Document:

EXHIBIT
10.47

 

SUBLEASE

 

THIS SUBLEASE
(“Sublease”), dated for reference purposes only July 21, 2004, is entered into
by and between Sugen, Inc. a Delaware corporation (“Sublandlord”), and
Exelixis, Inc., a Delaware corporation (“Subtenant”).

 

RECITALS

 

A.            Sublandlord leases
certain property located in the Britannia Pointe Grand Business Park (“Center”)
commonly known as 210-230 East Grand Avenue, South San Francisco, California
(the “Master Premises”).

 

B.            The Master Premises is
comprised of three (3), fully-developed office and research and development
buildings consisting of an approximate 222,539 combined rentable square feet,
more particularly described as follows:

 

(1)           210 East Grand Avenue –
a three-story building, containing approximately 67,672 rentable square feet
(“The Sublease Premises”);

 

(2)           220 East Grand Avenue –
a two-story building, containing approximately 48,391 rentable square feet
(“Phase IIA 220 East Grand Avenue Building”); and

 

(3)           230 East Grand Avenue –
a two-story building, containing approximately 106,368 rentable square feet
(“Initial Building/230 East Grand Avenue”).

 

C.            Sublandlord leases the
Sublease Premises and the Phase IIA 220 East Grand Avenue Building
pursuant to that certain Build-To-Suit Lease between Sublandlord and Britannia
Pointe Grand Limited Partnership, a Delaware limited partnership (“Master
Landlord”), dated as of April 7, 1999, as amended by First Amendment to
Lease (“First Amendment”) dated as of February 20, 2002 (as amended, the
“Master Lease”).  A true and complete
copy of the Master Lease is attached as Exhibit A to this Sublease
and incorporated by this reference.  The
Sublease Premises are depicted on Exhibits B-1 and B-2 to the First Amendment
as “Sugen Phase III”.  The Sublease Premises
are described in the Master Lease as the “Phase IIB Building” and in the First
Amendment as the “Phase III Building.”

 

D.            Sublandlord leases the
Initial Building/230 East Grand Avenue pursuant to that certain Build-To-Suit
Lease between Sublandlord and Master Landlord dated as of June 11, 1997,
as amended by First Amendment to Lease dated as of March 18, 1998, Second
Amendment to Lease dated as of May 28, 1998, Third Amendment to Lease
dated as of April 7, 1999, and Fourth Amendment to Lease dated as of
February 20, 2002 (as amended, the “Phase I Master Lease”).

 

E.             Sublandlord desires
to sublease the Sublease Premises to Subtenant, and Subtenant desires to
sublease the Sublease Premises from Sublandlord, upon the terms and conditions
provided for herein.

 

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F.             Capitalized terms
used but not otherwise defined herein shall have the meaning given such terms
in the Master Lease.

 

NOW, THEREFORE,
in consideration of the mutual covenants and conditions contained herein,
Sublandlord and Subtenant covenant and agree as follows:

 

AGREEMENT

 

1.             Sublease
Premises; Phase IIA 220 East Grand Avenue Building License.

 

(a)           Demise of
Sublease Premises; License of Lobby Area.  Sublandlord hereby subleases the Sublease
Premises to Subtenant, and Subtenant hereby takes and hires the Sublease
Premises from Sublandlord, on and subject to the terms, covenants and
conditions set forth in this Sublease. 
It is expressly understood and agreed that the Subtenant shall also have
a non-exclusive license to use in common with Sublandlord and the occupant(s)
of the Phase IIA 220 East Grand Avenue Building, the common area lobby
(“Lobby Area”) located between the Sublease Premises and the Phase IIA 220
East Grand Avenue Building as more particularly described on the site map
attached hereto as Exhibit B (“Site Map”).  Subtenant shall, at its cost, maintain the
Lobby Area pursuant to reasonable standards agreed to by Master Landlord,
Sublandlord, and Subtenant and Subtenant shall pay to Sublandlord, or at Sublandlord’s
written direction, an occupant of the Phase IIA East Grand Avenue Building, the
reasonable (based on square footage) costs incurred to operate the Lobby Area
(including but not limited to a reasonable portion of the utility costs and
other costs incurred to operate, maintain, repair, and replace the Phase IIA
220 East Grand Avenue Building HVAC system). 
Subtenant may, after obtaining consent from Sublandlord (which shall not
be unreasonably withheld) and from Master Landlord, enter into an agreement
with the occupants of the Phase IIA 220 East Grand Avenue Building with
respect to sharing the costs of maintaining the Lobby Area.  Sublandlord acknowledges that Subtenant
intends to construct a reception area in the Lobby Area.  Such construction shall be subject to all of
the terms of this Sublease, including but not limited to Article 11 of the
Master Lease, which is incorporated herein by reference.  Upon the written request of an occupant of
the Phase IIA 220 East Grand Avenue Building, and the agreement of such
occupant(s) to share in the cost of providing such receptionist, the Lobby Area
receptionist shall perform services for the Phase IIA 220 East Grand
Avenue Building, as well as for the Sublease Premises, including but not
limited to providing access to the Phase IIA 220 East Grand Avenue
Building.  If an occupant of the
Phase IIA 220 East Grand Avenue Building desires to construct a reception
desk in the Lobby Area, then it shall have the right to do so, and in such
instance, Sublessee shall, within 30 days after receipt of notice from
Sublandlord, move its Lobby Area wall signage to the wall which abuts the
Sublease Premises and its reception desk to the area near the Sublease
Premises.  In such case, then Subtenant
shall concurrently, and at its sole cost, repaint the back wall of the Lobby to
a neutral color.

 

(b)           Shipping and
Receiving License. 
Sublandlord also grants to Subtenant a temporary non-exclusive license
(“S&R License”) for (i) use of the shipping and receiving area and
loading dock located on the Phase IIA 220 East Grand Avenue Building
(collectively, “S&R Area”) solely for the unloading of goods and equipment,
and (ii) limited ingress and egress to and through a portion of the first
floor of the Phase IIA 220 East Grand Avenue Building from the S&R
Area to the Sublease Premises (“Access Pathway”).  The S&R Area and Access Pathway are more
particularly identified on the Site Map and are collectively referred to in
this Sublease as the “S&R License Area.” 
The term of the S&R License shall commence on the

 

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Commencement Date and terminate on the earlier of: (i) the date
that is three (3) months following the Sublandlord’s delivery of a notice
to Subtenant that Sublandlord has received an offer from a prospective
Subtenant (that Sublandlord intends to accept) to sublease all or a portion of
the Phase IIA 220 East Grand Avenue Building, (ii) the date Subtenant
completes construction of an approved loading dock on the Sublease Premises,
and (iii) the one (1) year anniversary of the Commencement Date
(“S&R License Term”).  The
construction of the loading dock shall be subject to all of the provisions of
this Sublease, including but not limited to Article 11 of the Master
Lease, which is herein incorporated. 
Sublandlord makes no representations or warranties to Subtenant
regarding the likelihood of securing necessary approvals, including but not
limited to from the Master Landlord, to construct the loading dock.  Subtenant shall not enter the S&R License
Area without: (a) providing prior notification to Sublandlord and
(b) being accompanied by Sublandlord’s personnel or agent.  Subtenant’s use of
the S&R License Area is limited to the receipt of goods and equipment
required for Subtenant’s business operations conducted on the Sublease
Premises, and shall be subject to other reasonable access and security
restrictions imposed by Sublandlord.  The
S&R License Area may not be used for storage or for the disposal of any
materials.  Except as explicitly set
forth herein, Subtenant shall not have any right to use any portion of the
Phase IIA 220 East Grand Avenue Building or any property or improvements
adjacent to or in the vicinity of the Phase IIA 220 East Grand Avenue
Building.  Without limitation of the
foregoing, Subtenant shall not have any right to use the storage lockers or
waste bins near the Phase IIA 220 East Grand Avenue Building.

 

(c)           Insurance
and Indemnity re: S & R License; No Radioactive Materials.  During the S&R License Term, Subtenant
shall include the S&R License Area under its commercial general liability
insurance and workers’ compensation policies, which policies shall comply with
all of the provisions of this Sublease, and Subtenant’s obligations to
indemnify, hold harmless, and defend Sublandlord and Master Landlord under this
Sublease (by way of incorporation of Section 14.6 (a) of the
Master Lease) shall apply with equal force to Subtenant’s use of the S&R
License Area.  Subtenant’s use of the
S&R License Area shall be subject to the conditions, prohibitions,
restrictions, and other provisions of this Sublease; provided, however, that
notwithstanding anything to the contrary contained in this Sublease, Subtenant
may not bring any radioactive materials or radiation into, on, under, or around
the S&R License Area.  Subtenant
shall not have any right whatsoever to make any alterations, additions, or
improvements to the S&R License Area.

 

(d)           Insurance
and Indemnity re: Lobby Area; No Radioactive Materials.  During the Term of the Sublease, Subtenant
shall include the Lobby Area under its commercial general liability and
workers’ compensation policies, which policies shall comply with all of the
provisions of this Sublease, and Subtenant’s obligations to indemnify, hold
harmless, and defend Sublandlord and Master Landlord under this Sublease (by
way of incorporation of Section 14.6 (a) of the Master Lease)
shall apply with equal force to Subtenant’s use of the Lobby Area.  Subtenant’s use of the Lobby Area shall be
subject to all of the conditions, prohibitions, restrictions and other
provisions of this Sublease; provided, however, that notwithstanding any thing
to the contrary contained in the Sublease, Subtenant may not bring any
radioactive materials or radiation into, on, under, or around the Lobby
Area.  Subtenant shall not have any right
whatsoever to make any alterations, additions, or improvements to the Lobby
Area, except pursuant to the terms of this Sublease, including but not limited
to the provisions of Article 11 of the Master Lease, which are
incorporated herein by reference.

 

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2.             Term.

 

(a)           Sublease
Term.  The term of this
Sublease (the “Sublease Term”) shall commence on the later of (i) the date
Sublandlord delivers possession of the Sublease Premises to Subtenant, or
(ii) the date Master Landlord delivers its written consent to this
Sublease to Subtenant (the “Commencement Date”). The parties anticipate that
the Commencement Date will occur on or before July 15, 2004 (the
“Scheduled Commencement Date”).  The term
of this Sublease shall expire, unless sooner terminated pursuant to the
provisions set forth herein, on July 31, 2018 (the “Expiration Date”).

 

(b)           Delay in
Possession: Termination Right. 
If for any reason Sublandlord cannot deliver possession of the Sublease
Premises to Subtenant by the Scheduled Commencement Date, Sublandlord shall not
be subject to any liability therefor, nor shall such failure affect the
validity of this Sublease or the obligations of Subtenant hereunder (except as
hereinafter provided) or extend the Base Rent Abatement Period or the Sublease
Term, but in such case Subtenant shall not be obligated to pay Rent until
possession of the Sublease Premises is tendered to Subtenant.  Notwithstanding the foregoing, if, for any
reason, other than as the result of any delay on the part of Subtenant,
Sublandlord is unable to deliver possession of the Sublease Premises on or
before the date which is sixty (60) days after mutual execution of this Sublease
by Sublandlord and Subtenant, then Subtenant shall have the right to terminate
this Sublease by delivering written notice thereof to Sublandlord.  If Subtenant so terminates this Sublease,
Sublandlord shall refund to Subtenant the prepaid Base Rent and return the
Letter of Credit (defined in Section 10 below) and the parties
thereupon shall be released from all further liability under this
Sublease.  Unless exercised prior
thereto, Subtenant’s right of termination hereunder shall expire upon the later
of delivery of the Sublease Premises to Subtenant or the delivery to Subtenant
of Master Landlord’s written consent to this Sublease.

 

(c)           End of
Sublease Term  The Sublease
Term shall end on the Expiration Date; provided, however, the Sublease Term
shall terminate earlier as set forth in this Sublease.

 

(d)           Commencement
Date Memorandum.  Promptly
following the Commencement Date, Sublandlord and Subtenant shall execute a
written acknowledgement of the Commencement Date and the Expiration Date in
form mutually acceptable to the parties, which acknowledgement shall be deemed
to be incorporated herein by this reference. 
Notwithstanding the foregoing requirement, the failure of either party
to execute such a written acknowledgement shall not affect the determination of
the Commencement Date or the Expiration Date in accordance with the provisions
of this Sublease.

 

3.             Rent.

 

(a)           Triple Net.  Rent payable by Subtenant for the Sublease
Premises shall be on a “triple net” basis and shall consist of base rent (“Base
Rent”) plus certain additional rental (“Additional Rent”), as provided below in
Sections 3(b), 3(c), 3(d) and 3(e). 
Base Rent, Additional Rent, and any other charges due under this
Sublease are hereinafter referred to collectively as “Rent.”  All Rent shall be paid to Sublandlord at the
address specified for Sublandlord below, or to such other person or to such
other place as Sublandlord may from time to time designate in writing.

 

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(b)           Base Rent
Schedule.  Subtenant shall pay
to Sublandlord in advance, without prior notice, demand, deduction or offset,
monthly Base Rent in accordance with the following table: 

 

	
  Month(s)

  	
   

  	
  Base
  Rent (NNN)

  per month

  	
   

  
	
  Months 1 – 12

  	
   

  	
  Base Rent is Abated

  	
   

  
	
  Months 13 – 24

  	
   

  	
  $ 81,336.00

  	
   

  
	
  Months 25 – 36

  	
   

  	
  $ 130,815.40

  	
   

  
	
  Months 37 – 48

  	
   

  	
  $ 134,204.40

  	
   

  
	
  Months 49 – 60

  	
   

  	
  $ 137,593.40

  	
   

  
	
  Months 61 – 72

  	
   

  	
  $ 140,982.40

  	
   

  
	
  Months 73 – 84

  	
   

  	
  $ 144,371.40

  	
   

  
	
  Months 85 – 96

  	
   

  	
  $ 147,760.40

  	
   

  
	
  Months 97 – 108

  	
   

  	
  $ 151,149.40

  	
   

  
	
  Months 109 – 120

  	
   

  	
  $ 154,538.40

  	
   

  
	
  Months 121 – 132

  	
   

  	
  $ 157,927.40

  	
   

  
	
  Months 133 – 144

  	
   

  	
  $ 161,316.40

  	
   

  
	
  Months 145 – 156

  	
   

  	
  $ 164,705.40

  	
   

  
	
  Months 156 –
  7/31/18

  	
   

  	
  $ 168,094.40

  	
   

  

 

Month 1 of the Sublease
Term shall begin on the Commencement Date and end on the day prior to the one
month anniversary of the Commencement Date. 
For example, if the Commencement Date is July 15, 2004, then Month
1 shall commence on July 15, 2004 and shall end on August 14, 2004.  Each subsequent month of the Sublease Term
shall be calculated in like manner.  For
example, if Month 2 commences on August 15, 2004, then it shall end on
September 14, 2004.  If the final
month of the Sublease Term is not a full month, then Base Rent for such month
shall be prorated (based on a thirty (30) day month).

 

(c)           Payment of
First Month’s Rent Upon Execution. 
Concurrently with its execution of this Sublease, Subtenant shall pay to
Sublandlord the Base Rent for Month 25.

 

(d)           Operating
Expenses.  The Master Lease
requires Sublandlord to pay to Master Landlord amounts representing “Tenant’s
Operating Cost Share” of the Operating Expenses.  The Master Lease also requires Sublandlord to
pay to Landlord all real property taxes and assessments taxed or assessed to
Master Landlord with respect to the Subleased Premises, which taxes and
assessments are deemed to constitute Operating Expenses and, to the extent any
real property taxes and assessments on the Sublease Premises are assessed
directly to Sublandlord, Sublandlord is responsible for the payment of such
taxes and assessments directly to the taxing authority.  Subtenant shall pay all personal property
taxes on its furniture, fixtures and equipment and reimburse Sublandlord, as
provided below, for any personal property taxes assessed to Sublandlord with
respect to the Personal Property. 
Subtenant shall pay to Sublandlord, as Additional Rent, the portion of
Tenant’s Operating Cost Share of Operating Expenses allocated to the Sublease
Premises by Master Landlord, or if, in the future, Master Landlord ceases
allocating a portion of the Tenant’s Operating Expense Share of Operating

 

5

 

Expenses to the Sublease Premises, then the portion of Tenant’s
Operating Expenses Share of Operating Expenses to be paid by Subtenant shall be
reasonably determined by Sublandlord taking into account, among other
reasonable factors, the rentable square footage of the Sublease Premises in
comparison to the rentable square footage of the Premises.  All such payments are due, at the same time
and in the same manner as the Tenant’s Operating Cost Share of Operating
Expenses becomes due under the Master Lease. 
In addition, Subtenant shall reimburse Sublandlord for all real and
personal property taxes or assessments assessed directly to and paid by Sublandlord,
within thirty (30) days following Subtenant’s receipt of Sublandlord’s written
demand, which demand shall be accompanied by supporting tax bills. Neither
Tenant’s Operating Cost Share of Operating Expenses allocable to the Sublease
Premises, nor any other Additional Rent, including but not limited to utility
charges, shall be abated during the Base Rent Abatement Period and all such
amounts shall be fully payable by Subtenant commencing on the Commencement
Date.

 

(e)           Additional
Charges.  Subtenant also shall
pay to Sublandlord, as Additional Rent, (i) all charges as may be imposed
by Master Landlord after the Commencement Date for parking, access cards, or
other utilities or services to the Sublease Premises not paid by Subtenant
directly to Master Landlord, regardless of whether such service is separately
metered or estimated by Master Landlord, and (ii) such other charges as
may be imposed by Master Landlord upon Sublandlord under the Master Lease, with
respect to the Sublease Premises.

 

(f)            Sublandlord’s
Obligations to Pay Underlying Rent. 
So long as Subtenant is not in default under this Sublease (beyond any
notice and cure period), Sublandlord shall pay the amounts required to be paid
under the Master Lease (collectively, “Underlying Rent”) on or before such
amounts become due and payable thereunder. 
If Sublandlord fails to make any payment of Underlying Rent as and when
required under the Master Lease, Subtenant shall have the right, but not the
obligation, to make such payments on behalf of Sublandlord, in which event
Subtenant shall have the right to offset any amounts so paid against Rent
thereafter payable under this Sublease. 
Neither Sublandlord nor Subtenant shall be liable to the other under or
in connection with this Sublease for consequential damages, including but not
limited to business interruption or lost profits.

 

(g)           Conditional
Abatement Following Casualty or Condemnation.  In the event of any casualty or condemnation
affecting the Sublease Premises, Base Rent shall be proportionately abated, to
the extent that Subtenant’s use of or access to the Sublease Premises is
materially impaired, but only to the extent that Underlying Rent payable under
the Master Lease is abated.  Subtenant
shall have the right to terminate this Sublease, in connection with any
casualty or condemnation upon the same terms Sublandlord has to terminate the
Master Lease under the terms thereof.

 

(h)           Interest on
Past Due Rent.  All Rent which
is not paid when due shall bear interest at the interest rate set forth in Section 3.2
of the Master Lease from the date due until the date of payment.

 

(i)            Late Charges.  In addition to the payment of interest as set
forth in the preceding subparagraph, Subtenant shall be responsible for the
payment of late charges pursuant to the provisions of Section 3.2
of the Master Lease to the extent incurred as a result of Subtenant’s failure
to pay Rent when due.

 

6

 

(j)            Hold-Over.  The parties hereby acknowledge that the
expiration date of the Master Lease is July 31, 2018 and that it is
therefore critical that Subtenant surrender the Sublease Premises to
Sublandlord not later than the Expiration Date in accordance with terms
hereof.  If Subtenant holds possession of
the Sublease Premises or any portion thereof after the Sublease Term with
Sublandlord’s written consent, then except as otherwise specified in such
consent, Subtenant shall become a subtenant from month to month at one hundred
ten percent (110%) of Base Rent and Additional Rent and otherwise upon the
terms herein specified for the period immediately prior to such holding over
and shall continue in such status until such tenancy is terminated by either
party upon not less than thirty (30) days prior written notice.  If Subtenant holds possession of the Sublease
Premises or any portion thereof after the Sublease Term without Sublandlord’s
written consent, the Sublandlord at its sole discretion may elect (by written
notice to Subtenant) to have Subtenant become a subtenant either from month to
month or at will, at one hundred fifty percent (150%) of Base Rent and
Additional Rent (prorated on a daily basis for an at-will tenancy, if
applicable) and otherwise upon all the terms herein specified for the period
immediately prior to such holding over, or any elect to pursue any and all
legal remedies available to Sublandlord under applicable law with respect to an
unconsented to holding over by Subtenant. 
Subtenant shall indemnify, and hold Sublandlord harmless from any loss,
damage, claim, liability, cost or expense (including reasonable attorney’s
fees) resulting from any delay by Subtenant in surrendering the Sublease
Premises (except to the extent such delay is with Sublandlord’s prior written
consent), including, but not limited to, any claims made by a succeeding
subtenant by reason of such delay. 
Acceptance of Rent by Sublandlord following expiration or termination of
this Sublease shall not constitute a renewal of this Sublease.  If Subtenant uses radioactive materials in
the Sublease Premises, then it shall be deemed a holdover tenant, without
Sublandlord’s consent, until it has delivered to Sublandlord and Master
Landlord a satisfactory letter, executed by all applicable governmental
agencies, which letter terminates the radioactive materials license and
releases the Sublease Premises for unrestricted use.  Nothing in the preceding sentence shall
abrogate any of the provisions of this Sublease with respect to the use of
radioactive materials in the Sublease Premises.

 

(k)           Definition
of Rent.  All amounts required
to be paid by Subtenant to Sublandlord or to any other person or entity,
including, but not limited to parking fees, access card fees, overtime or
excess supply of HVAC, and all other amounts paid to Master Landlord, pursuant
to this Sublease, other than Base Rent, shall be deemed to be Additional
Rent.  All Base Rent and Additional Rent
shall be collectively referred to as “Rent”.

 

4.             Personal
Property.  Sublandlord hereby
agrees to sell to Subtenant that portion of the furniture, fixtures and
equipment (collectively, the “Sold Personal Property”) located in the Sublease
Premises which is described on Schedule 1 pursuant to the Bill of
Sale attached hereto as Exhibit C-1, effective as of the
Commencement Date.  The purchase price
for the Sold Personal Property shall be one dollar ($1.00), payable by
Subtenant prior to the Commencement Date. 
The Sold Personal Property is being sold in its present “as-is”
condition.  The Sold Personal Property
shall not include the specialized utilities equipment located in the
“Specialized Utilities Closet” (as hereinafter defined) or the back-up
generator and related equipment located in the “Back-Up Generator Pad” (as
hereinafter defined) (collectively, personal property located in the
Specialized Utilities Closet and Back-Up Generator Pad shall be hereinafter
referred to as the “Licensed Personal Property”), which Licensed Personal
Property is described on Exhibit C-2 attached hereto.  The Licensed Personal Property shall be
licensed to Subtenant during the term of this Sublease; provided, however, that
the license of the Licensed Personal

 

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Property shall terminate concurrently with the termination of the
“Utilities Closet/Generator Pad License” (as hereinafter defined); further
provided however, that if the Utilities Closet/Generator Pad License is
terminated with respect to the Specialized Utilities Closet but not the Back-Up
Generator Pad, then the license of the portion of the Licensed Personal
Property contained within the Back-Up Generator Pad shall stay in effect and
the license of the portion of the Licensed Personal Property contained in the
Specialized Utilities Closet shall terminate. 
Conversely, if the Utilities Closet/Generator Pad License is terminated
with respect to the Back-Up Generator Pad but not the Specialized Utilities
Closet, then the license of the portion of the Licensed Personal Property
contained within the Specialized Utilities Closet shall stay in effect, and the
license of the portion of the Licensed Personal Property contained in the
Back-Up Generator Pad shall terminate. 
Subtenant shall not have any right to remove the Licensed Personal
Property from its current location in either the Specialized Utilities Closet
or the Back-up Generator Pad.  Unless
Sublandlord terminates the license provided herein to Subtenant for the
Licensed Personal Property, then during the Sublease Term, Subtenant shall be
fully responsible, at no expense to Sublandlord, for operating, maintaining and
repairing the Licensed Personal Property in compliance with all “Requirements”
(as defined in the Master Lease).  In no
event shall Sublandlord have any obligation to replace any Licensed Personal
Property.  Sublandlord makes no representation
whatsoever regarding the condition, quality, functionality, or operational
ability of any of the sold Personal Property or the Licensed Personal Property.

 

5.             As-Is.  Sublandlord subleases the Sublease Premises
to Subtenant and licenses the S&R License Area, the Lobby Area, the
Specialized Utilities Closet and the Back-up Generator Pad strictly in their
present “as-is”, “where-is”
and “with all faults” condition, and
Subtenant by acceptance of possession of the Sublease Premises, acknowledges
the same to be in good order and repair and in a tenantable condition. Tenant
acknowledges that Sublandlord, Master Landlord and brokers have not made, and
Tenant has not relied upon, any representations, warranties or other assurances
concerning the condition of the Sublease Premises, the Phase IIA 220 East
Grand Avenue Building or the Center.

 

6.             Master
Lease.        This Sublease is and shall at all times remain subject and
subordinate to all of the terms, covenants and conditions of the Master Lease,
and Master Landlord shall have all rights in respect of the Master Lease and
the Sublease Premises as set forth therein. 
Except for payments of Underlying Rent and except as otherwise provided
in Section 7 hereof, Subtenant hereby assumes and agrees to perform
for Sublandlord’s benefit, during the term of this Sublease, all of
Sublandlord’s obligations under the Master Lease (collectively, the “Assumed
Obligations”), which accrue during the Sublease Term.

 

7.             Incorporation
of Master Lease.

 

(a)           Definitions
of Terms and Incorporation of Master Lease.  Sublandlord and Subtenant acknowledge and
agree that the Master Lease pertains to both the Sublease Premises and the
Phase IIA 220 East Grand Avenue Building. 
Except as specifically set forth in this Sublease or where the context
otherwise requires for a fair and equitable interpretation of this Sublease,
the rights and obligations of Sublandlord or Subtenant under the incorporated
provisions of the Master Lease shall apply only to the Sublease Premises.  Subject to the preceding sentence and the
exclusions, limitations and modifications set forth in this Sublease, the
terms, covenants and conditions of the Master Lease are incorporated in this
Sublease by reference so that, except to the extent that they are excluded,
limited or otherwise modified by the provisions of this Sublease, each and
every term, covenant and condition of the Master Lease

 

8

 

binding on or inuring to the benefit of the Master Landlord thereunder
shall, in respect of this Sublease, bind or inure to the benefit of
Sublandlord, and each and every term, covenant and condition of the Master
Lease binding or inuring to the benefit of the Tenant thereunder shall, in
respect of this Sublease, bind or inure to the benefit of Subtenant, with the
same force and effect as if such terms, covenants and conditions were
completely set forth in this Sublease, and as if the words “Landlord” and
“Tenant,” or words of similar import, wherever the same appear in the Master Lease,
were construed to mean, respectively, “Sublandlord” and “Subtenant” in this
Sublease, and as if the word “Lease,” or words of similar import, wherever the
same appear in the Master Lease, were construed to mean this “Sublease.”  Subtenant represents that it has examined,
read and is thoroughly familiar with the terms, covenants and conditions of the
Master Lease, and Subtenant accepts those terms, covenants and conditions and
obligations thereof which have been incorporated herein.

 

(b)           Excluded
Provisions of Master Lease. 
The following sections of the Master Lease are not incorporated as a
part of this Sublease and are expressly excluded herefrom (except insofar as
the same may be referenced elsewhere in this Sublease for purposes of
identification or definition of certain matters):  1.1 (Lease of Property), 2.1 (Term), 2.2
(Early Possession), 2.3 (Delay in Possession), 2.4 (Acknowledgement of Rent
Commencement), 2.5 (Holdover), 2.6 (Option to Extend Term), 3.1 (Minimum Rent),
4 (Stock Warrants), 5 (Construction), 18.1(i) (Tenant Cross-Default); 18.4
(Landlord Cross-Default), 19.2 (Sale of Landlord’s Interest),  20 (Security Deposit), 21.1 (Notices),
Exhibit C (Work Letter), Exhibit D (Estimated Construction Schedule),
Exhibit E (Acknowledgement of Rent Commencement Date); and Sections 2
(Term), 3 (Construction of Phase III Building), 4 (Minimum Rental), 8 (Security
Deposit) and 10 (Subordination, Nondisturbance and Attornment) of the First
Amendment, together with Exhibits C-1 and D of the First Amendment.

 

(c)           Limitations
on Incorporated Provisions of Master Lease.  The following limitations shall apply to the
interpretation and enforcement of the incorporated terms, covenants and
conditions of the Master Lease:

 

(i)            Time Limits
Shortened.  The time limits
contained in the Master Lease for the giving of notices, making of demands or
performing of any act, condition or covenant on the part of the tenant
thereunder, or for the exercise by the tenant thereunder of any right, remedy
or option, are changed for the purposes of incorporation herein by reference by
shortening the same in each instance by three (3) days or three
(3) Business Days, as applicable, so that in each instance Subtenant shall
have three (3) days or three (3) business days, as applicable, less
time to observe or perform hereunder than Sublandlord has as the tenant under
the Master Lease, except for differing time frames set forth in this Sublease.

 

(ii)           Indemnity
and Related Provisions for Benefit of Both Master Landlord and Sublandlord; Additional
Insureds.  Any non-liability,
release, indemnity or hold harmless provision, and any provisions pertaining to
waiver of subrogation rights and/or the naming of a party under an insurance
policy, in the Master Lease for the benefit of Master Landlord which is
incorporated herein by reference, shall be deemed to inure to the benefit of
Sublandlord and Master Landlord, for the purpose of incorporation by reference
in this Sublease.  Both Sublandlord and
Master Landlord, as well as other parties required under the Master Lease shall
be named as additional insureds on all Subtenant insurance policies other than
workers’ compensation insurance.

 

9

 

(iii)          Access,
Inspection and Work Rights. 
Any right of the Master Landlord for access or inspection and any right
of the Master Landlord under the Master Lease to do work in the Sublease
Premises, the Common Areas, or elsewhere in the Center and any right of the
Master Landlord in respect of rules and regulations, shall be deemed to inure
to the benefit of Sublandlord and Master Landlord, for the purpose of
incorporation by reference in this Sublease; provided, however, that solely in
the case of an inspection of the Sublease Premises not arising out of an emergency
(in which no notice shall be required and entry may be made at any time)
Sublandlord shall provide Subtenant with not less than ten (10) business days
prior notice of entry.  Notwithstanding
the foregoing, if Subtenant reasonably believes that a proposed inspection of
the Sublease Premises by Sublandlord will provide Sublandlord with access to
Subtenant’s trade secrets, then Subtenant may provide Sublandlord with written
notice objecting to the proposed inspection (the “Objection Notice”).  Upon timely receipt of the Objection Notice
(i.e., such notice is received by Sublandlord at least five (5) business
days prior to the scheduled inspection), Sublandlord shall arrange for a third
party consultant (the “Consultant”) to inspect the Sublease Premises in lieu of
an inspection by Sublandlord.  The
Consultant shall concurrently provide a copy of its inspection report to both
Sublandlord and Subtenant and the Consultant shall agree in its contract with
Sublandlord that it shall keep Subtenant’s trade secrets confidential except to
the extent that: (a) the Consultant is required to disclose such trade
secrets as a matter of law or (b) it is necessary to disclose such trade
secrets to Sublandlord and Master Landlord in connection with the existence of
a condition on the Sublease Premises which may violate the terms of the
Sublease.

 

(iv)          Conflicts
Between this Sublease and Incorporated Provisions.  If any of the express provisions of this
Sublease shall conflict with any of the provisions incorporated by reference,
then as between Sublandlord and Subtenant, such conflict shall be resolved in
every instance in favor of the express provisions of this Sublease; provided,
however, that to the extent Master Landlord, a lender holding a deed of trust
on the Sublease Premises or any successor to either of them succeeds to
Sublandlord’s position under this Sublease, then the express provisions of any
subordination, non-disturbance and attornment agreement and/or consent
agreement relating to this Sublease which has been executed by Sublandlord and
Subtenant shall be controlling over the preceding provisions of this sentence.

 

(v)           If any incorporated
provision of the Master Lease cross-references a provision of the Master Lease
which is not incorporated in this Sublease, such cross-referenced Master Lease
provision shall be disregarded except to the extent required for a fair and
equitable interpretation of the incorporated Master Lease provision.

 

(vi)          Master
Landlord’s Obligations Under Master Lease.  Any obligation of Sublandlord which is
contained in this Sublease by the incorporation by reference of the provisions
of the Master Lease shall be observed or performed by Sublandlord by using its
reasonable good faith efforts to cause Master Landlord under the Master Lease
to observe and/or perform the same, and Sublandlord shall have a reasonable
time do so after written notice from Subtenant specifying with reasonable
particularity the deficiency in Master Landlord’s performance under the Master
Lease.  Sublandlord shall not be required
to furnish, supply, install, maintain or repair anything, including but not
limited to, utilities or services under any provision of the Master Lease.  Subtenant shall not in any event have any
rights in respect of the Sublease Premises greater than Sublandlord’s rights
under the Master Lease, and notwithstanding any provision to the contrary, as
to obligations that pertain to the Sublease

 

10

 

Premises, Phase IIA 220 East Grand Avenue Building, Initial
Building/230 East Grand Avenue, Common Areas, and the Center and are part of
this Sublease by the incorporation by reference of provisions of the Master
Lease, Sublandlord shall not be required to make any payment or to perform any
obligation except as expressly set forth in this Sublease, and Sublandlord
shall have no liability to Subtenant for any matter whatsoever, except for
Sublandlord’s obligation to pay the Underlying Rent and to use its reasonable
good faith efforts, upon request of Subtenant, to cause Master Landlord to
observe and/or perform Master Landlord’s obligations under the Master
Lease.  If, after Sublandlord has used
commercially reasonable efforts to induce Master Landlord to perform its obligations
through written and verbal communication, Master Landlord continues to fail to
perform, past all applicable notice and cure periods set forth in the Master
Lease, Subtenant may by written notice to Sublandlord, request Sublandlord to
retain counsel (chosen by Sublandlord) and to file a suit against Master
Landlord to enforce Sublandlord’s rights under the Master Lease, and within
thirty (30) days of the date of such notice, Sublandlord shall do so.  The costs of such suit, and the obligation to
pay Master Landlord’s attorney’s fees pursuant to the Master Lease in the event
that Sublandlord is not the prevailing party in such suit, shall be borne
solely by Subtenant.  In addition, any
damages payable by Sublandlord in connection with any such suit shall be borne
solely by Subtenant.  Subtenant shall
indemnify, and hold harmless Sublandlord from and against any and all losses,
liabilities, damages, judgments, penalties, costs and expenses incurred in
connection with or arising out of any suit prosecuted by Sublandlord pursuant
to this subparagraph.

 

(vii)         Interruption
in Utilities/Services. 
Sublandlord shall not be responsible for any failure or interruption,
for any reason whatsoever other than Sublandlord’s willful misconduct, of the
services or facilities that may be appurtenant to or supplied at the Sublease
Premises, the Phase IIA 220 East Grand Avenue Building or the Center by
Master Landlord, Sublandlord, or any other entity.  Subtenant hereby expressly waives the
provisions of any statute, ordinance or judicial decision, now or hereafter in
effect, which would give Subtenant the right to make repairs at the expense of
Sublandlord, or to claim any actual or constructive eviction by virtue of
interruption in access or services to, or failure to make repairs in or to, the
Sublease Premises, the Phase IIA 220 East Grand Avenue Building or the
Center.

 

(viii)        Consents
Required From Master Landlord and Sublandlord.  With respect to any approval or consent
required to be obtained from Master Landlord under the Master Lease, such
approval or consent must be obtained from both Master Landlord and
Sublandlord.  Any approval or consent
required of Sublandlord conclusively shall be deemed reasonably withheld if
Master Landlord withholds Master Landlord’s approval or consent.

 

(d)           Assumption
and Indemnity by Subtenant. 
Subtenant shall fully perform all of the Assumed Obligations and shall
indemnify, defend, protect, and hold harmless Sublandlord from any and all
liability, damages, liabilities, claims proceedings, actions, demands and costs
(including but not limited to reasonable attorneys’ fees) resulting, directly
or indirectly, from Subtenant’s failure to perform the Assumed Obligations.

 

(e)           Amendments
to Incorporated Provisions of Master Lease.  Without limiting the generality of the
foregoing, for purposes of incorporating the terms, covenants and conditions of
the Master Lease into this Sublease, the following provisions of the Master
Lease are amended as follows:

 

11

 

(i)            Rentable
Area has Been Agreed Upon. 
The rentable area of the Sublease Premises in the Master Lease and as
specified in Recital B above is only an approximation and no variation
between the amount so stated and the actual rentable area of the Sublease
Premises shall alter the obligations of Sublandlord and Subtenant under this
Sublease, it being expressly understood and agreed that the parties have
accepted such approximate measurement for the purpose of determining the amount
of Rent due, and no re-measurement, other than as a result of a physical change
in the size of the Sublease Premises made pursuant to an amendment to this
Sublease, shall change the amount of Base Rent or Additional Rent due
hereunder.

 

(ii)           Audit
Rights; Section 9.4(b) of Master Lease.  Under Section 9.4(b) of the
Master Lease, the period during which Subtenant may examine Sublandlord’s books
and records or request an independent audit shall be sixty (60) days following
Subtenant’s receipt of the annual statement of Operating Expenses from
Sublandlord, and Sublandlord hereby covenants, upon receipt of Subtenant’s
written request, to exercise Sublandlord’s rights under Section 9.4
of the Master Lease and to provide all the information resulting from such
exercise promptly to Subtenant.

 

(iii)          Utilities;
Section 10 of Master Lease. 
Section 10 of the Master Lease relating to utilities is
modified as set forth in Section 19 of this Sublease.

 

(iv)          Release of
Liability; Section 10.2 of Master Lease.  Under Section 10.2 of the Master
Lease, the release of “Landlord” from liability shall inure to the benefit of
both Sublandlord and Master Landlord.

 

(v)           Consent to
Alterations; Section 11.1 and 11.2 of Master Lease.  Under Sections 11.1 and 11.2 of the
Master Lease, when consent is required for any Subtenant alteration, addition
or improvement to the Sublease Premises, such consent shall be obtained from
both Sublandlord and Master Landlord. 
Sublandlord shall respond to any written request for consent by
Subtenant within thirty (30) calendar days after receipt of the request.  If Sublandlord does not respond within such
time period, then Sublandlord shall be deemed to have consented to any item for
which Subtenant requested consent. 
Additionally, either Sublandlord or Master Landlord, or both, may
require the removal of such alterations, additions or improvements pursuant to
the provisions of the Master Lease.

 

(vi)          Signage;
Section 11.5 of Master Lease. 
Section 11.5 of the Master Lease relating to signage is
modified as set forth in Section 18 of this Sublease.

 

(vii)         Subtenant’s
Limited Right to Enforce Master Landlord’s Obligation to Repair;
Section 12.1 of Master Lease. 
Under Section 12.1 of the Master Lease, Sublandlord shall be
required, after written request by Subtenant, to use its reasonable good faith
efforts to cause Master Landlord to perform any repairs, maintenance or
restoration called for thereunder, as more specifically set forth in Section 7(c)(v) above.  If, after Sublandlord has used commercially
reasonable efforts to induce Master Landlord to perform its obligations through
written and verbal communication, Master Landlord continues to fail to perform,
past all applicable notice and cure periods set forth in the Master Lease,
Subtenant may by written notice to Sublandlord, request Sublandlord to retain
counsel (chosen by Sublandlord) and to file a suit against Master Landlord to
enforce Sublandlord’s rights under the Master Lease, and within thirty (30)
days of the date of such notice, Sublandlord shall do so.  The costs of such suit, and

 

12

 

the obligation to pay Master Landlord’s attorney’s fees pursuant to the
Master Lease in the event that Sublandlord is not the prevailing party in such
suit, shall be borne solely by Subtenant. 
In addition, any damages payable by Sublandlord in connection with any
such suit shall be borne solely by Subtenant. 
Subtenant shall indemnify, and hold harmless Sublandlord from and
against any and all losses, liabilities, damages, judgments, penalties, costs
and expenses incurred in connection with or arising out of any suit prosecuted
by Sublandlord pursuant to this subparagraph.

 

(viii)        Environmental
Matters; Section 13.6 of Master Lease.  Section 13.6 of the Master Lease
relating to environmental matters is modified as set forth in Section 13
of this Sublease.

 

(ix)           Insurance;
Section 14.1(b) of Master Lease; Subtenant’s Limited Right to Enforce
Master Landlord’s Obligation to Insure.  Only the Master Landlord, and not the
Sublandlord, shall carry the insurance described in Section 14.1(b) of
the Master Lease.  Sublandlord shall be
required, after written request by Subtenant, to use its reasonable good faith
efforts to cause Master Landlord to maintain the insurance described in Section 14.1(b) of
the Master Lease.  If, after Sublandlord
has used commercially reasonable efforts to induce Master Landlord to perform
its obligations through written and verbal communication, Master Landlord
continues to fail to perform, past all applicable notice and cure periods set
forth in the Master Lease, Subtenant may by written notice to Sublandlord,
request Sublandlord to retain counsel (chosen by Sublandlord) and to file a
suit against Master Landlord to enforce Sublandlord’s rights under the Master
Lease, and within thirty (30) days of the date of such notice, Sublandlord
shall do so.  The costs of such suit, and
the obligation to pay Master Landlord’s attorney’s fees pursuant to the Master
Lease in the event that Sublandlord is not the prevailing party in such suit,
shall be borne solely by Subtenant.  In
addition, any damages payable by Sublandlord in connection with any such suit
shall be borne solely by Subtenant. 
Subtenant shall indemnify, and hold harmless Sublandlord from and
against any and all losses, liabilities, damages, judgments, penalties, costs
and expenses incurred in connection with or arising out of any suit prosecuted
by Sublandlord pursuant to this subparagraph.

 

(x)            Excess
Consideration; Sections 15.2(b) and 15.2(c) of Master Lease.  Notwithstanding Sections 15(b) and
15(c) of the Master Lease, Sublandlord shall be entitled to 100% of any
excess consideration in lieu of 50% of any excess consideration.

 

(xi)           SNDA.  This Sublease is subject to Master Landlord’s
execution of a Subordination, Nondisturbance and Attornment Agreement,
substantially in the form attached hereto as Exhibit D within sixty
(60) days after mutual execution of this Sublease by Sublandlord and
Subtenant.  Except as set forth in the
preceding sentence, and notwithstanding Section 19.1 of the Master Lease,
neither Sublandlord nor Master Landlord shall be under any obligation to obtain
a non-disturbance agreement from Master Landlord’s current or future ground
lessor, mortgagee, trustee, beneficiary or leaseback lessor and Subtenant’s
obligations under this Sublease shall not be conditioned upon receipt of a
“Non-Disturbance Agreement” as described in Section 10.1 of the
Master Lease.

 

(xii)          CCRs.  Subtenant hereby acknowledges and agrees that
it has received and reviewed the Declaration of Covenants, Conditions and
Restrictions Pointe Grand Business Park, recorded February 25, 1992, as
Instrument No. 9202 5214 in the Official Records of San Mateo County (the
“CC&Rs”).  Subtenant hereby
acknowledges the subordination of the

 

13

 

Master Lease and this Sublease to the CC&Rs and agrees to abide by
all applicable covenants, conditions and restrictions contained in the
CC&Rs.

 

(xiii)         Attorney’s
Fees; Section 21.5 of Master Lease.  In addition to the provisions of Section 21.5
of the Master Lease, in the event that Sublandlord consults an attorney in
connection with any breach or default of Subtenant under this Sublease, whether
or not suit is commenced or judgment is entered, Subtenant shall reimburse
Sublandlord promptly upon demand for attorneys’ fees and costs incurred by
Sublandlord in connection therewith.

 

(xiv)        Reimbursement
of Costs; Section 21.12 of Master Lease.  Under Section 21.12 of the Master
Lease relating to reimbursement of costs, Subtenant shall be required to pay
the reasonable costs incurred by either, or both, Sublandlord and Master
Landlord in connection with Subtenant’s request for any consent or approval
under this Sublease, which costs may include, without limitation, those of
Sublandlord’s or Master Landlord’s attorneys, architects, engineers and other
third-party consultants.

 

(xv)         Brokers;
Section 21.5 of Master Lease; Section 9 of First Amendment.  The names of the brokers set forth in Section 21.15
of the Master Lease and Section 9 of the First Amendment shall be
removed and replaced as follows:  Aaron
Wright and Craig McGahey of The Staubach Company represent Sublandlord and
Randy Scott of Cornish & Carey represents Subtenant.  Commission payable to the brokers in
connection with this Sublease transaction shall be paid as per separate
agreements.

 

(xvi)        Inducement
Recapture.  With respect to
the remedies available to Sublandlord upon a default under this Sublease by
Subtenant, any agreement by Sublandlord for free or abated Rent, the Right of
First Refusal, or any other cash or in kind bonus, inducement or consideration
to Subtenant entering into this Sublease (“Inducement Provisions”) shall be
conditioned upon Subtenant’s full and faithful performance of all of the terms
of this Sublease.  Upon the occurrence of
a default (beyond any notice and cure period) by Subtenant under this Sublease,
all Inducement Provisions shall be deemed automatically deleted from this
Sublease, and of no further force and effect and one-half (1/2) of any Rent abatement,
or other bonus, inducement or consideration theretofore abated or given or paid
by Sublandlord to Subtenant shall become immediately due and payable to
Sublandlord as Additional Rent due under this Sublease.  The imputed monthly Base Rent for the full
abatement period to be in effect for the first (1st) twelve (12)
months of the Sublease Term and the partial abatement period to be in effect
for months thirteen (13) though twenty-four (24) of the Sublease Term (which
imputed monthly Base Rent shall be used to compute any amount owed pursuant to
the preceding sentence) shall be equal to One Hundred Thirty Thousand Eight
Hundred Fifteen Dollars and Forty Cents ($130,815.40).

 

(f)            Indemnification
by Subtenant.  Subtenant shall indemnify, hold
harmless, protect and defend Sublandlord from and against any loss, damage or
injury, including, without limitation, reasonable attorneys’ fees, and/or any
amounts assessed against Sublandlord by Master Landlord under the Master Lease
on account of any action or omission by Subtenant that shall give rise to a
default or potential default under the Master Lease, which Sublandlord may
suffer or incur under the Master Lease as the result of any breach by Subtenant
of its obligations under this Sublease, including, without limitation, any
provisions of the Master Lease that are incorporated herein.  Subtenant’s obligations hereunder shall
survive the termination of this Sublease. 
Notwithstanding any other provisions of this Sublease to the contrary,
in the event

 

14

 

of a breach of this Sublease that may cause an event of default to
occur under the Master Lease, Sublandlord may, in addition to all other
remedies granted to Sublandlord hereunder, at Subtenant’s expense and after
notice to Subtenant, take such action as may reasonably be required to prevent
such matter from maturing into an event of default under the Master Lease, and
Subtenant shall pay such expenses to Sublandlord, together with expenses of
collection, within five (5) days after demand by Sublandlord.

 

(g)           Sublandlord’s
Limited Obligations.  Except
as expressly otherwise provided in this Sublease, Sublandlord shall have no
obligations to Subtenant with respect to the Sublease Premises or the
performance by Master Landlord of any obligations of Master Landlord under the
Master Lease.

 

8.             Early
Termination of Master Lease. 
Subtenant acknowledges that Sublandlord has early termination rights
under Section 2(b) of the First Amendment and agrees that
Sublandlord shall have the right to freely exercise the early termination
option set forth therein. Sublandlord shall have no liability to Subtenant on
account of the early termination of the Master Lease arising from Sublandlord’s
exercise of its early termination option, any other termination agreement
entered into by Master Landlord and Sublandlord, any termination of the Master
Lease arising out of Sublandlord’s default under the Master Lease, or any other
termination of the Master Lease.  Where
the Master Lease grants Sublandlord any discretionary right to terminate the
Master Lease, whether due to casualty, condemnation, or otherwise, Sublandlord
shall be entitled to exercise or not exercise such right in its sole and
absolute discretion without the necessity of obtaining any consent or approval
from Subtenant.

 

9.             Consents
Under Master Lease.  If
Subtenant desires to take any action which requires the consent of Master
Landlord pursuant to the terms of the Master Lease, including, without
limitation, the making of any alterations, then, notwithstanding anything to
the contrary herein, (a) Sublandlord, independently, shall have the same
rights of approval or disapproval as Master Landlord has under the Master
Lease, (b) Subtenant shall not take any such action until it obtains the
consent of both Sublandlord (whose consent shall not be unreasonably
withheld) and Master Landlord, and (c) Subtenant shall request that
Sublandlord obtain Master Landlord’s consent on Subtenant’s behalf and
Sublandlord shall use commercially reasonable efforts to obtain such consent,
unless Sublandlord and Master Landlord agree in writing that Subtenant may
contact Master Landlord directly with respect to the specific action for which
Master Landlord’s consent is required. 
Any approval or consent required of Sublandlord conclusively shall be
deemed reasonably withheld if Master Landlord withholds Master Landlord’s
approval or consent.  Subtenant shall
reimburse Sublandlord for all costs incurred by Sublandlord in processing any
request by Subtenant for Master Landlord’s or Sublandlord’s consent.  Sublandlord shall respond to any written
request for consent by Subtenant within thirty (30) calendar days after receipt
of the request.  If Sublandlord does not
respond within such time period, then Sublandlord shall be deemed to have
consented to any item for which Subtenant requested consent.

 

10.           Letter of
Credit.

 

(a)           Subtenant’s
Obligation to Provide Letter of Credit; Proceeds.  Subtenant shall deliver to Sublandlord an
unconditional, irrevocable, transferable letter of credit (the “Letter of
Credit”), in an amount equal to the Required Amount (defined in Section 10(e) below)
and satisfying the requirements set forth in Section 10(b) below.  The

 

15

 

Letter of Credit shall secure Subtenant’s obligations under this
Sublease. Accordingly, upon the occurrence or existence of any Draw Event
(defined in Section 10(c) below), Sublandlord may draw upon
the Letter of Credit and use the proceeds of such draw (the “Draw Proceeds”)
for the payment of Rent, for the repair of damage to the Sublease Premises, for
the payment of any other amount which Sublandlord may spend or become obliged
to spend by reason of Subtenant’s default, and/or to compensate Sublandlord for
any other loss or damage (including, without limitation, damages under
California Civil Code Section 1951.2 or any successor or similar statute)
which Sublandlord may suffer by reason of Subtenant’s Default, to the fullest
extent permitted by law.  Subtenant
acknowledges and agrees that the Letter of Credit represents the contractual
commitment of the issuer of the Letter of Credit (the “Issuer”) to answer for
Subtenant’s failure to timely and fully discharge or otherwise satisfy
Subtenant’s liabilities and obligations under this Sublease, and that the Draw
Proceeds represent funds of Issuer paid to Sublandlord in accordance with such
contractual commitment.  Accordingly,
Sublandlord and Subtenant agree that neither the Letter of Credit nor the Draw
Proceeds shall be treated as a security deposit within the meaning of
California Civil Code Section 1950.7 (or any successor or similar
statute), and Subtenant hereby waives all rights and benefits under California
Civil Code Section 1950.7 (or any successor or similar statute), or under
any judicial or administration decision, which would limit Sublandlord’s right
to use, retain and apply the Letter of Credit and the Draw Proceeds in
accordance with this Section 10. 
Subtenant shall not have any right to mortgage, assign or encumber any
interest in the Letter of Credit without the prior written consent of
Sublandlord, which may be withheld in Sublandlord’s sole and absolute
discretion.  Sublandlord shall have the
right to transfer or mortgage its interest in this Sublease to any party and in
such event, it shall have the right to concurrently transfer or assign its
interest in the Letter of Credit.

 

(b)           Issuer;
Terms of Letter of Credit. 
The Issuer of the Letter of Credit shall be a federally chartered banking
institution reasonably acceptable to Sublandlord with an office in New York,
New York (or will accept facsimile draw requests), allowing the Letter of
Credit to be presented to and paid by such office pursuant to procedures
reasonably acceptable to Sublandlord. 
Sublandlord approves Wells Fargo Bank as Issuer, based on the current
financial status and strength of such bank. 
Such approval may be withdrawn at any time by Sublandlord based on
adverse change in the credit rating or financial status of such bank.  The Letter of Credit shall (i) be a
stand-by, at-sight, irrevocable letter of credit; (ii) be payable to
Sublandlord or Sublandlord’s assignees (any of the foregoing, the
“Beneficiary”); (iii) require that any draw on the Letter of Credit shall
be made upon receipt by the Issuer of only a letter signed by an authorized
representative of the Beneficiary certifying that the Beneficiary is entitled
to draw on the Letter of Credit and specifying the Draw Event; (iv) allow
partial draws; (v) be issued for a term of no less than one (1) year
with an automatic renewal for at least an additional four (4) years unless
the Issuer gives the Beneficiary written notice of non-renewal at least thirty
(30) days prior to the expiry date of the Letter of Credit; (vi) provide
that the Letter of Credit is governed by the Uniform Customs and Practice for
Documentary Credits as in effect as of the date of the Letter of Credit; and
(vii) be in the form of Exhibit E hereto.  Subtenant shall, at its expense, keep the
Letter of Credit in full force and effect until the thirtieth (30th) day after
the Expiration Date or other termination date of this Sublease, except that if
this Sublease is terminated due to an Event of Default by Subtenant, then
Subtenant shall keep the Letter of Credit in effect until sixty (60) days after
a final, non-appealable judgment is entered which establishes Subtenant’s
liability to Sublandlord for breach of this Sublease.

 

16

 

(c)           Draw Event.  At any time after a Draw Event occurs, the
Beneficiary may present its written demand to Issuer for payment of a portion
of the amount of the Letter of Credit as is required to compensate Sublandlord
for damages incurred, with subsequent demands at the Beneficiary’s sole
election as Sublandlord incurs further damages and the Draw Proceeds so
obtained may be applied to the extent required to compensate Sublandlord for
damages incurred, or to reimburse Sublandlord as provided herein, in connection
with any such default or other Draw Event, and any remaining Draw Proceeds
shall be retained by the Beneficiary to secure the performance of Subtenant’s
obligations under this Sublease.  A “Draw
Event” shall mean any of the following: 
(i) an Event of Default by Subtenant (after the expiration of any
notice and cure period) under this Sublease; (ii) Subtenant is the subject
of an Insolvency Proceeding (as defined below); (iii) this Sublease is
terminated by Sublandlord due to an Event of Default by Subtenant; (iv) the
Letter of Credit is not replaced with another Letter of Credit meeting the
requirements of this Section 10 from an Issuer approved by
Sublandlord at least thirty (30) days prior to the expiry date of the Letter of
Credit then held by Sublandlord.  As used
herein, an “Insolvency Proceeding” shall mean the occurrence of any of the
following events:  Subtenant
(a) makes an assignment for the benefit of creditors; (b) is
adjudicated as insolvent; (c) files a petition (or files an answer
admitting the material allegations of a petition) under any state or federal
bankruptcy or other laws affecting creditors’ rights; (d) fails, within
ninety (90) days after the commencement of proceedings for relief under any
state or federal bankruptcy or other laws affecting creditors’ rights, to have
such proceedings dismissed; (e) has all or substantially all of its assets
subject to judicial seizure or attachment and such seizure or attachment is not
released within ninety (90) days; (f) consents to or acquiesces in the appointment
of a trustee, receiver or liquidator of all or any substantial part of its
assets; or (g) fails within ninety (90) days after the appointment of such
a trustee, receiver or liquidator to have such appointment vacated.

 

(d)           Replenishment
Following Draw.  If Sublandlord
or the Beneficiary uses any Draw Proceeds to cure any default by Subtenant
hereunder and/or for any other reason permitted or contemplated by this Section 10,
Subtenant shall provide a replacement Letter of Credit in the Required Amount,
and otherwise meeting the requirements of this Section 10, within
fifteen (15) days of notice from Sublandlord or the Beneficiary, and
Subtenant’s failure to do so shall be an Event of Default hereunder.  Upon providing the replacement Letter of
Credit in the Required Amount and otherwise meeting the requirements of this Section 10,
Sublandlord shall concurrently surrender the original or then current Letter of
Credit to Subtenant, and provided there is no other Event of Default by
Subtenant, any unused Draw Proceeds.

 

(e)           Required
Amount.  The terms “Required
Amount” shall mean One Million Five Hundred Sixty-Nine Thousand Seven Hundred
Eighty-Five and no/100ths Dollars ($1,569,785), subject to adjustment provided
below.  If Subtenant is not then in
default under this Sublease and has not previously been in default beyond any
applicable notice and cure periods on two (2) or more occasions during the
Term, the amount of the Letter of Credit may be reduced to Five Hundred Four
Thousand Two Hundred Eighty-Three and no/100ths Dollars ($504,283) concurrently
with the third (3rd) anniversary of the Commencement Date. Upon providing a
replacement Letter of Credit in the reduced Required Amount and otherwise
meeting the requirements of this Section 10, Sublandlord shall concurrently
surrender the original or then current Letter of Credit to Subtenant.

 

17

 

11.           Sublandlord’s
Lien Rights.  Subtenant, as
debtor, hereby grants to Sublandlord, as secured party, a security interest in
the Sold Personal Property in order to secure the payment and performance of
Base Rent and Additional Rent due under this Sublease.  This Sublease shall constitute a security
agreement under the California Uniform Commercial Code covering the Personal Property.  Sublandlord shall have the right to file a
UCC 1 Financing Statement and any other statements necessary or desirable to
perfect, continue or correct its security interest in the Sold Personal
Property.

 

12.           No Third
Party Rights.  Except as
otherwise expressly provided herein, the benefit of the provisions of this
Sublease is limited to Sublandlord and Subtenant and to their successors and
permitted assigns.  No third party shall
be construed to have any rights as a third party beneficiary with respect to
any of the provisions of this Sublease; provided, however, that Master Landlord
shall be entitled to the benefit of Subtenant’s indemnities under this
Sublease.

 

13.           Environmental
Matters.  Subtenant
acknowledges receipt of a copy of the Detailed Divestiture Environmental Site
Assessment prepared by URS on August 29, 2003 under Project No.
07427-093-175, together with all exhibits and attachments thereto.  Section 13.6 of the Master Lease
is incorporated into this Sublease with the following modifications:

 

(a)           Copies of
Filings.  All notices,
reports, MSDS, Hazardous Materials Management Plans, Contingency Plans and
Emergency Procedures as well as copies of permits, licenses, or registrations
authorizing Subtenant to conduct any activities involving hazardous substances,
or other documents to be delivered to Master Landlord pursuant to Section 13.6
of the Master Lease shall be concurrently delivered to Sublandlord; provided,
however, that Subtenant may redact out the chemical name and chemical equation
of active pharmaceutical compounds.

 

(b)           No
Underground Tanks without Consent; Grease Trap.  Subtenant shall not be permitted to install
any new underground storage tanks or to use any existing underground storage
tanks, without, in each instance, the express prior written consent of the
Sublandlord and Master Landlord, which consent may be withheld in the sole and
absolute discretion of either Sublandlord or Master Landlord.   Subtenant shall be permitted to use, in
accordance with all applicable laws, the underground grease trap installed in
connection with the cafetorium.

 

(c)           Sublandlord’s
Indemnity of Subtenant. 
Master Landlord’s indemnity set forth in Section 13.6(c) of
the Master Lease shall not apply as between Sublandlord and Subtenant and shall
not be incorporated into this Sublease. 
Sublandlord shall indemnify, defend and hold Subtenant harmless from and
against any and all claims, losses, damages, liabilities, costs, legal fees and
expenses of any sort arising out of or relating to any unauthorized release
into the environment of any hazardous substances or wastes or radiation or
radioactive materials from the Sublease Premises only to the extent such
release resulted from the negligence of or willful misconduct by Sublandlord.

 

14.           No Option to
Extend.  Subtenant shall not
have any option to renew or extend the term of this Sublease.

 

18

 

15.           Right of
First Refusal.  Sublandlord
hereby grants the following right of first refusal (“Right of First Refusal”)
to Subtenant.

 

(a)           Offer;
Offered Premises; Acceptance Notice; Amendment, Termination.  If, during the Term, Sublandlord receives an
executed letter of interest, letter of intent or similar summary of terms
(collectively, a “Letter of Interest”) from an unrelated third party
(“Offeror”) in connection with the subleasing of (i) all or a portion of
the Phase IIA 220 East Grand Avenue Building or (ii) all or a portion
of the Phase IIA 220 East Grand Avenue Building together with all or a
portion of the Initial Building/230 East Grand Avenue (in either case, the
“Offered Premises”), Sublandlord shall deliver to Subtenant a copy of such
Letter of Interest.  Delivery of the
Letter of Interest by Sublandlord to Subtenant shall constitute Sublandlord’s
offer (the “Offer”) to sublease to Subtenant the Offered Premises, in
accordance with the specific terms of the Letter of Interest and otherwise on
the terms and conditions of this Sublease. 
The Offered Premises, if subleased to Subtenant pursuant to this Right
of First Refusal, shall be hereinafter referred to as the “Additional
Premises.”  Subtenant shall have ten
(10) business days after receipt of the Offer within which to deliver to
Sublandlord written notice (“Acceptance Notice”) unconditionally accepting the
Offer.  The Acceptance Notice shall
constitute Subtenant’s acceptance of the Offer and binding agreement to
sublease the Additional Premises in accordance with the terms of the Offer.  If Subtenant so notifies Sublandlord by
timely providing an Acceptance Notice, the parties shall execute an amendment
of this Sublease (or, at Sublandlord’s option, a new sublease) demising the
Additional Premises on the terms and conditions specified in the Offer.  If Subtenant fails to properly deliver the
Acceptance Notice within such ten (10) business day period, or
conditionally accepts the Offer, or fails to execute a Sublease amendment or
new sublease, as the case may be, within the later of: (i) fifteen (15)
business days following the date on which the Acceptance Notice was delivered
to Sublandlord, and (ii) ten (10) days after the draft Sublease amendment
or new sublease is received by Subtenant, then Subtenant’s right of first
refusal shall terminate and Sublandlord shall be free to enter into a sublease
(a “Phase II A Sublease”) with the party who made the Offer substantially upon
the terms set forth in the Offer; provided, however, that if the aggregate rent
for the Phase II A Sublease is more than ten percent (10%) lower than the
aggregate rent disclosed in the Offer, then Sublandlord shall be required to
provide Subtenant with a revised Offer describing the reduced rent and
Subtenant shall have five (5) business days from receipt of such revised
Offer to provide Sublandlord with an Acceptance Notice pursuant to which
Subtenant unconditionally accepts the revised Offer.  Such Acceptance Notice shall constitute
Subtenant’s binding agreement to sublease the Additional Premises in accordance
with the terms of the revised Offer.  If
Subtenant so notifies Sublandlord by timely providing an Acceptance Notice, the
parties shall execute an amendment of this Sublease (or, at Sublandlord’s
option, a new sublease) demising the Additional Premises on the terms and
conditions specified in the revised Offer. 
If Subtenant fails to properly deliver the Acceptance Notice within such
five (5) business day period, or conditionally accepts the revised Offer,
or fails to execute a Sublease amendment or new sublease, as the case may be,
within the later of: (i) ten (10) business days following the date on
which the Acceptance Notice was delivered to Sublandlord, and (ii) ten
(10) days after the draft Sublease amendment or new sublease is received by
Subtenant, then Subtenant’s right of first refusal shall terminate and Sublandlord
shall be free to enter into a Phase II A Sublease with the party who
made the revised Offer.

 

(b)           Termination
of Right of First Refusal. 
Upon mutual execution of a Phase II A Sublease by Sublandlord and by
Subtenant or a third-party subtenant, as applicable,

 

19

 

Subtenant’s Right of First Refusal shall terminate and expire with
respect to the space covered by such Phase II A Sublease.  In addition, if a Phase II A Sublease to a
third-party subtenant grants an option, right of first refusal, right of first
offer, or similar right for a portion of the Phase IIA 220 East Grand
Avenue Building (a “Phase II A Option”), then the remaining Right of First
Refusal granted to Subtenant by this Section 15 shall automatically become
subordinate to the Phase II A Option so long as the Phase II A Option was
disclosed to Subtenant.  Upon the
termination of the Subtenant’s Right of First Refusal, then:
(i) Sublandlord shall not have any further obligations under this Section 15,
and (ii) except for the license of the Specialized Utilities Closet and
Back-up Generator Pad, Subtenant shall not have any occupancy or other rights
with respect to all or any portion of the Phase IIA 220 East Grand Avenue
Building.

 

(c)           Conditions
to Effective Exercise. 
Subtenant’s exercise of its right of first refusal shall be conditioned
upon the following:  (i) on the date
Subtenant receives the Offer from Sublandlord, Subtenant shall not be in
default under this Sublease, (ii) there must not have been an Event of
Default under this Sublease by Subtenant on more than two (2) occasions
during the term of this Sublease, and (iii) on the date Subtenant receives
the Offer from Sublandlord, Subtenant shall occupy one hundred percent (100%) of
the Sublease Premises.

 

(d)           Personal
Right.  The right of first
refusal shall be personal to Subtenant and may not be assigned except in
connection with an assignment of this Sublease, and then only in connection
with an assignment (but not a sublease) constituting a “Permitted Transfer”
under Section 15.1 of the Master Lease.  The right of first refusal shall terminate
upon the expiration or earlier termination of the Master Lease.

 

(e)           Sugen’s
Transfer to an Affiliate. 
Notwithstanding any provision of this Section 15 to the
contrary, Sublandlord shall be entitled to transfer its leasehold interest in
the Phase IIA 220 East Grand Avenue Building or any portion thereof, with
or without any portion of the Initial Building/230 East Grand Avenue, to an
affiliate of the Sublandlord, or upon the consolidation, merger or other
reorganization of Sublandlord or upon the sale or transfer of substantially all
of the stock or assets of Sublandlord; so long as any such transfer is
permitted by the terms of the Master Lease or consented to by Master Lessor
(each, an “Exempt Transfer”) without the obligation to offer to Subtenant the
leasehold to be transferred under this Section 15.  The transferee under an Exempt Transfer shall
be bound, however, by Sublandlord’s obligations under this Section 15
with respect to any future sublease which is not an Exempt Transfer.  For purposes of this Section 15,
an “affiliate” shall be any person or entity which controls Sublandlord, is
controlled by Sublandlord, or is under common control with Sublandlord.

 

16.           Notices.  Notices to be delivered to the parties
hereunder shall be delivered in accordance with Section 21.1 of the
Master Lease to the following addresses:

 

	
  If
  to Sublandlord:

  	
  Sugen,
  Inc.

  
	
   

  	
  235
  East 42nd Street,

  
	
   

  	
  New
  York, NY 10017-5755

  
	
   

  	
  Attn:

  	
  Arthur
  R. Silverman

  

 

20

 

	
  With
  copies to:

  	
  50
  Pequot Avenue,

  
	
   

  	
  MS
  6025-C5124

  
	
   

  	
  New
  London, CT 06320

  
	
   

  	
  Attn:

  	
  William
  C. Longa

  
	
   

  	
   

  	
  Susan
  E. Zimbelmann

  
	
   

  	
   

  	
   

  
	
  and

  	
  Reed
  Smith LLP

  
	
   

  	
  1901
  Avenue of the Stars, Suite 700

  
	
   

  	
  Los
  Angeles, CA  90067

  
	
   

  	
  Attn:

  	
  James
  R. Eskilson, Esq.

  
	
   

  	
   

  	
   

  
	
  If
  to Subtenant:

  	
  Exelixis,
  Inc.

  
	
   

  	
  170
  Harbor Way

  
	
   

  	
  South
  San Francisco, CA 94083-0511

  
	
   

  	
  Attn:

  	
  Chief
  Financial Officer

  
	
   

  	
   

  	
   

  
	
  With
  a copy to:

  	
  Cooley
  Godward LLP

  
	
   

  	
  One
  Maritime Plaza, 20th Floor

  
	
   

  	
  San
  Francisco, CA 94111-3580

  
	
   

  	
  Attn:

  	
  Anna
  B. Pope, Esq.

  
	
   

  	
   

  	
   

  
	
  If
  to Master Landlord:

  	
  Britannia
  Pointe Grand Limited Partnership

  
	
   

  	
  555
  Twelfth Street, Suite 1650

  
	
   

  	
  Oakland,
  CA 94607

  
	
   

  	
  Attn:

  	
  Magdalena
  Shushan

  
	
   

  	
  Telecopier:  (510) 763-6262

  
	
   

  	
   

  	
   

  
	
  With
  a copy to:

  	
  Folger
  Levin & Kahn LLP

  
	
   

  	
  Embarcadero
  Center West

  
	
   

  	
  275
  Battery Street, 23rd Floor

  
	
   

  	
  San
  Francisco, CA 94111

  
	
   

  	
  Attn:

  	
  Donald
  E. Kelley, Jr., Esq.

  
	
   

  	
  Telecopier:  (415) 986-2827

  
	
   

  	
   

  	
   

  
	
  and
  a copy to:

  	
  Britannia
  Pointe Grand Limited Partnership

  
	
   

  	
  444
  North Michigan Avenue, Suite 3230

  
	
   

  	
  Chicago,
  IL 60611

  
	
   

  	
  Attn:

  	
  Randall
  W. Rohner

  
	
   

  	
  Telecopier:  (312) 755-0717

  

 

17.           Parking.  During the Term, Subtenant shall be entitled
to use a pro rata portion of the parking rights granted to the Sublandlord
under the Master Lease, as determined in Sublandlord’s good faith judgment, and
all such rights shall be subject to the terms, conditions and restrictions set
forth in the CC&Rs.

 

18.           Signage.  Notwithstanding any provisions of Section 11.5
of the Master Lease to the contrary, and subject to the conditions and
limitations set forth in succeeding sentence of this Section 18,
Subtenant’s signage rights shall be limited to: (a) a sign displaying its
corporate name and logo on the back wall of the Lobby Area entrance as described
on Exhibit F-1 attached

 

21

 

hereto, (b) a sign displaying its corporate name on the west side
of the outside of the Sublease Premises in the location designated as “D” on Exhibit F-1
attached hereto, (c) a sign displaying its corporate name on the east side
of the outside of the Sublease Premises in the location designated as “B” on Exhibit F-1
attached hereto, and (d) the inclusion of its corporate name on the
existing monument sign which is shown as “E” on Exhibit F-1
attached hereto.  In each instance, the
signage described above shall be subject to: (i) the approval of Master
Landlord, (ii) consistent with the size, color, and general appearance for
such sign shown on Exhibit F-1 attached hereto, (iii) the
CC&Rs and (iv) any signage program adopted for the Center.  Subtenant’s use of the monument sign
identified as “E” on Exhibit F-1 attached hereto shall be shared
with the occupants (and future occupants) of the Phase IIA 220 East Grand
Avenue Building and the Initial Building/230 East Grand Avenue.  Notwithstanding anything to the contrary
contained herein, if the Phase IIA 220 East Grand Avenue Building is
occupied by a subtenant other than Subtenant, then Subtenant shall, upon
written request as described in Section 1 (a) above move the Lobby signage
to the wall which abuts the Sublease Premises or, only if agreed to by all
Phase IIA 220 East Grand Avenue Building subtenants, repaint and resize
the Lobby sign (and the painted background) to occupy not more than one-half
(1/2) (divided, side to side, not top to bottom) of the back wall of the Lobby
(the half of the back wall of the Lobby which is closest to Building 3).  In such case, Sublessee shall concurrently,
and at its expense, repaint the back wall of the Lobby in a neutral color.  In addition, at Sublandlord’s or Master
Landlord’s request, Subtenant shall remove any signage installed by Subtenant
upon the expiration or earlier termination of this Sublease.  Sublandlord shall, at its sole cost, remove
the “Sugen” signage on the Sublease Premises identified on Exhibit F-2
attached hereto within thirty (30) days after the Commencement Date.  Sublandlord shall
not have any obligation to remove, replace or modify any existing signage which
bears the name of the Master Landlord or the Center or any Sugen signage which
is not located on the Sublease Premises.

 

19.           Utilities.

 

(a)           Generic
Utilities.  Electric and gas
utility services are individually metered for the Sublease Premises and
Subtenant shall be responsible for contracting directly with the utility
provider for such services.  Sublandlord
shall provide generic water (industrial and domestic but not deionized or other
specialty water) and sewer service to the Sublease Premises as such services
are not currently separately metered and/or invoiced.  Sublandlord shall have the right, however, at
any time to separate such services or install monitoring meters to track water
consumption at the Sublease Premises with the cost of such installation to be
paid for one-half by Sublandlord and one-half by Subtenant.  Until such services are separately metered,
Subtenant shall pay as Additional Rent its pro rata share of such utility
costs, subject to adjustment for any vacancy of the Phase IIA 220 East Grand
Avenue Property, as determined in Sublandlord’s reasonable judgment.  Following the separation of such services,
Subtenant shall pay, as Additional Rent, the charges for such services shown by
the applicable meter or submeter.

 

(b)           Specialized
Utilities and Back-up Generator. 
Deionized/reverse osmosis water, carbon dioxide, nitrogen and clean dry
air (collectively, the “Specialized Utilities”) are provided to the Sublease
Premises and to the Phase IIA 220 East Grand Avenue Building by the
portion of the Licensed Personal Property which is located in the closet
described on Exhibit G-1 attached hereto (the “Specialized
Utilities Closet”).  Back-up electricity
is provided to the Sublease Premises and to the Phase IIA 220 East Grand
Avenue Building by

 

22

 

the portion of the Licensed Personal Property (collectively, the
“Back-Up Generator”) which is located on the pad described in Exhibit G-2
attached hereto (the “Back-up Generator Pad”). 
The Back-up Generator Pad shall not include the pad for the back-up
generator which serves the Initial Building/230 East Grand Avenue.  Except as set forth herein, during the
Sublease Term, Subtenant shall have a license, for no additional consideration,
to use the Specialized Utilities Closet and the Back-Up Generator Pad to
provide the Specialized Utilities and back-up electricity to the Sublease
Premises, the Lobby Area (solely with respect to back-up power), and to the
Phase IIA 220 East Grand Avenue Building (the “Utilities Closet/Generator
Pad License”).  The Utilities
Closet/Generator Pad License may be terminated by Sublandlord with respect to
the Specialized Utilities Closet, the Back-Up Generator Pad, or both, as
follows: (a) upon the occurrence of an Event of Default under this
Sublease, (b) if Sublandlord has separated the Specialized Utilities
and/or Back-Up Generator pursuant to subsection (e) below, or (c) if
Sublandlord has elected to operate (or to cause another party, including but
not limited to an occupant of the Phase IIA 220 East Grand Avenue Building
to operate) the Specialized Utilities and/or Back-Up Generator pursuant to
subsection (e) below.  Upon the
occurrence of an Event of Default, Sublandlord shall have the right, but not
the obligation, to terminate the license of the Specialized Utilities Closet
and/or Back-Up Generator Pad, either wholly or with respect to only the
Specialized Utilities Closet or the Back-Up Generator Pad, whether or not
Sublandlord terminates this Sublease.  So
long as the Specialized Utilities Closet/Back-Up Generator Pad License remains
in effect, Subtenant shall have the obligation, at no expense to the
Sublandlord, to operate, maintain, repair, and replace the Licensed Personal
Property and to keep both the Specialized Utilities Closet and the Back-Up
Generator Pad operational, safe, secure and clean.  In addition, so long as the Specialized
Utilities Closet/Back-Up Generator Pad License remains in effect, Subtenant
shall, at no expense to Sublandlord, provide to the Phase IIA 220 East
Grand Avenue Building (a) sufficient quantities of the Specialized
Utilities to allow any occupants of the Phase II 220 East Grand Avenue Building
to use the laboratory space which currently exists in the Phase IIA 220
East Grand Avenue Building at full capacity and (b) sufficient quantities
of electricity as needed in the case of any power outage, to operate the
Phase IIA 220 East Grand Avenue Building at full capacity.  Subtenant shall enter into an agreement with
the occupant(s) of the Phase IIA 220 East Grand Avenue Building pursuant
to which such occupant(s) shall reimburse Subtenant for the pro rata share
(reasonably based on the utilities usage) of Subtenant’s costs to provide the
Specialized Utilities and back-up electricity and to operate, maintain, repair
and replace the Licensed Personal Property located in the Specialized Utilities
Closet and on the Back-Up Generator Pad. 
The form of the agreement described in the preceding sentence shall be
subject to the reasonable consent of Sublandlord.

 

(c)           Increase of
Laboratory Space In Phase IIA 220 East Grand Avenue Building.  If an occupant of the Phase IIA 220 East
Grand Avenue Building desires to construct additional laboratory space in the
Phase IIA 220 East Grand Avenue Building, and Sublandlord reasonably
determines that such construction necessitates an increase in the capacity of
one or more of the Specialized Utilities, then Subtenant shall be obligated to
promptly install/construct facilities to provide the increased capacity of Specialized
Utilities; provided, however, that Subtenant’s obligation to do so shall be
conditioned upon the commitment of the occupant(s) of the Phase IIA 220
East Grand Avenue Building to reimburse Subtenant for Subtenant’s reasonable
out-of-pocket installation/construction costs incurred to provide such
increased capacity of Specialized Utilities. 
Subtenant shall obtain all necessary approvals from Sublandlord, Master
Landlord, and all applicable governmental bodies/agencies prior to performing
any such work.

 

23

 

(d)           Increase of
Laboratory Space In the Sublease Premises.  If Subtenant desires to construct additional
laboratory space in the Sublease Premises and Sublandlord reasonably determines
that such construction necessitates an increase in the capacity of one or more
of the Specialized Utilities, then Subtenant shall, at its sole cost (and
without any right of reimbursement from Sublandlord or from any occupant of the
Phase IIA 220 East Grand Avenue Building) and after obtaining all
necessary approvals from Sublandlord, Master Landlord and all applicable
governmental bodies/agencies, construct additional facilities in the
Specialized Utilities Closet in order to provide an additional capacity of the
Specialized Utilities sufficient to allow the occupant(s) of the Phase IIA
220 East Grand Avenue Building to continue operating laboratory space at full
capacity.  In no event shall Subtenant
diminish the capacity of the Specialized Utilities available to the Phase IIA
220 East Grand Avenue Building by diverting Specialized Utilities to the
Sublease Premises.

 

(e)           Option of
Sublandlord To Take Control of Specialized Utilities Closet/Back-Up Generator
Pad.  At its sole option,
which may be exercised at any time during the Sublease Term, Sublandlord may,
without cause and upon at least thirty (30) days prior written notice to
Subtenant, terminate the Specialized Utilities Closet/Back-Up Generator Pad
License, either wholly or only with respect to either the Specialized Utilities
Closet or the Back-Up Generator Pad.  As
described above, Sublandlord may also terminate the Specialized Utilities
Closet/Back-Up Generator Pad License immediately upon the occurrence of an
Event of Default, either wholly or only with respect to either the Specialized
Utilities Closet or the Back-Up Generator Pad. 
Upon the termination of the Specialized Utilities Closet/Back-Up
Generator Pad License, Sublandlord shall, with respect to the area/system for
which the license has been terminated (i.e., either or both of the Specialized
Utilities Closet and/or Back-Up Generator Pad License) either:
(a) operate, maintain, repair, and replace such system and/or generator
(in which case Sublandlord shall charge Subtenant for its pro-rata portion of
all of such expenditures as Additional Rent due monthly under the Sublease,
including but not limited to any expense of a third party company engaged to
operate, maintain, repair and/or replace any portion of the Specialized
Utilities or Back-Up Generator), (b) cause a third party, including but
not limited to an occupant of the Phase IIA East Grand Avenue Building to
operate, maintain, repair and/or replace such system and/or generator (in which
case Sublandlord, or the third party, shall charge Subtenant for its pro rate
share of all such expenditures, and all such expenditures shall be considered
Additional Rent, whether paid to Sublandlord or to a third party) or
(c) provide separate specialized utilities and/or a separate back-up
generator dedicated solely to the Sublease Premises.  If Sublandlord elects
option (c) described in the preceding sentence, then Sublandlord
shall pay for all capital expenditures incurred to create a separate back-up
generator and/or one or more specialized utility systems dedicated to the
Sublease Premises and Subtenant shall thereafter pay on a monthly basis, as
Additional Rent, all expenditures incurred in connection with the operation,
maintenance, repair and replacement of such system and/or generator.

 

20.           Conditions
Precedent.  This Sublease and
Sublandlord’s and Subtenant’s rights and obligations hereunder are conditioned
upon Master Landlord’s consent to this Sublease pursuant to Section 22
below and Master Landlord’s execution of a Subordination Non-Disturbance and
Attornment Agreement substantially in the form attached hereto as Exhibit D.

 

21.           Authority to
Execute.  Subtenant represents
and warrants that: (a) Subtenant is a duly organized and existing Delaware
corporation, and is qualified to do business in California, (b) such
persons executing this Sublease on Subtenant’s behalf are duly authorized to
execute

 

24

 

and deliver this Sublease on Subtenant’s behalf in accordance with a
duly adopted resolution of Subtenant’s board of directors and the Subtenant’s
bylaws and (c) this Sublease is binding upon Subtenant in accordance with
its terms.  Concurrently with Subtenant’s
execution and delivery of this Sublease to Sublandlord and/or at any time
during the Term within ten (10) days of Sublandlord’s request, Subtenant shall
provide to Sublandlord a copy of any documents reasonably requested by
Sublandlord evidencing such qualification, organization, existence and
authorization.

 

22.           Master
Landlord’s Consent to Sublease. 
This Sublease is subject to the consent of the Master Landlord, which
consent shall be evidenced by such form as may be acceptable to Master
Landlord.  Sublandlord agrees that
Subtenant has the right to seek Master Landlord’s agreement to include in the
consent to this Sublease the following provisions: (a) Master Landlord’s
agreement to Subtenant’s signage specifications and (b) Master Landlord’s
conceptual approval of the items set forth on Exhibit H attached
hereto.  Sublandlord has reviewed Exhibit H
and it has no conceptual objection to the alterations briefly described
thereon; provided, however, that Sublandlord has retained its rights under this
Sublease to approve of or disapprove of the alterations conceptually described
on Exhibit H, based upon its review of drawings, plans, and
specifications, and other details provided regarding the alterations described
in Exhibit H.  Nothing in the
preceding sentence shall provide Subtenant with the right to condition its
approval of Master Landlord’s consent upon the inclusion of any of the items
stated in the preceding sentence. 
Sublandlord agrees to use commercially reasonable efforts to obtain the
consent of Master Landlord to this Sublease as soon as reasonably possible
following execution of this Sublease by Subtenant and Sublandlord.  In the event that Master Landlord’s consent
is not obtained within sixty (60) days following the submittal of this Sublease
by Sublandlord to Master Landlord for consent, each of Sublandlord and
Subtenant shall have the right to terminate this Sublease by providing written
notice of termination to the other party. 
For purposes of this Section 22, Master Landlord’s consent
shall be deemed to have been given as of the date when Master Landlord’s
unconditional written consent to this Sublease has been delivered to Subtenant,
or, in the event such consent is conditional, the date upon which such
conditions have been fully satisfied or waived by Master Landlord.  Subtenant shall pay any and all fees charged
by Master Landlord in connection with seeking its consent to this Sublease.

 

23.           Counterparts.  This Sublease may be executed in any number
of counterparts, each of which counterparts shall be deemed to be an original,
and all of which taken together shall constitute one and the same instrument.

 

24.           Examination
of Sublease.  The submission
of this Sublease to Subtenant does not constitute an offer or option to lease
or create any obligation whatsoever on Sublandlord to negotiate with Subtenant
in good faith or to enter into a Sublease or any other agreement with
Subtenant.

 

25

 

IN WITNESS WHEREOF,
Sublandlord and Subtenant have executed this Sublease as of the date first
written above, intending to be bound hereby.

 

	
  SUBLANDLORD:

  	
  SUGEN, INC.

  	
   

  
	
   

  	
  a Delaware corporation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  Kent Bernard

  	
   

  
	
   

  	
  Name:

  	
  Kent Bernard

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SUBTENANT:

  	
  EXELIXIS, INC.

  	
   

  
	
   

  	
  a Delaware corporation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Frank Karbe

  	
   

  
	
   

  	
  Name:

  	
  Frank Karbe

  	
   

  
	
   

  	
  Title:

  	
  CFO

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Christoph
  Pereira

  	
   

  
	
   

  	
  Name:

  	
  Christoph
  Pereira

  	
   

  
	
   

  	
  Title:

  	
  VP, Legal
  Affairs

  	
   

  
					

 

26EXHIBIT
10.48

LEASE

 

	
  Landlord:

  	
   

  	
  Britannia Pointe
  Grand Limited Partnership

  
	
   

  	
   

  	
   

  
	
  Tenant:

  	
   

  	
  Exelixis, Inc.

  
	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
  May 24, 2001

  

 

TABLE OF CONTENTS

 

	
  1.  PROPERTY

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  1.1  Lease of Building and Property.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  1.2  Landlord’s Reserved Rights.

  	
   

  
	
   

  	
   

  	
   

  
	
  2.  TERM

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  2.1  Term.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  2.2  Early Possession.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  2.3  Condition of Premises; Landlord’s Work.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  2.4  Acknowledgement Of Commencement Date.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  2.5  Holding Over.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  2.6  Option To Extend Term.

  	
   

  
	
   

  	
   

  	
   

  
	
  3.  RENTAL

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  3.1  Minimum Rental.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)  Rental Amounts

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (b) Rental
  Amounts During First Extended Term

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)  Rental Amounts During Second Extended Term

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  3.2  Late Charge.

  	
   

  
	
   

  	
   

  	
   

  
	
  4.  [Omitted.]

  	
   

  
	
   

  	
   

  	
   

  
	
  5.  [Omitted.]

  	
   

  
	
   

  	
   

  	
   

  
	
  6.  TAXES

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  6.1  Personal Property.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  6.2  Real Property.

  	
   

  
	
   

  	
   

  	
   

  
	
  7.  OPERATING EXPENSES

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  7.1  Payment of Operating Expenses.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  7.2  Definition Of Operating Expenses.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  7.3  Determination Of Operating Expenses

  	
   

  

 

1

 

	
   

  	
  7.4  Final Accounting For Lease Year

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  7.5  Proration.

  	
   

  
	
   

  	
   

  	
   

  
	
  8.  UTILITIES

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  8.1  Payment.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  8.2  Interruption.

  	
   

  
	
   

  	
   

  	
   

  
	
  9.  ALTERATIONS; SIGNS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  9.1  Right To Make Alterations.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  9.2  Title To Alterations.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  9.3  Tenant Fixtures.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  9.4  No Liens.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  9.5 Signs.

  	
   

  
	
   

  	
   

  	
   

  
	
  10.  MAINTENANCE AND REPAIRS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  10.1  Landlord’s Work.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  10.2  Tenant’s Obligation For Maintenance.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)  Good Order, Condition And Repair

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)  Landlord’s Remedy

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)  Condition Upon Surrender

  	
   

  
	
   

  	
   

  	
   

  
	
  11.  USE OF PROPERTY

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  11.1  Permitted Use.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  11.2  [Omitted.]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  11.3  No Nuisance.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  11.4  Compliance With Laws.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  11.5  Liquidation Sales.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  11.6  Environmental Matters.

  	
   

  
	
   

  	
   

  	
   

  
	
  12.  INSURANCE AND INDEMNITY

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  12.1  Insurance.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  12.2  Quality Of Policies And Certificates.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  12.3  Workers’ Compensation.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  12.4  Waiver Of Subrogation.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  12.5  Increase In Premiums.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  12.6  Indemnification.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  12.7  Blanket Policy.

  	
   

  
	
   

  	
   

  	
   

  
	
  13.  SUBLEASE AND ASSIGNMENT

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  13.1  Assignment And Sublease Of Building.

  	
   

  

 

2

 

	
   

  	
  13.2  Rights Of Landlord.

  	
   

  
	
   

  	
   

  	
   

  
	
  14.  RIGHT OF ENTRY AND QUIET
  ENJOYMENT

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  14.1  Right Of Entry.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  14.2  Quiet Enjoyment.

  	
   

  
	
   

  	
   

  	
   

  
	
  15.  CASUALTY AND TAKING

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  15.1 Damage or Destruction.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  15.2  Condemnation.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  15.3  Reservation Of Compensation.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  15.4  Restoration Of Improvements.

  	
   

  
	
   

  	
   

  	
   

  
	
  16.  DEFAULT

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  16.1  Events Of Default.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (a)  [Omitted.]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (b)  Nonpayment.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (c)  Other Obligations.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (d)  General Assignment

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (e)  Bankruptcy

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (f)  Receivership

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (g)  Attachment

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (h)  Insolvency

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (i) Cross-Default

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  16.2  Remedies Upon Tenant’s Default.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  16.3  Remedies Cumulative.

  	
   

  
	
   

  	
   

  	
   

  
	
  17.  SUBORDINATION, ATTORNMENT AND SALE

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  17.1  Subordination To Mortgage.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  17.2  Sale Of Landlord’s Interest.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  17.3  Estoppel Certificates.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  17.4  Subordination to CC&R’s.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  17.5
  Mortgagee Protection

  	
   

  
	
   

  	
   

  	
   

  
	
  18.  SECURITY

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  18.1  Deposit

  	
   

  
	
   

  	
   

  	
   

  
	
  19.  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  19.1  Notices.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  19.2  Successors And Assigns.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  19.3  No Waiver.

  	
   

  

 

3

 

	
   

  	
  19.4  Severability.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  19.5  Litigation Between Parties.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  19.6  Surrender.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  19.7  Interpretation.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  19.8  Entire Agreement.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  19.9  Governing Law.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  19.10 No
  Partnership.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  19.11  Financial Information.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  19.12  Costs.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  19.13  Time.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  19.14  Rules And Regulations.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  19.15  Brokers.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  19.16  Memorandum Of Lease.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  19.17  Corporate Authority.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  19.18 Execution and Delivery.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  19.19  Survival.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  19.20 Parking

  	
   

  

 

EXHIBITS

 

	
  EXHIBIT A

  	
   

  	
  Real Property
  Description

  
	
   

  	
   

  	
   

  
	
  EXHIBIT B

  	
   

  	
  Site Plan

  
	
   

  	
   

  	
   

  
	
  EXHIBIT C

  	
   

  	
  Improvements and
  Equipment to be Left by Existing Tenant

  
	
   

  	
   

  	
   

  
	
  EXHIBIT D

  	
   

  	
  Acknowledgement
  of Commencement Date

  

 

LEASE

 

THIS LEASE (“Lease”) is made and entered into
as of May 24, 2001, by and between BRITANNIA POINTE GRAND LIMITED
PARTNERSHIP, a Delaware limited partnership (“Landlord”), and EXELIXIS,
INC., a Delaware corporation (“Tenant”).

 

THE PARTIES AGREE AS
FOLLOWS:

 

1.                                                                                                                                                                                                                                                                                PROPERTY

 

1.1                                                                                 Lease of Building and Property.

 

(a)                                  Landlord
leases to Tenant and Tenant hires and leases from Landlord, on the terms,
covenants and conditions hereinafter set forth, the two-story office and
laboratory building which is located on the real property described in Exhibit A
attached hereto (the “Property”), is commonly known as 240 East Grand
Avenue, South San Francisco, contains approximately 60,967 square feet and is
presently occupied by Rigel, Inc. (“Rigel”) as tenant (the “Building”).  The location of the Building on the Property
is depicted on the site plan attached hereto as Exhibit B (the “Site
Plan”).  The Property is part of the
Britannia Pointe Grand Business Park (the “Center”) at East Grand Avenue
and Harbor Way in the City of South San 

 

4

 

Francisco, County of San Mateo, State of
California.  The Building and related
improvements presently existing on the Property are sometimes referred to
collectively herein as the “Improvements.”  The parking areas, driveways, sidewalks,
landscaped areas and other portions of the Center that lie outside the exterior
walls of the buildings now or hereafter existing from time to time in the
Center, as depicted in the Site Plan and as hereafter modified by Landlord from
time to time in accordance with the provisions of this Lease, are sometimes
referred to herein as the “Common Areas.”  Tenant already leases two other buildings in
the Center from Landlord pursuant to a Build-to-Suit Lease dated May 12, 1999,
as amended by a First Amendment to Build-to-Suit Lease dated March 29,
2000, a Second Amendment to Build-to-Suit Lease dated January 31, 2001 and
a Third Amendment to Build-to-Suit Lease dated May 24, 2001 (as amended,
the “Existing Lease”); the location of those two buildings (the “Existing
Buildings”) is also depicted in the Site Plan.

 

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

 

1.2                                                                                 Landlord’s Reserved Rights.  To the extent reasonably necessary to permit
Landlord to exercise any rights of Landlord and discharge any obligations of
Landlord under this Lease, Landlord shall have, in addition to the right of
entry set forth in Section 16.1 hereof, the following rights:  (i) to make changes to the Common Areas,
including, without limitation, changes in the location, size or shape of any
portion of the Common Areas, and to relocate parking spaces on the Property and
in the Common Areas (but not materially decrease the number of such parking
spaces in areas of the Property generally adjacent to the Building);
(ii) to close temporarily any of the Common Areas for maintenance or other
reasonable purposes, provided that reasonable parking and reasonable
access to the Building remain available; (iii) to construct, alter or add
to other buildings and Common Area improvements on the Property (including, but
not limited to, construction of site improvements, buildings and Common Area
improvements on portions of the Property and/or on adjacent properties owned by
Landlord from time to time); (iv) to build in areas adjacent to the
Property and to add such areas to the Property or operate such areas, for
maintenance, access, parking and other purposes, on an integrated basis with
the Property; (v) to use the Common Areas while engaged in making
additional improvements, repairs or alterations to the Property or any portion
thereof or to any adjacent properties owned by Landlord from time to time; and
(vi) to do and perform such other acts with respect to the Common Areas
and the Property as may be necessary or appropriate; provided, however,
that notwithstanding anything to the contrary in this Section 1.2,
Landlord’s exercise of its rights hereunder shall not cause any material
diminution of Tenant’s rights, nor any material increase of Tenant’s
obligations, under this Lease or with respect to the Improvements.

 

2.                                                                                                                                                                                                                                                                                              TERM

 

2.1                                                                                 Term.

 

(a)                                  The
term of this Lease shall commence on the date (the “Commencement Date”)
on which Landlord delivers possession of the Building to Tenant with Rigel
having vacated the Building and with Landlord’s written, correct, good faith
certification to Tenant that to the best of Landlord’s knowledge, Landlord has
completed Landlord’s Work pursuant to Section 2.3(a) hereof, and shall
end, unless sooner terminated or extended as hereinafter provided, on
May 15, 2017 (the “Termination Date”), which is also the date on
which the initial term of the Existing Lease terminates in accordance with the
terms of the Existing Lease.  Tenant’s
minimum rental and Operating Expense obligations with respect to the Building
shall begin on the date (the “Rent Commencement Date”) which is fifteen
(15) days after the 

 

5

 

 

Commencement Date. 
The parties presently estimate that the Rent Commencement Date will
occur on approximately February 1, 2003.

(b)                                 Notwithstanding
the provisions of Section 2.1(a), Tenant acknowledges that Landlord’s
ability to deliver the Building to Tenant free of Rigel’s rights under its
existing lease of the Building is dependent upon the actual construction and
completion of new buildings to be constructed for occupancy by Rigel in the
Britannia Oyster Point development in South San Francisco, pursuant to a
Build-to-Suit Lease dated May 16, 2001 between Slough BTC, LLC and Rigel,
and Tenant agrees that Landlord shall have no liability to Tenant for any
damages caused by any delay in Landlord’s completion of Landlord’s Work and
delivery of the Building to Tenant as a result of any circumstances beyond
Landlord’s reasonable control, including (but not limited to) any failure or
inability of Slough BTC, LLC and/or Rigel to complete the construction of their
respective portions of such new buildings and/or any failure or inability of
Rigel to move into such new buildings in a timely manner, nor shall any such
delay affect the validity of this Lease or the obligations of Tenant hereunder.  Notwithstanding any other provisions of this
Lease, however, if for any reason the Commencement Date has not occurred by
December 31, 2003, then Tenant shall have the right to terminate this
Lease by written notice to Landlord at any time prior to Landlord’s
satisfaction of the conditions necessary to establish the Commencement Date
hereunder.

 

(c)                                  This
Lease is conditional upon Landlord’s receipt and delivery to Tenant, no later
than sixty (60) days after the date hereof (provided that Landlord shall
have the right to extend such period for up to an additional thirty (30) days
in order to continue pursuing receipt of the approval required hereunder if not
received within such initial 60-day period), of written approval by Landlord’s
lender, The Northwestern Mutual Life Insurance Company, of (i) the Lease
Termination Agreement between Landlord and Rigel with respect to Rigel’s
existing lease of the Building and (ii) the material terms of this
Lease.  Landlord agrees to use its best
efforts to obtain such written agreement promptly following mutual execution of
this Lease.

 

2.2                                                                                 Early Possession.  If Landlord, in its sole discretion, permits
Tenant to have access to or possession of the Building after the Building has
been vacated by Rigel but prior to the completion of Landlord’s Work, for the
purpose of installing fixtures and furniture, laboratory equipment, computer
equipment, telephone equipment, low voltage data wiring and personal property
and other similar work preparatory to the commencement of Tenant’s business in
the Building, such early access and possession shall be subject to and upon all
of the terms and conditions of this Lease (including, but not limited to,
conditions relating to the maintenance of required insurance), except that
Tenant shall have no obligation to pay minimum rental or Operating Expenses for
any period prior to the Rent Commencement Date as determined under
Section 2.1; such early possession shall not advance or otherwise affect
the Rent Commencement Date or the Termination Date determined under Section 2.1.  Tenant shall not interfere with or delay
Landlord’s contractors by any such early access or possession under this
Section 2.2, shall coordinate and cooperate with Landlord and its
contractors to minimize any interference or delay with respect to the completion
of Landlord’s Work, and shall indemnify, defend and hold harmless Landlord and
its agents and employees from and against any and all claims, demands,
liabilities, actions, losses, costs and expenses, including (but not limited
to) reasonable attorneys’ fees, arising out of or in connection with Tenant’s
early entry upon any portion of the Building hereunder.

 

2.3                                                                                 Condition of Premises; Landlord’s Work.

 

(a)                                  Promptly
following the surrender of the Building by Rigel upon termination of its
existing lease of the Building, Landlord shall, at Landlord’s sole cost and
expense, (i) replace all defective and/or stained ceiling and floor tiles
in the Building, (ii) perform all work necessary to place the electrical,
HVAC, plumbing and other existing systems in the Building in good working order
and to place the Building and Improvements therein in compliance with all
applicable building codes, and (iii) cause the Building to be in
broom-clean condition and free of debris (collectively, “Landlord’s Work”).  Except to the extent of Landlord’s
obligations expressly set forth in this Section 2.3, Tenant acknowledges
that it will accept and occupy the Building in “AS IS” condition as the
Building exists on the date possession is surrendered by Rigel, and Landlord
shall have no other obligation to improve, repair or prepare the Building for
occupancy by Tenant.

 

6

 

(b)                                 Landlord
warrants to Tenant that on the Commencement Date, the electrical, HVAC,
plumbing and other existing systems in the Building shall be in good working
order and that the Building and Improvements shall be in compliance with all
applicable building codes, regulations and ordinances in effect on the
Commencement Date.  If this warranty is
violated in any respect, or if Landlord has failed in any other way to complete
the performance of Landlord’s Work as described above by the Commencement Date,
then it shall be the obligation of Landlord, after receipt of written notice
from Tenant setting forth with specificity the nature of the violation or
failure of performance, to promptly, at Landlord’s sole cost, correct the
condition(s) constituting such violation or failure of performance.  Tenant’s failure to give such written notice
to Landlord within ninety (90) days after the Commencement Date shall give rise
to a conclusive presumption that Landlord has complied with all Landlord’s
obligations under this Section 2.3 and that there has been no violation of
Landlord’s warranty hereunder or failure of performance with respect to
Landlord’s Work, even with respect to latent defects (if any).  TENANT ACKNOWLEDGES THAT THE WARRANTY
CONTAINED IN THIS SECTION IS IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR
IMPLIED, WITH RESPECT TO THE PHYSICAL CONDITION OF THE BUILDING AND
IMPROVEMENTS AND THAT LANDLORD MAKES NO OTHER WARRANTIES EXCEPT AS EXPRESSLY
SET FORTH IN THIS LEASE.  Without
limiting the generality of the foregoing, Tenant acknowledges that except as
expressly set forth in this Lease, neither Landlord nor any agent of Landlord
has made any representation or warranty as to the present or future suitability
of the Building or Improvements for the conduct of Tenant’s business or
proposed business thereon.

 

(c)                                  Landlord
and Tenant shall each use their respective best efforts to schedule and
participate in, and to cause Rigel to participate in, a mutual walk-through of
the Building within thirty (30) days after the date hereof, with the objective
of promptly thereafter arriving at a list mutually approved by Landlord, Tenant
and Rigel describing all material fixtures, trade fixtures, equipment (if any)
and tenant improvements to be left in place in the Building by Rigel upon
Rigel’s surrender of the Building, including (but not limited to) all attached
fume hoods and lab benches.  A copy of
such list, when mutually executed by Landlord, Tenant and Rigel, shall be
deemed to be attached hereto as Exhibit C and incorporated herein
by this reference.  Landlord shall have
no obligation to enforce Rigel’s obligation to leave such items in place in the
Building, but shall, upon written request by Tenant, assign to Tenant for
enforcement by Tenant, in Tenant’s sole discretion, any rights and/or claims of
Landlord against Rigel, under such written agreement and/or under Rigel’s existing
lease of the Building, with respect to the condition in which Rigel is required
to leave the Building, including (but not limited to) the leaving of the
specified items in place in the Building.

 

2.4                                                                                 Acknowledgement Of Commencement Date.  Promptly following the Commencement Date,
Landlord and Tenant shall execute a written acknowledgement of the Commencement
Date, Rent Commencement Date, Termination Date and related matters,
substantially in the form attached hereto as Exhibit D (with
appropriate insertions), which acknowledgement shall be deemed to be
incorporated herein by this reference. 
Notwithstanding the foregoing requirement, the failure of either party
to execute any such written acknowledgement shall not affect the determination
of the Commencement Date, Rent Commencement Date, Termination Date and related
matters in accordance with the provisions of this Lease.

 

2.5                                                                                 Holding Over. 
If Tenant holds possession of the Property or any portion thereof after
the term of this Lease with Landlord’s written consent, then except as
otherwise specified in such consent, Tenant shall become a tenant from month to
month at one hundred ten percent (110%) of the rental and otherwise upon the
terms herein specified for the period immediately prior to such holding over
and shall continue in such status until the tenancy is terminated by either
party upon not less than thirty (30) days prior written notice.  If Tenant holds possession of the Property or
any portion thereof after the term of this Lease without Landlord’s
written consent, then Landlord in its sole discretion may elect (by written
notice to Tenant) to have Tenant become a tenant either from month to month or
at will, at one hundred fifty percent (150%) of the rental (prorated on a daily
basis for an at-will tenancy, if applicable) and otherwise upon the terms
herein specified for the period immediately prior to such holding over, or may
elect to pursue any and all legal remedies available to Landlord under
applicable law with respect to such unconsented holding over by Tenant.  Tenant shall indemnify and hold 

 

7

 

Landlord harmless from
any loss, damage, claim, liability, cost or expense (including reasonable
attorneys’ fees) resulting from any delay by Tenant in surrendering the
Property or any portion thereof (except to the extent such delay is with
Landlord’s prior written consent), including but not limited to any claims made
by a succeeding tenant by reason of such delay. 
Acceptance of rent by Landlord following expiration or termination of
this Lease shall not constitute a renewal of this Lease.

 

2.6                                                                                 Option To Extend Term.  Tenant shall have the option to extend the
term of this Lease, at the minimum rental set forth in Section 3.1(b) and
(c) and otherwise upon all the terms and provisions set forth herein with
respect to the initial term of this Lease, for up to two (2) additional
periods of five (5) years each, the first commencing upon the expiration
of the initial term hereof and the second commencing upon the expiration of the
first extended term, if any.  Exercise of
such option with respect to the first such extended term shall be by written
notice to Landlord at least twelve (12) months prior to the expiration of the
initial term hereof; exercise of such option with respect to the second
extended term, if the first extension option has been duly exercised, shall be
by like written notice to Landlord at least twelve (12) months prior to the
expiration of the first extended term hereof. 
If Tenant is in default hereunder, beyond any applicable notice and cure
periods, on the date of such notice or on the date any extended term is to
commence, then the exercise of the option shall be of no force or effect, the
extended term shall not commence and this Lease shall expire at the end of the
then current term hereof (or at such earlier time as Landlord may elect
pursuant to the default provisions of this Lease).  If Tenant properly exercises one or more
extension options under this Section, then all references in this Lease (other
than in this Section 2.6) to the “term” of this Lease shall be construed
to include the extension term(s) thus elected by Tenant.  Except as expressly set forth in this
Section 2.6, Tenant shall have no right to extend the term of this Lease
beyond its prescribed term.

 

3.                                                                                                                                                                                                                                                                                       RENTAL

 

3.1                                                                                 Minimum Rental.

 

(a)                                                                                  Rental Amounts. 
Tenant shall pay to Landlord as minimum rental for the Building, in
advance, without deduction, offset, notice or demand, on or before the
Commencement Date (i.e., the date on which possession of the Building is
tendered to Tenant, although the first such payment shall be applied to the
rental period which begins thereafter on the Rent Commencement Date) and on or
before the first day of each subsequent calendar month of the initial term of
this Lease, the following amounts per month (with the counting of such months
to begin on and as of the Rent Commencement Date):

 

	
  Months

  	
   

  	
  Monthly
  Minimum Rental

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  001
  - 012

  	
   

  	
  $ 259,109.75  ($ 4.2500/sq ft

  	
  )

  
	
  013
  - 024

  	
   

  	
  269,474.14  ($ 4.4200/sq ft

  	
  )

  
	
  025
  - 036

  	
   

  	
  280,253.11  ($ 4.5968/sq ft

  	
  )

  
	
  037
  - 048

  	
   

  	
  291,463.23  ($ 4.7807/sq ft

  	
  )

  
	
  049
  - 060

  	
   

  	
  303,121.76  ($ 4.9719/sq ft

  	
  )

  
	
  061
  - 072

  	
   

  	
  315,246.63  ($ 5.1708/sq ft

  	
  )

  
	
  073
  - 084

  	
   

  	
  327,856.49  ($ 5.3776/sq ft

  	
  )

  
	
  085
  - 096

  	
   

  	
  340,970.75  ($ 5.5927/sq ft

  	
  )

  
	
  097
  - 108

  	
   

  	
  354,609.58  ($ 5.8164/sq ft

  	
  )

  
	
  109
  - 120

  	
   

  	
  368,793.97  ($ 6.0491/sq ft

  	
  )

  
	
  121
  - 132

  	
   

  	
  383,545.73  ($ 6.2910/sq ft

  	
  )

  
	
  133
  - 144

  	
   

  	
  398,887.56  ($ 6.5427/sq ft

  	
  )

  
	
  145
  - 156

  	
   

  	
  414,843.06  ($ 6.8044/sq ft

  	
  )

  
	
  157
  - 168

  	
   

  	
  431,436.78  ($ 7.0766/sq ft

  	
  )

  
	
  169
  - 180

  	
   

  	
  448,694.25  ($ 7.3596/sq ft

  	
  )

  
	
  181
  - 192 (as applicable)

  	
   

  	
  466,642.02  ($ 7.6540/sq ft

  	
  )

  
	
  193
  - 204 (if applicable)

  	
   

  	
  485,307.70  ($ 7.9602/sq ft

  	
  )

  

 

8

 

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

 

(b)                                 Rental Amounts During First
Extended Term.  If Tenant
properly exercises its right to extend the term of this Lease pursuant to Section 2.6
hereof, the minimum rental during the first year of the first extended term
shall be equal to ninety percent (90%) of the fair market rental value of the
Building (as defined below), determined as of the commencement of such extended
term in accordance with this paragraph, and during each subsequent year of the
first extended term shall be equal to one hundred three percent (103%) of the
minimum rental in effect during the immediately preceding year of such extended
term.  Upon Landlord’s receipt of a
proper notice of Tenant’s exercise of its option to extend the term of this
Lease, the parties shall have sixty (60) days in which to agree on the initial
fair market rental for the Building at the commencement of the first extended
term for the uses permitted hereunder. 
If the parties agree on such initial fair market rental, they shall
execute an amendment to this Lease stating the amount of the applicable minimum
monthly rental (including the indexed amounts applicable during subsequent
years of the first extended term as described above).  If the parties are unable to agree on such
rental within such sixty (60) day period, then within fifteen (15) days after
the expiration of such period each party, at its cost and by giving notice to
the other party, shall appoint a real estate appraiser with at least five (5)
years experience appraising similar commercial properties in northeastern San
Mateo County to appraise and set the initial fair market rental for the
Building at the commencement of the first extended term in accordance with the
provisions of this Section 3.1(b). 
If either party fails to appoint an appraiser within the allotted time,
the single appraiser appointed by the other party shall be the sole
appraiser.  If an appraiser is appointed
by each party and the two appraisers so appointed are unable to agree upon an
initial fair market rental within thirty (30) days after the appointment of the
second, the two appraisers shall appoint a third similarly qualified appraiser
within ten (10) days after expiration of such 30-day period; if they are unable
to agree upon a third appraiser, then either party may, upon not less than five
(5) days notice to the other party, apply to the Presiding Judge of the San
Mateo County Superior Court for the appointment of a third qualified
appraiser.  Each party shall bear its own
legal fees in connection with appointment of the third appraiser and shall bear
one-half of any other costs of appointment of the third appraiser and of such
third appraiser’s fee.  The third
appraiser, however selected, shall be a person who has not previously acted for
either party in any capacity.  Within
thirty (30) days after the appointment of the third appraiser, a majority of
the three appraisers shall set the initial fair market rental for the first
extended term and shall so notify the parties. 
If a majority are unable to agree within the allotted time, the three
appraised initial fair market rentals shall be added together and divided by
three and the resulting quotient shall be the initial fair market rental for
the first extended term, which determination shall be binding on the parties
and shall be enforceable in any further proceedings relating to this
Lease.  For purposes of this Section 3.1(b),
the “fair market rental” of the Building shall be determined with
reference to the then prevailing market rental rates for properties in the City
of South San Francisco with shell and office, laboratory and research and
development improvements and site (common area) improvements comparable to
those then existing in the Building and on the Property, taking into account
for such determination all tenant improvements constructed at Landlord’s
expense and paid for by Landlord or by Tenant through additional rent
(including, but not limited to, all fixtures, equipment and laboratory
improvements in place in the Building on the Commencement Date), but excluding
from such determination any alterations or improvements constructed by Tenant
at its sole expense after the Commencement Date.

 

(c)                                  Rental Amounts During Second
Extended Term.  If Tenant
properly exercises its right to a second extended term of this Lease pursuant
to Section 2.6 hereof, the minimum rental during such second extended term
shall be determined in the same manner provided in the preceding paragraph for
the first extended term (including the indexation provision for years after the
first year of such second extended term), except that the determination shall
be made as of the commencement of the second extended term.

 

9

 

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

 

4.                                       [Omitted.]

 

5.                                       [Omitted.]

 

6.                                                                                                                                                                                                                                                                                           TAXES

 

6.1                                                                                 Personal Property.  Tenant shall be responsible for and shall pay
prior to delinquency all taxes and assessments levied against or by reason of
(a) any and all alterations, additions and items installed or placed on or
in the Building and taxed as personal property rather than as real property,
and/or (b) all personal property, trade fixtures and other property placed
by Tenant on or about the Property.  Upon
request by Landlord, Tenant shall furnish Landlord with satisfactory evidence
of Tenant’s payment thereof.  If at any
time during the term of this Lease any of said alterations, additions or
personal property, whether or not belonging to Tenant, shall be taxed or assessed
as part of the Property, then such tax or assessment shall be paid by Tenant to
Landlord within fifteen (15) days after presentation by Landlord of copies of
the tax bills in which such taxes and assessments are included and shall, for
the purposes of this Lease, be deemed to be personal property taxes or
assessments under this Section 6.1.

 

6.2                                                                                 Real Property. 
To the extent any real property taxes and assessments on the Property
(including, but not limited to, the Improvements or any portion thereof) are
assessed directly to Tenant, Tenant shall be responsible for and shall pay
prior to delinquency all such taxes and assessments levied against the
Property.  Upon request by Landlord,
Tenant shall furnish Landlord with satisfactory evidence of Tenant’s payment
thereof.  To the extent the Property
and/or Improvements are taxed or assessed to Landlord following the Rent
Commencement Date, such real property taxes and assessments shall constitute
Operating Expenses (as that term is defined in Section 7.2 of this Lease)
and shall be paid in accordance with the provisions of Article 7 of this
Lease.

 

7.                                                                                                                                                                                                                                             OPERATING EXPENSES

 

7.1                                                                                 Payment of Operating Expenses.

 

(a)                                  Tenant
shall pay to Landlord, at the time and in the manner hereinafter set forth, as
additional rental, an amount equal to ten and eighty-three hundredths percent
(10.83%) (“Tenant’s Operating Cost Share”) of the Operating Expenses
defined in Section 7.2; provided, however, that the Tenant’s
Operating Cost Share set forth in the preceding portion of this sentence shall
apply only to expenses that are determined and allocated by Landlord on a
Center-wide or multi-building basis, subject to any adjustments required under
any other applicable 

 

10

 

provisions of this Section 7.1, and that Tenant’s
Operating Cost Share shall be one hundred percent (100%) with respect to any
Operating Expenses defined in Section 7.2 that are reasonably allocable solely
to the Building and/or to the separate legal parcel on which the Building is
located.  As of the date of this Lease,
Landlord represents that the Building is the only building located on the
separate legal parcel on which the Building is located, that Landlord’s current
practice is to allocate only the security expenses for the Center on a
Center-wide basis and that all other Operating Expenses (including, but not
limited to, real and personal property taxes and assessments, insurance,
Building maintenance, property management, landscape maintenance and
irrigation, and parking area maintenance and lighting) are determined and
allocated on a stand-alone basis to the Building and/or to the separate legal
parcel on which the Building is located.

 

(b)                                 Tenant’s
Operating Cost Share as specified in paragraph (a) of this Section with
respect to Operating Expenses which are determined and allocated on a
Center-wide or multi-building basis is based upon an area of 60,967 square feet
for the Building and upon an aggregate area of 562,859 square feet for the
existing buildings owned by Landlord in the Center and consolidated with the
Building for operation, maintenance, common area and Operating Expense
purposes.  If the actual area of the
buildings owned from time to time by Landlord in the Center and consolidated
with the Building for operation, maintenance, common area and Operating Expense
purposes, as such area is determined in good faith by Landlord’s architect on
the same basis of measurement under which the Building has been determined to
contain 60,967 square feet (from the exterior faces of exterior walls and from
the dripline of any overhangs, except that in the case of any two-story
recesses or overhangs, the area to the dripline of the overhang shall be
counted as part of the area of the first story but not as part of the area of
the second story), differs from the assumed figure set forth above (including,
but not limited to, any such difference arising from the construction of
additional buildings in the Center as contemplated in Section 7.1(c)
hereof), then Tenant’s Operating Cost Share as it applies to Operating Expenses
that are determined and allocated on a Center-wide or multi-building basis
shall be adjusted to reflect the actual areas so determined as they exist from
time to time.

 

(c)                                  If
Landlord at any time constructs additional buildings in the Center or on any
adjacent property owned by Landlord and operated, for common area purposes, on
an integrated basis with the Center, then Tenant’s Operating Cost Share as it
applies to Operating Expenses that are determined and allocated on a
Center-wide or multi-building basis shall be adjusted to be equal to the
percentage determined by dividing the gross square footage of the Building as
it exists from time to time by the gross square footage of all buildings
located in the Center or on any applicable adjacent property owned by Landlord
as described above.  In determining such
percentage, a building shall be taken into account from and after the date on
which a tenant first enters into possession of the building or a portion
thereof, and the good faith determination of the gross square footage of any
such building by Landlord’s architects shall be final and binding upon the
parties.

 

7.2                                                                                 Definition Of Operating Expenses.

 

(a)                                  Subject
to the exclusions and provisions hereinafter contained, the term “Operating
Expenses” shall mean the total costs and expenses incurred by or allocable
to Landlord for management, operation and maintenance of the Improvements, the
Building, the Property and the Center (or, in the case of items that are
determined and allocated on a stand-alone basis as described in
Section 7.1, that portion of the Property and the Center that consists of
the separate legal parcel on which the Building is located), including, without
limitation, costs and expenses of (i) insurance (including earthquake and
environmental insurance), property management, landscaping, and the operation,
repair and maintenance of buildings and Common Areas; (ii) all utilities
and services; (iii) real and personal property taxes and assessments or
substitutes therefor levied or assessed against the Center or any part thereof,
including (but not limited to) any possessory interest, use, business, license
or other taxes or fees, any taxes imposed directly on rents or services, any
assessments or charges for police or fire protection, housing, transit, open
space, street or sidewalk construction or maintenance or other similar services
from time to time by any governmental or quasi-governmental entity, and any
other new taxes on landlords in addition to taxes now in effect; (iv) supplies,
equipment, utilities and tools used in management, operation and maintenance of
the Center; (v) capital improvements to the Center, the Improvements or
the Building, amortized over a reasonable period, (aa) which reduce 

 

11

 

or will cause future reduction of other items of
Operating Expenses for which Tenant is otherwise required to contribute or
(bb) which are required by law, ordinance, regulation or order of any
governmental authority or (cc) of which Tenant has use or which benefit
Tenant; and (vi) any other costs (including, but not limited to, any
parking or utilities fees or surcharges) allocable to or paid by Landlord, as
owner of the Center, Building or Improvements, pursuant to any applicable laws,
ordinances, regulations or orders of any governmental or quasi-governmental
authority or pursuant to the terms of any declarations of covenants, conditions
and restrictions now or hereafter affecting the Center or any other property
over which Tenant has non-exclusive use rights as contemplated in
Section 1.1(b) hereof.  Operating
Expenses shall not include any costs attributable to Landlord’s Work, nor any
costs attributable to the initial construction of the Building or of Common
Area improvements in the Center.  The
distinction between items of ordinary operating maintenance and repair and
items of a capital nature shall be made in accordance with generally accepted
accounting principles applied on a consistent basis or in accordance with tax
accounting principles, as determined in good faith by Landlord’s accountants.

 

(b)                                 Notwithstanding
anything to the contrary contained in this Lease, the following shall not be
included within Operating Expenses:

(i)                                     Costs
of maintenance or repair of the roof membrane for any building, except during
periods (if any) in which costs of maintenance or repair of the roof membrane
for the Building are likewise included as an Operating Expense (rather than
being incurred directly by Tenant or passed through directly to Tenant);

 

(ii)                                  Leasing
commissions, attorneys’ fees, costs, disbursements, and other expenses incurred
in connection with negotiations or disputes with tenants, or in connection with
leasing, renovating or improving space for tenants or other occupants or
prospective tenants or other occupants of the Center or of any other property
owned by Landlord;

 

(iii)                               The
cost of any service sold to any tenant (including Tenant) or other occupant for
which Landlord is entitled to be reimbursed as an additional charge or rental
over and above the basic rent and operating expenses payable under the lease
with that tenant;

 

(iv)                              Any
depreciation on the Building or on any other improvements in the Center or on
any other property owned by Landlord;

 

(v)                                 Expenses
in connection with services or other benefits of a type that are not offered or
made available to Tenant but that are provided to another tenant of the Center
or of any other property owned by Landlord;

 

(vi)                              Costs
incurred due to Landlord’s violation of any terms or conditions of this Lease
or of any other lease relating to the Building or to any other portion of the
Center or of any other property owned by Landlord;

 

(vii)                           Overhead
profit increments paid to any subsidiary or affiliate of Landlord for management
or other services on or to the Center or any portion thereof or any other
property owned by Landlord, or for supplies or other materials to the extent
that the cost of the services, supplies or materials exceeds the cost that
would have been paid had the services, supplies or materials been provided by
unaffiliated parties on a competitive basis;

 

(viii)                        All
interest, loan fees and other carrying costs related to any mortgage or deed of
trust or related to any capital item, and all rental and other amounts payable
under any ground or underlying lease, or under any lease for any equipment
ordinarily considered to be of a capital nature (except (A) janitorial
equipment which is not affixed to the Building and/or (B) equipment the cost of
which, if purchased, would be considered an amortizable Operating Expense under
the provisions of this Section 7.2, notwithstanding the capital nature of
such equipment);

 

(ix)                                Any
compensation paid to clerks, attendants or other persons in commercial
concessions operated by Landlord;

 

12

 

(x)                                   Advertising
and promotional expenditures;

 

(xi)                                Costs
of repairs and other work occasioned by fire, windstorm or other casualty of an
insurable nature, except to the extent of any applicable deductible amounts
under insurance actually carried by Landlord;

 

(xii)                             Any
costs, fines or penalties incurred due to violations by Landlord of any
governmental rule or authority or of this Lease or any other lease of any
portion of the Center or any other property owned by Landlord, or due to
Landlord’s negligence or willful misconduct;

 

(xiii)                          Management
fees to the extent they exceed, in any given period, one percent (1%) of gross
income (rent and Operating Expenses) received by Landlord with respect to the
Center (and any other property owned by Landlord and operated on an integrated
basis with the Center for operation, maintenance and common area purposes)
during the applicable period;

 

(xiv)                         Costs for
sculpture, paintings or other objects of art, and for any insurance thereon or
extraordinary security in connection therewith;

 

(xv)                            Wages,
salaries or other compensation paid to any executive employees above the grade
of building manager;

(xvi)                         The cost
of correcting any building code or other violations which were violations prior
to the Commencement Date;

 

(xvii)                      The cost of
containing, removing or otherwise remediating any contamination of the Center
(including the underlying land and groundwater) by any toxic or hazardous
materials (including, without limitation, asbestos and PCBs); and

 

(xviii)                   Premiums for
earthquake insurance coverage, but only to the extent (if any) that such
premiums exceed, in any applicable period, a commercially reasonable rate,
taking into account all relevant factors (including, but not limited to, the
nature, size and location of the Center, the nature and value of the
improvements therein that are owned by or insurable by Landlord, and the
general availability and cost of commercial earthquake insurance in the
insurance markets existing from time to time during the term of this Lease).

 

7.3                                                                                 Determination Of Operating Expenses.  On or before the Rent Commencement Date and
during the last month of each calendar year of the term of this Lease (“Lease
Year”), or as soon thereafter as practical, Landlord shall provide Tenant
notice of Landlord’s estimate of the Operating Expenses for the ensuing Lease
Year or applicable portion thereof.  On
or before the first day of each month during the ensuing Lease Year or
applicable portion thereof, beginning on the Rent Commencement Date, Tenant
shall pay to Landlord Tenant’s Operating Cost Share of the portion of such
estimated Operating Expenses allocable (on a prorata basis) to such month; provided,
however, that if such notice is not given in the last month of a Lease Year,
Tenant shall continue to pay on the basis of the prior year’s estimate, if any,
until the month after such notice is given. 
If at any time or times it appears to Landlord that the actual Operating
Expenses will vary from Landlord’s estimate by more than five percent (5%),
Landlord may, by notice to Tenant, revise its estimate for such year and
subsequent payments by Tenant for such year shall be based upon such revised
estimate.

 

7.4                                                                                 Final Accounting For Lease Year.

 

(a)                                  Within
ninety (90) days after the close of each Lease Year, or as soon after such
90-day period as practicable, Landlord shall deliver to Tenant a statement of
Tenant’s Operating Cost Share of the Operating Expenses for such Lease Year
prepared by Landlord from Landlord’s books and records, which statement shall
be final and binding on Landlord and Tenant (except as provided in
Section 7.4(b)).  If on the basis of
such statement Tenant owes an amount that is more or less than the estimated
payments for such Lease Year previously made by Tenant, Tenant or Landlord, as
the case may be, shall pay the deficiency to the other party within thirty (30)
days after delivery of the statement. 
Failure or inability of Landlord to deliver the 

 

13

 

annual statement within such ninety (90) day period
shall not impair or constitute a waiver of Tenant’s obligation to pay Operating
Expenses, or cause Landlord to incur any liability for damages.

 

(b)                                 At
any time within three (3) months after receipt of Landlord’s annual statement
of Operating Expenses as contemplated in Section 7.4(a), Tenant shall be
entitled, upon reasonable written notice to Landlord and during normal business
hours at Landlord’s office or such other places as Landlord shall designate, to
inspect and examine those books and records of Landlord relating to the
determination of Operating Expenses for the immediately preceding Lease Year
covered by such annual statement or, if Tenant so elects by written notice to
Landlord, to request an independent audit of such books and records.  The independent audit of the books and
records shall be conducted by a certified public accountant acceptable to both
Landlord and Tenant or, if the parties are unable to agree, by a certified
public accountant appointed by the Presiding Judge of the San Mateo County
Superior Court upon the application of either Landlord or Tenant (with notice
to the other party).  In either event,
such certified public accountant shall be one who is not then employed in any
capacity by Landlord or Tenant or by any of their respective affiliates.  The audit shall be limited to the
determination of the amount of Operating Expenses for the subject Lease Year,
and shall be based on generally accepted accounting principles and tax
accounting principles, consistently applied. 
If it is determined, by mutual agreement of Landlord and Tenant or by
independent audit, that the amount of Operating Expenses billed to or paid by
Tenant for the applicable Lease Year was incorrect, then the appropriate party
shall pay to the other party the deficiency or overpayment, as applicable,
within thirty (30) days after the final determination of such deficiency or
overpayment.  All costs and expenses of
the audit shall be paid by Tenant unless the audit shows that Landlord
overstated Operating Expenses for the subject Lease Year by more than five
percent (5%), in which case Landlord shall pay all costs and expenses of the
audit.  Each party agrees to maintain the
confidentiality of the findings of any audit in accordance with the provisions
of this Section 7.4.

 

7.5                                                                                 Proration.  If
the Rent Commencement Date falls on a day other than the first day of a Lease
Year or if this Lease terminates on a day other than the last day of a Lease
Year, then the amount of Operating Expenses payable by Tenant with respect to
such first or last partial Lease Year shall be prorated on the basis which the
number of days during such Lease Year in which this Lease is in effect bears to
365.  The termination of this Lease shall
not affect the obligations of Landlord and Tenant pursuant to Section 7.4
to be performed after such termination.

 

8.                                                                                                                                                                                                                                                                                  UTILITIES

 

8.1                                                                                 Payment. 
Commencing with the Rent Commencement Date and thereafter throughout the
term of this Lease, Tenant shall pay, before delinquency, all charges for
water, gas, heat, light, electricity, power, sewer, telephone, alarm system,
janitorial and other services or utilities supplied to or consumed in or with
respect to the Building (other than any separately metered costs for water,
electricity or other services or utilities furnished with respect to the Common
Areas, which costs shall be paid by Landlord and shall constitute Operating
Expenses under Section 7.2 hereof), including any taxes on such services
and utilities.  It is the intention of
the parties that all such services shall be separately metered to the
Building.  In the event that any of such
services supplied to the Building are not separately metered, then the amount
thereof shall be an item of Operating Expenses and shall be paid as provided in
Article 7.

 

8.2                                                                                 Interruption. 
There shall be no abatement of rent or other charges required to be paid
hereunder and Landlord shall not be liable in damages or otherwise for
interruption or failure of any service or utility furnished to or used with
respect to the Building or Property because of accident, making of repairs,
alterations or improvements, severe weather, difficulty or inability in
obtaining services or supplies, labor difficulties or any other cause.  Notwithstanding the foregoing provisions of
this Section 8.2, however, in the event of any interruption or failure of
any service or utility to the Building that (i) is caused in whole or in
material part by the active negligence or willful misconduct of Landlord or its
agents or employees and (ii) continues for more than three (3)
business days and (iii) materially impairs Tenant’s ability to use
the Building for its intended purposes hereunder, then following such
three (3) business day period, Tenant’s 

 

14

 

obligations
for payment of rent and other charges under this Lease shall be abated in
proportion to the degree of impairment of Tenant’s use of the Building, and
such abatement shall continue until Tenant’s use of the Building is no longer
materially impaired thereby.

 

9.                                                                                                                                                                                                                                               ALTERATIONS; SIGNS

 

9.1                                                                                 Right To Make Alterations.  Tenant shall make no alterations, additions
or improvements to the Building or the Property, other than interior
non-structural alterations costing less than Fifty Thousand Dollars
($50,000.00) in the aggregate during any twelve (12) month period, without
the prior written consent of Landlord, which consent shall not be unreasonably
withheld or delayed.  All such
alterations, additions and improvements shall be completed with due diligence
in a first-class workmanlike manner, in compliance with plans and
specifications approved in writing by Landlord and in compliance with all
applicable laws, ordinances, rules and regulations, and to the extent
Landlord’s consent is not otherwise required hereunder for such alterations,
additions or improvements, Tenant shall give prompt written notice thereof to
Landlord.  Tenant shall cause any
contractors engaged by Tenant for work in the Building or on the Property to
maintain public liability and property damage insurance, and other customary
insurance, with such terms and in such amounts as Landlord may reasonably
require, naming as additional insureds Landlord and any of its partners,
shareholders, property managers and lenders designated by Landlord for this
purpose, and shall furnish Landlord with certificates of insurance or other
evidence that such coverage is in effect. 
Notwithstanding any other provisions of this Section 9.1, under no
circumstances shall Tenant make any structural alterations or improvements, or
any substantial changes to the roof or substantial equipment installations on
the roof, or any substantial changes or alterations to the building systems,
without Landlord’s prior written consent (which consent shall not be
unreasonably withheld or delayed).  If
Tenant so requests in seeking Landlord’s consent to any alterations, additions
or improvements, Landlord shall specify in granting such consent whether Landlord
intends to require that Tenant remove such alterations, additions or
improvements (or any specified portions thereof) upon expiration or termination
of this Lease.  Landlord shall receive no
fee for supervision, profit, overhead or general conditions in connection with
any alterations, additions or improvements constructed or installed by Tenant
under this Lease.

 

9.2                                                                                 Title To Alterations.  All alterations, additions and improvements
installed in, on or about the Building or the Property shall become part of the
Property and shall become the property of Landlord, unless Landlord elects to
require Tenant to remove the same upon the termination of this Lease; provided,
however, that the foregoing shall not apply to Tenant’s movable furniture and
equipment and trade fixtures.  Tenant
shall promptly repair any damage caused by its removal of any such furniture,
equipment or trade fixtures. 
Notwithstanding any other provisions of this Article 9, however,
(a) under no circumstances shall Tenant have any right to remove from the
Building or the Property, during the term of this Lease or at the expiration or
termination of this Lease, any lab benches, fume hoods, cold rooms or other
similar improvements and equipment existing in the Building on the Commencement
Date, except with Landlord’s written consent (which consent may take the form
of either (i) a separate written consent or (ii) a written approval of
plans for proposed alterations or improvements, if and to the extent that such
plans specifically show the removal or relocation of any existing lab benches,
fume hoods, cold rooms or other similar improvements or equipment as part of
the proposed alterations or improvements), and (b) if Tenant requests
Landlord’s written consent to any alterations, additions or improvements under
Section 9.1 hereof and, in requesting such consent, asks that Landlord
specify whether Landlord will require removal of such alterations, additions or
improvements upon termination or expiration of this Lease, then Landlord shall
not be entitled to require such removal unless Landlord specified its intention
to do so at the time of granting of Landlord’s consent to the requested
alterations, additions or improvements.

 

9.3                                                                                 Tenant Fixtures. 
Subject to the final sentence of Section 9.2 and to
Section 9.5, Tenant may install, remove and reinstall trade fixtures
without Landlord’s prior written consent, except that installation and removal
of any fixtures which are affixed to the Building or the Property or which
affect the exterior or structural portions of the Building or the building
systems shall require Landlord’s written approval, which approval shall not be
unreasonably withheld or delayed. 
Subject to the provisions of Section 9.5, the foregoing shall apply
to Tenant’s signs, logos and insignia, all of which Tenant shall have the right
to place and 

 

15

 

remove
and replace (a) only with Landlord’s prior written consent as to location,
size and composition, which consent shall not be unreasonably withheld or
delayed, and (b) only in compliance with all restrictions and requirements
of applicable law and of any covenants, conditions and restrictions or other
written agreements now or hereafter applicable to the Property.  Tenant shall immediately repair any damage
caused by installation and removal of fixtures under this Section 9.3.

 

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

 

9.5                                                                                 Signs.  Without
limiting the generality of the provisions of Section 9.3 hereof, Tenant
shall have the right to display its corporate name and logo on the Building and
in front of the entrance to the Building, subject to Landlord’s prior approval
as to location, size, design and composition (which approval shall not be
unreasonably withheld or delayed), subject to the established sign criteria for
the Britannia Pointe Grand Business Park and subject to all restrictions and
requirements of applicable law and of any covenants, conditions and
restrictions or other written agreements now or hereafter applicable to the
Property.

 

10.                                                                                                                                                                                                                MAINTENANCE AND REPAIRS

 

10.1                                                                           Landlord’s Work.

 

(a)                                  Landlord
shall repair and maintain or cause to be repaired and maintained the Common
Areas of the Property and the roof (structural portions only), exterior walls
and other structural portions of the Building. 
The cost of all work performed by Landlord under this Section 10.1
shall be an Operating Expense hereunder, except to the extent such work
(i) is required due to the negligence of Landlord, (ii) involves the
repair or correction of a condition or defect that Landlord is required to
correct pursuant to Section 5.2 hereof, (iii) is a capital expense
not includible as an Operating Expense under Section 7.2 hereof, or
(iv) is required due to the negligence or willful misconduct of Tenant or
its agents, employees or invitees (in which event Tenant shall bear the full
cost of such work pursuant to the indemnification provided in Section 12.6
hereof, subject to the release set forth in Section 12.4 hereof).  Tenant knowingly and voluntarily waives the
right to make repairs at Landlord’s expense, except to the extent permitted by
Section 10.1(b) below, or to offset the cost thereof against rent, under
any law, statute, regulation or ordinance now or hereafter in effect.

 

(b)                                 If
Landlord fails to perform any repairs or maintenance required to be performed
by Landlord on the Building under Section 10.1(a) and such failure
continues for thirty (30) days or more after Tenant gives Landlord written
notice of such failure (or, if such repairs or maintenance cannot reasonably be
performed within such 30-day period, then if Landlord fails to commence
performance within such 30-day period and thereafter to pursue such performance
diligently to completion), then Tenant shall have the right to perform such
repairs or maintenance and Landlord shall reimburse Tenant for the reasonable
cost thereof within fifteen (15) days after written notice from Tenant of
the completion and cost of such work, accompanied by copies of invoices or
other reasonable supporting documentation. 
Under no circumstances, however, shall Tenant have any right to offset
the cost of any such work against rent or other charges falling due from time
to time under this Lease.

 

10.2                                                                           Tenant’s Obligation For Maintenance.

 

(a)                                                                                  Good Order, Condition And Repair.  Except as provided in Section 10.1
hereof, Tenant at its sole cost and expense shall keep and maintain in good and
sanitary order, condition and repair the Building and every part thereof,
wherever located, 

 

16

 

including
but not limited to the roof (non-structural portions only), signs, interior,
ceiling, electrical system, plumbing system, telephone and communications
systems of the Building, the HVAC equipment and related mechanical systems
serving the Building (for which equipment and systems Tenant shall enter into a
service contract with a person or entity designated or approved by Landlord),
all doors, door checks, windows, plate glass, door fronts, exposed plumbing and
sewage and other utility facilities, fixtures, lighting, wall surfaces, floor
surfaces and ceiling surfaces of the Building and all other interior repairs,
foreseen and unforeseen, with respect to the Building, as required.

 

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

 

(c)                                                                                  Condition Upon Surrender.  At the expiration or sooner termination of
this Lease, Tenant shall surrender the Building and the Improvements, including
any additions, alterations and improvements thereto, broom clean, in good and
sanitary order, condition and repair, ordinary wear and tear excepted, first,
however, removing all goods and effects of Tenant and all and fixtures and
items required to be removed or specified to be removed at Landlord’s election
pursuant to this Lease (including, but not limited to, any such removal
required as a result of an election duly made by Landlord to require such
removal as contemplated in Section 9.2), and repairing any damage caused
by such removal.  Tenant shall not have
the right to remove fixtures or equipment if Tenant is in default hereunder
unless Landlord specifically waives this provision in writing.  Tenant expressly waives any and all interest
in any personal property and trade fixtures not removed from the Property by
Tenant at the expiration or termination of this Lease, agrees that any such
personal property and trade fixtures may, at Landlord’s election, be deemed to
have been abandoned by Tenant, and authorizes Landlord (at its election and
without prejudice to any other remedies under this Lease or under applicable
law) to remove and either retain, store or dispose of such property at Tenant’s
cost and expense, and Tenant waives all claims against Landlord for any damages
resulting from any such removal, storage, retention or disposal.

 

11.                                                                                                                                                                                                                                                    USE OF PROPERTY

 

11.1                                                                           Permitted Use. 
Subject to Sections 11.3, 11.4 and 11.6 hereof, Tenant shall use
the Building solely for a laboratory research and development facility,
including (but not limited to) wet chemistry and biology labs, clean rooms,
pilot scale, clinical scale and GMP scale manufacturing, storage and use of
toxic and radioactive materials (subject to the provisions of Section 11.6
hereof), storage and use of laboratory animals, administrative offices, and
other lawful purposes reasonably related to or incidental to such specified
uses (subject in each case to receipt of all necessary approvals from the City
of South San Francisco and other governmental agencies having jurisdiction over
the Building), and for no other purpose.

 

11.2                                                                           [Omitted.]

 

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

 

11.4                                                                           Compliance With Laws.  Tenant shall not use the Property or permit
the Property to be used in whole or in part for any purpose or use that is in
violation of any applicable laws, ordinances, regulations or rules of any
governmental agency or public authority. 

 

17

 

Tenant
shall keep the Building and Improvements equipped with all safety appliances
required by law, ordinance or insurance on the Property, or any order or
regulation of any public authority, because of Tenant’s particular use of the
Property.  Tenant shall procure all
licenses and permits required for use of the Property.  Tenant shall use the Property in strict
accordance with all applicable ordinances, rules, laws and regulations and
shall comply with all requirements of all governmental authorities now in force
or which may hereafter be in force pertaining to the use of the Property by
Tenant, including, without limitation, regulations applicable to noise, water,
soil and air pollution, and making such nonstructural alterations and additions
thereto as may be required from time to time by such laws, ordinances, rules,
regulations and requirements of governmental authorities or insurers of the
Property (collectively, “Requirements”) because of Tenant’s construction
of improvements in or other particular use of the Property.  Any structural alterations or additions
required from time to time by applicable Requirements because of Tenant’s
construction of improvements in the Building or other particular use of the
Property shall, at Landlord’s election, either (i) be made by Tenant, at
Tenant’s sole cost and expense, in accordance with the procedures and standards
set forth in Section 9.1 for alterations by Tenant, or (ii) be made
by Landlord at Tenant’s sole cost and expense, in which event Tenant shall pay
to Landlord as additional rent, within ten (10) days after demand by
Landlord, an amount equal to all reasonable costs incurred by Landlord in
connection with such alterations or additions. 
The judgment of any court, or the admission by Tenant in any proceeding
against Tenant, that Tenant has violated any law, statute, ordinance or
governmental rule, regulation or requirement shall be conclusive of such
violation as between Landlord and Tenant.

 

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

 

11.6                                                                           Environmental Matters.

 

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

 

(b)                                                                                 Without
limiting the generality of the obligations set forth in Section 11.4 of
this Lease:

 

(i)                                     Tenant
shall not cause or permit any hazardous substance or hazardous waste to be
brought upon, kept, stored or used in or about the Property without the prior
written consent of Landlord, which consent shall not be unreasonably withheld,
except that Tenant, in connection with its permitted use of the Property as
provided in Section 11.1, may keep, store and use materials that constitute
hazardous substances which are customary for such permitted use, provided such
hazardous substances are kept, stored and used in quantities which are
customary for such permitted use and are kept, stored and used in full
compliance with clauses (ii) and (iii) immediately below.

 

18

 

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

 

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

 

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

 

(v)                                 If
applicable, Tenant shall provide Landlord in writing the following information
and/or documentation within fifteen (15) days after the Rent Commencement Date,
and shall update such information at least annually, on or before each
anniversary of the Rent Commencement Date, to reflect any change in or addition
to the required information and/or documentation (provided, however,
that in the case of the materials described in subparagraphs (B), (C) and (E)
below, Tenant shall not be required to deliver copies of such materials to
Landlord but shall maintain copies of such materials to such extent and for
such periods as may be required by applicable law and shall permit Landlord or
its representatives to inspect and copy such materials during normal business
hours at any time and from time to time upon reasonable notice to Tenant):

 

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

 

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

 

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

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

 

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

 

19

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(viii)
                     Tenant
shall indemnify, defend and hold Landlord harmless from and against any and all
claims, losses (including, but not limited to, loss of rental income), damages,
liabilities, costs, legal fees and expenses of any sort arising out of or
relating to (A) any failure by Tenant to comply with any provisions of this
paragraph 11.6(b), or (B) any receipt, use handling, generation,
transportation, storage, treatment, release and/or disposal of any hazardous
substance or waste or any radioactive material or radiation on or about the
Property as a proximate result of Tenant’s use of the Property or as a result
of any intentional or negligent acts or omissions of Tenant or of any agent,
employee or invitee of Tenant.

 

20

 

(ix)                                Tenant
shall cooperate with Landlord in furnishing Landlord with complete information
regarding Tenant’s receipt, handling, use, storage, transportation, generation,
treatment and/or disposal of any hazardous substances or wastes or radiation or
radioactive materials.  Upon request,
Tenant shall grant Landlord reasonable access at reasonable times to the
Property to inspect Tenant’s receipt, handling, use, storage, transportation,
generation, treatment and/or disposal of hazardous substances or wastes or
radiation or radioactive materials, provided that Landlord uses reasonable
efforts to avoid any unreasonable interference with Tenant’s business
operations in exercising such access and inspection rights, without thereby
being deemed guilty of any disturbance of Tenant’s use or possession and
without being liable to Tenant in any manner.

 

(x)                                   Notwithstanding
Landlord’s rights of inspection and review under this paragraph 11.6(b),
Landlord shall have no obligation or duty to so inspect or review, and no third
party shall be entitled to rely on Landlord to conduct any sort of inspection
or review by reason of the provisions of this paragraph 11.6(b).

 

(xi)                                If
Tenant receives, handles, uses, stores, transports, generates, treats and/or
disposes of any hazardous substances or wastes or radiation or radioactive
materials on or about the Property at any time during the term of this Lease,
then within thirty (30) days after the termination or expiration of this Lease,
Tenant at its sole cost and expense shall obtain and deliver to Landlord an
environmental study, performed by an expert reasonably satisfactory to
Landlord, evaluating the presence or absence of hazardous substances and
wastes, radiation and radioactive materials on and about the Property.  Such study shall be based on a reasonable and
prudent level of tests and investigations of the Property and surrounding areas
(if appropriate), which tests shall be conducted no earlier than the date of
termination or expiration of this Lease. 
Liability for any remedial actions required or recommended on the basis of
such study shall be allocated in accordance with Sections 11.4, 11.6, 12.6
and other applicable provisions of this Lease.

 

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

 

(d)                                 The
provisions of this Section 11.6 shall survive the termination of this
Lease.

 

12.                                                                                                                                                                                                                  INSURANCE AND INDEMNITY

 

12.1                                                                           Insurance.

 

(a)                                  Tenant
shall procure and maintain in full force and effect at all times during the
term of this Lease, at Tenant’s cost and expense, commercial general liability
insurance to protect against liability to the public, or to any invitee of
Tenant or Landlord, arising out of or related to the use of or resulting from
any accident occurring in, upon or about the Property, with limits of liability
of not less than (i) Two Million Dollars ($2,000,000.00) for injury to or
death of one person, (ii) Five Million Dollars ($5,000,000.00) for
personal injury or death, per occurrence, and (iii) One Million Dollars
($1,000,000.00) for property damage, or combined single limit of liability of
not less than Five Million Dollars ($5,000,000.00).  Such insurance shall name Landlord, its
general partners, its Managing Agent and any lender holding a deed of trust on
the Property from time to time (as designated in writing by Landlord to Tenant
from time to time) as additional insureds thereunder.  The amount of such insurance shall not be
construed to limit any liability or obligation of Tenant under this Lease.  Tenant shall also 

 

21

 

procure and maintain in full force and effect at all
times during the term of this Lease, at Tenant’s cost and expense,
products/completed operations coverage on terms and in amounts
(A) customary in Tenant’s industry for companies engaged in the marketing
of products on a scale comparable to that in which Tenant is engaged from time
to time and (B) mutually satisfactory to Landlord and Tenant in their
respective reasonable discretion.

 

(b)                                 Landlord
shall procure and maintain in full force and effect at all times during the
term of this Lease, at Landlord’s cost and expense (but reimbursable as an
Operating Expense under Section 7.2 hereof), commercial general liability
insurance to protect against liability arising out of or related to the use of
or resulting from any accident occurring in, upon or about the Property, with
combined single limit of liability of not less than Five Million Dollars
($5,000,000.00) per occurrence for bodily injury and property damage.

 

(c)                                  Landlord
shall procure and maintain in full force and effect at all times during the
term of this Lease, at Landlord’s cost and expense (but reimbursable as an
Operating Expense under Section 7.2 hereof), policies of property
insurance providing protection against “all risk of direct physical loss” (as
defined by and detailed in the Insurance Service Office’s Commercial Property
Program “Cause of Loss—Special Form [CP1030]” or its equivalent) for the shell
of the Building and for the improvements in the Common Areas of the Property,
on a full replacement cost basis (with no co-insurance or, if coverage without
co-insurance is not reasonably available, then on an “agreed amount”
basis).  Such insurance shall include
earthquake and environmental coverage and shall have such commercially
reasonable deductibles and other terms as Landlord in its reasonable discretion
determines to be appropriate.  Landlord
shall have no obligation to carry property damage insurance for any
alterations, additions or improvements installed by Tenant or by any
predecessor tenant in the Building or on or about the Property.

 

(d)                                 Landlord
shall procure and maintain in full force and effect at all times during the
term of this Lease, at Tenant’s cost and expense (chargeable, in Landlord’s
discretion, either as an Operating Expense allocable 100% to the Building or as
a direct pass-through to Tenant), policies of property insurance providing
protection against “all risk of direct physical loss” (as defined by and
detailed in the Insurance Service Office’s Commercial Property Program “Cause
of Loss-Special Form [CP1030]” or its equivalent) for the tenant improvements
existing in the Building on the Commencement Date and on all other alterations,
additions and improvements installed by Tenant from time to time in or about
the Building, on a full replacement cost basis (with no co-insurance or, if
coverage without co-insurance is not reasonably available, then on an “agreed
amount” basis).  Such insurance may have
such commercially reasonable deductibles and other terms as Landlord in its
discretion determines to be appropriate, and shall name both Tenant and
Landlord as insureds as their interests may appear.  The coverage required to be maintained under
this paragraph (d) may, in Landlord’s discretion, be added to or combined with
Landlord’s master policy carried under paragraph (c) above, in which event
Tenant shall be named as an insured only with respect to the portion of the
policy that covers tenant improvements as described in this paragraph (d).  Tenant shall provide to Landlord from time to
time, upon request by Landlord annually or at other reasonable intervals, an
updated schedule of values for the existing tenant improvements and any
subsequently constructed tenant improvements in the Building, and Landlord
shall have no obligation or liability with respect to any underinsurance of
tenant improvements that results from Tenant’s failure to keep Landlord
informed from time to time, on a current basis, of the insurable value of the
tenant improvements in the Building.

 

12.2                                                                           Quality Of Policies And Certificates.  All policies of insurance required hereunder
shall be issued by responsible insurers and, in the case of policies carried or
required to be carried by Tenant, shall be written as primary policies not
contributing with and not in excess of any coverage that Landlord may
carry.  Tenant shall deliver to Landlord
copies of policies or certificates of insurance showing that said policies are
in effect.  The coverage provided by such
policies shall include the clause or endorsement referred to in
Section 12.4.  If Tenant fails to
acquire, maintain or renew any insurance required to be maintained by it under
this Article 12 or to pay the premium therefor, then Landlord, at its
option and in addition to its other remedies, but without obligation so to do,
may procure such insurance, and any sums expended by it to procure any such
insurance on behalf of or in place of Tenant shall be repaid upon demand, with
interest as provided in Section 3.2 hereof.  Tenant shall obtain written 

 

22

 

undertakings
from each insurer under policies required to be maintained by it to notify all
insureds thereunder at least thirty (30) days prior to cancellation of
coverage.

 

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

 

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

 

12.5                                                                           Increase In Premiums.  Tenant shall do all acts and pay all expenses
necessary to insure that the Property is not used for purposes prohibited by
any applicable fire insurance, and that Tenant’s use of the Property complies
with all requirements necessary to obtain any such insurance.  If Tenant uses or permits the Property to be
used in a manner which increases the existing rate of any insurance carried by
Landlord on the Property and such use continues for longer than a reasonable
period specified in any written notice from Landlord to Tenant identifying the
rate increase and the factors causing the same, then Tenant shall pay the
amount of the increase in premium caused thereby, and Landlord’s costs of
obtaining other replacement insurance policies, including any increase in
premium, within ten (10) days after demand therefor by Landlord.

 

12.6                                                                           Indemnification.

 

(a)                                  Tenant
shall indemnify, defend and hold Landlord and its partners, shareholders,
officers, directors, agents and employees harmless from any and all liability
for injury to or death of any person, or loss of or damage to the property of
any person, and all actions, claims, demands, costs (including, without
limitation, reasonable attorneys’ fees), damages or expenses of any kind
arising therefrom which may be brought or made against Landlord or which
Landlord may pay or incur by reason of the use, occupancy and enjoyment of the
Property by Tenant or any invitees, sublessees, licensees, assignees,
employees, agents or contractors of Tenant or holding under Tenant (including,
but not limited to, any such matters arising out of or in connection with any
early entry upon the Property by Tenant pursuant to Section 2.2 hereof)
from any cause whatsoever other than negligence or willful misconduct or
omission by Landlord, its agents or employees. 
Landlord and its partners, shareholders, officers, directors, agents and
employees shall not be liable for, and Tenant hereby waives all claims against
such persons for, damages to goods, wares and merchandise in or upon the
Property, or for injuries to Tenant, its agents or third persons in or upon the
Property, from any cause whatsoever other than negligence or willful misconduct
or omission by Landlord, its agents or employees.  Tenant shall give prompt notice to Landlord
of any casualty or accident in, on or about the Property.

 

(b)                                 Landlord
shall indemnify, defend and hold Tenant and its partners, shareholders,
officers, directors, agents and employees harmless from any and all liability
for injury to or death of any person, or loss of or damage to the property of
any person, and all actions, claims, demands, costs (including, without
limitation, reasonable attorneys’ fees), damages or expenses of any kind
arising therefrom which may be brought or made against Tenant or which Tenant
may pay or incur, to the extent such liabilities or other matters arise in, on
or about the Property by reason of any negligence or willful misconduct or
omission by Landlord, its agents or employees.

 

23

 

12.7                                                                           Blanket Policy. 
Any policy required to be maintained hereunder may be maintained under a
so-called “blanket policy” insuring other parties and other locations so long
as the amount of insurance required to be provided hereunder is not thereby
diminished.

 

13.                                                                                                                                                                                                                 SUBLEASE AND ASSIGNMENT

 

13.1                                                                           Assignment And Sublease Of Building.  Except in the case of a Permitted Transfer,
Tenant shall not have the right or power to assign its interest in this Lease,
or make any sublease of the Building or any portion thereof, nor shall any
interest of Tenant under this Lease be assignable involuntarily or by operation
of law, without on each occasion obtaining the prior written consent of
Landlord, which consent shall not be unreasonably withheld or delayed.  Any purported sublease or assignment of
Tenant’s interest in this Lease requiring but not having received Landlord’s
consent thereto (to the extent such consent is required hereunder) shall be
void.  Without limiting the generality of
the foregoing, Landlord may withhold consent to any proposed subletting or
assignment for which consent is requested solely on the ground, if applicable,
that the use by the proposed subtenant or assignee is reasonably likely to be
incompatible with Landlord’s use of any adjacent property owned or operated by
Landlord, unless the proposed use is within the permitted uses specified in Section 11.1,
in which event it shall not be reasonable for Landlord to object to the
proposed use.  Except in the case of a
Permitted Transfer, any dissolution, consolidation, merger or other
reorganization of Tenant, or any sale or transfer of substantially all of the
stock or assets of Tenant in a single transaction or series of related
transactions, shall be deemed to be an assignment hereunder and shall be void
without the prior written consent of Landlord as required above.  Notwithstanding the foregoing, (i) an
initial public offering of the common stock of Tenant shall not be deemed to be
an assignment hereunder; (ii) any transfer of Tenant’s stock during any
period in which Tenant has a class of stock listed on any recognized securities
exchange or traded in the NASDAQ over-the-counter market shall not be deemed to
be an assignment hereunder; (iii) any transfer of Tenant’s stock in
connection with a bona fide financing, capitalization or recapitalization of
Tenant shall not be deemed to be an assignment hereunder, provided that such
financing, capitalization or recapitalization does not result in a material
reduction in Tenant’s net worth or materially change the nature of Tenant’s
ongoing business as a going concern; and (iv) Tenant shall have the right
to assign this Lease or sublet the Building, or any portion thereof, without
Landlord’s consent (but with prior or concurrent written notice by Tenant to
Landlord, except to the extent Tenant is advised by its counsel that such prior
or concurrent notice would be in violation of applicable law, in which event
Tenant shall give such written notice as soon as reasonably possible after the
giving of such notice is no longer in violation of applicable law), to any
Affiliate of Tenant, or to any entity which results from a merger or
consolidation with Tenant, or to any entity which acquires substantially all of
the stock or assets of Tenant as a going concern (hereinafter each a “Permitted
Transfer”).  For purposes of the
preceding sentence, an “Affiliate” of Tenant shall mean any entity in
which Tenant owns at least a twenty percent (20%) equity interest, any entity
which owns at least a twenty percent (20%) equity interest in Tenant, and/or
any entity which is related to Tenant by a chain of ownership interests
involving at least a twenty percent (20%) equity interest at each level in the
chain.  Landlord shall have no right to
terminate this Lease in connection with, and shall have no right to any sums or
other economic consideration resulting from, any Permitted Transfer.  Except as expressly set forth in this
Section 13.1, however, the provisions of Section 13.2 shall remain
applicable to any Permitted Transfer and the transferee under such Permitted
Transfer shall be and remain subject to all of the terms and provisions of this
Lease.

 

13.2                                                                           Rights Of Landlord.

 

(a)                                  Consent
by Landlord to one or more assignments of this Lease, or to one or more
sublettings of the Building or any portion thereof, or collection of rent by
Landlord from any assignee or sublessee, shall not operate to exhaust
Landlord’s rights under this Article 13, nor constitute consent to any
subsequent assignment or subletting.  No
assignment of Tenant’s interest in this Lease and no sublease shall relieve
Tenant of its obligations hereunder, notwithstanding any waiver or extension of
time granted by Landlord to any assignee or sublessee, or the failure of
Landlord to assert its rights against any assignee or sublessee, and regardless
of whether Landlord’s consent thereto is given or required to be given
hereunder.  In the event of a default by
any assignee, sublessee or other successor of Tenant in the performance 

 

24

 

of any of the terms or obligations of Tenant under
this Lease, Landlord may proceed directly against Tenant without the necessity
of exhausting remedies against any such assignee, sublessee or other
successor.  In addition, Tenant
immediately and irrevocably assigns to Landlord, as security for Tenant’s
obligations under this Lease, all rent from any subletting of all or a part of
the Building as permitted under this Lease, and Landlord, as Tenant’s assignee
and as attorney-in-fact for Tenant, or any receiver for Tenant appointed on
Landlord’s application, may collect such rent and apply it toward Tenant’s
obligations under this Lease; except that, until the occurrence of an act of
default by Tenant, Tenant shall have the right to collect such rent and to
retain all sublease profits (subject to the provisions of Section 13.2(c),
below).

 

(b)                                 Upon
any assignment of Tenant’s interest in this Lease for which Landlord’s consent
is required under Section 13.1 hereof, Tenant shall pay to Landlord,
within ten (10) days after receipt thereof by Tenant from time to time,
one-half (1/2) of all cash sums and other economic considerations received by
Tenant in connection with or as a result of such assignment, after first
deducting therefrom (i) the unamortized cost of any leasehold improvements
previously made in the Building and paid for by Tenant, (ii) any costs incurred
by Tenant for leasehold improvements (including, but not limited to,
third-party architectural and space planning costs) in the Building in
connection with such assignment, (iii) any real estate commissions and/or
attorneys’ fees incurred by Tenant in connection with such assignment, and
(iv) any economic consideration received by Tenant as bona fide,
reasonable compensation for services rendered by Tenant to the assignee and/or
personal property sold or leased by Tenant to the assignee.

 

(c)                                  Upon
any sublease of all or any portion of the Building for which Landlord’s consent
is required under Section 13.1 hereof, Tenant shall pay to Landlord,
within ten (10) days after receipt thereof by Tenant from time to time,
one-half (1/2) of all cash sums and other economic considerations received by
Tenant in connection with or as a result of such sublease, after first
deducting therefrom (i) the rental due hereunder for the corresponding period,
prorated (on the basis of the average per-square-foot cost paid by Tenant for
the entire Building for the applicable period under this Lease) to reflect the
size of the subleased portion of the Building, (ii) any costs incurred by
Tenant for leasehold improvements in the subleased portion of the Building
(including, but not limited to, third-party architectural and space planning
costs) for the specific benefit of the sublessee in connection with such
sublease, amortized over the term of the sublease, (iii) any real estate
commissions and/or attorneys’ fees incurred by Tenant in connection with such
sublease, amortized over the term of such sublease, (iv) the unamortized cost
of any leasehold improvements previously made and paid for by Tenant with
respect to the subleased portion of the Building, and (v) any economic
consideration received by Tenant as bona fide, reasonable compensation for
services rendered by Tenant to the sublessee and/or personal property sold or
leased by Tenant to the sublessee.

 

14.                                                                                                                                                                              RIGHT OF ENTRY AND QUIET ENJOYMENT

 

14.1                                                                           Right Of Entry. 
Landlord and its authorized representatives shall have the right to
enter the Building at any time during the term of this Lease during normal
business hours and upon not less than twenty-four (24) hours prior notice,
except in the case of emergency (in which event no notice shall be required and
entry may be made at any time), for the purpose of inspecting and determining
the condition of the Building or for any other proper purpose including,
without limitation, to make repairs, replacements or improvements which
Landlord may deem necessary, to show the Building to prospective purchasers, to
show the Building to prospective tenants (but only during the final year of the
term of this Lease), and to post notices of nonresponsibility.  Landlord shall not be liable for
inconvenience, annoyance, disturbance, loss of business, quiet enjoyment or
other damage or loss to Tenant by reason of making any repairs or performing
any work upon the Building or the Property or by reason of erecting or
maintaining any protective barricades in connection with any such work, and the
obligations of Tenant under this Lease shall not thereby be affected in any
manner whatsoever, provided, however, Landlord shall use reasonable
efforts to minimize the inconvenience to Tenant’s normal business operations
caused thereby.

 

25

 

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

 

15.                                                                                                                                                                                                                               CASUALTY AND TAKING

 

15.1                           Damage or Destruction.

 

(a)                                  If
the Building, or the Common Areas of the Property necessary for Tenant’s use
and occupancy of the Building, are damaged or destroyed in whole or in part
under circumstances in which (i) repair and restoration is permitted under
applicable governmental laws, regulations and building codes then in effect and
(ii) repair and restoration reasonably can be completed within a period of
one (1) year (or, in the case of an occurrence during the last year of the
term of this Lease, within a period of sixty (60) days) following the date of
the occurrence, then Landlord, as to the Common Areas of the Property and the
Building Shell (as such term is defined in the Existing Lease, but interpreted
and applied with reference to the Building), and Tenant, as to the Tenant
Improvements (as such term is defined in the Existing Lease, but interpreted
and applied with reference to the Building) in the Building, shall commence and
complete, with all due diligence and as promptly as is reasonably practicable
under the conditions then existing, all such repair and restoration as may be
required to return the affected portions of the Property to a condition
comparable to that existing immediately prior to the occurrence.  In the event of damage or destruction the
repair of which is not permitted under applicable governmental laws,
regulations and building codes then in effect, if such damage or destruction
(despite being corrected to the extent then permitted under applicable
governmental laws, regulations and building codes) would still materially
impair Tenant’s ability to conduct its business in the Building, then either
party may terminate this Lease as of the date of the occurrence by giving
written notice to the other within thirty (30) days after the date of the
occurrence; if neither party timely elects such termination, or if such damage
or destruction does not materially impair Tenant’s ability to conduct its
business in the Building, then this Lease shall continue in full force and
effect, except that there shall be an equitable adjustment in monthly minimum
rental and of Tenant’s Operating Cost Share of Operating Expenses, based upon
the extent to which Tenant’s ability to conduct its business in the Building is
impaired, and Landlord and Tenant respectively shall restore the Common Areas
and Building Shell and the Tenant Improvements to a complete architectural
whole and to a functional condition.  In
the event of damage or destruction which cannot reasonably be repaired within
one (1) year (or, in the case of an occurrence during the last year of the
term of this Lease, within a period of sixty (60) days) following the date of
the occurrence, then either Landlord or Tenant, at its election, may terminate
this Lease as of the date of the occurrence by giving written notice to the
other within thirty (30) days after the date of the occurrence; if neither
party timely elects such termination, then this Lease shall continue in full
force and effect and Landlord and Tenant shall each repair and restore
applicable portions of the Property in accordance with the first sentence of
this Section 15.1.

 

(b)                                 The
respective obligations of Landlord and Tenant pursuant to Section 15.1(a)
are subject to the following limitations:

 

(i)                                     If
the occurrence results from a peril which is required to be insured pursuant to
Section 12.1(c) and (d) above, the obligations of either party shall not
exceed the amount of insurance proceeds received from insurers (or, in the case
of any failure to maintain required insurance, proceeds that reasonably would
have been available if the required insurance had been maintained) by reason of
such occurrence, plus the amount of the party’s permitted deductible (provided
that each party shall be obligated to use its best efforts to recover any
available proceeds from the insurance which it is required to maintain pursuant
to the provisions of Section 12.1(c) or (d), as applicable), and, if such
proceeds (including, in the case of a failure to maintain required insurance,
any proceeds that reasonably would have been available) are insufficient,
either party may terminate the Lease unless the other party promptly elects and
agrees, in writing, to contribute the amount of the shortfall; and

 

26

 

(ii)  If the occurrence results from a peril which
is not required to be insured pursuant to Section 12.1(c) and (d) above
and is not actally insured, Landlord shall be required to repair and restore
the Building Shell and Common Areas to the extent necessary for Tenant’s continued
use and occupancy of the Building, and Tenant shall be required to repair and
restore the Tenant Improvements to the extent necessary for Tenant’s continued
use and occupancy of the Building, provided that each party’s obligation
to repair and restore shall not exceed an amount equal to five percent (5%) of
the replacement cost of the Building Shell and Common Area improvements, as to
Landlord, or five percent (5%) of the replacement cost of the Tenant
Improvements, as to Tenant; if the replacement cost as to either party exceeds
such amount, then the party whose limit has been exceeded may terminate this
Lease unless the other party promptly elects and agrees, in writing, to
contribute the amount of the shortfall.

 

(c)                                  If
this Lease is terminated pursuant to the foregoing provisions of this
Section 15.1 following an occurrence which is a peril actually insured or
required to be insured against pursuant to Section 12.1(c) and (d),
Landlord and Tenant agree (and any Lender shall be asked to agree) that such
insurance proceeds shall be allocated between Landlord and Tenant in a manner
which fairly and reasonably reflects their respective ownership rights under
this Lease, as of the termination or expiration of the term of this Lease, with
respect to the improvements, fixtures, equipment and other items to which such
insurance proceeds are attributable.

 

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

 

15.2                                                                           Condemnation.

 

(a)                                  If
during the term of this Lease the Property or Improvements, or any substantial
part of either, is taken by eminent domain or by reason of any public
improvement or condemnation proceeding, or in any manner by exercise of the
right of eminent domain (including any transfer in avoidance of an exercise of
the power of eminent domain), or receives irreparable damage by reason of
anything lawfully done under color of public or other authority, then
(i) this Lease shall terminate as to the entire Building at Landlord’s
election by written notice given to Tenant within sixty (60) days after
the taking has occurred, and (ii) this Lease shall terminate as to the
entire Building at Tenant’s election, by written notice given to Landlord
within thirty (30) days after the nature and extent of the taking have
been finally determined, if the portion of the Building taken is of such extent
and nature as substantially to handicap, impede or permanently impair Tenant’s
use of the balance of the Building.  If
Tenant elects to terminate this Lease, Tenant shall also notify Landlord of the
date of termination, which date shall not be earlier than thirty (30) days
nor later than ninety (90) days after Tenant has notified Landlord of
Tenant’s election to terminate, except that this Lease shall terminate on the
date of taking if such date falls on any date before the date of termination
designated by Tenant.  If neither party
elects to terminate this Lease as hereinabove provided, this Lease shall
continue in full force and effect (except that there shall be an equitable
abatement of minimum rental and of Tenant’s Operating Cost Share of Operating
Expenses based upon the degree to which Tenant’s ability to conduct its
business in the Building is impaired), Landlord shall restore the Building
Shell and Common Area improvements to a complete architectural whole and a
functional condition and as nearly as reasonably possible to the condition
existing before the taking, and Tenant shall restore the Tenant Improvements
and Tenant’s other alterations, additions and improvements to a complete
architectural whole and a functional condition and as nearly as reasonably
possible to the condition existing before the taking.  In connection with any such restoration, each
party shall use its respective best efforts (including, without limitation, any
necessary negotiation or intercession with its respective lender, if any) to
ensure that any severance damages or other condemnation awards intended to
provide compensation for rebuilding or restoration costs are promptly collected
and made available to Landlord and Tenant in portions reasonably corresponding
to the cost and scope of their respective restoration obligations, subject only
to such payment controls as either party or its lender may reasonably require
in order to ensure the proper application of such proceeds toward the
restoration of the Improvements.  Each
party waives the provisions of Code of Civil Procedure Section 1265.130,

 

27

 

allowing either party to petition the Superior Court
to terminate this Lease in the event of a partial condemnation of the Building
or Property.

 

(b)                                 The
respective obligations of Landlord and Tenant pursuant to Section 15.2(a)
are subject to the following limitations:

 

(i)                                     Each
party’s obligation to repair and restore shall not exceed, net of any
condemnation awards or other proceeds available for and allocable to such
restoration as contemplated in Section 15.2(a), an amount equal to five
percent (5%) of the replacement cost of the Building Shell and Common Area
improvements, as to Landlord, or five percent (5%) of the replacement cost of
the Tenant Improvements, as to Tenant; if the replacement cost as to either
party exceeds such amount, then the party whose limit has been exceeded may
terminate this Lease unless the other party promptly elects and agrees, in
writing, to contribute the amount of the shortfall; and

 

(ii)                                  If
this Lease is terminated pursuant to the foregoing provisions of this
Section 15.2, or if this Lease remains in effect but any condemnation
awards or other proceeds become available as compensation for the loss or
destruction of any of the Improvements, then Landlord and Tenant agree (and any
Lender shall be asked to agree) that such proceeds shall be allocated between
Landlord and Tenant, respectively, in the respective proportions in which
Landlord and Tenant would have shared, under Section 15.1(c), the proceeds
of any insurance proceeds following loss or destruction of the applicable
Improvements by an insured casualty.

 

15.3                                                                           Reservation Of Compensation.  Landlord reserves, and Tenant waives and
assigns to Landlord, all rights to any award or compensation for damage to the
Improvements, the Property and the leasehold estate created hereby, accruing by
reason of any taking in any public improvement, condemnation or eminent domain
proceeding or in any other manner by exercise of the right of eminent domain or
of anything lawfully done by public authority, except that (a) Tenant
shall be entitled to any and all compensation or damages paid for or on account
of Tenant’s moving expenses, trade fixtures and equipment and any leasehold
improvements installed by Tenant in the Building at its own sole expense, but
only to the extent Tenant would have been entitled to remove such items at the
expiration of the term of this Lease and then only to the extent of the then
remaining unamortized value of such improvements computed on a straight-line
basis over the term of this Lease, and (b) any condemnation awards or
proceeds described in Section 15.2(b)(ii) shall be allocated and disbursed
in accordance with the provisions of Section 15.2(b)(ii), notwithstanding
any contrary provisions of this Section 15.3.

 

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

 

16.                                                                                                                                                                                                                                                                             DEFAULT

 

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

 

(a)                                                                                  [Omitted.]

 

28

 

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

 

(c)                                                                                  Other Obligations.  Failure to perform any obligation, agreement
or covenant under this Lease other than those matters specified in
subsection (b) hereof, such failure continuing for thirty (30) days after
written notice of such failure; provided, however, that if such failure
is curable in nature but cannot reasonably be cured within such 30-day period,
then Tenant shall not be in default if, and so long as, Tenant promptly (and in
all events within such 30-day period) commences such cure and thereafter
diligently pursues such cure to completion; and provided further,
however, that any such notice shall be in lieu of, and not in addition to, any
notice required under California Code of Civil Procedure Section 1161 et
seq., as amended from time to time;

 

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

 

(e)                                                                                  Bankruptcy. 
The filing of any voluntary petition in bankruptcy by Tenant, or the
filing of an involuntary petition by Tenant’s creditors, which involuntary
petition remains undischarged for a period of thirty (30) days.  In the event that under applicable law the
trustee in bankruptcy or Tenant has the right to affirm this Lease and continue
to perform the obligations of Tenant hereunder, such trustee or Tenant shall,
in such time period as may be permitted by the bankruptcy court having
jurisdiction, cure all defaults of Tenant hereunder outstanding as of the date
of the affirmance of this Lease and provide to Landlord such adequate
assurances as may be necessary to ensure Landlord of the continued performance
of Tenant’s obligations under this Lease. 
Specifically, but without limiting the generality of the foregoing, such
adequate assurances must include assurances that the Building continues to be
operated only for the use permitted hereunder. 
The provisions hereof are to assure that the basic understandings
between Landlord and Tenant with respect to Tenant’s use of the Property and
the benefits to Landlord therefrom are preserved, consistent with the purpose
and intent of applicable bankruptcy laws;

 

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

 

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

 

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

 

(i)                                                                                     Cross-Default. 
Any default by Tenant under the Existing Lease, to the extent such
default continues beyond any applicable cure periods provided in the Existing
Lease and to the extent Landlord therefore has (and exercises concurrently with
any termination of this Lease) a right to terminate the Existing Lease; provided,
however, that the default event set forth in this Section 16.1(i) shall
not apply with respect to any default by Tenant under the Existing Lease if, at
the time of such default, any of the following conditions exists:  (A) the holder of the landlord’s
interest under the Existing Lease is neither the person or entity which is then
the holder of the landlord’s interest under this Lease nor a person or entity
which controls, is controlled by or is under common control with the person or
entity which is then the holder of

 

29

 

the landlord’s interest under this Lease; (B) the
holder of the tenant’s interest under the Existing Lease is neither the person
or entity which is then the holder of the tenant’s interest under this Lease
nor a person or entity which controls, is controlled by or is under common
control with the person or entity which is then the holder of the tenant’s
interest under this Lease; or (C) either the Property under this Lease or
the property subject to the Existing Lease is subject to one or more outstanding
mortgages or deeds of trust, and the other such property either is not subject
to any outstanding mortgage or deed of trust, or is subject to one or more
outstanding mortgages or deeds of trust and the beneficial interest under at
least one such mortgage or deed of trust on such other property is held by a
person or entity as lender which is neither the holder of the beneficial
interest under any of the outstanding mortgages or deeds or trust on the first
such property nor a person or entity which controls, is controlled by or is
under common control with the holder of the beneficial interest under any of
the outstanding mortgages or deeds of trust on the first such property.

 

16.2                                                                           Remedies Upon Tenant’s Default.

 

(a)                                                                                  Upon
the occurrence of any event of default described in Section 16.1 hereof,
Landlord, in addition to and without prejudice to any other rights or remedies
it may have, shall have the immediate right to re-enter the Building or any
part thereof and repossess the same, expelling and removing therefrom all
persons and property (which property may be stored in a public warehouse or
elsewhere at the cost and risk of and for the account of Tenant), using such
force as may be necessary to do so (as to which Tenant hereby waives any claim
for loss or damage that may thereby occur). 
In addition to or in lieu of such re-entry, and without prejudice to any
other rights or remedies it may have, Landlord shall have the right either
(i) to terminate this Lease and recover from Tenant all damages incurred
by Landlord as a result of Tenant’s default, as hereinafter provided, or
(ii) to continue this Lease in effect and recover rent and other charges
and amounts as they become due.

 

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

 

(c)                                                                                  If
Landlord terminates this Lease pursuant to this Section 16.2, Landlord
shall have all of the rights and remedies of a landlord provided by
Section 1951.2 of the Civil Code of the State of California, or any
successor Code section, which remedies include Landlord’s right to recover from
Tenant (i) the worth at the time of award of the unpaid rent and
additional rent which had been earned at the time of termination, (ii) the
worth at the time of award of the amount by which the unpaid rent and
additional rent which would have been earned after termination until the time
of award exceeds the amount of such rental loss that Tenant proves could have
been reasonably avoided, (iii) the worth at the time of award of the
amount by which the unpaid rent and additional rent for the balance of the term
after the time of award exceeds the amount of such rental loss that Tenant
proves could be reasonably avoided, and (iv) any other amount necessary to
compensate Landlord for all the detriment proximately caused by Tenant’s
failure to perform its obligations under this Lease or which in the ordinary
course of things would be likely to result therefrom, including, but not
limited to, the cost of recovering possession of the Building, expenses of
reletting,  including necessary repair,
renovation and alteration of the Building, reasonable attorneys’ fees, and
other reasonable costs.  The “worth at
the time of award” of the amounts referred to in clauses (i) and (ii)
above shall be computed by allowing interest at ten percent (10%) per annum
from the date such amounts accrued to Landlord. 
The “worth at the time of award” of the amounts referred to in
clause (iii) above shall be computed by discounting such amount at one
percentage point above the discount rate of the Federal Reserve Bank of San
Francisco at the time of award.

 

30

 

16.3                                                                           Remedies Cumulative.  All rights, privileges and elections or
remedies of Landlord contained in this Article 16 are cumulative and not
alternative to the extent permitted by law and except as otherwise provided
herein.

 

17.                                                                                                                                                                      SUBORDINATION, ATTORNMENT AND SALE

 

17.1                                                                           Subordination To Mortgage.  This Lease, and any sublease entered into by
Tenant under the provisions of this Lease, shall be subject and subordinate to
any ground lease, mortgage, deed of trust, sale/leaseback transaction or any
other hypothecation for security now or hereafter placed upon the Building, the
Property, or any of them, and the rights of any assignee of Landlord or of any
ground lessor, mortgagee, trustee, beneficiary or leaseback lessor under any of
the foregoing, and to any and all advances made on the security thereof and to
all renewals, modifications, consolidations, replacements and extensions
thereof; provided, however, that such subordination in the case of any
future ground lease, mortgage, deed of trust, sale/leaseback transaction or any
other hypothecation for security placed upon the Building, the Property, or any
of them shall be conditioned on Tenant’s receipt from the ground lessor,
mortgagee, trustee, beneficiary or leaseback lessor of a Non-Disturbance
Agreement in a form reasonably acceptable to Tenant (i) confirming that so
long as Tenant is not in material default hereunder beyond any applicable cure
period (for which purpose the occurrence of any event of default under
Section 16.1 hereof shall be deemed to be “material”), Tenant’s rights
hereunder shall not be disturbed by such person or entity and
(ii) agreeing that the benefit of such Non-Disturbance Agreement shall be
transferable to any transferee under a Permitted Transfer and to any other
assignee or subtenant that is acceptable to the ground lessor, mortgagee,
trustee, beneficiary or leaseback lessor at the time of transfer.  Moreover, Tenant’s obligations under this
Lease shall be conditioned on Tenant’s receipt, within sixty (60) days after
the date hereof (provided that Landlord shall have the right to extend
such period for up to an additional thirty (30) days in order to continue
pursuing receipt of the agreement required hereunder if not received within
such initial 60-day period), from The Northwestern Mutual Life Insurance
Company, the beneficiary under an existing deed of trust on the Property, of a
Non-Disturbance Agreement in a form reasonably acceptable to Tenant confirming
(i) that so long as Tenant is not in material default hereunder beyond any
applicable cure period (for which purpose the occurrence of any event of
default under Section 16.1 hereof shall be deemed to be “material”),
Tenant’s rights hereunder shall not be disturbed by such person or entity and
(ii) agreeing that the benefit of such Non-Disturbance Agreement shall be
transferable to any transferee under a Permitted Transfer and to any other
assignee or subtenant that is acceptable to the ground lessor, mortgagee,
trustee, beneficiary or leaseback lessor at the time of transfer.  If any mortgagee, trustee, beneficiary, ground
lessor, sale/leaseback lessor or assignee elects to have this Lease be an
encumbrance upon the Property prior to the lien of its mortgage, deed of trust,
ground lease or leaseback lease or other security arrangement and gives notice
thereof to Tenant, this Lease shall be deemed prior thereto, whether this Lease
is dated prior or subsequent to the date thereof or the date of recording
thereof.  Tenant, and any sublessee,
shall execute such documents as may reasonably be requested by any mortgagee,
trustee, beneficiary, ground lessor, sale/leaseback lessor or assignee to
evidence the subordination herein set forth, subject to the conditions set
forth above, or to make this Lease prior to the lien of any mortgage, deed of
trust, ground lease, leaseback lease or other security arrangement, as the case
may be.  Upon any default by Landlord in
the performance of its obligations under any mortgage, deed of trust, ground
lease, leaseback lease or assignment, Tenant (and any sublessee) shall,
notwithstanding any subordination hereunder, attorn to the mortgagee, trustee,
beneficiary, ground lessor, leaseback lessor or assignee thereunder upon demand
and become the tenant of the successor in interest to Landlord, at the option
of such successor in interest, and shall execute and deliver any instrument or
instruments confirming the attornment herein provided for.

 

17.2                                                                           Sale Of Landlord’s Interest.  Upon sale, transfer or assignment of
Landlord’s entire interest in the Building and the Property, Landlord shall be
relieved of its obligations hereunder with respect to liabilities accruing from
and after the date of such sale, transfer or assignment.

 

17.3                                                                           Estoppel Certificates.  Tenant or Landlord (the “responding party”),
as applicable, shall at any time and from time to time, within ten (10)
days after written request by 

 

31

 

the
other party (the “requesting party”), execute, acknowledge and deliver
to the requesting party a certificate in writing stating: (i) that this
Lease is unmodified and in full force and effect, or if there have been any
modifications, that this Lease is in full force and effect as modified and
stating the date and the nature of each modification; (ii) the date to
which rental and all other sums payable hereunder have been paid;
(iii) that the requesting party is not in default in the performance of
any of its obligations under this Lease, that the certifying party has given no
notice of default to the requesting party and that no event has occurred which,
but for the expiration of the applicable time period, would constitute an event
of default hereunder, or if the responding party alleges that any such default,
notice or event has occurred, specifying the same in reasonable detail; and
(iv) such other matters as may reasonably be requested by the requesting
party or by any institutional lender, mortgagee, trustee, beneficiary, ground
lessor, sale/leaseback lessor or prospective purchaser of the Property, or
prospective sublessee or assignee of this Lease.  Any such certificate provided under this
Section 17.3 may be relied upon by any lender, mortgagee, trustee,
beneficiary, assignee or successor in interest to the requesting party, by any
prospective purchaser, by any purchaser on foreclosure or sale, by any grantee
under a deed in lieu of foreclosure of any mortgage or deed of trust on the
Property, by any subtenant or assignee, or by any other third party.  Failure to execute and return within the
required time any estoppel certificate requested hereunder, if such failure
continues for five (5) days after a second written request by the requesting
party for such estoppel certificate, shall be deemed to be an admission of the
truth of the matters set forth in the form of certificate submitted to the responding
party for execution.

 

17.4                                                                           Subordination to CC&R’s.  This Lease, and any permitted sublease
entered into by Tenant under the provisions of this Lease, and the interests in
real property conveyed hereby and thereby shall be subject and subordinate to
any declarations of covenants, conditions and restrictions affecting the
Property from time to time, provided that the terms of such declarations
are reasonable, do not materially impair Tenant’s ability to conduct the uses
permitted hereunder on the Property, and do not discriminate against Tenant
relative to other similarly situated tenants occupying portions of the property
covered by such declaration(s). 
Moreover, this Lease, and any permitted sublease entered into by Tenant
under the provisions of this Lease, and the interests in real property conveyed
hereby and thereby shall also be subject and subordinate (a) to the
Declaration of Covenants, Conditions and Restrictions for Pointe Grand Business
Park dated November 4, 1991 and recorded on February 25, 1992 as
Instrument No. 92025214, Official Records of San Mateo County, as amended from
time to time (the “Master Declaration”), the provisions of which Master
Declaration are an integral part of this Lease to the extent this sentence is
applicable, (b) to the Declaration of Covenants, Conditions and
Restrictions dated November 23, 1987 and recorded on November 24,
1987 as Instrument No. 87177987, Official Records of San Mateo County, which
declaration imposes certain covenants, conditions and restrictions on the
Pointe Grand Business Park, and (c) to the Environmental Restriction and
Covenant (Pointe Grand) dated as of April 16, 1997 and recorded on
April 16, 1997 as Instrument No. 97-043682, Official Records of San Mateo
County, which declaration imposes certain covenants, conditions and
restrictions on the Pointe Grand Business Park. 
Tenant agrees to execute, upon request by Landlord, any documents
reasonably required from time to time to evidence such subordination.

 

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

 

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

 

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

 

(c)                                  bound
by any rent or additional rent that Tenant may have paid in advance to any
prior landlord or owner of the Property (including, but not limited to,
Landlord) for a 

 

32

 

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

 

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

 

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

 

18.                                                                                                                                                                                                                                                                            SECURITY

 

18.1                                                                           Deposit.  Within
ten (10) days after mutual execution of this Lease, Tenant shall deposit with
Landlord the sum of Two Hundred Fifty-Nine Thousand Ninety-Seven and No/100
Dollars ($259,097.00), which sum (the “Security Deposit”) shall be held
by Landlord as security for the faithful performance of all of the terms,
covenants, and conditions of this Lease to be kept and performed by Tenant
during the term hereof.  If Tenant
defaults with respect to any provision of this Lease, including, without
limitation, the provisions relating to the payment of rental and other sums due
hereunder, Landlord shall have the right, but shall not be required, to use,
apply or retain all or any part of the Security Deposit for the payment of
rental or any other amount which Landlord may spend or become obligated to
spend by reason of Tenant’s default or to compensate Landlord for any other
loss or damage which Landlord may suffer by reason of Tenant’s default.  If any portion of the Security Deposit is so
used or applied, Tenant shall, within ten (10) days after written demand
therefor, deposit cash with Landlord in an amount sufficient to restore the
Security Deposit to its original amount and Tenant’s failure to do so shall be
a material breach of this Lease. 
Landlord shall not be required to keep any deposit under this Section
separate from Landlord’s general funds, and Tenant shall not be entitled to
interest thereon.  If Tenant fully and
faithfully performs every provision of this Lease to be performed by it, the
Security Deposit, or any balance thereof, shall be returned to Tenant or, at
Landlord’s option, to the last assignee of Tenant’s interest hereunder, at the
expiration of the term of this Lease and after Tenant has vacated the
Property.  In the event of termination of
Landlord’s interest in this Lease, Landlord shall transfer all deposits then
held by Landlord under this Section to Landlord’s successor in interest,
whereupon Tenant agrees to release Landlord from all liability for the return
of such deposit or the accounting thereof.

 

19.                                                                                                                                                                                                                                                      MISCELLANEOUS

 

19.1                                                                           Notices.  All
notices, consents, waivers and other communications which this Lease requires
or permits either party to give to the other shall be in writing and shall be
deemed given when delivered personally (including delivery by private courier
or express delivery service) or four (4) days after deposit in the United
States mail, registered or certified mail, postage prepaid, addressed to the
parties at their respective addresses as follows:

 

To Tenant:                                                                                     Exelixis,
Inc.

170 Harbor Way

South San Francisco, CA  94080

Attn: George A. Scangos

 

with copy to:                                                                          Cooley
Godward LLP

One Maritime Plaza, 20th Floor

San Francisco, CA 
94111-3580

 

33

 

Attn:  Anna B.
Pope, Esq.

 

To Landlord:                                                                           Britannia
Pointe Grand Limited Partnership

1939 Harrison Street, Suite 715

Park Plaza Building

Oakland, CA 
94612

Attn: T. J. Bristow

 

with copy to:                                                                          Folger
Levin & Kahn LLP

Embarcadero Center West

275 Battery Street, 23rd Floor

San Francisco, CA 94111

Attn: Donald E. Kelley, Jr.

 

and copy to:                                                                             Slough
Estates USA Inc.

33 West Monroe Street, Suite 2000

Chicago, IL 
60603

Attn:  William
Rogalla

 

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

 

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

 

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

 

19.4                                                                           Severability. 
If any provision of this Lease or the application thereof is held to be
invalid or unenforceable, the remainder of this Lease or the application of
such provision to persons or circumstances other than those as to which it is
invalid or unenforceable shall not be affected thereby, and each of the
provisions of this Lease shall be valid and enforceable, unless enforcement of
this Lease as so invalidated would be unreasonable or grossly inequitable under
all the circumstances or would materially frustrate the purposes of this Lease.

 

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

 

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

 

34

 

This
provision shall be contained in any and all assignments or subleases made
pursuant to this Lease.

 

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

 

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

 

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

 

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

 

19.11                                                                     Financial Information.  From time to time Tenant shall promptly
provide directly to prospective lenders and purchasers of the Property
designated by Landlord such financial information pertaining to the financial
status of Tenant as Landlord may reasonably request; provided, Tenant
shall be permitted to provide such financial information in a manner which
Tenant deems reasonably necessary to protect the confidentiality of such
information.  In addition, from time to
time, Tenant shall provide Landlord with such financial information pertaining
to the financial status of Tenant as Landlord may reasonably request.  Landlord agrees that all financial information
supplied to Landlord by Tenant shall be treated as confidential material, and
shall not be disseminated to any party or entity (including any entity
affiliated with Landlord) without Tenant’s prior written consent, except that
Landlord shall be entitled to provide such information, subject to reasonable
precautions to protect the confidential nature thereof, (i) to Landlord’s
partners and professional advisors, solely to use in connection with Landlord’s
execution and enforcement of this Lease, and (ii) to prospective lenders
and/or purchasers of the Property, solely for use in connection with their bona
fide consideration of a proposed financing or purchase of the Property, provided
that such prospective lenders and/or purchasers are not then engaged in
businesses directly competitive with the business then being conducted by
Tenant.  For purposes of this Section,
without limiting the generality of the obligations provided herein, it shall be
deemed reasonable for Landlord to request copies of Tenant’s most recent
audited annual financial statements, or, if audited statements have not been
prepared, unaudited financial statements for Tenant’s most recent fiscal year,
accompanied by a certificate of Tenant’s chief financial officer that such
financial statements fairly present Tenant’s financial condition as of the
date(s) indicated.  Notwithstanding any
other provisions of this Section 19.11, during any period in which Tenant
has outstanding a class of publicly traded securities and is filing with the
Securities and Exchange Commission, on a regular basis, Forms 10Q and 10K and
any other periodic filings required under the Securities Exchange Act of 1934,
as amended, it shall constitute sufficient compliance under this
Section 19.11 for Tenant to furnish Landlord with copies of such periodic
filings substantially concurrently with the filing thereof with the Securities
and Exchange Commission.

 

Landlord and Tenant recognize the need of Tenant to
maintain the confidentiality of information regarding its financial status and
the need of Landlord to be informed of, and to provide to prospective lenders
and purchasers of the Property financial information pertaining to, Tenant’s
financial status.  Landlord and Tenant
agree to cooperate with each other in achieving these needs within the context
of the obligations set forth in this Section.

 

19.12                                                                     Costs.  If Tenant
requests the consent of Landlord under any provision of this Lease for any act
that Tenant proposes to do hereunder, including, without limitation, assignment
or subletting of the Building or any portion thereof, Tenant shall, as a
condition to

 

35

 

doing
any such act and the receipt of such consent, reimburse Landlord promptly for
any and all reasonable costs and expenses incurred by Landlord in connection
therewith, including, without limitation, reasonable attorneys’ fees, up to a
maximum of $2,500.00 per request.

 

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

 

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

 

19.15                                                                     Brokers. 
Landlord agrees to pay a brokerage commission to Tenant’s broker,
Cornish & Carey Commercial, in connection with the consummation of this
Lease in accordance with a separate agreement. 
Each party represents and warrants that no other broker participated in
the consummation of this Lease and agrees to indemnify, defend and hold the
other party harmless against any liability, cost or expense, including, without
limitation, reasonable attorneys’ fees, arising out of any claims for brokerage
commissions or other similar compensation in connection with any conversations,
prior negotiations or other dealings by the indemnifying party with any other
broker.

 

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

 

19.17                                                                     Corporate Authority.  Each of the persons signing this Lease on
behalf of Tenant warrants that he or she is fully authorized to do so and, by jointly
so signing, to bind Tenant.

 

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

 

19.19                                                                     Survival. 
Without limiting survival provisions which would otherwise be implied or
construed under applicable law, the provisions of Sections 2.5, 7.4, 9.2,
9.3, 9.4, 11.6, 12.6 and 19.5 hereof shall survive the termination of this
Lease with respect to matters occurring prior to the expiration of this Lease.

 

19.20                                                                     Parking. 
Landlord and Tenant agree that the Common Areas, taken as a whole, shall
include parking in amounts sufficient to satisfy the minimum parking
requirements of the City of South San Francisco applicable to the Property and
the Britannia Pointe Grand Business Park from time to time.  Landlord represents to Tenant that under the
most current drawings at this date for the complete build-out of the Property
and the Britannia Pointe Grand Business Park, the overall rate of parking is
approximately 3.00 spaces for each 1,000 square feet of space in the various
buildings presently existing or presently contemplated for construction on the
Property and in the remainder of the Britannia Pointe Grand Business Park.

 

[rest of page intentionally left blank]

 

36

 

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

 

 

	
  “Landlord”

  	
   

  	
  “Tenant”

  	
   

  
	
   

  	
   

  
	
  BRITANNIA POINTE GRAND LIMITED

  	
  EXELIXIS, INC., a Delaware corporation

  
	
  PARTNERSHIP, a Delaware limited

  	
   

  
	
  partnership

  	
  By:

  	
  /s/  George A. Scangos

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  BRITANNIA POINTE GRAND,

  	
   

  	
  George A.
  Scangos

  
	
   

  	
  LLC, a California limited liability

  	
   

  	
  President and
  CEO

  
	
   

  	
  company, General Partner

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/  T.J. Bristow

  	
   

  	
  By:

  	
  /s/  Glen Y. Sato

  	
   

  
	
   

  	
  T. J. Bristow

  	
   

  	
   

  	
   

  
	
   

  	
  Its Manager, President and

  	
  Its:

  	
  CFO

  	
   

  
	
   

  	
  Chief Financial Officer

  	
   

  	
   

  	
   

  
									

 

 

38

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