concrete
loading areas must use steel plates or wood blocks under the dolly wheels to prevent damage to the
asphalt paving surfaces. No parking or storing of such trailers will be permitted in the auto
parking areas of the Premises or on streets adjacent thereto.

15. Forklifts which operate on asphalt paving areas shall not have solid rubber tires and shall
only use tires that do not damage the asphalt.

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

17. The sidewalks, parking lots, driveways and entrances shall be used only as a means of ingress
and egress and shall remain unobstructed at all times. Loitering on any part of the Premises or
obstruction of any means of ingress or egress shall not be permitted.

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

19. Tenant shall be deemed to have read these Rules and Regulations and to have agreed to abide by
them as a condition to its occupancy of the Premises.

 

 

EXHIBIT D

Calculation of the Building Minimum Monthly Rent During First Year of Term

This Exhibit D forms a part of that certain Lease (the “Lease”) by and between Chamberlin
Associates 180 Oyster Point Blvd., LLC, as Landlord, and Elan Pharmaceuticals, Inc., as Tenant,
to which this Exhibit is attached. All capitalized terms referred to in this Exhibit shall have
the same meaning provided in the Lease, except where expressly provided to the contrary in this
Exhibit. This Exhibit D establishes the means of determining Minimum Monthly Rent only, and
shall not modify the respective rights and obligations of Landlord and Tenant under the Lease or
Work Letter; and in the event of any discrepancy between this Exhibit D and any contrary
provision of the Lease or Work Letter (except for the Minimum Monthly Rent payable under the
Lease), the terms and conditions of the Lease and Work Letter shall prevail.

The Building Minimum Monthly Rent for the first one year period after the Commencement Date (the
"Initial Year”) shall be calculated as set forth in this Exhibit D.

1. Definitions:

     A. The “Actual Total Project Costs” is an amount per rentable square foot
(“RSF”)1 equal to (1) the Total Project Cost per RSF as shown in the Project Budget
Summary attached hereto as Schedule 1 (which is $432.49 per RSF), plus (2) the Sum of the Cost
Factor Adjustments; with each Cost Factor thereof comprising the “Actual Project Cost Factor” of
each such category of Cost Factor.

     B. The “Adjusted Return Rate” is defined as the sum of the Landlord’s Actual Financing
Interest Rate and the Rate of Return Spread.

     C. The “Baseline Cost Factor” is defined as the baseline amount for each Cost Factor
(defined in Section 1.D below) per RSF. The baseline amount for each Cost Factor is set forth
below:

	 	 	 
	(1) Baseline Loan Finance Cost:2

	 	$30.12 per RSF
	(2) Baseline Entitlement and Permit Fees:

	 	$13.50 per RSF
	(3) Baseline Shell and Site Construction Cost:

	 	$155.48 per RSF

     D. The “Cost Factors” consist of the following (without duplication):

          i. The “Loan Finance Costs” is defined as all out of pocket financing costs, fees, and
interest charges associated with any permanent loan or construction loan (per actual RSF) that
are incurred by Landlord pursuant to Landlord’s financing of the acquisition of the Real
Property for the period from the acquisition of the Real Property by Landlord until the
Commencement Date, and such financing costs, fees and charges incurred by Landlord to finance
the construction and development of the Landlord’s Work and/or the payment of the Tenant
Improvement Allowance.

          ii. The “Entitlement and Permit Fees” is defined as all out of pocket costs incurred by
the Landlord (per actual RSF) for any and all entitlements and permits necessary for, or
associated with, the development of Landlord’s Work. Such costs include, but are not limited
to, all consultant fees, engineering fees, design fees, and building permit, mitigation, water
quality control, city planning and entitlement fees. Notwithstanding anything to the contrary
contained herein, for purposes of determining the Actual Project Cost Factor for the
Entitlement and Permit Fees, such Actual Project Cost Factor shall not exceed the amount of
the Capped Entitlement and Permit Fees described in Section 4 below.

          iii. The “Shell and Site Construction Costs” is defined as all other out of pocket costs
(exclusive of the Loan Finance Costs and the Entitlement and Permit Fees) incurred by Landlord
(per actual RSF) for the design, construction and/or development of the Landlord’s Work,
including, but not limited to, any associated off-site costs for signalization and median
modification required as a condition to the building permit or entitlement approvals for the

 

			
	1	 	For purposes of this Exhibit D, the term “RSF” means
the rentable square foot of Building
	 
	2	 	Based on Construction Loan Interest of $21.07, plus
Financing Fees & Costs of $9.05, for a total of $30.12.

1

 

Landlord’s Work, including, but not limited to, all labor costs, construction costs,
material costs, bond costs, and insurance costs to the extent associated therewith; provided,
however, that the foregoing shall not result in the payment of any Entitlement and Permit Fees
as part of the Shell and Site Construction Costs. Notwithstanding anything to the contrary
contained herein, for purposes of determining the Actual Project Cost Factor for the Shell and
Site Construction Costs, such Actual Project Cost Factor shall not exceed the amount of the
Capped Shell and Site Construction Costs as described in Section 4 below.

     E. The “Landlord’s Actual Financing Interest Rate” is defined as the actual interest rate
that the Landlord obtains for the permanent financing of the Real Property and all improvements
constructed and to be constructed thereon (collectively, the “Project”), which financing
Landlord shall obtain after the Effective Date and prior to the Commencement Date. Landlord’s
long term financing will be secured from a reputable institutional lender such as a regional or
national bank, life insurance company or comparable source.

     F. The “Landlord’s Baseline Financing Interest Rate” is Landlord’s assumed financing
interest rate for the Project, as set forth in the Project Budget Summary, which is an amount
equal to Seven percent (7%).

     G. The “Landlord’s Budgeted Rate of Return” is equal to .093, which was determined by
dividing the Landlord’s budgeted Initial Year Rent for a 12 month period, equal to $40.20 per
RSF per year ($3.35/month times 12 months), by the budgeted amount for the Landlord’s Total
Project Costs per RSF, as shown in the Project’s Budget Summary set forth in Schedule 1 attached
hereto (initially estimated to be equal to $432.49 per RSF).

     H. The “Project Budget Summary” shall mean the initial schedule of Total Project Cost set
forth in Schedule 1 attached hereto.

     I. The “Rate of Return Spread” is equal to .023 and is determined by taking the difference
between the Landlord’s Budgeted Rate of Return (.093) and Landlord’s Baseline Financing Interest
Rate (.07).

     J. The “Sum of the Cost Factor Adjustments” is an amount calculated as follows for each
Cost Factor: (i) determine the difference between the actual costs incurred by Landlord with
respect to such Cost Factor (but without including any amount of Entitlement and Permit Fees or
Shell and Site Construction Costs in excess of the Capped Entitlement and Permit Fees and Shell
and Site Construction Costs) and the amount of the Baseline Cost Factor for such Cost Factor as
set forth in Section 1.C of this Exhibit D; and (ii) sum all such Cost Factor differences;
however, if any such Cost Factor difference is a negative number, then subtract the absolute
value of that difference.

2. Calculating the Building Minimum Monthly Rent for the Initial Year. The Building
Minimum Monthly Rent for the Initial Year shall be calculated as follows:

     A. Add the Rate of Return Spread to the Landlord’s Actual Financing Interest Rate, to
determine the “Adjusted Return Rate”, however, under no circumstances shall Landlord’s
Adjusted Return Rate be less than .083; and

     B. Determine the Building Minimum Monthly Rate for the Initial Term by multiplying the
Actual Total Project Costs (per actual RSF) by the Adjusted Return Rate, and dividing by 12.

3. Example of the Calculation of the Building Minimum Monthly Rent During the Initial
Year. The following is an example of how the Building Minimum Monthly Rent during the
Initial Year is to be calculated.

	 	 	 
	Assuming
	 	 
	Landlord’s Actual Financing Interest Rate

	 	= 7.0 %
	Actual Loan Finance Cost

	 	= $40.39 per RSF
	Actual Entitlement and Permit Fees

	 	= $13.89 per RSF
	Actual Shell and Site Construction Costs

	 	= $225.62 per RSF

2

 

Step 1: Calculate the difference between the Actual Project Cost Factors and the Baseline
Cost Factors.

	 	 	 	 	 
	Actual Loan Finance Cost:

	 	$40.39 per RSF
	 	 
	Baseline Loan Finance Cost:

	 	$30.12 per RSF	 	 
	Difference:

	 	$10.27 per RSF	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Actual Entitlement and Permit Fees:

	 	$13.89 per RSF	 	 
	Landlord’s Capped Entitlement and Permit Fees3:

	 	$13.95 per RSF	 	 
	Baseline for Entitlement and Permit Fees:

	 	$13.50 per RSF	 	 
	Difference

	 	$0.39 per RSF	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Actual Shell and Site Construction Cost:

	 	$225.62 per RSF	 	 
	Landlord’s Capped Shell and Site Construction Cost4:

	 	$219.35 per RSF	 	 
	Baseline for Shell and Site Construction Cost:

	 	$155.48 per RSF	 	 
	Difference:

	 	$63.87 per RSF	 	 
	 

	 	 	 	 

Step 2: Calculate the Sum of Cost Factor Adjustments:

	 	 	 	 	 
	Sum of the Differences (a + b + c):
	 	$74.53 per RSF	 	 
	 
	 	 	 	 

Step 3: Calculate the Actual Total Project Costs:

	 	 	 	 	 
	Add the Sum of Cost Factor Adjustments to $432.49
	 	$507.02 per RSF	 	 
	 
	 	 	 	 

Step 4: Determine the Adjusted Return Rate:

Rate of Return Spread + Landlord’s Actual Financing Interest Rate

= .023 + .07 = .093

Step 5: Determine the Building Minimum Monthly Rent for the Initial Year:

	 	 	 	 	 
	[Actual Total Project Costs x Adjusted Return Rate)/12] 
	= 	[$507.02 x.093]/12	 	 
	 	=	$3.93 per RSF/month	 	 
	 
	 	 	 	 

 

			
	3	 	For calculation purposes, the Actual Entitlement and
Permit Fees shall not exceed the Capped Entitlement and Permit Fees pursuant to
Section 4.
	 
	4	 	The Actual Shell and Site Construction Costs shall not
exceed the Capped Shell and Site Construction Costs pursuant to Section 4.

3

 

4. Capped Cost Factors: Entitlement and Permit Fees and Shell and Site Construction
Costs. Landlord will provide updated cost information to Tenant throughout the period that
Landlord is performing Landlord’s Work (see Exhibit B, Work Letter). On or before December 1,
2007, Landlord shall deliver to Tenant updated projections for Entitlement and Permit Fees and
the Shell and Site Construction Costs based on the latest known costs, as well as on the
reasonably anticipated Entitlement and Permit Fees and Shell and Site Construction Costs, as may
be reasonably determined by Landlord (the “Capped Cost Factors ”). If the Rentable Square
Footage of the Building (as defined in the Lease) is still undetermined by the date Landlord
provides the Capped Cost Factors, the amount of the Capped Cost Factors will only be disclosed
in total dollar amounts (and not based on RSF). The Capped Cost Factors on a RSF basis will be
made when the Square Footage of the Building is determined as provided in the Lease. Tenant
shall have ten (10) business days after Landlord delivers such Capped Cost Factors to Tenant to
review and approve. If Tenant does not provide written notice of any objections (which shall
include a reasonable basis for the objection) within such ten (10) business day period, Landlord
shall provide a second written notice to Tenant requesting Tenant’s approval of the Capped Cost
Factors; and if Tenant fails to provide written notice to Landlord of any objections (including
a reasonable basis for the objection) to the Capped Cost Factors within five (5) business days
following such second notice, Tenant shall be deemed to have approved the Capped Cost Factors..
If Tenant approves, or is deemed to have approved, the Capped Cost Factors, then Landlord and
Tenant agree that the actual costs of the Entitlement and Permit Fees and Shell and Site
Construction Costs for purposes of determining the Building Minimum Monthly Rent for the Initial
Year, shall not exceed the Capped Cost Factors for Entitlement and Permits Fees and the Shell
and Site Construction Costs set forth for each category. Should Tenant object to one or both
of the Capped Cost Factors, and should Landlord and Tenant be unable to resolve any disagreement
regarding the same informally, then the dispute shall be resolved by binding arbitration with
the San Francisco, California office of the American Arbitration Association, pursuant to the
commercial rules of the American Arbitration Association. Upon the final resolution of any such
disagreement, the finally determined budget shall be considered the Capped Cost Factors for
purposes of this Exhibit D.

5. Payment of Building Minimum Monthly Rent for the Initial Year

     a. Landlord’s Determination of Building Minimum Monthly Rent During Initial Term.
Not more than six (6) months after Landlord’s completion of Landlord’s Work, Landlord shall
(a) calculate the Actual Total Project Costs for all Cost Factors (utilizing the Capped Cost
Factors, as set forth in their respective definitions), and (b) deliver written notice to
Tenant of the Actual Total Project Costs, along with reasonable evidence of the amounts
incurred by Landlord for the Cost Factors and Landlord’s determination of the Building Minimum
Monthly Rent for the Initial Year (“Landlord’s Initial Year Minimum Monthly Rent Notice”). If
Landlord has not delivered Landlord’s Initial Year Minimum Monthly Rent Notice prior to the
Commencement Date, then Tenant shall pay as Minimum Monthly Rent until the first day of the
month after Landlord delivers, to Tenant, Landlord’s Initial Year Minimum Monthly Rent Notice,
an estimated amount for the Minimum Monthly Rent (based on the Landlord’s latest updated cost
information), which amount shall be set forth in a written notice from Landlord to Tenant (the
“Estimated Initial Year Minimum Monthly Rent Notice”); provided, however that if Landlord does
not deliver such written notice to Tenant prior to the Commencement Date, Tenant shall pay, as
the estimated amount of Minimum Monthly Rent, an amount equal to Three and 93/100ths Dollars
($3.93) per RSF of Building per month. On the first day of the month following Landlord’s
Delivery of Landlord’s Initial Year Minimum Monthly Rent Notice, there shall be an adjustment
made to the Minimum Monthly Rent payment then due for the difference between the amount of
Minimum Monthly Rent Tenant has paid to Landlord since the Commencement Date and the amount
that Tenant would have paid if the Minimum Monthly Rent as set forth in Landlord’s Initial
Year Minimum Monthly Rent Notice had been in effect as of the Commencement Date.

     b. Tenant’s Right to Object to Landlord’s Determination. After receiving
Landlord’s Initial Year Minimum Monthly Rent Notice, if Tenant wishes to object to Landlord’s
determination of the Building Minimum Monthly Rent for the Initial Year, Tenant must deliver
written notice to Landlord objecting to the same, which shall include an explanation of the
objection and a statement of Tenant’s determination of the Building Minimum Monthly Rent for
the Initial Year, within fifteen (15) business days after receiving Landlord’s Initial Year

4

 

Minimum Monthly Rent Notice. If Tenant does not deliver such written notice to Landlord
within such fifteen (15) business day period, Landlord shall provide a second written notice
of Landlord’s determination of the Building Minimum Monthly Rent for the Initial Year; and if
Tenant fails to provide written notice (including an explanation of the objection and a
statement of Tenant’s determination of the Building Minimum Monthly Rent for the Initial Year)
to Landlord of any objections to the Minimum Monthly Rent during the Initial Year as set forth
in Landlord’s Initial Year Minimum Monthly Rent Notice within five (5) business days following
such second notice, Tenant shall be deemed to have approved of Landlord’s determination of the
Minimum Monthly Rent during the Initial Year as set forth in Landlord’s Initial Year Minimum
Monthly Rent Notice, which determination shall be final and binding on Landlord and Tenant.
If Tenant delivers written notice to Landlord objecting to Landlord’s determination, then
Landlord and Tenant shall, within fifteen (15) business days after Tenant’s delivery of such
written notice, agree upon an accounting firm to review Landlord’s records in order to
determine the Minimum Monthly Rent during the Initial Year. If Landlord and Tenant cannot
agree upon an accounting firm for purposes of determining the Minimum Monthly Rent during the
Initial Year, then an accounting firm shall be appointed by a referee under the Judicial
Reference procedures of Section 19.1 of the Lease. Any and all costs of such accounting firm
that are incurred in reviewing Landlord’s records and/or determining the Minimum Monthly Rent
for the Initial Year shall be split evenly by Landlord and Tenant, and shall not be included
in Operating Expenses or as part of the Landlord’s Actual Total Project Costs. However, in
the event such accounting firm ultimately determines that (a) Landlord’s calculation of the
Minimum Monthly Rent for the Initial Year is more than five percent (5%) greater than the
accounting firm’s determination, and Tenant’s calculation of the Minimum Monthly Rent for the
Initial Year is within five percent (5%) of the accounting firm’s determination, Landlord
shall reimburse Tenant for all such accounting firm costs that are paid by Tenant; or (b)
Tenant’s calculation of the Minimum Monthly Rent for the Initial Year is more than five
percent (5%) less than the accounting firm’s determination, and Landlord’s calculation of the
Minimum Monthly Rent for the Initial Year is within five percent (5%) of the accounting firm’s
determination, Tenant shall reimburse Landlord for all such accounting firm costs that are
paid by Landlord.

     c. Tenant’s Obligation to Pay Landlord’s Determination of the Minimum Monthly Rent
subject to Resolution of Any Tenant Objection. Notwithstanding anything to the contrary
contained herein, if Tenant delivers written notice to Landlord objecting to Landlord’s
determination of the Minimum Monthly Rent, Tenant shall be required to pay Landlord, as
Minimum Monthly Rent, and until such time that the amount of the Minimum Monthly Rent has been
finally determined in accordance with Section 5.b above, Tenant shall pay, as the estimated
amount of Minimum Monthly Rent, an amount equal to Three and 93/100ths Dollars ($3.93) per RSF
of Building per month. However, on the first day of the month following the applicable
accounting firm’s final determination of the Minimum Monthly Rent for the Initial Year, there
shall be an adjustment made to the Minimum Monthly Rent payment then due for the difference
between the amount of Minimum Monthly Rent Tenant has paid to Landlord since the Commencement
Date and the amount that Tenant would have paid if the Minimum Monthly Rent as determined
pursuant to Section 5.b above had been in effect as of the Commencement Date.

5

 

SCHEDULE 1

Project Budget Summary

Chamberlin Associates

180 Oyster Point: Project Budget Summary

Tenant: ELAN

	 	 	 	 	 	 	 	 	 
	PROJECT INFORMATION
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Estimated Building Size:
	 	 	100,000	 	 	 	 	 
	Land Area (acres):
	 	 	2.36	 	 	 	 	 

PROJECT BUDGET

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Percent Total	 	 	Cost/RSF	 	 	Cost	 
	 	 	Land:

	 	 	24.57	%	 	$	106.25	 	 	$	10,625,000	 
	++
	 	Shell, Site, Offsite

	 	 	35.95	%	 	$	155.48	 	 	$	15,548,474	 
	 	 	Finish Allowance

	 	 	15.26	%	 	$	66.00	 	 	$	6,600,000	 
	++
	 	Financing Fees,Costs,Interest

	 	 	6.97	%	 	$	30.12	 	 	$	3,012,500	 
	 	 	Interest On Equity

	 	 	2.94	%	 	$	12.70	 	 	$	1,269,688	 
	++
	 	Entitlement, Permit Fees

	 	 	3.12	%	 	$	13.50	 	 	$	1,350,000	 
	*
	 	Direct Expense

	 	 	7.73	%	 	$	33.44	 	 	$	3,344,078	 
	 	 	General And Admin

	 	 	3.47	%	 	$	15.00	 	 	$	1,500,000	 
	 	 	Total Project Cost

	 	 	100	%	 	$	432.49	 	 	$	43,249,740	 

	 	 	 	 	 
	OPERATING BUDGET
	 	 	 	 
	 
	 	 	 	 
	Net Rent
	 	$	3.35	 
	Annual Rent
	 	$	40.20	 

 

			
	++	 	baseline cost factors
	 
	*	 	Includes architectural engineering, entitlements and permits, utility hookups, taxes/exp, contingency

 

 

EXHIBIT E

TRANSPORTATION DEMAND MANAGEMENT PROGRAM REQUIREMENTS

Tenant agrees to comply with the Transportation Demand Management (“TDM”) measures as outlined in
the 180 Oyster Point Boulevard TDM Program report (“the TDM Report”), dated October 2006 and
published by Ferh & Peers, an independent transportation consultant. The purpose of the TDM
program is to develop a set of strategies, measures and incentives to encourage Tenant to walk,
bicycle, use public transportation, carpool or use other alternatives to driving alone when
traveling to and from work, and is required by the City of South San Francisco.

a) TDM Coordinator: Tenant will designate a TDM coordinator for the site. The TDM
coordinator will promote the TDM program, activities, and features to all employees, and will
conduct the monitoring/reporting process. The TDM coordinator will develop an on-site
transportation information center with SamTrans, BART, and CalTrain schedules and maps. The TDM
coordinator will provide information via new employee orientation packets, flyers, posters,
email, and educational programs. The TDM coordinator’s role will also include actively
marketing alternative mode use, administering the carpool and vanpool matching program,
promoting special programs such as Bike-to-Work Day or Carpool Week, and overseeing the
guaranteed ride home program (working with a local taxi service or rental car agencies). The
TDM coordinator will also conduct biannual employee commute surveys to identify the need for
mode specific promotional material and educational programs.

b) Carpool/Vanpool Matching Services: The TDM coordinator will provide an internet link
to the 511.org Rideshare website to access ride matching services, from its intranet website, if
available. The TDM coordinator will also administer an on-site carpool and vanpool
matching service for employees and maintain a list of available vanpools that provide service
between the Oyster Point offices and various points in the Bay Area.

c) Guaranteed Ride Home Program: Tenant will participate in the Peninsula Traffic
Congestion Relief Alliance’s (the “Alliance”) Guaranteed Ride Home program, which will be
managed by the TDM coordinator.

d) Information Boards and Kiosks: The TDM coordinator will be responsible for
maintaining an up-to-date display for the TDM Program located within the lobby of the building.
The display will include shuttle maps and schedules, transit maps and schedules, bicycle
facility maps, information regarding carpool and vanpool matching services, and information
regarding alternative commute subsidies.

e) Promotional Programs: The TDM coordinator will manage promotional programs that
include new employee orientation packets, flyers, posters, email, educational programs, and the
Guaranteed Ride Home program.

f) Shuttle Bus Service: The TDM coordinator will coordinate with the Alliance to help
fund their shuttle program and to identify on-site shuttle stops, if possible. The TDM
coordinator will also manage participation in the Alliance’s mid-day service on the Dasher
Shuttle to downtown South San Francisco.

g) TMA Membership: The TDM coordinator will participate in a local transportation
management association and work with the Alliance to create a Transportation Action Plan.

	 	 	 	 	 
	 	 	 	 	City of South
	 	 	 	 	San Francisco
	TDM Measure	 	Description	 	Municipal Code
	 
	 	 	 	 
	Required Measures	 	 
	 
	 	 	 	 
	Bicycle Racks and Lockers

	 	Six bicycle racks and four bicycle lockers will be provided
on-site.
	 	20.120.040 (A, B)
	 
	 	 	 	 
	Carpool/Vanpool Matching 

Services

	 	The TDM coordinator will provide ride-matching services for
carpools and vanpools users thorough 511.org and an internal
program.
	 	20.120.040 (C)
	 
	 	 	 	 
	TDM Coordinators

	 	The tenants of the building will designate a TDM coordinator.
	 	20.120.040 (D)
	 
	 	 	 	 
	Guaranteed Ride Home 

Program

	 	Employees will be able to utilize the Alliance’s free
guaranteed ride home program for emergencies via taxicabs
or rental cars.
	 	20.120.040 (G)
	 
	 	 	 	 
	Information Boards and
Kiosks

	 	The building lobby will include a permanent display of
commute alternative information.
	 	20.120.040 (H)
	 
	 	 	 	 
	Promotional Programs

	 	The TDM coordinator will provide new employee orientation
packets, flyers, posters, email, and educational programs.
	 	20.120.040 (L)
	 
	 	 	 	 
	Showers and Changing Rooms

	 	Two shower facilities with ten lockers will be provided
on-site.
	 	20.120.040 (M)
	 
	 	 	 	 
	Shuttle Bus Service

	 	The tenants will be able to use the Oyster Point BART,
Gateway Area Caltrain, and the Oyster Point Caltrain
Shuttles.
	 	20.120.040 (N)
	 
	 	 	 	 
	TMA Membership

	 	The tenants will join the Peninsula Traffic Congestion
Relief Alliance.
	 	20.120.040 (O)

1

 

	 	 	 	 	 
	 	 	 	 	City of South
	 	 	 	 	San Francisco
	TDM Measure	 	Description	 	Municipal Code
	 
	 	 	 	 
	Additional Required Measures	 	 
	 
	 	 	 	 
	Subsidized Transit Tickets

	 	The tenants will subsidize transit tickets with Commuter
Checks.
	 	20.120.050 (A)
	 
	 	 	 	 
	Flex-Time

	 	Ten percent of all employees will be allowed flexible work
hours.
	 	20.120.050 (D)
	 
	 	 	 	 
	On-Site Vanpool Program

	 	The TDM coordinator will provide an on-site ride-matching
service for carpools and vanpools.
	 	20.120.050 (J)
	 
	 	 	 	 
	Pay for Park and Ride Lots

	 	The tenants will subsidize park and ride costs at transit
stations.
	 	20.120.050 (J)
	 
	 	 	 	 
	Downtown Dasher

	 	The tenants will be able to use the Downtown Dasher service.
	 	20.120.050 (J)

Additional Required Measures may be substituted with alternate additional measures, so long as the
programmatic credits from the alternate measures meet or exceed the programmatic credits of the
measures identified in the 180 Oyster Point Boulevard TDM Program, dated October 2006.

Monitoring

The TDM coordinator will monitor the program by conducting a statistically valid annual employee
survey, beginning one year after tenant occupancy. The TDM coordinator may use information from
the employee surveys to adjust existing or implement new TDM program measures. The TDM coordinator
will submit a summary report presenting the findings of the annual survey to the South San
Francisco Economic Development Director. The TDM coordinator will also work with South San
Francisco Economic Development staff to document the effectiveness of the TDM program through
triennial reporting. Independent consultants, retained by the city and paid for by Tenant, will
measure, through observation, the alternative mode use achieved at 180 Oyster Point Boulevard every
three years, beginning three years after Tenant’s occupancy. If the alternative mode use goals are
not achieved, the TDM coordinator will provide an explanation of how and why the goal has not been
reached and a detailed description of additional measures that will be adopted to attain the
required mode use. The independent consultants will submit the findings of the triennial survey to
the South San Francisco Economic Development Director.

2

 

EXHIBIT F

FINAL BUILDING/PARKING/SERVICE AREA PLAN

 

 

EXHIBIT G

GUARANTY

          IN CONSIDERATION OF, and as an inducement for the execution by Chamberlin Associates 180
Oyster Point Blvd., LLC, a California limited liability company (“Landlord”), of that certain Lease
dated June 1, 2007 (the “Lease”), between Landlord and Elan Pharmaceuticals, Inc., a Delaware
corporation (“Tenant”), with respect to certain premises located in South San Francisco,
California, commonly referred to as 180 Oyster Point (as more particularly described in the Lease,
the “Premises”), the undersigned Elan Corporation, plc, a public limited company organized under
the laws of Ireland (“Guarantor”) has executed and delivered this Guaranty. Guarantor acknowledges
that Tenant is a subsidiary of Guarantor and therefore Guarantor will benefit when Landlord enters
into the Lease. This Guaranty is given as security for the performance of Tenant’s payment and
performance obligations under the Lease.

          1. Guarantor hereby guarantees to Landlord, its successors and assigns, the full and prompt
payment of the rent and all other sums and charges payable by Tenant, its successors and assigns,
under the Lease, and further hereby guarantees the full and timely performance and observance of
all the covenants, terms, conditions and agreements therein provided to be performed and observed
by Tenant, its successors and assigns, subject in each case, to the notice and cure period rights
of Tenant under the Lease, if any. Guarantor hereby covenants and agrees to and with Landlord, its
successors and assigns, that if default shall at any time be made by Tenant, its successors and
assigns, in the payment of any such rent or any or all such other sums or charges, or in the
performance and observance of any of the covenants, terms, conditions or agreements contained in
the Lease, Guarantor shall forthwith pay such rent and other sums and charges, and any arrears
thereof, to Landlord, its successors and assigns, and will forthwith faithfully perform and fulfill
all of such terms, covenants, conditions and agreements. Guarantor shall also forthwith pay to
Landlord all damages, costs and expenses that may arise in consequence of any default by Tenant,
its successors and assigns, under the Lease, including without limitation all reasonable attorneys’
fees, and disbursements incurred by Landlord or caused by any such default and/or by the
enforcement of this Guaranty.

               Tenant has delivered to Landlord a Letter of Credit (as defined in the Lease) as protection
for the performance by Tenant of all of its obligations under the Lease and for all losses and
damages Landlord may suffer, or that Landlord reasonably estimates it may suffer, as a result of
any breach or default by Tenant under the Lease. Notwithstanding anything to the contrary
contained in this Guaranty, although the application of the amounts drawn by Landlord under the
Letter of Credit shall not reduce Guarantor’s liability under this Guaranty, the obligations and
liabilities of Guarantor hereunder are nevertheless limited to the extent the amount of liability
outstanding or payment due to the Landlord under the Lease (the “Deficiency”) is greater than the
amount held by Landlord as part of the Letter of Credit, in which case, as long as Landlord is not
prevented by law or any action by Tenant or any creditor of Tenant, either at law or in equity,
including without limitation any bankruptcy or insolvency law (“Operation of Law”), from applying
any funds available under the Letter of Credit to the Deficiency, no claim shall be made under this
Guaranty until the amount of the Deficiency exceeds the amount held by, or immediately available
to, Landlord as security for Tenant’s obligations under the Lease, except to the extent that
Landlord draws less than the full amount available under the Letter of Credit and Tenant does not
restore the amount drawn to the full amount of the Letter of Credit within the time period provided
in the Lease, or Landlord is prevented by Operation of Law from demanding or collecting such
amount, then Guarantor’s obligation under this Guaranty shall include the amount drawn and properly
expended by Landlord toward the Tenant’s defaulted obligation, and Landlord shall have the right at
any time to make a claim against Guarantor for such drawn and expended amount.

          2. This Guaranty is an absolute and unconditional guaranty of payment and of performance. The
obligations of Guarantor under this Guaranty are independent of the obligations of Tenant under the
Lease. This guaranty shall be enforceable against guarantor without the necessity of any suit or
proceedings on Landlord’s part of any kind or nature whatsoever against Tenant, its successors and
assigns, or any other guarantor of all or any portion of Tenant’s obligations to Landlord under the
Lease, or any security for Tenant’s obligations under the Lease, and without the necessity of any
notice of nonpayment, nonperformance or nonobservance, or any notice of acceptance of this
Guaranty, or any other notice or demand to which Guarantor might otherwise be entitled, all of
which Guarantor hereby expressly waives. Guarantor’s obligations hereunder shall in no way be
terminated, affected, diminished or impaired by reason of Landlord’s assertion of, or
failure to assert, against Tenant or against Tenant’s successors and assigns, any of the rights or
remedies reserved to Landlord pursuant to the provisions of the Lease, or by relief of Tenant from
any of Tenant’s obligations under the Lease or otherwise by (a) the release or discharge of Tenant
in any creditors’ proceedings, receivership, bankruptcy or other proceedings, (b) the impairment,
limitation or modification of the liability of Tenant or the estate of Tenant in bankruptcy, or of
any remedy for the enforcement of Tenant’s said liability under the Lease, resulting from the
operation of any present or future provision of the United States Bankruptcy Code or other statute
or from the decision in any court, or (c) the rejection or disaffirmance of the Lease in any such
proceedings.

          3. Guarantor waives any defense to its obligations hereunder based upon or arising by reason
of: (i) Sections 2787 to 2855, inclusive, of the California Civil Code; (ii) any disability or
other defense of Tenant or any other person; (iii) the cessation or limitation from any cause
whatsoever, other than payment or performance in full, of the obligations of Tenant under the
Lease; (iv) any lack of authority of any officer, director, partner, agent or other person acting
or purporting to act on behalf of Tenant if a corporation, partnership or any other type of entity,
or any defect in the formation of such Tenant; (v) any act or omission by Landlord which directly
or indirectly results in or aids the discharge of Tenant or any portion of the Tenant’s obligations
under the Lease by operation of law or otherwise, or which in any way impairs or suspends any
rights or remedies of Landlord against Tenant; or (vi) any modification of the Lease. Guarantor
further waives all rights and defenses Guarantor may have arising out

1

 

of (A) any election of
remedies by Landlord, even though that election of remedies destroys Guarantor’s rights of
subrogation or Guarantor’s rights to proceed against Tenant for reimbursement, or (B) any loss of
rights Guarantor may suffer by reason of Tenant’s obligations under the Lease now or at any time
hereafter being secured by real property, or by reason of any rights, powers or remedies of Tenant
in connection with any anti-deficiency laws or any other laws limiting, qualifying or discharging
Tenant’s obligations under the lease, including, but not limited to, any rights or defenses based
upon Sections 580a, 580b, 580d or 726 of the California Code of Civil Procedure.

          4. This Guaranty shall be a continuing guaranty and the liability of Guarantor shall in no way
be affected, modified or diminished by reason of any assignment, amendment, renewal, supplement,
modification or extension of the Lease or by reason of any modification or waiver of, or change in,
any of the terms, covenants, conditions or provisions of the Lease, or by reason of any extension
of time that may be granted by Landlord to Tenant, its successors or assigns or a changed or
different use of the Premises consented to in writing by Landlord, or by reason of any dealings or
transactions or matters or things occurring between Landlord and Tenant, its successors or assigns,
whether or not notice thereof is given to Guarantor.

          5. Guarantor shall be fully bound by any consents, waivers or releases granted by Tenant in
favor of Landlord, made either with or without notice to or the consent of Guarantor.

          6. Landlord’s consent to any assignment or assignments, and successive assignments by Tenant
and Tenant’s assigns of the Lease, made either with or without notice to Guarantor, shall in no
manner whatsoever release Guarantor from any liability as Guarantor.

          7. The assignment by Landlord of the Lease and/or the avails and proceeds thereof, made either
with or without notice to Guarantor, shall in no manner whatsoever release Guarantor from any
liability as Guarantor. Landlord may without prior notice to Guarantor assign this Guaranty to the
grantee of Landlord’s interest in the Premises pursuant to any conveyance thereof, or to any lender
pursuant to a loan secured by Landlord’s interest in the Premises. Landlord shall use reasonable
efforts to provide notice to Guarantor of any such assignment, provided that such notice may be
given after the occurrence of any such assignment, and provided further that in any event the
failure of Landlord to provide any notice shall not affect the validity or enforceability of this
Guaranty.

          8. All of the Landlord’s rights and remedies under the Lease or under this Guaranty are
intended to be distinct, separate and cumulative, and no such right or remedy therein or herein
mentioned is intended to be in exclusion of, or a waiver of, any of the others. The obligations of
Guarantor hereunder shall not be released by Landlord’s receipt, application or release of security
given for the performance and observance of covenants and conditions required to be performed and
observed by Tenant under the Lease, nor shall Guarantor be released by the maintenance of or
execution upon any lien which Landlord may have or assert against Tenant and/or Tenant’s assets.

          9. Until all the covenants and conditions in the Lease on Tenant’s part to be performed and
observed are fully performed and observed, Guarantor (a) shall have no right of subrogation against
Tenant by reason of any payments or acts of performance by Guarantor in compliance with the
obligations of Guarantor hereunder, (b) waives any right to enforce any remedy which Guarantor now
or hereafter shall have against Tenant by reason of any one or more payments or acts of performance
in compliance with the obligations of Guarantor hereunder, and (c) subordinates any liability or
indebtedness of Tenant now or hereafter held by Guarantor to the obligations of Tenant to Landlord
under the Lease, subject, however, to the limitations set forth in Paragraph 1 above relating to
the application of the Security Deposit to any Deficiency amount.

          10. Guarantor hereby irrevocably appoints as its agents for the service of process in any
action or proceeding arising out of or in connection with this Guaranty any and all of the
following: (a) Tenant, or if Tenant is more than one person, then any one of them, or if Tenant is
a corporation, trustee or partnership all persons authorized to accept service on behalf of Tenant
under California law, or (b) if Tenant is not available for receipt of service on behalf of
Guarantor in accordance with the notice provisions of the Lease, C T Corporation System, 818 West
Seventh Street, Los Angeles, CA 90017; provided, however, that Guarantor shall have the right to
change its address for notice under this Guaranty from time to time upon reasonable advance written
notice to Landlord, provided that the changed address shall be a company or party in the State of
California. This provision does not affect any right to serve process upon Guarantor in any other
manner permitted by law.

          11. The parties agree that Landlord may, at its election, bring an action or actions in the
state or federal courts located in the County of San Mateo and/or the City and County of San
Francisco, or commence an arbitration or arbitrations in the County of San Mateo, to enforce this
Guaranty and/or to resolve any disputes arising out of or in connection with this Guaranty, and
Guarantor hereby irrevocably consents to the jurisdiction of such courts and arbitration tribunals.

               If Landlord elects to commence an arbitration, the matter shall be determined by final and
binding arbitration conducted in the County of San Mateo, California, and administered by and in
accordance with the Commercial Arbitration Rules of the American Arbitration Association (the
“Rules”), provided that all proceedings and any decision shall be presided over and rendered by one
sole arbitrator. The arbitrator shall be a retired California or federal judge selected in
accordance with the Rules. The sole arbitrator will decide the matter. The arbitrator will be
directed to: (1) require all testimony to be transcribed; (2) require any award or decision to be
accompanied by findings of fact and a statement of reasons for such award or decision; (3) allow
reasonable discovery; and (4) render its award or decision within thirty (30) days of being
appointed.

2

 

               The prevailing party, as determined by the court in the event an action is commenced as
provided herein, or the arbitrator, in the event an arbitration is commenced as provided herein,
shall be entitled to recover its reasonable attorneys’ fees and costs expended in any action or
arbitration proceeding, including court fees and the fees of the American Arbitration Association,
as appropriate, as well as in any subsequent proceeding required to enforce the judgment, ruling or
arbitration award.

               Any judgment, award, relief or remedy obtained by Landlord in connection with this Guaranty
shall be recognized and may be entered and enforced against Guarantor in any jurisdiction, court,
tribunal or body in the United States and abroad, including, without limitation, any court of
Ireland (including the High Court). Any judgment, award, relief or remedy obtained by Guarantor in
connection with this Guaranty shall be recognized and may be entered and enforced against Landlord
in the state or federal courts located in the County of San Mateo and/or the City and County of San
Francisco.

          12. As used herein, the term “Tenant” shall mean Elan Pharmaceuticals, Inc., a Delaware
corporation, and any successor to its interest under the Lease, whether by assignment, operation of
law or otherwise (including, without limitation, any receiver, trustee, liquidator or assignee for
the benefit of creditors). This Guaranty shall continue in full force and effect notwithstanding
any sale or other disposition of Guarantor’s financial interest, whether direct or indirect, in
Tenant, or Tenant’s disposition of its interest, whether direct or indirect, in the Lease.
Guarantor acknowledges that any such disposition of Guarantor’s financial interest in Tenant or of
Tenant’s interest in the Lease will result in a benefit to Guarantor.

          13. This Guaranty shall be governed by and construed in accordance with California law. The
terms, covenants, agreements and conditions herein contained shall apply to and bind the heirs,
successors, executors, administrators and assigns of Guarantor. If any provision of this Guaranty
shall be determined to be illegal or unenforceable, such determination shall not affect any other
provision of this Guaranty and all such other provisions shall remain in full force and effect.

          14. Guarantor hereby represents and warrants to Landlord that the persons signing and
delivering this Guaranty on behalf of Guarantor are fully authorized to do so; that Guarantor has
the full right, power and authority to enter into, deliver and perform this Guaranty; that all
requisite action necessary to authorize Guarantor to enter into, deliver, and perform its
obligations hereunder have been taken; that this Guaranty is a valid and binding obligation of
Guarantor enforceable in accordance with its terms; and that this Guaranty does not conflict with
or violate any of Guarantor’s organizational documents, or any provision of any agreement or
judicial order to which Guarantor is subject.

     IN WITNESS WHEREOF, the undersigned Guarantor has executed this Guaranty as of the
1st of June, 2007.

	 	 	 	 	 
	GUARANTOR:

Elan Corporation, plc,

a public limited company organized under the laws of Ireland

 	 	 
	By:  	/s/ Shane Cooke
 	 	 
	 	Name:  	Shane  Cooke 	 	 
	 	Title:  	Executive Vice President and Chief Financial Officer
A CEO, President or any Vice President 	 	 
	 
	 	 	 
	By:  	     /s/ Liam Daniel
 	 	 
	 	Name:  	William Daniel 	 	 
	 	Title:  	Secretary

A Secretary, any Assistant Secretary,

the Chief Financial Officer or any Assistant Treasurer 	 	 
	 

3

 

EXHIBIT H

TERMS UNDER WHICH THE LETTER OF CREDIT MAY BE REDUCED

This Exhibit H forms a part of that certain Lease (the “Lease”) by and between Chamberlin
Associates 180 Oyster Point Blvd., LLC, as Landlord, and Elan Pharmaceuticals, Inc., as Tenant,
to which this Exhibit is attached. All capitalized terms referred to in this Exhibit shall have
the same meaning provided in the Lease, except where expressly provided to the contrary in this
Exhibit.

     1. Pursuant to Sections 1.2 and 22 of the Lease, Tenant is obligated to deliver to Landlord a
Letter of Credit in the initial face amount of Six Million Dollars ($6,000,000.00). During the
Term of the Lease, the amount of the Letter of Credit may be reduced in accordance with the terms
of this Exhibit H and Section 22 of the Lease, provided that no uncured event of default by Tenant
exists under the Lease (following the expiration of the applicable cure period, if any) at the time
that Tenant is eligible (and requests) such reduction. Moreover, any fees and costs incurred by
Tenant pursuant to any reductions in the Letter of Credit in accordance with this Exhibit H or
Section 22 of the Lease shall be paid by Tenant at its sole cost and expense.

     2. If Tenant is entitled to reduce the Letter of Credit in accordance with this Exhibit H and
Section 22 of the Lease, Tenant shall deliver written notice to Landlord stating that Tenant is
entitled to reduce the Letter of Credit as set forth herein, certifying that the applicable
conditions of reduction have been satisfied and stating the reduced amount of the Letter of Credit.
Landlord shall, within ten (10) business days following receipt of such written notice from
Tenant, authorize the reduction of the Letter of Credit in the form reasonably required by the
issuing bank. If Landlord fails to respond to such written request by Tenant within such ten
business day time period, Tenant shall provide a second written request to Landlord for such
reduction in the Letter of Credit and if Landlord fails to respond within three (3) business days
after receipt of such second written request, Tenant shall have the right to authorize such
reduction on behalf of Landlord, as Landlord’s agent for such limited purpose. Upon receiving such
authorization from Landlord (or deemed authorization if Landlord fails to respond as provided
above), Tenant may obtain either a new reduced Letter of Credit or certificate of amendment to the
existing Letter of Credit, stating that the amount of the Letter of Credit has been reduced as
permitted by this Exhibit H and Section 22 of the Lease, and provide such new Letter of Credit or
certificate of amendment to Landlord. Upon receipt of a new reduced Letter of Credit in accordance
with this Section 2, Landlord shall, within ten (10) business days following the receipt thereof,
deliver the previously issued Letter of Credit to the issuing bank or Tenant in accordance with
Tenant’s instructions. Similarly, if the Letter of Credit is reduced and if Tenant is thereafter
obligated to increase the Letter of Credit as required herein, Tenant shall, within ten (10)
business days after Tenant’s actual knowledge of the occurrence of the event giving rise to the
obligation (which may be in the form of a written notice from Landlord notifying Tenant of the
occurrence of such event), apply to the issuing bank for either a new Letter of Credit or a
certificate of amendment to the existing Letter of Credit in the increased amount, and provide such
new Letter of Credit or certificate of amendment to Landlord within five (5) business days
following the issuance thereof by the issuing bank. Within ten (10) business days after receiving
a new Letter of Credit from Tenant, Landlord shall deliver the previously issued Letter of Credit
to the issuing bank or to Tenant in accordance with Tenant’s instructions.

     3. Subject to the terms of the Lease and this Exhibit H, Tenant shall be permitted to reduce
the Letter of Credit (a) in two separate reductions occurring after the fifth (5th) and
after the tenth (10th) anniversary of the Lease Commencement Date; and (b) in annual
reductions at anytime after the third (3rd) anniversary of the Lease Commencement Date
that the Bond Criteria (as defined in Section 3(b) below) has been satisfied, as determined on an
annual basis. However, under no circumstances shall the total balance of the Letter of Credit be
less than Two Million Dollars ($2,000,000).

     (a) Reduction of Letter of Credit Five (5) and Ten (10) Years After the Lease
Commencement Date. Tenant shall have the right to reduce the amount of the Letter of Credit
as follows:

1

 

          (i) Upon the fifth (5th ) anniversary of the Lease Commencement Date, or at such
time thereafter (if the Reduction Requirements are not satisfied on such anniversary date) that
Tenant has satisfied the Reduction Requirements (as defined below), Tenant shall be allowed to
reduce the Letter of Credit by twenty percent (20%) from the original Letter of Credit amount; and

          (ii) Upon the tenth (10th ) anniversary of the Lease Commencement Date, or at such
time thereafter (if the Reduction Requirements are not satisfied on such anniversary date) that
Tenant has satisfied the Reduction Requirements, Tenant shall be allowed to reduce the Letter of
Credit by an additional twenty percent (20%) from the original Letter of Credit amount.

     The “Reduction Requirements” for Tenant’s right to reduce the Letter of Credit as set forth
in paragraphs (i) and (ii) of this Section 3(a) shall consist of the following: (A) no uncured
default by Tenant shall exist under the Lease, (B) Elan Corporation, plc, a public limited company
organized under the laws of Ireland (“Guarantor”) and Tenant each is in compliance with all
financing (including loan, bond and note) covenants at the eligible reduction date, and (C)
Guarantor has completed four (4) consecutive quarters of profit from operations with an operating
income of fifty million dollars ($50,000,000) or greater on an annualized basis. As a condition
to any such reduction, Tenant shall provide Landlord with written documentation evidencing that
Tenant and Guarantor are in compliance with the applicable requirements of clauses (B) and (C)
above.

     (b) Reduction of Letter of Credit Based On Bond Rating for at Least 24 Consecutive
Months.

     In addition to the reductions permitted under Section (a) above, and provided the total
balance of the Letter of Credit does not drop below Two Million Dollars ($2,000,000), Tenant shall
also be allowed to reduce the Letter of Credit on an annual basis beginning on the third
(3rd) anniversary of the Lease Commencement Date (along with each subsequent
anniversary date, an “LC Reduction Date”), if Guarantor’s bond rating meets the following criteria
(the “Bond Criteria”) on such LC Reduction Date, or at such time following the LC Reduction Date
that such Bond Criteria are satisfied:

	 	•	 	If Guarantor at no time in the twenty-four (24) months preceding the applicable LC
Reduction Date has received bond ratings by any of the following agencies below the
specified rate: “A2” by Moody’s, “A” by Standard & Poor’s or Fitch, then Tenant shall have
the right to reduce the Letter of Credit in an amount equal to five percent (5%) of the
original required amount of the Letter of Credit. Furthermore, for each consecutive year
that Guarantor is able to satisfy the requirements of the preceding sentence, Tenant shall
be entitled to an additional reduction of five percent (5%) of the originally required
amount of the Letter of Credit on or after each subsequent LC Reduction Date when such
preceding requirements have been satisfied. As a condition to any such reduction, Tenant
shall provide Landlord with written documentation evidencing that Guarantor has satisfied
the Bond Criteria during the applicable period.
	 
	 	•	 	If Guarantor’s bond rating drops below the Bond Criteria specified above, Tenant will
not be eligible for further reductions until two (2) consecutive years of such ratings are
again achieved, in which case, Tenant shall have the right to reduce the Letter of Credit
by five percent (5%) of the original required amount on each subsequent LC Reduction Date,
or at such time following the LC Reduction Date that such ratings are again achieved, as
set forth above.
	 
	 	•	 	Should Guarantor’s bond rating fall below “Baa3” by Moody’s or “BBB-” by Standard &
Poor’s or Fitch for four (4) consecutive quarters, Tenant shall restore the Letter of
Credit to the full amount that Tenant would have been required to maintain had Tenant not
been allowed to reduce the Letter of Credit based on the Bond Criteria otherwise set forth
in this Section (b).
	 
	 	•	 	All reductions are contingent upon Guarantor and Tenant being in compliance with all
forms of financing covenants at the time of such reduction, and upon there being no
uncured default by Tenant under the Lease or by Guarantor under its guaranty of the Lease
(following the expiration of the applicable cure period, if any) at the time that Tenant
is eligible for (and requests) such reduction.
	 
	 	•	 	The reduction in the Letter of Credit based on the Bond Criteria in this Section 3(b)
may be combined with the reduction in the Letter of Credit pursuant to Section 3(a) above,

2

 

	 	 	 	provided that under no case shall the minimum amount of the Letter of Credit be reduced
below Two Million Dollars ($2,000,000). Subject to the foregoing, the maximum Letter of
Credit reduction in any one year will occur when the reduction of the Letter of Credit
based on the Bond Criteria is combined with the twenty percent (20%) reduction based on the
Reduction Requirements specified in Section (a) above.

Below is an example of the Letter of Credit reduction over the term of the Lease:

Reduction Periods (Years from Lease Commencement)

 

Example of reductions with all factors achieved, but no appropriate Bond Ratings achieved

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Lease Year(1)	 	1	 	 	2	 	 	3	 	 	4	 	 	5	 	 	6	 	 	7	 	 	8	 	 	9	 	 	10	 
	 
	% Reduction (2):
	 	 	0	%	 	 	0	%	 	 	0	%	 	 	0	%	 	 	20	%	 	 	0	%	 	 	0	%	 	 	0	%	 	 	0	%	 	 	20	%
	$ Reduction:
	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 	 	$	1,200,000	 	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 	 	$	1,200,000	 
	Balance Remaining:
	 	$	6,000,000	 	 	$	6,000,000	 	 	$	6,000,000	 	 	$	6,000,000	 	 	$	4,800,000	 	 	$	4,800,000	 	 	$	4,800,000	 	 	$	4,800,000	 	 	$	4,800,000	 	 	$	3,600,000	 

Example of reductions with all factors achieved, with earlier reductions resulting from appropriate Bond Ratings

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Lease Year	 	1	 	 	2	 	3	 	 	4	 	 	5	 	 	6	 	 	7	 	 	8	 	 	9	 	 	10	 	 	11	 	 	12	 	 	13	 
	 
	% Reduction:
	 	 	 	 	 	 	 	 	 	 	5	%	 	 	25	%	 	 	5	%	 	 	5	%	 	 	5	%	 	 	5	%	 	 	16.67	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	$ Reduction:
	 	 	 	 	 	 	 	 	 	$	300,000	 	 	$	1,500,000	 	 	$	300,000	 	 	$	300,000	 	 	$	300,000	 	 	$	300,000	 	 	$	1,000,000	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Balance Remaining:
	 	 	 	 	 	 	 	 	 	$	5,700,000	 	 	$	4,200,000	 	 	$	3,900,000	 	 	$	3,600,000	 	 	$	3,300,000	 	 	$	3,000,000	 	 	 	2,000,000	(3)	 	$	2,000,000	 	 	$	2,000,000	 	 	$	2,000,000	 	 	$	2,000,000	 
	Assumption:
	 	 	 	 	 	rating	 	rating	 	rating	 	rating	 	rating	 	rating	 	rating	 	rating	 	rating	 	rating	 	rating	 	rating
	 
	 	 	 	 	 	achieved	 	maintained	 	maintained	 	maintained	 	maintained	 	maintained	 	maintained	 	maintained	 	maintained	 	maintained	 	maintained	 	maintained

 

			
	Footnote 1: Number of years after Lease Commencement
	 
	Footnote 2: Applied to initial $6,000,000 deposit
	 
	Footnote 3: Minimum Letter of Credit amount achieved in Year 13 after Lease Commencement

3

 

EXHIBIT I

LIST OF BASELINE ENVIRONMENTAL REPORTS

	 	 	 	 	 
	TITLE
	 	PREPARED BY
	 	DATE
	 
	 	 	 	 
	Soil and Groundwater Management Plan

	 	Golder Associates
	 	March-07
	First Quarter 2007 Groundwater Monitoring Report

	 	Golder Associates
	 	February-07
	Soil and Light Non-Aqueous Phase I Liquid
Remedial Evacuation

	 	Golder Associates
	 	June-06
	Revision to the Work Plan for Light Non-Aqueous
Phase Liquid Remediation

	 	Golder Associates
	 	February-06
	Phase I Environmental Site Assessment

	 	Piers Environmental

Svcs
	 	December-05
	Alternative Evaluation and Work Plan for Light
Non-Aqueous Remediation

	 	Golder Associates
	 	November-05
	Supplemental Site Characterization Report

	 	Golder Associates
	 	November -05
	Additional Site Characterization and Second
Quarter 2004 Ground water Monitoring Report

	 	Conor Pacific/EFW
	 	August-04
	Phase I Environmental Site Assessment

	 	Treadwell & Rollo
	 	May-00
	Level Two Environmental Site Assessment

	 	Lumina Technologies
	 	February-00
	Report of Preliminary Hydrocarbon Investigations

	 	Connor Pacific/EFW
	 	August-99

Page 1

 

EXHIBIT J

DEPICTION OF SERVICE AREA

Page 1

 

Exhibit K

Rules and Regulations Governing Alterations

These Rules and Regulations Governing Alterations set forth those rules and regulations to be
observed by Tenant pursuant to any alterations, improvements or modifications which may be made by
or for Tenant following the commencement of the Lease, but shall not apply to the completion of any
initial tenant improvements in process as of the commencement date of the Lease. In the event of
any inconsistency between the terms of this Exhibit and the terms of the Lease, the terms of the
Lease shall prevail. All capitalized terms in this Exhibit shall have the meanings set forth in
the Lease.

General Requirements:

1. Prior to the commencement of any work in the Building, an orientation meeting is required
between the General Contractor, Landlord, and the Tenant in order to outline and identify the
general parameters and requirements for the work involved.

2. Tenant must provide Landlord in writing a complete schedule for the work, including start date,
demolition time frame (if applicable), material delivery schedule, critical project dates, and
standard working hours, which will be subject to Landlord’s prior approval, which approval shall
not be unreasonably withheld, conditioned or delayed. This communication and approval will help to
ensure the quickest possible access to construction areas.

3. Insurance certificates, in compliance with the contractor insurance requirements section
referenced in the Lease must be in possession of the Landlord prior to the commencement of the
work.

4. Tenant is required to submit home, mobile, and office telephone numbers for the Tenant’s project
manager (or if none, General Contractor) to Landlord prior to construction in the event that Tenant
or General Contractor must be contacted regarding the project after hours or on weekends.

5. Smoking is not permitted in any area of the Building.

6. During break time the contractors’ and subcontractors’ employees will not congregate in any
exterior parking area of the Building.

7. Tenant will provide Landlord with periodic updates regarding the status of the Tenant’s work, in
accordance with the work schedule approved by Landlord as required above, and if reasonably
requested by Landlord, Tenant will coordinate status meetings between those individuals involved in
the Tenant finish process and Landlord. If the Premises are part of a multi-tenant building, the
purpose of this meeting is to keep all interested parties advised of upcoming plans, problems
and/or anticipation of changes in work scheduling.

	 	 	 	 	 
	Rules & Regulations Governing Alterations

	 	Page 1
	 	 
	Elan Exhibit K 5-30
	 	 	 	 

 

 

8. If the Premises are part of a multi-tenant building, then prior to the commencement of the work
or delivery of any materials to the Premises, Tenant and Landlord will perform a walk-through
inspection, including the space proposed for construction, the entrance and each and every passage
of travel between the two points (including elevators, lobby, hallways, restroom, elevator cores,
etc.) and identify any and all existing damage that is present prior to the start of construction.
Immediately after the completion of construction, General Contractor, and Landlord will perform a
post construction walk-through and identify all areas of damage. Costs to repair any such damage
will be paid by Tenant.

9. General Contractor shall ensure that any portion of the work area and project site that are
visible from the exterior of the Premises are clean of all litter left by construction crews on a
daily basis.

10. If the Premises are part of a multi-tenant building, General Contractors’ and Subcontractors’
employees shall park in the areas agreed to by Landlord and Tenant and Tenant understands that any
vehicle parked in unauthorized areas may be towed at automobile owner’s or contractor’s expense.

11. It is understood that all Sub-Contractors performing services at the Building are experienced
and professional in their particular field of expertise and are solely under the direction of the
General Contractor. It is the responsibility of Tenant to be certain that these Rules and
Regulations are distributed to, understood and complied with by General Contractor and by every
individual under the direction of the General Contractor.

12. General Contractor and their Sub-Contractors are responsible for the safekeeping of their own
equipment, supplies and tools. The Landlord will not be responsible for any missing items.

13. If the Premises are part of a multi-tenant building: no supplies, tools, etc., are to be
placed outside the construction area; doors into common area corridors are to remain closed at all
times; and if an entry door to the Premises from a common area corridor has to be installed, a
plastic curtain must be hung to stop dust from entering public areas.

14. If the Premises are part of a multi-tenant building, any direct dust, paint debris tracked into
corridors or damage, which in the opinion of the Landlord is over and above normal, minimal limits,
must be cleaned or corrected immediately by the Contractor. Should the Contractor, after
notification, not correct the situation, Landlord or Tenant shall correct it at the Tenant’s sole
expense.

15. If the Premises are part of a multi-tenant building, no radios, tape players or like, may be
operated within the Premises during normal hours if such devices are audible outside the Premises.

16. No sign, placard, picture, name, advertisement or notice visible from the exterior of the
Premises will be inscribed, painted, affixed or otherwise displayed by Tenant or General

	 	 	 	 	 
	Rules & Regulations Governing Alterations

	 	Page 2
	 	 
	Elan Exhibit K 5-30
	 	 	 	 

 

 

Contractor
in any part of the Building or Premises without prior written consent of the Landlord or Tenant.
In the event of the violation of this rule by Tenant or General Contractor, Landlord or Tenant may
remove the violating items without liability and may charge the expense incurred by such removal to
the Tenant or Contractors violating this rule.

Building Specific Requirements: 

1. Building Access: All contractors will enter the building through the loading dock doors
and will use the freight elevator to access all construction floors.

2. After Hour’s Access and Cost: All access required outside of normal business hours,
(7:00 A.M. to 5:00 P.M.) or any time on weekends would require prior authorization by the Tenant.
It will be the General Contractor’s responsibility to grant access to any and all Sub-Contractors.
If the Premises are part of a multi-tenant building and a Building Engineer is required to be
present after normal business hours, the costs will be billed to the General Contractor.

3. Loading/Unloading Area:

	 	a.	 	All large deliveries to the Building should be scheduled in advance by Tenant
for arrival outside of the normal working hours if possible. If deliveries cannot be
completed after hours, Tenant should schedule such deliveries with Landlord to avoid
interference with the operational activities of any other tenants of the Building.
	 
	 	b.	 	All deliveries must be delivered through the loading dock entrance. Masonite,
plywood boards, planks and like protection must be utilized wherever materials are to
be rolled across carpeted or finished floor.

4. Freight Elevators: All contracted personnel must use the freight elevator for all
construction work. Passenger elevators are for Tenant and its guests only and are NOT
to be used by contractors for travel between floors

5. Demolition: The following rules and regulations apply:

	 	a.	 	Building trash dumpsters are not to be utilized for construction debris of any
kind.
	 
	 	b.	 	Prior approval of the location by the Tenant and Landlord is necessary for the
placement of General Contractor’s dumpster.
	 
	 	c.	 	If the Premises are part of a multi-tenant building, the opening and/or removal
of any medium pressure supply ducts must be scheduled for after hours, and must be
immediately capped so when the system starts it can maintain static pressure.

	 	 	 	 	 
	Rules & Regulations Governing Alterations

	 	Page 3
	 	 
	Elan Exhibit K 5-30
	 	 	 	 

 

 

	 	d.	 	Thermostats in the construction area of a multi-tenant floor of the Building
are usually servicing zones in occupied suites and corridors. Therefore, such
thermostats must not be turned off, removed, capped or remounted in a different
location than the drawing identifies. All pneumatic lines are to be capped immediately
should changes be required. Replacement thermostats or additional thermostats are
required to match the building standard.
	 
	 	e.	 	All doors, frames, lights, sidelights, carpet pieces or any other material
permanently fixed to the Premises and installed by Landlord or at Landlord’s expense
are the property of the Building. Arrangements must be made to transport these items
to the Building’s designated storage area.
	 
	 	f.	 	All construction debris must be transported during prescheduled time frames in
Rubbermaid type container so as to not damage walls, floors, etc. If the Premises are
part of a multi-tenant building, the staging of construction debris outside the
construction area is strictly prohibited. General Contractor shall take special care
to cover and protect all walls and outside corners.

6. Fire and Life Safety Systems: General Contractor and all associated Sub-Contractors
must ensure with the Landlord’s designated representative that the fire system is off-line each day
before the commencement of work. Any time reasonably required by Landlord’s personnel to respond
to false alarms caused by an employee, agent or contractor of General Contractor or an associated
Sub-Contractor will be charged back to Tenant. Persistent offenders will be removed from the
approved Contractor list and no longer be permitted access to the Premises. Proposed fire
detection equipment should be submitted to and reviewed by Landlord’s designated engineer before
starting any work (including smoke detectors, flow switches, pull stations, fire dampers, duct
detectors, etc.). The General Contractor will be required to bag each detector at the beginning of
each day and is required to unbag all detectors at the end of each workday. Any troubles on the
fire system that are caused by the General Contractor or any Sub-Contractors will be required to be
corrected the same business day and any costs associated with said repairs will be the Tenant’s
responsibility.

7. Alarm System Modification: Any change to the existing Building Fire Alarm System,
including but not limited to relocation of horns, speakers, magnetic hold opens, Card Access System
interface, etc., shall be planned and coordinated with Landlord. Any and all Work on these systems
must be performed by the Building’s approved Contractor, specifically licensed and empowered to
make changes to the existing system. All cost associated with modifications are to be made a part
of General Contractor’s overall budget and the designated Contractor, identified by Landlord, shall
become an additional Sub-Contractor to the General Contractor.

8. Scheduled walk-through: General Contractor should expect and anticipate that at a
minimum, once each week, a representative from the Building’s Management or Engineering department
shall schedule a walk-through inspection of the Premises in order to assess construction progress,
assure compliance with these Rules and Regulations and/or inform the General Contractor of any
special circumstances that may impact the construction progress.

	 	 	 	 	 
	Rules & Regulations Governing Alterations

	 	Page 4
	 	 
	Elan Exhibit K 5-30
	 	 	 	 

 

 

9. Disturbance to the Normal Course of Business: If the Premises are part of a
multi-tenant building, any project or operation causing a potential disturbance to other tenants of
the Building, such as but not limited to demolition, core drilling, powder actuated tools, etc.
would typically only be permitted during non-business hours and must be scheduled in advance with
Landlord. All costs associated with having the Landlord’s designated representative present after
hours is the sole responsibility of Tenant and will be billed by the Landlord.

10. Use of Hazardous Substances: General Contractor shall use the Hazardous Substance
Control Form any time hazardous substances are used on the facility required to be reported
under OSHA requirements. This control form is to be turned into Landlord prior to the
utilization of hazardous substances in conjunction with construction.

11. No kerosene, gasoline or other similar flammable liquid used in construction is permitted on
the Premises except when in use and must never be left unattended; provided that bottled flammable
gases typically utilized in construction activities may be stored in a safe and secure manner in
locations approved by Landlord.

12. Core Drilling: Tenant must coordinate all core drilling locations with Landlord; and
once such locations are approved, core drilling in any multi-tenant building may only take place
outside of normal business hours. If Landlord reasonably requires x-raying of floor slabs for core
drills and floor slab penetrations, such x-raying activities in multi-tenant buildings must be
performed during non-business hours. The cost for any repairs to conduit or wiring that is damaged
by core drilling shall be the sole responsibility of the Tenant.

13. Painting: If the Premises are part of a multi-tenant building, no painting, spraying
or other work, which involves noxious fumes, is permitted during working hours of the Building,
Monday through Friday (7:00 A.M. to 6:00 P.M.), and such work will have to be scheduled after hours
or on weekends and will require the Building Engineer to set up the ventilation system to provide
positive ventilation of the floor that these activities are taking place.

14. Cabling: The cabling contractor will be required to submit to Tenant the proposed
mapping of the cabling through the building’s riser space as well as plenums. Prior Landlord and
Tenant approval is required before cabling installation begins.

15. Ceiling. Electrical, plumbing or other services, which require access to the ceiling
in the occupied tenant space, must be performed professionally, neatly and as quickly as possible.
Fingerprints, dirt, construction debris, as well as replacement of any damaged ceiling tiles etc.,
shall be performed at Tenant’s cost and expense. If the Premises are part of a multi-tenant
building, then in some cases, it may be necessary to schedule this work outside the Tenant’s normal
business hours.

16. Janitorial Closets. Slop sinks are provided in the janitorial closets and this is the
only water source available to the General Contractor and Sub-Contractors. If the Premises are
part of a multi-tenant building, access to janitorial closets will be obtained through the Building

	 	 	 	 	 
	Rules & Regulations Governing Alterations

	 	Page 5
	 	 
	Elan Exhibit K 5-30
	 	 	 	 

 

 

Engineer. No debris is to be disposed of at janitors’ sinks (including, but not limited to,
painting and drywall tool clean up).

17. Door Locks. All Tenant interior and exterior door locks must match the Building master
system; therefore, all keying requirements must be coordinated by Tenant with Landlord.

18. Amendments. Landlord reserves the right at any time to reasonably change or rescind
any one or more of these Rules and Regulations, or to make such other and further reasonable Rules
and Regulations as in Landlord’s reasonable judgment may from time to time be necessary for the
management, safety, care and cleanliness of the Premises and Building, and for the
preservation of good order therein, as well as for the convenience of other occupants and tenants
therein.

	 	 	 	 	 
	Rules & Regulations Governing Alterations

	 	Page 6
	 	 
	Elan Exhibit K 5-30
	 	 	 	 

 

 

CONTRACTOR
INSURANCE REQUIREMENTS

     Contractor shall maintain in full force and effect, during the time frame services are
provided, insurance coverage of the types and in the amounts as required in the Lease.

	 	 	 	 	 
	Rules & Regulations Governing Alterations

	 	Page 7
	 	 
	Elan Exhibit K 5-30
	 	 	 	 

 

 

HAZARDOUS SUBSTANCE CONTROL FORM

Building Address:                                                             

Contractor Name:                                                             

Tenant Name:                                                             

Floor Number(s):                                                             

	•	 	Hazardous Substances to be used during construction:
	 
	 	 	(Attachment of MSDS is required)
	 
	•	 	Quantities to be stored on site during construction:
	 
	•	 	Intended use of hazardous substances:

	 	 	 	 	 
	Rules & Regulations Governing Alterations

	 	Page 8
	 	 
	Elan Exhibit K 5-30
	 	 	 	 

 

 

HAZARDOUS SUBSTANCE CONTROL (cont.)

Control measures that could be implemented in order to limit the exposure of hazardous fumes, over
spray and airborne material as they affect the health and safety of Tenants, workers and employees.

Please indicate with yes (y) or no (n):

	 	 	 	 	 
	* Physical enclosure of construction zone

	 	(y)
	 	(n)
	 
	 	 	 	 
	* Dilution of ventilation required

	 	(y)
	 	(n)
	 
	 	 	 	 
	* Outside exhaust

	 	(y)
	 	(n)
	 
	 	 	 	 
	* Off-site lacquer spraying

	 	(y)
	 	(n)
	 
	 	 	 	 
	* Use of alternate products with lower hazardous effect characteristics

	 	(y)
	 	(n)
	 
	 	 	 	 
	* Other (please state)
	 	 	 	 

GENERAL CONTRACTOR IS RESPONSIBLE FOR THE REMOVAL OF ALL REMAINING CONSTRUCTION MATERIALS FROM THE
SITE, ALSO INSURING THE PROPER HANDLING OF ANY HAZARDOUS SUBSTANCES.exv4wxbyx2y

 

Exhibit 4(b)(2)

STANDARD SINGLE-TENANT NET LEASE

CHAMBERLIN ASSOCIATES 200 OYSTER POINT, L.P.,

A California limited liability company,

As Landlord

AND

ELAN PHARMACEUTICALS, INC.,

A Delaware corporation,

As Tenant

 

 

SUMMARY OF EXHIBITS AND AMENDMENTS TO LEASE FORM

EXHIBIT A — LEGAL DESCRIPTION

EXHIBIT B — WORK LETTER

EXHIBIT C — RULES AND REGULATIONS

EXHIBIT D — CALCULATION OF BUILDING MINIMUM

MONTHLY RENT DURING FIRST YEAR OF TERM

EXHIBIT E — TRANSPORTATION DEMAND MANAGEMENT PROGRAM REQUIREMENTS

EXHIBIT F — FORM OF LETTER OF CREDIT

EXHIBIT G — GUARANTY

EXHIBIT H — Intentionally Deleted

EXHIBIT I — LIST OF BASELINE REPORTS

EXHIBIT J — Intentionally Deleted

EXHIBIT K — RULES AND REGULATIONS GOVERNING ALTERATIONS

 

 

     1.1. DATE. This lease is dated for reference purposes only December 17, 2007.

     1.2. PARTIES AND NOTICE ADDRESSES

          1.2.1 LANDLORD: Chamberlin Associates 200 Oyster Point, L.P.

               1.2.1.1 ADDRESS FOR NOTICES TO LANDLORD

c/o Chamberlin Associates

5880 West Las Positas Boulevard, Suite 34

Pleasanton, CA 94588-8552

Attention: Anne Hoffman AND Rahn Verhaeghe

E-Mail: Legal@Chamb.com

             Rahn@Chamb.com

With a copy to:

Law Offices of Glenn M. Feeley

1660 Olympic Blvd., Suite 350

Walnut Creek, CA 94596

Attention: Glenn M. Feeley

E-Mail: glenn@gfeeley.com

          1.2.2 TENANT: Elan Pharmaceuticals, Inc.

               1.2.2.1 ADDRESS FOR NOTICES TO TENANT

Elan Pharmaceuticals, Inc.

800 Gateway Boulevard

South San Francisco, CA 94080

Attn: Rick Smith

E-Mail: charles.smith@elan.com

With a copy to:

Elan Pharmaceuticals, Inc.

800 Gateway Boulevard

South San Francisco, CA 94080

Attn: Vice President, Corporate Legal

E-Mail: legal_corporate@elan.com

     1.3. PREMISES.

     (Section 2.1) The entire parcel of land legally described in Exhibit A and all
improvements thereto.

     1.4 BUILDING

     (Section 2.1) 200 Oyster Point Boulevard, So. San Francisco, CA 94080.

     1.5 COMMENCEMENT /EXPIRATION DATES.

     1.5(a). COMMENCEMENT DATE. Notwithstanding anything to the contrary contained herein or in
the Work Letter, Landlord and Tenant acknowledge and agree that the construction of the Initial
Tenant Improvements may be completed by Tenant on a floor by floor basis, with the Commencement
Date occurring on the earlier of (a) four (4) months after the Substantial Completion of the
Building Shell, as adjusted for any Tenant Delays such that the date of Substantial Completion of
the Building Shell, for purposes of this Section 1.5, shall occur on the date that the Building
Shell would have been Substantially Complete but for any Tenant Delays (the terms Initial Tenant
Improvements, Landlord’s Work, Substantial Completion, Tenant Delays, and Building Shell are
defined in the Work Letter attached to the Lease as Exhibit B, the “Work Letter”)), or (b) the
date that Tenant occupies the first, second and third floors of the Premises and commences
business operations thereon, following the date that Tenant obtains a temporary or final
certificate of occupancy for the Building. If Tenant occupies one or more floors (but not all
floors) of the Premises prior to the Commencement Date for the Premises (the “Early Occupancy
Period”), Tenant shall be obligated to pay Minimum Monthly Rent for only the floor(s) of the
Premises occupied during such Early Occupancy Period from the date that any portion of such floor
is occupied by Tenant for the purposes of operating Tenant’s business therein (and not solely for
the limited purpose of installing its furniture, fixtures and equipment therein); provided that
such early occupancy shall also be subject to the other terms of the Lease and the Work Letter,
including but not limited to Tenant’s obligation to provide Landlord with proof of Tenant’s
insurance as set forth in Section 6.3.3. The Minimum Monthly Rent payable for a floor during the
Early Occupancy Period shall be equal to one-third (1/3) of the Minimum Monthly Rent payable for
the Premises during the first full month after the Commencement Date.

Following the Commencement Date, Landlord shall deliver written notice to Tenant of the
Commencement Date (as may be adjusted herein) after finally determining the same, and unless
Tenant delivers written notice of objection to Landlord within five (5) business days after
receiving Landlord’s written notice of the Commencement

1

 

Date, Tenant shall be deemed to have approved of, and shall be bound by, Landlord’s determination of the Commencement Date.

     1.5(b) EXPIRATION DATE. The last day of the calendar month in which the fifteenth (15th)
anniversary of the Commencement Date occurs.

     1.6 TERM (Section 3.1) Approximately 180 months, expiring on the Expiration Date.

     1.7 RENT. The Minimum Monthly Rent for the Initial Year shall be determined in accordance with
the terms and provisions of Exhibit D (the Calculation of the Building Minimum Monthly Rent During
the First Year of Term).

     1.8 OPERATING EXPENSE/MONTHLY PAYMENT (See Section 6.1): Operating Expenses shall consist of those
components of Tenant’s additional rent obligations that are described in (and subject to the
limitations of ) Sections 6.2 — 6.5 of this Lease, the initial amount of which shall be estimated
by Landlord and provided to Tenant within thirty (30) days after written request by Tenant which
may be made no earlier than August 1, 2008.

     1.9 LETTER OF CREDIT. (See Section 22.0)     Six Million Dollars ($6,000,000)

     1.10 USE. Except as provided in the last sentence of this Section 1.10, the Premises shall be used
solely for pharmaceutical/biotechnology research and for pharmaceutical/biotechnology
manufacturing, marketing and distribution and any other use generally associated with diagnostic
and pharmaceutical development and production, and for those other uses associated therewith,
including but not limited to general office space, vivarium space, cold room and glass washing
facilities, and radioactive material and chemical storage space, and employee amenities such as a
gymnasium and a cafeteria. Notwithstanding the foregoing, any use of the Premises which is
permitted by law and consistent with other activities conducted on the Premises is permissible.

     1.11 CONTENTS Included as part of this Lease are Exhibits A through K, which are attached hereto
and incorporated herein by this reference.

2.0 PREMISES

     2.1 Description. Landlord hereby leases to Tenant and Tenant hereby leases from Landlord,
the real property described in Exhibit A (the “Real Property”), together with the entirety of the
building to be constructed by Landlord along with the other improvements to be located thereon
(collectively, the “Premises”) to be constructed by Landlord and Tenant, respectively, in
accordance with the Work Letter, including, but not limited to, a “basement” parking structure
(the “Basement Parking Structure”), a service loading dock, ramp and adjacent loading area,
surface parking, and the Service Area (as defined in Section 5.2), all substantially in the size
and location as will be set forth in the Plans (as defined in Section 1.7.3 of Exhibit B) , all of
which are reserved for the exclusive use of Tenant and its employees, contractors, agents,
invitees and guests throughout the Term of this Lease as part of Tenant’s leasehold interest in
the Premises, subject to (i) any other rights of Landlord set forth herein, (ii) any matters of
public record existing as of the date of this Agreement, and (iii) any other rights or matters
that are reasonably necessary for Landlord’s development of the Property as contemplated herein
(such as a reciprocal driveway easement or the Reciprocal Parking Easement defined in Section 25
below) (collectively, the items in clauses (i) through (iii) above are referred to herein as
“Landlord’s Reserved Rights”). Landlord shall not, subject to the Landlord’s Reserved Rights,
operate or make available any portion of the Premises for use by any person other than Tenant
during the Term as long as Tenant is not in default under this Lease.

     The “Rentable Square Footage of the Building” is estimated to be approximately 83,420 square
feet. Prior to the Commencement Date, the Building will be measured by Landlord’s Architect (as
defined in the Work Letter) in accordance with BOMA measurement standards pursuant to BOMA ANSI
Z65.1-1996, revised and readopted June 7, 1996; provided, however, that except as otherwise
expressly set forth herein, no floor area of the Building (nor of the Basement Parking Structure
or Service Area) other than (a) the first, second and third floors of the Building and (b) those
portions of the upper level garage within the Building constituting a lobby area and/or used for
circulation to the elevators, shall be included in the determination of the Rentable Square
Footage of the Building (i.e. regardless of whether any portion of the Basement Parking Structure,
Service Area or the Building roof includes any storage areas, machinery or electrical rooms or
HVAC chiller facilities, such areas shall not be included in the calculation of the rentable
square feet of the Building for purposes of determining Tenant’s Minimum Monthly Rent payments and
Landlord’s contribution of Tenant Improvement Allowance). If such measurement results in a change
in the Rentable Square Footage of the Building from the number stated above, the Minimum Monthly
Rent and the other provisions of this Lease based on square footage shall be recalculated
accordingly. Rentable square footage of the Service Area shall be measured in accordance with
Section 5.2 below. Before commencement of the Initial Tenant Improvements, Landlord and Tenant
will attempt to reach an agreement on the rentable square feet of the Building. If Landlord and
Tenant are unable to mutually agree upon the rentable square footage of the Building, either
Landlord or Tenant shall have the right to demand that the parties submit the dispute as to the
rentable square feet of the Building to a third party space management professional jointly for
resolution. Should such a demand be made, then within ten (10) days after either party delivers
written notice to the other of such demand, the parties shall select an independent third party
space management professional to resolve the dispute (the “Space Management Professional”).
Landlord shall initially retain the Space Management Professional, but the costs and expenses of
the Space Management Professional shall be split between the parties (with Tenant paying Landlord
its share of such costs and expenses within thirty (30) days after receiving an invoice from
Landlord requesting payment thereof). Thereafter, within ten (10) days after the parties select
the Space Management Professional, each party shall deliver to such Space Management Professional,
in a sealed envelope, their determination of the rentable square footage of the Building. If a
party

2

 

fails to deliver its determination of the rentable square footage of the Building to the
Space Management Professional within said ten (10) day period, and thereafter, if such party fails
to deliver its determination of the rentable square footage of the Building to the Space
Management Professional within five (5) days after receiving written notice from the other
party demanding that its determination be delivered to the Space Management Professional, then the
determination of the party providing its determination of the rentable square footage of the
Building to the Space Management Professional shall be binding on the parties. Should both
parties timely deliver their determination of the rentable square footage of the Building to the
Space Management Professional, then within forty-eight (48) hours after receiving both
determinations, the Space Management Professional shall call a meeting of the parties, and during
such meeting, the Space Management Professional shall open the envelopes containing the parties
determinations of the rentable square footage of the Building. If such determinations differ by
less than one percent (1%) of the lower number, then the rentable square footage of the Building
shall be the average of those two determinations, which number shall be binding on the parties.
Moreover, upon such determination, Landlord and Tenant shall set forth such rentable square
footage of the Building based on such process in a writing signed by Landlord and Tenant. If such
determinations are equal to or more than one percent (1%) of the lower number, then the Space
Management Professional shall field measure the rentable square feet of the Building in accordance
with this Section 2.1. Thereafter, the determination of the parties as to the rentable square
footage of the Building (as set forth in their submittal to the Space Management Professional)
that is closest to the measurement determined by the Space Management Professional shall be the
Rentable Square Footage of the Building for purposes of this Lease, and shall be binding on the
parties, and shall be set forth, in a writing, signed by both Landlord and Tenant. Once the
Rentable Square Footage of the Building is determined as provided in this Section 2.1, the
Rentable Square Footage of the Building shall not be subject to re-measurement.

     2.2 Initial Tenant Improvements. Initial Tenant Improvements to the Premises shall be
completed in accordance with the terms and provisions of the Work Letter attached hereto as
Exhibit B (the “Work Letter”).

     2.3 Delivery. Tenant shall accept possession of the Building Shell as of the date of
Substantial Completion of the Building Shell, subject to the terms and conditions of the Work
Letter and Landlord’s rights set forth therein to complete any Punch List Items, and Tenant’s
taking possession of the Building Shell on that date shall be conclusive evidence that Tenant
accepts the Building Shell in its then existing condition, and that the Building Shell was in good
condition at the time possession was taken, subject to the Punch List items associated therewith.

     Tenant shall accept possession of the Premises as of the date of Substantial Completion of
Landlord’s Work, subject to the terms and conditions of this Lease, the Work Letter and Landlord’s
rights set forth therein to complete any Punch List Items, and Tenant’s taking possession of the
Premises on that date shall be conclusive evidence that Tenant accepts the Premises in its then
existing condition, and that the Premises were in good condition at the time possession was taken,
subject to the Punch List items associated therewith.

     Tenant agrees and acknowledges that, except as expressly set forth elsewhere in this Lease
and the Work Letter, neither Landlord nor any agent of Landlord has made any representation or
warranty with respect to the condition of all or any portion of the Premises or the Real Property,
and/or the suitability of the Premises or the Real Property for the conduct of Tenant’s business.

     2.4 Construction Defects. Notwithstanding anything to the contrary in Section 2.3 above,
Landlord shall, at Landlord’s sole cost and expense, repair or replace any “Construction Defects”
(defined below) that Tenant notifies Landlord of, in writing, during the Landlord’s Warranty
Period (as defined in the Work Letter). Such repair obligation is referred to herein as
"Landlord’s Warranty.” Such costs and expenses shall not be included as an Operating Expense.
Moreover, if Landlord is obligated hereunder to correct a violation of Landlord’s Warranty, such
corrective work shall be completed within thirty (30) days after Landlord receives notice of such
Construction Defect from Tenant; provided however, if by the nature of such correction more than
thirty (30) days is required to effect such correction, Landlord shall not be in default hereunder
if such correction is commenced within such thirty (30) day period and is diligently pursued to
completion.

     For purposes of this Lease, and the attached Work Letter, the term “Construction Defects”
shall mean (a) any defect in design, workmanship or materials with respect to Landlord’s Work, (b)
the failure of Landlord’s Work to be constructed in accordance with the Plans (as defined in
Section 1.7.3 in the Work Letter), (c) the failure of Landlord’s Work to comply with all
applicable laws and regulations, including but not limited to the California Uniform Building Code
and all Environmental Laws (as defined in Section 4.3 below), restrictions of record encumbering
title to the Real Property, and any other applicable governmental orders, rulings or requirements
having the effect of law (collectively, “Applicable Laws”), and (c) any introduction or generation
of any Hazardous Materials in, on or about the Premises by Landlord or anyone under Landlord’s
control as part of Landlord’s Work in violation of any Environmental Law.

     Tenant’s taking possession of the Premises and acceptance of the Premises shall not
constitute a waiver of any claims based upon warranty or defect in regard to the design,
materials, or construction of the Building Shell or any other Landlord’s Work against the
Landlord’s Architect, contractor, materialmen, manufacturers and other responsible party. The
expense of repairs and replacements attributable to defects in design, materials or construction
are payable by Tenant to the extent not covered by Landlord’s warranty obligations in this Section
2.3 and the Work Letter. Pursuant thereto, Tenant shall be entitled to receive any recovery from
the Landlord’s Architect, contractor, materialmen, manufacturers and other responsible party, and
from applicable insurance policies, to the extent Tenant pays such expense; otherwise, Landlord
shall be entitled to any such recovery. Landlord hereby assigns to Tenant, effective as of the
expiration of the Landlord’s Warranty Period (the “Warranty Assignment Date”), and Tenant shall
have the benefit of, on a non-exclusive basis as of the Warranty Assignment Date, any and all
warranties with respect to the design, materials and construction of the Landlord’s

3

 

Work, although
such warranties shall revert to Landlord exclusively upon the expiration or earlier termination of
this Lease.

3.0 TERM

     3.1 Period; Commencement. The Term of this Lease shall commence in accordance with Section
1.5(a) (the “Commencement Date”), and shall be for the Term specified in Section 1.6, expiring on
the date specified in Section 1.5(b) (the “Expiration Date”).

4.0 USE

     4.1 Authorized. The Premises may be used and occupied only for the purposes specified in
Section 1.10 hereof, and for no other purpose or purposes.

     4.2 Compliance. Subject to Landlord’s construction and repair obligations set forth herein
and/or in the Work Letter, Tenant accepts the Premises by its occupancy of the Premises, and
subject to all Applicable Laws, in effect during the Term regulating the Premises, with which
Tenant shall comply at its sole cost as they relate to Tenant’s use of the Premises or to any
improvements, alterations or installations made to the Premises by or for Tenant, or to the
operation of Tenant’s business. Landlord makes no warranty that Tenant’s particular use of the
Premises complies with the zoning applicable to the Premises.

     4.3 Restricted Activities. Tenant shall not cause or permit the escape, disposal or release
of any biologically or chemically active or other hazardous substances or materials at or from the
Premises in violation of any Environmental Laws. Tenant shall not allow the storage or use of such
substances or materials in any manner which does not comply with all applicable Environmental Laws
in all material respects. For purposes of this Lease, the phrases “hazardous substance,”
“hazardous materials,” “hazardous substances or materials” and “hazardous substances and materials”
shall mean any chemical, compound, material, mixture, living organism or substance that is now or
hereafter becomes defined or listed in, or otherwise classified pursuant to any Environmental Law
as a hazardous substance, hazardous material, hazardous waste, extremely hazardous waste,
infectious waste, toxic substance, toxic pollutant or any other formulation intended to define,
list or classify substances by reason of deleterious properties such as ignitability, corrosivity,
reactivity, carcinogenicity or toxicity, and shall include, without limitation, any polychlorinated
biphenyls (PCBs), asbestos, lead-based paint or building materials, radon, petroleum, natural gas,
natural gas liquids, liquified natural gas or synthetic gas usable for fuel (or mixtures of natural
gas and such synthetic gas). “Environmental Law” shall mean any and all present and future federal,
state and local laws, statutes, rules or regulations, or any requirements under permits issued
pursuant to these laws, and other requirements of governmental authorities relating to the
environment, to any hazardous substance or to any activity involving hazardous substances, and
shall include, without limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. Section 9601 et seq.), the Federal Resource Conservation
and Recovery Act (42 U.S.C. Section 6901 et seq.), the Occupational Safety and
Health Act (29 U.S.C. Section 651 et seq.) (“OSHA”) and all other applicable
provisions of federal, state and local laws related to the environment.

     If any lender or governmental agency shall ever require testing to ascertain whether or not
there has been any release of hazardous substances or materials, then the reasonable costs thereof
shall be reimbursed by Tenant to Landlord upon demand as additional Rent (as defined in Section 5.1
below) if such release occurred and was caused or permitted by Tenant, or arose as a result of the
business activities of Tenant. In addition, Tenant shall execute affidavits, certificates and the
like from time to time at Landlord’s request concerning Tenant’s actual knowledge regarding the
presence of hazardous substances or materials on the Premises. In all events, Tenant shall
protect, defend, indemnify and hold harmless Landlord and its officers, members, partners,
employees, agents and representatives (collectively, the “Landlord Parties”) in the manner provided
in Section 11.1 of this Lease from any release of hazardous substances and/or materials on the
Premises occurring while Tenant is in possession thereof. If at any time during or after the Term
of this Lease, as it may be extended, Tenant becomes aware of any inquiry, investigation, or
proceeding by any governmental agency related to hazardous materials on or under the Premises,
Tenant shall within five (5) business days after first learning of such inquiry, investigation or
proceeding give Landlord written notice of same. This section shall survive the expiration or
earlier termination of the Lease.

     Tenant acknowledges receipt of those documents and reports relating to the soil and
environmental conditions at the Premises that are set forth in Exhibit I, which is attached hereto
and is expressly incorporated herein (collectively, the “Baseline Environmental Reports”). Landlord
makes no representations or warranties as to the truth or accuracy of the Baseline Environmental
Reports, or as to the contents thereof, except that Landlord hereby represents that Landlord’s Work
(as described in the Work Letter) shall be constructed in accordance with the recommendations set
forth in the soils report for the Real Property with respect to corrosivity (as set forth in the
Geotechnical Investigation report by Treadwell & Rollo, dated January 16, 2001). Tenant shall not
be obligated to remediate any pre-existing hazardous materials disclosed in the Baseline
Environmental Reports unless such pre-existing contamination is exacerbated by the gross negligence
or willful misconduct of Tenant or any of its subtenants or assigns. Landlord agrees to provide
Tenant with copies of any and all of the environmental reports performed by or for, or received by,
Landlord (at no expense to Tenant except as expressly provided in this Section 4.3) within thirty
(30) days of Landlord’s receipt thereof.

     Tenant shall, prior to Tenant’s vacation and surrender of the Premises on or prior to the
Expiration Date, comply with all Environmental Laws, to surrender the Premises at the expiration
of the Term, free from any residual impact from the Tenant’s hazardous materials storage and use
at the Premises, including, without limitation, complying with the facility closure process
required by the San Mateo County Department of Health and/or Health Services Agency (“County”),
and those other facility closure environmental laws, ordinances, rules, regulations, orders,
restrictions of record and requirements promulgated or issued by a federal, state or local

4

 

governmental department or agency required for the issuance of a facility closure permit, or its
equivalent (the “Closure Permit”), from all applicable governmental authorities with jurisdiction
over the subject matter (collectively, the “Closure Authority”). Tenant shall, within two (2)
business days of Tenant’s filing or receipt of the same, provide Landlord
with copies of: (a) the closure plan submitted by Tenant to the Closure Authority; and (b)
the closure report or any other closure approval(s) issued by the Closure Authority.
Notwithstanding anything to the contrary contained herein, Tenant shall remove from the Premises
at the end of the Term all hazardous waste containers that are brought onto the Premises by or for
Tenant or anyone under Tenant’s control during the Term.

     At least three (3) months prior to the surrender of the Premises, Tenant shall deliver to
Landlord a narrative description of the actions proposed (or required by the Closure Authority) to
be taken by Tenant in order to surrender the Premises at the expiration of the Term, free from any
residual impact from the Tenant’s hazardous materials storage and use at the Premises (the
“Surrender Plan”), prepared by a third party environmental consultant hired by Tenant, at Tenant’s
sole cost and expense (the “Environmental Consultant”), which Surrender Plan shall incorporate the
proposed closure plan to be submitted to the Closure Authority as required for the Closure Permit.
Landlord shall review such Surrender Plan and determine whether such Surrender Plan is acceptable
for the purpose of satisfying the Tenant’s surrender obligations relating to hazardous substances
and/or materials on the Premises. At a minimum, the Surrender Plan shall contain a listing of (i)
all hazardous materials licenses and permits held by or on behalf of Tenant with respect to the
Premises, and (ii) all hazardous materials used, stored, handled, treated, generated, released or
disposed of from the Premises for which a hazardous materials business plan is required under
Applicable Laws (e.g., excluding incidental hazardous materials in office and cleaning supplies).
Landlord shall either accept or propose reasonable modifications to the Surrender Plan within
thirty (30) days following Tenant’s delivery thereof to Landlord; and if Landlord does not respond
to the Surrender Plan with proposed modifications within such 30-day period, then the Surrender
Plan shall be deemed to be approved by Landlord. In connection with Landlord’s review of the
Surrender Plan, Tenant shall provide to Landlord such additional non-proprietary information
concerning Tenant’s hazardous materials use as Landlord may reasonably request. After Landlord’s
approval of the Surrender Plan, Tenant shall submit to, and obtain the Closure Authority’s
approval of the closure plan contained in the Surrender Plan, and after obtaining such approval,
Tenant shall comply with all governmental requirements indicated by the Closure Authority as
conditions to issuance of the Closure Permit. Upon Tenant’s vacating the Premises, and as a
condition to Tenant’s surrender of the Premises to Landlord at the expiration of the Term (subject
to Tenant’s right to holdover pursuant to Section 16.2), Tenant shall deliver to Landlord, in
addition to the Closure Permit, reasonable written evidence that all other actions required by the
Surrender Plan have been satisfactorily completed. Under no circumstances shall Landlord’s review
of the Surrender Plan, or any proposed modifications to the Surrender Plan, subject Landlord to
any liability or responsibility for the contents of such Surrender Plan or for the Surrender
Plan’s compliance with all Applicable Laws, nor shall Landlord’s review or proposed modifications
to the Surrender Plan satisfy Tenant’s obligation to comply with all Applicable Laws with respect
to Tenant’s hazardous materials storage and use at the Premises.

5.0 RENTS

     5.1 Minimum Monthly Rent. Tenant shall pay to Landlord at the place designated in Section
1.2, or at such place as Landlord may otherwise designate, without deduction, offset,
counterclaim, prior notice or demand, as Minimum Monthly Rent, the sum of the “Building Minimum
Monthly Rent” and the “Service Area Minimum Monthly Rent.” All such Minimum Monthly Rent
Payments shall be payable in advance on the first day of each month during the Lease Term. All
other costs and expenses that Tenant assumes or agrees to pay to Landlord under the Lease shall be
deemed additional rent (which, together with the Minimum Monthly Rent, is sometimes referred to as
the “Rent”). If the Term shall commence or end on a day other than the first day of a calendar
month, then Tenant shall pay, as rent for such partial calendar month, a pro rata portion of the
Minimum Monthly Rent, prorated on a per diem basis, with respect to the portions of the fractional
calendar month included in the Term.

     5.2 Rents; Adjustments. The Building Minimum Monthly Rent is the minimum monthly rent
associated with the Building, which during the first one year period after the Commencement Date
(as defined in Section 1.5) shall be equal to the amount determined in accordance with the formula
set forth in Exhibit D, which is attached hereto and is incorporated herein (the
“Calculation of the Building Minimum Monthly Rent During First Year of Term”). On each annual
anniversary of the Commencement Date, the Building Minimum Monthly Rent shall increase by three
percent (3%) from the prior year’s Building Minimum Monthly Rent.

     The Premises will include a service area (the “Service Area”), which shall be a secured area
to be used for loading, storage and distribution of Tenant’s process equipment, gas and chemicals,
as well as bio-waste containers, electrical transformers generators and other service equipment.
The location of the Service Area shall be reflected in Plans (as defined in Section 1.7.3 of
Exhibit B) . After the Substantial Completion of the Building Shell, Landlord shall cause
Landlord’s Architect to determine the rentable square footage of the Service Area, which shall
mean the surface area of the Service Area measured to the internal boundary of all surrounding
walls and fences, less the area of any easement or right of way in which no improvements are
permitted to be constructed by Tenant and any areas occupied by equipment or structures installed
by Landlord that are not a part of the Initial Tenant Improvements (except for the area upon which
the PG&E transformer is located, which shall be included in the determination of the rentable
square footage of the Service Area); and Landlord shall notify Tenant, in writing, of such
determination prior to the Commencement Date. If Tenant does not agree with such determination,
Tenant shall notify Landlord of such objection within ten (10) days after receiving such written
notice from Landlord. Tenant’s written notice of objection to the rentable square footage of the
Service Area should include Tenant’s determination of the rentable square footage of the same.
Tenant shall be deemed to have approved of Landlord’s determination of the rentable square footage
of the Service Area unless Tenant notifies Landlord, in writing, of such objection (along with
Tenant’s determination of the rentable square footage of the Service Area) within such

5

 

ten (10) day period. If Landlord and Tenant are unable to agree upon the rentable square footage of the
Service Area, after Landlord receives Tenant’s determination of the same, then Landlord and Tenant
shall mutually select an independent third party space measurement professional to field measure
the rentable square feet of the Service Area. Such third party independent measurement
professional’s determination shall be conclusive and binding on Landlord and Tenant. Landlord and
Tenant shall each pay one-half (1/2) of the fees and expenses of the independent third party space
measurement professional. If such determination is made, it will be confirmed in a writing signed
by Landlord to Tenant.

     The Service Area Minimum Monthly Rent is the minimum monthly rent associated with the Service
Area, which during the first one year period after the Commencement Date shall be equal to the
rentable square footage of the Service Area times 70/100ths Dollars ($.70) per rentable square
foot. On each annual anniversary of the Commencement Date, the Service Area Minimum Monthly Rent
shall increase by three percent (3%) from the prior year’s Service Area Minimum Monthly Rent.

6.0 OPERATING EXPENSES

     6.1 Payment. Tenant shall pay as additional rent, the Operating Expenses (Sections 6.2 —
6.5) for the Premises from the date of Substantial Completion of the Building Shell. Except as
otherwise specified herein, Tenant shall pay Landlord, on a monthly basis after the date of
Substantial Completion of the Building Shell, the estimated amount of the Operating Expenses
specified in Section 1.8 above; provided, however, that Landlord shall have the right to adjust the
estimated amount of Operating Expenses to be paid by Tenant by delivering written notice to Tenant
of the new estimated amount, in which case, the estimated amount to be paid by Tenant thereafter
shall be the new estimated monthly amount set forth in such written notice from Landlord. Landlord
shall provide Tenant with a statement of the actual amount of such expenses within 120 calendar
days following the end of each calendar year. Tenant shall pay to Landlord the amount by which
such actual expenses exceeds Tenant’s Operating Expense payments for such year and any excess
amounts paid by Tenant shall be credited to reduce Tenant’s payments for the next ensuing period,
or paid to Tenant if the Lease Term has expired. If Tenant disputes any amount set forth in the
statement of expenses to be delivered by Landlord pursuant to this Section 6.1, Tenant shall have
the right by written notice delivered to Landlord within thirty (30) days following receipt of such
statement to cause Landlord’s books and records with respect to the preceding calendar year to be
audited, which audit shall be completed within forty-five (45) days following Tenant’s receipt or
access to the materials required for such audit, which shall be performed by an accountant mutually
acceptable to Landlord and Tenant; provided that Tenant’s right to perform such audit shall be
conditioned on Tenant first paying to Landlord all such disputed amounts. The amounts payable by
Landlord to Tenant or Tenant to Landlord, as the case may be, shall be appropriately adjusted on
the basis of such audit. Access to such materials will be made available at the office of Landlord
or its property manager. If such audit discloses a liability for a refund by Landlord to Tenant in
excess of ten percent (10%) of the payments previously made by Tenant for such calendar year, the
cost of such audit shall be borne by Landlord; otherwise the cost of such audit shall be borne by
Tenant. If Tenant does not exercise its audit right for any year during the term (or any renewal
term) of this Lease in accordance with the provisions of this Section, then such statement shall be
conclusively binding for such year; provided, however, that a waiver by Tenant of its audit rights
in any one year shall not be deemed a waiver of audit rights under this Section for any subsequent
year.

     Moreover, the parties acknowledge that management of the Premises may, at Landlord’s sole and
absolute discretion, be included with other properties in the vicinity of the Premises owned by
Landlord or its affiliates to be commonly managed by Landlord, in which case, Landlord shall have
the right to commonly manage the entire project as long as such common management does not result
in increased Operating Expenses in excess of those amounts that would have been otherwise payable
under this Lease had Landlord not commonly managed the Premises and such adjacent Premises. If the
Premises are commonly managed with other properties, “Tenant’s Proportionate Share” shall mean the
rentable square footage of the Premises divided by the rentable square footage of all buildings
located on the properties commonly managed by Landlord. If the Premises are not commonly managed
with other properties, “Tenant’s Proportionate Share”, for purposes of this Lease, shall be equal
to 100%. For example, based on the fact that the Premises will be newly constructed as of the
Commencement Date, Tenant shall have no liability for the cost of restoring or replacing worn or
obsolete improvements that do not benefit the Premises (and that are located on adjacent
properties) as part of such Operating Expenses.

     6.2 Taxes. Tenant shall pay all real property and other taxes on the Premises, which shall
include any form of assessment, license, fee, commercial rental tax, levy or tax (other than net
income, franchise, inheritance or estate taxes) imposed by any authority having the power to tax
or levy assessments on the Premises and the reasonable cost of contesting any tax assessment,
whether such tax is (i) upon any legal or equitable interest of Landlord in the Premises; (ii)
upon this Lease, the Rent payable hereunder or the value thereof; (iii) with respect to any right
to occupancy, use, leasing, operation, management, maintenance, alteration, or repair of the
Premises or any part thereof; or (iv) imposed in substitution for, or in addition to, existing or
additional taxes against any part of the Premises whether or not now customary or within the
contemplation of the parties. If any governmental authority should pass any law or regulation
after the effective date of this Lease, which shall make it unlawful for Tenant to reimburse
Landlord for any of the taxes covered by this Section 6, the Minimum Monthly Rent payable to
Landlord under the terms of this Lease shall be increased so as to net to Landlord the amount that
would have been received by Landlord if such tax had not been imposed. Tenant shall pay prior to
delinquency all taxes assessed against and levied upon its trade fixtures, furnishings, equipment,
and other personal property, and any increase in real property taxes resulting from any
alterations, Initial Tenant Improvements, or any other improvements placed in or on the Premises.

6

 

     6.3 Insurance

          6.3.1 Property. Landlord shall obtain and maintain on Landlord’s Work, prior to the
Commencement Date, and on the Landlord’s Work and the Initial Tenant Improvements, as of the
Commencement Date and throughout the Term, and Tenant shall pay to Landlord, as an Operating
Expense, the cost of, an “all risk” policy of property casualty insurance (including, at
Landlord’s option, earthquake and flood coverage, inflation endorsement, and sprinkler leakage
endorsement) covering the full replacement cost of the improvements located on the Real Property,
excluding coverage of all Tenant’s personal property on the Premises and excluding any Tenant
alterations or improvements to the Premises other than the Initial Tenant Improvements.
Landlord shall have the right to provide such insurance in the form of a blanket policy covering
the Premises and all buildings owned or managed by Landlord and its affiliates in the vicinity of
the Premises, with Tenant’s liability for the costs thereof limited to an equitable share based on
the replacement cost of the Building as compared to the replacement cost of all buildings covered
by such blanket policy. In addition, such insurance shall include a lender’s loss payable
endorsement in favor of Landlord’s lender. Notwithstanding anything to the contrary contained
herein, in the event of earthquake damage, Tenant shall pay Landlord Tenant’s Equitable Share of
the deductible associated with such earthquake policy up to a maximum amount of $100,000,
amortized over a period of four (4) years, which amounts shall be payable in monthly installments
for the portion of the amortization period remaining in the Term (i.e. with payments thereon in
any 12 month period not exceeding $25,000). “Tenant’s Equitable Share” of the earthquake policy
deductible shall mean the deductible amount multiplied by a fraction, the numerator of which is
the cost of restoration associated with items included in Landlord’s Operating Expense Repair
Obligations (as defined below), and the denominator of which is the sum of all restoration costs,
including Landlord’s Non-Compensated Repair Obligations and Landlord’s Operating Expense Repair
Obligations. Tenant agrees not to engage in any activities (i) that will increase the cost of
such insurance, unless such actions by Tenant are consistent with its normal business operations
as set forth in Section 1.10 of the Lease, or (ii) that will prevent Landlord from procuring
policies reasonably satisfactory to Landlord. Tenant shall pay any increases in insurance
premiums resulting from the nature of Tenant’s occupancy or any act or omission of Tenant within
ten (10) business days after receiving an invoice from Landlord for the same.

          6.3.2 Tenant’s Obligation. Tenant shall maintain in full force and effect at all times
during the term of the Lease, at its own expense, for the protection of Tenant and Landlord, as
their interests may appear, (a) “all risk” property insurance on any alterations (but excluding
the Initial Tenant Improvements) to the Premises in the amount of the replacement cost thereof,
(b) commercial general liability insurance with limits of liability for bodily injury and property
damage of not less than $2,000,000 per occurrence and $3,000,000 in the aggregate, insuring
Landlord and Tenant against any liability arising out of the use, occupancy or maintenance of the
Premises (provided that such insurance coverage for more than $2,000,000 in the aggregate and in
excess of the per occurrence limit may be covered by an umbrella policy meeting the requirements
of Section 6.3.3 below), and (c) worker’s compensation insurance as required by any Applicable
Law. The proceeds of this insurance will be payable to Tenant. The limits of said insurance
shall not, however, limit the liability of Tenant hereunder. Notwithstanding anything to the
contrary in Section 6.3.3 below, neither Landlord nor Landlord’s lender shall be named as an
additional insured with respect to Tenant’s personal property or worker’s compensation insurance.

          6.3.3 Terms. All insurance policies required to be carried by Tenant hereunder shall conform
to the following requirements: (a) at Landlord’s request, shall carry a lender’s loss payee
endorsement in favor of Landlord’s lender; (b) an executed copy of each insurance policy,
including renewals (or a certificate thereof), as well as any required endorsements associated
therewith, shall be delivered to Landlord; (c) each certificate of insurance shall require that
the applicable insurer or insurance broker shall endeavor to notify Landlord in writing at least
thirty (30) days prior to any cancellation or expiration of such policy, or any reduction in the
amounts of insurance carried, provided, however, that Tenant shall provide written notice to
Landlord of any such cancellation or expiration or reduction in amounts at least fifteen (15) days
prior to the effective date of such cancellation, expiration or reduction; (d) each policy shall
be primary, not contributing with any insurance that Landlord may carry; (e) the commercial
general liability policy shall state that Landlord is entitled to recovery for the negligence of
Tenant even though Landlord is an additional insured; (f) the commercial general liability policy
shall name Landlord as an additional insured, by endorsement; and (g) shall be issued by companies
having a Best’s financial category minimum rating of Class “A-/VIII” or better in the most recent
edition of Best’s Insurance Report or as otherwise reasonably approved by Landlord in the event
such rating system shall be modified or discontinued.

          6.3.4 Waiver. Each of the parties hereto hereby releases the other, to the extent of the
releasing party’s insurance coverage required to be maintained hereunder (with Landlord’s
liability coverage deemed to be at least equivalent to the minimum limits on Tenant’s commercial
general liability policy required to be maintained under Section 6.3.2 above), regardless of any
vitiation of the releasing party’s insurance coverage caused by the releasing party, from any and
all liability for any loss or damage covered by such insurance which may be inflicted upon the
property of such releasing party even if such loss or damage shall be brought about by the fault
or negligence of the other party, its agents or employees; provided, however, that this release
shall be effective only with respect to loss or damage occurring during such time as the
appropriate policy of insurance shall contain a clause to the effect that this release shall not
affect said policy or the right of the insured to recover thereunder. If any policy does not
permit such a waiver, and if the party to benefit therefrom requests that such a waiver be
obtained, the other party agrees to obtain an endorsement to its insurance policies permitting
such waiver of subrogation if it is available. If an additional premium is charged for such
waiver, the named insured under such policy agrees to pay the amount of such additional premium.

7

 

     6.4 Repairs and Maintenance; Building Management

          6.4.1 Landlord’s Maintenance and Repair Obligations.

               6.4.1.1 Landlord’s Maintenance and Repair Obligations / Non-Operating Expenses. Landlord, at
its sole cost and expense and without reimbursement from Tenant, shall maintain, repair, and if
necessary, replace all structural components of the Building located on the Premises consisting of
all footings, foundations, load bearing walls, roofs (exclusive of the roof membrane), structural
steel columns and girders forming a part thereof (“Landlord’s Non-Compensated Repair
Obligations”).

               6.4.1.2 Landlord’s Maintenance and Repair Obligations / Operating Expenses. Subject to
Landlord’s obligations with respect to Construction Defects and Punch List Items (which Landlord
shall perform without reimbursement from Tenant), Landlord shall, with reimbursement from Tenant
for the costs associated therewith as an Operating Expense, perform all necessary maintenance and
repairs to (a) all exterior glass and other exterior surfaces of the Building, and all exterior
walls (other than load bearing walls included in Landlord’s obligations under Section 6.4.1.1
above), (b) the basement parking structure (including but not limited to all striping, exhaust
systems, and lighting systems contained within the basement parking structure), (c) all outdoor
parking facilities and driveways and all exterior sidewalks, (d) all exterior landscaping,
exterior irrigation systems, exterior drainage systems, and exterior lighting of the Premises, (e)
all drainage systems on the exterior portions of the Building, (f) the roof membrane, (g) all
utility lines (outside the Building) servicing the Premises up to their point of connection to the
Building (including but not limited to all backflow devices), and (h) the elevators within the
Building, as necessary to maintain the same in good condition and repair, subject to reasonable
wear and tear, throughout the Term (“Landlord’s Operating Expense Repair Obligations”). As part
of Landlord’s Operating Expense Repair Obligations for which Tenant shall reimburse Landlord for
the costs thereof as an Operating Expense, Landlord shall also be responsible for cleaning the
exterior side of all exterior windows of the Building, as necessary to maintain the same in good
condition and repair, subject to reasonable wear and tear, throughout the Term.

               6.4.1.3 Landlord’s Repair Obligations — Generally. Notwithstanding the foregoing, Landlord’s
repair obligations specified herein are limited to those repairs that would be commercially
reasonable to repair under common property management standards applicable to buildings that are
similar in type and quality to the Building. In addition, Landlord agrees to promptly perform its
repair obligations set forth herein after receiving written notice from Tenant to perform the
same.

               6.4.1.4 Landlord’s Failure to Commence Repairs. If Landlord fails to commence any repairs
required by this Section 6.4 within fifteen (15) days of notice thereof (as such time period may
be extended for Force Majeure Delays, as defined in Exhibit B), and thereafter fails to
diligently prosecute such repair to completion, then Tenant may perform such work on Landlord’s
behalf; provided, however, that Tenant first notifies Landlord, in writing, at least three (3)
days prior to commencing such repairs on Landlord’s behalf, that Tenant will be commencing such
repairs within three (3) days unless Landlord commences such repairs and diligently prosecutes the
same to completion. If Landlord commences and diligently works towards completing such repairs
within three (3) days after receiving written notice from Tenant, then Tenant shall have no right
to perform such repairs on Landlord’s behalf. Landlord shall deliver written notice to Tenant of
any Force Majeure Delays that are delaying Landlord’s commencement or the completion of the
repairs. Notwithstanding the foregoing, in the event of an emergency situation that threatens
damage to Tenant’s personnel or property, Tenant shall have the right to make repairs that are
required to be made by Landlord herein, on Landlord’s behalf, provided, however, that Tenant first
provides notice to Landlord of the emergency situation, and provided Landlord fails to commence
and diligently prosecute such repairs within 24 hours after receiving such notice of repair or
such shorter period as is reasonable under the circumstances.

               6.4.1.5 Reimbursement to Tenant for Work Performed On Landlord’s Behalf. If Tenant, on
Landlord’s behalf, repairs or replaces any item specified herein as being repaired or replaced by
Landlord, either at Landlord’s sole cost and expense or as an Operating Expense, then Landlord
shall reimburse Tenant for any such repair work performed by Tenant on Landlord’s behalf within
thirty (30) days after Landlord receives Tenant’s written request for payment of the same,
provided, however, that Tenant has first allowed Landlord to complete such repairs in accordance
with Section 6.4.1.4; and further provided that Landlord shall be permitted to include as an
Operating Expense for which Tenant shall be required to pay Tenant’s Proportionate Share of those
amounts paid by Landlord to Tenant as reimbursement under this Section 6.4.1.5 to the extent that
such repairs or replacements could have been included as an Operating Expense had Landlord (and
not Tenant) performed the same.

               6.1.4.1.6 Casualties. To the extent covered under Article 10, repairs required as the result
of fire, earthquake, flood, vandalism, war, or similar cause of damage or destruction shall, to
the extent covered under Article 10, be subject to Article 10.

          6.4.2 Tenant’s Performance Obligations. Subject to any maintenance or repair obligations
under this Lease that are specifically required to be performed by Landlord, Tenant shall, at its
sole cost and expense, be responsible for maintaining the Premises, including all improvements
constructed thereon, in good order, condition and repair, and Tenant shall promptly make all
repairs necessary to maintain such condition. Except as otherwise expressly set forth herein,
Tenant shall be solely responsible for all costs of maintaining and repairing the Premises,
including, without limitation, (1) maintenance and repair of all interior glass and interior and
exterior doors of the Building, and the interior of the Building, including, without limitation,
maintenance and repair of the interior walls and interior surfaces of exterior walls and all
interior electrical systems and lighting, (2) maintenance and repair of the HVAC system(s) serving
the Building (in accordance with the manufacturer’s

8

 

recommendations); and (3) maintenance and
repair of the Building fire, safety, and security systems, and all other equipment, plumbing,
wiring, conduits and cables within the Building, and (4) any and all generators on the Premises
(including but not limited to all emergency generators). Notwithstanding anything to the contrary
in this Lease, Tenant shall reimburse Landlord for all reasonable costs incurred by Landlord to
repair any damage to the Building or the Premises, beyond reasonable wear and tear, caused by
Tenant or its Agents (as defined in Section 10.3). Tenant hereby waives the benefit of any
applicable statutory provision that requires a landlord to maintain leased property. All repairs
made by Tenant shall utilize materials and equipment that are comparable to those originally used
in constructing the Premises. Tenant shall notify Landlord, in writing, prior to making any
repairs to any portion of the Premises that are reasonably expected to cost in excess of $25,000;
provided, however, that Tenant shall have no obligation to so notify Landlord of any repairs to be
made pursuant to a preventive maintenance program established under a contractual arrangement with
Tenant and a third party maintenance provider. Tenant’s repair and replacement obligations set
forth in this Section 6.4.2 shall not include any repairs or
replacements arising as a result of any Construction Defects to the extent covered by
Landlord’s Warranty. Furthermore, Tenant shall be reimbursed by Landlord for Tenant’s costs
incurred in complying with Tenant’s maintenance obligations set forth herein, (a) to the extent
such maintenance and repair arises from the negligence or willful misconduct of Landlord or
Landlord’s agents, employees, invitees or licensees; or (b) to the extent such repairs or
replacements are covered by Landlord’s insurance (unless due to the gross negligence or willful
misconduct of Tenant).

          6.4.3 Operating Expenses. Operating Expenses shall include (i) all sums expended by Landlord
for the supervision, maintenance, repair, replacement and operation of the Premises, and a
reasonable management and administrative fee (not to exceed three and one-quarter percent (3.25%)
of the net rent (i.e. the Minimum Monthly Rent payable over the year in question) plus the
Operating Expenses for the year), exclusive of those sums expended by Landlord for the supervision,
maintenance, or repair of Landlord’s Non-Compensated Repair Obligations, and (ii) any costs of
capital improvements made by Landlord to the Building or the Premises (x) to maintain the Building
and the Premises in a good, working condition and state of repair, or (y) that are required by any
governmental authority after the original construction of the Building. The portion of such
capital costs to be included each year as an Operating Expense shall be that amount allocable to
the year in question calculated by amortizing the costs thereof over the useful life of such
improvement, as reasonably determined by Landlord, with interest on the unamortized balance at the
rate of the Federal Reserve Bank of San Francisco, plus one percent (1%). However, if the capital
expense is less than Ten Thousand Dollars ($10,000), it shall be expensed in the year in which it
was incurred, and it shall not be amortized, provided that the aggregate amount of such capital
expenses that are less than $10,000 that are so expensed in any 12-month period of the Term shall
not exceed Thirty Thousand Dollars ($30,000), and if such aggregate amount is exceeded, then Thirty
Thousand Dollars ($30,000) of such capital expenses shall be proportionately allocated among such
capital expenses and expensed for the year in question, and the remainder shall be allocated
proportionately among the corresponding capital items, and amortized over the respective useful
lives. Notwithstanding the foregoing, operating expenses shall not include: (a) depreciation,
interest and principal payments on the Premises or Building; (b) the cost to complete the
Landlord’s Work or the Initial Tenant Improvements (but may include repair and maintenance costs
for the same in accordance with the requirements of this Article 6); (c) real estate broker
commissions; (d) repairs and maintenance costs paid to Landlord by proceeds of insurance or by
third parties; (e) legal fees incurred in connection with the development of the Project or leasing
of the Premises or any legal disputes arising from such leasing activities; (f) reserves for
Operating Expenses, taxes, insurance or any other costs for which Tenant is responsible under this
Lease; (g) costs of selling, syndicating, financing, mortgaging or hypothecating any of Landlord’s
interest in the Premises; (h) any fines, penalties or interest due to Landlord’s late payments; (i)
any amounts paid as ground rental by Landlord; (j) any recalculation of or additional Operating
Expenses incurred more than two (2) years prior to the year in which Landlord proposes that such
costs be included; (k) payments to Landlord or to subsidiaries or affiliates of Landlord for
services in the Building to the extent the same exceeds the costs of such services rendered by
unaffiliated comparable third parties on a competitive basis, except for the management and
administrative fee set forth above; (l) costs arising from Construction Defects in Landlord’s Work
for which Landlord is responsible under Landlord’s Warranty; (m) costs (such as property manager
salary and property management office expenses), for which Landlord is compensated by the
management and administrative fee; (n) capital expenses not included in clauses (ii)(x) or (ii)(y)
above; and (o) any costs related to any governmental, quasi-governmental, utility company or
similar program or plan for water, traffic, hazardous waste, environmental or handicapped access
management, mitigation, enhancement or remediation in which participation is voluntary, except to
the extent such participation results in a net reduction in Operating Expenses.

     Landlord and Tenant acknowledge that two other properties (180 Oyster Point and 230 Oyster
Point) share common driveway access rights (with the Premises) over a portion of the Premises (and
over such other properties) by way of easement agreements setting forth such access rights and the
maintenance costs and responsibilities associated with such common driveway. Tenant agrees to
pay Landlord, as part of the Operating Expenses, the Premises’ equitable share of maintenance
costs associated with such common driveway (based on the terms of such easement agreements).

          6.4.4 Landlord’s Right to Repair On Tenant’s Behalf. If Tenant fails to maintain the
Premises in good order, condition and repair, Landlord may give Tenant notice to do such acts as
are reasonably required to so maintain the Premises. If Tenant fails to commence such work within
ten (10) days following receipt of such notice and thereafter diligently prosecute it to
completion, then Landlord shall have the right to do such acts and expend such funds at the
expense of Tenant as are reasonably required to perform such work, in which case, Tenant shall pay
such amounts to Landlord within thirty (30) days after receiving an invoice for the same from
Landlord. Landlord shall have no liability to Tenant for any damage, inconvenience or
interference with the use of the Premises reasonably caused by Landlord’s performance of any such
work.

9

 

          6.4.5 Landlord’s Right to Make Repairs. Landlord shall have the right, in its reasonable
discretion, to close temporarily (for a reasonable duration and following reasonable notice) any
portion of the Premises to the extent required for Landlord to perform its maintenance rights and
obligations specified herein; provided that Landlord shall reasonably cooperate with Tenant to
schedule any such closure and work at times and in a manner which mitigates the impact thereof on
Tenant’s business operations in the Premises. Tenant’s obligation to pay the Minimum Monthly Rent
shall not abate as a result of such temporary closure, nor shall Landlord be responsible or liable
to Tenant for any interference with Tenant’s use of the Premises to the extent reasonably required
for any such temporary closure (and provided Landlord complies with its duty to cooperate with
Tenant as set forth above).

     6.5 Utilities, Telecommunications; Backup Generator. Tenant shall pay for water, gas, heat,
sewer, power, telephone services and any other utility supplied to or consumed in or on the
Premises, and shall insure that each utility provider transfers the applicable accounts into
Tenant’s name on or before the Commencement Date. Landlord shall not be responsible or liable for any interruption in
utility service, nor shall such interruption affect the continuation or validity of this Lease;
provided, however, that Landlord shall use reasonable efforts to remedy any interruption in the
supply of such utilities or services if such interruption is caused by Landlord or Landlord’s
employees, agents or contractors. If such interruption arises from the act of a third party,
Tenant and Landlord shall cooperate with each other to seek to remedy the interruption. Tenant
shall maintain and regularly test, at its sole cost and expense, the emergency power generators
(if any) installed on the Premises in accordance with the manufacturer’s recommendations. Tenant
shall be responsible at its sole cost for the installation, maintenance and repair of any phone,
data or other communications cable from the demarcation point supplied by the local regulated
public utility to and within the Premises. Any alterations, installations or modifications of
such cable shall be subject to the provisions of this Lease, including Articles 7 and 8.

     Tenant shall have the exclusive right during the Term, subject to Landlord’s Reserved Rights,
to install, maintain and operate on the roof of the Building, for the purpose of Tenant’s
business, telecommunications antennae, satellite dishes and other devices that make use of the
electromagnetic spectrum (“Telecommunications Devices”) and related wires, cables, conduits
between such equipment and the Premises, subject to the following requirements, (a) compliance
with all covenants or restrictions of record (as of the date hereof), building codes, regulations
and ordinances and other Applicable Laws, (b) compliance with the terms and provisions of the Work
Letter, but only to the extent that such devices are installed prior to the Substantial Completion
of Landlord’s Work (as such terms are defined in the Work Letter), and (c) compliance with the
terms and provisions of Sections 7 and 8 hereof, but only to the extent that such devices are
installed after the Substantial Completion of Landlord’s Work.

     Notwithstanding anything to the contrary contained herein or in the Work Letter, prior to
installing any Telecommunications Devices outside of the Building or on the exterior of the
Building, including but not limited to on any roof of any building within the Premises, Tenant
shall provide Landlord with written notice of Tenant’s desire to install such Telecommunications
Devices, together with plans and specifications for the installation of such Telecommunications
Devices. Landlord shall review such plans and specifications within ten (10) business days after
receiving the same, and within such period notify Tenant if Landlord approves the installation of
such Telecommunications Devices or disapproves the installation of such Telecommunication Devices,
and if Landlord disapproves the installation of such Telecommunication Devices, the reasons
therefore. Landlord’s failure to provide notice of its disapproval and the reasons therefore
within such ten (10) business day period shall be deemed Landlord’s approval of such installation
request. Landlord shall not unreasonably withhold approval of the installation of such
Telecommunications Devices; provided, however, that Landlord shall have the right to withhold such
approval, in its sole and absolute discretion, if (a) Tenant fails to provide Landlord with
sufficient documentation with respect to the installation of the Telecommunication Devices so as
to allow Landlord to fully review and evaluate the same, (b) the installation of such
Telecommunication Devices is reasonably likely to cause damage to the physical integrity of the
Building, or (c) the installation of such Telecommunication Devices will adversely affect the
appearance of the Building from surrounding areas, as reasonably determined by Landlord. Tenant
shall install screening materials in conformance with all Applicable Laws, and the appearance,
size and location of any screening materials shall be subject to Landlord’s approval, which
approval shall not be unreasonably withheld. Tenant shall be responsible for any installation and
maintenance costs of any such Telecommunication Devices, as well as any damage to the Building,
including without limitation the roof, arising out of or related to the installation or use by
Tenant of any such Telecommunications Device. Tenant shall not be obligated to pay any license
fee for the use of the roof of the Building pursuant to this Section during the Term of this Lease
or any extension thereof.

     Notwithstanding anything to the contrary contained herein, should the installation of the
Telecommunications Devices affect the engineered elements of Landlord’s Work or the roof of the
Building (including but not limited to the roof membrane), or should such installation potentially
affect any warranty provided to Landlord by Landlord’s Contractor or its material suppliers
(including but not limited to any roof warranty), then Tenant shall either (a) have Landlord
perform any work affecting Landlord’s Work, on Tenant’s behalf, pursuant to a Change Request in
accordance with Section 1.11 of the Work Letter (provided such request is made prior to the
Substantial Completion of Landlord’s Work, as such terms are defined in the Work Letter), in which
case, Landlord’s performance of such work on Tenant’s behalf shall comply with all terms and
requirements of the Work Letter, or (b) utilize Landlord’s Architect and/or Landlord’s Contractor
and/or any subcontractor or material supplier who originally installed such portion of Landlord’s
Work, at Tenant’s sole cost and expense, as necessary, for the design and construction of that
portion of Landlord’s Work affected thereby in order to maintain all contractual warranties
provided to Landlord by Landlord’s Contractor or its material suppliers with respect to such
Landlord’s Work, and to maintain all of Landlord’s contractual rights and remedies against
Landlord’s Architect with respect to the design of Landlord’s Work.

10

 

     Tenant may, through the Change Request process specified in the Work Letter, have a trench
(with cables and conduit installed therein) constructed within the boundaries of the Real Property
and any other properties in the vicinity of the Real Property owned by Landlord or any of its
affiliates for purposes of “hard wiring” for voice, data and power transmissions between and among
the buildings occupied by Tenant in the vicinity of the Premises. Landlord shall not unreasonably
withhold its approval of such Change Request, unless such trenching poses a material risk to the
physical integrity of the Building. Tenant is hereby advised that such trenching work must be
performed through the Change Request process prior to the Substantial Completion of Landlord’s
Work, since any subsequent installation of the same may be all but impossible due to site
configuration. If such trenching and cabling work is installed within the Premises, Tenant shall
not be obligated to remove the installed conduit upon the expiration or earlier termination of the
Lease, but Tenant shall strip all cabling from such conduit at its sole cost and expense upon
expiration or earlier termination of this Lease. Tenant shall not be obligated to pay any license
fee for the use of the conduits installed in the Real Property pursuant to this Section during the
Term of this Lease or any extension thereof.

     Landlord grants Tenant the license and right to use a portion of the Service Area for the
installation, operation and maintenance of a backup power generator and associated fuel tank,
which includes the passage of related wires, cables and conduit between Tenant’s electrical room
and the backup power generator on the Real Property or any backup generator located at any of the
other buildings (located at 180 Oyster Point Blvd. and 1000 Gateway Blvd., South San Francisco)
occupied by Tenant. However, any such improvements to be installed in the Service Area shall be
subject to the terms and provisions of Section 7 and 8 of this Lease, unless Tenant is installing
the same as part of the Initial Tenant Improvements, in which case, such improvements shall be
installed subject to the terms and provisions of the Work Letter. Subject to Landlord’s rights
herein, Tenant shall have access to the Service Area on a 24 hour per day/7 day per week basis.
Tenant shall be solely responsible for the repair and maintenance of Tenant’s improvements and
equipment within the Service Area, and Tenant agrees to maintain the same in a good state of
condition and repair. Tenant has advised Landlord that if and when it installs a backup generator
in the Service Area, it intends to run that backup generator on a regular basis in order to comply
with maintenance specifications and requirements of law and that such operation may be as often as
one (1) thirty (30) minute period per week. Except in cases of emergency, when no prior approval
shall be required, Tenant shall propose for Landlord’s reasonable approval the schedule for
operation of the backup generator to reasonably mitigate any interference with the use of adjacent
properties by other tenants.

7.0 ALTERATIONS, ADDITIONS AND FIXTURES

     7.1 Installation and Removal. Subject to the terms of this Section 7 and Section 8 below,
Tenant shall have the right to install its trade fixtures in the Building (and subject to Section
6.5 above, Tenant shall have the right to install any Telecommunication Devices on the exterior of
the building or within any other portions of the Premises outside the Building, or any backup
generator or associated fuel tank) during the term of this Lease; provided, however, that no such
installation or removal thereof shall affect the structural portion of the Building or the
engineered elements of Landlord’s Work, and that Tenant shall repair any damage to the Building or
the Premises caused by the installation, use or removal of any of Tenant’s furniture, fixtures,
equipment or other property; and provided however, that Tenant shall only be obligated to make
such repairs necessary to restore the Premises to its condition prior to such installation or
removal, ordinary wear and tear excepted. Notwithstanding the foregoing, Tenant shall not place a
load upon the floor or roof of the Premises that exceeds the load per square foot which such floor
or roof was designed (or is modified) to carry, as set forth in the Work Letter or the Plans for
Landlord’s Work. Tenant shall not install business machines or mechanical equipment which causes
noise or vibration to such a degree as to be reasonably objectionable to Landlord or other
neighboring owners or tenants. Further, except as otherwise provided in Section 6.5 above, and
except for those items of equipment (but not fixtures) that may be installed in the Service Area
from time to time by Tenant, Tenant shall not install, nor allow to be installed any equipment on
or outside the exterior of the Building without Landlord’s prior written consent, which consent
shall not be unreasonably withheld. For purposes of Section 6.4.1.1 and this Section 7.1, the
term “structural” shall refer to the footings, foundations, structural steel columns, girders,
bearing walls, exterior walls, and roof.

     7.2 Tenant’s Rights. Tenant shall not make or permit to be made any alterations or
improvements to the Premises without Landlord’s prior written consent. Notwithstanding the
foregoing, Landlord’s prior written consent shall not be needed for any alterations or
improvements to the premises that do not: (a) cost more than $25,000, (b) affect the exterior
appearance of the Premises or the Building, or (c) affect the structural portions of the Premises
or the engineered elements of Landlord’s Work. For purposes of determining the costs of the
alterations or improvements for purposes of clause (a) above, such costs normally associated with
such alterations and/or improvements must be included, and Tenant shall not be allowed to
segregate alterations or improvements in parts in order to allow Tenant to perform such work
without Landlord’s prior written consent. Any proposed alterations/improvements that do not
require Landlord’s consent pursuant to clauses (a), (b) or (c) above shall be referred to herein
as a “Minor Changes.” On a quarterly basis, Tenant shall deliver to Landlord a copy of the
“as-built” plans for any Minor Changes performed during the prior quarter that are of a type for
which “as-built” plans would customarily be prepared for such alteration, additions or
improvements or such other reasonable information to show such alterations, additions or
improvements if as-built plans are not customarily prepared for such work given the type, nature
and scope of the alteration, addition or improvement. Additionally, as a condition to Tenant’s
right to make Minor Changes, Tenant shall act reasonably to keep Landlord aware of the status of
Tenant’s alterations and improvement work in the Premises by means of quarterly meetings with
Landlord to review the status of work performed during the previous calendar quarter and work
planned for the current calendar quarter.

     Notwithstanding the foregoing, in making any alterations or improvements of any magnitude or
cost whatsoever, whether or not a Minor Change, Tenant shall comply with Section 8.

11

 

     7.3 Obtaining Landlord’s Consent. When seeking the Landlord’s consent to any alterations for
which such consent is required under this Article 7, Tenant shall provide to Landlord, for
Landlord’s review and approval, City approved plans and specifications for such changes, to the
extent City approval of the plans and specifications is required for such alterations.
Notwithstanding anything to the contrary contained herein, should any proposed alterations affect
the engineered elements of Landlord’s Work or the roof of the Building (including but not limited
to the roof membrane), or should such installation potentially affect any warranty provided to
Landlord by Landlord’s Contractor or its material suppliers (including but not limited to any roof
warranty), and if Landlord consents to such alterations, then, as required to prevent invalidation
of such warranty, Tenant shall utilize Landlord’s Architect and/or Landlord’s Contractor and/or any
subcontractor or material supplier who originally installed such portion of Landlord’s Work, at
Tenant’s sole cost and expense, for the design and construction of that portion of Landlord’s Work
covered by the affected warranty or warranties, or as required to maintain all of Landlord’s
contractual rights and remedies against Landlord’s Architect with respect to the design of
Landlord’s Work. If, for any reason, Landlord’s Architect, Landlord’s Contractor, or Landlord’s
subcontractors and material suppliers are unavailable to design and/or construct such alterations, then Landlord shall not
unreasonably withhold its consent to Tenant’s architect and contractors performing the design
and/or construction of such alterations.

     7.4 Tenant’s Construction Obligations.

          7.4.1 Performance of Tenant’s Work. Should any proposed alterations to be performed by Tenant
hereunder conflict with Landlord’s exercise of its rights, or its performance of its obligations,
set forth herein, then Tenant agrees to reasonably cooperate with Landlord in Landlord’s exercise
of such rights and its performance of such obligations. Should any alterations require Landlord’s
consent, and if such alterations involve the sprinkler, plumbing, mechanical, electrical power,
lighting or fire safety systems within the Premises, such alterations shall be performed by
subcontractors approved by Landlord in its reasonable judgment. For any work subject to Landlord’s
consent or approval, Tenant shall provide Landlord with written notice, not less than fifteen (15)
calendar days prior to the date Tenant desires to commence such Work, setting forth or accompanied
by all of the following:

               7.4.1.1 A description and schedule for the work to be performed;

               7.4.1.2 The names and addresses of all contractors and subcontractors who, as of the date of
such notice, will perform such alterations;

               7.4.1.3 A complete set of all plans, specifications, and calculations developed by or for
Tenant, including all plans which are required by the applicable governmental authorities for the
issuance of any permits or approvals or for the commencement of any of Tenant’s Work;

               7.4.1.4 Certificates of insurance evidencing that Tenant’s contractors and subcontractors (a)
carry workers compensation insurance covering all of their respective workers as required by law,
and (b) carry commercial general liability insurance with limits, in form and with companies as are
required to be carried pursuant to the following paragraph, and the certificate of insurance shall
contain a provision that the insurance carrier or broker shall endeavor to notify Landlord at least
30 days’ prior written notice of any cancellation, modification or lapse or reduction in the
amounts of such insurance, provided, however, that Tenant shall provide written notice to Landlord
of any such cancellation or expiration or reduction in amounts at least fifteen (15) days prior to
the effective date of such cancellation, expiration or reduction.

     Tenant’s contractor shall carry commercial general liability insurance covering Premises
damage, personal injury, death, and products and completed operations coverage, in an amount not
less than $3,000,000 per occurrence, and $5,000,000 in the aggregate with deductibles of no more
than $10,000, naming Landlord and its affiliates, employees and agents as additional insureds, by
endorsement (on an ISO form 2010 11 85), with an insurance company with a minimum of an A-VIII
rating. All subcontractors shall carry such insurance as well, except that subcontractors shall
only be required to carry such insurance in an amount of not less than $1,000,000 per occurrence
and $2,000,000 in the aggregate; provided that the insurance coverage of any of the applicable
subcontractors required under this Section may be provided, in whole or in part, through a blanket
policy of such insurance coverage maintained by Tenant’s contractor which expressly provides that
the insured’s subcontractors are covered thereunder. Such insurance shall be maintained at all
times during the construction of the alterations or improvements, except for the products and
completed operation coverage, which coverage is to be maintained during construction of the work
and thereafter in accordance with standard industry practice in the Bay Area of San Francisco,
California. Furthermore, such insurance shall preclude or waive subrogation claims by the insurer
against Landlord, its affiliates, or their agents, employees, or representatives. Such insurance
shall also provide that it is primary insurance with respect to the Landlord and that any other
insurance maintained by Landlord is excess and noncontributing with the insurance required
hereunder.

     Notwithstanding the foregoing, for any Minor Change, the limits of the commercial general
liability policy referenced above shall be $1,000,000 per occurrence and $1,000,000 annual
aggregate.

               7.4.1.5 Notwithstanding anything to the contrary contained herein, at least three (3) days
prior to the commencement of any such Tenant alterations, Tenant shall deliver to Landlord copies
of all licenses and permits that are required in connection with the performance of such
alterations.

     For any work not subject to Landlord’s consent or approval, Tenant shall provide Landlord with
the documents set forth in Sections 7.4.1.1 through 7.4.1.5 above prior to the commencement of any
such work.

12

 

     With respect to the design and construction of any such Tenant alterations, Tenant at its
sole cost and expense, shall comply with all laws, codes and regulations (including the Americans
with Disabilities Act and all other accessibility laws and regulations) relating to any
alterations or improvements, including obtaining any necessary permits with respect thereto, and,
upon completion, shall provide Landlord with as-built plans (in “CAD” (computer assisted design)
form) detailing such alterations and improvements, together with a certificate of occupancy or the
comparable municipal approval (such as a signed-off building permit) issued upon completion and
approval of alterations and improvements in the municipality. Tenant shall be responsible for the
accuracy of the as-built plans, and shall have Tenant’s contractor certify the accuracy of the
same, in writing, which certification shall be delivered to Landlord at the same time the as-built
CAD plans are delivered to Landlord.

     Additional rules and regulations regarding the design and construction of alterations (other
than Minor Changes), to which Tenant is bound, are attached hereto as Exhibit K (the “Rules and
Regulations Governing Alterations”), and is expressly incorporated herein.

          7.4.2 Damages due to Tenant’s Work. If any contractor or worker performing Tenant’s Work
performs any work which does impair, or demonstratively threatens to impair the quality, integrity
or performance of any portion of the Premises, Landlord shall give notice to Tenant and immediately
thereafter, Tenant shall cause such contractor or worker immediately to remove all of its tools,
equipment and materials and to cease working in the Premises. As additional rent under the Lease,
Tenant shall reimburse Landlord for any reasonable repairs or corrections to any portion of the
Premises made necessary as a result of the actions or omissions of anyone performing Tenant’s Work.

          7.4.3 Tenant’s Indemnity Obligations. Tenant shall defend, protect, indemnify and hold
Landlord harmless against all liens, claims, actions, damages, liability, costs, attorneys’ fees
and other expenses incurred as a result of any additions, alterations or improvements performed by
Tenant or any person claiming under Tenant, or incurred on account of claims by any person
performing work or furnishing materials or supplies for Tenant or any person claiming under Tenant.

     7.5 Removal of Alterations. All alterations and improvements to the Premises that are made
by Tenant shall be the property of Tenant until the expiration or earlier termination of this
Lease; at that time all such alterations and improvements shall remain on the Premises and become
the property of Landlord without payment therefor, unless Landlord gives written notice to Tenant
to remove the same at the time Landlord consents to such alterations (unless no Landlord consent
is required prior to the installation of such alterations, in which case, Tenant shall seek
Landlord’s determination, in writing, prior to the expiration of the Term, as to whether any such
alterations are to be removed prior to the expiration or earlier termination of the Term, which
determination shall be made by Landlord, in Landlord’s sole and absolute discretion, within ten
(10) days after Landlord receives written notice from Tenant requesting that Landlord make such
determination). Notwithstanding anything to the contrary herein, (a) Tenant shall not be required
to remove any Initial Tenant Improvements performed pursuant to the Work Letter, unless otherwise
required in accordance with the terms and conditions thereof, (b) Tenant’s removable trade
fixtures and personal property, as well as Tenant’s Telecommunication Devices and Tenant’s back-up
generator, if any, shall be and remain Tenant’s property, and shall be removed by Tenant from the
Premises, at Tenant’s sole cost, on or before the expiration or earlier termination of this Lease.
If Tenant is required per the terms of this Lease to remove any alterations and improvements,
Tenant shall remove the same and repair any damage resulting therefrom, normal wear and tear
excepted.

     7.6 Inapplicability this Section 7 to the Initial Tenant Improvements. Except as expressly
provided herein, the terms and provisions of this Section 7 shall not apply to those Initial
Tenant Improvements to be performed by Tenant pursuant to the terms of any Work Letter attached
hereto (which improvements are subject to the terms and provisions of such Work Letter).

     7.7 Tenant’s Construction Obligations. Landlord and Tenant agree that the obligations of
Tenant under this Section 7 shall not apply to any maintenance or repair work performed by Tenant
pursuant to its maintenance and repair obligations under this Lease.

     7.8 Security Interests in Tenant’s Personal Property and Trade Fixtures. Tenant shall have
the right, from time to time, to lease and to grant and assign security interests in that portion
of Tenant’s removable trade fixtures and personal property located in or at the Premises, which
may be subject to vendor financing, equipment leases and other means of personal property
financing (the “Tenant’s Lien Property”). Landlord agrees to execute, at Tenant’s cost and
expense, commercially-reasonable waiver forms releasing Landlord’s interest in those items of
Tenant’s Lien Property for which such a waiver is requested in favor of any purchase money seller,
lessor or lender who has an ownership or security interest in any of the Tenant’s Lien Property,
as long as such requested waiver specifically describes the equipment subject to such waiver, and
is not a general waiver. Without limiting the effectiveness of the foregoing, provided that no
default shall have occurred and be continuing, Landlord shall, upon the request of Tenant, and at
the Tenant’s sole cost and expense, execute and deliver any instruments reasonably necessary or
appropriate to confirm any such grant, release, dedication, transfer, annexation or amendment to
any person or entity permitted under this paragraph including Landlord waivers with respect to any
of the foregoing, and such acknowledgment shall include, if requested by the person holding such
ownership or security interest, the right to enter upon the Premises following a Tenant default
for a period not to exceed thirty (30) days, for the limited purpose of removing that portion of
the Tenant’s Lien Property subject to such person’s ownership or security interest, provided that
the lessor or secured party agrees to repair any damages resulting from the exercise of such
right. Tenant shall indemnify and hold Landlord harmless from and against any and all losses due
to damages to the Premises caused by the removal of any of Tenant’s Lien Property.

13

 

8.0 MECHANIC’S LIENS

     8.1 Tenant’s Obligations. Landlord shall have the right to post or keep posted on the
Premises, or in the immediate vicinity thereof, any notices of non-responsibility for any
construction, alteration or repair of the Premises by Tenant. Tenant shall promptly pay and
discharge all claims for work or labor done, supplies furnished or services rendered by Tenant’s
agents, employees, contractors, licensees, or invitees (collectively, “Agents”), and Tenant shall
keep the Premises free and clear of any liens arising out of work done by or for Tenant or
Tenant’s Agents. Should any such lien or notice of lien be filed, Tenant shall bond against or
discharge the same within twenty (20) days after such filing. If Tenant fails to bond or discharge
such lien within said twenty (20) day period, then Landlord shall have the right, but not the
obligation, to take any action or pay such amount as may be necessary to remove such lien, and
Tenant shall pay to Landlord as Additional Rent any such amounts expended by Landlord within five
(5) business days after notice is received from Landlord of the amount expended by Landlord as a
result thereof.

9.0 ENTRY BY LANDLORD

     9.1 Entry by Landlord. Tenant shall permit Landlord, its lenders, and their Agents to enter
the Premises at all reasonable times, subject to Tenant’s reasonable safety and security
requirements, for the purpose of inspection, maintenance, making repairs, alterations or additions
to any portion of the Building or the Premises, conducting environmental tests, inspections and
audits (including review of Tenant’s records relating to hazardous materials), serving or posting
notices as well as to exhibit the Premises for sale, mortgage or lease, and, during the last one
hundred eighty (180) calendar days prior to the expiration of this Lease, placing “For Lease”
signs, without any rebate of Rent and without any liability to Tenant for any loss of occupation or
quiet enjoyment thereby occasioned.

     Landlord understands that all utilities are critical to Tenant’s business operations and will
use its best efforts to make sure that these sources are not interrupted at any time without
providing advance notice to Tenant. Landlord shall exercise its rights of entry hereunder for (i)
purposes reasonably relating to the management of the Premises or the performance of its
obligations under the Lease, (ii) assuring, Tenant’s compliance with its obligations under the
Lease to the extent that Landlord reasonably believes that Tenant is not complying with its
obligations under the Lease, (iii) for purposes associated with any environmental testing or
compliance required by any governmental authority, or (iv) purposes related to the sale or
financing of the Premises, including but not limited to appraisals, property inspections, etc. In
entering the Premises for such purposes, Landlord shall conduct its activities with due and proper
concern for Tenant’s interests in safety and security, in being free from unreasonable
interference with its business operations, and in guarding the confidentiality of its business
operations.

     Any proprietary or confidential information relating to Tenant’s operation of its business
shall not be disclosed to third parties by Landlord or anyone under Landlord’s control, unless (a)
such information is or becomes publicly available through means other than disclosure by Landlord,
or anyone under Landlord’s control, (b) the disclosure of such information is reasonably necessary
for Landlord or anyone under Landlord’s control to carry out Landlord’s obligations under this
Lease, (c) the disclosure of such information is reasonably necessary for Landlord to assert a
claim against Tenant for a breach of this Lease, or (d) the disclosure of such information is
required to be disclosed by law or by court order; provided, however, that if Landlord receives a
request, pursuant to the terms of a subpoena, order, civil investigative demand or similar process
issued by a court of competent jurisdiction or by governmental body, to disclose such confidential
information, Landlord agrees to promptly notify Tenant of such request so that Tenant may seek
such a protective order prohibiting or limiting such disclosure as Tenant shall deem appropriate.
Notwithstanding the foregoing, Landlord shall have the right to disclose such confidential
information to (x) prospective buyers of the Real Property, (y) prospective lenders of the
Premises, and to (z) its employees, agents, attorneys, accountants, and representatives for
purposes associated with this Lease, provided, however, that (i) Landlord assures Tenant that
such parties maintain the confidentiality of such information to the same extent that Landlord is
required to maintain the confidentiality of such information as set forth herein, or (ii) in no
case shall Landlord disclose (nor shall Landlord allow any party receiving any such confidential
information from Landlord to disclose) any such confidential information to a business competitor
of Tenant (or an affiliate of such competitor), and (iii) such information is reasonably required
or necessary for the legitimate business purposes of the person requesting such information as it
relates to this Lease. The parties agree that damages would be an inadequate remedy for the
breach of this provision, and Tenant shall have the right to seek specific performance of the
confidentiality covenant of Landlord and to seek injunctive relief to prevent its breach.

10.0 DAMAGE BY FIRE OR OTHER CASUALTY

     10.1 Damage by Fire or Other Casualty. If the Premises shall be damaged or destroyed by fire
or other casualty, Tenant shall promptly notify Landlord, and Landlord, subject to the conditions
set forth in this Section 10, shall repair such damage and restore the Premises to substantially
the same condition in which it was immediately prior to such damage or destruction; provided funds
are reasonably available to Landlord (from insurance proceeds) for Landlord to restore the same.
Landlord’s restoration shall not include the repair, restoration or replacement of Tenant’s
fixtures, improvements, alterations, furniture or any other of its property; provided, however,
that Tenant’s Initial Tenant Improvements constructed pursuant to the Work Letter shall be
included in Landlord’s property insurance carried as an Operating Expense pursuant to Section
6.3.1. If a substantial casualty occurs during the last 12 months of the Term or any extension
thereof, Landlord or Tenant may cancel this Lease unless Tenant has at least one Renewal Term
remaining under this Lease, and has exercised the Renewal Option relating to such term, prior to
such casualty in accordance with Section 30.1 below, or does so within thirty (30) calendar days
after the date of the casualty. If in Landlord’s reasonable opinion (and through no failure of
Landlord to

14

 

maintain the insurance required to be maintained by Landlord in accordance with
Section 6.3.1 covering the full replacement cost of the Building), the cost of completing such
restoration exceeds the proceeds of such insurance (without reduction for any amounts to be paid
to Landlord’s lender or any other holder of a Security Instrument, as defined in Section 15.1) by
more than Two Hundred Fifty Thousand Dollars ($250,000), then Landlord may terminate this Lease by
giving Tenant written notice that specifies a termination date no less than thirty (30) calendar
days after its transmission; provided, however, that Tenant may elect to preserve this Lease by
committing in writing to Landlord to pay for any shortfall of insurance proceeds in excess of the
Landlord’s $250,000 limit set forth above no later than fifteen (15) days following Tenant’s
receipt of Landlord’s termination notice, which amount shall be deposited with Landlord within ten
(10) business days following Landlord’s written notice to Tenant setting forth the amount required
to cover such shortfall, which funds shall be used by Landlord solely for the cost of repairing
and restoring Landlord’s Work and the Initial Tenant Improvements.

     The proceeds of Landlord’s casualty insurance shall be used for restoration of the Building
and the tenant improvements covered by such insurance as provided above unless (i) this Lease is
terminated as provided above due to a casualty occurring during the last 12 months of the Term, or
any extension thereof, or a shortfall of insurance proceeds, or (ii) due to the casualty and
resulting damage to the Premises, where there is an impairment of the security under any loan
obtained by Landlord that is secured by a Security Instrument (as defined in Section
15.1), other than an impairment of the security due solely to a default by Landlord under such
Security Instrument, that permits such lender to apply such insurance proceeds towards the
repayment of such loan and not to the restoration of the damage to the Premises (herein referred
to as a “Landlord’s Loan Default”). If the proceeds of Landlord’s casualty insurance are not used
for restoration of the Premises and the tenant improvements covered by Landlord’s insurance due
solely to a Landlord’s Loan Default permitting such lender to apply such insurance proceeds
towards the repayment of such loan and not to the restoration of the damage to the Premises, then
Landlord shall indemnify and hold Tenant harmless from the cost of replacing the damaged tenant
improvements covered by Landlord’s casualty insurance to the extent any insurance proceeds
attributable to the replacement cost thereof is not available for the restoration of such tenant
improvements and provided that (a) Tenant is not in default under this Lease (after notice and the
expiration of the applicable cure period), and (b) Tenant is occupying and conducting business in
a majority of the Building at the Premises prior to the date of the casualty. Tenant agrees to
cooperate with Landlord and its lender if Landlord’s lender requires the insurance proceeds be
deposited in a construction escrow account and disbursed during the construction of the
restoration work.

          In the event any judgment, order, decree or similar directive from any applicable
governmental authority (the “Order”) is issued in connection with any toxic material clean up,
monitoring program or other similar problem in or about the Building, and such problem was not
caused by Tenant, or its agents, contractors, invitees or employees, and the Order unreasonably
interferes with Tenant’s use of the Premises, then Rent shall be abated, proportionately while the
Order is in effect on the basis of that percentage of Tenant’s overall use of the Premises which
is unreasonably interfered with by the terms and conditions of the Order as jointly determined by
Landlord and Tenant. Landlord and Tenant shall meet within the ten (10) business day period
commencing on the date the Order is issued, and negotiate in good faith to attempt to agree upon
the percentage of the Premises which Tenant is unable to use. In the event that Landlord and
Tenant are unable to agree on the percentage of the Premises which Tenant is unable to use within
that ten (10) business day period, then the dispute shall be resolved by Judicial Reference in
accordance with Section 19.1 below.

     10.2 Tenant’s Right to Terminate. Landlord within thirty (30) days after the date of
destruction shall notify Tenant if the Building cannot be fully repaired within one hundred fifty
(150) days after the date of destruction. In such event Tenant may terminate this Lease as of the
40th day after the date of destruction by giving Landlord written notice within ten (10) days
after Tenant’s receipt of Landlord’s notice.

     10.3 Rent Abatement. The Minimum Monthly Rent, Operating Expenses and any other amounts
payable by Tenant to Landlord hereunder (other than amounts which are accrued and unpaid) shall
abate to the extent that the Premises are rendered unusable by such damage or the repair thereof,
and are not used due to such damage or repair, in the proportion that the area of the Premises that
Tenant is prevented from using (and does not use) bears to the total area of the Premises, as
reasonably determined by Landlord and Tenant, taking into consideration such factors as the use of,
and the location of, the damaged portion and the effect of the damage to Tenant’s operations;
provided, however, that such Rent shall not abate to the extent that such interference with
Tenant’s use of the Premises arises from the acts or omissions of Tenant or its agents, employees,
contractors, licensees, or invitees (collectively, “Agents”). Such abatement shall commence with
the damage or destruction and end upon restoration of the Premises. Tenant shall not be entitled
to any compensation or damages from Landlord for loss of use of the Building or Premises, damage to
Tenant’s personal property or any inconvenience occasioned by such damage, repair or restoration.
Notwithstanding the foregoing, in the event Landlord’s rent abatement insurance provides coverage
to Landlord for any abatement of Tenant’s rent as a result of any acts or omissions of Tenant or
its Agents, then Tenant’s rent shall abate to the extent that Landlord is actually reimbursed by
such insurance as a result of Tenant’s inability to use the Premises.

     Notwithstanding the provisions of this Section 10.3 or Section 6.4.4 above, but subject to
Sections 6.3.4 and 11.1, Landlord shall be liable for loss of use of the Premises or damage to
Tenant’s personal property occasioned by Landlord’s repair or restoration to the extent such loss
or damage is caused by the negligence or willful misconduct of Landlord, its employees or agents.

11.0 INDEMNIFICATION

     11.1 Indemnity Obligations. Subject to Section 6.3.4 above and except as otherwise expressly
provided herein, Tenant shall hold harmless, indemnify, and defend Landlord against all claims,
actions, damages, liability and expense (including, without limitation, fees of attorneys,
investigators and experts) (collectively,

15

 

“Claims”) in connection with loss of life, personal
injury or damage to property in or about the Premises or arising out of the occupancy or use by
Tenant of the Premises or occasioned wholly or in part by any act or omission of Tenant or its
Agents, except to the extent such Claims arise from the negligence or willful misconduct of
Landlord and/or its Agents. Subject to Section 6.3.4 above, and except as otherwise expressly
provided herein, Landlord shall indemnify and hold Tenant harmless from and against all claims,
actions, damages, liability and expense (including, without limitation, fees of attorneys,
investigators and experts) in connection with loss of life, personal injury or damage to property
in or about the Premises resulting from the negligence or willful misconduct of Landlord, or its
employees, agents or contractors. Without limiting the foregoing, Tenant will forever release and
hold Landlord and its Agents harmless from all Claims arising out of damage to Tenant’s property,
except to the extent such Claims arise as a result of Landlord’s failure to make repairs that
Landlord is required to make under this Lease after the expiration of any cure period specified in
the Lease to repair the same after having received written notice of the need for such repair. In
no event shall either party be liable to the other for indirect or consequential damages,
including without limitation, any claims for lost profits or business opportunities, arising from
any cause whatsoever, including without limitation any negligence of either party, excepting only
that Tenant shall be fully liable for (a) all damages arising out of a breach of Tenant’s
obligations under Section 15 of the Lease caused by Tenant’s willful failure to comply with any
Landlord request, and (b) any damages, including without limitation, any claims for lost profits
or business opportunities, arising out of the continued occupancy by Tenant of the Premises
after the expiration or earlier termination of this Lease or any renewal thereof (as the
expiration date of the Lease may be extended subject to Section 16 of this Lease), without
Landlord’s written consent, except to the extent such holding over after the expiration or earlier
termination is due to a cause beyond the reasonable control of Tenant when such cause would affect
any person similarly situated (such as a casualty or governmental preemption of priorities or
other controls in connection with a national or other public emergency) but an event or occurrence
shall not be beyond the reasonable control of Tenant when peculiar to Tenant (such as financial
inability or delay in ordering materials requiring a long lead time, or a delay making requests
for governmental approvals or permits).

12.0 CONDEMNATION

     12.1 Permanent Taking. If (i) all of the Premises is covered by a condemnation, (ii) any
part of the Premises is covered by a condemnation and the remainder thereof is insufficient for
the reasonable operation therein of Tenant’s business, or (iii) any of the Premises is covered by
a condemnation and, in Landlord’s opinion, it would be impractical to restore the remainder
thereof, then this Lease shall terminate and all obligations hereunder shall cease as of the date
upon which possession is taken by the condemnor. If there is a condemnation and this Lease has
not been terminated pursuant to this Section, the obligations of Landlord and Tenant shall be
unaffected by such condemnation except that Rent shall abate in proportion to the area, if any, of
the Building covered by such condemnation. Statutory provisions with respect to termination upon
a partial taking of leased property shall not be applicable to this Lease.

     12.2 Condemnation Award. In the event of a condemnation affecting Tenant, Tenant shall have
the right to make a separate claim against the condemnor for loss of Tenant’s property and for
relocation expenses. Except as aforesaid, Tenant hereby assigns to Landlord all other claims
against the condemnor.

     12.3 Temporary Taking. No temporary taking of the Premises or any part thereof shall
terminate this Lease or give Tenant any right to any abatement of Rent. Any award made to Tenant
by reason of such temporary taking shall belong entirely to Tenant and the Landlord shall not be
entitled to share therein. For the purpose of this Section 12.3, a taking shall be considered
temporary only if it is one hundred twenty (120) calendar days or less in duration.

13.0 QUIET ENJOYMENT

     13.1 Tenant’s Rights. Landlord covenants that Tenant, upon performing the terms, conditions
and covenants of this Lease shall have quiet and peaceful possession of the Premises as against
any person claiming the same by, through or under Landlord, subject, however, to the exceptions,
reservations and conditions of this Lease.

14.0 ASSIGNMENT AND SUBLETTING

     14.1 Limitation. Tenant shall not transfer this Lease, voluntarily or by operation of law,
without the prior written consent of Landlord, which consent shall not be unreasonably withheld,
conditioned or delayed. For purposes of this Section 14, “transfer” shall include any sublease,
assignment, license or concession agreement, mortgage or hypothecation of this Lease or Tenant’s
interest therein or in all or a portion of the Premises, but shall not include any Permitted
Transfer or Permitted Concession (as such terms are defined below). For purposes of this Lease,
the term “transfer” shall also include (i) if Tenant is a closely held corporation (i.e., whose
stock is not publicly held and not traded through an exchange or over the counter), (A) the
dissolution, merger, consolidation or other reorganization of Tenant resulting in a change of
control of Tenant or (B) the sale, transfer, pledge or hypothecation by Tenant of all or
substantially all of its assets or all or substantially all of its stock; or (ii) if Tenant is a
publicly traded corporation, a merger of Tenant with another corporation or a sale or other
disposition of ten percent (10%) or more of its stock within a twelve (12)-month period or a sale
of substantially all its assets. “Control,” as used in this Article 14, shall mean the possession
of the power to direct or cause the direction of the management or policies of an entity, whether
through ownership or voting securities, or by contract or otherwise. Landlord shall not consent
to any transfer which provides for a rental or other payment based in whole or in part on the net
income or profits derived by a user or occupant of the Premises from its use or occupancy of the
Premises (other than an amount based on a fixed percentage or percentages of receipts or sales).
A consent to one transfer shall not be deemed to be a consent to any subsequent transfer.
Notwithstanding the foregoing, Tenant may assign this Lease or sublet the Premises, or any portion
thereof, with at least fifteen (15) calendar days prior written notice

16

 

to Landlord, but without
Landlord’s consent, to any corporation which controls, is controlled by or is under common control
with Tenant, or to any corporation resulting from a merger or consolidation with Tenant, or to any
person or entity which acquires all or substantially all of the assets of Tenant’s business (or
all or substantially all of the equity interests in Tenant) as a going concern (each, a “Permitted
Transferee”). Any transfer without Landlord’s consent (excluding any transfer that does not
require Landlord’s consent pursuant to this Section 14.1), shall be void at the option of
Landlord, giving Landlord the right to exercise any or all of its rights under Section 17 hereof.
None of the foregoing shall be interpreted to preclude Tenant permitting the use or occupancy of
the Premises by representatives or employees of any entity which is then performing services
related to Tenant’s business operations in the Premises (as long as the use or occupancy of the
Premises by such representatives or employees is not otherwise a subterfuge to avoid Tenant’s
assignment and subletting obligations under this Article 14), including, but not limited to
vendors providing outsourced services, such as employee travel services or food and beverage
services at the Premises (a “Permitted Concession”).

     Notwithstanding the foregoing, as a condition to Tenant’s right to transfer to a Permitted
Transferee, (i) if the transfer is an assignment of Tenant’s entire interest in this Lease, the
Permitted Transferee shall assume, in full and in writing, the obligations of Tenant under this
Lease, and Tenant shall provide to Landlord written documentation, signed by such Permitted
Transferee, evidencing the same, (ii) if the transfer is a sublease of a portion of Tenant’s
interest in the Lease, the Permitted Transferee shall assume, to the extent applicable to the
portion of the Premises subleased, and in writing, the obligations of Tenant under this Lease, and
Tenant shall provide to Landlord written documentation, signed by Permitted Transferee, evidencing
the same, (iii) Tenant shall remain fully liable under the Lease, and (iv) the use of the Premises
shall be permitted under this Lease. Furthermore, within ten (10) days after any transfer to a
Permitted Transferee, Tenant shall provide Landlord with reasonable documentation and information,
as reasonably requested by Landlord, evidencing that the transferee is sufficiently financially
responsible to perform its obligations in connection with the proposed transfer of this Lease

     14.2 Offer to Landlord. Tenant acknowledges that the terms of this Lease, including Rent,
have been based on the understanding that Tenant shall physically occupy the Premises for the
entire Term. Therefore, upon Tenant’s request for Landlord’s consent to a transfer (if required
pursuant to Section 14.1) of all or a portion of the Premises, Landlord shall be entitled to
sublease from Tenant for Landlord’s own account the portion of the Premises proposed to be
transferred by Tenant by written notice given to Tenant within twenty (20) days of Landlord’s
receipt of such request, upon the same terms as those proposed but otherwise upon the form of this
Lease; provided that Tenant may elect to avoid such sublease by rescinding the transfer request
within twenty (20) days following receipt of Landlord’s election; provided, however, that Tenant’s
right to rescind shall be limited to once every five (5) years (i.e. should Tenant rescind a
transfer request, Tenant shall have no right to rescind again for a period of five years after the
date that Tenant rescinds the transfer request). If Landlord so subleases for its own account,
Landlord shall have the further right to transfer such portion of the Premises to any person or
entity who is not a business competitor of Tenant, and Tenant shall be relieved of any liability
with respect to such portion of the Premises so subleased by Landlord until the term of such
sublease expires or is terminated.

     14.3 Conditions. Notwithstanding the above, the following shall apply to any proposed
transfer:

          (a) No transfer shall relieve Tenant of its obligation to pay Rent and to perform all other
obligations to be performed by Tenant hereunder. The acceptance of rent by Landlord from any
person shall not be deemed to be a waiver by Landlord of any provision of this Lease or to be a
consent to any transfer.

          (b) Any consideration received by Tenant as a result of a sublease or assignment (other than
from a Permitted Transferee or pursuant to a Permitted Concession) which exceeds the total sums
which Tenant is obligated to pay Landlord under this Lease, or the prorated portion thereof if only
a portion of the Premises is transferred, shall be payable to Landlord as additional rent under
this Lease without affecting or reducing any other obligation of the Tenant hereunder.
Notwithstanding the above, Tenant shall be entitled to deduct from such excess consideration its
reasonable expenses associated with such sublease or assignment (e.g., leasing commissions and cost
of alterations, attorneys’ fees, architectural fees, engineering fees and all other similar costs
normally associated with subletting or assigning), along with a reasonable return on all amounts
contributed by Tenant to the purchase and/or installation of the Initial Tenant Improvements (in
accordance with the Work Letter) and any alterations made by Tenant to the Premises associated with
the portion of the Premises being subleased or assigned, exclusive of any Tenant Improvement
Allowance paid by Landlord (and equitably allocated to the portion of the Premises being subleased
or assigned), at the initial book value of such Initial Tenant Improvements and alterations less
depreciation and any asset write-off, as reasonably agreed upon by Landlord and Tenant. Furniture
and equipment paid for and installed in the Premises by Tenant (based on the initial book value
less depreciation) shall be subject to such reasonable return to the extent such furniture and
equipment remains with the Premises as part of such sublease or assignment. Items of repair,
replacement, or maintenance which Tenant is required to perform by law or under the terms of this
Lease and items for which Tenant is in some other manner reimbursed or compensated, shall not be
subject to such return. Tenant’s return shall be an annualized rate of return of seven percent (7%)
of all amounts so contributed by Tenant (“Tenant’s Return”). Tenant’s Return may be retained by
Tenant at any time amounts in excess of applicable Minimum Monthly Rent, Operating Expenses and any
and all other amounts payable to Landlord by Tenant hereunder (“Excess Consideration”) are paid by
a subtenant or assignee. Tenant’s deductions shall be supported by documentation provided to
Landlord upon Landlord’s request, such as invoices, purchase orders, receipts and construction
contracts, detailing the amounts actually paid by Tenant for those improvements as to which Tenant
seeks to deduct such rate of return. Notwithstanding anything to the contrary set forth above, (i)
Tenant’s Return shall accrue continuously from the date of commencement of any permitted sublease
or assignment, (ii) Tenant shall be entitled to receive 100% of all Excess Consideration until it
is reimbursed the full amount of its subleasing or assignment expenses as described above and has
received 100% of Tenant’s Return. Thereafter, Landlord shall be entitled to 92% of all Excess
Consideration.

17

 

          (c) Each transfer to which Landlord has consented shall be by an instrument in writing in a
form satisfactory to Landlord, and shall be executed by Tenant and the transferee. Tenant shall
reimburse Landlord for Landlord’s reasonable costs and attorneys’ fees incurred in conjunction
with the processing and documentation of any such request.

15.0 SUBORDINATION; ESTOPPEL CERTIFICATES

     15.1 Subordination. Landlord represents that as of the date of this Lease, the Property is
not encumbered by a ground lease or a mortgage or deed of trust to which Landlord or any
affiliates of Landlord is a party. Nevertheless, this Lease shall, unless otherwise elected by
Landlord’s first mortgagee, lender, or ground lessor, be subordinate to any ground lease,
mortgage, deed of trust, or any other hypothecation for security (collectively, a “Security
Instrument”) now or hereafter placed upon the Premises and to any and all advances made on the
security thereof and to all modifications, replacements and extensions thereof. Notwithstanding
such subordination, this Lease shall not be terminated, nor shall the rights and possession of
Tenant hereunder be disturbed if Tenant shall not be in default under the terms of this Lease, and
upon such new landlord’s request, Tenant shall attorn to the new landlord or shall enter into a
new lease for the balance of the original or extended term hereof upon the same terms and
provisions contained in this Lease. In the event of a foreclosure of any such mortgage or deed of
trust or any other action or proceeding for the enforcement thereof, or any sale thereunder, this
Lease likewise will not be terminated, nor will the rights and possession of Tenant hereunder
be disturbed if Tenant shall not then be in default under the terms of this Lease, provided that
Tenant shall, at the new owner’s request, attorn to the new owner of the Premises. Tenant agrees
to execute and deliver upon demand such further instruments or documents as may reasonably be
required by Landlord evidencing the subordination of this Lease as set forth above; provided,
however, that Tenant’s covenant to subordinate the Lease is conditioned upon each senior mortgagee
under any senior mortgage executed after the date hereof providing a commercially reasonable
subordination and nondisturbance agreement to Tenant containing the nondisturbance commitment
specified above. This Lease shall, at the election of Landlord’s first mortgagee, lender or ground
lessor, be superior to any such Security Instrument. In any event, Tenant shall execute any
documents required to effectuate the subordination of this Lease or any Security Instrument within
ten (10) business days after Tenant’s receipt of the written request. Tenant shall attorn to any
purchaser at any foreclosure sale, or to any grantee or transferee designated in any deed given in
lieu of foreclosure.

     15.2 Condition of Lease. Within ten (10) business days after Tenant receives Landlord’s
written request, Tenant shall provide a written statement acknowledging the commencement and
termination dates of this Lease, that it is in full force and effect, has not been modified (or if
it has, stating such modifications), and providing any other pertinent factual information as
Landlord reasonably requests.

     15.3 Tenant’s Failure. If Tenant fails to execute and deliver to Landlord any document
requested by Landlord pursuant to Section 15.1 and 15.2 above within the time required therein,
and thereafter, if Landlord delivers a second written notice to Tenant requesting that Tenant
execute and deliver the same to Landlord, then if Tenant fails to execute and deliver such
documents to Landlord within five (5) business days after receiving such second written notice
from Tenant, then Tenant hereby irrevocably appoints Landlord as Tenant’s attorney in fact to
execute such documents on Tenant’s behalf, and all statements made in such documents shall be
deemed true and binding upon Tenant, and Landlord’s mortgagee(s) and/or purchaser(s) may rely on
said statements. If Landlord requests more than two (2) such certificates in any one calendar
year, Landlord shall pay Tenant’s actual attorney’s fees associated with reviewing all documents
relating to such additional requests, to the extent such attorneys’ fees are reasonable, not to
exceed Five Hundred Dollars ($500.00) per request.

     15.4 Financial Statements. Tenant shall deliver to Landlord such financial statements of
Tenant and its guarantor as may be reasonably requested by Landlord for any purpose, including,
but not limited to Landlord’s efforts to finance, refinance or sell the Premises or any part
thereof (provided that Tenant shall not be required to provide audited financial statements if
unaudited financial statements are prepared in the ordinary course of Tenant or its guarantor’s
business). Landlord acknowledges that such financial information is to be kept confidential and
Landlord agrees to limit the distribution of any financial statements of Tenant or Tenant’s
guarantor to its lender(s), joint venturers, partners, and prospective purchasers, unless Tenant’s
prior consent has been obtained for further distribution. Any distribution shall be limited to the
purposes agreed to by Tenant in granting its consent to such distribution. Landlord shall require
its lender and any other distributees to maintain the confidentiality of such financial
information as a condition of its release of the information. Tenant represents and warrants that
all financial information provided by Tenant or its guarantor to Landlord on behalf of Tenant or
its guarantor prior to execution by Landlord of this Lease is true and complete and fairly
represents the actual financial condition of Tenant and its guarantor, as applicable, as of the
date of such financial information (as indicated in the financial statement), and that there has
been no material adverse change in the financial condition, statements or information provided on
behalf of Tenant or its guarantor, from the date of such financial information to and including
the date of execution of this Lease. Upon Landlord’s request, Tenant shall furnish Landlord with
Tenant and its guarantor’s most recent periodic or annual reports. As long as the common stock
(or American Depository Receipts or any other equity security) of Tenant or its guarantor (or any
affiliate consolidated with Tenant or its guarantor for financial reporting purposes) is
publicly-traded on a United States national stock exchange, and such information is available as
part of Tenant’s or its guarantor’s (as applicable) periodic filings on the SEC’s Edgar website,
and such materials are current per SEC filing requirements, then Tenant may satisfy such submittal
requirement by notifying Landlord that such information is available at the SEC website, and
indicating the company filer of the pertinent information; provided, however, that at Landlord’s
written request, Tenant must satisfy such submittal requirement by delivering a PDF copy of such
filing, via e-mail, to President: e-mail address Legal@Chamb.com. Landlord shall have the right
to change the name and e-mail address of the person identified in the preceding sentence by
delivering written notice of such name and e-mail address change to Tenant, in writing, which name
and e-mail address changes shall be effective upon delivery. Tenant agrees that any material
misrepresentation to Landlord as

18

 

to Tenant’s or its guarantor’s financial condition, or any
failure to provide financial information required to be provided by Tenant or its guarantor on
behalf of Tenant hereunder, shall constitute a default under this Lease.

16.0 SURRENDER AND HOLDOVER

     16.1 Condition at End of Term. Subject to the terms of Articles 7 and 10, at the expiration
or earlier termination of the Term, Tenant shall promptly yield up, in the same condition, order
and repair in which they are required to be kept during the Term, the Premises and all alterations
thereto, and all fixtures and equipment servicing the Building and/or the Premises, ordinary wear
and tear excepted.

     16.2 Holdover Terms. If Tenant, or any person rightfully claiming through Tenant, shall
continue to occupy the Premises after the expiration or earlier termination of the Term or any
renewal thereof, with Landlord’s written consent, such occupancy shall be deemed to be under a
month-to-month tenancy under the same terms set forth in this Lease; except that the Minimum
Monthly Rent during such continued occupancy shall be any amount which Landlord may specify in a
written notice to Tenant. Any holding over by Tenant without Landlord’s prior written consent
shall constitute a default hereunder and shall be subject to all the remedies set forth in Section
17. Notwithstanding the above, the minimum monthly rent during any holdover period, with
Landlord’s consent, shall not exceed one hundred fifty percent (150%) of the Minimum Monthly Rent
in effect during the last month of the Lease term, as it may be extended. Notwithstanding the foregoing, if Tenant, at the time the
term of this Lease expires, as well as at the time the Holdover Notice (as defined below) is
delivered to Landlord, is not in default under this Lease, then provided that Tenant provides
Landlord with written notice at least sixty (60) days (and no more than one hundred twenty (120)
days) in advance of the expiration date of this Lease stating that Tenant will be unable to
vacate the entire Premises in the condition required by the Surrender Plan on or before such
expiration date due to reasons outside of Tenant’s reasonable control or because of Tenant’s
reasonable business requirements (the “Holdover Notice”), then Landlord shall be deemed to have
consented in writing to a twenty-one (21) day holdover by Tenant after the expiration of the term
of this Lease (the “Permitted Holdover Period”), and Tenant’s holdover occupancy during such
twenty-one (21) day period shall be subject to all terms and provisions of this Lease, provided,
however, that the Minimum Monthly Rent during such Permitted Holdover Period shall be based on an
accrual of the same on a weekly basis in an amount equal to One Hundred Ten percent (110%) of the
Minimum Monthly Rent payable during the last full month of the Lease prior to the Permitted
Holdover Period.

17.0 DEFAULT AND REMEDIES UPON DEFAULT

     17.1 Events. The occurrence of any of the following shall constitute a material default and
breach of this lease by Tenant:

          (a) Any failure by Tenant to pay Rent or to make any other payment required to be made by
Tenant hereunder when due (each occurrence thereof being referred to herein as a “Rent Default”);
provided, however, that Landlord shall exercise no remedies provided in Sections 17.2 and 17.3
unless Tenant fails to cure such Rent Default within ten (10) calendar days after Landlord gives
Tenant written notice of such Rent Default. Notwithstanding the foregoing, should Landlord
deliver to Tenant written notice of a Rent Default, then with respect to any subsequent Rent
Default occurring within one (1) year after the previously noticed Rent Default, Tenant will only
have five (5) calendar days after Landlord gives Tenant written notice of such subsequent Rent
Default to cure the same, provided, however, that the subsequent notice of a Rent Default within
specifies that Tenant only has five (5) calendar days to cure such Rent Default (should such
notice fail to specify that Tenant only has five (5) calendar days to cure such Rent Default, then
Tenant shall have ten (10) calendar days to cure such Rent Default);

          (b) A failure by Tenant to observe and perform any other provision of this Lease (each
occurrence thereof being referred to herein as a “Non-Rent Default”), where such failure continues
for thirty (30) calendar days after written notice thereof by Landlord to Tenant; provided,
however, that if the default cannot reasonably be cured within thirty (30) calendar days, Tenant
shall not be deemed to be in default if Tenant shall, within such thirty (30) calendar day period,
commence to cure and thereafter diligently prosecute the same to completion;

          (c) With respect to Tenant (or if Tenant is a limited liability company or partnership, any
member of or partner in Tenant) or any guarantor of Tenant’s obligations under this Lease
(collectively, with Tenant, a “Tenant Party”), either (1) the appointment of a receiver (except a
receiver appointed at Landlord’s request) to take possession of all or substantially all of the
assets of any Tenant Party, or (2) a general assignment by any Tenant Party for the benefit of
creditors, or (3) any action taken by any Tenant Party or by any other person against any Tenant
Party under any insolvency or bankruptcy act. In the event any of these actions has not been
withdrawn or dismissed within sixty (60) calendar days of the date of filing, Landlord may, at its
option, declare this Lease terminated and forfeited by Tenant in a written notice to Tenant, and
Landlord shall be entitled to immediate possession of the Premises; provided, that Tenant shall not
have such cure right with respect to any of such actions instituted, consented to or taken
voluntarily by Tenant.

     Tenant agrees that any notice given by Landlord pursuant to this Section 17.1(c) which is
served in compliance with Section 21 of this Lease shall be adequate notice for the purpose of
Landlord’s exercise of the remedies specified in Section 17.2 or any other remedies provided by
law. Therefore, any statutory provision relating to the manner of giving notice shall not be
applicable to this Lease.

     17.2 Landlord’s Rights. In the event of any material default by Tenant (as outlined above),
Landlord, in addition to all other remedies provided by law or in equity, shall have the immediate
option to terminate this Lease and all rights of Tenant hereunder by giving written notice of such
intention to terminate. If Landlord shall

19

 

elect to so terminate this Lease, Landlord may recover
from Tenant all damages suffered by Landlord as a result of Tenant’s material default, including,
but not limited to, the worth at the time of award (computed in accordance with paragraph (3) of
Subdivision (a) of Section 1951.2 of the California Civil Code) of the amount by which the unpaid
Rent for the balance of the Term after the time of award exceeds the amount of such Rent loss that
Tenant proves could be reasonably avoided. If Landlord does not elect to terminate this Lease,
Landlord shall have the remedy described in Section 1951.4 of the California Civil Code (Landlord
may continue the Lease in effect after Tenant’s breach and abandonment and recover Rent as it
becomes due, if Tenant has the right to sublet or assign, subject only to reasonable limitations).
In addition, if Landlord elects to continue the Lease in effect, Landlord may relet the Premises
or any part thereof for such term and at such rent and upon such other terms and conditions as
Landlord in its reasonable discretion may deem advisable with the right to make alterations and
repairs to the Premises. Any Rent received by Landlord from a reletting shall be applied to the
payment of (a) any indebtedness other than Rent due hereunder; (b) the cost of such reletting; (c)
the cost of any alterations and repairs to the Premises; (d) Rent due and unpaid hereunder; and
(e) the residue, if any, shall be held by Landlord and applied in payment of future Rent as the
same may become due and payable hereunder. If the Rent received from such reletting is less than
the Rent payable by Tenant, then Tenant shall pay such deficiency to Landlord immediately upon
demand therefore by Landlord. Such deficiency shall be calculated and paid monthly. Tenant shall
also pay to Landlord as soon as ascertained, any expenses incurred by Landlord that are not
covered by the Rent received from such reletting.

     17.3 Late Charge & Interest. Tenant shall pay a one time administrative fee (“Late Fee”) for
any Rent that is not paid within five (5) days after the date when due in an amount equal to the
greater of $100 or three percent (3%) of the amount due. Such late fee shall be due and payable
when incurred. In addition, all Rent (including all Late Fees) that are not paid when due shall
bear interest at the rate of ten percent (10%) per annum, or the maximum legal rate, whichever is
less. Landlord and Tenant agree that the Late Fee and interest set forth in this Section 17.3
represents a reasonable estimate of Landlord’s loss of the use of the money owed, and the costs
and expenses incurred by Landlord as a result of the non payment and is fair compensation to
Landlord for the loss suffered from Tenant’s nonpayment. Acceptance of any interest and/or late
payment penalty shall not constitute a waiver of Tenant’s default with respect to such nonpayment
by Tenant nor prevent Landlord from exercising any other rights or remedies available to Landlord
under this Lease. Notwithstanding the foregoing, after the second late payment by Tenant during
any consecutive twelve month period, Landlord may require Tenant make advance payments of Rent on
a quarterly basis or by wire transfer for the twelve (12) month period of the Lease Term following
such second late payment.

     17.4 Termination. No re-entry or taking possession of the Building or the Premises or any
other action under this Section shall be construed as an election to terminate this Lease unless a
written notice of such intention is given to Tenant or unless the termination thereof is decreed
by a Court of competent jurisdiction. Notwithstanding any reletting without termination by
Landlord because of any material default by Tenant, Landlord may at any time after such reletting
elect to terminate this Lease for any such material default.

     17.5 No Waiver. No waiver by either party of any breach by the other party shall be a waiver
of any subsequent breach, nor shall any forbearance by one party to seek a remedy for any breach
by the other party constitute a waiver by the non-breaching party of any rights and remedies with
respect to such or any subsequent breach. Efforts by either party to mitigate the damages caused
by the other party’s default shall not constitute a waiver by the non-breaching party to recover
damages hereunder.

     17.6 Cure of Tenant’s Default. Except as otherwise provided in Section 6.4.4, should Tenant
fail to perform any obligation imposed by this Lease, Landlord may perform or contract for the
performance of Tenant’s obligation after having given Tenant reasonable notice of the failure(s)
and a reasonable opportunity, which in no case shall exceed ten (10) calendar days, to remedy the
failure, and Tenant shall pay Landlord for all costs incurred by Landlord in connection therewith.
The exercise of one right or remedy by Landlord shall not in any way impair its right to any
other right or remedy. Should Tenant consist of more than one person or entity, they shall be
jointly and severally liable on this Lease.

     17.7 Waiver. Tenant waives (for itself and all persons claiming under Tenant) any right of
redemption or reinstatement of Tenant under Civil Code Sections 1179 and 3275 in the event that
Tenant is dispossessed from the Premises for any reason.

     17.8 Accord and Satisfaction. No payment by Tenant or receipt by Landlord of a lesser amount
than the amounts owed to Landlord in this Lease shall be deemed to be other than on account of the
earliest due amounts owed, nor shall any endorsement or statement on any check or letter
accompanying any check or payment be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord’s right to recover the balance of the Rent or
pursue any other remedy provided for in this Lease. In connection with the foregoing, Landlord
shall have the absolute right in its sole discretion to apply any payment received from Tenant to
any account or other payment of Tenant then not current and due or delinquent under the terms of
this Lease.

18.0 LIABILITY OF LANDLORD

     18.1 Landlord’s Right to Cure; Limitations on Liability. In the event of any actual or
alleged failure, breach or default by Landlord hereunder pertaining to the Building or the
Premises, Tenant shall give Landlord written notice thereof and Landlord shall not be deemed in
default unless it fails to diligently commence to cure such default within thirty (30) calendar
days after its receipt of such notice. Landlord’s (which term includes Landlord’s partners,
co-venturers, co-tenants, officers, directors, employees, agents (including any property manager
for the Premises), or representatives, all of whom have the authority to act on Landlord’s behalf)

20

 

liability to Tenant for any such default shall be limited to its ownership interest in the
Premises or the proceeds of a public sale of such interest pursuant to foreclosure of a judgment
against Landlord, plus any insurance proceeds actually received by Landlord with reference to the
Premises and not expended on the Premises or to pay claims covered by such proceeds. Landlord
shall not be liable for any deficiency beyond its interest in the Premises and the amount of such
insurance proceeds.

     18.2 Release or Transfer; Successor Liability. If Landlord shall transfer its interest in
the Building or the Premises, then from and after the effective date of the transfer, Landlord
shall be released from all obligations under this Lease, except for those already accrued. If
Landlord transfers the Security Deposit to the transferee, then upon the written acceptance of
Landlord’s obligations under this Lease regarding the return thereof to Tenant by said transferee,
Landlord shall be discharged from any further liability in reference to such Security Deposit.

19.0 JUDICIAL REFERENCE/ ATTORNEY FEES

     19.1 JUDICIAL REFERENCE. EXCEPT FOR THOSE CLAIMS AND/OR ACTIONS THAT ARE SUBJECT TO
RESOLUTION PURSUANT TO STATUTORY UNLAWFUL DETAINER PROVISIONS SET FORTH IN THE CALIFORNIA CIVIL
CODE AND CODE OF CIVIL PROCEDURE, WHICH CLAIMS AND/OR ACTIONS LANDLORD SHALL HAVE THE RIGHT TO
PURSUE IN ANY MANNER PERMITTED BY LAW, ANY CONTROVERSY, BREACH OR DISPUTE ARISING OUT OF THIS
LEASE, OR RELATING TO THE INTERPRETATION OF ANY TERM OR PROVISION OF THIS LEASE SHALL BE HEARD BY A REFEREE
PURSUANT TO THE PROVISION OF THE CALIFORNIA CODE OF CIVIL PROCEDURE, SECTIONS 638-645.1 INCLUSIVE.
THE PARTIES SHALL PROMPTLY AND DILIGENTLY COOPERATE WITH ONE ANOTHER AND THE REFEREE, AND SHALL
PERFORM SUCH ACTS AS MAY BE NECESSARY TO OBTAIN PROMPT AND EXPEDITIOUS RESOLUTION OF THE DISPUTE
OR CONTROVERSY IN ACCORDANCE WITH THE TERMS HEREOF. THE PARTIES AGREE THAT THE REFEREE SHALL HAVE
THE POWER TO DECIDE ALL ISSUES OF FACT AND LAW AND REPORT HIS/HER DECISION THEREON, AND TO ISSUE
ALL LEGAL AND EQUITABLE RELIEF APPROPRIATE UNDER THE CIRCUMSTANCES BEFORE HIM/HER. THE PARTIES
SHALL AGREE UPON A SINGLE REFEREE WHO SHALL BE A RETIRED JUDGE OF A CALIFORNIA SUPERIOR COURT WHO
SHALL THEN TRY ALL ISSUES, WHETHER OF FACT OR LAW, AND REPORT A FINDING AND JUDGMENT THEREON. IF
THE PARTIES ARE UNABLE TO AGREE UPON A REFEREE WITHIN TEN (10) DAYS OF A WRITTEN REQUEST TO DO SO
BY ANY PARTY, THEN ANY PARTY MAY THEREAFTER SEEK TO HAVE A REFEREE APPOINTED PURSUANT TO THE
CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 638 AND 640.

BY PLACING THEIR INITIALS BELOW, THE PARTIES AGREE TO RESOLVE ALL DISPUTES OF LAW AND FACT THAT
ARE SUBJECT TO THE JUDICIAL REFERENCE AS SET FORTH HEREIN BY A GENERAL REFERENCE TO A RETIRED
CALIFORNIA SUPERIOR COURT JUDGE.

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

LANDLORD

	 	 	 	 

TENANT
	 	 

     19.2 Venue. Except for those disputes between Landlord and Tenant that are subject to
judicial reference, which judicial reference proceedings shall take place in the County where the
Premises are located, The parties to this Lease consent and agree that jurisdiction, venue and
forum shall be had only in a state or federal court located in the County of San Mateo,
California, with respect to any action which, in whole or in part, arises under or relates to this
Lease.

     19.3 Attorney Fees. The prevailing party in any dispute between Landlord and Tenant that is
subject to the statutory unlawful detainer provisions specified in the California Code of Civil
Procedure and/or California Civil Code shall be entitled to recover from the non-prevailing party,
costs of suit and reasonable attorneys’ fees.

20.0 INTERPRETATION

     20.1 Captions. The captions in this Lease are for convenience only and are not a part of
this Lease and do not in any way define, limit, describe or amplify the terms and provisions of
this Lease or the scope or intent thereof.

     20.2 Entire Agreement. This Lease represents the entire agreement between the parties hereto
and there are no collateral or oral agreements or understandings between Landlord and Tenant with
respect to the Premises. No right, easements or licenses are acquired in the Premises or any land
adjacent to the Premises by Tenant by implication or otherwise except as expressly set forth in
the provisions of this Lease. Tenant agrees to make such changes to this Lease as are required by
any mortgagee, provided such changes do not substantially affect Tenant’s rights or obligations
hereunder. This Lease shall not be modified in any manner except by an instrument in writing
executed by the parties. The masculine (or neuter) pronoun and the singular number shall include
the masculine, feminine and neuter genders and the singular and plural number.

     20.3 Exhibits. Each writing or plan referred to herein as being attached hereto as an
Exhibit or otherwise designated herein as an Exhibit hereto is hereby made a part hereof.

     20.4 Severability; Governing Law. If any provision of this Lease shall be declared
unenforceable in any respect, such unenforceability shall not affect any other provision of this
Lease, and each such provision shall be deemed to be modified, if possible, in such a manner as to
render it enforceable and to preserve to the extent

21

 

possible the intent of the parties as set
forth herein. This Lease shall be construed and enforced in accordance with the laws of the State
of California.

     20.5 Authority. If Tenant is a corporation, partnership or any other form of business
association or entity, each individual executing this Lease on behalf of Tenant represents and
warrants (in his/her representative capacity only, and without personal liability) that he/she is
duly authorized to execute and deliver this Lease on behalf of said entity in accordance with its
corporate bylaws, statement of partnership, certificate of limited partnership or other
appropriate organizational documents, as the case may be, and that this Lease is binding upon said
entity in accordance with its terms. At the time of execution of this Lease, Tenant shall provide
Landlord with corporate resolutions or other appropriate written authorization, in a form
reasonably acceptable to Landlord, authorizing the execution, delivery and performance of this
Lease. The failure of Tenant to deliver the same to Landlord within five (5) business days of
Landlord’s request therefor shall be deemed a default under this Lease. (If more than one party
comprises Tenant, then the obligations of such parties hereunder shall be joint and several.)

     20.6 Rules and Regulations. Landlord shall have the right to establish, modify and enforce
reasonable rules and regulations (“Rules and Regulations”) with respect to the care and orderly
management of the Premises and Tenant shall abide by the same. Tenant acknowledges the Rules and
Regulations expressly set forth in Exhibit C hereto do not deprive Tenant of any material
rights under this Lease. Whenever the Rules and Regulations conflict with this Lease, this Lease
shall control and be deemed the prevailing document for purposes of resolving the conflict.

21.0 NOTICES

     21.1 Notices of Default. All notices of default hereunder shall be in writing and shall only
by made by either (a) personal delivery, in which case, such notice shall be deemed to have been
received on the date of delivery, (b) by certified mail, postage prepaid, return receipt
requested, in which case such notice is effective on receipt if delivery is confirmed by a return
receipt, or (c) by a professional courier company with charges prepaid or charged to the sender’s
account, in which case notice is effective on delivery if delivery is confirmed by the delivery
service. Notices of default may not be given by facsimile or by electronic mail. If a
representative is not generally available during normal business hours to accept delivery or
receipt of a notice, then a notice of default or other notice may be sent by first class mail to
the last address of the recipient known to the party giving the notice, in which case notice is
effective on delivery or leaving such notice at such last known address.

     21.2 Notices for Other Purposes. Except as otherwise expressly set forth in this Lease, all
notices or other communications under this Lease by either party to the other may be served and
delivered (a) in the manner set forth in Section 21.1 above, or (b) by facsimile, with a copy via
e-mail, provided receipt of confirmation of transmission thereof is obtained (in which case, such
notice shall be deemed to have been received on receipt of confirmation of both transmissions).

     21.3 General Provisions Regarding Notices. The Landlord’s and Tenant’s addresses for written
notices required to be given hereunder shall be the addresses set forth in Section 1.2 of this
Lease, or at such other place designated by advance written notice delivered in accordance with
the foregoing. Any correctly addressed notice that is refused, unclaimed, or undeliverable
because of an act or omission of the party to be notified shall be considered to be effective as
of the first date that the notice was refused, unclaimed or considered undeliverable by the
courier service, messenger or postal authority. If a notice is received on a Saturday, Sunday or
legal holiday, or after 5:00 p.m. (and before 12:00 a.m.), it shall be deemed received on the next
business day.

22.0 LETTER OF CREDIT

     22.1 Requirements. Within fifteen (15) days following Tenant’s receipt of written
notice from Landlord that Landlord has received all permits required for construction of the
Landlord’s Work, Tenant shall deliver to Landlord, as protection for the full and faithful
performance by Tenant of all of its obligations under this Lease and for all losses and damages
Landlord may suffer (or that Landlord reasonably estimates it may suffer) as a result of any
breach or default by Tenant under this Lease, an irrevocable and unconditional negotiable standby
Letter of Credit (“Letter of Credit”), in the form attached hereto as Exhibit F, or in
such other form as is reasonably acceptable to Landlord, payable at an office in the San Francisco
Bay Area, California, running in favor of Landlord and issued by a solvent, nationally recognized
bank with a long term rating of BBB or higher, under the supervision of the Superintendent of
Banks of the State of California, or a national banking association (an “Acceptable Issuing
Bank”), in the amount of Six Million Dollars ($6,000,000) (the “Letter of Credit Amount”). Tenant
shall pay all expenses, points, or fees incurred by Tenant in obtaining the Letter of Credit. The
Letter of Credit shall (1) be “callable” at sight, irrevocable, and unconditional; (2) be
maintained in effect, whether through renewal or extension, for the period from the Lease
Commencement Date and continuing until the date (the “Letter of Credit Expiration Date”) that is
one hundred twenty (120) days after the expiration of the Term, and will either be automatically
extended upon any extension of the initial Term or Tenant shall deliver a new Letter of Credit or
certificate of renewal or extension to Landlord at least forty-five (45) days before the
expiration of the Letter of Credit then held by Landlord, without any action whatsoever on the
part of Landlord; (3) be fully assignable by Landlord, its successors, and assignees of its
interest in the Premises; (4) permit partial draws and multiple presentations and drawings; and
(5) be otherwise subject to the Uniform Customs and Practices for Documentary Credits (1993-Rev),
International Chamber of Commerce Publication #500, or the International Standby Practices-ISP 98,
International Chamber of Commerce Publication #590. In addition, the form and terms of the Letter
of Credit and the bank issuing the same (the “Bank”) shall be subject to Landlord’s prior
approval, which approval shall not be withheld by Landlord if the proposed Bank is an Acceptable
Issuing Bank. Landlord, or its then managing agent, shall have the right to draw down an amount
up to the face amount of the Letter of Credit if any of the following shall have occurred or be
applicable: (a) Landlord certifies that such amount is due to Landlord under

22

 

the terms and
conditions of this Lease, and that Tenant is in default beyond all cure periods applicable
thereto, provided that if Landlord is prevented from delivering a notice of default to Tenant for
any reason, including, without limitation, because Tenant has filed a voluntary petition, or an
involuntary petition has been filed against Tenant, under the Bankruptcy Code (hereinafter
defined), then no such notice and cure period shall be required; (b) Tenant or any guarantor of
Tenant’s obligations under this Lease has filed a voluntary petition under any chapter of the U.S.
Bankruptcy Code or any similar state law (collectively, the “Bankruptcy Code”); (c) Tenant or any
guarantor of Tenant’s obligations under this Lease has assigned any or all of its assets to
creditors in accordance with any federal or state laws; (d) an involuntary petition has been filed
against Tenant or any guarantor of Tenant’s obligations under this Lease under any chapter of the
Bankruptcy Code, which petition is not dismissed within sixty (60) days after the date it is
filed; provided, however, that if Tenant is still operating its business in the Premises and this
Lease has not been terminated, Landlord may draw upon the Letter of Credit only to the extent such
amount is due Landlord under the terms of this Lease or the guaranty of this Lease; or (e) the
Bank has notified Landlord that the Letter of Credit will not be renewed or extended through the
Letter of Credit Expiration Date. The Bank will honor the Letter of Credit regardless of whether
Tenant disputes Landlord’s right to draw on the Letter of Credit.

     22.2 Transfers. The Letter of Credit shall also provide that Landlord, its successors,
and assigns, may, at any time and without notice to Tenant and without first obtaining Tenant’s
consent, transfer (one or more times) all or any portion of its interest in and to the Letter of
Credit to another party, person, or entity, provided such transferee is the assignee of the
Landlord’s rights and interests in and to this Lease, or to any lender providing financing to
Landlord. In the event of a transfer of Landlord’s interest in the Building, Landlord shall
transfer the Letter of Credit, in whole or in part, to the transferee and Landlord shall then (provided
such transferee assumes all of Landlord’s obligations under this Lease), be released by Tenant from
all liability therefor, and it is agreed that the provisions of this Section shall apply to every
transfer or assignment of the whole or any portion of the Letter of Credit to a new landlord. In
connection with any such transfer of the Letter of Credit by Landlord, Tenant shall execute and
submit to the Bank such applications, documents, and instruments as may be necessary to effectuate
such transfer, and Landlord shall be responsible for paying the Bank’s transfer and processing fees
in connection with any such transfer.

     22.3 Restoration. If, as a result of any drawing by Landlord on the Letter of Credit,
the amount of the Letter of Credit shall be less than the Letter of Credit Amount, Tenant shall,
within ten (10) business days after the drawdown by Landlord, take such actions as are required to
restore the Letter of Credit Amount as security for Tenant’s obligations under this Lease, which
may include, but is not limited to, providing Landlord with additional letter(s) of credit in an
amount equal to the deficiency, provided such additional letter(s) of credit comply with the
applicable requirements of the this Section 22. If Tenant fails to comply with this requirement,
such failure shall be deemed a Rent Default under Section 17.1(a) of this Lease, provided that if
Landlord is prevented from delivering a notice of default to Tenant for any reason, including,
without limitation, because Tenant has filed a voluntary petition, or an involuntary petition has
been filed against Tenant, under the Bankruptcy Code, then no such notice of default and cure
period shall be required for a Rent Default under Section 17.1(a) of this Lease.

     22.4 Renewals. Tenant covenants and warrants that it will neither assign nor encumber
the Letter of Credit or any part of it and that neither Landlord nor its successors or assigns will
be bound by any such assignment, encumbrance, attempted assignment, or attempted encumbrance.
Without limiting the generality of the foregoing, if the Letter of Credit expires earlier than the
Letter of Credit Expiration Date, Landlord will accept a renewal of the letter of credit (such
renewal letter of credit to be in effect and delivered to Landlord, as applicable, not later than
forty-five (45) days before the expiration of the Letter of Credit), which shall be irrevocable and
automatically renewable as required in section 22.1 through the Letter of Credit Expiration Date on
the same terms as the expiring Letter of Credit or such other terms as may be acceptable to
Landlord in its sole discretion. However, if the Letter of Credit is not timely renewed, or if
Tenant fails to maintain the Letter of Credit in the amount and in accordance with the terms set
forth in section 22.1, Landlord shall have the right to present the Letter of Credit to the Bank in
accordance with the terms of section 22.1, and the proceeds of the Letter of Credit may be applied
by Landlord against any Rent payable by Tenant under this Lease that is not paid when due and to
pay for all losses and damages that Landlord has suffered or that Landlord reasonably estimates
that it will suffer as a result of any breach or default by Tenant under this Lease. Any unused
proceeds shall be deemed held by Landlord as security in accordance with Applicable Laws, but need
not be segregated from Landlord’s other assets. Landlord agrees to pay to Tenant within thirty
(30) days after the Letter of Credit Expiration Date the amount of any proceeds of the Letter of
Credit received by Landlord and not applied against any Rent payable by Tenant under this Lease
that was not paid when due or used to pay for any losses and damages suffered by Landlord (or
reasonably estimated by Landlord that it will suffer) as a result of any breach or default by
Tenant under this Lease; provided, however, that if before the Letter of Credit Expiration Date a
voluntary petition is filed by Tenant, or an involuntary petition is filed against Tenant by any of
Tenant’s creditors, under the Bankruptcy Code, then Landlord shall not be obligated to make such
payment in the amount of the unused Letter of Credit proceeds until either all preference issues
relating to payments under this Lease have been resolved in such bankruptcy or reorganization case
or such bankruptcy or reorganization case has been dismissed.

     22.5 Draws. Tenant acknowledges and agrees that Landlord is entering into this Lease
in material reliance on the ability of Landlord to draw on the Letter of Credit on the occurrence
of any breach or default on the part of Tenant under this Lease. If Tenant shall breach any
provision of this Lease or otherwise be in default under this Lease, Landlord may, but without
obligation to do so, and without notice to Tenant, draw on the Letter of Credit, in part or in
whole, to cure any breach or default of Tenant and to compensate Landlord for any and all damages
of any kind or nature sustained or which Landlord reasonably estimates that it will sustain
resulting from Tenant’s breach or default, including any damages that accrue upon termination of
the Lease under the Lease and/or Section 1951.2 of the California Civil Code or any similar
provision. The use, application, or retention of any proceeds of the Letter of Credit, or any
portion of it, by Landlord shall not prevent Landlord from exercising any

23

 

other right or remedy provided by this Lease or by any Applicable Law, it being intended that Landlord shall not first be
required to proceed against the Letter of Credit, and shall not operate as a limitation on any
recovery to which Landlord may otherwise be entitled. Tenant agrees not to interfere in any way
with payment to Landlord of the proceeds of the Letter of Credit, following a draw properly made by
Landlord of any portion of the Letter of Credit. No condition or term of this Lease shall be
deemed to render the Letter of Credit conditional to justify the issuer of the Letter of Credit in
failing to honor a drawing on such Letter of Credit in a timely manner. Tenant agrees and
acknowledges that (1) the Letter of Credit constitutes a separate and independent contract between
Landlord and the Bank; (2) Tenant is not a third party beneficiary of such contract; (3) Tenant has
no property interest whatsoever in the Letter of Credit; and (4) if Tenant becomes a debtor under
any chapter of the Bankruptcy Code, neither Tenant, any trustee, nor Tenant’s bankruptcy estate
shall have any right to restrict or limit Landlord’s claim or rights to the Letter of Credit by
application of Section 502(b)(6) of the U.S. Bankruptcy Code or otherwise.

     22.6 Replacement. Tenant may, from time to time, replace any existing Letter of Credit
with a new Letter of Credit if the new Letter of Credit:

          (a) Becomes effective at least 30 days before expiration of the Letter of Credit that it
replaces;

          (b) Is in the applicable Letter of Credit Amount;

          (c) Is issued by an Acceptable Issuing Bank or a Bank otherwise acceptable to Landlord; and

          (d) Otherwise complies with the requirements of Section 22 and all subsections thereof.

     22.7 Not a Security Deposit. Landlord and Tenant acknowledge and agree that in no
event or circumstance shall the Letter of Credit or any renewal of it or any proceeds applied by
Landlord as provided in this Lease be (1) deemed to be or treated as a “security deposit” within
the meaning of California Civil Code Section 1950.7, (2) subject to the terms of Section 1950.7, or
(3) intended to serve as a “security deposit” within the meaning of Section 1950.7. Landlord and
Tenant (1) agree that Section 1950.7 and any and all other laws, rules, and regulations applicable
to security deposits in the commercial context (“Security Deposit Laws”) shall have no
applicability or relevancy to the Letter of Credit, and (2) waive any and all rights, duties, and
obligations either party may now or in the future have relating to or arising from the Security
Deposit Laws.

23.0 BROKERS

     23.1 Indemnity. Landlord and Tenant hereby warrant to each other that they have had no
dealings with any real estate broker or agent in connection with the negotiation of this Lease,
and that they know of no real estate broker or agent who is entitled to a commission in connection
with this Lease. Each party agrees to indemnify and defend the other party against and hold the
other party harmless from any and all claims, demands, losses, liabilities, lawsuits, judgments,
costs and expenses (including without limitation reasonable attorneys’ fees) with respect to any
leasing commission or equivalent compensation alleged to be owing on account of any dealings with
any real estate broker or agent occurring by, through, or under the indemnifying party.

24.0 SIGNAGE

     24.1 Identification Sign. Tenant shall, subject to Landlord’s written approval, which
approval shall not be unreasonably withheld, conditioned or delayed, be entitled to (a) all
Building signage permitted by Applicable Laws, including but not limited to one or more
building-top parapet identification signs (in locations reasonably agreed to by Landlord), and (b)
other exterior signs in and about the Premises permitted by Applicable Laws; provided, however,
that with respect to all such signage referenced in clauses (a) and (b) above, (i) Landlord
approves the design and location of such signage, which approval shall not be unreasonably
withheld, conditioned or delayed, (ii) the City of South San Francisco approves the same, if
required by law, (iii) such signage is in keeping with the master signage program for the Gateway
Business Park, and (iv) such signage does not affect the parking at the Premises. Moreover,
Tenant shall have the use of the monument sign being installed on the Premises by Landlord as part
of Landlord’s Work, provided, however that the requirements of clauses (i) through (iv) above are
satisfied. The cost of all of Tenant’s signage, its installation, maintenance and ultimate
removal expense shall be at Tenant’s sole expense. At the expiration or earlier termination of
this Lease, Tenant shall, at its sole cost, cause its signage to be removed and shall restore the
area upon which such signage was affixed to the condition existing prior to installation, normal
wear and tear excepted. Except as otherwise expressly set forth to the contrary in this Section
24, the design, installation, and construction of all signs shall be subject to the terms and
provisions of this Lease (and in the Work Letter, if applicable) governing alterations and/or the
Initial Tenant Improvements, as applicable.

25.0 PARKING

     25.1 Parking. Tenant shall be provided with the exclusive right to use the parking spaces of
the Premises, which shall be not less than the number of parking spaces required by the local
governmental authority; provided, however, that if the number of parking spaces on the Premises are
reduced below such minimum requirement as a result of changes beyond Landlord’s reasonable control,
Landlord may satisfy the parking requirements through non-exclusive parking spaces on properties
adjacent to the Premises. The parking stalls and the location of the same at the Premises will be
reflected in Plans (as defined in Section 1.7.3 of Exhibit B) All parking spaces shall be
available for Tenant’s use seven (7) days per week, and twenty-four (24) hours per day, subject to
(a) Landlord’s exercise of its rights and obligations specified herein, (b) the terms of this
Lease, including but not limited to the Rules and Regulations attached as Exhibit C, and (c) all
matters of record as of the date of this

24

 

Lease. Tenant shall be entitled, at its sole cost and
expense, to cause an access control system (card key activated or otherwise) to be installed at the
point of entry into the garage parking areas (the “Access Control System”).

26.0 MEMORANDUM OF LEASE

     26.1 Memorandum of Lease. Upon the request of either party, the other party shall execute and
acknowledge and deliver to the requesting party a Memorandum of Lease in form and substance
reasonably satisfactory to the requesting party. The requesting party shall have the right to
record the Memorandum of Lease in the Official Records of San Mateo County. If such Memorandum of
Lease is recorded, Tenant agrees to execute and acknowledge a quitclaim deed in favor of Landlord
at the expiration or earlier termination of this Lease.

27.0 CROSS-DEFAULT

     27.1 Cross-Default. So long as the Landlord under this Lease and the landlord under the
following leases including the 180 Oyster Point Lease dated as of June 1, 2007 (the “180 OP
Lease”), the 700 Gateway Boulevard Lease dated April 14, 1997 (the “700 Lease”), the 750/800/1000
Gateway Boulevard Lease dated April 14, 1997 (the “750/800/1000 Lease”), the 750G Gateway Boulevard
Lease dated September 21, 2004 (the “750G Lease”), or the 750R Gateway Boulevard Lease dated
September 29, 2006 (the “750R Lease”) are affiliated with one another, any default by Tenant under
Section 17.1(a) or Section 17.1(c) , or any material default by Tenant under Section 17.1(b) that
is not being diligently contested in good faith by Tenant, of the 180 OP Lease, or any default by
Tenant under Section 17.1(a) or 17.1(d), or any material default by Tenant under Section 17.1(c)
that is not being diligently contested in good faith by Tenant, of the 700 Lease, the 750/800/1000
Lease, the 750G Lease, or the 750R Lease, (subject in each case to all applicable cure periods),
shall, at Landlord’s election, constitute a default under
this Lease. Any default by Tenant under Section 17.1(a) or 17.1(c), or any material default by
Tenant under Section 17.1(b) that is not being diligently contested in good faith by Tenant, of
this Lease (in each case, subject to all applicable cure periods) shall, at the election of the
landlord under the 180 OP Lease, the 700 Lease, the 750/800/1000 Lease, the 750G Lease, or the 750R
Lease, constitute a default by Tenant under the 180 OP Lease, the 700 Lease, the 750/800/1000
Lease, the 750G Lease, or the 750R Lease. For purposes hereof, Landlord and the landlord of the 180
OP Lease, the 700 Lease, the 750/800/1000 Lease, the 750G Lease, or the 750R Lease shall be deemed
“affiliated” so long as all such entities are controlled by, or under common control with, Stephen
W. Chamberlin and/or Stephen Chamberlin Associates, Inc. or any corporate successor to Stephen
Chamberlin Associates, Inc. that is under the control of Stephen W. Chamberlin.

28.0 LANDLORD’S INDEMNITY

     28.1 Landlord’s Indemnity. Landlord shall indemnify and hold Tenant harmless against all
claims, actions, damages and liability (i) caused by any release of hazardous substances requiring
remediation caused by Landlord on the Premises or any real property in the vicinity of the Premises
owned or managed by Landlord or any person or entity affiliated with Landlord; or (ii) which arise
as a result of hazardous substances existing upon the Premises or any real property in the vicinity
of the Premises owned or managed by Landlord or any person or entity affiliated with Landlord prior
to the execution of this Lease. The foregoing indemnity shall not apply to any contamination or
release or any claims, actions, damages or liability relating to hazardous substances arising from
acts or occurrences caused, wholly or in part, permitted or subject to the control of Tenant, its
agents, employees, contractors, sublessees, assignees, licensees or invitees. This paragraph shall
survive the expiration or earlier termination of this Lease.

29.0 TRANSPORTATION DEMAND MANAGEMENT PROGRAM REQUIREMENTS

     29.1 Transportation Demand Management Program Requirements. Tenant shall comply with the
Transportation Demand Management Program Requirements that are attached hereto as Exhibit E, and
are expressly incorporated herein. Any penalties incurred by Tenant’s non-compliance shall be paid
by Tenant.

30.0 OPTION TO RENEW

     30.1 Grant of Option. Landlord hereby grants to Tenant an option (the “Renewal Option”) to
extend this Lease for an additional term of five (5) years (the “Renewal Term”) commencing upon the
expiration of the original Term. However, such Renewal Option shall be null and void, at
Landlord’s sole and absolute discretion, if Tenant is in material default beyond all applicable
notice and cure periods under this Lease at the time the Renewal Option is exercised and at any
time from Tenant’s exercise of the Renewal Option to the commencement date of the Renewal Term.
The Renewal Option must be exercised by written notice to Landlord not later than two hundred
seventy (270) calendar days prior to the expiration of the original Term. The Minimum Monthly Rent
for the Renewal Term shall be equal to the Fair Market Rent for the Premises (determined as
provided below), but in no event shall the Minimum Monthly Rent during any year of the Renewal Term
be less than the Minimum Monthly Rent payable during the last full month of the original Term. The
Renewal Option shall be terminated and of no further force and effect if, at any time provided
herein for exercise of the Renewal Option by Tenant, any federal, state, or local law or regulation
invalidates the Renewal Option. Landlord shall have no responsibility for payment of any brokerage
commission with respect to this Renewal Option, and Tenant shall indemnify, defend and hold
Landlord harmless from and against any claims (and any expenses, including attorney’s fees,
incurred by Landlord in connection therewith) made by any broker, agent or finder claiming the
right to a fee or compensation on account of dealings with Tenant in connection therewith. The
Renewal Option described in this Section 30.1 shall be personal to Tenant (or its Permitted
Transferee) and may not be exercised or be assigned voluntarily or involuntarily by or to any
person or entity other than the original Tenant under this Lease (or its Permitted Transferee) and
shall be exercisable by the original Tenant (or its Permitted Transferee) only if the original
Tenant under this Lease (or its Permitted Transferee) is then in occupancy of the Premises and the
Lease is then in full force and effect.

25

 

     30.2 Determination of Fair Market Rent. After Landlord receives written notice from Tenant of
the exercise of the Renewal Option, Landlord and Tenant shall have thirty (30) days in which to
agree on the initial Fair Market Rent for such Renewal Term. In the event that Landlord and Tenant
cannot mutually agree upon such Fair Market Rent within such thirty (30) day period, then Landlord
and Tenant shall, within fifteen (15) days after the expiration of such thirty (30) day period or
the date they acknowledge that they cannot agree on an applicable Fair Market Rent, whichever is
earlier, each provide to the other (by simultaneous exchange) their determination of the
appropriate Fair Market Rent in writing (hereinafter, “Landlord’s Determination” and “Tenant’s
Determination”), and thereafter, the issue of the Fair Market Rent shall be submitted to
arbitration. Within fifteen (15) days after Landlord and Tenant exchange their determination of
the appropriate Fair Market Rent, Landlord and Tenant shall mutually agree on an arbitrator (the
“Arbitrator”), who shall be a California licensed real estate broker who has been active over the
five (5) year period ending on the date of such appointment in the leasing of office/laboratory
properties in San Mateo County, California; provided, however that if Landlord and Tenant are
unable to agree upon any such arbitrator within such fifteen (15) day period, then Landlord and
Tenant shall have another ten (10) days to mutually agree upon a licensed professional MAI
appraiser (with experience in the appraisal of office/laboratory properties in San Mateo County,
California) to serve as the Arbitrator. The determination of the Arbitrator shall be limited solely
to the issue of whether Landlord’s Determination or Tenant’s Determination is the closest to the
actual Fair Market Rent as determined by the Arbitrator. Neither Landlord nor Tenant may directly
or indirectly consult with the Arbitrator prior to, or subsequent to, his or her appointment.

          30.2.1 The Arbitrator shall within thirty (30) days of appointment reach a decision as to
Fair Market Rent and determine whether the Landlord’s Determination or Tenant’s Determination is
closest to Fair Market Rent as determined by the Arbitrator and simultaneously publish a ruling
(“Award”) indicating whether Landlord’s Determination or Tenant’s Determination is closest to the Fair Market Rent as
determined by the Arbitrator, which shall become the then applicable Fair Market Rent. The Award
issued by the Arbitrator shall be binding upon Landlord and Tenant.

          30.2.2. If Landlord and Tenant fail to appoint an Arbitrator within the time period provided
in the first paragraph of this Section 30.2, either party may petition the presiding judge of the
Superior Court of San Mateo County to appoint such Arbitrator, subject to the criteria of this
Section 30.2, or if he or she refuses to act, either party may petition any judge having
jurisdiction over the parties to appoint the Arbitrator.

          30.2.3 The Fair Market Rent shall not include the value of the improvements and equipment
which Tenant is entitled to remove under this Lease.

          30.2.4 The cost of arbitration shall be paid (i) by Landlord if Tenant’s Determination is
determined by the Arbitrator to be closest to the Fair Market Rent, or (ii) by Tenant if Landlord’s
Determination is determined by the Arbitrator to be closest to the Fair Market Rent.

     30.3 Terms of Lease. During the Renewal Term, Tenant shall occupy the Premises upon all of
the terms and conditions set forth in this Lease except (a) the Minimum Monthly Rent for the
Renewal Term shall be as determined above, and (b) Tenant shall have no right to extend the term of
this Lease beyond the Renewal Term.

31.0 TERMINATION RIGHT

     31.1 Termination Right. Tenant shall have one (1) option (the “Termination Option”) to
terminate this Lease on the last day of the One Hundred Twentieth (120th) month after the
Commencement Date. The Termination Option must be exercised, if at all, by written notice
(“Termination Election Notice”) from Tenant to Landlord given not less than three hundred and sixty
five (365) calendar days prior to the intended effective date of such termination (“Early
Termination Date”). As a condition to the effectiveness of Tenant’s Termination Notice, Tenant
must pay Landlord the “Termination Fee” (as defined below) in accordance with the terms of this
Section 31. As used herein, the term “Termination Fee” shall mean and refer to an amount equal to
(x) the unamortized portion of any tenant improvement costs incurred by Landlord in connection with
the original build-out and delivery of the Premises, plus (y) the unamortized portion of all
leasing commissions applicable to Tenant’s Lease of the Premises, plus (z) nine (9) month’s of Rent
at the monthly rental rate in effect for the month in which the Early Termination Date occurs.
Such unamortized balances shall be determined by using a fifteen (15) year amortization period
commencing on the day following the first anniversary of the Commencement Date, utilizing an eight
and one-half percent (8.5%) per annum interest rate. One third (1/3) of the Termination Fee shall
be paid by Tenant to Landlord within thirty (30) calendar days after Tenant delivers the
Termination Election Notice to Landlord, another one third (1/3) of the Termination Fee shall be
paid by Tenant to Landlord at least One Hundred Eighty (180) calendar days prior to the Early
Termination Date, and the remaining one-third (1/3) shall be paid by Tenant to Landlord at least
thirty (30) calendar days prior to the Early Termination Date.

32. GUARANTY

     32.1 Guaranty. This Lease shall not become effective unless and until the duly executed
Guaranty of Lease attached hereto as Exhibit G is delivered to Landlord.

33.0 RULES AND REGULATIONS

     33.1 Rules and Regulations. The Rules and Regulations attached hereto as Exhibit C are
expressly incorporated herein; provided, however, that if any of the Rules and Regulations are in
conflict with Tenant’s rights and/or obligations expressly set forth in this Lease, the express
provisions of this Lease shall prevail over such conflicting Rules and Regulations.

26

 

34.0 BUSINESS DAYS

     34.1 Business Day. A “business day” is a day other than a Saturday, a Sunday or a legal
holiday as recognized by the Superior Court in the County in which the Premises are located.
Unless expressly defined as a “business day”, all references to the term “day” shall mean a
“calendar day.”

[the balance of this page has been intentionally left blank; signature page follows]

27

 

IN WITNESS WHEROF, Landlord and Tenant have executed this Lease as of the date first above
written.

	 	 	 	 	 
	 	LANDLORD:

CHAMBERLIN ASSOCIATES 200 OYSTER POINT, L.P.,

a California limited liability company

 	 
	 	By:  	Chamberlin Properties I Limited Partnership, 
a California limited partnership, 
Its Member
 	 
	 	 	 	 
	 	By:  	           Stephen Chamberlin Associates, Inc., 
a California corporation, 
Its General Partner
 	 
	 	 	 	 
	 	By:  	                                     /s/ Anne L. Hoffman
 	 
	 	 	Name:  	Anne L. Hoffman 	 
	 	 	Title:  	President 	 
	 
	 	TENANT:

ELAN PHARMACEUTICALS, INC.,
 a Delaware Corporation

 	 
	 	By:  	/s/ G. Kelly Martin
 	 
	 	 	Name:  	G. Kelly Martin 	 
	 	 	Title:  	President and Chief Executive Officer 	 

28

 

	 	 	 	 	 

EXHIBIT A

LEGAL DESCRIPTION

(LEASE SECTIONS 1.3 AND 2.1)

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

Parcel A, as shown on that certain Parcel Map entitled, “Parcel Map 04-0031”, filed for record in
the Office of the Recorder of the County of San Mateo, on April 14, 2005, in Book 76 of Maps, at
pages 16 & 17.

JPN: 015-002-022-03.01A

APN: 015-023-380

1

 

EXHIBIT B

WORK LETTER FOR SHELL CONSTRUCTION

AND TENANT IMPROVEMENTS

THIS WORK LETTER (this “Work Letter”) sets forth the agreement of Landlord and Tenant with respect
to the improvements to be constructed in the Premises, as defined in the Lease to which this Work
Letter is attached as an exhibit. In the event of any inconsistency between the terms of this Work
Letter and the terms of the Lease, the terms of this Work Letter shall control. All defined terms
used herein shall have the meanings set forth in the Lease, unless otherwise defined in this Work
Letter.

ARTICLE 1. LANDLORD’S WORK

     1.1. General Provisions. Landlord shall, at its sole cost and expense, plan, design
and construct those certain improvements described in Schedule B-1 in accordance with the building
specifications set forth therein, and with the other provisions of this Article 1, and the other
terms and conditions of the Lease. The planning, design and construction of such improvements by
Landlord are referred to collectively herein as “Landlord’s Work.” Except as otherwise specified
herein, Landlord’s Work shall materially comply with those certain Design Development Documents
attached hereto as Schedule B-3, as such Design Development Documents and Landlord’s Work shall
change as will be reflected in Plans (as defined in Section 1.7.3 of this Exhibit, and shall
include the underground and surface parking facilities of the Premises as required to provide the
parking spaces required under the Lease.

     1.2. Costs of Landlord’s Work. “Costs of Landlord’s Work” shall mean and include all
of the following costs incurred by Landlord with respect to Landlord’s Work: (a) architect’s,
engineer’s and consultants’ fees and costs for those architects, engineers and consultants retained
by Landlord; (b) deposits, fees and costs for building and other permits, licenses and approvals;
(c) tests and inspections; (d) security; (e) insurance and bond premiums; (f) utilities; (g) all
amounts payable to any contractors, subcontractors, suppliers and vendors retained by Landlord for
Landlord’s Work; and (h) all other charges, fees, expenses and other costs incurred or arising in
connection with Landlord’s Work. As of the date of the Lease, the Costs of Landlord’s Work have
not been bid by Landlord’s Contractor (as defined in Section 1.7.1.2 of this Exhibit) or any
subcontractor. In recognition that Tenant’s base rent payment obligations are directly tied to the
Costs of Landlord’s Work, as provided in Exhibit D to the Lease, Tenant shall have the right to
participate in the negotiations over the Costs of Landlord’s Work with Landlord’s Contractor as
provided in Section 1.7.1.2 of this Exhibit and will provide updated cost information to Tenant
throughout the period that Landlord is to perform Landlord’s Work as provided in Section 4 of
Exhibit D to the Lease. Landlord agrees not to unilaterally materially increase the Cost of
Landlord’s Work without Tenant’s prior approval, except as otherwise provided in Exhibit D to the
Lease or this Work Letter (e.g., increase costs due to any Tenant Delay, change requests, or
changes or work required by any governmental authority). Tenant’s approval shall not be
unreasonably withheld and its review is to confirm that the changes are permissible Costs of
Landlord’s Work.

     1.3. Building Shell. The “Building Shell” shall mean that portion of Landlord’s Work
identified in Exhibit B-1 as being part of the Building Shell (and not specified in Exhibit B-1 as
lagging behind the Substantial Completion of the Building Shell), provided, however, that the
Building Shell expressly excludes any exterior improvements to the Building podium, exterior
parking areas, exterior landscaping and other improvements outside the Building and the Building
podium, except for the underground utilities to the Building included as part of Exhibit B-1, which
shall be stubbed to the Building. Notwithstanding the foregoing, as part of the Building Shell,
Landlord shall provide for at least two (2) pass-through window locations on each of the second and
third floors of the Building in order for Tenant to install its furnishings and equipment on the
upper floors of the Building; provided that Tenant may after reasonable prior notice to Landlord
elect to have the work of the pass-through windows excluded from Landlord’s Work as Change Request
Work (as defined in Section 1.11.1 below), with the costs savings, if any, of such exclusion to
reduce the Costs of the Landlord’s Work in accordance with Exhibit D of this Lease.

1

 

     1.4. Substantial Completion.

          1.4.1 Definition of Substantial Completion.

               1.4.1.1 Substantial Completion of the Building Shell. For purposes of this Work
Letter, the term “Substantial Completion” or “Substantially Complete” shall mean, with respect to
the Building Shell, that Landlord’s Work on the Building Shell is complete to the point where: (i)
Landlord’s Work associated with the Building Shell is complete in accordance with the Plans for the
Building Shell, but for minor Building Shell Punch List work that is capable of completion within
thirty (30) days following the Walk-Through Date (as defined in Section 1.4.2 below) for the
Building Shell, (ii) Tenant can safely, effectively, and completely install all of its furnishings
and equipment therein with minimal risk of loss or damage due to exposure of the interior of the
Building Shell to the elements, and (iii) Tenant can have uninterrupted access to the roof and all
interior areas of the Building Shell for purposes of installing its furnishings and equipment
within the Building Shell, with sufficient parking available on-site or on adjacent properties for
Tenant’s contractors and subcontractors performing the work of the Initial Tenant Improvements.
Notwithstanding the foregoing, for purposes of determining the date of Substantial Completion of
the Building Shell, as long as Landlord has completed all material construction work associated
with any elevators included as part of the Building Shell, then the fact that all applicable
governmental authorities have not approved or permitted such elevators for use or occupancy shall
not delay the date that the Building Shell is determined to be Substantially Complete. If, as a
result of any such governmental authorities having not approved such elevators, it is not legally
permissible for Tenant to utilize the elevators for Tenant’s construction of the Initial Tenant
Improvements, then Landlord shall provide an alternative exterior service elevator for purposes of
allowing Tenant reasonable access to the upper floors of the Building Shell for purposes of
installing furnishings and equipment and for performing the Initial Tenant Improvements, the cost
of which shall be included in the Costs of the Landlord’s Work and considered in the calculation of
base rent under Exhibit D to the Lease, and which shall not require a separate agreement with
Landlord’s contractor or any subcontractor, notwithstanding the requirements of Section 2.4.3
hereof.

               1.4.1.2 Substantial Completion of Landlord’s Work. For purposes of this Work Letter,
the term “Substantial Completion” or “Substantially Complete” shall mean, with respect to
Landlord’s Work, that such Landlord’s Work has been completed in accordance with the design and
specifications of the Construction Documents, except for any minor Landlord’s Work Punch List items
which are reasonably capable of completion within a 30-day period following the Walk-Through Date
(as defined in Section 1.4.2 below) for the Landlord’s Work, as such 30-day period may be extended
as provided in Section 1.4.6.1 hereof.

          1.4.2 Walk Through at Substantial Completion. At least five (5) business days prior to
the Substantial Completion of the Building Shell and Landlord’s Work, respectively, Landlord shall
notify Landlord’s Contractor (defined in Section 1.7.1.2), Landlord’s Architect, Tenant and
Tenant’s Architect of the date and time of the inspection of the Building Shell or Landlord’s Work,
as applicable, for purposes of determining whether the Building Shell or the remainder of
Landlord’s Work, as applicable, is Substantially Complete. Such scheduled date and time for the
walk-through is referred to herein as the “Walk-Through Date.” Landlord, Tenant, Landlord’s
Contractor, as well as Landlord’s Architect and (if desired by Tenant) Tenant’s Architect, shall
meet at the Real Property on the Walk-Through Date to determine whether the Building Shell or
Landlord’s Work, as applicable, is Substantially Complete. If Tenant’s desired representative(s)
is/are not available on the Walk-Through Date, Tenant shall notify Landlord of the same, in
writing, at least two (2) days prior to the Walk-Through Date, in which case, the parties shall
coordinate another date and time for the walk-through, which shall be no later than five (5) days
after the originally scheduled Walk-Through Date. Both Landlord and Tenant shall have the right to
attend the walk-through inspections.

          1.4.3 Determination of Date of Substantial Completion.

               1.4.3.1 Building Shell. If during the walk-through inspection of the Building Shell,
Landlord and Tenant agree that the corresponding work is Substantially Complete, then (a) Tenant
and Landlord shall document such fact in writing (the “Substantial Completion Notice”) (but any
delay or failure to document such notice shall not delay the date
of Substantial Completion), which writing shall specify the date of Substantial Completion of
the

2

 

Building Shell, shall be signed by Landlord and Tenant, and (b) Landlord’s Architect shall
identify, in writing, those items of Landlord’s Work that are in need of repair, or that have yet
to be completed, and that Landlord agrees to repair (the “Building Shell Punch List”); provided,
however, that any Building Shell Punch List work shall be minor in nature, and shall not
unreasonably interfere with or delay the work of the Initial Tenant Improvements, and shall, in any
case, be reasonably capable of completion within thirty (30) days after the Walk-Through Date, as
provided in Section 1.4.6.1. Should Tenant disagree with the items on the Building Shell Punch
List, Tenant shall notify Landlord, in writing, within two (2) business days following receipt of
the proposed Building Shell Punch List from Landlord, of such disagreement and Tenant’s proposed
changes to the Building Shell Punch List. If the parties are unable to agree upon the Building
Shell Punch List scope of work, then any such disagreement shall be resolved in accordance with
Section 1.4.6.2. The date for the Substantial Completion of the Building Shell accurately set
forth in the Substantial Completion Notice shall be binding on Landlord and Tenant (but is subject
to adjustment for Tenant Delays and Force Majeure Delays as set forth herein).

               1.4.3.2 Landlord’s Work. If during the walk-through inspection of Landlord’s Work,
Landlord and Tenant agree that the corresponding work is Substantially Complete, then within two
(2) days following the Walk-Through Date associated with such walk-through inspection: (a)
Landlord’s Architect shall identify, in writing, those items of Landlord’s Work that are in need of
repair, or that have yet to be completed, and that Landlord agrees to repair (the “Landlord’s Work
Punch List”), and (b) Landlord, Landlord’s Architect, and Landlord’s Contractor shall complete and
execute a Certificate of Substantial Completion substantially in the form of the American Institute
of Architects document G704, as modified to reflect the definition of Substantial Completion
provided in this Work Letter, with the Landlord’s Work Punch List attached; provided, however, that
any Landlord’s Work Punch List items shall be minor in nature, shall not adversely affect the
exterior appearance of the Building or the exterior improvements of the Premises, nor unreasonably
interfere with or delay the work of the Initial Tenant Improvements, and shall, in any case, be
reasonably capable of completion within thirty (30) days after the applicable Walk-Through Date as
provided in Section 1.4.6.1. Should Tenant disagree with the items on the Landlord’s Work Punch
List, Tenant shall notify Landlord, in writing, within two (2) business days following receipt of
the proposed Landlord’s Work Punch List from Landlord, of such disagreement and Tenant’s proposed
changes to the Landlord’s Work Punch List. If the parties are unable to agree upon the Landlord’s
Work Punch List scope of work, then any such disagreement shall be resolved in accordance with
Section 1.4.6.2. The date for the Substantial Completion of the Landlord’s Work accurately set
forth in the Certificate of Substantial Completion shall be binding on Landlord and Tenant (but is
subject to adjustment for Tenant Delays and Force Majeure Delays as set forth herein).

          1.4.4 Disagreement As To Whether The Work Is Substantially Complete. If Landlord
considers the work Substantially Complete, but Tenant does not agree that the corresponding work is
Substantially Complete, then Tenant shall notify Landlord’s Architect, and Landlord, in writing, on
the Walk-Through Date of the reasons for withholding such confirmation. Thereafter, an independent
consultant with at least ten (10) years of experience in construction of commercial chemistry and
biological research laboratory buildings in the San Francisco Bay Area, who is not affiliated with
Landlord or Tenant or any of their respective Agents, or retained by either of them or any of their
Agents in any capacity within the three (3) year period preceding retention under this Work Letter
(the applicable person being referred to herein as the “Third Party Inspector”), shall be notified
of the dispute, and shall be instructed to immediately visit the site to determine whether such
work is Substantially Complete. The party or person selected to be the Third Party Inspector shall
be subject to the reasonable approval of Landlord and Tenant. The determination of the date of
Substantial Completion by the Third Party Inspector shall be binding on the parties (but shall be
subject to adjustment for Tenant Delays and Force Majeure Delays as set forth herein). Moreover,
the costs of such Third Party Inspector shall be split equally by the parties. In the event that
no Third Party Inspector is reasonably available, Landlord and Tenant shall use commercially
reasonable efforts to immediately agree upon another Third Party Inspector, and if Landlord and
Tenant cannot immediately agree upon such a Third Party Inspector, then either Landlord or Tenant
may apply to the American Arbitration Association in San Mateo, California, for an appointment of
an arbitrator to select the neutral Third Party Inspector.

3

 

          1.4.5 Delay in Determining Date of Substantial Completion. If for some reason there
is a delay in determining the date of Substantial Completion, then date of Substantial Completion
shall be the date when the corresponding work would have been Substantially Complete, but for the
delays. For instance, if there is a delay in the selection of the Third Party Inspector, the
Third Party Inspector will not only determine whether the work is Substantially Complete, but also,
the date the work would have been Substantially Complete but for the delays in determining the same
(which date may precede the date that such Third Party Inspector is selected).

          1.4.6 Punch List Items. 

               1.4.6.1 Completion of Punch List Items. Landlord shall complete any Building Shell
Punch List or Landlord’s Work Punch List work within thirty (30) calendar days of the applicable
Walk-Through Date, unless such Punch List work cannot reasonably be completed within such thirty
(30) day period, in which case, Landlord shall have whatever time is reasonably necessary to
complete such Punch List work, provided Landlord is diligently prosecuting the same to completion.

               1.4.6.2 Disagreement Re Punch List Items. If the parties disagree on the applicable
Punch List scope of work (for instance, if Landlord alleges it is not responsible for an item
requested to be included in the applicable Punch List), then any such dispute shall be resolved by
binding arbitration with the San Mateo, California office of the American Arbitration Association,
pursuant to the commercial rules of the American Arbitration Association; provided, however, that
such proceedings shall not delay the performance of the Landlord’s Work or the Initial Tenant
Improvements and if the failure to perform the Punch List work is reasonably likely to cause a
delay in the performance of the Landlord’s Work or the Initial Tenant Improvements, then Landlord
shall perform the work subject to resolution of any such dispute, and arbitration shall be used to
determine the parties’ respective liability for the cost thereof, either as a Cost of the
Landlord’s Work or as a cost of the Initial Tenant Improvements.

     1.5. Possession of the Premises. Upon the Substantial Completion of the Building
Shell, Tenant shall have possession and control of the Building Shell, subject to the rights of
Landlord and Tenant set forth in this Exhibit and the Lease. Upon the Substantial Completion of
all Landlord’s Work, Tenant shall have full possession and control of the Premises, including the
exterior parking facilities, loading areas and equipment yards of the Building, subject to the
terms and provisions of the Lease, and the rights of the Parties under the Lease.

     1.6. Anticipated Schedule, Delays and Adjustment of Commencement Date. Landlord’s
Work shall be constructed by Landlord in accordance with this Work Letter diligently following the
execution of the Lease.

          1.6.1 Anticipated Development Schedule. The preliminary development and delivery
schedule for the Building Shell and for the entirety of Landlord’s Work, is attached hereto as
Schedule B-2, and is expressly incorporated herein (the “Landlord’s Preliminary Development and
Delivery Schedule”). Tenant and Landlord shall use their respective commercially reasonable, good
faith, efforts and all due diligence to cooperate with the architects, engineers, and each other to
complete all phases of the Construction Documents, general contractor selection and the permitting
process, the Landlord’s Work and the Initial Tenant Improvements in accordance with the Landlord’s
Preliminary Development and Delivery Schedule, and, in that regard, Landlord and Tenant shall meet
on a scheduled basis to discuss progress in connection with the same.

          1.6.2 Building Permit for Landlord’s Work. Landlord shall use commercially reasonable
and diligent efforts to obtain a building permit for Landlord’s Work in accordance with the time
deadlines set forth in Landlord’s Preliminary Development and Delivery Schedule. If despite such
efforts, Landlord is unable to obtain a building permit on or before July 1, 2008, subject to
Landlord’s right to extend for an additional period of up to ninety (90) days upon written notice
to Tenant by June 1, 2008 (said date, as the same may be extended by Landlord for such period,
shall be referred to herein as the “Outside Permit Date”), then either party may terminate this
Agreement by delivering thirty (30) days written notice of termination to the other party (anytime
after the Outside Permit Date), provided, however, that the building permit is not

4

 

issued within
said thirty (30) day period. If the building permit is issued prior to the expiration of
that thirty (30) day period, then this Agreement shall remain in full force and effect and
such termination notice shall be of no force or effect. Conversely, if the building permit is not
issued within said thirty (30) day period, this Agreement shall terminate on the expiration of said
thirty (30) day period, whereupon, this Agreement shall be of no further force and effect, Landlord
shall return all sums deposited by Tenant with Landlord, including but not limited to any letters
of credit, and neither party shall have any obligation to the other under this Agreement. The date
that the building permit has been issued and pulled for Landlord’s Work is defined herein as the
“Building Permit Date.” The preliminary dates provided in Landlords’ Preliminary Development and
Delivery Schedule in Schedule B-2 shall be extended by the same period of time that the Outside
Permit Date is extended, if Landlord elects to extend the initial Outside Permit Date as provided
above in this Section 1.6.2.

          1.6.3 Early Access.

               1.6.3.1 Commencement of Early Access Period. Landlord shall provide Tenant with
reasonable access to the Building Shell (to allow Tenant to commence the construction of the
Initial Tenant Improvements (as defined in Section 2.1 below)) for a period of not less than sixty
(60) days within a period that is seventy-five (75) days prior to the Substantial Completion of the
Building Shell (the “Early Access Period”). The start of the Early Access Period shall be referred
to as the “Early Access Commencement Date.” Notwithstanding the foregoing, interruption of
Tenant’s access to the Building Shell as required for performance of the Landlord’s Work shall be
permitted without affecting the Early Access Commencement Date (“Permitted Interruptions”),
provided that Landlord gives reasonable advance notice of any such Permitted Interruption to Tenant
and the total days of Permitted Interruptions does not exceed fifteen (15) days during the Early
Access Period so that Tenant will have not less than sixty (60) days of access to the Building
within the Early Access Period. Landlord shall provide Tenant with at least twenty (20) days notice
prior to the date that Landlord will provide Tenant with such early access, and Landlord and Tenant
shall document the Early Access Commencement Date in writing promptly following such date.
Tenant’s entering the Premises for such purposes shall be at Tenant’s own risk, and under no
circumstances shall Tenant enter the Premises until all insurance required pursuant to the terms of
this Lease are in place. Landlord shall have control of those portions of the Premises where the
Landlord’s Work is being performed during the Early Access Period, but shall endeavor to cooperate
with Tenant to make those portions of the Premises and the other portions of the Premises available
to Tenant’s Contractor (hereinafter defined) and subcontractors throughout the Early Access Period
subject to Landlord’s right to interrupt Tenant’s access for Permitted Interruptions. In
performing any work resulting in a Permitted Interruption, Landlord shall also act to mitigate the
duration and extent of such Permitted Interruption as is reasonable under the circumstances, and
shall coordinate such mitigation efforts with Tenant.

               1.6.3.2 Landlord’s Failure to Provide Tenant with Reasonable Access. If Tenant does
not have reasonable access to the Building Shell for purposes of constructing the Initial Tenant
Improvements for a period of at least sixty (60) days during the Early Access Period, then the date
of Substantial Completion of the Building Shell (as accelerated for any Tenant Delays), for
purposes of determining the commencement date of Tenant’s obligation to pay CAM Charges (defined in
Section 1.6.3.5), shall be extended by the difference (as long as such difference is a positive
number) between (a) 60 days, and (b) the number of days that Tenant has reasonable access to the
Building Shell within the 75-day period prior to Substantial Completion of the Building Shell for
purposes of constructing the Initial Tenant Improvements (defined as “Tenant’s Access Delay”), in
accordance with Section 1.6.3.5 below.

               1.6.3.3 Scheduling of the Initial Tenant Improvements During the Early Access Period.
Tenant acknowledges that the exterior glass of the Building Shell may not be installed upon the
Early Access Commencement Date, and that Landlord anticipates that the exterior glass of the
Building Shell will be installed on a floor by floor basis. As such, Tenant agrees to schedule its
work so that it can continue to construct the Initial Tenant Improvements without the exterior
glass being installed on a particular floor and/or to allow the Initial Tenant Improvements within
a certain floor to be constructed before proceeding with the Initial Tenant Improvements on another
floor that does not have exterior glass installed (if such work would be impacted by not having the
exterior windows on that floor installed); provided, however, that all exterior building glass
(exclusive of any pass-through windows) must be installed by the date of

5

 

Substantial Completion of the Building Shell. Moreover, if the internal elevators within the
Building Shell are not available for use during the Early Access Period, then Landlord shall
provide an alternative exterior service elevator for purposes of giving Tenant reasonable access
throughout the Early Access Period to the second and third floors of the Building for purposes of
staging Tenant’s construction materials and equipment, commencing construction of the Initial
Tenant Improvements, installing furnishings and equipment, and the costs for such alternative
service elevator shall be included as part of Landlord’s Costs of Work and considered in the
calculation of Tenant’s base rent under Exhibit D to the Lease.

               1.6.3.4 Interference with Landlord’s Work. During the Early Access Period, Tenant
shall schedule its entry, installation and other work with Landlord so as not to interfere with
Landlord’s Work. Tenant shall comply with all reasonable instructions from Landlord and Landlord’s
Contractor during such Early Access Period, subject to the limitations on Permitted Interruptions
set forth in Section 1.6.3.1 above. Moreover, during the Early Access Period, Landlord shall
provide a reasonable location within or adjacent to the Premises so Tenant and its construction
personnel can stage construction operations, store materials and equipment, and park vehicles.

               1.6.3.5 Tenant’s Lease Obligations During Early Access Period. During the Early
Access Period, all terms and conditions of the Lease (including all insurance and indemnity
provisions) shall apply, except for payment of Minimum Monthly Rent, and utility costs, Operating
Expenses, real estate taxes, and/or other standard triple net expenses (collectively, “CAM
Charges”). Tenant’s obligations to pay CAM Charges shall commence on the date of Substantial
Completion of the Building Shell (as such date may be accelerated for any Tenant Delays (in
accordance with Section 1.6.11.2) and extended for Tenant’s Access Delay (in accordance with
Section 1.6.3.2)). Under no circumstances shall the date of Substantial Completion of the Building
Shell (as adjusted pursuant to this Section 1.6.3.5) occur any earlier than August 1, 2009.

               1.6.3.6 Responsibility During Early Access Period. During the Early Access Period,
except to the extent attributable to the gross negligence or willful misconduct of Landlord or any
of its agents, employees, contractors or invitees, Landlord shall have no responsibility for, and
Tenant shall be fully responsible for, the security for Tenant’s property, activities and
operations thereon. Each of Landlord’s Contractor and Tenant’s Contractor shall look to its
respective Builder’s Risk policy of liability insurance for any loss or damage to work being
performed by such contractor or its subcontractors, unless such loss or damage is attributable to
the gross negligence or willful misconduct of the other contractor or any of the other contractor’s
subcontractors.

               1.6.3.7 No Waiver of Condition. The fact that Tenant may, with Landlord’s consent,
enter into the Building prior to the date of Substantial Completion of Landlord’s Work for the
purpose of performing any Initial Tenant Improvements shall not be deemed an acceptance by Tenant
of possession of the Premises for the purposes of establishing the condition thereof upon Tenant’s
acceptance.

          1.6.4 Landlord’s Responsibility for Delay in the Substantial Completion of Building
Shell. If Landlord fails to Substantially Complete the Building Shell in accordance with the
time deadlines set forth in Landlord’s Preliminary Development and Delivery Schedule, as the same
shall be adjusted due to Tenant Delays and Force Majeure Delays, this Lease shall not be void or
voidable by Tenant, and Landlord shall not be liable for any loss or damage resulting therefrom,
except as provided in Section 1.6.6.1 below, and except for the Landlord’s obligation of repairing,
correcting or replacing any design or construction defects in Landlord’s Work in accordance with
the requirements set forth elsewhere in the Lease and this Work Letter.

          1.6.5 Responsibility After Substantial Completion of the Building Shell.

               1.6.5.1 Tenant’s Responsibility. After the Substantial Completion of the Building
Shell, and until the Substantial Completion of Landlord’s Work, (a) Tenant shall schedule its work
in the areas of the Premises outside the Building Shell with Landlord, (b) Tenant shall cooperate
with all reasonable instructions from Landlord and Landlord’s Contractor with respect to any such
construction work outside the Building Shell, and (c) Tenant shall

6

 

cooperate with Landlord in making those areas of the Premises within the Building Shell
reasonably available to Landlord so Landlord can complete Landlord’s Work.

               1.6.5.2 Landlord’s Responsibility. After the Substantial Completion of the Building
Shell, and until the Substantial Completion of Landlord’s Work, (a) Landlord shall schedule its
work within the Building Shell with Tenant, (b) Landlord shall cooperate with all reasonable
instructions from Tenant and Tenant’s Contractor with respect to any such construction work within
the Building Shell, (c) Landlord shall cooperate with Tenant in making those areas of the Premises
outside the Building Shell in the designated Service Area (as defined in Section 5.2 of the Lease)
reasonably available to Tenant so Tenant can complete the Initial Tenant Improvements outside the
Building Shell, and (d) Landlord shall provide a reasonable location within or adjacent to the
Premises (and outside the Building Shell) so Tenant and its construction personnel can stage
construction operations, store materials and equipment, and park vehicles; provided, however, that
Landlord’s providing such location to Tenant shall be at Tenant’s sole risk, and Tenant shall be
responsible for the security of all equipment and materials so stored.

          1.6.6 Substantial Completion of Landlord’s Work.

               1.6.6.1 Substantial Completion of Building Shell. Landlord shall Substantially
Complete the Building Shell on or before September 30, 2009, as extended if Landlord elects to
extend the initial Outside Permit Date as provided in Section 1.6.2, and as adjusted for Tenant
Delays and Force Majeure Delays (the “Adjusted Outside Shell Completion Date”). To the extent that
the Building Shell is not Substantially Complete, and the Premises are not delivered to Tenant, on
or before the Adjusted Outside Shell Completion Date, this Lease shall not be void or voidable by
Tenant, and Landlord shall not be liable for any loss or damage resulting therefrom, except Tenant
shall, as Tenant’s sole remedy, be entitled to (a) defer payment of CAM Charges until Substantial
Completion of the Building Shell; and (b) a credit towards Tenant’s Minimum Monthly Rent obligation
equal to two (2) days for each day that Building Shell is Substantially Complete after the Adjusted
Outside Shell Completion Date, provided, however, that the Landlord Delays during such period
adversely impact Tenant’s ability to complete the Initial Tenant Improvements or to conduct its
business operations on the Premises.

               1.6.6.2 Substantial Completion of Landlord’s Work. Landlord shall Substantially
Complete all of Landlord’s Work on or before October 31, 2009, as extended if Landlord elects to
extend the initial Outside Permit Date as provided in Section 1.6.2, and as adjusted for Tenant
Delays and Force Majeure Delays and as extended by the length of any delay in the Adjusted Outside
Shell Completion Date under Section 1.6.6.1 above (the “Adjusted Outside Final Completion Date”).
To the extent that Landlord’s Work is not Substantially Complete, and the Premises are not
delivered to Tenant, on or before the Adjusted Outside Final Completion Date, this Lease shall not
be void or voidable by Tenant, and Landlord shall not be liable for any loss or damage resulting
therefrom, except Tenant shall, as Tenant’s sole remedy, be entitled to a credit towards Tenant’s
Minimum Monthly Rent obligation equal to two (2) days for each day that Landlord’s Work is
Substantially Complete after the Adjusted Outside Final Completion Date, provided, however, that
the Landlord Delays during such period adversely impact Tenant’s ability to complete the Initial
Tenant Improvements or to conduct its business operations on the Premises. A delay or extension of
the Adjusted Outside Shell Completion Date shall cause the Adjusted Outside Final Completion Date
to be extended for the same number of days as the Adjusted Outside Shell Completion Date is delayed
or extended.

          1.6.7 Tenant Delays. For purposes of this Exhibit and the Lease, “Tenant Delays”
shall mean any delay of Landlord’s Work caused by Tenant which actually causes the Substantial
Completion of the Building Shell or Substantial Completion of Landlord’s Work to be delayed (unless
such delay can reasonably be avoided by Landlord without an increase in the costs of Landlord’s
Work) and is attributable to: (a) Tenant’s unreasonable rejection of all or any portion of the
Landlord’s Work Construction Documents (as defined in Section 1.7.2 below) or the modified
Construction Documents; (b) Tenant’s failure to provide Landlord with a reasonably detailed
statement of the reasons for rejecting all or any portion of the Construction Documents or the
modified Construction Documents or other approval required under this Exhibit within the time
period provided in this Exhibit; (c) Change Requests (as defined in
Section 1.11 below); or (d) any other delay caused by Tenant of which Tenant has received

7

 

notice as hereinafter provided (and has failed to timely cure if permitted under this Section
1.6.7). Landlord shall notify Tenant of any Tenant Delay within twenty-four (24) hours after
Landlord’s receipt of notice from Landlord’s Contractor of the Tenant Delay or when Landlord
otherwise has received actual knowledge of the Tenant Delay; provided, however, that if Landlord
does not notify Tenant of the Tenant Delay within such twenty-four (24) hour period of the Tenant
Delay, then the Tenant Delay shall not be deemed to have commenced until Landlord notifies Tenant
of the Tenant Delay (and if Tenant cures the cause of any Tenant Delay attributable to clause (d)
of the preceding sentence within twenty-four (24) hours after receipt of such notice, no Tenant
Delay shall accrue, but Tenant’s right to cure Tenant Delays shall not exceed five (5) days over
the course of Landlord’s Work). Such written notice shall be delivered in accordance with Section
1.6.10 below and shall state in reasonable detail the nature of such event and the reasons that
such event constitutes a Tenant Delay.

          1.6.8 Landlord Delays. For purposes of this Lease, “Landlord Delays” shall mean any
delay of the work of the Initial Tenant Improvements caused by Landlord which actually causes the
work of the Initial Tenant Improvements to fall behind the schedule for their completion in
violation of Section 2.4.4.1 below (unless such delay can reasonably be avoided by Tenant without
an increase in the cost of the Initial Tenant Improvements), and is attributable to: (a)
Landlord’s unreasonable rejection of Tenant’s plans or the modified plans; (b) Landlord’s failure
to provide Tenant with a reasonably detailed statement of the reasons for rejecting all or any
portion of the plans for the Initial Tenant Improvements or the modified plans for the Initial
Tenant Improvements; or (c) any other delay caused by Landlord of which Landlord has received
notice as hereinafter provided (and has failed to timely cure as permitted in this Section 1.6.8).
Tenant shall notify Landlord of any Landlord Delay within twenty-four (24) hours after Tenant’s
receipt of notice from the Tenant’s Contractor of the Landlord Delay or when Tenant otherwise has
received actual knowledge of the Tenant Delay; provided, however, that if Tenant does not notify
Landlord of the Landlord Delay within such twenty-four (24) hour period, then the Landlord Delay
shall not be deemed to have commenced until Tenant notifies Landlord of the Landlord Delay (and if
Landlord cures the cause of such Landlord Delay attributable to clause (c) of the preceding
sentence within twenty-four (24) hours after receipt of such notice, no Landlord Delay shall
accrue, but Landlord’s right to cure Landlord Delays shall not exceed more than five (5) days over
the course of the work of the Initial Tenant Improvements). Such written notice shall be delivered
in accordance with Section 1.6.10 below and shall state in reasonable detail the nature of such
event and the reasons such event constitutes a Landlord Delay.

          1.6.9 Force Majeure Delay.

               1.6.9.1 Definition of Force Majeure Delay. “Force Majeure Delay” means any delay in
Landlord’s Work or the work of the Initial Tenant Improvements due to fire or other casualty,
strikes or labor disputes (except as otherwise set forth in Section 1.6.9.2 below), embargo,
unavailability of power or supplies, war or violence, acts of terrorism, any moratorium pursuant to
any legal requirement of any governmental agency (subject to Section 1.6.9.3 below), or any other
occurrence or similar event beyond the reasonable control of the party claiming such Force Majeure
Delay, except for those occurrences caused by the actions of such party, which such party knows or
should reasonably know will result in any occurrence otherwise characterized as a force majeure
event above. Each party shall use its commercially reasonable and diligent efforts to notify the
other party, in writing, of any event claimed by such party as a Force Majeure Delay, which notice
shall state in reasonable detail the nature of such force majeure event and the reason(s) that such
event constitutes a Force Majeure Delay.

               1.6.9.2 Strikes & Labor Disputes. Notwithstanding anything to the contrary contained
herein, Force Majeure Delays shall not include strikes or labor disputes that arise solely due to
Landlord’s or Tenant’s, as the case may be, negligent decisions, made directly by such party
claiming a Force Majeure Delay, in the hiring of non-union contractors.

               1.6.9.3 Work Stoppage By Government Order. Notwithstanding anything to the contrary
contained herein, any moratorium or stoppage of either party’s work under this Work Letter due to
its intentional acts or omissions of known (or which would be known to an owner, tenant or
developer of real property, having similar resources and experience
as the personnel employed by such party) regulations or requirements may not be claimed by
such party as a Force Majeure Delay.

8

 

          1.6.10 Notice of Delays.

               1.6.10.1 Landlord’s Notice. Landlord shall notify Tenant, in writing, of any Tenant
Delay or any Force Majeure Delays within the applicable time period provided in Section 1.6.7 or
Section 1.6.9.1. Such written notice shall state the cause of the delay.

               1.6.10.2 Tenant’s Notice. Tenant shall notify Landlord, in writing, of any Landlord
Delay or any Force Majeure Delay in the work of the Initial Tenant Improvements within the
applicable time period provided in Section 1.6.8 or Section 1.6.9.1. Such written notice shall
state the cause of the delay; provided, however, that no Force Majeure Delay shall delay the
commencement of the term of the Lease or the date by which Tenant must commence paying rent or
other sums under the Lease.

               1.6.10.3 Delivery of Notice Of Delay. Notwithstanding anything to the contrary
contained herein, such notice of delay may be personally delivered, sent by overnight mail (FedEx
or another carrier that provides receipts for all deliveries), sent by certified mail, postage
prepaid, return receipt requested, or sent by e-mail transmission (provided that a successful
electronic confirmation is provided) to the persons set forth below. Each of the parties shall,
using commercially reasonable and good faith efforts, provide telephonic notice to the other party
that a notice of delay has been sent and the cause thereof.

	 	 	 
	If to Landlord:
	 	c/o Chamberlin Associates
	 

	 	5880 West Las Positas Blvd., Suite 34
	 

	 	Pleasanton, CA 94588-8552
	 

	 	Attention: Anne Hoffman
	 

	 	Office Phone: 925-227-0707
	 

	 	Fax: 925-227-0277
	 

	 	Email: Anne@chamb.com
	 
	 	 
	With a copy to:

	 	c/o Chamberlin Associates
	 

	 	5880 West Las Positas Blvd., Suite 34
	 

	 	Pleasanton, CA 94588-8552
	 

	 	Attention: Rahn Verhaeghe AND
	 

	 	                   Jennifer Von der Ahe
	 

	 	Office Phone: 925-227-0707
	 

	 	Fax: 925-227-0277
	 

	 	Email: Rahn@Chamb.com
	 

	 	Email: Jennifer@Chamb.com
	 
	 	 
	If to Tenant:

	 	Elan Pharmaceuticals, Inc.
	 

	 	800 Gateway Blvd.
	 

	 	South San Francisco, CA 94080
	 

	 	Attention: Brian Oppendike
	 

	 	Office Phone: 650-794-4238
	 

	 	Cell Phone: 650-267-0695
	 

	 	Email: brian.oppendike@elan.com
	 
	 	 
	With a copy to:

	 	Elan Pharmaceuticals, Inc.
	 

	 	800 Gateway Blvd.
	 

	 	South San Francisco, CA 94080
	 

	 	Attention: Rick Smith
	 

	 	Office Phone: 650-877-7647
	 

	 	Cell Phone: 858-864-3128
	 

	 	Email: charles.smith@elan.com

Such notices shall be effective upon delivery. Notice of change of address shall be given by
written notice in the manner set forth in this Section. Rejection or other refusal to accept or
the inability to deliver any notice due to changed address or e-mail address of which no notice in
accordance with this Section was given shall not effect the delivery date. Any operational failure
of a notice recipient’s e-mail system shall not effect the delivery date of such notice, unless
electronic notice thereof is received in response to any attempt to deliver such notice.

9

 

          1.6.11 Damages for Delays.

               1.6.11.1 Landlord Delay Damages. To the extent that any Landlord Delays cause a delay
to Tenant in the substantial completion of the Initial Tenant Improvements, then Landlord shall be
responsible for the actual additional out-of-pocket costs incurred by Tenant in constructing the
Initial Tenant Improvements as a result thereof, it being acknowledged that Landlord shall not be
responsible to Tenant for any consequential damages as a result of such delays.

               1.6.11.2 Tenant Delay Damages. To the extent that Tenant Delays cause a delay to
Landlord in the Substantial Completion of the Building Shell or the remainder of Landlord’s Work,
then (a) Tenant shall be responsible for the actual damages incurred by Landlord as a result
thereof, it being acknowledged that Tenant shall not be responsible to Landlord for any
consequential damages as a result of such delays, (b) the date of Substantial Completion of the
Building Shell shall be adjusted to the date that the Building Shell would have been substantially
completed but for such Tenant Delays, and (c) the date of Substantial Completion of the remainder
of Landlord’s Work shall be adjusted to the date the Landlord’s Work would have been Substantially
Complete but for such Tenant Delays.

     1.7. Plans & Permits

          1.7.1 Architects, Consultants and Contractors.

               1.7.1.1 Landlord and Tenant hereby acknowledge and agree that: (a) Randall Dowler and Karen
Lin of Dowler-Gruman Architects shall be the architect (“Landlord’s Architect”) for the Building
Shell, and (b) Dowler-Gruman Architects shall be the architect (“Tenant’s Architect”) for the
Initial Tenant Improvements. Notwithstanding the foregoing, Landlord and Tenant shall have the
right at any time, but subject to the approval of the other party (which shall not be unreasonably
withheld, conditioned or delayed) to designate a different architect.

               1.7.1.2 The general contractor for Landlord’s Work shall be J.M. O’Neil, Inc. (“Landlord’s
Contractor”), who shall perform Landlord’s Work pursuant to a guaranteed maximum price contract
(the “Construction Contract”) approved by Tenant (which approval shall not be unreasonably withheld
as long as it is consistent with the scope of work set forth in this Exhibit B, including, but not
limited to, the applicable schedules attached hereto). The Construction Contract shall contain, at
a minimum, terms and provisions requiring that Landlord’s Contractor name Tenant as an additional
insured on Landlord’s Contractor’s commercial general liability insurance policy and naming Tenant
as an additional indemnitee with the same rights of the owner set forth in any indemnity contained
therein, and as a third-party beneficiary with respect to any warranties contained therein;
provided, however that Tenant will not interfere with Landlord’s enforcement of any such warranties
during Landlord’s warranty period as provided in Section 1.7.2 below, as long as Landlord is
diligently pursuing enforcement of a warranty. Landlord shall allow Tenant to participate in
Landlord’s negotiations with the Landlord’s Contractor relating to the cost of the Landlord’s Work.
The Construction Contract shall also require, to the extent negotiable, that Tenant and Landlord
be named as third-party beneficiaries under all construction and equipment warranties (including
without limitation, the roof and any mechanical, electrical and plumbing equipment installed as
part of the Landlord’s Work, which Landlord’s Contractor shall endeavor to obtain for a minimum
warranty term of ten (10) years from the date of Substantial Completion of the Building Shell, with
the right to enforce such warranties directly against the obligor named therein; provided, however,
that there are no assurances that Landlord’s Contractor will be able to obtain such extended
warranties. The cost of causing the construction and equipment warranties to have terms in excess
of one (1) year shall be at Tenant’s sole cost and expense; provided, however, that Tenant shall
have sole discretion with respect to the decision to obtain any warranty exceeding a term of one
(1) year if Tenant is to be liable for the cost thereof.

          Landlord shall have the right to replace Landlord’s Contractor from time to time, provided
that such change shall not result in any increase in the cost of constructing Landlord’s Work or
the Initial Tenant Improvements, or the rights of Tenant under the construction agreement
(including, without limitation, the extended warranty periods negotiated with the Landlord’s
Contractor), unless such change is required as a result of a default by Landlord’s

10

 

Contractor under
the construction agreement approved by Tenant, in which case, Landlord and Tenant shall cooperate
in the selection of the replacement general contractor for Landlord’s Work in order to mitigate the
increased cost of Landlord’s Work that is incorporated into Tenant’s base rent obligations under
the Lease. Tenant shall have the right to pre-approve all subcontractors retained by the
Landlord’s Contractor for the major trades, which approval shall not be unreasonably withheld,
conditioned or delayed. Attached hereto as Schedule B-4 is a list of those major trade
subcontractors that are pre-approved by Tenant (the “Pre-Approved Major Trade Subcontractors”).
Notwithstanding anything to the contrary contained herein, Tenant shall have the right to retain
any of the Pre-Approved Major Trade Subcontractors for the Initial Tenant Improvements, provided,
however, that Tenant or Tenant’s Contractor enters into a written contract with such Pre-Approved
Major Trade Subcontractor(s), that Tenant and/or Tenant’s Contractor pay all amounts owed to such
Pre-Approved Major Trade Subcontractors under such contracts, and that under no circumstances shall
Tenant or its contractor have any right to direct the Pre-Approved Major Trade Subcontractors with
respect to Landlord’s Work.

          1.7.2 Construction Documents for Landlord’s Work. Attached hereto as Schedule B-3 is
a list of the design development documents for Landlord’s Work, as the same may change due to
changes required by the local governmental authority and changes resulting from the value
engineering process (the “Design Development Documents”). Landlord shall cause to be prepared the
plans and specifications for the construction of Landlord’s Work (the “Landlord’s Work Construction
Documents”) based on the Design Development Documents, and upon its completion, Landlord shall
deliver copies of the Landlord’s Work Construction Documents to Tenant. Landlord warrants to
Tenant, for a period of one year after Substantial Completion of the Building Shell, except for
Landlord’s Work Punch List and the portion of the Building Shell that may lag Substantial
Completion of the Building Shell as provided in Exhibit B-1 where the warranty period shall be one
year from completion of such portions of the work (the “Landlord’s Warranty Period”), (A) the
Landlord’s Work shall be constructed in accordance with the Plans (as defined in Section 1.7.3
below); (B) the Landlord’s Work shall comply with all Applicable Laws (as defined in Section 2.4 of
the Lease), including but not limited to the California Uniform Building Code; and (C) there shall
be no Hazardous Materials introduced or generated in, on, or about the Premises as part of
Landlord’s Work in violation of any Applicable Laws. For such warranty to be effective, Tenant
must notify Landlord of the violation within the Landlord’s Warranty Period.

          1.7.3 Tenant’s Acceptance of Landlord’s Construction Documents. Subject to Section
1.7.2 above, Tenant shall either accept or reasonably reject the Landlord’s Work Construction
Documents, in writing, within ten (10) business days after Tenant’s receipt of the Landlord’s Work
Construction Documents. Tenant shall not have the right to reject any improvements or details
specified in the Landlord’s Work Construction Documents if such improvements or details are
specified or contemplated in the Design Development Documents, as the same shall change to reflect
changes required by the local governmental authority and changes resulting from the value
engineering process. If Tenant rejects the Landlord’s Work Construction Documents, Tenant’s
written notice of rejection shall reasonably detail the reasons for such rejection. If Tenant does
not accept or reasonably reject, in writing, all or any portion of the Landlord’s Work Construction
Documents within said ten (10) business day period, it shall have no further right to review such
Landlord’s Work Construction Documents and Landlord may use the Landlord’s Work Construction
Documents as if they had been accepted. If Tenant timely and reasonably rejects the Landlord’s
Work Construction Documents, Landlord shall modify the Landlord’s Work Construction Documents and
provide modified Landlord’s Work Construction Documents to Tenant. Thereafter, for each set of
modified Landlord’s Work Construction Documents, Tenant shall either accept or reasonably reject,
in writing, the modified Landlord’s Work Construction Documents by providing Landlord with a notice
of acceptance, or a reasonably detailed statement of the reasons for the rejection, within five (5)
business days after Tenant’s receipt of the modified Landlord’s Work Construction Documents. If
Tenant does not accept or reasonably reject the modified Landlord’s Work Construction Documents, in
writing, within said five (5) business day period, it shall have no further right to review such
modified
Landlord’s Work Construction Documents, it shall be deemed to have accepted the modified
Landlord’s Work Construction Documents, and Landlord may use the modified Landlord’s Work
Construction Documents as if they had been accepted. Conversely, if Landlord decides, in its sole
discretion, to revise the Landlord’s Work Construction Documents or modified Landlord’s Work
Construction Documents pursuant to an untimely request from Tenant, Tenant shall be responsible for
all actual delays to the Substantial Completion of

11

 

          Landlord’s Work associated with such revision,
and the Commencement Date shall be subject to adjustment as a result thereof in accordance with the
provisions of Section 1.6.7 above. The final Landlord’s Work Construction Documents are referred
to herein as the “Plans.”

     1.8. Landlord’s Permits. Landlord shall, at Landlord’s sole cost and expense, procure
all permits, licenses, consents, notices and other approvals necessary to commence and complete
Landlord’s Work from all public and quasi-public authorities with jurisdiction (collectively, the
"Permits”). Landlord agrees to use its reasonably diligent efforts to obtain such Permits. If
prior to obtaining the Permits for Landlord’s Work, any governmental authority having jurisdiction
over the construction of Landlord’s Work or any portion thereof shall impose terms or conditions
upon the construction thereof which: (i) are materially inconsistent with the project envisioned in
the local governmental planning department’s approval of the proposed development that has been
accepted by Landlord (the “Planning Department Approval”), (ii) materially increase the cost of
constructing Landlord’s Work over what was reasonably envisioned in the Planning Department
Approval, or (iii) substantially delay the construction of Landlord’s Work beyond the Outside
Completion Date (each of the foregoing, a “Material Project Change”), Landlord and Tenant shall
reasonably, diligently, and in good faith seek means by which to mitigate or eliminate any such
adverse terms and conditions. If the parties are unable to agree upon such mitigation prior to
July 1, 2008 (the “Resolution Date”), which date may be extended by Landlord for up to an
additional ninety (90) days upon written notice to Tenant thirty days prior to the Resolution Date,
then this Agreement shall be subject to termination pursuant to Section 1.6.2 above. Any terms and
provisions required by a governmental authority that do not result in a Material Project Change
shall not give either party the right to terminate this Agreement.

     1.9. Construction Requirements for Landlord’s Work.

          1.9.1 Selection of Contractor. Landlord has selected the general contractor
identified in Section 1.7.1.2 above to be Landlord’s Contractor to construct Landlord’s Work.

          1.9.2 Landlord’s Design Changes.

               1.9.2.1 Changes Requested by Government. Landlord shall have the authority, without
the consent of Tenant, but with notice to Tenant and Tenant’s Architect, which notice may take the
form of a copy of a Landlord Change Directive, as defined in Section 1.10.1.2 below, to order any
changes to Landlord’s Work required by, or in order to comply with, Applicable Laws; provided that
such changes do not materially affect Tenant’s Permitted Use or occupancy of the Premises. Landlord
agrees to cooperate with Tenant in connection with such changes to attempt to mitigate any
additional Costs of Landlord’s Work in connection therewith, but Landlord makes no assurances that
such mitigation may be achieved, nor shall Tenant be entitled to terminate the Lease or have any
abatement in rent.

               1.9.2.2 Minor Changes. Landlord shall have the authority, without Tenant’s consent,
but with notice to Tenant and Tenant’s Architect, which notice may take the form of a copy of a
Landlord Change Directive, as defined in Section 1.10.1.2 below, to order any work that is
necessary in order to complete Landlord’s Work as contemplated herein, or to order minor changes in
Landlord’s work that do not adversely and materially affect the Costs of Landlord’s Work, the
quality of Landlord’s Work, or the schedule for the completion of the same; provided that such
changes do not materially affect Tenant’s Permitted Use or occupancy of the Premises, nor
materially increase (x) Tenant’s Costs of the Work (as defined in Section 2.6.5 hereof), (y) the
cost of installing Tenant’s furnishings and equipment, or (z) the costs associated with Tenant’s
use or occupancy of the Premises.

               1.9.2.3 Other Design Changes. Subject to the limitations on any material increases in
the Costs of Landlord’s Work in this Work Letter and in Exhibit D to the Lease, Landlord shall also
have the right, with Tenant’s prior written consent in accordance with Section 1.10.1.2 below,
which consent shall not be unreasonably withheld, conditioned or
delayed, to order Landlord Change Directives for any other reasons not covered under Section
1.9.2.1 or 1.9.2.2 above; provided, however, that if the Landlord Change Directive proposed by
Landlord will increase Tenant’s Costs of the Work, Tenant shall notify Landlord of the same, in
writing, at the time Tenant consents to such Landlord Change Directive. Such written notice from
Tenant shall also specify the estimated increase in Tenant’s Costs of the Work resulting

12

 

from such
Landlord Change Directive. Should Landlord decide to proceed with such Landlord Change Directive,
notwithstanding such notice from Tenant, then Landlord shall be responsible for all additional
Tenant’s Costs of the Work incurred by Tenant as a result of such Landlord Change Directive.

     1.10. Coordination of Changes

          1.10.1 Landlord’s Obligation to Coordinate Changes to Landlord’s Work.

               1.10.1.1 Landlord’s Coordination Obligations. Landlord shall cause Landlord’s
Architect to coordinate the development of any material change in the design of Landlord’s Work
with Tenant’s Architect, and Tenant shall cause Tenant’s Architect to coordinate with Landlord’s
Architect so Landlord’s Architect can coordinate such design change with the design of the Initial
Tenant Improvements, and so Tenant’s Architect can provide information to Landlord’s Architect in
order to allow Landlord’s Architect to mitigate Tenant’s damages as a result of such changes. No
approval of Tenant’s Architect to any design change shall be binding on Tenant unless Tenant has
also provided such approval in writing to Landlord to the extent the approval of Tenant is required
under Sections 1.9.2.1 through 1.9.2.3 of this Exhibit.

               1.10.1.2 Landlord’s Change Directives. Landlord shall have Landlord’s Contractor copy
Tenant on any requests for information (“RFI’s”) submitted by Landlord’s Contractor. In addition,
Landlord shall copy Tenant on any (a) responses to RFI’s, (b) change orders, and (c) any plan
clarifications sent to Landlord’s Contractor (collectively, “Landlord Change Directives”). It
shall be Tenant’s responsibility to review that information, and to object to the same within three
(3) business days after receiving Landlord’s Change Directives, if the same will impact the design
or construction of the Initial Tenant Improvements. Should Tenant fail to deliver written notice
to Landlord, within three (3) business days after receiving a Landlord Change Directive, then all
directions to Landlord’s Contractor set forth in any such Landlord Change Directive shall be deemed
to have no impact on the design or construction of the Initial Tenant Improvements.

               1.10.1.3 Landlord’s Obligation to Maintain As-Built Drawings. Landlord agrees to
reasonably cooperate with Tenant in order to allow Tenant (and Tenant’s Architect) to obtain the
most recent information regarding the Premises and the status and condition of Landlord’s Work,
which cooperation shall include requiring Landlord’s Contractor to keep an updated set of
“As-Built” drawings on site, and to make its “As-Built” drawings available for review by Landlord,
Landlord’s Architect, Tenant, and Tenant’s Architect.

          1.10.2 Tenant’s Obligation to Coordinate Changes to Tenant’s Work.

               1.10.2.1 Incorporation of Design Information. Tenant shall require that Tenant’s
Architect incorporate into the design of the Initial Tenant Improvements any information that it
receives from Landlord or Landlord’s Contractor regarding Landlord’s Work, including but not
limited to any Landlord Change Directive, and that it coordinate the design of the Initial Tenant
Improvements with Landlord’s Work.

               1.10.2.2 Tenant’s Obligation to Incorporate Changes Into its Design. At Landlord’s
request, Tenant shall attend (or shall cause Tenant’s Architect to attend) job site meetings for
purposes of discussing the progress of Landlord’s Work, the coordination of Landlord’s Work with
the Initial Tenant Improvements, and for purposes of reviewing the “As-Built” drawings prepared by
Landlord’s Contractor. If Tenant or Tenant’s Architect believes that the incorporation of any such
information into the plans for the Initial Tenant Improvements will increase the Tenant’s Costs of
the Work (as defined in Section 2.6.5 hereof), Tenant and/or Tenant’s Architect must notify
Landlord of the same, in writing, within three (3) business days after such meeting. Should Tenant
or Tenant’s Architect fail to notify Landlord of the same within said three (3) business day
period, then such information shall be deemed to have no
effect on the Tenant’s Costs of the Work. Should Tenant or Tenant’s Architect notify
Landlord, in writing, that such information will increase the Tenant’s Costs of the Work if such
information is incorporated into the plans for the Initial Tenant Improvements, then Landlord and
Tenant shall meet informally in an attempt to resolve the matter. Should the parties fail to
resolve the matter during the meeting, any dispute regarding the same shall be resolved by

13

 

binding
arbitration with the San Francisco, California office of the American Arbitration Association,
pursuant to the Commercial Rules of the American Arbitration Association.

               1.10.2.3 Tenant’s Obligation to Have Subcontractors Take Measurements. Tenant shall
require that (a) Tenant’s Contractor take field measurements of Landlord’s Work before installing
any work affected by Landlord’s Work, and that (b) Tenant’s Contractor immediately notify Landlord
and Tenant, in writing, of any material discrepancies between such field measurements and the plans
for the Initial Tenant Improvements. Should it be determined that the material discrepancies
resulted from the negligence of Landlord’s Architect or Landlord’s Contractor, then Landlord shall
be responsible for all additional Tenant’s Costs of the Work and any delays incurred by Tenant as a
result of such material discrepancies, but only to the extent of such additional costs could not
have been reasonably avoided (i) by Tenant’s contractor immediately notifying Landlord, in writing,
of any such material discrepancies after it was discovered, or would have been discovered by Tenant
or Tenant’s Contractor if it took field measurements as required above, or (ii) by Tenant
incorporating any information contained within a Landlord Change Directive into its Tenant’s Final
Plans (defined in Section 2.3.1) or any addendum or plan clarification to Tenant’s Final Plans.

     1.11. Change Requests. Tenant shall have the right to request changes to the
Landlord’s Work Construction Documents as set forth herein (each a “Change Request”), and Landlord
agrees not to unreasonably withhold approval of any such Change Request; provided, however, that
(a) Tenant first complies with all other terms and provisions of this Exhibit regarding such Change
Requests; (b) the Change Request is of a similar character to the other elements of Landlord’s Work
being constructed by Landlord’s Contractor; (c) such Change Request does not negatively affect the
market value of the completed Premises; (d) such Change Request does not negatively affect the
structural integrity of the building or the quality or the integrity of the other engineered
elements of Landlord’s Work; (e) such Change Request will not have an adverse effect on the
exterior appearance of either (1) the Building or (2) that portion of the Premises outside the
boundaries of the Building (as reasonably determined by Landlord); and (f) Tenant provides Landlord
with all reasonable and necessary information to implement the Change Request.

          1.11.1 Change Request Procedure. Tenant shall submit all proposed Change Requests to
Landlord in writing, along with all necessary plans and specifications that may be necessary for
Landlord to review and approve the Change Request. Landlord will either approve or disapprove of
the Change Request, in writing, within ten (10) business days after receiving Tenant’s proposed
Change Request. If Landlord disapproves of a Change Request, such notice of disapproval shall
specify in reasonable detail the basis for Landlord’s disapproval. Landlord shall be deemed to
have approved of Tenant’s proposed Change Request unless Landlord delivers written notice
disapproving of the Change Request within said ten (10) business day period. If Landlord approves
or is deemed to have approved of the Change Request, then Landlord shall have Landlord’s Architect
prepare plans and/or specifications with respect to such Change Request (the “Change Request
Plans”) based upon the information provided to Landlord in Tenant’s proposed written Change
Request. Notwithstanding the foregoing, if Landlord determines, in its reasonable discretion, that
Change Request Plans are not necessary to implement the Change Request, then Landlord shall not be
required to cause Change Request Plans to be prepared for such Change Request. All reasonable
costs associated with the design, permitting, implementation and construction of the Change Request
(the “Change Request Work”) that increase the Costs of Landlord’s Work shall be Tenant’s
responsibility, and any cost savings resulting from Change Request Work shall be factored into
Minimum Monthly Rent calculations made pursuant to Exhibit D to the Lease.

          1.11.2 Approval of Change Request Plans. Subject to Section 1.11.1, upon completion
of any Change Request Plans, Landlord shall submit such plans to Tenant for Tenant’s review and
approval. Tenant shall approve or reasonably reject such Change Request Plans, in writing, within
five (5) business days after Tenant’s receipt of the same. If Tenant
timely rejects such Change Request Plans, Tenant shall notify Landlord of the requested
revisions to such Plans at the time Tenant’s notice of rejection is given to Landlord. Thereafter,
Landlord shall proceed with the modifications to the Change Request Plans and shall submit the
modified Change Request Plans to Tenant for Tenant’s approval or reasonable rejection. If Tenant
fails to deliver written notice of approval or rejection within said five (5) business day period,
Tenant will be deemed to have abandoned the Change Request. Landlord shall continue

14

 

to make
revisions and submit such Change Request Plans to Tenant for Tenant’s approval until (a) Tenant
provides written notice of acceptance, or (b) Tenant fails to provide timely written notice of its
rejection of the revised Change Request Plans. Landlord will have no obligation to modify the
Change Request Plans after an untimely response by Tenant.

          1.11.3 Cost of Change Request. If Tenant gives Landlord timely written notice of its
acceptance of any Change Request Plans (or if Landlord notifies Tenant, in writing, that Change
Request plans are not necessary to implement the Change Request), then within ten (10) business
days after Landlord receives such written notice of acceptance of any Change Request Plans from
Tenant (or at the time that Landlord notifies Tenant that Change Request plans are not necessary to
implement the Change Request), Landlord shall notify Tenant, in writing (the “Change Request Cost
Notice”), of the cost of the Change Request (the “Change Request Cost”) and of the impact the
Change Request will have on the date of Substantial Completion of the Building Shell and/or
Landlord’s Work (the “Change Request Delay”). The Change Request Cost and the Change Request Delay
shall be reasonably determined by Landlord. If after receiving such Change Request Cost Notice,
Tenant elects to proceed with the Change Request, Tenant shall notify Landlord of the same, in
writing, within five (5) business days after receiving the Change Request Cost Notice, and shall
concurrently deliver to Landlord the Change Request Cost specified in Landlord’s Change Request
Cost Notice. Conversely, Tenant may utilize any remaining amounts of the Tenant Improvement
Allowance to pay such Change Request Cost, provided Tenant notifies Landlord of such election at
the time Tenant notifies Landlord that it is electing to proceed with the Change Request. Landlord
shall not be obligated to commence any Change Request Work until Tenant pays Landlord the Change
Request Cost, or notifies Landlord, in writing, that it is utilizing the Tenant Improvement
Allowance to pay for such Change Request Cost. Furthermore, if Tenant elects to proceed with the
Change Request, Tenant and Landlord shall be bound by Landlord’s determination as to the Change
Request Cost and the Change Request Delay. In the event that Tenant does not elect to proceed with
the Change Request Work, Tenant shall nonetheless be obligated to pay all of the Costs of
Landlord’s Work reasonably incurred by Landlord in processing the Change Request and preparing the
Change Request Plans, including all out-of-pocket design fees incurred by Landlord, within thirty
(30) calendar days after receiving Landlord’s written request for payment of the same.
Conversely, Tenant may, by delivering written notice to Landlord within said thirty (30) day
period, utilize any remaining amounts of the Tenant Improvement Allowance to pay for such Change
Request Cost.

ARTICLE 2. TENANT’S WORK

     2.1. Initial Tenant Improvements. Tenant shall plan, design and construct certain
improvements (the “Initial Tenant Improvements”) in accordance with (a) the terms and provisions of
this Article 2, (b) the other terms and conditions of the Lease, and (c) all Applicable Laws.
Landlord and Tenant acknowledge and agree that the Building will be improved by Tenant with “Office
Space” and/or “Lab Space.” “Lab Space” is defined as areas within the Building that are to be
primarily equipped for scientific experimentation, research, observation, or testing that may
include equipment and fixtures, such as hoods and casework, used to support work conducted within
the lab, but which may include incidental offices for research personnel, which may comprise up to
40% of the Lab Space. “Office Space” is defined as all other areas within the Building that are
not Lab Space, exclusive of any subterranean garage parking or subterranean storage areas.
Notwithstanding the foregoing, however, a portion of the Service Area (as defined in the Lease) may
be designated by Tenant, from time to time, but subject to the approval of Landlord (which approval
shall not be unreasonably withheld, conditioned or delayed by Landlord), as storage space, which
space shall not be added to the Rentable Square Footage of the Building, and Tenant shall not
receive any additional Tenant Improvement Allowance for such space, but such space shall be subject
to the Service Area Minimum Monthly Rent as further described in the Lease.

     2.2. Definitions. For purposes of this Article 2, each of the following terms shall
have the following meaning:

          2.2.1 Tenant’s Contractor. The general contractor selected by Tenant and approved by
Landlord, in writing, which approval shall not be unreasonably withheld, to construct the Initial
Tenant Improvements (herein referred to as “Tenant’s Contractor”). The Tenant’s Contractor must be
licensed and bondable in the State of California. Landlord shall

15

 

provide written notice of such
approval or disapproval within ten (10) business days after Tenant’s request for such approval.

          2.2.2 Construction Contract. The construction contract entered into between Tenant
and the Tenant’s Contractor for the Initial Tenant Improvements, which shall be approved by
Landlord, in writing, prior to execution, which approval shall not be unreasonably withheld,
conditioned or delayed, and if Landlord’s written approval or disapproval, accompanied by a written
detailed description of changes required by Landlord to satisfy its concerns relating to the
proposed contract, is not received within ten (10) business days after such contract is submitted
to Landlord for Landlord’s approval, then Landlord’s approval of the proposed construction contract
shall be deemed to have been received (provided it contains the required provisions of
subparagraphs 2.2.2.1 — 2.2.2.5 below). Such Construction Contract shall require, in addition to
any other provisions reasonably requested by Landlord, that:

               2.2.2.1 Tenant’s Contractor carry workers compensation insurance as required by law, and
employers liability insurance in an amount equal to $1,000,000, and shall require that all
subcontractors carry such insurance as well.

               2.2.2.2 Tenant’s Contractor carry comprehensive general liability or commercial general
liability insurance, covering Premises damage, personal injury, death, and products and completed
operations coverage, in an amount not less than $3,000,000 per occurrence, and $5,000,000 in the
aggregate with deductibles of no more than $10,000, naming Landlord and its affiliates, employees
and agents as additional insureds, by endorsement (on an ISO form 2010 11 85), with an insurance
company with a minimum of an A-VIII rating. The Construction Contract shall also require that all
of Tenant’s Contractor’s subcontractors carry such insurance as well, except that subcontractors
under subcontracts for less than ten percent (10%) of the cost of the Initial Tenant Improvements
shall only be required to carry such insurance in an amount of not less than $1,000,000 per
occurrence and $2,000,000 in the aggregate; provided that the insurance coverage of any of Tenant’s
subcontractors required under this Section may be provided, in whole or in part, through a blanket
policy of such insurance coverage maintained by Tenant’s Contractor which expressly provides that
the insured’s subcontractors are covered thereunder. Such insurance shall be maintained at all
times during the construction of the Initial Tenant Improvements, except for the products and
completed operation coverage, which coverage is to be maintained for ten (10) years following
completion of the work. Furthermore, such insurance shall preclude or waive subrogation claims by
the insurer against Landlord, its affiliates, or their agents, employees, or representatives.
Such insurance shall also provide that it is primary insurance with respect to the Landlord and
that any other insurance maintained by Landlord is excess and noncontributing with the insurance
required hereunder.

               2.2.2.3 Tenant’s Contractor deliver to Tenant and Landlord certificates of insurance, with
endorsements, evidencing the insurance requirements set forth in the Construction Contract prior to
Tenant’s Contractor’s entering the Premises.

               2.2.2.4 Tenant’s Contractor (to the greatest extent allowed by law) shall protect, defend,
indemnify, and hold harmless Landlord and its agents, employees, and representatives, for all
costs, losses, damages, injuries and liabilities related in any way to any act or omission of
Contractor or any of its subcontractors, suppliers, subcontractors, consultants, agents, or
representatives, or anyone directly or indirectly employed by any of them, with respect to the
Initial Tenant Improvements.

               2.2.2.5 Landlord be named as a third party beneficiary with respect to the Tenant’s
Contractor’s insurance and indemnity provisions of the Construction Contract.

          2.2.3 Construction Costs. Except as otherwise expressly set forth herein, any and all
costs, expenses, fees, taxes and charges relating to or associated with the Initial Tenant
Improvements and the design and/or construction of the same, shall be borne solely by Tenant.

     2.3. Plans for Initial Tenant Improvements.

          2.3.1 Preliminary Plans. Except as otherwise set forth herein, Tenant shall submit to
Landlord, and obtain Landlord’s approval of, any architectural floor plan of the Initial Tenant
Improvements to the Premises (“Proposed Preliminary Plans”). Landlord shall not

16

 

unreasonably
withhold its approval of such Proposed Preliminary Plans, provided, however, that (a) Tenant first
complies with all other terms and provisions of this Lease regarding the submittal of such Proposed
Preliminary Plans, (b) the design set forth in the Proposed Preliminary Plans does not negatively
affect the structural integrity of the Building Shell or the quality or the integrity of the other
engineered elements of Landlord’s Work; (c) the design set forth in the Proposed Preliminary Plans
will not have an adverse effect on the exterior appearance of the Building (as reasonably
determined by Landlord) or the portion of the Premises outside the Building, and (d) Tenant
provides Landlord will all reasonable and necessary information necessary to evaluate the Proposed
Preliminary Plans. After receiving such Proposed Preliminary Plans, Landlord shall notify Tenant
in writing whether (i) Landlord approves of such Proposed Preliminary Plans, or whether (ii)
Landlord disapproves of such Proposed Preliminary Plans. If Landlord disapproves of such Proposed
Preliminary Plans, Landlord’s disapproval notice shall specify the basis for such disapproval. If
Landlord fails to notify Tenant, in writing, of its disapproval of such Proposed Preliminary Plans,
along with the written description of the reasons for such disapproval, within ten (10) business
days after receiving the same, Landlord shall be deemed to have approved of such Proposed
Preliminary Plans. If Landlord disapproves of such Proposed Preliminary Plans, Tenant shall cause
the Proposed Preliminary Plans to be revised as required to address Landlord’s specified concerns,
and shall submit the revised preliminary plans to Landlord for its review and approval as provided
in this Section, and such procedure shall continue until Landlord has approved of (or is deemed to
have approved of) the revised preliminary plans submitted by Tenant. After Landlord’s approval of
the Proposed Preliminary Plans as provided above, such preliminary plans shall be referred to in
this Article 2 as “Tenant’s Preliminary Plans.”

          2.3.2 Final Plans. After Landlord’s approval or deemed approval of Tenant’s
Preliminary Plans, Tenant shall submit to Landlord, for Landlord’s review and approval, the plans
and specifications for the Initial Tenant Improvements, which shall be consistent with Tenant’s
Preliminary Plans (“Tenant’s Construction Documents”), and which shall be compatible with the
Landlord’s Construction Documents previously provided to Tenant by Landlord. After receiving the
Tenant’s Construction Documents, Landlord shall notify Tenant in writing whether (i) Landlord
approves of Tenant’s Construction Documents, which approval shall not be unreasonably withheld,
conditioned or delayed by Landlord, or (ii) Landlord reasonably disapproves of Tenant’s
Construction Documents. If Landlord reasonably disapproves of Tenant’s Construction Documents,
Landlord’s disapproval notice shall specify the basis for such disapproval. If Landlord fails to
notify Tenant, in writing, of its disapproval of Tenant’s Construction Documents, along with the
written description of the reasons for such disapproval, within ten (10) business days after
receiving the same, Landlord shall be deemed to have approved of Tenant’s Construction Documents.
If Landlord reasonably disapproves of Tenant’s Construction Documents and provides the written
description of the reasons for such disapproval as required, Tenant shall cause Tenant’s
Construction Documents to be revised as required to address Landlord’s specified concerns, and
shall submit the revised Tenant’s Construction Documents to Landlord for its review and approval as
provided in this Section, and such procedure shall continue until Landlord has approved Tenant’s
Construction Documents submitted by Tenant. After approval of Tenant’s Construction Documents as
provided above, such Tenant’s Construction Documents shall be referred to as “Tenant’s Final
Plans,” and Tenant shall generate a project schedule for construction of the Initial Tenant
Improvements (the “Schedule”), as approved by Landlord, which approval shall not be unreasonably
withheld, conditioned or delayed. Landlord acknowledges that Tenant’s business requirements for
the Building are subject to change during the one-year period following the date of the Lease, and
agrees that if any changes to Tenant’s intended use of the Premises result in Initial Tenant
Improvements which will reasonably require more time for construction than is currently anticipated
by Tenant, then Landlord will not unreasonably withhold its approval of a Schedule
that reasonably requires longer periods for completion of the Initial Tenant Improvements than
the sixty (60) day period following Substantial Completion of Landlord’s Work set forth Section
2.4.4.1 below; provided, however, that any additional time provided for construction of such work
shall not postpone or delay the date for the commencement of the Term of the Lease or the date by
which Tenant must commence paying rent or any other sums under the Lease. Tenant shall submit a
copy of Tenant’s Final Plans and the Schedule to Landlord for its records prior to commencing the
construction of the Initial Tenant Improvements. Notwithstanding the foregoing, where more than
one type of material or structure is indicated on Tenant’s Final Plans

17

 

approved by Landlord and
Tenant, the determination shall be made by Tenant in Tenant’s reasonable discretion.

          2.3.3 Landlord Information. Except for the Plans and other Construction Documents
provided by Landlord with respect to Landlord’s Work, all other information provided to Tenant by
Landlord is being made without any representation or warranty by Landlord, it being acknowledged by
Tenant that such information was furnished to Landlord by third parties, and Landlord shall not
have any liability or responsibility for the same; provided, however, that Landlord shall promptly
notify Tenant if Landlord discovers that any of the information furnished to Tenant by Landlord is
not materially true and correct. Tenant may look to the source of any reports for representations
or liabilities associated with any inaccuracies contained therein.

          2.3.4 Coordination With Landlord’s Work. Tenant shall require Tenant’s Architect to
coordinate its design of the Initial Tenant Improvements, and any changes to the Initial Tenant
Improvements, with Landlord’s Architect. Such coordination includes, but is not limited to,
reviewing Landlord Change Directives as more fully described in Section 1.10 above. In addition,
Tenant shall require that Tenant’s Contractor (a) take field measurements of Landlord’s Work before
installing any work affected by Landlord’s Work, and (b) immediately notify Landlord and Tenant, in
writing, of any material discrepancies between such field measurements and the Tenant’s Final
Plans, as further set forth in Section 1.10 above.

          2.3.5 General. It is the responsibility of Tenant to assure that Tenant’s Final Plans
and the Initial Tenant Improvements constructed thereunder conform to all of the Applicable Laws.
Landlord’s acceptance or approval of any plan, drawing or specification, including, without
limitation, Tenant’s Preliminary Plans, Tenant’s Final Plans, or any changes thereto, shall not
constitute the assumption of any responsibility by Landlord for the accuracy or sufficiency of such
plans and material, and Tenant shall be solely responsible therefor. Tenant agrees and understands
that the review by Landlord of all plans pursuant to the Lease or this Exhibit B is to
protect the interests of Landlord in the Building and the Premises, and Landlord shall not be the
guarantor of, nor responsible for, the correctness, completeness or accuracy of any such plans or
compliance of such plans with Applicable Laws. Notwithstanding the foregoing, when requesting
Landlord’s approval of any change to Tenant’s Final Plans, then to the extent such change effects
the engineered elements of the Initial Tenant Improvements, Tenant shall provide certification from
Tenant’s Architect and the applicable engineers that the requested change has been reviewed and
approved by such party.

          2.3.6 Changes.

               2.3.6.1 Non-Material Changes. After Landlord’s approval of Tenant’s Final Plans and
Schedule, any changes to Tenant’s Final Plans or Schedule that are not “material” (as defined in
Section 2.3.6.3 below) shall not require Landlord’s prior written consent. However, Tenant shall
cause Tenant’s Contractor, promptly after the implementation of such change, to update the as-built
drawings to reflect such changes to Tenant’s Final Plans.

               2.3.6.2 Material Changes. After Landlord’s Approval of Tenant’s Final Plans and
Schedule, any changes to Tenant’s Final Plans or Schedule that are “material” (as defined in
Section 2.3.6.3 below) shall require Landlord’s prior written consent, which consent shall not be
unreasonably withheld, conditioned or delayed.

               2.3.6.3 Definition of a Material Change. For purposes of Section 2.3.6.1 and 2.3.6.2
above, a “material” change is one that (a) will substantially change the character of the design of
the Initial Tenant Improvements contemplated in the Tenant’s Final Plans, (b) will delay completion
of the Initial Tenant Improvements by more than sixty (60) days
after the scheduled completion date set forth in the Schedule, (c) will materially and
adversely affect the market value of the Premises (exclusive of the Initial Tenant Improvements),
(d) will have a material adverse effect on the exterior appearance of the Building or the
appearance of the portion of the Premises outside the Building, or (e) will adversely and
materially affect the design or construction of the Landlord’s Work. For example, but without
limitation, a change in the number of offices on a floor of the Building Shell is not considered a
material change.

18

 

          2.3.7 Requirements when the Initial Tenant Improvements Affect Landlord’s Work.
Notwithstanding anything to the contrary contained herein, should any design for the Initial Tenant
Improvements (or any changes to the Initial Tenant Improvements) result in any change to the design
or specifications of the engineered elements of Landlord’s Work, or is reasonably likely to have an
adverse effect on any warranty provided to Landlord by Landlord’s Contractor or its material
suppliers with respect to Landlord’s Work, then Tenant shall either (a) have Landlord perform such
work, on Tenant’s behalf, pursuant to a Change Request in accordance with Section 1.11 above, or
(b) utilize Landlord’s Architect and/or Landlord’s Contractor and/or any subcontractor of
Landlord’s Contractor as necessary, for the design and construction of that portion of the Initial
Tenant Improvements, or any alterations to Landlord’s Work required by Tenant for the construction
of the Initial Tenant Improvements, or for the fixturing or furnishing of the Premises, to the
extent required to maintain (y) all contractual warranties provided to Landlord by Landlord’s
Contractor or its material suppliers with respect to such Landlord’s Work, and (z) all of
Landlord’s contractual rights and remedies against Landlord’s Architect with respect to the design
of Landlord’s Work. The decision as to whether Tenant shall comply with clauses (a) or (b) above
shall be made by Landlord in Landlord’s sole and absolute discretion. Notwithstanding anything to
the contrary contained herein, should Tenant fail to retain such parties for such work, Tenant
shall be responsible for the cost of any repairs that would have been covered by any warranty that
is invalidated as a result of such failure.

          2.3.8 Change Order Review Costs. Tenant shall reimburse Landlord for its reasonable
out of pocket costs incurred in third-party engineering review of any “material” changes (as
defined in Section 2.3.6.3) to Tenant’s Final Plans. Landlord agrees not to request any such third
party review unnecessarily. Tenant shall pay Landlord such amounts within thirty (30) days after
receiving a written invoice from Landlord requesting payment for the same.

          2.3.9 Tenant’s Obligation to Remove Initial Tenant Improvements. All Initial Tenant
Improvements shall be the property of Tenant until the expiration or earlier termination of this
Lease; at that time all such Initial Tenant Improvements shall remain on the Premises and become
the property of Landlord without payment therefor, unless Landlord gives written notice to Tenant
to remove the same at the time Landlord approves Tenant’s Final Plans, in which event Tenant shall
remove such Initial Tenant Improvements at the expiration or earlier termination of the Lease and
repair any damage resulting therefrom, normal wear and tear excepted; provided that Tenant’s
removable trade fixtures and personal property (such as case work, laboratory fixtures and other
personal properties) shall be and remain Tenant’s property, and shall be removed by Tenant from the
Premises, at Tenant’s sole cost, on or before the expiration or earlier termination of this Lease,
and Tenant shall repair all damage to the Premises resulting from such removal, normal wear and
tear excepted. Landlord’s right to require removal shall be limited to only those Initial Tenant
Improvements that are not normally found in a combined administrative office and wet and dry
laboratory facility (for example, fitness areas) or that are not of a scale appropriate to the size
of the building (for instance, if a cafeteria seating capacity is designed to accommodate a
population greater than that which can be housed in the Building then Landlord shall have the right
to require that Tenant remove (or, at Tenant’s election, downsize) those improvements designed for
a population greater than that housed in the Building).

     2.4. Construction of Initial Tenant Improvements.

          2.4.1 Pre-Construction Submittals to Landlord. At least ten (10) business days prior
to the commencement of construction of the Initial Tenant Improvements, Tenant shall submit the
following items to Landlord:

               2.4.1.1 A written statement setting forth the proposed commencement date and the estimated
completion date for the Initial Tenant Improvements;

               2.4.1.2 Certificates of insurance (and endorsements) from Tenant, Tenant’s Contractor, and
all other Tenant parties (exclusive of Tenant’s Contractor’s subcontractors) intending to enter the
Premises for purposes of constructing the Initial Tenant Improvements, evidencing the insurance
required to be maintained by such parties pursuant to the terms of this Lease;

19

 

               2.4.1.3 Copies of all building permits, and all other permits and approvals required by
governmental agencies to construct the Initial Tenant Improvements; and

               2.4.1.4 A copy of the fully executed Construction Contract with Tenant’s Contractor.

Notwithstanding the foregoing, at least ten (10) business days prior to the commencement of work by
any subcontractor hired by Tenant’s Contractor to perform (in whole or in part) the Initial Tenant
Improvements, Tenant shall provide Landlord with written notice of the name and address of such
subcontractor, the scope of work of such subcontractor, and certificates of insurance from such
subcontractor, evidencing the insurance required to be maintained by such subcontractor (or by
Tenant’s Contractor on behalf of such subcontractor) under Section 2.2.2.2 of this Work Letter.

          2.4.2 Conduct of Work. Tenant shall cause Tenant’s Contractor to perform the work of
the Initial Tenant Improvements in an orderly manner, removing trash and debris generated by
Tenant’s Contractor and its subcontractors from the Premises as required to maintain a safe and
orderly worksite, and Tenant shall not permit any pipes, wires, boards or other construction
materials brought into the Premises by Tenant’s Contractor or any of its subcontractors to cross
public areas in a manner constituting a nuisance. All construction work of the Initial Tenant
Improvements shall be undertaken in material compliance with all Applicable Laws and Landlord’s
reasonable rules and regulations. If Tenant fails to comply with these requirements, Landlord
shall have the right, but not the obligation, in addition to all other remedies available to
Landlord due to Tenant’s default, to cause remedial action (at Tenant’s cost) as reasonably deemed
necessary by Landlord to protect the public. Tenant shall complete construction of the Initial
Tenant Improvements free and clear of all liens, security interests and encumbrances of any kind,
and (subject to Tenant’s right under Section 2.4.4.2 below) Tenant shall remove from title (by
bonding or otherwise) any mechanic’s liens filed against the Building and/or the Premises within
fifteen (15) business days following Tenant’s notice thereof. If Tenant fails to post such bond or
otherwise remove such lien of record within said time period, Landlord shall have the right, but
not the obligation, in addition to all other rights and remedies available under the Lease and the
applicable requirements of Section 2.4.4.2 below, to pay the claim for such lien or obtain a bond
to remove the lien as a lien against property, in which event Tenant shall reimburse Landlord in
full, including attorneys’ fees, for any such expense, within fifteen (15) days after notice from
Landlord.

          2.4.3 Use of Equipment. Landlord and Tenant acknowledge that during the sixty (60)
day Early Access Period, and thereafter while Landlord is completing the Landlord’s Work and any
Punch List work associated with Landlord’s Work, it is anticipated that Landlord and Tenant will
both be performing work within the Premises concurrently, and that Landlord’s Contractor or any
subcontractor of Landlord’s Contractor may have equipment on the Premises for the performance of
Landlord’s Work that Tenant (or Tenant’s Contractor or any subcontractor of Tenant’s Contractor) is
desirous of using for the construction of the Initial Tenant Improvements. Should Tenant be
desirous of using any such equipment for the performance of the Initial Tenant Improvements, Tenant
must obtain the prior written consent of Landlord (which will not be unreasonably withheld provided
the use of such equipment will not delay the completion of Landlord’s Work or increase the costs of
Landlord’s Work) and Landlord’s Contractor or any subcontractor that owns, rents or has control
over such equipment to use such equipment, provided, however, that Tenant’s Contractor and any
subcontractor of Tenant’s Contractor shall be able to use the elevator or other alternative
exterior service elevator for access to the upper floors of the Building and the temporary
electrical power source to the Building. Landlord will cooperate with Tenant at no additional cost
or liability to Landlord in Tenant’s efforts to obtain the consent of Landlord’s Contractor or any
subcontractor, as the case may be, for the use by Tenant or Tenant’s Contactor of such equipment.
Tenant shall be solely responsible for payment of any additional costs, fees and charges required
by Landlord’s Contractor or the subcontractor for such use of the equipment. If such additional
costs, fees or charges are assessed to Landlord, then Tenant shall pay Landlord for such costs, fees or
charges within thirty (30) days after written request from Landlord. Tenant shall be responsible
for any damage to person or property, including any damage to any equipment of Landlord or
Landlord’s Contractor or subcontractor as a result of use of such equipment by Tenant or Tenant’s
Contractor or any subcontractor of Tenant’s Contractor. Tenant shall protect defend, indemnify,
and hold Landlord, and its agents, representatives, consultants, contractors, and

20

 

affiliated
entities harmless from and against any and all claims, actions, damages, liability and expense
(including, without limitation, fees of attorneys, investigators and experts) in connection with
loss of life, personal injury or damage to property in or about the Premises as a result of the use
of any such equipment by Tenant or anyone under Tenant’s control.

          2.4.4 Establishment of Escrow Account / Posting of Bonds.

               2.4.4.1 Schedule for Tenant’s Initial Tenant Improvements. With respect to the
schedule for the construction of the Initial Tenant Improvements, based on Tenant’s current
business projections, Tenant currently intends to substantially complete the Initial Tenant
Improvements within nine (9) months after the Substantial Completion of the Building Shell;
provided, however, that the schedule for construction shall be determined following Landlord’s
approval of the Final Tenant Plans, and shall be established in the Schedule in accordance with
Section 2.3.2 above. Subject to Tenant’s right to adjust the Schedule as set forth in Section
2.3.2 above, if, at any time after that date which is sixty (60) days following Substantial
Completion of the Building Shell, Tenant is more than sixty (60) days behind schedule with respect
to the construction of the Initial Tenant Improvements, as set forth in the Schedule, subject to
Force Majeure Delays and Landlord Delays, Landlord shall have the right, by delivering written
notice of the same to Tenant, and if Tenant does not remedy such failure within thirty (30) days
following receipt of such written notice, then Tenant shall be obligated to comply with the terms
and provisions of Section 2.4.4.3 below.

               2.4.4.2 Failure to Obtain Mechanic’s Lien Releases. As a condition to paying any
contractor, subcontractor, material supplier, or design professional (that has served or filed
pre-lien notices with Landlord) providing labor, material, equipment or services with respect to
the Initial Tenant Improvements, Tenant agrees to obtain conditional and unconditional lien
releases from such contractors, subcontractors, material suppliers, or design professionals in
accordance with California law, and agrees to promptly deliver the latest copies of the same to
Landlord on a monthly basis; provided, however, that the foregoing shall not prohibit Tenant from
engaging in good faith disputes, from time to time, with such persons relating to the cost and/or
performance of their goods and services; in which case, Tenant shall not be required to provide
conditional or unconditional lien releases from persons who are engaged with Tenant in such
disputes as long as (i) Tenant removes, whether by posting a bond or otherwise paying a claim, any
mechanic’s lien filed against the Real Property even if Tenant is in good faith disputing such
claim or lien, and (ii) the aggregate amount of all disputed claims outstanding at any time is not
more than $100,000. If the aggregate amount of the disputed claims are more than $100,000.00, then
Tenant shall be required to deposit in escrow that amount in excess of $100,000.00, which amount
shall be held in escrow until either (a) the amount in dispute is equal to or less than
$100,000.00, or (b) Tenant provides a surety bond resulting in the unbonded amount of disputed
claims being equal to or less than $100,000.00. Such escrow account shall be established in
accordance with the requirements set forth in Section 2.4.4.3.1 below. If a mechanic’s lien for a
disputed claim for which funds have been deposited in escrow by Tenant is bonded off by Tenant,
then funds deposited in escrow for such disputed claim may be withdrawn from escrow. If as a
result of such bonding, the amount of the bonded claims are less than or equal to $100,000.00, then
the entire escrowed amount shall be refunded to Tenant. Should Tenant fail to provide Landlord
with evidence that Tenant has made timely payment to such contractors, subcontractors, material
suppliers or design professionals of undisputed funds in accordance with the requirements of
Section 2.6.4 below, and removed (or bonded off) any lien against the Real Property, then provided
that Tenant does not remedy such failure within fifteen (15) business days after Landlord notifies
Tenant, in writing, to do the same, then Landlord shall have the right, by delivering written
notice of the same to Tenant, to require that Tenant comply with the terms and provisions of
Section 2.4.4.3 below.

               2.4.4.3 Adequate Assurance of Completion. Should Tenant fail to timely cure any
failure to comply with its obligations under Section 2.4.4.1 or 2.4.4.2 above, then Tenant shall
immediately thereafter, do one of the following:

                    2.4.4.3.1 Escrow Account. Tenant shall place that portion of Tenant’s Over Allowance
Amount that is reasonably necessary for Tenant to fund the remaining Tenant’s Costs of the Work (as
defined in Section 2.6 below), as reasonably determined by Landlord and Tenant, into an escrow
account established by Landlord for the benefit of both Landlord and Tenant. Said escrow account
shall be used to fund all amounts

21

 

remaining payable to the contractors, subcontractors, engineers,
designers, material suppliers and all other parties entitled to payment for the design or
construction of the Initial Tenant Improvements at the time such escrow is to be funded. Money may
only be withdrawn from such escrow account for purposes of paying the contractors, subcontractors,
engineers, designers, material suppliers and all other parties entitled to payment for the design
and/or construction of the Initial Tenant Improvements. In addition, the withdrawal of funds from
such escrow account shall only be made with either (a) a certification for payment from Tenant’s
Architect that the parties entitled to payment have performed the work associated with such
withdrawal request, or (b) written authorization from both Landlord and Tenant; and under no
circumstances shall money be withdrawn from such account unless all corresponding conditional and
unconditional lien releases are provided by the parties to be paid from such escrow account.
Landlord and Tenant agree to timely execute any escrow instructions that are reasonably necessary
in order to carry out the intent of this Section 2.4.4.3.1.

                    2.4.4.3.2 Bonds. Tenant shall provide Landlord, at Tenant’s sole cost and expense,
with a completion bond, a performance bond, and/or other bond requested by Landlord as may be
necessary to complete the Initial Tenant Improvements and to protect Landlord’s interest in the
Building, the Premises, and/or the Real Property. The amount of such bond(s) shall be reasonably
determined by Landlord and Tenant, but shall be based on that portion of Tenant’s Over Allowance
Amount that is reasonably necessary for Tenant to fund the remaining Tenant’s Costs of the Work.

          2.4.5 Notice of Completion; Copy of Record-Set of Plans. Within ten (10) calendar
days after completion of construction of the Initial Tenant Improvements, Tenant shall cause a
notice of completion (or the equivalent notice required under applicable local law to provide
notice to all contractors, subcontractors and materialmen that the work is completed and the time
for filing any mechanics’ lien is running) to be recorded in the Official Records of the County in
which the Building is located, and shall furnish a copy thereof to Landlord upon such recordation.
If Tenant fails to do so, Landlord may execute and file the same on behalf of Tenant as Tenant’s
agent for such purpose, at Tenant’s sole cost and expense. At the conclusion of construction: (a)
Tenant shall cause Tenant’s Contractor and Tenant’s Architect, as applicable (i) to update Tenant’s
Final Plans as necessary to reflect all changes made to Tenant’s Final Plans during the course of
construction, (ii) to certify to the best of their knowledge that the “record-set” of as-built
drawings are true and correct, which certification shall survive the expiration or termination of
the Lease, and (iii) to deliver to Landlord two (2) sets of printed copies of “as-built” drawings
(in computer assisted design format (“CAD”)), as well as an electronic formatted copy, within
ninety (90) calendar days following issuance of a certificate of occupancy for the Premises; and
(b) Tenant shall deliver to Landlord a copy of all signed building permits and certificates of
occupancy, and all warranties, guaranties, and operating manuals and information relating to the
Initial Tenant Improvements. Further, after the expiration of the Term or the earlier termination
of the Lease, Tenant shall, at Landlord’s written request, promptly assign to Landlord all of
Tenant’s remaining rights, title and interest in and to any and all Plans, contracts, warranties,
guarantees and other documents associated with those Initial Tenant Improvements remaining on the
Premises after Tenant’s surrender thereof.

          2.4.6 Correction of Work. As a condition to the payment of each progress payment of
the Tenant Improvement Allowance, Landlord may notify Landlord’s Architect, Tenant and Tenant’s
Architect of Landlord’s decision to perform a walk-through inspection of the Initial Tenant
Improvements on a day that is not later than five (5) business days following Landlord’s receipt of
the Draw Request for each progress payment and the date and time (during normal business hours) for
such walk-through inspection of the Initial Tenant Improvements for purposes of determining whether
there are any patent defects in the construction of the Initial
Tenant Improvements (the “Progress Payment Walk-Through Inspection”). Such scheduled date and time
for a Progress Payment Walk-Through Inspection is referred to herein as a “Progress Payment
Walk-Through Date.” Landlord, Tenant and Tenant’s Contractor, as well as Tenant’s Architect (if
desired by Tenant), shall meet at the Premises at the designated time on the inspection date. If
Tenant’s desired representative(s) is/are not available on the applicable Progress Payment
Walk-Through Date, Tenant shall notify Landlord of the same, in writing, at least two (2) days
prior to the applicable Progress Payment Walk-Through Date, in which case, the parties shall
coordinate another date and time for the walk-through, which shall be no later than five (5) days
after the originally scheduled Progress Payment Walk-Through Date. If during the Progress Payment
Walk-Through Inspection, Landlord and Tenant agree that the

22

 

corresponding work is free of material
defects and in substantial conformance with the Tenant’s Final Plans, then (a) Landlord and Tenant
shall document such fact in writing (the “TI Completion Notice”), and (b) Landlord shall identify,
in writing, those items of the Initial Tenant Improvements that are in need of repair, or that have
yet to be completed, and that Tenant agrees to repair (the “TI Punch List”); provided, however,
that any TI Punch List work shall be minor in nature, and shall not interfere with the continued
construction of the Initial Tenant Improvements or occupancy of the Premises for the Permitted Uses
set forth in the Lease in connection with the Final Scheduled Payment, and shall, in any case, be
reasonably capable of completion within thirty (30) days after the applicable Progress Payment
Walk-Through Date. Should Tenant disagree with the items on the TI Punch List, Tenant shall notify
Landlord, in writing within two (2) business days following receipt of the proposed TI Punch List
from Landlord, of such disagreement and Tenant’s proposed changes to the TI Punch List. If the
parties are unable to agree upon the TI Punch List scope of work, then any such disagreement shall
be resolved in accordance with Section 1.4.6.2; provided that the applicable Progress Payment shall
be made by Landlord net of the reasonably estimated cost of correcting the TI Punch List items
disputed by Tenant. The TI Completion Notice shall be binding on Landlord and Tenant, subject to
resolution of any disagreement relating to the scope of work of the TI Punch List. TI Punch List
items that are determined to be defective or not in substantial conformity with Tenant’s Final
Plans (as may be amended in accordance with the requirements set forth herein) shall be promptly
corrected by Tenant. Landlord’s failure to require a Progress Payment Walk-Through Inspection by
timely delivery of the written notice required above shall be deemed Landlord’s waiver of such
inspection rights for such Progress Payment.

     2.5. Indemnity/Insurance.

          2.5.1 Indemnity. Tenant’s obligation to defend, indemnify, and hold Landlord harmless
as set forth in the Lease shall also apply with respect to any and all costs, losses, damages,
injuries and liabilities (collectively, “Claims”) related in any way to the Initial Tenant
Improvements, or any act or omission of Tenant or any contractor, subcontractor, material supplier,
architect, engineer, consultant or any other party employed, directly or indirectly, by Tenant with
respect to the Initial Tenant Improvements, or in connection with Tenant’s non-payment of any
amount arising out of the Initial Tenant Improvements that Tenant is required to pay pursuant to
the terms of this Lease; provided, however, that Tenant shall not be obligated to defend,
indemnify, and hold Landlord harmless from and against any such Claims to the extent the same arise
directly due to Landlord’s intentional failure to timely pay Tenant any portion of the Tenant
Improvement Allowance that is then due, payable, and undisputed under this Work Letter.

          2.5.2 Insurance Requirements. In addition to the insurance requirements set forth in
the Lease, until the Final Scheduled Payment is received by Tenant in accordance with Section
2.6.3.3 below, Tenant shall carry, or shall cause its Contractor to carry, “Builder’s All-Risk”
insurance for the full replacement cost of the Initial Tenant Improvements, and otherwise in the
form required in Section 2.2.2.2 of this Work Letter. Such “Builder’s All-Risk” insurance coverage
shall preclude or waive subrogation claims by the insurer against Landlord, or its agents,
employees, or representatives, and any certificate evidencing such insurance coverage shall contain
a provision that the company writing said policy, or its agent, will endeavor to give Landlord
thirty (30) calendar days’ prior written notice of any cancellation or lapse of the policy or any
reduction in the amounts of such insurance. In the event that the Initial Tenant Improvements are
damaged by any cause during the course of the construction thereof, Tenant shall immediately repair
the same at Tenant’s sole cost and expense, subject to Landlord’s obligation to repair any damages
to the Landlord’s Work covered by Landlord’s insurance. Prior
to Substantial Completion of Landlord’s Work, Landlord shall carry, or cause Landlord’s
Contractor to carry, “Builder’s All Risk” insurance for the full replacement cost of Landlord’s
Work, excluding costs for footings and excavation and any off-site work, as an expense included in
the cost of Landlord’s Work prior to Substantial Completion of the Building Shell, and in CAM
Charges thereafter. Landlord shall cause such “Builder’s All-Risk” insurance coverage on the
Landlord’s Work to preclude or waive subrogation claims by the insurer against Tenant, or its
agents, employees or representatives, and any certificate evidencing such insurance coverage shall
contain a provision that the company writing such policy, or its agent, will endeavor to give
Tenant thirty (30) calendar days prior written notice of any cancellation or lapse of the policy or
any reduction in the amounts of such insurance prior to the Substantial Completion of Landlord’s
Work. Upon Substantial Completion of the Landlord’s Work, the “Builder’s All-Risk”

23

 

insurance coverage shall be replaced by an “all risk” policy of property insurance covering the replacement
cost of Landlord’s Work (exclusive of the Initial Tenant Improvements) in accordance with the
requirements of Section 6.3.1 of the Lease. Following Landlord’s receipt of a Draw Request
satisfying the conditions for the Final Scheduled Payment, Landlord shall cause the Landlord’s “all
risk” policy of insurance on the Premises to include the full replacement cost of the Initial
Tenant Improvements, and delivery of the Final Scheduled Payment shall be deemed Landlord’s
assumption of property insurance coverage for the Initial Tenant Improvements. In the event that
the Landlord’s Work is damaged by any cause during the course of construction thereof, Landlord
shall immediately repair the same at Landlord’s sole cost and expense, subject to Tenant’s
obligation to repair any damages to the Initial Tenant Improvements covered by Tenant’s insurance.
The requirements for the foregoing insurance shall not derogate from the provisions for
indemnification of Landlord by Tenant under the Lease or this Work Letter.

     2.6. Tenant’s Costs of the Work and Tenant Improvement Allowance.

          2.6.1 Tenant Improvement Allowance. Landlord agrees to reimburse Tenant Sixty-Six
Dollars and Sixty-Seven Cents ($66.67) per square foot of the Rentable Square Footage of the
Building (as defined in Section 2.1 of the Lease) (collectively, the “Tenant Improvement
Allowance”) for Tenant’s Costs of the Work (defined in Section 2.6.5 below) incurred by Tenant for
the construction of the Initial Tenant Improvements. Before the Initial Payment toward the cost
of the Initial Tenant Improvements, Landlord and Tenant shall agree on (a) the total square footage
of the Rentable Square Footage of the Building as provided in Section 2.1 of the Lease, and (b) on
the total amount of the Tenant Improvement Allowance. Such square footage determination, as well
as such Tenant Improvement Allowance determination, shall be binding on Landlord and Tenant
throughout the Lease Term.

          2.6.2 Tenant’s Responsibility for Costs; Distribution of Allowance. Tenant shall bear
the cost of Initial Tenant Improvements, including, without limitation, costs in connection with
design, engineering, plan checking, special inspections and testing, Tenant’s consultants, and
permits and fees for the Initial Tenant Improvements. After Landlord’s approval of Tenant’s Final
Plans, Tenant shall deliver to Landlord (for Landlord’s review and approval, which approval shall
not be unreasonably withheld, conditioned, or delayed) a detailed breakdown of the estimated costs
to be incurred for the design and construction of the Initial Tenant Improvements (the “Total
Estimated Costs of Tenant’s Initial Improvements”). Tenant shall incorporate any reasonable
requested changes from Landlord with respect to such estimated costs. Tenant shall update such
estimate from time to time to reflect any increases in the costs of constructing the Initial Tenant
Improvements. After Landlord’s approval of the Total Estimated Costs of Tenant’s Initial
Improvements, Tenant shall provide Landlord with a detailed breakdown of the estimated final costs
to be incurred, and that have been incurred, in connection with the Initial Tenant Improvements,
setting forth the estimated cost of the construction of the Initial Tenant Improvements in excess
of the Tenant Improvement Allowance (the “Over Allowance Amount”).

          2.6.3 Distribution of Tenant Improvement Allowance. During the construction of the
Initial Tenant Improvements, the Tenant Improvement Allowance (to the extent payable to Tenant)
shall be disbursed by Landlord in three payments to Tenant as follows:

               2.6.3.1 Provided that Tenant complies with the Draw Request procedures set forth in Section
2.4.6 above and Section 2.6.4 below, after 33% of the Total Estimated Costs of Tenant’s Initial
Improvements (as modified by any changes thereto as
permitted under Section 2.3.6 above) have been paid by Tenant and after Tenant’s Architect
certifies, in writing, that the Initial Tenant Improvements are at least 33% complete, Tenant shall
have the right to request a draw on the Tenant Improvement Allowance in an amount equal to the
product of the Tenant Improvement Allowance times 33%, minus any portion of the Tenant Improvement
Allowance previously paid by Landlord for any Change Request Costs as provided in Section 1.11.3
above, which amount requested by Tenant shall be paid by Landlord in accordance with Section 2.6.4
below (“Initial Payment”).

               2.6.3.2 Provided that Tenant complies with the Draw Request procedures set forth in Section
2.4.6 above and Section 2.6.4 below, after 66% of the Total Estimated Costs of Tenant’s Initial
Improvements (as modified by any changes thereto as

24

 

permitted under Section 2.3.6 above) have been
paid by Tenant and after Tenant’s Architect certifies, in writing, that the Initial Tenant
Improvements are at least 66% complete, Tenant shall have the right to request an additional draw
down on the Tenant Improvement Allowance in an amount equal to the product of the Tenant
Improvement Allowance times 66%, minus any portion of the Tenant Improvement Allowance previously
paid by Landlord at Tenant’s request, which amount requested by Tenant shall be paid by Landlord in
accordance with Section 2.6.4 below.

               2.6.3.3 Provided that Tenant complies with the Draw Request procedures set forth in Section
2.4.6 above and Section 2.6.4 below, after 100% of the Total Estimated Costs of the Work for
Tenant’s Initial Improvements (as modified by any changes thereto as permitted under Section 2.3.6
above) have been paid by Tenant and after Tenant’s Architect certifies, in writing, that the
Initial Tenant Improvements are 100% complete (except for any TI Punch List items), Tenant shall
have the right to request an additional draw down on the remaining balance of the Tenant
Improvement Allowance, which amount requested by Tenant shall be paid by Landlord in accordance
with Section 2.6.4 below (the “Final Scheduled Payment”) provided, however, that under no
circumstances shall such draw down amount cause the total amount withdrawn from the Tenant
Improvement Allowance to exceed the Tenant’s Costs of the Work (as defined in Section 2.6.5 below).

               2.6.3.4 Notwithstanding anything to the contrary contained herein, as of the Commencement
Date, if any portion of the Tenant Improvement Allowance has yet to be paid to Tenant, Tenant shall
be allowed to draw down the entire remaining unpaid balance of the Tenant Improvement Allowance to
reimburse Tenant for a portion of the Over Allowance Amount previously paid by Tenant.

          2.6.4 Draw Request for Payment of Allowance.

               2.6.4.1 Any request to draw on the Tenant Improvement Allowance (each, a “Draw Request”) shall
include the following items, the delivery of which are a condition to Landlord’s obligation to pay
Tenant the Tenant Improvement Allowance hereunder: (a) a copy of all design, consultant,
construction, and material supplier contracts for the Initial Tenant Improvements (the “Tenant
Construction Contracts”), that have been entered into by Tenant prior to the date of the Draw
Request (which shall cover all work for which Tenant seeks payment under the Draw Request) and any
change orders associated therewith (each contract and change order need be submitted only once and
may be in the form of Tenant’s corporate form of purchase orders for change orders and supplier
contracts); (b) a copy of the latest request for payment from Tenant’s Contractor, approved by
Tenant, in a form reasonably acceptable to Landlord, showing the percentage of completion of the
Tenant Improvements in the Premises, and detailing the portion of the work completed, and the
portion not completed, as well as a copy of the corresponding executed conditional and
unconditional mechanic’s lien release associated with such invoice from Tenant’s Contractor meeting
the requirements of California law; (c) copies of the latest up to date executed conditional and
unconditional mechanic’s lien releases, in accordance with California law, from all engineers,
subcontractors, and material suppliers that have served or filed pre-lien notices with Landlord, in
the statutory form; (d) a certificate from Tenant’s Architect certifying the requisite percentage
of completion of the work associated with the Initial Tenant Improvements has been completed so as
to entitle Tenant to draw on the Tenant Improvement Allowance, and (e) evidence showing that the
Tenant’s Costs of the Work paid for by Tenant as of the date that such Draw Request is submitted to
Landlord equal or exceed the requisite percentage of Tenant’s Estimated Costs of Tenant’s
Improvements. Notwithstanding the foregoing, if Tenant has paid any portion of the Tenant’s Costs of the
Work to Tenant’s Contractor or any subcontractors, engineers, design professionals or material
suppliers, but pursuant to any unresolved dispute, such persons shall fail to deliver an
unconditional lien waiver, then as long as Tenant provides reasonably satisfactory security against
the enforcement of any mechanics’ lien not waived unconditionally pursuant to the requirements in
Sections 2.4.4 (and all subsections thereof), Tenant shall receive reimbursement of the amount paid
by Tenant from the Tenant Improvement Allowance.

               2.6.4.2 Thereafter, Landlord shall deliver a check made payable to Tenant for the amount
requested by Tenant from the Tenant Improvement Allowance within twenty (20) days following receipt
of a Draw Request including the information required pursuant to Section 2.6.4.1. Landlord’s
payment of such amounts shall not be deemed

25

 

Landlord’s approval or acceptance of the work furnished
or materials supplied as set forth in Tenant’s Draw Request.

               2.6.4.3 Tenant shall cooperate in a commercially reasonable manner (and as long as such
disbursement schedule does not result in any increased costs to Tenant due to late fees or interest
payable to its contractors or suppliers) with the disbursement schedule of Landlord’s construction
lender and Landlord shall use reasonable efforts to insure that such amounts are paid promptly in
accordance with Section 2.6.4.2 above.

     Notwithstanding anything to the contrary contained herein, Landlord shall have no obligation
to pay Tenant, and Tenant shall waive its right to collect from Landlord, any portion of the Tenant
Improvement Allowance that is not invoiced to Landlord, in accordance with the requirements set
forth herein within eighteen (18) months after the Commencement Date.

          2.6.5 Tenant’s Costs of the Work. For purposes of this Work Letter, the “Tenant’s
Costs of the Work” shall mean and include all of the following costs incurred by Tenant with
respect to the design and construction of the Initial Tenant Improvements: (a) all design fees,
engineering fees and plan check fees, (b) all deposits, fees and costs for building and other
permits, licenses and approvals; (c) tests and inspections; (d) insurance and bond premiums; and
(e) all amounts payable to architects, engineers, designers, contractors, and subcontractors
retained by Tenant or Tenant’s Contractor for the Initial Tenant Improvements, and all suppliers
and vendors providing materials and services as part of the work of the Initial Tenant
Improvements. Tenant’s Costs of the Work expressly excludes the costs of (i) Tenant’s furniture,
and (ii) any Tenant equipment that Tenant may remove from the Premises in its sole discretion at
the expiration of the Term or the earlier termination of the Lease, pursuant to the terms and
provisions of the Lease.

     2.7. Transfer/Assignment of Lease. Notwithstanding anything to the contrary contained
herein, to the extent that the Landlord originally named in the Lease (the “Original Landlord”)
assigns or otherwise transfers its interest in the Premises prior to (a) the substantial completion
of Landlord’s Work, or (b) Landlord’s distribution of the entire Tenant Improvement Allowance which
Tenant is entitled to receive under this Work Letter (collectively, the “Original Landlord
Requirements”), then the Original Landlord shall remain responsible for, and shall warrant the
completion of such Original Landlord Requirements, notwithstanding such conveyance, unless the new
owner has expressly agreed to assume the obligation to perform the Original Landlord Requirements.

     2.8. Temporary Facilities During Construction. Until the Substantial Completion of the
Building Shell, storage of Tenant’s Contractor’s and subcontractors’ construction material, tools,
equipment and debris shall be confined to those areas that are reasonably designated for such
purposes by Landlord; provided, however that the location of such storage areas will not interfere
with Tenant’s completion of the Initial Tenant Improvements. Landlord shall not be responsible for
any loss or damage to Tenant, Tenant’s Contractor, or their agents, representatives,
subcontractors, consultant’s or employees’ equipment (each, a “Tenant Party”), unless such loss or
damage arising from the gross negligence or willful misconduct of Landlord or Landlord’s Contractor
or any of their respective agents, representatives, subcontractors or employees so long as such
loss or damage is covered by insurance carried by the applicable Tenant Party. After the
Substantial Completion of the Building Shell, and until the Substantial Completion of Landlord’s
Work, storage of Landlord’s Contractor’s and Tenant’s Contractor’s construction material, tools,
equipment and debris outside the Building Shell shall be confined to
those areas outside the Building Shell that may be designated for such purposes by Landlord,
and storage of same within the Building Shell shall be confined to those areas within the Building
Shell reasonably designated by Tenant, provided, however that the location of such storage areas
will not interfere with Landlord’s completion of Landlord’s Work. Tenant shall not be responsible
for any loss or damage to Landlord, Landlord’s Contractor, or their agents, representatives,
subcontractors, consultant’s or employees’ equipment (each a “Landlord Party”), unless such loss or
damage arising from the gross negligence or willful misconduct of Tenant or Tenant’s Contractor or
any of their respective agents, representatives, subcontractors or employees so long as such loss
or damage is covered by insurance carried by the applicable Landlord Party; provided, however, that
this Section shall be subject to any agreement that Tenant may have with such Landlord Party as
required under Section 2.4.3.

26

 

ARTICLE 3. MISCELLANEOUS

     3.1. Business Day. A “business day” is a day other than a Saturday, a Sunday or a
legal holiday as recognized by the Superior Court in the County in which the Premises are located.
Unless expressly defined as a “business day”, all references to the term “day” shall mean a
“calendar day.”

     3.2. Time of the Essence. Time is of the essence in this Work Letter, and unless
otherwise indicated, all references herein to a “number of days” shall mean and refer to calendar
days.

27

 

SCHEDULE B-1

THE BUILDING SHELL

(LANDLORD’S WORK)

Building Specifications

“*” indicates Landlord’s Work that may lag

behind the Substantial Completion of the Building Shell.

     The developed building shell and site will reflect a high image Life Science/R&D environment
per a schedule of design drawings attached. The building shell shall include the following:

Building Structure, Foundation and Floors

	 	•	 	One three (3) story steel braced frame building over grade level and
sub-grade parking.
	 
	 	•	 	Structural components for a shell building, including foundations,
footings, columns, beams, joints, purlins, girders, headers and other
structural members as required to support the building structure.

* Podium and surface parking on south side of Building
	 
	 	•	 	Fireproofing of structure as required by code.
	 
	 	•	 	Seismic importance factor of structure to be 1.0 per code.
	 
	 	•	 	Vibration design criteria are in the 6000-8000 MPS range at the 2nd and
3rd floors and in the 4000-5000 MPS range at the podium level.
	 
	 	•	 	Exterior façade will be a curtain wall system consisting of double
insulated glass and GFRC, or precast concrete, or metal panels. Interior
walls will be unfinished and will not include insulation, drywall, studs,
etc.
	 
	 	•	 	Typical building floor to floor heights to be sixteen (16) feet.
	 
	 	•	 	Typical elevated floors to have vented metal deck with concrete topping
slab. The floor ratings are as follows:

Garage to 1st floor: 4 hour

1st to 2nd floor:       2 hour

2nd to 3rd floor:       2 hour

Roof:                         1 hour

	 	•	 	Waterproof membrane on podium level under landscape panel.
	 
	 	•	 	Parking level 2 and a portion of Parking level 1 consist of reinforced
concrete slab-on-grade with capillary moisture break; the remaining portion
of Parking level 1 consists of an elevated conventionally reinforced
supported slab.
	 
	 	•	 	Main building entrances to include double (narrow style aluminum) doors
and canopy; design and installation of vestibule, custom doors, door
security, specialty hardware or modifications to be a part of tenant
improvement.
	 
	 	•	 	Two stairs assemblies with enclosures as required by code.
	 
	 	•	 	Exterior and/or basement level service area with location and size to be
determined.
	 
	 	•	 	One loading area with loading door.

Roof

	 	•	 	Roof: Vented metal deck with 2.5 inch concrete topping.
	 
	 	•	 	Roof system: Four ply built-up roof or single ply EPDM or PVC systems
with insulation to meet Title 24 requirements.
	 
	 	•	 	Roof screen design: Landlord to design roof screen with support system
to support future penthouse; supports for major rooftop equipment and davit
pedestals of window washing will be stubbed through roof membrane; roof
screen installation to be part of tenant improvement.

1

 

	 	•	 	Ladder and roof hatch for roof access.

Elevators

	 	•	 	Installation of one hydraulic freight elevator, 5,000 lbs. rated, 150
fpm capacity.
	 
	 	•	 	Installation of two traction passenger elevators, 3,500 lbs. Rate, 350
fpm capacity.
	 
	 	•	 	* May be pending State of California inspection/licensing of elevators

Sewer, Drainage and Plumbing

	 	•	 	Sanitary sewer line to be stubbed into building and capped for future
connection. Any monitoring requirements to be part of the tenant
improvement.
	 
	 	•	 	The sanitary sewer lateral (domestic) will be distributed in the garage
level to be connected with the trash enclosure floor drain. All lateral
distribution to be part of the Initial Tenant Improvements.
	 
	 	•	 	Domestic and irrigation water mains connected to the city water main in
the street. Domestic line to be brought to the building with all
distribution to be part of the tenant improvement.
	 
	 	•	 	Roof drain leaders and roof overflows piped and draining onto paved
areas or connected to the site storm drainage system.
	 
	 	•	 	Underground site storm drainage systems shall be connected to the city
storm system main.
	 
	 	•	 	Service hook-up and meter fees at cost of Tenant.

Utilities and Electrical

	 	•	 	The electrical service is anticipated to be 2,000 to 3,000 amps of
277/480 volt, three phase, four wire power. The electrical service will
include underground conduit, wire feeders, transformers, transformer pads,
as well as secondary conduits and secondary feeders from transformer pads
into the building’s electrical room.
	 
	 	•	 	Underground pull section and house panel for exterior lighting,
landscaping, and garage ventilation system. *Meter may be part of the
Landlord’s Work to be done after Building Shell completion if the City does
not permit a temporary meter and electricity is being provided from a
neighboring property (provided that the Building Shell work shall not be
substantially complete if Tenant is required to provide electricity for the
work of the Initial Tenant Improvements by means of an on-site generator).
However, Tenant must request and apply to PG&E for the installation of the
meter and the establishment of the account in Tenant’s name before the
meter can be installed.
	 
	 	•	 	* An electrically operated landscape irrigation system, with controller,
such that it is a complete and functioning system.
	 
	 	•	 	Underground conduit from the building to the main fire protection system
shut-off valve (PIV) for installation of supervisory alarm wiring.
	 
	 	•	 	Telephone service conduits from the street to a designated location in
the building.
	 
	 	•	 	* Gas line connected to the public utility main and run to gas meter
location.

Mechanical

	 	•	 	Mechanical exhaust fans as needed for parking garage.
	 
	 	•	 	Mechanical pressurization as needed for stairs.
	 
	 	•	 	Back-up generator to support mechanical items listed above.

Fire Protection (Sprinklers)

	 	•	 	A complete and fully functional overhead shell building system of
ordinary hazard density distributed throughout the building.
	 
	 	•	 	System shall include all upright pendant sprinkler heads (“uppers”) with
future sprinkler head drops to be part of the tenant improvement.

2

 

Sitework and Landscaping

	 	•	 	* Landlord’s Work will include site work outside the building and shall
include grading, asphalt concrete, paving, landscaping, landscape
irrigation, curbs, gutters, sidewalks, specialty paving (if any), retaining
walls, and trash enclosures.
	 
	 	•	 	* Paving sections for automobile and truck access shall be according to
the Geologic Soils Report.
	 
	 	•	 	* All parking lot striping, including handicap signage wheel stops and
spaces.
	 
	 	•	 	* Basic exterior directional signage
	 
	 	•	 	* Site lighting

Structural Design Criteria: Gravity

	 	 	 	The Building will be designed for the gravity loads listed below. The designation of
“Mechanical penthouse” is intended to apply to a specific area above the third floor
roof; the area designated “Roof screened area” is that area outside of the Mechanical
penthouse, bounded by the roof screen; and the area designated as “roof” is the area
outside the roof screen.

	 	 	 	 	 
	Area	 	Live Load	 	Dead Load
	Mechanical penthouse roof

	 	20 psf1
	 	10 psf suspended5
	 
	 	 	 	 
	Roof

	 	20 psf2
	 	10 psf suspended5
	 
	 	 	 	 
	Roof screened area

	 	50 psf2
	 	10 psf suspended5
	 
	 	 	 	 
	Penthouse floor

	 	100—150 psf3
	 	20 psf suspended6
	 
	 	 	 	 
	Third floor

	 	100 psf4
	 	20 psf suspended6
	 
	 	 	 	 
	Second floor

	 	100 psf4
	 	20 psf suspended6
	 
	 	 	 	 
	First floor

	 	100 psf4
	 	20 psf suspended6
	 
	 	 	 	 
	Podium level

	 	250—300 psf4
	 	5 psf suspended5
	 
	 	 	 	 
	Parking level 1

	 	50 psf4
	 	5 psf suspended5
	 
	 	 	 	 
	Parking level 2

	 	50 ps4
	 	NA
	 
	 	 	 	 

 

			
	Footnotes:
	 
	1	 	With allowable area reduction
	 
	2	 	With provision for 5k point load anywhere on joist
	 
	3	 	With provision for 10k point load anywhere on joist
	 
	4	 	With no allowable area reduction in vertical loading on horizontal framing
members, only columns and footings
	 
	5	 	With provision for 2k point load
	 
	6	 	With provision for 5k point load

3

 

SCHEDULE B-2

PRELIMINARY DEVELOPMENT AND DELIVERY SCHEDULE

FOR THE BUILDING SHELL AND LANDLORD’S WORK

	 	 	 
	Phase	 	Lease Benchmark Date
	 
	 	 
	Outside Date to Secure Building Permit (Section 1.6.2)

	 	July 1, 2008
	 
	 	 
	Earliest Date of Early Access for Commencement of Initial Tenant
Improvements (Section 16.3.1)

	 	June 1, 2009
	 
	 	 
	Earliest Date of Substantial Completion of
Building Shell (Section 1.6.3.1)
	 	August 1, 2009 
	 
	 	 
	Probable Date of Substantial Completion of
Building Shell (informational only)

	 	September 15, 2009
	 
	 	 
	Substantial Completion of Building Shell or
Penalties Accrue, subject to Tenant Delays
and/or Force Majeure (Section 1.6.6.1)

	 	October 31, 2009
	 
	 	 
	Substantial Completion of Landlord’s Work or
Penalties Accrue, Subject to Tenant Delays

and/or Force Majeure (Section 1.6.6.2)

	 	November 30, 2009

1

 

SCHEDULE B-3

DESIGN DEVELOPMENT DOCUMENTS

FOR LANDLORD’S WORK

The following list of Design Development Documents attached to this cover sheet is based on design
documents in existence and approved by Landlord and Tenant as of the date of the Lease. The Design
Development Documents may show or contemplate work that is beyond the scope of Landlord’s Work as
described in Exhibit B-1 to Exhibit B. However, the scope of Landlord’s Work is limited to the
work described in Exhibit B-1.

1

 

Schedule B-3

200 Oyster Point Boulevard, South San Francisco

DD Package Drawing List, 10/10/2007

Issued by DGA

	 	 	 	 	 	 	 
	 	 	 	GENERAL
	 
	 	 	 	 	 	 
	 

	 	 	0	 	 	COVER SHEET
	 

	 	 	A0.1	 	 	DRAWING INDEX
	 

	 	 	A0.2	 	 	PROJECT DATA CODE ANALYSIS
	 

	 	 	A0.3	 	 	CODE ANALYSIS EXITING PLANS
	 

	 	 	A0.4	 	 	CODE ANALYSIS EXITING PLANS
	 
	 	 	 	 	 	 
	 	 	 	CIVIL DRAWINGS
	 
	 	 	 	 	 	 
	 

	 	 	C1.0	 	 	EROSION CONTROL PLAN
	 

	 	 	C01.1	 	 	ROUGH GRADING & EROSION CONTROL PLAN
	 

	 	 	C1.1	 	 	GRADING & DRAINAGE PLAN
	 

	 	 	C2.1	 	 	UNDERGROUND PIPING PLAN
	 

	 	 	C3.1	 	 	DETAILS
	 
	 	 	 	 	 	 
	 	 	 	LANDSCAPE DRAWINGS
	 
	 	 	 	 	 	 
	 

	 	 	L0.1	 	 	MATERIAL SCHEDULE, NOTES & LEGENDS
	 

	 	 	L1.0	 	 	LAYOUT PLAN
	 

	 	 	L1.1	 	 	LAYOUT PLAN
	 

	 	 	L3.0	 	 	PLANTING PLAN
	 

	 	 	L3.1	 	 	PLANTING PLAN
	 

	 	 	L5.0	 	 	SITE DETAILS
	 

	 	 	L5.1	 	 	SITE DETAILS
	 

	 	 	L5.2	 	 	SITE DETAILS
	 

	 	 	L5.3	 	 	PLANTING DETAILS
	 
	 	 	 	 	 	 
	 	 	 	ARCHITECTURAL DRAWINGS
	 
	 	 	 	 	 	 
	 

	 	 	A1.0	 	 	SITE PLAN
	 

	 	 	A1.01	 	 	PODIUM SLAB LEVELS & WATER PROOFING
	 

	 	 	A1.1	 	 	SITE DETAILS
	 

	 	 	A1.2	 	 	ENLARGED SITE PLANS
	 
	 	 	 	 	 	 
	 

	 	 	A2.00	 	 	PARKING — LOWER LEVEL FLOOR PLAN
	 

	 	 	A2.0	 	 	PARKING — UPPER LEVEL FLOOR PLAN
	 

	 	 	A2.1	 	 	FIRST LEVEL FLOOR PLAN
	 

	 	 	A2.2	 	 	SECOND LEVEL FLOOR PLAN
	 

	 	 	A2.3	 	 	THIRD LEVEL FLOOR PLAN
	 

	 	 	A2.4	 	 	ROOF LEVEL PLAN
	 
	 	 	 	 	 	 
	 

	 	 	A3.1	 	 	WALL TYPE SCHEDULE & DETAILS
	 

	 	 	A3.2	 	 	DOOR SCHEDULE & DETAILS
	 

	 	 	A3.3	 	 	MOUNTING HEIGHT SCHEDULE
	 
	 	 	 	 	 	 
	 

	 	 	A4.1	 	 	BUILDING SECTIONS
	 

	 	 	A4.2	 	 	BUILDING SECTIONS
	 

	 	 	A4.3	 	 	BUILDING SECTIONS
	 

	 	 	A4.4	 	 	WALL SECTIONS
	 

	 	 	A4.5	 	 	WALL SECTIONS
	 
	 	 	 	 	 	 
	 

	 	 	A5.1	 	 	EXTERIOR ELEVATIONS
	 

	 	 	A5.2	 	 	EXTERIOR ELEVATIONS
	 

	 	 	A5.3	 	 	EXTERIOR ELEVATIONS
	 

	 	 	A5.4	 	 	EXTERIOR ELEVATIONS

1

 

	 	 	 	 	 	 	 
	 

	 	 	A8.1	 	 	INTERIOR DETAILS
	 
	 	 	 	 	 	 
	STRUCTURAL DRAWINGS
	 
	 	 	 	 	 	 
	 

	 	 	S1.0	 	 	GENERAL NOTES, ABBREVIATIONS, SYMBOLS & DRAWING INDEX
	 

	 	 	S2.00	 	 	LOWER LEVEL PARKING SLAB AND FOUNDATION PLAN
	 

	 	 	S2.0	 	 	UPPER LEVEL PRKG STRUCTURAL SLAB FRAMING PLAN
	 

	 	 	S2.1a	 	 	FIRST FLOOR STRUCTURAL SLABL FRAMING PLAN
	 

	 	 	S2.1b	 	 	FIRST FLOOR PODIUM PLAN
	 

	 	 	S2.2	 	 	SECOND FLOOR FRAMING PLAN
	 

	 	 	S2.3	 	 	THIRD FLOOR FRAMING PLAN
	 

	 	 	S2.4	 	 	ROOF FRAMING PLAN
	 
	 	 	 	 	 	 
	 

	 	 	S3.1	 	 	BRACED FRAME ELEVATIONS & COLUMN SCHEDULE
	 
	 	 	 	 	 	 
	 

	 	 	S5.1	 	 	CONCRETE DETAILS
	 

	 	 	S5.2	 	 	CONCRETE FOUNDATION DETAILS
	 

	 	 	S5.3	 	 	CONCRETE SLAB DETAILS
	 
	 	 	 	 	 	 
	 

	 	 	S7.1	 	 	STEEL DECK DETAILS
	 

	 	 	S7.2	 	 	STEEL DETAILS
	 

	 	 	S7.3	 	 	STEEL BRACED FRAME DETAILS
	 
	 	 	 	 	 	 
	 	 	 	MECHANICAL DRAWINGS
	 
	 	 	 	 	 	 
	 

	 	 	M0.1	 	 	SCHEDULES, NOTES & TITLE 24
	 

	 	 	M0.2	 	 	EQUIPMENT SCHEDULE
	 

	 	 	M2.00	 	 	LOWER LEVEL PARKING MECHANICAL PLAN
	 

	 	 	M2.0	 	 	UPPER LEVEL PARKING MECHANICAL PLAN
	 

	 	 	M2.1	 	 	FIRST FLOOR MECHANICAL PLAN
	 

	 	 	M2.4	 	 	MECHANICAL ROOF PLAN
	 
	 	 	 	 	 	 
	 	 	 	PLUMBING
	 
	 	 	 	 	 	 
	 

	 	P	0.1	 	 	INDEX, LEGENDS & SCHEDULES
	 

	 	P	2.00	 	 	PLUMBING LOWER LEVEL PARKING FLOOR PLAN
	 

	 	P	2.0	 	 	PLUMBING UPPER LEVEL PARKING FLOOR PLAN
	 

	 	P	2.1	 	 	FIRST FLOOR PLUMBING PLAN
	 

	 	P	2.2	 	 	SECOND FLOOR PLUMBING PLAN
	 

	 	P	2.3	 	 	THIRD FLOOR PLUMBING PLAN
	 

	 	P	2.4	 	 	ROOF PLUMBING PLAN
	 
	 	 	 	 	 	 
	 	 	 	ELECTRICAL
	 
	 	 	 	 	 	 
	 

	 	 	E0.1	 	 	LEGEND, EXTERIOR TITLE 24 & DRAWING INDEX
	 

	 	 	E0.2	 	 	INTERIOR TITLE 24
	 

	 	 	E1.0	 	 	SITE LIGHTING PLAN
	 

	 	 	E2.00	 	 	LOWER LEVEL PARKING ELECTRICAL PLAN
	 

	 	 	E2.0	 	 	UPPER LEVEL PARKING ELECTRICAL PLAN
	 

	 	 	E2.1	 	 	FIRST FLOOR ELECTRICAL PLAN
	 

	 	 	E2.2	 	 	SECOND FLOOR ELECTRICAL PLAN
	 

	 	 	E2.3	 	 	THIRD FLOOR ELECTRICAL PLAN

2

 

SCHEDULE B-4

PRE-APPROVED MAJOR TRADE SUBCONTRACTOR

200 Oyster Point Boulevard, South San Francisco

	 	 	 	 	 
	TRADE	 	COMPANY	 	LOCATION
	Concrete

	 	Casey-Fogli
	 	Hayward
	Concrete

	 	Central Concrete
	 	San Jose
	Concrete

	 	Dolan Concrete
	 	San Jose
	Concrete

	 	Jos. J. Albanese
	 	Santa Clara
	Concrete

	 	Peck & Hiller Co.
	 	Hayward
	Demolition

	 	Campanella Corporation
	 	Oakland
	Demolition

	 	Demcon
	 	Hayward
	Demolition

	 	Ferma
	 	Mt. View
	Demolition

	 	R&B Equipment
	 	Hayward
	Dock Leveling Equipment

	 	Interpro Systems
	 	Redwood City
	Doors & Hardware

	 	Advanced Doorways
	 	Livermore
	Doors & Hardware

	 	Overhead Door
	 	Newark
	Drywall

	 	Daley’s Drywall
	 	Campbell
	Drywall

	 	Golden Gate Drywall
	 	Burlingame
	Drywall

	 	Interior Design Construction
	 	Fremont
	Drywall

	 	Magnum Drywall
	 	Fremont
	Electrical

	 	Cupertino Electric
	 	San Jose
	Electrical

	 	Redwood City Electric
	 	Redwood City
	Electrical

	 	Sasco/Valley Electric
	 	Santa Clara
	Elevators

	 	Kone, Inc.
	 	Hayward
	Elevators

	 	Otis Elevator company
	 	SF
	Elevators

	 	Schindler Elevator
	 	San Leandro
	Fire Sprinklers

	 	Allied Fire Protection
	 	Oakland
	Fire Sprinklers

	 	Golden Bear Fire
	 	Hayward
	Fire Sprinklers

	 	Grinnell Fire Protection
	 	Rio Linda
	Fire Sprinklers

	 	J.W. McClenahan Co.
	 	San Mateo
	Glass & Glazing

	 	Bagatelos
	 	Sacramento
	Glass & Glazing

	 	CS Erectors
	 	San Ramon
	Glass & Glazing

	 	Walters & Wolf
	 	Fremont
	Grading & Paving

	 	Cozart Brothers
	 	Livermore
	Grading & Paving

	 	Interstate Grading
	 	S.SF
	Grading & Paving

	 	Mancebo Corporation
	 	Fremont
	Grading & Paving

	 	Top Grade
	 	Livermore
	HVAC

	 	ACCO Air Conditioning
	 	Glendale
	HVAC

	 	Cal Air
	 	San Jose
	HVAC

	 	Western Allied
	 	Menlo Park
	Insulation

	 	Rescom Insulation
	 	Hayward
	Landscape & Irrigation

	 	Decorative Paving
	 	San Jose
	Landscape & Irrigation

	 	Jensen Corporation
	 	Cupertino
	Landscape & Irrigation

	 	B&B Landscape
	 	San Jose
	Landscape & Irrigation

	 	Herzer Landscape
	 	San Lorenzo
	Landscape & Irrigation

	 	Maniglia Landscape
	 	San Jose
	Lath & Plaster

	 	Fisher Lath & Plaster
	 	San Jose
	Metal Decking

	 	Anning Johnson Company
	 	Hayward
	Metal Decking

	 	B.T. Mancini
	 	Milpitas
	Metal Decking

	 	JD2
	 	Auburn
	Metal Soffets

	 	LJ Interiors
	 	Livermore
	Misc. Steel

	 	West Co. Iron Works
	 	San Jose
	Painting

	 	Tollner Painting
	 	Mt. View
	Plumbing

	 	Castro Plumbing
	 	San Jose
	Plumbing

	 	KDS Plumbing
	 	San Jose
	Reinforcing Steel

	 	Broadhead
	 	S.SF
	Reinforcing Steel

	 	CMC Fontana Steel
	 	Stockton
	Reinforcing Steel

	 	Coliseum Steel
	 	Oakland
	Reinforcing Steel

	 	Nor Cal Steel
	 	Union City
	Roofing

	 	Alcal Roofing
	 	Hayward
	Roofing

	 	Alliance Roofing
	 	San Jose
	Roofing

	 	King’s Roofing
	 	San Jose
	Roofing

	 	Statewide Roofing
	 	San Jose
	Roofing

	 	Western Roofing
	 	San Jose
	Sheet Metal

	 	Michael D. Burns
	 	San Jose
	Striping

	 	Cee Gee Striping
	 	Campbell
	Striping

	 	Weatherly Striping Co.
	 	San Carlos
	Structural Steel

	 	Bambacigno Steel
	 	Modesto
	Structural Steel

	 	Gayle Manufacturing
	 	Woodland
	Structural Steel

	 	Lee’s Imperial Welding
	 	Fremont
	Structural Steel

	 	Olson & Co. Steel
	 	San Leandro
	Structural Steel

	 	Westco Iron Works
	 	San Jose
	Surveyor

	 	Kier & Wright
	 	Pleasanton
	Underground

	 	Blackwell Trenching
	 	San Jose
	Underground

	 	Hackett Pipeline
	 	San Jose
	Underground

	 	Preston Pipeline
	 	Milpitas
	Underground

	 	R&B Construction
	 	SF
	Underground

	 	Westside Underground
	 	Saratoga
	Waterproofing

	 	Danco Waterproofing
	 	Hayward
	Waterproofing

	 	Lawson
	 	S.SF
	Waterproofing

	 	W.R. Grace
	 	Greenbrae

 

 

EXHIBIT C

RULES AND REGULATIONS

1. No awning, shade, sign, placard, picture, advertisement, name, or notice shall be inscribed,
painted, installed or displayed on or outside the Building without written consent of Landlord.
Landlord shall have the right to remove any such unapproved item without notice and at Lessee’s
expense. All approved signs or lettering on doors and facia shall be printed, painted, affixed or
inscribed at the expense of Tenant by a person chosen by Landlord in accordance with Landlord’s
standard signage policy. All requests for listing on the Building directory shall be submitted to
the office of Landlord in writing and shall be subject to Landlord’s approval, not to be
unreasonably refused. Any change requested by Tenant of Landlord of the name or names posted on
directory, after initial posting, will be charged to Tenant.

2. Tenant, its employees, agents, contractors and invitees shall comply with all parking
regulations promulgated by Landlord from time to time for the orderly use of the vehicle parking
areas, including without limitation the following: Parking shall be limited to automobiles,
passenger or equivalent vans, motorcycles, light four wheeled pickup trucks, and (in designated
areas) bicycles. No vehicles shall be left in the parking lot overnight; provided however that
(i) occasional overnight parking by Tenant’s employees shall be permitted, and (ii) the full-time
parking of Tenant-owned maintenance and other vehicles in the basement of the parking structure
shall be permitted. Parked vehicles shall not be used for vending or any other business or other
activity while parked in the parking areas. Vehicles shall be parked only in striped parking
spaces, except for loading and unloading, which shall occur solely in zones marked for such
purpose, and be so conducted as to not unreasonably interfere with traffic flow within the Project
or with loading and unloading areas of other tenants. If the Premises are part of a multi-tenant
building, then employees of Tenant and Tenant’s vehicles shall not be parked in spaces marked for
visitor parking or other specific use. All vehicles entering or parking in the parking areas shall
do so at owner’s sole risk, and Landlord assumes no responsibility for any damage, destruction,
vandalism or theft. Tenant shall cooperate with Landlord in any measures implemented by Landlord
to control abuse of the parking areas, including without limitation access control programs,
tenant and guest vehicle identification programs, and validated parking programs, provided that no
such validated parking program shall result in Tenant being charged for spaces to which it has a
right to free use under its Lease. Each vehicle owner shall promptly respond to any sounding
vehicle alarm or horn, and failure to do so may result in temporary or permanent exclusion of such
vehicle from the parking areas. Any vehicle which violates the parking regulations may be cited,
towed at the expense of the owner, temporarily or permanently excluded from the parking areas, or
subject to other lawful consequence.

3. Tenant will not install or use any window coverings except those provided by Landlord. Tenant
shall not place anything against or near glass partitions or doors or windows which may appear
unsightly from outside the Building.

4. Tenant shall not use or keep in the Building or on the Premises any kerosene, gasoline or
flammable or combustible fluid or material (collectively, “Combustible Materials”) other than (i)
those limited quantities necessary for the maintenance of office equipment, and (ii) those
Combustible Materials that are necessary to and used in the ordinary course of Tenant’s business,
including, but not limited to, those associated with Tenant’s back-up generator, provided the same
are used in full compliance with all applicable laws, rules and regulations pertaining to such
use, and provided that Tenant shall be solely responsible for the same. Tenant shall not use or
permit to be used in the Building or on the Premises any foul or noxious gas or substance, or
permit or allow the Building or the Premises to be occupied or used in a manner offensive or
objectionable to Landlord by reason of noise, odors or vibrations.

5. Tenant shall not alter any lock or install any new locks or bolts on any exterior or lobby door
of the Premises without the prior consent of Landlord, which consent shall not be unreasonably
withheld, conditioned or delayed. All re-keying of office doors, after occupancy, shall be at the
expense of Tenant. Tenant, upon termination of its tenancy, shall deliver to Landlord the keys of
all locks for doors on the Premises, and in the event of loss of any keys furnished by Landlord,
shall pay Landlord therefor.

6. Canvassing, soliciting and distribution of handbills or any other written material, and
peddling in the Project are prohibited, and Tenant shall cooperate to prevent same.

7. Landlord reserves the right to exclude or expel from the Premises any person who, in Landlord’s
judgment, is intoxicated or under the influence of liquor or drugs or who is in violation of the
Rules and Regulations of the Premises.

8. Tenant shall comply with all safety, fire protection and evacuation procedures and regulations
established by any governmental agency or reasonably established by Landlord. No person shall go
on the roof without Landlord’s permission, except that Tenant may go upon the roof in order to
fulfill Tenant’s maintenance obligations.

9. Tenant assumes any and all responsibility for protecting the Premises from theft, robbery and
pilferage, which includes keeping doors locked and other means of entry to the Building closed.
Landlord shall have no obligation to secure the Building or the Premises, and Tenant hereby
releases Landlord, to the greatest extent allowed by law, from any responsibility for protecting
the Building or the Premises from theft, robbery and pilferage. If Tenant requires telegraphic,
telephonic, burglar alarm or similar services, it shall first obtain, and comply with Landlord’s
instructions in their installation. Tenant shall make provision for prompt termination of any
sounding alarm and failure to do so shall constitute grounds for Landlord to require that Tenant’s
alarm be modified as reasonably directed by Landlord or removed. Unless specifically permitted
under its Lease, Tenant shall not install any radio or television antenna,
loudspeaker or other devices on the roof or exterior walls of the Building. Tenant shall not
interfere with radio or television broadcasting or reception from or in the Building or elsewhere.

1

 

10. Business machines and mechanical equipment belonging to Tenant which cause noise or vibration
that may be transmitted to the structure of the Building, to such a degree as to be objectionable
to Landlord, shall be placed and maintained by Tenant at Tenant’s expense, on vibration
eliminators or other devices sufficient to eliminate noise or vibration.

11. All goods, including material used to store goods, delivered to Tenant at the Premises shall
be immediately moved into the Building and shall not be left in any surface parking or receiving
areas overnight. Tenant shall not use or permit the use of any portion of the Premises for
outdoor storage without the prior written consent of Landlord.

12. Tenant shall store all its trash and garbage within the Building or in the exterior trash
enclosures, or in other designated areas of the Premises established or consented to by Landlord.
Tenant shall not allow refuse, garbage or trash to accumulate outside of the Building except on
the day of scheduled scavenger pick-up services, and then only in areas designated for that
purpose by the Landlord. Tenant shall not place in any trash box or receptacle any material which
cannot be disposed of in the ordinary and customary manner of trash and garbage disposal within
the Premises. Tenant shall notify Landlord in advance of any unusually large amount of trash to
be disposed of in the designated trash areas, including without limitation, trash associated with
any permitted construction by Tenant on the Premises, Tenant’s moving in or out of the Building or
delivery to Tenant at the Premises of furniture, fixtures and equipment, and Tenant shall bear the
expense of any special trash pick up necessary to remove such trash.

13. Tenant shall not mark, drive nails, screw or drill into the partitions, woodwork or plaster or
in any way deface the Building or any part thereof except that pictures, certificates, licenses
and similar items normally used in Tenant’s business may be carefully attached to the walls by
Tenant. The cost of any special electrical circuits for items such as copying machines,
computers, microwave, etc., shall be borne by Tenant unless the same are part of the Building
standard improvements. Tenant shall not cut or bore holes for wires. Tenant shall not affix any
floor covering to the floor of the Building, in any manner except as approved by Landlord. Tenant
shall repair or be responsible for the cost of repair of any damage resulting from noncompliance
with this rule.

14. Tractor trailers which must be unhooked or parked with dolly wheels beyond the concrete
loading areas must use steel plates or wood blocks under the dolly wheels to prevent damage to the
asphalt paving surfaces. No parking or storing of such trailers will be permitted in the auto
parking areas of the Premises or on streets adjacent thereto.

15. Forklifts which operate on asphalt paving areas shall not have solid rubber tires and shall
only use tires that do not damage the asphalt.

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

17. The sidewalks, parking lots, driveways and entrances shall be used only as a means of ingress
and egress and shall remain unobstructed at all times. Loitering on any part of the Premises or
obstruction of any means of ingress or egress shall not be permitted.

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

19. Tenant shall be deemed to have read these Rules and Regulations and to have agreed to abide by
them as a condition to its occupancy of the Premises.

2

 

EXHIBIT D

CALCULATION OF BUILDING MINIMUM MONTHLY RENT DURING FIRST YEAR OF TERM

This Exhibit D forms a part of that certain Lease (the “Lease”) by and between Chamberlin
Associates 200 Oyster Point Blvd., L.P., as Landlord, and Elan Pharmaceuticals, Inc., as Tenant,
to which this Exhibit is attached. All capitalized terms referred to in this Exhibit shall have
the same meaning provided in the Lease, except where expressly provided to the contrary in this
Exhibit. This Exhibit D establishes the means of determining Minimum Monthly Rent only, and
shall not modify the respective rights and obligations of Landlord and Tenant under the Lease or
Work Letter; and in the event of any discrepancy between this Exhibit D and any contrary
provision of the Lease or Work Letter (except for the Minimum Monthly Rent payable under the
Lease), the terms and conditions of the Lease and Work Letter shall prevail.

The Building Minimum Monthly Rent for the first one year period after the Commencement Date (the
"Initial Year”) shall be calculated as set forth in this Exhibit D.

1. Definitions:

     A. The “Actual Total Project Costs” is an amount per rentable square foot
(“RSF”)1 equal to (1) the Total Project Cost per RSF as shown in the Project Budget
Summary attached hereto as Schedule 1 (which is $551.19 per RSF), plus (2) the Sum of the Cost
Factor Adjustments; with each Cost Factor thereof comprising the “Actual Project Cost Factor” of
each such category of Cost Factor.

     B. The “Adjusted Return Rate” is defined as the sum of the Landlord’s Actual Financing
Interest Rate and the Rate of Return Spread.

     C. The “Baseline Cost Factor” is defined as the baseline amount for each Cost Factor
(defined in Section 1.D below) per RSF. The baseline amount for each Cost Factor is set forth
below:

	 	 	 
	(1)     Baseline Loan Finance Cost:2

	 	$41.04 per RSF
	(2)     Baseline Entitlement and Permit Fees:

	 	$12.92 per RSF
	(3)     Baseline Shell and Site Construction Cost:

	 	$245.30 per RSF

     D. The “Cost Factors” consist of the following (without duplication):

          i. The “Loan Finance Costs” is defined as all out of pocket financing costs, fees, and
interest charges associated with any permanent loan or construction loan (per actual RSF) that
are incurred by Landlord pursuant to Landlord’s financing of the acquisition of the Real
Property for the period from the acquisition of the Real Property by Landlord until the
Commencement Date, and such financing costs, fees and charges incurred by Landlord to finance
the construction and development of the Landlord’s Work and/or the payment of the Tenant
Improvement Allowance.

          ii. The “Entitlement and Permit Fees” is defined as all out of pocket costs incurred by
the Landlord (per actual RSF) for any and all entitlements and permits necessary for, or
associated with, the development of Landlord’s Work. Such costs include, but are not limited
to, all consultant fees, engineering fees, design fees, and building permit, mitigation, water
quality control, city planning and entitlement fees. Notwithstanding anything to the contrary
contained herein, for purposes of determining the Actual Project Cost Factor for the
Entitlement and Permit Fees, such Actual Project Cost Factor shall not exceed the amount of
the Capped Entitlement and Permit Fees described in Section 4 below.

          iii. The “Shell and Site Construction Costs” is defined as all other out of pocket costs
(exclusive of the Loan Finance Costs and the Entitlement and Permit Fees) incurred
by Landlord (per actual RSF) for the design, construction and/or development of the
Landlord’s

 

			
	1	 	For purposes of this Exhibit D, the term “RSF” means
the rentable square foot of Building
	 
	2	 	Based on Construction Loan Interest of $33.12, plus
Financing Fees & Costs of $7.92, for a total of $41.04.

1

 

Work, including, but not limited to, any associated off-site costs for
signalization and median modification required as a condition to the building permit or
entitlement approvals for the Landlord’s Work, including, but not limited to, all labor costs,
construction costs, material costs, bond costs, and insurance costs to the extent associated
therewith; provided, however, that the foregoing shall not result in the payment of any
Entitlement and Permit Fees as part of the Shell and Site Construction Costs. Notwithstanding
anything to the contrary contained herein, for purposes of determining the Actual Project Cost
Factor for the Shell and Site Construction Costs, such Actual Project Cost Factor shall not
exceed the amount of the Capped Shell and Site Construction Costs as described in Section 4
below.

     E. The “Landlord’s Actual Financing Interest Rate” is defined as the actual interest rate
that the Landlord obtains for the permanent financing of the Real Property and all improvements
constructed and to be constructed thereon (collectively, the “Project”), which financing
Landlord shall obtain after the Effective Date and prior to the Commencement Date. Landlord’s
long term financing will be secured from a reputable institutional lender such as a regional or
national bank, life insurance company or comparable source.

     F. The “Landlord’s Baseline Financing Interest Rate” is Landlord’s assumed financing
interest rate for the Project, as set forth in the Project Budget Summary, which is an amount
equal to Seven percent (7%).

     G. The “Landlord’s Budgeted Rate of Return” is equal to .093, which was determined by
dividing the Landlord’s budgeted Initial Year Rent for a 12 month period, equal to $51.24 per
RSF per year ($4.27/month times 12 months), by the budgeted amount for the Landlord’s Total
Project Costs per RSF, as shown in the Project’s Budget Summary set forth in Schedule 1 attached
hereto (initially estimated to be equal to $551.19 per RSF).

     H. The “Project Budget Summary” shall mean the initial schedule of Total Project Cost set
forth in Schedule 1 attached hereto.

     I. The “Rate of Return Spread” is equal to .023 and is determined by taking the difference
between the Landlord’s Budgeted Rate of Return (.093) and Landlord’s Baseline Financing Interest
Rate (.07).

     J. The “Sum of the Cost Factor Adjustments” is an amount calculated as follows for each
Cost Factor: (i) determine the difference between the actual costs incurred by Landlord with
respect to such Cost Factor (but without including any amount of Entitlement and Permit Fees or
Shell and Site Construction Costs in excess of the Capped Entitlement and Permit Fees and Shell
and Site Construction Costs) and the amount of the Baseline Cost Factor for such Cost Factor as
set forth in Section 1.C of this Exhibit D; and (ii) sum all such Cost Factor differences;
however, if any such Cost Factor difference is a negative number, then subtract the absolute
value of that difference.

2. Calculating the Building Minimum Monthly Rent for the Initial Year. The Building
Minimum Monthly Rent for the Initial Year shall be calculated as follows:

     A. Add the Rate of Return Spread to the Landlord’s Actual Financing Interest Rate, to
determine the “Adjusted Return Rate”, however, under no circumstances shall Landlord’s
Adjusted Return Rate be less than .083; and

     B. Determine the Building Minimum Monthly Rate for the Initial Term by multiplying the
Actual Total Project Costs (per actual RSF) by the Adjusted Return Rate, and dividing by 12.

3. Example of the Calculation of the Building Minimum Monthly Rent During the Initial
Year. The following is an example of how the Building Minimum Monthly Rent during the
Initial Year is to be calculated.

	 	 	 
	Assuming 
	 	 
	Landlord’s Actual Financing Interest Rate

	 	=   7.0 %
	Actual Loan Finance Cost

	 	=   $41.39 per RSF

2

 

	 	 	 
	Actual Entitlement and Permit Fees

	 	=   $13.89 per RSF
	Actual Shell and Site Construction Costs

	 	=   $255.00 per RSF

Step 1: Calculate the difference between the Actual Project Cost Factors and the Baseline
Cost Factors.

	 	 	 
	Actual Loan Finance Cost: 

Baseline Loan Finance Cost: 

Difference:

	 	$41.39 per RSF

$41.04 per RSF

          $0.35 per RSF
	 
	 	 
	Actual Entitlement and Permit Fees: 

Landlord’s Capped Entitlement and Permit Fees3: 

Baseline for Entitlement and Permit Fees: 

Difference

	 	$13.89 per RSF

$13.95 per RSF

$12.92 per RSF

          $0.97 per RSF
	 
	 	 
	Actual Shell and Site Construction Cost: 

Landlord’s Capped Shell and Site Construction Cost4: 

Baseline for Shell and Site Construction Cost: 

Difference:

	 	$255.00 per RSF

$250.00 per RSF

$245.30 per RSF

          $4.70 per RSF
	 
	 	 
	Step 2: Calculate the Sum of Cost Factor Adjustments:
	 
	 	 
	          Sum of the Differences (a + b + c):

	 	$6.02 per RSF
	 
	 	 
	Step 3: Calculate the Actual Total Project Costs:
	 
	 	 
	          Add the Sum of Cost Factor Adjustments to $551.19

	 	 $557.21 per RSF
	 
	 	 
	Step 4: Determine the Adjusted Return Rate:
	 
	 	 
	          Rate of Return Spread + Landlord’s Actual Financing Interest Rate

	 	
	 
	 	 
	
                    = .023 + .07 = .093
	 	 
	 
	 	 
	Step 5: Determine the Building Minimum Monthly Rent for the Initial Year:

	          [Actual Total Project Costs x Adjusted Return Rate)/12] =

	 	[$557.21 x .093]/12
	 

	 	= $4.32 per RSF/month

 

			
	3	 	For calculation purposes, the Actual Entitlement and
Permit Fees shall not exceed the Capped Entitlement and Permit Fees pursuant to
Section 4.
	 
	4	 	The Actual Shell and Site Construction Costs shall not
exceed the Capped Shell and Site Construction Costs pursuant to Section 4.

3

 

4. Capped Cost Factors: Entitlement and Permit Fees and Shell and Site Construction
Costs. Landlord will provide updated cost information to Tenant throughout the period that
Landlord is performing Landlord’s Work (see Exhibit B, Work Letter). On or before November 1,
2008, Landlord shall deliver to Tenant updated projections for Entitlement and Permit Fees and
the Shell and Site Construction Costs based on the latest known costs, as well as on the
reasonably anticipated Entitlement and Permit Fees and Shell and Site Construction Costs, as may
be reasonably determined by Landlord (the “Capped Cost Factors”). If the Rentable Square
Footage of the Building (as defined in the Lease) is still undetermined by the date Landlord
provides the Capped Cost Factors, the amount of the Capped Cost Factors will only be disclosed
in total dollar amounts (and not based on RSF). The Capped Cost Factors on a RSF basis will be
made when the Square Footage of the Building is determined as provided in the Lease. Tenant
shall have ten (10) business days after Landlord delivers such Capped Cost Factors to Tenant to
review and approve. If Tenant does not provide written notice of any objections (which shall
include a reasonable basis for the objection) within such ten (10) business day period, Landlord
shall provide a second written notice to Tenant requesting Tenant’s approval of the Capped Cost
Factors; and if Tenant fails to provide written notice to Landlord of any objections (including
a reasonable basis for the objection) to the Capped Cost Factors within five (5) business days
following such second notice, Tenant shall be deemed to have approved the Capped Cost Factors.
If Tenant approves, or is deemed to have approved, the Capped Cost Factors, then Landlord and
Tenant agree that the actual costs of the Entitlement and Permit Fees and Shell and Site
Construction Costs for purposes of determining the Building Minimum Monthly Rent for the Initial
Year, shall not exceed the Capped Cost Factors for Entitlement and Permits Fees and the Shell
and Site Construction Costs set forth for each category. Should Tenant object to one or both
of the Capped Cost Factors, and should Landlord and Tenant be unable to resolve any disagreement
regarding the same informally, then the dispute shall be resolved by binding arbitration with
the San Francisco, California office of the American Arbitration Association, pursuant to the
commercial rules of the American Arbitration Association. Upon the final resolution of any such
disagreement, the finally determined budget shall be considered the Capped Cost Factors for
purposes of this Exhibit D.

5. Payment of Building Minimum Monthly Rent for the Initial Year

     a. Landlord’s Determination of Building Minimum Monthly Rent During Initial Term.
Not more than six (6) months after Landlord’s completion of Landlord’s Work, Landlord shall
(a) calculate the Actual Total Project Costs for all Cost Factors (utilizing the Capped Cost
Factors, as set forth in their respective definitions), and (b) deliver written notice to
Tenant of the Actual Total Project Costs, along with reasonable evidence of the amounts
incurred by Landlord for the Cost Factors and Landlord’s determination of the Building Minimum
Monthly Rent for the Initial Year (“Landlord’s Initial Year Minimum Monthly Rent Notice”). If
Landlord has not delivered Landlord’s Initial Year Minimum Monthly Rent Notice prior to the
Commencement Date, then Tenant shall pay as Minimum Monthly Rent until the first day of the
month after Landlord delivers, to Tenant, Landlord’s Initial Year Minimum Monthly Rent Notice,
an estimated amount for the Minimum Monthly Rent (based on the Landlord’s latest updated cost
information), which amount shall be set forth in a written notice from Landlord to Tenant (the
"Estimated Initial Year Minimum Monthly Rent Notice”); provided, however that if Landlord does
not deliver such written notice to Tenant prior to the Commencement Date, Tenant shall pay, as
the estimated amount of Minimum Monthly Rent, an amount equal to Four and 27/100ths Dollars
($4.27) per RSF of Building per month. On the first day of the month following Landlord’s
Delivery of Landlord’s Initial Year Minimum Monthly Rent Notice, there shall be an adjustment
made to the Minimum Monthly Rent payment then due for the difference between the amount of
Minimum Monthly Rent Tenant has paid to Landlord since the Commencement Date and the amount
that Tenant would have paid if the Minimum Monthly Rent as set forth in Landlord’s Initial
Year Minimum Monthly Rent Notice had been in effect as of the Commencement Date.

     b. Tenant’s Right to Object to Landlord’s Determination. After receiving
Landlord’s Initial Year Minimum Monthly Rent Notice, if Tenant wishes to object to Landlord’s
determination of the Building Minimum Monthly Rent for the Initial Year, Tenant must deliver
written notice to Landlord objecting to the same, which shall include an explanation of the
objection and a statement of Tenant’s determination of the Building Minimum Monthly Rent for

4

 

the Initial Year, within fifteen (15) business days after receiving Landlord’s Initial
Year Minimum Monthly Rent Notice. If Tenant does not deliver such written notice to Landlord
within such fifteen (15) business day period, Landlord shall provide a second written notice
of Landlord’s determination of the Building Minimum Monthly Rent for the Initial Year; and if
Tenant fails to provide written notice (including an explanation of the objection and a
statement of Tenant’s determination of the Building Minimum Monthly Rent for the Initial Year)
to Landlord of any objections to the Minimum Monthly Rent during the Initial Year as set forth
in Landlord’s Initial Year Minimum Monthly Rent Notice within five (5) business days following
such second notice, Tenant shall be deemed to have approved of Landlord’s determination of the
Minimum Monthly Rent during the Initial Year as set forth in Landlord’s Initial Year Minimum
Monthly Rent Notice, which determination shall be final and binding on Landlord and Tenant.
If Tenant delivers written notice to Landlord objecting to Landlord’s determination, then
Landlord and Tenant shall, within fifteen (15) business days after Tenant’s delivery of such
written notice, agree upon an accounting firm to review Landlord’s records in order to
determine the Minimum Monthly Rent during the Initial Year. If Landlord and Tenant cannot
agree upon an accounting firm for purposes of determining the Minimum Monthly Rent during the
Initial Year, then an accounting firm shall be appointed by a referee under the Judicial
Reference procedures of Section 19.1 of the Lease. Any and all costs of such accounting firm
that are incurred in reviewing Landlord’s records and/or determining the Minimum Monthly Rent
for the Initial Year shall be split evenly by Landlord and Tenant, and shall not be included
in Operating Expenses or as part of the Landlord’s Actual Total Project Costs. However, in
the event such accounting firm ultimately determines that (a) Landlord’s calculation of the
Minimum Monthly Rent for the Initial Year is more than five percent (5%) greater than the
accounting firm’s determination, and Tenant’s calculation of the Minimum Monthly Rent for the
Initial Year is within five percent (5%) of the accounting firm’s determination, Landlord
shall reimburse Tenant for all such accounting firm costs that are paid by Tenant; or (b)
Tenant’s calculation of the Minimum Monthly Rent for the Initial Year is more than five
percent (5%) less than the accounting firm’s determination, and Landlord’s calculation of the
Minimum Monthly Rent for the Initial Year is within five percent (5%) of the accounting firm’s
determination, Tenant shall reimburse Landlord for all such accounting firm costs that are
paid by Landlord.

     c. Tenant’s Obligation to Pay Minimum Monthly Rent subject to Resolution of Any
Tenant Objection. Notwithstanding anything to the contrary contained herein, if Tenant
delivers written notice to Landlord objecting to Landlord’s determination of the Minimum
Monthly Rent, Tenant shall be required to pay Landlord, as Minimum Monthly Rent, and until
such time that the amount of the Minimum Monthly Rent has been finally determined in
accordance with Section 5.b above, Tenant shall pay, as the estimated amount of Minimum
Monthly Rent, an amount equal to Four and 27/100ths Dollars ($4.27) per RSF of Building per
month. However, on the first day of the month following the applicable accounting firm’s
final determination of the Minimum Monthly Rent for the Initial Year, there shall be an
adjustment made to the Minimum Monthly Rent payment then due for the difference between the
amount of Minimum Monthly Rent Tenant has paid to Landlord since the Commencement Date and the
amount that Tenant would have paid if the Minimum Monthly Rent as determined pursuant to
Section 5.b above had been in effect as of the Commencement Date.

5

 

Schedule 1

Project Budget Summary

Chamberlin Associates

200 Oyster Point: Project Budget Summary

Tenant: ELAN

PROJECT INFORMATION

	 	 	 	 	 
	Building Size (SF):
	 	 	84,000	 
	Land Area (acres):
	 	 	1.91	 

PROJECT BUDGET

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Percent of Total	 	Cost/SF	 	Cost
	Land:
	 	 	19.50	%	 	$	107.48	 	 	$	9,028,201	 
	Shell, Site, Offsite1:
	 	 	44.50	%	 	$	245.30	 	 	$	20,605,500	 
	Finish Allowance:
	 	 	12.10	%	 	$	66.67	 	 	$	5,600,280	 
	Financing Fees, Costs, Interests1
	 	 	7.45	%	 	$	41.04	 	 	$	3,447,067	 
	Interest on Equity:
	 	 	3.05	%	 	$	16.82	 	 	$	1,412,820	 
	Entitlement, Permit Fees1:
	 	 	2.34	%	 	$	12.92	 	 	$	1,085,583	 
	Direct Expense2:
	 	 	7.82	%	 	$	43.10	 	 	$	3,620,275	 
	General And Admin:
	 	 	3.24	%	 	$	17.86	 	 	$	1,500,000	 
	Total Project Cost:
	 	 	100.00	%	 	$	551.19	 	 	$	46,299,725	 

OPERATING BUDGET

	 	 	 	 	 
	Net Rent/SF:
	 	$	4.27	 
	Annual Rent Building:
	 	$	51.24	 

Footnote:

 

			
	1	 	Baseline Cost Factor
	 
	2	 	Includes Architectural & Engineering, Utility Hookups, Taxes/Exp, Contingency

1

 

EXHIBIT E

TRANSPORTATION DEMAND MANAGEMENT PROGRAM REQUIREMENTS

Tenant agrees to comply with the Transportation Demand Management (“TDM”) measures as outlined in
the 200 Oyster Point Boulevard TDM Program report (“the TDM Report”), dated July 2007 and published
by Ferh & Peers, an independent transportation consultant. The purpose of the TDM program is to
develop a set of strategies, measures and incentives to encourage Tenant to walk, bicycle, use
public transportation, carpool or use other alternatives to driving alone when traveling to and
from work, and is required by the City of South San Francisco.

a) TDM Coordinator: Tenant will designate a TDM coordinator for the site. The TDM
coordinator will promote the TDM program, activities, and features to all employees, and will
conduct the monitoring/reporting process. The TDM coordinator will develop an on-site
transportation information center with SamTrans, BART, and CalTrain schedules and maps. The TDM
coordinator will provide information via new employee orientation packets, flyers, posters,
email, and educational programs. The TDM coordinator’s role will also include actively
marketing alternative mode use, administering the carpool and vanpool matching program,
promoting special programs such as Bike-to-Work Day or Carpool Week, and overseeing the
guaranteed ride home program (working with a local taxi service or rental car agencies). The
TDM coordinator will also conduct biannual employee commute surveys to identify the need for
mode specific promotional material and educational programs.

b) Carpool/Vanpool Matching Services: The TDM coordinator will provide an internet link
to the 511.org Rideshare website to access ride matching services, from its intranet website, if
available. The TDM coordinator will also administer an on-site carpool and vanpool matching
service for employees and maintain a list of available vanpools that provide service between the
Oyster Point offices and various points in the Bay Area.

c) Guaranteed Ride Home Program: Tenant will participate in the Peninsula Traffic
Congestion Relief Alliance’s (the “Alliance”) Guaranteed Ride Home program, which will be
managed by the TDM coordinator.

d) Information Boards and Kiosks: The TDM coordinator will be responsible for
maintaining an up-to-date display for the TDM Program located within the lobby of the building.
The display will include shuttle maps and schedules, transit maps and schedules, bicycle
facility maps, information regarding carpool and vanpool matching services, and information
regarding alternative commute subsidies.

e) Promotional Programs: The TDM coordinator will manage promotional programs that
include new employee orientation packets, flyers, posters, email, educational programs, and the
Guaranteed Ride Home program.

f) Shuttle Bus Service: The TDM coordinator will coordinate with the Alliance to help
fund their shuttle program and to identify on-site shuttle stops, if possible. The TDM
coordinator will also manage participation in the Alliance’s mid-day service on the Dasher
Shuttle to downtown South San Francisco.

g) TMA Membership: The TDM coordinator will participate in a local transportation
management association and work with the Alliance to create a Transportation Action Plan.

1

 

TABLE 1

200 OYSTER POINT BOULEVARD TRANSPORTATION DEMAND PROGRAM MEASURES

	 	 	 	 	 
	 	 	 	 	City of South
	 	 	 	 	San Francisco
	TDM Measure	 	Description	 	Municipal Code
	 
	Required Measures
	 	 	 	 
	Bicycle Racks and Lockers

	 	A bicycle rack for 5 bicycles will be provided on-site.
	 	20.120.040 (A, B)
	Carpool/Vanpool Matching 

Services

	 	The TDM coordinator will provide ride-matching services for carpool and vanpool users
through 511.org and an internal program.
	 	20.120.040 (C)
	TDM Coordinators

	 	The tenants of the building will designate a TDM coordinator.
	 	20.120.040 (D)
	Pedestrian Connections

	 	Lighted paths and sidewalks will be provided between the building, parking area, and
Oyster Point Boulevard.
	 	20.120.040 (E, J)
	Free Carpool/Vanpool 

Parking

	 	Free, preferential spaces will be designated for 21 carpools and 3 vanpools.
	 	20.120.040 (F, K)
	Guaranteed Ride Home 

Program

	 	Employees will be able to utilize the Alliance’s free guaranteed ride home program for
emergencies via taxicabs or rental cars.
	 	20.120.040 (G)
	Information Boards and
Kiosks

	 	The building lobby will include a permanent display of commute alternative information.
	 	20.120.040 (H)
	Passenger Loading Zones

	 	A loading zone for vanpool and carpool rides will be provided near the building
entrances.
	 	20.120.040 (I)
	Promotional Programs

	 	The TDM coordinator will provide new employee orientation packets, flyers, posters,
email, and educational programs.
	 	20.120.040 (L)
	Showers and Changing Rooms

	 	Two shower facilities with clothing lockers will be provided on-site.
	 	20.120.040 (M)
	Shuttle Bus Service

	 	The tenants will be able to use the Oyster Point BART, Gateway Area Caltrain, and the
Oyster Point Caltrain Shuttles.
	 	20.120.040 (N)
	TMA Membership

	 	The tenants will join the Peninsula Traffic Congestion Relief Alliance
	 	20.120.040 (O)
	Additional Measures
	 	 	 	 
	Subsidized Transit Tickets

	 	The tenants will subsidize transit tickets with Commuter Checks.
	 	20.120.050 (A)
	On-Site Vanpool Program

	 	The TDM coordinator will provide an on-site ride-matching service for carpools and
vanpools.
	 	20.120.050 (J)
	Downtown Dasher

	 	The tenants will be able to use the Downtown Dasher service.
	 	20.120.050 (J)
	Source: City of South San Francisco, 2006 and Fehr & Peers, 2007.	 	 

Additional Required Measures may be substituted with alternate additional measures, so long as the
programmatic credits from the alternate measures meet or exceed the programmatic credits of the
measures identified in the TDM Report, dated July 2007.

Monitoring

The TDM program will be performance-based and the alternative mode use will be monitored annually,
beginning one year after Tenant occupancy. The alternative mode use and general perceptions of the
TDM program will come from statistically valid employee surveys. The TDM Coordinator may use
information from the employee surveys to adjust existing or implement new TDM program measures.
The TDM Coordinator will submit a summary report presenting the findings of the annual survey to
the SSF Economic Development Director.

The TDM Coordinator will also work with SSF Economic Development staff to document the
effectiveness of the TDM program through triennial reporting. Independent consultants, retained by
the city and paid for by Tenant, will measure, through observation, the alternative mode use
achieved at 200 Oyster Point Boulevard every three years, beginning three years after Tenant
occupancy. If the alternative mode use goals are not achieved, the TDM Coordinator will provide an
explanation of how and why the goal has not been reached and a detailed description of additional
measures that will be adopted to attain the required mode use. The independent consultants will
submit the findings of the triennial survey to the SSF Economic Development Director.

2

 

			
	
	 	EXHIBIT F — Form of Letter of Credit

			
	BANK OF AMERICA — CONFIDENTIAL
	 	PAGE: 1

DATE: [to be completed]

IRREVOCABLE STANDBY LETTER OF CREDIT NUMBER: [to be completed]

	 	 	 
	 

	 	   ISSUING BANK
	 

	 	BANK OF AMERICA, N.A.
	 

	 	1000 W. TEMPLE STREET
	 

	 	7TH FLOOR, CA9-705-07-05
	 

	 	LOS ANGELES, CA 90012-1514
	 
	 	 
	   BENEFICIARY

	 	   APPLICANT
	CHAMBERLIN ASSOCIATES 200 OYSTER

	 	ELAN PHARMACEUTICALS, INC.
	POINT, LLC

	 	800 GATEWAY BOULEVARD
	5880 WEST LAS POSITAS BLVD.

	 	SOUTH SAN FRANCISCO, CA 94588-8852
	SUITE 34
	 	 
	 
	 	 
	PLEASANTON, CA 94588-8552
	 	 
	 

	 	   AMOUNT
	 

	 	NOT EXCEEDING USD 6,000,000.00
	 

	 	NOT EXCEEDING SIX MILLION AND
	 

	 	00/100’S US DOLLARS
	 
	 	 
	 

	 	   EXPIRATION

	 

	 	[to be completed]
	 

	 	AT OUR PALO ALTO OFFICE

WE HEREBY ESTABLISH OUR IRREVOCABLE STANDBY LETTER OF CREDIT IN YOUR FAVOR WHICH IS
AVAILABLE BY PAYMENT AGAINST YOUR DRAFTS DRAWN AT SIGHT ON BANK
OF AMERICA, N.A. BEARING THE CLAUSE: “DRAWN UNDER IRREVOCABLE LETTER OF CREDIT NO.
                    ” ACCOMPANIED BY THE FOLLOWING DOCUMENTS:

A STATEMENT SIGNED BY AN AUTHORIZED OFFICER OF THE BENEFICIARY STATING THE
FOLLOWING:

“ON BEHALF OF CHAMBERLIN ASSOCIATES 200 OYSTER POINT, LLC, AS
LANDLORD, UNDER THAT CERTAIN LEASE AGREEMENT DATED                     , WITH
ELAN PHARMACEUTICALS, INC., AS TENANT, FOR PREMISES LOCATED AT 200
OYSTER POINT BLVD., SOUTH SAN FRANCISCO, CALIFORNIA, THE UNDERSIGNED
HEREBY CERTIFIES THAT LANDLORD IS ENTITLED BY THE TERMS AND
CONDITIONS OF SAID LEASE TO DRAW UNDER YOUR LETTER OF CREDIT NO.
3088607 THE AMOUNT OF                                          DOLLARS ($                    ). ”

WE HAVE BEEN ADVISED, THE LEASE MENTIONED ABOVE IS FOR IDENTIFICATION PURPOSES ONLY AND IT IS
NOT INTENDED THAT SAID LEASE BE INCORPORATED HEREIN OR FORM A PART OF THIS LETTER OF CREDIT.

 

 

			
	
	 	EXHIBIT F — Form of Letter of Credit

			
	BANK OF AMERICA — CONFIDENTIAL
	 	PAGE: 2

THIS IS AN INTEGRAL PART OF LETTER OF CREDIT NUMBER:                     

THIS LETTER OF CREDIT IS TRANSFERABLE ONE OR MORE TIMES. TRANSFER OF THIS LETTER OF CREDIT IS
SUBJECT TO OUR CONSENT AND OUR RECEIPT OF BENEFICIARY’S INSTRUCTION IN THE FORM ATTACHED
HERETO AS EXHIBIT A ACCOMPANIED BY THE ORIGINAL LETTER OF CREDIT AND AMENDMENT(S), IF ANY.
COSTS OR EXPENSES OF SUCH TRANSFER SHALL BE FOR THE ACCOUNT OF THE BENEFICIARY. BANK AGREES
THAT SUCH COSTS OR EXPENSES SHALL NOT EXCEED $500.00 PER TRANSFER.

PARTIAL DRAWING AND MULTIPLE PRESENTATIONS ARE ALLOWED.

IT IS A CONDITION OF THIS LETTER OF CREDIT THAT IT IS DEEMED TO BE AUTOMATICALLY EXTENDED
WITHOUT AMENDMENT FOR ONE YEAR FROM THE EXPIRY DATE HEREOF, OR ANY FUTURE EXPIRATION DATE,
UNLESS AT LEAST 45 DAYS PRIOR TO ANY EXPIRATION DATE WE NOTIFY YOU IN WRITING BY REGISTERED
MAIL OR OVERNIGHT COURIER SERVICE AT THE ABOVE ADDRESS THAT WE ELECT NOT TO CONSIDER THIS
LETTER OF CREDIT EXTENDED FOR ANY SUCH ADDITIONAL PERIOD.

ALL DEMANDS FOR PAYMENT SHALL BE MADE EITHER IN PERSON OR BY OVERNIGHT COURIER SERVICE BY
PRESENTATION OF THE ORIGINAL DOCUMENTS, ON A BUSINESS DAY, AT OUR OFFICE AT PALO ALTO,
CALIFORNIA.

WE AGREE THAT WE SHALL HAVE NO DUTY OR RIGHT TO INQUIRE AS TO THE BASIS UPON WHICH BENEFICIARY
HAS DETERMINED THAT THE AMOUNT IS DUE AND OWING OR HAS DETERMINED TO PRESENT TO US ANY DRAFT
UNDER THIS LETTER OF CREDIT, AND THE PRESENTATION OF SUCH DRAFT IN COMPLIANCE WITH THE TERMS AND
CONDITIONS OF THIS LETTER OF CREDIT, SHALL AUTOMATICALLY RESULT IN PAYMENT TO THE BENEFICIARY.

THIS LETTER OF CREDIT IS SUBJECT TO THE UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS
(2007 REVISION), INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION NO.
600 AND ENGAGES US
PURSUANT TO THE TERMS THEREIN.

IF YOU REQUIRE ANY ASSISTANCE OR HAVE ANY QUESTIONS REGARDING THIS TRANSACTION, PLEASE CALL
213-580-8345.

	 	 	 	 	 
	 	 	 
	AUTHORIZED SIGNATURE
	 	 

THIS DOCUMENT CONSISTS OF 2 PAGE(S).

     HERMANN SCHUTTERLE

 

 

			
	
	 	EXHIBIT F — Form of Letter of Credit

TRANSFER FORM

                    
200  

Bank of America N.A.

1000 W. Temple Street 7th Floor

Los Angeles, Ca 90012

Mail Code CA9-705-07-05

Re:     Irrevocable Standby Letter of Credit No. 3088607

We request you to transfer all of our rights as beneficiary under the Letter of Credit referenced
above to the transferee, named below:

 
Name of Transferee

 
Address

By this transfer all our rights as the transferor, including all rights to make drawings under the
Letter of Credit, go to the transferee. The transferee shall have sole rights as beneficiary,
whether existing now or in the future, including sole rights to agree to any amendments, including
increases or extensions or other changes. All amendments will be sent directly to the transferee
without the necessity of consent by or notice to us.

We enclose the original letter of credit and any amendments. Please indicate your acceptance of our
request for the transfer by endorsing the letter of credit and sending it to the transferee with
your customary notice of transfer.

For your transfer fee of $500.00

	•	 	Enclosed is our check for $          
          
          
          
	 
	•	 	You may debit my/our Account No.
          
         
     

	 	 	 
	The signature and title at the right conform with
those shown in our files as authorized
to sign for the beneficiary. Policies governing
signature authorization as required for withdrawals
from customer accounts shall also be applied to
the authorization of signatures on this form. The
authorization of the Beneficiary’s signature and
title on this form also acts to certify that the
authorizing financial institution (i) is regulated
by a U.S. federal banking agency; (ii) has
implemented anti-money laundering policies and
procedures that comply with applicable requirements
of law, including a Customer Identification Program
(CIP) in accordance with Section 326 of the USA
PATRIOT Act; (iii) has approved the Beneficiary
under its anti-money laundering compliance program;
and (iv) acknowledges that Bank of America, N.A.
is relying on the foregoing certifications
pursuant to 31 C.F.R. Section 103.121 (b)(6).

	 	We also agree to pay you on demand any expenses which
may be incurred by you in connection with this transfer.

 
NAME OF TRANSFEROR

 
NAME OF AUTHORIZED SIGNER AND TITLE

 
AUTHORIZED SIGNATURE
	 
	 	 
	 
	 	 
	 
NAME OF BANK
	 	 
	 
	 	 
	 
	 	 
	 
AUTHORIZED SIGNATURE AND TITLE
	 	 
	 
	 	 
	 
	 	 
	 
PHONE NUMBER
	 	 

 

 

EXHIBIT G

GUARANTY

          IN CONSIDERATION OF, and as an inducement for the execution by Chamberlin Associates 200
Oyster Point, L.P., a California limited liability company (“Landlord”), of that certain Lease
dated December 17, 2007 (the “Lease”), between Landlord and Elan Pharmaceuticals, Inc., a Delaware
corporation (“Tenant”), with respect to certain premises located in South San Francisco,
California, commonly referred to as 200 Oyster Point (as more particularly described in the Lease,
the “Premises”), the undersigned Elan Corporation, plc, a public limited company organized under
the laws of Ireland (“Guarantor”) has executed and delivered this Guaranty. Guarantor acknowledges
that Tenant is a subsidiary of Guarantor and therefore Guarantor will benefit when Landlord enters
into the Lease. This Guaranty is given as security for the performance of Tenant’s payment and
performance obligations under the Lease.

          1. Guarantor hereby guarantees to Landlord, its successors and assigns, the full and prompt
payment of the rent and all other sums and charges payable by Tenant, its successors and assigns,
under the Lease, and further hereby guarantees the full and timely performance and observance of
all the covenants, terms, conditions and agreements therein provided to be performed and observed
by Tenant, its successors and assigns, subject in each case, to the notice and cure period rights
of Tenant under the Lease, if any. Guarantor hereby covenants and agrees to and with Landlord, its
successors and assigns, that if default shall at any time be made by Tenant, its successors and
assigns, in the payment of any such rent or any or all such other sums or charges, or in the
performance and observance of any of the covenants, terms, conditions or agreements contained in
the Lease, Guarantor shall forthwith pay such rent and other sums and charges, and any arrears
thereof, to Landlord, its successors and assigns, and will forthwith faithfully perform and fulfill
all of such terms, covenants, conditions and agreements. Guarantor shall also forthwith pay to
Landlord all damages, costs and expenses that may arise in consequence of any default by Tenant,
its successors and assigns, under the Lease, including without limitation all reasonable attorneys’
fees, and disbursements incurred by Landlord or caused by any such default and/or by the
enforcement of this Guaranty.

               Tenant has delivered to Landlord a Letter of Credit (as defined in the Lease) as protection
for the performance by Tenant of all of its obligations under the Lease and for all losses and
damages Landlord may suffer, or that Landlord reasonably estimates it may suffer, as a result of
any breach or default by Tenant under the Lease. Notwithstanding anything to the contrary
contained in this Guaranty, although the application of the amounts drawn by Landlord under the
Letter of Credit shall not reduce Guarantor’s liability under this Guaranty, the obligations and
liabilities of Guarantor hereunder are nevertheless limited to the extent the amount of liability
outstanding or payment due to the Landlord under the Lease (the “Deficiency”) is greater than the
amount held by Landlord as part of the Letter of Credit, in which case, as long as Landlord is not
prevented by law or any action by Tenant or any creditor of Tenant, either at law or in equity,
including without limitation any bankruptcy or insolvency law (“Operation of Law”), from applying
any funds available under the Letter of Credit to the Deficiency, no claim shall be made under this
Guaranty until the amount of the Deficiency exceeds the amount held by, or immediately available
to, Landlord as security for Tenant’s obligations under the Lease, except to the extent that
Landlord draws less than the full amount available under the Letter of Credit and Tenant does not
restore the amount drawn to the full amount of the Letter of Credit within the time period provided
in the Lease, or Landlord is prevented by Operation of Law from demanding or collecting such
amount, then Guarantor’s obligation under this Guaranty shall include the amount drawn and properly
expended by Landlord toward the Tenant’s defaulted obligation, and Landlord shall have the right at
any time to make a claim against Guarantor for such drawn and expended amount.

          2. This Guaranty is an absolute and unconditional guaranty of payment and of performance. The
obligations of Guarantor under this Guaranty are independent of the obligations of Tenant under the
Lease. This Guaranty shall be enforceable against Guarantor without the necessity of any suit or
proceedings on Landlord’s part of any kind or nature whatsoever against Tenant, its successors and
assigns, or any other guarantor of all or any portion of Tenant’s obligations to Landlord under the
Lease, or any security for Tenant’s obligations under the Lease, and without the necessity of any
notice of nonpayment, nonperformance or nonobservance, or any notice of acceptance of this
Guaranty, or any other notice or demand to which Guarantor might otherwise be entitled, all of
which Guarantor hereby expressly waives. Guarantor’s obligations hereunder shall in no way be
terminated, affected, diminished or impaired by reason of Landlord’s assertion of, or failure to
assert, against Tenant or against Tenant’s successors and assigns, any of the rights or remedies
reserved to Landlord pursuant to the provisions of the Lease, or by relief of Tenant from any of
Tenant’s obligations under the Lease or otherwise by (a) the release or discharge of Tenant in any
creditors’ proceedings, receivership, bankruptcy or other proceedings, (b) the impairment,
limitation or modification of the liability of Tenant or the estate of Tenant in bankruptcy, or of
any remedy for the enforcement of Tenant’s said liability under the Lease, resulting from the
operation of any present or future provision of the United States Bankruptcy Code or other statute
or from the decision in any court, or (c) the rejection or disaffirmance of the Lease in any such
proceedings.

          3. Guarantor waives any defense to its obligations hereunder based upon or arising by reason
of: (i) Sections 2787 to 2855, inclusive, of the California Civil Code; (ii) any disability or
other defense of Tenant or any other person; (iii) the cessation or limitation from any cause
whatsoever, other than payment or performance in full, of the obligations of Tenant under the
Lease; (iv) any lack of authority of any officer, director, partner, agent or other person acting
or purporting to act on behalf of Tenant if a corporation, partnership or any other type of entity,
or any defect in the formation of such Tenant; (v) any act or omission by Landlord which directly
or indirectly results in or aids the discharge of Tenant or any portion of the Tenant’s obligations
under the Lease by operation of law or otherwise, or which in any way impairs or suspends any
rights or remedies of Landlord against Tenant; or (vi) any modification of the Lease. Guarantor
further waives all rights and defenses Guarantor may have arising out

1

 

of (A) any election of remedies by Landlord, even though that election of remedies destroys Guarantor’s rights of
subrogation or Guarantor’s rights to proceed against Tenant for reimbursement, or (B) any loss of
rights Guarantor may suffer by reason of Tenant’s obligations under the Lease now or at any time
hereafter being secured by real property, or by reason of any rights, powers or remedies of Tenant
in connection with any anti-deficiency laws or any other laws limiting, qualifying or discharging
Tenant’s obligations under the lease, including, but not limited to, any rights or defenses based
upon Sections 580a, 580b, 580d or 726 of the California Code of Civil Procedure.

          4. This Guaranty shall be a continuing guaranty and the liability of Guarantor shall in no way
be affected, modified or diminished by reason of any assignment, amendment, renewal, supplement,
modification or extension of the Lease or by reason of any modification or waiver of, or change in,
any of the terms, covenants, conditions or provisions of the Lease, or by reason of any extension
of time that may be granted by Landlord to Tenant, its successors or assigns or a changed or
different use of the Premises consented to in writing by Landlord, or by reason of any dealings or
transactions or matters or things occurring between Landlord and Tenant, its successors or assigns,
whether or not notice thereof is given to Guarantor.

          5. Guarantor shall be fully bound by any consents, waivers or releases granted by Tenant in
favor of Landlord, made either with or without notice to or the consent of Guarantor.

          6. Landlord’s consent to any assignment or assignments, and successive assignments by Tenant
and Tenant’s assigns of the Lease, made either with or without notice to Guarantor, shall in no
manner whatsoever release Guarantor from any liability as Guarantor.

          7. The assignment by Landlord of the Lease and/or the avails and proceeds thereof, made either
with or without notice to Guarantor, shall in no manner whatsoever release Guarantor from any
liability as Guarantor. Landlord may without prior notice to Guarantor assign this Guaranty to the
grantee of Landlord’s interest in the Premises pursuant to any conveyance thereof, or to any lender
pursuant to a loan secured by Landlord’s interest in the Premises. Landlord shall use reasonable
efforts to provide notice to Guarantor of any such assignment, provided that such notice may be
given after the occurrence of any such assignment, and provided further that in any event the
failure of Landlord to provide any notice shall not affect the validity or enforceability of this
Guaranty.

          8. All of the Landlord’s rights and remedies under the Lease or under this Guaranty are
intended to be distinct, separate and cumulative, and no such right or remedy therein or herein
mentioned is intended to be in exclusion of, or a waiver of, any of the others. The obligations of
Guarantor hereunder shall not be released by Landlord’s receipt, application or release of security
given for the performance and observance of covenants and conditions required to be performed and
observed by Tenant under the Lease, nor shall Guarantor be released by the maintenance of or
execution upon any lien which Landlord may have or assert against Tenant and/or Tenant’s assets.

          9. Until all the covenants and conditions in the Lease on Tenant’s part to be performed and
observed are fully performed and observed, Guarantor (a) shall have no right of subrogation against
Tenant by reason of any payments or acts of performance by Guarantor in compliance with the
obligations of Guarantor hereunder, (b) waives any right to enforce any remedy which Guarantor now
or hereafter shall have against Tenant by reason of any one or more payments or acts of performance
in compliance with the obligations of Guarantor hereunder, and (c) subordinates any liability or
indebtedness of Tenant now or hereafter held by Guarantor to the obligations of Tenant to Landlord
under the Lease, subject, however, to the limitations set forth in Paragraph 1 above relating to
the application of the Security Deposit to any Deficiency amount.

          10. Guarantor hereby irrevocably appoints as its agents for the service of process in any
action or proceeding arising out of or in connection with this Guaranty any and all of the
following: (a) Tenant, or if Tenant is more than one person, then any one of them, or if Tenant is
a corporation, trustee or partnership all persons authorized to accept service on behalf of Tenant
under California law, or (b) if Tenant is not available for receipt of service on behalf of
Guarantor in accordance with the notice provisions of the Lease, C T Corporation System, 818 West
Seventh Street, Los Angeles, CA 90017; provided, however, that Guarantor shall have the right to
change its address for notice under this Guaranty from time to time upon reasonable advance written
notice to Landlord, provided that the changed address shall be a company or party in the State of
California. This provision does not affect any right to serve process upon Guarantor in any other
manner permitted by law.

          11. The parties agree that Landlord may, at its election, bring an action or actions in the
state or federal courts located in the County of San Mateo and/or the City and County of San
Francisco, or commence an arbitration or arbitrations in the County of San Mateo, to enforce this
Guaranty and/or to resolve any disputes arising out of or in connection with this Guaranty, and
Guarantor hereby irrevocably consents to the jurisdiction of such courts and arbitration tribunals.

               If Landlord elects to commence an arbitration, the matter shall be determined by final and
binding arbitration conducted in the County of San Mateo, California, and administered by and in
accordance with the Commercial Arbitration Rules of the American Arbitration Association (the
“Rules”), provided that all proceedings and any decision shall be presided over and rendered by one
sole arbitrator. The arbitrator shall be a retired California or federal judge selected in
accordance with the Rules. The sole arbitrator will decide the matter. The arbitrator will be
directed to: (1) require all testimony to be transcribed; (2) require any award or decision to be
accompanied by findings of fact and a statement of reasons for such award or decision; (3) allow
reasonable discovery; and (4) render its award or decision within thirty (30) days of being
appointed.

2

 

               The prevailing party, as determined by the court in the event an action is commenced as
provided herein, or the arbitrator, in the event an arbitration is commenced as provided herein,
shall be entitled to recover its reasonable attorneys’ fees and costs expended in any action or arbitration proceeding,
including court fees and the fees of the American Arbitration Association, as appropriate, as well
as in any subsequent proceeding required to enforce the judgment, ruling or arbitration award.

               Any judgment, award, relief or remedy obtained by Landlord in connection with this Guaranty
shall be recognized and may be entered and enforced against Guarantor in any jurisdiction, court,
tribunal or body in the United States and abroad, including, without limitation, any court of
Ireland (including the High Court). Any judgment, award, relief or remedy obtained by Guarantor in
connection with this Guaranty shall be recognized and may be entered and enforced against Landlord
in the state or federal courts located in the County of San Mateo and/or the City and County of San
Francisco.

          12. As used herein, the term “Tenant” shall mean Elan Pharmaceuticals, Inc., a Delaware
corporation, and any successor to its interest under the Lease, whether by assignment, operation of
law or otherwise (including, without limitation, any receiver, trustee, liquidator or assignee for
the benefit of creditors). This Guaranty shall continue in full force and effect notwithstanding
any sale or other disposition of Guarantor’s financial interest, whether direct or indirect, in
Tenant, or Tenant’s disposition of its interest, whether direct or indirect, in the Lease.
Guarantor acknowledges that any such disposition of Guarantor’s financial interest in Tenant or of
Tenant’s interest in the Lease will result in a benefit to Guarantor.

          13. This Guaranty shall be governed by and construed in accordance with California law. The
terms, covenants, agreements and conditions herein contained shall apply to and bind the heirs,
successors, executors, administrators and assigns of Guarantor. If any provision of this Guaranty
shall be determined to be illegal or unenforceable, such determination shall not affect any other
provision of this Guaranty and all such other provisions shall remain in full force and effect.

          14. Guarantor hereby represents and warrants to Landlord that the persons signing and
delivering this Guaranty on behalf of Guarantor are fully authorized to do so; that Guarantor has
the full right, power and authority to enter into, deliver and perform this Guaranty; that all
requisite action necessary to authorize Guarantor to enter into, deliver, and perform its
obligations hereunder have been taken; that this Guaranty is a valid and binding obligation of
Guarantor enforceable in accordance with its terms; and that this Guaranty does not conflict with
or violate any of Guarantor’s organizational documents, or any provision of any agreement or
judicial order to which Guarantor is subject.

     IN WITNESS WHEREOF, the undersigned Guarantor has executed this Guaranty as of the
17th of December, 2007.

	 	 	 	 	 
	GUARANTOR:

Elan Corporation, plc,

a public limited company organized under the laws of Ireland

 	 	 
	By:  	/s/ G. Kelly Martin
 	 	 
	 	Name:  	G. Kelly Martin 	 	 
	 	Title:  	President and Chief Executive Officer 

A CEO, President or any Vice President 	 	 
	 
	 	 	 
	By:  	     /s/ William Daniel
 	 	 
	 	Name:  	William Daniel 	 	 
	 	Title:  	Secretary 

A Secretary, any Assistant Secretary, 

the Chief Financial Officer or any Assistant Treasurer 	 	 

3

 

	 	 	 	 	 

EXHIBIT H

Intentionally Deleted

 

 

EXHIBIT I

LIST OF BASELINE ENVIRONMENTAL REPORTS

	 	 	 	 	 
	TITLE	 	PREPARED BY	 	DATE
	Soil Management Plan

	 	The Source Group Inc.
	 	May 2006
	Case Closure for Hazardous Materials Letter

	 	County of San Mateo
Health Department
	 	March 21, 2006
	Remedial Action Report

	 	The Source Group Inc.
	 	May 2005
	Soil Investigation Report

	 	The Source Group Inc.
	 	May 2004
	Environmental Site Characterization Report

	 	Treadwell & Rollo
	 	March 2003
	Geotechnical Investigation

	 	Treadwell & Rollo
	 	January 2001

 

 

EXHIBIT J

Intentionally Deleted

 

 

Exhibit K

Rules and Regulations Governing Alterations

These Rules and Regulations Governing Alterations set forth those rules and regulations to be
observed by Tenant pursuant to any alterations, improvements or modifications which may be made by
or for Tenant following the commencement of the Lease, but shall not apply to the completion of any
initial tenant improvements in process as of the commencement date of the Lease. In the event of
any inconsistency between the terms of this Exhibit and the terms of the Lease, the terms of the
Lease shall prevail. All capitalized terms in this Exhibit shall have the meanings set forth in
the Lease.

General Requirements:

1. Prior to the commencement of any work in the Building, an orientation meeting is required
between the General Contractor, Landlord, and the Tenant in order to outline and identify the
general parameters and requirements for the work involved.

2. Tenant must provide Landlord in writing a complete schedule for the work, including start date,
demolition time frame (if applicable), material delivery schedule, critical project dates, and
standard working hours, which will be subject to Landlord’s prior approval, which approval shall
not be unreasonably withheld, conditioned or delayed. This communication and approval will help to
ensure the quickest possible access to construction areas.

3. Insurance certificates, in compliance with the contractor insurance requirements section
referenced in the Lease must be in possession of the Landlord prior to the commencement of the
work.

4. Tenant is required to submit home, mobile, and office telephone numbers for the Tenant’s project
manager (or if none, General Contractor) to Landlord prior to construction in the event that Tenant
or General Contractor must be contacted regarding the project after hours or on weekends.

5. Smoking is not permitted in any area of the Building.

6. During break time the contractors’ and subcontractors’ employees will not congregate in any
exterior parking area of the Building.

7. Tenant will provide Landlord with periodic updates regarding the status of the Tenant’s work, in
accordance with the work schedule approved by Landlord as required above, and if reasonably
requested by Landlord, Tenant will coordinate status meetings between those individuals involved in
the Tenant finish process and Landlord. If the Premises are part of a multi-tenant building, the
purpose of this meeting is to keep all interested parties advised of upcoming plans, problems
and/or anticipation of changes in work scheduling.

Rules
& Regulations Governing Alterations

Lease-5gmf 200 Oyster

Page 1

 

8. If the Premises are part of a multi-tenant building, then prior to the commencement of the work
or delivery of any materials to the Premises, Tenant and Landlord will perform a walk-through
inspection, including the space proposed for construction, the entrance and each and every passage
of travel between the two points (including elevators, lobby, hallways, restroom, elevator cores,
etc.) and identify any and all existing damage that is present prior to the start of construction.
Immediately after the completion of construction, General Contractor, and Landlord will perform a
post construction walk-through and identify all areas of damage. Costs to repair any such damage will be paid by
Tenant.

9. General Contractor shall ensure that any portion of the work area and project site that are
visible from the exterior of the Premises are clean of all litter left by construction crews on a
daily basis.

10. If the Premises are part of a multi-tenant building, General Contractors’ and Subcontractors’
employees shall park in the areas agreed to by Landlord and Tenant and Tenant understands that any
vehicle parked in unauthorized areas may be towed at automobile owner’s or contractor’s expense.

11. It is understood that all Sub-Contractors performing services at the Building are experienced
and professional in their particular field of expertise and are solely under the direction of the
General Contractor. It is the responsibility of Tenant to be certain that these Rules and
Regulations are distributed to, understood and complied with by General Contractor and by every
individual under the direction of the General Contractor.

12. General Contractor and their Sub-Contractors are responsible for the safekeeping of their own
equipment, supplies and tools. The Landlord will not be responsible for any missing items.

13. If the Premises are part of a multi-tenant building: no supplies, tools, etc., are to be
placed outside the construction area; doors into common area corridors are to remain closed at all
times; and if an entry door to the Premises from a common area corridor has to be installed, a
plastic curtain must be hung to stop dust from entering public areas.

14. If the Premises are part of a multi-tenant building, any direct dust, paint debris tracked into
corridors or damage, which in the opinion of the Landlord is over and above normal, minimal limits,
must be cleaned or corrected immediately by the Contractor. Should the Contractor, after
notification, not correct the situation, Landlord or Tenant shall correct it at the Tenant’s sole
expense.

15. If the Premises are part of a multi-tenant building, no radios, tape players or like, may be
operated within the Premises during normal hours if such devices are audible outside the Premises.

16. No sign, placard, picture, name, advertisement or notice visible from the exterior of the
Premises will be inscribed, painted, affixed or otherwise displayed by Tenant or General

Rules
& Regulations Governing Alterations

Lease-5gmf 200 Oyster

Page 2

 

Contractor
in any part of the Building or Premises without prior written consent of the Landlord or Tenant.
In the event of the violation of this rule by Tenant or General Contractor, Landlord or Tenant may
remove the violating items without liability and may charge the expense incurred by such removal to
the Tenant or Contractors violating this rule.

Building Specific Requirements: 

1. Building Access: If the Premises are part of a multi-tenant building, all contractors
will enter the Building through the loading dock doors and will use the freight elevator to access
all construction floors.

2. After Hour’s Access and Cost: All access required outside of normal business hours,
(7:00 A.M. to 5:00 P.M.) or any time on weekends would require prior authorization by the Tenant.
It will be the General Contractor’s responsibility to grant access to any and all Sub-Contractors.
If the Premises are part of a multi-tenant building and a Building Engineer is required to be
present after normal business hours, the costs will be billed to the General Contractor.

3. Loading/Unloading Area:

	 	a.	 	If the Premises are part of a multi-tenant building, all large deliveries to
the Building should be scheduled in advance by Tenant for arrival outside of the normal
working hours if possible. If deliveries cannot be completed after hours, Tenant
should schedule such deliveries with Landlord to avoid interference with the
operational activities of any other tenants of the Building.
	 
	 	b.	 	If the Premises are part of a multi-tenant building, all deliveries must be
delivered through the loading dock entrance. Masonite, plywood boards, planks and like
protection must be utilized wherever materials are to be rolled across carpeted or
finished floor.

4. Freight Elevators: If the Building contains a freight elevator, (i) all contracted
personnel must use the freight elevator for all construction work, and (ii) passenger
elevators are for Tenant and its guests only and are NOT to be used by contractors for
travel between floors

5. Demolition: The following rules and regulations apply:

	 	a.	 	If the Premises are part of a multi-tenant building, Building trash dumpsters
are not to be utilized for construction debris of any kind.
	 
	 	b.	 	Prior approval of the location by the Tenant and Landlord is necessary for the
placement of General Contractor’s dumpster.

Rules
& Regulations Governing Alterations

Lease-5gmf 200 Oyster

Page 3

 

	 	c.	 	If the Premises are part of a multi-tenant building, the opening and/or removal
of any medium pressure supply ducts must be scheduled for after hours, and must be
immediately capped so when the system starts it can maintain static pressure.
	 
	 	d.	 	Thermostats in the construction area of a multi-tenant floor of the Building
are usually servicing zones in occupied suites and corridors. Therefore, such
thermostats must not be turned off, removed, capped or remounted in a different
location than the drawing identifies. All pneumatic lines are to be capped
immediately should changes be required. Replacement thermostats or additional
thermostats are required to match the building standard.
	 
	 	e.	 	All doors, frames, lights, sidelights, carpet pieces or any other material
permanently fixed to the Premises and installed by Landlord or at Landlord’s expense
are the property of the Building. Arrangements must be made to transport these items
to the Building’s designated storage area.
	 
	 	f.	 	All construction debris must be transported during prescheduled time frames in
Rubbermaid type container so as to not damage walls, floors, etc. If the Premises are
part of a multi-tenant building, the staging of construction debris outside the
construction area is strictly prohibited. General Contractor shall take special care
to cover and protect all walls and outside corners.

6. Fire and Life Safety Systems: General Contractor and all associated Sub-Contractors
must ensure with the Landlord’s designated representative that the fire system is off-line each day
before the commencement of work. Any time reasonably required by Landlord’s personnel to respond
to false alarms caused by an employee, agent or contractor of General Contractor or an associated
Sub-Contractor will be charged back to Tenant. Persistent offenders will be removed from the
approved Contractor list and no longer be permitted access to the Premises. Proposed fire
detection equipment should be submitted to and reviewed by Landlord’s designated engineer before
starting any work (including smoke detectors, flow switches, pull stations, fire dampers, duct
detectors, etc.). The General Contractor will be required to bag each detector at the beginning of
each day and is required to unbag all detectors at the end of each workday. Any troubles on the
fire system that are caused by the General Contractor or any Sub-Contractors will be required to be
corrected the same business day and any costs associated with said repairs will be the Tenant’s
responsibility.

7. Fire Alarm System Modification: Any change to the existing Building Fire Alarm System,
including but not limited to relocation of horns, speakers, magnetic hold opens, Card Access System
interface, etc., shall be planned and coordinated with Landlord. Any and all work on the Building
Fire Alarm System must be performed by a licensed contractor approved by Owner, which approval
shall not be unreasonably withheld. All cost associated with modifications are to be made a part
of General Contractor’s overall budget.

8. Scheduled walk-through: General Contractor should expect and anticipate that at a
minimum, once each week, a representative from the Building’s Management or Engineering

Rules
& Regulations Governing Alterations

Lease-5gmf 200 Oyster

Page 4

 

department shall schedule a walk-through inspection of the Premises in order to assess construction progress,
assure compliance with these Rules and Regulations and/or inform the General Contractor of any
special circumstances that may impact the construction progress.

9. Disturbance to the Normal Course of Business: If the Premises are part of a
multi-tenant building, any project or operation causing a potential disturbance to other tenants of
the Building, such as but not limited to demolition, core drilling, powder actuated tools, etc. would typically
only be permitted during non-business hours and must be scheduled in advance with Landlord. All
costs associated with having the Landlord’s designated representative present after hours is the
sole responsibility of Tenant and will be billed by the Landlord.

10. Use of Hazardous Substances: General Contractor shall use the Hazardous Substance
Control Form any time hazardous substances are used on the facility required to be reported under
OSHA requirements. This control form is to be turned into Landlord prior to the
utilization of hazardous substances in conjunction with construction.

11. Flammable Gases and Liquids. No kerosene, gasoline or other similar flammable liquid
used in construction is permitted on the Premises except when in use and must never be left
unattended; provided that bottled flammable gases typically utilized in construction activities may
be stored in a safe and secure manner in locations approved by Landlord.

12. Core Drilling: Tenant must coordinate all core drilling locations with Landlord; and
once such locations are approved, core drilling in any multi-tenant building may only take place
outside of normal business hours. If Landlord reasonably requires x-raying of floor slabs for core
drills and floor slab penetrations in any multi-tenant building, such x-raying activities in
multi-tenant buildings must be performed during non-business hours. The cost for any repairs to
conduit or wiring that is damaged by core drilling shall be the sole responsibility of the Tenant.

13. Painting: If the Premises are part of a multi-tenant building, no painting, spraying
or other work, which involves noxious fumes, is permitted during working hours of the Building,
Monday through Friday (7:00 A.M. to 6:00 P.M.), and such work will have to be scheduled after hours
or on weekends and will require the Building Engineer to set up the ventilation system to provide
positive ventilation of the floor that these activities are taking place.

14. Cabling: The cabling contractor will be required to submit to Tenant the proposed
mapping of the cabling through the building’s riser space as well as plenums. Prior Landlord and
Tenant approval is required before cabling installation begins.

15. Ceiling. Electrical, plumbing or other services, which require access to the ceiling
in the occupied tenant space, must be performed professionally, neatly and as quickly as possible.
Fingerprints, dirt, construction debris, as well as replacement of any damaged ceiling tiles etc.,
shall be performed at Tenant’s cost and expense. If the Premises are part of a multi-tenant
building, then in some cases, it may be necessary to schedule this work outside the Tenant’s normal
business hours.

Rules
& Regulations Governing Alterations

Lease-5gmf 200 Oyster

Page 5

 

16. Janitorial Closets. Slop sinks are provided in the janitorial closets and this is the
only water source available to the General Contractor and Sub-Contractors. If the Premises are
part of a multi-tenant building, access to janitorial closets will be obtained through the Building
Engineer. No debris is to be disposed of at janitors’ sinks (including, but not limited to,
painting and drywall tool clean up).

17. Exterior Door Locks. All Tenant exterior door locks to the Building must match the
Building master system; therefore, all keying requirements must be coordinated by Tenant with
Landlord.

18. Amendments. Landlord reserves the right at any time to reasonably change or rescind
any one or more of these Rules and Regulations, or to make such other and further reasonable Rules
and Regulations as in Landlord’s reasonable judgment may from time to time be necessary for the
management, safety, care and cleanliness of the Premises and Building, and for the preservation of
good order therein, as well as for the convenience of other occupants and tenants therein.

Rules
& Regulations Governing Alterations

Lease-5gmf 200 Oyster

Page 6

 

CONTRACTOR INSURANCE REQUIREMENTS

     Contractor shall maintain in full force and effect, during the time frame services are
provided, insurance coverage of the types and in the amounts as required in the Lease.

Rules
& Regulations Governing Alterations

Lease-5gmf 200 Oyster

Page 7

 

HAZARDOUS SUBSTANCE CONTROL FORM

Building Address:                                         

Contractor Name:                                         

Tenant Name:                                         

Floor Number(s):                                         

	Ø	 	Hazardous Substances to be used during construction:
(Attachment of MSDS is required)
	 
	Ø	 	Quantities to be stored on site during construction:
	 
	Ø	 	Intended use of hazardous substances:

Rules
& Regulations Governing Alterations

Lease-5gmf 200 Oyster

Page 8

 

HAZARDOUS SUBSTANCE CONTROL (cont.)

Control measures that could be implemented in order to limit the exposure of hazardous fumes, over
spray and airborne material as they affect the health and safety of Tenants, workers and employees.

Please indicate with yes (y) or no (n):

	 	 	 	 	 
	* Physical enclosure of construction zone

	 	(y)
	 	(n)
	 
	 	 	 	 
	* Dilution of ventilation required

	 	(y)
	 	(n)
	 
	 	 	 	 
	* Outside exhaust

	 	(y)
	 	(n)
	 
	 	 	 	 
	* Off-site lacquer spraying

	 	(y)
	 	(n)
	 
	 	 	 	 
	* Use of alternate products with lower hazardous effect characteristics

	 	(y)
	 	(n)
	 
	 	 	 	 
	* Other (please state)
	 	 	 	 

GENERAL CONTRACTOR IS RESPONSIBLE FOR THE REMOVAL OF ALL REMAINING CONSTRUCTION MATERIALS FROM THE
SITE, ALSO INSURING THE PROPER HANDLING OF ANY HAZARDOUS SUBSTANCES.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00137-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00137-of-00352.parquet"}]]